“Sat Chatterjee has waged a campaign of misinformation against me and Azalia for over two years now,” Ms. Goldie said in a written statement.

She said the work had been peer-reviewed by Nature, one of the most prestigious scientific publications. And she added that Google had used their methods to build new chips and that these chips were currently used in Google’s computer data centers.

Laurie M. Burgess, Dr. Chatterjee’s lawyer, said it was disappointing that “certain authors of the Nature paper are trying to shut down scientific discussion by defaming and attacking Dr. Chatterjee for simply seeking scientific transparency.” Ms. Burgess also questioned the leadership of Dr. Dean, who was one of 20 co-authors of the Nature paper.

“Jeff Dean’s actions to repress the release of all relevant experimental data, not just data that supports his favored hypothesis, should be deeply troubling both to the scientific community and the broader community that consumes Google services and products,” Ms. Burgess said.

Dr. Dean did not respond to a request for comment.

After the rebuttal paper was shared with academics and other experts outside Google, the controversy spread throughout the global community of researchers who specialize in chip design.

The chip maker Nvidia says it has used methods for chip design that are similar to Google’s, but some experts are unsure what Google’s research means for the larger tech industry.

“If this is really working well, it would be a really great thing,” said Jens Lienig, a professor at the Dresden University of Technology in Germany, referring to the A.I. technology described in Google’s paper. “But it is not clear if it is working.”

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How Intel Makes Semiconductors in a Global Shortage

Some feature more than 50 billion tiny transistors that are 10,000 times smaller than the width of a human hair. They are made on gigantic, ultraclean factory room floors that can be seven stories tall and run the length of four football fields.

Microchips are in many ways the lifeblood of the modern economy. They power computers, smartphones, cars, appliances and scores of other electronics. But the world’s demand for them has surged since the pandemic, which also caused supply-chain disruptions, resulting in a global shortage.

That, in turn, is fueling inflation and raising alarms that the United States is becoming too dependent on chips made abroad. The United States accounts for only about 12 percent of global semiconductor manufacturing capacity; more than 90 percent of the most advanced chips come from Taiwan.

Intel, a Silicon Valley titan that is seeking to restore its longtime lead in chip manufacturing technology, is making a $20 billion bet that it can help ease the chip shortfall. It is building two factories at its chip-making complex in Chandler, Ariz., that will take three years to complete, and recently announced plans for a potentially bigger expansion, with new sites in New Albany, Ohio, and Magdeburg, Germany.

Why does making millions of these tiny components mean building — and spending — so big? A look inside Intel production plants in Chandler and Hillsboro, Ore., provides some answers.

Chips, or integrated circuits, began to replace bulky individual transistors in the late 1950s. Many of those tiny components are produced on a piece of silicon and connected to work together. The resulting chips store data, amplify radio signals and perform other operations; Intel is famous for a variety called microprocessors, which perform most of the calculating functions of a computer.

Intel has managed to shrink transistors on its microprocessors to mind-bending sizes. But the rival Taiwan Semiconductor Manufacturing Company can make even tinier components, a key reason Apple chose it to make the chips for its latest iPhones.

Such wins by a company based in Taiwan, an island that China claims as its own, add to signs of a growing technology gap that could put advances in computing, consumer devices and military hardware at risk from both China’s ambitions and natural threats in Taiwan such as earthquakes and drought. And it has put a spotlight on Intel’s efforts to recapture the technology lead.

Chip makers are packing more and more transistors onto each piece of silicon, which is why technology does more each year. It’s also the reason that new chip factories cost billions and fewer companies can afford to build them.

In addition to paying for buildings and machinery, companies must spend heavily to develop the complex processing steps used to fabricate chips from plate-size silicon wafers — which is why the factories are called “fabs.”

Enormous machines project designs for chips across each wafer, and then deposit and etch away layers of materials to create their transistors and connect them. Up to 25 wafers at a time move among those systems in special pods on automated overhead tracks.

Processing a wafer takes thousands of steps and up to two months. TSMC has set the pace for output in recent years, operating “gigafabs,” sites with four or more production lines. Dan Hutcheson, vice chair of the market research firm TechInsights, estimates that each site can process more than 100,000 wafers a month. He puts the capacity of Intel’s two planned $10 billion facilities in Arizona at roughly 40,000 wafers a month each.

After processing, the wafer is sliced into individual chips. These are tested and wrapped in plastic packages to connect them to circuit boards or parts of a system.

That step has become a new battleground, because it’s more difficult to make transistors even smaller. Companies are now stacking multiple chips or laying them side by side in a package, connecting them to act as a single piece of silicon.

Where packaging a handful of chips together is now routine, Intel has developed one advanced product that uses new technology to bundle a remarkable 47 individual chips, including some made by TSMC and other companies as well those produced in Intel fabs.

Intel chips typically sell for hundreds to thousands of dollars each. Intel in March released its fastest microprocessor for desktop computers, for example, at a starting price of $739. A piece of dust invisible to the human eye can ruin one. So fabs have to be cleaner than a hospital operating room and need complex systems to filter air and regulate temperature and humidity.

Fabs must also be impervious to just about any vibration, which can cause costly equipment to malfunction. So fab clean rooms are built on enormous concrete slabs on special shock absorbers.

Also critical is the ability to move vast amounts of liquids and gases. The top level of Intel’s factories, which are about 70 feet tall, have giant fans to help circulate air to the clean room directly below. Below the clean room are thousands of pumps, transformers, power cabinets, utility pipes and chillers that connect to production machines.

Fabs are water-intensive operations. That’s because water is needed to clean wafers at many stages of the production process.

Intel’s two sites in Chandler collectively draw about 11 million gallons of water a day from the local utility. Intel’s future expansion will require considerably more, a seeming challenge for a drought-plagued state like Arizona, which has cut water allocations to farmers. But farming actually consumes much more water than a chip plant.

Intel says its Chandler sites, which rely on supplies from three rivers and a system of wells, reclaim about 82 percent of the freshwater they use through filtration systems, settling ponds and other equipment. That water is sent back to the city, which operates treatment facilities that Intel funded, and which redistributes it for irrigation and other nonpotable uses.

Intel hopes to help boost the water supply in Arizona and other states by 2030, by working with environmental groups and others on projects that save and restore water for local communities.

To build its future factories, Intel will need roughly 5,000 skilled construction workers for three years.

They have a lot to do. Excavating the foundations is expected to remove 890,000 cubic yards of dirt, carted away at a rate of one dump truck per minute, said Dan Doron, Intel’s construction chief.

The company expects to pour more than 445,000 cubic yards of concrete and use 100,000 tons of reinforcement steel for the foundations — more than in constructing the world’s tallest building, the Burj Khalifa in Dubai.

Some cranes for the construction are so large that more than 100 trucks are needed to bring the pieces to assemble them, Mr. Doron said. The cranes will lift, among other things, 55-ton chillers for the new fabs.

Patrick Gelsinger, who became Intel’s chief executive a year ago, is lobbying Congress to provide grants for fab construction and tax credits for equipment investment. To manage Intel’s spending risk, he plans to emphasize construction of fab “shells” that can be outfitted with equipment to respond to market changes.

