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Type the phrase “In 2019, I’ll …” and let your smartphone’s keyboard predict the rest. Depending on what else you’ve typed recently, you might end up with a result like one of these:
In 2019, I’ll let it be a surprise to be honest.
In 2019, i’ll be alone.
In 2019, I’ll be in the memes of the moment.
In 2019, I’ll have to go to get the dog.
In 2019 I will rule over the seven kingdoms or my name is not Aegon Targareon [sic].
Many variants on the predictive text meme—which works for both Android and iOS—can be found on social media. Not interested in predicting your 2019? Try writing your villain origin story by following your phone’s suggestions after typing “Foolish heroes! My true plan is …” Test the strength of your personal brand with “You should follow me on Twitter because …” Or launch your political career with “I am running for president with my running mate, @[3rd Twitter Suggestion], because we …”
Gretchen McCulloch is WIRED’s resident linguist. She’s the cocreator of Lingthusiasm, a podcast that’s enthusiastic about linguistics, and her book Because Internet: Understanding the New Rules of Language is coming out in July 2019 from Penguin.
In eight years, we’ve gone from Damn You Autocorrect to treating the strip of three predicted words as a sort of wacky but charming oracle. But when we try to practice divination by algorithm, we’re doing something more than killing a few minutes—we’re exploring the limits of what our devices can and cannot do.
Your phone’s keyboard comes with a basic list of words and sequences of words. That’s what powers the basic language features: autocorrect, where a sequence like “rhe” changes to “the” after you type it, and the suggestion strip just above the letters, which contains both completions (if you type “keyb” it might suggest “keyboard”) and next-word predictions (if you type “predictive” it might suggest “text,” “value,” and “analytics”). It’s this predictions feature that we use to generate amusing and slightly nonsensical strings of text—a function that goes beyond its intended purpose of supplying us with a word or two before we go back to tapping them out letter by letter.
The basic reason we get different results is that, as you use your phone, words or sequences of words that you type get added to your personal word list. “For most users, the on-device dictionary ends up containing local place-names, songs they like, and so on,” says Daan van Esch, a technical program manager of Gboard, Google’s keyboard for Android. Or, in the case of the “Aegon Targareon” example, slightly misspelled Game of Thrones characters.
Another factor that helps us get unique results is a slight bias toward predicting less frequent words. “Suggesting a very common word like ‘and’ might be less helpful because it’s short and easy to type,” van Esch says. “So maybe showing a longer word is actually more useful, even if it’s less frequent.” Of course, a longer word is probably going to be more interesting as meme fodder.
Finally, phones seem to choose different paths from the very beginning. Why are some people getting “I’ll be” while others get “I’ll have” or “I’ll let”? That part is probably not very exciting: The default Android keyboard presumably has slightly different predictions than the default iPhone keyboard, and third-party apps would also have slightly different predictions.
Whatever their provenance, the random juxtaposition of predictive text memes has become fodder for a growing genre of AI humor. Botnik Studios writes goofy songs using souped-up predictive keyboards and a lot of human tweaking. The blog AI Weirdness trains neural nets to do all sorts of ridiculous tasks, such as deciding whether a string of words is more likely to be a name from My Little Pony or a metal band. Darth Vader? 19 percent metal, 81 percent pony. Leia Organa? 96 percent metal, 4 percent pony. (I’m suddenly interpreting Star Wars in quite a new light.)
The combination of the customization and the randomness of the predictive text meme is compelling the way a BuzzFeed quiz or a horoscope is compelling—it gives you a tiny amount of insight into yourself to share, but not so much that you’re baring your soul. It’s also hard to get a truly terrible answer. In both cases, that’s by design.
You know how when you get a new phone and you have to teach it that, no, you aren’t trying to type “duck” and “ducking” all the time? Your keyboard deliberately errs on the conservative side. There are certain words that it just won’t try to complete, even if you get really close. After all, it’s better to accidentally send the word “public” when you meant “pubic” than the other way around.
This goes for sequences of words as well. Just because a sequence is common doesn’t mean it’s a good idea to predict it. “For a while, when you typed ‘I’m going to my Grandma’s,’ GBoard would actually suggest ‘funeral,'” van Esch says. “It’s not wrong, per se. Maybe this is more common than ‘my Grandma’s rave party.’ But at the same time, it’s not something that you want to be reminded about. So it’s better to be a bit careful.”
Users seem to prefer this discretion. Keyboards get roundly criticized when a sexual, morbid, or otherwise disturbing phrase does get predicted. It’s likely that a lot more filtering happens behind the scenes before we even notice it. Janelle Shane, the creator of AI Weirdness, experiences lapses in machine judgment all the time. “Whenever I produce an AI experiment, I’m definitely filtering out offensive content, even when the training data is as innocuous as My Little Pony names. There’s no text-generating algorithm I would trust not to be offensive at some point.”
The true goal of text prediction can’t be as simple as anticipating what a user might want to type. After all, people often type things about sex or death—according to Google Ngrams, “job” is the most common noun after “blow,” and “bucket” is very common after “kick the.” But I experimentally typed these and similar taboo-but-common phrases into my phone’s keyboard, and it never predicted them straightaway. It waited until I’d typed most of the letters of the final word, until I’d definitely committed to the taboo, rather than reminding me of weighty topics when I wasn’t necessarily already thinking about them. With innocuous idioms (like “raining cats and”), the keyboard seemed more proactive about predicting them.
Instead, the goal of text prediction must be to anticipate what the user might want the machine to think they might want to type. For mundane topics, these two goals might seem identical, but their difference shows up as soon as a hint of controversy enters the picture. Predictive text needs to project an aspirational version of a user’s thoughts, a version that avoids subjects like sex and death even though these might be the most important topics to human existence—quite literally the way we enter and leave the world.
We prefer the keyboard to balance raw statistics against our feelings. Sex Death Phone Keyboard is a pretty good name for my future metal band (and a very bad name for my future pony), but I can’t say I’d actually buy a phone that reminds me of my own mortality when I’m composing a grocery list or suggests innuendos when I’m replying to a work email.
