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Prolific social-media user says he would consider a deal with Elon Musk’s platform, now called X, for his new vehicle

Bill Ackman has amassed nearly 800,000 followers on X, the social-media platform formerly known as Twitter, by broadcasting his thoughts on topics ranging from how to end the war in Ukraine to Robert F. Kennedy Jr.’s controversial stance on vaccines.

Now, the investor might take his enthusiasm for the Elon Musk-owned platform to the next level.

Ackman’s firm, Pershing Square PSH 0.69%increase; green up pointing triangle, received regulatory signoff Friday for a novel investment vehicle whose purpose is to invest in a privately held company and take it public. When asked by The Wall Street Journal if he would consider a transaction with X, the billionaire investor said “Absolutely.”

Other companies that could fit the bill include private-equity-owned businesses, divisions of public companies or “mature unicorns” eyeing initial public offerings, according to the vehicle’s regulatory filing.

The chances of Ackman pulling off a deal for X aren’t great. Musk spent $44 billion just a year ago to buy the company and told people around then he could take it public in a few years. X’s ad revenues have dropped, Musk has said, in part because his management has scared advertisers away, and his purchase added $13 billion in debt, metrics that are unlikely to play well with public investors.

Ackman says he has no idea if X is interested and would still need to determine whether or not a deal is doable. X had no comment.

Either way, Ackman said he has “enormous respect” for Musk and what he is doing with the platform. Ackman, a registered Democrat, has become a big defender of Musk’s vision of X as a free-speech haven where unpopular opinions, especially those from the right, can be voiced without fear of censorship.

After spending most of his career as an activist investor, Ackman, 57, also fancies himself an expert at helping companies shine and could see an opportunity to help improve X’s results. His vehicle could also give X some much-needed cash to pay down its heavy debt burden.

While Ackman doesn’t know Musk well, his foundation made a small investment in X when the Tesla chief bought it, and he has occasionally tweeted ideas for the platform. One was adding an opposite button of sorts to certain tweets that would bring the user to the most popular tweet containing a counterargument. Musk responded, “Good idea.”

Ackman’s ‘SPARC’

Ackman is billing his new investment vehicle as an elevated version of the traditional special-purpose acquisition companies whose popularity surged before fizzling last year. While a SPAC raises money from investors before finding a company to merge with and take public, his version, called Pershing Square SPARC Holdings, flips the order. The “r” stands for “rights,” signaling investors’ rights to buy in after a target is identified.

Ackman has been waiting for the Securities and Exchange Commission to bless his creation for roughly two years, ever since regulatory concerns forced him to walk away from a large SPAC deal he orchestrated with Universal Music Group. At the time, he gave his investors their money back and warrants for the SPARC. (His investment firm took a 10% stake in Universal instead.)

The SPARC is expected to have at least $1.5 billion to invest in a deal, the filing says, which can be used by the company or to buy out existing investors. Pershing Square will contribute between $250 million and $3.5 billion.

Rights holders, a mix of retail and institutional investors, would contribute around $1.22 billion, and possibly much more. The rights price is set as part of the deal negotiation and there is no upward limit.

After a deal is announced, holders would get 20 business days to exercise or sell their rights, which will be trading on an over-the-counter market. A deal could close 10 business days later, the filing says.

On Friday, after regulators blessed the SPARC, Ackman took to X: “If your large private growth company wants to go public without the risks and expenses of a typical IPO, with Pershing Square as your anchor shareholder, please call me. We promise a quick yes or no.”

Ackman on X

Ackman rose to fame on Wall Street by pushing companies to make changes to boost their stock prices. He stepped back from activism—and the spotlight—several years ago after losing billions on a series of bad bets. He’s since rehabilitated Pershing Square, which now manages $16.5 billion, by placing friendlier wagers on companies such as Hilton and Chipotle.

When Ackman joined Twitter in 2017, his tweeting appeared like that of most public figures and companies—a forced exercise to further business interests. (“Eating our own cooking @ChipotleTweets,” read one of his first posts, which included a photo of him in line at the burrito joint.)

His account had been dormant for nearly a year when he picked it back up in the early days of Covid-19, tweeting impassioned pleas for swift government action to get the virus under control and later, mass vaccination.

