SourceCast: Episode 83: Trump vs. Amazon

President Trump mentioned several times that he believes Amazon is getting too big and is demonstrating a monopoly posture.  Are Amazon, Google, and Facebook getting too big and destroying competitive environments?  I try to answer that exact question this week.

Photo: Daniel Lee

 

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Supplier Report: 8/4/2017

Apple and Amazon are starting to feel the weight of China’s data restrictions.  Apple was forced to remove VPN software from the Chinese app store.  AWS customers are being told they can no long bypass China’s data restrictions with software and VPN services.

Both companies know that China is critical to their long term growth, so for now, they have to play nice.

Amazon is also starting to get the US government’s attention regarding competition.  Can Jeff Bezos avoid President Trump’s attacks over Amazon’s market position?

Acquisitions

  • Sprint could sell pieces to Comcast and Charter before attempting T-Mobile merger

    Details are scarce, but the deal isn’t likely to be a full-on merger, according to a Reuters source. Instead, Sprint would likely be selling a minority stake to the ISPs in exchange for providing access to its network infrastructure. Think hotspots, last mile service, non-compete agreements, that sort of thing.

    The cash from the deal would allow a still SoftBank-controlled Sprint to invest a bit more, and possibly give it some leverage in its merger negotiations with T-Mobile.

    https://techcrunch.com/2017/07/28/sprint-could-sell-pieces-to-comcast-and-charter-before-attempting-t-mobile-merger/?ncid=rss
    Update: Charter Says It Isn’t Interested in Acquiring Sprint

    On Sunday, Charter rejected the merger idea and indicated it would stick with an existing wireless reseller agreement with Verizon Communications Inc. —known as an MVNO pact—rather than switch to one with Sprint.

    “We understand why a deal is attractive for SoftBank, but Charter has no interest in acquiring Sprint,” Charter spokesman Alex Dudley said in an emailed statement. “We have a very good MVNO relationship with Verizon and intend to launch wireless services to cable customers next year.”

    https://www.wsj.com/articles/charter-says-it-isnt-interested-in-acquiring-sprint-1501466664

  • SoftBank Bets $250 Million on Small-Business Lender Kabbage

    SoftBank Group has invested $250 million to take a stake in online small-business lending startup Kabbage Inc.

    Kabbage was previously valued at $1 billion in a 2015 equity round, according to reporting by The Wall Street Journal. Robert Frohwein, the Atlanta-based company’s chief executive, said the new deal, a strategic-growth investment, marks “a material increase in the share price,” without giving specifics.

    https://www.wsj.com/articles/softbank-bets-250-million-on-small-business-lender-kabbage-1501756200

Artificial Intelligence

  • A Robot Can Be a Warehouse Worker’s Best Friend

    Deutsche Post AG’s DHL is testing “swarming” robots at a facility in Memphis, Tenn. These machines help workers pick out medical devices that need to be shipped quickly. Quiet Logistics Inc., which fulfills online orders for retailers like Bonobos and Inditex SA’s Zara, uses the same type of mobile robots in one of its warehouses.

    Known as “collaborative” robots, they are small and relatively cheap—costing tens of thousands of dollars—compared with miles of conveyor belts and automation systems that run into the tens of millions. The new robots are designed with the majority of warehouses world-wide in mind, where orders continue to be fulfilled manually by people pushing carts up and down aisles.

    https://www.wsj.com/articles/a-robot-can-be-a-warehouse-workers-best-friend-1501752600

Cloud

  • Amazon Cloud Customers Are Told: Don’t Bypass China’s Internet Gates

    Customers of Amazon, along with those of Apple Inc., AAPL 4.73% are facing pressure in China to comply with the Chinese government’s desire to further tighten the screws on its already heavily policed internet.

    On Saturday, Apple removed software from its app store in China that allowed users to circumvent the country’s web filters. The Cupertino, Calif., technology company cited new rules that require providers of VPNs, which are often used to get around Chinese internet firewalls, to obtain licenses from regulators.

    Complaints of disruptions affecting users of overseas VPNs in China have multiplied recently. Facebook Inc.’s encrypted WhatsApp messaging service has also been affected, with users finding it difficult or extremely slow to send messages.

    https://www.wsj.com/articles/amazon-cloud-customers-are-told-dont-bypass-chinas-internet-gates-1501626197

  • What is Motley Fool’s Accuracy on SAP Overtaking Oracle in Cloud?

