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    McDonald’s reverses U.S. same-store sales declines in the third quarter, but E. coli fallout looms

    McDonald’s third-quarter earnings and revenue topped Wall Street’s estimates.
    Its U.S. restaurants reversed last quarter’s same-store sales decline.
    However, investors are worried about another dent to U.S. sales fueled by a recent E. coli outbreak across 13 states linked to McDonald’s Quarter Pounder burgers.

    McDonald’s on Tuesday reported quarterly earnings and revenue that beat analysts’ expectations as its U.S. restaurants reversed last quarter’s same-store sales decline.
    However, investors are worried about another dent to U.S. sales fueled by a recent E. coli outbreak across 13 states linked to McDonald’s Quarter Pounder burgers. As of Friday, 75 health cases have been tied to the outbreak, including one death of an older adult.

    Health authorities have honed in on the burger’s slivered onions as the likely source, and McDonald’s has suspended its relationship with the supplier. Quarter Pounder burgers will return to affected restaurants on a rolling basis this week, sans slivered onions.
    “While the situation appears to be contained, and though it didn’t affect Q3 numbers, it’s certainly an important development, which I know is on many of your minds,” CEO Chris Kempczinski told investors on the company’s earnings call, adding that McDonald’s was sorry and is committed to “making this right.”
    Shares of the company fell more than 1% in premarket trading.
    Here’s what the company reported for the period ended Sept. 30, compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

    Earnings per share: $3.23 adjusted vs. $3.20 expected
    Revenue: $6.87 billion vs. $6.82 billion expected

    McDonald’s posted third-quarter net income of $2.26 billion, or $3.13 per share, down from $2.32 billion, or $3.17 per share, a year earlier.

    Excluding certain items, the fast-food giant earned $3.23 per share.
    Net sales rose 3% to $6.87 billion.
    The chain’s global same-store sales fell 1.5%, a more drastic decline than the 0.6% that Wall Street was expecting, according to StreetAccount estimates, and was weighed down by the company’s international markets. It’s the second straight quarter that the company’s same-store sales have fallen.
    “While we anticipated a challenging environment in 2024, our performance this year has fallen short of our expectations,” Kempczinski said.
    U.S. same-store sales rose 0.3%, reversing last quarter’s same-store sales declines but still slightly weaker than the 0.5% increase predicted by StreetAccount estimates. Traffic to its U.S. restaurants was slightly negative, but the company credited its marketing and a $5 value meal launched in late June for the increase in sales.
    Diners have pulled back their restaurant spending, leading McDonald’s and its rivals to lean into discounts and other marketing tricks to bring customers back to their restaurants. For example, in August, McDonald’s launched limited-time “Collector’s Edition” cups.
    The company’s two international divisions both reported steeper declines in same-store sales compared with the prior quarter. The international operated markets segment, which includes France, Germany and Australia, saw same-store sales shrink 2.1%. The international developmental licensed markets division reported same-store sales declines of 3.5%, driven by weak demand in the Middle East and China.
    Looking ahead to the fourth quarter, it’s unclear how the E. coli outbreak might affect U.S. sales, particularly as consumers have grown more picky about how to spend their money and where.
    McDonald’s executives have taken steps to reassure customers that the company’s menu items are safe to eat, including pulling Quarter Pounder burgers from menus in the affected areas until its beef patties were cleared as the culprit.
    Still, foot traffic to U.S. locations fell roughly 10% in the three days immediately following the Centers for Disease Control and Prevention announcement last Tuesday of the E. coli outbreak tied to McDonald’s, according to a research note from Gordon Haskett Research Advisors.
    This story is developing. Please check back for updates.

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    Rocket builder Firefly’s new CEO is working ‘maniacally’ to scale launches, spacecraft and moon missions

    Jason Kim, the new CEO of rocket and spacecraft builder Firefly Aerospace, said he is “going to work maniacally” to scale the company’s efforts, which range from rocket launches to moon landings.
    All of Firefly’s product lines are generating revenue, Kim said, and the company has kicked off fundraising a round of capital with a new lead investor.
    “At the end of the day, we have to execute. … As long as you execute, you can keep going bigger and bigger and bolder and bolder,” Kim told CNBC in his first interview since becoming Firefly CEO.

    CEO Jason Kim in the company’s lunar mission control center.
    Firefly Aerospace

    Jason Kim just nabbed one of the most coveted yet high-pressure C-suite gigs in the space industry.
    As the new CEO of rocket and spacecraft builder Firefly Aerospace, he’s no longer under the Boeing umbrella after leaving his previous role leading their satellite-making subsidiary Millennium. And he’s joined an operation that’s in rarefied air — as one of only four companies in the U.S. with an operational orbital rocket — with growing spacecraft and lunar lander product lines.

