| Here's your daily business briefing. - 🛒 Pandemic's E-commerce standouts adapt
- 💻 Deep Dive: Apple readies iPads and M3 MacBook Air to revive sales
- 📰 Archetype buys Cheddar News
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Happy New Year!! Shriram
p/Shriram | |
| 1 | | Post-pandemic challenges have hit online retailers like Peloton, Carvana, Wayfair, and Chewy, whose combined market capitalization peaked at over $160B but has now dropped over 80% to around $25B. In response to the decline, these companies have implemented cost-cutting measures and financial engineering to navigate the challenging environment. More: - Carvana has decreased costs by bringing in-house reconditioning services, reducing advertising, and tying shipping costs to longer-distance shipments.
- Wayfair intends to reduce expenses by more than $1B, which will involve introducing vendor-funded promotions, optimizing its logistics network, and terminating 10% of its workforce.
- Peloton saw a major makeover that included hiring more people, contracting out production, eliminating retail locations, lowering costs, increasing sales through wholesale channels, and launching a rental company.
- Peloton, in particular, has difficulties restoring its momentum, especially in light of the substantial advertising costs it incurred throughout its expansion.
- As an exception, Chewy's income is still increasing, albeit slower, and its market value is now approximately 80% less than when it peaked.
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What the numbers say: Mac sales fell 34% to $7.61B, and iPad revenue dropped 10% to $6.44B in the last quarter, constituting 15% of Apple's revenue. This decline is linked to a broader reduction in consumer tech spending, and 2023 is notable as the first calendar year without the release of new iPad versions in its history. Relevance: To address the decline in Mac and iPad sales, Apple is gearing up to launch new models and upgrades, such as the iPad Air, iPad Pro, and MacBook Air. The iPad Air, available in two sizes, including a 12.9-inch version, aims to reignite demand alongside software updates to iPadOS 17.4 and macOS 14.3, with the launch expected around the end of March. More data: Apple is developing four iPad Pro models featuring OLED screens, an M3 chip, and a redesign — the first since 2018. Additionally, Apple is working on a range of products, including the Vision Pro headset, an updated Apple Watch, a refreshed iPad mini, a new low-end iPad, and larger iPhones, all set to be released in the coming years. | | | |
| 3 | | Altice USA has sold its financial news streaming service, Cheddar News, to Archetype, a media company owned by private equity firm Regent LP. The deal, which includes oversight of media brands like Sunset Magazine and Military Times, is structured as an "earn-out" arrangement, with Altice USA set to receive future proceeds if Cheddar meets specified performance targets. More: - Jon Steinberg founded Cheddar in 2016, and Altice USA first bought it in 2019 for $200M.
- Archetype expresses excitement about helping Cheddar become a more autonomous "Voice of What's Next" and growing its influence.
- Under Altice USA's umbrella, Cheddar News, renowned for revolutionizing how millennials consume television news, has expanded its reach.
- The deal reflects calculated efforts made by Archetype in the media space, which will help Cheddar expand and reach new audiences.
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| 4 | | Huawei anticipates revenue surpassing $98.5B in 2023, indicating roughly 9% YoY growth, marking a recovery from the impact of U.S. sanctions. In a New Year message, rotating chairman Ken Hu expresses gratitude for the team's resilience, citing better-than-expected performance in the device business as a contributor to the positive outlook. More: - With the release of the Mate60 series smartphones in August 2023, Huawei returned to the high-end market with a locally developed processor.
- According to Counterpoint, Huawei's smartphone shipments increased 83% YoY in October, contributing to the 11% growth in the Chinese smartphone industry.
- The internal letter highlights goals for the device business, mainly focusing on product development and brand promotion as a primary growth area in 2024.
- Huawei wants to improve company operations' efficiency to overcome obstacles, which include geopolitical and economic concerns.
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| 6 | | Synopsys is reportedly discussing acquiring Ansys, potentially forming a major design-software company, with the deal expected to be concluded in early 2024. The talks come after a previous collaboration in 2017 when Synopsys and Ansys integrated their technologies to enhance product usage for shared customers. More: - Based in Canonsburg, Pennsylvania, Ansys has a market valuation of about $30B and specializes in software that forecasts the performance of products in the real world.
- Ansys is widely utilized in sectors such as aerospace, healthcare, and automotive, and it reported generating over $2.1B in revenue in 2022.
- At a market capitalization of about $85B, Sunnyvale, California-based Synopsys creates software for designing and testing silicon devices in various applications, such as AI and smartphones.
- Increasing interest in businesses profiting from the AI boom has resulted in a 70% boost in Synopsys' share price this year.
- During that time, Ansys' stock has increased by almost 40%; notably, the stock has increased by over 10% in response to news that the business is exploring several options, including a potential sale.
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- LinkedIn's ad prices have risen with big brands leaving Elon Musk's platform, boosting revenues for the Microsoft-owned networking site.
- Online sales of high-end fragrance brands outpaced in-store sales, nearly doubling the growth rate during the early part of Q4, as reported by Circana.
- Francoise Bettencourt Meyers, the heiress of L'Oreal and the world's wealthiest woman, has achieved the milestone of becoming the first woman to possess a $100B fortune, according to Bloomberg.
- Taylor Swift has driven a resurgence in U.K. vinyl sales, pushing them to their highest point since 1990, with an 11.7% increase to 5.9 million units in 2023, per preliminary data from the British Phonographic Industry.
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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