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After 6 Months Of Delays, Tesla Is Finally On Track With Model 3 Production
April 5, 2018 6:06 pm|Comments (0)

Tesla’s (TSLA) Q1 production update had me singing and dancing with joy. I encourage you to read the whole thing. Or if you prefer, watch this video from HyperChange covering the update:

The top three updates are on Model 3 production, Tesla’s cash flow, and Model 3 quality.

Model 3 production is at a burst rate of 2,000/week

After six months of delays, Model 3 production is finally on track:

In the past seven days, Tesla produced 2,020 Model 3 vehicles. In the next seven days, we expect to produce 2,000 Model S and X vehicles and 2,000 Model 3 vehicles.

If this rate can indeed be sustained into April and even increased, then Tesla is just shy of its goal to produce 2,500 Model 3s/week by the end of March. Bloomberg’s independent model has production about a month behind that target. For Tesla, a month late is basically on time! Moreover, in light of this update, Tesla might only be a few weeks behind.

As always, it bears reminding that this is an arbitrary, self-imposed goal largely designed around motivating employees. It’s not required for any financial, competitive, or technological purpose. A line in the sand just has to be drawn somewhere.

Model 3. Photo by Carl Quinn.

Tesla says it doesn’t need to raise cash this year

Recent alarm about Tesla’s solvency seems to be misplaced:

Tesla continues to target a production rate of approximately 5,000 units per week in about three months, laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow. As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.

Boom! That’s what I love to hear! Barring further delays, Tesla is about six months out from achieving massive positive cash flow from Model 3 sales. If targets are met, Model 3 will generate quarterly revenue on the order of $ 3.25 billion and quarterly gross profit on the order of $ 810 million. (That’s assuming a $ 50,000 ASP and 25% gross margin about a quarter after a 5,000/week production rate is achieved.) Previously, Tesla has guided that it will post sustained operating profits starting by the end of 2018, with a possibility of net profit before 2019 as well.

Based on my own review of the numbers, I think that Tesla’s cash “crunch” is being exaggerated. There are aspects of Tesla’s finances that are opaque to outsiders (such as the composition of accounts payable), however, so it is encouraging to get confirmation from Tesla on this. Here’s the basic math: As of the end of Q4 2017, Tesla had a cash balance of $ 3.37 billion. In Q4, it burned $ 277 million. At that rate of cash burn, it wouldn’t run out of cash until the beginning of 2021.

Several one-time factors contributed to cash burn for Q4 being so low, such as customer deposits for the Tesla Semi and next-gen Roadster. However, there were repeatable factors as well, perhaps most notably slowing discretionary capex. Tesla can slow expansionary spending to be in line with growth in revenue and gross profit. This makes particular sense when it comes to the sales, service, and charging infrastructure for the Model 3 fleet. We’ll have more hard data in about a month when Tesla releases its Q1 earnings.

The key here is the threshold beyond which Model 3 production goes from a net cash incinerator to a net cash generator. If all goes according to plan, by the end of this year, Tesla will likely have the ability to have positive free cash flow. However, that doesn’t seem to be the plan.

From the sounds of it, Tesla wants to finance capex for Model Y, Semi, Roadster, Solar Roof, Powerwall, Powerpack, and future products with debt and perhaps even equity, plus other sources of cash like customer deposits and securitizing leases. Note that Tesla says raising cash this year isn’t “required.” That doesn’t rule out raising discretionary cash to fund faster expansion.

Tesla has a total of $ 330 million in debt coming due in 2018. Given Tesla’s end of Q4 cash balance of $ 3.37 billion and ramping Model 3 production, $ 330 million is a manageable amount to repay. Heck, Tesla could probably wipe that debt away by collecting Model Y deposits. Because Elon Musk is a rock star.

Some convertible bonds to the tune of $ 920 million are set to mature in March 2019. The conversion price is $ 359.87. I can’t predict the ebb and flow of the markets, but it seems well within the realm of possibility that Tesla’s share price will exceed that $ 360 a year from now. If not, with approximately $ 810 million in quarterly gross profit from the Model 3, repayment will be no problem.

Tesla Semi. Photo by Korbitr.

