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In reorganization, beauty giant leans into higher-end beauty brands and mass-market fragrances

Cosmetics giant Coty is conducting a strategic review of CoverGirl and its other mass-market beauty brands, and will consider options including selling or spinning them off.

Coty’s share price has dropped about 40% since the beginning of the year. In the latest quarter, Coty reported a sales drop fueled by a 12% decline in the company’s mass-market beauty business unit, which includes drugstore brands such as Sally Hansen, Max Factor and Rimmel. Coty has cited headwinds including locked shelves in stores, immigration policy changes, and the ever-tightening squeeze on low-income consumers.

Sales growth has been slowing across the U.S. mass-market cosmetics industry and legacy brands like CoverGirl have been facing stiff competition from newer entrants like e.l.f. Beauty.

Coty plans to lean into its higher-end beauty brands as well as its mass-market fragrances, and merge them into a single business unit, according to a company announcement reviewed by The Wall Street Journal. Two executives from Coty’s mass-market beauty unit will leave the company.

Coty has hired Citi to advise on the strategic review, according to the announcement.

Fragrance sales in recent years have outperformed sales in other beauty product categories. Coty in August said it was making a big push into fragrance mists, which are lighter than traditional perfumes and gaining popularity as consumers layer scents and look for lower-priced treats.

Coty’s newly combined prestige and consumer beauty fragrance division—which will include fragrance brands like Gucci, Calvin Klein, Hugo Boss, Vera Wang and David Beckham—accounts for 69% of Coty’s sales.

Coty in 2020 sold a majority stake in its professional-beauty and hair-care businesses—including the Wella, Clairol and OPI brands—to private-equity firm KKR. Coty used much of the $2.5 billion cash proceeds to pay down debt.

Chinese tech firms have been stepping up efforts to upgrade their LLMs as competition rises

Chinese AI developer DeepSeek has released an experimental large language model that it says has much better training and reasoning, and which can be operated at a lower cost.

The Hangzhou-based company said its latest offering uses a “sparse attention” technique that cuts application programming interface prices by half. The API is the online interface that lets developers and companies access AI models and pay per use.

DeepSeek called the model the an advancement in its next-generation lineup of AI, in an article on Hugging Face, a developer forum, late Monday.

Chinese tech firms have been stepping up efforts to upgrade their LLMs as competition rises both at home and abroad. Last week, Alibaba Group rolled out a version of its flagship AI model that it described as its largest and most capable yet.

Western tech giants such as Google and OpenAI have also explored the “sparse attention” technique, which allows AI models to handle large amounts of information more efficiently. OpenAI wrote in 2019 that computing a full-attention matrix can be impractical for very large inputs, so “sparse patterns” where each output only considers a subset of inputs, is a better technique.

In a research paper released with the new model, DeepSeek said that its new model uses a “lightning indexer” and a “fine-grained token selection mechanism” to ensure attention is only applied to selected tokens.

Huawei Cloud said in a post late Monday that it has “quickly completed the adaptation” of the new DeepSeek-V3.2-Exp model.

DeepSeek’s V3.1 model and Alibaba’s Qwen3 series are the top-rated Chinese entries in the Artificial Analysis rankings of LLMs, behind offerings from players including OpenAI, xAI and Anthropic.

What shall we do with a shrunken Saylor?

The bloom has come off Michael Saylor’s rose.

In the world of bitcoin, no company has captured the public imagination quite like Strategy (née MicroStrategy). Under its executive chair, this erstwhile business software vendor has reinvented itself as a bitcoin investment vehicle. Its pivot in August 2020 from software to “stacking sats” has delivered a 23-fold gain for stockholders, and pioneered the idea of bitcoin treasury companies, inspiring more than 170 imitators. With over 640,000 bitcoin — about 3 per cent of the entire supply — Strategy is a genuine whale in the crypto ocean.

Yet since the unveiling of its so-called 21/21 capital strategy in late October — a plan to raise an eye-watering $42bn to buy more bitcoin — the company’s shares have lagged the very asset they are meant to outperform. So far in 2025, bitcoin has risen 22 per cent compared to just a 9 per cent gain in Strategy, an extraordinarily large “tracking error” by any measure. The stock still trades at a premium of roughly 1.4 times the company’s net asset value, but that premium has shrunk from over three times in November, suggesting mounting market unease.

