Tag Archives: slashing

Charles Schwab slashing jobs, offices to streamline operations – Fox Business

  1. Charles Schwab slashing jobs, offices to streamline operations Fox Business
  2. Charles Schwab plans to cut jobs, close offices as downturn hits Wall Street New York Post
  3. Charles Schwab to Save $500 Million Annually With Job Cuts, Office Closures Bloomberg
  4. Charles Schwab cutting jobs, sees cost savings of $500 million CNBC Television
  5. Charles Schwab Corp. discloses imminent, sweeping ‘TD Ameritrade’ layoffs, indirectly revealing it in new SEC filing that reports it will expense severance mostly in 2023 to gain ‘incremental’ $500 million synergy in 2024 and beyond RIABiz
  6. View Full Coverage on Google News

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Icahn Enterprises Shares Slump After Slashing Its Dividend Following Short-Seller Attack – Investopedia

  1. Icahn Enterprises Shares Slump After Slashing Its Dividend Following Short-Seller Attack Investopedia
  2. Icahn Enterprises L.P. (NASDAQ:IEP) Q2 2023 Earnings Call Transcript Yahoo Finance
  3. Famed activist investor Carl Icahn promises a ‘reset’ as his company’s shares plunge as much as 37% Fortune
  4. Icahn Enterprises Halves Quarterly Dividend Months After Short-Selling Report, Shares Plunge Barchart
  5. Embattled activist investor Carl Icahn’s firm plunges 30% after halving shareholders’ payouts Yahoo Canada Finance
  6. View Full Coverage on Google News

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Dow Jones Futures: Netflix Jumps On Subscribers, Google Slashing 12,000 Jobs After Market Rally Breaks Key Levels

Dow Jones futures edged higher early Friday, while S&P 500 futures rose modestly and Nasdaq futures climbed solidly. Netflix (NFLX) jumped on strong subscriber growth, with energy giant SLB (SLB) on tap. Google parent Alphabet (GOOGL) will cut 12,000 jobs, as big tech layoffs continue.




X



The stock market rally retreated again Thursday for a second straight day, with the major indexes testing or undercutting further key levels. The Dow Jones turned negative for 2023.

Fresh economic reports pointed to weaker economic activity, with one big exception: Initial jobless claims matched their lowest level since last April. The overall picture points to rising recession risks, but tight labor markets keeping the Federal Reserve hawkish.

Leading stocks are retreating to various degrees. Investors should wait to see if this pullback is temporary or something more serious.

MELI stock, Medpace Holdings (MEDP), Axon Enterprise (AXON), Vertex Pharmaceuticals (VRTX) and Exxon Mobil (XOM) are names that are holding up relatively well, so far.

MEDP stock and Axon Enterprise are on IBD Leaderboard. MercadoLibre and XOM stock are on the IBD 50. VRTX and SLB stock are on the IBD Big Cap 20. GOOGL stock is on the IBD Long-Term Leaders list.

MercadoLibre (MELI) was Thursday’s IBD Stock Of The Day. VRTX stock was Wednesday’s.

Dow Jones Futures Today

Dow Jones futures rose slightly vs. fair value. S&P 500 futures rose 0.3%. Nasdaq 100 futures climbed 0.8%. NFLX stock and Google are providing a boost to Nasdaq futures.

The 10-year Treasury yield rose 3 basis points to 3.43%.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Netflix Subscriber Growth Strong

Netflix earnings fell well short of Q4 views, while 2% revenue growth was in line. But Netflix subscribers swelled by 7.66 million, far more than 4.57 million expected. The streaming giant launched a lower-priced, ad-supported subscription option on Nov. 3. Netflix no longer provides subscriber guidance.

Meanwhile, Co-founder Reed Hastings stepped down as co-CEO to become executive chairman. Ted Sarandos will remain co-CEO, joined by Greg Peters, currently chief operating officer.

NFLX stock jumped in premarket trade. Shares fell 3.2% to 315.78 in Thursday’s regular session.

The Netflix subscriber growth is a positive sign for many other streaming plays, including Walt Disney (DIS), Paramount Global (PARA), Warner Bros Discovery (WBD) and Roku (ROKU). But DIS stock, Roku and the others had slim gains in extended action.

Google Job Cuts

Google parent Alphabet will lay off 12,000 workers, or 6% of staff. That’s according to a company memo. That follows Microsoft plans to cut 10,000 positions, or 4.5% of staff, earlier this week, with Amazon.com (AMZN), Salesforce.com (CRM) and many other tech giants reducing staff.

Late Thursday, Google said it would defer 20% of bonus payments to  at least March.

GOOGL stock climbed solidly in premarket trade.

Google stock rose 2.1% to 93.05 on Thursday, moving above the 50-day line for the first time since early December. The 50-day line has been a resistance area for the internet giant since late 2021. Still, GOOGL stock remains a long way from its 200-day line.

