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Commentary on The Capital Markets- Category [Company Specific]

So UBER is a "Great thing", right?

Well, no.  In fact it's a cash furnace disaster, just as were so many alleged "companies" in the late 1990s.

Uber Technologies Inc. is telling prospective investors that it generates $470 million in operating losses on $415 million in revenue, according to a document provided to prospective investors.

The term sheet viewed by Bloomberg News, which is being used to sell $1 billion to $1.2 billion in convertible bonds, doesn’t make clear the time period for those results. The document also touts 300 percent year-over-year growth.

Uh huh, sure.  We'll lose more money faster but make it up in volume.

I've heard that many times, starting with Microport in the 1980s.  They went under.  Then I heard it dozens of times in the 1990s, and they all went under too.  Now we're hearing it again, and they too will go under.

“These are substantially old numbers that do not reflect business activities today,” Uber spokeswoman Nairi Hourdajian said in an e-mail. Hourdajian declined to say why the numbers are being used to promote a current funding round.

Uh huh.  This is why they're being used in a current funding campaign, right?

Probably not.

The company is trying to raise $2 billion from a credit line and it funded $1.6 billion more in convertible bonds earlier this year.  What's the huge "need" unless the company is burning cash at a furnace-style pace and thus, absent it, would be in jeopardy of shriveling up into a prune and dying?

I have long argued that most of the so-called "sharing" economy is nothing more than regulatory arbitrage; finding ways to cheat on various laws that impose costs which will eventually be blocked by the governments involved as it impairs tax revenue.

Oh sure, it looks good at the outset, but that doesn't mean they'll be able to continue onward with that model on a durable and forward basis.  And yet that's the premise all of these firms have -- they have durable, ongoing businesses.

I think not.

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And now for reason 4,502,603 while I will never own an iPhone (or a Mac, for that matter):

A very serious security flaw in Apple’s iOS mobile platform and its OS X desktop operating system has been discovered by security researchers and seemingly acknowledged by Apple. Using the flaw, hackers can build an app that is capable of stealing any and all passwords saved in Apple’s Keychain. Additionally, the same flaw can reportedly be used to steal passwords directly from third-party apps as well as Apple’s own apps.

But security doesn't matter and neither does privacy to 'Muricans, right?  It's ok if the government spies on you, it's ok that people build crap products with zero security (e.g. "smart" devices that can be hacked that you will buy and put in your house!) and apparently that extends to your phone and computer too.

Oh, and the article claims that Apple was notified of the flaw last October and yet has failed to fix it as of now.

Good job 'Muricans -- keep buying from the company that has apparently sat on this for nearly nine months!

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I hate it when I'm right.

It would appear that the California Labor Commission has ruled that Uber drivers are employees.

As it stands now, Uber employs its drivers as third-party contractors, operating as a logistics company that provides access to customer demand and directions, transactions, etc. for the drivers. Uber has argued repeatedly in various courts that it is not a transportation or taxi company, but rather a software platform that matches customer demand with supply.

This ruling changes all that, turning Uber into a transportation startup instead of a logistics software company. That puts the company in a position to face a number of legal obstacles, as well as rising costs of employing those drivers directly and offering them benefits, etc.

What you claim you are is not what you are.  It's what you do!

Uber (and Lyft) set standards for their vehicles, provide signage, controls the tools the drivers use and how they transact, including pricing.  This is where the rubber meets the road -- if you control the means of production by your employees, set pricing for the work they perform and similar you generally are an employer, not a contract shop.

The fun part comes when the IRS reclassifies them federally, which is very, very likely.  At that point the company will be liable for back employment taxes along with, in the future, employment taxes, workman's comp insurance and unemployment insurance for openers.

It certainly appears that the entire business model of these firms depends on that not being the case and sloughing those costs off on the drivers.  As of today that looks increasingly tenuous -- and likely to fail, at least in the United States.

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It's not really a phone, per-se.  It's an operating system philosophy change, and a simple one to implement.

Let's take the typical "smartphone" today.  It has many "apps" on it that the user has loaded to do various things -- look up movie times, play games, communicate via various forms (e.g. Skype) and more.  All of these apps request "permissions" from the operating system to do various things -- read the phone's state (so it doesn't interrupt you when you're talking), get location data and so on.

Now here's the problem -- there's little or no granularity offered to the user, and never any based on the device's state.  This means that when you load the "Words with Friends" app and it wants your location data in its permission list you either take it or leave it, and unknown to you unless you look it leaves a piece running all the time and sends that data whether you're playing or not.

Some versions of Android and IOS will allow you to shut off permissions; this may break some functions but that's a choice you get to make.  Others (most-notably Android) do not.

But none of them are state-sensitive.

So here's what I propose:

  • You should be able to shut off permissions individually should you so choose.  BlackBerry and IOS already permit this for their apps; BlackBerry can trivially do so for Android apps as well since it controls the Android runtime it uses.

  • You should be able to define a context in which permissions are valid.  This is the innovation: Permissions should be able to be declared valid only when the device is awake, being used and the app in question has focus (that is it is being displayed to the user.)  In addition all apps must have two further permissions added as switchable -- access to the Internet over WiFi and over Cellular.  The "stateful" capability is implemented by making the permission switch three-state; off, on-while-focused and on always.  On-while focused prevents access to a given permission while the phone is in your pocket and dark or while you're doing something else.  You can thus prevent all data transmission from or to a given app in that state, only location data from being collected, only the ability to access files and similar.  Shutting off such access for "non-focused" apps will also produce a major improvement in battery life!

