CEO Daily: Tuesday, February 23
In the battle between Apple and the FBI, the public is siding with the FBI.
A poll conducted over the weekend by my former colleagues at the Pew Research Center found that the highly publicized battle, which continued to escalate with a letter from Tim Cook to his employees yesterday, has registered with the public. Fully 75% said they have heard either a lot (39%) or a little (36%) about the standoff. And 51% said the company should unlock the iPhone, while only 38% said it should not. The responses cut across political parties – a rare thing in today’s politically polarized climate – with equal shares of Republicans and Democrats favoring the FBI’s position.
Microsoft founder Bill Gates also came out in favor of the government’s position. “This is a specific case where the government is asking for access to information. They are not asking for some general thing, they are asking for a specific case,” Gates told The Financial Times. “It is no different than (the question of) should anybody be able to tell the phone company to get information, should anybody be able to get at bank records.” Reuters reports there are about a dozen other cases where the Department of Justice is seeking iPhone data.
Meanwhile, 200 British business leaders signed a letter to The Times of London warning of a risk to investment and jobs if the nation votes to leave the European Union in June. CEO signatories included Bob Dudley of BP, Ben van Beurden of Royal Dutch Shell, and Christopher Bailey of Burberry.
At FORTUNE, we were visited yesterday by Margaret Keane, CEO of Synchrony Financial, formerly the credit card unit of GE. She said the company’s data shows no sign of pending recession. “The customer is shopping,” she said. “They continued to shop. They are very disciplined. They make bigger payments than they have to… If we look 9-12 months out, we don’t really see anything happening.”
More news below. Enjoy the day.
• United Tech rebuffs takeover offer
A proposed transaction that would combine Honeywell and United Technologies has been rebuffed by the latter firm, which believes that combining two of the biggest players in the aerospace and commercial-building equipment businesses would face "insurmountable regulatory obstacles and strong customer opposition." A possible deal between the firms would be massive: the companies are each worth more than $70 billion. Talks between the two began last year when United Technologies approached Honeywell about a combination, Wall Street Journal reports, though the firms weren't able to agree on key points. In more recent weeks, Honeywell offered to be the acquirer with its CEO running the merger company. The Wall Street Journal (subscription required)
• BHP cuts dividend after profit drop
BHP Billiton, the world's biggest miner, made a larger-than-expected cut to its dividend as it seeks to protect its balance sheet and credit ratings amid a price collapse that saw first-half profits drop 92%. It was the first time BHP lowered the payout in 15 years. BHP warned in a statement that weaker prices and higher volatility across commodities markets are likely to persist, prompting the company to also cut its capital spending forecast and shake up top management. Bloomberg
• Valeant's stock takes multiple hits
Valeant Pharmaceuticals had a tough Monday that ended up badly denting the company's shares. First, a Wells Fargo research note said the company's board made decisions "that may have put Valeant at significant business and reputational risk." The firm's stock further dived after it was reported that CVS Health would soon limit the use of Jublia, which goes for $1,000 for an 8-ml bottle. And then after hours, Valeant made news again when it said it would restate its financial results for 2014 and 2015. Fortune
• Western Digital commits to SanDisk deal
Western Digital says it will buy SanDisk for $15.8 billion, sticking with plans to combine the makers of memory chips after a potential Chinese investor backed out of another deal amid a national security probe. A Chinese firm had intended to invest $3.8 billion in Western Digital but later learned the U.S. was planning to investigate the transaction amid heightened concern over Chinese investment in U.S. technology. With that in mind, Western Digital is recommitting to a cash-and-stock deal. It's worth less than the $19 billion offer in October, as Western Digital's shares have fallen in value since that deal was announced. Bloomberg
• Boeing CEO adds chairman title
Boeing CEO Dennis Muilenberg will succeed Chairman Jim McNerney when he retires March 1. Muilenberg previously succeeded McNerney as the aerospace company's 10th chief executive and joined the board last July. McNerney served as chairman for a decade. Muilenburg joined the company in 1985 as an engineering intern. USA Today
Around the Water Cooler
• NFL ordered to repay players millions
The National Football League has been ordered to return what its union calculates is more than $100 million to the pool of revenue that it shares with its players. The ruling was handed down by an arbiter, which found that NFL owners mis-characterized what Players Association officials say is roughly $120 million of ticket revenue during the past three years by creating an exemption that had the effect of keeping about $50 million out of players' pockets. The Wall Street Journal (subscription required)
• Fitbit focuses on the bigger picture
Fitbit has been on a roll: for three consecutive quarters, the maker of fitness trackers reported results that beat Wall Street's expectations and its own guidance. Unfortunately, shares have taken a beating after each report, with the latest worries circulating around Fitbit's outlook, which suggested demand will be weaker than expected for the first three months of 2016. Fitbit CEO James Park isn't worried about the pessimism. He says he is focused on full-year results, not just a single quarter. Fortune