WWD : The Return of Physical Fashion Rentals in L.A.

The Return of Physical Fashion Rentals in L.A.
“We're if Soho House, Barneys New York and Blockbuster had a baby," said Max Feldmann of Wild West Social House — a new, membership-based concept shop in West Hollywood.

Experiential fashion retail is nothing new. But Max Feldmann and Kyle Julian Skye are bringing it to the rental space — and IRL.

“We’re not just an archive house,” said Feldmann, former men’s buyer at Fred Segal. “We’re if Soho House, Barneys New York and Blockbuster had a baby.”

The duo — behind vintage platforms Recess Worldwide and Middleman Store, respectively — teamed to open a physical rental business in Los Angeles in 2023: Wild West Social House. Located in West Hollywood, it’s a membership-based concept offering services like delivery, pickup and same-day tailoring. There’s a social element, too, with a rooftop for hangouts, and they’ve partnered with neighboring Dialog Cafe for drink and food orders.

“We just kind of want to return to the actual luxury experience of making a day out of going to a store and enjoying it and being able to soak up some sun on the roof,” said Skye. “And being able to eat or have a bite with your friends and catch up and then come down and look through your clothes and just bring that kind of slower, more, you know, consumer-tailored vision to a boutique.”

They currently have more than 50 members, catering to professional stylists, celebrities and fashion lovers, with a small waitlist joining at the end of January. Both Feldmann and Skye have an eye for curation, bringing together a globally sourced selection of specialty items; pieces, which are also available for purchase, include finds like a silk embroidered “Life is Pain” top from Alexander McQueen’s fall 1996 “Dante” collection and ’70s “Punk Gang” muslin shirt by Vivienne Westwood.

Membership has three tiers: $299 a month for six items (up to three items per pull, or $3,000 in total value) for three days, $499 a month for 12 items (up to four items, or $4,000, with free delivery and pick-up in L.A.) for four days, and $999 a month with no limit on items (up to 15 per pull, both accessories and shoes included) for 10 days, with all services including temporary tailoring.

They plan to launch an app that would allow members to track their rentals, new in-store arrivals, order the services, and so on.

“You’d log in as a member, and we’d already have all of your sizes,” explained Feldmann. “We have your clients’ sizes, and so you’re actually able to filter in size and you’re not going through thousands of pieces. You’re really just going through sizes that would potentially work for you or your clients.”

“We consider this a million-dollar wardrobe for less than the price of a Prada T-shirt,” added Skye.

For Janet Mandell, business began in Chicago in 2018 and she’s grown to expand to L.A. and New York in 2023.

“I don’t follow trends,” said Mandell, whose L.A. showroom is on North La Cienega Boulevard, south of Santa Monica Boulevard. “I do follow the color palettes. And I do follow what people are buying, but that doesn’t necessarily relate to what we buy. I guess our focus is really vintage and eveningwear.”

On a busy day, L.A. brings in about 10 clients a day. The assortment is high-end, from Chanel to Oscar de la Renta, with contemporary brands like Acne and Dries Van Noten. While Chicago seeks more conservative looks — gowns for galas, mostly — in L.A. “it’s all about cutout. It’s all about showing skin,” Mandell went on. “It’s mostly celebrities that come in, stylists. We do cater to a lot of influencers, style-makers, socialites. A lot of girls in L.A. want over-the-top vintage gowns or, you know, something that’s sexy.”

Pricing starts at $300 for a four-day rental, with shoes at $150. There’s an additional showroom fee of $75 an hour and a $50 non-refundable styling fee.

“Because of COVID[-19], everybody wants to get more glammed up and dressed up than they usually do,” Mandell said of clients. “They want to really make a statement. They don’t want black. They really want colorful, outstanding pieces.”

She hopes to open in Miami this year and Dallas in 2025.

“I would say my exit plan is 10 years, and I would love to sell to a big conglomerate fashion house, whether it be Kering, LVMH,” she said. “I do have an exit plan.”

L.A. native Haile Lidow of Lidow Archive has a passion for vintage — no matter the designer name. She gravitates toward the fantasy.

“I do kind of err on the side of more like kooky and eccentric,” she said, accumulating nearly 9,000 pieces.

Her showroom is in the hills of Los Feliz, where regulars have been celebrity stylists, costume designers and photographers. She’s currently focused on attracting a new clientele: “I would really like to also just work with people who are going to events, going to weddings, just love clothes and want to have things fun to wear that they know that they don’t need to buy because they only want to wear it to one thing.”

Lidow Archive has become the go-to destination for unique finds — which have found themselves on the likes of Rihanna, Beyoncé and Miley Cyrus on the stage, music videos, red carpets and photo shoots. Prices range from $40 to $1,300 an item (the latter being a Gucci by Tom Ford spring 2000 one-shoulder rhinestone dress), with a $250 rental minimum per pull.

