Category Archives: Cloud Computing

SoftBank tightens grip on Yahoo Japan via $2 billion deal with Altaba

TOKYO (Reuters) – SoftBank Group is increasing its stake in Yahoo Japan through a $2 billion, three-way deal with U.S. firm Altaba to deepen ties with the internet heavyweight ahead of an IPO of its telecoms unit.

FILE PHOTO: A website of Yahoo Japan Corp is seen on a computer screen in Tokyo August 19, 2009. REUTERS/Stringer/File Photo

Under the deal, SoftBank will buy 221 billion yen ($2 billion) of Yahoo Japan shares from Altaba, formerly internet giant Yahoo Inc. Yahoo Japan will then buy back 220 billion of stock from SoftBank.

As a result of the transaction SoftBank’s stake in Yahoo Japan will rise to 48.17 percent from 42.95 percent with just a $9 million net investment. Altaba, Yahoo Japan’s second largest shareholder, will have about 27 percent and end a joint venture partnership.

SoftBank said in a statement on Tuesday the deal will strengthen cooperation between the company, one of Japan’s big three telecoms firms, and Yahoo Japan, an internet heavyweight in areas such as news and shopping.

The synergies between SoftBank and Yahoo Japan are “consistent with SoftBank Group’s broader strategic synergy group initiative,” SoftBank Chief Executive Masayoshi Son said in the statement.

FILE PHOTO: An employee works behind a logo of Softbank Corp at its branch in Tokyo March 2, 2011. REUTERS/Toru Hanai/File Photo

SoftBank and its Vision Fund, the world’s largest private equity fund standing at over $93 billion as of May last year, have been taking minority stakes in technology companies around the world that Son believes will come to dominate their respective fields.

The news of the Yahoo Japan deal comes as SoftBank prepares to list its domestic telecoms unit in what could be the largest Japanese IPO in nearly two decades.

Yahoo Japan could use SoftBank’s telecom services to boost demand for online shopping and mobile payments among Japan’s increasingly net-savvy shoppers. SoftBank, through Yahoo Japan and others, is offering its mobile users an increasingly wide range of top-up services in addition to a basic phone subscription.

Yahoo Japan’s shares were up nearly 12 percent in early afternoon Tokyo trading. Despite that jump, its shares are down more than 22 percent this year.

“It’s clear that using excess funds for share buybacks is the only way Yahoo Japan has to hold up its share price,” said Yasuo Sakuma, chief investment officer at Libra Investments. The firm does not hold positions in Yahoo Japan or SoftBank.

Altaba has been selling down its Yahoo Japan stake. Two Altaba appointments to the Yahoo Japan board will step down as a result of the transaction announced on Tuesday.

SoftBank shares were up 2 percent, with the benchmark Nikkei 225 index up 1 percent.

Reporting by Sam Nussey and Chris Gallagher; Additional reporting by Tomo Uetake; Editing by Stephen Coates and Muralikumar Anantharaman

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Astronomers Reveal Two New Candidates For Alien Life

Credit: NASA

Artist’s depiction, Kepler-1652b.

The list is getting longer.

Space scientists just added two more worlds to the Habitable Exoplanets Catalog—the online database ranking the best picks for life in the galaxy.

55 planets now make the list—all places where extraterrestrials may exist.

Or perhaps not; maybe nothing lives on any of them, not even a microbe.

“There are still so many unknowns,” says Abel Mendez, the catalog’s chief curator.

The two new planets, like their 53 predecessors, are little more than shadows to us, literally and figuratively—cosmic conundrums residing trillions of miles from our solar system.

But this much is known: Both worlds are near the size of Earth. Both might have Earth-like temperatures. Both orbit their stars in the habitable zone—the sweet spot in a system, a location where liquid water may flow and life may flourish.

Mendez, a planetary astrobiologist and professor at the University of Puerto Rico at Arecibo, says that’s enough to consider them “potentially habitable,” at least for now.

Credit: [email protected] Arecibo (phl.upr.edu)

Kepler-1652b is new to the Habitable Exoplanets Catalog.

Kepler-1652b—probably rocky, and “only ten percent larger than Earth,” says Mendez—orbits a red dwarf star in the constellation Cygnus, 822 light years away.

Red dwarfs aren’t easy parent stars. Many are hyperactive; some blitz nearby planets with ferocious stellar flares, annihilating their atmospheres.

