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.

George Soros, Golden Boy; Home Run for Home Depot; Pandora’s Streaming Away From Profits

Just because George Soros is doing it…

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George Soros just put a whole lotta money in gold. Lucky for him. However, the non-George Soroses of the world are supposed to take note, because, after all, he is, “The Man Who Broke the Bank of England.” And also because, since his net worth according to Forbes is $25 billion, he knows a things or two. Or a billion. In any case, according to a very recent regulatory filing that folks like him have to file (it’s called a 13F, and you are welcome that I am sparing you the boring details), Mr. Soros has sold off about 37% of his stock holdings. He then whipped out $387 million to buy lots of gold, including picking up a hefty 19 million shares in Barrick Gold, the world’s largest gold producer. It seems Mr. Soros is a more than a bit freaked out by the state of the global economy, and especially the slowdown in China. He feels the fiscal climate is reminiscent to him of 2007 – 2008 period just before the fiscal crash we are all still trying to forget. Not everyone agrees with Soros and his decision for his Soros Fund Management, but hey, he is the one who, back in 1992, bet against the British pound and made $1 billion off that bet – in a single day. I bet he’s real popular there. Anyway, it’s no secret that gold has always been a strong performer on Wall Street, as well as other places, mind you. The precious metal is up 21% for the year. But, just so ya’ know,  Soros still has plenty of other cash in plenty of other places. Like eBay and Apple. And Yahoo. And Gap…well, you see where I’m going with this. In fact, he’s got $80 million invested NOT in gold. In case you’re wondering what stocks he did ditch, some of those include Alibaba Group and Pfizer. Also, TripAdvisor and Expedia are out of his portfolio. Though, he did keep airline United Continental Holdings. Go figure.

Home improvement…

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As the warm weather brutalized plenty of retail outfits lately, (sorry, Macy’s, Nordstrom), Mother Nature knocked it out of the park for Home Depot. In turn, Home Depot warmed our hearts by boosting its sales and profit forecasts after regaling us with the news of its better-than-expected earnings, courtesy of Mother Nature. And as we all know, Wall Street loves nothing better than better-than-expected earnings. Except when investors feel that shares have hit their potential, for the moment anyway, which explains why shares of the home improvement chain were a wee bit down today. But no worries. A good housing market and fabulous weather added some $250 million in sales for Home Depot in the quarter, with February being the sweetest month, fiscally speaking. For the year, Home Depot is up about 20%, posting a profit of $1.8 billion a $1.44 per share. That was a 14% boost over last year, not to mention that it trumped analysts predictions of $1.36 per share. The company also saw $22.76 billion in sales, again stomping on predictions of $22.39 billion. The earnings also showed that consumers are actually spending their hard-earned cash, as opposed to hoarding it under mattresses (okay, banks too), unlike what was previously thought because of the generally poor performance in the retail sector. Spending money is good for the economy and now economists aren’t so worried anymore because they realize where all that hard-earned cash went. For the full year the retailer thinks it’ll pull down $6.27 per share for the year. And Spring has hardly sprung!

Closing the box…

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Pandora Media has had better years. Even better decades. Founded in 2000, the company had its IPO in 2011 and has about 80 million active users. While it was amongst the first crop of music streamers, the company’s stock is now down about 40% for the last twelve months, having never caught the same momentum as some of its competitors, including Apple and Spotify. Enter activist investor/Carl Icahn protégé Keith Meister, who feels that the time has come for Pandora to put itself on the market. Keith Meister’s Corvex Management has some very strong feelings about how much better – and profitable – Pandora can be and seeing as how he’s got 22.7 million shares, giving him an almost 10% stake in the company, he’s entitled to more than just his opinion on the matter. As the largest shareholder in the company, Meister wrote in a recent letter how he has “become increasingly concerned that the company may be pursuing a costly and uncertain business plan, without a thorough evaluation of all shareholder value-maximizing alternatives.” Basically, he’s wondering if the folks in charge, namely CEO and co-founder Tim Westergren, knows what they’re doing. Wall Street certainly seemed to be agreeing with Meister, as it sent the stock up today as much as 7% at one point.

Check This List, Toning Up and Pandora Rocks?

What’s the value of values?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

You can feel a whole lot better next time you chow down your Fruit Loops knowing that Kellogg Co. was voted one of the world’s most ethical companies. I swear I did not make this up. The Ethisphere Institute is an independant research institute that promotes and recognizes business ethics. “Companies that truly go beyond making statements about doing business ethically and translate those words into action,” according to a statement by Ethisphere, make it onto the list.  This is Kellogg’s sixth time on it. So break out a Pop Tart and celebrate. Some of the other companies that made the list include Google, Petco and Gap Inc. Now if they could only do something about those used car salespeople…

That’s printastic…

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Image courtesy of frankie_8/FreeDigitalPhotos.net

At its annual shareholders meeting, HP CEO Meg Whitman said it’s “like watching ice melt.” Obviously, she was discussing the current batch of 3D printers that could and should be doing oh so much more. Good thing Ms. Whitman thinks she, and HP, of course, have found the solution. Unfortunately that solution won’t be presented until June. Rumor has it, though that HP plans to speed up the printing and improve the quality. To be competitive they will have to price the printers at the $5000 point. That’s great news – as long as your employer is footing the bill.

Not exactly music to your ears…

Image courtesy of Boians Cho Joo Young/FreeDigitalPhotos.net

Image courtesy of Boians Cho Joo Young/FreeDigitalPhotos.net

If you’re still on the fence about getting that Pandora subscription now would be a really good time to make that decision. A federal judge just ruled that the streaming music service should be subject to a higher royalty rate than radio stations. Pandora One, the premium service from the music streamer, Pandora, is about to raise its price. They’re also scrapping their yearly subscription model. If you are already a subscriber, the price stays at $3.99. For now. Otherwise, procrastinators can expect to fork over another buck for the premium ad-free service. The new rate takes effect in May. Or you could just listen to your favorite music and your not so favorite ads for free.