The predictive text meme is comforting in a social media world that often leaps from one dismal news cycle to the next. The customizations make us feel seen. The random quirks give our pattern-seeking brains delightful connections. The parts that don’t make sense reassure us of human superiority—the machines can’t be taking over yet if they can’t even write me a decent horoscope! And the topic boundaries prevent the meme from reminding us of our human frailty. The result is a version of ourselves through the verbal equivalent of an Instagram filter, eminently shareable on social media.
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In 1961, a college student named David Myers traveled from Washington, DC, to the US Naval School of Aviation Medicine in Florida to take part in a new experiment. “I had a very limited understanding of what I was getting myself into,” Myers told me recently over email. “So I was extremely curious and mildly excited that first day.”
Myers was one of 11 men specifically recruited by Dr. Ashton Graybiel to help test the feasibility of human spaceflight, at a time when nobody knew whether the human body could withstand a trip beyond our atmosphere. For nearly a decade, the US Navy put 11 eleven men through countless tests. Four of the men spent 12 straight days inside a 20-foot room that rotated constantly. In another experiment, they were sent out to notoriously rough seas off the coast of Nova Scotia. On the boat, the men played cards while the researchers were so overcome with seasickness that they had to cancel the test and go home. Others were sent up in the so-called “Vomit Comet,” an aircraft designed to simulate zero gravity. That’s the test Myers is still most fond of. “This free floating was a fascinating experience,” he says. “No other tests came close as my favorites.” But Myers and the other men would never go to space. In fact, they would never be allowed. They were recruited for these tests for the exact reason they would never pass the NASA astronaut qualification exams: All 11 men were deaf.
Now known as the Gallaudet Eleven, Myers and his colleagues were recruited from Gallaudet College (now Gallaudet University), a school for d/Deaf students. (“Big D” Deaf refers to Deaf culture and community, while “small d” deaf refers to people who don’t identify with that community.) Ten out of the 11 men had become deaf because of spinal meningitis, an infection of the fluid in the spinal cord. The infection ultimately damaged each man’s inner ear, including their vestibular system, which also happens to be the system that is mainly responsible for motion sickness. This made the men perfect test subjects for a space program that was trying to understand what might happen to people in places where the inner ear can’t sense up and down. “Through their endurance and dedication, the work of the Gallaudet Eleven made substantial contributions to the understanding of motion sickness and adaptation to spaceflight,” wrote Hannah Hotovy of the NASA History Division. Harry Larson, another one of the Gallaudet Eleven, put it this way: “We were different in a way they needed.”
It’s no secret that it’s incredibly difficult to become an astronaut. NASA’s selection process is notoriously rigorous—strict enough that it was the most plausible kind of place to set the movie Gattaca, where only the perfectly genetically engineered get to board rockets bound for space. Writer Tom Wolfe documented the space program’s strenuous astronaut training program in his book The Right Stuff.
The assumption has long been that this training is a necessity—traveling to space is a mentally and physically grueling endeavor. We need the strongest, smartest, most adaptable among us to go. But strength comes in many forms, as do smarts. And if you want to find people who are the very best at adapting to worlds not suited for them, you’ll have the best luck looking at people with disabilities, who navigate such a world every single day. Which has led disability advocates to raise the question: What actually is the right stuff?
“Crip bodies were built for space travel. Crip minds already push the outer limits,” Alice Wong, founder of the Disability Visibility Project, tweeted last year. “We already master usage of breathing apparatuses and can handle challenging situations.” Wong went on to coedit an issue of the literary magazine Deaf Poets Society called “Crips in Space” with writer and performer Sam de Leve.
Take, for example, people who use ostomy bags. Right now, pooping in space is actually an important technical challenge. During takeoff, landing, and spacewalks, astronauts wear diapers. While in the space station, they use a toilet that requires a fair amount of precision and training to use. Astronauts have told all kinds of stories about rogue poop, or situations in which the toilet has backed up or generally gone awry. In 2008, NASA spent $ 19 million on a Russian toilet for the International Space Station. None of this would be an issue for an astronaut with an ostomy bag. “I could plug into the wall and just empty the container that’s been collecting,” says Mallory K. Nelson, a disability design specialist who uses an ileostomy bag—a pouch that connects to her intestine and collects waste. “I’ve moved the output location of poop, which creates a lot more flexibility in the kind of systems I can have. I could attach it to a space suit.”
Or consider movement in space. You’ve certainly seen videos of astronauts zipping around the space station using their arms and legs to push off surfaces and direct their motion. This is a type of movement that people who use wheelchairs and other mobility aids are already familiar with. In fact, the various devices and ways of moving the body in space are likely more familiar to people with disabilities than to able-bodied people. “We move our bodies in so many different ways, and the disabled community has an exuberant amount of options,” says Nelson, who is an amputee and who has used crutches, a wheelchair, a scooter, and a prosthetic to get around. Nelson even coined a term for this recently: transmobility, the idea that there are lots of ways to get around besides putting one foot in front of the other.
Nelson also points out that most astronauts have no prior experience relying on technology for their movement and lives, whereas people with disabilities do so every day. In a space suit, for a space walk, an astronaut has to be trained in how to move their body in unison with a piece of technology. They have to get used to the idea that, if that technology should fail, they could be in grave danger. This, again, is an experience people like Nelson live with every day. “I’m always moving my body in motion with another object. That’s all we do,” Nelson says.
Or take blind astronauts. In a piece for Scientific American, Sheri Wells-Jensen lays out the case for designing spaceships for blind space travelers:
“After all, in a serious accident, the first thing to go might be the lights! This generally means that the first thing a sighted astronaut must do for security is ensure visual access to the environment. He hunts for a flashlight, and if emergency lighting comes on, his eyes take a moment to adjust. Meanwhile, the blind astronaut is already heading toward the source of the problem. In the fire aboard the Russian Mir space station, in 1997, the crew struggled as smoke obscured their view. The blind astronaut, while still affected by the lack of good air, would not be bothered by either dim lighting or occluding smoke. She would accurately direct the fire extinguisher at the source of heat and noise.”
In the Mir fire that Wells-Jensen mentions, one of the problems that arose was the sighted astronauts’ inability to locate the fire extinguisher through the smoke. Had the ship been laid out with a blind participant in mind, there would have been a nonvisual signal already built in to such a critical piece of equipment.
