Barry Diller says his firms are ditching ‘absurd’ earnings guidance

Media magnate Barry Diller says his companies will end the “absurd” practice of giving earnings guidance to shareholders.

The billionaire chairman of IAC and Expedia said firms are wasting the time they spend setting targets for their financial performance. The coronavirus pandemic has already led many companies to withdraw their guidance because of the economic uncertainty the crisis has created.

“It kind of gave us the opportunity to say, you know what? Guidance is a bad business. We’re out,” Diller told CNBC on Friday. “We’re not doing it anymore, for either Expedia or for IAC.”

“Spend your time actually figuring out where you should invest your money, how you should run your company,” he added. “Anybody who runs their company for a quarter is a bird-brain.”

Issuing guidance is a common practice for public companies even though it’s not legally required. Proponents argue it keeps firms accountable to shareholders, CNBC reported. It’s also viewed as a way to increase a company’s stock price by boosting investors’ confidence, according to a Harvard Business Review article.

But some business titans reportedly argue that companies can fudge guidance to make it look like they beat expectations. Skeptics of the practice include investment maven Warren Buffett, whose conglomerate Berkshire Hathaway does not issue guidance.

“It keeps companies accountable? It keeps companies doing dumbass work,” Diller told CNBC.

“Companies spend too much time massaging the process, getting the model right, so that they can always beat, not miss, expectations, and the markets are always reactionary on that wildly short-term dumbness of what happened in the next quarter,” he added.

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What is forward guidance, and how does the Fed use it?

Fed minutes: Coronavirus led to uncertain economic future

FOX Business’ Edward Lawrence breaks down the minutes from the Federal Reserve’s policy-setting meeting at the end of April which said coronavirus continues to weigh heavily on the economy.

Federal Reserve Chairman Jerome Powell, at the beginning of May, acknowledged the central bank may need to deploy additional measures to fight the coronavirus-induced downturn — and said policymakers would rely on their "tried and true" toolkit to do so.

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FED'S POWELL SAYS US ECONOMY MAY NEED MORE POLICY HELP TO AVOID 'PROLONGED' RECESSION

"We think we have a good toolkit, and that’s the one we’ll be using," Powell said, adding: "We do feel that our tools work. Forward guidance and asset purchasing work."

Forward guidance is a fairly straightforward tool the Fed relies on to help the economy. Essentially, the central bankers tell the public about the likely course of monetary policy, including whether or not they intend to cut or raise interest rates.

US CONSUMERS' EXPECTATIONS DETERIORATED 'SHARPLY' IN APRIL, FED SAYS

When central bankers provide the public with forward guidance, they can use it to make informed decisions about spending and investments.

The Fed began using forward guidance in the early 2000s; before a rate-setting meeting in June 2004 — at which policymakers voted to increase interest rates — the Federal Open Market Committee signaled that it was going to tighten monetary policy.

It relied on the tool again during the 2008 financial crisis, when it slashed interest rates to near-zero and then used forward guidance to let the public know the likely course of monetary policy in the recession's aftermath.

For instance, after a meeting in December 2008, the FOMC wrote that weak economic conditions were "likely to warrant exceptionally low levels of the federal funds rate for some time" — letting the public know that interest rate hikes weren't coming anytime soon.

FED PLEDGES AGGRESSIVE ACTION TO SUPPORT US ECONOMY

The Fed has continued to rely on forward guidance during the economic lockdown triggered by the virus outbreak.

Fed officials left interest rates near-zero during their April meeting, and in their post-meeting statement, reiterated previous guidance that the benchmark federal fund rate will remain at a range between 0 percent and 0.25 percent "until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

Some members also indicated they'd like to designate a specific date before rates could be raised, according to recent meeting minutes.