The tension may sharpen with its most recent SEC filing. On Monday, Strategy disclosed a further $22.1mn purchase of bitcoin at an average price of $113,048. 

Typical Saylor, on the face of it —“Always Be Stacking,” he tweeted yesterday, echoing Alec Baldwin’s legendary tirade in the 1992 film Glengarry Glen Ross — even if the purchase size is much smaller than normal.

But the same 8-K filing also revealed the company had raised $128.1mn (mostly from selling common stock), leaving a gap of about $106mn.

That $106mn did not go into bitcoin. Instead, it will today be channelled into dividend payments owed on four classes of perpetual preferred stock.

The yawning gap between money raised and bitcoin purchased exposes the circularity of Saylor’s business model. Other than the legacy software arm — which generates little, if any, cash — the company sells no product or service. Its main output is its own securities, chiefly common stock. In effect, the company has transitioned from SaaS (software-as-a-service) to DaaS (dilution-as-a-strategy).

With no operational free cash flow to cover preferred dividends, Strategy must keep issuing new common shares to raise funds. It is the corporate equivalent of diluting common Peter to pay preferred Paul. The result is a system that subordinates ordinary shareholders twice over. They not only rank behind $8.2bn of convertible bondholders and $6.6bn of preferred stockholders in the event of any liquidation, but also shoulder the burden of financing the dividends that prop up those preferred instruments.

Saylor and his supporters talk of a financial “flywheel” and the “torque” generated by this structure, designed to magnify gains for common holders if bitcoin appreciates. But what we actually see is dilution and subordination, value structurally redirected from one stakeholder group to another. 

In short, an investment in Strategy reflects a multi-layered bet: on bitcoin itself, on the enduring premium to net asset value of its stock, and on the survival of a model that depends on constant newcomers to service Strategy’s own obligations. Above all, it’s a bet on Michael Saylor’s ability to untether the common stock from the relentless drag of its own dilution.

Affordable electric vehicles are spearheading China’s assault on a traditional stronghold for Japanese automakers

Surging sales of affordable Chinese electric cars are breaking Japanese automakers’ decades-long grip on south-east Asia, foreshadowing disruption across other regional vehicle markets.

The market share of Japan’s producers, led by Toyota, Honda and Nissan, has fallen to 62 per cent of car sales in south-east Asia’s six biggest markets in the first half of 2025, down from an average of 77 per cent in the 2010s, according to PwC data analysis. China has increased its share from negligible volumes to more than 5 per cent of 3.3mn annual car sales in those markets.

Faced with a brutal price war at home, China’s EV makers have set their sights on exports nearby due to a region-wide free trade deal that grants their cars duty-free market access.

“Chinese EV manufacturers’ market entry has heralded the end of an era of unrivalled dominance for Japan in south-east Asia,” said Patrick Ziechmann, a Malaysia-based partner at PwC.

Ramesh Narasimhan, who formerly led Nissan in Thailand, said Japanese auto groups would keep losing market share because of China’s offensive in their “backyard”, where previously they “could do no wrong”.

“It’s easy to take pricing actions that enable you to grow your volume and market share” for the Chinese, he said. “You see that across markets in south-east Asia.”

Even so, Chinese brands may struggle to sustain growth if the region’s EV subsidies are pared back, governments demand local production and electricity infrastructure constraints become barriers.

In Indonesia, the region’s largest consumer market with a population of around 280mn, Chinese car sales are growing exponentially, even as total sales slide due to economic challenges.

Japanese brands remain market leaders, but sales are slipping by the month. Toyota’s sales of cars and trucks fell 12 per cent between January and August this year to 161,079 units in Indonesia, while those of China’s BYD tripled to 18,989 units.

The key to Chinese companies’ success is affordable battery EVs. Prices of Chinese cars in Indonesia start as low as Rp200mn ($12,000).

“Price is the . . . decisive factor,” said Jongkie Sugiarto, vice chair of the Association of Indonesian Automotive Industries. “The Japanese have to do something, otherwise they are going to lose more and more of the market share.”

There are 15 Chinese brands in the Indonesian market, and five more are expected to launch soon, Jongkie said. At least three of those companies have set up manufacturing facilities in Indonesia, while the rest assemble cars in the country through local partners, including Jongkie’s company, PT Handal Indonesia Motor.

