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For two decades IBM has run the same playbook. It sells low-margin businesses, slashes expenses, buys some profitable software companies, and returns a lot of cash to investors. Over the past four quarters, the $152 billion company has spent more than $23 billion on dividends and buybacks.

The snag is that IBM is investing too little. Big Blue has only spent about $11 billion over the past four quarters in total on R&D, capital expenditure and acquisitions. That's a problem in tech, where old products soon become obsolete. While Google spends about 16 percent of its sales on R&D, IBM spends 6 percent.

The effect is becoming clear on the top line. Revenue has shrunk for 10 quarters in a row. Costs have been cut to the bone, sending customers fleeing to better service providers. In a good year for stocks, IBM shares have fallen more than 15 percent. That means IBM has overpaid on its last three years of buybacks.

That has spurred talk of activists. But what could rabble-rousing shareholders demand? Unlike Yahoo there's no obvious gem to dispose of or cash-laden balance sheet to raid. IBM has been selling off hardware, like last quarter's disposal of the chip division, lessening the appeal of an HP-style breakup. IBM hasn't done any big acquisitions recently, so an activist can't argue it is wasting capital like HP, which wrote off three-quarters of the $12 billion it paid for Autonomy. And year after year of punishing cost cuts leave no obvious fat to cut.

A better idea is to invest more in the business. Assume IBM repurchases $10 billion of stock next year. Bought back at current rates, that would result in a 7 percent increase in earnings per share. Meanwhile, IBM's pre-tax return on its business assets is 22 percent. Diverting that $10 billion into the business could result in more than $2 billion of pre-tax profit. Put this on IBM's low 20 percent tax rate and the result is more than a 12 percent increase in earnings per share.

IBM's focus on financial, rather than product, engineering has caused low employee morale, falling sales and shareholder dissatisfaction. It's time to invest.

CONTEXT NEWS

- IBM's revenue shrank by 4 percent in the third quarter of 2014 compared to the same period a year earlier. That is the 10th consecutive quarter revenue has declined.

Bank M&A: small is beautiful

Deals should be small and focused, rather than ‘transformational’

This year’s bonus letters have barely been printed, but merger and acquisition bankers will already be thinking about next year’s payouts. And where better to start than their own sector? Pickings have been thin in recent years. In 2007, there were more than 1,000 deals in the global banking sector worth a total of over $443bn, says Dealogic. In 2014, the deal value shrunk to less than $120bn. Europe has been particularly slow — in 2007 it accounted for more than 60 per cent of deals by value. This year that proportion has fallen to just 31 per cent.

But the M&A bankers might do well to target Europe as they set their strategies for 2015. The eurozone’s banks now have a common regulator, the European Central Bank. That, combined with the balance sheet review and stress tests completed in October, make the regulatory backdrop firmer. And the banks need to improve their returns — Morgan Stanley expects Europe’s banking sector to make a return on tangible equity of just 10.5 per cent in 2015. There’s no revenue growth to push that up, so any improvement will have to come from lower costs. Dealmaking is one way to achieve that.

All set for a bumper year of deals then? Don’t bank on it. Cross border M&A is likely to be thin. The shadows cast by failed deals from the boom years (ABN Amro, anyone?) are long. Pity the chief executive who tries to pitch a “transformational” deal to investors who have just finished recapitalising their bank. Spain’s Santander, traditionally active in M&A, was quick to squash rumours in November that it might be interested in troubled Italian lender Monte dei Paschi di Siena.

There will be pockets of dealmaking though. In-country consolidation will be one source. It is a must in Italy, and is also possible among the smaller German banks. There may also be more deals in Spain, where last year Caixabank bought much of Barclays’ local business for €800m. And the UK’s challenger banks need scale if they are going to take on the big boys.

Elsewhere, expect infill deals as banks add skills. This month Spain’s BBVA bought Madiva Soluciones, a “big data” specialist. Focused, small deals of this sort, which add capital light businesses or specific skills, should please shareholders, even if they won’t have advisers reaching for the champagne next December.

M&A bid battles face scrutiny in run-up to UK general election

The UK general election in May looms large over all British deals this year, with dealmakers braced for heightened political sensitivity and scrutiny of bid battles in the run-up to the vote.

How companies navigate the political landscape with political parties jostling for control of parliament will be an important factor in whether 2015 can outpace the $224bn in UK deals targeted at UK companies last year.

The greatest attention is likely to be paid to transactions involving well-known consumer brands and to those corporates that are big employers in the UK, say dealmakers. At least one big global bank is forecasting that large-cap UK M&A will slow dramatically until after the election.

Roger Barron, corporate partner at Linklaters, says the reason for the greater examination of deals is that since the crisis in 2008 politics and business have become more intertwined. “The flipside is that people are already prepared to work with the scrutiny and are looking to do the right sorts of deals,” he says.

