Business Updates: Apple Plans New Office in North Carolina
U.S. airlines have been bolstered by the return of customers eager to travel within the country or just outside its borders, but the nation’s largest carriers are still lamenting the loss of two particularly lucrative parts of the business: international and corporate travel. At least one of those could rebound this summer.
In an interview with The New York Times over the weekend, Ursula von der Leyen, the president of the European Commission, said she expected the European Union to ease travel restrictions for vaccinated American tourists, a move that could let the airline industry cash in during the year’s busiest travel season.
“Long-haul international flying represents a significant opportunity for United,” Andrew Nocella, the chief commercial officer for United Airlines, told investors last week. “We have seen in recent weeks that immediately after a country provides access with proof of a vaccine, leisure demand returns to the level of 2019 quickly.”
American Airlines and United said this month that international travel remained about 80 percent lower than in 2019. They and other airlines expect strong demand for domestic flights this summer, and the restoration of trans-Atlantic travel could provide the industry a much-needed boost as it works to generate profits again.
American, Delta Air Lines and United each reported a loss of more than $1 billion in the first three months of the year. Southwest Airlines reported a small profit, of $116 million, though its chief executive said the airline would have lost $1 billion without federal aid.
The news of the E.U. reopening to vaccinated American tourists was also welcomed by Willie Walsh, the director general of the International Air Transport Association, a global airline industry group, who said it could bode well for carriers elsewhere, too.
He said in a statement that coordination between the European Commission and the industry was essential “so that airlines can plan within the public health benchmarks and timelines that will enable unconditional travel for those vaccinated,” not just Americans but passengers from other countries as well.
Tesla on Monday is expected to report solid earnings for the first quarter of 2021, a result driven by continuing increases in sales and production around the world.
Analysts expect the automaker to report earnings of about 75 cents per share. That would be a significant increase from the 24 cents per share it reported for the fourth quarter of 2020. A year ago, it earned just 2 cents per share in the first quarter as the coronavirus pandemic hurt sales and forced the shutdown of its plant in Fremont, Calif.
Earlier this month, Tesla said it delivered a record 184,800 cars in the first three months of the year, more than double the total from the comparable period in 2020.
“Tesla continues to see growing pent-up demand throughout China and Europe,” Dan Ives, a Wedbush analyst, wrote in a report to investors. In the United States, the Biden administration’s push to reduce greenhouse gas emissions and support sales of electric vehicles is likely to help sustain demand for Tesla’s cars, Mr. Ives added.
In advance of the earnings report, Tesla stock was trading at about $739, up about 1 percent on the day. Although down from recent highs, the shares are more than five times as valuable as they were a year ago.
The earnings news comes as Tesla is facing increasing questions about the safety of its Autopilot driver assistance system. Two men were killed this month in Texas when the Tesla Model S they were riding in crashed into a tree on a residential street and burst into flames. Local police said one man was found in the passenger seat and the other in the rear seat and no one was at the steering wheel when the crash occurred.
The National Transportation Safety Board and the National Highway Traffic Safety Administration have sent teams to investigate the crash and see whether the men had relied on Autopilot to drive the car. A Texas Republican, Rep. Kevin Brady, has written to Elon Musk, Tesla’s chief executive, urging him to cooperate with safety regulators.
A week ago Mr. Musk posted a message on Twitter saying data from the car “so far” showed Autopilot was not enabled.
Tesla has also come under scrutiny in China, where authorities have looked into reports from consumers about battery fires and sudden acceleration by Tesla vehicles.
Apple said on Monday that it would increase its spending in the United States by 20 percent, or $80 billion, over the next five years and that it planned to build a new office in North Carolina.
The company said it would invest more than $1 billion in North Carolina, with a new office in the Raleigh-Durham area and at least 3,000 new jobs there. Many of those jobs will be in high-tech fields like machine learning and artificial intelligence.
The overall spending includes its operations at its Cupertino, Calif., headquarters and on data centers across the country, as well as the U.S. taxes it pays. But Apple also announced a number of new investments.
Apple said it was expanding in San Diego, Boston, Seattle and Boulder, Colo. The company also announced a $100 million investment with a supplier named XPO Logistics to create an advanced distribution center in Clayton, Ind., a small town outside Indianapolis.
Apple said it was on track to meet its 2018 goal of creating 20,000 new American jobs by 2023. On Monday, it set a new target of an additional 20,000 jobs in the United States over the next five years. Those jobs include some people hired directly by Apple but also positions at Apple suppliers and data centers. Apple said those jobs now included dozens of TV productions across 20 states for its Apple TV+ video-streaming service.
