The Wall Street Journal - 20.03.2020

THE WALL STREET JOURNAL. ** Friday, March 20, 2020 |B3

BYELIZABETHKOH

ANDTIMOTHYW.MARTIN

also opted to self-quarantine

and avoid contact with family

and friends for a while.

At the Dorsett Wanchai,

which describes itself as “a 4.5

star hotel,” a reservations em-

ployee said the hotel was re-

ceiving dozens of inquiries a

day about its 14-day quaran-

tine package. For 9,688 Hong

Kong dollars (US$1,248), or

about $89 per night, guests

can book a “Premier Room”

with a window that can be

opened to let in fresh air, an

unusual feature for high-rise

hotels in the semiautonomous

Chinese city.

“Together we fight the pan-

demic,” said a recent Chinese-

language advertisement for

the Dorsett chain that listed

14-day and 27-day package

rates for rooms at nine hotels.

The Dorsett Wanchai has

designated several floors for

quarantined guests, the em-

ployee said. Their rooms will

be cleaned once a week with

disinfectant sprays, with trash

bins emptied daily.

Quarantined guests also

must undergo temperature

checks twice a day to help de-

termine if they might have the

virus.

They can order meals from

an online food delivery ser-

vice, whose options include

Chinese food, pizza, pasta and

Indian cuisine. If they prefer

to order from other food out-

lets, the hotel’s concierge will

deliver the food to the room,

the employee said.

Occidental Petroleum
Corp. plans to bring back for-
mer Chief Executive Stephen
Chazen as its new chairman,
according to people familiar
with the matter, as the oil
producer scrambles to right
itself amid plunging demand
and an activist onslaught by
Carl Icahn.
Mr. Chazen, a heavy hitter
in the energy world, led Occi-
dental for roughly five years
until 2016 and handpicked
current CEO Vicki Hollub. His
appointment could be an-
nounced in the coming days,
assuming discussions don’t
fall apart.
The move is likely aimed at
mollifying Mr. Icahn and
avoiding a costly and distract-
ing proxy fight at Occidental’s
annual meeting later this year.
Mr. Icahn had tried to recruit
Mr. Chazen for the slate of di-
rectors he nominated in No-
vember.
Mr. Chazen at the time was
reluctant to get involved un-
less it would help Ms. Hollub
clear an impasse with the bil-
lionaire activist, The Wall
Street Journal has reported.
It isn’t clear whether the
appointment will have the de-
sired effect.
Mr. Icahn’s camp has more
recently been critical of what
it sees as Mr. Chazen’s role in
setting the strategy that led
to the company’s current
woes.
Mr. Chazen, who was an in-
vestment banker at Merrill
Lynch before a long career at
Occidental, is now chief execu-
tive ofMagnolia Oil & Gas
Corp., an independent pro-
ducer, and is expected to con-
tinue in that role.
The recent plunge in oil
prices, due to the novel coro-
navirus outbreak and a price
war between Russia and Saudi
Arabia, has devastated Occi-
dental, which just last year
loaded up with debt for the
$38 billion purchase of Ana-
darko Petroleum Corp.
That deal now looks like
one of the most ill-timed ac-
quisitions in history.
Occidental’s shares have
lost nearly 90% of their value
in less than two years and
closed Thursday at $10.83. Its
market value has shrunk to
less than $10 billion from well
over $40 billion before the
Anadarko deal was struck last
spring.
It also has so far been a
money-losing position for Mr.
Icahn, who owns roughly 10%
of the company after scooping
up additional shares last
week.
Occidental has already
added new directors in recent
months, including former
Schlumberger Ltd. CEO An-
drew Gould, to strengthen its
standing with shareholders
who would ultimately decide
any proxy fight.
Energy executive Jack
Moore was set to take over as
chairman from Gene
Batchelder before Mr. Chazen
entered the mix.
Occidental has been consid-
ering adding other new blood
to its board including former
Anadarko Chief Executive Jim
Hackett, some of the people
said, though it isn’t clear
where those discussions
stand.
Mr. Icahn and Occidental
representatives have spoken
briefly in recent days and
both sides are motivated to
prevent the fight from going
all the way to a shareholder
vote, some of the people said,
but they haven’t held substan-
tial settlement discussions.
Mr. Icahn wants to ensure
Occidental’s board will seri-
ously consider any sale offers
should oil prices recover and
consolidation in the industry
occur.
Mr. Icahn had accused Ms.
Hollub and the board of buy-
ing Anadarko to avoid an ac-
quisition of the company itself
and criticized its use of pricey
financing from investor War-
ren Buffett.
Occidental said last week it
would shrink its dividend and
cut costs, moves that would
allow it to roughly break even
with U.S. benchmark oil prices
in the low $30s a barrel.
Oil prices rallied Thursday
after hitting the lowest level
in nearly two decades, closing
at around $25.

