fortune--2020-04-30--Gilead’s remdesivir won’t be a COVID-19 miracle cure, but it’s still an important first step

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Remdesivir, the experimental coronavirus treatment from biotech giant Gilead, is steadily marching toward a Food and Drug Administration (FDA) approval.
A cascade of events in the past several days appear to ensure that the treatment will gain rapid regulatory approval, though the exact date is still unknown. Stock markets spiked on news from a pair of ongoing studies showing remdesivir’s efficacy against COVID-19, one being conducted by the federal government and another late-stage trial by Gilead.
That underscores the widespread hunger for something, anything, that may help us tame this pandemic. But it’s important to balance hope with the hard facts of the situation. Remdesivir, based on the data we’re now learning about, could very well be an effective treatment. But it’s unlikely to be a miracle cure, and its use will likely be limited at first to patients with the most severe COVID-19 cases.
This isn’t a knock on remdesivir. Reducing the burden on hospitals overwhelmed with coronavirus patients is critical. That can open up critical financial and medical resources for health care providers feeling the crunch.
“[Remdesivir is] the first step in what we project will be better and better drugs coming along,” said Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), which conducted one of the remdesivir trials, during an appearance on NBC’s Today show on Thursday. “It’s good news, but I was very serious when I said this is not the total answer, by any means, but it’s a very important first step.”
A combination of aggressive moves by states hard hit by the pandemic and social distancing measures that have, in some regions, begun to flatten the infection curve has helped prevent a true doomsday scenario for hospital capacity. But that doesn’t mean the nation’s health care providers are out of the woods—especially if a second wave of coronavirus infections flares up in the fall and winter in conjunction with flu season, according to Fauci, who has also called a second wave “inevitable” in the U.S.
“If by that time we have put into place all of the countermeasures that you need to address this, we should do reasonably well,” he told CNN on Wednesday. “If we don’t do that successfully, we could be in for a bad fall and a bad winter.”
There are a few reasons why remdesivir won’t automatically flip the switch on the spread of the coronavirus. For one thing, it’s being tested on “the most severe manifestations” of COVID-19 in multiple trials, according to both Gilead and the NIAID, an arm of the National Institutes of Health (NIH). Barring further data from different patient populations, it’s difficult to tell if remdesivir would be effective in earlier stages of the disease.
But the good news is that the NIAID study is a fairly rigorous one—it’s a randomized trial that pits remdesivir against a placebo, which presents stronger evidence of the drug’s efficacy. “Preliminary results indicate that patients who received remdesivir had a 31% faster time to recovery than those who received placebo,” wrote the agency.
The other late-stage trial touted by Gilead suggests that a five-day course of remdesivir treatment—which is administered intravenously—was just as effective, if not more so, in helping patients get discharged from the hospital as a 10-day course of treatment. More than half of patients receiving the pair of dosing regimens were discharged.
This is particularly important since expanding hospital bed capacity and opening up the number of ventilators available for seriously ill COVID-19 patients is critical to cutting the strain on the health system. A single day of hospital ventilation can cost $25,000 to the health system, says SVB Leerink analyst Geoff Porges.
Opening up hospitals’ financial and operational capacity is critical in the short term. But ultimately easing social distancing measures and returning to something approaching normal will require more drug and vaccine development, a better understanding of coronavirus immunity for those who have recovered, and continued vigilance.
More coronavirus coverage from Fortune:
—What the law says about forcing employees back to the office
—The next round of stimulus checks goes out this week. What you should know
—Five weeks off and nowhere to go: How coronavirus sabotaged the European vacation
—Unemployment claims are taking some states weeks to process. What to know
—Scammers made 150,000 fake stimulus check websites. How to protect yourself
—Mike Schur talks Parks and Rec coronavirus episode and why remote TV production isn’t the future
—The coronavirus pandemic is impacting critical research into neuromuscular diseases
—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 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--2020-04-30--Fearing wine lakes and rotten potato heaps, Europe’s farmers demand a coronavirus rescue package

Here ’ s who is winning ( and losing ) during Q1 earnings seasons so far

Anyone feeling peckish for potatoes? Say, three-quarters of a million tons, or thereabouts?
Earlier this week, the Belgian potato industry association, Belgapom, grabbed global headlines by begging the country’s citizens to do their patriotic duty and double their consumption of frozen pommes frites to twice a week to reduce overflowing stockpiles.
Belgium might have a famously hearty appetite for the dish, but calls to consume 750,000 tons of potatoes is a tall order for a country of 11.5 million. And so, on Wednesday, the industry’s plea was extended to the entire world.
Good luck with that.
Canadian potato growers are also urging a boost in french-fry consumption. The spuds crisis doesn’t end there; in Idaho, mountains of potatoes are rotting.
Unwanted stockpiling—with the looming prospect of a crude-oil-style price collapse—isn’t just a problem for the world’s potato growers, either.
It can be found in the dairy industry, where the grazing season is about to boost production just as consumption falls. “We have worked to reduce milk production, and we ask the European Union to take its responsibilities,” said French Agriculture Minister Didier Guillaume on Wednesday. “Today it is absolutely necessary to store milk, store powder, see how things can be done to ensure that this sector lives as well as it can.”
American dairy farmers are facing a similar demand shock.
First a trade war, now a pandemic
With Europe’s 2020 harvest just a few months away, wine producers are also facing a storage crisis. Some estimate a billion liters of wine may need to be tossed.
As with the potato and dairy situations, the coronavirus pandemic is largely to blame—hotels, bars, and restaurants are shuttered. But, as the European Federation of Origin Wines (EFOW) has warned, the industry has already been battered by the economic slowdown in Asia, a vital market, as well as by 25% tariffs imposed on European wines by the U.S. in retaliation for illegal subsidies granted to the European plane-making consortium Airbus.
“No amount of planning could have helped wine operators face these three consecutive crises,” EFOW president Bernard Farges wrote this week in a letter asking for help from the agricultural committee of the European Parliament.
“The problem is bad at the moment, and it’s really putting a lot of enterprises at risk of going bankrupt,” says Matin Qaim, a professor in the department of agricultural economics at the University of Göttingen in Germany.
Trying to help
The European Commission, the Union’s executive body, says it is trying to help farmers and growers.
Last week, it unveiled an emergency 76 million euro ($82.6 million) package to pay for private dairy and meat storage, to ease producers’ loads. The commission also said it would allow national governments to bypass their usual competition rules and fund schemes for the wine industry—through private storage schemes, but also the mass distillation of unwanted wine into industrial ethanol. Europe’s winemakers are desperate to avoid what happened roughly 15 years ago when a glut of wine forced many to destroy their stocks in so-called wine lakes.
On Thursday, Agriculture Commissioner Janusz Wojciechowski faced a grilling by members of the European Parliament’s agriculture committee—who, unlike European commissioners, are directly elected and therefore answerable to increasingly angry constituents.
“There are certain sectors, such as wine, where the measures simply don’t go far enough,” complained Herbert Dorfmann, an Italian member of the center-right European People’s Party (EPP)—the Parliament’s largest grouping. “The member states don’t have any more money.”
Next up was Italy’s Paolo De Castro of the center-left Socialists and Democrats (S&D), the second-largest grouping. “We really appreciate the work that the European Commission is doing, and there’s no doubt that the package…is going on the right track,” he said. “But to be clear, 76 million euros is what you’re offering. Do you really think that’s enough? That’s a little bit more than seven euros per farmer…Given these difficulties, I don’t understand why we aren’t looking for resources like we’re doing in other sectors.”
Wojciechowski responded that the commission had “done what is possible at the moment in order to guarantee that we can tackle the problems faced in the agricultural sector.” He added that the pandemic has “shown us just how important it is to guarantee food security.”
However, the commissioner added: “We know that all sectors of the economy are going through this crisis and there are enormous needs. Other sectors are facing problems as well…You can see there’s a lot of pressure on the budget.”
Disease risk
Teun de Jong, chairman of the Dutch Arable Farming Union (NAV), is not impressed with the commission’s financial commitments.
In the Netherlands, as in Belgium, potatoes are piling up—1.5 million tons have to be stored, and only a third of that is likely to be sold. Not good news for the world’s biggest potato exporter.
“In the Netherlands there is a program made in a coalition between farmer unions, trading companies, and the processing industries to get rid of the surplus,” de Jong says. “We don’t want the heap of potatoes back on the fields or behind the barns, because then there could be a spread of diseases in the new growing season. We want to use [these] potatoes for cattle feed, pet food, ethanol, and alcohol for disinfection.”
The Dutch government has only been able to commit a maximum of 50 million euros to support the scheme, which breaks down to 5 euro cents per kilogram—about a third of the potatoes’ cost price, a meager incentive for cash-strapped farmers. “Now we are waiting for a commitment from the EU” to help farmers out, de Jong says.
As the University of Göttingen’s Qaim notes, the financial risk to farmers is substantial in the short and medium term. But beyond that, he argues, it is hard to predict what will happen because we don’t know when the swing back to normality will happen—nor do we know “what the new normal will look like.”
Overall, Qaim says, the food industry is probably less affected by the coronavirus lockdown than other sectors, because supermarkets remain open, and people continue to eat. “But when you zoom in, you find subsectors of the industry that particularly rely on out-of-home consumption—they may be more affected,” he says.
“In the medium and long run, it might lead to a situation where all those french fries are processed in a different way, so they come in a different form that people eat at home,” Qaim says. “Such things can be changed within a year, but they cannot be changed in a few weeks.”
More coronavirus coverage from Fortune :
—What the law says about forcing employees back to the office
—The next round of stimulus checks goes out this week. What you should know
—Five weeks off and nowhere to go: How the coronavirus sabotaged the European vacation
—Unemployment claims are taking some states weeks to process. What to know
—Scammers made 150,000 fake stimulus check websites. How to protect yourself
—Mike Schur talks Parks and Rec coronavirus episode and why remote TV production isn’t the future
—The coronavirus pandemic is impacting critical research into neuromuscular diseases
—PODCAST: How two CEOs outside health care decided to pivot to fight COVID-19
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Subscribe to Outbreak, a daily roundup of stories on the coronavirus pandemic and its impact on global business, delivered free to your inbox.


