Author: admin

SAN FRANCISCO — What a farce.

That was one of the immediate reactions when word leaked out on Monday that Amazon’s much-ballyhooed search for a second headquarters outside of Seattle would result in not one, but two new locations. On Twitter, people used farce, sham or stunt to describe what had happened.

Amazon’s critics were apoplectic at what they called a bait and switch.

“I was shocked,” said Robert B. Engel of the Free & Fair Markets Initiative, a nonprofit that is a determined foe of the retailer on all fronts. “They’ve duped more than the bidders. They’ve duped all of us. They can’t even live up to a promise that wasn’t fair to anyone but Amazon.”

From the company’s point of view, however, things seem to be working out rather nicely.

The quest kept a persistent spotlight on Amazon as the suitor everyone sought — would it choose Denver? maybe Atlanta? surely Chicago? — even as the company apparently decided instead to set up smaller operations in the Washington metro area and in New York City, the two most obvious places all along. (Amazon declined to comment.)

Amid the guessing game, the company got information from dozens of cities about how much they would pay for a strong Amazon presence, valuable data that it will no doubt use to expand.

“What we see is Amazon evolving into a corporation whose headquarters is virtual and whose physical presence will span the globe,” said Charles R.T. O’Kelley, director of the Berle Center on Corporations, Law and Society at Seattle University. “Instead of being headquartered in one place and moving to a second headquarters, Amazon is going to be, and be thought of as, everywhere.”

What we see is Amazon evolving into a corporation whose headquarters is virtual and whose physical presence will span the globe

Charles R.T. O’Kelley,

This, after all, is how Amazon sees its destiny: to become not just the everything store, as it was branded a mere five years ago, but the everything company. People will buy groceries from Amazon, be entertained by Amazon shows, pick up snacks at Amazon Go stores, see all the ads they need on Amazon, find a plumber through Amazon, communicate through Amazon’s Alexa virtual assistant — and that is just the beginning.

Set against such ambition, the words “second headquarters” or, in Amazon parlance, “HQ2,” which proved so beguiling to the media, politicians and local governments ultimately mean little.

“The word ‘headquarters’ is a nontechnical, nonlegal term, but it plays well in the press to talk like this,” O’Kelley said. “It was a great PR move in all kinds of ways.”

Qinghai Wang, a finance professor at the University of Central Florida who has studied corporate headquarters, agreed.

“Corporate headquarters, or at least the part that is central to decision-making, should be just in one place,” he said. “Boeing, another Seattle company that moved headquarters more than 10 years ago, only moved a few hundred people to Chicago. Amazon is a big company, and it has a very big headquarters already.”

At least one expert realized some time ago how the game would end.

“Don’t be surprised if later this year, Amazon announces that it’s going to have more than one HQ2,” the City Observatory, a think tank in Portland, Oregon, said in an essay posted in January. One reason: “If a single winner is announced, and its competitors are dismissed, then Amazon’s negotiating position becomes much weaker,” the essay said. Having multiple winners, on the other hand, would allow the company to play one off the other.

Even as the news sank in on Monday, some people rued the lost chance that Amazon would do something truly transformative — not just for the company, but for its new home.

“Big tech is at a pivotal moment, and Amazon is at the head of the class,” said Scott Phillips, an entrepreneur who submitted a headquarters proposal to build an enormous city for Amazon in rural Oklahoma. “It is time for them to aggressively think not just about their bottom line but about ways they can do right by the world.”

(Amazon has) learned all kinds of things from the bidding cities — like their future infrastructure plans — that even their citizens are not privy to

Stacy Mitchell of the Institute for Local Self-Reliance

Washington and New York already have lots of tech talent, which of course explains why Amazon would move to those places. “Amazon could have pulled a new region of the country onto the ‘haves’ list and pioneered much of the world’s future in the process,” Phillips lamented.

In a way, the two-headquarters story was too good to be true even when Amazon proclaimed it bluntly and at length. “Amazon HQ2 will be Amazon’s second headquarters in North America,” the company said in its promotional material. “We expect to invest over US$5 billion in construction and grow this second headquarters to include as many as 50,000 high-paying jobs — it will be a full equal to our current campus in Seattle.”

