Good morning.
Qualcomm shares took a tumble yesterday amid reports that Apple might stop using the company’s chips in its products. Apple and Qualcomm have been caught in an increasingly nasty battle over patent royalty payments. Both sides have much at stake. Qualcomm’s modem chips are considered the best in the market, and while Intel is scrambling to catch up, it hasn’t yet. I can’t do justice to this battle royale here, but you can read more about it in this Fortune story. And you can watch Qualcomm CEO Steve Mollenkopf talk about the epic battle in this interview from July’s Brainstorm Tech in Aspen.
In the meantime, Apple fanboys are geeking out over the facial recognition feature of the new iPhone X. Fortune’s Andrew Nusca summarizes the responses here, but the bottom line is it works pretty well—unless you happen to be an identical twin. The Wall Street Journal’s Joanna Stern seems to have gone to the greatest extremes to test the new technology. You can watch her amusing video review here.
I’m writing this Tuesday evening from the Time Inc. offices, just a few blocks from where a Home Depot truck turned down a bike path this afternoon, killing at least eight people and injuring a dozen more. The government is treating it as a terror attack. It’s a frightening flashback for this lower Manhattan neighborhood, which is still rebuilding from the 9/11 terror attack.
News below.
Alan Murray
@alansmurray
alan.murray@fortune.com
Top News
• Another Truck, Another Uzbek
Eight people were killed and dozens more injured when a man inspired by the Islamic State drove a pickup truck down a cycle path in lower Manhattan, less than a mile from Ground Zero. The driver, a 29 year-old Uzbek national named Sayfullo Saipov, had entered the U.S. in 2010. He was shot and apprehended by police. He’s the latest in a string of Uzbeks involved in terror attacks worldwide, a product of a country that long ago fell into the trap of breeding terrorists with a one-dimensional policy of repression. Homeland Security wasn’t the only department whose vetting fell short: Uber confirmed Saipov was a registered driver with the company, having passed a background check. Fortune
• Rockwell Automation Rejects Emerson
Rockwell Automation rejected a $28 billion approach from Emerson Electric. A merger would create a new heavyweight in the area of industrial equipment systems that (according to its advocates) would generate $6 billion in synergies. However, Rockwell’s management were reportedly sniffy about the amount of Emerson stock involved the offer (roughly half). Rockwell’s has risen 150% over the last decade, Emerson’s only 27%. Fortune
• Burning Through Reserves
The cost of the California wildfires just keeps rising. Insurance commissioner Dave Jones said the latest estimate for insured losses is now $3.3 billion, more than three times an assessment made two weeks ago. Jones said he was concerned that the fires “are not an anomaly and may represent the new normal” due to Climate Change. If that’s true, then California’s annual premiums, currently $289 billion, are going to be heading much higher. Fortune
• Airbus Admission Raises U.S. Jeopardy
Airbus said it had misled U.S. regulators over details of its military aerospace exports, potentially exposing it to heavy fines. The efforts of German CEO Tom Enders to clear up a scandal over irregular payments to intermediaries and limit its liability have reportedly alarmed the French government. The satirical weekly Le Canard Enchaine will report today that President Emmanuel Macron wants to push Enders out, an effort that would undo years of efforts to make the company more independent of political pressure. Airbus’ stock still rallied 3.6% yesterday, on perceptions that things could have been much worse. Reuters
Around the Water Cooler
• Non Olet Pecunia (Series 3420, Ep. 8)
Facebook failed to spot the Russian provenance of ads designed to divide and polarize U.S. opinion even though they were paid for in roubles, Congress heard (with more than a little incredulity) yesterday. In a column for Fortune Insiders yesterday, Vivek Wadhwa and Alex Salkever boil social media’s problems down to the age-old problem that ‘money doesn’t smell.’ The rush for profit, and stock market valuation, has outweighed even the most rudimentary vetting of who is using the networks, and for what ends. Fortune
• What Could Possibly Go Wrong?
Bitcoin surged to a new high of over $6,500 overnight, revelling in another stamp of approval from the traditional world of finance. The Chicago Mercantile Exchange said it intended to offer futures contracts on the virtual currency. That greatly expands the pool of potential investors speculators, as well as the opportunities for bringing leverage to the party, given that premiums on futures are typically only a fraction of the value of the underlying contract. The plans of both the CME and its local rival, Cboe, which announced its ambitions for Bitcoin derivatives in August, still require approval from the CFTC. Bloomberg
• Under Armour Under Pressure
Shares in Under Armour took another heavy fall after it cut its sales forecast for the second time in three months, and confirmed its first quarterly sales decline in 12 years as a listed company. That may cast further doubt over its expansion into such exotic areas as outdoor apparel. It certainly reinforces the perception that Adidas is the company with all the momentum in the U.S. sports gear market right now. Fortune
• Revamped Sony Is Buzzing
Shares in Sony hit a nine-year high overnight after it forecast a record profit Tuesday. While the latest Spiderman flick may be responsible for a one-off tailwind in this year’s financials, underlying performance at its high-end TV and image sensor businesses has also improved sharply, while the music and PlayStation businesses also continue to churn out cash. Fortune
Summaries by Geoffrey Smith; geoffrey.smith@fortune.com
@geoffreytsmith
