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Uber’s Delivery Business Overtakes Rides

Credit…Mark Abramson for The New York Times

Uber said on Thursday that its revenue in the second quarter dropped 29 percent to $2.2 billion from a year ago and that its net loss narrowed to $1.8 billion, as the ride-hailing giant deals with the fallout from the coronavirus pandemic.

The revenue decline was the steepest since Uber went public in May 2019, though total revenue was better than what Wall Street analysts had projected. Uber’s losses improved from $5.2 billion a year ago when it had heavy stock-based compensation costs after its initial public offering.

The pandemic’s hit to Uber’s core ride-hailing business was unmistakable. The company said the amount of money it receives from rides before paying driver wages and other fees declined 73 percent from a year earlier.

But delivery surged, with revenue from Uber Eats, its food delivery business, exceeding the core ride-hailing business for the first time. Revenue from Uber Eats totaled $1.2 billion, while rides shrank to $790 million.

To bolster its delivery business, Uber recently agreed to acquire the food delivery company Postmates for $2.65 billion.

Credit…Christopher Capozziello for The New York Times

Since April, federal government’s Paycheck Protection Program has injected $523 billion into the economy, allowing small-business owners to stay afloat and keep employees on payrolls.

But with the program set to end Saturday and an economic rebound nowhere in sight, the looming question is: What happens to the millions of workers who have no jobs to return to, and the struggling businesses that employed them?

The numbers are already dire. On Thursday, the government reported that nearly 1.2 million Americans filed for state unemployment benefits last week — the 20th straight week that new jobless claims have topped one million. Economists estimate that 30 million Americans are unemployed.

Small businesses employ nearly half of America’s nongovernment workers, and the paycheck program preserved at least 1.4 million jobs through early June, a recent economic analysis concluded. More than five million companies received loans, averaging $102,000 each.

Ken Bodenstein borrowed $148,000 from the federal government to help cover payroll expenses at the Westport day care center he runs with his wife, Kristen. But by June 5, the money ran out, forcing the Bodensteins to furlough or lay off all but nine employees.

“We were just about to hit break-even, and then everything collapsed,” Mr. Bodenstein said.

So far, there is little agreement in Washington about how to continue to help millions of floundering businesses.

“There’s absolutely a need for more help in some industries,” said Carson Lappetito, president of Sunwest Bank, a regional lender based in Irvine, Calif., that has made more than 2,000 P.P.P. loans. “In the hotel and restaurant and hospitality sectors, those areas have been completely hammered.”

Credit…Mary Altaffer/Associated Press

Rupert Murdoch’s publishing empire took a staggering loss for the three months ending in June, as News Corp reported a $401 million loss for the period, with much of the decline related to impairment charges for some of its assets in Britain and Australia and restructuring costs related to the coronavirus pandemic.

  • But a surprise highlight was the company revealing for the first time financial details of its Dow Jones division, the group that publishes The Wall Street Journal. The unit was News Corp’s only growing business on an annual basis. For the fiscal year ending in June, revenue for Dow Jones, which includes Barron’s and the news and information site MarketWatch, was up 3 percent to $1.6 billion, and profit rose 13 percent to $236 million. Circulation sales increased 6 percent to about $1.2 billion, while ad revenue fell 9 percent to $359 million.

  • In addition to The Journal, News Corp publishes several newspapers across the United States, Britain and Australia, including The Times of London and the tabloids The New York Post and The Sun. Those papers are housed under a separate group from The Journal.

  • One advantage to laying out a division’s finances is it allows a potential acquirer to more accurately value that part of the business. The company has not said there are any plans to sell The Journal.

  • Robert Thomson, chief executive of News Corp, called the reporting of Dow Jones financials “a particularly historic moment.” He said it highlighted the division’s “superior profit profile and prospects compared to those of our nearest competitor.”

  • Subscriptions to The Wall Street Journal rose 15 percent to just under three million, including 2.2 million digital-only subscriptions.

  • Quarterly results revealed advertising challenges at Dow Jones, as at other news publishers. Revenue fell 4 percent to $381 million, largely because of a 28 percent drop in advertising sales to $71 million. Profit, however, was up 13 percent to $60 million.

  • Total sales for News Corp fell 22 percent to $1.9 billion, with advertising dropping across its properties. This is also the first quarter that News Corp is reporting its results without James Murdoch, a potential heir to the Murdoch family empire who stepped down from the company’s board last week.

The Trump administration is considering forcing Chinese companies to delist their shares from stock exchanges in the United States unless they share their audits with American regulators, a move that would further ratchet up tension between the world’s two largest economies.

