SHANGHAI, Dec 30 (Reuters) – Chinese tech giant Huawei Technologies Co Ltd (HWT.UL) estimated on Friday its 2022 revenue remained flat, suggesting that its sales decline due to U.S. sanctions had come to a halt.
Despite sales increasing a mere 0.02%, rotating chairman Eric Xu struck an upbeat tone in the company’s annual New Year’s letter, where he revealed the figure.
“U.S. restrictions are now our new normal, and we’re back to business as usual,” Xu wrote in the letter that was addressed to staff and released to media.
Revenue for the year is expected to be 636.9 billion yuan ($$91.53 billion), according to Xu.
That represents a tiny increase from 2021, when revenue hit 636.8 billion yuan, and marked a 30% year-on-year sales tumble as the U.S. sanctions on the company took effect.
Xu’s letter did not mention Huawei’s profitability. The company typically discloses its full annual results in the following year’s first quarter.
Revenue for 2022 still remained well below the company’s record of $122 billion in 2019. At the time the company was at its peak as the top Android smartphone vendor globally.
In 2019, the U.S. Trump administration imposed a trade ban on Huawei, citing national security concerns, which barred the company from using Alphabet Inc’s (GOOGL.O) Android for its new smartphones, among other critical U.S.-origin technologies.
The sanctions caused its handset device sales to plummet. It also lost access to critical components that barred it from designing its line of processors for smartphones under its HiSilicon chip division.
The company continues to generate revenue via its networking equipment division, which competes with Nokia (NOKIA.HE) and Ericsson (ERICb.ST). It also operates a cloud computing division.
The company began investing in the electric vehicle (EV) sector as well as green technologies around the time sanctions took effect.
“The macro environment may be rife with uncertainty, but what we can be certain about is that digitisation and decarbonisation are the way forward, and they’re where future opportunities lie,” said Xu in the letter.
Reporting by Josh Horwitz; Editing by Muralikumar Anantharaman
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It was Mother’s Day in May 2020, and an elderly woman lay dying in a Rhode Island nursing home. Her children couldn’t visit because of Covid, and as much as Adelina Ramos, her certified nursing assistant, longed to provide comfort from her bedside, she had to leave, even though she could see the woman was slipping away.
She had 25 other patients to care for that day.
It “really broke my heart,” Ramos said. “Families trust us to care for their loved ones. I can’t describe how painful it feels when we are forced to make those kinds of choices.”
She recounted the devastation wrought by the pandemic in a hearing on Wednesday before the House subcommittee on the coronavirus crisis.
Although Covid causes less panic now, particularly given the protection offered by updated vaccines and treatments, older Americans are still seeing their lives upended – and, tragically, ended entirely – by new outbreaks.
As the rest of the country seeks a new normal, millions of vulnerable Americans still remain at risk and in limbo. They’re now navigating a world ruptured by continued virus surges, shortages in the staff who care for them, and grief over more than a million people lost in two years.
Even so, the US Centers for Disease Control and Prevention (CDC) on Friday dropped its mask recommendations for hospitals and nursing homes, except during times of high transmission or while providers are caring for moderately and severely immune-compromised patients.
The move could make it even more difficult for those at risk, especially elderly people, to navigate health care settings and long-term care facilities safely.
Prioritizing older Americans during this time is “paramount”, said David Grabowski, a professor of health care policy at Harvard Medical School. “It’s the group overall during the pandemic that’s been hit the hardest, and yet in many ways … they’ve been an afterthought.”
People over the age of 50 account for more than 93% of Covid deaths in the US.
“We still are seeing hundreds of deaths a day, and they’re occurring disproportionately among older Americans,” said Theresa Andrasfay, a postdoctoral scholar of gerontology at the University of Southern California.
Coronavirus has dropped life expectancy rates for all Americans, but changes are greater among people of color. Photograph: Yuki Iwamura/Reuters
Life expectancy has dropped for all Americans, but changes are greater among communities of color, Andrasfay said. “The Native American population had by far the largest decline in life expectancy, followed by the Latino population and then the Black population.”
In February 2021, older Americans who caught Covid were 1,000 times more likely to die than teenagers, according to a McKinsey report that predicted the “arrival of safe, effective vaccines makes the pain of that isolation a time-bound problem”.
Yet for many, isolation and stress from the pandemic persist, especially as the protection offered by vaccines wanes without boosters and as new variants emerge.
Relatively high rates of vaccinations among older people helped mortality rates drop slightly in this age group from 2020 to 2021. But the Omicron variant, which is more transmissible and better at evading immunity, brought near-record surges in elderly mortality.
A total of 95% of Americans above the age of 65 have gotten at least one Covid shot. But from there, the coverage begins to drop precipitously. Among those who were fully vaccinated in this age group, 70.8% got their first boosters. But only 40% of that group went on to get second boosters.
That means a total of 14.9 million older Americans are up-to-date on vaccinations, compared with the 57.5 million who were willing to get the first shot. Booster rates are even lower among Americans aged 50 to 64.
This could have dire implications for their safety moving forward, even as remaining precautions disappear across the country.
