Raphael Stevens

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    GM slows its EV plans again even as sales grow

    GM is again slowing its plans for all-electric vehicles by further delaying a second U.S. electric truck plant and the Buick brand’s first EV.
    The delay also means the company will not achieve a prior target of having North American production capacity of 1 million EVs by 2025.
    GM did not update the timing on Buick’s first EV, which was expected in 2024.

    GM’s 2024 Chevrolet Equinox EV during a media launch event for the vehicle in Detroit, May 16, 2024.
    Michael Wayland / CNBC

    DETROIT – General Motors said Tuesday it is again slowing its plans for all-electric vehicles by further delaying a second U.S. electric truck plant and the Buick brand’s first EV.
    The six-month delay in retooling the electric truck plant in Michigan, until mid-2026, also means GM will not achieve a prior target of having North American production capacity of 1 million EVs by 2025.

    We are committed to growing responsibly and profitably,” GM CEO Mary Barra told investors Tuesday during the company’s second-quarter earnings call.
    Barra’s comments come a week after she raised concerns about GM hitting its North American EV production capacity target.
    Barra did not provide updated timing on Buick’s first EV, which was expected in 2024. The entire Buick brand has targeted being fully electric by 2030, as part of GM’s plans to exclusively offer consumer EVs by 2035.
    The changes add new questions about the Detroit automaker’s plans for future battery cell plants other than two current joint venture facilities with LG Energy Solution in North America. GM previously announced plans for four of the multibillion-dollar plants in the U.S. by 2026.
    Barra on Tuesday said the company would grow cell production in a “meaningful cadence.”

    GM CFO Paul Jacobson declined to discuss potential plans to delay or cancel the automaker’s future EV battery cell plants, aside from the two facilities making cells in Ohio and Tennessee.
    “We’re going to continue to be guided by the customer. We’re rapidly scaling in cell plants one and two,” Jacobson said during a media briefing. “We have nothing to comment on right now.”
    GM’s U.S. EV deliveries increased 40% during the second quarter compared with a year earlier to 21,930 units. Still, EVs made up only 3.2% of its total second-quarter U.S. sales.
    Jacobson said the company is set to ramp up assembly to achieve production and vehicle wholesales of between 200,000 and 250,000 all-electric vehicles in North America this year. He said the company wholesaled about 75,000 of its new EVs during the first half of the year.
    Jacobson reiterated GM expects its EVs to be profitable on a production, or contribution-margin basis, once it reaches output of 200,000 units by the fourth quarter.
    “We’re still holding to that,” Jacobson said, adding additional EV sales are expected to lower the company’s earnings, as they will be less than variable profits of GM’s traditional gas models

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    Lawmakers introduce bipartisan bill aiming to crack down on drug middlemen as scrutiny ramps up

    Bipartisan lawmakers introduced a new bill that aims to crack down on the business practices of drug supply chain middlemen who allegedly inflate prescription medication prices in the U.S.
    The legislation aims to lower costs for patients enrolled in federal healthcare programs and ensure that community pharmacies are reimbursed fairly by so-called pharmacy benefit managers.
    It comes amid a House committee hearing featuring testimony by the three largest PBMs, UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts.

    Feverpitched | Getty Images

    Bipartisan lawmakers introduced a new bill on Tuesday that aims to crack down on the business practices of drug supply chain middlemen who are widely accused of inflating prescription medication prices and harming U.S. patients and pharmacies.
    The legislation aims to ensure community pharmacies can provide care to patients enrolled in federal health-care programs while being reimbursed “fairly and transparently” by so-called pharmacy benefit managers, or PBMs. Under the “Pharmacists Fight Back Act,” seniors covered by Medicare and Medicaid, government employees and active duty service members, among other patients, would see lower health-care costs and have more freedom to choose which pharmacy to get their prescriptions from, according to a fact sheet on the bill.

    Reps. Jake Auchincloss, D-Mass., and Rep. Diana Harshbarger, R-Tenn., unveiled the bill ahead of a House Oversight and Accountability Committee hearing about the drug middlemen’s tactics on Tuesday. Executives of three of the largest PBMs – UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts – will testify on allegations that they play a role in rising healthcare costs, as federal scrutiny of their practices mounts. 
    The new bill joins dozens of other bipartisan efforts on the federal and state level to reform PBMs, which negotiate rebates with drug manufacturers on behalf of insurers, large employers and federal health plans. Those middlemen also create lists of medications, also known as formularies, that are covered by insurance and reimburse pharmacies for prescriptions. 
    But lawmakers and drugmakers alike argue that PBMs overcharge the plans they negotiate rebates for, underpay pharmacies and fail to pass on savings from those discounts to patients. Auchincloss said those practices have allowed PBMs to trap $300 billion in revenue in the middle of the drug supply chain between manufacturers and patients.
    Meanwhile, PBMs contend that drugmakers are responsible for setting high list prices for drugs, and argue that their tactics shield patients from high healthcare costs.
    Legislation targeting PBMs advanced through House and Senate committees with bipartisan support last year, and one proposal overwhelmingly passed the House in December. But that legislative momentum has stalled since Congress left PBM reform out of a massive government spending package earlier this year. 