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Stocks Making Big Moves After Hours: Kezar Life Sciences, Smartsheet, Cloudera, Zuora

Kezar Life Sciences, Inc. (KZR) – Shares of the clinical-stage biotechnology company soared nearly 80% after closing bell. The company’s lead drug candidate is KZR-616, a selective inhibitor of immunoproteasome that plays a crucial role in the immune system.

KZR-616 is under a phase Ib/II study in systemic lupus erythematosus patients with and without nephritis, dubbed MISSION. In the study, KZR-616 is administered as a subcutaneous injection weekly for 13 weeks or 24 weeks.

On Wednesday, the company announced an update from MISSION trial saying that KZR-616 showed improvement on exploratory efficacy measures across seven measures of disease activity. Two of two patients with Lupus Nephritis saw greater than 50% reduction in proteinuria.

Smartsheet Inc. (SMAR) – The cloud platform service provider tanked about 25% on Wednesday after hours. The company issued a weaker-than-expected outlook for the second quarter. Smartsheet sees second-quarter adjusted loss of $0.18 to $0.16 per share, wider than Thomson Reuters polled analysts’ current consensus estimate of $0.14 per share. Smartsheet expects revenues for the second quarter of $86 million to $87 million, lower than consensus of $88.23 million.

Air Transport Services Group (ATSG) – The air cargo transportation provider’s shares gained nearly 10% in extended session after tech giant Amazon.com Inc. (AMZN) Wednesday evening announced it will lease 12 converted Boeing 767-300 passenger planes from Air Transport Services. One of the new aircraft was added to Amazon’s existing fleet of 70 aircraft last month, while the rest will be delivered in 2021, Amazon announced.

Zuora, Inc. (ZUO) – Shares of the cloud-based subscription platform rose nearly 20% after the market closed on Wednesday. The company’s first-quarter results trumped Wall Street estimates. The company reported adjusted loss of $7.5 million or $0.06 per share, narrower than last year’s loss of $12.2 million or $0.11 per share. Revenues were $73.9 million, an increase of 15% year-over-year. Analysts polled by Thomson Reuters estimated loss of $0.10 per share and revenues of $70.93 million.

Cloudera Inc. (CLDR) – Shares of the enterprise software company plunged 11% in extended trading session Wednesday. The company’s second-quarter revenue outlook fell short of current Street estimates. Cloudera sees second-quarter adjusted earnings of $0.06 to $0.07 per share and revenues of $206 million to $209 million. Analysts polled by Thomson Reuters currently estimate earnings of $0.05 per share on revenues of $212.2 million. For the full year, Cloudera sees adjusted earnings of $0.26 to $0.30 per share on revenues of $825 million to $845 million, compared to analysts’ current consensus of earnings of $0.23 per share and revenues of $858.37 million.

“The business outlook is based on the assumption that the recessionary impact of the coronavirus pandemic (COVID-19) will peak in Cloudera’s second and third quarters of fiscal 2021 and moderate in the fourth quarter of our fiscal 2021,” the company said in a statement.

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Trump says RNC leaving North Carolina, blames Democratic governor

GOP to relocate Republican Convention from North Carolina

President Trump announced the GOP is relocating the Republican National Convention due to coronavirus restrictions in North Carolina. FOX Business’ Cheryl Casone with more.

North Carolina will miss out on millions of dollars in revenue from the Republican National Convention after Gov. Roy Cooper and the GOP couldn't come to an agreement about holding such a large event amid coronavirus risks, President Trump said.

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"Had long planned to have the Republican National Convention in Charlotte, North Carolina, a place I love," Trump wrote on Twitter on Tuesday night. "Now, NC Governor Roy Cooper and his representatives refuse to guarantee that we can have use of the Spectrum Arena – Spend millions of dollars, have everybody arrive, and then tell them they will not be able to gain entry."

RACEWAY DEFIES NORTH CAROLINA GOVERNOR, HOSTS ANOTHER CROWD DESPITE CORONAVIRUS WARNING

"Because of NC Governor, we are now forced to seek another State to host the 2020 Republican National Convention," Trump wrote.