    But now he’s taking on a launch market dominated by Elon Musk’s SpaceX. Legacy player ULA and rising challenger Rocket Lab are also ramping up their efforts in the market — with Jeff Bezos’ Blue Origin hot on their heels.
    But Kim is unfazed. He sees gaps in the launch market for Firefly’s Alpha and coming MLV rockets, which slot into the middle of the small-to-heavy class of vehicles. 
    “In the history of the world, we started with the sea and then we went to rail, roads and then airplanes. I think space is the next big transportation play. It’s a new category that Firefly is going to help create,” Kim told CNBC, speaking in his first interview since joining the company at the start of this month.

    Read more CNBC space news

    Millennium worked alongside Firefly last year when it launched the Space Force’s experimental Victus Nox mission, so Kim said he’d already seen first-hand the “unstoppable” attitude and “calculated risk taking” of Firefly employees.
    “I’m thrilled to be here. … I’m going to work maniacally to support this team so that we can achieve all of our visionary ideas,” Kim said.

    Firefly’s previous CEO was in the job for less than two years before a shock exit in July after reported allegations of an inappropriate employee relationship. It was the latest in what’s been a rollercoaster existence for Firefly. It was founded, went through bankruptcy, got restarted and underwent a federally-forced-ownership swap all in its past decade of existence.
    All the while, Firefly’s pushed forward. Building and testing at its “Rocket Ranch” outside Austin, Texas, the 700-person company has launched its Alpha rocket five times from California’s Vandenberg Space Force Base, reaching its intended orbit successfully on two of those.
    Firefly majority owner AE Industrial Partners moved quickly this summer to bring Kim over from Millennium, as he said he got a call three days after Firefly’s prior leader exited. Kim said being CEO of Firefly “was never in my road map” but emphasized that he was excited for the new challenge.
    “What I’ve learned through running multiple companies is that I think autonomy is something that is very precious when you’re running a company, and that autonomy helps you make the best decisions. You use your funds in the best manner to scale, to create differentiators. It helps you continue to grow and innovate at a very rapid pace. And so I would say that Firefly and autonomy are synonymous. That’s what’s going to help us grow and continue to evolve and be sustainable,” Kim said.
    Firefly has three main product lines: its rockets, Alpha and MLV; space tugs, called Elytra, and lunar landers, known as Blue Ghost. Kim said all of the company’s product lines are revenue generating, though he declined to say how much money they’re bringing in, and added that the company’s kicked off fundraising a round of capital “with a new lead investor.”
    “We’re already seeing significant demand [from investors] … more to come on that soon, but that’s going to help us with all the scaling that we need to do,” Kim said.

    More rockets

    The company’s fifth Alpha launch lifts off from Vandenberg Space Force Base in California in July 2024.
    Trevor Mahlmann / Firefly Aerospace

    The core of Firefly’s bid to be an end-to-end space transportation company is its rockets. 
    Alpha, standing at 95 feet tall, is designed to launch about 1,000 kilograms of payload to orbit — at a price of $15 million per launch.
    MLV (Medium Launch Vehicle), standing at 183 feet, is designed to launch as much as 16,300 kilograms of payload to orbit. The intended successor to Northrop Grumman’s Antares rockets, the pair of companies are co-developing MLV and aim to launch it for the first time in 2026.
    Alpha and MLV both fit in the middle of the rocket market, between Rocket Lab’s “small” Electron and the “heavy” rockets such as SpaceX’s Falcon 9.
    “The small-medium-large model is critical to support all the different needs of the market. … There’s no one size fits all kind of approach,” Kim said.

    A rendering of the MLV rocket.
    Firefly Aerospace

    Kim sees Firefly as having a key advantage — “an engine that works” — in its Reaver engines that power the Alpha rockets. And for MLV, Kim said Firefly took that “great engine technology” and “scaled it up to become Miranda, so you’re not starting from scratch” with a new engine.
    “We’re making huge strides on MLV,” Kim said. “We’ve had 50 Miranda engine tests already.” 

