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.

 

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.

 

Apple Throws Billions Towards U.S. Manufacturing; Ferrari Speeds into Double Digit Margins; Republicans Wage War on Dodd-Frank

iManufacture…

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China’s about to get some very unwelcome manufacturing competition from Apple. The tech giant just announced that it is starting a $1 billion fund promoting advanced manufacturing. Gosh, is the President going to take credit for this too? In fact, CNBC host Jim Cramer had the dubious distinction of being the first person to hear the news on his show “Mad Money.”  For those of you wondering what the difference is between manufacturing and “advanced manufacturing,” it means Apple will basically have to offer specialized skills and training for the latter and fill job gaps with these newly-trained, highly-skilled workers. In any case, Apple has thus far created some two million jobs in the U.S. and can hardly wait to create even more. But how does Apple plan on spending that $1 billion it’s setting aside for this latest project? Well, don’t get too excited just yet, because some of that cash is first going to a company that Apple has partnered with for this initiative. And the name of that lucky company has yet to be announced.

Magnifico!

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Ah Ferrari. What could be better than tooling around in a machine like that? How about its earnings, for one. The Italian automaker just released its first quarter earnings report and they were everything you’d expect from the maker of one of the world’s finest sports cars. Shares are up well over 6% today after the company announced a 36% earnings increase along with a 50% surge in deliveries. And by the way, those earnings were even better than expected, coming in at around $265 million  – which equals 242 million euros – in case you were curious. Estimates, mind you, were for 222 million euros. Revenues also impressed and elated investors, as they increased 22% to 821 million euros, easily beating expectations of 767 million euros.  Sure, those numbers are almost magical, but that’s not really what’s got Wall Street tongues wagging. It was Ferrari’s margins, which are now right up there with the aforementioned tech giant we call Apple. But I guess that’s to be expected when you’re selling cars whose ticket prices start well into the six-figures and can exceed $2 million. After all, we are talking about a company who sold out of a car, the Aperta convertible, before the car even made its official debut.

Let’s me be Dodd-Frank with you…

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Things are looking grim for Dodd-Frank, the Wall Street Reform and Consumer Protection Act. The Republican-led House Financial Services Committee argued that the law sucks for the economy since it slows it down, and today passed a bill that would overhaul and repeal parts of it. It certainly helps Republicans that President  Trump promised way back in his campaign to overhaul the law, which he says costs banks a fortune in compliance and limits lending way too much. Democrats argue the opposite and are convinced that the bill, if passed, will once again create the same conditions that led to the 2008 fiscal crisis. In case it wasn’t obvious, the law was initially passed under President Barack Obama. Naturally, Democrats voted against the bill and lost 34-26.

UnFriendly Skies Take a Well-Deserved Beating; FY-Infosys – Americans Getting on Payrolls; Paid Internships vs. Actual Job

Turbulent…

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The day of reckoning has finally come for airlines and their awful and questionably lawful treatment of its passengers. If you recall, the impetus for this day stemmed from a recent United Airlines flight, where a passenger, David Dao, was forcibly dragged off a plane and left with a litany of injuries including a concussion and broken teeth. So over at the House Transportation and Infrastructure Committee there was a hearing where airline execs insisted that they’ve been working to improve the situations that have been responsible for all the recent bad press. United CEO Oscar Munoz apologized again at the hearing for the recent tussle that cost his airline a presumably hefty settlement.  Of course plenty of blame has been pointed at unruly passengers. But then again who can blame them? Flights have gotten more crowded, equipment and tech failures have been resulting in delays on a fairly regular basis and obnoxious fees keep cropping up like a bad fungus. And don’t even get me started on the practice of over-booking flights. Apparently, a few airlines are rethinking their policies on that issue.  In the meantime, lawmakers are warning they’ll slap on major legislation if things don’t improve and they promise it wont be pretty.

