TIME General Motors

GM Names Safety Czar Amid Recall Scandal

It's just the latest response to the company's failure to address serious safety problems impacting over 3 million cars

General Motors (GM) has appointed a senior executive in charge of vehicle safety amid growing controversy around the company’s safety recalls.

Jeff Boyer, 58, has been named vice president of global vehicle safety. Throughout his forty years at GM, Boyer has held a variety of engineering and safety jobs. According to CNN Money, this is the first time someone so senior at the company has held the position.

The move comes after GM’s recently appointed CEO Mary Barra apologized Monday for the company’s safety failings, and promised to amend the situation.

The company has admitted that its engineers were aware for about 10 years of an ignition issue that potentially impacted the effectiveness of air bags for over 3 million vehicles. The issue has been linked to at least 12 deaths and is under federal investigation. “Something went wrong with our process in this instance, and terrible things happened,” Barra said in a video message. “We will be better because of this tragic situation if we seize the opportunity. And I believe we will do just that.”

Boyer was working in the company’s purchasing department when the safety problems were first discovered, CNN Money reports.

GM says it is increasing production lines to repair faulty cars and has recalled an additional 1.55 million more cars as part of its safety review.

[CNN Money]

TIME Retirement

Even More Proof Americans Think It’s a Great Time to Retire

Jonathan Kitchen—Getty Images

A new survey by the Employee Benefit Research Institute finds that 18 percent of Americans are "very confident" they'll live comfortably when they retire, up 5 percent from last year, thanks to planning like a 401(k) plan or IRA

The evidence keeps pouring in: last year’s torrid stock gains have revitalized the retirement dreams of many Americans. After five years of rock-bottom readings, new data show that confidence in a secure retirement has lifted for workers and retirees alike.

Among workers, 18% now say they are “very confident” they will live comfortably in retirement, up from 13% last year and similar readings each previous year since the recession, according to the 2014 Retirement Confidence Survey from the Employee Benefit Research Institute. Some 37% of workers are “somewhat confident”—also a post-recession high-water mark.

Among retirees, 28% now say they are very confident about maintaining their lifestyle, up from 18% last year; 39% say they are somewhat confident. For both workers and retirees, confidence remains short of peak levels reached before 2007. For example, 79% of retirees were very or somewhat confident about their future just before the crisis—a difference of 12 percentage points.

The reversal is heartening news and ads heft to recent reports showing that retirees, especially, are feeling better than they have in years. Fewer are postponing retirement and more say they believe the stock market will continue to rise and that interest rates will rise as well, providing a higher level of secure income.

But let’s not declare victory over hard times just yet. Two distinct sets of savers seem to be driving the gains in confidence: those with high household income and those who participate in a formal retirement plan like a 401(k) or IRA, EBRI found. This uneven advance may help explain why the percentage of the most forlorn workers and retirees–those saying they are “not at all confident” about retirement security–remains stuck at recession levels.

Nearly 50% of workers without a retirement plan are not at all confident about their financial security, compared with about 10% of those with a plan. Workers in a formal plan are more than twice as likely to be very confident (24%, vs. 9%) about retirement, EBRI found.

The biggest impediments to saving seem to be the high cost of day-to-day living and accumulated debt, the survey found. More than half of workers say daily expenses consume all their income. Meanwhile, only 3% of workers that describe debt as a major problem feel comfortable about retiring while 29% of those who have few debt issues say they are confident in their ability to retire comfortably. That’s hardly a surprise. But it drives home the importance of getting control of your debts before retiring.

TIME Automotives

Watch a Small Child Ruthlessly Bully Ricky Gervais in New Audi Ad


Luxury carmaker Audi has hired Ricky Gervais to plug its latest vehicle. The biting British comedian appears in a series of ads for the new 2015 Audi A3 sedan. In the main 60-second spot (below), Gervais, along with other celebrities such as comedian Kristen Schaal and boxer Claressa Shields speak the opening lyrics to Queen’s “We Are the Champions.”

Another spot (above) features Gervais sitting in an Audi A3 with his niece as she uses the car’s new 4G LTE wireless capability to look up people badmouthing Gervais on Twitter. “Ricky is a pig-nosed troll,” she recites, among other insults. The new Audi, which launches in April, will be the first U.S. car with 4G LTE.

The ads are part of Audi’s ongoing “Uncompromised” campaign, which also included the “Doberhuahua” spot during the Super Bowl. The series also features small video vignettes that profile the individual characters in the main 60-second commercial.

With the A3, which costs less than $30,000, Audi is attempting to bring luxury cars to a broader market. Mercedes is also pushing its prices down, having launched the $29,900 CLA last year. Automotive analysts told Ad Age that at such a price point, car companies can convince middle class families to upgrade from a Honda Accord or Toyota Avalon to a luxury brand.


