Tag: company activities and management

Lordstown Motors files for bankruptcy and sues former partner Foxconn | CNN Business

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Lordstown Motors filed for bankruptcy protection Tuesday and announced a lawsuit against Foxconn, accusing its former partner of setting out to “destroy” its business.

The electric vehicle maker, which specializes in pick-up trucks, made a Chapter 11 filing in a Delaware court while simultaneously starting legal action against Foxconn.

In a statement, the company said it was left with no choice after a high-profile tie-up with Foxconn, the world’s biggest contract electronics manufacturer, fell apart.

It accused the Taiwanese tech firm of fraud and failing to follow through on promises to invest in the company.

“Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option,” Lordstown CEO Edward Hightower said in the statement.

“We will vigorously pursue our litigation claims against Foxconn accordingly.”

Foxconn did not immediately respond to a request for comment.

Officially called Hon Hai Technology Group, Foxconn is best known for making iPhones for Apple

(AAPL), but has recently made moves toward building electric vehicles. In 2021, it purchased an Ohio factory that Lordstown Motors had itself bought from General Motors in 2019.

Foxconn also agreed to handle the manufacturing of Lordstown’s electric pick-ups at the site, and to make further investments provided certain milestones were met.

But the partnership appeared to break down earlier this year. In May, Lordstown disclosed that Foxconn said it wanted to back out of making further investments over claims that the automaker had not upheld its end of the agreement.

That impasse left the automaker on shaky financial ground. Lordstown warned last month that it could face bankruptcy.

— This is a developing story and will be updated.

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June 27, 2023
Thousands of Americans are leaving homes in flood-risk areas. But where are they moving to? | CNN

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For more than four decades, the US government has been paying cities and states to move homeowners away from areas that are at high risk of severe flooding.

When a hurricane or major flooding event devastates an area, a neighborhood can send a request for the local or state government to buy the impacted land and give residents money to start over someplace else.

The Federal Emergency Management Agency’s buyout program is a form of so-called “managed retreat” – a long process that relocates people, businesses, homes and infrastructure to an area that’s safer from the impacts of climate change-fueled weather events. But until recently, little was known about where people ultimately moved and whether their new location actually reduced their flood risk.

A new study published in the journal Environmental Research Letters — which coincides with a managed retreat conference unfolding in New York City this week — provides a clearer picture of these home buyouts.

Data from thousands of home buyouts shows people aren’t moving that far from their original homes — and often they are moving within the same floodplain. But overall, their risk of flooding decreased after the move, a nod to the program’s success. Researchers also found that race has played a role in who is moving and where they’re relocating to.

“As climate change and rising insurance costs increase the pressures to retreat from the coast and flooded areas, we need to pay more attention to where people are going,” James Elliott, a professor of sociology at Rice University and a co-author on the study, told CNN.

The findings “point to how the program plays out differently in different types of communities and neighborhoods across the country,” he said.

Using flood risk estimates, housing values, race and income data from the US Census Bureau, and FEMA relocation data between 1990 and 2017, researchers from Rice University built a nationwide database to map out where nearly 10,000 Americans sold their flood-prone homes and where they moved.

They found people who have taken advantage of the FEMA buyouts typically did not move that far to reduce their risk, and usually stayed within the same floodplain.

On average, buyout participants reduced their future flood risk by up to 65%, Elliott said. The average driving distance between their former homes and their new ones was around seven miles, with almost 74% of homeowners remaining within 20 miles of their old, flood-damaged homes.

The findings were also racially segmented, Elliot said. About 96% of homeowners who relocated from a predominantly White neighborhood ended up moving to another majority White community.

In contrast, residents of predominantly Black and Hispanic communities were far more likely to relocate to a new neighborhood with a different demographic: Only 48 percent of Black homeowners who go through the buyout moved to predominantly Black neighborhoods.

The study also found that buyout areas with predominantly White homeowners had a nearly 90% chance of flooding by 2050, while majority-Black buyout areas had a roughly 50% chance, suggesting that White residents tend to only participate in buyouts when flood risk is much more intense.

Though the data suggests that homeowners in White neighborhoods have a higher tolerance for flood risk, 80% of the people who took advantage of the FEMA program previously lived in majority-White neighborhoods. This could be because White communities “are more successful at winning the opportunity and money to participate” in the FEMA program, Elliott said.

The home buyout program, which is the largest managed-retreat initiative in the country so far, is “disproportionately targeted toward Whiter residential areas,” Elliott said.

“Communities of color and lower income areas just have fewer options to move nearby, so they are less likely to participate in the managed buyout,” Elliott said. In Houston, he found in a previous study that most of the people participating in buyouts in racially diverse communities tend to be White homeowners.

“It’s sort of the last wave of White flight in those neighborhoods,” he added. And when “flood risks come, the final White residents begin to pull up stakes through the buyout program and move further out.”

Alexander de Sherbinin, a senior research scientist at the Columbia Climate School and deputy manager of NASA’s Socioeconomic Data and Applications Center, said it’s not clear from the study that White homeowners are reluctant to move to racially diverse neighborhoods, and noted that there is evidence to the contrary.

De Sherbinin pointed out that there is a process of “climate gentrification” playing out in areas that have experienced climate disasters, “whereby more affluent households are moving into ethnically diverse neighborhoods that are less at risk of flooding, and are even displacing local residents.”

He pointed to Miami’s Little Haiti neighborhood as an example of this phenomenon, where higher ground helps protect the neighborhood from sea level rise and higher storm surges.

“The research findings make sense in one regard, which is that whiter, more affluent neighborhoods are more likely to have the insurance coverage and resources to stay in place, despite rising risks,” de Sherbinin told CNN. “In other words, they’re able to rebuild, and possibly accommodate risks by raising their houses above flood lines.”

As the climate crisis advances, more homeowners and businesses will be forced to relocate, adding stress and vulnerability to new regions. Previous research has shown that climate migration will become more likely as the planet warms and people seek places they consider safer and more stable.

“We really need to think about how people relocate locally, what the options are, and how the ongoing racial segregation, especially in urban environments, is affecting those local retreats and people’s decisions and abilities not to retreat, because all we see are the people who actually say yes to the program,” Elliott said.

“That’s the classic thing with climate change — it’s not about ‘if’ people have to move from these places, but ‘when and how’.”

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June 21, 2023
Watchdog report finds former Pentagon official created a toxic work environment | CNN Politics

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A newly released Defense Department inspector general investigation found that a former senior Pentagon leader berated and belittled subordinates, cursed at them, made some employees cry, and generally created a toxic work environment.

Michael Cutrone served as the principal deputy and acting assistant secretary of defense for international security affairs from May 2020 to January 2021 when he resigned. The Defense Department inspector general said in the new report released Wednesday that Cutrone repeatedly harassed subordinates and created an “intimidating, hostile, and offensive work environment.”

“Subordinates with decades of experience in the DoD described Mr. Cutrone as the most toxic boss they ever worked for and someone who poisoned self-confidence, created divisions, and was loathed and despised by his workforce,” the IG report said.

Cutrone was installed at the Pentagon by then-President Donald Trump in an effort to put more officials into the department who the Washington Post described as having an “undisputed allegiance” to the president, citing officials.

