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Google, Apple face off over augmented reality technology

SAN FRANCISCO (Reuters) – Alphabet Inc’s (GOOGL.O) Google on Wednesday unveiled tools to make augmented reality apps for mobile devices using the Android operating system, setting up its latest showdown with Apple Inc’s (AAPL.O) iPhone over next-generation smartphone features.

Phone-based augmented reality (AR), in which digital objects are superimposed onto the real world on screen, got a huge boost from the popularity of the Pokémon Go game. The game, launched in the United States in July last year, sent players into city streets, offices, parks and restaurants to search for colorful animated characters.

Analysts expected the game to make $3 billion for Apple over two years as gamers buy “PokéCoins” from its app store.

Google’s take on the technology will first be available on the Samsung Galaxy S8 and Google’s own Pixel phone. The company said in a blog post that it hoped to make the system, called ARCore, available to at least 100 million users, but did not set a date for a broad release.

Apple in June announced a similar system called ARKit that it plans to release this fall on “hundreds of millions” of devices.

Google and Apple will jockey for the attention of customers and software developers who will build the games, walking guides and other applications that would make AR a compelling feature.

Many tech industry leaders envision a future in which eyeglasses, car windshields and other surfaces can overlay digital information on the real world. Google and Microsoft Corp (MSFT.O) have already experimented with AR glasses.

“AR is big and profound,” Apple Chief Executive Tim Cook told investors earlier in August. “And this is one of those huge things that we’ll look back at and marvel on the start of it.”

Apple and Google have had to make compromises to bring the technology to market.

In Apple’s case, the Cupertino, California-based company decided to make its AR system work with devices capable of running iOS 11, its next-generation operating system due out this fall.

This means it will work on phones going back to the iPhone 6s, which have a single camera at the back and standard motion sensors, rather than a dual camera system found on newer models such as the iPhone 7 Plus or special depth-sensing chips in competing phones. That limits the range of images that can be displayed.

Google initially aimed to solve this problem with an AR system called Tango that uses a special depth-sensor, but only two phone makers so far support it. With ARCore, Google changed course to work on phones without depth sensors.

But the fragmentation of the Android ecosystem presents challenges. To spread its AR system beyond the Galaxy S8 and Pixel phone, Google will have to figure out how account for the wide variety of Android phone cameras or require phone makers to use specific parts.

Apple, however, is able to make its system work well because it knows exactly which hardware and software are on the iPhone and calibrates them tightly.

Michael Valdsgaard, a developer with the furniture chain IKEA, called the system “rock solid,” noting that it could estimate the size of virtual furniture placed in a room with 98 percent accuracy, despite lacking special sensors.

“This is a classic example of where Apple’s ownership of the whole widget including both hardware and software is a huge advantage over device vendors dependent on Android and the broader value chain of component vendors,” said Jan Dawson, founder and chief analyst of Jackdaw Research.

Reporting by Stephen Nellis; Editing by Jonathan Weber and Richard Chang

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Whole Foods overall prices still high after selective cuts: analyst

LOS ANGELES (Reuters) – Whole Foods shoppers may be premature in cheering’s (AMZN.O) steep price cuts on staples like bananas, avocados and beef, according to one analysis released on Tuesday that suggested the premium grocery chain has not yet shed its “Whole Paycheck” reputation for lofty prices.

“Amazon appears to be taking a page out of the old Wal-Mart playbook on the price action front – that is, announcing a plethora of price actions that on the surface look deep, but in reality only reveal modest reductions,” Gordon Haskett Research Advisors analyst Charles Grom wrote in a client note.

“We will continue to monitor the situation going forward, but our initial checks suggest that Amazon’s bark may be greater than its bite,” Grom wrote.

Whole Foods stores around the country on Monday cut prices on selected items by as much as 43 percent. The move, on the day Amazon closed its $13.7 billion acquisition of Whole Foods, was broadly cheered by shoppers.

But Grom said an analysis of prices on more than 100 products at a Whole Foods in Princeton, New Jersey, showed an average price decline of only 1.2 percent between Aug. 21 and Aug. 28th, dates that fell before and after the merger. Prices on about 78 percent of items were unchanged from the previous week, Grom said.

