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Ayala Land cuts spending due to virus

By Denise A. Valdez, Reporter

AYALA LAND, Inc. (ALI) is removing P40 billion from its capital expenditures (capex) this year as it focuses funds on essential expenditures and critical projects while assessing the impact of the pandemic.

Chief Finance Officer Augusto Cesar D. Bengzon told ALI’s stockholders during the property company’s annual meeting on Wednesday that the 2020 capex had been reduced to P70 billion from the original estimate of P110 billion.

He also said ALI would not be launching new projects this year and is rationalizing potential investments and land acquisitions.

“We recognize that we may miss out on some opportunities, but we believe that this is the right decision to ensure that Ayala Land is in a healthy and strong financial position throughout this crisis, for however long it may persist,” Mr. Bengzon said in the meeting, which was held online.

“We believe that we have sufficient projects in our development pipeline to sell once the situation normalizes, given that we have launched P159 billion worth of projects last year,” he added.

The company allocated P2.6 billion in rent condonation for merchants covering the 1.5-month enhanced community quarantine (ECQ). Some P600 million has also been set aside for 78,000 “inorganic” employees. These are service providers, construction workers, and security and maintenance personnel.

President and Chief Executive Officer Bernard Vincent O. Dy noted ALI expects a “major impact” on its performance this year from the ongoing pandemic, with a “high likelihood” of a spillover next year.

“Many of our revenue generating businesses have been significantly affected by the ECQ,” he said.

The government imposed an ECQ over Luzon starting middle of March until end of April due to the rapid spread of the coronavirus disease 2019 (COVID-19). Major cities in Visayas and Mindanao have also observed regional ECQs.

Since then, ALI has closed all of its malls and resorts and some of its hotels and offices across the country. What remains operational are more than 90% of its office spaces and nine out of 11 of its hotels but on limited operations.

Despite these operational constraints, Mr. Bengzon said ALI’s net cash flow from its operations is “more than sufficient” to fund its adjusted capex and financing expenses. This would allow the company to reduce its outstanding debt without the need to raise new capital.

He noted ALI is targeting to issue a two-year bond in early June to pay down a portion of its outstanding debt obligations this year.

“With P18 billion in cash, unutilized credit lines of P25 billion, action plans in place for prudent cost monitoring and capital allocation, and conservative debt management, I believe our balance sheet will remain robust and enable us to weather the challenging environment…,” Mr. Bengzon said.

Once the ECQ is lifted, Mr. Dy said ALI plans to do a gradual reopening of its offices with a majority of its employees still working from home. Operating assets like malls and resorts will also prioritize social distancing and safety protocols.

“We are now in the process of adjusting our plans to ensure that we adapt quickly to this new reality and remain resilient throughout this crisis,” he said.

ALI booked a net income of P33.2 billion in 2019, up 13% year-on-year, due to higher contributions from new leasing formats. Its shares at the stock exchange shed 75 centavos or 2.42% to P30.30 apiece on Wednesday.

Ayalas assess business as pandemic brings new normal

THE Ayala group is evaluating its business practices to adjust to the new normal after the lockdown, as it tallied P5.5 billion in total contributions to address the coronavirus disease 2019 (COVID-19) pandemic.

In a letter to the Ayala community, brothers Jaime Augusto and Fernando Zobel de Ayala said the company is approaching the pandemic with an enlightened outlook for the urgent need to adjust to the fast-changing times.

After spending billions in employee support, business operations waivers and monetary and in-kind donations as a response to the COVID-19 crisis, Ayala Corp. (AC) said it is now keeping its eyes on the potential of digital infrastructure and a re-thinking of the workplace once the enhanced community quarantine is lifted.

Part of the Ayala group are Ayala Land, Inc.; Globe Telecom, Inc.; Bank of the Philippine Islands (BPI); AC Energy, Inc.; Manila Water Co., Inc.; AC Industrials; and Ayala Healthcare Holdings, Inc. (AC Health), among others.

The brothers said the pandemic has shown the potential of digital platforms operated by its different units, like BPI’s mobile banking, Globe’s GCash, and AC Health’s KonsultaMD, Aide and MedGrocer.

“There are many such examples across the group — we have witnessed the adoption and growth of these platforms at unprecedented rates,” they said. “We are reminded of the potential of digital infrastructure — and have witnessed our investments in digital transformation paying forward.”

