Apple Music's U.S. subscriber count overtakes Spotify: source

FILE PHOTO: An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York City, July 21, 2015. REUTERS/Mike Segar

(Reuters) – Apple Inc’s streaming music service overtook rival Spotify Technology SA in terms of paid subscribers in the United States, a person familiar with the matter told Reuters on Tuesday.

Apple’s service had 28 million subscribers as of the end of February compared with Spotify’s 26 million paid subscribers, the person said.

Both companies charge $9.99 a month for subscriptions, though Spotify still has more total U.S. listeners than an Apple thanks to an ad-supported free tier of its service with fewer features. Analysts also believe Spotify has a stronger subscriber position than Apple outside the United States.

Neither Apple nor Spotify disclose country-level listener data, and both firms declined to comment. The Wall Street Journal earlier reported that Apple has overtaken Spotify on the metric.

Apple’s streaming service is part of a broader push at the company to make money off subscriptions and services as iPhone sales slow. Last month the company announced a news, television and gaming subscriptions, as well as a credit card partnership with Goldman Sachs Group Inc.

Spotify likely still has more paying users than Apple Music, with 96 million premium subscribers and 207 million month active users as of its most recent earnings report in February. The company said in its report that it has 28.8 million premium subscribers and 62.1 million monthly active listeners in its North American region, which includes Canada but not Mexico.

Apple does not regularly disclose how many subscribers it has, and the last official count – 50 million – came almost a year ago in May of 2018.

About 67 million of Spotify’s premium subscribers are outside of North America, the company said in its most recent quarterly report.

Reporting by Stephen Nellis; Editing by David Gregorio

Verizon Just Launched Its 5G Wireless Service a Week Earlier Than Expected

Verizon has flipped the switch on wireless 5G in Chicago and Minnesota, launching the service a week earlier than it had previously announced it would.

The move, which caught many by surprise, will give the customers who have 5G equipped phones access to wireless service with speeds of up to 1 Gps, roughly 10 times the peak speed of 4G.

“Verizon customers will be the first in the world to have the power of 5G in their hands,” said Hans Vestberg, Verizon’s chairman and chief executive officer in a statement.

The number of people who can actually take advantage of that service will be limited at first. Only one phone on the market—the Motorola Z3—supports 5G. Later this year, Samsung’s Galaxy S10 5G model, which will be exclusive to Verizon customers for a short period, will join that club.

The 5G service launched today will be limited to certain areas of the cities, Verizon warned.

In Chicago, 5G coverage is concentrated in areas of the West Loop and the South Loop, around landmarks like Union Station, Willis Tower, The Art Institute of Chicago, Millennium Park and The Chicago Theatre. Customers also have 5G Ultra Wideband service in the Verizon store on The Magnificent Mile and throughout The Gold Coast, Old Town and River North.

In Minneapolis, service is concentrated in the Downtown area, including Downtown West and Downtown East, as well as inside and around U.S. Bank Stadium, the site of this weekend’s NCAA men’s basketball Final Four. Verizon 5G Ultra Wideband service is also available around landmarks like the Minneapolis Convention Center, the Minneapolis Central Library, the Mill City Museum, Target Center and First Avenue venues, The Commons, areas of Elliot Park and in the Verizon store in The Mall of America.

Verizon’s launch comes as the carrier feuds with AT&T, which has launched a service it calls “5G E” that is not actually connected to a 5G network. The company ultimately plans to roll out 5G mobile service to 30 U.S. cities. AT&T did launch a mobile 5G device to customers in December, though it came with some caveats, such as the required use of a mobile Wi-Fi hotspot.

Late last year, Verizon launched 5G home service in four cities, testing the technology in smaller environments.

Customers who want the 5G service will pay a $10 per month premium on their unlimited data plans, the company announced last month.

LinkedIn Just Announced the 50 Top Companies for 2019 (Is Your Company on the List?)

LinkedIn looks at billions of actions taken by its members around the world to uncover the companies that are attracting the most attention from jobseekers and then hanging onto that talent. According to LinkedIn, “this approach looks at what members are doing — not just saying — in their search for fulfilling careers.” 

