Jan 31 (Reuters) – Intel Corp (INTC.O) said on Tuesday that it had made broad cuts to employee and executive pay, a week after the company issued a lower-than-expected sales forecast driven by a loss of market share to rivals and a PC market downturn.
The reductions will range from 5% of base pay for mid-level employees to as much as 25% for Chief Executive Pat Gelsinger, while the company’s hourly workforce’s pay will not be cut, said a person familiar with the matter who was not authorized to speak publicly.
Intel spokesperson Addy Burr said in a statement that the “changes are designed to impact our executive population more significantly and will help support the investments and overall workforce.”
Intel last week said its profit margins were plunging as the PC market cools after several years of growth during the pandemic.
Gelsinger also conceded that Intel has “stumbled” and lost market share to rivals such as Advanced Micro Devices Inc (AMD.O), which on Tuesday reported quarterly sales that were above Wall Street’s expectations.
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The person familiar with Intel’s pay cuts said that in addition to 5% decreases for mid-level employees, vice president level employees will see 10% reductions and the company’s top executives other than the CEO will get 15% cuts.
The company has also lowered its 401(k) matching program from 5% to 2.5% and suspended merit raises and quarterly performance bonuses, the person said.
Annual performance bonuses based Intel’s overall financial performance will remain but those bonuses have been smaller in recent years as the company has lost ground to rivals, the person added.
Reporting by Stephen Nellis in San Francisco; Editing by Christopher Cushing and Jamie Freed
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WASHINGTON, Jan 31 (Reuters) – Tesla Inc (TSLA.O) disclosed on Tuesday the U.S. Justice Department has sought documents related to its Full Self-Driving (FSD) and Autopilot driver-assistance systems as regulatory scrutiny intensifies.
The automaker said in a filing it “has received requests from the DOJ for documents related to Tesla’s Autopilot and FSD features.”
Reuters reported in October Tesla is under criminal investigation over claims that the company’s electric vehicles could drive themselves. Reuters said the U.S. Justice Department launched the probe in 2021 following more than a dozen crashes, some of them fatal, involving Autopilot.
Tesla did not respond to a request for comment.
Chief Executive Officer Elon Musk has championed the systems as innovations that will both improve road safety and position the company as a technology leader.
Regulators are examining if Autopilot’s design and claims about its capabilities provide users a false sense of security, leading to complacency behind the wheel with possibly fatal results.
Acting National Highway Traffic Safety Administration (NHTSA) chief Ann Carlson said this month the agency is “working really fast” on the Tesla Autopilot investigation it opened in August 2021 that she termed “very extensive.” In June, NHTSA upgraded to an engineering analysis its defect probe into 830,000 Tesla vehicles with Autopilot, a step that was necessary before the agency could demand a recall.
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Autopilot is designed to assist with steering, braking, speed and lane changes. The function currently requires active driver supervision and does not make the vehicle autonomous. Tesla separately sells the $15,000 full self-driving (FSD) software as an add-on that enables its vehicles to change lanes and park autonomously.
The automaker’s shares rose 2% in early trading.
The Wall Street Journal reported in October that the Securities and Exchange Commission is conducting a civil investigation into Tesla’s Autopilot statements, citing sources.
Tesla also forecast Tuesday capital expenditure between $7 billion and $9 billion in 2024 and 2025. The midpoint of that expectation is $1 billion higher than the $6.00 billion to $8.00 billion range provided for this year.
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Some of the spending will go toward a $3.6 billion expansion of its Nevada Gigafactory complex, where Tesla will mass produce its long-delayed Semi truck and build a plant for the 4680 cell that would be able to make enough batteries for 2 million light-duty vehicles annually.
Tesla said it recorded an impairment loss of $204 million on the bitcoin it holds, while booking a gain of $64 million from converting the token into fiat currency.
Cryptocurrencies such as bitcoin were hammered last year as rising interest rates and the collapse of major industry players such as crypto exchange FTX shook investor confidence.
Reporting by Akash Sriram in Bengaluru and David Shepardson; Editing by Sriraj Kalluvila and Bernadette Baum
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Jan 30 (Reuters) – The Biden administration has stopped approving licenses for U.S. companies to export most items to China’s Huawei, according to three people familiar with the matter.
