U.S. to revise Raytheon contract for satellite control

WASHINGTON The U. S. Air Force plans to revise its contract with Raytheon Co (RTN. N) for a new ground control network for GPS satellites after officials decided last week to delay completion of the program until July 2022, a senior official said Thursday.

Major General Roger Teague, director of space programs for the Air Force's acquisition chief, told Reuters in an interview it was not clear how much the delay would add to the program, which was previously expected to cost $3.6 billion.

He said the GPS program office would also review incentive fees associated with the contract to ensure they properly rewarded good performance and penalized the company if its performance did not improve.

Raytheon has said it was committed to meeting the Air Force's expectations for the program, but declined to give any further details.

Teague's comments followed a "deep dive" review last week by the Pentagon's chief arms buyer, Frank Kendall, of the troubled program, which was slammed as "a disaster" on Tuesday by General John Hyten, commander of Air Force Space Command.

Raytheon won a contract worth up to $1.5 billion in 2010 to develop the GPS Operational Control System, or OCX, to operate the next-generation GPS 3 satellites being built by Lockheed Martin Corp (LMT. N).

The project's cost had already more than doubled due to increased cyber security requirements and poor contractor performance, and now looks likely to rise further.

Teague confirmed that Air Force officials initially estimated a delay of 47 additional months, first reported by Reuters on Wednesday.

He said Kendall opted for a shorter delay, coupled with aggressive oversight at all levels of the program, to ensure that the sorely-needed satellite control capability was delivered to the military.

Teague said a new cost estimate would be done early next year, with Kendall and Raytheon Chief Executive Tom Kennedy to set meet for another quarterly "deep dive" review in early spring.

Teague said Lieutenant General Samuel Greaves, commander of U. S. Space and Missiles Systems Center, would now meet weekly with a Raytheon vice president about the program, while Lieutenant Arnold Bunch, the top Air Force officer in charge of acquisition, would participate on a biweekly basis.

Kendall decided not to restructure the contract as a fixed-price program because it would have reduced the government's oversight, Teague said. "It's a team sport," he said. "We need to have government participation and oversight and insight."

Teague said the Air Force was focused on getting the Raytheon program completed, but would keep its options open in case the new approach failed to get the program back on track.

(Editing by Miral Fahmy)

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Cyber security expert warns German banks of retail payments risks

OXFORD, England A top cyber security researcher has warned German banks that their retail payment systems have security flaws that could allow fraudsters to steal payment card PIN codes, create fake cards or siphon funds from customer or merchant accounts.

Karsten Nohl, who is credited with revealing major security threats in mobile phones, automobiles, security cards and thumb-sized USB drives, told Reuters he has found critical weaknesses in software that runs retail point-of-sale terminals in Germany.

Nohl outlined two types of attacks. One to steal personal identification numbers (PIN) or spoof transactions when customers pay at checkout tills and a second method that tricks payment processors that act as intermediaries between banks and merchants to transfer funds into other, fraudulent accounts.

Nohl and fellow researchers Fabian Braeunlein and Philipp Maier at Security Research Labs in Berlin disclosed their findings to banks, card issuers, device makers and industry associations in recent weeks. SRLabs acts as a security consultant to Fortune 500 firms, including several big banks.

In 2012, SRLabs uncovered defects in the most popular retail payment terminal in Germany, the Artema Hybrid from U. S.-based VeriFone Systems. The latest findings go further to show that virtually all terminals in Germany are liable to having payments hijacked and paid into any bank account of a hacker's choosing.

"Not only are these vulnerabilities more general, they are also much harder to mitigate, because it is not a mistake, it is how these things are programed to work," Nohl said in an interview.

Some flaws stem from an obscure German payment standard for reading magnetic stripe cards known as ZVT, which can be used not just to steal security codes but also to interfere with newer "chip and PIN" and "tap and go" contactless payment cards, he said.

The Federal Association of Electronic Cash Processors (BECN), which represents electronic cash networks in Germany, said it takes the security threats set out by Nohl's seriously.

The association recommends that payment terminal manufacturers take appropriate action to guard against such attacks by pushing out software updates with new safety measures or by replacing older payment terminals, it said in a statement.

Separately, a statement by the German Association of Savings Banks, issued on behalf of all German banks, said the attack scenarios presented by Nohl were only theoretically possible.

"This is nothing new to us," said German Association of Savings Banks spokesman Stefan Marotzke. "Since 2012, the card system has been based entirely on chip and PIN. Attacks carried out on the magnetic stripe technology are not transferable to smart cards," he said, referring to newer, more secure cards.

Nohl said the research found that security PIN codes can be revealed using these methods. Far from being theoretical, he has made scores of transfers in small amounts on different payment terminals and various banks to show these are active threats. He then refunds the money back from his corporate account, he said.

Two separate 1990s-era payment standards are at issue, Nohl said: ZVT, and a second, international standard known as ISO-8353, which sets how encrypted payment details are exchanged between merchants and payment processors over the Internet.

Attacks exploiting ZVT weaknesses require a thief to be in the building and have access to a merchant's local area network. In a hotel, for example, a hacker could check in as a guest and steal as other customers pay at front-desk terminals. Or at a jewelery store, a thief could piggyback on a customer's transaction.

ZVT is a feature in around 80 percent of payment terminals used in Germany and nearby Austria and Switzerland, Nohl said.

ISO 8583 could allow hackers to trigger remote refunds via the Internet to any bank account in Germany from merchants connected to the payment network. Systems in France, Luxembourg and Iceland are also affected, he said.

In the short term, vulnerable payment system features may need to be disabled by merchants, Nohl said. However, it may take months for vendors to push software upgrades to the estimated 500,000 merchant payment terminals to fit them with unique authentication numbers that could prevent such attacks, he said.

There is scant evidence that suggest criminals are exploiting these fraud techniques so far, banking experts said, but Nohl said such weaknesses in payment systems may explain PIN code thefts claimed by some German consumers.

(Editing by Louise Heavens)

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BlackBerry results trounce expectations on software; shares rally

TORONTO BlackBerry's pivot to software began to show traction on Friday, after the company reported a smaller quarterly loss and its first quarter-to-quarter revenue increase in over two years, sending its stock soaring 13 percent.

