AT&T vs. U.S. Government. And President Trump; Turkeys: CBS and Dish Networks Can’t Work Things Out; Lowe’s and Behold! It’s Earnings Win

Trump’d up suit?

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Dontcha just love a good fight? Today’s nasty dispute is brought to us by the U.S. government and AT&T. Not sure who my money’s on yet. You see, the government isn’t down with AT&T’s proposed $85 billion vertical merger with Time Warner. So it went ahead and did the most “American” thing possible: It sued AT&T to block the merger. Knowing that the U.S. government was going to be pesky about the merger, AT&T did what any smart company would do: It pre-emptively retained counsel. And AT&T went for the big guns hiring Dan Petrocelli. You remember him, dontcha? Or maybe you’re just trying to forget? He’s the dude that very shrewdly defended President Trump over lawsuits relating to the infamous Trump University real estate seminars. Oh, the irony. Trump hates the very thought of the merger and that may have something to do with his feud with CNN, which, incidentally, is owned by Time Warner. Petrocelli, who seems to have forgotten all about his Trump days, is arguing that not only does this lawsuit not pose a threat to industry competition, but the merger actually has the potential to lower cable bills. However, I have a hard time believing a cable carrier would willingly lower bills. As for investors, they seem to be on Team AT&T and believe the telecommunications giant will emerge victorious, especially because the last time the government was successful against a vertical merger, Nixon was president. Yikes!

Whose the turkey now?

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OMG! It’s football season and Dish Networks did the unthinkable – to football fans, anyway – and dropped CBS in some markets. “Some markets” includes over 3 million customers in 18 cities who will be feeling the effects of tryptophan sans quality NFL time if a deal is not reached by kickoff time. As if blocking football games isn’t bad enough, some viewers will even be getting deprived of “The Big Bang Theory” which is just so not cool. The issue, of course, is fees. Because it always is. Dish isn’t happy about CBS’s demands for higher fees, especially since Dish viewership is down (note: Google streaming on-demand video). Dish also insists that viewers are watching less CBS and feels that CBS ought to show a little more restraint in its fee demands. CBS, on the other hand, is accusing Dish of punishing its viewers while Dish is calling foul on CBS for not extending its contract until negotiations end.  However why any of this matters is beyond me since, invariably, those fees, on which the two sides eventually agree, usually end up getting passed on to subscribers via their monthly bill anyway. Now subscribers have something to look forward to once those inconveniently-timed negotiations come to a close.

Hurricane win…

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Hurricanes suck. Except for home improvement retailers. Lowe’s would agree. The company just reported third-quarter earnings, much to the delight of Wall Street. As a result of Mother Nature’s very unappreciated wrath, sales at Lowe’s went up 5.7% to $16.8 billion, way more than the predicted 4.6% and $16.6 billion. $200 million of those sales came courtesy of Hurricanes Harvey and Irma that wreaked its proverbial havoc on a large swath of the country. But they helped the home improvement chain take in an $872 million profit that added $1.05 per share, which was three cents higher than analysts’ estimates.  That number was particularly impressive since last year at this time, Lowe’s took in $462 million, nearly half that amount.  But Lowe’s doesn’t owe all its quarterly success to natural disasters. The company also made a big push to cater to professional contractors. And with good reason. They spend more money. Sure DIY home improvement is Lowe’s theme, but the company was savvy enough to recognize an additional opportunity and the fact that the housing market is doing pretty awesome lately only sweetens the pot.  And even though Lowe’s shares dropped a smidge during trading this morning, it can’t be too distraught since the company’s shares are up about 15% for the year.