In the years since, his account has morphed into continual reactions to current events and musings on everything from the best exercises for people with back issues to the “karmic quality” of seeing a short-seller attack his rival, Carl Icahn.

Ackman says X has become one of his principal ways of keeping track of current events after the Harvard professor and psychologist Steven Pinker called his attention to its usefulness at a dinner party years ago.

“It’s like one big brain,” Ackman says, referencing the various “takes” on any given topic found on the platform.

Ackman, like many hedge-fund managers, is famous for a contrarian streak when it comes to markets, but on X, he stokes debate in areas far afield from investing.

He took to the platform after he and his wife, the architect Neri Oxman, who he’s described as the female Elon Musk, watched testimony of Kyle Rittenhouse, the teenager charged with killing two people at a Wisconsin protest using an AR-15-style rifle.

“We came away believing that #Kyle is telling the truth and that he acted in self defense. We found him to be a civic-minded patriot with a history of helping his community,” began a more than 300-word missive.

The tweet prompted a reporter to text Ackman asking if his account had been hacked, he tweeted at the time. Rittenhouse was found not guilty.

After FTX founder Sam Bankman-Fried denied knowing what was going on at his $32 billion cryptocurrency exchange soon after its collapse, Ackman tweeted, “Call me crazy, but I think @sbf is telling the truth.” Several X users took him up on it, with one tweeting, “Bill are you currently under duress?”

His changeability has been on full display when it comes to the presidential election.

“I am going to make a bold and early call. @VivekGRamaswamy will run for POTUS and win,” he said in February of the Republican candidate. Two months later, he backtracked, saying some of the far-right candidate’s views were too extreme.

The following month, he urged JPMorgan Chase CEO Jamie Dimon to run in a tweet that spanned over 600 words.

“If you agree that he should be our next POTUS, give him a call, send him an email or go see him, and like and retweet this tweet,” it read. While Dimon has briefly considered running before, he has decided against running and said so publicly this summer.

Ackman has since resumed promoting Ramaswamy and also tweeted approvingly of vaccine skeptic Kennedy, which has increased his audience while startling some people close to him.

Alongside his growing popularity on the platform, Ackman has picked up the pace of public appearances too, stoking speculation he could run for office himself one day.

On Thursday, during an appearance at CNBC’s Delivering Alpha conference, he praised X, crediting the platform for influencing some of his most winning investments. In 2020 and 2021, combing through tweets helped prompt him to place a pair of bets that the market was misjudging Covid-19’s toll. They’ve made him $5.5 billion.

“I’ve comfortably covered the cost of my blue-check,” Ackman says, in reference to the $84 he pays annually for a premium X account.

While the Americans threatened to make a push after tempers flared on Saturday, Europe maintained its home dominance

GUIDONIA MONTECELIO, Italy—The most anticipated moment of the Ryder Cup’s final day arrived when American golfer Patrick Cantlay and his caddie stepped into the amphitheater for the final session. Less than a day earlier, Cantlay’s long putt delivered the Americans a dramatic victory on the 18th hole, and his caddie’s celebration stirred up altercations with Rory McIlroy.

The fans greeted Cantlay with jeers and by waving their hats at him—mocking his decision to not wear a cap this week, and referencing how his caddie waved his own hat at the crowd during the controversial celebration. The question facing the Americans was whether the fiery conclusion to Saturday could spark a record comeback on Sunday.

But after an inspired effort on the final day, the Americans failed to erase their struggles to begin the competition.

Europe withstood a late U.S. push to reclaim the Ryder Cup with a 16.5 to 11.5 win here at Marco Simone Golf Club, continuing their dominance on home soil in this biennial event. The Americans haven’t won on this continent since 1993 and have more broadly watched as their counterparts have come to own this competition: Europe has now won eight out of the last 11 Ryder Cups.

“At one point I was looking at the board trying to figure out how we get to 14.5 points,” European captain Luke Donald said. “But in the end, we got there easily.”

