Tag Archives: Investment & Company Information

Former MoviePass CEO reportedly pleads guilty to securities fraud

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Mitch Lowe, one of two MoviePass leaders indicted by the Justice Department in 2022, has pleaded guilty to securities fraud charges. The former CEO admitted to conspiring to deceive the public and investors about the service’s sustainability. Variety reports that the details of Lowe’s plea agreement haven’t been made public.

Prosecutors claim Lowe knew from the start that the company’s $9.95 “unlimited” plan was a short-term gimmick to attract subscribers and inflate stock. He’s also accused of making false statements in press releases, interviews and SEC filings about MoviePass’ long-term viability.

Those statements included allegedly lying about the company’s ability to become profitable on subscription fees alone and having tech that could generate revenue from customer data. He also claimed MoviePass was profiting from multiple revenue streams despite not having any income beyond subscriptions.

Prosecutors also accused Lowe and Ted Farnsworth, former CEO of MoviePass’ parent company Helios and Matheson, of preventing subscribers from getting what was promised from the “unlimited” subscription. The company settled with the FTC in 2021 over allegations that it intentionally invalidated subscriber passwords to freeze their accounts, blocking their ability to get the movie tickets the service promised. MoviePass and its parent company declared bankruptcy in 2020.

Although no sentencing date has been set, Lowe is free on bond and has a status conference court date scheduled in Miami for March 2025. The 72-year-old former executive faces a maximum of five years in federal prison.

“Mitch is a good man who is looking to move forward with his life,” Lowe’s attorneys, Margot Moss and David Oscar Markus, said in a statement to Variety. “He has accepted responsibility for his actions in this case and will continue to try to make things right.”

Meanwhile, Farnsworth is still in custody. He was initially freed on a $1 million bond that was revoked in August 2023 after the feds accused him of misusing nearly $300,000 in company funds. Farnsworth's former boyfriend, who he met on an escort site, was paid $147,000, and received a Cadillac worth $144,000; after the pair split up, the feds say he falsely accused his ex of stealing the vehicle.

This article originally appeared on Engadget at https://www.engadget.com/big-tech/former-moviepass-ceo-reportedly-pleads-guilty-to-securities-fraud-201131284.html?src=rss

OpenAI is reportedly moving away from its complicated non-profit structure next year

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Sam Altman has told OpenAI staff members during their weekly meeting that the company is changing its rather convoluted non-profit corporate structure next year, according to Fortune. The CEO said OpenAI will move away from being controlled by a non-profit entity and will transition into a more traditional for-profit organization. He didn't delve into the specifics of how the company will achieve that goal and what OpenAI's corporate structure will look like exactly. A spokesperson only told Fortune that it remains "focused on building AI that benefits everyone" and that non-profit is "core to [its] mission and will continue to exist."

OpenAI started as a non-profit organization in 2015 that relied on money from donors. In a page explaining its structure, it said that it only raised $130.5 million in total donations over the years, which it says made it clear that "donations alone would not scale with the cost of computational power and talent required to push [its] core research forward." The then-purely non-profit organization created a for-profit subsidiary in order to solve that problem. As Fortune explains, OpenAI's non-profit entity currently controls its for-profit arm, which in turn controls a holding company that takes investments from companies like Microsoft. 

Under this structure, the profit that can be allocated to investors, including Microsoft, has a cap. Anything OpenAI makes beyond the cap will go to its non-profit division. And the company's revenue is booming, according to a report by The Information published in June. OpenAI reportedly doubled its annualized revenue in the first half of the year, thanks to the subscription version of ChatGPT.

The company's complex structure also allowed OpenAI's non-profit board of directors to oust Altman in 2023, because they "no longer [have] confidence in his ability to continue leading OpenAI." Five days later, however, the board was disbanded and replaced, while Altman was reinstated as CEO. 

