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MatchesFashion went into administration a week ago, less than three months after Mike Ashley’s Frasers Group acquired the UK online fashion retailer. The official version was that trading conditions were so difficult, and the company losing so much money, its new owners had no choice but to pull the plug after having injected more than £20 million into it.

However, that’s not to say Mike Ashley, Frasers Group’s founder and controlling shareholder, won’t still come out on top despite the collapse of Matches. The high-street billionaire could still acquire the company’s stock on the cheap through the liquidation process that will follow the administration and sell it at a profit afterwards, industry sources said.

That would be true to form for Ashley, one of Britain’s most colorful and controversial businessmen. Ashley put his son-in-law Michael Murray in charge as CEO of Frasers Group in 2022 who was then 32-year-old and had little retail experience. Murray regularly tells British media he’s the one making decisions, but Ashley still has significant influence as he is a consultant and a director on the board. Many retailers believe he’s the one calling the shots. Ashley controls the London-listed company through a stake of more than 70 percent. He’s known for having a high-risk appetite when it comes to deals.

Ashley has been on a buying spree in recent years, cornering the sports goods retail market under his Sports Direct retail chain and buying stakes in many different retailers. Frasers Group also owns the fashion luxury multi-brand Flannels and since 2022, the prestigious Savile Row tailor Gieves & Hawkes. Ashley also has a 36 percent stake in British leather goods brand Mulberry. Mulberry’s board last year rejected Ashley’s demand for a board seat on the basis that it did not “consider he has the expertise that we need to grow the company.”

According to high-level industry sources in the French luxury industry, big luxury labels including those from LVMH and Kering group severed ties with MatchesFashion as soon as it was acquired by Frasers Group. The world’s leading luxury conglomerates have long feared tainting their prestige with buyers by association with mass market brands. Frasers Group was considered too risky a partner, these people said.

The company and its CEO Michael Murray did not reply to Miss Tweed’s requests for comment and questions.

DOWNHILL FROM THE START

Matches’ downhill chute after Frasers bought it on Dec. 20 has shocked the luxury industry. The reality is that it’s not only the economic downturn that caused the company to be placed into administration, several people with first-hand knowledge of the matter said. The company’s sales dropped dramatically because Frasers Group was the wrong fit from the start for the European luxury brands who supply Matches.

Ashley has a reputation as a brutal cost cutter and he approached Matches in the same manner he always does in turning round businesses, say people familiar with the events. Frasers forced hundreds of small and medium-sized fashion labels already struggling in a tough environment to accept 30-40 percent discounts if they wanted to get paid, these people said.

Frasers also cut the size of future orders. The group paid big brands like Kering’s Gucci, Balenciaga and LVMH’s Loewe but twisted the arm of the smaller brands to accept tough terms. Many refused and stopped working with the website. As a result, stock in-take fell as much as 50 percent and the company’s performance worsened as the newness and attractiveness of its assortment started to fade.

“Such behavior seriously damaged the perception of MatchesFashion in the fashion world and that of multibrand fashion e-commerce more generally,” said one member of staff who recently left Matches because of the way the company started treating partner brands. “Many houses refused Frasers’ harsh terms, but some smaller ones have had no choice because they need the money to produce the next collection. However, I suspect some will be in serious financial trouble because of what Matches is doing to them.”

SAVING MATCHES

Frasers told brands that it had “saved” Matches, therefore it deserved a discount, the former employee said. MatchesFashion’s top management was effectively “disempowered” by the company’s new owners and many of them resigned before the company went into administration, including CEO Nick Beighton. They did not want to be associated with the Frasers Group’s tough methods.

Sources close to the company say around half of the more than 500 brands sold on the website have not been paid in full for the stock they delivered and the orders that were placed. Matches’ debt to brands is estimated to be more than £30 million, several sources close to the company said. Most LVMH and Kering brands will have gotten paid, but they will still lose money going forward because their stock continues to be sold on the website, sources close to the company said.

This week, Matches’ home page was heavily advertising Saint Laurent’s new collection and offering an extra 20 percent off on many items from big and small brands.

On March 8, the Directors of MatchesFashion resolved to place the company into administration, and appointed Benji Dymant and Julian Heathcote of Teneo Financial Advisory Limited as Joint Administrators. Dymant declared then: “Like many luxury fashion retailers, MatchesFashion has experienced a sharp decline in demand over the last year, as a result of well-publicised pressures on discretionary spend, stemming from the high inflation and high interest macro environment. Since Frasers’ acquisition of MatchesFashion in December 2023 and an injection of additional funding, trading has continued to deteriorate, increasing the funding requirements of the business. This ultimately has resulted in the Directors taking the difficult decision to place the Company into administration.”

The company laid off 270 staff without compensation “to continue to operate” and it is expected that it will have to soon part ways with the 260 employees remaining.

