Wall Street to Elon Musk: Show Us the Money

(Bloomberg) — Wall Street and Washington have the same question for Elon Musk: Where’s the money?

Two days after he vowed on Twitter that he had “funding secured” for a spectacular $82 billion deal to take Tesla Inc. private, he has offered no evidence to back up the statement. No one has stepped forward publicly — or privately — to say they’re behind the plan. People with or close to 15 financial institutions and technology firms who spoke on the condition of anonymity said they weren’t aware of financing having been locked in before Musk’s tweet. Tesla shares sank 3.8 percent Thursday to $356.21, leaving them well below the $420 at which Musk said investors would be bought out.

All of which could be problematic as the Securities and Exchange Commission starts investigating the matter. Regulators have asked the company if what Musk tweeted was factual and why such a disclosure was made via social media rather than in a filing, according to the Wall Street Journal, citing unidentified people familiar with the matter. Judith Burns, an SEC spokeswoman, declined to comment. Tesla also declined to comment.

“When Musk tweeted this, was he saying this was something that was definitely going to happen? Something that might happen?” said Ira Matetsky, a partner at Ganfer & Shore in New York, outlining questions the SEC might ask. “How would a reasonable investor interpret that and was it consistent with the facts as they existed at the time?”

‘I Wish’

The chief executive officer raised the go-private possibility with the board last week, according to a statement from six of Tesla’s nine directors. They said he had “addressed the funding for this to occur,” without providing details.

As for Tesla shareholders, Musk said in one of his Twitter posts that “investor support is confirmed” for his plan. The largest shareholders declined to comment. At the California State Teachers’ Retirement System, which as of March owned about 213,000 shares, spokeswoman Michelle Mussuto said there was no advance warning.

“We have not been contacted by Tesla IR,” she said. “They didn’t reach out before the tweet either.”

Leaving the public marketplace isn’t a new vision for Musk, who told Rolling Stone in an interview published in November, “I wish we could be private with Tesla. It actually makes us less efficient to be a public company.”

In April 2017, when Musk held talks with Masayoshi Son about SoftBank Group Corp. investing in the electric carmaker, they touched on the possibility of fulfilling Musk’s wish, according to two people with knowledge of the discussions. The talks failed to progress due to disagreements over ownership and have not started up again.

Musk’s personal stake in Tesla is almost 20 percent, meaning he would need roughly $70 billion to take it out of the market. That kind of money may be accessible through sovereign wealth funds or other strategic investors, said Dwight Scott, president of Blackstone Group LP’s GSO Capital Partners. The money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private.

It’s possible Musk could persuade some large institutional and strategic investors to either newly become or remain shareholders in the private company, which could reduce his funding needs, said Toni Sacconaghi, an analyst at Bernstein who has long been bearish on Tesla shares.

But “if no firmer details emerge,” he wrote in a note to clients, “investors would likely increasingly debate Musk’s credibility and seemingly unhealthy focus on the shares’ price and volatility.”

It’s also possible Musk has some unconventional plan that would take Tesla private without using traditional sources. On Twitter, he alluded to the creation of a “special purpose fund enabling anyone to stay with Tesla,” though he didn’t elaborate on how it would work.

“What investors are waiting for is more details around what is meant when Elon Musk says funding is secured,” George Galliers, an analyst at Evercore ISI who rates Tesla the equivalent of a hold, said on Bloomberg Television. “They are raising a lot of sensible questions around who would be providing the funding and how exactly this might work.”

Tesla’s Potential Take-Private Coverage: In the wake of Musk’s tweet, more questions than answers Meet the Tesla board being tested like never before SEC review of Musk tweets likely to focus on truthfulness Musk is said to have discussed investment with SoftBank’s Son Dell’s lesson for Tesla: going private isn’t a cure-all

Indra Nooyi, Pepsi’s First Female CEO, Is Stepping Down

Indra Nooyi is stepping down as chief executive officer of food and beverage giant PepsiCo Inc., handing the reins to a top lieutenant in a transition that will draw attention to the dearth of prominent female CEOs in corporate America.