This article originally appeared on Engadget at https://www.engadget.com/ai/openai-is-reportedly-moving-away-from-its-complicated-non-profit-structure-next-year-130014948.html?src=rss

Verizon will buy Frontier for $20 billion to expand its fiber network

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Verizon is acquiring Frontier for $20 billion, the provider announced one day after reports emerged that the two companies were in talks. The deal will expand Verizon's fiber network across the United States, allowing it to better compete with its rival, AT&T. Frontier will add 2.2 million fiber subscribers in 25 states, extending Verizon's reach to about 10 million customers in 31 states and Washington, DC. Verizon has experienced slowing revenue, and acquiring Frontier could give it the boost it needed in less time than it would take to expand its own network. 

"The acquisition of Frontier is a strategic fit," said Verizon Chairman and CEO Hans Vestberg in a statement. "It will build on Verizon's two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fiber network."

Frontier has experienced a rocky few years. The company declared Chapter 11 bankruptcy in 2020 and pivoted to a "leaner business" but faced concerns about emptying its bank account before finishing ongoing upgrades. Furthermore, the FTC sued Frontier in 2021, claiming it misrepresented its actual speeds. The company had to pay over $8.5 million and remove all false information. 

This article originally appeared on Engadget at https://www.engadget.com/verizon-will-buy-frontier-for-20-billion-to-expand-its-fiber-network-114532971.html?src=rss

Snap is testing a less confusing version of its app

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One of the most common criticisms against Snapchat is that it's not very intuitive and is quite hard navigate as a new user. Personally, I never quite got the hang of it and find TikTok much, much easier to use. Apparently, Snap is aware of the issue, because it's currently testing a "simplified version of Snapchat." Snap CEO Evan Spiegel has revealed the existence of an experimental Snapchat app in a lengthy blog post discussing the company's highs and lows over the past 13 years, as well as its most recent earnings and future plans. 

The simplified app "aims to improve accessibility and usability," he wrote, adding that it's been positively received in early tests. In addition, the app could lead to better app performance and faster load times overall. Even so, Spiegel said that the company "will be thoughtful and deliberate about making a change of this magnitude" despite the app's reception. That most likely means that Snap is still testing the app more thoroughly and that we won't be seeing it anytime soon. 

In addition to revealing the existence of a simpler Snapchat, Spiegel has also revealed that the company is testing new advertisement formats. One of those formats called Sponsored Snaps will show up as new Snaps in your chat inbox, alongside your friends' messages. The good news is that you won't get a notification for those Snap ads, and opening the messages is optional. As The Verge notes, though, the ads could sit above your actual friends' messages if you never open them. 

The company most likely cooked up the new and potentially more intrusive ad placement as a response to its lagging share performance in the ad market. Spiegel said that the company has managed to reverse two years of declining year-over-year revenue growth, but its advertising business is growing slower than its competitors'. He also said that expanding the company's digital advertising business is key to its long-term revenue potential and that Snap's investors are getting concerned that it's not growing faster. 

This article originally appeared on Engadget at https://www.engadget.com/apps/snap-is-testing-a-less-confusing-version-of-its-app-113007479.html?src=rss

ChatGPT has doubled its weekly active users to 200 million

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ChatGPT now has 200 million weekly active users, according to OpenAI. That represents a doubling of the weekly audience of 100 million the company announced last November. A representative from the company told Engadget that API usage has also doubled since the July release of GPT-4o mini.

User numbers aren't the only big growth OpenAI has seen over the past year. CEO Sam Altman reportedly told employees this summer that the company's annualized revenue — which takes a monthly revenue figure and stretches it out over a whole year — had reached $3.4 billion, up from $1.6 billion at the end of 2023.

Separately from today's usercount announcement, The Wall Street Journal reported that Apple, Nvidia and Microsoft are in talks to invest in a new fundraising round for OpenAI. The only detail the report had about the scale of this funding round was that it would push OpenAI's valuation above $100 billion.

Microsoft has invested $13 billion into the AI business since 2019, while Apple revealed that ChatGPT will form a large part of its upcoming Apple Intelligence push. Both Microsoft and Apple gave up their seats on OpenAI's board of directors this summer after the European Commission raised antitrust concerns about the businesses' close relationships.

