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Tag: Breaking News: Technology

  • Cloud stocks just wrapped up their worst week since January, led by plunge in Five9 and SentinelOne

    Cloud stocks just wrapped up their worst week since January, led by plunge in Five9 and SentinelOne

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    Rowan Trollope, CEO, Five9

    Scott Mlyn | CNBC

    Cloud stocks plummeted 11% this week, the steepest drop since January, as executive departures at Five9 and Zscaler and investors’ continued rotation out of risk combined to send the group to its lowest level since March 2020.

    The WisdomTree Cloud Computing Fund, a basket of 75 cloud software stocks, has lost 53% of its value for the year, more than double the drop in the S&P 500. After soaring in 2020 and 2021, when Wall Street piled into growth at the expense of profit, the sector has fallen out of favor in 2022 on concerns over inflation and rising interest rates.

    Five9 shares suffered the biggest decline in the index, falling 29% for the week, after CEO Rowan Trollope said he was leaving to run a pre-IPO company. While the provider of call center software also pre-announced third-quarter revenue that indicated results would be better than expected, the numbers weren’t good enough to offset the concern caused by a transition in the C-suite.

    Trollope, who’s been CEO since 2018, is being succeeded by Mike Burkland, who resigned as CEO in 2017 after he was diagnosed with cancer. 

    “Interest level in the name remains high, but confidence is shaken following both announcements and the lack of clarification from Five9 until the earnings call next month,” wrote analysts from Piper Sandler in a report on Oct. 13. The firm still has a buy rating on the stock.

    Five9 wasn’t the only company in the group to lose a top executive. Security software vendor Zscaler announced the resignation of its president, Amit Sinha, who is also taking a CEO position at a pre-IPO company. The stock plunged 21% for the week.

    “While it’s never (or rarely) thought of as good news for a C-level executive to leave a company, we believe this change will not impact Zscaler’s near- or long-term prospects, and it appears to be a unique opportunity for Mr. Sinha,” wrote analysts from Guggenheim who recommend buying the stock.

    It was a choppy week for the markets broadly, capped off by a selloff on Friday. A consumer survey from the University of Michigan showed inflation expectations were increasing, a sentiment that the Federal Reserve is likely watching closely. The Nasdaq led declines as growth companies are most sensitive to interest rate hikes.

    The WisdomTree index fell all five days this week, and had its worst day on Friday, dropping 3.6%. SentinelOne, which sells cybersecurity software, dropped 22%, even with no particular news driving the decline. GitLab, a code repository for developers, slid 21%. SentinelOne and GitLab both went public last year in high-profile IPOs. They’ve each lost more than half their value this year.

    WATCH: The efficiencies of the cloud pose a long-term threat to hardware

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  • Microsoft’s GitHub is relying more on Azure, says cloud chief

    Microsoft’s GitHub is relying more on Azure, says cloud chief

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    Microsoft has been making its GitHub subsidiary more dependent on the company’s own Azure public cloud.

    That lines up with Microsoft’s desire to increase the use of Azure, whose revenue was growing 40% in the second quarter, faster than any other major product category the company discloses every three months.

    At the same time, it must be careful not to break commitments it made at the time of the $7.5 billion GitHub acquisition in 2018. Otherwise, some developers wary of Microsoft’s past behavior might not want to use GitHub to store their software code.

    In the late 1990s, the U.S. Department of Justice argued that Microsoft had illegally required device makers to commit to including the Internet Explorer browser on every PC they shipped with the Windows 95 operating system. In the settlement of the landmark antitrust case, Microsoft agreed to a ban on pacts mandating exclusive support of its software, among other changes.

    When GitHub was a standalone company, software developers saw it as a neutral ground where they could house their software projects and then run the code on the market-leading Amazon Web Services cloud or any other computing environment. Then Microsoft announced its plan to buy GitHub. Some developers objected, and over 1,900 people signed a petition to block the deal.

    “Microsoft likely acquired GitHub so it could more closely integrate it with Microsoft Visual Studio Team Services (VSTS) and ultimately help drive compute usage for Azure,” Sid Sijbrandij, co-founder and CEO of GitHub competitor GitLab, was quoted as saying in a company blog post.

    On the day Microsoft announced the GitHub deal, Microsoft published a blog post from its CEO, Satya Nadella, that communicated Microsoft’s intent.

