TIME Companies

China’s Xiaomi is Now Worth More Than Uber

Lei Jun, chairman and CEO of China's Xiaomi Inc., gives a lecture at Wuhan University in Wuhan, China on Nov. 29, 2014.
Lei Jun, chairman and CEO of China's Xiaomi Inc., gives a lecture at Wuhan University in Wuhan, China on Nov. 29, 2014. ChinaFotoPress—ChinaFotoPress via Getty Images

Chinese cell phone maker valued at more than $45 billion after raising $1 billion in new funding

Xiaomi, the Chinese maker of affordable smartphones, is now worth more than $45 billion after raising over $1 billion in its latest round of funding. That makes it one of the most valuable tech startups in the world, surpassing Uber’s $41 billion valuation.

The investment round is expected to close as early as Monday and is led by All-Stars Investment, a fund run by former Morgan Stanley analyst Richard Ji, Thee Wall Street Journal reported. Other big name investors are also getting in on the deal, including Alibaba Group Executive Chairman Jack Ma and Singapore sovereign-wealth fund GIC.

Following Xiaomi’s most recent funding round in August 2013, the smartphone maker was valued at $10 billion. The company’s valuation has skyrocketed 350% over the past 16 months. Expectations are high as Xiaomi pushes its product beyond China, where it rapidly became the top-selling vendor since its launch in 2010, and many investors are hoping that it can grow as quickly in emerging markets where the demand for inexpensive smartphones is high.

Xiaomi manufactures phones that operate a customized version of Google’s Android operating system and are known for balancing quality and affordability. It has grown rapidly, overtaking Samsung Electronics as China’s No. 1 maker of smartphones based on total shipments during the second quarter this year. Xiaomi’s shipments are expected to reach 60 million units worldwide this year, up from 18.7 million in 2013.

The privately-owned smartphone maker booked a net profit of about $56 million last year, according to a regulatory filing in December. The report also revealed razor-thin margins as the company seeks to gain a broader share of the global smartphone market. Xiaomi’s operating margin was 1.8% in 2013 compared to Samsung’s 18.7%.

The report applied to Xiaomi Inc., one company among a group of companies that are referred to as Xiaomi, a company spokeswoman told Reuters. She declined to provide more information about Xiaomi Inc. and its relationship with Xiaomi’s business as a whole.

“Our holding structure is considered a commercial secret,” spokeswoman Joy Han said.

The top of the company’s corporate structure is Xiaomi Corp., which is incorporated in the Cayman Islands, and is the recipient of the current round of funding.

This article originally appeared on Fortune.com

TIME Economy

Here’s the Big Problem With America’s Economic Recovery

Janet Yellen
Federal Reserve Bank Board Chairman Janet Yellen Chip Somodevilla—Getty Images

Yes, the U.S. is roaring back—especially compared to competitors—but that doesn't mean we're out of the woods yet exactly

If you could write one headline to encompass the past six years of economic history, it would probably be “U.S. Leadership Is Over.” The financial crisis, the Great Recession and the tepid recovery that followed seemed to mark a permanent decline in American market hegemony. But the past few months of economic data are calling all that into question: U.S. gross domestic product and jobs growth are the strongest they’ve been since the crisis. CEO surveys are predicting a new era of business spending. And the effect of the dramatic fall in oil prices since last summer will likely mean the equivalent of a $100 billion tax cut for U.S. consumers.

For an economy made up 70% of consumer spending, that could mean the beginning of that virtuous, job-creating consumption cycle that we’ve been awaiting since things went to hell in 2008. What’s more, with trouble in developing markets like Russia, India and Brazil as well as most of Europe, the U.S. is suddenly no longer the epicenter of market trouble but rather the best hope for global prosperity. The question everyone is asking now is, Can the U.S. lead the world again?—-economically, at least.

Times have changed since the U.S. last found itself in a similar position. Then, back in the late 1990s, when the Asian debt crisis had everyone predicting the end of a great run of global growth, the worst-case scenario never came to pass. Even as China and the other big Asian markets tanked, U.S. growth powered along at nearly 4%, helping the rest of the world maintain a respectable 2.5% average.

