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Poor smartphones sales drag LG to first quarterly loss in 2 years

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We’ve written extensively about LG’s struggling mobile business, which has suffered at the hands of aggressive Chinese Android makers, and now that unit has dragged its parent company into posting its first quarterly loss for two years.

The Korean electronics giant is generally in good health — it posted a $2.4 billion profit for 2018 — but its smartphone business’s failings saw it post a loss in Q4 2018, its first quarterly negative since Q4 2016.

Overall, the company posted a KRW 75.7 billion ($67.1 million) operating loss as revenue slid seven percent year-on-year to KRW 15.77 trillion ($13.99 billion). LG said the change was “primarily due to lower sales of mobile products.”

We’ve known for some time that LG’s mobile business is struggling — the division got another new head last November — but things went from bad to worse in Q4. LG Mobile saw revenue fall by 42 percent to reach KRW 1.71 trillion, $1.51 billion. The operating loss for the period grew to KRW 322.3 billion, or $289.8 million, from KRW 216.3 billion, $194 million, one year previous.

Over the full year, LG Mobile posted a $700 million loss (KRW 790.1 billion) but the company claimed things are improving thanks to “better material cost controls and overhead efficiencies based on the company’s platform modularization strategy.”

LG used CES to showcase a range of home entertainment products — that division is doing far better than mobile, with a record annual profit of $1.35 billion in 2018 — so we’ll have to wait until Mobile World Congress in February to see exactly what LG has in mind. Already, though, we have a suggestion, and it isn’t exactly set-the-world-on-fire stuff.

“LG’s mobile division will push 5G products and smartphones featuring different form factors while focusing on key markets where the LG brand remains strong,” the company said in a statement.

It will certainly take something very special to turn things around. It seems more likely that LG Mobile head Brian Kwon — who also heads up that hugely profitable home entertainment business — will focus on cutting costs and squeezing out the few sweet spots left. Continued losses, particularly against success from other units, might eventually see LG shutter its mobile business.

Still, things could be worse for LG — it could be HTC.

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Until further notice, think twice before using Google to download software

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Searching Google for downloads of popular software has always come with risks, but over the past few months, it has been downright dangerous, according to researchers and a pseudorandom collection of queries.

“Threat researchers are used to seeing a moderate flow of malvertising via Google Ads,” volunteers at Spamhaus wrote on Thursday. “However, over the past few days, researchers have witnessed a massive spike affecting numerous famous brands, with multiple malware being utilized. This is not ‘the norm.’”

One of many new threats: MalVirt

The surge is coming from numerous malware families, including AuroraStealer, IcedID, Meta Stealer, RedLine Stealer, Vidar, Formbook, and XLoader. In the past, these families typically relied on phishing and malicious spam that attached Microsoft Word documents with booby-trapped macros. Over the past month, Google Ads has become the go-to place for criminals to spread their malicious wares that are disguised as legitimate downloads by impersonating brands such as Adobe Reader, Gimp, Microsoft Teams, OBS, Slack, Tor, and Thunderbird.

On the same day that Spamhaus published its report, researchers from security firm Sentinel One documented an advanced Google malvertising campaign pushing multiple malicious loaders implemented in .NET. Sentinel One has dubbed these loaders MalVirt. At the moment, the MalVirt loaders are being used to distribute malware most commonly known as XLoader, available for both Windows and macOS. XLoader is a successor to malware also known as Formbook. Threat actors use XLoader to steal contacts data and other sensitive data from infected devices.

The MalVirt loaders use obfuscated virtualization to evade end-point protection and analysis. To disguise real C2 traffic and evade network detections, MalVirt beacons to decoy command and control servers hosted at providers including Azure, Tucows, Choopa, and Namecheap. Sentinel One researcher Tom Hegel wrote:

As a response to Microsoft blocking Office macros by default in documents from the Internet, threat actors have turned to alternative malware distribution methods—most recently, malvertising. The MalVirt loaders we observed demonstrate just how much effort threat actors are investing in evading detection and thwarting analysis.

Malware of the Formbook family is a highly capable infostealer that is deployed through the application of a significant amount of anti-analysis and anti-detection techniques by the MalVirt loaders. Traditionally distributed as an attachment to phishing emails, we assess that threat actors distributing this malware are likely joining the malvertising trend.

Given the massive size of the audience threat actors can reach through malvertising, we expect malware to continue being distributed using this method.

Google representatives declined an interview. Instead, they provided the following statement:

Bad actors often employ sophisticated measures to conceal their identities and evade our policies and enforcement. To combat this over the past few years, we’ve launched new certification policies, ramped up advertiser verification, and increased our capacity to detect and prevent coordinated scams. We are aware of the recent uptick in fraudulent ad activity. Addressing it is a critical priority and we are working to resolve these incidents as quickly as possible.

