FTI Consulting News Bytes – 11th February 2022

This week’s news

Cloudy with a chance of satellites

Up to 40 of 49 of SpaceX’s satellites have been hit. How, why and by what you ask? Geomagnetic storms are the answer. They’re caused by powerful explosions on the sun’s surface that spit out plasma and magnetic fields that can hit the earth. Unfortunately for SpaceX, that just so happens to be the case. The satellites were due to join Starlink’s satellite internet project which aims to provide high-speed internet using thousands of orbiting satellites. A key advantage is that the system can be used in places where wired connections can’t. A recent example is in Tonga where an undersea earthquake severed the country’s undersea data cable, a Starlink station is being built nearby in Fiji to help restore access. The story is a reminder of both the breadth of Tesla’s ambition, the challenges of building in space and, above all, the power of mother nature.  And in case you were worried about falling debris, Jacob Geer, the UK Space Agency’s Head of Space Surveillance, said he does not expect “any part” of the satellites to hit the ground.

Softbank pulls the plug

SoftBank Group has ditched its plan to go ahead with the blockbuster sale of Arm Ltd to U.S. chipmaker Nvidia Corp, which was valued at up to $80 billion, citing regulatory hurdles. When the deal was first announced in September 2020 it was valued at around $40bn (£29.6bn). Britain’s Arm, which named a new CEO on Tuesday, said it would go public before March 2023 and SoftBank CEO Masayoshi Son indicated that would be in the United States, most likely the Nasdaq. SoftBank acquired Arm, whose technology powers Apple’s iPhone and nearly all other smartphones, in 2016 for $32 billion. The planned sale had faced major regulatory hurdles in the UK, United States and European Union.

Peloton boss spins out

From an all-time high market cap of almost $50 billion to now hovering around the $12 billion-mark, Peloton has been on a rough ride over the past two years, to say the least. While the wheels may still be spinning for now, it’s the end of the road for co-founder and CEO John Foley, who announced his plan to step down. He is to be replaced by Barry McCarthy, the former chief financial officer of Spotify. This isn’t the only bad news coming from the company, with around 2,800 jobs announced to be cut, all while one of the Company’s largest investors, Blackwells Capital, continues to call for the company to be sold. Blackwells has previously said Peloton and its customer base was “extremely attractive” to companies such as Nike, Apple, Disney and Sony which explains recent rumoured interest from Nike and Amazon among others. Foley himself told the Wall Street Journal that the Company was “open to exploring any opportunity that could create value for Peloton’s shareholders,” but it will be up to his successor to see the company to its next stage.

Meta Snaps back to reality

For anyone hoping to learn from the latest earnings reports from leading tech companies, the whiplash at Snap this week has been emblematic of the wider hopes and fears that have ripped through the tech sector. Shares in the social media platform plunged 23 per cent on Thursday as investors fretted that a weak revenue forecast from Meta, parent of Facebook, would spill over into the wider digital advertising sector. Snap then rebounded 60 per cent in after-hours trading when the worries turned out to be unfounded. The result of all the stock market drama: Snap’s shares settled back to the level they were trading at just three weeks ago. In general, demand for digital services has held up. Amidst it all, the biggest tech companies — with the exception of Meta — have displayed the notable resilience that has become their hallmark, in the process appearing to take market share in their core businesses. The likes of Google, Apple and Amazon have all benefitted from this demand for digital services and cloud computing.

Maccies delivers Non-Fungible Takeaways

For anyone concerned about hunger pangs after a long day in the metaverse, fear not: McDonald’s is the latest business to file trademark applications for virtual goods, services and even virtual restaurants and cafes, marking growing corporate interest in the virtual world. The business has followed the growing trend of major corporations preparing for a potential wave of virtual reality marketplaces spearheaded by Meta, the parent company of Facebook, and its envisioned virtual world, the metaverse. McDonald’s included its McCafe brand in its metaverse trademark application, whilst another one of the applications was for the brand to be able to offer entertainment services namely, providing online actual and virtual concerts and other virtual events. The added bonus of being able to order fries from the metaverse straight to your physical home is sure to excite!

Top Tweets of the Week

• The CEO of Unity demo’s the Company’s latest tech – are you excited or concerned – will we see the first earning’s call delivered by an avatar?
• Robert Peston accurately sums up the British Wordle experience
• In a bold play on human behaviour, independent analyst Ben Evans lays out how Spotify incentives users to upgrade to its premium offering

Number of the Week

$80bn  – The reported value of the Arm and Nvidia deal

What’s happening next week?

• 14 February: ONS Economic Forum “Cost and benefits of home working”
• 15 February: Airbnb Q4 results
• 16 February: Barclaycard Small Business barometer
• 17 February: Walmart Q4 results

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