Japanese Airbag Maker Goes Bust; Pandora CEO Sings the Blues; ‘Pharma Bro’ Goes on Trial

Deflated…

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Japanese airbag maker, Takata Corp has filed for bankruptcy.  In the United States. Sure  companies file for bankruptcy almost everyday. But what makes this one unique is that Takata has the dubious distinction of issuing the largest auto-industry recall. Ever. With over 40 million vehicles in the U.S. possessing the potentially deadly airbags, some 125 million vehicles have been and will be recalled by 2019. It’s also the largest bankruptcy of a Japanese manufacturer, and one that finds itself staring down the wrong end of billions of dollars worth of losses over recalls that lasted the better part of a decade. From paying settlements to individuals who were harmed, to paying car makers, including Honda, BMW and Toyota – to name just a few – Takata’s fiscal trouble will take years to reverse. It seems that Takata’s faulty products were the cause for at least 16 deaths – that we know of. Fortunately a Chinese company had the good sense to swoop in and acquire Takata for a whopping $1.6 billion. Although, that is apparently a thorn in the side of the Japanese, since selling off to foreigners is something the country would rather like to avoid. Incidentally, the Chinese company that bought Takata is called Key Safety Systems and is based right here in the U.S. Go figure.

Cue the goodbye music…

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Looks like the music’s gone for Pandora CEO and Co-founder Tim Westergren. His departure may – or may not – have something to do with Sirius XM’x recent purchase of a $480 million, 16% stake in Pandora. But rumor has it that investors are bummed because they wanted Sirius to buy up the whole operation. If you recall, and it’s okay if you don’t, Howard Stern makes his radio home at Sirius. Not that this has anything to do with Westergren’s exit either. To add insult to injury, shares jumped a little on the news of Westergren’s impending departure, signaling that investors are stoked about his exit.  That itty bitty jump must have been especially welcome since Pandora’s stock has been down over 35% this year.  After all, Pandora is staring at some fierce competition from Spotify, Apple and JZ’s Tidal, to name just a few. As of yet, no replacement has been named so if you’re looking to throw your hat into the ring, now might be your chance.

What a pill…

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The time has come for everyone’s least favorite Pharma bro’ to head to court. And thus Monday begins with Martin Shkreli finding himself in a Brooklyn Fraud courthouse instead of a beach mansion in the Hamptons. But considering he raised the price of a life-saving drug by 5000%, he might very well go down as the least sympathetic defendant to ever sit in that courtroom. And just so ya’ know, being an a–hole isn’t crime and it’s not the reason why pharma-gazillionaire Shkreli is sitting in a courtroom on this fine summer day.  Rather ‘Pharma bro’ is on trial because prosecutors charged him with “widespread fraudulent conduct” and running a ponzi-like scheme that had him lying to investors while working at a hedge fund and his drug company.  Fun-fact: Shkreli was banned from Twitter back in January after harassing a female journalist who wrote an op-ed criticizing Donald Trump. Oh, the irony.

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Travis Kalanick’s Not-So-Fond Farewell; It’s Bottoms Up for George Clooney; Glassdoor Drops Another List and You Better Hope Your Boss is on it

Goodbye and farewell…

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Looks like Travis Kalanick’s “leave of absence” is now a permanent one as he finally took the hint from investors and officially resigned as Uber’s CEO. But not before the aforementioned investors placed a lot of pressure on the embattled CEO to step down. And who can blame the investors. Scandal after ugly scandal emerged from the $68 billion, privately held company and it seemed as if Kalanick wasn’t up to snuff when it came to dealing with them.  In an email to employees, Kalanick talked about his love for Uber and decided to step down “so that Uber can go back to building rather than be distracted with another fight.” How very gallant of him. While Kalanick still remains on the board of Uber, the business is now being run by fourteen people who once upon a time reported to him. Talk about irony.

Aye tequila!