Takeovers in the UK often invoke greater public passion in part because the country has fewer tools than other large economies such as the US or China to block takeovers from overseas bidders and review large M&A deals after they have been agreed.

That pre-emptive force was best seen last year when US drugmaker Pfizer launched a $120bn bid to acquire AstraZeneca, a UK-based rival.

Ian Read, Pfizer’s chief executive, penned a public letter to UK Prime Minister David Cameron and then faced two days of parliamentary hearings to address concerns about the potential deal’s impact on UK jobs, manufacturing and funding for scientific research.

Those promises included keeping at least 20 per cent of the combined group’s total research and development workforce in the UK, and completing the construction of AstraZeneca’s planned research and development hub in Cambridge.

However, shareholders and others questioned whether those promises were binding under the rules governing public takeovers in the UK even after the bid failed.

In depth

UK general election

The UK’s main political parties are facing the prospect of a close and unpredictable national poll on May 7 as they struggle to address the march of the populists

Further reading

In response, Vince Cable, the business secretary, said he would seek new regulations to bind companies to promises made during takeover negotiations. The self-regulatory body that polices UK takeovers subsequently responded by strengthening its rules to distinguish between undertakings and intentions made in deal talks.

Patrick Sarch, M&A partner at Clifford Chance, says: “As we approach the UK general election, any parties considering a major M&A transaction will need to consider the political and media dimensions.”

He adds: “As we have seen in recent years, there can be particular sensitivity to overseas acquisitions of UK household names and bidders have done what they can to address the concerns of politicians, media, employees and customers.”

That could affect a number mooted deals from the beverage industry — where investors are watching closely to see if global beer giant AB InBev makes an approach for London and Johannesburg-listed rival SABMiller — to the pharmaceuticals sector where some analysts believe Pfizer may return for a takeover of AstraZeneca or possibly GlaxoSmithKline.

The tensions surrounding a cross-border deal involving a well-known British company were exemplified by the fallout of Kraft’s takeover of the UK confectioner Cadbury in 2010, just after the last UK election. The US snack foods group faced a backlash from politicians after closing a plant it had pledged to keep open during the deal talks.

Guy Norman, global head of corporate at Clifford Chance, says the prospects of no outright winner in this year’s election could add greater uncertainty for acquirers and lead to a pause in dealmaking until the outcome becomes more clear.

“There is the possibility of a UK exit from the European Union if the Conservatives hold the balance of power; and less business-friendly policies around taxation and investment may be around the corner,” he says.

In the largely forgotten deserts of Baluchistan that straddle the Iran-Pakistan border, covert wars are underway that could have far reaching consequences.

TURBAT, Pakistan—Something fell out of the sky near Arif Saleem’s home at 5:20 a.m. on Nov. 25, 2013. He scrambled outside to find a 25-foot-wide crater just beyond the mud wall surrounding his family compound. The strike was one of three, in quick succession, that morning in the village of Kulahu, in Pakistani Baluchistan, 45 miles east of the Iran border. One of the blasts damaged the local mosque. Pages from the Quran fluttered in the air before landing gently on the rubble.

The next day, Saleem made the 30-mile trip east to Turbat, the administrative center of his small district in southwestern Pakistan. “They refused to register a case, saying the matter is out of their hands,” he told me.

With few legitimate industries or development assistance from the central government, Turbat is a derelict city prickling with militants. Most of the area’s inhabitants grind out a living as subsistence farmers or cross-border smugglers, shuttling everything from cement and diesel to Afghan opium between Pakistan and Iran. There are few paved roads, and at the airport, soldiers outnumber travelers.

It is also the epicenter of a war being waged by the Shiite regime in Iran against a shadowy group of Sunni Baluch jihadis.

Already involved in the fight against the Islamic State in Syria and neighboring Iraq, Iran is now increasingly worried about the threat from Sunni militants on its eastern border with Pakistan, who get backing, it claims, from the United States and Saudi Arabia. Although rarely mentioned in public, persuading Iran to budge on issues like its nuclear program may well depend on addressing what it now sees as a multi-faceted, global attack on it by Sunni jihadis.

On Sept. 9, those jihadists detonated a massive car bomb at an Iranian military base near the border, clearing a path for 70 fighters to stream in. According to a statement from the Iranian Revolutionary Guard, reinforcements had to be helicoptered to the scene to end a three-and-a-half-hour gun battle, and the fighters fled across the border into Pakistan. A few weeks later, the militants carried out a series of raids on border posts, killing five Iranian policemen. The attacks were the latest in a long campaign of roadside explosions, suicide bombings at mosques, and gun attacks on security posts that have killed more than 600 Iranians, mostly civilians, since 2005.