“But this planet is further out, close to the center of its habitable zone,” says Mendez. “It’s less likely to be damaged by flares.”

Indeed, preliminary data indicates reasonable surface temperatures—around 40 degrees Fahrenheit. In New York City, that’s a mild winter’s day.

“It probably has some temperatures similar to Earth,” says Mendez. “But that’s a guess.”

And that’s also the rub.

Credit: NASA / Walt Feimer

Artist’s impression of a red dwarf star.

Credit: NASA

The habitable zone.

Kepler-1652b is so far away—about five quadrillion miles—there’s little more to do than speculate and estimate. The world is too remote for even NASA’s James Webb Space Telescope, now slated for a 2021 launch.

“It will be a long time before we know much about this planet,” sighs Mendez. “It’s screaming, ‘Learn more about me.’ But the distance makes that very hard. It may be decades before we know more. Maybe centuries.”

The other planet—HD 283869b—orbits a “K star” in the constellation Taurus, 155 light years away, approximately 900 trillion miles.

“That’s the good thing about this one,” Mendez says. “It’s closer.”

K-stars—so-called “orange dwarfs”—are larger than reds, but smaller than our Sun.

“And stable,” says Mendez. “That’s a very good scenario.”

The planet, still awaiting confirmation, is about twice the size of Earth“and might be a hot ocean world,” Mendez says. “Microbial life may be an option.”

More additions to the catalog are expected before year’s end. Ultimately, Mendez anticipates a list of thousands.

“This is amazing,” he says. “Who would have thought that, even ten years ago?”

Credit: NASA

Artist’s concept. An exoplanet with life.

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Pixel 2 XL Vs. iPhone X: One Long-Term Winner (Review)

Credit: Google

Pixel 2 XL: Google can easily lay claim to one of the world’s best smartphones.

Which of two great phones squeaks out a win over the long haul and delivers an upside surprise? Read on.

Note: this updates a previous review of the two phones.

I’ve been using the iPhone X, Google Pixel 2 XL, and Pixel 2 since the fall of 2017.  In this short review I’ll focus on four metrics of the two flagships that impress over the long term.

Credit: @OnLeaks and MySmartPrice

Pixel 3 XL and Pixel 3 render.

To Notch Or Not: 

I prefer phones without a notch. Based on the above render of the Pixel 3 XL and Pixel 3 from @onleaks and mysmartprice, the Pixel 3 XL will get an iPhone X-like notch.

That’s a little disappointing (if true) because I favor the Pixel 2 XL physical design over the iPhone X because Google executed a great design without the notch. (That said, I guess we’ll all have to get used to the notch because it’s fast becoming the design element du jour.)

Display — Let’s talk about the Pixel 2 XL: 

Pixel 2 XL: I’ve had three builds of the Pixel 2 XL over the last seven months. Why? Because I didn’t like the initial OLED display (made by LG) on the XL: mostly because colors were muted. There was also a “blue shift,” i.e., a blue tint when viewed from an angle on white backgrounds. But the blue shift didn’t bother me as much since all OLED displays (including the iPhone X) have this to some degree.

My most recent build is January 25, 2018. That’s more than three months after it was released and at least four months since the early builds. The upshot: I have been pleasantly surprised with the fresh build. Maybe it’s a hit-or-miss thing but the display quality has definitely improved since the two early builds. The colors are no longer muted and the blue tint, while still there, isn’t glaring (though I can’t speak for others).

But, again, by far the most important thing is that the colors are deeper, more vibrant, i.e., it now looks like a high-quality OLED display (see notes at bottom¹).

iPhone X: Apple’s first iPhone with an OLED display (made by Samsung) is even better than the excellent LCD on the iPhone 8 (which I’ve also been using). That’s saying a lot. When looking at photos, the X’s OLED display is tuned so it’s not quite as garish as the saturated colors on Samsung’s Galaxy phones. In short, no complaints.

Credit: Apple

Software: 

Apps: an even match. Granted, there are some exceptions (like video editing, which tends to favor the iPhone) but generally there’s parity between the two platforms. In fact, most apps are indistinguishable between iOS and Android.

AI: This isn’t breaking news but Google Assistant on the Pixel is superior to Apple’s Siri. I don’t use Google Assistant or Siri that much but if you do, go with the Pixel. Simple fact is, Google does AI better than Apple.

