2019年11月6日 星期三

DealBook: It’s DealBook Conference Day

Some of the biggest newsmakers at the intersection of business and policy will join us onstage for candid conversations about hot-button issues.
 
 
November 6, 2019
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Andrew Ross Sorkin
Andrew Ross Sorkin  Samuel Corum for The New York Times
What to watch for at today’s DealBook Conference
Some of the biggest newsmakers at the intersection of business and policy will join Andrew onstage today for candid conversations focused on the hot-button issues of our time: inequality and corporate America’s role in society, the challenges of Silicon Valley’s scale, the streaming wars, the upcoming presidential election, the trade war with China, the future of I.P.O.s, the influence of “influencers” and the crisis at Boeing.
You can find updates from the conference on our live briefing all day long. But first, here are some of the biggest names we’ll hear from over the course of the day:
Dennis Muilenburg, the Boeing C.E.O., will be asked about the decisions that preceded the crashes of the company’s 737 Max jets, whether he can regain the trust of regulators and the public, and what happens next. (More news about Mr. Muilenburg below.)
Dara Khosrowshahi, the C.E.O. of Uber, will talk about the shifting landscape in Silicon Valley and the revaluing of its so-called unicorns.
Kris Jenner and Kim Kardashian West will discuss new power influencers and individual brands on social media.
Bill Gates, the software pioneer-turned-philanthropist, will discuss climate change and the political debate on wealth, inequality and capitalism.
Reed Hastings, the Netflix C.E.O., will talk about how he thinks the streaming wars will transform the TV and movie industry.
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Today’s DealBook Briefing was written by Andrew Ross Sorkin, Jamie Condliffe and Gregory Schmidt.
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Xerox considers a takeover of HP
The copier maker Xerox is considering a cash-and-stock bid for the computer company HP, a move that would unite two fading tech giants that are scrambling to restore their luster, reports Cara Lombardo of the WSJ, citing unnamed sources.
With a market value of $27 billion, HP is more than three times the size of Xerox. Any bid would be at a premium to HP’s current stock price, sources said. Xerox’s board reportedly discussed the potential deal yesterday.
Bolstering its chances, Xerox expects a $2.3 billion payout from the sale of its 25 percent stake in a joint venture with Fujifilm. Its stock rose about 5 percent yesterday on news of the deal with Fujifilm. And Xerox has received an informal funding commitment from a major bank, Ms. Lombardo reports. HP shares are down 10 percent this year.
Both companies are in cost-cutting mode, Ms. Lombardo writes, and a merger could afford new opportunities to shed expenses, by as much as $2 billion, according to her sources.
  Mohammad Khursheed/Reuters
Walgreens Boots could go private for $70 billion
The global drugstore group has reportedly been exploring the possibility of a take-private deal, according to Bloomberg, in what it says would be the “largest leveraged buyout in history.”
“The company has recently held informal talks with private equity firms including KKR,” Bloomberg reports, citing unidentified sources. Walgreens Boots shares rose 3.1 percent yesterday on the news.
“Some of the buyout firms have so far shown reluctance to participate in a deal,” it adds. That is in no small part due to the size of the transaction: Walgreens Boots has a market value of about $55 billion and $16.8 billion of debt, so a take-private deal would be bigger than the current largest leveraged buyout — the sale of the utility TXU to KKR and TPG — which was worth about $45 billion including debt.
A buyout would relieve the company of the pressure of quarterly reporting and give it some breathing room to cut costs and introduce changes that could help it adapt to a world in which discount stores and e-commerce sites like Amazon have eaten much of its lunch.
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Ambassador describes a quid pro quo with Ukraine
Gordon Sondland, the American ambassador to the E.U. and a crucial witness in the Trump impeachment inquiry, recounted to investigators yesterday that he had told a Ukrainian official that military aid was tied to a public commitment of the investigations President Trump wanted, Michael S. Schmidt writes in the NYT.
Mr. Sondland’s disclosure directly contradicted his testimony last month, when he said he had “never” thought there was any precondition to the aid. “I said that resumption of the U.S. aid would likely not occur until Ukraine provided the public anticorruption statement that we had been discussing for many weeks,” Mr. Sondland said in the new statement.
The updated testimony confirmed Mr. Sondland’s role in laying out a quid pro quo to Ukraine that conditioned the release of U.S. aid on the country’s willingness to say it was investigating Joe Biden, a candidate for the Democratic presidential nomination.
It provides Democrats with a valuable piece of evidence. Unlike other officials who have offered damaging testimony about Mr. Trump, Mr. Sondland is a political supporter of the president who has interacted directly with him.
More: Lawmakers released the testimony of Mr. Sondland and Kurt Volker, the former special envoy to Ukraine.
Ray Dalio
Ray Dalio  Andrew Renneisen for The New York Times
‘The world has gone mad’
Capitalism helped Ray Dalio build his investment empire. But the current system is broken, Mr. Dalio, the founder of Bridgewater Associates, writes in a LinkedIn post, continuing a crusade that he started in April.
“Money that is being pushed on investors isn’t pushing growth and inflation much higher,” he writes, because “investors who are getting it want to invest it rather than spend it.” That means “more companies than at any time since the dot-com bubble don’t have to make profits or even have clear paths to making profits to sell their stock,” he says.
“At the same time, large government deficits exist and will almost certainly increase substantially, which will require huge amounts of more debt to be sold by governments — amounts that cannot naturally be absorbed without driving up interest rates at a time when an interest rate rise would be devastating,” he writes.
