Police Could Use The Dead to Unlock Phones

When you die, someone could use your dead body to unlock your iPhone. USA Today reports that new technology like finger and face locks make it easier for us to identify ourselves to our smartphone to unlock it, but none of those technologies actually require you to be alive in order to use them.

The issue has come up in the case of Devin Kelley, the gunman in Texas that recently killed 25 people at a local church.

Within 48 hours of the incident, police could have potentially used Kelley’s thumbprint to unlock his phone if he had TouchID enabled on his device, even though he was deceased. After 48 hours of non-use, the feature requires the numeric passcode. The time limit passed before authorities attempted to unlock the phone, so they are currently unable to gain access to it.

It’s not a guaranteed deal. Speaking with USA Today, Anil Jain, a professor of computer science at Michigan State University notes that as a body rots it changes shape. “Body parts under water and in very hot climate will decompose much faster,” he says. So depending on where a person died and how they may or may not be capable of unlocking the device post-mortem.

It’s also a lot easier on older systems. Newer fingerprint scanners look for a conductive property on the skin (the same thing your touchscreen needs, and why it won’t work with gloves). You fingers lose that property shortly after death. In order to break into a phone, someone would need to build a conductive copy of your finger. Jain’s lab has already built several molds that have been used to unlock phones. While it’s not something a random person is probably going to do, it is possible.

Louis C.K. Responds After New York Times Report and Being Dropped by Netflix, The Orchard

Hollywood studios are moving quickly to distance themselves from Louis C.K. one day after a bombshell The New York Times report surfaced allegations from multiple women who accused the comedian of masturbating in front of them without their consent. On Friday, the comedian admitted that the allegations against him are true and issued an apology (see below).

The independent film studio The Orchard said in a statement on Friday that it “will not be moving forward with the release of I Love You, Daddy—the movie that Louis C.K. wrote, directed, and starred in—which was supposed to hit theaters November 17. The studio previously cancelled the movie’s New York premiere event on Thursday in advance of the Times‘ story.

The Orchard paid a reported $5 million to acquire worldwide distribution rights to the film in September after the movie made a well-received debut at the Toronto International Film Festival. (The deal was the largest to come out of that festival this year.) Even before yesterday’s huge allegations, Louis C.K. had been drawing criticism over I Love You, Daddy, which features some questionable content and offensive language, including a storyline where a character’s 17-year-old daughter has a romantic relationship with a 68-year-old man.

Meanwhile, multiple media giants also took a step back from Louis C.K. on Friday. Netflix announced that it will not move forward with a planned stand-up special featuring the comedian, who signed a deal with the streaming service to create two comedy specials earlier this year. The first of those two stand-up specials started streaming on Netflix in April.

“The allegations made by several women in The New York Times about Louis C.K.’s behavior are disturbing,” a Netflix spokesperson said in a statement provided to Fortune. “Louis’s unprofessional and inappropriate behavior with female colleagues has led us to decide not to produce a second stand-up special, as had been planned.”

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On Friday afternoon, Louis C.K. issued a statement verifying the accounts of five women who accused him of sexual misconduct in The New York Times‘ report. Here is the comedian’s full statement:

I want to address the stories told to the New York Times by five women named Abby, Rebecca, Dana, Julia who felt able to name themselves and one who did not.

These stories are true. At the time, I said to myself that what I did was okay because I never showed a woman my dick without asking first, which is also true. But what I learned later in life, too late, is that when you have power over another person, asking them to look at your dick isn’t a question. It’s a predicament for them. The power I had over these women is that they admired me. And I wielded that power irresponsibly.

I have been remorseful of my actions. And I’ve tried to learn from them. And run from them. Now I’m aware of the extent of the impact of my actions. I learned yesterday the extent to which I left these women who admired me feeling badly about themselves and cautious around other men who would never have put them in that position.
I also took advantage of the fact that I was widely admired in my and their community, which disabled them from sharing their story and brought hardship to them when they tried because people who look up to me didn’t want to hear it. I didn’t think that I was doing any of that because my position allowed me not to think about it.
There is nothing about this that I forgive myself for. And I have to reconcile it with who I am. Which is nothing compared to the task I left them with.

I wish I had reacted to their admiration of me by being a good example to them as a man and given them some guidance as a comedian, including because I admired their work.

The hardest regret to live with is what you’ve done to hurt someone else. And I can hardly wrap my head around the scope of hurt I brought on them. I’d be remiss to exclude the hurt that I’ve brought on people who I work with and have worked with who’s professional and personal lives have been impacted by all of this, including projects currently in production: the cast and crew of Better Things, Baskets, The Cops, One Mississippi, and I Love You Daddy. I deeply regret that this has brought negative attention to my manager Dave Becky who only tried to mediate a situation that I caused. I’ve brought anguish and hardship to the people at FX who have given me so much The Orchard who took a chance on my movie. and every other entity that has bet on me through the years.
I’ve brought pain to my family, my friends, my children and their mother.

I have spent my long and lucky career talking and saying anything I want. I will now step back and take a long time to listen.

Thank you for reading.

Time Warner’s HBO said it is removing the comedian from its lineup of performers for Jon Stewart’s annual fundraiser Night of Too Many Stars: America Unites for Autism when it airs on the cable network later this month, and HBO also said it is “removing Louis C.K.’s past projects from its On Demand services.”

And 21st Century Fox’s FX Networks, which airs the comedian’s comedy series Louie (along with projects Louis C.K. executive produces, like Better Things and Baskets) said in a statement on Thursday that the network is “obviously very troubled by the allegations” against the comedian and that “the matter is currently under review.”

Twitter's 280-Character Limit Is Forcing Users to Be Creative All Over Again (Kinda)

Not since the advent of non-chronological timelines has a change to Twitter caused such distress. Back in September, Twitter announced that it would be increasing the number of characters people could tweet from 140 to 280. Reactions were … mixed. Some favored the ability to say more, but most just thought changing the well-worn tweet size, and the forced brevity it caused, ruined the very thing that made Twitter charming in the first place. It was fixing something that wasn’t broken. And now, this week, as the Grand Embiggenment has expanded outward from its initial beta users, more and more people have been celebrating—or rueing—their newfound #280characters status.

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Some took it as an opportunity to string together long lines of vowels and consonants, a form of screaming into the abyss now made louder and (slightly) more noticeable. Still others took the opportunity to remind Twitter that all anyone has ever wanted was the ablitiy to edit tweets. Others pointed out that additional characters would enable even longer tweets with which to harass people. In perhaps my favorite 280-character tweet so far, Isiah Whitlock Jr., the actor who played Clayton Davis on The Wire, used his extra letters to do justice to his character’s catch phrase:

Then, a few users—mostly Twitter power-users with verified accounts—started getting creative. And corny.

In a very self-aware bit of honesty, the official account of NBA referees went with:

(Here’s a well-reasoned, complete sentence: If we have any sort of repeat of Game 4 of last year’s NBA finals officiating I will be all-caps screaming at you like I’m Draymond Green.)

And, in a perfect piece of whimsy, the unofficial account of the Oxford comma waded into the fray.

