Behind bars, Samsung scion Lee sees his wealth top $2 billion

October 13, 2017

SEOUL (Reuters) – Jay Y. Lee, the billionaire heir to South Korea’s Samsung Group, should find some comfort that its crown jewel Samsung Electronics Co Ltd has reported record profit every quarter since he was jailed in February, making him even richer.

Detained over charges that he bribed former president Park Geun-hye, Lee has since missed the launch of two new flagship phones and three record-breaking quarterly earnings, including July-September earnings guidance on Friday.

He will also be briefed that his top lieutenant and chief executive of Samsung Electronics, Kwon Oh-hyun, has decided to step down to make way for a new leader.

Kwon, who was expected to take a bigger role following Lee’s arrest and the departures of other key executives in the wake of the bribery scandal, made the surprise announcement on Friday when Samsung also forecast record quarterly profit on the back of the memory chip business.

While Lee is unable to do much to minimize a leadership vacuum at one of the world’s biggest technology firms, the 49-year-old Samsung scion will get some solace that Samsung is chugging along without him.

He may also like to know his wealth, in terms of his stake in Samsung Electronics, has increased by at least 45 percent since his arrest.

His Samsung Electronics stake, albeit below one percent, is now worth 2.3 trillion won ($2.0 billion). Lee also received at least 11.8 billion won ($10.5 million) in dividends from Samsung Electronics during his detention, and 837 million won in pay during the first half of 2017. He owns stakes in other Samsung affiliates.

He will miss another record earnings announcement expected in the fourth quarter as he is expected to stay in prison at least until February, when the appellate court hearing his case is likely to try to rule on the bribery suit.

While some investors worry about a prolonged leadership vacuum, and Kwon warned that Samsung was struggling to find new growth engines, others seem more sanguine.

“I think Samsung has a firm system to run the company even in the absence of its head, as we saw from the case of both Lee Kun-hee and (his son) Jay Y. Lee,” said a fund manager who owns Samsung shares, referring to the Samsung Group patriarch who was incapacitated in 2014 following a heart attack.

“Someone will replace him somehow. It’s just like Apple doing fine even after Steve Jobs,” he said, declining to be named as he was not authorized to talk to the media.

(Reporting by Joyce Lee; Additional reporting by Dahee Kim; Editing by Stephen Coates)

Toshiba discussing joint investment in chips with Western Digital

October 13, 2017

By Kentaro Hamada

YOKKAICHI, Japan (Reuters) – Toshiba Corp said it is discussing joint investment in a new chip production line with Western Digital Corp – its estranged business partner after the Japanese firm chose a different suitor to buy its $18 billion semiconductor business.

After a long and highly contentious auction, Toshiba agreed last month to sell the prized chip unit to a consortium led by Bain Capital LP, overcoming a key hurdle as it scrambles for funds to cover billions of dollars in liabilities arising from its now bankrupt U.S. nuclear unit Westinghouse.

Western Digital, which became Toshiba’s chip venture partner with its acquisition of SanDisk last year, argues that any deal will need its consent and has sought an injunction with the International Court of Arbitration.

Given competition with Samsung Electronics Co, it is best to have amicable ties with Sandisk, Yasuo Naruke, the head of the flash memory chip unit told a news conference.

Representatives for Western Digital were not immediately available for comment.

Western Digital, one of world’s leading makers of hard disk drives, paid some $16 billion last year to acquire SanDisk, Toshiba’s chip joint venture partner since 2000.

It sees chips as a key pillar of growth and is desperate to keep the business out of the hands of rival chipmakers. The Bain consortium includes South Korean chipmaker SK Hynix Inc.

Toshiba said this week it would invest an additional 110 billion yen ($980 million) in the Fab 6 chip production line in Yokkaichi, central Japan, on top of a planned initial investment of 195 billion yen.

(Reporting by Kentaro Hamada; Writing by Taiga Uranaka; Editing by Edwina Gibbs)

Bitcoin trades above $5,000 for first time ever

October 12, 2017

LONDON (Reuters) – Bitcoin smashed through the $5,000 barrier for the first time ever on Thursday, jumping as much as 7 percent to chalk up its biggest daily rise in over two weeks.

Bitcoin, the original and still the biggest cryptocurrency, has been on a tear recently, rallying nearly 75 percent in barely a month.