Nooyi, 62, will leave the role in October and remain chairman until early 2019. Ramon Laguarta, 54, who has been a candidate to take over since a promotion last year to president, will be just the sixth CEO in the 53-year history of the company.

Nooyi, who is from India, is the first foreign-born CEO of Pepsi and the first woman to lead the chips-and-soda behemoth, whose revenue topped $63 billion last year. Her departure thins the ranks of female CEOs running S&P 500 companies and comes at a time when Pepsi’s North American beverage unit is stagnating amid a general decline in soda consumption. In 24 years at Pepsi, including 12 as chief executive, she has helped the Frito-Lay unit grow in a challenging industry and added healthier drinks and snacks to a portfolio that includes Cheetos and Mountain Dew.

“I’ve had a wonderful time being CEO, but at some point you sit back and say, look, it’s a responsible move to effect an orderly transition and to have somebody else take over the leadership of this company,” she said in an interview. “Being a CEO requires strong legs and I feel like I ran two legs of a relay race and I want somebody else with nice strong legs and sharp eyes to come and lead this company.”

Rising Star

A 22-year Pepsi veteran, Laguarta ran the Europe Sub-Saharan Africa division before becoming president last year, overseeing global operations, strategy, public policy and government affairs. A Barcelona native, he worked at lollipop maker Chupa Chups before joining Pepsi.

Nooyi attended graduate school at Yale University and joined Purchase, New York-based Pepsi in 1994 as head of corporate strategy, rising to the CEO job in 2006. At the time only a handful of women ran major U.S. companies.

Nooyi faced down activist investor Nelson Peltz, repelling a bid to break up the company, and has guided Pepsi through a tricky stretch as shifts in how U.S. consumers eat and shop have bedeviled the largest food and beverage companies in the world.

“Indra’s legacy is that she’s figured out in a difficult environment that she could run a great company and drive great results and do good at the same time, while having long-lasting impact as a leader and global icon,” said Blair Effron, co-founder of Centerview Partners, an investment bank and advisory firm that’s worked with a range of consumer giants including Pepsi.

Developing Talent

As she ponders her next chapter, Nooyi said she’ll possibly take a vacation, in addition to watching the New York Yankees baseball team, and, she quipped, “listen to some music, take a walk in the woods.” She hasn’t thought through potential next steps, but at a time when global progress on promoting more women to CEO positions appears to have stalled, she plans to help develop more talent to ensure that women are represented in the top ranks of corporate America.

“I think people like me, after we leave privileged CEO jobs, I don’t think we can go silent,” she said. “We have to keep fighting the good fight to develop women, to mentor them, to support them, so that we can get more highly qualified women — and there’s plenty of them — into the boardroom, into C suites and into the ultimate CEO job. My job is in fact just beginning once I leave PepsiCo because I can do things now that I was constrained to do when I was CEO of the company.”

Female CEOs

The departure of Nooyi drops the number of women CEOs in the S&P 500 to 24, according to data compiled by researcher Catalyst, which advocates for more women in executive positions. The list was last updated July 13. Kathy Warden is scheduled to become CEO of Northrop Grumman Corp. in January, which would bring the total back to 25.

The packaged food industry in particular has witnessed several key female executive exits in the past year. Campbell Soup Co. CEO Denise Morrison abruptly departed in May, while former Mondelez International Inc. CEO Irene Rosenfeld handed over the reins of the Oreo maker in November.

Like many CEOs in a divisive political era, Nooyi has found herself a part of political discussions. She described herself at a conference as a supporter of Hillary Clinton in the 2016 election but congratulated Donald Trump for his victory and was part of his short-lived business advisory council.

No Politics

During an era when a businessman occupies the White House and corporate leaders including Mark Cuban and Howard Schultz are mentioned as potential presidential candidates, Nooyi said she doesn’t see a future for herself in politics.

