ViacomCBS’s Offload, Trump Likes Oracle For TikTok, Target and Apple

ViacomCBS looks to unload assets, including CNET, Trump endorses Oracle’s bid for TikTok and Target reports a strong quarter.
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(By RafaPress)
(By RafaPress)

Good morning! Today’s word count is 1,267 words, or an 8-minute read. Let’s get to it:

“Major stock indexes edged higher, even as negotiations for further coronavirus aid remain stalled and tensions between Washington and Beijing continued to rise,” The Wall Street Journal writes.

  • S&P 500: $3,392.51
  • Nasdaq: $11,214.80
  • Bitcoin: $11,982.65
  • U.S. 10-Year: 0.652%

Justin Oh’s Quick Read

Berkshire Hathaway ($BRK.B), at approximately $210, is starting to look attractive and gives you exposure to diversification, high-quality businesses, and a legendary management team. I believe it’s a wise, but lazy, position to buy into if you don’t feel like there are any better stocks to buy. But with its 10-year underperformance, possible COVID-related troubles coming for its insurance business and the fact that we can buy $AAPL, $AXP, $BAC ourselves, I would treat this as a holding position until I find something juicier. I would prefer to buy into the Capital Compounders under the ROIC Big Board.

ViacomCBS in Talks to Sell Tech Site CNET to Red Ventures

ViacomCBS is reportedly in talks to sell technology news and reviews site CNET to Red Ventures LLC, a digital media holding company that operates consumer websites such as Bankrate and Reviews.com. The deal isn’t final, and talks could stall, but the price discussed is around $500 million.

Why It Matters

ViacomCBS is consolidating.

  • CBS originally acquired CNET in 2008 for $1.8 billion and folded it into CBS Interactive.
  • Following last year’s merger between sister companies Viacom and CBS, the new iteration is trying to shore up its balance sheet.
  • Any additional cash is being funneled into its video-streaming efforts.
  • The company revised its three-year cost synergy target up to $800 million from $750 million.

CNET isn’t the only asset on the block as ViacomCBS is looking to sell:

  • Simon & Schuster, the book publishing company, for $1.2 billion
  • “Black Rock,” CBS’s historic Midtown Manhattan headquarters, for $800 million

The company’s long-term focus is on streaming.

  • ViacomCBS is “working on its so-called super service, an omnibus streaming product that will include movies from several of [its] TV networks and the Paramount movie studio.”
  • The service will also carry live news and sports.
  • ViacomCBS announced earlier this month its paid streaming subscriber base had grown 72 percent year-over-year to 16.2 million, and its ad-supported streaming service, Pluto TV, rose 61 percent to 26.5 million.

Numbers to Consider

  • $27.13 – ViacomCBS’s open price Wednesday.
  • $16.87 Billion – The company’s market capitalization.

Read More: (WALL STREET JOURNAL)

Trump Expresses Support for Oracle to Buy TikTok

President Trump voiced support for Oracle to buy the U.S. operations of TikTok after reports emerged that the software giant had had preliminary discussions about teaming up with some of ByteDance’s existing minority investors to purchase the app.

Why It Matters

Let’s recap.

  • The Trump administration has said TikTok is a threat to national security because a Chinese company owns it.
  • ByteDance, TikTok’s parent, has refuted any assertions that it would share information on U.S. users with the Chinese government.
  • Trump signed a series of executive orders giving ByteDance 45 days to find a buyer and 90 days to complete the transaction. Otherwise, the app would be banned.

Is Oracle the favorite now?

  • Microsoft has had the inside track – it’s been in negotiations with ByteDance for at least a few weeks.
  • But if Trump’s influence impacts the deal, Oracle has an advantage.
  • Oracle co-founder, chairman and largest shareholder Larry Ellison threw a fundraiser at his house for Trump earlier this year. CEO Safra Catz worked on the executive committee for the Trump transition team in 2016.
  • Also, Oracle doesn’t have the “deep pockets” of Microsoft but has $37 billion in cash.

Does it even make sense?

  • Oracle does bring the expertise needed to keep the app up and running.
  • An expanded cloud computing business could make a natural home for TikTok on Oracle’s servers.
  • But what Oracle lacks is the consumer-facing experience of Microsoft. The Xbox videogame business and Bing search engine give Microsoft a natural leg up.