    SAP and Oracle have fiscal calendars which end at different times of the year, but taking the latest 12 months of results for each company shows that SAP is growing at a much faster rate than Oracle. As a German company, SAP also reports its results in euros. Converting those figures to U.S. dollars results in annual cloud revenue of over $2.5 billion.

    http://www.scmfocus.com/saaseconomy/2017/07/23/motley-fools-accuracy-sap-overtaking-oracle-cloud/

  • Oracle delivers bevy of updates to its cloud suite

    The latest version certainly has a more modern look and feel, and that was the idea, says Steve Miranda, executive vice president of applications development at Oracle. Miranda says it’s a brand new experience compared to the previous version of the software. The company not only overhauled the design, it also wanted to improve workflows, working to take out unnecessary steps when possible.

    What’s more, Oracle has turned to a responsive design approach, where the interface adjusts depending on screen size. It’s a marked improvement over the previous mobile experience, Miranda says, which used different colors and visualizations and a different navigation paradigm. He says previously they had some apps designed specifically for mobile, but some simply were presented in the browser, and didn’t always translate well to a smaller screen. Today’s update is designed to address that.

    https://techcrunch.com/2017/08/02/oracle-makes-bevy-of-updates-to-its-cloud-suite/?ncid=rss

  • Could Amazon’s cloudy appetite crush your startup dreams?

    Not only does AWS (and Amazon) have a voracious appetite for new markets, but once it enters a market, it is both content with and adept at running at razor-thin margins. AWS margins have buoyed up the company’s overall profitability lately, but make no mistake: If Bezos sees a long-term opportunity to own a valuable market, he’s going to cut prices (and costs) relentlessly to do so.

    Competing with AWS, in short, is brutal.

    http://www.techrepublic.com/article/could-amazons-cloudy-appetite-crush-your-startup-dreams/

Datacenter

  • Samsung topples Intel as world’s largest chipmaker

    But Samsung didn’t get there by outselling processors — it’s been diversifying its chip offerings for years. While Intel has focused on CPUs for computers and servers after burying its wearables division last November, Samsung has broadened into making chips for mobile devices, as well as connected chips for IoT and smart vehicles. But the company also got ahead of Intel on the strength of its flash memory with more popular SSD products. Intel isn’t giving up on the rivalry, and claimed its next generation of long-delayed Cannon Lake 10nm chips will feature twice as many transistors as Samsung’s or TMSC’s, putting them “light years” ahead.

    https://www.engadget.com/2017/07/28/samsung-topples-intel-as-world-s-largest-chipmaker/

  • IBM’s new palm-sized tape prototype can store 330 terabytes of data

    Despite the fact that consumers have transitioned through several storage technologies over the past few decades to the high-speed, flash-based drives of today, tape still finds usage in long-term and high-capacity storage. While commercially available magnetic tape cartridges offer up to 15TB of storage, IBM and Sony have created a new standard that’s capable of storing as much as 330TB in a much smaller form factor.

    To give that some context, IBM suggests that such a cartridge would be able to store as many as 330 million books in a form factor the same size as your palm. The last generation of the same sort of tape technology could ‘only’ handle 220 million.

    https://www.digitaltrends.com/computing/ibm-sony-magnetic-tape-330tb-storage/

Other

  • Amazon’s stock falters after missing profit target by $1 a share

    Revenue at the online retailer rose 24.8 percent to $37.6 billion, while net income declined to 40 cents a share from $1.87 a share a year ago. Analysts were expecting Amazon to see revenue of $37.2 billion and net income of $1.42 a share in the quarter. The company also forecast an operating income of $300 million to a loss of $400 million for the current quarter.

    Amazon has been expanding into countries like India, which has been taking its toll on margins. The operating loss of its international operations rose more than fivefold to $742 million, while international revenue rose by only 17 percent. Revenue in North America, by contrast, rose by a more robust 27 percent.

    https://venturebeat.com/2017/07/27/amazons-stock-falters-after-missing-profit-target-by-1-a-share/

  • After Meg Whitman’s exit, Uber’s CEO search is down to only male candidates — as its board struggles and Travis Kalanick meddles

    But once he returned from the South Seas, his ardor for meddling in the company did not end. According to numerous insiders, the pugnacious entrepreneur has continued to try to involve himself in daily operating decisions, so much so that top execs have been mulling how to get help from the board to rein him in.

