Tag Archives: C&E Industry News Filter

Health

Starting a Family? Company Benefits Favor IVF Over Adoption

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Sarah Mahalchick and her future husband talked on one of their first dates about wanting to adopt. There were lots of children out there who needed parents, they told each other from the start.

But when they were ready to expand their family, they opted for fertility treatments, including in vitro fertilization. It seemed to make sense: Ms. Mahalchick’s employer would pay for a large chunk of the treatments through her health insurance; it offered almost no help on adoption.

Fertility benefits are becoming almost trendy at blue-chip companies, with more firms offering to help with the costs of IVF and egg freezing. But in many cases, companies that offer fertility benefits give no financial assistance to employees who want to adopt, and when they do their adoption benefits are often much less generous.

Estimates on how many companies offer fertility or adoption benefits are fuzzy. Most employers give neither. But the gap is clear.

The Society for Human Resource Management estimates that as of 2018, 27% of employers offered some form of infertility coverage and 11% offered adoption assistance. FertilityIQ, a website that offers courses and other information on family building, regularly scours benefit disclosures from thousands of employers. In a report released Saturday, it calculates that only one in five companies that offer fertility coverage also offer adoption assistance.

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Business

15 CEOs Reflect on Their Pandemic Year and the Lessons They’ve Learned

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Hilton Worldwide Holdings Inc. Chief Executive Chris Nassetta worked from home in Arlington, Va., with his wife, six daughters and two dogs for two weeks before returning to the hotel chain’s nearly empty headquarters for the rest of the past year. Sharmistha Dubey has been leading Match Group Inc. from her dining room table near Dallas. Herman Miller ’s Andi Owen has her dog Finn to keep her company while working from her home office in Grand Rapids, Mich. Moderna Inc. CEO Stéphane Bancel relishes twice-daily 30-minute walks between his home in Boston and the vaccine maker’s Cambridge offices, where he resumed working in August, so he can crystallize his priorities and reflect on the day. The Wall Street Journal photographed them and 11 other business leaders in their pandemic office spaces as they discussed the past year and what’s to come.

More than a year after the coronavirus upended the way we work, the business leaders said they have found that more communication, flexibility and transparency have been crucial in staying connected to their employees.

Heads of companies across sectors including finance, hospitality and technology spoke from their current workspaces about what they’ve learned from the largely remote year, what challenges they faced and what changes they plan to leave in place during the next phase of work.

Brad Karp, chairman of the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, predicted his schedule will remain less hectic after the pandemic is over: “Personally, I can’t see myself reflexively flying cross-country for an hour-long presentation or meeting.”

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Business

Inside Archegos’s Epic Meltdown – WSJ

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Bill Hwang was in trouble.

On Thursday of last week, the firm managing the former hedge-fund trader’s wealth arranged a conference call with executives at some of the largest investment banks in the world. The urgent topic: mounting losses at Mr. Hwang’s family office, Archegos Capital Management, from a handful of large bets on major stocks.

Because the wagers had been made in part with so-called total-return swaps—investments made by banks on behalf of clients for a fee—they had obscured Mr. Hwang’s large exposure to several companies.

Archegos shocked its lenders when it told them the size of its portfolio and how little cash it was holding, said people familiar with the call—not the least because they were all now facing billions of dollars in potential losses themselves.

Now Wall Street is sifting through the aftermath of the biggest single-firm meltdown since the financial crisis. Mr. Hwang alone lost approximately $8 billion in 10 days, a person familiar with the matter said, in what traders and investors say was one of the fastest losses of such a large sum they had ever seen.

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Business

Goldman, Morgan Stanley Limit Losses With Fast Sale of Archegos Assets

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Goldman Sachs Group Inc. and Morgan Stanley were quick to move large blocks of assets before other large banks that traded with Archegos Capital Management, as the scale of the hedge fund’s losses became apparent, according to people with knowledge of the transactions. The strategy helped limit the U.S. firms’ losses in last week’s epic stock liquidation, they said.

Losses at Archegos, run by former Tiger Asia manager Bill Hwang, have triggered the liquidation in excess of $30 billion in value. Banks were continuing to sell blocks of stocks linked to Archegos Monday, traders said.

“This is a challenging time for the family office of Archegos Capital Management, our partners and employees. All plans are being discussed as Mr. Hwang and the team determine the best path forward,” a company spokeswoman said in a statement Monday evening.

Archegos took big, concentrated positions in companies and held some positions in a mix of stock and swaps. Swaps are a common arrangement in which a trader gets access to the returns generated by a portfolio of shares or other assets in exchange for a fee.

Losses threatened to spill over into the so-called prime brokerage businesses that have been handling the firm’s trading. The group of large Wall Street banks includes Goldman, Morgan, Credit Suisse Group AG, Nomura Holdings Inc., UBS Group AG and Deutsche Bank AG , said people familiar with the firm’s trading.