“I think there are business leaders who like politics and there are business leaders who’d be lousy at politics,” she said. “I happen to be in the second group, and so I just want to make sure that whatever I can do behind the scenes to help any cause, I will — that makes sense for me. But politics no, not for me.”

Nooyi is leaving the top job at Pepsi at a time when overall soda consumption has dropped to its lowest level in more than 30 years as consumers try to avoid sugary drinks. That’s led Pepsi and competitors to try to diversify into new products perceived as healthier, and to market zero-sugar versions of their soft drinks and retool their diet beverages.

Diet Diversion

But there have been stumbles. A high-profile bid in 2015 to reformulate Diet Pepsi led to lower sales, and the company revived its old formula a year later. Nooyi told investors last month that Diet Pepsi is performing well again, but Coca-Cola Co. has won more attention this year for its revitalization of Diet Coke.

A ballyhooed 2012 joint venture with German dairy giant Theo Muller to sell yogurt in North America fizzled four years later due to slow sales. Pepsi was rebuffed in 2016 in its attempt to take a major stake in Chobani, the Greek-yogurt maker. The company pushed into the dairy case with the 2011 purchase of a majority stake in Wimm-Bill-Dann Foods OJSC, Russia’s leading branded food-and-beverage company.

The company’s Frito-Lay unit remains a snacking powerhouse with brands like Tostitos, Doritos and Lay’s chips dominating grocery-store shelves. Big Food companies have lost billions in revenue in recent years as consumers gravitate to more natural products made by smaller upstarts. But Frito-Lay, while not immune to the shifts, has defended its turf, controlling about two-thirds of the U.S. salty-snack market.

Hummus, Juice

Nooyi has also worked to appeal to modern snacks. Frito-Lay has versions of 11 core chip brands without artificial ingredients, aiming to break out of the traditional snack aisle and get into organic grocery stores. Products such as Sabra hummus and guacamole, Naked cold-press juices and Lipton Pure Leaf tea have bolstered results.

During Nooyi’s time leading the company, Pepsi shares rose about 80 percent, while rival Coca-Cola has more then doubled, as has the S&P 500.

Pepsi shares rose 0.7 percent as of 8:18 a.m. in New York on Monday before the start of regular trading.

Nooyi said under her tenure Pepsi considered and passed on large transactions that could have dramatically altered the company. “Everybody says, ‘Hey, do a transformative deal, it will put you in the neon lights,’” she said. “The issue is that we’ve got to derive value from large transformative deals. And we didn’t find one that would create shareholder value.”

Now, Laguarta prepares to take the reins at a tricky time for the company, with pressure ramping up to ignite growth, particularly in the North American beverage unit.

“Ramon is the product of a responsible development and succession plan,” Nooyi said. “He’s had a birds-eye view of the whole company and what kind of disruptive moves we would have to make, disruptive productivity, to take us to this next era of growth for this company.”

Apple’s Stock Is Going Gangbusters and it Could Be the First American Company Worth $1 Trillion

(Bloomberg) — Apple Inc. shares jumped 3.5 percent in pre-market trading Wednesday after the company projected sales that suggest consumers are still snapping up the company’s high-end iPhones even as updated models are on the horizon.

The Cupertino, California-based technology giant said on Tuesday it expects fiscal fourth-quarter revenue between $60 billion and $62 billion. Analysts were looking for $59.4 billion, according to data compiled by Bloomberg. Fiscal third-quarter results also beat Wall Street expectations, at one point sending the shares to $198 in extended trading, a record price if the increase holds through Wednesday.

Apple’s stock gained 12 percent this year though Tuesday’s close — before the results were announced — putting the iPhone maker on a path to become the first U.S.-based company with a market value of $1 trillion.

“These results and guidance will increase investor confidence,” Shannon Cross of Cross Research wrote in a note to investors. “We expect the vast majority of Apple’s product line-up to be refreshed during the next couple of quarters which should support near-term results.”

