fortune--2020-05-05--Uber’s (potentially) twisty Lime deal

Uber’s (potentially) twisty Lime deal

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Here’s a company hunting for bargains during the coronavirus—even while it’s not cash rich.
Ride-hailing giant Uber is in talks to lead a $170 million round of funding in scooter-sharing business, Lime, according to the Information, citing sources. The talks come at a time when Lime’s business has ground to a halt amid the pandemic.
The deal drives straight into the playbook of many investors seeking downtrodden valuations amid the recent market upheaval. Uber, an existing investor in Lime, is seeking to significantly increase its stake at a bargain: The new deal values Lime at $510 million—79% below its last financing.
It’s just that… Uber is not a cash-rich Apple or Google, and is, in fact, one of the worst hit amid the pandemic. Stay-at-home orders have razed demand for the ride-hailing economy, with Uber recently discussing plans to cut about 20% of the company while its restaurant delivery service, Uber Eats, discontinued operations in seven countries. Uber had plans for profitability by the end of this year, only to withdraw its guidance as the pandemic spread around the world.
Making the deal even more interesting: As part of an agreement, per the report, Uber would offload the bike-and-scooter-rental business it acquired in 2018, Jump, to Lime in return for stock, in what seems like an admission that the in-house path to scooter-sharing dominance didn’t work out as planned.
Uber, which reports earnings on Thursday, is likely to argue that such an investment plays into its long-term strategy of becoming the “Amazon and Google of transportation”—and that the so-called last mile problem that scooters help solve isn’t going away even after the coronavirus.
But investors believe that consumer habits could shift dramatically even after shelter-in-place orders are lifted. Consumers may continue avoiding contact with other humans and the sharing economy by proxy—which will make that an even costlier, and more far-off dream for Uber.
Fintechs get funded: Confirming previous reports, stock-trading app Robinhood announced Monday that it had raised $280 million in Series F funding valuing the company at about $8.3 billion—an up-round compared to its last raise in July which then valued the business at $7.6 billion.
While Robinhood suffered a high-profile outage earlier this year, trading activity has continued to rise as consumers sought to capitalize on the coronavirus-induced market volatility. Sequoia Capital, an existing investor, led the round, and was joined by others including NEA, Ribbit Capital, 9Yards Capital, and Unusual Ventures. Read more.
Berlin-based neo-bank N26 meanwhile raised an additional $100 million in extended Series D funding from investors including Tencent and Peter Thiel’s Valar Ventures, keeping the company’s valuation at about $3.5 billion. Notably, the branchless bank already topped up the Series D back in July—raising $170 million. The company saw a dip in user growth in March and also has cut spending on things including marketing, but insists it is not running low on cash—but wants to be “well prepared.”
VENTURE DEALS
- Ninja Van, a Singapore-based express logistics company, raised $279 million in Series D funding. GeoPost alongside two sovereign wealth funds led the round, and were joined by investors including B Capital Group and Monk's Hill Ventures.
- Back Market, a New York-based refurbished electronics marketplace, raised $120 million in funding. Goldman Sachs, Aglaé Ventures, and Eurazeo Growth were the investors.
- Cockroach Labs, a New York-based maker of a distributed SQL database for enterprises, raised $86.6 million in Series D funding. Altimeter Capital and BOND co-led the round and was joined by investors including Benchmark, GV, Index Ventures, Redpoint Ventures, Sequoia Capital, and Tiger Capital.
- ApplyBoard, an Ontario-based platform for international students seeking to apply abroad, raised C$100 million ($71 million) in Series C funding. Drive Capital led the round, and was joined by investors including Fidelity Investments Canada, the Business Development Bank of Canada, and existing investors including Anthos Capital, Artiman Ventures, and Plug and Play Tech Center. The company is now valued at C$2 billion ($1.4 billion).
- MasterClass, a San Francisco-based startup offering online classes taught by celebrities, is in talks to raise at a valuation of about $800 million, Bloomberg reports citing sources. Read more.
- Ver Se Innovation, an India-based operator of online news and content platform Dailyhunt, raised $35.6 million in extended Series G funding. Lupa Systems (James Murdoch), Bytedance, Advent Management, and Goldman Sachs participated. Read more.
- NEAR Protocol, a San Francisco-based blockchain project, raised $32.6 million in funding. Andreessen Horowitz led the round and was joined by investors including Libertus, Blockchange and Animal Ventures. Read more.
- Proxymity, a London-based investor communications platform developed within Citi’s Institutional Clients Group, raised $20.5 million in funding. Investors include BNY Mellon, Citi, Clearstream, Computershare, Deutsche Bank, HSBC, JPMorgan, and State Street.
- Cloudstaff Modern Workforce, a Sydney, Australia-based cloud-based workforce provider, raised $20 million in Series B funding. Navegar led the round.
- Omilia, a Cyprus-based AI platform for call centers, raised $20 million in funding. Grafton Capital was the investor.
- Orca Security, a Los Angeles-based cybersecurity firm, raised $20 million in Series A funding. GGV Capital led the round, and was joined by investors including YL Ventures and SVCI (Silicon Valley CISO Investments).
- Finite State, a Columbus, Oh.-based supply chain and IoT security firm, raised $12.5 million in a Series A funding. Energy Impact Partners led the round, and was joined by investors including Zetta Venture Partners, and Niloofar Howe.
- Tehama, an Ontario-based virtual office platform, announced today that it has raised $10 million in a Series A funding. OMERS Ventures led the round, and was joined by investors including BDC Capital’s Industrial, nClean and Energy Technology (ICE) Venture Fund.
- Qwilr, a Sydney, Australia-based document design and automation tool, raised $7.3 million in Series A funding. Investors included AirTree Ventures, Skip Capital, and Robert Muñoz (cofounder of Typeform).
- Agicap, a Lyon, France-based startup building a SaaS platform for SMBs to manage their cash flows, raised €15 million ($16.4 million) in funding. Partech led the round and was joined by investors including BlackFin Capital Partners and Kima Ventures.
- nate, a New York-based intelligent automation company for consumers, raised $8 million in seed funding. Coatue Management and Canaan Partners led the round.
- Revuze, a Netanya, Israel-based market research company, raised $5.1 million in Series A funding. Maverick Ventures Israel led the round, and was joined by investors including existing investor Prytek.
- Instabug, a Cairo-based platform for mobile developers, raised $5 million in Series A funding. Accel led the round. Read more.
- Daily.co, a video API provider, raised $4.6 million in funding. Investors including Moxxie, Slack Fund, and SV Angel invested. Read more.
- Platform Science, a La Jolle, Calif.-based platform for fleet management software solutions, raised an undisclosed amount from Daimler Truck AG.
PRIVATE EQUITY
- Blackstone’s talks to acquire Soho China, a Chinese office property, developer, have reportedly stalled. The deal was valued at $4 billion. Read more.
- Silver Lake agreed to invest $750 million in Reliance Jio, the Indian telecom operator, valuing it at $65 billion. Facebook invested $5.7 billion in the firm less than two weeks earlier.
- Altaris Capital Partners acquired a 83% stake in Kindeva, a St. Paul, Minn.-based drug delivery system, from 3M (NYSE: MMM). The deal is valued at $650 million.
- Bought By Many, a London-based pet insurance provider, raised £78.4 million ($98 million). FTV Capital led the round.
- Sensor Tower, a San Francisco-based mobile app market intelligence firm, raised $45 million in funding. Riverwood Capital led the round. Read more.
- Kaufman Hall, backed by Madison Dearborn Partners, acquired Nashville, Tenn.-based Change Healthcare's (Nasdaq: CHNG) Connected Analytics business. Financial terms weren't disclosed.
- AE Industrial Partners invested $10 million in ThayerMahan, a Groton, Conn.-based, provider of autonomous marine sensing solutions.
- Ampersand Capital Partners invested in Tjoapack Netherlands, a Netherlands-based packaging organisation (CPO) for the pharmaceutical industry. Financial terms weren't disclosed.
- Ardian acquired a minority stake in Argon & Co, a Paris-based management consultancy. Financial terms weren't disclosed.
- Cimarron, backed by Turnbridge Capital, acquired Aereon, an Austin, Texas-based provider of emissions control solutions for the energy and infrastructure industries. Financial terms weren't disclosed.
- Levine Leichtman acquired SiPM, a Belgium-based maker of e-learning solutions for corporations. Financial terms weren't disclosed.
- Safeguard Medical, a portfolio company of Water Street Healthcare Partners, acquired Water-Jel Technologies, a Carlstadt, N.J.-based maker of emergency burn care products. Financial terms weren't disclosed.
- BV Investment Partners invested in StraighterLine, an education technology company. Financial terms weren't disclosed.
- Sauer Brands, a portfolio company of Falfurrias Capital Partners, acquired Chicago Custom Foods, a Chicago-based maker of popcorn seasonings. Financial terms weren't disclosed.
- Sonoma Brands acquired KRAVE, an artisanal jerky maker, from the Hershey Company. Financial terms weren't disclosed.
- McGraw-Hill and Cengage Learning Holdings, two providers of textbooks, terminated their planned merger. Cengage is backed by Apax, KKR, and Searchlight Capital Partners. McGraw-Hill is backed by Apollo.
.
OTHERS
- Alexion Pharmaceuticals (NASDAQ: ALXN) agreed to acquire Portola Pharmaceuticals (NASDAQ: PTLA), a U.S.-based drug developer, in a deal valued at $1.41 billion.
- AmerisourceBergen is weighing a deal with Walgreens Boots Alliance’s pharmaceutical wholesaling division, per Reuters. Read more.
- AppLovin invested in Redemption Games, a San Diego, Calif.-based mobile game maker. Financial terms weren't disclosed.
- Namogoo acquired Personali, a New York-based company specializing in AI-powered sales analytics platform. Financial terms weren't disclosed.
- Hertz Global Holdings, the car rental company, is preparing for a possible bankruptcy filing. Read more.
- Zhejiang Century Huatong has submitted a takeover bid for Leyou Technologies Holdings, a Hong Kong-based gaming company, Bloomberg reported citing sources. Leyou has been in talks with iDreamSky Technology Holdings, but the deal stalled amid coronavirus. Read more.
IPOS
- Nongfu Spring, the Chinese bottled water manufacturer, is pressing ahead with its Hong Kong IPO. It plans to raise $1 billion. Read more.
- GAN Limited, a U.K.-based provider of gambling software, raised $54 million in an offering of 6.4 million shares priced at $8.50 apiece. It plans to list on the Nasdaq as “GAN.” Read more.
- Ayala Pharmaceuticals, a Rehovot, Israel-based biotech focused on small molecule therapeutics for rare and aggressive cancers, plans to raise $50 million in an offering of 3.3 million shares priced at $14 to $16 apiece. It has yet to post a revenue and posted losses of $8.8 million in 2018. Israel Biotech Fund (35% pre-offering), aMoon (25%), and Harel Insurance Company (18.5%) back the firm. It plans to list on the Nasdaq as “AYLA.” Read more.
EXITS
- Nvidia plans to acquire Cumulus Networks, an Mountainview, Calif.-based data center company. Financial terms weren't disclosed.
Sinch acquired SAP Digital Interconnect (SDI), a cloud-based engagement services for the enterprise, from SAP (NYSE: SAP) for about $250 million.
- Triangle Digital Ventures acquired Covideo, an Indianapolis-based video-messaging software company, from APCO. Financial terms weren't disclosed.
F+FS
- Apollo Global Management plans to raise $20 billion across credit and other strategies in the coming year, seeking to take advantage of the market dislocation amid the virus. Read more.
- Ara Partners closed its debut fund, Ara Fund I, with approximately $400 million in capital commitments.
- Alumni Ventures Group is targeting an initial raise of $10 million for a new fund focused on companies working to accelerate the world’s recovery from the COVID-19 crisis.
- Oberland Capital Management raised $1.1 billion in capital commitments for its Oberland Capital Healthcare Solutions Fund and affiliated vehicles.
- Runa Capital raised $157 million for Runa Capital Fund III.
PEOPLE
- Vista Equity Partners hired Kirk Hourdajian as a vice president and Head of ESG and Impact.


