• WHO to Mull Emergency Declaration as Toll Tops 130: Virus Update
    Bloomberg

    WHO to Mull Emergency Declaration as Toll Tops 130: Virus Update

    (Bloomberg) -- The World Health Organization called a meeting of its Emergency Committee Thursday to consider issuing a global alarm after cases in China surpassed the official number of SARS infections in the country during that epidemic.Governments tightened international travel and border crossings with China as they ramped up efforts to stop the spread of the disease. Airlines across the world suspended more flights to the country, as the U.S., the U.K., Japan and other countries moved to evacuate citizens from the outbreak’s epicenter, Wuhan.About 6,000 cases in China, at least 132 deaths: Track the outbreakTo map the virus on the Bloomberg terminal, click on thisCoronavirus’s mild symptoms open path for infection’s spread Airlines cancel more mainland China flights to counter virusToyota halts production, Cargill works from home: Virus ImpactWhat You Need to Know About China’s Virus Outbreak: QuickTakeRead about the global race to contain this killer bugHere are the latest developments.CDC Says Flight Bringing Back U.S. Citizens From Wuhan Has Arrived (2:30 p.m. New York time)The Centers for Disease Control and Prevention said more than 200 U.S. citizens have returned on a flight from Wuhan, China. They are being monitored at March Air Reserve Base in California.One of the citizens wasn’t allowed on the flight due to a fever, officials said at a briefing Wednesday. Passengers included State Department personnel and other Americans, including children.“We are going to monitor them for the full extent of their incubation period,” said Cameron Kaiser, public health officer for Riverside County, California, where the base is located. “Everyone has agreed to do that.”The passengers will be kept at the base for three days while tests are run. If any want to return to their home state or town after three days, the CDC said it would pass along information to local health departments so they can be monitored for the maximum 14-day incubation period.WHO to Consider Global Emergency Declaration (11:15 a.m. New York time)The World Health Organization’s Emergency Committee will meet Thursday to consider declaring the coronavirus a global crisis.“The whole world needs to be on alert now,” Michael Ryan, executive director of the UN agency’s Health Emergencies Program, said at a press conference in Geneva. “‘The whole world needs to take action and be ready for any cases that come” in China or beyond.The WHO last week stopped short of calling the outbreak a global health emergency, saying it remained a local crisis for the time being. Declaring a global emergency would allow the WHO to coordinate government responses to the crisis. Since last week, China has taken unprecedented measures to try to slow the spread of the virus.British Airways Halts China Bookings (2:50 a.m.):British Airways said it will halt flights to Beijing and Shanghai, joining other carriers in announcing the cutting or suspension of flights to China following the coronavirus outbreak.The moves come as the U.S. and U.K. said residents should avoid all non-essential travel to China. United Airlines Holdings Inc., the biggest U.S. carrier to the Asian nation, said it would cut flight service after a drop in demand.The U.S. government is considering several options to combat the emergence of the coronavirus, including a ban on flights to and from China, though no decision has been made, a person familiar with the deliberations said on Tuesday night.Toyota Halting China Production Until Feb. 9 (00:57 a.m.):Toyota Motor Corp. is halting operations in China until Feb. 9, joining a growing list of global companies that have cut back on business activities in China.