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Trump’s Commerce Sec’y Gets Delisted; Valeant Unvaliant with Female Viagra; Rainbows and Unicorns: Oprah’s Effect on Weight Watchers

Oops, I did it again…

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Looks like things are getting awkward for Commerce Secretary Wilbur Ross Jr. Turns out Trump’s buddy has some Russian connections that might just put him in a bit of a pickle. It goes a little something like this: The Commerce Secretary has some investments in a shipping firm he used to run called Navigator Holdings. The problem here is that this particular shipping firm has ties to some people that are subject to U.S. sanctions. One of those ties is none other than Vladimir Putin’s son-in-law.  Mr. Ross knew that he was supposed to unload all kinds of holdings that could potentially be a conflict of interest once he took office. And he did. Mostly. Just not really with this one. To be fair, Mr. Ross has a lot of partnerships and it’s those partnerships that retain a significant stake in Navigator Holdings. But still. It’s a problem, even if there’s nothing necessarily illegal about his ties to this shipping firm since he didn’t disclose those ties in the first place. This new development, along with tons of other juicy information, came courtesy of the leaked documents known as the “Paradise Papers” from the Bermuda-based law firm, Appleby. As for Mr. Ross, that’s not the only reason he’s been making headlines today. Apparently, on those very disclosure forms, where Mr. Ross neglected to mention his dubious Russian ties, he also neglected to mention that he isn’t a billionaire. Not to say that he’s a pauper. Far from it. However, his estimated assets are less than $700 million, not the $2 billion he said he’s worth. Even worse, for Ross’s ego anyway, is that he’s getting dropped from Forbes 400 wealthiest list, because let’s face it, $700 million just doesn’t cut it.

Typical…

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Valeant is the big kahuna making good waves on Wall Street with an earnings beat that sent the stock up 15% today.  Much of that had to do with a 6% increase across its divisions not to mention the boost it got from unloading some of its debt. The company picked up $3.69 per share on a $1.3 billion profit. But that wasn’t the only reason for the boost. Remember Addyi? It’s the drug that was dubbed the “female viagra”  and Valeant bought it from Sprout Pharmaceuticals around two years ago for about $1 billion. Problem is, the deal had been bleeding money since the beginning. Now, two years later, Valeant actually gave Sprout shareholders $25 million just to take the drug back and put it back in business. But that was only after Sprout sued Valeant because it felt the drugmaker wasn’t marketing the drug well. In all fairness to Valeant however, plenty of medical experts just weren’t that into the drug. Because, besides saying that the drug wasn’t that effective, they also felt that potential users wouldn’t be inclined to taking Addyi given that there was a risk of fainting. Yes, fainting. In fact, the fainting would occur following alcohol consumption while taking the drug. I’m pretty sure anyone could see why that would be a problem.

Weight a minute…

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Oprah Winfrey seems to have the Midas touch, at least with Weight Watchers, as the stock rallied today way over 20% to 54.43, its highest price in four years. Revenue numbers were also ridiculously impressive, coming in at almost $324 million, a 15% increase over last year’s revenue during this period. But back to Oprah. The media titan bought a hefty chunk of the company two years ago and will once again grace Weight Watchers ads. Besides the Oprah effect, the weight-loss company put some major thought into both its digital operations and marketing campaign, which apparently paid off given the fact that the company increased its subscribers by 18% to 3.4 million. Here’s the fun part: Analysts thought the company would do pretty good anyway, bringing in 51 cents per share. But Weight Watchers did better than pretty good, adding 67 cents per share on a $45 million profit. That, by the way, was a $10 million increase from last year at this time. Which kind of has me starting to think about all the companies that good use Oprah on their boards. Twitter, maybe?  Oh, and did I mention that Weight Watchers also raised it full year earnings outlook? Indeed it did and now, instead of expecting to earn between $1.57 and $1.67, it now expects to make between $1.77 and $1.83.  And if that’s not impressive enough for you, consider that shares of Weight Watchers are up 360% just for 2017.