So far, a lot of the most celebratory 280-character messages have come from #brands, either eager to show off their hipness, their newly-acquired status, or something else entirely. That’s mildly icky to think about, but it’s also a reminder: The reason companies even have Twitter accounts, and social media mavens entrusted with running them, is because early users’ creativity turned a ridiculous-seeming platform into an artform all its own. Figuring out how to be funny, or smart, or engaging in 140-characters or less became a talent all its own. Before it became, as designer Mike Monteiro put so elegantly in a recent essay on Medium, a “pretty hate machine,” Twitter was where people developed a whole new way to communicate. The 140 character limit was a big part of that. The service could add photo-sharing, GIFs, even threaded conversations, but the length was always the constant—and the thing that took the most mastery.

Now, it’s gone. Or leaving. Or whatever. It’s changing. Twitter always has been evolving, but this move feels like one that is letting go of the last vestiges of Original Twitter. Then again, when a service’s stewards are being called before Congress to answer for any part they might’ve played in altering the outcome of a US presidential election, maybe it’s past the point of singing “The Way We Were.” Besides, the platform has some other, more pressing issues that just might need those extra characters:

Whatever happens with the new Twitter, users are going to have to find new ways to be creative with it. Maybe really short fiction will take off. Or poetry. Or maybe people will still keep it simple and that extra space will just be an untapped resource. Or maybe the long, threaded screeds will just be even longer. (I didn’t say all of these options were good.) Once upon a time, Twitter constrained the internet into creativity; now it may be doing so again. It may turn out that the rewards are no longer worth the rewiring and the service loses its cool, if it hasn’t already. Or, more likely, users will find a new way to play; draft, adapt, retweet.

Logitech Is Giving Every Harmony Link Owner a Free Harmony Hub

When Logitech decided to intentionally brick its Harmony Link hub next March, it somehow didn’t anticipate the backlash, which spread from Reddit comment threads to major tech publications and beyond. Thursday, the company changed tack. The Harmony Link will still die next spring. But if you own one, no matter when you bought it, you’ll receive a free upgrade to the more recent—and decidedly better—Harmony Hub, no questions asked.

“I made a mistake. It was an honest mistake,” says Rory Dooley, head of Logitech Harmony. “Mea culpa. We’re going to do right by our customers, and do the right thing.”

Previously, Logitech had only offered the Home Hub upgrade to customers who had their Link still under warranty—a tough ask for a six-year-old product. Link owners who were out of warranty had to settle for a 35 percent discount on the $100 Home Hub. (Amazon already knocks off 11 percent, making the actual savings pretty meagre.) If you’re one of the 600 or so people who already took that offer, Logitech will now refund you.

The initial decision to pull the plug on Link—Logitech cited an expiring security certificate as the reason—set off a firestorm.

“It just feels vindictive,” says Kyle Wiens, CEO of iFixit and a consumer hardware rights advocate, of Logitech’s initial offer.

The rancor came in no small part because the move follows the steady erosion of the concept of ownership in tech. The Sony Dash became a fancy paperweight in July. Last spring, Nest kneecapped the $300 Revolv smart home hub two years after acquiring the company. In 2009, Amazon vanished purchased ebooks from Kindles. And on and on.

The free upgrade approach, which Logitech details in this blog post, goes at least some way toward keeping the Link off of that list. “The thought process was driven by the fact that we have something better, we’re making it better all the time, it supports home control, voice assistants, and it does all the things that Harmony Link already did,” says Dooley. “If we didn’t have anything to offer, then we would have done the work to keep the product working.”

As for why Logitech wouldn’t simply keep Link alive in the first place, Dooley notes not just the security certificate but the small install base—Home Hub has around 40 times as many users—and the work required to maintain it.

“In the context of managing everything we have to manage, to manage the whole product line, it was seen as a better use of resources to put them toward the future-facing products,” says Dooley.

Which again raises the question of who really owned that Link in the first place. “When I buy a house, I don’t expect that the seller of the house gets to randomly decide to shut the power off while I own it,“ says Charles Duan, director of the Patent Reform Project at Public Knowledge, a non-profit focused on open internet and IP property laws.

Still, offering a free replacement that serves the exact same purpose but adds features mitigates the impact. Dooley says the company will be “proactive” in reaching out to Link owners, and they they don’t even have to have registered the device to receive the trade-in. “If you send back in the Harmony Link, and say look I bought this at some point, we’ll replace it even if you haven’t connected it to our database,” Dooley says.

Logitech has also addressed a second-order outcry that arose when angry Link customers stormed the company’s forums, only to find that the company was censoring out the phrase “class action lawsuit.” Logitech says the automated removal was due to a list of blocked keywords—its Community Terms of Service doesn’t allow solicitation, including of the legal variety. As part of its apology tour, the company has unblocked “class action lawsuit,” and is reviewing the rest of its verboten forum words and phrases.

Even if Link owners aren’t mollified by Logitech’s make-good for some reason, they likely don’t have much legal recourse to the bricking of their device anyway. “They are allowed to do that, absent some sort of contractual agreement that they had in their Terms of Service,” says Duan.

It’s heartening, though, that vocal customers were actually able to effect change, hopefully in a way that reverberates well beyond Logitech. As for Home Hub owners, Dooley says they shouldn’t expect to go through the same rigamarole a few years from now.

“You’re always learning. The best way of learning is when you stumble, as we did here,” says Dooley. “Having an easy path for the customer that’s using a product and using a service is the right way of looking at this. We didn’t look at it that way, unfortunately. And we’ve learned from it.”

A CAPTCHA Killer is Coming. It's a Major Threat To Your Online Security

A core security mechanism that keeps us all safe online is likely to fail within the next few years. This could cause a massive rekeying of websites and big shifts in how we approach online security. It also signals a new wave of Artificial Intelligence systems that can teach themselves narrow tasks quickly and efficiently. Combined with the rapid rise of Quantum Computing, this could spell trouble for everyone’s online security (and the ability of your business to stay secure).

The security system in question is the hated but still effective CAPTCHA (and it’s close relative, the reCAPTCHA). CAPTCHA is an acronym for ‘Completely Automated Public Turing test to tell Computers and Humans Apart’. For more than a decade, the hard-to-decipher letters and numbers, often posted against textured backgrounds or photographs, have played a critical role in foiling automated attempts to hack into accounts by attempting username and password and combos over and over.

The CAPTCHA-Killer

Researchers from a Silicon Valley startup named Vicarious AI published details earlier this month about  a new type of Artificial intelligence system can learn how to decode CAPTCHAs quickly. Vicarious is backed by Amazon CEO and founder Jeff Bezos and Facebook CEO and founder Mark Zuckerberg. Because the CAPTCHA cracking algorithms and artificial intelligence system requires so little training and compute resources, it represents something of a breakthrough in artificial intelligence  and not just a proof-of-concept.

With the CAPTCHA breakthrough, scientists decided not to use traditional neural networks, which require millions of accurately labeled images to train a system. They tried a different model that relied on a different technique called “contour continuity”. This mirrored how the human brain distinguishes edges of overlapping objects. The new CAPTCHA cracker could decode Google’s squiggles with a 67% accuracy rate, not that far off the human accuracy rate of 87%. For PayPal and Yahoo, the system achieved an accuracy rate of greater than 50%. That’s more than enough to allow automated systems – bots – powered by this new form of AI to crack many current types of CAPTCHAs very quickly.