“I remember seeking out things and saving up to buy them when I was, like, 11,” said Lidow, who has a background in both fashion at Vogue and public relations at Black Frame. “And, you know, I still have them in the archives now.”

Her latest obsession? “I’ve been really, really into suits and matching sets. I’ve been looking for 1970s three-piece suits,” she said.

An item she’s particularly known for is the sky-high Marc Jacobs “Kiki” platform, found in many styles and colors. “I really love collecting.”

WWD : Central Retail Could Take a Larger Slice of Selfridges Following Signa’s C

Central Retail Could Take a Larger Slice of Selfridges Following Signa’s Collapse
The Thai retail group, which already has a majority stake in the operating company that controls Selfridges, could take control of the retailer's property division following the collapse of its JV partner Signa.

LONDON — Central Retail will invest further in the British department store only if the conditions are right, the company said in a filing to the Stock Exchange of Thailand.

Central Retail is the publicly traded division of Central Group, the majority owner of Selfridges, which it purchased two years ago alongside the troubled property giant Signa Holding.

On Friday, Central Retail said it would assess future investment opportunities based on “strategic fit, appropriate pricing and optimal timing.”

The company, which is thought to be mulling a further investment in Selfridges, said any business venture “must contribute positively to the interests of the company” and all shareholders.

Central clarified its position following speculation in the U.K. media that it might buy Signa’s remaining stake in the store.

Two years ago, Signa and Central joined to acquire Selfridges for a reported 4 billion pounds. They each took a 50-50 stake in the retailer, which they split into two businesses, a property one and a retail one. The latter pays rent to the former.

As reported last week, Signa Prime Selection AG, which has stakes in retailers including Selfridges, KaDeWe, and Karsdadt, has filed for bankruptcy and submitted its restructuring plan to a Vienna court.

After Signa’s troubles surfaced, Central took control of the operating company that oversees the Selfridges stores in the U.K.; Brown Thomas and Arnotts in Ireland, and De Bijenkorf in the Netherlands, which are all part of the Selfridges Group.

Central has said that “regardless of the position of our JV partner,” it is committed to supporting all of its European luxury stores. “We will ensure that they have all the backing they require to continue to operate as normal.”

The property company which owns the Selfridges’ Oxford Street and Manchester Exchange stores is still 50-50 owned by Signa and Central. It is understood that Central still has to decide whether it will take full ownership of that company following Signa’s insolvency.

Separately, earlier this week Fitch downgraded Signa’s Development division to “D” from “C” following its declaration of insolvency in Vienna in late December.

Fitch said Signa’s “constrained liquidity, including nonpayment to suppliers, caused a halt to some of its development projects. This has led to contagion effects on other Signa entities including Signa Development.”

Fitch noted that Signa Development plans to continue operations and repay its debt according to its presented restructuring plan, which is scheduled for approval at its creditors’ meeting in March.

The Information : Apple, iMessage and Antitrust

Apple, iMessage and Antitrust

Here’s a question: How much would Apple suffer if it opened up iMessage to Android? The widespread assumption—including within Apple itself—is that by removing a major impediment to people using Android, such a move would boost sales of the devices based on the Google operating system, at the expense of the iPhone. But that may not be as true as it was in the past. Consumers’ attachment to their iPhones is now so strong, and the array of devices of a similar quality is so limited, that the long-term impact on sales may prove to be much less than people think.

This may become more than just a thought experiment, given the growing signs that Apple’s iMessage lockdown could be the focus of a government antitrust lawsuit. On Friday The New York Times reported that the Justice Department is nearing the conclusion of a long-running antitrust investigation into Apple. Among the issues under scrutiny, The Times reported, is how Apple uses iMessage to keep competitors at bay. This has been a hot issue lately: Apple’s recent actions to block an app by the startup Beeper, which offered Android users an iMessage workaround, sparked calls for antitrust action from lawmakers last month.

Whether Apple would lose such a case is, of course, far from certain. It’s not exactly clear that Apple is doing anything illegal by keeping iMessage for its own products: After all, Apple created the iPhone and iMessage. It shouldn’t be punished because those are popular services. It may not seem fair that Apple doesn’t allow iMessage to interoperate with Android, but businesses don’t have to play fairly. If you don’t like the iPhone, you can use an Android happily: You just can’t get the benefits of iMessage. The same holds true for other things Apple does that the DOJ is reportedly investigating, such as ensuring that the Apple Watch works better with the iPhone than other, non-Apple devices do.

Even so, a lengthy antitrust lawsuit wouldn’t be great news for Apple. It would create uncertainty and distraction for management, among other things. Perhaps Apple should examine how much of a business impact it would really suffer by opening up iMessage, if doing so could short-circuit a lawsuit. In fact, by putting the phone on a level playing field with Android as regards services, Apple could demonstrate the true superiority of its device.