RIP: Apple Just Killed the iPad 2


Normally, Apple uses its glitzy new product introductions to quietly retire old models. When the company launched the iPad Air, for example, it nixed the fourth-generation iPad while keeping the iPad 2 around as the entry-level tablet. Now Apple has killed the iPad 2, replacing it with the Retina-and-Lightning model. The model is back on the Apple Store for the same price as the Retina iPad Mini.


TIME YouTube

Google and Viacom Settle YouTube Copyright Suit

People walk by a YouTube sign at the new Google office in Toronto, Nov. 13, 2012.
People walk by a YouTube sign at the new Google office in Toronto, Nov. 13, 2012. Mark Blinch—Reuters

The long-running, $1 billion litigation goes back to 2007

Viacom has settled its long-running lawsuit with Google over what the telecommunications giant alleged was willful copyright infringement by Google’s video-sharing site YouTube.

The two companies jointly announced the settlement deal with a statement Tuesday. Terms of the settlement were not disclosed.

“Google and Viacom today jointly announced the resolution of the Viacom vs. YouTube copyright litigation. This settlement reflects the growing collaborative dialogue between our two companies on important opportunities, and we look forward to working more closely together.”

Viacom originally sued YouTube in 2007, alleging the site’s success was built on users posting clips from Viacom-owned television programs in violation of the company’s copyright.

TIME Crime

Infomercial Star Kevin Trudeau Jailed For 10 Years

Kevin Trudeau
Kevin Trudeau walks through the Dirksen U.S. Courthouse in Chicago, Illinois Chicago Tribune/Getty Images

The judge called Trudeau "deceitful to the core" at sentencing Monday, after the author violated a 2004 court order prohibiting him from running misleading ads for his bestseller "The Weight Loss Cure 'They Don't Want You To Know About"

Too-good-to-be-true TV infomercial star and best-selling author Kevin Trudeau was sentenced to 10 years in federal prison Monday for defrauding millions of people with a phony weight-loss book.

“Since the age of 25, [Trudeau] has attempted to cheat others for his own personal gain,” U.S. District Judge Ronald Guzman said at the 51-year-old’s sentencing Monday, adding that the scam artist was “deceitful to the core.”

A jury convicted Trudeau for violating a 2004 court order that prohibited him from running misleading ads for his bestseller The Weight Loss Cure ‘They Don’t Want You To Know About, which encouraged 500-calorie-a-day diets and hormone treatments. In spite of the order, Trudeau reportedly ran infomercials for the book 32,000 times.

The NYT bestseller sold 850,000 copies and created $39 million in revenue, but when Trudeau was fined $37 million he claimed to be broke — and that he didn’t know where he put $100,000 in gold bars he bought.

While Trudeau’s defense claimed that the 10-year sentencing over a $30 book was “overblown and unfair”, Guzman noted that the huckster had been violating similar court orders since the 90’s.

Trudeau sold millions of other books including Debt Cures ‘They’ Don’t Want You to Know About and Natural Cures ‘They’ Don’t Want You to Know About and was fined $2 million by the FTC for claiming that Coral Calcium could cure cancer.

Trudeau’s attorneys plan to appeal the case.


Apple Is Launching a Much Cheaper 8GB iPhone 5c

Apple's iPhone 5c
Apple's iPhone 5c Apple

Apple is adding a lower-cost, lower-capacity 8GB iPhone 5C to its mobile lineup as a tacit admission that its strategy for the 5C—marketed as “for the colorful” in reference to its bright plastic case colors—hasn't worked well

Apple has added a lower-cost, lower-capacity 8GB iPhone 5C to its lineup of phones in Europe. In the UK, an unlocked version of the device costs £429, a difference of £40 from the 16GB model. The model is also available on the French Apple Store. As press time, it was not available on the U.S. Apple Store.

A lower-cost iPhone is a tacit admission that Apple’s strategy with the 5C—marketed as “for the colorful” in reference to its brightly colored plastic case—has not worked as well as the company anticipated. Apple has been under intense pressure to lower the price of its entry-level iPhone in order to expand its market share, especially in developing markets such as China. Wall Street widely expected the ‘C’ in iPhone 5C to stand for ‘cheap,’ but analysts were surprised at the phone’s price when it was released. Traders dinged Apple for the move by knocking $40 billion off the company’s market capitalization the day the 5C was unveiled. Apple CEO Tim Cook admitted in January that he had misjudged demand.

“The fact is, Apple doesn’t know what demand for the iPhone 5C will be in developing markets,” Piper Jaffray’s Gene Munster told Fortune the day the iPhone 5C was unveiled. Rather than give away more margin than necessary, he said, the company decided to start high and make adjustments later. Now, it looks like Apple is making those changes.