  • Companies emphasize values over perks: Companies are emphasizing company values over office perks, even as their values evolve with the times. Disney (No. 17) is paying full tuition even for its part-time workers; Slack (No. 23) is running a coding skills program within prisons; Lyft (No. 19) is offering free therapy to employees and their dependents; WeWork (No. 13) has all-vegetarian cafeterias; Goldman Sachs (No. 21) has relaxed their once-strict dress code, and WPP (No. 39) has banned drinking in their ad agency offices.
  • Tech companies, old and new, dominate rankings: Tech continues to be the fastest growing industry in the U.S., and more than half of this year’s top companies are from the tech industry. Traditional tech stalwarts such as Oracle (No. 9), Dell (No. 10), Cisco (No. 12), and Intel (No. 37) are competitively ranked alongside more recently founded companies including Airbnb (No. 8), Netflix (No. 11), Splunk (No. 39), and Snowflake Computing (No. 49).
  • Nearly 40 percent of companies are new to the list: Of the 50 companies on the list, 19 are new to the rankings. Newly recognized Top Companies to work for include Bank of America (No. 18), Citi (No. 22), Slack (No. 23), Wells Fargo (No. 25), Pinterest (No. 29), Coinbase (No. 35), and others. 

Published on: Apr 3, 2019

When to declare cloud application migration failure

One of the hip terms that you hear a great deal in Silicon Valley is “fail fast.” This means to find out what does not work so you can move on to what does. It’s solid advice, for the most part.

However, failing in some enterprises’ IT shops may get you put out of the organization, so many IT pros avoid failure at any cost—or at least never declare failure, even if it means spending millions of dollars in dealing with ineffective systems that are costly to run or even hurt the business.

For the cloud, you need to know when to declare a “fail,” when to hit the reset button and start from the beginning when doing migrations.

I bet if you look at your cloud migration projects now around the company, at lwast 20 percent are in big trouble. While the reasons for running into trouble that can lead to outright failure vary, these are the big three that I’m seeing:

  • Lift-and-shift is not working.
  • Data integration is an afterthought.
  • Compliance or security issues have not been addressed.

The biggest issue with migration of applications is the false belief that if it runs on premises on platform A (say, on Linux with four cores), provisioning virtual platform A on a public cloud using the same configuration means the application should work there as well. Umm, often no.

The result of such assumptions is that IT organizations run into issues around communications with systems that have not moved to the public cloud yet, or that their cloud bills are 300 percent higher than expected.

The reason: These lifted-and-shifted applications aren’t optimized for the cloud platform, either for functionality or costs. They don’t use native cloud features, so the value of moving to the cloud has gone out the window; indeed, it may cost you much more.

When that happens, there is nothing you can do other than declare failure and go back to the migration drawing board, this time refactoring to use cloud-native systems, as well as optimize it for the target cloud platform.

The other two issues—data integration, and compliance and security—are less frequent causes of outright failures, but they are still big issues.

Not considering the data integration needs before migration means that you’re not going to find the issue before you can do anything to fix it quickly. In many instances, the latency between on-premises systems and the cloud can’t be corrected. In such cases, you need to move back to the data center—after declaring failure.

Compliance and security issues often require systemic changes to the applications and databases in the cloud, and so need a lot of upfront planning. In a worst case, you end up with compliance or security failures so grave that you must start over.

It’s important to understand that failure is a part of cloud migration; after all, most organizations are still learning. So expect mistakes and build the fact of failure into the migration efforts. But do more than that: Also make sure you learn from the failures and thus continuously improve your practices, tools, and skills.

Three Research-Backed Strategies For Successful Work Management

According to a 2018 study conducted by Forrester Consulting, 35 percent of enterprise projects fail to meet their original business intent. Today’s business environment calls for a different approach to work management. 

1. Conduct a tool audit. 

Fixated on digital transformation and agile methodologies, organizations have morphed into SaaS-powered enterprises. The number of SaaS apps in organizations doubled from eight in 2015 to 16 in 2017, according to a 2017 report by BetterCloud. Workplaces are swarming with a potpourri of apps and communication tools. More often than not, these tools are haphazardly stitched together. 

The result is a Frankenstein’ed tool landscape that invites context shifting. Workers are constantly distracted by the string of pings emitted from their tool stack. A 2001 study by researchers at Loughborough University found that most workers react to incoming emails within a mere six seconds and proceed to squander an average of 64 seconds before resuming work. In a typical eight-hour workday, distractions by email alone amass to 90 minutes wasted. 