Eli Lilly Falls On FDA Alzheimer’s Rejection

The FDA rejected Eli Lilly’s accelerated approval submission of its Alzheimer’s treatment donanemab, seeking more data. Eli Lilly (LLY) fell modestly overnight. Biogen (BIIB), which recently released positive results on a similar Alzheimer’s drug, rose slightly before the opeb.

SLB Earnings Top

SLB earnings and revenue modestly topped quarterly views. SLB, formerly known as Schlumberger, said in the release that “we believe the macro backdrop and market fundamentals that underpin a strong multi-year upcycle for energy remain very compelling.” Oil&Gas-Field Services is rated No. 1 out of IBD’s 197 industry groups.

SLB stock climbed 2% early Thursday. Shares edged up 0.4% to 57.38 on Thursday, after coming down to the top of a recent base. But SLB iss slightly extended from a 53.97 handle buy point.


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Stock Market Rally

The stock market rally extended Wednesday’s losses on Thursday morning, rebounding somewhat in the afternoon but fading again into the close.

The Dow Jones Industrial Average fell 0.8%. in Thursday’s stock market trading, along with the S&P 500 index. The Nasdaq composite sank nearly 1%. The small-cap Russell 2000 declined 1%.

Solar stocks were big losers amid growing concerns about the residential solar market.

U.S. crude oil prices rose 1.1% to $80.33 a barrel, continuing to trade right around the $80 level. Gasoline futures climbed 2.9% to a two-month closing high.

The 10-year Treasury yield edged up 3 basis points to 3.4%.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) tumbled nearly 2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) sank 1.2%. The iShares Expanded Tech-Software Sector ETF (IGV) gave up 0.8%. The VanEck Vectors Semiconductor ETF (SMH) shed 2.45%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) skidded 3.2% and ARK Genomics ETF (ARKG) lost 3.3%.

SPDR S&P Metals & Mining ETF (XME) dipped 0.2%, along with U.S. Global Jets ETF (JETS). SPDR S&P Homebuilders ETF (XHB) sold off 3%. The Energy Select SPDR ETF (XLE) advanced 1.2%, with XOM stock the No. 1 holding and SLB also a major component. The Financial Select SPDR ETF (XLF) slid 1.2%. The Health Care Select Sector SPDR Fund (XLV) edged up 0.2%.


Five Best Chinese Stocks To Watch Now


Stocks To Watch

MELI stock edged up 0.4% to 1,072.74, pausing this week after a big run to start 2023. The Latin American e-commerce and payments giant is just below a 1,095.44 buy point, but really needs a handle to let the major averages catch up. MercadoLibre stock has held up very well but use some depth on any handle to shake out weak holders.

MEDP stock fell 1.5% to 228.84, near an official 235 buy point, according to MarketSmith analysis. Shares blasted above the 50-day line on Jan. 10, which offered an early entry. Now, Medpace stock could use a handle.

XOM stock tested its 50-day line but closed up 0.6% to 111.32. Shares are not far from a 114.76 buy point from a flat base.

VRTX stock edged down 0.6% to 307.94, still holding above its 50-day line. Shares popped above the 50-day line on Tuesday, offering an early entry at the time. Investors should wait to see if the biotech can move past Tuesday’s high of 312.35. The official flat-base buy point is 324.85.

AXON stock climbed 1% to 184.06, continuing to work on a handle on a cup base that would slightly lower the buy point from the current 193.95. Axon, which makes Tasers, body cameras and digital storage for law enforcement, cleared an early entry Jan. 9 as it moved above the 50-day line.

Market Rally Analysis

After Wednesday’s sharp downside reversal, the stock market rally showed further weakness. While the major indexes rebounded from their late morning lows, they faded into the close.

The S&P 500 index, after falling back below its 200-day line in the prior session, broke below its 50-day on Thursday. The Nasdaq also undercut its 50-day line, but bounced from its 21-day line. The Russell 2000, which nearly hit its late 2022 highs Wednesday morning, tested its 200-day on Thursday, but closed above that line.

The Dow Jones had its third straight significant decline, testing the low of the Jan. 6 follow-through day. Closing below the low of the FTD would be a bearish sign for a market rally, though the S&P 500 and Nasdaq are well above their Jan. 6 lows for now.

The indexes closing off lows offers hope that the current pullback is just a healthy pause, letting leading stocks forge handles and other new buying opportunities. But this could be more serious. Breaking below Thursday’s lows would be worrisome.

Some leading stocks, such as Axon, MercadoLibre and MEDP stock are holding up quite well. But others are suffering bigger losses. Deere (DE), which flashed an early entry Tuesday morning, undercut the low of its flat base on Thursday.


Time The Market With IBD’s ETF Market Strategy


What To Do Now

With the market rally retreating, many leading stocks are paring recent gains or even skidding below entries.

Investors should hold off on new buys for now. If anything, they want to cut modest exposure, if only because of the action in individual holdings.