CrunchBase : 15 Companies We Think May Actually, Really, Finally, Maybe Go Publi

15 Companies We Think May Actually, Really, Finally, Maybe Go Public In 2024

Will 2024 be the year IPOs finally come roaring back, after a more than two-year lull? That seems unlikely, but then again, all venture-backed startups have to exit sometime, so at least some companies will likely decide to head to the public markets this year.

With that in mind, we once again offer up some ideas for companies we think would be top contenders when the public markets eventually reopen for new tech listings.

Enterprise tech and cybersecurity
Arctic Wolf: Late in 2022, the Eden Prairie, Minnesota-based cybersecurity company raised $401 million in convertible notes led by existing investor Owl Rock Capital. Convertible notes work like a short-term loan, but these notes are repaid to the investor at a later point in equity — i.e. after an IPO — typically at a discount. However, there has to be an event to turn those notes to equity. That’s why we’re thinking after more than a year, maybe it’s time for the managed security provider to test the public market waters. Arctic Wolf is seasoned — it was founded in 2012 — and in July 2021 raised $150 million in a Series F, which took its valuation from $1.3 billion to $4.3 billion. At that time, then-CEO Brian NeSmith said an IPO was likely the next logical move. However, maybe that’s the problem — those valuations from 2021 are hard to reconcile now.
Databricks: If we keep putting Databricks on this list, eventually we’ll be right. In all honesty, we kinda doubt the San Francisco-based data and AI company will see an IPO in 2024. The simple reason is: it just doesn’t need to do it. The 10-year-old company has more than enough investors willing to support it in the private market, and who would go public when they don’t have to? But maybe this is a good time for an AI-related company to go public while investor appetite is there. The company hit a $43 billion valuation after raising a $685 million — per a filing — Series I led by funds and accounts advised by T. Rowe Price Associates in September. The company talked about surpassing a milestone of $1 billion in annual revenue this summer and has in the past hinted coyly at a potential IPO. It also just made a huge acquisition this year, buying OpenAI competitor MosaicML for $1.3 billion. Databricks has significant investors to eventually appease — the company has raised more than $3.5 billion, per Crunchbase — as well as deep technology, as it creates tools and products to help companies view both structured and unstructured data in a single location without moving between different systems. Maybe 2024 will be the year.

Rubrik: This one may be a layup, but we’ll see. In September, Bloomberg reported cloud and data security startup Rubrik was interested in going public as early as the fourth quarter of 2023. That would make sense. The company is nearly a decade old and has raised significant cash from the likes of Microsoft, Bain Capital Ventures and Khosla Ventures. Last January, the company also reported it had surpassed $500 million in software subscription annual recurring revenue and appointed Mark McLaughlin, former Palo Alto Networks chairman and CEO, to its board of directors. Expanding your board with those that have knowledge of how to run a public company and hitting milestones can sometimes point toward an IPO.

ServiceTitan: The cloud-based software provider for residential and commercial HVAC, plumbing, electrical and other field-service businesses has been rumored to be sniffing around the public markets for a while now. In September of 2021, Reuters reported the company was talking to investment banks and law firms for a potential IPO. Months before that, it raised a $200 million round led by Thoma Bravo at a $9.3 billion valuation. The 11-year-old company has other big-name investors, including Sequoia Capital and Tiger Global Management, which has helped it raise about $1.1 billion, per Crunchbase. Those investors likely eventually want some liquidity back for their investment. ServiceTitan also is not getting any younger, being founded in 2012 and in the last few years it has made a handful of acquisitions — which can often be a lead-up to an eventual IPO. Perhaps it is having a hard time living up to that 2021 valuation, but regardless, the clock is ticking.
— Chris Metinko
Fintech and banking
Stripe: As we’re out and about in Silicon Valley, we hear a lot of buzz and interest in investor circles about 13-year-oId Stripe maybe finally going public in 2024. The payments startup’s current value is $50 billion (though down from the $95 billion it saw after its Series H funding in 2021) thanks to a $6.5 billion funding it raised last year to cover early employee stock option costs. A possible clue that a long-awaited IPO for Stripe could be nigh: The San Francisco-based company brought veteran CFO Steffan Tomlinson — who had previously taken Confluent and Palo Alto Networks public — on board in September 2023.

Klarna: Buy now, pay later payment services Klarna from Stockholm is in the process of setting up a U.K. holding company, which signals a potential option to list in the U.K. However, the company says it has no immediate plans to go public. It slashed its valuation by more than 85% to $6.7 billion in mid-2022. However Affirm, a U.S. competitor, has seen its stock rise by more than 300% this year to a value over $12 billion, which one would think would at least make 18-year-old Klarna consider the public markets. And its investors, which includes Sequoia Capital, are surely looking for a payout sooner rather than later.

