High-Quality Hidden Gems (Continued)

As previously discussed, to achieve superior returns, investors may want to look for stocks that are way under-covered. We continue our search for hidden gems, this time in the US market. US stocks are generally more liquid, receiving more exposures, which makes it harder for us to land on high-quality hidden gems. Be aware that liquidity is a positive factor and analyst coverage is a negative factor in my proprietary stock quality ranker. Additionally, US market is overvalued probably by all metrics, including this Warren Buffett Indicator. Therefore, we loosen the screening/filtering criteria a bit as followed:

  1. Return on assets: no less than 10% for the past 10 years;
  2. Return on equity: no less than 12% for the past 10 years;
  3. Return on invested capital: no less than 12% for the past 10 years;
  4. Net margin: no less than 5% for the past 10 years;
  5. Gross margin: no less than 30% for the past 10 years;
  6. Operating margin: no less than 10% for the past 10 years;
  7. Free cash flow margin: no less than 5% for the past 10 years;

Again, I put the screening result into my stock ranker which further takes into consideration factors, such as growth/momentum, industry/sector, shareholder friendliness, financial strength. Overall, my combination of screener and ranker gives high weights to managements’ capital allocation skills, profitability, and cash flow. Below are the top-ranked ones with limited coverages here in the Seeking Alpha community. We include their respective valuation analysis in the end.

Federated Investors (FII)

Since 1955, Federated Investors has been a leading provider of investment management products and related financial services and is now one of the largest investment managers in the U.S. with $397.6 billion in assets under management (AUM) at the end of 2017.

Source: Federated Investors Annual Report 2017.

The majority (more than 60%) of the AUM is held through money market strategies and/or products at Federated. The heavy emphasis on money market assets lends to a stable AUM revenue stream regardless of market volatility. Actually, the money market portion of the business is a hedge on stock market volatility as any sell-off in the stock market may contribute to money market investments as the safe haven. Moreover, the rising interest rate would benefit Federated’s money market funds due to less likelihood of the fee waiver program, which cost losses to the company for many years during the low-rate period.

Federated Investors employs a super capital-light business model, consistently generating high returns on capital over the past decade (see below) and currently earning 1195.8% return on tangible equity. The business produces strong free cash flow (around 28% FCF margin) for its owners and spends less than 1% CAPEX on sales.

Source: Morningstar; data as of 8/5/2018.

The dividend is safe regardless of the current high yield (4.5%), thanks to its strong balance sheet (i.e., 3.6x current ratio, 0.22 Debt/Equity).

There is limited coverage on FII here in the Seeking Alpha community, with only three articles on the stock for the past year and no article for the past two months. The share is currently trading at a discount if compared to its historical levels in terms of P/E, P/B, P/S, P/CF and dividend yield (see below). Hence, FII is a strong buy on our hidden gems list.

Source: Morningstar; data as of 8/5/2018.


NIC Inc. is the leading provider of digital government services that help governments use technology to provide a higher level of service to businesses and citizens and increase efficiencies. It was founded in 1992 and is now headquartered in Kansas with 950+ employees nationwide and partnerships with 6,000 federal, state, and local government agencies in the US.

Source: Investor Presentation 2018.

NIC takes a flexible approach to funding digital government solutions. While most enterprise partnerships are funded through a transaction-based funding model, others are funded through fixed fees or a hybrid of fixed fees and transaction-based funding. The transaction-based model saves taxpayers’ money on upfront development cost and generates recurring revenue whenever users enjoy the efficiency through digital/online services provided by NIC. It is a win-win solution for all parties (i.e., governments, taxpayers, NIC), benefiting from user population growth, government promotion, and service monopoly.

The long-term contract, high switch cost, B2G (business-to-government) relationship and niche market play get NIC a wide moat to it economic castle with high profitability and returns on capital (shown below).

Source: Morningstar; data as of 8/5/2018.

The company’s balance sheet is another reason investors should be comfortable with the stock: over 2x current ratio with no debt.

There are only four articles on EGOV stock in the Seeking Alpha community during the past year and only five analysts covering the stock according to WSJ.com. Like FII, the share is quietly trading at a discount if compared to its historical levels in terms of P/E, P/B, P/S and P/CF (see below). Hence, EGOV is another buy on our hidden gems list.

Source: Morningstar; data as of 8/5/2018.

Atrion Corporation (ATRI)

Atrion is a leading supplier of medical devices and components to niche markets in the global healthcare and medical industry. While it is a comparatively small company in the sector, Atrion is the leading U.S. manufacturer of products in several market niches, including soft contact lens disinfection cases, clamps for IV sets, vacuum relief valves, surgical loops used in minimally invasive surgery, and check valves.

The company has been and will be benefiting from the industry tailwind as the growth of health care spending is consistently exceeding the overall GDP growth (see below) due to the aging population.

Source: Statista.