Despite some recent losses, a large number of stocks have been setting up. One or two good days could significantly improve the market rally’s technical picture and offer many new buying opportunities. So have your watchlists ready.

But just because a stock is setting up doesn’t mean it will break out or flash a buy signal, or that any such move will work.

Earnings season looks like it’s going to hit the market with individual stocks and the overall uptrend at a tenuous time. Tread carefully.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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Sony slashing prices on PS5 games and accessories ahead of Black Friday

Sony switched on some very good holiday deals on digital video games for PS5 and PS4, as well as PS5 accessories, like the DualSense controller. I won’t list out all of the game deals available at the PlayStation Store, but here’s the best way to frame the significance of the game discounts: you can get three PS5-exclusive games, like, say, Ratchet & Clank: Rift Apart, Returnal, and Ghost of Tsushima: Director’s Cut, for less than $100 ($30 each). That’s a far cry from the original $70 cost for just one of these titles. Newer games, like Horizon Forbidden West and Gran Turismo 7, are a bargain at $39.89 each for the PS5 versions. And then there’s the Uncharted: Legacy of Thieves Collection, which costs just $19.89.

Onto the hardware, GameStop, Amazon, and Best Buy are selling every color of the DualSense controller for $49.99 ($20 off or more, depending on the color). This gamepad works great on PC, too, in case you’re just in the market for extras. I’m partial to the blue, pink, and purple models, but they all look great in their own way. Previous discounts knocked $10 off, so this is a pretty big deal.

Meta has launched a Black Friday bundle of its Quest 2 virtual reality headset that has 128GB and comes with two games. It costs $50 less than usual, priced at $349.99, yet it includes Beat Saber (a normal inclusion following its $100 price bump over the summer) and Resident Evil 4 VR games. You can nab this bundle at a number of retailers, including Amazon and Best Buy.

Unlike the earlier Chromecast models, this 2020 model includes an easy-to-use remote. The Chromecast supports 4K resolution with Dolby Vision HDR and Atmos sound if you have the right kind of speakers. If you’re trying to decide which set-top streamer to get, it’s a great value for the price. Read our review.

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Ryan Seacrest FINALLY sells Beverly Hills estate after slashing price to $51M

Emmy-winning producer Ryan Seacrest has finally sold his sprawling Beverly Hills mansion for $51 million, three years after first listing the property back for a whopping $85 million back in 2020.

Earlier this year, the 47-year-old media personality put the estate back on the market with a significantly reduced price tag – first to $74.5million price, then $69 million, to offload the pad.

This marks the longtime American Idol host’s last massive home in California, which was listed by realtor Kurt Rappaport and purchased from Ellen DeGeneres for $36.5 million in 2012, according to TMZ.

Mogul: Emmy-winning producer Ryan Seacrest has finally sold his sprawling Beverly Hills mansion for $51 million, three years after first listing the property back for a whopping $85 million back in 2020; pictured in April 2022

The sale comes after moving into a massive six-story townhouse in New York City to host Live With Kelly and Ryan.

The new owner’s main house, which the listing says is one of ‘Beverly Hills most private and secluded’ estates, is a massive 9,200 square feet and located on 2.87-acres of land.

There are four bedrooms and six bathrooms in the main dwelling which has a breezy beige and white feel. 

Beautiful home: Earlier this year, the 47-year-old media personality put the estate back on the market with a significantly reduced price of $69 million in a bid to offload the pad after moving into a massive six-story townhouse in New York City to host Live With Kelly and Ryan

Sprawling: This marks the longtime American Idol host’s last massive home in California, which was listed by realtor Kurt Rappaport

Moving on from the West Coast: Over the years, the Live With Kelly And Ryan star been spending more time in New York to co-host the popular morning show with Kelly Ripa

The living room is large and inviting, making it perfect for cocktail parties for the rich and famous.

There are breathtaking views of the city skyline that make Los Angeles look like an ideal city full of high rise buildings and lush trees as the home is high above the traffic and strip malls.

The kitchen is perfect for a master chef who needs to whip up a gourmet meal for 20. The feel is airy with high ceilings and there are all the best appliances with two ovens and plenty of ranges. 

Light and airy: There are four bedrooms and six bathrooms in the main dwelling which has a breezy beige and white feel

Have a seat: The living room is large and inviting, making it perfect for cocktail parties for the rich and famous

Sit down and enjoy meal for 10: The dining room is stand alone with high white ceilings and a modern light fixture

And a view from the room as well: There are several windows at the end of the dining room that look at the back yard

There is also a roomy movie theater that can easily seat 20 people comfortably to see the latest blockbuster.

And there is a full working gym that can fit every exercise equipment a proper gym has.

There is a yoga room as well that is spacious and has plenty of light. 

