Taylor Swift performs onstage for the opening night of “Taylor Swift | The Eras Tour” at State Farm Stadium.
Kevin Mazur | Getty Images Entertainment | Getty Images
Box office analysts became Swifties in the lead-up to Taylor Swift’s Eras Tour concert film release, estimating blockbuster-style opening weekend numbers.
And Swift delivered.
While the pop singer fell short of the $100 million benchmark, domestic ticket sales still topped $95 million, according to distributor AMC Entertainment.
The theater chain provided a range of $95 million to $97 million for the film’s opening weekend on Sunday, with expectations that an official figure will be provided on Monday once all tickets have been tallied.
“The film’s debut is an undeniable tentpole-level success despite the challenges of predicting what it might achieve,” said Shawn Robbins, chief analyst at BoxOffice.com. “Swift, her fans, and theatrical exhibition should all be celebrating the results.”
Already, the film has shattered records, becoming the highest-grossing concert film release domestically, surpassing Justin Beiber’s “Never Say Never” film release, which hauled in $73 million over the course of its run in theaters in 2011, in a single weekend. And it easily beat Miley Cyrus’ “Best of Both Worlds” record opening of $31.1 million from 2008.
Swift’s Eras Tour film is also the widest-released concert film in history, arriving in more than 3,850 domestic locations during its debut.
Monday’s official tally will unveil if Swift was able to capture the highest opening of October, currently held by 2019’s “The Joker” ($96.2 million), and if it is the sixth or seventh-highest opening of 2023. Disney’s “The Little Mermaid” secured $95.6 million when it opened in May.
There’s also a possibility that word of mouth and fan’s love of Swift could send more moviegoers to theaters on Sunday, pushing it closer to that $100 million figure.
“As cautioned in recent weeks, forecasts were always going to be incredibly volatile given the highly unique nature of this release,” Robbins said. “Variables such as average ticket price, assessing how frontloaded Swift’s fan base would make the film’s presales, and whether or not any traditional marketing would bring out non-Swifties all weighed heavily on the wide range of possible outcomes.”
“Swift’s excitement-inducing reputation and the unprecedented nature of the release led to a massive outpouring of interest in the film certainly contributed to some overblown expectations of a $100 million plus weekend,” said Paul Dergarabedian, senior media analyst at Comscore. “But that should not detract from the enormity of this box office achievement.”
U.S. singer-songwriter Taylor Swift performs during her The Eras Tour concert at SoFi Stadium in Inglewood, California, on Aug. 7, 2023.
Michael Tran | Afp | Getty Images
A whopping 60% of tickets for the weekend were bought in advance, according to data from EntTelligence, one of the highest rates the movie data firm has ever seen. Typically, big tentpoles see 40% of tickets sold ahead of time.
Around 4.8 million people were estimated to have attended the film over the weekend, with an average ticket price of $20.75, EntTelligence reported. Nearly 80% of the audience was female.
International box office figures were not immediately available on Sunday, but with a solid domestic opening, expectations are high that the film can surpass the $262.5 million global haul of “Michael Jackson’s This Is It” during its limited run in theaters.
Swift’s film has weekend-only engagements in theaters, instead of daily screenings, so comparisons to other releases will be difficult in the coming weeks, but weekend-to-weekend figures will be comparable.
“The question now is what the Swift film will do for an encore in the coming days and weeks,” Dergarabedian said. “Reports of a spectacular in-theater experience bodes well for the long-term playability of the film and guarantees the film will easily eclipse the $100 million mark in the domestic market.”
Israeli soldiers on a tank are seen near the Israel-Gaza border.
Ilia Yefimovich | Picture Alliance | Getty Images
On Saturday, Dvir Ben-Aroya woke up expecting to go on his regular morning run. Instead, he was met with blaring alarms and missiles flying over Tel Aviv.
Ben-Aroya, co-founder of Spike, a workplace collaboration platform with clients including Fiverr, Snowflake, Spotify and Wix, was confused for over an hour — “No one really knew what was going on,” he recalled — but as time passed, social media and texts from friends began to fill him in.
That morning, Hamas, the Palestinian militant organization, had carried out terrorist attacks near the Israel-Gaza border, killing civilians and taking hostages. On Sunday, Israel declared war and began implementing a siege of Gaza, cutting off access to power, food, water and fuel. So far, more than 1,000 Israelis have been killed, according to the Israeli Embassy in Washington; in Gaza and the West Bank the death toll is nearing 850, according to two health ministries in the region.
At 3 p.m. local time Saturday, Ben-Aroya held an all-hands meeting, and he says every one of his 35 full-time, Israel-based employees joined the call. People shared their experiences, and Ben-Aroya decided everyone should work from home for the foreseeable future, adding that if anyone wanted to move away from Israel with their family, the company would support them. At least 10% decided to take him up on that offer, he told CNBC, and he believes more will do so in the coming weeks.
Israel’s tech community accounts for nearly one-fifth of the country’s annual gross domestic product, making it the sector with the largest economic output in the country, according to the Israel Innovation Authority. The tech sector also makes up about 10% of the total labor force. Even during war, much of Israel’s tech community is still finding a way to push forward, according to Ben-Aroya and a handful of other members of the tech community CNBC spoke with.
Israeli soldiers stand guard at the site of the Supernova desert music Festival, after Israeli forces managed to secure areas around Re’im.
Ilia Yefimovich | Picture Alliance | Getty Images
Ben-Aroya had been planning to launch Spike’s integrated artificial intelligence tool this past Monday, and he almost immediately decided to put the project on hold — but only for a week’s time.
For Amitai Ratzon, CEO of cybersecurity firm Pentera, Saturday began with “uncertainty and lots of confusion,” but when his company had its all-hands meeting on Monday, with 350 attendees, he recalled some Israel-based workers viewing work as a good distraction. For those who feel the opposite, the company is allowing them to take the time off they need.
Pentera operates from 20 countries, with Israel having the largest employee base, and it specializes in mimicking cyberattacks for clients such as BNP Paribas, Chanel and Sephora to identify system weaknesses. Ratzon said he has had to restructure some international commitments amid the conflict — canceling the training session some employees were flying into Israel for, asking someone to cover for his planned keynote address in Monaco, and having German and U.K. team members fly to a Dubai conference that Israel-based employees had been planning on attending.
“Everyone is covering for each other,” Ratzon told CNBC.
A considerable number of tech workers have already been called on for military reserve duty — a mobilization that so far totals about 360,000 Israelis.
Ratzon said Pentera has more than 20 of its best employees currently serving, “some of them on the front lines.”
Isaac Heller, CEO of Trullion, an accounting automation startup with offices in Tel Aviv, told CNBC that the company’s finance lead just finished its 2024 financial forecast and then immediately delivered new bulletproof vests for his Israeli Defense Forces unit after raising more than $50,000 to secure them.
Of digital bank One Zero’s almost 450 employees — all based in Israel — about 10% were drafted for reserve duty, CEO Gal Bar Dea told CNBC. He was surprised to see people constantly volunteering to cover for each other in an employee WhatsApp group.
“This guy says he was drafted, all of a sudden three people jump in and cover his tasks,” Bar Dea said. “There’s a sense of business as usual, everything is moving forward. … We had some meetings today on new launches coming. Everyone is keeping moving and covering for each other.”
One Zero is working on a ChatGPT-like chatbot for customer service, and this week employees opted to join optional planning meetings and decided not to move the deadlines, Bar Dea said. The person leading the ChatGPT efforts, an Air Force pilot who has been drafted, chose to join conference calls in his military uniform in between his duties, Bar Dea said.
