CEO Daily: Friday, 7th April
The U.S. fired 59 tomahawk missiles at an airfield and other facilities in Syria yesterday, in retribution for the deadly chemical weapon attack launched earlier in the week by Syrian forces. President Trump said the attack, which is likely to become a defining moment in the first 100 days of the Trump administration, was necessary “to prevent and deter the spread and use of deadly chemical weapons.”
I spent the day in San Francisco, where Fortune hosted a dinner of tech executives as part of the buildup to our annual Brainstorm Tech conference in Aspen in July. Nest CTO Yuky Matsuoka was the featured speaker, and attendees included Yahoo CEO Marissa Mayer, Medium CEO Ev Williams, and Tanium CEO Orion Hindawi.
Before the dinner, I spent time at Fitbit headquarters with CEO James Park. Later, my colleague Adam Lashinsky and I met at the Fortune offices with Pandora CEO Tim Westergren. Both Park and Westergren run post-IPO tech companies, both are under pressure from investors, and both are competing in the land of tech giants—with Apple, Google, and, in Pandora’s case, Amazon. Yet both believe they can win by producing better products. Pandora will be introducing its premium product, which will include on-demand music as well as streaming stations, later this month. Park is working on a Fitbit smart watch, which will accommodate apps, but he won’t say when it will hit the market.
I’m now on my way to Chapel Hill, where I suspect the NCAA victory celebrations continue. The rest of the news is below. Enjoy the weekend.
• Pouting Putin
Russia condemned the U.S. missile strike against Syria as “aggression against a sovereign nation” on a “made-up pretext” and said it would cause “significant damage” to U.S.-Russian relations. Iran also condemned the attack. The Pentagon had given Russia advance warning, so that Russian personnel weren’t hit. Their presence at the base raises questions about how much they knew about the chemical attack launched from there on Tuesday. Elsewhere, Germany called the strikes “understandable,” Turkey called them “a positive response to war crimes,” the U.K. said it “fully supported” the action, while France’s foreign minister was more guarded. The Syrian government said nine civilians were killed in the attack, while the Syrian Observatory for Human Rights said at least four Syrian solders died. Fortune
• Markets Knocked Off-Balance as Jobs Report Looms
The monthly employment report from the Bureau of Labor Statistics is due out today, and U.S. non-farm jobs are expected to have risen by 180,000 in March. That would be a slowdown from the last two months but still a decent clip. Arguably the risk is for a higher figure after the sharpest drop in weekly new jobless claims for two years. Normally, financial markets are content to wait for the figures, but the missile strikes overnight have dented stocks and pushed up ‘safe havens’ such as gold (which has hit a 5-month high) and bonds, as well as adding some geopolitical risk premium to oil prices. U.S. crude futures are at one-month high. Reuters
• Crisis? What Crisis?
Samsung reported its best quarterly operating profit in over three years, thanks to strong sales of memory chips and flat-panel displays. The components business (which counts Apple among its customers) was strong enough to more than compensate for the expensive failure of the Galaxy Note 7 smartphone. The news will have cheered up vice-chairman Lee Jae-yong, who made his first appearance in court Friday. The company’s shares have rallied over 60% in the last 12 months as its change in strategy, cutting its dependence on smartphones, starts to feed through into better results. Fortune
• BP’s Dudley Suffers in the U.K.’s “Shareholder Spring”
BP CEO Bob Dudley took a 40% pay cut to a mere $11.6 million last year, making him the highest-profile victim so far of shareholder activism against excessive executive pay. Shareholders have been egged on by Prime Minister Theresa May, who has taken a tougher line than her predecessor in tacking a politically sensitive topic. CEO pay at FTSE-100 companies rose over 10% last year, while average wages rose less than 2.5%. That plays badly when public services and benefits are still being cut to close a big budget deficit. Others to have seen their 2016 packages shrink include Reckitt Benckiser’s Rakesh Kapoor and Imperials Brands’ Alison Cooper. Fortune
Around the Water Cooler
• Recalls Add to Kia, Hyundai Pain
It’s not all good news for Korea Inc today. Automakers Hyundai and Kia are recalling over 170,000 cars at home and another 1.3 million in the U.S. over engine problems that will revive familiar concerns about quality. The recall could amplify declines in a U.S. market that appears to be slowing quite sharply. It also coincides with a sharp but probably only temporary hit to their sales in China due to nationalist anger at Korea’s willingness to accept new U.S. missile defenses on its territory. Both depend on China for around 20% of sales. Fortune
• A Double Boost for Lyft
Ride-hailing startup Lyft closed a $500 million funding round that valued it at $7.5 billion. That’s up 36% from January 2016, at its last capital-raising. The company has stepped up the pace of its geographical expansion this year, adding 100 new cities. The company has been slower out of the blocks than Uber but has been at pains to play up its lower governance risk. It got a boost from another direction Thursday, as the White House confirmed that President Trump plans to nominate Derek Kan, Lyft’s general manager and a former adviser to Senate GOP Leader Mitch McConnell, as Under-Secretary of Transportation. Fortune
• Fool Me Once…
Renaud Laplanche, forced out of peer-to-peer lender LendingClub last May, has resurfaced at the head of a new online lender called Upgrade. The company has raised $60 million in equity and convertible debt from investors including Chinese online lender CreditEase and Union Square Ventures (which also backed LendingClub). LendingClub’s shares fell nearly 75% after it emerged that Laplanche had manipulated its financial data in 2009 and overseen other loan malpractices. Jefferies, to whom LendingClub sold loans with altered documentation, is advising Upgrade on its capital markets strategy and will likely participate in loan purchases to kick off its securitization program, according to Reuters. Reuter
• Comcast Gets Into Mobile
Comcast unveiled its new wireless service, in an effort to enhance customer loyalty. The move brings new competition to the market, albeit in regions where it already operates its cable business. The cable industry has seen years of expensive stops and starts with wireless. Comcast's new service, Xfinity Mobile, includes just two basic plans, both with unlimited talk and texting. Unlimited data service will be $65 per line or an a-la-carte plan will be $12 per gigabyte. Competing plans are generally more expensive for a single line, but discount on additional lines in a way Comcast doesn’t. It will also start limiting download speeds at a lower data threshold than Verizon, AT&T, Sprint. and T-Mobile. The launch date isn’t yet fixed but will be ‘soon’. Fortune
Summaries by Geoffrey Smith; email@example.com