Chinese companies have also benefited from incentives offered by the Indonesian government, including import duty exemptions for battery electric vehicles. But those benefits will cease from next year, and automakers will be required to produce locally to receive subsidies.

Subsidy eligibility requirements have already proven challenging for smaller Chinese automakers. Neta, a Chinese EV brand, was this year warned by Thailand’s finance ministry that it might have to return subsidies if it fails to build at least three cars locally for every two imported by the end of the year. 

In Singapore, China’s takeover has been even more stark. BYD became the top-selling car brand this year, overtaking long-term market leader Toyota, which, as recently as 2023, accounted for 25 per cent of sales.

Government efforts to improve electric vehicle infrastructure, combined with several Chinese brands entering the market, have encouraged Singaporeans to switch to EVs. In BYD’s case, it has targeted the market with flashy showrooms in malls and in the city centre, as well as tie-ups with bars and restaurants.

“There is a bit of a market shift in Singapore right now,” said Adam Mirza, managing director at Prestige Auto Export, which deals in Japanese cars. Japanese brands “have accepted the fact that they can’t compete on EVs with the Chinese brands.”

Chinese EV makers are also hoping to leverage their leadership in vehicle software technology, which Japanese legacy carmakers have been slow to develop. Chinese start-up Xpeng started shipping the X9 model, which includes smartphone-controlled parking, to the region in February.

“We see south-east Asia as a market full of potential,” said Xpeng president Brian Gu in April.

Jessada Thongpak, associate director for Asean at S&P Global Mobility, said China’s south-east Asia advance was likely to be replicated elsewhere.

“We’re much more advanced. In Latin America, it’s the early adoption stage. We’re still in early adoption here but it’s resilient uptake,” he said, predicting Chinese companies would account for 20 per cent of Thailand’s car sales by 2032.

As a regional manufacturing hub, Thailand is also being transformed. Subaru shut down its plant last year, while Suzuki plans to close its facilities by the end of 2025. By contrast, BYD last month exported its first vehicle from Thailand to Europe.

Liu Xueliang, BYD’s Asia-Pacific sales director, said Japanese carmakers historically have helped boost the region’s economic growth. “But we’ll let consumers decide who the ultimate winners are,” he added.

Churn at Tesla and xAI comes amid disillusionment with billionaire’s activism, strategic pivots and mass lay-offs

Elon Musk’s business empire has been hit by a wave of senior departures over the past year, as the billionaire’s relentless demands and political activism accelerate turnover among his top ranks.

Key members of Tesla’s US sales team, battery and power-train operations, public affairs arm, and its chief information officer have all recently departed, as well as core members of the Optimus robot and AI teams on which Musk has bet the future of the company.

Churn has been even more rapid at xAI, Musk’s two-year-old artificial intelligence start-up, which he merged his social network X in March. Its chief financial officer and general counsel recently departed after short stints, within a week of each other.

The moves are part of an exodus from the conglomerate of the world’s richest man, as he juggles five companies from SpaceX to Tesla with more than 140,000 employees. The Financial Times spoke to more than a dozen current and former employees to gain an insight into the tumult.

While many left happily after long service to found start-ups or take career breaks, there has also been an uptick in those quitting from burnout, or disillusionment with Musk’s strategic pivots, mass lay-offs and his politics, the people said.

“The one constant in Elon’s world is how quickly he burns through deputies,” said one of the billionaire’s advisers. “Even the board jokes, there’s time and then there’s ‘Tesla time’. It’s a 24/7 campaign-style work ethos. Not everyone is cut out for that.”

Robert Keele, xAI’s general counsel, ended his 16-month tenure in early August by posting a AI-generated video of a suited lawyer screaming whilst shovelling molten coal. “I love my two toddlers and I don’t get to see them enough,” he commented.

Mike Liberatore lasted three months as xAI CFO before defecting to Musk’s arch-rival Sam Altman at OpenAI. “102 days — 7 days per week in the office; 120+ hours per week; I love working hard,” he said on LinkedIn.

Top lieutenants said Musk’s intensity has been sharpened by the launch of ChatGPT in late-2022, which shook up the established Silicon Valley order.