More than a decade after its debut, the iPhone is still Apple’s most-important product, accounting for about 60 percent of revenue. While unit sales have slowed recently, the company is building digital services and a suite of other gadgets around the device. Those newer businesses, along with higher iPhone prices, have supported revenue growth.

Apple’s fiscal fourth-quarter outlook is closely watched because this is usually the period when the company unveils new iPhones. The company is expected to launch three new phones later this year. That’s raised Wall Street expectations for more sales and profit.

The results “were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline,” Tim Cook, Apple’s chief executive officer, said in a statement.

Read about Apple’s future iPhone plans here.

Fiscal third-quarter sales rose 17 percent to $53.3 billion, Apple said. Profit came in at $2.34 per share. Analysts expected revenue of $52.4 billion and earnings of $2.18 a share.

The company sold 41.3 million iPhones in its third quarter, generating revenue of $29.9 billion. That was driven by a higher average selling price of $724, thanks in part to the iPhone X, which starts at $999.

Analysts were looking for 41.6 million iPhone units in the quarter, and an average selling price of $699, according to estimates compiled by Bloomberg News.

During a conference call with analysts, Cook said the iPhone X was the most popular iPhone in the fiscal third quarter, gaining market share around the world.

Apple reported record services revenue of $9.55 billion, up 31 percent from a year earlier. Analysts forecast $9.2 billion. The category includes the App Store, Apple Music, iCloud storage and Apple Pay. The company is working on expanding these offerings with original videos and a news subscription service.

Cook told analysts that Apple is on track to meet a goal of doubling Services revenue by 2020. Paid subscriptions have now passed 300 million, he also noted.

Apple said its gross profit margin will be 38 percent to 38.5 percent in the fiscal fourth quarter, versus analysts’ estimates of 38.2 percent.

The company’s Other Products segment continued to see strong growth, with revenue up 37 percent to $3.7 billion. The category includes AirPods headphones, the Apple Watch, Apple TV, and the HomePod. Cook said wearables were a highlight of the quarter, with sales up 60 percent year over year. The Apple Watch had a record quarter with mid-40 percent growth, the CEO also said. The company doesn’t report sales figures for the Watch.

Apple said it sold 11.6 million iPads in the quarter, up from the 11.4 million in the year-ago period. In March, Apple launched an updated $329 iPad geared toward students. It’s also working on an upgraded Pro model with iPhone X features like Face ID, which could increase sales of the device.

CBS’ Board Will Meet Monday to Talk About the Les Moonves Allegations

The board of CBS Corp. will discuss the future of embattled Chief Executive Officer Leslie Moonves during a regularly scheduled board meeting Monday, according to people familiar with the company’s plans.

Moonves was accused of sexual harassment by six women in a New Yorker article. Moonves, in the article, acknowledged there were times decades ago when he may have made some women uncomfortable by making advances, but he said he never used his position to harm anyone’s career.

The CBS board was already scheduled to meet Monday, a few days before the company reports financial results for its latest quarter. CBS’s independent directors have already said they plan to investigate the claims and will hire an outside law firm to do so.

The board is split between those loyal to Moonves, who has run the company for more than a decade, and Shari Redstone, whose family owns a controlling stake in CBS. It’s unclear how the allegations will affect those allegiances, if at all. The majority of the board has attempted to dilute the Redstones’ control of CBS.

CBS’s ad sales chief, Jo Ann Ross, voiced support for Moonves on social media after the New Yorker report.

Shares of CBS fell 6.1 percent on Friday and have declined 8.5 percent this year to $54.01. The stock declined as much as 1.3 percent more in early trading Monday.

Harley-Davidson Shares Rise as Company Finds Way to Blunt Impact of President Trump’s Trade War

(Bloomberg) — Harley-Davidson Inc. cut its forecast for profit margin this year by an amount that suggests it’s finding a way to cope with the damage done by President Donald Trump’s trade war.

