Still Not Much Momentum At Accuray

Small-cap oncology system manufacturer Accuray (ARAY) reported a decent fiscal fourth quarter, but it’s hard to see much momentum in the business or any real sign that this company is becoming a more disruptive force within the radiation oncology market. Although I continue to give management high marks for improving the underlying efficiency of the business and cleaning up the balance sheet, I just don’t see signs that Accuray is really gaining on Varian (VAR) (or even Elekta (OTCPK:EKTAY)) in any meaningful way, and I don’t see anything on the horizon that would drive a sudden shift in sentiment among customers.

Valuation remains undemanding, and I still believe the acquisition of Accuray by a Chinese or Japanese company is conceivable, but med-tech stocks most often trade on the basis of revenue growth and it looks like Accuray has a long row to hoe to generate enough revenue growth to get investors excited about the shares.

Like Many Quarters, Some Good And Some Bad In Fiscal Q4

Accuray reported stronger than expected revenue in the fourth quarter, with 2% growth driving a 5% beat. Outperformance was driven entirely by the service business (up 15% and about 13% above expectations), with product revenue down 10% and in line with expectations.

Although a higher than expected mix of service revenue did compress gross margin somewhat (and service margin declined 160bp year over year), product margin improved nicely (up over 600bp on an adjusted basis), helped by a richer mix of CyberKnife systems. Adjusted EBITDA declined 25% in the quarter, while operating income rose 10% and the company posted a minor miss at the operating line, but a small beat at the EPS line.

Orders were once again a source of disappointment. Gross orders rose 12%, missing expectations by around 10% despite what management characterized as “strong performance” in CyberKnife and a 26% improvement in orders from Asia. Net order performance was far worse, up 2% and almost 25% short of expectations as the company saw a significant increase in order cancellations – something that had been running at a fairly slow and steady pace.

Characterizing the orders, Accuray management said that 20% were replacement orders, 20% were competitive take-aways in established vaults and 60% were in new vaults. Although the company appears to be winning more business than it loses upon replacements, the pace of replacement orders has still been weaker than expected a couple of years ago.

Looking Back, This Wasn’t An Especially Great Year

I believe this is a reasonable time to look back at the guidance management gave a year ago for this fiscal year and see how things stack up.

On the revenue line, management exceeded initial expectations by a couple of percentage points relative to the midpoint of guidance and managed to exceed the high end of the initial guidance range. This came about from better-than-expected service revenue performance, though, as product revenue growth of 2% came in below the 5% to 10% growth guidance, with weaker sales to China tagged as the primary culprit.

Management met the gross margin target, but missed the adjusted EBITDA guidance range of $25 million to $30 million by a wide margin ($17 million reported), with the company electing during the year to spend more on developing the business (particularly R&D).

Gross order growth of 2% also missed guidance of 5%.

Looking Ahead

Management provided guidance of 4% to 8% product revenue growth for this next fiscal year, and overall revenue growth of about 4% at the midpoint – a level of growth that frankly doesn’t compare all that favorably to Varian or Elekta for a company that is supposed to be a share-gainer. Management is also no longer giving order guidance. While management claims this is due in part to its decision to focus more resources and attention on driving multi-system orders, which will be more volatile, I don’t view less guidance as a net positive, particularly from a company that has struggled to hit its own targets. I’d also note that the EBITDA guidance provided for the year ahead is lower than where expectations were going into the quarter.

Where’s The Spark?

I’m finding it harder to sustain the argument that Accuray has enough upside to be worth further patience, as the company just isn’t making the expected progress. While regulatory issues have held back sales in China and management claims to be “continuing to make progress” on finding a Chinese JV partner, the execution on the opportunity in China just hasn’t been there.

Likewise with the overall execution on Accuray’s opportunities in the market. Accuray has been unable to convince clinicians that CyberKnife or the Tomo platform offer meaningful treatment/outcome advantages over rival systems (particularly Varian). What’s more, while Accuray’s partnership with RaySearch (OTCPK:RSLBF) has helped it improve an area that was significantly deficient compared to Varian and Elekta (treatment planning software), the company has struggled to make a compelling “here’s why you should go with us” case that resonates with hospital purchasing managers.

And now there’s the added news that the company’s CFO of roughly three years is leaving to join a private med-tech. There was no couching this decision in terms of wanting to relocate to a particular geographic area or wanting to get back to a particular industry segment (the med-tech in question is a urology company), and I think investors should ask why the CFO would want to leave if great things were just around the corner.

To be sure, I’m not saying that Accuray is hopeless or that it cannot/will not continue to show improving margins and some level of ongoing product growth. Radixact has seen decent commercial interest and I still believe the Onrad system has potential in markets like China and Japan. Along those lines, I could also see Accuray having some possible acquisition appeal to a Chinese or Japanese acquirer, and I think Accuray’s small size and insignificant market share would help the deal approval process.