China does not allow its companies to provide their audit information to the Public Company Accounting Oversight Board, which oversees auditors in the United States. Officials at the Treasury Department and the Securities and Exchange Commission acknowledged that the Chinese government would likely have to amend its laws so that companies would be in compliance with the rules, if they take effect.

The President’s Working Group on Financial Markets recommended the move in a report released on Thursday as a way to protect American investors from what it described as the risks posed by Chinese companies. The recommendations would require the S.E.C. to undertake a rule-making process and would not take full effect until 2022.

“The recommendations outlined in the report will increase investor protection and level the playing field for all companies listed on U.S. exchanges,” Treasury Secretary Steven Mnuchin, who chairs the working group, said in a statement.

If a Chinese company did not comply with the rule and provide access to work papers of the principal audit firm, it would have until January 2022 to delist. A Chinese company could potentially satisfy the requirements by undertaking a co-audit with a comparable firm that would provide access to relevant information.

Treasury and S.E.C. officials acknowledged that the policy could lead to a wave of delistings.

There is currently bipartisan legislation in the House and the Senate that would impose restrictions similar to what the working group is proposing.

Credit…Chris Creese for The New York Times

With operations ceased for the entirety of the quarter and most of its employees laid off or furloughed, AMC Entertainment, the largest theater chain in the U.S., posted a quarterly loss for the period ended June of $561.2 million. Revenues totaled $18.9 million, a 98.7 percent plunge from the same period last year for the Kansas-based company.

The coronavirus has laid waste to the company’s 1,000 theaters scattered across the globe, calling into question whether it would be able to stay financially viable. AMC did restructure $2.6 billion of its debt, which Adam Aron, the chief executive, said will allow the company to stay afloat should theaters have to remain shuttered into 2021.

AMC is planning on reopening two-thirds of its U.S. theaters this month. Internationally, AMC has already restarted business in 130 markets and expects its remaining theaters to also open in August.

“We remain optimistic about AMC’s long term future,” Mr. Aron said in a statement. “Theatrical exhibition has always been resilient, and we are confident that at AMC we are taking the right steps to emerge from this crisis and to thrive once again as the leader in our industry.“

Last week, AMC shocked Hollywood by signing an agreement with Universal Studios that would dramatically shorten the amount of time movies need to play exclusively in its theaters before moving to premium video-on-demand. The deal, which now only requires a film to play for 17 days, will allow AMC to share in the revenue generated by the on-demand sales.

Wall Street regained its footing on Thursday afternoon, pushing higher after an unsteady start to the day, with the S&P 500 inching ever closer to its record and climbing for a fifth consecutive day.

The S&P 500 rose more than half a percent, gains that put the index about 1 percent below a high reached on February 19, before markets went into a tailspin as investors panicked about the fast spreading coronavirus.

Large technology stocks, which have played a large role in the rebound, rallied again. On Thursday, it was Facebook that ranked among the best performing stocks in the S&P 500, with a gain of almost 6.5 percent. Shares of Apple, Google and Microsoft were also higher, and the Nasdaq composite rose 1 percent.

The gains came despite more indications of the economic morass the United States finds itself in, and as prospects for a deal on a new financial rescue package appeared to dim.

It may have helped that President Trump on Thursday said he was willing to act unilaterally to strengthen the economy, saying he was looking at executive orders to forestall evictions, suspend payroll tax collection and provide extra unemployment aid and student loan relief.

Mr. Trump’s comments came after the Labor Department released data showing that workers filed more than one million new state jobless claims for the 20th straight week, as the coronavirus pandemic continued to lead to layoffs and business closures. The tally for last week, 1.2 million claims, was the lowest since March.

Shares in Europe fell, however, weighed down by warnings from Britain’s central bank of a slow recovery ahead.

Bank of England policymakers said that they expected the country’s economy to contract by 9 percent this year, a less severe downturn than they indicated a few months ago, but they also predicted that the economy would not return to its pre-pandemic levels until the end of 2021. Even in three years, they said, the economy will still be smaller than it would have been had the growth rate followed the path it was on at the end of 2019.

The Turkish lira hit a new low against the dollar Thursday, raising fears of a currency crisis that would undermine the fragile economy. The Turkish central bank said Thursday it would “use all available instruments to reduce the excessive volatility in the markets” after the lira fell as low as 7.3 to the dollar, down from 6 to the dollar at the beginning of the year.

Credit…Houston Cofield for The New York Times

The government reported on Thursday that nearly 1.2 million workers filed new claims for state unemployment benefits last week. It was the lowest weekly total since March, but signaled the continuing damage that the pandemic is inflicting on the labor market.