It has chalked up a more than fivefold increase in price since the start of the year.

(Reporting by Jamie McGeever; Editing by Sujata Rao)

Facebook to sell portable headset for virtual reality

October 11, 2017

By David Ingram

SAN JOSE, Calif. (Reuters) – Facebook Inc is launching a new virtual reality headset that does not require a separate computer to operate, allowing more mobile uses than the company’s existing Oculus Rift product, Chief Executive Mark Zuckerberg said on Wednesday.

Zuckerberg, speaking at a conference for virtual reality developers, said the “Oculus Go” device would cost $199 and ship early next year, too late for this year’s holiday shopping season but likely ahead of rivals.

Facebook has invested heavily in virtual reality hardware in hopes the technology, which offers a 360-degree panoramic view of faraway or imaginary spaces, will move from a niche interest to a widely used platform for gaming, communication and business applications.

In 2014, Facebook paid $3 billion to acquire Oculus and retain its employees.

The Oculus Go is billed as simpler than the Rift, which went on sale last year, or the Vive system made by HTC Corp <2498.TW>. Both of those require desktop computers to operate.

“I think you’re going to see these a lot on airplanes, because it’s way better than the back-of-the-seat monitor or my phone,” Mike Schroepfer, Facebook’s chief technology officer, said in an interview.

Schroepfer said the device is aimed at people who do not have Samsung smartphones. Oculus and Samsung Electronics Co <005939.KS> already sell a device, named Gear VR, that when paired with certain Samsung phones is similar to Oculus Go.

Alphabet Inc offers a rival headset, Google Daydream, that works with yet more smartphones.

“The Oculus Go has potential to be a huge driver of growth,” if people like the titles and apps on it, Stephanie Llamas, vice president of research at Super Data, said in an email.

Facebook will permanently cut the price of the Rift system to $399 from $499, the company said.

Facebook is expected to ship 213,000 Rift systems this year, while HTC is expected to ship 305,000 Vive systems, according to Super Data research.

Beyond price cuts and new products, Facebook is trying different ways to attract people to the virtual-reality medium.

The company is developing software known as Facebook Spaces that allows friends to meet in virtual rooms, and it said it will soon integrate live video.

On Wednesday, the company said it was releasing technology to create better, customized facial images, or avatars, and would soon add the ability to use playing cards in Facebook Spaces, in addition to the dice it already has.

(Reporting by David Ingram, editing by David Gregorio and Andrew Hay)

Toshiba’s accounting in focus as ISS, Tokyo bourse offer contrasting views

October 11, 2017

By Makiko Yamazaki

TOKYO (Reuters) – Proxy advisory firm ISS said on Wednesday it has recommended on that Toshiba Corp’s shareholders do not approve its earnings statements for the past financial year – the same day that the Tokyo bourse said it was taking the conglomerate off a special watch list.

The two developments offer very different views of the state of Toshiba’s accounting practices as the Japanese firm seeks to dig itself out of a financial crisis – the origins of which can be traced back to an accounting scandal in 2015.

Toshiba wants shareholders to sign off on its earnings at an Oct. 24 extraordinary meeting but the earnings have received a mixed review from its auditor.

PricewaterhouseCoopers Aarata LLC gave the report a “qualified opinion” endorsing Toshiba’s finances despite some minor problems, but made an “adverse” statement on Toshiba’s internal controls.

“It would be difficult to justify support for this resolution given the fact that the audit firm has rendered a qualified opinion, basically reflecting the auditor’s view that Toshiba’s financial statements are not accurate,” ISS said in a report.

The Tokyo Stock Exchange said earlier in the day that it would remove Toshiba from its “securities on alert” list on Thursday, adding that internal controls at the firm had improved. Toshiba had been placed on the list in the wake of the 2015 accounting scandal.

That scandal was followed by the emergence of billions of dollars in liabilities at its nuclear unit Westinghouse. It has since agreed to sell its chip unit to a consortium led by U.S. private equity firm Bain Capital for $18 billion.

