The Washington Post - USA (2020-12-11)

A16 EZ RE THE WASHINGTON POST.FRIDAY, DECEMBER 11 , 2020

Economy & Business

SOFTWARE

Oracle sales climb

in second quarter

Oracle reported quarterly
revenue that was in line with Wall
Street estimates, r eflecting f ewer
software licensing deals during a
pandemic-fueled r ecession.
Sales climbed 1.9 percent to
$9.8 billion in t he fiscal second
quarter, which ended N ov. 30, the
Redwood Shores, C alif.-based
company s aid Thursday i n a
statement. A nalysts, o n average,
expected $9. 79 b illion, a ccording
to data compiled by B loomberg
News. Profit, excluding some
items, was $1.06 a share. Analysts
projected $1.
Executive Chairman Larry
Ellison and Chief Executive Safra
Catz h ave tried t o boost languid
revenue growth a t the w orld’s
second-largest s oftware maker.
While Internet-based
applications for managing
corporate employees, a ccounting
and f inancial planning have
performed well, c lients have
shown w aning interest i n the
company’s l egacy tools. Oracle is
trying to become a technology
partner and cloud computing
services provider t o ByteDance’s

TikTok in i ts bid t o land major

customers for its public cloud, but

the d eal remains mired in U. S.

regulatory review.

Shares fell about 1 percent in

extended trading a fter closing at

$59.48 in New York. The stock has

gained 12 percent this y ear.

— Bloomberg News

HARDWARE

Broadcom reports

$1.32 billion income

Broadcom on Thursday

reported fiscal fourth-quarter net

income of $1.32 billion.

On a per-share b asis, the San

Jose-based company said it had

net income of $ 2.93. E arnings,

adjusted f or nonrecurring costs

and stock o ption expense, w ere

$6.35 per s hare.

The results exceeded Wall

Street expectations. T he average

estimate of 12 analysts surveyed

by Zacks Investment Research

was f or earnings of $6.26 p er

share.

The chipmaker posted r evenue

of $6. 47 b illion in the p eriod, also

beating S treet forecasts. N ine

analysts surveyed b y Zacks

expected $6.42 billion.

For the current quarter e nding

in February, B roadcom s aid i t

expects revenue in t he range of

$6.6 billion. Analysts surveyed b y

Zacks had e xpected r evenue of

$6.51 billion.

Broadcom shares have

increased 3 0 percent since the

beginning o f the year, while the

S&P 500 i ndex h as risen

14 p ercent. In the final minutes of

trading T hursday, shares h it

$410.04, a rise of 30 p ercent in the

last 12 months.

— Bloomberg News

ENTERTAINMENT

NBCUniversal offers

more ad access

Comcast’s NBCUniversal on

Thursday said i t will give local

U. S. a dvertisers a ccess to buy

more digital and streaming T V

advertising inventory and

introduce t he ability t o target

those ads t o consumers b y their

region, a s the media c ompany

looks to gain more r evenue from

small t o midsize businesses.

NBC S pot On, a program that

serves a dvertisers on

NBCUniversal’s l ocal TV s tations,

will expand t o let local businesses

buy a ds o n its streaming service

Peacock, a nd on N BCUniversal

content t hat appears on Google’s

YouTube and Apple News.

The move i s another s tep i n

NBCUniversal’s p ush to simplify

how advertisers of a ll sizes

purchase ads a cross all the

platforms where v iewers watch

content, including T V and

streaming s ervices.

NBCUniversal said it will a lso

double the amount of ad

inventory local advertisers c an

access on the NBC A pp, which has

content f rom networks including

MSNBC, Bravo and E!.

— R euters

ALSO IN BUSINESS

Membership-only retail chain

Costco Wholesale b eat market

estimates f or first-quarter

revenue Thursday as pandemic-

wary consumers s taying at h ome

bought more frozen f oods, l iquor

and h ome-furnishing products.

Total revenue rose t o

$43.21 billion in the q uarter

ended Nov. 2 2 from $ 37.04 billion

a year earlier, vs. a Refinitiv IBES

estimate of $42.42 billion.

Lululemon Athletica on Thursday

reported fiscal third-quarter net

income of $143.6 million. On a per-

share basis, the Vancouver-based

company said i t had profit of $1.10.

Earnings, a djusted for

nonrecurring costs, w ere $1.16 per

share. The results t opped Wall

Street expectations. The athletic

apparel maker posted revenue of

$1.12 billion in the period, also

surpassing Street forecasts.

Thirteen analysts surveyed by

Zacks e xpected $1.01 billion.

— From news services

COMING TODAY

8:30 a.m.: L abor Department

releases the producer p rice index

for N ovember.

DIGEST

MARK LENNIHAN/ASSOCIATED PRESS

Mannequins display fashions in a Zara store window in New York on

Thursday. The Spanish apparel retailer has recently invested more in

e-commerce, but it still has more than 2,000 locations worldwide

○

DOW 29,999.

