The Wall.St Journal 21Feb2020

B2| Friday, February 21, 2020 **** THE WALL STREET JOURNAL.

INDEX TO BUSINESSES

These indexes cite notable references to most parent companies and businesspeople in today’s edition. Articles on regional page inserts aren’t cited in these indexes.

A Advanced Micro Devices ...................................B Air China.....................B Alibaba Group...........B Alphabet................A4,B Amazon.com.............B American Airlines.......B Anglo American..........B Ant Financial Services Group.........................B Apple.........A4,A7,B1,B Asiana Airlines...........B AT&T......................A4,B B Bank of America.B4,B Berkshire Hathaway...B BHP Group..................B Big River Steel...........B Bilibili........................B Blackstone Group..B1,B BP................................B ByteDance............B1,B C Canadian National Railway.....................A Capital One Financial.B Carnival.......................A Cathay Pacific Airways .....................................B Cboe Global MarketsB Charles Schwab ......................A1,B10,B China Eastern Airlines .....................................B China Southern Airlines .....................................B Christopher Ranch......B Citadel Securities.....B Citigroup.....................A CKF..............................A

Clearing House Payments..................B Credit Suisse.............B D-E Domino's Pizza....B2,B DoorDash.............B2,B E*Trade Financial ......................A1,B10,B F-G Facebook......................B Fidelity Investments B FMR.............................B Foxconn Technology...A GAM Holding...............B General Motors...........A Goldman Sachs Group ......................A8,B10,B GrubHub...............B2,B H-I Hainan Airlines...........B Hellman & Friedman...B HNA Group..................B Honda Motor...............A Hong Kong Airlines....B ING Groep..................B Intel...........................B Intercontinental Exchange.................B J-K Jane Street Capital..B JPMorgan Chase..B4,B Kraft Heinz.................B Kronos.........................B L-M L Brands......................A McDonald's..................B Microsoft...................B Morgan Stanley ......................A1,B10,B

N-P Netflix.........................B Norwegian Cruise Line Holdings....................B Nova Chemicals..........A Nucor...........................B Nvidia........................B Papa John's International...........B Precision Castparts....B Procter & Gamble.....B Qantas Airways..........B R-S Rio Tinto.....................B Royal Dutch Shell.......B Senator Investment Group.........................B Shell............................B Six Flags......................B SoftBank Group..........B Spotify Technology.....B Sprint..........................B Steel Dynamics...........B T-U TD Ameritrade....A1,B Tencent................B4,B Thai Airways...............B Tivity Health.............B T-Mobile US................B Total............................B Twitter........................A UBS Group...........B6,B Ultimate Software.....B United States Steel....B V-Y Vale..............................B Verizon...................A4,B ViacomCBS..................B Virtu Financial..........B Yum Brands.........B2,B

INDEX TO PEOPLE

BUSINESS & FINANCE

at Big River were busy building a second furnace, another caster for molten steel and other processing equipment. Mr. Stickler is spending $716 million more there to double annual raw-steel capacity to 3.3 million tons and plans to install $500 million worth of additional equipment this fall to make higher-qual- ity sheet steel for auto bodies, transformers and appliances. Automation and less labor- intensive production processes allow Big River to produce more than 3,200 tons of steel annually per employee, compared with an average of 650 tons of steel annually per employee at U.S. Steel’s plants. Big River has 518 employees, about a third of the workforce at Granite City. But adding more capacity to

the domestic steel market at a time of relatively low prices and weak growth in demand could put more pressure on Big River’s next owner. Previ- ous attempts by old-line steel- makers to fold minimills into their operations have fared poorly, with most companies giving up on their electric-furnace mills after a few years. Steel companies plan to build more than 10 million tons of new flat-rolled steel- making capacity in the U.S. by

That could take even
more orders away from U.S.
Steel’s older plants. But the
company could capture that
business with Big River, which
accounts for about one-third
of the new capacity.
“It’s a game of take away,”
Mr. Stickler said.

In an interview with CNBC last year, Apple Chief Executive Tim Cook said he viewed Berk- shire’s investment as a privi- lege. “The fact that we’ve got the ultimate long-term investor in the stock is incredible,” he said. Berkshire’s bet has paid off. Apple’s shares soared 86% in 2019 and have climbed another 9.1% so far this year. “What’s surprising is how fast it increased,” said Doug Kass, president of Seabreeze Partners Management Inc. Given the current size of Berk- shire’s Apple stake, “it seems to me that it would be prudent for [Mr. Buffett] to be peeling out of some stock,” he said. Mr. Buffett has long pre- ferred to hold a concentrated portfolio of stocks. In his 1993 letter to shareholders, Mr. Buffett said that uninformed investors should diversify. But “if you are a know-something investor...con- ventional diversification makes no sense for you,” he said. “I cannot understand why an investor of that sort elects to put money into a business that is his 20th favorite rather than simply adding that money to his top choices.” Berkshire sold a small per- centage of its Apple holdings between mid-2018 and the end of 2019, according to securities filings. Those sales were made by either Mr. Weschler or Mr. Combs, who manage a fixed amount of money for Berkshire, according to a person familiar with the investments. Some of Berkshire’s other large investments have stum- bled. Berkshire owns 27% of Kraft HeinzCo., which fell 25% last year and has slid another 15% this year. Mr. Buffett said last year that Berkshire and 3G Capital overpaid in 2015 when they helped form Kraft Heinz. Berkshire’s Class A shares rose 11% in 2019. They closed Thursday at $342,122, up 0.7% year to date.

