The daily business briefing: January 18, 2019

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1. Tesla to cut 7 percent of workforce
2. Netflix shares fall after mixed earnings report
3. U.S. stock futures rise on hopes of easing U.S.-China trade tensions
4. Sears creditors challenge Lampert's winning bid
5. CVS reaches deal to keep Walmart in its pharmacy networks

published 18 January 2019

1. Tesla to cut 7 percent of workforce

Tesla CEO Elon Musk said Friday that the electric-car maker is cutting its full-time staff by 7 percent as it struggles to cut prices and ramp up production of its Model 3 sedan, the company's first mass-market vehicle. The job reductions follow other cost-cutting measures as Tesla struggles to expand profitability. Musk wrote in an email to Tesla employees that the company is "up against massive, entrenched competitors" and has to work "much harder than other manufacturers to survive while building affordable, sustainable products." He added that building "affordable clean energy products at scale necessarily requires extreme effort and relentless creativity." Tesla shares fell on the news, declining by nearly 6 percent in premarket trading.

Netflix shares fell by about 2 percent in extended trading Thursday after the streaming video company posted mixed fourth-quarter earnings. Netflix said its earnings per share came in at 30 cents, above Refinitiv consensus estimates of 24 cents per share. Revenue, however, was $4.19 billion, just missing the Refinitiv consensus forecast of $4.21 billion. New domestic subscribers totaled 1.53 million, narrowly beating the FactSet forecast of 1.51 million, while new international subscribers reached 7.31 million, significantly higher than the 6.14 million forecast by FactSet. The company also warned of lower-than-expected first quarter 2019 results.

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U.S. stock index futures rose early Friday on hopes the Trump administration could reduce tariffs on Chinese goods, easing trade tensions between the world's two biggest economies. Dow futures were up by 0.7 percent, extending Thursday's gains. Futures for the S&P 500 and Nasdaq-100 were up by 0.5 percent. On Thursday, the Dow recovered from an early loss to close up by 0.7 percent. The Nasdaq Composite also gained 0.7 percent, and the S&P 500 closed up by 0.8 percent after The Wall Street Journal reported that administration officials were debating the possible easing of tariffs against China to get Beijing to make deeper concessions.

A group of Sears creditors on Thursday challenged chairman Eddie Lampert's winning $5.2 billion bid to buy the iconic retailer in a bankruptcy auction. Sears confirmed Thursday that it had tentatively accepted a sweetened offer from Lampert's hedge fund, ESL Investments, to buy 425 stores and the rest of Sears' assets, which could save 45,000 jobs if the bankruptcy court approves the deal. "ESL's bid to 'save the company' is nothing but the final fulfillment of a years-long scheme to deprive Sears and its creditors of assets and its employees of jobs while lining Lampert's and ESL's own pockets," the creditors said in their filing. The unsecured creditors have been pushing for liquidation so they can get paid.

CVS Health Corp. and Walmart said Friday they had reached a multi-year deal under which Walmart would remain part of CVS's pharmacy benefit management (PBM) commercial and Medicaid retail pharmacy networks. The news came three days after CVS said Walmart would drop out of the prescription drug plans because the two sides couldn't agree on pricing. The companies did not reveal the financial terms of their new agreement. "We are very pleased to have reached a mutually agreeable solution with Walmart. As a PBM, our top priority is to help our clients and consumers lower their pharmacy costs," said CVS Caremark president Derica Rice. CVS shares rose by 2.6 percent in premarket trading on the news.

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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.