    A Miranda engine, left, and a Reaver engine.
    Firefly Aerospace

    Before MLV debuts, Firefly will also be delivering part of Northrop’s Antares 330 rocket, with a first stage similar to MLV’s, by the third quarter of next year.
    Additionally, while Firefly’s Alpha may not be reusable, the company has “purposely designed the MLV for reusability.”
    “We’re closer to how SpaceX tackled [rocket reuse],” Kim said, referencing how SpaceX added the landing capability of its Falcon 9 rockets over time.
    “We want to get some launches to orbit first before we tackle the ‘return to launch site’ part of it,” Kim added. “I do believe that reusability is going to help along the [launch] cadence of the MLV program, but for Alpha, we’re going to just get to our numbers by pure just cadence.”
    Firefly has built up a backlog of launches for Alpha, signing deals for upward of 50 launches. That includes bulk orders from Lockheed Martin and L3Harris, as well as trio of launches for startup True Anomaly, one being part of the Space Force’s latest responsive launch mission Victus Haze. 

    An aerial view of the “Rocket Ranch” in Briggs, Texas.
    Firefly Aerospace

    The company focused on infrastructure expansion this year, more than doubling Rocket Ranch’s footprint to over 200,000 square feet of floor space. Next year, Kim aims for Firefly to conduct four to six Alpha launches and then double that annually until Alpha is flying twice a month, or 24 launches a year.
    “We could have prioritized doing more Alpha launches this year but instead we prioritized scaling up for the future,” Kim said.

    A variety of spacecraft

    Kim talks to a company employee outside the clean room of its Blue Ghost lunar lander.
    Firefly Aerospace

    Firefly has another major debut coming up even sooner: The launch of its first Blue Ghost lunar lander is scheduled for December and is set to touch down on the moon’s surface 45 days after that.
    Seven feet tall and 12 feet in diameter, Blue Ghost is flying cargo under NASA’s Commercial Lunar Payload Services program. Firefly is one of three U.S. companies to win CLPS mission contracts. NASA in 2021 awarded Firefly with a $93 million contract for Blue Ghost Mission 1, to deliver 10 research payloads to the moon.
    “Any time you go to the moon, the whole world is watching. And when we land that thing, like Simone Biles sticks the landing in the Olympics, we’re going to be a different company,” Kim said.

    The Blue Ghost Mission 1 lunar lander.
    Firefly Aerospace

    Firefly’s other spacecraft is its Elytra line of space tugs, also known as orbital transfer vehicles. The trio —Dawn, Dusk, and Dark — are increasingly large spacecraft that can delivery spacecraft and payloads to orbits ranging from low-above Earth to orbiting the moon.
    “[Elytra] is getting the least amount of attention right now at Firefly publicly, but I think in about five years, it’s going to be a flywheel constellation program that’s servicing different missions. And so that’s where my expertise being a satellite manufacturer comes into play, is we can take something like Elytra and turn it into a multi-mission constellation capability,” Kim said.
    Kim has only just joined Firefly but he said he already has a clear sense of how the company needs to progress.
    “I’ve run companies before. At the end of the day, we have to execute. We’ve got to get a cadence. … As long as you execute, you can keep going bigger and bigger and bolder and bolder,” Kim said. More

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    Chinese IPOs in the U.S. and Hong Kong are set to increase next year, analysts say

    “Chinese companies are becoming increasingly interested in getting listed in Hong Kong or New York, due to difficulty in getting listed in Mainland China and pressure from shareholders to quickly achieve an exit,” said Marcia Ellis, Hong Kong-based global co-chair of private equity practice, Morrison Foerster.
    Few large China-based companies have listed in New York since the Didi IPO in the summer of 2021 increased scrutiny by U.S. and Chinese regulators on such listings.
    Many Chinese companies that list in Hong Kong see it as a way to test investors’ appetite for an IPO in another country, said Reuben Lai, vice president, private capital, Greater China at Preqin.

    Chinese autonomous driving company WeRide listed on the Nasdaq on Friday, Oct. 25, 2024.
    China News Service | China News Service | Getty Images

    BEIJING — Chinese IPOs in the U.S. and Hong Kong are set to increase next year, analysts said, as some high-profile listings outside the mainland this year raise investor optimism over profitable exits.
    Chinese autonomous driving company WeRide listed on the Nasdaq Friday with shares rising nearly 6.8%. Earlier this month, Chinese robotaxi operator Pony.ai also filed paperwork to list on the Nasdaq. Both companies have long aimed to go public.

    Few large China-based companies have listed in New York since the Didi IPO in the summer of 2021 increased scrutiny by U.S. and Chinese regulators on such listings. The Chinese ride-hailing company was forced to temporarily suspend new user registrations, and got delisted in less than a year.
    U.S. and Chinese authorities have since clarified the process for a China-based company to go public in New York. But geopolitics and market changes have substantially reduced U.S. IPOs of Chinese businesses.
    “After a couple of slow years, we generally expect the IPO market to revive in 2025, bolstered by interest rate decreases and (to some extent) the conclusion of the U.S. presidential election,” Marcia Ellis, Hong Kong-based global co-chair of private equity practice, Morrison Foerster, said in an email.