How Europe eventually clinched was peculiar. The deciding moment came when Rickie Fowler conceded a putt to Englishman Tommy Fleetwood on the 16th green—a decision that quickly drew scrutiny given the stakes. That didn’t matter to the jubilant fans here, whose supercharged energy went up another notch. One gray-haired fan celebrated by taking a plunge into one of the ponds on the course.

Down by five points entering Sunday, the U.S. needed the biggest final day comeback ever in order to win. There were moments when that didn’t seem entirely unreasonable, as a half dozen of Americans charged ahead in their matches while others were tied. Until late, a draw was also in play and that practically would have been a win for the visiting side. In the case of a tie, the team that last won the Ryder Cup—in this case, that was the U.S. after its big win in 2021—retains it.

“I couldn’t believe what we were seeing on the board, to be honest,” Irishman Shane Lowry said. Those last couple of hours were probably two of the most stressful hours on the golf course I’ve had.

But the Americans failed to capitalize on the opportunities that they needed to convert on to pull off something improbable. World No. 1 Scottie Scheffler, in the opening pairing against Spanish golf star Jon Rahm, grinded his way back from two down and was ahead heading into the 18th hole. Yet when Rahm’s putt from 90 feet away gave him a mere tap-in for birdie, that left Scheffler needing to chip-in from a short distance away to maintain his lead.

Instead, Scheffler’s ball scooted right of the hole, delivering Rahm a draw that felt like a win for Europe, which needed only four of 12 points going into the day to prevail. Once Englishman Tyrrell Hatton topped British Open champion Brian Harman, Europe had 14 of the 28 points and the Americans’ only option was to do something distinctly European: play for a draw.

But after Fowler went into the water on the short par-4 16th, while Englishman Tommy Fleetwood drove the green, Fowler eventually conceded the hole. The Europeans could safely say veni, vidi, vici.

The Americans ultimately doomed themselves on the first day of the event with a performance that was nothing short of a disaster. They didn’t win one of the eight matches, allowing Europe to race out to an early five-point lead that ultimately proved insurmountable.

Europe built on that lead early on Saturday, but the Americans soon had their first burst of hope when they won three out of the four afternoon matches. That’s also when tensions flared inside the ropes and spilled into the parking lot.

In the final four-ball match of that day, Cantlay sunk a long putt on the 18th hole to deliver the U.S. a dramatic, comeback win over a pairing including McIlroy, sending the American team and its fans into a frenzy of hat waving. (Cantlay said the U.S. hats didn’t fit him, and that an unsubstantiated report that claimed he was not wearing a hat over compensation was completely false. He didn’t directly answer whether it had to do with not wanting a tan line when he gets married on Monday.)

Those celebrating included Cantlay’s caddie, Joe LaCava, whose antics got in the way of McIlroy, who still needed to putt. McIlroy could be seen asking LaCava to move before the two got into it, and soon Lowry was shouting at the caddie.

That wasn’t the end of it. Later, video showed McIlroy shouting and pointing in the direction of Justin Thomas’s caddie before McIlroy was restrained by Lowry and got into a car.

“He was just the first American I saw after I got out of the locker room,” McIlroy said.

Everyone leaned into the controversy on the final day. European fans mocked Cantlay relentlessly. U.S. fans embraced it and chanted “no hat Pat!” Some American players, including Justin Thomas, played hatless like Cantlay. After holes during his win against Austrian Sepp Straka, Thomas celebrated by pretending to tip a cap that wasn’t on his head.

And players on both sides said the incident motivated their teams.

“We needed to rally around something,” Scheffler said.

“I let it fuel me,” McIlroy said after he beat Sam Burns on Sunday.

But even though the Americans showed pluck in the singles matches, there was no overcoming how their star players were utterly dominated over the first couple of days. Scheffler finished without having won a match while suffering the most lopsided defeat in the event’s history. That happened on Saturday morning when he and Brooks Koepka lost to Norwegian Viktor Hovland and Sweden’s Ludvig Aberg down by nine with seven holes to play. Afterward, television footage showed Scheffler appearing to wipe away tears.

Although some Americans such as Homa and Cantlay, who both won on Sunday delivered strong performances, the U.S. ultimately got clobbered by Europe’s stalwarts. McIlroy’s win on Sunday gave him an event-leading four points. Hovland also won his singles match, giving him 3.5 points. Rahm had two wins and two incredible draws—both in matches against Scheffler where he won the final hole to earn the half point.

