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Elon Musk Hits Back at Critics - The New York Times

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The electric carmaker reported a $105 million quarterly profit yesterday, giving boosters of the company more occasion to crow.

“The numbers suggest that Tesla has overcome the problems that plagued it in the first half of last year, when it lost more than $1 billion and scrambled to raise capital,” writes Niraj Chokshi of the NYT.

And production of its Model Y compact S.U.V. was ahead of schedule, the company said. Deliveries of the vehicle would begin in the spring, at least three months earlier than expected.

Shares in Tesla rose 12 percent in after-hours trading. The company’s market value is currently $104.7 billion, more than double that of traditional rivals like G.M. and BMW. (It also puts Elon Musk closer to fulfilling the requirements for a big bonus.)

Mr. Musk taunted critics yesterday, saying, “A lot of retail investors have deeper and more accurate insights than many of the big institutional investors.”

But there’s still plenty of fodder for doubters:

• Charley Grant of Heard on the Street notes that revenue for the quarter grew just 2 percent from the same time a year ago, while operating income fell 13 percent.

• And Tesla warned that car production would outstrip supply this year.

U.S. stocks are poised to open down today, after Asian and European markets fell amid more signs that the Chinese coronavirus outbreak is continuing to worsen.

Here’s the latest:

• The death count as of this morning stands at 170, while the number of cases has grown to 7,711 — officially more than in the SARS epidemic.

• Countries are quarantining people to prevent mass outbreaks.

• Google, Microsoft and Ikea are the latest companies to temporarily shutter offices or prevent employees from traveling to China.

S&P futures are down 20 points, while the Dow is set to fall nearly 140 points at market open today. Stocks in Hong Kong were down 2.6 percent, while those in Europe declined about 1 percent.

And China’s currency, the renminbi, slipped below 7 to the dollar for the first time this year.

It remains hard for businesses and political leaders to figure out their responses to the crisis. “Literally, we are evaluating on an ongoing basis in real time,” said a spokesman for Cummins, an engine maker with operations in China, “and I imagine other places are in the same position as we are.”

More: Stop hoarding face masks. That’s doing more harm than good.

Les Wexner, who has run the retail empire known as L Brands for 57 years, is in talks to relinquish his C.E.O. title, according to the WSJ and other media reports. His run has been dogged recently by both business underperformance and a longtime connection to the late financier Jeffrey Epstein.

The business angle: Shares in L Brands fell 29 percent last year, as sales at Victoria’s Secret have dropped amid changing beauty ideals among American women. (The NYT reports that the company is preparing for layoffs.)

The Epstein angle: Mr. Wexner had employed Mr. Epstein as his longtime financial adviser, giving him broad authority over his billions. Mr. Wexner has denied knowledge of alleged sexual abuse committed by Mr. Epstein.

Mr. Wexner has become an uncomfortable distraction to L Brands. He has already had to address his ties to Mr. Epstein to shareholders.

His departure could help L Brands sell a stake in Victoria’s Secret, raising money for the company, according to the FT. One potential investor is Sycamore Partners, a private equity firm specializing in retailers, the WSJ reports, citing unnamed sources.

Financial giants have made news recently by focusing more on environmental concerns in their investment decisions and threatening to sell shares in some offenders. But Greg Ip of the WSJ presents the argument for why that ultimately won’t amount to much.

• Big oil companies aren’t that dependent on stock market investors, Mr. Ip writes, since they “generate plenty of cash and don’t need to issue new equity or debt to finance capital spending; in fact, most are buying back stock.”

• If the largest banks stop financing oil exploration companies, regional ones would rush to replace them.

• And many oil producers are owned by sovereign governments and don’t need to bow to public opinion.

“Divestment isn’t going to shrink the fossil-fuel industry,” Mr. Ip adds. What will is “changing the underlying economics” through financing cleaner energy producers and governmental measures like carbon taxes.