Across the entrance to the only functioning hotel in Turbat, the proprietor has strung a thick rope to slow down gunmen who may want to attack his patrons. The carpeting is worn, the furniture is falling apart, and the electricity is out for most of the day. Here, in a dilapidated room, Saleem recounts the November blast. “Some buildings collapsed. Luckily, none of the kids were inside those.”

Clean-shaven and balding, Saleem is in his forties and walks with a limp. He speaks in a whisper, flanked by the two locals who set up the meeting. They eye the door anxiously, convinced that at any moment, a Pakistani or Iranian intelligence officer will come barging in.

“The blast was so strong,” he said, “we thought the world was ending.” Saleem believes that the strike came from a nearby airbase across the Iranian border. Others, he recalls, heard the buzzing of Iranian drones.

He hesitates when I ask him about the target of the other missiles. “I don’t even want to name him, he's not even from our area—but the missiles hit his homes.”

The man whose name Saleem is reluctant to utter is “Mullah Omar” (not to be confused with the Afghan Taliban leader of the same name). A senior Iranian official in Pakistan later confirmed the strike took place, declining to elaborate.

An ethnic Baluch from Iran, this Mullah Omar helps lead a shadowy outfit called Jaish ul Adl, or the Army of Justice, whose fighters number fewer than 500. He wasn’t on the premises when the strike hit, but it killed his 3-year-old grandniece, and injured other family members. Just a month earlier, Mullah Omar’s fighters had crossed into Iran and killed 16 Iranian soldiers.

The Kulahu strike was part of a widening covert war being waged by Iran inside Pakistan. In the weeks following the Sept. 9, car bombing at the Iranian base, Iran raided a village in the Pakistani district of Chagai. According to Pakistani officials, Iranian soldiers, sometimes in helicopters and convoys, have chased militants deep into Pakistan on an almost weekly basis over the last year, sparking firefights and occasionally killing Pakistani soldiers.

Iran says the jihadis enjoy support not only from Saudi Arabia and the U.S. Central Intelligence Agency, but also from the Inter-Services Intelligence branch of the Pakistani military.

Pakistani officials say they are overwhelmed by internal security problems, and securing the border with Iran is not a top priority.

Perhaps most importantly, the Sunni jihadists attacking Iran have deep ties with politically connected opium smugglers, men flush with billions of dollars who despise the Iranians for their own reasons.

Before it was split between Iran, Pakistan, and Afghanistan, Baluchistan spread over an area slightly larger than California. The 650-mile Iran-Pakistan border drawn by the British in 1871 starts at the Arabian Sea, cutting through rugged mountains and dry riverbeds, into open desert at a point where the frontiers of Afghanistan, Iran, and Pakistan touch.

The Baluch in Iran do not speak Farsi but Baluchi, just like the Baluch in Pakistan, and in Iran they are a Sunni minority. Instead of the Western-style men’s apparel popular in Tehran, the Baluch in Iran’s Sistan-Baluchistan province dress in shalwar kameez like their counterparts in Pakistan. Many still have family on both sides of the border, and culture is not the only thing they have in common: The Baluch in Iran and Pakistan share a troubled, often violent, relationship with their rulers.

Iran says the jihadis enjoy support not only from Saudi Arabia and the CIA, but from Pakistan’s ISI.

Pakistan’s province of Baluchistan, which accounts for nearly half of the country by area, is its poorest, least educated, and least developed region. Sistan-Baluchistan, where most of Iran’s Baluch live, lags behind the rest of Iran in almost every measure. Around half the Baluch in the province are unemployed, a result, say rights groups, of longstanding marginalization by Tehran.

Under the shah, Iranian Baluch children were banned from wearing shalwar kameez to school, and Baluchi language publications were blacklisted. After the Iranian Revolution, discrimination took on a sectarian flavor. Riots broke out in 1994, after Iranian authorities replaced a Sunni mosque in Mashad with a development project. Within a few years, Iran had jailed or driven from the country more than 60 Sunni clerics. Many of those clerics were welcomed into Saudi Arabia and Kuwait, where some now regularly appear on Arabic television networks, blasting the Shiite regime in Tehran. By the late 1990s, some Iranian Baluch had turned to militancy, couching their insurgency in a narrative of Sunnis fighting religious and ethnic discrimination at the hands of a Shiite theocracy.

In the midst of this religious and political turmoil, drug trafficking thrives. More than 70 percent of the world’s opium flows across the same border the jihadis do, and from the start, the traffickers and Baluch jihadis targeting Iran have cultivated a cozy relationship.