The defeat will lead to inevitable soul searching for the Americans about why they lost an away Ryder Cup yet again. Captain Zach Johnson indicated after their early struggles that there was an illness running through the team.

Whatever the reason, the U.S. still hasn’t won a Ryder Cup on this continent in 30 years. And now it will be at least another four more.

A big bet by CEO Patti Poppe to put thousand of miles of power lines underground risks rejection by regulators

Patti Poppe has staked her legacy at California utility PG&E PCG -0.92%decrease; red down pointing triangle on a pledge to bury power lines to reduce wildfire risk. Now, her plan is in jeopardy.

Poppe, who became chief executive in 2021 following a series of deadly wildfires ignited by the company’s equipment, said PG&E would bury 10,000 miles of power lines to stem the risk of them sparking wildfires.

She began appearing on TV commercials and social media to make the case that spending billions of dollars on the effort was necessary.

Two years later, California regulators are likely to significantly restrict the number of power lines PG&E can bury in the coming years in favor of other ways to reduce fire risk. They argue that the burial process, known as undergrounding, is too expensive when customers are paying larger bills as a result of inflation and other investments to bolster the power grid.

Poppe is making a last-minute effort to save her pledge, openly challenging regulators weeks before they are expected to make a final decision on the company’s proposed undergrounding investment, which it says would add, on average, $3.40 to a typical residential bill each month through 2026.

“I made a promise: We’re going to make it safe,” Poppe said in an interview. “There are lots of places where we can and will work on affordability, but having a compromise on safety and a willingness to accept risk at a $3.40-a-month cost seems dangerous to me.”

In total, PG&E has proposed spending $5.9 billion to bury roughly 2,000 miles of power lines between 2023 and 2026, the first step in Poppe’s broader plan. Underground lines pose almost no fire risk. Burying 2,000 miles of lines would reduce wildfire risk in high-threat areas by up to 20%, the company says.

But the California Public Utilities Commission is considering two modified proposals that would reduce costs, allowing the company to bury either 200 miles or 973 miles of lines between 2023 and 2026. Each proposal directs the company to insulate the remainder with material that would reduce, but not eliminate, the risk of them sparking wildfires. If approved, the proposals would imperil the 10,000-mile goal.

PG&E’s spending plan, all of which would be paid for by customers, is part of a larger proposal by the company that would add, on average, a total of $44.26 to residential bills each month over the four-year period. The CPUC proposals seek broad cost-cutting in the spending plan.

PG&E’s request comes as utilities across the country propose record capital investments to replace aging equipment, prepare for a surge in power demand driven by electric-vehicle adoption and strengthen their systems to withstand severe weather linked to climate change. Edison Electric Institute, an industry trade group, expects that utilities will invest roughly $168 billion in 2023 and $167 billion in 2024, more than any year since 2000, when the group began tracking the data.

The sharp increase in spending has sowed concern among regulators about customers’ ability to foot the bill as the prices of other goods and services escalate. The pressure is particularly acute in California—where utility rates are among the highest in the country—as the state pursues ambitious carbon-reduction targets that require substantial investments.

“We really feel that both of the proposals prioritize the investments that California needs,” said CPUC Executive Director Rachel Peterson. “There’s a lot in there that will aid in the overall decarbonization that California is on the path to accomplish. Both also set out a pathway for the long-term critical investments in PG&E’s system.”

Neither proposal pending before the CPUC would prevent PG&E from seeking to bury more lines in the future, and the agency is working to establish a program to expedite undergrounding efforts as part of a state law implemented last year. But both proposals would likely result in PG&E burying far fewer than 10,000 miles in total, because some of the lines it seeks to bury would instead be insulated, and a narrower scope of undergrounding work could affect its ability to scale the program.

The Utility Reform Network, a consumer advocacy group known as TURN, has argued in support of the plan that allows PG&E to bury 200 miles of power lines and insulate the remaining 1,800 at an estimated cost of about $2.1 billion. The group contends that insulating a mile costs about $800,000, while burying a mile costs about $3.3 million.