But now China represents four times as much of the world’s growth as it used to, having swapped places with Europe in terms of importance. The debt crisis and major economic slowdown happening in the world’s most populous nation are big reasons that oil prices have fallen—Chinese businesses and consumers are using much less energy these days. That creates a contagion effect in countries like Brazil, Nigeria and Russia and in parts of the Middle East, which have economies that are increasingly driven by China. No wonder experts like Morgan Stanley’s Ruchir Sharma are proclaiming that the next global recession will be “made in China.”

What does all that mean economically for the U.S.? While the fall in oil prices is great short-term news for middle- and low-income Americans—who are already buying more gas, cars and big-ticket appliances as a result—it also makes it tougher for American energy producers to pump out of the ground all that homemade shale oil and gas we’ve been hearing about for the past several years.

Unlike the Saudis, who can practically dig with a teaspoon and hit oil, we have to frack for it, and that’s expensive. Saudis need about $25 a barrel to make money on oil. We need at least $70, and most of the energy development and production happening in the U.S. now was set up at a time when prices were over $100. Currently they are hovering around $60, thanks not only to a sluggish China but also to the unwillingness of Saudi Arabia to cut production in order to boost prices (which may be part of a complex geopolitical strategy by the Saudis to put pressure on rival petro-autocrats in Iran, as well as Putin’s Russia).

All of this matters, and not just because energy is the de facto scoreboard for the global economy these days. If U.S. energy producers decide that they can’t afford to stay in the game with prices so low, that could hurt American manufacturers who were basing their expansion plans on cheap power. They might cut jobs, which cuts consumer spending, which cuts jobs … head-spinning, I know. The bottom line is that the evolution of the global economy over the past couple of decades blunts the ability of the U.S. to carry the rest of the world economically in the years ahead.

While it’s an amazing thing that the U.S. is likely to outgrow many emerging markets this year, the crucial question will be how robust the U.S. recovery will remain in the face of the global slowdown. At the risk of being a Cassandra, I’d feel better if I thought the U.S. recovery had been built on a firmer foundation, like a strong housing recovery or a real pickup in wages. Neither is the case. Rather, this recovery is genetically modified—it was engineered by the Fed’s $4 trillion money dump and interest rates that are still near zero. As they begin to rise—as they almost certainly will toward the middle to end of 2015—the monetary scientists in Washington will step back from the petri dish and see if the economy can sustain what they kick-started. Only then will we be able to gauge whether the U.S. has regained its position as the driver of the global economy.

TIME Media

Dish Network Drops Fox After Failed Contract Negotiations

Both sides are blaming each other

Fox News Channel and Fox Business were blacked out Saturday on satellite TV provider Dish Network, after the two parties failed to agree on a new contract.

Dish has been negotiating with the two Fox channels over the last several weeks, and both sides are pointing fingers at each other, the Wall Street Journal reported on Sunday.

In a statement, Dish’s senior vice president of programming, Warren Schlichting, accused Fox News of attempting to increase fees for sports and entertainment channels during the contract’s negotiation, which did not include those channels.

“It’s like we’re about to close on a house and the realtor is trying to make us buy a new car as well,” said Warren Schlichting, Dish’s senior vice president of programming. “Fox blacked out two of its news channels, using them as leverage to triple rates on sports and entertainment channels that are not in this contract.”

While Dish says the negotiations are continuing, and it has offered the two Fox channels a short term extension, Fox contends that Dish had prematurely blocked the channels. Fox News Channel vice president Tim Carry said in a statement that Fox’x blocking is in line with Dish’s history of failed negotiations, including a 12-hour CBS blackout earlier this month.

“It is disappointing that, after nearly two decades without a blackout, Fox News Channel has been blocked by Dish,” Carry said. “This is the third time in as many months that Dish customers have suffered through a blackout due to Dish’s intransigence. Dish’s record speaks for itself, and makes its rhetoric about ‘reasonable’ agreements ring hollow.”

[WSJ]

TIME Retail

Staples Estimates Hackers Breached 1.16 Million Credit Cards

Internal investigation finds traces of malware infecting sales systems at up to 115 locations

Staples confirmed on Friday that suspicious cyber activity, first spotted in September, was most likely a malware attack that may have breached 1.16 million credit cards.

A preliminary investigation found evidence of malware installed in the point-of-sales systems at 115 locations. The malware may have given hackers access to cardholder names, credit card numbers and verification codes. The breaches began in late summer and continued until the retailer detected and removed the malware in mid-September.

