Cloud Hosting is The Architecture of Cloud Computing Techniques

Cloud Hosting Technique

Cloud Hosting is The Architecture of Cloud Computing Techniques

Cloud Hosting is The Architecture of Cloud Computing Techniques

provides the hosting services in the form of a single virtual machine and is implemented through the use of cloud computing and cloud architecture. It dynamically distributes data and processes across the small servers of the system for processing. The cloud hosting system is divided into many virtual machines. The services offered by a loud hosting service provider are located at its premises and these can be accessed by using client software.

The cloud hosting allows the users to get their applications up and running much faster and enables the quick readjustment of virtual resources to meet the dynamic demands like increased data rate, traffic size and storage requirements. The users can assess the cloud using different client devices like desktops, laptops, tablets and phones. Some of the user devices require real time cloud computing for running their applications, while others can interact with a cloud application via web browsers. Some cloud applications only support specific client software dedicated for these applications. Some legacy applications are also supported through screen sharing technology. The internet giants such as Google and Amazon are using this state of art hosting technology successfully for their servers.

Cloud hosting can be offered in three different modes i.e. infrastructure as a service(IaaS) , platform as a service(PaaS) and software as a service(SaaS). The basic mode IaaS , offers the services in the form of physical or virtual machines ( computers & other processing devices), raw/block storage , firewalls , load balancing mechanism and networks .The IaaS mode services provider supply these resources from a large deployed pool of resources in data centers andthis also include provisioning of local area networks and  IP addresses. The PaaS mode cloud hosting services provider offers a cloud computing platform  that include an operating system, programming execution environment, database and server. The PaaS application software can be developed and run on a cloud platform and does not involve cost and complexity of buying and managing the hardware and software layers. The (SaaS) mode cloud hosting services provider  install and operate application software in the cloud and cloud users access the software from cloud clients and the cloud platform in this case is not managed by the clients. Clouds hosting can be physically deployed in the form of public cloud, personal cloud, hybrid cloud and community cloud.

Cloud hosting has greatly reduced the website operational cost. In older versions of servers, the clients used to pay for a specific bandwidth irrespective of the traffic on that server. The cloud hosting has tackled this problem through the skillful use of variable costing method, where the cost will increase with the traffic and as the load/traffic reduces the cost will be automatically decreases.

The cloud hosting has a great advantage in terms of its security, as it operates in isolated environment and only the host has the access to it. One of the biggest advantages of cloud hosting is that the cloud platform manageability, maintenance and upgrades can be easily and remotely accomplished, as it does not require any physical/hardware maintenance repair and replacement.

Huawei to spend $2 billion over five years in cybersecurity push

HONG KONG (Reuters) – Huawei Technologies [HWT.UL] on Tuesday said it would spend $2 billion over the next 5 years to focus on cybersecurity by adding more people and upgrading lab facilities, as it battles global concerns about risks associated with its network gear. The typically secretive Chinese technology giant made the comments at one of its most indepth press conferences at its Dongguan offices, after welcoming about two dozen international journalists into its new campus in the southern Chinese city.

People walk past the stall of the telecommunications equipment maker Huawei Technologies at the Security China 2018 exhibition on public safety and security in Beijing, China October 23, 2018. REUTERS/Thomas Peter

Huawei has been in the news these past weeks for the arrest of its chief financial officer Meng Wanzhou – also the daughter of its billionaire founder Ren Zhengfei – in Canada at the request of the United States.

This has exacerbated the woes of the Chinese firm, which has already been virtually locked out of the U.S. market and has been prohibited by Australia and New Zealand from building 5G networks amid concerns its gear could facilitate Chinese spying.

“Locking out competitors from a playing field cannot make yourself better. We think any concerns or allegations on security at Huawei should be based on factual evidence,” its rotating chairman Ken Hu said. “Without factual evidence we don’t accept and we oppose those allegations.”

Huawei has been communicating with governments worldwide regarding the independence of its operation, he said. He added that Japan and France had not formally banned its telecom equipment. Recent media reports have indicated moves by these governments to shun the company’s equipment.

Sources have told Reuters that Japan planned to ban government purchases of equipment.

Other media reported that the country’s three top operators planned not to use current equipment and upcoming 5G gear from Huawei, and that France was considering adding items to its “high-alert” list that tacitly targets Huawei.

Huawei has repeatedly said Beijing has no influence over it.

At the tour of Huawei’s Shenzhen headquarters on Tuesday, journalists glimpsed some of Huawei’s most advanced R&D labs housed in a three-storey building with a white facade and four columns, referred to by insiders as the “White House”.

Wu said Huawei had secured more than 25 commercial contracts for 5G, slightly above the 22 the Chinese technology giant had announced in November.

The company has shipped more than 10,000 base stations for the fifth generation of mobile communications, he said, adding that Huawei expects revenue to exceed $100 billion this year – up 8.7 percent from last year.

Huawei is the world’s largest supplier of telecommunications network equipment and second-biggest maker of smartphones and unlike other big Chinese technology firms, derives half its revenue from overseas.


Wu said on Tuesday Huawei was looking forward to “a just conclusion” in the case of Meng, who was arrested in Vancouver on Dec. 1 after U.S. officials alleged Huawei was trying to use banks to evade sanctions against Iran and move money out.

FILE PHOTO: A man walks past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China June 14, 2018. REUTERS/Aly Song/File Photo

She is awaiting possible extradition to the United States in a case that has roiled global markets amid concerns it would exacerbate tensions between the United States and China, which are already strained over trade matters.

Meng, the 46-year-old daughter of Ren, has said in a sworn affidavit she is innocent and will contest the allegations against her at trial if she is surrendered to the United States.

Wu said Meng’s arrest has had no impact on the travel of the company’s senior executives.

Reporting by Sijia Jiang and Anne Marie Roantree, writing by Sayantani Ghosh; Editing by Himani Sarkar

Foxconn not in settlement talks with Qualcomm in Apple battle: attorney

SAN FRANCISCO (Reuters) – The lead attorney for the group of Apple Inc device assemblers seeking at least $9 billion in damages from Qualcomm Inc said on Sunday the contract manufacturers are not in settlement talks with the mobile chip supplier and are “gearing up and heading toward the trial” in April.

FILE PHOTO: A motorcyclist rides past the logo of Foxconn, the trading name of Hon Hai Precision Industry, in Taipei, Taiwan March 30, 2018. REUTERS/Tyrone Siu/File Photo

The conflict is but one aspect of the global legal battle between regulators, Apple and Qualcomm, which supplies modem chips that help phones connect to wireless data networks.

Last week, Qualcomm secured a preliminary victory in a patent lawsuit in China that would have banned sales of some Apple iPhones there. Apple later said it believed it was already in compliance but would change its software “to address any possible concern” about its compliance.

