WSJ : Huawei Accuses U.S. of Bullying as It Seeks Support From Europe Chinese te

Huawei Accuses U.S. of Bullying as It Seeks Support From Europe
Chinese telecom company says its addition to U.S. blacklist marks unprecedented assault

Huawei Technologies Co. denounced U.S. actions against the company as “bullying” and implored European governments to resist American pressure to follow suit in a bid to safeguard one of its most lucrative markets.

The Trump administration’s move to blacklist Huawei last week marks an “unprecedented” assault on not only the Chinese telecom company but also rules-based global trade, Abraham Liu, Huawei’s representative to the European Union, said Tuesday.

“Now it is happening to Huawei, tomorrow it can happen to any other international company,” Mr. Liu said at a press briefing. “This is dangerous.”

Huawei’s push to enlist European allies follows White House pressure on EU governments to block Huawei from 5G tenders citing cybersecurity risks. Washington’s move to block Huawei from sourcing components from U.S. companies or running certain features on Google’s Android operating system in new smartphones also threatens its consumer business. U.S. officials said Monday they would waive that measure for 90 days for some suppliers.

Mr. Liu said Huawei was willing to sign no-spy agreements with all governments and customers in the EU to assuage any security concerns. The company’s 5G rollout won’t be delayed by recent developments, he added.

Huawei also invoked a core EU principle in its plea for support: protection of free markets and the rule of law. Europeans have been grappling to uphold the multilateral system amid challenges from Mr. Trump’s “America First” policies.

Highlighting its global supply chains and operations, the Shenzhen-based company cited more than $6 billion in annual purchases from Europe, vast research collaboration and a local workforce. About 70% of Huawei staff in the region are European.

The EU is treading carefully, however, mindful of trans-Atlantic tensions and trying to avoid getting caught up in the U.S.-China trade fight. Brussels and Washington are also locked in contentious trade negotiations, even as they jointly try to address what they see as challenges posed by Beijing’s state-capitalism.

European leaders, including French President Emmanuel Macron and German Chancellor Angela Merkel, have been reluctant to join the U.S. effort to isolate Huawei from Western markets.

Some EU governments have signaled their intention to allow the Chinese company’s participation in their 5G networks, despite persistent White House pressure to bar Huawei from tenders and some European intelligence warnings about security breaches.

While some European officials see Huawei as a national champion for China, they also acknowledge that it is leading in 5G technology.

The company beat the U.S. in developing the next generation of network devices, but now grapples with geopolitical battles that are beyond its control, a European official said.

Huawei’s comments follow a tumultuous few days, as the Chinese giant scrambles to assess the impact of last week’s addition by the U.S. Commerce Department to a trade blacklist that threatens to cut if off from American technology.

Last year Huawei bought $11 billion of American components such as semiconductors, and the company relies on Google’s Android operating system to power its smartphones around the world.

The decision was followed Monday by a U.S. order giving some suppliers a 90-day reprieve to the trade rules. The reprieve allows Alphabet Inc.’s Google to continue providing certain key services to Huawei smartphone users. It also allows other U.S. businesses to continue selling some components to the company.

“Keeping phones up-to-date and secure is in everyone’s best interests and this temporary license allows us to continue to provide software updates and security patches to existing models for the next 90 days,” a Google spokesman said Tuesday.

Beyond the 90-day reprieve, the U.S. has indicated it doesn’t plan to give many licenses to companies wishing to continue selling to Huawei.

Europe is one of Huawei’s most important international markets. Although the company has long faced resistance in the U.S., many European countries—including U.S. allies—have embraced Huawei telecom gear, while consumers have snapped up its smartphones.

Europe, along with the Middle East and Africa, generated 28% of Huawei ‘s $107 billion in revenue last year and was the company’s fastest-growing region.

Mr. Liu said it isn’t yet clear when Huawei’s own operating system will be ready for an international rollout. That poses a potential risk to the company’s next line of smartphones, which may have more limited access to Google’s Android.

“Obviously there is a challenge here,” Mr. Liu said.

