With 4 Short Words, Amazon Just Revealed the Brutal Truth About Its Decision to Cancel HQ2 in New York. (So Many People Don't Want to Admit This)

It’s not a plan really, not a hidden secret message. It’s more of an expression of emotion. Maybe a realization of necessity.

In fact, while the text Amazon posted on its blog on February 14 runs 363 words, the most important part of this crucial passage is just four words long. But those four words speak volumes.

It starts with a dig at “state and local politicians” in New York, and a statement about how many New Yorkers supposedly supported the deal. Then, we get to the crucial part:

We are disappointed to have reached this conclusion–we love New York, its incomparable dynamism, people, and culture–and particularly the community of Long Island City, where we have gotten to know so many optimistic, forward-leaning community leaders, small business owners, and residents. 

There are currently over 5,000 Amazon employees in Brooklyn, Manhattan, and Staten Island, and we plan to continue growing these teams.

Those four crucial words? “We love New York.”

They’re not included by accident. In fact, I’ll bet this statement probably went through more writing, editing and rewriting than anything in Amazon’s history.

But the passage is crucial. It’s a recognition that even in a post-HQ2 world Amazon, still depends big time on New York. That’s why I think the company is at pains to reassure everyone that it isn’t going to try to just reopen the HQ2 search and do this elsewhere.

The brutal truth is: New York City is special.

I know people don’t like to admit this. I know that there are many trying to make political points, attacking union leaders and politicians who they say are to blame for Amazon running away.

But there is no other place truly like New York City, and Amazon isn’t really going to run — not completely. It’s not just chest-thumping; it comes down at least partly to sheer numbers. Here are three of them:

  • By far, New York is the largest city in America, with 8.6 million people–almost as big as the second, third, and fourth largest cities combined.
  • By far, it’s the largest metropolitan area: more than 20 million people. If it were its own state, it would be about as big as Florida — but much more densely packed.
  • By far, it has the largest GDP of any metro area, at at $1.7 trillion. That’s nearly 9 percent of the entire country.

Was it ever possible that Amazon would direct a personal insult at the largest and most important market in the country, by jilting it for say, Nashville? 

No offense to Nashville, the so-called runner-up. It’s a really great city too, but numbers don’t lie: it’s tiny compared to New York.

Remember, they just proved it at Amazon, too.

After staging a 14-month beauty contest, playing off more than 200 cities against each other, and keeping the terms secret so that none of them could know what they needed to do in order to win, the result was almost comically predictable:

Amazing n couldn’t do better than New York and an area right outside Washington, D.C. 

You know what I think’s going to happen now? Amazon is going to redistribute those 25,000 jobs around a lot of different places. (Remember, it was only planning to create 700 jobs this year, and wouldn’t hit the full number until 2028 at least.)

Now, New York will still get the largest share, only without having to give an average of $120,000 per job in tax breaks to get them.

And, it will make up the rest and still more–because Amazon just did the legwork for every other company in America.

Especially if the state and city can come up with anything even approaching a small percentage of the deal they were willing to give Amazon, and offer it to a wide array of smaller employers,  think things look pretty rosy.

No matter your size, and as long as you don’t try to squeeze completely one-sided terms out of the deal, if you want to attract amazing workers and expand in one of the greatest cities in the world, Amazon just proved where you should go. 

Amazon loves New York. And a lot of other people do too. 

Germany to extend electric company car tax incentives: paper

FILE PHOTO: German Finance Minister Olaf Scholz attends a media briefing during his visit to Beijing, China, January 17, 2019. REUTERS/Thomas Peter

BERLIN (Reuters) – German Finance Minister Olaf Scholz plans to extend tax incentives for electric company cars, he told a newspaper on Saturday, the government’s latest attempt to boost demand for clean vehicles.

Germany is trying to increase electric car sales in the wake of a diesel emissions cheating scandal that has engulfed its auto industry in the last three years.

“Half of all cars sold in Germany are company cars,” Scholz told the Frankfurter Allgemeine Sonntagszeitung.

