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| | November 6, 2015 | |
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| | Earnings season this quarter has underscored the growing chasm between the tech juggernauts - whose growth continues unabated - and other companies - which are feeling the pains of a sluggish and maturing economy. The Wall Street Journal highlights the trend this morning here.
As noted on in Monday's CEO Daily, the current tech disruption has a tendency to create, if not a winner-take-all dynamic, at least a winner-take-most. We are watching that play out in real time, as technology moves from consumer gadgets and social platforms ever deeper into the enterprise. The ability of a business like Amazon Web Services to scale rapidly creates enormous bounty for them, but leaves other companies - IBM, Dell, HPE - scraping over the remains.
On Thursday, the Journal's Greg Ip wrote an insightful column pointing to "mounting evidence" that this gap between the most successful and least successful companies is a driving cause of the growing inequality in the U.S. Ip's column is worth reading, here.
I raised the notion that tech disruption is driving inequality during a session at the Fortune Global Forum earlier this week, prompting quick disagreement from Facebook's Sheryl Sandberg, and a dramatic outburst from investor Marc Andreesen. "Is this Fortune?' he asked. "Did I stumble into an International Workers Party conference?"
Off-stage, Andreessen moderated, saying his main concern is that a focus on inequality will lead to counterproductive policies. That's certainly true. History shows penalizing success is easier than preventing failure, and the result can be a receding tide that sinks all boats.
But that doesn't mean the winner-take-most nature of the current tech disruption doesn't demand our attention - for its social, economic and political consequences.
More news below. Share the CEO Daily.
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| | Top News | |
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| | • Exxon Mobil faces probe New York's Attorney General Eric Schneiderman has issued a subpoena against Exxon Mobil, citing possible lies to the public by the oil-and-gas giant about risks associated with climate change. The subpoena reportedly dates back to activities by the company stemming over the last 40 years. It focuses on whether Exxon Mobil warned investors about possible financial risks stemming from society's need to limit the usage of fossil fuels. Exxon Mobil has rejected the allegations. Fortune • United CEO to return in 2016 The chief executive of United Continental, who was hospitalized last month after suffering from a heart attack, said he plans to return to his job at the airline in the first quarter of 2016. "I am excited to tell you that I am on the road to recovery," said Oscar Munoz in a memo sent to employees. At the time Munoz had the heart attack, he had only been on the job for 37 days. His health status since then was a mystery. WSJ (subscription required) • Ackman backs Valeant CEO Billionaire investor Bill Ackman has thrown his support behind Valeant Pharmaceuticals CEO Michael Pearson, an executive that is facing increased pressure as the drugmaker's shares slid sharply since concerns were raised over its business practices. "You are one of the most shareholder-oriented CEOs I know," Ackman wrote to Pearson in an email seen by Reuters. Valeant's stock dropped sharply on scrutiny over high drug prices and accusations it used a specialty pharmacy to inflate revenue. Reuters • U.S. wins Libor rigging case Two former traders with Dutch cooperative bank Rabobank have been convicted in the U.S. for rigging Libor, the global benchmark interest rate, and could each face up to 30 years in prison when they are sentenced in March. That would be a landmark event for the Justice Department, which has become more determined to get tough on individuals involved in white-collar crime. Earlier this year, a former UBS trader became the first to be convicted for a Libor-rigging case - he was sentenced to 14 years in jail in the U.K. Fortune | |
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| | Around the Water Cooler | |
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| | • Stumpf: Debate is bigger than the rate Wells Fargo CEO John Stumpf says he can't wait for the Federal Reserve to finally get going with the cycle of rate hikes. " • Goldman accelerates promotions Goldman Sachs is making changes to improve life for younger bankers and prevent defections, moves that include faster promotions and more automation of grunt work. The investment bank is now saying it will promote all analysts to associates after two years and will also let them switch to different teams in their third year. The faster promotions will also mean higher pay for many junior bankers, as well as earlier conversations about their future roles at the firm. Bloomberg • Men's Wearhouse learns painful lesson Shares of Men's Wearhouse dropped sharply after the apparel company reported a steeper-than-anticipated drop in sales at the company's Jos. A Bank chain. Results were badly stung by Jos. A Bank's decision to ditch the company's "buy one, get-three-free" sales event. Scaling back on promotions is part of a broader strategy to make the brand more relevant today, but customers are clearly still very motivated by deals. As Fortune notes: weaning shoppers off discounts can be difficult. Fortune • Christie, Huckabee to miss main stage New Jersey Gov. Chris Christie and former Arkansas Gov. Mike Huckabee have been booted from the main stage in the next Republican presidential debate, joining a four-man undercard debate that will be moderated by Fox Business Network on Tuesday. They will debate Louisiana Gov. Bobby Jindal and former Pennsylvania Sen. Rick Santorum while eight other candidates - including businessman Donald Trump and Florida Sen. Marco Rubio - will take the stage for the main event. Fortune | |
| | 5 things to know today | |
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| | Egypt and October jobs — 5 Things to Know Today. Today's story can be found here. | |
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