Raphael Stevens

Digital World Acquisition Corp., the publicly traded blank check company that planned to merge with former president Donald Trump’s social media company, fired CEO Patrick Orlando.
DWAC cited “unprecedented headwinds” that necessitated a leadership change in order for the so-called SPAC to enter a “new phase.”
DWAC has said that it faces investigations by the Securities and Exchange Commission, and by federal prosecutors in New York.
The news comes as Trump faces potential indictment in Manhattan over a hush money payoff to porn star Stormy Daniels before the 2016 election.

Former US president Donald Trump announced plans on October 20 to launch his own social networking platform called “TRUTH Social,” which is expected to begin its beta launch for “invited guests” next month.
Chris Delmas | AFP | Getty Images

Digital World Acquisition Corp., the publicly traded blank check company that planned to merge with former president Donald Trump’s social media company, fired its CEO earlier this week, according to a Wednesday filing.
The former CEO, Patrick Orlando, will remain as a director for the company. He and his other company ARC Global Investments each own 10% of DWAC. The DWAC board appointed Eric Swider, another director, to serve as interim chief executive while the board works on executing a final succession plan. Orlando and a DWAC representative didn’t immediately respond to requests for comment.

In a Wednesday announcement, DWAC cited “unprecedented headwinds” that necessitated a leadership change in order for the company to enter a “new phase.”
The company has been under investigation by the Securities and Exchange Commission, as well as by federal prosecutors in New York City. Amid those legal obstacles, Digital World has also faced financial struggles.

Patrick Orlando-Cachay leave Manhattan Supreme court with their attorney Susan Karten after the arraignment of Nicholas Brooks Tuesday, Jan. 4, 2011 in New York. Brooks pleaded not guilty to murdering his swimsuit designer girlfriend, Sylvie Cachay, in a trendy New York City hotel.
Mary Altaffer | AP

The company had aimed to merge with Trump Media and Technology Group, the parent of Truth Social, but has delayed finalizing that deal. In November, the company secured a deadline extension for the Trump Media merger until September 2023. If it had not gotten that extension, it faced liquidation. The delays have cost the company $100 million.
“I know it has been a challenging process for the shareholders,” Swider said in Wednesday’s announcement.
The news of Orlando’s termination comes as Trump faces potential indictment in Manhattan over a hush money payment to porn star Stormy Daniels before the 2016 election.
Trump was also recently reinstated to social networks such as Twitter and Facebook following a ban on his social media messages during the Jan. 6, 2021, Capitol insurrection, when hundreds of his followers invaded Congress.

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Norfolk Southern’s CEO, Alan Shaw, said he supported portions of two bipartisan bills aimed at beefing up rail safety.
Shaw told lawmakers during his second Senate hearing within weeks that the company is making improvements.
The bills were introduced after a Norfolk Southern train derailed last month in eastern Ohio, releasing toxic chemicals into the enviornment.

Norfolk Southern CEO Alan Shaw testifies at a hearing before the Senate Environment and Public Works Committee on protecting public health and the environment in the wake of the Norfolk Southern train derailment and chemical release in East Palestine, Ohio in Washington, D.C., the United States, March 9, 2023.
Aaron Schwartz | Xinhua News Agency | Getty Images

Norfolk Southern CEO Alan Shaw on Wednesday told senators that his railroad company supports parts of two bipartisan rail safety bills that came in the wake of a derailment last month of a train carrying toxic materials in Ohio.
Testifying in front of the Senate Committee on Commerce, Science and Transportation, Shaw said the Railway Safety Act and the RAIL Act include “measures with the potential for meaningful improvement, such as funding additional training, better advanced notifications, accelerating the phase out of older tank cars, and much more.”