Huawei has faced U.S. export restrictions around items for 5G and other technologies for several years, but officials in the U.S. Department of Commerce have granted licenses for some American firms to sell certain goods and technologies to the company. Qualcomm Inc (QCOM.O) in 2020 received permission to sell 4G smartphone chips to Huawei.
A Commerce Department spokesperson said officials “continually assess our policies and regulations” but do not comment on talks with specific companies. Huawei and Qualcomm declined to comment. Bloomberg and the Financial Times earlier reported the move.
One person familiar with the matter said U.S. officials are creating a new formal policy of denial for shipping items to Huawei that would include items below the 5G level, including 4G items, Wifi 6 and 7, artificial intelligence, and high-performance computing and cloud items.
Another person said the move was expected to reflect the Biden administration’s tightening of policy on Huawei over the past year. Licenses for 4G chips that could not be used for 5g, which might have been approved earlier, were being denied, the person said. Toward the end of the Trump administration and early in the Biden administration, officials had still granted licenses for items specific to 4G applications.
American officials placed Huawei on a trade blacklist in 2019 restricting most U.S. suppliers from shipping goods and technology to the company unless they were granted licenses. Officials continued to tighten the controls to cut off Huawei’s ability to buy or design the semiconductor chips that power most of its products.
But U.S. officials granted licenses that allowed Huawei to receive some products. For example, suppliers to Huawei got licenses worth $61 billion to sell to the telecoms equipment giant from April through November 2021.
In December, Huawei said its overall revenue was about $91.53 billion, down only slightly from 2021 when U.S. sanctions caused its sales to fall by nearly a third.
Reporting by Chavi Mehta in Bengaluru, Stephen Nellis in San Francisco, and Alexandra Alper and Karen Freifeld in Washington; Additional reporting by David Kirton in Shenzhen; Editing by Shailesh Kuber and Stephen Coates
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NEW YORK, Jan 28 (Reuters) – Lawyers for Sam Bankman-Fried on Saturday urged a U.S. judge not to ban the indicted FTX cryptocurrency executive from communicating with former colleagues as part of his bail, saying prosecutors “sandbagged” the process to put their client in the “worst possible light.”
The lawyers were responding to a Friday night request by federal prosecutors that Bankman-Fried not be allowed to talk with most employees of FTX or his Alameda Research hedge fund without lawyers present, or use the encrypted messaging apps Signal or Slack and potentially delete messages automatically.
Bankman-Fried, 30, has been free on $250 million bond since pleading not guilty to charges of fraud in the looting of billions of dollars from the now-bankrupt FTX.
Prosecutors said their request was in response to Bankman-Fried’s recent effort to contact a potential witness against him, the general counsel of an FTX affiliate, and was needed to prevent witness tampering and other obstruction of justice.
But in a letter to U.S. District Judge Lewis Kaplan in Manhattan, Bankman-Fried’s lawyers said prosecutors sprung the “overbroad” bail conditions without revealing that both sides had been discussing bail over the last week.
“Rather than wait for any response from the defense, the government sandbagged the process, filing this letter at 6:00 p.m. on Friday evening,” Bankman-Fried’s lawyers wrote. “The government apparently believes that a one-sided presentation – spun to put our client in the worst possible light – is the best way to get the outcome it seeks.”
Bankman-Fried’s lawyers also said their client’s efforts to contact the general counsel and John Ray, installed as FTX’s chief executive during the bankruptcy, were attempts to offer “assistance” and not to interfere.
A spokesman for U.S. Attorney Damian Williams in Manhattan declined to comment.
Bankman-Fried’s lawyers proposed that their client have access to some colleagues, including his therapist, but not be allowed to talk with Caroline Ellison and Zixiao “Gary” Wang, who have pleaded guilty and are cooperating with prosecutors.
They said a Signal ban isn’t necessary because Bankman-Fried is not using the auto-delete feature, and concern he might is “unfounded.”
The lawyers also asked to remove a bail condition preventing Bankman-Fried from accessing FTX, Alameda or cryptocurrency assets, saying there was “no evidence” he was responsible for earlier alleged unauthorized transactions.
In an order on Saturday, Kaplan gave prosecutors until Monday to address Bankman-Fried’s concerns.