“So I have decided that we will not end tax support for electric cars and plug-in hybrid company cars in 2021 but extend them maybe over the whole decade,” he said, adding that would help improve air quality and meet climate goals.

He added, however, that the rules for plug-in hybrids would be tightened, so that only cars that can travel on electric power further than they do today would be eligible.

Since January, drivers of electric company cars which they also use for private journeys pay less tax than they would for a vehicle with a combustion engine.

Government subsidy schemes have helped boost sales but even with rising demand, electric cars made up only 1 percent of new car registrations last year, according to the KBA motor vehicle authority.

The government has acknowledged it will miss its target of having 1 million electric vehicles on the road by 2020 by two years.

Reporting by Madeline Chambers; Editing by Gareth Jones

CenturyLink: Don't Head To The Bomb Shelter

The big dividend cut by CenturyLink (CTL) came as a surprise to some shareholders, but my previous research indicated that investors remain focused on free cash flows and EBITDA margins. Whether or not the company uses the cash flows to pay dividends or reduce debt shouldn’t reflect on the stock as the value is in the ability to generate cash on a consistent and hopefully growing basis. Any stock weakness from cutting the dividend and maintaining cash flow targets provides a better entry point in the stock.

CenturyLink logo

Image Source: CenturyLink website

Dividend Slashed

Only last week, Citibank argued that CenturyLink would slash the dividend. Analyst Michael Rollins slapped a $11 price target on the stock making a bearish case around more capital spending and a focus on revenue growth issues.

The negative analyst call was odd considering the telecom had beaten estimates since the new CEO took over to the point that the dividend wasn’t really at question. Regardless, it appears that some investors evidently knew that a cut was on the way or were just wanting to push the stock down so far that the company would cut the dividend.

Along with the Q4’18 earnings report, the Board of Directors made the move to cut the dividend to $1.00, down from $2.16 per share. With the dividend up around 15% and so many analyst questions about the sustainability, a dividend cut wasn’t a huge bombshell.

The likely shock to the investor community is that CenturyLink is having any financial problems that would require a dividend cut. According to CEO Jeff Storey on the Q4’18 earnings call, the move was made purely to de-lever the balance sheet quicker:

However as you saw, we announced today that we plan to reduce the annual dividend to $1 from the current $2.16 per share beginning with the next dividend declaration. This decision is not based upon any concern for the outlook of our business. Our business fundamentals are strong and we believe our free cash flow could sustain the dividend at the prior level through 2019 and beyond. As I said, this change in policy isn’t about a diminished view of our business; it is driven by our view that the long-term interest of shareholders are best served by proactively accelerating, de-levering to a new lower target range of 2.75 to 3.25 times net debt-to-adjusted EBITDA.

Despite these facts, the stock is down over 40% in the last 6 months while the S&P 500 is only slightly down.

Chart

Data by YCharts

In fact, CEO Storey actually hinted at interest rate hike fears as the real reason for slashing the dividend payout to reduce leverage:

By reallocating more of our capital to leverage reduction, we believe, we will improve our cost of capital, return a significant amount of cash to shareholders at a very sustainable payout ratio, and provide additional flexibility to respond to market opportunities and any potential interest rate challenges that may occur. This is not something we did lightly but it is something we firmly believe is in the best long-term interest of our shareholders.

It sure sounds like the FED hiking interest rates in 2018 and the prospects of more hikes in the future caused CenturyLink to reconsider the acceptable leverage ratio.

About Those Cash Flows

A big key to understanding the story here is to look at the FCF progression in 2018. CenturyLink originally guided to FCFs of $3.15 to $3.35 billion for the year.

Source: CenturyLink Q4’17 presentation

The company ended up hitting an incredible $4.25 billion of FCF for the year. Due to a tax refund and other items that amounted to a $500 million bonus in 2018 that won’t repeat this year, the company was clear that the improved cash flows weren’t sustainable in 2019

Regardless, the guidance for 2019 has FCF at $3.10 to $3.40 billion. The most important detail is the capital expenditure guidance.