The IG said in its report that while Cutrone often “did not deny his conduct,” he told investigators he could not recall the specific instances mentioned by witnesses. He acknowledged to investigators that he fell short in some regards despite his intentions to be a positive leader.

The report also found that Cutrone consumed alcohol in the Pentagon without written authorization, which he said was done occasionally after office hours and was a misunderstanding of policy.

CNN has not been able to reach Cutrone for comment about the report.

Cutrone was provided tentative conclusions of the report by the IG in January this year and told investigators that he did not agree that he had failed to treat subordinates with dignity and respect, and that he had created a hostile work environment.

“Mr. Cutrone attributed his disagreements to his belief that the DoD IG failed ‘to understand and consider the appropriate context of the [ASD(ISA)] working environment,’ and the time that it took to complete the investigation,” the report said.

Complaints about Cutrone began rolling in on December 15, 2020, according to the IG report, when the DoD Hotline received an anonymous complaint that he “made two employees cry” and “berated and yelled at his employees.” Two days later, two other anonymous complaints that said Cutrone “verbally abused” his employees were referred to the IG to investigate.

Cutrone resigned from his position in January 2021, before the IG began its investigation in February 2021.

The IG ultimately interviewed 31 witnesses who worked with Cutrone; of those 31, four people used “positive terms” to describe his leadership like “hard working,” “ambitious,” “charismatic,” and “energetic.”

All 31 witnesses, however, including the four that used positive terms, described his leadership style negatively, using terms like “combative,” “bully,” “overly abrasive,” and “unprofessional.”

Witnesses said that Cutrone ignored Covid-19 mitigation policies in the Pentagon, regularly disregarding a policy that required masks in the building and telling subordinates they didn’t need to social distance. One witness said that Cutrone would “remove his mask to show them how mad he was,” the IG report said.

Witnesses also told the IG that Cutrone “started a culture of gossip,” asking staff about other employees and was “publicly denigrating” of those who worked for him in front of their coworkers. People told investigators they felt “miserable and depressed all the time,” were facing “abuse every day” that “exhausted” them and found that they were bending themselves “in knots trying to determine the formulation of language that will not in some way raise the ire of [M]r. Cutrone.”

Presented with comments from employees about the impact of his leadership, Cutrone told investigators he “tried to build a strong team” and “tried to do good by people.”

“I always tried to just be a strong collegial team member … and I’m sorry that I ever made people feel on edge and uncertain about what kind of engagement they were going to get,” he said.

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June 7, 2023
Bud Light sales keep slipping. But it remains America’s top-selling beer | CNN Business

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CNN
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Roughly two months after Bud Light endured a self-induced injury that torpedoed sales, the brand continues to lose ground to its competition. But there are signs the worst might be over.

Sales for the week leading into Memorial Day weekend fell 23.9% from the same period a year ago. That constitutes a slight improvement compared to the week prior when sales were 25.7% lower than a year earlier. That could indicate that the “bottom has been hit and we are seeing a turn-around in performance,” according to Bump Williams, an alcohol industry expert.

For the past several weeks, Bud Light sales declines have hovered around 25% weekly because of customer revolt following an Instagram partnership with transgender influencer Dylan Mulvaney. A single can bearing her face was given to her for a post, but some right-wing media attacked the brand, and some social media posts spewed transphobic comments.

Anheuser-Busch’s tepid statement about the controversy also angered some LGBTQ+ groups.

In response, Anheuser-Busch

(BUD) said it was bolstering marketing on Bud Light and would offer rebates to customers. Last weekend, the company offered $15 back on 15-packs of beer, leading to cases priced as low as $1.50 in some states, which Williams said contributed to part of its minor turnaround.

Still, Bud Light remains the top-selling beer in America, according to NIQ data provided to CNN by Williams. NIQ measures sales at convenience, liquor and grocery stores across the United States. Bud Light has made up 35.1% of domestic beer sales this year (through May 27), according to NIQ. That easily beats No. 2 Coors Light, which controls 21.6% of the market.

Although Bud Light’s share of the domestic beer market has slipped considerably over the past couple months, it remains in the lead. In the week ended May 27, Bud Light controlled 28.8% of the market, compared to Coors Light, which made up 25.6% of overall sales, NIQ reported.

The biggest beneficiaries of Bud Light’s slipping sales continue to be MolsonCoors’ Miller Light and Coors Light, with sales up a whopping 26% and 23% respectively, according to NIQ. Beer Business Daily reported Monday that some distributors are reporting shortages, but a company spokesperson told CNN that its supply is strong for the summer.

Another bright spot is Modelo, distributed by Constellation Brands

(STZ). Sales of its Modelo Especial and its recently launched low-carb beer Modelo Oro are strong, with sales up 9.5% and its share of the total beer category surpassing Bud Light last week, Williams said. He added that it’s “not a surprise” because of a halo effect from Cinco de Mayo and heavy advertising supporting its Oro launch.

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June 6, 2023
Why one popular shoe brand is lowering prices in the face of inflation | CNN Business

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CNN
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As inflation continues to strain family budgets, forcing people to prioritize purchasing daily necessities over discretionary buys, one maker of popular footwear is lowering prices on its products to provide some relief to weary consumers.

Oregon-based Keen, which makes walking shoes, boots and water sandals for toddlers to adults in addition to work boots, is moving in the opposite direction of most of its industry, It’s lowering prices as many of its customers start cutting out their shoe budget.

According to a survey in January by market research firm Circana (formerly IRI and The NPD Group), 56% of consumers (up from 52% in July 2022) said they had delayed or skipped a footwear purchase or chosen a less expensive option in the past six months due to price increases on either footwear or other goods.

Circana also noted that households with kids are pulling back on footwear spending more so than those without, as parents are forgoing footwear purchases for themselves.

“Families are obviously feeling the pressure from inflation,” Beth Goldstein, footwear and accessories analyst at Circana, said in the report. “Without the government assistance that many households with children had previously received, they are now prioritizing their kids’ footwear replacement needs over their own.”

The company said it’s started reducing prices across its portfolio of products, which range from $36 for kids’ shoes to about $250 for adult shoes.

“On average, we are bringing prices down by 5% across the board,” John Evons, president of Keen said Friday in an interview with CNN. The company announced the move on its website on Thursday.

“We believe we are doing the right thing to help people in this inflationary environment. We want people to continue to enjoy the outdoors and be able to go to work with safe shoes,” he said.

Keen, which employs around 350 people in the US, makes its footwear in Portland and in factories in the Dominican Republic and Thailand. While Evons declined to disclose the company’s annual sales, he said the business sells millions of pairs of shoes annually in the US and globally.

But being a vertically integrated business is what has allowed Keen to lower prices, he said. Keen owns 40% of its supply chain, from raw material sourcing to manufacturing plants to distribution centers.

“This helped us as we went into 2020 and faced supply chain challenges, mounting freight costs and disruptions because of the pandemic,” said Evons. “We were able to respond quickly to the evolving marketplace in 2021 and 2022.”

As supply chain and shipping costs have eased post-pandemic, Evons said the company wanted to also pass on some savings to its customers.

“We expect to stand behind this for the foreseeable future,” Evons said.

