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Business

AT&T Books $15.5 Billion Charge on DirecTV Unit

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AT&T Inc. booked a $15.5 billion charge on its pay-television business, reflecting the damage cord-cutting has taken on its DirecTV satellite unit even as the company’s HBO Max streaming service’s growth ramped up.

The write-down created a fourth-quarter loss as the media-and-telecommunications giant weighs the potential sale of its pay-TV assets and executives focus their investments on newer technologies. The company reported quarterly revenue declines in its legacy-video and WarnerMedia units, offsetting gains in its core wireless-phone division.

Executives called the noncash accounting charge a sign of the pay-TV unit’s aging status as the Dallas company promotes an internet-streaming model that gives its content-production business a direct line to viewers.

“Our biggest and single-most important bet is HBO Max,” Chief Executive John Stankey said on a conference call Wednesday. Executives plan to expand the service’s footprint in other countries this year and launch an advertising-supported version in the second quarter.

Overall, AT&T reported a fourth-quarter loss of $13.89 billion, or $1.95 a share, compared with a profit of $2.39 billion, or 33 cents a share, a year earlier. Revenue fell 2.4% to $45.7 billion.

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Business

GameStop, Microsoft, AMC: What to Watch When the Stock Market Opens Today

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Here’s what we’re watching ahead of Wednesday’s opening bell.

—U.S. stock futures slipped, as investors awaited a bumper day of major earnings reports and a meeting of the Federal Reserve.

S&P 500 futures were down 1.1%, while futures tied to the technology-heavy Nasdaq-100 edged down 0.7%. Dow Jones Industrial Average futures fell 1.1%.

What’s Coming Up

—Earnings updates expected:

Tesla,

TSLA -0.71%

Apple

AAPL -0.22%

and

Facebook

FB -2.39%

are due after the close. The electric-car maker is expected to record its first full-year profit.

The Federal Reserve releases a policy statement at 2 p.m. and Chairman Jerome Powell holds a press conference at 2:30 p.m.

Market Movers to Watch

—And then there’s GameStop. Its stock popped again ahead of the bell, soaring 73% in wildly volatile trading. CNBC reported that Melvin Capital, a hedge fund that has posted big losses so far this year in part because of a wager against the videogame retailer’s stock, had closed out its short position on Tuesday afternoon. The report caused a stir on the online platform Reddit—popular among day traders waging a battle against hedge-fund short-sellers—where some members wrote that it was an attempt to pull

GameStop

GME 109.79%

‘s share price back down. And

Elon Musk

weighed in on the stock again last night with a tweet, “Gamestonk!!“

—The show must go on: Another heavily shorted stock, movie-theater operator

AMC Entertainment Holdings,

AMC 133.87%

saw its shares vault more than 350% higher premarket.

—Headphone maker

Koss

KOSS 72.20%

has also joined the party, and its shares jumped 109% premarket.

—

Bed Bath & Beyond

BBBY 28.21%

resumed its upward trajectory, up 20% ahead of the bell. Online traders point to an early 2020 change in management and the fact that the company is buying back shares as signs that the share price will continue to increase.

—

Microsoft

MSFT 1.44%

shares are up 2.1% premarket. The software giant’s profit and sales jumped, propelled by pandemic-fueled demand for videogaming and accelerated adoption of its cloud-computing services.

—

Boeing

BA -4.46%

shares fell 3.3% premarket after the plane maker reported its biggest-ever annual loss and took a huge financial hit on its new 777X jetliner, reflecting the pandemic’s worsening toll.

—

Abbott Laboratories

ABT 1.12%

shares added 1.5% premarket after it logged hearty profit growth in the latest quarter as a surge in demand for its Covid-19 diagnostics services contributed to higher revenue.

—

Starbucks

SBUX -5.30%

slipped 3% premarket after the coffee chain reported that sales fell during the holiday quarter but showed signs of recovery, particularly in China. Its operating chief

Roz Brewer

is leaving to become CEO of

Walgreens

WBA 6.21%

Boots Alliance, where she’ll be the only Black woman leading a Fortune 500 company. Walgreens shares climbed 5%.

A Walgreens store in Tomball, Texas, Jan. 16, 2021.