The price adjustments varied by category. Dairy and yogurt were down the most with a 5.6 percent decline, while dry grocery and baking items prices posted the biggest gain of 4.9 percent.

Among individual items, the price on a 16-ounce tub of Talenti Gelato fell to $3.49 from $5.79, or almost 40 percent, while the price on a 6-ounce box of Annie’s Mac and Cheese more than doubled, going from $1 to $2.19.

Whole Foods did not immediately respond to a request for comment.

Reporting by Lisa Baertlein in Los Angeles; Editing by David Gregorio

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Mexico dusts-off ‘Plan B’ as Trump revs up threats to kill NAFTA

MEXICO CITY (Reuters) – Mexico sees a serious risk the United States will withdraw from NAFTA and is preparing a plan for that eventuality, Economy Minister Ildefonso Guajardo said on Tuesday, calling talks to renegotiate the deal a “roller coaster.”

U.S. President Donald Trump has threatened three times in the past week to abandon the North American Free Trade Agreement, revisiting his view that the United States would probably have to start the process of exiting the accord to reach a fair deal for his country.

Trump has vowed to get a better deal for American workers, and the lively rhetoric on both sides precedes a second round of talks starting on Friday in Mexico City to renegotiate the 1994 accord binding the United States, Mexico and Canada.

“This is not going to be easy,” Guajardo said at a meeting with senators in Mexico City. “The start of the talks is like a roller coaster.”

The need for a back-up plan in case Trump shreds the deal underpinning a trillion dollars in annual trade in North America has been a long-standing position of Guajardo, who travels to Washington on Tuesday with foreign minister Luis Videgaray to meet senior White House and trade officials.

“We are also analyzing a scenario with no NAFTA,” Guajardo said.

In an interview published earlier on Tuesday in Mexican business daily El Economista, Guajardo said “there is a risk, and it’s high” that the Trump administration abandons NAFTA.

Responding to Guajardo’s comments, Canadian Prime Minister Justin Trudeau said his government would continue to work “seriously” to improve NAFTA.

Earlier this month, Guajardo told Reuters a “Plan B” meant being prepared to replace items such as the billions of dollars in grain Mexico imports from the United States annually.

To that end, and to seek openings in more markets, Mexico is hosting trade talks with Brazil this week. Trade officials are also discussing a possible replacement for the Trans-Pacific Partnership trade pact that Trump ditched after taking office.

Overlapping with the NAFTA talks, Mexico will participate in separate trade meetings with Australia and New Zealand in Peru, and President Enrique Pena Nieto travels to China this weekend.

Still, attempts to diversify trade will not be easy. Some 80 percent of all Mexican exports go to the United States, and economies such as Brazil and China often compete with Mexico.

Guajardo also suggested World Trade Organization tariffs that would kick in if NAFTA crumbled would be more favorable for Mexico, a view held by many Mexican experts who think trade with the United States would survive the demise of the 1994 deal.

“I don’t think it’s going to make that much of a difference in terms of the trading relationship, said Andres Rozental, a former Mexican deputy foreign minister. “If we have to go to WTO tariffs, for us it’s fairly straightforward.”

Guajardo’s and Videgaray’s trip to Washington was announced after Trump not only threatened to pull out of the trade deal, but again said that Mexico would end up paying for the wall he wants to build between the two countries.

Mexico has refused point blank to pay for a wall. In January, after similar comments led Mexico to scrap a summit with Trump, the two sides agreed not to talk in public about it.

Reporting by Dave Graham; Editing by W Simon and Dan Grebler

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Buffett becomes Bank of America’s top shareholder

(Reuters) – Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) has become Bank of America Corp’s (BAC.N) largest shareholder by exercising its right to acquire 700 million shares at a steep discount, more than tripling an investment it made six years ago.

Berkshire is now the largest shareholder in the second- and third-largest U.S. banks, with stakes of roughly 6.6 percent in Bank of America and 10 percent in Wells Fargo Co (WFC.N), according to Reuters data.

It also has an interest in JPMorgan Chase Co (JPM.N), the largest U.S. bank, where Todd Combs, one of Buffett’s deputy portfolio managers, is a director.

Bank of America on Tuesday said Berkshire exercised warrants to acquire its shares for roughly $7.14 each, well below their closing price of $23.58, down 14 cents from Monday. The announcement was made after U.S. markets closed.