    “While there is a market perception of regulatory issues between the U.S. and China as being problematic, many of the issues driving this perception have been solved,” she said.
    “Chinese companies are becoming increasingly interested in getting listed in Hong Kong or New York, due to difficulty in getting listed in Mainland China and pressure from shareholders to quickly achieve an exit.” 

    This year, as many as 42 companies have gone public on the Hong Kong Stock Exchange, and there were 96 IPO applications pending listing or under processing as of Sept. 30, according to the exchange’s website.
    Last week, Horizon Robotics — a Chinese artificial intelligence and auto chip developer — and state-owned bottled water company CR Beverage went public in Hong Kong.
    The two were the exchange’s largest IPOs of the year, excluding listings of companies that also trade in the mainland, according to Renaissance Capital, which tracks global IPOs. The firm noted that Chinese delivery giant SF Express is planning for a Hong Kong IPO next month, while Chinese automaker Chery aims for one next year.
    Still, the overall pace of Hong Kong IPOs this year is slightly slower than expected, George Chan, global IPO leader at EY, told CNBC in an interview earlier this month.
    He said the fourth quarter is generally not a good period for listings and expects most companies to wait until at least February. In his conversations with early stage investors, “they are very optimistic about next year” and are preparing companies for IPOs, Chan said.
    The planned listings are generally life sciences, tech or consumer companies, he said.

    Hong Kong, then New York

    Investor sentiment on Chinese stocks has improved over the last few weeks thanks to high-level stimulus announcements. Lower interest rates also make stocks more attractive than bonds. The Hang Seng Index has surged over 20% so far this year after four straight years of declines.
    Many Chinese companies that list in Hong Kong also see it as a way to test investors’ appetite for an IPO in another country, said Reuben Lai, vice president, private capital, Greater China at Preqin.
    “Geopolitical tensions make Hong Kong a preferred market,” Ellis said, “but the depth and breadth of US capital markets still make many companies seriously consider New York, especially for those that focus on advanced technology and are not yet profitable, who sometimes believe that their equity stories will be better received by U.S. investors.”  
    Just over half of IPOs on U.S. exchanges since 2023 have come from foreign-based companies, a 20-year high, according to EY.
    Geely-backed Chinese electric car company Zeekr and Chinese-owned Amer Sports both listed in the U.S. earlier this year, according to EY’s list of major cross-border IPOs.
    Chinese electric truck manufacturer Windrose said it intends to list in the U.S. in the first half of 2025, with a dual listing in Europe later that year. The company, which aims to deliver 10,000 trucks by 2027, on Sunday announced it moved its global headquarters to Belgium.
    A recovery in Chinese IPOs in the U.S. and Hong Kong can help funds cash out on their early stage investments in startups. The lack of IPOs had reduced the incentive for funds to back startups.
    Now, investors are looking at China again, after recently deploying capital to India and the Middle East, Preqin’s Lai said. “I’m definitely seeing a greater potential from now in China whether it’s money coming back, valuation of the companies, exit environment [or] performance of the funds.”
    While the pickup in investor activity is far from levels seen in the last two years, the nascent recovery includes some investments in consumer products such as milk tea and supermarkets, Lai said. More

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    Ford guides to low end of 2024 earnings forecast as it slightly tops Wall Street’s third-quarter expectations

    Ford guided to the low end of its previously announced 2024 earnings forecast as it slightly topped Wall Street’s third-quarter expectations.
    The automaker now expects adjusted earnings before interest and taxes, or EBIT, of about $10 billion, down from a range of between $10 billion and $12 billion.
    Ford’s third-quarter results were led by its “Pro” commercial and fleet business as well as its traditional operations, known as “Ford Blue.”

    Ford and Lincoln vehicles are displayed for sale at a Ford dealership on August 21, 2024 in Glendale, California. 
    Mario Tama | Getty Images

    DETROIT — Ford Motor guided to the low end of its previously announced 2024 earnings forecast as it slightly topped Wall Street’s third-quarter expectations.
    The Detroit automaker said Monday it now expects adjusted earnings before interest and taxes, or EBIT, of about $10 billion. It had previously guided to between $10 billion and $12 billion. It retained its forecast for adjusted free cash flow of between $7.5 billion and $8.5 billion.

