Now with a flamethrower
Quote of the Day
The rumor that I’m secretly creating a zombie apocalypse to generate demand for flamethrowers is completely false."
Okay, so maybe Elon Musk isn't summoning an army of the undead, but his Boring Company is actually selling 20,000 flamethrowers. Because that's what you do when you run out of hats.
Market Snapshot
- Caterpillar dropped another 2.1%.
- The yuan, up 3%, is having its best month since 1980.
- U.S. equities had their best day in almost a year.
- Oil hit a three-year high.
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Does Dell Really Want to Go Public Again?
Dell is going through a midlife crisis and is exploring several paths to rejuvenation.
A few options on the table for the computing giant:
* Go public (again)
* Acquire the remaining 20% of subsidiary VMWare, a cloud infrastructure company
* Buy a Harley and get a neck tattoo
Let’s consider the options.
Option 1: Go public
Dell needs an influx of cash, pronto. As it stands, Dell spends ~$2 billion a year in interest on $52 billion in debt. And if it needs any more motivation to pay that off quickly, a provision in the GOP’s new tax law puts a cap on the interest companies like Dell can deduct.
So an IPO might be a risk worth taking. After all, the public markets have been very kind to most big tech companies (see: NASDAQ breaking records).
That said, founder Michael Dell seems to be enjoying life leading a company he called “the world’s largest start-up.” Remember, it wasn’t too long ago when Michael and PE firm Silver Lake took the company private for a whopping $25 billion in 2013. With an IPO, Silver Lake could begin to cash out.
But would Dell 2.0 be better off? Unclear. In its previous life as a public company, Dell missed revenue projections in its final seven earnings reports.
Option 2: Buy VMWare
In 2016, Dell acquired an 80% stake in cloud infrastructure company VMWare as part of its record-breaking $67 billion deal for EMC, a data storage provider. And VMWare has not disappointed—shares are up over 60% the last year.
So while Dell’s PC business gathers dust in a middle school computer lab, it might make sense to double-down on its push into enterprise cloud solutions and IoT (where it’s committing $1 billion in R&D over three years).
Option 3: Buy a Harley and get a neck tattoo
Seems like a no brainer.
Sexual Misconduct Allegations Stacked Against Casino Mogul
Another house of cards is falling.
Dozens of women have come forward with accusations against casino magnate Steve Wynn, detailing a “decades-long pattern of sexual misconduct.” Among the complainants were employees of Wynn Resorts, including massage therapists who were allegedly pressured to perform sex acts for large tips and a manicurist to whom Wynn already paid a $7.5 million settlement.
Wynn vehemently denied the allegations, saying, “the idea that I ever assaulted any woman is preposterous.” He continued that “the instigation of these accusations is the continued work of [his] ex-wife Elaine Wynn, with whom [he is] involved in a terrible and nasty lawsuit in which she is seeking a revised divorce settlement.”
Despite his denial, the Las Vegas mogul—once owner of the Mirage, Treasure Island, and Bellagio casinos—did resign as finance chair of the Republican National Committee. And his company also took a big hit. After the WSJ published the report on Friday afternoon, Wynn Resorts shed $2 billion in market value.
The company reiterated its commitment to a safe workplace culture with its required anti-harassment training and available anonymous hotline.
Just dial 1-800-#METOO.
President Trump Speaks at Davos
Protectionism or globalism? That’s the policy question President Trump—the first U.S. leader to speak at Davos since 2000—addressed in a speech on Friday. His answer? Both.
“America First does not mean America alone," he said—a suggestion that protecting U.S.’ trade interests isn’t intended to hinder global progress. Because “when the U.S. grows, so does the world.”
The president found support from Goldman Sachs CEO Lloyd Blankfein, who quickly “Agreed.” And despite controversy over aggressive trade stances like withdrawing from the Trans-Pacific Partnership, and a recent solar panel tariff directed at the Far East, the only chorus of boos President Trump received was in response to calling the media “nasty, mean, and fake.” Except for daily business newsletters.
While some critics felt his speech took a “very strong domestic focus” on the global stage, his composure and willingness to “stick to the script” caught other dissenters off guard.
After all, one Davos delegate said, “We were here for a show, and he didn’t deliver it.”