fortune--2020-05-05--Public transit systems face plunging revenue amid the coronavirus pandemic

Most college students won ’ t get stimulus checks—but they should

Before the pandemic, Boston commuters bonded over a slew of ills that plagued the nation’s oldest subway system, from delays and breakdowns to the occasional derailment.
Now public transit systems nationwide are grappling with a new reality — drastically plummeting ridership and revenue caused by a stealthy virus that’s also sickening and killing transit workers.
With no clear predictions about when most riders will feel safe enough to return, public transportation networks from Washington to New York to Chicago are doing their best to hold on.
The future feels especially shaky in Boston, the poster child for unreliable public transit.
A few years ago, the city abruptly withdrew what was seen as a strong bid for the 2024 Olympics after incredulous commuters asked how it could even think about hosting the Games with a system that often can’t get them to work on time.
The Massachusetts Bay Transportation Authority, the nation’s fourth-busiest public transit system, is now running a modified Saturday schedule and has about 20% of its typical ridership on buses. On subways, ridership is just 8% of a typical pre-pandemic day.
Despite the skeletal ridership and declining revenue from advertising on buses, subways and trams, there’s been no talk of shuttering the system, even as the virus has sickened dozens of employees — mostly bus drivers — and killed one.
“We certainly have seen a durable level of ridership,” MBTA General Manager Steve Poftak said. “We get every indication from the timing of the trips that many of these folks are health care workers and health care personnel.”
The coronavirus aid bill approved by Congress and signed by President Donald Trump included $25 billion in public transit grants to help agencies contend with the coronavirus. MBTA chief financial officer Mary Ann O’Hara has said the system should be eligible for about $840 million of those funds. The beleaguered transit system — which was already struggling to replace 30-year-old subway and trolley cars — is projecting a $231 million budget deficit for the fiscal year that ends June 30.
The T, as it’s known locally, is looking to stretch those federal dollars. In part because of statutory base revenue it receives from the state, about three-fourths of the federal funds — well over $600 million — can be applied to the upcoming 2021 fiscal year, state Transportation Secretary Stephanie Pollack said.
“Some other transit agencies are being forced to use a higher proportion for their current fiscal year, and that’s not true for the T,” she said.
Joe Aiello, chair of the Fiscal and Management Control Board, said the T is also watching transit systems elsewhere.
“If there are some great ideas coming from other agencies, we should just steal them,” he said.
Weekday subway ridership typically tops 5 million in New York, the nation’s busiest public transit system. But overall mass transit use has plummeted more than 90% in recent weeks. The Metropolitan Transportation Authority also operates several bridges and tunnels, where it’s now losing revenue.
The MTA has upwards of 70,000 employees, about two-thirds of whom work for the subway. At least 95 employees have died from confirmed or suspected COVID-19 cases.
While it’s already received about $3.8 billion from the relief bill, the MTA asked for roughly the same amount to help cover an operating loss it estimates could reach $8.5 billion. Without additional federal funding, MTA head Patrick Foye said, “the present and future of the MTA are in serious jeopardy.”
An MTA-commissioned study estimated 60% of riders could return to the transit system by fall. But Foye acknowledged “no one really knows” if that will happen.
The pandemic arrived at a time when the proliferation of bike-sharing and ride-sharing services was already chipping away at subway ridership.
“A change that was going to take five to 10 years has basically taken place overnight,” said Tom Wright, president of urban planning think tank Regional Plan Association.
Against that backdrop, New York’s legislature approved a first-in-the-nation “congestion pricing” plan last year to fund desperately needed improvements to the 116-year-old subway system. The scheduled early 2021 rollout to charge motorists entering Manhattan’s central business district is now unlikely, Foye said.
In Washington, officials with the nation’s second-busiest public transit system are using plummeting ridership to shut down stations and accelerate construction plans.
The Washington Metropolitan Area Transit Authority announced last month it will suspend Silver Line service and close nine stations in Northern Virginia from Memorial Day through fall to rebuild platforms and connect the Silver Line to the Metro’s existing network.
Ridership at some stations currently totals just 1,200 people per weekday, less than 5% of normal traffic, Metro general manager Paul Wiedefeld said in a statement.
Even with the economic hit, few urban transit systems are trying to boost ridership now.
Some transportation systems, like the Chicago Transit Authority, are actively trying to discourage riders who aren’t on a critical mission. Others, requiring riders to enter and exit buses from the rear door to protect drivers, have abandoned some fare collection efforts altogether.
Even in the midst of the public health crisis, transit officials are beginning to think about the future — including how to ensure riders feel safe when maintaining a distance from others at rush hour is hard to imagine.
The MBTA is already providing bus drivers with a button to push if their bus becomes too crowded, allowing managers to transfer other buses to the area, transit officials said.
More coronavirus coverage from Fortune:
—The Rebuild Program: A project to help small businesses reopen amid a pandemic
—Saving lives vs. saving the economy is a false tradeoff, economists say
—When government fails businesses, communities can step up to help them thrive
—Unemployment claims are taking some states weeks to process. What to know
—Inside China’s reopening: 7 personal stories of life after lockdown
—Gilead’s remdesivir won’t be a COVID-19 miracle cure, but it’s an important first step
—Work from home, online grocery shopping, cord cutting: What coronavirus trends will stick
—PODCAST: How 2 CEOs outside of health care decided to pivot to fight COVID-19
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-05--Do we need $4 trillion worth of real estate for parking places?

