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.

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.

Yahoo’s Marissa Mayer’s Expensive Goodbye; Intel Revs it Up on Self-Driving Cars; Another Sporting Goods Chain Throws in the Towel

Yah-who?

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Well the good news is that Marissa Mayer will get to add $23 million to her bank account. And who wouldn’t like to see their bank account get a deposit like that? The bad news is that the $23 million is part of her severance package from Yahoo. At least that’s what a regulatory filing indicated. And no one seems to know – and if they do, they are not talking – whether Ms. Mayer will be staying with the remaining entities of Yahoo that Verizon is buying. The parts of the company that Verizon is not buying will eventually be formed into a new company called Altaba, to be headed by Thomas J. McInerney. If you recall, Verizon got to cut $350 million from the final purchase price of $4.5 billion because of Yahoo’s fiscally disastrous data breach. Verizon’s feelings were that Yahoo execs didn’t quite “properly comprehend or investigate” those breaches that affected hundreds of millions of people. At this point, feel free to get a little more colorful in rephrasing that last bit with your own words and thoughts. Especially if you are a Yahoo account holder. The data breach also cost Ms. Mayer her own 2016 cash bonus of up to $2 million. However, to her credit, she did graciously gave up her bonus and equity grants for 2017.

Start me up…

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Intel just threw down over $15 billion to buy Israeli tech company, Mobileye NV.  What,  might you be wondering, is so special about this particular tech company that had a chip-maker eager to plunk down a 30% premium of $63.54 per share? Self-driving cars, which you may or may not realize, are all the rage these days. And since Mobileye already commands 70% of the global market for driver-assistance and anti-collision  technology, this acquisition seemed like an awfully prudent way for Intel to break into that industry in a very big way. So I think we can all agree that even though this was Intel’s most expensive purchase of any single company, it was totally worth it. I suppose Mobileye would have to agree as well, since its own stock went up a very substantial 30% on this latest news.

Another one bites the dust…

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Just when you thought you’d seen the last of the sporting goods chains bankruptcies, along comes Gander Mountain to remind us that, alas, those days are far from their bitter end. The Minnesota-based company will follow the unfortunate fiscal footsteps of Sports Authority, Golfsmith and about ten other retailers from the last year or so, and shutter over 30 of its 162 stores. Fierce online competition led to less traffic in stores and too much merchandise on the shelves. Around 1,300 employees will be affected by the closures, but will apparently have an opportunity to be relocated to locations that aren’t floundering. Yet, anyway.

 

Mo’ Money, Mo’ Brexit Problems; DOJ V. Health Insurance Industry: The First Round; No News is Not Good News at Yahoo

It’s all Brexit to me…

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The bad Brexit news just keeps on coming with the IMF now sharing its unpleasant thoughts. The fund has cut the global forecast for the next two years, expecting global economic growth for 2016 to come in at 3.1% and 3.4% for 2017. And those figures are on the bright side since the IMF feels that there is “sizable increase in uncertainty” about how bad the Brexit damage will be. That forecast is riding the wave that the EU and British officials will graciously reach new trade agreements that won’t make trading conditions any more challenging than necessary. If officials can’t hash out the details then Britain just might be staring down the wrong end of a recession. All because of the Brexit vote. Perhaps the pro-Brexiters really didn’t expect investors would ditch Britain in favor of more fiscally welcoming euro areas. And who can blame the ditchers, seeing as how the pound has dropped an ugly 12% against the dollar since the ominous vote. The IMF, however, still anticipates actual growth for the UK, if only by a paltry 1.7%. By the way, this is the IMF’s fifth time cutting its forecast in just 15 months. In fact, had the Brexit vote gone the other way, the IMF was set to upgrade global projections. Way to go Britain! As for the impact in the U.S., the IMF thinks it will go relatively unscathed. How reassuring.