Given these trends, Goldstein said Keen’s move is noteworthy.

“Most brands are reacting to consumers pulling back by offering increased promotions and not bringing the original product price down,” she said to CNN. “This is unique, and it will be interesting to see if other companies follow suit.”

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June 4, 2023
The world’s biggest ad agency is going all in on AI with Nvidia’s help | CNN Business

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London
CNN
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WPP, the world’s largest advertising agency, has teamed up with chipmaker Nvidia to create ads using generative artificial intelligence.

The companies announced the partnership Monday, with Nvidia

(NVDA) CEO Jensen Huang unveiling WPP’s new content engine during a demo at Computex Taipei.

“Generative AI is changing the world of marketing at incredible speed. This new technology will transform the way that brands create content for commercial use,” WPP CEO Mark Read said in a statement.

The platform will enable WPP

(WPP)’s creative teams to integrate content from organizations such as Adobe and Getty Images with generative AI to produce advertising campaigns “more efficiently and at scale,” according to WPP

(WPP). This would enable companies to make large volumes of advertising content, such as images or videos, “more tailored and immersive,” the company added.

In the demo screened by Huang, WPP had created realistic footage of a car driving through a desert.

The new AI-powered content engine means that same car could be placed on a street in London or pictured in Rio de Janeiro to target the Brazilian market — all without the need for costly on location production.

Just as advertising campaigns can be rapidly adapted for different countries or cities, they can also be customized for different digital channels, such as Facebook or TikTok, and their users.

“You can build very finely tuned campaigns to resonate with an audience… On the other hand, you could make up imaginary scenarios that never existed in real life,” Greg Estes, vice president of developer programs at Nvidia told CNN.

The platform is the latest example of how AI is being rapidly deployed by major companies to enhance productivity and deliver new products to customers. Many in the advertising and media industries are concerned about threats to their jobs because of the way that AI is able to aggregate information and create visual content indistinguishable from photography.

WPP said its new platform “outperforms current methods” of having people “manually create hundreds of thousands of pieces of content using disparate data coming from disconnected tools and systems.” In other words, the new technology could mean that much smaller creative teams are ultimately able to do the same amount of work.

“It’s much easier to identify the jobs that AI will disrupt than it is to identify the jobs that AI will create,” Read told the Financial Times Monday. “We’ve applied AI a lot to our media business, but very little to the creative parts of our business.”

Nvidia’s Huang said: “The world’s industries, including the $700 billion digital advertising industry, are racing to realize the benefits of AI,” adding that WPP would now enable brands to “deploy product experiences and compelling content at a level of realism and scale never possible before.”

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May 29, 2023
Australian gold miner Newcrest backs Newmont’s $17.8 billion offer | CNN Business

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Australian gold miner Newcrest Mining said on Monday it would back Newmont A$26.2 billion ($17.8 billion) takeover offer in one of the world’s largest buyouts so far this year.

The deal, subject to approval from shareholders of both companies and other regulatory hurdles, would lift Newmon

(NEM)t’s gold output to nearly double its nearest rival, Barrick Gold

(GOLD), and catapult the miner past Freeport McMoRan to become the largest US gold and copper producer by market capitalization.

Newcrest

(NCMGF) shareholders would receive 0.400 Newmont share for each share held, with an implied value of A$29.27 a share, higher than a previous exchange ratio of 0.380 that Newcrest

(NCMGF)’s board rejected in February.

Newcrest shares opened on Monday 1.5% higher at A$28.68, and the offer is a 30.4% premium to the stock’s price in February before the Newmont bid became public.

Newmont is also allowing Newcrest to pay a franked special dividend of up to $1.10 per share on the implementation of the deal that returns tax credits to Australian shareholders.

The merger is set to be the third-largest deal ever involving an Australian company and the third-largest globally in 2023, according to data from Refinitiv and Reuters’ calculations.

“This transaction will combine two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline,” said Newcrest Chairman Peter Tomsett.

Newmont said it would have about 8 million ounces of total combined annual gold production once the deal closed, with more than 5 million gold ounces from 10 long-life and low-cost mines.

The Denver-based miner added it would have combined annual copper production of approximately 350 million pounds from Australia and Canada.

Newcrest shareholders will be able to choose to receive New York Stock Exchange-listed Newmont shares or Australian-listed CHESS Depository Instruments (CDIs) as payment.

Newcrest said it recommended its shareholders vote in favor of the deal at a meeting expected to be held in September or October.

The deal requires Australia’s Foreign Investment Review Board (FIRB) approval as well as Newcrest and Newmont shareholders to vote in support the transaction, among other regulatory requirements.

The companies said the deal was due to be finalized in the fourth quarter of 2023.

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May 16, 2023
China’s deflation worries deepen as consumer prices grow only 0.1% in April | CNN Business

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CNN
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Deflationary pressure in China is worsening as consumer prices increased at the slowest pace in two years, suggesting weakness in domestic demand and a long road ahead to full economic recovery.

The consumer price index rose by just 0.1% in April from a year ago, the lowest rate since February 2021, according to the National Bureau of Statistics on Thursday. In March and February, it increased 0.7% and 1% respectively.

The producer price index, which measures factory-gate prices, declined by 3.6%, marking the biggest contraction in three years. It’s the seventh straight month the figure has fallen.

Prices are stagnating or falling in the country despite the fact that the People’s Bank of China, the central bank, has been cutting interest rates and pumping cash into the financial system to bolster the economy.

This is a developing story and will be updated.

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May 11, 2023
Lachlan Murdoch: No change in strategy at Fox News | CNN Business

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Despite a turbulent and expensive few weeks, Fox News isn’t changing course.

Fox Corp. CEO Lachlan Murdoch said there will be no change in strategy at the company’s top rated cable news network, despite the firing of its top rated anchor Tucker Carlson and a massive $787.5 million settlement to Dominion Voting Systems that resulted in the company swinging to a loss in the just completed period.

“There is no change to our programming strategy at Fox News,” Murdoch said in response to an analyst who asked about Carlson’s ouster during the investor call Tuesday to discuss its financial results.

Murdoch described Fox News as “obviously a successful” and suggested Carlson’s firing was a tweaking of its strategy, not a departure from it.

“As always, we are adjusting our programming and lineup and that is what we continue to do,” Murdoch said.

His comments came after the company reported a $50 million net loss for the just completed quarter, compared to $290 million in profit a year earlier.

The reason was a $719 million charge including the cost of the Dominion settlement, other legal settlements related to its news division and other legal costs, including attorney fees, which was partly offset by equity earnings of it affiliates and a change in the market value of some of its investments.

The earnings statement didn’t mention Dominion Voting Systems, although it does refer to charges related to legal settlement costs at Fox News Media. On the company’s call with investors Murdoch referred to the settlement with Dominion as in the best interest of the company and its shareholders, given rulings by the Delaware court that he said limited its defense. He said going to trial could have led to two to three years of appeals.

“We’re proud of our Fox News team, the exceptional quality of their journalism and their stewardship of the Fox News brand,” he said. “So as we look ahead, we are confident in the strength of the Fox brands and the strength of our balance sheet.”