TURN has argued that by using insulation in conjunction with other technologies, the company can reduce fire risk at a similar level to what it outlined in its undergrounding proposal.

“Undergrounding has been laid out as a solution because, I will admit, it reduces a lot of wildfire risk,” said Katy Morsony, a staff attorney for the group. “However, it also comes with an extraordinary price tag, and we have to look at what customers are already facing in their utility rates.”

PG&E, like many other utilities, once considered undergrounding prohibitively expensive. It now argues that undergrounding, though expensive upfront, is the most cost-effective means of risk reduction long term because it will allow the company to spend less on maintenance and trimming or removing trees that could strike power lines. Burying 2,000 miles of conductor would ultimately save nearly $5.7 billion, the company says.

“I did it myself as a utility executive—we told everyone it was too expensive,” Poppe said. “We have to unteach them, and show them how the map has changed because the conditions have changed.”

The company says undergrounding will also curb power outages by reducing the need for technology that causes power lines to shut off on contact with trees and other objects, as well as proactive shut-offs when winds pick up, which creates higher fire risk.

After more than a decade at General Motors, Poppe headed a Michigan utility before becoming CEO at PG&E in January 2021. The company was in turmoil following wildfires that killed more than 100 people and destroyed more than 15,000 homes in Northern California, including the 2018 Camp Fire, which killed 84 people and destroyed the town of Paradise.

PG&E emerged from bankruptcy court months before Poppe’s arrival with a reorganization plan that involved paying $25.5 billion in wildfire-related claims.

In July 2021, a tree fell on a small power line not far from Paradise, igniting what became the second-largest wildfire in California history. It was then that Poppe made an executive decision. She traveled to Butte County, where the fire was blazing, and announced the company’s 10,000-mile plan.

It was a big bet: The company hadn’t yet had a substantive conversation with CPUC about its change in strategy. Weeks earlier, the company had submitted a spending plan to the agency that proposed burying only 200 miles of lines between 2023 and 2026.

Regulators have expressed doubt about PG&E’s ability to complete the undergrounding work at the speed and scale it has proposed, as well as its ability to significantly cut costs. The company is targeting roughly $2.8 million per mile by 2026.

Poppe says PG&E needs to invest heavily up front to line up labor and achieve economies of scale necessary to hit the 10,000-mile goal. The CPUC’s spending proposals, she said, reflect a “fundamental misunderstanding” of the long-term affordability of the plan.

“I have never publicly spoken out against a regulator like this, ever,” Poppe said. “There is so much at stake.”

The active giant turned in a quarter that showed better traction and kept analysts at bay, but the CEO is looking at the long game.

Shares of the active leader jumped up 6.7 percent to $95.62 on Friday as the company topped profit expectations for the first quarter and showed that it continued to keep inventory in control as it seeks to balance its wholesale and direct businesses.

Diluted earnings came in at 94 cents a share, well above the 76 cents analysts projected, according to FactSet. Sales rose 2 percent to $12.9 billion, less than the $13 billion Wall Street had penciled in.

Ike Boruchow, an analyst at Wells Fargo, summed it up as: “Good, not great…but good enough.”

“The quarter itself was OK — but consider[ing] where sentiment had drifted, we’d call it a win,” Boruchow said. He pointed to the direct business’ growth of 6 percent to $5.4 billion, as a reflection of Nike brand strength, although comparisons against last year will continue to be “lumpy.”

“We remain patiently optimistic as we see cost pressures fading as inventory dynamics normalize,” the analyst said. “Cost inflation/North American wholesale remain headwinds, but this should subside in the second half and we see material bottom-line growth into fiscal year 2025.”

Nike is playing the short game and the long game, trying to gain share today while laying the groundwork for continued growth down the line.

“We have a saying here at Nike,” John Donahoe, president and chief executive officer, told analysts on a conference call. “There is no finish line. We never settle. We always measure ourselves against our full potential. Nike has always been synonymous with sport. We’re at our best when we deliver breakthrough ideas by lining up innovative product with distinctive storytelling delivered through differentiated marketplace experiences. And when we do it well, we expand and grow the market.”

Nike has already done quite a bit.

