Hershey looks for strong Halloween sales / Deep Dive: China’s risky investigation into Foxconn / BMS earnings beat expectations despite generics

Plus, Boeing cuts 737 Max deliveries due to production flaws

Inside Business For October 30, 2023

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Here’s your daily business briefing. 🎃 Hershey looks for strong Halloween sales 📊 Deep Dive: China’s risky investigation into Foxconn 💰 BMS earnings beat expectations despite generics Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thank you!! Shriram p/Shriram

1 Hershey depends on Halloween shoppers for candy sales, including popular brands like Reese's and Kit Kat, with this year's sales showing a slower trend compared to previous years as customers have delayed their purchases closer to the holiday. While Halloween sales in the chocolate and non-chocolate categories have been slightly slower, Hershey's overall retail sales for Halloween are marginally higher than the previous year. More: For candy companies, Halloween is vital, and Hershey's gets between 25 and 30% of its annual revenue from Halloween-related events. Sales of Hershey's regular chocolate have decreased, and the increase in everyday chocolate sales has slowed down as of the third quarter. The organization observed that when finances get tighter, consumers' top concerns are value and affordability, which forces changes to pricing and retail tactics. Strong demand and a cocoa shortage have caused prices to rise consistently, which might mean more significant costs and possibly price increases for businesses like Hershey.

2 What the numbers say: In the electronics manufacturing services sector, returns on invested capital have declined internationally, from 12% in 2018 to 9%. Multinational companies, including Apple, are exploring alternative manufacturing hubs in India and Vietnam amid rising geopolitical tensions and the need for risk diversification, with complex factors like advanced parts manufacturing shifting to Chinese companies and declining foreign investment in China. Relevance: Apple and its suppliers have been pivotal in the U.S.-China economic partnership, where China's share of U.S. smartphone imports decreased from 85% in 2021 to about 75% in 2022. An investigation into Foxconn might influence diversification incentives, potentially speeding up the shift of manufacturers and clients to other nations due to policy unpredictability in China. More data: Approximately 98% of smartphones purchased in India in 2022 were domestically produced, marking an increase in China's electronics exports to India and Southeast Asia, while foreign investments in China have seen a decline early in 2023.

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3 Bristol Myers Squibb beat earnings expectations in Q3 with adjusted earnings per share of $2, while its revenue was $10.96B, down 2% from the previous year. The decline was primarily attributed to a 41% drop in sales of the blood cancer drug Revlimid, influenced by generic competition and increased patient access. More: For the same period last year, the company's net income was $1.61B, or $0.75 per share, while this year's net income was $1.93B, or $0.93 per share. The New Jersey-based firm's stock is down more than 26% for the year and closed more than 6% down, hitting a new 52-week low. CEO Christopher Boerner revised his original estimate of $10B to $13B in revenues for 2025 and pushed back the date for the new pharmaceuticals to reach $10B in sales to 2026. Bristol Myers lowered its adjusted earnings forecast for the entire year to between $7.50 and $7.65 per share and restated its prediction for a low single-digit percentage fall in revenue. The American multinational pharmaceutical company updated its revenue projection and full-year profitability outlook for Revlimid, estimating $6B in sales for the medication. Eliquis and Opdivo had sales of $2.71B and $2.28B, respectively, while sales of more recent drugs, such as the prescription anemia therapy Reblozyl and the skin cancer drug Opdualag, increased.

4 Boeing reported its Q3 results with an adjusted loss per share of $3.26, slightly worse than the expected $2.96, while revenue reached $18.10B, just above the anticipated $18.01B, marking a 13% increase from the previous year's same quarter. Boeing reduced its 2023 737 Max delivery forecast to 375–400 planes (previously 400–450) due to production issues but maintained its 2023 free cash flow projection at $3B–$5B. More: Dave Calhoun, CEO of Boeing, highlighted a commitment to openly addressing and resolving all production concerns. Although sales of Boeing's commercial aircraft division increased by 25% to $7.88B, the company's operating margin was negative at 8.6% due to lower production costs and fewer 737 deliveries. At the end of the year, Boeing intends to boost 737 production to 38 aircraft per month and switch to Dreamliner manufacturing at a rate of five aircraft per month. Production issues stem from misdrilled holes in 737 Max fuselages manufactured by top-tier aerostructures company Spirit AeroSystems. The defense unit incurred losses, including a $482M loss on the Air Force One program due to cost estimates and labor issues and a $315M loss on a satellite contract.