The company said that affected customers could request free identity protection services and would not be held liable for fraudulent charges.

TIME energy

Gas Stations in 24 States Drop Prices to $2 a Gallon

Mark Monaham, owner of the Raceway gas station in McComb, Miss., changes his fuel price billboard, Friday, Dec. 19, 2014. Gas prices throughout the region continue to fall as oil prices plummet.
Mark Monaham, owner of the Raceway gas station in McComb, Miss., changes his fuel price billboard on Dec. 19, 2014. Daniel Lin—AP

Christmas comes early for many commuters

An oil boom has pushed gas prices at some stations, as of Saturday, down to as little as $2 a gallon.

Price tracking service GasBuddy.com found that pockets of low prices below $2 have also cropped up across the country, while average prices across the U.S. are tracking at $2.43 a gallon.

“As of this morning, there are 24 states with prices under $2 a gallon,” GasBuddy’s senior petroleum analyst told USA Today.

Commuters in Missouri have reaped the biggest windfalls, with gas dropping to $1.96 a gallon in Springfield–and even lower in some outlying towns.

With Saudi Arabia’s announcement in September that it would keep the oil flowing, despite falling prices, analysts predict that gas prices have not bottomed out just yet. American Automobile Association analysts expect prices to fall by another seven cents, just in time for Christmas.

Read more at USA Today.

TIME Media

Sony Chief Says ‘We Have Not Caved’ on The Interview

"We have not given up," Michael Lynton said after his studio cancelled the movie under pressure

Sony Pictures Entertainment CEO Michael Lynton defended his company’s decision to cancel the release of The Interview on Friday, even as the company refused to rule out releasing the movie in other ways.

Lynton said Sony’s decision was prompted by movie theaters opting not to show the film after hackers, who U.S. officials believe are linked to North Korea and who have wreaked havoc on the studio by disclosing emails and other company information, threatened 9/11-style attacks. Moments earlier, President Barack Obama had called the move to cancel the Christmas Day release a “mistake.”

“The unfortunate part is in this instance the President, the press, and the public are mistaken as to what actually happened,” Lynton said on CNN. “When it came to the crucial moment… the movie theaters came to us one by one over the course of a very short period of time. We were completely surprised by it.”

Read more: You can’t see The Interview, but TIME’s film critic did

Sony said in a statement later Friday that its decision was only about the Christmas Day release.

“After that decision, we immediately began actively surveying alternatives to enable us to release the movie on a different platform,” the studio said. “It is still our hope that anyone who wants to see this movie will get the opportunity to do so.”

Obama told reporters he wished Sony had reached out to him before canceling the film’s Christmas day release. It depicts a fictional assassination attempt against North Korean leader Kim Jong Un.

“We cannot have a society where some dictator someplace can start imposing censorship here in the United States,” he said. “Imagine if producers and distributors and others start engaging in self-censorship because they don’t want to offend the sensibilities of someone who’s sensibilities probably need to be offended.”

Lynton denied the studio had given into the hackers’ threats.

“We have not caved. We have not given up,” he said. “We have always had every desire to have the American public see this movie.”

Read next: Obama Says Sony “Made a Mistake” Pulling ‘The Interview’

TIME Companies

Uber Is Trying to Patent Its Surge Pricing Technology

The practice recently fueled criticism when users in Sydney faced rising prices as they tried to flee the area of a hostage crisis

The fast-growing ride-sharing service Uber wants to patent a pricing technology that has come under fire from critics who accuse the company of price gouging.

The technology, which Uber calls “surge pricing,” is among at least 13 patent applications the company has filed with the U.S. patent office, which typically become public 18 months after filing, Bloomberg reports. So far, most of the applications have been initially rejected for “obviousness” or because they were otherwise ineligible, but there’s been no decision yet on the surge pricing technology.

Read more: This is how Uber’s surge pricing works

The company, which was founded in San Francisco in 2009 and has already expanded to more than 50 countries, has defended the practice, which adjusts prices in real time based on the amount of demand in the area.

But Uber, already under pressure in jurisdictions around the world over regulatory and safety concerns, drew renewed criticism when the service raised prices in Sydney earlier this week as users were trying to leave the area around a hostage crisis.

[Bloomberg]

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