But Qualcomm was also handed a setback in an antitrust lawsuit brought against it by the U.S. Federal Trade Commission when a judge said it will not be able to mention that Apple ditched Qualcomm chips for competing ones from Intel Corp when the case goes to trial next month.

Qualcomm representatives did not immediately return a request for comment on Sunday outside of U.S. business hours.

The group of contract manufacturers – which includes Foxconn parent Hon Hai Precision Industry Co Ltd, Pegatron Corp, Wistron Corp and Compal Electronics Inc – became embroiled in the dispute between Apple and Qualcomm last year.

In the supply chain for electronics, contract manufacturers buy Qualcomm chips and pay royalties when they build phones, and are in turn reimbursed by companies like Apple. Qualcomm sued the group last year, alleging they had stopped paying royalties related to Apple products, and Apple joined their defense.

The contract manufacturers have since filed claims of their own against Qualcomm, alleging the San Diego company’s practice of charging money for chips but then also asking for a cut of the adjusted selling price of a mobile phone as a patent royalty payment constitutes an anticompetitive business practice.

They are seeking $9 billion in damages from Qualcomm for royalties they allege were illegal. That figure could triple if the manufacturers succeed on their antitrust claims.

Ted Boutrous, a high-profile partner at Gibson, Dunn & Crutcher LLP who is representing the contract manufacturers, told Reuters that statements from Qualcomm executives suggesting there were meaningful settlement talks with the contract manufacturers were “false.”

“To the extent Qualcomm has indicated there have been licensing discussions with the contract manufacturers, they’ve basically made the same sort of unreasonable demands that got them to where they are right now, which impose significant preconditions to even discuss a new arrangement,” Boutrous said.

In July, Qualcomm CEO Steve Mollenkopf told investors on the company’s quarterly earnings call that Qualcomm and Apple itself were in talks to resolve the litigation.

At a hearing in the case in San Diego on Nov. 30, one of Apple’s attorneys disputed that notion, saying there had not been “talks in a number of months. So the parties are at loggerheads and are going … to have to go into trial.”

Reporting by Stephen Nellis in San Francisco; Editing by Chris Reese and Himani Sarkar

What Should I Do With My IBM Shares?

On October 28, 2018 Seeking Alpha’s News Editor Brandy Betz announced the following IBM acquires Red Hat for $34B, which I am sure left many investors scratching their heads as to why IBM (IBM) would do such a thing? In this article, I will not discuss the various operations of the proposed merged company and how each is doing, as you can read many such articles on Seeking Alpha, both pro and con. What I will simply do is a quantitative analysis of IBM’s results on Main Street and then relate them to what an investor should do on Wall Street, using zero emotion.

Since 2013 IBM has struggled on both Main Street and Wall Street and this under performance has forced many investors (including legendary investor Warren Buffett) to cut and run from IBM and sell their shares in disgust. This has occurred for the simple reason that IBM’s management has struggled to grow the company’s revenue. Over the last four decades, I have learned one very important lesson as an Analyst and that is that investors on Wall Street hate negative revenue growth more than anything else. IBM has been the poster child of negative revenue growth over the past five years , achieving 21 consecutive quarters of negative revenue growth, before having the streak recently end.

This negative revenue growth rate has unfortunately forced IBM’s management to go outside of the company (in its acquisition of Red Hat), in order to find revenue growth, as it has tried internally for 21 consecutive quarters before eventually doing so. Here is our Friedrich datafile and quantitative chart (not technical chart) of Red Hat (RHT).

So in hunting for revenue growth, IBM ended overpaying by a large margin for Red Hat. The white line you see in the chart above is the Wall Street price for Red Hat and the yellow line is our Friedrich algorithms Main Street price (or what the algorithm believes the company is worth to a private buyer on Main Street if s/he were to buy the entire company per share) At $190 offered per share in cash for Red Hat, we believe that IBM paid over 4 times what the company is really worth. So in effect the decision making at IBM has gone from bad to worse. Let us now go and analyze IBM and then see what our Friedrich algorithm has to say about what you should do with your shares.

Main Street vs. Wall Street

In analyzing IBM, we will present some unique ratios that our Friedrich Investing System uses and will present a real-time quantitative analysis that will demonstrate the power of free cash flow in the investment process. In doing so, we will also teach everyone how to analyze one’s portfolio holdings on Main Street vs. Wall Street. At the same time, we will explain how the methodology involved in this analysis came about.

Main Street is where IBM operates and Wall Street is where its shares trade. The IBM shares that one can purchase on Wall Street are traded publicly on exchanges and the company has little control over how each share will trade. IBM is required to release its earnings reports each quarter and, from time to time, it also provides press releases to its shareholders (and the general public) giving updates on how its operations are doing on Main Street.

Main Street is where IBM invests in its own operations and sells to its customers. How well the CEO of IBM and its management do in selling those products determines how profitable the company will be. Wall Street then reacts based on the success or failure of management to meet its goals. Main Street and Wall Street are thus interlinked, but because anyone with a computer (or even just a smart phone), an internet connection, and a brokerage account can buy or sell any stock at any time, expertise is not a requirement in order to invest on Wall Street.

This results in Wall Street being a very dangerous place to operate as many investors tend to invest through emotion or follow the herd in and out of stocks. During bull markets, investors feel like they can do no wrong as “the rising tide lifts all boats.” But when a bear market suddenly shows up, these same investors tend to panic and like lemmings stampede over the cliff. Thus, we have the classic case of “greed vs. panic.”

Creation of the Friedrich Algorithm

Having noticed this problem some 35 years ago, I spent the last three decades building an algorithm called Friedrich. Our algorithm was designed to assist all investors (both Pro and Novice alike) and give them the ability to quickly compare a company’s Main Street operations, to its Wall Street valuation (Overbought or Oversold condition). Friedrich can do this on an individual company basis or assist users in analyzing an entire index like the S&P 500, an ETF, Mutual Fund, or individual portfolio with the use of our Portfolio Analyzer. I recently did so when I compared Apple (AAPL) to the S&P 500 Index (SPY) Apple Vs. The S&P 500: Which Is The Better Investment?

Many years ago, while reading Berkshire Hathaway’s ( BRK.A) ( BRK.B) 1986 letter to shareholders, I discovered a ratio, which Mr. Buffett called “Owner Earnings,” or what we may consider to be Mr. Buffett’s version of FCF, or “Free Cash Flow.” To my amazement, in that little footnote, Mr. Buffett explained how to use it and basically states that it is one of the key ratios that he and Charlie Munger used in analyzing stocks. In that article, he defined the term “owner earnings” as the cash that is generated by the company’s business operations.

“[Owner earnings] represent [A] reported earnings plus [B] depreciation, depletion, amortization, and certain other non-cash charges… less [C] the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume.”