Integration with Mac: Apple is better at synching iOS features with the MacBook out of the box. That includes call features such as FaceTime calls. I also use a Pixelbook (made by Google) with the Pixel 2 XL but, aside from the obvious things like Chrome, Photos, Docs, and Calendar, there isn’t the deeper level of integration that iOS and the macOS have. This a big plus for Apple and I value this a lot. (And I would suggest that Google do a better job here.)

Value: 

Apple has an amazing phone but loses this one because, starting at $999 with 64GB, it is about $100 too much. On the other hand, the Pixel 2 XL with 64GB and a considerably larger 6-inch OLED display (both taller and wider than the 5.8-inch on the X) starts at $849.

Other upsides: the Pixel 2 XL is the best pure, lag-free Android experience, doesn’t have a notch (unlike the iPhone X), has a gorgeous display (on the later builds), a camera that’s the iPhone X’s equal, and feels great in the hand for a big phone.

Overall:

Platform preference aside, the Pixel 2 XL is a better value and boasts quality equal to the iPhone X — even considering the initial display problems. And has a gorgeous physical design sans the notch.

And one more thing: Biometrics. I’m not a big fan of the iPhone X’s Face ID because it requires you to hold the phone directly (more or less) in front of your face. I prefer the XL’s fingerprint ID on the back of the phone. But this is a personal preference thing so I may be in the minority here.

—-

¹The colors appear much less muted even with “Saturated” toggled off (this is done in the “Display” settings under “Advanced”). I have chosen to keep Saturated turned on, which I did not do on the earlier builds because I thought it looked too artificial. That’s not the case now.

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How Chinese Internet Giant Baidu Uses Artificial Intelligence and Machine Learning

, Opinions expressed by Forbes Contributors are their own.

At the beginning of 2017, Chinese tech company Baidu, the largest provider of Chinese language internet search as well as other digital products and services, committed to emerging business sectors such as artificial intelligence (AI) and machine learning. Since China has 731 million internet users, almost twice the U.S. population, Baidu’s data set is capable of fueling AI algorithms to make them even better. With this focus on artificial intelligence, Baidu is exploring some very intriguing applications for artificial intelligence and machine learning including in their offices where facial recognition technology makes standard ID cards unnecessary and allows you to order tea from a vending machine.

Adobe Stock

Adobe Stock

They have also recruited top AI talent including one of the world’s most notable AI pioneers Lu Qi, who was previously a Microsoft executive before he became Baidu’s COO in January 2017. Qi will step down in July 2018 for personal reasons. Although he was only at Baidu for a short time, he helped chart a clear strategy for the company’s AI operations that will continue. Here are a few ways Baidu uses artificial intelligence and machine learning.

DuerOS is Baidu’s voice assistant

Since Baidu can leverage its expansive data set, its voice assistant called DuerOS has accumulated more conversation-based skill sets than Alexa, Siri or Cortana. Partnering with other tech companies is one way Baidu hopes to accelerate innovation. They have teamed up with more than 130 DuerOS partners, and the voice assistant is in more than 100 brands of appliances such as refrigerators, TVs, and speakers. Since homes in India, Japan, Europe, and Brazil are more like homes in China, there may be better opportunities for DuerOS to globalize since Alexa, Cortana and Echo are optimized for American households. At CES 2018, Baidu debuted its DuerOS-powered smart screen called Little Fish VS1. This technology can recognize and respond to individual faces.

Mobile partners to accelerate AI-powered devices

Unlike its competitors, Baidu was steadfast in its commitment to desktops and missed the shift to mobile. To survive, Baidu needed a new strategy and artificial intelligence technology provided just the platform to turn the business around. That’s one of the reasons Baidu has committed so aggressively to AI investment. Today, AI products and services are priorities to make them the core of the company’s future. Now, they are partnering with Huawei to develop an open mobile AI platform to support the development of AI-powered smartphones and Qualcomm to optimize its DuerOS for IoT devices and smartphones using Qualcomm’s Snapdragon Mobile Platform.

