| Here’s your daily business briefing. - 📰 FT, OpenAI ink content deal
- 🔍 Deep Dive: Low-income customers cut fast-food orders
- 💼 Bristol Myers Squibb beats revenue, cuts $1.5B amid loss
Thanks for reading! Shriram
p/Shriram | |
| 1 | | The Financial Times (FT) has partnered with OpenAI to license its archived content for training AI models. This agreement allows OpenAI to develop generative AI technology for text, images, and code, enabling ChatGPT to offer brief summaries of FT articles with links to FT.com. More: - The partnership seeks to empower news organizations and journalists while enhancing the ChatGPT experience with real-time journalism.
- Associated Press, Axel Springer, Le Monde, and Prisa Media have already signed deals, making this the fifth agreement for OpenAI.
- The agreement's financial details were undisclosed, yet Axel Springer anticipates earning tens of millions of euros annually from a comparable deal.
- Last year, the New York Times filed a lawsuit against Microsoft and OpenAI, claiming that their content was improperly used to create ChatGPT models.
- News publishers like News Corp. and Thomson Reuters are in talks and making agreements with AI companies for content licensing.
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What the numbers say: Roughly a quarter of low-income consumers, defined as those earning less than $50,000 annually, reported reducing fast food consumption, while about half indicated fewer visits to fast-casual and full-service restaurants. Food prices surged by 20% from January 2021 to January 2024, the steepest increase on record, prompting budget-conscious individuals to cut back, with half of those earning less than $35,000 a year struggling to meet everyday expenses and nearly 80% experiencing moderate to high stress due to recent price hikes, as per a recent census Household Pulse Survey. Relevance: Fast-food companies are adjusting strategies to appeal to low-income consumers through value menus and app-driven discounts, recognizing their significance in the customer base and indicative spending trends. Unlike a decade ago, when prioritizing customer traffic over profitability was prevalent, chains are now less inclined to aggressively pursue low-income customers due to consistent sales supported by increased prices. More data: Wendy's introduced a $1 app-exclusive burger to retain its share of the low-income market, while major fast-food brands are increasingly relying on loyalty apps to enhance customer retention and gather valuable transaction data, with Domino's making its loyalty program more accessible to lower-income consumers by halving the minimum purchase price and reducing the number of purchases needed for a free pizza. | | | |
| 3 | | Bristol Myers' ($BMY) first-quarter results exceeded Wall Street expectations, with an adjusted loss per share of $4.40 compared to the expected loss of $4.44 and revenue of $11.87B, surpassing the expected $11.46B. Bristol Myers plans to cut expenses by $1.5B by 2025, reallocating the funds into drug development, and will initiate layoffs of 2,200 employees this year while discontinuing certain drug programs. More: - Bristol Myers CEO Chris Boerner highlighted that the savings will be derived from internal operations.
- The U.S. major pharmaceutical company reported a net loss of $11.9B, or $5.89 per share, during the first quarter, compared to a net income of $2.3B, or $1.07 per share, in the same period last year.
- Reblozyl saw a 72% sales surge to $354M, while Opdualag's sales spiked 76% to $206M, exceeding analyst forecasts.
- Eliquis, in collaboration with Pfizer, achieved sales of $3.72B, marking a 9% increase from the previous year, while Revlimid sales reached $1.67B, exceeding analyst forecasts.
- Opdivo sales totaled $2.07B, declining by 6% from the previous year, while Abecma, a cell therapy for multiple myeloma, generated $82M in sales.
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| 4 | | Mexico's manufacturing sector is surging amid U.S. supply chains' move away from China, with nearshoring gaining traction by relocating production facilities closer to domestic markets. The U.S.-Mexico-Canada (USMCA) agreement further bolsters Mexico's appeal for manufacturing, though worries persist about Chinese goods potentially entering the U.S. via Mexico to circumvent tariffs. More: - In 2023, Mexico became the leading exporter to the U.S., with manufacturing accounting for 40% of its economy.
- Mexico's automobile exports to the U.S. are on the rise, with nearly every American carmaker depending on Mexican components.
- U.S. imports from Mexico rose steadily, while Chinese exports to the U.S. experienced a 20% decline in 2023.
- Based on an analysis of Container Trade Statistics by Xeneta, shipping container exports from China to Mexico surged by almost 60% in January compared to the previous year.
- Both President Joe Biden and former President Donald Trump prioritize expanding domestic manufacturing but employ contrasting strategies.
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| 5 | | Apollo Global Management Inc. ($APO) affiliates are set to acquire US Silica Holdings Inc. for $1.21B, with shareholders receiving $15.50 per share ($SLCA) in cash, reflecting an 18.7% premium over the April 25 closing price. US Silica supplies frack sand that is utilized to maintain fractures in oil-bearing rock formations. More: - US Silica's CEO, Bryan Shinn, dubbed the 2022 surge in demand as "sandemonium," witnessing a 150% price hike.
- One of the last significant producers of frack sand to leave the open market is US Silica.
- As shale producers pursue cost reductions, the sand-supply industry has adapted, with exploration firms increasingly sourcing sand locally in West Texas.
- The acquisition is set to conclude in the third quarter, with Piper Sandler & Co. advising US Silica and BNP Paribas Securities Corp., and Barclays advising Apollo.
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| 6 | | Alo Yoga and Vuori, direct-to-consumer brands, are making gains in the activewear market, showing significant overlap with established players like Lululemon and Nike. Both brands have increased their market share by 1% in the past year, while Under Armour has seen a decline, and others like Athleta, Adidas, and Fabletics have maintained or grown their presence. More: - Vuori customers allocated 27.4% of their total spending on active and athleisure wear to the brand, a rise from 21.6% the previous year.
- Vuori shoppers reduced their spending on Nike's direct-to-consumer channels by 17% in April compared to the previous year.
- According to a Piper Sandler survey, Alo Yoga and Vuori have grown notably with teenagers.
- Both brands are expanding, with Vuori aiming to launch 100 stores by 2026 and Alo Yoga expanding its store network and virtual experiences.
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| 7 | | Quick Hits: - Tesla, led by Elon Musk, partners with China's Baidu to advance driver assistance technology, bringing autonomous driving features closer to deployment in the largest auto market globally.
- Hertz's shares hit an all-time low as it began to sell off its fleet of Tesla vehicles, with a quarterly loss of $1.28 per share, nearly three times worse than anticipated.
- The U.S. government is seeking input from leading AI companies to defend critical infrastructure against AI-driven threats, forming a panel with CEOs from major industries, according to the Department of Homeland Security.
- Pickleball, the fastest-growing sport in the U.S., is expanding into India with events scheduled to start in 2025, and Major League Pickleball is set to sell franchises there.
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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 Shriram Jeevakumar | |
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