If not another flat was built and sales continued at their current pace, it would take eight years to sell all the homes lying dormant around Luoyang, a city of 7m in central China. The region is a hot spot for the country’s property crisis, where years of overbuilding have turned entire districts into housing graveyards. Sprawling wastelands of concrete and glass scar the city. More
Pity the California taxman. The state has a yawning budget deficit, which politicians are attempting to narrow. Local laws make it difficult to raise taxes, requiring a two-thirds majority. Worse, once-reliable sources of funds are running dry. Fuel-tax revenues are forecast to fall sharply as drivers switch to electric vehicles. Revenues from cigarette taxes have fallen by $500m, or 29%, since 2017; now those from alcohol taxes are dropping, too. This is a concern: at present, revenues from the trio of taxes amount to nearly half of what the state spends on higher education. More
Merck reported third-quarter revenue and adjusted earnings that topped expectations.
The company saw strong sales from its top-selling cancer drug Keytruda, recently launched treatments and its animal health business.
But Merck’s vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S., posted another quarter of lighter-than-expected sales.
The exterior view of the entrance to Merck headquarters in Rahway, New Jersey, on Feb. 5, 2024.
Spencer Platt | Getty Images
Merck on Thursday reported third-quarter revenue and adjusted earnings that topped expectations as the company saw strong sales from its top-selling cancer drug Keytruda, recently launched treatments and its animal health business.
But Merck’s vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S., posted another quarter of lighter-than-expected sales. Revenue from the shot, Gardasil, fell 11% compared to the year-earlier period, mainly due to lower demand in China.
The pharmaceutical giant narrowed its full-year sales forecast to a range of $63.6 billion to $64.1 billion, from a previous guidance of $63.4 billion to $64.4 billion.
Merck also lowered its adjusted profit guidance from a range of $7.72 to $7.77 per share, from a previous forecast of $7.94 to $8.04 per share. That updated outlook reflects a one-time charge of 24 cents per share related to business development deals with Curon Biopharmaceutical and Daiichi Sankyo.
Here’s what Merck reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
Earnings per share: $1.57 adjusted vs. $1.50 expected
Revenue: $16.66 billion vs. $16.46 billion expected
Merck posted net income of $3.16 billion, or $1.24 per share, for the third quarter. That compares with net income of $4.75 billion, or $1.86 per share, during the year-earlier period.
Excluding acquisition and restructuring costs, Merck earned $1.57 per share for the three-month period.
The company booked $16.66 billion in revenue for the third quarter, up 4% from the same period a year ago.
The results come as Merck shows substantial progress in preparing for Keytruda’s patent expiration in 2028. The loss of exclusive rights to the medicine will likely cause sales to fall, forcing the company to draw revenue from elsewhere.
But Merck has a handful of new deals under its belt and key drug launches that will help it offset those losses. That includes Winrevair, a medication approved in the U.S. in March to treat a progressive and life-threatening lung condition.
And Capvaxive, a vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and lung infection, was approved in the U.S. in June.
Pharmaceutical unit beats estimates
Merck’s pharmaceutical division, which develops a wide range of drugs, booked $14.94 billion in revenue during the third quarter, up 5% from the same period a year ago.
The company’s immunotherapy drug Keytruda recorded $7.43 billion in revenue during the quarter, up 17% from the year-earlier period. Analysts had been expecting $7.33 billion in Keytruda sales, according to estimates from StreetAccount.
That increase was driven by higher uptake of Keytruda for earlier-stage cancers and strong demand for the drug for metastatic cancers, which spread to other parts of the body.
Source: Merck
Gardasil brought in $2.31 billion in sales, down 11% from the third quarter of 2023. Merck said the decline was primarily due to lower demand in China compared with the year-earlier period. It was partially offset by higher sales in the U.S.
That is below the $2.51 billion that analysts expected, according to StreetAccount.
Winrevair posted $149 million in revenue for the third quarter following its approval in March. Analysts had expected the treatment to book $127 million in sales.
The company’s Type 2 diabetes treatment, Januvia, saw $482 million in sales, down 42% from the same period a year ago. Merck said the decline was primarily due to lower prices of the drug in the U.S., along with generic competition in several countries.