Self-driving cars

Page 1 / 2

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Kroger Becomes Latest Commercial Player in Autonomous Driving, With Nuro Partnership

Kroger’s efforts to play catch-up with Amazon in grocery delivery have taken it to the fringes of the “last mile” and a new partnership with an autonomous-driving startup that was hatched by guys who were involved in getting Google’s driverless-car operation off the ground. It’s the latest indication that the commercial logistics business is likely to have much more to do with shaping the early days of self-driven automotive transportation than the consumer side is.

The Cincinnati-based supermarket chain, largest in the United States, said that it will begin piloting an “on-road, fully autonomous delivery experience” with Nuro, maker of the world’s first unmanned road vehicle, in a city that the retailer hasn’t yet announced, beginning this fall.

The partnership will allow customers to place same-day delivery orders through Kroger’s ClickList digital ordering system and Nuro’s app. During the test, orders will be delivered by Nuro’s fleet of autonomous vehicles, with human safety drivers to start out. This will be the first application and deployment of Nuro’s hardware and software.

Domino’s is another non-automotive company that is doing heavy testing of self-driven vehicles for its delivery purposes, and there are and will be more.Among other things, initiatives like Kroger’s and Domino’s are likely to result in a proliferation of varying commercial automotive forms for the autonomous-vehicle era. Without the requirement to accommodate human operators, self-driven vehicles will shed many of the physical constraints that keep today’s human-driven vehicles pretty similar in shape, form and functions.

Nuro’s R1 driverless vehicles were unveiled in January and are thinner and shorter than normal vehicles. R1 “looks like a toaster on wheels, or an oversized, intelligent lunchbox covered in cameras, radar and laser sensors,” said TheVerge.com.

Kroger’s intention is to “change the status quo of grocery delivery through convenience at a low price” and “allow customers to get what they need, when they need it, wherever they are.”

“We have already started to redefine the grocery customer experience and expand the coverage area for our anything, anytime and anywhere offering,” stated Yael Cosset, Kroger’s chief digital officer. “Partnering with Nuro, a leading technology company, will create customer value by providing Americans access to fast and convenient delivery at a fair price.”

Nuro Co-Founder Dave Ferguson, one of the ex-Google guys, stated that “unmanned delivery will be a game-changer for local commerce. Our safe, reliable and affordable service, combined with Kroger’s ubiquitous brand, is a powerful first step in our mission to accelerate the benefits of robotics for everyday life.”

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New Zealand's Z Energy flags possible data breach in online card system

(Reuters) – Fuel supplier Z Energy Ltd on Wednesday said it had been presented with evidence that customer data from its Z Card Online database was accessed by a third party in November 2017.

The database held customer data such as names, addresses, registration numbers, vehicle types and credit limits with the company, Z Energy said in a statement.

The company said it had notified affected customers and advised the Privacy Commissioner of the breach. It said the system in question had been closed since December 2017.

Reporting by Ambar Warrick in Bengaluru

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The Common Drug That Makes Opioid Overdose Five Times As Likely

(Photo by: BSIP/UIG via Getty Images)

Opioid overdoses continue to increase, accounting for nearly two-thirds of all overdose deaths in the US, but a high percentage of those overdoses also include other drugs. A new study shows that the combination of opioids with one common class of drugs in particular is especially risky in the first 90 days of concurrent use. Those drugs are benzodiazepines (often called “benzos”), the class that includes alprazolam (Xanax), diazepam (Valium), and clonazepam (Klonopin), meds frequently prescribed to alleviate anxiety.

The study examined data from more than 71,000 Medicare Part D beneficiaries to find out how simultaneous use of opioids and benzos influence overdose risk over time. Patients were divided based on whether they had only taken opioids prior to overdose or had a supply of both opioids and a benzo drug. For those in the group with a supply of both, the researchers subdivided by the cumulative number of days they’d taken an opioid with a benzo.

The analysis showed that overdose risk was five times higher for patients taking both drugs during the first 90 days compared to those only taking an opioid. Risk was doubled for those taking both drugs during the next 90 days. After 180 days, risk of overdose was roughly the same as taking only opioids.

“Patients who must be prescribed both an opioid and a benzodiazepine should be closely monitored by health care professionals due to an increased risk for overdose, particularly in the early days of this medication regimen,” said lead study author Inmaculada Hernandez, Pharm.D., Ph.D., assistant professor at the Univeristy of Pittsburgh School of Pharmacy, in a press statement.