 

 

Schadenfraud Anyone? Forbes Unveils its Latest Top 400; Can’t Stop Netflix; Venmo’s the New Way to Go. At Least According to Paypal

That’s a whole lotta money…

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Forbes has unveiled its latest list. This time it’s the top 400 richest Americans for 2017 and there are very few surprises in store. Bill Gates and his $89 billion net worth takes the top spot, followed by Amazon’s Jeff Bezos and everyone’s favorite Omaha Oracle, Warren Buffett.  Facebook’s Mark Zuckerberg sits pretty in fourth place. The first time we finally see a woman on the list is at spot number 13 and it’s occupied by Alice Walton of the illustrious Walmart clan. There are 22 newbies on the list and some of them are even self-made billionaires, including Netflix CEO Reed Hastings who comes in at number 359. He had a good year and his company had a great quarter. But we’ll get to that one in a bit. Former Uber CEO Travis Kalanick comes in at number 115, despite being out of his CEO job, while beloved Star Wars creator George Lucas gets spot 118. As for President Trump, he did make the list, coming in at a less than impressive (for him) ranking of 248.  He shares the spot with 15 other people including Snapchat founder Evan Spiegel. Their fortunes are valued at $3.1 billion, a figure the President will probably dispute. It’s a steep drop for the President, whose 2016 ranking had him at the 156th spot. But I guess that’s what happens when your portfolio loses $600 million. I wonder who he’s going to blame for that one?

Wall Street ❤️ Netflix…

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The best way to bring Wall Street to its finicky knees is to crush its expectations. And Netflix did just that. First, the video streaming company laughed in the face of analysts’ projections for subscriber growth. For Netflix that was a 5.3 million increase, far from the modest forecast of 4.5 million new subscribers. A large percentage of those new subscribers came from outside the U.S. Netflix now boasts 109 million subscribers and I’m guessing you must be one of them, right? As for the next quarter, the company expects to add 6.3 million subscribers. Revenue for the company was $2.99 billion, again beating projections of $2.97 billion.  However, at first glance, Netflix’s profit was not so impressive. But that’s only because the company is throwing down serious cash for producing its own shows. And if you’ve ever seen “Orange is the New Black” or “House of Cards” then you’d probably agree that it’s money well spent.  So what does this all mean for you, the Netflix connoisseur/viewer, who obsessively waits for new seasons of your beloved shows to be unleashed? Well, you can probably expect an increase in your subscription plans but hey, that’s the price you gotta pay if you want to keep watching new seasons of “Stranger Things,” right?

Going half-sies…

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If you haven’t signed up for Venmo yet, now might be a good time to start. The company just announced that users can now use the app to make mobile online purchases from over 2 million retailers including Forever 21 and Foot Locker.  But what’s so darn cute about Venmo is a feature that gives you the option to split a purchase with a friend. Or even an acquaintance, I suppose. Which is so great when you go out for lunch and can’t be bothered to do the math at the table or when you just want to pay the rent down the middle. And, you can even share status updates about the purchase. How nifty. Especially if you’re a millennial. Did I mention that Paypal is Venmo’s parent company? Well, it is. And pretty much anywhere you’re able to use PayPal, you can now use Venmo there as well. Just think of all the Lululemon merchandise you can purchase with all your besties.

 

 

 

​Big City Woos: It’s All About Amazon’s HQ2; Weinstein’s Ship Might Be Sinking But You Won’t Believe Who Might Come to its Rescue; Nords​trom’s Holding Out for a Santa Save

Pick me! Pick me!

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As a Thursday deadline looms, a heated race is on for cities across the United States (okay, and Canada too) as they toss away all their dignity in desperate attempts to woo Amazon and its latest project. The e-commerce giant announced about a month ago that it wants to set up a second headquarters, dubbed HQ2 and now there’s a mad dash from Atlanta to Grand Rapids and beyond to claim that glory, not to mention the $5 billion investment that comes with it. The fact that a project of this magnitude would also create around 50,000 jobs is the icing on this proverbial fiscal cake. Of course, Amazon’s got its own formula for picking the winning city and it’s got very little to do with Tucson delivering a 70 ft. saguaro cactus to Amazon’s Seattle door or Birmingham erecting giant replicas of Amazon boxes and strategically placing them around the city. For Amazon, it will probably boil down to which city will offer up the best tax incentives and breaks from local and state governments. In fact, the company has earned quite the reputation for being able to secure those tax breaks, whether through the promise of job creation or other financial packages that would have any major city’s mouth watering. Besides financial incentives for Amazon, any city that legitimately stands a snowball’s chance is also going to have to be in close proximity to a major airport,  possess the infrastructure to support the project, have easy access to mass transit and a population that boasts at least a million people to readily fill tens of thousands of jobs. That right there puts the kibosh on a bunch of contenders. But you know which cities analysts are expecting to see on the short list? Atlanta, Denver and Pittsburgh. As for Tucson and its aforementioned cactus, well you can visit the rejected botanical specimen at the Desert Museum.