Cooper could agree to a scaled-down convention but not the full-scale convention he said RNC officials wanted, the Democratic governor wrote in a letter to RNC officials on Tuesday afternoon. After Trump said the RNC would pick a new state on Tuesday night, Cooper said the news was "unfortunate."

"We have been committed to a safe RNC convention in North Carolina and it’s unfortunate they never agreed to scale down and make changes to keep people safe," Cooper wrote on Twitter. "Protecting public health and safety during this pandemic is a priority."

Other states have jumped at the chance to host the RNC.

Sen. Kelly Loeffler, R-Ga., told Fox News that she has pushed for the RNC to move to her home state.

North Carolina Gov. Roy Cooper listens to a question during a briefing on the coronavirus pandemic at the Emergency Operations Center in Raleigh, N.C., Wednesday, May 20, 2020. (Ethan Hyman/The News & Observer via AP)

"I've spoken to the president about coming to Georgia," Loeffler said. "I would love for him to have a rally or even hold the convention in the state of Georgia. And I've actually spoken to him and the vice president about that."

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Lt. Gov. Dan Forest, Cooper's rival in the 2020 governor's race, said losing the RNC would hurt North Carolina businesses when they need help the most.

"When it comes to the convention right now, you are talking about $160 million of revenue poured into the state and that has a massive impact … at a time that it's needed most, especially for restaurants and hotels and people like that who have been struggling the most," Forest told FOX Business' Stuart Varney in May.

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Box office could see 50 percent drop in ticket sales this year, analyst finds

The coronavirus will slash box office revenues in half this year, and the pandemic is now poised to weaken the longtime status of movie theaters as destinations for first-run movies, according to an influential media analyst.

Revenue from ticket sales will plunge to $5.5 billion this year, down more than 50 percent from $11.4 billion in 2019, MoffettNathanson analyst Michael Nathanson predicted on Tuesday. The drop could get steeper if theaters don’t reopen in July and if summer blockbusters like Warner Bros.’ “Tenet,” set to debut July 17,  or Disney’s “Mulan,” scheduled for July 24, get pushed back to later in the year.

The analyst predicted “a significant bounceback” in 2021 to $9.7 billion in ticket sales, partly because a better-looking crop of movies is slated for release next year. But he also noted that movie theaters can’t count on their exclusive 90-day window for new releases to remain intact.

The pandemic has not only kept movie theaters closed since March, but also pushed studios to bypass the theatrical window, which gave movie theaters a 90-day period to exclusively show new releases. In recent weeks, Universal Pictures released “Trolls World Tour” directly to video-streaming services instead of delaying it for when cinemas reopen.

The kids’ flick sequel reportedly generated more than $100 million in home rentals during its first three weeks — more than the original “Trolls” movie reaped in a five-month theatrical release.

“This unprecedented time, as movie theaters around the world have been closed, has led to headline-making experiments in studio windowing,” Nathanson said. “Before the shutdowns, these tests would have been met with strenuous push backs and likely blackouts by exhibitors.”

Post-pandemic, Nathanson expects studios to narrow the window, and in some cases, bypass them altogether as streaming services like Netflix, HBO Max, Disney+ and Amazon Prime Video, have gained in importance. 

“As long as multiple studios push forward with premium video on demand or some other form of window changes, the balance of power in favor of studios shifts even more in their favor and reduces the leverage the exhibitors have as they would be unlikely to boycott multiple studios’ upcoming releases,” he wrote.

In the meantime, Nathanson said it will be difficult for the Hollywood studios behind big-budget flicks to move forward with summer release dates if major markets like New York, San Francisco and Los Angeles, which have yet to set a reopening date, aren’t ready to open.

“Given the uncertainty around the key questions we mention above, including sticking to July release dates, when key markets reopen and willingness of movie-goers to return before a vaccine, our estimates today are very much a work in process with lots of volatility in the months ahead,” the analyst said.