  • You should be able to load via a trivial means (e.g. a flat text file listing IP addresses and/or domain names, one per line) a list of entries for /etc/hosts with each having 127.0.0.1 automatically listed as their destination.  This blackballs them from being able to be contacted via the device's internet connection, thereby giving you an airtight ad blocker.  This provision instantly and trivially goes far beyond "do not track" in that it makes access to any host in that list flatly impossible and therefore ads from said addresses do not work.

The last of these is already done by various apps on "Rooted" Android devices (and, I assume, jailbroken IOS ones.)

Apple and Google will never implement the latter two and the reason is simple -- both of them are utterly married at the hip to app-based advertising and allowing either will impair that model.

But BlackBerry is not married in this fashion and yet BlackBerry handsets can run most, but not all, Android apps!

Then you market the hell out of the capability and its privacy implication, which would be trivial to do.

Let me also put a fork in one of the "ideas" that's running around -- that BlackBerry is considering and should move forward with Android on one or more handsets.  Before I bought a BB10 handset (my Z10) in that a number of years ago and I owned three Android handsets sequentially -- a Samsung (T-Mobile) Vibrant, a Motorola Triumph and a Samsung SGS-II.  All three were phones that I was unwilling to own and use without rooting and modifying the software on them since all three were ridiculous in terms of usability problems, stability problems (that is, they crashed a lot), security problems and more.  If BlackBerry does such a thing I presume they will make an actually-secure device that will preclude me from rooting and fixing it, which means all of the Android warts will be things I have to live with -- which I will refuse to do.  It is of note that BB10 handsets have yet to be violated (rooted, have unauthorized firmware loaded on them that actually executes, etc) over the space of more than two years, and I can tell you that I've put a decent effort into it -- and failed too.  This would be a backward move by BlackBerry rather than a forward one as it would add further privacy violations to those already existing: No thanks.

In my opinion that's the wrong direction for both the company and the world of smartphones in general.

The right direction is to play to the strengths that BB10 and BlackBerry has -- not the competitor's weaknesses!

There is a sea change starting among people with all the data theft going on.  It is beginning -- just beginning -- to matter to the average person.  Will the relatively minor impairment in BB10 app availability not only be tolerated but EMBRACED if you can be free of online advertising on your handset AND control what sort of data advertisers and others get about where you are and what you do?

Yes, I believe it will -- by a landslide.

PS: This is a few hours worth of work to implement too.... making it one of the cheapest means of providing a monstrous differentiation in product that could be implemented and pushed within days or weeks.  You're welcome Mr. Chen.

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2015-06-12 06:20 by Karl Denninger
in Company Specific , 120 references
 

Seriously, BlackBerry.

You finally are slated to release a device that I have been unable to buy and have since the original T-Mobile MDA, my literal first smartphone.  That's a slider; a phone with a full landscape-mode screen and a slide-out keyboard.  A form-factor that gives up a bit in thickness but wins huge in other ways, including having enough room for a nice-sized battery.  A form-factor that nobody else makes in the market right now.  A form-factor that I want to buy, but I want it with BB10 OS on it, not Android!

Two sources said that by launching an Android-based device of its own, BlackBerry would be sending a signal to skeptics that it is confident that the BES12 system can not only manage, but also secure smartphones and tablets powered by rival operating systems.

BlackBerry will probably use Android on an upcoming slider device that is likely to be released this autumn, two sources said. The slider will combine a touch screen with a physical keyboard that users can use if they prefer.

I like being able to run Android apps on my Passport.  Yes, not all of them work, and I wish they would, but the Hub, the integrated security such as auto-connect VPN service, the functional email client (not Google's piece of crap) and more are all unique features that make the Passport (and my Z10) devices that get things done and make my life more-productive.

Further, I do not want Google to have all my data and what Android has become is a tracking device that Google uses; there is no such thing as "free" and Android's price is your privacy.

I get the App-Gap problem, although it doesn't impact me to a degree that bothers me.  Simply removing the intentional cockblock that BlackBerry has put into their OS that prohibits sideloading the Play components would make possible bypassing that for those people who want to, and opening the app permission settings to easy modification for Android apps (I can do it now with an app that I loaded; there's no reason not to make it possible off the main permission screen) would also make possible shutting down the incessant giving up of personal data (including location data!) to apps that want it but don't actually need it.

In fact, that's one of the big problems with so-called "smart devices" today -- and one where BlackBerry could and should differentiate itself.  Ad-blocking, for example, is something BlackBerry could and should support -- with a user API.  Right now you have to root Android to do it and Apple is talking about allowing it in the next major IOS release for Safari.

But doing it at the operating system is quite-easy; all you need to do is allow user modification of the "hosts" file.  To maintain security only honor entries for 127.0.0.1 (effectively a null connection) in that file, but expose an API so it can be modified by the user.

Now you have an ad blocking system that is very simple, easy to use, able to be customized by each user as they wish and yet it blocks not only ads in the browser it also blocks them in all the apps you load!

BlackBerry needs to trade on its uniques, not on the samo-samo of the rest of the world.  This is one of those uniques that would be utterly trivial to implement.

Please BlackBerry, make the slider and don't cripple it to the degree that I won't want one.  

And yes, if you put Android on it, I probably won't buy it.

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