Good morning, and welcome to Feedback Friday.
We received lots of response to last Friday’s post, which included some of the pithy pointers provided by CEOs to our Fortune 500 CEO survey question asking: “What’s the best management advice you ever received?”
I asked those who thought they had better bits of advice than that coming from the big dogs to send them my way. And they did, in spades. A sampling below:
From MN: “When in doubt, remember what you want in your retirement speech.” (Cisco CEO John Chambers proffered me a similar piece of advice.)
From AC: “Be Bold, and step out of your comfort zone.”
From TN: “In a boxing match, it is not over when you fall down. It is over when you don’t get up.”
From TS, but attributed to Richard Branson: “Train your people so they can get a job anywhere; treat them so they won’t want to leave.”
From GM: “Common sense and street smarts trump brains.”
From MD: “Control the controllable.”
From SS: “Go to lunch with someone every day—relationships are important.”
From PS: “If it’s a yes, it’s a yes. If it’s a maybe, it’s a no.”
From TT: “Pray without ceasing.”
More news below. I’ll be on vacation next week, and Geoffrey Smith will take over the top.
• Tech industry sell-off resumes
Tech stocks resumed their sell-off Thursday, despite a brief respite a day earlier. By mid-day on Thursday, the market capitalization of the so-called FAANG stocks had fallen by about $38.8 billion in total. Facebook shares dipped as much as 2.6% in trading. Apple’s shares fell as much as 2%, Amazon shed 2.7%, Netflix lost as much as 3.3%, while Google’s parent company Alphabet fell as much as 2.9%. By the market’s close though, most had pared some of those losses. The sell-off first started last week, when a Goldman Sachs note sparked worries that investors had piled into tech stocks too much, and too fast. After all, the total market capitalization of all information technology stocks on the S&P 500 has risen $1.1 trillion over the past year—up 18%.
• Nike to trim jobs globally
The world’s largest athletic-gear company said it would cut about 1,400 jobs as part of a restructuring that comes in the wake of softening North America sales and a challenging climate for retail and apparel purveyors. On Thursday, the company said that in order to streamline Nike’s organization and essentially speed up any strategic initiatives the brand wants to pursue, it would cut the company’s global workforce by about 2%. Other changes include cutting production creation cycles in half and reducing the number of styles by 25%. Nike is in the midst of pursuing an ambitious sales target of achieving $50 billion in sales by 2020—a sharp increase from the $30.6 billion generated in fiscal 2015—but athletic-apparel sales have faced headwinds in the U.S. German sportswear maker Adidas has rebounded in recent quarters, which has put pressure on Nike as well.
• Dow-DuPont win approval to merge
DuPont and Dow Chemical have won U.S. antitrust approval to merge on condition that the companies sell certain crop protection products and other assets, according to a court filing on Thursday. The asset sales required by U.S. antitrust enforcers were similar to what the companies had agreed to give up in a deal they struck with European regulators in March. The deal is one of several big mergers by farm suppliers, and the antitrust approval was denounced by the National Farmers Union, which said that, ultimately, farmers would face higher costs. The Justice Department, however, said the asset sales would prevent price hikes or lost innovation. Dow and DuPont initially announced a deal at the end of 2015, in what was billed as an all-stock merger valued at $130 billion.
• Nestle mulls U.S. confectionery sale
Swiss-based food giant Nestle is weighing a possible sale for the company’s confectionery business, which generates over $920 million annually from the sale of popular brands including Butterfinger and SkinnyCow. The consumer-products giant said it had launched a strategic review that could result in the sale of several well-known, sugar-packed snacks including Baby Ruth, Raisinets, and Chunky. The review would also cover the international rights for the Crunch chocolate brand, but won’t incorporate Nestle’s Toll House baking products. Some Wall Street observers have said there is room for consolidation in confectionery, and one big deal almost occurred last year when Oreo maker Mondelez tried to buy Hershey, though that deal ultimately failed to materialize because the latter company wasn’t interested in the union.
• Kroger stung by competition
Profits at Kroger, the nation’s largest conventional grocery chain, are sliding as costs rise amid ever-tightening competition. Shares of the Cincinnati-based grocer fell 19% on Thursday, hitting a 52-week low, after the company cut its earnings guidance for the current quarter. Shares also slipped for Whole Foods, Walmart, and Target. Kroger was previously thought to be holding its own in an increasingly cutthroat market known for commanding very slim markets, but earlier this year it reported its first decline in same-store sales, a closely watched retail metric that tracks the health of stores open a year or more. The figure fell again in the most recent quarter. Newer competition is coming from all ends: Amazon.com is aiming to tackle the grocery aisle, while German-based Aldi is planning to open hundreds of new stores, and rival Lidl also plans to open its first supermarkets in the U.S. starting this year.
Around the Water Cooler
• Musk envisions a city on Mars
Tech billionaire Elon Musk wrote a new paper detailing his vision for a “self-sustaining city” on Mars that was published in the scientific journal New Space earlier this month and posted online this week. The 16-page commentary details ideas the SpaceX CEO has been mulling for years and most recently presented at the International Aeronautical Congress in Mexico last year. But now that his outline is available in print, the scientific community will be able to scrutinize the proposal. The main obstacle, Musk argues, is the high cost of transporting people to the red planet. Using traditional methods like the approach that was used to send men to the moon in 1969, Musk estimates that it would cost about $10 billion per ticket. “If we can get the cost of moving to Mars to be roughly equivalent to a median house price in the United States, which is around $200,000, then I think the probability of establishing a self-sustaining civilization is very high,” Musk writes.
• Netflix tops U.S. cable rivals on subscriber count
Streaming media has totally upended the entertainment landscape, and Netflix has led the charge, as shown by the fact that the popular streaming service’s U.S. subscriber base has doubled in just the past five years. Now, Netflix has claimed a major symbolic victory over the country’s biggest cable providers, with research showing that the streaming service now has more U.S. streaming subscribers (50.85 million) than the number of customers for the country’s largest cable companies (48.61 million). Netflix announced those subscriber totals as part of its most recent quarterly earnings report, while the cable industry numbers come from a study published last month by Leichtman Research Group, which estimated the combined subscriber base of the top six U.S. cable companies—including Comcast and Charter Communications—which represent the bulk of the U.S. cable industry.
Summaries by John Kell; firstname.lastname@example.org; @johnnerkell