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Some guys have all the luck and George Clooney is one of them. If you think he’s just an actor with a pretty face then you are so very wrong. Turns out the Hollywood hunk also has his own tequila brand –  along with two other partners – called Casamigos, which was just bought for $1 billion by liquor company giant Diageo. The name Diageo might not ring a bell for you, but the name Smirnoff should, and that is just one of the many notable brands that belongs to the Diageo family. Curious who George’s other partners are? Mr. Cindy Crawford, aka Rande Gerber and Mike Meldman. Annoyingly enough, Clooney and Gerber were just trying to come up with their very own “house” tequila for the properties they own in Cabo San Lucas.  But a very lucrative opportunity knocked that had them expanding the brand beyond Cabo, and just last year 120,000 cases of the stuff was shipped out. This year the company expects that number to climb to 170,000. And with a price tag between $45 to $55 a bottle, Clooney and company get to live large without having to rely on other their other talents, including acting and such. As for Diageo, you can bet that this acquisition had less to do with Clooney’s movie star charm and more to do with the fact that tequila volume in the U.S. more than doubled from 2002 to 2015.

There’s a list for that too…

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Glassdoor has regaled us with yet another list. This time it’s to let us know who the top CEO’s in the world are, according to employees And you can bet Travis Kalanick did not make the cut. The Clorox Company’s Benno Dorer takes the top spot. What? Were you expecting a tech CEO? Well too bad because Dorer earned a 99% approval rating from his employees.  Another name from the list you might recognize is Elon Musk who takes the eighth spot. Interestingly enough, his 98% employee approval rating came not from Tesla, but his other company, SpaceX. Wonder what that’s about. Facebook’s Mark Zuckerberg makes it onto the list at number ten, also with a 98% approval rating. But sadly that’s a sharp drop from his number four spot in 2016. Google’s Sundar Pichai grabs the 17th spot while LinkedIn’s Jeff Weiner comes in at number 35. The biggest bummer on the list just might be Apple’s Tim Cook. Last year he held the number eight spot, but this year he drops to spot number 53. In all fairness, however, he still scored a 93% approval rating.

 

Barclays Busted; Ford Ditches Mexico for China; UPS Gives Heads Up on Holiday Shipping

Cheerio…

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Looks like 2008 is not done haunting banks that allegedly played dirty back then. Today’s banking scandal, that includes charges of conspiracy to commit fraud, is brought to us by Barclays and four of its former executives. The trouble started in 2008 when Barclays reached out to Qatar for some substantial cash that the bank was going to use to avoid a major government bailout. Barclays was inclined to hit up Qatar investors for some big money instead of getting a governmental bailout because a governmental bailout comes with major governmental oversight. And for banks, governmental oversight is a four letter word. Of course, asking help from the Qataris wasn’t exactly the problem. While there were two rounds of fundraising from Qatari investors, with one involving a $3 billion loan for Barclays, the UK bank also paid the Qataris $406 million in “fees.” It seems that last bit might not have been honestly and properly disclosed to shareholders. And that got authorities wondering if Barclays was trying to cover up the the gist of the plan because it might not necessarily have been totally legit. Besides, anytime there is suspicion of toying with shareholders, you can expect that there will be hell to pay.  These charges mark the first time that any bank in Britain got busted for questionably lawful behavior during the 2008 fiscal crisis. So congrats, Barclays. You now hold that dubious distinction. If convicted, the bank faces a nasty fine and the former execs each face up to ten years in prison if found guilty. As for the Qatari’s, they’re off the hook. Completely.

Adios…

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Ford is ditching Mexico for China, at least as far as the Ford Focus is concerned.  Rumor has it that by ending all production of the vehicle in the U.S. and moving production to China instead of Mexico,  Ford will end up saving a whopping $1 billion. Which is especially weird since it is cheaper to build and import cars from Mexico as opposed to China. But here’s where the logic enters: Ford will now spend money to revamp just one factory in China instead of two in North America. Hence, billions of dollars in savings. While no U.S. jobs are expected to be affected, the United Auto Workers remained conspicuously silent regarding the news. This latest decision is the very first major one to come from Ford’s newly installed CEO Jim Hackett. However, what analysts are finding interesting is that this move shows how Ford is putting the focus – no pun intended – on SUV’s and trucks, as opposed to smaller, more fuel efficient cars, thanks to lower fuel costs. Besides, sales of the Ford Focus are down way over 20% since low gas prices are no longer standing in the way of those coveted SUV’s. The only question now is how is this move going to sit with President Trump and what will he tweet about it.