Or consider d/Deaf astronauts once again. The Gallaudet Eleven were tapped for their immunity to motion sickness—John Glenn even reportedly said he was envious of their ability to withstand the tests without getting sick—but there are other reasons why bringing a d/Deaf astronaut along could be useful. “Studies have shown that using sign languages confers cognitive advantages in one’s visual working memory, enhancing how we see, remember, and manipulate objects in our mind,” says Joseph Murray, a professor at Gallaudet University and the scholar behind the term Deaf Gain, the idea that deafness should not be considered a loss of something but, rather, a gain of a whole host of other things. “The challenge Deaf Gain offers for NASA and all workplaces is to rethink their automatic assumptions about deaf people’s capabilities,” Murray says. “If there is a mission need for people with advanced spatial processing skills who do not get motion sick, then there are quite a few deaf people ready and willing to serve.”
And it’s not just on a trip to space that people with disabilities might have an advantage. Take a situation in which astronauts are going somewhere to settle: Able bodies might no longer behave the way we expect. “Humans have an environmental niche on Earth, like all other creatures do, and we exploit it in different ways,” says Ashley Shew, a professor at Virginia Tech. Mars, or even a space station, is nothing like that niche. “The conditions in which our bodies have grown up are so drastically different that our existence in space will be much more like being a disabled person on Earth than like being an abled person on Earth.” Who better to send than those who are used to navigating environments not built for them—those who experience that every day on Earth? “Disabled people will fare better in space because disabled people have learned to negotiate hostile situations in ways that able bodied people are completely unaware of,” Shew says. Wong agrees. “The way we communicate, function, and exist with our diverse bodyminds sets us up as ideal space explorers and ambassadors of Earth, ready to make first contact with sentient beings,” she told me.
Whether this will actually happen is hard to say. NASA didn’t respond to my request for comment on their astronaut selection policy (like all government agencies, NASA personnel are currently not working due to the government shutdown). Nor did Mars One or SpaceX. Online, Mars One has a whole page of qualifications for candidates for their proposed Mars mission, stating, “In general, normal medical and physiological health standards will be used” and disqualifying anybody without “normal range of motion and functionality in all joints,” anybody with less than 20/20 vision, and anybody who is deemed not “healthy.” NASA’s FAQ section says that “for maximum crew safety, each crewmember must be free of medical conditions that would either impair the person’s ability to participate in, or be aggravated by, space flight, as determined by NASA physicians.”
Changing these requirements won’t be easy. Spacecraft are designed with certain assumptions about what kinds of bodies will be sitting in the seats and operating the controls. The opportunity to change those parameters is small and must be seized while ships are being designed, not down the road. Plus, many people with disabilities who might want to go to space can’t get access to the pipeline that delivers so many astronauts: “Astronauts come via the military and that’s a closed door for disabled individuals,” Myers says. “Those kinds of obstacles need to be removed for those individuals who are otherwise qualified.” And NASA itself has had no reason to rethink their stance, because no one has really pushed them to. Yet, that is.
But all that could change. In 2017, Johanna Lucht became the first Deaf engineer to work at NASA. Eddie Ndopu, a South African activist and humanitarian, has said he wants to be the first disabled person in space. He plans to book a flight on a commercial trip into space and deliver an address to the UN while he’s up there. (MTV is slated to film the entire thing.) Julia Velasquez, a Deaf woman from California, has gone through many of the steps traditionally taken by astronauts—she’s interned at NASA, recently received her pilot’s license, and even lived in a simulated Mars colony in Hawaii.
When I asked Myers if he ever wished he could have been an astronaut, he said, “Yes, absolutely. At one point I told Dr. Graybiel, ‘If you ever develop an experiment involving a flight into space, I want to be first in line.’” Myers likely won’t wind up in space in his lifetime. But he might live to see a disabled person make the journey, opening up space to a whole new set of uniquely qualified astronauts.
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As the great bard Billy Squier once sang, “Christmas is a time say I love you.” And, whether you celebrate the holiday or are just enjoying 24 hours during which basically everything in America is closed, here’s hoping you have a wonderful day.
In case you need a little last-minute inspiration, here are 21 of the best Christmas quotes — some heartwarming, some humorous, some profound — to get you in the spirit.
1. “Out upon merry Christmas! What’s Christmas time to you but a time for paying bills without money; a time for finding yourself a year older, but not an hour richer…? If I could work my will,” said Scrooge indignantly, “every idiot who goes about with ‘Merry Christmas’ upon his lips should be boiled with his won pudding, and buried with a stake of holly through his heart. He should!”
– Charles Dickens, A Christmas Story
2. “Aren’t we forgetting the true meaning of Christmas. You know, the birth of Santa?”
– Matt Groening
3. “It was the beginning of the greatest Christmas ever. Little food. No presents. But there was a snowman in their basement.”
― Markus Zusak, The Book Thief
4. “One of the most glorious messes in the world is the mess created in the living room on Christmas day. Don’t clean it up too quickly.”
– Andy Rooney
5. “‘Elf’ has become this big holiday movie, and I remember running around the streets of New York in tights saying, ‘This could be the last movie I ever make.’ I could never have predicted that it’d become such a popular film.”
– Will Ferrell
6. “I like to compare the holiday season with the way a child listens to a favorite story. The pleasure is in the familiar way the story begins, the anticipation of familiar turns it takes, the familiar moments of suspense, and the familiar climax and ending.”
– Fred Rogers
7. “I bought my brother some gift wrap for Christmas. I took it to the gift wrap department and told them to wrap it, but in a different print so he would know when to stop unwrapping.”
– Steven Wright
8. “One can never have enough socks. Another Christmas has come and gone and I didn’t get a single pair. People will insist on giving me books.”
– Professor Dumbledore (J.K. Rowling’s Harry Potter and the Sorcerer’s Stone)
9. “Christmas is built upon a beautiful and intentional paradox; that the birth of the homeless should be celebrated in every home.”
― G.K. Chesterton
10. “Once again, we come to the Holiday Season, a deeply religious time that each of us observes, in his own way, by going to the mall of his choice.”
– Dave Barry
11. “Its easier to feel a little more spiritual with a couple of bucks in your pocket.”