They also said they are now evaluating how flexible work environments can increase productivity, given the wide-scale implementation of a work-from-home scheme for the majority of its over 56,500 permanent employees.

“Our business units are devoting a significant amount of time to building out a revised playbook — considering what aspects of our previous business model may be at risk, and the ways in which we can take advantage of opportunities that have arisen,” they said.

“In conclusion, we are learning through this crisis and adjusting to new realities… We view ourselves as one component of many efforts — both singly and collectively,” they said.

AC is the country’s oldest conglomerate with a net income of P35.28 billion in 2019. Its businesses span across real estate, banking, telecommunications, water, electronics manufacturing, and healthcare, among others.

Shares in AC at the stock exchange gained P18 or 3.13% to P593 each on Wednesday. — Denise A. Valdez

SEC warns vs illegal investment schemes

THE Securities and Exchange Commission (SEC) has continued alerting the public of groups that offer investment opportunities without license from the government.

The regulator issued separate advisories on its website tagging Norway International OPC; Viceem Help Worldwide/Viceem Help by Millionare Maker Team; Nexus P Capital by GK Marketing Ltd.; and My Profit Robot (MPR) as unauthorized operators of investment schemes.

It said some of these groups have been previously flagged but came back to business carrying new names.

Norway International OPC is a Laguna-based entity that invites investors to start their own businesses by selling soap bars, moisturizers, toners, slimming coffee and detergent soaps. But to earn more, it offers investors with an investment of P1,500 to get P90,000-270,000 in returns through “recruitment, pairing, downline system, and their direct match bonus.”

The SEC said this “ridiculous” rate of return without as much risk is an indication of a Ponzi scheme. This happens when money from new investors is given as “fake profits” to earlier investors. “[A]ny promise that defies the normal financial logic is surely unreliable and sketchy,” it warned the public.

In the case of Viceem Help, the SEC said its operators are the same people behind Azenzo Online — a group that it warned the public against earlier this month.

Like Azenzo Online, Viceem Help operates by promising a 30-100% return on investment within five to 20 days. The SEC noted it is a similar scheme to that of Kapa-Community Ministry International, which it called the country’s largest investment scam in recent history.

Nexus P Capital, which the SEC said is operated by a United States-registered corporation, deals with cryptocurrency and forex trading through its own platforms. It lures investors by offering a “leverage system,” which supposedly allows investors to use only a fraction of their capital in trading while the rest is provided by a broker or agent, and a “trading bonus system,” which discourages investors from pulling their money out of the system.

The SEC also likened Nexus P Capital’s operations to a Ponzi scheme, such that most of its investors lose because of its business methods. It also noted the policies and agreements of the company are written with unclear language as if willfully confusing investors of its actual scheme.

Lastly, MPR was found by the SEC as operating a robot cryptocurrency trading through the platforms BXTCoins and Property Arbitrage. It promises an average daily profit of 1% equivalent to a 365% profit per annum.

To earn more, investors are invited to refer other investors in exchange of a 35% commission on sales. Like in the other groups, the SEC said the investment scheme employed by MPR is similar to a Ponzi scheme as it promises ridiculous rates of return with little to no risk.

As all these groups offer investment opportunities without securing a secondary license from the commission, the SEC said they have violated the Securities Regulation Code. The people behind these groups may be fined up to P5 million, or imprisoned for up to 21 years, or both.

The public is warned to stop investing in the identified companies. — Denise A. Valdez

Gov’t pays Uy’s 2GO P35M for quarantine vessels

THE government is paying Dennis A. Uy-led shipping and logistics company 2GO Group, Inc. P35 million for the use of its two vessels to quarantine arriving overseas Filipino workers (OFWs), Transportation Secretary Arthur P. Tugade said.

“Ito ho ay nirerentahan ng gobyerno, ‘yung two mga P35 million at mura naman yan… if you will compute it in terms of bed space and use,” Mr. Tugade said in a Laging Handa press briefing on Wednesday.

(The two vessels are being rented by the government at around P35 million, and that’s cheap if you compute it in terms of bed space and use.)

Transportation Assistant Secretary Goddes Hope O. Libiran said the original rental price per ship was more than P120 million.

“Ibinaba lang ng todo to help government (They reduced it to [P35 million] to help the government,” she added.

2GO’s two passenger vessels, which are being used as quarantine facilities, are docked at the Port Area in Manila.

