In The Headlines
GM Gets Serious About Driverless Cars
General Motors (GM) recently announced that it will acquire Cruise Automation, a San Francisco-based developer of autonomous vehicle technology. No financial terms were disclosed, but sources close to the situation estimate that the deal is valued at “north of $1 billion,” in a combination of cash and stock.
Talks between the two companies originally related to a strategic investment by GM in Cruise, which was planning to raise a new round of venture capital funding. But that quickly morphed into an acquisition discussion with the entire agreement getting hashed out in less than six weeks. Cruise Automation had raised over $18 million in venture capital funding, most recently at a post-money valuation of around $90 million. Investors include Spark Capital, Maven Ventures, Founder Collective, and Y Combinator.
The three-year old company is best known for having created an aftermarket “kit” that allows buyers to convert certain types of cars―namely Audi A4 and S4 models―into autonomous vehicles for highway driving. But GM appears to be more interested in integrating Cruise’s technology into its original manufacturing process. General Motors spokesman Kevin Kelly said the company could not comment on the price or the terms of the deal. The transaction is expected to close in the second quarter. Cruise Automation will operate as an independent unit within GM and maintain its offices in San Francisco.
The plan is to grow the company aggressively and to get the best talent it can, Kelly said without providing further details on how many people might be hired. About 40 people work at Cruise Automation. The software company’s website, which has been updated to reflect the acquisition by GM, is currently listing 10 job openings mostly in engineering.
The acquisition follows GM’s recent move to create a team dedicated to the development of self-driving car technology within the company. The team of engineers and executives, led by Doug Parks, is responsible for all critical technologies in the car, including electrical design, controls and software, and safety integration, according to internal documents.
General Motors has been criticized for being slow to adopt new technology and for letting tech companies like Google take the lead in developing self-driving cars. However, GM has been quietly working on self-driving technology, and it has been one of the most aggressive automakers in adding Wi-Fi to dozens of new Buick, Chevrolet, Cadillac, and GMC models thanks to an AT&T 4G radio module providing the same kind of high-speed link one would expect from the latest 4G iPad or Samsung Galaxy.
And it is preparing to roll out a level 2 semi-autonomous feature, known as Super Cruise, which will debut in 2017 on the Cadillac CT6 sedan, the only model on which it will be an option. Over the past seven months, GM has also announced a number of initiatives that highlight its interest in unconventional transportation popularized by a new wave of startups, including a partnership and $500 million investment in ride-hailing startup Lyft. It’s end game is a network of self-driving cars within Lyft’s service that can shuttle passengers around town without a driver. GM is also developing a car-sharing service, joining a growing list of major automakers pushing into new businesses to attract customers who don’t own vehicles. The new business division called Maven will combine and expand several of GM’s existing test programs under one brand.
Getting to Know You: Retailers Test Face Recognition Software
Joseph Atick recalls the day in 1994 when the computer he and colleagues at Rockefeller University had built was able to recognize their faces. As each of the three mathematicians introduced themselves, a metallic voice responded, “I see Joseph. … I see Paul. … I see Norman.” Atick, who now chairs an organization that promotes identification technologies, says, “We didn’t realize what we’d just done.” Fast-forward two decades and picture a talking mannequin that greets a shopper by name as she enters a favorite store, informing her that pants that match the blouse she bought a week earlier have just been marked down. “It’s just a matter of time until we start to see this technology reach shopping malls and beyond—it’s ready right now,” says Werner Goertz, a Gartner analyst who has authored a report on the adoption of facial recognition and other surveillance tools by retailers, casinos, and theme parks.
Some of this new technology was on display at the National Retail Federation’s annual meeting in New York and the International Consumer Electronics Show in Las Vegas. Tokyo-based NEC boasts that its NeoFace software instantly recognizes faces, even in a crowd and on low-resolution video. Originally devised for law enforcement, the product is being adapted for use in retail, says Allen Ganz, who heads the unit at NEC America that markets biometrics to companies. “With increasing competition from online sources, retailers have to become much smarter about how they engage with consumers,” he says. “This is a new kind of data for retailers, and once this information is utilized, it’s addictive.” Ganz wouldn’t say which stores may be the first to roll out NeoFace.
At the National Retail Federation’s show, Austin-based startup EyeQ demonstrated a system that can recognize physical traits—say, differentiating between male and female visitors—and customize messages on in-store digital displays accordingly. Tom Litchford, vice president of retail technology at the federation, calls one-to-one marketing the industry’s “holy grail.” Sales of facial-recognition gear will reach $6.2 billion globally by 2020, up from last year’s $2.8 billion, according to forecasts by MarketsandMarkets. Almost 30% of retailers in the U.K. are already using the technology, says Computer Sciences Corp., an IT consulting firm that works with stores.