The Opportunity

After incorporating fourth quarter performance and guidance, I’m still looking for long-term revenue growth in the neighborhood of 3%. Although Elekta continues to struggle in the market, Varian seems to be benefitting the most from that. I do expect Accuray to be cash flow positive and generate better FCF margins in the coming years as the company slowly builds operating leverage on a growing revenue base. The biggest upside to those numbers, aside from some sort of unexpected shift among key opinion leaders that CyberKnife is must-have/must-use technology, would be more clarity in China and stronger sales execution in what should be a sizable long-term market opportunity for the company.

The Bottom Line

Accuray is not at all expensive, and I believe fair value remains between $4.50 and $5.50. Although announcing multiple multi-system wins could get some excitement back in the shares, as could the announcement of a meaningful partnership in China, the valuation argument is hampered by the reality that med-tech, and particularly small-cap med-tech, stock performance is typically driven by revenue growth and Accuray just isn’t likely to produce a lot of that. Consequently, investors need to at least appreciate the risk of this becoming/remaining a value trap and understand that it’s going to take time for the story to work.

Disclosure: I am/we are long ARAY.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The Healthiest Healthcare REITs

The U.S. Census Bureau categorizes Baby Boomers as individuals born between 1946 and 1964, and the effects of having to care for such a large group will be felt in many areas.

By 2029, when the last round of Boomers reaches retirement age, the number of Americans 65 or older will climb to more than 71 million, up from about 41 million in 2011, a 73 percent increase, according to Census Bureau estimates.

As Ventas CEO Debra Cafaro points out, “we know that the silver wave of the over 75 population will experience a net gain of 70 million individuals between 2020 and 2035, boarding well for our business and giving us confidence in the future while we manage through current operating condition.”

According to CBRE’s 2018 U.S. Real Estate Market Outlook, the aging U.S. population will be a significant tailwind for medical office demand in the years ahead.

We expect demand for medical office buildings to grow, fueled by a shift away from the delivery of patient services on hospital campuses, the adoption of new technology, the aging population, healthcare job growth, tight market conditions and the relative recession-resistance of these properties,” said Andrea Cross, Americas head of office research, CBRE.

The medical office market has performed well in recent years, registering a lower peak vacancy rate than traditional office properties during the 2008 recession and showing a steady decline in vacancy during the recovery. Net absorption has outpaced new supply in 24 of the past 29 quarters, with particularly large imbalances since 2015.

Gross asking rents have been stable, reflecting consistent user demand and long lease terms that limit tenant turnover. New medical space completions have also been low relative to pre-recession levels, and the amount of space under construction has decreased slightly from the Q2 2016 peak. Chris Bodnar, vice chairman, Healthcare, CBRE Capital Markets, explains:

“Investment trends reflect strong medical-office market fundamentals and a broadening pool of interested investors. While uncertainty about healthcare policy poses a risk to the medical office market, favorable demographic trends point to continued strong healthcare demand, regardless of any policy changes.”

The core business of healthcare is inherently driven by demand for patient care, providing a stable foundation to support investment in the sector. The need for more facilities and services to manage the chronic illnesses of this aging population will be a major driver for growth.

Despite the controversy around these and future changes to reimbursement, healthcare is a required service that will continue to need real estate assets, and REITs provide an excellent vehicle for healthcare providers to become more efficient by partnering with “healthy” capitalized companies.

(Photo Source)

The Healthiest Healthcare REITs

So, shoulders back, chin up, deep breath… here’s a handful of hearty and healthy healthcare REITs:


The Big WHY: Champion, diversified healthcare REIT with deliberately constructed portfolio of more than 1,200 assets

Feathers in its Cap: Focused on high-quality real estate well located in attractive markets (with high barriers to entry). Partners with top operators in each asset class – sector leaders, well-positioned for growth. Properties in U.S., Canada, United Kingdom. Portfolio: Senior Housing 62%, Medical Office 20%, Life Science 7%, Health Systems 5%, IRFs/LTACs 2%, Skilled Nursing 1%.

Downsides: Though skilled nursing triple net is 1% of NOI, VTR experienced continued decline in Genesis’s (NYSE:GEN) performance given ongoing industry SNF headwinds.

Performance YTD: 1.2%.

Alpha Insider Management Update: The company’s investments across the healthcare real estate spectrum provide sustainable, growing cash flow during strong economic cycles and resilience during downturns.

Bottom Line: VTR has the absolutely best credit profile and balance sheet. Its net debt-to-EBITDA ratio now stands at an excellent 5.3x and debt-to-assets is also robust at 36%. Substantial dry powder ($3.1 billion on credit facility) for any M&A. Successful history of dividend performance, and growth profile, current yield 5.38%. Payout ratio 78% on FFO. STRONG BUY (as in “buy, and hold onto this one!”)