“Yung malaki, hindi lahat ng beds nagagamit dahil sa social distancing, ang magagamit lang ay 270 at this time. Sa maliit na barko ang kapasidad 135,” Mr. Tugade explained.

(Only 270 beds can be used on the large vessel because of the social distancing protocol while the small vessel provides 135 beds.)

The Department of Transportation came up with the quarantine ships to serve as temporary shelters for OFWs while they are on forced 14-day quarantine.

President Rodrigo R. Duterte signed into law on March 24 Republic Act No. 11469, or the Bayanihan to Heal as One Act, which gives him authority to exercise powers “necessary and proper” to combat the spread of the coronavirus disease 2019 (COVID-19).

The law states that “when the public interest so requires,” the President can direct the operation of any privately owned hospitals and medical and health facilities including passenger vessels and other establishments to house health workers; serve as quarantine areas or centers; and public transportation to ferry health, emergency, and frontline personnel and other persons; among others.

Provided, however, that the management and operation of such enterprises “shall be retained by the owners… who shall render a full accounting to the President or his duly authorized representative of the operations of the utility or business as basis for appropriate compensation.”

Provided, further, that “reasonable compensation for any additional damage or costs incurred by the owner or the possessor of the subject property solely on account of complying with the directive shall be given to the person entitled to the possession of such private properties or businesses after the situation has stabilized or at the soonest time practicable.” — Arjay L. Balinbin

Shipping firms seek gov’t aid as revenues fall

THE Philippine Liner Shipping Association (PLSA) is seeking government support for the domestic shipping transport industry whose shipping revenues have dropped by as much as 80% due to the government-imposed enhanced community quarantine (ECQ).

“The PLSA wrote to the Department of Transportation and Department of Finance and requested for government assistance to support domestic shipping as a vital and strategic industry that serves the needs of the economy and the Filipino people,” the group said in a statement issued on Wednesday.”

The PLSA said shipping lines will not be able sustain their operations “without government assistance and support to have some relief on its loans, government fees and other operational costs.

The group noted that 60% of the customers of shipping lines that offer domestic shipping transport service have been affected by the Luzon-wide lockdown.

It said the lockdown caused the drop in shipping volumes of all shipping lines to below 50%. Revenues were also down by as much as 60% to 80%.

“The situation has become untenable for the domestic shipping operators, and with ECQ being considered to extend until mid-May,” PLSA said.

The group also cautioned that the collapse of the domestic shipping transport industry will lead to a “dangerous disruption” of the supply chain for essential goods, resulting in more job losses and significant increases in logistics costs and prices of basic commodities.

PLSA’s members, that are also the primary users of the Manila North Harbor, include 2Go Group, Inc.; Gothong Southern Shipping Lines, Inc.; Magsaysay Shipping and Logistics; Lorenzo Shipping Corp.; and NMC Container Lines Inc., among others.

“Manila remains the center of trade and the distribution hub where most essential goods are brought to/from the rest of the country. It is thus very important that there is no disruption to the strategic service that domestic shipping companies provide, to ensure that the vital needs of the people are met,” PLSA said. — Arjay L. Balinbin

NEA’s off-grid solar project faces delay

THE National Electrification Administration (NEA) said its off-grid solar project to power far-flung communities faces delay as the global coronavirus disease 2019 (COVID-19) pandemic disrupts trade.

In a statement on Wednesday, the agency tasked to power rural communities said the solar photovoltaic (PV) mainstreaming project saw a delay in the delivery of solar panels coming from China.

“The competitive bidding process and the awarding of contracts to the successful bidders have already been completed. We are just awaiting delivery of solar panels, which will be coming from China,” said Ernesto O. Silvano, Jr., acting manager of NEA’s total electrification and renewable energy development department.

The solar project under NEA’s expanded household electrification program seeks to cover around 5,000 households that are deemed “unviable” for grid connection in the next five years.

The agency allotted P153 million for its implementation.

Households that will benefit from the project are those in the coverage areas of five electric cooperatives: Busuanga Island Electric Cooperative, Inc.; Camarines Sur IV Electric Cooperative, Inc.; Iloilo III Electric Cooperative, Inc.; Cotabato Electric Cooperative, Inc.; and Zamboanga del Norte Electric Cooperative, Inc.

These power cooperatives are set to receive 5,039 solar home system units, which provide cost-effective means to supply electricity to communities not connected to power grids.