Harley sped up shipments to the European Union to blunt the impact of higher tariffs that the bloc enacted last month. As a result of the tariffs, operating margin this year will drop to about 9.5 percent, the midpoint of a range the Milwaukee-based manufacturer gave in a statement Tuesday, compared with a previous projection of about 10 percent. The squeeze wasn’t as severe as analysts had anticipated.

While the accelerated shipments reduced the cost of the levies to as much as $35 million this year, the annual impact may still run about $90 million to $100 million, Chief Executive Officer Matt Levatich said during a conference call with analysts. The European tariffs, enacted as retaliation for Trump’s taxes on steel and aluminum imports, forced the motorcycle company to make moves it had never considered before.

“We are doing everything we can as a company to absorb the costs that we can,” Chief Financial Officer John Olin said on the call. “We never contemplated moving our European volume out of the U.S. Consequently we’re analyzing the capacity options that we have, manufacturing costs, supply chain, logistics, in an effort to optimize it and to reduce and mitigate those tariffs.”

Harley shares rose 7.7 percent to close at $44.63 in New York, the biggest jump since October 2016. That pared the stock’s loss this year to 12 percent.

Adjusted profit for the second quarter was $1.52, beating analysts’ average estimate for $1.41. Revenue slipped to $1.53 billion, topping the average projection for $1.42 billion.

Trump’s Attack

Harley was caught in the crossfire of Trump’s trade war last month when it announced plans to shift some U.S. production overseas to sidestep higher tariffs imposed by the EU. The president attacked the iconic American company, claiming it was using the levies as an excuse to send jobs overseas. Harley had already announced plans to close a factory in Missouri and build a plant in Thailand.

The EU tariffs, which came in retaliation to Trump’s steel and aluminum levies, will cost about $2,200 per motorcycle shipped to Harley’s second-biggest market, the company estimated in a June 25 filing. The manufacturer hasn’t specified which of its overseas plants will begin producing bikes for European riders.

Harley is trying to navigate escalating trade tensions as sales in its core U.S. market continue to shrink. Bike deliveries in the U.S. sank 6.4 percent in the second quarter, the 14th decline out of the last 15 quarters. Worldwide sales fell 3.6 percent.

The EU enacted tariffs on Harley bikes and other U.S.-made products, such as blue jeans and Kentucky bourbon, on June 22, so it had a limited effect on second-quarter results. International sales increased 0.7 percent, driven by gains in Europe, the Middle East and Latin America.

Turnaround Plan

Levatich has struggled to attract younger consumers with premium motorcycles and has begun to release a series of cheaper bikes. He’s aiming to cultivate 2 million new U.S. riders by 2027 and for half of global revenue to come from outside the U.S. Harley will release more details about its turnaround strategy on July 30.

Harley’s forecast for motorcycle shipments this year was unchanged, and its moves to consolidate U.S. manufacturing are on track, which may help offset investor jitters about the tariff hit, Morgan Stanley analyst Adam Jonas wrote in a research note.

“While this may give pause to the pressure facing the stock, it’s unlikely to entice serious incremental capital,” he said.

Papa John’s Founder Won’t Appear in Commercials After He Used a Racist Slur

(NEW YORK) — Papa John’s plans to pull founder John Schnatter’s image from marketing materials following reports he used a racial slur.

The decision was made by top executives but details of the change have not been worked out, according to a person inside the company with knowledge of the decision who wasn’t authorized to speak publicly.

The person was not aware of any plans to change the pizza chain’s name.

Schnatter has long been the face of the brand, appearing in TV ads for Papa John’s, and the company has noted in regulatory filings its business could be harmed if Schnatter’s reputation was damaged. Papa John’s got a taste of that last year, when Schnatter stepped down as CEO after blaming disappointing pizza sales on the outcry surrounding football players kneeling during the national anthem.

