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HP board unanimously rejects Xerox’s bid to acquire the company



Tony Avelar | Bloomberg | Getty Images

HP’s board of directors said Sunday that they unanimously rejected a proposal from Xerox to acquire the company, because the offer is not in the best interest of shareholders and would undervalue HP. 

Xerox had offered HP $22 per share in its takeover bid for the company. The bid consists of 77% cash and 23% stock, or $17 in cash and 0.137 Xerox share for each HP share. 

“In reaching this determination, the Board also considered the highly conditional and uncertain nature of the proposal, including the potential impact of outsized debt levels on the combined company’s stock,” the board wrote in a letter to John Visentin, Xerox’s CEO. 

HP announced in October that it will cut between 7,000 and 9,000 jobs by the end of fiscal 2022 as part of a broader restructuring plan that it estimates will save $1 billion a year. The cuts would amount to nearly 16% of its 55,000 employees across the world, according to data from FactSet.

The software company is worth $29 billion and is over three times the size of Xerox, which makes printers and copiers, in terms of market cap.

“We note the decline of Xerox’s revenue from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, which raises significant questions for us regarding the trajectory of your business and future prospects,” the board wrote. 

“In addition, we believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination,” the board wrote. “With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction.”

HP was created after Hewlett-Packard separated its enterprise business — Hewlett Packard Enterprise — which sells data storage equipment and servers, among other things. 

Activist investor Carl Icahn, who owns a 10.6% stake in Xerox, recently bought a $1.2 billion stake in HP. He was pushing for the merger of the two companies, as he believed that a combined company would be in the best interests of both sets of shareholders given the potential for cost savings and a balanced portfolio of printer options. 



Emerging Technology Trends – Nextgov




Technology-driven tools and initiatives are accelerating productivity and paving new opportunities for agencies to progress. This year saw many of those efforts come to fruition. 

Under direction from the Trump administration, agencies and departments are leveraging and investing in artificial intelligence to meet their missions through new technological capabilities like never before. The year also saw massive leaps in both quantum and high-performance supercomputing. New discoveries were launched with a great deal in federal support—agencies even helped Google achieve quantum supremacy this year. And federal entities have also made notable strides in deploying emerging technologies including blockchain, 5G, 3D printing and robotic process automation. 

While each agency continues to modernize at its own pace, this report offers an in-depth look at key developments in federal technology innovation in 2019—a year of buzzwords, packed with new policies, challenges, milestones and disruptions. 

Read more about them in this special report. 


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Fractured Forests Are Endangering Wildlife, Scientists Find




Around the world, humans are fracturing vast forests. Highways snake through the Amazon’s rain forests, and Indonesia plans an ambitious transportation grid in Borneo, through some of the largest untouched expanses of tropical forests.

If you were to parachute at random into any of the planet’s forests, you’d probably land a mile or less from its edge, according to a recent study.

Conservation biologists have intensely debated the dangers that the fracturing of woodlands poses to animals. While many studies have shown that extinctions are more common in fragmented environments, others haven’t documented much effect.

A study published on Thursday may help resolve what has been a strident debate, showing why many species are vulnerable to the fragmenting of forests while others are not. Animals in places with a long history of disturbances are relatively resilient, the researchers found. Species that have existed in stable habitats for thousands of years are far more sensitive.

“They are taking a new approach on a global scale,” said Anna Hargreaves, an evolutionary ecologist at McGill University in Montreal, said of the scientists. “I find it compelling.”

The first hints of this risk to biodiversity came in the 1960s, when researchers found that bigger islands tended to host more species than smaller ones. Ecologists began to think of forests as islands, too: When a logging company splits what had been continuous belt of trees, two smaller islands may be formed, each of which might support fewer species than the undisturbed tract had.

Scientists found evidence for this hypothesis in jungles and woodlands in many parts of the world. Isolation in a forest fragment can put a population of animals at risk of extinction — they may struggle to find food, for example.

But some of the consequences may be less obvious. Cristina Banks-Leite, a conservation biologist at Imperial College London and a co-author of the new study, captured thousands of birds in the forests of Brazil.

She found fewer species in the smaller patches of forest and even fewer species near the edges of these fragments, suggesting that the new borders were to blame.

Can’t birds just fly from one patch of trees to another? In Brazil’s tropical forests, it turns out, they seldom do. Dr. Banks-Leite said that sunlight may be one reason: Tropical forests are always dim, thanks to their dense canopy. The birds adapted to low light might find bright sunlight at the forest’s edges too harsh.

But ecologists in the eastern United States uncovered contradictory evidence. There, animals often thrive near forest edges. Nor is there much evidence that forest fragmentation has led to many extinctions.

