New York
CNN Business
 — 

Fall is the season for new gadgets. Apple recently announced its latest iPhones, Amazon showed off new smart speakers and even an Alexa-activated microwave, and Google is hosting its own product launch event next week.

But Tuesday is all about Microsoft, which unveiled a slew of devices ahead of the holiday shopping season. Its lineup includes a new version of its desktop computer, called the Surface Studio 2, and its first pair of smart headphones. It also announced the Surface Pro 6 and Surface Laptop 2.

The first Surface desktop, an iMac competitor focused on creativity, was introduced in October 2016. Its successor, the Surface Studio 2, offers improved graphics performance and Microsoft says it’s the fastest Surface device ever made. It has a 28-inch display and USB-C support. It’s available for pre-order on Tuesday starting at $3,499.

The Surface Headphones ($349) offer adjustable noise cancellation and automatic pause and play, which will stop the video you’re viewing when you take them off. Microsoft’s voice assistant Cortana is built in and can read your emails aloud or start a conference call. Surface Headphones will be available later this year.

Meanwhile, Microsoft says the Surface Pro 6 is 67% faster than its predecessor but with the same battery life (up to 13.5 hours). Microsoft also says it’s easy to toggle between laptop, studio and tablet mode. It comes in black and platinum and starts at $899.

The original Surface Pro in 2012 was marketed as a tablet. It looked kind of like an iPad, but with the addition of a keyboard cover. Microsoft (MSFT) has since shifted its pitch to a laptop with a touchscreen. This 2-in-1 format is aimed at people like doctors, pilots and students who need tablets for note-taking or reading, but a laptop for full functionality.

The Surface Laptop 2 (starting at $999) comes with faster and quieter typing and up to 14.5 hours of battery life, according to Microsoft. It’s 85% faster than its predecessor, and the Surface Laptop 2 comes in a new color (black), as well as the existing options burgundy, platinum and blue.

“More and more, devices are permeating your whole life. We build these things to appeal for your work and personal life,” Yusuf Mehdi, Microsoft’s corporate VP of modern life and devices, told CNN.

The company also unveiled its next-generation Windows software – called Windows 10 October 2018 Update – which has a focus on productivity. For example, the Your Phone App brings texts and photos from your Android phone to your PC. (Apple allows such an integration for its iMessage service.) You can also integrate a To-Do list with Outlook.com, and drag an item into an open slot on your calendar to block time to finish it.

Microsoft’s main audience for these new devices is enterprise business professionals, according to Andrew Hewitt, an analyst at research firm Forrester. Ahead of Tuesday’s event, he noted Microsoft has heavily invested in productivity elements including Timeline, which lets you go back to where you left off on files and websites, and Focus Assistant, a feature that limits distractions like notifications.

“There is a sense that Microsoft is trying to compete with Apple on the creative front, with new capabilities for picture and movie editing,” Hewitt said. “But the other features are much more aligned with Microsoft’s mission to empower employees to be productive.”

Tesla’s stock tumbled Friday morning after the SEC sued Elon Musk for misleading investors.

Musk tweeted on August 7 that he had secured funding to take Tesla private at $420 a share. Typically, stocks match takeover prices that a company publicizes. Investors assume the deal will be completed and the company will eventually be worth the price at which the company says it will be sold.

However, skeptical investors never believed Musk, and the stock never approached anything close to $420 a share. It rose as high as $387.46 on August 7 and tumbled since then.

Their skepticism was for good reason: Musk had never secured the funding, the SEC alleges. He abandoned the plan to go private three weeks after he first tweeted about it.

The stock fell as low as $265 after the bell Thursday, 14% below Tesla’s closing price for the day. Including the off-hours plunge, Tesla’s stock has plummeted more than 29% since Musk’s infamous tweet.

Tesla’s (TSLA) falling stock price could come back to haunt the company. Tesla is burning through cash to build expensive plants and cars, but it badly needs that money to pay about $1 billion in debt by February 2019. Most of that would convert to stock if Tesla’s price holds above $360 — but that seems unlikely.