So much off to the side: There is a breakfast nook as well with a mini living room that can be seen from the kitchen

Another dining room! In addition to the main dining room there is another one which has a butler’s station and two windows

Sweet dreams in this dreamy space: The master bedroom is large with corner windows that look out to the back yard

Another angle: And there are also windows to the side where there is a chaise lounge that makes the room look relaxing

The walk in closet is as big as most bedrooms in Los Angeles if not bigger. The style is decidedly male with brown/beige wood shelves and walls as well as a golden beige carpet.

The wide middle island has a dresser drawer and an inlaid top.

Outside there is plenty of room for strolls and there are also a selection of sprawling wildlife ponds. 

And a pond just for fun: There is a large pond with lily pads and fountains that is surrounded by large river rocks

Another place to have an al fresco dinner: This dining space is surrounded by mature trees and a paver walkway

And there is a pizza oven near the seating area that can fit 25 people.

There are also three adjacent guest-homes, and while Ryan owned the property, he ought another one.

Will And Grace co-creator and Emmy Award-winner Max Mutchnick lived in the house before Ellen.

So much space: The swimming pool is perfect for laps or for sunbathing next to; there is also a cabana

In good company: Will And Grace co-creator and Emmy Award-winner Max Mutchnick lived in the house before Ellen

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Walmart lays off corporate employees after slashing forecast

Exterior view of a Walmart store on August 23, 2020 in North Bergen, New Jersey

VIEW press | Corbis News | Getty Images

Walmart confirmed on Wednesday that it has begun to lay off corporate employees about a week after the company slashed its profit outlook and warned consumers had pulled back on discretionary spending due to inflation.

In a statement to CNBC, the retail giant described the layoffs as a way to “better position the company for a strong future.”

Anne Hatfield, a Walmart spokesperson, declined to say how many workers will be affected and what divisions have experienced cuts. She said Walmart is still hiring in parts of its business that are growing, including supply chain, e-commerce, health and wellness and advertising sales. 

“Shoppers are changing. Customers are changing,” she said. “We are doing some restructuring to make sure we’re aligned.”

The corporate layoffs were first reported by the Wall Street Journal.

Walmart is the largest employer in the country with nearly 1.6 million workers in the U.S. The company, seen as a bellwether for the nation’s economy, spooked investors last week when it cut its outlook for quarterly and full-year profit guidance. That warning had a chilling effect on the retail sector, dragging down the stocks of companies including Macy’s and Amazon and sending up a flare about the health of the American consumer.

Walmart said at the time that as shoppers spent more on necessities like groceries and fuel, they were skipping over high-margin merchandise like apparel. It said it would have to cut prices to sell more of those items, especially as a glut of inventory piled up in its stores and at those of competitors like Target and Bed Bath and Beyond.

Later that same week, Best Buy cut its profit and sales forecast, saying it was seeing softening demand for consumer electronics — big-ticket, discretionary purchases that some shoppers can postpone.

This story is developing. Please check back for updates.

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Amazon slashing private-label selection amid weak sales: report

Amazon.com has been reassessing its private-label brand business and has discussed exiting that business completely as sales sag.

The company has drastically reduced the number of items it sells under its own brands, according to the Wall Street Journal.

As of 2020, Amazon’s private-label business offered 45 house brands accounting for 243,000 products.

Amazon warehouse. (Getty Images / Getty Images)

The business has been a source of controversy because it competes with other sellers on its platform. 

AMAZON PRIME DAY ARRIVES AS COMPANY SUFFERS SLOWDOWN IN ONLINE SALES GROWTH

The company has been criticized in recent years by lawmakers and others accusing Amazon of favoring its products at the expense of products sold by other vendors on its site.

Packages run along a conveyor belt at an Amazon logistics center. (Bodo Schackow/picture alliance via Getty Images / Getty Images)

The private-label team reportedly was told to slash the list of items and not to reorder many of them, according to people familiar.

AMAZON’S PRIME DAY SPARKS RIVAL SALES

Amazon’s private-label business started in 2009 with consumer electronics products such as cables and expanded into other categories. It now encompasses everything from vitamins and coffee to clothing and furniture.

An Amazon delivery truck. (Reuters/Carl Recine / Reuters Photos)

 A spokeswoman declined to comment on whether it has discussed the possibility, or to say how many private label items it is cutting.

AMAZON PRIME DAY SKIRTS INFLATION

Amazon just completed its biggest Prime Day event in history this week.

Ticker Security Last Change Change %
AMZN AMAZON.COM INC. 110.63 +0.23 +0.21%

The e-commerce giant said Prime members purchased more than 300 million items worldwide during this year’s two-day event, saving a record $1.7 billion. Customers spent over $3 billion on more than 100 million small business items. The company did not disclose the event’s total sales. 

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Amazon Has Been Slashing Private-Label Selection Amid Weak Sales

Amazon.com Inc.

AMZN 0.21%

has started drastically reducing the number of items it sells under its own brands, and the company has discussed the possibility of exiting the private-label business entirely to alleviate regulatory pressure, according to people familiar with the matter.

