An AR glasses pioneer collapses

In the first days of 2017, Osterhout Design Group arrived up at CES with a two-story booth and huge promises. The startup’s founder, Ralph Osterhout, wanted to take the small San Francisco-based company even further past its military contractor roots in AR, building out major enterprise and consumer businesses with flashy new product lines. The company had just raised $58 million, and the Las Vegas electronics show served as its launchpad for its R-8 and R-9 augmented reality glasses lines that Osterhout hoped would bring “glasses to the masses.”

Less than a year later, however, the company had burned through its funding and couldn’t pay employees. By early 2018, ODG had lost half of its workforce as it sought loans to pay back employees. Today, a skeleton crew awaits a patent sale less than a week away after acquisitions from several large tech companies, including Facebook and Magic Leap, fell through, multiple sources tell TechCrunch.

ODG founder and CEO Ralph Osterhout

Ralph Osterhout, 73, founded ODG 20 years ago as a high-tech toy company, built after his previous venture, Machina, collapsed in what a Wired report at the time called “a spectacular bankruptcy.” After underwriting ODG with $14,000 of his own cash, Osterhout kept the startup plugging along on its own merits before he decided that it was time to reach for outside funding to turn his company into a powerhouse in the burgeoning augmented reality industry. At the end of 2016, the company raised a $58 million round led by 21st Century Fox.

ODG was already getting thousands of orders for its R-7 glasses, an enterprise-focused product that it billed as a head-worn Android tablet that could help workers go through checklists, review documents and share live video feeds hands-free. Osterhout wanted to get AR glasses into the hands of consumers and take advantage of new tech advances, even as Magic Leap was teasing the release of its own heavily hyped consumer product.

“I hope Magic Leap is a huge success. I want everyone in AR to be a huge success,” Osterhout said in an interview with TechCrunch in 2017. “[Augmented reality] is going to be transformative.”

Months later, a large Chinese firm approached ODG with an offer north of the company’s $258 million Series A valuation, a source tells TechCrunch. Talks fell through, but ODG’s leadership was at their most ambitious and felt like they couldn’t be stopped.

At the same time, following the CES 2017 product unveil, some employees wondered whether having three distinct product lines under development aimed at roughly the same customer was the right direction for the company with around 100 employees. Ralph Osterhout’s strong internal popularity kept these concerns at bay even as the company faced double-digit return rates from customers of its current-generation R-7 glasses due to manufacturing issues.

“That’s a little bit the story of ODG and Ralph, in general: everything is a prototype, nothing is finished, and before one thing is 60 percent done, you’re already onto the next one,” a former employee tells TechCrunch. “I think the heart of ODG’s downfall was its lack of focus.”

The company never ended up shipping the R-9 or the R-8 or even fulfilling all of its R-7 orders. It blew through its funding before the fall of 2017, and it wasn’t long before employees were on half-pay and soon stopped getting paid at all. ODG sought backing from Chinese firms, but sources say that a negative trade environment hampered those efforts. In 2018, it received an $8 million loan from a Chinese firm used to pay back employees as Osterhout began trying to scrounge together an exit strategy, seeking out buyers for the company that bore his name.

Suitors for the company included Magic Leap, Facebook, Razer and Lenovo, sources tell TechCrunch. In each case talks fell through, as Osterhout was convinced that his company was being undervalued by the prospective acquirers.

ODG’s San Francisco offices in 2016

Sources say that Magic Leap continued to bump up its offer, eventually signing a letter of intent in the final months of 2018 to purchase the startup. The final proposed purchase price ended up at $35 million, still a far cry from its 2016 valuation, a source familiar with the deal tells TechCrunch.

This offer came with stipulations for the types of engineers Magic Leap wanted to bring aboard, leading ODG to shrink its staff to just a couple dozen employees. As the startup whittled itself down to prepare for a disappointing, yet relatively dignified, sign-off, Magic Leap began to grow cagey about finalizing the acquisition, sources say. As the deal started to fall through, some in ODG’s leadership began to wonder aloud whether Magic Leap was “acting in poor faith” and was only looking to starve the company before purchasing assets at a discount in a patent sale.