To address the chip shortage, Mr. Gelsinger will have to make good on his plan to produce chips designed by other companies. But a single company can do only so much; products like phones and cars require components from many suppliers, as well as older chips. And no country can stand alone in semiconductors, either. Though boosting domestic manufacturing can reduce supply risks somewhat, the chip industry will continue to rely on a complex global web of companies for raw materials, production equipment, design software, talent and specialized manufacturing.


Produced by Alana Celii

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How You’re Still Being Tracked on the Internet

While Meta adjusts, some small businesses have begun seeking other avenues for ads. Shawn Baker, the owner of Baker SoftWash, an exterior cleaning company in Mooresville, N.C., said it previously took about $6 of Facebook ads to identify a new customer. Now it costs $27 because the ads do not find the right people, he said.

Mr. Baker has started spending $200 a month to advertise through Google’s marketing program for local businesses, which surfaces his website when people who live in the area search for cleaners. To compensate for those higher marketing costs, he has raised his prices 7 percent.

“You’re spending more money now than what you had to spend before to do the same things,” he said.

Other tech giants with first-party information are capitalizing on the change. Amazon, for example, has reams of data on its customers, including what they buy, where they reside, and what movies or TV shows they stream.

In February, Amazon disclosed the size of its advertising business — $31.2 billion in revenue in 2021 — for the first time. That makes advertising its third-largest source of sales after e-commerce and cloud computing. Amazon declined to comment.

Amber Murray, the owner of See Your Strength in St. George, Utah, which sells stickers online for people with anxiety, started experimenting with ads on Amazon after the performance of Facebook ads deteriorated. The results were remarkable, she said.

In February, she paid about $200 for Amazon to feature her products near the top of search results when customers looked up textured stickers. Sales totaled $250 a day and continued to grow, she said. When she spent $85 on a Facebook ad campaign in January, it yielded just $37.50 in sales, she said.

“I think the golden days of Facebook advertising are over,” Ms. Murray said. “On Amazon, people are looking for you, instead of you telling people what they should want.”

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American Realty Investors, Inc. reports Earnings for Q4 2021

DALLAS–(BUSINESS WIRE)–American Realty Investors, Inc. (NYSE:ARL) is reporting its results of operations for the quarter ended December 31, 2021. For the three months ended December 31, 2021, we reported net loss attributable to common shares of $6.8 million or $0.42 per diluted share, compared to net income attributable to common shares of $0.4 million or $0.03 per diluted share for the same period in 2020.

Financial Highlights

  • We collected approximately 97% of our rents for the three months ended December 31, 2021, comprised of approximately 96% from multifamily tenants and approximately 99% from office tenants.
  • Total occupancy was 91% at December 31, 2021, which includes 95% at our multifamily properties and 70% at our commercial properties.
  • On November 17, 2021, we entered into a Major Decision with Macquarie to engage a broker and initiate a sale of all the properties held by the VAA joint venture. In connection with the sale, VAA will distribute seven of its existing properties to us, and we in turn, will contribute one of our properties into the VAA Portfolio. The remaining forty-five properties will be sold to third party. The Major Decision agreement will expire on August 1, 2022, if the VAA Portfolio has not been sold.
  • On January 14, 2022, we sold Toulon, a 240 unit multifamily property in Gautier, Mississippi, for $26.8 million. The proceeds were used to pay off the mortgage note payable on the property and for general corporate purposes.
  • On March 3, 2022, we extended our $39.0 million loan on Stanford Center to February 26, 2023.

Financial Results

Rental revenues decreased $9.8 million from $17.4 million for the three months ended December 31, 2020 to $7.6 million for the three months ended December 31, 2021. The decrease in rental revenue is primarily due to the receipt of a $5.9 million lease termination payment at Browning Place in 2020 and a decline in occupancy in our commercial properties.

Net operating loss increased $7.6 million from net operating income of $3.9 million for three months ended December 31, 2020 to net operating loss of $3.7 million for the three months ended December 31, 2021. The increase in net operating loss is primarily due to the lease termination payment at Browning Place in 2020 and an increase in legal fees in 2021.

Net loss attributable to common shares increased $7.2 million from net income of $0.4 million for the three months ended December 31, 2020 to net loss of $6.8 million for the three months ended December 31, 2021. The increase in net loss is primarily attributed to the lease termination payment at Browning Place in 2020, an increase in legal fees in 2021 and a decrease in gain on sale of assets, offset in part by a decrease in loss on foreign currency transactions in 2021.

About American Realty Investors, Inc.

American Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including office buildings, apartments, shopping centers, and developed and undeveloped land. The Company invests in real estate through direct ownership, leases and partnerships and invests in mortgage loans on real estate. The Company also holds mortgage receivables. The Company’s primary asset and source of its operating results is its investment in Transcontinental Realty Investors, Inc. (NYSE:TCI). For more information, visit the Company’s website at www.americanrealtyinvest.com.

 
 
 
 

AMERICAN REALTY INVESTORS, INC.    

CONSOLIDATED STATEMENTS OF OPERATIONS     

(Dollars in thousands, except per share amounts)    

            

 

  

Three Months Ended

December 31, 

 

Twelve Months Ended

December 31, 

 

  

2021

 

2020

 

2021

 

2020

 
Revenues:          
Rental revenues

 $

       7,625

 

 

 $

    17,448

 

 

 $

    37,808

 

 

 $

     51,909

 

Other incomes

 

            989

 

 

 

        1,770

 

 

 

         4,231

 

 

 

          7,117

 

Total revenue

 

         8,614

 

 

 

       19,218

 

 

 

       42,039

 

 

 

        59,026

 

Expenses:           
Property operating expenses

 

         4,360

 

 

 

        5,853

 

 

 

       20,860

 

 

 

        24,360

 

Depreciation and amortization

 

         2,397

 

 

 

        4,417

 

 

 

       11,870

 

 

 

        14,755

 

General and administrative

 

         3,143

 

 

 

        2,656

 

 

 

       15,942

 

 

 

        10,614

 

Advisory fee to related party

 

         2,391

 

 

 

        2,354

 

 

 

       13,985

 

 

 

          9,409

 

Total operating expenses

 

        12,291

 

 

 

       15,280

 

 

 

       62,657

 

 

 

        59,138

 

Net operating (loss) income

 

        (3,677

)

   

 

        3,938

 

 

 

      (20,618

)

   

 

           (112

)

Interest Income

 

         6,033

 

 

 

        6,639

 

 

 

       23,421

 

 

 

        23,098

 

Interest expense

 

        (6,604

)

 

 

       (8,709

)

 

 

      (29,080

)

 

 

       (35,004

)

Loss on foreign currency transactions

 

        (7,360

)

 

 

     (14,152

)

 

 

       (6,175

)

 

 

       (13,378

)

Loss on extinguishment of debt

 

              –

 

 

 

             –

 

 

 

       (1,451

)

 

 

               –

 

Equity in income (loss) from unconsolidated joint venture

 

         3,183

 

 

 

           263

 

 

 

       14,634

 

 

 

           (379

)

Gain on sale or write-down of assets, net

 

            382

 