I have used the free cash flow ratio for decades, using data from the Value Line Investment Survey, whose founder was Arnold Bernhard. Mr. Bernhard was a big fan of free cash flow and probably introduced it sooner than Mr. Buffett did. I know this as I was able to calculate the FCF ratio using old Value Line sheets for my 60-year backtest of the DJIA from 1950 to 2009.

The backtest mentioned above demonstrated that if one can purchase a company whose shares are selling for 15 (or less) times its Price to Free Cash Flow Ratio, that the probability of success will dramatically increase in most cases. I have renamed the ratio the Bernhard Buffett Free Cash Flow ratio in honor of both men. The following is how that ratio is calculated.

Wall Street Analysis

Price to Bernhard Buffett Free Cash Flow Ratio = Sherlock Debt Divisor / [(net income per share + depreciation per share) + (capital spending per diluted share)]

Sherlock Debt Divisor = Market Price Per Share – ((Working Capital – Long-Term Debt)/Diluted Shares Outstanding))

The above are the ratios I use when analyzing a stock on Wall Street, and below are the ratios I use when analyzing a stock on Main Street.

Main Street Analysis

FROIC means “Free Cash Flow Return on Invested Capital”

Forward Free Cash Flow = [((Net Income + Depreciation) (1+ % Revenue Growth rate)) – (Capital Spending)]

FROIC = (Forward Free Cash Flow)/(Long-Term Debt + Shareholders’ Equity)

The FROIC ratio tells us how much forward free cash flow we can expect the company to generate on Main Street relative to how much total capital it has employed. So, if a company invests $100 in total capital on Main Street and generates $20 in forward free cash flow it, therefore, has a FROIC of 20%, which we consider excellent. This is just one of the key ratios (66 in total) that we use to identify how a company is performing on Main Street, as it is our belief that if a company is making a killing on Main Street, Wall Street will eventually take notice.

So, let us begin our analysis and at the same time try to teach everyone how to do a similar analysis on one’s own portfolio. In analyzing IBM’s Price to Bernhard Buffett FCF ratio, we must first adjust IBM’s Wall Street Price to account for its debt using our Sherlock Debt Divisor. Below is a detailed definition of that ratio and how we use it.

Sherlock Debt Divisor

A major concern that I have these days in analyzing companies is the debt burden relative to its operations and whether management is abusing this situation by taking on more debt than it requires. Debt, when used wisely, allows for what is called leverage, and leverage can be extremely beneficial within certain parameters. On the other side of the coin, the use of debt can also be excessive and put a company’s future in jeopardy. So, what I have done to determine if a company’s debt policy is beneficial or abusive is to create the Sherlock Debt Divisor.

What the Divisor does is punish companies that use debt unwisely and rewards those who successfully use debt as leverage. How do I do this? Well, I take a company’s working capital and subtract its long-term debt. If a company has a lot more working capital than long-term debt I reward it but punish those whose long-term debt exceeds its working capital. So, if this result is higher than the current stock market price, then leverage is being used and the more leveraged a company is, the worse the results of this ratio will be and the less attractive its stock will be as an investment.

Thus, having successfully defined the Sherlock Debt Divisor, we need the following four bits of financial data in order to calculate it for IBM. TTM (trailing twelve months) is as close to real-time data as we can get, based on when each company reports. The current analysis is taken from the IBM’s September 30, 2018 filing with the SEC (except the Market Price per share).

Market Price Per Share = $119.90

Working Capital = Total Current Assets – Total Current Liabilities

Total Current Assets = $48,258,000,000

Total Current Liabilities = $36,823,000,000

Working Capital = $11,435,000,000

Long-Term Debt = $35,989,000,000

Diluted Shares Outstanding = 915,200,000,000

Sherlock Debt Divisor = Market Price Per Share – ((Working Capital – Long-Term Debt)/ (Diluted Shares Outstanding))

Sherlock Debt Divisor = $119.90 – ((11,435,000,000 – $35,989,000,000)/ 915,200,000))

Sherlock Debt Divisor = $119.90 – ($-26.83) = $146.73

Since IBM has more Long-Term Debt vs. Working Capital, we, therefore, must punish it and use the new $146.73 as our new numerator in all our calculations.

Wall Street Analysis of IBM

Price to Bernhard Buffett FCF Ratio = Sherlock Debt Divisor/[(net income per share + depreciation per share) + (capital spending per diluted share)]

Sherlock Debt Divisor = $146.73

Net Income per diluted share = $5,720,000,000/ 915,200,000= $6.25

Depreciation per diluted share = $4,517,000,000/ 915,200,000 = $4.93

Capital Spending per diluted share = $-3,569,000,000/ 915,200,000 = $3.89

$6.25 + $4.93 – ($3.89) = $7.29

Price to Bernhard Buffett Free Cash Flow Ratio = $146.73/$7.29 = 20.13

Now, if one goes to our FRIEDRICH LEGEND (on what is considered a good or bad result), you will notice that our result of 20.13 is considered average where anything under 15 is considered excellent.

We last ran our data file for IBM on December 15, 2018, and our Friedrich Algorithm gave a recommendation to our subscribers that IBM is a “Hold” as our Friedrich Data File and Chart below shows. There you will also find the last ten years of IBM’s Price to Bernhard Buffett Free Cash Flow results.

Main Street Analysis of IBM

Now that we have taught everyone how to calculate our Price to Bernhard Buffett Free Cash Flow ratio, let us now move on and teach everyone how to calculate our FROIC ratio.

This is how we calculate it:

FROIC means “Free Cash Flow Return on Invested Capital”

Forward Free Cash Flow = [((Net Income + Depreciation) (1+ % Revenue Growth rate)) + (Capital Spending)]

FROIC = (Forward Free Cash Flow)/(Long-Term Debt + Shareholders’ Equity)

Net Income per diluted share = $5,720,000,000/ 915,200,000= $6.25

Depreciation per diluted share = $4,517,000,000/ 915,200,000 = $4.93

Capital Spending per diluted share = $-3,569,000,000/ 915,200,000 = $3.89

$6.25 + $4.93 – ($3.89) = $7.29

Revenue Growth Rate TTM = 2%

[(($6.25 + $4.93) (102%)) – ($3.89) =$7.51

Long-Term Debt = $35,989,000,000

Shareholders Equity = $19,784,000,000

Diluted Shares Outstanding = 915,200,000

FROIC = (Forward Free Cash Flow)/ (Long-Term Debt + Shareholders’ Equity)

$7.51/$60.94 =12.3%

FROIC = 12.3%

Now, if one goes to my FRIEDRICH LEGEND again (on what is considered a good or bad result), you will notice that our result of 12.3% is considered good and tells us that IBM produces $12.30 in forward free cash flow for every $100 it invests in total capital employed on Main Street .

