Author Archives: Jorge Blanco

Fujifilm is suing Xerox for more than $1 billion over failed merger

19 Jun 18
Jorge Blanco
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BY Rishi Iyengar


Fujifilm wants more than $1 billion from Xerox for backing out of a merger between the two companies.

The Japanese firm filed a lawsuit in a district court in New York on Monday seeking “punitive damages for Xerox’s intentional and egregious conduct” in canceling the deal.

Xerox (XRX) was set to merge with Fuji Xerox, an existing joint venture between the two companies, in a deal that would have given Fujifilm (FUJIF) control of the combined entity.

But activist investors Carl Icahn and Darwin Deason, who own 15% of Xerox between them, bitterly opposed the deal, saying it undervalued the iconic American printer and copier firm.

Xerox said last month it had reached a new agreement with Icahn and Deason, which also saw CEO Jeff Jacobson and five other board members step down.

Xerox said in a statement that it was “extremely confident” about its right to back out of the deal. It said it would seek remedies for Fujifilm’s “mismanagement and misconduct.”

The amount Fujifilm is seeking is significantly higher than the $183 million “termination fee” the companies agreed upon if one of them walked away from the agreement. The Japanese firm argues Xerox has deprived it of the benefits of the deal they struck.

Fujifilm is also demanding that Xerox be ordered to pay the termination fee.

It said in a statement that it continued to believe that its takeover of Xerox was the “only correct solution” for investors in both companies.

“It is inconsistent with shareholder democracy to allow Carl Icahn and Darwin Deason, minority shareholders with only 15% of Xerox’s shares, to dictate the fate of Xerox,” the company added.

How a positive statement made millions for this T-shirt company

19 Jun 18
Jorge Blanco
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BY Andrea Lo



In 1990, Bert and John Jacobs joked that they would “go where no T-shirt guys had gone before.”

The brothers embarked on a road trip along the East Coast of the United States, selling colorful T-shirts with abstract designs door to door.

It didn’t go well. Four years later, business was so bad they had just $78 between them.

“We were considering giving up,” Bert Jacobs told CNNMoney. But a “recurring conversation about the daily flood of negative news” made them wonder if a positive message could turn things around.

The brothers came up with the slogan “Life is Good” and printed it on their T-shirts.

It was a game-changing move. Within three years, the business had generated $1 million in sales.

Today, Life is Good is a lifestyle brand that makes roughly $100 million in annual revenue, selling products ranging from T-shirts and sleepwear to accessories and home decor items.

The Jacobs grew up in Needham, Massachusetts. In 1989, they co-designed their first T-shirt and sold it on the streets of Boston. Bert and John were aged 24 and 21, respectively.

“We were both looking for a way to make a living by creating art,” Bert Jacobs said. The world of fine art felt intimidating whereas “putting art on t-shirts was more down to earth,” he added.

In 1994, they created a smiley character called Jake and put him on T-shirts along with the “Life is Good” slogan. At a street fair in Cambridge, Massachusetts, all 48 T-shirts sold out within an hour.

“It confirmed everything we had hoped: people want to rally around something positive,” Jacobs said.

05 life is good
Life is Good has developed into a lifestyle brand that sells products ranging from T-shirts and sleepwear to accessories and home decor items.

Once the Jacobs found a design that resonated with customers, the business took off. It hit the $100 million sales mark in 2007.

Life is Good declined to disclose how much it made last year, only saying that the business is in “healthy shape.” It donates 10% of its annual profits to charities that help children in need.

The Jacobs still own and run the company, which is headquartered in Boston and has 178 employees. Its products sell in more than 2,500 stores in the US and Canada and ship internationally.

Even though the business is far bigger now, Bert Jacobs says the aim is the same as it was when it started out — to spread optimism.

“It’s a mission that feels more vital today than ever,” he said.

Australian company loses $1 billion on UK retail investment

25 May 18
Jorge Blanco
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By Daniel Shane


A badly timed bet on the UK retail sector has cost one big Australian company $1 billion.

Wesfarmers (WFAFFsaid Friday that it was selling British home improvement chain Homebase at a huge loss, just over two years after it bought it.

Wesfarmers — which owns supermarkets, hotels and chemicals plants — paid £340 million pounds (about $470 million at the time) for Homebase in February 2016. It’s now offloading it for a “nominal amount” to Hilco Capital, an investment firm that specializes in restructuring struggling companies.

Wesfarmers Managing Director Rob Scott admitted during briefings with reporters and analysts Friday that the disastrous foray into UK retail had cost it about $1.3 billion Australian dollars ($1 billion) when all the losses from Homebase were added up.

Scott blamed Britain’s flagging retail sector.

“From the point we bought Homebase to where we sit now, there has been a dramatic deterioration in the UK macro and retail environment,” he said.

