After Hours Summary: TSEM +51.3% jumps on WSJ report that INTC nearing deal to acquire TSEM; AMKR +8.5%, ANET +8.2%, RLGT +6.2% up on earnings; OMCL -4.5%, BKD -4.1%, VNO -3%, AAP -1% lower on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: TNET +9% (also stock repurchase program increased by $300 mln), CPSS +9%, AMKR +8.5%, ANET +8.2%, RLGT +6.2%, OTTR +4.6%, SCI +2%, POWW +1.3%, NTB +1.2% (also announces new 2 mln share repurchase program)
Companies trading higher in after hours in reaction to news: TSEM +51.3% (INTC near deal to acquire TSEM for roughly $6 bln, according to WSJ), IBRX +13.9% (announces positive data from bladder cancer trial), JOBY +6.9% (announces partnership with ANA HOLDINGS to bring air taxi service to Japan), MNST +3% (MNST in discussions with STZ re possible combination, according to Bloomberg), VMEO +2.5% (reports performance metrics for January), MRTN +1.7% (expands dry truckload operations into Mexico), AVEO +1.4% (to present positive data from Phase 3 TIVO-3 Study of FOTIVDA), AUR +0.4% (AUR and USX announce partnership for the deployment of autonomous trucks), NVAX +0.4% ( Singapore Health Sciences issues interim authorization for Nuvaxovid), SWAG +0.3% (announces combination agreement with Nogin), AZN +0.2% (LYNPARZA plus Abiraterone reduced risk of disease progression by 34%), HUM +0.1% (announces selection by Louisiana Health Dept to deliver coverage to Medicaid beneficiaries), RTX +0.1% (names new COO), JNJ +0.1% (announces initial results from Phase 3 MAGNITUDE study)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: OMCL -4.5%, BKD -4.1%, VNO -3%, CLR -1.6% (also increases share buyback program by $500 mln), CAR -1.4%, AAP -1% (also increases dividend by 50% and authorizes $1 bln for share repurchases)
Companies trading lower in after hours in reaction to news: SBEV -16% (stock offering), SGH -4.3% (names new chair), ANGH -4% (stock offering), MS -1% (federal investigators are probing block trading on Wall Street, according to WSJ), FHTX -1% (files for $300 mln mixed securities shelf offering), MET -0.7% (aims to sell $1 bln of private-equity assets through secondary sale, according to WSJ), LLY -0.6% (awarded $1.08 bln Army contract for Bebtelovimab), GS -0.4% (federal investigators are probing block trading on Wall Street, according to WSJ), USX -0.3% (AUR and USX announce partnership for the deployment of autonomous trucks), HUN -0.2% (increases dividend)
Clariant/Saudi Aramco: whistleblowers rock Swiss chemicals group
Delayed results and a pending investigation into accounting irregularities have hit the company’s share price
Clariant should know something about reactions — of the chemical kind. But the response it received on Monday had a more explosive nature. The Swiss chemicals group said it was delaying publication of last year’s results, pending an investigation into accounting irregularities. Its shares plummeted 16 per cent.
The sketchy information released hardly illuminates the situation. The investigation follows allegations by internal whistleblowers and will determine whether employees incorrectly booked provisions and accruals to influence reported profits.
Cash flow generation may — in the end — be unaffected, though the risk of reputational damage could send a chill through some bullish shareholders. However, its largest investor will not flinch so easily.
For now, management has yet to change its sales and profit targets. Sales last year should still return to roughly 2019 levels. Clariant also remains confident that ebitda margins will be within its previous 16 per cent to 17 per cent guidance. However, without a completed review of the complaints presumably, all Clariant’s targets may also receive further scrutiny. The fact is that its auditors PwC have not signed off on last year’s accounts.
Prior to this revelation, shares traded around 19 times next year’s earnings, in line with the wider European sector. Although, its share price had outrun peers such as BASF and EMS Chemie in the past six months.
Some of that excitement is because of Clariant’s push into biofuels. Its Sunliquid plant in Romania hopes to harness second-generation biofuel technology, produced from non-food crops. The refinery, which was completed last year, will convert straw into ethanol. Licensing the technology and supplying the chemicals for the process will drive future income.
But Clariant has a big backer, state-owned oil producer Saudi Aramco via its chemical subsidiary, Sabic. The latter acquired the stake in 2018, prior to Aramco’s takeover, as a show of support for its supplier when a takeover by US group Huntsman fell through. An activist opposed the deal.