    Heading into Monday’s results, several Wall Street analysts were concerned Ford would need to lower its forecast due to softening demand, rising vehicle inventory levels and worries about Ford’s ability to achieve an announced $2 billion in cost cuts this year.
    “Our focus continues on cost and quality, which are holding back our progress and represent tremendous upside potential,” Ford CFO and Vice Chair John Lawler said Monday during a media briefing.

    Lawler said Ford has achieved its $2 billion in material, freight and manufacturing costs, but higher inflationary and warranty costs have eaten into those improvements and have restricted the company “from having a record year.”
    Here’s how the company performed in the third quarter, compared with average estimates compiled by LSEG:

    Earnings per share: 49 cents adjusted vs. 47 cents expected
    Automotive revenue: $43.07 billion vs. $41.88 billion expected

    Shares of the automaker were down by roughly 5% during after-hours trading after closing Monday at $11.37, up 2.7%.

    The automaker was under pressure after a disappointing second quarter in which unexpected warranty costs caused the company to miss Wall Street’s earnings expectations.
    Lawler said the company’s warranty costs in the third quarter were slightly lower than they were a year earlier after increasing by $800 million year over year during the second quarter.
    “It’s an improvement, but it’s not as big as we would like to see,” Lawler said, declining to disclose the overall costs during the period.
    Ford’s third-quarter results were led by its “Pro” commercial and fleet business as well as its traditional operations, known as “Ford Blue.” Blue reported adjusted earnings of $1.63 billion, while Pro earned $1.81 billion.
    Lawler said Ford Pro and Blue operations are being affected — and likely will continue to be affected — by some supplier problems, in part due to Hurricane Helene in late September.
    Ford’s “Model e” electric vehicle unit recorded losses of $1.22 billion during the third quarter — less than it lost a year earlier, largely due to lower volumes and cost cuts.
    Ford CEO Jim Farley told investors Monday that the company continues to believe in its EV strategy; however, the automaker has pulled back on many investments in the vehicles to focus on hybrid models.
    Ford’s net income for the third quarter was $896 million, or 22 cents per share. Adjusted EBIT increased roughly 16% year over year to $2.55 billion. Ford’s 2023 third quarter included $41.18 billion in automotive revenue, net income of $1.17 billion, or 30 cents per share, and adjusted earnings before interest and taxes of $2.2 billion, or 39 cents per share.
    Ford’s overall revenue for the third quarter, including its finance business, increased about 5% year over year to $46.2 billion. It marked the company’s 10th consecutive quarter of year-over-year revenue growth.
    Farley noted that the company’s operations in China, where legacy automakers have increasingly struggled, have contributed more than $600 million to the company’s EBIT. That includes Ford’s plans to increase vehicle exports from the country.
    Farley also addressed the company’s rising new vehicle inventory levels. Ford has 91 days’ supply of gross inventory, including vehicles in the company’s possession, and 68 days’ supply on dealer lots at the end of the third quarter, which has concerned investors.
    He said the mix and price of those vehicles is “really good” and the company is holding back some inventory to assist with vehicle changeovers in early 2025. More

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    JPMorgan begins suing customers who allegedly stole thousands of dollars in ‘infinite money glitch’

    JPMorgan Chase has begun suing customers who allegedly stole thousands of dollars from ATMs by taking advantage of a technical glitch that allowed them to withdraw funds before a check bounced.
    The bank on Monday filed lawsuits in at least three federal courts, taking aim at some of the people who drew down the highest amounts in the so-called infinite money glitch that went viral on TikTok.
    A Houston case involves a man who owes JPMorgan $290,939.47 after an unidentified accomplice deposited a counterfeit $335,000 check at an ATM, according to the bank.

    JPMorgan Chase has begun suing customers who allegedly stole thousands of dollars from ATMs by taking advantage of a technical glitch that allowed them to withdraw funds before a check bounced.
    The bank on Monday filed lawsuits in at least three federal courts, taking aim at some of the people who withdrew the highest amounts in the so-called infinite money glitch that went viral on TikTok and other social media platforms in late August.

    A Houston case involves a man who owes JPMorgan $290,939.47 after an unidentified accomplice deposited a counterfeit $335,000 check at an ATM, according to the bank.
    “On August 29, 2024, a masked man deposited a check in Defendant’s Chase bank account in the amount of $335,000,” the bank said in the Texas filing. “After the check was deposited, Defendant began withdrawing the vast majority of the ill-gotten funds.”
    JPMorgan, the biggest U.S. bank by assets, is investigating thousands of possible cases related to the “infinite money glitch,” though it hasn’t disclosed the scope of associated losses. Despite the waning use of paper checks as digital forms of payment gain popularity, they’re still a major avenue for fraud, resulting in $26.6 billion in losses globally last year, according to Nasdaq’s Global Financial Crime Report.
    The infinite money glitch episode highlights the risk that social media can amplify vulnerabilities discovered at a financial institution. Videos began circulating in late August showing people celebrating the withdrawal of wads of cash from Chase ATMs shortly after bad checks were deposited.
    Normally, banks only make available a fraction of the value of a check until it clears, which takes several days. JPMorgan says it closed the loophole a few days after it was discovered.