Shaw did not fully endorse the Railway Safety Act, which includes provisions calling for two-person crews on all railroad locomotives. “We’re not aware of any data that links crew size with safety,” Shaw said Wednesday.
“If the railroads had it their way — down to a one-person crew — and they reduced the conductor position to ground-based, meaning a person at a pickup truck driving to the site, that puts engineers in danger,” said Clyde Whitaker, an official at the SMART Transportation Division union, in response. “It also puts the response time and the assessment of the issue in danger.”
The legislation was introduced by Sens. J.D. Vance, R-Ohio, and Sherrod Brown, D-Ohio, in the weeks following the Feb. 3 East Palestine, Ohio, train derailment, which released toxic chemicals into the surrounding area.
In prepared remarks, Shaw said he agrees in “principle” with portions of the legislation, such as “establishing performance standards, maintenance standards, and alert thresholds for safety sensors.”
“We encourage even stricter standards for tank car design,” Shaw said in prepared remarks. “There are significant opportunities for advanced technology to enhance rail safety, and we encourage Congress to consider additional research into on-board rail car defect detection technology.”

Brown, who spoke at the hearing along with Vance, suggested the problems with Norfolk Southern were broader, pointing to 579 violations during one recent fiscal year, with the company paying an average fine of $3,300.
Ohio Gov. Mike DeWine said at the hearing that he agrees “with the changes in the law” that the bill proposes, as well as the RAIL Act proposed last week by Reps. Bill Johnson, R-Ohio, and Emilia Strong Sykes, D-Ohio. DeWine, a Republican, said lawmakers added his request to include a provision requiring rail carriers to provide advance notification and information to state emergency response officials about the goods they are transporting.
Ohio sued Norfolk Southern last week, seeking damages, civil penalties and a “declaratory judgement that Norfolk Southern is responsible,” Attorney General Dave Yost said.

Making improvements

Shaw, who testified before the Senate Committee on Environment and Public Works two weeks ago, said in prepared remarks that the company will enhance its hot bearing detector network, deploy more acoustic bearing detectors, accelerate its inspection program and improve practices for detectors. Norfolk Southern has said the detectors were working as designed in East Palestine, but it is adding 200 additional hotbox detectors.
National Transportation Safety Board Chairwoman Jennifer Homendy said the agency supports a quicker shift away from an old standard of tank cars, as well as improved information sharing between emergency responders and railroads.
“Even one rail car of any hazardous material justifies notifying emergency responders, not 20 or more than 35 loaded tank cars, which could contain 1 million gallons of hazardous materials,” Homendy wrote in prepared remarks.
The NTSB on Monday released three preliminary reports on recent incidents, including a train derailment in Alabama on March 9, a collision with a dump truck on March 7 that killed the train conductor and a derailment on March 4 in Springfield, Ohio.
Homendy suggested expanding the definition of high-hazard flammable trains, as well as providing real-time information for responders and residents.
In his remarks, Shaw addressed the controversial practice of precision scheduled railroading, which has been criticized as a method for cost-cutting and driving a low operating ratio. Shaw said the company has taken “a more balanced approached to service, productivity, and growth” by “aggressively” hiring craft railroaders.
“No longer is identifying defects the goal of inspections but rather minimize the time it takes to perform them or the elimination of them altogether,” said Whitaker. “Compound this with the fact that the railroads are on a determined course to grow these trains to astronomical lengths and you have a predictable outcome, and that outcome is East Palestine.”
From 2017 to 2021, railroads cut their workforce by 22% and reduced investment in the network by 24%, though accident rates increased by 14% over the time period, according to Sen. Maria Cantwell, D-Wash., who chairs the committee that held the hearing Wednesday.

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Shares of Carvana popped after the embattled used car retailer pre-announced guidance for the first quarter and released plans to restructure some of its $9 billion debt load.
Carvana expects a first-quarter loss of between $50 million and $100 million, drastic improvement from a loss of $348 million it reported a year earlier, despite significantly lower sales and revenue.
The company is offering noteholders the option to exchange their unsecured notes at a premium to current trading prices in exchange for new secured notes.

A Carvana glass tower sits illuminated on Feb. 23, 2022, in Oak Brook, Illinois.
Armando L. Sanchez | Tribune News Service | Getty Images

Shares of Carvana popped during early trading Wednesday after the embattled used car retailer pre-announced guidance for the first quarter and released plans to restructure some of its $9 billion debt load.
The company’s stock rose by nearly 30% on Wednesday morning before leveling off at around $9.50 a share, up roughly 20%. The stock has more than doubled this year following a rapid decline last year as the company’s operations and earnings disappointed Wall Street.

