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As coronavirus outbreak grinds on, e-commerce operations buckle under increased pressure
Digital advertising and online retail are grappling to handle the logistical bottlenecks and product shortages caused by the coronavirus.
As cases of the virus spread, the commercial impact could be just as far-reaching, causing profit warnings, store closures and credit defaults among companies that rely heavily on China’s vast consumption power. Some companies, however, appear well-positioned to benefit from the shifts on consumer behavior caused by the outbreak.
When the outbreak happened in China, it inadvertently created a boon for e-commerce as shoppers stuck at home bought their goods online.
Sales of fresh food on JD.com, which is partly-owned by Tencent, jumped 215% to almost 15,000 tonnes during the 10-day period to Feb. 2.
The outbreak has also triggered a spike in online sales of provisional supplies from those would-be shoppers concerned about keeping their families safe from a viral outbreak, including brands selling immune-boosting products. Online sales of disinfectant produced by the Reckitt Benckiser-owned Dettol rose 643% year-on-year between February 10 and February 13 on the Chinese e-commerce business Suning.com, for example.
“We predict it will be highly dependent on the type of product categories the company manufacturers, such as toys, baby-care items, personal care, household cleaning, which are often disproportionately manufactured in China,” said Jonathan Treiber, CEO of e-commerce-focused ad tech vendor RevTrax. “This compares to the huge swathe of food-based consumer goods manufacturers, which typically manufacture their products within a broader set of geographies.”
But the surge in online orders has also heaped pressure on businesses to fulfill them. In some instances, this pressure is getting too much for businesses and threatens to upend their e-commerce operations.
Executives from Procter & Gamble told shareholders last week that the coronavirus was putting pressure on their e-commerce business. As sales from stores that sell their products slide, with many either closed or open for shorter periods of time, the demand has moved online, said the CPG company’s chief financial officer Jon Moeller at a Consumer Analyst Group of New York event. While the demand for products is there, the supply of them is limited, he said.
“The operating challenges change with the hour, and of course the path of the virus is unknown, making it very difficult to provide precise estimates of impact,” said Moeller.
Transport routes have been severely disrupted as a result of areas across China being quarantined, while staff employed at warehouses to fulfill orders have been unable to work.
With the coronavirus scaring some advertisers from buying ads in parts of China, there’s less competition for advertisers still committed to running campaigns on platforms like WeChat. Several clients for digital agency Roast have elected to pause or significantly reduce online media spend in the impacted regions.
Automotive businesses have jumped on the opportunity. Mercedez Benz is running a campaign on the WeChat app that lets people see a 360-degree interior view of its GLB SUV. Meanwhile, Chinese automotive manufacturer Geely has recently launched a service that lets customers buy its cars online and get them delivered to their homes.
The disruption has even taken its toll on China’s most valuable company. Alibaba CEO Daniel Zhang told investors earlier this month to expect a slump in sales from its core e-commerce business due to the coronavirus outbreak preventing its employees from processing and delivering orders.
The coronavirus isn’t the first time these sorts of disruptions have hit retailers and their customers. Long before this outbreak, the SARS virus in 2003 was a turning point for both Alibaba and Tencent. At the time, e-commerce was relatively primitive but as the outbreak left many Chinese suppliers with few brick-and-mortar stores to sell their goods, many turned to the online platforms that hadn’t been forced to close.
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Ratchet & Clank: Rift Apart is one of those games that veteran Sony console fans are looking forward to. The good news is that Insomniac Games has spared no effort to keep its fans informed, as it has been making news and new trailers available with good frequency since last year, something that was repeated recently on Monday morning (26). In addition, the company confirmed a new State of Play (Sony digital event) title this Thursday (29th) at 6 pm GMT.
This time, we have a very interesting gameplay trailer that officially presents the name of the mysterious character that had already been introduced in other ads. As we can see in the video, the new protagonist is called Rivet and she is a resistance fighter who came from another dimension, where all her life is led by a tyrant emperor, who is known as Nefarious.
Trailer in English
In the gameplay excerpts, you can already understand that Rivet will be essential in the new adventure of Ratchet & Clank and will have as many moments of action as of platform, something that really couldn’t be out of focus in a game of this franchise. Of course, we will still have a lot of screen time with our old protagonists, which should please the most nostalgic players.
It is worth remembering that there is also not much left for the launch of the title, which arrives exclusively on PS5 already on June 11 this year. If you want to know even more news about the game, Sony will give it full focus at the next State of Play (the company’s digital event), which takes place this week, on April 29.
There will be at least 15 minutes of unprecedented gameplay that you can check on Sony’s official channel on Twitch or YouTube. Comment below if you are also excited for this brand new title in the Ratchet & Clank franchise!
Ratchet & Clank: Rift Apart arrives exclusively on PS5 on June 11, 2021.

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There has been a strong wave of digitization spreading globally. Consumers from all across the world, are shifting from copper based to fiber based internet connectivity, a medium that offers faster, reliable speeds that fulfill their appetite of reliability and scalability. This brings the idea of Fiber to the Home (FTTH) internet services to the forefront.
In Pakistan, recent statistics by PTA reveal that the broadband penetration rate is rather low, with just 51.8 million subscribers (25.58% of the population) taking advantage of it. Furthermore only 0.11% (58,688) of these subscribers are using FTTH services so far. There’s no doubt that Pakistani consumers need a reliable FTTH service provider that they can count on.
A high-speed internet infrastructure, backed by FTTH, is the need of the hour in Pakistan, because of these reasons:
- For Pakistan’s budding startup and entrepreneurial culture to flourish,
- for promoting financial inclusion initiatives in all corners of the country,
- for powering the next-generation of social development tools that can make a huge difference in people’s lives.
StormFiber is a leading provider of high-speed uninterrupted FTTH (fiber-to-the-home) internet services in Karachi, Lahore, and Faisalabad. It offers premium Triple Play Services (Internet, TV & Phone) backed by Fiber Optics. After expanding its coverage in three major cities, the ISP finally launched its services in Peshawar, KPK.
StormFiber recently held an event, signaling the arrival of its triple play services in Peshawar, which include internet, TV, and phone services with every package.
StormFiber believes that its expansion to KPK’s provincial capital can help it power the next startups and services given the province’s focus on empowering entrepreneurs and startups at the local level.
The company is hoping to bridge the gaps between the citizens of Pakistan and the rest of the world through the provision of high-speed and high-quality internet services that are unmatched in this part of the world. To accomplish this, StormFiber will be delivering consistent internet services, along with HD television and crystal-clear voice services, to enhance the lifestyle of the end customers.
Currently StormFiber is bringing its services to these key areas in Peshawar, with many more areas under development and to be announced at a later date:
- Peshawar Cantt
- University town
- Shami colony
- Hayatabad Phase 5
As for packages, StormFiber is offering the following plans, complete with voice, TV and internet services:
- 10 Mbps
- 20 Mbps
- 30 Mbps
StormFiber is among the fastest growing private ISP networks of Pakistan with its services currently online in 4 cities i.e. Karachi, Lahore, Faisalabad, and now Peshawar. The company is planning to bring its services to other major Pakistani cities as well.
StormFiber Launch Event in Peshawar
Qaiser Alam, Secretary Information and Public Relations, KP attended the launch event of StormFiber held on March 9, 2018 at Pearl Continental, Peshawar. Mr. Alam was joined by Managing Director StormFiber Fawad Yousuf Laher, Chief Executive Officer Cyber Internet Services Pvt. Ltd Danish A.Lakhani & Chief Operating Officer Maroof Ali Shahani.
Mr. Alam commended StormFiber’s efforts to empower the people of Pakistan with its internet services. He stressed the need for such services to be deployed nationwide and highlighted the benefits high speed internet brings with it to every business and economic field consequently, contributing to the betterment of the economy of Pakistan.
CEO Cybernet, Mr. Danish A. Lakhani, shared his insights on the unreasonably high regulatory duties that have been levied on the import of fiber optic cables in Pakistan.
He observed that the 20% additional RD introduced in late 2017 is on top of existing 20% customs duty, 17% sales tax, 3% Advance Tax and 5.5% income tax. The net impact on the import of fiber optic cable, given that this is an extremely heavy item and costly to transport, is well over 100%.
Mr. Lakhani further stated that high duties will make many broadband projects in KPK and other provinces simply unviable. He advised the provincial government to work with the Federal Government to reduce these oppressive duties – and instead of short term revenue gains, come up with a long-term vision to increase fiber based broadband penetration across Pakistan which stands at an abysmally low 0.11%.
He appreciated how StormFiber has been welcomed in KP and assured the company’s support and cooperation with the government at all levels for the development of the IT sector in KP.
StormFiber MD, Fawad Yousuf Laher said:
“We are extremely proud of launching our services in the city of Peshawar. Peshawar has made phenomenal strides in its growth of becoming a modern bustling city. Launching here was the logical step which is consequently in line with our vision to connect the people of Pakistan with the outside world.”
He further stated that,
“StormFiber not only seeks to provide internet services, but raises the bar by giving people access to high speed internet along with superior entertainment services using its robust and reliable FTTH network.”


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Where next for the FTSE?
It is three years to the day since the FTSE 100 closed at 3,287 – its lowest point following the dotcom crash.
While the tumble sent many investors fleeing from equities, the brave few took advantage of bargain prices and snapped up cheap shares.
The index has grown by 80% since 12 March 2003 - just days before the first bombs started to rain down on Baghdad at the start of the second Iraq war - with growth of 24%, 10% and 16.9% in the three years that followed.
But as the market edges closer to the 6,000 barrier, what is in store for the FTSE 100? We weigh the views from both sides.