― Craig Ferguson
12. “This whole Santa Claus thing just doesn’t make sense. Why all the secrecy? Why all the mystery? If the guy exists why doesn’t he ever show himself and prove it? And if he doesn’t exist what’s the meaning of all this? … [A]ctually, I’ve got the same questions about God.”
― Bill Watterson (Calvin & Hobbes)
13. “Santa Claus has the right idea – visit people only once a year.”
– Victor Borge
14. “Christmas is a season for kindling the fire for hospitality in the hall, the genial flame of charity in the heart.”
15. “A good conscience is a continual Christmas.”
16. “It is a fine seasoning for joy to think of those we love.”
17. “Nothing’s as mean as giving a little child something useful for Christmas.”
– Kin Hubbard
18. “To the American People: Christmas is not a time or a season but a state of mind.”
― Calvin Coolidge, Presidential message, December 25, 1927
19. “For it is in giving that we receive.”
– Francis of Assisi
20. “Sending Christmas cards is a good way to let your friends and family know that you think they’re worth the price of a stamp.”
– Melanie White
21. “Money’s scarce
Times are hard
Here’s your [f——]
― Phyllis Diller
Bonus: “Now I have a machine gun. Ho Ho Ho.”
– Die Hard (best Christmas movie of all time)
AT&T (T) has caught the eye of many income-oriented investors throughout 2018 because of its share price weakness. We have been long the stock as long-term investors and have been pounding the table due to the market’s irrational treatment of this company for a year now. We said that AT&T is cheap at these levels in the low $ 30s and that we think the Time Warner Acquisition will be a major boon for the company long term. In this regard, I personally have recently added a position recently. With all of this in mind, we thought it made sense to update on AT&T, which is yielding 6.5% after its recent sell-off.
The fact that the AT&T’s dividend yield is now more than double the interest rate on the U.S. 30-year bond seems to point towards the fact that the market believes AT&T’s yield is unsustainable. In short, we disagree. In this piece, we will examine the income-oriented metrics surrounding AT&T’s yield, as well as the value proposition that the shares present to investors at today’s beaten down levels. To us, the market’s current treatment of AT&T is irrational. T’s relative strength index has fallen well into oversold territory, and this treatment of the stock may be creating an attractive long-term opportunity for income-oriented investors.
We feel compelled to write this bullish report about AT&T because this is a company that so many love to hate, and honestly, we don’t see why. To a certain extent, we think AT&T has been politicized, either subconsciously or not, because of the current administration’s attacks on CNN and AT&T’s new ownership of that network via Time Warner. In this day and age, it seems that everything is overly politicized in this country. We think it is too bad. But, regardless of whether or not you watch CNN and enjoy the content it provides, the network continues to be profitable, which is what matters most for AT&T. Instead of focusing on sentiment-driven things like political opinions, we think investors are much better served focusing on T’s cash flows, its underlying fundamentals, and the valuation that its shares present.
With this in mind, we want to highlight the fact that due to its current weakness, AT&T is now trading at valuations not seen since the trough of the Great Recession. As you can see on the F.A.S.T. Graph below, AT&T is currently trading for less than 8.8x Trailing 12 Months (‘TTM’) earnings, which is below the level that the stock hit in the spring of 2009!
Source: F.A.S.T. Graphs
We can’t rationalize that. Sure, AT&T has an enormous debt load which we will touch on, but as far as corporate outlook goes, we are not sure why the market is placing the same premium on shares today as it did when some believed that the modern financial system could potentially collapse.
On a forward looking basis, T is even cheaper. This is another reason that we believe the stock is being irrationally discounted. Analysts aren’t expecting to see a ton of EPS growth in 2019 and 2020, but they are expecting growth. This stock is being priced as if it’s going into a significant earnings recession, and that’s not the picture that the 30 Wall Street analysts who cover the company are painting. Right now, the average EPS estimate for 2019 is $ 3.61. The consensus EPS estimate for 2020 is $ 3.67. This means that the stock is trading for just 8.3x 2019 estimates and 8.17x 2020 estimates!
Recent Earnings Report
AT&T just reported its 3rd quarter results. During the earnings report and accompanying conference call, AT&T management reiterated full year EPS guidance of $ 3.50. That was slightly below the market’s expectation of $ 3.53; however, it still represents a strong, double-digit growth over 2017’s $ 3.05 figure. At this point, we think it is fair to note that not only did AT&T’s EPS increase by double digits during Q3, but sales, cash from operations, and free cash flows did as well. This $ 3.50 EPS guidance is well above the company’s $ 2.00 annual dividend, representing a payout ratio of 57% (or a dividend coverage of 174%).
Management also reiterated full year free cash flow (or FCF) guidance of ~$ 21b. This is well above the $ 17.6b of FCF that T generated in 2017. This figure is also well above T’s dividend responsibilities. In the recently reported Q3, T’s free cash flow dividend payout ratio was 56.1%. It’s worth mentioning that this ratio is lower than the 54.2% a year ago. That’s because T’s dividend related expenses growth outpaced free cash flow growth during the quarter. This large bump in both figures y/y is due to the Time Warner acquisition.
Continued Growth Moving Forward
Moving forward, we think it is likely that this trend reverses. We suspect that AT&T will increase its quarterly dividend by the normal $ 0.01/share when it announces the December dividend which should only increase the dividend expense in the low single digits while we think it’s possible that free cash flow growth at a mid-high single digit clip as AT&T further integrates Time Warner’s assets into its distribution model.
A Dividend Aristocrat
Speaking of T’s $ 0.01 dividend increase, now’s the time to mention that we’re talking about a dividend aristocrat here. AT&T has increased its dividend for 34 consecutive years! The nice thing about adding reliable dividend growth to a high-dividend yield is that investors not only receive the passive income that they’re looking for, but the purchasing power of that income stream is protected from inflation. This is why we prefer owning equities to bonds when looking for passive income. Sure, bonds offer more security, but they don’t offer protection from the erosion caused by inflation over time.
This long history of increases is yet another reason why we believe that AT&T’s dividend is safe. Shareholders, both institutional and retail, rely on AT&T for income. They have had for decades. The company knows this. And therefore, it knows well that any dividend cut would lose the faith that it has built up with the income-oriented market and cause significant damage to the stock price.
