fortune--2020-06-11--Grubhub sells, but not to Uber

Grubhub sells, but not to Uber

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Life goes on, as does business.
The European food-delivery company Just Eat Takeaway is buying Grubhub for more than $7 billion. Casual observers can be forgiven for thinking Uber was buying Grubhub, a deal reported to have been in the works since last month. Sources talking to journalists suggested an Uber-Grubhub tie-up wouldn’t have passed muster with U.S. antitrust regulators. Seeing as Grubhub wanted to sell, it went with someone who could buy.
Breakingviews.com cleverly suggests Just Eat investors will need a fistful of antacid to swallow the deal. Because the buyer doesn’t have its own U.S. operations, it’ll need to keep Grubhub’s. That’s good for Grubhub employees, but Wall Street types note that Uber would have been able to rationalize its prey better—a euphemism for firing more people.
As for Uber, its to-do list remains long. Acquiring Doordash or Postmates would be pricier—and still problematic, regulatory-wise. The food-delivery business needs to get bigger quickly if it’s to make money. The self-driving car world is busy consolidating, but there hasn’t been a peep of late about Uber’s intentions for its robotic vehicle business. And California is winning its case that Uber’s drivers should be treated as employees. Still, Lyft has said business is picking up in the U.S., so the same is likely true for Uber. Demonstrating its stated commitment to hygiene will be a challenge.
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
The invisible man. Fueling a trend started by IBM this week, Amazon said it would stop allowing police to use its facial-recognition technology for a year. “We hope this one-year moratorium might give Congress enough time to implement appropriate rules, and we stand ready to help if requested,” the company said. Still, Amazon's Ring unit partners with hundreds of police departments to share doorbell video footage, drawing criticism this week from digital civil libertarians. Meanwhile, European antitrust regulators are close to filing charges against Amazon for improperly using information from third-party sellers to bolster its own efforts.
Building castles in the sky. More than 40 white women turned their popular Instagram accounts over to black women on Wednesday for an effort dubbed the #ShareTheMicNow campaign. Endeavor chief marketing officer Bozoma Saint John posted from Kourtney Kardashian’s account, author and activist Eunique Jones Gibson was at the helm of newscaster Katie Couric's account, and VC and entrepreneur Jessica O. Matthews wrote for singer and actress Ashley Judd.
One and a half trillion is a lot of trillion. The stock market's stunning rally since March has been led by tech companies. On Wednesday, both Apple and Microsoft closed with stock market values over $1.5 trillion, a first on U.S. exchanges. I'm definitely going to win my wager that Saudi Aramco, the world's first $2 trillion company when it went public in December, will be surpassed by year end (it's trading around $1.7 trillion today).
Musk rules. Mindlessly retweeting links in your feed? Twitter isn't happy about it. It's adding a feature to its Android app that will ask users if they'd like to open a link before passing it on. That pleased at least one major Twitter user. “Great point,” wrote Tesla CEO and occasionally troublesome user of the service Elon Musk. “Many articles are retweeted based on headlines that don’t match the content.” Could this explain "funding secured"?
Right foot up, left foot slide. After cancelling its developer event and delaying software releases, Google released its next version of Android on Wednesday. The Android 11 beta includes changes to notifications, such as a new bubble pop up, an easier way to take screen shots, and many other tweaks.
I may not live to see our glory. Just as Apple gets ready to shift away from Intel's chips, Intel is getting ready to overhaul its designs in ways that may leap ahead. The first effort of the Jim Keller era at Intel arrived on Wednesday with the debut of the Lakefield CPU that combines one typical processor core with four low-power cores, memory, and other functions all on the same piece of silicon.
FOOD FOR THOUGHT
Even though Amazon is following IBM in limiting facial-recognition use by police, plenty of other vendors still sell similar applications. Rebecca Heilweil at Recode reviews the situation and finds more action may be needed at a national level.
But ultimately, regardless of what major technology companies are doing, the lack of strong government regulations will leave facial recognition technology open to abuse or misuse.
“There’s always going to be some small, shady firm that is willing to do the worst things with technology that you can do, and will sell it to whoever will buy it,” Evan Greer, the deputy director of the digital rights group Fight for the Future told Recode. “It’s not going to be enough to just kind of call on companies to cancel their contracts or back away from making this type of technology. We need lawmakers to step in and do their jobs.”
IN CASE YOU MISSED IT
Best Buy ends appointment-only shopping By Phil Wahba
Netflix adds Black Lives Matter collection as platforms grapple with outdated racist content By Radhika Marya
Why this analyst says the future of cars is electric—and Chinese By Grady McGregor
SoftBank-backed Arm says it ousted its China CEO. Arm China says it hasn’t By Lucinda Shen
Coronavirus cases are rising significantly in nine reopened states By Erika Fry and Nicolas Rapp
(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
Many people are focusing on new pursuits like knitting, painting, and gardening during the pandemic. But I wasn't quite prepared for the story of "Babe, the zucchini that stole our hearts." Have a fruitful day!
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-06-11--Over 44.2 million Americans have filed for unemployment during the coronavirus pandemic

Bendable , with the help of Pete Buttigieg , wants to create an educational marketplace

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Another 1.5 million Americans filed initial unemployment claims the week ending June 6, according to the U.S. Department of Labor. That brings the total jobless claims since the start of the coronavirus shutdowns to a whopping 44.2 million.
Before the shutdowns, the U.S. hadn’t experienced one week with over a million jobless claims. Now we are at 12 straight weeks with unemployment claims topping a million.
But as those unemployment claims continue to mount, the total number of Americans receiving unemployment benefits—continued claims—actually fell another 339,000, to 20.9 million. As more states ease their lockdowns, the number of out-of-work Americans on the unemployment rolls has fallen 4 million from its peak of 24.9 million on May 9.
That drop in the number of Americans receiving unemployment benefits is a sign that employers are bringing workers back, and the economy is growing again. Coupled with the unemployment rate dropping from 14.7% in April to 13.3% in May, it points to the economy swinging from recession to growth.
While 44.2 million have claimed unemployment benefits at some point during the pandemic, only 20.9 million are currently receiving the benefits. The reason for the huge gap? Workers put on furlough, even for just a week, can apply for jobless benefits, and employers in reopened states are bringing workers back. Some states are also still wading through their backlog of applicants.
Pennsylvania saw the biggest weekly decline in unemployment rolls at –165,571. It was followed by Texas (–160,309), Michigan (–90,913), and Maryland (–85,994). Those declines are spurred by reopening in the respective states. However, upticks in coronavirus cases could put those gains at risk.
Americans currently on the unemployment rolls are receiving an additional $600 weekly in benefits on top of their state benefits through the end of July. But with waning political support and an improving economy, it’s unlikely those benefits will get extended.


fortune--2020-06-11--How racism, COVID-19 and air pollution reveal striking patterns of inequality

This is the web version of The Loop, Fortune’s weekly newsletter on the revolutions in sustainability. To get it delivered to your inbox, sign up here.
Hello from London. This is Katherine, taking over today from Eamon.
Today we’re asking: What do the environment and the protests over the killing of George Floyd have in common?
It may seem difficult to draw a direct link between police brutality and pollution. But add the impact of COVID-19 to the mix, and we can map out how all of these crises exist in the same universe, where health, safety, and access to clean air collectively reveal striking patterns of inequality.
Protests over police brutality and structural racism in the U.S. aren’t necessarily new, but the current wave has exploded with a force many attribute to the trauma of the pandemic and the accompanying swan-dive into economic crisis on a scale not seen since at least the Great Depression. In the U.S. alone, at least 115,000 people have died due to COVID-19, and at least 42.6 million people have lost their jobs. Both the deaths, and the job losses, have been disproportionately borne by black Americans.
In the U.S., a recent pre-print from Harvard reinforced previous studies that have emerged during the pandemic that show black Americans are much more likely to die from COVID-19—as the percentage of black residents in a neighborhood goes up, so does the death rate.
In the U.S., those deaths are largely explained by socio-economic factors—as they are here in the U.K., where government research has confirmed that black Britons, and some other communities of color, are disproportionately dying from COVID-19 due to factors including overcrowded housing, living in deprived neighborhoods, over-representation in essential but badly paid jobs, insufficient access to the health system, and underlying conditions heavily linked to stress and poor quality of life.
Meanwhile, exposure to high levels of air pollution has been repeatedly linked to vulnerability to COVID-19. The pattern emerged even when the hotspots were Wuhan, a manufacturing hub, and northern Italy, another manufacturing hub with high levels of air pollution.
In the U.S., black people are more likely to be exposed to air pollution than white people, largely due to where they live, with the accompanying risk of asthma and other respiratory conditions. In fact, a frequently cited paper from researchers from the Environmental Protection Agency published in April 2018 found that the exposure to air pollution was more closely linked to race than to poverty. I worry, too, that cities and regions that were already struggling financially, and that are disproportionately black, will increasingly lack the resources to adapt their infrastructure to climate change or recover from ever-more-frequent disasters, like flooding and hurricanes.
It’s clear that poor environmental conditions and protections can’t be separated from racial inequality or the COVID-19 epidemic. In fact, we wrote a lengthy story on how virologists say environmental degradation is responsible for the pandemic. Poor air quality contributes to both, helping to reinforce a punishing feedback loop of poor health, economic inequality, housing segregation, and over-policing for black Americans.
None of this is new. But by connecting the dots, perhaps we can explore holistic solutions.
More news below.
Katherine Dunn
@katherine_dunn
katherine.dunn@fortune.com
CARBON COPY
Mine
Australian mining giant Rio Tinto has drawn outrage after decimating a 46,000-year old Aboriginal heritage site in explosions used to expand the site of its iron ore mine. Traditional owners of the land had objected to the expansion. Weeks later, fellow mine operator BHP Billiton is set to destroy as many as 86 Aboriginal sites in an expansion of one of its mines. The Guardian
Patagonia CEO steps down
Patagonia CEO Rose Marcario has stepped down after six years in the company’s top position. Marcario is credited with bringing Patagonia’s environmental activism to the fore—streamlining supply lines, cutting plastic and developing recyclable materials. Marcario’s departure has been in the works since last year but a successor has yet to be announced. The 12-year veteran says she's stepping down now to allow a new leadership to navigate through the post-pandemic change. Fast Company
Refining
BP is set to cut 10,000 jobs, or 14% of its workforce, as the pandemic accelerates efforts to slim down ahead of the energy transition. In a memo to staff, CEO Bernard Looney said the cuts were in line with plans set out in February to downsize staff as the company reduces carbon emissions. Bloomberg
Rupture
Mark McCollum, CEO of Weatherford International—a leader in oilfield services—has stepped down ahead of possible restructuring. Analysts suspect the departure signals the company’s second bankruptcy in less than a year. Financial Times
Risk
In its latest global financial stability report, the IMF said companies should be forced to disclose their exposure to climate risk because relying on them to do so voluntarily does not go far enough. "In the short term, mandatory climate change risk disclosure could be based on globally agreed principles. In the longer term, climate change risk disclosure standards could be incorporated into financial statements compliant with international financial reporting standards,” it said. The Guardian
OPEC'd
Members of OPEC agreed Saturday to extend production cuts through to the end of July. In April, the group agreed to cut output by 9.7 million barrels a day; the new deal calls for further cuts of 9.6 million barrels a day. Some OPEC allies, however, refused to make cuts, throwing the deal into jeopardy. Wall Street Journal
Winds of change
French oil refiner Total bought a 51% stake in a North Sea wind farm, marking the company’s first major move into offshore wind. The $3.8 billion farm will be Scotland’s largest offshore facility. The move comes a month after Total pledged net-zero emissions across its products and operations in Europe by 2050. Financial Times
IN CASE YOU MISSED IT
4 ways companies can thrive in the COVID-19 economy, according to philanthropy strategists by Jen Butte-Dahl and Denielle Sachs
Why this analyst says the future of cars is electric—and Chinese by Grady McGregor
From beekeepers to giant pension funds, activist shareholders are being silenced by the coronavirus by Bernhard Warner and Katherine Dunn
Net zero by 2050: Diageo, H&M, and Rolls-Royce join drive to avert climate catastrophe by David Meyer
CLOSING NUMBER
2 months
As of Wednesday, that’s how long Britain (that is, the U.K. minus Northern Ireland) has gone without generating electricity from coal. No coal has been burned in Britain since April 9, when the last of four remaining coal plants was taken offline by the National Grid, pre-empting a demand drop as the nation entered pandemic lockdown. But coal use was already in decline. Last year, Britain went 18 days without coal while 10 years ago, coal provided 40% of the island’s electricity.


fortune--2020-06-11--Could a Western Union–MoneyGram deal help two giants fend off fintech disrupters?

