An Apple a day

Quote of the Day

My New Year’s resolution is to get unbelievably fit so I’m ready for a trip into space.”

Market Snapshot

• The Dow got a slight push from big banks.
• The dollar fell to a three-year low after Steve Mnuchin said, “a weaker dollar is good for trade.”
• Texas Instruments sank 8.5% after reporting weak revenue growth.
• Bitcoin held steady around $11,000.

SoftBank Enters the Construction Zone

SoftBank is breaking ground in the literal bricks-and-mortar industry, leading an $865 million round in three-year-old construction startup Katerra.

Nothing like a little venture capital with your manual labor

Katerra, with SoftBank’s help, is trying to turn the construction industry upside down. The constructech (get used to that term) company—now valued at ~$3 billion—is using IoT tools and proprietary software to streamline every facet of the construction process, from conception to building. From its warehouse in Arizona (with another expected in eastern Washington), Katerra ships pre-assembled materials to building sites, as needed. Sounds expensive.

But CEO Michael Marks—former electronics revolutionary at Flex and interim CEO of Tesla in 2007—seems to realize what he’s gotten himself into and has a blueprint to follow. “It’s very similar to Uber or Airbnb or WeWork. It’s tech guys in Silicon Valley driving into a new industry that has never had any technology. Construction is one of the worst.”

But maybe there’s a reason construction hasn’t yet crossed the (assembly) line to automation

With so many moving parts, Katerra—and the industry, at large—has to answer a few big questions:

* How do you account for building codes that vary state-to-state or even town-to-town?
* Or plan for differently weathered regions, from the hurricane’d Gulf to the earthquake’d West?
* How do you prevent industry-standard project delays and overrun costs?
* And even with pre-assembled walls, floors, and cabinets shipped to the construction site, someone still has to put all the pieces together. Which might not be so easy considering the dearth of available skilled workers.

Assuming Katerra can uniformly answer all of those questions, its optimistic building plans estimate $10 billion in sales over the next ten years—with $1.3 billion in orders already. In which case, it’s no wonder SoftBank is moving in.

It’s Qualcomm’s Turn Under the EU Microscope

For all the talk of regulating tech giants, there seems to be only one person who’s actually following through—EU’s antitrust chief, Margrethe Vestager. She threw down the hammer on Qualcomm (-0.53%) with a $1.23 billion fine for unfairly thwarting competitors (read: Intel) in the LTE chip market.

Here’s what happened: the EU alleges Qualcomm and Apple (an important customer) arranged a quid pro quo: Qualcomm paid Apple billions of dollars in exchange for Apple buying certain chips exclusively from Qualcomm (which will appeal the decision).

And if you think you’ve got a lot on your plate, it’s nothing compared to Qualcomm. The chipmaker is already juggling a hostile takeover bid from Broadcom and a drawn-out legal battle with Apple.

But this story is as much about Vestager as it is about Qualcomm. She’s spent the past few years cutting multinationals down-to-size, hitting Google for a record $2.7 billion and shaking down Apple for $15.4 billion in Irish back taxes.

Meg Whitman Goes from HP to Mobile TV

For her new gig, Silicon Valley vet Meg Whitman is leaving corporate America and entering the startup world. Welcome, Meg. Hope you’re brushing up on your growth hacking skills.

One month after stepping down from leading HP Enterprise on February 1, Whitman will settle into the corner office at NewTV (its working name), a media company that’ll produce high-quality mobile videos of two to ten minutes.

The startup is the first venture from media investment firm WndrCo, which makes up for in star power what it lacks in vowels. Its co-founder Jeffrey Katzenberg started DreamWorks, and as a Disney producer, he was responsible for some of your fondest childhood memories, like Aladdin and The Lion King.

In fact, it was at Disney where Katzenberg met Whitman, a fellow executive. That’s where she kicked off a stellar career that includes running for governor of California and taking eBay from 30 employees to 15,000.