Forward-thinking businesses are embracing the value of conducting a tool audit, an end-to-end inventory of how workplace apps are being used (or not), which ones are duplicative, and which ones are improving (and impairing) productivity and collaboration. The more companies are able to consolidate and integrate tools, the lower the risk of context shifting. 

2. Adopt a centralized work management system. 

Not too long ago, project management was the exclusive domain of certified project management experts. In recent years, project management has been democratized. The need for greater project management proficiency across all teams has increased by 70 percent, according to the Forrester report. 

Alas, work management tools have become just another rung of the Frankenstein’ed tool stack. Companies are relying on a hodgepodge of different tools–including Evernote lists, paper to-do lists, Google docs, Trello, Slack, and more. The result is noise, a lack of transparency, and organizational silos. 41 percent of companies lack collaboration between IT, data and analytics, and business functions, according to a 2017 report by Forbes Insights and EY. The most common hurdle that knowledge workers face in using enterprise collaboration tools is ensuring that all employees are using the same tools and all stakeholders are included. 

Research has shown that collaboration improves when workers are co-located in the same physical environment. The same philosophy applies to collaborative technologies and work management solutions. When stakeholders rely on the same platform, collaboration and productivity increase. Without a central system of record, workers won’t have a unified view of organizational objectives and understand how their work funnels up into broader company goals. It’s no surprise that 78 percent of companies view collaboration across silos as critical and 69% view transparency across silos as critical to delivering on top business objectives, according to the Forrester research. 

3. Measure collaborative analytics. 

Despite the fact that enterprise-grade social tools have infiltrated the workplace, most companies aren’t paying attention to how collaborative work is getting done, and the cost of collaborative activities. Research by Babson College’s Robert Cross revealed that three to five percent of people in an organization account for 20 to 35 percent of the useful collaboration. Organizations need to recognize the importance of evaluating collaborative analytics. 

It’s especially important to assess the “dark side” of collaboration–the people who have a disproportionately negative impact on collaboration and fuel collaborative overload. Collaborative overload causes burnout, drives attrition, slows agility, and creates friction in networks. Cross’ research has also revealed that when a worker is heavily sought out, such that more than 25 percent of the people around them want greater access to them, burnout is especially common. One study found that the attrition rates around these individuals were more than 200 percent higher than leaders who were not overloaded.

Traditional organizational network analyses (ONA) informed by often-biased survey results do not shed light on the true extent of collaboration. Organizations need to measure collaborative activity by the digital exhaust of a company–the collection of email exchanges, chats, file transfers, and task assignments. When all this raw material is housed in a central work management system, the results can be transformative. Collaborative analytics can help prevent collaborative overload, reduce redundancy, and identify the individuals who are driving the most value-added collaboration. Research by Aberdeen Group found that collaborative intelligence can speed up decision-making by 46%

Today’s business dynamic is calling for a different approach to strategic execution. Organizations can’t afford to fly blind in their implementation of workplace tools. The philosophy that “more is better” is a recipe for disaster. The onus is on leaders to critically examine tool stacks and strategically select centralized tools that encourage transparency and a shared understanding of how individual tasks funnel up into larger organizational goals. 

Flying on American, Southwest, United, JetBlue or Alaska Today? Check Your Flight. They All Had Problems This Morning

American, Southwest, United, JetBlue, and Alaska Airlines, along with smaller regional carriers, were forced to ground flights across the United States this morning after a computer system error that affected many U.S. airlines.

The apparent problem, several airlines said, stemmed from a shared system that many airlines use — rather than any kind of simultaneous problem encountered by multiple airlines on their individually operated computer systems. 

Airline spokespeople at JetBlue and American Airlines both told me this morning that they put the blame on a system run by a company called Aerodata.  

A Federal Aviation Administration official also told The Washington Post that the Aeroplan system tracks “weight and balance of a plane,” and is also “used in flight planning.”

While it appears that most if not all of the flights are now cleared, and the problem resolved, airlines said they expected delays would likely reverberate across their schedules today.

