Posts with «finance» label

DoorDash is laying off around 1,250 corporate employees

DoorDash says it is laying off around 1,250 employees in the latest instance of belt tightening at a well-known tech company. CEO Tony Xu wrote in a note to employees that DoorDash sped up hiring during the COVID-19 pandemic to catch up with its growth, since the company was actually undersized as of early 2020. Most of DoorDash's investments are said to be paying off. However, Xu noted that "while we’ve always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth. That’s on me. As a result, operating expenses grew quickly."

Xu added that DoorDash has "been more resilient than other ecommerce companies." Third-party data suggests that the company increased its share of the food delivery market to 56 percent of sales as of September. However, DoorDash is still vulnerable to external factors, such as rising interest rates and the threat of a recession.

The company's growth has slowed and Xu said if DoorDash didn't cut costs, its operating expenses would outpace its revenue. The layoffs will account for around six percent of DoorDash's workforce, according to Bloomberg.

DoorDash's severance package will include 17 weeks of pay along with a February 2023 stock vest for those who are eligible. Health benefits will run through the end of March and COBRA coverage will remain available for up to 18 months. Xu noted that DoorDash will set March 1st as the employment termination date to give immigrant workers who are in the US on visas more time to find another job. Moreover, DoorDash says it will offer recruiting support.

Lyft, another major player in the gig economy space, said earlier this month it would lay off 13 percent (nearly 700) of its employees. Other notable tech companies have conducted mass layoffs in recent months, including Meta, Twitter, Amazon, Roku, Snap, Patreon and Peloton.

Crypto lender BlockFi files for Chapter 11 bankruptcy amid FTX fallout

Cryptocurrency lender BlockFi has filed for Chapter 11 bankruptcy protection. The move comes just over two weeks after BlockFi suspended all platform activity, including withdrawals, in the wake of crypto exchange FTX's implosion. "Given the lack of clarity on the status of, FTX US and Alameda, we are not able to operate business as usual," the company said in an FAQ. Withdrawals remain paused.

"BlockFi’s chapter 11 cases will enable BlockFi to stabilize its business and provide BlockFi with the opportunity to consummate a reorganization that maximizes value for all stakeholders," BlockFi said. "The court-supervised restructuring process is transparent and encourages dialogue between all stakeholders."

As with many other players in the industry, BlockFi faced an uncertain future after several crypto companies crumbled in the spring, taking the prices of many cryptocurrencies down with them. Soon after, FTX agreed to prop up BlockFi with a $400 million credit line. The agreement also gave FTX the option to buy BlockFi for up to $240 million. As The New York Times notes, that meant the companies had close financial ties and FTX's collapse into bankruptcy has had a knock-on effect on BlockFi.

“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the company,” Mark Renzi of Berkeley Research Group, BlockFi's financial advisor, said in a statement. “From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders.”

BlockFi says that, as part of its restructuring, it will "focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities." However, it noted that recoveries from FTX are likely to be delayed, given that company's bankruptcy process. In addition, BlockFi says it has $256.9 million in cash on hand, which should provide “sufficient liquidity to support certain operations during the restructuring process," such as paying employee wages and continuing benefits.

In a court filing, BlockFi estimated it had more than 100,000 creditors and consolidated liabilities of between $1 billion and $10 billion. Among the listed creditors are FTX (to which it owes $275 million in loan repayments) and the Securities and Exchange Commission, which it owes $30 million.

Earlier this year, BlockFi agreed to pay $100 million to settle charges from the SEC and 32 states. The SEC claimed that BlockFi offered interest accounts without registering them under the Securities Act. The agency also found that the company made "false and misleading" claims related to the level of risk in its lending activity and loan portfolio.

Filing for Chapter 11 bankruptcy protection doesn't inherently mean a company is done for. The process allows a struggling business to keep trading while it restructures and looks for ways to pay back creditors. However, bankruptcy isn't easy to come back from, and BlockFi is just the latest in a long line of dominoes to fall in the precarious crypto industry.