More: Venture capitalists are conspicuously absent from this round of the climate change fight.

The internet giant yesterday reported a slowdown in revenue growth, something it had warned would happen. But it’s coming at a time when Facebook faces plenty of tough challenges.

The main points of Facebook’s latest earnings:

• Fourth-quarter revenue grew 25 percent, to $21.1 billion. That’s the slowest pace in Facebook’s history as a publicly traded company, according to the WSJ.

• Expenses also rose, reducing Facebook’s operating margin to 42 percent from 46 percent.

• Daily users of the core Facebook platform grew to 1.66 billion, beating analyst expectations of 1.65 billion.

But the company also said it would pay $550 million to settle a class-action lawsuit over its use of facial-recognition technology. It’s the latest sign of the legal headaches that continue to bedevil Facebook, which also include new regulations around the world.

Shares in Facebook fell 7 percent in after-hours trading yesterday, with investors worrying that the company has peaked and faces only downside now.

Yet some analysts think there’s reason for optimism. Rich Greenfield of Lightshed told Bloomberg that Facebook’s business model “is not broken.” And Tim Culpan of Bloomberg Opinion thinks the company can make more money from its overseas users.

The billionaire announced an end to his 43-year career as a newspaper owner yesterday when Berkshire Hathaway agreed to sell its 31 papers to Lee Enterprises for $140 million in cash, Michael de la Merced of the NYT reports.

The papers being sold include The Buffalo News, which Berkshire bought in 1977, and 30 other papers that Mr. Buffett had acquired over the past decade, including a collection of publishers in Virginia.

Mr. Buffett is bowing to reality. In an interview last year, he said that most papers were “toast” because of falling ad sales — a sharp turnaround from his declaration in 2012 that he was an “addict” who wanted to keep buying newspapers.

But he’s still going to profit from the news industry. Berkshire will lend Lee $576 million, some of which will pay for the newspaper deal, at a 9 percent annual interest rate.

Yusaku Maezawa has backed out of an online documentary detailing his search for a girlfriend to take on his trip around the moon on SpaceX’s inaugural tourism flight.

“Due to personal reasons, I have informed AbemaTV yesterday with my decision to no longer participate in the matchmaking documentary,” he tweeted this morning.

Deals

• The casino operator Penn National agreed to buy a 36 percent stake in Barstool Sports, the popular website, for $163 million. (CNBC)

• AT&T’s latest quarterly results show the company is still trying to justify its $85 billion takeover of Time Warner. (Bloomberg Opinion)

• The investment bank Evercore plans to lay off up to 6 percent of its employees. (Bloomberg)

• The parent company of MoviePass filed for bankruptcy. (Business Insider)

Politics and policy

• President Trump signed into law the new North American free trade deal known as the U.S.M.C.A. (NYT)

• The European Parliament approved Britain’s withdrawal from the E.U. yesterday. (NYT)

• Mike Bloomberg’s latest attack on President Trump: health insurance protections for people with pre-existing conditions. (NYT)

Tech

• The E.U. recommended that its members put limits on using Huawei in their 5G wireless networks — but not ban the Chinese company outright. (NYT)

• Apple and Broadcom were ordered to pay $1.1 billion in damages for infringing on Caltech patents on Wi-Fi technology. (Bloomberg)

• The ride-hailing service Lyft plans to lay off employees in its marketing and enterprise sales divisions. (NYT)

Best of the rest

• Boeing said that it expects costs tied to the 737 Max to surpass $18 billion. (NYT)

• U.S. life expectancy rose in 2018 for the first time in four years, in large part because of a decline in fatal drug overdoses. (Politico)

• Why you don’t need to be an accountant to be a modern C.F.O. (WSJ)

• Greta Thunberg wants to trademark her name to prevent commercial misuse. (Bloomberg)

We’d love your feedback. Please email thoughts and suggestions to business@nytimes.com.

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Elon Musk Hits Back at Critics - The New York Times
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