“Given the various factors including the guidelines by the local and region governments and parts supply situation, as of Jan. 29, we have decided to halt operations in our plants in China until Feb. 9,” said Maki Niimi, a spokesman for the Japanese automaker. “We will monitor the situation and make further decisions on operations from Feb. 10.”U.A.E. Reports First Confirmed Middle East Cases (1:08 p.m. Hong Kong):The United Arab Emirates reported the first cases of the novel coronavirus in the Middle East.The disease was diagnosed among members of a family that arrived from the Chinese city of Wuhan, state-run WAM news agency reported, citing the Ministry of Health and Prevention. The patients are in stable condition and are under medical observation, it said.The ministry didn’t specify the number of diagnosed cases.Macau’s China Visitors Plunge, Hurting Casinos (12:25 p.m. Hong Kong)Visitor arrivals to Macau from mainland China have plunged 79% during the Lunar New Year holiday, as the impact from the virus outbreak deals a major blow to casino operators.The number of Chinese visitors from Jan. 24-28 slumped to 127,149, according to data from Macau Government Tourist Office. While casinos in the world’s largest gambling hub remain open for now, the region has been effectively shut down. Nearby Hong Kong has restricted transportation from the mainland, while Beijing has stopped issuing visas for individual travel to both Hong Kong and Macau.A Bloomberg Intelligence index of Macau casino operators dropped as much as 5.1% on Wednesday, the most intraday in almost six months.Evacuation Begins for U.S. Citizens in Wuhan (9:58 a.m. Hong Kong):A plane taking U.S. citizens out of Wuhan has taken off from the city at the center of the coronavirus outbreak, according to a U.S. government official.The U.S. State Department has been working with Chinese authorities to bring back American consulate personnel and other citizens from Wuhan. The plane is expected to land in Ontario, California. The state department said travelers would be screened and monitored.Hong Kong Stocks Tumble as Trading Resumes (9:36 a.m. Hong Kong):Investors in Hong Kong caught up with the rapidly spreading virus outbreak, as the Hang Seng Index dropped as much as 3% in early trading. Financial markets in Hong Kong opened for the first time this week following the Lunar New Year break.Financial markets in China will reopen on Monday after the central government extended the holidays on the mainland. China pledged to provide abundant liquidity for money markets and urged investors to evaluate the impact of the coronavirus objectively.Australian Scientists Growing Virus (Earlier Wednesday):Scientists in Melbourne are growing the virus from a patient sample, the Peter Doherty Institute for Infection and Immunity said Wednesday. Information gleaned from the research will provide other laboratories with data needed to help combat the virus, they said.Research labs in various cities, including Hong Kong, are already growing the virus to study and characterize its properties, including where in the body it’s likely to replicate and cause infection.China Virus Cases Surpass Those From SARS (8:09 a.m. Hong Kong):The number of infected cases in mainland China soared to 5,974, the National Health Commission said Wednesday. That’s more than the 5,327 cases officially reported in the country during in the SARS epidemic 17 years ago.The death toll climbed to 132, with most of the cases in Hubei, the epicenter of the outbreak. The province added 25 fatalities on Wednesday. Almost 60,000 patients are under observations, the NHC said, double the number from earlier in the week.\--With assistance from Allen Wan, Yinan Zhao, Isabel Reynolds, Jason Scott, Farah Elbahrawy, Chester Dawson, Jason Gale and Thomas Penny.To contact the reporters on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net;James Paton in London at jpaton4@bloomberg.net;Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.netTo contact the editors responsible for this story: Kazunori Takada at ktakada17@bloomberg.net, ;Kenneth Wong at kwong11@bloomberg.net, ;Drew Armstrong at darmstrong17@bloomberg.net, Eric Pfanner, Mark SchoifetFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Facebook's First Human Rights Chief Confronts Its Past Sins
    Bloomberg

