There was a lot of hoot this week…
We know you were listening to Weezer’s new album on repeat, and didn’t hear much else this week. Luckily, you have us to inform you with our business news recap!
On Monday HP (HPQ) announced that it will split into two separate businesses. One organization will focus on enterprise systems, while the other will focus on the PC/printer business. Meg Whitman, HP’s current CEO, will continue in her position as CEO at HP Enterprise and Dion Weisler will become CEO of HP Inc.
The split marks the third big announcement of an international corp breakup in one week (Symantec (SYMC) & eBay (EBAY) also announced breakups, respectively). This news comes amidst waves of activist investors calling for breakups of many large or unwieldy companies, such as Dupont (DD), Pepsi (PEP), Ingersoll-Rand (IR), Darden Foods (DRI) and Walgreen’s (WAG). Several firms have similarly chosen to spin off high growth brands from medium-to-low growth parents, examples include Kraft (KRFT) and GE (GE). The trend reveals growing market support for running high growth companies and “steady-giants” by different management teams and under different styles.
…But apparently the Chinese market doesn’t buy it. Reports that fast-food meat products are pumped with chemicals poisoned the Chinese market in August, sending revenue tumbling at several American fast-food chains. Yum Brands (YUM), owners of Taco Bell and KFC, lowered its third quarter earnings to $.89, from $1.09, after facing a 13% drop in September sales. Similarly, McDonald’s (MCD) posted a deep revenue drop in August sales across China. The stumbles are troubling for both retailers as their growth strategies depend on high demand across the Chinese market for years to come.
French authorities increased pressure on Google (GOOG) this week as the government peered deeper into Google’s European tax structure. In its current state, French authorities claim, Google is able to grossly avoid paying due taxes on upwards of $1b in revenues. Google, in contrast, argues that it is compliant with the 20% global tax rate and has cited its generous contributions to the EU as evidence that it is supportive of economic development in the Eurozone.
Meanwhile, the EU commenced scrutiny of Amazon (AMZN) this week. The regulator reported that it would investigate Amazon’s tax arrangements with Luxembourg. The statement comes barely a week after the Commission spoke out against Ireland’s tax arrangements with Apple (APPL).
Activist investor Carl Icahn said ‘me likey’ to Apple CEO Tim Cook Thursday. In a letter posted on his blog Icahn stated that Apple’s stock is undervalued. Icahn has a soft spot for the software company for two primary reasons: the capabilities of the Apple management team, and the potential for the iPhone to steal market share from Google’s Android operating system. He writes that Apple stock, which trades around $100/share, should go for $200/share. The Apple enthusiast thinks that the company as a whole should be worth $1.2T. Curiously, Icahn chose to publish his perspective publically leading one to wonder if the stock will stay ‘undervalued’ for long, or if his letter will create iPhone 6-like demand for the stock, and naturally drive the price up. Either way, Icahn will be a winner.
Learn more on these companies: Apple
The first wave of market-ready driver-less cars are here to save us! Tesla (TSLA) CEO, Elon Musk, unveiled a new Tesla model Thursday evening which included automated features that permit driverless parking, automated lane-switching when using the turning signal and automated breaking when heading towards a rear-end collision. Musk boasted that the car’s sensors will be able to detect even a small child or dog when going up to 150 MPH. The Model D, named for its dual electric engines, will be one of the fastest sedans on the market, going 0 to 60 in 3.2 seconds. And at a starting price of $89,570 we all have chance of… well, seeing one!
Learn more on these companies: Tesla
Insights from The Owler Community this Week
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Follow the companies mentioned in this blog post on Owler:
HP | Symantec | eBay | Dupont | Pepsi | Ingersoll-Rand | Darden Foods | Walgreen’s | Kraft | GE | Yum Brands | Taco Bell | KFC | McDonald’s | Google | Amazon | Apple | Tesla