No CEO wants to be the one in charge when a multi-decade dividend growth streak is at hand. Sure, this is all speculative and isn’t back up by concrete figures, but we are fairly certain that AT&T CEO Randall Stephenson would do whatever it takes, even if that meant selling off assets, to preserve the sanctity of T’s illustrious dividend (in the Q3 conference call slide show, AT&T management notes that non-core asset sales and capital market considerations are potential options, should free cash flow not cover debt requirements, yet they made no mention of cutting the dividend).
A Closer Look at the Debt
Thankfully, the CEO shouldn’t have to come to those drastic measures as to cut the dividend. The primary threat that many see when it comes to T’s yield is the company’s enormous debt load. At the end of Q3, T reported a total debt load of $ 183.4 billion and a net debt load of $ 174.7 billion. This is a worrisome figure, without a doubt. However, roughly 90% of the company’s debt is fixed rate, meaning that the company is protected from rising rates. Furthermore, as management noted in the recent conference call, rising rates are actually somewhat bullish for the company (so long as they rise at a slow and steady rate) because rising rates decrease the company’s pension liability, which serves as a bit of a hedge against the trouble that rising rates may have on the non-fixed portion of T’s debt portfolio.
Right now, T’s net debt to pro forma adjusted EBIDTA ratio is 2.85x. The company plans to pay down debt in the short term to reduce this figure to 2.5x by the end of 2019. Management expressed confidence that they’re on schedule to do this in the recent quarterly report. They also noted that they plan on returning it to normal historical leverage ratios by 2022.
Looking at AT&T’s debt maturities, we see that the company will need to retire $ 73b of debt during the next 5 years. That seems like an enormous amount, but it’s important to realize that this company is on schedule to produce $ 21b in free cash flow in 2018, and by 2023, it’s possible for that figure to be nearly $ 30b/year.
So, as long as T’s free cash flow growth outpaces the company’s dividend growth, it seems very likely that T will be able to both continue to provide investors with a reliably growing dividend and reduce the debt on schedule. The company currently receives a BBB credit rating from Standard & Poor’s. While this isn’t exactly stellar, it is investment grade, which will help them to receive competitive rates should they have to roll over any maturities moving forward.
An Unjustified Selloff
If debt doesn’t appear to represent a dire threat, then what other reason might have caused the stock to sell off nearly 22% year to date?
In a large part, it appears to be because of the company’s exposure to the media business. AT&T has chosen to go down the path of integrating media/entertainment assets into its existing distribution system. Some (like us) view this as a bullish divergence by management. The content that T can provide with its distribution network differentiates it from its competition.
We’re living in a digital age now. The 5G revolution appears to be just around the corner which will totally disrupt the traditional media landscape. High quality streaming content will be easily accessible once the 5G infrastructure is put in place. This, alongside the rise of the “internet of things”, should create immense demand for data from the providers. We believe that this demand will commoditize data over time. As the world becomes more dependent on broadband, I can foresee a time when these providers will be regulated like the utilities are with electricity. In this situation, having a diversified revenue model and access to alternative growth markets will lead to valuation premiums. AT&T should have this with its media/entertainment content as well as the advertising platform that it is developing alongside the Time Warner assets.
In the short term, we suspect that T’s exposure to media could continue to act as a headwind. The markets hate uncertainty, and the cord cutting phenomena is creating quite a bit of that in the media landscape. However, once that process plays itself out, we suspect that the leaders left on the playing field will be those who have the strongest content portfolios. Historically, we’ve seen consolidation happen in the entertainment industry, and I don’t think that’s going to change. Scale is important when selling advertisements and, ultimately, the brands with the largest eyeball appeal will win out.
T is well on its way to becoming one of those successful giants with the Time Warner assets, which include CNN, TNT, TBS, the Warner Bros studios, and one of the most successful over the top platforms in existence: Home Box Office (‘HBO’). With Time Warner, AT&T now has exposure to a nice variety of programmed and live television, including extensive sports rights (especially with the NBA, which is probably the hottest sports league in America with regard to growth), and major film productions. Very few media names can compete with T’s portfolio at the moment, and we expect to see it continuing to build out that portfolio over time with excess cash flows (once debt is reduced to normal levels in the medium term).
Media names are very attractive now. This is in large part due to what we call the Wall-E thesis, which is based upon the future reality depicted in the Disney animated film where it got its namesake where humans essentially sit around all day, get fat, and consume content while robots take care of them. We don’t think it will necessarily play out exactly like that, but as 5G ushers in increased automation, human society will become ever more efficient. This should lead to more free time for individuals, and that should result in increased demand for entertaining content that will fill a lot of this void. We want to own the companies who will benefit from this trend. The vast majority of them are low yielders like Walt Disney (DIS) or Comcast (CMCSA), but for those seeking high-dividend opportunities, AT&T is one of the best options out there.
So, in conclusion, we think AT&T offers investors an intriguing opportunity in the high-yield space. The company is yielding 6.5%, offers a safe dividend with a 174% dividend coverage, a long history of dividend growth, showing that the company has a culture of generosity towards its shareholders, and a dirt cheap valuation. It’s rare that a single investment checks all of these boxes. The debt is the major downside to AT&T at the moment, but as discussed, management appears to have a plan to reduce it, and the company’s massive cash flows support this plan. Any equity investment comes with risk. No dividend in the market is inherently safe; they’re all at risk of being cut. However, companies like AT&T don’t become dividend aristocrats on accident and when looking for reliable high yield, we have been willing to bet a portion of our savings on this wonderful company. The recent pullback creates a unique entry point for conservative dividend investors; A high quality 6.5% yield selling on the cheap.
A note about diversification: To achieve an overall yield of 9%-10% and optimal level of diversification, we recommend a maximum allocation of 2%-3% of the portfolio to individual high-yield stocks like AT&T, and a maximum of 5% allocation to high-yield exchange traded products (such as ETFs, ETNs and CEFs). For investors who depend on the income, diversification usually results in more stable dividends, mitigates downside risk, and reduces the overall volatility of your portfolio.
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1. Take a second look at recruiting, hiring and training.