To pay for the shares, Berkshire swapped $5 billion of Bank of America preferred stock it had bought in August 2011.

Its new common shares are worth roughly $16.5 billion, giving Berkshire a roughly $11.5 billion paper profit.

Berkshire owns more than 90 businesses such as the Geico car insurer, Dairy Queen ice cream and the BNSF railroad.

Buffett has run the Omaha, Nebraska-based conglomerate since 1965. The billionaire turns 87 on Wednesday.

The swap was made possible by Bank of America’s decision in June to boost its dividend 60 percent, after the Charlotte, North Carolina-based lender passed a Federal Reserve “stress test” of its ability to navigate tough markets.

It also vindicates Buffett’s confidence in Bank of America Chief Executive Brian Moynihan, who accepted his money when the bank was only midway through cleaning up balance sheet and litigation issues tied to the U.S. housing and financial crises.

“In 2011, we welcomed Berkshire Hathaway as a shareholder, and we appreciate their continued support now as our largest common shareholder,” Moynihan said in a statement on Tuesday.

Berkshire will collect $336 million of annual dividends from Bank of America, more than the $300 million generated by the preferred stock. It also receives close to $800 million of annual dividends from Wells Fargo.

Some of Berkshire’s other large equity investments are American Express Co (AXP.N), Apple Inc (AAPL.O), Coca-Cola Co (KO.N) and Kraft Heinz Co (KHC.O).

Reporting by Jonathan Stempel in New York; Editing by Dan Grebler

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U.S. software coding school Galvanize to cut 11 percent of workforce

(Reuters) – Galvanize, a for-profit software coding school that has raised $63 million in venture funding, plans to lay off 11 percent of its workforce, the company said on Tuesday.

The five-year-old startup said the downsizing will affect 37 people at the company’s headquarters in Denver, effective Friday, Robin Olsen, a spokeswoman, said. Galvanize has approximately 350 employees.

The layoffs come as Galvanize shifts its focus to teaching online students and serving corporate clients, the company said in a statement.

“In order to adjust to evolving market demands we made the difficult decision to reduce our workforce today,” Galvanize said. “These actions are consistent with our overall strategy to build a more product-focused platform that enables a continuous learning environment.”

The layoffs come a month after two other so-called “coding boot camps,” Dev Bootcamp in San Francisco and Iron Yard of Greenville, South Carolina, announced plans to shut down by the end of 2017. In the past year, eight coding schools have closed, up from years past, according to review website Course Report. Currently there are 95 coding schools in the United States.

Coding boot camps are for-profit schools that promise to train students to be software engineers and land coveted tech jobs within a matter of weeks. The average tuition for the boot camps is $11,400, according to Course Report.

Last month, Galvanize announced that co-founder Jim Deters would step down as chief executive officer and become chairman. The company has not yet named Deters’ replacement.

Since 2011, the boot camps have raised more than $250 million, but the layoffs at Galvanize are the latest indicator that the companies may not live up to investor expectations, said Jeff Casimir, executive director of Turing School of Software Design, a non-profit coding school in Denver.

“How could you (undertake an) IPO in an environment where programs are shutting down, or who would acquire that kind of company?” Casimir said. “Neither outcome seems likely.”

It is no longer enough to rely on a business model that is focused on teaching students in person, said Jake Schwartz, CEO and co-founder of New York’s General Assembly, which has raised $120 million in venture capital.

“It is very difficult to do this without getting to scale,” Schwartz said. “Scale is not just about geography, but it’s also about how many people can you reach and how many different ways can you reach them?”

Reporting by Salvador Rodriguez in San Francisco; Editing by Lisa Shumaker and Jeffrey Benkoe

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Harvey threatens more U.S. Gulf refineries, supply constraints emerge

HOUSTON (Reuters) – Record rains and flooding from Tropical Storm Harvey triggered more oil refining outages in Texas on Tuesday, bringing the total offline to more than 16 percent of overall U.S. capacity as the storm took aim at plants along the Louisiana coast.

As the storm moved up the Gulf Coast, supply shortages emerged, as major pipelines carrying gasoline, diesel and jet fuel started to adjust deliveries or close lines outright due to lack of supply.