“Ralph turned around and he didn’t have a company or team anymore, and then Magic Leap goes, you know what, we’re just going to buy the IP, we don’t want the company, you don’t have a company anymore,” one source said.

Magic Leap did not respond to a request for comment.

With the deal shot and the indebted company in shambles, the team dwindled down further to a skeleton crew — essentially a deals team — as company assets were put up for sale by IP advisory firm Hillco Streambank. The company’s patent portfolio up for sale next week includes 107 issued patents and 83 pending applications.

The 20-year-old company has already seen its early work in foundational AR patents pay off for it. In 2014, Microsoft paid around $150 million to acquire a trove of ODG patents after deciding not to buy the company outright. In documents reviewed by TechCrunch, ODG highlights a number of AR patents in its collection that it believes existing products from companies like Magic Leap, Google and Facebook infringe on, specifically pointing to diagrams of systems like the Magic Leap One and Oculus Quest that they claim conflict with its prior art.

With a patent sale (spotted first by UploadVR), ODG’s leadership is looking to recoup enough to pay back the company’s debts, as well as the employees who worked for months on partial salaries.

Whether or not ODG’s downfall was largely a cause of mismanagement, the disparity between acquisition offers and its 2016 valuation showcases a broader cool down in the augmented reality industry, as capital-intensive efforts in enterprise and hardware have proven to be a more difficult sell for investors heading into 2019.

Last month, Blippar, an enterprise-focused AR startup that raised more than $130 million, collapsed after failing to secure an emergency influx of cash. Just yesterday, it was reported that Meta, an AR hardware startup with $73 million in funding from Y Combinator, Tencent and Comcast, had fallen into insolvency. Magic Leap itself has had issues breaking into broader markets: In November the startup lost out to Microsoft on a $480 million military contract.

Asked whether they would pin the company’s failures on the broader industry slowdown, a former employee said, “From an internal standpoint, all I saw was, we are fucking it up.”

Ralph Osterhout did not respond to a request for comment.

Exxon ships have not returned to area of Venezuela dispute -Guyana

A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes

GEORGETOWN (Reuters) – Seismic research vessels hired by Exxon Mobil to explore for oil off Guyana’s coast have not yet returned to the site of a December incident with Venezuela’s navy, but they may in the future, Guyana’s foreign minister said on Thursday.

Guyana, with no history of oil production, has become the focus of intense interest since Exxon announced the discovery of over 5 billion barrels of oil and gas off its shores. That has reignited a territorial dispute with neighboring Venezuela going back centuries. OPEC-member Venezuela’s crude output is near its lowest levels in 70 years amid an economic crisis.

In a speech at a trade union forum in the capital Georgetown, Foreign Minister Carl Greenidge said the Dec. 22 incident when the ships complied with Venezuela’s order to turn around – which both countries say took place within their territorial waters – would not necessarily hold back future exploration.

“They haven’t returned to the area. It doesn’t mean they can’t return in the future,” Greenidge said. “We’re not speaking in absolutes here.”

According to a notice posted on Guyana’s Maritime Administration Department’s website before the incident, the ships’ activities were expected to begin on Dec. 6, 2018 and conclude on Dec. 31. No new notice has been posted.

Venezuela’s Information Ministry did not immediately respond to a request for comment on Greenidge’s statements. In a press conference on Wednesday, socialist President Nicolas Maduro praised the armed forces for intercepting the ships, noting that if it were not for their patrol, “one day we would get there and they would be taking oil.”

“Is a world like that viable, without respect for international law?” Maduro said.

An Exxon spokeswoman did not immediately respond to a request for comment.

Reporting by Neil Marks; Additional reporting by Jennifer Hiller in Houston; Writing by Luc Cohen; Editing by Phil Berlowitz

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Shareholder suit alleges Google covered up its sexual harassment problems with big payouts

Months after an earth-shattering New York Times investigation exposed Google parent company Alphabet’s $90 million payout to Android co-founder Andy Rubin, despite the accusations of sexual misconduct made against him, a Google shareholder is suing the company.

