2B ❚ MONDAY, APRIL 6, 2020❚ USA TODAY MONEY
Facebook last week announced up-
dates to its small-business grant pro-
gram that was introduced on March 17.
Those include $40 million in grants
for small businesses.
The grants will go to 10,000 U.S.
small businesses in 34 locations where
Facebook employees live and work.
Those located in New York and Se-
attle will be the first to receive funds,
starting this week.
“In this challenging time, when in-
formation is changing daily, we are lis-
tening to and learning from scores of
small businesses to understand what
they need now and what they will need
down the road,” said Sheryl Sandberg,
COO of Facebook, in a blog post.
Facebook says it also is collaborat-
ing with small-business partner Uree-
ka to invest in eligible minority and
women-owned businesses.
Local businesses can go to face-
book.com/grantsforbusiness to check
their eligibility.
The company also is introducing
new tools for small businesses on its
social media platform.
These include introducing digital
gift cards, expanding its fundraising
portal and making it easier for busi-
nesses to communicate service
changes, such as delivery and pickup,
to their customers.
Businesses who use the fundraising
tool will have the opportunity to create
personal campaigns to raise money di-
rectly from supporters and customers.
Facebook’s digital gift cards are
available in the U.S. and will roll out
more broadly in the coming weeks.
Facebook says Instagram also is
working on offering digital gift cards.
According to a survey by Goldman
Sachs, 96% of U.S. small businesses
say they have been affected by CO-
VID-19.
“Small businesses are the heartbeat
of their communities,” Sandberg said.
“We are determined to help, and we
know the road ahead will require a lot
more from all of us.”Facebook:
$40M to
small
businesses
Jazmin Goodwin
USA TODAYdiately clear whether he would endorse
taking a similar approach with Boeing.
Skepticism of a Boeing bailout isn’t
without precedent. Bailouts of banks
and automakers during the global finan-
cial crisis of 2008 and 2009 spawned a
chorus of outrage among critics who
said the government should not inter-
vene to rescue companies that failed
due to their own missteps.
If Boeing does get help from the gov-
ernment, taxpayers would be stepping
in to provide the company with funds to
ensure it can survive a double whammy
of:
❚The 737 Max safety crisis, which
began in October 2018 when the first of
two Max crashes occurred and has cost
Boeing at least $18.6 billion so far, in-
cluding money set aside to deal with fu-
ture issues and lost orders, the company
said in January. The costs stem from the
impact of grounding 737 Max planes
whose flaws killed 346 people.
❚A global pandemic that has slowed
travel to a trickle. Airlines, which make
up a significant portion of Boeing’s cus-
tomer base, are widely expected to delay
plane deliveries due to the global spread
of the virus.
“There is a broad consensus that
Boeing needs some kind of financial
stabilization,” said Peter McNally, global
sector lead for industrials, materials
and energy for Third Bridge’s Forum
business, which provides stock re-
search to investors. “For Boeing, the cri-
sis began with the 737 Max, but corona-
virus has imperiled the financial health
of its key customers,” such as American
Airlines, Delta Air Lines and Southwest
Airlines.
Treasury Secretary Steven Mnuchin
said last week on Fox Business Net-
work’s “Mornings with Maria” that Boe-
ing hadn’t yet requested help.
“I appreciate the fact that Boeing
thinks they can operate on their own,”
he said. “That’s what we want them to
do. The government is only there in case
they can’t do that.”
He left open the door for financial aid
to Boeing but said “taxpayers will be
fully compensated” if it happens.
Boeing declined to comment for this
story on whether it would pursue a bail-
out.
The company released a statement
thanking Trump, Mnuchin and Con-
gress for taking “swift bipartisan action
to support the American economy,” in-
cluding Boeing and its suppliers. “The
bill’s access to public and private liquid-
ity, including loans and loan guaran-
tees, is critical for airlines, airports, sup-
pliers, and manufacturers to bridge to
recovery.”
The Treasury Department did not re-
spond to requests seeking comment on
how a deal might be structured.
The key question is whether Boeing
can stabilize itself, or whether the com-
pany needs or should receive the gov-
ernment’s helping hand.
In 2019, Boeing posted its first full-
year loss since 1997 – a total of $636 mil-
lion – after the safety crisis kept the Max
jets grounded while engineers pursued
a fix.
The company is clearly facing finan-
cial distress, said Seth Crystall, a senior
credit analyst at restructuring research
firm Debtwire who has been studying
Boeing’s finances. But he said it appears
Boeing could take a series of steps to
preserve cash without taking a bailout.
After recently drawing a $13.8 billion
bank loan, Boeing has about $24 billion
in cash on hand, according to Debtwire
estimates.