 

 

       12,093

 

 

 

       24,647

 

 

 

        36,895

 

Income tax provision

 

           (129

)

 

 

           493

 

 

 

         1,067

 

 

 

             147

 

Net (loss) income

 

        (8,172

)

 

 

           565

 

 

 

         6,445

 

 

 

        11,267

 

Net income attributable to noncontrolling interest

 

         1,368

 

 

 

          (162

)

 

 

       (3,098

)

 

 

        (2,237

)

Net (loss) income attributable to common shares

 $

     (6,804

)

 

 $

        403

 

 

 $

      3,347

 

 

 $

       9,030

 

Earnings per share – basic           
Basic and diluted

 $

       (0.42

)

 

 $

       0.03

 

 

 $

        0.21

 

 

 $

         0.56

 

Weighted average common shares used in computing earnings per share                                                                                                                                            
Basic and diluted

 

16,152,043

 

 

 

16,045,796

 

 

 

16,152,043

 

 

 

16,045,796

 

 

 

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SmartRent Reports Fourth Quarter and Full-Year 2021 Financial Results and Provides 2022 Guidance

SCOTTSDALE, Ariz.–(BUSINESS WIRE)–SmartRent, Inc. (NYSE: SMRT) (“SmartRent” or the “Company”), a leading provider of smart home and smart building automation for property owners, managers, developers, homebuilders and residents, today reported financial results for the full-year and fourth quarter ended December 31, 2021.

“SmartRent celebrated many notable successes in 2021. From our public listing on the New York Stock Exchange in August 2021, to reaching record revenue levels and launching several new, best-in-class products, I could not be more proud of our team and all that we accomplished last year,” said Lucas Haldeman, SmartRent CEO. “In 2022, we’re looking forward to continuing to build on our strong foundation and solidify our position as the market leader in enterprise smart home solutions. We have sufficient capital resources to support our organic growth and incremental external growth initiatives. We are confident in the direction of our business and inspired by the opportunity ahead for our Company, our customers, and all of our stakeholders.“

Fourth Quarter 2021 Highlights

  • Increased total revenue 155% to $34.7 million as compared to $13.6 million for the fourth quarter of 2020.
  • Increased annualized software as a service (SaaS) annual recurring revenue (ARR) 114% to $10.6 million as compared to $4.9 million for the fourth quarter of 2020.
  • Increased Hosted Services average revenue per user (ARPU) 2% to $6.86 as compared to $6.75 for the fourth quarter of 2020.
  • Net loss of $(26.0) million as compared to $(10.7) million for the fourth quarter of 2020.
  • Adjusted EBITDA of $(21.8) million as compared to $(6.8) million for the fourth quarter of 2020.
  • Deferred Revenue grew 79% to $95.6 million as compared to $53.5 million as of December 31, 2020.
  • Deployed 52,076 organic units, up 72% as compared to 30,220 units for the fourth quarter of 2020.
  • Increased Units Booked 42% to 84,052 as compared to 59,067 for the fourth quarter of 2020.
  • Increased organic Committed Units 5% to 736,461 as of December 31, 2021, from 704,242 as of September 30, 2021.
  • Aggregate organic Deployed and Committed Units of 1,059,309 as of December 31, 2021.
  • Acquired iQuue, LLC (“iQuue”), a smart home technology company with 22,605 aggregate Deployed and Committed Units.
  • Cash balance of $432.1 million as of December 31, 2021.

Full-Year 2021 Highlights

  • Increased total revenue 111% to $110.6 million as compared to $52.5 million in 2020.
  • Net loss of ($72.0) million as compared to a net loss of ($37.1) million in 2020.
  • Adjusted EBITDA of $(55.6) million as compared to $(26.7) million in 2020.
  • Deployed 167,743 units, up 101% as compared to 83,293 in 2020.
  • Increased Units Booked 94% to 218,106 from 112,555 in 2020.
  • Launched multiple products including Alloy Access, Smart Video, Smart Parking and Fusion Hub.
  • Commenced trading on the New York Stock Exchange (NYSE).
  • Entered into a $75.0 million revolving credit facility and retired $4.9 million of outstanding term debt.

Fourth Quarter and Full-Year Results

Total revenue increased 155% to $34.7 million in the fourth quarter of 2021 from $13.6 million in the fourth quarter of 2020. For the year, total revenue increased 111% to $110.6 million, as compared to $52.5 million in 2020. For the fourth quarter and the full year, the increase in revenues was driven primarily by growth in the Company’s record Units Deployed, increased subscriptions for the Company’s software applications, growth in its customer base and increased monthly SaaS subscription rates.

Operating expenses rose 185% to $22.8 million in the fourth quarter of 2021 from $8.0 million in the prior year period. For the year, operating expenses increased 96% to $61.6 million as compared to $31.4 million in 2020. Contributing to the increase in both periods were higher sales and marketing, and research and development expenses associated with hiring and scaling those teams to support SmartRent’s current and anticipated pace of growth. The Company increased total headcount to 639 employees at the end of 2021, a 147% year-over-year increase. SmartRent anticipates the need to carefully expand these teams in 2022; however, the rate of growth should slow as the Company realizes efficiencies and approaches staffing levels necessary to meet near-term demand. Higher general and administrative expenses, specifically legal, insurance, banking and consulting fees, equity-based compensation, and other activities related to operating as a public company, also contributed to the increase.

Net loss was $(26.0) million in the fourth quarter 2021, as compared to $(10.7) million in the fourth quarter of 2020. For the full-year 2021, net loss was $(72.0) million as compared to $(37.1) for full-year 2020. Contributing to the loss was a warranty charge, recorded as a component of hardware cost of revenues, $0.7 million in the fourth quarter of 2021 and $6.4 million for full-year 2021, related to a battery defect in a portion of its SmartHubs.

Adjusted EBITDA was $(21.8) million for the fourth quarter of 2021 and $(55.6) million for the full-year as compared to $(6.8) million in the fourth quarter of 2020 and $(26.7) million for the full-year 2020.

Total deferred revenue was $95.6 million as of December 30, 2021, up from $53.5 million on December 31, 2020.

At year-end, the Company had $432.1 million of cash and cash equivalents on its balance sheet and no outstanding debt.

Supply Chain

The Company has taken proactive steps to support its logistics and supply chain management efforts in light of sustained headwinds in the global supply chain resulting from the COVID-19 pandemic. Despite these measures, there may be unanticipated events outside of the Company’s control that may impact its supply chain; examples include factory closures due to the resurgence of COVID-19 and continued shortages of component parts.

Subsequent Events

On March 22, 2022, SmartRent acquired SightPlan, Inc. (“SightPlan”), a leader in multifamily workflow management, for approximately $135 million in cash. The acquisition advances SmartRent’s product roadmap and augments the breadth of cloud-based SaaS solutions for current and prospective customers, creating a comprehensive property and resident management platform. Additional information regarding the acquisition is available on the Investor Relations section of SmartRent’s website at www.smartrent.com.