    “Going forward, GitHub will remain an open platform, which any developer can plug into and extend,” Nadella wrote. “Developers will continue to be able to use the programming languages, tools and operating systems of their choice for their projects — and will still be able to deploy their code on any cloud and any device.”

    The company would also speed up the ability for developers at large companies to use Microsoft’s cloud infrastructure, Nadella wrote.

    Some developers worried that Microsoft would adjust GitHub so that running code on Azure would be the easiest approach.

    But Microsoft has employed more subtle tactics.

    Instead of pushing developers to run their code on Azure, GitHub has simply introduced new products and features, many of which are built on Azure. So when developers use GitHub, Azure is increasingly the backbone.

    For instance, GitHub Copilot, a tool that helps developers complete their coding projects line by line, uses Azure, said Scott Guthrie, Microsoft’s executive vice president for cloud and enterprise, in an interview with CNBC. The GitHub Actions service for building and deploying code and the Codespaces cloud-based development environment operate in Azure, too, Guthrie said.

    “GitHub, historically, I could say, has run in their own data centers, not actually on a public cloud, and a lot of the new features of GitHub are using our public cloud,” Guthrie said.

    That means the GitHub acquisition can increase Azure usage — even if customers don’t realize it — and Microsoft can say that GitHub continues to allow people to run their code on any server.

    Under Nadella, Microsoft has transformed other companies it has bought into Azure users. In 2019 LinkedIn announced plans to move the business social network to Azure, and in 2020 Microsoft said Mojang Studios, publisher of the popular Minecraft video game, would stop using Amazon’s AWS.

    “There is a lot of great stuff we’re doing, but at the same time, we’re being super careful, obviously, because you know, GitHub has a gestalt of its own, and so we’re making sure — and I think we’ve done a really good job of that — sort of being able to integrate all of those features in a very native way inside of GitHub,” Guthrie said.

    In September Microsoft informed investors that its closely watched Azure and Other Cloud Services revenue growth number each quarter would expand to include “additional GitHub cloud revenue now delivered via our datacenter infrastructure.” Until now that revenue has fallen under the company’s Server Products category.

    WATCH: Investors can ‘hide out’ in shares of Microsoft, says Laffer Tengler Investments CEO

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  • Biden signs executive order with new framework to protect data transfers between the U.S. and EU

    Biden signs executive order with new framework to protect data transfers between the U.S. and EU

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    President Joe Biden signed an executive order to implement a new framework to protect the privacy of personal data shared between the U.S. and Europe, the White House announced Friday.

    The new framework fills a significant gap in data protections across the Atlantic since a European court undid a previous version in 2020. The court found the U.S. had too great an ability to surveil European data transferred through the earlier system.

    The court case, known as Schrems II, “created enormous uncertainty about the ability of companies to transfer personal data from the European Union to the United States in a manner consistent with EU law,” then-Deputy Assistant Commerce Secretary James Sullivan wrote in a public letter shortly after the decision. The outcome made it so U.S. companies would need to use different “EU-approved data transfer mechanisms” on an ad hoc basis, creating more complexity for businesses, Sullivan wrote.

    The so-called Privacy Shield 2.0 seeks to address European concerns about possible surveillance by U.S. intelligence agencies. In March, after the U.S. and EU agreed in principle to the new framework, the White House said in a fact sheet that the U.S. “committed to implement new safeguards to ensure that signals intelligence activities are necessary and proportionate in the pursuit of defined national security objectives.”

    The new framework will allow individuals in the EU to seek redress through an independent Data Protection Review Court made up of members outside of the U.S. government. That body “would have full authority to adjudicate claims and direct remedial measures as needed,” according to the March fact sheet.

    Before a matter reaches the DPRC, the civil liberties protection officer in the Office of the Director of National Intelligence will also conduct an initial investigation of complaints. Its decisions are also binding, subject to the independent body’s assessment.

    The executive order directs the U.S. intelligence community to update policies and procedures to fit the new privacy protections in the framework. It also instructs the Privacy and Civil Liberties Oversight Board, an independent agency, to examine those updates and conduct an annual review of whether the intelligence community has fully adhered to binding redress decisions.

    “The EU-U.S. Data Privacy Framework includes robust commitment to strengthen the privacy and civil liberties safeguards for signals intelligence, which will ensure the privacy of EU personal data,” Commerce Secretary Gina Raimondo told reporters Thursday.