The management team has done an exceptional job allocating capitals efficiently, indicated by a stable and high margin and return on capital (shown below). The business also maintained its typical profitability and growth during the 08/09 great recession, thanks to the recession-proof nature of the industry. The niche market play and sufficient R&D spending have been giving Atrion the durable competitive advantage.

Source: Atrion Corporation Annual Report 2017.

The stock (as shown below) has consistently outperformed the market benchmark and the sector benchmark. It has its track record of raising dividends consecutively for 15 years now, with a super clean balance (i.e., no debt, plenty of cash, and a current ratio of over 9x).

For the past 12 months, there has been only one article on ATRI in the Seeking Alpha community and no Wall Street analyst following the stock according to WSJ.com. Nonetheless, the valuation appears to be a bit rich if we compare the price multiples to their historical averages (see below P/E, P/B, P/S and P/CF). Therefore, we would like to put Atrion on our watch list for now.

Source: Morningstar; data as of 8/5/2018.


Warren Buffett once mentioned that he has confidence in getting as high as 50% returns on a small amount of money to invest in stocks. Likewise, we believe it is not hard to beat most investment funds with large scales or financial professionals. To achieve so, investors (especially those individual ones with a relatively small amount of investable fund) should take advantage of small caps with little popularity and coverage. Thankfully, size is not an advantage in the investment world and being popular or not has no correlation with investment results.

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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Soros Fund Management adds popular tech names, BlackRock in second-quarter

NEW YORK (Reuters) – Soros Fund Management LLC added Facebook Inc (FB.O), Apple Inc (AAPL.O) and Twitter Inc (TWTR.N), but trimmed stakes in Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) in the quarter through June, according to a regulatory filing on Tuesday.

Billionaire hedge fund manager George Soros speaks during a discussion at the Clinton Global Initiative’s annual meeting in New York, September 27, 2015. REUTERS/Brendan McDermid/File Photo

The family office of billionaire George Soros also bought stakes in AT&T Inc (T.N), Chevron Corp (CVX.N) and T-Mobile US Inc (TMUS.O) and divested stakes in eBay Inc (EBAY.O), Nvidia Corp (NVDA.O), Snap Inc (SNAP.N) and Paypal Holdings Inc (PYPL.O).

Soros Fund Management also dramatically boosted its shares in BlackRock Inc (BLK.N) – the world’s largest asset management firm, overseeing $6 trillion – by nearly 60 percent to 12,983 total shares in the second quarter.

Other notable adjustments included paring stakes in Netflix Inc (NFLX.O), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N), but raising its shares of Pandora Media Inc (P.N) and Salesforce.com Inc (CRM.N).

Soros Fund Management took share stakes in Facebook of 159,200 class A shares during the second quarter and 54,500 shares in Apple.

A number of prominent fund managers sharply cut their holdings in Apple only weeks before it became the first publicly-traded U.S. company to be worth more than $1 trillion.

Einhorn’s Greenlight Capital slashed its stake by 77 percent, while Philippe Laffont’s Coatue Management unloaded 95 percent. Advisory firm Diamond Hill Capital Management cut its stake by 27 percent.

Other big holders, including Sanders Capital and Adage Capital Partners, only trimmed small amounts in the second quarter.

Soros also rejigged his energy holdings, raising stakes in Devon Energy Corp (DVN.N) and Kinder Morgan Inc (KMI.N), while dissolving his stake in the VanEck Vectors Oil Services ETF (OIH.P) and cutting exposure to Canadian Natural Resources Ltd (CNQ.TO) and Williams Companies Inc (WMB.N).

Quarterly disclosures of hedge fund managers’ stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are one of the few public ways of learning what the managers are selling and buying.

But relying on the filings to develop an investment strategy comes with some risk because the disclosures come 45 days after the end of each quarter and may not reflect current positions. Still, the filings offer a glimpse into what hedge fund managers saw as opportunities to make money on the long side.

The filings do not disclose short positions, or bets that a stock will fall in price. As a result, the public filings do not always present a complete picture of a management firm’s equities holdings.

Reporting by Jennifer Ablan; additional reporting by Trevor Hunnicutt, editing by G Crosse

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Want to Stop Hiring Mediocre Salespeople? Look for These Red Flags

I’ve had a lot of experience in this area and made some great hires and a few mistakes. Based on my experience, what I look for in a salesperson is: 1) A track record of success, 2) Enthusiasm and passion for the product, 3) Customer-focused mentality, 4) That they are organized and prepared for the interview, and 5) Strong business acumen.

On the other hand, a big red flag for me is someone who has moved sales positions every two years. I want to see someone who has perseverance and drive to overcome challenges and be successful. I really like it when you see on their resume that they were at a company for four to six years and they’ve had multiple promotions. It shows that they can grow and take on additional responsibility. This is definitely something I would look for when hiring a sales manager too.

