Trump Backs Brexit
It’s hard to avoid the feeling this morning that we are all bit players in Donald Trump’s reality TV show. A few headlines:
-Trump said Britain would be “better off without” the European Union – but politely added: “I want them to make their own decision.”
-Paul Ryan says he’s “not ready” to endorse Donald Trump, prompting Trump to put out a release saying he’s not ready to support Paul Ryan.
-Ben Carson, who is heading up Trump’s vice presidential search, said the pick might be a Democrat – prompting Ben Carson’s spokesperson to say Mr. Carson “fully expects Mr. Trump to choose a Republican.”
-Mitt Romney, John McCain, George W. Bush, and George H.W. Bush all said they won’t be attending the Republican convention this year. That means the only Republican party standard bearer from the last seven elections who will be in Cleveland is Bob Dole – and he hasn’t committed to voting for Trump in November.
If you think you know how this show ends, I’d recommend reading Politico’s piece: The Twelve Signs Trump Will Win the White House, here.
More news below. And for further evidence that reality is so much stranger than fiction, read the first installment of Peter Elkind’s The Disturbing Decline of Sumner Redstone.
• Mr. Cook Goes to Beijing
You can’t say Tim Cook doesn’t listen to his shareholders. A week after Carl Icahn sold out of his multi-billion dollar position in Apple due to concerns about the threat to its business in China from government intervention, Cook is heading to Beijing. Reuters reports that the Apple CEO will meet with senior government officials, including those charged with monitoring the country’s media sector, during the visit. It’s not the first time Cook has traveled there, but the timing is interesting, to say the least. Xi Jinping’s administration has become increasingly sensitive recently towards foreign technology companies, fearful that they could undermine the Communist Party’s control of local media. It shut down the company’s book and online music stores in China last month. Apple hasn’t yet confirmed the report. Fortune
• …While Mr. Abe Heads to Sochi
Japanese Prime Minister Shinzo Abe is paying Vladimir Putin an official visit today, despite a personal plea from President Barack Obama and diplomatic pressure from the rest of the G7 not to. Dependent on imported energy and directly opposite North Korea and an increasingly assertive China, ignoring and isolating Russia comes at a high cost for Japan, which needs all the friends it can get in that neighborhood. With Italy’s Prime Minister Matteo Renzi also due to visit Russia next month, and with constant pressure from French and German business lobbies, the White House-led campaign to isolate and pressure Putin in the wake of his Ukrainian adventure appears to be slowly coming apart. Any hopes that low oil prices would achieve what diplomatic pressure couldn’t are also fading: the IMF said Friday the worst is probably over for Russia’s economy, although it may not return to growth till next year. Bloomberg
• SpaceX Scores Another Successful Landing
Just under a month after SpaceX finally managed to land the first stage of a Falcon 9 rocket on a floating drone ship, Elon Musk’s space company has done it again. And this time, it landed its rocket under tougher conditions. Compared with the April descent, this time the first stage was coming in faster and heating up more. This was because it had to take its payload higher —the first payload was only going up to the International Space Station, which has an altitude of around 250 miles, but this time it was sending a satellite around 22,000 miles up. It’s an important milestone because being able to reuse rockets is the primary point of this exercise: it would drastically lower the cost of sending stuff into space. For Musk, it also has the valuable side-effect of demonstrating his ability to deliver head-spinning technological achievements at a time when he’s looking to raise money for another one—the mass production of affordable electric vehicles. Fortune
• Light at the End of the Tunnel for Herbalife
Herbalife said it’s close to settling with the Federal Trade Commission over a probe into its business practices, estimating the likely cost of the settlement at $200 million. That’s well below the worst-case estimate and the company’s shares rose over 14% in after-hours trading to reflect that. The news will be an unwelcome development for activist investor Bill Ackman, who has tried to prove that the company runs a pyramid scheme and who has backed his campaign with a $1 billion short position against it. The company isn’t out of the woods entirely: the FTC said the settlement could force Herbalife to change its business practices. But the signs are that consumers appear to have remained loyal: sales in North America rose 8.5% in the first quarter, allowing it to raise its profit forecast for the full year slightly. Fortune
Around the Water Cooler
• GoPro’s Bad Karma
Another setback for GoPro, the action-camera maker beloved of thrill-seekers: it won’t be bringing its much-anticipated ‘Karma’ drone to market until the holiday season. CEO Nick Woodman admitted as much in a conference call yesterday, having previously guided for a launch date in the first half of this year. The company also confirmed what its investors had feared about its first-quarter performance, as losses widened seven-fold to $107.5 million on an eye-watering 50% year-on-year drop in sales. The company’s shares have lost over 90% from their 2014 high, in a salutary warning about the risks of executing constant improvements in short-cycle consumer-focused tech. Fortune
• Apple Ties up with SAP
Apple is roping in another business technology giant in an effort to make the iPhone and iPad more essential tools for executives. The company announced Thursday it will partner with German enterprise software company SAP to incorporate apps tailored for its mobile devices. SAP, for its part, will create a new software development kit that corporate developers can use to build their own iOS apps for their companies. The new software development kit will let coders build corporate software powered by SAP’s HANA database technology. Apple already has a similar partnership with IBM (which has led to over 100 new apps being built). The move looks like another effort to wring incremental benefits out of innovations whose initial, transformative impact on people’s lives has faded. Fortune
• Toshiba’s New Broom
Toshiba nominated Satoshi Tsunakawa, a former head of its medical equipment division, to be its next chief executive officer, in what it hopes will draw a line under its damaging accounting scandal. Sixty-year-old Tsunakawa, who was not embroiled in the mess over the creative accounting that hid the woes of Toshiba’s nuclear business, is credited with having grown the medical equipment unit into a major profit driver. Tsunakawa told a press conference he “would place the most immediate priority on beefing up the capital base,” which suggests that either more asset disposals or a cash call on shareholders may be on the way. Interestingly, Shigenori Shiga, who was chairman of Westinghouse when it was booking the losses that Toshiba was too scared to disclose, was nominated to become group chairman. Tsunakawa said his experience in negotiations with the government and utility firms was indispensable. Fortune
• Amazon Squeezes the Couriers
Amazon is really putting the squeeze on Fedex and UPS. It said Thursday it intends to take a stake of up to 30% in Atlas Air Worldwide Holdings, a large cargo carrier, in an effort to control more of the delivery process (and hence the value chain of its business). It’s the second such deal for Jeff Bezos’ company in short order, following one in March with Air Transport Services Group. In addition to the planes that Amazon will be getting, Atlas also operates a leasing operation that supplies customers with airplanes flight crews and maintenance, all of which will increase its ability to handle flexible workloads with the lowest possible inventory and fixed costs. Atlas owned or leased 49 planes as of the end of last year, and will add another 20, under the terms of the deal. A further boost for Amazon is that the up-front costs of the deal are minimal, having been structured through warrants and options. Bloomberg