The news last week that Western Union is considering an acquisition of rival MoneyGram would not have been a huge surprise to those following the remittance space in recent years.
Despite their status as the two largest legacy players in the realm of money transfers, the companies have been on divergent paths as of late. Western Union remains the dominant name in its industry. With more than 550,000 retail locations in more than 200 countries around the world, the 169-year-old firm generated $5.3 billion in revenue last year and carries a market capitalization exceeding $10 billion.
MoneyGram, by contrast, has struggled mightily. Since U.S. regulators blocked a proposed $1.2 billion acquisition by the Alibaba-owned Ant Financial in early 2018, the 80-year-old company has been beset by declining revenues and annual losses. MoneyGram generated less than $1.3 billion in revenues last year (down 11% from the previous year) while its stock has also underwhelmed. As of Wednesday, its market cap stood at less than $212 million.
For years, analysts and market observers have floated a Western Union acquisition of MoneyGram that would further cement the former’s position in its industry. With MoneyGram floundering more than ever, the circumstances would appear ripe for such a transaction.
“You’ve heard rumors about [a deal] pop up over the years, because it does make so much sense,” according to Morningstar equity research analyst Brett Horn. “Money transfers, like any payment processing business, is highly scalable. If you put two of the leading players together, you end up with more scale, and that’s the benefit.”
Representatives for Western Union did not return requests for comment, while a spokesperson for MoneyGram said the company does not comment “on market rumors or speculation.”
Doubling down against digital disruption
Should a deal transpire, the added scale would help insulate Western Union against the threat posed by a new generation of tech-enabled remittance startups pining for a piece of its enviable market share. Though they lack Western Union’s global network of retail agents and its vast compliance infrastructure, upstart fintech competitors like TransferWise, Remitly, and the PayPal-backed Xoom are focusing their efforts on a limited number of high-traffic money transfer “corridors,” such as the U.S.-to-Philippines and the U.K.-to-Pakistan. They’re also betting that their online-oriented platforms will prove ever more viable in an increasingly cashless world—not to mention economical and more efficient to operate.
“It’s going to become cheaper and cheaper every year to move money around,” says TransferWise CTO Harsh Sinha. “It reminds me of what happened in international texting 10 years ago when WhatsApp came around. You used to get charged $15 per month for a texting plan. That business wasn’t costly for [mobile carriers], but they could charge that because nobody else could bring their prices down.”
In response, both Western Union and MoneyGram have sought to accelerate the digital transformation of their own businesses. Western Union has pointed to steadily growing digital revenues, and the expansion of its online platform to more than 75 countries, as evidence that it’s looking to stay ahead of tech-fueled disruption. As the coronavirus pandemic forced brick-and-mortar retailers around the world to shut their doors, the company responded by promptly rolling out new digital services for its customers.
MoneyGram is also in the midst of its own “digital transformation,” company COO Kamila Chytil told Fortune earlier this year. That has involved a new mobile app and a shift away from legacy services like call centers, as well as a partnership with blockchain firm Ripple (which itself trialed an ill-fated pilot program with Western Union). Chytil compared the process of developing and implementing new digital capabilities at a legacy firm like MoneyGram to “changing an engine on an airplane that’s flying.”
Despite their efforts, both firms’ digital operations remain a limited piece of their overall business. Western Union’s digital money transfer revenues represented 14% of its $4.4 billion consumer-to-consumer business in 2019, while digital transactions made up 20% of MoneyGram’s overall business last year. (Naturally, both companies have reported a significant increase in digital transactions since the onset of the coronavirus pandemic.)
An acquisition of MoneyGram would see Western Union double down on its core business and further expand its already formidable, global brick-and-mortar retail network. MoneyGram has 350,000 retail agent locations of its own around the world, and these outposts remain preferred by both companies’ core customer base: migrant workers from across the globe, many of whom are underserved by banks and financial institutions but still need a way to send money to their families back home.
As Morningstar’s Horn notes, the countries on the “receive” side of Western Union’s money transfers are “often developing markets” that remain “very cash-based.”
“The shift to digital [money transfers] is happening, and it’s likely to be accelerated by the coronavirus, but there will continue to be demand for cash transfers,” Horn says. A merger between the two largest players in the remittance space, he adds, would “create a bigger organization with more volume that, down the road, would have the ability to invest in that shift toward digital.”
A checkered acquisition track record
Western Union, however, has a checkered recent history when it comes to ambitious acquisitions meant to bolster its business—as seen with its attempts to grow its Western Union Business Services segment. The company spent $370 million to acquire Canadian business-to-business payments provider Custom House in 2009, and nearly $1 billion to buy British foreign exchange provider Travelex’s business payments division, in 2011.
Both purchases were characterized by a failure to effectively integrate the businesses into Western Union’s own operations, according to analysts and market observers. Today the company remains hugely reliant on its consumer-to-consumer operations, which makes up 85% of its total revenues in the first quarter of this year, while Western Union Business Solutions represented only 8% of revenues.
A MoneyGram acquisition would be more straightforward than Western Union’s attempts to expand business-to-business services, given the synergies inherent to both companies’ business models. “They were trying to build a new business, and it didn’t pan out,” Horn says of the Custom House and Travelex deals. “This time, you’d be merging like-for-like.”
It would also provide a pathway to growth for a company that, even before the pandemic, was “struggling to break out of low-single-digit revenue growth” and “kept trying to cut costs to drive any semblance of margin improvement,” according to Bank of America Merrill Lynch equity research analyst Jason Kupferberg. (In September, Western Union unveiled a strategy that earmarked $150 million in annual savings by 2022, in an attempt to improve operating margins and return up to $3 billion to shareholders by 2022.) Those challenges have been exacerbated by the pandemic, which the World Bank projects will lead to a 20% decline in global remittance volume this year.
Of course, there is the matter of making the financials work. While it’s unclear what Western Union is prepared to offer for its rival, it would likely have to assume the nearly $878 million in debt that was on MoneyGram’s books at the end of the first quarter. And the prospect of a Western Union–MoneyGram merger has always raised the specter of antitrust issues that may have to be negotiated.
In a Bank of America research note on Wednesday, Kupferberg downgraded Western Union to “neutral” and expressed a more skeptical outlook on an acquisition.
“[MoneyGram] would add scale and create cost synergies, but both companies face very similar, potential longer-term structural headwinds related to industry competition and technology disruption,” he wrote. Kupferberg added that the deal “would be a large transaction by [Western Union]’s historical standards”—one that would come with “regulatory review risk” and force the company to take on leverage that would hurt shareholder returns.
But with MoneyGram’s stock trading at under $3 per share before the news broke of the potential acquisition, the timing and circumstances may finally lend themselves to a merger.
“If there’s a catalyst for this deal, it’s probably MoneyGram’s issues,” Horn notes. “I think Western Union can pay a good premium on the stock price, and have it be a good, value-creating deal.”


fortune--2020-06-11--Zoom closed the accounts of U.S. based Chinese pro-democracy activists, citing ‘local laws’

Zoom Video Communications Inc. said it reactivated the account of a U.S.-based group of Chinese pro-democracy activists, after earlier closing the account “to comply with local laws.”
The San Jose, California-based company suspended the group’s user credentials after it hosted a recent gathering to commemorate the 1989 protests and massacre at Tiananmen Square, a seminal event for advocates of democracy in China. Zoom’s decision to close the account was reported earlier by Axios.
“Just like any global company, we must comply with applicable laws in the jurisdictions where we operate,” a Zoom spokesman said in a statement. “When a meeting is held across different countries, the participants within those countries are required to comply with their respective local laws. We aim to limit the actions we take to those necessary to comply with local law and continuously review and improve our process on these matters. We have reactivated the US-based account.”
Zoom, which maintains a significant research-and-development workforce in China, has come under scrutiny for its links to the country. After the videoconferencing application surged in popularity during the Covid-19 pandemic, researchers discovered instances when calls were routed through servers in China, even though no participant was based there. That raised concerns the Chinese government might be able to snoop on the video calls.
The company has since focused on raising encryption standards for its video conferences, though only large businesses that are paying customers will get access to end-to-end encryption, the strongest form of privacy. Zoom’s co-founder and chief executive officer, Eric Yuan, was born in China, though he is a U.S. citizen.


