Uber Drama Revs Up; Gymboree’s Next Chapter in Life: 11; Aldi Ready to Feed You For Less. Much Less

These are the days of Uber’s life…

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Image courtesy of marcolm/FreeDigitalPhotos.net

The Silicon Valley soap opera we call Uber is making awkward, unpleasant headlines again. This time it’s because the rumor mill is swirling with talk that Uber CEO, Travis Kalanick, is about to take a leave of absence. Which begs the question about how this new development will affect Uber, if at all. Then we turn our attention to the now ex-number two honcho at the ride-sharing company, Emil Michael, who has left the Uber building. It’s doubtful he’ll be missed that much since he was apparently pressured to step down. In fact, Kalanick was advised to let Michael go earlier this year, however he declined to entertain that suggestion – a decision that eventually bit him in his corporate butt. Perhaps had Kalanick let Michael go when asked to do so, he might not find himself figuring out how to spend all his newfound free time. All this unpleasantness – well for Kalanick and Michael, anyway – ensued following a meeting with Eric Holder’s law firm. You remember him, dontcha? He’s the former U.S. Attorney General and if he’s got some recommendations, it’s prudent to follow them. Holder’s firm was retained by Uber to conduct internal investigations following accusations of sexual harassment and gender bias. The findings, his firm reported, were “ugly.” That doesn’t bode well for the world’s most valuable privately held company, now does it?

Another one bites the dust…

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Image courtesy of aechan/FreeDigitalPhotos.net

Today’s Chapter 11 bankruptcy filing is brought to you by Gymboree, the children’s clothing store chain which can be found in just about any mall in the United States. Well, maybe not for much longer. The company still plans to remain in business, it’s just going to be shuttering anywhere from 375 to 450 of its stores. But rest assured, if you’re a frequent patron of the chain, there will still be well over 800 stores left from which to do your kids’ clothes shopping. If you are at all shocked about the store closures and bankruptcy filing, then clearly you aren’t one of the many creditors Gymboree refused to pay in the last few months. With increasing online competition and a major slowdown in mall traffic, it’s no wonder Gymboree just couldn’t make bank. The company is staring down the wrong end of $1.4 billion worth of debt and hopes to nail down a plan to help it shed about $1 billion of it.  The kicker, though, is that the company is still profitable, a bonus that a lot of analysts think will help propel Gymboree towards a bright, shinier fiscally nourishing future.

Grab your cart…

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Grocery chain Aldi has got some lofty goals. And if you’re thinking you’ve never heard of the chain, then just wait. The company just announced a $3.4 billion plan to make sure you do. Aldi has set its grocer sights on becoming the third largest grocery chain behind Kroger and Walmart. The grocery store chain currently boasts 1,600 locations from which to purchase your groceries, but by 2022, it expects to have 2,200 stores gracing the country.  Some 1,300 of its pre-existing stores are also being treated to a $1.6 billion remodel. And who doesn’t love a little remodel? However, the biggest thrill of all is that Aldi is going to attempt to price its merchandise over 20% lower than its rivals while adding 25,000 jobs in the process. If that doesn’t sound appetizing, the I don’t know what does.

Amazon Lands Itself in the Middle East; Price of New Skin Drug Will Make Your Skin Crawl; Spoiler Alert: Uber’s Not So Diverse

Just Souq it up…

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Image courtesy of aechan/FreeDigitalPhotos.net

In case you were wondering what Amazon’s been up to lately, here’s a hint: It’s got nothing to do with drones. Sort of. Instead, the online marketplace just agreed to scoop up Souq.com, the Dubai-based Amazon of the Middle East, and apparently the largest online retailer in the region. While we don’t know the exact numbers involved in the deal, we do know that 1.) There was one other bid by a billionaire from Dubai and 2.) It’s apparently the biggest tech merger & acquisition in the Arab world. Ever. At least according to somebody at Goldman Sachs. But I guess Goldman Sachs would know something like that. Rumor has it that although the Dubai billionaire, Mohamed Alabbar, counter-offered $800 million for the company, Amazon will be paying even less. What’s super-interesting about that factoid is that last year Souq.com was valued at around a billion following a funding round.

What a bargain…

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Image courtesy of jscreationzs/FreeDigitalPhotos.net

The good news is that the FDA actually approved a new treatment for severe eczema. The bad news is that it costs $37,000 a year to get it. But for some it might be worth every penny considering that one-third to two-thirds of the patients who used the drug actually regained clear or almost-clear skin.  Manufactured by Frace’s Sanofi SA and New York’s Regeneron Pharmaceuticals, the just approved drug, called Dupixent, is actually injected under the skin every two weeks, unlike previous eczema treatments, which are typically topical and often involve steroids and antihistamines. The injection apparently contains an antibody that does something to basically scare off the skin condition condition. Sort of. In any case, while $37,000 seems like a ridiculous amount of money to pay – because it is – consider that it’s still lower than Humira and Enbrel, drugs that also treat skin ailments. However, Wall Street didn’t look at it that way and instead sent shares of Regeneron down upon news of the five-figure price tag.

