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.

American Airlines Wants You to Fly the Cramped Skies; New York Times “Trumps” Estimates; Tesla’s Big Losses and Bigger Gains

Low-class…

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As if customers aren’t irritated enough, and because American Airlines maybe just doesn’t give a hoot, the airline just announced plans to make its flights even more cramped and unpleasant. In economy class, mind you. And this un-strategically timed announcement comes the day after airline execs took a truly deserved congressional beating over how poorly they treat those customers. American Airlines spokesman Joshua Freed said, “We believe we’re still providing a good product for customers.” Of course they do. So if you didn’t feel squeezed and claustrophobic enough before, you can now look forward to even 1-2 inches less of legroom. In fact, that will leave so little legroom, that it will almost put American Airlines in the same legroom class as low-cost carriers like Spirit Airlines and Frontier Alines. That’s classy, alright. What’s worse, is that if American Airlines ends up getting away with these new seating arrangements, then you can expect other major airlines to follow suit. Because that’s how these cats work.

Sign of the “Times”…

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The New York Times whipped out some impressive earnings this quarter and they can thank its very own Public Enemy Number One: President Donald Trump. Oh, the irony.  The Newspaper of Record took in 308,000 new digital subscribers, a 60% increase over last year that marked the company’s best-ever quarterly growth, and now brings its total digital viewership to 2.2 million subscribers. But then it gets even more interesting. Print ad revenue took an 18% dive since apparently a lot of companies just don’t see the value in placing ads in newspapers anymore. However, lo and behold, digital ad revenue was up 19%. See how well that worked out for the media company? Even its revenue grew 5% to almost $400 million, with the company picking up 11 cents per share, a whole penny more than last year at this time. Bonus: it beat estimates of 7 cents per share. Despite the President’s insistence that the company is failing, the fact – not an alternative one, mind you – is that it enjoyed its best quarterly revenue growth in six years. Naturally, shares rose 12% on the not fake news.

Solar-ious…

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Tesla whipped out some quarterly earnings that were not exactly electrifying, given that it had losses that were much much bigger than expected, but also not bad. At all. The company took a $1.33 hit on it earrings, when estimates were for a less severe 83 cents per share loss. That’s where the bad news ends. Revenue came in at $2.70 billion, more than double last year at this time, and nowhere near the expected $2.61 billion. But then we get to the part about vehicle deliveries. Tesla delivered a record breaking 25,000 cars, a number that sent shares of the company up up and away. It was that impressive of a number. Elon Musk made sure to rub that into the faces of traders who were shorting the stock by tweeting, “Stormy weather in Shortville…” That’s just trading humor on Wall Street. Anyway, the stock is up 46% in the last twelve months, so they must be doing something right over at Tesla. One can only hope…

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.

Show Me the Money! Forbes Unveils Its Annual List of People With Money to Show; UK Shows Google What Happens When You Don’t Shut Down Haters; Twitter Did Something Impressive. Just Not With Its Earnings

Rich-y rich…

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It’s that time of year again. The one where Forbes reminds us just how much money we don’t have relative to the richest people in the world. And here goes. There are 13% more billionaires this year than last year and their combined net worth totals almost $7.7 trillion. Yes. Trillion.  The number one spot goes to Microsoft co-founder Bill Gates who’s net with totals $86 billion. When Gates is not busy fixing the world and explaining to the President why his budget ideas are bad ideas, he runs the world’s largest charitable organization. Naturally, the Oracle of Omaha, Warren Buffet, comes in a close second with a net worth of $75.6 billion, while Amazon’s Jeff Bezos makes his debut into the top three with a net worth of $72.8 billion. And even though we only finally see a woman on this list at the number 14 spot, there’s still some uplifting news. For instance, the number of women who ma∂e it onto the list has increased 170% since 2009. Also, there’s a record 56 women on the list who are self-made billionaires. If you’re curious to see who did and didn’t make the list, click here to find out. And spoiler alert: Perhaps President Donald Trump really ought to consult Bill Gates on any and all future budget concerns for the country, considering he lost a billion in the last year and ranks #544.