fortune--2020-06-11--A Global 500 CEO on leading through crisis

Good morning, Broadsheet readers! Sephora signs the 15% Pledge, Rep. Karen Bass has been fighting to reform policing for 30 years, and a Global 500 CEO reflects on leading through crisis. Have a peaceful Thursday.
– Chain of events. When the coronavirus pandemic began to upend global supply chains in January, you could argue that no company was more affected than Flex. “I can’t think of something that’s essential that we’re not involved in,” says CEO Revathi Advaithi.
Advaithi leads the $26 billion global manufacturing and supply chain logistics company, which makes everything from ventilators and other healthcare equipment to the infrastructure needed to keep the world’s communications systems functioning. She is one of few women of color to run a Fortune 500 or Global Fortune 500 company.
Since the beginning of the coronavirus pandemic stateside, the Broadsheet has been asking executives to tell us how the crisis has affected their businesses; past interviews include Enterprise CEO Chrissy Taylor and Citi president and global consumer banking CEO Jane Fraser. I wanted to talk to Advaithi for several reasons, including the newfound resonance of supply chains with consumers; casual readers of business news may have never heard of the term before wondering why they couldn’t find toilet paper on store shelves.
Flex’s supply chains are slightly more complex, and Advaithi shares some of those details here. She usually spends 60% of her time traveling to the company’s factories around the world (“Think of a country, I probably have been there in the past year,” she told me) but has been grounded in California since March.
We conducted this interview before protests over police brutality and racism exploded across the country and around the world. While Flex sent a statement from Advaithi about demonstrations in Minneapolis—saying that “we have work to do until every black man can walk on the street without worrying about his life, until every black woman knows that she is safe in this country”—Flex declined to make Advaithi available to answer further questions about leading through this moment.
Hopefully, some of her lessons about leading through the crisis of the coronavirus can apply to the multiple challenges the world is facing right now. Read the rest of our interview here.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
Plus: Black employees in the corporate world, Fortune wants to hear from you: Submit anonymous thoughts and anecdotes here to be included in a new series, Working While Black.
ALSO IN THE HEADLINES
- Chair in charge. Rep Karen Bass, chairwoman of the Congressional Black Caucus, is in charge of the House of Representatives' response to the death of George Floyd in police custody. Bass was a Los Angeles activist when Rodney King was beaten by police officers almost 30 years ago. She expected reform to policing then—and is leading the effort to achieve it now. LA Times
- Making up for lost time. Aurora James, a New York-based creative director, started the 15% Pledge, a campaign asking retailers to commit 15% of their shelf space to products from black-owned businesses. Sephora and Rent the Runway, led by CEO Jennifer Hyman, are two of the first major companies to sign on. New York Times
- Cori for Congress. Cori Bush has been an activist in the Black Lives Matter movement since the 2014 protests in Ferguson, Missouri. Now, Bush is running for Congress in the state. In this piece, she makes the argument for why we need a Black Lives Matter activist in Congress: Elle
- Ulta-matum. Major retailers are starting to review their physical stores as they chart the path ahead during and after the coronavirus pandemic. Zara announced it would close up to 1,200 stores yesterday, and Ulta Beauty, led by CEO Mary Dillon, is undertaking a review of the same question. Wall Street Journal
MOVERS AND SHAKERS: Patagonia CEO Rose Marcario is stepping down; the company is searching for a successor. Director Ava DuVernay, producer Lynette Howell Taylor, makeup artist Linda Flowers, and casting director Debra Zane were elected to the Academy of Motion Picture Arts and Sciences' board of governors for the first time.
IN CASE YOU MISSED IT
- Speak first, debate later. PagerDuty was one of the first companies to put out a statement about the death of George Floyd, speaking out before several of its peer companies in tech. How did the company move so quickly? "I called my head of people and said, 'I'm going to make a statement,' not, "Do you think we should say something?" says CEO Jennifer Tejada. Protocol
- Pandemic pressures. Before the coronavirus pandemic hit, Indian women were already dropping out of the country's workforce. The lockdown and economic crisis has now accelerated that trend—and has the potential to increase the number of arranged marriages. New York Times
- Mic drop. White women handed over their Instagram accounts to black women yesterday as part of the #ShareTheMicNow campaign to amplify black voices. On Kourtney Kardashian's account, followers heard from Endeavor CMO Bozoma Saint John; Sen. Elizabeth Warren's page was run by Planned Parenthood president Alexis McGill Johnson. Fortune
ON MY RADAR
New pro sports venture puts women’s sports in the players’ hands New York Times
As protests rage, more Democrats want Biden to pick woman of color as VP Politico
This filmmaker won't let Breonna Taylor be forgotten Vanity Fair
PARTING WORDS
"Being silent is never the answer. Everyone should have a voice in the matter and use it."
-Tennis star Naomi Osaka on why she's speaking up about police brutality


fortune--2020-06-11--How the profits of Fortune 500 companies stack up in one chart