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Grindr buyer reportedly has ties to Chinese owner of app

The investor group that’s buying Grindr has connections to the Chinese tech firm that was forced to sell the gay dating app in the first place, a new report says.

Federal regulators last week approved Beijing Kunlun Tech Co.’s sale of Grindr to a company called San Vicente Acquisition LLC. The Committee on Foreign Investment in the US ordered Kunlun to dump Grindr last year amid concerns about staffers in China having access to sensitive user data.

But Kunlun has personal and financial ties to San Vicente, which was incorporated less than four months ago, Reuters reported Tuesday.

A “close business associate” of Kunlun founder Zhou Yahui worked to raise money for a fund to purchase Grindr, and two of that fund’s partners later joined San Vicente, according to the news agency. Kunlun also offered San Vicente help with financing but did not do the same for two other groups interested in the app, the report says.

It’s reportedly unclear what Kunlun told the Committee on Foreign Investment and whether the panel had concerns about about the ties. Kunlun did not immediately respond to a request for comment Tuesday morning.

“The buyers for Grindr were selected after an extensive and unbiased bidding process that complied fully with all applicable regulations, as the receipt of all necessary approvals — including CFIUS — demonstrates,” a Grindr spokeswoman told Reuters.

The committee reportedly does not reveal the reasons for its orders. But Kunlun has faced scrutiny for giving some of its engineers access to a cache of highly sensitive information from Grindr about millions of Americans — including private messages and HIV status, as Reuters reported last year.

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Americans' retirement plans are improving, but here's how to make yours even better

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Statistics on the average American's retirement plan are usually pretty dire. Many people struggle to save as much as they'd like to, and an alarming number of people haven't begun saving for retirement at all. But the news isn't all bad.

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American workers' confidence in their retirement plans is rising, according to a recent Employee Benefit Research Institute (EBRI) survey, with two thirds saying they are at least somewhat confident that they are doing a good job preparing financially for retirement, and a quarter saying they are very confident. The survey also reported an uptick in the number of respondents who said they've taken some key steps to prepare for retirement, compared to 2019.

CORONAVIRUS PUTS FULL SOCIAL SECURITY BENEFITS AT RISK YEARS EARLIER THAN EXPECTED, RESEARCHERS SAY

Despite these positive signs, there's still a lot of room for improvement. Here are a few steps you can take to improve your retirement readiness right now.

Estimate how much money you’ll spend in retirement

About 44% of those surveyed said they estimated how much they would need each month in retirement, up from 39% in 2019. But that still means 56% of people aren't doing this, which could prove dangerous. Without a plan for how much you'll spend in retirement, it's easy to save too little and run out of savings prematurely.

Estimating retirement expenses isn't easy because you don't always know how your spending will change between now and retirement. But you can use your current spending as a baseline and adjust up or down as necessary. You won't need to save for retirement in retirement, and you probably won't have to pay for child care anymore, so you can leave those costs out of your new budget. But you might spend more on other things, like transportation, if you plan to travel often. Or you may need to budget more money for the hobbies you plan to enjoy in retirement.

CORONAVIRUS FORCING EARLY RETIREMENT? HERE ARE YOUR OPTIONS

Once you have a rough monthly estimate, you can multiply this by 12 to get a rough annual estimate, and then multiply that by the estimated number of years of your retirement, adding 3% annually for inflation, to figure out how much you need to save in total. Use a retirement calculator to estimate how much your investments could grow to between now and retirement. Subtract money you expect from other sources, like Social Security, a pension, or an employer 401(k) match, to determine how much you must save on your own. Then, make adjustments as necessary until you have a plan that works for you.

Know how you’ll cover a large emergency

Surprise expenses can affect you at every stage of your life, and if they happen in retirement, they can derail your entire plan. Yet only 38% of workers EBRI surveyed reported preparing for emergencies and large expenses in retirement. This is still an improvement over the 2019 survey results, when just 31% said the same, but it means a lot of people are taking a big risk when it comes to their financial security.