fortune--2020-04-30--How the CEO of Chegg believes COVID-19 will change higher education for good

Ten years ago, Dan Rosensweig made a bet on higher education and the Internet. The whole college system, he decided, was ridiculously outdated. Universities would have to modernize and embrace online teaching sooner or later. The former COO of Yahoo and CEO of Guitar Hero took on the role of CEO and president of Chegg, an online tutoring and student services company.
In 2010, he expected to see gradual growth in the sector. Never in his wildest dreams did he imagine the explosion and panic of the COVID-19 pandemic would be what triggered nearly every college in the country to rapidly embrace online education a decade later. Still, he was poised to help. Rosensweig now consults with state education systems facing unprecedented challenges, members of Congress who want to help forlorn students, and indebted former college students who find themselves among the tens of millions of newly unemployed Americans.
Fortune met with Rosensweig in early April to discuss how the college system, both private and public, will permanently change because of the virus and economic crisis, how college students and those who are still in debt should address the system, and why COVID-19 might bring about more equality to the higher education landscape.
The conversation below has been edited for brevity and clarity.
Tell me about what drew you to Chegg.
I realized that like every other institution, the college system is organized to protect the institution and not serve its primary constituents. Education was never designed for the student: It was too expensive; it was too complicated; it was too long. Teachers didn’t have to teach many hours. You aren’t even guaranteed to get into your classes. On top of that, costs have never lowered because the government will give you a loan to go to school no matter how much the cost. So they ended up creating this situation that had to collapse. Everything is about extracting money from the student, and nothing is about preparing the student for the world outside of education.
Then we realized that the average college student isn’t what you might think. If a student graduates at all, it takes them six years on average—and they’re increasingly from single-family homes, from homes where everybody works. Many students come from situations where they’re choosing between eating and reading. They have to decide: If my job is at 9 a.m. and my class is at 9 a.m. which one do I do?
What are the lasting implications of the COVID-19-necessitated pivot to online courses?
According to our data, 20% percent of students are already questioning whether or not they plan to go to school in the fall as a result of this pandemic, and students are 25% more likely to go to a school that has a strong online program now than they were just 90 days ago. Schools finally have to acknowledge that they’re ill-prepared for this, but they better get prepared because significant numbers of schools are going to go out of business if they don’t.
We suddenly find ourselves in conversations with entire state school systems about whether or not Chegg can provide that necessary support because education is going to have to be on demand, meaning it can’t only be at a scheduled time. People’s lives don’t work that way anymore, particularly now when they might have lost their jobs and may have to start working part-time or in the gig economy. College also has to be way more affordable, and it has to be accessible. Colleges can’t just broadcast lectures, they have to be interactive. The professor needs to understand the technology and how to utilize it. Schools need to look at data—they need to see which students are engaged and how they’re engaged. And there have to be online support systems to enable people to learn. The way this ends positively is if major state universities and community colleges realize that students ought to be able to choose between in-person and online classes or a hybrid of both. Students should be allowed to binge their education. The number one reason other than money that people don’t get educated is the time that it takes. And the reason it takes so much time is because 95% of a college student’s time on campus is spent outside of the classroom.
We binge-watch our favorite shows, right? Why can’t we binge chemistry or geometry?
But do you retain information as well if you binge it? Students are always told not to cram.
Different students learn differently. On Chegg, we allow you to watch a video if you want or we let you do a step-by-step solution if you want. We let you ask any question.
You said you’ve been having conversations with state education systems that are unsure of what to do right now. What specific fears are they expressing?
Look, even nonprofit schools are businesses, and they have a motivation to generate more revenue than their costs. How could Stanford have a $27 billion endowment and cut the salaries of professors? That’s just crazy. What is that money for, if not for getting through times like this?
The thing is that these schools recognize that students are often ill-prepared for their college education. Schools have been allowing people in because they want the revenue, whether or not that student is prepared. You’re seeing now certain states getting rid of the ACT and SAT [requirements] during this crisis—that’s just an excuse to let more people in without a barrier because they want the revenue.
About 43% of students don’t graduate. Let me just do the economics and math for you: If a student comes to a school, fills a seat, and then next year doesn’t fill that seat, that’s lost revenue. That’s one of the reasons the cost of education keeps going up. [Chegg] is able to help schools keep retention higher and graduation rates higher because students are able to consume their education at whatever time they want with live help. We teach them better because they can depend on us, because we’re exceptionally affordable, and really comprehensive.
You mentioned that 20% of students are considering not going back to school next year. Is that specifically because of this current crisis?
Yes, that’s specifically because of the COVID-19 crisis. It is a large number, but, first of all, people are scared as all hell right now, and they don’t know what the fall looks like. The second thing is a lot of these people come from families that likely lost their jobs, and so they have to think about whether they can afford college. The third thing is that because of the pandemic, foreign students may not be able to come back. Foreigners represent over 10% of full-paying students in the country, so we’re going to see institutions in desperate need.
What will happen to those schools?
I think we’re going to see a whole lot of underfunded private schools merge or fold. I think you’re going to see a lot of them try to copy the model and go hybrid or go completely online like Southern New Hampshire University has done. I think you’re going to see an increased amount of curriculum aimed toward the workforce and not necessarily just for academics, because that’s where the funding is going to go. And whether that funding comes from corporations in your state or whether it comes from the government, it’s going to be about making people employable.
What schools will fold?
The low-funded, middle-tier private schools are going to go away, and what will happen is that the better schools with the better brands will take all of their full-pay students. I see these schools taking on more students online. Yale just put one of its most popular programs online.
Here’s the evolution of what I’ve witnessed over my last 10 years: Everybody said online sucks because the for-profits were bad actors. But here’s what we know is inevitable in the education system: We know the cost has to come down; we know the curriculum has to expand to be both academic and workforce-oriented; and we know that schools are going to have to use the Internet to become more accessible. So yes, just because for-profit schools didn’t do online education well doesn’t mean that we can’t get it right. Now, every school has been forced to go online because they’re not giving back the money they’ve collected this year. And what are they going to do if the fall is the same? They’re going to have to generate more undergraduate revenue in new ways without raising prices and without charging people to be on campus. I think the only way to do it is to expand the curriculum and the opportunity online. The business dynamics will force the smarter schools to do that, including the Ivy Leagues. Look, I would like America to be able to lower the cost, have on-demand, online, high-quality content relevant to an individual’s needs for education, and you cannot do that in person.
I can imagine a scenario in which wealthy Americans go to college campuses and everyone else takes classes online, creating a new inequality.
There are more people of lower-income and of color going to college than ever before, but they’re not graduating. They’re not getting a degree, but they are getting debt and putting themselves into a worse situation. The problem continues to be the affordability, availability, and the relevance. That’s where online education can work to the advantage of getting rid of income inequality.
Yes, there are always going to be people with more money who can buy a better experience. But I think you’re going to find in most cases that when you really make a commitment to going online and doing things right, it makes college more available, more accessible, more relevant, lower cost, and can serve people of every conceivable background.
And why can’t we make it cheaper? I mean the content is written once and it’s used many times. Income inequality can be positively affected by the better institutions and better professors making themselves more accessible online at more hours of the day with good technology.
Did you get everything that you wanted from this third stimulus bill?
I believe in stimulus bill four or five, the government is probably going to have to forgive some loans. You’ve got $1.6 trillion in student debt with 44 million Americans in debt—40% of whom are already behind in their payments.
Tell me about the Education for Equity program.
We decided as a board to put our money where our mouth is. We’re here advocating on behalf of students, and student debt is their biggest crisis.
The hopelessness of debt, you know, is you’ll never get out of, right? So we decided to put together a pool, without charging our shareholders, to create something that pays off all of our employees’ college debt over time. Lower-paid employees get $5,000 a year, and higher-paid employees get $3,000 a year. That’s more than they would pay on their own in a year, so we can help them pay down their principal. From there we learned that the benefit is actually taxable to our employees, which is ridiculous.
We realized that most larger companies have had the ability to pay for continuing education, and so we said: If we’re going to pay for them to get more education, why aren’t we willing to pay for the education they got that made them employable? We got involved with Ashton Kutcher to change the rules and hired a consultant that worked with the Obama administration, and we went and lobbied on the Hill to change those rules. Unfortunately, the only two things that got in the last stimulus were a two-month delay on student loans with no interest, and that corporations can pay up to $5,250 and not have the employee taxed. What I think we’ll get later on is a $10,000 forgiveness on student debt.
You think $10,000 in student-loan forgiveness will be included in the fourth stimulus bill?
It was included in the third and got knocked out. I think everybody is going to realize how much is at stake when people won’t be able to get educated and won’t be able to pay back their debt. I think they’ll see that the best stimulus bill in the world is putting money back in young people’s pockets to buy things.
So what should someone do if they’re in student debt right now?
The stimulus bill can’t delay payments for people who got their loans from private institutions. But the overwhelming majority of loans are backed by the government, and all of those people are eligible. Chegg has been working on a project called Chegg Money, which stems from the fact that we had asked college students what were the things they wish they had learned in college that they didn’t, and the number one thing was personal finance, so we’re building a site to answer those questions. How do I get unemployment? What do I do with my student loans? What am I eligible for and how do I sign up? We’re going to try to answer any question people in student debt may have.
But what advice do you have for students in debt?
Here’s what I would say to anyone who asks me personally: Your primary goal should be to make sure you’re sheltered and fed and healthy, and any money you have after that should be used to try to mitigate any one of the loans you have. The most expensive loan you have should be paid off first because you want to get rid of anything with a high interest rate. That’s going to kill you more than anything else. You can now delay your student loan with no interest accrued for at least two months, and I do believe it’s going to be extended, so put those on your back burner if you have to. Get rid of every credit card expense that you possibly can, because credit card companies are not your friends. The only benefit of paying student-loan debt now is that you pay principal only and no interest, but you should only do that if you have the financial flexibility, and most students don’t.
Dive into stories from Fortune’s print edition:
—The trillion-dollar question: How far will GDP fall?
—How each industry is fueling the U.S. unemployment rate in one chart
—What we can learn from China’s color-coded apps for tracking the coronavirus
—The retailers that are smartest about tech will finish on top after the coronavirus
—Big Pharma has the chance to come to the world’s rescue
—More surveillance and less privacy will be the new normal after the coronavirus
—WATCH: Why the banks were ready for the financial impact of coronavirus
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--2020-04-30--Europe turns to a familiar tool—negative rates—in bid to lend its way out of the crisis