Put up your dukes…

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Looks like there won’t be any big health insurance company mergers. At least not if the Department of Justice has its way. Which it usually does. Anthem’s proposed $48 billion merger with Cigna and Aetna’s proposed $34 billion merger with Humana are on hold, and maybe permanently, as the Justice Department gets set to file antitrust lawsuits to block their ambitious plans. The Justice Department, which has been scrutinizing these deals for a year, is worried that these mergers would reduce competition and harm the little people a.k.a. the consumers with much higher prices. But the health insurance companies argue that they’ve endured some challenges with President Barack Obama’s Affordable Care Act and would like to prove the Justice Department wrong by shedding assets to competitors which would help them achieve cost savings and better results. Anthem and Aetna argued that their proposed mergers would provide them with the right scale to create more savings. And who doesn’t like savings? But the Justice Department isn’t biting. A merger between Anthem and Cigna would give the  newly combined company 54 million members with $117 billion in yearly revenue. The health insurance industry would shrink to three humongous players from five massive ones. United Health Group would sit smack dab in the middle of them. Expect a fight. A very long and costly one. Investors apparently are as shares went down today at all four health insurance companies.

How much is that website in the window?

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What’s to talk about at Yahoo is that there is not much to talk about at Yahoo. Still no word on who will buy the site’s core internet assets, though today is the last day that bids will be accepted. Offers are expected to be between $3.5 billion and $5 billion. Rumors are swirling that Verizon will be the lucky/likely buyer. Not that that has been confirmed. What has been confirmed is that Yahoo managed to eke out earnings of nine cents per share. Too bad expectations were for ten cents.  To add insult to fiscal injury, last year at this time Yahoo took in 16 cents per share. Want to hear about Yahoo’s net loss? Of course you do. The company ate $448 million in net losses. Just to put that into perspective, last year at this time Yahoo only lost $22 million. Yahoo also found itself writing down the value of Tumblr. Again. The first time it did that this year it was for $230 million. Now it was for $382 million. Yahoo bought the internet site just three years ago for the whopping sum $1.1 billion. Oh well. It’s like paying full price for something that went to clearance shortly after. Yahoo also slashed its work-force, going from 11,00 employees to 8,800 employees. And just so you know, Yahoo CEO Marissa Mayer said that the cost-cutting measures are working. It’s just not clear for whom.

 

Ralph Lauren’s Man with a Plan; Voila! French Rogue Trader Gets Last Laugh…Almost;Ya-Who Will Get the Winning Bid?

 

Plan of attack…

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Ralph Lauren will bite the very preppy bullet and start cutting jobs, closing stores and cashing out on some real estate as the retailer tries to climb out of a dismal fiscal year. Out of its 15,000 full-time employees, 1,000 of them will soon be getting their walking papers so the company can restructure itself and go from nine management layers to six. Spearheading these new changes are CEO Stefan Larrson, who is the person responsible for lifting Gap Inc.’s Old Navy out of its own retail funk awhile back. And Larsson’s got his work cut out for him. The retailer posted sales losses for every quarter of fiscal 2016, resulting in a full year sales decline of 3% and a 30% decline in shares in the last twelve months. Part of Larsson’s plan to lift Ralph Lauren out of its misery is to speed things up. Literally. It currently takes well over a year for a design to hit shelves ,which accounts for improperly forecasting supply and demand. Instead, Larsson will shorten that turnaround, as he feels that nine months is a perfectly reasonable amount of time for designs to reach stores. Unfortunately, 50 of those stores will be closing. But at least there will be over 440 other stores from which to purchase those expedited designs. Phew. While this restructuring will cost Ralph Lauren a whopping $400 million, not to mention an additional $150 million in inventory reduction, this new plan will also help the retailer save $220 million a year and Ralph Lauren needs every million it can get.

Wait a minute…

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Societe General Bank’s very own rogue trader, Jerome Kerviel, just got his day in court. Even though his poor trading skills cost the French bank billion in euros, and got him convicted of fraud and breach of trust in the process, the trader still managed to win a wrongful dismissal case against his former employer. What was, in fact, wrongful, was that SocGen waited too long between the time it discovered Kerviel’s misdeeds and the time it booted him from the firm. French labor code allows companies a grand total of two months to sanction those who have been found guilty of misconduct. Kerviel, however, was dismissed in 2008, many many months after the time, in 2007, when it was discovered that he went rogue and lost 4.9 billion euros. The Labor Court has now ordered SocGen to pay Kerviel 450,000 euros, which is roughly equivalent to $510,000. SocGen’s lawyer, Arnaud Chalut, called the ruling “scandalous,” presumably in French, and plans to appeal the decision. Kerviel, however, is not in the clear just yet and neither is his $510,000. France’s highest court already ruled that the three years of jail time to which Kerviel was sentenced was justified. But the court didn’t feel that he should be liable for the whole 4.9 billion euros. So the bank has brought a civil suit against Kerviel, which begins next week, to determine exactly how much he should pay back to SocGen.