On Main Street, IBM is doing ok, while on Wall Street it is considered a hold.

What To Do?

Going forward, IBM in our opinion bought Red Hat in order to help it achieve a consistent positive revenue growth rate, but that it way overpaid for that privilege. Not only that, but it paid 10.77 times Red Hat’s TTM (Trailing Twelve Months) revenue and 118 times its TTM earnings. Those are boom and bust numbers and will only make matters worse at IBM. Once the merger is complete we will come back and write another article about the combined firm and you will probably find that though revenue growth maybe positive, every other result will be greatly reduced. The WARNINGS that you see in the IBM Datafile above are given when a company has one of three things happen to it.

1) Revenue growth is negative for two periods in a row

2) Badwill to Price is greater than 33%. (Badwill = Goodwill + Intangible Assets)

3) Sell price achieved.

Well, IBM has overcome its 21 consecutive periods of negative growth and may further do so when merging operations with Red Hat, but it will probably increase its Goodwill and Intangible assets substantially and that we see as a serious “Badwill to Price” negative. As you can see from our Red Hat Datafile at the beginning of this article, that Red Hat has had WARNINGS over the entire 10 year period under analysis and that is because it has always sold above its sell price. The reason for this is because its revenue growth has been excellent and that is what Wall Street loves more than anything. All I can say is that Warren Buffett is probably very happy he sold his entire stake in IBM prior to this disastrous merger being announced. In our opinion IBM dramatically overpaid for Red Hat and it should come back to haunt them sooner than later. We also recommend that investors follow Warren Buffett’s lead, as management keeps creating more problems for the company with every attempt they make to save it. Management’s days in our opinion are numbered.

In conclusion, it is my belief that free cash flow analysis is the ultimate tool when analyzing companies, and my hope is that you may add these ratios to your own investor toolbox in order to help you in your own due diligence. If you have any questions, please feel free to ask them in the comment section below.

Disclosure: I am/we are long AAPL. 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: This analysis is not an advice to buy or sell this or any stock; it is just pointing out an objective observation of unique patterns that developed from our research. Factual material is obtained from sources believed to be reliable, but the poster is not responsible for any errors or omissions, or for the results of actions taken based on information contained herein. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice.

This Study of 195 Billion-Dollar Companies Found 6 Counterintuitive Truths About Building a Unicorn

Ali Tamaseb, a founder turned venture capitalist at Data Collective VC, recently spent 300 hours gathering data on billion-dollar startups. He generated 100 charts exploring their history and outlined dozens of valuable insights–all in a quest to learn what billion-dollar startups look like at inception. 

Tamaseb gathered data on 65 key factors from all 195 unicorn startups based in the U.S. His work included all startups since 2005 that have publicly reached a valuation of more than $1 billion. The least surprising finding is that almost 60 percent of billion-dollar startups were created by serial entrepreneurs. In fact, he found that 70 percent of billion-dollar founders were “superfounders,” or founders with at least one previous exit of more than $50 million. This aligns with both traditional thinking and my experience.

I can also attest to some of the other trends from this study based on my investment history, but several of Tamaseb’s findings are contrary to my experience and to widely accepted investor wisdom. These counterintuitive findings are the most valuable in my mind:

1. Industry knowledge isn’t required.

Contrary to what I’ve always believed, Tamaseb found that most founders of billion-dollar startups don’t have direct experience in the industry or domain they are trying to disrupt (except in healthcare and pharmaceuticals, where 80 percent of founding CEOs had direct experience in the target market.)

2. Technical CEOs aren’t necessarily more successful.

Tamaseb’s data addresses a widely debated topic: do technical founding CEOs do better than non-technical founding CEOs when it comes to creating a billion-dollar startup? His data showed a 50-50 split.

I had always believed that a technical startup (biotech, SaaS, mobile apps, etc.) should be led by someone who could build the product, but this research showed that non-technical founders can also succeed. So I went back into our portfolio at Ryerson Futures and found that some of our most successful startups to date had technical CEOs, but many more had business-minded or domain experts in the CEO role. So perhaps I need to revisit this bias, and perhaps you should too.

3. You don’t need to be capitally efficient. 

In the world of startups, capital efficiency refers to how much money a startup needs to spend in order to be able to sustain itself on internally generated funds. A startup that is capital efficient spends a little to make a lot. 

While VCs often focus on investing in capital efficient companies, less than 45 percent of the billion-dollar companies in Tamaseb’s pool were capital efficient. The rest required a high level of investment to scale–indicating that a company doesn’t need to be self-sufficient to be worth $1 billion.

4. It’s (usually) not OK to be a copycat.

Tamaseb found that more than 60 percent of billion-dollar startups had a very high level of product differentiation compared to what was already in the market. He also found that the worst competition case comes from copying what another startup is doing, especially when that other startup is well funded.

While that makes sense, it is not consistent with some billion-dollar startups, such as Rocket Internet, that were created in China, India, Germany and elsewhere over the last decade and were clones of startups like eBay, Amazon, Tinder, and Facebook.

5. You don’t have to be first to market.

Only 30 percent of the billion-dollar startups in the study were first to market, and just under 40 percent entered markets with five or more competitors.

Contrary to widely held beliefs, the best markets for billion-dollar startups already have a number of large incumbents, and often the startup uses the inefficiencies of these incumbents as a point of disruption.

Timing is always key when launching a startup. Too early and the market won’t buy; too late, and all the early adopters will already be using another startup’s products. The majority of billion-dollar startups went after markets that were already large and growing.

6. You don’t need to be part of an accelerator to be successful.

Accelerators are all the rage worldwide. As of 2018, there are more than 1,500 programs to accelerate startups. Despite the marketing produced by accelerators like Techstars and Y Combinator, the majority of billion-dollar startups in the U.S. did not participate in a formal accelerator program. I find this surprising, since unicorns like Airbnb, Dropbox, Quora, Stripe, and Twilio all came from accelerators. So why are so few unicorns on this list coming from accelerators?

I think the answer comes from the fact that 70 percent of billion-dollar founders are superfounders. Perhaps founders with a previous exit don’t need the network, knowledge and mentorship that accelerators offer. Maybe that means not being a superfounder is just one more reason to apply to accelerators–to learn from others. That is certainly what I focus on. 

Quantum Computers Threaten the Web’s Security. We Must Take Action Now.

Inside the stark and sweeping Eero Saarinen-styled exterior of the Thomas J. Watson Research Center in Yorktown Heights, IBM’s blue jeans-wearing boffins are assembling a new generation of super-powered computers built on quantum mechanical principles. These otherworldly machines dangle from sturdy, metal frames, looking like golden chandeliers, or robotic beehives. The devices perform their magical-seeming operations inside vacuum-sealed, super-cooled refrigerator encasements. It’s a technology that combines both brains and beauty.