Amazon’s private-label business, with 243,000 products across 45 different house brands as of 2020, has been a source of controversy because it competes with other sellers on its platform. The decision to scale back the house brands resulted partly from disappointing sales for many of the items, the people said. It also came as the retail-and-technology giant has faced criticism in recent years from lawmakers and others that it sometimes gives advantages to its own brands at the expense of products sold by other vendors on its site.

Over the past six months, Amazon leadership instructed its private-label team to slash the list of items and not to reorder many of them, the people said. Executives discussed reducing its private-label assortment in the U.S. by well over half, one of them said.

Dave Clark initiated a review of Amazon’s private-label business.



Photo:

LINDSEY WASSON/REUTERS

The move was initiated after a review of the business by

Dave Clark,

a longtime Amazon executive who took over as head of its global consumer business in January 2021, the people said. Mr. Clark left the company last month. As a result of that review, Mr. Clark pushed the team to focus on bestselling commodity goods, along the lines of

Target Corp.’s

“Up & Up” or

Walmart Inc.’s

“Great Value” brands, rather than offer the extensive range of items Amazon currently does, the people said.

Amazon’s private-label business started in 2009 with consumer electronics products such as cables and expanded into other categories. It now encompasses everything from vitamins and coffee to clothing and furniture, with brand names such as Amazon Basics, Goodthreads and Solimo. However, Amazon has said that its house brands only account for about 1% of its retail sales. Amazon’s revenue last year, including other businesses such as its cloud-computing operation, totaled $469.8 billion.

The growing scale of its own offerings increasingly put Amazon in competition with other sellers on its platform, angering those sellers and resulting in antitrust scrutiny.

In 2020, The Wall Street Journal detailed how Amazon employees used data from its platform on individual third-party sellers to develop Amazon-branded products that compete with those sellers. The Journal also reported that year how some major brands were angered by products Amazon developed for its own labels that closely resembled their items, claiming the tech company copied their designs.

Amazon at the time said it was opening an internal investigation into how its private-label employees use seller data and if they were violating a company policy not to use such data. In testimony to Congress, then-CEO

Jeff Bezos

said “I can’t guarantee you that policy has never been violated.”

Amazon’s handling of such competition issues has been under scrutiny from a congressional committee investigating big tech companies and from regulators including the Securities and Exchange Commission, which the Journal reported in April was examining how the company disclosed some details of its business practices. The Federal Trade Commission has been investigating Amazon’s competitive practices.

Amazon Basics products on display at an Amazon 4-star store in Berkeley, Calif., in 2019.



Photo:

Cayce Clifford/Bloomberg News

Amazon has said its platform provides opportunity for nearly two million small- and medium-size businesses that sell there, and that it competes fairly and in a way that benefits its customers.

The scrutiny has prompted Amazon executives over the past year to consider fully exiting private brands, and how the company might go about that, the people said. The executives decided not to take any action until necessary, potentially as a concession they could offer if the FTC or another regulatory agency were to threaten or file litigation, some of the people said.

After a version of this article published online, Amazon said in a statement that: “We never seriously considered closing our private label business and we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today.”

A spokeswoman declined to comment on whether it has discussed the possibility, or to say how many private label items it is cutting.

U.S. lawmakers have proposed legislation aimed at big tech companies including Amazon that would bar dominant tech platforms from favoring their own products and services. On Thursday, Amazon proposed concessions to settle two antitrust cases against it in the European Union. Amazon promised not to use nonpublic data about sellers on its marketplace, after the EU accused Amazon of violating competition law by using nonpublic information from merchants to compete against them.

Mr. Bezos, who stepped down as CEO last year to be executive chairman, has long been a backer of the private-label business. In the past he has bristled at its relatively small sales, said some of the people.

A few years ago, Mr. Bezos gave the private-label team a goal to reach 10% of Amazon sales by 2022, the Journal has reported. The team responded by rapidly adding thousands of items to try to juice sales, said the people involved.

Many items ended up sitting in warehouses or needing to be marked down.

Under Mr. Clark, private-label teams did a profitability review of each private-label item, determining which ones didn’t sell enough to hit their profit threshold and targeting them to be phased out. The strategy now is to make fast-selling private-brand items, such as Amazon’s phone-charging cables, that it can place at warehouses all over the country to deliver quickly, some of the people said, instead of tens of thousands of items that sell in low quantities.

Write to Dana Mattioli at dana.mattioli@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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F.D.A. Aims to Cut Down on Smoking by Slashing Nicotine Levels in Cigarettes

The Food and Drug Administration is planning to require tobacco companies to slash the amount of nicotine in traditional cigarettes to make them less addictive and reduce the toll of smoking that claims 480,000 lives each year.

The proposal, which could take years to go into effect, would put the United States at the forefront of global antismoking efforts. Only one other nation, New Zealand, has advanced such a plan.

