NY Post : Streaming subscriptions were way, way up in 2020

Streaming subscriptions were way, way up in 2020

The coronavirus pandemic has helped streaming services thrive in 2020, despite an influx of new competitors jockeying for viewership.

The top streamers, including Netflix, Disney Plus and Amazon’s Prime Video will finish the year with a total 50 percent more subscribers than they had a year ago, according to the Wall Street Journal.

With movie theaters, sports arenas and concert venues closed across the country, Americans have been turning to streaming options more than ever before.

Analyzing data from market-research firms MoffettNathanson and HarrisX, the Journal reported that streamers had a banner year, with consumers adding more subscriptions rather than choosing one over the other.

Netflix saw its subscriber numbers jump from 62.8 million in the first quarter of 2020 to 66.2 million by Q4. Prime Video, meanwhile, saw a similar jump from 45.9 million to 48 million over the same time frame, while Disney Plus climbed from 28 million subscribers to 37 million.

“Instead of a streaming war, there’s been streaming coexistence and parallel growth,” HarrisX CEO Dritan Nesho told the paper. “Disney+ did not displace existing services. It complemented them.”

The report showed that Netflix usage spiked at the beginning of the pandemic, and has remained strong since March, with the streaming giant adding hundreds of new programs to its library every month.

Netflix is also the service that users are most likely to pay for themselves, with 82 percent of subscriptions being funded by someone in the household. Apple TV+, on the other hand, gets 59 percent of its eyeballs from free subscriptions offered with purchases of Apple devices.

>>> US After Hours Summary: Some year-end additions to indices are the big headl

After Hours Summary: Some year-end additions to indices are the big headline -- ENPH +0.9% is being added to S&P 500; CELH +12.4% and ELF +11.5% get added to S&P SmallCap 600

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: None

Companies trading higher in after hours in reaction to news: CELH +12.4% (to be added to S&P SmallCap 600), ELF +11.5% (to be added to S&P SmallCap 600), IPI +2.5% (provides update on its potash and Trio pricing and its 2021 outlook), NLS +2% (changes its fiscal year to end on March 31), ENPH +0.9% (to be added to S&P 500), CTS +0.2% (to acquire Sensor Scientific), AZN +0.1% (vaccine likely to be authorized for emergency use in the US in April, citing chief adviser for US vaccine program, according to Reuters; also co discloses submission to EMA in support of possible application for conditional marketing authorization for COVID-19 vaccine candidate), MX +0.1% (unveils new brand identity), XOM +0.1% (provides summary of factors management believes will impact Q4 results)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: None

Companies trading lower in after hours in reaction to news: BRKS -6.4% (to be added to S&P MidCap 400), CPRI -5.9% (to be added to S&P MidCap 400), WPX -4.1% (DVN and WPX shareholders vote in favor of previously announced all-stock merger), SRGA -2.2% (stock offering), PSNL -1.3% (files for $300 mln mixed securities shelf offering; also files for 1,774,240 share offering by selling shareholder), DVN -0.1% (DVN and WPX shareholders vote in favor of previously announced all-stock merger), KRC -0.1% (promotes three executives, including Michelle Ngo to CFO), LMT -0.1% (awarded $900 mln Navy contract)

WSJ : Record IPO Surge Set to Roll On in 2021

Record IPO Surge Set to Roll On in 2021
Despite the Covid recession, companies raised more than $167 billion on U.S. exchanges this year

Defying expectations, investors piled into initial public offerings at a record rate in 2020, and few expect the euphoria to wear off soon.

Companies raised $167.2 billion through 454 offerings on U.S. exchanges this year through Dec. 24, compared with the previous full-year record of $107.9 billion at the height of the dot-com boom in 1999, according to Dealogic.

The coronavirus pandemic turned the typical rhythm of the IPO market on its head, with $67.3 billion raised in the fourth quarter. That amount is roughly six times the total for the first three months of the year.

