Good morning,
August just got significantly hotter.
North Korea said this morning it was “carefully examining” plans for a missile strike on the U.S. Pacific territory of Guam, just hours after President Donald Trump told the North Koreans that any threat to the United States would be met with “fire and fury.” Trump made his comments in a formal press statement – not a tweet – and seemed to be echoing Harry Truman’s “rain of ruin” threat that preceded the dropping of the atomic bomb on Nagasaki.
The war rhetoric was accompanied by a cooling off of trade tensions with China. The White House seems to be holding off on anticipated sanctions on Chinese banks following China’s vote for North Korean sanctions in the U.N. this weekend.
Stock markets fell around the world in reaction to the rapidly escalating rhetoric.
Separately, The Wall Street Journal has a page one takeout on Ford Motor Chairman Bill Ford, who seems to be reasserting his electric car vision after engineering the departure of CEO Mark Fields and his replacement with Jim Hackett earlier this year. The Journal says Ford has “taken a more commanding role” at the company over the past year, and quotes him saying “we’ve got to have a point of view about the future.”
Ford will be joining us at the Fortune Global Forum in Guangzhou, China, Dec. 6-8. You can find more details here.
More news below, including a response from YouTube CEO Susan Wojcicki to yesterday’s CEO Daily on the #Googlememo issue.
Alan Murray @alansmurray alan.murray@fortune.com
Top News
•Wojcicki Defends Damore Firing
YouTube CEO Susan Wojcicki, in a column for Fortune, defended Google’s decision to fire James Damore over the memo he wrote attributing female under-representation in certain functions to biological factors. “What if the memo said that biological differences amongst Black, Hispanic, or LGBTQ employees explained their underrepresentation in tech and leadership roles?” she argues. “The language of discrimination can take many different forms and none are acceptable or productive.” Fortune
•Disney Cuts the Cord
Disney’s shares fell nearly 4% after the bell as it unveiled a radical new distribution strategy for some of its most lucrative products. The company will set up its own subscription streaming services for movies and sports, and pull its new productions from Netflix. It will also pay $1.6 billion to raise its stake in streaming technology company BAMtech to 75% from 33%. Netflix shares lost 7% in after-hours trading, at the prospect of it swapping a symbiotic relationship with Disney for a more nakedly competitive one. Shares in cable providers Charter and Comcast also fell, albeit more modestly. Disney’s quarterly report also revealed that its ABC channel paid $177 million to settle the ‘pink slime’ defamation case earlier in the summer. Fortune
•Kors, Lauren Back in Fashion
Two of the U.S.’s biggest fashion names appear to have got their mojo back. Michael Kors’ shares rose 21% after it announced a smaller-than-expected drop in and higher-than-expected profits in the second quarter and raised its outlook for the full year. It said newly acquired Jimmy Choo would add $275 million in sales in the second half. Meanwhile Ralph Lauren rose 13% after an earnings statement that showed its own efforts to move back upmarket and regain its luxury cachet were also paying off. Fortune
•Vantiv, Worldpay Agree Merger Terms
Vantiv finally produced a binding $10 billion offer for U.K.-based payments provider Worldpay, after a month of haggling over various issues. Worldpay shareholders will get around 43% percent of the new business, which will also ditch the Vantiv name in favor of Worldpay's (better reflecting the aspirations of the new group). The company will be run from London but there will be no formal guarantee of U.K.-based jobs. Vantiv’s Charles Drucker will be executive chairman and also co-CEO with Worldpay’s Philip Jansen. Fortune
Around the Water Cooler
•Uber Retrenches Again
The Wall Street Journal reported that Uber is to close its Xchange Leasing business in the U.S. after discovering that it was losing $9,000 per car, rather than the $500 it had bargained for. It’s the latest sign of retrenchment from the company and comes only a week after reports that it had knowingly leased unsafe vehicles to drivers in Singapore. Fortune
•Softbank’s Sporting Bet
Softbank’s spending spree goes on. Masayoshi Son's investment house will spend $1 billion on Fanatics, an e-commerce company specializing in sports goods. That’s part of a funding round that values the Florida-based company at $4.5 billion, according to Reuters' sources. Fortune
•ITC Move Raises Pressure on Apple to Settle with Qualcomm
Apple is likely to pay around $8 billion to settle its dispute with chipmaker Qualcomm out of court – possibly as early as this month. So reckons Credit Suisse analyst Kulbinder Garcha, anyways. The International Trade Commission has formally agreed to hear Qualcomm’s complaint, opening the door to a possible ban on imports of iPhones into the U.S.. Fortune
•Draft Climate Change Report Poses Quandary
A draft report compiled by scientists from 13 federal agencies is set to assert that anthropogenic climate change is real and already having an impact on the quality of U.S. lives, according to the New York Times. The report, which is awaiting White House approval, offers President Trump an elegant way to walk back from his claims that Climate Change is a Chinese-manufactured hoax – if he wishes to take it. NYT