Starling Bank: Among the neobanks, Starling Bank in the U.K. seems to be poised to go public first, with lots of strong numbers underlying its business. The company, now on the cusp of being a decade old, posted profits of $243 million for the year ending in March 2023, growing sixfold year over year. The company received a U.K. banking license in 2016. CEO Anne Boden stepped down in May to hand the reins to COO John Mountain, who will be the interim CEO. Starling is also said to have 4 million accounts across four different account types. Other challenger banks in Europe include Revolut, Monzo, N26 and Atom Bank.
— Gené Teare
Checkout.com: The London-based company says it’s in no hurry to check out to the public markets, but if its biggest competitor, Stripe, does, maybe Checkout.com will also get in line? The e-commerce payments startup has now raised $1.8 billion from investors including Dragoneer, Insight Partners, Tiger Global and Coatue — most recently a $1 billion round in January 2022 at a valuation of $40 billion. But CEO Guillaume Pousaz told TechCrunch in December 2022 that the company had lowered its internal valuation to $11 billion. The move was to reprice shares for employees and not a downround, he said — in fact, Pousaz said then, Checkout.com was in no hurry to raise additional funding. But investors who have poured money into the now 12-year-old company surely want to get returns and liquidity some time, right? (It’s also worth noting that the company reportedly saw numerous C-suite execs depart last year and laid off dozens of employees — which could either be seen as a sign of trouble, or that the company is making the sort of cost-cutting moves public market investors might want to see.)

Plaid: This is the third year in a row we’ve put the San Francisco-based startup on this list, but this time we really mean it! Now, 11-year-old Plaid, which connects user bank accounts to fintech apps, has certainly been dropping clues about its desire to go public since a planned $5 billion sale to Visa was scrapped in 2021 following regulatory issues. Plaid CEO Zachary Perret told Fortune in November that “an IPO is certainly an aspiration” and that the company would consider either a traditional IPO or a direct listing. The same month, the company hired former Expedia CFO Eric Hart as its first chief financial officer — the sort of move that always gets tongues wagging about IPO plans. The company has raised more than $734 million from investors, most recently at a $13.4 billion valuation in 2021.
— Marlize van Romburgh
Cleantech
Redwood Materials: The battery recycling company seems to fit a lot of the criteria that public investors like. It has a prominent founder and CEO (former Tesla CTO JB Strabuel). It has attracted $1.8 billion in equity funding from high-profile late-stage investors including Goldman Sachs and T. Rowe Price. And it’s an area where, with the right technology and scaling methodology, it’s hard to envision a real cap on potential demand. With that in mind, we wouldn’t be shocked to see the 6-year-old Nevada-based company test the waters for a potential offering next year.
— Joanna Glasner
Retail and travel
Navan: Navan, formerly known as TripActions, reportedly submitted a confidential filing for a public offering in September 2022. The corporate travel and expense management software provider has yet to file publicly for an IPO, but there’s reason to believe it’ll do so in 2024. For one, the 8-year-old, Palo Alto, California-based company has raised roughly $1 billion in equity funding and $1.2 billion in debt funding over the years, with lead venture backers like Andreessen Horowitz, Greenoaks, and Coatue, who’d certainly appreciate an exit. More recently, the company laid off 5% of staff last month in a move reportedly aimed at speeding its path to profitability.

Turo: The peer-to-peer car rental marketplace sure would like to go public. It originally filed to go public in January 2022. But unlike others who relinquished IPO dreams when market conditions turned, San Francisco-based Turo is still revving to go. The 14-year-old company has consistently submitted amended filings to the SEC, including the most recent in mid-November. For the first nine months of last year, the company had $666 million in revenue, up nearly 20% from the year-ago period.
— Joanna Glasner
Shein: We have to include this one on the list, of course. In November, Shein reportedly filed confidentially for a 2024 IPO in the U.S. The Chinese fast-fashion retailer has raised some $4.1 billion from investors including Sequoia Capital China, Tiger Global Management and General Atlantic. It was last valued at $60 billion in a May 2023 funding round (though that was down more than a third from a year earlier). Shein is technically based in Singapore since it moved its headquarters there from China in 2022 in what was seen as IPO prep. Since its founding in 2008, it has shaken up the apparel industry with its low-cost clothing and other goods shipped directly to American and Western consumers from factories in Asia. Its growth has been stratospheric: It generated an estimated $23 billion in sales in 2022 and accounted for nearly one-fifth of the fast-fashion market that year. If it does go public this year, it’ll be one of the largest listings in the U.S. by a Chinese company and could well help kickstart the IPO market overall for other hopefuls.
— Marlize van Romburgh
Health tech and agtech
Strive Health: Denver-based Strive Health bills itself as a next-generation kidney care provider, with a focus on identifying conditions earlier, driving better outcomes and lowering costs. To that end, the 5-year-old company has raised $386 million to date, including a $166 million May Series C led by New Enterprise Associates. While Strive isn’t one of the “usual suspects” on IPO prediction lists, we thought it warranted inclusion due to its prodigious fundraising and fast growth, as well as because health care is an industry where it’s not uncommon to launch public offerings after a big Series C.
— Joanna Glasner

