Category Archives: Business

Paramount Stock Plunge Shows Perils Of Streaming Plans – Deadline

Was it the Bumblebee bit?

Paramount Global stock has plunged more than 20% since the company’s investor presentation Tuesday, including a 3% dip today. The vanishing of almost $5 billion in market value, after the company formerly known as ViacomCBS declared it was going all-in on streaming, has left even die-hard backers searching for explanations.

The virtual presentation itself was businesslike, running about 2 hours and 20 minutes, notably shorter than the three-hour one mounted by the company last year. But in a deviation from the recently established template for streaming pitches to Wall Street, Paramount’s kicked off with some shtick. As they had in 2021, board chair and controlling shareholder Shari Redstone and CEO Bob Bakish appeared together in a short sketch, trading synergistic quips while driving in Bumblebee, the yellow car from Transformers.

“I feel the need — the need for speed!” Bakish crowed from the driver’s seat, quoting Top Gun. “You go, Maverick!” Redstone replied. As they screeched to a halt, she added, “Thanks for the ride. Now let’s get to work!”

Taking the virtual stage, Bakish struck an upbeat tone. “When we spoke to you last year, some of you felt we were on an impossible mission,” he said. “But today, as you can see, it’s not only possible, it’s happening.” Repeatedly throughout the event, Bakish, Redstone and a number of other executives emphasized how fully the company was committed to streaming.

Wall Street, however, is reconsidering whether streaming is good business. A conga line of executives rolling out sizzle reels of new premium programming won’t make the splash it once did for Disney and, to a lesser extent, WarnerMedia and NBCUniversal. Not during a collective panic attack over whether company balance sheets can survive the high cost of content spending. A number of analysts issued downbeat takes on Paramount, including Bank of America’s Jessica Reif Ehrlich, who downgraded her rating on the company’s shares to “neutral” from “buy,” helping to trigger an 18% plunge by the stock the day after the event. While she acknowledged the sizable upsizing of the company’s subscriber forecast (to 100 million by 2024), she said the legacy part of Paramount remains “under continuing pressure.”

Streaming Gets A Rethink

The rethink started last year and accelerated in January after Netflix reported disappointing fourth-quarter subscriber growth and issued a weak forecast. Its stock took a huge hit, falling 20% in a single day, and it hasn’t recovered. “If Netflix can’t be successful and scale and get leverage from all of their content spend, then nobody can,” one analyst observed.

The Paramount event contrasted with Disney’s successful efforts to rally investor enthusiasm in 2019 and 2020. When Disney first laid out its plans for Disney+, drawing gasps when its initial $7 monthly pricing was revealed, the company’s stock rose 10% the next day. In December 2020, when the company announced a flood of new film and TV titles in a four-hour extravaganza, the gains were even larger, with the stock jumping almost 14%.

After the first Disney day, one analyst recalled, “everybody re-did their models and as they started seeing some success with subscribers and some successful shows, the idea was they had to be all-in – pull all theatrical and put the money on Disney+. That’s started to change.”

One fund manager felt the Bakish-Redstone intro was “kind of cringey” and the numbers laid out by the management team left questions even for those impressed by the company’s content pipeline and the growth of Paramount+. The streaming service ended 2021 with 32.8 million subscribers, accounting for most of the company’s 56 million subscribers. But content spending, which will hit $6 billion in 2024, is eroding cash flow and earnings. Even though the pay-TV bundle is shrinking, the dual revenue stream perfected by the cable business is hard for any legacy media player to quit.

And, even at $6 billion, Paramount’s spend will be a fraction of the outlay by Netflix and rivals like Disney and WarnerMedia (even before the latter’s pending merger with Discovery). “I am not sure how they think they can spend as little as they are spending,” one analyst said. “They have to spend more to compete. But I don’t know that they can afford to spend more – or even that they can afford to spend what they are spending.”

“Maybe Let’s Look Out Further”

What would have helped investor day? Perhaps providing forecasts beyond 2024, to the point when the company expects Paramount+ to hit break-even. (CFO Naveen Chopra predicted losses would peak in 2023.) “Some timeframe would have been nice,” said one Wall Streeter. With 2024 just two years away, agreed another, “Maybe let’s look out further, to 2027 … Let’s go out five years. What does the combined business look like, total EBITDA, total free cash flow, what does the balance sheet look like?”

He took issue with what he called an “amorphous comment” by Chopra that over the long term, the streamer could have the same type of margins as the TV/media business. “I have a tough time believing that on faith and the market does as well.” Ehrlich, in her downgrade note, said she didn’t expect those margins to materialize until “the back half” of this decade.