The headwinds are fierce. Tobacco companies have already indicated that any plan with significant reductions in nicotine would violate the law. And some conservative lawmakers might consider such a policy another example of government overreach, ammunition that could spill over into the midterm elections.

Few specifics were released on Tuesday, but according to a notice published on a U.S. government website, a proposed rule would be issued in May 2023 seeking public comment on establishing a maximum nicotine level in cigarettes and other products. “Because tobacco-related harms primarily result from addiction to products that repeatedly expose users to toxins, F.D.A. would take this action to reduce addictiveness to certain tobacco products, thus giving addicted users a greater ability to quit,” the notice said.

The F.D.A. declined to provide further details. But in a statement posted on its website, Dr. Robert M. Califf, the agency’s commissioner, said: “Lowering nicotine levels to minimally addictive or non-addictive levels would decrease the likelihood that future generations of young people become addicted to cigarettes and help more currently addicted smokers to quit.”

Similar plans have been discussed to lessen Americans’ addiction to tobacco products that coat the lungs with tar, release 7,000 chemicals and lead to cancer, heart disease and lung disease. Nicotine is also available in e-cigarettes, chews, patches and lozenges, but this proposal would not affect those products.

“This one rule could have the greatest impact on public health in the history of public health,” said Mitch Zeller, the recently retired F.D.A. tobacco center director. “That’s the scope and the magnitude we’re talking about here because tobacco use remains the leading cause of preventable disease and death.”

About 1,300 people die prematurely each day of smoking-related causes, according to the Centers for Disease Control and Prevention.

The obstacles to such a plan, though, are immense and could take years to overcome. Some plans that have been floated would require a 95 percent reduction in the amount of nicotine in cigarettes. Experts say that could toss U.S. smokers, an estimated 30 million people, into a state of nicotine withdrawal, which involves agitation, difficulty focusing and irritability and send others in search of alternatives such as e-cigarettes. Those deliver nicotine without most of the chemicals found in combustible cigarettes.

Experts said that determined smokers might seek to buy high-nicotine cigarettes on illegal markets or across the borders in Mexico and Canada.

The F.D.A. would likely have to overcome opposition from the tobacco industry, which has already begun pointing out the reasons the agency cannot upend an $80 billion market. Legal challenges could take years to resolve, and the agency may give the industry five or more years to make the changes.

The effort to lower nicotine levels follows a proposed rule announced in April that would ban menthol-flavored cigarettes, which are heavily favored by Black smokers. That proposal was also hailed as a potential landmark advance for public health and has already drawn tens of thousands of public comments. The F.D.A. is bound to review and address those comments before finalizing the rule.

Other major tobacco initiatives outlined in the landmark 2009 Tobacco Control Act have been slow to take shape. A lawsuit delayed a requirement for tobacco companies to put graphic warnings on cigarette packs. And the agency recently said it would take up to another year to finalize key decisions on which e-cigarettes might remain on the market.

A statement from the tobacco company Altria, the maker of Marlboro, offered a preview of arguments that opponents are expected to make against any rule that drastically slashes nicotine levels. “The focus should be less on taking products away from adult smokers and more on providing them a robust marketplace of reduced harm FDA-authorized smoke-free products,” the company said in a statement on Tuesday. “Today marks the start of a long-term process, which must be science-based and account for potentially serious unintended consequences.”

RAI Services, the parent company of RJ Reynolds, declined to comment on the announcement, but said: “Our belief is that tobacco harm reduction is the best way forward to reduce the health impacts of smoking.”

“Both an express and a de facto ban would have precisely the same effect — both would eviscerate Congress’s expressly stated purpose ‘to permit the sale of tobacco products to adults,’” according to a letter in 2018 from RAI Services to the F.D.A. about an earlier proposal.

Five years ago, Dr. Scott Gottlieb, the agency’s commissioner at the time, released a plan to cut nicotine levels in cigarettes to a minimally or non-addictive level. The proposal took shape in 2017 but did not lead to a formal rule during the Trump administration.

Among the 8,000 comments that poured in on that proposal, opposition emerged from retailers, wholesalers and tobacco companies. The Florida Association of Wholesale Distribution, a trade group, said it could result in “new demand for black market products, and result in increased trafficking, crime and other illegal activity.”

In 2018, RAI Services said that the F.D.A. had no evidence that the plan to cut nicotine levels would improve public health. The agency “would need to give tobacco manufacturers decades to comply” and figure out how to consistently grow low-nicotine tobacco, RAI said in the letter to the F.D.A. The Tobacco control law of 2009 gave the F.D.A. broad powers to regulate tobacco products with standards “appropriate for the protection of the public health,” although the law specifically outlawed a ban on cigarettes or the reduction of nicotine levels to zero.