It’s all a matter of perspective…or is it?

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The Weinstein Co. may be getting a much-needed cash-infusion to stay afloat in the wake of co-founder Harvey Weinstein’s ever-growing sexual harassment scandal. The cash-infusion could come from a private equity firm called Colony Capital, headed by an individual named Tom Barrack. If the name Tom Barrack rings a bell that’s because he served as chairman of President Trump’s Private Inaugural Committee and his name is being been bandied about as a pick for the White House Chief of Staff.  That’s right! Harvey Weinstein, an ardent Hillary Clinton supporter and staunch Democratic donor is probably getting a bailout from a Trump ally. But for Barrack, it’s all in a days work since he has a habit of picking up distressed companies in the entertainment realm, making all sorts of deals for the assets still in its clutches and making a mean mint in the process. Perhaps you can take comfort in the fact that there’s a good chance that this bailout will actually mean the Weinstein name disappears from the company, along with some of its honchos, because apparently, they knew about Harvey Weinstein’s sickening behavior for a long time. A sale could also mean that the Weinstein company, sans the name which is now synonymous with lechery, harassment, and abuse, could be restored to its former glory as a powerhouse of independent film and television production.

Let it snow let it snow let it snow…

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We may still have Halloween ahead of us but Nordstrom is already gearing up for Christmas. The retailer, which has seen its share of loss in the last few quarters – along with every other retailer in the U.S. – previously had plans for the founding namesake family to take the company private. There’s talk that the family, who controls a third of the shares, was trying to team up with private equity firm Leonard Green Partners to achieve this goal. However, now those plans are on hold to until after the holiday shopping season because rumor has it, the Nordstroms have been experiencing some issues borrowing cash at a respectable rate, whatever that means. Interestingly enough, while the company isn’t faring as well in terms of same-store sales, its e-commerce is alive, well and thriving quite nicely.  Still, Wall Street didn’t much care for the news and sent shares plummeting over 6%  Those shares, by the way, are over 30% lower than its 52-week high of $62.82.

Barclays Busted; Ford Ditches Mexico for China; UPS Gives Heads Up on Holiday Shipping

Cheerio…

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Looks like 2008 is not done haunting banks that allegedly played dirty back then. Today’s banking scandal, that includes charges of conspiracy to commit fraud, is brought to us by Barclays and four of its former executives. The trouble started in 2008 when Barclays reached out to Qatar for some substantial cash that the bank was going to use to avoid a major government bailout. Barclays was inclined to hit up Qatar investors for some big money instead of getting a governmental bailout because a governmental bailout comes with major governmental oversight. And for banks, governmental oversight is a four letter word. Of course, asking help from the Qataris wasn’t exactly the problem. While there were two rounds of fundraising from Qatari investors, with one involving a $3 billion loan for Barclays, the UK bank also paid the Qataris $406 million in “fees.” It seems that last bit might not have been honestly and properly disclosed to shareholders. And that got authorities wondering if Barclays was trying to cover up the the gist of the plan because it might not necessarily have been totally legit. Besides, anytime there is suspicion of toying with shareholders, you can expect that there will be hell to pay.  These charges mark the first time that any bank in Britain got busted for questionably lawful behavior during the 2008 fiscal crisis. So congrats, Barclays. You now hold that dubious distinction. If convicted, the bank faces a nasty fine and the former execs each face up to ten years in prison if found guilty. As for the Qatari’s, they’re off the hook. Completely.