The breadth of the Commerce Department order means that certain European suppliers have been swept up in the trade restrictions. On Monday, chip maker Infineon Technologies AG said it was terminating the delivery to Huawei of some components originating in the U.S., though it said the “great majority” of products it sells to Huawei aren’t subject to restrictions.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • JCP -9.6%, KSS -9.4%, QTT -5.3% (also announced resignation of Lei Li as CEO; appointed Eric Siliang Tan as CEO and Xiaolu Zhu as co-CFO), NDSN -3.5%, HD -0.6%, MNRO -0.5%

M&A news:

  • VAR -2.9% ( to acquire Cancer Treatment Services International; lowers FY19 EPS guidance)

Other news:

  • BCRX -44% (despite announcement that its Phase 3 APeX-2 trial met its primary endpoint as traders call the results 'clinically disappointing')
  • OCUL -14.5% (OTX-TP failed to meet primary endpoint in Phase 3 glaucoma trial)
  • CVNA -5.6% (commences public offering of 3.5 mln shares of common stock and private offering of $250.0 mln of senior notes)
  • GH -3.1% (proposes 4.5 mln share offering)
  • MRCY -2.8% (announces 5.0 mln common share offering)
  • INSM -2.7% (commences $250 mln stock offering; presented new ARIKAYCE data)
  • AKRX -2.4% (receives ANDA for Azelastine Hydrochloride Nasal Spray, 0.1%)
  • SWI -1.7% (launches public offering of 15.0 mln shares of common stock)
  • SNE -1.5% (provides updated mid range outlook at strategy meeting)

Analyst comments:

  • TSLA -3.6% (Morgan Stanley note circulates; analyst Adam Jonas cuts his 'bear-case' scenario on the stock to $10 from $97 given the increased debt load, geopolitical exposure, and potential for negative news flow to impact fundamentals)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • AZO +2.9%, UAL +0.8% (reaffirms Q2 adjusted pre-tax margin of 11-13%, continues to see FY19 adjusted diluted EPS of $10-12 vs $11.24 S&P Capital IQ Consensus Estimate)

M&A news:

  • CIR +51.5% (Crane Co. (CR) confirms proposal to acquire CIRCOR for $45/share in cash)

Select tech related names showing strength after Department of Commerce issued a 90-day license for some companies to work with Huawei:

  • QCOM +2.6%, LITE +2.4%, MU +2%, NVDA +1.5%, AMD +1.3%, GOOG +0.6%

Other news:

  • SESN +16% (completes Type C CMC meeting, reaches agreement with the FDA on Analytical Comparability Plan)
  • ARWR +7.2% (to join S&P SmallCap 600)
  • VNE +6.2% (launches concurrent offerings of $350 mln of common stock and $150 mln of convertible senior notes due 2024)
  • CLVS +6.1% (highlights Phase 3 ARIEL3 Rubraca data)
  • ASNA +2.6% (to commence a wind down of Dressbarn's operations)
  • MRVL +1.9% (ticking higher; to acquire Avera Semiconductor)
  • USAT +1.7% (receives additional Nasdaq deficiency and extends contract of Interim CFO)
  • QEP +1.4% (spikes on reports of M&A interest)

Analyst comments:

  • TRIP +2.1% (upgraded to Neutral from Sell at Guggenheim)
  • KR +1.5% (upgraded to Outperform from Mkt Perform at Bernstein)
  • PII +0.8% (upgraded to Outperform from Market Perform at BMO Capital Markets)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • AZO +2.9%, UAL +0.8% (reaffirms Q2 adjusted pre-tax margin of 11-13%, continues to see FY19 adjusted diluted EPS of $10-12 vs $11.24 S&P Capital IQ Consensus Estimate)

M&A news:

  • CIR +51.5% (Crane Co. (CR) confirms proposal to acquire CIRCOR for $45/share in cash)

Select tech related names showing strength after Department of Commerce issued a 90-day license for some companies to work with Huawei:

  • QCOM +2.6%, LITE +2.4%, MU +2%, NVDA +1.5%, AMD +1.3%, GOOG +0.6%

Other news:

  • SESN +16% (completes Type C CMC meeting, reaches agreement with the FDA on Analytical Comparability Plan)
  • ARWR +7.2% (to join S&P SmallCap 600)
  • VNE +6.2% (launches concurrent offerings of $350 mln of common stock and $150 mln of convertible senior notes due 2024)
  • CLVS +6.1% (highlights Phase 3 ARIEL3 Rubraca data)
  • ASNA +2.6% (to commence a wind down of Dressbarn's operations)
  • MRVL +1.9% (ticking higher; to acquire Avera Semiconductor)
  • USAT +1.7% (receives additional Nasdaq deficiency and extends contract of Interim CFO)
  • QEP +1.4% (spikes on reports of M&A interest)

Analyst comments:

  • TRIP +2.1% (upgraded to Neutral from Sell at Guggenheim)
  • KR +1.5% (upgraded to Outperform from Mkt Perform at Bernstein)
  • PII +0.8% (upgraded to Outperform from Market Perform at BMO Capital Markets)

>>> US Early premarket gappers

Early premarket gappers

Gapping up:

  • CIR +44.6%, VNE +8.9%, ARWR +6.2%, CLVS +6.1%, QCOM +2.9%, MU +2.8%, ASNA +2.6%, AMD +2.3%, NVDA +1.9%, USAT +1.7%, AMRS +1.5%, QEP +1.4%, LITE +1.3%, SNAP +1%, LM +1%, GOOG +0.7%, HD +0.6%, STZ +0.5%

Gapping down:

  • OCUL -12.5%, SWI -4.5%, QTT -4.3%, GH -4.2%, CVNA -4.1%, VAR -2.9%, INSM -2.7%, AKRX -2.6%, NDSN -2.5%, MRCY -2%, SNE -1.5%, EBS -1.1%

WSJ : Urban Outfitters to Start Renting Its Clothes

Urban Outfitters to Start Renting Its Clothes
Retailer launches $88 monthly service, jumping into market led by Rent the Runway

Urban Outfitters Inc. URBN -0.11% is jumping into clothing rental, trying to tap one of the fastest-growing areas of fashion without discouraging people from shopping at its stores.

The company, which owns the namesake chain along with Free People and Anthropologie stores, is launching an $88 monthly service in the summer that allows shoppers to borrow six items from those brands and outside labels like Gal Meets Glam and Reebok, as well as vintage pieces sourced from flea markets and dealers.

The new business, called Nuuly, will be run as a separate entity by David Hayne, chief digital officer at Urban Outfitters and son of the company’s co-founder and CEO. Mr. Hayne, who started at the company folding shirts at a store in Philadelphia, has held several roles at the chain since 2001, including chief operating officer of the Free People brand.

The rise of fast fashion and online shopping is driving the growth of the rental apparel market, which has been growing at a rate of more than 20% annually, according to GlobalData Retail. The market, excluding costume rental, was valued at about $1 billion in 2018 and is projected to surpass $2.5 billion by 2023, the market research firm said.

Mr. Hayne said Urban executives focused on the rental business when discussing how to diversify the company’s business. The garment retailer, which also sells housewares, beauty products and clothes from outside labels, already has taken unconventional steps for a clothing seller. In 2015 it bought a pizza chain.

Now the company is betting Nuuly will attract new shoppers and boost purchases by current ones rather than cannibalize sales. Within a year of operation, Mr. Hayne expects Nuuly to add 50,000 subscribers and be on pace to have more than $50 million in annual revenue.

“We certainly don’t think the customers are just going to stop purchasing,” he said in an interview at the company’s headquarters in Philadelphia. “Purchases make sense for things you know you’re going to use often; rental makes sense for things you would like to try.”

Customers choose six garments from Nuuly’s website, which will arrive with a reusable bag and a prepaid postage label. They must keep the clothes for a full month and return them at the end of the month to obtain six more. They can also buy the items. The garments that are returned will be washed, dry-cleaned and inspected at the company’s own facility before being sent to another customer.

Urban Outfitters has reported rising comparable sales for the past several quarters, boosted by growth online. But in March, the company said it had started the year with weaker-than-expected sales. The stock is down about 19% this year. The company reports its quarterly results after the market closes Tuesday.

Clothing rental also is benefiting from two other trends—shoppers’ desire to have a new outfit for every Instagram post and an increasing awareness of sustainability issues, said Naomi Braithwaite, a lecturer at Nottingham Trent University who has been conducting research on consumers’ attitudes toward clothing rental. One challenge for middle-market brands, she said, is that shoppers are more resistant to rent cheap garments.

“It’s already so convenient to buy the fast fashion and everyday things,” she said.

The largest player in clothing rental is Rent the Runway, which was founded in 2009. The company rents out dresses, tops, coats and other items from designer labels such as Reformation, Rag & Bone, A.L.C., as well as luxury brands like Proenza Schouler and Prabal Gurung. It also offers flexible rental plans, including options that allow shoppers to exchange their garments an unlimited number of times throughout the month. Earlier this year, the company said it was valued at a $1 billion.

Several mall retailers, including Ann Taylor, Express and American Eagle, have started renting out their clothes by using a startup called CaaStle, which provides a web platform for retailers and handles logistics such as shipping and dry cleaning. For $95 a month, Ann Taylor lets shoppers choose up to three pieces at a time and swap them throughout the month. American Eagle offers a similar service for $50 a month.

Christine Hunsicker, CaaStle’s CEO and founder, said brands were worried at first that the rental business would cut into sales, but the service has brought new customers, increased spending among existing shoppers and turned a profit. She said a clothing rental business, when run well, has about a 25% operating profit, compared with low single digits for a clothing retailer. “Rental is a significantly more lucrative business than selling clothes,” she said.