The European Central Bank intensified its response to the coronavirus crisis by cutting the cost of funding for banks, while urging politicians to provide more fiscal support.
Hours after data showed the worst three-month contraction in a quarter-century of statistics, President Christine Lagarde warned that the euro-area economy could shrink as much as 12% this year.
“Continued and ambitious efforts are needed, notably through joint and coordinated policy action, to guard against downside risks and underpin the recovery,” she said in a virtual press conference on Thursday. “An ambitious and coordinated fiscal stance is critical, in view of the sharp contraction.”
She spoke after policy makers reduced the cost of their emergency loan program for banks, and unveiled a further facility to inject liquidity into the outbreak-stricken economy.
In a statement, the ECB said it would be dipping further into negative territory with the new loans program. For banks that qualify, the lowest interest rate would fall to 50 basis points below the deposit rate, currently at -0.5%. In effect, the rates are -1%, a move meant to spur lending to companies and households will. Interest on the new, non-targeted facility, meanwhile, will be 0.25% below the main refinancing rate that presently is zero.
Officials kept their pandemic purchase program at 750 billion euros ($815 billion), which together with earlier programs, means it will buy more than 1 trillion euros of debt through the end of this year.
Most economists predict the ECB will bump that up later this year. Lagarde said the central bank is “fully prepared” to increase or extend the program if needed.
Bond investors largely signaled satisfaction with the move, with Italian yields falling after initially briefly jumping.
“For today, it’s enough,” said Carsten Brzeski, an economist at ING in Frankfurt. “So much has been announced in the past six weeks.”
Lockdowns to curb the spread of the coronavirus have sent unemployment soaring across the region and burdened the currency area’s economies with massive costs.
Figures earlier Thursday showed European output shrank the most on record during the first quarter, a period only partially blighted by coronavirus lockdowns. Countries such as Italy, Spain and France, with limited room to spend their way out of the crisis, saw contractions of around 5%.
With more pain to come, demands by the euro area’s most vulnerable nations for a joint fiscal response will only grow louder. So far, most government action has been at the national level.
Squabbling Leaders
Leaders have asked the European Commission to come up with a broader proposal by May 6, though its unclear how to resolve disagreements on whether aid should take the form of grants or loans. Likewise, Germany and the Netherlands have led opposition to joint debt over fears they’ll end up with much of the bill.
The squabbling has unnerved investors, who fret that heavily indebted nations such as Italy will be tipped into a deeper crisis. The country’s credit rating was unexpectedly cut by Fitch this week.
The response contrasts with other major economies where fiscal support has been stronger. Federal Reserve Chairman Jerome Powell warned on Wednesday, after maintaining his institution’s own emergency settings, that this is “not the time” to worry about the U.S. debt burden.
Michael Pyle, global chief investment strategist at BlackRock, finds the contrast telling. He says the ECB’s move on Thursday only amount to “incremental steps in the right direction.”
“When we compare what we’re seeing out of the Fed and U.S. policy makers more broadly, the scale in response is much different,” he told Bloomberg Television. “We’re going to need to see quite a bit more, looking ahead.”
The ECB already eased the terms of its bank-lending program at its March policy meeting. It also recently loosened standards on the collateral it’ll accept for refinancing.
More must-read finance coverage from Fortune:
—Why Goldman Sachs thinks Q1 GDP will be “worse than it looks”
—5 lessons for the coronavirus recovery, from an expert on success and failure in crisis
—What the law says about forcing employees back to the office
—This time, the banks were ready: How the Big Four prepared to survive the coronavirus
—Where investors can find income in a coronavirus-crushed market
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Why the banks were ready for the financial impact of coronavirus
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-04-30--What is WeWork worth now?

What is WeWork worth now?

Already troubled office-sharing space WeWork is among the worst hit from the coronavirus.
As customers work from home, SoftBank revealed that it experienced a loss of $8.4 billion for the most recent fiscal year, $1.4 billion more than previously expected. That comes as SoftBank plans to write down its WeWork stake held outside the Vision Fund portfolio by $6.6 billion for the year.
“Every writedown takes WeWork’s carrying value closer to reality. Clearly the value is zero,” said Kirk Boodry, an analyst at Redex Holdings told Reuters.
It doesn’t look good for WeWork now—and into future quarters.
Surviving and operating during the epidemic will take a pivot for offices of all kinds. Investors are no longer waiting solely on a vaccine but looking for tech solutions around long-term social distancing. WeWork pitched itself as a tech company in IPO filings. If it plans to survive, it—along with other offices—will need to tap into contact-tracing platforms and population management software, even for meetings.
That said, shrinkage seems inevitable. Even with a vaccine, the company’s model of packing in as many people as efficiently possible into a workspace isn’t an attractive one.
A bet on smart cars: Samsung, Nationwide, and GE have invested $52 million in Nexar, a maker of software that alerts drivers to road hazards like potholes and helps with auto insurance claims.
The company, now valued at roughly $272 million, uses AI to recognize objects like a stop sign via the car’s camera—then alert drivers via smartphone. In the case of an insurance claim, customers can also nix the time-consuming paperwork process by giving insurers access to video of the accident and info such as its time, date, and location.
The company is operating in an abnormal environment right now. Car insurers aren’t so worried about accidents at the moment—the coronavirus has razed travel of all kinds, and car insurance claims along with it. But when travel restrictions begin to lift, analysts tell Term Sheet, car travel is expected to be the first to come back.
My colleague Jonathan Vanian has the story.
VENTURE DEALS
- Pivot Bio, an Berkeley, Calif-based agtech startup seeking to maximize crop yields, raised $100 million in Series C funding Breakthrough Energy Ventures and Temasek led the round, and were joined by DCVC.
- Otonomo, a Hertzliya, Israel-based automotive data services platform, raised $46 million in Series C funding. Investors include SK Holdings, Avis Budget Group, Alliance Ventures, and Bessemer Venture Partners.
- Taysha Gene Therapies, a Dallas-based gene therapy company seeking to treat monogenic diseases of the central nervous system, raised $30 million in seed funding. PBM Capital and Nolan Capital co-led the round.
- Genespire, a Milan-based biotechnology company focused gene therapies, raised €16 million ($17.4 million) in Series A funding. Sofinnova Partners was the investor.
- Tridge, a Seoul-based sourcing hub for food buyers and suppliers, raised $11 million in Series B funding. Activant Capital and Forrest Partners (Korea) were the investors.
- WindESCo, a Burlington-based software startup focused on wind farms, raised $10 million in Series B funding. WAVE Equity Partners led the round, and was joined by investors including an affiliate of Tenaska.
- Wise, a San Mateo, Calif.-based challenger bank for small businesses, raised $5.7 million in seed funding. Base10 Partners led the round, and was joined by investors including Abstract Ventures, Backend Capital, The Fund, and Two Culture Capital. Read more.
PRIVATE EQUITY
- AE Industrial Partners acquired Adcole Maryland Aerospace, a Marlborough, Mass.-based provider of satellite components. Financial terms weren't disclosed.
- Spectrum Equity invested in OurFamilyWizard, a Minneapolis, Minn.-based co-parenting application. Financial terms weren't disclosed.
- Vander-Bend Manufacturing, a portfolio company of Aterian Investment Partners, acquired TMK Manufacturing, a Santa Clara, Calif.-based specialty prototyping and precision machining provider. Financial terms weren't disclosed.
- Macquarie Capital Principal Finance acquired a majority stake in Multifuels Midstream Group, a Houston-based operator of lateral natural gas pipelines and related infrastructure in the U.S. Financial terms weren't disclosed.
- MPK Equity Partners and Princeton Equity Group invested in Restoration 1, a Waco, Texas-based property restoration company and sister brand Bluefrog Plumbing + Drain, a plumbing franchise.
- Warburg Pincus invested in Polyplus-transfection SA, a Illkirch, France-based, developer of gene and cell therapies, alongside the existing majority shareholder, ArchiMed. Financial terms weren't disclosed.
OTHERS
- The Abu Dhabi Investment Authority is delaying the sale of $2 billion in private equity fund stakes due to the coronavirus, per Bloomberg citing sources. Read more.
- Chesapeake Energy Corp, an Oklahoma City-based oil and gas exploration and production company, is preparing a potential bankruptcy filing, per Reuters citing sources. Read more.
- Dribbble acquired Creative Market, a San Francisco-based design assets marketplace. Financial terms weren't disclosed.
- Henkel and KKR are holding off bidding for a portfolio of beauty brands from Coty, a New York-based cosmetics firm, per Reuters. Read more.
- Hertz Global Holdings, a Florida-based car rental company, is preparing for a potential bankruptcy filing. Read more.
- Terminus acquired Ramble, an Atlanta-based chat solution. Financial terms weren't disclosed.
IPOs
- JD.com Inc. filed confidentially for a second listing in Hong Kong, per Bloomberg. Read more.
EXITS
- British Columbia Investment Management, Neuberger Berman, StepStone, and Skandia have acquired a significant minority stake in Waterlogic, a New Castle, De.-based provider of purified drinking water dispensers. Castik Capital was the seller. Financial terms weren't disclosed.
- Engage Brand acquired Boston Market, a Golden, Colo.-based fast casual chain, from Sun Capital. Financial terms weren't disclosed.
- Inverness Graham sold Kalkomey Enterprises, a Dallas, Texas-based provider of online recreational safety education, certifications and cloud-based agency management solutions. Financial terms weren't disclosed.
- Mitsubishi Chemical America agreed to acquire Gelest Intermediate Holdings, a Morrisville, Pa.-based supplier of silicones, organosilanes, metal-organics, and specialty monomers, from New Mountain Capital. Financial terms weren't disclosed.
F+FS
- Warwick Group raised $388 million for its fourth fund. Read more.
- Owl Ventures is seeking to raise $350 million for its fourth fund. Read more.
- Silverton Partners, the Austin headquartered venture capital firm which has raised $144M new fund to invest in the next generation of Texas startups.
- Arctos Sports Partners raised over $430 million for its inaugural fund. Read more.
- Blackstone raised $233 million for its private infrastructure fund. Read more.