    “It’s not stopped,” said one top exec about Kalanick up in the grill of the operating group that is running Uber. “None of us know what to do since it is Travis.”

    In addition, to cut off Kalanick’s access, the Uber board has reinforced a policy that all directors get the same limited access to information about Uber’s ongoing operations. “We have had to put guardrails on him,” said one person involved. “Even if he keeps trying to break through them.”

    https://www.recode.net/2017/7/30/16066332/uber-ceo-search-travis-kalanick-meg-whitman-steve-jobs-board

Photo: Liming Huang

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News You Can Use: 8/2/2017

  • Is IT having an identity crisis?

    Forty percent of the CIOs said that they make 50% or less of the IT decisions for their companies. And 39% said that business departments buy their own technology without consulting IT “often,” “very often” or “most of the time.” Meantime, IT departments themselves perform a shrinking proportion of the technology work they still oversee, with 24% of the respondents saying they outsource more than 50% of their IT and only 9% saying they outsource none at all.

    If outsourcing is the norm, and business departments outside IT are increasingly procuring their own technology, it may be time to ask exactly what IT’s role and identity is in the modern workplace.

    Also:

    Whatever IT’s identity within an organization may be, if it’s primarily viewed as a cost center, that’s not a good thing. “IT is a foundational element,” says Ed McLaughlin, CIO at Mastercard. “You really have to cease thinking of technology as a cost center. Technology is one of the primary assets of a business.”

    http://www.computerworld.com/article/3191986/it-management/is-it-having-an-identity-crisis.html

  • Do Raises Make Employees Happy or Is It Something More?

    “One of the most striking results we’ve found is that, across all income levels, the top predictor of workplace satisfaction is not pay. It is the culture and values of the organization, followed closely by the quality of senior leadership and the career opportunities at the company. Among the six workplace factors we examined, compensation and benefits were consistently rated among the least important factors of workplace happiness.”

    However, there was a study from Princeton that found that “having a higher income increases happiness but only up to about $75,000 per year.” After that, “higher pay doesn’t influence happiness much, and other factors take over.”

    https://www.entrepreneur.com/article/297326

  • The Case for National Childcare
  • 8 Ways Any Millennial Can Be a Millionaire in 5 Years

    Investing can be tricky, but it’s one of the best ways to get a return on the money you currently have. If you want to make significant money quickly, you’ll need to take some major risks, which means being willing to lose all the money you put in. For best results, start by investing a good amount of money. You can make more potentially if you risk more. Pick certain sectors that you find yourself most interested in and concentrate on investments in those spaces. Before any of this though, take time to learn as much as possible about the stock market.

    https://www.entrepreneur.com/article/297322

  • Six Words And Phrases That Make Everyone Hate Working With You

    3. “IT IS WHAT IT IS”
    Clichés like this make you sound like a lazy thinker. We default unthinkingly to empty expressions when we’re trying to give the impression we have something to say but really don’t, and also when we want to sound as though we’re comfortable with something but might not be. “Business is business,” “it is what it is,” and phrases like them aren’t just meaningless and repetitious—they sound like you don’t really care or that your brain just isn’t in gear. Good luck getting promoted that way.

    https://www.fastcompany.com/40441775/six-words-and-phrases-that-make-everyone-hate-working-with-you
    This is my dad’s favorite saying, guess he won’t be getting that big butcher shop promotion…

Photo: Brodie Vissers

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SourceCast: Episode 82: Trump vs. Apple

Last Tuesday, President Trump announced that Apple would be opening three manufacturing plants within the United States. The news left many technology journalists scratching their heads since Apple doesn’t build manufacturing plants. This week we dive into Trump’s announcement to determine fact from potential fiction.

Photo: Freestocks.org

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Supplier Report: 7/28/2017

Jeff Bezos surpassed Bill Gates to become the richest man in the world.  Bezos’ company has long competed with Microsoft in cloud hosting and now it seems they will battle in the healthcare space. There are reports that Amazon has a secret project to address electronic records which Microsoft has also been investigating for some time.