As a result of the scramble, stalwarts of the 21st-century economy including Airbnb Inc., DoorDash Inc. and Palantir Technologies Inc. are now publicly traded, accessible to the average investor.

When the pandemic began shutting down swaths of the U.S. economy in March and the stock market swooned, veteran IPO watchers braced for another disappointing year after activity in 2019 fell short of expectations.


Following a brief pause, new-issue activity resumed in late May after the Federal Reserve signaled it would take extraordinary measures to shore up the economy, and the stock market rebounded from a steep decline.

Several stocks that made their debuts around then soared, setting the stage for a race to the public markets that after a brief holiday pause is expected to pick up again in the new year.

The IPO market got a boost from a surprising surge in special-purpose acquisition companies, or SPACs, empty vehicles that raise money through listings and then look for businesses to merge with. They represent a bet that a yet-unknown business will generate steep returns and typify the risk appetite that is fueling new issues and markets more broadly.

Nearly half of all fundraising in the IPO market was for SPACs, and the total raised through SPACs this year is almost six times as much as the vehicles raised in 2019, the previous record-setting year.

The IPO frenzy reached its height in the second week of December, typically a quiet time for new offerings as year-end approaches, when Airbnb and DoorDash soared in early trading. That gave the two companies, which have yet to produce consistent profits, valuations stretching well into the tens of billions of dollars.

Those gains raised eyebrows among some who worry the IPO market is overheating and drew parallels with the period before the internet bubble burst in early 2000. They point to a surge in interest among individual investors, many of whom use a brokerage app run by Robinhood Financial LLC. If history is any guide, they say, such investors are liable to run for the exits as soon as markets reverse course.

Colin Stewart, Morgan Stanley’s global head of technology equity capital markets, said investors have “limitless interest” in certain stocks, particularly those that have captured the imagination of individual investors. “The moves and valuations of certain stocks are not necessarily based on business fundamentals,” he said.

Such concerns were evident when two companies that had planned to debut in the wake of Airbnb and DoorDash—Roblox Corp. and point-of-sale lender Affirm Holdings Inc.—decided to delay their listings. Roblox officials in particular were concerned about leaving money on the table should the videogame platform also have a big first-day pop, according to people familiar with the matter.

Not all new entrants are receiving a warm welcome from public investors. The week after Airbnb and DoorDash made their debuts, for example, the parent of e-commerce site Wish closed below its IPO price on its first day of trading.

Few bankers predict the current pace will abate soon.

“With interest rates near zero, there are few asset classes out there that offer a return above inflation. And U.S. equities is one of those, including IPOs,” said Jeff Zajkowski, head of Americas equity capital markets at JPMorgan Chase & Co.

A slew of billion-dollar-plus startups, like Robinhood itself, bitcoin exchange Coinbase Global Inc. and grocery-delivery service Instacart Inc., are waiting in the wings. Many more international companies, like South Korean e-commerce company Coupang Corp., are considering listing on U.S. exchanges too.

And the SPAC frenzy will likely continue. Noted technology investor SoftBank Group Corp. filed paperwork for a potential SPAC in late December. The Japanese conglomerate is considering plans to bring at least two more to market in 2021, according to people familiar with its plans.

The flurry of activity kicked off in late May, when the largest offering since the onset of the pandemic, the IPO of insurance-policy-comparison site SelectQuote Inc., raised $570 million after pricing above an initial range. The shares rose 35% on their first day of trading.

Several companies followed, handing investors more big wins. Vroom Inc., an online used-car seller that made their debuts in early June, and Lemonade Inc., an insurance startup that followed about a month later, more than doubled in their first day of trading. The performance encouraged more companies to push ahead with plans for new issues.

This year’s technology IPOs—the backbone of the new-issue market—have posted the biggest gains on their first day of trading since 2000, at 34% on average compared with 65% then, according to Dealogic. (Overall, IPOs have jumped roughly 18% on their first day of trading; excluding SPACs, the average first-day return of operating companies is about 36%.) On average, 2020 IPOs have risen roughly 48% from their original prices.