Arrival CEO steps back amidst the electric van startup's financial woes

Denis Sverdlov, the CEO and founder of the embattled EV startup Arrival, has stepped back from the company's day-to-day operations, according to The Financial Times and Bloomberg. Sverdlov won't be leaving the company completely but will instead switch places with Arrival chair Peter Cuneo, who served as CEO of Marvel Entertainment before it was acquired by Disney. 

Arrival had big plans for the EV space and was developing an electric van, bus and car. In the middle of 2022, however, the company cut its workforce because it was running out of cash. It also announced that it was shuttering its bus and car projects completely to focus on developing its vans for the US market, citing the EV tax credits the US offers as a major factor in its decision. Cuneo will run the company while it's seeking to raise funds under the threat of bankruptcy. 

Arrival likely decided on the swap, hoping Cuneo could use his expertise — after all, he's known for orchestrating successful corporate turnarounds and had helped guide Marvel out of bankruptcy during his tenure as its CEO. Whatever Cuneo decides to do, he'll have to accomplish it without the help of one key executive: Avinash Rugoobur, company president and strategy chief, has left his roles but will still serve as a board member. 

The EV startup teamed up with UPS to build a new generation of electric delivery vans in 2018, and in 2020, UPS put in an order for 10,000 vehicles to be rolled out over the next few years. Arrival said in September that despite issues with production, it was done building a "production verification vehicle" and that it will be able to deliver 20 vans to customers by the end of the year. 

HP will lay off up to 6,000 employees over the next few years

Add HP to the list of tech companies cutting staff. The PC maker plans to lay off as many as 6,000 employees over the next three years. The cuts are part of a broader restructuring HP announced during its Q4 earnings call on Tuesday (via Gizmodo). The company estimates its “Future Ready Transformation plan” will save it $1.4 billion by the end of fiscal 2025, in part by reducing its headcount by at least 4,000 employees.

“The company expects to reduce gross global headcount by approximately 4,000-6,000 employees,” HP said. “These actions are expected to be completed by the end of fiscal 2025.”

HP employs approximately 51,000 employees globally. The company’s most recent fiscal quarter saw revenue drop by more than 11 percent year-on-year to $14.8 billion. CEO Enrique Lores blamed the poor performance on macroeconomic conditions and “softening demand” for the company’s PCs and printers.

Following Tuesday’s announcement, Lores said HP’s restructuring plan would “enable [the company] to better serve our customers and drive long-term value creation by reducing our costs and reinvesting in key growth initiatives to position our business for the future.”

HP isn’t the only tech company to announce significant job cuts in recent weeks. Twitter completed multiple rounds of layoffs after Elon Musk took control of the company on October 27th. Meta and Amazon also announced job cuts this month. In the case of the social media giant, the 11,000 employees it let go on November 9th represented the first mass layoffs in the company’s history.

FTX implosion could affect 'more than one million' investors

Bankruptcy documents filed by the crypto exchange FTX indicate that it currently faces more than 100,000 creditors, but that number could expand to over one million, The Financial Times has reported. The company also stated that it has been in contact with US federal prosecutors, as well as "dozens of federal state and international regulatory agencies" over the last few days. 

FTX filed for bankruptcy last week following the sudden collapse of its exchange. Today, the Securities Commission of The Bahamas said it had received court approval to appoint two partners from the Bahamas and Hong Kong to oversea the unwinding of FTX Digital Markets, a key part of FTX. The filing called the state of affairs "unprecedented," noting that "barely more than a week ago, FTX, led by its co-founder Sam Bankman-Fried, was regarded as one of the most respected and innovative companies in the crypto industry." 

In addition, the Royal Bahamas Police confirmed yesterday that they were working "to investigate if any criminal misconduct occurred," according to the FT. The day after the bankruptcy was filed, the company reported that millions of dollars went missing from crypto wallets following "unauthorized transactions." In addition, at least $1 billion worth of customer funds vanished from FTX prior to that.

FTX's troubles started after the price of its native FTT token plunged and numerous users withdrew their cryptocurrency. After it was reported that FTX was facing a liquidity crisis, rival Binance said it would sell off around over $500 million worth of FTT, all but wiping out the token's value. Binance then said it would take over FTX, but backed out of the deal a day later, citing concerns that emerged while carrying out due diligence. Bankman-Fried said he plans to eventually publish an account detailing exactly what happened to FTX.