Also, some investors have gotten the impression that the company has been selling off assets like CNET, Black Rock, CBS Studio City and Simon & Schuster to fund its business shift. Free cash flow, a key metric, was only $481 million last year, a decline from almost $1.9 billion in 2020 due to stepped-up investments in programming.

The overall shift to streaming is “permanently depressing the profitability of the industry,” warned one media agency vet.

Not only could paying subscribers be hard to attract and keep, but advertising revenue in streaming is showing signs of flattening. Free platform Pluto TV, which Viacom acquired in 2019, has grown into more than a billion-dollar business, but ad revenue outside of Pluto increased just 9% in the fourth quarter to reach $322 million.

The overall shift to streaming is ‘permanently depressing the profitability of the industry,’ warned one media agency vet.

The oft-used reference to the “streaming wars” sort of implies a single winner. Even if more than one new arrival makes a viable go of it, an upper echelon is starting to form. Netflix remains the leader with 222 million global subscribers, and Disney+ has earned a spot in the top tier with almost 130 million after just two-plus years in existence. HBO Max ended 2021 with almost 74 million subscribers when combined with linear HBO and considers itself among the top three. Obviously, cash-rich tech firms Amazon and Apple aren’t going anywhere and can put the squeeze on media companies by spending freely and pursuing a different strategy.

Optimists about Paramount+ see its deep content well giving it a fighting chance to compete. Execs chalk up the stock movement to market volatility and point to the streaming shift as a long-term strategy, one that is impossible to measure in daily increments. Internally, according to a person familiar with management’s thinking, the view from the top is that the investor presentation was a success.

Still, many longtime industry observers note that Sony is happy and prosperous as an “arms dealer” without its own streamer. That was a description Bakish also embraced while he was running Viacom before its reunion with CBS. While the decision to license Yellowstone and library cornerstones like South Park and the Godfather films to rival streamers hasn’t been an especially good look, it generated lots of cash. The company has been working in recent months to change course and claw back more rights.

“They’re doing the right thing to spend heavily on content and put all their resources on building the DTC business,” one analyst said. “Because that is going to work, and they will have a business that in three to four years supports overall growth at the company in a stable way. Or it won’t work, and they will get bought.”



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Stocks choppy, Roku tumbles, Deere boosts outlook : LIVE UPDATES

New York Federal Reserve President John Williams talks March rate hike

Symbol Price Change %Change
SPY $435.47 -1.61 -0.37%

Prepared Remarks reviewed by FOX Business:

“But with today’s strong economy and inflation that is well above our 2 percent longer-run goal, it is time to start the process of steadily moving the target range back to more normal levels. In particular, I expect it will be appropriate to raise the target range at our upcoming meeting in March.Once the interest rate increases are underway, the next step will be to start the process of steadily and predictably reducing our holdings of Treasury and mortgage-based securities, which had grown significantly as a result of the purchases that began in March 2020. Last month, the FOMC released a set of principles that will guide that process.3 Assuming the economy develops roughly as I expect, I foresee this process getting started later this year.” said Williams.

Roku shares getting ripped

Roku’s stock is on pace for its worst percentage drop in history.

Midday Market Check

Afternoon selling accelerating for U.S. stocks

Bitcoin ETF Check

Symbol Price Change %Change
BITO $25.27 -0.44 -1.72%
BITQ $16.00 -0.36 -2.21%
GCC $22.81 0.00 0.00%

Bitcoin’s drop is weighing on exchange traded funds…

Bitcoin breaks below $40,000 level

Bitcoin is getting battered along with stocks as investor rotate out of riskier assets

U.S. Stock Check

Symbol Price Change %Change
SPY $434.69 -2.39 -0.55%
QQQ $342.10 -3.35 -0.97%
IYY $107.39 -0.56 -0.52%

U.S. stocks slip fractionally…

Stocks and oil slide amid Russia, Ukraine uncertainty

Investors continue to take a cautious view of U.S. stocks as Russia, Ukraine tensions mount.

Stocks futures little changed, oil retreats

U.S. equity futures were little changed on Friday as investors kept a close eye on escalating worries over the possibility Russia may invade Ukraine.

Oil fell to the $90 per barrel level.

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Deere lifts profit view on price hikes, strong farm equipment demand

Deere & Co raised its annual profit forecast on Friday, as the world’s largest farm equipment maker expects a boost to margins from price hikes and solid demand for its tractors and combines.

