“Why shouldn’t you be in jail?” — Rep. Michael Capuano to Wells Fargo CEO John Stumpf during a brutal four hours of questioning on the House floor yesterday. If you thought the illegal sales scandal that’s decimated Wells Fargo was going away anytime soon, think again.
- U.S. stocks fell yesterday as Deutsche Bank default fears frightened lenders after Bloomberg reported 10 hedge funds reduced their stakes in the struggling bank
- Fitbit plunged 10% after receiving a rare downgrade from Pacific Crest Securities, citing lagging demand for its core fitness product and low user engagement
Tech Giants Form Artificial Intelligence Alliance
…For education and ethics. Yes, you read that right. But the robot uprising hasn’t begun (yet). The partnership, formed by Google, Amazon, Facebook, Microsoft and IBM, seeks to set standards of practice, educate the public and review the ethics of AI. One player curiously missing from the mix: Apple, whose own AI research has been highly touted by the company. It seems Microsoft is planning to bring the big guns to the race, with the company announcing that it would be combining the teams behind its research group, Bing and virtual assistant Cortana to create a giant, AI-focused organization with over 5,000 employees. Who knows, maybe the Brew’s articles will be written by machines one day—or are they already…(spoiler alert: they’re not)
Crack Open a Pepsi
…Or a Pure Leaf tea or Naked juice, for that matter—because PepsiCo’s Q3 earnings report crushed analysts’ expectations by a hefty margin. Here are the deets: first off, revenue and earnings both came in well ahead of expectations, so that’s a nice start. Though the snack and drink giant’s CEO is “cautiously optimistic” about the future, Pepsi is seeing growth prospects shift across its product mix. Here’s an example: as consumers continue to avoid artificial sweeteners like the plague, Diet Pepsi has taken a sales hit, but Pepsi has responded—quite strongly—with its non-carbonated products, like Naked juice. To cap it off, analysts are now predicting EPS to rise to $4.78 this year from an earlier estimate of $4.71. All in a day’s work.
A Soda Company and a Donut Company Walk into a Bar
…And a few drinks later, we’ve got a deal. That’s exactly what Dunkin’ Brands Group (of Dunkin’ Donuts fame) and Coca-Cola did yesterday—forming a partnership to launch a line of ready-to-drink cold coffee beverages in the U.S. It’s like two celebrities just had a beautiful baby. It’s certainly an interesting move considering Starbucks controls 97% of the U.S. ready-to-drink coffee market thanks to a long-standing partnership with Pepsi. Uphill battle, much? Sounds like some healthy (and caffeinated) competition.
The U.S. Economy Still Isn’t Great
…But at least it’s better than we thought. Yesterday brought the third revision of second quarter GDP in the U.S., and you can turn that frown upside down—the previously-reported annualized figure of 1.1% was surprisingly revised higher to 1.4%. Granted, 1.4% is far from stellar, but we’ll take what we can get, especially in the seasonally slower first half of the year. So what fueled the jump? You can thank your friendly neighborhood corporation: businesses stepped up their investment spending more than previously thought. With that said, you, our fearless Brew readers, can still take credit for the bulk of the GDP growth—consumer spending alone accounted for a whopping 4.3% of growth.
- Qualcomm said to be in talks to buy NXP Semiconductors
- Samsung warns that its washing machines might explode too
- Spotify finally launches in Japan, the world’s second-largest music market
- Google’s Waze Carpool pilot expands to San Francisco-area commuters
- Monday: Carnival (+) Earnings; New Home Sales (+/-)
- Tuesday: Nike (-) Earnings; Consumer Confidence (+); S&P Case-Shiller Home Price Index (+/-)
- Wednesday: BlackBerry (+) Earnings; Durable Goods Orders (+/-)
- Thursday: PepsiCo (+), Costco (+), Accenture (+) Earnings; U.S. Q2 GDP (3rd Estimate) (+); Pending Home Sales (-); Weekly Jobless Claims (+/-)
- Friday: Personal Income and Outlays; Consumer Sentiment
The Gap is Real
The gender wage gap: appallingly, it’s still a thing in the U.S. But the gap is about more than just money: a new study published this week dove into the structural and cultural issues facing women in the workplace. Facebook COO Sheryl Sandberg’s group Leanin.org worked with McKinsey to survey more than 34,000 workers and analyze HR data from 132 companies. Their findings expand on the underrepresentation of women in senior roles in the corporate pipeline. Sound problematic? Here’s a quick look:
- While 54% of entry-level employees are men and 46% are women, the C-suite breakdown is less even: 89% are men. For young women in these companies, implications range from less mentoring and opportunities for growth to a sizeable ambition gap: 56% of men aspire to become a top executive, compared to just 40% of women.
- Office culture and management style play an implicit role, too. Compared to the men surveyed, women reported being less likely to be consulted for important decisions or assigned challenging projects, and more likely to be ignored in meetings.
- It’s not all doom and gloom. Here’s an upshot: two-thirds of women believe their companies are inclusive workplaces where they can be themselves. We’re getting there…right?
Interview Question of the Day
Can you arrange four nines to make them equal to 100? Hint: use two mathematical symbols. (Answer)
Business Person of the Day
Kasper Rorsted is the former CEO of Henkel AG, and was credited with leading a significant turnaround for the consumer products giant. What’s next? He’s now taking over as CEO of Adidas. In North America, Adidas only generates about $1 in sport-footwear and activewear sales for every $7 in Nike sales. Good luck, Kasper.
Food for Thought
Och-Ziff Capital Management, one of the largest hedge funds with $39 billion under management, agreed yesterday to pay $412 million in criminal and civil penalties. According to prosecutors, around $250 million in Och-Ziff funds were used in part to bribe the current president of the Democratic Republic of Congo—among others—in exchange for access to certain mining rights. That’s a no-no.
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