Hulu with Live TV adds 14 new channels ahead of next month's price increase

Hulu is adding 14 new channels to its Live TV offering, the Disney-owned streaming service announced on Monday. Five of the additions – the Weather Channel, Comedy.TV, Hallmark Channel, Hallmark Movies & Mysteries and Hallmark Drama – are already available to watch, with the remaining nine (most of them Vevo music channels) joining the service on December 1st.

That means most of the new additions will arrive a week before Disney increases the cost of its Hulu + Live TV bundle. After December 8th, the with ads package will cost $75 per month, up from $70 currently. With today’s expansion, Hulu notes the Live TV component of its service provides access to more than 85 channels, with mainstays like CNN, EPSN, MTV and the NFL Network represented.

For some, the new channels might make them reconsider canceling or modifying their Hulu + Live TV subscription, an outcome Disney is clearing banking on. Last week, the company announced Disney+, Hulu and ESPN+ had a combined customer base of 236 million subscribers, putting the company in the ballpark of Netflix’s numbers. At the same time, Disney said operating losses for streaming increased from $0.8 billion to $1.5 billion during its most recent fiscal quarter. Moving forward, Walt Disney CEO Bob Chapek said the company expects those losses to narrow, partly thanks to the price increases it announced earlier this year.

FTX investigates ‘unauthorized transactions’ after millions go missing from crypto wallets

Mere hours after filing for Chapter 11 bankruptcy protection, FTX’s fraught situation worsened dramatically. On late Friday night, the crypto exchange claimed it had been hacked after millions of dollars in digital assets were siphoned from FTX wallets despite the company freezing withdrawals earlier in the day. The exact amount of missing money is unclear, but CoinDesk puts the figure at more than $600 million.

“FTX has been hacked. FTX apps are malware.” the company posted on its official Telegram account. It urged customers to avoid the FTX website and delete its apps from their phones. Following the announcement, FTX General Counsel Ryne Miller said the company was moving all of its digital assets offline “to mitigate damage upon observing unauthorized transactions."

Following the Chapter 11 bankruptcy filings - FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening - to mitigate damage upon observing unauthorized transactions.

— Ryne Miller (@_Ryne_Miller) November 12, 2022

As CoinDesk points out, some crypto community members have speculated the funds may have been withdrawn by someone from FTX founder Sam Bankman-Fried’s inner circle. Bankman-Fried hasn’t commented on the incident. The missing millions are in addition to at least $1 billion worth of customer funds that vanished from FTX before the company filed for bankruptcy. According to Reuters, Bankman-Fried “secretly transferred” $10 billion from the crypto exchange to his trading company Alameda Research. He reportedly disclosed the financial gap to other FTX executives on November 6th, mere days before Binance announced and subsequently abandoned its bid to rescue the firm.

“We didn’t secretly transfer,” he told Reuters. “We had confusing internal labeling and misread it.” When asked about the missing funds, he reportedly replied “???” On Saturday, Bankman-Fred also denied reports he had flown to Argentina after he resigned as CEO of FTX.

Disney reportedly freezes hiring and expects some layoffs

Disney CEO Bob Chapek has told division leads in a letter that the company is implementing cost cutting measures in part to help it "achieve the important goal of reaching profitability for Disney+ in fiscal 2024." Based on the internal memo obtained by CNBC, Disney is planning to limit additions to its workforce through a targeted hiring freeze. It will still welcome new people for the "most critical, business-driving positions," but all other roles are on hold for now. Chapek has also admitted in his letter that Disney "anticipate[s] some staff reductions" as it looks at all aspects of its business to find places where it can save money. 

Chapek's letter comes after Disney reported less-than-stellar earnings for the previous quarter. While Disney+ welcomed 12.1 million new subscribers for the company's fourth fiscal quarter ending on October 1st, the company's operating loss for streaming jumped from $0.8 billion to $1.5 billion. The company expects its losses to taper off going forward, thanks to its streaming services' price hikes and the launch of an ad-supported tier on Disney+. In his memo, Chapek also reiterated he is "confident in [the company's] ability to reach the targets [it has] set," but Disney clearly intends to tighten its belt until it hits its goals.

