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Boeing reports Q4 loss but reaffirms 2023 targets

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Boeing reported a 2022 fourth quarter loss as elevated supply chain costs dragged down results despite a late-quarter uptick in plane deliveries
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Persistent supply chain woes and staffing issues led to another quarterly loss at Boeing, but the company on Wednesday confirmed its 2023 outlook amid strong aviation demand.

Boeing said its commercial plane business was dented by “abnormal costs,” while “labor instability and supply chain disruption” weighed on its defense, space and security unit.

The company’s $634 million loss for the quarter ending December 31 was smaller than the $4.1 billion loss in the same period last year. Revenues rose 35 percent to $20 billion, but came in below analyst forecasts.

The aviation giant, which has been beset in recent years with production problems and certification delays following the 737 MAX crashes, nevertheless finished 2022 with positive free cashflow for the first time since 2018 as it reaffirmed 2023 targets.

“We had a solid fourth quarter, and 2022 proved to be an important year in our recovery,” said Boeing Chief Executive Dave Calhoun.  

“Demand across our portfolio is strong, and we remain focused on driving stability in our operations and within the supply chain to meet our commitments in 2023 and beyond.”

Boeing has said it expects to return to a level of financial strength comparable to its pre-pandemic state around the 2025-26 timeframe. 

The company’s turnaround has been aided by robust demand for commercial planes as airlines struggle to meet pent-up demand for flying and replace older planes with newer jets that burn less energy and release fewer carbon emissions.

But efforts to ramp up output have been hindered by snags in garnering key parts and materials, including delays in receiving engines from key suppliers.

Calhoun, in an interview with CNBC, said suppliers have made progress in hiring more staff, but are still working through the process to be able to increase output.

“You have to train,” Calhoun told the network. “Every one of these products are pretty sophisticated.”

He predicted that 2023 would remain “bumpy” as far as the supply chain, but said the ramp-up was aided by shared knowledge that demand for aviation remains strong.

Boeing has resumed deliveries of the 787 Dreamliner after a lengthy halt, and confirmed it would increase production in 2023 from the current “low” level.

The company expects to deliver 70-80 Dreamliners in 2023, up from 31 last year. Boeing is eyeing 400-450 deliveries of 737s, compared with 387 in 2022.

– Breakthrough in China? –

A key unknown facing the company is the degree to which it can expect bankable revenues from China after a lengthy pause in deliveries of 737 MAX planes while the country maintained strict Covid-19 policies.

Boeing executives have previously suggested the suspension was a reflection at least in part of the tense state of US-China relations. 

China was the last major market to clear the MAX to return to service after a global grounding following two fatal crashes. 

On January 13, a 737 MAX operated by China Southern Airlines undertook the first flight by a MAX plane in the country since March 2019.

Calhoun told CNBC that he expects progress over the next six months in moving the 100 MAX planes already in China back into the air, but that he wouldn’t engage in a “guessing game” about when deliveries of new planes could resume.

The Boeing CEO said he was “optimistic and constructive” around the market given the reopening Chinese economy, but that he didn’t have “rose colored glasses on.”

Shares of Boeing fell 2.2 percent to $207.24 in early trading.

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Google looks to take generative AI lead with Gemini

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Google is giving its Bard chatbot a major artificial intelligence boost as ChatGPT-maker OpenAI deals with the aftermath of a boardroom coup that saw chief executive Sam Altman fired then rehired within a span of days
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Google on Wednesday infused its Bard chatbot with a new-generation artificial intelligence model called Gemini, which it touts as being able to reason better than ChatGPT and other rivals.

The search engine juggernaut is aiming to take the generative AI lead from ChatGPT-maker OpenAI as that company deals with the aftermath of a boardroom coup that saw chief executive Sam Altman fired and then rehired within a matter of days.

Google has for years discreetly developed AI powers but was caught off guard when OpenAI late last year released ChatGPT and teamed up with Microsoft to make its capabilities available to users worldwide.

“This is incredible momentum, and yet, we’re only beginning to scratch the surface of what’s possible,” Google chief executive Sundar Pichai said in a release.

“This new era of models represents one of the biggest science and engineering efforts we’ve undertaken as a company.”