The Iranian strike in Kulahu in November 2013, which is one of the best documented in this secretive war, was partly aimed at a compound in the village that has hosted jihadis since the 1990s, when an Iranian banker named Maula Bux Darakhshan formed Sipah-e-Rasul (or the Army of the Prophet). Maula Bux (as he is called) mixed with the Afghan Taliban, and financed most of his work by trafficking poppy, according to a Salafi cleric who knew him personally. Local journalists recall watching his fighters parade blindfolded Iranian soldiers through the streets of Kulahu in the back of Toyota Hilux pickup trucks.

Mullah Omar, the Jaish ul Adl leader, got his start with Sipah-e-Rasul, where he and other fighters doubled as muscle for the trafficker, breaking associates out of Turbat’s fortress-like prison.

Maula Bux himself was killed in 2006, after being lured across the border by Iranian forces on the pretext of a drug deal. But another, more powerful jihadi group already was emerging in Iran.

On Dec. 14, 2005, gunmen ambushed the lead car in a motorcade carrying Iranian President Mahmoud Ahmadinejad on a tour of Sistan-Baluchistan, killing the driver and a bodyguard. Ahmadinejad escaped alive, but Tehran was rattled.

The attack was orchestrated by Abdelmalek Rigi, then age 22. Rigi’s boyish, grinning face became the defining image of Baluch jihad in Iran. As a teenager, the Iranian-born Rigi had come across one of Iran’s notorious public executions—eight young Baluch men strung up by cranes in public view—and he dated his militancy, in part, from that moment. In 2007, he told Western media (PDF) that his group aimed not to topple the Iranian regime, but to increase autonomy for Sistan-Baluchistan and shield minorities from Tehran’s “despotic religious rule like Fascism, [or] like Nazism.” Within six months of the attempt on Ahmadinejad, Rigi’s group, Jundullah, pulled off several more brazen attacks on highways near the border, killing dozens of non-Baluch and taking Iranian Republican Guard officers hostage.

By the end of 2009, Jundullah suicide bombings had killed scores of Shiite worshippers at mosques in southeastern Iran and 42 people in Pishin, including the deputy commander of Iran’s Revolutionary Guard ground forces. Fuming Iranian officials blamed the United States and United Kingdom for backing the militants, and Pakistan for inaction. A dozen Revolutionary Guards were caught deep inside Pakistan, tracking Rigi. In public, Pakistan denied Rigi was on its soil, but in private, authorities quickly moved to help the Iranians find him, focusing on the border near Turbat.

A 2008 Pakistani raid near Turbat turned up Abdolhamid Rigi, the brother of Abdelmalek Rigi. “Whatever used to happen in Iran, they would say it was because of Pakistan. But we did a lot, and the proof of that is that we handed over Abdolhamid Rigi,” said the then-Pakistani Interior Minister Rehman Malik. During two years in Iranian custody, Abdolhamid provided crucial details of how Jundullah operated. On Feb. 23, 2010, when Abdelmalek Rigi boarded a Kyrgyzstani passenger plane from Dubai to Bishkek, Iran had the flight diverted to Sharjah’s airport, where the head of Jundullah was arrested.

Before executing Rigi in June 2010, Iranian television aired his “confession,” detailing how the West and Pakistan had supported Jundullah. In his statement, Rigi named Naser Boledi as a main mediator between him and representatives of NATO. Rigi said he met American handlers at bases in Afghanistan on trips arranged by Boledi and Yasin Ahwazi, an Iranian-Arab who lives in Europe. Both Boledi and Ahwazi have been prominent critics of Tehran for decades. Boledi, who lives in Sweden, laughs heartily when I call him to ask about his connections to Jundullah. He denies any link.

Outside of Iran, Rigi's “confession” seemed like another in the long tradition of statements extracted from prisoners there. There was, however, some evidence the American intelligence community had sources inside Rigi’s group, and some knew of Jundullah’s intention to carry out attacks in Iran.

Part of a $400 million budget request for the CIA in 2007 included a recommendation to build ties with armed anti-Tehran groups like Jundullah. Some in the intelligence community seem to have followed through on that plan. According to an investigation by The New York Times, Thomas McHale, a detective with the Port Authority of New York and New Jersey, cultivated extensive contacts with Jundullah, starting in 2007. McHale was assigned to the Newark, New Jersey, Joint Terrorism Task Force, which includes several state and federal agencies and is supervised by the FBI. McHale passed his intelligence on to the CIA, the FBI, and the Pentagon, and his reports suggested he had known of Jundullah’s intention to carry out attacks in Iran in advance, but it is unclear if he knew the details. When the CIA began to suspect he was too close to Jundullah, it cut ties with McHale, but the FBI, and later the Pentagon, still sponsored half a dozen trips to Pakistan and Afghanistan where he met Jundullah members. The relationship continued until late 2013, long after Jundullah was declared a terrorist organization by the State Department in 2010.