“The court expects all counsel to abstain from pejorative characterizations of the actions and motives of their adversaries,” the judge added.
Reporting by Jonathan Stempel in New York; Editing by Andrea Ricci
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Jan 27 (Reuters) – Lucid Group’s (LCID.O) shares surged 43% on Friday, paring gains after doubling on market speculation that Saudi Arabia’s Public Investment Fund (PIF) wanted to buy out the electric vehicle maker.
The speculation originated from an “uncooked” alert attributed to deals website Betaville, using its term for market gossip. Lucid was the sixth-most traded stock on U.S. exchanges and third top mover on the Nasdaq mid-afternoon.
The PIF, the sovereign wealth fund that owns more than 65% of Newark, California-based Lucid, did not immediately respond to a request for comment. Lucid declined to comment.
In 2018, PIF was interested in taking Tesla private, but the deal did not materialize. Tesla chief Elon Musk is under trial for allegedly misleading investors with his tweet “funding secured” for taking the company private.
Lucid has been struggling to deliver its sleek Air luxury EVs after delivering 4,369 vehicles last year.
With Tesla’s price cuts, money-losing U.S. startups like Rivian Automotive Inc (RIVN.O) and Lucid will find it difficult to grab share in an industry competing for shrinking consumer wallets.
Lucid’s short interest as a percentage of its total float is around 37% versus only 3.5% for Tesla. Still, in dollar amounts, Lucid’s short interest totals $1.6 billion, versus $15.01 billion of Musk’s car maker.
Short sellers dealt a mark-to-market loss of $685 million with Lucid’s shares spike on Friday, analytics firm S3 Partners added. Losses, however, only materialize if short sellers close out their positions.
“With Lucid short sellers’ mark-to-market losses climbing, we should expect short covering to begin in earnest after today’s short-side blood bath,” said Ihor Dusaniwsky, managing director of S3, adding it has become a popular trading position.
One long-short fund manager who had no previous exposure to Lucid said it decided to short it as this person believes the spike was solely based on rumors.
Reporting by Carolina Mandl, in New York, Chavi Mehta in Bengaluru and Hyun Joo Jin; Editing by Maju Samuel and Josie Kao
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Jan 25 (Reuters) – Tesla Inc’s (TSLA.O) aggressive price cuts have ignited demand for its electric vehicles, Chief Executive Elon Musk said on Wednesday, playing down concerns that a weak economy would throttle buyers’ interest.
The company slightly beat Wall Street targets for fourth-quarter revenue and profit earlier on Wednesday despite a sharp decline in vehicle profit margins, and it sought to reassure investors that it can cut costs to cope with recession and as competition intensifies in the year ahead.
Deep price cuts this month have positioned Tesla as the initiator of a price war, but its forecast of a 37% rise in car volume for the year, to 1.8 million vehicles, was down from 2022’s pace.
However, Musk, who has missed his own ambitious sales targets for Tesla in recent years, said 2023 deliveries could hit 2 million vehicles, absent external disruption.
Tesla’s sales prospects, as it confronts a weaker economy, are a key focus for investors. The company said it maintains a long-term target of a compounded 50% annual rise in sales.
Musk addressed the issue at the start of a call with investors and analysts.
“These price changes really make a difference for the average consumer,” he said, adding that vehicle orders were roughly double production in January, leading the automaker to make small price increases for the Model Y SUV.
He said he expected a “pretty difficult recession this year,” but demand for Tesla vehicles “will be good despite probably a contraction in the automotive market as a whole.”
Shares rose 5.3% in extended trading.
CYBERTRUCK
The company is relying on older products and Musk said its Cybertruck, its next new electric pickup truck, would not begin volume production until next year. Reuters in November reported that the highly anticipated model would not be produced in volume until late this year.
Tesla will detail plans for a “next-generation vehicle platform” at its investor day in March.
Tesla’s vehicles “are all in desperate need of updates beyond software,” said Jessica Caldwell, Edmunds’ executive director of insights. She said Tesla will largely depend on the cheaper unit as well as Model 3 and Model Y to bring EVs to the masses.
“It’s unlikely that the Cybertruck will attempt to achieve mass-market volumes like the Detroit competitors.”