A number of major retailers, including Walmart Stores, Giorgio Armani, and Macy’s in the U.S., Benetton Group in Europe, and Baidu and Alibaba Group in Asia, are exploring or even staging trials of facial recognition and other surveillance tools, according to analysts and other industry experts. Both Macy’s and Benetton denied that they are currently using facial recognition. “A lot of retailers would be afraid of the backlash of being discovered,” says Bryan Roberts, a director at the retail marketing firm TCC Global in London. “You can aggregate data anonymously, but once consumers know they’re being tracked by the shopping center, they’ll be more hesitant to come back.”
While privacy advocates argue that retailers should be required to obtain customers’ consent before including them in biometric databases, the reality is that companies face few regulatory constraints, at least in the U.S. Only Illinois, Texas, and Connecticut have laws governing the use of these technologies.
The courts may help establish some parameters. Facebook is facing a class-action lawsuit that accuses the company of having “secretly amassed the world’s largest privately held database of consumer biometric data” for photo-tagging purposes. A federal judge is expected to rule soon on whether to dismiss the suit, because its claims under the Illinois biometrics law are barred by Facebook’s user agreement. Jay Edelson, a lead plaintiff’s attorney in the suit, predicts the outcome will have far-reaching implications. “This case can change everything,” he says. Facebook spokeswoman Genevieve Grdina says, “The lawsuits are without merit, and we will defend ourselves vigorously.”
The man who helped uncork the facial recognition genie would not mind seeing some restrictions put in place. Says Atick: “Consumers don’t yet understand the power of a machine that can recognize a human and what that power could do to humanity if it falls into the wrong hands.”
The Good News Is . . .
• Purchase applications for home mortgages rose again for the week of March 4. The purchase applications index measures applications at mortgage lenders, and is a leading indicator for single-family home sales and housing construction. The purchase index rose 4.0% for a sizable year-on-year gain of 30%. Recent demand for refinancing has also been strong.
• Twitter Inc., a leading social networking service, reported earnings of $0.16 per share, an increase of 33.3% over year-earlier earnings of $0.12 per share. The firm’s earnings topped the consensus estimate of analysts by $0.04. The company reported revenues of $710.5 million, an increase of 48.3%. Management attributed the company’s results to its successful restructuring programs and strong growth in its advertising revenues, especially the mobile ad segment.
• AMC Entertainment announced it will acquire Carmike Cinemas for about $737 million in cash, forming the country’s largest chain with more than 600 theaters and 8,380 screens. Under the terms of the deal, AMC will pay $30 a share. Including the assumption of Carmike’s debt, the transaction is valued at about $1.1 billion. AMC said the deal would increase the geographic spread of its theaters, while allowing it to trim expenses by consolidating administrative operations for the two companies.
Guide to Considering a Roth IRA vs. a Traditional IRA
The Roth version of the individual retirement account lets investors put away $5,500 in 2016; those over age 50 can put in an extra $1,000 in catch-up contributions. But that is no different from the traditional IRA. The significant differences between the Roth and the traditional IRA hinge on when you pay taxes and how much money ultimately goes to the government. Below are some of the things you might want to consider in using a Roth IRA versus a traditional IRA. It is best to consult with your financial advisor before making any investment decision to determine if it is appropriate to your situation.
Tax free withdrawals – You can withdraw money from a Roth IRA whenever you like. You have paid taxes on your contributions already, so you can access them at any time. But keep in mind, taking distributions will slow your earnings.
Withdraw earnings penalty-free – You can withdraw your earnings penalty-free under certain circumstances. If you are buying a first home, you can take out up to $10,000. If it is for qualified education or medical expenses, or if you become disabled, you can take out earnings, free of taxes and penalties, as long as you have had the Roth IRA for more than five years. The rules can be tricky, though, so consult with a tax professional first.
Contribution options for high income individuals – Exceeding certain income levels makes you ineligible for Roth IRA contributions. High-income earners generally cannot make a contribution to a Roth IRA. The IRS has income thresholds that limit the size of the contribution that high earners can make. Above that threshold, direct contributions to a Roth IRA are disallowed. But there is a way around that. People who make a lot of money can make a nondeductible contribution to a traditional IRA and then convert it to a Roth. However, the IRS does require you to take into consideration all your pretax holdings when figuring the tax liability of a conversion. Because it is complicated, it’s best to consult a tax professional before attempting this maneuver.
Tax credits for contributions – You could get a tax credit for contributing. The IRA offers a Saver’s Credit, which is a tax credit on contributions for couples and individuals making below certain levels.
No required withdrawals – The government will not force you to make withdrawals. Roth IRA owners are not subject to required minimum distributions, unlike traditional IRA owners. Your money can stay in a Roth and continue to grow as long as you would like.
1. http://bit.ly/1Rg4Whz – RothIRA.com
2. http://bit.ly/1RYPun4 – Bankrate.com
3. http://bit.ly/1nHONUm – Investopedia
4. http://bit.ly/1JK5gQw – Motley Fool
5. http://bit.ly/1QWT6na – MoneyCrashers.com