So if you’re flying anywhere in the United States today on a U.S. carrier, it would be a good idea to check your flight’s status before heading to the airport.

Earlier, Southwest had said it grounded all fights across the United States for about 40 minutes Monday morning. 

“We’re working with customers on any impacts to their travel plans and we appreciate their understanding as we place nothing higher than the safe operation of every flight,” a spokesman said.

At Delta, it appeared the problem might have been confined largely to regional airlines operating as Delta Connection, although a spokesperson advised via USA Today, ” If you’re on a flight departing soon, please check the status of your flight via the Fly Delta Mobile App or Delta.com.”

Some reports said that JetBlue was most heavily affected, and as of about 8:30 this morning, the company told me in an email that it was still experiencing delays. At one point, it appeared the airline had grounded all flights due to the issue.

It appears the computer problem has been resolved as of about 9:30 a.m., but airlines expected some residual delays throughout the day as they work to get back on schedule. 

United Airlines said about 150 of its flights were affected Monday morning. 

“Some of our regional carriers experienced an issue with a flight planning program this morning that impacted operations, resulting in delays for select United Express flights. Our team worked quickly with our partners to resolve the issue,” a spokeswoman for United told me.

Alaska Airlines also reportedly had delays, but the company did not respond to my request for comment this morning.

Earlier reports — for example when the FAA reported via Twitter at about 7:42 a.m. simply that “several U.S. airlines” were “experiencing computer issues this morning” — led to some concerns that the problems might have been happening simultaneously on each airline’s separate systems.

While there’s no word on what caused the Aerodata issue, the good news here seems to be that there’s nothing like a concerted attack on multiple airlines’ systems–along with the fact that the airlines apparently responded quickly, and were able to resolve it all.

4 Things That Pundits Who "Predict" the Future Always Seem to Get Wrong

Peter Thiel has pointed out that we wanted flying cars, but got 140 characters instead. He’s only partly right. For decades futuristic visions showed everyday families zipping around in flying cars and it’s true that even today we’re still stuck on the ground. However, that’s not because we’re unable to build one. In fact the first was invented in 1934.

The problem is not so much with engineering, but economics and safety. We could build a flying car if we wanted to, but to make one that can compete with a regular automobile is another matter entirely. Besides, in many ways, 140 characters are better than a flying car. Cars only let us travel around town, the Internet helps us span the globe.

That has created far more value than a flying car ever could. We often fail to predict the future accurately because we don’t account for our capacity to surprise ourselves, to see new possibilities and take new directions. We interact with each other, collaborate and change our priorities. The future that we predict is never as exciting as the one we eventually create.

1. The Future Will Not Look Like the Past

We tend to predict the future by extrapolating from the present. So if we invent a car and then an airplane, it only seems natural that we can combine the two. If family has a car, then having one that flies can seem like a logical next step. We don’t look at a car and dream up, say, a computer. So in 1934, we dreamed of flying cars, but not computers.

It’s not just optimists that fall prey to this fundamental error, but pessimists too. In Homo Deus, author and historian Yuval Noah Harari points to several studies that show that human jobs are being replaced by machines. He then paints a dystopian picture. “Humans might become militarily and economically useless”, he writes. Yeesh!

Yet the picture is not as dark as it may seem. Consider the retail apocalypse. Over the past few years, we’ve seen an unprecedented number of retail store closings. Those jobs are gone and they’re not coming back. You can imagine thousands of retail employees sitting at home, wondering how to pay their bills, just as Harari predicts.

Yet economist Michael Mandel argues that the data tells a very different story. First, he shows that the jobs gained from e-commerce far outstrip those lost from traditional retail. Second, he points out that the total e-commerce sector, including lower-wage fulfillment centers, has an average wage of $21.13 per hour, which is 27 percent higher than the $16.65 that the average worker in traditional retail earns.

So not only are more people working, they are taking home more money too. Not only is the retail apocalypse not a tragedy, it’s somewhat of a blessing.

2. The Next Big Thing Always Starts Out Looking Like Nothing At All

Every technology eventually hits theoretical limits. Buy a computer today and you’ll find that the technical specifications are much like they were five years ago. When a new generation of iPhones comes out these days, reviewers tout the camera rather than the processor speed. The truth is that Moore’s law is effectively over.

