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Nextdoor, a ZIP code-curated and vetted social network, does not allow discussions about U.S. politics — even during an election year. Here's why.
When the Department of Defense finally made a decision in October on the decade-long, $10 billion JEDI cloud contract, it seemed that Microsoft had won. The company announced on November 22nd that it had filed suit in the U.S. Court of Federal Claims protesting the DoD's decision to select Microsoft. Sources tell us that AWS decided not protest the start of initial JEDI activities at the time of the court filing in November as an accommodation made at DoD’s request.
The top stories here are Apple's ITP vulnerability, Amazon's motion to stop work under the JEDI contract, Amazon's soaring music subs and the UK digital tax.
Quarterly earnings results from Comcast, Southwest, American Airlines, and more. And a look at why Pure Storage, Inc. (PSTG) is a Zacks Rank 1 (Strong Buy) stock right now, as it trades under $20 a share...
Visa (V) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
The Australian dollar rallied quite significantly during the trading session on Thursday, reaching towards the 200 day EMA as the jobs numbers came out much stronger than anticipated.
(Bloomberg Opinion) -- Have we finally reached the point where we automatically assume that every new retail disaster has been caused by a private equity firm? Yes, I believe we have. When the New York Post published a report on Tuesday contending that New York’s Fairway Market grocery chain was going to liquidate — a claim denied by the company, which subsequently filed for Chapter 11 bankruptcy protection on Thursday — I began exploring whether private equity was indeed responsible for its problems.It was.The year was 2007. Fairway, a treasured New York institution that was founded in 1933, had grown from one store on Manhattan’s Upper West Side to four stores, three in New York City and one on Long Island. The stores were supermarket size, but they didn’t much resemble a Safeway or a Kroger. They were eclectic, with 50 brands of olive oil, dozens of varieties of olives, cheese, smoked salmon, imported beer and who knows what else. It was quintessential New York. On a per-square-foot basis, the four Fairways were among the highest grossing grocery stores in the country.Howie Glickberg, the grandson of the founder, was one of three partners who owned Fairway Market. The other two were ready to cash out, and others in management who held small equity stakes were looking for a payday. Glickberg needed to find a source of liquidity. Unfortunately for him, he found Sterling Investment Partners, a private equity firm based in Westport, Connecticut, that focuses on mid-market companies.“I was looking to expand the business,” Glickberg told me when I caught up with him on Wednesday afternoon. In the ensuing buyout, Sterling put $150 million into the company in return for an 80% ownership stake. The majority of that was debt. Needless to say, the debt landed on Fairway’s books, not Sterling’s. Three Sterling partners, including co-founder Charles Santoro, joined the board. None of them had any grocery experience.Sterling had enormous ambitions for the company. Glickberg had envisioned expanding slowly, a store at a time. Santoro talked about turning Fairway into a national chain with hundreds of stores that would compete with Whole Foods and Trader Joe’s. Santoro did not respond to an email request for an interview.By 2012, Fairway was up to 12 stores, including some in suburban New Jersey, where the company’s urban cachet didn’t necessarily translate. Most of this expansion was fueled by yet more debt. Not surprisingly, the expansion eviscerated the company’s profits while adding millions more in debt to its balance sheet. By 2012, its debt burden had grown to more than $200 million, and it was losing more than $10 million a year.Badly in need of cash, Sterling turned to the public markets. In April 2013, Fairway Group Holdings Corp., as the company was now called, went public at $13 a share, raising $177 million. Its prospectus said that the money would go toward “new store growth and other general corporate purposes.” But that wasn’t quite accurate; the prospectus showed that more than $80 million went to pay “dividends” to preferred shareholders — i.e. Sterling Investment Partners. An additional $7.3 million went to management.Around the same time as the IPO, Glickberg was pushed aside and a new chief executive officer was brought in, an accountant who had been an executive at Grand Union, a grocery chain that failed in 2013. Glickberg did stay on the board, however, where he was the only person with either grocery or retail experience.By 2014, Fairway was up to 15 stores. Its directors — a number of them Sterling executives — were paying themselves absurd amounts of