CORONAVIRUS DRIVES RETIREES TO SPEND ‘MUCH MORE’ ON THIS EXPENSE THAN ANTICIPATED

Workers should have an emergency fund to help them cover unplanned expenses, and they should carry this into retirement to help them cover surprise bills so they don't have to dip into the money they've set aside for their routine living expenses. Retirees may want to have an even larger emergency fund than workers since they don't have a job to provide income to replenish their emergency fund after they've used it. You should definitely save at least three months' worth of living expenses for emergencies, but feel free to save six months' worth or more if you want to feel extra secure.

You should also make sure you have adequate insurance coverage for your home, vehicles, and family so you aren't stuck paying for large bills out of your own pocket. Consider making a backup plan for how you'll handle it if you find you're unable to cover a large expense. You might have to cut back monthly spending or forego some recreational activities, such as travel, so you have enough to cover your essential bills.

Plan for healthcare in retirement

Only 36% of workers surveyed said they'd calculated how much money they'd need for healthcare costs in retirement, up from 29% in 2019. It's easy to overlook healthcare costs because they're sporadic and unpredictable, apart from your monthly insurance premiums. And with your future health uncertain, it's hard to know what to plan for.

As I mentioned above, making sure you have adequate insurance is crucial for reducing your out-of-pocket costs. Medicare will cover some of your retirement healthcare costs, but it has its own premiums, copays, and deductibles, and it doesn't cover everything. You might want to purchase a supplemental health insurance policy as well to cover the things Medicare doesn't.

HOW TO GET A PERSONAL LOAN WITH GOOD CREDIT

You should also save for your retirement medical expenses in a health savings account (HSA) if you're eligible for one. Money you put in these accounts reduces your taxable income this year, and if you use it for medical expenses at any age, you won't pay taxes on it at all. You can also use your HSA funds for non-medical expenses, but then you'll pay taxes on them, plus a 20% early withdrawal penalty if you're under 65.

You must have a high-deductible health insurance plan to contribute to an HSA — one with a deductible of $1,400 or more for an individual in 2020 or $2,800 or more for a family. Individuals may contribute up to $3,550 in 2020, and families may contribute up to $7,100. Adults 55 and older may add another $1,000 to these limits. You're free to contribute up to the annual limit every year you have a qualifying insurance plan, but once you enroll in Medicare, you can no longer contribute to an HSA. You may still use your existing HSA funds, though.

65% OF PRE-RETIREES WORRY THEY WON'T MANAGE TO PAY FOR THIS MAJOR EXPENSE

Planning for the above three things isn't easy because there are so many variables involved, but you should at least attempt it so you have some idea of how much you must save for retirement. If you're worried about not having enough, you can always save a little more or delay your retirement, until you feel confident that the savings are sufficient.

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Apple CEO Tim Cook slams ‘senseless’ George Floyd death, pledges donation

Apple CEO Tim Cook condemned the “senseless” police killing of George Floyd in a note to employees announcing that the tech giant would donate money in response to the incident.

In the Sunday memo, Cook cast Floyd’s death as the latest manifestation of systemic racism that has affected even his own staff. Just 9 percent of Apple’s employees were black as of December 2018, according to company data.

“I have heard from so many of you that you feel afraid — afraid in your communities, afraid in your daily lives, and, most cruelly of all, afraid in your own skin,” Cook said in the note, which was published by multiple news outlets.

“To our colleagues in the Black community — we see you,” he added. “You matter, your lives matter, and you are valued here at Apple.”

Cook joined several other tech giants in speaking out against racism this weekend amid sometimes violent protests over Floyd’s death last week in Minneapolis. Facebook chief Mark Zuckerberg said the company would give $10 million to “groups working on racial justice,” while Amazon, Netflix and Instagram issued statements expressing support for their black employees and users.