When looking for sales managers, I also ask myself the following questions: 1) Are they competent, savvy, and successful in their current role selling the product or service? 2) Do they genuinely want to help people? 3) Do they care more about other people than themselves? (This can be hard to tell so you have to ask a lot of probing questions and look at past behaviors.) 4) Do I think this is a person would could hire and retain top talent? (Would I want to work for them if I were a sales person?) 5) Will they represent our company values? and 6) Are they a good mentor and coach? A top salesperson should always make more money than their manager. If the person is in it for the money only, they will likely make a great sales rep, but not a great manager. Managers have to be empathetic and care about their team’s and company’s success more than their own.

When I interview, the first thing I do is look at their LinkedIn profile, hoping to find successes, tenure, and common connections. For a senior role, if it’s not a confidential hire, I will actually reach out to a couple trusted common connections before the interview to see what they think of the candidate. Then during the interview, I give an overview of the company and the role, and then I want to hear their story and what they’ve learned that will serve them well in this role. I spend a lot of time on behavioral questions and real-life experiences and scenarios. The best candidates have done their research and have thoughtful questions for someone at my level. When I ask if someone has any questions and they don’t, it’s unlikely they’ll get the job.

This question originally appeared on Quora – the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google+. More questions:

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Musk says talking to Saudi fund, others on Tesla buyout

(Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk said on Monday he was in discussions with Saudi Arabia’s sovereign wealth fund and other potential backers of his plan to take the electric car-maker private, but said financing was not yet nailed down.

Musk’s disclosure, made in a blog post on Tesla’s website, comes six days after the Silicon Valley billionaire shocked investors with a post on Twitter saying he was considering taking Tesla private at $420 a share and that funding was “secured.”

Tesla shares fell 1.2 percent after opening sharply higher.

Musk’s tweet last Tuesday is under investigation by the U.S. Securities and Exchange Commission, according to the Wall Street Journal, and is the subject of lawsuits brought against him by investors.

Wall Street has voiced doubts about Musk’s ability to pull off what could be the largest-ever go-private transaction, valued at as much as $72 billion.

Musk said on Monday he expects two-thirds of existing Tesla shareholders would roll over into a private company, but said he was in talks with major shareholders about his proposal.

He added that most capital for the deal would come from equity and it would not be “wise” to burden the company with added debt. Discussing full details on the plan, including the source and nature of the funding, would be “premature” now, he said.

FILE PHOTO: Tesla CEO Elon Musk at a press conference at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper/File Photo

“I left the July 31st meeting (with the Saudi fund) with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving,” Musk said.

“This is why I referred to ‘funding secured’ in the August 7th announcement.”

He said that since his Twitter posts on the possibility of a deal the managing director of the Saudi fund had expressed support for proceeding subject to financial and other due diligence.

“I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base,” Musk wrote.

Saudi Arabia’s Public Investment Fund (PIF) is known for its technology investments, including the $45 billion it has spent in SoftBank Group Corp’s (9984.T) Vision Fund.

Yasir Othman al-Rumayyan, managing director of the PIF, when contacted, referred Reuters to the corporate communications team.

PIF officials have said in the past that decisions at the sovereign wealth fund are made with care, emphasizing corporate governance. The PIF board is headed by the Crown Prince Mohammed bin Salman.

Tesla declined to comment further beyond Musk’s blog post.

Moody’s Investor Services on Friday had said Musk’s consideration to take Tesla private was credit negative, noting the company’s negative cash flow in the second quarter and maturities of $1.2 billion in convertible debt through March 2019.

Reporting by Supantha Mukherjee in Bengaluru; editing by Patrick Graham and Bill Rigby

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Alex Jones Tops This Week's Internet News Roundup

In the last seven days, Stormy Daniels’ lawyer declared he was interested in the US presidency, a Facebook video revealed Chicago police use a “bait truck” to try to convince potential thieves to thieve, and a judge threatened to hold Attorney General Jeff Sessions in contempt of court and demanded a plane be turned around mid-flight when it was discovered that the government had deported a mother and daughter even though their case was still pending. In other words, it’s been another week in the Meta-Zone that is the internet, and we’re all Rac Shades in our own way. Let’s see what else everyone’s been talking about this week, shall we?

For Once, It Really Was a Simple ‘Yes’ or ‘No’ Question

What Happened: Paul Manafort’s business partner Rick Gates testified against him, and it was genuinely glorious.

What Really Happened: The ongoing trial against former Trump campaign chair Paul Manafort hit a high point last week, and we’re not talking about the testimony of his former accountant. No, instead, there was the much-anticipated debut on the stand of the trial’s star witness…

Yes, Rick Gates—Manafort’s former protege! His appearance was pretty much what everyone had been waiting for since the trial began, working on the assumption that, if anyone knew Manafort’s dark secrets, it’d be Gates (and that, as he’d already pled guilty to special counsel Robert Mueller, he’d share the details with the court). As it turned out, he really didn’t disappoint.

You can bet that this made all the headlines, for obvious reasons, with the “stunning” testimony gaining traction on Twitter, too.

Oh, and it turns out, that’s not all Rick Gates has to offer.

As you might expect, the President of the United States had some calm, well-modulated words of wisdom about everything that was unfolding.

