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Friday, January 8, 2016
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New York Attorney General Eric Schneiderman on Thursday announced a deal that would require Uber to encrypt geolocation information about its riders, as well as enhance its data security practices.

The AG opened an investigation into Uber in 2014, in response to allegations that the service had tracked riders and displayed their locations in an aerial format, known internally as the "God View."

The AG's office opened another investigation early last year, after Uber notified it that an unauthorized third-party had accessed the names and driver's license information of Uber drivers as early as May 2014, although the company did not discover it until the following September, according to legal documents obtained by the E-Commerce Times.

"We are committed to protecting the privacy of consumers and customers of any product in New York State, as well as that of any employee of any company operating here," Schneiderman said.

New Data Rules

The settlement requires that Uber encrypt rider geolocation information, adopt multifactor authentication before any Uber employee can access sensitive rider information, and engage in other protection practices, according to the AG's office.

The settlement also requires Uber to pay a US$20,000 penalty for failing to provide timely notice to drivers and to the AG's office regarding the September 2014 data breach.

"We are deeply committed to protecting the privacy and personal data of riders and drivers," Uber said in a statement provided to the E-Commerce Times by spokesperson Matt Wing. "We are pleased to have reached an agreement with the New York Attorney General that resolves these questions and makes it clear our commitment to best practices that put our community first."

We've Been Expecting You

Buzzfeed reporter Johana Bhuiyan in 2014 discovered that her Uber ride had been tracked as she traveled to the company's Long Island City headquarters while on assignment to interview its New York general manager.

She had not given prior consent to the tracking, and it was against company policy to do such a thing, according to a Buzzfeed exclusive report.

The AG's office mentioned the Buzzfeed article in its announcement of the settlement; however, Wing declined to comment on the incident.

Uber last year posted a privacy policy that mentioned the hiring of law firm Hogan Lovells to review the company's privacy practices.

Uber conducts annual privacy and security training, has an employee designated to supervise it, and takes other steps that already comply with the AG agreement, it said.

Companies often fail to protect sensitive customer data, according to Charles Duan, staff attorney at Public Knowledge, who pointed to the AT&T breach in which call center employees had access to customer data, including 280,000 Social Security numbers.

"I expect that many consumers will now start to think twice before hitting that Uber request button," he told the E-Commerce Times. "Uber's ride service is largely based on the idea that it's better than taxis, and now they've shown that taxis are actually superior in at least one respect -- namely, privacy and anonymity."

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

5:17 AM

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All but one of Apple's top team received a pay raise in 2015, according to a proxy statement filed with the Securities and Exchange Commission this week.

While Angela Ahrendts, Apple's senior vice president for retail and online stores, didn't get a raise, she's still pulling down the highest executive compensation at the company at US$25.8 million.

Her compensation in 2014 was $73.4 million, but that's because Apple offered her a fat financial deal to jump ship from Burberry.

By comparison, CEO Tim Cook's compensation in 2015 was $10.3 million, up from $9.2 million in 2014.

Stock Holdings

However, Cook has large equity holdings in the company awarded him when he become CEO. They include unvested shares worth $353.3 million and equity incentives worth $192.7 million.

Ahrendt also has substantial stock holdings: unvested shares worth $42.5 million and equity incentives worth $18.4 million.

CFO Luca Maestri received compensation of $25.3 million, an increase from $14.0 million in 2014, the SEC filing showed.

His stock holdings include unvested shares worth $36.1 million and equity incentives worth $9.7 million.

Meanwhile, Eddy Cue, Apple's senior vice president for Internet software and services, had compensation of $25.1 million, a jump from $24.4 million in 2014.

Cue's stock holdings include $92.6 million in unvested shares and $18.4 million in incentives.

Skewed Compensation

Although Apple was a revenue and profit machine in 2015, its stock languished.

Full-year revenues for the company were $233 billion and profits were more than a billion dollars a week at $53.4 billion.