Disney is but one of the many companies imposing a hiring freeze due to the economic downturn. When Meta chief Mark Zuckerberg announced that the Facebook parent company is laying off 11,000 employees, he also said that it's extending its hiring freeze through the first quarter of 2023. Amazon froze hiring at its corporate offices earlier this month, as well. 

Crypto exchange FTX files for bankruptcy as its CEO resigns

Twitter isn’t the only notable tech company to bandy around the word “bankruptcy” this week. After a stunningly rapid collapse, crypto exchange FTX has filed for Chapter 11 bankruptcy protection, while founder Sam Bankman-Fried has resigned as CEO.

The bankruptcy filing covers FTX Trading, FTX US, Alameda Research and around 130 other companies under the umbrella of the FTX Group, according to a press release. Some others, such as FTX Australia and FTX Express Pay, are not involved in the bankruptcy proceedings. Filing for Chapter 11 bankruptcy doesn't necessarily mean that a company is dead in the water — it allows a business to keep trading while it figures out a plan to pay back creditors. However, it's a tough position to come back from.

Press Release

— FTX (@FTX_Official) November 11, 2022

"The immediate relief of Chapter 11 is to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders," new CEO John J. Ray III (a former Enron chairman who came in to oversee that company's liquidation) said in a statement. "The FTX Group has valuable assets that can only be administered in an organized, joint process. I want to [assure] every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency." Ray suggested that stakeholders should remain patient, noting that "events have been fast-moving and the new team is engaged only recently."

The company swiftly found itself in dire straits after the price of its native FTT token nosedived and many users withdrew their cryptocurrency. Following reports that FTX was facing a liquidity crisis, Changpeng Zhao, the CEO of rival crypto giant Binance, said his company would sell off around $529 million worth of FTT. That all but wiped out the token's value.

Binance then agreed to bail out FTX by taking over the company. However, it backed out of the deal a day later, citing concerns that emerged while conducting due diligence. Bankman-Fried went on to apologize for the mess and said on Thursday he was doing everything he could to raise funds and do "right by users." He stepped down just a day later. 

"This doesn't necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes," Bankman-Fried wrote on Twitter after the bankruptcy filing. "I'm going to work on giving clarity on where things are in terms of user recovery ASAP." Bankman-Fried added that he will soon publish a more complete, play-by-play account of what happened to FTX.

Meanwhile, reports have suggested that the Department of Justice and Securities and Exchange Commission are investigating FTX. It's not clear when the DOJ started looking into the company's dealings, but the SEC’s investigation has reportedly been ongoing for several months.

Crypto exchange Binance abandons rescue of FTX one day after announcing takeover bid

FTX won’t be rescued by its biggest rival. One day after announcing a proposed deal to buy the cryptocurrency exchange, Binance said it didn’t like what it found in the company’s books. “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX,” Binance tweeted on Wednesday afternoon. “Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”

As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of

— Binance (@binance) November 9, 2022

The abandoned takeover bid caps off a tumultuous week for FTX. On November 2nd, Coinbasepublished a report that revealed that the cryptocurrency exchange was facing a liquidity crisis. In response to the article, Binance CEO Changpeng Zhao announced that the company would sell about $529 million worth of FTX’s FTT token, a move that wiped out the value of the cryptocurrency and launched a public spat between the competing exchanges.

Even when the acquisition was first announced, the likelihood of it moving forward seemed uncertain at best, with Zhao stressing at the time that the deal was non-binding. “This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time.” he said on Tuesday. By the following morning, The Wall Street Journal and Coinbase came out with separate reports claiming Binance was strongly leaning toward abandoning the rescue.

Less than an hour later, Bloomberg reported that the US Securities and Exchange Commission was investigating FTX to determine if the company had mishandled customer funds. It’s worth noting here that the Department of Justice and SEC are also investigating Binance.