(Reporting by Makiko Yamazaki; Additional reporting by Chris Gallagher and Takahiko Wada; Editing by Edwina Gibbs)

Israeli spies found Russians using Kaspersky software for hacks: media

October 11, 2017

WASHINGTON (Reuters) – Israeli intelligence officials spying on Russian government hackers found they were using Kaspersky Lab antivirus software that is also used by 400 million people globally, including U.S. government agencies, according to media reports on Tuesday.

The Israeli officials who had hacked into Kaspersky’s network over two years ago then warned their U.S. counterparts of the Russian intrusion, said The New York Times, which first reported the story.

That led to a decision in Washington only last month to order Kaspersky software removed from government computers.

The Washington Post also reported on Tuesday that the Israeli spies had also found in Kaspersky’s network hacking tools that could only have come from the U.S. National Security Agency.

After an investigation, the NSA found that those tools were in possession of the Russian government, the Post said.

And late last month, the U.S. National Intelligence Council completed a classified report that it shared with NATO allies concluding that Russia’s FSB intelligence service had “probable access” to Kaspersky customer databases and source code, the Post reported.

That access, it concluded, could help enable cyber attacks against U.S. government, commercial and industrial control networks, the Post reported.

The New York Times said the Russian operation, according to multiple people briefed on the matter, is known to have stolen classified documents from a National Security Agency employee who had improperly stored them on his home computer, which had Kaspersky antivirus software installed on it.

It is not yet publicly known what other U.S. secrets the Russian hackers may have discovered by turning the Kaspersky software into a sort of Google search for sensitive information, the Times said.

The current and former government officials who described the episode spoke about it on condition of anonymity because of classification rules, the Times said.

The newspaper said the National Security Agency and the White House declined to comment, as did the Israeli Embassy, while the Russian Embassy did not respond to requests for comment.

The Russian embassy in Washington last month called the ban on Kaspersky Lab software “regrettable” and said it delayed the prospects of restoring bilateral ties.

Kaspersky Lab denied to the Times any knowledge of, or involvement in, the Russian hacking. “Kaspersky Lab has never helped, nor will help, any government in the world with its cyberespionage efforts,” the company said in a statement on Tuesday.

Eugene Kaspersky, the company’s co-founder and chief executive, has repeatedly denied charges his company conducts espionage on behalf of the Russian government.

Kaspersky spokeswoman Sarah Kitsos told the Washington Post on Tuesday that “as a private company, Kaspersky Lab does not have inappropriate ties to any government, including Russia, and the only conclusion seems to be that Kaspersky Lab is caught in the middle of a geopolitical fight.” She said the company “does not possess any knowledge” of Israel’s hack, the Post said.

U.S. intelligence agencies have concluded that Russian President Vladimir Putin ordered a multipronged digital influence operation last year in an attempt to help Donald Trump win the White House, a charge Moscow denies.

(Reporting by Eric Walsh; editing by Grant McCool)

Russian central bank to ban websites offering crypto-currencies

October 10, 2017

MOSCOW (Reuters) – Russia will block access to websites of exchanges that offer crypto-currencies such as Bitcoin, Russian Central Bank First Deputy Governor Sergei Shvetsov said on Tuesday.

He called them “dubious”.

Russian financial authorities initially treated any sort of money issued by non-state approved institutions as illegal, saying they could be used to launder money.

Later the authorities accepted the globally booming market of crypto-currencies but want to either control the turnover or to limit access to the market

“We cannot stand apart. We cannot give direct and easy access to such dubious instruments for retail (investors),” Shvetsov said, referring to households.

Speaking at a conference on financial market derivatives, Shvetsov said the central bank sees rising interest in crypto-currencies because of high returns from buying into such instruments.

He warned, however, that crypto-currencies gradually transform into high-yielding assets from being a mean of payment.

Bitcoin, the most well-known virtual currency that emerged in mid-2010, last traded at around $4,807, up from its initial price of less than $1.

“We think that for our citizens, for businesses the usage of such crypto-currencies as an investment object carries unreasonably high risks,” he said.

Russian authorities said earlier this year they would like to regulate the use of crypto-currencies by Russian citizens and companies.

(Reporting by Elena Fabrichnaya; Writing by Andrey Ostroukh; Editing by Jermey Gaunt)

Nokia plans to cut up to 310 jobs, halt VR camera development

October 10, 2017

HELSINKI (Reuters) – Nokia plans to reduce up to 310 jobs from its Nokia Technologies unit and halt development of its virtual reality camera “OZO” and hardware, the Finnish company said on Tuesday.

