SoftBank Takes Another Multibillion-Dollar Hit From Bad Bets - The New York Times

SoftBank Group has taken another multibillion-dollar hit from its ambitious but costly bets on once high-flying companies like Uber and WeWork, putting growing pressure on the Japanese conglomerate to get its financial house in order.

The company, which has used its $100 billion Vision Fund to dominate the world of technology investment, has become a target for hedge fund giant Elliott Management, which has been urging changes at the Japanese firm, including governance overhauls and stock buybacks.

On Wednesday, SoftBank may have given Elliott another reason to complain. It said the Vision Fund and other investments cost its bottom line 225.1 billion yen, or about $2 billion, in the final three months of last year.

Overall, SoftBank reported a profit of about $501 million for the quarter, well short of what investors had expected. Its profit was less than one-tenth of what it had posted one year earlier. Its operating profit fell 99 percent.

In November, SoftBank said it had lost $4.6 billion on its investment in WeWork, the office space tech company whose initial public offering imploded spectacularly last fall after the revelation of serious governance issues, including allegations of self-dealing by the company’s chief executive.

The results came one day after a judge in the United States approved a merger between Sprint, which SoftBank controls, and T-Mobile, another American wireless carrier.

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2020-02-12 08:12:00Z
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SoftBank shares jump 13% after Sprint merger approval - MarketWatch

Shares of SoftBank Group Corp. 9984, +11.89% soared more than 13% in early trading Wednesday in Tokyo, as the Japanese conglomerate benefited from a U.S. judge's approval of the merger between Sprint Corp. S, +77.50% and T-Mobile US Inc TMUS, +11.78%. SoftBank is a major stakeholder in Sprint, which saw its shares skyrocket 78% during Tuesday trading in New York. Wednesday's gains marked SoftBank's biggest intraday jump in more than a year. The Sprint approval was welcome news for SoftBank, which has seen some of its major investments stumble of late, including the canceled IPO of WeWork and Tuesday's shutdown of retail startup Brandless. SoftBank shares are up 23% year to date, compared to the Nikkei index's 0.6% gain.

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2020-02-12 03:49:00Z
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WATCH LIVE: Federal Reserve Chairman Powell testifies on coronavirus, state of economy - Washington Post

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2020-02-11 14:56:46Z
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Fed chairman: Coronavirus could hurt the global economy - CNN

"We are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy," Powell said in his prepared testimony before the House Financial Services Committee, where he is set to deliver his semiannual report to Congress. He will testify again before the Senate Banking Committee at 10:00 am ET on Wednesday.

The outbreak of the coronavirus, which has now killed more than 1,000 people, has added uncertainty to the global outlook -- and the US economy -- as companies have shuttered plants and shifted supply chains to contain spread of the infectious disease.

In late January, Powell described the outbreak as a "very serious issue," but at the time, he noted the virus was still in its early stages and it remained uncertain how far it would spread and what the macroeconomic effects would be.

Holding rates steady

Powell spent last year guiding the Fed to help buffer the US economy from turbulent trade tensions between the United States and China. The trade war led to weakness in the manufacturing sector, hurt business investment and slowed global growth.

The Fed slashed interest rates three times last year -- in July, September and October -- to a range of between 1.25% and 1.5%. Since then, Powell has signaled the central bank plans to take a wait-and-see approach for this year, a stance he once again reinforced in his testimony to lawmakers.

"The current stance of monetary policy will likely remain appropriate," said Powell. Adding, "If developments emerge that cause a material reassessment of our outlook, we would respond accordingly."

In his testimony, Powell sought to thread the needle of sending a reassuring message that the US economy is still in "a good place," but that policymakers would act as needed to continue the longest-running expansion on record, now in its 11th year.

Low unemployment, but a ballooning deficit

The Fed chairman has routinely pointed to the country's record low unemployment rate as a benefit to low-and middle-income families, who have been among the last to reap rewards from the economic expansion. He pointed to higher wages for those communities, particularly those with lower-paying jobs.

Even so, Powell cautioned that the country continues to face challenges, including drawing in more workers into the labor force, boosting productivity and reconciling with a ballooning federal deficit.

The renewed warning by Powell to Congress to get the nation's fiscal house in order comes weeks after the nonpartisan Congressional Budget Office released its latest report, projecting that the deficit would widen over the coming decade, reaching a total of $1.7 trillion in 2030.

"Putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy during a downturn," said Powell. "A more sustainable federal budget could also support the economy's growth over the long term."

With interest rates at historic lows, the Fed's ammunition to rescue the economy is diminished, requiring fiscal policies by Congress to help offset any economic weakness.

Powell's testimony comes a day after the White House released President Donald Trump's fiscal 2021 budget blueprint, which calls for deep cuts in safety net programs and projects a balanced budget by 2035 assuming the economy returns 3% economic growth annually.

That's significantly higher than what most economists and the Federal Reserve forecast.