    Meanwhile, the Biden administration has ramped up pressure on PBMs as Americans struggle to afford prescription drugs. The Federal Trade Commission is planning to sue Caremark, Express Scripts and OptumRx, CNBC previously reported. 

    Pedestrians walk by a CVS store on November in San Francisco, California.
    Justin Sullivan | Getty Images

    The new bill would do some of the same things as earlier legislation would, such as increasing transparency around certain PBM business practices and banning spread pricing, or charging plans more than what they pay pharmacies for a drug. 
    But Auchincloss, who co-led another PBM bill that passed the House last year, said his new legislation is “bigger and tougher,” and focuses on pharmacies. A Tuesday release about the bill also described it as the “most comprehensive PBM reform ever introduced at the federal level.”
    “It seeks to take the pharmacists’ view and say, ‘What is making it impossible for pharmacists to thrive as small business owners and provide clinical and pharmacological advice to the patients that they serve?'” Auchincloss told CNBC. “We’re systematically tackling the impediments to that mission …This bill is about those pharmacists fighting back against corporate greed.” 
    Auchincloss pointed to a new pharmacy reimbursement model under the bill, which would largely center around a medication’s so-called national average drug acquisition cost, or NADAC.  That measures the average price pharmacies pay to purchase a drug from manufacturers or wholesalers based on a survey of invoices. 
    “That is going to ensure that the actual cost of goods is what the price is predicated on,”, Auchincloss said. He added that the bill’s reimbursement model is most relevant to generic rather than branded prescription drugs. 
    Pharmacies are typically paid using a complicated system not directly based on what they spend to purchase medications. That model, which involves a multitiered network of insurers, manufacturers, PBMs and pharmacies, leads to ambiguity around fees and markups added to the original cost of a drug. 
    Among the bill’s other efforts, it requires PBMs to share 80% of rebates with patients and prohibits several other practices. It would bar requiring patients to obtain branded medications when a cheaper generic version is available, steering patients to PBM-affiliated pharmacies and excluding any in-network pharmacy from filling a prescription, among other tactics.
    The bill would “put in place much-needed reforms to stop the gouging of independent pharmacies, make life-saving drugs more affordable for patients, and implement solutions that will yield savings to taxpayers,” Harshbarger said in a statement. More

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    A Silicon Valley executive had $400,000 stolen by cybercriminals while buying a home. Here’s her warning

    Rana Robillard, chief people officer at software startup Tekion, was tricked into sending her life savings to a criminal.
    What happened to Robillard, a 25-year veteran of tech companies, speaks to the increasingly sophisticated nature of cybercrime.
    Real estate, with its large transaction sizes and frequent use of wire transfers, has proven to be an especially lucrative target for criminals.

    Rana Robillard, an Oakland-based tech executive, in front of the home in Orinda, CA that she attempted to purchase earlier this year.
    Courtesy: Rana Robillard

    After a yearlong search, Rana Robillard was elated to learn she’d beaten three other bidders for a house in the leafy California suburb of Orinda, just outside of San Francisco.
    So when Robillard, chief people officer at software startup Tekion, received an email in late January from her mortgage broker with directions to wire a $398,359.58 down payment to a JPMorgan Chase account, she wasted no time sending the money.

    After all, the email appeared to be a response to one Robillard had sent her broker asking about final steps before the closing, which was rapidly approaching.
    But on Jan. 30, the day after she’d sent the wire, Robillard got what looked like a duplicate request for the down payment, and it dawned on her that she had fallen for a scam — one that would throw her life into turmoil for the next six months. To her horror, instead of sending a down payment for her future home to the title company, as she believed she had done, Robillard had been tricked into sending her life savings to a criminal.
    “That’s when I went into a full panic,” Robillard, 55, told CNBC, which verified the details of her story with the four banks involved.
    What happened to Robillard, a 25-year veteran of tech companies including cybersecurity firm HackerOne, speaks to the increasingly sophisticated nature of cybercrime. Fraudsters are able to penetrate the email systems of mortgage brokers, real estate agents, lawyers or other advisors, waiting for the perfect moment to strike by sending emails or phone calls that appear to be from trusted parties.
    Real estate, with its large transaction sizes and frequent use of wire transfers, has proven to be an especially lucrative target for criminals. Wires are faster than other forms of payment, typically closing within 24 hours, can handle far larger sums and are often irreversible, making them ideal for fraud.