Future iterations of these quantum computers will be able to solve mathematical problems ordinary computers have no hope of computing. They will vastly speed up classical calculations, accurately model complex natural phenomena like chemical reactions, and open as yet unexplored frontiers for scientific inquiry. Despite seeming arcane, machines like these will touch every aspect of our lives—from drug discovery to digital security.

IBM scientists examine quantum computing hardware.

IBM scientists examine quantum computing hardware.

Courtesy of IBM.

This latter area presents significant challenges. One advantage quantum computers have over traditional ones is a knack for factoring large numbers, an operation so difficult for present-day computers that it has become the foundation for almost all today’s encryption schemes. A sufficiently advanced quantum computer, on the other hand, can chew through these math problems with the destructive force of that metal-melting Xenomorph blood in the Alien film franchise. The prospect of quantum computing necessitates a complete rethinking of cryptography.

Today’s encryption may be rendered obsolete sooner than most people anticipate. As Adam Langley, a senior software engineer at Google, has pointed out in a recent blog post, some experts predict this latter-day Y2K could occur within the decade. Michele Mosca, cofounder of the Institute for Quantum Computing in Waterloo, Ontario, has estimated a 1-in-7 chance that quantum breakthroughs will defeat RSA-2048, a common encryption standard, by 2026. If that’s true, then the time to begin reengineering our digital defenses is now. As Langley writes, waiting around for guidance on standards “seems dangerous”; there’s no time to lose.

Buttressing Langley’s view is a recent paper out of the National Academies of Sciences, Engineering, and Medicine. The research organization determined that, while the advent of an encryption-busting quantum computer is unlikely within the decade, preparations to defend against one must be undertaken as soon as possible. Since web standards take more than a decade to implement, a press release accompanying the paper warned, developing new, attack-resistant algorithms “is critical now.”

The era of quantum computation fast approaches. Fortune 500 companies like IBM, Google, Microsoft, and Intel, are plugging away on the tech alongside smaller startups, like Calif.-based Rigetti. Nation states like China are, meanwhile, dumping billions of dollars into research and development. Whichever entity achieves so-called quantum supremacy first will find itself in possession of unprecedented power—the equivalent of X-Ray goggles for the Internet.

That is, unless we act with urgency to armor up.

A version of this article first appeared in Cyber Saturday, the weekend edition of Fortune’s tech newsletter Data Sheet. Sign up here.

AT&T Dividend Increase: Interactive Exploration On The Impact On The Stock

It has been a dismal year for AT&T (T) investors. While the dividends kept rolling in like clockwork, the rest of the business performed nothing close to Swiss clockwork, and as a result, the stock tanked up to 25% before making up some lost ground at the end of November but has since then continued to exhibit unusually high volatility.

Source: AT&T – Media Gallery

AT&T has a stellar and long-term dividend track record, and while recent increases have only come in the 2% region, the stock remains a cornerstone of many long-term dividend and retirement portfolios. As expected, AT&T followed its previous pattern of a conservative $0.04 per share dividend increases putting the dividend at $2.04.

Over the past few weeks two of Wall Street’s biggest banks have upgraded AT&T with Citi going to buy and a $34 target price and J.P. Morgan overweighting the stock with a juicy $38 price target. Although this has lead to an initial daily 1-2% gain, the “sell-any-rally-no-matter-how-small” pattern with AT&T continues.

AT&T has recently outlined its 2019 expectations predicting very strong cash flow, substantial debt reduction and the launch of a new streaming service. Potentially, the upcoming dividend hike can help establish some degree of optimism with investors.

This article now analyzes how AT&T’s stock has reacted in the past to these dividend hikes. Are we observing investors buying the stock in the run-up to the declaration date? Are we observing people buying the stock after the dividend hike? Let’s find out!

How Do Dividend Increases Impact AT&T’s Stock Price?

To do so, I have analyzed AT&T’s stock price behavior in the 9 trading days leading up to the dividend declaration date and the 9 trading days following the dividend hike. The period covers 14 years over which AT&T’s dividends developed as follows:

Figure I: Dividend History with declaration date

Source: Seeking Alpha Dividend History – author’s visualizations

With AT&T raising its dividend like clockwork every year before Christmas, we can expect that the market is aware of this. Thus, any patterns we find are not just anecdotal evidence but proven by back-testing analysis.

By plotting how the stock behaved in the 9 days leading up to the dividend declaration date vs. the performance over the 9 days following the dividend declaration data, we get a correlation matrix which looks like this:

Figure II: PRIOR and POST dividend declaration performance of AT&T with all dividend increases colored in GREEN

Let’s run through what this means by focusing on the dividend declaration in 2017, which has the “FOCUS!” label attached to it as well as the part highlighted in green and yellow.

In 2017, AT&T announced an increase in its dividend on December 15. Over the respective time periods mentioned above, AT&T’s stock closed as follows:

  • 9 trading days before declaration date: $37.27
  • On the declaration date: $38.24
  • 9 trading days following declaration date: $38.88

This then leads to the following performances:

+2.6% prior to the declaration date

+1.7% following the declaration date

This was an exceptionally strong period for AT&T’s stock price and very few expected what happened in 2018 to the stock. Could we see the reversal this year?

Visually, this looks like this:

Figure III: Stock price changes before and after declaration date

Source: Author’s calculations and visualization

In Figure II we can see that in the lower section the performance in the Q4 cluster following the dividend declaration clearly outperforms those of the other three. This certainly implies that the dividend increases in Q4 have a meaningful and relevant impact on the stock price, even though this pattern does not repeat every single year. Also, this only reflects performance of the 9 days following the dividend declaration but does not disclose even higher highs within these 9 days.

This is where Figure III comes in handy. For the most recent dividend increase the stock reacted very favorably and consistently over the next days and surprisingly already rose strongly into the expected dividend declaration date.

So now that we know what this is all about, let’s explore whether it is a good idea to buy AT&T in anticipation of a dividend hike or better wait once it has been announced. Or does the stock rather stay flat in anticipation and following those announcements?

To do so, I have plotted that behavior mentioned above for all the 16 years covered in that analysis:

Figure IV: Tree-map of stock reactions POST dividend hikes

Source: Author’s calculations and visualization

As regards the stock’s reaction to the dividend increase that tree-map easily shows that there are far more green than red squares with the size of the square indicating the overall performance. Over the 15-year time horizon, AT&T’s stock rose in 12 out of 15 years post the declaration date.

It rose in 6 out of 15 into the declaration date but only in three years throughout both periods (2003, 2007 and 2017).

Figure V: Tree-map of stock reactions PRIOR to dividend hikes

As a result, we can observe a clear trend that investors start flocking into the stock once this heavyweight and super reliable dividend payer has raised its dividend as it does year after year after year. This behavior is also evident in the correlation map shown in Figure II.