If Tesla needs to pay back its debt with cash — and if the company lacks the cash to pay it — Tesla could raise the money by issuing more debt or stock. But that could further deflate its stock price, depressing the amount of capital the company has to spend on new infrastructure to build cars.

Musk has denied that the company faces a cash crunch. He says increased Model 3 sales will generate enough cash to finally make Tesla profitable in the second half of 2018.

The SEC’s lawsuit could cause other problems for Tesla.

The agency has asked a federal judge to prevent Musk from serving as an officer or a director of a public company, among other penalties.

That’s a serious concern for Tesla, which Musk built from scratch into a multibillion-dollar company. He’s the carmaker’s chairman and CEO.

CNNMoney (New York) First published September 27, 2018: 5:52 PM ET

CNN
 — 

A rare spot of happy news: Apple is finally getting a llama emoji. And a raccoon, bagel, frisbee and mosquito emoji, too.

The company said it will likely add 70 new emoji for iPhone and iPad users later this month. Beta testers and developers who update to iOS 12.1 will see the new emoji starting Tuesday.

Beyond the new cute (and bloodsucking) animals, iOS 12.1 users will now be able to send a bagel, salt, luggage, compass, hiking boot, softball, frisbee, and an Asian-inspired Red Gift Envelope to friends and family.

On World Emoji Day in July, Apple previewed new options for bald and redheaded emoji characters, as well a lobster, cupcake and superheroes. These emoji will also roll out to iOS 12.1.

The Unicode Consortium, the nonprofit organization that manages the world’s emoji standards, unveiled its latest list in February. Each company that uses emoji in their products puts their own spin on the tiny cartoons and picks which options from the master list to include.

The interpretations can lead to controversy, such as Google’s misplacement of foam on its beer emoji, and the tragic jumbling of ingredients on its hamburger emoji. Both have since been corrected.

Bitcoin’s big stock market debut is coming at a bad time.

Three of the world’s top makers of cryptocurrency technology are planning to sell shares, giving investors a new way to bet on digital currencies. They’re reportedly hoping to raise billions of dollars.

Unlike the dollar or the euro, which are issued by central banks, cryptocurrencies are based on computer code. Bitcoin, for example, is created and traded through the “mining” process in which computer algorithms solve increasingly complex math problems.

Bitmain, Canaan and Ebang, which are all based in China, make money by selling the high-tech parts and systems that power this mining. Together, they dominate the business.

But the three companies operate in a young, unpredictable industry and are planning their IPOs in Hong Kong in brutal market conditions. The price of bitcoin, which soared to nearly $20,000 in December, has since plunged by about two-thirds. Other cryptocurrencies like ethereum have plummeted, too.

“If the market price of cryptocurrencies suddenly falls … demand for our mining hardware and cryptocurrency mining services will also drop rapidly,” Bitmain warned potential investors this week.

On top of that, Hong Kong’s stock market, where the companies plan to list, entered a bear market this month, having plunged more than 20% from its previous peak because of concerns about China’s economic slowdown and trade war with the United States.

The mining technology companies haven’t said when exactly they plan to go public or how much they’re seeking to raise. Bitmain and Canaan declined interview requests, while Ebang didn’t respond to a request.

“These firms might be looking to cash out before the market takes an even steeper nosedive,” said Benjamin Quinlan, founder of Hong Kong-based financial services consulting firm Quinlan & Associates.

He points out that cryptocurrencies are slowly gaining more acceptance among mainstream investors despite recent setbacks, and that the three mining companies’ revenues are still growing. But the industry faces major challenges.

A key one is how governments go about regulating digital currencies. Last year, China banned most activities involving bitcoin. The country is still thought to be home to a significant number of cryptocurrency mining operations, but authorities have been trying to push them out.

Cryptocurrency miners need huge amounts of electricity to run their rooms full of computing equipment around the clock. Some public utilities in the United States are already introducing higher tariffs specifically for miners.

“Increasing the cost of bitcoin mining will decrease the demand for mining equipment, hindering the performance of these companies,” Quinlan said.

Mining cryptocurrencies is already less lucrative than it used to be.