Revenues last year topped $51 billion, with apparel accounting for $13.8 billion of that, or 27 percent. Since 2019, the company has added about $12 billion in sales and, even with stock declines earlier in the year, still has a jaw-dropping market capitalization of nearly $150 billion. That makes the stock worth something like three Lululemon Ahtleticas and around 50 Under Armours.

Apparel weaves in and out of the strategy, which, of course, is shoe-centric. Zenvy, Go and Universa — Nike “statement” leggings all — got a shout-out on the call for posting double-digit growth in the quarter. Ditto for the brand’s latest Tech Fleece.

Like LVMH Moët Hennessy Louis Vuitton in luxury or Walmart Inc. in the mass market, Nike has scale on its side as it looks to keep expanding.

And to listen to Donahoe tell it, the brand — despite the inventory concerns or weakness in North American wholesale — the company has much larger trends at its back.

“The definition of sport is expanding,” the CEO said. “And so with the movement toward health and wellness and fitness and new big areas of movement like dance, one of my favorites — we’ve had a lot of interaction with breakdancing in the last three months here on [the Nike] campus, seeing some of the elite breakdancers who will compete in the Paris Olympics coming. But dance throughout Asia and other places is a huge market. So we just see an expanding definition of sport where movement has become sport, and we’re at the center of that.

“The movement toward athleisure, right, there doesn’t need to be a trade-off between what you wear on the pitch and at work between comfort and performance and style,” he said. “Athleisure combines all of those, and we are very well positioned to continue to drive that trend.”

Wall Street is watching to see just how close Nike can come to Donahoe’s target, the company’s “full potential.”

Next time you try to wipe a smudge off your iPhone screen, take a closer look. See if you can spot one of the two tiny QR codes etched into its glass.

Chances are you won’t be able to find them. Both codes are tiny—one is the size of a grain of sand and can only be seen with special equipment, while the other, roughly the size of the tip of a crayon, is laser-printed on the reverse side of the glass somewhere along its black border or bezel. The codes are placed on the glass at different stages of manufacturing to help Apple track and reduce defects. They represent the company’s obsessive attention to detail in manufacturing devices such as the iPhone, which has helped it squeeze costs in a traditionally low-margin business.

• Two tiny barcodes on the cover glass of iPhone help Apple track defects

• Apple struggled to get clarity on glass defect rates from suppliers

• Newest bar code has saved Apple hundreds of millions of dollars

“Apple has been granularly and singularly tracking many components in the iPhone for some time, but expanding that to the glass and doing it with a microscopic bar code is another level of obsessive attention to detail that few companies would do,” said Kyle Wiens, CEO of iFixit, a popular Apple gadget repair site. “I’ve never heard of serial numbers on the glass level, but if you’re throwing infinite money at improving your manufacturing knowledge, then why not?”

Apple added the smaller of the two QR codes—0.2 mm in width—to iPhone screens in 2020 so it can track precisely how many usable cover glass units its two Chinese suppliers, Lens Technology and Biel Crystal, are making and how many defective cover glass units they are throwing away during manufacturing. Lens and Biel have previously stymied Apple’s efforts to learn the true rate of defects, which can raise its production costs. Apple has paid millions of dollars to install laser and scanning equipment at Lens and Biel factories to both add the microscopic QR code and scan the cover glass at the end of the production process.

Apple, Lens and Biel didn’t respond to requests for comment.

That subsurface bar code, which comprises a matrix of 625 uniquely positioned dots, is embedded with tiny lasers and scanned with high-definition lenses that magnify its image, according to two people familiar with the matter. It isn’t in the same spot on every iPhone, although it was located just below the speaker receiver hole on the iPhone 12 and somewhere inside the black frame at the bottom edge of the screen in some later models, the people said.

Apple has long kept track of components such as metal parts in its supply chain using tiny printed bar codes to help it identify the source of leaks or trace the cause of defects. But developing the technology for the microscopic bar code was particularly complex. Initially the bar code, which is embedded with lasers inside the glass rather than on its surface, weakened the screen. In drop tests, for example, any crack in the iPhone’s cover glass would often originate from where the subsurface bar code was placed.