Analysts had expected the drug to rake in $610 million in sales, StreetAccount said.
Januvia is one of 10 drugs targeted in ongoing Medicare drug price negotiations, a policy that aims to make costly medications more affordable for seniors. Those price talks, a key provision of President Joe Biden’s Inflation Reduction Act, will end at the beginning of August.
Sales of Merck’s Covid antiviral pill, Lagevrio, also fell 40% to $383 million during the quarter.
Still, that topped analysts’ expectations of $124.2 million in sales, according to StreetAccount.
Merck’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted $1.49 billion in sales for the third quarter. That is up 6% from the year-earlier period and slightly above what analysts surveyed by StreetAccount were expecting. More
Morgan Stanley is introducing a new portfolio for investors tied to the most prominent sports leagues.
It will target high net worth sports fans and will carry a minimum investment of $250,000.
Sports have proven to be an attractive and growing asset class as valuations have skyrocketed over the past decade.
The Morgan Stanley headquarters in New York on Dec. 27, 2023.
Angus Mordant | Bloomberg | Getty Images
Morgan Stanley is introducing a new portfolio for investors tied to the most prominent sports leagues.
The investment bank’s wealth management division on Thursday announced the launch of what it is calling Parametric Custom Core Sports League strategy. The portfolio, aimed at high net worth sports fans, will allow them to invest in a curated index of companies with strong sponsorship, media and advertisement ties to the most prominent sports leagues.
There is a $250,000 investment minimum to participate.
Sports have proven to be an attractive and growing asset class as valuations have skyrocketed over the past decade. That has left those who are still on the sidelines wanting to get in. But for most Americans, owning a pro sports team is financially well out of reach. Morgan Stanley is hoping to change that.
The idea for the new offering first came about when a Morgan Stanley client asked the bank to design a portfolio made up of the companies that support a specific sport.
“We saw that there was a bigger opportunity to do something here,” said Sandra Richards, managing director and head of Morgan Stanley’s Global Sports and Entertainment Division. “This one person represents many, and multiples of many that are looking to invest in sports as a fan looking to get engaged.”
The portfolio’s holdings are selected from large-cap U.S. equities and will consist of between 250 and 400 securities from companies that you may see on the sidelines, in the tickers or among the advertisers of major sporting events.
Morgan Stanley says the portfolio will mimic the risk characteristics of the S&P 500.
The bank, which has $516 billion of assets under management, will tap into Nielsen Sports as its data source to track the activity, spending and visibility of the companies with exposure to professional sports leagues.
“We see the demand from our clients that are asking about ways to invest in sports,” said Richards. “And it’s going to continue.”
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Block’s business-focused payments arm, Square, told CNBC it has rolled out it’s Square Card product in Britain.
It marks the first time Block has expanded its business card offering outside North America, where it first launched in 2019.
The firm will come up against local banking giants like Lloyds and NatWest, as well as fintech players including Pleo, Payhawk and Spendesk.
Marco Bello | AFP | Getty Images
LONDON — Block, the payments company owned by tech billionaire Jack Dorsey has launched its corporate card service in the U.K. in a bid to deepen its expansion into the country and take on big incumbents like American Express.
The firm’s business-focused payments arm, Square, told CNBC that it opened registrations for its Square Card product in Britain late Wednesday, marking the first time Block has expanded its business card offering outside North America, where it first launched in 2019.
Currently available in the U.S. and Canada, Square Card is a free business spending card that reduces the time between merchants making a sale and having funds available to spend. It competes with offerings from the likes of American Express and Citigroup.
Samina Hussain-Letch, executive director of Square U.K., said the launch of the firm’s corporate card product in the U.K. would give merchants speedier access to funds and help them more easily manage their daily expenses.
“When designing this product we went back to our mission of making commerce easy,” Hussain-Letch told CNBC. Based on internal research Square found that small and micro businesses “prefer their funds to be consolidated in one place,” she said, adding that real-time access to funds was also an important factor.
In the U.K., Square Card will come up against local banking giants like Lloyds and NatWest. It will also heighten competition for some well-funded European fintech players, including Pleo, Payhawk and Spendesk.
