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AT&T judge warns parties to hurry to make June 21 deadline

(Reuters) – U.S. judge Richard Leon on Wednesday warned attorneys for the Department of Justice and ATT Inc to speed up the trial over the proposed merger of the large telecommunications company and Time Warner Inc, or risk missing the June 21 deadline to complete the deal.

An ATT logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni

Under the agreement, which had been extended from April 22, either company can pull out if the deal announced in October 2016 is not completed by the deadline.

“Both sides need to sit down with their clients and their teams and make sure the have down what they need versus what they want,” Leon said. “If we are going to get this done prior to that date, we have to move.”

The U.S. government opposes the $85 billion deal, arguing that it would hurt consumers because ATT, which owns pay TV service DirecTV, would have more leverage to raise prices by owning Time Warner’s Turner networks.

Wednesday was the fourth day of the trial in U.S. District Court in Washington, that is due to last six to eight weeks. It has been delayed by one snow day.

In testimony that began late Tuesday and ended on Wednesday, Turner networks Chief Executive John Martin said the company had no incentive to hold back its CNN, TBS and TNT content from other distributors if parent Time Warner was bought by ATT.

A screen shows the current price of Time Warner shares, above the floor of the New York Stock Exchange, shortly after the opening bell in New York, U.S., November 15, 2017. REUTERS/Lucas Jackson

The government, however, claims Time Warner would hold back Turner content from distributors that compete with ATT and DirecTV.

“I would like every distributor to carry every network I have and carry it at 100 percent penetration,” Martin said, when cross-examined by ATT attorney Daniel Petrocelli.

Online streaming services, such as Dish Network Corp’s Sling TV and Hulu, which cost subscribers $20 to $40 a month for a select number of networks live and on-demand, are important for Turner because revenue cable and satellite companies is slowing down, he said.

The Department of Justice also asked Marty Hinson, a marketing executive at Cox Communications, about HBO, Time Warner’s premium channel. He said it was vital to attract new customers and keep old ones.

When asked about government estimates that if ATT bought Time Warner each subscriber’s average monthly cable bill would rise by 45 cents, Hinson said Cox customers would end up paying “tens of millions of dollars a year for the exact same content.”

In his cross exam, Petrocelli asked Hinson if he had ever seen documentation or been told that prices would go up or that it would withhold its programming. Hinson said, “No.”

Reporting By Jessica Toonkel; Editing by Susan Thomas and Richard Chang

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Wall St. edges up as gains in defensive shares counter Amazon losses

NEW YORK (Reuters) – Wall Street edged higher during a rocky session on Wednesday as gains for defensive stocks offset a sharp fall in Amazon shares and declines in technology stocks.

A woman passes by the Nasdaq Market Site in Times Square in New York City, U.S., February 7, 2018. REUTERS/Brendan McDermid

The benchmark SP 500 moved in and out of positive territory following Tuesday’s late-session, tech-driven sell-off on the heels of Monday’s rally as traders adjusted to a return of volatility in recent weeks.

“We’re seeing a bit of a rotation away from technology and into some of the healthcare stocks and consumer staples-type names that you haven’t seen in a while,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“I think we’re in for more choppiness for the next month until the earnings situation clarifies itself and some of the headline items, either good or bad, come to pass or get dropped along the way.”

At 2:43PM ET, the Dow Jones Industrial Average rose 69.35 points, or 0.29 percent, to 23,927.06, the SP 500 gained 2.81 points, or 0.11 percent, to 2,615.43 and the Nasdaq Composite dropped 23.96 points, or 0.34 percent, to 6,984.85.

Online retailer lost as much as $53 billion in market value after a report that President Donald Trump indicated he wanted to rein in the company. The stock later pared its loses and was down 4.2 percent in afternoon trading.

Shares of automaker Tesla slumped 8.1 percent, extending recent losses, following a credit downgrade and news that officials are investigating a fatal crash and fire in California.

Countering those losses were gains for defensive sectors such as consumer staples, real estate, and telecom .

The U.S. economy slowed less than previously expected in the final months of 2017 as consumer spending saw its biggest quarterly gain in three years. GDP expanded at an 2.9 percent annual rate in the fourth quarter of 2017, ahead of the previously reported 2.5 percent, according to the U.S. Commerce Department.

Robust economic data could open the door to more aggressive interest rate increases by the U.S. Federal Reserve this year.

“I think there is general consensus that the economy is doing good and that number proves it, but it’s always difficult to know what’s already in the stock market versus what people are anticipating,” said Tuz. “I get the sense that people are nervous right now.”