About 3 million bpd of U.S. refining capacity had already been shut, with more shutdowns expected. Restarting plants even under the best conditions can take a week or more.

The U.S. Gulf Coast is home to nearly half of domestic refining capacity, with some 5.6 million barrels per day (bpd) of capacity in Texas and 3.3 million bpd in Louisiana.

More refinery closures were expected, as parts of Texas have received more than four feet of rain. Fuel prices were expected to keep rising as refining capacity remains down and pipelines run short. Explorer Pipeline, which runs from Texas to Chicago, will shut two lines early Wednesday.

“These closures are already impacting markets, with crude prices lower on a perceived drop in demand and gasoline prices spiking in response to lower supply,” said Sandy Fielden, director of oil and products research at Morningstar.

Colonial Pipeline, the key artery sending gasoline up the East Coast, was still shipping barrels there, but has faced flooding at origination points in Texas.

The Northeast was already dealing with reduced supply. Philadelphia Energy Solutions, the region’s largest refiner, said it has sold all its available regular gasoline barrels due to increased demand, while Monroe Energy’s refinery has increased runs.

U.S. gasoline futures RBc1 on Tuesday rose 2.6 percent to $1.756 per gallon, and have jumped about 8.5 percent since last Wednesday, when refiners started shuttering capacity ahead of the storm making landfall. Heating oil futures, a proxy for diesel and other distillates, rose 1.1 percent.

“Harvey will raise product prices nationwide, denting demand, especially in September,” said Barclays analysts in a note Tuesday.

U.S. crude futures CLc1 were down 0.8 percent on Tuesday, a day after falling more than 2 percent.

In cash trading, the spread between Gulf Coast gasoline prices and benchmark futures rallied further, a day after hitting a five-year high in anticipation of constrained supply. That price was lately 24 cents above benchmark futures RBc1, traders said.

Retail gasoline prices have started to rise, with the average gallon of gasoline rising 1 cent overnight to $2.38 nationally. The average price in Texas rose 2 cents to $2.19 per gallon.

Marathon Petroleum Corp (MPC.N) was shutting two refineries in the Houston area on Tuesday because of flooding, according to sources familiar with plant operations. The 459,000 bpd Galveston Bay Refinery in Texas City, Texas, 45 miles (72 km) south of Houston, has flooding in its tank farm and on nearby streets, the sources said.

Exxon has shut its 362,300 bpd Beaumont refinery in east Texas due to high water in the plant, said sources familiar with the plant. The company earlier shut production at its Baytown, Texas, refinery, the nation’s second largest.

Motiva Enterprises [MOTIV.UL] planned to decide on Tuesday on whether to shut its Port Arthur, Texas, plant, the largest U.S. crude refinery, two sources familiar with plant operations said.

Total cut production to the minimum at its 225,500 bpd Port Arthur refinery as of Tuesday afternoon, according to sources.

Additional reporting by Jarrett Renshaw and Devika Krishna Kumar in New York; Writing by Gary McWilliams; Editing by Meredith Mazzilli and David Gregorio

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Bombardier out of running for $3.2 billion New York transit contract

MONTREAL (Reuters) – Canada’s Bombardier Inc (BBDb.TO) is out of the running for an estimated $3.2 billion New York City subway contract, in what the plane and train maker on Tuesday called a disappointment.

Bombardier Transportation spokesman Eric Prud’Homme said the company’s proposal to supply more than 1,000 subway cars to the Metropolitan Transportation Authority (MTA) was “no longer under consideration,” but declined to specify a reason because the contract had not yet been awarded.

“We are extremely disappointed as we spent considerable time developing an innovative solution that included world-class subway cars, an attractive delivery schedule, a competitive price, and the creation of US jobs, many in New York State,” he wrote by email.

MTA spokesman Kevin Ortiz declined to comment on the subway contract.

The Montreal-based company is in the middle of a turnaround plan to improve performance and profitability, including that of its German-headquartered rail division, which in July reported stronger second quarter margins and sales.

Bombardier has faced recent challenges in its North American business, including accusations of delays by a Canadian client, the Toronto-area transit agency Metrolinx.

In 2016, the company lost a $1.3 billion rail contract from another longstanding client, the Chicago Transit Authority, to China’s CRRC Corp Ltd (601766.SS).

