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.

 

Alphabet Soup: Google Parent Hits a Milestone; Premium Quality: Tesla Could Get Even Pricier; SEC Gets SCOTUS-Smacked

Whoa…

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Google’s parent company, Alphabet, broke the $1000 per share ceiling and yes, that is a vey impressive feat. Even for Google. What’s more impressive, is that this milestone happened on the very same day that shares of Apple, the world’s most expensive company, was downgraded. Not that Google would be experiencing any schadenfreude, or anything of the sort. In any case, Alphabet can pat itself on the back for becoming the third S&P 500 company to break the $1000 barrier, following in the illustrious footsteps of Amazon – who achieved that milestone just last week – and Priceline. Yes, Priceline. Remember them? To be fair, Google had, once upon a time, hit $1,200 a share but then the stock split. And then it became Alphabet, and the rest is S&P history.  Of course Berkshire Hathaway also trades above $1000. Way above $1000. In fact, if you’re inclined to spending $250,156.00, you could pick up a single solitary share of Warren Buffett’s company. But then again, what’re you gonna do with just one share?

Cry me a river…

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A new Tesla was sounding really good, at least up until the weekend when Automotive News reported that AAA is gearing up to raise its insurance rates on the super-shmancy electric automobiles. But that’s just AAA insurance. The verdict is still out on whether other insurers will follow suit. It’s all because of some very unflattering data detailing Tesla’s higher-than-usual and more expensive claims for both the Models S and Model X. In fact, those pricey claims could mean a 30% premium increase on Teslas, which makes you wonder if the fuel savings is even worth it. Tesla seems to be offended by the new data, calling it “severely flawed” and “not reflective of reality.” Apparently, the data had the audacity to compare a Tesla to a Volvo station wagon. I mean, c’mon? A Volvo station wagon? Not that I have anything against Volvo station wagons. Some of my best friends drive Volvos. And station wagons. It’s just that a station wagon is the last thing on my mind when fantasizing about being behind the wheel of a Tesla. Just saying.  In all fairness, however, Tesla boasts some of the most advanced safety features in their automobiles. Yet, none of that seems to help given the car’s expensive collision costs. In fact, claims for the Model S are 46% higher than other cars, and its losses come in at 315% higher. Yikes. Station wagons aside, those are some very un-sleek numbers. Ironically, Tesla’s medical payment claim frequency is below average while its personal injury protection losses are very low. So take that, Volvo!

Can’t touch this!

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Score one for Wall Street because it looks like the SEC won’t get to grab all those ill-gotten gains like it used to. At least according to the U.S. Supreme Court, which just ruled – in a 9-0 decision –  that the SEC’s use of “disgorgement” now has to face the wrong end of a five year statute-of-limitations. Disgorgment is the act of repaying money that was attained illegally, typically by people and firms in the financial industry.  For this latest Wall Street victory, the securities sector can thank Charles Kokesh, a New Mexico-based investment adviser. It all started back in 2009 when the SEC sued Kokesh for misappropriating funds from his investors. He may not be a saint, but he was ordered to pay $2.4 million in penalties plus another $35 million – which was for disgorgement purposes. The problem, Kokesh and his lawyers argued, was that much of that $35 million disgorgment figure had happened outside a five year statute of limitations. Instead of $35 million, the disgorgment should have been closer to $5 million, which is quite a substantial difference. As for the SEC, this new ruling is going to prove to be a real downer for the agency seeing as how it has since collected $3 billion for disgorgment claims.  Oh well. Maybe it’ll discover a new way around that minor, yet pesky obstacle.

 

Not in the Moody’s: China Gets a Downgrade; Tiffany & Co. Fails to Shine; Can’t Contain The Container Store’s Earnings

Awkward…

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Look like Moody’s wont be getting a warm reception from China in the near – and probably far – future. It took thirty years, but the investor service downgraded China’s sovereign credit rating. Moody’s is more than a bit skeptical that the country can get its debt issues under control while at the same time trying to maintain economic growth. Hence, it bumped China’s rating down a smidgen from a respectable A1 to a not-as-respectable Aa3.  On the bright side – though I highly doubt China sees it that way – Moody’s did upgrade its outlook for the country from negative to stable. That’s gotta count for something, right? Well, maybe not to the Chinese. In any case, even though China has enjoyed pretty fast growth rates that easily surpassed 6%, it is apparently due in large part to its mounting pile of debt, and Moody’s said that it expects that rate to soon come down closer to 5%. As for China, the Finance Ministry is, shall we say, unhappy about this downgrade and called the move “inappropriate”  and “absolutely groundless.” Oh well. So much for diplomacy.