“Right away, that begs the question –
that sounds like a lot of money, why do
they need to borrow money from the
government if that’s the case?” Crystall
said.
Boeing “has access to plenty of mon-
ey,” said longtime aerospace industry
analyst Richard Aboulafia, who advises
financial institutions on aerospace mar-
ket conditions for Teal Group. “It’s just a
question of whether the country simply
wants to see the economic damage as-
sociated with halting jetliner produc-
tion for a year or two.”
Without a bailout, Boeing would like-
ly be forced to temporarily close entire
factories to reduce its expenses, Abou-
lafia said.
In the case of previous companies
that received bailouts, they were hem-
orrhaging cash and didn’t have the op-
tion of staying afloat with a temporary
halt to production, he said.
“(Boeing) could lose the factories, fire
the workers, have their suppliers close
their factories and fire their workers” for
the duration of the financial crisis to en-
sure survival, he said. But that would
deal “another huge blow to the U.S.
economy” that may be unacceptable
given the human and defense conse-
quences.
Still, there are measures the compa-
ny can take to minimize its need for
help.
On Thursday, Boeing offered buyouts
to employees in a bid to cut costs, saying
it would provide details to workers
within three to four weeks.
To preserve cash, the company has
already suspended its dividend, which
paid out $4.6 billion to shareholders in- It also has suspended its share
buybacks, which totaled nearly $21 bil-
lion from 2017 through 2019, including
$2.7 billion before they were suspend-
ed in April 2019. Companies typically
do share buybacks to return money to
shareholders and boost the value of
their stock.
The company is also still moving to-
ward closing a $4.2 billion deal with
Brazilian regional aircraft maker Em-
braer to form a joint venture that
would be 80% owned by Boeing. The
company views that deal as strategi-
cally important for its future, but the
deal could be canceled – and the pur-
chase price pocketed – for a breakup
fee of $100 million, Crystall said.
Boeing could also issue stock to
shore up its finances, a move that
could raise between $5 billion and $
billion, Crystall estimated.
“So the thought would be they have
enough cash” to ride this out without a
bailout if the company takes aggres-
sive steps to preserve its finances, he
said.
But Boeing does not exist in a
vacuum since it sells planes to cus-
tomers like Southwest and Delta,
whose daily operations have been lim-
ited by the pandemic.
McNally said that “if Boeing’s cus-
tomers had remained healthy, the ur-
gency for additional funds probably
would not exist,” but the sudden eco-
nomic crisis for airlines like Delta,
American, United and Southwest has
plunged the company deeper into the
red and necessitated action.
To be sure, the defense division of
Boeing’s business is in better financial
shape than its commercial aircraft
unit. But defense, space and security
represented just over a third of Boe-
ing’s revenue in 2019, meaning it’s like-
ly not enough to sustain the company
without airline customers coming
back.
Boeing was already experiencing a
decline in orders from airline custom-
ers before the coronavirus crisis be-
gan. During 2019, Boeing’s backlog of
orders for commercial planes fell by
about 8% to about $377 billion. Deliv-
ery of finished planes outpaced new
orders during the year. The company
said in its annual report that orders of
new 737 Max planes had declined and
that it was at risk of losing significant
orders if the planes remain grounded.
For Boeing, the pain could continue
for years.
“Aircraft purchases won’t be signifi-
cant for another two or three years, at
least,” Aboulafia said in an email. “The
only thing that matters is deliveries,
which will fall too, but not nearly as
drastically as orders.”
But orders don’t necessarily trans-
late into significant revenue.
As of Dec. 31, Boeing expected to
convert only about 17% of its backlog
into revenue in 2020, according to a
public filing. That has likely fallen
since then.
Contributing: Michael Collins,
Chris Woodyard
Boeing
Continued from Page 1B
Employees work on Boeing 737 MAX
airplanes in Renton, Wash. The MAX
remains grounded over safety issues.
FILE PHOTO BY JASON REDMOND/AFP VIA GETTY
IMAGESyou do with the money? Spending is
just fine, charitable contributions even
better. But if you are inclined to save
the money, saving to invest is the best
long-term strategy.
Let’s consider an example from the
last bear market in 2008-2009 which I
discuss in my book, “The Women’s
Guide to Successful Investing.”
When I saw a chance to buy Star-
bucks (SBUX) in April 2007, I did. The
stock had declined 30% from a recent
high of $40 and settled in around $31.
At the bottom of the market rout in
2008, the stock declined to below $
per share. Yikes! But as every investor
learns, you don’t have to know the ex-
act day the stock hits bottom. You
don’t have to be right about every de-
tail. You just have to stick to your dis-
cipline and let the company manage-
ment do the heavy lifting.
