Raphael Stevens

More stories

  • 163 Shares199 Views

    in Business

    Target ekes out slight growth in holiday-quarter sales, but warns of continued slowdown

    Target topped Wall Street’s earnings expectations for the first time in a year.
    Its holiday-quarter sales rose roughly 1% from the same period a year prior.
    CEO Brian Cornell in a release cited “a very challenging environment,” with groceries, beauty items and household essentials lifting sales as consumers focused on necessities.

    A shopper leaves a Target store in New York, August 15, 2021.
    Scott Mlyn | CNBC

    Target on Tuesday topped Wall Street’s earnings expectations for the first time in a year, as its holiday-quarter sales rose roughly 1% from the same period a year prior.
    Still, the big-box retailer revealed shrinking profit and margins and gave a conservative full-year outlook, saying customers are tossing fewer discretionary items into their shopping carts.

    The company said it expects that comparable sales, a key metric that tracks sales at stores open at least 13 months and online, will range from a low single-digit decline to a low single-digit increase for fiscal 2023. Target said it expects full-year earnings per share of between $7.75 and $8.75. That was below Wall Street’s expectations of $9.23 per share, according to StreetAccount estimates.
    CEO Brian Cornell said in a release the company performed well, despite “a very challenging environment,” with groceries, beauty items and household essentials lifting sales as consumers focused on necessities.
    “I think we’re being appropriate with our guidance in this environment,” Cornell said Tuesday morning on CNBC’s “Squawk Box.” “We know inflation is still high — it’s been very stubborn. It’s still at a very high level. We know interest rates are rising. And we’re going to watch the consumer really carefully.”
    Cornell will share more of Target’s plans for the year at an investor day in New York City later Tuesday morning.
    Shares of Target were down slightly in premarket trading Tuesday.

    Here’s what the company reported for its fiscal fourth quarter that ended Jan. 28, compared with Refinitiv consensus estimates:

    Earnings per share: $1.89 vs. $1.40 expected
    Revenue: $31.4 billion vs. $30.72 billion expected

    Though the company beat on the top and bottom lines, it cleared a bar that had been substantially lowered in recent months. 
    The big-box retailer, known for its lower-priced, but fashion-forward clothing, home goods and more, saw sales spike during the first two years of the Covid pandemic. Its annual total revenue has grown by about $31 billion – or nearly 40% – from fiscal 2019 to 2022.
    Yet over the past year, Target has faced a shift in both sales trends and market sentiment. The discounter became a poster child in the industry for inventory troubles, squeezed profit margins and concerns about inflation-pinched, middle-income consumers. The company missed Wall Street’s earnings expectations for the first three quarters of the fiscal year and warned investors to expect softer holiday sales. 
    Target’s net income for the period, which runs from November through January, fell by about 43% to $876 million, or $1.89 per share, from $1.54 billion, or $3.21 per share in the year-ago period.
    Comparable sales, also called same-store sales, rose 0.7% in the quarter. That surpassed Wall Street’s expectations for a decline of 1.6%, according to StreetAccount estimates.
    Customer traffic, which includes online and in stores, grew by 0.7% in the fourth quarter, though Target’s average ticket was roughly flat.
    Target said needs-based merchandise sold better in the quarter. Food and beverage made up its strongest category, with comparable sales rising by low double digits year over year. Essentials and beauty increased by high single digits, and several discretionary-focused categories, including home and apparel, declined, but the company didn’t specify by how much. 