HOW THE BULLS SEE IT
Everyone's buying British
There is lots of liquidity in the markets and plenty of cash flying about for takeovers and mergers. This year has mirrored 2005 in that there has been a great deal of activity to keep M&A lawyers in work, including the takeovers of Pilkington Glass and P&O Ports. M&As not only typically boost the share prices of the companies involved, but also suggest confidence in the market.
James Ridgewell, manager of New Star's UK Special Situations Fund, is buoyed by the fact that it is rivals taking over each other, rather than venture capitalists buying companies. He says: 'Venture capitalists buy a company when they think it is cheap. A company buys a rival company when it thinks the market it operates in is strong.'
Share buyback schemes
Many of the leading companies have launched share buyback schemes, including ITV, Shell, Vodafone and BskyB. Companies buy back their own shares as a way of using strong cashflow to boost earnings per share (eps). Assuming that the p/e (price/earnings) ratio stays the same, then a higher eps number will mean a higher share price - so shareholders benefit.
Shares historically cheap
When measured in terms of price/earnings ratio, shares don't look expensive on a historical basis. According to HSBC, the p/e ratio stands at 12.8 today, compared to 14.4 on the low. At this level shares still look cheap and suggest there is still some growth potential.
Strong corporate earnings
The recent run of record profit announcements by the leading banks shows corporate earnings are still healthy wheich can only be good news for the markets. Around 20% of the FTSE is made up of oil stocks and these have also been reporting terrific figures.
The Dow Jones recovered from the dotcom crash more quickly than the FTSE and the UK market still lags behind. But it's not just the US market; the FTSE Eurofirst 300 index has climbed 96.7% since March 2003, while the Nikkei 225 average is up 97.2%.
Simon Brown, a chartist with Quantigma, says: 'The FTSE has suffered badly when compared to other markets. It has taken longer to come back, but I'm sure it will break the 7,000 barrier by the end of the year or the end of first quarter next year.'
HOW THE BEARS SEE IT
Oil is a major manufacturing cost and as the price of oil has been soaring over the past 12 months, so have manufacturing costs. However, High Street inflation has remained at around 2%, which suggests these increased costs aren't being passed on to consumers.
Carl Stick, manager of Rathbone's Special Situation Fund, says: 'It's very difficult to pass these costs on to consumers, but companies haven't been reporting difficulties with this. However, I think we are going to see last year's input costs reflected in this year's results.'
Spending in shops is slowing
Consumers are feeling the squeeze. Inflation-busting energy hikes and increases to council tax bills have put family budgets under pressure. Strong consumer spending has underpinned economic growth over the past two years, but there is evidence that this is drying up. Figures produced by the British Retail Consortium showed that sales fell by 0.3% in February.
Investments more risky
Most mergers and acquisitions have so far progressed smoothly, but Stick feels a couple of stutters could put the frighteners on the industry. He says: 'We are seeing quite a few deals going through, which has buoyed the market. I am just wondering whether we might see a fall back if if we don't see deals happening successfully.'
Events, dear boy
The global political situation is still delicate, especially in the Middle East. Iraq remains a boil that can't be lanced and the situation surrounding Iran remains tense. The lead-up to the Iraq War proves stock markets don't like political uncertainty and any change in circumstances could have an effect.
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Warren Buffett’s Berkshire Hathaway continues to trim its long position in BYD, China’s biggest domestic electric vehicle maker and Tesla’s main rival, after holding it for 14 years.
The legendary conglomerate of investors sold an additional 3.2 million shares of BYD listed in Hong Kong last week, reducing its stake to 15.99%, a Hong Kong stock exchange filing showed on Tuesday.
The sale was valued at approximately $80 million.
It is BYD’s fifth-biggest Berkshire stock sale since August, according to public records. The pace of sales has picked up significantly this month, with three transactions so far in November.
Berkshire did not disclose the reason for the sales. The company did not immediately respond to a request for comment from CNN Business 🇧🇷
Before the first deal was unveiled in August, Berkshire owned 225 million BYD shares for 14 years.
The American conglomerate first bought BYD shares at an average of HK$8 (US$1.02) each in 2008, with an investment of US$230 million.
By that time, BYD stock had fallen to a record low during the global financial crisis.
But the stock has rebounded sharply since then. In 2020, Hong Kong-listed BYD shares soared 437% as the company developed its “Blade Battery” and China’s EV market exploded.
The company says the blade-shaped battery is thinner and longer than conventional lithium iron cells. As a result, you can maximize the use of available battery space. It’s also less likely to catch fire even when it’s severely damaged, according to BYD.
BYD has already overtaken Tesla to become China’s top-selling EV brand. Last month, it sold 103,157 pure electric vehicles in China. By comparison, Tesla has delivered 71,704 vehicles from its factory in China, according to data from the China Passenger Car Association.
At the end of June, Hong Kong-listed BYD shares hit a record high of HK$331.4 (US$42). That was about 41 times the price Berkshire paid 14 years ago.
Since the summer, Berkshire has been on a BYD selling spree. Based on the latest stock exchange listing, the conglomerate has divested more than 49 million BYD shares in the last four months.
It’s unclear how much Berkshire profited from the sale. But the average price of each share in the five deals reported by the company since August has been around HK$205 (US$26).
Using that average, Berkshire could have made a net profit of $1.2 billion by divesting the 49 million shares, assuming a purchase price of HK$8, according to a calculation by CNN Business 🇧🇷
The conglomerate’s current stake in BYD is $3.9 billion, based on the latest share price.
Source: CNN Brasil


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Big Tent will focus on elevating The Biggest Loser into a multi-faceted franchise that symbolizes healthy living, creating solutions for everything from nutrition to fitness. The company plans to initially concentrate on developing licensing partnerships with category leaders across key product segments including food and nutrition, fitness products and publishing, and will also seek out like-minded brands for promotional partnerships and event integrations.
“The Biggest Loser is a proven brand with longevity in the marketplace. Our vision is to carry this success forward as we position the franchise as a long-term lifestyle solution for consumers looking for something that combines fitness and nutrition,” says Rich Collins, chief executive officer, Big Tent Entertainment.
The brand already has a number of successful extensions, including an online destination website, a
New York Times
best-selling book series, a best-selling fitness DVD series, branded RunWalk events and fitness resorts with four locations nationwide.
“The Biggest Loser has inspired and empowered millions of people over the past 14 seasons to take charge of their health,” says Kim Niemi, senior vice president, NBCUniversal Television Consumer Products. “We are excited to partner with Big Tent Entertainment to grow the franchise by creating more opportunity and greater accessibility for the general public to achieve their personal health and fitness goals.”
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McDonald’s announced the ouster of CEO Steve Easterbook Sunday over an inappropriate relationship with an employee. The company’s board determined that Easterbrook “violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee,” it announced. The CEO switchup came less than two weeks after McDonald’s reported its first quarterly profit miss in two years, with a 4 percent drop compared to a year earlier.
GlaxoSmithKline is recalling the popular heartburn medicine Zantac in all markets, days after the US Food and Drug Administration (FDA) found “unacceptable” levels of probable cancer-causing impurity in the drug. Zantac, also sold generically as ranitidine, is the latest drug in which cancer-causing impurities have been found. Regulators have been recalling some blood pressure and heart failure medicines since last year.
VW has rejected a judge’s plea to settle a mass lawsuit in Germany over the diesel emissions scandal. A lawsuit involving about 450,000 owners of diesel Volkswagen cars began on Monday. While the company settled in the US, where emissions rules are stricter, it is resisting settling with its domestic customers. The scandal has already cost VW €30bn (£26.6bn) worldwide.
Forever 21, the fast fashion clothing chain anchoring shopping malls across the United States, filed for bankruptcy protection on Sunday, reporting more than $1 billion in liabilities. The New York Times reported that the company would end its operations in 40 countries, including Canada and Japan, and could close as many as 350 of its more than 800 stores worldwide.
Shares of Peloton Interactive Inc, the fitness startup known for on-demand workout programs on its exercise bikes, slid as much as 7% in their market debut on Thursday, indicating that investors are becoming increasingly skeptical of money-losing startups. The New York-based company’s shares opened at $27.00, down from its initial public offering price of $29.00 that raised about $1.16 billion at a valuation of $8.1 billion.
Google has won a court battle that could have forced it to take requests from around the world to wipe personal information from its search results. The tech giant was braced for a potentially landmark ruling from the EU Court of Justice (ECJ), which could have decided to expand the remit of the so-called “right to be forgotten” law beyond Europe.
Fifty U.S. states and territories, led by Texas, announced an investigation into Google’s “potential monopolistic behavior.” The Monday announcement closely followed one from a separate group of states Friday that disclosed an investigation into Facebook’s market dominance. The two probes widen the antitrust scrutiny of big tech companies beyond sweeping federal and congressional investigations and enforcement action by European regulators.
US toy maker Hasbro will acquire Peppa Pig owner Entertainment One for around £3.3bn ($4bn), the firms said in a statement. Hasbro said the deal would expand its entertainment and “family-oriented storytelling” portfolio. UK-listed Entertainment One owns other preschool titles including PJ Masks. The American toy giant is behind a diverse range of titles including the My Little Pony and Transformers franchises, as well as the Monopoly board game and Play-Doh.
Apple has agreed to buy the majority of Intel’s smartphone modem division, the companies announced on Thursday. Apple currently purchases Intel modems for iPhones, which allow it to connect to networks operated by carriers such as Verizon and AT&T. But in April, Intel announced that it planned to leave the smartphone modem market because Intel had “no clear path to profitability and positive returns.
The US justice department is opening a broad antitrust review into major technology firms, as criticism over the companies’ growing reach and power heats up. The investigation will focus on growing complaints that the companies are unlawfully stifling competition. “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” added the assistant attorney general Makan Delrahim, of the antitrust division.