Source: CenturyLink Q4’18 presentation

A big key here is the capital expenditures of $3.50 to $3.80 billion or roughly 16% of revenues. The company has guided to a long-term target of ~16% of revenues, but CenturyLink didn’t hit those targets in 2018 with capex of only $3.175 billion.

In essence, the 2019 plan includes an ~$500 million boost to capital expenditures in comparison to some of the under spending in 2018. Clearly, the company could further boost cash flows by constraining capex, but the best idea is for CenturyLink to reestablish a higher level of capital spending.

The end result is solid capex spending and a dividend payout of only $1.075 billion with a payout ratio in the 30% range on FCFs of $3.25 billion. In addition, the leverage ratio was already improved by $1.7 billion in debt repayments in 2018 due in part to the extra FCFs last year. The goal of reaching a leverage ratio of 2.75x in ~3 years is another positive sign for the stock.

Source: CenturyLink Q4’18 presentation

Takeaway

The key investor takeaway is that all of the numbers indicate the dividend cut was indeed due to a focus on reducing leverage and improving the capital structure. No indication exists that the cut was due to financial problems out into the future, therefore, the stock is appealing down below $13 with a dividend yield that still sits over 7.5%.

Investors shouldn’t make the mistake of heading to the bomb shelter like with typical dividend cuts.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.

Disclosure: I am/we are long CTL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Lyft to woo investors with fast U.S. growth in IPO race with Uber

SAN FRANCISCO/NEW YORK (Reuters) – Lyft Inc will pitch investors on its fast growth in the United States as it seeks to beat out Uber Technologies Inc to become the first publicly listed ride-hailing company, according to people familiar with the matter.

An illuminated sign appears in a Lyft ride-hailing car in Los Angeles, California, U.S. September 21, 2017. REUTERS/Chris Helgren

Lyft plans to tell investors its U.S. market share is approaching 40 percent, up from 35 percent in early 2018, the people said. The company has pushed aggressively into smaller and mid-sized cities. Lyft currently serves more than 600 American and Canadian cities, three times more than in early 2017.

San Francisco-based Lyft is under pressure to sell investors on its prospects as it races neck-and-neck with Uber to an initial public offering (IPO) that could come as early as the second quarter of 2019.

If Lyft gets to list first, it would avoid being judged by the valuation given to its larger rival.

Uber remains the undisputed king of ride-hailing in terms of size. Its revenue for the third quarter of 2018 was $2.95 billion, up 38 percent from the prior year. It operates in about 70 countries and also has businesses in freight hauling, autonomous driving, food delivery, air taxis and artificial intelligence research.

In contrast, Lyft is available only in the United States and Canada. And it has stayed tightly focused on its core ride-hailing service. Lyft has kept its financials secret.

It is estimated to be worth between $20 billion and $30 billion, compared to Uber’s prospects for a valuation of up to $120 billion. So Lyft will be seeking to assure IPO investors it represents an attractive bet compared to its more established competitor, people familiar with its marketing strategy said.

Lyft has benefited from a spate of scandals that rocked Uber in 2017, including allegations of sexual harassment made by its female employees, the forced resignation of its chief executive officer and its use of illicit software to deceive regulators. A #DeleteUber campaign surged on social media. The negative publicity helped Lyft attract new drivers and riders without spending much on marketing.

Given that both Uber and Lyft are still losing money, investors will be focused on their growth and potential for future profitability. Lyft has prepared some earnings metrics it hopes will persuade investors that it will not be in the red for long, the people familiar with its strategy said.

These include its overall growth in ride bookings, the total number of rides per passenger, the commissions it earns from drivers, and the percentage of rides across its different ride types, particularly its growing carpooling service, the people said.

Lyft declined to comment.

“The IPO market will be focused on growth,” said Jim Williams, chief investment officer of Creative Planning Inc, a wealth and investment manager in Overland Park, Kansas. His firm advises clients who already own shares in Lyft and Uber as well as those considering buying stock in the companies.

Investors will be assessing the companies based on the number of new riders and total rides, Williams said.

They will want to know, “Are these companies expanding?” he said.

