“Business has been forced to adjust itself to staggering acceleration in the rate of change,” observed McKinsey, a consultancy, in a promotional pamphlet it published in 1940. “What period in history has ever presented more difficult problems for the executive?” Naturally, demand for McKinsey’s advice was soaring, it wrote. More
CoRPORATE America’s profit engine has been remarkably robust over the past few years, even amid stubborn inflation and elevated interest rates. Faced with Donald Trump’s assault on global trade, however, it is starting to sputter. Companies from General Motors, a carmaker, to Nike, a sportswear brand, have seen their profits plummet owing to Mr Trump’s levies on imports. Goldman Sachs, a bank, reckons that American businesses are absorbing around three-fifths of the cost of the duties. More
Few firms in America are more unloved than health insurers. As gatekeepers of the world’s costliest health-care system, their miserly response to claims is a constant source of patient unhappiness. Investors, by contrast, have long regarded them as soothingly safe bets: boring businesses with steady returns. That is no longer the case. UnitedHealth Group, the country’s largest insurer, stunned investors in April by reporting unexpectedly disappointing results. Within weeks it had replaced its boss and scrapped its profit forecast for the year. Its latest results, released on July 29th, offered more misery. Since November UnitedHealth’s market value has collapsed from $575bn to $240bn. More
America’s biggest technology companies are combining Silicon Valley returns with Ruhr Valley balance-sheets. Investors who bought shares in Alphabet, Meta and Microsoft a decade ago are sitting on eight times their money, excluding dividends. Spending on data centres means the firms possess property and equipment (accounting-speak for hard assets) worth more than 60% of their equity book value, up from 20% over the same period. Add the capital expenditure of these firms during the past year to that of Amazon and Oracle, two more tech giants, and the sum is greater than the outlay of all America’s listed industrial companies combined. Jason Thomas of Carlyle, an investment firm, estimates that the spending boom was responsible for a third of America’s economic growth during the most recent quarter. More
A show called “Hello Kitty and Friends Supercute Adventures” might be expected to feature the world-famous cat more prominently than one of her lesser-known companions. In fact in its most-watched episode, “Kuromi’s Bad Day”, Hello Kitty plays a supporting role, cheering up grumpy Kuromi, a rabbit dressed in hot pink, with milk and a doughnut. Nor is this an isolated relegation. In an annual poll of fans’ favourite characters, Hello Kitty has won only once in the past decade. More
Read the headlines and the easy conclusion is that big business has abandoned the fight against climate change. In the past two weeks BP, an oil giant, sold its American onshore-wind business; Jaguar Land Rover, a carmaker, has reportedly delayed the launch of its new electric Range Rover; and HSBC, a bank, left the Net-Zero Banking Alliance (nzba), a group committed to lending in a greener way. But these bits of news are only part of the picture. Taken as a whole, companies are quietly making progress on their climate goals. More
America’s tech giants are masters of the digital realm. Yet as they bet stupendous sums on artificial intelligence (ai), their ambitions are facing constraints in the physical world. Shortages of chips and data-centre equipment such as transformers and switching gear mean soaring prices and lengthy waits. Just as pressing is access to energy as utilities struggle to match the demands of Silicon Valley. On July 24th President Donald Trump published an “ai action plan” which describes America’s stagnating energy capacity as a threat to the country’s “ai dominance”. How is big tech coping with a worsening power crunch? More
Louis Vuitton’s new 17,000-square-foot development in Shanghai is, quite literally, the luxury brand’s Chinese flagship. The structure, which serves as a store, restaurant, museum and billboard, is shaped like a giant boat, its hull emblazoned with Louis Vuitton’s unmistakable monogram print. To some, it is also a metaphor for Louis Vuitton’s parent company, LVMH, which is floundering in China and beyond. Is it a superyacht headed for promising new waters, asks Flavio Cereda-Parin of GAM, an asset manager, or “Titanic 2.0”? More