Don’t forget the tip.

  • Trump reiterated Tuesday that any TikTok buyer “must make a substantial payment to the U.S. government as part of the transaction.”
  • “You have to put money into the Treasury,” Trump said.

Numbers to Consider

  • $55.65 – Oracle’s open price Wednesday.
  • $136 Billion – How much cash Microsoft has in reserve.
  • $211.58 – Microsoft’s open price Wednesday.

Read More: (WALL STREET JOURNAL)

A Quick Look

Target Sales Jump as Pandemic Speeds E-Commerce Shift

  1. Target posted the strongest quarterly growth in its history, including a near tripling of digital sales as Covid-19 concerns fuel contactless pickup or reduced trips to the store.
  2. Online comparable sales increased by 195 percent from a year ago. Comparable sales from stores and digital channels operating for at least 12 months jumped up 24 percent in the quarter ending Aug. 1, a company record and twice as much as the May quarter.
  3. Target operates roughly 1,900 stores and posted total revenue of $22.9 billion in the quarter compared to $18.4 billion a year earlier. Sales through digital channels accounted for 17 percent of revenue, or around $3.9 billion.
  4. Net income hit $1.7 billion and surpassed Wall Street’s expectations, increasing 80 percent compared to last year. Target plans to extend the traditional back-to-school shopping season throughout the fall as the reopening of schools remains uncertain.

Read More: (WALL STREET JOURNAL)

Worth Your Time

Safe And Sound: The impact of China’s new national-security law imposed in Hong Kong is reaching far across the world. Classes at elite universities such as Harvard and Princeton will come with a warning label this fall – “this course may cover material considered politically sensitive by China.” Schools are also weighing other measures to protect students’ identities, such as using codes on their work instead of names in a Chinese politics class. With virtual learning an inevitable outcome, many students will connect from China and Hong Kong. Some academics fear the lessons could be recorded and ultimately end up in the hands of the Chinese authorities. (WALL STREET JOURNAL)

Stuck In The Middle With You: “Democratic and Republican leaders are hinting that they are looking for a path toward reviving stalled negotiations on the next round of pandemic relief for the U.S. economy, even as both sides remain far from any deal. House Speaker Nancy Pelosi suggested that Democrats might be willing to cut more from their proposal to reach agreement on immediate needs and — with the party growing more confident of gains in the November elections — return to do more after votes are cast.” (BLOOMBERG)

Double Trouble: Roche Holding AG has agreed to partner up with Regeneron Pharmaceuticals to manufacture and distribute a promising antibody-based Covid-19 treatment. The agreement could more than triple supplies of the medicine if regulators authorize it. Regeneron’s drug, code-named REGN-COV2, has become a promising treatment option for Covid-19 in clinical trials as a treatment for sick patients and temporarily prevents new infections in high-risk candidates. Regeneron could seek approval or emergency authorization before the end of the year based on the study results. (WALL STREET JOURNAL)

Tidbits

“Apple on Wednesday became the first U.S. public company to eclipse $2 trillion in market value, a dizzying achievement that highlights the iPhone maker’s commanding role in the world economy.”

“Uber and Lyft have said they may suspend their ride-hailing operations in California as soon as Friday, escalating a high-stakes battle with their home state over how their drivers should be classified.”

Johnson & Johnson has agreed to buy Momenta Pharmaceuticals for around $6.5 billion, broadening its unit in immune-mediated diseases and expanding into the autoantibody-driven disease space.

Former Bloomberg digital campaign advisor and venture studio founder John Mendelsohn has raised $15 million for his new venture, Hangar, to help government agencies that aren’t using technology effectively.

Hong Kong-based startup DayDayCook announced it has raised $20 million to expand its multifunctional food platform, geared to users primarily from mainland China.

TikTok announced a deal with UnitedMasters Tuesday, giving artists on the app the right to distribute their songs to streaming services and other partners directly.

A Couple Cents Content

Justin Oh looks at Moderna and how valuable the biotech firm can be with so many players in the vaccine race. (POST)

Take a trip back in time and learn how an earthquake crashed the economy and created the Fed, (TIKTOK)

Here’s a brief look at what Sportradar’s deal with the NHL means, especially if a SPAC takes it public. (TIKTOK)

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