Frasers told many media that it was not willing to fund a turnaround after the business had “consistently missed its business plan targets” and made losses.

EVERYTHING IS FINE

However, two months ago, the story was quite different. After Frasers Group acquired Matches, it went on a charm offensive, telling brands that it had big ambitions for Matches. The head of the wholesale department of an important European fashion brand told Miss Tweed on condition of anonymity: “The communication I got in January from the team was that they were going to keep the soul and spirit of Matches. And they would focus on accessories and luxury and reduce the contemporary, more accessible fashion assortment.” That person said Frasers even promised to roll out their Carlos Place concept – the company’s prestigious Mayfair townhouse where it hosts events – in the United States and the Middle East. On top of that mansion, Matches runs two other stores in London, one in Marylebone Village and one in Wimbledon where it was founded in 1987 by Tom and Ruth Chapman. The bricks-and-mortar boutique was called Matches and it was among the first in Britain to sell Prada, Dolce & Gabbana, Versace and other luxury brands.

After the financial crisis of 2008, it moved online to broaden its reach and in 2013, it rebranded itself MatchesFashion. When Apax bought control in 2017, in a deal that valued it at around £800 million, its ambition was to become “the number-one luxury fashion commerce company in the world”. The private equity firm lost more than £600 million in the process.

VALUE OF MATCHES IS IN ITS STOCK

Days before Matches went into administration on March 8, the company was still telling brands it was business as usual, several sources said. It was also still taking stock from them. The website currently says that it’s got lots of new styles that just came in.

One medium-sized French brand delivered more than €500,000 worth of stock to Matches London’s warehouse on the evening of March 7, hours before it was placed into administration. On March 11, the brand sent aggressive lawyers and a truck to try to get its merchandise back. “We’re not going to let them get away with it,” one of the managers at the brand said. However, when a company is placed under administration, its banks accounts are frozen and creditors such as supplying brands cannot get paid. Many labels are going to suffer from Matches’ demise. Some may try to organize a class action on the basis that the sequence of events looked premeditated and mistreating brands was sure to accelerate its downfall, several financial and industry sources suggested. “The directors of the company knew that the company was going under, yet they accepted stock knowing fully well they would not pay for it,” the CEO of one of the fashion brands that is fighting against Matches told Miss Tweed on condition of anonymity.

“To ask small brands for discounts means they don’t care about helping small brands and they don’t understand the industry,” one wholesaler told Miss Tweed.

On Monday March 4, there was a meeting between the senior management of Frasers Group and Matches. Frasers’ executives said they were disappointed by the performance of the business. Frasers Group managers said they realized they would have to inject several tens of millions of pounds more into Matches to make it break even and announced that they were no longer willing to support it.

The following day, on March 5, the three directors who had been appointed on January 4 by Frasers to the board of Matches resigned, official filings registered on Companies House show.

The plan appears to be the following: As of March 8, the administrators have 10 days to find a buyer for the company. If no one comes forward, which is likely, the company’s assets will be liquidated and Frasers Group will be able to acquire the company’s stock without its liabilities.

“The value of Matches is its stock. The platform itself is not worth much,” a specialist in distressed debt said.

Matches is estimated to be sitting on more than £100 million worth of stock at cost prices. If Matches goes into liquidation, a viable path for Ashley would be to acquire that stock and resell at a profit through various channels, including its Flannels retail chain. In the 12 months to February 2023, Matches recorded losses of £35 million on turnover of £380 million.

Under the deal signed just before Christmas, Frasers Group acquired Matches for £52 million and that money effectively went to the creditors who were owned around £150 million. The difference was written off. Apax Partners who sold the company to Frasers Group effectively got close to nothing.

Now hundreds of fashion brands will try to get some money out of Matches and some of their stock back. Good luck to them. Ashley is a professional. He’s made money from distressed companies many times before, industry specialists say. That’s partly how he built his empire and became so rich. Stay tuned.

Only 3.5% of offices sold last year came from a distressed seller, thanks to optimism and forgiving lenders

If offices are in such hot water, where are all the forced sellers?

Office-building owners have been under pressure since the Covid-19 pandemic hollowed out their buildings in early 2020. According to data from real-estate consulting firm Colliers, the U.S. vacancy rate has risen from 11% in late 2019 to 17% today, higher than at any point in the 2008 global financial crisis.

But forced sales are still surprisingly rare. In 2023, only 3.5% of all office deals in the U.S. involved a distressed seller, based on analysis by MSCI Real Assets. The most recent numbers available show the share slipping to 2.7% in January. Distressed sales ramped up much faster in the GFC.

A strong economy is helping to delay the day of reckoning, as most tenants are still paying the rent. Pressure is building slowly as leases expire: Many companies are reducing their space by 30% to 40% when their contracts end.

Lenders are also eager to kick the can down the road. They don’t want to force borrowers to sell buildings into a weak commercial real-estate market, which would lead to punishing losses.