Bid adieu…

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Verizon is on the prowl for some internet business and it is honing in on Yahoo. The telecom giant is said to be bidding $3 billion for the privilege of owning Yahoo’s core internet biz, however, Verizon is not the only company looking to scoop up that entity. AT&T is said to be licking its chops at the opportunity, in addition to private equity firm TPG , Advent International and Vista Equity Partners, to name but a few. Experts were thinking that bids would come in between $4 billion and $8 billion. But then some bidders lost interest after Yahoo CEO Marissa Mayer made a presentation last month showing how Yahoo’s online ad biz is headed south, losing digital advertising ground to Facebook, Google and even Twitter. Yahoo, however, might just prove to be the perfect fit for Verizon, which already picked up AOL last year for $4.4 billion. Together with AOL, the two companies attract over one billion users every month. There is probably going to be one more bidding cycle before any deals are reached and it’s still anybody’s guess where Yahoo will land. But if I were a betting man…well, I’m not.

Things are Getting a Little Seated at Yahoo!; IRS Has Close to $1 Billion Up for Grabs; Wall Street’s Crazy ‘Bout a Sharp-Dressed Man

Board to tears……

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Yahoo added two directors to its board, bringing the grand total to nine seats, all in the hopes of making things that much more difficult to deflect attacks from hedge fund Starboard Value. Starboard Value has not been shy about expressing its disapproval over the way CEO Marissa Mayer has been handling matters at the tech giant. Starboard is on a mission to make an attack and win seats on the board so it can run the company in its own special way. The new folks coming to fill those seats are former Morgan Stanley executive Catherine Friedman and former Broadcom Corp CEO Eric Brandt. The seats originally belonged to tech entrepreneur Max Levchin and Charles Schwab. Yes, that Charles Schwab. But both vacated their seats amidst all the squabbling at Yahoo over how to run the company without losing tons of cash in the process. Board re-election comes later in the year but nominations are due this month and the process should be a fun little corporate spectacle as Yahoo has been under some fierce pressure to sell off its core web assets, including Yahoo Sports and Yahoo Mail. Among the potential suitors who are rumored to be interested in picking up those core assets are Verizon and Time, And now, instead of looking to grow the company, Marissa Mayer has switched courses and would be really happy to just execute a $400 million cost-cutting plan. That’s in addition to shareholder pressure of trying to spinoff of the company’s sizable share in Alibaba, without actually having to pay any taxes on the deal. That effort should be entertaining in and of itself.

In it to claim it…

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The IRS is sitting on close to $1 billion in outstanding refunds from 2012. The question is, can you claim any of it? Well there are an estimated one million taxpayers who qualify for a piece of that pie since they apparently failed to file their 2012 IRS tax return. Taxpayers get a three-year window to file a claim based on the return due date which this year happens to be April 18, 2016. All you’ll need to do is fill out the 2012 1040 form and collect the w-2, 1098, 1099 or 5498 from that same year. Just check out the IRS website if you don’t believe me. But filer be warned: If you didn’t bother filing your 2013 and 2014 return, then don’t bother collecting your refund just yet as it may just get withheld. The IRS, however, wants you to claim your refund, otherwise all that cash goes into the hands of the U.S. Treasury. IRS Commissioner John Koskinen said, “We especially encourage students and others who didn’t earn much money to look into this situation because they may still be entitled to a refund.”And I guess the IRS just isn’t that into the treasury if they are so eager for you to claim that money. Texas and California are the states with the most unclaimed refunds. And the average refund that could be collected clocks in at $718. So what are you waiting for?