Shrubs and small trees dot a parched landscape along the road from Turbat to the border. Dust devils as tall as skyscrapers appear in the distance. Occasionally, green orchards of date palms emerge from the bleak horizon, a reminder of the region’s once famous export.

Rugged, unmarked roads branch off, leading northwest through the Zamuran Hills to the Iranian frontier district of Sarawan, where Jaish ul Adl attacked the army base in September 2014. Nestled in the hills are small market towns like Buleda, dominated by Baluch who make a living smuggling diesel and drugs. Three years ago, Republican Guard soldiers came into the hills and killed a cleric accused of hosting Jundullah fighters.

“Iranian forces have long-term grievances with the people in the Pakistani border areas,” said Zahoor Buledi, a former provincial minister. “They are always blaming us for abetting Jundullah, because Jundullah usually does its operations near these areas... Bombing and shelling are routine matters.”

Hundreds of families have left Zamuran because of the shelling, settling in places like Turbat, only to have the war follow them there too.

“Iran knows who lives in each and every house here,” one man in a Turbat mosque tells me. “They could come here, even to Turbat city, and take any of us and our government wouldn’t do anything.”

In a one-room home on the outskirts of town, a man named Abdullah speaks in a hushed voice as he recounts the disappearance of his 26-year-old son, Tanveer, in a Pakistani border town. On Jan. 11, 2013, four plainclothes soldiers in two Iranian trucks posed as diesel merchants and lured the young man into one of their vehicles. “When Tanveer realized what was happening, he jumped out of the truck, but the Iranians shot him,” Abdullah says. “We got the body two weeks later. They said they had the wrong Tanveer.”

At the Iranian consulate in Quetta, ringed by multiple layers of giant sand bags to deter would-be suicide bombers, Syed Hasan Yehyavi offers tea, Turkish delight, and diplomatic words. “We have full confidence in the goodwill of Pakistan, our brothers and neighbors,” said the consul general, “but we expect more help from Pakistani officials.” He follows up with the now official line from Tehran, that Jaish ul Adl is being backed by the CIA, Saudi Arabia and “regional” powers—a nod to the ISI.

Mosques and madrassas run by Salafi Baluch, some of whom are financed and have studied in Saudi Arabia and other Gulf countries, have sprung up in the region surrounding Turbat in the last decade, leading some to believe funding might be channeled through them to groups like Jaish ul Adl.

Pakistani security officials offer a more nuanced explanation. Khan Wasey, the spokesman for the Frontier Corps, a Pakistani paramilitary force tasked with securing the border, claims there are no real Jaish ul Adl bases in Baluchistan. He says his troops work to stop smugglers and jihadists, “but there are other forces at play.”

Indeed, more than 55,000 Pakistani troops are in Baluchistan waging a war of their own. For the last nine years, they have battled secular Baluch nationalists who would like to see an independent Baluchistan. The Baluch militants blame a Punjabi-dominated military for profiting from the extensive natural gas, gold, and copper deposits that should have made the province the wealthiest in the country. The fighting goes on along the same dusty back roads used by Jaish ul Adl militants moving into Iran, but it’s apparent that they’re not the main enemy for those Pakistani government troops, and they exploit the disorder for their own ends.

The Jaish ul Adl compound in Kulahu sits on a route where three Baluch separatist groups and at least one alleged government-backed death-squad have set up their own checkpoints; bribes ease the flow of diesel and opium here, even though Iran has constructed hundreds of kilometers of walls and trenches along the border.

Local police officials like Bashir Brohi, Turbat’s soft-spoken, well-manicured police chief, think Jaish ul Adl is probably able to fund its activities through drug smuggling and conceded “the government’s writ basically ends at the city lines” of Turbat.

His latest target has been Hajji Hassan, a Baluch drug lord who fled Iran and settled in Turbat in 2000. Hajji Hassan is legendary here. Back in Iran, he once got word that the Iranians were going to raid a village where his men were stationed. “When the soldiers entered a valley, Hajji Hassan’s men opened fire, killing more than 50 of them,” one of the kingpin’s neighbors tells me. “After that, he had to leave Iran.”

Hajji Hassan lives in Turbat’s Overseas Colony, a hamlet for the city’s elite whose imposing mansions covered in glazed tiles strike a jarring contrast with the traditional mud-walled homes in the city. Many of the bosses living here, who dominate a multibillion-dollar-a-year drug trafficking industry along the border, are Iranian Baluch in exile, and thought to finance groups like Jaish ul Adl. Locals close to Hajji Hassan say he has hosted Jundullah’s leadership, including Abdelmalek Rigi, in the past, and may be hosting Mullah Omar’s fighters as well.