Low-nicotine cigarettes are already available to consumers, albeit in a limited fashion. This spring, a New York plant biotech company, 22nd Century Group, began selling a reduced-nicotine cigarette that took 15 years and tens of millions of dollars to develop through the genetic manipulation of the tobacco plant. The company’s brand, VLN, contains 5 percent of the nicotine level of conventional cigarettes, according to James Mish, the company’s chief executive.

“This is not some far-off technology,” he said.

To earn its F.D.A. designation as a “reduced-risk” tobacco product, VLN was subjected to a raft of testing and clinical trials by regulators.

For now, the company is selling VLN at Circle K convenience stores in Chicago as part of a pilot program. Mr. Mish described sales as “modest” — retail prices are similar to premium brands like Marlboro Gold — but he said the F.D.A. proposal would most likely accelerate plans for a national rollout in the coming months.

Dr. Neal Benowitz, a professor of medicine at the University of California, San Francisco, who studies tobacco use and cessation, first proposed the idea of paring the nicotine out of cigarettes in 1994.

He said one key concern was whether smokers would puff harder, hold in smoke for a longer time or smoke more cigarettes to compensate for the lower nicotine level. After several studies, researchers discovered that the cigarette that prevented those behaviors was the lowest-nicotine version, one with about 95 percent less of the addictive chemical.

Dorothy K. Hatsukami, a professor of psychiatry at the University of Minnesota who studies the relationship between nicotine and smoking behavior, said a growing body of evidence suggested that a rapid and significant reduction of nicotine in cigarettes would provide greater public health benefits than the gradualist approach that some scientists had been promoting.

A 2018 study led by Dr. Hatsukami that followed the habits of 1,250 smokers found that participants who had been randomly assigned cigarettes with ultralow nicotine smoked less and exhibited fewer signs of dependency than those who had been given cigarettes with nicotine levels that were gradually reduced over the course of 20 weeks.

There were, however, downsides to slashing nicotine in one fell swoop: Participants dropped out of the study more frequently than those in the gradualist group, and they experienced more intense nicotine withdrawal. Some secretly turned to their regular, full-nicotine brands.

“The bottom line is we’ve known for decades that nicotine is what makes cigarettes so addictive, so if you reduce the nicotine, you make the experience of smoking less satisfying, and you increase the likelihood that people will try to quit,” she said.

A recent study offers a cautionary tale, though, on the degree of public health benefit that lawmakers can expect from tobacco-control policy. While there is no other nation to look to for experience with a low-nicotine cigarette mandate, there is for the menthol flavor ban.

Alex Liber, an assistant professor in the oncology department of Georgetown University’s School of Medicine who studies tobacco control policy, examined Poland’s experience with a menthol cigarette ban instituted in 2020.

The study he and others wrote found the ban did not lead to a decrease in overall cigarette sales, Mr. Liber said, probably because tobacco companies cut cigarette prices and also began selling flavor-infusion cards (for about a quarter each) that users can put in their cigarette pack to add back the flavor. (Some experts say any move to sell flavor-infusion cards in the U.S. would likely be illegal.)

“They know how to sell and make money and they will make more and more as long as they have wiggle room,” he said. “I just expect nothing less.”

Zolan Kanno-Youngs contributed reporting from Washington.

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Recession-fearing investors keep slashing fastest-growing cloud stocks

Nima Ghamsari, co-founder and chief executive officer of Blend, speaks during the Sooner Than You Think conference in New York on Oct. 16, 2018.

Alex Flynn | Bloomberg | Getty Images

Tech investors finally got some relief this past week, as the Nasdaq broke a seven-week losing streak, its worst stretch since the dot-com bust of 2001.

With five months in the books, 2022 has been a dark year for tech so far. Nobody knows that more than investors in cloud computing companies, which were among the darlings of the past five years, particularly during the stay-home days of the pandemic.

Paradoxically, growth remains robust and businesses are benefiting as economies re-open, but investors are selling anyway.

Bill.com, Blend Labs and SentinelOne are all still doubling their revenue year over year, at 179%, 124% and 120%, respectively. Yet the trio is worth around half of what they were at the end of 2021. The market has taken a sledgehammer to the entire basket.

Byron Deeter of Bessemer Venture Partners, an investor in cloud start-ups and one of the most vocal cloud-stock commentators observed earlier this month that the revenue multiples for the firm’s BVP Nasdaq Emerging Cloud Index had fallen back to where they were in 2017.

Profits, please

One of Deeter’s colleagues at Bessemer, Kent Bennett, isn’t sure why the fastest growers aren’t getting a pass on the slashing across the cloud category. But he has an idea.

“You can absolutely imagine in a moment like this it would go from revenue to, ‘Holy crap, get me out of this market,’ and then settle back into efficiency over time,” said Bennett, who sits on the board of restaurant software company Toast, which itself showed 90% growth in the first quarter. The stock is now down 52% year to date.

