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Goldman Sachs To Cut Dozens Of Investment Banking Jobs, Plus Salesforce Makes A Purchase

#Morning Brew
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“I am uncomfortable with the lack of urgency, stewardship and performance of our great company” — Lululemon founder Chip Wilson, who chastised his “athleisure” company and its lack of vision in a letter to investors. Maybe Chip needs to chill and do some yoga.

MARKET SNAPSHOT

Big Picture

  • U.S. stocks barely finished positive to start June, with economic data coming in weaker than investors anticipated, calling into question the overall strength of an economy likely about to have interest rates hiked

Market Movers

  • Under Armour fell 4% after the company revised its revenue figures based on the bankruptcy of Sports Authority, a major customer of UA
  • Whole Foods jumped nearly 5% after receiving an upgrade from Credit Suisse, which is a fan of the company’s new low-cost “365” store model

CORPORATE PRIMER

Profits: The Spring Collection

Who else? Michael Kors is bringing some serious financial style back to the retail sector. After narrowly beating analyst expectations on both the top and bottom line,shares soared 6%. This is a big deal: if you’ve been living under a rock, you might’ve missed the retail sector getting beaten to a pulp amidst a string of missed earnings (to be fair, Michael Kors was down 25% in the past three months too). Call it warm weather holding retailers back or a broken brick-and-mortar business model that e-commerce is destroying, but we’re just glad someone in the industry is keeping things “sporty, sexy and always glam”—thanks Mr. Kors.

Salesforce Makes a Purchase

If you’re a merger junkie like us, take heed—here’s your daily fix: cloud computing company Salesforce is buying out longtime business partner Demandware for $2.8 billion in sweet, sweet cash. The deal values Demandware at about $75 a share—a 56% premium to Tuesday’s closing price—and is Salesforce’s biggest acquisition to date. While Salesforce has had a sketchy track record with M&A, analysts see value in adding Demandware’s e-commerce revenue stream to its business model—and as the retail sector painfully knows, e-commerce is the place to be.

Box: What’s Inside

Let’s take a peek: Box, the cloud storage and file-hosting provider (the Brew is in a cloudy mood today) that competes with Dropbox and Google Drive (among others), reported $90 million in revenue last quarter, a massive 37% increase from just a year ago. While the company is still losing money, earnings still beat analyst estimates. That’s the good news. Here’s the bad: the company projects revenue of $95 million for the upcoming quarter, which is on the (very) low end of expectations. Couple this with the announcement of the departure of one of Box’s star engineers, and you have a recipe for investor concern: shares plummeted by as much as 12% after hours.

U.S. MACRO

Neglected and Alone

Let’s get serious here people. U.S. auto sales numbers for May are in, and they ain’t pretty. Sales fell 6%, partially attributable to fewer selling days on the calendar, but still a large decline compared to previous years. Certain companies fared better than others, but “better” is only relative: General Motors sales shot down 18%, while Ford “only” slipped 6%. Overall, it looks like Americans are choosing to stick with the cars they own, causing manufacturers to rely more on sales to rental car companies and other bulk buyers. Hang in there, autos.

OTHER STORIES

ECONOMIC CALENDAR

THINK YOU’RE TOO GOOD FOR CLEAN ENERGY?

Clean energy is a hot topic in today’s overheating world—and for good reason—but how’s renewable energy faring in terms of business? Not half bad, actually. Turns out there may be hope for the climate, as 2015 was the best year yet for therenewable energy sector in terms of investment and building. Here are the deets:

  • The renewable energy sector is still a fairly small industry, meaning there’s a lot more room for growth compared to more established energy industries (cough oil cough).
  • Where’s all the growth coming from? Turns out America isn’t in the lead—developing nations are. These countries invested a total of $156 billion in renewable energy last year, a 19% increase from 2014.
  • This makes up a pretty fat chunk of the world’s total investment of $286 billion—especially when you consider the 8% decline in investment by developed nations.
  • Say what? Why are developed nations slacking off? Simply put, unlike developed nations, developing countries have more flexibility in setting up their infrastructure (and aren’t tied down by a long term dependence on fossil fuels, if you know what we mean). With a fast-growing need for more energy capacity, developing nations are where it’s at.

INTERVIEW QUESTION OF THE DAY

What is the probability of drawing two sevens in a card deck? (Answer)

HISTORY-MAKING STATISTIC

Uber, aka the world’s most valuable private company (worth a casual $62.5 billion), has received the largest-ever single investment for a private company: $3.5 billionfrom Saudi Arabia’s main investment fund. This is part of Saudi Arabia’s push to diversify itself and move away from oil (as the Brew reported on last month); however, it’s still a strange place for Uber to seek funding, considering Saudi Arabia’s whole women-can’t-drive policy. Awkward.

FOOD FOR THOUGHT

From $4.5 billion last year to zero today—according to Forbes, the net worth of Theranos CEO and founder Elizabeth Holmes is now zero. That’s what happens when your high-flying blood testing company comes under fire for questionable accuracy and quality of its flagship blood tests. Better luck next time.

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