“Many, many members of the tech community have been called up to reserve duty,” Yaniv Sadka, an investment associate at aMoon, a health tech and life sciences-focused venture capital firm, told CNBC, adding that a large swath of the community has been called to serve in Israel’s intelligence units as their reserve duty.
“I will have, by tonight, already been to two military funerals,” Sadka said.
Some members of Israel’s tech community are working overtime on tech tools specific to the conflict, such as a bulletin board-type website for missing persons, cyberattack defense tools, a GoFundMe-like tool and even a resource for finding online psychologists, according to Bar Dea.
“It’s pretty amazing — it’s the secret sauce of Israel … startup nation,” Bar Dea told CNBC, adding, “In two days, people are raising money, volunteering, taking kids in, building new houses, walking deserted dogs. … All the high-tech companies. People are building cyber stuff, communication stuff … stuff to help civilians … websites to find hostages.”
Sadka said that he’s “never seen anything like” the mass donations and mass volunteering happening at the moment.
“It’s thousands upon thousands upon thousands of people taking care of each other. There are everyone from teenagers to senior citizens helping,” he said.
Five minutes before Bar Dea’s call with CNBC, he said he heard sirens blaring from his office, and that his wife had taken his kids inside their home to shelter in place.
“It’s interesting trying to be the CEO of a bank or high-tech company, meanwhile I’m the father of a 10-year-old and a 6-year-old,” Bar Dea said, adding, “It’s very tough. It’s something we’ve never experienced before, ever. … Everyone is trying to get our hands around how to deal with it from a business perspective and also from a personal perspective.”
Sadka added, “It’s very difficult to concentrate on work when you’re dealing with all these personal matters and on securing yourself and the country.”
United Auto Workers members strike the General Motors Lansing Delta Assembly Plant on September 29, 2023 in Lansing, Michigan.
Bill Pugliano | Getty Images
DETROIT – A shift in strategy by the United Auto Workers union this week has some analysts wondering if the parties are — perhaps, counterintuitively — getting closer to a deal.
On Wednesday the union initiated a surprise work stoppage at Ford Motor’s Kentucky Truck Plant. The strike involves 8,700 workers and affects the most crucial plant, by far – responsible for $25 billion in revenue annually – that the union has walked out on since the strikes began Sept. 15. It’s expected to quickly have a ripple effect on other Ford plants and suppliers.
It also ushered in what UAW President Shawn Fain characterized as a “new phase” of strikes and contract negotiations with Ford, General Motors and Chrysler-parent Stellantis, giving the union the element of surprise to keep the automakers on edge during the ongoing negotiations, Fain told members in a Friday presentation.
“We’re entering a new phase of this fight and it demands a new approach,” Fain said Friday. “We’re done waiting until Fridays to escalate our strike.
“We are prepared at any time to call on more locals to stand up and walk out,” he said.
Until this week, Fain had announced all of the union’s new strikes on Fridays, during what has become a weekly livestreamed update for union members.
Some Wall Street analysts and industry experts think this week’s shift in strategy could be a sign that UAW leaders feel a deal with Ford is close, and that they’re increasing pressure as a tactic to get the deal over the finish line — and to help sell a potential tentative deal to their members.
“We continue to believe the escalation at [Ford] this week is a sign the talks may be coming to an end. KY Truck is likely Ford’s most profitable plant, and therefore the strike is the highest level of escalation, aside from a national strike,” Wells Fargo analyst Colin Langan wrote in a Friday note. “This escalation would likely be done to push for final terms.”
But the UAW’s leaders may be looking one more step ahead, to the process of selling a tentative deal with Ford to their members. The thinking is that to convince members to ratify a potential new contract, UAW President Shawn Fain and the union’s leadership will need to convince autoworkers that the union has fought as hard as possible to have their demands met. Striking Ford’s most profitable factory might be one way to do that.
Wolfe Research’s Rod Lache argued the Kentucky strike may allow UAW leadership to claim that they did all that could be done, especially if it leads to one or two more concessions from Ford.
“In another week or two, Fain should be able to credibly announce that he has forced Ford into one last capitulation (battery plants?), and that UAW members have secured the last few ounces of wage, benefits, and job protection concessions that they can get,” Lache wrote Thursday to investors.
Factory workers and UAW union members form a picket line outside the Ford Motor Co. Kentucky Truck Plant in the early morning hours on October 12, 2023 in Louisville, Kentucky.
Only about 34,000 U.S. automakers with the companies, or roughly 23% of UAW members covered by the expired contracts with the Detroit automakers, are currently on strike.
“Hitting a very high-dollar, high-profitable plant, it certainly gets Ford’s attention very quickly,” said Art Wheaton, a labor professor at the Worker Institute at Cornell University. “It also sends a huge message to Stellantis and General Motors.”
Wheaton argues the escalation in Kentucky may just be the beginning. There are plenty more plants the union could hit for each of the automakers, including the full-size pickup truck plants owned by all three and large SUV plants at GM and Stellantis.
GM avoided a strike at its most profitable SUV plant in Texas last week with a last-minute offer to include battery cell plant workers under the company’s national agreement, however details regarding how that will be done are believed to be still being negotiated.
While Fain declined to expand strikes against GM and Stellantis Friday, Wells Fargo’s Langan thinks that doesn’t necessarily mean they’re spared.
“The lack of GM & STLA strike today, even though both have not matched F’s offer, would be consistent with the UAW holding out the most profitable plants for a final push,” he wrote in a Friday note.
All of that tea-leaf reading aside, rapid escalation-turned-resolution is just one potential outcome.
Another includes the automakers holding out for the union to deplete its resources, specifically its strike and defense fund. Or, the UAW could continue rotating strikes or filing additional unfair labor practice charges against the companies. Yet another outcome could see the sides seeking mediation or legal resources.
“I think they’ve got to be getting close to some sort of an agreement, or you just have to conclude a reasonable deal is not in the making — and that this is really more a matter of a test of will than anything else,” said Marick Masters, a business professor at Wayne State University in Detroit who specializes in labor issues.
An automaker also could submit what’s known as a “last, best and final offer,” which, as it states, is typically a final proposal when bargainers have reached an impasse.
Ford may be close to that point. An executive said Thursday the automaker was “at the limit” of what it can offer UAW in terms of economic concessions.
The Detroit automakers have largely given into many of the union’s demands, but not all of them.
The companies haven’t waved the white flag on demands for a 32-hour workweek — which was always a nonstarter for the companies and which has largely fallen out of union talking points — and a 40% wage increase.
Ford was up to a record 23% wage increase in its recent contract proposal, with the others not far behind.
Then there’s the outstanding issues of benefits for retirees as well as a return to traditional pension plans and future battery plant jobs and workers.
Industry experts and sources familiar with the talks believe regardless of the outcome, the contracts will have ripple effects on the companies potentially in the way of reorganizations, cost cuts and future investments and jobs.
A former high-ranking bargainer for one of the automakers told CNBC that it’s nearly guaranteed that the companies will cut union jobs through product allocation, plant closures or other means to offset increased labor costs once the contracts are set.
“They’re going to have to pay up. The question is how much,” said the longtime bargainer, who agreed to speak on the condition of anonymity. “This ends up with fewer jobs. That’s how the automakers cut costs.”
Healthcare workers strike in front of Kaiser Permanente Los Angeles Medical Center, as more than 75,000 Kaiser Permanente healthcare workers go on strike from October 4 to 7 across the United States, in Los Angeles, California, October 4, 2023.