It was another very profitable year for Warren Buffett. His Berkshire Hathaway led the Fortune 500 with $81.4 billion in profits, though that figure comes with a footnote: U.S. accounting rules forced Berkshire to count some $54 billion in gains from its stock holdings as net income. Overall, the Fortune 500 earned $14.2 trillion last year—an all-time record. The graphic below shows the size of the profit (or loss) for every company on this year’s 500. And in the tables that follow we break down the fastest-growing companies on the list, those that use their capital most efficiently, and the ones that have provided the best returns to investors.
Fast growers of the 500
While auto safety supplier Autoliv is technically a U.S. company, the 10-year profit champion seatbelt and airbag maker is based in Stockholm. Salesforce.com continues to ride the growth of the cloud-computing market, which is set to hit $330 billion in 2020. Electric-car leader Tesla, meanwhile, has yet to make an annual profit, but its sales have risen sevenfold in five years to $25 billion.
Growth in profits, 1 year
Rank Company 500 revenues rank 2019 % growth in EPS 1 CISCO SYSTEMS 63 12,950.0 2 ALLEGHANY 351 2,166.8 3 BERKSHIRE HATHAWAY 6 1,937.1 4 NRG ENERGY 324 1,832.2 5 NETAPP 478 1,510.7 6 ALTICE USA 327 600.0 7 CINCINNATI FINANCIAL 400 591.4 8 BECTON DICKINSON 187 556.7 9 NEWMONT 328 495.3 10 DAVITA 230 472.8 11 CARDINAL HEALTH 16 459.3 12 JACOBS ENGINEERING GROUP 206 419.7 13 MGM RESORTS INTERNATIONAL 249 379.0 14 XEROX HOLDINGS 347 320.3 15 JABIL 121 269.4 16 DISCOVERY 287 234.9 17 ORACLE 82 230.0 18 JETBLUE AIRWAYS 394 218.3 19 ELI LILLY 145 184.0 20 OLD REPUBLIC INTERNATIONAL 427 183.1 The 500 median 5.1
Growth in profits, 5 years
Rank Company 500 revenues rank 2014–19 % annual growth in EPS 1 HD SUPPLY HOLDINGS 478 166.9 2 NRG ENERGY 324 135.9 3 EBAY 295 120.6 4 ADOBE 285 62.5 5 BUILDERS FIRSTSOURCE 425 60.2 6 DELTA AIR LINES 68 56.4 7 MOLINA HEALTHCARE 193 54.8 8 BURLINGTON STORES 424 51.4 9 BANK OF AMERICA CORP. 25 50.2 10 NETFLIX 164 46.3 11 BROADCOM 138 45.4 12 REGENERON PHARMACEUTICALS 405 44.0 13 BERRY GLOBAL GROUP 358 42.5 14 FACEBOOK 46 42.4 15 MARKEL 335 42.1 16 ABBVIE 99 36.9 17 STEEL DYNAMICS 299 35.3 18 INTL FCSTONE 100 35.0 19 BERKSHIRE HATHAWAY 6 32.7
20 STRYKER 214 32.5 The 500 median 9.9
Growth in profits, 10 years
Rank Company 500 revenues rank 2009–19 % annual growth in EPS 1 AUTOLIV 369 46.0 2 KROGER 23 43.5 3 SOUTHWEST AIRLINES 141 41.8 4 CBRE GROUP 128 41.2 5 BORGWARNER 312 41.2 6 LITHIA MOTORS 252 39.7 7 L3HARRIS TECHNOLOGIES 250 39.6 8 HOLLYFRONTIER 184 37.2 9 RUSH ENTERPRISES 492 37.2 10 ASBURY AUTOMOTIVE GROUP 428 37.0 11 PACCAR 118 36.3 12 ACTIVISION BLIZZARD 463 36.0 13 ULTA BEAUTY 418 33.8 14 XPO LOGISTICS 196 33.4 15 CARMAX 173 33.3 16 NETAPP 478 33.0 17 ROBERT HALF INTERNATIONAL 482 32.2 18 VIACOMCBS 111 32.1 19 FOOT LOCKER 397 31.1 20 CAPITAL ONE FINANCIAL 97 31.0 The 500 median 10.5
Growth in revenues, 1 year
Rank Company 500 revenues rank 2019 % growth in revenues 1 CIGNA 13 215.7 2 ANDERSONS 390 168.3 3 UNITED NATURAL FOODS 133 129.6 4 L3HARRIS TECHNOLOGIES 250 108.0 5 VIACOMCBS 111 91.6 6 WESTINGHOUSE AIR BRAKE TECH. 388 87.9 7 COMMSCOPE HOLDING 381 82.7 8 FISERV 311 74.9 9 KKR 349 74.6 10 KEURIG DR PEPPER 288 49.4 11 TENNECO 185 48.3 12 CINCINNATI FINANCIAL 400 46.5 13 NGL ENERGY PARTNERS 127 39.4 14 MARKEL 335 39.2 15 SCIENCE APPLICATIONS INTERNATIONAL 466 36.9 16 WAYFAIR 348 34.6 17 NEWMONT 328 34.3 18 CVS HEALTH 5 32.0 19 ALLEGHANY 351 31.3 20 VISTRA ENERGY 270 29.1 The 500 median 2.9
Growth in revenues, 5 years
Rank Company 500 revenues rank 2014–19 % annual growth in revenues 1 TESLA 124 50.4 2 XPO LOGISTICS 196 47.9 3 WAYFAIR 348 47.2 4 FACEBOOK 46 41.5 5 CHARTER COMMUNICATIONS 71 38.1 6 BUILDERS FIRSTSOURCE 425 35.3 7 CENTENE 42 35.1 8 CIGNA 13 34.5 9 NETFLIX 164 29.6 10 UNITED NATURAL FOODS 133 28.2 11 JONES LANG LASALLE 179 27.1 12 SALESFORCE.COM 190 26.1 13 AMAZON.COM 2 25.8 14 BEACON ROOFING SUPPLY 434 25.0 15 LENNAR 147 23.4 16 REGENERON PHARMACEUTICALS 405 22.8 17 DOLLAR TREE 131 22.4 18 OLIN 481 22.2 19 ADOBE 285 21.9 20 WESTINGHOUSE AIR BRAKE TECH. 388 21.9 The 500 median 4.0
Growth in revenues, 10 years
Rank Company 500 revenues rank 2009–19 % annual growth in revenues 1 CENTENE 42 33.2 2 SALESFORCE.COM 190 29.3 3 NETFLIX 164 28.3 4 AMAZON.COM 2 27.6 5 ENERGY TRANSFER 59 25.9 6 LAM RESEARCH 331 24.1 7 CIGNA 13 23.6 8 ALLEGHANY 351 22.5 9 JONES LANG LASALLE 179 21.9 10 LENNAR 147 21.7 11 APPLE 4 21.7 12 ALPHABET 11 21.2 13 UNITED NATURAL FOODS 133 21.1 14 CHARTER COMMUNICATIONS 71 21.1 15 LITHIA MOTORS 252 21.0 16 WESTROCK 177 20.6 17 BOOKING HOLDINGS 210 20.5 18 LKQ 257 19.7 19 CBRE GROUP 128 19.1 20 THOR INDUSTRIES 404 17.9 The 500 median 5.3
Bringing in the bucks
Apple was knocked out of the top spot in profits after a five-year reign, but the iPhone maker earned more than $50 billion in net income for the third time in five years, for a total of $262 billion over that span. Elsewhere, Visa and Mastercard charged to the top in profit efficiency. And NGL Energy Partners racked up the most revenues per employee.
Profits
Rank Company 500 revenues rank 2019 $ millions 1 BERKSHIRE HATHAWAY 6 81,417.0 2 APPLE 4 55,256.0 3 MICROSOFT 21 39,240.0 4 JPMORGAN CHASE & CO. 17 36,431.0 5 ALPHABET 11 34,343.0 6 BANK OF AMERICA CORP. 25 27,430.0 7 INTEL 45 21,048.0 8 WELLS FARGO 30 19,549.0 9 CITIGROUP 31 19,401.0 10 VERIZON COMMUNICATIONS 20 19,265.0 11 FACEBOOK 46 18,485.0 12 PFIZER 64 16,273.0 13 JOHNSON & JOHNSON 35 15,119.0 14 WALMART 1 14,881.0 15 EXXON MOBIL 3 14,340.0 16 FANNIE MAE 24 14,160.0 17 AT&T 9 13,903.0 18 UNITEDHEALTH GROUP 7 13,839.0 19 COMCAST 28 13,057.0 20 VISA 137 12,080.0 The 500 median 889.5
Return on revenues
Rank Company 500 revenues rank 2019 profits as % of revenues 1 VISA 137 52.6 2 MASTERCARD 191 48.1 3 NRG ENERGY 324 45.0 4 BOSTON SCIENTIFIC 296 43.8 5 CONSTELLATION BRANDS 392 42.3 6 BIOGEN 223 41.0 7 ELI LILLY 145 37.3 8 FM GLOBAL 447 36.8 9 TD AMERITRADE HOLDING 486 36.7 10 SIMON PROPERTY GROUP 497 36.5 11 TEXAS INSTRUMENTS 222 34.9 12 AMGEN 135 33.6 13 BOOKING HOLDINGS 210 32.3 14 BERKSHIRE HATHAWAY 6 32.0 15 S&P GLOBAL 451 31.7 16 PFIZER 64 31.4 17 CHARLES SCHWAB 271 31.4 18 MICROSOFT 21 31.2 19 BLACKROCK 219 30.8 20 INTERCONTINENTAL EXCHANGE 459 29.5 The 500 median 6.7
Return on shareholders’ equity
Rank Company 500 revenues rank 2019 profits as % of equity 1 COLGATE-PALMOLIVE 203 2,023.1 2 S&P GLOBAL 451 443.2 3 O’REILLY AUTOMOTIVE 314 350.1 4 ELI LILLY 145 319.1 5 NRG ENERGY 324 267.7 6 LOWE’S 44 217.1 7 LOCKHEED MARTIN 57 199.2 8 MARRIOTT INTERNATIONAL 157 181.1 9 ROCKWELL AUTOMATION 452 172.1 10 CLOROX 474 146.7 11 MASTERCARD 191 137.8 12 UNITED PARCEL SERVICE 43 135.9 13 NETAPP 478 107.2 14 FANNIE MAE 24 96.9 15 QUALCOMM 126 89.3 16 BURLINGTON STORES 424 88.1 17 ILLINOIS TOOL WORKS 229 83.3 18 SIMON PROPERTY GROUP 497 83.2 19 BOOKING HOLDINGS 210 82.0 20 AMGEN 135 81.1 The 500 median 13.2
Revenues per dollar of assets
Rank Company 500 revenues rank 2019 $ 1 CORE-MARK HOLDING 240 7.0 2 WORLD FUEL SERVICES 91 6.1 3 GLOBAL PARTNERS 246 4.7 4 AMERISOURCEBERGEN 10 4.6 5 MURPHY USA 262 4.5 6 PERFORMANCE FOOD GROUP 168 4.2 7 NGL ENERGY PARTNERS 127 4.1 8 SPARTANNASH 370 3.8 9 MCKESSON 8 3.6 10 CARDINAL HEALTH 16 3.6 11 COSTCO WHOLESALE 14 3.4 12 SYSCO 56 3.3 13 INTL FCSTONE 100 3.3 14 C.H. ROBINSON WORLDWIDE 208 3.3 15 DEAN FOODS 421 3.3 16 UNITED NATURAL FOODS 133 3.3 17 WAYFAIR 348 3.1 18 VERITIV 412 3.1 19 GRAYBAR ELECTRIC 415 3.0 20 ALBERTSONS COS. 55 2.9 The 500 median 0.7
Revenues per dollar of equity
Rank Company 500 revenues rank 2019 $ 1 COLGATE-PALMOLIVE 203 134.1 2 AMERISOURCEBERGEN 10 62.4 3 INTL FCSTONE 100 55.4 4 AK STEEL HOLDING 467 42.0 5 ALBERTSONS COS. 55 41.7 6 ASCENA RETAIL GROUP 473 41.3 7 LOWE’S 44 36.6 8 MARRIOTT INTERNATIONAL 157 29.8 9 GLOBAL PARTNERS 246 28.6 10 MCKESSON 8 26.5 11 O’REILLY AUTOMOTIVE 314 25.5 12 SYSCO 56 24.0 13 CARDINAL HEALTH 16 23.0 14 UNITED PARCEL SERVICE 43 22.7 15 CORE-MARK HOLDING 240 22.5 16 OWENS & MINOR 332 20.9 17 WORLD FUEL SERVICES 91 19.5 18 LOCKHEED MARTIN 57 19.1 19 CDW 178 18.8 20 RITE AID 150 18.3 The 500 median 2.3
Revenues per employee
Rank Company 500 revenues rank 2019 $ millions 1 NGL ENERGY PARTNERS 127 18.5 2 INTL FCSTONE 100 16.4 3 FANNIE MAE 24 16.0 4 FREDDIE MAC 41 10.9 5 VALERO ENERGY 32 10.1 6 AMERISOURCEBERGEN 10 8.4 7 PHILLIPS 66 27 7.6 8 PBF ENERGY 125 7.1 9 PLAINS GP HOLDINGS 98 6.7 10 WORLD FUEL SERVICES 91 6.7 11 KKR 349 6.6 12 CHENIERE ENERGY 329 6.4 13 EOG RESOURCES 186 6.0 14 NORTHWESTERN MUTUAL 102 5.4 15 BRIGHTHOUSE FINANCIAL 457 4.9 16 ENTERPRISE PRODUCTS 101 4.5 17 REINSURANCE GROUP 225 4.5 18 ENLINK MIDSTREAM 483 4.5 19 CALPINE 319 4.5 20 HOLLYFRONTIER 184 4.3 The 500 median 0.6
Shareholders win big with Big Tech
Microsoft wasn’t the first technology behemoth to surge past $1 trillion in market value over the past couple of years. (Apple and Amazon each got there first.) But the software and cloud giant landed on top in market capitalization for a second straight year, wowing investors with its $39 billion profits, while Facebook jumped into the top five. Also, for a second year in a row, Netflix took the crown for best 10-year stock return in the Fortune 500.
Biggest companies by market value
Rank Company 500 revenues rank 3/31/20 $ millions 1 MICROSOFT 21 1,199,549.7 2 APPLE 4 1,112,640.8 3 AMAZON.COM 2 970,680.1 4 ALPHABET 11 798,905.3 5 FACEBOOK 46 475,455.2 6 BERKSHIRE HATHAWAY 6 442,897.1 7 JOHNSON & JOHNSON 35 345,704.9 8 WALMART 1 321,803.3 9 VISA 137 316,199.1 10 JPMORGAN CHASE & CO. 17 276,750.1 11 PROCTER & GAMBLE 50 271,639.8 12 MASTERCARD 191 242,794.1 13 UNITEDHEALTH GROUP 7 236,555.2 14 INTEL 45 231,661.9 15 VERIZON COMMUNICATIONS 20 222,220.0 16 AT&T 9 209,387.5 17 HOME DEPOT 26 200,665.0 18 MERCK 69 195,140.5 19 COCA-COLA 88 189,983.0 20 BANK OF AMERICA CORP. 25 185,226.9 The 500 median 12,483.1
Biggest companies by equity
Rank Company 500 revenues rank 2019 $ millions 1 BERKSHIRE HATHAWAY 6 424,791.0 2 BANK OF AMERICA CORP. 25 264,810.0 3 JPMORGAN CHASE & CO. 17 261,330.0 4 ALPHABET 11 201,442.0 5 CITIGROUP 31 193,242.0 6 EXXON MOBIL 3 191,650.0 7 WELLS FARGO 30 187,146.0 8 AT&T 9 184,221.0 9 CHEVRON 15 144,213.0 10 STATE FARM INSURANCE COS. 36 116,231.9 11 MICROSOFT 21 102,330.0 12 FACEBOOK 46 101,054.0 13 APPLE 4 90,488.0 14 GOLDMAN SACHS GROUP 60 90,265.0 15 WALT DISNEY 49 88,877.0 16 COMCAST 28 82,726.0 17 MORGAN STANLEY 61 81,549.0 18 INTEL 45 77,504.0 19 WALMART 1 74,669.0 20 TRUIST FINANCIAL 217 66,384.0 The 500 median 6,128.4
Biggest companies by employees
Rank Company 500 revenues rank 2019 number of employees 1 WALMART 1 2,200,000 2 AMAZON.COM 2 798,000 3 YUM CHINA HOLDINGS 361 450,000 4 KROGER 23 435,000 5 HOME DEPOT 26 415,700 6 BERKSHIRE HATHAWAY 6 391,500 7 FEDEX 47 389,500 8 INTERNATIONAL BUSINESS MACHINES 38 383,800 9 UNITED PARCEL SERVICE 43 377,640 10 TARGET 37 368,000 11 STARBUCKS 114 346,000 12 UNITEDHEALTH GROUP 7 325,000 13 COGNIZANT TECHNOLOGY 194 292,500 14 CVS HEALTH 5 290,000 15 WALGREENS BOOTS ALLIANCE 19 287,000 16 TJX 80 286,000 17 ALBERTSONS COS. 55 267,000 18 PEPSICO 51 267,000 19 LOWE’S 44 260,000 20 WELLS FARGO 30 259,800 The 500 median 26,190
Total return to shareholders, 1 year
Rank Company 500 revenues rank 2019 % 1 FANNIE MAE 24 194.3 2 FREDDIE MAC 41 183.4 3 ADVANCED MICRO DEVICES 448 148.4 4 BUILDERS FIRSTSOURCE 425 132.9 5 SONIC AUTOMOTIVE 301 129.4 6 TENET HEALTHCARE 174 121.9 7 LAM RESEARCH 331 118.3 8 WORLD FUEL SERVICES 91 104.8 9 CAESARS ENTERTAINMENT 363 100.3 10 TARGET 37 99.3 11 BLACKSTONE GROUP 420 96.6 12 LITHIA MOTORS 252 94.6 13 XEROX HOLDINGS 347 92.5 14 GROUP 1 AUTOMOTIVE 264 92.3 15 APPLIED MATERIALS 218 89.8 16 APPLE 4 89.0 17 LEIDOS HOLDINGS 289 88.7 18 HOWMET AEROSPACE 226 83.5 19 COTY 366 79.2 20 WESTERN DIGITAL 198 78.7 The 500 median 28.9
Total return to shareholders, 5 years
Rank Company 500 revenues rank 2014–19 annual rate % 1 ADVANCED MICRO DEVICES 448 76.6 2 NVIDIA 292 64.8 3 NETFLIX 164 46.0 4 AMAZON.COM 2 42.9 5 BURLINGTON STORES 424 37.0 6 WAYFAIR 348 35.4 7 ADOBE 285 35.3 8 CDW 178 33.7 9 LAM RESEARCH 331 32.1 10 MICROSOFT 21 30.4 11 BUILDERS FIRSTSOURCE 425 29.9 12 CINTAS 441 29.4 13 MASTERCARD 191 29.1 14 BROADCOM 138 28.7 15 BOSTON SCIENTIFIC 296 27.8 16 LEIDOS HOLDINGS 289 27.7 17 FISERV 311 26.7 18 S&P GLOBAL 451 26.6 19 ZOETIS 472 26.0 20 UNITEDHEALTH GROUP 7 25.7 The 500 median 8.0
Total return to shareholders, 10 years
Rank Company 500 revenues rank 2009–19 annual rate % 1 NETFLIX 164 45.0 2 CHENIERE ENERGY 329 38.1 3 BROADCOM 138 35.5 4 LITHIA MOTORS 252 34.9 5 UNITED RENTALS 340 32.8 6 XPO LOGISTICS 196 31.6 7 REGENERON PHARMACEUTICALS 405 31.6 8 ULTA BEAUTY 418 30.3 9 AMAZON.COM 2 30.0 10 NVIDIA 292 29.9 11 CONSTELLATION BRANDS 392 28.8 12 CHARTER COMMUNICATIONS 71 28.6 13 MASTERCARD 191 28.5 14 CINTAS 441 28.3 15 ROSS STORES 202 28.3 16 CENTENE 42 28.1 17 O’REILLY AUTOMOTIVE 314 27.7 18 APPLE 4 27.3 19 UNITEDHEALTH GROUP 7 27.3 20 SHERWIN-WILLIAMS 180 26.7 The 500 median 12.8
A version of this article appears in the June/July 2020 issue of Fortune with the headline “How the companies stack up.”