Bombardier’s rail division is said to be in advanced talks to form joint ventures with rival rail giant Siemens (SIEGn.DE) of Germany, although a deal has not been finalized.

Reporting By Allison Lampert; Editing by Tom Brown

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S&P sees U.S. keeping AA+ rating if it avoids default

NEW YORK (Reuters) – Standard Poor’s said on Tuesday the United States would maintain its AA+ credit rating, its second highest, as long as the federal government avoids a default even if it does not increase the debt ceiling in a timely manner.

SP is the only one of the three major U.S. bond agencies that do not currently assign the top-notch AAA-rating to the world’s biggest economy.

In August 2011, SP stripped the United States of its coveted top rating over a debt ceiling showdown in Washington, citing “political brinkmanship” during the debate over raising the government’s legal borrowing limit.

Six years later, SP is taking a narrower scope to judge its rating for the United States.

“If the debt ceiling is not raised in a timely way, we expect, at a AA+ level of confidence, that the government will take necessary measures to avoid default on the debt which our ratings address,” Robert Sifon-Arevalo, a managing director in SP’s sovereign ratings group, said in a statement.

Last week the other rating firms, Moody’s Investors Service and Fitch Ratings, staked out their views on the looming deadline in late September when Uncle Sam would run out of cash if it cannot borrow more to pay all its obligations.

Similar to SP, Moody’s said it would not downgrade the U.S. as long as it does not default. It would not remove its AAA-rating even if the government were to skip or delay payments on its non-debt obligations.

Fitch, however, took a tougher stance that if the debt ceiling is not raised, prioritizing debt service payments over other government obligations “may not be compatible with ‘AAA’ status.”

U.S. lawmakers are scheduled to return to work on Sept. 5 after their summer recess. They are expected to hammer out a deal to raise the debt ceiling, currently at $19.9 trillion, and to pass a budget in an effort to avoid a default and to keep the government operating.

U.S. President Donald Trump threatened last week to shut down the government if Congress did not agree to fund his proposed wall between U.S. and Mexico.

“We expect Congress to ultimately raise or suspend the debt ceiling, potentially with heated discussion,” SP’s Sifon-Arevalo said. “It remains our view that the debate about raising or suspending the ceiling weighs on the economy.”

Reporting by Richard Leong; Editing by Chizu Nomiyama

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NBA star Durant takes shot at Under Armour, stock falls

(Reuters) – Shares of Under Armour Inc (UAA.N) sank more than 3 percent on Tuesday, a day after National Basketball Association star Kevin Durant said young players do not like the company’s shoes.

“Nobody wants to play in Under Armours. I’m sorry. The top kids don’t because they all play Nike,” the All-Star forward of the 2017 champion Golden State Warriors said during an interview on “The Ringer” podcast on Monday.

Under Armour did not immediately respond to a request for comment

Sportswear companies pay top-tier athletes millions of dollars to endorse shoes and other sports gear. Durant signed a new shoe deal with Nike (NKE.N) in 2014, spurning a deal from Under Armour that reportedly was worth as much as $285 million over 10 years.

Warriors teammate Stephen Curry has a multimillion dollar contract with Under Armour that includes an equity stake.

Asked if he had spoken to Curry about Under Armour shoes, Durant, the 2017 Most Valuable Player in the NBA finals, said, “Everybody knows that. They just … nobody don’t want to say nothing.”

Curry’s shoe line carried Under Armour’s sales for three years, but demand for the latest collection, Curry 3, has been underwhelming.

Baltimore, Maryland-based Under Armour became a sensation in recent years, helping pioneer “athleisure” fashion. But with changing trends, the company is struggling to attract shoppers with new offerings.

At the start of August, it said it will cut jobs and close stores, sending its stock to all-time lows. On Tuesday, shares shed 3.5 percent at $16.34, bringing their loss to 44 percent since the start of the year.

Adding to pressure on Under Armour as well as Nike, athletics shoes retailer Finish Line (FINL.O) on Monday cut its full-year profit forecast and said the retail environment would remain “highly competitive and promotional”.

Finish Line fell 18 percent and Nike was down 2.2 percent.

Reporting by Noel Randewich in San Francisco; Editing by Jeffrey Benkoe

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