Dis-content…

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Just when you thought Google could do no wrong, the search engine giant finds itself in the midst of some major policy revamping after a bunch of big-name advertisers pulled their marketing  – and whole lot of money – because it was showing up on /sexist/hate-filled/offensive/anti-semitic/terrorist-promoting content. The trouble started when major brands, including the BBC and department store chain Marks & Spencer, noticed their ads being being placed alongside content promoting violent extremist groups. Last I heard, department stores were no great fans of terrorism. Now, part of the policy revamp includes broadening Google and YouTube’s definitions of hate speech, which is always a good thing since hate manages to always rear its ugly face no matter how subtly its presented. Also, content won’t be able discrimnate against groups based on their identity, socieo-economic class and country of origin. Such measures ought to make it a tad bit more difficult for the haters to get their odious messages out. In addition to some added controls and a few default settings, Google should end up creating a kinder, gentler platform. Hopefully…

Speaking of which…

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Even though Twitter doesn’t exactly have the fiscal luxury to delete accounts, to its credit, the social media company did just that and put the kibosh on close to 380,000 of them because of their links to terrorism. So lousy earnings aside I say “Kudos” to Twitter.  Those accounts were just the ones it took down between July and December of 2016.  Since August of 2015, over 635,000 accounts have been removed for the same reason. The information was disclosed in its latest transparency report and these actions are part of an effort to weed out extremist groups and other assorted haters. Interestingly enough, almost 75% of the accounts that were removed from Twitter were discovered by technology created just for this purpose for Twitter, while 2% of those accounts came down after governments made requests for the company to get rid of them.

 

Trump Tweet-Targets Nordstrom; Under Armour CEO Says It All Wrong; Wells Fargo Continues to Anger

Oh no you didn’t…

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Just one week after pulling Ivanka Trump’s fashion line from its stores, Nordstrom has managed to incur some serious Presidential social-media wrath, via Twitter of course. The Tweeter-In-Chief wrote that his daughter was “treated so unfairly” by the department store and “She is a great person — always pushing me to do the right thing! Terrible!” Nordstrom argued that the merchandise’s performance wasn’t up to snuff, and that it regularly evaluates the thousands of brands that it carries to decide which ones get the boot and which ones don’t. And Ivanka’s line got it, though the chain had been carrying the line since 2009. Back in November, Nordstrom co-president Pete Nordstrom sent out a company memo explaining that the turmoil surrounding the election is putting the retailer in a “tight spot.” It risks offending Trump-haters for keeping the line, but also risks alienating shoppers who support him. Nordstrom tried to explain that it makes a “sincere effort not to make business decisions based on politics but on performance and results,” but found itself “in a very difficult position.”  That difficult position probably had to do with calls for boycotts of the merchandise, and even the store.  And it’s not like Nordstrom was the only one who took this sort of action. Neiman Marcus Group also stopped selling her jewelry online and in one of its stores in the northeast. Shares of Nordstrom had dropped a smudge 1% following Trump’s tweet. But they quickly bounced back. So maybe the effect of Trump’s fury only goes so far.

That’s gonna come back to haunt you…

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Speaking of which…Under Armour CEO Kevin Plank played nice with Trump so of course, it’s now going to cost him. Literally. During an interview on CNBC’s “Fast Money Halftime Report,” host Scott Wapner asked the athletic apparel chief executive about his involvement in Trump’s initiative to create manufacturing jobs in the United States. Some of the pearls that escaped Plank’s mouth included, “To have such a pro-business president is something that is a real asset for the country…People can really grab that opportunity.” [cue crickets chirping]. Naturally, Under Armour had to issue a statement to clarify Kevin Plank’s remarks – lest anyone think that he really meant what he said, which would lead to a boycott. Except that sort of already happened as “Boycott Under Armour” hashtag made its way into the Twitter-sphere in no time. In the meantime, UA insisted that it engages in “policy, not politics” and Plank’s statements had to do with job creation.  I shall spare you the details of official company statement – you’re welcome! – but rest assured it included all the usual themes about the beauty of unity, diversity, welcoming immigrants etc. The fact is, UA can’t afford any boycotts, whether Plank meant what he said or not. Its shares have been falling lately and in its most recent earnings report, the company missed expectations and forecasted slower growth for 2017.