The extreme interest in some IPOs, while others languish, has made it especially tricky for underwriters to find the right price for stocks to debut at.

Take Snowflake Inc. It went public in September at a price of $120, or roughly triple what the data-warehousing company targeted when it started marketing the shares to investors. The stock still more than doubled on its first day of trading and was recently up more than 150% from its IPO price.

In a sign companies continue to experiment with new ways to access public markets, Palantir and smaller tech startup Asana Inc. made their debuts without raising money. The so-called direct listings, which have only been used by four major companies, are expected to gain in popularity in 2021 after the Securities and Exchange Commission said in December it will allow issuers to raise capital when they use them to go public.

Whatever the method, startups’ interest in going public shows no signs of abating. John Chirico, co-head of North American banking, capital markets and advisory at Citigroup Inc., said companies “see the benefit and value of being public like they never have before.”

Write to Maureen Farrell at maureen.farrell@wsj.com

Corrections & Amplifications
DoorDash shares rose 86% in their first day of trading. An earlier version of this article incorrectly said they more than doubled. Also, the top 10 U.S. IPOs in 2020 by deal value had first-day percentage changes in share price from their offer price that ranged from –5% to a gain of 113%. An earlier version of this article had a graphic that incorrectly displayed the first-day performance of those stocks. (Corrected on Dec. 30.)

WSJ : LVMH and Tiffany to Have Short Honeymoon

LVMH and Tiffany to Have Short Honeymoon
Tiffany shareholders voted in favor of new terms to the $16 billion union; French luxury giant won’t delay in sprucing up its latest purchase

Tiffany TIF 0.02% & Co. executives will be happy that the final hurdle to the jeweler’s bumpy union with LVMH LVMUY 0.29% Moët Hennessy Louis Vuitton has been removed. The French buyer might be more preoccupied with how to make the pricey deal pay off.

On Wednesday, Tiffany’s shareholders gave their approval for a slight discount to the original merger terms. The jeweler now has a sticker price of $15.8 billion, down from $16.2 billion. It is still a good result for investors who at one stage feared the deal could collapse. They cash out at a 33% premium to the value of the shares before news of talks between the two sides first leaked in October of 2019, even though the pandemic has shrunk the brand’s revenue.

After the deal closes in early January, five top executives at Tiffany will receive golden parachutes worth $100 million in total, and LVMH will begin an overhaul.

Jewelry has performed better than other luxury products during the pandemic. Global sales will be down 15% in 2020 compared with last year’s levels based on Bain & Company estimates. By comparison, high-end watches and clothing will decline at double that rate.

Tiffany might still underperform the global jewelry market, though. The company’s sales were down by one-quarter over the nine months through October. It relies on tourists for a chunk of sales, particularly at its Fifth Avenue flagship in New York, and its engagement-ring business is suffering as couples delay marriage.

Strong demand in mainland China this year suggests the brand still has plenty of room to grow in Asia. The share of its e-commerce business—now an important focus for luxury companies—has doubled to 12% of group sales from last year’s level. And Tiffany only has one-sixth of its stores based in Europe, giving it the option to expand if and when tourist spending recovers in the region.

LVMH has a good record in taking jewelry brands upmarket. When it bought Bulgari back in 2011, the Italian brand had an operating margin of just 8%. By 2018, that number had roughly tripled to 25% according to Jefferies estimates. Now that the drama of this merger is over, the work needed to polish up Tiffany can begin.

WSJ : SoftBank to Get Majority Stake in Katerra With $200 Million Bailout

SoftBank to Get Majority Stake in Katerra With $200 Million Bailout
New funding, which comes on top of $2 billion already invested, allows construction startup to avoid bankruptcy

SoftBank Group Corp. 9984 0.04% has agreed to invest $200 million more to bail out Katerra, a construction startup that ran into financial problems as it tried to shake up the building industry.