Combining these more detailed findings with the quarterly overview shown in Figure II we can conclude that the distinct behavior that the stock rises post the dividend declaration can only be observed in Q4 throughout all those years and only randomly during the other quarters. I am not speculating on the reasons but the initial thinking that for a company like AT&T which always raises its dividend in December by a fraction it shouldn’t have any influence on the impact but in fact it more often than not has provided all other factors like general market sentiment remain equal. This is an omnipresent assumption in all kinds of statistical analysis where we try to infer the future from movements in the past and by no means guarantees that it will be the same this year. Still, it may be another relevant point to consider for investors when buying into AT&T now.

Interactive Exploration

Finally, to bring it all together and allow for individual analysis, I have built a dashboard that you can interact with. This allows you to select different years and find out how AT&T’s stock price reacted to its dividend increases, respectively. All you have to do here is to simply select a year on the right and then hover with your mouse over the data for further descriptions.

Figure VI: How does AT&T stock react to dividend hikes – Dashboard

Source: author’s calculations and visualization

In the screenshot above, only the year 2017 and Q4 have been selected, but if you select all the years, you will be able to reproduce the views from Figure IV and V. Regarding the 2017 dividend hike, you see two squares, one indicating stock performance “post AT&T’s dividend declaration date!” and the other showing the performance “prior AT&T’s dividend declaration date!” If you hover over the top left square, you will, for instance, see the following:

The “2.6%” figure mentioned in that “tooltip” information can also be found in the stock price chart below:

Investor Takeaway

AT&T is my largest position, and as such, I am constantly eyeing the stock for further investment opportunities. I was shocked that AT&T almost declined to a 7% yield but also delighted to be able to buy more at these generous prices.

After a dismal 2018, it seems logical that 2019 will be better but only if AT&T delivers on its cash flow generation, pays down debt substantially and ultimately limits the impact from the erosion of its traditional TV business. 2019 will be the decisive year to gauge whether its business transformation and strategy can succeed. That said, 2020 when the all-new streaming service will be fully in place will be big as well. For 2019, though, I have outlined three main topics that will shape AT&T’s financial year and thus also how its stock performs.

Historic analysis has shown the stock is expected to trend upwards now that AT&T has raised its dividend yet again. A current yield of 6.8% beats the broad market by a mile and should be considered one of the safest bets in this yield segment in the entire market.

I am also patiently waiting for January, precisely January 9, 2019, when the stock will go ex-dividend as well as its Q4/2018 earnings release around the same time. Here I will likely buy even more following the regular ex-dividend date drop.

This strategy does not consider AT&T’s underlying business model and business performance and is assuming the historic ceterus paribus conditions will be applicable to the future as well. Investors may take further aspects into consideration before making a decision.

Disclosure: I am/we are long T. 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 am not offering financial advice but only my personal opinion. Investors may take further aspects and their own due diligence into consideration before making a decision

Apple to push software update in China as Qualcomm case threatens sales ban

SHANGHAI/SAN FRANCISCO (Reuters) – Apple Inc, facing a court ban in China on some of its iPhone models over alleged infringement of Qualcomm Inc patents, said on Friday it will push software updates to users in a bid to resolve potential issues.

An Apple company logo is seen behind tree branches outside an Apple store in Beijing, China December 14, 2018. REUTERS/Jason Lee

Apple will carry out the software updates at the start of next week “to address any possible concern about our compliance with the order”, the firm said in a statement sent to Reuters.

Earlier this week, Qualcomm said a Chinese court had ordered a ban on sales of some older iPhone models for violating two of its patents, though intellectual property lawyers said the ban would likely take time to enforce.

“Based on the iPhone models we offer today in China, we believe we are in compliance,” Apple said.

“Early next week we will deliver a software update for iPhone users in China addressing the minor functionality of the two patents at issue in the case.”

The case, brought by Qualcomm, is part of a global patent dispute between the two U.S. companies that includes dozens of lawsuits. It creates uncertainty over Apple’s business in one of its biggest markets at a time when concerns over waning demand for new iPhones are battering its shares.

Qualcomm has said the Fuzhou Intermediate People’s Court in China found Apple infringed two patents held by the chipmaker and ordered an immediate ban on sales of older iPhone models, from the 6S through the X.

Apple has filed a request for reconsideration with the court, a copy of which Qualcomm shared with Reuters.


Qualcomm and Apple disagree about whether the court order means iPhone sales must be halted.

The court’s preliminary injunction, which the chipmaker also shared with Reuters, orders an immediate block, though lawyers say Apple could take steps to stall the process.

All iPhone models were available for purchase on Apple’s China website on Friday.

Qualcomm, the biggest supplier of chips for mobile phones, filed its case against Apple in China in late 2017, saying the iPhone maker infringed patents on features related to resizing photographs and managing apps on a touch screen.

Apple argues the injunction should be lifted as continuing to sell iPhones does not constitute “irreparable harm” to Qualcomm, a key consideration for a preliminary injunction, the copy of its reconsideration request dated Dec. 10 shows.

“That’s one of the reasons why in a very complicated patent litigation case the judge would be reluctant to grant a preliminary injunction,” said Yiqiang Li, a patent lawyer at Faegre Baker Daniels.


Apple’s reconsideration request also says any ban on iPhone sales would impact its Chinese suppliers and consumers as well as the tax revenue it pays to authorities.

The request adds the injunction could force Apple to settle with Qualcomm. But it was not clear whether this referred to the latest case or their broader legal dispute.

Qualcomm has paid a 300 million yuan ($43.54 million) bond to cover potential damages to Apple from a sales ban and Apple is willing to pay a “counter security” of double that to get the ban lifted, the copy of the reconsideration request shows.

Slideshow (2 Images)

Apple did not immediately respond to questions about the reconsideration request and Reuters was not independently able to confirm its authenticity.

Lawyer Li said the case would undoubtedly ramp up pressure on Apple, especially if a ban was enforced.

“I think that Qualcomm and Apple, they always have those IP litigations to try to force the other side to make concessions. They try to get their inch somewhere. That’s always the game.”

Reporting by Adam Jourdan in Shanghai and Stephen Nellis in San Francisco; Editing by Himani Sarkar

Japan rules out asking private firms to avoid telecoms gear that could be malicious

FILE PHOTO: Japan’s Chief Cabinet Secretary Yoshihide Suga attends a news conference at Prime Minister Shinzo Abe’s official residence in Tokyo, Japan May 29, 2017. REUTERS/Toru Hanai

TOKYO (Reuters) – Japan’s government has no plan to ask private companies to avoid buying telecommunications equipment that could have malicious functions, such as information leakage, its top spokesman, Yoshihide Suga, said on Thursday.