In nursing homes, only 57% of residents and 43% of staff are up to date on their vaccines. Rates are lowest in Arizona, Florida, Nevada and Texas.
In nursing homes, 57% of residents and 43% of staff are up to date on their vaccines. Photograph: Yuki Iwamura/Reuters
Fewer than 1% of Americans live in long-term care facilities, yet about one-fifth of all deaths from Covid-19 are related to nursing homes, with more than 200,000 residents and workers dying from the coronavirus since the start of the pandemic.
“Residents, their families and their caregivers have long known that US nursing home care is broken, yet this issue has gone largely unnoticed in the broader population. Covid changed this,” Grabowski testified at the hearing.
The House coronavirus subcommittee outlined the “dire” conditions of for-profit nursing homes during the early months of the pandemic, revealing widespread neglect that led to health deterioration and death.
Nurses and nursing aides cared for as many as 38 patients during their shifts. In April 2020, when only one nurse was covering two entire floors at a facility in Nevada, one resident waited four hours for a sip of water and another resident who vomited on herself was not cleaned for at least two days, according to the House report.
Yet at least 32 states have passed legislation making it harder for residents or their families to sue long-term care facilities for such treatment.
Some of the worker shortages were because of Covid cases among staff, which could have been prevented in part with better precautions. But one nursing home worker alleged that the corporations wanted to save money by not hiring additional workers despite the need for them.
Long-term care facilities were plagued with staffing shortages and low morale before the pandemic started, and Covid sharply amplified the cracks in how America cares for its senior population.
“Nursing homes are already understaffed, under-resourced. So when you’re putting a profit motive on nursing homes to squeeze out a couple extra dollars from these communities, it’s going to compromise care,” said Ashwin Kotwal, assistant professor of geriatrics at the University of California, San Francisco, School of Medicine.
But it’s not only nursing home residents who have been affected by Covid – and damage from the pandemic wasn’t limited to the virus itself.
The pandemic also caused stress and loneliness, which affects both mental and physical health. In 2019, about 1.6 million adults above the age of 70 were homebound, but that number more than doubled to 4.2 million in 2020. Being homebound increases the risks of sickness and death.
Age was the greatest risk factor for severe outcomes from Covid, but loneliness compounded poor health, according to a Commonwealth Fund survey conducted between March and June 2021. Pandemic disruptions limited and delayed health care, and it amplified “considerable” social and economic challenges.
The pandemic caused stress and loneliness, affecting mental and physical health. Photograph: Eric Risberg/AP
“Compared to their counterparts in the other survey countries, older adults in the US have suffered the most economically from the Covid-19 pandemic, with more losing a job or using up all or most of their savings,” the report said. Economic hardships for older Americans were four to six times greater than in other countries surveyed, and they were more likely among Latino and Black adults than among white adults in the US.
Disruption and isolation are likely to continue for those who need to continue taking Covid precautions.
“What’s concerning going forward, as there’s more focus on individual responsibility, is that it makes it more difficult for people who are vulnerable, either because of underlying conditions or because of their age, to feel safe taking part in necessary activities,” Andrasfay said.
Those activities can include taking public transportation, medical visits, returning to work or seeing family and friends.
Weighing these risks is a fraught and exhausting process, Kotwal said.
“It can make even the most simple of social activities something that people really stress over and think about a lot. I’ve seen a lot of anxiety around how people make these decisions to do what are really normal activities, like going to grab coffee with their child or hanging out with their grandchildren.”
Keeping up-to-date on vaccines is an important part of protecting those most at risk, he said. “We can bring this into a place of community – being responsible, trying to protect others – rather than only looking at this from the individual safety lens.”
Vaccination clinics and vaccine mandates in health systems and long-term care facilities were “really effective,” Grabowski said. About 87% of residents and staff in nursing homes were vaccinated because of the clinics and mandates – but those requirements have not been updated to include boosters.
An expanded federal mandate for staff to receive booster doses would help, he said. And more vaccine clinics for facilities, as well as campaigns to reach homebound adults and others facing access problems, could also increase booster rates and protect older adults this winter.
“This is too important,” Grabowski said. “By all means, let’s make this as easy as possible.”
An aerial view shows containers and cargo vessels at the Qingdao port in Shandong province, China May 9, 2022. Picture taken with a drone. China Daily via REUTERS
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China’s export growth in single digits, misses forecast
Imports lag, reflecting weak demand
Trade balance narrows from July’s record
Booming trade momentum expected to weaken
BEIJING, Sept 7 (Reuters) – China’s exports and imports lost momentum in August with growth significantly missing forecasts as surging inflation crippled overseas demand and fresh COVID curbs and heatwaves disrupted output, reviving downside risks for the shaky economy.
Exports rose 7.1% in August from a year earlier, slowing from an 18.0% gain in July and marking the first slowdown since April, official data showed on Wednesday, well below analysts’ expectations for a 12.8% increase.
Outbound shipments have outperformed other economic drivers this year but now face growing challenges as rising interest rates, inflation and geopolitical tensions pummel external demand.