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.
A pandemic has a way of making urgent topics less urgent. That in turn gives cover to entrepreneurs to work stealthily and somewhat less frantically on their products.
Autonomous driving an example. The field has gone in recent years from tomorrow to right around the corner to some time in the future to maybe one day.
I spoke last week to Dan Ammann, the former General Motors president who now runs Cruise, the majority-GM-owned self-driving car company in San Francisco. Ammann Zoomed from his home, sporting a black Chevrolet cap and a black Izod shirt. His company has grown from 40 people in 2016 to 1,800 today. It has raised $7 billion from Honda, SoftBank, T. Rowe Price, and others and is busy testing its technology on the complicated and hilly streets of San Francisco.
Every robotic car company has its own unique goals. Cruise’s goal is to operate is own ride-hailing service and to sell vehicles to other transportation companies. (It is already running a service for employees only.) Ammann sees a future where Cruise’s service puts a dent in the $4 trillion worth of cars in the U.S. that occupy $4 trillion worth of parking places. Isn’t that future pretty bad for majority shareholder GM? Says Ammann: “You might as well be part of making it happen.” (It, being the future.) He also notes that GM’s profit drivers today, at least pre-pandemic, were in pickup trucks for rural customers; Cruise aims to make its money in cities.
Cruise is betting its technology will improve dramatically over time, making it safer and more commercially attractive than the competition. There is plenty of it.
***
I visited the premium sneaker reseller Stadium Goods’ office just after a New York snowstorm in 2017. I interviewed its CEO as part of a story I was writing about Alibaba. One of the joys of being a business journalist is learning about companies you otherwise would know nothing about. Stadium Goods has done really well since then, according to this fun piece over the weekend in WSJ Magazine.
***
I’ve been trading movie recommendations with friends who have middle schoolers. The goal: not too juvenile but also not too mature/disturbing/violent/adult. I’d love to hear your suggestions. My family’s last three, legal-themed films, in this order: On the Basis of Sex, Legally Blonde (it held up really well), and RBG. Two thoughts: Stay healthy, Justice Ginsburg, and The Future Is Female.
***
(Correction, May 7, 2020: An earlier version of this story misstated the origins of Cruise’s ride hailing app. It was developed internally.)
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
I guess you're just what I needed. My finger had been hovering over the "buy" button for weeks, and I finally got to press it on Monday (for one of our involuntary at-home students). Apple debuted an update to its 13-inch MacBook Pro laptop that does away with the horrendous butterfly switch keyboard. In a telling detail about Intel's struggles, some of the new Apple models still have three-year-old CPUs. Intel's newest CPUs aren't much faster on most tasks except graphics, turns out.
I don't mind you comin' here and wastin' all my time. Speaking of involuntary at-home students, when colleges and universities shut down due to the pandemic, most said they'd still offer classes, just online. Now students from at least 25 schools, including Cornell, Purdue, and the University of Colorado, are suing, alleging that the online options fall short and they should get partial refunds of tuition and housing costs.
I needed someone to feed. The weak economy is likely driving some consolidation in the startup scene. Nvidia bought network software specialist Cumulus Networks. And Intel is paying almost $900 million for transit and mobility app developer Moovit. Meanwhile, Uber is looking to invest more in Lime, at 20% the valuation of Lime's 2018 fundraising, and get an option to buy the scooter rental company outright.
It doesn't matter where you've been. While they perfect a contact-tracing system of sorts, Apple and Google have decided the phone-based plan will not allow GPS tracking, the better to protect user privacy. But that's thwarting the desire of some public health experts who want tracing apps to collect such data to help identify disease hotspots.
I don't mind you hangin' out. Fortune's own Ellen McGirt, who writes our raceAhead newsletter, will be a guest today at 1 p.m. ET/ 10 a.m. PT on Salesforce’s Leading Through Change online series, discussing the impact of COVID-19 and race in America. Other guests will be CNN’s Van Jones and epidemiologist Dr. Camara Jones. The livestream will air on Twitter, LinkedIn, Facebook, and on Salesforce's website.
(Headline reference video explainer, with thanks to The Cars and the late, great Ric Ocasek.)
FOOD FOR THOUGHT
Today's food for thought goes pretty deep. In a timely essay for our pandemic times, tech thinker Jennifer Schaffer writing in The Baffler pulls back the curtain on the service app economy to consider what she sees as the exploitive and sexist underpinnings of the system.
What concerns me as much as these developments is the broader picture of which they form only a part: a world in which the exact forms of labor women have fought to have recognized and remunerated—chief among them caretaking labor, tedious household labor, buoying-the-male-ego labor, service-with-a-smile labor—are being co-opted, monetized, and sold back to us as shiny, premium, cutting-edge tech, the intermediary step of individual households outsourcing such tasks to workers primarily from the Global South having been insufficiently profitable for the Silicon Valley brain trust. As automation rises, technology will increasingly undercut the wages of these workers; the human workers who depend on these precarious gigs are viewed by the tech industry and the broader economy as a temporary inefficiency.
ON THE MOVE
Upset with how Amazon has treated critical workers and failed to protect the health of warehouse workers, vice president and well-known programmer Tim Bray said he was quitting on Monday. Citing a "vein of a vein of toxicity running through the company culture," Bray writes on his blog: "I choose neither to serve nor drink that poison"...The former CTO of Pandora, Chris Martin, is joining Lyft as VP of data science and machine learning...Quest Software hired Patrick Nichols, former CEO of Corel Corp., as its new top boss...Cynthia Hogan, Apple’s VP for public policy and government affairs, is helping Joe Biden's campaign vet vice presidential possibilities...Maggie Zhang, former EVP of video research and insights at Dentsu Aegis Network, is jumping to Amazon to work on advertising and audience measurement for Prime Video.
IN CASE YOU MISSED IT
How A.I. may help solve science’s ‘reproducibility’ crisis By Jonathan Vanian
How Marc Benioff is helping out during the coronavirus pandemic By Rachel Schallom
Robinhood raises $280 million in push for global expansion By Jeff John Roberts
Disney earnings preview: A sprawling media empire in the deep end By Aric Jenkins
How to play live pro sports in a pandemic? Taiwan, South Korea offer lessons By Grady Mcgregor
(Some of these stories require a subscription to access. There is a 50% discount for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.)
BEFORE YOU GO
Try and keep a dry eye while you admire the mad skills, creativity, and pure joie de vivre of this video made by a bunch of Juilliard students, staff, and alumnae (hat tip to Jason Kottke for the link). Best watched on a screen somewhat larger than your phone.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-05-05--Why grandparents are essential to the economy—and parents’ sanity

Good morning, Broadsheet readers! Ida B. Wells wins a posthumous Pulitzer, Rep. Alexandria Ocasio-Cortez’s district is now a coronavirus epicenter, and we miss our parents and grandparents—for all kinds of reasons. Have a nice Tuesday.
Today’s essay comes to us courtesy of our colleague Michal Lev-Ram:
– It takes a village. My editor, Adam Lashinsky, taught me about the “I want my mommy” moment several years ago. I had actually experienced it plenty of times before, but never given it a name—leave it to an editor to come up with a headline for an emotional state.
The “I want my mommy” moment can mean different things for different people. For journalists, it is best described as the 11th hour of a deadline, that stomach-churning, career-questioning existential crisis you claw your way through when trying to finalize (or, um, start) a draft when you have very little time left. It usually hits you at around 2 o’clock in the morning, or sometime thereafter, and may be preceded by a few days of poor personal hygiene.
Lately, I’ve been feeling the “I want my mommy” moment a lot, but not just while on deadline. My mom—and dad, he does his part too!—are among the 22% of grandparents who regularly provide childcare for their grandchildren in the U.S. (This stat comes from a 2014 study from Pew Research Center, and I’m guessing the number hasn’t significantly fluctuated since). Before the pandemic, my parents regularly picked up my three kids from school and daycare. Now, not only do they not babysit their grandchildren, they don’t even see them because we want to be cautious—seniors face higher risks of complications from the virus, as we all know.
This reality has been hard on us all, my parents included. And it is particularly challenging not knowing when it will end. The virus has made me realize just how much I rely on my parents to help with my children—and how difficult it is parenting without them. My grandparents did the same for my mom, especially in the days when she was single, with two very young daughters and a full-time job. Growing up, we spent almost every weekend at their house. It was my second home, and I’ve always wanted my children to have the same closeness to their grandparents. It’s not just a matter of bonding though: My parents play a huge role in my ability to do my job, providing an unpaid but invaluable service to our economy, as many other grandparents and family members do.
I know I’m lucky. I have a job I can do remotely. I live 10 minutes away from my parents, and they are alive and well and an incredibly vital part of my children’s upbringing, even over Zoom and FaceTime—our modes of communication for the time being. (An extra perk: My mom makes homemade tahini to-go for my sister and I, and we pick it up from their doorstep weekly.)
But I ache for the days that I can call them up and just stop by. To drop off the kids when my toddler refuses to nap and I have a story to turn in. To give them a hug. Yes, I know I’m lucky. And I realize I’m 40 years old. But I still want my mommy.
Michal Lev-Ram
michal.levram@fortune.com
@mlevram
Today’s Broadsheet was produced by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Prizewinning reporting. Ida B. Wells won a long-overdue Pulitzer yesterday. The groundbreaking journalist who reported on violence against African-Americans was awarded a posthumous special citation. Other 2020 Pulitzer winners include Nikole Hannah-Jones, who oversaw the New York Times' 1619 Project, and author Anne Boyer. Poynter
- Post-lockdown life. Our Fortune colleagues in Hong Kong documented what re-opening a country looks like. Seven people from seven different Chinese cities, including Chengdu coding education company founder Jasmine Yang, Shanghai consultant Vicky Zhao, and Beijing communications professional Cathy Fu, adjust to the new normal. Fortune
- NBC makes news. Andy Lack is out as NBC News chairman after facing criticism for his handling of the sexual assault allegations against Matt Lauer and for allegedly quashing reporting about Harvey Weinstein. On-air talent including Rachel Maddow had questioned his leadership. Fortune
- Tune in. Our colleague Ellen McGirt, author of Broadsheet sister newsletter raceAhead (subscribe!), will appear on Salesforce's Leading for Change series to discuss the intersection of COVID-19 and race in America today. Watch at 10 a.m. PT/1 p.m. ET here.
IN CASE YOU MISSED IT
- District devastation. The Bronx and Queens congressional district represented by Rep. Alexandria Ocasio-Cortez is now an epicenter of the coronavirus outbreak. Ocasio-Cortez feels that the disconnect with other lawmakers who haven't experienced the personal toll—everyone in her district knows someone who has died, she says—is yet another way she has had a Congressional experience far different from those of than her peers. New York Times
- No deal. L Brands' deal to sell its Victoria's Secret brand to Sycamore Partners is off after the coronavirus crisis complicated matters. L Brands says it still plans to split itself in two and see longtime CEO Les Wexner exit after scrutiny of his ties to convicted sex offender Jeffrey Epstein and reports of a toxic culture at the lingerie brand. Wall Street Journal
- Shed a tear. During the coronavirus pandemic, more leaders are crying in public—but who's allowed to shed those public tears? It's still mostly men who are praised for displaying emotion, but leadership traits associated with women, like empathy and vulnerability, are more valued than ever. New York Times
- Financial star. After steering Peru's coronavirus economic recovery package, finance minister Maria Antonieta Alva is suddenly a national celebrity. The 35-year-old gets stopped for selfies by people who've noted the plan's support of small businesses and ordinary citizens. Bloomberg
ON MY RADAR
What do we know about the woman who invented leavened bread? Slate
How CBS legal drama All Rise made its virtual coronavirus episode Fortune
How to celebrate Mother's Day from a distance MEL Magazine
PARTING WORDS
"Sometimes, for me, it’s almost like a therapy session. ... You realize that, the problems you’re having—you’re not facing it alone."
-Atlanta Mayor Keisha Lance Bottoms on U.S. Conference of Mayors conference calls


fortune--2020-05-05--French doctors confirm COVID-19 case from December, throwing Europe outbreak timeline into question