fortune--2020-04-30--Samsung, Nationwide, and GE just invested in A.I. startup Nexar

Nationwide Insurance, GE, and one of Samsung’s investment arms have invested $52 million in Nexar, a maker of software that alerts drivers to road hazards like potholes and helps with auto insurance claims.
The funding, announced Thursday, pushes the amount the five-year-old Israeli company has raised to a total of $100 million. Nexar declined to comment on its new valuation, but a source familiar with the deal said the value is $272 million, including the new money put into the startup.
Nexar’s computer vision software alerts drivers to help them avoid accidents or receive updates on traffic problems like blocked lanes ahead. The company does so by partnering with third-party dashboard-camera makers like Scosche Industries to use its software.
Nexar’s technology then taps deep learning—run on people’s smartphones that are wirelessly connected to their car cameras—to recognize objects in the road. For example, when the camera sees a stop sign, drivers receive an alert informing them that they’re approaching this traffic sign.
People can also link their Nexar accounts to their insurance providers to speed up the claims process. For instance, they can send video of an accident, along with information like the time, date, and location of the collision, without having to fill out a lot of paperwork.
This idea of using A.I. to create insurance reports is being explored by several insurance companies like China’s Ping An, as Fortune detailed last summer. Indeed, Nexar also said that Japanese giant Mitsui Sumitomo Insurance (MSI), which was not among its investors, has also partnered with Nexar to help it expand in Japan.
Nexar CEO Eran Shir said the company also sells data it collects from its users to mapping companies and municipalities, an idea that’s integral to so-called smart-city projects. Las Vegas, for instance, uses the startup’s service to collect information about the impact of traffic congestion on the city, among other uses, Shir said.
However, privacy advocates are worried about private companies giving governments access to powerful surveillance technologies. In response, Shir said Nexar obscures personally identifying information like license plate numbers when providing data to governments. But security researchers say that even anonymized data is dangerous because it can be combined with other information to provide a fuller picture.
As for the coronavirus pandemic’s impact, Shir said that Nexar has noticed a drop in driving activity over the past few months because of nationwide shelter-in-place orders. The startup may have also lucked out with its fundraising, which began last fall, before the coronavirus took its toll on businesses and investing.
“In a sense I think what you see is a lot of hesitation in the seed level, A-round-level, and obviously there’s a lot of turmoil in the public markets,” Shir said.
Corner Ventures was Nexar’s lead investor for its latest deal. Other investors included La Maison, Micron Ventures, Sompo, Atreides Management, Aleph, Mosaic Ventures, and Ibex Ventures.
More must-read tech coverage from Fortune:
—Who is new AT&T CEO John Stankey?
—Work-from-home tips from the executive team that brought you Zoom
—Is A.I. better at diagnosing illnesses than doctors? Don’t believe the hype
—Facebook debuts Zoom-like videochat feature called Messenger Rooms
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—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--2020-04-30--The latest round of  unemployment claims puts real jobless rate near Great Depression peak

At the height of the Great Depression the unemployment rate topped 25.6%—a figure the real unemployment rate is nearing again.
Another 3.8 million Americans filed initial unemployment claims in the week ending April 25, according to the U.S. Department of Labor. That’s down from the 4.4 million claims the week prior, but brings the total claims since mid-March to 30.3 million.
Before this six-week stretch of 30.3 million initial jobless claims, there were already 7.1 million unemployed Americans as of March 13. When those figures are combined, it equals more than 37 million unemployed, or a real unemployment rate of 23%.
But some think that staggering number doesn’t capture the full picture. “There are some people who are unemployed who are maybe not showing up in initial claims because they haven’t been processed yet because of state backlogs,” says Dan White, head of fiscal policy research at Moody’s Analytics.
The unemployment rate for March is 4.4%, but that calculation is through just March 13—before the effects of the coronavirus pandemic were fully felt. The April rate that comes out on May 9 is expected to top double digits.
But there’s another reason the official rate might be undercounting the situation. Out-of-work Americans are categorized as unemployed by the U.S. Bureau of Labor Statistics (BLS) only if they’re also looking for a new position. Even though many states have waived requirements that workers be job hunting in order to collect unemployment, the BLS includes only those actively seeking work in the jobless counts. Many businesses remain shuttered, and presumably lots of laid-off workers are waiting for stay-at-home orders to lift before searching for work.
Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today.
More must-read finance coverage from Fortune:
—Why Goldman Sachs thinks Q1 GDP will be “worse than it looks”
—5 lessons for the coronavirus recovery, from an expert on success and failure in crisis
—What the law says about forcing employees back to the office
—This time, the banks were ready: How the Big Four prepared to survive the coronavirus
—Where investors can find income in a coronavirus-crushed market
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Why the banks were ready for the financial impact of coronavirus
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-04-30--Why Google is a better stock bet than Facebook right now

