CEO Daily: Wednesday, October 7
While you were sleeping, Samsung threw a party. The company announced that its operating profit for the third quarter will be up 80% from a year earlier, to $6.29 billion, soaring past analysts’ estimates. The surge reflects improvement in its components business, rather than mobile phone sales. Favorable currency trends also played a role. The company’s stock jumped 9% in response.
Though it is the world’s largest tech company (number 13 on the Fortune Global 500), Samsung plays the Rodney Dangerfield role in this country, where the tech obsessed are dazed by the bright lights of the Apple store and wait breathlessly for Aaron Sorkin’s Steve Jobs biopic. Samsung has a reputation as a “fast follower” rather than an innovator, and is struggling to overcome that, as my colleague Adam Lashinsky chronicles in this recent story.
But give the company some credit for an innovation it brought to the U.S. just last week – Samsung Pay. Unlike other mobile payments systems, Samsung Pay uses “magnetic secure transmission” in which your payment information is transmitted from your cell phone via magnet. The beauty of the technology is that it works with most existing credit card readers. You just touch your phone against the place you normally swipe your card.
I saw this technology in action in Seoul last month, where it still leaves unaccustomed check-out clerks in stunned amazement. It’s a small step forward. But any company that simplifies life by making disparate technologies work better together has cred with me.
Enjoy the day. I’m off to San Francisco to celebrate this year’s class of 40 Under 40. You can meet them here.
• AB InBev unveils SABMiller offer
Anheuser-Busch InBev went public with an offer to buy rival SABMiller in a deal valued at $104.1 billion, a bid to combine the world's two largest brewers but also a transaction that will almost certainly result in U.S. divestitures if the companies were to merge. AB InBev said the latest proposal was the third it has made to SABMiller's board – a bid that is also supported by SABMiller's largest shareholder, U.S. tobacco giant Altria Group. WSJ (subscription required)
• UAW workers threaten strike
The United Auto Workers union could strike against Fiat Chrysler as soon as Wednesday, when a contract extension expires, if a new deal isn't reached. The UAW had proposed a deal recently but Fiat Chrysler workers voted against it, the first time auto workers have voted against a UAW-backed contract since 1982. What's the main sticking point? A two-tier wage structure that many members disapprove of. Fortune
• Volkswagen recalls to start in '16
Volkswagen is expecting to start a recall for cars affected by its diesel emissions crisis in January and hopes to complete the fix by the end of 2016. In an interview with a German newspaper, CEO Matthias Mueller said he believes only a few employees were involved in the diesel emissions rigging that has punished the company's stock, led to the exit of Volkswagen's former CEO Martin Winterkorn, and drastically damaged the auto company's reputation. Reuters
• Fantasy sports companies probed
Two of the biggest daily fantasy sports sites – DraftKings and FanDuel – are the target of a probe by New York State Attorney General Eric Schneiderman, who has requested data from the companies after allegations that employees placed bets using internal data. Employees at both firms allegedly made money using company data not available to the public. Fortune reports that in light of the scandal, both companies have banned their employees from playing on the other websites. Bloomberg
Around the Water Cooler
• Ackman: Bloomberg for 2016
Hedge fund manager Bill Ackman has a 2016 presidential prediction: billionaire Mike Bloomberg is going to run for president. And he will win. Of note, Ackman made these comments while speaking at a Bloomberg-sponsored conference held in Bloomberg's media headquarters in New York. Still, Ackman promises his support for the former mayor of New York City is completely genuine. Fortune
• Toyota sets self-driving goal
With a feature Toyota is testing called "Highway Teammate," the Japanese automaker has said it envisions self-driving cars will be on the highway by 2020. The technology – being tested on a modified Lexus GS – enables automated driving on highways once a car enters the on-ramp and through the exit on the off-ramp. Toyota is accelerating research into automated driving technologies and is hoping to make the car's technology a partner, not completely replace the driver. Fortune
• Rubio's on-demand economy pitch
GOP presidential candidate Marco Rubio is angling to win over the so-called "sharing economy," saying that if he is elected, he will fight the regulatory battles on behalf of companies like ride-sharing service Uber and peer-to-peer hotel booking website Airbnb. Rubio also addressed the debate over how to classify the workers at those companies – conceding neither the "contract worker" and "full time employee" classifications work. Fortune
5 things to know today
Brewing merger and Monsanto's growth plans--5 things to know today. Today's story can be found here.