Significantly, gains in software revenue more than offset a steepening decline in legacy system access fees for the first time, and the Waterloo, Ontario-based company said this trend should continue.

The company may break even in the current quarter, but this could be complicated by investments being made toward growing both software and hardware sales, said Chief Executive John Chen, who sees a return to sustainable profitability in fiscal 2017, which begins March 1.

BlackBerry has staked its turnaround on software and more aggressively licensing its trove of patents after its once-dominant handsets conceded the consumer smartphone market.

"BlackBerry hit a software number that investors have been looking for them to hit for quite some time," said Morningstar analyst Brian Colello. "I think the investment in security, in software, is the right move."

The better-than-expected results were driven by a sharp jump in software and patent licensing revenues and a higher average selling price for phones, driven by the Priv, its new Android-powered device.

"We're planning on other Android phones, but it all hinges on how we do with the Priv," said Chen at a media roundtable, adding the Priv will be hitting over 30 countries this quarter.

Chen, who sees the hardware business possibly turning the corner this quarter, said BlackBerry is open to licensing some of its proprietary software features.

"I've said that if we cannot make money we're going to get out of the phone business, and I mean hardware. We have tons of software that absolutely could run, not only on Android phones, but Apple and Windows phones too," said Chen.

"We will remain in the phone business one way or the other," said Chen, stressing that ideally he would like to keep making devices and licensing at the same time.

QUARTERLY RESULTS

In the quarter ended Nov. 28, BlackBerry reported a loss of $89 million, or 17 cents a share. That compared with a year ago loss of $148 million, or 28 cents a share.

Excluding restructuring charges and other one-time items, the company posted a loss of $15 million, or 3 cents a share.

Quarterly revenue fell 31 percent to $548 million from a year earlier, but rose 12 percent from the prior quarter, after nine consecutive quarters of declines.

Analysts, on average, expected BlackBerry to post a loss of 14 cents a share on revenue of $489 million.

Software revenue more than doubled in the quarter, putting BlackBerry within striking range of its $500 million target for the fiscal year ending Feb. 29, 2016.

Device sales also rose for the first time in four quarters to $214 million from $201 million in the second quarter on the back of the Priv.

BlackBerry sold 700,000 devices, down from about 800,000 in the prior period, but average selling prices jumped to $315 from $240.

(Editing by Jeffrey Benkoe and Meredith Mazzilli)

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Dell's cybersecurity unit SecureWorks files for IPO

n">Dell Inc's cybersecurity unit SecureWorks Corp filed for an initial public offering with U. S. regulators on Thursday.

SecureWorks named Bank of America Merrill Lynch, Morgan Stanley, Goldman Sachs & Co and JPMorgan among the underwriters to the IPO, according to a preliminary prospectus filed with the U. S Securities and Exchange Commission. (bit.ly/1QssM8J)

The Atlanta, Georgia-based company said it intends to list its Class A common stock on the Nasdaq under the symbol "SCWX."

The Wall Street Journal first reported in October that Dell, the third-largest personal computer maker, had filed confidentially for an initial public offering of the software and consulting firm acquired by Dell in 2011. (on.wsj.com/1QsvfjC)

SecureWorks could be worth as much as $2 billion, though the target valuation was not finalized, sources had told the Wall Street Journal.

Dell agreed to buy data storage company EMC Corp for $67 billion in October to diversify from a stagnant consumer PC market and give it greater scale in the more profitable and faster-growing market for cloud-based data services.

The filing did not reveal how many shares were planned for sale in the IPO or their expected price. The company set a nominal fundraising target of $100 million.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

(Reporting By Arathy S Nair in Bengaluru; Editing by Savio D'Souza and Lisa Shumaker)

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Hilton says some payment systems hit by malware

n">Hotel chain operator Hilton Worldwide Holdings Inc said on Tuesday it identified unauthorized malware in some payment systems that targeted payment card information.

A third-party investigation found that the malware targeted specific payment card information, that included cardholder names, payment card numbers, security codes and expiration dates, Hilton said.

The information targeted, however, did not include addresses or personal identification numbers (PINs), the company added.

Hilton said customers who used their cards during a 17-week period - from Nov. 18 to Dec. 5, 2014 or April 21 to July 27, 2015 - were advised to check their bank statements.

The owner of the Conrad and Double Tree hotel chains did not provide details on the number of cards affected.

The news comes less than a week after rival Starwood Hotels & Resorts Worldwide Inc said that 54 of its hotels in North America had been infected with a malware designed to collect payment card data.

Shares of the company were unchanged in extended trading on Tuesday. They closed at $23.45 on the New York Stock Exchange.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Siddharth Cavale)

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More than a million OPM hack victims still not notified

WASHINGTON More than a million victims of a massive hack of U. S. government computer files have still not been officially notified that their data was compromised and that they are eligible for free credit-monitoring protection, officials said on Friday.

The government this week finished sending notifications through the Postal Service to 21.5 million people affected by the breaches, said the Office of Personnel Management (OPM), the federal hiring agency that was hacked.

The intrusions, linked to China, began in May 2014 and were not discovered and announced publicly until a year later.

The postal notifications should be received by the middle of next week, but about 7.0 percent of those hacked, or roughly 1.5 million people, could not receive notification letters because their addresses have changed or are not on file, OPM said.

The hack exposed names, addresses, Social Security numbers and other sensitive information for current and former federal employees and contractors, as well as applicants for federal jobs and individuals listed on background check forms.

In an interview on Friday, an OPM spokesman said it would resend postal notices to updated or changed addresses and rely on a "media campaign" to tell people they can check online to see if their information was hacked.

“We’re going to clean up that 7.0 percent and get as close to 100 percent as possible," OPM spokesman Sam Schumach said, calling 93-percent notification "a really high percentage."

OPM will not rely on email notifications to close the gap. Victims of a smaller, related OPM hack were notified by email and given instructions about what to do, but some experts said the emails unfortunately resembled a phishing scam.

"It's just not as secure," Clifton Triplett, OPM’s newly appointed cyber adviser, told Reuters on Friday.

The government awarded technology firm Advanced Onion a $1.8 million contract to help locate and notify those affected by the data heist. More than $130 million was awarded to Identity Theft Guard Solutions to provide victims credit and identity-theft insurance for three years.

