Good Monday. (Want this by email? Sign up here.)
Prosecutors and regulators circle Boeing
In the wake of two fatal crashes involving its 737 Max 8 airplane that shared similarities, Boeing finds itself with prosecutors and regulators inspecting its development processes and safety assessments.
• A grand jury in Washington, D.C., issued a subpoena dated March 11 — the day after the Ethiopian Airlines crash — seeking documents from at least one person involved in the development of the 737 Max jets, the WSJ reports.
• The Transportation Department inspector general’s office was also reportedly examining the plane’s design certification before the second deadly crash.
• An investigation by The Seattle Times found that the F.A.A. delegated wide responsibility for the 737 Max safety assessment to Boeing itself. The resulting analysis included “crucial flaws,” according to the investigation.
Boeing said in a statement on Sunday that “aircraft certification processes are well established and have consistently produced safe aircraft designs.” It added that the “737 Max certification program followed the F.A.A.’s standard certification process.”
Lyft thinks it’s worth up to $23 billion
The ride-hailing company will start the road show for its I.P.O. today in New York City. It won’t be short on ambition: Lyft hopes to achieve a valuation of as much as $23 billion.
In its updated prospectus, Lyft said that it hopes to raise nearly $2.4 billion from its I.P.O. That figure is close to the $2.16 billion in revenue that it generated last year.
At the high end of its proposed stock price, $68, the company would be valued at $23 billion. That would make the stakes held by each of the company’s founders, Logan Green and John Zimmer, worth hundreds of millions of dollars apiece. The company is expected to price its offering on March 28, and would then trade on the Nasdaq the next day.
Lyft is poised to become one of the biggest market debuts by a tech company since the Alibaba Group’s I.P.O. in 2014. (Until Uber goes public later this year, at least.)
But the I.P.O. is not without controversy. It’s facing backlash from investors who aren’t happy about a dual-class stock structure. Paul Singer, the head of the activist hedge fund Elliott Management, is one of them, writing in an FT op-ed:
“Those with the insight and daring to found a business deserve our respect. But once they sell the vast majority of the company to the public, they should not be allowed to run it forever without any shareholder input. Public ownership must mean public accountability.”
Deutsche Bank and Commerzbank take their merger effort public
The two German lenders announced yesterday that they will formally begin merger talks. Now they must convince critics that combining is a good thing.
Deutsche Bank said it was reviewing “strategic options” for shoring up its profitability and growth. Christian Sewing, the firm’s C.E.O., told employees, “I have consistently stressed that consolidation in the German and European banking sector is an important topic for us.”
The combined bank would be one of Europe’s biggest, with $2 trillion in assets and about one-fifth of all private customers in Germany.
Going public signals that the deal has political backing. Germany’s finance minister has argued that the country needs a strong national champion to compete against foreign banks. (Here is the FT’s list of the key decision-makers for any deal.)
But opposition to a merger is strong. German unions have criticized the plan, fearing tens of thousands of job cuts. And Elisa Martinuzzi of Bloomberg Opinion warns that it wouldn’t fix the bigger problems in the German banking system.
It’s hard work making the world shun Huawei
The Trump administration’s campaign to prevent countries from using Huawei equipment in their 5G wireless networks has faltered, Julian E. Barnes and Adam Satariano of the NYT write.
American officials have been pressuring and threatening other nations to shun Huawei. The push is rooted in U.S. concerns that Chinese telecom companies are a significant security threat, and could help Beijing spy on other nations.
But it’s not really working. Britain, Germany, India and the United Arab Emirates have all signaled that they are unlikely to follow America’s lead.
The U.S. campaign has been criticized for a lack of evidence. American intelligence briefings have reportedly failed to clearly show how the Chinese government has used Huawei to steal information. (Read what five experts and two senators have to say about whether it is a threat.) Some European and Asian officials also believe that President Trump may not fully support the fight.
American officials want to find other ways to curb Huawei’s rise, Mr. Barnes and Mr. Satariano write, “including possibly restricting American companies from supplying Huawei with key components that it needs to build 5G networks across the world.”
More: Huawei has built its own operating system for smartphones and computers, to be used if the company can no longer use software developed by Google and Microsoft.
Wall Street’s first #MeToo case could go to trial
The financial sector hasn’t felt the impact of #MeToo as much as other industries. But as David Gelles of the NYT reports, a lawsuit against the asset manager TCW could change that.
• Sara Tirschwell, who created a distressed-debt fund at TCW but was fired in 2017, has sued the firm; her former boss, Jess Ravich; and the C.E.O., David Lippman. She claimed that her dismissal was retaliation against her for reporting a sexual harassment claim against Mr. Ravich, gender discrimination and a breach of contract.
• Ms. Tirschwell alleges that Mr. Ravich pressured her into sex several times during her tenure with the firm. The first encounter made her feel, according to her lawsuit, “as if rejection would mean the end of Ravich’s crucial support.”
• TCW, Mr. Ravich and Mr. Lippman denied the allegations. “I was Sara’s biggest supporter at TCW and had no role in the decision to fire her,” Mr. Ravich said.
• So far, there’s been no talk of a settlement. Mr. Gelles writes, “Days in court have been rare for the movement — and rarer still for Wall Street, where grievances are typically dealt with in private, and by wire transfer, when they are dealt with at all.”