James Martin filed suit in the San Mateo Superior Court Thursday morning, alleging the company’s leaders deployed massive allowances to poor-behaving executives to cover up harassment scandals. Both Rubin and Google’s former head of search Amit Singhal, who peacefully left the company in 2016 amid harassment allegations that weren’t made public until the following year, are listed as defendants in the court filing. This is because the plaintiff is seeking a full return of the massive payouts awarded to the embattled former execs.

With charges including breach of fiduciary duty, unjust enrichment, abuse of power and corporate waste, per The Washington Post, the lawsuit asks for an end of nondisclosure and arbitration agreements at Google, which ensure workplace disputes are settled behind closed doors and without any right to an appeal. Martin is also requesting Google incorporate three new directors to the Alphabet board and put an end to supervoting shares, which gives certain shareholders more voting control.

The lawsuit also targets Rubin, Google co-founders Larry Page and Sergey Brin, chief executive officer Sundar Pichai and executive chairman Eric Schmidt. Former human resources director Laszlo Bock, chief legal officer David Drummond and former executive Amit Singhal are also named, as are long-time venture capitalists and Google board members John Doerr and Ram Shriram.

Google didn’t immediately respond to a request for comment.

Following the release of the NYT report, Googlers across the world rallied to protest the company’s handling of sexual misconduct allegations. The protestors had five key asks, including an end to forced arbitration in cases of harassment and discrimination, a commitment to end pay and opportunity inequity and a clear, uniform, globally inclusive process for reporting sexual misconduct safely and anonymously. Google ultimately complied with employees and put an end to forced arbitration; other tech companies, such as Airbnb, followed suit.

UPDATE 2-U.S.-based stock funds draw $8.74 bln in latest week – Lipper

FILE PHOTO: A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 8, 2019. REUTERS/Brendan McDermid

NEW YORK (Reuters) – Investors put money to work in both U.S. stock and bond markets for the week ended Wednesday, after soothing remarks by Federal Reserve Chair Jerome Powell that low inflation would allow the U.S. central bank to be “patient” in deciding whether to continue raising rates this year.

U.S.-based stock funds attracted about $8.74 billion in the week ended Jan. 9, following the previous week’s cash withdrawal of $18.7 billion, according to data released Thursday by Lipper. U.S.-based taxable bond funds attracted $8.4 billion in the week ended Wednesday, following the previous week’s cash outflows of over $12.7 billion, according to Refinitiv’s Lipper research service.

“It appeared to be ‘risk-on’ for the week,” said Tom Roseen, head of research services for Lipper. He noted that it was the first week in 29 that equity mutual funds – excluding exchange-traded funds (ETFs) – witnessed net inflows of over $4.4 billion. That marked their largest weekly net inflows since June 20, 2018, he said.

But Roseen said it was the seventh consecutive week that taxable bond funds, excluding ETFs, witnessed net outflows, handing back $926 million this past week. Taxable bond ETFs, for their part, attracted roughly $9.35 billion for the same time period, Lipper data show.

“Domestic equity funds – ex-ETFs – took in a little less than $3.3 billion, witnessing their second weekly net inflows in three while posting a 3.99 percent return on average for the flows week,” Roseen said.

Their non-domestic equity fund counterparts, posting a 4.08 percent return on average, witnessed their first weekly net inflows since Sept. 19, 2018, said Roseen, noting more than $1.1 billion of inflows this past week.

For the 15th week in a row, non-domestic equity ETFs witnessed net inflows, with this past week attracting $3.6 billion, Roseen said. That was their largest weekly net inflows since Jan. 31, 2018, he said.

All told, safer money-market funds attracted over $17 billion in the week ended Wednesday, underscoring investors’ skittishness on financial markets given the recent volatility. It was the sector’s fifth consecutive week of cash inflows, Lipper said.

Reporting by Jennifer Ablan; Editing by Tom Brown and James Dalgleish

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Ford’s ride-share service Chariot to shut operations by March-end

A Ford Transit Chariot van in London, Britain, January 31, 2018. REUTERS/Peter Summers

(Reuters) – Ford Motor Co’s (F.N) ride-share service Chariot is ceasing its operations in the United States and the UK by the end of March, Chariot said in a blog post bit.ly/2D3DKjL on Thursday.