This might explain why debt maturities aren’t triggering the kind of distress that some property watchers expected. Of the $35.8 billion of office loans that came due in the commercial mortgage-backed securities market last year, only a quarter were paid off in full, according to data from real-estate analytics firm CRED iQ. Other loans were extended or sent to a special servicer—a third party that tries to find the best outcome for the debt, which may include modified payment terms or foreclosure.

Office loans are more complex today than they were during the 2008 crisis, which is delaying distressed sales. As there are more lenders involved—especially on the big buildings owned by institutional investors—getting everyone to agree to foreclose or sell a property is difficult.

For instance, of the roughly 600 defaulted CMBS office loans sent to a special servicer over the past two years, lenders have realized a loss on just five, according to CRED iQ analysis. In these cases, the buildings went into foreclosure and were sold off.

Opportunistic investors are crawling out of the woodwork with offers of debt. Reven Capital is trying to raise $1 billion in a blind-pool initial public offering for an office-focused distressed lender. “It’s 1929 for offices,” says Reven founder Chad Carpenter. He thinks distressed-debt funds will be able to lend at very favorable terms as banks have pulled back.

Blackstone, Brookfield, Cohen & Steers and Manhattan landlord SL Green Realty are also bullish about distressed real-estate lending. Ironically, Blackstone and Brookfield are simultaneously handing back keys to some of their offices.

Distressed-debt investors might slow the pace of forced sales in a handful of cases, but the office sector’s need for finance will soon massively outstrip supply. CBRE thinks U.S. office landlords face a $72.7 billion refinancing shortfall between now and the end of 2025.

The lack of distressed sales might also be a sign of wishful thinking. Some borrowers and their lenders are likely holding out for lower interest rates: Cheaper debt might limit the price cuts they need to accept when they sell. There are also hopes that some office demand might come back. It wasn’t long ago that remote work was considered a fad: The value of offices bought in 2021 was the second-highest since 2008, based on MSCI Real Assets data.

There are costs to holding out, though. It is expensive to insure and maintain offices that could end up obsolete. And when a flood of distressed assets does eventually hit the market, it will put further pressure on office values that have already fallen 35%.

Offices will be “the buying opportunity of our generation,” provided investors pick the right locations, says Mike McDonald, a senior managing director at real-estate firm JLL. Ultrawealthy families and local property developers are among the earliest investors gearing up to buy cheap buildings.

A flood of “For Sale” signs looks inevitable, but they are taking longer than expected to arrive.

Scientists alarmed about consistent off-the-charts increase in sea temperatures since March 2023

Oceans marked 365 straight days of record-breaking global surface sea temperatures this week, fuelling concerns among international scientists that climate change could push marine ecosystems beyond a tipping point.

The consistent climb in temperatures reached a peak on Wednesday when the new all-time high was set for the past 12 months, at 21.2C.

The world’s seas have yet to show any signs of dropping to typical, seasonal temperatures, with daily records consecutively broken since they first went off the charts in mid-March last year, according to data from the US National Atmospheric and Oceanic Administration and the Climate Reanalyzer research collaboration.

Driven by human-caused climate change and amplified by the cyclical El Niño weather phenomenon that warms the Pacific Ocean, this exceptional heat has bleak implications.

Richard Spinrad, the US under secretary and administrator of Noaa, said this week that the warming would have “rather dramatic impacts on major storms, on ecosystems”.

Noaa warned earlier this month that the world was on the brink of experiencing its fourth global mass coral reef bleaching event.

The US agency’s Coral Reef Watch introduced three new bleaching alert levels as several regions, particularly in the eastern Pacific and Greater Caribbean, experienced such extreme heat stress that it was no longer sufficiently captured by the old scale.

Scientists further worry that the coming Atlantic hurricane season has the potential to be devastating because of this sustained heat, even as the El Niño system weakens to give way to the opposing La Niña weather cycle that results in a cooling effect.

Spinrad said that, historically, the hurricane season started at the beginning of June and ended in November, but this pattern had shifted, with areas of the central Atlantic far warmer for March than normal.

“If you look at the record, we are seeing certainly tropical cyclones forming earlier than June 1, and we’re seeing systems extending well beyond the end of November. So that, hurricane season has certainly become longer both on the front and the back,” he said.

The world’s oceans absorb 90 per cent of the excess heat and energy released by greenhouse gas emissions that are trapped in the Earth’s system and are the cause of climate change.

The largest carbon sink in the northern hemisphere is the Atlantic Ocean, where the circulation of water helps ensure that temperatures on land are regulated.

There was “a lot of concern”, Spinrad said, about what is described as the conveyor belt of circulation in the oceans, known as the Atlantic Meridional Overturning Circulation, which may be slowing because of excess heat, with unknown consequences for habitable conditions on Earth.