Toast disclosed declining revenue in 2020 as in-person restaurant visits lightened up, leading to less intense use of the company’s point-of-sale hardware and software. Then online ordering took off. Now people are increasingly dining in again, and Toast is seeing stronger demand for its Go mobile point-of-sale devices and QR codes that let people order and pay on their own phones, CEO Chris Comparato said in an interview with CNBC earlier this month.

Now that the company has recovered from its Covid stumble, investors are telling the company to “paint a better path toward profitability,” he said.

Management is telling all teams to be very diligent about their unit economics, but Comparato said he’s not ready to tell investors when exactly the company will break even, though.

What Toast did offer up is new information on margins. On Toast’s first-quarter earnings call earlier this month, finance chief Elena Gomez said guidance implies that its margin for earnings before interest, tax, depreciation and amortization in the second half of 2022 will be 2 points higher compared with the first half as the company works to bolster margins in the future.

“A few investors pushed, and they want a little bit more detail, certainly,” Comparato said. “But many of them are like, ‘Okay, this was a different tone, Chris, thank you. Chris, and Elena, please keep executing on this on this vision.'”

Other cloud companies are getting the message, too.

Data-analytics software maker Snowflake, which just ended a two-and-a-half-year streak of triple-digit revenue growth, is “not a growth-at-all-costs company,” CEO Frank Slootman declared on a call with analysts on Wednesday.

Zuora, which offers subscription-management software, is “focused on building a successful long-term company, delivering durable and profitable growth for years to come,” CEO Tien Tzuo said on his company’s quarterly analyst call. The company reported a $23.2 million net loss on $93.2 million in revenue, compared with a $17.7 million loss in the year-ago quarter.

Return to the ‘Rule of 40’

Even across the wider software industry, there is a re-acknowledgment of the old-fashioned view that software should make money. Splunk, whose software helps corporate security teams amass and analyze data, included a slide in its shareholder presentation called “Growing Profitability With Scale.” It charted the past few years of Splunk’s performance against the “Rule of 40,” a concept stipulating that a company’s revenue growth rate and profit margin should add up to 40%. Splunk called for 35%, the closest it will have been in three years, in the current fiscal year.

The emphasis on efficiency isn’t completely absent at Bill.com, whose software helps small and medium-sized businesses manage bills and invoices, but that’s easier to miss, because the revenue is growing so much faster than it is at most businesses. Even before the software selloff began in November, executives have touted the company’s healthy unit economics.

Blend Labs, which gives banks software they can draw on for mortgage applications and other processes, has been more active in repositioning itself for the new market reality, but it’s also one-seventeenth the size of Bill.com by market capitalization.

Despite enjoying hypergrowth, Blend cut its headcount by 10% in April. Nima Ghamsari, the company’s co-founder and head, told analysts the company was conducting a “comprehensive review to align our cash consumption and market realities near-term, while charting a clear course toward stronger product and operating margins that will lead to Blend having long-term profitability.”

SentinelOne, which sells cybersecurity software that detects and responds to threats, has been busy working on its cost structure. Co-Founder and CEO Tomer Weingarten turned analysts’ attention to its margin improvement during a March conference call, and he said the company aims to make more progress over the next year.

The comments, and the better-than-expected results in general, were well received by analysts. But many still lowered their price targets on SentinelOne stock anyway.

“While we are increasing our growth estimates on S, we reduce our PT to $48/share due entirely to a reduction in software multiples,” analysts at BTIG wrote to clients. In other words, the category was getting crushed, and SentinelOne was not exempt.

By that point the WisdomTree Cloud Computing Fund, an exchange-traded fund tracking Bessemer’s index, had tumbled 47% from its Nov. 9 high. The decline hasn’t stopped as the Federal Reserve has reiterated plans to fight inflation with higher interest rates.

That leaves cloud observers wondering when the downward pressure will ease up.

“It’s going to take us a couple months to get through this, said Jason Lemkin, founder of SaaStr, a company that holds cloud-centric conferences. He likens the decline to a hangover, after Covid got investors drunk on cloud stocks. “We haven’t got through our Bloody Marys and Aspirins,” he said.

Two of the biggest divas in the Covid cloud set, Shopify and Zoom Video Communications, saw the triple-digit growth go away last year as stores began to reopen and in-person social engagements began to return. If anything, that’s when investors should have grasped that the demand boom was largely in the past, Lemkin said.

“We’re reverting to the mean,” he said.

The reset might not be uniform, though. Cloud companies that adhere to the Rule of 40 are showing considerably healthier revenue multiples than those that don’t, said Mary D’Onofrio, another investor at Bessemer. Companies showing free cash flow margins above 10% are also enjoying higher multiples better these days, she said, with investors fearing a recession.

“The market has rotated to where cash is king,” D’Onofrio said.

— CNBC’s Ari Levy contributed to this report.

WATCH: Tech will see cutbacks in marketing budgets, slower recruiting and layoffs, says Bessemer’s Deeter

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