The Takeaway Let’s just take that last tweet from President Trump on its own terms for a second, shall we?

Bon Voyage, Alex Jones

What Happened: Inforwars founder Alex Jones, the man trying to get people to believe the Sandy Hook shooting was a hoax, was finally pushed off of a number of prominent internet platforms this week. An attempt to rally the rest of the internet around him didn’t go that well.

What Really Happened: It was also a very rough start of the week for conspiracy-spreader Alex Jones and Infowars, which were banned by YouTube, Spotify, and Apple forhate speech“; Facebook also removed multiple pages related to Jones, and Pinterest also followed suit. Considering some of the things he’s said, this is a move that’s pretty overdue, but not everyone seemed to see it that way. Indeed, some were very disturbed by what they thought they were looking at.

Others didn’t feel the same way. And, even as Jones tried to monetize his situation, they took to Twitter to parody the right wing’s use of the famous Martin Niemöller “First they came for” quote, which might have gotten its start at right wing news site The Daily Caller.

The Takeaway: This is only the beginning.

The Platform That Didn’t Boot Alex Jones? Twitter

What Happened: As the one hold-out keeping Alex Jones on its platform, Twitter had some explaining to do. Sadly, it tried, and made everything worse.

What Really Happened: So, not every social media platform got rid of Alex Jones last week. In fact, not only did Twitter fail to remove his personal account or the Infowars one— as evidenced by the fact that he used it to complain all week —Twitter boss Jack Dorsey took to the service to argue just why that hadn’t happened.

That was … certainly a take. And not one that many people agreed with, as it turned out.

Not content with upsetting a large swath of Twitter’s users by denying responsibility entirely, Dorsey upped his game with a media appearance on Wednesday.

The appearance made headlines by its very existence, with the softball interview being seen by many as a sign that Dorsey, and by extension Twitter, was embracing the right.

Let’s chalk this up to unfortunate public relations failure, and get back to the whole Alex Jones on Twitter thing, shall we? Because that’s what CNN did a day after Dorsey appeared on Sean Hannity’s radio show.

The story goes in depth about the ways in which Dorsey’s defense of keeping Jones on the platform are, with the best will in the world, nonsensical at best considering the actual evidence on show. The irony of a journalist bringing this up, following Dorsey’s earlier commentary, wasn’t lost on everyone.

The plot thickened in real time on this one, as well.

Is Jones editing and removing his content to try and stay on the one mainstream platform left open to him? If so, is that even necessary considering Twitter hasn’t ousted him yet? Stay tuned; this one is likely to continue developing.

The Takeaway: For those who have gone from Twitter evangelists to Twitter not-so-enthusiasts, it was a pretty sobering, depressing week.

Let’s Go to the Tape

What Happened: It’s not enough that Omarosa is back with a new book (out next week); now she’s got secret tapes to help promote it, apparently.

What Really Happened: If nothing else, the Trump administration should be applauded for the ways in which it consistently appears to believe in the dramatic conceit of Chekhov’s gun. Remember last year when the president was very worried about being secretly recorded? We thought that was just his Putin paranoia, but ohhhhhhh no. There was far better dramatic irony to come.

The sheer joy in this ridiculous story was shared across Twitter.

However, not everyone was too impressed by the tease.

Even as Omarosa teased that other tapes featuring Trump using the N-word—albeit ones not in her possession—the obvious question remains: Would even those tapes make any difference, at this point?

The Takeaway: So, now that it’s certain Michael Cohen and Omarosa were taping President Trump, the obvious question is, who’s next?

Space Force!

What Happened: It’s been teased and talked about for months, and now it … actually seems to be happening? Folks, meet the sixth branch of the US military: Space Force.

What Really Happened: It’s been a wacky notion of the president’s for some time, but last week, it was finally made official:

Yes, that’s right; #SpaceForce. It’s actually happening, somehow! #SpaceForce!

Needless to say, everyone was very excited at the prospect. #SpaceForce!

But don’t worry; no sooner was Space Force officially announced than the other shoe dropped—and it was called logo design. #SpaceForce!

Yes, merchandise, because of course merchandise. Well, maybe that’s where the money for Space Force’s $8 million price tag is going to come from. Meanwhile, some people had some thoughts about the logo choices. #SpaceForce!

Well, that’s one idea…

Others had some more designs they wanted to share … for the good of #SpaceForce!

The Takeaway: Even if some of the logos weren’t exactly the best quality, at least everyone could admit that “Mars Awaits” couldn’t be topped as a slogan for #SpaceForce! Or … could it?


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The Techies Turning Kenya Into a Silicon Savannah

People hunched over greasy computer screens, crunching data, writing code: The scenes in Janek Stroisch’s photographic series Co.Ke are familiar to anyone who’s ever been to a coffee shop in Silicon Valley. But this isn’t San Francisco. It’s Nairobi, in Kenya’s Silicon Savannah.