    Miami and California

    The other lawsuits filed Monday are in courts including Miami and the Central District of California, and involve cases where JPMorgan says customers owe the bank sums ranging from about $80,000 to $141,000.
    Most cases being examined by the bank are for far smaller amounts, according to people with knowledge of the situation who declined to be identified speaking about the internal investigation.
    In each case, JPMorgan says its security team reached out to the alleged fraudster, but it hasn’t been repaid for the phony checks, in violation of the deposit agreement that customers sign when creating an account with the bank.
    JPMorgan is seeking the return of the stolen funds with interest and overdraft fees, as well as lawyers’ fees and, in some cases, punitive damages, according to the complaints.

    Criminal cases?

    The lawsuits are likely to be just the start of a wave of litigation meant to force customers to repay their debts and signal broadly that the bank won’t tolerate fraud, according to the people familiar. JPMorgan prioritized cases with large dollar amounts and indications of possible ties to criminal groups, they said.
    The civil cases are separate from potential criminal investigations; JPMorgan says it has also referred cases to law enforcement officials across the country.
    “Fraud is a crime that impacts everyone and undermines trust in the banking system,” JPMorgan spokesman Drew Pusateri said in a statement to CNBC. “We’re pursuing these cases and actively cooperating with law enforcement to make sure if someone is committing fraud against Chase and its customers, they’re held accountable.”

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    Bret Taylor’s AI startup Sierra raises funding at $4.5 billion valuation

    AI Age
    AI Insights

    Sierra, the startup founded by ex-Salesforce co-CEO Bret Taylor and former Google executive Clay Bavor, has raised a funding round that values the company at $4.5 billion. 
    The $175 million round was led by Greenoaks Capital, with participation from ICONIQ and Josh Kushner’s Thrive Capital. 
    One in every three venture dollars this year has gone to an artificial intelligence startup, according to CB Insights.

    Artificial intelligence startup Sierra, co-founded by ex-Salesforce co-CEO Bret Taylor, is more than quadrupling its valuation to $4.5 billion in a fresh funding round.
    The San Francisco-based company, which was valued at $1 billion in January, raised $175 million in a funding round led by Greenoaks Capital. The Information reported earlier this month that Sierra was in the midst of raising capital.

    Taylor is chairman of OpenAI’s board and previously ran Salesforce, alongside Marc Benioff. He was also chairman of Twitter when Elon Musk was negotiating to buy the social media company. Taylor is a longtime entrepreneur, widely credited with helping to create Google Maps. At Google, he met his Sierra co-founder Clay Bavor, who spent nearly two decades at the tech giant, leading virtual reality efforts and Google Labs.
    Sierra is focused on helping enterprises like home security company ADT, Sonos, Weight Watchers and Casper personalize and implement AI agents for customer service. Taylor and Bavor unveiled the startup earlier this year.
    “We think every company in the world, whether it’s a technology company or a 150-year-old company like ADT, can benefit from AI, and the technology is ready right now,” Taylor told CNBC in an interview. “We want to enable Sierra to address that market, and that means expanding internationally and to other industries.” 
    ICONIQ and Josh Kushner’s Thrive Capital contributed to the new funding round.
    Taylor describes Sierra as “conversational AI,” and bristles at the word “chatbot,” even banning the phrase in the company’s downtown San Francisco office. Sierra is looking to create a more conversational style of interaction, Taylor said. He pointed to the ease of OpenAI’s ChatGPT and compared it with the frustrating experience of talking on the phone with an airline bot.

    “When you think of chatbots, you think of those annoying, robotic things — you can feel the difference,” Taylor said, adding that Sierra is making its agents more “empathetic and conversational.”

