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Archive | News

Apple Receiving the Flak from Investors

The first major challenge to Apple post Steve Jobs era was fired off by David Einhorn of Greenlight Capital when the hedge fund manager filed suit against the tech firm for a bigger slice of its US$137 billion retained cash earnings to its investors.

This is a surprising move amidst the current issues the world’s most valuable company is facing, such as falling share prices, increased competition in its niche smartphone and tablet markets and doubt as to the company’s ability to create new innovations on its product line.

For his part, Einhorn, who is a well-known industry short seller of interests and shares, intimated in an interview with CNBC that Apple’s current management has a “Depression-era mentality”, leading it to hoard cash and invest in safe securities with low yields.

This is but a response to Apple’s history, as it went broke back in the 1990s before the return of Steve Jobs. With Jobs at the helm again, the company went into its now historical run with the launch of market standard products such as the iPhone and the iPad. This meteoric rise from ruin is what has guided the company in its very conservative activities with its earnings.

Now after the demise of Jobs, Apple has come under fire from its investors because of this large cash hoarding with a quarterly cash dividend and a share buy back option that would cost US$45 billion in the next three years while having US$98 billion in money available.

The lawsuit is targeting Apple’s moves to eliminate the preferred stock shares from its coffers. Einhorn urged fellow shareholders to vote against this proposal from the Apple board on its annual meeting to be held on February 27. In its stead, Einhorn proposed that the company issue preferred stock that has a perpetual four percent dividend return. Many investors have supported this move, though just in principle.

The share stock prices of Apple in the market has tumbling as of late, with a fall of 35% to US$468.22. Einhorn continued to criticize the company’s ‘cash problem’ and adding, “It has the sort of a mentality of a depression. In other words, people who have gone through traumas and Apple has gone through a couple of traumas in its history, they sometimes feel they can never have enough cash.”

In another interview, this time with Reuters, Einhorn said, “When I discussed this with Tim Cook and actually, the conversation has been going on for the last couple of weeks, he said that he wasn’t familiar with my previous conversations with Peter Oppenheimer and whoever Peter Oppenheimer’s advisers were. I was surprised by that.”

For its part, Apple has called Einhorn’s lawsuit over its shareholder proposal was ‘misguided’. In an official communiqué, Apple said, “Contrary to Greenlight’s statements, adoption of Proposal #2 would not prevent the issuance of preferred stock. Currently, Apple’s Article of Incorporation provide for the issuance of a ‘blank check’ preferred stock by the Board of Directors without shareholder approval. If Proposal #2 is adopted, our shareholders would have the right to approve the issuance of preferred stock.”

Samsung Goes After iPhone5

The chief competitor of Apple in the smartphone market, the Korean technology giant Samsung has again taken legal action, this time on the iPhone 5. The new court papers filed alleged that the recently launched device had infringed on eight of the patents of Samsung.

The move came through an amendment to its original lawsuit filed in April against Apple, adding the iPhone 5 to the list of devices that had been alleged to infringe on the patents of Samsung. Other devices included in the suit are the iPhone 4, the iPhone 4S, iPad 2 and “the new iPad.”

The main issue in the patent infringement suit is the alleged use of Samsung’s LTE or “Long Term Evolution” connectivity for the next generation smartphone. The new iPhone 5, after scrutiny, confirmed that it had features similar and/or identical to Samsung’s speedy fourth generation wireless networking system. According to Samsung, there were eight specific patents at issue, amongst them are six utility patents and two standard essential patents which are separate and distinct from its LTE patent portfolio.

In a statement, Samsung said “We have little choice but to take the steps necessary to protect our innovations and intellectual property rights.” The Korean giant also included the iPhone 5 as a federal judge had issued an order that dissolved the three month ban on the sale of Samsung’s Galaxy Tab 10.1 in the United States. The order had a stipulation that the dissolution order may be reversed once Samsung has been found innocent on charges of patent infringement on the Apple tablet design, which the latter had patented and was upheld last month in another case between the two consumer electronics firms.