    Facebook's First Human Rights Chief Confronts Its Past Sins

    (Bloomberg) -- In July, Facebook Inc. quietly hired Miranda Sissons, a 49-year old human rights activist whose previous work has included stints at the Australian diplomatic service and the International Center for Transitional Justice. The hiring, which was never formally announced, is part of a broader effort by the company to atone for more than once failing to stop online abuse on Facebook from spilling over into real-world violence. Human rights advocates in places like Sri Lanka, the Philippines, India and Brazil have long complained that the company has refused to acknowledge mounting evidence about the dangers of digital hate. As Facebook pursued world-changing growth, particularly in developing countries, it didn’t always have local staff there, or even employees who spoke the language. In Myanmar, a wave of online hate preceded a campaign of violence against the country’s Rohingya minority that led to thousands of deaths and the displacement of over 700,000 people. An independent report Facebook commissioned in 2018 found that it bore partial responsibility for fueling the conflict. Immediately after taking the job, Sissons took a five-day trip to the country. “I was deeply, deeply aware of the criticism of Facebook’s inaction in Myanmar, and deeply aware of the struggles humankind is facing with the impact of social media,” Sissons told Bloomberg News earlier this month in her first press interview in her new role. “This is one of the greatest challenges of our time.”Sissons work is part of a broader reckoning within the technology industry, which has been forced to reexamine its role in world conflicts. Several months before Facebook hired Sissons, Twitter Inc. brought on Cynthia Wong, a former researcher at Human Rights Watch, to be its human rights director. As with Facebook, Twitter never announced the hiring. In discussions with more than a dozen people familiar with Facebook’s work on human rights, a picture emerges of a company that has been moving rapidly but, according to its skeptics, not always effectively. One Facebook employee, who asked not to be identified discussing private information, said its shortcomings have not always been the result of having too few people dedicated to human rights, but at times having so many people involved that they’re working at cross-purposes. Human rights advocates outside the company acknowledge Facebook’s effort to hire experts, and say it has become far more responsive. But they worry that internal advocates like Sissons won’t be adequately empowered, and many are withholding praise until the company makes more concrete changes. “They are hiring people who have the right knowledge, experience and sensibility to tackle human rights problems,” said Matthew Smith, chief executive of Fortify Rights, a human rights group. “So far, though, that’s clearly not enough.”  Sissons’ human rights education started early. Her father was a prominent Australian historian who served in the occupation force of Hiroshima after World War II, then worked as an interpreter in the Australian-led tribunals of Japanese officials accused of war crimes. “My early childhood was completely taken up with discussions of war crimes, war criminals, the Second World War, and notions of justice,” she said.After attending the University of Melbourne, Sissons spent time in East Timor, researched Middle Eastern issues and took several posts with the Australian diplomatic corps, including a frustrating stint answering phones at an Australian embassy in Egypt. “My Arabic wasn’t very good,” she confessed. “People would ring me up and shout at me about all kinds of things, and I would have to find a solution. ” Eventually, Sissons went on to work on her own high-profile tribunal as an independent observer of the trial of former Iraqi leader Saddam Hussein, and she did stints at Human Rights Watch and the Australian diplomatic corps. In 2011 Sissons switched her focus to the relationship between human rights and technology. She had been working in the Middle East, where the Arab Spring was just getting underway, and many people believed social media could shift the balance of power between citizens and oppressive regimes. It was a time of unmatched optimism about the potential of social media in political organizing.The good feelings didn't last. As early as 2014 there were credible reports emerging of coordinated incitement on Facebook against the Rohingya in Myanmar. The online abuse foreshadowed a wave of violence that began in earnest in 2016.By the time Facebook began looking for a human rights director in 2018, the conventional wisdom on tech from a few years earlier had effectively reversed. The killings in Myanmar and elsewhere, coupled with Russian-led disinformation campaigns in Donald Trump’s presidential election, had darkened popular opinion. Companies that were accustomed to being revered were suddenly being accused of simultaneously squelching free expression and tolerating active manipulation of their platforms.The tech industry’s first halting steps to control the flow of abuse initially won few fans. In an online essay in late 2018 Cynthia Wong, then senior internet researcher for Human Rights Watch, said it was time for a “moral reckoning” in Silicon Valley. “If regulators, investors, and users want true accountability, they should press for a far more radical re-examination of tech sector business models, especially social media and advertising ecosystems,” she wrote. In some cases, the companies started hiring their critics. Twitter brought on Wong as its legal director of human rights in April 2019. The company declined to make her available for an interview, and said in a statement that it was “uniquely positioned to help activist and civic-minded people around the globe make their voices heard." Other attempts at reform were wholly unsuccessful. In early 2019 Ross LaJeunesse, then Google’s global head of international relations, saw Facebook’s posting for a human rights director, and used it to argue for the creation of a similar structure at his company. He failed, and left the company soon after. LaJeunesse, who is currently running for the U.S. Senate in Maine, now says tech companies can’t handle these issues on their own. “There has to be government oversight,” he said. Sissons, who reports to Facebook’s head of global policy management Monika Bickert, has over the last several months been quietly incorporating human rights protections into Facebook’s policies, and making sure that people with human rights training are in the meetings where executives sign off on new product features. She said the company had made progress before she arrived, including the reform of its 2018 decision to begin removing misinformation in situations where it could lead to physical harm.