Amazon Shatters Sales Records. Again.; Apple Plays Nice With China’s New Laws; U.S. Gov’t Says Nyet to Cybersecurity Company

Primed for purchase…

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If you haven’t heard by now, yesterday was Prime Day, which is basically Amazon’s answer to Black Friday deals in the middle of summer. Laugh and poke fun all you want. But if you do, the joke’s on you. Because according to preliminary figures from Amazon, not only were sales up 60% over last year’s Prime Day, but “Prime” sales for July 11 even blew past 2016’s Black Friday and Cyber Monday. In fact, Amazon called it it’s “biggest day ever.” To be fair, this year’s Prime Day was 30 hours long, compared with last year’s 24 hours. But it wasn’t just about the deals that has Amazon all giddy today. Prime Day also brought in a significant amount of brand-spanking new Prime members.  Because as everyone on Amazon already knows, if you want those super deals, you need to be a Prime member, and yesterday saw more Prime membership sign-ups than any other time in Amazon’s history. As for the most popular Prime purchase, that would be the Echo Dot for the ultra-bargain price of $34.99, which usually sells for around $50. The most popular non-Amazon item sold in the U.S. on Prime Day was an Instant Pot Pressure Cooker. I could not make that up if I tried.

Apple of China’s eye….

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Leave it to Apple to not let some vague, burdensome, newly enacted cyber-security legislation get in the way of setting up a data center in China. China’s new cyber-security laws require that any data collected on its citizens needs to be stored on servers in China. If companies want to transfer any of that information, they need to go through regulatory review and approval…in China. For Apple, complying with Chinese law means an opportunity to improve the speed and reliability of the company’s products and offerings. While other foreign firms are still busy complaining about these new regulations, calling them a burden and a threat to proprietary data, Apple gets to become the very first of those foreign companies to make the necessary changes and set up shop. The province of Guizhou will play host to the tech giant, and Apple is making down a $1 billion investment to hunker down in that region of China. However, in order for any company to do legit business in China, it needs to team up with a local entity.  So Apple will be partnering up with the Guizhou-Cloud Big Data Industry firm, where all kinds of personal information, belonging to people who own Apple devices, will be stored.

Nyet so fast…

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It seems like just yesterday when you would walk into your local big box electronics retailer and have salespeople urging you to get Kaspersky Labs security for your computer. The company already has some 400 million users worldwide and generated $374 million in sales in 2016 just from the U.S. and Western Europe. But it looks like those days are about to go buh-bye now that the U.S. government is moving to block federal agencies from buying the cyber-security software from the Russian-based company. It seems that Kaspersky may have enjoyed a much much cozier relationship with Russia’s intelligence agencies than it was letting on, and apparently even helped develop security technology for Russia’s spy agency, FSB. However, Kaspersky Labs is calling foul and said it is being unjustly accused. The company also voiced its complaint that there’s an inherent assumption that because it’s a Russian company, that it must be tied to the Russian government. Besides calling the claims “unfounded conspiracy theories” and “total BS,”  CEO Eugene Kaspersky also said “…as a global company, does anyone seriously think we could survive this long if we were a pawn of ANY government?”  But it seems that the U.S. intelligence and law enforcement agent seriously do think that and said as much at an open Senate hearing.

 

Look Out Tesla! Volvo Plans to Disrupt Electric Car Industry; Plus Tesla’s Major Q2 Miss; Losing My Religion: Denim Company Goes Bust

Tesla disrupt…

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With all the attention Tesla has been getting – and seeking – lately, a major company just threw down the automotive gauntlet in the electric car arena. Enter Volvo, the perennial boxy but safe, Swedish import, which just announced that come 2019, it will only sell hybrid or electric vehicles. That’s right. The ultra-reliable, ever dependable Volvo will likely be giving Tesla a serious run for its money. The fact that its got a solid, dependable reputation to back it up only sweetens the pot. Lucky for Volvo, its parent company Geely Automobile Holdings of China has already sold tons of electric vehicles and now Volvo gets to tap into all those tech resources. And it’s not just Tesla that should be worried. Toyota, Honda and BMW, to name a few, should also look to up their game now that Volvo has entered the field. This announcement is epic since it means that Volvo becomes the very first major automobile manufacture to make the decision to completely kick internal combustion engines to the curb. Interestingly enough, hybrids accounted for only about 2% of auto sales in the U.S. last year, in part because gas prices have fallen so much, that people don’t mind getting cars with traditional gas-guzzling engines.

Speaking of which…

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Shares of Tesla took a nasty little drop today after the company reported that its second quarter sales were flat as a pancake. To add insult to fiscal injury, the company also reported that it delivered just 22,000 vehicles. That seems like a good thing except for the fact that Tesla had built over 25,000 cars. Demand is good. Oversupply is not so good. At all. And the fact that consumers have stopped demanding the Model S sedans and the Model X utility cars leaves Wall Street feeling less than stoked about Tesla. Especially Goldman Sachs, which just released a report documenting its concern over Tesla’s slow growth. It’s never good when Goldman Sachs is concerned about you. Naturally, Tesla pointed its finger at the ever-reliable and handy excuse of “production issues” to explain the shortfall of deliveries. Too bad Wall Street didn’t seem to care what excuse Tesla used.

Another one bites the dust…

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Today’s Chapter 11 bankruptcy filing is brought to us by True Religion, purveyor of super-pricey denim. True Religion brass is pointing the finger at e-commerce and the shift in consumer spending habits, since customers are choosing to purchase their goods from their devices instead of heading into actual stores where True Religion merchandise is typically sold. Fortunately, the company was able to come up with a restructuring agreement with several of its lenders that should get rid of approximately $350 million of its debt, while its creditors would get paid in full, at least the ones critical to the company’s operations. In the meantime, with 140 stores still under its belt, the company is going to explore ways to “reinvigorate the brand.” In other words, it is going to try to figure out how to get people to spend hundred of dollars on True Religion’s pricy merchandise once again.

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.

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.