Hussain-Letch highlighted The Vinyl Guys as an example of an early adopter of its corporate card offering. The vehicle branding and signage printing shop based in Stafford used the corporate card as part of a testing phase with domestic U.K. customers.
“We’ve had some great feedback about the benefits of having instant access to funds which really helps our small business sellers to run and grow, as we know that the number one reason small businesses fail in the UK is due to problems with cash flow,” she added.
Merchants can personalize employee spending cards with signatures and business branding.
Once an employee is onboarded onto the Square Card program, they can begin using within their own digital wallet apps. The service doesn’t charge monthly fees, maintenance fees, or foreign exchange fees.
Square is deepening its investment in the U.K. at a time when the country is seeking to be viewed as a destination for global technology businesses.
Entrepreneurs have been warning of a possible exodus of talent from the U.K. in response to the government’s controversial taxation changes.
On Wednesday, Finance Minister Rachel Reeves hiked Capital Gains Tax (CGT) — a levy on investment profits. But the news offered some relief for technology entrepreneurs who feared a more intense tax raid on the wealthy. The lower capital gains tax rate will be increased to 18% from 10%, while the higher rate will climb to 24% from 20%, Reeves said. The tax hikes are expected to bring in £2.5 billion. More
Chinese smartphone company Honor on Thursday announced backing from new investors as the Huawei spinoff prepares for an initial public offering.
The new backers include China Telecom and CICC Capital.
Honor said earlier this year it planned to start changing its shareholder structure in the fourth quarter, and start the IPO process “at a suitable time.”
Chinese smartphone company Honor has released devices that fold up to be nearly as thin as an iPhone.
Nurphoto | Nurphoto | Getty Images
BEIJING — Chinese smartphone company Honor on Thursday announced backing from new investors as the Huawei spinoff prepares for an initial public offering.
The new backers are: China Telecom — one of the major telecommunications operators in the country — CICC Capital, Chinese venture capital firm Cornerstone and SDG, a fund linked to a Shenzhen economic zone. Honor said its existing partners also made a new investment round through an entity called Jinshi Xingyao.
Honor said earlier this year it planned to start changing its shareholder structure in the fourth quarter, after which it would start the IPO process “at a suitable time.”
The company has not said where it would list. Honor announced its IPO plans in November 2023.
Honor spun off from Chinese telecommunications giant Huawei in November 2020 after the parent company was hit by U.S. sanctions. Huawei said it does not hold any shares in Honor or have involvement in business decisions.
Last week, Honor revealed the next version of its operating system can use AI to mimic actions on a touchscreen, such as opening an app to order coffee delivery. The company on Wednesday released its new Magic7 series of phones that can use the AI features in China.
Just under one-third of Honor’s sales came from outside China in the first half of this year, according to Counterpoint.
— CNBC’s Arjun Kharpal contributed to this report. More
Starbucks will eliminate the extra charge for dairy alternatives after years of pleading from customers.
In recent months, the coffee giant’s higher prices have scared away some of its occasional customers.
The surcharge can reach up to 80 cents in some markets.
Starbucks offers oat milk as a dairy-free option.
Source: Starbucks
Starbucks said Wednesday that it will remove the surcharge for dairy substitutes, saving some U.S. customers more than 10% on their drinks.
The change goes into effect Nov. 7 and follows years of pleading from customers to eliminate the extra fee, especially as milk alternatives have grown more popular. More recently, Starbucks has seen its U.S. sales fall as its higher prices scare away occasional customers whose wallets have already been stretched by inflation.
“This is just one of many changes we’ll make to ensure a visit to Starbucks is worth it every time,” CEO Brian Niccol said in a statement.
Substituting a nondairy milk is the second-most requested customization from customers, trailing only adding a shot of espresso, according to Starbucks.
The change to its surcharge pricing coincides with the launch of the company’s holiday menu, as well as the discontinuation of the chain’s line of olive oil-infused drinks.
Niccol joined the company in early September after six years as CEO of Chipotle. At Starbucks, he is tasked with leading a turnaround to reinvigorate its business, particularly in its home market. His early strategic focuses include changing the coffee chain’s marketing, simplifying menus and fixing pricing.