And here’s one more reason to hate Wells Fargo…

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In case you weren’t incensed enough by Wells Fargo’s fraudulent account scandal, CEO Tim Sloan said that the bank is committed to helping the Dakota Pipeline project. While it would be nice to focus all rage on Wells Fargo, who loaned $120 million toward this project, the fact is the bank is just one of 17 that gave loans to help fund the $3.8 billion project. Obama had initially halted the project, but President Trump swiftly reversed that action and is looking forward to its completion. Come June, the pipeline is expected to ship half a million barrels of crude every day from North Dakota to Illinois. Unfortunately the 1,200 mile pipeline cuts through an Indian reservation with deep cultural significance, and it’s likely the pipeline will incur damage on the site. The pipeline also poses major environmental hazards where it crosses the Missouri River. The Standing Rock Sioux reservation is downstream from the crossing and the pipeline could end up polluting the Tribe’s drinking water. The Seattle Council is doing its part to combat Wells Fargo’s involvement by pulling about $3 billion in city funds.  Seattle has a contract with the bank that expires in 2018, and it most definitely will not be renewed. In the meantime, the council is on the hunt for a more “socially responsible bank.” Good luck with that one.

Tesla Deliveries Anything But Electrifying; Sec’y of State Nominee’s Future Looks Green; Trump’s SEC Chairman Pick

Not electrifying…

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Tesla’s fourth quarter sales rose 27%, yet deliveries fell short with CEO Elon Musk pointing to production delays. And Tesla didn’t fall short according to Wall Street’s predictions but rather its very own.  It may seem like a convenient excuse, but it’s a valid one that was also used to blame the company’s second quarter shortcomings. The electric car company delivered 22,000 cars in its last quarter, which was over 5,000 more than the same time last year. That might seem awfully impressive except that Tesla wanted that figure to top 25,000 vehicles. So now, that 3,000 car miss becomes an ugly smudge on the company’s fourth quarter earnings report. Tesla’s grand total of car deliveries for the year hit over 76,000. But once again, because Tesla went ahead and predicted that number would hit 80,000, it disappointed only itself.  Setting forecasts he just can’t meet is a nasty habit that Elon Musk can’t seem to break.  Production delays or not, maybe Tesla’s should stop trying to predict the future.  Shares were down 11% for 2016 which marks the first time that Tesla reported an annual decline since its 2010 IPO. But miraculously those shares still rose today because Wall Street clearly has a thing for Elon Musk. Well, his company, anyway.  Wall Street and consumers alike are waiting with bated breath to see if the much anticipated $35,000 Model 3 will actually surface this year. Some experts, however, think the more affordable model will only be making its grand debut in 2018. That still has’t stopped loyal Tesla buyers and enthusiasts from shelling out a total of $350,000 worth of deposits for the car.

Hatched…

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President-elect Donald Trump’s pick for Secretary of State, Rex Tillerson, reached a very lucrative retirement deal with ExxonMobil. If Tillerson does in fact get confirmed – and that’s still kind of iffy – then he’ll walk away from his post with $180 million comfortably nestled in a trust account. And that’s the approximate value of Tillerson’s 2 million deferred shares of the energy giant. Because he would not be allowed to own shares of the company if he took the post, the shares would get cashed out and put into an independently managed trust account. Besides dumping his ExxonMobil shares, Tillerson will not be allowed to work in the oil and gas industries for a period of ten years. Plus, he has to give up a cash bonus and other benefits that are worth another $7 million because he won’t be there in March, when he’ll have reached the company’s official retirement age that affords him the opportunity to collect on that $7 million package. But, that $180 million ought to tide him over. He’ll also need to agree to sever ties in order to avoid any conflicts of interest. Should he decide to return to the industry, then all that money would be given to charities of the main trustee’s choosing. But I did write that his confirmation is”iffy” because there are plenty of Congressional members who aren’t down with Tillerson’s cushy relationship with Russian president Vladimir Putin. That’s going to come up a lot during the confirmation hearings and it’ll probably be ugly, if not wholly entertaining.