Kenya’s $1 billion tech hub is home to more than 200 startups, as well as established firms like IBM, Intel and Microsoft. They’re working to solve problems through tech, though here the problems are a little different than finding a parking spot or getting your laundry folded. The company BRCK, for instance, is connecting off-the-grid schools to the internet through solar-powered routers and tablets. AB3D turns electronic waste into affordable 3D printers that spit out artificial limbs. According to Stroisch, AB3D founder Roy Mwangi “wants Kenya to be understood as a country that has innovation and creative potential.”

That creative potential was unleashed about a decade ago, thanks to a strong private sector, government support, and outside investment. The first major successes came in 2007 with the wildly popular money-transferring app M-PESA and crowdsourcing platform Ushahidi; the latter, launched to track election violence, has since been used to monitor disasters and conflicts everywhere from Haiti to Syria. The Kenyan government poured diesel on the flames in 2009 with TEAMS, the undersea fiber-optic cable that gave Kenyans cheap, reliable broadband—with average speeds faster than those in the US. The next year, incubator and coworking space iHub set up shop and began spawning dozens of companies. Though growth recently slowed, the government hopes to spur development with the construction of a $10 billion smart city 40 miles south of the capital.

All this was news to Stroisch when he heard about it two years ago at a tech panel in Munich, where he lives. And that bothered him. His understanding of Kenya had been shaped by photojournalistic images of poverty, war, and disease—depictions that didn’t paint a full picture of the country. “There was no space for technical innovation in my old-fashioned image of Kenya,” he says. So last year, he traveled to Kenya last year to update that image.

Over two months in Nairobi, Stroisch visited 10 companies, tech hubs, and coworking spaces where developers race to build the next big app, stopping only for coffee and pizza. He photographed them with a DSLR, fixed lens, and two-camera-triggered flashes. “The light stands for knowledge and enlightenment,” he says.

The images present a brighter vision of Kenya, one that narrows the gap between western perceptions of the country and a silicon-shaped reality that is strikingly familiar.

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Spotify Is Testing Letting Free Users Skip All the Ads They Want

A big change might be coming to Spotify’s free tier.

The music streaming service is running a test in Australia that allows users to skip as many ads as they like, regardless of the ad, according to Ad Age.

The move would bring another upgrade to Spotify’s free tier, which the company has said sees a good deal of engagement and typically leads to paying subscribers. Spotify recently brought a number of changes to its app for free users.

Under the new system Spotify is testing called “Active Media,” advertisers also wouldn’t have to pay for ads that are skipped.

“Our hypothesis is if we can use this to fuel our streaming intelligence, and deliver a more personalized experience and a more engaging audience to our advertisers, it will improve the outcomes that we can deliver for brands. Just as we create these personalized experiences like Discover Weekly, and the magic that brings to our consumers, we want to inject that concept into the advertising experience,” Danielle Lee, Spotify’s global head of partner solutions, told Ad Age.

Lee added that Spotify hopes to move beyond Australia and bring Active Media global, Ad Age reported.

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Twitter CEO Jack Dorsey: We Haven’t Banned Alex Jones Because He Hasn’t Violated Our Rules

YouTube, Facebook, Spotify, Apple be damned: Twitter will not be following suit.

The social network announced Tuesday that it would not ban Alex Jones or InfoWars from the site, noting that neither are currently in violation of its rules.

But in case the service’s position was not entirely clear, Twitter founder and CEO Jack Dorsey further shed light on its stance via a series of tweets late Tuesday.

Noting that he knows it’s “hard for many” that Twitter hasn’t suspended Alex Jones or InfoWars, Dorsey explained that “the reason is simple: he hasn’t violated our rules.” Nevertheless, he said that Twitter will “enforce if he does” and will “continue to promote a healthy conversational environment by ensuring that tweets aren’t artificially amplified.”

Dorsey noted that the site will “hold Jones to the same standard we hold to every account, not taking one-off actions to make us feel good in the short term, and adding fuel to new conspiracy theories.” He highlighted the need to adhere to Twitter’s own rules rather than “succumbing” and “reacting” to outside pressure, as that would lead Twitter to becoming a service that’s “constructed by our personal views that can swing in any direction.”

While the social network has already been the recipient of criticism for choosing not to suspend Jones, Dorsey’s last tweet in particular drew additional ire. Dorsey suggested that although “accounts like Jones’ can often sensationalize issues and spread unsubstantiated rumors,” it is the responsibility of journalists to validate his claims “so people can form their own opinions.”

“This is what serves the public conversation best,” he added.

To which New York Times technology reporter Cecilia Kang replied, “What is it that you think journalists do? Spend all day combing Twitter to fact check Alex Jones? That’s good for Twitter but not for democracy. There’s a bigger world out there, @Jack”

Twitter has repeatedly come under fire for failing to stop bullying and abuse among its users and refusing to ban some users while seemingly unfairly blocking others.

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Facebook Apologizes for Algorithm Mishap That Threw Balloons and Confetti on Indonesia Earthquake Posts

Facebook’s algorithm that triggers balloons and confetti when users write the word “congratulations” on the site is usually just a festive add-on.