“There are now a lot of resources in place,” Sissons said. The challenge is to quickly identify local signs of trouble, then block or slow the spread of certain content, or take swift action against particular users. “We are testing continuously in crisis environments to try and predict what resources we’ll need,” she said, “and to ensure they’re in place.” When Sissons went to Myanmar with Facebook she made a stop in Phandeeyar, a tech hub and community center in downtown Yangon. Jes Kaliebe Petersen, its CEO, said he’s been meeting with Facebook employees for years—he helped the company develop local community standards almost five years ago. But the encounters have calcified into a depressingly predictable routine. “They send a bunch of people who have never been here before, and they talk to us,” said Petersen. “And we never hear from them again.” A spokesman for Facebook said it has held many introductory meetings at the request of local advocates, and argued the company has taken significant strides in the country. Besides hiring Sissons, it shut down hundreds of pages and accounts, including that of the head of Myanmar’s army, for spreading misinformation and hatred. It has hired a Myanmar head of public policy for the first time. And it assembled a team of 100 content moderators who speak Burmese. That group will be able to “support escalations” in other languages used in the country as well, Sissons said.The company also set up an independent review board for thorny content moderation issues, and in an unusual step, commissioned independent human rights assessments of what happened in Myanmar and other trouble spots. In November 2018, it published a 60-page report on Myanmar from the nonprofit group Business for Social Responsibility, in full. “They deserve praise for putting it out there,” said Dunstan Allison-Hope the lead author of the report. “You don’t see that.” But Facebook has never made the results of a similar assessment in Sri Lanka public, despite calls to do so. Sissons declined to say whether it had plans to publish those results. And there are currently no Facebook staff members working in Myanmar full-time—something that many advocates have called for. Representatives for Facebook say its staff based in Singapore and elsewhere are regularly in Myanmar, and that it has spent well over a year taking hundreds of meetings with people in the country. One person who said he'd never gotten an invitation to meet with Facebook is Nickey Diamond, a local advocate working for Fortify Rights. Diamond said he has been the target of harassing posts from the government for years, and still faces a menacing atmosphere online. “They’re sharing my picture with the word ‘traitor’ in Burmese,” he said. “Every human rights defender is in the same situation.”  The broader problem Facebook is confronting—the vigilant monitoring of an ever-evolving social network used by 2.3 billion people—can seem almost impossibly daunting. The company now has content moderators examining posts in approximately 50 languages, Sissons said, a number that is unchanged from its count last April, and is fewer than half of the languages that Facebook actively supports. Facebook has said only technological improvements can combat problems at scale. It has automated tools that scan for hate speech, as well as image recognition technology monitoring for obscene content regardless of language. About 80% of the posts that Facebook acts on for violating its hate speech policies are now first identified by its automated filters, up from about 24% a year earlier.Soon, the challenges of monitoring the spread of abusive posts could become even more difficult. Facing pressure to increase user privacy, Facebook has prioritized private communications, meaning more content is encrypted so that even the company itself won’t know what it says. In those cases, Sissons said the company is working on tools that will look for patterns associated with problematic content, so it can either remove such messages or impede them from spreading so rapidly. Facebook is aware of the scope of its challenges, said Rebecca MacKinnon, the director of Ranking Digital Rights, an online advocacy group. “Facebook is making an effort to engage. Whether that will make a difference in the real world, we’ll see,” she said. “They’re dealing with some problems that no one knows how to solve.” When Sissons met with members of the Phandeeyar team last November in Myanmar, they came prepared with a handful of suggestions for actions Facebook should take before the national elections there, which are expected to take place later this year. While Phandeeyar staffers had been deeply engaged in the specifics for months, Sissons was still just getting her feet under her, and there wasn’t enough time in the hour-long meeting to get much resolution, said Phandeeyar CEO Petersen.  “There’s always lots of goals for improvements. Hopefully Miranda has a sound plan for how to get there,” he said. “The thing is, we don’t really have that much time.” (Clarifies that Petersen was not in the meeting with Sissions in the penultimate paragraph of article published Tuesday. An earlier version of this story corrected the dates of Sissons' hiring and trip to Myanmar.)To contact the author of this story: Joshua Brustein in New York at jbrustein@bloomberg.netTo contact the editor responsible for this story: Anne VanderMey at avandermey@bloomberg.net, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Earnings Preview: ANGI Homeservices (ANGI) Q4 Earnings Expected to Decline
    Zacks