“Where will the money come from to buy these bonds and fund these deficits? It will almost certainly come from central banks, which will buy the debt that is produced with freshly printed money,” he adds. “This whole dynamic in which sound finance is being thrown out the window will continue and probably accelerate.”
“At the same time as money is essentially free for those who have money and creditworthiness, it is essentially unavailable to those who don’t have money and creditworthiness, which contributes to the rising wealth, opportunity, and political gaps,” Mr. Dalio writes. “The system of making capitalism work well for most people is broken.”
The U.S. trade gap is expanding
President Trump vowed to shrink the U.S. trade gap, arguing that the deficit is proof that unfair practices by China and other countries have been hurting the United States. But figures released by the Commerce Department yesterday show that it continues to grow, Ana Swanson of the NYT writes.
• The trade deficit for goods and services in the first three quarters of the year increased 5.4 percent, to $481.3 billion, from the same period last year.
• Total American exports fell by $7 billion from the previous year, while imports grew by $17.8 billion.
Mr. Trump’s trade war “has not had the effect he desires in terms of bolstering American manufacturing and exports,” Ms. Swanson writes. “In fact, some business executives say they have been hurt by the uncertainty it has created.”
“Trump administration officials insist their negotiations will alter the terms of trade yet and have been in discussions with the Chinese to try to reach a deal in the coming weeks,” she adds.
But economists say the gap isn’t a useful metric for judging the health of the U.S. economy. They argue that the gap has widened because the U.S. economy is growing faster than that of other countries, leading to greater purchases of foreign products by Americans and slowing sales abroad.
More: President Emanuel Macron of France and President Xi Jinping of China have pledged to uphold free trade and multilateralism. Prime Minister Boris Johnson of Britain reportedly asked Mr. Trump to lift tariffs on Scotch whisky. And does China risk overplaying its hand in trade negotiations with the U.S.?
Dennis Muilenburg
Dennis Muilenburg  Sarah Silbiger/Reuters
Boeing’s C.E.O. forfeits his bonus
Dennis Muilenburg, the C.E.O. of Boeing, volunteered last weekend to not receive bonus pay this year in the wake of the two deadly crashes of the company’s 737 MAX jets.
Mr. Muilenburg came under pressure to resign last week when he testified before lawmakers in Congress. He politely declined to do so.
But over the weekend he called Boeing’s new chairman, Dave Calhoun, according to Reuters. During that conversation, Mr. Muilenburg suggested that he shouldn’t receive bonus pay this year or any stock grants until the grounded jet fully returns to service.
“Dennis has done everything right” in the eyes of the Boeing board, Mr. Calhoun said in an interview with CNBC yesterday. “He has our confidence.”
We’ll hear more from Mr. Muilenburg when he speaks to Andrew at today’s DealBook conference in New York. You can follow the event on our live briefing.
Revolving door
Paul Maidment, the editorial director of G/O Media, the parent company of the crisis-racked sports website Deadspin, has resigned.
Apple’s outside ad agency, Media Arts Lab, has reportedly cut about 50 jobs.
The speed read
Deals
• The F.C.C. approved the merger of T-Mobile and Sprint. (WSJ)
• AstraZeneca plans to raise up to $1 billion for a new fund that would invest in Chinese health care start-ups. (WSJ)
• SoftBank reported a loss of $6.4 billion for the last quarter, driven by the falling valuations of some of its biggest bets such as WeWork and Uber. Also: Some people say WeWork is still in critical condition. (NYT, Reuters)
• The German fintech company Wirecard agreed to acquire the Chinese group AllScore Payment Services for €109 million, or about $120 million. (FT)
Politics and policy
• If the Supreme Court agrees to hear President Trump’s request to keep his tax returns private, its decision is likely to produce a major statement on the limits of presidential power and test the independence of the court. (NYT)
• Democrats won control of Virginia’s government for the first time in a generation and claimed a narrow victory in the Kentucky governor’s race. (NYT)
• The Justice Department saw no evidence of successful tampering by any foreign government in state and local elections yesterday. (Reuters)
• Senators Elizabeth Warren and Bernie Sanders are confronting the same challenges to their health care policies that stymied state lawmakers in Colorado and Vermont who tried to start Medicare-for-all systems. (WSJ)
• Manufacturers in Rust Belt regions that helped Mr. Trump win in 2016 are struggling, putting a potential dampener on his re-election chances. (CNBC)
Tech
• How the rise of TikTok is forcing Americans to consider a world influenced by a Chinese-backed social media network. (NYT)
• Inside the high-stakes race to build the world’s first flying taxi. (NYT)
• AT&T will pay $60 million to settle F.T.C. allegations that it misled customers about their unlimited data plans. (WSJ)
• Samsung will close its U.S. unit that designs computer processor chips after failing to win market share from Qualcomm. (FT)
• The self-driving Uber vehicle that killed a woman in 2018 “did not include a consideration for jaywalking pedestrians” in its software, according to the U.S. National Transportation Safety Board. (BBC)
Best of the rest
• Days after Barneys New York was sold for pieces, the store’s closing sales have started. (NYT)
• California mayors, frustrated with wildfires and intentional blackouts caused by PG&E, are calling for a customer-owned power company to replace the giant utility. (NYT)
• Germany’s finance minister has called on the E.U. to move forward with plans to create a secure banking union. (FT)
• In a first, the Salt Lake Tribune, a Pulitzer-prize-winning newspaper in Utah, announced that it was becoming a nonprofit entity. (FT)
• Institutional investors continue to put billions into large private equity funds, despite new data showing that smaller firms deliver better returns. (Institutional Investor)
• A Florida detective said that he had obtained a warrant to search the database of a consumer DNA site with nearly a million users, a development that could have profound implications for genetic privacy. (NYT)
Thanks for reading! We’ll see you tomorrow.
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