Key Operating Metrics(1)

SmartRent set company records for both the quarter and the year for Units Booked and Units Deployed. Units Deployed in the fourth quarter increased 72% to 52,076 from the fourth quarter of 2020. For the full year, Units Deployed increased by 101% to 167,743 from 83,293 in 2020. Total Units Deployed at year-end were 339,485, comprising 322,848 from SmartRent’s customer base and 16,637 units that were part of the iQuue acquisition completed on December 30, 2021.

Units Booked in the fourth quarter of 2021 increased 42% to 84,052 from 59,067 in the fourth quarter of 2020. For the full year, Units Booked increased 94% to 218,106 as compared to 112,555 for 2020. The Units Booked in 2021 had an average SaaS ARPU of $3.82, up 11% from $3.45 in SaaS ARPU for Units Booked in 2020. Growth in SaaS ARPU was primarily driven by the Company’s ability to improve its pricing model with the continued diversification of its customer base.

Bookings, which represent the value of Booked Units from Hardware, Professional Services and Hubs, as well as one year of SaaS, increased 10% for the fourth quarter to approximately $67.6 million and 80% to approximately $170.1 million for the year.

Committed Units in the fourth quarter, including Committed Units acquired with iQuue, increased 5% to 742,429 on a sequential quarter basis and are up 23% since the first quarter of 2021, when the Company began tracking Committed Units as a key performance indicator. In the fourth quarter, aggregate Deployed and Committed Units increased sequentially from the third quarter of 2021 by 11% to 1,081,914, including 22,605 aggregate Deployed and Committed Units gained in the iQuue acquisition.

SmartRent’s customer base grew at a record pace in 2021, both for the fourth quarter and the full year. During the fourth quarter, SmartRent added 31 new customers and gained 19 additional customers through its acquisition of iQuue, bringing SmartRent’s total customer base to 249.

For the year, SmartRent grew its customer base 75%, from 142 customers at the end of 2020. Collectively, the Company’s 249 customers own or operate approximately 4.5 million units.

Recent Business Highlights

In December 2021, SmartRent acquired iQuue, an open-architecture smart apartment company with 16,637 Units Deployed and 5,968 Committed Units primarily located throughout the East Coast. The acquisition provides SmartRent incremental exposure in the new-build multifamily market and expands SmartRent’s presence in the Southeast by adding 19 new customers who own or control approximately 100,000 units. We anticipate iQuue will contribute approximately $2.0 million in annual recurring revenue (ARR) in 2022. The transaction closed on December 30, 2021 and did not contribute to SmartRent’s fourth quarter revenue. Additional details regarding the acquisition are available in the Company’s 2021 Annual Report on Form 10-K.

In January 2022, SmartRent announced the appointment of Brian Roberts as Chief Legal Officer. Mr. Roberts, an experienced public-company executive with over 20 years of corporate legal experience, oversees all legal, corporate governance and compliance matters for the Company.

Balance Sheet and Liquidity

As of December 31, 2021, the Company had $432.6 million in cash on its balance sheet as compared to $38.6 million as of December 31, 2020. The increase in cash reflects the capital raised from SmartRent’s financing and public listing on NYSE in August 2021. The Company ended the year with approximately $95.6 million of deferred revenue on its balance sheet, as compared to approximately $53.5 million at the end of 2020, reflecting growth in the Company’s Deployed Units.

In December 2021, SmartRent entered into a $75.0 million senior secured revolving credit facility with a five-year term and a provision for an incremental $75.0 million subject to certain conditions. The revolving facility was unused as of December 31, 2021. The Company also retired a $4.9 million term loan with its available cash. As of December 31, 2021, the Company has no outstanding debt and approximately $507.6 million in liquidity including availability under its revolving credit facility and cash on the balance sheet.

Financial and Business Outlook

The Company continues to experience strong demand for its smart home enterprise software solutions and is providing guidance for full-year 2022 and the first quarter of 2022.

The estimates presented below represent a range of possible outcomes and may differ materially from actual results. These estimates exclude the impact of potential acquisitions, capital markets activity, and unforeseen potential challenges with supply chain and logistics. The estimates are forward-looking based on the Company’s current assessment of demand for its product, execution capabilities and market conditions, as well as other risks outlined below under the caption “Forward-Looking Statements.”

Full-Year 2022 Guidance

  • Total Revenue of $220 to $250 million.
  • Adjusted EBITDA of $(50) to $(35) million.
  • Units Deployed of 280,000 to 320,000.

Quarter ended March 31, 2022 Guidance

  • Total Revenue of $35 to $37 million.
  • Units Deployed of 46,000 to 48,000.

Definitions of non-GAAP financial measures and the reconciliations to the most directly comparable GAAP measures are provided in subsequent sections of the press release and supplemental schedules. SmartRent has not provided a reconciliation of forward-looking Adjusted EBITDA, including certain components of the forward-looking reconciliation to the most directly comparable GAAP financial measures, due primarily to variability and difficulty in making accurate forecasts and projections of non-operating matters that may arise, as not all of the information necessary for a quantitative reconciliation is available to SmartRent without unreasonable effort. For the same reasons, SmartRent is unable to address the probable significance of the information.

Conference Call Information

SmartRent is hosting a conference call today, March 24, 2022, at 5 p.m. ET to discuss its fourth quarter and full-year 2021 financial results. To join the call, dial 1-877-407-3982 in the USA or Canada, or 1-201-493-6780 if dialing in internationally. The passcode for the conference call is 13726960.

Following the call’s conclusion, a webcast of the call will be posted on the Events and Presentations section of SmartRent’s website.

About SmartRent

Founded in 2017, SmartRent (NYSE: SMRT) is an enterprise smart home and smart building technology platform for property owners, managers, developers, homebuilders and residents. The SmartRent solution is designed to provide property managers with seamless visibility and control over all their assets while delivering cost savings and additional revenue opportunities through all-in-one home control offerings for residents. For more information, please visit smartrent.com.

Forward-Looking Statements

This press release contains forward-looking statements which address the Company’s expected future business and financial performance, and may contain words such as “goal,” “target,” “future,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “project,” “may,” “should,” “will” or similar expressions. Examples of forward-looking statements include, among others, statements regarding the benefits of the Company’s strategic acquisitions, changes in the market for our products and services, expected financial results, product portfolio enhancements, expansion plans and opportunities and earnings guidance related to 2022 financial and operational metrics. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, among other things, our ability to: (1) execute our business strategy within the smart home technology industry; (2) expand our products and solutions to meet the demands of the market; (3) meet legal obligations, including laws and regulations related to security and privacy; (4) prevent unauthorized or inadvertent access to our information technology systems and customer or resident data; (5) successfully manage the competitiveness of our market and pricing levels of our competitors; (6) hire, retain, manage and motivate employees, including key personnel; (7) successfully manage and ensure that our suppliers produce or obtain quality products and services on a timely basis or in sufficient quantity; (8) successfully manage interruptions to, or other problems with, our website and interactive user interface, information technology systems, manufacturing processes or other operations; (9) successfully identify, acquire, and integrate quality acquisition targets; (10) successfully resolve legal proceedings, recall claims, and governmental inquiries; (11) acquire and protect our intellectual property and acquire or make investments in other businesses, patents, technologies, products or services to grow the business; (12) comply with laws and regulations applicable to our business, including developments in state and local regulations; (13) fuel growth and accelerate the adoption of our products and services; (14) develop, design, and sell services that are differentiated from those of competitors; (15) manage risks associated with product liability, warranty, personal injury, property damage and recall matters; and (16) successfully deploy the proceeds from the business combination we completed last year. The forward-looking statements herein represent the judgment of the Company, as of the date of this release, and SmartRent disclaims any intent or obligation to update forward-looking statements. This press release should be read in conjunction with the information included in the Company’s other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand the Company’s reported financial results and our business outlook for future periods.