    The company’s private-label brands, which are often cheaper than national brands, grew at a faster pace than overall sales. 
    One of Target’s weakest points has been its profit margins, which have been weighed down by markdowns and higher supply chain costs. Last summer, Target announced an aggressive inventory plan to clear through unwanted goods.
    Its inventory levels are in better shape than previous quarters, dropping by 3% year over year during the fiscal fourth quarter. Its inventory had been up about 14% year over year in the third quarter, 36% in the second quarter and 43% in the first quarter. 
    Target said that it has a different mix of merchandise, too. Inventory in discretionary categories fell about 13% compared with a year ago, as the retailer ordered more high-frequency items like food and paper towels.
    “We realized consumer spending habits have changed,” Cornell said on “Squawk Box.” “So we took a pretty bold action and said, ‘We’re going to address inventory. We’re going to get our inventory levels right.’ We finished the year exactly where we wanted to be.”
    The company has missed its goal of reaching healthier margins, though. It had promised an operating income margin rate around 6% in the back half of the fiscal year, when it cut its profit outlook in June for the second time. For the fourth quarter, Target’s operating margin was 3.7%, weaker than the 3.9% it posted for the third quarter but ahead of the 3.1% Wall Street was looking for, according to StreetAccount estimates. 
    “We’re on a multiyear journey to get back to pre-pandemic margin levels,” Cornell said. “Right now, mix is certainly impacting margins. We’re selling more lower-margin items like food and beverage and household essentials, and less of apparel and home, but that’s going to moderate over time.”
    Target now says it plans to return to its pre-pandemic rate of 6% beginning next fiscal year or later, depending on the economic backdrop and consumer demand. 
    Target’s stock has fallen nearly 40% from its all-time closing high. It closed Monday at $166.81 per share, bringing its market value to nearly $77 billion. So far this year, however, its shares have been up about 12% and outpaced the almost 4% growth of the S&P 500.

    WATCH LIVEWATCH IN THE APP More

  • 150 Shares109 Views

    in Finance

    Stocks making the biggest premarket moves: Dish, Target, Zoom, Arconic and more

    Dish Networks exhibit at CES 2016 in Las Vegas.
    Justin Solomon | CNBC

    Check out the companies making the biggest moves in premarket trading:
    Dish Network — The satellite company’s shares fell almost 5% amid its multi-day service outage and double-downgrade from Bank of America. Dish shares are down 13.5% in 2023 amid a 61.8% drop during the past 12 months.

    Target — The retailer gained 1.2% after reporting fiscal fourth-quarter earnings per share of $1.89, topping the $1.40 consensus of analysts polled by Refinitiv. Revenue also beat, but Target’s full-year EPS guidance came in below expectations.
    Arconic — Shares fell 3.5% following a downgrade to sell from neutral by Goldman Sachs. The firm cited an uncertain demand outlook in Europe.
    Celsius Holdings — The energy-drink maker rose 4.2% after being upgraded to outperform from neutral by Credit Suisse. The firm said the distribution agreement with Pepsi is going well and the long-term potential is high.
    Norwegian Cruise Line Holdings — Shares of the cruise company fell more than 5% in premarket trading Tuesday after Norwegian reported a wider-than-expected loss for the fourth quarter. The company lost an adjusted $1.04 per share on $1.52 billion of revenue. Analysts surveyed by FactSet’s StreetAccount were expecting a loss of 86 cents per share on $1.50 billion of revenue. Norwegian’s earnings guidance for 2023 also came in below expectations.
    Zoom Video —The video communications company rallied 6.9% in the premarket following a top- and bottom-line beat for the fourth quarter. Full-year revenue guidance came in lighter than expected, but its earnings guidance topped estimates.

    Dick’s Sporting Goods — The sporting-good retailer slid 2.6% after being downgraded by Citi to neutral from buy. The Wall Street firm said it expects near-term gross margin pressure to continue.
    Workday — The human resources software fell 2.4% after its revenue guidance for the first quarter came in lighter than expected. However, it beat estimates for fourth-quarter revenue and earnings, according to Refinitv.
    Hims & Hers Health — The telehealth stock jumped more than 9% after Hims & Hers Health reported quarterly results that exceeded estimates on the top and bottom lines. The firm posted a loss of 5 cents per share on revenue of $167.2 million. That surpassed consensus estimates of a loss of 7 cents per share on revenue of $161.2 million, according to Refinitiv.
    Advance Auto Parts — The automotive aftermarket parts company gained 4.4% after reporting fourth-quarter EPS of $2.88, topping a StreetAccount estimate of $2.41. Revenue also beat expectations.
    — CNBC’s Hakyung Kim, Alex Harring, Sarah Min, Jesse Pound and Michael Bloom contributed reporting.

    WATCH LIVEWATCH IN THE APP More

  • 138 Shares159 Views

    in Finance

    Credit Suisse ‘seriously breached’ obligations in Greensill case, Swiss regulator says

    Credit Suisse “seriously breached its supervisory obligations” in the context of its business relationship with financier Lex Greensill and his companies, Swiss regulator FINMA found Tuesday.
    The Swiss lender’s exposure to Greensill Capital led to massive reimbursements to investors after the supply chain finance firm collapsed in early 2021.