    Raimondo said she will transfer a series of documents and letters from relevant U.S. government agencies outlining the operation and enforcement of the framework to her EU counterpart, Commissioner Didier Reynders.

    The EU will then conduct an “adequacy determination” of the measures, the White House said. It will assess the sufficiency of the data protection measures in order to restore the data transfer mechanism.

    American tech companies and industry groups applauded the measure, with Meta‘s president of global affairs, Nick Clegg, writing on Twitter, “We welcome this update to US law which will help to preserve the open internet and keep families, businesses and communities connected, wherever they are in the world.”

    Linda Moore, president and CEO of industry group TechNet, said in a statement, “We applaud the Biden Administration for taking affirmative steps to ensure the efficiency and effectiveness of American and European cross-border data flows and will continue to work with the Administration and members of Congress from both parties to pass a federal privacy bill.”

    But some consumer and data privacy watchdogs critiqued the extent of the data protections.

    BEUC, a European consumer group, said in a release that the framework “is likely still insufficient to protect Europeans’ privacy and personal data when it crosses the Atlantic.” The group added that “there are no substantial improvements to address issues related to the commercial use of personal data, an area where the previous agreement, the EU-US Privacy Shield, fell short of GDPR requirements,” referring to Europe’s General Data Protection Regulation.

    Ashley Gorski, senior staff attorney at the ACLU National Security Project, said in a statement that the order “does not go far enough. It fails to adequately protect the privacy of Americans and Europeans, and it fails to ensure that people whose privacy is violated will have their claims resolved by a wholly independent decision-maker.”

    — CNBC’s Chelsey Cox contributed to this report.

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    WATCH: Why the U.S. government is questioning your online privacy

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  • Elon Musk offers to buy Twitter at original price days before trial: Sources

    Elon Musk offers to buy Twitter at original price days before trial: Sources

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    Elon Musk has reversed course and is again proposing to buy Twitter for $54.20 a share, according to sources familiar with the matter. A deal could happen as soon as Friday, the sources added.

    Twitter shares jumped as much as 15% on Tuesday after Bloomberg first reported on the Tesla CEO’s plans to go forth with his deal to acquire the company. The stock was halted after the report.

    A few weeks after Musk agreed to the deal earlier this year, valuing Twitter at $44 billion, he quickly tried to back out, officially informing the company in July of his intentions to terminate the agreement. Twitter sued Musk to force him to go through with the purchase. The two sides were scheduled to go to trial in Delaware Chancery Court on Oct. 17.

    Musk alleged that Twitter was misstating the number of “bots” on its service as one of the reasons he was reneging on the deal. He and his lawyers claimed the social media company was misleading investors by providing false numbers in corporate filings with the Securities and Exchange Commission.

    Twitter countered, however, that Musk’s assertions of fraud were incorrect and were based on a misunderstanding of the way the company tallies bots and fake accounts on its platform.

    Musk also alleged Twitter failed to provide him with the necessary data related to spam and bots, which Twitter denied.

    Twitter alleged Musk was looking for a reason to back out of the deal when the company’s shares dropped alongside a broader decline in the overall market.

    Although Musk sought to delay the trial date, Delaware Chancellor Kathaleen McCormick rejected his wish citing the potential for Twitter to incur “irreparable harm.” The chancellor did allow Musk and his attorneys to amend their counterclaim to include certain accusations made by Twitter’s former head of security in a separate whistleblower suit against the company.

    CNBC has learned that Musk could own Twitter within a matter of days and that all litigation would come to an end.

    In September, Twitter shareholders approved Musk’s original bid to purchase the company.

    Meanwhile, Tesla shares have dropped about $10 per share (about 4%) on the news so far Tuesday and are up about 2% for the day.

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  • Tesla delivered 343,000 vehicles in the third quarter of 2022

    Tesla delivered 343,000 vehicles in the third quarter of 2022

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    A Tesla Model Y on display inside a Tesla store at the Westfield Culver City shopping mall in Culver City, California, U.S., on Thursday, April 14, 2022.

    Bing Guan | Bloomberg | Getty Images

    Electric vehicle makers Tesla just posted third-quarter vehicle production and delivery numbers for 2022. Here are the numbers:

    • Total deliveries Q3 2022: 343,000
    • Total production Q3 2022: 365,000

    Deliveries are the closest approximation of sales reported by Tesla, and they fell short of analysts’ expectations 364,660 vehicles, according to estimates compiled by FactSet-owned Street Account.