Yet its stock price dropped to 105.26 in December from 111.89 in January.

The stock closed Thursday at 96.45.

Apple's current executive team is responsible for destroying more than $480 billion in shareholder value, maintained Trip Chowdhry, managing director for equity research at Global Equities Research.

"Should they be rewarded for destroying $480 billion of potential shareholder value?" he told the E-Commerce Times. "Their compensation is totally skewed."

Bad P/E

Apple's price-to-earnings ratio of 11.5 is half the S&P 500 average of 20.5, Chowdhry added.

"The team should be compensated based on the P/E multiples. They shouldn't get bonuses until they match the market multiples," he said.

"It's a classic scenario of executives self-congratulating themselves for a dismal performance. These executives are rewarding themselves for underperforming on every metric," Chowdhry continued.

"If Steve Jobs was alive today, he would have gone bananas," he added.

Stratospheric Salaries

One of the problems in corporate America is executives continuing to make good money regardless of how the company is doing, observed Rob Enderle, principal analyst at the Enderle Group.

"There's been a decoupling of company performance and salaries at the top level of firms that's been problematic," he told the E-Commerce Times. "Often, even if a company drops into unprofitability, the salaries will remain stratospheric."

That's not the case at Apple, however, according to Enderle.

"Apple continues to be one of the most profitable companies in the technology segment," he said. "As long as that is the case, you'd expect the compensation to remain reasonably good."

Unreasonable Expectations

While Apple may not be doing as well as it did under Steve Jobs, Enderle continued, it's doing better than most companies do when an iconic leader leaves.

"The fact that Apple was designed around Jobs and they're doing as well they're doing is a testament to their capability," he said.

When Bill Gates left Microsoft to Steve Balmer, the company's value collapsed and still hasn't recovered, Enderle noted.

As for Apple's stock price, "tech companies have a history of being undervalued," he observed.

"The issue with Apple is they're expected to overperform, so they get pounded when they don't," Enderle continued.

"The expectations around Apple are often unreasonable," he added, "largely because Apple has shown they can perform at unreasonable levels."

John Mello is a freelance technology writer and contributor to Chief Security Officer magazine. You can connect with him on Google+.

4:27 AM

All but one of Apple's top team received a pay raise in 2015, according to a proxy statement filed with the Securities and Exc...

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All but one of Apple's top team received a pay raise in 2015, according to a proxy statement filed with the Securities and Exchange Commission this week.

While Angela Ahrendts, Apple's senior vice president for retail and online stores, didn't get a raise, she's still pulling down the highest executive compensation at the company at US$25.8 million.

Her compensation in 2014 was $73.4 million, but that's because Apple offered her a fat financial deal to jump ship from Burberry.

By comparison, CEO Tim Cook's compensation in 2015 was $10.3 million, up from $9.2 million in 2014.

Stock Holdings

However, Cook has large equity holdings in the company awarded him when he become CEO. They include unvested shares worth $353.3 million and equity incentives worth $192.7 million.

Ahrendt also has substantial stock holdings: unvested shares worth $42.5 million and equity incentives worth $18.4 million.

CFO Luca Maestri received compensation of $25.3 million, an increase from $14.0 million in 2014, the SEC filing showed.

His stock holdings include unvested shares worth $36.1 million and equity incentives worth $9.7 million.

Meanwhile, Eddy Cue, Apple's senior vice president for Internet software and services, had compensation of $25.1 million, a jump from $24.4 million in 2014.

Cue's stock holdings include $92.6 million in unvested shares and $18.4 million in incentives.

Skewed Compensation

Although Apple was a revenue and profit machine in 2015, its stock languished.

Full-year revenues for the company were $233 billion and profits were more than a billion dollars a week at $53.4 billion.

Yet its stock price dropped to 105.26 in December from 111.89 in January.

The stock closed Thursday at 96.45.

Apple's current executive team is responsible for destroying more than $480 billion in shareholder value, maintained Trip Chowdhry, managing director for equity research at Global Equities Research.