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The disappointing August trade figures rattled global financial markets, which have already been buckling under a surging dollar and the prospect of much higher U.S. interest rates. read more
“It seems the export softness arrived in earlier than expected, as recent shipping data suggests that demand from the U.S. and EU has already slowed as shipping prices have been falling significantly,” said Zhou Hao, chief economist at Guotai Junan International.
He expects pricing effects will continue to disrupt trade and said import growth in real terms had already turned negative since the late first quarter, suggesting more headwinds for demand.
Responding to the disappointing data, China’s yuan extended losses, losing 0.36% to 6.98 per dollar and approaching the psychologically crucial 7 mark. read more
Despite languishing around two-year lows, the weakening yuan has failed to give China’s exports the competitive edge they need to make up for softening external demand.
The slower growth is also in part due to unflattering comparisons with strong exports last year, but also worsened by more COVID restrictions as infections spiked and heatwaves disrupted factory output in southwestern areas.
Export hub Yiwu imposed a three-day lockdown in early August to contain a COVID outbreak, disrupting local shipments and delivery of Christmas goods amid the peak season.
Bucking the broader trend, auto exports remained robust in August, jumping 47% from a year earlier, according to Reuters calculations based on customs data.
In the first eight months, China exported 1.9 million units of cars, up 44.5%, supported by strong demand for new energy vehicles in Southeast Asia.
IMPORT WORRIES
Weak domestic demand, weighed by the worst heatwaves in decades, a property crisis and sluggish consumption, crippled imports.
Inbound shipments rose just 0.3% in August from 2.3% in the month prior, well below a forecast 1.1% increase. Both imports and exports grew at their slowest pace in four months.
China’s imports of crude oil, iron ore and soybeans all fell, as the strict COVID curbs and extreme heat disrupted domestic output.
Baking temperatures, however, led to the fastest increase in coal imports this year as power generators scrambled for additional fuel to meet surging electricity demand.
“The remarkably slower imports growth indicated the sector has faced a wave of headwinds in recent months, which is not expected to ease anytime soon,” said Bruce Pang, a chief economist at Jones Lang Lasalle.
“COVID outbreaks disrupted supply chains and demand, while the power rationing measures hurt production. The broad dollar strength also brings pressure on imports.”
This left a narrower trade surplus of $79.39 billion, compared with a record $101.26 billion surplus in July, marking the lowest since May when Shanghai was emerging from lockdowns.
Chinese policymakers this week signalled a renewed sense of urgency to shore up the flagging economy, saying action was critical in the quarter as data points to a further loss of economic momentum. read more
The central bank on Monday said it would cut the amount of foreign exchange reserves financial institutions must hold, a move aimed at slowing the yuan’s recent declines. read more
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Reporting by Ellen Zhang and Ryan Woo; Editing by Sam Holmes
Our Standards: The Thomson Reuters Trust Principles.
A National Institutes of Health (NIH)-sponsored study found that COVID-19 vaccine-induced antibody response to the Omicron subvariants wanes significantly over time.
The immune responses to several Omicron subvariants “waned substantially” among “all groups” of individuals who received either the Pfizer, Moderna, and Johnson & Johnson vaccine as well as a booster dose, or combinations of different vaccines. Neutralizing antibody levels dropped by up to five-fold three months after receiving the booster shot, the NIH said in a news release of the study earlier this week.
All vaccine combinations provided high levels of neutralizing antibodies to the initial Omicron BA.1 sub-lineage that was first reported in the fall of 2021. However, those who received the Johnson & Johnson vaccine and booster saw low antibody levels to BA.1, according to the NIH.
But when the Omicron subvariants BA.2.12.1 as well as BA.4/BA.5 emerged earlier this year, all vaccines performed poorly after three months as compared with the BA.1 strain, the researchers said. The vaccines provided even less protection against the subvariants than their ancestral COVID-19 strain known as D614G, they found.
“Omicron sub-lineages BA.2.12.1 and BA.4/BA.5 were 1.5 and 2.5 times less susceptible to neutralization, respectively, compared to the BA.1 sub-lineage, and 7.5 and 12.4 times less susceptible relative to the ancestral D614G strain,” NIH wrote, noting that the BA.5 subvariant is currently is the dominant variant across the United States.
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The researchers, who published their findings in Cell Reports Medicine on July 19 and have received virtually no mainstream news coverage so far, said they administered COVID-19 vaccines to adults who previously got one of the three vaccines that were available to people at the time. They evaluated six separate groups with around 50 participants per vaccine group who either received the initial vaccine regimen and the same booster or who mixed and matched vaccines and boosters.
Ultimately, they concluded that the “immune response to Omicron sub-lineages show reduced susceptibility to these rapidly emerging subvariants,” according to the NIH release. “The data could be used to inform decisions regarding future vaccine schedule recommendations, including the need for variant vaccine boosting.”
Between 29 days and 91 days after getting the booster, neutralizing antibodies among all groups decreased “2.4- to 5.3-fold for Omicron and no more than 2.4-fold for the (ancestral) D614G variant,” the researchers wrote.