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2020-02-11 13:41:00Z
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Fed’s Powell says risks to the U.S. economy remain, particularly from the coronavirus - MarketWatch

Some of the forces that held down U.S. economic growth last year have eased, but risks to the outlook remain, particularly from the coronavirus, Federal Reserve Chairman Jerome Powell said Tuesday.

“We are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy,” Powell said, in testimony prepared for a House Financial Services Committee hearing later Tuesday.

The Fed’s report to Congress on monetary policy noted fragility in China’s corporate and financial sector that could leave it vulnerable to an adverse shock.

Read : Fed concerned about world’s second-largest economies

Earlier Tuesday, Tedros Adhanom Ghebreyesus, the director general of the World Health Organization, said coronavirus is “a grave threat for the rest of the world” amid some signs the rate of infection may be slowing.

Although the semi-annual hearing on Fed monetary policy doesn’t start until 10 a.m., the House panel decided to release the Fed chairman’s testimony a few hours early.

Worried about the health of the economy, the U.S. central bank cut interest rates by a quarter point at three successive meetings last fall, bringing its benchmark rate down to a range of 1.5%-1.75%.

These fears have eased somewhat. Over the past two policy meetings in December and January, Fed officials have left the key policy rate unchanged.

Powell said the Fed was able to hold policy steady over the past 12 weeks because some uncertainties surrounding trade had diminished recently and there were some signs that global growth “may be stabilizing.”

Fed officials believe the current accommodative stance of policy is appropriate to support growth and push inflation up to the central bank’s 2% target, Powell said.

If incoming data back up this belief, the current stance of monetary policy will remain appropriate, Powell said.

But things could change.

“If developments emerge that cause a material reassessment of our outlook, we would respond accordingly” Powell said.

Roberto Perli, a former Fed staffer and now a fellow at Cornerstone Macro, said Powell’s language about monitoring the coronavirus significantly lowers the bar for a rate cut.

Financial markets think the Fed will cut its benchmark rate in July, according to the CME Group’s FedWatch tool. Other economists think the Fed will remain on hold throughout 2020.

Over the last six months of 2019, the U.S. economy appeared to be growing at a moderate rate, and the labor market strengthened further, Powell said. The government’s initial reading of first-quarter GDP won’t come until the end of April.

While consumer spending moderated toward the end of the year, “fundamentals supporting household spending remain solid,” Powell said. Consumer spending has been the main driver of economic growth over the past year, as manufacturing has stumbled and business investment dried up due in part to uncertainties related to the Trump administration’s trade policies.

Overall inflation, based on the price index for personal consumption expenditures, was up 1.6% over the past 12 months ending in December, well below the Fed’s 2% target.

“Over the next few months, we expect inflation to move closer to 2%,” Powell said, as some low readings from early last year drop out of the 12-month calculation.

If the economy stumbles, with the Fed’s benchmark rate already so low, it will be important for fiscal policy to help support the economy, Powell told lawmakers.

He urged Congress to put the federal budget on a more sustainable path while the economy remains healthy.

The Congressional Budget Office recently forecast deficits above $1 trillion over the next ten years.

The recent reduction in interest rates has benefitted the stock market. The Dow Jones Industrial Average DJIA, +0.60%   is up 738 points, or 2.6% so far this year.

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2020-02-11 13:30:00Z
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Judge approves $26 billion merger of T-Mobile and Sprint - CNBC

Shares of Sprint soared Tuesday after a U.S. District judge ruled in favor of its $26 billion deal to merge with T-Mobile.

The stock was up 73% in premarket trading. It had risen after hours Monday after The Wall Street Journal reported the judge was expected to rule in favor of the deal. Shares of T-Mobile were up more than 9% before markets opened.

The ruling clears one of the final hurdles for the deal, which still can't close until the California Public Utilities Commission approves the transaction.

Attorneys general from New York, California, Connecticut, Hawaii, Illinois, Maryland, Michigan, Minnesota, Oregon, Wisconsin, Massachusetts, Pennsylvania, Virginia and D.C. originally brought the lawsuit to block the deal following approval from the Justice Department of Federal Communications Commission. The states had argued that combining the No. 3 and No. 4 U.S. carriers would limit competition and result in higher prices for consumers. The companies had argued their merger would help them compete against top players AT&T and Verizon and advance efforts to build a nationwide 5G network.

In a statement following the ruling, New York Attorney General Letitia James, who helped led the states' push, said the states "disagree with this decision wholeheartedly, and will continue to fight the kind of consumer-harming megamergers our antitrust laws were designed to prevent." She called the ruling and called it a "loss" for Americans who rely on wireless networks and said the states will review their options, including a potential appeal.

"From the start, this merger has been about massive corporate profits over all else, and despite the companies' false claims, this deal will endanger wireless subscribers where it hurts most: their wallets," James said.

California Attorney General Xavier Becerra, who also led the states' efforts, said in a statement, "Our fight to oppose this merger sends a strong message: even in the face of powerful opposition, we won't hesitate to stand up for consumers who deserve choice and fair prices. We'll stand on the side of competition over megamergers, every time. And our coalition is prepared to fight as long as necessary to protect innovation and competitive costs."

