Category: Business

Swedish Ericsson works its way out of borkage

Ericsson will refocus its business for managed services, explore options for its loss-making media arm and take several writedowns.

The move is the first from its new CEO which is supposed to lead the Swedish telecoms equipment maker out of its worst crisis in a decade

Board member Borje Ekholm took over as CEO in January and the markets had been awaiting for his cunning plan to get out of the mess the company is in.

The firm is grappling with shrinking markets and fierce competition from China’s Huawei, Finland’s Nokia and the rise of the Ice Giants trying to cross the Bridge of Bifrost (we made the last one up).

The Swedish company said it would take $797 million-$1.02 billion in the first quarter related to recent negative developments in certain large customer projects.  This has worried some analysts who fear that taking that much cash out of the bank might indicate the company is a bit borked.

The company will also write down assets in the first quarter, with an estimated impact on operating income of $342-$456 million, it said in a statement.

Ekholm said he expected his bottom line to be well and truly massaged and for significant improvements to be seen in 2018.

“Beyond that I am convinced that Ericsson, on a sustainable basis, can at least double the 2016 Group operating margin, excluding restructuring charges,” he said.

Romans declare piracy sites legal

After years of backing the sinking of pirate content websites, the Roman Court of Appeal has overturned a 600,000 euro ruling against four unlicensed sites that offered streaming movies to the public.

For those who came in late, the ruling is unexpected.  Italian courts have passed down many decisions against unlicensed sites which have seen hundreds blocked by ISPs.

But now the Court of Appeal has defined a pirate site in a way which makes it difficult for shedloads of them to be shut down on the basis of a stiff letter coming from Big Content..

In 2015 when the operator of four sites that linked to pirated movies was found guilty of copyright infringement by a local court and ordered to pay more almost 600,000 in fines and costs. As a result, filmakers.biz, filmaker.me, filmakerz.org, and cineteka.org all shutdown.

However, an appeal was filed and heard by the Rome Court of Appeal in February. The site’s lawyer Fulvio Sarzana said that the Court ruled that the links do not qualify as distributing files protected by copyright law.

This means that sites can list links and not be prosecuted.

“The Judge has recognized as lawful the portals’ activities, and this is despite the presence of advertising banners,” Sarzana says.

It is no longer enough to simply show that the ‘pirate’ site generates income. The prosecution must show that profit activity is connected to an individual.

If it fails, the sharing aspect could be considered as merely avoiding an expense rather than a for-profit activity designed to generate “significant gain”.

The judge ruled that file sharing is an  expensive saving move and a not a for-profit business and in such cases you cannot apply the penal provisions of copyright law and the resulting administrative sanctions.

 

Trump makes more bizarre tech claims

Desperate to appear in control again after losing a crucial anti-Obama care vote, Donald (Prince of Orange) Trump has claimed that he was personally involved in a move by Charter Communications’ decision to invest $25 billion in the United States and hire 20,000 workers over four years.

At a White House event with the second largest US cable company’s Chief Executive Thomas Rutledge and Texas Governor Greg Abbott, Trump praised Charter for planning to close its offshore call centres and move them to the United States.

Trump said: “We’re embracing a new economic model – the American Model. We’re going to massively eliminate job-killing regulations – that has started already, big league – reduce government burdens, and lower taxes that are crushing American businesses and American workers.”

But the decision is not new. Charter said last May that it planned to add 20,000 jobs as part of its merger with Time Warner Cable and acquisition of Bright House Networks. As early as June 2015, Rutledge said Charter would need an additional 20,000 employees after those deals.

The company said more than a year ago in February 2016 that it planned to close foreign Time Warner Cable call centres and move the jobs to the United States.

This is not the first time that Trump has touted job announcements at the White House that had been previously planned or announced.

“You’re going to see thousands and thousands and thousands of jobs, of companies, and everything coming back into our country.”

Microsoft sued over Windows 10

Three people in Illinois have filed a lawsuit against Microsoft, claiming that its Windows 10 update destroyed their data and damaged their computers.