grandchildren about their alle- giance to Apple products, Mr. Buffett decided Apple was a re- tail company he could understand. “I didn’t go into Apple be- cause it was a tech stock,” Mr. Buffett said at Berkshire’s 2018 annual meeting. He cited the strength of the company’s brand and its capital return strategy. “I don’t think that re- quired me to take apart an iPhone or something and figure out what all the components were or anything. I think it’s much more the nature of con- sumer behavior,” he said. Mr. Buffett added to Berk- shire’s Apple holdings aggres- sively in 2017 and 2018. Berk- shire is Apple’s second-largest shareholder and held 5.6% of the company at the end of 2019, according to FactSet.

Continued from page B

Buffett’s

‘Elephant’

Is Apple

Big River Steel in Arkansas melts scrap in an electric furnace to make new steel.

HOUSTON COFIELD FOR THE WALL STREET JOURNAL

BerkshireHathaway'sstake inApple,quarterly

Source: FactSet

Note: The last data point is an estimate based on Berkshire’s 4Q 2019 holdings and Apple’s share price as of Thursday and assumes the company didn’t buy or sell any Apple shares this year.

$

0

25

50

billion

2017 ’18 ’19 ’

B-C Barber, Marshall.........B Bharadwa, Jay............B Bogliari, Alessandro...B Brennan, Matthew.....B Buffett, Warren..........B Burritt, David..............B Chandlee, Blake..........B Christopher, Ken.........B E-G Ermotti, Sergio.........B Gottstein, Thomas....B Gray, Jonathan............B

H-K Hamers, Ralph..........B Hardiman, James........B Kass, Doug..................B Kellner, Jonathan......B Khan, Iqbal................B Klabin, Alexander.......B M-N Meslow, Andrew.........A Milan, John.................B Naratil, Tom..............B O-R Orcel, Andrea............B

Rio, Frank Del.............B Russo, Thomas...........B S-T Sanderson, Peter........B Silverman, Douglas....B Sippel, Jason.............B Stickler, David.............B Thiam, Tidjane..........B Tramuto, Donato.......B Tunnell, David.............B W-Y Weber, Axel..............B Wexner, Les................A Yang, Shawn...............B

Berkshire’s bet on Apple underscores the change in investment approach by Mr. Buffett, shown at the 2019 shareholders meeting.

JOHANNES EISELE/AGENCE FRANCE-PRESSE/GETTY IMAGES

Domino’s Pizza Inc. has demonstrated it can generate strong sales and profit without sending its pies to customers via food-delivery companies. The pizza chain on Thursday beat sales and profit expecta- tions for its fiscal fourth quarter. Shares of the Ann Arbor, Mich.-based company leapt al- most 26% to $373. Domino’s is one of the big- gest fast-food chains to refuse to work with outside food-delivery companies such asDoor- DashInc. andGrubhubInc. Ex- ecutives have said that commissions those companies charge are too steep and that they encroach on its relation- ship with customers. Chief Executive Ritch Allison told investors Thursday that

other food delivery companies continue to offer diners dis- counts and promotions that un- dermine profits across the fast- food industry. He said Domino’s was finding ways to generate sales and profit despite those pressures. “While we’re not in the mid- dle of the firing squad, we might get hit by a few stray bullets,” Mr. Allison said. Instead of joining with delivery companies, Dominos has in- vested in its own technology instead. The company is install- ing GPS-enabled order tracking in the U.S. and building more stores to cut down on delivery times. Those efforts are expensive. Domino’s administrative ex- penses last year rose 2.6%. The company attributed part of the increase to investments in tech-

nological initiatives. Domino’s franchisees pay royalties to use those services. Domino’s is also boosting its carryout business, which is more profitable than taking pizza to customers. The company said this week it had started a service for customers to order takeout online and pick it up in designated lanes to cut down on wait times. Ex- ecutives said last month that carryout has grown to nearly half of all orders from about a third eight years ago. “We see it as a huge oppor- tunity for us,” Mr. Allison said. The company earned a profit of $129.3 million and $1.15 billion in revenue for its fiscal fourth quarter. Domino’s attributed the rise in net income to higher royalty revenues from domestic and in-

