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Tesla Regains Consumer Reports Endorsements as GM Brands Stumble

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(Bloomberg) — Tesla Inc.’s Model 3 and S sedans reclaimed recommendations from Consumer Reports, though the electric-car maker still ranks toward the bottom of the group’s annual reliability survey along with other U.S. automakers’ brands.The two Tesla models earned an average rating in Consumer Reports’ reliability survey, leading the organization to restore endorsements it revoked from the Model 3 in February and the Model S a year ago. Five of General Motors Co. and Fiat Chrysler Automobiles NV’s brands placed among the 10 worst in the survey, which was again dominated by Japanese and Korean carmakers.Consumer Reports’ fluctuating views of Tesla’s sedans reflect the company’s frequent design changes and rush to ramp up production, according to Jake Fisher, senior director of auto testing. The Model X still scores among the least reliable in the survey, leaving the electric-car maker’s brand ranking 23rd out of 30.“We recommend the Model 3 with a caveat,” Fisher said in an interview. “I don’t know what will happen in the next six or 12 months because the car keeps changing, so results may vary.”GM’s WoesReliability issues for established automakers including GM and Volkswagen AG frequently relate to their new vehicles offering technologically advanced features for the first time, such as touchscreen infotainment and driver-assistance systems.“GM really has consistently had problems with new model launches as they add new technology, and it was across the board for their vehicles,” Fisher said. Three of its four brands finished in the bottom 10, with Cadillac finishing dead last, thanks in part to a troublesome infotainment system. VW’s namesake fell nine spots to 27th, and its luxury brand Audi slipped seven places to 14th.Buick, the only GM brand to finish around the middle of the pack, fell five spots to 18th. Chevrolet ranked 25th, with some of its highest-volume models — the Chevy Colorado mid-size pickup and Silverado full-size truck — scoring poorly.Chevy’s Silverado rated 20 on a 100-point scale, matching Ford’s F-150 and narrowly beating the Ram pickup’s 18. The overall Ford brand ranking was unchanged from a year ago, at 16th.GM’s is having trouble with the drive system and in-vehicle electronics on the new Chevy Silverado and GMC Sierra pickups. That’s problematic especially since the new trucks underwent modest changes and have disappointed Consumer Reports’ test drivers. GM probably took a conservative approach to engineering the new trucks because the previous-generation Silverado and Sierra had reliability issues, Fisher said.For GM, improvement is a must. The Silverado and Sierra are among its most profitable vehicles, and the automaker has been fending off a challenge from Fiat Chrysler’s Ram, which has gained market share at Chevy’s expense. There’s also more competition on the way: Tesla plans to show off an electric truck on Nov. 21. The pickup, which Chief Executive Officer Elon Musk has said is inspired by the sci-fi film “Blade Runner,” will try to crack Detroit’s profit center along with another electric upstart, Amazon.com Inc.-backed Rivian Automotive Inc.Asian DominationAsian brands fared best in the study. Toyota Motor Corp.’s Lexus luxury line again took top honors, its namesake brand finished third, and Japanese partner Mazda was sandwiched in between. The best vehicle in the study was the Lexus IS sedan, with a score of 99.The Genesis luxury brand from South Korea’s Hyundai Motor Co. placed fifth, and the company’s namesake line finished in sixth. Among European brands, only Porsche and Mini were in the top 10.Tesla’s Model 3 was initially recommended by Consumer Reports in 2018 because the early models fared well in terms of customer satisfaction and reliability was initially good enough. Tesla made a lot of changes to the car that year, including adding more comfortable seating and improving the suspension to soften the ride. But some tweaks brought about glitches that cost the car the group’s blessing.In the past year, Tesla has fixed many of those problems, and its two sedans have risen in the rankings. Fisher spoke with Musk after the Model 3 lost its recommendation last year and said the CEO was eager to hear what owners were complaining about.“He wanted the feedback,” Fisher said. “He wants to build the best cars in the world.”To contact the reporter on this story: David Welch in Southfield at dwelch12@bloomberg.netTo contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Kevin Miller, Keith NaughtonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.



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Happy contrails … Delta sees strong 2020 profit, revenue

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Delta Air Lines, the most profitable U.S. carrier, expects profits and revenue to increase next year on sustained demand for air travel and stable prices for jet fuel.