It is the first AI model to outperform human experts in certain benchmarks involving problem solving, math, physics, history, law, medicine and ethics, Google DeepMind vice president of product Eli Collins said during a briefing.

A demonstration showed Gemini recognizing what it was shown, from a person acting out a “Matrix” movie scene to someone drawing a duck and then holding up a rubber duck.

Gemini commented on what it was shown, making comparisons, drawing conclusions, and offering suggestions.

Performance of an “Ultra” version of Gemini “far exceeds” that of other state-of-the-art models in 30 benchmark tests measuring capabilities such as image understanding or mathematical reasoning, according to Collins.

A “Pro” version of Gemini built into Bard is designed to handle a wide range of tasks. A “Nano” version is tailored for smartphones, coming first to Google’s top-of-the-line Pixel 8 handset.

Google raced out its own Bard chatbot earlier this year, continually updating the chatbot based on people’s feedback, according to Bard vice president Sissie Hsiao.

“All of that rapid innovation is bringing us to what we see as a truly transformative moment,” Hsiao said during the briefing.

“With Gemini, Bard is getting its biggest upgrade yet.”

– AI collaborator –

Bard will use Gemini for more advanced reasoning, planning, and understanding capabilities, a demonstration showed.

It will be available in English in more than 170 countries and territories, with more languages added soon, according to Hsiao.

Gemini-infused Bard will be expanded to be “multi-modal,” meaning it will be able to work with auditory and visual input as well as text prompts, executives said.

“With Gemini we are one step closer to our vision of bringing you the best AI collaborator in the world,” Hsiao said.

Gemini ramps up the quality of Bard’s performance, whether in writing poetry or computer code to shopping queries or research projects, according to Hsiao.

The “Ultra” version of Gemini designed to handle highly complex tasks will be released early next year, Google said.

“I’m in awe of what it’s capable of,” Collins said of Gemini.

“This is the start of a new era for us at Google as we continue to rapidly innovate and advance the model’s capabilities.”

Google in September integrated Gmail, YouTube and other tools into its Bard chatbot as tech giants seek to persuade users that generative AI is useful and not dangerous or just a fad.

Those capabilities closely match offerings from Microsoft that infuse its Office 365 apps with AI powers, though those come at an extra cost to customers and are not available through the chatbot on its search engine Bing.

The staying power of generative AI chatbots, once the initial excitement has faded, is yet to be confirmed.

Moreover, integration of the OpenAI-based chatbot into Microsoft’s search engine earlier this year failed to make an impact on Google’s overwhelming dominance of search.

Governments and tech companies however insist that generative AI is technology’s next big chapter and have ramped up spending on new products, research, and infrastructure.

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EU proposes three-year delay on UK electric car tariffs

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The U-turn by the European Commission delays a 10% tariff on electric car sales between the EU and UK for three years
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Brussels proposed Wednesday a three-year delay on tariffs on the sale of electric vehicles between Britain and the EU that was meant to kick in from January, in a major reversal of its previous position.

The European Commission said it now wants a one-off extension, until December 31, 2026, after the EU automotive industry raised concerns about the massive costs that would arise from a post-Brexit 10-percent tariff.

The commission’s extension proposal must formally be approved by the EU member states. EU leaders are to hold a regular summit in Brussels next week.

The commission had initially strongly opposed such an extension, despite industry’s pleas, requests from the British government and calls for pragmatism by EU lawmakers.

Its extension proposal, which also covers batteries, includes wording designed to make it legally impossible to put off tariffs beyond the December 2026 date.

“Today’s decision means that we skip an intermediate phase of somewhat strict rules of origin that would have applied from 2024 until the end of 2026,” Commission Vice President Maros Sefcovic said.

“This removes the threat of tariffs on export of EU electric vehicles to the UK and vice versa on 1st January 2024.”

The change of stance was needed because of “circumstances not foreseen” when an EU-UK agreement regulating post-Brexit trade and ties was signed in 2020, Sefcovic said.

He cited higher energy prices spurred by Russia’s full-scale invasion of Ukraine last year, high inflation, and big subsidies China and the United States deploy to boost their electric-vehicle industries.

