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Tesla’s $675 Million Loss Pulls Elon Musk Back To Earth After Stellar SpaceX Launch

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Elon Musk wowed millions of people who watched the livestream of a flawless first launch of SpaceX’s Falcon Heavy rocket, which carried a Tesla roadster into space, capped by the elegant, simultaneous landing of two boosters. Musk’s euphoria was undiminished as he shifted gears on Wednesday to Tesla, pointing to a silver lining for the high-flying carmaker that capped a year of big losses and production headaches for its critical Model 3 sedan.

The company reported a whopping $675.4 million net loss for the final quarter of 2017 and a $1.96 billion deficit for the year, the most ever on both counts. Loss per share was $4.01 on a GAAP basis, or $3.04 per share excluding some items. That was better than consensus estimates for adjusted EPS losses of $3.10 to $3.19, and likely the result of bigger than expected sales of emissions credits. Tesla shares plunged 8.6% to $315.23 on Thursday.

Musk and Tesla CFO Deepak Ahuja acknowledged 2017’s challenges in a letter to investors but also said the table was set for a much better year in 2018. Notably, they predict operating income will become “sustainably positive” at some point this year and that production of Model 3, as well as the S and X crossover, will continue to grow.

“2018 will be a transformative year for Tesla, with a high level of operational scaling,” the two said. “As we ramp production of both Model 3 and our energy products while keeping tight control of operating expenses, our quarterly operating income should turn sustainably positive at some point in 2018.”

The company stuck with its production guidance for the Model 3, nominally priced from $35,000, to reach 2,500 units a week by the end of the first quarter, and then 5,000 a week at the end of the second quarter. The Palo Alto, California-based company didn’t say when it will hit its ultimate target of 10,000 Model 3s a week, enough to hit Musk’s goal of 500,000 a year.

“Even this Tesla realist and Model 3 deposit holder has doubts about Tesla ramping up to 10,000 units/week, essentially promising production levels of over 250,000 units in 2018,” said Rebecca Lindland, executive analyst at Kelley Blue Book’s KBB.com. “I think they’ll be lucky to get 150,000 units out the door in 2018, and even that would be an incredibly impressive feat, requiring an average weekly rate of over 3,000 units for every single week left in 2018 with no breaks. Elon Musk needs a team of forecasters that he’ll listen to so he can finally provide Wall Street and depositors with achievable targets.”

READ MORE: Roadblock: Elon Musk’s Net Worth Drops $800 Million In A Day

Last month, Tesla cut its Model 3 production target for a second time after building just 2,425 in the fourth quarter. Total production, including the higher-priced Model S and Model X, was 101,027 units in 2017.

Still, the fact that the company affirmed its production goals, which were revised down in January, was the best news in the report, said Jeff Reeves, analyst and executive editor of InvestorPlace.com.

“There are never any guarantees, but Elon Musk hasn’t been shy about cutting back forecasts in recent months so he certainly would have pulled back on the reins if Tesla wasn’t confident,” Reeves told Forbes. The company also managed to burn far less cash in the fourth quarter, trimming it to $276.8 million in the quarter, compared with $1.42 billion in the third quarter and $969.8 million a year ago, he said.

“It’s always about growth with Tesla, not the bottom line,” Reeves said. “But it’s also encouraging to see a smaller-than-expected loss and a cash burn that dropped significantly from Q3 to Q4.”

Tesla’s sales of zero-emission vehicle, or ZEV, credits to other automakers that need them to comply with California’s tough emissions rules, were up significantly from a year earlier, to $179 million compared with $20 million in the final quarter of 2016. Barclays analyst Brian Johnson predicted $10 million for the quarter. Exceeding the forecast provided Tesla an adjusted net loss that was slightly better than expected.

Tesla completed the integration of SolarCity into its operations in 2017 and aims to significantly boost shipments of solar panels and power storage units this year.

“We expect energy storage products to experience significant growth, with our aim to at least triple our sales this year,” Musk and Ahuja said. “We expect energy generation and storage gross margin to improve significantly in 2018 as we enter the year with a backlog of higher-margin commercial solar projects and a more profitable energy storage business due to manufacturing efficiencies from scaling.”

READ MORE: Musk’s Multi-Billion-Dollar Tesla Comp Plan Is Shrewd Marketing Amid Rocky Patch

Capital expenditures will continue to rise in 2018, to expand output at the Gigafactory battery plant in Nevada and continued investment in production capacity at Tesla’s Fremont, California, plant, the company said. Tesla will also start investing this year to add production of the Model Y, a small electric crossover that will be the next vehicle in its lineup.