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5 Here are the quarterly earnings reports for the following companies released in October:

6 Merck outperformed expectations in Q3, with adjusted earnings per share of $2.13 ($1.95 expected) and revenue of $15.96B ($15.32B expected), marking a 7% increase from the previous year. Keytruda, Gardasil, and Lagevrio contributed significantly to the strong performance. More: Merck increased its full-year sales forecast to $59.7B-$60.2B but reduced its adjusted profit guidance due to charges related to collaborations and acquisitions. The Rahway-based firm's stock closed up almost 2% on Thursday but has declined by 5% over the year. Keytruda's $6.34B in revenue was driven by a robust global demand for treatment for metastatic cancer, an increase of 17% YoY. Surpassing analyst forecasts, Lagevrio, the COVID-19 antiviral therapy, contributed $640M in sales for the quarter. After removing Lagevrio, the company's pharmaceutical division reported $14.26B in revenue, representing a 9% gain.

7 Quick Hits: Are you getting the best discounts from leading cloud providers? This is your go-to resource for learning how to maximize multicloud discounts.* As Microsoft enters a "new era of AI," Takeshi Numoto, a cloud marketing veteran, replaces Chris Capossela as CMO after his 32-year tenure with the tech giant. Healthpeak Properties Inc. is set to acquire Physicians Realty Trust in an all-stock deal, creating a company with a 52 million-square-foot real estate portfolio, with the purchase price estimated at around $2.64B based on Physicians' closing price. Western Digital is planning to split its traditional hard drive and flash-memory businesses into separate companies, aiming to enhance their focus, according to CEO David Goeckeler. Google CEO Sundar Pichai defended the firm in the significant antitrust trial where the U.S. government is seeking to prove that Google unlawfully monopolized online search, reminiscent of the 1990s Microsoft case. Create a winning SaaS business plan and calculate your break-even point. Join the 1-Page SaaS Blueprint Challenge to map out your startup.* *This is sponsored content.

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Shriram Jeevakumar 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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Google to invest in Anthropic / Seurat raises $99M Series C round / MarketForce shuts operations in three markets

Plus, Skyroot raises $27.5M for second rocket launch

Inside Startups For October 30, 2023

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Here’s a look at today’s Startups briefing. Google has reportedly agreed to invest $2B in AI startup Anthropic. 3D metal-printing startup Seurat raises $99M Series C round. Kenyan B2B e-commerce startup MarketForce shuts operations in three markets. Thank you. Karan p/karan-chafekar

1 Google reportedly plans to invest up to $2B in Anthropic, a large language model startup. The deal would include an up-front investment of $500M, with the remainder injected over time.  More: Anthropic develops the Claude-2 and Claude Instant, making them available via API and chatbot interface.  Google first invested in Anthropic in 2022, reportedly acquiring a 10% stake for $300M. It also participated in the startup's $450M round in May.  The newest deal would come within weeks of Amazon's $4B investment in Anthropic, which made AWS the startup's main cloud provider.

2 3D metal-printing startup Seurat secured $99M in Series C funding co-led by Nvidia's VC arm NVentures and Capricorn's Technology Impact Fund.  Relevance: New investors Honda Motor and Cubit Capital participated in the funding round along with existing backers SIP Global Partners, Porsche Automobil Holding SE, Denso Global, General Motors Ventures, Maniv Mobility LP, and Xerox Ventures. Six customers, including Siemens Energy, have signed letters of intent with Seurat. The firm will be looking to supply 4,000 tons of material in the next few years, of which Siemens intends to buy 59 tons for its wind turbines. Seurat expects to rake in $750M in revenue over the next few years.  What the numbers say: Seurat's fresh fundraising comes as Series B and C rounds show signs of stabilizing after slumping consistently since mid-2021. Carta data shows that the median Series C round size increased by 1% QoQ to $25M in Q3, whereas the median Series B round size increased by 11% QoQ to $15.6M.