And I choose you…

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Trump just announced his pick for Securities and Exchange Commission Chairman and it’s one that should surprise…no one. Enter Jay Clayton, a lawyer with the law firm Sullivan and Cromwell, who has plenty of experience with banks. Well, representing them, anyway. Besides banking clients, Clayton also defended a variety of “large financial institutions” against such entities as the Department of Justice, other government agencies and regulators and – get this – even the SEC itself.  Some of his more notable achievements include representing everybody’s favorite Chinese e-commerce giant, Alibaba, when it made its grand IPO debut. He’s also represented Barclays when it unceremoniously scooped up Lehman Brothers, and Bear Stearns when JP Morgan took it on. You didn’t think we’d leave out Goldman Sachs, did you?  Because he repped that one too.  Word on the street is that Carl Icahn interviewed Clayton, along with several other candidates for the post. Presumably the two gentlemen discussed how to best undo obstructive banking regulations, Dodd-Frank and all those other pesky rules that have been casting a major downer on the financial world.

Trump Tweets Threats of Big Taxes to GM Over Small Cars; Ford Rearranges Plants Much to Trump’s Delight; Trump’s Trade Pick China’s Worst Nightmare?

Small-fry…

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Trump is tweeting again, this time going after General Motors. The President-elect wants to slap some big ugly taxes on the auto company because it imports Chevrolet Cruzes from Mexico instead of making them in the United States. But here’s where things get dicey: According to GM, only the hatchback version of the car is made in Mexico, and are meant for global distribution. The sedans, however, are made in Ohio. Ohio. In fact, of the 172,000 Cruzes sold last year, only 4,500 of them came from Mexico.  Even the United Auto Workers Union doesn’t care if GM does assemble those cars in Mexico since the Ohio factory isn’t equipped to make the hatchbacks. (Incidentally, over 1,000 employees at this plant are getting laid off soon.)  Besides, it’s alot of fuss to make about a car whose sales were down 18% in November.  The fact is, low gas prices are leading to higher sale of of SUV’s and trucks.  And the Chevrolet Cruze doesn’t figure in very nicely here.  Which all probably explains why this latest Trump tweet didn’t even harm the stock.  While it did lose some juice early on, it rebounded into positive territory very very quickly.

Adios…

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In the meantime, just hours after Trump used his social media account to lash out at GM, Ford announced that it is officially scrapping plans to build a $1.6 billion assembly plant in Mexico. But that doesn’t mean its ditching our neighbor to the south. Instead, Ford will continue making Ford Focus compact cars in an existing plant there while taking $700 million from that budget to upgrade a plant in Michigan for building electric cars. And bonus: 700 jobs would be added to the mix for that Michigan plant. It’s all part of a bigger $4.5 billion plan that Ford had in place to manufacture 13 new models of both electric and hybrid cars. A win-win, no?  There are plenty who think it’s just a win for Trump, who made it clear that he’s not into NAFTA and that manufacturing cars in Mexico only hurts the U.S. economy.  They also think Fields scrapped his original plans in an effort to make nice with the incoming President, not to mention, avoid tariffs. However, Fields said he was planning to make this move anyway, whether Trump was elected or not. Which doesn’t explain why construction on the new plant already started in May. But anyway, you needn’t cry for Mexico…just yet. The existing plant in Mexico will be adding 200 jobs there as well, so that country doesn’t come out a total loser either. While shares of Ford rose on the news today, can you guess what happened to the peso? It took a .9% hit against the dollar.  How do you say “ouch” in Spanish?