That sort of reputation seems to have tipped the Iranians to ask Police Chief Brohi and the Frontier Corps to search in the Overseas Colony for five soldiers Jaish ul Adl kidnapped in February 2013 in the Overseas Colony. A series of raids this year turned up dozens of Tanzanians, Nigerians, and Yemenis, and Iranians, too, kept as human collateral in global drug deals, but no soldiers. Four of the five soldiers Jaish ul Adl kidnapped were eventually found in Iran, near the Zamuran hills, and released after the mediation of an Iranian Baluch cleric.

Pakistani officials point to that exchange as proof Jaish ul Adl has no presence in their country, but some are still convinced the ISI is grooming the militants indirectly, by supporting the drug kingpins who finance them.

For officials like Brohi, pursuing the drug traffickers in Turbat would mean crossing a political minefield. One of the drug world’s most notorious traffickers also hails from Turbat, and enjoys the support of the ruling provincial party. Imam Bheel, as locals call him, was added to a list of worldwide traffickers subject to U.S. sanctions in 2009. His son, Yaqoob Bizenjo, served as a member of the National Assembly until 2013.

With all the internal security problems plaguing this corner of Baluchistan, it seems unlikely Pakistan will crack down on groups like Jaish ul Adl, or the drug kingpins funding them, any time soon.

Rigi used to couch Jundullah’s aims in terms of an ethnic minority fighting for autonomy within a federalized Iranian state. Mullah Omar and his other successors, by contrast, have relied on the kind of polemical Shiite-Sunni rhetoric used by the self-proclaimed Islamic State, or ISIS, in Syria and Iraq.

When Jaish ul Adl took five Iranian border guards hostage in February 2013, its demand in exchange for their release included the freeing of 300 Sunni prisoners, some of whom it claimed were being held in Syria. An attack last year that killed 16 Iranian soldiers was publicized as a “response to crimes of the Revolutionary Guards in Syria.”

The group puts out most of its statements—on its Twitter feed, or its numerous websites—in Arabic, as opposed to Baluchi or Farsi. The outlets giving these pronouncements the most airtime are Arabic news stations in the Gulf. The group also has admirers in Pakistan.

“In Iran, Sunnis are not allowed to build mosques; their mosques are destroyed, their rights are taken away,” says Ramzan Mengal, provincial head of the Ahle Sunnah Wa Al Jamah party, which has been accused of targeting Shiites in Pakistan for decades. Two policemen guard the door to his rundown madrassa on the outskirts of Quetta, protection provided to him, he says, because “Iranian agents” have gunned down eleven Sunni clerics in the city. Jundullah and Jaish ul Adl sprang up “in reaction to that kind of oppression,” he said. “They started as small groups that are big thorns in Iran's side now.”

“The Syrian war is having its effects here as well,” said Yehyavi, the Iranian consul general in Quetta. “People want to paint this as a [global] sectarian war.” Yehyavi and other Iranian officials worry Jaish ul Adl might become a globally-connected group, drawing support from the same forces backing the Islamic State in Syria.

Rights activists like Boledi, the Iranian Baluch dissident living in Sweden, harbor some of the same concerns. As a well-known advocate for Baluch rights in Iran, young Iranians reach out to him for advice. “I've had the same cellphone number for 15 years, so occasionally I do get calls from these militants,” he said. “I tell them, we are Muslims, but we are not looking for some new Islamic government. I tell them you are not what the Baluch want.”

SHARETWEETPOSTEMAIL22COMMENTS

"There are plenty of ways to adjust monetary policy," Kuroda said in an interview with the Mainichi daily that ran on Thursday, reiterating that the BOJ was ready to expand stimulus again if needed to meet its 2 percent price target.

Kuroda ruled out the possibility of watering down the bank's commitment to hit its inflation target in the fiscal year beginning in April, a move which has been advocated by some BOJ policymakers who believe the target to be too ambitious.

"If the BOJ loosens its commitment just because it's difficult to achieve the price target, that in itself will make it impossible to meet the price target," he said.

In October, the BOJ unexpectedly expanded the massive stimulus program which it launched in April 2013, under which it buys government bonds and risky assets aggressively in a bid to end 15 years of grinding deflation.

Kuroda has voiced confidence that Japan will see inflation hit 2 percent as targeted in 2015. But many analysts, and even some within the BOJ board, are skeptical as slumping oil prices have recently slowed consumer inflation to below 1 percent.

Economists polled by Reuters in November believe the BOJ will fall well short of its 2 percent inflation goal despite the latest easing and may have to offer additional stimulus.

Comcast Customer Spends Four Hours Canceling His Account

From cloud wars to the certainty that there will be hacks, venture capitalists believe that 2015 will be a year of tumult and (in public markets anyway) triumph for the startup world.

Here are the visions that the general partners, managing directors and partners from firms such as NEA, IVP, Cue Ball Group,General Catalyst Partners and MDV have when they gaze into their crystal balls.