The project is part of NEA’s target this year to power 775 sitios or rural villages, as well as 38 resettlement sites by local government units.

As of 2018, there are around 19,740 unpowered sitios across the country, 1,702 of which were classified as off-grid.

This year, the government allotted P1.53 billion for the agency’s electrification projects, which include its sitio electrification program.

Providing electricity to a sitio, NEA noted, costs at least P1.5 million on average. — Adam J. Ang

Fruitas partners with Mindanao dairy farm operator

Fruitas Holdings, Inc. has teamed up with a Mindanao-based dairy farm operator to be the exclusive carrier of its products.

The food and beverage kiosk operator told the stock exchange on Wednesday it forged a partnership with Bukidnon Milk Company to have the rights to carry its products via carts, kiosks and stalls.

Before this partnership, Fruitas has been carrying Bukidnon Milk Company’s fresh milk and yogurt products through its delivery platform.

“We have received very positive feedback on Bukidnon Milk Company products from our customers… [W]e are glad to partner with a top-notch local producer of fresh dairy. This new collaboration is in line with our vision for Fruitas to be synonymous with fresh products and become an essential part of Filipinos’ daily lives,” Fruitas President and Chief Executive Officer Lester C. Yu was quoted in the statement as saying.

Products of Bukidnon Milk Company will now be featured in Fruitas’ fresh store concept under the Babot’s Farm brand. As announced in March, the company wants the new concept to carry three major verticals of fresh products: a buko beverage line, a soy-based products line and a fresh dairy line.

“(The fresh store concept) will prominently feature Bukidnon Milk Company products alongside Fruitas’ leading buko beverage line, and Soy & Bean’s soy-based products,” it said.

Partnerships such as this is part of Fruitas’ strategy to generate revenues amid the challenges brought by the coronavirus disease 2019 (COVID-19) pandemic.

“As constraints brought about by the COVID-19 pandemic continues to present challenges to all businesses from large conglomerates to small operators, Fruitas commits to mitigate the impact by adding new revenue and profit streams,” it said.

It also assured investors that it has “more than sufficient funds” to survive the pandemic, noting it raised P820 million when it did an initial public offering last year.

“Since its initial public offering, Fruitas has completed the acquisition of Heat Stroke Grill, Kuxina, The Tofu Store, and CocoDelivery and forged partnerships with Pan de Manila and Bukidnon Milk Company, which have made the company bigger and stronger,” it said.

Fruitas has not disclosed its earnings for 2019 yet, but in the year prior, its consolidated revenue stood at P1.58 billion to increase 37% year on year.

Shares in Fruitas at the stock exchange inched up nine centavos or 6.67% to P1.44 each on Wednesday. — Denise A. Valdez

Yields on seven-day term deposits drop as banks get liquidity boost

YIELDS on the central bank’s term deposit facility (TDF) continued to drop amid rising demand, with banks parking some of their funds in the instruments after additional liquidity was infused into the system due to the reduction in the reserve requirement ratio (RRR) of big banks.

Total tenders for the Bangko Sentral ng Pilipinas’ (BSP) seven-day term deposits amounted to P119.288 billion on Wednesday, going beyond the P30 billion on offer as well as the P78.496 billion worth of bids seen last week.

Banks asked for yields ranging from 2.295% to 2.5%, lower than the 2.775% to 3% band logged on April 15. This caused the average rate for the one-week papers to settle at 2.4369%, shedding 52.09 basis points (bps) from the 2.9578% fetched a week ago.

The BSP has yet to resume auctions for the longer 14- and 28-day tenors.

The TDF is the central bank’s primary tool to gather excess liquidity in the financial system and to better guide market interest rates.

To support the banking system and financial stability, the central bank suspended the TDF auctions at the onset of the enhanced community quarantine in Luzon last month.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the lower yields sought by banks is a positive development and may mean that there is excess liquidity in the banking system during the lockdown.

He added that the lower yields also came weeks after the 200 bps reduction in the RRR of big lenders as well as “other tools by the BSP to infuse liquidity into the banking system.”

“Some of [these funds] found their way to the 7-day BSP TDF auction and able to earn relatively higher interest rate returns for excess funds,” Mr. Ricafort said.

The reserve requirement for universal and commercial banks has been lowered to 12% effective early April. Last week, the BSP said banks’ lending to small and medium-sized enterprises will also be counted as part of their compliance with reserve requirements.