DOWN 69.55, 0.2% ○

NASDAQ 12,405.

UP 66.86, 0.5% ○

S&P 500 3,668.

DOWN 4.72, 0.1% ○

GOLD $1,837.

DOWN $1.10, 0.1% ○

CRUDE OIL $46.

UP $1.26, 2.8% ○

10-YEAR TREASURY YIELD 0.90%

DOWN 3.3%

CURRENCIES

$1= 104.22 Y EN, 0.82 EUROS

tections, and that helps a private

equity giant that was sitting on

billions of dollars of its own mon-

ey,” Ramamurti said. “A nd at

worst, I think this generous loan

was rushed into place to benefit a

firm with close personal ties t o the

president’s family and I think that

this warrants further investiga-

tion by this commission.”

Mnuchin said he had no com-

munication with Kushner or his

staff about the YRC loan, and he

cited letters from members of

Congress, saying there was “tre-

mendous interest” to expedite the

loan, and t hat the Defense Depart-

ment had certified that YRC quali-

fied for the loan.

“So of course we were going to

prioritize this,” Mnuchin said.

“There was a tremendous risk to

the Department of Defense, and a

tremendous risk to the number of

jobs.”

An Apollo spokeswoman, Joan-

na Rose, said the firm “was not

involved at all” in YRC’s decision

to seek the Tr easury loan, and is

“one of many lenders to YRC.”

Rep. French Hill (R-Ark.), a for-

mer commercial banker and in-

vestment manager, also criticized

the terms of the loan, suggesting

that U. S. taxpayers’ investment

was at risk. He cited YRC’s past

financial woes and high debt in

the past decade, saying that the

company had f ound “ itself exactly

in the same position before the

pandemic.”

“Having analyzed this data, re-

viewed the collateral, it makes me

realize that were I still in f inance, I

would not have made this loan,”

Hill said.

In e xchange for its $700 million

loan to YRC, the Treasury Depart-

ment received a 30 percent equity

stake in the company, which

Mnuchin said is now worth

$100 million.

Mnuchin acknowledged that

Tr easury may lose money on the

YRC l oan, but said that “both Con-

gress and outsiders encouraged us

to take losses” when providing

relief to firms.

“A lthough I think because the

economy has recovered taxpayers

will do very well on this loan, I want

to acknowledge, this was a risky

loan,” Mnuchin said. “A gain, we

were very focused on saving jobs.”

Mnuchin also encouraged his

successor next year to “seriously

look at s elling this [YRC] loan a nd

recovering what I think will be a

profit to taxpayers, because this

BY YEGANEH TORBATI

AND JEFF STEIN

Republicans and Democrats in
Congress grilled Tr easury Secre-
tary Steven Mnuchin on Thursday
over his agency’s $700 million
loan to a troubled trucking com-
pany backed by a massive private
equity company with White
House ties.
The Tr easury Department
made the loan to YRC Worldwide
in July under a program author-
ized by Congress to help compa-
nies critical to national security
suffering because of the coronavi-
rus pandemic. The Congressional
Oversight Commission, which is
scrutinizing Tr easury’s loans, has
said the loan to YRC is suspect
because the company is not criti-
cal t o the n ation’s d efense and was
struggling long before the pan-
demic.
The Pentagon, which also
played a crucial p art in the nation-
al security loans to YRC and other
firms, declined to send an official
to testify at the hearing and is
resisting the public release of its
eventual testimony on the pro-
gram, Sen. Patrick J. Toomey
(R-Pa.) s aid a t the hearing.
YRC is backed by Apollo Global
Management, a large private equi-
ty f irm. O ne of i ts founders, Joshua
Harris, advised the administra-
tion on infrastructure policy in
20 17, the New York Times report-
ed. Later that year, Apollo lent
$184 million to the family real
estate company of top White
House official Jared Kushner,
President Tr ump’s son-in-law, to
help it refinance its mortgage o n a
Chicago s kyscraper.
At the hearing, Bharat Rama-
murti, a member of the Congres-
sional Oversight Commission, cit-
ed a new report by the Govern-
ment Accountability O ffice, which
found that Tr easury accelerated
the l oan t o YRC e ven t hough other
firms faced similarly urgent cir-
cumstances.
“A t best, this is a loan... that
puts nearly $1 billion of public
money at risk with minimal pro-

was a success, but we do not want

to be in the long-term business of

lending t o this type of c ompany.”

Tr easury received 7 4 applica-

tions for the loan fund, which was

initially meant for major compa-

nies like Boeing or the aviation

division of General Electric. In-

stead, large firms balked at the

terms and did not apply, leaving

the $17 billion fund mostly un-

spent more than eight months af-

ter Congress passed the Cares Act.

Tr easury ended up making 11 loans

from the fund, mostly to a hodge-

podge of little-known companies.