Trump’d…

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A company based in India, with 200,000 employees worldwide, is now on the line to hire 10,000 workers in the U.S. Enter Infosys, one of a number of companies who engage in outsourcing – a four letter word according to the President – because the practice takes jobs away from Americans. Now, the company announced plans to open four new centers in the United States in the next two years. In the past, Infosys and other similar companies have relied on work visas for its employees. But now President Trump has ordered a major review and overhaul of that program. That’s expected to lead to some very unpleasant changes for companies who are used to employing foreigners in the United States, instead of tapping into the talent pool already present in the country. As for Infosys’s CEO, Vishal Sikka, who happens to be based in Palo Alto (oh, the irony), he explained that “…bringing in local talent and mixing that with the best of global talent in the times we are living in and the times we’re entering is the right thing to do. It is independent of the regulations and the visas.” Of course it is.

How do you like your coffee?

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If you’re not having the easiest time finding a job, maybe getting a position as an intern might be the better way to go. And leave it to Glassdoor to unearth the 25 highest paying internships in the United States. You see, the median annual salary in the U.S. for a full time worker is $51,350 – or about $4,300 a month. An internship gig at Facebook – provided you can even get one  – is worth $8,000 a month. Plus, as a Facebook intern, you get room and board, free food, transportation…Does it get any better than that? Just good luck. You’ll need it. Actually, you’ll really need computer science skills. But that’s besides the point. Microsoft comes in second with a paycheck that is about a thousand dollars less a month than what you’d get at Facebook. But former interns can’t stop raving about the projects they got to work on. Rounding out the third spot is ExxonMobil. While it’s not tech-related, it is a company that is highly focused on professional development of its interns. And who couldn’t use some of that? Amazon and Apple take spots fifth and sixth, respectively, and they’ll both keep you in style for about $6,400 a month. While the tech companies seem to dominate much of the list, there are still plenty of opportunities to map out a career in banking. If you’re sure that’s your thing.

Uh Oh Canada: Trump Starts Up With Our Neighbors to the North; Marissa Mayer Walks Away Golden; Nasdaq Yowza!

Good Tariffs don’t make good neighbors…

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As if things weren’t awkward enough between the President and Mexico, now it’s the U.S.’s relations with Canada that are getting the Trump treatment. This time it’s Canada’s lumber industry that’s getting caught up in the import debate as the President’s plan calls for a tariff of up to 24% on Canada’s lumber products. Canadian lumber companies are pretty ticked off and Canada’s Prime Minister, Justin Trudeau, is itching to fight back. Just how remains to be seen. In case you didn’t know, Canada is the world’s largest soft-wood lumber exporter and the U.S. is its biggest customer, reportedly importing $6 billion worth of the resource just in 2016. But here’s where things get dicey, well for the U.S. anyway – shares of home-building companies took a very unwelcome dive on the soft-lumber dispute, as Wall Street realized raw materials could get a whole a lot pricier. That will likely end up leading to a very unpleasant domino effect on other related industries. If you’re looking to buy a home, take note that this Canada lumber is issue is sending home prices up as well. Incidentally, Canada is going to stop importing U.S. dairy products, as a sort of retaliatory action. Sort of. But basically, this means dairy farmers are getting screwed here too. And don’t you hate when that happens? On the flip side, U.S. lumber producers said that cheap lumber imports from Canada, which are they say are unfairly subsidized by the Canadian government, have put a major crimp in their business and these tariffs will give the domestic lumber industry a much needed reboot.

What color is your parachute?

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Yahoo might have gone bust but Marissa Mayer will be walking away from the entity with $186 million lining her pockets. That’s even after Verizon agreed to buy the  beleaguered company. She’s sitting on 4.5 million shares of the failed internet company and she’ll get that substantial wad of cash once she pays to exercise her options. That $186 million is based on Monday’s closing price, in case you were wondering, and while Mayer may not have had the best run at Yahoo, the stock still tripled during her five-year CEO stint there. And as Verizon plunks down $4.5 billion for Yahoo, Mayer will take in another $3 million as part of her golden parachute. That’s besides the fact that last year she lost out on her bonus following the massive data security breaches that affected one billion Yahoo accounts.