(For a graphic on global growth projections for ride sharing, see: tmsnrt.rs/2V51lqr)

UBER TOUTS DIVERSIFICATION

Uber reported sharply slower global bookings growth in the third quarter of 2018; that figure slid to 6 percent over the previous quarter in a business that had routinely been expanding by double-digit percentages.

People familiar with management’s thinking say Uber executives are concerned that if investors judge the company by the same yardstick as Lyft — focusing on the number of rides it sells as opposed to its other initiatives — its valuation could suffer in an IPO.

Uber plans to portray itself to IPO investors as a global logistics and mobility platform, and will spend less time on metrics specific to its core ride-hailing business, the people said.

Uber declined to comment.

Over the last year, Uber CEO Dara Khosrowshahi has sought to direct investor attention to food-delivery business Uber Eats, whose revenue grew 150 percent in the third quarter over the previous year.

Uber and Lyft continue to diverge, offering different financial opportunities to IPO buyers, according to Anna-Marie Wascher, CEO and founding partner at Flat World Partners, an investment management firm that made an early Lyft investment.

“With Uber, you will invest in Uber Eats and global expansion,” Wascher said. “Lyft will get investors betting on the U.S. ride-hailing market.”

Reporting by Joshua Franklin in New York and Heather Somerville in San Francisco; Additional reporting by Carl O’Donnell and Jessica DiNapoli in New York; Editing by Greg Roumeliotis and Marla Dickerson

Why Walmart farms out same-day grocery deliveries to low-cost freelance drivers

ALPHARETTA, Ga. (Reuters) – Jeff Leonard slides behind the wheel of his burgundy Hyundai Accord and heads to a nearby Walmart Inc store, where he picks up the package of groceries waiting for him.

Jeff Leonard, a DoorDash driver, waits to pickup an order at a Walmart online grocery pickup parking lot in Cumming, Georgia, U.S., November 5, 2018. REUTERS/Nandita Bose

Roughly an hour later, the 62-year-old delivers vegetables, flavored water and cleaning supplies to a shopper’s front door. It is one of nearly 100 such Walmart deliveries for Leonard since July, when he first signed up to courier for the world’s largest retailer.

But he does not wear a uniform or collect a traditional paycheck. He is not on Walmart’s staff.

Leonard is one of hundreds of local independent drivers for DoorDash, the San Francisco-based online delivery service that Walmart uses to handle same-day delivery of groceries to shoppers’ homes outside of Atlanta.

Leonard and his cohort of some 16.5 million American “gig” workers – people who currently work in contingent jobs or as on call workers – come at a lower cost for Walmart than full-time employees, according to interviews with drivers, delivery companies and Walmart documents reviewed by Reuters. But they lack loyalty when there are better paying deliveries out there, adding risk to Walmart’s latest attempt to win more online grocery customers.

“This affords me the ability to make my own hours,” said Leonard, who pays for his own fuel, car insurance and gets no health insurance, retirement plan or other employee benefits. He and other gig drivers in the area collect $7 to $10 per Walmart delivery. Walmart has deemed $11 an hour as minimum wage for its own employees.

The world’s largest retailer began bolstering its partnerships with third-party courier firms to reach consumers in 100 U.S. cities last year to better compete with Amazon.com Inc. The move came as it ended initiatives to use Uber and Lyft drivers, and struggled with using Walmart’s own employees, to deliver packages.

Walmart told Reuters it benefits from the speed as well as the driver contacts of its seven partner firms, such as DoorDash. The move allows same-day grocery delivery to 40 percent of households across the United States, without the burden of hiring employees. The retailer is able to keep costs down by negotiating pre-determined delivery rates with the firms, namely by breaking down delivery costs by zones in cities, according to three sources with direct knowledge of the situation, who spoke to Reuters on condition of anonymity. 

The amount that drivers are paid is determined largely by the distance from a store to the shopper’s home or location. For example, for all deliveries within 5 miles of the pick-up point, the retailer agrees to pay a certain amount. It works similarly for distances of 10 or 15 miles from the store as the pick-up point.