Earlier this month, the Centers for Disease Control and Prevention released a study that found the efficacy of vaccine booster doses dropped under 50 percent after four months against COVID-19 subvariants. Both Moderna’s and Pfizer’s mRNA vaccines provided just 51 percent protection against COVID-19-linked urgent care encounters, emergency room visits, and hospitalizations as the Omicron BA.2 and BA.2.12.1 variants were spreading across the United States, it found.
After about 150 days, the efficacy of the vaccines dropped to 12 percent, the study said.
COVID-19 is caused by the CCP (Chinese Communist Party) virus, sometimes known as SARS-CoV-2.
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Jack Phillips is a breaking news reporter at The Epoch Times based in New York.
A new research study published in The Lancet Respiratory Medicine shows that protection against the omicron variant deteriorates over time – even after a third vaccine dose.
The study, published Tuesday in the New England Journal of Medicine, looked at the health records of more than 1.25 million vaccinated people in Israel who were 60 or older from January through March 2022, a time when the Omicron coronavirus variant was the dominant strain.
The rate of severe Covid-19 infection in the fourth week after a fourth dose of vaccine was lower than in people who got only three doses by a factor of 3.5.
However, protection against severe illness did not seem to wane in the six weeks after the fourth shot, though the study period wasn’t long enough to determine exactly how long this protection lasts.
The rate of confirmed infection in the fourth week after the fourth dose was lower than in the three-dose group by a factor of 2. There seemed to be maximum protection against Omicron in the fourth week after vaccination, but the rate ratio fell to 1.1 by the eighth week, suggesting that “protection against confirmed infection wanes quickly,” the study says.
The protection provided by any vaccine naturally wanes, but a vaccine primes the immune system to make protective antibodies if it encounters threats later on.
The currently available Covid-19 vaccines were made to protect against the original strain of the virus. Omicron is significantly different, and therefore, vaccines have lost some of their effectiveness. Israel and the US are among the governments that have suggested fourth vaccine shots for certain people who are at high risk of severe illness, like those who are older.
Last week, the FDA expanded its emergency use authorization to allow adults 50 and older to get a second booster shot as early as four months after their first booster of a Pfizer or Moderna vaccine. People with certain immune deficiencies can also get a fourth dose in the US. But the debate continues about whether one is needed for the general population.
The US Food and Drug Administration’s independent vaccine committee meets Wednesday to discuss what the country’s booster strategy should be going forward. Some experts have suggested that the Covid-19 vaccine could become an annual shot like the flu vaccine.
There are limits to what the new research can say about the need for a fourth vaccine dose. It compares only protection provided by third and fourth doses, so it doesn’t include unvaccinated people for comparison. It also doesn’t add to the debate over whether people under the age of 60 may need a fourth dose. Previous research in Israel showed that a fourth dose didn’t do much in younger healthy populations, at least in terms of protection from infection.
For confirmed infection, “a fourth dose appears to provide only short-term protection and a modest absolute benefit,” the researchers wrote. But when it comes to severe infection, the fourth shot seems to help.
“Overall, these analyses provide evidence for the effectiveness of a fourth vaccine dose against severe illness caused by Omicron variant as compared with a third dose administered more than four months later,” the study says.
Even with this news, it is unclear how many eligible people will get a fourth Covid-19 shot. About 66% of the US population has gotten at least one Covid-19 vaccine, but only 30% of people are fully vaccinated with a booster dose, according to the US Centers for Disease Control and Prevention.
The data are broadly consistent with real-world effectiveness data for adults showing that protection from two doses diminishes over time, but that in people eligible for a booster, a third dose revs the immune system back up to robust levels. In children, as with adults, vaccine effectiveness faded during omicron and generally decreases relative to the time since vaccination.
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The research provides an evolving picture of the vaccine’s performance in children, and some experts said it suggested a need to consider increasing the size of the dose 5-to-11-year-olds receive.
Pediatric infections and hospitalizations reached their highest rate in January, when omicron swept the country. Its higher transmissibility meant more people — including the vaccinated — were likely to be infected. Despite this increase in infections and hospitalization, data show coronavirus vaccines continued to protect 5-to-17-year-olds against severe illness, hospitalization and death.
The Pfizer-BioNTech vaccine is the only shot authorized for children 5 to 11 in the United States. That group receives a 10-microgram dose while those 12 and older get 30 micrograms.
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“We knew from the adult data that’s been published previously that the vaccine provides less protection versus omicron than it did against delta, and I think we’re continuing to see that pattern in children,” said Ruth Link-Gelles, who leads CDC’s team on effectiveness of coronavirus vaccines.
“We also know from the adult data again that vaccine provides much better protection against severe disease. And we are seeing, I think, that same pattern in children,” Link-Gelles said.
Experts said the message for parents is that even if vaccine efficacy declines over time, “it is still better than being unvaccinated, and it is better for you to vaccinate your children,” said John P. Moore, a professor of microbiology and immunology at Weill Cornell Medicine.
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Link-Gelles, who has a daughter not yet eligible for vaccination, said she found the data reassuring.