BSP Governor Benjamin E. Diokno has been authorized by the Monetary Board to cut RRR by a total of 400 bps in 2020 in order to boost liquidity amid the pandemic.

Meanwhile, ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa said there was “downward pressure on yields after BSP’s recent rate cut.”

The BSP slashed rates by another 50 bps last Thursday, barely a month since it reduced rates by the same amount, to encourage lending to the most vulnerable amid the crisis.

This brought borrowing costs to record lows, with the overnight reverse repurchase rate at 2.75%, while lending and deposit rates now stand at 3.25% and 2.25%, respectively.

The central bank has already cut rates by 125 bps this year following the 75 bps worth of reductions implemented in 2019. This means the BSP has already unwound the 175 bps in hikes done in 2018 when inflation was at multi-year highs. — L.W.T. Noble

Lenovo launches new additions to gaming line

By Zsarlene B. Chua
Senior Reporter

COMPUTER manufacturing company Lenovo said demand for laptops and personal computers “will continue to be very high” even amid the coronavirus disease 2019 (COVID-19) pandemic as these enable “everybody to stay connected and be productive,” a local executive said.

Many industries have seen less demand for their products and stalled production lines due to the continued fight against COVID-19, but Lenovo launched just last week new additions to their gaming line, the Legion.

“In the past three weeks while we were actually in quarantine, one of the highly sought-after brands [for those working] from home is actually the Legion and I actually see this continuing even after ECQ (enhanced community quarantine). Even if we enter [the third quarter], I think this will continue…. I can actually see the demand even increasing,” Michael Ngan, country general manager of Lenovo Philippines, told reporters during a digital press conference on April 17.

Lenovo’s Legion is a three-year-old gaming line that focuses on sleek design while delivering high performance as needed for productivity or gaming.

“Legion did really well in the past 12 months. We are now the fastest-growing PC gaming brand in the Asia Pacific,” Ian Tan, Asia Pacific gaming lead for Lenovo, said in the same event.

This year, the brand launched five new laptop models plus a “refreshed” version of the Y740Si alongside two desktops with features gamers wanted, Mr. Tan added.

“Gamers today seek the perfect balance of work and play in their lives. Lenovo Legion’s latest lineup was developed to meet their demands for stylish machines that have great performance for every scenario. Our innovations such as Lenovo Legion Coldfront 2.0 and TrueStrike keyboards offer superior thermals and typing comfort, further elevating the gaming experience for everyone,” Mr. Tan said in a company statement.

Aside from the improved thermal system (Coldfront 2.0) and a keyboard that allows 1.3 mm travel per key and improved responsiveness, the new line includes either the latest 10th generation Intel Core H-Series or AMD Ryzen 4000 series processors while some laptops can have the new NVIDIA GeForce GTX 1650 Ti and RTX 2080 GPUs.

Legion also rationalized the naming of their products — calling the highest end entry Legion 7i followed by the mid-tier entry Legion 5Pi, 5i, and 5, and the entry-level Lenovo IdeaPad Gaming 3i.

The top-tier Legion 7i is a 15-inch machine that comes with the NVIDIA GeForce RTX 2080 Super Max-Q graphics chip and Intel 10th gen Intel Core i9 processor. It has a 1080p display with a refresh rate of 240 Hz and has the TrueStrike keyboard with “100% anti-ghosting” and a Corsair iCue system lighting.

The slim 2.2 kg machine also has a sleek design with a battery that can last for up to 8 hours when not used for gaming and can be charged to 50% within 30 minutes. It also comes with 2TB NVMe PCIe SSD storage and up to 32GB DDR4 memory.

Legion 7i is priced at P119,995 and will be available starting June.

The mid-tier Legion 5 series has much of the 7i’s features but is a step down as it has the option for NVIDIA GeForce RTX 2060 or GTX graphics card, 10th gen Intel H-series processors or AMD Ryzen 7 4000 H-Series Mobile Processor. It will also have 15-inch and 17-inch varieties though only the pricing for the 15-inch entries is announced.

The Intel-based 15-inch Lenovo Legion 5i will start at P62,995 while the AMD-based 15-inch Lenovo Legion 5 will start at P56,995. They are expected to be available by June.