“That (payment) gets defined ahead of time and that is fixed,” said a source, referring to the company’s agreement with Walmart. The retailer, the source said, then charges the customer a delivery fee.

The strategy helps Walmart avoid paying surge pricing – higher fares when demand for delivery drivers spikes due to rush hour, bad weather or popular meal times – that can dramatically drive up delivery costs.

Walmart spokeswoman Molly Blakeman said speed is a big factor in Walmart’s reliance on the delivery companies, who have existing contracts with drivers and technology to dispatch them on demand. “To develop that on our own in each market would take us much longer to roll out,” she said.

Walmart’s partnership approach to grocery delivery is in contrast to Amazon Flex, which taps freelance drivers directly as needed, and pays them $18 or more per hour. Amazon is also launching its own branded delivery service for Amazon packages, providing couriers with access to leased Mercedes delivery vans and discounted insurance. Amazon did not respond to request for comment.

By working with partners who hire out drivers “on demand” as contractors who can then also earn money from other outlets, Walmart is also able to lower liability risk from labor-related driver lawsuits, which are growing in number around the United States.

Walmart’s Blakeman said the drivers are paid by the delivery, not by the hour, and the all-in average delivery time is 35 minutes. The delivery companies then make decisions about payments to drivers and how they are distributed, she said.

In Georgia and Ohio where these drivers deliver for Walmart as well as local restaurants, Reuters found nearly two dozen drivers take in compensation of less than $11 an hour when they made deliveries for Walmart. And some took in less than the federal minimum wage of $7.25 an hour. All but one of the 22 deliveries, Reuters tracked, took over an hour to finish.

In a statement, DoorDash Chief Operating Officer Christopher Payne said a majority of drivers earn over $11 an hour while completing Walmart deliveries and a significant portion of the drivers earn over $15 an hour. Reuters was not independently able to verify the higher end of the hourly pay scale.

Walmart partner Deliv paid drivers by the hour, sources said. Reuters reported earlier this week that Deliv, one of Walmart’s partners in Miami and San Jose, ended the relationship altogether.

LACKING LOYALTY

The risk to Walmart’s new strategy is driver loyalty. None of the drivers in Georgia and Ohio Reuters interviewed said they would commit to handling Walmart deliveries over more lucrative gigs from local restaurants, especially during busy hours.

Garrick Clark, a 44-year-old driver making deliveries for Walmart in Alpharetta, said he would prefer dropping packages for Amazon over delivering groceries for Walmart because Amazon pays $18 to $24 an hour for similar deliveries.

A source with direct knowledge of why the relationship between Walmart and Deliv ended, said delivering large orders over long distances was a hurdle to the tie-up. Walmart charges $7.99 to $9.99 delivery fee on a minimum order size of $30 for online grocery orders, and customers willing to pay for same-day delivery often do not live close to a Walmart store, the person said.

Further, many Walmart’s stores are in low-income neighborhoods which generated fewer online grocery orders for Deliv’s same-day delivery, two sources said.

Parking stall signs for Walmart online grocery pickup are seen at a Walmart parking lot in Cumming, Georgia, U.S., November 5, 2018. REUTERS/Nandita Bose

“To get drivers to agree to $7 or so to drive 15 miles to deliver 40 items was a big problem. Most drivers were like, ‘We don’t want to do Walmart anymore,’” one of the sources said. According to Spend Management Experts, Walmart would have to spend at least $141.76 per employee, per day if it hired them to make deliveries for 8 hours at $11 an hour in Atlanta. The cost analysis, which the firm performed on behalf of Reuters in December, includes what Walmart would pay for fuel, car insurance and car maintenance. But it excludes the cost of employee benefits.

Leonard, the driver here in Alpharetta, said getting a guaranteed minimum wage from delivery companies for the hours he logs would be a big help.

“But they don’t, and that’s the nature of the beast,” Leonard said.

Reporting by Nandita Bose in Alpharetta, Georgia; Additional reporting by Jonathan Stempel in New York and Lisa Baertlein in Los Angeles; Editing by Vanessa O’Connell and Edward Tobin

Cities Spurned By Amazon for HQ2 Renew Courtship After Winning New York Has Second Thoughts

As Amazon faces political obstacles in building a huge office in New York City, cities that were once candidates for the campus are courting the tech giant once again.