That seems tragic, because our ability to exponentially increase the number of transistors that we can squeeze onto a silicon wafer has driven technological advancement over the past few decades. Every 18 months or so, a new generation of chips has come out and opened up new possibilities that entrepreneurs have turned into exciting new businesses.

What will we do now?

Yet there’s no real need to worry. There is no 11th commandment that says, “Thou shalt compute with ones and zeros” and the end of Moore’s law will give way to newer, more powerful technologies, like quantum and neuromorphic computing. These are still in their nascent stage and may not have an impact for at least five to ten years, but will likely power the future for decades to come.

3. It’s Ecosystems, Not Inventions, That Drive the Future

When the first automobiles came to market, they were called “horseless carriages” because that’s what everyone knew and was familiar with. So it seemed logical that people would use them much like they used horses, to take the occasional trip into town and to work in the fields. Yet it didn’t turn out that way, because driving a car is nothing like riding a horse.

So first people started taking “Sunday drives” to relax and see family and friends, something that would be too tiring to do regularly on a horse. Gas stations and paved roads changed how products were distributed and factories moved from cities in the north, close to customers, to small towns in the south, where land and labor were cheaper.

As our ability to travel increased, people started moving out of cities and into suburbs. When consumers could easily load a week’s worth of groceries into their cars, corner stores gave way to supermarkets and, eventually, shopping malls. The automobile changed a lot more than simply how we got from place to place. It changed our way of life in ways that were impossible to predict.

4. We Can Only Validate Patterns Going Forward

G. H. Hardy once wrote that, “a mathematician, like a painter or poet, is a maker of patterns. If his patterns are more permanent than theirs, it is because they are made with ideas.” Futurists often work the same way, identifying patterns in the past and present, then extrapolating them into the future. Yet there is a substantive difference between patterns that we consider to be preordained and those that are to be discovered.

Think about Steve Jobs and Appl for a minute and you will probably recognize the pattern and assume I misspelled the name of his iconic company by forgetting to include the “e” at the end. But I could have just have easily been about to describe an “Applet” he designed for the iPhone or some connection between Jobs and Appleton WI, a small town outside Green Bay.

The problem with patterns is that the future is something we create, not some preordained plan that we are beholden to. The things we create often become inflection points and change our course. That may frustrate the futurists, but it’s what makes life exciting for the rest of us.

3 Stocks To Hold During The Economic Slowdown

Stocks are becoming more expensive. Yet earnings have not bolstered these prices. In fact, earnings surprises have been mostly negative, causing the Citigroup Economic Surprise Index to diverge with the price-to-earnings ratio of the market:

This index, almost by necessity, oscillates. As earnings continue to disappoint, analysts will inevitably lower their expectations, in turn creating an environment of more positive earnings surprises. This is bullish for the market, especially for companies reporting earnings in the coming months.

When earnings surprise, stocks rise. This is true even when stocks are perceived to be expensive. Those who are concerned with the inflated equity costs should be comforted to know that we are still in a bull market.

Don’t Worry Yet

Leading economic indicators tell us not to worry just yet. For example, ISM New Orders show continued growth in customer demand – 38 consecutive months of growth, in fact.

Note that new orders trend down before recessions:

We might be seeing slower growth, but we still see growth. Eventually, the top will be in, and leading economic indicators will start to decay before the next recession. For now, the economy is as strong as ever but with slowing growth.

Because the economy influences company earnings and because the economy is still strong, the Citigroup Economic Surprise Index being low is likely the result of analysts’ expectations being too high. With growth slowing, this makes sense. Analysts have been assuming the fast growth in corporate earnings will continue, neglecting the slowdown in economic growth.

Peak Growth

Currently, the slope of leading economic indicators (LEIs) is flattening. This could be a temporary stall, but we often see this toward the end of a bull market. The economy is likely leaving the expansion phase of the business cycle and entering a slowdown phase:

At this point, the risk/reward curve begins to become concave, meaning that the downside risk is beginning to outweigh further upside reward. From here, we will likely see lower volatility as the market makes its way up to a peak for this bull market. Before we hit the recession phase of the business cycle, we will likely see another rally, but one of much lower volatility and speed than the post-December rally.