And he again defended the company’s post-election coverage of the false conspiracy theories made against Dominion, even though internal communications among Fox anchors made public during the discovery process showed many of them didn’t believe the claims being made.

“We always acted as a news organization reporting on the newsworthy events of the day,” Murdoch told investors Tuesday. “Now we have been and remain confident in the merits of our position that the first amendment protects a news organization’s reporting and allegations being made by a sitting president of the United States. However, the Delaware court severely limited our defenses and trial through pre-trial rulings.”

Fox did not have to apologize or admit wrongdoing as part of the settlement in Dominion’s defamation suit against it, although its statement did say it acknowledged “the Court’s rulings finding certain claims about Dominion to be false.”

Fox still faces a lawsuit from another voting machine manufacturer, Smartmatic, which is seeking $2.7 billion in damages. Murdoch told investors that case is “fundamentally different” from the Dominion case and that Fox will have greater defenses available to it than in the Delaware court hearing the Dominion case. He predicted that case won’t go to trial until 2025.

The Dominion settlement was reached on April 18, but it was still reported in Fox’s fiscal third quarter, which concluded March 31. Excluding the legal costs and other special items reported Tuesday, it was a pretty good financial quarter for Fox.

It reported adjusted earnings of $494 million, or 94 cents a share, up from $459 million a year earlier. That was better than the 87 cents a share forecast by analysts surveyed by Refinitiv. The company was helped by the profits and revenue gain it received from airing this year’s Super Bowl.

Revenue at the company rose 18% to $4.1 billion, slightly higher than analysts’ forecasts. Most of that gain was due to a 43% surge in advertising revenue, helped greatly by $650 million in Super Bowl ads. Fox did not broadcast the Super Bowl in 2022.

Fox had plenty of money available to pay the settlement. It said it had $4.1 billion in cash and cash equivalent on hand as of March 30, about three weeks before the settlement was reached. It also announced it repurchased $1.8 billion of its shares in the nine months ending March 31, as part of a $7 billion share repurchase plan. So far, Fox has repurchased $4.4 billion worth of shares as part of its plan.

Murdoch said Fox is better positioned than many other media companies to ride out the delays and lost revenue that could take place from a prolonged strike by the Writers Guild of America. Some programming, such as late night shows, have already gone dark due to the strike that started last week, and production on other shows has been halted.

But Murdoch said the fact that Fox has more of its revenue and profit coming from sports and news, which are not affected by the strike, puts it in a better position.

“Our healthy balance of scripted and unscripted content on the network puts us in a tremendous position,” he said.

The hit from the settlement was well known by investors ahead of the report. But even with the better than expected results, Fox

(FOX) shares were up only about 1% in trading at the market open following the report.

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May 9, 2023
Apple posts second consecutive quarterly revenue decline | CNN Business

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Apple on Thursday reported that its revenue fell 3% to $94.8 billion for the first three months of the year as consumers scale back spending on smartphones and computers amid looming recession fears.

The company’s revenue was slightly better than what Wall Street had expected, but it nonetheless represented the second consecutive quarterly revenue decline for the iPhone maker.

Apple attempted to appease investors by announcing up to $90 billion in share buybacks. Shares of Apple were largely flat in after-hours trading Thursday following teh results.

Despite the continued revenue decline, there were bright spots in the report.

Apple CEO Tim Cook said Apple hit a “a March quarter record for iPhone despite the challenging macroeconomic environment” and that the installed base of active devices reached an all-time high.

Apple’s latest quarterly earnings report comes amid a sharp decline in PC and smartphone sales globally after a surge earlier in the pandemic.

Worldwide PC shipments declined 30% in the first quarter of 2023 compared to the year prior, according to data from Gartner. Global smartphone shipments plunged 14.6% last quarter, according to separate data from market intelligence firm IDC.

Apple’s report on Thursday caps off a closely-watched earnings season for Silicon Valley amid broader economic jitters. All five Big Tech companies beat Wall Street’s estimates, but the numbers paint a stark picture of the industry at this moment.

Apple and its peers once enjoyed seemingly limitless growth. Now these business are struggling to grow sales and profits – or posting declines.

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May 4, 2023
Ford cuts price of the Mustang Mach-E again | CNN Business

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CNN
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Ford is once again cutting the price of its electric SUV, the Mustang Mach-E, as it ramps up its price war with Tesla.

Tesla, the leader in EV sales by a large margin, has cut prices six times so far this year. Its price cuts have eaten into its industry-leading profit margins and added pressure to its stock price.

Ford’s price cuts for the Mach-E come to $3,000 to $4,000 for most models, or about 6%. It’ll put the sticker price at between $43,000 and $60,000. It also said it would increase production of the Mach-E in the second half of this year.

Ford cut the price of the Mach-E in January but it has not announced price cuts for its other electric vehicles, including the F-150 Lightning pickup. Tesla has yet to deliver its first electric pickup, due out later this year.

Tesla’s profit margins have been falling, because it sells only EVs. But Ford still gets the overwhelming majority of its sales from its profitable sales of gasoline powered cars and trucks. So it was able to report improved results even with the EV price cuts announced earlier.

And on Tuesday, Ford stuck with the full-year earnings guidance it issued in March despite the new price cut. Even with the EV losses, Ford confirmed its earlier guidance that it expects to earn between $9 billion and $11 billion on an adjusted basis this year. The EV sales at Ford are still a fraction of its overall sales and pricing changes don’t move the profit needle the way it does at Tesla.

Ford is still losing money on its EV sales. It said Tuesday it expects to lose about $3 billion before taxes, interest and depreciation from its electric vehicle division during the year, but that’s the same guidance it gave when it met with investors in March and broke out the results for that segment for the first time. It lost $722 million on that basis from EVs in the first quarter.

Overall, Ford’s profit for the first quarter was much better than expected. It earned $2.5 billion, or 63 cents a share, up nearly $1 billion from what it earned on that basis a year ago. That was far better than the 41 cents a share earnings forecast by analysts surveyed by Refinitiv.

Sales grew 20% to $41.5 billion, fueling the stronger than expected results. While revenue from the EV segment fell 27%, that segment only had sales of $700 million, a fraction of its overall revenue. Overall, the number of EVs Ford sold fell 32% to 12,000, despite the lower pricing for the Mustang Mach E. Tesla sales have increased after it lowered prices.

Ford sold 1.1 million total vehicles in the quarter, up 9%.

Shares of Ford

(F) fell 2% in after hours trading, despite the strong results and unchanged earnings guidance.

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May 2, 2023
Adidas sued by shareholders over its failed Ye partnership | CNN Business

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CNN
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Adidas shareholders filed a class-action lawsuit against the brand, accusing it of failing to warn investors about the antisemitism and “extreme behavior” exhibited by the rapper formerly known as Kanye West, before their partnership ended last year.

In the lawsuit, filed Friday in a federal court, shareholders allege that Adidas “routinely ignored” his behavior as early as 2018. They claim that senior executives “ignored serious issues” affecting the Yeezy partnership, namely his antisemitic remarks and troubling public comments about slavery.

In a report from that year, Adidas was “generally alluding” to the risks “rather than stating that the company had actually considered ending the partnership as a result of West’s personal behavior,” according to the lawsuit. During that time, Ye said that slavery was a “choice” in a TMZ interview.