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Google talks up Shopping Graph at I/O conference
Google has announced several expansions to its eCommerce offering that should get brands and marketers pretty interested this week at its annual I/O Conference.
One of those is the growth of its Shopify partnership, a few increased ways to shop and the introduction of the Google Shopping Graph.
One big Shopify announcement
Now all 1.7 million merchants who sell on Shopify will have discovery across Search, YouTube, Shopping and Images turbocharged. Everyone who sells on the platform will also be eligible for Google's free listing – a handy boost in the penny-pinching COVID era.
The expanded Shopify integration will allow merchants to sign up quickly and have their products appear across the whole of the Google eco-system in places like Lens, Maps and Images.
How could you say no?
The latest Shopify update builds upon the Google Shopping foundations laid down last year.
Google Shopping Foundations
In 2020, Google offered a major boost for organisations struggling with COVID-19 by opening its Shopping search results to unpaid, organic listings.
The Google Shopping tab results now consists primarily of free product listings, helping merchants better connect with consumers, regardless of whether they advertise on Google.
Before last year's announcement, Google Shopping was only available as a paid solution to advertisers and widely regarded as the gold standard of search advertising.
Just as Google doesn't charge sites to be part of the Google Search index, listings for participating retailers are eligible to appear in these results at no cost to them. Paid listings continue to appear in ad slots and operate in essentially the same way as before.
Since last year's developments, Google has seen 80% more merchants selling their wares via the platform, feeding into the wider Google Shopping Graph.
"The Shopping Graph is a dynamic, AI-enhanced model that understands a constantly-changing set of products, sellers, brands, reviews and most importantly, the product information and inventory data we receive from brands and retailers directly, as well as how those attributes relate to one another."
The Shopping Graph, formally announced this week, sounds similar, in principle, to the Knowledge Graph that underpins certain types of search results.
For example, search "Sherminator" on desktop (why not? It's Friday afternoon), and you will see an infobox appear on the right-hand-side containing information/images/links on the legendary American Pie character, with the information gathered from a variety of sources.
Google Shopping Graph
"With people shopping across Google more than a billion times a day, the Shopping Graph makes those sessions more helpful by connecting people with over 24 billion listings from millions of merchants across the web. It works in real-time so people can discover and shop for products that are available right now."
The Shopping Graph has vast potential within the retail sector since its deep understanding of the products for sale online means that Google can help shoppers find stuff to buy in innovative ways. One such method is within images.
With Google Lens, for example, you can take a screenshot, open it within Google Photos and find the option that says 'search inside screenshot.'
Once that's been done, Google Lens will find the products it can identify and show you where they can be bought.
On top of this, new Cart Reminders will also now show previews of products that users have left in their shopping carts across various retailers.
"We're introducing a new feature in Chrome that works locally on your device to let you see your open carts when you open a new tab. So when you step away or browse on other sites, you can pick up your shopping right where you left off."
Spare a thought for poor shopaholics… it sounds like the Shopping Graph isn't taking any prisoners.


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Chinese e-commerce huge Pinduoduo has been guiding its rivals Alibaba and JD.com when it comes to worldwide enlargement. Now Pinduoduo has released a U.S. e-commerce internet site identified as Temu.
Rafael Henrique | Sopa Images | Lightrocket | Getty Photographs
Pinduoduo released its U.S. on the internet shopping web-site as the Chinese e-commerce huge can make its to start with main force overseas.
The website called Temu, which went on-line Thursday, lists products across a selection of categories together with outfits, jewelry, pet materials and home and garden, and could mark a new obstacle to U.S. e-commerce leader Amazon.
Pinduoduo did not react to a ask for for comment when contacted by CNBC.
Temu marks Pinduoduo’s biggest thrust overseas nevertheless as the domestic Chinese overall economy faces a selection of problems from a resurgence of Covid-19 to an energy crunch. That has hurt financial expansion in China and dampened shopper sentiment.
China’s biggest technological innovation firms from Tencent to Pinduoduo’s e-commerce rivals Alibaba and JD.com keep on to go after global markets. Pinduoduo, a much young enterprise than Alibaba and JD.com, possessing only been launched in 2015, is at the rear of its rivals when it arrives to the abroad push.
Alibaba took a managing stake in Singapore-based Southeast Asian e-commerce site Lazada in 2016 and has considering that invested money in the small business to expand its existence in the location. Alibaba also has a independent site known as AliExpress that solutions marketplaces like Europe and the U.S.
JD.com meanwhile operates Joybuy.com for worldwide buyers.
Pinduoduo’s Temu is a cross-border e-commerce internet site with most solutions likely to arrive from overseas, specially China. Temu explained transport to the U.S. could acquire 7-15 company days.
“It’s critical to retain in intellect that you may well see for a longer period shipping times than you happen to be made use of to from other e-commerce web-sites. This is due to the reality that products that might be coming from a further region or require to be bundled or packaged with other comparable-sized merchandise,” the site says on the shipping and delivery facts page.
Shipping is totally free for orders around $49.
Pinduoduo could experience some problems in cracking the U.S. market. Initial it will want to construct model status as opposed to the likes of Amazon. And it could also endure from its comparatively extended shipping and delivery instances versus the same-day or subsequent-day deliveries Amazon provides by way of its Prime membership providers.
Temu’s “key problems will be cultivating rely on and awareness amongst customers,” Jacob Cooke, CEO of WPIC, an e-commerce tech and internet marketing firm that assists overseas brand names offer in China, informed CNBC.
There are at this time also some types that have really few items. For example, the men’s wristwatch category experienced just two merchandise shown.
Nevertheless, Temu could contend on rate. On Thursday, Temu experienced a 20% discounted offer sitewide. And items appear to be rather low cost. For illustration, the women’s dresses stated had been largely less than $20.
Temu could also have an edge owing to “present interactions with very low-cost manufacturers in China that perhaps have not expanded to the U.S. yet,” Cooke reported.
Pinduoduo has developed speedily in its seven-12 months record to turn into a person of China’s most significant e-commerce firms. The firm has tended to concentrate on decreased-income buyers by featuring seriously discounted merchandise. And it has been focusing on bringing agricultural items onto its system to differentiate from rivals. The firm is worth all-around $87 billion.


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The most important announcement out of XO18 happens to be the acquisition of Obsidian.
During Microsoft’s XO18, “Celebration of all things Xbox” we got a few key announcements that caught our attention, Microsoft is staying true to it’s commitment to gaming despite still being clearly second favourite to Sony when it comes to the console war.
One of Microsoft’s biggest shortcomings over the past few years has been the lack of exclusive games which can be attributed to the fact that Sony just has way more studios. While the likes of Forza, Gears of War and Halo are no doubt some of the best franchises in gaming, a bit of variety beyond indie’s and timed exclusivity was severely missing from the Xbox store. Which is why Microsoft’s most important announcement out of XO18 happens to be the acquisition of Obsidian, the studio behind Fallout New Vegas and Pillars of Eternity. They join the growing list of studios Microsoft freshly added at E3 with Playground Games, Undead Labs, Ninja Theory and Compulsion Games. Hopefully, we can hear something leading up to E3 2019 that gets fans really excited.
Crackdown 3 has been talked about for quite a while now and after a bunch of delays, it’s finally hitting stores on February 15. Not only will the game launch with it’s singleplayer campaign but a multiplayer mode as well that pits folks in a 5v5. What’s interesting is that Microsoft is really committed to making Xbox Game pass a default +1 for all gamers with Crackdown launching day 1 for Xbox Game Pass owners, something similar to what EA is trying with Origin Access Premier. Looks like subscriptions are here to stay and that’s not necessarily a bad thing.
Speaking of Xbox Game Pass games, one of Microsoft’s most underwhelming titles this year is getting some new free content; I’m of course talking about Sea of Thieves. Set for early 2019, the Arena is a brand new PvP multiplayer mode that pits multiple pirate crews against each other in quest for more treasure. Loot islands, fight rival crews and become the greatest pirates of all time. My only concern is, could it be too little too late for what was supposed to be one of the best games of this year.


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Protectionism is all the rage in the United States nowadays, fueled by xenophobia from nativists (because of hot topic of immigration, especially from Central America), isolationists (partially because of foreign policy fiascoes like Iraq), and, most of all, anti-free-traders (anti-China; those seeking an enemy to blame for the loss of US manufacturing jobs).
America cannot stick its head in the sand just because of some foreign policy screw-ups, a trade deficit and loss of blue-collar jobs to places like China, and the influx of immigrants — many to do jobs Americans probably wouldn't. Pretending a problem doesn't exist or enacting a quick 'fix' isn't the answer. Politically, the Republicans are more anti-immigration; the Democrats more protectionist. But, as many financial experts warn, protectionism or xenophobia is not the answer to America's economic woes. Globalization isn't something new, and don't expect it to go away either.
Southern U.S. states should improve workers' skills to compete in the global economy rather than look to trade restrictions for protection, three Federal Reserve bank presidents said.
Barriers to commerce can backfire and hurt the economy as overseas partners retaliate by imposing their own restrictions against U.S.-made goods, the Fed chiefs from Dallas, St. Louis and Atlanta told a meeting of the Southern Governors' Association in Biloxi, Mississippi, today. The Fed presidents didn't discuss the current economic outlook or monetary policy.
``The answer is not protectionism,'' Richard Fisher of the Fed Bank of Dallas said in his speech. ``Rather than labor fruitlessly to protect your constituents from foreign competition, you and your legislatures must prepare them for it.''
Fed officials have been touting the benefits of free trade as members of Congress call for restrictions on imports from China, accusing the world's fastest-growing major economy of keeping its currency artificially cheap to benefit exporters.
The officials' comments don't just apply to the American south, but the whole of America and numerous other developed countries seeing the effects of globalization on the industrial workforce, and the economy in general.