The Big WHY: Triple net leases primarily in senior housing and healthcare properties via joint ventures, sale-leaseback transactions, mortgage financing, preferred equity, mezzanine lending.

Feathers in its Cap: In business over 25 years. Enterprise value as of June 30 over $2.1 billion. Holds 199 investments in nearly balanced capital allocation: assisted living communities (102, includes independent living & memory care communities), skilled nursing centers (96), and behavioral healthcare hospital. Located in 28 states. Funds From Operations (FFO): $29.6 million for Q2-18, compared with $31.4 million Q2-17 (per diluted common share $0.75 and $0.79).

Downsides: Decreases in Q2-18 results mostly due to defaulted master lease on cash basis in third quarter 2017 and reduction in rental income related to properties sold the past year.

Performance YTD: 6.2%.

Alpha Insider Management Update: Sold portfolio of six assisted living and memory care communities at a net gain of $48.3 million. Completed acquisition of two memory care communities in Texas for $25.2 million with 10-year master lease and 7.25% initial cash yield. Entered into partnership for properties in Medford, OR, and opened new facility in Illinois. New unsecured credit agreement has the opportunity to increase to $1.0 billion.

Bottom Line: Rated as a STRONG BUY. Dividend payout ratio of 76%, yielding 5.09%.

HEALTHY HEALTHCARE REIT #3: Healthcare Trust of America, Inc. (NYSE:HTA)

The Big WHY: Largest dedicated owner and operator of 450 medical office buildings (MOBs) in the U.S. (33 states), across more than 24 million square feet. Over $7 billion invested.

Feathers in its Cap: Provides real estate infrastructure for integrated delivery of healthcare services in highly desirable locations, targeted to build critical mass in 20-25 leading gateway markets generally with leading university and medical institutions, to support a strong, long-term demand for quality medical office space. Q2-18 FFO increased 55.8% to $84.4 million (Q2-17 comparison), or per diluted share +33.3%, to $0.40. During Q2-18, new and renewed leases on approximately 1.0 million square feet (4.2% of portfolio). Tenant retention rate of 86%. Occupancy rate of 90.9%. The company just increased its dividend by 1.6% (payable October 5).

Downsides: MOB is out of favor with institutions, yet sector rotation can provide attractive opportunities for intelligent REIT investors.

Performance YTD: -1.0%.

Alpha Insider Management Update: (“BBB” balance sheet) Announced new development in key gateway market (Miami), and commenced two redevelopments, including on-campus MOB in Raleigh, NC. Sell agreements: Greenville, South Carolina MOB portfolio, $294.3 million. Total leverage 31.8% (debt less cash and cash equivalents to total capitalization). Total liquidity end of quarter $1.0 billion. During Q2, paid down $96.0 million on $286.0 million promissory note in Duke acquisition.

Bottom Line: Founded in 2006 and NYSE-listed in 2012, HTA’s returns have outperformed those of the S&P 500 and US REIT indices. 75% payout ratio, dividend 4.28%. STRONG BUY.


The Big WHY: The operating environment for seniors housing remains challenging, but the benefit of owning a premier major urban market-focused portfolio is attractive. WELL’s operating portfolio continues to show the resiliency expected from the premier operators in top markets and submarkets.

Feathers in its Cap: The REIT’s Q2-18 closing balance sheet position was strong with $215 million of cash and equivalents and $2.5 billion of capacity under the primary unsecured credit facility. The leverage metrics were at robust levels, with net debt-to-adjusted EBITDA of 5.4x and net debt-to-undepreciated book capitalization ratio of 35.6%, while the adjusted fixed charge cover ratio remained strong at 3.5x. WELL increased the normalized FFO range to $3.99-4.06 per share from $3.95-4.05 per share prior.

Downsides: QCP, and partnering with ProMedica is a pretty unique transaction that provides integration and complexity risk.

Performance YTD: 5.9%.

Alpha Insider Management Update: Strong balance sheet with investment grade credit ratings from Moody’s (Baa1), Standard & Poor’s (BBB+), and Fitch (BBB+).

Bottom Line: 5.33% dividend yield, and we are updating from a HOLD to a BUY.

HEALTHY HEALTHCARE REIT #5: Physicians Realty Trust (NYSE:DOC)

The Big WHY: The most important factor in accessing the quality of a medical office building is the health system affiliation, credit quality to tenant, age of the building, occupancy, market share as a tenant, average remaining lease term, size of the building, and the client services and mix of services in the facility. Around 88% of DOC’s growth space is on campus and/or affiliated with a healthcare system.