Bitcoin mining activity has exploded over the past year, boosting demand for the technology. But that means the profits from mining are spread more thinly across a greater number of users. That could hit future demand for mining equipment.

Bitmain, Canaan and Ebang were all profitable in their most recent financial year, according to documents setting out their intention to go public.

But staying in the black will be a “massive challenge,” said Leilei Wang, a Shanghai-based consultant at research firm Kapronasia.

The companies are aware of the risks they face and are trying to adapt. For example, they say they are increasing investment in more advanced chip technology that can be used in areas like artificial intelligence, cybersecurity and connected devices.

Although the Chinese government has a tough stance on cryptocurrencies in general, it’s eager to bulk up the country’s technological prowess in areas like computer chips. Chinese companies are still largely reliant on foreign chip technology, especially from the United States.

“Whether [the cryptocurrency companies] are able to successfully pivot remains to be seen,” Wang said.

For now, their fate is tied to that of the wider industry.

“Cryptocurrencies will likely fall out of favor” without greater mainstream adoption in the near future, Quinlan predicted. The mining equipment makers “will find it extremely difficult to survive when the cryptocurrency market, as a whole, withers away,” he said.

But bitcoin bulls are still hopeful that the currency can stage a recovery as financial exchanges and big companies start to take it more seriously.

“As you see more adoption of just people being comfortable with it, it feels like it’s going to go up,” Mike Novogratz, CEO of cryptocurrency investment firm Galaxy Digital, told CNN this week.

CNNMoney (Hong Kong) First published September 27, 2018: 6:56 AM ET

Elon Musk agreed Saturday to step down as chairman of Tesla and pay a $20 million fine in a deal to settle charges brought this week by the Securities and Exchange Commission.

Under the settlement, which requires court approval, Musk will be allowed to stay as CEO but must leave his role as chairman of the board within 45 days. He cannot seek reelection for three years, according to court filings.

He accepted the deal with the SEC “without admitting or denying the allegations of the complaint,” according to a court document.

Separately, Tesla agreed Saturday to pay $20 million to settle claims it failed to adequately police Musk’s tweet.

“The $40 million in penalties will be distributed to harmed investors under a court-approved process,” the SEC said in a press release.

The company also agreed to appoint two new independent directors to its board and establish a board committee to oversee Musk’s communications.

Tesla declined to comment. A spokesperson confirmed Musk will be permitted to remain a member of the board.

The announcement from the SEC comes two days after the agency filed a lawsuit against Musk, claiming he misled investors. The suit centers on tweets Musk sent on August 7 in which he said he had secured funding to take Tesla private at $420 a share, causing the company’s stock to soar. He had not secured the funding, the SEC said.

The lawsuit sought to ban Musk from serving as an officer or director of any publicly traded company.

Musk called the SEC’s suit “unjustified.”

“I have always taken action in the best interests of truth, transparency and investors,” he said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

CNBC, citing unnamed sources, reported that the agency filed the suit on Thursday after Musk refused an earlier settlement offer. Under that deal, Musk would have had to pay a “nominal fine” and leave his role as chairman for two years. He chose not to accept the terms because “because he felt that by settling he would not be truthful to himself,” according to the outlet.

A representative for Musk did not immediately reply to CNN’s request for comment Saturday.

Jay Dubow, a partner at Pepper Hamilton and a veteran of the SEC’s enforcement division, said it was “unusual” that the SEC agreed to let Musk stay on as chief executive but exit the chairman role.

It’s surprising considering “the conduct at issue, if [the SEC] really thought it was egregious,” Dubow said. “The CEO is certainly more involved than the chairman in day-to-day operations.”

He suggested the SEC may have determined that removing Musk as CEO would cause more harm to Tesla’s share price, and thus harm investors.

Barclays analyst Brian Johnson estimated in a recent note that Tesla’s stock has a $130 “Musk premium,” which could disappear if he leaves.

Still unclear is whether or not the Department of Justice will file criminal charges against Musk.

Tesla confirmed earlier this month that the DOJ was investigating whether Musk’s comments about taking his company private constituted criminal activity.