fortune--2020-06-11--COVID-19 has changed how people exercise, but that doesn’t mean gyms are going away

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A national kettlebell shortage and social media calls to #plankthecurve may have highlighted the importance of at-home fitness during COVID-19 social distancing, but as gyms open up, people are returning in droves to sweat with their peers.
Gyms have reopened in more than half of states across the country as stay-at-home orders begin to lift, most under some form of reduced occupancy or other social distancing restrictions. President Trump’s federal reopening plan allows gyms to reopen as part of phase 1. Public health experts say it’s too soon for a return to the weightlifting bench, but many Americans can’t wait to get back to working out—even if the gym has been modified to allow for social distancing.
Pure International Group, with 30-plus locations across South Asia, was one of the first club companies to close, then to reopen. In many of its clubs, it has constructed cardio equipment screens between each piece of machinery. This allows for a safe workout space while minimizing the loss of valuable real estate. Courtesy of International Health, Racquet and Sportsclub Association
Fitness is a $34 billion industry, and an estimated 20% of Americans have a membership to some kind of fitness club, according to the International Health, Racquet & Sportsclub Association (IHRSA). When their workout spaces shut their doors, a number of them turned to their phones or laptops. The pandemic has increased the addressable market for virtual fitness offerings and also forced traditional gyms to move into offering more virtual products for at-home workouts, says Zach Apter, chief commercial officer of Classpass, which announced a $1 billion unicorn valuation in January. The pandemic has also raised awareness of the health benefits of working out: Poor cardiovascular health is one of the major risk factors for severe illness or death as a result of COVID-19.
“We have experienced a demand shock for online or virtual fitness that might not have happened in a non-COVID world,” Apter says. The IHRSA had already identified technology-enhanced offerings like virtual fitness as an important industry trend in its 2019 report, and many gyms, especially large chains, were looking at moving further into the virtual space. But it might never have become such a priority without COVID-19.
All this unfolded in an industry that was already in a state of change. “The fitness industry has evolved a lot in the last couple of years,” says analyst Peter Keith of Piper Sandler. The largest market segments are at the high-end boutique fitness studios, which tend to cater to one specific kind of exercise like Pilates or barre, and high-value, low-price (HVLP) gyms like Planet Fitness that rely on volume. In the middle market are properties like Gold’s Gym, which were already struggling to maintain relevance when the pandemic began, their traditional customer base hollowed out by offerings at the top and bottom of the market, Keith says.
Planet Fitness is one of the few publicly traded stocks in this space, and Keith says that what happened there is a good example of how the pandemic impacted valuation in the fitness space. “You’re looking at a stock that went from about $70 to kind of bottoming out around $30,” he says.
But the stock saw a jump at the beginning of June, when an SEC filing stated that membership numbers at the 800 locations were remaining steady, thanks to a spike in new sign-ups offset by churn. Keith says that’s consistent with the results of two surveys his firm conducted in April and May that showed about 80% of respondents are likely to retain their gym membership.
To reassure uncertain people and ensure continued membership, fitness clubs at all points in the market need to have firm plans for what a reopened gym will look like in terms of social distancing and continue to reinforce those measures as they reopen, which will mean decreased capacity and increased sanitation measures, among other things.
A new normal: Scenes from newly reopened Gold’s Gym. Courtesy of Golds Gym
Benjamin Sibley, an Appalachian State University professor of exercise science who studies workout motivation, says many Americans are likely to return to their gym. “Gyms still offer a lot of things that people are struggling to achieve at home,” says Sibley.
One of the gym’s big appeals—besides easy access to equipment and workout space, two things that are expensive and may not be available at home—is access to both the expert knowledge of trainers and class instructors and the community knowledge and support of other people working out. “Part of it is actively working out with other people at the same time and that shared suffering. I think a lot of people are going to be hungry for that,” says Sibley.
Those who managed to make the transition to at-home workouts successfully are likely to continue working out at home, at least some of the time. For one thing, it’s convenient. For another, they have the equipment now. Purchases of home fitness equipment from big-ticket items like treadmills to more basic equipment like dumbbells spiked in the last quarter, causing supply shortages as people tried to ensure they can keep up with their fitness routines. Serious weekend warriors have likely figured it out, says Sibley.
Even many who don’t have the knowledge to design a routine themselves have relied on a wide selection of online classes. Gyms that have a lot of group fitness offerings, like CrossFit gyms and yoga studios, have tried to give their clients access to some of that knowledge and community at home by doing things like live-streaming workouts, posting videos for on-demand consumption, providing motivational coaching online, and even in some cases renting out equipment.
Exercise is more important now than ever, says Jennifer Heisz, a McMaster University kinesiologist who studies exercise and the brain. For people who regularly exercise, even two weeks of sedentary time “is enough to cause a dip in mood,” she says. And exercise is a key component of stress relief, crucial to the millions of people who had their lives upended by the pandemic. Finally, she says, exercise helps people stay alert and focused, which might make those long Zoom meetings a little easier to handle.
Things won’t go back to normal anytime soon. Virtual offerings help gyms hold on to clients and keep them engaged, even if they won’t be returning to the gym for months or a year, Sibley says. These offerings are often less expensive than gym memberships or offered on an à la carte basis.
When its gyms shut their doors because of the pandemic, Gold’s Gym already had an app. The company made that app free to download and use and saw hundreds of thousands of downloads since January, says Gold’s Gym president and CEO Adam Zeitsiff. The company accelerated improvements that had already been in the works and added new features. In the future, “we’re going to be investing heavily,” Zeitsiff adds.
Consumer engagement with virtual fitness companies has also grown in recent months. For example, Peloton—which sells both a $12.99 per month independent digital membership and a $39 per month subscription for use with its stationary bike or treadmill, which both have one-time costs of thousands of dollars for the equipment—has seen a significant bump since the pandemic began, pushing the company over the 1 million subscriber mark.
Hitting that mark is an “uphill battle,” says Peloton analyst Ron Josey of JMP Securities, and may have longer-term effects on market penetration. For now, many of those new subscribers are still on free trial of the stand-alone app, which the company extended from one to three months at the start of the pandemic. The short-term financial impact of all those extra subscribers won’t necessarily show up in this quarter’s earnings, he says—but the next quarter will show how many were converted to paying subscribers.
Bloomberg Intelligence data suggests that, historically, about 10% of Peloton’s stand-alone app users are converted to an All-Access membership with a bike or treadmill. It’s possible that the recent economic downturn could change that conversion figure since many may have less disposable income. But in a certain light, this boutique fitness offering could be a budget choice: Analyst Paul Golding of Macquarie notes that Peloton is making the largest sales gains in households with income under $75,000.
The sticker shock of the bike and the expensive monthly subscription it needs has turned off consumers before, but Peloton’s argument is that for a household with two users, the monthly payment for both the subscription and equipment, if paid in installments, is significantly less at $97 than two boutique gym memberships. “It also goes to show that however expensive a piece of equipment might seem, the industry has found ways of conveying the value as well as the flexibility that that brings,” Golding says.
“Home equipment, home exercise, is one of these trends that is likely to continue,” Josey says. He expects further diversification into this space but says Peloton is well positioned and ahead of its boutique virtual fitness competitors like Echelon, Myx Fitness, and Mirror.
The bottom line is that, like everything else, the fitness industry has been changed by the pandemic. But that doesn’t mean people are going to stop working out together. “I don’t think people are going to want to stay at home forever,” says B. Nalani Butler, a professor of sport management at Kennesaw State University. “Everybody, right now, is just craving that sense of community, and sports really does bring that.”
Butler says fitness and sports venues are closely watching what happens as Disney properties reopen. “From what I understand, they’re really setting the standards for how we’re going to be doing everything in sports,” she says, “from face masks to cashless payments to temperature checks when you go in.”
Reopened fitness centers at all segments of the market have implemented some of those measures already. But it’s likely to be months or years before the industry stabilizes, because a vaccine for SARS-CoV-2, the virus that causes COVID-19, is at least a year away, according to most estimates. But the rapid shift occasioned by the pandemic has shown two important things: The closer virtual fitness products can get to replicating the community impact of fitness, the more likely they are to succeed; and when it’s possible, many are eager to sweat among their friends once again.


fortune--2020-06-11--Gaming giant NetEase soars in Hong Kong IPO as Chinese firms seek U.S. alternative