Together these firms have more than $22 billion under management, so they’re not only seeing the future, they’re often shaping it.

1. Jon Sakoda, General Partner, NEA

Cloud Wars – The Empires Strike Back: The cloud computing wars started years ago, but, largely speaking, Amazon has been uncontested and has quietly become the dominant player in the space. In 2015, Amazon will face a multi-front war as Google will launch its assault on Amazon’s traditionally strong presence in the developer ecosystem, and Microsoft will combat Amazon in the enterprise market by re-doubling its efforts on Azure.

Legacy Titanics – Icebergs Ahead: We will see more “unbundling” of legacy software companies. The disruptive forces that have pushed HP and Symantec to break up their operations in order to compete with new entrants will accelerate as activist investors and private equity owners push to maximize the value of these existing assets. Look for significant moves from Microsoft, EMC, VMware, Citrix, and Dell in the next year.

2. Tony Tijan, Chief Executive and Managing Director, Cue Ball Group

The Promise of Payments: Despite heightened focus, increased investment dollars and strong media buzz around a revolution in the payments space, there has been relatively little tangible change in the way we pay for things. NFC payment hasn’t taken off despite the introduction of Apple Pay, POS integrations are incredibly fragmented and interchange fees are being driven toward zero.

Wearables Weren’t Quite Ready: There was much excitement around wearable technology, but practical usage isn’t quite there so adoption has been low. While there were some notable product releases, wide-spread adoption and everyday use is still not at hand. For that to happen, creators need to figure out use cases and applications that genuinely simplify everyday tasks, rather than complicate them. 2015 will feature greater entrepreneurial enablement. For example:

Bigger, Better Deals: With a 21 percent decline in funds but a 40 percent increase in dollars raised, we are seeing larger funds spread across fewer firms. In 2015 we can expect to see the average deal size increase with an uptick in later growth rounds.

Tech Enablement Creates More Entrepreneurs: Real-time and mobile services have empowered a new segment of workforce that thrives on flexible and independent work. This has enabled those that aren’t able to (or simply don’t want to) fulfill 9-5 jobs to enter the workforce and creates a prevalence of non-traditional careers in services. In 2014 in the U.S. alone, there are 18 million independent workers. Expect that number to increase at sharp rates in 2015.

Government Empowers & Creates Even More Entrepreneurs: 2014 saw changes in policy that enable the entrepreneur with greater independence and freedom. More lenient immigration policies will allow people to pursue entrepreneurship, while affordable individual health care makes traditional employment less of a draw. These policy changes will drive a massive influx of entrepreneurs in 2015 and beyond.

3. Steve Herrod, Managing Director, General Catalyst Partners

Deconstruction Of Traditional IT Applications: Independent of whether this will be driven by startups or by Google, there will be a shift in how and where companies do business in the future leveraging SaaS models and moving away from the stranglehold of traditional ENT software vendors like Microsoft, Oracle, SAP and others.

Network Virtualization: Virtualization will continue to rise in popularity and finally take the main stage in networking – we have seen this starting to take place with the acquisition of Nicira and ACE.

There Will Be Hacks: As we move into 2015, security breaches will continue to happen as companies work to patch holes in current software and networks. Trying to stay one step ahead of hackers with the latest software or security features isn’t going to be enough; companies will need to work together in order to combat and fight them off.

4. Neil Sequiera, Managing Director, General Catalyst Partners

The End Of The ‘Superstore’ In Verticals: First it was Circuit City, then Radio Shack, followed by Best Buy. There is still a place for Walmart and grocery stores but not vertical players in alternative commerce. That is were the web and mobile win. With companies like The Honest Company, there will be a rise of vertical commerce with a unique connection to the customer directly.

The Downside To Consolidation And Failure Of Media Properties: Consumers realize that this isn’t a good thing — AT&T plus Direct TV, Comcast plus Time Warner Cable. The fewer people there are to compete on the price of cable, phone and, most importantly, high-speed data, as well as provide thoughtful journalistic integrity is a concern and the consumers will realize this in 2015.

5. Katherine Barr, Partner, MDV

New Enterprise Trend: Labor and Workforce Innovation: Until a decade ago, machine learning (ML) and artificial intelligence (AI) were relegated to research labs, technical publications, and big-budget science fiction films. ML and AL have “crossed the chasm” and will have a profound impact on the way businesses work. Pairing human workers with machine learning and automation will transform knowledge work and unleash new levels of human productivity and creativity. Without the advances in automation, the swelling volume of data would overwhelm knowledge workers and cripple businesses.

