Business

Investors are accustomed to volatility in the semiconductor industry. But recent ups and downs have been especially discombobulating. On October 15th ASML, a supplier of chipmaking gear, reported that orders during its most recent quarter were only half what analysts had expected, causing its shares to plunge. Two days later TSMC, the world’s biggest chip manufacturer, reported record quarterly profits and raised its sales forecast for the year. More

TO CALL APPLE a corporate behemoth is to be uncharitable. It is much bigger than that. On many financial measures it makes more sense to compare the iPhone-maker not with other companies but with stockmarket indices—and not some obscure ones, either. Exclude financial firms and India’s Nifty 50 sit on less cash. When Apple reports its annual results on October 31st analysts reckon its net profit will be just below what Germany’s DAX blue chips raked in last year. On October 21st its market capitalisation nudged $3.6trn, more than Hong Kong’s Hang Seng. More

However much you might want to keep politics out of business, politics has other plans for you. Events have a habit of sucking organisations into controversy. In 2022 Disney was caught up in a very public row with the state of Florida over a bill about teaching sexuality and gender identity in public schools. Earlier this year Google fired some employees who had taken part in a sit-in to protest against the tech firm’s cloud-computing contract with Israel. University administrators have conspicuously struggled to manage the passions aroused by the war in Gaza. More

TKO Group is paying $3.25 billion for three sports-related businesses from Endeavor Group.
The deal is all stock, increasing Endeavor’s ownership in TKO to 59%.
The three businesses are Professional Bull Riders, On Location and IMG.

TKO Group, the company that owns WWE and UFC, is expanding into sports-adjacent properties by acquiring three businesses for $3.25 billion from its controlling owner, Endeavor Group.
The businesses are Professional Bull Riders, On Location and IMG, the companies announced Thursday. The deal is all stock, and Endeavor’s ownership in TKO will increase from 53% to 59%.

The transaction expands TKO’s strategic ambitions by broadening its sports focus beyond the operation of leagues. While the company does acquire a new league in PBR, the world’s largest bull riding league, it also is expanding into luxury hospitality with On Location and media rights consultancy through IMG.
“Sports unify us and have never been in more demand,” said Mark Shapiro, the president and chief operating officer of both Endeavor and TKO, in an interview. “At TKO, we’re primarily interested in league ownership if that exists and businesses that can power our current sports ecosystem. That could be ticket sales, hospitality, consumer products, media rights expertise. That’s what we’re getting in IMG and On Location.”
Private equity firm Silver Lake announced its intentions to take Endeavor private earlier this year. As part of that transaction, Silver Lake wanted to divest certain assets, Shapiro said. Endeavor came to the TKO board with a proposal to sell the three businesses. TKO organized a special committee to examine the transaction, which it ultimately recommended to the board, Shapiro said.
PBR puts on more than 200 events annually for more than 1 million fans. PBR CEO and Commissioner Sean Gleason will continue to lead the organization, TKO said in a statement.
On Location provides luxury hospitality for major sporting events including the Super Bowl, the Ryder Cup, March Madness, the FIFA World Cup and the Olympics. 

IMG packages and sells media rights and brand partnerships, providing strategic consultancy on the biggest TV deals for the NFL, English Premier League, National Hockey League, Major League Soccer, UFC, WWE, and PBR. The acquisition of IMG does not include “businesses associated with the IMG brand in licensing, models, and tennis representation, nor IMG’s full events portfolio,” according to the TKO statement. 
In addition to the transaction, TKO also announced it is initiating an annual dividend of $300 million and has authorized a share buyback program of up to $2 billion for its Class A common stock.

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Southwest Airlines and activist investor Elliott Investment Management said Thursday they’ve struck a settlement that averts a proxy fight.
The deal includes the addition of six directors to the airline’s board and the earlier retirement of executive chairman Gary Kelly.
Southwest CEO Bob Jordan will keep his job.

Bob Jordan, CEO of Southwest Airlines, listens to questions from media during Southwest Airlines Investor day at Southwest Airlines Headquarters on September 26, 2024 in Dallas, Texas. 
Sam Hodde | The Washington Post | Getty Images

Southwest Airlines and activist hedge fund Elliott Investment Management struck a deal to avert a proxy fight in exchange for naming six directors to the airline’s board — short of board control — and an earlier retirement for executive chairman Gary Kelly. Southwest CEO Bob Jordan will keep his job as part of the deal.
“We are pleased to have come to an agreement with Southwest on the addition of six new directors that will enhance and revitalize its Board,” Elliott’s John Pike and Bobby Xu said in a statement on Thursday.