Aude Guerrucci | Reuters
More than 85,000 health workers reached a tentative labor agreement with Kaiser Permanente on Friday that will avoid more strikes after the Biden administration intervened in the negotiations.
President Joe Biden praised the health workers and reiterated his support for organized labor in a statement Friday.
“Health care workers and support staff kept our hospitals – and our nation– going during the dark months of the pandemic,” Biden said in a statement Friday. “They had our backs during one of our nation’s toughest times. We must continue to have theirs.”
“I always say that collective bargaining works,” Biden said. “It works for UPS drivers and dock workers, writers, and millions of American workers who exercise their right to participate in a union.”
Biden has touted himself as the most pro-union president in American history. He recently joined the picket line in Detroit to support the United Auto Workers in their strike against Ford Motor, General Motors and Stellantis.
Tens of thousands of health workers walked out of Kaiser hospitals and facilities last week to protest short staffing and demand better pay. The strike lasted three days in California, Colorado, Oregon and Washington state. The walkout was said to be the largest health-care worker strike in U.S. history.
The Coalition of Kaiser Permanente Unions had threatened additional strikes if management did not meet their demands, particularly over short staffing and the outsourcing of jobs.
Julie Su, acting labor secretary, arrives to testify during the House Education and the Workforce Committee hearing titled “Examining the Policies and Priorities of the Department of Labor,” in Rayburn Building on Wednesday, June 7, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
The union coalition and Kaiser executives met for bargaining sessions this week. The sides reached a tentative labor contract to avoid further strikes after the intervention of acting Labor Secretary Julie Su.
The agreement includes a 21% pay hike over four years, a minimum wage of $25 in California and $23 in other states, protections against outsourcing, and numerous investments to address short staffing.
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Su flew to California on Thursday evening to help facilitate the deal, according to the union coalition. Sarah Levesque, secretary-treasurer of OPEIU Local 2, said Su was instrumental in brokering the deal.
“We’re incredibly grateful to acting U.S. Labor Secretary Julie Su and the Biden administration for supporting workers’ right to collective bargaining,” Levesque said.
Biden also praised Su’s role, “She continues to play an integral role helping my administration and workers across this country build an economy that works for everyone,” the president said.
Jamie Dimon, chairman and CEO of JPMorgan Chase, at the U.S. Capitol for a lunch meeting with the New Democrat Coalition in Washington, D.C., June 6, 2023.
Nathan Howard | Bloomberg | Getty Images
JPMorgan Chase is scheduled to report third-quarter earnings before the opening bell Friday.
Here’s what Wall Street expects, according to analyst estimates compiled by LSEG, formerly known as Refinitiv
Earnings per share: $3.96
Revenue: $39.65 billion
JPMorgan will be watched closely for clues on how the industry fared amid surging interest rates and rising loan losses.
While the biggest U.S. bank by assets has navigated volatile rates adeptly so far this year, the situation has caught several peers off guard, including a trio of midsized lenders that collapsed after deposit runs.
Bank stocks plunged last month after the Federal Reserve signaled it would keep interest rates higher for longer than expected to fight inflation amid unexpectedly robust economic growth. The 10-year Treasury yield, a key figure for long-term rates, jumped 74 basis points in the third quarter. One basis point equals one-hundredth of a percentage point.
Higher rates hit banks in several ways. The industry has been forced to pay up for deposits as customers shift holdings into higher-yielding instruments like money market funds. Rising yields mean the bonds owned by banks fall in value, creating unrealized losses that pressure capital levels. And higher borrowing costs tamp down demand for mortgages and corporate loans.
Banks including JPMorgan have also been setting aside more funds for anticipated loan losses.
Wall Street may provide little help this quarter, with investment banking fees likely to remain subdued and trading revenue expected to be flat or down slightly.
Finally, analysts will want to hear what CEO Jamie Dimon has to say about the economy and his expectations for the banking industry. Dimon has been vocal in his opposition against proposed increases in capital requirements.
Shares of JPMorgan have climbed 8.7% year to date, far outperforming the 19% decline of the KBW Bank Index.
Google has opened its first west coast visitor Experience” center which is located by its Mountain View headquarters.
Mark Wickens
Google is opening a sliver of its main campus to the general public starting this week.
The company opened its doors to what it’s calling its “Visitor Experience” center the public Thursday, following a ceremony where Google executives and local leaders gathered hear its headquarters in Mountain View, Calif.
“We’ve always been focused on the experience of Googlers and their friends,” said Google’s head of real estate Scott Foster. “But this project was designed intentionally for the general public.”
Ruth Porat, Google’s President and Chief Investment Officer, was also in attendance and helped cut the celebratory ribbon to the space.
Google’s new Mountain View “Visitor Experience” center features a Google store.
Although the public can’t walk into Google’s actual office space, the new visitor center features a room where a community group or nonprofit can request to reserve the space for meetings or events. It also includes a cafe and retail Google store, which comes two years after the company opened its first public Google retail store in New York’s Chelsea neighborhood.
The center’s cafe features dishes like sandwiches, soup, and desserts from local eateries. It’s Google’s first cafe open to the public, but has a lighter selection than a typical large campus cafeteria. It also features an outdoor “plaza” for events as well as a small craft space and a small local shop that will feature a rotation of local retailers.
Google’s new visitor center feature a space where a community group or nonprofit can request to reserve the space for meetings or events.
Mark Wickens
Executives said that the center, which has been in the works for several years, comes at a time when technology is moving quickly and a post-pandemic need for more in-person spaces.
“Innovation is moving so fast that having a place to be together is even more important,” campus research and design director Michelle Kaufmann told CNBC, referring to artificial intelligence and cloud computing. “It’s a step in not being an ivory tower and hopefully it can be a blueprint for how community can be more involved.”
Google’s new visitor experience includes an outdoor event space for the public.
It comes amid a trend of Silicon Valley tech companies like Facebook (now Meta) and Google departing from the traditional style of campus designs, which have historically been closed off from the general public. The trend comes as companies face pressure to appease both top talent and their non-tech neighbors.
Facebook re-worked its big Menlo Park campus plans for a similar model that would include affordable housing, a full-service grocery, and pharmacy among other amenities.
Google was approved for plans for an even larger 80-acre mixed-use campus 10 miles down the road in downtown San Jose to house 25,000 employees. Executives have maintained it is still committed to doing a project in the area long-term after CNBC found that it halted project plans after the first demolition phase, due to economic concerns and cost-cutting this year.
Google executives and local government leaders gathered for the company’s new visitor center opening Wednesday.
Representative Jim Jordan, a Republican from Ohio, during a news conference at the US Capitol in Washington, DC, US, on Thursday, April 27, 2023.
Ting Shen | Bloomberg | Getty Images
Republican lawmakers are expected to vote Wednesday morning to nominate a candidate for speaker of the House of Representatives, a week after Kevin McCarthy was ousted by rebel GOP members in a historic no-confidence vote.
House Republicans are scheduled to hold a closed-door meeting at 10 a.m. ET to vote on who should succeed McCarthy as speaker. House Majority Leader Steve Scalise of Louisiana and Judiciary Committee Chairman Jim Jordan of Ohio are considered the top candidates for the post.
The candidate who wins the backing of the House Republicans will still have to face a full vote on the chamber’s floor to secure the speakership.
It is unclear if either Scalise or Jordan can win the 217 votes needed to become the next speaker. McCarthy faced a grueling 15 ballots before he was finally elected speaker in January.