Photo:

Jeff Lautenberger for The Wall Street Journal

—

AT&T

T -1.11%

shares slipped 1.3% premarket after it reported a fourth-quarter loss as it booked a $15.5 billion charge on its pay-TV business.

—Chip maker

Texas Instruments

TXN -2.81%

‘s shares slipped 1.7% premarket even though quarterly results and outlook both topped Wall Street estimates after Tuesday’s close.

Market Fact

Retail order flows have reached 20% of the U.S. stock market’s total, according to

UBS

research, twice what they were in 2010.

Chart of the Day

GameStop shares have become a favorite of online traders who are seeking to make money from buying options.

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Renewed Demand for Treasurys Quells Fears of Rising Rates—for Now

Goldman CEO David Solomon Takes $10 Million Pay Cut for 1MDB Scandal

Biden’s Candidate for SEC Chairman Is Expected to Be Tough

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Business

Apollo CEO Leon Black to Step Down Following Review of Jeffrey Epstein Ties

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Leon Black plans to step down as chief executive of Apollo Global Management Inc. after an independent review revealed larger-than-expected payments to disgraced financier Jeffrey Epstein that it nevertheless deemed justified.

The monthslong review by Dechert LLP found no evidence that Mr. Black was involved in the criminal activities of the late Epstein, who was indicted in 2019 on federal sex-trafficking charges involving underage girls, according to a copy of the law firm’s report that was viewed by The Wall Street Journal.

In its report, Dechert found the fees that the billionaire had paid Epstein were for legitimate advice on trust- and estate-tax planning that proved to be of significant value to Mr. Black and his family. Mr. Black paid Epstein a total of $148 million, plus a $10 million donation to his charity—far more than was previously known.

Mr. Black wrote in a letter to Apollo’s fund investors that he would cede the role of CEO to co-founder Marc Rowan on or before his 70th birthday on July 31 while retaining the role of chairman. In the letter, a copy of which was viewed by the Journal, Mr. Black detailed other governance changes he is recommending to the board, including the appointment of more independent directors and the elimination of Apollo’s dual-class share structure.

Mr. Black also pledged to donate $200 million of his family’s money to women’s initiatives.

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Science

World’s Ice Is Melting Faster Than Ever, Climate Scientists Say

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From Antarctica to the Arctic, the world’s ice is melting faster than ever, according to a new global satellite survey that calculated the amount of ice lost from a generation of rising temperatures.

Between 1994 and 2017, the Earth lost 28 trillion metric tons of ice, the survey showed. That is an amount roughly equivalent to a sheet of ice 100 meters thick covering the state of Michigan or the entire U.K.—and the meltwater from so much ice loss has raised the sea level just over an inch or so world-wide, the scientists said.

“It’s such a huge amount it’s hard to imagine it,” said

Thomas Slater,

a research fellow at the U.K.’s University of Leeds Centre for Polar Observation and Modelling and the lead author of a paper describing the new research. “Ice plays a crucial role in regulating the global climate, and losses will increase the frequency of extreme weather events such as flooding, fires, storm surges and heat waves.”

The paper was published Monday in the European Geophysical Union’s journal the Cryosphere.




Adding up the loss from glaciers, ice shelves, polar ice caps and sea ice, Dr. Slater and his colleagues determined that the rate of global melting has accelerated 65% since the 1990s.

The ice loss has grown from 0.8 trillion tons a year to 1.3 trillion tons a year, driven by rising atmospheric and ocean temperatures resulting from greenhouse gas emissions, the scientists said. Slightly more than half the ice loss occurred in the Northern Hemisphere.

Dr. Slater and a team of eight other scientists from the University of Edinburgh, University College London and a Edinburgh-based climate data company called Earth Wave Ltd. based their findings on 50 studies of ice loss, field measurements and data from 17 satellite missions.

The researchers employed a variety of techniques to reach their conclusions. These included the use of satellite altimeters and gravity sensors to measure the volume and mass of ice on the ground below. They also used satellite imagery of ice shelves and glaciers to detect changes over the years.

“It’s a reminder that dangerous climate change is already here, in this case in the form of melting ice, rising sea level and the inundation of our coastlines,” said

Michael Mann,

a Pennsylvania State University climatologist and author of “The New Climate War.” He wasn’t involved in the research.