But it took an inadvertent turn in Indonesia following a deadly, 6.9 magnitude earthquake on the island of Lombok on Sunday. Users took to Facebook to express concern for those affected by the earthquake, employing the Indonesian word “selamat”—which can mean safe or unhurt, but can also mean congratulations depending on the context.

The word was misinterpreted by Facebook’s algorithm, accidentally prompting the celebratory animation.

Facebook quickly apologized for the mishap, noting that the feature is “widely available” on the site globally, but expressed regret “that it appeared in this unfortunate context.” Lisa Stratton, a Facebook spokesperson further explained to Motherboard that they have since turned off the feature locally, and said that their “hearts go out to the people affected by the earthquake.”

Herman Saksono, an Indonesian PhD student in human-computer interaction, expressed surprise that Facebook hadn’t accounted for the double meaning of “selamat,” telling Motherboard that “People use the word interchangeably.”

“Researchers spend a lot of time before launching a function like this to make sure it truly fits the culture and practices in languages in which it will be used,” he said. “I would expect Facebook to do the same, given all the resources they have. I guess [they] missed this one.”

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New iPhone X: Exactly When Apple Will Reveal All Its iPhones For 2018

That feeling you’ve got, somewhere in your middle. That’s anticipation, just elbowing into impatience while we wait for Apple’s next big announcement. Oh, sure, we think we know what will be announced, from three iPhones with, potentially, radically different designs to an all-screen iPad Pro with Face ID. Not to mention the long-awaited AirPower charging pad and the fourth-generation Apple Watch. And maybe even AirPods 2, too.

Apple iPhone X in silver.David Phelan

But when will this embarrassment of riches finally arrive?

Nobody knows for certain yet, not even most of Apple’s 120,000 staff. Sure, there’ll be a date pencilled known to senior execs, but things can change, right up to the last minute. Apple won’t announce that push the button to announce the date until it knows everything’s in place.

I’ve asked Apple, oh, believe me, I’ve asked. But I had low expectations of finding anything out and those expectations were met.

Frankly, I’d have had more luck if I’d sauntered up to the front door of Fort Knox and asked for the passcode to the bullion room.

In the past, it was possible to check out bookings for venues like the Bill Graham Civic Auditorium and divine from mysteriously unavailable dates when the event might be. But all that changed last year when the sumptuous Steve Jobs Theater opened at Apple Park. What’s happening when in that auditorium is for Apple’s eyes only.

We’re left to guesswork, analysis of what happened in the past and gut feelings.

What do we know, exactly?

The bright, vivid OLED screen on the iPhone X. Will one of the successors to the iPhone X have an advanced LCD screen?David Phelan

Can previous years tell us anything?

The original iPhone was announced by Steve Jobs in January 2007. Then, the iPhone 3G, 3GS and iPhone 4 were unveiled in June in subsequent years. Since then every iPhone from the iPhone 4s onwards, apart from the SE and special edition colors, have been revealed in fall announcements. The iPhone 4s was the only October announcement, October 4 2011.

CNET has already done some work on when the big reveal might happen in a compelling post by Lynn La. The site points out that Apple has always unveiled its new wares on either a Tuesday or Wednesday and always in the first or second week of September.

My analysis is similar, though not quite the same. CNET ties the announcement to Labor Day, which is an important consideration.

But I think there’s another factor at play here as well: IFA.

Last year’s first-ever event at the Steve Jobs Theater came with this invite.Apple

So, when will they announce the announcement?

IFA is the enormous electronics show held every year in Berlin. It’s about the same size as the CES show that fills Las Vegas every January. The Berlin extravaganza runs in the last days of August, or the first days of September. This year it runs from August 31 to September 5. Apple doesn’t appear at IFA, though its shadow looms large.

Not least because it’s often on the eve of IFA that Apple sends out invitations to its next event. Last year, that was on Thursday August 31 for a September 12 keynote. In other words, the invites went out almost two weeks before the event.

I would expect something similar this year, that is, invites will be sent out on Thursday August 30.

That doesn’t mean quite set the day of the announcement, of course, as sometimes the invitations go out just a few days before the event itself.

Is it coincidence that Apple’s invites are timed to upstage IFA? Because that’s certainly the effect. It’s all anyone talks about at IFA on the day it’s announced.

Well, no, it’s not a coincidence, Apple thinks these things through meticulously. But it’s not a certainty. Three years ago, in August 2015, the invites went out on August 27, a week before IFA started for a keynote held 12 days after. Though the upstaging of IFA was still intense!

In which case, the invites could go out as early as Thursday August 23 this year, but my guess is the following week.

People arrive for a new product announcement at the Steve Jobs Theater on the new Apple campus, Tuesday, Sept. 12, 2017, in Cupertino, Calif. (AP Photo/Marcio Jose Sanchez)

In that case, what are the options?