The bull market is not over. With foreign economies clearly being deep in the slowdown phase, the US market is one of the last places for bulls. Yet the fact that the economy is slowing down means investors should be rebalancing their portfolios for the sake of maintaining alpha.

Outperforming Sectors

According to research on sector performance during the business cycle, at this point, investors should be ditching real estate and consumer discretionary stocks in favor of healthcare and consumer staples:

Drawing inspiration from this, here is my list of positions to hold during the coming economic slowdown:

Macquarie Infrastructure (NYSE:MIC)

This company falls in the “industrials” sector. This is a B2B service company – or set of companies, rather.

MIC has seen a stable, positive growth rate since around 2013. The slowdown earlier this decade did not make a significant impact on the company’s growth, implying that we should see growth continue during the next slowdown:

(Source: Damon Verial; data from ADVFN)

Cash flows too have been strong and growing:

(Source: Damon Verial; data from ADVFN)

Putting it all together, I calculate the company as undervalued as per its discounted cash flow valuation. Here is my discounted cash flow valuation plotted against the stock:

(Source: Damon Verial; data from ADVFN)

You can see that MIC was not underpriced until the last selloff. My chart only generated a buy signal in 2018. The valuation implies a 60% upside.

Four analyst downgrades after February’s earnings brought the stock to a discounted level. We know this was an overreaction because the stock is quickly filling the down area gap that appeared after earnings:

(Source: Stockcharts.com)

One key reason for my choice of MIC is its mispricing. Yet once the gap fills, the post-earnings drift will be officially over. Get in on this one early for some excess returns and to lock in on the company’s 10% dividend yield.

TreeHouse Foods (NYSE:THS)

This food and beverage company falls in the “consumer staples” category. It attracted my attention last month with an odd earnings reaction. The company reported a revenue decline of over 10%, causing the stock to fall.

Yet it was bought right back up, with dip-buying erasing all losses. The stock carried on as if nothing happened. This type of post-earnings reaction shows a strong investor base, which limits news-based drawdowns:

(Source: Stockcharts.com)

I dug into the earnings call transcript to see if I could find anything of interest. Lexical analysis is useful here. Proper financial lexical analysis can generate management sentiment, which is a predictor of a stock’s price over the coming month.

THS’s earnings calls were quite interesting. Rarely does a call contain more pessimism than optimism. However, THS was the rare exception for most of this and last year – except for the recent quarter.

Its most recent earnings call was roughly as optimistic as the average company. Because the previous quarter and year showed negative sentiment scores, I cannot make a comparison. Suffice to say, management is indirectly pointing to an inflection point in the company.

Here are a few flagged statements from the earnings call:

“Importantly, pricing execution has gone a lot more smoothly than last year with a minimal disconnect between inflation and pricing.”

– A tangible factor for the recent turnaround in sentiment.

“We worked hard as an organization to resolve the majority of our service issues and to restore customer trust and TreeHouse’s ability to deliver.”

– A similar statement; an admission of problems that are being corrected. Acknowledgement of issues and plans for resolution remains a strong indicator of excess returns, according to financial lexical analysis. (The downplaying of problems in contrast implies negative excess returns.)

“Quite frankly, solving the Snacks issue right now is our most important and where all the focus is.”

– A continued focus on problems. Should the company again succeed, we will likely see another quarter of strong sentiment, implying upward pressure on the stock price.

THS has outperformed the US food market to a great extent: 68% annual returns versus -4%. Yet my analysis hints that mean reversion is still underway, as the company still has a lower price-to-book than the average food stock. The company is expected to see a 60% earnings growth over the next year, making now a good entry point.

Because THS does not offer a dividend, you can use options instead for this play. I recommend the Aug 16 $60 calls. These have a delta of 100, allowing you to fully mimic holding 100 shares of THS per contract at a cost of around $650 and with minimum theta decay.

Madrigal Pharmaceuticals (NASDAQ:MDGL)

This company falls in the “healthcare” category. Investing in MDGL gives you exposure to a pipeline of cardiovascular, liver, and metabolic treatments. The stock is trading at under half its previous price because shares were diluted via a public offering for the sake of raising capital.

This capital will be used to finance the company’s pipeline. The timing was smart: just before a slowdown. The company will be able to focus on its pipeline with little regard to decaying economic conditions.