A New Era in Retail and Commerce Innovation: The traditional retail infrastructure and supply chain logistics as we know it is being disrupted by companies creating new technology platforms and data-enabled distribution systems that have predictive analytics, better customer profiling, deeper consumer engagement, blended online and offline data, and more agile supply chains. The supply-chain has been fragmented and inefficient for years, particularity with the delivery of heavyweight goods to the consumer, which until now have been expensive and complex. E-commerce platforms are being transformed for the consumer and the manufacturer by leveraging powerful analytics and forecasting tools helping to alleviate “last mile” (i.e. from warehouse to consumer) problem that is the key logistics issue – where most of the cost, complexity and fragmentation lies, especially with the delivery of heavyweight items.

Life Tech Will Take on New Life: In life, time really is money, and a major source of time is spent on home and family tasks. Life tech allows digitally-enabled services, intelligent personal agents and mobile-device-enabled communication and collaboration infrastructure to truly optimize consumers’ lives. Similar to how ERP helped to organize the business side of our lives, life tech promises to organize the personal side of our lives In addition to companies like Nest. Other companies, such as TicketFly and Ruby Ribbon, have products and services that optimize, personalize and automate our lives as consumers and are creating a smart world that shifts and responds to our needs.

6. Jules Maltz, General Partner, Institutional Venture Partners

The IPO Market: The IPO market will stay open, but a large number of tech companies will price their IPOs below the price of their last private financings.

7. Sandy Miller, General Partner, Institutional Venture Partners

Tech IPOs: I think 2015 will be the best year since the ‘bubble’ for venture-backed tech IPOs. We have had a solid year in 2014 and the deals late this year are working well. There is considerable institutional investor appetite; they have made good returns on tech IPOs this year. Most importantly, there are an unprecedented number of high-quality, private, venture-backed tech companies of real scale ($50 million or more in annual revenues) and growth (30-50 percent top-line growth).

Back in the day, we reported that messaging app Snapchat* was raising over $100 million in a round led by Kleiner Perkins. And then the WSJ reported that it was $20 million, which left us wondering why a growth round would be so small in terms of total principle. Well, it turns out it’s not.

Snapchat has raised a much bigger amount: Nearly $500 million in aggregate, according to an SEC filing that it slipped out as the working day for New Years Eve was drawing to a close. The filing notes that 23 investors took part, although it’s not clear from the SEC document who led the round.

Here is what happened, according to our sources: Snapchat originally set out to raise $40 million, but demand for the round skyrocketed, and it decided to shoot for an ambitious $900 million instead. When that didn’t work out, it dialled it back to $500 million. Rumor has it that Kleiner is leading this latest round, with GIC, Yahoo and maybe wildcards August Capital participating. Portions of that, such as the Yahoo part of the fundraise, closed some time ago. The SEC filing notes that the date of first sale was in April 2014.

We’ve also heard that the current post money valuation is $20 billion, although others have disputed this and said it’s closer to $10 billion.

The cash is much-needed. One source said that Snapchat has an over $30 million-per-year burn rate, and pays half of that to Google Apps Engine to host all its photos, though this number seems low to us. Another noted that at one point the company was paying $3 million each month in legal fees alone. Snapchat’s had its share of lawsuits.

Alibaba was the original lead on that round as Re/Code (nee AllThingsD) reported. According to a source, the Alibaba position was then punted to Yahoo, which put in $20 million of its own cash on hand post the Alibaba IPO. We’ve also heard that Yahoo has actually put in more than this but have been unable to corroborate that beyond the $20 million close.

The cause of the numerical ups and downs of Snapchat’s fundraising is the company’s unique spin on financing, which works on a “rolling” basis, from how one source describes it.

Snapchat is interesting in that they break the conventions of traditional fundraising, one source tells us. Traditionally an entrepreneur will set out to raise a round for a specified amount of money, and then you get interested investors on the same page based on an agreed valuation and then you close it. Spiegel does this somewhat differently. “He goes after individual investors at different valuations. It’s a rolling investment and a rolling close. In theory you could say he’s already done 40 rounds.” (40 is likely figurative rather than literal.)

What this means is that, if it’s true, then yes, Snapchat may have raised nearly $500 million in the last six months. Of that $500 million, it may be that only 75% of it is closed, and with portions at different valuations, some getting in pre-$10-billion, like Yahoo, and some above it and closer to $20 billion.

The logic for the high valuation is interesting, too, and points to some of the big hopes Snapchat and its investors have for the app. The last reported number of active monthly users of the ephemeral message app was 100 million back in August 2014, but things are moving fast. From what we understand the MAU number is now approaching 200 million users. The company in May 2014 reported 700 million photos sent per day on the app, with 500 million Snapchat Stories.

Among the company’s revenue-generating services are sponsored Our Stories, which launched in November. There have also been interesting appearances from companies like Amazon using the platform to send disappearing deals to users, and while Snapchat and Amazon may be talking, the e-commerce giant is not among the list of investors at the moment, says a source.

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