Record grain prices have put more cash in farmers’ pockets and spurred them to increase investments in agricultural machinery amid a tight labor market. The U.S. Department of Agriculture estimated net farm income to have risen 25% to $23.9 billion in 2021.

Deere raised prices to combat rising shipping and supply chain costs, but that has not deterred demand, with the company’s North American order books full for most of its large farm equipment in 2022.

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Roku shares plunge in premarket after revenue misses on supply chain snags

Roku Inc. reported quarterly revenue on Thursday that missed estimates, as the company was hit by supply chain issues that affected sales of television sets and its own streaming devices.

Roku said it expects current-quarter revenue of $720 million, compared with analysts’ estimates of $748.5 million, according to IBES data from Refinitiv.

The company said acquiring customers will remain a priority and it will not pass on higher costs to customers. Roku’s gross margins fell about 3% in the reported quarter.

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Stock futures higher on hopes diplomacy will ease Russia-Ukraine tensions

U.S. equity futures traded higher on Friday, trimming losses from Thursday’s plunge on escalating worries over the possibility Russia may invade Ukraine.

The major futures indexes suggest a gain of 0.5% when the opening bell rings. Continue reading

Bitcoin price clawing back from Thursday plunge

Bitcoin was attempting to pare the previous day’s losses, trading Friday morning above $40,000. 

Bitcoin took a hit of more than 7% on Thursday as markets reacted to concerns over a possible Russia invasion of Ukraine spiked. It was the largest percentage decrease since Jan. 21, when it fell more than 11%.
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Gold spikes to nine-month high on Russia, Ukraine

Nervous investors, spooked by a Russian-Ukraine conflict, barreled into gold on Thursday, driving the price to a level not seen since June of 2021: $1,900.70 and upward momentum may continue, aiding the SPDR Gold ETF.  Continue Reading



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Musk Pivots Boring Company to Prioritize Texas and Florida

Photo: Robyn Beck (Getty Images)

Poor performance and even poorer public perception have forced Elon Musk’s Boring Company to largely pivot away from its most ambitious projects and opt instead to prioritize more politically friendly locals. Now, Musk reportedly has his sights set on Texas and Miami for the company’s near future.

Boring has reportedly filed for permits to develop a new test site and compound in Bastrop Country near Austin, according to 2021 documents obtained by Bloomberg Businessweek. The company reportedly plans to build a compound on the land equipped with on-site housing where they will build “as many tunnels as necessary” to test out new techniques for developing underground tubes. Each of the tunnels at the test site may stretch around 300-600 feet long.

Besides the tunnels, Boring’s Texas site will reportedly feature 10 prefabricated, 550 square feet one-bedroom homes for workers, and may one day include a cafe and retail buildings.

Meanwhile, about 1,300 miles to the east, the company also recently submitted a proposal for a new 6.2-mile loop tunnel in Miami. That proposal, Insider reports, claims the so-called “The North Miami Beach Loop” could potentially transport more than 7,500 passengers per hour. At scale, Boring believes that figure could jump up to 15,000 per hour, though if Boring’s recent displays are any guide that’s still a long, long way away.

Boring estimates its proposed Miami project would cost between $185 million to $220 million and could take less than three years to build. The company also outlines ways it could expand upon the 6.2-mile route, potentially adding connections to Hard Rock Stadium and Florida International University’s Biscayne Campus. As with all Musk-related ventures, these timelines and estimates should be taken with a grain of salt.

Still, the proposals were met with excitement from at least some Florida officials.

“We have a lot of traffic congestion and this would be a way of alleviating a great deal of that traffic,” North Miami Beach Commissioner Michael Joseph told Insider. Joseph claims Musk’s tunnels could come at a fraction of the cost of larger infrastructure plans and could potentially get started with comparatively few major disruptions to the local economy.

The Miami proposal marks the second attempt by Boring to cave out the ground beneath Florida in as many years. Last summer, the Fort Lauderdale mayor said the city had accepted a proposal to build a tunnel connecting the city down toward the beach, something he saw as a “truly innovative way to reduce traffic congestion.”

Both of these new projects follow a slew of reported pitfalls and strategic re-orientation at the company. Though Boring once had grand, years-long plans to build tunnels connecting Washington and Baltimore and another meant to shuttle Los Angeles residents to Dodger stadium, both of those endeavors stalled due to regulatory restrictions and environmental review, Bloomberg notes. In a sign of exasperation, the company reportedly removed any mention of the projects from its website.