Tesla’s internal data shows high Model 3 owner satisfaction

Finally, Tesla again shared internal survey data of Model 3 owners:

The quality of Model 3 coming out of production is at the highest level we have seen across all our products. This is reflected in the overwhelming delight experienced by our customers with their Model 3s. Our initial customer satisfaction score for Model 3 quality is above 93%, which is the highest score in Tesla’s history.

Although this is somewhat encouraging, Tesla is of course incentivized to present the Model 3 in the best possible light. Before I consider this matter settled, I want to see data from an independent source like Consumer Reports. Consumer Reports has yet to publish survey data on the Model 3. So, for now, we wait.

What is not particularly informative are anecdotes about Model 3 quality. If you, like me, believe in the Enlightenment values of science and logically rigorous thought, then you’ll agree that anecdotes plucked from large samples seldom reveal the truth and often mislead. Statistics reveal the truth. It is surprising and disconcerting to me that so much investment and media analysis — particularly of Tesla — seems to exist in a pre-scientific, pre-Enlightenment mode of thinking in which fact and conjecture are haphazardly mixed, cherry-picked anecdotes are held up as representative, and rumour and hearsay are credulously accepted. So much of what you’ll read and hear about Tesla is either essentially made up or grossly exaggerated because there is little to no application of Enlightenment criteria of truth.

The way I think about companies is to try to approximate as best I can the scientific method. Any way I can remove my own subjective bias is a relief. Hard data is always a breath of fresh air. So is any other empirical test that can serve to falsify an idea. Without scientific discipline, we will inevitably fool ourselves, and wander around in the darkness.

So, I don’t consider a photo of a Model 3 with egregious panel gaps to be informative. A photo of a Model 3 with seamless panels is equally uninformative. Ignore anecdotes. Find statistics. For now, we simply don’t know the level of quality of the Model 3.

Conclusion

Panic and doomsaying about Tesla may never stop entirely. However, it has taken another step toward demonstrating that it has a sustainable business model capable of long-term growth and profits. A year from now, we will probably be having a very different conversation about this company. I look forward to it.

Disclosure: I am/we are long TSLA.

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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The NRA Massively Increased Online Advertising After the Parkland School Shooting
March 24, 2018 6:08 pm|Comments (0)

As activists from around the country gather in Washington to march for gun safety regulation, new data shows that the National Rifle Association has been aggressively resisting their message through online ads. In the weeks following the school shooting that triggered Saturday’s protests, the NRA spent more than six times its prior daily average on digital ads – including some that appeared with media intended for children.

The finding came from the digital research firm Pathmatics, as reported by the Chicago Tribune. The NRA briefly suspended its online ad efforts after a February school shooting that left 17 dead at Marjory Stoneman Douglas High School in Parkland, Florida. But Pathmatics found that over the 24 days after the ads resumed, the NRA spent an average of $ 47,300 per day, up from an average of $ 11,300 per day before the murders.

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The ad spending was primarily focused on social media, with Facebook pocketing an average of $ 34,000 of it per day. The NRA also climbed the ranks of the biggest-spending YouTube advertisers, and Pathmatics found that some NRA ads were displayed with videos from Kids’ Toys, a very popular channel featuring two youngsters reviewing Barbie dolls and Lego playsets.

A media commentator told the Tribune that this odd placement probably showed the NRA’s desire for broad reach, rather than the targeting of any specific audience. The NRA reportedly continued to use long-running ads after the shooting, most of them aimed at increasing memberships.

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SpaceX Facebook page down after Musk promises on Twitter
March 23, 2018 6:06 pm|Comments (0)

(Reuters) – Rocket company SpaceX’s verified Facebook page disappeared on Friday, minutes after its founder and Silicon Valley billionaire Elon Musk promised on Twitter to take down the page when challenged by a user.

Elon Musk at a SpaceX press conference last month. REUTERS/Joe Skipper

“Delete SpaceX page on Facebook if you’re the man?” a user tweeted to Tesla Inc (TSLA.O) chief Musk. His response: “I didn’t realize there was one. Will do.” (bit.ly/2pDcu3l)

SpaceX’s Facebook page, which had more than 2.7 million followers, is no longer accessible. (bit.ly/2G8BGWo)

Musk had begun the exchange by responding to a tweet from WhatsApp co-founder Brian Acton of the #deletefacebook tag.