Assuming recent years’ announcements are matched, there are four most-likely dates: Tuesday September 4, Wednesday September 5, Tuesday September 11 and Wednesday September 12. Whichever date it is, it will start at 10AM Pacific – the time Apple always chooses for its events.

Since Labor Day falls on Monday September 3, it makes Tuesday September 4 less likely as journalists and Apple staff may not want to be traveling or working on Labor Day.

The other three dates seem more plausible, then. CNET believes Wednesday September 12 is the most likely date.

My personal take is that it’s going to be between Wednesday September 5 and the following Wednesday, September 12. I think likelihood is near-identical between the two, but a September 5 reveal just edges it for me. Or is that just that I can hardly wait?

By the way, a launch on September 11, though not out of the question, is not as desirable in terms of connotations. As Lynn La points out, the accompanying news cycle.

I’d put it another way: Apple will, I suspect, want to be respectful to the memory of 9/11.

Let’s take the two dates that are most likely in my view, in turn.

Why September 5?

So, although the two dates are pretty evenly matched, what might give the edge to September 5? It’s down to the quarterly results just gone.

Apple has just had a record-breaking third quarter. Assuming the next iPhones, or two of the three predicted phones at least, go on sale in September, it needs an especially big uptick to beat the last quarter convincingly. In the earnings call a few days ago, Apple CFO Luca Maestri said,

On iPhone… the only thing that I would point out is that obviously we’re exiting the June quarter at a significantly higher level than in the past and so that I think is important to keep in mind as we move into the September quarter. It’s important to keep in mind the type of revenue growth that we’ve implied in our guidance.

In other words, Apple needs to get those new iPhones out as soon as it can to get the best results in the next quarter. While it’s likely pre-orders will open very soon after the keynote is done, the company will still want to get the phones into stores sooner rather than later to maximize revenue from sales.

Since usually the iPhones arrive instore nine or 10 days after they’re announced, the likely onsale date is Friday September 14 or the following one, September 21. Both are highly doable, though I think Apple will deem earlier to be better.

Why September 12?

If it can, I think Apple will go for the earliest date it can. But, for sure, it won’t do anything until it’s 100% ready – there won’t be a disorderly launch.

And one more thing, that makes September 12 the chief contender.

Although it wants bumper sales figures for September, the actual onsale date makes less difference than you might think – the second Apple announces pre-orders are open is when the big sales numbers will start stacking up. Sure, there will be lines outside key Apple Stores on the day it launches but with so many sales online now, they may not be as long as they used to be. In that sense, either date in September will yield big numbers for the quarter.

If details begin to leak out – and Apple is traditionally very good at keeping these dates to itself for a while – I’ll update this post, so do check back or please click the Follow button on my contributor’s page.

If you enjoyed this story, you might also like these:

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Why The Orange iPhone X Leak Is Real (And Why I Want One)

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iOS 12 Public Beta 5: Back to School Edition

Sadly, you will not be able to upgrade your instructor to a more stable version.Anthony Karcz/Pexels

That’s right betanauts, summer is coming to an end, school is back in session (in some parts of the country, at least), and (as I predicted last week) Apple has started releasing weekly Public Beta builds!

This is iOS 12 Public Beta 5 for all of you keeping track at home and there are some juicy things to keep an eye out for. As revealed earlier this week, examination of the code base and developer tools and discovery of “larger than the current iPhone X” icons representing iPhones, confirmed the eminent release of the iPhone X Plus. Also revealed were the “I can’t believe we’re still waiting for this” wireless charging case Airpods.

But even if you’re not a developer and are just an iOS enthusiast, there’s plenty to keep you busy in iOS 12 Public Beta 5. Siri Shortcuts continues to be refined, as does Screen Time. And if you haven’t measured anything with the new Measure app yet, you really need to get on that.

In the meantime, here’s what’s been fixed, what’s still busted, and what’s new in iOS 12 Public Beta 5.

What’s Fixed

  • No need to get out your cypher to try and identify your Bluetooth devices after a reboot. iOS 12 will again display device names instead of addresses.
  • Feel free to ask for your apps by name in CarPlay. Siri will properly open them now
  • Using a Siri Shortcut that requires it to open an app? It’ll actually open now (instead of Siri passive-aggressively saying it will and doing nothing).
  • Use Siri and Apple Pay Cash to send money again with wanton abandon.

What’s Still Broken

  • Inviting iOS 11 users with multiple email addresses associated with their Apple ID to HomeKit might not work.
  • Seeing non-localized language in localized text is still an issue.
  • iOS 12 and T-Mobile still haven’t made up. iOS 12 Public Beta 5 will still drop calls when handing off Wi-Fi calls to their network. Oops.
  • In Screen Time, Picked Up Phone data may be inflated due to synced devices.
  • If you have multiple ride sharing apps installed (and who doesn’t?), Siri might just open the app instead of giving you an ETA.
  • Stop screaming at your phone to complete a shortcut if it’s locked. It’s not going to do it.