Five of Elliott’s board nominees along with former Chevron CFO Pierre Breber will join the board, which will stand at 13 members after the appointments, Southwest said.
The Southwest board will appoint a new chairman to replace Kelly, who will now step down next month instead of next year.
Elliott had called for both Kelly and Jordan’s ouster and criticized the airline’s leadership for not moving fast enough on sales- and profit-boosting strategies. The airline has made few changes to its business model in its 50 years of flying and is now planning to upend its long-standing policies like open seating and a single-class cabin for premium seats that more profitable carriers like Delta Air Lines offer.
Southwest shares are up more than 6% so far this year while the S&P 500 is up 21%. The airline’s third-quarter profit, also announced Thursday, topped analysts’ estimates.
The Dallas-based carrier has been slashing unprofitable routes to cut costs. At an investor day last month, it said the new revenue initiatives and other changes put it on track to boost earnings before interest and taxes in 2027 by $4 billion. The airline also authorized a $2.5 billion buyback, the first $250 million of which was announced Thursday. 

Elliott and Southwest as recently as last week had been girding for a proxy fight. The activist had been seeking to install 10 new directors to the airline’s board and had called for a special meeting in December when shareholders would have voted on them. Elliott’s campaign hinged in large part on the removal of Kelly and Jordan from their leadership positions.
With eight new directors joining as a result of the settlement and of Southwest’s earlier board refreshment, the deal is the largest board change Elliott has driven in a U.S. fight.
Southwest’s board said in September it would drop from 15 directors to 12.
Also in September, Southwest said Kelly would step down next spring, but the airline’s board had staunchly backed Jordan. Both Kelly and Jordan have worked at Southwest for more than three decades.
“I believe Southwest’s best days lie ahead under the vision and leadership of Bob Jordan and the oversight of this reconstituted Board,” Kelly said in a release Thursday.
— CNBC’s Leslie Josephs contributed to this report.
Correction: This story has been corrected to remove an inaccurate description for Pierre Breber, who will be joining Southwest’s board. Southwest previously announced its board would drop from 15 directors to 12. An earlier version of this story misstated that announcement. More

Jeff Vinik has sold an ownership stake in the NHL’s Tampa Bay Lightning to a group of investors led by Doug Ostrover and Marc Lipschultz, both of asset manager Blue Owl Capital.
Vinik will remain in control of the team and serve as the Lightning’s governor for the next three years.
As part of the deal, sports-focused private equity firm Arctos will sell a portion of its stake in the Lightning. Arctos will maintain a minority stake.

Jeffrey Vinik, owner of the Tampa Bay Lightning.
Adam Jeffery | CNBC

The Tampa Bay Lightning’s ownership group is expanding.
Vinik Sports Group, run by titan investor Jeff Vinik, is selling a portion of the National Hockey League team to a group of investors led by Doug Ostrover and Marc Lipschultz.

Terms of the deal weren’t disclosed, but earlier reports indicate a valuation close to $2 billion. The transaction represents a compound annual growth rate of about 18%, based on the team’s valuation in 2010 when it sold to Vinik.
The deal was approved by the NHL’s Board of Governors on Oct. 1, and will take effect immediately, according to a news release. Vinik will retain control of the team after the transaction and remain as the team’s governor for the next three years. At that time, control will transfer to Ostrover and Lipschultz.
Private equity has been rushing to acquire stakes in professional sports teams in the U.S. Most recently, the owners of the National Football League voted to allow select private equity firms to acquire up to 10% of teams.

Tampa Bay Lightning center Steven Stamkos (91) hoists the Stanley Cup after the Lightning defeat the Dallas Stars in game six of the 2020 Stanley Cup Final at Rogers Place.
Perry Nelson | USA TODAY Sports | Reuters

Deal-making has intensified as valuations among professional sports teams have skyrocketed.
As part of the Lightning deal announced Thursday, Arctos Partners will also sell a portion of its ownership and remain a minority stakeholder.