Mnuchin also responded to

criticism that the nati-

onal-security loans took months

to be approved — companies ap-

plied i n May and r eceived funds i n

late O ctober o r November, in most

cases. He said that Tr easury,

tasked with “huge obligations” as

a result of the coronavirus relief

spending, had prioritized helping

the a viation i ndustry f irst ahead of

the n ational security firms.

Mnuchin said no further loans

would be made from the national

security funds, and urged Con-

gress to reallocate the funds to

help aviation f irms and small b usi-

nesses.

A YRC spokesman did not im-

mediately respond to a request for

comment. The Congressional

Oversight Commission will hold a

separate teleconference with the

Pentagon regarding the loans, but

the a gency does not want the t ran-

script of that teleconference to be

made public, Toomey said.

“The commission strongly urg-

es DOD to reconsider that posi-

tion,” Toomey said. “The commis-

sion and DOD have a responsibili-

ty t o inform the public how taxpay-

er funds are being used, especially

given the concerns that have been

raised a bout the Y RC loan.”

The Pentagon played a key role

in the loans because it certified

that the firms, including YRC,

were critical to national security

and was crucial to qualifying for

the funds. Jessica Maxwell, a Pen-

tagon spokeswoman, said the P en-

tagon’s undersecretary for acqui-

sition and sustainment, Ellen

Lord, had responded to the com-

mission’s q uestions in writing.

Lord “welcomes a telephone

call to answer any outstanding

questions,” Maxwell said.

[email protected]

[email protected]

Mnuchin defends ‘risky’ loan to private-equity-backed firm

Treasury agreement with

troubled company draws

scrutiny in Hill hearing

SARAH SILBIGER FOR THE WASHINGTON POST

Treasury Secretary Steven Mnuchin arrives to testify at a Congressional Oversight Commission hearing Thursday on Capitol Hill.

BY RACHEL LERMAN

Airbnb’s stock opened at $
per share Thursday — more than
double the figure the company
set the night before for its initial
public offering. It is the largest
tech IPO of the year, closely
followed by delivery company
DoorDash and cloud company
Snowflake, according to data
from S&P Global Market Intelli-
gence.
Airbnb’s soaring stock market
debut comes at the tail end of a
year that has been both disas-
trous and triumphant for the
short-term-rental company.

The company priced its initial

public offering Wednesday eve-

ning at $68 per share, a price

even higher than the company

expected.

The company had already

increased its share-price expec-

tation once this week, from $

to $60 for its 51.6 million

shares, and its debut comes on

the heels of a strong showing

from fellow Internet company

DoorDash — optimistic signs

for Airbnb.

Airbnb raised about $3.5 bil-

lion during its IPO.

Before trading began Thurs-

day, c hief executive Brian Chesky

said he was “humbled” by the

news Airbnb was expected to

open at $139 per share.

During a Bloomberg TV inter-

view with Emily Chang, Chesky

heard the number for the first

time and reacted with a sur-

prised eyebrow raise.

“The higher the stock price,

the higher the expectations, the

harder we’re going to be work-

ing, obviously,” he told Chang.

Airbnb put its IPO on hold

earlier this year when the travel

industry all but ground to a halt

amid coronavirus restrictions.

Reservations through the site

fell dramatically as pandemic

travel restrictions a nd fear set in.

Airbnb said in a securities filing

that the lowest point came in

April, when bookings dropped

more than 72 percent from the

previous year.

The company l aid o ff a quarter

of its workforce in May, citing the

pandemic.

But Airbnb has fared much

better than many others in the

travel industry this year, partly

because of the flexible nature of

its service.

Airbnb hosts started deep-

cleaning protocols at the urging

of the company, and many

opened their homes to longer-

term stays.

Airbnb launched marketing

campaigns encouraging people

to “go near” — that is, to still r ent

an Airbnb, but within driving

distance of their home.

“Airbnb was able to recover

because of the nature of the

platform,” said Davide Proserpio,

an assistant professor of market-

ing at the University of Southern

California Marshall School of

Business. “It’s much more flexi-

ble than hotels.”

The company, which reports it

now has more than 4 million

hosts and has had 825 million

stays since its founding, remains

an attractive service for post-

pandemic life, when analysts

expect travel to be one of the key

activities people want to pick up

again.

“With alternative accommo-

dations being the brightest spot

in online travel, it’s perhaps an

opportune time for the market

leader to debut,” said Lee Horo-

witz, an analyst at Evercore ISI.

Like many tech companies

seeking an IPO, Airbnb has never

recorded an annual profit. Its

losses grew to $674 million last

year and will increase again this

year.

[email protected]

Airbnb’s stock soars in debut, making it the biggest tech IPO of a rocky year

“Were I still in

finance, I would

not have made

this loan.”

Rep. French Hill, during a

Congressional Oversight

Commission hearing

Thursday, discussing a $

million loan from the

Treasury Department to the

troubled trucking company

YRC Worldwide