Enter Quantum Computing, and It Spells Security Trouble

The impending CAPTCHA crisis compounds fears about the ability of quantum computers to crack nearly any password in seconds. Quantum computers are a new type of computer that relies on quantum states to quickly calculate certain types of math equations. Quantum computers are not ready for prime time yet but a host of tech giants are rushing to improve existing quantum computing technology to make it stable and accurate enough to use for real world problem solving. Security experts fear that a quantum computer in the hands of hackers or government intelligence agencies could rapidly undermine the security of the internet.

With the impending doom of CAPTCHA and the approach of Quantum Computers, businesses (and all of us) will need to rethink in how we lock down our online accounts – and quickly adopt new ways of creating a secure digital world. I’ll write more about that in another column.

5 Reasons Small Business Owners Should Plan a Corporate Retreat

Corporate retreats have earned a reputation that’s largely negative, but they’re far from a negative event. They’re an opportunity for employees to come together in person for work and relaxation. But if they’re perceived negatively, why would we recommend retreats to small business owners?

Because if they’re executed correctly, a corporate retreat will be one of the best investments you ever make in your company. One Inc.com article says that as a leader, it’s your responsibility to plan a retreat that challenges, unites, and accelerates your team.

Here are five tips to help you plan a retreat that does just that.

1. Take some time for targeted improvements.

Each business is unique in what can build teams up. If you’ve noticed areas for improvement within your company, or other employees have brought ideas to you, you can — and should — incorporate them into your retreat.

The trick is to not plan too much into one retreat. You have to manage your expectations and retreat schedule around a few key aspects you want to hone or develop within your team.

2. It’s a chance to get away–find an accessible outdoor spot.

While there’s never truly a day off in the life of a small business owner, a retreat at least gets you out of the office. That alone does wonders for your mental and physical health.

You need to take advantage of the opportunity to get away from the office and not just spend that time at a convention center a few blocks from your building. Since location is so important to the efficacy of a retreat — certain activities can’t happen at a convention center, and vice versa — you need to pick your location carefully.

Locations that offer a myriad of outdoor activities are hugely popular. The Huffington Post reports that connections with nature have been proven to improve an employee’s performance at work.

What you don’t want, however, is going too far into the outdoors. You want to balance what the outdoors offers with basic modern living comforts. Resorts near national parks are great examples of this balance — they offer unparalleled access to nature while giving employees a hot shower, soft bed, and WiFi at night.

3. Make it an opportunity for real discussion.

When you’re planning your retreat, take a look at your planned speeches and presentations. How many of those could be turned into a discussion instead? And how many activities provide an opportunity for meaningful discussion afterward? That discussion is arguably the most important part of a retreat.

According to a report from the Civil Service College of Singapore, “The discussions after the (outdoor) activity are more important, as its purpose is usually to set the stage for real-life applications of its lessons.”

4. Target the needs of your employees.

If you do it right, a retreat will have a lasting positive impact on your employees’ attitudes and professional aspirations. Again, the key here lies in crafting a retreat that targets the needs of your employees. Workers today are, “focused on meeting targets and making an impact with clients. That would indicate that retreats that include trust falls and golf . . . are out . . . and other experiential activities that can help foster employee growth are in.”

Experiential activities are essentially a 21st-century version of the trust fall. Morell gives an example of a nonprofit company in England that spent an entire day investigating a murder. It was staged, of course, but employees had to work together to dig up the remains of the murder, analyze forensic data, and identify a suspect.

You can find more ideas here, but some of the best are:

Tesla Shorts Are Too Short-Sighted

Intro

Tesla (TSLA) reported earnings Wednesday, November 1st, with the entire call and much of the quarterly letter focused on the Model 3. One of the most prominent pieces of information that came out was that the vehicle faces a 3 month delay to reach a 5,000 a week run-rate. For those paying attention, this was not a complete surprise, as a supplier already announced a 3-month postponement of higher volumes for a part for Tesla, and Panasonic admitted delays in the production lines at the Gigafactory.

The stock reacted negatively the next day, dropping nearly 7% by Thursday’s close.

In this article, we will take a walk down memory lane and examine the Model S and X releases, and see if there is any clues about potential outcomes for the stock at different points in the Model 3 ramp.

Model Releases & Stock Effect

2012: Model S

A very long time ago in Tesla time, Model S was just about to be released. The supercharger network concept had just been introduced, and the only vehicle Tesla had ever sold was the Roadster, an amalgamation of IP from the company Tesla had grown from, and the Lotus Elise.

People were skeptical Tesla could produce a compelling, reliable car in any sort of volume. The automaker was aiming to produce 20,000 a year of the car. News eventually broke from Tesla they were having trouble ramping some variants of the Model S. The stock lost ~21% of it’s value from the news before bottoming out.

Chart
TSLA data by YCharts

As Tesla proved their ability to manufacture a vehicle designed in-house from the ground up and slowly ramp production, investor confidence soared to new highs as can be seen in the chart below:

Chart
TSLA data by YCharts

The stock posted gains from July 1st, 2012 ($29.02) to July 1st, 2013 ($117.18) of over 400%. This does not include gains had from the bottoming-out of the stock near ~$20 that occurred from the temporary delays.

2015: Model X

After many delays of the final reveal and official delivery as opposed to the initial reveal in 2012 seen here), the Model X finally started rolling off the assembly line in September 2015. The stock had gotten over-hyped pending the release of the model and had gone to new-highs of $280 in July.

Since it’s initial release, the Model S had improved in reliability significantly, had undergone range and performance enhancements, and had gone on to sell 50% more than the planned ~20,000 a year from 2012 in 2014 with 31,655 deliveries.

The Model X then began rolling off the assembly in line in severely low numbers, with shorts calling the beginning of deliveries “fake” and the share price being tested. From September to February, the share price of Tesla fell from around $250 the time of the Model X delivery ceremony to $151 as the Model X failed to be produced in significant numbers.

Chart
TSLA data by YCharts

Just a couple month later, as it was proven that the Model X ramp was salvageable and the production rate (and reliability of the vehicle) was brought up to speed with Model S investor confidence once again returned, propelling the stock near new highs.

Chart
TSLA data by YCharts

This rally would continue due to many catalysts other than the Model X (like growing anticipation of Model 3, Merger with SolarCity, Gigafactory progress) until the Model 3 delivery ceremony.

All in all, the stock had dropped 47.37% from the highs reached before deliveries began, only to recover almost 70% from the bottom once the Model X situation had been remedied. Looking at the gains from the high pre-Model X deliveries to pre-Model 3 deliveries, the gains were approximately ~37% above previous highs.

Chart
TSLA data by YCharts

2017: Model 3

Tesla stock saw the return to new-highs, like leading into the Model S and X ramp, as anticipation of the Model 3 worked up to feverish levels. Shortly before the highly anticipated launch of the model, the stock reached a peak of $383 in June (and again when it achieved $385 in September).

In keeping with the past, as the hype has worn off and volumes of the vehicle have failed to materialize, the stock has slowly slid to present levels of the low $300’s, or a little more than a 20% decrease from previous highs.

Chart
TSLA data by YCharts

Now that we are brought up to speed with the past performance of the stock in relation to the ramps, and have identified the trend seems to be continuing with the Model 3, let’s look at implications for the share price going forward. Below is a table looking at the changes as different sentiments regarding the ramp have been achieved.