"Should they be rewarded for destroying $480 billion of potential shareholder value?" he told the E-Commerce Times. "Their compensation is totally skewed."

Bad P/E

Apple's price-to-earnings ratio of 11.5 is half the S&P 500 average of 20.5, Chowdhry added.

"The team should be compensated based on the P/E multiples. They shouldn't get bonuses until they match the market multiples," he said.

"It's a classic scenario of executives self-congratulating themselves for a dismal performance. These executives are rewarding themselves for underperforming on every metric," Chowdhry continued.

"If Steve Jobs was alive today, he would have gone bananas," he added.

Stratospheric Salaries

One of the problems in corporate America is executives continuing to make good money regardless of how the company is doing, observed Rob Enderle, principal analyst at the Enderle Group.

"There's been a decoupling of company performance and salaries at the top level of firms that's been problematic," he told the E-Commerce Times. "Often, even if a company drops into unprofitability, the salaries will remain stratospheric."

That's not the case at Apple, however, according to Enderle.

"Apple continues to be one of the most profitable companies in the technology segment," he said. "As long as that is the case, you'd expect the compensation to remain reasonably good."

Unreasonable Expectations

While Apple may not be doing as well as it did under Steve Jobs, Enderle continued, it's doing better than most companies do when an iconic leader leaves.

"The fact that Apple was designed around Jobs and they're doing as well they're doing is a testament to their capability," he said.

When Bill Gates left Microsoft to Steve Balmer, the company's value collapsed and still hasn't recovered, Enderle noted.

As for Apple's stock price, "tech companies have a history of being undervalued," he observed.

"The issue with Apple is they're expected to overperform, so they get pounded when they don't," Enderle continued.

"The expectations around Apple are often unreasonable," he added, "largely because Apple has shown they can perform at unreasonable levels."

John Mello is a freelance technology writer and contributor to Chief Security Officer magazine. You can connect with him on Google+.

3:20 AM

All but one of Apple's top team received a pay raise in 2015, according to a proxy statement filed with the Securities and Exc...

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Thursday, January 7, 2016
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New York Attorney General Eric Schneiderman on Thursday announced a deal that would require Uber to encrypt geolocation information about its riders, as well as enhance its data security practices.

The AG opened an investigation into Uber in 2014, in response to allegations that the service had tracked riders and displayed their locations in an aerial format, known internally as the "God View."

The AG's office opened another investigation early last year, after Uber notified it that an unauthorized third-party had accessed the names and driver's license information of Uber drivers as early as May 2014, although the company did not discover it until the following September, according to legal documents obtained by the E-Commerce Times.

"We are committed to protecting the privacy of consumers and customers of any product in New York State, as well as that of any employee of any company operating here," Schneiderman said.

New Data Rules

The settlement requires that Uber encrypt rider geolocation information, adopt multifactor authentication before any Uber employee can access sensitive rider information, and engage in other protection practices, according to the AG's office.

The settlement also requires Uber to pay a US$20,000 penalty for failing to provide timely notice to drivers and to the AG's office regarding the September 2014 data breach.

"We are deeply committed to protecting the privacy and personal data of riders and drivers," Uber said in a statement provided to the E-Commerce Times by spokesperson Matt Wing. "We are pleased to have reached an agreement with the New York Attorney General that resolves these questions and makes it clear our commitment to best practices that put our community first."

We've Been Expecting You

Buzzfeed reporter Johana Bhuiyan in 2014 discovered that her Uber ride had been tracked as she traveled to the company's Long Island City headquarters while on assignment to interview its New York general manager.

She had not given prior consent to the tracking, and it was against company policy to do such a thing, according to a Buzzfeed exclusive report.

The AG's office mentioned the Buzzfeed article in its announcement of the settlement; however, Wing declined to comment on the incident.

Uber last year posted a privacy policy that mentioned the hiring of law firm Hogan Lovells to review the company's privacy practices.