A patient hospitalized with flu-like symptoms at the end of December in France turned out to have had Covid-19, a finding that suggests the new coronavirus was spreading there at least a month earlier than official records show.
The 42-year-old fishmonger showed up at a hospital near Paris on Dec. 27 with a cough, headache and fever and was treated with antibiotics and discharged after two days. Doctors found he had Covid-19 by retroactively testing his respiratory samples along with those from a handful of hospitalized patients, describing their work in a case report.
The finding contradicts official statistics, which show the first Covid-19 cases in France occurred in people who returned from Wuhan, China, at the end of January. They also raise questions about how the patient was infected. Virologists who studied the main strains of the virus circulating in France last month concluded that they probably didn’t come directly from China or Italy, and had been spreading undocumented for some time.
“Identifying the first infected patient is of great epidemiological interest as it changes dramatically our knowledge regarding Sars-CoV-2 and its spreading in the country,” Yves Cohen, the head of intensive care at two large hospitals northeast of Paris, and colleagues wrote in the report. “Moreover, the absence of a link with China and the lack of recent travel suggest that the disease was already spreading among the French population at the end of December.”
The researchers said official numbers, which peg Covid-19 cases at 203,253 in France, probably underestimate the disease’s impact, and that their findings could “change our understanding of the dynamic of the epidemic.”
A spokesman for the World Health Organization said other countries may make similar discoveries by running new tests on samples from patients who were sick in December and January.
“It’s the old story of the deeper you look, the more you find,” WHO spokesman Christian Lindmeier said at a press briefing Tuesday.
Cohen and his team reviewed medical records of patients admitted from early December to mid-January. The researchers selected 14 frozen respiratory samples from people with Covid-19-like symptoms who hadn’t tested positive for other coronaviruses or the flu. When one came up positive for Sars-CoV-2, they confirmed the result with another more powerful test that checked the quality of the sample.
The patient, a man born in Algeria who hadn’t traveled there since August, had a medical history of asthma and type 2 diabetes.
He came to the emergency ward on Dec. 27 with a blood-stained cough, headache and a fever that had developed over the previous four days. A CT scan of his lungs was opaque, a sign of tissue damage and abnormalities. He was admitted to intensive care, treated with antibiotics and discharged on Dec. 29 after getting better.
One of the man’s children reportedly had flu-like symptoms before his developed. It’s likely that “many asymptomatic patients were not diagnosed during January 2020 and contributed to the spread of this epidemic,” the authors wrote.
Read other ‘reopening’ stories in Fortune:
—A Shenzhen entrepreneur gets a 6 a.m. throat swab and mandatory quarantine
—A tech founder in Chengdu returns to a changed workplace
—A Shanghai consultant eschews a contact-tracing app
—A startup operations manager in Hangzhou sees automation accelerating
—A Beijing tech worker needs a quarantine certificate to dine out
—A Harbin university professor confronts a second lockdown
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-05-06--The pandemic makes the case for more transparent layoffs

This U.K. scientist helped shape the country ’ s social distancing rules .
Then he broke them

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Call it layoffs, downsizing, or RIFs (reduction in force). Whatever name you put on it, cutting your workforce is never a pleasant process—and it always has a profoundly damaging effect, not only on those who have been let go but also, to a lesser extent, on those who stay on.
But could there a better way to do layoffs? If there was ever a time to innovate on how we navigate through this painful but often inevitable aspect of running a business, it would be now.
The COVID-19 outbreak has led to massive levels of workforce reductions, with the unemployment rate in the United States now estimated to be surging above 15%. Employers who are letting go of large proportions of their staff know that they are releasing them into this bleak wilderness. That’s why some managers, particularly in the tech startup sector, are trying to find new ways to lessen the blow.
“When we recognized we were going to have to restructure the company, we told people very quickly,” says Kieran Snyder, co-founder and chief executive officer of Seattle-based Textio, an artificial intelligence-powered “augmented writing” service for corporations. “We shared with the company a week before that we knew we would need to make some changes.”
Snyder challenged the conventional wisdom—or rather, practice—that layoffs should only be announced on the very day they are carried out. And while she says it was hard making any accurate business forecasts in the current state of affairs, she also says that sharing what you do know, and what you can foresee, is key. It can do a lot to prepare employees, both practically and emotionally, for what’s to come, and to provide them with better understanding of why their jobs are being eliminated.
Henry Ward, the CEO of Carta, a Palo Alto, Calif.-based equity management platform, started talking to his employees about how the pandemic could impact their business outlook about five weeks before pulling the trigger on layoffs. Two weeks before the cuts, he told his workforce that he can’t imagine not having to let some employees go. “What I tell other CEOs is that it’s not enough that they’re transparent on the day of, you have to be transparent up until that day.”
To be sure, that’s easier to do at privately-held companies like Textio and Carta, which tend to be smaller and aren’t beholden to the fluctuations of their stock price. Still, even scrappy tech startups don’t have a particularly glorious history of openness when it comes to layoffs.
“Many founders still think that productivity will be lost, and that it’s a morale drain [if they talk about layoffs too early],” says Ward, who announced definitive layoffs on a Friday and notified impacted employees five days later. “It’s true that nothing got done on that Friday,” he admits. “But in our experience, in the weeks leading up to the layoffs, productivity actually went up.”
Ward does say that, in retrospect, he would have probably shortened the time between announcing the layoffs and actually carrying them out, maybe notifying employees by Monday, not Wednesday. But in general, he thinks employees prefer having some sort of a heads up, and an understanding of why layoffs are happening in the first place. (A note: Recent media reports have speculated that Carta is in the midst of raising a new round of funding; the company declined to comment on the rumors.)
Ward tossed out other standard layoff procedures as well. “We let all of the employees [who were laid off] keep their laptops,” says the CEO. “Many of them didn’t have a laptop at home, and what are we going to do with 150 computers shipped over to our I.T. guy’s home anyways? It’s such a cheap show of good will.”
If you’re wondering how the tech department felt about Ward’s decision, yes, they freaked out. (For security reasons, let-go employees are typically asked to turn in their company-issued devices the same day they are let go.) But Ward says he believes ex-employees were actually more likely to comply with security protocols because it was all done in “good faith.”
“We just asked them to wipe their laptops clean and take a screenshot to show us,” he explains.
Letting ex-employees keep their laptops didn’t cost Ward anything. But it can mean a lot for those who are now jobless and may not have had another computer at home. The current economic climate, coupled with the shutdown status in many states—including California and Washington, where Carta and Textio are based—makes it more challenging to network and job-hunt. Creative and generous ways of thinking about providing assistance for employees once they are let go can go a long way. And it matters not only to those directly impacted, but also to those who are still a part of your workforce. “Whether they’re leaving or staying, employees really care about how their friends are being treated,” says Ward.
Both Ward and Snyder gave their employees generous severance packages—starting at three months and one month, respectively, with extended health coverage as well. But they also found other ways to help newly laid-off employees navigate through their new reality.
Snyder asked one of her human resources execs to do “reverse recruiting”—write up resumes for those employees who were asked to depart. And while many leaders wouldn’t have wanted to call attention to their company’s layoffs, she also went to Twitter to spread the word about some of the specific individuals whose jobs she cut, encouraging other employers to hire them. “Once people had shared their news, I felt responsible and committed to help them be seen,” says Snyder. “We had employees and former employees who also mobilized to help.” (Some larger companies are also thinking about this creatively: Accenture, ServiceNow, Lincoln Financial Group and Verizon recently banded together to launch a website that aims to help their laid off or furloughed employees find new jobs.)
Lisa Semerdjian, a former senior recruiter at Textio whose job was cut in the recent round of layoffs, says she was very grateful for all of help and lead generation for new jobs on the part of Snyder and other former colleagues. Still, with all of the layoffs happening at so many tech companies, she says job searching has been very difficult. “My LinkedIn feed is very sad,” says Semerdjian, who worked at Textio for one and a half years.
In other words, there is only so much that even the most well-meaning and creative leaders can do. But a little empathy can go a long way, especially today.
After announcing the layoffs, Snyder created a Slack channel for people who wanted to say farewell to those who were leaving—and for those who were leaving to share their personal contact information, if they wished. “It’s an acutely painful thing not to get to say farewell in person,” says Snyder.
It’s also an acutely painful thing to find yourself jobless in today’s economy, as millions of Americans know all too well. With more layoffs expected in the coming weeks and months, across so many different sectors, more business leaders could and should rethink the old ways of conducting layoffs. While it may never be pleasant, there will always be room for improvement.
More coronavirus coverage from Fortune:
—The Rebuild Program: A project to help small businesses reopen amid a pandemic
—Saving lives vs. saving the economy is a false tradeoff, economists say
—States can’t access emergency COVID-19 election funding because of steep match rates
—Unemployment claims are taking some states weeks to process. What to know
—Inside China’s reopening: 7 personal stories of life after lockdown
—How to play live pro sports in a pandemic? Taiwan, South Korea offer lessons
—Work from home, online grocery shopping, cord cutting: What coronavirus trends will stick
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-06--Where’s the beef? Wendy’s runs low on hamburger patties as coronavirus socks America’s beef supply c

Where’s the beef? Wendy’s runs low on hamburger patties as coronavirus socks America’s beef supply chain