Cybersecurity researchers have said there is no indication that information from the hack has appeared for sale on online black markets and that this suggest the Chinese government, not criminals, stole the data trove.

(Editing by Kevin Drawbaugh)

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Storage tech company Nutanix files for IPO

SAN FRANCISCO Online storage startup Nutanix has filed for its long-awaited public offering, the latest indication that the IPO window may still be open for some highly valued tech companies.

Nutanix, which builds server and storage systems for companies, was valued at $2 billion at its last private financing round in August 2014.

Sources familiar with the matter told Reuters in April that the initial public offering could value Nutanix at more than $2.5 billion, including debt.

Tuesday's filing said Nutanix plans to raise $200 million in the deal, but that will likely change when the company offers a share price. The company, founded in 2009, did not disclose how many shares it would sell.

Based in San Jose, California, Nutanix is not profitable, and for the fiscal year ending July 31, 2015 it lost $126.1 million. Losses widened 50 percent from the prior year.

Its revenue for the most recent fiscal year was $241.4 million, a 90 percent jump from the prior year.

Nutanix will list on the Nasdaq under the ticker symbol 'NTNX'.

Underwriting banks include Goldman Sachs, Morgan Stanley, J. P. Morgan and Credit Suisse.

Nutanix entered into talks with banks in April, but the tepid IPO market deterred many tech companies from making their debut this year.

Proceeds from IPOs are down 65 percent from last year, and IPO returns are in negative territory, according to IPO fund manager Renaissance Capital. Public market investors have hotly rejected the valuations of some tech companies.

Nutanix is one of the high-profile unicorns, or venture-backed tech companies valued at $1 billion or more, that have been waiting in the IPO pipeline.

Its filing follows one of the strongest tech IPOs of the year, from software company Atlassian Corp, which raised $462 million in its debut and brought some cheer to the dour market. Atlassian, however, has been profitable for a decade.

Nutanix has raised more than $312 million from investors. Principal shareholders include Lightspeed Venture Partners, which owns 23 percent of the company, and Khosla Ventures, with a 10.9 percent stake. Co-founder and Chief Executive Dheeraj Pandey owns 9.2 percent of the company.

(Reporting by Heather Somerville; Editing by Dan Grebler and Bill Rigby)

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Chinese lending platform Yirendai makes tepid U.S. market debut

n">Yirendai Ltd, the consumer finance arm of Chinese peer-to-peer (P2P) lender CreditEase, made a tepid U. S. market debut on Friday, with its shares trading as much as 16.5 percent below the offer price.

The company's initial public offering raised $75 million after its American Depository Shares were priced at $10 each, the midpoint of the expected range of $9-$11.

Yirendai, founded in 2012, is growing rapidly by filling a demand for credit from individuals who find it difficult to obtain loans from traditional Chinese lenders.

Yirendai Chief Financial Officer Dennis Cong told Reuters that their market debut was "a little surprising, given how strong the demand he saw from the investors".

"The market volatility or the end of the year has some play in it", he said.

The shares were trading at the IPO price after about 20 minutes, valuing the company at about $585 million. The stock traded between $9.65 and $10.39.

Beijing-based Yirendai is the first Chinese online P2P platform to be listed overseas, joining numerous Chinese financial institutions that listed on the U. S. exchanges this year.

Chinese financial institutions have raised about $59.6 billion so far in IPOs and follow-ons, the second largest raising after 2010, according to Thomson Reuters data.

Yirendai offers prime borrowers in China access to unsecured credit by connecting them to investors through its online marketplace, similar to the peer-to-peer model of U. S. lender LendingClub Corp, which went public late last year.

The company, which has about 6.7 million registered users, says it facilitated $984 million of loans in the nine months ended Sept. 30, up from $41 million in all of 2013.

CreditEase's shareholders include Morgan Stanley's Asia private equity arm, Kleiner Perkins Caufield & Byers, and IDG Capital Partners.

Yirendai founder and Executive Chairman Ning Tang, who owns about 38 percent stake in the company after the offering, has committed to buy $30 million shares at the IPO price. Along with the IPO, the company sold $10 million shares to Internet company Baidu Inc through a concurrent private placement.

Earlier this week, police in China said they had frozen and seized assets from Ezubao, the country's largest P2P platform by loans, as part of an investigation.

Morgan Stanley, Credit Suisse, Needham & Co and China Renaissance are among the underwriters of the IPO.

(Reporting by Shu Zhang in Beijing and Sruthi Shankar in Bengaluru; Editing by Ted Kerr and Shounak Dasgupta)

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Apple to launch Apple Pay in China, take on Alibaba, Tencent

SHANGHAI Apple Inc said it will launch its payment service in China as soon as 2016, pitting it against entrenched Chinese rivals Alibaba Group Holding and Tencent Holdings.

Apple will partner with China's main bank card and payment firm UnionPay, a state-controlled consortium that has a monopoly on all yuan payment cards issued and used in the country.

UnionPay also plans to tie up with Samsung Electronics Co Ltd's payment system, Samsung Pay, the Chinese firm said in a statement on Friday.

The move will see Apple Pay also take on Tencent's WeChat Payment and Alipay, the crown jewel of ecommerce king Alibaba's affiliate Ant Financial, the top player in China's fast-growing online payments market.

Atlantic Equities analyst James Cordwell expects Apple Pay to take a larger share of the market than Samsung Pay, which was launched earlier this year.

"I think Samsung Pay depends on Samsung selling devices and I think if anything, Samsung is in retreat in that (Chinese)market. So, I don't see Samsung Pay as a major threat," Cordwell said.

"The bigger challenge is against Alipay or WePay, which are more platform agnostic and have a strong user base. I see that as the main competitive threat to Apple," he said.

Eddy Cue, Apple's senior vice president of Internet software and services, said the tie-up with UnionPay and leading local banks would help Apple Pay give Chinese shoppers a "convenient, private and secure payment" option.

"China is an extremely important market for Apple," he said.

China, the world's second-largest economy, is one of Apple's most important markets for iPhone and tablet sales, but until now the firm has been kept out of its online payments market.

Online transactions are booming in China, boosted by the proliferation of hundreds of millions of smartphones that are being used for everything from paying for taxis and meals to buying goods at High Street stores.