Farmers Business Network: Here’s a prediction we’re dusting off from 2022. San Carlos, California-based Farmers Business Network makes a platform that allows farmers to get up-to-date data on everything from seed selection to operations in an effort to help them minimize risk and maximize profits. The startup, which will be a decade old next year, reportedly was making moves toward an IPO in 2022. CEO Amol Deshpande told Bloomberg that year: “We’re certainly of a scale where we can IPO, without a shadow of a doubt.” Maybe this will be the year.
— Marlize van Romburgh

TechCrunch : Netflix considers adding in-app purchases and ads to games, report

Netflix considers adding in-app purchases and ads to games, report says

For two years, Netflix subscribers have been able to download tons of mobile games, all included for free with their subscription. Netflix has developed more than 75 mobile games, boasting popular IPs like Grand Theft Auto, Love Is Blind, Monument Valley and Oxenfree, among many others.

Now, Netflix could potentially be exploring ways to generate revenue from its gaming business, a recent report suggests.

According to The Wall Street Journal, the company has had discussions about how to make money from its games for months now, including in-app purchases, putting a price tag on more premium titles and placing ads on games that subscribers to its ad tier have access to. These methods are common (and effective) in the mobile gaming world, with consumers expected to spend $111.4 billion on mobile games in 2024.

Netflix declined to comment to TechCrunch.

A discussion doesn’t always lead to action, so the company may decide to pivot away from monetizing games. Netflix appeared to shut down the idea of ads and in-game payments during an earnings call in April 2023.

“We want to have a differentiated gaming experience and part of that is giving game creators the ability to think about building games purely from the perspective of player enjoyment and not having to worry about other forms of monetization, whether it be ads or in-game payment,” Netflix co-CEO Greg Peters told investors.

Plans do change, though. After all, Netflix was initially against launching an ad-supported tier and cracking down on password sharing, yet reversed its decision after losing thousands of subscribers in 2022, marking its first subscriber loss in over a decade.

Plus, the move to monetize games would make sense for the streamer since its growth stagnated at the beginning of 2023, laying off 3% of its workforce as a result. Netflix also recently increased its prices again, with the premium plan now costing $22.99 per month for new U.S. customers.

Also, Netflix posted a job listing in 2022 for a game director to work on an AAA PC game, which can be a considerably expensive project in the video game industry. The U.K. Competition and Markets Authority (CMA) reported that AAA games can have development budgets of $200 million or more. Netflix has reportedly discussed charging money for their future high-budget games, WSJ wrote, adding that analysts determined Netflix has spent approximately $1 billion on acquiring gaming studios and overall investing in its gaming business.

WSJ : Southwestern, Chesapeake Near $17 Billion Merger

Southwestern, Chesapeake Near $17 Billion Merger
Combination of natural-gas producers could come together as soon as next week

Southwestern Energy SWN 7.34%increase; green up pointing triangle and Chesapeake Energy CHK 2.91%increase; green up pointing triangle are close to a merger that would create a roughly $17 billion company ranking as one of the largest natural-gas producers in the U.S.

A deal could come together as soon as next week, according to people familiar with the situation, provided the talks don’t hit a last-minute snag.

Southwestern had a market capitalization of roughly $7.0 billion and Chesapeake’s was a little more than $10 billion as of Friday afternoon. Southwestern stock then jumped to close up more than 7% after The Wall Street Journal reported a deal is close. Chesapeake shares rose nearly 3%.

Chesapeake produced about 3.4 billion cubic feet of gas per day in the third quarter, while Southwestern produced 4 billion. The two producers combined would leapfrog rival EQT and likely become the largest gas producer in the U.S.

A merger would strengthen Chesapeake’s existing positions in the U.S. Northeast and Louisiana and allow it to further its strategy centered on exports of liquefied natural gas out of the Gulf Coast, where most refrigeration plants sit.

Co-founded in 1989 by charismatic wildcatter Aubrey McClendon, Oklahoma City-based Chesapeake was the poster child for the fracking boom, borrowing lavishly to acquire millions of acres across Louisiana, Texas and Appalachia. But a glut of supply drove down prices in the early 2010s and the company slashed gas drilling and diversified into crude.

The company was laden with debt as it entered the pandemic’s price spiral and in 2020 filed for bankruptcy.