Feathers in its Cap: DOC’s disciplined approach to investments continues to improve portfolio metrics, narrowing the gap with competitors at an aggressive pace. For example, the company has just 4.4% of leases expiring through 2022 (the peer average is 11.8%).

Downsides: Same as HTA – institutional investors have rotated out of the MOB sector. Also, DOC has yet to increase its dividend.

Performance YTD: -1.4%.

Alpha Insider Management Update: The REIT’s balance sheet metrics remain strong, with debt-to-firm value of 34% and net debt-to-EBITDA of 5.5x. DOC is extremely well-positioned in the rising rate environment. 99% of debt is at a fixed interest rate or is completely hedged, with no significant maturities until 2023.

Bottom Line: DOC’s dividend yields 5.36%, and it’s a STRONG BUY.

(Source: F.A.S.T. Graphs)

Note: We will be providing a detailed SWAN (sleep well at night) research report in the upcoming (September) edition of the Forbes Real Estate Investor.

Note: Brad Thomas is a Wall Street writer, and that means he is not always right with his predictions or recommendations. That also applies to his grammar. Please excuse any typos, and be assured that he will do his best to correct any errors, if they are overlooked.

Finally, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinking. If you have not followed him, please take five seconds and click his name above (top of the page).


I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The Secret About Resumes No Recruiter Will Tell You

For decades, job seekers have been told the importance of having a great resume. Rules and guidelines abound. Your resume should be no longer than one page, attractively formatted, include the right keywords, and display a sense of your individual personality.

If that’s not enough guidance, there are thousands of books to help you write one. But that’s nothing compared to the info that’s available online. A Google search of the phrase “how to write a resume” returns a whopping 37 million (!) results.

Your resume is said to be so crucial to your career that it’s become a proxy for job hunting itself. If you make a mistake at work, for instance, you should “update your resume.” If you “send out 1,000 resumes” and don’t get a job offer, why, there must not be any jobs out there.

As with any business skill, there are secrets that only a very few people know, and in this case the people in the know are the corporate recruiters to whom those resumes are targeted. Surely the recruiters know what really works when it comes writing a great resume, right?

Well, it turns out that the big secret about resumes isn’t how you describe yourself or the jobs you’ve had or your accomplishment. The big secret isn’t about the kind of paper to use or whether to include your hobbies, or anything else like that.

No, the big secret about resumes is that almost nobody reads them and that they’re almost entirely useless as job hunting tools. Macy Andrews, Cisco’s senior director of human resources recently put it in a recent CNN Money article: “The résumé has probably gone from about 40-35% of the hiring process to less than 10%.”

What’s replacing the resume? Well, partly it’s LinkedIn, which is now the go-to place to find out what a person is doing and has done in the business world, as well as who that person might already know. And, contrary to popular belief, your LinkedIn profile isn’t an online resume, any more than your Facebook page is an online version of an Xmas newsletter.

But even LinkedIn is only the tip of the proverbial iceberg because corporate recruiters are now using of big data both to locate qualified candidates and to vet candidates that pop onto their radar. 

According to recent Harris poll of over a thousand hiring and human resource managers, fully 58% consider it a top priority to search for information that supports a candidate’s job qualifications. And one out of five actively look for “a reason not to hire.” 

The idea is patently absurd that a paper resume would have any relevance whatsoever in a world where virtually everything about you is accessible to virtually any company who’s willing to pay for it. Writing a great resume is skill you need about as much as quill-pen calligraphy.  

If you want a great job, here’s what you must do:

Create an online presence that reflects the job you want to land. And that very much means cleaning up anything and everything that might conflict with the image you want to present.

Network, network, network. No just online but in person. Maintain and cultivate every business contact. Take every opportunity to extend those contacts. And then turn contacts into relationships. 

Here’s the good news: both of the above are a heck of a lot more fun than trying to cram who you are and what you can do into a stupid piece of paper.

Despite Not Winning a Championship in a Decade, Tiger Woods Shows Exactly How to Adopt a Winner's Mindset

Top performers such as LeBron James, Jeff Bezos, Elon Musk, and Tiger Woods have a way of captivating our attention no matter what they’re doing. This concept was on full display recently as Tiger Woods was close to winning another major at the PGA Championship.

Normally winning championships and Tiger Woods are synonymous with each other, but Tiger Woods hasn’t won a major in a decade. In fact, he’s been fairly irrelevant from a perspective of actual contention.

Nevertheless, seeing Woods recent resurgence over the last two major championships reminded me of why he’s still one of sports biggest stars. In fact, if you peel back some layers, you’ll see that Tiger Woods is teaching us about mental toughness and how to adopt a winners mindset with these four principles.