The company said its overall spending would reach $430 billion in the United States over the next five years.
In 2018, the company said it would spend $350 billion in the country over the following five years. That figure included a one-time $38 billion tax payment as it moved billions of dollars it was holding overseas under the new tax law signed by former President Donald J. Trump. Apple saved an estimated $43 billion under the law, more than any other company.
Turkish authorities arrested four employees of a cryptocurrency trading platform on suspicion of fraud after customer accounts were frozen, authorities said, the second collapse of a digital currency firm in Turkey within a week.
The collapse of Vebitcoin, one of dozens of cryptocurrency trading platforms that have sprung up in Turkey in recent years, came after the Thodex trading platform shut down last week, more than 60 of its employees were arrested, and its chief executive left the country.
Vebitcoin was a relatively small operation and the losses from it are unlikely to be big, said Turan Sert, who advises BlockchainIST, a cryptocurrency research center affiliated with Bahcesehir University in Istanbul.
Ilker Bas, the chief executive of Vebitcoin, told police after his arrest that the platform has 90,000 registered users and had a trading volume of 600 million lira to 800 million lira, or $72 million to $96 million, per month, the private news agency Demiroren reported. Customer losses are probably much smaller, because the same assets are typically traded repeatedly during the course of a month.
“Due to the recent developments in the crypto money industry, our transactions have become much more intense than expected,” Vebitcoin said on its website. “We have decided to cease our activities in order to fulfill all regulations and claims.”
Cryptocurrency trading is little regulated in Turkey, and the number of platforms has proliferated because of the relatively low cost of setting up. Off-the-shelf trading software costs around $100,000, said Mr. Sert, who also advises Paribu, one of the largest cryptocurrency trading platforms.
Mr. Sert estimated that there were more than 90 platforms, mostly “very small mom-and-pop shops.”
The phenomenon is by no means limited to Turkey. Cryptocurrencies like Bitcoin or Dogecoin have attracted the attention of serious investors and become a hot topic on Wall Street. Coinbase, a U.S.-based cryptocurrency trading platform, sold shares to the public for the first time this month and is valued by the stock market at $58 billion. Regulators in the United States and other countries have struggled to keep up with the fast growth of digital money.
The Turkish Central Bank barred the use of cryptocurrencies for purchases this month, citing their riskiness and popularity with criminals, and signaled that more regulation of the sector is coming. The prospect of greater scrutiny could be prompting some platforms to shut down, Mr. Sert said.
Customers of Thodex may have lost $2 billion, a lawyer for the firm’s clients said last week, but Mr. Sert said that figure probably referred to the site’s trading volume and greatly overstated the potential losses. Many platforms exaggerate their trading volume to attract customers, he said.
The total losses to cryptocurrency investors, while devastating to some individuals, are not large enough to push Turkey’s already shaky economy into crisis, Mr. Sert said.
“I don’t think this will create any instability in the system,” he said.
The gap between executive compensation and average worker pay has been growing for decades. Chief executives of big companies now make, on average, 320 times as much as their typical worker, according to the Economic Policy Institute. In 1989, that ratio was 61 to 1.
The pandemic compounded these disparities, as hundreds of companies awarded their leaders pay packages worth significantly more than most Americans will make in their entire lives, David Gelles reports for The New York Times.
In the course of his reporting, corporate public relations teams employed various tactics to justify their bosses’ big paydays:
A Hilton spokesman stressed that the figure in its latest proxy filing did not represent take-home pay for Chris Nassetta, because the company restructured several stock awards. “Said directly, Chris did not take home $55.9 million in 2020,” the spokesman said. “Chris’s actual pay was closer to $20.1 million.” Hilton lost $720 million last year.
Boeing wanted to make clear how much money Dave Calhoun “voluntarily elected to forgo to support the company through the Covid-19 pandemic” — some $3.6 million, according to a spokesman. Nonetheless, Mr. Calhoun was awarded $21.1 million last year, while Boeing lost $12 billion.
Starbucks, which awarded Kevin Johnson $14.7 million, was among many companies making the case that their chief executive was essential to future success. “Continuity in Kevin’s role is particularly vital to Starbucks at this time,” said Mary Dillon, a member of the compensation committee. The company made a $930 million profit in its latest fiscal year, down three-quarters from the previous year.
After months of delays and technical problems, the federal government finally opened a $16 billion grant fund for music club operators, theater owners and others in the live-event business on Monday.