On Thursday, the Chinese gaming company NetEase debuted in a secondary listing on the Hong Kong stock exchange, closing at HK$130 a share, seven points above its initial public offering price of HK$123. The stock was Thursday’s second-highest traded company on the exchange, and the listing helped the company raise $2.7 billion.
The Hong Kong IPO represents NetEase “returning to a market in which we share a closer mutual understanding,” said CEO William Ding. The comment was perhaps a swipe at the U.S.’s Nasdaq, where NetEase has traded since 2000 and where skepticism of Chinese companies is growing.
In the wake of an April fraud scandal surrounding the Nasdaq-listed Chinese coffeehouse chain Luckin Coffee, Nasdaq proposed rules on May 18 to the U.S. Securities and Exchange Commission that would impose stricter fundraising and auditing requirements, thus making it more difficult for Chinese companies to debut on its exchange.
The U.S. Senate also has passed a bill that would require Chinese companies to undergo financial audits in order to keep their U.S. listings. The bill currently is being considered by the U.S. House of Representatives, but, if passed, could lead to the delisting of dozens of Chinese companies on U.S. exchanges.
NetEase is the largest Chinese company to pursue a secondary listing in Hong Kong since Alibaba’s blockbuster IPO in Hong Kong last November. Its offering comes as rising tensions in the U.S. have encouraged other Chinese firms, like e-commerce company JD.com, to seek secondary listings in Hong Kong. Many analysts predict NetEase’s offering Thursday will be the first of many Hong Kong debuts by U.S.-listed Chinese firms now under closer American scrutiny.
What is NetEase?
NetEase debuted on the Nasdaq 20 years ago, and its shares on that exchange have traded at record highs recently, notwithstanding the controversy over U.S. listing requirements for Chinese firms.
On Jan. 2, shares on the Nasdaq were trading at $329, giving NetEase a market capitalization of $31 billion. On Thursday, shares were at $425, for a market cap of roughly $55 billion. The surge reflects the boom in Chinese online gaming during the coronavirus pandemic. Online gaming revenue in China during the first quarter of 2020 surged 30% from the same period in 2019.
NetEase, China’s second-largest gaming company behind the tech giant Tencent, has said it will use the cash injection from the Hong Kong listing in part to expand its global presence.
The company announced Monday that it will open a new game development studio in Tokyo; its Knives Out game is already one of Japan’s most popular. The Tokyo location will be the company’s second international gaming studio; it opened one in Montreal last November.
In China, NetEase boasts some of China’s most popular online games like Tianxia III and Heroes of Tang Dynasty Zero. Its most popular franchise, which has some 360 million users and has earned the company $6.5 billion in profits, is called Fantasy Westward Journey.
Returning home
NetEase’s Hong Kong IPO reflects a trend that Hong Kong Exchanges and Clearing CEO Charles Li identified in mid-May in an interview with Fortune: He expressed regret that the state of U.S.-China relations was taking a toll on Chinese companies in the U.S., but admitted that Hong Kong would likely benefit from Chinese firms seeing Hong Kong as an alternative to the U.S.
“Americans will be best served if Chinese companies are allowed to succeed there,” he said. “But if in the short term, for whatever reason, they are not welcomed, we always welcome that.”
Chinese firms indeed seem reluctant to enter the U.S. market. In the first six months of 2019, Chinese IPOs in the U.S. raised $3.5 billion. This year, that figure has fallen to $1.7 billion, according to Reuters.
Last week, during a conference call with the investment bank Piper Sandler, Li seemed confident that NetEase may only be one of many Chinese companies this year to pursue primary and secondary listings in Hong Kong rather than looking toward the U.S.
“This is going to be a big year for IPOs, including both huge IPOs from China, but very substantial returnees, what we call them, from the United States,” Li said.


fortune--2020-06-12--Twitter removes more than 32,000 propaganda accounts linked to China, Russia and Turkey

Zoom ’ s censorship stumble is a familiar narrative for tech stuck between U.S. and Beijing

Twitter Inc. removed tens of thousands of accounts engaged in propaganda that were linked to Russia, China and Turkey.
In a Thursday blog post, the social media company disclosed that it had removed 32,242 accounts for violating its policy against manipulating the service. Twitter described the accounts as “state-linked information operations.”
The 23,750 accounts tied to China tweeted messages, largely in Chinese languages, that supported the government and spread “deceptive” narratives about Hong Kong’s political dynamics, according to Twitter, which said that most of the accounts were discovered before they gained much traction.
Twitter also disclosed 1,152 Russia-linked accounts that were part of a network promoting the pro-Kremlin United Russia party and attacking dissidents. The accounts were associated with a media site known as Current Policy that publishes “state-backed political propaganda within Russia,” according to Twitter. “A network of accounts related to this media operation was suspended for violations of our platform manipulation policy, specifically cross-posting and amplifying content in an inauthentic, coordinated manner for political ends.”
The final batch of 7,340 accounts primarily targeted domestic audiences in Turkey. They “demonstrated strong support” for Turkish President Recep Tayyip Erdogan and amplified narratives promoting the ruling AK Party. The network, which appears to be associated with the party’s youth wing, contained several compromised Twitter accounts that were connected to organizations critical of Erdogan and the Turkish government, according to the social media company.
Information campaigns from financially motivated groups and foreign governments are common on social media like Twitter and Facebook Inc.’s network. The two companies have been fighting to identify and remove them with regularity since the 2016 U.S. presidential election, when a Russian disinformation campaign on social media sought to sow divisions in the U.S. Facebook now reports campaign removals on a monthly basis.
–With assistance from Kurt Wagner.


fortune--2020-06-12--U.K. airlines to sue government over two week quarantine rule for arriving passengers

The biggest airlines operating in the U.K. sued the government to overturn a new requirement that people arriving in Britain self-isolate for two weeks amid the Covid-19 pandemic.
British Airways moved with budget carriers Ryanair Holdings Plc and EasyJet Plc to try to block the rules, which began Monday. They require travelers arriving in the U.K. to self-quarantine despite criticism from the airline industry that the move will stop lockdown-weary customers from booking summer vacations.
The government’s plan “will have a devastating effect on British tourism and the wider economy and destroy thousands of jobs,” the airlines said Friday in an emailed statement. They’ve asked for their judicial review to be heard as soon as possible.
British Airways parent IAG SA wrote to the Home Office to start a process to block the measure last week, but was left disappointed by the government response. On Friday, the Home Office declined to immediately comment on the lawsuit.
Prime Minister Boris Johnson is trying to balance the need for businesses to reopen with the risks of controlling the spread of coronavirus, which has hit the U.K. worse than any other European country. The government, which made a series of radical moves in March including ordering many businesses to shut, is now taking measures to ease the lockdown and encourage the economy to start moving again.
BA and its rivals want the government to roll its plan back to rules in force since March 10, which required only travelers from “high risk” countries to self-isolate.
The new rules are tougher on travelers than on people who have been confirmed with Covid-19, the airlines said. Their challenge says the requirements weren’t properly discussed and haven’t been backed up by scientific advice. Frequent fliers from countries such as France and Germany, where infection rates have dropped, are being penalized, the airlines said.
Global carriers have been some of the worst hit businesses. The International Air Transport Association on Tuesday predicted carriers will lose a combined $84 billion this year and almost $16 billion in 2021, its first estimate of the hit to earnings since the coronavirus crisis began. That compares with $31 billion during the 2008-2009 recession.
With infection levels on the decline in most European countries, governments have been easing travel restrictions, and beaches are opening in Greece, Spain and Portugal. Airlines are trying to salvage the summer season when tens of millions of people generally take their vacation.
The quarantine would torpedo BA’s plans to resume about 40% of its scheduled flights in July and force it to continue burning 20 million pounds ($25 million) a day, the carrier said. EasyJet is planning to resume some scheduled flights June 15, while Ryanair plans to restart flying July 1.


fortune--2020-06-12--Zoom’s censorship stumble is a familiar narrative for tech stuck between U.S. and Beijing

Twitter removes more than 32,000 propaganda accounts linked to China , Russia and Turkey