Use of Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with GAAP, SmartRent also discloses certain non-GAAP financial measures in this press release. These financial measures are not recognized measures under GAAP and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. EBITDA and Adjusted EBITDA are non-GAAP financial measures as defined by SEC rules. These non-GAAP financial measures, as defined below by SmartRent, may be determined or calculated differently by other companies. Reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements have been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliations.

As detailed in the reconciliations, the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income or loss. EBITDA and Adjusted EBITDA are not used as measures of SmartRent’s liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP.

SmartRent’s management uses EBITDA and Adjusted EBITDA in a number of ways to assess the Company’s financial and operating performance and believes that these measures provide useful information to investors regarding financial and business trends related to SmartRent’s results of operations. EBITDA and Adjusted EBITDA are also used to identify certain expenses and make decisions designed to help SmartRent meet its current financial goals and optimize its financial performance, while neutralizing the impact of expenses included in its operating results which could otherwise mask underlying trends in its business. SmartRent’s management believes that investors are provided with a more meaningful understanding of SmartRent’s ongoing operating performance when non-GAAP financial information is viewed with GAAP financial information.

(1) Key Operating Metrics Defined

SmartRent regularly monitors several operating and financial metrics including the following non-GAAP financial measures which the Company believes are key measures of its growth, to evaluate its operating performance, identify trends affecting its business, formulate business plans, measure its progress, and make strategic decisions. The Company’s Key Operating Metrics may not provide accurate predictions of future GAAP financial results.

Units Deployed is defined as the aggregate number of SmartHubs that have been installed (also including customer self-installations) as of a stated measurement date. The Company uses this operating metric to assess the general health and trajectory of its business growth.

New Units Deployed is defined as the aggregate number of SmartHubs that have been installed (also including customer self-installations) during a stated measurement period. The Company uses this operating metric to assess the general health and trajectory of its business growth.

Committed Units is defined as the aggregate number of SmartHub units that are subject to binding orders from customers together with units that existing customers who are parties to a SmartRent master services agreement have informed us (on a non-binding basis) that they intend to order in the future for deployment within two years of the measurement date. The Company tracks the number of Committed Units to assess the general health and trajectory of its business and to assist in its longer-term resource analysis.

Units Booked is defined as the aggregate number of SmartHubs associated with binding orders executed during a stated measurement period. The Company utilizes the concept of Units Booked to measure estimated near-term resource demand and the resulting approximate range of post-delivery revenue that it will earn and record. Units Booked represent binding orders only and accordingly are a subset of Committed Units.

Annual Recurring Revenue (“ARR”) is defined as the annualized value of our recurring SaaS revenue earned in the current quarter.

EBITDA and Adjusted EBITDA: We define EBITDA as net income or loss computed in accordance with GAAP before the following items: interest expense, income tax expense and depreciation and amortization. We define Adjusted EBITDA as EBITDA before the following items: stock-based compensation expense, non-employee warrant expense, loss on extinguishment of debt, change in fair value of derivatives, unrealized gains and losses in currency exchange rates, and warranty provisions for battery deficiencies. Management uses EBITDA and Adjusted EBITDA to identify certain expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance, while neutralizing the impact of expenses included in our operating results which could otherwise mask underlying trends in our business. See “Use of Non-GAAP Financial Measures” for additional information and reconciliation of these measures.

SMARTRENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

For the quarters ended December 31,

For the years ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

Hardware

$

21,177

 

$

8,022

 

$

69,629

 

$

31,978

 

Professional services

 

7,387

 

 

2,746

 

 

22,732

 

 

12,304

 

Hosted services

 

6,104

 

 

2,833

 

 

18,276

 

 

8,252

 

Total revenue

 

34,668

 

 

13,601

 

 

110,637

 

 

52,534

 

 

Cost of revenue

Hardware

 

21,226

 

 

10,234

 

 

70,448

 

 

35,225

 

Professional services

 

12,340

 

 

4,585

 

 

38,189

 

 

16,176

 

Hosted services

 

4,256

 

 

1,695

 

 

12,073

 

 

5,430

 

Total cost of revenue

 

37,822

 

 

16,514

 

 

120,710

 

 

56,831

 

 

Operating expense

Research and development

 

7,515

 

 

2,765

 

 

21,572

 

 

9,406

 

Sales and marketing

 

4,923

 

 

1,381

 

 

14,017

 

 

5,429

 

General and administrative

 

10,317

 

 

3,825

 

 

25,990

 

 

16,584

 

Total operating expense

 

22,755

 

 

7,971

 

 

61,579

 

 

31,419

 

 

Loss from operations

 

(25,909

)

 

(10,884

)

 

(71,652

)

 

(35,716

)

 

Interest expense, net

 

(50

)

 

(49

)

 

(249

)

 

(559

)

Other income (expense), net

 

(14

)

 

224

 

 

55

 

 

(685

)

Loss before income taxes

 

(25,973

)

 

(10,709

)

 

(71,846

)

 

(36,960

)

 

Provision for income taxes

 

(15

)

 

(21

)

 

115

 

 

149

 

Net loss

 

(25,958

)

 

(10,688

)

 

(71,961

)

 

(37,109

)

Other comprehensive loss

Foreign currency translation adjustment

 

(92

)

 

103

 

 

(226

)

 

235

 

Comprehensive loss

$

(26,050

)

$

(10,585

)

$

(72,187

)

$

(36,874

)

Net loss per common share

Basic and diluted

$

(0.13

)

$

(1.03

)

$

(0.96

)

$

(4.32

)

Weighted-average number of shares used in computing net loss per share

Basic and diluted

 

192,053

 

 

10,378

 

 

74,721

 

 

8,598

 

SMARTRENT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

 

 

 

December 31, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

430,841

 

 

$

38,618

 

Restricted cash, current portion

 

 

1,268

 

 

 

 

Accounts receivable, net

 

 

45,486

 

 

 

20,787

 

Inventory

 

 

33,208

 

 

 

17,628

 

Deferred cost of revenue, current portion

 

 

7,835

 

 

 

6,782

 

Prepaid expenses and other current assets

 

 

17,369

 

 

 

3,840

 

Total current assets

 

 

536,007

 

 

 

87,655

 

Property and equipment, net

 

 

1,874

 

 

 

847

 

Deferred cost of revenue

 

 

18,334

 

 

 

10,072

 

Goodwill

 

 

12,666

 

 

 

4,162

 

Other long-term assets

 

 

10,802

 

 

 

1,113

 

Total assets

 

$

579,683

 

 

$

103,849

 

 

 

 

 

 

 

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

6,149

 

 

$

2,275

 

Accrued expenses and other current liabilities

 

 

22,234

 

 

 

9,555

 

Deferred revenue, current portion

 

 

42,185

 

 

 

19,348

 

Current portion of long-term debt

 

 

 

 

 

1,651

 

Total current liabilities

 

 

70,568

 

 

 

32,829

 

Long-term debt, net

 

 

 

 

 

3,169

 

Deferred revenue

 

 

53,412

 

 

 

34,153

 

Other long-term liabilities

 

 

6,201

 

 

 

516

 

Total liabilities

 

 

130,181

 

 

 

70,667

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value; 50,000 and 105,995 shares authorized as of December 31, 2021 and December 31, 2020; no shares of preferred stock issued and outstanding as of December 31, 2021; 104,822 shares issued and outstanding as of December 31, 2020.

