The daily business briefing: September 25, 2019
1.
WeWork co-founder Adam Neumann agreed Tuesday to step down as CEO and surrender majority control of the office-sharing startup in the face of an investor revolt. WeWork parent We Company had to postpone its initial public offering of stock last week as the company's valuation plummeted due to investors' crumbling confidence in Neumann. Leading shareholder SoftBank Group Corp. and other investors called for Neumann's departure as the company's losses mounted. "In recent weeks, the scrutiny directed towards me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive," Neumann said in a statement. [Reuters]
2.
U.S. stock index futures were down early Wednesday as political tensions weighed on markets. Futures for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq all fell by 0.2 percent or more following House Speaker Nancy Pelosi's announcement that the House would launch a formal impeachment inquiry into President Trump due to suspicion that he pressured Ukraine's president to investigate and damage Democratic rival Joe Biden. Even though most analysts see no chance the Republican-led Senate would find Trump guilty, the political developments, along with ongoing U.S.-China trade tensions, were cited as a factor in Tuesday stock losses. The Dow closed down by 0.5 percent, while the S&P 500 and the Nasdaq plunged by 0.8 percent and 1.5 percent, respectively. [CNBC]
3.
Nike shares jumped by more than 5 percent in after-hours trading after the athletic shoe and apparel giant reported quarterly earnings that beat expectations. Nike reported revenue of $10.7 billion, compared to consensus estimates compiled by Bloomberg of $10.4 billion. Earnings per share came in at 86 cents, beating forecasts of 70 cents. CEO Mark Parker said product innovation, including a new Joyride running shoe, and a stronger online business "continue to deepen our consumer relationships around the world." The improvement in the first quarter of Nike's new fiscal year followed a rare earnings miss in the last three months of its last fiscal year that Nike attributed to a jump in its tax rate and marketing expenses during the period. [Yahoo Finance, CNBC]
4.
German prosecutors on Tuesday charged Volkswagen CEO Herbert Diess, supervisory board chair Hans Dieter Potsch, and former CEO Martin Winterkorn with stock market manipulation. The executives are accused of failing to promptly tell shareholders when VW diesel vehicles' emissions came under investigation. The inquiries resulted in charges of cheating on diesel emissions tests. Hiltrud Dorothea Werner, a member of VW's management board, defended the executives, saying the company had thoroughly investigated the matter and "the allegations are groundless." Daimler separately agreed to pay a $957 million fine for selling Mercedes-Benz diesel cars that polluted excessively. The cases marked the latest in a series of blows to the reputations of German automakers as they struggle with declining sales and the transition to electric vehicles. [The New York Times]
5.
Best Buy said Wednesday it was aiming for another $1 billion in cost cuts over the next five years, and targeting $50 billion in revenue by 2025, up from a guidance range of $43.1 billion to $43.6 billion in 2020. The electronics retailer said it expected its operating to rise at a rate of 5 percent through the period. CEO Corie Barry said in an interview with CNBC ahead of a Wednesday investor meeting that the company would "double down" on its strategy of pursuing growth despite ongoing "disruption" of the electronics retail industry. Barry in June took over leadership of the company, making her the first woman to run Best Buy and the youngest female CEO of a Fortune 100 company. [MarketWatch, CNBC]