New Issues

  • Want to choose a new voice for your iDevice? Maybe wait till the next beta build. Trying to pick a voice in Speech settings is making the app quit unexpectedly.
  • If you have a 3rd gen Apple TV and are trying, unsuccessfully, to turn it into a HomeKit hub, it’s not you, it’s iOS 12 Public Beta 5.
  • This one is super-specific, but also super-annoying. Settings will crash when you try and open Siri & Search settings, but have uninstalled FaceTime, Maps, Voice Memos, or Mail.

What’s Next for iOS 12

Now that we’re on a weekly cycle, expect to see more bugs fixed than found. As Apple nears September, the pressure will be on to figure out what’s causing these issues and get them patched before they become public headaches. Ironically, that can mean smaller bugs make it into the final release (and will then be patched in a quick iOS 12.1 release…but we’re not there yet). The bug list will steadily shrink throughout August.

Before you download iOS 12 Public Beta 5, take a look at the lists above. Chances are, a lot of those issues are going to be fixed next week when Public Beta 6 drops. But in the meantime, you’ll have to come up with a workaround for anything that impedes your workflow. If you’d rather just wait at this point for the official release (it’ll be along in about a month), you can downgrade back to iOS 11.4.

Automatic software updates will take care of your update if you’ve decided to brave the unknown. For everyone else, head to Settings > General > Software Update and get the download started.

I’ve been writing about technology, gadgets, and pop culture for the past two decades. I’ve seen the rise and fall (and rise again) of Apple. I’ve watched c-beams glitter in the dark near the Tannhäuser Gate… In addition to Forbes.com, I am a core contributor at GeekDad.c…


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Going cloud-native costs more than you think

There is a bit of sticker shock out there. No, it’s not the big IaaS public cloud bill that will make you gasp, it’s the price of changing applications to take advantage of cloud-native features as they move to the cloud.

There are three basic ways to deal with application migration to the cloud:

  • Lift and shift, or just putting the applications on a public cloud unmodified and hoping for the best.
  • Partial refactoring, which means modifying parts of the applications to take advantage of some cloud-native features.
  • Complete refactoring, or redoing most of the application to take advantage of cloud native features.

Of course, lift and shift is the cheapest way to go, and thus the way that many enterprises have directed their cloud migrations. The downside is not taking advantage of the cloud platform where the application resides, leads to higher bills, slower applications, and just not making the application be all that it can be on the public cloud platform.

The refactoring approaches, to take advantage of cloud-native features, result in lower cloud bills and higher performance, but it adds costs and risk. Moreover, the worse the state of your applications, the higher the refactoring cost and the risk.

Enterprises are doing the right thing in trying to refactor applications moving to the cloud, including running the cost metrics of the work that would need to be done. This refactoring effort not only includes the rewriting itself, but testing, deployment, and perhaps using new devops organizations and tool chains.

The problem is the cost. I see them ending up triple what enterprises initially expected. This is due largely to the fact that the applications were much worse than originally assumed, and major (unexpected) gutting was needed to get them first to a good architectural state and then to a cloud-native state. It’s like when you go to the auto mechanic to find out what is making those ticking sounds, only to find that a pushrod is bad and needs a major expensive overall.

So, will enterprises pay the extra cost? Some will, for most of their critical applications. But budgets are budgets. So, enterprises will end up not refactoring as many applications as originally thought, perhaps putting them off for 2020 or 2021. This may end up costing more money in the long run. If that’s acceptable to you, fine. My advice is fix it now, rather than later, and absorb the costs you’ll end up paying later anyhow. After all, that pushrod can come right through the block.

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TSMC says third-quarter revenue hit by computer virus

TAIPEI (Reuters) – A computer virus outbreak has hit third-quarter results at Taiwan Semiconductor Manufacturing Company Ltd, the world’s largest contract chipmaker, the company said on Sunday.

A logo of Taiwan Semiconductor Manufacturing Co (TSMC) is seen at its headquarters in Hsinchu, Taiwan October 5, 2017. REUTERS/Eason Lam

On Saturday, TSMC, a major supplier for Apple Inc, said that a number of its computer systems and fab tools had been infected by a virus, but the problem had been contained.

The company expects full recovery on Aug. 6, the company said in an updated statement on Sunday.

“TSMC expects this incident to cause shipment delays and additional costs. We estimate the impact to third quarter revenue to be about three percent, and impact to gross margin to be about one percentage point,” it said.

“The Company is confident shipments delayed in third quarter will be recovered in the fourth quarter 2018, and maintains its forecast of high single-digit revenue growth for 2018 in U.S. dollars given on July 19, 2018.”

The chipmaker has notified its customers and is working with them on the wafer delivery schedule. Details will be provided to each customer individually over the next few days, it said.

The virus outbreak occurred during the software installation for a new tool, which caused a virus to spread once the tool was connected to the company’s computer network, TSMC said.

“Data integrity and confidential information was not compromised. TSMC has taken actions to close this security gap and further strengthen security measures,” it said.

Reporting by Jess Macy Yu, editing by Larry King

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