 

 

 

 

 

111,432

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit)

 

 

 

 

 

 

Common stock, $0.0001 par value; 500,000 and 140,595 shares authorized as of December 31, 2021 and December 31, 2020; 193,864 and 10,376 shares issued and outstanding as of December 31, 2021 and December 31, 2020

 

 

19

 

 

 

 

Additional paid-in capital

 

 

604,077

 

 

 

4,157

 

Accumulated deficit

 

 

(154,603

)

 

 

(82,642

)

Accumulated other comprehensive income

 

 

9

 

 

 

235

 

Total stockholders’ equity (deficit)

 

 

449,502

 

 

 

(78,250

)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

 

$

579,683

 

 

$

103,849

 

SMARTRENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

For the years ended December 31,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(71,961

)

 

$

(37,109

)

Adjustments to reconcile net loss to net cash used by operating activities

 

 

 

 

 

 

Depreciation and amortization

 

 

463

 

 

 

295

 

Amortization of debt discount

 

 

14

 

 

 

8

 

Non-employee warrant expense

 

 

931

 

 

 

481

 

Provision for warranty expense

 

 

7,634

 

 

 

3,370

 

Loss on extinguishment of debt

 

 

27

 

 

 

164

 

Non-cash lease expense

 

 

621

 

 

 

461

 

Stock-based compensation related to acquisition

 

 

812

 

 

 

707

 

Stock-based compensation

 

 

7,319

 

 

 

1,052

 

Compensation expense related to acquisition

 

 

 

 

 

3,353

 

Non-cash interest expense

 

 

11

 

 

 

100

 

Provision for excess and obsolete inventory

 

 

(39

)

 

 

778

 

Provision for doubtful accounts

 

 

226

 

 

 

512

 

Change in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

(23,969

)

 

 

(13,526

)

Inventory

 

 

(15,778

)

 

 

(11,090

)

Deferred cost of revenue

 

 

(9,315

)

 

 

(8,584

)

Prepaid expenses and other assets

 

 

(11,284

)

 

 

1,014

 

Accounts payable

 

 

3,811

 

 

 

(72

)

Accrued expenses and other liabilities

 

 

1,605

 

 

 

(3,209

)

Deferred revenue

 

 

38,945

 

 

 

32,841

 

Lease liabilities

 

 

(449

)

 

 

(36

)

Net cash used in operating activities

 

 

(70,376

)

 

 

(28,490

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Payments for Zenith acquisition, net of cash acquired

 

 

 

 

 

(2,382

)

Payments for iQuue acquisition, net of cash acquired

 

 

(5,902

)

 

 

 

Purchase of property and equipment

 

 

(1,471

)

 

 

(298

)

Payment for loan receivable

 

 

(2,000

)

 

 

 

Net cash used in investing activities

 

 

(9,373

)

 

 

(2,680

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from revolving line of credit

 

 

 

 

 

7,179

 

Payments on revolving line of credit

 

 

 

 

 

(11,981

)

Payments on term loan

 

 

(4,861

)

 

 

(139

)

Payments of senior revolving facility transaction costs

 

 

(658

)

 

 

 

Payments on note payable related to acquisition

 

 

 

 

 

(4,327

)

Proceeds from warrant exercise

 

 

5

 

 

 

 

Proceeds from convertible notes

 

 

 

 

 

50

 

Convertible preferred stock issued

 

 

35,000

 

 

 

57,500

 

Payments of convertible preferred stock transaction costs

 

 

(207

)

 

 

(61

)

Proceeds from business combination and private offering

 

 

500,628

 

 

 

 

Payments of business combination and private offering transaction costs

 

 

(55,981

)

 

 

 

Net cash provided by financing activities

 

 

473,926

 

 

 

48,221

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(191

)

 

 

143

 

Net increase in cash, cash equivalents, and restricted cash

 

 

393,986

 

 

 

17,194

 

Cash, cash equivalents, and restricted cash – beginning of period

 

 

38,618

 

 

 

21,424

 

Cash, cash equivalents, and restricted cash – end of period

 

$

432,604

 

 

$

38,618

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets

 

 

 

 

 

 

Cash and cash equivalents

 

$

430,841

 

 

$

38,618

 

Restricted cash, current portion

 

 

1,268

 

 

 

 

Restricted cash, included in other long-term assets

 

 

495

 

 

 

 

Total cash, cash equivalents, and restricted cash

 

$

432,604

 

 

$

38,618

 

SMARTRENT, INC.

RECONCILIATION OF NON-GAAP MEASURES

(In thousands)

 

 

Years ended December 31,

 

 

2021

 

 

2020

 

Net loss

$

(71,961

)

 

$

(37,109

)

Interest expense, net

 

249

 

 

 

559

 

Provision for income taxes

 

115

 

 

 

149

 

Depreciation and amortization

 

463

 

 

 

295

 

EBITDA

 

(71,134

)

 

 

(36,106

)

Stock-based compensation

 

8,131

 

 

 

1,759

 

Non-employee warrant expense

 

931

 

 

 

481

 

Loss on extinguishment of debt

 

27

 

 

 

164

 

Loss on change in exchange rates

 

 

 

 

470

 

Compensation expense in connection with Zenith acquisition

 

 

 

 

3,353

 

Warranty provision for battery deficiencies

 

6,430

 

 

 

3,200

 

Adjusted EBITDA

$

(55,615

)

 

$

(26,679

)

 

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Why Tesla Soared as Other Automakers Struggled to Make Cars

For much of last year, established automakers like General Motors and Ford Motor operated in a different reality from Tesla, the electric car company.

G.M. and Ford closed one factory after another — sometimes for months on end — because of a shortage of computer chips, leaving dealer lots bare and sending car prices zooming. Yet Tesla racked up record sales quarter after quarter and ended the year having sold nearly twice as many vehicles as it did in 2020 unhindered by an industrywide crisis.

Tesla’s ability to conjure up critical components has a greater significance than one year’s car sales. It suggests that the company, and possibly other young electric car businesses, could threaten the dominance of giants like Volkswagen and G.M. sooner and more forcefully than most industry executives and policymakers realize. That would help the effort to reduce the emissions that are causing climate change by displacing more gasoline-powered cars sooner. But it could hurt the millions of workers, thousands of suppliers and numerous local and national governments that rely on traditional auto production for jobs, business and tax revenue.