The move is a setback for Ford, which bought the San Francisco-based Chariot in 2016 to expand beyond auto manufacturing and take another step toward becoming a mobility company. [reut.rs/2D3vv77]

Earlier on Thursday, Ford said it will cut thousands of jobs, look at plant closures and discontinue loss-making vehicle lines as part of a turnaround effort aimed at achieving a 6 percent operating margin in Europe.

Reporting by Mary Ann Alapatt in Bengaluru; Editing by Shailesh Kuber

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JPMorgan Chase boosting employee bonus pool 3 percent for 2018

FILE PHOTO: The logo of JPMorgan Chase & Co (JPM) is seen in Los Angeles, California, United States, on October 12, 2010. REUTERS/Lucy Nicholson

LONDON/NEW YORK (Reuters) – JPMorgan Chase & Co (JPM.N) is boosting its bonus pool by 3 percent for 2018 after its investment banking division topped charts throughout the year, people familiar with the matter told Reuters on Thursday.

Bankers, traders and other employees will find out how much they were awarded on an individual basis next week, said one of the people. They shared information on the condition of anonymity because they were not authorized to publicly discuss bonuses.

JPMorgan employees who can look forward to bonus payments likely include those in the equities trading division. Equity markets revenue was up 17 percent in third quarter of 2018 over the prior year.

JPMorgan reports fourth quarter earnings on Tuesday.

JPMorgan is known as one of the stingier banks on Wall Street in terms of how much it pays revenue-generating employees.

In 2017, the largest U.S. bank spent $7.5 billion on total compensation, which includes bonuses as well as salaries and other employee-related expenses, like health benefits. That represented 31 percent of overall revenue.

In its investment bank, that amount was $2 billion last year, representing a compensation ratio of 27 percent. At Wall Street rival Goldman Sachs Group Inc (GS.N), that figure was 37 percent.

Reporting By Sinead Cruise in London and Elizabeth Dilts in New York; Editing by Lauren LaCapra and Tom Brown

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UPDATE 1-JPMorgan Chase boosting employee bonus pool 3 pct for 2018

FILE PHOTO: The logo of JPMorgan Chase & Co (JPM) is seen in Los Angeles, California, United States, on October 12, 2010. REUTERS/Lucy Nicholson

LONDON/NEW YORK (Reuters) – JPMorgan Chase & Co (JPM.N) is boosting its bonus pool by 3 percent for 2018 after its investment banking division topped charts throughout the year, people familiar with the matter told Reuters on Thursday.

Bankers, traders and other employees will find out how much they were awarded on an individual basis next week, said one of the people. They shared information on the condition of anonymity because they were not authorized to publicly discuss bonuses.

JPMorgan employees who can look forward to bonus payments likely include those in the equities trading division. Equity markets revenue was up 17 percent in third quarter of 2018 over the prior year.

JPMorgan reports fourth quarter earnings on Tuesday.

JPMorgan is known as one of the stingier banks on Wall Street in terms of how much it pays revenue-generating employees.

In 2017, the largest U.S. bank spent $7.5 billion on total compensation, which includes bonuses as well as salaries and other employee-related expenses, like health benefits. That represented 31 percent of overall revenue.

In its investment bank, that amount was $2 billion last year, representing a compensation ratio of 27 percent. At Wall Street rival Goldman Sachs Group Inc (GS.N), that figure was 37 percent.

Reporting By Sinead Cruise in London and Elizabeth Dilts in New York; Editing by Lauren LaCapra and Tom Brown

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Moody’s lowers PG&E’s credit rating to junk, joins S&P

FILE PHOTO: A PG&E truck carrying an American Flag drives past PG&E repair trucks in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage

(Reuters) – Moody’s on Thursday joined S&P in lowering PG&E Corp’s (PCG.N) credit rating deeper into junk territory, citing a challenging environment for the California power provider as it faces billions of dollars in liabilities related to wildfires.

Moody’s, which cut PG&E’s rating to B2 from Baa3, said access to capital has become more uncertain for the company.

The downgrade followed a Reuters report on Friday, citing sources, that the utility company was exploring filing for bankruptcy protection.

Moody’s also downgraded its ratings of PG&E unit Pacific Gas & Electric Co to Ba3 from Baa2.