Katerra’s shareholders on Wednesday voted to approve the new investment on top of the roughly $2 billion SoftBank has already invested. Under the plan, the Japanese investment firm’s stake in Katerra will grow to give it a majority stake, while other investors will see their stakes severely diluted, according to people familiar with the matter.

SoftBank’s new investment will enable Katerra to avoid having to seek bankruptcy protection, according to Katerra’s chief executive, Paal Kibsgaard. The company needed SoftBank’s latest investment “to continue as a going concern,” he said in a notice to shareholders about Wednesday’s meeting.

As part of the funding package, SoftBank-backed financial-services firm Greensill Capital agreed to cancel around $435 million in debt owed by Katerra in exchange for a roughly 5% stake in the company, Mr. Kibsgaard said in an interview Wednesday.

Founded in 2015, Katerra has been trying to compete with established builders by assembling building parts in factories and offering services such as plumbing and architecture under one roof.

But some of the company’s projects were plagued by delays and cost overruns, while its aggressive growth strategy and a high debt load depleted its cash reserves. The Covid-19 pandemic, which delayed construction projects in some cities, added another challenge.

SoftBank, the world’s largest technology investor, was an early backer of Katerra. The bailout marks the second time this year that SoftBank has increased its investment in the firm. In May, when Katerra’s board tapped Mr. Kibsgaard to be CEO, the startup secured an additional $200 million investment from SoftBank.

Katerra initially thought that money was enough, Mr. Kibsgaard said in the interview, but later realized a more serious restructuring was needed. Mr. Kibsgaard, the former head of oil-services firm Schlumberger Ltd., was hired as CEO with a mandate to fix the company’s finances.

Mr. Kibsgaard said in the interview that before he became CEO, the company discovered financial practices that weren’t in line with generally accepted accounting principles and launched an investigation. The probe resulted in people getting fired, he said. The irregularities weren’t material and didn’t require the company to restate its results, he said.

In a statement Wednesday, SoftBank said that Mr. Kibsgaard “addressed several operational inefficiencies and improved the financial trajectory of Katerra” and that it remained “committed to the Company’s long term vision and believes the current leadership team has the ability to make this vision a reality.”

Katerra expanded aggressively by acquiring other construction firms and building factories in a number of cities. Michael Marks, a Katerra co-founder who served as its CEO before Mr. Kibsgaard, said in a February 2019 interview the company expected to be “cash flow neutral by the end of this year.”

In a statement Wednesday, Mr. Marks said, “I greatly respect the backing that we got from SoftBank and wish them the absolute best and hope that I can be helpful.”

Mr. Kibsgaard said the company took on too many projects and side businesses in its earlier years. “I think we underestimated the complexity of executing self-perform projects at a large scale, including manufacturing and material sourcing and managing our own labor,” he said.

The company made significant job cuts in the U.S. and plans to wind down unprofitable side businesses and get rid of some of its leases, Mr. Kibsgaard said. He said Katerra is on track to make between $1.5 billion and $2 billion in revenue this year and expects to see positive cash flow in 2022.

SoftBank, best known for its $100 billion Vision Fund, has experienced several high-profile flops. In October 2019, the investment firm agreed to provide a lifeline to WeWork after a failed initial public offering left the office-sharing company in danger of running out of money.

But on balance, 2020 has been a good year for SoftBank. It has cashed in on several successful investments and its shares are up more than 50% this year.

FT : UK faces ‘dangerous situation’ as new Covid cases surge

UK faces ‘dangerous situation’ as new Covid cases surge
Oxford/AstraZeneca vaccine approval raises hopes of beating pandemic but questions remain on speed of rollout

The UK is in a “very dangerous situation” in its battle against coronavirus, facing a “grim and depressing picture” of rising infections and deaths as millions more were placed under the tightest tier of restrictions.