Not so Gaga for Tiffany…

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All is not bling-y for Tiffany & Co. as the luxury jeweler took a nasty 4% hit on its comparable sales, even during the fiscal quarter that brings us Valentine’s Day. Of course, with that ugly bit of news came an even uglier hit to its stock, taking it down around 10%. Like with so many other brands, the company just can’t seem to get a hold on that finicky demographic we call millennials.  And that’s even after the luxury brand made Lady Gaga its poster gal while poaching Coach’s Creative Director, Reed Krackoff to add a little millennial-desirability to the the label.  Naturally, some blame also went to that pesky strong dollar of ours which seemed to put a crimp on tourist spending.  Net sales were up close to $900 million. Too bad expectations were for $914 million On the bright side, Tiffany & Co. added 74 cents to its shares, beating analyst estimates by four cents. Last year at this time, the company hauled in over $891 million in revenue with 69 cents added per share.

Can’t contain myself…

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Shares of The Container Store Group surged 37% after announcing it not only beat expectations, but it also has a restructuring plan in the works. If any company knows a thing or two about restructuring and organization, it’s gotta be The Container Store, right? At least when I walk into one of their stores, I always find myself feeling grossly inadequate and disorganized. In any case, the company took in sales of $221 million, easily blowing expectations of $213 million out of the water. The company also took in 17 cents per share which was 140% higher than last year at this time. Yes, you read that correctly. 140%. Analysts expected 11 cents per share. But mind you, the company’s stock had been down around 50% since it hit a one year-high back in December.  As for the restructuring plan, sadly, there will be layoffs. It’s an unfortunate result of trying to combat all the e-commerce competition that has dogged The Container Store and countless other businesses.

Ford Looks to Boost Profits With Layoffs; Twitter Sequel: The Return of Biz; Avocados Will Not Make You Rich!

Slash and burn…

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Today’s job-slashing news is brought to us by Ford Motors. The automotive company, which employs about 200,000 people worldwide, plans to cut about 10% of its salaried workforce. Apparently, the job cutting efforts are simply part of a $3 billion cost cutting program. What Ford is really hoping to accomplish is to keep its stock from from getting too close to a five-year low and boost profits at the same time. Ford released an official statement today and made sure to talk a lot about priorities, profit and growth. Curiously enough, however, no mention was made about job cuts. Wonder what that’s all about. If it’s any consolation, rumor has it that Ford is offering generous early retirement incentives to some of the aforementioned salaried workers. However what generous and incentives actually mean remains to be seen. In any case, CEO Mark Fields, who came on board back in July, wants people to know that the folks over at Ford “are as frustrated as you are by the stock price.” Fields in particular must be awfully frustrated considering that the stock has dropped over 35% since he took the CEO reins.

Let’s get Biz-y with it…

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Amidst a throng of high-level departures comes a potential bright spot for Twitter – the return of co-founder Biz Stone, six years after he left. In a Medium post he wrote that he’s returning to the embattled social media company for the purpose of “filling the ‘Biz-shaped hole.'” Yup. He said that. He went on to say, “You might even say the job description includes being Biz Stone.” Yup. He said that too. Biz wants to guide company culture, feeling and energy, and Twitter could definitely use help in all three of those categories. Besides, it’s not like Biz had anything else going on these days since he just sold his latest start-up to Pinterest for an undisclosed sum. You got that? An undisclosed sum. (I have no definitive idea of what that means.) As for Jack Dorsey, another co-founder and current Twitter CEO, Biz counts him as “his closest friend.” At Twitter anyway. Wall Street seems to be thrilled about Biz Stone’s return as well, sending the stock up over 2%. Twitter’s stock will take any boost it can get these days. And according to Stone, and presumably President Trump, “The world needs Twitter, and it’s here to stay.”

It’s the pits…

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Today is not a good day for the avocado industry. It seems Australian millionaire Tim Gurner said during an interview on Australia’s “60 Minutes” to ditch the avocados if you want to buy a house. It’s not that Gurner has anything against the green-fleshed delicacy. Only that Millennials should focus on saving their money towards purchasing a home and accumulating wealth instead of spending $19 on pricey avocado sandwiches. See the connection? Neither did plenty of Twitter users.  On Twitter @kalebhorton wrote: “Alright, I did the math. If I stopped eating avocado toast every day, I would be able to afford a bad house in Los Angeles in 642 years.” Foghorn Greghorn tweeted: “Avocado Toast $6.50 Data $150 House $650,000 Utility $150 someone who is good at the economy please help me budget this my family is dying.” But maybe Gurner’s onto something. After all, he is a real estate tycoon with an estimated $460 million. And I bet he owns lots of homes.