Though I bought SBUX far from
where it ultimately bottomed, the total
return (from where I bought it)
through March 20 is 336% versus 113%
for the S&P 500. On an annualized ba-
sis, SBUX has returned 12% versus 6%
for the S&P 500. I am not recommend-
ing Starbucks. You must consider your
own risk tolerance and investment ob-
jectives. What I am saying is that when
you buy great companies, you can
have the confidence to hang in there
and, even buy more in bear markets.
No one knows where the bottom in
this sell-off will end. What we do know
is that with stocks down more than
30%, as measured by the S&P 500, we
are closer to the bottom than we were
on Feb. 19, when the market hit a his-
toric high. There is no rush. Be deliber-
ate. Don’t get caught up in the panic.
As Warren Buffett once said: The
most important quality for an investor
is temperament, not intellect ... You
need a temperament that neither de-
rives great pleasure from being with
the crowd or against the crowd.”
Nancy Tengler is chief investment
officer at Laffer Tengler Investments.Stimulus
Continued from Page 1BThe whole consumption rate for milk is
so much different than it was before CO-
VID-19,” Sweney said.
For now, Dairy Farmers of America,
the cooperative the Elbe family belongs
to, has agreed to pay them for their milk
that’s being dumped. But, like most co-
ops, DFA is in tough financial shape and
can only afford to do that for so long.
“We need to figure this out now, not
in the next couple of weeks,” Elbe said.
“I know many industries are experi-
encing hardship now. This is just the
story of ours,” he added.
Normally, his family’s milk goes to a
Kemp’s processing plant owned by
Dairy Farmers of America. But that
plant is full to the brim, as are many oth-
ers across Wisconsin.
Some of the larger DFA members
were asked to dump their milk last week
because, as Concentrated Animal Feed-
ing Operations, or CAFOs, it could be
monitored in their regulated wastewa-
ter lagoons.
“You can’t just dump milk in a field,”
Elbe said.
There’s simply too much of it now,
according to DFA based in Kansas City.
“This, in combination with the per-
ishable nature of our product, has re-
sulted in a need to dispose of raw milk
on farms in some circumstances,” Kris-
ten Coady, a DFA vice president, said in
a statement provided to the Journal
Sentinel.
“With the uncertainty of COVID-
and evolving consumer buying habits,
we are seeing demand for dairy prod-
ucts change. While we initially saw in-
creased demand at grocery stores as
consumers stocked up on many prod-
ucts, like dairy ... the retail demand is
starting to level off. For this reason, we
anticipate that milk will be more readily
available at grocery stores in the coming
weeks,” Coady added.
Flushing milk down the drain is
heart-wrenching, Elbe said, even if a
farmer is being reimbursed for it by their
cooperative.
The wasted product represents a
massive amount of work on the farm
that includes the planting and harvest-
ing of crops and raising youngstock intomilking cows.
“This is a lot of milk, planning and
hard work going up in flames,” Elbe
said.
Dairy veterinarian Kent Bindl, from
Sheboygan, put it this way Wednes-
day:
“For me today, we have reached a
new level of despair. As a veterinarian
for the past 18 years, I have seen the re-
siliency and optimistic nature of my
clients be tried over and over again.
However, today is different. Many
have been told there is no place to
process today’s loads and milk is being
pumped into their manure storage fa-
cilities. The pain these producers are
feeling today is palpable.”
More farms are likely to experience
milk dumping in the coming weeks.
The dairy crisis that began in late 2014
underscored shifts in agriculture that
have been taking place for decades but
sped up more than many expected.
In the last few years, thousands of
Wisconsin dairy farmers lost money
practically every day they milked cows
as an oversupplied market kept prices
depressed. Waves of small and mid-
size farms shut down because they
didn’t benefit from economies of scale
found on larger operations.
“The disposal of milk, which we
hoped to avoid, has begun, and that is
very troubling,” said Daniel Smith,
president and CEO of Cooperative Net-
work, a Wisconsin and Minnesota
group that represents cooperatives in
dozens of fields including agriculture,
health care and utilities.
“The dairy industry is facing un-
precedented challenges as a result of
the COVID-19 pandemic. It is essential
that every means of support be given
to Wisconsin dairy farmers and coop-
eratives as quickly as possible.”Dairy
Continued from Page 1B
Chris Elbe works on his family’s Golden
E Dairy near West Bend, Wis.
MARK HOFFMAN/MILWAUKEE JOURNAL SENTINEL
VIA USA TODAY NETWORK“We have reached a new
level of despair. ... The pain
these producers are feeling
today is palpable.”
Kent Bindl, dairy veterinarian