Edison Investment Research

Android Security – Swiss cheese pt. IV

Another horrible hack that Google is powerless to address

§  The worst part of this latest breach is that the hackers are targeting vulnerabilities in Android that have been well known for some time which no-one appears capable of fixing.
§  This only serves to reinforce my view that Google’s only way out of the nasty mess of Android fragmentation where virtually no phones can be properly updated remains to take Android fully proprietary.
§  3m Google users appear to have had their accounts stolen which are now being used to generate $320,000 per month in fraudulent advertising scams.
§  The Gooligan exploit is a variant of Ghost Push which came to light in September 2015 some 14 months ago meaning that there has been plenty of time to issue a fix.
§  The problem with Android is not that it has any particular flaws that make it less safe than iOS or Windows but that none of the fixes for these problems ever make it onto the affected devices.
§  There remain two reasons for this:
§  First: The infrastructure for updating Android devices is horribly fragmented with each manufacturer or operator having control if its updates.
§  With all the different variations and add-ons, extensive testing is required to ensure that the variations and add-ons don’t break when the phone is updated.
§  Furthermore, because none of these players own the end relationship with the customer they have no incentive to improve it.
§  We think that this is Google’s most pressing problem (see here) .
§  Second: Most Android handsets cannot be updated.
§  Android is a commoditised, brutally competitive market meaning that in the mid-range, every cent of cost matters.
§  Making a device updateable means that extra storage and memory must be added to the device which are never reflected in the price.
§  Hence, the vast majority of Android devices are not updateable to later versions of Android as there is no incentive for the device maker to add this capability.
§  The net result is that there is very little prospect for owners of these devices ever to be free from this problem or any of the others that have emerged for Android without buying a new device.
§  This is far beyond the means of most Android users meaning that they will constantly be exposed to any new threat that emerges with little prospect of it ever being fixed.
§  This is just another reason why usage of Android devices is likely to continue trailing that of iOS and why these devices are likely to yield a much lower return for the ecosystems that run upon them.
§  For example, Edison estimates that Google can earn $31.6 per user per year from an iOS device whereas its own Android devices can only generate $14.0 per user per year on average.
§  Part of this is due to the differences in demographics between the two ecosystems but We are certain that most of it is due to the fact that Android devices are more difficult to use, less secure and as a result generate much less traffic.
§  Consequently, we think that Google has to take control of Android because in its current state, it is very unsecure where very little is likely to change.
§  We cohttp://www.radiofreemobile.com/google-closed-source/ntinue to believe that this may happen in 2017 as Oracle has provided Google with the perfect excuse to do so (see here) .
§  We remain pretty cautious on Alphabet preferring instead Tencent, Baidu and Microsoft.

Market Commentary - Housing, Infrastructure, Construction and Services - 1st December 2016

Serco is holding a CMD later today and has updated the market this morning, Fulcrum Utility Services has announced a £4m contract, Inland Homes has issued an AGM trading update and Grainger has issued its full year results announcement. We try to spot companies with substantial potential operating with talented management teams. We have been positive about Fulcrum for some time and remain so. Inland Homes is also a fast moving fledgling company that is well managed; its top team have built and sold a house builder before (Country and metropolitan) so they were always going to have some advantage

Decommissioning - changing the mindset

£1.1 billion was spent on decommissioning in the UK in 2015, accounting for 5% of total UKCS expenditure that is expected to increase to 12% in 2017. Oil & Gas UK has estimated that decommissioning on the UKCS up to 2025 represents a £17.6 billion opportunity.

With the UKCS accounting for 50% of the global decommissioning spend over the next 5 years, the North Sea is at the forefront of developing the techniques to optimise the process and could position itself as a major player in the global decommissioning industry. At a recent conference on the subject hosted by Edison, together with Addleshaw Goddard, the key themes of cost uncertainty and industry collaboration emerged.

Market Commentary - Housing, Infrastructure, Construction and Services - 30th November 2016

Its a relatively quiet day for newsflow and with temperatures at current levels it will be pretty quiet on many construction sites first thing this morning! Telford Homes has produced it interims and Breedon has issued a trading update and told us of an acquisition that will cost up to £15.7m, Sherburn Minerals. The moves yesterday were more about the ebb and flow of trading than signals regarding future moves. Interserve was the best performer, up 1.6% on only 250,035 shares traded.

Market Commentary - Housing, Infrastructure, Construction and Services - 29th November 2016

Vp, LSL, Shaftesbury and Countryside provide news this morning. The themes are the same which are that trading is going well, better than last year and there are few tangible signs yet of slowdown caused by Brexit or any other factors. And yet sector share prices do not seem to correspond to that view which we discuss below.  The moves yesterday show the market is getting lukewarm on the sector despite the flow of news that for many seems unexpectedly good.Our sense is that there are some stocks that present good value in the sector and as has been seen investors can take advantage of some of the wobbles that occur.

Market Commentary - Housing, Infrastructure, Construction and Services - 27th November 2016

Several items of interest this morning among the smaller companies in the HICS area. Lavendon has had a second serious approach the new one coming from Loxam SAS, the quoted international hire operator.Capital and Counties has issued a trading update in which it says that London has been characterisd by greater uncertainty but trading performance has been positive and rental levels reached a new peak. For choice in the Merchants the real recovery potential probably lies with SIG

Ola. vs. Uber – Welfare state.

We suspect Ola will need state intervention to survive.

Market Commentary - Housing, Infrastructure, Construction and Services - 25th November 2016

There is no directly relevant news today but updates from Pennon and Thames Water provide some data with both pointing to continued high levels of investment, as per the current AMP6 schedule. Mitie was again a leader yesterday, up 3.3% to 208p on 2.6m shares traded

Microsoft – Back to front

Back to front strategy of Surface Phone looks sure to fail.

Is the last bastion of the UK Defence Industry at risk?

Urgent decisions are needed about UK shipbuilding

Naval Ships and Submarines are forecast to consume 40% of total UK defence equipment spending over the next decade, so you would think it is a safe assumption that shipbuilding is an excellent market for the likes of BAE Systems, Babcock and Rolls-Royce?  Last week’s report by the House of Commons Defence Committee suggests otherwise. MPs highlighted that decisions made over the next year about the Type 26 and Type 31 are critical in establishing whether skills can be maintained, budgets can be met and ships can be delivered on time.