    Bret Taylor, co-CEO of Salesforce, speaks at the Viva Technology Conference in Paris on June 15, 2022.
    Nathan Laine | Bloomberg | Getty Images

    Sierra’s team lets each client customize the agent’s personality to its corporate brand. Clothing company Chubbies, for example, took a more sarcastic route with a younger sounding agent named Duncan Smothers. Taylor said some luxury brands are opting for a British accent with a more serious tone. 
    “We really think that your conversational AI agent should be not only transactional, but a brand ambassador,” Taylor said. “It’s actually something that is a statement of your values. So do you want to be sarcastic? Do you want to use emoji? Do you want it to sound like text messaging, or do you want it to sound like a lawyer?”
    Sierra uses what Bavor and Taylor describe as a “constellation” of models, with a “supervisor.” The technology uses one model to do the heavy lifting, with the expectation that it won’t be 100% reliable, but use a second model as a backup, to “check” the others and help with accuracy. The company currently relies on large language models from OpenAI, Anthropic and Meta, among others. 
    There’s competition in the space. Taylor’s former company, Salesforce, as well as Microsoft, in partnership with OpenAI, are exploring the AI agent space. Taylor compared Sierra with the companies that built cloud software on top of Amazon Web Services and other cloud infrastructure.
    “In the cloud era, you had Shopify, Salesforce, ServiceNow and Adobe — I think the same thing will play out in AI with Sierra,” Taylor said. “We’re helping their branded customer facing agent.”
    He mentioned startups like Cursor, which makes coding agents, and Harvey, which makes legal agents.
    Sierra’s funding follows a flurry of major AI announcements in Silicon Valley. OpenAI raised billions of dollars at a $157 billion valuation. Perplexity is in the midst of raising a round that values the company at $9 billion, a source confirmed to CNBC. One in three venture dollars this year has gone to an AI startup, according to CB Insights. 
    “When a technology wave like this happens, I think a lot of people are trying to place their bets,” Taylor said. “I don’t know which company will win, but it’s a smart investment, categorically. Clearly customer experience and customer service is a huge opportunity, and I think we are the leader in this space, and seeing a lot of demands because of that.” 

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    Immersive entertainment company Cosm lands rights to broadcast NFL games

    Cosm will broadcast NFL games across networks on Thursdays, Sundays and Mondays.
    The immersive experience, with a 360-degree dome and giant 8K LED screens, allows people to feel as though they are at the game.
    Cosm has locations in Los Angeles and Dallas, with plans for another venue in Atlanta and more down the road.

    Cosm currently has two locations in Los Angeles and Dallas, Texas but plans but is planning on expanding to additional locations in the future.
    Courtesy: Cosm

    Cosm, the immersive technology company that broadcasts live sports events using what it calls “shared reality,” is partnering with the National Football League, the company announced Monday.
    As part of the deal, Cosm will produce and distribute NFL games at its venues throughout the rest of the 2024 season.

    The deal includes broadcasting every Thursday night football game on Amazon, all Sunday night games on NBC, every Monday night football game on ESPN and select games on Sunday with Fox.
    The company, founded in 2020 by Mirasol Capital, uses a 360-degree dome with giant 12K+ LED screens to offer viewers a fully immersive “shared reality” experience that mirrors being at the game.
    The domes fit about 700 people with the average ticket price ranging between $22 and $127. Cosm uses a dynamic pricing model, similar to concerts or live sports.
    “What’s so unique about a property like the NFL is that fandom is everywhere,” said Jeb Terry, president and CEO at Cosm. “We see fans coming in wearing jerseys, bringing the Terrible Towel, bringing cow bells, having an absolute blast, like they’re at the stadium themselves.”
    The company did not disclose the financial details of its deal with the NFL.

    Cosm offer a wide range of live sports and also educational programming
    Courtesy: Cosm

    Cosm first opened its doors in Los Angeles and Dallas this summer and recently announced its third venue would be in downtown Atlanta, with future locations to be announced soon.
    Cosm already has deals in place with the NBA, UFC, ESPN, NBC Sports, TNT Sports, Fox Sports and Amazon Prime Video, and broadcasts everything from the Summer Olympics in Paris to the current World Series.
    Tickets for the first game of the World Series featuring the Los Angeles Dodgers and the New York Yankees sold out in seven minutes, Cosm said. The second game sold out in one minute.
    “Inventory is flying off the shelf,” Terry said.