Uber conducts annual privacy and security training, has an employee designated to supervise it, and takes other steps that already comply with the AG agreement, it said.

Companies often fail to protect sensitive customer data, according to Charles Duan, staff attorney at Public Knowledge, who pointed to the AT&T breach in which call center employees had access to customer data, including 280,000 Social Security numbers.

"I expect that many consumers will now start to think twice before hitting that Uber request button," he told the E-Commerce Times. "Uber's ride service is largely based on the idea that it's better than taxis, and now they've shown that taxis are actually superior in at least one respect -- namely, privacy and anonymity."

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

1:20 AM

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Wednesday, January 6, 2016
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Activist investor Starboard Value, which has dogged Yahoo over the years, on Wednesday sent a letter to the company demanding it make changes or face a proxy fight.

Yahoo "made the right decision" by suspending the Alibaba spinoff, but "the continued downward spiral of Yahoo's core Search and Display advertising businesses" has been "frustrating for us, and likely for you," the letter, posted on ValueWalk, states.

The management team hired to turn around the core business "has failed to produce acceptable results" despite more than three years of effort and billions spent on acquisition, the letter says. "It appears that investors have lost all confidence in management and the Board," and most of Yahoo's current value derives from its Alibaba shares.

Starboard demands "dramatically different thinking" and "significant changes across all aspects of the business starting at the board level, and including executive leadership," according to the letter. It wants to see cost-cutting, paring off unprofitable businesses and research projects, and an overhaul of Yahoo's incentives and compensation programs.

Yahoo should look at selling its core businesses, Starboard's letter suggests. Otherwise, an election contest "may very well be needed" to replace members of the board.

Mixed Investor Feelings

The market immediately drove up Yahoo's share prices briefly, but they closed at $32.16, down 4 cents from the previous day but up 35 cents from the opening bell figure.

Given the strong wording of Starboard's letter, the market's reaction might indicate that investors still have some faith in Yahoo CEO Marissa Mayer's vision.

"Yahoo is in the midst of a multiyear transformation," Yahoo said in a statement provided to the E-Commerce Times by spokesperson Rebecca Neufeld.

"We attract more than a billion people every month, and we've built a profitable billion-dollar business in mobile, video, native and social that we expect will drive sustainable growth," Yahoo continued.

The company will "share additional plans for a more focused Yahoo on or before" its fourth-quarter earnings call, it said.

That probably will be held some time later this month.

Starboard's Angst

Starboard is concerned by both the deteriorating financial performance of Yahoo's core business and an "accelerating number of executive leadership departures," the letter states.

Further, annual operating costs have increased by about $500 million despite falling revenues. Yahoo has spent more than $2.3 billion on acquisitions, most of which have "been misguided, poorly overseen, and, ultimately, shut down," Starboard's letter continues. "EBITDA continues to decline quarter after quarter while spending continues at an alarming pace."

Starboard has "attempted to work constructively with management and the Board of Yahoo" behind the scenes for over a year, and has grown increasingly frustrated, the letter maintains.

"It took significant effort for us to convince you it was the right choice to suspend the [Alibaba] spinoff," it says. "Unfortunately, instead of heeding our advice and concurrently announcing that you would explore a sale of the core business, you have now hid behind a plan to spin off the core business and Yahoo Japan without fully understanding the alternative options."

Identity Problem

"Apart from making acquisitions, Yahoo has not diversified," contended Mukul Krishna, a senior global director of research at Frost & Sullivan.

Yahoo "is such a hodgepodge of different things that, unless they have a driving strategy, what you have is a zillion different things and a company that doesn't have an identity," he told the E-Commerce Times.

The board "might be to blame in that they haven't been able to agree among themselves what Yahoo is," Krishna said.

Light at the End of the Tunnel?

Mayer has a great opportunity if she defines Yahoo's identity and strategy and strips out everything that's not in line with that vision, he suggested.