The bleak picture painted on Wednesday by Jonathan Van-Tam, England’s deputy chief medical officer, followed news of the regulatory approval of the Covid-19 vaccine from Oxford university and AstraZeneca, which has raised hopes that the virus could be defeated.

But that optimism faded as the UK recorded 981 coronavirus-related deaths, the highest daily figure since April. Infection rates soared to 50,023 new cases.

The alarming surge in deaths spurred new measures to limit the spread of the virus.

The return of secondary schools after the Christmas break has been delayed as ministers announced that by Thursday almost four-fifths of England would be living under the toughest tier 4 restrictions. Mr Johnson warned that the measures could last until April.


The rapid spread of the new, more virulent variant of coronavirus contrasted with the regulatory approval of the Oxford/AstraZeneca vaccine, described by ministers as a “game changer”.

The UK has purchased enough doses of the vaccine to inoculate the whole adult population. The first injections will be given on Monday, ahead of a significant increase in the number of jabs delivered.

But questions were raised about the government’s ability to deploy the vaccine fast enough to outpace the spreading virus after health secretary Matt Hancock told MPs that 530,000 doses of the Oxford vaccine would be ready for use by Monday — far below the 4m promised by the end of the year by the vaccines task force.

AstraZeneca said the doses were ready for distribution but added that each batch had to be individually checked for safety and quality, dictating the pace at which they could be released.

Whitehall officials added that the entire 4m Oxford/AstraZeneca doses, and possibly more, would be available next month, along with fresh consignments of the BioNTech/Pfizer vaccine.

The programme will also gather speed in February as more vaccination centres come on stream and additional doses arrive, safeguarding the target of vaccinating all over-50s and the most seriously ill in younger age groups by the end of March. One person close to the vaccination programme said: “The rollout will be ramping up very quickly.” 

The government intends to have protected all of the vulnerable adult population by the spring.

Mr Johnson said: “We are still in the tunnel of this pandemic. The light, however, is not merely visible, thanks to an extraordinary feat of British engineering, if you like. The tunnel has been shortened.”

But his government was forced to announce that significant chunks of England would move into the highest tier of restrictions, meaning non-essential shops, pubs and restaurants will have to close, as well as gyms and leisure centres.

Secondary schools will now be reopened on January 11 for those sitting exams next year, while other pupils will have to study at home until January 18. All schools in the areas where Covid-19 is most prevalent will be closed to most students until the same date.

In total, 44m people — 78 per cent of England’s population — will be in tier 4 from Thursday. Areas that will be put under greater curbs include North East England, Greater Manchester, Nottingham, Somerset and Cumbria. Most of the West and East Midlands will also be under the top restrictions.

The Liverpool city region, Cornwall, Devon, York and North Yorkshire will move into tier 3 from midnight, where non-essential shops can remain open but indoor socialising is forbidden. A total of 12m people will be under tier 3 restrictions.

Nowhere in England will be in tier 2 after the government’s latest assessment of the coronavirus data. Only the Isles of Scilly, 25 miles off the Cornish coast, will be in the lowest tier.

Prof Van-Tam warned that the impact of the partial relaxation of social rules for Christmas had yet to filter through to the health service, with a further rise in infections and deaths likely. He urged people to stay at home during New Year’s Eve celebrations.

“I know new year is coming up, I know it’s normally a time of great festivity, but you have just got to play your part now in bringing us back from this very dangerous situation,” he said.

FT : What did Silicon Valley’s ICO bubble create?

What did Silicon Valley’s ICO bubble create?
Three years after investors poured $20bn into crypto projects, start-ups are revealing what they did with the money

Three years ago, when the blockchain start-up Filecoin raised $257m with nothing more than a promise to build a decentralised marketplace for data storage, it looked like another example of the mania that was sweeping through the cryptocurrency world.