Resilient economy weakens argument that monetary policy is too tight, but that could soon change

When the Federal Reserve began sharply raising interest rates two years ago, the prospect of mortgage rates hitting 7% terrified Dwight Sandlin, a home builder based in Birmingham, Ala. “I was scared to death. Scared. To. Death,” he said.

He just booked his most profitable year ever.

While sales of his modern farmhouse-style homes have dipped since the postpandemic frenzy, profits are strong because a shortage of existing homes for sale has propped up prices.

“The market is still very firm—not great, but firm. And there’s only one reason: There ain’t enough inventory,” said Sandlin. “If you can’t make money in the home-building business right now, you need to go do something else.”

The Fed meets this week to decide whether, when and by how much it should cut rates later this year. A key question it must answer: Just how tight is its monetary policy? Not very tight, judging by the experience of builders such as Sandlin and consumers’ overall resilience. For Fed officials, that argues against cutting rates much, or soon, especially after two months of firmer-than-expected inflation.

On the other hand the federal-funds rate target, at 5.25% to 5.5%, is relatively high in nominal and inflation-adjusted terms, and there are signs the economy’s current strength won’t last—a point Chair Jerome Powell has hinted at. If so, then monetary policy might soon start to look tight, reinforcing the case for cutting.

A key gauge of inflation, which excludes volatile energy and food prices, has fallen below 3% in recent months from nearly 5% early last year.

Two feet on the brakes—or just one?

Because of lags, the question of whether growth perseveres or rolls over in the face of past interest-rate hikes might well be resolved in the next six months.

The Fed raises short-term interest rates to cool inflation by slowing demand, hiring and wage growth. It does that through the ripple effects on broader financial conditions such as stock prices and long-term bond and mortgage rates. The interest rate that achieves financial conditions that keep the economy at full strength and inflation steady is called “neutral.” To slow growth and reduce inflation, the Fed must push rates above neutral.

Some business executives, economists and Fed officials say solid growth suggests rates might not be that far above neutral right now.

“We thought we had two feet on the brakes, but maybe we in fact only have one foot on the brakes, and that’s why we haven’t seen as much of a reduction in demand,” Minneapolis Fed President Neel Kashkari said.

Pandemic-driven idiosyncrasies blunt higher rates

When Covid-19 hit four years ago, the government showered the economy with cash and the Fed pushed interest rates down to near zero. Businesses and consumers locked in those low rates, dulling the initial effect of the Fed’s rapid tightening two years later.

Thanks to more recent government spending on infrastructure and green-energy projects, “you haven’t seen the normal shedding of construction jobs that you should have” with higher rates, said Eric Rosengren, former president of the Boston Fed.

No sector illustrates the postpandemic resilience to high rates as much as housing. Historically, it is the most important channel through which Fed tightening slows the economy. To be sure, sales of existing homes have tumbled.

But prices haven’t fallen because many Americans who locked in low mortgage rates are staying put, as are many who have no loan since there is so little to buy. Some home builders are offering buyers somewhat below-market interest rates on new homes, offsetting the full hit from Fed hikes for their buyers.

“This is a property market that wants to recover,” said Ray Farris, an economist based in New York. “This thing is a loaded spring.”

Higher housing prices and a stock market up nearly 20% since November are boosting wealth and thus supporting consumption, especially of high-income households. The price of bitcoin has recently surged to records, a sign of exuberant risk-taking.

In addition, banks that turned more cautious over the last two years in anticipation of a recession could open up lending spigots. Bond issuance has been strong this year.

“Find me a place where you can’t borrow money,” said Farris. “The debt markets in the United States and in Europe are completely open,” for both investment and speculative-grade companies.

Evidence of tighter policy

But there are reasons to think 2023’s surprisingly brisk 3.1% growth doesn’t capture how tight monetary policy really is. Powell has suggested that growth isn’t a result of demand but instead reflects a burst of supply from higher immigration and more people entering the workforce. “That won’t go on forever,” he told reporters on Jan. 31. “When that peters out, the [monetary] restriction will show up, probably, more sharply.”

Some economists say as long as interest rates stay as high as they are now, the economy will face a drag from households and businesses that must devote more income to interest expenses.

They point to other pockets of weakness. Commercial real-estate values have tumbled and delinquency rates on office-backed loans jumped in December to 5.8%, the highest since late 2017, according to S&P Global. Delinquencies on apartment-backed loans are also creeping up.

Surveys show banks are pulling back from consumer lending. Interest rates on credit cards are near record highs and credit-card delinquencies are rising. Retail sales in January and February were soft.

“You have to look at whether banks are willing to continue making loans to consumers, and the data suggests they’re not quite as keen as they were a year ago or two years ago,” said Peter Berezin, chief global strategist at BCA Research in Montreal.

