business news in context, analysis with attitude

Published on: November 11, 2022

I got some legitimate pushback on yesterday's FaceTime, which talked about companies with purpose and c-suites that have added Chief Purpose Officers to their roster.  Some thoughts…

Published on: November 11, 2022

The Wall Street Journal reports that Amazon CEO Andy Jassy has launched a "cost-cutting review of the tech giant and paring back on businesses at the company that haven’t been profitable."

According to the story, "The review reflects Mr. Jassy’s intense interest in reducing expenses and focus on profits in recent months, some of the people said. Amazon has lost $3 billion this year after posting net income of about $33 billion in 2021 and $21 billion in 2020."

Among the components being evaluated is the Alexa business, which "has more than 10,000 employees and is a major recipient of investment capital."  However, the Journal says that "Amazon’s devices unit, which includes Alexa, had an operating loss of more than $5 billion a year.

"The company is currently considering whether it should focus on trying to add new capabilities to Alexa, a voice assistant available on a variety of Amazon devices. Adding capabilities would require greater investment, and many customers use the device for only a few functions."

The Journal writes that "as part of the monthslong cost-cutting review, Amazon has told employees in certain unprofitable divisions to look for jobs elsewhere in the company, because the teams they were working on were being suspended or closed."

The announcement was certainly was good for Amazon's stock price, which saw a 12 percent gain after the Journal story came out;  Amazon's stock price was down 48 percent since the beginning of the year.

Bloomberg adds to the story:

"Amazon said Thursday that it remains confident in its overall operations, as well as initiatives such as Prime Video, Alexa, Grocery, Kuiper, Zoox and its health-care efforts. 

Most big tech companies are hitting the brakes on hiring plans, but Amazon is dealing with an especially severe pandemic hangover. The company almost doubled its headcount during Covid-19 restrictions to handle a surge in orders from home-bound consumers.

"When shoppers returned to their previous habits this year, Amazon had to pare back its logistics operations. As the economic outlook darkened and it became clear that a slowdown in online sales growth was here to stay, the cutbacks spread to Amazon’s corporate offices."

In related news, the Boston Globe reports that "Bedford-based iRobot has laid off employees and plans to trim its real estate footprint in an effort to cut costs, as the maker of the Roomba vacuum faces declining revenue and a pending acquisition by Amazon.

'The company said in a regulatory filing Thursday that it terminated about 100 employees, or 8 percent of its workforce, in August and eliminated a 'number of open positions.'  When iRobot originally announced the Amazon acquisition on Aug. 5, it hinted that future layoffs would affect about 10 percent of its workforce."

Also, to keep things in perspective, Amazon still is moving forward.  Bloomberg reports that Amazon "unveiled a new delivery drone design on Thursday that’s smaller, makes less noise and can fly through light rain, the latest effort to get the troubled and long-developing project off the ground.  The company has spent nearly a decade pursuing founder Jeff Bezos’ vision of autonomous drones that can deliver a package weighing less than 5 pounds as little as 30 minutes after a customer places an order. Beyond speeding delivery times, drones could significantly cut the cost of delivery which still mostly requires a person driving a vehicle to someone’s home.

"The new drone, dubbed MK30, will go into service in 2024 and replace the existing MK27-2, the model that will be used to make deliveries in Lockeford, California, and College Station, Texas, this year. The new unit has a longer range, can fly in a wider range of temperatures and has new safety features, Amazon said."

Published on: November 11, 2022

The Seattle Times reports that "Albertsons’ investors hoping for their share of a promised $4 billion payment must wait at least another week for a payout bound up in a controversial merger with rival Kroger. 

"On Thursday, King County Superior Court Judge Ken Schubert extended through Nov. 17 a week-old restraining order on the payment. Schubert added the extra week in part so state lawyers could better prepare their claim that the payment would weaken Albertsons and potentially void the nearly $25 billion merger, which was announced last month."

At the hearing, the Times reports, "Schubert pushed Albertsons and Kroger to share more information about the connection between the dividend and the merger, which would unite two of America’s largest grocery retailers … Schubert also wants the companies to fully comply with the state’s request for board minutes and other internal communications about the impact of the dividend."

Earlier this week, a US federal court judge refused to temporarily block the $4 billion dividend payment, rejecting arguments made by the attorneys general of California, Illinois and Washington D.C who sought to block the payout until antitrust reviews of the proposed merger were completed.

However, the Washington Post reports that the Oregon attorney general’s office also has "sent a letter to Albertsons requesting documents regarding the merger proposal and a related move to take $4 billion out of Albertsons and return it to shareholder … The attorney general’s office 'intends to fully investigate all the conduct of individuals and entities involved in negotiation and determining the 'special dividend'.'"

Published on: November 11, 2022

Bloomberg reports that Target built a new store in Katy, Texas, that offers a blueprint for a larger format in which the backroom is "devoted to handling online orders for same-day pickup," and "is five times as large as at stores of a similar size."

