© 2019 Dow Jones & Company. All Rights Reserved. *** THE WALL STREET JOURNAL.** Thursday, October 31, 2019 |B1

TECHNOLOGY: SONY SENSOR UNIT’S PERFORMANCE IS DOUBLE-EDGED SWORD B6

BUSINESS&FINANCE

INSIDE

duced by climate change.

“Climate change has had a

big impact on investing in Cal-

ifornia utilities, and the risk of

fires is here to stay,” said Ste-

phen Byrd, head of utilities re-

search at Morgan Stanley.

Abrams Capital Manage-

ment LP, Baupost Group LLC,

Elliott Management Corp. and

Värde Partners are among the

dozens of funds that have

bought PG&E stocks or bonds.

It was unclear how big the

paper losses were for each

fund in recent days and

whether they sold securities.

Investors say the selloff has

been driven by concern over

the Kincade Fire’s spread. An

increase in the amount of

wildfire claims against the

bankrupt electric utility could

wipe out its stock and leave

too little for the company to

repay bondholders in full.

“The number one question

for investors is are they on the

hook for the Kincade Fire and,

if so, how much will that cost,”

said Andrew DeVries, a bond

analyst at the research firm

PleaseturntopageB2

Investors in PG&E Corp.

stocks and bonds lost about

$4.1 billion in the four trading

days after a blaze in Sonoma

County, Calif., started late Oct.

23, according to an analysis by

The Wall Street Journal.

Those who sold the securi-

ties missed out on a rebound

Wednesday after the fire

abated and the value of the

shares and debt jumped by

about $1.6 billion.

The stock has dropped 25%

since the fire began, cutting

the utility’s market capitaliza-

tion to $3.25 billion on

Wednesday from a high of $37

billion in 2017. PG&E bond

prices have fallen as much as

12.5%—the biggest decline

since a PG&E power line set

off the Camp Fire in Northern

California last November that

killed 85 people.

The swings in PG&E securi-

ties are complicating hedge

funds’ efforts to profit from

what some are describing as

the first major bankruptcy in-

BYMATTWIRZ

ANDJULIETCHUNG

PG&E Investors Lost

$4.1 Billion in 4 Days

expect this is going to be a

very tough year.”

As with other recent Face-

book earnings, booming reve-

nues and strong operating

margins were all but taken for

granted. The company’s $17.7

billion in total sales and $6.1

billion profit both exceeded

analyst estimates compiled by

FactSet.

Shares of Facebook climbed

more than 5% in after-hours

trading. Before Wednesday,

the company’s shares had

risen more than 43% year to

date, well ahead of the average

for the technology sector.

Mr. Zuckerberg defended

how Facebook has handled po-

litical advertising and the

company’s broader role in

moderating and amplifying

content online. Less than 90

minutes after Twitter Inc.

chief executive Jack Dorsey

said the company would stop

running ads on its platform

about politics and controver-

sial social issues, Mr. Zucker-

berg said Facebook had no

PleaseturntopageB4

Facebook Inc.’s profit ma-
chine showed little wear and
tear from the beating the so-
cial-media giant has received
lately in Washington, though
chief executive Mark Zucker-
berg warned the political pres-
sure could soon take a toll.
After mentioning Face-
book’s strong third-quarter fi-
nancial performance on a
quarterly earnings call
Wednesday, Mr. Zuckerberg
defended the company’s
moves that have made it a
punching bag on the campaign
trail and on Capitol Hill.
Mr. Zuckerberg cast Face-
book’s actions as aligning with
his personal principles and
said the company was willing
to pay a price for standing by
them.
“Over the next year of cam-
paigns,wearegoingtobeat
the center of the debate,” Mr.
Zuckerberg said, warning that
the platform’s centrality to po-
litical discourse could drive
additional investigations. “I

BYJEFFHORWITZ

Facebook Profit

Surges,asCEO

Warns on Politics

business.

The manufacturer has been

through several difficult years

caused by problems in its

power and financial-services

units.

It switched leaders, gutted

its dividend and sold off busi-

ness units.