    Earnings Preview: ANGI Homeservices (ANGI) Q4 Earnings Expected to Decline

    ANGI Homeservices (ANGI) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

  • GoPro (GPRO) Reports Next Week: Wall Street Expects Earnings Growth
    Zacks

    GoPro (GPRO) Reports Next Week: Wall Street Expects Earnings Growth

    GoPro (GPRO) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

  • Analysts Estimate GrubHub (GRUB) to Report a Decline in Earnings: What to Look Out for
    Zacks

    Analysts Estimate GrubHub (GRUB) to Report a Decline in Earnings: What to Look Out for

    GrubHub (GRUB) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

  • Canada panel urges taxes and domestic content rules for Netflix, other U.S. firms
    Reuters

    Canada panel urges taxes and domestic content rules for Netflix, other U.S. firms

    Ottawa should require U.S. tech companies such as Netflix, Amazon and Facebook to collect the same taxes as Canadian companies and also be subject to the same requirements for supporting domestically produced content, a Canadian government-mandated panel recommended on Wednesday. Prime Minister Justin Trudeau's government created the six-member panel in 2018 to examine Canada's decades-old broadcasting and telecoms laws, and advise the government on how to bring the legislation up to date with the current digital landscape. The report stated that it was not recommending a so-called "Netflix Tax" by charging consumers an extra levy.

  • 5 ETFs to Ride on Higher Consumer Confidence
    Zacks

    5 ETFs to Ride on Higher Consumer Confidence

    Americans are optimistic about 2020 attributable to the initial trade deal, a soaring stock market and the lowest unemployment rate in 50 years.

  • Bloomberg

    AT&T Tops Profit Estimates Despite Record TV Customer Losses

    (Bloomberg) -- AT&T Inc. topped earnings estimates as cost cuts helped offset steep TV-subscriber losses and higher spending on its media business, a positive sign as the company tries to mend its balance sheet and turn attention to the launch of its HBO Max streaming service.Fourth-quarter earnings excluding one-time items were 89 cents a share. Analysts had predicted 87 cents, according to estimates compiled by Bloomberg. The company, which operates DirecTV, the largest U.S. TV service, lost 1.2 million subscribers, more than the 782,000 decline analysts expected, according to data compiled by Bloomberg.See more details.Key InsightsThe record annual loss of 4.1 million U.S. TV subscribers that AT&T reported for last year highlights the challenge facing the company as cord cutters switch to streaming services like Netflix Inc. and Hulu. AT&T has also tried to widen margins in its entertainment business by eliminating discounts, further accelerating the exodus.HBO Max, launching in May, will be a primary focus for AT&T as it tries to bolster its appeal to its whole universe of customers. Revenue for the existing HBO premium service rose 1.9% on gains in digital customers, but it’s an open question whether millions of people will want to subscribe to HBO Max for the same $15 monthly cost, even with expanded content.The company raised a net $18 billion last year through moves like selling real estate and tower rent payments, helping it pay down debt and lower its leverage ratio as it had promised investors such as activist Elliott Management Corp. AT&T expects to sell a further $5 billion to $10 billion in assets this year.Market ReactionAT&T shares fell 3.4% to $37.28 in New York trading at 12:01 p.m. The stock was up 37% in 2019, outpacing the 9% gain by peer Verizon Communications Inc. and topping the 29% increase in the S&P 500 Index.Get MoreRead the statement.See AT&T estimates.(Updates analysts’ TV-subscriber estimate in second paragraph, based on an adjustment to the data compiled by Bloomberg.)To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.netTo contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards IIIFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Global Corporate Tax Avoidance Might Get Harder