Household savings buffers for lower-income consumers, built up during the pandemic thanks to restrained spending and government relief, also appear to be exhausted. Bank deposits and money-market funds are below prepandemic levels when adjusted for inflation for all but the 20% most affluent households, said Berezin.

Consumers spent heavily the past few years because “they had money in their pockets,” said Philadelphia Fed President Patrick Harker. “For consumers of lower-to-moderate income, they’ve burned through that. It is gone, and they are struggling. That’s why they’re loading up on credit-card debt.”

Ian Borden, chief financial officer at fast-food giant McDonald’s, said last week that more consumers are eating at home instead of dining out now that those savings buffers are gone.

And executives at Lennar, the nation’s second-largest home builder, said last week that more prospective buyers in recent months were struggling to qualify for a loan because they had too much debt.

While job growth is strong and unemployment stable, the number of open jobs is declining and wage growth has slowed, which both point to cooler demand for labor.

The share of small businesses planning to add jobs fell to 12% in February, the lowest since the pandemic, according to the National Federation of Independent Business.

Outside of hiring for government and healthcare, “it’s been pretty flat,” said Harker. “That starts to give me a little concern.”

The challenge of unscrambling conflicting signals explains why officials are focusing on what happens with inflation. If inflation continues to move lower, “you could say, ‘Why keep rates where they are?’” said Kashkari, the Minneapolis Fed president. But if the economy is expanding solidly, it is fair to ask “why do anything?”

Super Micro Computer has gone from an obscure server maker to a $60 billion company set to join the S&P 500 Monday

Nvidia NVDA -0.12%decrease; red down pointing triangle has reigned as the investor darling of the artificial intelligence boom, more than quadrupling the value of its shares in the past year. But one of the chipmaker’s customers is performing even better.

Once under the radar, server-maker Super Micro Computer SMCI -5.42%decrease; red down pointing triangle has become a go-to supplier for companies and governments eager to participate in the AI boom. Runaway sales of its servers filled with Nvidia’s AI chips are projected to double the company’s revenue this year and have leapfrogged it ahead of some of its biggest competitors.

Super Micro Computer’s shares have increased more than 12-fold in the past 12 months, and it is set to become part of the S&P 500 index of large U.S.-listed companies on Monday. When it does, it will be—by far—the index’s top one-year performer.

The company, usually referred to by its Supermicro brand, was founded in Silicon Valley in 1993—the same year Jensen Huang co-founded Nvidia. And like Nvidia, Supermicro has also been led for its entire history by one person. In Supermicro’s case, by President and Chief Executive Charles Liang, who was born in Taiwan and came to the U.S. after college.

Liang said in an interview with The Wall Street Journal that he has known Huang for decades. But the companies’ fortunes have become heavily entangled only now, amid the boom in AI.

Nvidia spent its first couple of decades focusing mostly on making chips that improved computer graphics for gamers. Supermicro competed in the less-flashy world of servers for data centers, latching onto the growth of cloud computing and the digital economy.

Then AI came along. Nvidia’s chips became the workhorses of the boom, making the complex computations necessary to create systems such as OpenAI’s ChatGPT. Server manufacturers who could ship those chips to customers fastest and in the largest quantities had an edge.

Liang said it has been helpful that his base in San Jose, Calif., is just a 15-minute drive from Nvidia’s headquarters in Santa Clara. “Our engineering teams are able to work together from early morning to midnight,” he said.

Supermicro’s recent dominance in the AI boom, industry executives and analysts say, also stems partly from its strategy of making electronic “building blocks” that can be assembled into servers in an almost endless number of configurations. Rivals offer a more limited menu to customers.

That flexibility has been an advantage in the AI boom, analysts say. Developers of self-driving car technology want different server setups than companies making language-generation AI systems such as ChatGPT. Supermicro can deliver customized infrastructure for both.

Competitors are trying to match Supermicro’s speed at building custom servers, said Hans Mosesmann, analyst with Rosenblatt Securities.

“The treadmill is just going too fast,” Mosesmann said.

‘Give me more chips’

Liang said Supermicro has also benefited from having a $1 billion-plus inventory. And it has been able to get its hands on large quantities of Nvidia’s most advanced AI chips, even during a period of sky-high demand for them that has led to a long-lasting shortage.

When Liang and Huang appeared together at a computing conference in Taiwan last summer, Liang launched an AI server that he said would be available in the next few weeks, depending on the availability of Nvidia’s chips. “It depends on you, not me,” Huang said.

“Give me more chips!” Liang replied.

Supermicro has grown so fast that it has needed to raise money to afford those chips, each of which costs around $25,000. The company raised $1.5 billion from the sale of convertible debt last month, after adding $600 million to its coffers from a stock issuance three months ago.

“We need more money because demand is so strong,” Liang said, adding that the cash would also help to build up Supermicro’s supply chain.