Google is fighting with AWS and Microsoft to gain a footing in enterprise cloud. It seems that their plans might be working as contracts valued at $500K or more have tripled for them this year.

Apple is getting in President Trump’s good graces this week with the promise to work with Foxconn on building up to three manufacturing planets in the United States.

Acquisitions

  • Mitel to buy ShoreTel for $430 million to create unified communications powerhouse

    Combining the two companies catapults Mitel to number two in the Unified Communications as a Service (UCaaS) market, according to the company.

    As for ShoreTel, while it will get absorbed in the deal, it looks like the shareholders did quite well, scoring a 28 percent premium over the closing stock price yesterday. The deal looks like this: Mitel will pay $7.50 a share for a total value of $430 million in an all-cash deal.

    With the stroke of a pen, Mitel now has almost doubled its UCaaS revenue to $263 million, and there will be other efficiencies achieved by combining the two companies with similar markets.

    https://techcrunch.com/2017/07/27/mitel-to-buy-shoretel-for-430-million-to-create-unified-communications-powerhouse/?ncid=rss

  • KKR confirms it will buy WebMD for $2.8B in cash

    Some consolidation is afoot in the world on health-focused online media properties. Today, WebMD, one of the biggest sites in the world for health-related information — announced that it would be acquired by Internet Brands — the company that is controlled by KKR and owns a large portfolio of B2B and B2C websites in verticals like automotive, health, home, travel and legal — for a $66.50 per share in cash, or $2.8 billion. The news confirms a report from this weekend noting that the deal was on the cards.

    https://techcrunch.com/2017/07/24/kkr-confirms-it-will-buy-webmd-for-2-8b-in-cash/

  • OpenText acquires forensic security vendor Guidance Software for $240 million

    OpenText, the content management company based in Waterloo, Ontario announced today that it was buying Guidance Software, a forensic security and eDiscovery vendor for $240 million.

    OpenText agreed to pay Guidance shareholders $7.10 a share. The price will be less Guidance’s cash on hand of approximately $18 million, making the final price just around $222 million, according to OpenText. Under the terms of the purchase, the company will become a wholly owned subsidiary of OpenText.

    https://techcrunch.com/2017/07/26/opentext-acquires-forensic-security-vendor-guidance-software-for-240-million/?ncid=rss

  • Merger Talks Between BMC and CA End

    BMC, which is owned by private-equity firms Bain Capitaland Golden Gate Capital, is no longer exploring a deal with CA and the talks aren’t likely to heat up again soon, according to people familiar with the matter.

    The deal the companies were discussing would have been structured as a leveraged buyout and counted as one of the largest such deals in years, given CA’s market value of $14.6 billion Thursday morning.

    https://www.wsj.com/articles/merger-talks-between-bmc-and-ca-end-1501169897

  • SoftBank is reportedly keen to buy ‘multi-billion dollar stake’ in Uber

    Less than a day after it agreed to put $2 billion into Southeast Asia’s Grab alongside Didi, now SoftBank is being linked with an investment in Uber, the U.S. firm that rivals those two aforementioned ride-sharing companies.

    A Wall Street Journal report claims SoftBank has been in touch with Uber with the apparent goal of buying a “multi-billion dollar stake” in the company. To date, Uber has raised close to $12 billion from investors, with its most recent valuation reportedly above $60 billion.

    https://techcrunch.com/2017/07/25/softbank-is-reportedly-keen-to-buy-multi-billion-dollar-stake-in-uber/?ncid=rss
    John and I predicted this would happen on SourceCast episode 78

Artificial Intelligence

  • Google targets AI startups with Developers Launchpad Studio mentorship program

    Helpful perks to creators to be made available at the Developers Launchpad Studio include product validation support and introductions to AI investors, as well as feedback and advice from people like Google director of research Peter Norvig and Yossi Matias, head of Google’s R&D Research Center in Israel. Participants will also receive $50,000 in financial support without the need to give Google equity, as well as product credits for services like Google Cloud.

    https://venturebeat.com/2017/07/26/google-launches-developers-launchpad-studio-to-mentor-ai-startups/

  • IBM Watson Helps More Puppies Become Guiding Eyes for the Blind

    While this video provides no information on how Watson is being used to select helper puppies… who doesn’t like to look a puppies (damn you IBM, you knew what you were doing).