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[1/5] A Tesla supercharging station is seen in the early morning sun, in Kettleman City, California, U.S., January 25, 2023. REUTERS/Mike Blake
Reuters Graphics
Analysts said Tesla’s goal is bullish given the macroeconomic uncertainties.
“I think that you’re going to see some severe demand destruction across consumer spending and I think cars are going to take a big hit,” Edward Moya, senior market analyst at OANDA, said.
Tesla said it does not expect meaningful near-term volume growth from China, since its Shanghai factory was running near full capacity, rebounding from production challenges last year.
“Even a small cooling of demand will have significant implications for the bottom line,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdown.
Tesla said that its automotive gross margins, which dropped to a two-year low of 25.9% in the reported quarter, were pressured by the costs of ramping up battery production and new factories in Berlin and Texas, as well as higher raw material, commodity, logistics and warranty costs.
Tesla expected its automotive gross margin to remain above 20%.
Margins generally are expected to be under further pressure from its aggressive price cuts. Tesla, which had made a series of price increases since early 2021, reversed course and offered discounts in December in the United States, followed by price cuts of as much as 20% this month.
Analysts had said Tesla’s profitability gave it room to cut prices and pressure rivals. The company’s $9,000 in net profit per vehicle in the past quarter was more than seven times the comparable figure for Toyota Motor Corp (7203.T) in the third quarter. But it was down from almost $9,700 in the third quarter.
“In severe recessions, cash is king, big time,” Musk said, adding that Tesla is well positioned to cope with an economic downturn because of its $20 billion of cash.
The company’s stock posted its worst drop last year, hit by demand worries and Musk’s acquisition of Twitter, which fueled investor concerns he would be distracted from running Tesla.
Musk dismissed surveys that suggest his political comments on Twitter are damaging the Tesla brand. “I might not be popular” with some, he said, “but for the vast majority of people, my follow count speaks for itself.” He has 127 million followers.
Revenue was $24.32 billion for the three months ended Dec. 31, compared with analysts’ average estimate of $24.16 billion, according to IBES data from Refinitiv.
Tesla’s full-year earnings were bolstered by $1.78 billion in regulatory credits, up 21% from a year earlier.
Adjusted earnings per share of $1.19 topped the Wall Street analyst average of $1.13.
It ended the fourth quarter with 13 days’ worth of vehicles in inventory, more than four times higher than the start of 2022, and a record $12.8 billion in value.
Reporting by Hyunjoo Jin in San Francisco and Akash Sriram in Bengaluru, Additinoal reporting by Joe White and Ben Klayman in Detroit and Kevin Krolicki in Singapore
Writing by Peter Henderson
Editing by Sriraj Kalluvila, Matthew Lewis, Sam Holmes and David Goodman
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Jan 25 (Reuters) – Meta Platforms Inc (META.O) said Wednesday it will reinstate former U.S. President Donald Trump’s Facebook and Instagram accounts in the coming weeks, following a two-year suspension after the deadly Capitol Hill riot on January 6, 2021.
The restoration of his accounts could provide a boost to Trump, who announced in November he will make another run for the White House in 2024. He has 34 million followers on Facebook and 23 million on Instagram, platforms that are key vehicles for political outreach and fundraising.
His Twitter account was restored in November by new owner Elon Musk, though Trump has yet to post there.
Free speech advocates say it is appropriate for the public to have access to messaging from political candidates, but critics of Meta have accused the company of lax moderating policies.
Meta said in a blog post Wednesday it has “put new guardrails in place to deter repeat offenses.”
“In the event that Mr. Trump posts further violating content, the content will be removed and he will be suspended for between one month and two years, depending on the severity of the violation,” wrote Nick Clegg, Meta’s president of global affairs, in the blog post.
The decision, while widely expected, drew sharp rebukes from civil rights advocates. “Facebook has policies but they under-enforce them,” said Laura Murphy, an attorney who led a two-year long audit of Facebook concluding in 2020. “I worry about Facebook’s capacity to understand the real world harm that Trump poses: Facebook has been too slow to act.”
The Anti-Defamation League, the NAACP, Free Press and other groups also expressed concern Wednesday over Facebook’s ability to prevent any future attacks on the democratic process, with Trump still repeating his false claim that he won the 2020 presidential election.