“What’s Facebook?” Musk tweeted.

Reporting by Supantha Mukherjee in Bengaluru

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Tencent loses $24 billion in market cap after Naspers' selldown
March 23, 2018 6:01 am|Comments (0)

HONG KONG (Reuters) – China’s Tencent Holdings Ltd (0700.HK) saw its shares down 4.51 percent at the midday trading break on Friday after the internet firm’s largest shareholder, Naspers Ltd (NPNJn.J), said it would lower its stake for the first time in 17 years.

A Tencent sign is seen during the fourth World Internet Conference in Wuzhen, Zhejiang province, China, December 4, 2017. REUTERS/Aly Song

The Hong Kong-listed stock opened 7.8 percent lower at HK$ 405, its lowest opening price since Feb. 9, before regaining ground to HK$ 419.6 by noon. The benchmark Hang Seng Index .HSI was down 2.81 percent.

A day earlier, the stock fell 5 percent following Tencent’s late Wednesday report showing quarterly revenue missed estimates as well as expectations of margin pressure, although profit beat forecasts.

Friday’s decline wiped $ 24 billion (17 billion pounds) off Tencent’s market value, though at $ 508 billion, it is still Asia’s most valuable listed company and fifth globally behind Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O), Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O).

South African media and e-commerce group Naspers said on Thursday it planned to sell up to 190 million Tencent shares, or 2 percent of its holding, in a sale that could earn Naspers up to $ 11 billion. It also said it had no plans to further reduce its holding for the next three years.

“The funds will reinforce Naspers’ balance sheet and be invested in classifieds, online food delivery and fintech globally,” said CICC analyst Natalie Wu. “We think it is a good opportunity to buy into dips given Tencent’s solid fundamentals.”

Jefferies analyst Karen Chan said, “Given Naspers’ largest single shareholding and board representation in Tencent, we believe its stake sale is unlikely to be a reaction to Tencent’s quarterly results. Instead of a timed profit-taking move, we believe this is more to improve Naspers’ own free cash flow and allow it higher flexibility in pursuing investment opportunities.”

A Tencent spokeswoman said it was informed and supportive of Naspers’ decision, and that Naspers’ intention to keep its remaining stake for the next three years demonstrated its confidence in Tencent.

Reporting by Sijia Jiang and Donny Kwok; Editing by Paul Tait and Christopher Cushing

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Woman dies in Arizona after being hit by Uber self-driving car
March 19, 2018 6:01 pm|Comments (0)

SAN FRANCISCO (Reuters) – A woman died of her injuries after being struck by a Uber self-driving vehicle in Arizona, police said on Monday, and the ride hailing company said it had suspended its autonomous vehicle program across the United States and Canada.

FILE PHOTO: Uber’s logo is pictured at its office in Tokyo, Japan, November 27, 2017. REUTERS/Kim Kyung-Hoon

The accident in Tempe, Arizona, marked the first fatality from a self-driving vehicle, which are still being tested around the globe, and could derail efforts to fast-track the introduction of the new technology in the United States.

FILE PHOTO: A fleet of Uber’s Ford Fusion self driving cars are shown during a demonstration of self-driving automotive technology in Pittsburgh, Pennsylvania, U.S. September 13, 2016. REUTERS/Aaron Josefczyk/File Photo

At the time of the accident, which occurred overnight Sunday to Monday, the car was in autonomous mode with a vehicle operator behind the wheel, Tempe police said.

“The vehicle was traveling northbound … when a female walking outside of the crosswalk crossed the road from west to east when she was struck by the Uber vehicle,” police said in a statement.

A spokesman for Uber Technologies Inc said the company was suspending its North American tests. In a tweet, Uber expressed its condolences and said the company was fully cooperating with authorities.

Reporting by Alexandria Sage; Editing by Jonathan Oatis

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Facebook critics want regulation, investigation after data misuse
March 18, 2018 6:00 am|Comments (0)

SAN FRANCISCO (Reuters) – Facebook Inc faced new calls for regulation from within U.S. Congress and was hit with questions about personal data safeguards on Saturday after reports a political consultant gained inappropriate access to 50 million users’ data starting in 2014.