Tesla and its enigmatic chief executive, Elon Musk, have said little about how the carmaker ran circles around the rest of the auto industry. Now it’s becoming clear that the company simply had a superior command of technology and its own supply chain. Tesla appeared to better forecast demand than businesses that produce many more cars than it does. Other automakers were surprised by how quickly the car market recovered from a steep drop early in the pandemic and had simply not ordered enough chips and parts fast enough.

G.M. and Stellantis, the company formed from the merger of Fiat Chrysler and Peugeot, all sold fewer cars in 2021 than they did in 2020.

Tesla’s production and supply problems made it an industry laughingstock. Many of the manufacturing snafus stemmed from Mr. Musk’s insistence that the company make many parts itself.

Other car companies have realized that they need to do some of what Mr. Musk and Tesla have been doing all along and are in the process of taking control of their onboard computer systems.

Mercedes, for example, plans to use fewer specialized chips in coming models and more standardized semiconductors, and to write its own software, said Markus Schäfer, a member of the German carmaker’s management board who oversees procurement.

traced to the outbreak of Covid-19, which triggered an economic slowdown, mass layoffs and a halt to production. Here’s what happened next:

It also helps that Tesla is a much smaller company than Volkswagen and Toyota, which in a good year produce more than 10 million vehicles each. “It’s just a smaller supply chain to begin with,” said Mr. Melsert, who is now chief executive of American Battery Technology Company, a recycling and mining firm.

recall more than 475,000 cars for two separate defects. One could cause the rearview camera to fail, and the other could cause the front hood to open unexpectedly. And federal regulators are investigating the safety of Tesla’s Autopilot system, which can accelerate, brake and steer a car on its own.

“Tesla will continue to grow,” said Stephen Beck, managing partner at cg42, a management consulting firm in New York. “But they are facing more competition than they ever have, and the competition is getting stronger.”

The carmaker’s fundamental advantage, which allowed it to sail through the chip crisis, will remain, however. Tesla builds nothing but electric vehicles and is unencumbered by habits and procedures that have been rendered obsolete by new technology. “Tesla started from a clean sheet of paper,” Mr. Amsrud said.

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F.T.C. Sues to Block Nvidia’s Takeover of Arm

WASHINGTON — The Federal Trade Commission on Thursday sued to block Nvidia’s $40 billion acquisition of a fellow chip company, Arm, halting what would be the biggest semiconductor industry deal in history, as federal regulators push to rein in corporate consolidation.

The F.T.C. said the deal between Nvidia, which makes chips, and Arm, which licenses chip technology, would stifle competition and harm consumers. The proposed deal would give Nvidia control over computing technology and designs that rival firms rely on to develop competing chips.

“Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets,” said Holly Vedova, the director of the F.T.C.’s competition bureau. “This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”

Federal antitrust regulators have promised greater scrutiny of mergers and a clamp down on monopolies in a push to reinvigorate competition in the economy. The action against the deal is the first major merger decision by the Federal Trade Commission under the leadership of Lina Khan, a critic of big corporate mergers and monopolies in technology. Ms. Khan is among a slew of top antitrust officials picked by President Biden to rein in the power of Silicon Valley giants.

promised to break open gas, telecom and pharmaceutical markets to bring down consumer prices at the gas pump and for home internet and prescriptions. Last month, the Justice Department sued to stop Penguin Random House, the largest publisher in the United States, from acquiring its rival Simon & Schuster.

In a statement, Nvidia said it would contest the F.T.C. lawsuit. “We will continue to work to demonstrate that this transaction will benefit the industry and promote competition.”

The F.T.C. suit, if successful, would not have much immediate financial impact on Nvidia or Arm. Shares in Nvidia rose slightly in aftermarket trading.

But a successful suit would be a blow to Nvidia’s ambitions to play a more central role in shaping the direction of the computer industry — particularly in the field of artificial intelligence.

Arm, a British company that the Japanese conglomerate SoftBank bought in 2016, licenses designs for microprocessors and other technology that other companies use in their semiconductors. Its technology has been wildly successful, providing the calculating functions in essentially all smartphones and many other devices. Arm recently estimated its technology is used in about 25 billion chips per year.

Nvidia, based in California, is a dominant provider of chips used to render graphics in video games, technology it has adapted in recent years to also power artificial-intelligence applications used by cloud companies and self-driving cars.

Jensen Huang, the company’s chief executive, has been pushing the company to become a broader, “full-stack” provider of computing technology. In April, for example, Nvidia said it was building an Arm-based microprocessor for servers used in data centers.

In announcing the deal in September 2020 to buy Arm, Mr. Huang said the combination would create a premier company for advancing A.I. technology. He also promised to operate Arm without any change to its business model, acting independently and treating all chip customers fairly.

Mr. Huang said at the time that artificial intelligence would set off a new wave of computing and that “our combination will create a company fabulously positioned for the age of A.I.”

But the deal was controversial from the start, with some of Arm’s big customers, like Qualcomm, worried about the heightened competition from Nvidia and the possibility of a rival gaining access to their confidential information. Mr. Huang took a dig at Qualcomm’s new chief executive, Cristiano Amon, at an annual dinner hosted by the Semiconductor Industry Association last month in Silicon Valley, asking, “How is it possible that Cristiano knew every regulator on the planet?”

The deal had already attracted close scrutiny from regulators in Europe, particularly in the United Kingdom, where Arm’s headquarters in Cambridge is a major employer. Britain’s Competition and Markets Authority launched an in-depth inquiry into the transaction in November, citing both competition and national-security concerns.

The F.T.C. said the merger would give Nvidia access to sensitive information about its rivals, who license technology and designs from Arm.

“Licensees rely on Arm for support in developing, designing, testing, debugging, troubleshooting, maintaining and improving their products,” the F.T.C. said in a statement. “Arm licensees share their competitively sensitive information with Arm because Arm is a neutral partner, not a rival chip maker. The acquisition is likely to result in a critical loss of trust in Arm and its ecosystem.”

The vote to block the merger was unanimous among the F.T.C.’s commissioners. The full complaint filed by the agency is not expected to be released for a few days. An administrative trial for the lawsuit is scheduled for May 10.

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Google Wants to Work With the Pentagon Again, Despite Employee Concerns

Three years after an employee revolt forced Google to abandon work on a Pentagon program that used artificial intelligence, the company is aggressively pursuing a major contract to provide its technology to the military.

The company’s plan to land the potentially lucrative contract, known as the Joint Warfighting Cloud Capability, could raise a furor among its outspoken work force and test the resolve of management to resist employee demands.

In 2018, thousands of Google employees signed a letter protesting the company’s involvement in Project Maven, a military program that uses artificial intelligence to interpret video images and could be used to refine the targeting of drone strikes. Google management caved and agreed to not renew the contract once it expired.

The outcry led Google to create guidelines for the ethical use of artificial intelligence, which prohibit the use of its technology for weapons or surveillance, and hastened a shake-up of its cloud computing business. Now, as Google positions cloud computing as a key part of its future, the bid for the new Pentagon contract could test the boundaries of those A.I. principles, which have set it apart from other tech giants that routinely seek military and intelligence work.

contract with Microsoft that was canceled this summer amid a lengthy legal battle with Amazon. Google did not compete against Microsoft for that contract after the uproar over Project Maven.

