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SAN FRANCISCO (Reuters) – When Tesla Inc announced last month a second round of job cuts to rein in costs, one crucial department was particularly badly hit. The automaker more than halved the division that delivers its electric vehicles to North American customers, two of the laid-off workers said.
FILE PHOTO: A Tesla logo is seen at a groundbreaking ceremony of Tesla Shanghai Gigafactory in Shanghai, China January 7, 2019. REUTERS/Aly Song/File Photo
Some 150 employees out of a team of about 230 were let go in January at the Las Vegas facility that gets tens of thousands of Model 3s into the hands of U.S. and Canadian buyers, they said, in a sign the company expected the pace of deliveries to significantly slow in the near term.
The cuts, which have not been previously reported, could fuel investor worries that demand for the Model 3 in the United States has tailed off after a large tax break for consumers expired last year and the car remains too expensive for most consumers.
Tesla has said its focus this quarter is on supplying cars to customers waiting in China and Europe.
“There are not enough deliveries,” one of the former employees told Reuters. “You don’t need a team because there are not that many cars coming through.”
Delivery of the Model 3 was the company’s key priority in the latter half of 2018, as Tesla tried to supply all buyers wanting the full benefit of the $ 7,500 U.S. tax credit before it was cut in half at year’s end.
The Model 3 is crucial to Tesla’s plans for long-term profitability. The company aims to post a profit in each quarter this year, based on the expectation that it will sell more Model 3s and continue to cut costs.
Tesla declined to comment on the job reductions in the delivery team. The company still has an undisclosed number of delivery personnel attached to other locations.
‘EVERY BEING ON THE PLANET’
Even before the paring back of the delivery team, investors questioned the level of demand for the Model 3 remaining after Tesla’s all-out push to supply buyers ahead of the tax credit cut.
“Given the need for revenue to cover costs and generate cash, the financial community should be focused on the level of demand for Tesla vehicles – in particular the Model 3,” wrote Barclays analyst Brian Johnson in January.
The two former delivery workers said the 2018 sales push has left Tesla’s reservations list plucked clean of North American buyers willing to pay current prices of over $ 40,000 to get their hands on a Model 3.
Chief Executive Elon Musk initially said in 2016 the car would start at $ 35,000 – which sparked a rush of reservations – but Tesla has yet to actually sell any cars at that price, despite two price cuts already this year.
“We sold through just about every car we had on the ground and we called almost every being on the planet who had ever expressed desire to own a Tesla to let them know the tax credit was expiring,” said the other ex-employee.
Tesla workers around the company were reassigned to pitch in, that source said.
“They said, ‘Your job is off the table now, we have to get these cars delivered. Because if we don’t get these cars delivered, you don’t have a job tomorrow,’” the former employee said.
HALF A MILLION BUYERS
At the Model 3 launch in July 2017, Musk said over half a million buyers had put down deposits on the new car. That helped send Tesla shares up almost 15 percent over the following six weeks.
The company delivered 145,610 Model 3s in 2018, but all of them at prices far above $ 35,000. Musk said last week a $ 35,000 version that could be sold profitably was perhaps six months away. Even with two price cuts this year, the lowest price tag on a Model 3 is now $ 42,900.
Musk maintains that Model 3 demand is “insanely high,” but his company has not released any figures to demonstrate that.
Asked about the reservations list last week by analysts, outgoing Chief Financial Officer Deepak Ahuja declined to disclose how many people remained, calling it “not relevant.”
Musk has said Tesla has multiple ways of stoking demand, if it chose to, such as offering leases or boosting marketing efforts.
The Model 3s now rolling out of Tesla’s Fremont, California, factory are going to Chinese and European buyers, Tesla says.
The two laid-off employees said delivery targets for North America – made up of mostly U.S. buyers – this quarter would be 55 percent to 60 percent of what they were in the last quarter of 2018.
If Tesla does not cut prices soon, it risks losing potential customers – and ones already on its reservation list – to a slew of German and Asian competitors whose electric vehicles will hit the U.S. market this year. Each of the new entrant’s first 200,000 buyers will be eligible for a full federal subsidy.
Having met that number already, the U.S. tax credit for Tesla buyers drops in half to $ 3,750 for the first six months of 2019, then falls by half again in the second six months.
Musk said last month his “rough guess” was that Tesla would begin building the $ 35,000 Model 3 in mid-2019.
One of the sources said that could recharge U.S. demand: “If there was a Model 3 for $ 35,000 that was still a really good car, that blows away the competition, I could see demand going through the roof.”
Reporting by Alexandria Sage in San Francisco; Editing by Greg Mitchell and Bill Rigby
Facebook’s recent hack that affected around 30 million people may have been caused by spammers, rather than entities tied to certain nation states.
That’s according to a report on Thursday by The Wall Street Journal citing anonymous sources familiar with the social networking giant’s investigation of the hack. The report said that the group responsible for the attack on Facebook’s software infrastructure was a collection of spammers that Facebook security members have been following for an unspecified amount of time.