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The House remains leaderless more than a week after Rep. Matt Gaetz of Florida and seven other Republicans who engineered the ousting of McCarthy, who ran afoul of hard-right members of the GOP for working with Democrats to pass spending legislation last month to avoid a government shutdown.
The House is effectively in a state of paralysis until someone is elected to take the speaker’s gavel.
The race to find a new speaker has become urgent as Israel wages war on Hamas after the militant group launched a series of devastating terrorist attacks on towns that border the Gaza Strip.
President Joe Biden said Tuesday that he will ask Congress to take “urgent action” to fund the national security needs of U.S. partners as the Middle East descends into war and Ukraine wages its grinding counteroffensive to push Russia out of its eastern territories.
Congress also needs to pass spending legislation by Nov. 17 to avoid a government shutdown.
This is a developing story. Please check back for updates.
The Nobel economics prize was on Monday awarded to Professor Claudia Goldin of Harvard University for her research on women in the labor market.
Goldin provided the first comprehensive account of women’s earnings and labor market outcomes through the centuries, the Nobel committee said during the prize announcement. Her research reveals new patterns, identifies causes of change but also speaks to the main sources of the remaining gender gaps, the committee added.
The winners of the award, which is officially titled the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, receive 10 million Swedish krona ($907,000) between them.
Last year’s prize went to U.S.-based economists Ben Bernanke, Douglas Diamond and Philip Dybvig for their work on banks and financial crises.
The Nobel committee said their research in the early 1980s had “significantly improved our understanding of the role of banks in the economy, particularly during financial crises,” and in showing the importance of avoiding bank collapses. They added this was “invaluable” during the 2008-09 financial crisis and the Covid-19 pandemic.
This is a breaking news story, and it is being updated.
Passengers look at a departure board at Ben Gurion Airport near Tel Aviv, Israel, on October 7, 2023, as flights are canceled because of the Hamas surprise attacks.
Gil Cohen-magen | AFP | Getty Images
Several airlines suspended service to Israel this weekend after surprise attacks by Hamas and Israeli retaliation left hundreds dead.
United Airlines, Delta Air Lines and American Airlines each scrubbed service to Tel Aviv. United Flight 954, which departed San Francisco Friday night for Israel, turned back near Greenland, according to flight-tracker FlightAware.
Lufthansa Group said all of its flights, including those on Swiss International Air Lines and Austrian Airlines, were suspended into Tel Aviv through Monday.
“We are continuously monitoring the security situation in Israel and are in close contact with the authorities,” Lufthansa said in a statement. “The safety of our guests and crew members has top priority for Lufthansa.”
Israeli airline El Al said Sunday that its flights are “operated as scheduled.”
El Al and other carriers also offered travel waivers for customers to delay or cancel their trips.
Venture-capital giant Softbank notched a $15 billion-plus gain on its 2016 deal to buy Arm Holdings when the artificial intelligence-enabling semiconductor firm went public last month. But not as many investors know about Softbank’s “other” big AI investment, Wilmington, Mass.-based software and robotics maker Symbotic, which Walmart has taken a big stake in itself.
That may soon change.
Symbotic, a company that has already generated market heat selling AI-powered robotic warehouse management systems to clients including Walmart, Target and Albertson’s, is partnering with Softbank to play in a potentially giant and transformative market. The two are teaming up in a joint venture called GreenBox Systems which promises to deliver AI-powered logistics and warehousing to much smaller companies, delivering it as a service in facilities different companies share. They say it’s a $500 billion market, and an example of the kind of change AI can bring to the economy at large.
If it works, GreenBox will reach companies that could never afford the multi-million dollar required investment, in the same way cloud computing puts high-end information tech within reach, said Dwight Klappich, an analyst at technology research firm Gartner.
“I’ve seen a lot of robotics tech and I’ve never seen anything like it in my life,” TD Cowen analyst Joseph Giordano said. “Compared to what it replaces, it’s like day and night.”
Erasing memories of a big WeWork real estate blunder
It might even mute the memory of Softbank’s most disastrous commercial real estate management investment ever, the notorious office-sharing company WeWork.
Like WeWork, GreenBox is a promise to fuse technology and real estate. Indeed, its sales pitch of “warehouse as a service” recalls the “space as a service” slogan in WeWork’s 2019 IPO prospectus almost exactly. The big difference: with WeWork, outside analysts struggled to identify what technological advantage WeWork ever offered clients over working at home or in traditional offices, let alone one that justified its peak valuation of $47 billion. WeWork today is worth under $150 million and is now under bankruptcy watch as it warned in August of its potential inability to remain “a going concern,” and more recently stopped making interest payments on debt, asking lenders to negotiate.
At GreenBox, the technology is the whole point, Giordano said. And unlike WeWork, which wanted people to change the way they used offices, Symbotic and GreenBox are out to let companies that already run warehouses boost efficiency and profits, he said.
“Contract warehousing exists today – but those operations are mostly manual,” said Robert W. Baird analyst Rob Mason.
Softbank owns more than 8% of Symbotic, according to data from Robert W. Baird, and took it public through a special purpose acquisition company last year. Softbank also owns 65% of the GreenBox venture, which launched with $100 million in investment by the two companies. Walmart owns another 11% of Symbotic, according to a proxy statement from the robotics company, and is by far its biggest customer until the GreenBox venture ramps up, accounting for almost 90% of revenue.
“We share the same vision of going big and going fast,” Symbotic CEO Rick Cohen said. “We believe this market is massive.”
Symbotic has generated stock-market excitement even before the GreenBox deal. Its shares are up 190% this year. Sales in its most recent quarter climbed 77%, and orders for its existing warehouse-management systems jumped to $12 billion – a backlog it would take the company years to fulfill Add in the $11 billion of Symbotic software and follow-on services GreenBox committed to buy over six years in July, and that backlog soars to $23 billion for a company that expects its first billion-dollar revenue year in fiscal 2023, and to break even on an EBITDA basis for the first time as a public company in the fourth quarter.
The best indication of the future may be from Walmart, which bought its Symbotic stake as part of the companies’ deal to automate the retailer’s 42 U.S. regional distribution centers for packaged consumer goods.
The product is the reason why, analysts say.
At prices of $25 million to hundreds of millions, according to a conference call Symbotic held with analysts in July, a Symbotic system blends as many as dozens of autonomous robots that scoot around warehouses at speeds up to 25 mph, moving and unloading boxes from pallets and picking orders with AI software that optimizes where in a warehouse to put individual cases of goods, and lets boxes be packed to the warehouse’s ceiling, Giordano said, wasting much less space in the building.
The system works something like a disk drive that uses intelligence to store data efficiently and retrieve the right data on demand – but with boxes of stuff. And a large warehouse can use several different systems, piling up the required investment to get moving.
Because Symbotic’s system can track inventory down to the case easily, where stuff is put can be matched much more easily to incoming orders, making it possible to more fully automate order picking. It can also match the design of outgoing pallets to the layout of the store the pallet is headed to, speeding up unloading and shelf stocking, Klappich said.
But the biggest innovation the tech allows is in business models, rather than in technology itself. That hasn’t spread outside of giant companies yet, but Giordano and Mason say they think it will.
The AI’s precision will let multiple companies share the same warehouse, and even commingle their goods for efficient shipping without confusion, much as cloud computing lets multiple clients share the same computer servers, Mason said.
“Through sharing infrastructure, you can get out of the infrastructure business and focus on what’s important to you,” Klappich said. “Larger-scale automation without the capital expense has been a challenge.”