The Pentagon’s restart of its cloud computing project has given Google a chance to jump back into the bidding, and the company has raced to prepare a proposal to present to Defense officials, according to four people familiar with the matter who were not authorized to speak publicly. In September, Google’s cloud unit made it a priority, declaring an emergency “Code Yellow,” an internal designation of importance that allowed the company to pull engineers off other assignments and focus them on the military project, two of those people said.

On Tuesday, the Google cloud unit’s chief executive, Thomas Kurian, met with Charles Q. Brown, Jr., the chief of staff of the Air Force, and other top Pentagon officials to make the case for his company, two people said.

Google, in a written statement, said it is “firmly committed to serving our public sector customers” including the Defense Department, and that it “will evaluate any future bid opportunities accordingly.”

The contract replaces the now-scrapped Joint Enterprise Defense Infrastructure, or JEDI, the Pentagon cloud computing contract that was estimated to be worth $10 billion over 10 years. The exact size of the new contract is unknown, although it is half the duration and will be awarded to more than one company, not to a single provider like JEDI.

Project Maven in 2017 and prepared to bid for JEDI. Many Google employees believed Project Maven represented a potentially lethal use of artificial intelligence, and more than 4,000 workers signed a letter demanding that Google withdraw from the project.

Soon after, Google announced a set of ethical principles that would govern its use of artificial intelligence. Google would not allow its A.I. to be used for weapons or surveillance, said Sundar Pichai, its chief executive, but would continue to accept military contracts for cybersecurity and search-and-rescue.

weapons or those that direct injury.”

Lucy Suchman, a professor of anthropology of science and technology at Lancaster University whose research focuses on the use of technology in war, said that with so much money at stake, it is no surprise Google might waver on its commitment.

“It demonstrates the fragility of Google’s commitment to staying outside the major merger that’s happening between the D.O.D. and Silicon Valley,” Ms. Suchman said.

Google’s efforts come as its employees are already pushing the company to cancel a cloud computing contract with the Israeli military, called Project Nimbus, that provides Google’s services to government entities throughout Israel. In an open letter published last month by The Guardian, Google employees called on their employer to cancel the contract.

The Defense Department’s effort to transition to cloud technology has been mired in legal battles. The military operates on outdated computer systems and has spent billions of dollars on modernization. It turned to U.S. internet giants in the hope that the companies could quickly and securely move the Defense Department to the cloud.

awarded the JEDI contract to Microsoft. Amazon sued to block the contract, claiming that Microsoft did not have the technical capabilities to fulfill the military’s needs and that former President Donald J. Trump had improperly influenced the decision because of animosity toward Jeff Bezos, Amazon’s executive chairman and the owner of The Washington Post.

In July, the Defense Department announced that it could no longer wait for the legal fight with Amazon to resolve. It scrapped the JEDI contract and said it would be replaced with the Joint Warfighting Cloud Capability.

The Pentagon also noted that Amazon and Microsoft were the only companies that likely had the technology to meet its needs, but said it would conduct market research before ruling out other competitors. The Defense Department said it planned to reach out to Google, Oracle and IBM.

But Google executives believe they have the capability to compete for the new contract, and the company expects the Defense Department to tell it whether it will qualify to make a bid in the coming weeks, two people familiar with the matter said.

The Defense Department has previously said it hopes to award a contract by April.

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What Ever Happened to IBM’s Watson?

IBM insists that its revised A.I. strategy — a pared-down, less world-changing ambition — is working. The job of reviving growth was handed to Arvind Krishna, a computer scientist who became chief executive last year, after leading the recent overhaul of IBM’s cloud and A.I. businesses.

But the grand visions of the past are gone. Today, instead of being a shorthand for technological prowess, Watson stands out as a sobering example of the pitfalls of technological hype and hubris around A.I.

The march of artificial intelligence through the mainstream economy, it turns out, will be more step-by-step evolution than cataclysmic revolution.

Time and again during its 110-year history, IBM has ushered in new technology and sold it to corporations. The company so dominated the market for mainframe computers that it was the target of a federal antitrust case. PC sales really took off after IBM entered the market in 1981, endorsing the small machines as essential tools in corporate offices. In the 1990s, IBM helped its traditional corporate customers adapt to the internet.

IBM executives came to see A.I. as the next wave to ride.

Mr. Ferrucci first pitched the idea of Watson to his bosses at IBM’s research labs in 2006. He thought building a computer to tackle a question-answer game could push science ahead in the A.I. field known as natural language processing, in which scientists program computers to recognize and analyze words. Another research goal was to advance techniques for automated question answering.

After overcoming initial skepticism, Mr. Ferrucci assembled a team of scientists — eventually more than two dozen — who worked out of the company’s lab in Yorktown Heights, N.Y., about 20 miles north of IBM’s headquarters in Armonk.

The Watson they built was a room-size supercomputer with thousands of processors running millions of lines of code. Its storage disks were filled with digitized reference works, Wikipedia entries and electronic books. Computing intelligence is a brute force affair, and the hulking machine required 85,000 watts of power. The human brain, by contrast, runs on the equivalent of 20 watts.

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Going to the Moon via the Cloud

Before the widespread availability of this kind of computing, organizations built expensive prototypes to test their designs. “We actually went and built a full-scale prototype, and ran it to the end of life before we deployed it in the field,” said Brandon Haugh, a core-design engineer, referring to a nuclear reactor he worked on with the U.S. Navy. “That was a 20-year, multibillion dollar test.”

Today, Mr. Haugh is the director of modeling and simulation at the California-based nuclear engineering start-up Kairos Power, where he hones the design for affordable and safe reactors that Kairos hopes will help speed the world’s transition to clean energy.

Nuclear energy has long been regarded as one of the best options for zero-carbon electricity production — except for its prohibitive cost. But Kairos Power’s advanced reactors are being designed to produce power at costs that are competitive with natural gas.

“The democratization of high-performance computing has now come all the way down to the start-up, enabling companies like ours to rapidly iterate and move from concept to field deployment in record time,” Mr. Haugh said.

But high-performance computing in the cloud also has created new challenges.

In the last few years, there has been a proliferation of custom computer chips purposely built for specific types of mathematical problems. Similarly, there are now different types of memory and networking configurations within high-performance computing. And the different cloud providers have different specializations; one may be better at computational fluid dynamics while another is better at structural analysis.

The challenge, then, is picking the right configuration and getting the capacity when you need it — because demand has risen sharply. And while scientists and engineers are experts in their domains, they aren’t necessarily in server configurations, processors and the like.

This has given rise to a new kind of specialization — experts in high-performance cloud computing — and new cross-cloud platforms that act as one-stop shops where companies can pick the right combination of software and hardware. Rescale, which works closely with all the major cloud providers, is the dominant company in this field. It matches computing problems for businesses, like Firefly and Kairos, with the right cloud provider to deliver computing that scientists and engineers can use to solve problems faster or at lowest possible cost.

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