Dubow, the former SEC official, said he suspects nothing will come of it.

“My guess is that it’s still possible the DOJ will pursue something, but…it’s more likely than not that the DOJ chooses not to pursue this,” he said.

The settlement has likely assuaged the SEC, mitigating the DOJ’s incentive to act.

CNNMoney (New York) First published September 29, 2018: 5:46 PM ET

An attack on Facebook exposed information on nearly 50 million of the social network’s users, the company announced Friday — and gave the attackers access to those users’ accounts with other sites and apps that they logged into using Facebook.

The attackers exploited a bug in a feature called “View as” that lets users see their Facebook page the way someone else would. The attackers were able to take over the accounts and use them exactly as if they were the account holders. That would include posting or viewing information shared by any of that account’s friends. Facebook says no credit card information stored with the company was accessed.

Facebook (FB) said it does not know who the attackers were or where they were based. It also said it has already fixed the issue and informed the FBI and other law enforcement, as well as lawmakers and regulators. It has also informed the Irish Data Protection Commission about the breach, a step required by Europe’s GDPR regulations. The commission said it received the notification, but expressed concern with its timing and lack of detail.

More than 90 million users were forcibly logged out of their accounts by Facebook and had to log back in on Friday for security reasons. The accounts of Facebook CEO Mark Zuckerberg and COO Sheryl Sandberg were among the 90 million accounts forcibly logged out by Facebook.

Users do not need to take any additional security precautions or reset their passwords, said Facebook. All logged out users will receive a notification about the issue from Facebook, but it won’t tell them if they were in the group of 50 million impacted or 40 million included as a precaution.

The attackers would have also been able to access third-party services or sites accessed with a Facebook login, Facebook’s Guy Rosen said in a follow-up call with reporters on Friday, though it is not yet clear if they did so. It could have also impacted Instagram accounts that use the same login as Facebook, but Rosen said WhatsApp, which is also owned by Facebook, was not impacted. It’s the largest hack ever for Facebook, a spokesperson said.

The company says it does not know if the affected accounts were misused in any way or if any user information was actually accessed. It has not determined if any specific locations or accounts were targeted. It has turned off the “View As” feature that the attackers exploited while it investigates.

“From experience, breach notifications like this always tend to get worse as time goes on and information from investigations is shared with the public,” said Jessy Irwin, the head of security at cybersecurity firm Tendermint. “There’s not much that is public about how those [linked] accounts are impacted, but this seems to go much deeper into Facebook’s entire ecosystem than Cambridge Analytica did.”

Facebook says the vulnerability is the result of three distinct bugs, and originally appeared in July 2017 when the company made a change to a video uploading feature. The company first detected some unusual activity — a spike in user access to the site — on September 16, 2018. It launched an investigation and uncovered this attack on Tuesday, September 25. On Wednesday it notified law enforcement and on Thursday evening it fixed the vulnerability and began resetting login tokens, according to Facebook.

The attackers stole Facebook “access tokens” which keep a person logged into their Facebook account over long periods of time so they don’t have to keep signing in. Facebook reset all 50 million tokens, as well as tokens for an additional 40 million people who had used the “View as” feature in the past year as a “precautionary step.” The reset also unlinked accounts like Instagram and Oculus, both of which are owned by Facebook, which users will need to relink.

“The reality here is we face constant attacks from people who want to take over accounts or steal information…. we need to do more to prevent this from happening in the first place,” CEO Mark Zuckerberg said during a call with reporters shortly after the announcement.

The announcement is the latest issue for the company, which has struggled with security breaches, privacy issues and misinformation in recent years. Facebook says it is investing heavily in security going forward, and increasing the number of people working on security from 10,000 to 20,000.

“Security is an arms race and we’re continuing to improve our defenses,” said Zuckerberg.

— CNN’s Donie O’Sullivan, Laurie Segall and Sara O’Brien contributed reporting.

CNNMoney (San Francisco) First published September 28, 2018: 12:58 PM ET

Can Tesla navigate through its many controversies and still meet its sales targets? We’re about to find out.