The importance of people of developed countries to learn
As China and other emerging economies are using the mostly-positive forces of globalization to scoop up manufacturing jobs, America and other developed countries are in more need as ever for educated, skilled workers. If jobs are being lost, more need to be filled or created. Since many people cannot afford or achieve a high-level college education, there should be at least some government-run instructions.
More and more people seem to not be prepared for the real world. And as economic globalization increases the US and others are in need of innovative thinkers and service industry workers. Education has to start from childhood and continue through adulthood — from primary school to job training.
For a developed economy like America's, tariffs are counter-productive. They hurt the consumers because they raise prices, and lower competition and quality. They do, however, help the businesses they affect; but, in general, strong tariffs are not a good thing. In addition they are almost always politically-motivated (special interests) and are very rarely used appropriately. Ironically the pro-business politicians in the United States that used to support tariffs now favor their own brand of 'free trade' (e.g. Bush), like CAFTA, but bend the rules now and then.
Fair is (often) free
Note: Just because I believe in free trade, that does not mean I am against regulation, including in the case of fair trade. The exploitation of the poor by the rich is not what the free market is about. Sadly, that's what it has become. On economic issues I am somewhere to the left of the centrist weekly The Economist. Protectionism and idiotic tariffs are not the equivalent to fair trade; the protection of third world workers sorting through our trash is.


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Armory appoints Jim Douglas as CEO
Armory announced that Jim Douglas will succeed Daniel R. Odio (DROdio) as chief executive. DROdio, who co-founded Armory in 2016 as CEO and helped build the company into a global leader in digital transformation, will transition to chairman of the board. Douglas most recently served as president and CEO of Wind River.
“Armory is in such a unique position in the software delivery world, with amazing customers and great investors. With DROdio at the helm, Armory has become the default leader in digital transformation,” said Douglas. “I’m looking forward to building on the work DROdio began as CEO, and working with him in his role as chairman of the board.”
Douglas brings more than 30 years of executive management experience to Armory, including a strong go-to-market background and experience scaling companies in the DevOps space. Douglas has honed his expertise not only through executive positions at companies such as CodeGear, ReShape, Tality, and Cadence Design Systems, but also as an advisor to Suometry.
From his product leadership role in taking Cadence from $50 million to $1.5 billion in revenue, to transforming Wind River as CEO from a flat-growth company into an at-scale growth story with revenue growing to half a billion dollars and a footprint of 1,200 employees globally, his entire career has been focused on growth.
During his tenure as CEO, DROdio led Armory through years of rapid growth, helping define a new category for Continuous Delivery in the Software Development Lifecycle. Under DROdio’s leadership, Armory has raised $83 million and become the premier software delivery platform to unlock innovation in Global 2000 enterprises by making software delivery reliable, scalable and safe.
“When we started Armory in my garage and went through Y Combinator almost exactly five years ago, I knew we were building a very special company due to the size of the untapped market opportunity,” said DROdio. “Today, Armory has deep expertise in software delivery, world-class customers and strong backing from stellar investors. I’m incredibly proud of our progress, but even more proud of the people, our Armory Crew, that have dedicated their lives over the past five years to be a part of this shared journey to unlock innovation for the world by making software delivery reliable, scalable and safe. With Jim as CEO, Margaret Francis as COO, and Ben Mappen, co-founder and SVP of Strategic Partnerships, Armory is well-positioned to execute on Armory’s next stage of growth.”
“I have watched Armory transition over the last five years into the company it is today, poised for continued growth with a strong team in place to make that happen,” said Mappen. “DROdio helped create Armory from scratch and having his experience and expertise on the board, while having Jim take over the day-to-day running of the company, will only make us stronger. I’m as excited as ever about Armory’s future–given the strength of our executive team, our entire Armory crew, and our partnerships with AWS and others–we are as well positioned as ever to help our customers unlock innovation and value through software.”


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The proportion of small and medium-sized enterprises (SMEs) utilizing open banking performance is larger than that within the shopper market, and the hole is rising, analysis has discovered.
Open Banking Restricted (OBL), which reported in February that seven million customers and SMEs have been utilizing open banking merchandise, has revealed that 16% of SMEs now use open banking, in contrast with 11% of customers.
In its newest report, OBL mentioned 75,000 SMEs already use open banking, many as a part of their accounting software program to import transaction information, and are additionally making the most of the power to view multiple checking account in the identical place, often called account info providers (AIS). A complete of 79% of SMEs are receiving real-time insights for cashflow and forecasting by way of these providers.
In distinction, customers are broadly utilizing fee initiation providers (PIS), which permit them to maneuver cash. This may be to high up wallets or pay bank card payments.
The OBL mentioned there have been 68.2 million open banking funds in 2022, in contrast with 25.2 million in 2021, with month-on-month progress of 10%. It estimated that as much as 11% of digitally enabled customers and small companies used open banking in March 2022. This determine has elevated from 9-10% in March 2021.
Marion King, chair and trustee of OBL, mentioned: “It’s encouraging to see a continued and regular improve within the adoption of open banking services and products, notably by the UK’s small corporations, that are seeing tangible advantages from real-time enterprise insights supplied by open banking information.”
In 2018, UK banks have been required to implement the Competitors and Markets Authority (CMA) open banking laws, which led to the event of utility programming interfaces (APIs) in banking to offer customers extra management over their accounts.
Marion King, OBL
The tip purpose was to extend competitors in a sector dominated by large monetary providers corporations. Buyer banking information is shared by the trade by way of APIs, with buyer permission, enabling companies to supply tailor-made merchandise.
The subsequent part of open banking – often called open finance – will go a lot additional. Open finance will see corporations share information throughout extra providers, corresponding to mortgages and loans, additionally by way of APIs, and supply services and products from exterior organisations.
King mentioned the providers being supplied by open banking suppliers have been increasing. “It’s thrilling to see the enlargement of providers in key areas corresponding to borrowing and monetary decision-making empowering folks to make higher knowledgeable selections about managing their cash, which is essential as we face an elevated price of residing,” she mentioned.
A report this week, from impartial advocacy group Coalition for a Digital Economic system (Coadec), described the UK open banking trade as being at a crossroads, with clear regulatory route required if the UK open banking sector is to proceed to develop.
In its report, Coadec mentioned: “A multibillion-pound sector stands on the precipice of retreating past fee account information to open up a brand new frontier of innovation and competitors.
“Alternatively, the darling of the UK’s fintech ecosystem may stagnate, condemned to tread water and to not fulfil the promise of the previous few years, with the perfect and brightest corporations pressured to mood their (and their buyers’) expectations or upsticks throughout the channel.”


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- Good news everyone—according to a recent report from The Creative Group, salaries for marketing and advertising positions will increase by 3.5% on average in 2015.
- The report looked at the job market overall for 125 interactive, design, marketing, advertising, and public relations positions.
- Forty-five percent of respondents said they try to negotiate salary when presented with a job offer.
A steady increase in salaries is a sign of good health for the marketing and advertising industries. The report could also be a sign of a recovering economy, where professionals across the board are seeing a steady rise in salaries. What's also great about reports like this one from The Creative Group is that it gives professionals some leverage to negotiate if salaries are increasing along with the rest of the industry or if their salaries don't fall in line with national averages.


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Maybe you thought “ReRAM” was dead, but think again, writes Susquehanna Financial Group’s Mehdi Hosseini today in a note to clients extolling the virtues of the technology following a joint announcement this morning by SanDisk (SNDK) and Hewlett-Packard (HPQ) stating the two will develop ReRAM together over many years.
ReRAM is a technology some think can replace NAND flash chips, which SanDisk currently supplies, after the next generation of NAND, so-called 3-D NAND, peters out — hence, some years in the future.
As explained in the press release, “the partnership will center around HP’s Memristor technology and expertise and SanDisk’s non-volatile ReRAM memory technology and manufacturing and design expertise to create new enterprise-wide solutions for Memory-driven Computing. The two companies also will partner in enhancing data center solutions with Solid State Drives (SSDs).”
In a note entitled “ReRam Is Still Alive,” Hosseini, who has a “Positive” rating on SanDisk stock, writes that this could be a big deal in the year 2020:
ReRAM technology could emerge as the next advancement in cost/performance for non-volatile storage after 3D NAND (most likely by 2020 and beyond). We do not envision this to be material in the N-T, however we believe it represents a significant step forward in the advancement of ReRam as both companies have invested significant R&D into the technology. For SNDK specifically, we view this net-positively, as HP’s broad footprint in the data center and expertise in the solutions-level can be a key contributor to catalyzing adoption of ReRam technology (which is 1,000x faster and has 1,000x more endurance than existing Flash technology) and will complement SNDK’s core competency in component design and manufacturing.
We also view this am’s announcement as net-positive for ASML (given that ReRam is more litho intensive than 3D NAND), but net-negative for AMAT and LRCX (as ReRam does not require as much Deposition/Etch equipment.) For HP Enterprise (Not Rated), we believe the announcement will reinvigorate optimism around The Machine, a project aiming towards a monumental advancement in performance and cost efficiency in computing.
SanDisk stock today rose $2.42, or almost 4%, to close at $64.11, while HP shares closed up $1.17, or 4.2%, at $29.18.
Semiconductor analyst Robert Maire of boutique research firm Semiconductor Advisors today weighs in with some thoughts on the chatter in the last week or so about a possible battery-life difference between units of the Apple (AAPL) iPhone 6s that use chips alternately sourced from Taiwan Semiconductor Manufacturing (TSM) and Samsung Electronics (005930KS).
Apple has never disclosed suppliers for its manufacturing of its custom “A9” microprocessor, but the Street believes the company has “dual-sourced” manufacturing from the two chip manufacturers.