Anecdotal evidence that Google malvertising is out of control isn’t hard to come by. Searches seeking software downloads are probably the most likely to turn up malvertising. Take, for instance, the results Google returned for a search Thursday looking for “visual studio download”:

Clicking that Google-sponsored link redirected me to downloadstudio[.]net, which is flagged by VirusTotal as malicious by only a single endpoint provider:

On Thursday evening, the download this site offered was detected as malicious by 43 antimalware engines:

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ChatGPT sets record for fastest-growing user base in history, report says

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Enlarge / A realistic artist’s depiction of an encounter with ChatGPT Plus.

Benj Edwards / Ars Technica / OpenAI

On Wednesday, Reuters reported that AI bot ChatGPT reached an estimated 100 million active monthly users last month, a mere two months from launch, making it the “fastest-growing consumer application in history,” according to a UBS investment bank research note. In comparison, TikTok took nine months to reach 100 million monthly users, and Instagram about 2.5 years, according to UBS researcher Lloyd Walmsley.

“In 20 years following the Internet space, we cannot recall a faster ramp in a consumer internet app,” Reuters quotes Walmsley as writing in the UBS note.

Reuters says the UBS data comes from analytics firm Similar Web, which states that around 13 million unique visitors used ChatGPT every day in January, doubling the number of users in December.

ChatGPT is a conversational large language model (LLM) that can discuss almost any topic at an almost human level. It reads context and answers questions easily, though sometimes not accurately (improving its accuracy is a work in progress). After launching as a free public beta on November 30, the GPT-3 powered AI bot has inspired awe, wonder, and fear in education, computer security, and finance. It’s shaken up the tech industry, prompting a $10 billion investment from Microsoft and causing Google to see its life flash before its eyes.

Also on Wednesday, OpenAI announced ChatGPT Plus, a $20 per month subscription service that will offer users faster response times, preferential access to ChatGPT during peak times, and priority access to new features. It’s an attempt to keep up with the intense demand for ChatGPT that has often seen the site deny users due to overwhelming activity.

Over the past few decades, researchers have noticed that technology adoption rates are quickening, with inventions such as the telephone, television, and the Internet taking shorter periods of time to reach massive numbers of users. Will generative AI tools be next on that list? With the kind of trajectory shown by ChatGPT, it’s entirely possible.

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Netflix stirs fears by using AI-assisted background art in short anime film

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Enlarge / A still image from the short film Dog and Boy,, which uses image synthesis to help generate background artwork.

Netflix

Over the past year, generative AI has kicked off a wave of existential dread over potential machine-fueled job loss not seen since the advent of the industrial revolution. On Tuesday, Netflix reinvigorated that fear when it debuted a short film called Dog and Boy that utilizes AI image synthesis to help generate its background artwork.

Directed by Ryotaro Makihara, the three-minute animated short follows the story of a boy and his robotic dog through cheerful times, although the story soon takes a dramatic turn toward the post-apocalyptic. Along the way, it includes lush backgrounds apparently created as a collaboration between man and machine, credited to “AI (+Human)” in the end credit sequence.

In the announcement tweet, Netflix cited an industry labor shortage as the reason for using the image synthesis technology:

As an experimental effort to help the anime industry, which has a labor shortage, we used image generation technology for the background images of all three-minute video cuts!

Netflix and the production company WIT Studio tapped Japanese AI firm Rinna for assistance with generating the images. They did not announce exactly what type of technology Rinna used to generate the artwork, but the process looks similar to a Stable Diffusion-powered “img2img” process than can take an image and transform it based on a written prompt.

The film is currently available to view for free on YouTube.

Netflix’s official Dog and Boy promotional video.

Almost immediately, Twitter users responded with a torrent of negative replies to Netflix’s tweet announcing the film, such as, “I know a ton of animators looking for work if you guys are struggling to find them (are you looking very hard?).” Several others quoted legendary Studio Ghibli animator Hayao Miyazaki as saying that AI-powered art “is an insult to life itself.”

In a news release, Netflix expressed its hopes that the new technology would assist with future animation productions (translated by Google Translate): “As a studio, Netflix focuses on supporting creators in the creation of works on a daily basis. As the shortage of human resources in the animation industry is seen as an issue, we hope that this initiative will contribute to the realization of a flexible animation production process through appropriate support for creators using the latest technology.”

It also looks like Makihara also wanted to push boundaries in animation by using AI technology as part of the production process. The Netflix release quoted him as saying, “By combining tools and hand-drawn techniques, we can create something unique to humans … I think that the core of the story is ‘drawing a human being.’ I think that it will be possible to secure and return to its roots, which will eventually strengthen the strengths of Japanese animation and expand its possibilities.”

Labor shortage or not, AI assistance may possibly speed up production times and lower production costs, allowing the creation of more animated content than ever before. But will people be happy about it? That remains to be seen.

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