1. Being yourself is more than enough.

In today’s world (especially on Instagram), it seems that there are a plethora of individuals who seemingly have it all. In fitness, it’s the perfectly sculpted body that is on display. In business, it’s another story of someone making six-figures in 3 months. And at the beginning of his journey, Woods was a mythical figure who couldn’t do any wrong.

As we all know, this period of seeming invincibility came to a screeching halt with multiple incidents. Woods plummeted down and struggled massively in both life and his sport. But, this very fall from grace made Woods more relatable to everyone.

I make mistakes each day. Many of you reading this make plenty of mistakes on a daily basis. And now, we saw that Tiger Woods even makes mistakes.

Just as Tiger owned up to his mistakes, it’s imperative that you own up to your mistakes when you make them. While the initial inclination is to feel you’ll lose business, trust, or connection–the opposite will happen.

You’ll garner more respect because you’re being authentic and truthful.

2. Be willing to admit your mistakes.

If Tiger continued to deny all of those past mistakes and deflect them onto everyone else, he wouldn’t have earned back the public’s trust and support.

Looking at the Tiger Woods situation reminds me of a lesson I was told as a teenager which stated that “It can take years to build a strong and powerful reputation, but all of that can be wiped away with one irrational decision.”

However, he also reminded me of the second part of the equation, “People are forgiving even to those who make the biggest of mistakes if they feel they’ve learned their lesson and are truly sincere with their apologies.”

Just as the human life is fragile, our reputations and businesses are fragile. Mistakes are bound to happen, but how will you respond? Anything other than taking extreme ownership of the situation isn’t good enough.

If you’re sulking in your mistakes and not dealing well with the scrutiny, take solace in the fact that the world loves comeback stories. A good second act and redemption arc are more than possible.

But people will only give you the chance of rewriting the script if you’re completely transparent and upfront with what you did.

3. Sometimes taking steps back is the only way to go forward.

If you look at the world from a purely superficial standpoint, you may be inclined to think that success is a straight line projection upward. However, achieving success is anything but a linear climb upward. Instead, success is filled with many dips and setbacks along the trek upward.

Between injuries and missing the cut at 15 of the previous 18 majors, Woods efforts to climb back to the top is teaching us that the journey is anything but pretty. During this time, Woods had to make some changes to his game which may have been tough to adjust to in the short run, but will provide big dividends in the long run.

As you go about your journey, don’t be afraid to take steps back in the short term because often times, that’s a necessary action needed to ensure a more fruitful future.

From blue lipstick to Facebook Live, home shopping networks refine their pitch

WEST CHESTER, Pa. (Reuters) – The Home Shopping Network is getting an image makeover.

A studio set is seen at the QVC Studio Park in West Chester, Pennsylvania, U.S., June 4, 2018. Picture taken June 4, 2018. REUTERS/Brendan McDermid.

A U.S. television network where shoppers can buy everything from electronics to kitchen gadgets, the Home Shopping Network is overhauling its lineup to offer more beauty products while adding streamed video content to win over shoppers without cable TV.

A division of Qurate Retail Group, the network is facing growing competition from Amazon Inc. and Evine Live Inc for consumers like 24-year old Erin Bounds, who regard buying products through TV shows a relic of the past.

“Someone who is 24 doesn’t have the time nor desire to watch an hour-long show about a piece of jewelry or a vacuum when they can get an answer and the product quicker and probably cheaper on Amazon,” said Bounds, a resident of Ellicott City, Maryland.

For decades, the main difference to shoppers between HSN and Qurate’s other shopping network, QVC, typically came down to variations in branding and merchandise, with HSN selling more electronics. Qurate acquired HSN in late 2017 for $2.1 billion so the two shopping networks could join forces to better compete against Amazon and its home-shopping-style online video promotions.

Qurate executives told Reuters they now are culling HSN’s core merchandise offerings to eliminate many higher-priced electronics and some home goods, such as vacuum cleaners and blenders.

Host Sloane Glass sells beauty products during a Facebook live event at the QVC Studio Park in West Chester, Pennsylvania, U.S., June 4, 2018. Picture taken June 4, 2018. REUTERS/Brendan McDermid

Instead, they are adding more niche cosmetic and apparel brands to help draw some distinction with QVC. They are also pushing both QVC and HSN to pursue younger shoppers with click-to-buy links on Instagram and Facebook Live for items such as earrings, shoes and Vince Camuto jeans, in a bid to spark a rebound in demand.

Second-quarter revenue at HSN declined 12 percent to $473 million from $533 million a year later the company announced Wednesday. Stock in the company, which counts media mogul John Malone as one of its largest investors, is down about 8 percent year to date, compared with a 14 percent increase for the Nasdaq index, and 64 percent increase for year to date.

“You’re seeing the impact of them digesting a large organization that is clearly not growing if you look at the numbers,” said Ben Claremon, partner and research analyst at investment firm Cove Street Capital, one of Qurate’s shareholders.