The European Automobile Manufacturers’ Associations (ACEA) and the UK’s Society of Motor Manufacturers and Traders (SMMT) welcomed the commission’s move and urged EU countries to endorse it.

The tariffs, ACEA said, would have cost the EU vehicle makers it represents 4.3 billion euros ($4.6 billion) over the next three years and caused them to lose market share to non-European competitors.

The extension would “allow UK and EU manufacturers to compete with the rest of the world and, crucially, give the European battery industry time to catch up,” Mike Hawes, SMMT chief executive, said.

– ‘Cannot be repeated’ –

The European Union is particularly concerned about potentially unfair competition from cheaper Chinese electric vehicles. In October it formally launched an investigation into Beijing’s subsidies for car manufacturers.

Commission chief Ursula von der Leyen accused China in September of keeping the cost of Chinese electric cars “artificially low by huge state subsidies”.

Sefcovic said the commission’s proposal “supports the competitiveness of our industry and protect jobs in the European Union” and “it’s absolutely clear that this one-off extension cannot be repeated nor prolonged”.

Britain formally left the European Union in January 2020 then, during a transition period, sealed the post-Brexit free-trade agreement with the bloc which came into effect in 2021.

Under that deal, tariffs were to start on January 1, 2024, on vehicles that do not have at least 45 percent UK- or EU-made content, and with batteries that are at least 50-60 percent sourced from each of those territories.

Along with the extension proposal, the commission announced additional funding of up to three billion euros to boost the EU’s battery-manufacturing industry.

The EU’s trade commissioner, Valdis Dombrovskis, said the proposal “provides much-needed predictability and stability to EU car- and battery-makers at a time of fierce global competitive pressure”.

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Twitch to shut down in SKorea over ‘seriously’ high fees

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The platform said it had tried to lower its costs by reducing the maximum video quality but it was still losing money
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US-based streaming platform Twitch said Wednesday it would stop its service in South Korea in February because of “seriously high” network costs, dealing a blow to millions of users in one of the heartlands of e-sports.

The Amazon-owned company said in a statement signed by CEO Dan Clancy that costs were 10 times higher than most other countries, making it impossible to continue operating.

South Korea allows internet service providers to charge data-heavy companies like Twitch extra fees, which has already led to a long dispute with Netflix.

Big telecom firms in Europe have pushed for a similar deal, which they call “fair share”, but an EU consultation concluded in October that the idea was not popular.

Twitch said it had tried to lower its costs by reducing the maximum video quality but it was still losing money and would pull out of the country on February 27.

“The cost of running Twitch in South Korea is currently seriously high,” said the statement.

– ‘Stellar player’ –

Twitch, acquired by Amazon in 2014 for close to $1 billion, gained significant traction among gamers in South Korea.

The firm does not publish user numbers but it was widely reported in 2021 to have six million users in South Korea, more than four percent of its global total.

The country is known for its passionate, competitive, and dedicated gaming community, as well as its megastar Faker — a gamer hailed as the Michael Jordan of e-sports.

“We would like to reiterate that this was a very difficult decision, and one that all of us at Twitch are deeply saddened by,” the company’s Wednesday statement said.

“South Korea has always been a stellar player in the global e-sports community and will continue to do so.”

Shares in South Korean video streaming service Afreeca TV, Twitch’s competitor, soared almost 30 percent in afternoon trading in Seoul.

Some of the country’s Twitch users were devastated by the news.

One streamer, yummy_2 said: “It feels like losing my job right now.”

– Biden vs Trump –

Netflix was the first major international firm to cry foul over South Korea’s rules on network fees, getting entangled in lawsuits with SK Broadband, one of South Korea’s biggest internet service providers.

However, the two firms announced in September they would drop the legal cases and would now instead “collaborate as partners for the future”.

While the usage fees are a boon to telecom companies, they are bitterly opposed by tech platforms around the world.

European lawmakers and digital rights activists also argue such an arrangement could break rules on net neutrality, whereby telecoms firms are barred from selling faster internet speeds to particular companies.

The issue has been at the heart of a years-long dispute in the United States with former President Donald Trump rolling back net neutrality rules and his successor Joe Biden struggling to restore them.

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