“Every time there’s a new variant, we worry that the vaccine will provide no protection at all,” Link-Gelles said. “And that is certainly not the case here. … The infection cases are less concerning to me as a parent. What I want to avoid are midnight emergency room visits, hospitalizations and, obviously, death. And I think that these data do show that we’re continuing to see protection against those outcomes.”
Jesse Hackell, a pediatrician in Rockland County, N.Y., said his advice to parents will remain the same.
“The vaccine is extraordinarily safe, and it protects against the rare but serious illnesses,” Hackell said in an email. “There is no downside to giving it, even if the efficacy is less than hoped — one is STILL better off having had the vaccine than not, even if the benefit is smaller.”
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The latest data on efficacy in 5-to-11-year-olds come after developments involving shots for children younger than 5. The Food and Drug Administration in January said it would review data for a two-dose regimen in hopes of swift authorization and then add a third dose after data on a booster became available.
But the agency reversed course in mid-February, after receiving disappointing data on two doses. It announced it would not make a decision on whether to authorize a coronavirus vaccine for children younger than 5 until data on a third dose becomes available. That means the vaccine is unlikely to be available until at least mid-April.
Some experts said the recent findings raise additional questions about the dose needed for younger children. Data from New York state “strongly suggest that the lower vaccine dose given to 5-to-11-year-olds is not inducing the strong protective immune responses we see in older children and adults,” said Albert Ko, an infectious-diseases physician and epidemiologist at the Yale University School of Public Health.
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The data “doesn’t feel settled,” said Natalie E. Dean, an Emory University biostatistician. “This may well be a three-dose vaccine. … We’re still piecing this together. It’s going to take a few more studies.”
The CDC released two analyses Tuesday. One report evaluated the protection afforded by the Pfizer-BioNTech vaccine against emergency department and urgent care visits in 10 states from April 2021 through January. It showed the vaccine was protective against hospitalization and death in 5-to-17-year-olds, even after omicron emerged.
— After two doses, the vaccine initially was 92 percent to 94 percent effective for 12-to-17-year-olds against hospitalization during the delta and omicron waves. But protection against hospitalization faded more than five months after getting the second shot, with effectiveness falling to a range of 73 percent to 88 percent.
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— Children 5 to 11 years old were not eligible for vaccine until early November 2021 so did not become fully vaccinated until mid-December, as omicron surged. Twenty-three vaccinated children were hospitalized with covid-like symptoms during the study period, but only two were infected. By comparison, 262 unvaccinated children were hospitalized, and 59 were infected.
— Two doses of the vaccine were about 51 percent effective in preventing 5-to-11-year-olds from going to emergency departments and urgent care centers as omicron spread, the CDC study found. For fully vaccinated 12-to-17-year-olds, protection ranged between 34 percentfor older teens and 45 percent for younger adolescents for the same period. For older teens who received boosters, protection rose to 81 percent.
In a separate CDC analysis of surveillance data from 29 jurisdictions,vaccinated children and adolescents were less likely to be infected than those who were unvaccinated, despite a decline in protection against infection during the omicron surge. Unvaccinated 5-to-11-year-olds were 1.3 times more likely to get infected during January, compared with those who were vaccinated; unvaccinated 12-to-17-year-olds were 1.5 times more likely to get infected.
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That analysis identified nine covid deaths in vaccinated children 5 to 17 years old between April 4, 2021, and Jan. 1, compared with 121 deaths among unvaccinated children.
New York state data released Monday, which is about one-tenth the size of the population analyzed in the CDC surveillance data, showed a rapid and steep drop in vaccines preventing infection in 5-to-11-year-olds compared with adolescents.
The New York study analyzed health records for covid cases in children and teens from Dec. 13, 2021, to Jan. 30. During that period, protection against infection from a two-dose regimen for 5-to-11-year-olds fell from 68 percent to 12 percent. Protection against hospitalization fell from 100 percent to 48 percent.
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In the New York study, protection against infection for 11-year-olds was much lower compared with children a year or two older, possibly because the 11-year-olds received the 10-microgram-dose, while the older children received 30 micrograms.
If the findings are replicated in other settings, the researchers wrote, “review of the dosing schedule for children 5-11 years appears prudent.”
New York State Health Commissioner Mary T. Bassett said in a statement the data are not surprising because the vaccine was developed in response to an earlier version of covid and “reduced effectiveness of 2 doses against the omicron variant has been seen to some degree with all vaccines and ages.”
Bassett said it was critical to stress that vaccination is still recommended for everyone 5 and older.
Peloton is temporarily halting production of its connected fitness products as consumer demand wanes and the company looks to control costs, according to internal documents obtained by CNBC.
Peloton plans to pause Bike production for two months, from February to March, the documents show. It already halted production of its more expensive Bike+ in December and will do so until June. It won’t manufacture its Tread treadmill machine for six weeks, beginning next month. And it doesn’t anticipate producing any Tread+ machines in fiscal 2022, according to the documents. Peloton had previously halted Tread+ production after a safety recall last year.