“There’s just not the degree of demand for home shopping products, and the desire to spend hours of the day watching them diminishes as you go down in age,” he said.


The new strategy is aimed at creating more distinction with the two cable channels after the merger, according to Rob Robillard, the new VP of Beauty Integration at Qurate.

In beauty, for example, one of HSN’s top selling products is Too Faced “Unicorn Tears” blue lipstick, which sells for roughly $22. One of QVC’s best products is the Doll 10 Nude lipstick with a price tag of around $25, noted Robillard.

Slideshow (20 Images)

“We were sort of hoping there would be this real big difference between HSN and QVC,” he said. “But the two are actually very similar.”

Qurate will partner with Robin Burns-McNeill, chairman of Batallure Beauty, a company specializing in brand strategy, product and package development, sourcing and manufacturing in the fragrance, cosmetics and skincare categories, to create a collection of proprietary beauty brands, the company told Reuters exclusively.

The first manufactured beauty products from this partnership are slated to launch in fall 2019 on, and, if all goes well, the company said they would likely tap on Burns-McNeill’s shoulder to create proprietary brands for HSN as well.

They have a tall order. Amazon is the top online destination for beauty and the fifth-most-popular retailer for skincare and cosmetics, according to Coresight Research, behind leaders Walmart, CVS Health, Target Corp and Walgreens. QVC and HSN do not rank on the list.

In March 2016, Amazon launched “Style Code Live,” a daily live fashion show which has since gone off-air.

This June, Amazon unveiled Prime Wardrobe in the United States, allowing Prime members to try on clothing, shoes, and accessories before purchase. Customers have up to seven days to try their clothes on at home, and are charged only for those items they choose to keep.

Celebrity-driven shows and videos on QVC still have their upside, according to vendors such as Xcel Brands Inc Chief Executive Robert D’Loren. A QVC apparel vendor for more than six years, D’Loren cites on-air appearances of fashion designer and QVC host Isaac Mizrahi – D’Loren’s largest, most successful brand on QVC – as strategic advantage for the home shopping network.

D’Loren thinks Qurate, which currently accounts for 60 percent of Xcel’s brand volume, is well-positioned to take on competitors and video retailer Evine, and that it’s “only a matter of time” before millennials like Bounds give Qurate’s QVC and HSN a shot.

“There is something to tuning in, watching, having product fully demonstrated to you that is unique and has great value, and I haven’t seen that anywhere else in the market,” he said.

Editing by Vanessa O’Connell and Edward Tobin

Unilever to use to move products across China

BERLIN (Reuters) – Chinese ecommerce firm has agreed a deal with Unilever to move products like Lipton’s tea and Lux soap between warehouses across China as the consumer goods firm looks to expand sales in more remote parts of the country.

FILE PHOTO – An employee works at a logistics centre in Langfang, Hebei province, November 10, 2015. REUTERS/Jason Lee/File Photo

The deal is the latest move by an ecommerce company to muscle into the territory of logistics companies by leveraging the expertise and supply chains they have built up for their own retail business to offer those services to others. said in a statement that Unilever, which previously worked exclusively with logistics firms such as Deutsche Post’s DHL for its China distribution, will use its network to shift goods destined for stores between warehouses.

The firms gave no financial details.

FILE PHOTO: The company logo for Unilever is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 17, 2017. REUTERS/Brendan McDermid/File Photo

The move comes as many Western brands are pushing to expand sales to consumers beyond Chinese cities, both online and offline. agreed a similar partnership with the water subsidiary of France’s Danone last year.

“JD will now help us bring our most popular products to the most hard-to-reach communities in China, securely and quickly,” Rohit Jawa, executive vice president of Unilever North Asia, said in the statement. has sought to differentiate itself from bigger rival Alibaba by running all its own logistics, operating over 500 warehouses, and fleets of vehicles, promising it can deliver over 90 percent of orders on the same or next day.

“ knows that they need to increase the density of shipments within their network and they know it is a way to create a strategic and competitive advantage,” said supply chain consultant Brittain Ladd.

“Once a brand is available in China and customers are buying their products, the big challenge is replenishment and warehouses.”

Unilever signed a strategic partnership with Alibaba in 2015, including using data from its online marketing unit and its cloud business, to improve its digital advertising strategy and expand its distribution channels for rural consumers.

Reporting by Emma Thomasson; Editing by Mark Potter

Tesla's slow disclosure raises governance, social media concerns

WASHINGTON (Reuters) – Tesla Inc’s (TSLA.O) handling of Chief Executive Elon Musk’s proposal to take the carmaker private and its failure to promptly file a formal disclosure has raised governance concerns and sparked questions about how companies use social media.