Gains and Losses in Relation To Ramps & SP Lows/Highs

Model SP Loss from High Due To Delays SP Gain from Previous High On Successful Ramp SP Gain Over Ramp Related Low
Model S ~21% ~225% ~432%
Model X ~47% ~37% ~70%
Model 3 ~20%* ? ?

*20% As of publishing

Thoughts On The Trend

I believe that as the ramp gets worked out, whether it be in a month or in 6, the stock will rebound quickly to the previous upwards resistance level around $385 and surpass it be a fairly large margin. As long as reliability is average or above when reviews do start coming out in earnest, (or even if they do not as Model X showed) I think investors will be very pleased whenever the Model 3 run rate of 5,000 is achieved. Obviously, the sooner the better, but I would expect investors would prefer a knock-out product later rather than one that could jeopardize the vast log of reservations sooner.

It definitely seems that each model ramp has had a significant impact on investors, with worries from delays creating tremendously attractive buying opportunities. If the share price increases over the previous high in a similar to manner to the Model X rally, the new high would be over $500.

Before we conclude with a summary of the above and our stance on the stock, I believe it is worth taking in a point about the nature of ramps at Tesla.

A Point About The Ramp

One point Musk tried to really drive home, as he has done in the past, is that the ramp is really a “stepped exponential”. What this means essentially is that it does not follow a linear path. I wish to illustrate the point further than he was able to on the call with a scenario as outlined below:

linear vs exponential graph

(Image Source)

Suppose the assembly line has 100 process steps to complete the product. 90 of the steps are capable of creating 1000 of the product a day, the companies desired run rate. 5 of the other steps are able to do 1,200, which is actually above the companies goal. The other 5, unfortunately, are only able to do 100, 200, 300, 400 and 500 a day, respectively.

The company fixes the step that is only able to do 400 a day and makes it 500, however they can still only do 200 a day, as that is the bottleneck of the entire production process. Then, they make that one able to do 1000 a day. Now, they can only do 300 a day. Even if they fix the two that can do 500 a day, they will still be limited to 300 a day.

What this lengthy hypothetical demonstration above shows is that they could be making vast improvements to various processes on the line each day, however they will not reflect in the daily, weekly, or even monthly production levels unless they were able to increase the rate of whichever process was causing the biggest slow-down. This could be equated to the buffalo herd theory.

What this means for us is that if people begin extrapolating based off how much they were able to improve the run-rate in a certain amount of time, they could be blown away by sudden improvements that occur seemingly overnight. This is also why management is not guiding for certain levels by quarters end, but in slightly broader time frames.

Additionally, it is worth noting that they have been planning for “volume deliveries in second half of 2017” since before Q3 2016. This seems to be relatively on track, although it will only be somewhere below 3,000 until March and not the full 5,000.

Other Effects of The Delay

Of course, the delay will impact Tesla in a very real way besides investment sentiment. These include possible customer dissatisfaction (or lack thereof), and increased duress on their financials.

Customer Satisfaction

If the delay is underestimated and expected delivery dates get repeatedly pushed back (something already occurring as documented here) they could see a mass influx of cancellations. While I expect demand to remain quite healthy for several years to come for the Model 3, unhappy customers can be a nightmare for companies. For more insight into how important customer satisfaction can be, consider looking at my recent article about google(GOOG) (GOOGL) and customer service here.

While there will likely be many customers to take the place of those who do cancel, it will certainly not be good for Tesla. The even bigger impact will be on lost or deferred revenue, however.

Financials

If the Model 3 is delayed beyond the initial 3 month estimate, Tesla’s financials will start to deteriorate rapidly. Investors were more than happy to expedite the production of Model 3 when the company last raised capital, but this will not hold true if they must repeatedly raise more and more money to accomplish the same task.

Any minor dilution is not a cause for concern for many bulls due to the fact that if Tesla succeeds it will generate massive returns for shareholders so dilution should negligibly effect returns. However, they may have issue being lent more capital if their share price deteriorates significantly, which may continue if the ramp struggles for much longer than currently expected.

An inability to raise capital on favorable terms (as a result of a lack of investor confidence) could compound the problems and create the perfect storm the shorts are waiting for. I would assert that this is the single biggest threat to Tesla right now (other than their execution itself).

Conclusion

Since the news broke of the delay, Tesla has retained support above the $280 level, and recovered 2.5% to $306 to close-out the week, less than $15 below where it was heading into Earnings.

The historical data shows repeated dips in the stock around model ramp delays, with investors getting spooked about Tesla’s ability to execute. Once the delays had been overcome, the stock soared to new all-time highs over 1/3 higher than previous.

Tesla is not a conventional company, and they do not do things in conventional ways. Although their ramps may differ in style and timeliness from industry norms, they are capable of doing so and will reward investors when they do ultimately deliver. Tesla has delivered 250,000 cars since it’s inception over a decade ago. Next year they plan to deliver 500,000 (and I think they will deliver at least 275,000). Regardless of where they fall in that range, they will double the number of Tesla’s on the road from today in one year.

It seems that there is not much additional downside for Tesla in the near-term with the stock already dropping 20% off the news of the delay and possible removal of the tax-credit. However, it’s worth noting support levels of around $220 is the stock does drop further. Regardless of short-term movement, a year from now after the ramp is considered a success, I believe the stock will likely be at new highs in the $400-$500 range.

Investor Take-away

With significant milestones achieved in the recent quarters, the Model 3 ramp delayed (and who can say they are honestly surprised) but on track and the Semi reveal slated for this month I only see positive catalysts in the near-term for Tesla, besides a potential capital raise and confirmation of the removal of the tax-credit.

If you are long the stock, holding is definitely the recommended position at this time going into 2018. I think the stock is bottomed out for the next several months and shorts should cash out if they are in the money.

If history is anything to go by, this may be the last opportunity to pick up Tesla shares in the low 300’s for quite some time.

If you found this article informative, are interested in Tesla or other disruptive technological companies I cover such as Amazon, Google and Apple, please consider following me by clicking the button at the top of the page.

Disclosure: I am/we are long TSLA.

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.

BP, Shell lead plan for blockchain-based platform for energy trading

(Reuters) – A consortium including energy companies BP and Royal Dutch Shell will develop a blockchain-based digital platform for energy commodities trading expected to start by end-2018, the group said on Monday.

The logo of BP is seen at a petrol station in Kloten, Switzerland October 3, 2017. REUTERS/Arnd Wiegmann

Other members of the consortium include Norwegian oil firm Statoil, trading houses Gunvor, Koch Supply & Trading, and Mercuria, and banks ABN Amro, ING and Societe Generale.

Blockchain technology, which first emerged as the architecture underpinning cryptocurrency bitcoin, uses a shared database that updates itself in real-time and can process and settle transactions in minutes using computer algorithms, with no need for third-party verification.

Mercuria has been a vocal advocate of implementing blockchain technology to significantly cut costs in oil trading.

“Ideally, it would help to eliminate any confusion over ownership of a cargo and potentially help to make managing risk more exact if there are accurate timestamps to each part of the trade,” said Edward Bell, commodities analyst at Dubai-based lender Emirates NBD PJSC.