“I think you can declare these dead,” Dena Belzer, President of Consultancy Strategic Economics, told Bloomberg at the time.

Other still active projects on the other hand have failed to whip up the levels of hype attained by Musk’s other side hustles. In Las Vegas, for example, where Boring currently operates a tunnel transporting drivers to the Las Vegas Convention Center, cars can still only attain a top speed of around 35mph and have to drive one at a time. Videos posted of commuters using the tunnel so far appear half-assed at best.

From a purely practical perspective though, Boring’s geographic reorientation makes sense, particularly in Texas. Tesla, for instance, officially moved its headquarters from Palo Alto to Austin last year, as did Musk himself. Both Texas and Austin also saw some of the largest influx of tech workers migrating during the pandemic as well, though there are signs some of that shakeup is at least partially leveling out.

Metro areas in Texas and Florida, which largely lack subways and other forms of public transportation, do legitimately need some major reimagining of their transportation infrastructure. Whether or not Boring so far lackluster tubes can actually make any meaningful difference in that department, though, is another thing entirely.



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Burning cargo ship carrying Porsches, Volkswagens, Bentleys is adrift in the Atlantic Ocean

The Portuguese navy said it rescued all 22 crew members via helicopter. Authorities described the rescue mission as “highly skilled and physically demanding.” The crew members were taken to a hotel on Faial Island in the Azores, according to the Associated Press. None of the crew members were injured in the fire.

The fire was still burning on the ship as of Friday, according to the Portuguese navy, and photos showed white smoke billowing out of the vessel. Joao Mendes Cabecas, a captain of the nearby port of Hortas, told Reuters that lithium-ion batteries in the electric cars on the Felicity Ace caught fire, but it was unclear whether that is what started the blaze.

“The ship is burning from one end to the other,” Cabecas said. “Everything is on fire about five meters [16 feet] above the water line.”

Angus Fitton, a spokesman with Porsche North America, told The Washington Post that the company was thankful that the Felicity Ace crew members were safe. He confirmed that “a number of our cars are among the cargo.”

“We are in contact with the shipping company, and the details of the cars on board are now known,” Fitton said. “While it remains too early to confirm what occurred and next steps, we are — along with our colleagues at Porsche AG — supporting our customers and our dealers as best we can to find solutions. Anyone concerned by this incident and the implications on the car they’ve ordered should contact their Porsche dealer.”

It remains unclear how many of the thousands of luxury vehicles onboard have been lost in the blaze, but it’s probably millions of dollars worth. The Felicity Ace can carry more than 18,700 tons of cargo.

Depending on the model of the Porsche, the average price for the German-made vehicle can range from $101,000 to $174,000, according to U.S. dealers. In addition to the Porsches and Volkswagens, there were also 189 Bentleys on the ship, the Drive reported. Newer-model Bentleys can cost between $166,000 and $348,000, according to Car and Driver.

A spokesman for the Volkswagen Group confirmed that the Felicity Ace was transporting its vehicles to the United States but declined to elaborate on the extent of the losses.

“We are in contact with the shipping company to get more information about the incident,” said the spokesman, Dirk Ameer.

The Japanese shipping line Mitsui O.S.K. Lines, which operates the Felicity Ace, did not immediately respond to a request for comment.

The cargo ship fire is the latest wrinkle in the ongoing supply chain struggles that have affected U.S. retailers large and small since the start of the coronavirus pandemic. The U.S. Agriculture Department recently suspended imports of avocados from Mexico at a time when Americans were celebrating one of their two most avocado-centric events: the Super Bowl. (The other is Cinco de Mayo.)

Felicity Ace crew members issued a distress signal Wednesday morning after a blaze was reported on one of the cargo decks. Soon thereafter, the ship was designated as “NUC” — not under command — and the crew members were swiftly evacuated, according to FleetMon, a ship-tracking database.

“Welp, some folks aren’t getting their long awaited Porsches and whatever else was on this boat,” wrote writer and photographer Zerin Dube.

That same day, Porsche acknowledged the Felicity Ace fire in notices sent to customers tracking the status of their cars.

“We kindly ask for your patience while we work diligently on getting the Porsche of your dreams to you as quickly as possible,” the company wrote.

A Portuguese navy ship is monitoring the Felicity Ace to see whether the cargo ship is sinking or causing pollution, authorities said. A navy spokesperson told the AP that it’s unlikely the ship will be towed to a port in the Azores because of its massive size.