This article originally appeared on Engadget at https://www.engadget.com/ai/chatgpt-has-doubled-its-weekly-active-users-to-200-million-233037951.html?src=rss

UK opens antitrust investigation into Amazon over its ties to AI startup Anthropic

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The UK’s antitrust regulator is set to carry out an antitrust investigation into Amazon and its ties with AI startup Anthropic. This comes after Amazon completed a $4 billion investment into the company. For the uninitiated, Anthropic is the organization behind the AI chatbot Claude.

The investigation will decide whether the aforementioned $4 billion investment qualifies as a merger under current regulations set forth by the country’s Competition and Markets Authority (CMA.) If it’s officially considered a merger, the investigation will then look into whether or not it will harm competition in the country. The investigators have 40 working days to come to a decision.

Amazon has previously stated the investment does not give it a majority stake in Anthropic, according to a report by TechCrunch. The company also told Financial Times that the investment “does not raise any competition concerns or meet the CMA’s own threshold for review.” Anthropic has also dismissed the notion that the investment indicates a merger of any kind.

“We are an independent company,” a spokesperson said in a statement. “Amazon does not have a seat on Anthropic’s board, nor does it have any board observer rights. We intend to cooperate with the CMA and provide them with a comprehensive understanding of Amazon’s investment and our commercial collaboration.”

The investigation is a small piece of a larger puzzle in which UK regulators look to curb “quasi-mergers.” This is when larger companies exert outsized influence over startups via strategic investments or by scooping up talent. This would, in theory, give the older company all of the benefits of a merger but without the regulatory scrutiny that would accompany an official acquisition.

To that end, the CMA is also preparing to launch an investigation into Google and its own massive investments into Anthropic. The company reportedly made two large investments, one for $300 million and another for $2 billion. Anthropic has raised $10 billion since its inception back in 2021, so Google and Amazon account for over half of that amount.

The regulatory agency is carrying out a related inquiry into Microsoft’s close partnership with OpenAI, which could represent a quasi-merger. It’s also looking into Microsoft hiring the core team behind Inflection AI, a rival to OpenAI. Last month, the CMA said it would be extending that last one into a full probe.

This article originally appeared on Engadget at https://www.engadget.com/ai/uk-opens-antitrust-investigation-into-amazon-over-its-ties-to-ai-startup-anthropic-153026609.html?src=rss

Sonos is delaying two product launches until it fixes its buggy app

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Last quarter should've been a triumphant one for Sonos with the launch of its first headphones, but the company is facing the realities of its botched app redesign. CEO Patrick Spence explained in the company's Q3 earnings press release that Sonos has reduced its 2024 fiscal guidance as a result of "problems" both customers and partners encountered with the software update. But, the issues don't stop with revenue. The company also said on its earnings call it will delay two new product launches planned for Q4 until the app is fixed.  

“Thanks to Ace, our long-awaited entry into headphones, we reported year over year revenue growth and delivered results that slightly exceeded our expectations in our third quarter,” Spence said. “This was overshadowed by the problems that our customers and partners experienced as a result of the rollout of our new app, which in turn has required us to reduce our Fiscal 2024 guidance. We have a clear action plan to address the issues caused by our app as quickly as possible."

Spence said the new products were ready to ship in Q4, but that right now "our number one priority is to make this right and ensure that the next chapter is even better than the previous ones." Of course, the company hasn't officially discussed exactly what those two products are just yet. Bloomberg reported late last year that Sonos was working on a set-top TV streaming box and a successor to its premium Arc soundbar. The CEO also admitted during the call that the total cost of fixing the issues with the app will cost the company $20-$30 million. However, Spence is confident Sonos will bounce back, describing this as only one "chapter" in the company's history.