    The logo of Credit Suisse Group in Davos, Switzerland, on Monday, Jan. 16, 2023.
    Bloomberg | Bloomberg | Getty Images

    Credit Suisse “seriously breached its supervisory obligations” in the context of its business relationship with financier Lex Greensill and his companies, Swiss regulator FINMA concluded Tuesday.
    The embattled Swiss lender’s exposure to the London-based Greensill Capital resulted in massive reimbursements to investors after the supply chain finance firm collapsed in early 2021.

    “In its proceedings, FINMA concluded that Credit Suisse Group seriously breached its supervisory duty to adequately identify, limit and monitor risks in the context of the business relationship with Lex Greensill over a period of years,” the regulator said, adding that it also found “serious deficiencies in the bank’s organisational structures” during the period under investigation.
    “Furthermore, it did not sufficiently fulfil its supervisory duties as an asset manager. FINMA thus concludes that there has been a serious breach of Swiss supervisory law.”
    Credit Suisse CEO Ulrich Körner welcomed the conclusion of the FINMA investigation in a statement Tuesday.
    “This marks an important step towards the final resolution of the SCFF issue. FINMA’s review has reinforced many of the findings of the Board-initiated independent review and underlines the importance of the actions we have taken in recent years to strengthen our Risk and Compliance culture. We also continue to focus on maximizing recovery for fund investors,” he said.
    In March 2021, Credit Suisse closed four supply chain finance funds at short notice related to Greensill companies. The funds were distributed to qualified investors with client documentation indicating low risk, and client exposure sat at around $10 billion at the time of the closure.

    The Greensill saga was a key reason behind Credit Suisse’s massive overhaul of its risk management and compliance operations, alongside the collapse of Archegos Capital.
    Credit Suisse highlighted that, since March 2021, it has undergone senior management changes, implemented disciplinary measures and a new global accountability model, increased governance oversight and strengthened controls by moving risk oversight into a dedicated divisional risk management function.
    FINMA announced Tuesday that it has ordered remedial measures and opened four enforcement proceedings against former Credit Suisse managers.
    “In future, the bank will have to periodically review at executive board level the most important business relationships (around 500) in particular for counterparty risks,” the regulator said.
    “In addition, the bank is required to record the responsibilities of its approximately 600 highest-ranking employees in a responsibility document.”
    Credit Suisse noted that all of the requirements identified by the regulator “are being addressed through the organizational measures already underway.”
    “FINMA has not ordered any confiscation of profits in connection with the proceedings and the implementation of the additional measures is not expected to result in significant costs for Credit Suisse,” the bank added.
    Credit Suisse shares fell 1.8% during early trade in Europe.

    WATCH LIVEWATCH IN THE APP More

  • 150 Shares99 Views

    in Finance

    The U.S. and China have a culture clash around their telephone hotline

    After the U.S. shot down an alleged Chinese spy balloon this month, China’s defense ministry declined a call with its U.S. counterpart, according to statements from both sides.
    Chinese culture is a reason why, said Shen Yamei, deputy director and associate research fellow at state-backed think tank China Institute of International Studies’ department for American studies.
    The default U.S. view is quite different.

    Flags of the U.S. and China displayed on a table ahead of a meeting.
    Jason Lee | AFP | Getty Images

    BEIJING — The politically important U.S.-China relationship is vulnerable to cultural differences — such as why a phone call doesn’t get picked up.
    After the U.S. shot down an alleged Chinese spy balloon this month, China’s defense ministry declined a call with its U.S. counterpart, according to statements from both sides.

    It isn’t the first time China didn’t answer the phone — a hotline set up for emergencies.
    Chinese culture is a reason why, said Shen Yamei, deputy director and associate research fellow at state-backed think tank China Institute of International Studies’ department for American studies.
    She said she wasn’t aware of what actually happened between the U.S. and China regarding the declined phone call. But she shared potential factors — “the hidden worry,” in her understanding of Chinese culture.

    “We are really afraid that if the so-called conflict control or crisis control measures that the U.S. [has] been keen to set up are really put in place, then it might be encouraging more [reckless] and careless and brazenly bold action from the U.S. side,” Shen said.
    “We want China-U.S. relations to be stable,” she said. “If the U.S. is always talking about the worst-case scenario, the hotlines, the crisis control, then we are putting U.S.-China relations on a very low scale.”