FILE PHOTO: Facebook logo is seen at a start-up companies gathering at Paris’ Station F in Paris, France on January 17, 2017. REUTERS/Philippe Wojazer/File Photo

Facebook disclosed the issue in a blog post on Friday, hours before media reports that conservative-leaning Cambridge Analytica, a data company known for its work on Donald Trump’s 2016 presidential campaign, was given access to the data and may not have deleted it.

The scrutiny presented a new threat to Facebook’s reputation, which was already under attack over Russians’ alleged use of Facebook tools to sway American voters before and after the 2016 U.S. elections.

“It’s clear these platforms can’t police themselves,” Democratic U.S. Senator Amy Klobuchar tweeted.

“They say ‘trust us.’ Mark Zuckerberg needs to testify before Senate Judiciary,” she added, referring to Facebook’s CEO and a committee she sits on.

Facebook said the root of the problem was that researchers and Cambridge Analytica lied to it and abused its policies, but critics on Saturday threw blame at Facebook as well, demanding answers on behalf of users and calling for new regulation.

Facebook insisted the data was misused but not stolen, because users gave permission, sparking a debate about what constitutes a hack that must be disclosed to customers.

“The lid is being opened on the black box of Facebook’s data practices, and the picture is not pretty,” said Frank Pasquale, a University of Maryland law professor who has written about Silicon Valley’s use of data.

Pasquale said Facebook’s response that data had not technically been stolen seemed to obfuscate the central issue that data was apparently used in a way contrary to the expectations of users.

“It amazes me that they are trying to make this about nomenclature. I guess that’s all they have left,” he said.

Democratic U.S. Senator Mark Warner said the episode bolstered the need for new regulations about internet advertising, describing the industry as the “Wild West.”

“Whether it’s allowing Russians to purchase political ads, or extensive micro-targeting based on ill-gotten user data, it’s clear that, left unregulated, this market will continue to be prone to deception and lacking in transparency,” he said.

With Republicans controlling the Senate’s majority, though, it was not clear if Klobuchar and Warner would prevail.

The New York Times and London’s Observer reported on Saturday that private information from more than 50 million Facebook users improperly ended up in the hands of Cambridge Analytica, and the information has not been deleted despite Facebook’s demands beginning in 2015.

Some 270,000 people allowed use of their data by a researcher, who scraped the data of all their friends as well, a move allowed by Facebook until 2015. The researcher sold the data to Cambridge, which was against Facebook rules, the newspapers said.

Cambridge Analytica worked on Trump’s 2016 campaign. A Trump campaign official said, though, that it used Republican data sources, not Cambridge Analytica, for its voter information.

Facebook, in a series of written statements beginning late on Friday, said its policies had been broken by Cambridge Analytica and researchers and that it was exploring legal action.

Cambridge Analytica in turn said it had deleted all the data and that the company supplying it had been responsible for obtaining it.

Andrew Bosworth, a Facebook vice president, hinted the company could make more changes to demonstrate it values privacy. “We must do better and will,” he wrote on Twitter, adding that “our business depends on it at every level.”

Facebook said it asked for the data to be deleted in 2015 and then relied on written certifications by those involved that they had complied.

Nuala O’Connor, president of the Center for Democracy & Technology, an advocacy group in Washington, D.C., said Facebook was relying on the good will of decent people rather than preparing for intentional misuse.

Moreover, she found it puzzling that Facebook knew about the abuse in 2015 but did not disclose it until Friday. “That’s a long time,” she said.

Britain’s data protection authority and the Massachusetts attorney general on Saturday said they were launching investigations into the use of Facebook data.

“It is important that the public are fully aware of how information is used and shared in modern political campaigns and the potential impact on their privacy,” UK Information Commissioner Elizabeth Denham said in a statement.

Massachusetts Attorney General Maura Healey’s office said she wants to understand how the data was used, what policies if any were violated and what the legal implications are.

Reporting by David Ingram; Editing by Peter Henderson and Chris Reese

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China's ZTE says is trusted partner after U.S. concern
February 15, 2018 6:00 am|Comments (0)

BEIJING (Reuters) – Chinese telecoms equipment group ZTE Corp hit back on Thursday against concerns from U.S. lawmakers that it is a vehicle for Chinese espionage, saying it was a trusted partner of its U.S. customers, state news agency Xinhua reported.