A Tribute to Ikea Founder Ingvar Kamprad
Swedish home-furnishing visionary Ingvar Kamprad passed away at the age of 91. Ingvar went from dyslexic boy who struggled in school to assembling the world’s largest furniture retailer. In all, Ikea has more than 350 stores across 29 countries. In honor of Ingvar’s memory, we thought we’d piece together some interesting facts about his life:
Fact #1: After years of selling matches, pens, and home decor, Ingvar started Ikea at the age of 17. I.K.E.A stood for the initials of his name, plus the initials of his family farm and village—Elmtaryd and Agunnaryd, respectively.
Fact #2: He would often travel to stores around the country and either pretend to be a customer, questioning sales associates, or pretend to be an employee and ask customers about their experiences. Call him the OG Undercover Boss.
Fact #3: Not everyone fell for Ingvar’s charm. For years he became fascinated with fascism and even help raised money for Swedish Nationalist movements. Ingvar apologized later in life for his involvement saying, “[it was] a part of my life I bitterly regret.”
Fact #4: With over 200 million copies distributed each year, Ikea’s catalog is as popular as the Bible and the Quran.
What Else Is Happening…
- Of course there’s a black market for buying social media followers.
- The BBC is closing the wage gap by cutting its male journalists’ salaries.
- Saudi billionaire Prince Alwaleed bin Talal was released from detention.
- The U.S. International Trade Commission ruled against Boeing (and for Bombardier) in a high-profile trade dispute.
Economic Calendar
- Friday (Jan 26th) Earnings: Honeywell (+), Rockwell Collins (+)
- Monday Earnings: Lockheed Martin
- Tuesday Earnings: AMD, Aetna, Electronic Arts, McDonald’s, Pfizer
- Wednesday Earnings: AT&T, Boeing, eBay, Facebook, Microsoft, Mondelez, Nasdaq, PayPal, Qualcomm, Textron, Xerox
- Thursday Earnings: Alibaba, Alphabet, Amazon, Apple, DowDuPont, GoPro, Mattel, Royal Dutch Shell, Time Warner, Visa
- Friday Earnings: Charter, Exxon, Merck, Sony, Sprint
Economic Events: Durable Goods (+), GDP (-)
Economic Events: Personal Income and Outlays
Economic Events: Consumer Confidence
Economic Events: Chicago PMI
Economic Events: Motor Vehicle Sales, PMI Mfg Index, ISM Mfg Index
Economic Events: Consumer Sentiment, Factory Orders
A Closer Look: The Music Industry Gets its Act Together
And the winner is…everyone?
While you were paying attention to your favorite music artists accepting their Grammy awards, they (or more likely, their lawyers) were paying attention to getting paid fairly and on time.
With the bipartisan Music Modernization Act garnering unprecedented industry support, music licensing and copyright laws may be getting a significant rewrite. One of the biggest updates: a public database that helps match songs with their rightful owners. What does that mean? For songwriters, bigger and faster royalty checks.
So what’s the catch? There...isn’t one. Which is surprising considering the the years-long riffs between artists, record labels, and streaming companies like Pandora and Spotify—the latter, the subject of a $1.6 billion copyright lawsuit in December.
Instead, this bill (currently in the House and Senate) is just another step toward harmony in the music world, following recent announcements of licensing deals between Facebook and Universal; YouTube, Universal, and Sony; and YouTube and the American Society of Composers, Authors and Publishers (ASCAP) to ensure artists get paid for the use of their music on the video platform.
We’re adding this collaboration to our “Game Changing” playlist—right after “We Are the World.”
The Breakroom
Question of the Day
Use addition, subtraction, multiplication, division, and parentheses to make the following equation hold:
9 8 7 6 5 4 3 2 1=2001
You can't use two or more of the digits to make multiple-digit numbers (i.e. solutions like (987+6-5+4*3)*2+1=2001 are not allowed.)
(Answer located at the bottom of newsletter)
Business Trivia
Who was younger when he first took his company public: Mark Zuckerberg (Facebook) or Michael Dell (Dell)?
(Answer located at the bottom of newsletter)
Stat of the Day
10,000—Expected applicants for an upcoming online course in flying car engineering, offered by Silicon Valley e-learning company Udacity. We’d go back to school for that.
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Breakroom Answers
Question of the Day: 9*8*(7+6*5)/4*3+2+1=2001
Business Trivia: Michael Dell (23). Zuckerberg was 28
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