It’s beginning to look a lot like Christmas…

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Start saving up. Christmas is just around the corner and UPS wants to let you know that it will be charging you extra to ship those holiday presents. Between November 19 and December 2, the package carrier will slap on a 27 cents surcharge and then again, from December 17 – 23. If you want your package delivered via next day air, then prepare to whip out 81 cents and 97 cents for two or three day ground delivery.  UPS typically delivers around 30 million packages a day during the holiday season and analysts are expecting that will rise even more. And who can blame UPS for charging more money to deliver your goods? After all, the holidays are the company’s peak season where not only can their internal systems become over-whelmed, but mother-nature can throw out a few unhelpful surprises as well.

 

That’s All Folks: Yahoo Rides Off Into the Sunset; Uber Drama; Trump’s Attempts at Flattery; It’s Raining Tacos and Cheesecake Today

And that’s a wrap…

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Sometimes goodbyes are hard and sometimes goodbyes are worth $23 million. At least that’s the case for Marissa Mayer, who will be collecting that much cash now that Verizon’s $4.5 billion acquisition of Yahoo is a done deal. Gosh, imagine what she’d be collecting if she were asked to stay on board. In any case, Yahoo will now melt into the AOL vortex and together they will morph in a new entity profoundly named Oath. However, once that happens, over 2,000 employees can expect to kiss their jobs goodbye. The last itty bitty remaining pieces of Yahoo will be named Altaba in homage to the fact that it is primarily a holding company for Yahoo’s sizable stake in the Chinese e-commerce site Alibaba.

Other highlights from today…

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  • It’s official: Uber CEO Travis Kalanick needs to compose his out-of-office reply. A management group will be established to run the show in his absence and when he returns he’ll be stripped of some of his duties. As for his return date, that is yet to be determined. It appears that he wont be missed that much. In the meantime, Uber now needs to come up with an effective system to tackle HR complaints. That might take awhile seeing as how the company is pretty much starting from scratch in that area.
  • In a meeting with Federal Reserve Chair Janet Yellen, President Trump said to her that he thinks she’s a “low-interest person” like himself. Which is ironic since during his campaign he had plenty of criticism for the Fed because it kept those rates low. He also said he “likes her” and “respects her” which could mean anything and nothing when you’re President Donald Trump. Naturally, the Fed declined to comment, all while rumors swirl that it is expected to raise short-term interest rates for the fourth time in two years.
  • Go out and get yourself a free taco today. A Doritos Locos Taco, to be more specific. It’s on the house. At least at Taco Bell. The fast-food chain is being generous because the Golden State Warriors “stole” game 3 from the Cleveland Cavs. Naturally, it’s all part of a promotion, in this case the one that goes “Steal a Game, Steal a Taco.” Whatever. It’s free food.
  • Shares of Cheesecake Factory took a beating today because of Mother Nature. No, really. Apparently, because of some bad weather, customers near locations in the East and Midwest couldn’t enjoy enough “patio time” whilst eating copious amounts of cheesecake, thereby negatively affecting sales. And just like you, the analysts didn’t buy that excuse either.

Uber Drama Revs Up; Gymboree’s Next Chapter in Life: 11; Aldi Ready to Feed You For Less. Much Less

These are the days of Uber’s life…

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The Silicon Valley soap opera we call Uber is making awkward, unpleasant headlines again. This time it’s because the rumor mill is swirling with talk that Uber CEO, Travis Kalanick, is about to take a leave of absence. Which begs the question about how this new development will affect Uber, if at all. Then we turn our attention to the now ex-number two honcho at the ride-sharing company, Emil Michael, who has left the Uber building. It’s doubtful he’ll be missed that much since he was apparently pressured to step down. In fact, Kalanick was advised to let Michael go earlier this year, however he declined to entertain that suggestion – a decision that eventually bit him in his corporate butt. Perhaps had Kalanick let Michael go when asked to do so, he might not find himself figuring out how to spend all his newfound free time. All this unpleasantness – well for Kalanick and Michael, anyway – ensued following a meeting with Eric Holder’s law firm. You remember him, dontcha? He’s the former U.S. Attorney General and if he’s got some recommendations, it’s prudent to follow them. Holder’s firm was retained by Uber to conduct internal investigations following accusations of sexual harassment and gender bias. The findings, his firm reported, were “ugly.” That doesn’t bode well for the world’s most valuable privately held company, now does it?