Micromanaging often has a root in bringing someone into the company who wasn’t the best fit in terms of culture or skills. That can cause the worker to clash with you or have trouble following protocols or policies, which in turn might make you feel like you have to watch the employee like a hawk. Review how you describe positions and what you require of your recruiters to see if you can’t find more ideal candidates. Once you’ve hired, make sure that workers have access to resources they need to learn and complete the tasks you expect.
2. Keep your schedule full.
The idea here isn’t to work yourself into the ground. Rather, it’s to keep yourself just busy enough that you’re less tempted to constantly watch over everyone. Try to schedule activities with others for accountability and network expansion, and get yourself out of the office when it’s practical.
3. Take a 360 picture of your life and do more self-care.
While some individuals naturally are a little more prone to micromanaging because of their personalities, you might also do it if you feel like there are other areas of your life that you can’t control. In this case, micromanaging employees can be a way of trying to find balance and cope with personal stress. Consider making some lifestyle changes that can put you back in the driver’s seat outside of the office, and talk with people you trust about what you find challenging.
4. Improve your own skills and creativity.
Micromanaging can be a way to live vicariously–if you don’t feel like you have specific competencies or capabilities, you might want to control the people who do so you can feel connected to those positive traits and take credit for their outcomes. Take classes or find other opportunities to affirm your own talents. Always ask yourself whether your requirements satisfy you or whether they satisfy the interests of the business.
5. Improve your communication.
Good communication between you and your employees reassures you that the workers are progressing as you wanted, which alleviates the worry that can prompt you to micromanage. It also builds rapport and trust, which can make you more confident that the workers will follow your directions even when you’re not looking over their shoulders. Schedule regular check-ins and establish an open-door policy so your team knows they can come to you. Make sure your operational routines and protocols discourage siloing and allow time for interaction. Lastly, outline clear goals and constraints for each project so there isn’t any confusion as you delegate.
6. Get more data.
Just like a lack of control in personal areas of your life can make you tighten your grip on workers, a lack of data can make you scared that you’re missing something or will lose out. Instead of keeping tabs on how workers spend every minute, stay focused on the bigger picture. Get other facts and figures that can reassure you that you’re on target, or that can give you better insights about what your employees can and can’t control. Use that data to evaluate team and company goals and adjust processes or resources on a regular basis.
7. Let workers call you out.
Address the elephant in the room and tell your team outright that you’re trying to be better and eliminate the micromanaging habit. Ask them to let you know when they need some breathing space so you can learn about their needs and what typically triggers you to be most watchful. Most employees will be impressed at your willingness to address the fault and just need some reassurance that they won’t be punished for pointing out what you’re doing.
I started my “portable” computer life with a 22-pound KayPro II in 1982. Since then, I’ve used IBM and Lenovo ThinkPads, Compaq luggables, Nec Ultralites, Dell XPS 13s, the list goes on and on. These days, my laptop of choice is the Google Pixelbook.
At a starting price of $ 999, this is not a Chromebook for everyone. But, if you want to make the most not just from Chrome OS, but from Android and Linux as well, it’s your Chromebook.
There are often discounts for the Pixelbook. You can also get a 10-percent discount on the Pixelbook if you’re a student.
At a minimum the Pixelbook comes with a 1.2GHz 7th gen Intel Core 7Y57 processor, 256GB of SSD storage, and 8GB of RAM. Unlike the others, the Pixelbook comes not with a 100GB free Google Drive storage for two years, but 1TB of free storage for two years. That’s a value of almost $ 240 alone.
The Pixelbook also has Google Assistant, built-in. You can get to it via its own dedicated button on the Pixelbook’s keyboard or by simply saying “OK Google.” It’s context sensitive, so it will open with search results for what you already have on screen.
This luxury-model Chromebook comes with a pair of USB-C ports. One of these, however, is used to power the system up. For Wi-Fi, it uses 802.11ac.
With a battery life of about 10 hours, it won’t last long as some of the others, but then you can do a lot more with it. On my high-end model, I’ve had over 100 tabs open, while running Android and Linux applications.
You sure wouldn’t want to give this Pixelbook to an elementary student, but an advanced high-school or college student would be another matter. The Pixelbook is meant for power users and developers, if that describes your daughter or son, then get them this one. You’ll be glad you did.
Google is always modifying its apps and devices with upgrades and new features. The pace of change is so relentless that trying to keep track can be overwhelming. In case you missed them, here are some of the best new features Google introduced during July.
Site Isolation for the Chrome browser
Site Isolation a major security update for the Chrome browser that protects users from malicious websites that steal sensitive data like passwords and encryption keys. Site Isolation puts content from a website’s domain in a sandboxed process that is prevented from sharing memory with other domains. Malicious websites and threats like Spectre can’t steal what they can’t access.
Site Isolation can increase memory overhead by 10 to 13% in some cases. This change produced a flurry of misleading headlines implying the memory increase is some kind of major problem. It isn’t. The increased memory demands are only likely to result in a performance decline for some users in some circumstances. If you’re a Windows user, it’s a simple matter to find out if Chrome is stressing your system memory with the Task Manager. If it is, easy solutions range from closing some tabs to using any one of a number of Chrome extensions that put background tabs to sleep.
Site Isolation is currently operating in Chrome for Windows, Chrome OS, Mac and Linux. Google estimates that 99% of Chrome users on these operating systems are protected. More information about Site Isolation can be found here.
Chrome 68 arrives
Site Isolation wasn’t July’s only security enhancement for the Chrome browser. Warning labels were attached to unsafe websites and users were protected from malicious redirects in Chrome 68 which rolled out several days ago.
While most websites have migrated from the unsafe HTTP network protocol to the much safer HTTPS, some haven’t. Data is sent in clear text over HTTP which means anyone who intercepts it can read it. This is not good if, for example, you enter your credit card information when you buy something online. HTTPS is a secure version of HTTP. Communication between the website and the browser is encrypted and if it is intercepted, it can’t be read without the encryption key.
Chrome 68 adds a “Not secure” warning label in the URL bar at the top of the page on websites that still use HTTP. If you see the label, be aware that any communication with the website is easily stolen.
A website redirect sends the user to a different website or pops up a new window when the user opens a page. Redirects have many legitimate uses, but they are also commonly employed to pop up annoying ads or surreptitiously send users to malicious websites. Chrome 68 interferes with redirects that are frequently used for malicious purposes by opening a window that gives the user the option of moving to the new website or staying where they are.