    The default U.S. view is quite different.

    But if one side of a relationship thinks there is a misunderstanding or a problem, then any marriage counselor will tell you the other side needs to at least listen to why.

    Barbara K. Bodine
    Director, Institute for the Study of Diplomacy

    “You have hotlines because if something becomes difficult or tense, or there is at least a potential for a major misunderstanding and therefore a major miscalculation, you need to be able to talk to each other quickly,” said Barbara K. Bodine, a retired ambassador and director of the Institute for the Study of Diplomacy at Georgetown University.
    “Even though we probably don’t call it a hotline, if something happens with Ottawa we get on the phone and say, ‘Excuse me, what was that?'” she said. “That’s the basic part of diplomacy.”

    Spy balloon vs. weather tracker

    China and the U.S. have different explanations for why the balloon was flying over the U.S.
    Beijing maintains it was a “civilian unmanned airship” for weather research simply blown off course. The U.S. says it was a “high altitude surveillance balloon” attempting to spy on strategic sites within the country.
    The incident, widely covered by U.S. media, forced U.S. Secretary of State Antony Blinken to postpone his trip to Beijing — a rare opportunity for both countries to communicate amid heightened tensions.
    The fallout also makes activating hotlines “absolutely critical” for the bilateral relationship, said Scott Kennedy, senior advisor and Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies in Washington, D.C.

    The next step, he said, “is to have more in-depth dialogue about how we view the other side, what are red lines, what we want out of the relationship and what’s achievable and practical, and then look to build on that.”
    Officially, China’s defense ministry said it declined a call about the balloon because the U.S. decision to shoot it down “failed to create a proper atmosphere for dialogue and exchange between the two militaries.”
    The Pentagon said it remained open to communication and doesn’t seek conflict.
    But its press secretary said “a responsible nation” would have sent an alert if a civilian balloon was about to enter a sovereign nation’s airspace. “The PRC did not do that,” the secretary said, referring to the official name of China. “They didn’t respond until after they were called out.”

    Read more about China from CNBC Pro

    Beijing’s decisions are affected by the government’s closed structure and national history, while U.S. expectations on international communication are embedded in a view about relationships in general.
    Using a hotline to diffuse a potentially dangerous situation does imply there’s a situation that needs to be diffused, Bodine said. “But if one side of a relationship thinks there is a misunderstanding or a problem, then any marriage counselor will tell you the other side needs to at least listen to why.”
    And if that side says there’s no problem, “all of your worries and concerns and worst-scenario nightmares about what’s going on in your personal relationship are not going to get better,” she said. “They’re going to get worse.”

    Future meetings

    Shen from the China Institute of International Studies pointed out both sides have worked to manage tensions, and that it was important for both countries to communicate regularly, if not cooperate on issues such as climate change and international financial stability.
    Blinken met with his Chinese counterpart Wang Yi at a security conference in Munich this month. U.S. Treasury Secretary Janet Yellen is also expected to visit China.

    Since the balloon incident, Beijing has published several papers.
    One reiterated its stance on the Russia-Ukraine war, another discussed its “Global Security Initiative” that claims to support world peace. A third paper discussed so-called U.S. hegemony — going back to the 1823 Monroe Doctrine.
    “It’s very important to prevent the rhetoric from being dominated by one opinion maker,” Shen said.
    Beijing has long called for the U.S. to follow principles of “mutual respect, peaceful coexistence and win-win cooperation” — a position that often results in focusing on what’s favorable for China.
    “Probably most countries would like to talk about the good things in the relationship and not necessarily talk about the areas of difference,” Bodine said. “And we wouldn’t want to have a relationship that only talks about good stuff.”
    “If we didn’t talk about anything disagreeable, we wouldn’t need embassies on all sides.”

    WATCH LIVEWATCH IN THE APP More

  • 188 Shares129 Views

    in Business

    Rupert Murdoch says some Fox News anchors ‘endorsed’ false election fraud claims in Dominion case

    Fox Corp. Chairman Rupert Murdoch said some anchors of the company’s TV networks parroted false fraud claims in the months following the 2020 election.
    In new filings as part of Dominion Voting Systems’ $1.6 billion defamation lawsuit against Fox and its networks, Murdoch said he doubted the claims being aired on Fox News and Fox Business Network.
    Monday’s court filings show Murdoch and other Fox executives remained close to Fox News CEO Suzanne Scott during the election coverage.