Making a break for it…

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The Nasdaq broke the 6000 mark with a lot of help from big corporate gains and, believe it or not, even President Donald Trump. That’s because the President has big “tax reform and reduction” plans which involve reducing the United States’ onerous corporate tax rate from a whopping 35% to a more corporation-friendly, and globally competitive, 15%. Plans like that could mean a big boost all-around on Wall Street. Companies including Apple, Microsoft and McDonald’s, to name a few, reported impressive gains, sending the Nasdaq all the way up to 6034.74. If you’re finding Trump’s contribution hard to swallow, consider that the result of France’s Presidential election also factored into that 6000 point breakthrough. French Presidential Candidate Emanuel Macron’s first-round victory helped matters, probably because of his centrist politics, which apparently Wall Street digs. It wasn’t since March 7, 2000, that the Nasdaq broke the 5,000 barrier. But alas, that remains nothing but a very distant memory.  The Nasdaq, incidentally, is up over 10% since the beginning of the year and up way over 20% in the last twelve months.

Apples to Apples: Warren Buffett Increases Stake in Tech Giant; Groupon’s Earnings Show Everyone Loves a Deal; Trump Wine Makes Trouble

Well, if Warren Buffett’s doing it…

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It’s all about Apple and airplanes these days for Warren Buffett. His company, Berkshire Hathaway, again increased its position in the iPhone maker to 57.4 million shares back in December. This means the company now boasts a hefty $7.74 billion stake in the Cupertino-based company. The Oracle of Omaha also decided to scoop up more shares in the airline industry’s four biggest carriers in the United States: American Airlines Group, Delta Airlines, Southwest Airlines and United Continental Holdings. This little purchase set Berkshire Hathaway back by about $9.3 billion. What’s a bit weird about Warren Buffett’s new-found affection for Apple, is that he has never been much of a fan of tech stocks only because – or so he would like us to think – that they are apparently outside his realm of understanding. I’m pretty sure there’s very little in this world that’s outside his scope of knowledge. Just saying. The airline investment was also a little surprising given Warren Buffett’s hands-off stance on the industry for the last twenty years. Now, however, he apparently sees some potential in airlines that he hadn’t seen in years. In any case, the timing of Berkshire Hathaway’s Apple purchase couldn’t have been better because shares of Apple closed at an all-time high yesterday, as I noted here in this blog.  In fact, shares of all the companies in which Berkshire Hathaway invested have gone up. Because if Warren Buffett puts his fiscal stamp of approval on a company, investors take that as a sign – albeit a not very scientific one –  and they all tend to follow suit.  As for his ten year old Walmart stake, the news was not as good. Berkshire Hathaway dumped almost all of its shares  – close to a billion dollars worth – and analysts are now wondering just how bad of an omen is that.

Get your Groupon, yo!

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Groupon, it seems, is not only beloved to bargain hunters, but to Wall Street as well, as the company just released its fourth quarter earnings, easily beating estimates all-around. For a company that’s all about posting discounts, it took in revenues of $935 million, when analysts only expected $913 million. While the company earned close to $370 million in profit, analysts were left a bit bummed, since last year’s number was higher, at almost $372 million. However, Groupon did add 7 cents per share, more than triple the expected 2 cents. Plenty of its success from the quarter is apparently due to its acquisition of website LivingSocial, which Groupon scooped up back in October.  Groupon’s customers increased by two million, one million of whom came from LivingSocial, and its total amount of customers purchased 11% more goods and services during the same period last year. Interestingly enough, the amount of purchases this past quarter was a smidgen lower, coming in at $1.70 billion, when last year at this time it was more like $1.71 billion. But hey, what do you expect from bargain-hunters, after all?

