Business News at a Glance
Posted July 25, 2018 10:21 p.m. EDT
Facebook Starts Paying a Price for Scandals
After appearing bulletproof despite a series of scandals, Facebook reported Wednesday that growth in its digital advertising sales and in the number of its users had decelerated in the second quarter. Shares of Facebook tumbled more than 23 percent in after-hours trading, erasing more than $120 billion in market value in less than two hours. In the months ahead, CEO Mark Zuckerberg and other Facebook leaders said profits would most likely take a hit because the company planned to spend more on security, and revenue growth would decline because Facebook will give people more privacy settings to limit the kinds of ads they saw.
Automakers Say Year’s Outlook Is Weaker, and Stocks Plummet
Detroit’s Big 3 automakers — General Motors, Ford Motor and Fiat Chrysler — all issued downward revisions Wednesday in their 2018 financial forecasts, with each highlighting rising commodities costs that stem in part from the steel and aluminum tariffs imposed by the Trump administration. The adjustments sent their shares down sharply. Ford recorded the worst showing of the three, as net income fell by nearly half to $1.1 billion from the same period ago. GM said its pretax profit fell 13.3 percent to $3.2 billion, while Fiat Chrysler said it now expects adjusted pretax profit to drop up to 14 percent from its June 1 forecast.
Qualcomm Plans to Drop $44 Billion NXP Deal, Blaming China Inaction After Tariffs
Qualcomm said Wednesday that it expected to call off its $44 billion deal to buy the Dutch chip maker NXP Semiconductors after Chinese regulators did not approve the transaction amid a trade war between Washington and Beijing. Qualcomm also said it would follow through with previously signaled plans to buy back up to $30 billion of its stock ito lift its share price. The transaction failed after a series of trade moves by the Trump administration, including tariffs on Chinese goods, and retaliatory measures from China. Trade experts said China appeared to be withholding approval of the Qualcomm deal to gain negotiating leverage.
Ryanair, Long Opposed to Unions, Grapples With Strikes in Europe
Ryanair cabin crews in several European countries went on strike Wednesday, the start of a planned two days of industrial action that has forced the low-cost carrier to cancel hundreds of flights, affecting around 50,000 passengers. The strike — the biggest that Ryanair has had — highlights the shifting fortunes of the Irish carrier. Ryanair made its name by cutting costs and vociferously opposing union membership, but it now faces challenges as profits have fallen, rivals from Eastern Europe are competing for customers and employees are striking with complaints about low pay, contracts with insufficient employment rights and a punishing workplace culture.
Giving In to China, U.S. Airlines Drop Taiwan (in Name at Least)
Bowing to pressure from China, American Airlines, Delta Air Lines and United Airlines began to remove references to Taiwan as a separate country from their websites Wednesday. American, which was the first to make the switch, listed Taipei Taoyuan International Airport, the main airport in Taiwan's capital city, as a destination for travelers looking to book a flight on its website, with no reference to Taiwan. Delta listed only Taipei and the code for the city’s airports. China, which regards the self-ruled democratic island of Taiwan as a breakaway province, wants airlines to drop references to Taiwan as a separate country.
Waymo Teams Up With Walmart, Avis and Others for Short Driverless Rides
Waymo, Google’s autonomous-vehicle spinoff, said Wednesday that it teamed up with five companies, including Walmart, Avis and AutoNation, to offer rides in its self-driving cars in the Phoenix area. The partnerships hint at Waymo’s plans for fusing its technology into people’s everyday lives by transporting them between their homes and stores, restaurants or other nearby destinations. The company’s arrangement with Walmart will allow shoppers who buy groceries online to summon a Waymo vehicle to shuttle them to a store to pick up their orders.