Chesapeake reduced its debt by more than $7 billion through the bankruptcy process and prioritized returning cash to shareholders and solidifying its existing position in the Haynesville Shale, a large gas-producing region in Louisiana and East Texas strategically located close to the Gulf Coast’s LNG export terminals.

The company sold oil assets in Texas and reoriented its production around natural gas. In 2021 it acquired Vine Energy, a Haynesville driller, for $1.1 billion and the following year bought Marcellus Shale producer Chief and associated assets for about $2.6 billion.

The company has since announced a 36-month agreement to supply 300 million cubic feet a day of gas to Golden Pass LNG, an export terminal on the Gulf Coast that is due to come online in 2025. Chesapeake has also signed preliminary agreements to supply LNG to trading houses Gunvor and Vitol.

A predecessor to Spring, Texas-based Southwestern was founded in 1929 to provide natural gas to northwest Arkansas, before expanding into Oklahoma, and eventually the Appalachian Basin. In 2021, Southwestern acquired Haynesville producers Indigo Natural Resources and GEP Haynesville in back-to-back deals collectively worth around $4 billion.

The Southwestern-Chesapeake deal would be the latest tie-up in the energy industry, as investors urge producers to scale up. In October Exxon Mobil struck a $60 billion deal for Pioneer Natural Resources, followed by Chevron’s $53 billion deal for Hess.

Occidental Petroleum in December said it would buy Permian producer CrownRock for nearly $11 billion. This past week, oil producer APA said it had agreed to buy smaller peer Callon Petroleum in a deal valued at around $2.6 billion.

WSJ : Big Design-Software Companies Near $35 Billion Deal

Big Design-Software Companies Near $35 Billion Deal
Synopsys and Ansys are in exclusive talks, and a deal could come as soon as next week

Synopsys SNPS -1.10%decrease; red down pointing triangle is in advanced talks to acquire Ansys ANSS -0.02%decrease; red down pointing triangle for around $35 billion in a stock-and-cash deal that could be one of the first big transactions of the new year.

The two companies are in exclusive negotiations, according to people familiar with the matter. A deal could come together as soon as the middle of next week, granted the talks don’t fall apart.

Synopsys is discussing paying around $400 per share for Ansys.

Shares of Ansys, which have run up since news of deal talks broke in late December, closed Friday roughly flat at $344.08, giving the company a market value of about $30 billion. Synopsys had a market value of $73.7 billion at Friday’s close, with the stock ending trading down 1.1%.

Cadence Design Systems, a rival company with a market value of almost $70 billion, initially approached Ansys with an unsolicited offer for the company, thereby putting it into play, the people said.

The Wall Street Journal reported last month that Synopsys was in talks to acquire Ansys and working toward striking a deal in early 2024.

Canonsburg, Penn.-based Ansys makes software that helps predict how products will or won’t work in the real world, according to its website. It is used in the aerospace, healthcare and automotive industries, among others. The company booked revenue of roughly $2.1 billion in 2022.

Sunnyvale, Calif.-based Synopsys makes software that engineers use to design and test silicon chips used in everything from smartphones to self-driving cars and other forms of artificial intelligence. Synopsys’ customers include Nvidia, Advanced Micro Devices and Intel.

The companies have joined forces in the past. In 2017, they announced a partnership to integrate Ansys’ technologies with some of Synopsys’. It was meant to help overlapping customers of the two companies use their products more efficiently.

A deal for Ansys would also give Synopsys certain solutions around simulation and analysis that it previously wasn’t able to offer at scale, and ones that its customers require.

WSJ : Alaska Airlines Jet Makes Emergency Landing After Boeing 737 MAX Rips Open

Alaska Airlines Jet Makes Emergency Landing After Boeing 737 MAX Rips Open
Plane returned safely to Portland, Ore., shortly after takeoff; FAA is investigating

An Alaska Airlines flight made an emergency landing in Portland, Ore., Friday night after a section of the new Boeing 737 MAX ripped away in midair.

The plane, with more than 170 passengers and six crew, returned to Portland safely after experiencing an unspecified incident shortly after its departure, Alaska said. The airline said it is investigating.

“While this type of occurrence is rare, our flight crew was trained and prepared to safely manage the situation,” the airline said.

Photos and video that passengers posted on social media showed a gaping opening in the plane. Oxygen masks dangled down.

The Federal Aviation Administration said that the plane returned after its crew reported a pressurization issue. The FAA and the National Transportation Safety Board both said they are investigating.

The Boeing 737 MAX plane was certified by the FAA in November.

Boeing said it is aware of the incident and was gathering information. “A Boeing technical team stands ready to support the investigation,” the company said. A spokeswoman declined to comment further.

The Alaska flight departed shortly after 8 p.m. ET en route to Ontario, Calif., and reached a maximum altitude of about 16,000 feet before flying back to Portland International, according to aviation tracker Flightradar24. The airline used the Boeing 737 MAX-9 model for the flight, Flightradar24 said.