money: $12.1 million in 2013, according to the company’s 2014 proxy. Santoro alone took down $5.4 million that year — at a company with a market cap below $170 million.And that wasn’t the only problem with how Fairway was being run. Hannah Howard, Fairway’s former director of communications, would later describe what it looked like from the inside:[T]he place was kind of a mess: It took months to get paid, with leadership claiming paychecks had been lost on the truck to Red Hook. As expansion scaled, finding talented, knowledgeable staff became more difficult, so quality at new locations began to suffer. It became increasingly apparent that Fairway’s corporate leaders were good at running two or three stores, but they didn’t make the right preparations to run a dozen. “There were not processes or systems in place that were scalable,” says one erstwhile executive. “The leadership was completely incompetent.”Meanwhile, Whole Foods and Trader Joe’s were expanding methodically. When Amazon Inc. bought Whole Foods, it meant that Fairway had a competitor with limitless cash. Fairway’s vaunted revenue-per-square-foot numbers dropped by a third. Cash flow was consistently negative. The stores looking increasingly shabby because the company couldn’t afford to keep them up. By 2016, saddled with $267 million in debt, Fairway filed for Chapter 11 bankruptcy protection. It hadn’t turned a quarterly profit the entire time it was a public company.Here perhaps is the strangest part of the story: Although Fairway managed to reduce its debt by $140 million through the bankruptcy process, it didn’t use bankruptcy to close stores or break any of its expensive leases ($6 million alone for the flagship store on the Upper West Side). It didn’t try to go back to what it was, a small chain of groceries that were part of New York’s central nervous system. Meanwhile, Sterling Investment Partners, having milked Fairway for nine years, walked away. Another private equity firm, the Blackstone Group Inc., took over. Glickberg retired.By August 2018, Blackstone had exited and the company had been bought by two other private equity firms: Brigade Capital Management LP and Goldman Sachs Group Inc. In November, they hired a new CEO, a turnaround specialist named Abel Porter, who actually did have grocery experience. He was the company’s fourth CEO in six years.“We’re not burning cash, we’re accumulating cash,” Porter told Bloomberg News at the time. He added that there was “no risk of running out of capital” despite a debt level that exceeded $300 million. In that same article, however, a credit analyst for Moody’s Investment Service, Mickey Chadha, predicted that Fairway would need to be restructured again within 18 months. More money was going out the door than was coming in.Chadha’s prediction was off, but not by much. It’s been 14 months since that article ran, and Fairway is once again in deep trouble. When I asked him how he saw it coming, he laughed. “That’s my job,” he said. “You could see it when you looked at their liquidity. They just weren’t generating enough cash. No free cash flow, and lots of debt. It was highly predictable.”A few months ago, Chadha updated his analysis of Fairway’s bonds. He said that, as of June, the company’s remaining cash was down to $10 million and he predicted that it would continue to dwindle through 2020. “The company,” he concluded, “has limited alternative sources of liquidity as virtually all tangible and intangible assets are pledged to the credit facilities.”As part of its bankruptcy plan, Fairway agreed to sell five stores and a distribution facility to Village Supermarket Inc. for $70 million. Village Supermarket is another grocery chain owned by a family, the Sumas family of New Jersey. It seems to have done what Sterling Investment Partners could not: expand sensibly. The company now has 30 stores. If a handful of Fairway stores end up being run by the Sumas family, it will have saved an institution that private equity nearly destroyed.“I’m upset about what happened,” Glickberg told me. “They made a lot of bad decisions. They brought in people who knew nothing about the business and nothing about New York. My grandfather started the company, so it was more than a business to me.”I guess one moral of this story is that if you run a family company, don’t sell it to a private equity firm unless you don’t care what happens afterward. But mainly, it reaffirms what we are all coming to realize: private equity firms like Sterling Investment Partners aren’t on the side of the companies they buy. Not really. They’re out for themselves.To contact the author of this story: Joe Nocera at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
AMD's fourth-quarter results are likely to reflect deal wins on strength in EPYC server processors and uptick in holiday sales amid increasing expenditure on product development.