    Members of Rise and Resist participate in their weekly “Truth Tuesday” protest at News Corp headquarters on February 21, 2023 in New York City.
    Michael M. Santiago | Getty Images News | Getty Images

    Fox Corp. Chairman Rupert Murdoch said some anchors of the company’s TV networks parroted false fraud claims in the months following the 2020 election, according to new court papers out Monday.
    In new filings as part of Dominion Voting Systems’ $1.6 billion defamation lawsuit against Fox and its networks, Murdoch said he doubted the election fraud claims being aired on Fox News and Fox Business Network.

    Murdoch also acknowledged that Fox’s TV hosts endorsed the false election fraud claims. In unveiled question and answers from Murdoch’s deposition, when Murdoch was asked if he was “now aware that Fox endorsed at times this false notion of a stolen election,” Murdoch responded, “Not Fox, no. Not Fox. But maybe Lou Dobbs, maybe Maria [Bartiromo] as commentators.”
    “Some of our commentators were endorsing it,” Murdoch said in his responses during the deposition. “They endorsed.”
    Dominion sued Fox and its right-wing cable networks, Fox News and Fox Business, arguing the networks and its personalities made false claims that its voting machines rigged the results of the 2020 election. Fox News has consistently denied that it knowingly made false claims about the election, and has said “the core of this case remains about freedom of the press and freedom of speech.”
    In earlier court papers, Fox said that the past year of discovery has shown the company played “no role in the creation and publication of the challenged statements — all of which aired on either Fox Business Network or Fox News Channel.”
    Murdoch and his son, Fox CEO Lachlan Murdoch, as well as Fox’s chief legal and policy officer Viet Dinh, were questioned in connection with the lawsuit in recent months. Earlier in February court papers were released that showed snippets of the evidence Dominion gathered through the months-long process of discovery and depositions, which also included Fox TV personalities.

    Text messages and testimony have shown Fox executives and Fox’s TV anchors were skeptical about claims that the election between Joe Biden, a Democrat, and Trump, a Republican, was rigged.
    Dominion said in court papers filed Monday that Fox’s defense that the statements made were opinion “goes nowhere.”
    “Even if some of Fox’s hosts’ statements could qualify as ‘opinions,’ they are still actionable if—as here—they are based on false or undisclosed facts,” Dominion said.
    A representative for Fox News reiterated in a statement on Monday that Dominion mischaracterized the facts by cherry-picking soundbites: “When Dominion is not mischaracterizing the law, it is mischaracterizing the facts.”
    Fox has also targeted Dominion’s private-equity owner in court papers regarding Dominion’s request for $1.6 billion in damages, saying the firm “paid a small fraction of that amount” to buy Dominion. Fox has also said in court papers the $1.6 billion figure has no connection to Dominion’s financial value.
    “Dominion’s lawsuit has always been more about what will generate headlines than what can withstand legal and factual scrutiny, as illustrated by them now being forced to slash their fanciful damages demand by more than half a billion dollars after their own expert debunked its implausible claims,” said a Fox spokesperson in a statement Monday. “Their summary judgment motion took an extreme, unsupported view of defamation law that would prevent journalists from basic reporting and their efforts to publicly smear FOX for covering and commenting on allegations by a sitting President of the United States should be recognized for what it is: a blatant violation of the First Amendment.”
    A Dominion spokesperson said Monday, “The damages claim remains. As Fox well knows, our damages exceed $1.6 billion.”
    Dominion brought its lawsuit not only against the TV networks, but parent company Fox Corp., arguing the parent company and its top executives played a role in the spread of misinformation about voter fraud by Fox’s personalities. A Delaware judge had ruled Dominion’s case could be expanded beyond the networks to include Fox Corp.
    Monday’s court filings show Murdoch and other Fox executives remained closed to Fox News CEO Suzanne Scott during the election coverage.
    “I’m a journalist at heart. I like to be involved in these things,” Murdoch said during his deposition testimony, according to court papers.