“We are going, as you suspect, to need to make some capital investments in the second half of this year, in late Q3, Q4, for Model Y. We want to wait probably three to six months before announcing any definitive plans on production location or details associated with that,” Musk said in a conference call with analysts.

His expectations for Model Y, which hasn’t yet been unveiled, are enormous.

“To give you some flavor for optimism for Model Y… we might aim for something like maybe capacity of a million units a year, just for Model Y alone. I think we’ll be able to do that for capex that is less than Model 3 capex at the half-million-unit level”, Musk said.

Notably, customer deposits for Model 3, as well as the recently announced Semi and Roadster became a major balance sheet item for Tesla, totaling $858 million at the end of 2017, up from $663 million a year earlier. While most of those funds are from the nearly half-million reservations Tesla has for the Model 3, a growing portion comes from the battery-powered Class 8 truck and high-end sports car.

Separately, Musk said that Jon McNeill, who had been head of the company’s sales and service group, had left the company. Musk said he’ll oversee those functions himself. Lyft said it hired McNeil as its chief operating officer.

“Jon is a world-class leader who brings deep experience as a highly successful entrepreneur and executive,” Lyft CEO Logan Green said in an emailed statement. “Last year, the Lyft community experienced more growth than in all previous years combined, growing rides by 2.3x and increasing market share by more than 50%. Jon is the right leader to build upon this momentum with his unique background of starting companies from scratch and managing at scale.” – Written by 

Current Affairs

Here’s How The US Claims The Assange-Manning Conspiracy Worked

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The U.S. government has disclosed more of its case against WikiLeaks cofounder Julian Assange. It hinges on a claim he and Chelsea Manning worked together to crack a password for a computer storing sensitive government files.

An affidavit unsealed Monday outlining the case against Assange said he conspired with Manning when they discussed working together to crack a password “related to two computers with access to classified national security information.” More specifically, the password belonged to a user called FTP (not to be confused with an FTP server) on two Windows computers that Manning could access from a base in Iraq, the government said.

The FTP account wasn’t associated with any specific individual, and the government alleged that if Manning had used it to pilfer files and hand them over to Wikileaks, she could have foiled investigators looking into who was behind the leaks.

“Although there is no evidence that the password to the FTP user was obtained, had Manning done so, she would have been able to take steps to procure classified information under a username that did not belong to her,” the affidavit read. “Such measures would have frustrated attempts to identify the source of the disclosures to WikiLeaks.”

The alleged conspiracy to crack the password took place in March 2010, two months after she’d walked out of the Iraq base with classified war reports from Iraq and Afghanistan. She was later convicted and served seven years in jail for downloading tens of thousands U.S. military documents and diplomatic cables.

How passwords are cracked

The reason any password had to be cracked in the first place was the use of what’s known as a “hash.” Microsoft’s Windows operating system doesn’t store passwords in plain text. That’s to prevent hackers who find a way on to the computer from seeing and stealing them. Instead, Microsoft makes life harder for cybercriminals and snoops by turning that plain text into scrambled code. That string of letters and numbers is known as a “hash value” and it’s created when an algorithm is applied to the plain text of the password.

For an attacker to get at the plain text it’s possible to do a so-called “brute force attack.” The process for this is basic: The hacker creates a huge list of guessed passwords through the same hashing algorithm used by Windows to find a matched hash value for the hidden password. Once the same hash value is calculated, the password has been found.

Sometimes a password will be too complex for guessing to work in a short enough time frame. That’s where “rainbow tables” come in. These contain a massive number of hash values for previously calculated passwords. Hackers use them to do a quick comparison of the hash they have with the ones in the table, in the hopes that it’s already been seen before and a match is available.

“In computing terms we call this a time/memory trade-off. Rather than spend time on a task, we pre-calculate parts of it and store them somewhere, essentially trading time for memory,” says Tom Wyatt, senior penetration tester at cybersecurity provider Bulletproof. “These tables can be calculated or downloaded from various online sources, and it simply boils down to paying for storage for it all; even in 2010 this was fairly cheap and entirely possible.”

But Microsoft goes one step further in protecting those hash values by splitting them in two, storing the parts in separate files. Here’s where a little trick comes in handy: A hacker might be able to recover those two separate pieces by rebooting a Windows PC using a CD with the Linux operating system. Back in 2010, it was possible to do that and recover the full hash value.