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Business

ThredUp’s Stock Jumps 30% in Market Debut

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Shares of ThredUp Inc. opened 30% above the listing price in their market debut Friday, an early sign that investors continue to be bullish on online secondhand retail.

The Oakland, Calif.-based retailer’s stock began trading at $18.25, after being set at $14, which was the high end of its previously announced range. At the listing price, ThredUp, which sold 12 million shares, raised $168 million at a valuation of about $1.3 billion.

ThredUp will use the proceeds to expand the business, including adding new categories, and make new investments in the company’s operating platform and technology, co-founder and Chief Executive James Reinhart said in an interview Friday. The initial public offering is “just another validation of the market opportunity, and ThredUp plays in the biggest, fattest part of the market at our price point,” he said.

ThredUp, which sells women’s and children’s apparel, posted $186 million in revenue last year, a 14% jump from the previous year, according to a filing with the Securities and Exchange Commission. The company lost $48 million last year, compared with a loss of $38 million in 2019.

The company said it had 1.2 million active buyers at the end of last year, up 24% from the previous year. On average, those shoppers visited ThredUp six times a month and placed 3.2 orders in the year. The company defines active buyers as customers who have made at least one purchase in the past 12 months. “Customers are continuing to be engaged on our platform and continue to shop at higher rates,” Mr. Reinhart said. “I think it shows remarkable resilience.”

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Business

WeWork Agrees to SPAC Deal That Would Take Startup Public

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WeWork has agreed to merge with a special-purpose acquisition company, according to people familiar with the matter, in a deal that would take the shared-office provider public nearly two years after its high-profile failure to launch a traditional IPO.

The planned merger with the BowX Acquisition Corp. SPAC would value WeWork at $9 billion including debt, the people said. WeWork would also raise $1.3 billion, including $800 million in a so-called private investment in public equity, or PIPE, from Insight Partners, funds managed by Starwood Capital Group, Fidelity Management and others, the people said.

In January, The Wall Street Journal reported that WeWork was in talks to combine with BowX.

WeWork is a big player in the market for flexible office space. It signs long-term leases with landlords, then after renovating a space and furnishing it, subleases small offices or even whole buildings to tenants for as little as a month at a time. Should the merger close in the coming months as expected, it would cap what has been a long and bumpy road toward a listing for WeWork.

The company is taking advantage of a torrent of new SPACs to accomplish what it failed to pull off in 2019, when public investors rejected the money-losing company and its visionary yet erratic leader, Adam Neumann, who subsequently resigned as chairman and CEO. Further hit by the coronavirus pandemic, which has emptied out offices throughout the country, WeWork has closed locations, renegotiated leases and cut thousands of jobs in a bid to slash expenses.

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Technology

Microsoft Is in Exclusive Talks to Acquire Discord

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Microsoft Corp. is in advanced talks to acquire messaging platform Discord Inc. for $10 billion or more, according to people familiar with the matter, as the software giant seeks to deepen its consumer offerings.

Microsoft and Discord are in exclusive talks and could complete a deal next month, assuming the negotiations don’t fall apart, the people said.

Originally favored by gamers, San Francisco-based Discord offers voice, text and video chatting. The platform’s popularity has surged since the pandemic took hold as people stay home and connect online—as has that of other chat services, like Facebook Inc.’s WhatsApp and Signal Messenger LLC. Discord has been considering an IPO.

Microsoft, which has a market value of more than $1.7 trillion, has been on the hunt for an acquisition that would help it reach more consumers. Last summer, it held talks to buy the popular video-sharing app TikTok amid a high-profile geopolitical standoff prompted by the Trump administration, before abandoning the effort.

VentureBeat reported this week that Discord was exploring a sale and had entered exclusive discussions with an unnamed suitor.

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Business

Why Did GameStop Stock Price Fall? Its Earnings Report Mattered After All.

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Text size

GameStop shares were down 20.2%, at $145.05, in midday trading.


Michael M. Santiago/Getty Images


GameStop

stock was falling fast on Wednesday after the company’s fiscal fourth-quarter results disappointed analysts. There’s also another elephant in the room: The company is considering selling more stock, which could dilute its shares.

GameStop stock (ticker: GME) closed down 33.8%, at $120.34. The S&P 500 index fell 0.6%, while the

Dow Jones Industrial Average

ended flat.

In a filing with the Securities and Exchange Commission, GameStop said it has been evaluating whether or not to increase the size of its previously announced $100 million at-the-market stock-sale program. The company had announced the ATM program in December, with Jefferies acting as the sales agent. The company said it didn’t sell stock as its valuation surged.

GameStop stock received a mix of downgrades, price target cuts, and raises from analysts following the report. “Many on Wall Street have wondered why GameStop has not done an ATM transaction to take advantage of the elevated share price,” Telsey Advisory Group analyst Joseph Feldman wrote. “The answer may be that its balance sheet is in great shape, with cash and cash equivalents of $635MM (incl. restricted cash of $110MM) and debt of $363MM at the end of 2020. The new commentary seems to be a signal that an ATM transaction could be on the way.”