The lawsuit said that Adidas was aware of his behavior and that the company “failed to take meaningful precautionary measures to limit negative financial exposure” if the partnership ended.

The lawsuit doesn’t name the rapper, who now goes by Ye. Adidas’ Chief Financial Officer Harm Ohlmeyer and former CEO Kasper Rørsted are named as defendants. The suit covers anyone who bought an Adidas share from May 3, 2018 (when Ye made the slavery remark) until 2023.

“We outright reject these unfounded claims and will take all necessary measures to vigorously defend ourselves against them,” Adidas said in a comment to CNN.

Adidas

(ADDDF) ended its almost decade-long partnership in October 2022 after Ye wore a “White Lives Matter” T-shirt in public. The Anti-Defamation League categorizes the phrase as a hate slogan used by White supremacist groups, including the Ku Klux Klan. Days later, Ye said “I can say antisemitic s*** and Adidas

(ADDDF) cannot drop me” during a podcast taping.

Adidas said that its partnership with Ye ended because it “does not tolerate antisemitism and any other sort of hate speech” and said his comments were “unacceptable, hateful and dangerous.” It also said they violated the company’s “values of diversity and inclusion, mutual respect and fairness.”

The company said in February that it was expected to lose $1.3 billion in revenue this year because it’s unable to sell the designer’s Yeezy clothing and shoes. In a statement, Adidas said its financial guidance for 2023 “accounts for the significant adverse impact from not selling the existing stock.” If the company can’t repurpose any of the remaining Ye clothing, Adidas said that could cost the company $534 million in operating profit this year.

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May 1, 2023
Big banks are bidding for troubled First Republic as FDIC deadline looms | CNN Business

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CNN
—

Federal regulators are holding an auction for ailing regional bank First Republic, a person familiar with the matter tells CNN.

Final bids are due for First Republic Bank at 4 p.m. ET on Sunday, the source said.

The Federal Deposit Insurance Corporation, the independent government agency that insures deposits for bank customers, is running the auction.

Neither First Republic nor the FDIC were immediately available for comment.

Shares of First Republic

(FRC) plunged from $122.50 on March 1 to around $3 a share as of Friday on expectations that the FDIC would step in by end of day and take control of the San Francisco-based bank, its deposits and assets. But that never happened.

The FDIC had already done so with two other similar sized banks just last month — Silicon Valley Bank and Signature Bank — when runs on those banks by their customers left the lenders unable to cover customers’ demands for withdrawals.

The Wall Street Journal previously reported that JPMorgan Chase and PNC Financial are among the big banks bidding on First Republic in a potential deal that would follow an FDIC seizure of the troubled regional bank.

PNC declined to comment. JPMorgan did not respond to requests for comment.

“We are engaged in discussions with multiple parties about our strategic options while continuing to serve our clients,” First Republic said in a statement Friday night.

If there is a buyer for First Republic, the FDIC would likely be stuck with some money-losing assets, as was the case after it found buyers for the viable portions of SVB and Signature after it took control of those banks.

A kind of shotgun marriage, arranged by regulators who didn’t want a significant bank to end up in the hands of the FDIC before it was sold, occurred several times during the financial crisis of 2008 that sparked the Great Recession. Notably, JPMorgan bought Bear Stearns for a fraction of its earlier value in March of 2008, and then in September bought savings and loan Washington Mutual, soon after Bank of America bought Merrill Lynch.

The failure of Washington Mutual in 2008 was the nation’s largest bank failure ever. First Republic, which is bigger than either SVB or Signature Bank, would be the second largest.

Soon after collapses of SVB and Signature in March, First Republic received a $30 billion lifeline in the form of deposits from a collection of the nation’s largest banks, including JPMorgan Chase

(JPM), Bank of America

(BAC), Wells Fargo

(WFC), Citigroup

(C) and Truist

(TFC), which came together after Treasury Secretary Janet Yellen intervened.

The banks agreed to take the risk and work together to keep First Republic flush with the cash in the hopes it would provide confidence in the nation’s suddenly battered banking system. The banks and federal regulators all wanted to reduce the chance that customers of other banks would suddenly start withdrawing their cash.

But while the cash allowed First Republic to make it through the last six weeks, its quarterly financial report Monday evening, with the disclosure of massive withdrawals by the end of March, spurred new concerns about its long-term viability.

The financial report showed depositors had withdrawn about 41% of their money from the bank during the first quarter. Most of the withdrawals were from accounts with more than $250,000 in them, meaning those excess funds were not insured by the FDIC.

Uninsured deposits at the bank fell by $100 billion during the course of the first quarter, a period during which total net deposits fell by $102 billion, not including the infusion of deposits from other banks.

The uninsured deposits stood at 68% of its total deposits as of December 31, but only 27% of its non-bank deposits as of March 31.

In its earnings statement, the bank said insured deposits declined moderately during the quarter and have remained stable from the end of last month through April 21.

Banks never have all the cash on hand to cover all deposits. They instead take in deposits and use the cash to make loans or investments, such as purchasing US Treasuries. So when customers lose confidence in a bank and rush to withdrawal their money, what is known as a “run on the bank,” it can cause even an otherwise profitable bank to fail.

First Republic’s latest earnings report showed it was still profitable in the first quarter — its net income was $269 million, down 33% from a year earlier. But it was the news on the loss of deposits that worried investors and, eventually, regulators.

While some of those who had more than $250,000 in their First Republic accounts were likely wealthy individuals, most were likely businesses that often need that much cash just to cover daily operating costs. A company with 100 employees can easily need more than $250,000 just to cover a biweekly payroll.

First Republic’s annual report said that as of December 31, 63% of its total deposits were from business clients, with the rest from consumers.

First Republic started operations in 1985 with a single San Francisco branch. It is known for catering to wealthy clients in coastal states.

It has 82 branches listed on its website, spread across eight states, in high-income communities such as Beverly Hills, Brentwood, Santa Monica and Napa Valley, California; in addition to San Francisco, Los Angeles and Silicon Valley. Outside of California, branches are in other high-income communities such as Palm Beach, Florida; Greenwich, Connecticut; Bellevue, Washington; and Jackson, Wyoming.

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April 30, 2023
Manhattan prosecutors ask judge to limit Trump’s ability to publicize information about his criminal case | CNN Politics

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Prosecutors with the Manhattan district attorney’s office have asked the judge overseeing Donald Trump’s criminal case to impose a protective order restricting the former president’s ability to publicize information about the investigation.

In a motion, prosecutors told the judge that Trump’s team would not consent to a protective order.

“The risk that this Defendant will use the Covered Materials inappropriately is substantial. Defendant has a long history of discussing his legal matters publicly—including by targeting witnesses, jurors, investigators, prosecutors, and judges with harassing, embarrassing, and threatening statements on social media and in other public forums—and he has already done so in this case,” prosecutors wrote in the filing.

Manhattan prosecutors have accused Trump of falsifying business records with the intent to conceal illegal conduct connected to his 2016 presidential campaign. The criminal charges stem from Manhattan District Attorney Alvin Bragg’s investigation into hush money payments, made during the 2016 campaign, to women who claimed they had extramarital affairs with Trump, which he denies. Trump has pleaded not guilty to all of the charges.