At the time, investors were pouring an estimated $20bn into so-called Initial Coin Offerings — sales of new digital tokens by projects which, like Filecoin, claimed to be building important new digital infrastructure. Many have since sunk without a trace, and ICOs quickly went out of fashion.

But in recent weeks, the Filecoin marketplace has finally seen the light of day. People vying to earn its tokens have already committed a combined 1.3 exabytes of storage capacity, according to Juan Benet, the project’s founder. An exabyte is equivalent to 500 times the data stored in all US research libraries.

Demand from customers looking to buy storage is still only a small fraction of this, but Filecoin’s first goal was to attract capacity, and progress has been ten times ahead of expectations, claimed Mr Benet.

The activation of Filecoin’s network is part of the belated emergence of a handful of blockchain projects, financed by the ICO bubble, that set out with big ambitions to change online activity.

Polkadot, a platform others can use to create their own blockchains, is close to completing the phased launch of its network. Others, like Cosmos, which provides a way to connect different blockchains, and Tezos, a “smart contract” competitor to Ethereum, have also gone live.

The founders of some of these projects admit that their ideas benefited from the wave of financial speculation. Gavin Wood, a founder of Polkadot, said that much of the money pouring into ICOs in 2017 represented the recycled profits from investments in Ethereum (which he also co-founded) and Bitcoin.

“Ultimately I think a lot of people viewed this as a sort of accumulator bet,” Mr Wood said. “They won a lot of money on Ethereum and they wanted to see if they could carry on rolling.”

Yet he and other crypto entrepreneurs claim that the technical innovations from a handful of survivors will prove more lasting than the financial mania surrounding the ICOs.

“These projects have built pretty significant things,” said Mr Benet. “I think the total capital organised [by ICOs] in the last three years is not — if you look at the rest of technology — out of the ordinary.”

Though some of the blockchain networks have gone live, the applications they were built to support have yet to be developed, making it hard to judge their ultimate impact.

The Tezos blockchain, for instance, was designed for “any place where you're trying to create a digital economy”, like purchases made inside a video game, said Kathleen Breitman, one of its founders.

Other potential uses are in online “creator economies”, said Alison Mangiero, president of TQ Tezos — places where individual artists, entertainers and influences might see a benefit in “cutting out the middleman and working out ways to monetise their fan bases.” They promise applications like this will start to appear in 2021.

Meanwhile, a recent surge in interest in DeFi — decentralised finance applications that cut out traditional intermediaries — has also drawn attention to the blockchain platforms that could support it.

Polkadot has been one of the main beneficiaries of developer attention: its platform for interlinked blockchains could be well suited to DeFi, supporting a large number of simple applications that could be combined to create new and more complex financial products.

Platforms like this are not designed to simply deliver an existing set of services at marginally lower cost, said Mr Wood. Rather, they could support entirely new services, or ones that could only be provided with “orders of magnitude more overhead” using older methods, he said.

The same is true of data storage delivered over a blockchain, according to Mr Benet. Though it might sound like the ultimate undifferentiated service, the storage services sold by a handful of giant cloud companies like Amazon Web Services are highly complex and “anything but a commodity”, he added.

Opening up Filecoin’s network to smaller players, as well as developers who can build specialist services to make use of the raw capacity, will be as disruptive to the cloud companies as Airbnb has been in the hotel world, he said.

If new applications are still largely theoretical, the financial gains are all too real. The price of Filecoin’s tokens have risen 14-fold from the average price paid during its ICO, while Dots — the tokens used on the Polkadot network — are up nearly 20-fold.


The promoters of some of these projects also stand to be big winners. Filecoin, for instance, reserved 300m tokens for itself at its inception. That haul is currently worth around $7bn, though Mr Benet said the tokens will not fully vest for six years.

The recent Bitcoin boom has also cast some of the less successful veterans of the ICO bubble in a new light. Most accepted payment in Bitcoin and Ether in exchange for their own tokens, leaving them with a potential windfall. The Tezos Foundation took in $232m through its 2017 ICO — an amount that had risen to $652m by July this year. With more than 60 per cent of its reserves held in Bitcoin, it is now likely to be worth well over $1bn.