The researchers adjusted the results to account for a range of demographic factors and clinical factors, including the number of clinicians that prescribed the drugs. The adjustment revealed that risk increased with the number of clinicians involved — the more clinicians prescribing drugs to any given patient, the greater the risk of overdose. The researchers think this result points to lack of communication between doctors treating the same patient.

“These findings demonstrate that fragmented care plays a role in the inappropriate use of opioids, and having multiple prescribers who are not in communication increases the risk for overdose,” said senior study author Yuting Zhang, Ph.D., of the University of Pittsburgh Graduate School of Public Health.

The risk of combining opioids and benzos has been studied extensively, with alarms sounded by multiple public health groups and government agencies, including the US FDA and Centers for Disease Control and Prevention. The FDA released an emphatic warning earlier this year, citing risk of respiratory depression when taking both drugs because both are potent central nervous system depressants.

Respiratory depression occurs when breathing becomes slow and erratic and the body can’t adequately remove carbon dioxide. In the case of overdose, breathing can completely stop, leading to respiratory arrest and potentially death.

More than 30% of overdoses involving opioids also involve benzos, according to the NIH National Institute of Drug Abuse (a third common drug, alcohol, another central nervous system depressant, often also plays a role in overdose deaths involving opioids and benzos).

A 2017 study found that among more than 315,000 privately insured patients, the number that were prescribed both an opioid and a benzo increased 80% from 2001 to 2013. Similar to the latest study, that study also found a significant increase in overdoses among patients taking both drugs.

The latest study was published in JAMA Network Open.

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How This Keynote Speakers Bureau Hit The Inc 5000 And Nearly Doubled Its Revenue In Just Four Years

Executive Speakers Bureau is one of the most successful speakers bureaus in the U.S. and one of the only speakers bureaus to ever hit the Inc. 5000. Founded by Angela Schelp in Memphis in 1993 (husband and partner Richard Schelp joined as president and co-owner in 2001), Executive Speakers Bureaus offers and books hundreds of keynote speakers nationally and internationally and continues to grow at a pace rarely approached in this competitive industry, nearly doubling its overall revenue and number of bookings in just the last four years, while maintaining a reputation for customer service and community involvement that is widely viewed as second to none.

Micah Solomon, Inc.com: You’ve spoken in passing about the importance of your vision of success.  Can you explain what this means specifically as it relates to commercial success?

Richard Schelp, President and Co-Owner, Executive Speakers Bureau: In order to succeed in a competitive marketplace, you need a true plan or strategy.  Our ability to anticipate some of the challenges we have had to face in the industry and our understanding of how to address those challenges has kept us ahead of our competitors and driven our success in revenue and profitability.

Solomon: I’ve heard you and Angela speak about the power of your company’s culture and the pride you take in your employees.  Can you speak a bit about this? 

Schelp: From the beginning the culture of Executive Speakers Bureau has been built around respect for each other, a true sense of team, and the fact that both what we do within our business and in our community affects many people’s lives.  Very few work environments can promise its employees this kind of value.  

Our employees are some of the best you will see in any industry, and certainly in ours.  It is not just a job to them.  They are proud of where they work, and they truly feel responsible for the success of Executive Speakers Bureau.  This is the reason why they want to stay.  They want to see this thing through to the end.  

Solomon: What in your and Angela’s prior background led you to be able to take this approach and succeed with the culture of your company and your relationship to your employees?

Schelp: Both Angela and I have a wealth of corporate experience (IBM, AT&T, and other big firms) in which we have both managed and worked for a number of people.  When you have seen a lot of examples of great and terrible management, you start to get a feel for what works and what doesn’t.  All of the previous managers that I respected established environments in which I felt comfortable going to them, and they were the primary reason for me enjoying my job

 Solomon: Your bureau has grown quite quickly. How is life different now that you are an agency of significant size and pull?

Schelp: Life at Executive Speakers Bureau is definitely a little bit different now that we are much bigger.  With that does come a level of responsibility and respect.  Because of our increased size, we now have a larger role within our industry association.  As a matter of fact, I will become the president of the association next Spring. 

Also, in the early years of our bureau we used to base our decisions about processes, documents, fee recommendations, etc. on what the larger bureaus were doing.  Now we don’t check with others.  We make our decisions based on what we know and what we think makes the most sense.  Surprisingly many bureaus are following our lead, and they are calling us to ask how we do things. 