Cook said Apple also made donations Sunday to organizations including the Equal Justice Initiative, a nonprofit focused on criminal justice reform. Cook did not name the other organizations or disclose how much money Apple donated, but he said the company would match certain employee donations two-for-one during the month of June.

“To create change, we have to reexamine our own views and actions in light of a pain that is deeply felt but too often ignored,” Cook said in the memo.

Apple did not immediately respond to a request for comment Monday morning.

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BT cut off our vulnerable father in the lockdown

Our 84-year-old father lives in an assisted-living complex, currently in lockdown. He is confused by the sudden change in his everyday life and upset we are not visiting. Our only means of contact is by daily calls to his BT landline as he is unable to use a mobile or computer. But this has been out of order for more than 10 days.

My brother has been in regular communication with BT, but with no success. At first he was told the line was fine and we should buy another handset. Then he was informed repeatedly that an engineer was due out within 24 hours, and last Friday he was assured the line would be fixed by close of business on Saturday – more than 10 days since the problem was reported. The line was not repaired but BT closed the case. We called again and had confirmation the case was tagged on to another in the same complex.

However, the phone line is still not working and my brother has spent another frustrating 45 minutes doing battle with BT. All it could say was “an engineer is working on it” – no estimate of how long it will take, no description of the fault and no way to escalate it.

There were other problems in the area during some of last week but these are now resolved. The main office line into the housing complex is working, but my father’s phone remains out of order.
SH
, on behalf of SH, Maghull, Merseyside

We feel your frustration. While there are challenges for engineers carrying out repairs in care homes during lockdown, it is disappointing that a vulnerable individual was left incommunicado.

As soon as we got in touch, BT assured us the line had now been fixed. It says: “We’re very sorry for the time it has taken to reconnect SH’s landline and for any inconvenience caused, but there were a number of factors that we needed to investigate. Following an engineer visit (when the engineer wore PPE), the landline is now fully up and running. Moving forward, SH is noted as a vulnerable customer on our system, and his family has details of who to contact if there are any further issues.”

Among other initiatives offered to vulnerable landline-only customers, BT has removed out-of-bundle charges for the most critical services, such as UK landline and mobile calls, and introduced a £5-a-month cap so customers such as your father can make the essential calls without worrying about the final bill.

We welcome letters but cannot answer individually. Email us at [email protected] Please include a daytime phone number. Submission and publication of all letters is subject to our terms and conditions: http://gu.com/letters-terms

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U.S. Personal Income Unexpectedly Spikes Due To Stimulus Checks

Reflecting the distribution of stimulus checks by the federal government, the Commerce Department released a report on Friday unexpectedly showing a substantial increase in U.S. personal income in the month of April.

The Commerce Department said personal income spiked by 10.5 percent in April after tumbling by a revised 2.2 percent in March.

The jump in personal income came as a surprise to economists, who had expected income to plunge by 6.5 percent compared to the 2.0 percent slump originally reported for the previous month.

Disposable personal income, or personal income less personal current taxes, also soared by 13.4 percent in April following a 1.8 percent drop in March.

Meanwhile, the report showed a steep drop in personal spending, reflecting the impact of the coronavirus-induced lockdown.

The Commerce Department said personal spending plummeted by 13.6 percent in April after a revised 6.9 percent slump in March.

Economists had expected spending to tumble by 12.6 percent compared to the 7.5 percent nosedive originally reported for the previous month.

“The 13.2% m/m plunge in real personal spending in April, which leaves consumption nearly 20% below its February level, illustrates the full extent of the hit to demand from the coronavirus lockdowns,” said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, “But the surge in personal incomes, as the stimulus cheques came through, should help to support the recovery.”

With income spiking and spending plunging, personal saving as a percentage of disposable personal income surged up to a record high 33.0 percent in April from 12.7 percent in March.

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