China is trying to gain access to sensitive U.S. technologies and intellectual properties through telecommunications companies, academia and joint business ventures, U.S. senators and spy chiefs warned on Tuesday.

Republican Senator Richard Burr, chairman of the Senate Intelligence Committee, said he was concerned about the ties to the Chinese government of Chinese telecoms companies like Huawei Technologies Co Ltd and ZTE.

“ZTE is proud of the innovation and security of our products in the U.S. market,” Xinhua cited a ZTE spokesman as saying.

The company takes cybersecurity and privacy seriously, has always adhered to laws and remains a trusted partner of U.S. suppliers and customers, the company added.

“As a publicly traded company, we are committed to adhering to all applicable laws and regulations of the United States, work with carriers to pass strict testing protocols, and adhere to the highest business standards,” it said.

Last week, Republican Senator Tom Cotton and Republican Senator Marco Rubio introduced legislation that would block the U.S. government from buying or leasing telecoms equipment from Huawei or ZTE, citing concern the companies would use their access to spy on U.S. officials.

In 2012, Huawei and ZTE were the subject of a U.S. investigation into whether their equipment provided an opportunity for foreign espionage and threatened critical U.S. infrastructure – something they have consistently denied.

Allegations of hacking and internet spying have long strained relations between China and the United States. In 2014 then FBI Director James Comey said Chinese hacking likely cost the U.S. economy billions of dollars every year.

China has strongly denied all U.S. accusations of hacking attacks.

Reporting by Ben Blanchard; Editing by Stephen Coates

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Why Is Apple Down 3% After Crushing Earnings?
February 3, 2018 6:01 am|Comments (0)

By Bob Ciura

Apple, Inc. (AAPL) stock whipsawed after the company posted quarterly earnings. After initially dropping 2%, shares turned up 3.5% in after-hours trading, only to give up the gains and decline nearly 3% on Friday, February 2nd.

Indeed, there is reason for the market’s mixed reaction. On one hand, Apple sold fewer phones than it did a year ago. And, after a massive 32% rally in the past one year, the stock is trading well above its average valuation.

On the other hand, Apple is still generating strong growth rates. Average iPhone selling prices continue to rise, and the services business is booming. Apple also has appeal for dividend growth investors. Since Apple re-instituted its dividend in 2012, it has increased its dividend by 10% each year. Apple is one of 331 stocks in the technology sector that pays a dividend. You can see all 331 dividend-paying tech stocks here.

There seem to be good reasons for both the bullish and bearish case for Apple. This article will discuss why the tug-of-war could continue.

Earnings Overview

For the fiscal 2018 first quarter ended December 30th, Apple had earnings-per-share of $ 3.89, on revenue of $ 88.3 billion. Earnings-per-share beat analyst forecasts by $ 0.04. Revenue increased 12.7% from the same quarter a year ago, and beat expectations by $ 670 million. Apple sold 77.3 million iPhones in the quarter, which was down from 78.3 million in the same quarter last year. Apple was expected to report 80 million iPhones sold.

At the same time, average iPhone selling price increased over $ 100, from $ 695 last year to $ 796 in the most recent quarter. Analysts were forecasting an average iPhone selling price of $ 737. This could be the reason why Apple stock jumped over 3%, after initially selling off. While Apple sold fewer phones overall, the bigger-than-expected increase in average selling price indicates a more favorable shift to higher-priced models. Stronger demand for upper-end iPhones, such as the iPhone X, would be a very good sign.

Once again, Apple’s cash mountain continued to grow. Cash, marketable securities, and long-term investments hit $ 285.1 billion, which represents an all-time high. Cash and investments totaled $ 268.9 billion in the same quarter last year. Apple’s current cash pile amounts to 33% of its market capitalization. This is a huge amount of cash, which Apple can use to reward shareholders with cash returns, and invest for future growth.

Growth Prospects

Overall, Apple had a good quarter. Revenue and earnings-per-share increased 13% and 16%, respectively. Both measures hit all-time records, and going forward, there is plenty of room for growth to continue. Apple continues to be hugely popular; its active installed base of devices reached 1.3 billion in January, a 30% increase in the past two years.