    Tucker Carlson, host of “Tucker Carlson Tonight,” poses for photos in a Fox News Channel studio, in New York.
    Richard Drew | AP

    Earlier court papers have shown top anchors including Sean Hannity, Tucker Carlson and Laura Ingraham expressed disbelief in Sidney Powell, a pro-Trump attorney who aggressively promoted claims of election fraud, at the time.
    Paul Ryan, the former Republican speaker of the House and a Fox board member, also sat for questioning as part of the lawsuit. Court papers out Monday show Ryan said that “these conspiracy theories were baseless,” and that the network “should labor to dispel conspiracy theories if and when they pop up.”
    Ryan also told both Rupert and Lachlan Murdoch “that Fox News should not be spreading conspiracy theories,” according to the filings.
    Dominion alleges that Fox News anchors were feeling pressure from the audience and related to rival right-wing networks like Newsmax, fueling on-air fraud claims.
    The court papers have also shown other glimpses of the network’s internal response to the events that occurred on Jan. 6, 2021, the day a violent mob breached the U.S. Capitol in support of then-President Donald Trump.
    Fox executives shut down Trump’s attempt to appear on the network’s air that evening, after he dialed into on-air personality Lou Dobbs’ show in the afternoon, court filings show.
    That same evening, Carlson texted his producer calling Trump “a demonic force. A destroyer. But he’s not going to destroy us,” referring to Fox’s network and its audience, court papers show.
    Meanwhile, the night before Jan. 6, court papers showed, Murdoch told Fox News CEO Suzanne Scott, “it’s been suggested our prime time three should independently or together say something like ‘the election is over and Joe Biden won.'”
    The lawsuit is being closely monitored by First Amendment watchdogs and experts. Libel lawsuits are typically focused on one falsehood, but in this case Dominion cites a lengthy list of examples of Fox TV hosts making false claims even after they were proven to be untrue. Media companies are often broadly protected by the First Amendment.
    A status conference in the case is slated for next week, and the trial is set to begin in mid-April.

    WATCH LIVEWATCH IN THE APP More

  • 175 Shares179 Views

    in Finance

    Stocks making the biggest moves after hours: Zoom Video, Occidental Petroleum, Workday and more

    Eric Yuan, founder and CEO of Zoom Video Communications, stands before the opening bell during the company’s initial public offering at the Nasdaq MarketSite in New York on April 18, 2019.
    Victor J. Blue | Bloomberg | Getty Images

    Check out the companies making headlines after the bell: 
    Zoom Video — Shares of the video communications company and pandemic darling jumped 8% postmarket after Zoom posted a top-and-bottom line beat for the fourth quarter. First-quarter earnings per share guidance came in above expectations, according to Refinitiv.

    Occidental Petroleum — Occidental Petroleum’s stock traded about 1.2% lower. The energy giant missed analysts’ expectations for fourth-quarter earnings and revenue, according to Refinitiv.
    Workday — Workday’s stock fell 1% even after the human resources software company beat Wall Street’s fourth-quarter revenue and earnings expectations, according to Refinitv.
    Hims & Hers Health — The online health and wellness stock surged 10% in extended trading. Hims & Hers posted a smaller-than-expected loss for the fourth quarter and revenue that came in slightly above Wall Street’s expectations, according to Refinitiv. Hims & Hers also issued strong revenue guidance for the first quarter and full year.

    WATCH LIVEWATCH IN THE APP More

  • 238 Shares99 Views

    in Business

    Fisker confirms Ocean EV deliveries will begin in spring, it’s on track to build more than 40,000 in 2023

    Electric vehicle startup Fisker said Monday it remains on track to begin deliveries of its Ocean SUV this spring and to build more than 40,000 vehicles in 2023.
    It also spent less in 2022 than it had expected.
    Fisker had “approximately 65,000” reservations for the Ocean, up slightly from “over 62,000” as of its prior earnings report.

    Henrik Fisker stands with the Fisker Ocean electric vehicle after it was unveiled at the Manhattan Beach Pier ahead of the Los Angeles Auto Show and AutoMobilityLA on November 16, 2021 in Manhattan Beach, California.
    Patrick T. Fallon | AFP | Getty Images

    Electric vehicle startup Fisker said Monday that it spent less money in 2022 than it had expected, and that it remains on track to begin deliveries of its Ocean SUV this spring and to build more than 40,000 vehicles in 2023.
    Fisker’s shares closed up over 30% on Monday.