The new store is 150,000 square feet, about 20,000 square feet larger than Target's average unit.  According to the story, "Target is betting that the new blueprint will boost its strategy of using stores as fulfillment hubs for digital orders — an approach that gained ground during the pandemic. Next year, the retailer will incorporate updated design elements into about 30 new locations of all sizes and half its planned 200 remodels and then expand their use in 2024."

Bloomberg also writes that "the new concept … is roomy enough to fit an expanded food section and outposts for partners such as Ulta Beauty Inc. and Walt Disney Co. It also adds large windows, plants and walls of reclaimed wood. The righthand entrance is designed to cater to customers looking to stay and shop for a while. It funnels shoppers by a Starbucks counter illuminated by natural light."

Published on: November 11, 2022

Bloomberg reports that "the US Federal Trade Commission plans to make wider use of its 1914 founding statute to police anticompetitive behavior by companies in the internet age," issuing a new policy statement signaling its intention to prevent “unfair methods of competition.

"FTC Chair Lina Khan said the policy, which re-affirms Section 5 of the FTC Act, will effectively reactivate the FTC’s authority to police conduct, especially in online markets."

“In the digital economy, we’ve seen time and time again, there’s a real premium for businesses to capture the market as quickly as they can,” Khan said. That “can lead businesses to play fast and loose with the rules.”

The National Grocers Association (NGA) responded to the announcement this way:

"NGA is encouraged by the FTC’s policy statement that price discrimination and abuses of market power, including violations of the Robinson-Patman Act, may violate section 5 of the FTC Act. In the generation that laws against economic discrimination have been ignored, dominant food retailers have grown bigger and bigger, taking advantage of their size to amass greater power, and in turn pressuring their suppliers and limiting customer options. We look forward to working closely with the FTC to ensure a diverse and competitively robust food retail marketplace that benefits stakeholders throughout the food supply chain, including independent community grocers, wholesalers, manufacturers, suppliers, farmers, and most importantly, consumers."

Published on: November 11, 2022

From Fox Business:

"Sears Holdings has emerged from bankruptcy after more than 10,000 court filings and a four-year stay that saw the department store chain shrink from almost 700 stores to less than two dozen.

"The bankruptcy estate’s reorganization plan took effect on Oct. 29, signaling an end to Chapter 11 and the start of a liquidation process for its remaining assets.

"Sears Holdings is a shell company. It sold its stores in February 2019 to ESL Investments, an affiliate of former Sears chair Eddie Lampert. The $5.2 billion sale included more than 400 retail locations."

Published on: November 11, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  The Boston Globe reports that "Boston city councilors on Wednesday called on Walgreens to postpone the closures of three Boston stores slated to shutter this week, and also asked the chain to refrain from opening any new stores in the city until they agree to halting the closures … The three Walgreens closing this week — the Nubian Square and Mattapan storefronts, as well as a location at 1329 Hyde Park Avenue — are all located overwhelmingly Black and Hispanic communities. The pharmacies are transferring patient files to other Walgreens locations, but each is at least a mile’s walk away."

Walgreens has not commented on the resolution.

Optics are lousy. Period. 

•  The New York Times reports that "KFC’s German branch has apologized for seeming to encourage its customers to mark the anniversary of Kristallnacht — the notorious Nazi pogrom against Jews — by eating chicken, saying that a promotional message was sent in error as a result of an automated push notification.

"The pogrom that began on Nov. 9, 1938, is known as the night of broken glass, and is widely commemorated as the start of the Holocaust. It was a coordinated assault on German Jews and their homes, businesses and synagogues.

"On Wednesday, KFC Germany sent a message to users of its app with the title 'Anniversary of the Reich’s pogrom night,' according to reports in the German news media and screen shots of the promotion that circulated widely on Twitter. The message invited customers to enjoy 'tender cheese with crispy chicken.'

"KFC Germany quickly followed up with an apology within the app for having sent what it called an 'incorrect” and “inappropriate' message. But criticism was swift and merciless."

This would've been seen as inappropriate under any circumstances, but at the moment, when anti-semitism is on the rise, sensitivities are acute.  As they should be.

I do have to wonder about the mindset of any person who would write those words.

Published on: November 11, 2022

I love this email:

Longtime reader, first time caller (writer?)!

I’d like to stay anonymous, but - 

I just thought I’d say that I also see lots of entitlement out there, but one place I don’t see it is at work. So, I thought I’d share something positive-

I work for The J.M. Smucker Co., and everything (and I mean everything) we do is driven by “Our Commitment to Each Other” and our “Basic Beliefs”. They are central to the culture at Smucker, and truly inform how we interact with each other. I know I’m biased since I’m a Smucker employee, but every person I’ve worked with at Smucker has been caring, selfless and kind, both at work and outside of work.

“Our Commitment to Each Other” asks us to say “thank you for a job well done”, to listen with our full attention, to look for the good in others, and to have a sense of humor.  Our “Basic Beliefs”  are to be bold (challenge the status quo), be kind, do the right thing, thrive together (make decisions with careful regard for each other, our communities, and our planet), and play to win (hold our work to the highest standards).