    The shared reality experience gives fans the feeling of being at the game.
    Courtesy: Cosm

    While live sports act as the core anchor for Cosm, the company also has nonsports offerings, including an animated voyage beyond the planets through the eyes of astronauts and a Cirque du Soleil show. This allows the company to have programs throughout lunch and matinee hours when live sports may not be available.
    As fans’ viewing habits are changing, Cosm is finding rapid success in its tech-forward model.
    Terry said the venues are already seeing repeat customers and they will soon be introducing membership rewards and season passes.
    In July, the company raised more than $250 million in funding to expand globally. Cosm is valued at more than $1 billion, and its investors include sports heavyweights such as former Milwaukee Bucks owner Marc Lasry, Cleveland Cavaliers owner Dan Gilbert and co-managing partner of the Philadelphia 76ers and the New Jersey Devils David Blitzer.
    Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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    Wise’s billionaire CEO fined £350,000 by UK regulators over failure to report tax issue

    Kristo Käärmann, who co-founded Wise in 2011, was on Monday ordered by the Financial Conduct Authority to pay a £350,000 fine.
    The FCA said that Käärmann failed to notify the regulator about him not paying a capital gains tax liability when he cashed in on shares worth £10 million in 2017.
    The watchdog found him in breach of its Senior Management Conduct Rule 4, which states: “You must disclose appropriately any information of which the FCA would reasonably expect notice.”

    Kristo Kaarmann, CEO and co-founder of Wise.
    Eoin Noonan | Sportsfile | Getty Images

    LONDON — Kristo Käärmann, the billionaire CEO of money transfer firm Wise, was slapped with a £350,000 ($454 million) fine by financial regulators in the U.K for failing to report an issue with his tax filings.
    Käärmann, who co-founded Wise in 2011 with fellow entrepreneur Taavet Hinrikus, was on Monday ordered by the Financial Conduct Authority (FCA) to pay the sizable penalty due to a breach of the watchdog’s senior manager conduct rule.

    The FCA said that Käärmann failed to notify the regulator about him not paying a capital gains tax liability when he cashed in on shares worth £10 million in 2017.
    The watchdog found him in breach of its Senior Management Conduct Rule 4, which states: “You must disclose appropriately any information of which the FCA would reasonably expect notice.”
    It comes after the Wise boss was hit with a separate £365,651 fine by U.K. tax collection agency Her Majesty’s Revenue and Customs (HMRC) in 2021 for being late to submitting his tax returns during the 2017/18 tax year.
    Käärmann’s name was added to HMRC’s public tax defaulters list. His tax liability for that year was £720,495, according to HMRC. He has a net worth of $1.8 billion, according to Forbes.

    ‘High standards’ expected

    The FCA said Monday that, between February 2021 and September 2021, the tax issues were relevant to its assessment of Käärmann’s fitness and propriety as a senior director of a financial services firm.

    Käärmann failed to consider the significance of the issues and notify the FCA despite being aware of them for over seven months, the regulator added.
    “We, and the public, expect high standards from leaders of financial firms, including being frank and open,” Therese Chambers, joint executive director of enforcement and oversight, said in a statement Monday.

    “It should have been obvious to Mr Käärmann that he needed to tell us about these issues which were highly relevant to our assessment of his fitness and propriety.” 
    Käärmann said in a statement Monday that he remains “focused on delivering the mission for Wise and achieving our long-term vision.” “After several years and full cooperation with the FCA, we have brought this process to a close,” he said.
    “We continue to build a product and a company that will serve our customers and owners for the decades to come,” Käärmann added.
    The chair of Wise, David Wells, said that the company’s board of directors “continues to take Wise’s regulatory obligations very seriously.”
    Wise’s board found that Käärmann was “fit and proper” to continue in his role at the firm after an internal investigation in 2021.
    As a result of that review, Käärmann was required by the board to take “remedial actions” to ensure his personal tax affairs were appropriately managed.

    Less severe than feared

    The value of the FCA’s fine is substantially lower than the potential maximum fine he could have faced.
    Käärmann could have been fined as much as £500,000 for his tax failings, but qualified for a 30% discount because he agreed to resolve the issues.

    News of the fine comes after Wise earlier this month reported a 17% increase in “underlying income,” which consists of cross-border revenue, card and other revenue, and interest income.
    Wise reiterated its target of achieving an underlying profit before tax margin of 13% to 16% over the medium term thanks to investments in pricing, and added that meant it wouldn’t have to make “further material investments in reduced pricing” in the second half of the year.
    In a note Monday, analysts at British investment bank Peel Hunt boosted their expectations for Wise’s full-year profit before tax by 15%. They have a £1,000 price target and a “buy” rating on the stock.
    “While Wise made no changes to the guidance set in June 2024, we expect a significant near-term beat,” Peel Hunt analysts Gautam Pillai and Barun Singh wrote in the note. 
    Käärmann and Hinrikus, both Estonian tech entrepreneurs who immigrated to the U.K., took Wise from a scrappy startup to a payments disruptor now worth £7.4 billion.
    They created Wise to offer a low-cost alternative to banks charging hidden fees for moving money across borders. More