Thousands of people hit the website for the Shuttered Venue Operators Grant program the moment it began accepting applications at midday. Speed mattered: The money will be awarded on a first-come-first-served basis and is widely expected to run out fast.
One applicant posted a screenshot showing that he was in line behind more than 6,000 others waiting for their turn to apply. “Hunger Games” memes — “May the odds be ever in your favor” — popped up in Twitter posts from desperate business owners venting their collective anxiety.
But this time, the system stayed up. Sarah Elger, chief executive of Pseudonym Productions, an events production company in Philadelphia, successfully submitted her application 16 minutes after she got access to the system.
“It was such a relief,” Ms. Elger said. She was one of thousands of business owners who had their hopes dashed earlier this month, when the Small Business Administration, the agency that runs the program, tried — and failed — to start taking applications. After four hours, the agency took the system offline for what turned into weeks of technology repair work.
Ms. Elger estimated that she uploaded more than 100 documents for her application, which she and her husband, Ricky Brigante, spent months preparing. They knew they would have to move quickly once the application website opened.
“We turned it into a game,” Ms. Elger said. “We had lots of folders on the desktop and raced through the uploads.”
The Small Business Administration said it would immediately start reviewing the applications, which can yield grants worth up to 45 percent of applicants’ prepandemic gross earned annual revenue, up to $10 million.
“We recognize the urgency,” said Barb Carson, the deputy associate administrator of the agency’s Office of Disaster Assistance. “With venue operators in danger of closing, every day that passes by is a day that these businesses cannot afford.”
The Small Business Administration is also preparing to open a second grant program, the Restaurant Revitalization Fund, a $28.6 billion support fund for bars, restaurants and food trucks. That program is planning a seven-day test to help the agency avoid the kind of technical problems that plagued the venue program.
On Monday, the Supreme Court will hear a case that could upend American politics. It has largely escaped attention because it’s not obviously political at all.
The case, Americans for Prosperity Foundation v. Rodriquez, involves a fight over California’s donor disclosure requirements for charities and “may seem like a measly spat over state nonprofit rules,” Senator Sheldon Whitehouse, Democrat of Rhode Island, told the DealBook newsletter. “But a massive threat lurks within.”
Americans for Prosperity Foundation is a nonprofit organization arguing that the right to anonymous assembly guaranteed by the First Amendment extends to donor data. Critics say that a ruling in favor of the Koch-funded charity would allow more untraceable money to flow through groups designed to mask the outsize role that a few wealthy players have in American politics. If the foundation wins, “special interests will have a free pass to rig our democracy from behind a veil of secrecy,” Mr. Whitehouse said.
Companies influence politics with “dark money” donations that are deliberately opaque. Some nonprofit groups are quasi-political yet don’t have the same reporting requirements as explicitly political groups. Similarly, trade groups take corporate donations and pass them on, obscuring the sources.
“The importance of dark money in society, the scope of it, is something people don’t really grasp, but it impacts everyday life,” said Anna Massoglia, a researcher at the Center for Responsive Politics.
A decision in the case is expected around late June. Notably, the court took the case on Jan. 8, two days after the Capitol riot prompted a reckoning over corporate political donations. Both the Chamber of Commerce and the National Association of Manufacturers filed briefs supporting the foundation’s case for anonymity, and Allen Dickerson, a member of the Federal Election Commission, argued the same in a Wall Street Journal op-ed.
China’s fast-moving campaign to rein in its internet giants is continuing apace with an antitrust investigation into Meituan, a leading food-delivery app.
The investigation, which the country’s market regulator announced with a terse, one-line statement on Monday, focuses on reports that the company blocked restaurants and other merchants on its platform from selling on rival food-delivery sites.
Earlier this month, the regulator imposed a record $2.8 billion fine on the e-commerce titan Alibaba for exclusivity requirements of this sort. In a statement on Chinese social media, Meituan said that it would cooperate with the authorities and that its operations were continuing as usual.
Meituan is a powerhouse in China. It made more than 27 million food-delivery transactions a day last year and reported around $18 billion in revenue, making it larger than Uber by sales. Meituan’s main rival in takeout delivery in China is Ele.me, a service owned by Alibaba.
Alibaba has been an early major target in China’s efforts to curb what officials describe as unfair competitive practices in the internet industry. But Beijing has made clear that it will be keeping a much closer eye on all of the sector’s biggest and richest companies.