Matt Farah, a car enthusiast and editor of the Smoking Tire, is one of the customers who believes his vehicle is stuck at sea. Farah tweeted that he had been waiting since August for a 2022 Boxster Spyder that was modified to his specifications. The vehicle, which he declared as “the best sports car of all time, hands down,” has a retail price of about $123,000.

But when he got the call from his dealer, he was left disappointed and stunned.

“My car is now adrift, possibly on fire, in the middle of the ocean,” he wrote.

While he’s not sure if his car survived the fire, Farah said it’s likely the vehicle will need to be rebuilt.

“Odds are a new build and hopefully not another 8 months wait for it,” he tweeted.



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Stocks seesaw, oil and gold slip with Russia, Ukraine uncertainty

U.S. stocks were firmly lower midday as investors kept a close eye on escalating worries over the possibility Russia invading Ukraine.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 34000.21 -311.82 -0.91%
SP500 S&P 500 4329.46 -50.80 -1.16%
I:COMP NASDAQ COMPOSITE INDEX 13470.443967 -246.28 -1.80%

The Dow Jones Industrial Average fell over 200 points or 0.6%, while the S&P 500 and Nasdaq Composite fell 0.8% and 1.3%. 

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Ticker Security Last Change Change %
GLD SPDR GOLD SHARES TRUST – EUR ACC 177.16 -0.12 -0.07%

GOLD SPIKES TO NINE-MONTH HIGH ON RUSSIA, UKRAINE

The price of gold, traditionally a safe haven during geopolitical uncertainty, was little changed after hitting a nine-month high. 

Ticker Security Last Change Change %
USO UNITED STATES OIL FUND L.P. 64.37 +0.16 +0.25%

Oil fell to the $88-per-barrel level. 

In earnings, Deere & Company boosted its profit outlook, expecting to earn as much $7.1 billion net income 2022 above expectations. “Looking ahead, we expect demand for farm and construction equipment to continue benefiting from strong fundamentals,” said CEO John May. 

WALMART STOCK JUMPS AS RETAILER BOOSTS FORECAST DESPITE INFLATION

Ticker Security Last Change Change %
DE DEERE & CO. 367.18 -13.45 -3.53%
CAT CATERPILLAR INC. 191.50 -3.19 -1.64%

Roku shares tanked over 20% after warning supply chain disruptions will likely impact profit and sales as television orders remained delayed. The stock is on pace for the biggest percentage drop ever. 

Ticker Security Last Change Change %
ROKU ROKU INC. 106.70 -38.01 -26.27%

DraftKings also slid after forecasting a loss of as much as $925 million in 2022, wider than expected. 

Ticker Security Last Change Change %
DKNG DRAFTKINGS INC. 17.70 -4.36 -19.74%

On the economic agenda, existing home sales for the month of January rose 6.7%, as reported by the National Association of Realtors. This follows a steeper-than-expected decline of 4.6% in December due to high prices and low inventory. Home prices hit a record $362,800 on average. 

Also, the Conference Board’s Leading Economic index for January fell 0.3%. 

CLICK HERE FOR FOX BUSINESS’ REAL-TIME CRYPTOCURRENCY PRICING DATA 

Bitcoin fell below the $40,000 level. 

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FOX Business’ Ken Martin and The Associated Press contributed to this report.

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Walmart Is Winning the Inflation Wars

Walmart‘s (NYSE:WMT) latest earnings report was packed with good news for investors about the business: The company grew sales on top of soaring results a year ago and projected another solid annual performance ahead in fiscal 2023.

Walmart is using its size advantage to help win market share against competitors, both big and small, which are struggling to find enough inventory and labor today. The chain is capitalizing on a new focus on prices, too, as inflation jumps.

Let’s take a closer look.

Image source: Getty Images.

Winning in the grocery aisle

Walmart’s growth slowed compared to a year ago but stayed in positive territory. Comparable-store sales (or “comps”) were up 6% this past holiday season vs. a 9% spike in late 2020.

The chain achieved that growth with a balance between rising spending and higher customer traffic. Walmart handled 3% more visitors, who collectively spent 2% more on each trip. Management said the market share wins were especially strong in groceries, which likely means more gains against peers like Kroger.

Securing the goods

Few companies have anything approaching Walmart’s buying clout (it just booked its first quarter of over $105 billion in U.S. sales). The company is taking advantage of that size mismatch by stuffing its shelves while peers struggle to find enough merchandise to satisfy shoppers.

Inventory was up 28% this quarter, allowing the chain to avoid out-of-stock situations over the holidays and putting it in a great position to meet demand through early 2022.