Adios…

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Ford is ditching Mexico for China, at least as far as the Ford Focus is concerned.  Rumor has it that by ending all production of the vehicle in the U.S. and moving production to China instead of Mexico,  Ford will end up saving a whopping $1 billion. Which is especially weird since it is cheaper to build and import cars from Mexico as opposed to China. But here’s where the logic enters: Ford will now spend money to revamp just one factory in China instead of two in North America. Hence, billions of dollars in savings. While no U.S. jobs are expected to be affected, the United Auto Workers remained conspicuously silent regarding the news. This latest decision is the very first major one to come from Ford’s newly installed CEO Jim Hackett. However, what analysts are finding interesting is that this move shows how Ford is putting the focus – no pun intended – on SUV’s and trucks, as opposed to smaller, more fuel efficient cars, thanks to lower fuel costs. Besides, sales of the Ford Focus are down way over 20% since low gas prices are no longer standing in the way of those coveted SUV’s. The only question now is how is this move going to sit with President Trump and what will he tweet about it.

It’s beginning to look a lot like Christmas…

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Start saving up. Christmas is just around the corner and UPS wants to let you know that it will be charging you extra to ship those holiday presents. Between November 19 and December 2, the package carrier will slap on a 27 cents surcharge and then again, from December 17 – 23. If you want your package delivered via next day air, then prepare to whip out 81 cents and 97 cents for two or three day ground delivery.  UPS typically delivers around 30 million packages a day during the holiday season and analysts are expecting that will rise even more. And who can blame UPS for charging more money to deliver your goods? After all, the holidays are the company’s peak season where not only can their internal systems become over-whelmed, but mother-nature can throw out a few unhelpful surprises as well.

 

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.

Apple Throws Billions Towards U.S. Manufacturing; Ferrari Speeds into Double Digit Margins; Republicans Wage War on Dodd-Frank

iManufacture…

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China’s about to get some very unwelcome manufacturing competition from Apple. The tech giant just announced that it is starting a $1 billion fund promoting advanced manufacturing. Gosh, is the President going to take credit for this too? In fact, CNBC host Jim Cramer had the dubious distinction of being the first person to hear the news on his show “Mad Money.”  For those of you wondering what the difference is between manufacturing and “advanced manufacturing,” it means Apple will basically have to offer specialized skills and training for the latter and fill job gaps with these newly-trained, highly-skilled workers. In any case, Apple has thus far created some two million jobs in the U.S. and can hardly wait to create even more. But how does Apple plan on spending that $1 billion it’s setting aside for this latest project? Well, don’t get too excited just yet, because some of that cash is first going to a company that Apple has partnered with for this initiative. And the name of that lucky company has yet to be announced.

Magnifico!

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Ah Ferrari. What could be better than tooling around in a machine like that? How about its earnings, for one. The Italian automaker just released its first quarter earnings report and they were everything you’d expect from the maker of one of the world’s finest sports cars. Shares are up well over 6% today after the company announced a 36% earnings increase along with a 50% surge in deliveries. And by the way, those earnings were even better than expected, coming in at around $265 million  – which equals 242 million euros – in case you were curious. Estimates, mind you, were for 222 million euros. Revenues also impressed and elated investors, as they increased 22% to 821 million euros, easily beating expectations of 767 million euros.  Sure, those numbers are almost magical, but that’s not really what’s got Wall Street tongues wagging. It was Ferrari’s margins, which are now right up there with the aforementioned tech giant we call Apple. But I guess that’s to be expected when you’re selling cars whose ticket prices start well into the six-figures and can exceed $2 million. After all, we are talking about a company who sold out of a car, the Aperta convertible, before the car even made its official debut.

Let’s me be Dodd-Frank with you…

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Things are looking grim for Dodd-Frank, the Wall Street Reform and Consumer Protection Act. The Republican-led House Financial Services Committee argued that the law sucks for the economy since it slows it down, and today passed a bill that would overhaul and repeal parts of it. It certainly helps Republicans that President  Trump promised way back in his campaign to overhaul the law, which he says costs banks a fortune in compliance and limits lending way too much. Democrats argue the opposite and are convinced that the bill, if passed, will once again create the same conditions that led to the 2008 fiscal crisis. In case it wasn’t obvious, the law was initially passed under President Barack Obama. Naturally, Democrats voted against the bill and lost 34-26.