The new research comes as the U.S. moved last week to rejoin the Paris Agreement, an international climate accord designed to limit greenhouse-gas emissions by 2050 and keep the rise in global temperature to no more than 3.6 degrees Fahrenheit (2 degrees Celsius), compared with preindustrial levels.

Former President

Trump

officially withdrew from the accord last year after vowing to do so for several years.

The average global temperature has risen about 2 degrees Fahrenheit since the 1880s, when systematic record-keeping began, according to the National Aeronautics and Space Administration.

Last week, NASA and the European Union’s Copernicus Climate Change Service announced that Earth’s average global surface temperature in 2020 tied 2016 as the warmest year on record.

Independent studies by the National Oceanic and Atmospheric Administration and a private climate-analysis group called Berkeley Earth found that 2020 was slightly colder than 2016 but warmer than every other year since 1850.

All told, the past seven years have been the warmest in the modern record, according to NASA.

“It’s important that we keep up with the big picture for ice because the story there is very dramatic, despite the possibility that one glacier here or there might be doing something different,” said climate scientist

Gavin Schmidt,

director of the NASA Goddard Institute for Space Studies in New York.

Write to Robert Lee Hotz at sciencejournal@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

China’s Love of TikTok-Style Apps Powers $5 Billion IPO

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Kuaishou Technology has its eyes on the world’s biggest initial public offering in more than a year, seeking to raise about $5 billion from a Hong Kong share sale as short-video and live-streaming apps surge in popularity in China.

Kuaishou—which competes with ByteDance Ltd., the rival Chinese company behind TikTok and its sister app Douyin—started taking investor orders Monday. With the offering, which could value it at more than $60 billion, Kuaishou is joining a string of tech companies from China that have listed in Hong Kong.

Kuaishou, which means “fast hand” in Chinese, is backed by Tencent Holdings Ltd. It was co-founded by Su Hua and Cheng Yixiao, software engineers who previously worked for Google China and Hewlett Packard , respectively.

Both Kuaishou and ByteDance have capitalized on growing demand from younger Chinese people to watch and record short videos on their smartphones. Its namesake short-video platform is the world’s second-largest, according to data cited in its prospectus, and there were 305 million average daily active users of its apps and mini-programs in China for the nine months as of September.

With a minimum deal size of $4.95 billion, the IPO would be the largest in the world since late 2019, when state-controlled Saudi Arabian Oil Co., commonly known as Aramco, raised $29.4 billion, Dealogic figures show.

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Business

China Overtakes U.S. as World’s Leading Destination for Foreign Direct Investment

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China overtook the U.S. as the world’s top destination for new foreign direct investment last year, as the Covid-19 pandemic amplifies an eastward shift in the center of gravity of the global economy.

New investments by overseas businesses into the U.S., which for decades held the No. 1 spot, fell 49% in 2020, according to U.N. figures released Sunday, as the country struggled to curb the spread of the new coronavirus and economic output slumped.

China, long ranked No. 2, saw direct investments by foreign companies climb 4%, the United Nations Conference on Trade and Development said. Beijing used strict lockdowns to largely contain Covid-19 after the disease first emerged in a central Chinese city, and China’s gross domestic product grew even as most other major economies contracted last year.

The 2020 investment numbers underline China’s move toward the center of a global economy long dominated by the U.S.—a shift accelerated during the pandemic as China has cemented its position as the world’s factory floor and expanded its share of global trade.

While China attracted more new inflows last year, the total stock of foreign investment in the U.S. remains much larger, reflecting the decades it has spent as the most attractive location for foreign businesses looking to expand outside their home markets.

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Business

Apple, Tesla and Facebook ready to report record sales in busiest week of earnings

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U.S. companies have barely managed to eke out positive earnings growth so far in this quarterly results season, but the big test arrives in the week ahead.

Nearly a quarter of the S&P 500
SPX,
-0.30%
is set to report results, with those companies representing 39% of the index by market value, according to calculations based on FactSet data. Given that the S&P 500 is weighted by market capitalization, this roster of companies will have an outsize impact on the profit trajectory for the index.