FILE PHOTO: Tesla CEO Elon Musk at a press conference at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper/File Photo

Musk stunned investors last Tuesday by announcing on Twitter that he was considering taking Tesla private in a potential $72 billion transaction and that “funding” had been “secured.”

Tesla’s shares closed up 11 percent before retrenching after the Wall Street Journal reported that the U.S. Securities and Exchange Commission (SEC) had asked Tesla why Musk announced his plans on Twitter and whether his statement was truthful.

Musk provided no details of his funding and as of Thursday Tesla’s board had not received a financing plan from Musk, Reuters reported, leaving investors and the broader market clamoring for more information.

Putting aside whether Musk misled anyone, the unorthodox manner in which he announced the news and Tesla’s failure to promptly clarify the situation with a regulatory filing is a corporate governance lapse that raises questions about how companies use social media to release market-moving news, securities lawyers said.

“Management buyouts or other take-private transactions already suffer from serious information asymmetry between management and public shareholders,” said Gabriel Rauterberg, a University of Michigan law professor.

SEC rules typically require companies to file an 8-K form within four business days of a significant corporate event.

While several securities lawyers said Musk’s tweets alone did not trigger this obligation, such a filing would be prudent given the unusual circumstances, David Axelrod, a partner at law firm Ballard Spahr LLP, said.

“An 8-K would provide some more details, it would say what stage negotiations are in, and provide more information than 53 characters in a tweet,” he added.

SEC guidelines published in 2013 allow companies and their executives to use social media to distribute material information, provided investors have been alerted that this is a possibility. Tesla did this in a 2013 filing.

But such disclosures have to be full and fair, meaning the information is complete and accessible by all investors at the same time, a bar that Musk’s tweets may not have met.

“Twitter is not designed to provide full and fair disclosure. That doesn’t mean that you couldn’t, but in a series of 20 to 30 characters I’m not sure you’re getting full disclosure,” said Zachary Fallon, a former SEC attorney and principal at law firm Blakemore Fallon.

Tesla and the SEC did not reply to requests for comment on Sunday.

Securities lawyers said there was also a question mark over whether Musk selectively disclosed information on the possible terms of the deal when he subsequently replied to followers, two of whom claim in their handles to be investors.

Those tweets were not immediately visible to all followers of Musk’s main feed until he retweeted them.

The 47-year-old billionaire’ s history of joking about Tesla and using twitter to bait his critics, also appears to have undermined trust in Musk’s feed as a reliable source of company information, with many investors initially believing Tuesday’s tweet was a prank.

“Musk’s irreverence and showmanship is part of the Tesla brand, I get that, but I don’t think the securities laws do,” said Fallon.

Reporting by Michelle Price and Jessica DiNapoli; Editing by Susan Thomas

Vietnam's Vinfast in deal with Siemens for technology to make electric buses

HANOI (Reuters) – VinFast Trading and Production LLC has signed two contracts with Siemens Vietnam, a unit of Siemens AG, for the supply of technology and components to manufacture electric buses in the Southeast Asian country.

The headquarters of Siemens AG is seen before the company’s annual news conference in Munich, Germany, November 9, 2017. REUTERS/Michael Dalder

VinFast, a unit of Vietnam’s biggest private conglomerate, Vingroup JSC, said on Monday the deals will enable it to launch the first electric bus by the end of 2019.

“Electric buses are an essential element of sustainable urban public transportation systems,” Siemens Vietnam President and CEO Pham Thai Lai said in the statement.

VinFast will also produce electric motorcycles, electric cars and gasoline cars from its $1.5-billion factory being built in Haiphong City, it said.

In June, General Motors Co agreed to transfer its Vietnamese operation to VinFast, which will also exclusively distribute GM’s Chevrolet cars in Vietnam.

Reporting by Khanh Vu; Editing by Himani Sarkar

This Viral Southwest Airlines Flight Attendant's Safety Brief is Hilarious. But There's 1 Big Problem

You’ll crack a smile at least when you watch the Southwest Airlines flight attendant’s safety brief that I’ve embedded below. It’s pretty funny, although she does talk quite fast.

But it’s time to ask a serious question: Would you remember any of what she said in an actual emergency? 

That’s the big debate right now, as airlines do whatever they can think of to make people pay attention to safety videos and briefings. And we’ve reached a point where yes, some of the messages are in fact quite funny.

(The Air New Zealand one with the naked flight attendants for example will make you laugh, and the new Turkish Airlines LEGO Movie one, which you can also see at the end of this article.) 

But while these are entertaining videos and briefings, they’re hiding a giant problem: Passengers often don’t actually remember what they’ve been told to do, in a high-stress, emergency situation. 