The airline’s top executive, however, warns that concern about the environmental impact of flying — including flight-shaming and the potential for higher taxes on emissions — is “the existential threat” to Delta’s ability to keep growing.

“You see it happening in Europe, it’s increasingly coming here to the U.S., you’ll see it on a global scale,” CEO Ed Bastian said Thursday. “We are seen in the world’s eyes as somewhat of a dirty industry.”

During a meeting with analysts in Atlanta, Bastian said the airline industry has done a “terrible” job explaining how it is reducing emissions through the use of more fuel-efficient planes, and needs to more forcefully argue for the economic and other benefits of travel.

On Thursday, however, investors seemed more interested in Delta’s short-term financial outlook. They bid up shares of Delta Air Lines Inc. by $1.89, or 3.4%, to $56.97 in midday trading.

The Atlanta-based airline said that 2020 adjusted earnings will be between $6.75 and $7.75 per share. The midpoint of that range is modestly higher than the $7.05 projected by industry analysts, according to a survey by FactSet.

Delta expects revenue to grow 4% to 6% over this year, above the 3.6% increase predicted by the analysts.

Bastian said strong spending by travellers boosting the airline now should spill into 2020.

“Holiday bookings look good, and bookings into the first quarter look strong,” he said in an interview with The AP. “So the U.S. consumer is holding (up) well.”

However, many analysts believe fares will fall next year if and when regulators allow the grounded Boeing 737 Max to resume flying. American, Southwest and United would likely add new seats to the market with their Max jets, which have been grounded since March while Boeing works to fix problems that played a role in two deadly crashes overseas.

There are a number of other factors that could influence travel decisions, including political uncertainty with a general election in the U.S. next year.

“The last election cycle, in 2016, we did see spending slow down a little bit in certain spaces — some consumer spending as well as business spending,” Bastian said.

Delta expects to increase its passenger-carrying capacity by 3% to 4% next year — unchanged from earlier plans — with a chunk of that related to resuming flights to India.

Delta predicted a modest increase in costs. After a sustained increase between 2016 and 2018, the cost of jet fuel has remained stable this year. This summer, Delta increased spending on overtime to handle heavy traffic, and it is negotiating with pilots over a new contract that is certain to include pay raises.

The airline said this week that it plans to hire 1,300 pilots in 2020, although Bastian said most will replace those who are retiring or leaving the airline.

Delta also announced it will invest in privately held Wheels Up, which lets members use private planes at an hourly rate. Delta did not disclose the size of its investment or how much equity it will get in Wheels Up, which will have a fleet of 190 planes.

Delta has reported net income of more than $33 billion since the start of 2010 after losing $26 billion in the previous decade, which was marked by terror attacks using U.S. planes, two recessions and an oil-price shock.

In recent years, the airline has plowed some of those earnings into new aircraft that will be about 25% more fuel-efficient than the planes they will replace.

Aviation accounts for 2% to 3% of carbon emissions, but it is growing faster than most other sources. Airline executives including Air France CEO Anne Rigail have sounded alarms about flight-shaming. UBS said its survey in the U.S. and Europe found that one in five respondents claimed they had cut back on flying in the past year.

And Time just named 16-year-old Swedish climate activist Greta Thunberg its youngest Person of the Year for leading a movement that includes avoiding flying.

In response to criticism, airlines have stepped up carbon offsets — investing in projects to reduce climate-changing pollution — and flown a few flights with biofuels. But true breakthroughs, something like all-electric airliners, are years if not decades away.

David Koenig, The Associated Press


The post Happy contrails … Delta sees strong 2020 profit, revenue appeared first on Canadian Business – Your Source For Business News.