With just under one-third of the shares and Aramco’s predilection for long-term investments, at least that part of Clariant’s register should remain loyal. This should give some comfort to smaller holders.
London Tube and bus fares face biggest hike for a decade
Cost of using passenger services in capital to climb 4.8% as mayor seeks to rebuild TfL finances after pandemic
Sadiq Khan, the mayor of London, has unveiled the biggest rise in public transport fares in the UK capital in a decade in an effort to rebuild the London transport authority’s shattered finances.
Fares on Transport for London services, including the Tube and buses, will rise by 4.8 per cent from March 1, the mayor’s office announced on Monday.
The increase comes amid an escalating cost of living crisis in the capital and followed petrol prices hitting record levels on Monday and ahead of looming rises to rail fares across the UK.
“Today’s steep fare rises will add further to the cost of living pressures being felt by Londoners,” said Nick Bowes, chief executive at Centre for London, a think-tank.
The hike to TfL fares represents the largest rise in the cost of travel since 2012, when UK prime minister Boris Johnson was the city’s mayor.
Khan, who froze fares in London between 2016 and 2021, said the changes were a condition of emergency funding provided by central government to help TfL’s finances survive a collapse in passenger numbers during the coronavirus pandemic.
Ministers have provided TfL with several short-term funding deals worth over £5bn to help keep services running, and the latest agreement is scheduled to run out at midnight on Friday. In return, Khan has had to cut costs and raise up to £1bn in new revenue.
Khan said the fare increases would help ensure TfL buses and trains and the underground could continue to operate during a period of reduced passenger numbers, but would not solve wider budget problems at the transport body. He repeated a call for a long-term funding deal for the capital’s transport network.
“We have been forced into this position by the government and the way it continues to refuse to properly fund TfL, but I have done everything in my power to keep fares as affordable as possible,” he said.
The fare rise comes as office workers begin to return to in-person work following the disruption caused by the emergence of the Omicron coronavirus variant and government guidance, rescinded in late January, to work from home where possible.
TfL data released last week showed passenger numbers on the underground had increased by more than 25 per cent since early January and returned to 60 per cent of pre-pandemic levels on weekdays. Bus ridership is at around 75 per cent of pre-pandemic levels.
Rail fares across the UK will rise by 3.8 per cent in March, and consumer fuel prices have also hit their highest level on record, with motoring groups on Monday warning of further increases expected because of tensions with Russia.
Petrol prices rose to 148.02p a litre and diesel to 151.57p in recent days, according to the AA motoring organisation.
“With the oil price teetering on the brink of $100 a barrel and retailers keen to pass on the increase in wholesale fuel quickly, new records could now be set on a daily basis in the coming weeks,” said Simon Williams from the RAC.
“The cost of living crisis has been ratcheted up yet another notch, tightening the vice on family spending when it faces other pressures from impending domestic energy cost and tax increases,” said Luke Bosdet from the AA.
Texas Sues Meta Over Facebook’s Facial-Recognition Practices
State says social-media giant violated privacy protections in lawsuit, seeks hundreds of billions of dollars in civil penalties
The Texas attorney general filed a suit against Facebook parent Meta Platforms Inc. FB -0.23% on Monday, charging that the social-media giant’s longstanding and now discontinued use of facial-recognition technology violated that state’s privacy protections for personal biometric data.
The lawsuit, filed in state district court in Marshall by Texas Attorney General Ken Paxton, seeks civil penalties in the hundreds of billions of dollars, according to a person familiar with the matter.
In a statement, Mr. Paxton said the company’s capture of facial geometry in photographs that users uploaded from 2010 to late last year resulted in “tens of millions of violations” of Texas law.
“Facebook has been secretly harvesting Texans’ most personal information—photos and videos—for its own corporate profit,” Mr. Paxton said. “Texas law has prohibited such harvesting without informed consent for over 20 years. While ordinary Texans have been using Facebook to innocently share photos of loved ones with friends and family, we now know that Facebook has been brazenly ignoring Texas law for the last decade.”
Facebook didn’t immediately respond to a request for comment.
Facebook previously settled another lawsuit over its facial-recognition practices for about $650 million. That class-action suit filed in 2015 was brought under Illinois’s biometric privacy law, which is similar in some respects to the Texas law. Both laws require individuals’ consent before their biometric identifiers can be captured.
In the class-action case, Facebook’s lawyers said the Illinois law didn’t apply to its method for identifying users in photos. The company also said it had given users the ability to opt out of the feature.
Facebook’s efforts to dismiss the class-action case were unsuccessful, and the company settled the case in 2020.