    Fisker said that to date, 56 Oceans have been built at manufacturing partner Magna International’s contract-manufacturing facility in Austria. Fifteen of those were completed before year-end and are being used for testing by both Fisker and Magna, as the two companies refine the manufacturing process, test additional features, and work through regulatory approval processes in the U.S., Canada and Europe.
    The report comes less than a week after EV startups Lucid and Nikola underwhelmed with their production and delivery results.
    Fisker said previously that the Ocean would have about 350 miles of range in top trims, but CEO Henrik Fisker said Monday that early testing has shown the Ocean has more range than expected.
    “These results reinforce our expectation that, at the time of launch, the Fisker Ocean will have the longest range of any SUV/Crossover priced below $70,000,” he said.

    Read more about electric vehicles from CNBC Pro

    In base trim, the Ocean has about 250 miles of range and a starting price of $37,499; longer-range versions start at about $50,000.

    Fisker expects to complete the testing needed for regulatory approval of the Ocean next month, and to ramp up production — and begin deliveries — in the second quarter. The company reiterated its previous production guidance — “up to” 42,400 vehicles in 2023 — “provided the supply chain delivers per our forecast and we receive [regulatory approval] in a timely manner.”
    Fisker had “approximately 65,000” reservations for the Ocean as of Feb. 24, up slightly from “over 62,000” as of its third-quarter earnings report in early November. Because it will be built in Austria, the Ocean won’t qualify for the new U.S. government EV incentives.
    Fisker spent a total of $702 million in 2022, a bit below its guidance range of $715 million to $790 million. The company had $736.5 million in cash remaining at year-end, including $57 million raised from its ongoing at-the-market share offering in the fourth quarter of 2022. It currently expects to spend between $535 million and $610 million in 2023.
    Fisker is targeting a positive gross profit margin of between 8% and 12% for the year and said that it may have positive earnings before interest, tax, depreciation, and amortization, or EBITDA, for the full year as well.
    Fisker’s fourth-quarter net loss was $170.1 million, or 54 cents per share, on revenue of about $306,000. Both were short of estimates: Wall Street analysts polled by Refinitiv had expected a loss of 42 cents per share on revenue of $2.5 million.
    Fisker also said it has made progress on its upcoming second model, a lower-cost small EV called the Pear, and it remains on track to go into production next year.
    The company said it now has “over 5,600” reservations for the Pear, up from “over 5,000” reservations in early November. The Pear, which is expected to start at $29,900, will be built by Foxconn Technology Group in the former Lordstown Motors factory in Ohio starting in 2024.

    WATCH LIVEWATCH IN THE APP More

  • 150 Shares169 Views

    in Finance

    After splitting with Kanye West, British audio startup Kano asks for funding

    Kano, which sells hardware targeted at musicians and creatives, is launching a new equity investment round that’s open to the public after cutting ties with controversial rapper Kanye West.
    West, whose legal name is Ye, collaborated with Kano on the startup’s Stem Player audio device and at one point had offered to acquire the company for $80 million, CEO Alex Klein told CNBC.
    After a dispute over terms, and a series of antisemitic outbursts from Ye, Kano walked away from the deal and in January ended its commercial agreement with Ye for good.
    Klein is hoping to look past the ordeal, and is planning to use the funding to invest in the development of a new product, the Stem Headphones.

    Kanye West arrives at the Vanity Fair Oscar Party on Feb. 9, 2020, in Beverly Hills, Calif.
    Evan Agostini | Invision | AP

    British audio and computing hardware startup Kano is planning to raise equity funding from its users and fans, as the company tries to chart a path forward after cutting business ties with Kanye West, also known as Ye.
    The firm will launch a crowdfunding campaign on Crowdcube on Tuesday, Kano’s CEO Alex Klein told CNBC. Ordinary users will be able own a slice of Kano alongside its institutional backers, which include Microsoft and billionaire investor Jim Breyer’s Breyer Capital.