Born out of stealth work with Walmart, minting a multi-billionaire
The idea grew out of a vision Cohen had when running his family’s grocery distribution company, C&S Wholesale Grocery, which he has grown to $33 billion in annual revenue from $14 million since 1974. Symbotic was founded in 2006, and worked in stealth mode for years while refining its prototypes with Walmart.
“I’ve spent my whole life in the outsourcing and [logistics] business with C&S, so, this — the ability to run warehouses for people — has always been on the plate, Cohen said in the July analyst call. “We said we’re going to take care of Walmart first. …We are now starting to say, I think we can do more.”
Symbotic and C&S have made the 71-year old Cohen one of America’s richest men, with a net worth hovering around $15.9 billion, according to Forbes.
Symbotic teamed up with Softbank to build GreenBox in order to preserve its own capital, Cohen told analysts. The joint venture was initially capitalized 65% by Softbank and 35% by Symbotic, for a total of $100 million. Analysts say the venture will require much more capital, possibly raised by having GreenBox itself borrow money in the bond market. Symbotic said it will use its share of the profits from sales to GreenBox to keep its equity stake in the joint venture around 35%.
“The question has been, who has the capital to set it all up?” Klappich said. “Softbank could be the key because they have deep pockets.”
The joint venture will buy software from Symbotic, then turn around and sell the warehouse space, equipment and related services as a package to tenants.
Many questions remain, and potential threats from Amazon, private equity
Much else about the new company remains unknown, beginning with the identity of its not-yet-announced chief executive, Mason said. The venture could either develop warehouses or rent them, though Symbotic said it will probably mostly rent them. Pricing for the warehouse-as-a-service is undisclosed.
But the rise of Greenbox more than doubles Symbotic’s potential market, and nearly doubles its backlog. Symbotic has said that its total market is about $432 billion, a figure chief strategy officer Bill Boyd repeated on the conference call when the GreenBox alliance was announced. Early adopters will be in businesses like grocery and packaged goods, with Symbotic expanding into pharmaceuticals and electronics over time, according to Symbotic’s annual federal regulatory filing this year.
The GreenBox market for smaller companies shapes up as another $500 billion of possible demand, Gartner’s Klappich said. The estimates are based on the number of warehouses in those industries, the likely percentage of warehouses in each whose owners can afford the technology, either independently or through GreenBox, and the average price of Symbotic-like systems.
The third quarter of the company’s fiscal year, which ends in October, illustrates how the company’s profits might scale. Revenue jumped 77% to $312 million, and its loss before interest, taxes and non-cash depreciation and amortization expenses shrank to $3 million. Mason says the company will turn profitable on an EBITDA basis in the fiscal year that begins this fall, before orders from GreenBox begin, and EBITDA will be “in the mid-teens” as a percent of sales by the following year.
Clients stand to save money all the way through the warehouse, Klappich said.
Giordano estimated the savings at eight hours of labor per outgoing truck. The technology can also cut space rental costs by allowing goods to be packed closer together and stacked higher.
Using the facility as a service will let seasonal companies cut back on the space and robot time they use during slow periods, rather than carry them all year. The warehouse should run with many fewer workers, Giordano said. And GreenBox will pay for upgrades to robots and software every few years, rather than making tenants invest more, he said.
Walmart led investors on a tour of its Brooksville, Fla. warehouse in April, and said technology investments like the Symbotic alliance will let profits grow faster than sales. More than half of distribution volume will move through automated centers within three years, improving unit costs by about 20% as two-thirds of stores are served by automated systems. The company has said little about the impact on jobs, but CEO Doug McMillon said overall employment should stay about the same size but shift toward delivery from warehouse roles.
Competition will be arriving soon enough, analysts say. Building something like Symbotic, and especially moving it down into the realm where companies other than global giants can afford it, takes a combination of technology, money and vision, Klappich said.
Amazon could expand into the space, using its warehousing expertise in a service that resembles its Web hosting business model, or private-equity firms awash in investable cash might acquire combinations of companies to produce competing products and business models, Klappich said.
For Softbank, the payoff if GreenBox works is potentially huge. Analysts on average project Symbotic shares to rise another 53% in the next year after pulling back amid recent recession fears, according to ratings aggregator TipRanks. With post-IPO estimates arguing that Arm shares will stagnate, and taking into account that Softbank paid a reported $36 billion for Arm in 2016, it’s possible Symbotic will be the bigger win in the end, at least on a percentage basis, as the 65% share of GreenBox rises in value.
Consumers are still splurging for a side of fries with their meals. That can have a positive read through for the economy.
Frozen potato supplier Lamb Weston Holdings has seen the share of consumers ordering the iconic side with fast food meals — known as the fry attachment rate — remain above pre-pandemic levels, CEO Tom Werner told analysts on the company’s earnings call Thursday. That could indicate a resilient consumer even as inflation has pinched pocketbooks and fears of a recession have mounted.
“The global frozen potato category continues to be solid with overall demand and supply balanced,” Werner said. “Fry attachment rate, which is the rate at which consumers order fries when visiting a restaurant or other food service outlets across our key markets have remained largely steady and above pre-pandemic levels.”
When consumers feel financial pressure, a natural reaction is to cut back on spending through measures like trading down to cheaper brands or cutting extraneous expenses. In the case of Lamb Weston and fast food companies, that can manifest in the form of customers opting to skip fries or other sides in a bid to keep spending restricted.
To be sure, the impact of inflation can impact the business in other ways outside of just fry sales. Lamb Weston saw little change in total traffic in key U.S. markets, but evidence of a shift in consumer behavior was there: Growth in quick-service food providers, which are typically more affordable, balanced out declines seen in full-service and casual-dining restaurants.
Werner also said inflation can continue to drive up costs for the company, specifically related to potato contract prices.
He pointed to June as a source of restaurant traffic weakness seen in the fiscal fourth quarter. But Werner said it has been reassuring to see trends approve since then, while remaining confident in the ability of the company’s potato offerings to weather an economic slowdown.
“We suspect that restaurant traffic trends will be volatile in the near term as high interest rates, high inflation and uncertainty continues to affect consumer,” Werner said. “That said, frozen potato demand has proven resilient during the most challenging economic times, and we continue to be confident in the long-term growth prospect for the global category.”
Lamb Weston stock jumped more than 9% in Thursday’s session. The stock has performed almost in line with the broader market in 2023, up almost 11% since the year began.
United Auto Workers members strike the General Motors Lansing Delta Assembly Plant on September 29, 2023 in Lansing, Michigan.
Bill Pugliano | Getty Images
DETROIT – General Motors’ stock price fell below $30 a share Thursday for the first time in more than three years amid ongoing strikes by the United Auto Workers union and a report of a potentially costly airbag recall for the automaker.
Since the UAW union’s targeted strikes began Sept. 15, shares of the Detroit automaker have fallen by more than 10%. The stock closed at $33.66 a share a day before the work stoppages began.
The most recent share decline occurred midday Thursday following The Wall Street Journal reporting GM has at least 20 million vehicles built with a potentially dangerous air-bag part that the government says should be recalled before more people are hurt or killed.
The potential recall of roughly 52 million air-bag inflators from Tennessee-based auto supplier ARC Automotive had been reported about previously, but the number of affected GM vehicles had not.
The National Highway Traffic Safety Administration held a public meeting Thursday on its determination that the air-bag parts are defective and should be recalled, according to the report. Automakers, including GM, have until later this year to file responses on the matter.