Similar efforts for an energy trading platform have failed to take off, Bell said, but added this latest bid with backing from BP and Shell and the banks, “may have more success than if it were an independent party trying to convince oil and gas companies to make use of it.”

The new venture is seeking regulatory approvals and would be run as an independent entity, the consortium said in a statement.

“The platform aims to reduce administrative operational risks and costs of physical energy trading, and improve the reliability and efficiency of back-end trading operations…,” the statement said.

(This version of the story was refiled to make clearer in headline that platform is tool for trading, not a trading platform)

Reporting by Arpan Varghese in Bengaluru; Editing by Manolo Serapio Jr.

Our Standards:The Thomson Reuters Trust Principles.

Mobile bank N26 sees customers tripling within two years: CEO

LONDON (Reuters) – The smartphone-based bank N26 expects to peel away 5 to 10 percent of retail customers aged 18 to 35 from established banks in its core continental European market in the next two to three years, its chief executive told Reuters.

FILE PHOTO: Valentin Stalf, Founder and CEO of the Fintech N26 (Number26), poses for a portrait in Berlin, Germany, August 19, 2016. REUTERS/Axel Schmidt/File Photo

The Berlin-based fintech start-up has been signing up 1,500 to 2,000 customers a day in recent months, putting it on track to triple in size to around 1.5 million clients within two years from its current 500,000 users, Valentin Stalf said in an interview in London on Friday.

The company, which counts Chinese billionaire Li Ka-shing and Silicon Valley investor Peter Thiel among its backers, is competing with traditional branch-based retail banks by offering a suite of mobile banking services that customers can use entirely from their smartphones.

It also faces competition from other digital banks such as Revolut and Monzo, and even French telecom operator Orange (ORAN.PA), which launched its own banking service last week.

Since its launch in Germany in 2015, the company has expanded rapidly into 17 European countries including Austria, France, Spain and Italy. It recently said it will start operating in Britain and the United States next year.

“We see the U.S. as a big opportunity because digital banking is underdeveloped,” Stalf said. “There are no clear rivals for us there.”

The regulatory environment is also becoming more favorable, Stalf said.

In 2018, new European Union rules will start to force banks to allow customer data to be made available to other companies if the customers agree. That will help the likes of N26 identify potential customers and offer them better deals than their current lenders.

Stalf said that within three years N26 expects to have a 5 to 10 percent share of the market in the main countries where it operates.

N26 offers a free current account, its “anchor product”, but makes most of its money through card usage, savings, credit and insurance services.

The company made its name taking on traditional banks but came under scrutiny itself last year after a security researcher found that its apps exposed users to potential account hijacking. N26 then implemented fixes to prevent such problems.

Stalf said the main advantages of being an app are having daily interactions with customers and as a result being able to better understand their needs and offer tailor-made, value-added services.

“If I happen to book a trip and hire a car with my N26 card, my app would instantly use that information to offer me travel and car insurance.”

With marketing costs of 5 to 10 million euros per year – far lower than those of traditional banks – and customer data gathered via payments, N26 has been able to either make a profit or break even from each newly acquired customer.

Stalf said that excluding marketing costs, the company could be profitable in about a year.

Acquiring a banking license has also helped keep costs down, and the company is now betting that word-of-mouth and good Apple Store ratings will help it contain its marketing costs and help it move along the path to profitability.

“Today you can create a trusted brand much faster because everything is more transparent,” said the 32-year-old Vienna-born entrepreneur.

(In the first paragraph, company corrects to say .. retail customers aged 18 to 35 ..not.. all retail customers)

Reporting by Sophie Sassard in London; Additional reporting by Eric Auchard in Frankfurt; Editing by Hugh Lawson

Our Standards:The Thomson Reuters Trust Principles.

Donald Trump's Twitter Hiatus Tops This Week's Internet News Roundup

Last week was a whirlwind in the media. The owner of Gothamist and DNAinfo shuttered them both. ESPN issued new guidelines for what their employees can say on Twitter and other social platforms. And Disney declined to give the Los Angeles Times early screenings of its films following the paper’s coverage of the company’s dealings with the city of Anaheim. But that’s just what was happening in the traditional media world. What about social media? Start scrolling, dear reader.

He’s Not There

What Happened: For 11 whole minutes last week, President Trump’s Twitter account went down. Reactions were swift and plentiful.

What Really Happened: So, last Thursday, out of nowhere, this happened:

Almost as soon as it was gone, it was back. Then the conspiracy theories started, some more serious than others.

Many, of course, were happy about Trump’s brief absence from Twitter.

But what actually happened, anyway?

Well, that certainly seems possible?

And then the plot thickened.

As the media started picking up on the story, the world waited for Trump’s inevitable response. He didn’t disappoint:

The Takeaway: For some, Trump’s Twitter hiatus was so brief it almost didn’t seem real.

That’s Not What Fossil Fuels Are For

What Happened: While no one should doubt that fossil fuels are capable of great things, there are limits on what they can reasonably do. Do you hear that, Rick Perry?

What Really Happened: Remember Rick Perry? The former Republican presidential candidate who, in 2011, forgot the three government agencies that he wanted to scrap and then, in 2017, became the head of one of those agencies? Well, speaking at an energy policy event this week in his official role as the Secretary of Energy, he had something very surprising to say:

Wait. What? Did Rick Perry literally just say that fossil fuels are necessary so that there can be electricity that powers lights, which will then shine righteousness on sexual assault? Is that a real thing that was actually said? Twitter was incredulous about the comment.

As the comment started being shared across the media—FYI, not everyone thought he was wrong—one environmental reporter decided to unpack what he’d said. Emily Atkin at The New Republic, step right up.

The more you know, as they say. Oh, and then there’s this ironic fact, as well:

The Takeaway: Speaking of responses from New Republic journalists, another tried to put Perry’s comments into a somewhat wider, snarkier, perspective:

He’s Not There (Reprise)

What Happened: The man behind the curtain, having noticed that people were paying attention after all, decided to make a career change and offer a half-hearted mea culpa.

What Really Happened: Robert Leroy Mercer wasn’t necessarily a name that was well-known even a few months ago, but it should have been. A former computer researcher turned CEO of hedge fund Renaissance Technologies, he was one of the main funders of a few things you might have heard of, like the Brexit campaign in the United Kingdom, Donald Trump’s election effort, and Breitbart. (You can read more about him here, if you’re curious.) Given that his causes are ascending right now, it was surprising to see this happen on Thursday.

Or, to put it another way…

Judging by the media coverage, the move was certainly unexpected, which led to many people wondering the obvious question: Just what could have been behind it? Twitter had some ideas, because of course it did.

Of course, Mercer might have had something else on his mind…

But for those who thought that this meant an end to the Mercer influence in politics, that was perhaps a bit misguided.

So there’s that.

The Takeaway: If nothing else, at least people can appreciate that Mercer stepped away from his position in a subtly ideological manner.

This Is Not the George Papadopoulos You’re Looking For

What Happened: Apparently, it’s not great for your Twitter mentions when you happen to share the same name as someone in the news. Who knew?