This article originally appeared on Engadget at https://www.engadget.com/audio/speakers/sonos-is-delaying-two-product-launches-until-it-fixes-its-buggy-app-213743460.html?src=rss

Nintendo profits fall 55 percent as people save their cash for the Switch 2

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People are so excited for the next-gen Switch, they're likely holding off on buying Nintendo's current consoles and games. At least that's what the company's latest earnings report seems to indicate. For the quarter ending on June 30, Nintendo posted a net profit of 80.9 billion Japanese Yen, which is higher than its forecast but over 50 percent lower than its net profit for the same period last fiscal year. In addition, the company said it only sold 2.1 million Switch consoles for the quarter. That means it experienced a 46.3 percent decline on unit sales year-on-year. Even its games didn't sell well, seeing as Nintendo posted a software sales figure that's 41.3 percent lower than last fiscal year's at 30.64 million units sold. 

In its report, Nintendo admits that the low sales figures for games was caused by the lack of big releases, such as the previous year's The Legend of Zelda: Tears of the Kingdom. The Super Mario Bros. Movie also helped "energize" its business back then. But since hardware sales for this quarter are similar to the previous one's, Nintendo considers its Switch sales to be stable. 

Nintendo is expected to launch its "Switch 2" console soon. It was expected to come out sometime this year, but according to reports published in the previous months, it will be released in early 2025 instead. There's still very little known about the upcoming console, but rumors say it will have backwards compatibility, as well as 4K capabilities. 

This article originally appeared on Engadget at https://www.engadget.com/nintendo-profits-fall-55-percent-as-people-save-their-cash-for-the-switch-2-140019403.html?src=rss

Intel will cut over 15,000 jobs in a sweeping cost-cutting effort

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In a crushing quarterly update, Intel disclosed that it will cut more than 15 percent of its workforce. The layoffs, which could impact over 15,000 jobs, are part of the company's $10 billion cost-reduction plan to recover financial stability. Intel posted a second-quarter net loss of $1.6 billion, plunging from the net income of $1.5 billion it reported in the same period of 2023.

CEO Pat Gelsinger addressed employees with a memo acknowledging the scope of today's announcements. "This is painful news for me to share," he said. "I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history."

As well as the job cuts, the cost-reduction plan includes creating separate financial reporting for Intel Products and Intel Foundry. The Intel Foundry branch saw an operating loss of $2.8 billion in Q2, even more than the $1.8 billion operating loss it saw during the second quarter last year. Intel has been in the process of overhauling its foundries to make them more competitive. In the interim, it has had to rely on other companies for some production. TSMC, the same manufacturer used by Apple, Qualcomm and AMD, is producing its new Lunar Lake chips.

The company took an additional hit in the public eye when its 13th- and 14th-generation desktop CPUs began experiencing instability issues. While a fix is expected this month to prevent any further problems, any damage that the microcode errors caused to CPUs appears to be permanent.

This article originally appeared on Engadget at https://www.engadget.com/intel-will-cut-over-15000-jobs-in-a-sweeping-cost-cutting-effort-220951016.html?src=rss

Intel will cut over 15,000 jobs in a sweeping cost-cutting effort

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In a crushing quarterly update, Intel disclosed that it will cut more than 15 percent of its workforce. The layoffs, which could impact over 15,000 jobs, are part of the company's $10 billion cost-reduction plan to recover financial stability. Intel posted a second-quarter net loss of $1.6 billion, plunging from the net income of $1.5 billion it reported in the same period of 2023.

CEO Pat Gelsinger addressed employees with a memo acknowledging the scope of today's announcements. "This is painful news for me to share," he said. "I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history."

As well as the job cuts, the cost-reduction plan includes creating separate financial reporting for Intel Products and Intel Foundry. The Intel Foundry branch saw an operating loss of $2.8 billion in Q2, even more than the $1.8 billion operating loss it saw during the second quarter last year. Intel has been in the process of overhauling its foundries to make them more competitive. In the interim, it has had to rely on other companies for some production. TSMC, the same manufacturer used by Apple, Qualcomm and AMD, is producing its new Lunar Lake chips.

The company took an additional hit in the public eye when its 13th- and 14th-generation desktop CPUs began experiencing instability issues. While a fix is expected this month to prevent any further problems, any damage that the microcode errors caused to CPUs appears to be permanent.

This article originally appeared on Engadget at https://www.engadget.com/intel-will-cut-over-15000-jobs-in-a-sweeping-cost-cutting-effort-220951016.html?src=rss