Cloud

  • The cloud wars explained: Amazon is dominating, but Microsoft and Google are striking back

    Still, Microsoft’s key advantage isn’t necessarily in technology, but rather in its enterprise know-how and established customer base. Lots of Microsoft’s biggest customers have contracts with the company that give them steep discounts on its software. Microsoft has been using those agreements to give customers big incentives to try Azure.

    Microsoft has also worked to make Azure more attractive to software developers. Under Nadella, the company has swallowed its pride and begun to support in Azure technologies it previously tried to crush. Most notably that includes the Linux operating system — a bit of software that developers absolutely love, but that ex-Microsoft CEO Steve Ballmer once called “a cancer” and “communism,” because it’s available for free.

    That newfound openness to open-source code like Linux has won Microsoft a lot of appreciation from programmers. At last count, Linux accounted for about a third of all Azure usage, according to Microsoft.

    http://www.businessinsider.com/why-amazon-is-so-hard-to-topple-in-the-cloud-and-where-everybody-else-falls-2017-7

  • Google triples number of $500k cloud deals year over year as latest results announced

    “To be more specific about our momentum with big customers, in Q2 the number of new deals we closed worth more than $0.5 million is three times what it was last year,” Pichai added.

    This was about as specific as Pichai got, as Google puts cloud in its ‘other revenue’ bucket, alongside such products as the Google Play app store. Google’s other revenues for Q217 were at $3.1 billion, up 42% from this time last year but seeing a very slight decrease from Q1 this year.

    https://www.cloudcomputing-news.net/news/2017/jul/25/google-triples-number-500k-cloud-deals-year-over-year-latest-financial-results/

  • Amazon has set its sights on healthcare tech with a stealth lab it calls ‘1492’

    The e-commerce giant has set up a new, stealthy lab called “1492” that’s dedicated to healthcare technology, CNBC reported Wednesday.

    According to the report, the lab is exploring ways to tap into medical providers’ electronic records to make that data more accessible for consumers and their physicians, according to the report. The lab is also considering building a telemedicine system that could connect patients and doctors. And its looking into making health apps for Amazon devices, like the Echo, CNBC reported.

    http://www.businessinsider.com/report-amazon-pursues-healthcare-tech-1492-lab-2017-7
    Amazon may be going head-to-head with Microsoft in healthcare

    For those who may have forgotten (or never knew), Microsoft has been targeting some of these same spaces for years with its HealthVault patient-records service. Earlier this year, Microsoft extended HealthVault with a new Insights research project designed to provide users with analytics around patient-health.

    Microsoft’s AI + Research Group has a specific Healthcare NExT effort via which Microsoft is working with external partners to integrate research and health-technology product development.

    http://www.zdnet.com/article/amazon-may-be-going-head-to-head-with-microsoft-in-healthcare/

Datacenter

  • Seagate Shares Slide After Earnings Miss

    Seagate Technology shares plunged 19% to $32.01 in early trading Tuesday after the company reported fourth-quarter profit and sales well below expectations.

    Separately, Seagate said that Chief Executive Steve Luczo will step down from his role effective Oct. 1. Mr. Luczo, who will stay with the company as executive chairman, will be succeeded by Chief Operating Officer Dave Mosley.

    https://www.wsj.com/articles/seagate-shares-slide-after-earnings-miss-1500991020

  • Meg Whitman steps down from HP’s board (Not HPE)

    “I will be forever grateful to Meg for her many contributions,” said Dion Weisler, HP’s CEO in a statement. “She is a terrific friend and advisor and will remain so as we continue executing on our strategy of reinvention. I very much look forward to working closely with Chip as our new Chairman as we shepherd HP into the future.”

    The release did not indicate whether recent reports from Recode and Bloomberg are accurate, which suggested that she’s on the short list of candidates being considered for Uber’s CEO.

    https://techcrunch.com/2017/07/26/meg-whitman-steps-down-from-hps-board/?ncid=rss

Software/SaaS

Other

  • Amazon’s Jeff Bezos Becomes World’s Richest Person

    Mr. Bezos, 53, reached a net worth of over $90.6 billion as the stock market opened Thursday, according to Forbes, which has tracked a list of wealthiest people since 1987. That allowed him to steal the title from Microsoft Corp. founder Bill Gates by $500 million. Stock prices increased from there, adding to his lead.