In seeking the protective order, prosecutors cited some of Trump’s past attacks on witnesses who previously spoke out against him, including his former personal attorney Michael Cohen and Alexander Vindman, a former national security official who testified publicly during Trump’s first impeachment.

They asked the judge to order that Trump only be allowed to view certain material turned over by prosecutors in the presence of his defense counsel and not allow him to copy material designated as “limited dissemination materials.”

Specifically, they asked the judge to instruct anyone who receives materials, including grand jury testimony, to not post them on any news organization or social media websites without approval from the judge. They also asked the judge to limit the use of any materials they provide to Trump to defending the present case.

“At the outset, it is important to note that the People are not at this time seeking a gag order in this case. Defendant has a constitutional right to speak publicly about this case, and the People do not seek to infringe upon that right,” prosecutors wrote.

Prosecutors also asked the judge to limit the review of images of two cell phones related to a witness in the case to Trump’s defense lawyers, saying there is highly personal information included on the phones.

In addition to limiting the disclosure of certain information prosecutors turn over to Trump from becoming public, they also asked the judge to limit the disclosure of identifying information about any support staff working for the prosecution team to the public until jury selection begins in the case.

They cited Trump’s past statements about Bragg and the judge in the case.

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April 25, 2023
3M announces mass layoffs as manufacturing slows | CNN Business

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CNN
—

3M announced significant layoffs Tuesday as part of yet another major restructuring plan as the manufacturing sector prepares for a possible recession and slumping demand for goods.

The manufacturing behemoth behind some consumer brands, including Post-It Notes and Scotch Tape, said it would lay off 6,000 staff around the world. Those cuts are in addition to the 2,500 manufacturing roles 3M eliminated in January. 3M also announced several mass layoffs in 2019 and 2020, but total headcount has been up and down over the past several years.

The company said it anticipates it will save up to $900 million a year before taxes after the layoffs are complete. 3M argued that the cuts are “intended to make 3M stronger, leaner and more focused” by simplifying its supply chain and reducing layers of management.

“These actions are expected to meaningfully reduce costs and drive long-term improvement in margins and cash flow while enabling a more efficient and effective structure for driving long-term growth,” 3M said in a statement.

3M also announced several management changes as it reported earnings and sales that fell from the previous year. Sales slumped 9% to $8 billion, while net income attributable to the company tumbled 25% to under $1 billion in the quarter.

The company said it would prioritize products that customers are increasingly demanding, including climate tech, sustainable packaging and automated industrial products, among other emerging technologies. 3M also reaffirmed its previous outlook for 2023, anticipating sales would fall by as much as 6% this year.

3M said the supply chain problems that doomed the sector for years in the wake of the pandemic have largely eased. That means backlogged orders have been shipped, and the company (and its peers) no longer need as much staff to handle the workload.

Meanwhile, demand for manufactured goods has fallen in recent months. Consumers have been spending less on stuff and more on experiences lately, and businesses are gearing up for an anticipated recession.

3M rival Dow also announced thousands of layoffs at the beginning of the year.

Shares of 3M

(MMM) rose slightly in premarket trading.

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April 25, 2023
NBCUniversal CEO stepping down over ‘inappropriate relationship’ | CNN Business

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CNN
—

NBCUniversal CEO Jeff Shell is leaving the company after an outside investigation “into a complaint of inappropriate conduct,” its parent company Comcast announced Sunday.

Shell will depart effective immediately in the wake of an investigation led by an outside counsel.

“Today is my last day as CEO of NBCUniversal. I had an inappropriate relationship with a woman in the company, which I deeply regret,” Shell said in a statement. “I’m truly sorry I let my Comcast and NBCUniversal colleagues down, they are the most talented people in the business and the opportunity to work with them the last 19 years has been a privilege.”

The brief statement did not specify who the woman was or include any other details about the investigation. CNN has reached out to Comcast and NBCUniversal.

Shell had been named CEO in January 2020 after leading content creation, programming and distribution for NBCUniversal Film and Entertainment.

Shell had expressed confidence in NBC’s streaming service, Peacock, which surpassed 20 million paid subscribers at the end of 2022 and “nearly tripled” its revenue to $2.1 billion, according to its fourth quarter earnings report, which ended at the end of 2022. Its adjusted earnings loss, however, was wider.

“There’s no question the whole television landscape is changing,” Shell said in an interview on CNBC “Squawk on the Street” last October. “If you have the right content, and you offer a broad distribution platform, your consumers are going to find you and that’s what we’re doing with Peacock.”

Comcast is set to report its first quarter earnings on Thursday.

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April 23, 2023
Bed Bath & Beyond files for bankruptcy | CNN Business

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CNN
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Bed Bath & Beyond, the store for seemingly everything in your home during the 1990s and 2000s, filed for bankruptcy on Sunday. The company said it would sell off its merchandise and then go out of business.

“Thank you to all of our loyal customers. We have made the difficult decision to begin winding down our operations,” a statement at the top of the company’s website said Sunday morning.

The company’s 360 Bed Bath & Beyond locations, along with its 120 buybuy BABY stores, will remain open for now, as will their websites. But store closing sales will begin Wednesday, and the company will liquidate all its inventory.

Bed Bath & Beyond had been a crown jewel of the era of so-called “category killers” — chains that dominated a category of retail, such as Toys “R” Us, Circuit City and Sports Authority. Those companies, too, ultimately filed for bankruptcy as shoppers turned away from huge specialty stores in favor of online options like Amazon.

Bed Bath & Beyond became known for pots and pans, towels and bedding stacked from the floor to the ceiling at its cavernous stores — and for its ubiquitous 20%-off coupons. The blue-and-white coupons became something of a pop culture symbol, and millions of Americans wound up stashing them away in their cars, closets and basements.

The company said customers will have Sunday, Monday and Tuesday to use their remaining 20%-off coupons. The company will stop accepting them Wednesday. Instead, Bed Bath & Beyond expects to offer “deep discounts” on its products as part of its going-out-of-business sales.

The retailer attracted a broad range of customers by selling name brands at cut-rate prices. Brands coveted a spot on Bed Bath & Beyond’s shelves, knowing it would lead to big sales. Plus, the open-store layout encouraged impulse buying: Shoppers would come in to buy new dishes and walk out with pillows, towels and other items.

Stores were a fixture for shoppers around the winter holidays and during the back-to-school and college seasons, and Bed Bath & Beyond also had a strong baby and wedding registry business.

But the New Jersey-based company has been slow to respond to shopping changes and struggled to entice customers who had moved on to Amazon, Target and other chains.

In its bankruptcy filing, Bed Bath & Beyond said it had $5.2 billion in debt and assets of just $4.4 billion. It secured $240 million in financing Sunday to stay afloat just long enough to close its stores and wind down its operations.

The company encouraged shoppers to seek out its discounted merchandise later this week. Items purchased before Wednesday can be returned until May 24, but all sales after Wednesday will be final. The store will stop accepting gift cards on May 8.

