I’ve been attending the annual meeting of the World Economic Forum in Davos on and off for more than two decades. As a journalist, it is irresistible, with hundreds of the world’s most interesting subjects squeezed into a small Alpine village, trudging about in snow boots.
But the forum has always struggled with purpose. Yes, everyone is here, but why? The organizers of the event declare a theme each year, but it is usually so vague and inclusive as to be meaningless: “The New Global Context” (2015), “The Reshaping of the World” (2014), “Resilient Dynamism” (2013).
This year is different. The topic is “Mastering the Fourth Industrial Revolution.” And in case there is any doubt about what that means, Klaus Schwab, the enterprising Swiss professor who created this über-gabfest, has written a useful primer on the subject. Historians can argue over professor Schwab’s numbering scheme, but there is no longer any question that the early 21st century is witnessing a set of economic and business changes of historic importance—characterized, as Schwab says, “by a much more ubiquitous and mobile Internet, by smaller and more powerful sensors that have become cheaper, and by artificial intelligence and machine learning.” Conversations in Davos this year revolve around this topic: How will this new industrial revolution transform business and the economy? How will it change the nature of work? What does it mean for jobs, inequality, and the environment?
Davos’s obsession is also FORTUNE’s. One fascinating aspect of the revolution is businesses that scale with unprecedented speed, because of low or zero costs at the margin. It’s that dynamic that has enabled the more than 170 startups on FORTUNE’s unicorn list to achieve valuations exceeding $1 billion in record time. With the market meltdown, however, many of those valuations are now being called into question, and Unicorn investors are wondering both whether and when they will get their money out.
William Cohan takes a deep look at the troubled IPO market in the February issue of our magazine. You can read his story online here.
More news below.
• Sharp Corp. takeover offer floated
Foxconn, the Taiwanese company that assembles the bulk of Apple’s iPhones, has offered to pay about $5.3 billion to buy troubled Japanese electronics maker Sharp Corp., The Wall Street Journal has reported. Sharp is reportedly set to also be reviewing a competing offer from a government-backed investment fund in Japan. Japanese officials have expressed worries about letting Sharp come under foreign control, citing the company’s technology in display panels. The WSJ says Innovation Network Corp. of Japan is the preferred buyer, though Foxconn is offering more and willing to shoulder all of Sharp’s debt.
Wall Street Journal (subscription required)
• News Corp denies Twitter rumors
Rupert Murdoch’s News Corp said rumors about the company’s interest in buying Twitter or building a stake in the social-media company were untrue. Those rumors sent Twitter’s shares climbing sharply on Wednesday, rising as much as 14% before paring some gains and closing up 4.1%. The stock rose from a record low after unconfirmed chatter of a possible deal, a rumor that intensified after a segment on CNBC. Twitter, which has been trying to make the site more engaging, already has several high-profile investors including former Microsoft CEO Steve Ballmer.
• Pearson to cut 10% of global workforce
The London-listed educational publisher announced plans to cut 4,000 jobs in response to falling sales in key markets such as the U.S., a move that comes after it already cut 5,000 positions in a previous restructuring over the last two years. Most of the latest cuts, which will cost the company over $450 million this year, will be in the U.S. textbook and testing business. The news sent shares jumping, as investors saw it as a sign that Pearson was addressing a likely long-term drop in print-focused educational materials.
• Dow stocks all in the red so far in 2016
The 30 companies that make up the Dow Jones Industrial Average are worth less today than they were when starting the new year, highlighting the broad declines that have stung U.S. stocks. Analysts are saying the broad declines reflect fears that the continued drop in commodity prices are signalling a weaker global economy than previously expected, though some say the worries are an overreaction that isn’t supported by underlying data.
• Citrix names a new CEO
The business software company on Wednesday appointed former Microsoft executive Kirill Tatarinov to the CEO role, hiring one of four executives who left Microsoft in June as part of a management overhaul driven by Satya Nadella. Before he worked at Microsoft, Tatarinov was also the chief technology officer of IT services company BMC. Citrix has been under pressure from activist investor Elliott Management to sell off parts of its business that Elliott believes are “non-core.” It is already planning to spin off the company’s GoToMeeting web conferencing unit later this year.
Around the Water Cooler
• Walmart plans massive raise
The world’s largest retailer will next month increase pay for more than 1.2 million employees in a move Walmart says will be one of the largest private-sector pay increases in history. The hike, which will help lift the average hourly full-time rate to $13.38 in 2016, will take effect on February 20. Walmart’s pay increases are part of a two-year investment that has yielded better customer service scores and higher sales at the company’s U.S. stores, though profit has come under pressure due to that investment.
• How Michigan created the Flint crisis
One national story that should be on everyone’s radar is an ongoing crisis that has led to the lead poisoning of one of Michigan’s largest cities, Flint. Governor Rick Snyder has placed the blame primarily on the state’s Department of Environmental Quality, the agency responsible for ensuring the safety of water supply when Flint disconnected from the Detroit Water Authority and began to draw from the Flint River. Fortune has put together a comprehensive timeline and thorough web story to help explain why Flint was hit by this crisis.
• GM could be a problem for Uber
Just two weeks after General Motors announced it was working with Lyft on a network of self-driving cars, the auto maker bought the intellectual property and staff from a recently defunct ride-sharing company called Sidecar. Wired points out a 14-year-old patent held by Sidecar could be problematic for Uber, as it predates any patent filed by Uber and Lyft – though Sidecar never went to court over the issue. Separately, Fortune reported on Thursday that GM would launch its own new car-sharing service called Maven.