Zoom Video Communications Inc. confirmed on Thursday that it complied with a Chinese government demand in suspending the accounts of three U.S.- and Hong Kong–based human rights activists for hosting Zoom events to commemorate the anniversary of Beijing’s violent suppression of demonstrators in and around Tiananmen Square in 1989.
Zoom said it suspended the paid account of a U.S.-based Chinese dissident group, Humanitarian China, as well as the accounts of Lee Cheuk-yan, the Hong Kong–based organizer of the region’s annual Tiananmen vigil, and Wang Dan, a U.S.-based Tiananmen activist. All three accounts have been reinstated.
Zoom said it had been contacted by the Chinese government in May and early June about four online meetings related to the Tiananmen Square crackdown that had been publicized on social media.
“The Chinese government informed us that this activity is illegal in China and demanded that Zoom terminate the meetings and host accounts,” the company said in a Thursday blog post.
Zoom reviewed the meetings’ metadata—from the U.S.—and confirmed from IP addresses that several participants would be calling from China’s mainland. The accounts hosting the events were not registered in mainland China.
“I’m very angry, of course, that even in this country, in the United States…we have to be prepared for this kind of censorship,” Zhou Fengsuo, who founded the U.S. nonprofit group whose account Zoom suspended, told the South China Morning Post. Zhou was a prominent student organizer in Beijing in 1989. He served a year in prison after the crackdown, has lived in exile in the U.S. since 1995, and is now a U.S. citizen.
Zoom said it “fell short” by suspending accounts based outside of mainland China while aiming to “comply with local laws.”
“Our response should not have impacted users outside of mainland China,” Zoom said in the Thursday statement. The company promised that in the future, Zoom users outside China’s mainland would not be affected by Chinese government requests.
Global lockdowns to slow the spread of the coronavirus have proved a huge boon for Nasdaq-listed Zoom, driving the number of its daily users above 300 million—and its share price into the stratosphere. Zoom’s chat service has become a key work-from-home tool for businesses, schools, and universities around the world, including in China, which boasts, by far, the world’s largest online population with an estimated 840 million Internet users.
Eric Yuan, Zoom’s founder and CEO, was born in China. He is a U.S. citizen and launched Zoom after years as a senior engineer at Cisco Systems videoconferencing unit Webex.
In China, Zoom has operated a censored, localized version of its video chat service since September, when Beijing blocked the global version. About a third of Zoom’s developers are based there.
Beijing has erected an elaborate system of rules and technologies, often called the Great Firewall of China, to censor and monitor the dissemination of online information within its borders. In May, Zoom changed its policy in China so that unregistered users could join but not host Zoom meetings. Mainland China users who want to host must buy a license from the company, a move seen as further compliance with Chinese government Internet controls.
Zoom said it will continue to comply with government requests within China. The company is developing technology that will enable it to remove or block any participant in a Zoom call, based on the participant’s location, so that it will be able to “comply with requests from local authorities when they determine activity on our platform is illegal within their borders[.]”
Zoom founder Eric Yuan makes a toast after the Nasdaq opening bell ceremony on April 18, 2019, in New York City. The videoconferencing software company announced its IPO priced at $36 per share, at an estimated value of $9.2 billion. Kena Betancur—Getty Images
Lee, the Hong Kong activist whose account was suspended, said he wanted a refund for his Zoom subscription and called for a boycott of the company. “What we are opposing is political censorship,” he told Hong Kong broadcasting service RTHK on Friday. “It’s very obvious [Zoom is] kowtowing to the pressure from China.”
Zoom’s efforts to comply with Beijing’s demand drew sharp criticism from U.S. legislators. Sen. Josh Hawley (R-Mo.) wrote a letter to Yuan telling the executive to “pick a side” between “American principles and free speech, or short-term global profits and censorship.” Rep. Greg Walden (R-Ore.) and Rep. Cathy McMorris Rodgers (R-Wash.) also wrote a letter to Yuan asking him for details of whether user data was shared with Beijing and whether Zoom encrypted users’ communications.
The Zoom saga follows a long string of American Internet companies that have grappled with how to adapt their U.S.-based platforms to China’s heavy-handed censors without losing either market.
Most—if not all—have stumbled in that balancing act, abandoning one market for the other or building clones of their flagship tools to appease Beijing. Zoom, still a relative newcomer, is learning the lessons of its predecessors the hard way.
LinkedIn
Zhou, the Tiananmen activist and Humanitarian China founder, has been the subject of previous tech run-ins with Beijing.
In 2019, LinkedIn, which is owned by Microsoft, censored Zhou’s profile on the platform, explaining in a message that his page would no longer be viewable in China “due to the presence of specific content.”
“While we strongly support freedom of expression, we recognized when we launched that we would need to adhere to the requirements of the Chinese government in order to operate in China,” LinkedIn said in its message to Zhou. The company later restored Zhou’s profile after public outcry and apologized, calling the move “a mistake” and saying the profile had been “blocked in error.”
Zhou’s profile is blocked on LinkedIn China, the localized version of the website available in mainland China that the company launched in 2014.
LinkedIn continues to operate its Chinese-language site in China as one of the few unblocked international Internet companies, thanks to its willingness to abide by the country’s censorship requirements. It will remove any posts or profiles the Chinese government deems politically sensitive.
Yahoo
In 2004, Chinese journalist Shi Tao leaked a government-issued document with censorship instructions for the upcoming June 4 anniversary to a U.S.-based website, emailing it via a Yahoo account. The website, Democracy Forum, uploaded the document as an anonymous post, but Yahoo provided the Chinese government with evidence that Shi had sent the email.
Chinese authorities arrested Shi in December 2004, and in June 2005 the Changsha Intermediate People’s Court sentenced Shi to 10 years in prison for sharing the document, accusing him of “illegally providing state secrets to foreigners.”
Another dissident, Wang Xiaoning, brought a lawsuit against Yahoo in 2007, while serving a 10-year prison sentence in China. Wang accused the company of helping Chinese authorities identify and torture political dissidents, including Shi Tao and himself. Yahoo settled the lawsuit that year.
“To be doing business in China, or anywhere else in the world, we have to comply with local law,” Yahoo cofounder and then-CEO Jerry Yang said in 2005. Yang later testified in front of the U.S. Congress about Yahoo’s role in the dissidents’ arrests and apologized to Shi’s mother, who was present at the hearing.
Gao Qin Sheng (center), mother of Chinese journalist Shi Tao—sentenced by the Chinese government to 10 years in prison with the help of information that was provided by Yahoo—bursts into tears after committee chairman Rep. Tom Lantos (D-Calif.) requested Yahoo CEO Jerry Yang (left) publicly apologize to Shi’s family during a hearing before the House Foreign Affairs Committee as Chinese dissident Harry Wu (right) looks on. Nov. 6, 2007, on Capitol Hill in Washington, D.C. Alex Wong—Getty Images
Yahoo invested $1 billion for 30% of Alibaba in 2005, and Alibaba bought and operated Yahoo’s China domain, Yahoo.cn, which journalism advocacy group Reporters Without Borders in 2006 said had stricter censors than any other search engine in China.
Yang stepped down as CEO of Yahoo in 2009. In 2012, Yang resigned from Yahoo’s board of directors and also resigned from the boards of Yahoo Japan and Alibaba Group.
Yahoo in 2012 off-loaded a significant portion of its China assets when it sold half its stake back to Alibaba in 2012. Yahoo off-loaded its remaining Asian assets in 2019 when Altaba, the spinout created in 2017 to house Yahoo’s remaining Alibaba stake, sold its 15% stake in Alibaba and 35.5% stake in Yahoo Japan.
TikTok
TikTok, a short video platform that is wildly popular in the U.S., is owned by Beijing-based tech company ByteDance, which operates a separate version of the app called Douyin for the China market.
In November, TikTok locked the account of an American teenager who posted a video criticizing the Chinese government’s treatment of Muslims in China. The company later apologized and reversed the account ban, calling it a “human moderation error.” A leaked document obtained by the Guardian last year showed that TikTok moderators had instructions to censor videos that mention politically sensitive topics in China like the Tiananmen protests and Tibetan independence, undercutting the claims of TikTok U.S. that it doesn’t censor content on the platform.
ByteDance’s assurances that TikTok is run separately from its Chinese counterpart have been greeted with skepticism from U.S. authorities, who have held congressional hearings to discuss whether TikTok, which has offices in the U.S., is a national security threat.
Google
Google was blocked in China on and off throughout the 2000s. A censored version of Google, Google.cn, launched in 2006 and was available in China until 2010, when it was shut down over censorship disputes. Google and Google-related apps like Gmail, Blogspot, and Google Maps have been largely unavailable in China since then. Youtube, a subsidiary of Google, is also blocked in China.
In 2018, the Intercept obtained leaked documents and reported that Google was planning to launch a new censored version of its search engine for China, code-named Dragonfly, that would automatically blacklist websites and search terms already blocked by China’s government web censors.
Google said in 2019 that it had “terminated” the Dragonfly project. Google employees publicly protested the project for months after it was revealed in 2018, and over a thousand employees signed an open letter calling for the cancellation of the project, which they said would enable state surveillance and help the Chinese government “repress dissent.”
Facebook
Facebook has been blocked in China since 2009, following ethnic unrest and riots in Urumqi, Xinjiang, and reports that protesters were using Facebook to communicate. Twitter was also blocked after the riots, as government censors moved to stanch the flow of information in China about the unrest.
Facebook CEO Mark Zuckerberg (right) and the overseas representatives of China Development Forum applaud for the arrival of Chinese Premier Li Keqiang at a meeting at the Great Hall of the People in Beijing on March 21, 2016. Reuters
Facebook-owned Instagram was blocked in 2014, in the midst of Hong Kong’s “Umbrella Movement” protests, reportedly to prevent the pro-democracy message of the movement spreading to the mainland.
Facebook’s WhatsApp was blocked in 2017, weeks before a large Communist Party gathering—a common move by Chinese government censors to limit and monitor discussion of sensitive topics and ensure important political events run smoothly.
Mark Zuckerberg, Facebook’s founder and chief executive, has long and unsuccessfully courted Beijing in an attempt to gain access to China’s Internet. Zuckerberg has made public his efforts to learn Mandarin, taken jogs through the Beijing smog, recommended Xi Jinping’s book to his employees, and even asked the Chinese leader to help name his unborn daughter. Facebook and its subsidiaries remain blocked in China.


fortune--2020-06-12--U.S. tech firms are pausing facial recognition, but that creates a problem

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
Well that was quick. In rapid succession this week, Microsoft followed Amazon which followed IBM in putting the brakes on selling facial recognition software to law enforcement, because of concerns about racial profiling. Anyone who thought post-George-Floyd CEO statements were just talk now have a bit of action to point to.
But Microsoft’s Brad Smith raised the obvious problem with this approach. In China, which has made winning the A.I. race a national priority, concerns about privacy and profiling are faint. Said Smith:
“I think it’s important to see what IBM has done. I think it is important to recognize what Amazon has done. It is obviously similar to what we are doing. But if all of the responsible companies in the country cede this market to those who are not prepared to take a stance, we won’t necessarily serve the national interests or the lives of the black and African-American people of this nation well.”
IBM CEO Arvind Krishna Had this to say about the tech trend he started:
“This is a time when people are expecting companies to take clear and definitive actions. Technology must be used in ways that are fair and responsible. These actions, together with precision regulation, can help ensure innovations are used in ways that make technology part of the solution to society’s most serious challenges.”
Separately, Rhode Island Governor Gina Raimondo spoke with Fortune’s Most Powerful Women community yesterday, and offered one unexpected casualty of COVID 19 – the snow day. “I announced yesterday the end of the snow day in Rhode Island. Our kids have missed many days because of snow. No more.” When it snows in Rhode Island, the schools will go virtual.
And one bit of Friday feedback: Dow CEO Jim Fitterling wrote in after yesterday’s health post to say that telemedicine–and virtual education, as well–won’t succeed until we do a better job getting broadband to all parts of the U.S.:
“Getting the entire US connected via Wi-Fi is an imperative in any infrastructure stimulus. It will facilitate better health care delivery to underserved areas, increase education opportunities, allow the US to jump ahead digitally and increase our competitiveness. Every state should accelerate digital for delivery and lowering costs. This would be a major silver lining, and change the shape of recovery and future growth.”
News below.
Alan Murray
@alansmurray
alan.murray@fortune.com
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here.
TOP NEWS
Dow slump
Yesterday's 6.9% drop in the Dow Jones Industrial Average—caused by concern over a new wave of COVID-19 infections—was followed by a comparatively mild day on Asian markets, with the Nikkei 225 and the Hang Seng each down around 0.7%. Early trading in Europe was flattish to positive and U.S. futures point to 2% pop for the Dow at opening. Wall Street Journal
U.K. GDP
British GDP saw a record slump of 20.4% in April, as the coronavirus lockdown took hold. Perhaps needless to say, the country is on course for recession. Accommodation and food services were particularly hard hit, falling 40.1%. U.K. finance chief Rishi Sunak: "We've set out our plan to gradually and safely reopen the economy. Next week, more shops on the high street will be able to open again as we start to get our lives a little bit more back to normal." Sky
Quarantine pushback
British Airways, Ryanair and Easyjet have banded together to sue the British government over its requirement that arrivals self-isolate for two weeks. The airlines said the quarantine rules, which entered into force Monday, "will have a devastating effect on British tourism and the wider economy and destroy thousands of jobs." Bloomberg
Chinese disinformation
Twitter has removed over 170,000 China-linked accounts that have been spreading disinformation about Hong Kong, Taiwan and China's response to the coronavirus outbreak. Security analysts say Beijing's online disinformation tactics are starting to resemble those of Moscow. Twitter said the accounts "were largely caught early and failed to achieve considerable traction on the service, typically holding low follower accounts and low engagement." China's response? It said Twitter should remove accounts that smear China. CNBC
AROUND THE WATER COOLER
Airline cuts
Yesterday's Lufthansa job cuts announcement, where the German group said it would shed 22,000 roles, takes the total number of job cuts announced by major airlines up to around 70,000—and that's not even taking into account the vast number of job losses that are being experienced at suppliers and their suppliers, such as Boeing, Airbus and Rolls-Royce. And on that note, Airbus has warned that its cuts are more likely to hit U.K. employees than those in France or Germany, if the British government does not maintain support schemes that are comparable to those in place on the continent. Fortune
Walmart cases
Walmart, facing criticism, has said it will stop locking up black beauty and hair care products in glass cases as an anti-shoplifting measure (as with razor blades and so on, the items need to be unlocked by a staffer.) Walmart: "We serve millions of customers every day from diverse backgrounds. We have made the decision to discontinue placing multicultural hair care and beauty products in locked cases." Fortune
SoftBank buyback
SoftBank spent around $570 million buying back its shares in May, as part of an effort to support its share price. Since announcing its buyback program in March, the Japanese conglomerate has now spent $2.9 billion on the scheme—making credit rating agencies rather nervous. Reuters
Brexit U-turn
The British government has reportedly relented to pressure from businesses and abandoned plans to introduce rigorous border checks on imports after this year, when the Brexit transition period ends. The shift to a more lax border-check regime is down to the coronavirus pandemic—businesses are having a hard enough time as it is. BBC
This edition of CEO Daily was edited by David Meyer.