Bricks-and-mortar retailers in the UK have struggled since the country’s vote to leave the European Union almost two years ago.

The British pound dropped dramatically following the vote, making it more expensive for retailers to purchase goods from abroad. That has translated into higher prices for consumers, and growth in the wider economy has slumped.

The industry has been rocked by the collapse of household names like Toys “R” Us and electronics chain Maplin, and thousands of retail jobs have been lost.

Homebase currently has about 230 stores across the United Kingdom and employs 12,000 people.

homebase store RESTRICTED

But some analysts accused Wesfarmers of failing to adequately assess the risks before entering the UK market.

During a conference call with executives from the Australian company on Friday, Bank of America Merrill Lynch analyst David Errington called Homebase “a very poor investment” and called for Wesfarmers’ board to be held accountable.

“There’s got to be penalties for losing such a large amount of money in such a short space of time,” he added.

In response, Scott said that the company had been transparent about the problems with the deal and that managers’ pay would be affected by the losses.

The company admitted in its statement that “poor execution” of the Homebase deal was a key part of the problem.

Wesfarmers may at least get the opportunity to claw back some of its losses one day. The deal with Hilco Capital includes a clause that the Australian company gets 20% of any proceeds from a future sale of Homebase.

— Ivana Kottasová contributed to this report.

These companies are getting killed by GDPR

25 May 18
Jorge Blanco
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By Ivana Kottasová


Europe’s new data protection law is coming into effect on May 25. For some companies, that means closing up shop.

The cost of complying with the new law has already forced an online game producer, a small social network and a mobile marketing firm to close key businesses or shut down entirely.

The EU General Data Protection Regulation (GDPR) applies to any organization that holds or uses data on people inside the European Union, regardless of how big they are or where are they based.

Google (GOOGL), Facebook (FB) and other big tech companies will be affected by the changes, but experts say that smaller competitors are finding it much harder to comply.

Julie Bernard, chief marketing officer at Verve, said that the mobile marketer would shutter its operations in Europe because “the regulatory environment is not favorable to our particular business model.”

She said that while the new law would benefit consumers, it may also advantage large companies with the resources — lawyers, data experts and programmers — needed to make the transition.

“The implications and ramifications of GDPR compliance will challenge numerous organizations … with resources on scales smaller than, say — and in particular — Facebook and Google,” said Bernard.

The new rules give Europeans more control over their personal data.

In many cases, companies need consent to process that information. They won’t be allowed to store the data for longer than necessary, and they must respond to requests from customers who want their data deleted. Data breaches must be promptly reported.

Companies may also have to prove they are handling data correctly, meaning increased monitoring and documentation. Some may have to hire data protection officers.

Complying with the new regulations isn’t cheap, and experts say the world’s biggest companies are spending tens of millions of dollars to prepare. Smaller companies that do not have the same resources are struggling.

“[They] don’t have the apparatus and the team in place to actually really continuously support this kind of compliance,” said Chris DeRamus, the chief technology officer at DivvyCloud.

Related: Under 16? You’re banned from WhatsApp in Europe

Uber Entertainment, which makes online games, will shut down its Super Monday Night Combat game on May 23 because of GDPR.

The company said it would cost too much to rewrite the game, or migrate it onto a different platform. The current design, which was built in 2009, makes it difficult to delete data from user accounts.

“We’ll keep playable for as long as we are legally allowed to, but the day GDPR hits, we’ll pull it down so as to be in compliance,” said Jeremy Ables, CEO of Uber Entertainment.

Gravity Interactive, the maker of Ragnarok and Dragon Saga games, is taking a different approach: It will block Europeans from accessing its games.

Czech internet company has said it will shutter its social network for classmates because of the regulation. It said the platform, which has 20,000 daily active users, would have to change completely in order to comply with the regulations.

Related: Your inbox is being flooded with emails about privacy. Here’s why

European lawmakers have pushed back on suggestions that GDPR could give the biggest tech companies an advantage over smaller rivals.

Giovanni Buttarelli, the European Union’s data protection supervisor, said that the biggest companies will also face the largest fines if they violate the rules.

The regulators can impose penalties on companies of up to €20 million ($25 million) or 4% of annual global sales, whichever is bigger.

“Accountability and obligations in the GDPR are scalable, with data protection authorities empowered to enforce the law with rigor proportionate to the scale of the violation,” Buttarelli said in a statement.

Experts say some smaller companies outside Europe might not yet realize that they have to comply with GDPR, because similar rules don’t exist in their home market.

As Gasoline Nears $3 a Gallon, U.S. Economy Likely to Motor On

25 May 18
Jorge Blanco
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By  and 


Consumer spending in the U.S. is probably well-equipped to ride out near-$3 gasoline that’s made for the costliest driving in four years, though an extended and more pronounced increase could prove more challenging for the economy.