Instead, while nothing official has been announced and things could shift at the last minute, it appears HQ2 will rank with the company’s proclamation that drones would deliver packages. When the chief executive, Jeff Bezos, unveiled that initiative on “60 Minutes,” he said the drones would come in “four, five years.” That was almost exactly five years ago.

The drones have not taken flight, but many articles about them did. Amazon likewise gained enormous amounts of raw publicity from its search for a second headquarters.

It gained something else as well.

“It’s tempting to roll your eyes at this soap opera, but Amazon will walk away from this stunt with a cache of incredibly valuable data,” said Stacy Mitchell of the Institute for Local Self-Reliance, a frequent Amazon critic. “It’s learned all kinds of things from the bidding cities — like their future infrastructure plans — that even their citizens are not privy to.”

Here’s what next, she said: “Amazon will put this data to prodigious use in the coming years as it looks to expand its market power and sideline the competition.”

Amazon is always expanding its market power. Consider a routine news release it issued Friday: “Amazon Announces 14th Inland Empire Fulfillment Center in Beaumont,” it said. Fulfillment centre is a fancy term for warehouse. The Inland Empire is a vast area east of Los Angeles. To build 14 warehouses there in six years is a feat. Amazon said it was now the largest employer in the region.

Amazon likes to release news on its own schedule. But the headquarters story leaked out to outlets including The Washington Post — owned by Bezos — and The Wall Street Journal. It was a rare stumble for a company that excels at controlling the narrative.

The real narrative, now and always with Amazon, is its ambition — sometimes veiled, sometimes overt, but never absent. The satirical site The Onion took the present to its logical extreme last month:

“After a search for a new location lasting more than a year, a massive dome was seen descending from the sky and enclosing the whole nation Friday as Amazon CEO Jeff Bezos announced to a horrified American populace that it was now living inside his company’s second headquarters.”

The New York Times

CALGARY – Nalcor Energy executives will discover Wednesday whether millions of dollars in seismic exploration work and trips to the world’s oil capitals were enough to attract lucrative bids from global oil and gas majors.

For the first time in two years, the Canada-Newfoundland and Labrador Offshore Petroleum Board will announce winning bids for prospective offshore exploration blocks on Wednesday, which independent evaluators believe contain a total of 11.7 billion barrels of oil and 60.2 trillion cubic feet of natural gas.

The last time the C-NLOPB held a bidding round for an offshore exploratory block, in 2016, BP Plc marked its entry into the province’s oil and gas sector with a winning bid of $461 million for a prospect that contained an estimated 25.5 billion barrels of oil and 20.6 trillion cubic feet of gas.

Expectations for Wednesday’s bid are high and should reveal whether or not the provincially owned energy company’s revamped approach to attracting oil and gas bids continues to be a success.

“We have a saying around here, which is ‘Those who use crystal balls end up with broken glass,’” Nalcor executive vice-president, offshore development, Jim Keating said. He declined to provide an estimate of what Wednesday’s bid might fetch in work commitments from oil and gas companies.

“I think we’ve experienced a real good level of interest from oil and gas companies for the last several months and for the better part of a year now since the licence area was announced, so that makes us optimistic,” Keating said.

The province, through its Crown corporation Nalcor and the C-NLOPB, made major changes to its bidding process beginning in 2011. It moved to a scheduled bid process from a system in which any entrant could bid at any time.

Nalcor also began spending significantly more money on 2D and 3D seismic work to better understand the province’s offshore geology and de-risk the exploration blocks for prospective oil companies.

In addition to conducting that exploratory work, the Crown corporation now sends its geoscientists to Calgary, Houston, London, Oslo and other oil centres to present their findings to the world’s largest oil and gas producers. Keating was in Calgary last week promoting his province’s oil and gas prospects.

