CEO Daily: Thursday, 10th November

This morning, we unveil Coins2Day’s Business Person of the Year, an annual exercise that starts with our data guru Scott DeCarlo scouring the numbers, to sort out which businesses have performed best over a one-year and three-year period, and then adds in our editors’ judgments about each leader’s strategy, vision, and general influence on the world of business.

This year, that process led us inevitably to a man who is only 32 years old, but has built a powerhouse company worth $375 billion with $22 billion in profits and close to 1.8 billion users: Facebook’s Mark Zuckerberg. His meteoric rise says something about the world in which we live – increasingly tied to the social networks at our fingertips – and also about the world of business, where digital companies can reach massive scale almost overnight. You can read Adam Lashinsky’s story on Zuckerberg’s unexpected management prowess here.

Number two on the list is another digital powerhouse, Amazon’s Jeff Bezos, who not only dominates the world of e-commerce, but whose Amazon Web Services is powering the transformation of business, and whose voice-controlled Amazon Echo is pioneering the new computer interface. Adam profiled Bezos in March, here.

And then there is number three, Mary Dillon, who became CEO of Ulta Beauty in mid-2013 and since then has doubled sales and profits, increased profit margins, and scored hefty gains in same store sales. She soared to the top of our numbers screen, and is the rare success story in what otherwise has been a gloomy decade for retail. You can read Phil Wahba’s September story on her here.

The full Business Person of the Year list is here.

More news below.

Top News

• The Trump Rally (an Occasional Series)

Asian and European stocks are flying this morning, Asia’s because they closed yesterday before the big U.S. Rally started, and Europe’s chiefly because bank stocks are surging in expectation that the Trump administration will end the post-crisis era of  ‘financial repression’,  a combination of low official interest rates and swingeing new regulations that force banks to hold more low-risk assets like Treasury bonds. Those bonds were dumped with gusto yesterday, with yields on 10- and 30-year issues swinging 0.3 percent intraday and ending at 10-month highs. Wall Street institutions were among the biggest winners yesterday on similar expectations of greater freedom and higher rates, but a one-for-one read-across to Europe seems a bit of a stretch: Trump hasn’t come to power on a mandate to help French and Italian industry, and if there’s no demand for five-year credit at 0.5%, we wonder how much there’ll be at 2%. Elsewhere, gold is off its highs while industrial metals are up strongly and crude futures are flat just above $45 a barrel. Don’t ask about the peso. Bloomberg

• Viacom Reminds Everyone What All the Fuss Was About

Box office flops and disruption of its cable TV offerings caused Viacom’s revenue and profit to slump in the third quarter, although the company still—just—managed to exceed analysts’ much-pruned forecasts on profit. Sequels to Zoolander and Teenage Mutant Ninja Turtles both failed badly during the summer. Viacom’s networks showed that pressure on advertizing revenue from new media is almost as acute as that faced by print media groups: domestic ad revenue fell 8%. Incoming CEO Bob Bakish didn’t say much to update on the status of its proposed merger with CBS, but hinted clearly at cutting the number of channels it operates. At present, a quarter of its channels (MTV, Nickelodeon, Nick Jr., Comedy Central, Spike and Paramount Channel) account for over 80% of revenues.    WSJ, subscription required

• Cities Vote for Soda Taxes

While speculation rages over what a Trump administration might do over the next four years, voters Tuesday already decided on a number of issues with a direct impact on business. One of the most ominous, at least for PepsiCo, Coca Cola and their rivals, was that voters in four major cities approved taxes on sugary drinks­--an indication that more taxes from local governments could be in the pipeline for the soda industry. The measures passed with over 60% support in San Francisco and Oakland. Albany, Ca. And Boulder, Co. Also passed similar measures, joining Philadelphia, which became the first major city to tax sodas earlier this year.   Coins2Day

• GM Will Lay Off 2,000 Workers in January

General Motors plans to lay off 2,000 employees at two U.S. Auto plants in early 2017, the automaker said on Wednesday. GM’s Lordstown, Ohio and Lansing, Michigan plants build slow-selling cars sold by Chevrolet and Cadillac. GM said it will furlough the employees when it cuts the third shift at both plants in January. The furlough is a response to what GM believes will be a continued shift from cars to crossovers and trucks. Sales of the models made at the two plants were down by 17% and 20% respectively through October. GM also promised to invest more than $900 million in three facilities at Toledo, Lansing and Bedford, Indiana, to prepare for future product programs.   Coins2Day

Around the Water Cooler

• Mylan Swings to Loss on Medicaid Settlement

Pharma stocks may have been among the biggest winners yesterday as the market priced in a lighter-touch regime for drug pricing under a Donald Trump Presidency, but the industry still has some issues to deal with in the short term. Mylan swung to a loss of $120 million in the three months to September, from a profit of $429 million a year earlier, after paying $465 million to settle allegations of overcharging Medicaid for its Epipen auto-injector. Revenue also fell slightly short of expectations, and it’s a reflection of the prevailing climate that the company didn’t give any forecast for revenue in 2017. In after-hours trading, the company’s shares gave up half of the 5% gains they had posted earlier in the day.  WSJ, subscription required

• Siemens to List Healthcare Business

Siemens, the German conglomerate, said it will spin off its health care operations into a separate company with an estimated value of $15 billion, after two years of wondering what to do with a business that didn’t fit into its new strategy. CEO Joe Kaeser said the timing would depend on market conditions. The move has been in the air since the company rebranded its most profitable unit ‘Healthineers’, dropping the Siemens name from its moniker. Like its rival GE, Siemens is trying to cut the ‘conglomerate discount’ on its stock by focusing on a smaller number of core businesses. Its shares rose over 4% on the news but still trade at only 16 times trailing earnings. Reuters

• SolarCity Pulls a Rabbit out of the Hat

SolarCity announced a surprise swing to profit in the third quarter, in what it clearly hoped would help disarm Tesla Motors shareholders who oppose the merger of the two companies because they think Tesla is being forced to bail out the rooftop solar energy company. The company didn’t quite dispel concerns that it’s burning through cash: total liabilities rose by $330 million, while cash only rose by $144 million. But the figures did suggest that it is making progress in transitioning from a leasing model to one where it lends customers the money to buy their installations outright. The latter model is now in vogue partly because costs have fallen, and partly because of federal tax credits. Only one of those factors looks sustainable after Tuesday. Coins2Day

• ‘Flash Crash’ Trader Convicted

Navinder Singh Sarao, the British day trader accused of causing the 2010 “Flash Crash”, pleaded guilty to manipulating commodities markets in a Chicago court. That made him the second person to be convicted for such manipulation since it was expressly outlawed as part of the Dodd-Frank act.  Sarao made some $40 million over a period of five years by ‘spoofing’—placing orders that he never intended to execute, and he agreed to forfeit $12.9 million in ill-earned gains from his trades. Sarao, who has severe Asperger’s Syndrome, was allowed to return home to the U.K. Until his sentencing on Feb. 9.   Bloomberg

Summaries by Geoffrey Smith, [email protected]

@geoffreytsmith