Heading into Tuesday, Feldman had the highest price target listed by FactSet. He lowered his to $30 from $33, calling the event “anti-climactic.” On the flip side, Jefferies analyst Stephanie Wissink raised her target by 1,066% to $175. That’s the new Street-high, in case there was any doubt.

Wissink argued the moves by Chewy co-founder and GameStop board member Ryan Cohen to transform the company into more of a technology firm warrant a completely different valuation method. The company’s earnings release was paired with another trio of hires with e-commerce backgrounds, including

Amazon

alum Jenna Owens as its next chief operating officer.

Wissink wrote that she moved from basing her target on earnings before interest, taxes, depreciation, and amortization, or Ebitda, to a sales multiple that factors in a shift to e-commerce.

She also makes the point that GameStop has the potential to participate in the rise of non-fungible tokens, or NFTs, and the hosting of shoppable content streams.

“As a result, we expect store closures to persist & sales to transfer to dot com,” Wissink wrote. “Total revs may come down, but value per dollar of sales should increase if non-retail streams are realized.”

S&P Global Ratings analysts Mathew Christy and Andy Sookram wrote in a note on Wednesday that they believe the turnaround will involve sizable execution risks and possibly a material increase in its capital investment.”The recent increase and volatility in GameStop’s share price have not affected our fundamental view of its business or the risks the company faces,” they wrote. “However, we note the potential financial flexibility afforded by its improved equity market standing if it chose to raise additional capital to reposition its business or reduce its debt.”

BofA Global Research analyst Curtis Nagle maintained his $10 price objective and Underperform rating. He notes that while GameStop’s adjusted earnings per share of $1.34 beat his estimate for $1.22, he notes that the beat was driven by a large tax credit during the quarter. The company’s Ebitda came in short of his expectations by 66%.

“We continue to be very skeptical on GME’s efforts to address its long standing issue of digital disintermediation and the fact that its core market in new and pre-owned physical console gaming is shrinking at a rapid pace,” Nagle added. “GME also called out leveraging its existing digital assets like its PowerUp rewards program but this has seen declining engagement for years.”

Wedbush analyst Michael Pachter lowered his rating on GameStop to Underperform from Hold, but raised his price target to $29 from $16. While he still thinks GameStop is well-positioned to benefit from the new consoles from

Sony

and

Microsoft,

he says the short squeeze has spiked the stock to “levels that are completely disconnected from the fundamentals of the business.”

“Our downgrade isn’t a reflection of our opinion of company management, which remains very high; rather, it appears that the ‘real’ value of GameStop shares (the price willing buyers are prepared to pay in the open market) vastly exceeds the ‘fundamental’ value we believe investors expecting a financial return can reasonably expect,” he wrote.

Write to Connor Smith at connor.smith@barrons.com

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Health

Pfizer Goes It Alone to Expand Vaccine Business Beyond Covid-19 Pandemic

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Pfizer Inc. aims to expand its vaccine business by becoming a leader in the new gene-based technology behind its successful Covid-19 shots.

Pfizer will develop new shots using the technology, called mRNA, to target other viruses and pathogens beyond the coronavirus, Chief Executive Albert Bourla said in an interview. He said the company’s scientists and engineers gained a decade’s worth of experience in the past year working on the Covid-19 vaccine with Germany’s BioNTech SE , and is ready to pursue mRNA on its own.

“There is a technology that has proven dramatic impact and dramatic potential,” Mr. Bourla said. “We are the best positioned company right now to take it to the next step because of our size and our expertise.”

Pfizer will increase R&D in the technology, including adding at least 50 employees whose assignments will include mRNA, and it will harness the new mRNA manufacturing network it assembled in the past year to compete.

“We are now ahead and we plan to maintain the gap,” he said of the mRNA vaccine market.

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Business

Fire at Giant Auto-Chip Plant Fuels Supply Concerns

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TOKYO—A fire at a factory of one of the world’s leading auto chip makers has added to the troubles of car makers that already have slashed production because of a semiconductor shortage.

The fire Friday left a swath of charred equipment in the factory owned by a subsidiary of Renesas Electronics Corp. in Hitachinaka, northeast of Tokyo. The company said it would take at least a month to restart the damaged operations.

Shares of Japan’s three leading car makers— Toyota Motor Corp. , Nissan Motor Co. and Honda Motor Co. —all fell by more than 3% on Monday, worse than the overall market, while Renesas shares were down 4.9%.

Renesas said heat from an electrical problem inside a single piece of equipment caused the fire and contaminated clean rooms needed to make semiconductors. It said two-thirds of the chips made at the fire-affected factory were automotive chips.

Renesas’s chief executive, Hidetoshi Shibata, said Sunday the impact on global chip supplies would be significant. Mariko Semetko, a credit analyst at Moody’s Japan, said the fire was likely to damp the recovery of global auto production this year, while auto makers said they were still assessing the impact.

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