In July, China proposed regulations to shake up the online payment services sector, where companies which own payment systems can reap huge profits by charging transaction fees.

(Reporting by Adam Jourdan in Shanghai, Arathy S Nair and Kshitiz Goliya in Bengaluru; Editing by Lisa Shumaker, Stephen Coates and Savio D'Souza)

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Software maker Atlassian pops in debut, brings light to IPO market

n">Atlassian Corp Plc brought some cheer to the end of a dour year for technology public offerings on Thursday with a 32-percent pop on its Wall Street debut, demonstrating that investors are eager to reward growing tech companies that can reliably turn a profit.

Shares of the Australian software maker, which helps companies collaborate and manage their operations, ended their first day of trading at $27.78, up almost a third from the initial public offering price of $21.

The Sydney-based company closed out the day with a market value of $5.8 billion, well above its last private valuation of $3.3 billion last year.

The performance shone some light on a bleak stretch for IPOs, on pace to have their worst year in terms of dollars raised since 2009, according to IPO fund manager Renaissance Capital. First-day returns from IPOs this year are in negative territory.

"It's always hard to anticipate the enthusiasm in the market," said Jay Simons, Atlassian president and head of the company's San Francisco office. "There is a very small percentage of IPOs even in the last couple of years that have moved their price range up and then priced above the range."

Atlassian's IPO raised $462 million after pricing just above the expected range of $19 to $20. It is the sixth-most highly valued IPO of the year.

Its strong debut signals that not all of the 145 tech 'unicorns' - venture-backed private companies worth $1 billion or more - are overvalued. Atlassian, unlike most of those unicorns, makes a profit.

Some startups struggling to make money have been hit with discounts in both the private and public market. Loss-making mobile payments company Square was valued at $6 billion in the private market but took a 42 percent haircut on its valuation in its IPO last month.

Meanwhile, Fidelity Investments has been marking down the value of its private tech holdings.

Atlassian, which has been profitable for the last 10 years, has not raised any venture capital funding to support its operations. For the last fiscal year, it posted profit of $6.78 million.

However, the company said its profit, which shrank by about two-thirds from 2014, may continue to slide as it spends more on developing new technology.

That could pose a problem, said James Gellert, CEO of Rapid Ratings, which assesses the financial health of companies. Over the past several months Atlassian has rushed new, potentially lower quality products to market.

"If they lose the confidence of the development community they could see . a serious sales problem," Gellert said.

(Reporting by Heather Somerville in San Francisco; Additional reporting by Nikhil Subba in Bengaluru; Editing by Ted Kerr and Bill Rigby)

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Wirecard to process Alipay payments for Chinese tourists in Europe

FRANKFURT Alipay, a unit of Chinese e-commerce giant Alibaba and German banking software company Wirecard AG, said on Friday the companies have agreed to a deal to provide mobile phone payment services for Chinese tourists visiting Europe.

In Europe, the payments process will be run through Wirecard and run on existing payment terminals with no software upgrades necessary, the companies said in a joint statement.

Customers paying for goods with Alipay show their phone to a retail clerk who scans a barcode symbol with a checkout scanner.

Alipay counts more than 400 million active users of its payment systems in China, representing an estimated 80 percent of the mobile payments market and 50 percent of the online market in the world's second-largest economy.

Its electronic wallet system is widely used in both retail shops and for online transactions.

(Reporting by Eric Auchard; Editing by James Regan)

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HP Inc profit forecast misses Street on weak PC, printer sales

n">HP Inc, which houses former Hewlett-Packard Co's legacy printer and PC business, forecast adjusted profit for the first quarter below market expectations as it struggles with weak sales of PCs and printers.

However, Hewlett Packard Enterprise Co, which is headed by Meg Whitman and holds the corporate hardware and services businesses, maintained its adjusted profit forecast for the year.

HP Inc's shares were down 7.1 percent in extended trading on Tuesday, while HPE's shares were up 2.3 percent.

"Looking ahead, we expect the PC market to remain challenged for more quarters to come," HP Inc's Chief Executive Dion Weisler said on a conference call with analyst.

PC sales have been falling sharply worldwide and the recent launch of Windows 10 has so far failed to reboot the industry.

Revenue in HP's personal computer and printer businesses fell about 14 percent in the fourth quarter ended Oct. 31, pushing Hewlett-Packard Co's overall revenue down for the fifth straight quarter.

The results are the last for Hewlett-Packard Co, the tech pioneer that split into two separate companies this month, before HP Inc and Hewlett Packard Enterprise Co start to report separately.

The 76-year-old company has struggled in recent years to keep up with newer technologies and trends, such as the shift by consumers to smartphones and tablets and by businesses to the Internet to store and manage large amounts of data.

HP Inc forecast adjusted profit of 33-38 cents per share for the quarter ending January, missing analysts' average estimate of 42 cents, according to Thomson Reuters I/B/E/S.

The company also cut its 2016 adjusted profit forecast to $1.59-$1.69 per share from $1.67-$1.77 per share.

Hewlett-Packard Co's revenue from enterprise services division fell 9 percent, while revenue from its enterprise group rose 2 percent.

Overall, revenue at Hewlett-Packard Co fell 9.5 percent to $25.71 billion.

Net income fell to $1.32 billion from $1.33 billion a year earlier. But on a per share basis, profit rose to 73 cents per share from 70 cents, based on fewer shares outstanding.

Up to Tuesday's close of $13.69, HPE shares had fallen 7 percent since their market debut on Nov. 2.

In contrast, HP Inc's shares, which closed at $14.64, had risen about 20 percent.

(Reporting by Abhirup Roy and Anya George Tharakan in Bengaluru; Editing by Anil D'Silva)

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China says tech firms have nothing to fear from anti-terror law

BEIJING Technology companies have nothing to fear from China's new anti-terrorism law which aims to prevent and probe terror activities and does not affect their copyright, China's Foreign Ministry said on Wednesday, rebuffing U. S. criticism as unwarranted.

The draft anti-terrorism law has caused concern in Western capitals as it could require technology firms to install "back doors" in products or to hand over sensitive information such as encryption keys to the government.

The law is currently having another reading at the latest session of the standing committee for China's largely rubber-stamp parliament, the National People's Congress, which ends on Sunday.