As part of that effort, Liang is expanding manufacturing in San Jose, as well as in Taiwan and Malaysia. Liang said his goal was to be producing 5,000 racks of servers a month—an amount of computing infrastructure that would measure 6 feet high and almost 2 miles long—by the middle of this year.

“More than 50% of that is AI,” he said. Liang has also said that the manufacturing growth is sufficient to bring the company’s potential revenue above $25 billion a year, an addition of roughly $10 billion to annual sales based on its latest quarterly revenue.

Past and future challenges

While analysts say the company’s prospects remain bright even after the stock’s meteoric rise, Supermicro has had its share of challenges. Its chief financial officer and one of its co-founders stepped down after an internal audit begun in 2017 led to revisions to the company’s previous financial statements. The Securities and Exchange Commission charged the former CFO with accounting violations in 2020, which was followed by a settlement of the proceeding.

Liang has said those troubles are behind the company, which is focused now on making sure it stays ahead of its competitors in the increasingly fierce battle for market share in AI computation. Both of Supermicro’s main rivals, Dell Technologies and Hewlett Packard Enterprise, have more employees and more than double the company’s revenue, even after its recent rise.

The AI processor market is expected to keep growing fast. Chip maker Advanced Micro Devices is projecting the market for AI accelerators will reach $400 billion by 2027, and analysts expect demand for servers to increase in tandem.

Supermicro’s AI-oriented servers made up more than half of its nearly $3.7 billion in sales in its latest quarterly report. Dell and HPE, by comparison, shipped $800 million and more than $400 million of similar servers, respectively.

Analysts clash on Supermicro’s ability to hold on to its position longer term. Wedbush analyst Matt Bryson said, historically, no company selling servers has had more than 30% market share.

“There’s not a reason Dell can’t do exactly what they’re doing,” Bryson said.

Others aren’t so sure. Some analysts say that established competitors will have a hard time bringing new products to market so quickly and have larger revenue streams from software and services.

Supermicro is trying to gain further market share by doubling down on AI and continuing to ship its servers out quickly. The company is also keeping prices low to entice new customers: Its gross profit margin totaled around 15% in its latest quarter, down from 17% in the previous one. HPE, by comparison, had gross margins of 36% in its latest quarter.

“In order to take market share, we will take opportunities by being more competitive on pricing,” Chief Financial Officer David Weigand said on the company’s earnings call in January.

Vladimir Putin’s fifth term in office will likely be dominated by the war in Ukraine and making sure Russians support it

What’s next for Vladimir Putin?

After 24 years in the Kremlin, the Russian leader is on the cusp of securing another six years as president as this weekend’s presidential election winds up Sunday. The vote itself is largely a formality, putting him on the path to becoming Russia’s longest-serving leader since Stalin. His government pulled out all the stops to secure the win. It jailed critics, muzzled the press and introduced new laws to stamp out anything that could be considered criticism of his war in Ukraine. Putin’s most effective opponent, Alexei Navalny, was gone, found dead in an Arctic prison camp last month where he was serving out sentences totaling 30 years in circumstances that haven’t been fully explained.

What matters more is the extent of his victory. Putin, now 71 years old, doesn’t just want to win. Analysts who follow the country’s politics say he needs to win big if he wants a free hand in reviving what he says are Russia’s conservative Orthodox traditions and, ultimately, prevailing in Ukraine and in his broader confrontation with the West.

“This would legitimize Putin’s legacy and his war of aggression, relegating the remaining opposition to an even more marginalized role, and allowing Putin to implement, unchecked, his vision for the next six years,” the European Parliament Think Tank, which provides analysis and research on policy issues relating to the European Union, said in a briefing paper this month.

The last presidential election in 2018 put turnout at 67.5%, with close to 77% of the vote going to Putin, according to government data. The Kremlin has made clear it wants even higher numbers this time around to provide the Russian leader a free hand in pursuing his objectives, following the “tradition of post-election carte blanche for Putin,” as Boris Vishnevsky, deputy head of the opposition party Yabloko, put it in comments posted on his Telegram channel.

Putin has already signaled some of his plans in speeches and interviews. Chief among them is his insistence on carrying on the war in Ukraine as the U.S.’s support for Kyiv shows signs of wavering.

“I think this is what the election was about—that this is a national war, that he’s the leader of the nation in this existential struggle to maintain Russia’s role in the world, to maintain Russia’s territorial integrity,” said Angela Stent, author of the book “Putin’s World: Russia Against the West and With the Rest” and a senior adviser at the Washington, D.C. -based United States Institute of Peace. “Everything that he has signaled is that he’s going to continue the war.”

Observers predict the Russian leader could soon launch another wave of arrests and detentions at home, new laws to stifle dissent and increased taxes on the rich. Analysts said there could also be a new wave of mobilizations to reinforce Russia’s growing advantage on the battlefield in Ukraine.