Stocks had shot up earlier in the week as comments from officials in United States and China implied the world’s two largest economies would renegotiate tariffs and trade imbalances, averting a dreaded trade war.

China is due to announce a list of tariffs on U.S. exports to China in a tit-for-tat retaliation against the expected tariff proposals from the U.S. on Chinese imports.

Advancing issues outnumbered declining ones on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored decliners.

Reporting by Stephen Culp; Editing by Nick Zieminski

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Amazon shares fall after report Trump wants to curb its power

WASHINGTON (Reuters) – Inc (AMZN.O) shares fell as much as 7.4 percent on Wednesday, briefly wiping about $53.6 billion from its market value, after news website Axios reported that U.S. President Donald Trump is obsessed with the world’s largest online retailer and wants to rein in its growing power.

The logo of Amazon is seen at the company logistics center in Lauwin-Planque, northern France, February 20, 2017. REUTERS/Pascal Rossignol

Trump has talked about using antitrust law to “go after” the company because he is worried about mom-and-pop retailers being put out of business by Amazon, Axios reported, citing five sources it said had discussed the issue with him.

Trump also wants to change Amazon’s tax treatment, the report said, an issue the president raised publicly last year when he called for an internet tax for online retailers, even though Amazon already collects sales tax on items it sells direct to customers.

In response to questions about the Axios report, a White House official said no specific policy changes related to Amazon were known, but it was always looking at different options on a range of policy issues.

Another administration official confirmed to Reuters that Trump has been complaining about Amazon in private, believing the company has become too powerful.

The official said Trump links this to Amazon Chief Executive Jeff Bezos’ private ownership of the Washington Post, which he has called “fake news” and effectively a mouthpiece for Bezos’ business interests.

The logo of the web service Amazon is pictured in this June 8, 2017 illustration photo. REUTERS/Carlos Jasso/Illustration

Amazon could not be reached immediately for comment.


Trump has criticized the big e-commerce company over taxes and jobs in the past, without offering evidence.

Tech stocks are already under pressure after Facebook Inc (FB.O) acknowledged this month that user data had been improperly harvested by a consultancy.

“Capitol Hill wants Facebook’s blood, but President Trump isn’t interested. Instead, the tech behemoth Trump wants to go after is Amazon,” Axios reported.

Changing Amazon’s tax treatment or using antitrust law to thwart Amazon would be difficult.

“In my many years of being an antitrust lawyer, I’m not aware of a scenario where an individual company was singled out by the president of the United States with a strong encouragement to the Department of Justice to file an antitrust case,” said Jeffrey Jacobovitz of the law firm Arnall Golden Gregory LLP.

Michael Pachter, a former tax attorney who is now a financial analyst with Wedbush Securities, said Trump’s information about Amazon’s tax status is likely outdated.

“I think somehow he’s convinced himself that they don’t collect sales tax,” Pachter said, adding that “When Trump came into office, they were already collecting sales tax” in every state that has one.

The stock, which fell as low as $1,386.17, was last down 4.2 percent at $1,434.54.

“With Facebook and regulatory worries, the last thing nervous tech investors wanted to see was news that Trump is targeting Bezos and Amazon over the coming months as this remains a lingering cloud over the stock and heightens the risk profile in the eyes of the Street,” GBH Insights analyst Daniel Ives said.

Additional reporting by Sonam Rai in Bengaluru; Diane Bartz and Amanda Becker in Washington; Sinead Carew in New York; Writing by Chris Sanders; Editing by Jeffrey Benkoe and James Dalgleish

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Stella McCartney to buy brand in full from Kering

PARIS (Reuters) – Kering and fashion label Stella McCartney said on Wednesday they had agreed to end their 17 year partnership, as the British designer behind the brand buys the 50 percent owned by the French luxury goods group.

FILE PHOTO – British designer Stella McCartney appears at the end of her Fall/Winter 2017-2018 women’s ready-to-wear collection show during the Paris Fashion Week, in Paris, France March 6, 2017. REUTERS/Benoit Tessier

They did not disclose financial terms for the deal.

McCartney, known for her understated designs and commitment not to use fur or leather, had an option until March 31 to buy out half of her label under the terms of the partnership.

“It is the right moment to acquire the full control of the company bearing my name,” McCartney said in a statement.

FILE PHOTO: British designer Stella McCartney appears at the end of her Autumn/Winter 2018-2019 women’s ready-to-wear collection show, during Fashion Week in Paris, France March 5, 2018. REUTERS/Pascal Rossignol/File Photo

A spokesman for the label declined to comment on how the acquisition would be financed.