This week, the U. S. State Department said it had expressed "serious concerns" to China about the law which would do more harm than good against the threat of terrorism.

Chinese Foreign Ministry spokesman Hong Lei said he was "dissatisfied" with the U. S. position and hoped they respected China's law-making process and did not adopt "double standards".

China faced a serious threat from terrorism and needed to improve its legal framework to deal with the problem, Hong added.

"What we are doing is reasonable and fair," he said.

Terrorists had been using the Internet to operate and China needed laws to cope with this, Hong added.

"While formulating this law, we referred to the laws of other countries, including the United States," he said, pointing to the U. S. Communications Assistance for Law Enforcement Act, a wiretapping law.

"The draft of our anti-terrorism law mandates the obligation of telecommunications operators, Internet servers and service providers to assist public and state security organ in stopping and probing terrorist activities," Hong added.

"This is both totally rational and necessary. This rule won't limit the lawful operations of companies, does not provide a 'back door' and will affect neither the firms' intellectual property nor Internet users' freedom of speech."

Officials in Washington have argued the law, combined with new draft banking and insurance rules and a slew of anti-trust investigations, amounts to unfair regulatory pressure targeting foreign companies.

China's national security law adopted in July requires all key network infrastructure and information systems to be "secure and controllable".

The U. S. has also said the new law could restrict freedom of expression and association.

Hong said China paid great attention to the relationship between fighting terrorism and protecting human rights and would ensure people's legal rights are protected.

Officials say China faces a growing threat from militants and separatists, especially in its unruly Western region of Xinjiang, where hundreds have died in violence in the past few years.

Rights groups, though, doubt the existence of a cohesive militant group in Xinjiang and say the unrest mostly stems from anger among the region's Muslim Uighur people over restrictions on their religion and culture.

(Reporting by Ben Blanchard; Editing by Nick Macfie)

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Pentagon vows tough scrutiny of Raytheon GPS control system

WASHINGTON The Pentagon's chief arms buyer on Tuesday vowed "very intense management" of Raytheon Co's work on a ground control network for new global positioning system (GPS) satellites, and said the department would revisit other options if Raytheon's performance did not improve.

Defense Undersecretary Frank Kendall told Reuters he believed a new plan that delays completion of the ground system by two years would ultimately succeed, but said the U. S. Defense Department - and he personally - would remain vigilant.

Kendall approved the revamped schedule after a Dec. 4 review of the troubled program, whose projected cost has more than doubled to $3.6 billion, including inflation. Kendall said officials were still calculating the new projected cost of the program.

"We looked very hard and we considered all possible options. The consensus in the room after we had done so was that we needed to continue" with Raytheon, Kendall said in an interview. "But we're going to do it with very intense management."

Halting the program and starting over would have added billions of dollars in costs and delayed completion by at least three years, Kendall said.

Kendall said he would meet personally with Raytheon's chief executive, Tom Kennedy, once a quarter to review progress, and said he has engaged internal and external experts to keep independent tabs on the program.

"It’s going to get as intense a management as I can bring to it and I’m expecting to see an improvement in performance," he said. "If we don’t, then we can consider some of those options again."

Kendall said he opted for the two-year delay instead of the 47-month delay initially proposed by the Air Force because Kennedy had assured him it was doable, and also because he did not want to "give the program that kind of latitude."

The Air Force's initial proposal included a year of "pure buffer . and another year of presumed problems," he said.

Kendall said Raytheon's problems on the program had gone on for years and the program "has not been executed very well."

He said he and Kennedy would meet early next year to discuss the revised cost estimate and possible changes in the incentive fee structure in the existing cost-plus contract. He said it was not yet clear when the department would assess whether to continue with Raytheon or choose another contractor.

Kendall had no immediate details on how much Raytheon's incentive fee had been docked due to poor performance. He said the issue could affect Raytheon's ratings in future weapons competitions, which assess "past performance."

(Reporting by Andrea Shalal; Editing by Andrew Hay and Leslie Adler)

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Digital TV storms Golden Globes, ousting old favorites

NEW YORK Streaming services stormed the Golden Globe television nominations on Thursday with new shows such as "Narcos" and "Mozart in the Jungle," turning established broadcasters into also-rans as Americans move away from traditional television to online-demand viewing.

Just three years after digital platforms plunged into original content television for the first time, Netflix landed a leading eight nominations for its shows and actors, ahead of usually dominant premium cable channel HBO.

Two of Amazon.com's original video series, transgender comedy "Transparent" and behind-the-scenes classical music series "Mozart in the Jungle," earned five nods. Hulu, the ABC-NBC-Fox joint-owned online video venture, landed a best comedy series nomination for its modern dating show "Casual."

Online streaming has revolutionized the television industry with bold content and by uploading full seasons of shows in one go, allowing viewers to watch at their leisure. Hulu's "Casual" is the only online nominee to release a new episode each week.

None of the four major U. S. broadcast networks - ABC, CBS, NBC and FOX - are in the running for the coveted best TV comedy series Golden Globe award. Only one - Fox's hit hip-hop family drama "Empire" - will compete for best TV drama series.

HBO, with seven nominations, took second place overall to Netflix, including its Emmy-winning series duo - White House comedy "Veep" and medieval fantasy "Game of Thrones."

Old favorites like "Modern Family" and "Homeland" were shut out, while "Mad Men" and "Downton Abbey" garnered just single acting nods for Jon Hamm and Joanne Froggatt respectively.

Netflix's TV nominations came from drug drama "Narcos," Aziz Ansari's comedy "Master of None," thriller "Bloodline," comedy "Grace and Frankie," women's prison comedy "Orange Is The New Black" and Washington political drama "House of Cards."

"Narcos" co-creator and executive producer Chris Brancato said the nominations were "a signal that borderless, truly international television is here to stay."

Members of the Hollywood Foreign Press Association, organizers of the Golden Globes, recognized a slew of new acting talent, such as Rachel Bloom, 28, star of the CW's "Crazy Ex-Girlfriend," who landed her first major nomination.

Rami Malek, 34, earned a best actor nod for playing a cybersecurity expert with social anxiety on cable network USA's best drama series nominee "Mr. Robot."

