Alphabet Takes on Some Heavy Lyfting; Crash and Burn: Black Monday Crash-iversary Turns 30; Blue Apron Puts Employees on the Chopping Block

 

Car-ma?

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Uber? What’s Uber? I can tell you what Uber isn’t. It isn’t $1 billion more valuable. But you know who is? Its rival Lyft, which just received a very hefty sum of money from Google’s parent company, Alphabet, following a very recent financing round that brings its total valuation to $11 billion. CapitalG, an Alphabet growth investment fund, will now get a seat on the board and an even cushier relationship with the ride-sharing company.  Incidentally, Alphabet is also connected to Uber. However, that relationship went south when Uber went ahead and started developing autonomous cars that compete directly with Alphabet’s Waymo autonomous-driving technology. Naturally, that didn’t sit well with Alphabet. If you recall, and it’s totes okay if you don’t, Alphabet then sued Uber, alleging the beleaguered ride-sharing company committed trade secret theft. Some analysts believe that this little infusion from Alphabet is the company’s way of hitting back at Uber. Seems legit.  In any case, it appears an IPO may be on the horizon for Lyft and if Alphabet’s throwing money at it, it might turn out to be a stock worth watching.

Unhappy anniversary…

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Today’s date marks an anniversary many would like to forget: The stock market crash of 1987, aka, Black Monday. It was exactly 30 years ago today that the Dow Jones Industrial Average (DJIA) crashed 508 points to a smidge past 1700. The index tanked by 22% and the shockwaves rippled all over the world. It was an even bigger one day drop than the stock market crash of 1929.  But miraculously, the market recovered. Well, maybe not for everyone.  In any case, this week (of all weeks), that very same index just hit a new record, breaking the 23,000 mark. To put it in perspective, if the DJIA crashed by 22% today, it would need to lose almost 6,000 points – heaven forbid! Poo poo poo.  Some market experts warn that we could experience another disastrous drop. However, following the nightmare of Black Monday, certain safeguards, dubbed “circuit breakers,” were put into place that basically – and very conveniently – shut down the market after major drops. This prevents trading and sell-offs that could cause further damage. And basically, now if the S&P 500 falls either 7%, 13% or 20%, depending on certain factors, market trading is halted automatically. You are now free to breathe a sigh of relief.

Stick a fork in me…

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Nothing spells trouble like having to cut your workforce just four months after going public. Which brings us to Blue Apron, purveyor of fine meal-kits, which just found itself having to do just that. The fact is, there’s a lot of competition sprouting everywhere, from Amazon and its Whole Foods acquisition to Albertsons picking up the company Plated in order to sell their kits at the grocery chain’s 2000+ locations. For Blue Apron, it meant having to slash 6% of its workforce which amounts to about 300 employees. The stock is trading today at around $5.20 a share, down almost 50% from its IPO price back in June.

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In: Tax Inversions, Out: Pres Obama’s Opinion on Them; Tyson’s Earnings Nothing to Cluck at; Wal-Mart is Shaking Up the Calendar

Invert this…

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Pfizer and Allergan are thisclose to becoming the world’s largest pharmaceutical company through a $160 billion merger. Even though Pfizer is substantially bigger, with a $200 billion market cap to Allergan’s $122 billion market cap, Pfizer wants Allergan to “buy” it, in a structured reverse merger all in the name of a tax inversion. It’s a practice that President Obama, unironically, calls unpatriotic and the Treasury Department has even set rules to make it difficult to execute them. Yet, the corporate tax rate in the United States is the highest in the industrialized world so that no matter how difficult the Treasury Department tries to make the practice, big corporations have too much incentive to overcome the obstacles and move their entities overseas, in this case Ireland. Pfizer CEO Ian Read argues that the U.S. corporate tax rate leaves U.S companies competing with overseas companies “to fight with one hand tied behind our back.” Once the merger is finalized, the newly formed company can expect to pay a corporate tax rate of 17% – 18% in the first year. That rate will go up to about 20%. But even at 20%, that rate is nothing compared to the 25% rate it would have to pay in the United States. It’s expected to be a savings of  billions of dollars that would go into research and development of drugs instead of the governments coffers. Of course, shareholders still need to weigh in with their votes but given the billions at stake, it’ll most likely pass.

Who you callin’ chicken?

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It’s the largest meat processor in the U.S., so why shouldn’t it see its highest intra-day jump in 22 months. And that’s exactly what happened when Tyson Foods Inc. announced its earnings and beefed up its projected forecast for the year. The company now expects to earn $3.50 – $3.65 per share, even more than what analysts had predicted. Those numbers were helped a lot by poultry, chicken especially. Beef? Eh. Not so much, as that division took a $33 million operating loss compared with an operating income this time last year of $153 million. Apparently, there’s a lot more demand for chicken lately. But Tyson’s earnings were also helped by the fact that the food the chickens eat, very uncreatively called feed, has gone down in price. (In case you were wondering, chicken feed is made up of corn and soybean.) Even though, Tyson missed profits by a nickel, coming in at 83 cents per share, it beat sales estimates posting $10.5 billion, a 4% increase over last year and $300 million more than what was projected for the quarter.

Cyber showdown…

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Forget Cyber Monday. Wal-Mart’s wants you to start your cyber-holiday shopping on Sunday night instead, which is just so…2014. Wal-Mart doesn’t feel its necessary to limit Cyber Monday to just Monday. According to Wal-Mart Chief Executive Fernando Madeira, “now everyone has internet.” As in, the high-speed kind. Consumers now have access to high speed internet and no longer need to wait until the official “Black Monday” to use their employers high-speed connections. So why, Wal-Mart argues, wait until then to take advantage of all those smoldering deals, right? To make your cyber Wal-Mart shopping experience more enticing, the world’s largest retailer will attempt to lure you in with bargains including a Microsoft Surface Pro for $599, and a 48” Samsung 4K TV for $598. But those are just a few of the expected 2,000 deals (last year there were only a paltry 500 deals) that are expected to start rolling out online beginning at 8pm on November 29. Expect to see three times as many Star Wars toys, lots of drones and 3D printers to make a nice showing. Besides, the retailer needs to up its “A” game on e-commerce giant Amazon. Last year, $2 billion was spent just on Cyber Monday. But with 21 million visitors expected, Cyber Monday sales could hit $3 billion. So why not start the experience the sooner the better?