Solomon: Many of my readers are entrepreneurs and business leaders themselves. It’s very helpful and enjoyable (!) for them to hear about mistakes you’ve made or tricky situations you’ve endured in the past, what went sideways and how you either dealt with it or learned from it.

Schelp: A few years ago I faced an extremely tricky situation that taught me so many lessons as a business owner in our industry. A high-profile sports figure was supposed to speak for me at a large convention in New York.  He decided to fly in on his private plane the morning of the event.  However, there was a terrible electrical storm that morning, and his plane was grounded, leaving me without a speaker.  I received the call at 6:30AM and the speaker’s presentation was at 10:30AM.  I had four hours to find a replacement for a great speaker and get him to the event on time.  Immediately I went to work by calling all of the speakers and agents who were high quality and could get there-and, ultimately, I was fortunate enough to find a speaker who my client absolutely loved.

The lessons from this incident were numerous, but most importantly I realized just how crucial it is to have access to many resources, so that an emergency situation becomes doable, otherwise it is impossible.  Also, I learned that as long as you are determined and efficient any task can be accomplished.

 

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A New Study Says These Are the States With the Most Psychopaths (You Might Want to Avoid One Part of the Country)

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

Do you find that, when you travel to certain parts of the country, you suffer from excessive discomfort.

Somehow, the people seem odd. Or rude. Or very, very loud. Or simply have a menacing look in their eyes.

Well, I’m here to help you with your future travels, so that you can avoid excessive disturbance.

A new study — not yet peer-reviewed — has listed the states with the most psychopaths and the ones that appear to bathe in greater depths of sanity.

Ryan Murphy from Southern Methodist University looked at previous research of personality states by state — analyzed according to the so-called Big Five characteristics.

These are neuroticism, agreeableness, extroversion, conscientiousness and openness to experience

He also looked at previous research of classifying psychopathy with respect to these five characteristics. From that he deduced which states enjoy the most troubling sorts.

You might decide, on perusing his conclusions, that they’re enlightening. Or disturbing. 

Or, indeed, both.

You see, the winning state is Connecticut. 

Perhaps it’s a state you don’t think about very often. Or perhaps you feel it’s the home of far too many hedge funds and that explains everything.

After all, psychopathy is often defined by such traits as a lack of inhibition, meanness and a certain sort of bold attitude. Viewers of Billions will surely understand.

However, Connecticut isn’t, on the whole, a state that enjoys all that much national attention.

On the other hand. 

California came second.

So many have strong opinions about this fascinating state — where I happen to live.

Can it be that, despite all the lovey-dovey (of self) nature and the sense of crusading freedom, California is full of, well, difficult sorts? 

Murphy’s overarching conclusion is touching: “Areas of the United States that are measured to be most psychopathic are those in the Northeast and other similarly populated regions. The least psychopathic are predominantly rural areas.”

I don’t know about all of that, sir. The literature of rural areas offers alternative evidence.

Although, having lived in New York for a couple of years, I certainly won’t battle all of Murphy’s thoughts.

It wasn’t just that Connecticut came first, but New Jersey came third and New York tied for fourth.

Murphy also offered a stunningly disturbing — and entirely unsurprising — parenthesis:

The District of Columbia is measured to be far more psychopathic than any individual state in the country, a fact that can be readily explained either by its very high population density or by the type of person who may be drawn to a literal seat of power.

And millions scream: “You don’t say!”

Murphy prefers to exclude D.C. from his league table simply because it has no geographical diversity. Which I don’t think is excuse enough.

My colleagues here at Inc have offered all sorts of tips on how you can spot a psychopath. 

Jessica Stillman, for example, has warned that those who discuss food, sex and money to excess might be difficult sorts. (They are.)

Jeff Haden teased out spotting a psychopath by the sort of boss they prefer.

He also showed how true psychopaths have a certain greed for reward about them. (Now who does that remind you of?)

Murphy’s research doesn’t entirely absolve the more rural areas. Wyoming tied for fourth with New York. Which surely offers the Wyoming Tourism Authority an excellent new avenue for marketing.

Wyoming. We’re as Mean as New York, but the Air’s Better.

You, though, have been holding out hope that you live in the least psychopathic state.

This, according to Murphy’s estimates, is West Virginia.

Which surely also offers this state’s tourism authority fodder for marketing.