Offering lower prices

Walmart was also able to secure better prices across niches like fresh foods, consumer electronics, and health and beauty products. That win has allowed its pricing advantage to grow compared to pre-pandemic times, just as inflation became a bigger concern for shoppers.

And customers noticed. Walmart boosted its U.S. comp sales by 15% on a two-year basis this past year. The retailer didn’t have to sacrifice much in terms of profitability, either. Gross profit margin actually rose in the core U.S. market. “We had another strong quarter to finish off a strong year,” CEO Doug McMillon said in a press release.

Returning cash to investors

Shareholders won’t have to wait long to see the payoff from these successes. Walmart is projecting higher profits and slightly expanding margins in 2023, even as many of its peers warn about weaker earnings ahead. The chain also sees sales growth staying in positive territory after two straight years of big gains.

Walmart plans to spend at least $10 billion on stock buybacks this year, and its dividend just increased another 2%, marking its 49th consecutive year of raises.

Some investors might be turned off by what looks like modest increases in sales, earnings, and cash returns ahead in 2022. But Walmart is building off of a huge base that has expanded quickly since the start of the pandemic.

Inflation and supply-chain issues in the industry only make it stronger relative to its retailing peers, too. As a result, Walmart should continue delivering solid returns for shareholders over time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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Apple Stores employees make effort to unionize

Spurred by wages that have stagnated below the rate of inflation, and encouraged by successful efforts by Starbucks employees to form unions, retail workers say they hope they can push the world’s most valuable company to share more of its record-setting profits with the workers who sell, repair and troubleshoot the products it sells.

Apple has more than 500 retail locations around the world and more than 270 in the United States, according to its website. It employs more than 65,000 retail workers. Sales through Apple retail stores and the Apple website made up 36 percent of the company’s $366 billion in total revenue in the 2021 fiscal year, according to Securities and Exchange Commission filings.

Apple has seen astonishing revenue growth in recent years, bringing in $378 billion in the last calendar year, compared with $240 billion in 2017. Its astronomical cash flow has allowed the company to spend tens of billions a year in stock buybacks and dividends for investors, buoying its share price.

Retail employees interviewed by The Washington Post say they haven’t shared in the company’s gains. Apple retail employees can earn anywhere from $17 to more than $30 per hour, depending on their market and position, and receive between $1,000 and around $2,000 in stock, they said. But those wages have not kept up with inflation over the years, they say, which means retail employees are making less as they sell more Apple products.

Employees say Apple’s hourly rates are usually in line with what other retail jobs pay in the regions where they’re employed. But most other retailers do not earn so much in revenue, nor are they valued at near $3 trillion. Apple Store employees interviewed by The Post believe their knowledge and passion for the products help drive sales and that they should share more fully in the company’s success.

“I have a lot of co-workers and friends who I genuinely love and they do not make enough to get by,” said one labor organizer who works at an Apple retail store. “They’re struggling and they’re hurting and we work for a company that has the resources to make sure that they’re taken care of.”

Apple did not have immediate comment.

The labor efforts at Apple Stores come as unions are starting to make a comeback after decades of decline. More than 80 Starbucks venues and counting have filed to unionize since the first store started the trend last August, with a successful vote in December. Last month, employees at an REI store in Manhattan filed to form a union. And employees at Raven Software, a division of Activision Blizzard, formed a union called the Game Workers Alliance last month. Google employees a year ago formed a union, but did not certify with the NLRB.

Not all cases have been successful. In April 2021, employees at an Amazon warehouse in Bessemer, Ala., voted against unionizing in a closely watched test case. Workers got a second chance to vote, after the NLRB found irregularities the first time around. The new vote will be decided sometime next month.

Apple is known for its loyal base of more than 150,000 employees, but the fact that its retail workers want to unionize reflects the way the company’s sheen has worn off in recent years. Some employees have increasingly voiced disapproval with how Apple handles alleged discrimination, harassment and bullying in the workplace, as well as work-from-home policies.

Apple Store workers interviewed by The Post said the company is an attractive one to work for and promises promotions to management or “corporate.” But those sometimes fail to materialize.

Matt Herbst recently left an Ohio Apple Store for another job in part for that reason. After starting there five years ago, he earned a shot at what the company calls a “career experience,” a six-month stint at Apple’s headquarters in California. But the store wouldn’t allow him to go, he said, because of a worker shortage at the beginning of the pandemic. Herbst, now 24, detailed his experience at Apple in a recent blog post.

“I do think a union would be beneficial for retail employees,” he said.