Others said it was the right decision.
Jameel Jaffer, executive director at the Knight First Amendment Institute at Columbia University and a former ACLU official, defended the reinstatement. He had previously endorsed the company’s decision to suspend Trump’s account.
“The public has an interest in hearing directly from candidates for political office,” said Jaffer. “It’s better if the major social media platforms err on the side of leaving speech up, even if the speech is offensive or false, so that it can be addressed by other users and other institutions.”
OTHER REACTIVATIONS?
The decision to ban Trump was a polarizing one for Meta, the world’s biggest social media company, which prior to the Trump suspension had never blocked the account of a sitting head of state for violating its content rules.
The company indefinitely revoked Trump’s access to his Facebook and Instagram accounts after removing two of his posts during the Capitol Hill violence, including a video in which he reiterated his false claim of widespread voter fraud during the 2020 presidential election.
It then referred the case to its independent oversight board, which ruled that the suspension was justified but its indeterminate nature was not. In response, Meta said it would revisit the suspension two years after it began.
Meta’s blog post Wednesday suggested it may reactivate other suspended accounts, including those penalized for their involvement in civil unrest. The company said those reinstated accounts would be subject to more stringent review and penalties for violations.
Whether, and how, Trump will seize upon the opportunity to return to Facebook and Instagram is unclear.
Trump has not sent any new tweets since regaining his account on Twitter, saying he would prefer to stick with his own app Truth Social. But his campaign spokesman told Fox News Digital last week that being back on Facebook “will be an important tool for the 2024 campaign to reach voters.”
In a post on Truth Social, Trump responded to his reinstatement on Meta apps, saying: “Such a thing should never again happen to a sitting President, or anybody else who is not deserving of retribution!” He did not indicate if or when he would begin posting on Meta platforms again.
Representative Adam Schiff, a Democrat who previously chaired the House Intelligence Committee, criticized the decision to reinstate him.
“Trump incited an insurrection,” Schiff wrote on Twitter. “Giving him back access to a social media platform to spread his lies and demagoguery is dangerous.”
Reporting by Sheila Dang in Dallas and Katie Paul in Palo Alto; additional reporting by Greg Bensinger, David Shepardson, Kanishka Singh, Eva Mathews and Yuvraj Malik; Editing by Kenneth Li and Rosalba O’Brien
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Outage impacts Microsoft cloud platform Azure for hours
Multiple Microsoft services including Teams and Outlook hit
Microsoft says most customers now have service restored
Shares down 3.2%
Jan 25 (Reuters) – Microsoft Corp (MSFT.O) said on Wednesday it had recovered all of its cloud services after a networking outage took down its cloud platform Azure along with services such as Teams and Outlook used by millions around the globe.
Azure’s status page showed services were impacted in Americas, Europe, Asia Pacific, Middle East and Africa. Only services in China and its platform for governments were not hit.
By late morning Azure said most customers should have seen services resume after a full recovery of the Microsoft Wide Area Network (WAN).
An outage of Azure, which has 15 million corporate customers and over 500 million active users, according to Microsoft data, can impact multiple services and create a domino effect as almost all of the world’s largest companies use the platform.
Businesses have become increasingly dependent on online platforms after the pandemic caused a shift to more employees working from home.
Earlier, Microsoft said it had determined a network connectivity issue was occurring with devices across the Microsoft WAN. This impacts connectivity between clients on the internet to Azure, as well as connectivity between services in data centres, it said.
Microsoft later tweeted that it had rolled back a network change that it believed was causing the issue and was using “additional infrastructure to expedite the recovery process”.
Microsoft did not disclose the number of users affected by the disruption, but data from outage tracking website Downdetector showed thousands of incidents across continents.
The Downdetector site tracks outages by collating status reports from various sources including users.
Microsoft’s cloud business had helped shore up its fiscal second-quarter earnings on Tuesday. It forecast third-quarter revenue in its so-called intelligent cloud business would be $21.7 billion to $22 billion despite worries that the lucrative cloud segment for big tech companies could be hit hard as customers look to cut spending.
Azure’s share of the cloud computing market rose to 30% in 2022, trailing Amazon’s AWS, according to estimates from BofA Global Research.