Founded in 1971 by Warren Eisenberg and Leonard Feinstein, two veterans of the discount retail industry in Springfield, New Jersey, the chain of small linen and bath stores — then called Bed ‘n Bath — first grew around the northeast and in California selling designer bedding, a new trend at the time. Unlike department stores, it didn’t rely on sales events to draw in customers.

The company changed its name to Bed Bath & Beyond in 1987 to reflect its expanded merchandise and bigger “superstores.” The company went public in 1992 with 38 stores and around $200 million in sales.

“We had witnessed the department store shakeout and knew that specialty stores were going to be the next wave of retailing,” Feinstein said in 1993. “It was the beginning of the designer approach to linens and housewares and we saw a real window of opportunity.”

By 2000, those figures leapt to 241 stores and $1.1 billion in annual sales. The 1,000th Bed Bath & Beyond store opened in 2009, when the chain had reached $7.8 billion in annual sales.

The company was something of an iconoclast. It spent little on advertising, relying instead on print coupons distributed in weekly newspapers to attract customers.

“Why not just tell the customer that we’ll give you a discount on the item you want — and not the one that we want to put on sale? We’ll mail a coupon, and it will be a lot cheaper,” Eisenberg said in a 2020 New York Times interview.

The chain was known for giving autonomy to store managers to decide which products to stock, allowing them to customize their individual stores, and for shipping products directly to stores instead of a central warehouse.

But as brick-and-mortar began to give way to e-commerce, Bed Bath & Beyond was slow to make the transition — a misstep compounded by the fact that home decor is one of the most commonly bought categories online.

“We missed the boat on the internet,” Eisenberg said in a recent Wall Street Journal interview. (The co-founders are no longer involved with the company.)

Online shopping weakened the allure of Bed Bath & Beyond’s fan-favorite coupons, too, because consumers could find plenty of cheaper alternatives on Amazon or browse a wider selection on sites like Wayfair

(W).

It wasn’t just Amazon and online shopping that sank Bed Bath & Beyond, however.

Walmart

(WMT), Target

(TGT) and Costco

(COST) have grown over the past decade, and they have been able to draw Bed Bath & Beyond customers with lower prices and a wider array of merchandise. Discount chains such as HomeGoods and TJ Maxx have also undercut Bed Bath & Beyond’s prices.

Without the differentiators of the lowest prices or widest selection, Bed Bath & Beyond’s sales stagnated from 2012 to 2019.

Then the pandemic hit in 2020. The company temporarily closed all of its stores while rivals deemed “essential retailers” like Walmart remained open. Sales sank 17% in 2020 and 15% in 2021.

What’s more, Bed Bath & Beyond has rotated through several different executives and turnaround strategies in recent years.

Former Target executive Mark Tritton took the helm in 2019 with backing from investors and a bold new strategy. He scaled back coupons and inventory from national brands in favor of Bed Bath & Beyond’s own private-label brands.

But this change alienated customers who were loyal to big brands. The company also fell behind on payments to vendors, and stores did not have enough merchandise to stock shelves. Tritton stepped down as CEO in 2022.

Bed Bath & Beyond

(BBBY) has been teetering on the brink of bankruptcy for months.

In February, it was able to stave off bankruptcy by completing a complex stock offering that gave it both an immediate injection of cash and a pledge for more funding in the future to pay down its debt. That offering was backed by private equity group Hudson Bay Capital.

But Bed Bath & Beyond last month said it terminated the deal with Hudson Bay Capital for future funding and was turning to the public market to try to raise funds.

The company has also been shrinking to save money. It said earlier this year it would close around 400 locations, but would keep open profitable stores in key markets.

And the company tried to save money by not paying severance to some laid-off workers at closing stores.

Bed Bath & Beyond laid off 1,295 workers in New Jersey this month, just days before a new state law kicked in that mandates severance pay — equal to one week of pay for each year of employment — for workers who lose their job.

All these moves were not enough to keep the once-dominant chain out of bankruptcy, however.

And Bed Bath & Beyond is the latest retail chain to file for bankruptcy this year. Bankruptcies are piling up in the retail sector as interest rates go up and discretionary spending slows down.

David’s Bridal, Party City, Tuesday Morning, mattress manufacturer Serta Simmons and Independent Pet Partners, a pet store retailer, have filed for bankruptcy in recent weeks.

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April 23, 2023
Easily stolen Hyundais and Kias should be recalled, more than a dozen attorneys general say | CNN Business

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CNN
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A coalition of attorneys general for 17 states and the District of Columbia on Thursday called for a federal recall of Hyundai and Kia vehicles that they say are unsafe and too easy to steal.

The attorneys general called for the recall “following the companies’ continued failure to take adequate steps to address the alarming rate of theft of their vehicles,” a release from California Attorney General Rob Bonta, who is leading the coalition, said.

In a letter to the National Highway Traffic Safety Administration, the coalition requested a recall of “unsafe” Hyundai and Kia vehicles manufactured between 2011 and 2022 “whose easily bypassed ignition switches and lack of engine immobilizers make them particularly vulnerable to theft.”

The vehicles in question, 2015-2019 Hyundai and Kia models, such as the Hyundai Santa Fe and Tucson and the Kia Forte and Sportage, when equipped with turn-key ignitions — as opposed to cars that only require a button to be pushed to start — are roughly twice as likely to be stolen as other vehicles of a similar age. Many of these vehicles lack some of the basic auto theft prevention technology included in most other vehicles, even in those years, according to the Highway Loss Data Institute, an industry group that tracks insurance statistics.

These models became the subject of a viral social media trend in which thieves filmed themselves and others stealing Hyundai and Kia vehicles and taking them for a drive. In some parts of the country, the problem became so bad that some insurance companies refused to write new policies on these Hyundai and Kia models in places where the thefts had become extremely common.

The models in question don’t have electronic immobilizers, which rely on a computer chip in the car and another in the key that communicate to confirm that the key belongs with that vehicle. Without the right key, an immobilizer should do just that — stop the car from moving.

“Hyundai and Kia announced that they will initiate voluntary service campaigns to offer software updates for certain vehicles with this starting-system vulnerability. Unfortunately, however, this is an insufficient response to the problem and does not adequately remedy the safety concerns facing vehicle owners and the public,” the letter to the NHSTA said.

Hyundai and Kia did not immediately respond to CNN’s request comment.

The two South Korean automakers have created a software patch to fix the problem, the automakers have said. Hyundai and Kia operate as separate companies in the United States, but Hyundai Motor Group owns a large stake in Kia, and various Hyundai and Kia models share much of their engineering.

The patch will be installed free of charge on models that need it, with software that requires an actual key in the ignition to turn the vehicle on. The software will also block the car from being started after the doors have been locked using the key fob remote control. The vehicle will need to be unlocked before it can be started.

The software also extends the length of the alarm sound from 30 seconds to a full minute. Hyundai dealers will also affix window stickers stating that the vehicle has anti-theft software installed.

“The bottom line is, Kia’s and Hyundai’s failure to install standard safety features on many of their vehicles have put vehicle owners and the public at risk,” Attorney General Bonta said. “We now ask the federal government to require these companies to correct their mistake through a nationwide recall and help us in our continued efforts to protect the public from these unsafe vehicles.”