That chatter is back on the agenda today following some new tests by users that show that some Samsung versions of the A9 chip in the iPhone seem to display somewhat shorter battery life than the models with the TSM-fabbed A9.
In a piece on Macrumors this morning, Mitchel Broussard writes that some videos posted by users on YouTube showed as much as 50 minutes of extra battery life, while other tests showed a mere 1% difference in battery life.
As suspected from early results yesterday, the takeaway from Morrison and Evans’ videos today seems to be that while intense cases like synthetic Geekbench tests designed to push devices to their limits can reveal significant differences in battery life between devices using the two chips, real-world impacts are much smaller and are likely to be unnoticeable to many users.
Maire, writing this morning, and acknowledging there’s no hard evidence of battery life differences, mused whether any ultimate difference, if demonstrated, would prompt masses of Apple customers to want to trade in the Samsung-made versions of their phone’s chip. Maire offers the larger question, “Did Apple vendor gamesmanship go too far?”
Writes Maire, the evidence has been thin to date:
So far we have not seen a credible, reliable, scientific source of comparative power consumption testing – sources on the internet appear to show similar results but are unsubstantiated and therefore questionable so far…..
Maire notes TSM has talked about how its process technology has lower current leakage than that of Samsung:
We would remind readers That TSMC has made a very big deal about their power consumption/leakage advantage over other competitive manufacturing processes. TSMC has claimed up to a 20% power advantage in their 16nm process which may jive with these unconfirmed comparison results.
He then goes on to write, ominously, “Lets start the stopwatch ticking on Oct 7th at noon and see how long before the first law firm brings a class action suit against Apple and their defective Iphone 6S.”
If there were to be a real issue, he wonders if Apple would find it mis-stepped with dual sourcing:
Apple went to a new extreme and got very cute by dual sourcing the most critical component in the phone this way playing Samsung and TSMC off against one another. Could this now have blown up in their face? Who tested and vetted both parts at Apple? Where’s the quality control? We would question why Apple would even take the risk of using two different parts in the same phone….its just begging for comparison & trouble. Just use one part in the 6S and the other part in the 6S plus so you can’t compare them. Maybe Apple was forced into this position due to availability issues.
And would any fallout propel fortunes of Intel (INTC) as an alternate source, he wonders:
If this turns out to be true and a significant issue we will likely be able to hear the laughter in the halls of Intel all the way in New York (Intel had their own mathematically challenged processor many years ago). There has obviously been concern over Samsung and TSMC catching up to Intel….well maybe this could potentially prove at least Sasmung moved too fast and took too many risks versus Intels more cautious slowing of their tick tock cadence.
Apple shares today are down $2.31, or 2%, at $108.47.
Shares of chip equipment giant Applied Materials (AMAT) are up 11 cents, or 0.7%, at $15.05, while shares of competitor Lam Research (LRCX) are down 17 cents at $65.51, after RBC Capital Markets’s Mahesh Sanganeria cut his rating on both shares to Underperform from Sector Perform, citing a big decline in spending on both DRAM and NAND production in 2016.
Sanganeria cut his price target for Lam to $52 from $76, and cut Applied to $12 from $16.
Sanganeria’s main point is the same for both stocks, the decline in tool spending on memory parts:
We estimate CY16 total capex will be down 13% yoy to $46B, driven by 38% decline in DRAM capex, 17% drop in NAND spending, flattish foundry investment and 3% growth in IDM. In our opinion, DRAM spending is positioned to decline in 2016 after two years of high level spending on new capacity and 20nm conversion. 3D NAND in CY16 appears to be limited after Samsung filled up Xi’an fab with 90k capacity as Micron and Toshiba need to expand current fabs for 3D conversion. We model 38% decline in DRAM and 17% drop in NAND capex in CY16. We estimate flattish foundry spending and 3% growth in IDM for CY16, as we believe IDM/foundry spending will likely remain muted until 10nm ramp. Please see our note, Incrementally more cautious on capital spending, also published today, for more details of our industry view.
Lam’s got too much dependence on DRAM memory tools:
Lam shipments to DRAM have increased from $50M in Q4’12 (bottom of last cycle) to a ~$500M quarterly run rate in 1H15. NAND shipments also increased from ~$60M in Q4’12 to ~$290M in Q2’15. Shipment to the memory (both DRAM and NAND) segment represents 60% of total shipments. In the near term, we think that Samsung investment in 3D NAND will help Lam to achieve SepQ shipment guidance of $1.58B. However, management had indicated that DecQ shipments will be lower than MarQ, representing a 20% q/q decline. While we currently model 25% q/q for DecQ, we see potential downside risk to our estimates.
As for Applied, it’s too optimistic about ’16 tool spending overall:
During JulQ earnings call, management expected DRAM spending to be down 10% and NAND to remain at a high level driven by continued 3D NAND investment in CY16. Additionally, the company expects big 10nm foundry spending. Earlier, during the July Analyst Day, the company also expected to increase market share to 21.9% riven by inflection technologies. We believe the WFE market share is very sticky and unlikely to change quickly due to the process complexity.
Note that analysts are mulling what to make of a filing last week by the largest contract chip maker Taiwan Semiconductor Manufacturing (TSM), which indicated a weaker-than-expected level of spending than some might expect. As Cowen & Co.’s Timothy Arcuri wrote on Friday:
CQ3:15 WFE orders +5% Q/Q (YTD -1% Y/Y); while much depends on actual CQ3 capex levels, this order uptick is not enough of a Q/Q jump to change the concept that TSMC is still running far below full-year capex guide of $10.5-11.0B. We continue to see ’16 in the $7.5-8.0B range but Y/Y clearly depends on what gets spent in 2H:15.
Here are some things going on today in your world of tech:
Shares of Twitter (TWTR) closed up $1.35, or 5%, at $26.94, following a re/Code article by Kara Swisher saying the company is going to name co-founder and interim CEO Jack Dorsey its permanent chief “as early as tomorrow,” citing unnamed sources.
Dorsey’s, and Twitter’s, fates have been a subject of much speculation of late. In response to Swisher’s piece, Citigroup’s Mark May reiterates a Neutral rating this afternoon, writing “If Dorsey is indeed named permanent CEO, we would take a generally positive view given that his product-focused approach and deep knowledge of the company could help accelerate the rate of product innovation at the company.”
Shares of AT&T (T) closed up 51 cents, or 1.6%, at $32.58, after the company yesterday afternoon reiterated its outlook for the year, today announced several product initiatives, including its “network on demand” capability, and enhancements to its “NetBond” technology for managing cloud computing capabilities.
I spoke with Ralph de la Vega, CEO of AT&T’s mobility group. He said others are just imitators: Our NetBond technology is based on 20 patents about how you take a workload to the cloud, and dynamically adjust it with APIs, without requiring human intervention,” said de la Vega. “That’s the value add. I’ve never seen anyone introduce that kind of automated system into the market.”
It was a decent day for M&A action.
Shares of hard drive maker Western Digital (WDC) rose $10.57, or 15%, to close at $79.44, after the company announced before the market opened it got an equity investment of nearly $4 billion from Unisplendour, a division of Chinese government-backed Tsinghua Unigroup, at a 34% premium to its closing price Tuesday.
But shares of high-speed server interconnect chip vendor Mellanox Technologies (MLNX) dropped $2, or 5%, to close at $37.79, after the company this morning announced it would purchase chip maker EZchip Semiconductor (EZCH) for $25.50 per share, or $811 million in cash, a 16% premium to EZchip’s close yesterday.
And there were rumors: Shares of touch sensor controller chip maker Synaptics (SYNA) closed up $17.69, or 27%, at $82.46, after a piece this morning by Bloomberg’s Alex Sherman and Ian King stated the company rejected an offer from a Chinese state-backed investment firm at $110 per Synaptics share.
It was a good day for rumors generally.
Shares of adventure camera maker GoPro (GPRO) closed up $1.36, or 5%, at $31.22 following speculation, picked up by multiple wire services, that Google (GOOGL) is going to take a stake in the company.
And shares of data center services provider Rackspace Hosting (RAX) opened higher but closed down 51 cents, or 2%, at $24.68, after a report yesterday by The Wall Street Journal‘s Robert McMillan saying the company is teaming up with Amazon.com (AMZN) to support Amazon Web Services.
However, Evercore ISI‘s Jonathan Schildkraut, who has a Hold rating on the stock and $38 price target, wrote that the payoff might end up being less than investors hope for.
Shares of Apple (AAPL) closed up $1.24, or 1%, at $110.30, after activist Carl Icahn took part in a long discussion with CNBC‘s Scott Wapner, telling Wapner that Apple’s still one the best stock buys around, what he has often referred to as a “no brainer,” and stating “I’m very seriously considering buying a lot more of it,” meaning, Apple stock.
Speaking of Apple, Timothy Arcuri of Cowen & Co. this morning wrote the company has made the “unprecedented” decision to use chips manufactured by both Samsung Electronics (005930KS) and Taiwan Semiconductor Manufacturing (TSM) in the same model of the new iPhone, which may give Apple increased leverage over the suppliers. He also anticipates there may be a role for Intel (INTC) as a foundry partner to Apple if the company wants options beyond the other two.
Shares of security technology vendor Barracuda Networks (CUDA) plunged $7.97, or 34%, at $15.58, after the company yesterday afternoon missed fiscal Q2 revenue expectations by a hair, and cut its outlook for the remainder of the year, citings sluggish sales in European, the Middle East and Africa, and the effect of the rising U.S. dollar.
Three analysts cut the stock to Hold, and price targets were cut dramatically, with some arguing the shares were still inexpensive enough to recommend and others arguing it’s not clear how bad things may get.
Facebook (FB) shares finished up $3.23, or almost 4%, at $89.90, following an article this morning by staff in the Taiwan-based publication Want China Times suggesting the social network may start to operate in China at some point after a photo op Facebook CEO Mark Zuckerberg had with Chinese president Xi Jinping.