The complaint, filed in Chicago’s US District Court, claimed that Vole’s Windows 10’s installer was a defective product, and that its maker failed to provide adequate warning about the potential risks posed by Windows 10 installation.

The attorneys representing the trio are seeking to have the case certified as a class action that includes every person in the US who upgraded to Windows 10 from Windows 7 and suffered data loss or damage to software or hardware within 30 days of installation.

They claim there are hundreds or thousands of affected individuals.

Microsoft responded that they’d offered free customer service and other support options for “the upgrade experience,” adding “We believe the plaintiffs’ claims are without merit”.

The complaint argues Windows 10’s installer “does not check the condition of the PC and if the hard drive can withstand the stress of the Windows 10 installation”.

The lead plaintiff says her hard drive failed after Windows 10 installed without her express approval, and she had to buy a new computer.

Intel goes to Nervana to sort out its intelligence

Chipzilla has put its artificial intelligence efforts into a single business group led by former CEO of Nervana,  Naveen Rao.

For those who came in late, Intel bought Nervana in the firm belief that the next big thing will be AI powered IT innovation and machine learning.

Writing in his bog, Rao outlined how the Artificial Intelligence Products Group will work across multiple units. Part of the group’s remit will be to bring AI costs down and forge standards. Rao said the group will combine engineering, labs, software, and hardware from its portfolio.

Intel is building an AI lab and a centralised organisation, reporting directly to CEO Brian Krzanich, to make it all work.

This is classic organisational strategy, accelerating delivery by creating  a cross-product group directly reporting to the CEO.

Amazon wins tax case

Online bookseller and purveyor of talking radios, Amazon, has won a decade old case against the US taxman.

The Internal Revenue Service wanted Amazon to pay more than $1.5 billion over transactions involving a Luxembourg unit.

Judge Albert Lauber of the US Tax Court rejected a variety of IRS arguments, and found that on several occasions the agency abused its discretion, or acted arbitrarily or capriciously.

The case involved transactions in 2005 and 2006, and could boost its federal tax bill by $1.5 billion plus interest. It also said a loss could add “significant” tax liabilities in later years.

Amazon made just $2.37 billion of profit in 2016, four times what it made in the four prior years combined, on revenue of $136 billion.

In one of the more pot calling the kettle black moves of the US elections, Donald (Prince of Orange) Trump claimed that Amazon did not pay enough taxes and accusing it on Fox News of “getting away with murder tax-wise”.

The IRS case involved “transfer pricing,” which arises when different units of multinational companies transact with each other.

Amazon argued that the IRS overestimated the value of “intangible” assets, such as software and trademarks, it had transferred to a Luxembourg unit, Amazon Europe Holding Technologies SCS.

Amazon did this through a plan called “Project Goldcrest,” to have the “vast bulk” of income from its European businesses taxed in Luxembourg at a “very low rate”.

Amazon has said it may face more tax bills in Europe if authorities in Brussels conclude that prior rulings by Luxembourg tax officials amounted to improper “state aid” that gave it an unfair advantage over rivals.

Lithuanian phishes two big US tech companies

A 48-year-old Lithuanian scammer named Evaldas Rimasauskas managed to trick two American technology companies into wiring him $100 million.

According to the US Department of Justice, Rimasauskas  masqueraded as a prominent Asian hardware manufacturer and tricked employees into depositing tens of millions of dollars into bank accounts in Latvia, Cyprus, and numerous other countries.

What is amazing about this rather bog standard phishing scam is how much cash he walked away with and the fact it was the IT industry, which should have known better.

The indictment does not name and shame the companies.  The first company is “multinational technology company, specializing in internet-related services and products, with headquarters in the United States”. The second company is a “multinational corporation providing online social media and networking services”.

Both apparently worked with the same “Asia-based manufacturer of computer hardware,” a supplier that the documents indicate was founded some time in the late ’80s.

Representatives at both companies with the power to wire vast sums of money were still tricked by fraudulent email accounts. Rimasauskas even went so far as to create fake contracts on forged company letterhead, fake bank invoices, and various other official-looking documents to convince employees of the two companies to send him money.