More information about Chrome 68 can be found here.
Google Maps adds personal recommendations and neighborhood tracking
Google Maps now surfaces information tuned to your tastes and interests with a redesigned Explore tab and a new For You tab. For You also lets you keep track of what’s going on in the neighborhoods where you hang out. Here’s what’s new.
- The Explore tab gives eating and drinking recommendations for any location you choose. Recommendations can be filtered by type of food.
- If you’re trying out the places on a trending list, Maps will keep track of the ones you’ve visited and the ones you haven’t.
- Explore also surfaces upcoming events and activities that can be filtered for the kind of thing that interest you in an area of your choosing.
- Restaurants and bars have a numerical rating that reflects Google’s best guess about whether you’ll enjoy the place. The ratings are ennabled on Android but not iOS and location sharing has to be turned on.
- For You lets you track establishments and neighborhoods. It’s a great way to find out if a new place that caters to your interests has opened in your neighborhood or if something about one of your favorite places has changed.
The revamped Explore tab is available for Android and iOS worldwide. For You is only available for Android in the US, UK, Canada, Australia and Japan.
Visual Snapshot brings personalization to the Assistant
Maps wasn’t the only app that received enhanced personalization features in July. Visual Snapshot brings the defunct Google Now’s summary of information that helps you navigating through your day to the Assistant.
Visual Snapshot adds reminders, weather and traffic reports, events on your schedule and more to the Assistant app. It can interact with both Google and third-party apps to corral information from a variety of sources into one convenient location. Visual Snapshot is accessed through an icon that looks like a radiant inbox in the upper right corner of the Assistant app. Tap the icon to see what the Assistant can tell you about the rest of your day.
Google Earth adds a measurement tool
How long is the route you take when you walk your dog? How many acres is your property? What’s the difference between the straight-line distance from your home to your job and the route you actually take to get to work? You can answer all of these questions with Google Earth’s new measurement tool.
Place an anchor on any two points and Google earth will return the distance between them. You can drop a string of anchors on corners and along curves to measure route distances. Enclose a space and Google Earth gives you both the perimeter and the area.
Google Earth’s new measurement tool is available on the web and Android with support for iOS promised sometime in the future.
Waze added to the Android Auto app
Waze was added to Android Auto for in-car displays last July and now it’s finally available for the Android Auto app on phones. Whether you’re using Android Auto on a head unit or a phone, Waze lets you
- Launch navigation by tapping on a pre-programmed destination or by saying “OK Google” to wake up the Assistant.
- Get video and audio alerts about upcoming problems and find alternate routes on a large map.
- Access your personalized Waze experience and view your ETA panel.
- Report accidents, road hazards or traffic jams through a visual report menu.
Waze for Android Auto is available for Android 5.0 (Lollipop) and up and is optimized for use with a car dock.
“OK Google” no longer needed before every interaction with a Home device
Google rolled out Continued Conversation in late June but it’s such a huge improvement in ease of use for the company’s Home devices that I had to include it here. With Continued Conversation you don’t have to repeat the wake-up phrase before every subsequent command or query once you’ve begun an interaction with the Assistant in Home. The Assistant has an eight-second window during which it will respond to another input without hearing the wake-up phrase. If it doesn’t hear a command or query after eight seconds, it shuts down. The Assistant will also shut down if you say “Thank you” when you’re finished. Talking to the Assistant in Home feels much more like having a conversation than it did before.
Continued Conversation is toggled off by default. You can turn it on through either the Home or Assistant apps on a smartphone, tablet or Chromebook. More information about continued Conversation can be found here.
These seven new features were the most useful for me, but Google added a lot more during July and you may discover something different that makes your life easier or more enjoyable. Take a look at these articles for more of the new features Google added to it’s apps and devices in late June and July.
Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek.
In today’s America, we tend to feel gray areas are a touch passé.
You’re either right or you’re wrong. And if you can’t see which you are, then you’re two slices short of a sandwich.
How, though, can you even begin to persuade someone who’s mistaken — or even worse, vehemently disagrees with you?
A new study makes a curious suggestion, one that won’t please everyone.
The study, conducted by Brendan Nyhan of Dartmouth College and Jason Reifler of the University of Exeter, is entitled The roles of information deficits and identity threat in the prevalence of misperceptions.
They’re very polite about the fountains of knowledge pouring into today’s humans.
“Why do so many Americans hold misperceptions?” the researchers ask.
To which I reply: “Why do many Americans now put mis in front of pleasant words, instead of calling them that they really are? Lying has become misspeaking? Oh, I don’t think it has.”
Nyhan and Reifler come to a startling, even painful conclusion: “In three experiments, we find that providing information in graphical form reduces misperceptions. A third study shows that this effect is greater than for equivalent textual information.”
Yes, if you want to persuade your half-cut, halfwitted neighbor or colleague about the parlous state of the world and the dangers of fascism/socialism/democracy/self-help books, your best bet is to show them a chart.
Worse, it seems that a chart is better than even text. Goodness, is that where I’ve been going wrong all my life?
I can, though, already see Jeff Bezos’s eyes rolling into the back of his head and emerging with a very red hue.
As the Amazon CEO explained in his latest letter to shareowners: “We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of ‘study hall.'”
So no slides or charts and graphics for Bezos. All he wants is a short story. Could he, perhaps, misperceive the benefits of charts?
Still, charts surely can’t be so effective, otherwise everyone would have tried them.
Moreover, it’s not as if you can create a chart to describe every false belief. How, for example, do you create a chart for a CEO who simply thinks his touch and feel is always right?
Nyhan and Reifler explain that a considerable reason why people hold on to false information is purely psychological. It confirms their world view.
“On high-profile issues, many of the misinformed are likely to have already encountered and rejected correct information that was discomforting to their self-concept or worldview,” they say.
Yes, but it’s not as if that nice man on CNN with his Election Night charts has ever persuaded many people, is it?
Expect, though, the rising stars in many companies now rushing to create charts in order to show that they’re right and their brain-manacled bosses are wrong.
Expect, too, that American politics will now be revolutionized with the presentation of definitive charts of right and wrong.