Update 9:20 AM: The 8GB iPhone 5C is available in China and Australia as well.


Wal-Mart Wants to Buy Your Used Video Games

Customers enter a Wal-Mart store on Feb. 20, 2014 in San Lorenzo, Calif.
Customers enter a Wal-Mart store on Feb. 20, 2014 in San Lorenzo, Calif. Justin Sullivan—Getty Images

The world’s largest retailer is set to begin a program in more than 3,100 locations that allows consumers to turn in old games—for consoles like Sony Playstation, Microsoft Xbox and Nintendo Wii—in exchange for Wal-Mart gift cards that can be used in stores or online

The world’s largest retailer will begin taking consumers’ old video games in exchange for gift cards on March 26. Wal-Mart said its new service will allow customers to trade in games for credit they can use to shop for other goods in stores or on the company’s website, walmart.com. The program will roll out in more than 3,100 Wal-Mart stores nationwide.

Wal-Mart executives said the service will accept an unlimited number of games for consoles such as the Sony Playstation, Microsoft Xbox, and Nintendo Wii so long as they are in original packaging and undamaged. The trade-in value—which could be used to by anything from groceries to gasoline—will range from a few dollars to $35, depending on the title’s age. Customers must be 18 years or older to participate, the company said.

The retail giant is hoping to tap into the $2 billion pre-owned video game market. Duncan Mac Naughton, Wal-Mart’s chief merchandising and marketing officer, told CNNMoney, the company estimates that there are nearly 1 billion unused video games sitting in homes across the United States. “This is a new category for us. We’re doing it because our customers have asked us for it,” he said.

MORE: The History of Video Game Consoles – Full


Tech Looks Like It’s Entering Another Period of Insanity

Fackbook Acquires WhatsApp For $16 Billion
Justin Sullivan—Getty Images

But are some sky0high prices defensible?

Is the world of tech investing losing its head again? Or are some tech investments worthwhile even at jaw-dropping prices because of the potential for future growth? Such questions crop up now and then, but in the past few weeks they’ve come up with an alarming frequency.

Last month, after Facebook said it would buy WhatsApp for $19 billion, a furious debate broke out over whether the price was insane or defensible. Since then, similar debates have emerged in different areas: most recently, the wildly successful IPO of digital-healthcare startup Castlight; and Intercept Pharmaceuticals, a top-performing stock in the red-hot biotech sector, among others.

There are key differences between these three examples: One is in M&A, another a recent IPO and the third as stock that has traded publicly for a few years. Each operates in a different sector. But they’ve all sparked debates that have a similar dynamic – a disconnect between those who see strategic sense in betting on future growth, and those who say the valuation is unjustified by any logic.

And there seems to be no bridging the disconnect between the two.

Facebook’s acquisition of WhatsApp. Announced four weeks ago, the proposed deal would offer $4 billion in cash and the rest in Facebook shares, which most analysts expect to keep rising for the next year at least.

Why it’s so promising: Facebook needs more must-have apps to remain relevant on mobile. WhatsApp attracted 450 million users with 55 employees and no marketing. Facebook gets better exposure to emerging markets and strengthens its ownership of the photo-sharing market. WhatsApp could conceivably contribute billions to Facebook’s annual revenues. Importantly, Facebook keeps Google from owning WhatsApp.

Why it’s so overvalued: Facebook is paying $345 per employee. For a precedent you have to go back to the dot-com era. Valuing a company on a per-user basis was a desperate metric used in that same era, which didn’t end well. Monetizing WhatsApp faces challenges: Competition is rife (WeChat, KakaoTalk, Kik), and some may undercut WhatsApp’s subscription fees or offer a richer platform of services.

Castlight’s IPO. Founded in 2008, the San-Francisco-based company uses cloud technology to help companies manage healthcare costs more efficiently. Castlight filed to raise $100 million last month, but demand bumped its take up to $176 million. The stock rose 149% to $39.80 on its first day of trading last Friday before settling at $37.25 Monday.

Why it’s so promising: Health care is a notoriously opaque industry, and Castlight is early in creating transparency through cloud software. Its founders hail from RelayHealth (acquired by McKesson), VC firm Venrock and Athenahealth, adding cred on Wall Street. Castlight has a $109 million backlog of contracts not recognized yet at revenue.

Why it’s so overvalued: The company listed at 107 times revenue and now trades at 250 times revenue. (Athenahealth trades at 11 times revenue.) It’s lost a total of $131 million to date. Castlight’s involvement in the cloud and healthcare exposes it to two markets subject to speculative investment.