Following the agreement, Kering will continue to lend some support and services to the brand for a year, and the split will be final by the end of the first quarter of 2019, according to a spokeswoman for the French group.

FILE PHOTO: A model presents a creation by British designer Stella McCartney as part of her Spring/Summer 2018 women’s ready-to-wear collection show during the Paris Fashion Week, in Paris, France, October 2, 2017. REUTERS/Charles Platiau/File Photo

McCartney will stay on as a board member of the Kering Foundation, which works to stop violence against women, and the companies said she would collaborate with Kering “in the field of sustainable fashion” – an area that has become her hallmark.

London-born Stella McCartney, daughter of the Beatles’ Paul McCartney, first made her mark at Richemont-owned fashion label Chloe.

She launched her eponymous label in partnership with the Gucci Group, formerly a division of what is now Kering, in 2001.

Kering, run by Francois-Henri Pinault, the scion of the group’s founding family, does not break out earnings for the brand, but it is a much smaller contributor to sales than labels such as Gucci or Balenciaga.

The conglomerate’s latest financial report said revenue growth at Stella McCartney was buoyant but had slowed in 2017 compared to previous years.

The split with Stella McCartney comes as Kering prepares to spin off German sportswear label Puma to its own shareholders, as it focuses more squarely on its high-margin luxury brands and builds up those with a high growth potential.

Stella McCartney presented her latest collection for next autumn and winter at Paris’ sumptuous Opera Garnier in early March. It was the label’s first show catwalk show to mix men and women’s clothing, and some designs such a jacket were made from materials like alter nappa, an alternative to leather.

Reporting by Sarah White; Editing by Alison Williams

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Tesla shares dive again, stung by fatal crash, credit downgrade

NEW YORK (Reuters) – Tesla Inc shares fell sharply again on Wednesday, reeling from a credit downgrade of the electric car maker by Moody’s Investors Service, federal probes of a fatal crash and concerns about Model 3 production.

Shares tumbled 9 percent, then bounced off the session low to trade at $260.80, down about 6.5 percent. On Tuesday, Tesla tumbled 8.2 percent to its lowest close in almost a year after the U.S. National Transportation Safety Board (NTSB) opened a field investigation into a fatal crash and vehicle fire in California on March 23.

On Wednesday, a second federal regulator, the National Highway Transportation Safety Administration (NHTSA), said it was sending a team to California to investigate the crash.

Late on Tuesday, Moody’s Investors Service downgraded Tesla’s credit rating to B3 from B2, citing “the significant shortfall in the production rate of the company’s Model 3 electric vehicle.” It also noted “liquidity pressures due to its large negative free cash flow and the pending maturities of convertible bonds.”

Tesla has $230 million in convertible bonds maturing in November 2018 and $920 million in March 2019.

Moody’s said its negative outlook “reflects the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity shortfall.”

It said Tesla’s weekly production target is now 2,500 Model 3 vehicles by the end of March, down sharply from its year-earlier target of 5,000 per week by the end of 2017. Tesla’s weekly target for the end of June is 5,000.

  • U.S. auto safety agency to probe fatal Tesla California crash

Tesla declined to comment on the downgrade. The company plans to provide an update on Model 3 production next week.

Tesla shares have experienced big swings in the past, as worries about losses have vied with enthusiasm for Chief Executive Officer Elon Musk’s ambitious plans.

The selloff has left Tesla’s stock market value at $44 billion, below General Motors Co’s $49 billion. Palo Alto, California-based Tesla has at times had a larger market value than GM, the largest U.S. automaker by vehicle sales.

Since the end of February, the median analyst price target for Tesla has dipped by $10 to $356, about 37 percent higher than Wednesday’s price, according to Thomson Reuters data. Nomura Securities analyst Romit Shah has the highest Tesla price target, $500, or nearly double the current price. All the targets were set before the March 23 crash.

In last week’s accident in which the Tesla struck a highway median, it was unclear if the vehicle’s automated control system called Autopilot was driving, the NTSB and police said.

A Tesla dealership is seen in West Drayton, just outside London, Britain, February 7, 2018. REUTERS/Hannah McKay

The 38-year-old driver of the Tesla died at a nearby hospital shortly after the crash.

Late Tuesday, Tesla said in a blog post it does “not yet know what happened in the moments leading up to the crash,” but added that data shows Tesla owners have driven the same stretch of highway with Autopilot engaged “roughly 85,000 times… and there has never been an accident that we know of.” The statement did not say if the crashed vehicle was in Autopilot mode.