In recent weeks, Apple has offered raises to some of its retail employees. But workers at several Apple Stores said the raises in some cases backfired. Some employees got raises of less than a dollar per hour, when they were hoping for more than $5. Many employees say they got raises that don’t compensate for recent inflation. Because of inflation, they effectively make less money than when they started, they added.

Before officially filing, Apple Store organizers have been informally gauging interest among the staff, hoping that more than half of the employees will vote to unionize, people familiar with the matter say, the threshold needed to gain official legal standing with the NLRB.

In at least one case, store employees hoped to gain at least 80 percent support before officially filing to form a union. That’s because the organizers expect that Apple will try to convince employees to vote against the union.

To avoid detection by managers at the stores, employees have been meeting in secret and communicating with encrypted messaging, sometimes using Android phones, the competitor to Apple’s iOS operating system, to avoid any possible snooping by Apple.

Apple Store employees at one store said managers have already begun pulling employees aside and giving speeches about how unions will hurt employees, lower their wages and force Apple to take away benefits and opportunities, such as the “career experience” that Herbst described. Managers try to eavesdrop on employees, they said, while pretending to do something else.

Labor organizers refer to this kind of activity as “union busting.” Starbucks, for instance, recently urged its employees, which it calls “partners,” to vote against unionizing, arguing that Starbucks could better address employee concerns by negotiating with them directly and saying a union would just get in the way.

More than 90 Starbucks stores have filed paperwork to form unions since a store in Buffalo became the first last summer. Apple Store employees hope that once the first store successfully unionizes, others will fall like dominoes.

The retail workers are getting support from a contingent of employees, including software engineers and product managers, who work at Apple corporate, as it’s called by retail workers. Some Apple corporate employees have donated to The Coworker Solidarity Fund, a nonprofit that has helped employees from Apple and Netflix who have spoken up to criticize the companies.

That support is happening in secret, because employees fear they will face retaliation for aiding in labor organizing.

Last year, Apple fired Janneke Parrish, who helped organize #AppleToo, a movement aimed at improving working conditions at the company, particularly for traditionally underrepresented groups. Parrish said she was being investigated for leaking information from a company all hands meeting, a charge she denies.

And Cher Scarlett, a software engineer who encouraged employees to share their salaries in a survey to expose possible wage disparities hurting underrepresented groups, alleged she was pushed out in retaliation for her efforts.

“We are and have always been deeply committed to creating and maintaining a positive and inclusive workplace. We take all concerns seriously and we thoroughly investigate whenever a concern is raised and, out of respect for the privacy of any individuals involved, we do not discuss specific employee matters,” Apple spokesman Josh Rosenstock said previously.

Parrish and Scarlett both said they have been in contact with organizers at Apple retail stores and support their efforts. “If the richest company in the world won’t pay its workers enough to live, who will?” Scarlett said.

On Dec. 24, Apple retail employees staged a walkout and launched a new website, Apple Together, to help retail employees.

“Apple does think stores are looking at organizing. I think they are looking at how unhappy retail workers are,” Parrish said. “What they don’t know is how far some of these stores are into the process.”



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Chamath Palihapitiya steps down from Virgin Galactic board

Virgin Galactic leaders in front of the New York Stock Exchange, from left: CEO George Whitesides, founder Richard Branson and Chairman Chamath Palihapitiya.

Virgin Galactic

Virgin Galactic announced Friday that Chairman Chamath Palihapitiya is stepping down from the space tourism company’s board of directors, effective immediately.

Palihapitiya’s SPAC, or special purpose acquisition company, took Virgin Galactic public in October 2019. The company’s stock has experienced volatile trading since then – climbing above $60 a share in the months ahead of Sir Richard Branson’s test spaceflight, but recently falling back below its public debut price with the beginning of commercial service delayed more than two years from what the company forecast.

The now-former chairman sold his personal Virgin Galactic stake in early 2021 that was worth over $200 million at the time. But Palihapitiya indirectly owns about 15.8 million shares through Social Capital Hedosophia Holdings.

In a statement, Palihapitiya said he is leaving “to focus on other existing and upcoming public board responsibilities” but is “proud to leave the team in such capable hands” and looks forward to “one day flying to space with them.”

Virgin Galactic’s stock was little changed in premarket trading from its previous close of $9.01 a share.

“We’ve always known the time would come when he would shift his focus to new projects and pursuits. I’m grateful for everything Chamath has done for our company and wish him all the best,” Virgin Galactic CEO Michael Colglazier said in a statement.