Another one bites the dust…

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Today’s Chapter 11 bankruptcy filing is brought to you by Gymboree, the children’s clothing store chain which can be found in just about any mall in the United States. Well, maybe not for much longer. The company still plans to remain in business, it’s just going to be shuttering anywhere from 375 to 450 of its stores. But rest assured, if you’re a frequent patron of the chain, there will still be well over 800 stores left from which to do your kids’ clothes shopping. If you are at all shocked about the store closures and bankruptcy filing, then clearly you aren’t one of the many creditors Gymboree refused to pay in the last few months. With increasing online competition and a major slowdown in mall traffic, it’s no wonder Gymboree just couldn’t make bank. The company is staring down the wrong end of $1.4 billion worth of debt and hopes to nail down a plan to help it shed about $1 billion of it.  The kicker, though, is that the company is still profitable, a bonus that a lot of analysts think will help propel Gymboree towards a bright, shinier fiscally nourishing future.

Grab your cart…

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Grocery chain Aldi has got some lofty goals. And if you’re thinking you’ve never heard of the chain, then just wait. The company just announced a $3.4 billion plan to make sure you do. Aldi has set its grocer sights on becoming the third largest grocery chain behind Kroger and Walmart. The grocery store chain currently boasts 1,600 locations from which to purchase your groceries, but by 2022, it expects to have 2,200 stores gracing the country.  Some 1,300 of its pre-existing stores are also being treated to a $1.6 billion remodel. And who doesn’t love a little remodel? However, the biggest thrill of all is that Aldi is going to attempt to price its merchandise over 20% lower than its rivals while adding 25,000 jobs in the process. If that doesn’t sound appetizing, the I don’t know what does.

Amazon’s Kindness Almost Knows No Bounds; Uber Cleans House; Crew-Cut: CEO Drexel Waves a Preppy Goodbye

Yep, they went there…

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It’s the American Dream. Well, for Amazon anyway. Rather than worry about disenfranchising an entire portion of the population that can’t comfortably afford Amazon’s Prime subscription service, the e-commerce giant is now offering this highly esteemed membership privilege for a 50% discount to those on government assistance. All it takes is a valid Electronic Benefits Transfer card. Because why should the fact that someone is receiving government assistance stand in the way of their Amazon shopping experience, right? It is incredibly thoughtful of Amazon to think of those less fortunate by reducing the cost of subscription for them. However, if it were not to Amazon’s fiscal advantage, then this latest initiative might not have been unveiled. That fiscal advantage comes in the form of a competitive edge over Walmart, whose low prices have attracted the very countless customers that Amazon is trying to woo with this new incentive. After all, studies have shown that once customers sign up for Prime status, they tend to beef up their orders. So, we’re talking a win-win for Amazon. And a lose for Walmart.

Job openings…

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Looks like karma may finally be catching up with some folks over at Uber, as the ride-sharing company just fired 20 employees over sexual harassment claims. Apparently 215 claims were leveled against these 20 individuals, which sort of begs the question: Was there anybody left at Uber who didn’t get sexually harassed? The investigation was conducted by law firm Perkins Coie and disturbingly enough, it found that no action was even taken in 100 of those claims. Oh, and there are still even more claims being investigated.  In addition to the 20 terminated fiends, seven other employees received written warnings, while 31 more employees need to get “special training” to teach them how not to harass people and behave like stupid, thoughtless destructive pieces of trash. CEO Travis Kalanick launched the investigation back in February after a former Uber employee named Susan Fowler wrote in a blog post about her personal experiences of sexual harassment and gender bias at the company. However, when asked about the issue back in May, Uber’s head of HR, Liane Hornsey, said it wasn’t an issue that had come up. Especially if you had your head firmly entrenched in the sand, of course.

And that’s a wrap…

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After 14 years, J. Crew’s Mickey Drexler is calling it quits and handing over the reins to West Elm CEO James Brett. While Drexler may be out as CEO, he’ll still stay on as Chairman. And why not? After all, he owns 10% of the preppy apparel company. Drexel decided to step down from his role after declining sales – 6% in just the last year – led to a whole bunch of other problems including restructuring, layoffs and the departure of its pseudo-celebrity, high-profile creative director, Jenna Lyons. Not that any of that was entirely Drexel’s fault. Only a bit of it, some might argue. Because apparently the problems and challenges he faced were industry wide for apparel companies in general, as so many of them continue to struggle to get a leg up on fast-fashion, affordable competitors like Zara and H&M.