The company said in a confidential presentation dated Jan. 10 that demand for its connected fitness equipment has faced a “significant reduction” around the world due to shoppers’ price sensitivity and amplified competitor activity.
Peloton has essentially guessed wrong about how many people would be buying its products, after so much demand was pulled forward during the coronavirus pandemic. It’s now left with thousands of cycles and treadmills sitting in warehouses or on cargo ships, and it needs to reset its inventory levels.
The planned production halt comes as close to $40 billion has been shaved off of Peloton’s market cap over the past year. Its market value hit a high of nearly $50 billion last January. But on Tuesday its shares tumbled to a 52-week low of $29.11 — nearly falling below the $29 mark, where it priced its initial public offering in September 2019.
Peloton’s shares fell more than 20% on the news, bringing the stock’s market value below $8 billion and hitting a 52-week low of $24.02, before trading was halted.
The company’s presentation shows Peloton had initially set expectations on Oct. 31 for demand and deliveries in its fiscal third quarter and fourth quarter that ended up being far too high. It reevaluated those forecasts on Dec. 14, according to the presentation, and Peloton’s expectations dropped significantly for its Bike, Bike+ and Tread.
However, Peloton said, the latest forecast doesn’t take into account any impact to demand the company might see when it begins to charge customers an extra $250 in delivery and setup fees for its Bike, and another $350 for its Tread, beginning at the end of this month.
Peloton also said it has seen low email capture rates for the upcoming debut of its $495 strength training product, Peloton Guide, which is codenamed “Project Tiger” in internal documents viewed by CNBC. Email capture rates keep track of the number of people who enter their email addresses on Peloton’s website to receive information on the product. The company said this is a signal of “a more challenging post-Covid demand environment.”
The official launch of Guide in the U.S. was pushed from last October to next month and now could come as late as April, the presentation dated earlier this month said. The company also said it initially planned to charge $595 for the bundle that includes one of Peloton’s heart rate arm bands and later dropped the price by $100.
A Peloton spokesperson declined to comment.
The company is scheduled to report its fiscal second-quarter results on Feb. 8 after the market closes.
Too much supply as spending flatlines
A little more than a year ago, Peloton was facing the exact opposite issue. It had too much demand and not nearly enough supply. In December 2020, it announced a $420 million acquisition of the exercise equipment manufacturer Precor, giving it more than 625,000 square feet of production space. That deal closed early last year.
Then, last May, Peloton said it would be spending another $400 million to build its first factory in the United States to speed up production of its cycles and treadmills. That facility in Ohio isn’t expected to be up and running until 2023.
In recent months, though, gyms have reopened and consumers don’t appear to be throwing as much money into at-home fitness equipment. At the end of its latest quarter, Peloton counted 2.49 million connected fitness subscribers. It only added about 161,000 net new members in the period ended Sept. 30, its lowest growth in two years.
The reversal is seen in its stock price. Pelton shares rallied more than 440% in 2020, but dropped 76% in 2021.
In a separate internal Peloton presentation dated October 2021, which was obtained by CNBC, Peloton said that it was expecting overall fitness spending would continue to grow year over year, but instead overall spending was flat following the summer months.
Analysts in recent weeks have been trimming their expectations for Peloton’s second quarter as well as their price targets for the stock, projecting that Peloton had a weak holiday.
Peloton’s market share could be falling
One bright spot the presentation noted was that Peloton’s share of the total connected fitness market had been increasing.
But a report from research firm M Science shows that Peloton’s overall market share might be on the decline. In November, Peloton’s share of all connected fitness products priced at a minimum of $1,400 was tracking slightly below levels observed in 2019 and 2020, M Science said. That’s despite the lift Peloton saw on key holiday shopping days including Black Friday and Cyber Monday, it said.
M Science pegs Peloton’s share of the market for products priced at more than $1,400 at a little more than 65%, making it the leading player. Other at-home fitness products that M Science tracks include Echelon, Hydrow, Lululemon’s Mirror, NordicTrack and Tonal.
M Science also said that it didn’t yet see “any evidence of another wave of at-home fitness demand as a result of recent Covid-19 developments.”
CNBC reported on Tuesday that Peloton is working with consulting firm McKinsey & Co. to look for ways to slash costs, which could entail job cuts and store closures. A person familiar with the matter said Peloton has already started layoffs in its sales division. The person requested anonymity because they weren’t authorized to speak for the company.
“We just need to get a number right?” said Rep. Ro Khanna, a Democrat from California and member of the House’s progressive caucus. “The House is going to be unified. We need to get one number from one senator, and I think we got to make it very clear that that’s holding everything back.”
The White House seems keenly aware of the dynamic, with Sinema holding a meeting with Biden and then two separate meetings with the President’s top aides on Tuesday alone — and Manchin also getting face time with the President for more than an hour. Sinema herself has had 10 official meetings at the White House since this summer, aides say.
But sources familiar with the sessions said there were still ample areas of disagreement — and it was far from clear how quickly a deal could be reached.