Cheers…

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In today’s installment of “Who’s Next to Face a Boycott for Carrying Trump Merchandise?”and the #GrabYourWallet campaign, we turn our attention to Wegmans Food Markets.  The offending merchandise in question is wine, or rather products from the Trump Winery, of which Eric Trump, President Trump’s son, is the President. While a group aptly named “Stop Trump Wine,” is calling upon Virginians to boycott businesses that carry the beverages because “Eric Trump shares the views of his father,” the local chapter of the National Organization for Women got 300 of its members to come up with ways to get Wegmans to put the kibosh on the products. But my question is, if the wine is really good, will the boycott be effective? Just wondering. Like all other retailers, Wegmans, with its 92 stores, explains that it only looks at how a product is performing. If the products in question are performing well, with people still buying them, and the boycotts aren’t necessarily having an effect, chances are, the wine stays put.

Fed Chairwoman Shuts Down Congressman; Mattel Goes For Big With Alibaba; Apple Hits New High On iPhone Dreams

Sit back down…

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Almost everyone’s favorite Federal Reserve Chair, Janet Yellen, was in the hot seat today. First she graciously explained in a letter to Republican Congressman Patrick McHenry that, in fact, the Fed possess the authority and has the responsibility to work and consult with foreign entities with regard to financial industry oversight and the development of international banking rules. McHenry, who is Vice Chairman of the House Financial Services Committee, didn’t appreciate that the Fed had already engaged in international talks before President Trump had a chance to put his peeps into play to conduct their own reulatory review. But no dice for McHenry as Chairwoman Yellen explained that such efforts were to the benefit and in the best interests of the United States and its financial stability. In other news, Ms. Yellen was mum on whether the Fed would raise rates at its next meeting in March but said waiting too long wouldn’t be a good idea. Besides inflation and the labor market, Yellen and co. are looking to see what policy changes President Trump is going to make before making any major announcements from the Fed’s end. Which seems like a prudent plan, especially from someone who was appointed by President Obama, but is doing her best to keep from playing sides since she has still has a few years left on her term during the current administration. And also because Trump criticized her during the campaign when he said that she was deliberately keeping rates low in order to benefit President Obama. Yikes.

Ni-Hao Barbie…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Mattel’s wound licking might just be on hold for now, despite losing some major Disney-Princess licensing mojo to Hasbro awhile back. The toy company has begun to forge a new path with Chinese e-commerce giant Alibaba. Nothing like gaining a foothold in the $7 billion Chines toy marketplace to ease those Disney-licensing blues. By the way, the United States’ toy industry is estimated at over $20 billion. Just saying. The company that makes Barbie dolls and Hot Wheels cars is in a partnership with Alibaba to create and promote interactive and educational toys, in addition to producing entertainment content based on Mattel products. Because hey, who doesn’t love shows based on toys – and vice-versa? Mattel will be selling its new wares via Tmall.com, which is Alibaba’s business-to-consumer retail site. Incidentally, Mattel had already been selling on Tmall.com for about six years now and rumor has it that its selection of Fisher-Price toys have actually been the top-sellers for five years in a row on Alibaba’s November 11 Singles Day. Mattel’s new products for Alibaba will hit Alibaba’s virtual shelves by mid-2017.  Mattel could really use the boost, especially since sales of Barbies have not been doing as well as they have in the past, and despite throwing some more realistic features onto the doll. Also, the company reported an earnings miss February 1, taking in 52 cents per share on an 8% revenue decline to $1.83 billion, when analysts expected 71 cents per share. But with Alibaba boasting over 440 million active buyers, chances are Mattel has the ability to turn that last earnings report into a mere distant bad memory.

Apple of my i-Phone…

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For the first time in two years, Apple hit a new high of $134.90 and a market cap of $701 billion. And in case you don’t own any shares, that probably means a whole lot of nothing to you. The last time it hit a new high was back on April 28, 2015, when the stock hit $134.54. But that 36 cents means a whole lot to investors who are hoping, and probably betting, that Apple will release a new iPhone, dubbed the iPhone 8, or the iPhone X – if you dare –  that will magically lift blah sales for the tech giant. While the company reported impressive earnings in its last earnings report, its outlook was less so, and the fact that Apple’s revenue decreased by 8% for 2016 didn’t help the mood on Wall Street as of late, even if it is the most valuable company in the world.  Rumor has it, the new phone is going to be even more expensive than previous ones, which is always a good way to get Wall Street tongues wagging.