    Scams involving fake emails in real estate deals have exploded over the last decade, rising from less than $9 million in losses in 2015 to $446.1 million by 2022, according to FBI data.

    Once criminals have a victim’s money, they quickly shuffle it to other bank accounts before withdrawing it as cash, converting it into crypto or exploiting mules to launder the funds, according to Naftali Harris, CEO of anti-fraud startup SentiLink. That’s why recovering funds in wire fraud can be so difficult, he added.
    “The faster the fraudster moves it out of that first account and the more institutions they move it to, the better for them, because it just gets murkier and harder to track,” Harris said.
    That’s what initially happened to Robillard’s funds, which went from a JPMorgan Chase account to ones at Citigroup and Ally Bank, according to people with knowledge of her case who weren’t authorized to speak publicly.
    Robillard had alerted her bank, Charles Schwab, of the fraud on Jan. 30; within days, an official working in the cyber branch of the San Francisco division of the FBI had this message:
    “Funds have been located and are frozen,” the official said, according to a Feb. 2 email reviewed by CNBC. “That’s all I’m allowed to tell you.”

    Waiting for months

    After that promising start, Robillard’s frustrations have only mounted.
    Robillard says she was initially told that her funds would likely be released after 90 days. But as the weeks and months stretched on, there were few updates from JPMorgan, which has taken the lead on the case, she said.
    The FBI told her that once the banks involved had frozen the funds, its role was over, she said. So Robillard became obsessed with advocating for herself, reaching out to elected officials and government agencies including the Federal Trade Commission and the Consumer Financial Protection Bureau.
    “Nobody will give you any updates or information,” Robillard said. “I’ve been very assertive trying to get people to help; every week I’m following up with random people on LinkedIn from Chase, I’m filing to the California attorney general, the FTC, the CFPB, but it’s gotten me nowhere.”
    In early July, Robillard told CNBC she had no idea whether she would ever see her money again.
    And while she’s been in financial limbo, the world has moved on. The home she had envisioned living in with her daughter — a newly renovated four bedroom on nearly half an acre of land — has been relisted by Opendoor for $1.63 million.

    Rana Robillard, an Oakland-based tech executive, in front of the home in Orinda, CA that she attempted to purchase earlier this year.
    Courtesy: Rana Robillard

    Robillard says she decided to publicize her story to boost awareness of real estate wire fraud, besides being a last-ditch attempt at getting her money back.
    “This is not what I thought my public representation would look like, which is that I’ve lost all this money,” Robillard said. “If it helps other people, I’m happy to do it, even though it’s obviously not my proudest moment.”

    Room for improvement

    Robillard acknowledges that she could’ve been more cautious before initiating the wire transfer. For one, she says she should’ve confirmed with OS National, the title company owned by Opendoor, that the wire request sent to her in January was an authentic one.
    But Robillard also sees ample room for improvement in all the parties involved: Her real estate agent should’ve explained that wire directions would be coming directly from the title company; the banks should’ve verified that the receiving account was that of a genuine title company and not a fraudster; and her mortgage broker should’ve used a secure portal for document sharing.
    In a chain of more than 20 emails seen by CNBC between Robillard and her mortgage processor, Kristy Aichinger of Compass Mortgage Advisors, just one was sent by the cybercriminal. It was indistinguishable from the rest.
    While Martinez, California-based Compass Mortgage denies being hacked, it acknowledged that the email with wire directions wasn’t from them, according to Robillard.
    When reached by phone last week, Aichinger declined to comment and referred a reporter to the company’s founder and president, Kent Donahue.
    Donahue didn’t respond to several detailed messages about this story.

    ‘We are sorry’

    After more than five months in limbo, Robillard finally caught a break.
    A few days after CNBC contacted the banks in early July about the Robillard case, she received a $150,000 wire from Chase, funds that had been bounced back from Ally. Then, on Thursday, Robillard got the balance of her down payment that had been at Citi, nearly $250,000.
    A JPMorgan spokesman had the following comment:
    “We are sorry to hear that Ms. Robillard was tricked into sending funds from her real estate transaction to an imposter,” the spokesman said. “Although she’s not our customer, we were able to recover all of her funds.”
    Further, JPMorgan said that consumers should be wary of last-minute changes to payment instructions and to always verify wire recipients before sending money.
    Robillard’s bank, Schwab, told CNBC that it urged customers to “remain vigilant in protecting their personal information, and stay skeptical when it comes to financial transactions.”
    Robillard still doesn’t know who was behind the scam.
    While overjoyed that she can finally begin a new home search, the tech executive struck a pessimistic note.
    The real estate industry has gotten used to closing transactions electronically, which is efficient, but leaves buyers open to fraud, she said. Advances in artificial intelligence will give criminals more tools to impersonate those they trust to steal Americans’ money, she warned.
    “The banks and real estate companies weren’t even prepared for the old world, how are they going to handle the new one?” Robillard said. “Nobody’s ready for what’s coming.” More