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3 Kenyan B2B e-commerce startup MarketForce has exited operations from three markets in Africa. The firm is also considering spinning out a social commerce firm called Chpter, which will help merchants increase sales from social media channels.  More: MarketForce's CEO and co-founder, Tesh Mbaabu, is poised to lead Chpter as its CEO.  The firm had to scale down operations after VCs backtracked on Series A funding commitments.  As a result, the firm had to abandon its growth ambitions and instead focus on profitability, which meant shutting down non-profitable business divisions and exiting areas with low demands.  The firm was recently able to raise $1M through crowdfunding.  MarketForce will only cater to customers in Uganda and has closed operations in Nigeria, Rwanda, and Tanzania.  The firm will continue to be headquartered in Kenya.

4 Skyroot, a space company based in Hyderabad, India, announced a $27.5M Series C led by Temasek. The startup was India's first company to launch a private rocket in 2022. More: Skyroot is preparing for the launch of its second commercial rocket, Vikram-I, in 2024, which can carry ~661 lbs to low Earth orbit. The round comes within a week of its competitor Agnikul Cosmo raising $26.7M as it seeks its inaugural launch. Skyroot has raised a total of $95.1M since its inception. The company last raised $51M through a Series B led by Waverly in Sep. 2022.

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5 Oxide Computer, a San Francisco-based on-premise cloud company, raised a $44M Series A led by Eclipse. The round included participation from Intel, Riot Capital, Counterpart Ventures, and Rally Ventures. More: The company sells a cloud computer for data center use, combining computing, network, and storage.  The computer uses 16 to 32 rack sleds, with each containing a 64-core central processing unit from Advanced Micro Devices, a 1 TB memory pool,  and 1 TB of NVMe flash storage. Oxide says its product is used by the Idaho National Laboratory and an unnamed global financial services organization.

6 Intercontinental Exchange Inc's subsidiary, the New York Stock Exchange (NYSE), launched the NYSE LaunchPad program. The cloud-based program is aimed at helping startups evaluate and test their product ideas and gain actionable insights about the products.  More: NYSE Group's president Lynn Martin said, "NYSE LaunchPad provides startups with a unique opportunity to tap into our vast expertise, using a secure, cloud-based platform to leverage the best in enterprise-level technology." Startups using the NYSE LaunchPad program will be able to test and evaluate ideas based on real-world use cases.  Additionally, startups will gain feedback from other innovators and tech professionals.  Startups will also have the opportunity to participate in NYSE's annual Tech Summit conference.

7 Get noticed and join the conversation! Create your account on Inside.com and participate in our featured questions to be featured in our newsletters here and reach a wider audience. See your name in lights and share your expertise with the community. ⭐️ Go to Inside.com

8 Quick Hits: Are you getting the best discounts from leading cloud providers? This is your go-to resource for learning how to maximize multicloud discounts.* Airbnb spinout Samara bagged $41M in Series A funding led by Thrive Capital, with participation from 8VC, General Catalyst, SV Angels, and others. The firm is making prefabricated studio and one-bedroom units using "environmentally-considerate" materials.  Global accelerator Brinc and VC firm Hatcher+ announced their intent to support more than 300 climate tech startups over the next three years.  Chinese online fashion giant Shein acquired British online fashion brand Missguided from Frasers Group Plc for an undisclosed sum. Frasers had acquired Missguided for $21M (£20M) after it entered into insolvency proceedings.  Create a winning SaaS business plan and calculate your break-even point. Join the 1-Page SaaS Blueprint Challenge to map out your startup.* *This is sponsored content.

Upcoming Events NOV 8 Compete Week - Competitive Intelligence Summit is back: Join top GTM leaders from Salesforce, Hubspot, Apollo and more!* Virtual Register Here NOV 25 AI in Financial Services with Saroop Bharwani Virtual Watch On Demand NOV 25 The Future of Fractional Work with David Berkowitz Virtual Watch On Demand * This is a sponsored event

Knowledge Hub Term of the Day Upselling: Upselling is a sales technique that encourages customers to buy upgraded versions of their selected products. Read More Question of the Week What's one tool or app that has significantly made your life easier at work? Join the conversation

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Karan Chafekar Analyst Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.  Nicolas is a Sr. Analyst at Inside, covering startups and transportation trends. He is an avid map maker and data nerd. Nicolas has worked in the shared-scooter space, as well as advised e-bike and moped start-ups.  This newsletter was edited by Vibha Chapparike

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