Earnings growth of 10%+ each year is within reach for Apple. Consumers love their Apple devices, and are willing to pay a premium for them. Apple is the most valuable brand in the world, and as a result, the company holds tremendous pricing power. Since the iPhone business is Apple’s most important by far, the ability to sell higher-priced iPhones is crucial to future earnings growth.

Another catalyst for Apple is its booming services business, which includes iTunes, the App Store, Apple Pay, and more. Services revenue is now a $ 30 billion-a-year business for Apple. In the most recent quarter, services revenue increased 18%, the highest-growth product aside from the “other” category. Services are now Apple’s second-largest segment, behind the iPhone.

Valuation & Expected Returns

Apple is a very high-quality business, with continued room for growth. But even after its strong quarter, the stock fell over 2% after earnings. After a huge gain last year, Apple seems to be taking a breather, which is confusing since the company is still generating strong growth. One reason for the market’s cautious tone toward Apple, could be the valuation of the stock, which has expanded significantly in recent years.

Apple had earnings-per-share of $ 9.73 in the past four quarters. As a result, the stock has a price-to-earnings ratio of 17.8. At first glance, Apple does not seem to be undervalued, relative to the broader market index. The S&P 500 trades for an average price-to-earnings ratio of 26.3.

But in a different context, it is reasonable why investors might be reluctant to bid the stock up even further. In terms of its own historical average, Apple’s valuation is at a multi-year high. Apple has not traded for a price-to-earnings ratio above 18 since 2009. According to ValueLine, over the past five years, Apple has held an average price-to-earnings ratio of just 13.1.

Apple currently trades at a 35% premium to its average price-to-earnings ratio of the past five years. A reversion to the mean would negatively impact the stock. For example, if Apple reverted back to a price-to-earnings ratio of 15-16, the stock would decline approximately 10% to 15%.

To be sure, Apple will generate positive returns, from earnings growth and dividends. In the past 5 years, Apple has increased earnings at a 10% average rate, each year. A potential breakdown of future returns is below:

  • 6%-8% sales growth
  • 3% share repurchases
  • 1.5% dividend yield

The combination of earnings growth and dividends could yield annual returns of 10%-13% each year. But even in this scenario, total returns could still be mediocre, if the valuation multiple declines. For example, if Apple’s price-to-earnings ratio declines to 15 over the next three years, contraction of the valuation multiple would reduce annual returns by 5% per year. In that case, total annual returns would be in the 5%-8% range over that time.

Final Thoughts

Apple is a fantastic business, and the company is growing revenue and earnings at impressive rates. The only significant risk for the stock moving forward, could be the valuation. While Apple is not overvalued relative to the S&P 500, it does trade at a much higher valuation than it has over the past five years. If the stock were to return to its average valuation, it could be a headwind for the stock.

Disclosure: I am/we are long AAPL.

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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Down Syndrome Charity Dumps LuLaRoe After Shocking Video
January 28, 2018 6:01 pm|Comments (0)

LuLaRoe is no stranger to controversy. But the multilevel marketing women’s clothing company has really stepped in it after a battle with the National Down Syndrome Society (NDSS) over a shocking video that mocked the disabled. Attempts to spin the controversy are challenging at best.

The company faced significant bad press during 2017, whether for changing return policies to the detriment of independent sales agents, trying to force a critical blogger to divulge sources, or reportedly using an artist’s designs without payment or permission.

A lawsuit last October alleged that the business structure was an illegal pyramid scheme. And founders and owners Mark and DeAnne Stidham have been accused of blaming the independent salespeople for problems that might have been the company’s.

This latest tussle is particularly ugly. For some time, LuLaRoe has been an official supporter of NDSS as DeAnne Stidham, who had a grandchild with the condition. Even that has some questions tied to it, as one promotion that tied a $ 1 donation for sales of two different special items would be more than offset by increased costs to the salespeople.

The latest situation came about when an independent sales agent mocked people with special needs, as reported by KXTV television, in a video posted to YouTube. The specific remark starts at about 55 seconds in.

NDSS posted on Facebook about the incident. The organization had received an apology, but apparently told LuLaRoe that it would not maintain relationships with the company unless the seller was terminated, which did not happen. Here is what NDSS posted on Friday evening:

Within the last 24 hours, it has come to the attention of the National Down Syndrome Society that an online video by a LuLaRoe independent retailer, which mocks a person with a disability, was posted on YouTube. This video is unacceptable and further perpetuates the stigmas we work to fight and end each and every day at NDSS.