What Really Happened: I hope everyone had a good Indictment Day on Monday, when special counsel Robert Mueller handed down the first evidence that he’s been hard at work with the investigating over the last few weeks. As surprising as it was to see Rick Gates and Paul Manafort get charged, the real eye-opener that some campaign advisor called George Papadopoulos had already pled guilty months. The intrigue! It was straight out of the Shonda Rhimes playbook, and of course everyone wanted to know everything they could about this new character (if only because maybe he wore a wire in the White House, which is awesome).

There’s only one problem: Turns out, there is more than one George Papadopoulos.

Indeed, technically there are a lot of George Papadopoulouses, if you know where to look.

As you would expect, Twitter was extremely understanding about the mixup—or, you know, maybe kind of.

Still, at least he was taking it well.

Of course, other people know what it’s like to be the namesake of someone famous.

All of which leads us to wonder this one simple question: Is there someone else called Donald Trump out there in the world? And if so: Do you think he’s on Twitter?

The Takeaway: Before we leave the subject entirely: George, do you happen to have any words of advice to the other George P? You know the one who’s already said he was guilty of lying to the FBI?

Trick, or Treat?

What Happened: Just when you thought it couldn’t get worse with people using their kids—real and imagined—in political arguments on social media, it gets worse. And on Halloween, as well!

What Really Happened: Let’s close this week out with a simple morality play. It was Halloween last week, and you know what that means: trick-or-treating! That night when we share candy with kids in costumes because it’s always good to let kids have lots of sugar late at night. But one man—Donald Trump Jr.—tried to use the holiday for his own purposes.

Let’s see what everyone thought of that idea, shall we?

Even the media piled on, including Stephen Colbert using his television platform to offer a little lesson to the president’s son.

[embedded content]

The Takeaway: Thankfully, Don Jr. took it all in the spirit it was intended.

Toyota seeks more investments in Israeli auto tech, robotics

TEL AVIV (Reuters) – Japan’s Toyota Motor Corp is seeking more investments in Israeli robotics and vehicle technologies after its venture arm led a $14 million investment in Intuition Robotics in July.

A logo of Toyota Motor Corp is seen at the company’s showroom in Tokyo, Japan June 14, 2016. REUTERS/Toru Hanai/File Photo

The startup, which makes robots for the elderly, was the first Israeli investment for Toyota AI Ventures, a new $100 million fund investing in artificial intelligence, robotics, autonomous mobility and data and cloud computing.

“We will see more involvement of Toyota in the Israeli market in the future,” said Jim Adler, managing director of California-based Toyota AI Ventures, which is part of the $1 billion Toyota Research Institute.

“There’s more in the pipeline,” he told Reuters during a visit to Israel, adding that technologies dealing with perception and prediction and planning were of particular interest to Toyota.

Perception technology enables a self-driving vehicle to understand the world around it while prediction and planning can help a car interpret situations such as whether a child at an intersection might try to cross at a red light.

“There’s a tremendous amount of innovation happening in Israel as cars become more produced by data,” said Adler, who is in the country meeting companies whose technologies interest Toyota.

Israel is a growing center for automotive technology. Earlier this year Intel Corp bought autonomous vehicle firm Mobileye – one of Israel’s biggest tech companies – for $15.3 billion.

On Friday Germany’s Continental AG said it was buying Israel’s Argus Cyber Security, whose technology guards connected cars against hacking.

Toyota AI Ventures has made five investments and expects to invest in at least 20 companies worldwide.

Regarding its investment in Intuition Robotics – which plans to begin trials of its robots with older adults in their homes early next year – Adler said there were many common features between robotics and autonomous vehicles, which he referred to as “big robots with wheels”.

Japan’s population is aging, with 40 percent expected to be over 65 in 20 years, he said, and there will be demand for technologies that help the elderly stay in their homes, rather than have to move to assisted-living facilities.

“We think Toyota will have a role there,” he said.

Editing by Keith Weir

Our Standards:The Thomson Reuters Trust Principles.

Tesla: 10-Q Deep Dive

As many of you know by now, the most interesting articles for me are those where I am either writing about crunching through numbers myself or reviewing the work from other organizations.

We are once again ready to crunch through Tesla’s (NASDAQ:TSLA) 10-Q released a short while ago. As we already know Tesla’s loss in Q3 was over $600 million, far exceeding my guess of $450-500 million. The average price per delivered unit dropped by over 13% in Q3. That is a whopping decline in average selling price of over $13,000 per unit.

For this entire article, these two links for Q3 (here) and Q2 (here) 10-Qs should be all the reference sources you will need.

By the zones

Tesla reports global revenues by breaking them down into four zones. The U.S, China, Norway, and all Others lumped into one group. If we subtract out Energy generation/storage, Services and other, and ZEV credit sales, we should have a pretty accurate number of New Automotive Sales for the four regions. We know of little in the way sales outside the U.S. for energy and services, so until Tesla offers us better information, I am giving the U.S. all the credit for these revenues.

What is startling is the decline in growth of new car sales revenue for the U.S. After delivering over 4,100 more units in Q3 over Q2, and increasing revenues by $175 million, why was the U.S. not a bigger participant? Sales only grew by $39 million, which included 220 Model 3 units. Using an average of $50,000 for each Model 3 means Tesla had $11 million in sales. That reduces the Model S and X growth to just $28 million in the U.S. What we find is a slowing increase in sales in the U.S. and strong growth in China and Norway. For Norway, this matches the information in updates I receive from Andreas Hopf for that region. However, the $100 million in new Chinese growth is a bit of a surprise. While numbers are difficult to come by, evobsession.com had Chinese sales at just 2,100 new units in the last month of Q2. At the end of June, the same website was estimating total sales of Model S and X at a combined 9,299 units. If we add the revenues from Q1 and Q2 and divide by the number of units, we arrive at an average sale price of $104k in 1H17. Apply that number to the revenues and we can estimate sales at 5,418 units. Evobsession.com had Tesla sales at 310 units in July and 1,700 in August. That would mean a rough delivery number of 3,408 in September or a 62% increase in sales over Q2. While not out of the question, it may be a better indication of a growing number of used car sales in China.

What do the “deliveries” numbers represent?

Tesla reported an increase in deliveries of over 4,100 units in Q3, but it appears new vehicle revenues only increased $175 million or an average of $42,682 per unit. Something is way off. There are only two explanations.

I have gone back two years through every delivery report. The word “new” is never used. Could Tesla be now (or may have always been) reporting CPO sales in deliveries? (I have not been able to confirm this one way or the other because Tesla has not responded to my questions on the issue.) CPO units are being given the same treatment at the delivery centers as new units. The cars are refurbished to look as close to new as possible (at great expense it would appear). So why would they not be?

The second option is Tesla gave away everything but the sales office furniture to achieve those additional sales in Q3. This is the more probable answer. Jon McNeill was promised a $700,000 bonus in late August if he could “move the metal”. He is doing just that. It would explain the huge average price drop from $103,937 in Q2 to $90,320 in Q3. We also know the Q3 sales exceeded available production by over 2,000 units built before Q3. Where these units are being stashed until sold is anyone’s guess. But my calculations show here are still 6,600 unsold units accumulated just since Q3 last year (see chart below).

The Tesla website currently claims there are no new 75kWh battery pack cars remaining. Sadly, this is not true because it is easy enough to go to the EV-CPO.com website, do an inventory sort for 75kW cars and find direct links to specific cars back on the Tesla website ignored by an inventory search. For a tech company, as Tesla claims to be, its website is amateurish at best, and pretty much useless.