BYCARALOMBARDO

Occidental

Ex-CEO to

Return in

New Role

What is expected to worsen

is demand for Samsung’s hand-

sets, now that the virus has

reached the U.S. and Europe.

Analysts have estimated the

widespread lockdowns and

quarantines in China, the

world’s largest smartphone

market, have depressed hand-

set demand by more than 30%

in the first quarter. The U.S.

and Europe are expected to see

a more moderate version of

that sales shock as the virus

disrupts day-to-day life.

And though Samsung hand-

sets and chips are primarily

made in Asia, the pandemic’s

impact in the U.S. and Europe

could have other manufacturing

implications for the conglomer-

ate’s businesses.

Europe is home to some of

its television and battery manu-

facturing operations, and Sam-

sung has foundry and other

manufacturing plants in the

U.S., including a washing-ma-

chine factory in South Carolina.

premises after virus cases were

detected. Its share price has

slid, as have those of its South

Korean technology peers LG

Electronics Inc. and chip maker

SK Hynix Inc.

Some supply-chain issues

are improving. As China turns

the corner on its own crisis and

the number of new cases de-

creases, logistics are springing

back, said Mr. Huang. But facto-

ries may still be squeezed for

critical components such as

printed circuit boards if pro-

duction doesn’t recover quickly

enough to catch up to dwin-

dling inventory, he said.

Samsung moved its factories

out of China, but remains reli-

ant on components from the

country for its factories in Viet-

nam and India. Problems pro-

curing some of those compo-

nents were so urgent that

Samsung had offered last

month to infuse up to $2.1 bil-

lion in loans and cash payments

to local suppliers.

urging all employees to “work

from home where possible,”

and said it would be conducting

health screenings, including

temperature checks, before al-

lowing workers to enter its fa-

cilities.

The company, based in Su-

won, South Korea, has re-

stricted travel to trips that are

“mission-critical,” it said.

Samsung had to briefly

close, on multiple occasions, a

South Korean plant near the

city of Daegu where it manufac-

tures its Galaxy Z Flip devices

and some Galaxy S20 phones,

so crews could disinfect the

grow this year,” he said. But

with the pandemic and the pos-

sibility its effects could last lon-

ger than expected, “the smart-

phone market is somewhat

contracted.”

That contraction will be felt

for months, if not the entire

year. A Counterpoint Research

analysis projected global smart-

phone sales for the first quarter

could fall by at least 7% com-

pared with the prior year’s, and

that “downside risks are in-

creasing daily.”

“The expectation of a quick

recovery has diminished the

further out we’ve gotten. Un-

certainty keeps going up and

the news keeps getting worse,”

said IDC analyst Linn Huang,

who has been assessing the

pandemic’s impact on device

sales trends.

The virus has transformed

Samsung’s operations, as it has

for just about every other ma-

jor company. On Monday, Sam-

sung issued an internal memo

When the novel coronavirus

ripped through China earlier

this year,Samsung Electronics

Co. executives could take solace

in a multiyear bet that diversi-

fied its smartphone production

into Vietnam and India, insulat-

ing it somewhat as the world’s

supply chain wheezed.

But as the virus took on the

proportions of a pandemic—

shuttering schools, businesses

and gatherings from South Ko-

rea to North America to Eu-

rope—the value of that strategy

eroded, forcing a re-evaluation

of how much diversification can

shield businesses and markets

from such a widespread threat.

The pandemic has chal-

lenged Samsung, the world’s

largest smartphone and mem-

ory-chip maker, on two fronts.

Worries about the virus are

weakening buyers’ demand for

flashy devices, such as its new

lineup of Galaxy handsets, and

the supply chain in Asia is only

beginning to re-emerge from

lockdowns and quarantines that

could still muffle access to key

parts even outside China.

Those woes illustrate the

pandemic’s economic magni-

tude and how it has tripped up

even one of the world’s most

diversified manufacturers.

The dive in smartphone de-

mand in China early this year is

expected to foreshadow similar

demand shock in Samsung’s

most prized market, the U.S., as

local and federal officials con-

sider more drastic measures to

curb the spread of the virus.

At Samsung’s annual share-

holders’ meeting Wednesday,

D.J. Koh, the president and

chief executive of the com-

pany’s IT and mobile-communi-

cations division, acknowledged

the virus was forcing them to

revise demand projections for

the company’s handsets.

“Originally the demand for

smartphones was expected to

On Wednesday afternoon,

three hotel employees were

cleaning door handles and

windows near its entrance

with disinfectant spray. A sign

on the check-in desk said

guests could get bottles of

hand sanitizer refilled.

Most hotels offering quar-

antine packages normally ca-

ter mostly to tour groups or

budget travelers and have

seen that business largely dis-

appear, said Gloria Chang, ex-

ecutive director at hospitality

consulting firm Horwath HTL

in Hong Kong.