Like Rent the Runway, Nuuly has hired its own engineers, data scientists and product managers to develop the technology. The brand is building a warehouse and fulfillment center outside Philadelphia with dry cleaning and other laundry facilities. For the past several months, employees have been working with laundry consultants to learn how to lengthen the life of each garment through different wash options.

Mr. Hayne said Nuuly chose to focus on more under-the-radar brands to set itself apart and that its plans, pricing and assortment could evolve over time. “We have the ability to control the destiny and think about the right way to shape this in the future because we don’t need the underlying technology and infrastructure,” he said.

(WP) Federal court presses Trump administration to release Khashoggi documents

Federal court presses Trump administration to release Khashoggi documents

More than six months after Saudi government agents brutally murdered Post contributing columnist Jamal Khashoggi, the Trump administration has yet to publicly reveal what it knows about the crime and how it has handled the investigation. But a federal judge is pressing the U.S. government to release more information, and faster — or the court could force it to do so.

On April 19, the federal court for the Southern District of New York held its first hearing in the Open Society Justice Initiative’s case against seven government agencies under the Freedom of Information Act. The nongovernmental organization, funded by George Soros, is trying to compel the U.S. government — including the CIA, the Justice Department and the State Department — to produce all records related to the killing and the killers, including the CIA’s reported assessment that the murder was ordered by Saudi Crown Prince Mohammed bin Salman.

“This case is about the public’s right to know about what happened to Washington Post journalist Jamal Khashoggi and what the United States government is doing in order to hold the appropriate individuals accountable,” Amrit Singh, who directs the initiative’s project on national security and counterterrorism, said at the hearing, according to the transcript.

U.S. District Judge Paul A. Engelmayer called out the government’s delays in producing documents during the hearing and said the government is “not behaving.” The initial FOIA requests were in December, he noted, adding he regretted that court action was needed to get the government to fulfill its responsibilities.

“So I have to wake up the back table [of government agency lawyers] here by putting some deadline that’s going to scare the bejesus out of the seven agencies,” Engelmayer said.

The judge gave all the agencies until May 29 to complete their searches for documents and ordered both sides to negotiate in good faith to figure out which documents were relevant to produce and on what schedule. But he promised to impose even more oversight and accountability if the U.S. government agencies didn’t prioritize production of documents related to the Khashoggi murder and treat the FOIA case with extreme urgency.

“I'm sure everyone wants their responses handled quickly, but this is a breaking news story,” he said. “This is a current, front-page controversy where timeliness is everything.”

A State Department spokesperson said the department cannot comment on ongoing legal cases.

In a May 13 letter brief, the State Department proposed producing 300 pages per month, far short of the plaintiff’s request for State to produce 7,500 pages per month. The State Department blamed “current limited resources and competing obligations, the volume of potentially responsive records, and the fact that potentially responsive records in this case likely contain classified information.”

At the rate the State Department is proposing, the tens of thousands of relevant documents might not see public disclosure for decades. Singh told me the State Department’s proposal was insufficient.

“The court has recognized how important it is for the public to know how the United States government is responding the Jamal Khashoggi murder, that it’s a matter of intense public debate, and having a timely response is critical for upholding the public’s right to know,” she said. “This lawsuit is necessary because [the] Trump administration has withheld from the public the full truth about who is ultimately responsible for the brutal murder of Jamal Khashoggi.”

There are 11 bills in Congress meant to address the Khashoggi murder. The Trump administration missed a Feb. 8 deadline to report to Congress on whether the U.S. government believes Mohammed bin Salman is culpable in the murder. These documents could greatly inform the ongoing congressional debate.

In November, the Trump administration sanctioned 17 Saudi officials under the Global Magnitsky Act — but not Mohammed bin Salman. President Trump essentially declared that he didn’t care whether the Saudi leader was involved, stating, “it could very well be that the Crown Prince had knowledge of this tragic event – maybe he did and maybe he didn’t!"

In Riyadh in January, Secretary of State Mike Pompeo repeated his mantra that “every single person responsible” for Khashoggi’s brutal murder in October in the Saudi Consulate in Istanbul should be held accountable. His own department’s actions undermine the credibility of that claim.

The next court conference is scheduled for June 4. In an environment in which the Trump administration seems to be intent on withholding the truth from the public about who is ultimately responsibly for the Khashoggi’s murder, this lawsuit represents a ray of hope.

More broadly, if the Saudi government is allowed to kill a critical journalist in cold blood and escape justice, that spells danger for every Saudi dissident who looks to the United States for protection and moral leadership. The truth about Khashoggi’s murder must come out.