This week, Papa John’s was already trying to further publicly distance itself from Schnatter after Forbes reported he used the N-word during a media training session in May. Schnatter apologized and said he would resign as chairman, prompting the company’s stock to recover some of the losses it suffered after the report.

Schnatter remains on the board and is still the company’s largest shareholder.

It’s not yet clear how quickly the company will be able to remove Schnatter from marketing materials, the person with knowledge of the decision said. In addition to TV ads, Schnatter’s image is on packaging and at the center of a logo that is all over the company’s website.

Papa John’s began operations in 1984 and had more than 5,200 locations globally. For the first three months of this year, the chain said a key sales figure fell 5.3 percent in North America.

‘Disabled People Are Not Part of the Conversation.’ Advocates Speak Out Against Plastic Straw Bans

Some disabled rights advocates are speaking out against an emerging trend of restaurants and other companies phasing out the use of plastic straws with drink orders, arguing that the alternatives can be inadequate for customers with various disabilities.

Plastic straws have been disappearing from coffee shops, airlines, hotels and more amid concerns that they frequently wind up as ocean waste, presenting an environmental hazard. The campaign against them accelerated this week amid news that major companies like Starbucks, American Airlines and Hyatt are drastically reducing their use, in some cases opting for straw-less plastic tops on some drinks instead.

But disability advocates say they feel the campaign against plastic straws is being waged without adequate input from disabled customers.

“The disability community is concerned with the ban because it was implemented without the input of their daily life experience,” says Katherine Carroll, policy analyst at the Rochester, New York-based Center for Disability Rights. “Plastic straws are an accessible way for people with certain disabilities to consume food and drinks, and it seems the blanket bans are not taking into account that they need straws and also that plastic straw replacements are not accessible to people.”

Popular alternatives for plastic straws include options made from biodegradable paper and metal, the latter of which are typically reusable once cleaned. But Jamie Szymkowiak, founder of the Scotland-based “One in Five” disabled rights campaign, says those options may not suit people with certain disabilities.

For instance, Szymkowiak — who says he has arthrogryposis, a condition that affects the movement of his joints — says some disabled people can take a longer time to drink, leading paper straws to get soggy or even disintegrate, potentially increasing the risk of choking. He added that metal straws are usually inflexible, making them more difficult to use for people who have a mobility-related impairment.

Szymkowiak says the disabled community understands and respects the environmental concerns that plastic straws present, but he feels that major companies should work to accommodate and value disabled customers. He and Carroll both want companies to keep plastic straws available behind the counter, and to use their clout to push manufacturers to create environmentally-friendly flexible straws.

Starbucks told TIME that the company “intends to focus on inclusive design to ensure that all customers will be able to enjoy their Starbucks beverages.” An American Airlines representative said the carrier plans to keep a small number of plastic straws and sticks on hand for passengers who may need them. Hyatt did not immediately return TIME’s request for comment, but in a press release said that “straws and picks will be available on request only.”

“It’s just commonplace that disabled people are not part of the conversation when it comes to implementing laws and legislation,” says Szymkowiak. “Having our voices not heard is all too familiar. We recognize the environmental concern and we see the impact single-use plastic has on the environment. It’s good that they are reacting to customer concerns, but a company as big as Starbucks should pay attention to disabled customers’ needs and produce assessable straws.”

Starbucks Will Ditch Plastic Straws by 2020 to Reduce Ocean Waste

SEATTLE — Starbucks, citing the environment threat to oceans, will ban plastic straws from all of its stores globally in less than two years.

The company becomes the largest food and beverage company operating globally to do so.

Starbucks said Monday that it is making available a strawless lid at 8,000 stores in the U.S. and Canada for certain drinks.

Starbucks Coffee Co. estimates the switch will eliminate more than 1 billion plastic straws a year.

The company’s announcement comes a week after it’s hometown, Seattle, banned single-use plastic straws and utensils at businesses that sell food or drinks in the city.

Starbucks said cold beverages in which a straw is typically included make up 50 percent of the drinks its sells, up from just 37 percent five years ago.