GM’s stock since Oct. 1, 2020
GM has recalled about 1 million vehicles due to the problem. The company reiterated Thursday that it “believes the evidence and data presented by NHTSA at this time does not provide a basis for any recall” beyond the ones the company has already done.
“Neither the affected automakers nor NHTSA, despite eight years of study and investigation, have identified a systemic design or manufacturing defect in ARC frontal airbag inflators,” the company said in an emailed statement. “If GM concludes at any time that any unrecalled ARC inflators are unsafe, the company will take appropriate action in cooperation with NHTSA.”
GM said it “will continue to work collaboratively with NHTSA, other manufacturers, and ARC to monitor and investigate the long-term performance and safety of ARC airbag inflators.”
While many Wall Street analysts have said a strike by the UAW was already priced into GM shares, the automaker’s stock has only experienced five positive trading days out of 14 sessions.
GM confirmed Thursday it had made a counteroffer to the union, marking its sixth since the start of negotiations. It comes a day after the automaker said the strike cost it $200 million in lost production during the third quarter.
“We believe we have a compelling offer that would reward our team members and allow GM to succeed and thrive into the future. We continue to stand ready and willing to negotiate in good faith 24/7 to reach an agreement,” the company said Thursday in an emailed statement.
The last time shares of GM dropped below $30 a share during intraday trading was on Oct. 2, 2020, according to FactSet.
DETROIT – General Motors secured a new $6 billion line of credit as the automaker braces for additional strikes by the United Auto Workers union.
“The facility that we announced today is a $6 billion line of credit that I think is prudent in light of some of the messages that we’ve seen from some of the UAW leadership that they intend to drag this on for months,” CFO Paul Jacobson told CNBC’s Phil LeBeau in an interview on “Halftime Report.”
The targeted strikes already cost the automaker $200 million during the third quarter, GM said Wednesday.
A GM spokesman said the $200 million strike cost is due to lost production on wholesale volume, largely due to the UAW’s initial Sept. 15 strike at GM’s midsize truck and full-size van plant in Wentzville, Missouri. The strike has since expanded to GM’s parts and distribution facilities nationwide and, as of last Friday, a crossover plant in mid-Michigan.
As a result of the strike in Missouri, GM also idled its Fairfax Assembly Plant in Kansas, where it builds the Cadillac XT4 SUV and the Chevrolet Malibu sedan, and laid off nearly 2,000 workers.
Both GM CEO Mary Barra as well as Ford Motor CEO Jim Farley have publicly criticized UAW President Shawn Fain and the union’s strike strategy, claiming Fain is not actually interested in reaching deals for 146,000 workers with GM, Ford and Chrysler parent Stellantis.
Members of the United Auto Workers (UAW) Local 230 and their supporters walk the picket line in front of the Chrysler Corporate Parts Division in Ontario, California, on September 26, 2023, to show solidarity for the “Big Three” autoworkers currently on strike.
Patrick T. Fallon | AFP | Getty Images
“It’s clear that there is no real intent to get to an agreement,” Barra said in an emailed statement Friday night. “It is clear Shawn Fain wants to make history for himself, but it can’t be to the detriment of our represented team members and the industry.”
Fain has consistently said the union is available to negotiate 24/7 and has in turn accused the automakers of slow-walking negotiations.
GM’s newly announced line of credit will require the automaker to maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity. The terms of the credit agreement also restrict GM from mergers or sales of assets and limits on other, new debt. As of June 30, GM’s total automotive liquidity was $38.9 billion.
The credit line comes more than a month after Ford obtained a $4 billion line of credit to help it manage through “uncertainties” in the market.
United Auto Workers members strike at the Ford Michigan Assembly Plant on September 15, 2023 in Wayne, Michigan.
Bill Pugliano | Getty Images
DETROIT – Ford Motor’s third-quarter U.S. new vehicle sales increased 7.7% compared to a year earlier, driven by increased sales of traditional pickup trucks across its lineup.
The Detroit automaker on Wednesday reported a 15.3% increase in truck sales compared to a 5.1% decline in cars and sales of SUVS that were essentially flat.
An ongoing strike by the United Auto Workers union against the Detroit automakers, including Ford, was not expected to directly impact sales during the quarter.
This is a developing story. Please check back for additional updates.
The prosecutor’s office confirmed Friday that a preliminary investigation had been underway since 2022 and that a report from France’s Tracfin financial intelligence unit relating to an Alpine real estate purchase by Sarkisov and “likely to characterize acts of money laundering” had been brought to its attention.
Spokespeople for both Arnault, the CEO and chairman of the world’s largest luxury goods company and Europe’s richest man, and Sarkisov, a senior executive at Russian insurance company RESO-Garantia, have vehemently denied any wrongdoing.
A preliminary investigation does not suggest a crime has been committed. In a statement, Arnault’s attorney, Jacqueline Laffont, said the allegations were “absurd and unfounded.”
“The transaction that allowed for the expansion of the Hotel Cheval Blanc in Courchevel is perfectly known and was conducted in accordance with the law and with legal support. The investigation, seemingly under way, will demonstrate these facts,” she said in an emailed statement over the weekend.
“Furthermore, who could seriously imagine that Bernard Arnault, who has developed over the past 40 years the leading French and European company, would pursue money laundering to expand a hotel? I believe the senseless nature of these allegations will be recognized by all.”
French newspaper Le Monde reported Thursday, citing Tracfin, that Sarkisov acquired property in the French ski resort of Courchevel using a loan from one of Arnault’s companies.
RESO-Garantia Deputy CEO Igor Ivanov told CNBC on Friday that neither the company, nor Nikolai Sarkisov personally, had been involved in the transaction, and that Sarkisov and Arnault had never met.
“The transaction was managed by a small investment unit which invests professionally in European real estate. It consisted of acquiring flats in an old building in Courchevel from various private owners, with the view to sell them later to a developer once the entire building was bought out,” Ivanov said in an email.
“All transactions were carried out by French companies, through French notaries by French lawyers on all sides. This was a usual real estate deal.”
Correction: Jacqueline Laffont is Arnault’s attorney. An earlier version misspelled her name.
The snack aisle is seen during a tour of a new Amazon Go store in the Capitol Hill neighborhood of Seattle, Washington, U.S., on Monday, Feb. 24, 2020.
Chona Kasinger | Bloomberg | Getty Images
For more than a century, frosted cornflakes have been the backbone of Kellogg’s business. That changes Monday, when the company will spin off its stable cereal business in favor of its faster-growing snack unit and rename itself Kellanova.
The spinoff comes weeks after another wager that consumers will graze between meals, when J.M. Smuckerbought Twinkie maker Hostess Brands for $5.6 billion in a bid to expand its snack lineup.
But food companies’ majorbets on snacking come as investors fear the looming danger of Big Pharma’s blockbuster obesity and diabetes drugs Wegovy and Ozempic. Many investors have high hopes for the pharmaceuticals’ future, but their success could mean slower sales for the companies that produce Oreos, Doritos and Hershey’s Kisses.
Big Food’s bet on snacking began roughly a decade ago, and it’s only accelerated as the rest of the grocery aisles see sales stagnate, particularly as prices rise. The U.S. market for savory snacks is expected to grow 6% annually from 2022 through 2027, and sweet snacks’ sales are expected to rise 4.6%annually during that time, according to HSBC. Roughly three-quarters of consumers plan to snack every day, according to Accenture data.
Millennials and Generation Z consumers are fueling the trend. Younger generations snack more often than older consumers, said Kelsey Olsen, food and drink analyst for market research firm Mintel. Millennials and Gen-Z consumers tend to eat smaller meals that are closer together, creating more occasions to grab a snack.