T-Mobile and Sprint agreed to certain concessions to the government before the agencies cleared the deal. The companies told the FCC they would deploy a 5G network covering 97% of the U.S. population within three years of closing the deal. Sprint also agreed to sell Boost Mobile, Virgin Mobile and other prepaid phone businesses, as well as some of its wireless spectrum to Dish Network for $5 billion before gaining approval from the Justice Department.

FCC Chaitman Ajit Pai said in a statement that he was "pleased" with the court's ruling and that the merger "will help close the digital divide and secure United States leadership in 5G," calling it "a big win for American consumers."

In his decision filed Tuesday, Judge Victor Marrero wrote, "The resulting stalemate leaves the Court lacking sufficiently impartial and objective ground on which to rely in basing a sound forecast of the likely competitive effects of a merger."

The judge laid out three points on which the court rejected the states' objections to the merger. First, he said, they failed to convince the court that the merged party "would pursue anticompetitive behavior that, soon after the merger, directly or indirectly, will yield higher prices or lower quality for wireless telecommunications services."

Second, the court rejected that Sprint would be able to continue operating effectively as a wireless services competitor without the merger. 

"The Court is thus substantially persuaded that Sprint does not have a sustainable long-term competitive strategy and will in fact cease to be a truly national [mobile network operator]," the ruling said.

And finally, the court rejected the states' argument that Dish "would not enter the wireless services market as a viable competitor nor live up to its commitments to build a national wireless network."

If approved by the California commission, the deal would create a new wireless competitor in Dish, which has tried for years to become a provider, spending billions on airwaves it has stored away. Under a previous deal between Dish and the DOJ and FCC, the company had a deadline this year to build a narrowband internet of things (IoT) network connecting "people and sensors and microprocessors." If the deal clears, Dish will instead focus its efforts on building a 5G network covering 20% of the country by June 2022 and 70% of the U.S. population by June 2023, with the consequence of facing a $2.2 billion payment to the U.S. Treasury if it fails to live up to its commitments.

Shares of Dish were up 10% on the judge's ruling.

T-Mobile CEO John Legere announced last year he would step down from the role and be succeeded by President and COO Mike Sievert. Legere had been expected to step down once the company's merger with Sprint was completed. Sprint and T-Mobile had initially said Legere would lead the combined company when they announced their intention to merge in April 2018.

-CNBC's Alex Sherman contributed to this report.

This story is developing. Check back for updates.

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2020-02-11 13:17:00Z
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Under Armour shares tank on sales miss, sees $50 million to $60 million hit from coronavirus - CNBC

An Under Armour store front is seen on November 04, 2019 in Sunrise, Florida.

Joe Raedle | Getty Images

Under Armour shares plummeted Monday morning after the company reported sales that missed analysts' estimates during the holiday quarter and issued a bleak outlook.

It said it is facing "ongoing demand challenges" for its athletic apparel and sneakers, and is calling for sales to be down a low-single digit percentage in fiscal 2020. That includes a high-single-digit drop in sales in North America, Under Armour said. Analysts had been calling for overall sales to be up 4.2% for the year.

Providing its 2020 outlook, Under Armour said it expects the coronavirus outbreak in China to lower sales by roughly $50 million to $60 million during the fiscal first quarter.

The company is also embarking on a restructuring plan, which among other things could entail not opening its New York City flagship location. It could take between $325 million and $425 million in estimated pretax charges this fiscal year tied to these efforts, it said, including about $225 million to $250 million related to not opening the store.

Under Armour shares sank as much as 17% in premarket trading on the news.

Here's how Under Armour did for the quarter ended Dec. 31, compared with what analysts were expecting, based on a poll by Refinitiv:

• Earnings per share: 10 cents, adjusted, vs. 10 cents expected
• Revenue: $1.44 billion vs. $1.47 billion expected

Under Armour reported a net loss of $15.3 million, or 3 cents per share, compared with net income of $4.2 million, or a penny a share, a year ago. Excluding one-time items, Under Armour earned 10 cents a share during the fourth quarter, in line with analysts estimates, based on Refinitiv data.

Revenue grew slightly to $1.44 billion from $1.39 billion a year ago. But it was short of expectations for $1.47 billion.

Sales in North America were up 1.9% during the quarter and rose 9.8% in Asia-Pacific. Apparel sales were up 0.2% overall, while footwear revenue was up 10.3% and accessories sales grew 1.6%.

Under Armour has been struggling to grow sales for the past few years. The company reported its first quarterly loss in 2017, as momentum for the brand started to slow. It faces intense competition from the likes of Nike, Lululemon and Adidas in the U.S. It also is more reliant on wholesale partners, such as Kohl's, which analysts say has hurt Under Armour's business as those retailers have suffered.

Patrik Frisk notably took over as CEO from Under Armour founder Kevin Plank on Jan. 1. Plank remains executive chairman and brand chief.

As of Monday's market close, Under Armour's stock has fallen about 1.5% this year. The company has a market cap of about $9.2 billion.

Read the full earnings press release here.

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2020-02-11 12:10:00Z
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