Carvana expects a first-quarter loss of between $50 million and $100 million, drastic improvement from a loss of $348 million it reported a year earlier, despite significantly lower sales and revenue.
As for Carvana’s debt, the company is offering noteholders the option to exchange their unsecured notes at a premium to current trading prices in exchange for new secured notes. The actions will provide exchanging noteholders with “collateral while reducing Carvana’s cash interest expense and maintaining significant flexibility,” the company said in a filing Wednesday with the Securities and Exchange Commission.
If fully subscribed, the exchange offer would reduce the face value of Carvana’s outstanding $5.7 billion of unsecured bond debt by $1.3 billion and its annual cash interest bill by roughly $100 million, according to the Financial Times.
Carvana was a coveted stock during the Covid pandemic, as consumers moved toward online car purchasing and the used vehicle market skyrocketed due to a lack of inventory of new vehicles. But the company failed to capitalize at the right time and launched a restructuring of the business focused on cost reductions rather than growth.
“2022 was a really hard year for us by any measure. It was a year that provided experiences we never wanted to have. It was a year we didn’t foresee. While experiences you don’t foresee and always hoped to avoid are difficult, they are often where you learn the most,” Carvana CEO Ernie Garcia said Tuesday in the company’s 2022 annual report.

For the first quarter, Carvana said it expects retail units sold to be between 76,000 and 79,000, compared with 105,185 a year ago, on net sales and operating revenues of between $2.4 billion and $2.6 billion, down from $3.5 billion a year earlier.
— CNBC’s Michael Bloom contributed to this report.

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Ford will begin reporting its financial results by business unit, instead of by region, and will release revised results that will show how the new business units would have performed in 2021 and 2022.
The changes amount to the most detailed look yet by any legacy automaker into the finances behind the EV business.
Wall Street is taking a wait-and-see approach to the changes, but is expecting significant EV unit losses.

Incoming Ford CEO Jim Farley (left) and Ford Executive Chairman Bill Ford Jr. pose with a 2021 F-150 during an event Sept. 17, 2020 at the company’s Michigan plant that produces the pickup.
Michael Wayland | CNBC

DETROIT – Ford Motor is about to tell investors what they’ve long wondered: How much is the transition to electric vehicles costing?
The automaker on Thursday plans to begin reporting its financial results by business unit, instead of by region, ushering in the new reporting structure with a “teach-in” for analysts and media — on the theme of “Ford Refounded” — and releasing revised versions of its financial results that will reveal how the new business units would have performed in 2021 and 2022.

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Those new business units include “Ford Blue,” Ford’s traditional internal combustion engine business; its “Model e” electric vehicle unit; the “Ford Pro” commercial and government fleet business; “Ford Next,” which includes nonautomotive mobility solutions and other future tech; and its existing Ford Credit financial services subsidiary.
The changes amount to the most detailed look yet by any legacy automaker into the finances behind the EV business.
The carmaker is expected to release profits and losses, revenue, margins and earnings before interest and taxes, or EBIT, for each of the units – giving investors and analysts a baseline for comparisons as the company’s transformation unfolds.
As part of a sweeping rethink of its business under CEO Jim Farley, Ford decided last year to separate its primary profit engines – internal combustion vehicles and its commercial fleet business – from the company’s emerging all-electric vehicles, which are not expected to be profitable for at least a few years.
Farley and other executives have emphasized that the reporting changes aren’t just about disclosure: The new format reflects the way Ford’s executive team thinks about and runs the business.

“The changes are significant. It’s not the first time Ford Motor Co. has had to reimagine its future or form its own path that’s different from other companies,” Farley said when announcing the new business units on March 2, 2022. “Is this about winning? 100%.”
Wall Street is taking a wait-and-see approach to the changes. Analysts on average maintain a hold rating on the stock with a $13.50 price target, according to ratings compiled by FactSet. The shares traded Wednesday for about $11.70 per share.
Shares of Ford jumped by 8.4% the day executives announced the new businesses, but the stock is down 35% since then, dragged lower by changing market conditions, supply chain issues and underwhelming quarterly earnings.
The company will report its first-quarter results under the new format on May 2 and will host a capital markets day on May 22.