The comment suggests Japan does not intend, for the moment, to extend to private firms a policy of not buying such equipment for the government, after it issued a policy document on Monday on the need to maintain cybersecurity during procurement.

While China’s telecoms equipment supplier Huawei Technologies, and ZTE (0763.HK) are not explicitly named, sources said last week the change aimed at preventing government procurement from the two Chinese makers.

Reporting by Chang-Ran Kim and Sam Nussey; Editing by Clarence Fernandez

Tesla To 90,000: Delivery Forecasts For The Fourth Quarter

Tesla is on track to deliver more than 61,000 Model 3s in the fourth quarter.


Much is written about Tesla (TSLA) and Elon Musk on this platform and elsewhere. The circus that surrounds Tesla is well-known and heavily-covered on this platform – so I won’t write about any of that here.

Instead, this is simply an attempt to forecast Q4/18 vehicle deliveries based on the best available data. Overall, I estimate that Tesla will deliver ~91,085 vehicles – up 9% from last quarter, including over 61,000 Model 3s. This estimate implies that Tesla will meet their 2018 target for 100,000 Model S and X delivered with a bit of breathing room to spare.

Given analyst revenue estimates of ~3.5% sequential growth, Tesla will need to keep ASPs from slipping more than 4.5% to meet those top-line targets, assuming my estimates are close and assuming the Tesla’s non-automobile units are flat sequentially. Tesla has raised prices several times over the last few months, which should help prevent too much price erosion on their vehicles, although this will be offset by the introduction of the $46,000 Model 3 MR.

In my view, Tesla has a good chance of beating its Model S/X delivery target and a reasonable chance of beating analysts’ top-line estimates. I will continue to hold my Tesla shares.

Model S Delivery Estimate: 14,907 Vehicles

Each of the estimates herein is based primarily on three pieces of data.

Each estimate is based on Tesla’s actual delivery information from past quarters. This data is available in Tesla’s quarterly update letters delivered on earnings day. Tesla also provides estimates of this data in an 8-K filing within a day or two of the end of a quarter. This data provides Tesla’s actual deliveries but is only available quarterly – unlike many manufacturers which provide similar data every month.

This data provides Tesla

(Inside EVs Monthly Plug-in EV Sales Scorecard)

Estimates are also based on monthly estimates for Tesla’s American sales from Inside EVs Monthly Plug-in EV Sales Scorecard. Inside EVs only includes sales in the United States but is updated each month, usually within a few days of the end of the month.

This data is a bit incomplete for the most recent month, as shown above: Spanish Model S registration results are not yet available.

(Tesla Motors Club)

Estimates are further based on European vehicle registration date from Tesla Motors Club. A post on TMC’s forum contains European sales data from each European country, with data updated as it becomes available. This data is a bit incomplete for the most recent month, as shown above: Spanish Model S registration results are not yet available.

Compiling these three data sources into one for the Model S, and combining the data into quarters rather than months, I arrive at the following table:

Compiling these three data sources into one for the Model S, and combining the data into quarters rather than months, I arrive at the following table

(Author based on data from Inside EVs and Tesla Motors Club)

Here, the “Model S Registrations, Europe” is data from Tesla Motors Club, by quarter. “Model S Sales, United States” is data from Inside EVs, also organized by quarter. Total Model S Sales is simply the addition of those two lines and Tesla Deliveries refers to Tesla’s published total Model S deliveries in a given quarter. Most of this data comes from 8-Ks, as Tesla doesn’t usually break down S vs. X deliveries in its quarterly update letters.

As shown, over the past year, sales in Europe and the United States have made up ~85% of sales of Model S vehicles over the past year, with the remainder of sales primarily occurring in APAC and Canada.

We could simply multiply sales by ~1.5x to move from the two-month Q4/18 sales to three-month sales, but history tells us this would be very inaccurate. Why? Because Tesla tends to sell the fewest vehicles in the first month of each quarter and more vehicles in the last month of each quarter:

Tesla Monthly Sales for the Model S and X show monthly seasonality

(Author based on data from Inside EVs and Tesla Motors Club)

As shown, Tesla has had six months where they sold more than 10,000 Model S and X vehicles combined: 9/16, 12/16, 3/17, 9/17, 12/17, 3/18, and 9/18. All of those months are the third month of a fiscal quarter. Indeed, since the start of 2015, Tesla has always delivered the most vehicles in the third month of the quarter.

Thus, simply multiplying the first two-month results by 1.5x will yield inaccurate delivery estimates: Those estimates would have been too low in each of the past 15 quarters.

Tesla will sell nearly 15,000 Model S vehicles in Q418

(Author based on data from Inside EVs and Tesla Motors Club)

To remedy this problem, the above chart includes only the first two months of European registrations and Inside EVs sales estimates from every quarter. For example, last quarter, Insides EVs showed Tesla having Model S sales of 1,200 in July, 2,625 in August, and 3,750 in September. Thus, the above chart shows 3,825 (1,200 + 2,625) Model S vehicles sold in the United States in Q3/18 – excluding the 3,750 reported September sales.

The Tesla deliveries above are actual deliveries for the quarter, and the percentage of sales is sales in the first two months divided by total sales. As shown, last quarter, U.S. and European sales in the first two months of the quarter accounted for 37% of total Model S deliveries in Q3/18.

For Q4/18, I estimate that Tesla will deliver ~14,907 Model S vehicles. This is based on assuming that reported deliveries in the first two months will be 39% of total quarterly deliveries – the average percentage of the last two quarters. Averaging the last two quarters here is conservative compared to using the 37% metric from Q3/18, which would yield an estimate closer to 16,000 Model S deliveries.

Model X Delivery Estimate: 14,923 Vehicles

Tesla Model X is the best-selling SUV EV.

(Author based on data from Inside EVs and Tesla Motors Club)

Last quarter, Tesla delivered 13,190 Model X vehicles. Thus far in Q4/18, Tesla has delivered 5,683 vehicles, although data from Tesla Motors Club is again missing Spain for November. That is a very minor exclusion though, given that Spain is averaging 15.9 Model X registrations/month. Given the level of error inherent in these estimates, the absence of this data is trivial.

We will again take the first two months’ data rather than full-quarter sales data to form estimates: Sales of the Model X show a lot of seasonal variability as in the chart above.

Tesla could deliver nearly 15,000 Model X vehicles in the next quarter.

(Author based on data from Inside EVs and Tesla Motors Club)

Last quarter, first two-month sales in the United States and Europe represented 38% of total Model X deliveries. If we estimate that the same percentage of Model X deliveries occurred in those regions in those months, this suggests that Tesla may deliver ~14,923 Model X vehicles in the fourth quarter.