Recalls are ordered by NHTSA or, much more commonly, undertaken by automakers to correct safety-related defects. The attorneys general’s letter asserts that the ease of theft of these Hyundai and Kia vehicles constitutes a safety hazard and the vehicles fail to meet federal standards for theft prevention.

“Moreover, thieves have driven these vehicles recklessly, speeding and performing wild stunts and causing numerous crashes, at least eight deaths, and significant injuries,” the letter said.

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April 21, 2023
Boy Scouts of America will begin to compensate sexual abuse victims from a $2.4 billion trust after emerging from bankruptcy | CNN

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The Boy Scouts of America will begin to distribute compensation to thousands of victims of sexual abuse after emerging from bankruptcy Wednesday, the organization announced.

As part of a settlement with more than 82,000 survivors of abuse, the BSA will pay out $2.4 billion from a Victims Compensation Trust that was established by the court during its bankruptcy reorganization.

“This is a significant milestone for the BSA as we emerge from a three-year financial restructuring process with a global resolution approved with overwhelming support of more than 85% of the survivors involved in the case,” Chief Scout Executive, President and CEO Roger Mosby said in a statement.

“Our hope is that our Plan of Reorganization will bring some measure of peace to survivors of past abuse in Scouting, whose bravery, patience and willingness to share their experiences has moved us beyond words,” Mosby added.

The youth organization filed for bankruptcy in February 2020, when it was facing hundreds of sexual abuse lawsuits involving thousands of alleged abuse survivors. In September 2022, a judge in Delaware federal bankruptcy court granted final approval for the confirmation of a reorganization plan.

“These boys – now men – seek and deserve compensation for the sexual abuse they suffered years ago,” Chief Judge Laurie Selber Silverstein wrote in an order last year. “Abuse which has had a profound effect on their lives and for which no compensation will ever be enough. They also seek to ensure that to the extent BSA survives, there is an environment where sexual abuse can never again thrive or be hidden from view.”

The co-founder of the Coalition of Abused Scouts for Justice, a group including more than two dozen law firms representing more than 70,000 of the claimants, said it was the largest sexual abuse settlement fund in history.

Coalition co-founder and attorney Adam Slater also commended the court for “bringing survivors one step closer to justice.”

“After years of protracted bankruptcy proceedings and decades of suffering in silence, tens of thousands of survivors of childhood sexual assault will now receive some tangible measure of justice. With this decision, the Plan will now become effective, and the Trust will be able to begin distribution of the historic $2.45B settlement fund,” Slater said.

“Even more important, it means that the safety measures and protections for current and future Scouts included in the Plan will also be put into place – and we know that for many survivors, this has been the highest priority,” Slater added.

The Boy Scouts of America have since enacted a number of protocols to “act as barriers to abuse.”

The protocols include mandatory youth protection training for volunteers and employees, a screening process that includes criminal background checks for new adult leaders and staff, and a policy requiring at least two youth-protection trained adults to be present with youth at all times during scouting activities.

The policy also bans one-on-one situations where adults would have any interaction alone with children.

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April 20, 2023
Three investors on how to protect your portfolio | CNN Business
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New York
CNN
—

Wall Street has been hit with a barrage of complex signals about the economy’s health over the past month. From banking turmoil to weakening jobs data to slowing inflation, and now the start of earnings season, investors have remained largely resilient.

But the Federal Reserve’s March meeting minutes revealed last week that officials believe the economy will enter a recession later this year. While that’s not new news to investors who have worried that a recession is on the horizon for the past year, it does mean that markets could take a turn for the worse.

So, how should investors protect their portfolios? Investors say there isn’t one asset that Wall Street should pile all their bets on, but there are fundamentals that should underlie their investment strategies.

Jimmy Chang, chief investment officer at Rockefeller Global Family Office, says he advises clients to be patient, defensive and selective when navigating the market.

In other words, investors should make decisions based on logic, not a fear of missing out.

“You chase these rallies and then it fizzles out — you’re left holding the bag,” he said.

Chang also recommends that investors stay defensive by investing in high-quality blue chip stocks with solid balance sheets and keep dry powder.

Doug Fincher, portfolio manager at Ionic Capital Management, says investors should brace their portfolios against inflation.

The Personal Consumption Expenditures price index rose 5% for the 12 months ended in February, showing that inflation remains much higher than the Fed’s 2% target.

Coupled with the fact that the central bank has signaled that it plans to pause interest rate hikes sometime this year, it’s possible inflation could prove stickier than Wall Street expects.

“It is the boogeyman of traditional investments,” Fincher said.

He manages the Ionic Inflation Protection exchange-traded fund, which seeks to specifically perform well during periods of high inflation. The portfolio’s core exposure is inflation swaps, which are transactions in which one investor agrees to swap fixed payments for floating payments tied to the inflation rate. The fund also invests in short-duration Treasury Inflation Protected Securities.

Megan Horneman, chief investment officer at Verdence Capital Advisors, says that her firm has hedged its portfolio in cash. A well-known haven, cash is a better alternative to other perceived safe spots like gold, which tends to be volatile and run up too fast, she said.

Investors have rushed into money market funds in recent weeks after the banking turmoil both shook their confidence in the banking system and sent ripples through the market.

“Cash is actually earning you something at this point,” Horneman said. “You have to look long term.”

Earnings season kicked off Friday with a bonanza of earnings from the nation’s largest banks.

Perhaps most noteworthy out of the bunch was JPMorgan Chase, which reported record revenue and an earnings beat for its latest quarter.

The bank has $3.67 trillion in assets, making it the largest bank in the country and a bellwether for the economy. Strong earnings reports from the New York-based bank and its peers including Wells Fargo, Citigroup and PNC Financial Services have shown a promising start to the earnings season.

Charles Schwab, Goldman Sachs, Bank of America and Morgan Stanley report next week.

Here are some key takeaways from JPMorgan Chase’s first-quarter earnings:
The company guided net interest income to be about $81 billion in 2023, up $7 billion from its previous estimate. That’s especially important because this earnings season is all about guidance, as investors try to gauge whether the economy is headed for a recession and which companies will be able to weather a potential downturn.

CEO Jamie Dimon said in the post-earnings conference call that while financial conditions are a bit tighter after the collapse of Silicon Valley Bank and Signature Bank, he doesn’t see a credit crunch. But chances of a recession are now higher, he said.

The company said that its portfolio’s exposure to the office sector is less than 10%, addressing concerns that the $20 trillion commercial real estate industry could be the next space to see turmoil.
Read more here.

Monday: Empire State manufacturing index and homebuilder confidence index. Earnings report from Charles Schwab (SCHW).

Tuesday: Earnings reports from Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ), Netflix (NFLX), United Airlines (UAL) and Western Alliance Bancorp (WAL).

Wednesday: Earnings reports from Citizens Financial Group (CFG), Morgan Stanley (MS), Tesla (TSLA) and International Business Machines (IBM). Speech from NY Federal Reserve President John Williams.

Thursday: Philadelphia Fed manufacturing index, jobless claims, mortgage rates, US leading economic indicators and existing home sales. Earnings reports from AutoNation (AN) and American Express (AXP).

Friday: Manufacturing PMI and services PMI. Earnings report from Procter & Gamble (PG).
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April 16, 2023