COMPANY NEWS IN BRIEF

14 August 2020 | Business

Oil major Chevron invests

Oil major Chevron Corp said it is investing in Zap Energy Inc, joining Italy's ENI and Norwegian state oil company Equinor who have also backed nuclear fusion start-ups to reduce their carbon footprint.

Chevron's decision comes as energy companies face increasing pressure from investors to reduce emissions, spend more on low-carbon energy and disclose the impact of their fossil fuel production on climate change.

"Chevron Technology Ventures' investment in fusion is an opportunity to enhance the company's focus on a diverse portfolio of low-carbon energy resources," Chevron said in a statement, without putting a number on the size of its investment.

Nuclear fusion is a process that releases large amounts of energy with no greenhouse gas emissions and limited long-lived radioactive waste.

Zap Energy raised US$6.5 million from its Series A financing on July 12, according to data from Crunchbase. – Nampa/Reuters

SmileDirectClub revenue plunges

Dental products maker SmileDirectClub Inc reported an 82% fall in quarterly revenue on Wednesday, as delayed procedures due to coronavirus-led restrictions hurt sales of its aligners, sending its shares down about 6% in extended trade.

The company, which sells clear plastic teeth aligners at its SmileShops and online, had to temporarily shut most of its 391 shops in March following government's order to delay non-essential medical and dental procedures.

Shipment of its aligners, sold directly to customers, more than halved in the second quarter, the company said, adding that numbers improved towards the end of the three months and it expects better volume in the current quarter.

"As we open up these countries, whether it's Asia, Continental Europe, we're pretty much seeing a pent-up demand like we saw in the US," chief executive officer David Katzman said during a post-earnings call.

The company, which in May warned of a smaller shop footprint going forward, posted a bigger-than-expected quarterly loss. Excluding items, the company reported net loss of 17 cents, compared with analysts' expectations for a 14-cent loss. – Nampa/Reuters

Vroom shares tumble

Shares of Vroom Inc tumbled by 14% as the Covid-19 pandemic fuelled a bigger-than-expected quarterly loss in the online used car seller's first set of results since its blockbuster market debut in June.

Vroom also forecast third-quarter revenue of between US$268 million and US$290 million, while analysts on average had expected US$344.6 million, according to Refinitiv data.

The company's Texas Direct Auto segment sold 1 110 cars in the quarter, 60.2% lower than last year, due to government-mandated "stay-at-home" orders and coronavirus-led disruptions in the Houston area.

Vroom's chief executive Paul Hennessy said the drop in demand and uncertainty around vehicle pricing early on in the pandemic led the company to significantly reduce its inventory during the first half of the quarter.

However, Vroom's e-commerce revenue jumped 45.2% as auto retailers increasingly turn to e-commerce to arrange for vehicles to be picked up or delivered without requiring customers to visit stores. – Nampa/Reuters

Cisco's profit disappoints

Cisco Systems Inc on Wednesday forecast first-quarter revenue and profit below Wall Street estimates and laid out a restructuring plan, as the coronavirus crisis forced its clients to hold back spending.

Shares of the top network equipment maker fell nearly 5% after the bell. The restructuring, which includes a voluntary early retirement program and layoffs, will begin this quarter, the company said, adding that it expected to recognize a related one-time charge of about US$900 million.

On a conference call with investors, chief executive Chuck Robbins said Cisco also plans to reduce its expenses by US$1 billion on an annualized basis "over the next few quarters."

The company also announced that chief financial officer Kelly Kramer will retire from Cisco, but will remain with the company until a successor is found.

Cisco expects current-quarter revenue to drop between 9% and 11% from last year, implying a range of between US$11.71 billion and US$11.97 billion, while analysts had expected US$12.25 billion. – Nampa/Reuters

Lyft maintains profitability goal

Lyft Inc said on Wednesday cost cuts put the company on track to reach its goal of becoming profitable on an adjusted basis by the end of 2021, even as its second-quarter revenue tumbled 61% due to coronavirus-related restrictions.

On a post-earnings call, executives said the company would be forced to suspend operations in California if a preliminary injunction that prevents it from classifying drivers as independent contractors goes into effect on Aug. 21.

Larger rival Uber Technologies Inc has also echoed similar concerns. Lyft said the number of active riders dropped by 60% to 8.69 million during the second quarter but added it was encouraged by the recovery trends.

"We saw a rebound in demand in Q2 and have seen further evidence of this trend since the end of Q2. Rideshare rides in July were 78% greater than April," chief executive officer Logan Green said.

Uber last week said while its gross bookings declined 75% overall in the second quarter, bookings in some regions outside the United States exceeded pre-Covid-19 levels. – Nampa/Reuters

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