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.
For years when I first moved to Silicon Valley, I wrote about tech stocks, first at The San Jose Mercury News, then the TheStreet.com, and finally, occasionally, at Fortune. I disliked the who’s up/who’s down nature of the game; I always loved the rat-a-tat-tat of kicking it around with market professionals, all of whom are paid to have a point of view.
Wednesday, I hosted a Data Sheet conversation with Gene Munster of Loup Ventures and a longtime stock analyst with Piper Jaffray. You can listen to the whole 28-minute call here. Some highlights:
Munster is a perma-bull on Apple, and he thinks it is grossly undervalued today. He thinks Apple suffers from a “hardware discount,” the persistent belief among investors that hardware companies eventually fail. He doesn’t think Apple will fail—he thinks it’ll be the first $2-trillion market-cap company.
The lesson of Google’s better-than-feared quarter is that search performance is returning to normal. He thinks Google, or Alphabet actually, is a better diversified bet than Facebook and therefore a better play on the future. (Facebook didn’t do too shabbily Wednesday in its earnings report.)
A listener asked if we should declare Amazon a national asset, in other words, a regulated utility. Munster hates that idea.
Tesla is eating the car market, in part because young people love the brand. It’s not an apples to apples comparison, but Munster notes that Tesla’s global shipments recently were up 40% while U.S. automaker sales were down 29%. He sees the traditional market getting hollowed out.
Munster likes Zillow, which recently suspended its house flipping business. He sees it as a long-term thing, not a stock to buy when buyers can’t do a walk through.
Like me, Munster is a 5G bull. So I asked him what concerns him about the allegedly transformative communications technology. His answer: the extreme hype, the lack of immediate use cases, the way it will vanquish battery life. He thinks it is dangerous for investors but good for the world.
The world is falling apart, layoffs and food lines are mounting, and so much about the epochal pandemic remains unknown. And still there are tech stocks to discuss.
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
Just think of something stupid to say and then don't say it. Speaking of stocks, a bunch of tech companies released earnings last night. But forget the numbers. The real headline was Tesla CEO Elon Musk calling out San Francisco's work-from-home order as "fascist" while praising China's investment in its infrastructure. For a smart guy...
Advanced statistics for dummies. Okay, let's not totally forget the numbers. Microsoft's sales jumped 15% to $35 billion, better than analysts expected, and CEO Satya Nadella said he thought gains for cloud computing during the pandemic will stick. Microsoft's stock, already up 13% this year, gained another 2% in pre-market trading on Thursday. Facebook said ad spending sharply slowed in March but stabilized in April. Its revenue increased 18% to $17.7 billion. The company's stock, previously down 5% in 2020, erased that loss with a 9% jump in pre-market trading. Spotify reached 130 million paid subscribers, up 31%, and revenue of $2 billion, up 22%. Its stock gained 11% in trading on Wednesday and is now in positive territory for the year, with a 4% gain.
More is more. At eBay, net revenue slipped 2% to $2.4 billion. The company's stock, up 8% this year previously, slipped 4% pre-market. And Qualcomm's sales gained 7% to $5.2 billion, but the company predicted a deep drop in phone sales for the year due to COVID-19. Qualcomm's stock, down 11% in 2020, gained 2%. At Twitter, revenue rose just 3% to $808 million. That was better than what was feared. Its shares, previously down 3%, jumped 9%.
Fuel to the fire. We have been inaccurately reporting Zoom usage, but it's partly Zoom's fault. The company did not have 300 million daily active users. It has had that number of daily meeting participants, a figure which counts a single person multiple times if they attend more than one meeting per day (and, at this point, who doesn't?). Zoom itself used the incorrect phrasing on its blog, then quietly corrected the terminology. Given that the numbers helped drive its stock price, expect some federal interest in the mistake soon.
When the heat comes down. Probably also not helping Zoom's stock price, Google said it would make Meet, its premium video conferencing app, free to all users. In other news at the Googleplex, the company and partner Apple released the first APIs to developers for their exposure notification system (AKA the band previously called contact tracing).
Money is not peace of mind. Venture capital firm Andreessen Horowitz had enough success with its first fund dedicated to digital currencies and related tech that it's coming back for more. The second crypto and blockchain fund starts with $515 million, up from the $300 million in its 2018 fund.
FOOD FOR THOUGHT
We have previously discussed the challenges facing schools and students forced to shift to online and remote learning. Now some districts are throwing in the towel after deciding the online set-up just isn't worth it. Wall Street Journal reporter Tawnell Hobbs has the story of schools closing up early for summer vacation.
Schools have struggled to launch remote learning for more than 50 million children across the country during the coronavirus pandemic in the largest experiment in remote learning ever. Among the issues they’ve encountered, not all students have internet access or have parents available to help, causing concerns about inequity. As a result, many districts haven’t required schoolwork be completed or graded. Student participation, when schools are even able to measure it, has often been below regular attendance level.
The Bibb County School District in Macon, Ga., is ending school Friday for about 21,500 students—three weeks early.
“The vast majority of our community was feeling stressed,” said Curtis Jones Jr., superintendent of the Bibb County district, just over an hour south of Atlanta. “There were inequities between schools. I had teachers who were telling me, `I’m trying to figure out how to do my job as well as teach my class.’ It made sense to us to get rid of the stress and get ready for the following school year.”
IN CASE YOU MISSED IT
Cybercriminals adapt to coronavirus faster than the A.I. cops hunting them By Jeremy Kahn
4 key things to watch for in Apple’s earnings on Thursday By Aaron Pressman
Lyft to cut or furlough 1,300 employees amid the coronavirus pandemic By Danielle Abril
Where will Bitcoin go after ‘The Halvening’? By Robert Hackett and David Z. Morris
GDP shrinks 4.8%—but what comes next will be far worse By Lance Lambert
Scammers have registered 150,000 fake stimulus check websites. Here’s how to protect yourself By Lee Clifford
Coronavirus patient data stored in electronic health records found difficult to study at scale By Fred Schulte and Kaiser Health News
(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
There have been some complaints in the Pressman household during lockdown that nightly dreams have gotten bogged down in the mundane. National Geographic has something to stimulate richer visions during your next sleep: vivid pictures of a new dinosaur find. I hope you weren't expecting something calm and soothing.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-04-30--Mayor London Breed stays home while she figures out how to reopen San Francisco

Good morning, Broadsheet readers! Senate Democrats continue to push for a childcare bailout, Gap Inc. faces a crisis, and we hear from San Francisco Mayor London Breed. Have a lovely Thursday.
– Mayor to mayor. It’s been two months since Mayor London Breed locked down San Francisco, and who knows how long since she ate a vegetable.
That last part might be an exaggeration—but the mayor of one of the first U.S. cities to impose a coronavirus shutdown did tell members of Fortune‘s Most Powerful Women community yesterday that she doesn’t love eating vegetables and prefers takeout from a local juice shop to get her vitamins.
Breed joined us for a video chat about leadership during the crisis yesterday. The event was the second virtual gathering Fortune MPW has hosted, following a session with Merck vaccine expert Dr. Julie Gerberding.
Besides juicing, listening to public-health experts, and figuring out how to responsibly re-open her city (it could involve takeout and delivery for non-essential businesses, too, like boutiques), Breed is staying at home, exercising and watching Tiger King to relax, and taking regular calls with California Gov. Gavin Newsom and a dozen other big-city mayors in the state. On that last topic—Breed told the MPW group that she’s grateful to work with a politically-aligned governor and that her “heart goes out to” peers like Atlanta Mayor Keisha Lance Bottoms who are trying to keep their cities safe while sparring with state leadership. “She is an incredible person and doing a great job despite the circumstances,” Breed said of Bottoms.
Thanks to Mayor Breed for joining us yesterday—read on for more from her talk here.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
ALSO IN THE HEADLINES
- Goodbye because of all that. Citigroup made a discovery about its senior employees: men and women leave those roles for very different reasons. Women tend to say they've chosen to depart because of something about the company or its leadership, while men blame their relationship with their direct manager. Bloomberg
- Childcare cause. Sens. Elizabeth Warren and Tina Smith are still pushing for their $50 billion bailout for the nation's childcare system in the next coronavirus stimulus package. The senators first proposed the plan earlier this month and this week sent a letter to Senate leadership with the support of more Congressional colleagues. HuffPost
- A final fall into the Gap? Is the coronavirus crisis what finally kills Gap Inc.? The retailer, now led by CEO Sonia Syngal, was once the iconic American brand, but is now at the center of trends and financial realities that don't bode well for its post-pandemic future. Marker
Movers & Shakers: Molly Langenstein, president of Chico's and White House Black Market, has been named CEO and president of parent company Chico's FAS.
IN CASE YOU MISSED IT
- UAW to GM. Federal investigators have long been looking into corruption at the United Autoworkers union; now they're probing UAW leaders' interactions with Mary Barra's General Motors. Authorities aim to figure out whether GM "violated U.S. labor law barring companies from providing union officials with items of value." The investigation is focused on one specific employee training center jointly operated by GM and the UAW; GM says it has been cooperating with the government in the investigation. Wall Street Journal
-Virus vaccine. In the race for a coronavirus vaccine, one woman has pulled ahead. Sarah Gilbert, a professor at Oxford University's Jenner Institute, developed a vaccine for the coronavirus MERS and is making progress on COVID-19. The billionaire-backed "Manhattan Project" for a vaccine, in comparison, has few women involved. New York Times
- UNintended. The lockdowns and disruptions to health services caused by the coronavirus pandemic could prevent 47 million people worldwide from accessing contraceptives—leading to 7 million unintended pregnancies, according to the UN. UN
ON MY RADAR
Serena Williams, Naomi Osaka will play in a celebrity Mario Tennis tournament on Facebook The Verge
The history behind the Netflix documentary Murder to Mercy: The Cyntoia Brown Story Time
Carrie Symonds: a media-savvy history-maker in No. 10 Guardian
I don't want to be a fun mom New York Times
PARTING WORDS
"It can still be beautiful, exciting; we’re still excited about babies being born."
-Shonna Carter, a Lenox Hill hospital labor and delivery nurse, on working during the coronavirus pandemic


fortune--2020-04-30--The U.S. has a new plan to fast-track a COVID-19 vaccine: ‘Operation Warp Speed’