 

Well, what did you expect?

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Uber finally finally released its very first diversity report following a slew of issues, a ton of criticism, not to mention claims of sexual discrimination. But the only surprising thing about the report is that there weren’t any.  Surprises, that is. Sure the company employees minority groups. Unfortunately, those groups aren’t as well-represented at the top. The ride-hailing app employs about 12,000 people globally, and about 64% of them are males. Of that 12,000 figure, 36% are women and 22% of those women hold higher-level positions, while 15% of them work in the company’s tech areas. In the U.S., however, the numbers are almost embarrassing as blacks hold just 2.3% of leadership roles, while Hispanics represent .8% of those positions  – just not on the technical side.  And just to be clear, those percentages are not exclusive to Uber, but rather are fairly representative of Silicon Valley tech companies. Except now Uber pledged to throw $3 million at the problem in order to find solutions to make those numbers...better.

Oil-vey! Trump’s Secretary of State Pick Putin Us On; Trump vs. Silicon Valley; Rate Hike Sends Joy Throughout Wall Street

Energized…

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Trump’s latest pick, this time for Secretary of State, has naturally already ruffled more than a few political feathers. Enter Exxon Mobil Corp. CEO Rex Tillerson, a man who happens to be very very cushy with Russia and its fearless leader, Vladimir Putin. If you recall, Russia is very brazenly messing with Ukraine, to the point where the U.S. felt compelled to impose sanctions. Now, the CIA said the country also launched cyber attacks against the U.S. in an effort to influence the election results. But that very same country awarded Tillerson the Friendship Medal in 2013.  Tillerson, who has never held a public office, has been at Exxon, the world’s largest energy firm, for 40 years and during that time spent many many hours cultivating relationships and establishing major business deals with countless foreign countries and companies. But he’ll still need to be confirmed by the Senate. However, considering that former Secretaries of State Condoleeza Rice and James Baker are big fans, not to mention Defense Secretary Robert Gates, he shouldn’t have too much of an uphill battle. By the way, Condoleeza Rice also happens to be a consultant at Exxon Mobil, and Robert Gates was a consultant at one point too. Rumor has it that they all plan to vouch for the CEO.  Lindsay Graham and John McCain, however, are just not that into him, presumably because of his chummy relationship with Putin, of whom they are not particularly fond. Also not in Tillerson’s favor is the fact that Exxon currently has billions of dollars in deals with Russia, not to mention one valued at $500 billion that involves exploring and pumping for oil in Siberia. Those deals can only go forward if the U.S. decides to lift its sanctions against Russia and, fyi,  Tillerson was never much of a fan of the sanctions. And just so you know, according to a filing from a year ago, Tillerson owns $218 million in Exxon stock along with a $70 million pension plan. Shares of Exxon Mobil went up 2.2% on the news of Tillerson’s nomination.

 

Speaking of Trump…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Tomorrow is a big day at Trump Towers as some of Silicon Valley’s top execs head over to the President-elect’s digs for a little quality time with Donald Trump. Expected to attend the power meeting are: Apple’s Tim Cook, Facebook’s Sheryl Sandberg, Microsoft’s Satya Nadella, Amazon’s Jeff Bezos, Tesla’s Elon Musk and Google’s Sergey Brin and Eric Schmidt…to name but a few. While the agenda’s not public, there are some predictions about what might be discussed tomorrow. There’s the not-so-minor issue of antitrust enforcement and those pesky government demands for user data. But much higher on that list is Trump’s immigration policies and how they have the potential to put a very major damper on the inner workings at many of these Silicon Valley companies. The fact that these companies bring in a lot of employees on special visas, not to mention that they also send plenty of jobs overseas, doesn’t exactly jibe well with Trump’s vision of “Making America Great Again.”  To be fair, Apple did say it has 80,000 employees in the United States and is also responsible for creating another 2 million jobs from all the business opportunities Apple creates. However, Trump did say, in his very eloquent way, that he wants to “get Apple to build their damn computers and things” right here.  Donald Trump is all for establishing major tax reforms and is acutely aware that all these tech companies have a lot of cash offshore. Major reform will help bring that cash back to the States. So its in everyone’s best interests to work together towards that goal, whether they supported Trump’s presidential aspirations or not. And for the record, they did not.

Stocks, and bonds and hikes…Oh my!