The entry-level IdeaPad Gaming 3i is for those wanting a gaming setup without breaking the bank as the 15-inch IdeaPad Gaming 3i laptop with optional 120Hz refresh rate features an up to 10th Gen Intel Core i7 H-Series mobile processor. It also comes with 8 hour battery life and Rapid Charge, full HD IPS display and Dolby audio. The Intel variant is at P52,995 while an AMD variant is to be released within the year. The 3i is expected to be available by June.

Meanwhile, the refreshed version of the Y740Si is considered the brand’s lightest gaming laptop with a weight of 1.7 kg has 10th Gen Intel Core i9 H-Series mobile processors and a 15-inch 4K (3840 x 2160) In-plane Switching (IPS) panel display touting VESA DisplayHDR 400, Dolby Vision and 100 percent RGB color gamut.

When gaming, users can shift into their preferred performance mode by pressing Fn+Q keys to trigger Lenovo Q-Control 2.0.

The Y40Si starts at P144,995 and will be available within the second half of the year.

The desktop variants include the Legion Tower i5 comes with NVIDIA GeForce RTX 2080 SUPER GPU for ultrafast frame rates with 4K resolution. It also has Lenovo’ improved thermal system with 150-watt CPU cooler “letting air circulate faster throughout its airy 28-liter volume interior.”

The tower will be available in June with Intel processors though an AMD Ryzen processor will arrive later in the year. Price starts at P72,995.

For a budget-friendly option, Lenovo is offering IdeaPad Gaming Center 5i which can support up to NVIDIA GeForce RTX 2060 GPU and Intel Core processors (an AMD version will be available soon). No pricing has been announced yet though they are expected to arrive in the second half of the year.

Netflix swears it won’t run out of TV shows during the pandemic

FACED with an unprecedented global health crisis that has frozen businesses around the world, Netflix Inc. is reassuring customers (and investors) that it won’t run out of new TV shows or movies anytime soon.

The company has already finished production on almost all of its slate for this year, and has also finished filming many programs for next year. Season four of The Crown, an award-winning drama about British royals, is already in post-production, as is Over the Moon, an animated project.

“We work really far out relative to the industry,” Chief Content Officer Ted Sarandos said during an earnings call with analysts Tuesday. “We don’t anticipate moving things around.”

Over the past decade, Netflix has lured more than 180 million customers to its streaming service by offering a never-ending buffet of new shows. Seemingly nothing — not debt, not competition, not bad reviews — could stop its weekly drop of new dramas, comedies and documentaries.

But the coronavirus disease 2019 has plunged Netflix into unknown territory. The company has paused production all around the world, with the exception of Iceland and South Korea. The global health crisis has interrupted the production of a new season of the hit show Stranger Things, as well as a movie starring Dwayne “The Rock” Johnson.

With a lineup that includes Too Hot to Handle, #blackAF, and Space Force, Netflix isn’t going to run out of shows this quarter. It also has the rights to the Michael Jordan documentary The Last Dance, which has already been a hit for ESPN. But Netflix has no way of knowing what will happen later this year, which is one of the reasons it cautioned investors Tuesday not to read too much into a record-breaking surge in subscribers last quarter.

“No one knows how long it will be until we can safely restart physical production in various countries, and, once we can, what international travel will be possible, and how negotiations for various resources (e.g., talent, stages and post-production) will play out,” the company said in a letter to shareholders.

Netflix has shifted all of its animation series to remote production, and did the same with post-production on more than 200 shows. Animation is a huge new area of investment for Netflix, and now includes a couple of buildings in Hollywood. The company earned an Oscar nomination in 2020 for the animated movie Klaus, and has more than a dozen animated series due for release this year. It’s unclear how the new setup will affect the rollout of any projects.

Netflix still plans to release more original content in 2020 than last year. And for the moment, the pause in production is a boon to its finances, helping lift cash flow.

If Netflix can’t make as many movies itself, it can always buy them. Its film division will benefit from other studios being eager to offload product due to the temporary shutdown of movie theaters. Paramount Pictures and Media Rights capital sold Netflix The Lovebirds, a comedy starring Issa Rae and Kumail Nanjiani, while Legendary sold Netflix a film starring Millie Bobby Brown of Stranger Things fame.

Rather than waiting to see when they can release those movies in theaters, the studios can book a profit by selling the projects above cost to Netflix. Netflix, meanwhile, gets new films to market to its users.

But if Netflix can’t get production up and running this year, neither animation nor new movies will fill the hole. The company releases hundreds of new TV shows, documentaries and other specials each year, and most of them require having dozens or hundreds of people on a set somewhere.