Intercept’s stock surge. The New York-based developer of drugs for chronic liver disease went public in late 2012 at $15 a share and was trading around $60 a share in early January. After phase II trials of a drug was stopped early because of positive results, the stock has since risen as high as $462 last week, a 577% gain year to date.

Why it’s so promising: The drug treats NASH, a liver condition that can lead to liver failure and that affects an eighth of the US adult population. It’s considered an unmet medical need with no approved therapies. One analyst called the news “potentially paradigm changing” while another said the market could be “bigger than Hepatitis C” with sales as high as $4 billion.

Why it’s so overvalued: Intercept has lost $186 million to date, yet its market cap has gone from $1 billion in January to $8 billion today, and analysts are saying it could rise to $17 billion. The NASH drug has passed a key obstacle but still faces more. The phase II results don’t necessarily guarantee regulatory approval, and long-term side effects could hurt marketing.

It’s important to note that none of these are fly-by-night companies attempting to mislead investors. Each has a well-run business and a promising story to tell. What’s notable is that the market is willing to price each one on a best-case scenario that lies several years down the road. And that’s assuming nothing will go wrong.

No investor wants to be left out of the next big thing. And yet the willingness to invest in sunny, best-case scenarios is something that was absent from the market even a couple of years ago, but is growing more commonplace in 2014. Back then, companies with nine-digit losses couldn’t squeak into the markets. And tech giants like Facebook were focusing on modest acqui-hires.

We’re in a different market now. One where valuations are starting to resemble those of 15 years ago. The difference this time is many of the highly valued companies have a persuasive story to tell. But even a good story can lead to disappointment when it’s priced to perfection.

TIME Government

Wrecking Balls Needed! Cities Can’t Tear Down Blighted Homes Fast Enough

Detroit Struggles To Re-Build A Bankrupt City Amidst Poverty And Blight
Lawrence Payne walks past two abandoned houses on September 4, 2013 in the Six Mile Gratiot neighborhood of Detroit, Michigan. Andrew Burton—Getty Images

Around the country, insufficient funding and epic amounts of red tape are among the hurdles holding American cities back in the quest to demolish tens of thousands of vacant buildings.

Over the weekend, a Philadelphia Inquirer story explored a tough situation in Philly: Authorities have labeled nearly 600 homes as “imminently dangerous” and in need of being torn down, and yet the city does not have enough money in the budget to handle the job. Normally, the cost of razing a dangerous building is the responsibility of the property owner, but in many cases these dilapidated, usually vacant homes have no owners.

By comparison to Detroit, however, Philadelphia’s problems seem minor. The Detroit Free Press recently rehashed some of the monumental challenges facing the city, which has established a goal of tearing down some 80,000 blighted homes over the course of six years. Among the hurdles that must be surmounted to reach the goal is the presence of squatters in a sizable percentage of these homes, as well as the difficulty of finding and transporting the staggering amount of dirt that will be necessary to fill the holes left once the homes and their basements are removed.

Then there’s arguably the most difficult, aggravating challenge of all: paperwork. “Titles must be cleared, utilities shut off, notifications sent, asbestos removed,” the Free Press explained. “Often it can take months to certify that a structure is ready for demolition before the city can issue a permit to a demolition contractor.”

The headaches being encountered by Detroit’s enormous initiative will only seem to grow as the city picks up the pace of demolition. Crews are currently working at a rate of roughly 100 tear-downs per week. By next year, the plan calls for 400 to 500 homes in the city to be razed and removed each and every week.

(MORE: Guess Where the Middle Class Can’t Afford to Live Now? Yep, Detroit)

A New York Times story published last fall explored the idea that cities such as Baltimore, Buffalo, Cleveland, and St. Louis are deciding in favor of demolition not simply because buildings are dangerous and uninhabitable, but sometimes because after seeing the local population decrease year after year, the buildings now have little use. Here’s how one expert quoted by the Times explained the transformation in urban planners’ decision making:

“In the past, cities would look at buildings individually, determine there was a problem, tear them down and then quickly find another use for the land,” said Justin B. Hollander, an urban planning professor at Tufts University. “Now they’re looking at the whole DNA of the city and saying, ‘There are just too many structures for the population we have.’”

The Times reported that Cleveland had spent $50 million over the previous six years on the demolition of houses. Yet it seems as if the work has barely begun. A Cleveland Plain Dealer editorial recently referenced an estimate indicating that 12,000 to 15,000 “eyesores (and potential crime scenes)” in the area should be razed. Because studies have shown that “strategic demolition of blighted structures stabilized and increased real estate values, decreased foreclosure rates and lessened tax delinquencies,” the editorial calls for tens of millions of more dollars to be used to knock down homes as soon as possible.

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