    (Bloomberg Opinion) -- Slap a tariff on steel and you’re sure to roil markets. But behind the big headlines on trade sanctions are developments that might be just as momentous for the global economy: About 135 of the world's countries are negotiating a radical change to the rules about where and how much multinational companies pay in taxes. The topic was the subject of back-room talks in Davos last week and continue this week in Paris at a working meeting of the Organization for Economic Cooperation and Development. There are important reasons that this effort -- after so many false starts -- may actually deliver change. First, the interests of rich and poor countries are aligned in an unusual desire to seize these untaxed profits. Second, the global corporations that benefit from the current system worry about new and uncoordinated taxes popping up around the world. Third, if there’s one economic issue that angers voters more than unfair trade, it’s rich corporations that skirt paying taxes. The G-20’s leaders started this process in 2013, and experts at the OECD are on the hook to build support for major reforms by the end of this year. The jargon for the technical problem they are tackling is “base erosion and profit shifting,” which refers to corporate efforts to book profits in low-tax jurisdictions and in many cases avoid taxes where they have no physical presence. International rules generally allow countries to tax only business activities in their own territory. The advent of digital services and online sales, however, makes it harder to pinpoint exactly where many business activities occur. Moreover, the rising value of brand names and intellectual property opens the way for financial engineering that makes sales by companies such as Amazon, Google and Starbucks in high-tax countries look less profitable. Measuring worldwide corporate tax avoidance involves a little guesswork. The OECD puts the number at about $240 billion in lost annual tax revenue, but one International Monetary Fund study reckons it could be more than twice that much, or almost 1% of global gross domestic product. Still another measure of the problem found that some 40% of reported foreign direct investment passes through corporate shells with no business activity, probably to avoid taxes.The OECD proposals that will be further fleshed out this week focus on two principal reforms. First, countries would be allowed to tax a proportion of a business’s global profits based on a company’s sales within that country. This would be a significant help for developing countries where many multinationals sell without a physical presence. A second set of proposals would establish the right to impose a minimum tax on global profits.It doesn’t take much imagination to see the devilishly complex issues such rules might trigger around definitions, reporting and fairness. A key goal of President Donald Trump’s 2017 tax reform was to bring home untaxed profits parked abroad, but so far its results have been mixed. Meanwhile, the European Union’s efforts to agree on a common digital tax have run aground.More dramatically, France’s unilateral tax on digital transactions triggered a sharp reaction -- and tariff threats -- from the Trump administration because the biggest targets were American. Trump and French President Macron brokered a temporary truce on the digital tax in Davos, with each side agreeing to stand down while multilateral negotiations continue. But the U.S. administration seems inclined to strike a broader deal. On the one hand, if Washington doesn’t like raising taxes, it certainly doesn’t like losing revenues to other countries. On the other, digital taxes similar to France's are on the table in the U.K., Canada, Australia and elsewhere. Trump is unlikely to punish them all as anger mounts over corporate tax evasion at home.Companies themselves are watching closely and sense that change is afoot. The only thing worse than coordinated change is uncoordinated change, although the details of the final deal will be crucial.There are the political calculations as well. If current leaders fail to deliver meaningful change, they may be swept aside by rising populist waves of unhappiness over inequality and excess corporate wealth. What’s currently on the table looks mild in comparison to proposals by the U.K. Labour Party and some U.S. Democratic presidential candidates.Investors may be reluctant to focus on such abstruse negotiations at the moment, especially when the economic data looks mostly promising. Political, national security and public-health headlines all are more likely to trigger market volatility.Still, it’s not too soon to start incorporating the risks of higher taxes on the world largest businesses. Investors ignore the consequences at their own peril.To contact the author of this story: Christopher Smart at cwsmart01@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Christopher Smart is chief global strategist and head of the Barings Investment Institute.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • AT&T Is Still Struggling to Justify Its Time Warner Deal
    Bloomberg