Wendy’s Co., the fast-food chain that touts its burgers as fresh and never frozen, said that tight meat supplies are causing intermittent shortages of menu items at its restaurants.
“Beef suppliers across North America are currently facing production challenges,” the company said in an email. “Because of this, some of our menu items may be in short supply from time to time at some restaurants in this current environment.”
Wendy’s is making hamburger deliveries two to three times a week to restaurants and is working with suppliers to monitor the situation. The company said it’s trying to minimize the impact on restaurants and customers.
Customers have taken to social media to flag the lack of burgers—the chain’s signature item—on Wendy’s menus at some locations. About 18% of Wendy’s restaurants were “completely sold out of beef items as of Monday evening,” Stephens analyst James Rutherford said in a research note, citing his company’s data analysis, which reviewed the online menu of every Wendy’s nationwide.
North America’s meat-supply chain has fallen apart as coroanvirus outbreaks shutter slaughterhouses, heightening the prospect that pork, beef and chicken may go missing from grocery shelves and restaurant menus. About a dozen slaughterhouses shut last month because of infections among employees jammed together on processing lines.
Wendy’s shares closed down 2.4% to $18.81 on Tuesday. The stock has dropped about 16% in 2020. The company is scheduled to report first-quarter results this morning before the start of trading.
Vulnerable Supply
The company spent years establishing itself as the first major fast-food chain to offer fresh-never-frozen beef. Rivals such as McDonald’s Corp. have followed suit. It’s a shift that has left some companies more vulnerable to disruptions to America’s beef supply chain than ones that still rely on imports from Australia and other countries.
Rutherford said that some states have full menus at all locations while some, like Ohio, Michigan, Tennessee, Connecticut and New York, have 30% or more of restaurants without fresh beef on the menu.
Wendy’s is more exposed to the shortage than other fast-food chains because of its focus on fresh beef, but “a short outage is not material” and there could be a quick improvement in supply, Rutherford said. Sales trends at Wendy’s have been strong in recent weeks, he added.
More coronavirus coverage from Fortune:
—The Rebuild Program: A project to help small businesses reopen amid a pandemic
—Saving lives vs. saving the economy is a false tradeoff, economists say
—States can’t access emergency COVID-19 election funding because of steep match rates
—Unemployment claims are taking some states weeks to process.What to know
—Inside China’s reopening: 7 personal stories of life after lockdown
—How to play live pro sports in a pandemic? Taiwan, South Korea offer lessons
—Work from home, online grocery shopping, cord cutting: What coronavirus trends will stick
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-06--This U.K. scientist helped shape the country’s social distancing rules. Then he broke them

The pandemic has been an impetus for innovation

The scientist whose analysis pushed Boris Johnson to put the U.K. into lockdown has resigned from his advisory role after the Telegraph reported he’d broken social distancing rules to meet a woman.
Neil Ferguson, an epidemiologist at Imperial College London, led the team that produced a model in March showing deaths from coronavirus would shoot up and overwhelm the health service without a lockdown.
He said Tuesday evening he had “stepped back” from the government’s Scientific Advisory Group for Emergencies, which has been guiding the British response, on Tuesday evening. Its members are under increasing pressure over their advice, with the U.K. death toll now the highest in Europe.
“I accept I made an error of judgment and took the wrong course of action,” Ferguson said in an emailed statement. “I acted in the belief that I was immune, having tested positive for coronavirus and completely isolated myself for almost two weeks. I deeply regret any undermining of the clear messages around the continued need for social distancing.”
More coronavirus coverage from Fortune:
—The Rebuild Program: A project to help small businesses reopen amid a pandemic
—Saving lives vs. saving the economy is a false tradeoff, economists say
—States can’t access emergency COVID-19 election funding because of steep match rates
—Unemployment claims are taking some states weeks to process. What to know
—Inside China’s reopening: 7 personal stories of life after lockdown
—How to play live pro sports in a pandemic? Taiwan, South Korea offer lessons
—Work from home, online grocery shopping, cord cutting: What coronavirus trends will stick
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-06--Does Apple’s stock buyback strategy make sense in this market?

For the past half decade, Apple greatly enriched its shareholders by shrewdly deploying buybacks. But the approach that was a splendid gambit when its shares were cheap is looking like a rigid, questionable strategy now that they’re far from a bargain.
At Berkshire Hathaway’s virtual shareholder meeting on May 2, Warren Buffett delivered a staunch defense of share buybacks. “It’s very politically correct to be against buybacks,” he declared. The federal COVID-19 relief programs, Buffett noted, ban recipients of loans and grants from repurchasing shares, underscoring how “fashionable” it’s become to join “the cry about how terrible it is that companies have bought back stock.” But Buffett reprised his oft-stated conviction that what’s become the most popular practice of returning cash to investors is valuable and responsible because it allows them to build their ownership stakes without being forced to take their share of annual profits in taxable dividends, “whether they want them or not.”
Buffett added an important proviso: Repurchases should be opportunistic, not routine. “Companies should buy [stock] back below what they think it’s worth,” he said. “If the stock is selling below what it’s worth, it’s a big mistake not to buy the stock.” Buffett cautioned that announcing a multibillion buyback program for a given year can lock management into loading up on shares even if they’re overpriced. “You hear about all these programs where we’re going to spend $5 billion or $10 billion, and that’s like saying you’re buying some business this year for $5 billion or $10 billion and not knowing what you’re going to get for the money,” Buffett warned.
Buffett’s Berkshire Hathaway holds $70 billion in Apple stock, amounting to around one-quarter of its total portfolio. Berkshire has profited handsomely from the iPhone-maker’s policy of giant annual repurchases, the likes of which corporate America has never seen, and Buffett is a big fan of CEO Tim Cook and its top management. But Apple’s pledge to keep repurchases rolling when its stock hovers at lofty valuations makes it logical to apply Buffett’s standard and pose the question: Is the king of buybacks so infatuated with its own shares that it will keep buying at any price?
In the past, Apple’s buyback strategy has paid off big-time
In its seond-quarter earnings release on April 30, Apple announced that it’s adding $50 billion to its repurchase program, bringing the total available to $90.5 billion. It’s hardly surprising that Apple richly replenished the buyback pool: Over the past half decade, repurchases have long been its strongest lever for rewarding shareholders.
Over fiscal years starting on Oct. 1, 2014 (Apple’s fiscal year ends Sept. 30) through March 2020, Apple generated $321 billion in free cash flow and channeled $278 billion, or 86%, into repurchases. That policy proved a big success. Apple paid an average price of $160 per share, a 45% discount to its early May level of $291. Over those five-and-a-half years, Apple has shrunk the number of shares outstanding by over 26%, from 5.865 to 4.334 billion. Shareholders who’ve owned Apple since 2014 have seen their stake in its profits grow by more than a quarter thanks to that regular program of buybacks. That’s a case study in what Buffett calls the virtue of buybacks.
Buybacks were particularly essential for Apple, because its profits, though gigantic, barely grew. From 2015 to 2019, Apple’s earnings budged less than 4% from $53.4 billion to $55.3 billion. Yet its earnings per share jumped almost 29%. It was the big buybacks that by lowering the float by 25% drove roughly 90% of the full increase in EPS. For fiscal year 2020, repurchases once again should account for almost all of any rise in EPS, because earnings are likely to stay flat at best. Apple disclosed that problems with its supply chain in China will delay the launch of its 5G product, the iPhone 12, and COVID-19’s hit to consumer spending is slowing sales of pricey flagship iPhones.
The market radically repriced Apple last year
Until recently, Apple was garnering outsize benefits because it was buying cheap. From October 2014 to mid-2019, its price-to-earnings multiple averaged around 16. In effect, investors were valuing Apple as what its numbers portrayed, a wondrous machine that generated incredible amounts of cash but barely grew. But in July of last year, Apple seemed to take on new glamour as part of the FAANG club that includes Facebook, Amazon, Netflix and Google, all go-go growth stocks. Suddenly, investors started pricing Apple a lot less like an old reliable, and more like a swaggering FAANG. From summer 2019 to the market peak in February, its shares jumped from under $200 to $325, a 65% climb that handily beat the S&P 500.
Amazingly, the coronavirus crisis barely dimmed the magic. On May 4, Apple shares stood at $292, a retreat of just 10% since the crisis struck. Over the period of this epic run-up, Apple’s net earnings weren’t ascending, they were flat as usual. Its stock price suddenly uncoupled from its underlying profits, and took flight. Even now, its P/E sits at 23, 44% higher than its five-year average prior to the takeoff.
Put simply, in a matter of months, investors recast Apple as a growth stock, then when the virus crisis struck, recast it again as the safest of safe havens in the storm of the century. Suddenly, buybacks that looked like a no-brainer when Apple was a steal look a lot more questionable at its new, premium valuation.
The big rise in price didn’t slow Apple’s campaign. In the six months from October through March, it spent $38.5 billion buying back shares at $285, almost twice the $147 average for the previous five years.
The big run-up makes buybacks far less valuable
When Apple repurchased a staggering $73 billion in stock during 2018, it was paying a P/E of around 16. So for every dollar spent, Apple raised EPS by 6.25¢, or 6.25%. The deals were even sweeter at multiples of 14 (plus 7.1% for EPS) in 2015 and 12 (plus 8.3%) in 2016.
But at to today’s P/E of 23, Apple’s investors will only garner EPS gains of 4.34% for each dollar of buybacks. Now, Apple is facing the challenge Buffett posed for all buybacks. Is Apple stock really worth more than $292 per share? For years, Apple’s P/E lagged far behind the S&P average; today, its multiple of 23 floats 15% above the index’s benchmark of 20. At these prices, are buybacks still a good deal?
Is going on autopilot with buybacks the best option?
Apple’s elevated price means it should be questioning whether buybacks should remain the prized package for its immense earnings.
The best option would be the one Apple apparently isn’t able to exploit: reinvesting heavily in innovative, high-growth products.
Between buybacks and dividends, Apple has long been returning over 100% of its free cash flow to investors. That choice suggests that it lacks new opportunities to invest significant portions of its free cash flow in profitable new products that would drive profits to fresh heights. “Apple is generating 17% returns on the cash already invested in its businesses,” says Jack Ciesielski, a portfolio manager and leading accounting expert. “The best solution would be finding new investments that would produce returns anywhere near those levels. New projects that return, say 15%, would generate strong earnings growth. They’re gushing cash on a quarterly basis, but can’t make a good return by reinvesting it.”
Today, Apple distributes around 25% of its earnings in dividends for a yield of just 1.1%, maintaining a conservative payout rate. Of course, we don’t know if Apple has big plans for breakthroughs that aren’t yet public, and sets the ratio low to maintain flexibility. We’ll assume that Apple’s superb management isn’t reinvesting much for a sound reason: It’s tough to invent the next iPhone or iPad. So the choices distill to how much to hoard in cash, how much to pay out in dividends, and how much to keep plowing into Apple’s favorite channel, buying back stock.
Apple does have plenty of room to comfortably raise its dividend. By lifting its payout ratio from 25% to 35%, it would better reward investors looking for current income. Buffett frequently says that companies should serve both shareholders looking to build their ownership via buybacks, and those seeking steady cash distributions. But Apple has no good choices for the other 65% of its cash flow. If it eschews buybacks and accumulates cash, it will garner tiny returns parking that burgeoning stockpile in the likes of Treasuries.
Nor is continuing to repurchase gigantic blocks of stock a great option. Say Apple spends $70 billion in the next four quarters on buybacks at a price of $290, and months later, its P/E reverts from 23 to 16. It will have effectively overpaid by 45%, and wasted $30 billion versus what it would have spent if it had waited for what’s traditionally been fair value.
As Ciesielski points out, buying in shares, even at high prices, is preferable to “empire building” by overpaying for acquisitions, a pitfall Apple has wisely avoided. Or perhaps the comfort and stability that Apple epitomizes has permanently raised its value, and that safety does merit a premium multiple. In that case, continuing big buybacks makes sense. That scenario’s possible but unlikely. On paper, the best option might be to conserve cash and buy back loads of stock when Apple is obviously cheap or fairly priced. That course might better satisfy the Buffett criteria. But it’s tough to depart from a tradition that’s been so famously successful.
The only clear conclusion is the one dictated by the numbers. For folks thinking of buying Apple at today’s rich prices, consider that those huge buybacks won’t deliver nearly the bang they used to. And if the safe haven halo fades, and Apple reverts to its traditional middling valuation, the return to the old normal would turn what looked like shelter into the cold comfort of stinging losses.
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More must-read finance coverage from Fortune:
—Saving lives vs. saving the economy is a false tradeoff, economists say
—Exxon Mobil’s CEO is banking on a return to normal, but most others aren’t so sure
—Cybercriminals adapt to the coronavirus faster than the A.I. cops hunting them
—How cannabis purveyors are coping during the pandemic
—Inside the chaotic rollout of the SBA’s PPP loan plan
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Why the banks were ready for the financial impact of the coronavirus
Subscribe to How to Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic.


