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London (CNN Business)Investors have piled into tech stocks during the coronavirus pandemic, sending shares in companies such as Facebook (FB), Amazon (AMZN), Google (GOOGL) and Apple (AAPL) into the stratosphere as demand for their services increased.
The same has happened for Japan’s SoftBank (SFTBF), but for different reasons. Not so long ago, it looked like the conglomerate was in pretty rough shape. Investments in startups including Uber (UBER), Didi, Oyo and Grab appeared to be at risk from the pandemic, forcing SoftBank to sell assets as losses snowballed. Now, things are looking brighter: SoftBank said Tuesday that it returned to profitability during the three months ending in June, reporting net income of 1.26 trillion yen ($11.9 billion). That’s up nearly 12% compared to the same period a year earlier.
The results could add to the buoyant mood among investors. Shares in SoftBank have been boosted in recent months by founder and CEO Masayoshi Son’s plan to sell $41 billion worth of assets to buy back stock and slash debt. Reducing stakes in Chinese e-commerce giant Alibaba and US telecom operator T-Mobile has helped push SoftBank stock up by nearly a third this year, and nearly 140% from recent lows reached in March.More deals could soon materialize, even with the pressure off. SoftBank is exploring a sale of UK chip designer Arm Holdings, according to the Wall Street Journal, and Bloomberg reports that Britain’s Aveva Group is in talks to acquire OSIsoft, an industrial software-maker backed by SoftBank.Read MoreSoftBank may now be able to ride out the pandemic by playing defense.Son began the earnings presentation on Tuesday with typical flair, showing black and white photos of soldiers armed with rifles defending themselves against mounted attackers as a way of illustrating his strategy.He compared the military tactics to his decision to sell assets, plastering the words “Defense = Cash” across the historical photo.After the pandemic: Even as it sells assets, there are signs that SoftBank is preparing for a future where its investment portfolio takes center stage.On Tuesday, the company said it would stop reporting its operating income, saying the metric is “not useful” in measuring the financial performance of a strategic investment holding company.
Uber ordered to reclassify drivers as employees in California
Uber and Lyft have been ordered by a California court to reclassify their drivers in the state as employees, the latest escalation in an ongoing legal battle over a new state law impacting much of the on-demand economy.The firms have 10 days to appeal, according to the ruling from San Francisco Superior Court judge Ethan Schulman, and they are expected to do so. Uber and Lyft currently treat their drivers as independent contractors.Timing matters: Uber and Lyft continue to grapple with the coronavirus pandemic, which significantly cut demand for their ride-hailing businesses. Both companies have undergone layoffs and have long histories of losses. Uber’s food business is now bigger than rides.Legal issues: Monday’s order comes after California’s attorney general and a coalition of city attorneys filed for a preliminary injunction in late June to force the two companies to comply with the California law known as AB-5. Under the law, which went into effect on January 1, companies must prove workers are free from company control and perform work outside the usual course of the company’s business in order to classify workers as independent contractors rather than employees.The suit accuses Uber and Lyft of depriving workers of protections, including a minimum wage, overtime, paid sick leave, and unemployment insurance, that they would be entitled to as employees.What happens now: The companies are asking California’s voters to back a proposal that would exempt them from the AB-5 law but provide drivers with some benefits.On Monday, Lyft spokesperson Julie Wood said the company would fight the court ruling, insisting that “drivers do not want to be employees, full stop.””We’ll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers,” said Wood.The court case will be watched in other jurisdictions, too. The UK Supreme Court is considering whether Uber should be forced to treat its drivers not as contractors, but as employees entitled to the minimum wage, sick leave and the right to unionize.
Tim Cook joins the billionaire club
Apple CEO Tim Cook is now a billionaire, according to the Bloomberg Billionaires index, which tracks the world’s wealthiest people.The tech leader crossed the milestone nine years into his tenure as head of one of the world’s most valuable companies.Cook only directly owns “about 0.02% of Apple shares, worth around $375 million,” according to Bloomberg Billionaires, which based its estimate of the CEO’s net worth on an analysis of the company’s regulatory filings.But over the years, Cook has also received sizeable stock awards and other forms of compensation, which add to his estimated wealth.An unusual path: Unlike many other Silicon Valley billionaires, Cook didn’t found the company that propelled him into the exclusive club.Cook joined Apple in 1998 and served in a variety of senior roles, including chief operating officer and executive vice president of worldwide sales and operations, before he was named CEO in August 2011.
Up next
Sysco and Broadridge Financial report earnings before the opening bell. Also today:
- The US Producer Price Index will be released at 8:30 a.m. ET.
Coming tomorrow: US inflation and crude inventories data.
Source: edition.cnn.com