Ostrover and Lipschultz are co-CEOs of Blue Owl Capital, an asset manager with a sports strategy fund. They were introduced to Vinik through their relationships with Arctos.
Arctos has a deep bench of investments in sports, and was among the private equity investors recently approved to take stakes in the NFL. The firm — which earlier this year closed its second sports-focused fund, totaling $4.1 billion in commitments — owns roughly two dozen stakes in sports and e-sports teams.
The Lightning have won two Stanley Cup championships since 2020 and three overall. Vinik acquired the Lightning in 2010 for a reported $110 million and since then has invested billions in real estate development in downtown Tampa Bay. More

Southwest’s sales and profits topped analysts’ estimates and the airline forecast higher revenue to end the year.
The carrier’s leaders have been trying to fend off activist investor Elliott, which has called for leadership changes at the airline.

Southwest Airlines’ third-quarter profit fell from a year ago but topped Wall Street estimates as the carrier worked to drum up revenue and fend off activist investor Elliott Investment Management.
Elliott and Southwest struck a deal, announced Thursday, that averts a proxy fight and adds six of the activist’s candidates to the board. CEO Bob Jordan will keep his job as part of the deal.

The Dallas-based carrier forecast unit revenue for the fourth quarter would increase 3.5% to 5.5% on a 4% drop in capacity compared with a year ago. It said costs, excluding fuel, would likely rise as much as 13%.
“Thus far in the quarter, travel demand remains healthy and bookings-to-date for the holiday season are strong, demonstrating the continued resilience of the leisure travel market,” Southwest said in an earnings release.
Other carriers have pointed to strong travel demand to close out 2024 as airlines scale back unprofitable capacity that pushed down airfare.
Separately, Southwest last month laid out a three-year plan that the company would add $4 billion to earnings before interest and taxes in 2027. The airline also said it authorized a $2.5 billion buyback and would slash underperforming flights from Atlanta to cut costs.
Southwest said Thursday that it will repurchase $250 million of Southwest stock through an “accelerated” program under the overall buyback plan.

The carrier is planning to abandon its longtime open seating to instead charge for seats as well as offer extra legroom options that come at a higher price, the biggest changes in its more than 50 years of flying.
Here is how Southwest performed in the third quarter compared with Wall Street expectations, according to consensus estimates from LSEG:

Earnings per share: 15 cents adjusted vs. an expected zero cents
Revenue: $6.87 billion vs. $6.74 billion expected

It reported third quarter revenue of $6.87 billion, an increase of more than 5% on the year. Net income fell 65% from the year-earlier quarter to $67 million, or 11 cents a share, though that was ahead of estimates. Adjusting for one-time items, it reported $89 million in net income or 15 cents a share, compared with analysts’ forecasts to break even on an adjusted basis.

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American Airlines raised its 2024 profit forecast year after a sales strategy shift.
The carrier also beat Wall Street’s earnings and revenue expectations for the third quarter.

American Airlines posted a third-quarter loss but raised its profit forecast for the year as CEO Robert Isom said the company’s sales strategy shift earlier this year is paying off.
The carrier said it expects to earn between 25 cents and 50 cents a share on an adjusted basis for the fourth quarter, above the 29 cents analysts polled by LSEG expected. For the full year, the airline expects to earn as much as an adjusted $1.60 a share, ahead of an earlier American forecast for no more than $1.30 a share.

American in May fired its chief commercial officer after a sales strategy that aimed to drive direct bookings backfired and quickly reverted much of its sales model.
“We have taken aggressive action to reset our sales and distribution strategy and reengage the business travel community, which we’re confident will improve our revenue performance over time,” Isom said in an earnings release on Thursday. “We have heard great feedback from travel agencies and corporate customers as we work to rebuild the foundation of our commercial strategy and make it easy for customers to do business with American.”
Here is how American performed in the third quarter compared with Wall Street estimates compiled by LSEG:

Earnings per share: 30 cents adjusted vs. 16 cents
Revenue: $13.65 billion vs. $13.49 billion expected

American’s revenue rose 1.2% to a record $13.65 billion for the three months ended Sept. 30, but posted a net loss of $149 million, narrower than the $545 million loss it reported a year earlier. Unit revenue fell 2% in the quarter.
For the fourth quarter, American said its unit revenue will likely drop between 1% to 3% compared with last year, with capacity up as much as 3% year over year.

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