At the same time, Novo Nordisk’s Ozempic and Wegovy have taken off, fueled by prescriptions to help patients lose weight. The drugs, known as GLP-1 agonists, suppress appetites by mimicking a gut hormone. Some patients even report developing aversions to foods with higher sugar and fat content — a category that includes many big snack brands.
More than 9 million prescriptions for these kinds of drugs were written in the U.S. in the fourth quarter of 2022, according to a Trilliant Health report.
Morgan Stanley estimates that the number of patients taking GLP-1 drugs could reach 24 million, or nearly 7% of the U.S. population, by 2035.
If so, consumption of baked goods and salty snacks could fall 3% — or even more if the new eating habits of the people using the treatments extend to their broader households and friends, according to Morgan Stanley’s research. That puts companies like Hershey, Mondelez, PepsiCo, General Mills and Kellogg’s successor Kellanova at risk.
But not everyone in the industry agrees with that assessment.
Boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes and made by Novo Nordisk, is seen at a Rock Canyon Pharmacy in Provo, Utah, May 29, 2023.
George Frey | Reuters
After buying Hostess Brands, Smucker CEO Mark Smucker defended the future of Twinkies and Ding Dongs against the threat of GLP-1 drugs.
“There are multiple ways that consumers will continue to snack. … And given that consumers are going to continue to seek all different types of snacks, and sweet snacks are going to continue to be on the radar, we view that our projections here are sound,” he told analysts on a conference call.
For one, GLP-1 drugs like Wegovy and Ozempic are expensive, with a list price of roughly $1,000 a month. That high price has led some insurers to decide not to cover the treatments.
While some of the nation’s largest insurers, like CVS’s Aetna, cover prescriptions of these drugs, the federal Medicare program, many state Medicaid programs and some commercial insurers don’t, leaving patients to pick up the bills themselves.
Another factor could work in the favor of snack sales.Many of the consumers who eat the most junk food likely won’t be able to afford Wegovy or Ozempic.
“Consumption of indulgent salty snacks that would be considered ‘junk food’ generally over-indexes toward lower-income individuals, who are unlikely to be these drugs’ primary users, ” RBC analyst Nik Modi said in a research note Tuesday.
Modi wrote that he doesn’t believe the drugs will ultimately be problematic for the manufacturers of salty snacks.
What’s more, patients have to inject themselves once a week, and if they stop taking the treatments, their effects disappear, usually erasing any weight loss that had occurred over time.
“This sort of drug is super interesting in what it can do, but I think until it comes in a radically different formulation, in a pill or something like that, and something that has enduring impact and obviously the much lower price point, I think it’s going to be tricky,” said Oliver Wright, senior managing director of Accenture’s consumer goods and services unit.
Even if the drugs become more affordable and are more widely adopted, the change won’t happen overnight. Food companies will have time to adjust to shifting consumer behavior.
“We acknowledge that the impact in the near term is likely to be limited given drug adoption will grow gradually over time, but we could see a longer-term impact as drug prevalence increases,” Morgan Stanley’s Paula Kaufman wrote in a note to clients. “Moreover, we expect companies to adapt to changes in consumer behavior through innovation and portfolio reshaping efforts.”
That may mean slower sales growth than expected and moves to divest some brands. But Big Food has been making strides toward healthier options anyway. GLP-1 drugs could just put more pressure on companies to update their portfolios.
PepsiCo and Mondelez are among the companies that have snapped up smaller brands that make healthier snacks. Still, growing them into global powerhouses will take time.
Food companies are also looking internally, investing in their research and development teams to create new formulations that mirror the taste of their full-sugar and salt versions.
“My prediction is, before the end of the decade, we will have a healthy Oreo that can be put on a plate with an old one, and consumers won’t be able to tell them apart — and that will be a good thing,” Accenture’s Wright said.
Bernard Arnault, Chairman and CEO of LVMH Moet Hennessy Louis Vuitton, attends a news conference to present the 2022 annual results of LVMH in Paris, France, January 26, 2023.
Gonzalo Fuentes | Reuters
The Paris public prosecutor’s office is investigating LVMH CEO Bernard Arnault over financial transactions involving Russian oligarch Nikolai Sarkisov.
French newspaper Le Monde reported Thursday, citing France’s Tracfin financial intelligence unit, that Sarkisov had bought real estate at an Alpine resort with the help of a loan from Arnault.
The Paris prosecutor’s office confirmed Friday that a preliminary investigation had been underway since 2022, and that a Tracfin report “drawing the attention of the prosecutor’s office to operations concerning Mr. Bernard Arnault and Mr. Sarkisov, likely to characterize acts of money laundering, has been attached to this procedure.”
The prosecutor’s office declined to comment further on the ongoing investigations. A preliminary investigation does not necessarily imply wrongdoing, and Le Monde cited a close associate of Arnault as saying the deal was carried out within the scope of French law.
Arnault, founder, CEO and chairman of the world’s largest luxury goods company and one of the world’s richest men, lost a high court case against French tax investigators in February over the legality of a 2019 raid on LVMH’s headquarters. The raid related to a tax fraud probe linked to activities in Belgium.
Nikolai Sarkisov is a senior figure at his brother Sergey’s Russian insurance company, RESO-Garantia.
RESO-Garantia Deputy CEO Igor Ivanov told CNBC on Friday that neither the company, nor Nikolai Sarkisov personally had been involved in the transaction, and that Sarkisov had never met Arnault.
“The transaction was managed by a small investment unit which invests professionally in European real estate. It consisted of acquiring flats in an old building in Courchevel from various private owners, with the view to sell them later to a developer once the entire building was bought out,” Ivanov said in an email.
“All transactions were carried out by French companies, through French notaries by French lawyers on all sides. This was a usual real estate deal.”
He added that neither the company nor Sarkisov had received any request for documents from French authorities.
LVMH this weekend sent CNBC a comment from Jacqueline Laffont, Arnault’s lawyer, who said the allegations of money laundering were “as absurd as they are unfounded.”
“The operation that was conducted to allow the expansion of the White Horse Hotel in Courchevel is well known and was conducted in compliance with the laws and with the support of councils. The investigation, apparently in progress, will not fail to recognize this,” she said, according to the statement.
“Moreover, who can seriously imagine that Mr. Bernard Arnault, who for the past 40 years has built France and Europe’s top company would engage in money laundering to expand a hotel? I think that the senseless nature of these allegations cannot escape anyone.”
Members of the United Auto Workers union picket outside the Michigan Assembly Plant in Wayne, Michigan, on Sept. 26, 2023.
Matthew Hatcher | AFP | Getty Images
DETROIT — The United Auto Workers union is holding up negotiations with Ford Motor over future electric vehicle battery plants, Ford CEO Jim Farley said during a press briefing Friday.
“I believe we could have reached a compromise on pay and benefits, but so far the UAW is holding the deal hostage over battery plants,” he said after the UAW announced it would expand strikes to two additional assembly plants — one each for Ford and General Motors.
Farley criticized the union for its targeted strike strategy, saying he feels the actions were “premeditated” and insinuating the union was never interested in reaching a deal before a Sept. 14 deadline.
“We have felt from the very beginning, between all the lines of our comments, that the original strike was premeditated and that everything is taking way too long,” he said. “That actual events are predetermined before they happen. It’s been very frustrating.”
Farley’s public criticism of the union is uncharacteristic for Ford, which is historically viewed as the most union-friendly company of the Detroit automakers.