[1/5] Microsoft Teams app is seen on the smartphone placed on the keyboard in this illustration taken, July 26, 2021. REUTERS/Dado Ruvic/Illustration
Microsoft joined other big tech companies in turning to layoffs to ride out the weaker economy, announcing last week it was cutting over 10,000 jobs.
Its shares were down 3.2% at $234.41.
Outages of Big Tech platforms are not uncommon as several companies ranging from Google (GOOGL.O) to Meta (META.O) have seen service disruptions. Azure, the second largest cloud services provider after Amazon (AMZN.O), faced outages last year.
During the outage, users faced problems in exchanging messages, joining calls or using any features of Teams application. Many users took to Twitter to share updates about the service disruption, with #MicrosoftTeams trending as a hashtag on the social media site.
Microsoft Teams, used by more than 280 million people globally, forms an integral part of daily operations for businesses and schools, which use the service to make calls, schedule meetings and organise their workflow.
There were few signs of significant disruption at major UK-based financial services firms, where multiple messaging applications offered by providers like Movius and Symphony are used alongside Microsoft Teams to connect bankers with clients, and office-based staff with colleagues working remotely.
Two London-based sources, working at two major global banks, said they hadn’t even noticed a problem.
Deutsche Boerse Group, which operates the Frankfurt Stock Exchange, said there had been no impact on trading. Frankfurt-based Commerzbank AG (CBKG.DE) said in a statement that Microsoft was investigating several issues impacting the bank.
Among the other services affected were Microsoft Exchange Online, SharePoint Online, OneDrive for Business, according to the company’s status page.
“I think there is a very big debate to be had on resiliency in the comms and cloud space and the critical applications,” Symphony Chief Executive Brad Levy said.
Reporting by Akriti Sharma in Bengaluru and Supantha Mukherjee in Stockholm, additional reporting by Sinead Cruise in London; Writing by Charlie Devereux, Editing by Elaine Hardcastle
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J&J falls on sales warning; GE down on weak profit view
Microsoft to report quarterly earnings after market close
Indexes: Dow up 0.18%, S&P 500 off 0.13%, Nasdaq down 0.25%
NEW YORK, Jan 24 (Reuters) – Wall Street was mixed on Tuesday as a raft of mixed earnings took some wind out of the sails of the recent rally.
The session got off to an rocky start, as a spate of NYSE-listed stocks were halted at the opening bell due to an apparent technical glitch, which caused initial price confusion and prompted an investigation by the U.S. Securities and Exchange Commission (SEC).
More than 80 stocks were affected by the glitch, which caused wide swings in opening prices in stocks, including Walmart Inc (WMT.N) and Nike Inc (NKE.N).
“It looks like NYSE got on it real early,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “Now they’re trying to determine what opening trade prices were.”
“Everyone involved in trade settlements is going to have a long day today.”
All three indexes sputtered near the starting line, with little apparent momentum in either direction.
Fourth quarter earnings season is in full swing, with 72 of the companies in the S&P 500 having reported. Of those, 65% have beaten consensus, just a hair below the 66% long-term average, according to Refinitiv.
On aggregate, analysts now expect S&P 500 earnings 2.9% below the year-ago quarter, down from the 1.6% year-on-year decline seen on Jan. 1, per Refinitiv.
“Earnings don’t make a bull or bear case for the market yet, but there’s an anxiousness among investors to be long when the Fed is done raising rates,” Sroka added. “We’re hitting a ramp in the earnings cycle, and by next week we’ll have a lot more information on the direction of the market.”
Economic data showed shallower-than-expected contraction in the manufacturing and services sector in the first weeks of the year, suggesting that the Federal Reserve’s restrictive interest rates are dampening demand.
The Dow Jones Industrial Average (.DJI) rose 60.69 points, or 0.18%, to 33,690.25, the S&P 500 (.SPX) lost 5.36 points, or 0.13%, to 4,014.45 and the Nasdaq Composite (.IXIC) dropped 28.39 points, or 0.25%, to 11,336.03.
Among the 11 major sectors of the S&P 500, industrials was down the most.
Intercontinental Exchange Inc (ICE.N), owner of the New York Stock Exchange, dropped 2.5% as SEC investigators searched for the cause of Tuesday’s opening bell confusion.