fortune--2020-05-06--The pandemic has been an impetus for innovation

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
One of the paradoxes of the pandemic is that it has been an impetus for, not an impediment to, innovation. The sudden move to shut down travel and send everyone home has led to an explosion of “digital transformation” over the last two months that might have taken years to accomplish otherwise.
There’s plenty of reason to think an economic crisis of this size might reduce investment and thus lead to less innovation. But the evidence of the opposite is overwhelming. Part of that is the nature of this particular crisis, forcing us all to turn en masse to virtual alternatives. And part of it is because, when faced with crisis, many of the cultural obstacles to innovation crumble. “Move fast and break things” becomes a necessity, for better or worse.
In our new survey of Fortune 500 CEOs, we asked the CEOs whether the crisis would 1) accelerate their technological transformation, 2) slow their technological transformation, or 3) have no significant effect. The result was surprisingly lopsided: 63% said “accelerate,” while only 6% said “slow.”
I spoke yesterday with Doug Merritt, CEO of the data platform Splunk, who confirmed that view. Splunk’s customers include cruise lines, airlines and hotels, yet Merritt says the company “has not lost customers” in the pandemic—although some of those hardest hit are asking for “alternative payment structures.” At the same time, Merritt sees a host of new demands spurred by the pandemic—companies that need to move to remote work virtually overnight, or do “contact tracing” using diverse data sets, or coordinate virus and antibody test deployments and results.
“There are two things we’ve seen,” Merritt says. “One is the rapid acceleration of digital transformation. I am positively blown away by the things I’ve seen. Five-year projects completed in two months.” And the other is how management of the pandemic “has raised the importance of gathering data and interrogating data,” in order to deal with its widespread implications.
The revolution has been hastened. More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
EU contraction
The European Commission has revised down its growth projections by around nine percentage points, from the forecast it provided last fall. Now it's looking at a contraction of around 7.5% this year, and growth of around 6% next year. However, as its economy chief Valdis Dombrovskis noted, this is only a tentative forecast as "the depth of the impact will depend on the evolution of the pandemic, our ability to safely restart economic activity and to rebound thereafter." Added note of caution: this forecast makes a "purely technical assumption of status quo" in terms of future U.K.-EU trading relations. CNBC
Airbnb cuts
Airbnb has cut around 1,900 workers, or a quarter of its workforce. Here's CEO Brian Chesky's email to staff, in which he says "we are collectively living through the most harrowing crisis of our lifetime"—tempting fate, perhaps, but let's hope he's right. Here's the rub, though; the need for cuts became clear "when we faced two hard truths: 1) We don't know exactly when travel will return. 2) When travel does return, it will look different." Cue "a more focused business." Fortune
Disney blow
Disney took a $1.4 billion hit to its Q1 net income. It's not all down to the lockdown—accounting for the consolidation of assets acquired in its 2019 21st Century Fox deal also played a part. But the former factor will obviously play a much bigger role this quarter. Executive chairman Bob Iger is trying to sound upbeat about the post-lockdown future though: "People find comfort in our messages of hope and optimism." Wall Street Journal
Task Force
The White House is looking to disband its official coronavirus task force, which operates under VP Mike Pence and includes the likes of Anthony Fauci and Deborah Birx. Pence now claims communities in the U.S. have the resources they need to fight the pandemic. Plus, there's already a shadow task force being run by Jared Kushner, which relies on volunteers from the private equity and consulting sectors. Fortune
AROUND THE WATER COOLER
European reopening
What does Europe's reopening look like? Here's a gallery showing the resumption of normal-ish economic activities across the continent, including takeaway coffee being served in Rome, churches holding services again in Germany, and the paint-enabled expansion of sidewalks in Spain. Fortune
Tracking apps
France's digital affairs minister, Cedric O, has warned that the French government will "remember" Apple's refusal to modify iOS privacy settings to aid the functionality of the government's upcoming contact-tracing app—as though the French government had previously been a fan of American Big Tech firms. The reality here is complex: France, like the U.K., is taking a more privacy-invasive approach to the development of such apps, and Apple and Google are keener on the more privacy-friendly alternatives being taken up by other European countries such as Germany and Austria. Bloomberg
Mutating virus
A study by Los Alamos National Laboratory researchers suggests that the coronavirus currently ravaging the U.S. and Europe is a mutated strain of that which emerged in Wuhan, China. The study is yet to be peer reviewed, but the researchers warn of "urgent concern" considering efforts to develop COVID-19 vaccines. CNBC
Investment call
Where's a good place to invest right now? New Zealand, according to that country's prime minister, Jacinda Ardern, who says New Zealand's suppression of the coronavirus's spread gives it a "safe haven" advantage. Ardern: "We are ready to welcome quality investments and offer a safe place for operations in both the health and business sense." Reuters
This edition of CEO Daily was edited by David Meyer.


fortune--2020-05-06--Forget earnings. Investors care about one thing right now: reopening