Are increased sales really helping?

Tesla revenues set a new record in Q3 at nearly $3 billion. But is Tesla getting anywhere by growing revenues? It appears not. While revenues increased by just 7%, the costs of goods sold jumped a huge 19%. This slashed gross profit by 32%. Management can make all the excuses it wants but just growing sales is not working.

As you can read in the chart above, Tesla’s quarterly loss took a HUGE jump in Q3. This was caused by not only a drop in gross profit shown above but also continued increases in R&D and SG&A expenses. Whether the recent reductions in headcount will offer any relief in either direct or indirect labor expense is doubtful since Tesla seems to be planning to replace most of the fired workers.

Inventory

In my most recent article yesterday, I took a lot of flak for my predictions regarding what the new inventory numbers would reveal. I was partially right and partially wrong.

We know that the average unit sold for $90,320 in Q3. We know that the accumulated inventory was reduced by 2,174 units or about an adjusted $147 million by removing at a 25% gross margin.

But we now know finished goods only lowered by $52 million. That should mean Tesla was sitting on about $95 million worth of finished Model 3 units on 9/30. On a cost basis of $35,000 for each retailed $50,000 unit, there should be over 2,700 Model 3 units sitting somewhere as of Sept. 30. But Tesla only claimed to have 40 units sitting on 9/30. Is Tesla now recording 2,600 partially built Model 3s as finished goods? Are they all sitting waiting for their battery packs from the Gigafactory?

The only substantial inventory growth was in raw materials and not in work-in-process (WIP) as you would expect for a new model ramping up production.

So where are these hundreds of thousands of anticipated parts coming from the suppliers? As one commenter suggested yesterday, Tesla should be sitting on trainloads of parts from suppliers by now. The $54 million in raw materials is probably in aluminum and steel needed for all of the cars since they are still building all three models.

Does this mean all of the incoming shipments were not recorded or unloaded in September? If so, we are going to see a huge increase in accounts payable in Q4.

I will agree I may have gotten a bit ahead of my skis on finished goods. But Tesla still needs to explain the $95 million discrepancy. If it is indeed partially completed units that is a big change in its reporting.

Recap

  • Higher sales
  • Lower profits
  • Bigger expenses
  • Higher losses

Add these all up and you have a company that should get out of the car business and stick to “energy generation and storage”. It is the only place Tesla knows how to make money it seems after more than 13 years in business.

Based on inventory counts, it seems Tesla never had any plan to build 5,000 units a week in 2017. It doesn’t have the parts to build that many units a month let alone a week. Unless we see a big leap in inventories in Q4, it will certainly not have the parts to build them in Q1 either.

The conference call struck me as a group of men struggling to find answers to some very basic questions. How do we control costs while selling more product? Why can’t we build a simpler car in less time than it took to ramp up the Model S? Why do we need more people and spend more money to build a car than every other manufacturer on the planet?

Bill Maurer had a great article (here) on the rising guarantee obligations Tesla is facing. Just one more nail in the proverbial coffin.

If it doesn’t figure this out soon, Tesla won’t be around by the end of 2018.

Disclosure: I am/we are short TSLA VIA OPTIONS.

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.

Additional disclosure: I would like to thank the many SA readers who have helped make me the #1 most read author in both the “Short Ideas” and “Consumer Goods” categories! I do my best to make my articles not only informative but also entertaining and thought-provoking. If you want automatic notification and faster access to all of my new articles, please click the “Follow” button at the top of this article and check the “Get email alerts” box.

Want to Avoid Delays This Thanksgiving? Steer Clear of These Airports and Airlines

Ah, Thanksgiving! The season for delicious feasts, family togetherness, Black Friday deals, and… utter travel mayhem. As much as many of us look forward to yummy turkey and post-meal sloth, we dread the craziness at the airports with just as much fervor.

Is there any way to get the pumpkin pie without the horrific delays and soul-crushing traffic? RewardExpert wants to help make that possible. Each year the airline reward program info site analyzes Bureau of Transportation Statistic data on the holiday period to make recommendations for travelers on when to travel, which airports to avoid, and which carriers to opt for. This year’s edition is just out.

When to travel: your mom won’t like the answer

If you haven’t booked your tickets home yet, being strategic about when you choose to fly can save you a lot of headaches, according to RewardExpert. First, avoid flying the weekend before Thanksgiving like the plague (especially Sunday). Those days have the most delays.

For most of who aren’t blessed with vast amounts of time off, that leaves the three-day run-up to the holiday. Which of those days is your safest bet? “The Tuesday before Thanksgiving is the second-worst day to fly,” cautions RewardExpert. “Surprisingly, our data shows that you are more likely to arrive on time if you wait until Wednesday. Over the past five years, an average of 84.9 percent of all flights on Thanksgiving Eve have been on-time.” 

Finally, if your journey is short enough and your mom isn’t the guilt-trip type, flying on the actual holiday itself isn’t a bad idea either. “The data shows the lowest rates of delayed flights on Thanksgiving day,” claims the analysis.

As for the trip back, get out of Dodge early if you don’t want to find yourself killing time in a crowded airport. Black Friday is best, Saturday is alright, and then everything goes downhill after that: “You can expect heavy delays starting with Sunday, which will get worse before they get better. Last year, the Monday after Thanksgiving was the worst day to fly back. This year, Tuesday is likely to be just as bad, if not worse. Flip a coin.”

Which airline to fly: a good excuse to go to Hawaii  

According to RewardExpert’s report the least delay-prone airlines are a healthy mix of big companies and regional carriers. Here’s their list of the top ten most on-time airlines, along with the percentage of flights that leave as scheduled during the holiday crunch period:

  1. Hawaiian, 93.94 (Another advantage: you get to go to Hawaii)
  2. Delta, 88.30
  3. Alaska, 85.88
  4. United, 82.98
  5. American, 82.96
  6. JetBlue, 81.17 –
  7. Skywest, 80.54
  8. Southwest, 79.79
  9. Frontier, 78.87

Which airports to avoid: sorry, Bay Area  

It’s slightly sadistic to mention it as many flyers simply don’t have that much choice when it comes to which airports they’ll fly in and out of, but the RewardExpert report also breaks down which hubs suffer the most delays over Thanksgiving. It might at least help with choosing where to connect. 

New Yorkers, for instance, should stay away from Newark. “Delays increased sharply at Newark’s Liberty International Airport last year, affecting more than one quarter of all flights last Thanksgiving,” the analysis found. “Newark now takes second place for worst on-time performance record behind delay-plagued San Francisco International Airport.” Oakland, Sacramento, and Houston’s William P. Hobby Airport round out the list of worst offenders.

Which airports get a gold star from RewardExpert? The answer is yet another reason to consider Thanksgiving in Hawaii: Honolulu has the least delays of all. If swapping a luau for your turkey dinner isn’t feasible, the next best bets are Hartsfield-Jackson in Atlanta, Charlotte Douglas, Southwest Florida, and Salt Lake City.

Good luck out there and may you get home on time and with your sanity intact.

Equifax clears executives who sold shares after hack

(Reuters) – Equifax Inc (EFX.N) said on Friday four of its executives who sold shares before the credit-reporting firm disclosed a massive data breach that wiped out billions from its market value were not aware of the incident when they made the trades.