Timothy Arcuri of Cowen & Co. this morning writes that Apple (AAPL) has made the “unprecedented” decision to use chips manufactured by both Samsung Electronics (005930KS) and Taiwan Semiconductor Manufacturing (TSM) in the same model of the new iPhone, which may give Apple increased leverage over the suppliers.
“Checks with teardown and engineering analysis vendors have confirmed that Apple is shipping both Samsung 14nm and TSMC 16nm A9 processors into the same iPhone SKU (not, as some have reported, by SKU or iPhone size),” writes Arcuri, who has a Market Perform rating on Apple shares.
There are many cases of fabless semiconductor companies dual sourcing foundry of chips by using a combined design rule set and creating a common layout that can be fabricated in two different foundries within the same process node; this is often done to exert pressure on the foundries and ensure adequate supply. What Apple did here WAS A FIRST in that it has driven pin-for-pin compatibility with DIFFERENT packages on different process nodes that adjust for the difference in pin configuration and die sizes (TSMC’s version is ~9% larger, as it is on 16nm).
To Arcuri, this is evidence that in the chip world, the famed heuristic, Moore’s Law, is not “slowing,” as many say, but rather “splintering,” meaning “some companies able to successfully build leading edge and others not – i.e., it is more about PROCESS and there is more opportunity for competitive differentiation.”
(Note that Macrumors‘s Juli Clover yesterday reported a software developer has introduced a program for the iPhone that will tell one whether their device contains a processor manufactured by TSM, or by Samsung, though the site advises against installing the application given security concerns.)
Arcuri thinks Apple planned to go with Samsung but made sure to work with TSM as “insurance.”
“For AAPL, once yield issues are worked out, it will be in a great position to exert maximum pressure on each foundry in future capacity contracting,” he thinks.
Could Could Intel (INTC) be the next to fall in line?
Barring the foundries pushing back (e.g., Samsung maybe bows out on A10?), this seems likely to continue going forward – especially since INTC desperately wants the AAPL foundry business. This could open a window. With 10nm not available in time for the A10 launch, INTC’s 14nm offers a meaningful improvement in performance and power consumption over the TSMC and Samsung 16nm/14nm nodes as it uses a next- generation FinFET.
Apple stock is up $1.22, or 1%, at $110.28.
Intel shares are up 76 cents, or 2.6%, at $30.
Contract electronics manufacturer Jabil Circuit (JBL), which assembles products for Apple (AAPL), among others, this afternoon reported fiscal Q4 revenue and earnings that comfortably surpassed analysts’ estimates, sending its shares spiking in late trading.
Revenue in the three months ended in August rose to $4.68 billion, yielding EPS of 53 cents.
Analysts had been modeling $4.55 billion and 45 cents EPS.
THe “Diversified Manufacturing Services” part of Jail, it’s smaller unit, but one with a lot of the more noteworthy assembly deals, brought in $1.9 billion in revenue, versus $2.8 billion for “Electronics Manufacturing Services.”
CEO Mark Mondello remarked that he was “extremely pleased” with the company’s “financial strength demonstrated as we exited the year.” He emphasized free cash flow of $300 million for the year, saying “Our strong cash generation provided us the financial flexibility to complete a number of strategic acquisitions, aggressively re-invest in the business and return approximately $150 million to shareholders via dividend and share repurchases.”
Mondello said of the company’s outlook, “Our team is positioned for another solid year in fiscal 2016. Jabil’s strong first quarter guidance can be directly attributed to the commitment of our employees, the exceptional brands we serve and a focused pursuit of our growth strategy.”
For the current quarter, the company sees revenue of $5.1 billion to $5.3 billion, and EPS of 72 cents to 88 cents. That is well ahead of consensus for $4.94 billion and 59 cents.
For the full year, the company sees revenue “of approximately $20 billion” and EPS of $2.60. That compares to consensus for $19.3 billion and $2.37.
That forecast includes the diversified manufacturing group seeing a 33% jump in revenue this quarter. The electronics manufacturing business will see revenue flat with the prior-year period.
Jail shares are up $1.70, or almost 9%, at $21.20, in late trading.
The Street this morning is pondering the implications of Samsung Electronics’s (005930KS) decision to cut its capital spending next year by 20%, mostly for DRAM products, according to a piece by Kim Yoo-chul of the Korea Times, citing multiple unnamed sources.
Yoo-chul cites one unnamed source as stating “Samsung has no plans to build new chip factories next year. The company’s top priority next year is to gain more profits rather than expand volume.”
Summit Research’s Srini Sundararajan writes this morning that “while we had heard sell-side talking about capex cuts we wanted to wait for a definitive word from a trustable journalist and here we have it.”
“So, in our opinion, this is the authoritative word/ messaging that Samsung intends to propagate currently.”
But, Sundararajan writes that “a tiger doesn’t change its spots,” meaning Samsung doesn’t really expect to spend less next year, it is doing a bit of a head fake:
Having the Cake and Eating it Too; How? By Downslamming Capex Projections and Then Spend a Bunch in 2H16: Merely hinting that they are curtailing supply will have the effect of firming up prices and if followed by baby steps to curtail prices, Samsung can have the cake and eat it too. Hence, irrespective of what Samsung is saying now, we need to wait for 2016 to arrive. In addition, this is the first time in recent years that Samsung has messaged its capex intentions earlier than the April of the year of the capex (i.e. in this case, they would have been likely to message capex intentions and merely say that it would be flattish).
Sundararajan thinks the purported cut in DRAM tool spending is immediately good news for Micron Technology (MU) and for FormFactor (FORM). He also thinks KLA-Tencor (KLAC) might come out better if this means there’ll be some spending rise in tools for logic circuit manufacturing:
In this note, we come to the conclusion that MU and FORM (BUY, P.T.$12) will be winners of any Samsung capex cut due to increased DRAM prices. On the other hand, we also feel that too much has been made of the current Samsung capex suggestions because reality in 2016 could be quite different. Not only will it quite different for Samsung but we also think that any void left by Samsung will be quickly filled up by its competitors unless global economy goes into a deep recession. In addition, if logic spending is gangbusters next year due to a 10nm arms race, KLAC (BUY, P.T. $65) also stands to benefit disproportionately. Finally though, we want to quote and pay homage to Yogi Berra known for his Yogi-isms “It ain’t over till it is over”. That is, this is not likely the last word on Samsung capex.
On a less sanguine note, Robert Maire of Semiconductor Advisors writes that the article is confirmation of his skeptical view, and that bulls will have to capitulate:
Semiconductor Bulls have been saying that 2016 capex is in good shape and that Samsung will keep Capex flat. Those analysts who have remained too bullish for too long are going to have to back pedal and capitulate and start to take numbers down.
Nor does he think this is a head-fake: spending will remain depressed, as the industry experiences its traditional cyclicality:
We would expect that Samsungs spending cut will remain in effect throughout 2016 as it will take a while to sop up the excess capacity in the market. It is also clear that 3D NAND and foundry will not make up for the drop in DRAM spend as DRAM has been spending at a much higher than normal rate for a while now. We have been very clear that this wouldn’t last forever and sooner or later things would come back to the industry’s normal cyclical behavior. We continue to maintain that while the cyclicality is not as severe it is still none the less a cyclical industry……though many in the industry have developed amnesia given the length of the upturn.
But like Sundararajan, he sees KLA shielded to some extent:
Of the large semi equipment companies KLAC will be the least impacted as they have the lowest exposure to memory and higher exposure to logic and foundry which seems to be at or near a bottom. KLAC recently said that business had seemed to be at the high end of very lowered expectations.
Shares of Micron, FormFactor, and KLA are all down fractionally today with the broad market’s decline.
Here are some things going on today in your world of tech:
Shares of Internet daily deals purveyors Groupon (GRPN) are down 9 cents, or 2.4%, at $4.08, after the company said in an 8-K filing with the Securities & Exchange Commission that it will cut 1,100 workers as part of a restructuring of its international operations.
COO Rich Williams penned a blog post on the matter, saying that a two-year effort to streamline the company’s IT meant that “allow us to do more with less while still providing the high level of service our customers expect and trust.”
Shares of Linux and open-source software distributor Red Hat (RHT) are down $1.19, or 1.7%, at $71.54, declining with the broader market, after the company yesterday afternoon reported better-than-expected fiscal Q2 results and outlook, and raised its year view.
There are no ratings changes, and price targets are mostly staying put, despite an increase in estimates at several shops. Even bears were impressed, with Jefferies & Co.’s John DiFucci and Brad Zelnick, reiterating a Hold rating, writing that despite “billings” being a little lit of expectations, “new subscription ACV was strong,” a more important measure of the state of things.
Shares of adventure camera maker GoPro (GPRO) are up $1.07, over 3%, at $33.34, bucking the heavy selling in the broader market, after CEO Nick Woodman appeared on CNBC a short while ago downplaying fears about his company. Woodman called “short sighted” the view that the company might be a “one trick pony” with its “Hero” line of mountable cameras.
Shares of Apple (AAPL) are down $2.32, or 2%, at $112.89, outpacing the broader market, as critics respond to the company’s latest iPhone models with largely favorable views. Many reviewers laud the higher-resolution camera and the ability to shoot 4K video, and the novel “3D Touch” enhancement.
One of the less glowing remarks was from The Wall Street Journal’s Joanna Stern, who writes that it’s “the best iPhone yet,” but “it’s also proof that smartphone innovation has plateaued and what we demand most in our newest phones are improvements to the essentials.”
iPhone 6s and 6s Plus go on sale at retail this Friday.