The failure to get a deal with moderate senators over the bill’s scope, key policy details and its price tag — they want it slashed from its $3.5 trillion cost — has forced Speaker Nancy Pelosi to abruptly reverse course on her initial strategy. She had promised for months to hold a final vote on a trillion-dollar infrastructure bill until the larger economic package first was approved by the Senate.
But now, Pelosi is planning on moving the infrastructure bill first for a final vote on Thursday — due to a previous deal she was forced to cut with House moderates — without the larger economic plan close to finished.
And Schumer privately told his caucus on Tuesday he wasn’t consulted on Pelosi’s decision to reverse course, a rare break between the two party leaders. Manchin and Sinema didn’t address the caucus at the meeting, attendees said.
Other top Democrats are nervous as well — in large part because they don’t have a precise idea what Sinema and Manchin want.
“I am,” Senate Majority Whip Dick Durbin, the No. 2 in his caucus, said when asked if he’s concerned about Pelosi’s reversal. “We need to keep everybody together. … I don’t want to guess what Nancy’s challenges are. I respect her so much, and I’m sure she has a good reason. But I’m a little nervous.”
Asked if he had a good sense of what Manchin and Sinema want, Durbin said: “No, I don’t. Others may.”
Sen. Mazie Hirono, a Hawaii Democrat, added, “I and others are waiting for Kyrsten and Joe to tell us what is it that they like or don’t like, and then we can get it done, because other people have been waiting for all these programmatic areas of support for a long time.”
Privately, the assessment is much harsher.
“They’re a total moving target,” said one Democratic senator, who added they seem to have one thing in common: “A total lack of clarity.”
Sinema, as she raced between the Capitol and the White House Tuesday, declined to comment when asked about her demands. Manchin seemed to acknowledge that there’s high interest among his colleagues about his position, insisting Tuesday his talks with Biden are happening in “good faith,” even as he said he didn’t discuss a price tag with the President.
“It’s always been a very productive meeting with the President,” Manchin said. “We understand getting to know each other better and being understanding where his vision of the country is and the things he wants to do and I respect and appreciate all that. And he’s very good at listening and what my concerns may be — so we’ve always had very productive.”
Others appear weary of hearing about the moderates in their caucus.
Sen. Bernie Sanders, a Vermont independent and Budget Committee chairman, said bluntly: “I don’t want to talk about Sinema and Manchin. Talk to them.”
Major divisions among Democrats
The disagreement within the Democratic caucus is not just over a few items, but over almost every major aspect of the President’s Build Back Better agenda.
How much to spend is only the first challenge. Democrats are growing uneasy about where Sinema and Manchin stand on several of the proposed tax increases on corporations, businesses and even wealthy individuals as well as the moderate senators’ positions on how bold to go on the social agenda and health care expansion.
Manchin, who hails from a coal-producing state, has raised concerns about the provisions dealing with climate change, telling CNN this week he has “big differences” with his party on the issue.
But Manchin also has sought to pare back a number of the benefits in the package — such as universal pre-K, tuition-free community college, the child tax credit expansion and new Medicare benefits, according to sources with knowledge of the matter.
Sinema, on the other hand, has been supportive of more aggressive climate change goals than Manchin. Yet, she has been concerned about corporate tax hikes, sources familiar with the matter said. And as she and Manchin have effectively vetoed a $3.5 trillion price tag, she has joined the West Virginia Democrat in raising concerns about the potential impacts of such a big bill on inflation.
“It is saddening to see them use Republican talking points,” Rep. Ilhan Omar, a progressive Minnesota Democrat, told CNN on Monday. “We obviously didn’t envision having Republicans as part of our party.”
Sinema, a former House member in her first Senate term and Manchin — who replaced the longest-serving senator in history, Robert Byrd, 11 years ago — both hold outsized power in the 50-50 Senate. With Democrats relying on a special budget process to advance the social safety package on a simple majority vote, one Democratic defection would be enough to sink the plan — and the two senators are the most likely to break ranks.
The two were central in cutting the bipartisan infrastructure deal that passed the Senate last month — but now are at risk of seeing that plan collapse as liberals demand they sign onto the larger social safety net plan first.
Pelosi can only afford to lose three Democrats to get the larger bill through her chamber, even as she still plans to push the infrastructure bill through her chamber for a final vote on Thursday.
For many progressives to get to “yes” on the infrastructure bill, they want Sinema and Manchin to sign off on at least an outline over the larger bill that they find acceptable. But it appears doubtful that can be reached by Thursday.
“I think what we need right now is a number from the Senate,” said Rep. Richard Neal, a Massachusetts Democrat who chairs the tax-writing Ways and Means Committee. “We did our part in markup. We have a plan. It’s been well met.”
How Sinema and Manchin negotiate
Aides and members point out that behind the scenes, Sinema is entrenched in the policy minutia, asking detailed questions to staff and members on everything from an expansion of Obamacare to tax policy. But, unlike Manchin who is more big picture, can be fuzzy on the precise details and is a known quantity because he has operated in Washington for years, Sinema is tougher for many members to read.
“They are totally different. Manchin is more predictable because he is more of an old-time politician,” one Democrat laid out on the condition of anonymity to privately discuss internal party dynamics.