The Trump administration is organizing a Manhattan Project-style effort to drastically cut the time needed to develop a coronavirus vaccine, with a goal of making enough doses for most Americans by year’s end.
Called “Operation Warp Speed,” the program will pull together private pharmaceutical companies, government agencies and the military to try to cut the development time for a vaccine by as much as eight months, according to two people familiar with the matter.
As part of the arrangement, taxpayers will shoulder much of the financial risk that vaccine candidates may fail, instead of drug companies.
The project’s goal is to have 300 million doses of vaccine available by January, according to one administration official. There is no precedent for such rapid development of a vaccine.
President Donald Trump’s top medical advisers, led by the infectious disease expert Anthony Fauci, have repeatedly said that a coronavirus vaccine won’t be ready for 12 to 18 months at best. Until then, White House guidelines envision some economically damaging social-distancing practices maintained even as the U.S. begins to resume a more normal social and business life.
Last month, Trump directed Health and Human Services Secretary Alex Azar to speed development of a vaccine, and administration officials have been meeting on the effort for three to four weeks, one of the people said. A meeting on the project was scheduled at the White House on Wednesday.
The people familiar with the project and the administration officials asked not to be identified because it hasn’t yet been publicly announced.
A spokesman for the Department of Health and Human Services, Michael Caputo, said the president refused to accept the timeline for standard vaccine development and encouraged a breakthrough process.
Speeding Up
Vaccine development is typically slow and high risk. The project’s goal is to cut out the slow part, the people said. Operation Warp Speed will use government resources to quickly test the world’s most promising experimental vaccines in animals, then launch coordinated human clinical trials to winnow down the candidates.
The best prospective vaccines would go into wider trials at the same time mass production ramps up.
The project will cost billions of dollars, one of the people said. And it will almost certainly result in significant waste by making inoculations at scale before knowing if they’ll be safe and effective—meaning that vaccines that fail will be useless. But it could mean having doses of vaccine available for the American public by the end of this year, instead of by next summer.
The group is discussing which Americans might be vaccinated first, as the medicines would likely roll off production lines in batches, one of the people said. The project would be funded from money already available to the government and won’t require new authority from Congress, one of the people said.
There are at least 70 different coronavirus vaccines in development by drugmakers and research groups, according to the World Health Organization. But drugmakers have not coordinated their efforts to the extent they could through the Warp Speed project, one of the people said.
Under the effort, the Defense Department would make its animal research resources available for pre-clinical work on vaccines.
The group is also discussing the use of what’s known as a master protocol to test the vaccines. Instead of multiple clinical trials run by each drugmaker, competing for patients and resources, the government would organize one large trial to test several vaccines at once and advance the most promising ones.
Oxford Vaccine
The Trump administration isn’t alone in trying to fast-track a vaccine. One of the world’s most promising vaccine candidates has been developed by a team at Oxford University. Last month, scientists at the U.S. National Institutes of Health inoculated six rhesus macaques with the Oxford vaccine and then exposed them to the coronavirus, the New York Times reported.
All six were healthy more than four weeks later, according to the Times. The researchers are currently testing their vaccine in 1,000 patients and plan to expand to stage two and three clinical trials next month involving about 5,000 more people.
The Oxford group told the Times they could have several million doses of their vaccine produced and approved by regulators as early as September.
In the U.S., the Bill & Melinda Gates Foundation has meanwhile shifted much of its research effort to the coronavirus virus.
One of the people familiar with Operation Warp Speed drew a distinction with the Oxford group, describing the U.S. effort as broader in scope. It’s unclear which vaccine candidates would be part of Operation Warp Speed, or whether it would include the Oxford vaccine.
More than 1 million cases of coronavirus have been confirmed in the U.S., and at least 58,000 people have died from the illness it causes in the last two months. Widespread social-distancing measures have helped slow the spread, but at the cost of millions of jobs and losses to the economy that experts fear will take years to recover.
Along with wider diagnostic testing for the virus and an effective therapeutic drug, a vaccine is one of the key tools for reducing long-term risk from the virus. Testing can help contain an outbreak in its early stages, or after it’s been curbed enough to manage. A therapy can help those who get sick, reducing the risk of death and the burden on hospitals.
Gilead Sciences Inc. announced Wednesday that in a trial conducted by Fauci’s agency, the U.S. National Institute of Allergy and Infectious Diseases, its experimental coronavirus therapy remdesivir helped patients recover faster than under standard care.
Optimistic Timetable
Vaccines are one of the most effective tools against viral disease, as they can prevent people from becoming sick at all. They’re a shortcut to the immunity that most people acquire after they’re sickened by a virus and recover. During the illness, the immune system produces antibodies that it can subsequently use to fight off later exposure to the same pathogen.
Vaccines use a live, weakened virus, a dead one, or pieces of the pathogen to trick the body into building defenses without having to get sick.
But even Fauci’s prospective 12-to-18-month timetable would be years faster than typical vaccine development. A vaccine for the Ebola virus that went into clinical trials in 2014 received approval from U.S. regulators in December—a five-year effort considered remarkable for its speed.
And the new coronavirus poses fresh challenges. How many people get immunity after exposure, how robust the pathogen is, and how long it lasts are all still questions. Some research has shown that immunity to other coronaviruses, including those that cause SARS, MERS and forms of the common cold, may be limited or only last for a relatively short time.
It’s not clear how much of Operation Warp Speed is new and how much will involve ongoing projects, such as investments made by BARDA, the Biomedical Advanced Research and Development Authority.
BARDA has already handed out hundreds of millions of dollars to drugmakers including Moderna Inc. and Johnson & Johnson. The money is meant to fund both research and large-scale manufacturing at the same time, hopefully to accelerate vaccine production.
But last week, BARDA’s director Rick Bright was removed and reassigned to the NIH. He has said he will file a whistle-blower complaint, alleging the White House retaliated against him because he resisted promoting widespread use of malaria drugs Trump has touted for coronavirus.
The drugs, chloroquine and hydroxychloroquine, haven’t been proven effective against the virus and some clinical trials have been abandoned because of dangerous side effects. After directing the government to obtain more than 29 million doses of the drug, Trump has recently stopped promoting the medicine as a coronavirus treatment.
He claimed last week that he didn’t know Bright and was unaware of his removal.
More politics coverage from Fortune:
—Joe Biden may be the USPS’s only hope—if it can survive until November
—Boris Johnson won his personal battle against COVID-19. Now comes the hard part
—There may be 22 hidden coronavirus hotspots in states poised to lift restrictions
—U.S. adds cameras at Mexico border despite drop in crossings
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
Get up to speed on each morning with Fortune’s CEO Daily newsletter.


fortune--2020-04-30--The oil business may never be the same again, Shell CEO acknowledges

Europe’s largest oil company is bracing for permanent change in customer behavior, signaling demand may not fully recover once the coronavirus pandemic is over.
The global spread of the virus has roiled oil markets, dragging down profits at some of the biggest producers and promising worse to come next quarter. But the long-term impact on the way consumers work and travel could be even more devastating for the industry.
“There will be changes, and therefore we have to be ready for that,” Royal Dutch Shell Plc Chief Executive Officer Ben van Beurden said in a Bloomberg Television interview. “That means that we probably have to re-establish what is going to be our strategy.”
The Anglo-Dutch major on Thursday cut its dividend for the first time since the Second World War as the oil slump dragged first-quarter earnings down 46%. The company presented a bleak outlook, citing prolonged economic uncertainty, lower commodity prices, higher volatility and persistent weakness in demand.
Lifestyles will probably “be altered for some time to come, whether that is because of the economic bandwidth that people will have or businesses will have, or whether it is because of attitudes,” Van Beurden said. “We do not expect a recovery of oil prices or demand for our products in the medium term,” he said later in a press briefing.
Attitudes have of course been changing for some time as the world shifts gradually toward cleaner forms of energy. Mounting pressure from customers, governments and — increasingly — investors has seen large oil companies make ambitious promises to slash their carbon emissions.
Yet many, including Shell, haven’t provided a blueprint on how much they’ll invest in clean energy to fulfill their long-term pledges. Now, with the coronavirus crisis reshaping the entire oil market and the future of consumption, such investment plans may be brought sharply into focus.
“Will demand ever go back to where it was? That is hard to say,” Van Beurden said, acknowledging that the likelihood of oil peaking this decade “has indeed gone up” amid the market turmoil. “We live in a crisis of uncertainty at the moment; we don’t know what is on the other side.”
More must-read finance coverage from Fortune:
—Why Goldman Sachs thinks Q1 GDP will be “worse than it looks”
—5 lessons for the coronavirus recovery, from an expert on success and failure in crisis
—What the law says about forcing employees back to the office
—This time, the banks were ready: How the Big Four prepared to survive the coronavirus
—Where investors can find income in a coronavirus-crushed market
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Why the banks were ready for the financial impact of coronavirus
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-04-30--4 key things to watch for in Apple’s earnings on Thursday

There could be a strange quarterly earnings report from Apple this week. As Toni Sacconaghi, a top analyst who follows the company at Bernstein Research, put it last week: Do the numbers even matter?
That’s because with economies across the globe in lockdown, Apple has been suffering from declining sales along with almost every other consumer-tech seller. The company will report results for the first quarter, its fiscal second quarter, on Thursday after the market closes.
In February, the company admitted that its revenue would be below the $63 billion to $67 billion it had forecast just a few weeks earlier. How far below, and what Apple signals about future sales, may be the most critical information for investors in this report. After iPhone sales had come roaring back to life at the end of 2019, analysts expect the company’s overall revenue to drop about 6% from last year’s first quarter to $54.6 billion, on average. Net income is expected to decline by 8% to $2.27 per share.
Apple’s stock price has held up better than some tech companies, but it has not proved to be the best shelter in its industry. With its share price down 9% over the past three months, Apple lags Netflix’s 18% gain, a 28% rise at Amazon, or Zoom Video Communications’ 105% leap over the same period. But Apple has done better than smartwatch maker Garmin’s 19% loss; Facebook, which has lost 11%; and HP, down 25%.
Despite the uncertainty, here are four things investors will be watching in Apple’s quarterly report on Thursday.
What impact is COVID-19 having on Apple?
During the company’s previous earnings call in January, the coronavirus was still mainly an issue in China alone. CEO Tim Cook said Apple had closed some stores and was working to accommodate the loss of suppliers in Wuhan and surrounding Hubei province. Obviously since then things have gotten considerably more serious globally.
“We are all still bracing for the worst to come,” Sacconaghi wrote.
J.P. Morgan analyst Samik Chatterjee said investors may be be surprised by just how badly Apple has been hit. “The magnitude of the short-term dislocation might not be fully priced in yet, particularly given what we believe is a high likelihood that the firm will sidestep its usual practice of giving specific guidance for the next quarter,” he said in a recent report. But he expects pent-up demand will boost sales after the pandemic passes.
Goldman Sachs analyst Rod Hall downgraded his rating on Apple to “sell” on April 17, as he thinks the pandemic will hurt sales more deeply than most.
“The company has faced unprecedented production stoppage due to the COVID-19 epidemic in China, followed by likely rapid deterioration in demand with most of the rest of the world locked down in March,” Hall wrote in a report last week. “We believe consensus earnings expectations for 2021 are too high considering the weaker consumer demand environment and resulting weak [average selling prices] that we expect to persist well into next year from this recession.”
Will Apple provide any financial guidance?
Apple typically lets investors know its thinking about the current quarter with a forecast of its expected total revenue and other key data points such as its gross profit margin, tax rate, and operating expenses. But companies have been withdrawing and dropping guidance amid the pandemic. Last week, Intel, Texas Instruments, and Netflix reported results and offered second-quarter guidance. But Snapchat’s parent company, Snap, decided against giving a forecast, while Intel withdrew its projection for the full year.
Cowen analyst Krish Sankar is among those who think Apple will not give guidance. “Forecasting demand in these uncertain times, especially when there is a wide variance in personnel movement across different geographies, is extremely challenging,” Sankar said in a report on Monday. Still, he thinks over the longer term, sales will increase and rates Apple’s stock “outperform.”
Morgan Stanley’s Katy Huberty sounded a more hopeful note in her report. “While there is a small risk that Apple does not guide for the June quarter, we believe the more likely outcome is that Apple guides to a wider range than typical,” she wrote.
Sacconaghi agreed in his report. “Apple could conceivably have better visibility into the crisis than most companies, given its familiarity with China as a precedent for the rest of the world,” he wrote. “So perhaps Apple could provide fiscal Q3 guidance with a wider-than-usual range, or at least provide verbal commentary on how the quarter is trending.”
How is Apple TV+ doing?
Apple debuted its new premium streaming-video service on Nov. 1, so the just-finished quarter is the first full one for the offering. In January, Cook said Apple TV+ was “off to a rousing start,” but he didn’t reveal any hard numbers. CFO Luca Maestri went so far as to say that revenue from the service was “immaterial,” which wasn’t surprising, given that Apple offered a free one-year subscription to buyers of new iPhones and other devices.
The Apple service enters a crowded market, with Disney saying its new streaming service already has more than 50 million paid subscribers. And Netflix said last week that it had gained 16 million new subscribers in just the first quarter.
“We hope to get a better idea of what the free trial take rate has been in this quarter, as that then would have a material impact on our services growth expectations this year,” Goldman Sachs analyst Hall noted in a report.
Will 5G iPhones be delayed?
Cook usually plays his cards pretty close to the vest. Too many times to count since Cook took over as CEO has an analyst asked about a future product only to get the brush-off. During a conference call last quarter, Morgan Stanley analyst Huberty tried to get some information about Cook’s view of 5G and got the standard response from the CEO: “Sorry. We don’t comment on future products.”
But with so many reports circulating that Apple has delayed ramping up manufacturing of this year’s crop of new iPhones, it’s possible Cook will address the rumors.
More must-read tech coverage from Fortune:
—Who is new AT&T CEO John Stankey?
—Work-from-home tips from the executive team that brought you Zoom
—Is A.I. better at diagnosing illnesses than doctors? Don’t believe all the hype
—Facebook debuts Zoom-like video chat feature called Messenger Rooms
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—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--2020-05-01--Ryanair to cut 3,000 jobs, as lockdown pain spreads across Europe’s airlines