The Zacks Analyst Blog Highlights: JPMorgan Chase, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs
The employment report is good news for Australian Dollar bulls and discouraging news for short-sellers betting on a February rate cut. Now they have to reset the clock to April or May so selling the AUD/USD on rallies may not be sound advice unless the coronavirus scare spooks investors into dumping the currency because of Australia’s ties to China’s economy.
The British pound has flexed some muscle, as GBP/USD has climbed above the 1.31 line for the first time in two weeks. Will the upward move continue?
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.China is strengthening efforts to encourage direct financing of companies in a financial system that’s long been dominated by banks, as the private sector struggles with access to credit.Regulators in recent months relaxed rules for companies seeking listings on China’s stock markets, moving toward a registration-based system that in theory automatically green-lights applicants provided they meet set criteria. While regulators still demand case-by-case reviews for bond sales, a legal amendment to be rolled out March 1 calls for “sharply simplifying” the requirements.The moves are part of a broader initiative to raise the sophistication of the nation’s capital markets. The campaign includes letting overseas asset managers apply for mutual-fund licenses from April, and new legal guidance on bondholders’ rights. At stake for the private sector is broadening access to credit beyond banks, which tend to favor state-owned enterprises.“China has been pushing for more direct financing for years but we’ve noticed a stronger tone on that front lately,” said Gao Ting, head of research at Nomura Orient International Securities Co. in Shanghai. “China’s economy is still faced with big downward pressures so regulators sense the urgency.”Economic growth in China has been squeezed the past couple years both by the trade war with the U.S. and policy makers’ moves to shrink the shadow financing sector. The clampdown on leverage has particularly hit private enterprises, which had tapped into China’s swelling wealth management products to fund growth. A clean-up of regional banks has also put the squeeze on smaller private firms.Why Even Xi Can’t Get Funding to Small Firms in China: QuickTakeNoise from Washington about potentially making it tougher for Chinese firms to raise capital in the U.S. have only added to the impetus to develop China’s own stock markets. The latest developments came in late December, when China’s legislature approved revisions to the nation’s Securities Law, easing up on rules for companies to list on stock exchanges.Issuance SurgeThis year could see 260 to 320 new listings, raising as much as 380 billion yuan ($55 billion) across four different domestic venues, according to projections by Deloitte LLP. That would mark a surge from 201 initial public offerings raising about $38 billion last year, according to data compiled by Bloomberg.The shift to a registration-based system has been years in the making. The China Securities Regulatory Commission previously served as the gatekeeper for offerings, with a seven-person listing-review committee examining each application. Under a registration system, questions of IPO supply and timing are left to companies and the market, rather than regulators.Relaxed controls were also announced late last year for secondary share sales, at least for those on ChiNext, a market focused on small-cap stocks. That could help stoke a rebound since squeeze on share placements was enacted in 2017 to help reduce pressure on the equity market at the time.Foreign CapOn the demand side, China is now looking at letting foreign investors buy bigger shares of the nation’s domestic equities. Fang Xinghai, vice chairman of the CSRC, said this week. There’s potential to lift the limit beyond 30%.“While not immune from the vagaries or highly sentiment-reliant equity behavior often present in emerging markets, China’s equity market has expanded rapidly and China is working to professionalize its investor base,” said Hannah Anderson, Global Market Strategist at JPMorgan Asset Management. “Efforts are further along on the equity side than they are on the bond side,” she said.When it comes to bonds, issuance is still on a case-by-case approval basis for much of China’s market. After the national legislature’s Dec. 28 announcement, all eyes will be on the scheduled March 1 roll-out of the Securities Law amendments -- which called for streamlining pre-requisites for bond sales and eliminating “approval committees” at the regulatory agencies that oversee them.Demand BaseA bigger challenge is encouraging a diversified ownership base for China’s corporate bonds, including the budding domestic mutual-fund industry along with overseas investors.