But some upscale hotels are

also getting in on the action.

At the Renaissance Hong Kong

Harbour View Hotel, a staffer

greeting visitors at the front

desk Thursday said the hotel

had recently begun offering

14-day packages for guests

needing to be quarantined.

Rates begin at about $160

daily before service and taxes,

a discount from standard

prices.

Guests must remain in their

rooms but are eligible for dis-

counts on food and laundry

services.

At the Fairmont Singapore

rooms are now available for

two weeks for as little as $110

plus tax and service daily. All

rooms have balconies. While

housekeeping staff cannot en-

ter rooms, fresh towels are left

at the door.

With the coronavirus pan-

demic pummeling global

travel, some hotels are em-

ploying a new tactic to boost

bookings: targeting guests

who face lengthy quarantines.

The risky strategy is a reac-

tion to the challenge that the

world’s hospitality companies

now face, with few people

traveling and few likely to do

so for some time.

Hotel occupancy rates have

plummeted as coronavirus in-

fections have spread through-

out the world. In Hong Kong,

Singapore and South Korea,

where cases started climbing

early in the global crisis, occu-

pancy rates have fallen from

about 70% or higher in Janu-

ary to as low as 20% this

month, according to hotel data

tracker STR. Hotels in the U.S.

and Europe are now suffering

a similar fate.

With few tourists visiting

Hong Kong, where confirmed

coronavirus cases reached 208

on Thursday, hotels are now

offering special packages for

people who need—or want—to

quarantine themselves. On

Thursday, a new rule took ef-

fect requiring all people arriv-

ing from abroad to be in quar-

antine for two weeks. Some

individuals who returned to

the city in recent days have

BYNEWLEYPURNELL

ANDFRANCESYOON

As Guests Cancel, Hotels Cater to the Quarantined

Hotel concierge counters with no customers at Hong Kong International Airport on Thursday.

KEITH TSUJI/ZUMA PRESS

Drivers fromFedExCorp.

andUnited Parcel ServiceInc.

are encountering obstacles and

heightened levels of suspicion

due to the pandemic.

The interaction of handing

over a package and getting a

signature is now fraught. Cus-

tomers, wary of the number of

people drivers are exposed to

grill them about whether they

might be infected.

While much of the world re-

treats, delivery workers have

moved closer to the front lines

of the pandemic as they try to

fill a growing need for every-

thing from protective equip-

ment and test kits at medical

facilities, even as they serve

consumers who are hunkered

down and buying more basics

online.

Nick Perry, a UPS package-

car driver in Columbus, Ohio,

said his daily route brings him

to between 70 and 80 commer-

cial stops each day, from small

businesses to community col-

leges, where he delivers up to

300 packages.

“That’s a lot of volume and a

lot of interaction,” the 32-year-

old Mr. Perry said. He said he

has faced questions about

whether he has contracted cor-

onavirus. Other drivers in his

facility have been asked to sign

woman said.

Drivers have raised other

concerns about their work situ-

ation, including the sanitation

of trucks and facilities. Mr.

Perry, for instance, has been

told by supervisors that Lysol

wipes weren’t allowed on deliv-

ery vehicles because they didn’t

have a safety sheet as required

by the federal Occupational

Safety and Health Administra-

tion.

A UPS spokesman said that

such a form isn’t required and

the company’s health and

safety director is sending out a

message “to ensure there is no

confusion about approval for

this product.”

structed to stick a notice on a

front door, ring the doorbell

and step back. The recipient is

then asked to sign the notice

with their own pen and close

the door before the driver

leaves the package.

FedEx, meanwhile, has sus-

pended collecting most signa-

tures for deliveries in the U.S.

and Canada.

“This change is meant to

help protect our team members

and customers by preventing

exchange of the signature

equipment at the point of deliv-

ery and keeping them at a safe

distance from each other con-

sistent with social distancing

guidelines,” a FedEx spokes-

documentation about their

health status and submit to

temperature checks when mak-

ing deliveries to nursing homes.

FedEx and UPS have advised

drivers that they don’t have to

sign such declarations about

their health status or recent

travels, or have their tempera-

ture taken. Instead, the compa-

nies are devising workarounds

like finding alternative drop-off

locations.

The companies have

changed procedures to respond

to recipients who have balked

at signing the drivers’ touch-

screen devices.

For deliveries needing a sig-

nature, UPS drivers are now in-

BYPAULZIOBRO

Package Deliverers Face Wary Customers

It moved factories

out of China, but

remains reliant on

Chinese parts.

BUSINESS NEWS

Virus Foils Samsung’s World Plan

Supply chain spanning

the globe helped the

company outwit the

virus only for a while

At the company’s annual meeting in Suwon, South Korea, on Wednesday, attendees kept their distance and wore masks.

AHN YOUNG-JOON/PRESS POOL