CEO Daily: Thursday, June 2
Apple is the past; Amazon is the future. That’s one of many takeaways from analyst Mary Meeker’s annual state of the Internet report, delivered last night at the Code technology conference.
Meeker believes iPhone sales may have peaked in 2015. On the other hand, she sees Amazon’s voice-activated home assistant Echo as at the beginning of a new boom. She believes that voice ultimately will become the most efficient form of computer input, because it is fast, easy, and keyboard free. You can find other takeaways from Meeker’s report here, and get the full 213 page slideshow here.
Meeker’s assessment appears to be echoed in our survey of Fortune 500 CEOs. We asked the 500: “Which CEO other than yourself do you most admire.” Last year, Tim Cook and Jamie Dimon took top honors. This year, Amazon’s Jeff Bezos walked away with it. He was mentioned by almost a quarter of those responding. No other CEO got even a third as many mentions. The lagging “runner up” category included Cook, Dimon, Satya Nadella, Warren Buffett, Larry Page and Jeff Immelt.
Fortune put Bezos in the number one spot on its World’s Greatest Leaders list earlier this year. If you missed Adam Lashinky’s insightful profile, you should go back and read it here, to find out why Bezos is so admired by his peers (if not the New York Times.)
Alexa, give me more news (below).
• Monetarists and Capulets
Two households, both alike in dignity
In fair Vienna where we lay our scene,
From ancient habit hold their various meetings,
While markets try to figure what they mean.
OPEC and the ECB’s governing council both hold their policy-making meetings later today (the latter venturing away from its Frankfurt HQ as it occasionally does). Neither is expected to change policy: the ECB is under less pressure to act after the Eurozone grew more than expected in the first quarter, and the turn in oil prices has—for now—banished the specter of deflation. Yesterday’s OECD report will also have stiffened the resolve of hawks who don’t want interest rates to go any further below zero. Across town at OPEC, there is no chance of formal output restraint to support crude prices. Iran is steaming mad at Saudi Arabia, whose new oil minister, Khalid al-Falih, blamed Iranian pilgrims for getting themselves crushed in last year’s fatal stampede during the Haj in Mecca. Iran has just forbidden its citizens to perform their sacred duty of pilgrimage this year on security grounds. Not a backdrop for a meaningful cooperation on oil policy. Bloomberg
• Uber Breaks Records, Again
Not that Saudi Arabia isn’t making news. Its Public Investment Fund has just invested $3.5 billion in Uber, the largest single investment ever for a venture capital-backed company. It brings the total raised by Uber to nearly $11 billion, not including a $2.3 billion convertible debt issue, a staggering sum that underlines how far and how fast ride-hailing companies are changing the concept of urban mobility. Yasir Al Rumayyan, the managing director of Saudi’s sovereign wealth fund, will get a board seat and a stake of around 5%, according to the Financial Times. Accounts of the company’s valuation vary from $62.5 billion to $68 billion. But Uber is still a long way from having things all its own way: Didi Chuxing, Uber’s biggest rival in a Chinese market where both are still losing money, said Wednesday it is currently engaged in a financing round that it hopes will be even bigger than Uber’s. Didi, you’ll remember, was the recipient of $1 billion from Apple last month. Fortune
• Back in the Slow Lane
The U.S. auto market looks to have exited its sweet spot. After a banner couple of years in which easy credit, a recovering economy and cheap gas prices combined to turbocharge the performance of Detroit’s big three, things are getting markedly tougher and the industry’s old problem of overcapacity is starting to rear its ugly head again. Sales to individual consumers fell 10.6% in May from a year earlier, according to Autodata. Even adjusted for the fact that there were two more working days in May last year, they barely grew. GM had a particularly bad month. Fiat Chrysler eked out modest gains thanks to its strength in SUVs. In recent months, the majors have all been relying more on lower-margin fleet sales to keep their momentum going. But Autodata said Wednesday that sales incentives had risen 11% from a year earlier, another indication of how much harder companies are having to try to shift inventory. WSJ, subscription required
• D-Day for Payday Lenders
Federal regulators are set to unveil a new set of rules clamping down on abuses by the payday loan industry, which has thrived since Main Street banks turned their backs on riskier borrowers in the wake of the financial crisis. The Consumer Financial Protection Bureau is set to require lenders to verify customers’ income and confirm that they can repay what they intend to borrow. It will also limit the number of times that people can roll over their loans. Reaction to the measures is likely to divide along partisan lines, with Republicans against them and Democrats for them. Payday lending was an important and rare source of credit for the financially insecure after 2008, and a well-meaning CFPB needs to take care not to push such people into darker areas of the credit market. All the same, there are good reasons why the practise isn’t even legal in 14 states, and the industry’s abuses are both real and damaging to the economy. We’ve seen where poor lending practises lead enough times to know they need to be restrained. Fortune
Around the Water Cooler
• The Golden State Worrier
Hillary Clinton risks losing the Democrats’ California primary next week, according to a new poll for NBC and the Wall Street Journal. The poll found Clinton’s lead over Senator Bernie Sanders had shrunk to only 2 points, well within the margin of error. While even a defeat in California probably won’t stop her clinching the Democratic nomination, it would be a major embarrassment and a blow to her efforts to unify the party ahead of the general election. It would also encourage Sanders to continue his campaign to the national convention, in the hope that the various scandals dogging Clinton may gather enough momentum to persuade senior Democratic ‘superdelegates’ to rally behind him instead. The NBC/WSJ poll is also notable for the huge margin of victory that either candidate would have over Donald Trump in November-24 points for Clinton, and 31 points for Sanders. WSJ, subscription required
• Lashing out at Lululemon
Chip Wilson, who made yogawear maker Lululemon a cult success and then helped blow it up by suggesting that some women were too fat to wear its ‘technical cashmere’ pants, is back. Wilson, who is still the company’s largest shareholder with 14.2%, rounded yesterday on the board he left last year, saying it “has lost its way” and isn’t up to competing with the likes of Nike and Under Armour. The company has struggled to expand beyond its traditional core markets, both in terms of product range and geography. Wilson is pressing for the whole board to face re-election every year, as opposed to the staggered arrangement currently in place. The idea is obviously to light a fire under the behinds of a set of directors who have failed to get the share price beyond where it was when Wilson stepped down. The company’s shareholders have their annual meeting today. Fortune
• It's Getting Easier Being Green
The march of renewable energy across the world gathers pace. According to a report out yesterday, investment in green power rose 4.8% to a new record of $286 billion last year, despite a collapse in oil prices that made it harder for wind, solar et al. to compete with traditional fossil fuels. One of the stand-out points of the report is that emerging markets, led by China, are now outspending rich countries. That’s largely a result of three trends: technological improvements that have brought costs down (especially for solar power), a shift in public policies away from direct subsidies to competitive tendering, and a big increase in funding sources: venture capital, crowdfunders and mainstream lenders are all feeling more comfortable with the risks of an increasingly familiar market. In the U.S., spending on renewables rose to $44.1 billion last year from $37 billion in 2014, but that’s still well short of the $49 billion record posted in 2011. Fortune
• Warriors vs Cavs, Part II
But enough of the real news. The NBA finals start tonight, with the Golden State Warriors looking to repeat last year’s triumph over Cleveland. We don’t have a dog in this fight: the Warriors’ amazing dominance in the regular season sort of demands to be crowned by victory in the play-offs. Anything else would mock what Steph Curry and Steve Kerr, in particular, have achieved this year. On the other hand, can anyone (other than Knicks fans sore at seeing all their old players on the Cavaliers’ roster) really begrudge Cleveland a first title (not to mention revenge for last year)? Sports Illustrated