    Tesla also said in its report the company produced 19,935 of its higher priced Model S and X vehicles, and 345,988 of its more popular Model 3 and Y vehicles during Q3.

    Total production increased from the prior quarter of 2022, when Tesla said it made 258,580 vehicles.

    During the year-ago quarter, Tesla reported deliveries of 254,695 vehicles, and that it had produced 237,823 cars including just 8,941 Model S and X vehicles, which are the company’s more expensive sedan and SUV with falcon-wing doors, respectively.

    In the third quarter of 2022, Tesla faced soaring commodity prices, executive turnover (with the notable departure of AI leader Andrej Karpathy in July) and growing pains at its new factories in Germany and Texas.

    Tesla has not historically disclosed its vehicle production and delivery numbers by region.

    In July this year, Tesla had to suspend most of its Shanghai factory production temporarily to make upgrades to the plant. By the month of August, however, the company’s production and deliveries in China had rebounded, according to China Passenger Car Association data.

    In the U.S., at the end of the second quarter, Tesla laid off an entire AI office and made other headcount cuts. Musk also mandated that all Tesla employees should work at a Tesla office at least 40 hours per week, even if they were previously allowed to work remotely.

    After that, some employees were dismissed and others chose to resign, while those who returned to the office found over-crowded conditions that persisted through the third-quarter, making it hard to get work done normally at some of the companies facilities, including its first U.S. car factory in Fremont, California, and battery plant outside of Reno, Nevada.

    By September, executives speaking at an all-hands meeting with employees at the Nevada Gigafactory were celebrating new production records, and lauding employees’ hard work.

    As CNBC previously reported, Tesla execs said at that time August had been a record month for the Fremont factory in terms of production, and that Tesla’s relatively new factory in Austin, Texas, had hit a 1,000 cars per-week production rate on a seven day rolling basis, a promising milestone.

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  • Apple downgrade sparks tech sell-off, sending Alphabet and Microsoft to one-year lows

    Apple downgrade sparks tech sell-off, sending Alphabet and Microsoft to one-year lows

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    Shares of large technology companies suffered heavy losses on Thursday, dragging down many other U.S. stocks along with them, after analysts at Bank of America lowered Apple’s stock rating.

    Tech stocks have been pushed down all year as investors have rotated out of growth and flocked to more defensive assets to deal with higher interest rates and to get ahead of a possible recession.

    The tech-heavy Nasdaq Composite rose on Tuesday and Wednesday, but the buying came after the worst two weeks since the onset of the Covid pandemic. Now the downward trend is back, with the Nasdaq off 2.8% on Thursday — it’s steepest one-day setback since Sept. 13. The broader S&P 500 fell 2.1%.

    Apple CEO Tim Cook speaks at an Apple special event at Apple Park in Cupertino, California on September 7, 2022. – Apple is expected to unveil the new iPhone 14. (Photo by Brittany Hosea-Small / AFP) (Photo by BRITTANY HOSEA-SMALL/AFP via Getty Images)

    Brittany Hosea-small | Afp | Getty Images

    Apple shares declined nearly 5% as Bank of America analysts led by Wamsi Mohan changed their rating to neutral from buy, straying from the buy position held by a majority of analysts polled by FactSet.

    The analysts pointed to several risks, including a weaker buying cycle associated with the iPhone 14 that Apple released this month. One day earlier, a report said Apple had scrapped its plan to boost iPhone production by 6 million units in the second half of the year.

    Apple stock is now worth 20% less than it was at the end of 2021, while the Nasdaq is down 31% over the same period.

    Of the technology companies with the largest market valuations, Microsoft took the lightest blow. It ended Thursday’s trading session down about 1.5%, which was still a 52-week low. Google parent Alphabet also reached a 52-week low, dropping 2.6%. Shares of Facebook parent Meta Platforms slid 3.7%, Amazon declined 2.7% and Tesla was off 6.8%.

    Smaller growth-oriented tech companies also suffered, with Coinbase down nearly 8% after Wells Fargo initiated coverage with an underweight rating. Elsewhere, Shopify fell 8.45%, Rivian declined 7.9% and Roblox was off 7%.

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