Reporting by David Shepardson in Washington and Alexandria Sage and Noel Randewich in San Francisco; Editing by Dan Grebler and David Gregorio

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Turner CEO: No reason to hold back networks post AT&T merger

(Reuters) – Turner Chief Executive John Martin told a U.S. court on Wednesday that there is no incentive for the company to hold back its networks, which include CNN, TBS and TNT, from other distributors if parent Time Warner is bought by ATT Inc.

John Martin, Chairman and CEO of Turner speaks during his keynote at the Mobile World Congress in Barcelona, Spain, February 28, 2017. REUTERS/Paul Hanna

The U.S. government wants to stop the $85 billion deal, arguing that it would hurt consumers because ATT, which owns pay TV service DirecTV, would have more leverage to raise prices by owning Time Warner Inc’s Turner networks.

Wednesday’s testimony was the fourth day of the trial in U.S. District Court in Washington, D.C. that is due to last six to eight weeks.

The government claims that Time Warner would have an incentive to hold back Turner content from distributors that compete with ATT and DirecTV.

“I would like every distributor to carry every network I have and carry it at 100 percent penetration,” Martin said, when he was cross-examined by ATT attorney Daniel Petrocelli.

Specifically, online streaming services, such as Dish Network Corp’s Sling TV and Hulu, in which subscribers pay between $20 and $40 to watch a select number of networks live and on-demand, are key for Turner given that revenue through the cable and satellite companies is decelerating, he said.

These services “are the only source of growth,” he said, comparing them to traditional cable and satellite companies that are losing customers.

Martin took the stand on Tuesday afternoon as an adverse witness by the U.S. Department of Justice.

An ATT logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni

Department of Justice attorney Eric Welsh grilled Martin on the importance of Turner’s sports rights with the National Basketball Association, “March Madness” college basketball tournament and Major League Baseball to other distributors.

When asked about the costs of these rights, U.S. District Judge Richard Leon expressed surprise to learn that Turner paid $1.1 billion.

“That was the fee to the NBA?” Leon asked.

Leon also pressed Martin to explain how he knew that viewers of its sports programming were “engaged.”

“What is engaged … they are watching it,” he said. “How do you know they are fans?” Martin responded that Turner looks at aggregate viewership data as well as surveys.

Welsh pressed Martin on whether the sports programming was “must see TV,” noting that the executive had referred to it many times as such in internal memos and interviews.

“Must have is another way of saying we have popular programming,” Martin said.

Reporting By Jessica Toonkel; Editing by Susan Thomas

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Nissan launches new Altima into a sputtering U.S. sedan market

NEW YORK (Reuters) – Japanese automaker Nissan Motor Co Ltd (7201.T) on Wednesday unveiled an all-new Altima sedan, and demonstrated the auto industry’s problem adjusting new-model investments fast enough to keep pace with shifts in consumer demand.

The 2019 Nissan Altima is presented at the New York Auto Show in the Manhattan borough of New York City, New York, U.S., March 28, 2018. REUTERS/Brendan McDermid

The Altima, and rival midpriced sedans such as Toyota Motor Corp’s (7203.T) Camry and Honda Motor Co Ltd’s (7267.T) Accord, used to be high-volume sellers, keeping assembly lines rolling full-time. All three automakers several years ago committed to significant redesigns of their sedans.

Since those investments were made, demand for midsized cars has collapsed in the United States due to the growing consumer appetite for larger SUVs and pickup trucks. Sales of sedans made up 36.8 percent of the U.S. market in 2017, down sharply from 51.2 percent in 2012.

Through February this year, sedans made up 33.3 percent of new-vehicle sales and are down 12 percent versus the same period in 2017.

Jack Hollis, Toyota’s North American head of sales and marketing, said the automaker expects by the end of 2018 sedans will make up around 30 percent of sales.

Last summer, Honda launched its all-new Accord, arguing that the well-reviewed sedan would help it maintain sales levels in a declining market. Instead, sales of the new Accord dropped nearly 16 percent in February from a year ago. Honda said that between April and June it will halt production at its Marysville, Ohio, plant for 11 days to reduce a high inventory of unsold vehicles.

Slideshow (3 Images)

Nissan executives at the New York auto show on Wednesday said the new Altima has a chance to buck the trend.

Nissan has added all-wheel drive, automatic rear braking and some autonomous features that help drivers stay in their lane or remain a set distance behind the vehicle in front to make the revamped Altima more attractive to consumers.

“This (new Altima) sends a message that the sedan is back,” Nissan’s senior vice president for global design, Alfonso Albaisa, said as he stood beside the new sedan onstage at the New York auto show.

Rivals are shifting their investments to trucks and sport utility vehicles. Intensifying competition among automakers to sell sedans should lead to higher discounts and narrower profits, said car-shopping website Autotrader’s executive publisher, Brian Moody.