You think I’m wrong about that?
Send me a chart to show me why.
My dad, who would be mortified if he knew I was doing this, has been my greatest inspiration in business. Thanks to his disdain for any sort of self-aggrandizement, I’m doing this behind his back (sorry, dad).
If I’ve had any success in business, it’s because my dad lived his life according to the doctrine of entrepreneurship and I got to watch from the sidelines. He was living proof that you’re not confined to the hand you’ve been dealt and you can determine your own outcomes in this life.
Over the years, my dad’s shared countless bits of wisdom with me that we endearingly refer to as, “The Marty Lecture Series.” Today, in honor of Father’s Day, I’d like to share some of my personal favorite “Lecture Series” quotes with you.
When You Lose, Don’t Lose The Lesson
My dad never took “no” as no. “No” was always a starting point for negotiation. Where others saw obstacles or setbacks, my dad saw (and still sees) opportunity.
Every time I came home with a perceived failure, he’d reframe it with how it taught me something or made me stronger.
It was infuriating as a 14-year-old who relished in self-pity and just wanted a “normal parent” who would indulge her, but it’s been invaluable as an entrepreneur. It’s impossible to be derailed by failure when you’re forced to find a lesson.
Sometimes You Gotta Be Ok With “Good ‘Nuff”
I was complaining about a mediocre grade on something when my dad spit this quote at me for the first time. Irate, I thought he meant you should settle for less than you deserve or are capable. It took me years before I realized what he meant was “done is better than perfect.”
He was teaching me how to ship.
Patience and Shuffle the Cards
In a world where my contemporaries are obsessed with quick Instagram-worthy wins, my dad always shared this quote from Cervantes. He was never impressed with status, fame, or fancy things. Perhaps it was the Texan in him, but he was never influenced by those who projected the illusion of success.
He was impressed with people who had passion, determination, and (most importantly) the wherewithal to endure the setbacks that come at you as you go down the road less traveled. People who played the long game.
Any day I felt like everything was over, the world was collapsing, and I should quit (aka: every other day in business), he’d remind me today was one of many.
This is a long game. You gotta have patience and shuffle the cards.
Some Days Just Need to Be Over
This one is a crowd favorite, especially in a culture obsessed with self-improvement and maximizing everything. Some days, you gotta accept that you can’t win.
Don’t dwell on it. Accept your losses, go for a run, do something else productive, but don’t waste your time beating yourself up over a crap day.
Some days just need to be over.
You Gotta Fight Em In The Streets
This one is my favorite.
To my dad, there’s nothing more respectable than someone who is “fightin’ em in the streets.” In other words, there is no substitute for doing the work. The tireless work that no one sees, the stuff people won’t thank you for, the things no one will recognize or know you did. All the “not sexy” parts of entrepreneurship.
This mentality also inspired the name of my virtual co-working space, The Arena. The Arena is a metaphor for “fighting in the streets.” It’s where you show up and do your best. Win, lose, or draw, you show up. You fight. You do your best.
My dad always said he’d never judge me for losing. He’d judge me for not having tried.
To my dad and all the other entrepreneurial father’s out there, Happy Father’s Day.
Good morning, Cyber Saturday readers.
A month ago I was milling about a hotel room in New Orleans, procrastinating my prep for on-stage sessions at a tech conference, when I received a startling iMessage. “It’s Alan Murray,” the note said, referring to my boss’ boss’ boss.
Not in the habit of having Mr. Murray text my phone, I sat up straighter. “Please post your latest story here,” he wrote, including a link to a site purporting to be related to Microsoft 365, replete with Microsoft’s official corporate logo and everything. In the header of the iMessage thread, Apple’s virtual assistant Siri offered a suggestion: “Maybe: Alan Murray.”
The sight made me stagger, if momentarily. Then I remembered: A week or so earlier I had granted a cybersecurity startup, Wandera, permission to demonstrate a phishing attack on me. They called it, “Call Me Maybe.”
Alan Murray had not messaged me. The culprit was James Mack, a wily sales engineer at Wandera. When Mack rang me from a phone number that Siri presented as “Maybe: Bob Marley,” all doubt subsided. Jig, up.
There are two ways to pull off this social engineering trick, Mack told me. The first involves an attacker sending someone a spoofed email from a fake or impersonated account, like “Acme Financial.” This note must include a phone number; say, in the signature of the email. If the target responds—even with an automatic, out-of-office reply—then that contact should appear as “Maybe: Acme Financial” whenever the fraudster texts or calls.
The subterfuge is even simpler via text messaging. If an unknown entity identifies itself as Some Proper Noun in an iMessage, then the iPhone’s suggested contacts feature should show the entity as “Maybe: [Whoever].” Attackers can use this disguise to their advantage when phishing for sensitive information. The next step: either call a target to supposedly “confirm account details,” or send along a phishing link. If a victim takes the bait, the swindler is in.
The tactic apparently does not work with certain phrases, like “bank” or “credit union.” However, other terms, like “Wells Fargo,” “Acme Financial,” the names of various dead celebrities—or my topmost boss—have worked in Wandera’s tests, Mack said. Wandera reported the problem as a security issue to Apple on April 25th. Apple sent a preliminary response a week later, and a few days after that said it did not consider the issue to be a “security vulnerability,” and that it had reclassified the bug as a software issue “to help get it resolved.”
What’s alarming about the ploy is how little effort it takes to pull off. “We didn’t do anything crazy here like jailbreak a phone or a Hollywood style attack—we’re not hacking into cell towers,” said Dan Cuddeford, Wandera’s director of engineering. “But it’s something that your layman hacker or social engineer might be able to do.”
To Cuddeford, the research exposes two bigger issues. The first is that Apple doesn’t reveal enough about how its software works. “This is a huge black box system,” he said. “Unless you work for Apple, no one knows how or why Siri does what it does.”
The second concern is more philosophical. “We’re not Elon Musk saying AI is about to take over the world, but it’s one example of how AI itself is not being evil, but can be abused by someone with malicious intent,” Cuddeford said. As we continue to let machines guide our lives, we should be sure we’re aware how they’re making decisions.
Have a great weekend—and watch out for imposters.
Maybe: Robert Hackett
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’sdaily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.