When your entire workforce lives and breathes these values, you end up with a pretty special environment. I’m lucky to be a part of it.

It’s also worth noting that Smucker just celebrated 125 years in business, and is on its 5th generation of family leadership. It’s estimated that less than half a percent of companies have survived 100 years, let alone 125. Maybe this is also an eye-opener?

Now that I sound sufficiently like a commercial, I’ll sign off. Thanks, KC, for all that you do at MNB.

Nothing like hearing from someone who is happy in their work, fully engaged with the company, and with no doubt about mission, purpose and priorities.

On another subject, from another reader:

As much as you are a baseball fan, you didn’t mention the Astros games over the weekend and the eventual World Series title. While the first trophy the Astros was questioned by many, on how they got the title, this one was well deserved by a team that came back time and time again. I may not live in HTown any more yet am a lifelong fan no matter where I hang my hat!

You're right.  I didn't.

The fact is, I took Monday off … which is the day that I normally would've posted something about the World Series, not to mention the weekend's NFL scores and the winners of the New York Marathon.

I thought about doing it on Tuesday, but it just seemed late.  I said to myself, "But you always post the sports results."  And then I said to myself, "Just because you 'always' do it is not a good enough reason to do it on Tuesday."

That said … congrats to your Houston Astros, and especially to Dusty Baker, the team's 75-year-old manager, who is getting his first championship ring.

Published on: November 11, 2022

In Thursday Night Football, the Carolina Panthers defeated the Atlanta Falcons 25-15.

Published on: November 11, 2022

In the hard-boiled American detective novel genre - which is different from the British mystery genre, and the thriller genre, and a number of other genres that people sometimes and misguidedly lump together - Michael Connelly's Harry Bosch is a singular creation.  While he has spent much of his career working as a homicide detective for the Los Angeles Police Department, Bosch shares a characteristic with the creations of such authors as Raymond Chandler, Ross Macdonald and Robert B. Parker - a powerful ethic that believes in justice, and that dictates his decisions and moves far more than rules and laws and superior officers.

Another remarkable thing about the Bosch novels is that they take place in real time - he was born in 1950, served in Vietnam, and has aged in the books at the same pace as he would in life.  This has allowed Connelly to use the novels to create an expansive and overarching narrative that uses Bosch as a prism through which to view Southern California, changes to the perception of justice and the administering of law and order.  Which is not to say that Bosch is in any way a cipher.  He's not.  From his house perched in the Hollywood Hills (paid for by money he earned as a consultant on a miniseries about one of his cases) to his ancient Jeep Cherokee to the the jazz he plays on turntable that serves as a kind of soundtrack to his life, Bosch is a unique combination of romance and disillusionment, believing in his own ability to find and deliver justice, but without much faith in a system that constantly disappoints him.

All of which is a long lad-up to "Desert Star," the latest Bosch novel, out just this week.  As Bosch has aged - he's now in his early seventies, and enjoys "being the cranky old ex-cop in the neighborhood whom people were afraid to approach" - Connelly has teamed him up with Renée Ballard, a much younger detective who made her debut in 2017's "The Late Show."  The Ballard connection allows Bosch to continue to function in law enforcement, sometimes as mentor, sometimes as much more, without stretching credibility or time lines.

In "Desert Star," Ballard has been put in charge of a cold case unit, and asks Bosch to join as a volunteer;   she believes that his experience and instincts will serve the unit well.  He agrees, understanding that the top priority will be a case with political implications, though he also wants the opportunity to reengage with a murder case  from decades before that he was unable to solve - the brutal murder of a family of four.

Connelly's magic is that we know everything we need to know by page eight, and then we're off to the races in a novel that is the very definition of a page turner, filled with intrigue, a smattering of violence, an occasional dissection of social conventions, and a melancholy portrait of an aging lion who continues to believe, despite considerable evidence, that "everybody counts, or nobody counts."

"Desert Star" is great Connelly and great Bosch.  It manages to be simultaneously propulsive and elegiac.  Get it and read it.

Back in the seventies and the eighties, author Gregory Mcdonald published nine mystery novels about IM Fletcher, known as "Fletch," a sometime investigative reporter.  I haven't read them since they first came out, and remember having mixed emotions about two movies featuring the character that starred Chevy Chase:  Fletch was pretty good, and Fletch Lives was something of a mess, probably because they did't use any of McDonald's original material.  

Now, we've got Confess, Fletch from Showtime, starring Jon Hamm in the title role.  It strikes me as closer in tone to what I remember of the books, and Hamm is amiably charming as Fletch.  The movies also benefits from supporting turns by Roy Wood Jr. and Ayden Mayeri (as police detectives), Marcia Gay Harden (very funny as an Italian countess), and especially John Slattery (Hamm's old "Mad Men" costar, who here plays his former editor and boss).

Confess, Fletch isn't great moviemaking, but it is both fun and funny - a mystery in a minor key that is a comfortable way to spend 98 minutes.

That's it for this week.  Have a great weekend, and I'll see you Monday.

Sláinte!