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Last we checked on General Electric, the company was cutting its dividend and looking for ways to sell off enough of its lines of business in order to stay afloat. Basically, it was pulling a WeWork.
In a move that would make even Gordon Gekko cringe, GE has announced that it is freezing its pension plan for 20k US workers as the company continues to look for ways to pay off its debt. On top of the freeze, the company is offering to buy out 100k former employees from their current pensions. Kiss Del Boca Vista goodbye.
In fairness to GE, the company is one of the last manufacturing conglomerates around to even offer a pension program (though entry has been closed since 2012). The gesture helped recruit talent in the past but has caused headaches of late.
GE is on the hook for pension and post-employment benefits programs that were underfunded by $27B last year. Freezing the plan doesn’t release the company from any of its current obligations. It does, however, stop the bleeding and will allow GE to cut its pension deficit by as much as $8B this year. I wonder if Jack Welch practiced saying “not my problem” in his mirror during his tenure as CEO?
The bottom line …
The employees themselves will be allowed to roll their pensions into GE’s 401k plan going forward. Meanwhile, the company’s main focus is to pay off its debt through cost-cutting measures. Some analysts see the pension move as a precursor to more job cuts.
Houston Rocket’s GM Daryl Morey had quite the Friday. It started off like any other: strolled into work late (presumably still drunk from last night), grabbed a cup of joe, and pulled up Twitter. Then he fired off the tweet heard round the world. Morey’s tweet supported the Hong Kong protesters (and democracy in general).
The only problem with that? More than 500M Chinese citizens watch the NBA, especially the Houston Rockets, following Yao Ming’s stint with the team. A large majority of those citizens do not “stand with Hong Kong,” especially if you ask the Chinese government.
Morey eventually deleted the tweet, but it was too late, the flood gates had been opened. Chinese citizens voiced their government-approved outrage, and calls for boycotts began to mount.
At one point, all Rockets gear had been wiped from every major Chinese e-comm site as if the team never existed. Some were even threatening to boycott their beloved star, Stephon Marbury *audible gasps*.
In response to the blowback, both Morey and the NBA issued statements that roughly equated to “sorry you feel that way,” not apologizing for the words themselves, but for the backlash they caused abroad.
The bottom line …
The NBA is between a rock and a hard place. It’ll either need to apologize to China (and face potential blowback stateside) or risk alienating a huge, rapidly growing market. Or, of course, they could just make everyone happy and make the Dunk Contest fun to watch again.
At stake are billions of dollars in potential revenue … and at least one Stephon Marbury shoe deal. Your move, Adam Silver.
IN OTHER NEWS
- Taking a breather. Israeli pot company, Breath of Life, has postponed its IPO on the Toronto Stock Exchange, citing subpar market conditions … also, Phish is playing that night. The cannabis company was originally looking to raise $113M via its public offering, at a range of C$27 to C$32 a share, but is sitting on the sidelines until market conditions improve. The marijuana market has been bearish since the spring due to regulatory issues, disappointing earnings, and vaping concerns.
- Cut it out. HSBC, which announced 4.7k job cuts in August, plans to cut up to 10k more employees, bringing the total headcount down to roughly 238k. Interim CEO Noel Quinn, who just took over in August, is looking to control costs while the bank deals with trade war and Brexit headwinds. This is far from the first bank to “tighten the belt” and “make tough decisions” this year, as Deutsche (lol), Barclays, and Citigroup have trimmed more than 60k worker bees combined.
- I stream, you stream, we all stream. Comcast’s NBCUniversal appointed a new boss to head its streaming service Peacock. As a part of the television-production restructuring efforts, Bonnie Hammer will be named chair(wo)man of the NBCUniversal Content Studios, overseeing its new streaming service and all content for NBCU outlets. Current EVP of Xfinity Services, Matt Strauss, will become chairman of Peacock, which will make its debut next April. Both Mr. Strauss and Ms. Hammer were seen confidently strutting around the office after the announcements.
- The (Bean) boys are back in town! Farmers rejoice (though, I doubt you’re reading this), as China is buying soybeans again. Chinese buyers bought more than 1.5M metric tons of US soybeans last week, which is the biggest purchase of those soiboiz in over a year. In August, China bought nearly $1B worth, which was the most since January 2018, but nowhere near the peak levels of 2017 when China purchased $15B in the year. Hmmm, wonder what happened? Agricultural purchases are a good barometer of how the trade talks are going, and while there is not a deal in place, there’s at least money changing hands. So we’ve got that going for us.
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