Two crashes of the 737 MAX in 2018 and 2019 grounded the jets around the world for almost two years. The accidents took 346 lives and drew scrutiny from federal regulators and lawmakers. Both crashes were of the smaller MAX-8 variant.

Alaska has 65 of the MAX-9 aircraft type involved in the incident Friday night, which it has said are ideal for long-haul routes with high demand. United Airlines, which also operates the MAX-9, didn’t immediately comment.

FT : Bitcoin ETFs miss the point

Bitcoin ETFs miss the point
Given existing options to gain listed exposure like MicroStrategy, the real problem is finding a use for the crypto assets

The cryptoworld has been abuzz in recent weeks about the likelihood that the Securities and Exchange Commission will soon greenlight a bitcoin exchange-traded fund.

The idea that such an ETF will soon be offered to hungry, if misguided, US investors has helped provide a year-end kicker to the remarkable rally in bitcoin from the depths of its latest “winter” in late 2022. It became one of the best performing investments of 2023, rising around 160 per cent over the past year to nearly $44,000.

That is quite a turnaround given the crypto world has been on the ropes reputationally often during the past year or so. Not only has there been the bankruptcy of crypto exchange FTX and the criminal conviction of its founder Sam Bankman-Fried, but also its chief rival Binance agreeing to pay $4.3bn in penalties related to money laundering and breaching international sanctions. That was one of the largest corporate penalties in US history. Binance founder Changpeng Zhao also pleaded guilty to failing to protect against money laundering and resigned from his position.

But if you think about it, there has already been a way for investors to play the bitcoin rollercoaster for years: by buying, or selling, the stock of enterprise software company MicroStrategy which has hitched its fortunes to bitcoin, rendering its sales of enterprise software somewhat irrelevant to its stock market valuation.

Under a strategy driven by the company’s 58-year-old, MIT-educated executive chair Michael Saylor, MicroStrategy has been buying bitcoin since 2000. “Due to its limited supply, bitcoin offers the opportunity for appreciation in value if its adoption increases and has the potential to serve as a hedge against inflation in the long term,” it said at the time. MicroStrategy is thought to be the largest listed holder of bitcoin in the world. The company owns 189,150 bitcoins, purchased over the years at an aggregate price of around $5.9bn, as of the end of December.

MicroStrategy’s software operations have brought Saylor into the regulatory spotlight. In 2000, he agreed to pay $8.3mn plus a $350,000 penalty to settle SEC charges of materially overstating software revenues and earnings. But when bitcoin was riding high, say around November 2021, when its price hit $69,000, he drew a lot of attention. He even bedazzled Tucker Carlson for more than an hour about the wisdom of the cryptocurrency before the television anchor was defenestrated from Fox.

Saylor is a true believer, and an articulate one at that. His interviews about bitcoin are lengthy and spellbinding. He speaks in complete paragraphs. You come away from listening to him convinced that bitcoin is the next great innovation in the financial world. And then, you step back, give it a thought or two and remember that Jamie Dimon, CEO of JPMorgan, said of cryptocurrency, “If I was the government, I’d shut it down.”

Saylor relinquished the role of the CEO of MicroStrategy in August 2022 to become executive chair after yet another bitcoin plunge. At the time, the company had reported cumulative impairment losses of nearly $2bn on its digital assets since acquisition.

But thanks to the run-up in the price of bitcoin in 2023, MicroStrategy’s hoard is now worth more than $8bn, giving the company a gain of some $2bn on its investment. Not surprisingly, MicroStrategy’s stock price also outperformed in 2023, up more than 330 per cent for the year. Its market value of around $8.8bn means that investors are valuing its software business at around $800mn. (That is still hefty given MicroStrategy made a small pre-tax profit of around £13mn on revenues of $371mn in the nine months to September 30, after taking into account share-based pay but excluding impairments on its digital holdings.)

So MicroStrategy is essentially a play on bitcoin and has been for years. In other words, there’s been no need to wait for the SEC to approve a bitcoin ETF, it seems to me. Saylor himself told CNBC: “We’re kind of like your nonexistent spot ETF.”

The problem with bitcoin isn’t that there hasn’t been a way to speculate on it. The problem with bitcoin is that it’s all about speculation. We don’t need new ways to speculate on the cryptocurrency. What we need, if bitcoin is going to be the saviour its advocates want us to think it is, is a use for bitcoin.

When it can be used to buy and sell the things we want, as seamlessly as fiat currency, that’ll be the game changer. The real excitement for bitcoin won’t come from the SEC authorising new ways to speculate on it, but rather when there’s more to it than just speculation.

BArrons : 2 Ugly Stocks With Upside—and 6% Yields

2 Ugly Stocks With Upside—and 6% Yields

For 6% yields, consider shares of a comatose wireless carrier and a bloated bank.

