Good Monday Morning,
Daylight – This weekend, the leadership of Starbucks huddled and got to the bottom of why they have to tweak 2017 revenue projections, because of a softness in store sales that kind of came out of nowhere. First thought was “here we go again.” Schultz leaving, new guy coming in and slack seeps in the trot line – seen it a hundred times. Wrong. Just the opposite – revenue runoff from people traffic jamming Starbucks lines, due to chaotic adoption of mobile order and pay, turning away customers in line who are paying with cash, and high numbers of cars driving by the drive through because of long lines.
Economics – Starbucks’ shares were down 4.21 percent Friday after the company cut its full-year revenue forecast. The company put out this stat this weekend that should wake us all up faster than a triple tall latte – they had 1,200 stores this quarter that fit the profile where 20 percent of transaction volume is coming from mobile order and pay. In December, it was 600 stores. The company’s main action plan is to add a new digital tool that will send text message notifications when mobile order is ready for pickup. Forget email – have a text strategy.
M&A – Vita Coca, a producer of coconut water-based beverages, has hired J.P. Morgan to explore a sale that could value the company at more than $1 billion.
Lionsgate is in talks to sell its stake in Epix, a premium cable channel, to existing shareholders MGM Holdings and Paramount (a unit of Viacom).
Style – This weekend, I watched a rerun of the “Mary Tyler Moore” show and as far as I know, it was the only Entrepreneurial episode – Ted Baxter, the local weatherman, decided to start a broadcasting school and had the room set up for 200 students at the school orientation. One emotionally involved student showed up. Ted had invited Mary and the station management team to give faculty speeches. WW – worth watching and maybe one of the funniest comedy episodes to play on TV. “Mary Tyler Moore” positively moved the country.
Live Rounds – President Donald Trump’s executive order to clamp down on people entering the U.S. from seven predominantly Muslim countries sent technology leaders to the barricades – just about everyone in Silicon Valley came from somewhere else or is the daughter or son of someone who did. Sergey Brin, co-founder of Google, immigrated from the Soviet Union at age six and marched in the protest at the San Francisco airport. Brian Chesky, founder of Airbnb, promised free housing to refugees not allowed in the U.S., and Uber promised to pay legal fees for drivers with immigration problems. Uber’s goodwill is always tied to revenue. Now, there is another view – Trump is doing exactly what he said he would do. For every 500 people that Trump rightfully loses in Silicon Valley, he picks up another five million supporters in the Swampland. The man runs marketing campaigns. The ban affected 109 people this weekend, and he got a billion dollars of free advertising.
Buzzard’s Roost – The bike shop bites the dust. – A competitor to the bike repair shop has emerged: mobile shops that make house calls or you just take your bike to the Repair Cafe, a meeting where people repair household and mechanical devices. Handy Dandy scores.
Hot – Prime time Super Bowl LI ad this year will cost $5 million, and companies eager to get their money’s worth now spend 25 percent or another million to market the ad itself on both traditional and social media.
An HBO documentary debuting tonight, “Becoming Warren Buffett,” looks at his personal relationships. As he said, you are going to be disappointed if you watch to know how to pick cheap stocks. Legend has it his former wife helped him find his next wife.
Culture – I am getting pushback from baby boomers on “La La Land” – some are not getting it, not liking it and throwing their hands up halfway through the movie, saying it’s a total let down. First, it is a good movie, but you have to open your mind to fare-stage just like when you visit Disney World – not a drama fix like “An Officer and a Gentlemen.” Millennials, take your grandparents to see “La La Land.”
Investment Banking – Reviver, a developer of digital license plates, raised $6.8 million.
Hedge Funds – Veritas Capital agreed to buy Harris Corporation’s government IT services business for $690 million in cash. Trump signed an executive order this week to put a freeze on federal hiring – this was totally under the radar, as his order on immigration took all the oxygen out of the room.
Spotlight – Our LA in May with Miracles in Malibu venture will have a confirmed date no later than Friday of this week. Also, tomorrow we will announce Great Debates program on February 17 at 8:30 a.m. We have a TLA tomorrow at 10 a.m.
Deal Stream>>>>>>>>>>>>>>>>>>>>
IPO – Jagged Peak Energy, an oil and gas company, raised $474 million in its initial public offering. The company priced 31.6 million shares at $15 per share, down from the 38.2 million shares it had planned on offering for $16 to $18 a share.
JELD-WEN Holding, a door and window manufacturer, raised $575 in its IPO, offering 25 million shares at $23.
Jounce Therapeutics, a developer of cancer immunotherapy treatments, raised $104 million in its IPO, offering 6.4 million shares at $16.
REV Group, an emergency and specialty vehicles manufacturer, raised $275 million in its initial public offering, offering 12.5 million shares at $22 per share (above its range of $19 to $21).
Venture Capital – BitFury Group, a bitcoin blockchain provider, received a $30 million investment from Credit China Fintech Holdings Limited. The deal includes equity funding and the establishment of a joint venture.
CafeX Communications, a provider of software for real-time collaboration within business applications, raised $18 million.
Entrypoint, a virtual reality startup, raised $2 million.
Private Equity – Sun Capital Partners acquired Arrow Tru-Line, a manufacturer and distributor of garage door hardware and fittings.
And that’s what’s ahead, Cliff
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