“What we have seen recently is an increase in activity of Russian intelligence and security services, which are extremely aggressive,” a reflection of the regime’s pre-election paranoia, Andrei Soldatov, a senior fellow at the Washington, D.C.-based Center for European Policy Analysis told a media briefing on Thursday. “Because it is political stability which is at stake, everything is justifiable, including the killing of political opponents [and] attacks abroad,” he said.

Soldatov predicted the clampdown on criticism evident in the run-up to the election will continue once the vote is done, following a familiar pattern in Russia. “They use the election as an excuse, and then they just make these methods and activities part of their playbook. My biggest concern is that they’re going to be using this for months and months to come,” he said.

Putin may face a more delicate balancing act in keeping Russia’s economy ticking. It has fared relatively well despite Western sanctions, with trade with China and buoyant oil prices helping to insulate the country’s political and business elite from any real hardship. Analysts said he would likely focus on making sure Russians continue living life as normal, while also announcing plans to spend billions of dollars to tackle poverty and to rebuild much of the country’s aging infrastructure as more of the economy goes into a war footing.

To pay for it, Putin has proposed a more progressive taxation system that some analysts suggested was aimed at appeasing poorer Russians who are making more sacrifices, both financially and in terms of family members being drafted to fight in the war.

“Truly, the distribution of the tax burden should be fair in the sense that corporations, legal entities, and individuals who earn more should contribute more to the national treasury, towards addressing nationwide problems, primarily towards fighting against poverty,” he said in an interview on state television on Wednesday.

He also spoke of creating a new elite composed of veterans and those who served in the Ukraine war and has called for them to be given more support, including academic opportunities and training.

“The true, real elite is everyone who serves Russia, workers and warriors, reliable, proven, who have proven their devotion to Russia, worthy people,” Putin said.

Some analysts described such rhetoric as empty pre-election promises. What seems more realistic, they said, was that Putin could eventually order a second mobilization, needed to gain a battlefield advantage at a time when Ukraine has faced some foot-dragging from Western nations supporting its military campaign.

Putin’s first draft of some 300,000 men in September 2022 sent hundreds of thousands fleeing across the border, among them droves of young professionals. The Russian leader will need to find a way to prevent a repetition of the exodus, such as closing the border, some analysts said.

“There’s no evidence they wouldn’t incur the same kind of resistance if he did it in the next few months,” Stent said. Though some polls show that Russians largely support the war, “it’s another thing to have their fathers, sons, brothers mobilized and sent to fight,” she said.

Other Russia watchers suggested that in addition to throwing more money at potential contract soldiers, another way to replenish the troops on the battlefield would be to draw more conscripts into the fight.

Under Russian law, conscripts aren’t supposed to be deployed to fight in Ukraine, only reservists who have completed their military service and training. But last summer, Russia raised the maximum conscription age by three years to 30 and established that conscripts would be able to enter into contracts for military service for one year during certain circumstances, including during a period of mobilization, in wartime and when the Russia’s armed forces are fighting outside the country.

Some Russians braved the threat of arrest to voice their opposition to Putin as voting began on Friday. The Central Election Commission reported five incidents of voters trying to sabotage ballot boxes by pouring liquid into them, including dye. The Investigative Committee, the country’s main federal investigating authority, said it was investigating several such incidents on criminal grounds.

The deputy election-commission chairman, Nikolai Bulaev, accused opposition elements of adopting what he said were terrorism tactics. His boss, Ella Pamfilova, called the suspects “scum” who deserved to go to jail for up to five years, Russia’s state news agency TASS reported.

In a separate incident, investigators said they had opened a criminal probe into the case of a woman suspected of setting fire to a voting booth at a polling station in southeast Moscow. Maria Andreeva, who is among a movement of wives and mothers campaigning for their mobilized men to be returned home, posted a letter from prosecutors on Telegram warning her against participating in unauthorized public events planned at polling stations in Moscow.

The real test of opposition may be yet to come.

Putin’s critics, including Navalny’s widow, Yulia Navalnaya, joined forces by calling for voters to flood polling stations at noon on Sunday, and for those brave enough, to wear blue and white—colors that have been used to symbolize opposition to Russia’s invasion of Ukraine. Opponents have also encouraged people to spoil their ballots or vote for someone else.

At this point, it is more a token gesture of defiance, though, and one that could result in severe consequences for anyone caught up in another crackdown.

The more significant election could be the presidential vote in the U.S. in November. Stent, the analyst, said Putin was likely waiting for the outcome along with other elections in Europe, where support for Ukraine is also showing cracks.

“He’s awaiting what will happen if Western support for Ukraine erodes, and there are already clearly differences in the alliance about that,” she said. “I think he’s going to continue the war for as long as he needs to. At this point, he feels that time is on his side.”

Congressional panel whose hearings prompted resignation of Harvard president turns gaze on Doha

The congressional Republicans who spearheaded investigations into antisemitism on US college campuses are turning their focus on the Qatari government, one of the largest donors to American universities over the past decade.