Earnings are expected to decline for the fourth consecutive quarter once all results are in for the latest period, but those companies that have reported thus far have been beating expectations in aggregate.

The FactSet consensus now models a 5% earnings decline for the index, compared with the 6.3% drop projected a week ago. If profit growth for the S&P 500 ultimately ends up positive, it would mark an end to the current earnings recession, which takes place when corporate profits drop for two or more consecutive quarters.

Apple Inc.
AAPL,
+1.61%
and Facebook Inc.
FB,
+0.60%
are among the highlights of next week’s slate, along with Tesla Inc.
TSLA,
+0.20%,
which will deliver results for the first time since it became a member of the S&P 500. All three high-profile companies are scheduled to report Wednesday afternoon and expected to have produced record revenue in the holiday quarter.

The holiday quarter is always crucial for Apple, which releases new iPhones in the fall. With a slightly later launch than usual this year due to the pandemic pushing sales into the period, Apple is widely expected to post its largest quarterly revenue total ever and its first ever total above $100 billion. The technology giant likely also continued to see benefits from remote-work and remote-schooling trends, which have driven strong iPad and Mac sales throughout the COVID-19 crisis.

Full preview: Get ready for Apple’s first $100 billion quarter in history

Facebook is also expected to post what should easily be a record quarter given strong digital advertising trends during the holiday period. Still, the company will face questions about user engagement and a decision to ban Donald Trump from the platform indefinitely over his role in inciting the violent riot at the U.S. Capitol. Bernstein analyst Mark Shmulik points to “continued usage fatigue” across social media as well as a “conversation skewed towards unmonetizable political events.”

Full preview: Facebook earnings still flourishing amid pandemic, economic slowdown and antitrust scrutiny

Tesla already disclosed delivery numbers for the full year that came in ahead of analyst expectations, and all eyes will be on the company’s outlook for 2021. RBC Capital Markets analyst Joseph Spak anticipates a delivery forecast of 825,000 to 875,000 million units for the full year, even though Chief Executive Elon Musk said on Tesla’s last earnings call that an analyst was “not far off” for expecting 840,000 to a million deliveries during 2021.

Full preview: Can Tesla’s sales growth match stock’s rise?

Here’s what else to watch for in the week ahead, which brings reports from 117 members of the S&P 500 and 13 Dow Jones Industrial Average
DJIA,
-0.57%
components.

Up in the air

Boeing Co.’s
BA,
-0.76%
journey remains turbulent even as the company’s 737-MAX jets were recertified after being grounded for almost two years. Though the company began deliveries of these aircraft, “the pace of delivering all 450 parked 737-MAX will be dictated by airline customers ability to absorb aircraft as well as air traffic demand,” according to Benchmark Company analyst Josh Sullivan.

Boeing’s Wednesday morning report will offer perspective on the company’s recovery expectations amid the pandemic, though Sullivan sees volatility ahead stemming from a recent equity offering and the impact of the COVID-19 crisis on airlines.

The fourth-quarter reports from U.S. airlines have been bleak so far, and American Airlines Group Inc.
AAL,
-0.06%
and Southwest Airlines Co.
LUV,
-0.80%
offer more on Thursday morning.

Can you hear me now?

Verizon Communications Inc.
VZ,
+0.35%
leads off a busy week of telecommunications earnings Tuesday morning, followed by AT&T Inc.
T,
+0.35%
Wednesday morning and Comcast Corp.
CMCSA,
-0.92%
Thursday morning.

For the wireless carriers, a key issue will be the impact of iPhone 12 promotions on recent results. Investors will also be looking for information about a recent wireless auction offering spectrum that will be crucial for 5G network deployments. Though the bids haven’t been made public yet, the auction drove record spending and AT&T and Verizon are both expected to have paid up handsomely to assert their standing. The question for investors is what impact these bids will have on the companies’ financial positioning.

Full preview: AT&T earnings to kick off a defining year for telecom giant

AT&T and Comcast have more media exposure than Verizon, and those two companies have been trying to contend with the new realities brought on by the pandemic. Both companies have made moves to emphasize streaming more with their film slates given theater closures, and the financial implications of these moves will be worth watching.