Cities including Miami, Chicago, and Newark, NJ have all recently talked to Amazon, brushing off their earlier rejections in hopes of landing thousands of jobs. Then Denver and Dallas said they never stopped speaking with Amazon.

Since announcing plans to build a new “second headquarters” in New York City three months ago, Amazon has encountered intense blowback. New York politicians are balking at a plan to hand over huge financial incentives to one of the biggest companies in the world while local residents complain about the impact of thousands of new workers on an already expensive and crowded neighborhood.

The opposition has Amazon second-guessing its move into the city, according to media reports, opening the door to former candidates to dust off their old proposals.

Last year, Amazon last year received 238 bids for the new headquarters, which originally was planned for one city. Candidate cities made big offers—like Maryland’s $8.5 billion incentive package—in hopes of landing the giant.

After going through the proposals, Amazon released a list of 20 finalists, which included Atlanta, Austin, Boston, Chicago, Denver, Los Angeles, Miami, and Columbus, OH—though very few of these cities publicly disclosed the incentives attached to their bids.

Ultimately, Amazon decided to change course and name two winning cities, but with only 25,000 job each. In addition to New York City, the company chose Crystal City, VA.

And while many losing cities were disappointed about being passed over, a few now are taking advantage of the tension in New York for a second chance with Amazon.

Illinois governor J.B. Pritzker, who previously helped pitch Chicago, immediately jumped on the phone with Amazon.

“Governor Pritzker reached out to Amazon to make a full-throated pitch to attract these good-paying jobs to Illinois and assure them that they would have a strong partner in the governor’s office,” Jordan Abudayyeh, spokeswoman for the governor’s office, told Fortune in a statement.

Meanwhile, Newark, NJ contacted Amazon to let the company know the city and state still have incentive packages, approved before the city was rejected, waiting for Amazon. Officials hope the news will show Amazon that it can move in without any risk of second guessing.

Miami-Dade’s mayor Carlos Giménez told the Miami Herald that he’s ready to restart talks about bringing the Amazon to Miami or other South Florida sites that were included in an earlier joint bid. The mayor of Magic City, Fla., said he planned to reach out to Amazon CEO Jeff Bezos to pitch him directly, according to the Herald.

A representative of the Dallas Regional Chamber said during a panel that that organization “never hung up the phone with Amazon,” according to media reports. The chamber declined to comment on whether Dallas planned to approach the company directly.

But Dallas mayoral candidate Jason Villalba was vocal about the matter on Twitter, saying, “Dallas can win this bid!” Undoubtedly, he also was using the issue as a way to highlight his experience in economic development to voters.

Similarly, The Dallas Morning News took the opportunity to write an op-ed titled, “Dear Amazon, New York doesn’t want you; Dallas does.” Mind you, the Morning News’ former headquarters is one of the potential sites for Amazon’s headquarters that Dallas listed in its proposal—a financial consideration that the News failed to mention.

Japanese self-drive cars map developer to buy rival U.S. startup for $200 million

(Reuters) – Japanese map platform developer Dynamic Map Platform announced on Wednesday it plans to acquire Detroit-based map startup Ushr for up to $200 million in a bid to widen its geographical footprint in the burgeoning self driving cars market.

Dynamic Map Platform counts Japan’s Toyota Motor, Nissan and Honda among its investors, while Ushr provides 3D mapping data to General Motors.

The move comes as the Japanese car makers seek to challenge Alphabet Inc’s Google and Chinese rivals in the mapping business.

For the acquisition, Dynamic Map Platform said it would raise a combined 22 billion yen ($198.9 million) from investors including two existing shareholders – the Japanese state-backed INCJ fund and Mitsubishi Electric.

“Through the combination, we will be able to offer automotive OEMs a comprehensive high-definition mapping solution for the North American and Japanese markets, with the ability to expand globally in the future,” Tsutomu Nakajima, the head of Dynamic Map Platform, said in a statement.