“We’ve had a build-up of debt in the past decade, and that has lumbered the banks with some burden on their balance sheets,” said Timothy Moe, chief Asia-Pacific strategist at Goldman Sachs Group Inc. That “suggests that China’s financing model of banks financing the majority of capital needs to shift to include a greater focus on capital markets,” he said at a conference earlier this week.Many borrowers, such as property developers, faced with limited options at home have been raising dollar debt offshore. But China has been working to develop its domestic bond market, the world’s second-largest at $13 trillion. Along with reforms to open up foreign buyers, regulators in the past year moved to welcome overseas ratings agencies and underwriters.David Chin, China country head for UBS Group AG, highlights two stark differences between China and developed markets.“One is the size of direct financing (equities and bonds) is dwarfed by the size of bank lending, and the other is the retail portion of the stock market, which is about 80% versus 20% institutional,” he says. “Both of these two, over decades, will become more like mature markets overseas. But it will take a long time.”(Updates with Goldman analyst’s comment in second paragraph after ‘Demand Base’ subheadline.)\--With assistance from Irene Huang, Shen Hong and Annie Lee.To contact Bloomberg News staff for this story: Amanda Wang in Shanghai at firstname.lastname@example.org;Lucille Liu in Beijing at email@example.comTo contact the editors responsible for this story: Sofia Horta e Costa at firstname.lastname@example.org, Christopher Anstey, David WatkinsFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Goldman Sachs has become the first Wall Street bank to declare it will not take companies public in the US and Europe unless they have at least one “diverse” candidate on their board — but failed to include Asia, which has the worst record on gender diversity. Chief executive David Solomon on Thursday said diversity on corporate boards was a “very, very important issue”, with evidence showing that companies that made their stock market debut with at least one female director were likely to perform “significantly better” than others. Goldman confirmed that the bank planned to expand the policy to other geographies “over time”, adding that the majority of initial public offerings conducted by Goldman were in the US or Europe, Middle East and Africa regions.
Employment figures give the Aussie a boost as the focus shifts to the ECB. Will Lagarde follow the BoC with a dovish outlook to sink the EUR?
Apple stock has skyrocketed nearly 110% in the last year. Now the question is should investors think about buying the iPhone giant's stock before Apple reports its Q1 2020 earnings results on Tuesday, January 28?
Advanced Micro Devices (AMD) closed at $51.43 in the latest trading session, marking a +0.74% move from the prior day.
(Bloomberg) -- PayPal Holdings Inc. is taking another step into the giant Chinese payments market, partnering with state-backed China UnionPay Co. in a move that could expand PayPal’s network in the country. The partnership will allow some UnionPay cardholders access to PayPal’s network, and eventually, could pave the way for PayPal to be accepted at Chinese locations that take UnionPay.Users of Shanghai-based UnionPay, the world’s largest card company by payment volume, will be able to add their UnionPay cards to PayPal accounts and use them in a number of countries where PayPal is accepted outside of China. “There is a lot of room for us to help people visiting from China find a way to pay while traveling,” Jim Magats, senior vice president of global payments at PayPal, said in an interview.The companies also said that the tie-up would allow PayPal and UnionPay’s global subsidiary, UnionPay International, to “explore opportunities” to expand PayPal’s reach in China. In a statement, Magats said the new partnership would give the company the option to “expand PayPal’s digital wallet to physical retail locations where UnionPay is accepted in China, or internationally.”The UnionPay partnership is part of a string of moves by PayPal to grow its Chinese presence. In September, China’s central bank granted PayPal approval to buy a 70% stake in a Chinese payment company Gopay Information Technology Co., allowing PayPal to become the first foreign compapny to operate in China’s payment service market. Gopay has licenses for online, mobile and cross-border yuan payment services.China’s $27 trillion payments industry is dominated by a few companies, with Ant Financial Services Group and Tencent Holdings Ltd. accounting for a majority of digital payments, according to Bloomberg Intelligence. However, in a recent interview with Bloomberg, PayPal Chief Executive Officer Dan Schulman said that it wasn’t too late for the company to stake a claim there. “It’s an exploding market,” he said. “It’s growing so quickly that there’s room for every player in it.”On Wednesday, UnionPay cards will be available to be added to PayPal wallets in Australia, the Philippines, Singapore, South Korea and Thailand. The companies said they plan to add the option for more than 30 other markets in 2020.To contact the reporter on this story: Julie Verhage in New York at email@example.comTo contact the editors responsible for this story: Mark Milian at firstname.lastname@example.org, Anne VanderMeyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.