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning. Can we make it three days in a row? Stocks are mixed in Asia and Europe, but U.S. futures are showing strength, buoyed by President Trump’s vow to reopen the economy.
Let’s take a closer look.
Markets update
Asia
The major indices are mixed . Japan’s Nikkei was down while Hong Kong and Shanghai were holding on to gains.
. Japan’s was down while and were holding on to gains. China’s Labor Day holiday (it actually ran over five days this year) saw a dramatic drop-off in domestic travel . Tourism revenues sank nearly 60% y-o-y.
holiday (it actually ran over five days this year) saw a dramatic in domestic . Tourism revenues sank nearly y-o-y. “This is still the first half of the marathon,” Singapore’s national development minister warns about its flattening-the-curve efforts. You may recall Singapore had what appeared to be a handle on COVID-19 contagions in March, only to see a powerful second wave .
had what appeared to be a handle on COVID-19 contagions in March, only to see a . Disney will reopen its Shanghai theme park on May 11, one of the few uplifting tidbits to come out of yesterday’s quarterly results.
Europe
European bourses were flat at the open, before ticking up. The benchmarked Stoxx Europe 600 began the day down 0.1% while London’s FTSE and Germany’s Dax were both trading higher.
bourses were flat at the open, before ticking up. The began the day down while and were both trading higher. The ECB struck a defiant tone Tuesday night saying it remains committed to its QE-style bond-buying program to nudge inflation higher.
struck a defiant tone Tuesday night saying it remains committed to its QE-style bond-buying program to nudge higher. That’s in response to yesterday’s bombshell German court ruling saying the central bank had overstepped its mandate in doing what central banks everywhere around the world do these days: load up their balance sheet with all manner of sovereign and corporate assets. The spread on Italian bonds ticked up on the decision, a sign of market uneasiness.
saying the central bank had in doing what central banks everywhere around the world do these days: with all manner of sovereign and corporate assets. on Italian bonds ticked up on the decision, a sign of market uneasiness. To corporate news now… BMW cut its profit forecast this morning and Italian lender UniCredit posted a €2.71 billion ($2.94 billion) loss.
cut its profit forecast this morning and Italian lender posted a €2.71 billion ($2.94 billion) loss. Fresh off the presses, the European Commission has slashed its 2020 full-year eurozone growth rate forecast to -7.75%, point to “a recession of historic proportions.”
U.S.
The Dow , S&P 500 and Nasdaq futures all point to a positive open.
, and futures all point to a positive open. The indices closed in the green yesterday, a second straight day of gains. But all three sunk in the last hour of trade on Tuesday.
yesterday, a second straight day of gains. But all three in the last hour of trade on Tuesday. President Trump, on a rare trip outside of Washington D.C., yesterday vowed to reopen the economy , “and open soon.”
, “and open soon.” There are a lot of concerns that soon doesn’t turn into too soon.
“The economics of ending a lockdown depend on fear and confidence,” UBS’s Paul Donovan wrote in his morning note today. Come out too soon and inflict damage on consumer confidence, and “the economic downturn continues independent of the lockdown policy.”
depend on fear and confidence,” UBS’s Paul Donovan wrote in his morning note today. Come out too soon and inflict damage on consumer confidence, and “the independent of the lockdown policy.” Speaking of confidence …With the travel sector on life support, Airbnb announced it would cut 25% of its workforce.
…With the travel sector on life support, announced it would cut of its workforce. Speaking of reopening… Fortune‘s crack reporting staff, from Hong Kong to San Francisco, are covering what the great reopening around the world will look like. It’s called “How to Reopen.”
Elsewhere
Gold is down, slightly.
is down, slightly. The dollar is up, slightly.
is up, slightly. Crude is climbing. WTI has had quite a run in the last week, topping $24/barrel.
The engine of the economy
A big factor in any turnaround calculus is the creditworthiness of Corporate America. With good reason. Bankruptcies and credit downgrades are decimating the retail, travel and energy sectors.
The American consumer may be in even worse shape, a dire sign for all industry sectors. The consumer is the engine of the U.S. economy. If she pulls back significantly, there will be no comeback.
That’s why yesterday’s data is so troubling. The New York Fed released its quarterly report on household debt. The numbers showed the American consumer is $14.3 trillion in the red, a new record, as today’s chart from the New York Fed shows.
The American consumer has looked pretty precarious for much of the past decade. Those red and blue lines trending up, up, up are not a good sign.
Interestingly, the global financial crisis, a decade ago, forced Americans to tighten their belts and step up savings. That didn’t last long. Over the past five years the trend has gone in the opposite direction. Fast forward to today and the American consumer has piled on a further $1.6 trillion debt since Q3, 2008. A surge in student loan, mortgage and auto loan debt is to blame for much of this debt burden. (Credit card debt has declined some, the Fed reports, a sign more of Americans’ income is shifting from spending to debt-servicing.)
It will be interesting to see if the coronavirus shock forces Americans to retrench, and turn more thrifty. That would be good for America’s household finances. But it would be bad for America’s comeback story.
***
Have a nice day everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
Where's the beef? There are headlines that make me shake my head and mutter to no-one in particular, "The U.S. is not having a good pandemic." Here's another one. According to The New York Times, hundreds of Wendy's hamburger chains have run out of...hamburgers. There's a run on red meat in the U.S. as production at meat processing plants across the country plummets, putting that Memorial Day barbecue in doubt. On the bright side: nobody was going to show up anyhow.
Waiting by the mailbox. Less than half of American adults (41%) have received their stimulus check, a Fortune-SurveyMonkey survey finds. So much for a rapid injection of stimulus to help the cash-strapped through these troubled times. One group left out altogether is college students. That should be remedied, this executive says.
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Market candy
Photo essay: Europe reopens
My colleagues put together a lovely photo-rich report depicting a new Europe as it slowly reopens for business. Rome makes the cut. Some bars here are doing white-glove take-away coffee service. What I'd give for an espresso from Bar Sant'Eustacchio near the Pantheon—the best espresso in the world.


fortune--2020-05-06--Reopening of Shanghai Disneyland is a proving ground for pandemic-era theme parks

The Walt Disney Co. is in dire straits. Worldwide, the entertainment Goliath’s resorts and theme parks are closed, production of upcoming releases is on hold, and advertising revenues have plunged as the coronavirus pandemic takes its toll.
According to the company’s earnings for the fiscal second quarter, announced Tuesday, COVID-19 cost Disney $1.4 billion in operating income. But a bright spot is emerging in China where Shanghai Disney Resort—the latest of Disney’s properties—is preparing to reopen.
“We are seeing encouraging signs of a gradual return to some semblance of normalcy in China,” CEO Bob Chapek said on a conference call with investors Tuesday, announcing that the Disney resort in Shanghai will reopen on May 11, after more than three months of closure.
The happiest place on Earth
As China’s official count of new coronavirus cases remains low, the government is actively encouraging a return to normalcy. Authorities, who initially spurred workers to return to factories in March, are now urging consumers to return to shops and tourist sites, too. Cities in more than two-thirds of China’s provinces have issued cash vouchers to residents to spend on consumer goods and “cultural activities.”
Notably, Shanghai has yet to deploy a voucher scheme, so the reopening of its flagship theme park is a bet that consumers are ready to resume spending even without incentives.
Unlike the Shanghai resort’s grand opening in 2016, when crowds of tourists mobbed the park, Shanghai’s pandemic-era reopening will be a timid affair.
In keeping with government regulations, visitors will have to wear masks, submit to temperature checks, and present the ubiquitous health code apps before entering the park. Local authorities have told the park it can only operate at 30% capacity, too.
According to Chapek, normal attendance at Disneyland Shanghai reached 80,000 guests per day. Under the new restrictions, that number would drop to 24,000, but Chapek says the park will initially target an even lower number, gradually increasing attendance to the 30% threshold.
“We will take a phased approach with limits on attendance, using an advanced reservation and entry system, controlled guest density using social distancing, and strict government-required health and prevention procedures,” Chapek said.
It’s a small world, after all
The reopening of Disneyland Shanghai could be a test run for Disney’s other resorts, all of which remain shut. Disneyland Hong Kong closed its doors a day after Shanghai on Jan. 26. Tokyo Disneyland held out until February, while in the U.S., Disney parks remained open until mid-March.
Hong Kong’s loss-making Disneyland—the smallest of the conglomerate’s six “castle lands”—has reportedly conducted test runs of how social distance queueing would work at the park. The official task force in charge of organizing a return to normal in Orange County, Fla., also issued guidelines on how Walt Disney World could reopen, but when remains a mystery.
Disney’s theme parks fall under the company’s Parks, Experiences, and Consumer Products division. The unit was Disney’s fastest-growing profit segment until park closures caused revenue to crash 10% in the second quarter. Disney estimates it lost $1 billion in operating income from the segment alone.
To offset its losses, Disney has furloughed over 100,000 workers, cut executive pay by up to 30%, and is forgoing its July dividend, which in itself could save the company $1.6 billion. Reopening parks could be a much-needed shot in the arm.
However, after months of sheltering in place for fear of the coronavirus, the real learning point from Disneyland Shanghai’s rerun will be whether consumers still have an appetite for adventure.
More coronavirus coverage from Fortune:
—The Rebuild Program: A project to help small businesses reopen amid a pandemic
—Saving lives vs. saving the economy is a false tradeoff, economists say
—States can’t access emergency COVID-19 election funding because of steep match rates
—Unemployment claims are taking some states weeks to process. What to know
—Inside China’s reopening: 7 personal stories of life after lockdown
—How to play live pro sports in a pandemic? Taiwan, South Korea offer lessons
—Work from home, online grocery shopping, cord cutting: Which coronavirus trends will stick
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to How to Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic.


fortune--2020-05-06--Meat processing plants are reopening, but not all workers are returning