Rimasauskas has been charged with one count of wire fraud, three counts of money laundering, and aggravated identity theft. In other words, he faces serious prison time of convicted — each charge of wire fraud and laundering carries a max sentence of 20 years.

 

Google and Facebook investigated by Israeli tax man

The Israeli Tax Authority has opened an inquiry into the local antics of tech giants Google and Facebook.

The taxmen have conducted meetings with clients of Google, asking detailed questions about the methods used by Google and Facebook to conduct local operations.

Questions put to clients centered around the degree of involvement that local representatives of Google and Facebook had in designing marketing campaigns, and setting budgets and targets for clients.

Basically the Israeli’s are unsure if the Israeli teams were acting independently, or if they were referring business matters to overseas headquarters and then merely implementing corporate decisions in the local market.

Should the investigation conclude with the determination that Google and Facebook Israel teams are independently responsible for activities in the local market, the tax authority may recommend that the companies pay a rather a large tax to the Israeli government for business conducted within the country.

Facebook and Google claim that they operate in Ireland, thereby avoiding paying direct or indirect taxes to the Israeli government.

Research shows that total online advertising expenditures topped $333 million in Israel in 2015, with online taking an ever-expanding segment of budgets from traditional advertising. Of that $333 million, over half was dedicated to spending on social media and search sites, two areas dominated by Facebook and Google.

In April 2016, the Israel Tax Authority unveiled a new set of guidelines regarding tax liability for foreign corporations operating in Israel. Under these rules, an international company would owe taxes if its services were produced in Israel. To prevent double taxation with countries that have international tax agreements with Israel, the foreign corporation must have a permanent establishment within Israel.

A permanent establishment was defined as a physical space used by the business to conduct operations, or a virtual space – including a website – where agents are empowered to conduct local business and enter into contracts on behalf of the corporation.

IBM lets dog eat its home workers

Biggish Blue has been an enthusiastic supporter of its staff working from home, but in less than a year into her tenure as IBM’s chief marketing officer, Michelle Peluso has decided she does not like it one bit.

In a video message, Peluso explained the “only one recipe I know for success”. Its ingredients included great people, the right tools, a mission, analysis of results, and one more thing: “really creative and inspiring locations”.

She said that IBM had decided to “co-locate” the US marketing department, about 2,600 people, which meant that all teams would now work together, “shoulder to shoulder,” from one of six different locations — Atlanta, Raleigh, Austin, Boston, San Francisco, and New York.

Employees who worked primarily from home would be required to commute, and employees who worked remotely or from an office that was not on the list – or an office that was on the list, but different than the one to which their teams had been assigned – would be required to either move or look for another job.

Similar announcements had already been made in other departments, and more are expected. At IBM, which has embraced remote work for decades, a large proportion of employees work outside of central hubs.

Peluso trots out the same sort of stuff that managers have been saying about remote working for decades.

“When you are playing phone tag with someone is quite different than when you’re sitting next to someone and can pop up behind them and ask them a question,” Peluso says.

However most remote workers are not like that. Telephone tag does not happen if someone is working from home because there is only one number to a house and the person usually answers it. Telephone tag however happens a lot when someone is in a big office.

We also think it is unlikely that one of Peluso’s workers would just show up in her office if they want a chat.

TSMC mulls US chip plant

TSMC fab in Hsinchu - Wikimedia CommonsTSMC has said that it will decide next year on building a US chip plant to get the Trump government off its back.

TSMC chairman Morris Chang had said the company did not rule out the idea of building a US foundry, however it now is clear the company is waiting until next year to see what happens.

The company said that there would be a loss of some benefits if it moved to the States. If an earthquake happened for instance in Taiwan, it could send thousands of people there as support, while it is harder in the States.

Local media CNA news agency reported on Monday that TSMC would make a decision on the plant in the first half of 2018.

The report also said TSMC was considering a $16.41 billion investment for the plant.

But the company could also be distracted by another more pressing matter of investing in Toshiba’s chip business. An industry source familiar with the matter said TSMC was deeply interested in the Toshiba unit.