Employees also perceive Musk’s rivalry with Altman — with whom he co-founded OpenAI, before they fell out — to be behind the pressure being put on staff.

“Elon’s got a chip on his shoulder from ChatGPT and is spending every waking moment trying to put Sam out of business,” said one recent top departee.

Last week, xAI accused its rival of poaching engineers with the aim of “plundering and misappropriating” its code and data centre secrets. OpenAI called the lawsuit “the latest chapter in Musk’s ongoing harassment”.

Other insiders pointed to unease about Musk’s support of Donald Trump and advocacy for far-right provocateurs in the US and Europe.

They said some staff dreaded difficult conversations with their families about Musk’s polarising views on everything from transgender rights to the murder of conservative activist Charlie Kirk.

Musk, Tesla and xAI declined to comment.

Tesla has traditionally been the most stable part of Musk’s conglomerate. But many of the top team left after it culled 14,000 jobs in April 2024. Some departures were triggered as Musk moved investment away from new EV and battery projects that many employees saw as key to its mission of reducing global emissions — and prioritised robotics, AI and self-driving robotaxis.

Musk cancelled a programme to build a low-cost $25,000 EV that could be sold across emerging markets — dubbed NV-91 internally and Model 2 by fans online, according to five people familiar with the matter. 

Daniel Ho, who helped oversee the project as director of vehicle programmes and reported directly to Musk, left in September 2024 and joined Google’s self-driving taxi arm, Waymo.

Public policy executives Rohan Patel and Hasan Nazar and the head of the power-train and energy units Drew Baglino also stepped down after the pivot. Rebecca Tinucci, leader of the supercharger division, went to Uber after Musk fired the entire team and slowed construction on high-speed charging stations.

In late summer, David Zhang, who was in charge of the Model Y and Cybertruck rollouts, departed. CIO Nagesh Saldi left in November.

Vineet Mehta, a company veteran of 18 years, described as “critical to all things battery” by a colleague, resigned in April. Milan Kovac, in charge of Optimus humanoid robotics programme, departed in June. 

He was followed this month by Ashish Kumar, the Optimus AI team lead, who moved to Meta. “Financial upside at Tesla was significantly larger,” wrote Kumar on X in response to criticism he left for money. “Tesla is known to compensate pretty well, way before Zuck made it cool.”

Amid a sharp fall in sales — which many blame on Musk alienating liberal customers — Omead Ashfar, a close confidant known as the billionaire’s “firefighter” and “executioner”, was dismissed as head of sales and operations in North America in June. Ashfar’s deputy Troy Jones followed shortly after, ending 15 years of service.

“Elon’s behaviour is affecting morale, retention and recruitment,” said one long-standing lieutenant. He “went from a position from where people of all stripes liked him, to only a certain section”.

Few who depart criticise Musk for fear of retribution. But Giorgio Balestrieri, who had worked for Tesla for eight years in Spain, is among a handful to go public, saying this month he quit believing that Musk had done “huge damage to Tesla’s mission and to the health of democratic institutions”.

“I love Tesla and my time there,” said another recent leaver. “But nobody that I know there isn’t thinking about politics. Who the hell wants to put up with it? I get calls at least once a week. My advice is, if your moral compass is saying you need to leave, that isn’t going to go away.”

But Tesla chair Robyn Denholm said: “There are always headlines about people leaving, but I don’t see the headlines about people joining.

“Our bench strength is outstanding . . . we actually develop people really well at Tesla and we are still a magnet for talent.” 

At xAI, some staff have baulked at Musk’s free-speech absolutism and perceived lax approach to user safety as he rushes out new AI features to compete with OpenAI and Google. Over the summer, the Grok chatbot integrated into X praised Adolf Hitler, after Musk ordered changes to make it less “woke”.

Ex-CFO Liberatore was among the executives that clashed with some of Musk’s inner circle over corporate structure and tough financial targets, people with knowledge of the matter said.

“Elon loyalists who exhibit his traits are laying off people and making decisions on safety that I think are very concerning for people internally,” one of the people added. “Mike is a business guy, a capitalist. But he’s also someone who does stuff the right way.”

The Wall Street Journal first reported some of the details of the internal disputes.