Farley said the company isn’t “at an impasse” with the union but warned that day “could come if this continues.”
GM CEO Mary Barra echoed much of Farley’s criticisms of Fain and the UAW’s strike strategy.
“It’s clear that there is no real intent to get to an agreement,” she said in an emailed statement Friday night. “It is clear Shawn Fain wants to make history for himself, but it can’t be to the detriment of our represented team members and the industry.”
UAW President Shawn Fain fired back at Farley, saying the CEO hasn’t been present at the bargaining table and that he’s “lying about the state of negotiations.”
“It could be because he failed to show up for bargaining this week, as he has for most of the past ten weeks. If he were there, he’d know we gave Ford a comprehensive proposal on Monday and still haven’t heard back,” Fain said in a statement Friday afternoon. “He would also know that we are far apart on core economic proposals like retirement security and post-retirement healthcare, as well as job security in this EV transition, which Farley himself says is going to cut 40 percent of our members’ jobs.”
Multibillion-dollar EV battery plants — and their thousands of expected workers — are crucial to the automotive industry’s future and uniquely positioned to have wide-ranging implications for the UAW, automakers and President Joe Biden’s push toward domestic manufacturing.
Current and former union leaders previously told CNBC that the battery plants will have to be a priority for the labor organization, regardless of whether they’re directly discussed in the national agreement, for the long-term viability of the union.
However, they’re considered a “wild card” issue in the contract negotiations. Many of the battery plants that have been announced cannot legally be included in the current talks, as they are joint venture facilities.
United Auto Workers President Shawn Fain addresses picketing UAW members at a General Motors Service Parts Operations plant in Belleville, Michigan, on Sept. 26, 2023, as U.S. President Joe Biden joined the workers.
Jim Watson | Afp | Getty Images
Ford has announced four future battery plants, including three joint ventures and a wholly owned subsidiary using battery technology licensed from Chinese auto supplier CATL. Ford earlier this week paused construction on the latter plant in Marshall, Michigan, due to the union negotiations, Farley said.
“We can make Marshall a lot bigger or a lot smaller,” Farley said Friday.
GM is the only Detroit automaker with a joint venture battery plant in operation and unionized — making it the first in the country to face this particular negotiating dynamic and a landmark plant to set standards for the industry.
Farley noted that some of the battery production won’t even be covered under the timeline of the deals that are currently being negotiated. He also defended the company’s prior offers, which include more than 20% hourly wage growth, reinstatement of cost-of-living adjustments, job protections and other benefits.
“If the UAW’s goal is a record contract, they have already achieved this,” Farley said. “It is grossly irresponsible to escalate these strikes and hurt thousands of families.”
A shopper leaves a Nike store along the Magnificent Mile shopping district with a purchase in Chicago, Dec. 21, 2022.
Scott Olson | Getty Images
Nike reported revenue Thursday that fell short of Wall Street’s revenue expectations for the first time in two years, but it beat on earnings and gross margin estimates.
Here’s how the sneaker giant performed during its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:
Earnings per share: 94 cents vs. 75 cents expected
Revenue: $12.94 billion vs. $12.98 billion expected
The company’s reported net income for the three-month period that ended August 31 was $1.45 billion, or 94 cents per share, compared with $1.47 billion, or 93 cents per share, a year earlier.
Sales rose to $12.94 billion, up about 2% from $12.69 billion a year earlier.
Nike shares rose by about 1% in extended trading Thursday.
Investors have been laser focused on Nike’s recovery in China, its relationship with its wholesale partners and how the resumption of student loan payments will impact sales.
They’re also keen to see Nike’s margins recover after bloated inventories, high promotions and supply chain woes contributed to lower profits over the last few quarters.
During the quarter, Nike’s gross margin fell about 1 percentage point to 44.2%, but it was higher than the 43.7% analysts had expected, according to StreetAccount.
Sales in China grew by 5% compared to the year-ago period to $1.74 billion, which fell short of the $1.84 billion analysts had expected, according to StreetAccount.
During the previous quarter ended May 31, Nike saw China sales jump 16% compared to the year-ago period. But the numbers were against easy comparisons because the region was still under Covid-related lockdown orders during the prior year.
While Nike remains bullish on China, the region’s economic recovery has so far been a mixed bag. Following a sluggish July, retail sales picked up during the month of August to rise 4.6% compared to the prior year, beating expectations of a 3% growth forecast by Reuters.
When it comes to its wholesale revenues, Nike’s relationship with those partners have been rocky. As the company has pivoted to a direct-to-consumer model, it has focused on driving sales online and in its stores at the expense of its wholesale accounts.
However, as Nike grappled with excess inventories throughout 2023, it relied on those partners to move through that merchandise. It has now restored its relationship with both Macy’s and DSW – accounts that it previously cut in favor of its DTC strategy.
Some analysts expected Nike’s wholesale revenue to be sluggish during the quarter because excess inventories have been a problem throughout the retail industry – and some wholesalers are being more particular in what they order to avoid another backlog.
Wholesale revenue during the quarter was flat compared to the year-ago period at $7 billion.
Amid decades-high inflation rates, consumers have been pulling back on apparel and footwear. With the resumption of student loan payments looming ahead, some analysts expect those sectors to take an even greater hit.
Jefferies conducted a survey on U.S. consumer spending and found 54% of respondents plan to spend less on apparel and accessories. Meanwhile, 46% plan to spend less on footwear, which doesn’t bode well for Nike.
It may still be too early to gauge the impact of student loan payments on Nike. Its first quarter ended in late August, and payments aren’t set to resume until October.
Delta Air Lines Boeing 717-200 airplane as seen on the final approach landing at New York JFK John F. Kennedy International Airport, NYC, USA.
NurPhoto / Contributor
Delta Air Lines CEO Ed Bastian said the airline will make “modifications” in the next few weeks to its loyalty program after a recently announced overhaul that would make it more expensive for many travelers to earn elite status and get into airport lounges was met with a backlash from customers.
“No question we probably went too far,” Bastian said at the Rotary Club of Atlanta on Monday.
The program changes, which Delta unveiled earlier this month, would reward customers with elite status based on how much they spent, a model similar to that of American Airlines, and reduce access to Delta popular airport Sky Club lounges for many American Express cardholders.
JetBlue Airways tried to capitalize on some customers’ anger over Delta’s changes by offering frequent flyer status matching, saying, “we’ve made it easy for you to cozy up to a new loyalty program and see where it goes.”
Delta has been grappling with a surge in elite travelers, bolstered by Covid pandemic and post-pandemic spending, and swarms of travelers trying to get into its lounges, leading to long lines for many customers. The airline and rivals including American and United have been racing to build bigger airport lounges to cater to swelling numbers of big spenders.
Bastian said the airline will announce the updated program changes in the coming weeks. A Delta spokesman declined to comment further on the changes.
“It’s gotten to the point, honestly, where we have so much demand for our premium product and services that are far in excess of our ability to serve it effectively in terms of our assets,” Bastian said.
He said that over Covid, the airline has doubled the number of Diamond Medallion status members.
David Neeleman, CEO of Breeze Airways and founder of JetBlue, told CNBC on Wednesday that he has Delta Medallion status and that he tries to use Delta’s airport lounges but that sometimes “there’s a big line and it’s not worth it.”
Delta last year announced several changes to crack down on overcrowding at the clubs, such as barring employees from using them when flying standby with company travel privileges, even if they had qualifying credit cards. The Atlanta-based carrier also raised prices for club memberships for regular customers.