The Web is Not Making Users Mad

The latest edition of Newsweek provides a less-than-accurate insight about the claim that the Internet is causing ‘extreme forms of mental illnesses’ in its user population. The lack of scientific research and the sweeping generalizations clearly serve not to help but actually further muddle the current issues involving the Internet.

One of the generalizations in the article states:

“The current incarnation of the Internet – portable, social, accelerated and all pervasive – may be making us not just dumber or lonelier but more depressed or anxious, prone to obsessive-compulsive and attention-deficit disorders, even outright psychotic.”

This kind of stereotyping and hyperbolic language does not suit a respected magazine such as Newsweek. Psychosis is a condition determined by the World Health Organization as the third most disabling health condition. These include schizophrenia and bipolar disorder, conditions that can disable an individual even in their best health. To characterize the Internet as contributory to psychosis of this magnitude is without basis but surely is a kind of science fiction that sells magazines.

The following are also similar discussions found in the article which misleads not only the science seeking to cure psychosis and the effect of the Internet on an individual.

“But the research is now making it clear that the Internet is not ‘just’ another delivery system. It is creating a whole new mental environment, a digital state of nature where the human mind becomes a spinning instrument panel and few people leave unscathed.”

“’This is an issue as important and unprecedented as climate change,’ says Susan Greenfield, pharmacology professor at Oxford…”

There are also shared conclusions based on dodgy scientific research, such as:

“A 1998 Carnegie Mellon study found that Web use over a two-year period was linked to blue moods, loneliness and the loss of real world friends. But the subjects all lived in Pittsburgh, critics sneered.”

The writer made this conclusion without even mentioning that the same research team, after a three year follow up study on 208 of these respondents found that the identified effects in the 1998 study dissipated in the long run. Clearly there is an angle to the story, because the simple naked search on Google would yield the same study identified in the article followed closely by the follow up study. Without reading or brushing up on the other knowledge about the topic, one may lead to the conclusions that the Newsweek article writer stated.

There are also neuroscience misconceptions that create more confusion. According to the article, the Internet ‘rewrites the brain’ – a concept that clearly is unclear as the brain continues to re wire itself until one dies. The effect of the changes is the release of dopamine in the brain.

There are many other criticisms on the studies the article used but no appraisal as to their process and methodology. There was no assessment as to methodologies regarding internet addiction studies or the wide spectrum of prevalence of psychosis ranges between 1% and 66% of online users creates more issues that impact the public attitude and perception about mental illness. The only conclusion this article can lead its reader would be the Internet can lead to mental illness and psychosis when one relies in the perception of individuals that this is the effect of the Internet on the individual in the long run.

Control of the Internet to be Granted to United Nations?

This December 2012, the United Nations will meet in Dubai UAE concerning matters that can carry long term effects for all users of the Internet. The question in mind is, should the United Nations be granted more control over the Internet?

This meeting is precipitated with members of the US government together with private sector firms meeting with lawmakers to find ways to shoot down this proposal, as it would be considered as a serious breach of existing norms.

The current set-up is regulated through a multi-stakeholder system, wherein many private and public organizations have specific roles to keep the Internet online and
under control. Modifying, altering or even changing the status quo, according to these stakeholders, can result in grave consequences to the operation and structure of the
Internet.

According to Robert McDowell, FCC Commissioner, “A top-down centralized international regulatory overlay is antithetical to the architecture of the Net, which is a global network of networks without borders. No government, let alone an intergovernmental body, can make engineering and economic decisions in lightning-fast Internet time.”

Countries that support the plan have argued that organizations currently overseeing the Internet, such as the Internet Corporation for Assigned Names and Numbers or ICANN, are too closely related to the United States. Should this feature be moved to the United Nations, then this process, such as naming conventions, would become more democratic in nature and control.

Another major issue highlighted by Internet privacy experts would be the increased role of censorship heavy nations such as China on Internet regulation would effectively
have consequences for free speech on the Internet. One such expert, Larry Seltzer for Byte Magazine said, “Maybe it bothers you that the US controls these major keys to
the Internet, but I think it’s a good thing. Without control of these critical facilities, no international group of dictators can really exert much control outside of their own
boundaries.”