Linda Yaccarino, chief executive of X, resigned in July after the social media platform was subsumed by xAI. She had grown frustrated with Musk’s unilateral decision-making and his criticism over advertising revenue.

xAI’s co-founder and chief engineer, Igor Babuschkin, stepped down a month later to found his own AI safety research project.

Communications executives Dave Heinzinger and John Stoll, spent three and nine months at X respectively, before returning to their former employers, according to people familiar with the matter. 

X also lost a rash of senior engineers and product staff who reported directly to Musk and were helping to navigate the integration with xAI.

This includes head of product engineering Haofei Wang and consumer product and payments boss Patrick Traughber. Uday Ruddarraju, who oversaw X and xAI’s infrastructure engineering, and infrastructure engineer Michael Dalton were poached by OpenAI. 

Musk shows no sign of relenting. xAI’s flirtatious “Ani bot” has caused controversy over sexually explicit interactions with teenage Grok app users. But the company’s owner has installed a hologram of Ani in the lobby of xAI to greet staff.

“He’s the boss, the alpha and anyone who doesn’t treat him that way, he finds a way to delete,” one former top Tesla executive said.

“He does not have shades of grey, is highly calculated, and focused . . . that makes him hard to work with. But if you’re aligned with the end goal, and you can grin and bear it, it’s fine. A lot of people do.”

Global dealmaking is up by a third this year, setting 2025 up to be the best 12-month stretch since 2021

A record number of megadeals, such as Monday’s $55bn leveraged buyout of Electronic Arts, has propelled global mergers and acquisitions activity past $1tn in the third quarter.

The take-private deal for the video games maker behind the Madden NFL and Battlefield series capped an unusually busy summer for dealmaking, with 14 deals valued in excess of $10bn announced globally, according to data from the London Stock Exchange Group.

The series of megadeals has emboldened dealmakers to believe the much-heralded M&A boom under US President Donald Trump could be coming to fruition, after hopes were initially dashed by the uncertainty created by the tariff policy announced on “liberation day”.

Railroad behemoth Union Pacific’s $85bn takeover of Norfolk Southern, mining company Anglo American’s $50bn tie-up with Teck and cyber security group Palo Networks’ $25bn acquisition of CyberArk rank among the biggest deals of the summer.

In total, there were 47 deals valued at more than $10bn over the first three quarters, the highest number since LSEG records began. Big break-ups, such as the decision to split Kraft Heinz and Keurig Dr Pepper’s plans to hive off its coffee business after buying JDE Peet’s, have also been driving deal activity.

“The previously unimaginable now seems possible,” said Eric Tokat, co-president at boutique bank Centerview Partners. “Deals that people didn’t think are possible are now being brought back to the table.”

“A lot of decision makers are re-examining work that they did several years ago on a deal and asking for it to be refreshed through the lens of the realities today,” said Brandon Van Dyke, a partner at Skadden Arps who advised on the railroad megamerger.

“The impetus to dust off those plans could be driven by a different market environment, a different antitrust approach or just the confidence to do deals,” he added.

Globally, M&A activity this year has reached nearly $3.1tn, up 35 per cent compared with the same period last year and putting this year on track to be the best 12-month stretch since 2021. Private-equity deals take up a smaller share of M&A compared with this time last year, but interest rates are likely to boost sponsor activity.

The upshot has been a near-record fee haul for investment banks. Globally, $95.4bn of investment banking fees were generated in the nine months to the end of September, the second-highest year-to-date total since LSEG records began.

Bank of America is set to earn an estimated $130mn fee from advising Norfolk Southern on the railroad tie-up if the deal makes it through a two-year antitrust review, potentially eclipsing the record $123mn fee JPMorgan Chase earned from advising Allergan on its $63bn sale to AbbVie.

Charles Ruck, global chair of the corporate department at Latham & Watkins, who advised EA, Teck and CyberArk on their megadeals, said he was at his busiest since the special purpose acquisition company craze in 2021.

“It’s been a while since the market has rewarded companies for doing deals and I think we’re there again,” said Ruck. “M&A is infectious: the CEO of company A does a big deal and then the CEO of company B starts thinking maybe I need to do something.”

“The M&A market is on fire at the moment and I don’t think that’s changing anytime soon,” said Jacob Kling, co-chair of Wachtell Lipton’s M&A practice. “We are seeing huge transformational deals getting done in a way we haven’t seen in years.”