Early next week Tesla will report how many cars it made in the third quarter and how many it was actually able to deliver to customers.

Three months ago, investors and Tesla fans waited to see if the company could hit its long-promised target of building 5,000 Model 3 cars in a week. It just made that goal, building 5,031 in the last week of June.

Experts say the report on third quarter production is much more important to the company and its future. It’ll show whether the production level at the end of the second quarter was a blip or sustainable.

“The idea of having sustained production is so much more important than a production sprint during a week,” said Jeremy Acevedo manager of industry analysis at Edmunds. “The difference between 5,000 a week and 20,000 a month is huge.”

And even more importantly it’ll show whether Tesla (TSLA) is on track to meet CEO Elon Musk’s promises that the company would be profitable in the third and fourth quarters. The company had only two marginally profitable quarters in its history as a public company, and posted its largest loss ever in the second quarter as it rushed to ramp up production.

The losses, and more than $1 billion in debt that will be come due at Tesla by next spring, are why some experts are raising the possibility of a cash crunch at Tesla that could force it to sell more shares to raise cash. That could be more difficult as the stock loses value and Musk faces a federal lawsuit for misleading investors.

Musk has insisted that the company will not need to raise cash because it will generate more revenue with increased production. But he also has admitted that the company is having trouble delivering all the cars it is building.

“Sorry, we’ve gone from production hell to delivery logistics hell,” Musk tweeted two weeks ago, though he promised, “We’re making rapid progress. Should be solved shortly.”

Needless to say, its customers who are waiting for their Teslas aren’t paying for their long-anticipated cars until they actually get delivered. So the logistics problems could be its own red flag for the company revenue.

“The delivery scramble and chaos they’re going through right now, it’s disconcerting,” said Rebecca Lindland, analyst with Cox Automotive.

She said that while some fans of Tesla might want to focus on whatever production number is reported, it’s important to look at both production and deliveries.

Tesla’s most consequential report in its history has been overshadowed with controversy.

In August Musk announced via tweet that he was planning to take the company private at a price of $420 a share, and that he had “funding secured” to do so. Although he had some investors expressing interest in financing such a deal, there was nothing secured, according to the SEC. He dropped plans to go private by the end of the month. But by then he had already been sued by shareholders who charged that the tweet was a deceptive effort to manipulate the stock price. And Thursday the Securities and Exchange Commission filed a suit against Musk, seeking to have him removed as an officer at Tesla or any other public company.

Add in stories about Musk not getting any sleep and smoking pot during a podcast, and his other company SpaceX selling a trip to the moon for a billionaire tourist on his other company SpaceX, and its easy to forget that a good measure of success is actually how many cars you can build and sell.

CNNMoney (New York) First published September 28, 2018: 3:47 PM ET

New York
CNN Business
 — 

Reddit cofounder Alexis Ohanian’s venture capital firm has raised an additional $225 million to invest in early-stage startups.

It is the fourth and largest fund raised by Initialized Capital, the San Francisco-based venture capital firm founded by Ohanian and Garry Tan.

The new fund, announced on Tuesday, comes as Ohanian spends more time with the firm. About nine months ago, he stepped away from his day-to-day role at Reddit, the popular discussion board platform he co-founded in 2005. When Initialized Capital launched in 2012, Ohanian and Tan were also partners at Y Combinator, a Silicon Valley accelerator fund known for helping companies like Airbnb and Dropbox get off the ground.

Tan and Ohanian credit their past experiences as engineers, operators and investors at Y Combinator for their success as investors at their own firm.

“We know that investors sitting around a table are not going to be able to come up with the future because we aren’t the ones actively building it, but we’ve seen enough and built enough in the way of software and scalable businesses that our ‘Spidey’ senses start tingling when we get on the right track with a founder,” Ohanian told CNN Tuesday.

Together, Ohanian and Tan have invested in several startups that are now “unicorns” -— the term for privately-held startups valued at $1 billion or more. That includes crypto marketplace Coinbase and grocery delivery startup Instacart, among others.