After tumbling in 2017 and

2018, GE’s share price is little

changed from where it was

when Mr. Culp took over.

GE reported adjusted cash

flow from industrial operations

of $650 million for the third

quarter and predicted it would

generate as much as $2 billion

of cash on that basis for the full

year.

Cash flow is essentially the

money remaining after paying

bills and making investments.

GE’s struggles in recent

years have made cash flow the

most important financial mea-

sure for investors.

JPMorgan’s Steve Tusa, who

has a negative opinion of GE

shares, said this week that 2019

cash flow would likely be

slightly positive.

PleaseturntopageB5

General Electric Co. re-
ported a $9.5 billion third-quar-
ter loss weighed down by ac-
counting charges, but the
industrial conglomerate
showed signs of progress and
again raised its cash-flow out-
look for the year.
Larry Culp, who took over as
chief executive about a year
ago, has been revamping GE
with a focus on cutting its debt
and generating cash from its
businesses of making jet en-
gines and power turbines.
“I’m starting to see the im-
provements I wanted to see
when we started on this path a
year ago,” Mr. Culp said on a
conference call Wednesday. The
first outsider to run GE, Mr.
Culp has called 2019 a reset
year for the Boston-based com-
pany.
GE’s shares rose 11% to
$10.11 on Wednesday. Investors
and analysts were relieved the
company’s core operations
were apparently stabilizing and
there were no surprises from a
review of a legacy insurance

BYTHOMASGRYTA

GE Posts Loss but

Raises Cash Outlook

TECHNOLOGY

Lyft raises its outlook

for the year after

revenue increased in

the quarter. B4

BANKING

Credit Suisse doubles

profit with help from

the sale of a fund

platform. B10

STEFAN WERMUTH/BLOOMBERG NEWS

BEIJING—China plans to

turn on its first 5G networks on

Friday, setting up the country

to leapfrog other nations in de-

ploying the superfast cellular

technology at the center of a

technological arms race be-

tween China and the U.S.

China’s three major state-

owned wireless carriers, China

Mobile Ltd., China Telecom

Corp. and China Unicom , will

open its 5G network for public

use in around 50 major cities,

including Beijing and Shanghai,

said Chen Zhaoxiong, vice min-

ister of the Ministry of Industry

and Information Technology

Thursday.

The move will allow those

with the few available 5G-com-

patible smartphones to buy a

subscription to the network.

Although wireless carriers in

the U.S. and South Korea have

already been offering 5G for

months, China is expected to

sprint ahead in coming weeks.

The Chinese government has

made building 5G a national

priority, clearing red tape and

reducing costs so the three

wireless providers can intro-

duce the new technology as

swiftly as possible.

5G, or fifth-generation, tech-

nology promises to be the

backbone of tomorrow’s inter-

net, transforming virtually ev-

ery industry, including weap-

onry and manufacturing, by

offering seamless wireless con-

PleaseturntopageB4

MISSION SPECIALIST: Sylvia Acevedo, a former NASA engineer who is chief executive of the

century-old organization, seeks to reverse a membership decline with the help of new badges for

science, technology and engineering. Boss Talk, B5.

S&P 3046.77À0.33% S&PFIN g0.14% S&PIT À0.61% DJ TRANS g1.76% WSJ$IDX g0.22% LIBOR3M 1.909 NIKKEI (Midday)22887.06À0.19% See more at WSJ.com/Markets

MILAN— Fiat Chrysler Auto-
mobiles NV and Peugeot maker
PSA Group of France have
agreed on the terms of a merger
that would create one of the
world’s largest auto makers by
volume with a market value of
$48.4 billion, said people famil-
iar with the situation.
The boards of Fiat Chrysler,
Peugeot and Exor NV, the Ag-

nelli family holding company

that controls the Italian-Ameri-

can car maker, approved the

deal Wednesday.

Fiat Chrysler Chairman John

Elkann is slated to become

chairman of the newly merged

company while Peugeot Chief

Executive Carlos Tavares would

be CEO. Both would have seats

on the board of the new com-

pany, which would comprise six

Peugeot appointees, including

Mr. Tavares, and five from Fiat

Chrysler.