The value of their crypto holdings means that many of the less successful blockchain projects are now sitting on reserves worth more than their “market caps” — or the total value of their outstanding coins. That is likely to bring intervention from activist investors “holding projects’ feet to the fire” and forcing them to pay out some of their surplus cash, said Ryan Zurrer, a crypto investor and entrepreneur.

Tech history has seen this before. In the aftermath of the dotcom bubble, cash rich companies without viable business models sometimes lingered for years while investors agitated to get their cash back.

The dotcom period also produced a small number of big winners, including Amazon and Yahoo. The survivors from the ICO bubble still have a long way to go to prove they have anything like the staying power.

FT : Engie under pressure as it embarks on slimming plan

Engie under pressure as it embarks on slimming plan
French group’s new chief must lead a sharp shift in strategy while keeping investors onside

Even by 2020 standards Engie has had a difficult year. The French energy group ousted a chief executive, hired another, dramatically changed strategy and sold a €3.4bn stake in water and waste group Suez, kicking off a corporate fight that is still shaking the world of French business. 

Now the company has to prove to investors it can turn itself round under a new leader as it shifts away from services to focus on energy infrastructure and renewable power — while making sure it does not become a takeover target in the process.

“We needed to tick the box on some big subjects like Suez,” Jean-Pierre Clamadieu, Engie chairman, told the Financial Times. “With these boxes ticked, quarter after quarter, we need to demonstrate that, indeed, growth is happening where we expect it to happen. Now it’s not just aspirational.”

Engie’s planned asset sales next year include the carve-out of a customer services business that employs 74,000 of the group’s 170,000-strong workforce and brought in 20 per cent of last year’s €60bn in sales.

The company has yet to decide if this will be done through an initial public offering or a sale to private equity, and Mr Clamadieu is searching for a management team to run the new business. But whatever route it takes, the pressure is on.

“Engie has to gain in value faster than it sells assets, that’s the game next year,” said one banker close to the group. 

Mr Clamadieu admits the company has had a “hard crisis” — it cancelled its dividend — a rare and painful move for a utility. Despite a relatively good third quarter, its share price has fallen about 13 per cent over the course of the year and its market capitalisation stands at roughly €31bn.

The task of turning the company’s strategy into a business plan will fall to Catherine MacGregor, a former executive at oilfield services group Schlumberger who takes over as chief executive in January.

Mr Clamadieu’s job, in part, will be to manage Engie’s largest shareholder with a 24 per cent stake: the French state.

Paris has a reputation as a heavy-handed shareholder. Its board representatives voted against Engie’s October sale of 29.9 per cent of its 32 per cent stake in Suez.

The fact Engie went ahead with the sale has been seen as a significant moment in its relationship with the government, but Mr Clamadieu plays the matter down. France is planning to sell down its holding but there is no timetable, and Engie’s valuation means it is not rushing to market. 

Previous chief executive Isabelle Kocher, a former civil servant who tried to radically overhaul the company, was forced out in February.

To her supporters Ms Kocher reinvented Engie as a green energy champion focused on services, and faced opposition from entrenched interests resistant to change. But critics say she struggled to take hard decisions — including whether to sell the Suez stake or buy more — and failed to translate her vision into a functioning business model. Senior Engie figures say privately that Ms Kocher was more focused on the big picture than “nuts and bolts” work.

Engie, in the eyes of investors, had become too hard to understand. And in the eyes of Mr Clamadieu, it had become too complicated internally, making decisions slow and painful.

The chairman said the current structure of the company, made up of 27 business units in almost 70 countries, remained “very complex and is very difficult for a CEO and an executive committee to supervise.”

He believes processes within the group need to be sped up.