EV losses

Farley argued last year that Ford’s stand-alone EV business will “produce as much excitement as any pure EV competitor, but with scale and resources that no start-up could ever match.”
Still, he described the legacy business as “a profit and cash engine” for the 120-year-old automaker. As with other automakers and EV startups, investors should expect deep losses when it comes to Ford’s electric vehicle business, according to Wall Street analysts.
Model e is expected to include the company’s EV platforms, electronics, batteries, motors, and embedded software and digital experience.
Morgan Stanley’s Adam Jonas expects Ford Model e to have negative gross margins of between 10% and 20% with adjusted EBIT margins of between negative 20% and negative 30%. Both would imply significant losses.
Ford has said it expects 8% margins on its EVs — along with 2 million units in annual production of the vehicles — by 2026, helping to boost its overall adjusted profit margins to 10%. The company’s adjusted profit margin last year was 6.6%.
Deutsche Bank analyst Emmanuel Rosner believes Ford could be incurring gross losses of about $9,000 per EV sold. The analyst expects Ford to reveal Thursday Model e operating losses of $6 billion for 2022. That’s after accounting for significant research and development investments — roughly 65% of the company’s total R&D — into the EV unit.

“The EV business could report much deeper losses than investors expect, which could make Ford’s target for 8% EV EBIT margin by 2026 particularly difficult to achieve,” Rosner said Monday in an investor note.
Aside from EV leader Tesla, no major automakers are expected to generate meaningful profits from electric vehicles for at least several years, as the industry works to increase EV output and manufacturing scale. That’s particularly true of EVs like Ford’s, as mass-market vehicles typically generate lower profits than luxury models.

Profit engine

Ford’s current bread and butter is vehicles with internal combustion engines, specifically its F-Series pickups, which have topped U.S. sales charts for more than 40 years.
The large pickups fuel the company’s operations and are expected to for “years to come,” Farley said when announcing the split last year.
Deutsche Bank estimates the Ford Blue traditional business could show an EBIT margin of 7.3% for 2022, more than offsetting last year’s EV losses.
Morgan Stanley’s Jonas said Ford’s new reporting structure should “confirm our view that the ICE business (Ford Blue) is highly cash flow generative and currently funding the capital consuming EV business.”
However, “Investors may question how long this can continue,” he said.

2023 Ford Super Duty F-350 Limited

Ford’s plan is to cut at least $3 billion in structural costs largely out of the traditional business by mid-decade to boost margins. Kumar Galhotra, head of Ford Blue, said the company expects to do this by reducing complexity, quality and structural costs over the next two to three years, he said in March 2022.
“Nothing is going to be off the table,” Galhotra said last March. “Our complexity needs to be radically simplified; our warranty costs need to be substantially lower. Our advertising cost needs to be what we do when we invest in our products. Those investments need to be made at world-class efficiency.”

Ford Pro surprise?

The pleasant surprise on Thursday may be the profitability of Ford Pro, the company’s fleet unit. Deutsche Bank estimates that Ford Pro would have been the company’s most profitable automotive unit in 2022, with an EBIT margin of 23.5%.
Ford has long been a significant player in the commercial fleet markets in North America and Europe with its deep expertise in pickups and its huge-selling line of Transit vans. More recently, it has looked to increase the profitability of its fleet operations with software and services that draw on its decades of experience serving fleet operators – and that take advantage of the connectivity and new technologies built into its latest vehicles.
Thanks in part to those new technology-enabled offerings, Ford Pro’s recent profit margins will almost certainly impress. But will they be sustainable? Deutsche Bank’s Rosner, who has a sell rating on Ford’s stock, wrote that he wonders if Ford Pro’s profitability “could come under pressure as the segment ramps up vehicles with expensive electric powertrains.”
Sales of EVs are expected to be a significant part of Ford Pro’s business in the coming years as the company introduces additional electric models tailored for its fleet customers. That will almost certainly hurt Ford Pro’s margins as Ford’s EV production ramps up. (In 2022, the numbers were still small: Only 6,500 of the roughly 105,000 Transit vans that Ford sold in the U.S. last year were EVs.)
Still, Ford Pro CEO Ted Cannis says fleet electrification offers new opportunities for Ford Pro.
“Our commercial customers are confused [about EVs], and they want a lot of help,” Cannis said at an Evercore utilities conference in January. “The key part for us to accelerate the move to electrification is to make it easier.”