"That means it will shrink in the short term, but in the long term, it will be much better in terms of continuity and moving forward," Krishna remarked. "It'll be a tough 24 to 36 months but, if they stick to that strategy, investors will back them."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

10:57 AM

Activist investor Starboard Value, which has dogged Yahoo over the years, on Wednesday sent a letter to the company demanding it ma...

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Why do so many companies fail at industry analyst relations? Since the best answer might come from an industry analyst, I'll share a few thoughts with you. I'll also share some secrets for building a successful long-term technology analyst program. Hint: It's about being on the growth side of the wave.

This is a good week to address this issue, since CES 2016 is taking place in Las Vegas -- once again, bigger and louder than ever. Companies must find a way to stand out and be heard. That means they must win over the technology analyst community, the media and investors, as well as customers.

As an industry analyst, I get hundreds of requests from companies that want to get on my radar. The noise can be deafening! That's the point. Many companies realize they must get the right message to the analyst community, but they forget they're competing with other companies trying to do the same thing. How do companies get heard?

The Biggest Mistake

The biggest mistake most companies make is thinking every industry analyst business model is the same. In reality, there are many different business models. In order to be successful with the analyst community, a company must understand how key analysts work -- that is, what they focus on, how they share their opinions, and how they earn income.

Then the company must adjust its approach to each analyst accordingly. If it wants good coverage, it should make it easier -- not harder -- for analysts to follow it. The companies that clear the path often will get better results -- and isn't that the goal?

The Importance of Analysts

Technology analysts are important because others value their research and opinions. Analysts spend their time studying industry players and products. They investigate the changes that are reshaping the industry and track the changes that are reshaping the competition.

Investors, customers, workers, partners -- and of course, the media -- respond to analyst opinions about companies, technologies, industry direction, innovation and so on. They're guided by analyst observations on who is leading, who is following, who is winning and losing -- and why.

The media is one important channel for analysts to spread their influence. So are reports, speeches and conferences. However, each analyst is different. Each focuses on a specific group of companies or industries. Analysts share their opinions in different ways. Understanding the differences among analysts is key.

Take me, for example. As an industry analyst, I give media interviews on a daily basis, write columns, speak at meetings and conferences, conduct research, write reports, and so on.

Now multiply what I do by all the key analysts who are important to a company's business. Multiply that by hundreds more general analysts, and it's clear how important it is to have a great analyst relations program.

Best Analyst Briefings

I have participated in more briefings than I can count in the last few decades. In my opinion, the best in-depth briefings are not at shows like CES or CTIA. Rather, the best briefings are individual meetings -- when companies fly me in to visit them in person, or at least start with a personal phone call and private briefing.

Companies that focus on quality rather than numbers typically are ahead of the game from the start. However, companies simply don't have the resources to get close to hundreds or thousands of analysts. They must split the analyst community into groups.

Quality Relationships

The smallest group consists of key analysts who have the greatest impact on a company's sector. They are obviously the most important to the company. A good relationship with that small group is key. They often have different business models, though, so it's important to understand what they cover, how they share their thoughts, how they earn income and so on.

General analysts make up a much larger group. While it is very important for a company to be successful with them as well, the relationships are different -- more general and high level.

When companies rely solely on shows like CES or CTIA to get close to the analyst community, they more often than not miss. Companies that have successful industry analyst programs at these shows likely have robust, year-round programs, and the shows are just one piece of the puzzle.

In my book, the important thing to understand is that it's not the individual briefing at a show that matters. Rather, it's the long-term relationship that's built over time that matters the most. From the company's perspective, I think that's where the real value enters the picture.

What Companies Do Right - and Wrong

I've attended countless briefings over the years, which has given me a valuable perspective on what companies do right and wrong. In my view, only a few companies do a great job. Most want to, but they simply don't know how. Many fail to connect and build strong, long-term relationships. Many simply don't understand the basics.

A strong, positive result with an industry analyst requires more than a quick slam dance and thank you ma'am. The one-night-stand approach doesn't work. It takes time to build a good long-term relationship with each key analyst, based on an understanding of the way each analyst works.