Reporting by Rashmi Ashok in Bengaluru and Makiko Yamazaki in Tokyo; Editing by Stephen Coates and Muralikumar Anantharaman

U.S. judge keeps documents secret in Facebook encryption case

SAN FRANCISCO (Reuters) – A U.S. judge on Monday rejected a bid by two civil rights groups that had sought to force the release of documents describing a secret U.S. government effort to compel Facebook Inc to decrypt voice conversations between users on its Messenger app.

Silhouettes of laptop users are seen next to a screen projection of Facebook logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration

The issue arose in a joint federal and state investigation into activities of the MS-13 gang in Fresno, California, revolving around the end-to-end encryption Facebook uses to protect calls on its Messenger service from interception.

End-to-end encryption means that only the two parties in the conversation have access to it.

Groups including the American Civil Liberties Union argued that the public’s right to know the state of the law on encryption outweighed any reason the U.S. Justice Department might have for protecting a criminal probe or law-enforcement method.

The Washington Post newspaper also filed a legal brief to unseal the records.

However, U.S. District Judge Lawrence O’Neill in Fresno ruled that the documents described sensitive law enforcement techniques and releasing a redacted version would be impossible.

“The materials at issue in this case concern techniques that, if disclosed publicly, would compromise law enforcement efforts in many, if not all, future wiretap investigations,” O’Neill wrote, adding that the underlying criminal case was still ongoing.

An ACLU representative and a spokeswoman for the U.S. Justice Department both declined to comment.

Both the Justice Department and Facebook’s arguments in response to the ACLU were themselves kept secret. However, O’Neill wrote that Facebook supported the ACLU’s requests to unseal, with limited redactions, while the government opposed them.

Neither U.S. prosecutors nor Facebook have commented publicly about the Messenger case because of a court gag order. But Reuters reported last year that investigators failed in a courtroom effort to force Facebook to wiretap Messenger voice calls.

U.S. telecommunications companies are required to give police access to calls under federal law, but many apps that rely solely on internet infrastructure are exempt. Facebook contended Messenger was covered by that exemption, sources told Reuters.

Public court filings in the Fresno case showed the government was intercepting all ordinary phone calls and Messenger texts between the accused gang members.

An FBI affidavit cited three Messenger calls that investigators were unable to hear. The participants in those calls were arrested anyway.

Reporting by Joseph Menn, Writing by Dan Levine, Editing by Rosalba O’Brien

Brookfield in talks with India's Reliance Industries to buy tower, fibre assets: report

MUMBAI (Reuters) – Canadian private equity firm Brookfield Asset Management is in preliminary talks with India’s Reliance Industries to buy a stake in its optical fibre and telecom tower assets, The Times of India newspaper reported on Friday.

FILE PHOTO – People walk to Brookfield Place off Bay Street on the day of the annual general meeting for Brookfield Asset Management shareholders in Toronto, May 7, 2014. REUTERS/Mark Blinch

Reliance Industries Ltd said in December it planned to separate its fibre and tower business from its telecom arm Reliance Jio Infocomm Ltd, commonly known as Jio.

“The end objective of that is to find a different set of investors who would be wanting to run these kind of assets,” V Srikanth, joint chief financial officer of Reliance Industries said in January at the company’s quarterly results announcement.

The move will help Reliance to unlock value in the assets and reduce debt, he said.

While Srikanth declined to mention the number of towers the company has, or the reach and length of the fibre optic infrastructure, the company had said earlier it wanted to cover 99 percent of India’s population by the end of December 2019 with its telecom service.

The value of the assets is expected to be around $15 billion, the newspaper said, without citing its sources.

Reliance and Brookfield did not reply to emails seeking comment.

Jio, which has absorbed $40 billion of Reliance’s capital expenditure (capex) in the last five years, has around $25 billion of debt and has been instrumental in turning India’s most valuable energy company into a position of net debt.

Analysts at foreign broking firm CLSA have said that since a big chunk of Jio’s capex has been put towards building its tower and fibre infrastructure, a potential sale of the assets could reduce the telecom firm’s debt substantially.