“Since 2011, we’ve invested just over $100 million. That level of investment has revealed just about $2.5 billion in bidding thus far and there are more bidding rounds to come,” Keating said.

By comparison, in the previous 20 years the province managed to attract an average of just under $100 million per year in bids.

The new approach has helped sustain and even expand the province’s offshore energy sector in recent years even as global oil prices collapsed and the world’s largest oil and gas companies scaled back spending, Newfoundland and Labrador Oil and Gas Industries Association CEO Charlene Johnson said.

“We’ve now seen seven new entrants to our province and that, in effect, doubles the number of operators with acreage in the province, so it’s helped attract foreign direct investment,” she said.

The additional bids are leading to more work in the province’s energy sector, Johnson said, as five companies have submitted drilling programs to the provincial regulator and a sixth program is expected.

There are about 25 to 30 of these licence rounds going on each year all around the world so we need to have that leg up

Charlene Johnson, CEO, Newfoundland and Labrador Oil and Gas Industries Association

Exxon Mobil Corp. is expected to drill on its parcels in the province’s Flemish Pass in summer 2019 and BP has issued requests for drilling proposals in the past two weeks.

“There are about 25 to 30 of these licence rounds going on each year all around the world so we need to have that leg up and jurisdictions need to be competitive,” Johnson said, adding that Nalcor taking on much of the exploratory risk helped provide that leg up.

She also said the federally approved carbon tax plan introduced in St. John’s this week would not unduly hurt the local oil and gas sector.

“I think it strikes a balance,” Johnson said of the carbon tax. She said the tax exempts oil and gas exploratory work, which is important given the province’s attempts to encourage the growth of the industry.

She said the provincial government understands the energy sector still accounts for 24 per cent of Newfoundland and Labrador’s gross domestic product,  down from 33 per cent of GDP prior to the oil price crash of 2014.

The National Energy Board forecasts Newfoundland and Labrador oil and gas production will average over 300,000 barrels of oil per day this month. That is a significant increase over the 227,000 bpd oil platforms in the province pumped at the beginning of the year, driven by rising production from ExxonMobil’s Hebron project. Exxon receives global oil prices as it’s not subjected to Canada’s pipeline constraints.

In its fall fiscal update released this week, Newfoundland and Labrador announced its deficit would come in $135.9 million lower than expected at $547 million, partially as a result of higher-than-expected oil prices.

“All in all, we view the update as positive for the province, and note that the prospects for a cheaper-than-expected (Canadian dollar) along with above planned oil prices could provide for stronger royalties relative to budget planning assumptions, which could improve progress on the provincial deficit,” National Bank Financial analyst Catherine Maltais said in a research note.

• Email: gmorgan@nationalpost.com | Twitter: geoffreymorgan

Saskatoon-based Nutrien Ltd., the largest potash company in the world, announced late Monday evening that it is closing a mine in Sussex, N.B. that cost billions of dollars to construct and that it had barely operated.

Marc Thorne, mayor of Sussex, said that the news arrived quickly. On Monday, the company asked for a meeting on short notice, and told him it planned to close its potash mine and return the site to nature.

“In four or five years, there may not be any indication that the mine was even there,” said Thorne.

The situation illustrates the dismal state of the potash market. Nutrien’s predecessor, the Potash Company of Saskatchewan, started building the mine in 2007 and finished eight years later at a cost of US$2.2 billion. During that time, the bottom dropped out of the potash market and prices fell 75 per cent from more than US$800 per ton to around US$225 per ton.

In early 2016, not long after construction finished, the mine was put on “care and maintenance” and 430 employees were laid off.

Now, Nutrien is taking a US$1.8 billion impairment charge, and closing the mine. That will save some $25 million per year, including the elimination of around 50 staff.

“We can expect to see that as savings in a year or two as we complete closure,” said Will Tigley, a spokesman for the company.

Overall, the company reported a US$1.1 billion net loss for the third quarter, or US$1.74 per share. Nonetheless, the company reported that retail earnings increased ten per cent year over year, and increased its dividend to 43 cents.

