CEO Daily: Friday, January 22
After three days of hyper-networking at the World Economic Forum in Davos, a few common themes have emerged. I offer four of them here with a disclaimer: What happens in Davos isn’t always fully connected with what’s happening in the rest of the world.
The markets are not predicting recession. Among the CEOs here, there is little evidence of panic. Most believe the economy will slow in 2016, particularly in China, but they aren’t bracing for a full-blown global recession, and they certainly don’t see anything comparable to 2008.
The European Union is in trouble, not for economic reasons, but due to concerns about migration and security. A British exit from the European Union is now rated as a 50-50 possibility, and other countries could well follow. Angela Merkel, who was named by our sister publication TIME as person of the year in 2015, is seen as an endangered species in 2016.
Digital transformation is as much about people as technology. I moderated two private CEO-level discussions focused on the digital transformation of industries, and in both, the human challenges trumped technological ones. Companies struggle to create cultures that can embrace rapid technological change, and governments struggle in response to publics more likely to focus on future risks than future benefits.
Transformation is big business. The Swiss shops that normally line the main street in Davos have been temporarily eradicated in favor of networking lounges offering comfortable seating, free wi-fi, good coffee, and giant signs promoting the companies that want to power the Fourth Industrial Revolution. Accenture’s occupies nearly half a block; Flex and Infosys the same. Salesforce has storefronts on both sides of the street. Data-miner Palantir has constructed its own building, as has Facebook. Snow boot and chocolate stores are no longer easy to find.
Also today, we are releasing a story from February’s FORTUNE magazine about the significant challenges faced by black men in the executive suite. You can read it here.
Enjoy the snow. More news below.
• Flights canceled as blizzard looms
Thousands of flights were canceled or delayed on Thursday ahead of a winter storm expected to dump up to 30 inches of snow along the East Coast, with at least five states already declaring emergencies by Thursday afternoon. Blizzard warnings have been issued in Washington D.C. and Baltimore with extreme conditions expected to begin Friday, while New York City is under a blizzard watch for Saturday morning. It is expected to be the season's first major Atlantic Coast storm. Reuters
• Yahoo resists pressure to sell assets
Yahoo is reportedly planning to decide on next strategic steps only after the Internet company releases quarterly earnings in early February, Reuters reports, as it continues to resist investor calls to look into a sale of its core Internet assets. Sources say Yahoo this month rebuffed several potential buyers, including private equity firms, for those assets. Instead, it wants to gauge shareholder reaction after presenting a strategic vision during the earnings conference call, one person familiar with the matter told Reuters. Reuters
• Boeing cuts 747 jet production
The U.S. aircraft manufacturing giant said it would cut the production rate on the company's 747-8 jet program amid weaker demand in the air cargo market. Starting in September of this year, production on the wide-body planes will drop from one aircraft per month to one every two months, Boeing said. The reduction will result in a $569 million after-tax charge when Boeing reports quarterly results next week. This cutback comes after Boeing already reduced production to 12 planes a year starting in March, down from roughly 16 aircraft previously. USA Today
• RadioShack's new CEO quits
Ron Garriques, who took the reins of RadioShack after it filed for bankruptcy and was sold to a New York hedge fund, has reportedly quit as CEO after less than a year in the position. He is reportedly leaving to "pursue other interests in a role that will put him back closer to his family." A local newspaper in Texas, where RadioShack is based, has reported that CFO Gordon Briscoe will serve as RadioShack’s interim CEO. RadioShack, which went into Chapter 11 almost a year ago, has closed more than half of its 4,000 locations as it struggled with poor sales as demand for electronics migrated to Amazon and other websites. Fortune
Around the Water Cooler
• Older drives hit the ride-sharing road
The New York Times is known for some ridiculous trend stories, but this story involving senior citizens earning money by driving for Uber and Lyft is an enjoyable, fun piece. After one group of teen riders "started to get rowdy," they stopped because one said "'Grandma's in the car,'" according to a 73-year-old Uber driver that NYT quoted for the piece. Retirees in general drive about 20 to 30 hours a week, with some saying they enjoy making extra cash and their own schedule, while others see it as potential exploitation of older people. But demand is so high that Uber and a subsidiary of AARP formed a partnership last summer to recruit more people to drive for the ride-hailing app. New York Times (subscription required)
• Facebook exploits ESPN's digital lapse
Facebook has debuted a new feature called Sports Stadium, which is a real-time hub for sports-related commentary and game scores. It is a challenger not only to ESPN – exploiting the network's lack of a real-time digital strategy – but also to both Twitter and Snapchat, as the latter's Snapchat Stories has become popular for big sports events. Facebook is angling to become the "second screen" for sports, a place where people can trash talk about the opposing team or players, watch video highlights, or catch up on what the score is in their favorite match. Fortune
• Amazon offering hoverboard refunds
The online shopping giant was likely one of the top destinations for one of the most hotly-anticipated gadgets this past holiday season: the hoverboard. But now, Amazon is offering full refunds on any hoverboards sold on the site, a response to the rash of fires and falls that have plagued the two-wheeled balance boards. The U.S. Consumer Product Safety Commission, which has been investigating hoverboard safety issues since late last year, has said it expects other retailers and manufacturers to do the same. CNN Money
• Congress vs. Shkreli in testimony battle
A lawyer for former pharmaceutical executive Martin Shkreli has informed the U.S. House Committee on Oversight and Government Reform of his intent not to appear next week at a hearing about drug prices. The main reason he is being called to that hearing would be to discuss his decision to raise the price of a life-saving medicine by more than 5,000% when he was CEO of Turing Pharmaceuticals. Lawmakers are warning Shkreli he could be prosecuted for contempt while Shkreli, known for his prolific use of social media, has said he will invoke his Fifth Amendment right against self-incrimination. Reuters