Meituan was one of 34 Chinese internet firms that were summoned to meet with the antitrust authority this month. The following day, the regulator began publishing on its website statements from the companies, Meituan included, in which they vowed to obey laws and regulations.
NEW DELHI — With a devastating second wave of Covid-19 sweeping across India and lifesaving supplemental oxygen in short supply, India’s government on Sunday said it had ordered Facebook, Instagram and Twitter to take down dozens of social media posts critical of its handling of the pandemic.
The order was aimed at roughly 100 posts that included critiques from opposition politicians and calls for Narendra Modi, India’s prime minister, to resign. The government said that the posts could incite panic, used images out of context and could hinder its response to the pandemic.
The companies complied with the requests for now, in part by making the posts invisible to those using the sites inside India. In the past, the companies have reposted some content after determining that it didn’t break the law.
The takedown orders come as India’s public health crisis spirals into a political one, and set the stage for a widening struggle between American social media platforms and Mr. Modi’s government over who decides what can be said online.
On Monday, the country reported almost 353,000 new infections and 2,812 deaths, marking the fifth consecutive day it set a world record in daily infection statistics, though experts warn that the true numbers are probably much higher. The country now accounts for almost half of all new cases globally. Its health system appears to be teetering. Hospitals across the country have scrambled to get enough oxygen for patients.
In New Delhi, the capital, hospitals this weekend turned away patients after running out of oxygen and beds. Last week, at least 22 patients were killed in a hospital in the city of Nashik, after a leak cut off their oxygen supplies.
Online photos of bodies on plywood hospital beds and the countless fires of overworked crematories have gone viral. Desperate patients and their families have pleaded online for help from the government, horrifying an international audience.
Mr. Modi has been under attack for ignoring the advice of experts about the risks of loosening restrictions, after he held large political rallies with little regard for social distancing. Some of the content now offline in India highlighted that contradiction, using lurid images to contrast Mr. Modi’s rallies with the flames of funeral pyres.
More than five million Americans, or nearly 8 percent of those who got a first shot of the Pfizer or Moderna vaccines, have missed their second doses, according to the most recent data from the Centers for Disease Control and Prevention. That is more than double the rate among people who got inoculated in the first several weeks of the nationwide vaccination campaign.
Even as the country wrestles with the problem of millions of people who are wary about getting vaccinated at all, local health officials are confronting a new challenge of ensuring that those who do get inoculated are doing so fully, Rebecca Robbins reports for The New York Times.
The reasons that people are missing their second shots vary. In interviews, some said they feared the side effects, including flulike symptoms, which were more common and stronger after the second dose. Others said they felt that they were sufficiently protected with a single shot.
Those attitudes were expected, but another hurdle has been surprisingly prevalent. A number of vaccine providers have canceled second-dose appointments because they ran out of supply or didn’t have the right brand in stock.
Walgreens, one of the biggest vaccine providers, sent some people who got a first shot of the Pfizer or Moderna vaccine to get their second doses at pharmacies that had only the other vaccine on hand.
Several Walgreens customers said in interviews that they scrambled, in some cases with help from pharmacy staff members, to find somewhere to get the correct second dose. Others, presumably, simply gave up.
U.S. stocks drifted higher on Monday ahead of a week loaded with corporate earnings results and a meeting of the Federal Reserve.
The S&P 500 was up about 0.2 percent. Stocks in Europe were mostly higher, with the benchmark Stoxx Europe 600 index gaining 0.3 percent.
Stocks remained close to recent record highs, and on Monday, yields on U.S. Treasury bonds rose. The yield on 10-year notes climbed slightly to 1.57 percent. Later this week, the Federal Reserve will announce its latest monetary policy decisions, but forecasters aren’t expecting a change. Policymakers have promised to telegraph any pull back in monetary stimulus well in advance.
Apple said Monday that it would spend more than $1 billion to open a new office in North Carolina, part of an expansion by the technology giant away from its headquarters in California. Apple said the new campus, in the Research Triangle area, would create at least 3,000 new jobs in machine learning, artificial intelligence and other research fields.
Among the companies scheduled to report results this week are the electric vehicle maker Tesla, and the four largest technology companies — Apple, Microsoft, Amazon and Alphabet.
“With a lot of good news already priced into markets, stocks could be vulnerable to negative surprises, whether from growth disappointments, higher inflation, or policy missteps,” strategists at UBS Global Wealth Management wrote in a note.
Today in the On Tech newsletter, Shira Ovide talks with Jack Nicas about the fight between the two tech giants, and why we should pay attention to it.