In other Trump business news…

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The President-elect has set his sights on his pick for the U.S. Trade Representative post. Enter Robert Lighthizer, a Reagan administration alum, who has spent the last thirty years representing major companies in anti-dumping and anti-subsidy cases. Presumably, he was incredibly successful in that aspect of his career, or else Trump might not have looked in his direction.  According to Trump,  Lighthizer has made some very effective deals that protected significant sectors and industries in the U.S. economy. Yowza. Trump’s banking that Lighthizer will do something about “failed trade policies which have robbed so many Americans of prosperity.” That’s a definite plus for working in the Trump administration. As Trump’s top trade negotiator, one of Lighthizer’s major duties will be to try and reduce that pesky trade deficit and apparently, he has a knack for making deals that do just that. Lighthizer doesn’t care for the trade policies we have in place for China, so be sure to watch the drama that unfolds as he goes after one of the world’s largest economies. You can expect some big changes in that arena and damned be the Word Trade Organization rules if it comes to that. Which it just might considering Lighthizer’s not that into the WTO.

Yahoo’s Got Major Un-security Issues; Big Pharma Slapped With Big Lawsuit; Super Bowl “Ads” Up to Big Bucks

Some heads are gonna roll…

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Today’s massive data breach is brought to us by Yahoo. Again. It’s estimated that a billion users had their personal data breached back in 2013, which is nearly twice as big as the last data breach Yahoo reported just a few months ago that happened in 2014. Now Yahoo has the dubious distinction of being the target of arguably the largest data breach. Ever. Incidentally, it wasn’t even Yahoo that discovered the breach but rather law enforcement officials. Law enforcement handed over files to the internet company that they received from a third party who said the info was stolen. Way to stay on top of things, Yahoo! Virginia Senator Mark Warner is now on a mission to investigate why Yahoo can’t seem to get its cyber-defense act together, while Yahoo is on its own mission to investigate who was responsible for the breach.  The Senator went to the SEC  back in September to ask them to investigate if Yahoo did what it was required to do by informing the public about the breach that occurred in 2014.  Warner would have preferred that Yahoo informed the public about the breach when it first happened – and NOT three years later. Sounds fair. In the meantime, there’s talk about whether Verizon still plans to acquire Yahoo’s core internet business for $4.83 billion. With Yahoo’s stock experiencing its biggest intraday drop in almost a year, that deal might go buh-bye as Verizon reviews “the impact of this new development.”  Or Verizon will just offer Yahoo a lower price to acquire it. Because, apparently it still makes strategic sense to purchase Yahoo even with two massive data breaches under its belt.

Suited up…

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Twenty states are going after big pharma via a massive lawsuit that probably wont be going away anytime soon. Mylan NV,Teva Pharmaceuticals and four other companies that manufacture generic medicines are now staring at the wrong end of a very big lawsuit. This lawsuit, by the way, is completely separate from the investigations being led by the Justice Department and other agencies. The companies are being sued for conspiring to fix drug pricing on two generic drugs: an antibiotic called doxycycline and a drug used to treat diabetes called glyburide. The suit charges that brass at the pharmaceutical companies jacked up the drug prices by setting them and also allocated markets, which they all knew was illegal. They made sure any incriminating correspondence was deleted or simply avoided written communication. When asked for a comment, one of the companies named in the suit, Heritage Pharmaceuticals Inc., conveniently blamed former executives who had since been fired.  Jeffrey Glazer, former CEO of Heritage Pharmaceuticals is actually expected to plead guilty next month. Mylan predictably denied the charges while Teva said it’s still reviewing the complaint. The others remained mum.