While we appreciate the apology from this individual and the previous support from LuLaRoe, we must uphold our mission statement, and end our partnership and any further programming with LuLaRoe immediately.

LuLaRoe posted a response three hours later that said, in part, the following:

We are deeply saddened and disappointed to announce our decision to end our relationship with the National Down Syndrome Society. Our company and the Independent Fashion Retailers have embraced the NDSS and its important work, and have enthusiastically supported the organization’s efforts over the past year.

Regrettably, a LuLaRoe Independent Fashion Retailer exhibited unacceptable and insensitive behavior during a live sale, which understandably offended viewers as well as everyone at LuLaRoe. His bad judgment in no way represents the beliefs and character of LuLaRoe or Independent Fashion Retailers.

Immediately after his sale, the Retailer posted an apology. He also reached out to NDSS and said he and his wife have agreed to use the incident as a learning experience and expressed his intention to focus his business on support for the organization and its cause.

After speaking with the Retailer at great length, we believe his apology is sincere and accepted his assurance that this type of behavior would never happen again. We are also using this unfortunate incident as an opportunity to redouble our sensitivity and tolerance training efforts and policies for Independent Fashion Retailers.

Unfortunately, NDSS leadership is unwilling to accept the Retailer’s apology and has informed us that unless we terminate his contract with LuLaRoe, the organization will no longer associate with us. We do not believe the most productive response to his actions, which he has fully apologized for, is to close his business and threaten his ability to provide for his family.

Trying to decide who is “right” can be difficult. LuLaRoe claims that an apology that it thought was sincere should have been enough. At the same time, it would seem that NDSS would be the party to decide whether the apology was adequate, as its cause was the one injured and it has doubtlessly faced analogous situations over the years. Words of contrition in uncomfortable cases often are the result of people trying to avoid the consequences of their actions. Would NDSS essentially support the idea that everyone had one free pass to mock people with Down Syndrome? At a time when there seems to be zero tolerance for sexual harassment, why wouldn’t other concerns receive the same degree of respect?

Aside from those considerations, however, LuLaRoe handled the situation badly in three ways. When you employ independent people as agents of your company, you have tied yourself to them and their actions. By decided that “education” had already been achieved, LuLaRoe effectively handed itself a pass on the issue.

Not only did LuLaRoe forgive itself, it compounded that action by blaming NDSS through its choice of words. By saying, “Unfortunately, NDSS leadership is unwilling to accept the Retailer’s apology,” the company shifted responsibility to the organization by implying that NDSS was unreasonable in its approach.

Finally, the company’s navigation of cause marketing is problematic. To partner with an organization and gain some marketing advantage requires the following:

  • Your company’s values or interests should have an organic connection to the cause.
  • You need to understand the requirements and implications of partnering with an organization.
  • To be sincere, you then have to not only support the organization and cause, but meet the requirements going forward.

LuLaRoe should have identified any difference in philosophy with the organization before pledging support, no matter how much its founders believed in the cause. Had it done so, it would have known in advance the necessary course of action should a conflict arise and then known whether or not it could live with the conditions.

The seller in question may have been sincere in having learned a lesson, but NDSS had its own need to see that disrespect carried a penalty beyond momentary embarrassment. Ultimately, it is LuLaRoe’s fault for not having asked the right questions and then deciding that the organization should change its philosophy to accommodate the company’s.

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WhatsApp messaging service returns after global outage
January 1, 2018 6:00 am|Comments (0)

(Reuters) – WhatsApp, a popular messaging service owned by Facebook Inc, suffered a global outage for about an hour on Sunday before the problem was fixed.

“WhatsApp users around the world experienced a brief outage today that has now been resolved”, a WhatsApp spokeswoman said in an emailed statement. The cause of the outage, about an hour long, was not immediately known.

In India, its biggest market with about 200 million of its billion-plus users, the app was down just a few minutes past midnight into the new year.

Users in other countries also complained of outages on social media.

Reporting by Sangameswaran S in Bengaluru; Editing by Jeffrey Benkoe

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