“One of the business unit heads was presenting her project to the board and she told me that she had more than 150 people from corporate areas asking questions in the process where this project was prepared and then delivered to the board.”

Engie plans to plough at least some of the money it raises from the asset sales into building up its renewables portfolio. Mr Clamadieu said the company would continue to grow but that larger scale M&A was not on the radar.

It is also looking at winding down its Belgian nuclear operations, in line with the country’s energy plans. Engie has provisioned about €13bn for the eventual shutdown, including dismantling the plants and disposing of the nuclear waste.

While Engie’s changes are designed to make the group easier to understand, they also expose it to a new type of competition, from pension and infrastructure funds as well as oil and gas majors such as Total.

Vincent Ayral at JPMorgan, said that meant Engie would “ultimately” become “an M&A target over the medium to long term, like the rest of the sector”.

But Mr Clamadieu disputes that idea, in part because Engie remains complex and diversified.

“Who could see us as a target?” he said. “I can’t see people organising a large, very large takeover project” when they only want access to “20 per cent or 25 per cent” of the company’s operations.

>>> US Close Dow +0.24% S&P +0.13% Nasdaq +0.15% Russell +1.05%

Closing Stock Market Summary

The S&P 500 increased 0.1% on Wednesday in a relatively tight-ranged session. The Dow Jones Industrial Average (+0.2%) and Nasdaq Composite (+0.2%) also finished with small gains, but it was a record close for the Dow. The Russell 2000 pulled ahead with a 1.1% gain, as investors bought the dip in small-caps. 

Corporate news was sparse heading into New Year's Eve, which is a full trading day for Wall Street, but one notable story was the UK approving the COVID-19 vaccine from AstraZeneca (AZN 50.18, +0.28, +0.6%) and Oxford for emergency use. 

The vaccine approval may have benefited cyclical sectors like energy (+1.6%), materials (+1.3%), and industrials (+0.7%) since it resonated with the narrative that economic activity will pick up next year with several effective vaccines in the market. The communication services (-0.7%), consumer staples (-0.1%), and information technology (-0.02%) sectors closed lower. 

Walt Disney (DIS 181.17, +3.87, +2.2%), a stock many consider a reopening stock, was an individual standout, as was Visa (V 218.36, +3.99, +1.9%) on word that the $600 stimulus checks have started to hit people's bank accounts. On a related note, Senate Majority Leader McConnell said that $2000 stimulus checks (an increase from $600) have "no realistic path" to quickly pass in the Senate.

Shares of Tesla (TSLA 694.78, +28.79, +4.3%), meanwhile, rose 4.3% in a momentum trade to fresh all-time highs. Tesla helped mitigate some weakness in Amazon (AMZN 3285.85, -36.15, -1.1%) for the consumer discretionary sector (+0.3%). AMZN underperformed with the other FAANG stocks today. 

U.S. Treasuries finished little changed. The 2-yr yield was flat at 0.13%, and the 10-yr yield decreased one basis point to 0.93%. The U.S. Dollar Index decreased 0.4% to 89.64. WTI crude futures increased 0.9%, or $0.42, to $48.39/bbl.

Reviewing Wednesday's economic data:

  • Pending home sales dropped 2.6% m/m in November (consensus -0.5%) following a revised 0.9% decline in October (-1.1%).
  • The Chicago PMI for December increased to 59.2 (consensus 56.9) from 58.2 in November.
  • The Advance International Trade in Goods deficit widened to $84.8 billion in November (prior -$80.3 billion); Advance Retail Inventories increased 0.3% (prior increase revised to 0.9% from 0.8%); and Advance Wholesale Inventories decreased 0.1% (prior increase revised to 1.1% from 0.9%).

Looking ahead, investors will receive the weekly Initial and Continuing Claims report on Thursday.

  • Nasdaq Composite +43.4% YTD
  • Russell 2000 +18.7% YTD
  • S&P 500 +15.5% YTD
  • Dow Jones Industrial Average +6.6% YTD