A little less dapper…

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Tailored Brands, a.k.a. the company that owns Men’s Wearhouse and Jos A. Bank, finally experienced some Wall Street lovin’ as the stock jumped more than 11% today. The company hasn’t had a jump like this in two years and it’s all because the company announced that it would be closing about 250 of its stores this year out of over 700 that are dotted all over the country. It’s not that Wall Street didn’t care for the company’s merchandise, it’s that Wall Street didn’t like that consumers weren’t buying enough of it and the company was bleeding money. The company’s revenue took a nasty beating after brass decided to chuck Jos A. Bank’s “Buy One Get Three free” promotion back in October. This move apparently upset consumers who shopped at the chain for just that reason. Executives felt, however, that the promo cheapened the line, especially when the promo ended up in an “SNL” skit where the apparel was called “effectively cheaper than paper towels.” Ouch. Cheap or not, customers let the company know how they felt by sending sales down 32%, while Men’s Wearhouse managed to take in a 4.3% gain. The stock lost 30 cents a share in its fourth quarter, which was miraculously not as bad as the 37 cents analyst predicted the stock would lose.

Radio Shack’s Got Nick Cannon’s Talent; Fed’s Merry Rate Hike; Yah-who?

 

Going for broke…

 

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Radio Shack may have filed for bankruptcy protection back in February, but that hasn’t stopped the struggling electronics retailer from putting celebrity Nick Cannon on the payroll. Indeed, the America’s Got Talent host was just named Radio Shack’s CCO, as in Chief Creative Officer. Laugh all you want, but it’s not like its Nick Cannon’s first foray into business. He is a bona fide electronics entrepreneur…according to some, anyway. The retailer thinks Nick Cannon can lure in that magical, elusive millennial demographic into its over 1,700 stores by having him develop exclusive products, curate playlists for the shops and even sing a song or two in the process. Among his other duties, Nick Cannon will also be responsible for helping to advance Radio Shack’s education and STEM initiatives. Because, after all, isn’t Nick Cannon the first image that springs to mind when you think of the STEM fields?  As for his paycheck, well, Radio Shack’s not talking, but I suspect Nick Cannon won’t need to ask for a raise anytime soon.

3…2…1…Hike…

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Fed Chairwoman Janet Yellen managed to put a little drama (okay, I’m getting carried away) into her talk at the Economic Club of Washington when she made it clear that this month interest rates, which have been sitting pretty close to zero, would finally receive its much overdo hike. It will be the first time in a decade that the Fed has raised the rates and many there feel that the economy is long overdue for this riveting moment. After all, the labor market is kicking butt, in a good way, and the economy is holding its own. Of course, Janet Yellen said it much more eloquently explaining that a rate hike is a testament to an economy’s recovery. But I am no Janet Yellen and could never take down Ralph Nader as graciously as she did last week. But I digress. Both the economy and the labor market have unwittingly met the Central bank’s goals which are resulting in that much-anticipated rate hike expected by December 16. Unemployment is staying put at 5%, when back in 2009, unemployment was 10%. Inflation is still not as high as the Fed would like it to be because of low oil prices and the strong dollar. But the Fed expects it will reach 2% – a natural and necessary component to a healthy economy. At least that’s what the experts say. There are those naysayers at the Fed who are not down with any hiking right now because they think its too soon and it might trip up a steadily recovering economy. But Janet Yellen says not raising those rate could have even worse consequences. So there. Besides, the time between putting monetary policy into place and seeing the results of it take so long that it’s almost like not raising those rates at all. Sort of. Okay, maybe not.  Any subsequent rate hikes will be based on data and reports so don’t assume that this is the beginning of constant stream of hikes.

Boohoo Yahoo…

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Things are kind of iffy at Yahoo these days even though shares did rise more than 7%. But the reason they rose is because the board is meeting to make some big decisions that will hopefully reverse Yahoo’s downward spiral. One of the bigger questions on that conference room table is whether to sell its core internet business, which includes YahooMail and YahooNews. Shareholders value that particular biz at less than zero. To be fair, however, YahooNews is one of the most visited websites in the U.S., according to someone, anyway. But, if it’s sold, it could fetch around $3 billion. So it’s not that worthless. Then there’s the issue of Marissa Mayer who after three years has still been unable to reverse the company’s aforementioned downward spiral. Yahoo’s total market cap is around $34 billion. But that’s mostly because it has a huge $30 billion stake in Alibaba Holdings Group Ltd. and another big stake in Yahoo Japan. Corp. Which brings us to the next order of discussion: whether to spin off the billion dollar Alibaba stake into its very own company.  The problem, however, is whether or not Uncle Sam will find a way to make such a transaction taxable and sic shareholders with a $12 billion tax bill? Yahoo Activist Investor Starboard Value LP already considered this unpleasant scenario and last month put the kibosh on the idea of such a sale.