If you didn’t watch Mitt Romney yesterday eviscerating Donald Trump, I would urge you to do so today. It was a brilliantly crafted and delivered speech – leaving many wondering where that Romney was four years ago. It also was unprecedented in modern politics.
Sure, Republicans have had their squabbles before – Goldwater versus Rockefeller in 1964; Ford versus Reagan in 1976 – but nothing like this, where the party’s previous standard bearer made such a complete and uncompromising denunciation of a man who is barreling towards the nomination. And the high/low drama continued in the Fox News debate last night. Historians will have to check me on this, but I’m pretty sure it’s is the first time the size of a candidate’s private parts have become the subject of open campaign discussion.
This won’t end well for Republicans (as was true in 1964 and 1976.) The Romney scenario is for Cruz, Rubio, and Kasich to stay in the race, winning what states they can, in an attempt to deprive The Donald of the 1237 delegates he needs for a first ballot win at the convention. After that, the delegates can do as they please (and maybe even turn to Romney?) All the candidates pledged last night they would support whoever wins the nomination. But does anyone believe that if Trump goes to the convention with a strong delegate lead and has the nomination wrested from him by the “establishment” – whatever that may be – he and his supporters won’t blow up the party?
The alternative is that Trump wins the nomination. But the Romney speech now gives many Republicans the cover they need to sit out the election. Perhaps Trump can offset that by wooing disaffected Democrats, as Rupert Murdoch suggested on Twitter this morning. But that won’t be easy.
In business, FORTUNE this morning publishes Jennifer Reingold’s wonderful look inside Zappos, a company that used to be a regular on our 100 Best Companies to Work For list, but has fallen off this year as a result of an employees revolt against Tony Hsieh’s radical “holocracy” management style.
• Big Tech companies rally behind Apple
A coalition of 17 tech companies has filed a legal brief supporting Apple in its fight against the FBI over access to a dead terrorist’s iPhone. The members, which include eBay, LinkedIn and Twitter, submitted a joint amicus brief that argued that “the government’s investigative arm has no legal basis to force Apple to help unlock the iPhone.” Requiring Apple to unlock the phone, they claim, “threatens the core principles of privacy, security and transparency that underlie the fabric of the Internet.” The FBI, meanwhile, wants to compel Apple to develop new software that would undermine the security protections on its phones so investigators can access data of one of the San Bernardino shooters. Fortune
• China reportedly intervened in stocks
Bloomberg has reported China intervened to support its stock market on Friday, helping the benchmark index cap its best weekly gain of 2016 before policy makers meet to approve a five-year road map for the economy. State-backed funds bought primarily bank shares, while some local branches of the securities regulator asked listed companies, mutual funds and brokerages to stabilize the market during the National People’s Congress and the Chinese People’s Political Consultative Conference, sources told the news agency. Authorities have in the past been known to intervene in markets before key national events. Bloomberg
• WPP’s Sorrell strikes cautious tone
WPP Chief Executive Marin Sorrell struck a note of caution on Friday about the outlook for the advertising industry even as the world’s biggest advertising agency by sales reported higher full-year profit on improved revenue. Sorrell listed some top concerns: the continuing crisis in Ukraine, political instability in the Middle East and North Africa, and the possible exit of the U.K. from the European Union. Despite his cautious outlook, WPP predicted major events like the Summer Olympics, the European soccer championships and the U.S. presidential election would drive growth in 2016. The Wall Street Journal (subscription required)
• Movie theater chains to merge
AMC Entertainment has agreed to buy peer Carmike Cinemas in a deal valued at about $1.1 billion, including debt, making the combined company the largest U.S. theater chain. AMC agreed to pay $30 per share in cash to buy all of Carmike’s outstanding shares, which represents a premium of about 19.5%. AMC, already the second-largest movie theater chain in North America with 387 locations, will add Carmike’s 276 theaters to its total count. Reuters
Around the Water Cooler
• Costco increases starting wage
Costco Wholesale said it was raising its starting wage for the first time in nine years, becoming just the latest retailer to increase pay in a tightening labor market. The bulk retailer, the second-largest U.S. store chain by revenue, said it would lift its minimum wage by $1.50 in both the United States and Canada. Starting pay will rise to $13-to-$13.50 an hour stateside. The move comes after Walmart announced a two-step raise for hundreds of thousands of U.S. workers last year. Sam’s Club, owned by Walmart and Costco’s most direct rival, has also raised pay, as has Target. Fortune
• Fortune 500 CMO: Best ways to say no
Beth Brady, CMO of Principal Financial, has answered the question asked by the Fortune 500 Insiders Network: At work, what’s the right way to say no? Brady outlined a scenario in which her team is confident they have a winning solution for a new idea or concept but from her seat, she knows it won’t work out. While Brady acknowledges saying “no” isn’t easy, it can also be handled in a way that can separate good leaders from great ones. Some tips? Brady advocates listening before saying “no,” perhaps highlighting elements that are worth exploring, and explaining priorities so the team can understand why the proposal won’t fit into current priorities.
• Why Barnes & Noble is still surviving
The New York Times describes the latest results from Barnes & Noble as “another not-so-bad quarter” as retail sales dropped 1.8% to $1.4 billion. That may sound like a back-handed compliment, but it actually indicates that the traditional brick-and-mortar retailer is navigating threats to its business as best it can. A move to diversity to sell goods other than books have paid off: sales of other goods like toys and games grew 12.5%. There is also increased interest in items like adult coloring books and vinyl records. And as e-books lose popularity, paperbacks are enjoying a comeback. The New York Times (subscription required)
• Adidas to open 3,000 stores in China
The German sports apparel maker plans to open 3,000 new stores in China by 2020, apparently undeterred by concerns about the economy there, which last year recorded its slowest growth in 25 years. The new stores will increase the company’s retail locations in China from the 9,000 it has now to 12,000, and the number of cities where it has a presence will increase to more than 2,200, The Wall Street Journal reported. H&M is also making a bigger bet on the region, moves that come as other western companies – particularly luxury goods makers – have faced some sales challenges due to the Communist Party’s crackdown on conspicuous consumption. Fortune
• SolarCity shares rally on buyout rumor
The shares of the largest solar installer in the U.S., SolarCity, rose by more than 15% on Thursday on a rumor that the company might be considering going private. The stock has had some troubles since the end of last year after the company warned it plans to grow more slowly in 2016. It also late last year abruptly decided to stop doing business in Nevada after the state regulator changed an important policy for solar. Billionaire entrepreneur Elon Musk is the Chairman of SolarCity, and his cousin Lyndon Rive is the CEO. A few weeks ago, Musk bought $10 million more shares of SolarCity, news that sent the stock soaring at the time of the purchase. Fortune