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Stocks all over the world rejoiced today by going up while the Dow Jones Industrial Average came thisclose to hitting the 20,000 mark following its 9% surge since Election Day. Actually, the index came within 50 points of the 20,000 mark which sent Wall Street into fits of fiscal joy. The S&P got in on the action by going up .8% to its very own all-time high. The reason for all this excitement is because the Federal Reserve is expected to officially and finally finally announce a rate hike tomorrow, marking the second time in ten years that we get to witness and take part in that elusive increase. Rate hikes are welcome since they signal that the economy is strong and steady in all the right ways. Low interest rates have this nifty little effect on stocks that makes them cost higher. Problem is low interest rates are just no good  for the savers among us who like high interest rates because of the income they get from bonds and bank accounts.  Even though borrowing costs are about to get that much higher, investors are still positively giddy at the prospect that the President-elect intends to usher in an era of potentially lower corporate tax rates, less regulation and lots more infrastructure spending.

 

Raise Praise for Walmart ; Pinterest Tries to Double Up; Priceline’s Beamed Up Earnings

You raise me up…

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Image courtesy of             nongpimmy/FreeDigitalPhotos.net

It’s a good day to be a Walmart employee. No, seriously. It is. The gargantuan retailer just announced it’ll be raising the salaries of some 500,000 of its hardworking employees raising to about $1.75 more than the Federal minimum wage. Full-time employees will go from an average of $12.85 an hour to about $13 per hour. Part-timers will see their paychecks go up to $10 per hour from the average $9.50 they make now. The pay-raise fun begins in April and CEO Doug McMillon says it’s all part of a master plan to improve customer service, employee morale, etc. Those are all nice and pleasant things, of course, but no doubt Walmart is really hoping it will also lead to higher sales and profit. Walmart figures higher pay will help attract and retain employees that know the value of good customer service. And if it improves its somewhat tarnished reputation for its lousy pay practices in the process then why not?  So how bad could their pay practices have been that the company is implementing this change? Well, a majority of its employees’ salaries were so low that, all together, they were eligible to receive millions – I repeat, millions – of dollars in public benefits.  This initiative will cost Walmart about $1 billion, but hey, you’re worth it.

 In the land of unicorns…

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Image courtesy of vectorolie/FreeDigitalPhotos.net

The next social media darling that may be headed off to the wonderful, not-so-mystical land of Silicon Valley “unicorns” is Pinterest. By “unicorns,” I am referring to billion dollar startups, a term thoughtfully coined by Cowboy Ventures founder Aileen Lee. But apparently these “unicorns” are turning out to be a bit more ubiquitous than previously thought as Pinterest is but among a larger group of “unicorns” and “decacorns” and “super-unicorns”…but I digress. Founded by CEO Ben Silbermann, Pinterest graciously allows users to “pin” images of all kinds of stuff that appeals to them on their boards, thereby bringing light and joy to the world. And now Pinterest is said to be adding a “buy” button. That ought to bring even more light and joy. Adding e-commerce into the social media start-up picture tends to prove lucrative on so many levels. Pinterest is rumored to be raising funds to the tune of $500 million. Any takers? This new round of funding would put the company in the $11 billion valuation stratosphere, nearly doubling its $5 billion valuation it had back in May.

But what does this mean for Captain Kirk?

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Image courtesy of jscreationzs/FreeDigitalPhotos.net

Priceline, the company shilled by the inimitable William Shatner, beat Wall Street estimates for its fourth quarter earnings taking in almost $452 million with adjusted earnings at $10.85 per share. Well beam me up on those numbers, Scottie, because analysts only expected Priceline to score $10.05 per share. Those impressive digits were helped by growth from hotel and car rental reservations. Revenues were $1.84 billion and, once again, those analysts predicted the online travel booking service would only rake in $1.8 billion. Naturally, shares of Priceline took a joyous upswing in the news and clearly sending the message to Wall Street that the Orbitz-Expedia deal didn’t seem to have any adverse affects on the company. Well, not yet, anyway. If you’re in the market for some shares of Priceline, it’ll only set you back about $1,200.00…per share.

IBuMmer; Icahn/Andreesen Billionaire Smackdown; Valeant/Allergan Smackdown

 Big Blue-boo…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Perhaps you recall IBM?  Perhaps you don’t. The once powerful company that sat at the forefront of technology is now at the forefront of…nothing as the company just released its very disappointing earnings. The once mighty maker of chips – and I don’t mean potato (though we might be seeing better earnings if the chips were indeed of the potato variety), has sold that portion of its business. Revenue was down 4% to $22.4 billion which might seem like a nice beefy number except that analysts were expecting $1 billion more than that. And the company’s revenue has been going down for a few years now.  Analysts expected  the company to at least pull in $4.32 per share. It didn’t. Instead, profits for IBM took a 10% dive earning $3.68 per share.  Oh well. There’s always next quarter.