The company said that Virgin Galactic board director Evan Lovell will serve as interim chairman, with a new chair expected to be selected later. In a filing, Virgin Galactic said Palihapitiya informed the board of his decision to resign on Thursday.

Virgin Galactic has steadily made changes to its structure and brand under Colglazier, who was appointed as CEO in July 2020. Earlier this week the company revealed a rebrand, replacing the iris of Branson in its logo with a purple outline of its spacecraft.

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Wall Street analysts share hedging tactics as Russia-Ukraine tensions mount

A service member of the Ukrainian armed forces takes part in tactical military exercises at a training ground in the Rivne region, Ukraine February 16, 2022.

Ukrainian Presidential Press Service via Reuters

Assets across the spectrum have been affected by the geopolitical tensions, including oil and natural gas, wheat, the Russian ruble and safe havens such as gold, government bonds, the Japanese yen and the Swiss franc.

Philipp Lisibach, chief global strategist at Credit Suisse, told CNBC earlier this week that any confirmed de-escalation would give a boost to risk assets after a period of uncertainty and volatility.

“If we have, let’s say, a resolution in terms of the geopolitical issues that we currently face, I would imagine that the global economy takes a breather, risky elements of the market can certainly recover, the cyclicality and the value trade should probably do well, and European equities particularly that have come under pressure, we assume that they can continue to outperform, so we would certainly look into that angle specifically,” Lisibach said.

‘General geopolitical hedges’

Given the vast array of possible outcomes to the current standoff, investors have been reluctant to set forth a base case scenario, opting instead for careful portfolio hedging to mitigate the potential downside risks of a Russian invasion, while capturing some of the upside in the event of a de-escalation.

“We would rarely look to position for material geopolitical risk, as it’s so opaque. That said, we do have some general geopolitical hedges in the portfolio, principally gold and, depending on the source of the risk, some oil exposure, as well as, of course, some government bonds, though with reduced duration,” said Anthony Rayner, multi-asset manager at Premier Miton Investors.

Bhanu Baweja, chief strategist at UBS Investment Bank, argued earlier this week that outside of energy and Russian assets, markets had actually not priced in a great deal of risk.

“We have seen equities come off a little bit, but if you look at consumer durables — because that is the one sector or subsector that would definitely be impacted through weaker growth and higher inflation — in Europe that sector is doing much better than it is in the U.S.” he said.

Baweja added that U.S. high yield debt is also underperforming that of Europe, while the euro has remained relatively steady.

Markets are tracking the “playbook from 2014,” Baweja suggested, when Russia first invaded Crimea and the subsequent levying of sanctions against Russia through the summer.

“Through that period what really happened was some parts of CEE FX got impacted, oil rose a little bit in the first iteration, came down in the second one, so not a lot happened in stocks, so really it became quite a local event,” Baweja told CNBC on Tuesday.

“This time it seems much more serious, but I don’t think investors want to completely upend their way of thinking and probably want to look for hedges, rather than completely changing their core portfolio.”

FX seen as the best hedge

In terms of hedging, Baweja suggested that with equity and bond volatility already high due to central bank speculation, investors should look to foreign exchange markets, where volatility is still relatively low.

“Similar to 2014, I would be looking at CEE (Central and Eastern Europe) FX, places like dollar-Pole (zloty) or dollar-Czech (koruna), for hedges,” he said.

“Russian assets themselves have moved a lot so they along with energy are pricing a lot of risk, which also means if the situation becomes better, then you really shouldn’t see global equities seeing massive relief from that, you should see Russian assets going up and energy coming down.”

If the situation escalates, Baweja suggested hedging through FX rather than buying defensive stocks or favoring U.S. assets over Europe.

“If we have to do it within equities, we think DAX and European banks are probably the best hedges,” he added.

While equity markets in Russia and around the world continue to look sensitive to geopolitical developments, the ruble has remained relatively robust around the 75 mark against the dollar, despite some volatility.

Luis Costa, head of CEEMEA FX and rates strategy at Citi, told CNBC on Thursday that flows into the ruble are likely to render it the most resilient Russian asset class, with high energy and gas prices pointing to strong current account surpluses in Russia.

“And let’s not forget Russia used to buy FX, they used to buy dollars as a derivative on the fiscal law, and they stopped the purchase of dollars about a month ago in order to support the currency,” Costa said.

“This is making natural flows in Ruble even more positive for the currency, so we think that – in the whole asset array of Ruble risk, of Russia risk, credit, rates, bonds and FX – FX will continue to be the most resilient part of the puzzle here.”

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