Notably, while Tesla did not provide a Q4/18 forecast for Model 3 deliveries (or production), Tesla did forecast deliveries for the Model S and X (combined):

In each of the last four quarters, Tesla has suggested that Model S and X deliveries should total 100,000 or more. If Tesla meets my estimates, they would beat this target with a little bit of breathing room to spare:

Tesla Deliveries Q4/17 Q1/18 Q2/18 Q3/18 Q4/18E
Model S/X Deliveries 28,425 21,815 22,319 27,710 29,830?
Cumulative, 2018 21,815 44,134 71,844 101,674?

That said, the margin of error on this estimate is quite high. Notably, this estimate excludes China, which may have seen sales fall off in the fourth quarter. Tesla has denied reports that sales in China fell 70% in October:

“‘While we do not disclose regional or monthly sales numbers, these figures are off by a significant margin,’ a Tesla spokesperson told MarketWatch in emailed comments.”

MarketWatch, Nov 27, 2018

However, even with less dramatic declines than 70% it is possible – perhaps even probable – that these estimates will be too high as Tesla’s U.S. and European sales may make up a higher proportion of total sales given tariffs in China. We’ll find out in January.

Model 3 Delivery Estimate: 61,255 Vehicles

According to Autoweek, the Tesla Model 3 will roll out in Europe in February 2019

(Author based on data from Inside EVs)

The Tesla Model 3 is not available in Europe. According to Autoweek, the Tesla Model 3 will roll out in Europe in February 2019 – well after the end of Q4/18. Because of that, Model 3 deliveries are based solely on data from Inside EVs.

Aside from the United States, the Tesla Model 3 is only available in Canada – it is also not yet available in APAC. Thus, American sales represent the vast majority of Tesla Model 3 deliveries. Last quarter, for example, Inside EVs reported Model 3 sales equal to 97% of total Model 3 deliveries.

in Q2/18, Model 3 sales were higher in the second month of the quarter (May 2018) than in the final month of the quarter (June 2018).

(Author based on data from Inside EVs)

Sales of the Model 3 have not been going on long enough to draw as strong of conclusions as for the Model S and X. Sales appear to show some monthly seasonality: Last-month-of-quarter sales were the highest in four of the five quarters that the Model 3 has been offered. However, in Q2/18, Model 3 sales were higher in the second month of the quarter (May 2018) than in the final month of the quarter (June 2018).

Overall, the trend here is that last-month-sales are becoming decreasingly over-sized for the Model 3. This is based up by first two-month data:

I estimate that Tesla will deliver ~61,255 Model 3 vehicles in the fourth quarter of 2018

(Author based on data from Inside EVs)

As shown, over the past four quarters, first two-month sales have made up an increasing proportion of total sales – from 31% in Q4/17 up to 57% in Q3/18. As the quarters pass, Tesla’s monthly Model 3 sales are becoming flatter and flatter, with respect to in-quarter seasonality.

Because of flattening monthly variations, I will estimate the first two-month sales make up 59% of total Model 3 sales – continuing the 53%, 55%, 57% trend of increase by 2 pp each quarter. Thus, I estimate that Tesla will deliver ~61,255 Model 3 vehicles in the fourth quarter of 2018.

Tesla to 90,000: Total Deliveries Estimate is ~91,085

Tesla will deliver an amazing 91,000 electric vehicles next quarter: More than every before

Tesla will deliver nearly a quarter-million electric vehicles in 2018 - more than twice as many as last year.

(Author based on Tesla filings and own estimates)

In total, my estimates would result in 91,085 Tesla deliveries in Q4/18. This would be a record for the company. This estimate implies ~9% sequential growth in automobile deliveries.

Given 9% sequential growth in deliveries, Tesla should break their own record for the most automotive revenue in a quarter, set last quarter at $6.1 billion. Given the relatively small size of Tesla’s other segments, Tesla would also be very likely to beat their Q3/18 revenue as well.

Last quarter, Tesla earned $6.82 billion in revenue. Analysts at Yahoo Finance expect Tesla to generate $7.06 billion in revenue next quarter, up 3.5% from Q3/18. If automobile sales rise 9% in Q4/18, that may be an achievable target: Tesla would need to prevent automobile ASP from falling more than ~4.5% to beat this revenue target, assuming they ship 91,085 automobiles and assuming that non-automotive segment revenue is flat from Q4/18.

The primary driver for falling ASPs in Q4/18 will be the introduction of the less-costly Model 3 mid-range. Depending on product mix, this $46,000 vehicle could reduce average sales prices substantially, although that decline may be offset by waves of price increases on Tesla vehicles, beginning in the middle of last quarter. Given those price increases, Tesla may have a good shot at beating top-line revenue estimates. We will find out in ~early February.

Happy investing!

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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.

Kubernetes etcd data project joins CNCF


Kubernetes: The smart person's guide

Kubernetes: The smart person’s guide

Kubernetes is a series of open source projects for automating the deployment, scaling, and management of containerized applications. Find out why the ecosystem matters, how to use it, and more.

Read More

How do you store data across a Kubernetes container cluster? With etcd. This essential part of Kubernetes has been managed by CoreOS/Red Hat. No longer. Now, the open-source etcd project has been moved from Red Hat to the Cloud Native Computing Foundation (CNCF).

What is etcd? No, it’s not what happens when a cat tries to type a three-letter acronyms. Etcd (pronounced et-see-dee) was created by the CoreOS team in 2013. It’s an open-source, distributed, consistent key-value database for shared configuration, service discovery, and scheduler coordination. It’s built on the Raft consensus algorithm for replicated logs.

Also: Kubernetes’ first major security hole discovered

Etcd’s job is to safely store critical data for distributed systems. It’s best known as Kubernetes’ primary datastore, but it can be used for other projects. For example, “Alibaba uses etcd for several critical infrastructure systems, given its superior capabilities in providing high availability and data reliability,” said Xiang Li, an Alibaba senior staff engineer.

When applications use etcd they have more consistent uptime. Even when individual servers fail, etcd ensures that services keep working. This doesn’t just protect against what would otherwise prove show-stopping failures, it also makes it possible to automatic update systems without downtime. You can also use it to coordinate work between servers and set up container overlay networking.

In his KubeCon keynote, Brandon Philips, CoreOS CTO, said: “Today we’re excited to transfer stewardship of etcd to the same body that cares for the growth and maintenance of Kubernetes. Given that etcd powers every Kubernetes cluster, this move brings etcd to the community that relies on it most at the CNCF.”

Must read

That doesn’t mean Red Hat is walking away from etcd. Far from it. Red Hat will continue to help develop etcd. After all, etcd is is an essential part of Red Hat’s enterprise Kubernetes product, Red Hat OpenShift.

Moving forward, etcd will only grow stronger. It being used by more and more companies, as Kubernetes is adopted by almost every cloud container company. In particular, Phillips said, he expects far more work to be done on etcd security.

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