    Analysts expect Amazon to report another quarter of strong sales after the market closes, as the company continues to prove its dominance in everything from retail to cloud services.

    https://www.wsj.com/articles/amazons-jeff-bezos-becomes-worlds-richest-person-1501169993

  • Should America’s Tech Giants Be Broken Up?

    They don’t engage in the predatory behavior of yore, such as selling goods below the cost of production to steal market share and cripple competitors. After all, the services that Facebook and Google offer are free (if you don’t consider giving up your personal data and privacy rights to be a cost). However, academics have documented how these companies employ far fewer people than the largest companies of decades past while taking a disproportionate share of national profits. As they grow and occupy a bigger part of the economy, median wages stagnate and labor’s share of gross domestic product declines. Labor’s shrinking share of output is widely implicated in the broader economic growth slowdown.

    Still others have shown that, as markets become more concentrated and established companies more powerful, the ability of startups to succeed declines. Since half of all new jobs spring from successful startups, this dampens job creation.

    https://www.bloomberg.com/news/articles/2017-07-20/should-america-s-tech-giants-be-broken-up

  • Why it might be ‘dangerous’ for IBM to turn itself around: professor

    “I think IBM has had a good run,” NYU Stern School of Business professor Aswath Damodaran told Yahoo Finance. “Not all companies last forever. There is a life cycle to a company. They are born grow and then decline. They [IBM] have been in decline for 10 or 12 years.”

    Damodaran, who teaches corporate finance and valuation, says trying to force growth in older companies like IBM could actually have a negative impact on them, because they might end up simply throwing good money away.

    “When you’re 75, you’d love to be 35 again, but you’re not going to,” Damodaran said. “So that’s the way I think of aging companies. Trying to turn them around might be the most dangerous thing you can do.”

    https://finance.yahoo.com/news/might-dangerous-ibm-turn-around-professor-125001765.html

  • IBM Is One of 18 Companies That Could Soon Be Attacked by an Activist Investor

    International Business Machines Corp. (IBM)  reported its twenty-first consecutive quarter of year-over-year sales declines on July 19. IBM joined our list in May after reporting in April its 20th consecutive annual revenue decline and accelerated margin deterioration. It also reportedly recently began working with two investment banks to formulate an activist defense plan.

    https://www.thestreet.com/story/14239194/1/ibm-is-one-of-18-companies-that-could-soon-be-attacked-by-an-activist-investor.html

  • Apple Supplier Foxconn Looks at Producing Display Panels in Wisconsin

    Foxconn, formally known as Hon Hai Precision Industry Co., has said publicly that it is looking at seven states in the U.S., where it would invest a total of $10 billion or more to manufacture flat-panel screens and related equipment. In June, a company executive identified the seven as Illinois, Indiana, Michigan, Ohio, Pennsylvania, Texas and Wisconsin.

    In addition to Wisconsin, Foxconn is looking in the Detroit area for a possible plant, two people familiar with the plans said. It wasn’t clear what that plant would make.

    https://www.wsj.com/articles/apple-supplier-foxconn-looks-at-producing-display-panels-in-wisconsin-1500884344

  • Trump Says Apple CEO Has Promised to Build Three Manufacturing Plants in U.S.

    Mr. Trump, in a 45-minute interview with The Wall Street Journal, said Mr. Cook promised him Apple would build “three big plants, beautiful plants.” Mr. Trump didn’t elaborate on where those plants would be located or when they would be built.

    “I spoke to [Mr. Cook], he’s promised me three big plants—big, big, big,” Mr. Trump said as part of a discussion about business-tax reform and business investment. “I said you know, Tim, unless you start building your plants in this country, I won’t consider my administration an economic success. He called me, and he said they are going forward.”

    https://www.wsj.com/articles/trump-says-apple-ceo-has-promised-to-build-three-manufacturing-plants-in-u-s-1501012372

Photo: Hieu Vu Minh

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