Southwest and Delta

In this age of social media and instant video, we see fast proof. Let me give you two quick, recent examples:

  • Southwest flight 1380 last April, the emergency landing in which passenger Jennifer Riordan died. Viral video and photos show that almost all of the passengers wore their oxygen masks wrong. They would have been useless if the pilot hadn’t descended quickly enough to get to breathable air.
  • Delta Air Lines flight 1854 the following month. Flight attendants I heard from were livid, as they watched passengers evacuate a smoke-filled cabin, but stop to get their carry on bags in violation of a major safety rule.

As Zoe Chance of Yale University explained to the Los Angeles Times recently, the airlines’ funny safety briefings are like the companies that spend millions on Super Bowl ads, only to learn that people loved their ads–but can’t remember what they advertised.

“Just having naked flight attendants doesn’t work if the passengers don’t remember the message,” she said. “They just remember the naked flight attendants.”


So what’s the solution? One idea might be if airlines at least passed some of the safety equipment around on planes occasionally.

It might be helpful, for example, if the first time most passengers ever see an airplane oxygen mask or an under seat flotation device, it’s not during the panic of an actual emergency.

However, some airline pilots and other employees have told me they don’t think that is practical, in this era of shaving seconds off turnaround times in order to meet on-time departure goals.

So barring that, I’d suggest looking to the the U.S. military, which has spent decades learning to teach people to execute complex procedures in highly stressful conditions. 

Quick example: It’s been 15 years since I fired an M16A2 rifle in the Army Reserve, but I remember what to do if one jams in combat, because of the mnemonic they drilled into us: S-P-O-R-T-S: SLAP the magazine, PULL the charging handle, etc.

The military understands that stress makes it really hard to concentrate and remember things. Under intense stress pressure, people will literally forget things like which side of a weapon is the dangerous side (“FRONT TOWARD ENEMY“). 

Same as people will forget, under intense stress, that you’re supposed place the mask “over your nose AND mouth.”


Air travel is safer than it’s ever been, so maybe we’ve been lucky, or maybe this is not as big a problem as it might seem. But it would be great if we could figure out memorable, stressed-out-passenger-proof ways to teach these safety instructions. 

That said, I do find a lot of these briefings funny, and I don’t think I’ve ever personally had a bad experience on Southwest Airlines or Delta. And I do want to give credit where it’s due for being entertaining.

So we’ll end with a few of the funnier safety briefings–including the most recent Southwest one to go viral, along with the classic Air New Zealand video, and the brand new Turkish Airlines one.

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Cyber Saturday—The War on InfoWars

Good evening, Cyber Saturday readers.

A number of tech companies excised the rantings and ravings of Alex Jones, a pundit known for promulgating deranged conspiracy theories, from their digital repositories this past week.

On his website, InfoWars, Jones has been known to push baseless, detestable claims; for example, that the Sandy Hook massacre was a hoax and the September 11th attacks were orchestrated by the government. Fed up with Jones’ antics, Apple, Facebook, Spotify, and YouTube—with the notable exception of Twitter—corked his megaphone.

Add this confrontation to the longstanding tug-of-war between free speech and censorship on the web. One of my favorite contributions to this dialogue was supplied last year by Matthew Prince, CEO and cofounder of Cloudflare, a startup offering services that improve website performance and security. By policy, Prince’s firm chooses to protect all comers, whether that’s the webpage of an ecommerce startup or a black market site. Cloudflare has long maintained that policing the Internet is a job for, well, the police—not for itself.

Until Prince broke his own rule. As the CEO described it in a blog post, one day he felt a customer crossed the line. The Daily Stormer, a neo-Nazi sympathizing site, said that Prince’s company was a secret supporter of its ideology. That went too far—and to prove the point, Prince gave the site the boot.

“Now, having made that decision, let me explain why it’s so dangerous,” Prince wrote. “Without a clear framework as a guide for content regulation, a small number of companies will largely determine what can and cannot be online.”

Subverting his own decision, Prince continued: “Law enforcement, legislators, and courts have the political legitimacy and predictability to make decisions on what content should be restricted. Companies should not.”

I don’t have an easy answer for these predicaments. But as I considered Facebook’s move, the words of the company’s parting security chief, Alex Stamos, rang in my ears. “We need to be willing to pick sides when there are clear moral or humanitarian issues,” he said in March, part of a letter addressed to Facebook that leaked publicly. “And we need to be open, honest and transparent about our challenges and what we are doing to fix them.”

Amen to that. What do you make of this debate, dear reader? I would like to hear from you. What is the right course of action for these companies? Is Twitter CEO Jack Dorsey in the right for keeping Jones afloat, or not?

Do write. I welcome your thoughts.

Have a great weekend.

Robert Hackett


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Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my, PGP encrypted email (see public key on my, Wickr, Signal, or however you (securely) prefer. Feedback welcome.