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    GM far exceeds second-quarter estimates, will restructure struggling China business

    General Motors is raising several key financial targets for 2024 after easily beating Wall Street’s earnings expectations for the second quarter.
    Wall Street analysts expected adjusted earnings per share of $2.75 and revenue of $45.46 billion.
    GM executives will host an earnings conference call at 8:30 a.m. ET.

    DETROIT — General Motors is raising several key financial targets for 2024 after easily beating Wall Street’s earnings expectations for the second quarter, while it restructures money-losing operations such as autonomous vehicles and its China business.
    The Detroit automaker now expects full-year adjusted earnings before interest and taxes of between $13 billion and $15 billion, or $9.50 and $10.50, up from previous guidance of $12.5 billion to $14.5 billion, or $9 and $10, previously. It also raised its adjusted automotive free cash flow forecast, while slightly lowering the range for its net income attributable to stockholders by less than 1%.

    Here’s how the company performed in the second quarter, compared with average estimates compiled by LSEG:

    Earnings per share: $3.06 adjusted vs. $2.75 expected
    Revenue: $47.97 billion vs. $45.46 billion expected

    Shares of GM were up about 4% during premarket trading. The stock has risen roughly 38% in 2024.
    GM’s second-quarter results included net income attributable to stockholders, which excludes some dividend payouts, of $2.93 billion, up 14.3% from $2.57 billion a year earlier. On a per-share basis, GM reported earnings of $2.55, up from $1.83 a year earlier. Adjusted earnings before interest and taxes came in at $4.44 billion, up 37.2%, and adjusted earnings per share were $3.06.
    Its unadjusted net income was $2.88 billion, up 14.8% from a year earlier. GM said its revenue for the second quarter was a fresh quarterly record for the automaker, up 7.2% compared with $44.75 billion a year earlier.

    Stock chart icon

    GM’s stock performance in 2024.

    “It was truly a great first half and second quarter, and we’re positioned to have a very strong year,” GM CFO Paul Jacobson said during a media briefing. “We expect to see some seasonally higher commodity costs, as well as some pricing headwinds that we’ve assumed in the second half of the year.”

    Alongside the strong earnings, GM on Tuesday said it is indefinitely pausing production of its Cruise Origin autonomous vehicle, triggering a $600 million special charge in the second quarter. It also said it’s attempting to restructure a joint venture in China with SAIC amid continuing losses, including a $104 million loss in equity income during the second quarter.

    North America leads

    As they have in recent years, GM’s North American operations, driven by truck sales, were largely responsible for the company’s second-quarter beat and guidance raise. Specifically, pricing on the vehicles has remained more resilient than GM anticipated at the beginning of the year, according to Jacobson.
    GM said its average transaction price during the second quarter was roughly $50,000, with incentives lower than the U.S. industry average.
    The North America division increased adjusted earnings during the quarter to $4.43 billion, up nearly 40% from a year earlier. The unit reported a profit margin of 10.9%, up 2.3 percentage points from a year earlier.
    While GM outperformed in several areas, it did not achieve an anticipated return to profitability in China, where the automaker has experienced significant declines in earnings.

    The automaker’s Chinese operations posted an equity loss of $104 million – its second consecutive quarterly loss after hitting a roughly 20-year low in 2023.
    “In China, we’ve been taking steps to reduce our inventories, align production to demand, and reduce our fixed costs, but it’s clear that the steps that we’ve taken, while significant, have not been enough,” Jacobson said during a media briefing. “We’re working closely with our JV partner to restructure the business, to make it profitable and sustainable, while ensuring that it doesn’t require incremental capital.”
    GM’s international operations, which include South Korea, Brazil and the Middle East, reported adjusted earnings of $50 million during the second quarter, down 78.8% from a year earlier. Its financing arm reported adjusted earnings of $822 million, up 7.3% from a year earlier.