The unit has about 1,090 employees and the potential cuts are expected to affect staff in Finland, the United States and Britain. Nokia employed about 102,000 employees as of end-June.

The unit will continue to focus on digital health and patent and brand licensing business, Nokia said.

“The slower-than-expected development of the VR market means that Nokia Technologies plans to reduce investments and focus more on technology licensing opportunities,” it said in a statement.

Nokia, whose main business is now telecoms network equipment, launched the camera last year as the first device for its digital media business, one of its new hopes for future growth.

It was designed for making 3D movies and games that can be watched and played with virtual reality headsets. Nokia cut the price of the camera by 25 percent to $45,000 later last year.

(Reporting by Jussi Rosendahl; editing by Jason Neely)

Ericsson picks former Atlas Copco CEO as new chairman

October 9, 2017

STOCKHOLM (Reuters) – Ericsson has picked Ronnie Leten, the former boss of mining gear maker Atlas Copco, as its new chairman, as the mobile equipment company battles to revive its fortunes.

Leten will, pending shareholder approval, take over from Leif Johansson, who said in July he would step down.

Ericsson has been hit hard by competition from China’s Huawei and Finland’s Nokia as well as weak emerging markets and falling spending by telecoms operators, with demand for next-generation 5G technology still years away. Its shares have almost halved in value in the past two years.

Leten, a 60-year old Belgian, stepped down as CEO of Sweden’s Atlas Copco earlier this year.

Under his leadership, Atlas Copco shares rose 326 percent, twice as much as the European industrial sector index, with investors applauding its nimble cost structure and strong aftermarket sales that drove high margins and a robust cashflow.

Leten is also leaving his position as chairman at Electrolux, the home appliance maker said in a separate statement on Monday.

“Mr Leten is a very skilled businessman, technically savvy and strategically versatile,” Johan Forssell, chairman of Ericsson’s nomination committee, said in a statement.

At 0720 GMT, Ericsson shares were up 2 percent at 47.66 Swedish crowns.

Ericsson drafted in new a CEO, Borje Ekholm, earlier this year, but corporate activist investor Cevian Capital, which has bought a more than 5-percent stake, has been pushing for further change.

(Reporting by Helena Soderpalm and Olof Swahnberg; Editing by Anna Ringstrom and Mark Potter)

Google to use balloons to provide Puerto Rico cell service

October 7, 2017

By David Shepardson

WASHINGTON (Reuters) – The U.S. Federal Communications Commission said late on Friday it had approved Alphabet Inc’s application to provide emergency cellular service to Puerto Rico through balloons.

In the aftermath of Hurricane Maria, Puerto Rico has struggled to regain communications services. The FCC said on Friday that 83 percent of cell sites remain out of service, while wireless communications company are deploying temporary sites.

Alphabet, which announced its Project Loon in 2013 to use solar-powered, high-altitude balloons to provide internet service in remote regions, said in an FCC filing it was working to “support licensed mobile carriers’ restoration of limited communications capability” in Puerto Rico.

Earlier on Friday, FCC Chairman Ajit Pai announced he was forming a Hurricane Recovery Task Force with an emphasis on addressing challenges facing Puerto Rico and the U.S. Virgin Islands.

“It is critical that we adopt a coordinated and comprehensive approach to support the rebuilding of communications infrastructure and restoration of communications services,” Pai said in statement.

Separately, Puerto Rico Governor Ricardo Rossello said in a Twitter posting late on Friday that he had a “great initial conversation with @elonmusk tonight. Teams are now talking; exploring opportunities. Next steps soon to follow.”

Musk, the chief executive of Tesla Inc, said on Friday the company would send more battery installers to Puerto Rico to help restore power after Hurricane Maria knocked out all power on the island over two weeks ago.

Musk said he was diverting resources from a semi-truck project to fix Model 3 bottlenecks and “increase battery production for Puerto Rico & other affected areas.”

In late September, Tesla said it was sending hundreds of batteries that can store power generated by solar panels to Puerto Rico to provide emergency help in the wake of Hurricane Maria.

(Reporting by David Shepardson; Editing by Sandra Maler)