Ken Munro, a penetration tester with Pen Test Partners, told Forbes the technique still works, as long as there’s no additional layer of security over it, such as full disc encryption. “Whilst the technique still works, it’s quite rare to find systems that don’t now have full disc or similar encryption,” he added. (Microsoft hadn’t responded to a request for comment at the time of publication). According to the government’s telling of the story, evidence suggests Manning tried, and very possibly failed, with this technique. In a footnote in the affidavit, the government said Manning hadn’t provided Assange with the full hash, only one of the two halves required.

It’s alleged Manning passed what she thought was a hash value to Assange. The Wikileaks chief then said he would pass it on to a specialist in cracking, according to chats over the Jabber encrypted communications app, as provided in the affidavit. But, as per the investigators’ claims, there was some confusion: Manning said she wasn’t even sure what she handed to Assange was the hash value they wanted. Assange messaged Manning to ask if there were “any more hints” about the hash and that he’d had “no luck so far,” according to the government account. From there it’s unclear what happened. The government admits it didn’t know whether the password was ever cracked.

Not that it changes much for Assange: The charge is that of conspiracy. If he did offer assistance to help Manning gain access to U.S. government systems and encouraged the then intelligence analyst to leak files, the charge still stands. Manning, who served seven years in jail before being pardoned by President Barack Obama, is back behind bars for refusing to testify in the investigation into Wikileaks. Her lawyer had not responded to a request for comment at the time of publication.

Assange’s lawyer, Jennifer Robinson, couldn’t be reached for comment at the time of publication. She told Sky News yesterday that the indictment against her client showed “the kinds of communications journalists have with sources all the time.” Following Assange’s arrest, however, various journalists have said on Twitter that any incitement to hack organizations or steal documents was far from normal and risked breaking the law.

Meanwhile, the fallout from Assange’s arrest continues. According to Reuters, Ecuador’s telecommunications vice minister Patricio Real said the government’s networks had been hit by a mass of cyberattacks after it decided to revoke Assange’s asylum status. He claimed various government websites had been slammed by 40 million hacking attempts per day, double the number it typically sees.

-Thomas Brewster; Forbes Staff

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Health

10 Rules Of Email That Will Reduce Your Stress Levels

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Email and smart phones can be stressful. Academics are calling this constant work connection “technostress”. Consequently, many European countries are now offering employees the “right to disconnect”.

The way email is used is complex, it cannot simply be labelled as “good” or “bad” and research shows that personality, the type of work people do and their goals can influence the way they react to email.

Good practice with email use is not just about limiting the amount of emails sent, but improving the quality of communication.

Here are ten tips to reduce the stress of email at work:

1. Get the subject line right

Use clear and actionable subject lines.

The subject line should communicate exactly what the email is about in six to ten words, to allow the recipient to prioritise the email without even opening it. On mobile devices, many people only see the first 30 characters of a subject line. So keep it short. But make it descriptive enough to give an idea of what the email is about from just the subject line.

READ MORE | Burnout, stress lead more companies to try a four-day work week

2. Ask yourself: is email the right medium?

Are you in the same office? Could you go and speak to the person? Could you call? Often these other forms of communication can avoid the inefficient back and forth of emailing.

Instant messaging and video calling platforms like Slack and Skype could be more appropriate for quick internal back and forth messaging. Also, remember that most of the advice below applies to all types of electronic communication.

3. Don’t email out of office hours

Research shows that out-of-hours emails make it harder for people to recover from work stress.

Try and influence your company culture by avoiding sending or replying to emails outside your normal working hours.

Management should lead by example and avoid contacting their staff outside of their normal working hours. Some workplaces even switch off email access to employees out of hours. Consider implementing this while keeping a backup phone system for emergency contact only.

New research has also shown that just the expectation of 24-hour contact can negatively affect employee health.

READ MORE | A Career Secret Weapon: Thank-You Notes

4. Use the delay delivery option

Some people like integrating their work and family lives and often continue working from home during their off-job time. If you are one of these people, or if you work across time zones, consider using the delay delivery option so your emails do not send until the next working day and do not interfere with other people’s off-job time.

5. Keep it positive

Think about the quality of email communication. Not just the quantity. Changes to email use should also focus on the quality of what is being sent and take into consideration the emotional reaction of the recipient.

Research suggests that conflicts are far easier to escalate and messages to be misinterpreted when communicated via email. Therefore, if it is bad news, think back to rule #2: is email the right medium?

6. Try ‘no email Friday’

In order to shift company culture and get people thinking about other methods of communication than email, try a “no email Friday” on the first Friday of every month, or maybe even every week. This is an initiative suggested by experts from the National Forum for Health and Wellbeing at Work, and is being used by businesses around the globe. Employees are encouraged to arrange face-to-face meetings or pick up the phone – or just get on top of the many emails they already have in their inbox on that day.