    EVs

    GM continues to target production and vehicle wholesales of between 200,000 and 250,000 all-electric vehicles in North America, despite slower-than-expected adoption.
    Its EV deliveries during the quarter increased 40% compared with a year earlier to 21,930 units. Still, EVs made up only 3.2% of its total second-quarter U.S. sales.
    Jacobson reconfirmed that GM expects its EVs to be profitable on a production, or contribution-margin basis, once it reaches output of 200,000 units by the fourth quarter.

    GM’s 2024 Chevrolet Equinox EV during a media launch event for the vehicle in Detroit, May 16, 2024.
    Michael Wayland / CNBC

    “EVs are going to be an earning headwind as we scale, until we reach variable profits positive during the fourth quarter, then they should start to become a tail wind for EBIT,” he said.
    Jacobson declined to discuss potential plans to delay or cancel the automaker’s future EV battery cell production in North America, aside from two joint venture plants currently producing cells with LG Energy Solution in Ohio and Tennessee.
    “We’re going to continue to be guided by the customer. We’re rapidly scaling in cell plants one and two,” Jacobson said. “We have nothing to comment on right now.”
    Last week, GM CEO Mary Barra said the automaker’s goal of reaching EV production capacity of 1 million vehicles in North America by the end of 2025 was heavily in doubt.

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    UPS shares slide on earnings miss, guidance cut

    United Parcel Service on Tuesday reported profit and revenue for the second quarter that came in below expectations
    It also cut its 2024 revenue guidance to approximately $93 billion, revised from a previous forecast for as much as $94.5 billion.
    Weak freight demand and soft pricing in the shipping sector is causing what some call a global freight recession.

    A person walks into a UPS (United Parcel Service) customer center on April 1, 2024 in Los Angeles, California. 
    Mario Tama | Getty Images

    United Parcel Service on Tuesday reported profit and revenue for the second quarter that came in below expectations and cut its 2024 revenue guidance. The company’s shares were down 9% in premarket trading.
    UPS now expects 2024 revenue to be approximately $93 billion, revised from a previous forecast for as much as $94.5 billion. Full-year capital expenditures, however, are now expected at around $4 billion, rather than the previous $4.5 billion.

    The company also announced it’s targeting around $500 million in share repurchases in 2024.
    UPS noted that the guidance does not include the impacts of the recently announced sale of its trucking business Coyote Logistics to RXO Logistics. The transaction is expected to close by the end of the year, UPS said in a previous press release.
    The company also recently entered into an agreement to acquire Mexican express delivery company Estafeta, as it continues to expand its international presence.
    Here’s how the shipping giant did in the quarter ended June 30 compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

    Earnings per share: $1.79 cents adjusted vs. $1.99 expected
    Revenue: $21.8 billion vs. $22.18 billion expected

    The company’s reported net income for the quarter was $1.41 billion, or $1.65 cents per share, compared with $2.08 billion, or $2.42 per share, a year earlier. Adjusting for the impact of settling an “international regulatory matter,” UPS posted earnings of $1.79 per share.

    The company reported operating profit of $1.94 billion, down from $2.78 billion a year earlier.
    “This quarter was a significant turning point for our company as we returned to volume growth in the U.S., the first time in nine quarters,” UPS Chief Executive Officer Carol Tomé said in the company’s earnings release. “As expected, our operating profit declined in the first half of 2024 from what we reported last year. Going forward we expect to return to operating profit growth.”
    Revenue also fell to $21.82 billion, down from $22.06 billion a year earlier, mainly due to declines in the company’s domestic and international segments.
    Its U.S. operation saw a 1.9% decrease in revenue, which the company said was due primarily to changes in product mix. The international segment saw a 1% decline in revenue, which UPS attributes to a 2.9% decrease in average daily volume.
    The company’s third segment, supply chain solutions, increased its revenue by 2.6% from same time last year, due primarily to growth in logistics, including health care.
    The report comes as weak freight demand and soft pricing in the shipping sector is causing what some call a global freight recession. Investors had turned to UPS earnings to understand whether demand was improving.
    UPS recently snagged an air cargo contract with the United States Postal Service from rival FedEx. UPS will become USPS’ primary air cargo provider starting Sept. 30, after FedEx’s current contract expires.
    Although financial details of the deal were previously undisclosed, UPS referred to the award as “significant” in an April press release. The deal brought in $1.75 billion to FedEx in fiscal 2023, that company said.
    Correction: UPS reported second-quarter profit and revenue on Tuesday. An earlier version misstated the day.

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    Comcast posts mixed results, weighed down by film studio, theme parks

    Comcast reported second-quarter earnings before the bell. 
    The company beat on earnings, but missed on revenue estimates due to pressure in its film studio and theme park segments. 
    NBCUniversal’s Peacock subscribers increased 38% year over year to 33 million.