5 new books to read in May

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Ryanair Holdings Plc will cut 3,000 jobs and said it will challenge some 30 billion euros ($33 billion) in state aid being doled out to save its European competitors.
The Irish discount carrier on Friday added to a mounting employment toll that includes 12,000 cuts at British Airways and 5,000 at SAS AB. The reductions represent about 15% of Ryanair’s workforce, and would include pilots and cabin crew.
The company plans 20% pay cuts for the remaining staff, Chief Executive Officer Michael O’Leary said in an interview with Bloomberg TV. O’Leary expects demand to bounce back slowly, while warning that bailouts will spur ticket discounts, worsening the effects of weak demand on pricing and industry profit.
“The people who went in weakest, which is the legacy airlines, Air France, Alitalia, Lufthansa, have either been nationalized or are receiving extraordinary volumes of state aid,” O’Leary said. “These are going to hugely distort the level playing field for aviation in Europe for three to five years. What we’re facing now is a historic decline in air traffic in Europe for the next 12-18 months.”
Ryanair shares fell as much as 5.3% in London, with markets closed in Dublin and other European cities because of the May 1 holiday. U.K. discounter EasyJet Plc dropped as much as 7.3%, while IAG SA, the parent of British Airways, declined as much as 4.6%.
Ryanair said in a statement that it will carry less than 1% of its normal passenger volume in its fiscal first quarter and doesn’t expect a full recovery until summer 2022 at the earliest.
O’Leary has consistently railed against bailouts, saying that they are in breach of European Union competition and state aid rules, and said the carrier will challenge them in court. Carriers across the region are asking for help to survive the coronavirus crisis that has grounded much of Europe’s air traffic, endangering not only the airlines but connections that keep tourists flowing to Rome and Paris and help power Germany’s export economy.
British Airways sister airlines Iberia and Vueling on Friday said they reached agreements for a combined 1 billion euros ($1.1 billion) in Spanish government-backed loans to weather the disruption caused by the pandemic.
Union Reaction
Balpa, which represents some of Ryanair’s pilot said that there had been no warning or consultation by Ryanair about the job losses.
“Ryanair seems to have done a U-turn on its ability to weather the COVID storm,” Brian Strutton, general secretary of Balpa, said in a statement. “Aviation workers are now facing a tsunami of job losses.”
Ryanair said it expects flights to resume in July, and that “it will take some time for passenger volumes to return.” The company is working on reducing deliveries of 737 Max narrow-bodies from Boeing Co. and Airbus SE A320-series jets from leasing firms.
Ryanair has 150 higher-capacity Boeing jets on order with options from another 60. The Max has been grounded for over a year following two fatal crashes and Boeing now expects the plane to return to service in the third quarter of 2020.
“We would still like to take some if not all of those aircraft,” O’Leary said. “We need to rightsize the company for what is going to be 3-5 years of very grim trading for Ryanair.”
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—WATCH: Fortune’s top 10 heroes of the coronavirus pandemic
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--2020-05-01--Chrissy Taylor on keeping Enterprise’s rental fleet moving—and her family’s business afloat

5 new books to read in May

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Chrissy Taylor took over as CEO of the world’s largest rental-car company in December, but she’s been training for the job for a lifetime. The granddaughter of Enterprise Holdings’ founder, Taylor served as chief operating officer before finally taking the wheel of the $26 billion travel industry giant and its fleet of 2 million vehicles in January.
Now, in her first months on the job, Taylor is deep in coronavirus crisis management mode. But she’s maintaining a long-term outlook, preparing for the travel industry to be forever changed. “I always knew being CEO was not easy, but this came a little sooner than I thought,” she says.
For a new series, Fortune asked female business leaders—including those who appear on Fortune‘s annual Most Powerful Women in Business list—to talk about leading through the public health and economic crisis. This interview has been edited and condensed.
Fortune: What’s your No. 1 concern related to the coronavirus and your business?
Chrissy Taylor: Our No. 1 priority and concern is our employee safety and our customer safety. Everything that we’re doing right now, from modifying our operations and our messaging—everyone is focused first and foremost on employee and customer safety. As an essential provider of transportation, we still remain open, so it’s important that everyone knows we are conducting ourselves in a safe manner.
How has the coronavirus impacted your business in the short term?
My grandfather founded Enterprise, and over the course of six decades we’ve seen many storms and recessions, but nothing has been as significant as this. The impact has been greater than Sept. 11 and the 2008 recession combined. Our airport operation, which is one-third of our business, has been impacted. Business travel is significantly down, if functioning at all. The leisure industry has also all come to a halt. Two-thirds of our business happens in the suburban market—where we have stay-at-home orders. The dealership business is closed, where we provide rentals to people getting their cars fixed, so that business has also seen reduction in rentals.
How do you expect the crisis to impact your business in the long term?
Right now, it’s crisis management, but we’re also watching how quickly our operations morph. We are learning so much about new customer expectations. How do we safely provide transportation and mobility that is essential for keeping the world moving? How can we use our digital properties more efficiently to get customers’ information up front so they don’t have to come into our store? How do we continue to improve the delivery process? We’re revisiting our cleaning processes. What’s important to the customer is going to change and we’re learning a lot right now.
Social distancing—we’re taking the the response that those will always be in place. I think there will be social distancing whether there’s a mandate or not, and we, as a customer-facing business, need to be respectful of and responsible for that. The new normal is going to be different than the old normal.
The prudent thing to do for us is to prepare. If the virus does come back, we don’t have to repeat what we’ve just done. We’ve learned something along the way. The velocity of this was unbelievable, and there was a lot of manpower behind it. So how do we now use technology, if this happens again, to deliver on customer expectations so much better than we can now? We’re doing a great job today, but obviously this isn’t the ideal situation we want to be operating in.
How are you planning for the future of your business with such immediate uncertainty?
We’re privately held, we’re a family business, and we’ve built a strong business with a great leadership team. That’s how you prepare for future—by making sure you have great leaders and a great team. We’ve built a strong balance sheet that will help us weather this storm.
What management lessons or principles are you drawing on as you face this unprecedented crisis? What, if any, roadmap are you following?
It comes back to my grandfather’s philosophy: Take care of your customers and your employees first and everything will fall into line. It was so true back then, and it’s so true today.
How are you protecting your employees?
We’ve got a network of 10,000 stores globally. We have minimized our footprint; we’re operating out of one hub in most counties so that we reduce foot traffic for customers and our employees. In the master hub, we are limiting the number of employees at that location. It’s our job to make sure that we continue to remind and communicate to our team that social distancing and safety is our number one priority.
We’ve definitely had to make hard decisions. Some employees are on furlough right now, but we made sure they had health benefits through the month. These decisions are hard, but it’s also for the long-term viability of the business, and there is a balance there of course. [Editor’s Note: After this interview was conducted in mid-April, Enterprise laid off at least 2,000 employees, including some who had previously been on furlough.]
Is your company taking any direct measures to aid in the coronavirus response?
We have a foundation that supports our employees. We are deemed an essential business, and we continue to rent to healthcare workers, utility companies, and the government to make sure that they can get to the jobs that they need to do. That’s a big piece of our business right now; overall, other parts of our business are down, so those contracts with the government or with FEMA feel more prevalent.
What—if any—good do you think will come from this crisis?
We are learning so much about our customers and how they interact with us. Once we move out of triage mode, people are going to think about how do we use technology? How can we be more innovative to service the customer going forward? Everyone was thinking about innovation before, but now it’s been turned on its head. We’re also learning about communication—as CEO, I cannot over-communicate right now.
What data are you monitoring to gauge the crisis short-term? Long term?
We are very metric-oriented—is the business up or down, and where is it up or down. But we stopped our customer service calls—we felt it wasn’t the right time to put another call on our customers. Long-term, we have to think hard about how we measure customer service. How do we want to get the sentiment from the customer about how well we’ve serviced them and the experience we’re providing?
What’s the biggest way your professional life has changed amid this crisis?
In the new normal, when I think about my professional life, I immediately also think about my personal life. Working at home, trying to homeschool, also trying to interact with my team—it feels like it has all merged together. Having conversations about the well-being of my team, my family, and myself—there’s never been more.
I’ve always lived and died by the schedule, my personal stuff and work stuff is all on my Outlook calendar—managing that is my little sense of normalcy.
My husband is working from home, with our 7-year-old and 10-year-old. It’s messy, it’s fun, it can be frustrating, but we will all make it through. I feel better during the day because I know every single person is struggling with this.
What does it mean for your two children to see the full breadth of running the family-run business from home? Is witnessing their family’s business up close something that will stick with them?
No question. Before this all happened, they could see my father—they know Pop Pop works for the business. They also know that I come into the business every day and our offices are next to each other. Now that I’m home, they hear me on conference calls and see my Enterprise Holdings papers all over, they really are getting a sense. They are starting to understand what it means to be part of a family business.
More on the most powerful women in business from Fortune:
—How Global 500 companies are responding to the coronavirus
—14% of women considered quitting their jobs because of the coronavirus pandemic
—Why “Mrs. America” and the 1970s fight over the ERA are more relevant than ever
—Inside Lyft’s coronavirus response team
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: The double burdens that hold women back
Keep up with the world’s most powerful women with The Broadsheet newsletter.


