Newsletter: California Inc.: Taking aim at short-term housing rentals
Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I'm Business columnist David Lazarus, and here's a rundown of upcoming stories this week and the highlights of last week.
The guessing game about an interest rate hike continues. Data to be released Friday on new jobs created last month will offer the latest clue about the strength of the economy, which in turn could influence whether Federal Reserve policymakers will end the era of almost-free money.
Last Friday, the smallest gain in consumer spending in eight months was recorded for September, along with an itty-bitty increase in personal income. The Fed will be crunching all these numbers before pulling the trigger.
Looking Ahead
Bank merger: The $5.4-billion acquisition of Los Angeles' biggest bank, City National, by Royal Bank of Canada in Toronto is expected to close Monday. It's the biggest in a series of recent banking deals, and it will put Hollywood's "Bank to the Stars" under out-of-town ownership. As part of the deal, the bank committed $11 billion to help low-income neighborhoods and small businesses.
Personal data: The U.S. Supreme Court will hear a case Monday on whether websites can be sued for minor mistakes when reporting data. Thomas Robins alleged that Spokeo, a Pasadena site, made several errors in providing publicly available data on people. If Robins wins, Spokeo could face a huge number of similar claims. The company argued that Robins suffered no actual injury.
Tesla earnings: Electric car company Tesla Motors will report third-quarter earnings Tuesday. Investors will be looking for an update on production rates for Tesla's new Model X crossover, which is finally going into production after two years of delays. They'll also be watching to see whether Tesla meets its estimates for quarterly vehicle deliveries. Initial speculation put the automaker behind its target.
Entertainment report: Investors in Time Warner Inc. should learn its growth plans for its video-on-demand service HBO Now when it reports third-quarter financial results Wednesday. The New York media company is projected to earn $1.09 a share on revenue of $6.5 billion in the third quarter. Besides owning HBO, Time Warner has Warner Bros. studios.
Jobs data: The Labor Department gives its latest snapshot of the jobs market Friday, a key indicator of the economy's health. Analysts estimate that a net 180,000 workers were added to payrolls in October — the third straight month that the total would be below the 200,000 threshold. In September, the nation's employers created a net 142,000 new jobs. The unemployment rate is expected to stay at 5.1%.
The Agenda
Today's Business section explores San Francisco's Proposition F, known as the Airbnb Initiative. The contentious measure concerns regulation of short-term rentals in the city. It toughens the rules that hosts and platform providers must follow, such as limiting the number of nights a unit can be rented to 75 a year.
Story Lines
Here are some of the other stories that ran in the Times Business section in recent days that we're continuing to follow:
Pharma merger: Botox maker Allergan is in early talks to combine with drug giant Pfizer Inc. in a deal that would cap a remarkable spree of mergers this year in the healthcare industry. Allergan, a Dublin, Ireland, firm with sizable operations in Irvine, said that it was approached by Pfizer and that discussions were "friendly." A merger would help lower Pfizer's tax rate, a key impetus for a deal.
Stealth work: Aerospace giant Northrop Grumman Corp. won an intense four-year competition to build the nation's new fleet of stealth bombers, but Southern California should end up being the real winner. Northrop said it will probably create 1,400 new jobs at the Air Force hangars in Palmdale. The company will build 80 to 100 long-range bombers over the next decade under an $80-billion contract.
RushCard fund: RushCard, the pre-paid debit card backed by hip-hop mogul Russell Simmons, will create a "multimillion-dollar" fund to help cover the costs that its customers suffered while the card was beset by technical problems last month. RushCard customers must show that they incurred late fees or suffered a financial setback as a direct result of the RushCard problems.
Drugstore merger: Walgreens has agreed to buy Rite Aid for about $9.4 billion, combining two of the nation's largest drugstore chains as they bulk up to better compete in the rapidly changing healthcare industry. Walgreens has about 8,200 stores throughout the United States, including 637 in California. Rite Aid operates about 4,600 stores in 31 states, including 577 in California.
Taxi tech: Taxicabs are about to get a technology makeover. Flywheel, a Redwood City, Calif., technology company that works with the taxi industry, announced that it will begin piloting in San Francisco an all-in-one GPS-based smartphone taxi meter, which will replace existing technology in participating taxis. TaxiOS will work on Android phones and replace meters, payment systems, navigation and dispatch technologies with a single app.
What We're Reading
And some recent stories from other publications that caught our eye:
Unhealthy tech: Fortune asks whether working in Silicon Valley is bad for your health. Healthcare professionals in the region have diagnosed heart attacks and mental health issues associated with chronic stress and anxiety. There also are rashes, irritable bowel syndrome and "muscular complaints related to repetitive motions and a lack of physical activity."
Self-driving cars: Bloomberg buckles up and looks at Detroit's efforts to compete with Google on development of self-driving cars. A Stanford professor who ran Google's program for four years says the tech giant has the edge because it's focused on creating a "mobility service," not just a vehicle.
Theranos woes: Wired delves into the legal ramifications of a Wall Street Journal article that questioned whether blood-testing company Theranos can deliver promised results. Will there be a libel lawsuit? This could be tough. The company has to prove that the Journal was wrong and "knew it was wrong."
A pricey policy: Inc. magazine looks at the Seattle company, Gravity Payments, that set a $70,000 minimum wage for all workers. Good intentions aside, the company's CEO "has sold all his stocks, emptied his retirement accounts and mortgaged his two properties — including a $1.2 million home with a view of Puget Sound."
Fewer commercials: Too many commercials in your TV diet? AdWeek reports that TruTV is cutting back from about 19 minutes an hour to about 11. The network says this will be the lowest average commercial and promo time on TV and "a game-changer that will shake up how we as an industry approach video ad sales." Works for me.
For the latest money news, go to www.latimes.com/business. Until next time, I'll see you in the Business section.