An additional 656,000 claims were filed by freelancers, part-time workers and others who do not qualify for regular state jobless aid but are eligible for benefits under a separate federal unemployment insurance program, the Labor Department announced on Thursday. Unlike the state figures, that number is not seasonally adjusted.

“Over all, the data was modestly better than we expected, a surprising improvement,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics. There were declines across nearly all the states, even those where there is a resurgence of the virus.

But jobless claims “remain at alarmingly high levels,” she said, and the stubbornly high number of people collecting unemployment — estimated by economists at 30 million — suggests that “temporary layoffs are becoming permanent.”

Although the number of new claims is down from the stratospheric levels reached in the early days of the pandemic, the million-plus tallies that have continued for 20 weeks in a row are still extraordinarily high by historical standards.

And now that emergency federal supplemental benefits have expired, the newest entrants to join the ranks of unemployed will not be receiving the extra $600 a week that has helped jobless workers pay bills through the spring and early summer.

Credit…Pool photo by David Calvert

The Nevada Legislature has approved a bill mandating health protections for hundreds of thousands of workers in the hospitality industry while providing most of the state’s businesses with a liability shield against coronavirus-related lawsuits.

The state’s powerful culinary union pushed for the worker protections as part of what it called the Adolfo Fernandez Bill, named for a utility porter on the Las Vegas Strip who died after contracting Covid-19.

Gov. Steve Sisolak, a Democrat, is expected to sign the measure, which was approved Wednesday night. Both houses of the Legislature are controlled by Democrats.

In the counties that include Las Vegas and Reno, the bill requires daily temperature screenings of hospitality workers, coronavirus tests for those returning to work and regular cleaning of high-touch surfaces. The legislation bars employers from forcing workers with symptoms from reporting to the job while awaiting test results and offers paid time off to those testing positive.

At the same time, the bill shields businesses in most of the state’s industries from potential lawsuits by customers who become ill with Covid-19.

State Senator Yvanna Cancela, a co-majority whip, said the measure “finds a balance” in offering health protection to workers while assuring employers that “there can be certainty around which you can operate.”

But progressive groups criticized the liability provisions, saying they offered a shield to employers not bound by the safety mandates that apply to casino and hotel workers.

Hugh Baran, a staff lawyer with the National Employment Law Project, a worker advocacy group, said the liability provisions would grant “legal immunity to employers who fail to protect their workers.”

Credit…Christopher Smith for The New York Times

While the elevated levels of jobless claims show that businesses are still struggling to keep employees on the payroll, there has been some pickup in hiring. After drooping, job postings at the online jobs site ZipRecruiter rose by 7.4 percent in July and are still climbing, said Julia Pollak, the company’s labor economist.

But the latest economic data is mixed, she cautioned. Surveys from the Institute for Supply Management, for instance, showed that business activity in service industries expanded last month, but that the employment index declined, an indication that many companies are still not bringing back workers.

There were steep increases in joblessness related to the performing arts and other live events in July, Ms. Pollak said.

And announcements of impending layoffs continue to pile in. Ms. Pollak has been tracking plant closings and layoffs that the government requires to be announced in advance. “They are showing that new layoffs are still taking place at an alarming rate,” she said. “Plenty of layoffs are scheduled for August, September and October, as well.”

“Many companies are realizing now that the effects will be much longer than expected,” she said.

  • Facebook will allow its employees to work from home until at least July 2021, the social media giant confirmed on Friday, and will give employees an additional $1,000 to support continued remote work. The company believed in the importance of in-person communication and had few remote workers before the pandemic, but Mark Zuckerberg, the chief executive, has said as many as half of Facebook’s employees will be permanently remote within the next decade.

  • Nintendo, the creator of Animal Crossing for its Switch consoles, reported on Thursday a staggering 541 percent increase in quarterly profit from the previous year. Behind that number were 10.6 million sales of Animal Crossing: New Horizons, pushing the Japanese gaming company’s net income to 106.5 billion yen ($1 billion), and the company said “sales of this title continue to be strong with no loss of momentum.” Since it was released, there have been more than 22 million sales of the game.

  • Snap, the company behind the popular social media app Snapchat, is planning a major push to register first-time voters within its app and to guide them through the ballot process ahead of the election on Nov. 3. Beginning in early September, the app will introduce a new tool in partnership with TurboVote that allows users to register from within their Snap account with a streamlined set of prompts.

  • More than half of Americans who flew in the past year are not ready to do so again, according to a new survey, underscoring the difficulty airlines face in convincing people it is safe for them to get back on planes. Younger adults are more willing to travel; only a third of those between the ages of 18 and 34 expressed discomfort with the idea. But older adults, who tend to have more time and money to travel, are far more reluctant. Among those 55 or older, 69 percent said they would not be comfortable taking a flight.

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