The show's creator and director, Sam Esmail, said the unexpected acclaim for the series "was definitely a twist none of us saw coming."

Premium cable channel Starz earned six nods, including its "Outlander," a time-travel series set in the Scottish Highlands that put Ireland's Caitriona Balfe in the best actress race and garnered a spot in the best drama series category.

"Just managed to scrape my jaw off the floor," tweeted a delighted Balfe.

(Reporting By Jill Serjeant; Editing by Steve Orlofsky)

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Google developing new messaging app: WSJ

n">Google, part of Alphabet Inc, is building a new mobile messaging application to better compete with rival services such as those offered by Facebook Inc, The Wall Street Journal reported.

The new service would tap into Google's artificial intelligence know-how, integrating chatbots, or software programs that answer questions, inside a messaging app, the Journal reported on Tuesday, citing people familiar with the matter. (on.wsj.com/1NBajmA)

The new app will enable users to text friends or a chatbot, which will search the web and other sources for information to answer a question.

It is unclear when the service will be launched, or what it will be named, the report said.

Google declined to comment.

Popular messaging apps include Facebook's WhatsApp and Messenger services, and Tencent Holdings Ltd's WeChat, while Google has a service called Hangouts.

(Reporting by Sai Sachin R and Ankush Sharma in Bengaluru; Editing by Sriraj Kalluvila and Leslie Adler)

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Apple Music wins exclusive video deal with Taylor Swift

NEW YORK Pop star Taylor Swift's "1989 World Tour Live" concert video will be available exclusively on Apple Inc's music streaming service, Apple Music, starting Dec. 20, Apple said on the service's Twitter account on Sunday.

Swift, who celebrated her 26th birthday on Sunday, tweeted a trailer for the concert video and said: "Thank you so much for all the birthday wishes. I have a little surprise for you." The trailer's description listed Jonas Akerlund as the video's director.

The singer also tweeted that an interview discussing the video would be broadcast at 9 a.m. PST (1700 GMT) on Monday on Beats 1, Apple's radio station. Apple officials were not immediately available for comment.

Apple introduced Apple Music in June. Apple Chief Executive Tim Cook said in October the music streaming service had netted more than 6.5 million paid users, and that an additional 8.5 million people were participating in a free trial.

Swift said in June she would put her hit album "1989" on Apple Music, days after the tech giant bowed to pressure from Swift and some independent music groups and labels and agreed to pay artists during a free trial of its music service.

Swift's decision came after she pulled her entire catalog of music from online streaming platform Spotify in November 2014 and refused to offer "1989" on streaming services, saying the business had shrunk the numbers of paid album sales drastically.

(Reporting by Sam Forgione; Editing by Peter Cooney)

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Google developing new messaging app: WSJ

n">Google, part of Alphabet Inc, is building a new mobile messaging application to better compete with rival services such as those offered by Facebook Inc, The Wall Street Journal reported.

The new service would tap into Google's artificial intelligence know-how, integrating chatbots, or software programs that answer questions, inside a messaging app, the Journal reported on Tuesday, citing people familiar with the matter. (on.wsj.com/1NBajmA)

The new app will enable users to text friends or a chatbot, which will search the web and other sources for information to answer a question.

It is unclear when the service will be launched, or what it will be named, the report said.

Google declined to comment.

Popular messaging apps include Facebook's WhatsApp and Messenger services, and Tencent Holdings Ltd's WeChat, while Google has a service called Hangouts.

(Reporting by Sai Sachin R and Ankush Sharma in Bengaluru; Editing by Sriraj Kalluvila and Leslie Adler)

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Exclusive: U.S. Justice Department probes data breach at Uber - sources

SAN FRANCISCO The U. S. Department of Justice is pursuing a criminal investigation of a May 2014 data breach at ride service Uber [UBER. UL], including an examination of whether any employees at competitor Lyft were involved in the episode, sources familiar with the situation said.

Earlier this year, Uber revealed that as many as 50,000 of its drivers' names and their licence numbers had been improperly downloaded. An investigation by Uber determined that an Internet address potentially associated with the breach can be traced to Lyft's technology chief, Chris Lambert, Reuters reported in October.

Department of Justice spokesman Abraham Simmons said on Wednesday he could not confirm or deny a criminal probe. No one has been accused of any wrongdoing, and it is unclear whether anyone will ultimately be charged in connection with the breach.

A recently hired attorney for Lambert, former federal prosecutor Miles Ehrlich, said Lambert "had nothing to do" with the breach.

"Given that Uber apparently lost driver data, a law enforcement investigation is to be expected," Ehrlich said. "And the benefit is that the culprit here is going to be identified - and that's going to remove Chris' name from any conversation about Uber's data breach, as it should."

In a statement on Friday, Lyft said "we have not been contacted by the DOJ, U. S. Attorney's office or any other state or federal government agency regarding any investigation."

Uber declined to comment. The people familiar with the matter could not be named because they were not authorized to speak publicly.

SEARCH FOR HACKER

Lyft is much smaller than Uber, which operates in more than 300 cities in 67 countries and has raised $7.4 billion from investors. The companies, based in San Francisco, compete fiercely for drivers and customers.

Uber learnt last year that someone downloaded its driver database, which should have been accessible only with a digital security key. A search for that key turned up a copy on the code-development site GitHub, where it had been left by mistake.

Uber then obtained information from GitHub about who had connected to that page before the breach and found only one Internet Protocol address that did not belong to an Uber user or have another plausible explanation, according to court documents. 

Uber filed a civil lawsuit in San Francisco federal court in February in an attempt to unmask the perpetrator. The company's court papers claim that an unidentified person using a Comcast IP address had access to the security key.

On its own, Uber investigated that address and determined that it had been assigned to Lambert, Reuters reported in October.

A U. S. judge ruled that Uber could further probe the IP address, saying it was "reasonably likely" that such an inquiry could help identify the hacker. That ruling is on hold pending an appeal.

SWORN STATEMENT

Attorneys for the unnamed Comcast subscriber have pointed out in court that the data breach was conducted from a different IP address than the Comcast address that accessed the security key. Lyft said that Uber allowed the key for the database "to be publicly accessible for months before and after the breach."