READ MORE | The 12 Biggest Career Crashes Of 2018

7. Make your preferences known

Research has shown that not only too much but also too little email can cause stress due to a mismatch between the communication preferences of different people. Some people may like being emailed and cope much better with high email traffic than other means of communication. For these people, reducing the amount of emails they receive may cause more stress than it alleviates.

So consider people’s individual differences and make yours known. Add your preferred contact preferences to your email signature whether it is email, text or instant messages or a phone call.

8. Consider a holiday ‘bounce back’

Having a backlog of emails that builds up over the week appears to be one of the most commonly mentioned sources of technostress for workers. Think about setting up a system where emails are bounced back to the sender when someone is on holiday, with an alternative contact email for urgent requests. This would let you come back to a manageable inbox.

9. Have a separate work phone

Make this the only mobile device you can access work emails on, which gives you the freedom to switch it off after work hours. Also consider turning off email “push” (this is where your email server sends each new email to your phone when it arrives at the server) and instead choose a regular schedule (such as once per hour) for emails to be delivered to your phone (this also increases battery life).

10. Avoid late night screen time

Research suggests that late night smart phone use reduces our ability to get to sleep and also leads to constant thoughts and stress about work. This in turn reduces your sleep quality. Make the bed a phone-free zone to improve your sleep hygiene.

The Conversation

-The Conversation

-Ricardo Twumasi; Lecturer in Organisational Psychology, University of Manchester

-Cary Cooper; 50th Anniversary Professor of Organisational Psychology and Health, University of Manchester

Lina Siegl; PhD Researcher, University of Manchester

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Technology

The World’s Largest Airplane Takes Flight. Next Stop? Outer Space

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On Saturday, the world’s largest aircraft, the Stratolaunch, made its first complete test flight. The aircraft flew for about two and a half hours over the Mojave desert, reaching a speed of 189 miles per hour and an altitude of 17,000 feet.

The aircraft was created by the Stratolaunch Systems Corporation, which was founded by the late Paul Allen. The purpose of the plane isn’t normal commercial travel, but rather to carry rockets into high altitudes, then launch those rockets from the plane itself.

“What a fantastic first flight,” Jean Floyd, CEO of Stratolaunch, said in a statement. “Today’s flight furthers our mission to provide a flexible alternative to ground launched systems.”

Scaled Composites, which was acquired by Northrop Grummon in 2007, worked on the design and build of the Stratolaunch aircraft. Saturday’s test flight was piloted by Scaled Composites test pilots Evan Thomas and Chris Guarente.

“I honestly could not have hoped for more on a first flight especially of an airplane of this complexity and this uniqueness,” Thomas said in a press briefing following the flight.

Stratolaunch in flight
Stratolaunch in flight on Saturday, April 13 Picture: STRATOLAUNCH SYSTEMS CORPORATION

The Stratolaunch aircraft was first announced in 2011, and is the largest plane ever built out of composite materials. Its wingspan is 385 feet, the longest of any aircraft that has ever flown, including the Spruce Goose, which had a wingspan of about 320 feet. By comparison, a Boeing 747 has a wingspan of about 212 feet – making the Stratolaunch plane nearly twice the size. It’s propelled by six PW4056 turbofan engines, and is actually capable of launching multiple rockets on a single flight, up to about 500,000 pounds.

Airplane-launched rockets seemed at one point to be a good bet as a way of providing more convenient flights into space. Scaled Composites won the Ansari X Prize for launching the first private, reusable spacecraft into space in June of 2004. That effort was backed by Paul Allen, and this approach was not only adopted by Stratolaunch but also by Richard Branson’s Virgin Galactic.

However, it’s taken much longer than expected to develop these types of spaceflight. Virgin Galactic only first reached a space-approaching altitude at the end of 2018 – 14 years after that first Scaled Composite flight – though it hopes to be providing passenger service as early as later this year. Stratolaunch at one time was developing a rocket for its aircraft, but abandoned that effort earlier this year.

Rather than launch its own rockets, Stratolaunch has shifted strategy to be a platform for other aircraft-launched rockets. In particular, for Northrop Grummon’s Pegasus family of rockets. First demonstration Pegasus flights off of the Stratolaunch plane are scheduled for 2020.

Though they’ve taken longer to develop, the arrival of private plane-launched rockets via Virgin and Stratolaunch may be well-timed, as more satellite startups are looking for options to get satellites into space on their own timetable. Rockets launched from airplanes have more flexibility in terms of timing than their counterparts that launch from the ground, which may be a critical factor for companies looking to build up constellations in a hurry.

-Alex Knapp; Forbes Staff

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