fortune--2020-05-01--5 new books to read in May

5 new books to read in May

Gift ideas for new graduates and young professionals

As the age of self-isolating continues, summer reading can start early this year. New books being published in May include a new memoir from the author of the popular novel Sweetbitter; a beginner’s guide on how to drink wine from an award-winning sommelier and one of the cofounders of The Infatuation; and a deeply researched cultural history of some of the most beloved children’s TV programs ever aired.
The Lost Memoir by Lou Gehrig
Available May 12
Published for the first time this year, The Lost Memoir (Simon & Schuster) is the rags-to-riches tale of a poor kid from New York who became one of the most revered baseball players of all time. At age 24, Gehrig was already one of the most famous athletes in the country, enjoying a record-breaking season with the legendary 1927 World Series–winning Yankees. Fourteen years after penning his autobiography, Gehrig would tragically die from ALS, a neuromuscular disorder now known as Lou Gehrig’s disease. Included is an insightful biographical essay by historian Alan D. Gaff, who stumbled upon this rare find while researching another book.
Sunny Days: The Children’s Television Revolution That Changed America by David Kamp
Available May 12
If you’re looking for a healthy dose of nostalgia, this is your book of the month. Sunny Days (Simon & Schuster) is a deeply researched cultural history of beloved children’s TV programs—including Sesame Street, Schoolhouse Rock, The Muppets, and many more. At a time when few others even considered the emotional intelligence of children, programs like Fred Rogers’s Mister Rogers’ Neighborhood and Marlo Thomas’s Free to Be…You and Me introduced younger audiences to important social issues like feminism, diversity, and mental health.
How to Drink Wine by Grant Reynolds and Chris Stang
Available May 12
While reports earlier this year found that millennials were buying wine at far lower rates than previous generations, that might all change during and after the coronavirus pandemic. The key is drinking responsibly. (Not to mention knowing more about what you like in a wine could also save your budget.) How to Drink Wine (Clarkson Potter) is not going to make you an immediate expert, but it will help you understand the fundamentals and give you enough knowledge to begin to incorporate wine into your life.
Stray: A Memoir by Stephanie Danler
Available May 19
Stephanie Danler’s debut novel, Sweetbitter, was an immediate bestseller when it was published in 2016 and was soon thereafter adapted as a soapy TV show about the New York City restaurant scene. Many readers assumed the narrative was Danler’s own, but the truth was something else entirely.
In Stray (Knopf), Danler remembers and relives what it was like growing up the child of addicts (her mother, a lifelong alcoholic; her father, a recovering opiate and crystal meth addict) and returning home to California after almost a decade away to confront her family’s past. She evaluates how it has weighed on her own life, from the decisions she’s made to the men she’s loved.
Courtesy of Princeton University Press
Very Important People: Status and Beauty in the Global Party Circuit by Ashley Mears
Available May 26
With social distancing still the mandate of the moment, it might be hard to imagine going to a party, let alone a bar or a club, anytime in the near future. Let this new insider-y book from a sociologist and former fashion model take you on a ride. In Very Important People (Princeton University Press), Ashley Mears pulls back the curtain on the exclusive global nightclub and party circuit—from the Hamptons to Saint-Tropez—to reveal the intricate but power-hungry economy of beauty, status, and money. Mears spent 18 months researching this book, revealing the extreme gender inequality at play, as young women are frequently exploited to enhance the status of men and enrich club owners, exchanging their bodily capital for as little as free drinks and a chance to party with men who are rich—or aspire to be.
More must-read lifestyle coverage from Fortune:
—The coronavirus puts the craft beer industry at risk
—Georgia’s staple cheesy bread is more than Instagram bait. It’s an economic indicator
—These dry ciders are made like wine and packaged like beer
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—File your taxes, get a free case of Natty Light
—WATCH: Can San Francisco Be Saved?
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fortune--2020-05-01--After coronavirus, expect a ‘new’ Delta

After coronavirus, expect a ‘new’ Delta

5 new books to read in May

Good morning.
CEOs are taking pay cuts in response to the COVID-19 crisis. A report out later today, which was shared early with CEO Daily, finds 11% of companies in the Russell 3000—343 companies—reported executive pay cuts between March 1 and April 24. Some 60% of the reports came from the hospitality and retail sectors, where the job losses have been greatest. Data was compiled from SEC reports by The Conference Board, in collaboration with Semler Brossy and Esgauge.
Among the companies that reported pay cuts, 27 percent said they cut out the CEO’s base salary entirely. Another 19 percent cut pay by half. Most of the companies also cut the pay of other top executives, as well as cash retainers for board members.
The report doesn’t include how companies are dealing with equity grants, which at public companies often account for the lion’s share of CEO pay.
One of the CEOs who has taken a 100% base salary cut (but traditionally earns most of his pay through stock awards) is Delta CEO Ed Bastian, who talked recently with Fortune’s Susie Gharib. His comments make it clear the industry is preparing for a long, tough slog. “Our load factors are in the 15-20% range. Our overall number of passengers is about 5% of what it should be. There is not too much lower we can go.”
Bastian said it will be three years before the airline gets back to a “sustainable” level. “We are not going to be building back what we had necessarily. We will be building back a new Delta. I’m not sure you are going to see travel at scale the way we have come to know it in our industry.” You can watch the full interview here.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
30.3 million
Another week, another round of job losses in the millions—with 3.8 million people filing for unemployment last week. While that's down from the previous week, it brings the total jobless tally to above 30 million—with the real unemployment rate inching toward a rate last seen in the Great Depression. Fortune
Ryanair layoffs
The Irish low-cost carrier, which set the standard for bargain-basement flights across Europe, said it would eliminate 3,000 jobs, and warned that they expect the recovery to previous levels to take at least two years. In warning that the impact will be long lasting, and switching from furloughs to layoffs, the carrier also follows the lead of British Airways parent IAG earlier this week. FT
Amazon and Apple
Sales rose at both companies in Q1, but the details showed a very different picture for how each was coping with the pandemic. Amazon has become a vital service amid lockdowns, with sales soaring, requiring rapid expansions in employees—even as profit dropped. Apple's 1% uptick in revenue was unexpected. More worrying, the company declined to give additional revenue guidance for the first time since 2003. WSJ
Europe goes negative
The ECB returned to a familiar tool this week: pushing rates even further into negative territory. For banks that qualify, rates will sink to essentially -1%, while ECB President Christine Lagarde warned that the euro-bloc economy could sink by as much as 12% this year. Bloomberg
AROUND THE WATER COOLER
Wine lakes and potato mountains
Farmers in Europe (and beyond) are facing vast stockpiles of wine, and piles of rotting potatoes, as consumption of french fries and wines plunge while restaurants are closed. Pleas to get Belgians—a french fry loving nation—to eat more of them don't seem to be working, either. European farmers, at least, will get some aid. Fortune
Winners and losers
Q1 earnings reporting this year is a mixed bag—not just because the pandemic itself is drawing deep financial divides, but because the start of the year was, well, not bad. That means analysts are parsing earnings guidance and weighing the macro factors to see how companies will fare in Q2. So far, winners tend towards tech—and those on the losing side are banks—and McDonalds. Fortune
'Past the peak'
The U.K. is past the worst of the pandemic, prime minister Boris Johnson said on Thursday evening, in his first address since recovering from COVID-19 himself. (He also became a father, again, earlier this week.) However, Johnson dodged questions on the government missing its own testing target, and said indications of how the country would emerge from a nationwide lockdown would come next week. Fortune
A bigger bailout
The U.S. government is in the midst of historic bailout packages to save, or at least salvage, some of the economy amid COVID-19 lockdowns. But an author who argued against bailouts for major companies in past crises argues it's now time for longterm stimulus plans on another scale, involving a rebirth of the ideas behind the Depression-era Reconstruction Finance Corp. Bloomberg
This edition of CEO Daily was edited by Katherine Dunn.