S&P 500 chiefs got big raises last year
Despite delivering disappointing returns to investors, many C.E.O.s saw their compensation climb last year, according to the WSJ.
• “Median compensation for 132 chief executives of S&P 500 companies reached $12.4 million in 2018, up from $11.7 million for the same group in 2017,” the WSJ calculates.
• “Most of these C.E.O.s received substantial raises — the median was 6.4 percent — even though the December stock-market swoon meant most of the companies finished out the year posting sluggish shareholder returns.”
• “Markets did pretty well, companies did well, and the economy held up,” Robin Ferracone, an executive-pay consultant, told the WSJ.
• But she also said that boards may have been thinking forward to an economic slowdown, adding, “They know they’re going to have to bring it down when the bloom’s off the rose.”
Big Tech’s extremism problem
The shooting at a mosque in Christchurch, New Zealand, was designed to go viral on the internet. What can we do about it?
“The attack was teased on Twitter, announced on the online message board 8chan and broadcast live on Facebook,” Kevin Roose of the NYT writes. “The footage was then replayed endlessly on YouTube, Twitter and Reddit, as the platforms scrambled to take down the clips nearly as fast as new copies popped up to replace them.”
“Online extremism is just regular extremism on steroids. There is no offline equivalent of the experience of being algorithmically nudged toward a more strident version of your existing beliefs,” Mr. Roose adds. “People become fluent in the culture of online extremism, they make and consume edgy memes, they cluster and harden. And once in a while, one of them erupts.”
But telling terrorists from trolls isn’t easy for tech companies, Christopher Mims of the WSJ argues. Knowing which online extremists will erupt with an act of violence can be virtually impossible, and their broadcasts of sudden acts of violence can be hard to automatically block.
More needs to be done. “We need to understand and address the poisonous pipeline of extremism that has emerged over the past several years, whose ultimate effects are impossible to quantify but clearly far too big to ignore,” Mr. Roose writes. “It’s not going away, and it’s not particularly getting better.”
PG&E is reportedly close to naming Bill Johnson, the outgoing head of the Tennessee Valley Authority, as its next C.E.O.
Google named Scott Beaumont, the head of its greater China and Korea operations, as the chief of its Asia-Pacific team.
Stuart Benson resigned as the C.F.O. of MoviePass.
Princeville Capital, a venture capital firm that invests in climate technology, has recruited Leonardo DiCaprio as an adviser.
The speed read
• Fidelity National Information Services agreed to buy an international payments processor, Worldpay, for $34 billion. (The companies)
• Caesars Entertainment and Eldorado Resorts are reportedly in early merger talks. (Reuters)
• Private equity firms like KKR and CVC Capital Partners are reportedly interested in buying Bayer’s animal-health division. (Bloomberg)
• PagerDuty, a popular start-up that alerts I.T. workers to tech problems that need fixing, publicly filed for an I.P.O. (Business Insider)
Politics and policy
• Investors eagerly await the Treasury Department’s rules for investing in tax-advantaged opportunity zones. (NYT)
• Fox News suspended Jeanine Pirro over a monologue questioning a Muslim lawmaker’s loyalty to the U.S. — and President Trump was unhappy about the move. (NYT)
• Cindy Yang, the former owner of a massage parlor busted in a prostitution ring, has come under scrutiny for political activities, including donations to the president’s re-election campaign. (NYT)
• Prime Minister Theresa May is expected to put her Brexit deal up for a third parliamentary vote this week, but that is likely contingent on gaining the backing of the Democratic Unionist Party. (FT)
• Meanwhile, the Labour Party appears set to support a plan that would seek a public vote on Mrs. May’s deal if it is approved by lawmakers. (Reuters)
• The U.S. and China are pushing for a meeting in late April to complete a trade deal, but negotiators are still grappling over the details. (NYT)
• The Russian metals tycoon Oleg Deripaska has sued the U.S. Treasury Department over sanctions placed on him last year. (CNBC)
• President Xi Jinping of China starts a series of state visits to Europe this week in a bid to bolster trade with the continent. (Bloomberg)
• Marc Andreessen, a Facebook board member, reportedly met with the Cambridge Analytica whistle-blower Chris Wylie in 2016. If true, it would suggest he understood the extent of the company’s harvesting of Facebook data. He denies the claim. (Observer, Business Insider)
• In related news, the academic behind Cambridge Analytica’s data mining has sued Facebook for defamation. (NYT)
• Apple is making a billion-dollar bet to take on Netflix. Will it work? (NYT)
• Tech investors are now including #MeToo clauses in their start-up deals. (FT)
• Breaking up tech giants has suddenly become a populist concept — but not in San Francisco. (NYT, Bloomberg)
Best of the rest
• In the wake of the admissions scandal, colleges are rethinking athletic special admissions. (WSJ)
• The Fed is likely to say later this week that it has little appetite for more interest rate rises this year. (WSJ)
• Why do successful joint ventures turn sour? It’s often because the success breeds a desire for control that the venture sought to avoid. (Economist)
• The European Central Bank is unhappy about the E.U.’s plans for increasing supervision of clearing houses. (FT)
Thanks for reading! We’ll see you tomorrow.
We’d love your feedback. Please email thoughts and suggestions to firstname.lastname@example.org.
Source link Business