Companies can learn from those that do the best job with analyst relations. The best approach each analyst differently, and when they're on target, they win. Now excuse me -- I have another briefing on the other side of town! Taxi!

E-Commerce Times columnist Jeff Kagan is a wireless analyst, telecom analyst, industry analyst, consultant and speaker who has been sharing his colorful perspectives on the changing industry for 25 years. Email him at jeff@jeffKAGAN.com.

1:20 AM

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Tuesday, January 5, 2016
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Yahoo Rolls Up Screen

Yahoo has shut down its Yahoo Screen on-demand streaming video hub, according to news reports.

The hub's offerings included a National Football League game played in London, licensed clips of shows such as Saturday Night Live, and a number of original series, including Community.

The company had to write off US$42 million in losses stemming from running original series, Yahoo's third-quarter report states.

Video was one of the four areas CEO Marissa Mayer had banked on to turn the company around, the other three being core content, social and gaming. The closure raises more questions about Mayer's leadership and even Yahoo's continued survival as an online company.

"The question [Mayer] has to ask herself is, can Yahoo be saved?" commented Michael Goodman, a research director at Strategy Analytics.

The write-down on original series could have happened to any company, because "professional video is very expensive to produce and getting more expensive as the industry gets crowded," he told the E-Commerce Times. "This made it more difficult for [Mayer] to execute her plans."

The Show Must Go On

Video properties from Yahoo Screen will be placed next to similar content in the company's digital magazines. For example, streamed concerts from the Live Nation channel might be run with content from Yahoo Music.

Ongoing video efforts, such as daily news reports from Katie Couric, whom the company lured to its site, are expected to continue.

In December, Yahoo and NBC Sports Group renewed and expanded their digital sports broadcasting partnership, and it remains to be seen whether and how this will survive the closure of Yahoo Screen. Properties include live sports and Fantasy Football Live.

Meanwhile, Yahoo's increasingly restive investors reportedly are ramping up pressure for the company to hive off its core Internet properties at once rather than launch a tax-free reverse spinoff. Yahoo plans to transfer assets and liabilities other than its Alibaba shares into a newly formed company whose stocks would be distributed pro rata to shareholders, it announced last month.

Why Yahoo's Video Efforts Failed

"On all fronts, [Yahoo Screen] was a half-hearted effort," asserted Mukul Krishna, a senior global research director at Frost & Sullivan.

"Its launch two years ago should have been much more aggressive and sustained because it takes money to make money, and relying on word of mouth or things going viral wasn't going to make things happen, considering the high level of competition," he told the E-Commerce Times.

Screen also suffered from a lack of awareness, Krishna added.

Further, all the properties Yahoo acquired to help its move into video "have always done their own thing, didn't fully integrate into Yahoo, and consumers don't know whether they're Yahoo properties," he said.

What Yahoo Needs to Do Now

Mayer has to "first determine what Yahoo's identity is, what she's going to do tactically in the short term, and work out a long-term strategic vision of where Yahoo's going," Krishna said. "Investors are willing to put in the money if they see the possibility of a tangible return, but one of the reasons they haven't been able to invest heavily in Yahoo is its lack of an identity."

Yahoo "still has several quality assets, particularly its finance page," suggested Charles Sizemore, principal at Sizemore Capital. "That's still the single best portal for finance related news for regular investors."

Mayer also should focus on original content, he told the E-Commerce Times.

There's a crying need for a "very engaging content library," Krishna noted. Netflix's video library doesn't offer much new; Amazon Prime's offerings are limited, with most of the good content being transactional-based; and Hulu hasn't filled the gap.

"If Yahoo steps up, they have a chance," he said. However, it must invest considerable money and effort into promoting the content.

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

11:23 AM

Yahoo has shut down its Yahoo Screen on-demand streaming video hub, according to news reports. The hub's offerings included a ...

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