The options market is pricing the stock at $130, which is slightly above MDGL’s current price. I, too, see the stock as undervalued. Over the past year, MDGL has outperformed the biotech sector with 8% returns versus -1% returns.

Since 2016, MDGL has had no long-term debt and can cover its short-term debt with its current cash and assets. With its moat of cash, MDGL can continue working on its pipeline without worrying about earnings. A strong clinical trial result or two should draw investors into this company, and the stock will rally in response.

This stock is more of a gamble than the other two, so do look into the pipeline to see if anything strikes your fancy. Biotech stocks are notoriously hard to predict, and so my philosophy is to bet on those that are (1) outperforming the sector, (2) have a decent pipeline or high-sales product, and (3) are financially healthy, whether that mean strong earnings or enough cash runway to support the pipeline.

This is a rather unpopular stock for the general public, but is popular with the “smart money”: venture capitalists, hedge funds, and institutions:

(Source: Simply Wall St)

If you want to play this without putting too much capital at risk, I suggest the June 21 $130 call options. If the option market’s prediction is correct, these contracts are currently underpriced. Aim for roughly 25% ROI over the next quarter and roll the options over quarterly.

Conclusion

The US economy is at peak growth. From here, it will soon (or already has by some measures) enter into the slowdown phase of the business cycle. During this phase, three sectors show excess returns: industrials, consumer staples, and healthcare.

While you could simply buy ETFs in these sectors, if we are to seek alpha, we should look for stocks that are to outperform in these sectors. Thus, we gain excess returns upon excess returns. I gave my three picks, one from each sector.

We have MIC, an industrial with strong growth; THS, a food company that is at an inflection point, having solved many of its major problems, and a management, which has recently traded pessimism for optimism; and MDGL, a biotech company that is cash-rich and focusing on its pipeline. All things being equal, holding these companies in your portfolio during the inevitable slowdown will produce alpha. Happy trading.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Daimler buys Torc Robotics stake for self-driving trucks

FRANKFURT (Reuters) – Daimler Trucks has agreed to buy a majority stake in self-driving truck software maker Torc Robotics as part of a broader push to develop autonomous vehicles.

The Daimler logo is seen before the Daimler annual shareholder meeting in Berlin, Germany, April 5, 2018. REUTERS/Hannibal Hanschke

Torc, based in Blacksburg, Virginia, will help Daimler accelerate software development by giving the German manufacturer access to 120 skilled staff, Daimler Trucks Chief Executive Martin Daum said.

“You cannot have enough expertise in this area. Our Achilles’ heel is the ability to quickly develop software,” Daum said.

Financial terms of the deal were not disclosed.

Torc Robotics has partnerships to develop self-driving technology with Caterpillar with mining and agricultural applications, and competed in the DARPA self-driving vehicles challenge 12 years ago.

Torc has developed technology that allows vehicles to operate at a high level of automation, known as level 4, helping Daimler to accelerate its own plans for commercializing self-driving vehicles.

“Torc’s Level 4 system has been shown to operate well for both urban and highway driving in rain, snow, fog, and sunshine,” said Roger Nielsen, CEO of Daimler Trucks North America (DTNA), which includes the market-leading Freightliner brand.

Daimler currently offers a level 2 automation system on its trucks, which can automatically brake, accelerate and steer using radar and camera systems that make partially automated driving possible.

“Bringing Torc Robotics within the Daimler Trucks family creates a unique and powerful team of innovators to put highly automated trucks on the road,” Daum said.

Torc will continue to be run on an arms-length basis from Daimler but the Torc team will work closely with Daimler Trucks’ developers, Daimler said.

Torc will continue to develop its Asimov self-driving software and testing at its Blacksburg facility. At the same time, Daimler Trucks will focus on further evolving automated driving technology and vehicle integration for heavy-duty trucks at its Automated Truck Research & Development Center in Portland.

Daimler Trucks will also use know-how about sensors and automation from the group’s Mercedes-Benz passenger car brand, the car and truck maker said.

Reporting by Edward Taylor; Editing by Thomas Seythal and Mark Potter

Exclusive: Told U.S. security at risk, Chinese firm seeks to sell Grindr dating app

(Reuters) – Chinese gaming company Beijing Kunlun Tech Co Ltd is seeking to sell Grindr LLC, the popular gay dating app it has owned since 2016, after a U.S. government national security panel raised concerns about its ownership, according to people familiar with the matter.