A long hold on production could prevent Netflix from releasing as many shows as its customers have come to expect, and provide a reason for many cost-conscious consumers to cancel their subscriptions. The company put out 180 new titles in the US last quarter, according to the blog What’s on Netflix, and had plans for similar amounts in the quarters ahead.

Netflix said that a lack of new material might affect it less than peers because of its large library of old shows. But the company has also said time and time again that new shows are the biggest drivers of new customers. That’s why Netflix has minimized the impact of rival studios pulling popular programs like The Office and Friends. — Bloomberg

Kominers’s Conundrums: The best puzzles are made out of words

By Scott Duke Kominers, Bloomberg Opinion

DURING these recent weeks of lockdown, we’ve solved logic puzzles based around household objects — light switches and chessboards.* Now it’s time to try another genre, one of my personal favorites: wordplay.

Making games out of words is literally ancient. Even the Romans had a precursor of our modern crossword. And, of course, wordplay comes naturally to everyone in the form of puns, tongue twisters, and spoonerisms.** Wordplay puzzles take things to the next level by seeking surprising relationships between words, such as the ability to convert one into another by shuffling letters — otherwise known as an anagram. Here’s a famous one: https://wordsmith.org/anagram/hof.html

One of the best sources for these sorts of puzzles is the National Puzzlers’ League. They publish a monthly compilation in a journal called The Enigma — mostly in a versical form called “flats.”

In flats — which predate the crossword — a short poem is presented with some words conspicuously missing, along with a clue about how those words are related. The goal is to fill in the blanks.

I published one in The Enigma just over a decade ago:

HETERONYM (9, 2 *4-3)

(*4 = not MW)

I’m NINE that any hunter

Would want to TWO FOUR-THREE.

In rabbit or duck season,

It’s a bad plan, you see.

The verse itself is the puzzle, and lines at the top tell you a bit about the words you’re looking for:

The Basics: A “HETERONYM” is a classic form of wordplay. It means you’re looking to fill in the verse with two words or phrases that have the same spelling but different meanings. “Object” pronounced one way means “a thing”; pronounced another way, it means “to disapprove.” Meanwhile, “contract” could mean either shrinking something or a legal document. “Sake” is a rice wine, but it’s also the reason you take an action. You get even more heteronymic opportunities if you allow changes in capitalization (“August” vs. “august”; “Polish” vs. “polish”) or spacing (“mustache” becomes “must ache”).

The Clues: The numbers “(9, 2 *4-3)” indicate the lengths of the two parts of the answer: One of them is a single word that’s nine letters long; the other is a three-word phrase consisting of a two-letter word, a four-letter word, and a three-letter word (with a hyphen). The “*” before the 4 means that the four-letter word is actually a proper noun. And, naturally, these answer words fit into the analogous spaces in the verse (“NINE” and “TWO FOUR-THREE,” respectively).

The Advanced Clue: “(*4 = not MW)” further explains that the four-letter word isn’t just a proper noun — it’s an unusual one. In particular, it doesn’t appear in “MW,” better known as Merriam-Webster’s dictionary.

So give it a try: Can you think of a nine-letter word that fits where the “NINE” appears in the poem, and which you can break up into a three-word phrase with the proper word lengths to fit “TWO FOUR-THREE”?

Are you puzzled — befuddled, even?

There are multiple angles to try out: First, you might examine the verse, and focus on the words that seem most specific, or most unusual. Those are likely to be clues. “Rabbit or duck season?”: Why those animals specifically? Do they remind you of anything in particular?

And then you can think about the words themselves: How many nine-letter words would fit into the first line? It seems like the verse is suggesting a word like “SURPRISED.” That has nine letters, but when you break them up into the prescribed pattern it turns into gobbledygook.

So what else could the nine-letter word be?

Here’s another hint: I’ve actually used the word in my discussion of this puzzle already. Can you find it, figure out how it fits the verse, and then work out the wordplay? If so, then you’ve succeeded in stretching a different part of your brain than the one used for the light-switch and chessboard conundrums. Instead of logical reasoning, you’re deploying your brain’s language faculties, perhaps with a bit of assist from the part that processes humor.

And here’s another puzzle for more practice:

HETERONYM (7, 7)

Stuck at home another week:

a child past SEVEN?