    AT&T Is Still Struggling to Justify Its Time Warner Deal

    (Bloomberg Opinion) -- AT&T Inc.’s leadership says proudly that it’s delivering on its promises. Investors aren’t sure if they even like those promises.Fourth-quarter results released Wednesday once again revealed how AT&T is struggling to justify CEO Randall Stephenson’s costly decision to turn a strong wireless company into a riskier communications and entertainment conglomerate. Earnings per share beat analysts’ expectations, thanks to a subsiding price war among the U.S. wireless carriers. But AT&T’s pay-TV operations continued to be a drag, losing 1.2 million subscribers during the period, nearly double the amount analysts figured. That brought total video disconnections for the year to 4.1 million, far outpacing cord-cutting at rivals such as Comcast Corp. Meanwhile, investments in the HBO Max streaming-TV app — which will face fierce competition when it launches in May from Walt Disney Co.’s Disney+, Comcast’s Peacock, Apple Inc.’s Apple TV+, Netflix and other lower-priced services — reduced AT&T’s revenue by $1.2 billion. The shares slipped more than 2%.Stephenson and his team did manage to sell about $18 billion of assets in 2019. That helped AT&T pay down more than $20 billion of debt, meeting a crucial net-debt-to-Ebitda target that was promised to shareholders while allowing the company to maintain its plush dividend. The entertainment division, which is made up of DirecTV, AT&T TV Now and other services, also didn’t deteriorate any further on an Ebitda basis, holding at $10 billion as executives said it would. Having fewer subscribers reduced costs. “We’ve checked every box,” Stephenson said on Wednesday’s earnings call.But there’s still the feeling that AT&T is trying to jump through an awful lot of hoops for a transformation it arguably didn’t need to make. Why hold on to DirecTV and all of its headaches? Why take on all that debt to buy Time Warner? Why join Netflix at its money-torching party?The AT&T team would say that’s the wrong way to think about it. They would like for everyone to stop viewing AT&T as a disparate conglomerate comprising an attractive wireless business on one side and finicky media assets on the other. Instead, they want the entertainment brands and pay-TV services to be seen as reinforcing the wireless business over time. It comes back to the idea of bundling, a remnant of the cable era that is likely to be reborn in the streaming era. The idea goes like this: In a 5G world, where wireless connections are significantly faster, video consumption on mobile devices should only increase. Access to HBO Max and AT&T TV Now could give consumers greater reason to choose AT&T and stick with the network.As it is, AT&T’s unlimited elite plan — which includes HBO Now at no extra charge — has lower churn, meaning fewer of those customers are leaving, John Stephens, AT&T’s chief financial officer, said in a phone interview Wednesday. But very few of AT&T’s 75 million postpaid wireless subscribers actually have that specific plan (and in fact, overall churn was up at AT&T in the latest quarter). The goal is to use the new HBO Max app to achieve the same reduction in churn across a broader swath of its subscriber base as it has with those unlimited elite subscribers, Stephens said.John Stankey, a longtime AT&T executive who heads up WarnerMedia and serves as chief operating officer of the parent company, took it a step further in an interview last October (see my deep-dive: “Is AT&T’s Hollywood Plot Too Far-Fetched?”). AT&T is no longer just competing with Verizon Communications Inc. and other carriers. “We need to make this move to compete with companies that are incredibly strong and capable like the Googles, Amazons and Apples of the world — and so we’re playing big,” Stankey said. His perspective is important because he could end up CEO when Stephenson retires.Verizon has taken an entirely different tack. Instead of launching itself into Hollywood like AT&T has, Verizon has partnered with Disney+ by giving the service away free for a year to customers who sign up for an unlimited data plan. It’s a simpler, less fraught strategy, and investors have rewarded Verizon for keeping it that way. But Verizon is also no Apple or Amazon, and perhaps AT&T deserves credit for trying to be. Plenty of companies — retailers, health-care companies, grocery stores, parcel-delivery services — have been criticized for not better intuiting and preparing for how innovation by Big Tech would overtake their industries.AT&T did what it said it would in 2019, and by 2022 it’s promising better profit margins, stronger free cash flow and a smaller debt load. It’s just that Wednesday’s results make it harder to believe the company will be able to balance it all.To contact the author of this story: Tara Lachapelle at tlachapelle@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Economic Data Deluge
    Zacks