The IP address the hacker used is associated with Anonine, a virtual private network service based in Sweden that is known for vigorously protecting the privacy of its users, two people familiar with the situation told Reuters.

Ehrlich said Lambert offered to provide Uber with a sworn statement that he had nothing to do with the breach, made under penalty of perjury.

Lambert signed the statement over the summer, a separate source familiar with the situation said. In it, Lambert also said he was not aware of anyone who has copies of Uber's database, and that he did not instruct anyone to access it, the source said.

However, Lyft and Ehrlich declined to confirm or deny that Lambert's Comcast address connected to the GitHub page containing the key. They also declined to give details about Lyft's internal investigation of the matter.

Lyft reiterated on Friday that it investigated the matter "long ago" and concluded "there is no evidence that any Lyft employee, including Chris, downloaded the Uber driver information or database, or had anything to do with Uber's May 2014 data breach."

Uber's lawsuit alleges the hacker violated civil provisions of the federal Computer Fraud and Abuse Act, as well as a similar California law. It is unclear if the leaked driver information was ever used by the hacker or anyone else.

(Editing by Jonathan Weber and Matthew Lewis)

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Micron forecasts surprise loss for current quarter

n">Micron Technology Inc forecast a surprise loss for the second quarter, as the memory chipmaker struggles with weak demand for chips used in personal computers and lower average selling prices.

The estimate of its first loss in more than two years sent the company's shares down 5.7 percent to $13.78 in extended trading on Tuesday.

Micron, which makes DRAM and NAND flash memory chips, forecast a loss of 5-12 cents per share and revenue of $2.9 billion-$3.2 billion for the current quarter ending March 5.

Analysts on average were expecting a profit of 22 cents and revenue of $3.46 billion, according to Thomson Reuters I/B/E/S.

"We have a perfect storm going on here," Wedbush Securities analyst Betsy Van Hees said.

"We have a seasonal weak quarter. We have weaker-than-expected end-market demand. We have pricing headwinds," she said.

Micron, which competes with Samsung Electronics Co Ltd and SK Hynix Inc, has been investing to ramp up production of its higher-margin 20 nm DRAM chips and develop more efficient and cost-effective 3D NAND chips.

Micron earlier this month agreed to buy the remaining interest in Taiwanese chipmaker Inotera Memories Inc in a $3.2 billion deal.

NAND flash memory chips are widely used in smartphones, cameras and other mobile devices to store music, pictures and other data, while DRAM chips are mostly used in personal computers.

"Overall, our revenues were impacted by declining pricing particularly in the PC DRAM segment," Chief Financial Officer Ernie Maddock said in a conference call.

Research firm Gartner Inc said worldwide shipments of personal computers fell 7.7 percent to 73.7 million units in the third quarter, adding that the Windows 10 launch had minimal impact on shipments as users chose to upgrade to Windows 10 on existing PCs.

Net income attributable to Micron fell to $206 million, or 19 cents per share, in the quarter ended Dec. 3, from $1 billion, or 84 cents per share, a year earlier.

Excluding items, the company earned 24 cents per share, beating analysts' average estimate of 23 cents, according to Thomson Reuters I/B/E/S.

Net sales fell 26.7 percent to $3.35 billion, missing the average analyst estimate of $3.46 billion.

Up to Tuesday's close, Micron's shares had fallen about 58 percent this year.

(Reporting by Kshitiz Goliya in Bengaluru; Editing by Sriraj Kalluvila)

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Pentagon vows tough scrutiny of Raytheon GPS control system

WASHINGTON The Pentagon's chief arms buyer on Tuesday vowed "very intense management" of Raytheon Co's work on a ground control network for new global positioning system (GPS) satellites, and said the department would revisit other options if Raytheon's performance did not improve.

Defense Undersecretary Frank Kendall told Reuters he believed a new plan that delays completion of the ground system by two years would ultimately succeed, but said the U. S. Defense Department - and he personally - would remain vigilant.

Kendall approved the revamped schedule after a Dec. 4 review of the troubled program, whose projected cost has more than doubled to $3.6 billion, including inflation. Kendall said officials were still calculating the new projected cost of the program.

"We looked very hard and we considered all possible options. The consensus in the room after we had done so was that we needed to continue" with Raytheon, Kendall said in an interview. "But we're going to do it with very intense management."

Halting the program and starting over would have added billions of dollars in costs and delayed completion by at least three years, Kendall said.

Kendall said he would meet personally with Raytheon's chief executive, Tom Kennedy, once a quarter to review progress, and said he has engaged internal and external experts to keep independent tabs on the program.

"It’s going to get as intense a management as I can bring to it and I’m expecting to see an improvement in performance," he said. "If we don’t, then we can consider some of those options again."

Kendall said he opted for the two-year delay instead of the 47-month delay initially proposed by the Air Force because Kennedy had assured him it was doable, and also because he did not want to "give the program that kind of latitude."

The Air Force's initial proposal included a year of "pure buffer . and another year of presumed problems," he said.

Kendall said Raytheon's problems on the program had gone on for years and the program "has not been executed very well."

He said he and Kennedy would meet early next year to discuss the revised cost estimate and possible changes in the incentive fee structure in the existing cost-plus contract. He said it was not yet clear when the department would assess whether to continue with Raytheon or choose another contractor.

Kendall had no immediate details on how much Raytheon's incentive fee had been docked due to poor performance. He said the issue could affect Raytheon's ratings in future weapons competitions, which assess "past performance."

(Reporting by Andrea Shalal; Editing by Andrew Hay and Leslie Adler)

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Music, digital art intersect in 'Day for Night' festival in Houston

HOUSTON Sound, image and digital art installations collide in Houston this weekend for the Day for Night Festival, which brings together music giants including Kendrick Lamar and visual artists such as Casey Reas.

Walls of light, animations projected onto buildings and video installations created by award-winning artists connect three performance stages and multiple warehouse galleries.

"What we’re trying to do is create an immersive experience where moving throughout the festival grounds is as engaging as standing and staring at the stage,” said Omar Afra, the Day for Night festival producer.

Reas, whose software, prints and installations have been featured in galleries globally, will showcase a television signal collage that highlights the most watched shows on a local Los Angeles station projected onto a 20-by-25-foot (6.1-by-7.6-metre) canvas.