Ad-citing news…

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The Super Bowl is still a couple of months away but the advertisers are gearing up for their multi-million dollar thirty second spots come February 5. Rumor has it Fox is charging between $5 million – $5.5 million. GoDaddy, which skipped last year’s Super Bowl ad festivities, is coming back this year, along with Snickers, Skittles and – get this – Avocados from Mexico. Can’t wait to see how Donald Trump tweets about that one.  GoDaddy skipped last year’s festivities, apparently to focus on breaking into more international markets. That mission has presumably been accomplished as the domain services company is now available in 56 markets. Of course, it wouldn’t be the Super Bowl without beer ads and Anheuser Busch has got a whole bunch of spots lined up touting its refreshing assortment. In the meantime, regular advertisers, PepsiCo and FritoLay are sitting out this year. It’ll be the first time in ten years that viewers will not see a Doritos ad during the big game. But don’t get too choked up about Pepsico’s absence. The company will still figure prominently since its Pepsi Zero Sugar is the official sponsor of the half-time show starring Lady Gaga.

Trump Must Say Buh-bye to DC Namesake Hotel; Amazon’s Latest Tricks Up its Sleeve; The Urge to Merge: Alaska Airlines and Virgin America

Give it up…

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The official word out of Washington DC and, more importantly, the General Services Administration (GSA), is that Donald Trump has to give up his beloved hotel that is housed in the Old Post Office, just a few blocks from the White House. It’s the one that he opened back in September and has been the site for so very many Trump protests. That particular building is especially off limits to the President-elect because it is leased from the Federal government. The GSA, in case you were wondering, manages property owned by the Federal government. So it stands to reason that it has a say in what Donald Trump can and can’t do in this particular situation. Incidentally, Federal law does not exactly prohibit a president’s involvement in private business. However, members of Congress and lower ranked executive branch officials cannot. So weird, huh? As for a president’s assets, those have been typically put into blind trusts in an effort to avoid any appearance of impropriety – which seems logical. The owners of these blind trusts have no knowledge of how the assets are being managed and are typically managed by independent third parties. Donald Trump’s daughter, Ivanka, has apparently been dealing with the GSA to resolve this particular issue. However, her involvement is sort of iffy, according to some, since she is an official member of Trump’s transition team.

Droning on and on…

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Amazon’s unleashing plenty of big news today while Jeff Bezos is kicking up his heels at Trump Tower, trying to make nice with the President-elect. First, the online retailer giant announced its first drone delivery, called Prime Air, which took place December 7 in the U.K. A Fire TV device, along with a bag of popcorn found its way to its buyer just thirteen minutes after the order was made. The drop was made in an area in Cambridge that has been authorized for drone testing. So far, two customers have access to this new delivery method. But in the coming months that number is expected to grow by leaps and bounds. The drones fly no higher than 400 feet, are guided by GPS and can carry up to five pounds of merchandise. But best of all, for Amazon anyway, is that drone delivery of small packages are an excellent way to keep delivery costs really low. How does a dollar a drop sound?  Then, Amazon also announced the launch of its very own live streaming video service available just about everywhere. Except China. That must warm Donald Trump’s heart a little.  In any case, the new service is giving Netflix   – which also has yet to conquer China – some very unwanted competition. By the way, Amazon’s launch was eerily reminiscent of Netflix’s global launch almost a year ago. Just saying. The new service, aptly called Prime Video, would get bundled with your average Amazon Prime subscription. The idea is to get people to sign up for Amazon Prime service and from watching all of Amazon’s amazing (it really is) programming, viewers will then have an insatiable urge to buy even more stuff on Amazon. It’s meant to be a win-win. Just not necessarily for your bank account. In Amazon’s defense, however, the company wants to make sure that you’re getting a lot of value from your annual Prime subscription. I can live with that.

Take wing…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The Alaska Airlines/Virgin America merger is in effect with the official blessing from the U.S. Justice Department. But to be clear, Alaska Airlines is actually buying Virgin America – which has only been around since 2007 –  for about $2.6 billion. The total cost, after all is said and done, is expected to hit closer to $4 billion.  Alaska Airlines is currently the sixth biggest airline operator in the United States, while Virgin America holds steady at number eight. But once these two babies unite, they’ll become the fifth largest airline in the industry. The top four airlines, however, still control 80% of the country’s domestic market. At least the merger will allow for the new entity to become a major player in the highly competitive West Coast region. Combined, the two airlines have around 40 million customers and have so far this year generated $2.4 billion in revenue.