    Comcast reported mixed results before the bell Tuesday, missing on revenue estimates due to tough year-over-year comparisons for its film studio and theme parks.
    The company’s streaming service, Peacock, however, continued to make gains. Comcast’s stock was down nearly 3% in premarket trading.

    Here is how Comcast performed, compared with estimates from analysts surveyed by LSEG:

    Earnings per share: $1.21 adjusted vs. $1.12 expected
    Revenue: $29.69 billion vs. $30.02 billion expected

    For the quarter ended June 30, net income was down 7.5% to roughly $3.93 billion, or $1 per share, compared with $4.25 billion, or $1.02 per share, in the same quarter last year. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, fell about 1% to $10.17 billion.
    The company’s revenue dropped nearly 3% to $29.69 billion compared with the same period last year. Revenue from the content and experiences segment, which includes the NBCUniversal TV business, theme parks and Universal Pictures, was down 7.5% to $10.06 billion.
    While Comcast lost customers in some of its key units, the losses weren’t as deep as feared, according to Wall Street estimates.
    The cable industry as a whole has experienced a slump in broadband customer growth in recent quarters as fewer Americans buy and move houses and competition for home internet from wireless providers ramps up.

    The company said it lost 120,000 broadband customers — 110,000 of those residential — during the quarter, compared with a loss of roughly 142,000 expected by StreetAccount.
    Revenue for the segment that includes Xfinity-branded broadband, cable TV and mobile fell 1.5% to $17.82 billion due to further decreases in the cable TV business. Comcast shed 419,000 cable TV customers during the quarter, still below the 502,000 that analysts expected according to StreetAccount.
    Revenue for domestic broadband grew 3% to $6.57 billion due to price increases.
    The company’s mobile business continued to bloom, as its number of customer lines increased 20% compared with last year to 7.2 million.
    Revenue for the Universal Pictures studio, in particular, fell 27% to $2.25 billion, facing a tough comparison with last year, when “Super Mario Bros.” and “Fast X” were released, one of Comcast’s best theatrical quarters ever. Comcast is looking ahead to the rest of the year’s film slate, including this summer’s box-office success “Despicable Me 4,” and “Twisters,” and the upcoming “Wicked” release in November.
    Meanwhile, theme park revenue dropped nearly 11% to $1.98 billion as attendance normalized compared with a record-setting 2023.
    Last quarter the theme park segment began its cool down from the hot post-Covid lockdown attendance surge in 2023.
    However, NBCUniversal’s TV business offset the segment, posting $6.32 billion in revenue, up 2% from last year.
    NBCUniversal’s answer to streaming, Peacock, remained a bright spot for the company. The streamer posted its best year-over-year improvement, with paid subscribers increasing 38% to 33 million. Revenue for the streamer increased 28% to $1 billion.
    Peacock also boosted the media segment’s adjusted EBITDA, which was up 9% to $1.36 billion.
    Losses related to Peacock were $348 million, a significant improvement from losses of $651 million in the same period last year.
    Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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    Coca-Cola tops earnings estimates, hikes full-year outlook as global demand rises

    Coca-Cola beat second-quarter earnings estimates and raised its full-year outlook.
    Unit case volume grew globally, but dipped slightly in North America.
    The results come after Coke’s rival PepsiCo reported weaker U.S. consumer demand.

    Coca-Cola on Tuesday raised its full-year outlook as global demand for its drinks rose in the second quarter.
    For 2024, Coke now expects organic revenue growth of 9% to 10%, up from its prior forecast of 8% to 9%. The company also raised its outlook for comparable earnings growth to a range of 5% to 6% from a previous range of 4% to 5%.

    Shares of the company rose about 1% in premarket trading.
    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

    Earnings per share: 84 cents adjusted versus 81 cents expected
    Revenue: $12.36 billion versus $11.76 billion expected

    Coke reported second-quarter net income attributable to shareholders of $2.41 billion, or 56 cents per share, down from $2.55 billion, or 59 cents per share, a year earlier.
    Excluding restructuring costs, charges related to the value of the Fairlife milk brand and other items, the beverage giant earned 84 cents per share.
    Net sales rose 3% to $12.36 billion. Organic revenue, which strips out acquisitions, divestitures and foreign currency, climbed 15% in the quarter.