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Apple Avoids $150-Per-iPhone Levy After U.S., China Reach Deal

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(Bloomberg) — Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Apple Inc. avoided 15% tariffs on its most important products, the iPhone, iPad and MacBooks, after U.S. President Donald Trump signed off on a trade deal with China.The new import duties were due to kick in Dec. 15 and could have added about $150 to the price of iPhones during the crucial holiday shopping season, according to Wedbush Securities analyst Dan Ives.“Trump delivered an early Christmas present to Apple,” Ives wrote in a note to investors following news of the trade deal. “If this tariff went through it would have been a major gut punch for semi players/Apple and could have thrown a major wrench into the supply chain and demand for the holiday season.”Holding product prices steady while swallowing additional tariffs would have cut Apple earnings per share by about 4% next year. If the company reacted by raising iPhone prices, demand would shrink 6% to 8% in 2020, Ives estimated.Apple already is paying duties on the Apple Watch, AirPods headphones, iMac desktop computer and HomePod speaker. Some of those levies may be rolled back. The deal presented to Trump on Thursday included a promise by the Chinese to buy more U.S. agricultural goods. Officials also discussed possible reductions of existing duties on Chinese products, according to people familiar with the matter.Although the Dec. 15 tariffs were averted, the broader trade war has exposed a weakness at the heart of Apple’s business. The world’s largest technology company relies on suppliers and manufacturing partners that are mostly based in China. Apple can’t quickly move production to other countries, so it has counted on a furious White House lobbying campaign this year, led by Chief Executive Officer Tim Cook, to protect its key products from tariffs.Cook met frequently with Trump this year, and even took criticism for standing beside the president as he blasted the media and House speaker Nancy Pelosi at a Mac Pro assembly facility in Texas last month.Trump said at that event that it isn’t fair for Apple to be taxed on iPhones built in China given that South Korean rival Samsung Electronics Co. wouldn’t have to pay the duties.“Cook has become so crucial in these ongoing China negotiations,“ Ives wrote on Thursday. Apple “more than any company out there has the most to lose if this tariff war does not see a truce going forward.”To contact the reporter on this story: Mark Gurman in Los Angeles at mgurman1@bloomberg.netTo contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Alistair Barr, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.



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Safra Catz to Remain Sole Oracle CEO After Mark Hurd’s Death

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Oracle executive chairman Larry Ellison said the software giant won’t hire a second chief executive officer to run the business alongside CEO Safra Catz, deciding not to replace the late Mark Hurd.

“We have no plans for having a second CEO,” Ellison said Thursday during a conference call with analysts. He pointed to the company’s second-tier of executives, who are being groomed for future leadership. “Those people will be the next CEO when Safra and I retire, which will be no time soon.”

Bloomberg News reported in November that Oracle decided to hold off on naming a direct successor to Hurd and was instead focusing on grooming its leaders who are now running business divisions. Hurd had been co-CEO with Catz for five years before his death in October.

Additionally, Oracle gave a sales forecast for the current quarter that was in line with analysts’ estimates, signaling muted demand for the company’s software amid its uneven transition to cloud computing.

Revenue will increase 1% to 3% in the fiscal third quarter, Catz said Thursday on a conference call with analysts. Wall Street projected a 2.3% jump.

Earlier, the world’s second-largest software maker reported sales gained less than 1% to $9.61 billion in the period that ended Nov. 30, short of analysts’ projections of $9.65 billion. Shares declined 3% in extended trading after closing at $56.47 in New York. The stock has gained 25% this year.

Since Hurd’s death, Ellison and Catz have sought to reassure investors about the company’s stability, emphasizing Oracle’s advantage in the market for financial planning applications, where it’s seeing some of its strongest sales growth.

While Oracle has made little headway in its effort to compete with the biggest cloud companies to rent computing power and storage, it remains a leader in database software. Now, the company is betting on its new Autonomous Database, which runs without a need for human administrators, to spur revenue in the face of strong competition from Amazon.com Inc.’s cloud division.

After inconsistent sales growth the past five years, Catz pledged to investors in September that revenue would accelerate this fiscal year and next, and that earnings per share would grow by a double-digit percentage. To help reach that goal, the company that month announced a new artificial intelligence-driven operating system, as well as partnerships with software makers such as VMware Inc. and Box Inc.

In the fiscal second quarter, revenue from cloud services and license support climbed 2.6% to $6.8 billion. While that metric includes sales from hosting customers’ data on the cloud, a large portion is generated by maintenance fees for traditional software housed on clients’ corporate servers.

Cloud license and on-premise license sales decreased 7.5% to $1.13 billion in the period, suggesting the company is signing fewer new deals.

Profit, excluding certain items, was 90 cents a share, compared with analysts’ average estimate of 89 cents. In the current quarter, Oracle projected earnings of 95 cents a share to 97 cents a share. Analysts, on average, estimated 96 cents a share.



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