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DirecTV said it reached a deal with Newsmax to once again carry the right wing cable TV channel.
The satellite TV provider and Newsmax had been in a months-long dispute.
DirecTV said it stemmed from financial differences between the two.

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DirecTV said Wednesday it reached a deal with Newsmax Media to once again carry the right wing network in its satellite-TV and streaming packages.
DirecTV had not carried Newsmax on its services since late January, when carriage negotiations broke down between the two companies. Newsmax had earlier alleged at the core of the dispute was “political discrimination,” with some politicians getting involved along the way, while DirecTV said it came down to economic differences.

Newsmax will return to DirecTV’s packages at no additional cost. Financial terms of the deal weren’t disclosed.
The TV network, run by CEO Christopher Ruddy, had been pushing to receive fees. Initially, DirecTV carried the network without paying fees and Newsmax relied on advertising revenue, which is typically the case for new TV channels.
“Newsmax recognizes and appreciates that DirecTV clearly supports diverse voices, including conservative ones,” Ruddy said in a statement, adding DirecTV helped give Newsmax its start nearly a decade ago.
Throughout the public dispute, DirecTV said such blackouts were a common occurrence in the pay-TV industry, and consumers were often “caught in the middle.”
“This resolution with Newsmax, resolving an all-too-common carriage dispute, underscores our dedication to delivering a wide array of programming and perspectives to our customers,” Bill Morrow, CEO of DirecTV, said in a statement.
Pay-TV providers like DirecTV have been bleeding customers in recent years due to the rise of streaming services. While negotiations between pay-TV distributors and TV channels have long been tense, such discussions have become increasingly fraught. Higher fees to TV networks often mean pay-TV package prices increase, accelerating the exodus of customers.

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Starbucks is launching its olive oil-infused Oleato line in the U.S. in select locations, starting this week.
The line, which is the brainchild of former CEO Howard Schultz, debuted in roughly two dozen Italian cafes in February.
Early reviews of the Oleato drinks in the U.S. press were largely negative.

Starbucks initial Oleato launch will launch three olive oil-infused drinks in stores across Italy.
Source: Starbucks

After launching olive oil-infused coffee in Italy, Starbucks is bringing its Oleato line stateside, starting Thursday.
The upscale Reserve Roasteries and select Reserve cafes in New York, Chicago and Seattle will sell the drinks first, as well as the original Starbucks location in Pike Place Market. Then, on Monday, customers at 550 locations across Seattle and Los Angeles will be able to buy the drinks.

The line launched in roughly two dozen Italian cafes in February. Former CEO Howard Schultz, who stepped down on Monday, went to Italy this summer, where he witnessed Sicilians drinking olive oil as a daily ritual. He, too, began drinking olive oil alongside his daily coffee and decided that Starbucks should try to mix the two together.
Oleato means “with oil” in Italian, according to Starbucks.
The initial Oleato lineup of drinks infuses olive oil into Starbucks’ Caffé Latte, Iced Shaken Espresso and cold foam. The Partanna olive oil is steamed with oat milk for the latte, shaken in the iced espresso drink and infused in vanilla sweet cream foam to create the “golden” foam that tops cold brews.
Starbucks hasn’t shared any details on how successful the line is in Italy, but early reviews in the U.S. press were largely negative. CNN Business said the olive oil “felt like too much,” while the New Yorker said the drink “tasted like a large spoonful of olive oil in coffee.”
The coffee giant plans to bring the Oleato drinks to Japan, the Middle East and the United Kingdom later this year.

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