The price of regular-grade fuel has climbed 47 cents a gallon, or 19 percent, since the start of 2018, according to motoring group AAA. Pricier seasonal fuel blends and increased summer demand as families go on vacation have pushed the cost of gasoline to its highest since 2014. Nonetheless, the movement in prices from January through May is about in line with the average over past five years.

Prices typically peak each year in the traditional summer driving season kicked off by the upcoming Memorial Day weekend — when about 37 millionpeople are expected to be on the road, up almost 5 percent from 2017 — and taper off through the rest of the year.

While bigger fuel bills leave Americans with less to spend on other goods and services, there’s no sign yet the costlier fill-ups are altering overall shopping habits. Government figures last week showed that retail sales posted a broad-based advance in April, spurred by higher receipts at clothing stores, furniture merchants, building-materials outlets, non-store retailers and department-store chains. Analysts surveyed by Bloomberg News see economic growth rebounding to a 3.1 percent annualized pace in the second quarter and 3 percent in the following three months, following 2.3 percent in the January-March period.

What’s more, the last time gasoline exceeded $3 a gallon, in 2014, inflation-adjusted consumer spending actually kicked into a higher gear. During the first five months of that year, the nationwide average price rose from $3.33 to $3.67 a gallon. Rather than cutting back, households boosted inflation-adjusted outlays at a 3.5 percent annualized rate. As gasoline’s seasonal effects faded and prices retreated, real purchases accelerated even more throughout the remainder of the year.

For consumers, it all boils down to how they perceive the increase, and most measures of sentiment have held up fairly well as gas-price gains mounted. Rather than dwell on the pinch to their wallets, Americans are instead responding favorably to tax cuts, the lowest unemployment rate since 2000 and a moderate wage pickup.

Still, higher fuel bills matter over time. Every one-cent change in retail gasoline prices translates into about $1 billion in annual energy spending, so a $1 increase in costs would be equivalent to a $100 billion tax increase, according to calculations by Joseph LaVorgna, chief economist for the Americas at Natixis SA.

Fuel prices haven’t gained nearly that much this year, and overall inflation is moving up only gradually. Disposable incomes — earnings adjusted for taxes and price changes — have been growing in 2018, though at a cooler pace the past two months. One thing to watch is whether the saving rate comes under pressure; it has picked up slightly since dropping in December to a 13-year low.

— With assistance by Catarina Saraiva

U.K. Economy Barely Grows as Households Rein in Spending

25 May 18
Jorge Blanco
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U.K. consumer spending lost momentum in the first quarter and companies cut investment after severe weather swept the country.

Household spending rose just 0.2 percent, the weakest performance in more than three years, and business investment declined 0.2 percent as snowstorms kept shoppers at home and disrupted construction projects.

Economic growth was left unrevised at 0.1 percent, the figures Friday showed, and the Office for National Statistics continued to maintain that the weather had little impact on the quarter on balance. However, that assessment was challenged this week by Bank of England Governor Mark Carney.


The BOE refrained from raising interest rates this month, leaving economists and investors puzzling over whether officials will now choose to hike in August.

Much depends on how quickly the economy rebounds and the evidence so far is mixed, with Brexit fears mounting and consumers only just emerging from a cost of living squeeze that has hit stores from Marks & Spencer to home- improvement chain B&Q.

Consumer spending rose 1.1 percent from a year earlier, the smallest increase since the start of 2012.

The quarterly fall in business investment was the first in more than a year and was driven by lower spending on non- residential buildings and vehicles, the ONS said. Construction output dropped by 2.7 percent.

GDP per head fell 0.1 percent, leaving growth from a year earlier at 0.6 percent, the weakest pace since 2012.

Services, the largest part of the economy, rose just 0.1 percent in March following a 0.3 percent decline in February. Growth in the first quarter was unrevised at 0.3 percent, with consumer-facing services experiencing a poor start to the year.

Trade had no impact on GDP growth, as exports fell 0.5 percent from the fourth quarter and imports declined 0.6 percent.

Britain is set to remain stuck in the economic slow lane again this year, with growth of around 1.4 percent trailing well behind Group of Seven peers Germany, France and the U.S.

— With assistance by Mark Evans

Japan’s longest growth streak in decades just came to an end

16 May 18
Jorge Blanco
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BY Daniel Shane


The world’s third-largest economy is shrinking again.

Japan’s gross domestic product contracted at an annualized rate of 0.6% in the first quarter of 2018, according to government data published Wednesday.

That snaps a run of eight consecutive quarters of growth, the longest Japan has achieved since the boom days of the late 1980s.

The limp first-quarter performance was spread across different areas of the economy, according to Marcel Thieliant, senior Japan economist at research firm Capital Economics.

“Private consumption and public demand were flat while investment spending and net exports fell slightly,” he said in a note to clients.