“That’s good news if you want to buy a sedan because you should be able to get a good deal,” Moody said.

Johan de Nysschen, head of General Motors Co’s (GM.N) luxury Cadillac division, reiterated the company’s plans to cut the number of sedans in its family of vehicles, the smallest of which will be focused more on the Chinese market rather than U.S. consumers.

Like other brands, Cadillac is adding sport utility vehicles and crossovers to its lineup.

“Just as we are rebalancing our portfolio and reducing our number of sedan entries, so I imagine others will be doing the same,” de Nysschen told Reuters on Wednesday. “The market just won’t sustain that many derivatives anymore.”

The three big Japanese automakers, however, have large U.S. factories dedicated to midsized sedans such as the Altima, Camry and Accord.

Toyota’s Hollis said Toyota remains committed to sedans.

“We’re not pulling anything back, we will continue to invest,” he said. “If other players want to pull out, fine, we’ll just take more market share.”

Additional reporting by David Shepardson in New York; Editing by Joe White and Matthew Lewis

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BlackBerry beats profit estimates on higher margins

(Reuters) – BlackBerry Ltd reported a fourth-quarter profit on Wednesday that beat analysts’ estimates and said it expects strong billings at its high-margin software and services business for the full year.

FILE PHOTO – A Blackberry sign is seen in front of their offices on the day of their annual general meeting for shareholders in Waterloo, Canada in this June 23, 2015. REUTERS/Mark Blinch/File photo

The company, which reinvented itself after customers ditched its smartphones for Apple’s iPhones and Android devices, said revenue from its enterprise software and services business rose about 19 percent to $108 million.

“Our strategy is working,” Chief Executive Officer John Chen said on a morning conference call.

The company extended CEO Chen’s contract earlier this month, and followed that up with two big deals in software security — one with Jaguar Land Rover and the other with Microsoft.

BlackBerry, which had about 3,500 enterprise customer orders in the reported quarter, expects total company software and services billings to grow by double digits in 2019.

“BlackBerry’s subscription revenue is coming up good. If billings are going up that means their models are transitioning very well to a subscription model,” Global Equities Research’s Trip Chowdhry told Reuters.

The company’s quarterly profit beat was helped by higher margins on software and services sales. BlackBerry’s gross margins rose to 76 percent of the revenue, from 60.1 percent a year earlier.

Excluding items, the Waterloo, Ontario-based company earned 5 cents per share. Analysts on average had expected the company to break even, according to Thomson Reuters I/B/E/S.

Net loss narrowed to $10 million, or 6 cents per share, in the fourth quarter ended Feb. 28, from $47 million, or 10 cents per share, a year earlier.

The company’s revenue fell 18.5 percent to $233 million.

BlackBerry shares were down marginally on the Toronto Stock Exchange.

Reporting by Taenaz Shakir in Bengaluru and Jim Finkle in Toronto; Editing by Shailesh Kuber and Shounak Dasgupta

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CME Group in advanced talks to buy Britain’s NEX for $5.4 billion

(Reuters) – U.S. exchange operator CME Group (CME.O) is in advanced talks to buy Britain’s NEX Group (NXGN.L) for about 3.8 billion pounds ($5.4 billion) to create a cross-border trading powerhouse.

Men enter the CME Group offices in New York, U.S., October 18, 2017. REUTERS/Brendan McDermid

NEX, formerly known as ICAP, said on Wednesday that CME Group had made a takeover proposal of 10 pounds per share, a premium of around 3 percent to the stock’s closing price.

Talks with CME – one of the world’s biggest exchange groups that owns the Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange – are at an advanced stage, NEX Group added in a statement after the market close.

NEX, a financial technology company that matches buyers and sellers of bonds, swaps and currencies, said there was no certainty an offer would be made.

NEX shares closed 9.8 percent higher at 972 pence.

The stock has risen more than 40 percent over the last two years as market volatility triggered by political surprises – such as the election of U.S. President Donald Trump and Britain’s vote to leave the European Union, fuelled trading on its platforms.

Attempts at blockbuster exchange mergers, such as between the London Stock Exchange (LSE) and Deutsche Boerse, have hit antitrust buffers in recent years, and buying NEX could be easier for regulators and politicians to accept.

CME Group closed two operations in London last year after they ran up losses of more than $100 million, saying its customers preferred using its U.S. operations.

($1 = 0.7089 pounds)

Reporting by Justin George Varghese and Parikshit Mishra in Bengaluru; Editing by Shailesh Kuber and Mark Potter

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