The Texas lawsuit—in particular the size of the civil penalties being sought—points to the impact that increasingly widespread privacy laws could have on big tech companies’ operations.
After Facebook’s settlement of the Illinois class-action case became known, Texas sent its own civil subpoena to the company seeking information about the facial-recognition system. Facebook announced it was ending its facial recognition system last November.
“These procedural protections are particularly crucial in our digital world because technology now permits the wholesale collection and storage of an individual’s unique biometric identifiers—identifiers that cannot be changed if compromised or misused,” U.S. District Judge James Donato wrote in the class-action case. “When an online service simply disregards the Illinois procedures, as Facebook is alleged to have done, the right of the individual to maintain her biometric privacy vanishes into thin air.”
Texas says Facebook’s facial-recognition system ignored that state’s legal requirements for capturing users’ facial features.
“For over a decade, while holding itself out as a trusted meeting place for Texans to connect and share special moments with family and friends, Facebook was secretly capturing, disclosing, unlawfully retaining—and profiting off of—Texans’ most personal and highly sensitive information: records of their facial geometries, which Texas law refers to as biometric identifiers,” the state argues, according to a draft of the complaint reviewed by The Wall Street Journal.
The Texas law makes it unlawful to capture people’s biometric identifiers without their informed consent and prohibits sharing that information.
Unlike the Illinois law that led to the class-action suit, the Texas law can only be enforced by the state’s attorney general. The Texas law also provides for a penalty of $25,000 per violation. The complaint estimates that at least 20 million Texans were members of Facebook in 2021.
The civil subpoena issued by Texas demanded all the materials that Facebook had produced in response to the class-action lawsuit.
Facebook’s announcement that it would stop using its facial-recognition system cited public concern over the technology. “We’re shutting down the Face Recognition system on Facebook,” the company said in a blog post, explaining that it would “delete more than a billion people’s individual facial recognition templates.”
It said that “the many specific instances where facial recognition can be helpful need to be weighed against growing concerns about the use of this technology as a whole.”
Texas officials say in their suit that they are seeking to recover civil penalties for past violations of the law and that they would try to stop any future improper uses—suggesting Meta might still retain some of the facial-recognition data it collected.
“Facebook announced, in November 2021, that it would cease use of the face-recognition feature on its Facebook social-media platform,” the draft complaint says. “Facebook has made no such commitment with respect to any of the other platforms or operations under its corporate umbrella, such as Instagram, WhatsApp, Facebook Reality Labs, or its upcoming virtual-reality metaverse.”
In a blog post announcing that it was ending its use of facial recognition, Facebook said that it would “continue working on these technologies and engaging outside experts…[But] amid this ongoing uncertainty, we believe that limiting the use of facial recognition to a narrow set of use cases is appropriate.”
The Texas suit also says Facebook has obtained patents for systems “where consumers wandering in stores or standing at checkout counters have their faces scanned and matched with their social-networking profiles.”
The Texas investigation itself might have slowed at least some of the facial-recognition system’s shutdown. Following the company’s announcement in early November, Texas authorities demanded that relevant data be preserved while the state investigated.
In a follow-up letter on Nov. 10, Texas officials said Facebook had confirmed that Meta “will not delete any source code related to Facebook’s Facial Recognition system,” and would “preserve all metadata related to the system” including data sufficient to identify Texas users, which users had facial recognition enabled, and which users had face templates saved.
Facebook said it believed the face templates themselves weren’t material and could be deleted, according to the Nov. 10 letter from the Texas attorney general’s office. The attorney general’s office expressed concern about that, and demanded that Meta not delete any face template information for past or present Texas residents.
Jana Partners (Barry Rosenstein) discloses updated portfolio positions in 13F filing: New MRCY LPSN positions, Confirms ZEN holding, Increases EHC holding
Highlights from 2021 Q4 filing as compared to Q3 2021:
- New positions in: MRCY (~3.56 mln shares), ZEN (~2.39 mln), LPSN (~0.46 mln)
- Increased positions in: BKSY (to ~2.84 mln shares from ~1 mln shares), EHC (to ~2.89 mln from ~2 mln), SPY (to ~0.33 mln from ~0.14 mln), LH (to ~0.46 mln from ~0.39 mln)
- Maintained positions in: CAG (~8.05 mln shares), THS (~5.15 mln)
- Closed positions in: VG (from ~10.07 mln shares), CONE (from ~1.74 mln), VVV (from ~1.28 mln)
- Decreased positions in: M (to ~0.76 mln shares from ~4.63 mln shares)