Enjoy your February 16th hand-crafted Brew!
QUOTE OF THE DAY
- Major U.S. indexes closed at record levels for the fifth day in a row after bullish comments from Fed Chair Janet Yellen and unexpectedly strong increases in retail sales and inflation helped bolster investor confidence
- Shares of Southwest Airlines, American, Delta and United spiked up to 3.6% after Warren Buffett disclosed significant positions in the U.S. air carriers, which could become particularly attractive stocks should President Trump cut corporate tax rates
…PepsiCo slightly beats quarterly profit and earnings thanks to healthy products. For most of its existence, PepsiCo (-0.18%) has banked on strong consumer demand for its signature sugary cola. Well the times they are a-changin’, as consumers are increasingly seeking healthier options. In fact, consumers’ taste buds have changed so much that the company now gets 45% of its net revenue from “guilt-free” products, or products with low levels of calories and fat. Although PepsiCo was able to top analyst expectations, CEO Indra Nooyi conceded that there are still many challenges ahead, as the company continues to diversify. Best of luck to ya, PepsiCo.
SoftBank Buys Experience
…Because launching the world’s largest private equity fund ain’t easy. In October, Japanese tech and telecom conglomerate SoftBank (+1.58%) announced that it would be partnering with Saudi Arabia to launch a $100 billion tech private equity fund. That’s a tall order. So, what do you do if you have plenty of money but limited expertise? Buy someone who does. SoftBank’s most recent strategic move was to buy Fortress Investment Group (+28.66%), an investment firm with about $70 billion in assets under management, for $3.3 billion. This is SoftBank’s first major investment in an asset manager, and it’s hoping that Fortress’ extensive private equity experience will help bolster its Vision Fund.
Verizon Still Loves Yahoo
…Data breaches and all. With that said, there is some renegotiation in order. The good news? The two are close to a new deal on Yahoo! Inc.’s (+1.40%) internet properties. The latest and greatest price tag would shave $250 million off the original $4.8 billion deal—which, believe it or not, would be a big burden lifted off the shoulder of Yahoo shareholders. Why? They’re happy to have any deal at all after speculation over recently revealed data breaches. It’s been rumored that the two companies have also been discussing an agreement to share any liabilities as a result of these data breaches. We hope Verizon knows what it’s inheriting. Yahoo shares have been up 2% after news of the tentative deal.
A Turnaround at Groupon?
…Daily deals are here to stay. Groupon came out with stellar earnings and solid 2017 guidance, sending shares up a whopping 23%. Groupon, whose stock has been crushed since its 2011 IPO, has undergone plenty of restructuring to win back investors—like downsizing from nearly 50 markets to just 15, and shifting its central focus to e-commerce. It also doesn’t hurt that Chinese giant Alibaba purchased nearly 6% of Groupon a couple months ago in December. And strikingly, Groupon claims to have paid nothing for the acquisition of longtime rival LivingSocial. Not a bad deal for taking a competitor out of market.
- Walmart acquires Moosejaw for $51 million
- Spotify moving U.S. headquarters to 4 World Trade Center
- Large activist investor, Trian, accumulates $3 billion stake in P&G
- CBS fourth quarter results hurt by lower NFL ratings
- Monday: Teva (+) Earnings
- Tuesday: AIG (-), T-Mobile (+), Credit Suisse (+/-), Dr. Pepper Snapple (-) Earnings; Producer Price Index (+)
- Wednesday: Cisco (+), Pepsi (+), Kraft Heinz (+/-), CBS (+/-), Marriott (+), Hilton (+/-), GoDaddy (+/-), Groupon (+) Earnings; Consumer Price Index (+); Retail Sales (+); Industrial Production (-)
- Thursday: Charter Communications, MGM Resorts, Hyatt Hotels, Wendy’s Earnings; Weekly Jobless Claims; Housing Starts
- Friday: Deere, J.M. Smucker Earnings
Winning Off the Court, but Losing on It
The Knicks and Lakers might be some of the NBA’s most disappointing franchises of the past few years (losing over two thirds of their games), but their owners are laughing all the way to the bank. After a lucrative media deal with ESPN and TNT and a new collective bargaining agreement, the value of NBA teams has skyrocketed:
- The average NBA franchise is worth $1.36 billion, three and a half times more than its worth five years ago. For comparison, the average MLB team is worth $1.30 billion and the average NFL team is worth $2.34 billion. Guess football is still king.
- The Knicks led the way with a $3.3 billion valuation. Despite going 32-50 last year, the team recorded an NBA-record operating profit of $141 million—thanks in large part to a new local cable deal. In Porzingis, they trust.
- The Lakers came in second with a valuation of $3 billion. Rounding out the top five were the Warriors ($2.6 billion), the Bulls ($2.5 billion) and the Celtics ($2.2 billion).
- The players are doing pretty well for themselves too: LeBron James, the highest earning NBA player, made a cool $86 million in 2016. After signing a lifetime deal with Nike last year, LeBron is chasing Michael Jordan (like always) to become the second billionaire athlete in history.
Interview Question of the Day
I live on Sunset Boulevard, where there are six houses on my side of the block. The house numbers are consecutive even numbers. The sum of all six house numbers is 8790. You don’t know which block I live on, and it’s a long street, but I will tell you that I live in the lowest number on my side of the block. What’s my address? Answer
Startup of the Day
StockX, a website that connects buyers and sellers with stock market-style bidding, has secured a new $6 million round of funding from an eye-popping list of celebrities. Known as the “stock market for sneakers,” StockX looks to capitalize on the resale shoe market which does more than $1 billion in sales each year. Eventually, the company hopes be expand to all consumer goods and be considered the “stock market of things.”
Food for Thought
It’s a sad day for Blackberry and its loyal supporters. BlackBerry’s share of the global smartphone market is now 0.0%. In the fourth quarter of 2016, more than 432 million smartphones were sold, and of those, just 207,900 were BlackBerry devices running its own operating system. To be precise, it’s 0.0481%.