America’s meat-processing plants are starting to reopen, but not all workers are showing up. Some still fear they’ll get sick after coronavirus outbreaks shut more than a dozen facilities last month. Employees are taking leave, paid and unpaid — or just quitting.
At a JBS USA plant in Greeley, Colorado, absenteeism is running as high as 30%. Before the pandemic, it was about 13%. The company is paying about 10% of the workforce — people deemed vulnerable — to stay home. Others aren’t coming in because they are sick.
But some workers are staying home because they are “scared,” according to Kim Cordova, president of United Food & Commercial Workers Local 7 union, which represents workers at the plant. She couldn’t provide specific numbers but noted on a recent visit that production speeds at the plant were “really slow” because of the labor crunch.
Meat plants have been at the nexus of coronavirus hot spots across America’s rural heartland. The disease spread through plants in March and April as companies struggled to adapt their workplaces to new rules dictated by the pandemic. As absenteeism persists, the U.S. is at risk of continued meat shortages and higher prices, even after President Donald Trump signed an executive order to keep plants running.
JBS is following federal “guidance around safety and social distancing, and we’re doing everything possible to provide a safe working environment for our team members who have been eager to get back to work,” the company said in an emailed statement to Bloomberg.
At the Colorado plant, JBS says it has given out masks and face shields and put up plexiglass barriers to separate people.
Workers still need higher quality protective equipment, and there are still areas where employees can’t social distance, Cordova said.
“If they don’t mitigate, we’re going to continue the cycle of workers dying and workers getting sick,” she said.
The company has had more success at its plant in Souderton, Pennsylvania, which also reopened recently and is running “beyond expectations,” JBS said.
Conditions at U.S. meat plants contributed to increased risk of infections, and ultimately more than 4,900 workers fell ill, according to the Centers for Disease Control and Prevention. The agency cited difficulty maintaining social distancing and adhering to the heightened cleaning and disinfection guidance among the factors that increased risks for workers. There were 20 deaths among employees as the virus spread to 115 meat plants across 19 states, data through late April showed.
Shutdowns at the massive plants have created bottlenecks in supply, which could continue amid absenteeism. Giant producers have such a stranglehold on output that it leaves few remedies when even a handful of facilities slow, leaving farmers with decreased options for selling their animals.
Even as U.S. pork processing picks up in the coming weeks, hog producers may be forced to euthanize as many as 7 million pigs in the second quarter, Will Sawyer, lead economist at CoBank, said in a report Tuesday. Meat supplies for retail grocery stores could shrink almost 30% by Memorial Day, leading to retail pork and beef price inflation as high as 20% relative to prices last year, he estimates.
Unions say many workers fear that new measures companies have put in place, including temperature scanners and face masks, aren’t enough to guarantee their safety as operations resume weeks or in some cases just days after a plant has idled.
“There’s a number of folks who have quit — and there may be others who decide not to go back,” said Kooper Caraway, president of Sioux Falls AFL-CIO, which represents 3,700 workers at Smithfield Foods Inc.’s South Dakota pork plant.
Smithfield’s South Dakota operation was among the first major facilities to shutter. The plant accounts for about 5% of the nation’s pork supply, and Chief Executive Officer Ken Sullivan rang the alarm over meat shortages as he announced plans to close on April 12. His warnings have proved prescient, with grocers from Kroger Co. to Costco Wholesale Corp. limiting shoppers’ purchases after plants were idled on virus outbreaks.
‘Easing Anxiety’
“The company and the government need to take this time to be easing anxiety, and make sure people don’t feel like they’re going back to the same unsafe plant they left two weeks ago,” Caraway said, adding that facility is doing a gradual reopen in two departments with about 250 people.
Smithfield declined to comment on worker absenteeism and operations at Sioux Falls.
South Dakota Governor Kristi Noem said Tuesday the Sioux Falls plant would likely reopen this week. About 1,500 workers came in for the first day of free testing, with about 10% of them showing symptoms of coronavirus, she said, adding that test results were expected within 48 hours. The plant has about 3,700 employees, and testing will continue for the next several days.
The problems aren’t limited to the U.S.
In Canada, Cargill Inc.’s High River plant in Alberta is crawling back to life, but the plant, which accounts for 40% of the country’s beef processing capacity, is having trouble attracting workers.
Empty Buses
Early Monday morning, buses retrofitted with protective barriers rolled through the gates, ferrying in laborers so they could resume processing cattle after a two-week hiatus. But after coronavirus infected nearly half of the 2,000 employees, in one of the largest workplace outbreaks in North America, some buses were empty and one carried a single passenger.
In total, union officials estimate only a third of the 300 workers Cargill anticipated showed up.
Cargill said the plant reopened with support form the provincial health and safety authorities and that “according to health officials, the majority of our employees remain healthy or have recovered.” The health and safety of employees continues to be the company’s top priority, according to a statement.
“Ultimately, they aren’t going to be able to do what they want to do at all unless there’s people there to do it,” said Michael Hughes, spokesman for United Food & Commercial Workers Local 401 union that represents workers at the High River plant.
The union has sought a stop-work order and filed an unfair labor practice complaint to try and stop Cargill from reopening and advised High River employees that they have the right to refuse to perform dangerous work. Though the union is not in a legal position to strike, it is considering other options with its legal team until the company and authorities can assure workers that the facility is 100% safe, Hughes said.
“What we’re going to see is absenteeism across North America as an expression of people putting their lives and health and safety first,” he said.
More coronavirus coverage from Fortune:
—The Rebuild Program: A project to help small businesses reopen amid a pandemic
—Saving lives vs. saving the economy is a false tradeoff, economists say
—States can’t access emergency COVID-19 election funding because of steep match rates
—Unemployment claims are taking some states weeks to process. What to know
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—How to play live pro sports in a pandemic? Taiwan, South Korea offer lessons
—Work from home, online grocery shopping, cord cutting: What coronavirus trends will stick
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-06--No buses, no problem. Some cities provide subsidized Uber rides amid pandemic

Now is the time to invest in preschool education .
Here ’ s why

As cities cut bus and train service because of the coronavirus epidemic, Uber is trying to partner with them to fill in the gaps.
Uber has signed deals with seven public transit agencies to provide car rides along suspended routes or where service has been reduced. For Uber, the partnerships provide a little extra revenue, while for cities, it helps lower their costs because they don’t need to operate routes that now have few passengers.
Transit agencies that have signed on with Uber subsidize rides for people who need to make essential trips but are unable to take their normal bus or train rides because of service cuts. That means, in some cases, passengers get a free ride to where they are going in lieu of paying for a bus. While this may cost transit agencies more per rider, the overall cost is less because they’re operating fewer buses.
“Paying for 40 to 60 trips a night is much more cost-effective than having 17 buses running all night,” said Alice Bravo, director of transportation and public works for Miami-Dade County in Florida.
The service is the latest way Uber has worked with local transit authorities, a program the company started in 2015. Since then, it has teamed up with more than 30 agencies to provide subsidized rides to and from major bus and rail stations.
Both agencies that already had partnerships with Uber and agencies that had never worked with the company before are opting into the service amid the pandemic. The programs are expected to be temporary but may serve as a test-run for future services.
In addition to hurting public transit agencies, the pandemic has caused a significant drop in ridership for Uber. The company’s agreements with cities help it modestly increase its rides business while helping people get where they need to go during a difficult period.
“We’ve just been ready to move quickly to help agencies as they’ve approached us during this period,” said David Reich, Uber’s head of transit. This is a nice moment to work together to solve really critical problems.”
Uber CEO Dara Khosrowshai may provide more details about its plans for mass transit during its first quarter earnings on Thursday. The company will also share with investors how much the pandemic has hurt company’s ride business, which has plummeted.
On Wednesday, because of the slowdown, Uber said it would cut 3,700 jobs.
In Miami-Dade, the Uber partnership started three weeks ago and is merely a test program along a handful of overnight bus routes. Free service is provided late at night starting midnight and lasts until 5 a.m.
When commuters need a ride, they can open the Uber app and enter a city voucher code, which will pay for the entire cost of the ride.
Bravo says its Uber partnership may extend beyond the area’s shelter-in-place order. Once the order is lifted, there will likely be an increase in riders, but capacity will be limited due to new safety measures on buses and trains.
Additionally, Miami-Dade’s agreement with Uber provides it with data about whether the partnership makes sense long-term. The agency is rethinking its bus routes, particularly those with the least ridership. In those areas, Uber could serve as the city’s transportation provider.
“This is an interesting experiment for that project,” Bravo said.
The Indianapolis public transit authority, IndyGo, started its pilot with Uber on April 23, giving people subsidized roundtrip rides to and from work. On May 1, it began charging $60, the same cost as a monthly bus pass, for a month’s worth of Uber rides, one roundtrip per day. The test is expected to end at the end of the month.
After that, the authority, which had never worked with Uber before, may partner with an outside company to provide rides to and from its bus stations as well as within areas where ridership is low.
“Uber can fill in those gaps,” said Inez Evans, president and CEO IndyGo, “That’s what we’re looking at right now.”
In addition to providing rides for cities, Uber has also previously added to its app the public transportation options that users have in various cities, and in some locations, provides tickets for those rides.
Uber says despite whether the partnerships may be short-lived, it’s hoping its service provides aid to those who need it most. Meanwhile, agencies welcome the assistance.
“The external environment is changing, and we need to respond,” said Luis Montoya, chief planning officer at Des Moines Area Regional Transit Authority, which started on April 13 providing transit passengers rides through Uber. “Just having this extra tool was really helpful for us to make sure we could have continuity of service.”
More must-read tech coverage from Fortune:
—Remote work, online grocery shopping, cord cutting: What coronavirus trends will stick
—How T-Mobile shifted 12,000 employees to work from home in less than two weeks
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—The startup founder in India striving to improve mass transit through the pandemic
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Zoom’s ups and downs since the coronavirus crisis
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-05-06--Endeavor, hit hard by the coronavirus, to sell part of stake in Fortnite maker Epic Games

Endeavor Group Holdings Inc., owner of a major Hollywood talent agency and the Ultimate Fighting Championship, will sell part of its stake in Epic Games Inc., the publisher of the popular title Fortnite, raising cash it can use to prop up a business hit hard by the coronavirus.
Endeavor is selling its stake as part of Epic’s next round of fundraising, in which the company is expected to net a valuation well north of the $15 billion it received in 2018, according to three people familiar with the matter. The company will still hold onto some of its piece in the soaring video-game publisher, said the people, who asked not to be identified because the deal hasn’t closed.
Endeavor built a sprawling empire of media, sports and entertainment assets predicated on the growing value of live events. It operates the mixed martial arts league UFC and stages hundreds of live events all over the world. The temporary pause on such events almost everywhere has forced Endeavor to dismiss, furlough or cut salary for about one-third of its workforce, and prompted credit-rating firms to downgrade its debt.
Endeavor isn’t interested in selling any of its major assets, like UFC or talent agency William Morris Endeavor. But it will look to dispose of noncore assets, in particular those that can reap a healthy return.
IPO halted
Endeavor had $4.6 billion of debt at the end of June. It had sought to raise as much as $465 million through an initial public offering last year, but halted that process in October in a choppy stock market. In the prospectus for that offering, Endeavor cited Epic as a case study for its ability to manage live events, licensing and sell media rights for the video-game company’s key title, Fortnite.
Epic’s operations have surged amid the shutdown, with kids home from school. Fortnite has more than 350 million users, the company said in a release on Wednesday. They played the cartoonish every-person-for-themselves shooting game for more than 3.2 billion hours in April.
Houseparty, which integrates games and trivia into multiperson video calls, has also been a breakout hit in recent weeks. It’s been one of the most popular social-networking apps in Apple Inc.’s store every day since March 20, and co-founder Sima Sistani told Bloomberg News in mid-April that it had seen more than 50 million sign-ups in the past month — about 70 times the typical amount in some markets.
Epic Games, which was founded in 1991 by Tim Sweeney from his parents’ house in Potomac, Maryland, bought Houseparty for an undisclosed amount last June. The app’s last private valuation was about $70 million, according to Pitchbook data. While Epic has sworn off ads as a potential revenue source for Houseparty, it’s considering offering in-app purchases, mimicking the way that games like Fortnite bring in money.
“There are some companies that are really thriving in this environment,” Mamoon Amjad Hamid, a partner at venture capital firm Kleiner Perkins Caufield & Byers, said in a Bloomberg TV interview April 14. “Companies that do work from home, or are providing some sort of entertainment.”
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More must-read entertainment coverage from Fortune:
—Taika Waititi is officially directing a new Star Wars movie
—The best streaming services for live TV in 2020, according to critics
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—How CBS legal drama All Rise made its virtual coronavirus episode
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—WATCH: One on one with Grace Potter
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic