The daily business briefing: February 5, 2019
Alphabet posts strong earnings but shares fall, GM launches a 4,000-job layoff round, and more
Alphabet shares fall despite better-than-expected earnings
Shares of Google-parent Alphabet dropped by about 3 percent in after-hours trading on Monday after the tech giant reported quarterly earnings that beat expectations but said its advertising prices were falling as costs rise. Earnings were $12.77 per share, exceeding expectations of $10.82, according to Refinitiv consensus estimates. Revenue hit $39.28 billion, narrowly beating Refinitiv consensus estimates of $38.93 billion. Cost per click on Google properties fell by 29 percent compared to last year, and by 9 percent compared to last quarter, potentially raising concerns that the lower amounts Google can charge advertisers indicates its power is eroding.
GM laying off 4,000 salaried workers in latest round of cuts
General Motors on Monday said it was laying off about 4,000 salaried workers as part of its restructuring effort. Hundreds of people are being affected at the automaker's information technology centers in Texas, Georgia, Arizona, and Michigan, two people briefed on the cuts told Reuters. More than 1,000 people are losing their jobs at GM's Michigan Tech Center. The largest U.S. automaker announced in November that it would shutter five North American plants and cut 15,000 jobs, including 8,000 salaried positions, about 15 percent of its North American workforce. "These actions are necessary to secure the future of the company," GM spokesman Pat Morrissey said.
Charlotte Russe files for bankruptcy protection
Young women's clothing chain Charlotte Russe announced Monday that it had filed for Chapter 11 bankruptcy protection and planned to close 94 stores. Charlotte Russe, which operates 500 stores in malls nationwide, was the latest in a series of mall-based retailers to seek bankruptcy protection, joining companies such as Gymboree, Claire's, and Mattress Firm. Charlotte Russe said it had "suffered from a dramatic decrease in sales and in-store traffic" and faced ongoing problems stemming from "the burden of maintaining a large brick-and-mortar presence." The company has lined up $50 million from lenders to keep operating its website and about 400 Charlotte Russe and Peek Children's stores. It aims to emerge from bankruptcy with lower costs and a new owner.
New Jersey governor signs law phasing in $15-an-hour minimum wage
New Jersey Gov. Phil Murphy (D) on Monday signed a law phasing in an increase of the hourly minimum wage to $15 over the next five years. "It is a great day to make some history for New Jersey's working families," Murphy said. New Jersey joins California, Massachusetts, New York, and the District of Columbia in phasing in the $15 wage, a policy goal for labor and left-leaning activist groups. New Jersey's former Republican governor, Chris Christie, vetoed a similar measure in 2016. Republicans and many business leaders argued that higher wages would encourage layoffs and more automation at businesses that can't afford to raise pay. "The amount of job loss that we are going to see among small businesses will be tragic," state Sen. Declan O'Scanlon (R) said in a statement.
Super Bowl ratings fall
Sunday night's Super Bowl received lower ratings compared to recent years, with a 5 percent decline from last year's championship game. Preliminary ratings show that about 45 percent of American households tuned into the game, which is still by far the largest audience of any other television event, but continues an ongoing ratings slip for the NFL. The New England Patriots won their second Super Bowl in three years, beating the Los Angeles Rams 13-3. It was the Patriots' sixth National Football League championship since 2001, and the lowest-scoring Super Bowl in history. "With almost everyone except Patriots fans calling the low-scoring game a snooze, it's a wonder that the ratings weren't even lower," writes CNN.