The spammers posed as an unnamed digital marketing company, the report said.
Facebook declined to confirm if the hack was caused by spammers.
“We are cooperating with the FBI on this matter.” Facebook vice president of product management Guy Rosen said in a statement to Fortune. “The FBI is actively investigating and have asked us not to discuss who may be behind this attack.”
Facebook first revealed the hack, likely the company’s biggest in its history, in late September and originally said that around 50 million people may have been affected. A few weeks later, however, Facebook lowered the number of people it believed were impacted to 30 million, many of whom had sensitive data like email addresses, phone numbers, relationship status, and birth-dates compromised.
Executives at the company told reporters that the attackers were likely sophisticated because they were able to discover three separate bugs within Facebook’s large software infrastructure. After discovering how the software flaws were interrelated, the hackers were able to launch an attack.
Facebook said it discovered the attack on Sept. 14 and remedied the situation on Sept. 27.
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The major hack came just months after Facebook’s Cambridge Analytica scandal, which also compromised user data but was not technically a hack. That data blunder had to do with an academic who built a Facebook quiz app to collect user data, and then sold that information, against Facebook’s data policies, to the Cambridge Analytica political consulting firm.
Facebook’s security researchers typically say that much of the company’s work safeguarding its systems is intended to help reduce the prevalence of spam and related malicious activities on the social network. With the plague of fake news generated by bad actors allegedly trying to influence the U.S. and other world elections, Facebook has said that much of its security efforts are also being heavily directed at preventing propaganda from spreading on its various services.
The market continued to slide the first few weeks of February. Dividend Aristocrats and other great dividend stocks continued to fall to levels I haven’t seen in a while. Lanny and I were having multiple discussions each day about which stocks are looking great and where to potentially focus our attention. Look how strong some of the names are that were on his January dividend stock watch list. Well, there is one stock that has continued to catch my eye as the price continues to decline. I’ve purchased the stock twice already in 2018 and I could not resist when their price fell below the half-century mark. Here is why I bought Realty Income (NYSE:O) for the third time in 2018!
After my second January purchase of Realty Income, I owned 70 shares of Realty Income. I was excited. This purchase was made at the sweet price of $ 54.14, which was over $ .80/share cheaper than my first purchase. However, I quickly realized that I probably should have waited a few more days to make this purchase, because Realty Income’s price continued to fall. $ 53… $ 52… $ 51. In my mind, there was NO WAY the company’s stock price was going to drop below $ 50/share. I told Lanny that I would continue to add if it hit this limit.
Then, it happened, Realty Income’s stock price fell below $ 50/share. I immediately transferred money to my Roth IRA. $ 1,000 in fact. I had a free trade credit to my name, so as soon as the funds arrived, I made my purchase. Last week, I was able to add ANOTHER 20 shares of Realty Income at $ 49.50 per share, adding $ 52.56 in forward dividend income to my portfolio. After this purchase, I now own 90.1082 shares of the Monthly Dividend Company, producing $ 236.80 in forward dividend income. What’s cool is that I would be able to add almost five new shares via dividend re-investment each year at the current market prices. That is a heck of a lot of shares and will only help accelerate the growth in my forward dividend income.
Why have I continued to purchase shares of Realty Income? I am huge fan of the diversification of the company’s real estate portfolio. This is in terms of both the types of properties they own and the industries that their tenants operate in. Plus, the company is on the verge of becoming a Dividend Aristocrat. It is a great company and one that I had always wanted to increase my position in. Well, the slump to start 2018 has presented me with a great opportunity to do just that. For more details about why I like Realty Income, check out my first purchase article from January, where I provided a little more detail than this brief paragraph. Since I’ve detailed this once in the last 30 days, I didn’t want to do it again and bore everyone!
Entering the year, I targeted increasing this stake to $ 5,000. With this third purchase, I am closing in on this total. So for now, I may look elsewhere and focus on increasing other positions in my portfolio. Or heck, I may even initiate a new position if the right opportunity presents itself. Lanny has been talking to me about several great stocks that I do not own that continue to fall, so they are on my radar. You will hopefully see some of these names on my next watch list, which I am expecting to release at the end of the month. But for now, I couldn’t be happier that my stake in Realty Income is finally over 90 shares! I cannot wait to receive that first monthly dividend in March that reflects my full position.
With their latest outage, Amazon Web Services (AWS) provides business leaders with a stark reminder: The public cloud is not infallible, the public cloud does not guarantee high availability and when it goes down, it does it magnificently. Which is why Hybrid IT is so valuable.
Annotation website Genius has been at the center of a brewing media controversy.
On Tuesday, the whole situation jumped up a notch thanks to a letter from a sitting congresswoman.
Representative Katherine Clark of the 5th District of Massachusetts penned a letter to Genius CEO and cofounder Tom Lehman to express concerns about “the Genius online annotation platform and its lack of safeguards against Internet harassment and abuse.”
Genius, which started out as a website to annotate rap lyrics, has been building out a larger editorial operation in hopes of reaching a larger audience. Read more…