Love doesn’t live here anymore…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It’s official. Marc Andreesen and Carl Icahn are not friends. And I don’t think they ever can be. At least not anymore after Mr. Icahn said in an interview that Andreessen is “what’s wrong with corporate America” and Andreesen telling CNBC that Carl Icahn lies and “makes stuff up.” Where is the love gentlemen? In any case, the latest episode in the Icahn/Andreessen saga is that Marc Andreesen has bid a not-so-fond farewell to the board over at EBay. It seems the extremely prescient Silicon Valley billionaire, Andreesen, and activist investor, Icahn,  got themselves tangled in yet another kerfuffle which has probably something to do with the kerfuffle they had earlier where Mr. Icahn accused Mr. Andreesen and fellow board member, Scott Cook, of having conflicts of interests where PayPal and EBay are concerned. I shall spare you the lurid details. Mr. Andreesen and Mr. Cook vehemently disagreed with Mr. Icahn’s accusation. But alas, it matters not as PayPal is no longer one with EBay. As for hopes of Mr. Andreesen and Mr. Icahn burying the corporate hatchet (or whatever it is that insanely wealthy executives do), don’t hold your breath.

A wrinkle in plans…

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Image courtesy of patpitchaya/FreeDigitalPhotos.net

Perhaps you may recall pharmaceutical giant Valeant? Perhaps you recall how this pharmaceutical giant wanted to take over another pharmaceutical giant by the name of Allergan, notable for perennial fan fave Botox? And perhaps you recall that Allergan would prefer if Valeant would just go away? Well, it looks like that’s not going to happen anytime soon as Valeant just released some very impressive earnings, easily trumping analysts’ expectations. Except that Valeant also had good earnings. But no matter because Valeant really wants very badly to scoop up Allergan even though Allergan very badly does not want that to happen. Activist investor Bill Ackman, and his Pershing Square Capital Management LP, who is gunning for an Allergan takeover, just might make that even likelier and hostile-r because of Valeant’s newly announced, financially robust numbers, since numbers like those will allow him, together with Valeant, to up the ante to buy out the fabulous Botox maker.

 

Snoop Dogg and Jared Leto Join the Reddit Fray; Jobs They are Aplenty; Soda Delivery Right to Your Door

Reddit already?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Reddit, the website billed as “The Front Page of the Internet” is itself making headlines for having raised $50 million in funding. Of course, the usual Silicon Valley suspects whipped out their wallets to get a piece of the Reddit action but they weren’t the only ones. Hip-hop icon Snoop Dogg and oh-so-pretty-Oscar-winning-actor Jared Leto wanted in on the Reddit pie too. Reddit, whose content leaves some tongues wagging and other tongues gagging, plans on using that $50 million for all sorts of neat things like hiring more staff, improving its mobile offerings and, of course, ads. Reddit CEO Yishan Wong also has big convoluted plans to give back 10% –  in money, that is –  to the users who so valiantly scourge the internet to find the right stories that drive the traffic which entertains and sometimes horrifies its visitors. However Wong fully admits “that this plan could tally fail.” Totally. We mustn’t forget to mention that unfortunate incident when nude celebrity photos were leaked onto the site. Many thought the leak was extremely uncool. The site was launched back in 2004 and boasts 133 million users.

Sweet September…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Just in case you were feeling bummed about the economy, because I know that was your first thought when you woke up this morning, then here’s some good news. According to Automatic Data Processing aka ADP, aka those three letters that help decorate your paycheck, just released new data telling us that 213,000 jobs were added in the month of September. That marks the sixth month in a row that job gains are up. It’s especially good news since job gains over the 200,000 mark have a special little way of making the unemployment rate head a wee bit south. And these numbers are just from the private sector which, by the way, gained in all industries. Just wait till you see what numbers the public sector posts. Ooh. I can hardly stand the excitement. Now if the Bureau of Labor Statistics would graciously back up those numbers then all would be right with the world. Almost. Because less people are filing for jobless claims, which happen to be at a seven year low, more and more spending occurs, which leads to more and more economic growth, which leads to…well, you can figure it out from here.

Amazon quench…

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Image courtesy of kraifreedom/FreeDigitaPhotos.net

Thirsty? Then you better log onto Amazon. Quick. That is if you are jonesing for PepsiCo’s latest beverage offering, PepsiTrue. What’s true is that this drink can only be purchased, for now anyways, via the e-commerce website – in 24 packs. What is also true is that it still has calories in it, except 30% less of them. As for the hotly contested high-fructose corn syrup and artificial sweeteners? Those ingredients have been scrapped as a way to win back Millenials who seem to prefer beverages sans those items and have been shifting away from soda for the last several years. And, by initially selling the product on Amazon, PepsiCo, apparently, will be able to gauge the response for the new cola. Now can someone tell me what PepsiCo would have done if this were 1984? Anyone?