The surcharges for dairy alternatives can reach up to 80 cents per drink in some markets. Currently, Starbucks customers can already add up to 4 ounces of a dairy substitute at no extra charge to hot or iced brewed coffee or tea, cold brew and Americano drinks. But other drinks made with milk in the standard recipe, such as lattes, currently have surcharges.
Starbucks first started serving nondairy milk in 1997, when it added soy milk to menus. In 2015, coconut milk landed on menus nationwide, and then came almond milk the following year. In 2021, Starbucks locations across the U.S. began using oat milk.
Recently, PETA has targeted Starbucks for the nondairy surcharges, relying on stunts to call attention to the cause. For example, two years ago, actor and activist James Cromwell, known for his roles in “Succession” and “Babe,” glued himself to the counter of a New York City location. When Niccol joined the company, PETA said it would pause the campaign to give him time to change the strategy.
In March, three lactose-intolerant women sued Starbucks in federal court, alleging that the surcharge discriminated against customers with allergies. The company has been seeking to dismiss the case. The next scheduled court appearance is Nov. 6, according to court filings.
Starbucks declined to comment on the suit, citing the company’s policy against discussing pending litigation.
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Starbucks on Wednesday reported quarterly earnings and revenue that missed analysts’ expectations.
The company previously released a preliminary report of its quarterly results on Oct. 22 and announced it was suspending its fiscal 2025 outlook.
Investors are expecting that Niccol will share more details about his turnaround strategy during the company’s conference call, scheduled for 5 p.m. ET.
Brian Niccol speaking on CNBC’s “Squawk Box” on Oct. 30, 2018.
Anjali Sundaram | CNBC
Starbucks on Wednesday reported quarterly earnings and revenue that missed analysts’ expectations as sales in the U.S. and China, its two biggest markets, disappointed.
The company previously released a preliminary report of its quarterly results on Oct. 22 and announced it was suspending its fiscal 2025 outlook.
This report marks the first under CEO Brian Niccol, who joined the company on Sept. 9 to revive the floundering business.
“It is clear we need to fundamentally change our strategy to win back customers,” CEO Brian Niccol said in a statement. “We have a clear plan and are moving quickly to return Starbucks to growth.”
Niccol outlined a multipart plan to improve the company’s U.S. business immediately. Many of the steps address a new goal for Starbucks: hand delivering a customer’s drink in under four minutes. Roughly half of current transactions are within that threshold, according to Niccol.
Cafes will bring back the condiment bars that disappeared behind counters during the pandemic, get rid of extra charges for milk alternatives and cut back menus. Niccol also told investors that he wants to bring “order to mobile order and pay” and improve restaurant staffing.
“I’m very optimistic, despite the near-term challenges,” Niccol said. “I believe we have significant strengths, a strong, enduring brand. We have a clear plan. We’re going to be moving quickly.”
For now, the strategy is focused on North America. Niccol said he’d need to spend time in China to better understand the company’s operations and the market before deciding how to revive sales there.
In fiscal year 2025, Starbucks also plans to cut back on new cafes and renovations. CFO Rachel Ruggeri said the shift is to “accommodate a redesign” across its locations and free up capital to spend on the broader turnaround.
Shares of the company were flat in extended trading on Wednesday.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
Earnings per share: 80 cents vs. $1.03 expected
Revenue: $9.07 billion vs. $9.36 billion expected
Starbucks reported fiscal fourth-quarter net income attributable to the company of $909.3 million, or 80 cents per share, down from $1.22 billion, or $1.06 per share, a year earlier.
Net sales dropped 3% to $9.07 billion.
The company’s global same-store sales fell 7%, fueled by weak demand in the U.S. and China. Traffic to its stores worldwide fell 8% during the quarter.
The company’s U.S. restaurants reported same-store sales declines of 6%, fueled by a 10% tumble in traffic.
In China, the company’s same-store sales plummeted 14% as both traffic and average ticket fell. Starbucks has been facing greater competition from local rivals, such as Luckin Coffee, which can undercut the company’s prices.
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