Viacom Pulls Merger Plug; Trump’s Next Tweet Tackle Goes After Lockheed Martin; JetSmarter Channels Uber for Air Travel


On second thought…

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Today father-daughter Redstone team, Shari and Sumner, announced that they are no longer interested in a merger with sister company CBS. It was Shari Redstone who said as much in a letter from the family’s privately-held company National Amusements Inc.  She gets to do that sort of thing since, after all, she controls the voting shares of both Viacom and her dad, which altogether adds up to 80% of the voting stock. Wall Street wasn’t too happy about Viacom finding its own way sans CBS and not only sent the stock down 7%, it also took Viacom to a 52 week low. The two companies were actually merged once upon a time, but back in 2006 went into splitsville. Initially, the merger was meant to give Viacom a much needed boost. But the father-daughter duo decided to put the kibosh on the merger because they apparently developed renewed confidence in Viacom’s prospects under the leadership of its new CEO Bob Bakish. At least that’s how team Redstone spun it. However, rumor has it that it was because CBS chief Les Moonves wasn’t on board for a number of reasons. For one, Viacom was looking to get a premium on its shares and CBS wasn’t willing to pay for it. Also, Moonves wanted control of both companies along with increased equity and the Redstones weren’t too keen on giving him all that. Other sources say that Moonves wasn’t even interested in trying to fix Viacom. Had the merger gone through it would have resulted in a massive media giant.

F-35 you!

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President-elect Donald Trump’s latest Tweet target is Lockheed Martin’s F-35 program. Naturally, his Tweet dumping on Lockheed Martin sent the stock south along with several other defense contractors. Trump said that come January 20th, he plans to save billions of dollars on the aircraft that he described as being “not very good” according to his very expert opinion. Lockheed Martin said that it already spent millions to reduce costs on the 5th generation fighter aircraft by more than 60% and  I am pretty sure there is a joke somewhere in there.  But it’s not just Trump who thinks the program’s costs are bananas. A voice of reason who we know as John McCain, and who also serves as the Senate Armed Services Chairman is critical of the program. He wrote a letter to the Pentagon challenging the $1 billion cost overrun for the program. But Lockheed Martin said that it creates 146,000 jobs in the U.S. and Puerto Rico, besides the fact that analysts also feel the aircraft is necessary since Russia and China have highly advanced competitive fighter aircraft. We wouldn’t want to let them have the upper hand as far as our defense goes, now would we? There are six other countries who also use the jets and 3,000 planes are supposed to be built for the U.S. and other countries. The estimated cost of the program is about $400 billion and has the dubious distinction of being described as the most expensive weapons system in history. The fact that other countries participate in the program is supposed to help spread out the costs a little more. However, it’s not clear exactly how much their participation has helped the U.S.

Coffee, tea or Jay-Z?

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JetSmarter, a company that is basically Uber for flying privately can now count Jay-Z and the Saudi Royal family among its investors. The company has so far raised $157 million with $105 million raised just in its latest round.  JetSmarter founder and CEO Sergey Petrossov discovered a very lucrative opportunity when he realized that 35% of private planes have no passengers. With 50 routes in 30 cities around the world, JetSmarter wants to take its latest cash-infusion to expand into Asia, South America and Africa.  Plenty of other similar start-ups have failed so how come JetSMarter hasn’t? Apparently because seat prices on Jet Smarter change based on predictions about the popularity of certain routes and flight times. JetSmarter allows its members to buy empty plane seats from private jet companies and sell them through its app.  The company boasts 6,700 members and currently, a membership will set you back about $15,000 for the first year and $11,500 per year after that. But hey, that gets you an average of 12-15 flights per year. However, if you decide to create a charter flight or want to take a member created flight, that costs extra. And while the company does not own any of its own planes, it does have about 32,000 aircraft in its network with a $1.6 billion valuation.