    Coke’s unit case volume rose 2% for the quarter, helped by its international markets. The metric strips out the impact of pricing and foreign currency to reflect demand.
    But in North America, volume fell 1% for the quarter. Coke said North American volume declined for its water, sports, coffee tea, trademark Coca-Cola and other soda brands, offsetting growth for its juice, dairy and plant-based beverages. Coke’s rival PepsiCo reported earlier this month that the U.S. consumer has weakened, hurting demand for its own drinks and snacks.
    Coke’s sparkling soft drinks division, which includes its namesake soda, saw its global volume rise 3%, thanks to strong demand in the Asia Pacific and Latin America regions. Its juice, dairy and plant-based beverages business reported volume growth of 2%. And the water, sports, coffee and tea division saw flat volume, hurt by shrinking demand for bottled water and falling Costa coffee sales in the United Kingdom.
    Coke’s overall prices were up 9% compared with the year-ago period, but about half of that came from hyperinflation in certain markets, like Argentina.
    For the third quarter, Coke anticipates that foreign currency will again drag on its results. The company is forecasting a 4% currency headwind to its comparable net sales and an 8% currency headwind to its comparable earnings per share.

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    Inside Best Buy’s push to get back to sales growth, cash in on AI craze

    Best Buy on Tuesday rolled out its strategy to get back to sales growth, including through dedicating staff to key parts of its stores, creating more videos to pique customers’ curiosity and debuting a new marketing campaign.
    The consumer electronics retailer is trying to cash in on a much-awaited replacement cycle of pandemic-era purchases and a fresh wave of innovation.
    In an interview with CNBC, CEO Corie Barry said the company is focused on “getting all of that ‘new’ back in there.”

    Microsoft PCs on display at a Best Buy store in Secaucus, N.J. 
    Melissa Repko | CNBC

    Best Buy on Tuesday announced new plans to try to reverse a two-year sales slump and cash in on a much-awaited replacement cycle of pandemic-era purchases and a fresh wave of innovation.
    The consumer electronics retailer said it would add trained sales teams to key parts of its stores, create more YouTube videos to pique customers’ curiosity and kick off a marketing campaign with a fresh tagline: “Imagine that.”

    In an interview with CNBC, CEO Corie Barry said customers told Best Buy that retailers’ store experiences and the technology they offer have “lost a bit of [their] sparkle.” She added the consumer electronics innovation has hit a dry spell.
    “That is our big focus this year,” she said. “Getting all of that ‘new’ back in there.”
    One of Best Buy’s major hopes to drive sales comes from artificial intelligence-enabled laptops and smartphones.

    Arrows pointing outwards

    Still, the retailer doesn’t expect its sales to improve overnight. The company has reported 10 consecutive quarters of declining comparable sales, a key metric that takes out the impact of store openings and closures. Best Buy said in May that it expects comparable sales for the full year to be roughly flat or to drop by as much as 3% compared to the prior year.
    Best Buy expects revenue to range from $41.3 billion to $42.6 billion, a decline from $46.3 billion last year. The range would put its revenue slightly below the $43.6 billion for the pre-pandemic fiscal year that ended in early 2020.

    Barry said consumers are still “making very clear, value-based decisions.”
    Shares of Best Buy have reflected the sales struggles: As of Monday’s close, the stock has fallen about 36% from its all-time high of $138, which shares hit during the Covid pandemic.

    Arrows pointing outwards

    Steven Zaccone, an equity research analyst who covers retail for Citi Research, upgraded Best Buy’s stock from sell to buy in early June, in part due to an expected wave of new products.
    But he acknowledged trends have become tougher to predict as consumers watch their wallets after the highest inflation in decades and get distracted by the uncertainty of this year’s presidential election.
    “People who are focused on the near term would say the category is still declining,” he said. “So the call is based on the hope that you’re going to have a pivot to growth.”

    Wearable tech on display at the Best Buy store in Secaucus, N.J. 
    Melissa Repko | CNBC

    Rooting for a replacement cycle

    Best Buy executives and investors have reason to feel optimistic. In each of the past two quarters, Best Buy’s laptop sales were higher than the year-earlier periods, early signs that a replacement and upgrade cycle may be starting.
    Last week, shoppers’ purchases of consumer electronics like tablets, TVs and Bluetooth speakers helped drive sales to a record $14.2 billion across U.S. retailers’ websites during Amazon’s two-day Prime event, according to Adobe Analytics. It was a shift from last year when shoppers worn down by inflation took advantage of deals on household essentials. (Best Buy is among the retailers that have participated in the Amazon-created retail holiday by offering up its own deals.)
    Best Buy’s ability to drive sales partly depends on its vendors. It’s been hungry for innovation that gives customers fresh reasons to come to its stores or website.
    Over the past few months, Apple, Samsung and Microsoft have announced fresh launches that could create hype and drive customer traffic. Apple launched a collection of new iPads in May. Earlier this month, Samsung debuted its first “smart rings” with health-tracking features to compete with Oura’s own ring and Apple’s watch.
    Elsewhere, Microsoft announced a collection of new PCs in May that include Copilot, an artificial intelligence-powered chatbot. The collection, which includes roughly 40 different items with about 40% exclusive to Best Buy, began to get delivered in mid-June.
    Barry said the retail chain will benefit as customers see those leaps in technology and stores offer entirely new lines of business like rings that can track sleep, physical activity and more.
    “Five years ago, we would have never carried jewelry in our stores and now we’re going to have a whole section of wellness-oriented products that you can wear in really unique ways,” she said.

