CEO Daily: Friday, October 30
Early this morning, the Senate gave final approval to a two-year budget deal, stitched together with gimmicks that would make Valeant’s accountants blush. The deal gives the President an extra $80 billion to spend, delays any budget and tax showdown until after the election, and allows ex-speaker John Boehner to get the hell out of Dodge. The business lobby largely supported the deal; tea partiers and GOP presidential candidates opposed it.
Fortune’s Tory Newmyer breaks down the business winners and losers as follows:
Big business generally. AT&T CEO Randall Stephenson said eliminating the threat of another shutdown will boost business confidence.
Big business specifically. The agreement junks a provision of Obamacare requiring big businesses to automatically enroll new hires in health plans.
Defense contractors. Half the $80 billion would go to defense spending.
Generic drug makers: The deal cuts subsidies for generics by $1.3 billion over ten years.
Hedge funds: The deal streamlines the process for audits, raising $11 billion over ten years.
Companies with defined benefit pensions: The deal increases premiums to the Pension Benefit Guaranty Corporation.
The deal cleared the way for Paul Ryan to be elected speaker Thursday. Good luck to him. More news below.
• Valeant to end ties with pharmacy
Drug maker Valeant Pharmaceuticals is moving to end the company's ties with mail-order pharmacy Philidor Rx Services, which will shut down operations as soon as possible. The move comes as Valeant has been under pressure about the company's approach to drug pricing and accounting practices. Allegations about activities at Philidor became increasingly problematic, and CEO J. Michael Pearson said Valeant "lost confidence" in Philidor's ability to operate in a manner that was acceptable to the drug company. WSJ (subscription required)
• Starbucks' holiday forecast disappoints
The world's largest coffee company reported strong quarterly earnings, though investors were disappointed that the profit forecast for the upcoming holiday quarter – the biggest for the company by revenue – fell short of Wall Street's expectations. Starbucks said it was hurt by the strong dollar, which would reduce revenue for the period. There was also little upside for the full-year forecast and as Reuters notes, that could also pressure the company's stock, which has soared more than 60% over the past year. Reuters
• LinkedIn knows how to make money
LinkedIn shares jump on Thursday after the business-focused social media company reported a much bigger-than-expected profit for the latest quarter, news that sent the stock up more than 12%. Though shares are still below where LinkedIn traded in May, when it cut its earnings outlook due to a downturn in display ads, it is still doing a lot better than some key peers – notably Twitter. What's working? LinkedIn is benefiting greatly from the company's fast-growing "Talent Solutions" unit, which charges recruiters to connect with candidates and helps diversify LinkedIn's revenue stream. Fortune
• 3D Systems' CEO steps down
With a tumbling stock, it comes as no surprise that the CEO of 3D Systems, a high-profile 3D printing company, has stepped down. While 3D Systems continues to report revenue growth, there are worries that the technology – expanding into industries like manufacturing and medicine – doesn't have viability for the consumer market. For now, 3D Systems will be led on an interim basis by Chief Legal Officer Andrew Johnson. Fortune
Around the Water Cooler
• Nintendo finally goes mobile
Japan-based Nintendo is finally dipping its toes into the mobile app world with the planned launch of the gaming company's first mobile app, set to launch in March. But Nintendo's shares tumbled on the news, as the launch was delayed into 2016 and is for a game called Miitomo – not the more popular franchises like Super Mario or The Legend of Zelda. Nintendo prefers to build its business on proprietary hardware and the best way to get gamers to buy those systems is to exclusively provide franchise content. That business model is threatened by any foray into mobile. Fortune
• Google planning big change for Chrome
Search engine giant Google is reportedly planning to fold the company's Chrome operating system for laptop computers into Android, which powers its mobile devices. Android, which Google bought in 2005, is the most widely used mobile operating system while Chrome – developed in-house – is mostly used for browser-based applications. Combining the two would likely mean the new version of Android would also run on personal computers. Rival Microsoft has one operating system for both computers and mobile devices, while Apple maintains two separate systems. Fortune
• China's baby-related bump
China's decision to back off a one-child policy it introduced in 1979 has impacted currencies, commodities and perhaps unsurprisingly, some key stocks. Firms with ties to the baby business have seen their shares rise on the news, as there is an expectation that more babies will be born in the world's largest nation by population. Mead Johnson Nutrition, Danone SA, Biostime International Holdings and Synutra International were among the gainers on Thursday. Bloomberg