fortune--2020-06-12--Markets crash back down to Earth amid fears of a coronavirus ‘second wave’

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning, Bull Sheeters. This is Fortune finance reporter Rey Mashayekhi, filling in for Bernhard Warner.
Thursday was a day of reckoning for bulls who have ridden the market’s extraordinary rally—one apparently disconnected from the harsh economic realities gripping much of the world right now. Here’s how things stand as we near the end of the week.
Markets update
Asia
After posting sharp losses early Friday, Tokyo’s Nikkei (-0.75%) and Hong Kong’s Hang Seng (-0.7%) rebounded to close slightly down. On mainland China, the major indices in Shanghai (-0.04%) and Shenzhen (+0.07%) also rallied to par. In South Korea, the KOSPI (-2%) saw a sharper decline.
(-0.75%) and Hong Kong’s (-0.7%) rebounded to close slightly down. On mainland China, the major indices in (-0.04%) and (+0.07%) also rallied to par. In South Korea, the (-2%) saw a sharper decline. There’s more U.S.-China trade tumult in the news. China’s WTO delegation denounced a U.S. executive order banning American firms from using telecom equipment from Chinese companies said to pose a national security risk. In D.C., senators introduced a bipartisan bill that would increase oversight and penalties on foreign companies for intellectual property theft . Meanwhile, Beijing’s envoy to Ottawa labeled the U.S. a “troublemaker” for interfering in Chinese-Canadian relations.
in the news. China’s WTO delegation banning American firms from using telecom equipment from Chinese companies said to pose a national security risk. In D.C., senators introduced a bipartisan bill that would increase oversight and penalties on foreign companies for . Meanwhile, Beijing’s envoy to Ottawa for interfering in Chinese-Canadian relations. Singapore ’s prominence as a derivatives trading hub may take a hit after it lost an MSCI index licensing deal to Hong Kong .
’s prominence as a derivatives trading hub may take a hit after it lost an MSCI index licensing deal to . Count retail traders in South Korea among those who have proven desperate to get in on the market’s rally.
Europe
The European bourses took sizable losses across the board Thursday. London’s FTSE (-4%), Frankfurt’s DAX (-4.5%), the CAC 40 in Paris (-4.7%), and the pan-European STOXX 600 (-4.1%) all fell.
took sizable losses across the board Thursday. London’s (-4%), Frankfurt’s (-4.5%), the in Paris (-4.7%), and the pan-European (-4.1%) all fell. Amazon is reportedly facing antitrust charges by European regulators over its treatment of third-party sellers.
is reportedly facing by European regulators over its treatment of third-party sellers. Consumer goods giant Unilever is ditching its long-held, dual British-Dutch legal status in favor of establishing a single entity in Britain .
is ditching its long-held, in favor of establishing a . Lloyds Bank is being fined £64 million ($81 million) by British regulators for mistreating mortgage customers.
U.S.
Wall Street had its worst day since March as the great coronavirus rally of 2020 came to a screeching halt. The Dow (-6.9%) lost more than 1,800 points, while the S&P 500 (-5.9%) also slid and the Nasdaq (-5.3%) fell back below 10,000 points. But futures were up on Friday morning, indicating a possible rebound in the cards.
as the great coronavirus rally of 2020 came to a screeching halt. The (-6.9%) lost more than 1,800 points, while the (-5.9%) also slid and the (-5.3%) fell back below 10,000 points. But on Friday morning, indicating a possible rebound in the cards. With coronavirus cases increasing in many parts of the U.S., investors appear spooked that the economic recovery from the pandemic will be longer, slower, and more painful than many hoped. Not even a decline in unemployment claims could lift the mood of the markets.
in many parts of the U.S., investors appear spooked that the economic recovery from the pandemic will be longer, slower, and more painful than many hoped. Not even a could lift the mood of the markets. I recapped Hertz ’s incredible post-bankruptcy stock bounce yesterday. Now, the beleaguered car rental firm is looking to issue more shares potentially worth up to $1 billion .
’s incredible post-bankruptcy stock bounce yesterday. Now, the beleaguered car rental firm is potentially worth up to $1 billion DoorDash is reportedly close to securing new funding from T. Rowe Price, Fidelity, and other investors that would value the food delivery firm at more than $15 billion. DoorDash is said to still be eyeing an IPO this year.
Elsewhere
Spot gold fell slightly, while gold futures climbed.
fell slightly, while climbed. The dollar notched upward.
notched upward. Crude oil continued its slump, with Brent settling at over $37/barrel.
Escaping the carnage
It was a brutal day virtually across the board for publicly listed companies on Wall Street. All 11 industry sectors tracked by the S&P 500 registered sizable declines, and even resilient tech behemoths couldn’t escape losses.
The five most valuable tech companies all fell sharply on the day, shedding roughly $270 billion in value combined. Microsoft led the way (-5.4%), followed by Facebook (-5.2%), Apple (-4.8%), Alphabet (-4.3%), and Amazon (-3.4%).
Did anyone manage to escape the carnage? Only a select few. In fact, only one S&P 500 company saw its shares climb on the day: supermarket retailer Kroger, which managed to just tick upward (+0.4%). And over on the Nasdaq, Zoom Video Communications—whose platform has become seemingly ubiquitous in our new teleworking reality—was one of the few winners (+0.5%).
Meanwhile, the rest were left to patch themselves up and hope that bullish futures translate to a better Friday on the markets.
***
That’s all for me this week; you’ll be back in Bernhard’s hands on Monday. Stay safe, and have a wonderful weekend.
Rey Mashayekhi
@ReyM12
Rey.Mashayekhi@Fortune.com
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
Stronger together. A merger between Western Union and MoneyGram has long been mooted by those following the remittance industry. With reports last week that Western Union has lodged a bid for its smaller rival, it appears a deal may finally happen. I examined a potential union between the two legacy players, who are now competing with a new wave of tech-enabled money transfer startups pining for a piece of their market share.
Take it easy. The 1MDB scandal has been a cloud hanging over Goldman Sachs for some time now. But as Goldman’s day of reckoning for its role in the scheme approaches, the investment banking giant is reportedly asking federal prosecutors for leniency—requesting fines lower than the $2 billion suggested and seeking to avoid a guilty plea, according to the New York Times. As the Times notes: “It has been a point of pride for Goldman that it has never had to admit guilt in a federal investigation.”
Get rich Quick. Quicken Loans is preparing to go public, CNBC reported Thursday. America’s largest mortgage lender filed a confidential IPO prospectus that could be unveiled as soon as next month, per the report. Morgan Stanley, Goldman Sachs, Credit Suisse, and JPMorgan Chase are all said to be working with the company, which is supposedly seeking a valuation “in the tens of billions of dollars."
Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.
Market candy
“I think if stocks are trading at 30, 35 times earnings, yes, it’s a bubble. Those sorts of valuations are historically extreme—and in all likelihood, end in tears.”
—Scott Minerd, global chief investment officer at Guggenheim Partners, who told CNBC on Thursday that the market’s bad day may be the start of a more severe correction. Minerd has been bearish on equities for some time, and reiterated his belief that the S&P 500 could fall as low as 1,600 points.


fortune--2020-06-12--7 states see coronavirus cases rise significantly after reopening

America is at a tipping point .
Here ’ s how we can recover

For the latest data on coronavirus cases by state, please check out our updated map here.
As Americans head into the weekend, COVID-19 cases are trending strongly upward in a number of states. Arizona, Florida, and Alabama all posted record high levels of new coronavirus cases today, and in a Fortune analysis of New York Times data through June 11, nearly half the country—24 states—were experiencing higher levels of new COVID-19 cases than two weeks prior.
In seven of those states, primarily in the South, the new caseloads were significantly higher, with a seven-day average of more than 200 more new cases per day compared to the seven-day period ending May 28.
Arizona, which also reported a record-high level of COVID-19 hospitalizations today, recorded the biggest jump. Over the past seven days, the state saw an average of 894 more new cases per day than two weeks before. California and Texas both saw new case numbers jump up by an average of more than 700 per day.
Many of the hardest hit states in the Northeast and Midwest, meanwhile, are seeing new infections trending downward. New cases have dropped significantly in eight states. In Illinois, which has the nation’s fourth-highest total case count, new cases are down by an average of 936 cases per day compared to two weeks ago. In New York and New Jersey, which hold the highest total number of COVID-19 cases in the country and which have only begun to reopen their economies, new cases were down by an average of 651 and 437 cases per day, respectively, compared to numbers two weeks ago. New York Gov. Andrew Cuomo claimed today at his daily press briefing that New York currently holds the nation’s lowest rate of COVID-19 transmission.


fortune--2020-06-12--Transgender health care protections overturned by Trump administration

The Trump administration Friday finalized a regulation that overturns Obama-era protections for transgender people against sex discrimination in health care.
The policy shift, long-sought by the president’s religious and socially conservative supporters, defines gender as a person’s biological sex. The Obama regulation defined gender as a person’s internal sense of being male, female, neither or a combination.
LGBTQ groups say explicit protections are needed for people seeking sex-reassignment treatment, and even for transgender people who need medical care for common conditions such as diabetes or heart problems.
Behind the dispute over legal rights is a medically recognized condition called “gender dysphoria” — discomfort or distress caused by a discrepancy between the gender that a person identifies as and the gender at birth. Consequences can include severe depression. Treatment can range from sex-reassignment surgery and hormones to people changing their outward appearance by adopting a different hairstyle or clothing.
Many social conservatives disagree with the concept.
Women’s groups say the new regulations also undermine access to abortion, which is a legal medical procedure.
“No one should fear being turned away by a medical provider because of who they are or the personal health decisions they have made,” said Fatima Goss Graves, president of the National Women’s Law Center, raising the threat of a court challenge.
The ACLU has also said it would sue to overturn the Trump rule.
Under the Obama-era federal rule, a hospital could be required to perform gender-transition procedures such as hysterectomies if the facility provided that kind of treatment for other medical conditions. The rule was meant to carry out the anti-discrimination section of the Affordable Care Act, which bars sex discrimination in health care but does not use the term “gender identity.”
Roger Severino, head of the Health and Human Services Department unit that enforces civil rights laws, has said transgender people continue to be protected by other statutes that bar discrimination in health care on account of race, color, national origin, age, disability and other factors.
For the administration it’s the latest in a series of steps to revoke newly won protections for LGBTQ people in areas ranging from the military to housing and education.
The administration also has moved to restrict military service by transgender men and women, proposed allowing certain homeless shelters to take gender identity into account in offering someone a bed for the night, and concluded in a 2017 Justice Department memo that federal civil rights law does not protect transgender people from discrimination at work.
The proposed new rule would also affect the notices that millions of patients get in multiple languages about their rights to translation services. Such notices often come with insurer “explanation of benefits” forms. The Trump administration says the notice requirement has become a needless burden on health care providers, requiring billions of paper notices to be mailed annually at an estimated five-year cost of $3.2 billion.