    Best Buy is kicking off a new marketing campaign this back-to-school season, which features a “spokeshologram” named Gram and a new tagline “Imagine that.”
    Courtesy: Best Buy

    Less tech specs, more discovery

    Instead of rattling off TV and laptop dimensions, Best Buy staff will instead focus on helping customers understand how items can save them time or make life easier, Barry said.
    At stores, customers will see more experiential displays that show off products including Tesla chargers, GoPro video equipment and Lovesac’s furniture later this summer. It will also add dedicated teams to its computing, appliance and home theater parts of the store, three key areas where Barry said customers tend to need support.
    Barry said those store employees will underscore unique features that customers may not know about, such as a laptop with more than double the battery life, a washer/dryer combo that allows them to do two laundry loads at once or a home theater system that can make a workout space feel like a spinning studio.
    On Best Buy’s app, customers will see a personalized home screen, a new “Discover” tab and an ability to set alerts for when an item on their wish list goes on sale.
    The company plans to roll out more than 500 videos by the end of year on its YouTube channel, app and website. That’s triple the number that it added last year.
    And as it gears up for back-to-school season, Best Buy will run advertising spots online, on streaming services and on social media that feature a “spokeshologram” named Gram.
    “We are absolutely doubling down on what makes us different and I think we’re the only ones to kind of help bring that ‘What if?’ question to life for our customers,” Barry said.
    Yet, Best Buy will be rolling out this sharper customer strategy on a tighter budget. Barry said on the company’s earnings call in May that the retailer plans about $750 million in capital expenditures this fiscal year, about $50 million less than last year. It is cutting spending with “refreshes” of all of its approximately 900 U.S. stores instead of major remodels and new store openings, she said.
    The company’s dedicated teams in part of the store will be made up of its existing workforce and supplemented with employees from its vendors, she told CNBC.

    A Best Buy store in Woodbridge, Virginia, US, on Tuesday, May 21, 2024. 
    Nathan Howard | Bloomberg | Getty Images

    ‘Murphy’s law of headwinds’

    Best Buy has faced a “Murphy’s law of headwinds” over the past three years, said Scot Ciccarelli, an equity research analyst at Truist Securities, referring to the adage that “Anything that can go wrong will go wrong.” 
    Among the company’s challenges, consumers have pulled back on pricier purchases like smartphones as everyday costs like food, gas and rent have gone up. Slower turnover in the housing market fueled by higher interest rates has dampened demand for home-related purchases like a bigger TV or new kitchen appliances.
    But Ciccarelli said Best Buy’s unusually high sales during the pandemic have haunted the retailer the most. It threw off the typical cadence of shoppers replacing smartphones, laptops, home appliances and more, since many of them bought that tech when setting up their home offices, gyms and kitchens during the Covid lockdown.
    Plus, as consumer electronics brands contended with temporarily shuttered factories and clogged supply chains during the pandemic, they debuted less game-changing tech. Without those advancements, Best Buy has been stuck competing on price as it sells roughly the same devices as competitors like Amazon and Walmart, particularly if customers have little reason to touch or feel a product before buying, Ciccarelli said.
    Consumer electronics have been a weaker category of retail, as sales had fallen 4% in dollars and 5% in units year to date as of the end of June compared to the year-ago period, according to Circana, a market research firm that tracks point-of-sale data across major U.S. retailers. The market research firm’s definition includes most major devices like TVs, tablets and audio equipment, but excludes some categories that Best Buy sells, like home appliances.
    However, consumer electronics spending is up 5% this year compared with the same pre-pandemic period in 2019, according to Circana.
    Some of increase comes from higher prices of computers, TVs and other items, said Paul Gagnon, consumer technology industry advisor for Circana. For example, he said the average price spent on items in the headphones category has jumped 60% compared with 2019 as customers gravitated toward wireless ear buds like Apple’s Airpods or headband-style wireless headphones.
    Consumer electronics’ biggest sales season is still ahead. About 57% of the category’s sales have historically come in the second half of the year, according to Circana data.
    And the biggest days for consumer electronics are still ahead in the back-to-school and holiday seasons.

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