According to the U.S. Geological Survey, the potash market collapsed in 2009 as the broader global economy suffered. Potash prices had been high in the first half of the year, which led to a drop in consumption. But that drove up inventories, and the price fell and never fully recovered.

Mayor Thorne say losing potash mining has been a big blow to the people of Sussex, a town of around 4,300 people, located between Moncton and Saint John.

“It’s huge,” he said about the recently completed mine that is now being closed. “The headframe dominates the landscape from kilometres away.”

But he insisted the town has never been entirely reliant on mining, with agriculture and forestry running deeper in its history.

Thorne added that everyone in town had hoped Nutrien would “cut some salt” out of the new mine before decommissioning it, a prospect that might have created several dozen jobs. But no one expected the company to reopen the mine, he said.

I think everybody accepted the reality

Sussex Mayor Marc Thorne

“I think everybody accepted the reality,” said Thorne. “I’ve met on a frequent basis with the representatives and they’ve never indicated that they were going to reopen the mine.”

For nearly three years, the town has been working to absorb the shock of the closure. The original potash mine arrived in town in the 1980s and now Sussex is planning a future without potash mining.

Some of the people who were laid off started commuting to Saskatchewan to work for Nutrien there, while others found jobs in the dairy industry or in forestry, he said.

Thorne’s older brother, an engineer at the mine, was 57 in 2016, and stayed on for a year helping with maintenance, before leaving the company with two years’ severance pay. But he had always planned to retire at age 60, so the closure had no impact, Thorne said, adding that other families are still reeling from the impact.

“It’s still hard to believe that a company would spend $2.2 billion to build a mine and then write it off,” he said.

gfriedman@postmedia.com

The turnaround at Quebec-based Bausch Health Cos. Inc. appeared to take another step forward Tuesday, after the company reported positive organic growth for the third quarter, sending shares up more than five per cent in Toronto.

Bausch, which changed its name from Valeant Pharmaceuticals Inc. in July, has been digging out from a pile of debt and legal issues ever since it was swept up in fraud allegations that sparked a spectacular share price collapse.

At its high in July 2015, the company was valued at $341.84 per share, making it for a time the most valuable company on the Toronto Stock Exchange. Less than two years later, the shares had plunged to a low of $11.20.

Tuesday’s earnings report was well-received — despite a US$350 million net loss — because the pharmaceuticals company beat expectations on both revenue and EBITDA, according to a CITI Research report. Bausch also raised its EBITDA guidance to between US$3.30 billion and US$3.45 billion from US$3.20 billion and US$3.35 billion.

“I’m pleased to say, the third-quarter results further demonstrate that the progress towards transformation is on track,” CEO Joseph Papa said on an earnings call.

Perhaps most important for investor confidence, the company reported a three per cent increase in organic growth — which it calculates by removing divestitures and currency fluctuations.
Bausch, Papa said, has now seen organic growth for eight straight quarters.

In two years since he took over from Michael Pearson, Papa has focused on reducing the company’s more than US$30 billion debt load, which had piled up in the wake of dozens of acquisitions.

In May, the company said it had reduced its debt by US$6.9 billion in two years. That trend continued in third quarter as Bausch used nearly 70 per cent of its cash flow — more than US$360 million of US$522 million — to pay down debt. There’s still a long way to go, Papa acknowledged. Bausch still owes about US$25 billion. Most of that is due after 2021, with more than US$6 billion due in 2023.

Evercore ISI pharmaceutical analyst Umer Raffat said the move to push out the majority of their debt was an important one in the company’s turnaround.

“They’ve pushed out the debt maturities, along with (completing) asset divestitures, along with doing a very good job with expectations management and they have beat expectations,” said Raffat, who remains equal weight on the company.

What Bausch needs to prove, Raffat said, is that the company has a clear path to growth in spite of its debt. The way forward, he said, is investing in innovation and new drugs.

During the earnings call, chief financial officer Paul Herendeen said Bausch spent an additional US$26 million on research and development this quarter compared with the third quarter of 2017.