“The company (PG&E) is increasingly reliant on extraordinary intervention by legislators and regulators, which may not occur soon enough or be of sufficient magnitude to address these adverse developments,” Jeff Cassella, Moody’s vice president-senior credit officer, said in a statement.

S&P cut the rating on PG&E and its Pacific Power & Gas Co unit on Monday to “B” from “BBB-,” the lowest tier of so-called investment-grade ratings.

The wildfire, which killed at least 86 people, broke out on the morning of Nov. 8 near the mountain community of Paradise. It is said to be one of the most destructive wildfires in California’s history.

Moody’s said it would continue to look for signs of legislative and regulatory support for PG&E, as the company works through various investigative, legal and regulatory processes.

Reporting by Arundhati Sarkar in Bengaluru; Editing by Maju Samuel

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UPDATE 1-Moody’s lowers PG&E’s credit rating to junk, joins S&P

FILE PHOTO: A PG&E truck carrying an American Flag drives past PG&E repair trucks in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage

(Reuters) – Moody’s on Thursday joined S&P in lowering PG&E Corp’s (PCG.N) credit rating deeper into junk territory, citing a challenging environment for the California power provider as it faces billions of dollars in liabilities related to wildfires.

Moody’s, which cut PG&E’s rating to B2 from Baa3, said access to capital has become more uncertain for the company.

The downgrade followed a Reuters report on Friday, citing sources, that the utility company was exploring filing for bankruptcy protection.

Moody’s also downgraded its ratings of PG&E unit Pacific Gas & Electric Co to Ba3 from Baa2.

“The company (PG&E) is increasingly reliant on extraordinary intervention by legislators and regulators, which may not occur soon enough or be of sufficient magnitude to address these adverse developments,” Jeff Cassella, Moody’s vice president-senior credit officer, said in a statement.

S&P cut the rating on PG&E and its Pacific Power & Gas Co unit on Monday to “B” from “BBB-,” the lowest tier of so-called investment-grade ratings.

The wildfire, which killed at least 86 people, broke out on the morning of Nov. 8 near the mountain community of Paradise. It is said to be one of the most destructive wildfires in California’s history.

Moody’s said it would continue to look for signs of legislative and regulatory support for PG&E, as the company works through various investigative, legal and regulatory processes.

Reporting by Arundhati Sarkar in Bengaluru; Editing by Maju Samuel

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UPDATE 1-Alphabet board faces lawsuit on allegations of sexual misconduct cover-up

Google signage is seen at the Google headquarters in the Manhattan borough of New York City, New York, U.S., December 19, 2018. REUTERS/Shannon Stapleton

SAN FRANCISCO (Reuters) – A shareholder’s lawsuit filed on Thursday said the board of Google parent Alphabet Inc played a direct role in covering up sexual misconduct claims against two top executives in 2014 and 2016.

The company did not immediately respond to a request for comment.

The lawsuit in San Mateo County Superior Court in California by shareholder James Martin cites minutes from Alphabet board and board committee meetings. The lawsuit seeks to force Google to upgrade its governance and oversight to stop future sexual harassment and discrimination.

It also seeks to have shareholders vote on proposals to end non-disclosure agreements and mandatory arbitrations that keep suspected misconduct from becoming public and to force directors to pay punitive and other damages to Alphabet.

Attorneys for Martin said they plan to show that Google suffered hundreds of millions of dollars in damages because of the board’s actions.

The sum stems from payouts made to executives accused of sexual misconduct, lost productivity from employees around the world walking off the job briefly in November to protest the payouts and brand reputation damage.

Google Chief Executive Sundar Pichai apologized last year to employees for the companies’ past handling of sexual misconduct cases and vowed to improve practices. here

The employee demonstrations followed a New York Times report in October that said Google in 2014 gave a $90 million exit package to then senior vice president Andy Rubin after he was accused of sexual harassment. Rubin said the report mischaracterized the circumstances of his departure.

Martin’s lawsuit said Alphabet board members were directly involved in deciding how to deal with Rubin after an internal investigation found the allegations against him credible.

Reporting by Paresh Dave and Jonathan Stempel; editing by Grant McCool

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