FILE PHOTO: Credit reporting company Equifax Inc. corporate offices are pictured in Atlanta, Georgia, U.S., September 8, 2017. REUTERS/Tami Chappell/File Photo

A special committee set up by Equifax’s board to investigate the trades concluded that no insider trading took place and that pre-clearance for the trades was appropriately obtained. (reut.rs/2habhk9)

The company’s shares were up 0.2 percent at $109.10 on Friday at midday, around 24 percent lower than on Sept. 7 when Equifax disclosed that cyber criminals had breached its systems and accessed sensitive information on 145.5 million consumers.

The shares slumped as much as 37 percent in the days after the disclosure.

Atlanta-based Equifax had been aware of the breach since July 29, days before some of its senior executives, including its chief financial officer, sold $1.8 million in shares.

After an investigation that included 62 interviews and a review of over 55,000 documents, including emails, text messages, phone logs, and other records, Equifax said the executives had no knowledge of the breach when they sold the stock.

“The conclusion that the Company executives in question traded appropriately is an extremely important finding and very reassuring,” non-executive Chairman Mark Feidler said in a statement.

Former Equifax Chief Executive Officer Richard Smith, who stepped down in September and agreed to forgo his annual bonus, told lawmakers last month that the executives would not have known of the breach because suspicious incidents are detected every day at the firm and take days or weeks to confirm.

The U.S. Justice Department is conducting its own criminal investigation into the share sales.

The hack, among the largest ever recorded, exposed information that included names, birthdays, addresses and Social Security and driver’s license numbers.

It has also prompted investigations by multiple federal and state agencies as well as scores of class action lawsuits.

The exact financial toll on Equifax is still unknown, and as of early Friday, the company said it still had not set a date to release its third quarter financial results. If the company does not release the results by Nov. 9, it will have to seek an extension from the U.S. Securities and Exchange Commission, which gives large companies 40 days after the close of a quarter to report their financials to investors.

Equifax is also still searching for a replacement for former CEO Smith.

Credit monitoring services such as Equifax collect vast amounts of financial information from consumers, working with banks and other lenders, for example, to track the creditworthiness of individuals.

Reporting by John McCrank in New York and Aparajita Saxena in Bengaluru; Editing by Saumyadeb Chakrabarty and Frances Kerry

Our Standards:The Thomson Reuters Trust Principles.

'Wolfenstein II' Review: Elevating Nazi-Killing to High Art

New Orleans is on fire, and the new word to have is revolution. In the alternate-history 1961 portrayed in Wolfenstein II: The New Colossus, the city has been walled-off, turned into a massive ghetto by the Nazis who won World War II. A place to send the “undesirables.” And now, with the stirring of legitimate resistance to the Nazi regime taking hold across America, the Axis fascists have descended on the city, intent on stamping out their enemies for good. When the player arrives, the bayou is a miasma of terror and bullets. And then there’s you, the hero, the quintessential figure of the American fever dream, the source of Wolfenstein‘s greatest strength and its greatest liability: a good guy with a gun. Shooting, chopping, punching, and dismembering Nazis to set the world right. No matter what.

The problem with Wolfenstein II is the same problem shared by media like Quentin Tarantino’s Inglorious Basterds, and really by any story that purports to tackle serious issues while also indulging in ideas of righteous bloodshed. How do you make a story around over-the-top, violent revenge fantasies while also taking the subject matter seriously? How do you make a game about killing faceless, cartoonishly evil Nazis without somehow cheapening the real-world evil they represent? (Or, perhaps worse, by offering a cop-out: a way to indulge in imaginary violence without ever pointing back to the realities that spawned it?)

Wolfenstein‘s answer comes early. The game takes place after the ending of the first one, finding its Nazi-killing protagonist, former US Marine BJ Blazkowicz, triumphant in a major strike against the worldwide Nazi regime but left near death, crippled and comatose following a brutal final fight. In his months-long recovery, he dreams of his father. In a horrific, sudden scene, BJ flashes back to a moment of childhood abuse: his father insults BJ’s Jewish mother, drops the n-word repeatedly, and hurts both BJ and his mother.

Bethesda Softworks

It’s an unexpected moment, all the more horrific for its surprise, so harrowing that more telegraphing, or maybe an explicit warning, might have been appreciated. But it also makes an essential rhetorical point. If Wolfenstein, as a game about a big ol’ American boy fighting the baddies, is going to traffic in larger-than-life Americana, then it will do so while acknowledging that America is no stranger to cruelty of its own devising. By incorporating American racism and patriarchal violence into its narrative, Wolfenstein II insists that, even in its alternate history setting, the Nazis weren’t a new arrival to the United States. In a very real sense, they were already here.

And so the developers at Machinegames work to infuse their hyper-violent shooter with equal parts camp and authentic pathos. The Nazis are both absurd and horrific, as are the uniquely American horrors that BJ faces, like the Ku Klux Klan. The resistance is built from a coalition of period-appropriate American leftist movements, socialist labor workers from the South working with a Black Panthers-style group led by an Angela Davis lookalike, alongside a mystical purveyor of weird science out of an Indiana Jones flick. Actual references to Nazi atrocities like Kristallnacht give way to cathartic moments of self-righteous gore.

The camp here seems intended to act as a release valve for the story’s more serious morality-play elements; it’s a conduit for the player’s righteous anger, giving them the means to mete out justice against people who really, really deserve it. Meanwhile, the darker elements reframe the campy violence into a metaphorical statement against fascism, against abuse of power and racism and all the evils that feed into it. To occupy the Nazi-killin’ combat boots of BJ Blazkowicz is to affirm that it’s more than OK to punch Nazis—it’s necessary, if only to defend the weak and the marginalized.

Bethesda Softworks

And Machinegames makes one hell of an argument for that dynamic. The writing here is as sharp, as humanistic and witty and real, as anything in videogames, and the action is equally compelling. The levels are dynamic, challenging puzzles of ruined urban environments and gun-toting fascists. The guns, massive demonic machines in obsidian black, thunderclap with explosions like the sound of collapsing buildings. Enemy soldiers burst into bloody chunks, and Nazi war machines burn with all the colors of the sunset. Wolfenstein taps into that darker element of the psyche, that horrible ancient place that says, maybe, it’s okay to enjoy something horrible. They’re Nazis, after all.

Any given individual’s enjoyment of Wolfenstein II: The New Colossus is going to come down to their willingness to buy into that above assertion, and with it the messy juxtaposition of camp and tragedy that it tries to pull off. Its detractors will undoubtedly suggest it’s an insincere game, going for shock value and dumb laughs, not really doing justice to its ideas. And, in some instances, it almost certainly doesn’t. But Wolfenstein II is also authentically angry, a coiled and wild beast ready to strike. Machinegames has built something that honestly believes that evil needs to be fought, and it conjures that anger not just to entertain it but to stoke it.

Wolfenstein II believes that people can do things that turn them into monsters, and it believes that monsters need to be dealt with, in the fantasy world it creates but also in the real one. The imagery of American racism, of paternal abuse, is too stark, too specific and strong to suggest anything otherwise. Fuck up what you can, it says, in the name of BJ Blazkowicz.