Herendeen said productivity was slower than expected but won’t “sacrifice the productivity of our investments … for speed.”

Productivity was slower than expected but (Bausch) won’t ‘sacrifice the productivity of our investments … for speed’

CFO Paul Herendeen

In the call, Papa outlined three products — a non-opioid to help those with withdrawal, a bowel cleanser and an acne treatment lotion — that have launched since August. Two more drugs, both for psoriasis treatments, are expected to be launched in the coming months.

The launch of these products contributed to Morgan Stanley upgrading Bausch to overweight from equal weight and moved its target price for the New York listed shares to US$32 on Monday. Equity analyst David Risinger wrote that he expects the company to accelerate toward durable revenue growth in 2020.

In a report on Bausch’s third-quarter earnings, Stifel Nicolaus analyst Annabel Samimy said she expects a positive move for Bausch’s stock after another quarter of stability.

“We think as BHC demonstrates its success in stabilizing and transforming, the market will again grant the company appropriate value for its franchises, which in our view has been overwhelmed with negative sentiment,” she wrote.

Bausch was boosted in August when Moody’s upgraded its credit rating to positive from stable.

Its shares closed Tuesday at US$26.72 in New York and $35.19 in Toronto.

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A reporter receives a scam tip, reviews the e-mail, checks an address on the blockchain, and figures the balance shown is the take from the scam in progress. Probably the author and most of his peers are guilty of the assumption — the pseudonymous nature of the blockchain makes it difficult to know right off the top what the real source of some funds are. A recent example involves scams targeting Tesla and SpaceX founder Elon Musk, who is the frequent target of impersonations and profile hijacking.

Reports circulated this week that these scams had collectively made more than $175,000 for their perpetrators. However, an overview of the addresses in question brings to light the reality: the scammers might have actually made as much as $175,000 from their scams, though in fact, a significant portion of the funds is likely their own. In the same way that a tip jar might have a few employee dollars to “get it started,” good scammers understand that psychologically humans are more likely to contribute to something they already perceive as in progress — if others are sending funds, it makes all the more sense to send some.

Two Transactions Out of 19

 

The address associated with one recent scam has a total of 19 transactions. Of these, many have a similar amount around .001 BTC, a few sent have 10 times that at .01 BTC, and all of these fail to meet the requirements stated on the scammer’s page, which reads: “send from .1 to 1 BTC to get from 1 to 10 BTC back!” Only two transactions in the list actually meet this requirement, indicating that the other funds are unlikely actually to be victims. And, given the close proximity of the transactions to the address, it’s entirely plausible that none of the transactions are from victims. Users who fell for the scheme would have to come forward. Ultimately, those who found these scams through legitimate channels such as Twitter or bona fide ad networks might have some legal recourse with companies serving the nonsense.

As noted by Udi Wertheimer, who took another site to task on this subject, this is a very common tactic among scammers. It makes sense for the aforementioned reasons: if people were to click a link reportedly from Elon Musk and fall for the trick, they’d be surprised that none of the billionaire’s friends or anyone else had sent any funds. He was referring to a more successful group of scams, the vastness of which have prompted Elon Musk himself to take action with the help of Dogecoin creator Jackson Palmer.

The address, 1NCj5V2a8Yp7Wu6wsEWoRZu6togKccgDYz, had just over .06 BTC in it when the first transaction for .1 BTC came in. Again, the close proximity of the transactions — all in the space of three hours — makes us suspect the scammer might have netted nothing at all. There are plenty of deep-pocketed people who recently entered the space, however, who might fall for a bitcoin doubling scam once or twice.

A potential way to see if the funds came from themselves or others would be to investigate where they go and see if the addresses are at all connected to the depositing addresses.

This author’s first use of bitcoin was in a Ponzi scheme wherein he lost more than a few hundred dollars. There’s a lot of psychological victimization that takes place in crypto scams, and it’s unfortunate to say that even in 2018 our only best defense is ourselves — those with the platform giving voice to the voiceless and warning the rest as soon as possible.

Featured image from Flickr/TED Conference

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