CEO Daily: Tuesday, 23rd May

Good morning.

Mark Fields’ ouster as CEO of Ford yesterday is another example, if anyone needed one, of just how hard it is to lead a company in the midst of disruptive change. The auto industry is actually riding the waves of three separate disruptions, all at the same time: electric engines, ride sharing, and autonomous vehicles. Fields enthusiastically embraced all three, investing in a Silicon Valley research center, becoming a regular at the CES tech fest, and talking of making Ford a “mobility company,” with one foot firmly in the present and one boldly in the future.

But shareholders weren’t buying it. The stock was down 40% since he became CEO, and Tesla recently surpassed Ford in market cap—despite the fact that Ford made $4.6 billion last year, while Tesla lost more than half a billion. (Here’s what Fields told Fortune recently about that.) Apparently, the markets will listen to Elon Musk’s futuristic musings all day long, but Fields’ were seen as a distraction from the business at hand. Company chairman Bill Ford told the Wall Street Journal he feared the “one foot in today one foot in tomorrow” mantra may have splintered the company culture. “We don’t want competing groups,” he said. “We don’t want one group to feel like they’re the cool group and the other group is left out.”

There’s lots of coverage on this this morning, but my favorite is this piece from Wired. It notes that while Fields talked of making Ford a “mobility” company, the company’s efforts sometimes “felt like tactics in search of a strategy.” And it’s unclear how naming the head of its “smart mobility” unit, Jim Hackett, to replace Fields will solve that.

“If there’s one takeaway from Ford ditching Fields,” Wired concludes, “it’s that in our current transportation environment, ‘mobility’ isn’t so much a strategy as it is a euphemism for ‘we have no idea what’s happening next.’”

More news below.

Alan Murray
@@alansmurray
alan.murray@fortune.com

Top News

•  Trump Rolls Out Budget Proposal

President Donald Trump will release a federal budget proposal on Tuesday that would slash spending by at least $3.6 billion over the next decade while taking particular aim at various social safety-net programs such as Medicaid and the federal Children’s Health Insurance Program. The president says the proposal would balance the federal budget within a decade with lower spending and support from the White House's planned tax reform. The plan's nearly $4.1 trillion request for 2018 calls for multi-billion dollar increases to the budgets for Homeland Security and the Pentagon next year, though defense spending remains mostly unchanged in subsequent years. The White House will reportedly face opposition to the budget proposal from both sides of the aisle, with Democrats likely to be strongly opposed to the social welfare cuts while various factions within the GOP could also push back on the plan. Washington Post

•  Trump, U.K.'s May Respond to Manchester Attack

On Tuesday morning, President Trump offered his condolences to the victims of Monday night's suspected terror attack at an Ariana Grande concert in Manchester, England, which reportedly killed 22 people while injuring dozens of others. Speaking from the West Bank after a meeting with Palestinian President Mahmoud Abbas, Trump said that the U.S. stands in "absolute solidarity" with the British people and he called the perpetrators of the attack "evil losers." Meanwhile, British Prime Minister Theresa May confirmed that the bombing is being treated as a terrorist attack by authorities and said that terrorists and extremists "must be driven out of our society forever." Reuters

Experts Link WannaCry Ransomware Attack to North Korea

Cybersecurity firms Symantec and FireEye on Monday said they have evidence suggesting that a hacking group affiliated with North Korea was behind the massive "WannaCry" ransomware attack that affected more than 300,000 computers worldwide earlier this month. Researchers said that they found multiple instances of the same code from this month's attack being used in previous activity by the group called Lazarus, which has ties to the government and private companies in North Korea and was also linked to the massive hack at Sony Pictures in 2014. North Korea has consistently denied any involvement in previous cyber attacks and the country on Monday called reports linking it to WannaCry "a dirty and despicable smear campaign."  Reuters

•  AT&T Strikers Return to Work

Thousands of striking AT&T employees returned to work on Monday after a three-day stoppage forced the telecommunications giant to close hundreds of stores over the weekend. The company's wireless employees have been working without a contract since February, while thousands of employees in AT&T's traditional telephone and Internet divisions have lacked new contracts for over a year. Wage increases, healthcare charges, and the threat of outsourcing are among the issues that have stalled negotiations between the company and its employees. Wireless workers, specifically, are also concerned about the company's sales commission structure.  Fortune

Around the Water Cooler

•  Zuckerberg: I'm Not Running for Office

Several months into a nationwide tour that's seen Mark Zuckerberg visit a Ford plant in Michigan and dine with a family in Ohio (among other stops), the Facebook CEO took the time on Monday to dispel a popular rumor about his possible political ambitions. In a Facebook post, Zuckerberg wrote that he has no plans to run for public office, with the tech mogul reiterating that his tour is merely the fulfillment of his latest personal challenge: to visit every U.S. state where he hasn't spent a lot of time before in 2017. Many people have speculated that Zuckerberg's national tour could set the stage for a potential political run, but the Facebook CEO swatted away those rumors in his post. "I'm doing it to get a broader perspective to make sure we're best serving our community of almost 2 billion people at Facebook and doing the best work to promote equal opportunity at the Chan Zuckerberg Initiative," he wrote.  Fortune

•  Can China Save Hollywood?

Hollywood had a record year in 2016 in terms of total domestic box office grosses, but the North American movie industry is also dealing with shrinking audiences as the number of actual tickets sold annually has dipped by 80 million over the past decade. (Higher ticket prices mean that overall sales continue to climb.) That still leaves Hollywood with a problem, but it's one that China's rapidly-growing movie market may help solve. Last year, China added 7,500 new movie screens to pass the total in the U.S. (more than 40,000) for the first time. In the near future, China is also expected to overtake the U.S. to become the world's largest movie market after seeing 144% box-office revenue growth since 2012. U.S. movie studios are well aware of China's value, which is why more and more movies are being made with the country's audiences in mind. Fortune

•  CBS Extends CEO Moonves' Contract Through 2021

CBS has reached an agreement on a two-year contract extension with CEO Leslie Moonves, who will stay in that role through at least June 2021 at an annual salary of about $3.5 million. Moonves has served as CEO of CBS since the company split from Viacom in 2006. Last year, the family of media mogul Sumner Redstone, which holds majority stakes in both Viacom and CBS, called off an effort to bring the two media entities back together amid financial struggles at Viacom. Wall Street Journal, subscription required

Supreme Court Delivers Blow to Patent Trolls in Texas

The U.S. Supreme Court on Monday overturned a lower court's previous ruling and said that patent owners must bring lawsuits against infringing companies in the districts where they are incorporated. The ruling, written by Justice Clarence Thomas, represents a blow to so-called "patent trolls," which are shell companies that exist solely for the purpose of acquiring patents in order to bring lawsuits against companies that infringe upon those patents. By no longer allowing patent trolls to pick and choose the districts where they bring such lawsuits, the Supreme Court is making it more difficult for those companies to seek out the venues that are most friendly to their cause, such as East Texas, where juries have been known to hand out favorable verdicts to shell companies in patent cases. Fortune

Summaries by Tom Huddleston, Jr.; tom.huddleston@fortune.com @tjhuddle

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