Apple’s also attracting interest today over the Journal’s Daisuke Wakabayashi’s report yesterday that the company will ship its own car come 2019. Some are already a little mixed in their view of this: UBS’s Steve Milunovich, a bull on the stock, offers a list of good points and bad points about a possible Apple auto, saying he’s a little concerned about what it means for the company.
Note, too, Apple gets new coverage today: Goldman Sachs’s Simona Jankowski takes over coverage from Bill Shope, initiating her view with a Buy rating and a $163 price target, arguing estimates for 2016’s iPhone sales are too negative on the Street.
Shares of F5 Networks (FFIV) are down $3.05, or 2.6%, at $112.76, after Guggenheim’s Ryan Hutchinson cut his rating on the shares to Neutral from Buy, writing that the company’s main category of “application delivery controller,” or ADC, is “slowing,” but also that the company “has become a net ADC share donor.” Fair value for the stock is $126, he thinks.
Shares of chip equipment vendor KLA-Tencor (KLAC) are up 10 cents, or 0.4%, at $49.39, after Nomura Securities’s Romit Shah, who raised his rating on the stock to Buy from Neutral, while maintaining a $60 price target, writing that spending on equipment is going to swing back to KLA’s favor with a renewed emphasis on logic tools following a period of binging on memory chip tools.
Speaking of equipment, Citigroup’s Atif Malik writes that the latest data from industry consortium SEMI show booking for “wafer front-end,” or WFE, machines, were up 34% in the three-month period ending in August, which to him suggests “WFE stocks to remain range bound in the near-term as improving 10nm foundry spend sentiment is offset by worsening DRAM spend.” He likes the “trough” in back-end bookings, down 32%, and consequently prefers Teradyne (TER) shares.
Speaking even further of equipment names, Robert Maire of Semiconductor Advisors wonders if Lam Research (LRCX), which as been outperforming KLA and others, will be “the last to fall,” noting that it yesterday “showed a significant crack in the armor as the stock strongly broke through a $70 support level and was down about 4.5%.”
“Could Lam’s fall off on no news be a signal that the strongest stock in the space is finally capitulating?” he wonders. “If it is capitulating, where is the downside to? how far can it fall? Could we get back to $60?”
Lam Stock today is down $2.08, or 3%, at $65.99.
Shares of chip equipment maker KLA-Tencor (KLAC) are down 59 cents, or 1.2%, at $48.61, falling with the broader market, despite an upbeat note this morning from Nomura Securities’s Romit Shah, who raised his rating on the stock to Buy from Neutral, while maintaining a $60 price target,
citing ” improving cyclical trends that could drive an inflection in earnings revisions.”
KLA’s problem has been that it’s not in the ultra-hot segment of tools for memory chip manufacturing, which has resulted in its revenue trailing overall sales trends in wafer “front-end spending,” or WFE.
“A key reason is mix,” writes Shah. “KLAC is less exposed to Memory spending, which has increased from 24% of WFE in 2012 to almost 50% in 2015E, while strong in Logic, which has declined.”
Here’s Shah’s chart of how logic equipment orders have deteriorated the last few years:
But, the trend is now starting to shift back to “logic” spending, tools for making circuits smaller, he believes:
However, capital spending is starting to shift toward logic and drive better- than-expected growth through 2016. KLA recently commented that September orders would be at the upper end of its guided range due to 10nm logic. We estimate that Intel contributed less than $10m in revenue in the first half of 2015, but should normalize to $75-100m per quarter starting in December. This corroborates with recent comments from Intel’s CEO, who indicated this year’s capex spend is an “anomaly.
He does a deep dive into some logic spending stats:
Intel reduced its capex from $10b in 2014 to $7.7b in 2015, the lowest since 2010. We believe that that the drop in capex is temporary and Intel itself has called the drop-off in capex an anomaly. We estimate that Intel contributed no more than $10m in revenue in the first half of 2015, a substantial drop considering Intel usually contributes $75-100m per quarter. KLA recently commented that September orders would be at the upper end of its guided range due to a better-than-expected environment in 10nm logic. This suggests that Intel is back to the table and KLA could see a return in revenues from Intel starting in the December quarter.
“Overall, we estimate that in a flat to up WFE spending environment, revenue growth could accelerate up 10% (vs. -2.3% in CY15) and drive strong double-digit EPS growth. (vs. -4% in CY15),” concludes Shah.
For this year, Shah estimates $2.82 billion in revenue, up from a prior $2.776 billion estimate, and raises his EPS estimate to $3.17 form $3.03. For 2016, he models $3.1 billion, up from $2.915 billion, and raises his EPS estimate to $4.25 from $3.68.
Change is coming to the world of semiconductor manufacturing, writes Atif Malik with Citigroup, who covers the chip equipment makers, in a note to clients this morning.
That is the premise for a multi-stock note today, in which Malik upgrades shares of Teradyne (TER), while cutting shares of Amkor Technology (AMKR). His note is accompanied by that of his colleague, Roland Shu, who raises his rating on Taiwan Semiconductor Manufacturing (TSM), the world’s largest contract chip house, to Buy from Neutral.
Malik offers the big picture view, the move beyond Moore’s Law, the 50-year rule of thumb that has dominated IC production:
We believe rising techno-economics of Moore’s law (miniaturizing semi devices every two years) will push chipmakers to invest more in new device architectures and materials vs. traditional scaling in the next 3-5 years. Rising $ manufacturing cost per transistor at 20/16nm technologies coupled with difficult scaling have resulted in new device types like FinFET, 3D NAND, and TSV in the last three years. We expect new architectures and materials to dominate and drive more than 2/3rd of the device performance in the future which bodes well for our #1 LRCX and #2 TER equipment picks.
He notes that TSM has come up a new packaging approaching, “InFO,” that is going to cause pain to Amkor’s “OSAT” business in 2016, as TSM captures business with Apple (AAPL):
Roland Shu, Citi’s Taiwan semiconductor analyst, expects TSMC’s back-end InFO (integrated fan-out) manufacturing process to be a major disruption for OSATs (outsourced assembly and test) companies in C16 (see note TSMC (2330.TW) – Upgrade to Buy: Raising the Bar With InFO Technology for more details). Citi believes InFO technology should help TSMC gain a dominant share of Apple’s A10 AP and other high-end smartphone demand.
Note that a piece yesterday by Apple Insider’s Roger Fingas yesterday claimed that TSM will get all of Apple’s production contract for custom chips for the next iPhone, presumably an “iPhone 7,” next year, because of the virtues of the “integrated fan-out,” or InFO, approach. That article was based on a Chinese language piece by China Times.
Shu’s note contains an extensive discussion of InFO:
TSMC has been consistently investing in cutting-edge wafer manufacturing technology. It has been mass producing 16nm for Apple’s A9 and others’ chipsets from 2Q15. TSMC’s 10nm is going to be at risk production by end of 2015 and mass production from 4Q16. The OSAT technology roadmap, on the other hand, has stayed at flip chip CSP package for a long time. TSMC’s moves in COWOS and InFO are to avoid OSAT technology being the bottleneck to customers’ adoption of the company’s leading-edge technology. Given the long yield rate learning curve and a high cost of the scrapped dies from the yield loss during the InFO process, we estimate the InFO business will be loss- making for TSMC in the near term. However, the InFO technology will differentiate it from peers, e.g., Samsung. The thinner as-packaged chip form factor and better performance will raise the bar for competitors. If TSMC’s peers can’t duplicate exactly the form factor and performance of the chipset, customers will find it difficult to have a second source for the technology. We believe that TSMC is investing in InFO technology and building capacity for Apple and other key customers. If InFO is successfully adopted for the A10 processor for iPhone 7 in 2016, TSMC is very likely to gain the dominant allocation of A10 given InFO is different to Samsung’s current PoP and any other type of advanced package technology. Though InFO itself will be a loss-making business in the near term, the losses should be made up by the greater allocation on A10.
As for Teradyne, he sees InFO also benefitting its chip test business:
We are upgrading TER to Buy from Neutral to reflect increased SoC test demand in C16 driven by a) TSMC’s adoption of InFO which should help test spend at OSATs, and b) stabilization in test equipment spend trend per third party driven by device complexity and slowdown of Moore’s law which helps proliferate new device designs. Stabilization in test equipment spend should also help expand TER’s multiple, in our view.
Today, Amkor shares are down 12 cents, or 2.3%, at $5.17, TSM is up 24 cents, or 1%, at $20.28; and Teradyne is up 93 cents, or 5%, at $18.86.
Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: email@example.com.


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The latest Elite: Dangerous newsletter has been posted and features a drabble from Dave Hughes (the author of the upcoming Elite: Dabgerous paper RPG). You can read the newsletter here.
To Market by Dave Hughes
"The manifest says they're food." The creatures just sat there looking at Carlo, their dirty, leathery hides covered in dirt and grime from the cargo bay floor. "They escaped from the cage," Reet said.
Carlo glanced at the soil-covered cage, then back to the escapees with an expression of revulsion, "They're hideous."
"They're really popular in the Core," Reet explained, "We make good profit on 'em."
"But they're filthy. They're covered in their own waste, for Randomia's sake. People eat them?"
"Apparently," Reet shrugged.
"Crazy," Carlos said, shaking his head. "What are they called?"
Reet glanced at her manifest, "Pigs."
You can visit Dave at his site: http://daftworks.co.uk/


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While worldwide economies are threatened with the possibility of coming to a grinding halt due to the COVID-19 epidemic, small businesses in South Africa face apprehension and uncertainty as they head into the unknown realm of the national shut down.
The question posed is “How will Small, Medium and Micro Enterprise (SMMEs) survive during self-isolation, mandatory work from home policies and the potential loss of suppliers/ buyers in the market?”
Thankfully these questions have been answered at a government level, with the implementation of safety nets for small businesses around the country ensuring that while the country avoids contagions businesses can survive the market slump.