    It’s seeking to raise $900,000 from individual investors in the U.K. and Europe. The company also plans to expand the crowdfund to the U.S.
    Kano, which sells hardware targeted at musicians and creatives, has undergone a few dramatic twists over the years.
    Initially started as a venture to help kids code with easy to build computer kits, the firm has since moved much of its focus to developing audio products, the main one being its Stem Player, a puck-shaped device that lets users split songs up into individual tracks, like vocals, bass, or drums.
    Kano agreed tie-ups with big brands to launch a select few products, including a Harry Potter wand users could customize through code, a Windows version of its modular Kano PC, and a coding kit inspired by Disney’s “Frozen.” It has since ceased production of those devices, and no longer sells any of its products in big-box retailers.
    In 2019, Klein met with Kanye West, the disgraced rapper and musician who has been increasingly ostracized from the business world over his antisemitic remarks.

    The two would go on to discuss the beginnings of what eventually became the Stem Player. It was originally named the “Donda Stem Player,” a reference to West’s 10th studio album, Donda. Ye’s 11th album, Donda 2, was released exclusively on the Stem Player, on Feb. 23, 2022.

    How the tie-up unwound

    Then came Ye’s antisemitic outbursts. In October, West made several harmful remarks about Jewish people, including repeated attacks on “Jewish media,” invoking the antisemitic claim that Jewish people disproportionately control the media.
    Those beliefs were expressed privately as well as publicly, according to Klein, who, in an exclusive CNBC interview, recalls one of Ye’s advisors saying the rapper couldn’t go through with a deal to acquire Kano “because one of the investors is Jewish.”

    Alex Klein, co-founder and chief executive of Kano, talks about and demonstrates the firm’s do-it-yourself computer kit.
    Tristan Fewings | Getty Images

    “He was doing stuff that was just disgusting,” Klein told CNBC. “My dad is Jewish.”
    A lawyer from Australian law firm King and Wood Mallesons representing Ye was not immediately available for comment on this story when contacted by CNBC.
    Ye did not immediately respond to a reply asking him about the on the social media app Parler, where he last posted two months ago.
    Ye verbally committed to purchase Kano outright for $80 million early last year, Klein said. A mutual confidentiality agreement shared with CNBC shows that, in March 2022, the pair agreed to initiate exclusive deal talks.
    Klein says he was expected to manage Ye’s finances for him in order to seal the deal, an unorthodox request in deal-making terms. Klein says he did look over Ye’s finances but an acquisition didn’t materialize, and all the advisors involved were fired.
    As the two went back to the drawing board, a subsequent proposal was made that would have seen Kano become a joint venture named Yeezy Tech, funded with $10 million from an outside VC. Ye then proposed a new version of the deal, backed entirely by his own cash. Faced with “worse” terms and news of Ye’s antisemitic comments, Kano didn’t accept, Klein said.
    It wouldn’t be the first time Ye has engaged in, and then backed away from, a tech company deal. In October, Ye agreed to buy Parler, an app associated with conservatives, for an undisclosed sum. That deal was “mutually” terminated in November, according to a company statement to TechCrunch.
    Despite recent outcry over Ye’s antisemitic remarks, he has frequently raised eyebrows. At October’s Paris fashion week, Ye donned a T-shirt with the racially sensitive slogan “White Lives Matter.” In 2016, the rapper expressed his support for former U.S. President Donald Trump and in 2018 spent a stunning and surreal half hour talking to Trump in the Oval Office.

    Klein admits he stuck by the rapper as long as he did because it meant being flush with capital and widespread promotion. “$10 million is a hard thing to turn down,” he said.
    A simpler reason, Klein said, was because he considered Ye a “friend.” Klein said: “On a human level, I was like, this is a guy I’ve written lyrics with. This is a guy I’ve had great conversations with about lots of topics. It was difficult.”

    What next for Kano?

    Now, Klein wants to put the Ye debacle behind him. Once its Crowdcube round closes, Klein plans to invest a significant portion of it into Kano’s future products. It plans to launch a pair of white headphones called the Stem Headphones, by the end of 2023 or early 2024.
    The Stem Player, along with West’s dedicated fanbase, drove great commercial success for the small London startup. The device, which starts at a retail price of $200, has sold almost 100,000 units to date.
    Kano eked out a £1.6 million ($1.9 million) profit before tax in 2022, the first time in three years, according to unaudited financials shared by Klein with CNBC, a turnaround from a £13.7 million loss in 2021. Revenues grew nearly 28% to £17.4 million.  
    That has raised questions about whether the business can continue its success post-Ye.

    Kano is working on a futuristic pair of headphones called the Stem Headphones.

    WATCH LIVEWATCH IN THE APP More