To prevent that from occurring, Apple engineers had to make sure the bar code wasn’t etched either too deeply or too shallowly beneath the glass’s surface. The company had to devise new techniques to scan the barcode, which involved pairing special microscope lenses with ring lights.

The work paid off. Before Apple introduced this bar code into iPhones, Lens and Biel had to toss out as many as three out of 10 pieces of iPhone cover glass because of defects, even late into mass production, when they had supposedly worked out manufacturing kinks. Since then, the number of errors has fallen to fewer than one in 10, according to one person with direct knowledge of the matter. Lower defects reduce the overall cost of making the component. Apple has saved hundreds of millions of dollars a year as a result.

The addition of the microscopic barcode highlights the complexities involved in making iPhone screens, which are actually two components—the cover glass and the display—joined together.

Apple contracts with several companies in at least four countries to handle the work. Corning, for example, makes the material used in cover glass in places including South Korea and Taiwan. The U.S. firm then ships the glass in large sheets mainly to Lens and Biel, whose factories in China are responsible for transforming the raw glass into the form-fitting screens that go on top of the iPhone’s displays. The two firms cut, grind, polish and chemically strengthen the glass, and add black ink to its border and hole- and pill-shaped cutouts, where the iPhone's front camera and sensors go. The smaller bar code is added at the beginning of this process to keep suppliers honest about their production levels.

The second, larger bar code on the cover glass tracks the units as they move further down the supply chain. It is added just before shipment of the finished cover glass to places such as Vietnam, where companies including Samsung and LG install it on top of displays they have made for the iPhones. From there, the screen goes back to China, where Foxconn and other vendors add the iPhone’s multiple sensors and front camera behind the screen’s cutouts. Apple relies on the second bar code to determine which supplier—Lens or Biel—is responsible for causing any defects that occur during screen assembly.

Cost of Innovation

Complaints about overheating in Apple’s newest iPhones, the 15 Pro and 15 Pro Max, which have spread across social media this week, are a reminder of the enormous complexities involved in making modern smartphones. Some observers attribute the overheating to the fact that Apple is using titanium—a new material designed to make the phones lighter—rather than steel in the top-tier version of the iPhone 15. The lesson is that every innovation has its drawbacks, something Apple has also found with the iPhone screens, which it regularly redesigns.

Former Apple employees said the brittleness of cover glass means it has one of the highest rates of defects—or lowest yields, in manufacturing parlance—of any iPhone component. When Apple introduced the iPhone X—a model that came with a completely redesigned screen—in 2017, Lens and Biel were initially throwing out one of every two pieces of cover glass they produced because of defects, which had become more noticeable due to the new model’s sharper displays. That meant the two firms were charging Apple more for production, given how expensive it was to make one usable piece.

Although these suppliers have an incentive to overstate the defects they’re encountering to pad their costs, they also don’t want Apple to order more of the cover glass from the other, which it might do if either producer is struggling with low yields. As a result, the manufacturers sometimes fudge the absolute number of glass screens they make. In 2018, for example, Biel overstated how much usable cover glass it produced for Apple, according to a former Biel employee. Apple dispatched two of its own employees to physically count the number of glass screens in a Biel warehouse, only to come up short of Biel’s claims, the employee said.

Apple has since tried other methods to check whether Lens and Biel are accurately reporting their production. At one point, it proposed weighing the raw glass coming in from Corning and others against the final weight of cover glass produced by Lens and Biel, one former Apple employee said. However, representatives from Lens and Biel objected to the practice, saying the grinding and cutting of glass during production produced enough waste to make the comparison meaningless, the former employee said.

Now Apple uses the equipment it installed in Lens and Biel factories to scan every piece of cover glass after it is cut, ground, polished and chemically strengthened. Uploaded and recorded on Apple’s servers, the data allow Apple to identify which company made the glass and on what day it was produced. This helps Apple keep tabs on the Chinese manufacturers’ production levels and yields.

