Apple Forced To Pay University Of Wisconsin Over $200 Million, Plus GE Tops Earnings Expectations

morning-brew

“MTCH” — Wall Street has a hot new date, and it’s going by the nickname MTCH. Over the weekend, Match, which owns many popular online dating sites (including Tinder and OKCupid), filed for an IPO under the ticker “MTCH.” Now you’ll have the chance to swipe right on the company that popularized the very idea of swiping right.

MARKET SNAPSHOT 

Twitter Pops, China GDP Drops

  • Stocks closed at their highs of the day on Friday to finish a generally strong, earnings-filled week: all three major indices had positive weeks (the Nasdaq led, up over a percent as oversold biotech stocks rallied), but small-caps noticeably underperformed.
  • Former Microsoft CEO Steve Ballmer disclosed a 4 percent stake in Twitter (via a tweet, of course), which puts his ownership stake higher than new CEO Jack Dorsey. It’s a much-needed vote of confidence for the struggling social media giant, and shares were appropriately up 4 percent on Friday. But don’t get too confident: Ballmer’s investing track record has proven he’s no Warren Buffett.
  • Chinese stocks were muted to kick off the week, despite plenty of economic noise: the world’s second-largest economy grew at a 6.9 percent pace in the third quarter, slightly beating expectations of 6.8 percent but still the slowest growth since the financial crisis.
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CORPORATE PRIMER

GE’s Fresh Start

GE has gone back to the basics, and their earnings show it. After divesting over $30 billion in their commercial lending arm and unveiling a plan to sell off $200 billion in assets from GE Capital, GE topped the Street’s expectations by reporting $2.51 billion in earnings with renewed focus on aviation, energy and transportation (i.e. their non-finance businesses). Investors remain fans of the company’s dramatic transformation plans, and shares jumped 4 percent on Friday.

Volkswagen’s Unwelcome Visitor

An emission rigging scandal, class-action lawsuits and severe financial penalties (ringing a bell?). Just when we thought things couldn’t get more out of hand, police raided Volkswagen’s headquarters in France. In light of evidence of “aggravated deception,” police straight-up barged in and seized computer hardware from the disgraced auto manufacturer. And there’s more: Martin Winterkorn, who already resigned as Volkswagen’s CEO in the immediate aftermath of the scandal, also resigned as chief executive of Porsche SE, which owns over half of Volkswagen’s voting shares. The hits just keep on coming.

Honeywell Pulls it Off

Honeywell, the conglomerate known for its consumer products (like thermostats) and aerospace (think rockets), reported third quarter earnings above analysts’ estimates, but a strong dollar and a weak global economy resulted in lower-than-expected revenue. The foreign currency exchange shifts alone brought revenue down 6 percent, and it was only Honeywell’s improved margins that kept overall profits strong.

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TODAY IN TECH

Apple Caught Red Handed

Apple got caught with its hand in the patent cookie jar on Friday. A U.S. jury ordered Apple to pay the University of Wisconsin $234 million for infringing on a patent license by using Wisconsin’s microchip technology in iPads and iPhones. The judge ruled that Apple had not willfully infringed on the patent, so they’re only paying $234 million out of the $400 million they were initially charged (that’s right, only). But Wisconsin isn’t finished badgering yet—last month, they launched another lawsuit targeting Apple’s newest chips and devices.

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: IBM, Morgan Stanley, Haliburton Earnings; China GDP
  • Tuesday: Chipotle, Verizon, Yahoo Earnings; Housing Starts
  • Wednesday: American Express, Boeing, Coca-Cola, eBay, General Motors, Las Vegas Sands, SanDisk Earnings
  • Thursday: Alphabet, Amazon, AT&T, McDonald’s, Microsoft, Under Armour Earnings; Existing Home Sales; Weekly Jobless Claims
  • Friday: Procter & Gamble Earnings

CURRENCY CRISIS 101

Think fast—what’s the exchange rate of the Venezuelan Bolívar to the U.S. dollar? Don’t worry if you don’t know: no one really does. One dollar can be worth 700 bolívars, or 6.3. How is this possible? Here’s more on the currency crisis in Venezuela:

  • As the price of oil, Venezuela’s main export, has fallen, so has Venezuela’s economy—to the tune of negative 10 percent just this year. Furthermore, the IMF predicts inflation this year will hit 159 percent. However, the government is adamant that the official exchange rate stay frozen at 6.3 bolívars to the dollar.
  • The black market may be a more reliable measure of the exchange rate, where one dollar goes for about 700 bolívars. This is a marked increase from the one-to-100 black market rate of just a year ago. This change shows the increasing lack of faith in the country’s economy and government.
  • So what’s the real disparity? Well, Venezuela’s minimum wage of 7,421 bolívars a month translates to either $1,178 or $10.60, depending on how you look at it. Quite the disparity.

INTERVIEW QUESTION OF THE DAY

What do the following words have in common: coughing, thirsty, defiant? (Answer)

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BUSINESS TERM OF THE DAY

Mad Hatter — A CEO or managerial team whose ability to lead a company is highly suspect. A mad hatter CEO will often make puzzling decisions that many, inside and outside the firm, may question. These types of CEOs are also known for making spontaneous decisions with little thought for the consequences.

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FOOD FOR THOUGHT
55 percent: the portion of Democrats who thought Hillary Clinton won last week’s first Democratic presidential debate.

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