Alphabet Inc (GOOGL.O) shares dipped 1.8% after the Justice Department filed a lawsuit against Google for abusing its dominance of the digital advertising business.
Johnson & Johnson’s (JNJ.N) profit guidance came in above analyst expectations. Even so, its stock softened 0.3%.
Industrial conglomerates 3M Co (MMM.N) and General Electric Co (GE.N) both provided underwhelming forward guidance due to inflationary headwinds.
3M’s shares were off 5.1% while General Electric’s were modestly lower.
Aerospace/defense companies Lockheed Martin Corp (LMT.N) and Raytheon Technologies Corp (RTX.N) were a study in contrasts, with the former issuing a disappointing profit forecast and the latter beating estimates on solid travel demand.
Lockheed Martin and Raytheon were up 1.5% and 2.5%, respectively.
Railroad operator Union Pacific Corp missed profit estimates as labor shortages and severe weather delayed shipments. Its shares shed 2.7%.
Microsoft Corp (MSFT.O) is due to report after the bell.
Advancing issues outnumbered declining ones on the NYSE by a 1.16-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored decliners.
The S&P 500 posted 27 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 69 new highs and 21 new lows.
Reporting by Stephen Culp; Additional reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru; Editing by Aurora Ellis
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Jan 24 (Reuters) – Paranoid? The domino downfall of FTX and other crypto custodians is enough to make the most trusting investor grab their bitcoin and shove it under the mattress.
Indeed, holders big and small are taking “self-custody” of their funds, moving them from crypto exchanges and trading platforms to personal digital wallets.
In a sign of this shift among retail investors, the number of bitcoin held in smaller wallets – those with under 10 bitcoin – rose to 3.35 million as of Jan. 11, up 23% from the 2.72 million held a year ago, according to data from CoinMetrics.
As a percentage of total bitcoin supply, wallet addresses holding under 10 bitcoin now own 17.4%, up from 14.4% a year ago.
“A lot of this really depends on how frequently you’re trading,” said Joshua Peck, founder of hedge fund TrueCode Capital. “If you’re just going buy and hold for the next 10 years, then it’s probably worth making the investment and learning how to custody your assets really, really well.”
The stampede has been turbocharged by the FTX scandal and other crypto collapses, with large investors leading the way.
The 7-day average of daily movement of funds from centralized exchanges to personal wallets jumped to a six-month high of $1.3 billion in mid-November, at the time of FTX collapse, according to data from Chainalysis.
Big investors with transfers of above $100,000 were responsible for those flows, the data showed.
Reuters Graphics
WHERE ARE MY KEYS?
Not your keys, not your coins.
This mantra among early crypto enthusiasts, cautioning that access to your funds is paramount, regularly trended online last year as finance platforms dropped like flies.
Self-custody’s no walk in the park, though.
Wallets can range from “hot” ones connected to the internet or “cold” ones in offline hardware devices, although the latter typically don’t appeal to first-time investors, who often buy crypto on big exchanges.
The multi-level security can often be cumbersome and expensive process for a small-time investor, and there’s always the challenge of guarding keeping your encryption key – a string of data similar to a password – without losing or forgetting it.
Meanwhile, hardware wallets can fail, or be stolen.
“It’s very challenging, because you have to keep track of your keys, you have to back those keys up,” said Peck at TrueCode Capital, adding: “I’ll tell you it’s a very challenging prospect of doing self custody for a multi-million-dollar portfolio of crypto.”
Institutional investors are also turning to regulated custodians – specialized companies that can hold funds in cold storage – as many traditional finance firms would not legally be able to “self-custody” investors’ assets.
One such firm, BitGo, which provides custodian services custody for institutional investors and traders, said it saw a 25% increase in onboarding inquiries in December versus the month before from those looking to move their funds from exchanges, plus a 20% jump in assets under custody.
David Wells, CEO of Enclave Markets, said trading platforms were extremely cautious of the risks of storing the investors’ assets with a third party.
“A comment that stuck with me was ‘investors will forgive us for losing some of their money through our trading strategies, because that’s what they sign up for, what they’re not going to forgive us is for being poor custodians’.”
Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Pravin Char
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