Related: Why Japan’s economy still needs help after $3 trillion binge

The contraction was bigger than economists had forecast. But Japan may still dodge a recession, which is usually defined as two consecutive quarters of negative growth. Thieliant said he expects Japan’s economy to return to growth in the second quarter.

The country faces serious challenges, including a rapidly aging population, a lack of women in the workforce and stubbornly low inflation. Moderate inflation is good for an economy as it encourages consumers to spend.

Japan just doesn’t have the resources to keep growing at a healthy clip, according to Thieliant. That can mean a shortage of drivers to deliver goods, not enough roads or ports to move cargo, or a lack of machinery for manufacturing products.

Japan’s recent growth streak was helped by years of massive stimulus from the Bank of Japan that aimed to get businesses and consumers spending again after a prolonged period of stagnation and falling prices.

Related: Japan is set to miss out on the global growth party this year

Jesper Koll, head of Japan at investment firm WisdomTree, said that Wednesday’s disappointing economic data means the central bank won’t be turning off the money spigot anytime soon.

Rising wages aren’t prompting consumers to spend more. Households are saving the extra income instead, which suggests “a fundamental lack of confidence in the future,” Koll said.

Another problem for Japan could be its currency, according to analysts at investment bank Nomura said. The yen has strengthened more than 2% against the dollar since the start of the year, making Japanese exports like cars and electronics more costly.

It could rise further if global trade tensions spook markets because the Japanese currency is regarded as safe haven for investors during periods of turmoil, the Nomura analysts said.

“The Bank of Japan will want to do everything it can to prevent a rise in the yen,” Koll added.

Spain’s Top Economists Vow to Boycott All-Male Panel Discussions

16 May 18
Jorge Blanco
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A group of leading Spanish economists plan to boycott panel discussions and events that don’t include at least one woman.

Fifty economists and academics including Rafael Domenech, the head of macroeconomic research for Banco Bilbao Vizcaya Argentaria, and Emilio Ontiveros, a former government adviser and founder of the Madrid-based think tank Afi, have signed the manifesto, which will be made public on Wednesday.

The signers pledge “not to take part in any academic events or round table of more than two speakers that do not feature a female expert,” according to a draft version of the document reviewed by Bloomberg. Called “Not Without Women,” it calls on event organizers to include more female experts in areas that have traditionally been dominated by men.

Like many countries around the world, Spain has been grappling with a rising call for equal opportunities for women. More than 5 million women participated in the country’s first 24-hour female strike on March 8, prompting Prime Minister Mariano Rajoy to reverse his earlier comments that pay equality wasn’t a top priority for his administration.

Global organizations including the International Monetary Fund have urged governments to promote equality and do more to tackle the disparity in how men and women are rewarded for their work. In the U.K., the government introduced legislation requiring companies to disclose the pay gap between female and male employers, with the results often showing significant disparities in pay in particular among top earners.

U.S. Factory Production Shows Broad-Based Gain Outside Autos

16 May 18
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U.S. factory production regained its footing in April to push capacity utilization to the highest since 2015, indicating the industry will support economic growth this quarter, Federal Reserve data showed Wednesday.

Key Takeaways

The gain in factory output was broad-based outside of a decline in motor vehicles and parts. Several categories posted increases of more than 1 percent, including machinery; computer and electronic products; electrical equipment and appliances; and aerospace and miscellaneous transportation.

The factory-use rate rose to 75.8 percent — the highest since August 2015 — from 75.5 percent a month earlier. Even so, that’s still 2.5 percentage points below its long-run average.

The results bolster the view that the industry, along with consumer spending, will contribute to a projected second-quarter rebound in economic growth. Tax cuts and steady overseas sales are expected to underpin gains in business investment. At the same time, rising prices for materials and tariffs on imported metals, along with U.S.-China trade tensions, pose risks for American manufacturers.

Automobile and parts production decreased 1.3 percent after two months of strong gains, the Fed’s report said. That’s consistent with government figures based on industry reports and released earlier, which showed motor-vehicle sales cooled in April.

Revisions to data had the effect of paring gains in factory production in the first three months of the year. Manufacturing output rose at an annual rate of 1.4 percent in the quarter, down from a previously reported 3.1 percent. That followed a 5.2 percent gain in the fourth quarter of 2017, which was the best since early 2012.

Homebuilders in U.S. Continue to Fall Further Behind: Chart

16 May 18
Jorge Blanco
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America’s homebuilders are struggling to keep up with demand. While 510,000 single-family houses were under construction in April, the most since mid-2008, there were 91,000 dwellings authorized but waiting to be started, also a new expansion high, according to a Commerce Department report Wednesday. “Capacity constraints may be responsible for the leveling off in groundbreaking activity,” Stephen Stanley, chief economist at Amherst Pierpont Securities, wrote in a note. “Builders have been complaining for a long time about labor shortages” and more recently, building materials costs have jumped.