You see, this is why I didn’t do well as a stockbroker. But a little acceptance of the two companies’ flaws might be in order here.

The U.S. stock market is increasingly driven by artificial-intelligence world beaters. Its seven biggest tech companies are now worth more than the combined stock markets of Japan, Canada, and the United Kingdom, points out private-equity investor Apollo Global Management. For index fund buyers, valuations look puffy, with the S&P 500 index back up to 20 times earnings.

But there are still plenty of cheapies. Only 27% of stocks in the S&P 500 outperformed the index last year—the narrowest leadership in data going back to 1987. I count more than 150 index members trading below 15 times forward earnings projections.

A few of these companies are deeply challenged, but most are just unexciting. For example, Conagra Brands makes a frozen economic miracle called Marie Callender’s Chicken Pot Pie. Walmart sells the 10-ounce, 610-calorie one for $2.98. This past week, Conagra cut its sales guidance, saying that stretched shoppers are doing more scratch cooking. Shares lost 2%. I suppose they’re inexpensive at 11 times earnings, with a 4.9% dividend. But the sub-$3 dinner market sounds like a tough place to find returns.

Two stocks that are even further out on the value end of the S&P 500 attracted analyst upgrades this past week.

Let’s start with Verizon Communications, which KeyBanc Capital Markets took to Overweight from Sector Weight. A report outlining the bank’s reasoning contained the saddest of bullish points: “Adjusted Ebitda” growth is projected to top 2% this year, versus zero in 2023, which would be the second-fastest rate since 2018. In other words, a financial measure engineered for flattery might show barely perceptible improvement, which would qualify as better news than usual.

There are some brighter points, it turns out. One is that the wireless industry looks poised for benign competition in 2024. Subscriber counts are broadly growing. Churn, or the rate of customer defections, is stable. Device promotions don’t look overly generous. Revenue per user is rising. And funding needs for network investments are falling.

Easing competition could be particularly helpful for Verizon, which has been a market share donor for years. Its share of postpaid accounts, or ones with recurring monthly billing, fell from over 41% in 2019 to an estimated 36% last year. KeyBanc predicts steady improvement in net customer additions from here.

Broadband momentum is another plus. KeyBanc sees telecom players in broadband generally gaining market share from cable. Verizon in particular is estimated to have added more than a million connections in 2023, net of losses, counting 5G and Fios. AT&T is estimated to have lost broadband connections overall. Both trends appear poised to continue this year.

All of this should be good for Verizon’s free cash flow, which Wall Street sees approaching $19 billion this year, or 11.5% of the company’s market value. That makes its dividend yield of 6.7%—a high enough figure to raise suspicion—appear sustainable. It also makes debt reduction in 2024 look likely, and stock buybacks in 2025 not out of the question.

Shares, at a recent $39 and change, trade at 8.5 times forward earnings projections. The five-year average is just over 10 times. KeyBanc sees potential for a near-term rise to $45 a share. Add in the dividend and that would work out to a total return of more than 20%.

Let’s move on to Truist Financial. It’s both huge and not quite familiar to investors, for good reason. The company was formed by a 2019 merger between SunTrust and BB&T, making it the No. 6 bank by deposits. And it gave itself a new and totally made-up name. Atlanta Braves fans, at least, are basking in the branding—they see games now at Truist Park, formerly SunTrust Park.

So far, the merger has been a dud for shareholders, who are down 21% since the closing date, and that’s counting the hefty dividend yield, recently 5.6%. The S&P 500 over that same stretch has returned 57%. The stock is up 30%, though, since Barron’s recommended it in September. BofA Securities this past week upgraded Truist shares to Buy from Neutral, giving a few reasons for optimism.

More so than its peers, Truist’s net interest income stands to benefit from the Federal Reserve shifting from interest-rate hikes to cuts, as expected. Long term, a footprint in the U.S. Southeast bolsters growth prospects. Cost cuts should help. Management aims to bring cost growth down from 7% last year to a range of flat to negative 1% this year.

Savings will come from shrinking the workforce and branch networks and consolidating tech and administrative work. BofA says there is room for cost-cutting to continue beyond 2024. A recent shrinking of the board and some senior management replacements suggest that change is gathering pace.

There is also Truist’s 80% ownership in Truist Insurance Holdings, the sixth-largest U.S. insurance brokerage. Selling that stake would free up cash to refinance debt and boost earnings per share. BofA calls that business “differentiated” but “not strategically integral,” which I’m pretty sure nets out to a “ditch it.”

Shares, at about $37, sell for 10.8 times estimated 2024 earnings, versus over 13 times before the pandemic. BofA says they ought to be able to fetch $43 within a year, which would put the total return on this one, too, at over 20%.