    Economic Data Deluge

    Economic Data Deluge

  • Peer Review Is Science’s Wheel of Misfortune
    Bloomberg

    Peer Review Is Science’s Wheel of Misfortune

    (Bloomberg Opinion) -- In 1936, Albert Einstein submitted a paper, coauthored with his assistant Nathan Rosen, to the journal Physical Review. A month later, he received a critical report from an anonymous reviewer together with a polite request from the journal’s editor to address it. Outraged by what was apparently his one and only brush with peer review, Einstein wrote back: “We (Mr. Rosen and I) had sent you our manuscript for publication and had not authorized you to show it to specialists before it is printed. I see no reason to address the — in any case erroneous — comments of your anonymous expert.”Modern scientists can only marvel at Einstein’s contempt for peer review. Over the years, this process has become so central to scientific publishing that nowadays even the most distinguished researchers must regularly subject themselves to its trials and tribulations.We can, however, easily identify with Einstein’s disregard for the opinions of the so-called expert.(1) The same time-honored sentiment drives the popular Facebook group “Reviewer 2 Must Be Stopped,” which is devoted to the proposition that reviewers are too often ignorant, careless, petty or downright evil.Unfortunately, peer review has problems that run deeper than the quality of any particular reviewer. The process is inconsistent and subjective to the degree that — in the words of Richard Smith, a former editor of the British Medical Journal — it’s “something of a lottery.” Smith wrote that Robbie Fox, a one-time editor of the Lancet, went so far as to question “whether anybody would notice if he were to swap the piles marked ‘publish’ and ‘reject.’” There’s a mountain of evidence that these claims aren’t far from the truth.The situation is especially grim in artificial intelligence, where most impactful publications appear in conference proceedings. Every year, each of several large conferences in the field receives thousands of submissions in a single day, which are then reviewed simultaneously by a “program committee” consisting of thousands of volunteers. It’s obvious that enforcing consistency at this scale is all but impossible.Still, AI researchers were shocked by the results of an experiment conducted in 2014 by the organizers of the influential Conference on Neural Information Processing Systems. A portion of the submissions(2) were evaluated by two different committees, which made independent decisions to accept or reject. It turned out that 57% of the papers accepted by one committee were rejected by the other. That’s unnervingly close to what you'd expect from purely random selection.Even the most alarming cases — papers that are blatantly wrong or fraudulent — are rarely caught in the peer review net. One of the most egregious examples is that of Jan Hendrik Schoen, a German physicist who published a slew of supposedly groundbreaking — but actually fraudulent — papers in the early 2000s. He was exposed when colleagues who were trying to build on his work noticed duplicated figures in one of his papers, leading to discoveries of additional anomalies and ultimately a full-blown investigation. In the aftermath, dozens of Schoen’s meticulously peer-reviewed papers were retracted, including an eye-popping total of 16 published in two of the most prestigious journals, Science and Nature.The Schoen scandal mainly serves as a cautionary tale, but it also hints at why the scientific enterprise is so successful despite the shortcomings of peer review. Publication is just one part of a much larger process in which important papers are identified and then heavily scrutinized by the relevant scientific community. That’s doubly true in today’s scientific ecosystem, where online preprint repositories like arXiv make it possible for papers to achieve widespread fame or notoriety before they’re even submitted for publication.My concern, then, is not for the integrity of science, but for the welfare of scientists.The question of how many papers a scientist published, and where, plays a huge role in decisions about hiring, promotion, funding and — in disciplines like computer science — even admission into Ph.D. programs. A scientist’s career may depend on whether a few reviewers choose to accept or reject a single paper.To receive tenure at a leading economics department, for example, candidates are expected to have published two or three papers in the discipline's most prestigious journals, imaginatively called the "top 5." Three of these journals famously rejected “The Market for Lemons,” a seminal paper that upended economic thinking and won its author a Nobel Prize, with one reviewer complaining, “If this paper was correct, economics would be different.”It seems paradoxical that scientists — ostensible paragons of evidence-based reasoning — would give such weight to the outcomes of peer review, despite the growing evidence of the system’s limitations. One reason is laziness: nothing’s easier than skimming through a colleague’s list of publications and noting where they appeared. But another may well be that relatively few scientists recognize just how flawed peer review is. It’s up to universities and academic associations, therefore, to examine the evidence and initiate an honest discussion of this question: Assuming the way in which we evaluate papers stays fundamentally the same, how should we evaluate each other?Scientists should also work on solutions to the problems of peer review, as many are already doing. My own contribution to this effort is reported in a recent manuscript coauthored with two former colleagues at Carnegie Mellon University, Ritesh Noothigattu and Nihar Shah. I am especially fond of this footnote: “Even papers about peer review are subject to peer review, the irony of which has not escaped us.” That irony, however, was apparently lost on our esteemed peers, who have thrice rejected the paper. To paraphrase a great scientist, I see no reason to address the — in any case erroneous — comments of these anonymous experts.(1) Amusingly, in this case the reviewer was actually right.(2) In 2014, the conference received “only” 1,678 papers. By 2019, the number of submissions had skyrocketed to 6,743.To contact the author of this story: Ariel Procaccia at arielpro@seas.harvard.eduTo contact the editor responsible for this story: Jonathan Landman at jlandman4@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Ariel Procaccia is Gordon McKay Professor of Computer Science at Harvard University. His areas of expertise include artificial intelligence, theoretical computer science and algorithmic game theory. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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