“Not at all,” he said to me,

“I’ve got my game SEVEN!”

Here you’re looking for a single word with seven letters that means different things in the two contexts.*** And if you’ve really enjoyed solving these flats, check out this mini-issue of The Enigma, which gives a more detailed introduction to the form — http://download.puzzlers.org/public/enigma-minisample.pdf.

THE BONUS ROUND
Try this 100% online “escape room” developed by Nick and Spike Huntington-Klein (https://nickchk.com/cgi-bin/escape_entrance.py). Or read and solve one of these interactive puzzle stories (https://www.puzzletales.com/). Get yourself a new virtual conference background (https://www.pocket-lint.com/apps/news/151711-best-zoom-backgrounds-fun-virtual-backgrounds-for-zoom-meetings), or just rate your competition (https://twitter.com/ratemyskyperoom?s=03; hat tip: Josh Krieger). Also: “Math Bridge Extended Beyond Fermat’s Last Theorem” (https://www.quantamagazine.org/amazing-math-bridge-extended-beyond-fermats-last-theorem-20200406/); RIP John Conway (https://www.nytimes.com/2020/04/15/technology/john-horton-conway-dead-coronavirus.html). Quarantine-themed picture puzzles (https://www.insider.com/quarantine-themed-puzzles-2020-4); a cool take on the quadratic formula (https://www.youtube.com/watch?v=ZBalWWHYFQc); a coffee-pouring problem (https://twitter.com/_herbeautyxo/status/928756533370015749) that apparently broke the Internet (https://www.insider.com/coffee-pouring-puzzle-has-the-internet-confused-2017-11). And inquiring minds want to know: Real or Cake? (https://www.coolmathgames.com/trivia/real-or-cake)

* Last week I suggested that we may not be able to tell when an arbitrary modified chessboard has a domino covering. But my student Alex Wei has managed to prove that one can quickly verify whether a domino covering is possible, by converting the problem into an example of what is called “bipartite matching.” So if you have a modified chessboard and are curious, you can send it to him :). Or if you’ve got a bit of graph theory under your belt, you can try to work out the algorithm yourself.

**And don’t forget the name game, which features prominently in “Glinky” perhaps the strangest short story I’ve ever read.

***Experienced flat aficionados will notice I’ve taken a bit of liberty with format here in order to make the puzzle more accessible to readers who’ve never solved them before.

Drop in productivity seen as companies shift to work-from-home setups

By Arjay L. Balinbin
Reporter

MANAGEENGINE, an India-based multinational technology firm, warned companies that a sudden shift to work-from-home setups could lead to a “big drop” in employee productivity.

In a recent e-mail interview, Rajesh Ganesan, vice-president of ManageEngine, told BusinessWorld there are operational risks associated with the work-from-home setups, which became popular during the coronavirus lockdown.

“The culture and operating model of the business may pose a challenge. For example, if teams inside the business are used to in-person meetings for communication and collaboration, or if the culture demands strict supervision of employees, the sudden shift to working from home will cause a big drop in productivity,” he said.

He added that leaders of companies should plan for this and instill continuous awareness and training to keep their employees’ productivity at optimum levels.

Mr. Ganesan likewise said maintaining information security during this period is a primary challenge.

“Attackers will exploit the opportunity, so IT leadership needs to ensure security is tight before opening up remote access. They should look into investing in technology that facilitates secure remote access,” he explained.

He noted that most businesses today have completely migrated their communication and collaboration tools to the cloud.

With the new setup, he said, companies should make sure their employees are trained in basic information security, ensure employees understand their responsibilities and set up comprehensive auditing and surveillance for all user sessions, among others.

When providing their remote employees with access to exclusive corporate information, he said remote privileged session management tools can help.

“These tools offer secure channels through which employees can access information and perform operations remotely. The tools only provide access to users with the right permissions, ensure remote sessions last only for the required time, and record all actions users carry out in every session,” he explained.

Another factor that could affect employees’ productivity is the “at-home environment” where they are expected to get their work done, Mr. Ganesan added.

“Leadership must be proactive and understanding of employee needs, and should prepare plans to allocate a portion of the workstation budget for employees that need to replicate an office setup at home,” he suggested.

ManageEngine is the enterprise IT management software division of Zoho Corp., a software company headquartered in India that focuses on developing web-based business tools and IT solutions such as office tools suites, Internet of Things management platforms, and IT management softwares.

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