For her part, Sinema has spent the better part of the summer asking questions rather than making any promises or staking out every position publicly, aides say. She rarely opines to large gaggles of reporters on what she perceives as potential pitfalls in legislation, repeating her mantra she doesn’t negotiate in the press.
Sinema’s style is to go directly to members or committee chairmen she needs to talk to, a habit that is reflected in the number of times she has met directly one-on-one with the President.
When pushed on criticism by fellow members that Sinema isn’t more forthcoming about her positions, Sinema’s team pointed CNN to the more than 10 formal meetings the Arizona senator has had with the White House. Those don’t include informal contacts, texts or other shorter exchanges that have become part of Sinema’s daily operation.
“I think what she does is she picks who she is going to engage with. She’s not going to engage with all 49 of us,” one Democratic colleague said in defense of Sinema’s style. “She sort of precise even in her thinking about who she talks to and about what.”
“I just like her, which is problematic because she is on the wrong side of some things,” the member joked.
Sinema has also been deeply engaged with the majority leader and his staff as well as key committees. Just last week, her team pointed to a meeting Sinema had directly with the staff on the Health, Education, Labor and Pensions committee.
Members who have negotiated with Sinema in the past also note that the Arizona Democrat is someone who stays true to what she promises.
“Her word is her bond. All that good stuff,” one Democrat said.
They also are quick to note she’s a task master. During the negotiations over the bipartisan infrastructure bill, Republicans say it was Sinema who would keep members moving through talks even as tempers would flare, reminding them that failure wasn’t an option and that wine was available if necessary.
Sinema’s style to play it close to the vest is one that has afforded her access to the major players, a direct line to leadership and to the White House. In recent weeks, she’s had nearly daily interactions with leadership and the White House, aides say. Her reputation for being hard to get to “yes,” but steadfast in her decision once she gets there has also earned her trust among many of her colleagues.
Yet even like-minded allies are uncertain where she — and Manchin — stand at a critical moment for the Biden agenda, causing anxiety in the ranks.
Sen. Angus King, an independent from Maine who also occupies the more centrist lane of the Democratic caucus, said, “I honestly don’t know,” when asked if he had an idea where the two stand.
“Yes,” King said when asked if he were concerned at the lack of clarity in their positions. “It concerns me because we are searching for a resolution on these important issues.”
CNN’s Ted Barrett, Morgan Rimmer, Annie Grayer and Ali Zaslav contributed to this report.
China has been grappling with the spread of the highly contagious Delta variant since July 20, when a cluster of Covid-19 infections were detected among airport cleaning staff in the eastern city of Nanjing.
Since then, it has spiraled into the worst outbreak China has seen since 2020, spreading to more than half of the country’s 31 provinces and infecting more than 1,200 people. The surging cases driven by Delta were seen as the biggest challenge yet to China’s uncompromising zero tolerance virus policy.
Local authorities responded by placing tens of millions of residents under strict lockdown, rolling out massive testing and tracing campaigns and restricting domestic travels.
And on Monday, the country reported 21 imported cases and zero locally transmitted symptomatic infections — the first time no local cases have been recorded since July 16. It also reported 16 asymptomatic cases, all of which were imported too, according to the NHC. China keeps a separate count of symptomatic and asymptomatic cases and does not include asymptomatic carriers of the virus in the official tally of confirmed cases.
If the trend continues, China could become the world’s first country to control a major Delta outbreak.
Doubling down on zero-Covid
China is one of a number of countries, including Singapore, Australia and New Zealand, that have sought to completely eradicate Covid-19 within their borders.
Authorities closed off borders to almost all foreigners, imposed strict quarantines for arrivals, and launched targeted lockdowns and aggressive testing and tracing policies to stamp out any cases that slipped through the defenses. And for more than a year, these measures had been largely successful in keeping cases close to zero.
But fresh outbreaks driven by the Delta variant are prompting some countries to rethink their approach.
In Australia, several major cities, including Sydney, Melbourne and the capital Canberra, have been placed under weeks of lockdown, but cases have continued to surge. On Saturday, the country recorded its highest single-day caseload since the pandemic began, while thousands of people took to the streets to protest against prolonged lockdowns.
In an opinion piece published in Australian media Sunday, Prime Minister Scott Morrison hinted at an end to the country’s zero Covid-19 restrictions, saying the lockdowns “are sadly necessary for now” but “won’t be necessary for too much longer.” He said the Australian government intended to shift its focus from reducing case numbers to examining how many people were getting seriously ill from Covid-19 and requiring hospitalization.
Singapore, too, has laid out a road map to transit to a “new normal” of living with Covid-19.
China, meanwhile, appears to be resolutely sticking to its zero-Covid approach, with state broadcaster CCTV warning on Monday that the pandemic has not ended, and that people shouldn’t become careless in epidemic prevention.
The country has also continued to ramp up its vaccination drive. As of Sunday, it has administered more than 1.94 billion doses of domestically made Covid-19 vaccines, according to the NHC. More than 135 doses have been administered per 100 people, a ratio higher than that of the United Kingdom and the United States.