At first, ecologists argued about which results mattered most. Eventually, a number of researchers decided to pool their results and take a look at the big picture.

In 2014, Dr. Banks-Leite and her colleagues unveiled a database of fragmented forests called Biofrag. Each scientist added his or her observations, building a compendium that included thousands of species of birds, mammals, spiders and other animals.

The researchers set about looking for a hypothesis that might explain why some researchers have found strong effects from fragmentation and others haven’t. They found inspiration in an idea put forward in 1996 by Andrew Balmford, an ecologist now at the University of Cambridge in England.

He proposed that the risk faced by a species today may depend on the experiences the species had in the past. On many islands, for example, birds are now threatened with extinction. Rats introduced onto the islands from ships attack the birds’ eggs, and they are helpless to do anything about it.

Dr. Balmford observed that some islands have had native species of rodents for thousands of years. Birds on those islands may be resilient to the threat of new rodents, he speculated.

This idea is called the extinction filter hypothesis. The species we see today have passed through a gantlet of challenges over time. Other animals unable to cope with a threat in the past became extinct — filtered out by history, as it were.

The authors of the new study reasoned that an extinction filter might be at work in today’s forest fragments. Some forests were relatively undisturbed until recent decades, while others were split into fragments in ancient times.

In parts of Europe and Asia, farmers were breaking up forests thousands of years ago. Even before, some forests were regularly disturbed by storms or fires. And during each ice age, northern belts of trees were broken into isolated stands.

In the new study, published in Science, the researchers examined 4,493 species in 73 forest regions worldwide. They used several methods to determine how sensitive each species was to forest fragmentation. For instance, they observed whether species could be found at the edges of forests or kept to the core of the fragment.

Some species, such as the cedar waxwing of North America and the rufous-tailed hummingbird of Central America, didn’t seem to mind life in fragments. But other species shied away from forest edges, such as the sun bear of Borneo and the hairy woodpecker of North America.

In certain regions, like Borneo, the researchers found that many species stayed in the forest cores. In others, like New England, many were comfortable at the edges. “It shows everyone was right,” said Dr. Banks-Leite.

She and her colleagues then put the extinction filter hypothesis to the test. They looked at how many of each kind of species — sensitive and not — were found in forests with a history of disturbances and in undisturbed forests.

The difference was stark.

Just over half of animal species in undisturbed forests are now sensitive to fragmentation. Only 18 percent of the species in historically disturbed forests are affected.

“It hit us over the head pretty hard,” said Matthew Betts, an ecologist at Oregon State University and a co-author of the new study.

The results suggest that vulnerable species in places like New England have gone extinct as storms and glaciers have fragmented their forests. In places like the Amazon, those fragile species found refuge — until now.

Most of the world’s diversity remains in undisturbed forests. Dr. Betts and his colleagues estimated that 40 species of birds in North American forests are vulnerable to fragmentation. But in the more pristine forests of Central and South America, 900 species of birds are at risk.


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California Bans Insurers From Dropping Policies Made Riskier by Climate Change




California’s wildfires have grown so costly and damaging that insurance companies — a homeowner’s last hope when disaster strikes — have increasingly been canceling people’s policies in fire-prone parts of the state.

On Thursday, however, California took the highly unusual step of banning the practice, a decision that exacerbates the insurance industry’s miscalculation of the cost of climate change.

The new policy imposes a one-year moratorium, preventing insurers from dropping customers in or alongside ZIP codes struck by recent wildfires. The moratorium covers at least 800,000 homes around the state. The state has also asked insurers to voluntarily stop dropping customers anywhere in California because of fire risk for one year.

“People are losing insurance even after decades with the same company and no history of filing claims,” Ricardo Lara, California’s insurance commissioner, said in a statement. “Hitting the pause button on issuing non-renewals due to wildfire risk will help California’s insurance market stabilize and give us time to work together on lasting solutions.”

One consequence of global warming is that it intensifies natural disasters such as fires and floods, but insurers have struggled to anticipate the spiraling costs. Natural disasters in 2017 and 2018 generated a record $219 billion in payouts worldwide, according to Swiss Re, a leading insurance company.

At the same time, though, government regulators are struggling with their own conundrum: They must balance the need to protect consumers from high insurance rates with the need to keep insurance companies from going out of business entirely.

The insurers’ struggle is all the more remarkable considering that they are explicitly in the business of putting an accurate price on risk.

“There’s just the shock of companies waking up to the liability that’s on their books,” said Rex Frazier, president of the Personal Insurance Federation of California, which represents the state’s insurers. “There are a lot of people scrambling to really understand the nature of this catastrophic risk.”