Virginia is for Lovers. West Virginia’s For the Sane.

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The Race To $1 Trillion, But What About $2 Trillion?

Which company is going to reach the notorious $1 trillion market cap first? Apple (AAPL) will but Amazon (AMZN) will whiz by to be the first to $2 billion. Let’s take a look at the numbers…

By the Numbers

Company

Share Price

Market Cap

% Increase to $1 Trillion

Apple

$192.64

$941 billion

5.6%

Amazon

$1,711

$822 billion

20.65%

Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL)

$1,151.78

$788 billion

26.06%

Microsoft (NASDAQ:MSFT)

$101.65

$781 billion

28.04%

Company

Share Price at $1 Billion

Apple

$203.42

Amazon

$2,063.18

Alphabet

$1,451.79

Microsoft

$129.47

Only the top 4 companies by market cap were included because Facebook (NASDAQ:FB) was fifth and the market cap was around $555 billion at $192 per share. So it basically needs to double before Apple has to go up 5.6%. Possible but not plausible.

So you can see by the numbers Apple looks to be the winner. Especially since the company only trades for 18x earnings, pretty much in line with the S&P 500 (SPX). Even intuitively, Apple reaching $203 before Amazon reaching $2,063 just seems way more possible.

If the question was posed, which company will reach $2 trillion first, a lot of people would have bet on Amazon. Granted, Apple was undervalued a couple of years ago, especially when it bottomed around $90/share and Buffett, or more appropriately Combs and Weschler, backed up the truck. But Amazon’s rate of innovation and the growth of AWS led me to believe Amazon would win the foot race.

Also, Apple has bought back stock aggressively, spending over $275 billion over the past 6 or so years on buybacks and dividends. So it only makes sense that Apple is here, about to cross the finish line first.

The Race To $2 Trillion

But what about $2 Trillion? Which company is going to reach that historic landmark first? Honestly, it would not be extremely surprising if a company not even public right now managed to reach $2 trillion first, but from this vantage point, the easy answer is Amazon. The other three companies here don’t stand a chance. And for one reason: fear of failure. Amazon is not afraid to fail and that has given them a huge sustainable advantage in the form of the culture.

In other words, the company’s mindset is completely different from Apple or Microsoft. The people aren’t smarter, everyone at these companies is a genius. It’s about how those geniuses function in the context of the business. In this department, Amazon will win every time. It has proven itself time and time again. Reading a quarterly press release from Amazon is pure silliness; the highlights section goes on and on and on. There seems to be so much innovation, even the press release can’t handle it.

How Amazon Will Get There

There won’t be a comprehensive model of Amazon’s revenue, split into the three operating segments: AWS, North America and International because well, Amazon is so unpredictable. Instead, just retail and AWS will be considered. This is mostly because the quarterly numbers for the past four years and the financials do not lend themselves to pattern recognition. The only real trends are that cash flow has been strong and revenue has accelerated in the past year, due in part to the Whole Foods acquisition, which is absolutely incredible at this scale.

A slight acceleration might give the company around $240 billion in net sales at the end of this year. Nearly a quarter trillion! About 10% of that will most likely be AWS revenue, which accounts for more than 100% of operating income. Yes, you read that right, more than 100%.

It would be surprised if the company reaches $2 trillion before 2021 honestly. However, in just three years, there will probably be so many innovations investors never even saw coming.

But just some quick, back-of-the-napkin math perhaps.

Year

Total Sales at 25% Growth

AWS Sales at 40% Growth

Retail Value (2x sales)

AWS Value (40x EBIT at 30% opm)

2018

$235 billion

$24 billion

2019

$294 billion

$34 billion

2020

$367 billion

$47 billion

2021

$459 billion

$66 billion

$902 billion

$800 billion

2022

$574 billion

$92 billion

$964 billion

$1,104 billion

This is very rough math but it just goes to show that even for Amazon, it will not be easy to reach $2 trillion. Let’s break down some of the math.

  • The retail value was derived from taking the net sales and subtracting AWS sales (574-92) = 482 and giving it a 2x sales multiple = 964 billion.

To break down the growth in the retail segment, Amazon’s revenue has actually been accelerating in the last couple of years. In 2015, sales grew by 20%, in 2016, growth was 27% and this past year’s numbers shot to 30%.