By negotiating the deal, Mr.

Elkann is acting on a lesson

passed on from the Italian-

The U.S. and French govern-

ments have been briefed on the

deal, according to people famil-

iar with the deal.

Spokesmen for Fiat Chrys-

ler, Peugeot and Exor declined

to comment.

Fiat Chrysler and Peugeot

had already discussed a poten-

tial merger earlier this year,

and many of the specifics were

hashed out at the time, accord-

ing to people familiar with

those discussions. Those talks

were shelved in May when Fiat

Chrysler sought a deal with Re-

nault instead. But that deal fell

through at the 11th hour after

of Fiat Chrysler’s profit, help-

ing to offset the struggling Fiat

brand.

Until Mr. Marchionne’s

death, Mr. Elkann was largely

in the shadow of his larger-

than-life CEO. Mr. Marchionne

was the toast of the car indus-

try thanks to his frankness on

a host of topics, including the

need for industry consolida-

tion. In 2015, Mr. Marchionne

pursued a deal with General

Motors Co. After several ad-

PleaseturntopageB2

Mr. Elkann failed to get the full

backing of the French govern-

ment and Renault’s alliance

partner Nissan Motor Co.

Mr. Elkann hired Mr. Mar-

chionne as Fiat’s CEO in 2004

when the company was losing

close to €1 million ($1.1 mil-

lion) a day and shedding mar-

ket share as its small cars fell

out of favor. Mr. Marchionne

nursed Fiat back to health, in

part by engineering a takeover

of bankrupt Chrysler in 2009.

He focused on expanding the

appeal of Jeep sport-utility ve-

hicles and Ram trucks, which

now account for the majority

American car maker’s longtime

Chief Executive Sergio Mar-

chionne, who died last year:

Merge and grow, or fade into

irrelevance.

Five months after a failed

merger attempt with Renault

SA, Mr. Elkann, the U.S.-born

heir of the Agnelli dynasty that

founded Fiat, is once more

front and center after person-

ally negotiating with Mr. Tava-

res, some of the people said.

By Eric Sylvers ,

Ben Dummett

and Nick Kostov

Fiat Chrysler, Peugeot Agree on Merger

Deal would create one

of the world’s largest

auto makers; John

Elkann to be chairman

$20

0

5

10

15

billion

2016 ’17 ’18 ’19

Valuable Connections

Facebook’s shares have risen more than 43% year to date, well
ahead of the broader market.

Quarterly revenue Stock performance

Sources: the company (revenue); FactSet (stock performance)

3Q 2019

$17.7B

Facebook

S&P 500

50

–10

0

10

20

30

40

%

Jan. April July Oct.

Apple Inc. is showing it has

life beyond the iPhone, report-

ing growth in other gadgets

and services in the latest quar-

ter that outweighed further

pain in its bedrock business.

The technology company re-

ported revenue rose 1.8% in the

September quarter to $64.04

billion, driven by rising sales of

wearables including its smart-

watch and services such as

apps, streaming-music sub-

scriptions and mobile pay-

ments.

Those gains helped offset a

9.2% decline in iPhone sales,

which have been falling for the

past year.

Profit fell 3% to $13.69 bil-

lion. That was better than ex-

pected but marked the first

time since Chief Executive Tim

Cook took over in 2011 that Ap-

ple’s profit has declined in all

four quarters of a fiscal year.

The company’s operating ex-

penses have risen considerably

since 2017 when it introduced a

pricier new iPhone and in-

creased its spending on re-

search and development.

Revenue and profit for the

fiscal year through September

both edged down, their first

annual declines since 2016.

PleaseturntopageB4

BYTRIPPMICKLE

Apple

Sales Rise

As iPhone

Weakens

Rocket Scientist Propels Girl Scouts Into Digital Age

KELLY MARSHALL FOR THE WALL STREET JOURNAL

 UAW reaches tentative labor

deal with Ford........................... B6

BYSTUWOO

China Ready

To Ac t i va t e

5G Networks