"The idea is to create something which is already a visual assault and make it more of a literal visual assault,” Reas said.

On the musical side, New Order, one of the more influential British bands of the 1980s, will take the stage along with other headliners that include the Philip Glass Ensemble, known for its avant-garde symphonies and operas.

Vincent Houze created a structure of gauzy black screens that act as a container of fog and serve as canvases for lava-lamp-like animations of water meant to mimic brain activity after going under general anesthesia. The exhibit will be controlled from his smartphone.

"Millennials are engaged every moment with the screen on the phone, the screen on the computer, video games and we feel like this is a long time coming for the world of music production to catch up with the way young people engage art and music,” Afra said.

(Writing by Jon Herskovitz; Editing by James Dalgleish)

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Adobe profit beats on strong subscriptions for Creative Cloud

(Reuters) - Adobe Systems Inc reported a profit that topped market expectations for the ninth straight quarter on strong subscriber growth for its Creative Cloud package of software tools, which includes Photoshop.

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Ford to invest $4.5 billion more in electric car plan by 2020

DEARBORN, Mich. Ford Motor Co (F. N) plans to invest an additional $4.5 billion by 2020 in programs to broaden its offerings of hybrids and electric vehicles, Chief Executive Officer Mark Fields said Thursday.

Fields said it will launch late next year a new version of its Ford Focus electric car that has a 100-mile range and can recharge in 30 minutes.

Ford also plans to add 13 new plug-in hybrid, hybrid or electric vehicles to its lineup by 2020, moving to more than 40 percent the share of the company's vehicle lines that will be electrified.

Fields said the company sees plug-in hybrid systems - which allow drivers to operate part of the time on batteries recharged from the grid, and part of the time on gasoline - as the solution many customers will prefer. The batteries for plug-in hybrids are not as heavy or expensive as those required to deliver 200-mile or more range in an all-electric vehicle.

(Reporting By Joe White; Editing by Bernard Orr)

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Ford to invest $4.5 billion more in electric car plan by 2020

DEARBORN, Mich. (Reuters) - Ford Motor Co plans to invest an additional $4.5 billion by 2020 in programs to broaden its offerings of hybrids and electric vehicles, Chief Executive Officer Mark Fields said Thursday.

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Parking valet startup Luxe adds subscription service

SAN FRANCISCO (Reuters) - Luxe, a startup that provides valet parking through an app, launched a subscription service for all its users on Thursday, as consumers increasingly turn to their smartphones for transportation options at the press of a button.

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Six-year-old Kentucky boy gets 'bionic' hand courtesy of 3-D printing technology

LOUISVILLE (Reuters) - A 6-year-old Kentucky boy born with a malformed right hand because of a rare disorder has received what he called his best Christmas gift ever - a "bionic" prosthetic made from 3-D printing technology.

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LPC-Qihoo 360 seeks $3.4 billion-equivalent buyout loan

HONG KONG Chinese mobile security software maker Qihoo 360 Technology Co is raising a US$3.4bn-equivalent loan to back its US$9.3bn buyout by a group of investors, banking sources said on Tuesday.

Qihoo received a buyout offer from a consortium led by CEO Zhou Hongyi in June, which was the biggest of a slew of 'take private' buyout offers announced earlier this year while Chinese stocks were soaring.

Qihoo's loan has been fully underwritten by sole mandated lead arranger and bookrunner China Merchants Bank, which has invited two other Chinese banks to join the deal, the sources said.

The new loan brings the total volume of loans raised by US-listed Chinese companies to back privatizations to at least US$7.45bn in 2015, according to Thomson Reuters LPC data.

The renminbi-denominated loan is being raised in China, as the sponsors are mainland Chinese companies which primarily generate revenues in renminbi, the sources said. The borrowing entity will be an onshore company.

The acquisition loan will not be launched into general syndication and is expected to close by the end of this year, the source said.

The deal includes a US$3bn-equivalent seven-year loan and a US$400m-equivalent bridge loan facility, according to sources and a press release on December 18.

The ratio of debt-to-Ebitda is no more than 6x, one source said.

OFFER DETAILS

Qihoo agreed to be acquired by a group of investors for about US$9.3bn on December 18, including about US$1.6bn of debt. The remaining US$5.9bn will be funded by the consortium, according to the sources.

Holders of each American Depositary Share (ADS) - two of which represent three class A ordinary shares - will get US$77 in cash, while owners of class A and class B ordinary shares will receive US$51.33 in cash per share, the company said last Friday.

Qihoo said last Friday that entities controlled by Zhou, who is also Qihoo's co-founder, and Chairman Xiangdong Qi had agreed to vote all their shares in favour of the deal. Their combined stake represents about 61% of the voting rights attached to the outstanding shares.

The consortium taking the company private includes Citic Guoan, Golden Brick Silk Road Capital, Sequoia Capital China, Taikang Life Insurance, Ping An Insurance, Sunshine Insurance, New China Capital, Huatai Ruilian, Huasheng Capital or their affiliated entities.

Many of the loans provided this year to back the privatizations of Chinese companies have been provided by Chinese banks and have not been syndicated.

Medical devices manufacturer Mindray Medical International mandated Bank of China Macau and Ping An Bank in November to arrange a US$2.05bn term loan to support its US$3.3bn management buyout.

Ping An Bank and Shanghai Pudong Development Bank also underwrote a US$1.1bn loan in August that backed the US$3.3bn privatisation of New York-listed WuXi PharmaTech (Cayman) Inc.

Industrial Bank is also expected to arrange a debt financing to support Trina Solar Ltd’s proposed buyout and said that it is highly confident in its ability to underwrite the financing, according to press release on December 14.

(Editing by Tessa Walsh)

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Exclusive: U.S. states pass laws backing Uber's view of drivers as contractors

SAN FRANCISCO (Reuters) - State legislators in Ohio and Florida are moving ahead with regulations governing Uber and other ride services that would designate all drivers as independent contractors, bolstering a critical but much-disputed aspect of Uber's business model.

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Ford investing in ride-hailing services, expanding electric vehicles

DEARBORN, Mich. (Reuters) - Ford Motor Co is developing new ride-hailing services and investing $4.5 billion to expand its fleet of plug-in and hybrid electric vehicles, company executives said Thursday.

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