The pay-offs for years of innovation are just rolling in. In the past quarter, revenue re-accelerated to 43%. An impressive feat for a company of Amazon’s scale. Over the next three or so years, 25% as a revenue growth estimate might be a little aggressive but you cannot deny the technological advancements. For example, apparently almost 30 million Alexas have been sold. Some reports peg this voice-enabled technology market at $55 billion.

And the company is, of course, attacking many other industries. According to some reports, Prime Video has over 26 million watchers and in 2017, Amazon sent nearly $5 billion on original content. And some reports estimate the online streaming industry to reach $82 billion by 2023.

Even more, the Whole Foods acquisition has certainly accelerated the grocery delivery business, a market expected to reach $100 billion by 2025. But the Amazon juggernaut will be a serious player in logistics in the far but not too distant future. Last year, the company unveiled a $1.5 billion hub for its cargo planes. For just its planes! As it funds more the purchasing of more assets through current business operations, it continues to cement its competitive advantage.

For instance, buying more trucks for delivery gives Amazon more control over delivery times, meaning more customers will sign up for Prime, meaning it can fund more trucks. It’s really a beautiful cycle, one that JD.com (NASDAQ:JD) has taken very seriously. The size of this global market is immense. Some estimates have it in the trillions, which Amazon could take a small bite of.

It is much different than an asset-light model but it gives the company a huge structural advantage, enabling a better customer experience. This is all to say that the company’s retail segment can grow and grow and grow. It doesn’t seem to be slowing down anytime soon.

And if Amazon reached $574 billion in revenues, the company would still have less than 10% of just North America’s retail market. Plus, with forays into the pharmaceutical industry, Amazon just keeps expanding its markets. Now we have covered grocery delivery, video streaming, logistics, voice-enabled devices, and now drugs. For instance, McKesson (MCK), does over $200 billion in sales for distributing drugs every year. It is possible for Amazon to get a small piece of that.

So all in all, the company has a lot of optionality in terms of the industries it can attack and has decided to attack. The crazy part is that this doesn’t even include international expansion.

To add it all up by the year 2022 (author’s estimates based on reports):

– Voice-enabled tech: $55 billion

– Online streaming: $75 billion

– Grocery delivery: $80 billion

– Logistics: realistically $5 trillion

– Pharmaceutical distribution: $200 billion

– Retail: $5 trillion

Total TAM: $10.4 trillion

Of course, Amazon’s respective market shares of each of these markets varies widely. In logistics and pharmaceuticals, it is practically nothing right now. But it has more than two-thirds of the market in voice-enabled technology. The retail category will naturally move more towards Amazon. Estimates have the e-commerce market at $5 trillion in 2022, up from $2.8 trillion this year. It is likely that the company will capture a sizable piece of that growth.

If the incremental growth in only e-commerce is $2.3 trillion, it is likely that Amazon can add over $300 billion in revenues in the next four years, adding in all the other industries it is involved in as well. Capturing just 10% of that incremental $2.3 billion, leaves the company with revenues of $230 billion. It is likely that Amazon can capture an additional $70 billion from the combination of industries discussed above.

  • The AWS value came from a 30% operating margin on the 2021 number ~20 billion with a 40x EBIT multiple = 800 billion.

One could go on and on about AWS, but it really is a powerhouse. On the last earnings call, Bezos noted that he and his team got a seven-year head-start. In something that moves as quickly as computing, seven years is a huge gap to make up. Only now is Microsoft catching up a little bit with Azure. Even Buffett had to comment.

The fact is that AWS is a gorilla and it will continue to be. By 2022, the cloud computing market is pegged at $210 billion. Currently, the company commands 47% market share so the estimate of $92 billion in four years is not far-fetched at all. In fact, it actually factors in a bit of market share deterioration to 44%.

So all in all, we get over $2 trillion for a market cap, more than a double from today’s levels, or about 26% annual returns after 4 years. That seems like a tall order but then again, it’s Amazon.

Guessing – Why Not?

To guess, Amazon will surpass the $2 trillion mark in the third quarter of 2022. There you have it. Will that be wrong? Almost guaranteed, but based on some quick numbers and knowledge of Amazon’s intensity and innovation, that estimate is plausible.

Apple will reach $203 per share pretty soon. But Amazon will likely be the first company to reach $2 trillion, a crazy number to believe, more than 10% of the US’s current GDP.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.

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