Since its launch in September 2016, Jio, billionaire Mukesh Ambani’s most ambitious venture, has upended the telecom sector in India with cut price data and free voice calls. The entry of Jio has pushed all telecom companies into losses or forced consolidation.

Last year, newspapers reported that Brookfield was also in talks to acquire a natural gas pipeline owned by a personal investment vehicle of Mukesh Ambani.

($1 = 71.2000 Indian rupees)

Reporting by Promit Mukherjee; Editing by Mark Potter

A Survey of 6,672 Executives Reveals the Biggest Trends Poised to Disrupt Businesses Within 3 Years

Only a decade ago, businesses who operated seamlessly across both the digital and physical worlds had a hugely competitive marketplace advantage. Now, that level of integration, along with digital transformation advocacy has become standard — those who haven’t face inevitable obsolescence. Increasingly, companies — small and large alike — are digital at their core, and as such, are tasked with staying abreast of developing technologies and further mastering the ones they already employ.

Each year a slew of new technological trends emerges, but only a handful promise to effect large-scale change in the enterprise. As such, here are 3 trends from Accenture’s 2019 Technology Vision report that highlight where and how changes are occurring within the workplace — and the potential impact to businesses. 

1. Embracing the DARQ

Gone are the days where artificial intelligence (AI) or machine learning (ML) were considered trends. The DARQ is a collection of relevant emerging technologies, each of which represents significant advances in their own right, but when taken together, are powerful enough to completely transform entire industries. Accenture’s survey revealed that 89% of executives are already experimenting with at least one of these technologies. So what are they?

  • Distributed ledger technology

  • Artificial intelligence 

  • Reality, extended (both virtual and augmented)

  • Quantum computing

Distributed ledgers decrease the ‘trust cost’ of doing business while simultaneously maximizing the value of databases. Artificial intelligence is revolutionizing our idea of efficiency in terms of input, output, and analysis, as well as driving higher ROIs. Extended reality encourages the reimagining of countless products and services. The quantum computing era is rapidly approaching and where there are positive implications, businesses need to be aware of the quantum-threat exists.

Organizations are no longer embracing and preparing for one emerging technology (or threat) — the DARQ-side is here to stay. 

2. Cross-functional awareness, ownership, and distribution of cybersecurity threats

The Internet of Things (IoT), along with the industries and economies that it makes possible, could hardly be more beautiful to behold. Its power, though, arises out of its incredible complexity, and complexity breeds vulnerability.

The digital world is basically comprised of a vast collection of devices just waiting to be mobilized for a given purpose, granting threat actors both an unlimited number of targets and access points. As supply chains and business ecosystems grow, so does the risk of organizations being either victimized, used as a threat vector, or both. Invulnerability to cyber threats is essentially a pipe dream. However, resilience in the face of security breaches is becoming ever more important.

What we’re seeing is a redistribution of cybersecurity responsibility. In other words, it’s about enacting an upward shift to help educate, empower, and activate cross-functional teams and leaders about these growing threats and how to prepare for them.

Shared ownership across cross-functional lines — it’s happening (and needs to).

3.  Workplaces are adapting to the ever-evolving…you

Returning to the Accenture survey results, 71% of respondents admitted to their employees being ‘more digitally mature’ than their organizations as a whole. Of course, this isn’t surprising, given that it’s much easier for an individual to evolve digitally than it is for an entire enterprise. As a result, workforces are becoming increasingly empowered through the use of technologically enabled skills, knowledge, and connectedness, while workplaces continue to play catch-up.

Breaking down this trend involves identifying the shifts that businesses are making in order to keep their model efficient, their culture appealing, and their workforce loyal. Here are a handful of such shifts that represent just the tip of the iceberg:

Once upon a time, running a successful business was as simple as offering a competitive product to a reliable customer base.

In modern times, profitability is short-lived unless accompanied by a willingness to constantly assess and adjust according to available technologies.

It’s not a matter of if legacy companies will be left behind, but when.