By revealing their true yields, Apple has been able to exert pressure on Lens and Biel to reduce their prices, saving money for the iPhone maker while also cutting down on waste. Apple accounted for 71% of Lens’ $6.4 billion in revenue in 2022, according to Lens’ regulatory filings. (Biel is private and doesn’t disclose its finances)

Apple first added the subsurface bar code to the Apple Watch Series 5 in 2019 as part of a broader effort companywide to reduce costs. Rob York, an Apple vice president of manufacturing design, led the initiative. Early in his career, York worked in the auto industry, which tracks components closely due to the possibility of safety recalls. Adding the code to the Watch was easier because of its smaller display size and thicker glass. Within the next 12 months, Apple added the code to the glass screens of the iPad and MacBook before it made its way to the iPhone, Apple’s most profitable and highest-volume product, two former Apple employees said.

Defense tech is no longer a hard no

Defense company Anduril was once described as “tech’s most controversial startup.” But that hasn’t stopped it from raising a massive $1.48 billion Series E round of funding last December, which is presumably fueling its recent acquisition spree. Its latest deal is the takeover of Blue Force Technologies, the design and engineering firm behind the “Fury” unmanned fighter jet.

Anduril is more than a counterpoint, though. It is symbolic of a trend in which defense tech and venture capital dollars are no longer antithetic. As my TechCrunch colleague Aria Alamalhodaei noted:

“Anduril’s success has flown in opposition to the long-dominant perspective that defense tech is ill-suited for venture dollars. Such success stories, combined with rising geopolitical tensions and a sea change inside the Pentagon itself, has meant that more startups than ever before are actively seeking to work on tech at the intersection of national security and commercial — and more investors are willing to fund them.”

Shares of Nike and its peers rose Friday after earnings from the maker of athletics gear relieved concerns about discounting. It’s a much-needed boost for Nike and the sportswear sector overall.

Nike (ticker: NKE) stock was up 7.5% at $96.39 in trading Friday after giving better-than-expected guidance alongside its first-quarter earnings. The gains put the stock on pace for its biggest increase since December last year.

The stock had been down 23% this year so far as of Thursday’s close as the company struggled with concerns over a slowdown in China and elevated inventory. The report came after the bell.

“A big sigh of relief will be the likely investor reaction,” wrote Jefferies analyst James Grzinic. He said key positives were Nike’s falling inventory and maintained guidance for growth in sales and an improved gross margin.

“Other interesting flags include a call-out around a ‘highly promotional’ Chinese environment which did not prevent an improvement in full price sales,” Grzinic said.

Jefferies has a Hold rating and $100 target price on Nike stock. Nike was a Barron’s stock pick earlier this year.

The whole athletic-gear sector rose after Nike’s report. On Holding (ONON) was up 7.5%, Foot Locker (FL) rose 2.8%, Under Armour (UA) rose 4.9%, Skechers USA (SKX) was up 3.6%, and Dicks Sporting Goods (DKS) rose 1.5%.

Nike’s European rivals Adidas (ADS.Germany) and Puma (PUM.Germany) climbed 7.1% and 7.8%, respectively.

While analysts acknowledged Nike’s outlook offered some relief against a tough backdrop, they weren’t uniformly betting on the rally to continue.

The performance was good enough to convince CFRA Research analyst Zachary Warring to raise his 12-month price target on the stock to $91 from $88 but keep a Hold rating on Nike. He said that at 25 times its forward earnings per share, it looks to be trading at a fair multiple.

Future sales in North America were an issue for a number of analysts, with concerns about the resumption of payments on student loans possibly holding back spending on clothes and sneakers.

“Recovery in the back half remains intact, for now, though growth in North

America is likely to remain challenged as we lapse two strong quarters of growth from 2Q/3Q 2023. Additionally, we believe that Greater China improvements are to remain muted in the near term due to ongoing foreign exchange headwinds,” KeyBanc analyst Ashley Owens wrote.

Owens kept a Sector Weight rating on the stock without a price target.

Seaport Research analyst Mitch Kummetz kept a Neutral rating on the stock with no price target, arguing the company still looks to be losing market share in running shoes to HOKA –owned by Deckers Outdoor (DECK)– and privately owned New Balance.

For a bullish take, investors have to look further out and have confidence Nike meets its guidance for the second half of its fiscal year.

“We believe the stock can rise further if it becomes clear Nike can achieve its Q2 revenue guidance. If this happens, we think the narrative around the stock will change,” UBS analyst Jay Sole wrote.