In a survey of 27 state insurance regulators this year, the consulting firm Deloitte found that just four states said their insurers were “fully” or “largely” prepared to respond to the risks of climate change. The danger of insurers being overwhelmed by worsening natural disasters “is very real,” Deloitte wrote in its report.

The outcome of that struggle matters far beyond the effects on people who buy insurance, or the investors who stand to lose if insurers fail. Insurance is vital to the ability of communities to rebuild after wildfires, storms and other catastrophes, experts say, particularly as government funding for assistance becomes increasingly strained.

“Is our business model going to keep working in the face of this kind of change?” said Carolyn Kousky, executive director of the Wharton Risk Center at the University of Pennsylvania, characterizing the concerns sweeping the insurance industry. “If our insurers are in trouble, that jeopardizes people’s recovery.”

That challenge is acute in California. The state has become a case study of how an industry that is central to dealing with climate change has instead been hobbled by it — and how regulators, in their efforts to protect consumers, could risk making the problem worse.

After two years of extreme losses, it is clear that California’s insurers are struggling to prepare themselves for a new era of accelerating climate risk, according to interviews with insurance executives, academics and regulators. New research shows that the wildfires of 2017 and 2018 alone wiped out a full quarter-century of the industry’s profits. Last year’s Camp Fire was the costliest disaster anywhere in the world that year, according to the insurer Munich Re.

The reckoning is now unfolding as insurers strain to predict future losses, drop some of their most vulnerable customers, push for rate increases, fight with regulators and nervously watch what could become a third straight year of heavy losses.

As terrifying as the threat of wildfires is, what happens after the fire is just as worrisome to climate adaptation experts.

The past two years of wildfires have shown that even insurers are struggling to predict the risks associated with climate change. The consequences of that failure could be profound, experts say: The very industry that’s meant to stabilize society in the face of climate change is itself being destabilized by climate change, threatening to make it harder for people to cope with the rising tempo of disasters.

The state’s homeowners insurers lost a total $20 billion in the 2017 and 2018 wildfires, according to an analysis published in October by Milliman, an actuary and consulting firm. That’s twice the industry’s cumulative profits since the last major wildfires, in 1991. A line of business that was until recently profitable is now unprofitable, the authors wrote, “exposed to a severe peril that is neither easily measured nor fully understood.”

Eric Xu, an actuary at Milliman’s San Francisco office and one of the report’s authors, said that the shock of the California wildfires echoes Florida after Hurricane Andrew in 1992, which caused $28 billion in damage and caused the failure of a dozen insurers.

But the threat facing insurers in California is in one sense trickier: After Andrew, many national insurers stopped writing coverage in Florida. But Mr. Xu said California represents too great a share of total revenue for most national insurance companies to just walk away from the state altogether.

Unable to leave, insurers have sought other solutions to protect themselves from rising wildfire costs. But those changes highlight the obstacles facing insurers as climate change worsens.

One fix is for insurers to buy what’s called reinsurance — a sort of insurance for insurers — providing payments if claims rise beyond a certain level. But as the risks from climate change have grown, reinsurance companies have raised the cost of the protection they offer.

For insurance companies, the most obvious response is to pass the costs on to customers in the form of higher prices. California insurers filed 80 requests for rate increases in 2018, more than double the number of requests in 2015, according to data provided by the state.

But California, like many states, gives regulators the power to reject those requests. And the state forbids insurance companies from setting rates based on what they expect in future damages. Insurers are allowed to set rates only based on prior losses.

“That works, until it doesn’t,” said Mr. Frazier, of the insurers’ trade group. He said the state should change the rules so that insurers can base premiums on more than just past experience.

Ricardo Lara, California’s insurance commissioner, said he’s wary of letting insurers use models that may not be accurate.

“I want to be very cautious about opening the rate-approval process to anything that compromises the transparency and objectivity that exists today,” Mr. Lara said in a statement. “Protecting consumers is our top priority, and that is the lens we will use to evaluate any catastrophe risk models in the future.”

Mr. Frazier acknowledged that the ability to predict wildfire damage remains imperfect.

“There are a lot of people scrambling to really understand the nature of this catastrophic risk,” Mr. Frazier said. He called the wave of fires starting in 2017 “a complete wake-up moment for an industry that thought it knew what was on its books, but actually didn’t.”

When insurers try to respond to risks they don’t understand, they tend to set premiums too high, to give themselves a buffer against error, according to Dr. Kousky of the Wharton Risk Center. But the problem with that, she said, is that when it comes to climate change, insurers may respond by setting premiums so high that insurance in many parts of the country becomes unaffordable.


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