UIF claim for temporary shut down
The department of labour has announced special regulations that will enable the Unemployment Insurance Fund (UIF) to offer relief to companies that find themselves in distress due to the COVID-19 outbreak. If a company is forced to shut down for a limited period due to precautionary health measures in response to COVID-19, the UIF benefit will apply. This benefit is to prevent layoffs and ensure that employees still receive payments to ensure their livelihoods.
The department of labour has extended benefits for cases where employees have needed to practice self-quarantine for two weeks or longer as a result of exposure to the virus. The time taken off work due to isolation will be recognised by the department as special leave – provided that this leave meets government health guidelines, employees will then receive paid UIF benefits. The department of labour has issued these reprieves for small businesses’ to ensure their survival once the pandemic is over, as well as to reduce layoffs and curb potentially high unemployment rates that will be caused by the COVID-19 pandemic. Other measures will be taken by the South African government to ensure that small businesses survive the market slump caused by the national shut down, to prevent further pressure on the economy once the shutdown is over.
Government SMME support
Small business development minister Khumbudzo Ntshavheni has announced that the South African government will service the debt of small businesses during the COVID-19 pandemic national shutdown. This is a response by the government to the inevitable slowdown of the economy due to suppressed productivity during this period. In an attempt to curb any further adverse effects caused by the national shutdown, the government is giving a lifeline to small businesses that can’t afford the loss of customers and suppliers. The Debt Relief Fund has been created to provide relief on existing debts and repayments, to assist SMMEs during this period. However, there are requirements needed before aid can be given, including the demonstration of a direct link to the impact or potential impact the COVID-19 pandemic had on business operations.
The small business department has also announced relief for small businesses and in some cases, the likes of hawkers and the self-employed, making available a range of funds and mechanisms for survival. Some small businesses will be permitted to receive loans at prime less 5%, which currently means an interest rate of 3.75% per year. However, those that try to miniplate and take advantage of the crisis will be punished with interest rates of prime plus 10 percentage points, meaning chancers caught out will pay 18.75% in interest. The requirements needed for support from the various funds include:
- The businesses must be 100% South African owned
- At least 70% of employees must be South Africans
- Recipients must be tax compliant and registered with the South African Tax Revenue Services (SARS)
The government is not the only organisation that has come to the aid of SMMEs with many banks looking at the role they will play in ensuring the prosperity of the South African economy.
Bank relief for SMMEs
Along with the government, many other organisations are stepping up to the plate to ensure the survival of SMME’s. Standard Bank has announced the Coronavirus Business Interruption Payment Scheme, which will provide payment relief to SMME’S for 90 days – launching on the 1st of April. To be eligible for this payment relief the following requirements apply:
- Your business is South African based, with a turnover of no more than R 20 million per year
- Your Business Current account, Bizlaunch account, and Business Lending accounts are paid up to date
- Your business is in good standing
The Reserve Bank has also guaranteed help by slashing rates by 100 basis points for the first time in a decade, announcing additional liquidity measures to ease the pressure on the system. First National Bank also jumped on the bandwagon and announced that the company is working with the Reserve Bank and Banking Association SA to find solutions to support consumers and businesses. These banks have recognised the impact the shutdown will have on businesses and the economy as a whole – supporting those that are beating the odds by continuing operations via digital means.
Adapt to digital
As mandatory work from home policies are implemented, having a digital presence has never been more relevant. The time to adapt to digital is now and each business must take the necessary measures to ensure that operations continue despite the national shut down. The following tips can be followed to ensure that your company can work remotely through the digital realm:
- Get everyone behind the change – the first step is to ensure that each person in your team is embracing the necessary changes
- Identify how your business can operate digitally – have a good understanding of how your business is going to operate digitally, whether that means a new website or an overhaul of internal structure to support remote communication.
- Invest in cloud computing services – by moving to cloud-based solutions, huge savings can be achieved in terms of management and space. Google Drive, Microsoft Box, Dropbox are easy to use and setup takes just a few minutes; you can have your business fully backed up and accessible anywhere in the world.
- Put more into digital marketing – ensure that you have an online presence, make sure that customers will be able to find your services o Digital assets such as a relevant website and social media presence are vital.
Adapting to digital can be tricky, thus a business must train its employees to use the necessary platforms adequately before making the shift. Many online platforms can also support conversation between your employees such as Skype, Zoom and Google Hangouts – to ensure the effective flow of information in the organisation.
Working as a collective is key to maintaining a healthy economy once the dust settles, this includes governments, corporations, small businesses and individuals alike. Whilst panic incurs worldwide due to the pandemic, businesses should play their part in sticking together to mitigate the negative effects that will arise from the COVID-19 outbreak. It’s time for adaptation to ensure survival.


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Many state politicians have been actively introducing bills to raise the minimum legal age to purchase tobacco and tobacco related products to 21. This initiative, named Tobacco 21, seeks to prohibit the purchase of tobacco and nicotine products, such as e-cigarettes, to all persons under the age of 21.
What Is Tobacco 21?
The Tobacco 21 campaign defines a list of policies its proponents aim to see enacted alongside the raising of the minimum legal sales age to 21, including:
- A requirement for retailers and their clerks to utilize strict age verification protocol when selling tobacco products.
- The creation of an enforcement body whose sole purpose would be to ensure adherence to the law by retailers and dispense proper punishment should any violations occur./li>
- Provide for state, county and city inspections of retailers to monitor continued compliance.
Tobacco 21 suggests drawing its funding from fees associated with the institution of a licensing requirement to be obtained by retailers wishing to continue selling tobacco products. The initiative also seeks to instill penalties on retailers and licensees rather than the youth attempting to purchase the products with a shift from the criminal penalty standard for youth violations to a civil penalty, removing any potential hardships faced for having a criminal record due to illegal tobacco purchases.
How Much Ground Has Tobacco 21 Gained?
The Tobacco 21 initiative has been successful in many states, counties and cities across the country, as seen in the map below with statewide age 21 restrictions highlighted in yellow, and varying age restrictions highlighted in green.
In 2015, Hawaii became the first state to pass a law increasing the minimum legal age to purchase tobacco and/or tobacco related products to 21, with California following suit in 2016.
Statewide Tobacco 21 Legislation
Since then, New Jersey, Oregon, Maine, Illinois, Delaware and Massachusetts have all also followed suit in raising the minimum age has been raised to 21. Other states have also passed measures to raise the legal purchase age to 21, including Arkansas, Texas, Vermont, Connecticut, Maryland, New York, Washington and Utah; however, those measures have yet to be enacted. Utah’s new age requirement takes effect in July 2021; however, lawmakers have been pushing the initiative for the last six years and even implemented a total ban against purchasing e-cigs online in 2016 in an effort to combat youth vaping – even though online retailers have access to technology that can help prevent the sale of tobacco products to minors.
For example, here at White Cloud, we recognized the issues with selling electronic cigarettes online long before the implementation of local and state laws regulating the purchasing age (we even included a “We Card” sign and checked IDs at our mall kiosks from the very beginning, even though there were no laws set in place telling us to do so). In an effort to ensure we were selling our products to adults only, >we teamed up with LexisNexis to develop a sophisticated age verification process, which has proven quite successful. If we can’t verify the age of the purchaser, we don’t send them our products. It’s as simple as that. We’ve even caught a few minors trying to purchase e-cigs with their parents’ information (and even received an apology from one teen for trying to purchase with his parent’s credit card – imagine that!)
Citywide Tobacco 21 Legislation
Many American metropolises have also implemented the increased tobacco sales age. Cities such as Boston, Chicago, San Francisco, New York City, Minneapolis, Cincinnati and Cleveland have all joined in on the Tobacco 21 movement. Further, in May 2019, Senator Mitch McConnell (R-KY) introduced a bill to the Senate seeking to increase the federal minimum age to purchase tobacco and tobacco related products from 18 to 21. It’s worth noting that legislators in Senator McConnell’s home state of Kentucky quashed a similarly styled bill in its state congress earlier this year.
The Tobacco 21 wave does not seem to be dying down as many initiatives are popping up in several remaining states. Florida, Indiana, Iowa, Louisiana, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, and West Virginia all have Tobacco 21 measures up for vote in their respective congresses.
What Are the Pitfalls of Tobacco 21 Legislation?
The Tobacco 21 initiative has been put forth with good intent. Parents want to protect their children from youthful experimentation, from the mistakes their parents made in their own youth. However, is more legislation the right answer?
Laws are already in place for regulating the sales of tobacco and tobacco related products to minors, those under the age of 18. If the issue is the sale of tobacco related products to America’s youth, the current regulations should be strictly enforced. Policies penalizing retailers for the sale of tobacco products to minors have already been enacted, and they should be actively enforced. Increase the penalties on retail outlet owners. Perhaps the fear of incurring penalties in the form of significant monetary fines would force the owners to hire employees who follow the current standard of law. Changing the minimum age to 21 does not guarantee the clerks selling tobacco products will now suddenly comply with the new regulations.
Another significant issue with Tobacco 21 legislation is the inclusion of smoking cessation devices with standard tobacco related products. E-cigarettes have generally been accepted as a healthier alternative to tobacco use – even the American Cancer Society publicly recognized this in a statement that read, “…some smokers, despite firm clinician advice, will not attempt to quit smoking cigarettes and will not use FDA approved cessation medications…these individuals should be encouraged to switch to the least harmful form of tobacco product possible.”
Treating cigarettes and e-cigarettes equally under the Tobacco 21 laws misleads consumers into believing cigarettes and e-cigarettes are the same product with the same hazards. If the goal is to eventually end all smoking (and smoking rates have been steadily declining and hitting record lows since the introduction of e-cigarettes), the means to that end is to enhance education, not expand prohibition.