Paying up

The evolving situation with the pandemic is reflected perhaps no more clearly than in the results of Visa Inc.
V,
-1.52%,
Mastercard Inc.
MA,
-1.63%,
and American Express Co.
AXP,
-1.01%,
which have a pulse on the global consumer spending landscape. The companies should provide insight on a travel recovery toward the end of the year, as well as the impact of recent lockdowns.

Susquehanna analyst James Friedman wrote recently that his Mastercard revenue projection of $3.97 billion is slightly below the consensus view, though he also asked: “does anyone really care about Q4 2020?” Friedman is upbeat about mobile-payments and online-shopping dynamics that suggest “positive trends ahead” for Mastercard, which reports Thursday morning. Visa follows that afternoon, while American Express kicks of the week with its Tuesday morning report.

The chip saga continues

Advanced Micro Devices Inc.
AMD,
+1.38%
is poised to keep benefiting from Intel Corp.’s
INTC,
-9.29%
stumbles, which analysts expect to last for some time even as Intel prepares for a new, technology-oriented chief executive to take the helm.

“We have low confidence that Intel will be able to close that transistor gap quickly, and therefore expect it to continue to lose share for the foreseeable future,” Jefferies analyst Mark Lipacis wrote after Intel’s latest earnings report. AMD will show how that dynamic has played out on its side of the equation when it posts numbers Tuesday afternoon.

Full preview: If Intel gets its act together, can AMD maintain swollen valuation?

Other chip makers reporting in the week ahead include Texas Instruments Inc.
TXN,
-1.31%
on Tuesday afternoon; Xilinx Inc.
XLNX,
+1.26%,
which is in line to be acquired by AMD, on Wednesday afternoon report, when it will be joined by chip-equipment maker Lam Research Corp.
LRCX,
-0.06%
; and Western Digital Corp.
WDC,
-5.23%
on Thursday afternoon.

Busy week for the Dow

Among the 13 members of the Dow Jones Industrial Average
DJIA,
-0.57%
set to report this week are 3M Co
MMM,
-0.96%.
, Johnson & Johnson
JNJ,
+1.13%,
American Express, Verizon, and Microsoft Corp.
MSFT,
+0.44%,
all of which report Tuesday.

“Near term, we see the company’s COVID-19 vaccine readout as a key upcoming catalyst and believe efficacy in the 80%+ range would suggest a clear role for the product in the market,” J.P. Morgan analyst Chris Schott wrote of Johnson & Johnson.

Cowen & Co. analyst J. Derrick Wood sees tough comparisons for Microsoft especially in its Azure and server businesses, though he expects a more favorable situation going forward.

Full preview: SolarWinds hack may actually be a good thing for Microsoft

Wednesday brings results from Boeing and Apple, while Thursday features McDonald’s Corp.
MCD,
-0.07%,
Dow Inc.
DOW,
-0.10%,
and Visa. Honeywell International Inc.
HON,
-1.45%,
Chevron Corp.
CVX,
-0.30%,
and Caterpillar Inc.
CAT,
-0.13%
round out the week Friday morning.

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Sports

Comcast’s NBCUniversal to Shut Down Sports Cable Channel NBCSN by Year-End

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NBCUniversal is shutting down its sports cable channel NBCSN at the end of the year and migrating much of its programming to its sister general entertainment network USA, the company said.

The premium properties on NBCSN are the National Hockey League and Nascar auto racing, both of which will start to transition to USA Network this year. Some content will remain on both channels until NBCSN officially turns off the lights. NBCUniversal informed staffers of the plan Friday afternoon in a company memo.

“We’re absolutely committed more than ever to live sports as a company, and having such a huge platform like USA Network airing some of our key sports content is great for our partners, distributors, viewers and advertisers alike,” said NBC Sports Group Chairman Pete Bevacqua.

By putting high-profile sports on USA Network, NBCUniversal—a unit of Comcast Corp. —is hoping to solve two problems with one move: Get rid of an underperforming asset and boost an already powerful one. The Premier Soccer League will also have matches on USA.

NBCSN has struggled to compete against bigger rivals such as Walt Disney Co. ’s ESPN and Fox Corp.’s Fox Sports cable network. While it has a large national reach, its ratings pale in comparison to its competition. Fox Corp. and Wall Street Journal parent News Corp share common ownership.

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