The Committee on Foreign Investment in the United States (CFIUS) has informed Kunlun that its ownership of West Hollywood, California-based Grindr constitutes a national security risk, the two sources said.

CFIUS’ specific concerns and whether any attempt was made to mitigate them could not be learned. The United States has been increasingly scrutinizing app developers over the safety of personal data they handle, especially if some of it involves U.S. military or intelligence personnel.

Kunlun had said last August it was preparing for an initial public offering (IPO) of Grindr. As a result of CFIUS’ intervention, Kunlun has now shifted its focus to an auction process to sell Grindr outright, given that the IPO would have kept Grindr under Kunlun’s control for a longer period of time, the sources said.

Grindr has hired investment bank Cowen Inc to handle the sale process, and is soliciting acquisition interest from U.S. investment firms, as well as Grindr’s competitors, according to the sources.

The development represents a rare, high-profile example of CFIUS undoing an acquisition that has already been completed. Kunlun took over Grindr through two separate deals between 2016 and 2018 without submitting the acquisition for CFIUS review, according to the sources, making it vulnerable to such an intervention.

The sources asked not to be identified because the matter is confidential.

Kunlun representatives did not respond to requests for comment. Grindr and Cowen declined to comment. A spokesman for the U.S. Department of the Treasury, which chairs CFIUS, said the panel does not comment publicly on individual cases.

Grindr, which describes itself as the world’s largest social networking app for gay, bisexual, transgender and queer people, had 27 million users as of 2017. The company collects personal information submitted by its users, including a person’s location, messages, and in some cases even someone’s HIV status, according to its privacy policy.

CFIUS’ intervention in the Grindr deal underscores its focus on the safety of personal data, after it blocked the acquisitions of U.S. money transfer company MoneyGram International Inc and mobile marketing firm AppLovin by Chinese bidders in the last two years.

CFIUS does not always reveal the reasons it chooses to block a deal to the companies involved, as doing so could potentially reveal classified conclusions by U.S. agencies, said Jason Waite, a partner at law firm Alston & Bird LLP focusing on the regulatory aspects of international trade and investment.

“Personal data has emerged as a mainstream concern of CFIUS,” Waite said.

The unraveling of the Grindr deal also highlights the pitfalls facing Chinese acquirers of U.S. companies seeking to bypass the CFIUS review system, which is based mostly on voluntary deal submissions.

Previous examples of the U.S. ordering the divestment of a company after the acquirer did not file for CFIUS review include China National Aero-Technology Import and Export Corporation’s acquisition of Seattle-based aircraft component maker Mamco in 1990, Ralls Corporation’s divestment of four wind farms in Oregon in 2012, and Ironshore Inc’s sale of Wright & Co, a provider of professional liability coverage to U.S. government employees such as law enforcement personnel and national security officials, to Starr Companies in 2016.

PRIVACY CONCERNS

Kunlun acquired a majority stake in Grindr in 2016 for $93 million. It bought out the remainder of the company in 2018.

Grindr’s founder and chief executive officer, Joel Simkhai, stepped down in 2018 after Kunlun bought the remaining stake in the company.

FILE PHOTO: An unidentified man using a smart phone walks through London’s Canary Wharf financial district in the evening light in London, Britain, September 28, 2018. REUTERS/Russell Boyce/File Photo

Kunlun’s control of Grindr has fueled concerns among privacy advocates in the United States. U.S. senators Edward Markey and Richard Blumenthal sent a letter to Grindr last year demanding answers with regards to how the app would protect users’ privacy under its Chinese owner.

Kunlun is one of China’s largest mobile gaming companies. It was part of a buyout consortium that acquired Norwegian internet browser business Opera Ltd for $600 million in 2016.

Founded in 2008 by Tsinghua University graduate Zhou Yahui, Kunlun also owns Qudian Inc, a Chinese consumer credit provider, and Xianlai Huyu, a Chinese mobile gaming company.

Reporting by Carl O’Donnell, Liana B. Baker and Echo Wang in New York; Editing by Greg Roumeliotis and Lisa Shumaker