Initialized Capital will remained focused primarily on funding early-stage startups but will cut larger checks, such as $1 million, compared to $50,000, the size of some of its first investments. That’s a sign of the times — valuations and deal sizes have grown in recent years. The average deal size in the second quarter of this year was $18 million, the highest this decade, according to PitchBook.

The firm now has a team of eight partners who help portfolio companies with everything from product development to legal, design and marketing.

Ohanian and Tan say their approach to funding startups is “thesis agnostic,” but they tend to look for businesses with “software at their core.”

They’ve invested in startups like Voyage — a self-driving car company that operates its vehicles in two retirement communities — as well Ro, a healthcare company whose first brand, Roman, is helping diagnose and treat those with erectile dysfunction.

“We still feel like there’s a lot of work left to be done when it comes to software solving big problems,” said Ohanian, who also sits on the board of Reddit and Ro. “This is our sweet spot.”

New York
CNN Business
 — 

Honda and General Motors are teaming up to create a new generation of fully autonomous vehicles. Honda will invest $2 billion over 12 years into GM’s autonomous vehicle subsidiary, Cruise.

GM and Cruise have been building and developing self-driving versions of GM’s Chevrolet Bolt EV electric car with plans to deploy a fleet of them for public use next year. With Honda’s engineering and financial assistance, Cruise will begin developing a new vehicle that is not based on any existing car, the companies said. It will represent the next step in autonomous driving, one in which controls for human operation are entirely absent.

“This is a purpose-built vehicle that will be the first vehicle produced at scale that is freed from the constraints of vehicle design and having a driver at the wheel,” said GM president Donald Amman.

Amman gave no precise timing on when Cruise Automation’s self-driving vehicles will be shuttling members of the general public, either in the Bolt EV or the new car. The cars will be deployed only when it has been decided they are safe enough, Amman enough.

The Japanese tech-focused investment bank Softbank recently invested $2.25 billion in Cruise, and Honda took a $750 million equity stake. Together, the Honda and Softbank investments give Cruise a total value of $14.6 billion.

“Autonomous vehicles are not simply a Silicon Valley-based dream,” said Zo Rahim, Research Manager at the automotive media company Cox Automotive. “Current auto manufacturers are primed to dictate the direction and growth of the future of mass mobility.”

GM’s stock rose 2% on Wednesday.

Honda and GM have been working together on electric car battery technology and hydrogen fuel cells, which extract energy electricity from hydrogen gas. The new partnership with Cruise Automation grew out of the two companies’ previous work.

GM (GM) boasts that, with the self-driving Bolt EV, it is currently the only company building autonomous vehicles on a production line. The companies would not say where or when the new vehicle will be produced.

Analysts are telling Tesla investors to brace themselves.

“If you buy or own Tesla stock, be prepared for a wild ride,” Autotrader analyst Michelle Krebs told CNNMoney.

The Securities and Exchange Commission sued Elon Musk on Thursday for making “false and misleading” statements to investors in an August 7 tweet that said he had secured funding to take Tesla (TSLA) private at $420 a share. The SEC alleges he did not have the funding secured.

Tesla’s stock fell 12% to $270 a share on Friday.

The company’s future is in the “board’s court now and it remains to be seen what will happen next,” wrote Cowen analyst Jeff Osborne in a note. The firm slashed Tesla’s price target to $200 per share.

Tesla needs to raise $2 billion in the fourth quarter to avoid bankruptcy in 2019, Osbourne estimates. That will be more of a challenge with Musk’s future in doubt, Osbourne said.

The firm chided Tesla as a company “that has always over promised and under delivered.”

Barclays analyst Brian Johnson said that Tesla’s stock has a $130 “Musk premium,” which could disappear if he leaves. If a judge forces Musk to step aside, investors will “focus back on the value of Tesla as a niche automaker, rather than a founder-led likely disrupter of multiple industries,” Johnson wrote in a note aptly titled “Lawsuit Secured” to clients.

Citigroup downgraded Tesla’s stock to a “sell” rating. It slashed Tesla’s price target to $225.

CNNMoney (New York) First published September 28, 2018: 9:48 AM ET