ternational franchised stores, as well as stronger demand from franchisees for various goods needed to operate Dom- ino’s locations. The pizza company has sold more company- owned stores to franchisees to try to boost returns, a strategy other fast-food chains including McDonald’sCorp. andYum BrandsInc. have also pursued. Domino’s sales at U.S. res- taurants open at least a year rose 3.4% for the quarter. That was less than the 5.6% gain the company recorded on that met- ric a year earlier, but better than the 2.3% increase ex- pected by analysts polled by FactSet. —Micah Maidenberg contributed to this article.

BYHEATHERHADDON

Carryout Growth Helps Deliver

Strong Results for Domino’s

year after they secured concessions from T-Mobile and Sprint, the third- and fourth-largest U.S. wireless carriers by subscribers, re- spectively. Those concessions include an agreement that Sprint would sell airwaves and about nine million customer accounts to Dish Network Corp. to set up a fourth na- tionwide cellphone carrier. The new agreement allows either company to walk away from the merger without pen- alty if the transaction hasn’t closed by July 1. T-Mobile executives have said the transition will be smooth, touting their experi- ence handling a past combination with wireless provider MetroPCS. The new T-Mobile will have more than 90 million U.S. customers and aims to nab more subscribers fromAT&T Inc. andVerizon Communications Inc. The three companies will dominate the U.S. wireless market, though they must also compete with more newcomers, including cable companies that resell service from large carriers. T-Mobile and Sprint have spent more than seven years pursuing a combination in some form. The two companies abandoned previous attempts in 2013 and 2017 before their boards struck an agreement in early 2018 that would allow T-Mobile to take over its smaller rival, creating a company closer in size to Verizon and AT&T. —Sarah Krouse contributed to this article.

in federal court. They argued the merger would create a more efficient network that would offset any harm to competition. Given the downward slide of Sprint’s shares amid continued customer defections since the tie-up was announced—as T-Mobile’s growing customer base pushed up its stock— Deutsche Telekom was ex- pected to push for an altered exchange ratio and a larger share of the new T-Mobile. When the deal was announced, Sprint shares were trading around $6.50. Before the court ruling Feb. 11, Sprint’s share price had sunk to $4.80. It has since jumped above $9. Sprint shares closed nearly unchanged Thursday at $9.48, and rose 5% in after-hours trading. T-Mobile shares closed down about 1% at $99.50, and fell a further 1% in after-hours trading. The deal was valued above $26 billion when the carriers originally struck it in April 2018. Both the U.S. Justice De- partment and Federal Commu- nications Commission ap- proved the combination last

Sprint,

T-Mobile

Revise Deal

$600 a ton, Big River Chief Ex- ecutive David Stickler said. “U.S. Steel has an opportu- nity to change the direction of its company,” he said. Mr. Stickler, 59 years old, is senior managing partner of a Miami investment firm and has a record of financing steel startups that are risky. For Big River, he assembled investors—including a unit of Koch Industries, the Arkansas schoolteachers’ pension fund and private-equity firms— about seven years ago to build the first phase of the mill for about $1.3 billion. Big River’s cluster of blue metal buildings rises out of 1,300 acres of former soybean fields along the west bank of the Mississippi. On a recent morning, construction workers

closing the blast furnace there in 2015. The company is up- grading equipment at its leg- acy mills in Gary, Ind., and near Pittsburgh—and cutting back at other mills as steel demand weakens. U.S. Steel plans to idle most of its Great Lakes Works near Detroit this year, laying off up to 1, workers. The company in Jan- uary said it expects to ship about 7% less flat-rolled steel in 2020 than in 2019. Analysts expect U.S. Steel to eventually cut back output at other plants, including the Granite City mill in Illinois, about 250 miles upstream from Big River. U.S. Steel de- clined to comment on poten- tial mill closures after acquir- ing Big River. President Trump has cited the Granite City mill as an ex- ample of the domestic steel industry’s recovery under his administration. After the U.S. imposed tariffs on foreign steel in 2018, prices and sales soared. U.S. Steel recalled hun- dreds of laid off steelworkers to restart blast furnaces at Granite City that had been idled for more than two years. Since then, fortunes have shifted in the steel business. After peaking above $900 a ton in July 2018, the spot-market price for hot-rolled coiled steel has fallen as manufacturers have cut back on purchases. Steel prices are hovering below the $600-a-ton that analysts say U.S. Steel’s older mills need to make a profit. Minimills can make a profit at well below

U.S. Steel

Recasts Its

Operations

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The Wall.St Journal 21Feb2020

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