The line of inquiry, led by Republicans on the US House’s education committee, focuses on suggestions among conservative activists that Qatari funding has influenced attitudes towards Israel at elite US universities, which have come under intense scrutiny since Hamas’s October 7 attacks.

Virginia Foxx, the conservative North Carolina Republican who chairs the committee, has asked three Ivy League schools — Harvard, the University of Pennsylvania and Columbia — to disclose any Qatari donations since January 2021. 

Foxx has also requested information about enrolment data for Jewish students and various other details about the universities’ responses to antisemitic incidents.

Qatar is the only nation mentioned in the inquiries about funding from “foreign sources”. A person close to the committee said the goal was to determine “what is innocuous and what is bleeding into what’s happening on campus”.

The focus on Qatar comes amid a campaign by activists and alumni donors to scrutinise elite American universities after a surge of anti-Israel protests following the October 7 attacks and Israel’s subsequent offensive in Gaza — including demonstrations of outright support for Hamas. The protests have come at the same time as a rise in reports of harassment and intimidation of Jewish students.

The Republican-controlled House committee already helped bring down the presidents of two Ivy League schools, Penn and Harvard, who were forced to resign after their testimony before the panel was seen as insensitive to the concerns of Jewish students.

Qatar has emerged as the largest foreign donor to US universities, contributing $5.1bn since 1986, according to one study. Most of the donations were made in the past decade.

Much of that has been spent to entice US universities to establish campuses in Doha, a more than two-decade long initiative that the Qataris have promoted as a way to bring western-style higher education to the Gulf state.

A Qatari official said the Gulf state’s financial contributions to US universities were “allocated within Qatar, covering expenses such as the construction and maintenance of buildings and the salaries of employees”.

“Recent claims about university funding have unfortunately been influenced by a well-funded and vicious campaign of disinformation,” the Qatari official said. “Hatred for any group is wrong — including both antisemitism and Islamophobia alike. Through international collaboration on education, Qatar’s aim has always been to forge partnerships, learn from one another, and tear down stereotypes.”

Defenders of Qatar’s funding say it is no different from the lobbying efforts of other sovereign governments trying to burnish their reputation in the US. After Saudi Arabia and the United Arab Emirates led a regional embargo against Qatar in 2017, the nation of just 2.6mn people has moved aggressively to rebuild its image, including spending heavily on Washington lobbyists.

Qatar is an important US ally in the Gulf region. Ruled by the Al-Thani family, its sits atop the world’s third-largest natural gas reserves and hosts the largest US military facility in the Middle East.

In the past, Qatar’s alleged support for Islamist groups and its independent foreign policy have drawn the ire of regional neighbours. The stance has allowed the Gulf state to position itself as a neutral party in a complicated region, and US President Joe Biden has designated Qatar a major non-Nato ally and lauded its assistance in hostage negotiations between Israel and Hamas.

But that policy has been a source of concern among some conservatives, many with ties to Israel or American Jewish causes. In the wake of October 7, scrutiny of Qatar’s relationship with Hamas and the Islamist Muslim Brotherhood has intensified.

Texas A&M University last month announced that it would close the satellite campus it established in Doha in 2003. The university cited “regional instability” for its decision, but it has also faced unwanted publicity since October 7 about its patron’s ties to Hamas.

A report by the Institute for the Study of Global Antisemitism and Policy think-tank piled further pressure on Texas A&M by claiming that the university was licensing sensitive nuclear technology to Qatar as part of the campus agreement. Mark Welsh, the school’s president, rejected that accusation as false in a lengthy statement.  

Qatar, meanwhile, called Texas A&M’s decision “deeply disappointing” and driven by “a disinformation campaign”. An official at the Qatari embassy in Washington did not respond to a request for comment on the larger issue of the country’s donations to US universities.

Mitchell Bard, author of The Arab Lobby and a longtime analyst of Gulf nations’ influence operations in America, saw little evidence that Arab money was contributing to hostility towards Jews and Israel on campuses.

Some US universities that have seen incidents of antisemitism and large anti-Israeli demonstrations, such as the University of California at Berkeley, received little or no Qatari money, Bard noted. The biggest US recipient was Cornell University, which received $1.9bn to establish a medical school in Doha. 

“If several hundred million dollars go [to Cornell], what does that have to do with antisemitism in Ithaca?” Bard asked, referring to Cornell’s campus in upstate New York.

US universities are supposed to report any foreign donations of $250,000 or more. But the relevant law, dating to 1965, is seldom enforced. Universities tend to share little information about where the money goes or if any conditions are attached. In 2019, a Senate report called foreign money at US universities “effectively a black hole”, noting that many donations pass through charitable organisations and other third parties.

Foxx has sponsored legislation, known as the Deterrent Act, that would tighten reporting rules.