Apple Is Putting You in Charge of Your Health Records

Remembering if you’ve ever had a navel rash for the physician’s questionnaire just got a whole lot easier with Apple’s (-1.59%) new iOS 11.3 update (currently in beta testing). Certain health providers (like Johns Hopkins and Penn Med) will now send medical reports to your Apple Health app.

Need to check your cholesterol levels? No worries. Past immunizations? They’re at your fingertips. Lab results from that bloodwork last week? Mazel tov, you’re clean. And if you’re feeling generous, you can even share your medical data with researchers.

Apple is not the first tech giant to slap on a white coat—Google and Microsoft both rolled out similar health services a decade ago (Google’s failed, Microsoft’s is still pumping). But that was a decade ago and Apple stands ready to capitalize on upgrades in tech.

If Cook’s master plan works, it’ll give Apple more footing in the $3 trillion U.S. healthcare arena. A similar push from Amazon into pharmacy should give you a taste of where Big Tech is headed.

So we’ll say it, and we’ll only say it once: an Apple a day does keep the…. oh, you get the point.

What Else Is Happening…

• GE (-2.66%) is under SEC investigation after a $6.2 billion insurance loss.
• LG said it will raise prices on its washing machines in response to recently announced tariffs.
• Toys 'R' Us will close one-fifth of its U.S. stores by spring.
• Nielsen will now measure social engagement across Instagram.
• Medical marijuana companies Aurora Cannabis (-5.48%) and CanniMed Therapeutics (+13.01%) are merging.
• Alphabet is launching Chronicle, a new business unit focused on cyber security.

Economic Calendar

• Monday     Earnings: Netflix (+/-), UBS (-)

                    Economic Events: Chicago Fed National Activity Index (+)

• Tuesday    Earnings: Johnson & Johnson (+), P&G (+), Travelers (+), Verizon (-)

                  Economic Events: Rich Fed Mfg Index (-)

• Wednesday    Earnings: Comcast (+), DFS (-), Ford (-), GE (-), Novartis (+)

                        Economic Events: PMI (-), Existing Home Sales (+/-)

• Thursday   Earnings: 3M, American Airlines, Caterpillar, Celgene, FCA, Intel, Northrop Grumman, Raytheon, Southwest, Starbucks

                   Economic Events: Jobless Claims, New Home Sales

• Friday       Earnings: Honeywell, Rockwell Collins

                 Economic Events: Durable Goods, GDP

The Bigger Picture: Netflix

Netflix recently aired 8.3 Million Reasons Why (read: new subscribers) it’s the king of streaming. Q4 2017 went off without a hitch just like Q3 before it, and Q2 before that, and...you get it. The news sent the company’s stock up 10% past $100 billion in market cap.

Netflix’s growth has been nothing short of staggering:

if you had your images enabled this would be an image of an awesome chart
But as the saying goes, you have to spend money to make money. And Netflix has certainly lived up to that wisdom...well, kind of.

if you had your images enabled this would be an image of an awesome chart
Revenue topped $3.3 billion in Q4, but Netflix still posted negative free cash flow of $509 million. And CEO Reed Hastings noted the trend would likely double in the coming years.

Bottom line: Keep an eye on Netflix’s bottom line. Subscribing to high-spend, fast-growth strategies (think Tesla) typically end on the moon—or go bust. For now, it streams to be paying off.

The Breakroom

Question of the Day

The following sentences can be completed by adding two words that are anagrams of one another. Each word has only four letters.

1. If you prick your finger while picking a ____, it may be very ____.

2. If you take a ____ at the Mad Hatter's party, you still may not get a sip of his ____.

3. If you need some stamps, then you must ____ by the ____ office.

(Answer located at the bottom of newsletter)

Business Trivia

On the New York Stock Exchange, what is the name of the company whose stock symbol is CAKE?

(Answer located at the bottom of newsletter)

Stat of the Day

1.4 million—How many Americans will be out of work due to advances in technology over the next eight years. We’re learning all of the new skills.

Breakroom Answers

Question of the Day: 1) rose, sore 2) seat, teas 3) stop, post (Explannation)

Business Trivia: Cheesecake Factory