The US government is reportedly considering buying a stake in Intel.
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Yahoo
2 minutes ago
- Yahoo
C.H. Robinson gets an upgrade at S&P Global, reduced headcount a key reason
C.H. Robinson is back to its long-time debt rating of BBB+ from S&P Global Ratings, after about 15 months at a level one notch below that. The ratings agency on Wednesday increased the rating of the giant 3PL by one notch to BBB+. It had cut that rating to BBB in May 2024, after the company had held a BBB+ since at least 2018. But the May reduction came right about the same time that C.H. Robinson (NASDAQ: CHRW) was beginning its turnaround, at least as far as its earnings demonstrated. A strong first quarter 2024 report sent the company's stock price soaring, and that has been followed by continuing solid financial reports and a rise in its stock price of about 73% since the end of April 2024. The stock is up almost 24% just in the last month. The S&P Global (NYSE: SPGI) rating is considered one notch above the Moody's (NYSE: MCO) rating of Baa2 for C.H. Robinson. Moody's affirmed that rating in late June. Both ratings are in investment-grade territory. Headcount cuts came faster than expected Geoffrey Wilson, the San Francisco-based S&P Global analyst who conducted the analysis leading to the C.H. Robinson upgrade, said the relatively quick turnaround in C.H. Robinson's fortunes owed to several developments. But one stood out. 'One is that they significantly and very quickly rightsized their head count,' Wilson said in an interview with FreightWaves. Wilson said many 3PLs, during the post-pandemic freight boom of 2022, were facing 'rising rates that made for some good times.' 'And what we saw were a lot of companies that wanted to take advantage of the good times and maybe take a disproportionate piece of market share that was growing there,' Wilson said. That push came with adding headcount. But the problem these companies encountered when the good times slowed is that they were dealing with a new capital structure that was now facing low freight rates and rising interest rates. 'The capital structure was completely different from how they foresaw the next two years,' Wilson added. Wilson alluded to last year's S&P Global downgrade of C.H. Robinson and its proximity to the evidence of a turnaround. 'When we ultimately downgraded them, it was early days of the head count restructuring but we just didn't see how it could be done quick enough to give them the sources of liquidity needed,' he said. At C.H. Robinson, Wilson said, executives were saying on earnings calls as early as the fourth quarter of 2022 that cutbacks were likely. 'What we've seen since then is a very quick headcount restructuring that to this day is still going on,' Wilson said. The S&P Global report notes that personnel expenses at C.H. Robinson have dropped 19% since a fourth quarter 2022 peak. Average headcount is down 27% since then. Ultimately, ratings agencies rely on numbers in deciding whether to upgrade, downgrade or hold steady a company's debt rating. In its release announcing the change, S&P Global said the metric of funds from operations to debt at C.H. Robinson has been above 45% since the fourth quarter of 2024, a key metric. The ratings agency said it expects C.H. Robinson to sustain that coverage at 'well over' 45%,'which comfortably exceeds our previous upside threshold for our rating.' That metric was another key number that led to the upgrade, S&P Global said. Debt load is reduced Another development cited by S&P Global was debt redemption by C.H. Robinson. The ratings agency said the 3PL has fully repaid a $141 million balance on its revolving credit facility and reduced its borrowing under an accounts receivable lending facility by $70 million. Other metrics cited by S&P Global are efficiency-driven. For example, the agency said, shipments per person per day 'have grown at a double digit percentage for over two years, supported by automation and digital capabilities.' The upgrade came with an outlook of stable. A stable outlook means conditions are such that an upgrade or downgrade in the short to medium term is not likely; C.H. Robinson had a negative outlook prior to its 2024 downgrade. 'The stable outlook reflects our view that operational efficiencies gained over the past few years can offset potential industry headwinds arising from trade policy uncertainty,' the report said. It added that S&P Global expects the FFO to debt metric to be in the mid 50% range for this year. In a prepared statement, C.H. Robinson said the upgrade 'reflects the meaningful progress we've made in strengthening our financial profile, driven by disciplined capital allocation, sustained market outgrowth, margin expansion and productivity improvements, and a resilient operating model. Despite persistent freight market headwinds, our strong business performance and focus on operational improvement initiatives have enabled us to maintain healthy leverage ratios and consistent cash flow, which S&P recognized as key contributors to our improved credit standing.' The increase in C.H. Robinson's debt rating is particularly notable given what has happened to the debt ratings of the small group of other 3PLs that have publicly-traded debt. RXO (NYSE: RXO) was cut by S&P Global to BB, a non-investment grade rating, in May 2024. Echo Global Logistics has been at B- since October 2023. Odyssey Logistics' move to a B- rating took place in early June. More articles by John Kingston TQL takes its loss in a broker liability case to the Supreme Court 'Impossible position' cited by truck manufacturers in lawsuit against California In brief comments, Trimble CEO introduces new product for matching capacity with shippers The post C.H. Robinson gets an upgrade at S&P Global, reduced headcount a key reason appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 minutes ago
- Yahoo
Why Trump might push for a US gov't. stake in Intel
Intel (INTC) stock is popping following reports that the US government is considering taking a stake in the legacy chipmaker after Trump's meeting with Intel CEO Lip-Bu Tan. Slatestone Wealth chief market strategist and host of Yahoo Finance's Trader Talk, Kenny Polcari, and Yahoo Finance Senior Reporter Allie Canal join Opening Bid to take a closer look at what the reported government partnership could mean for the US, Intel, and the evolving chip landscape. To watch more expert insights and analysis on the latest market action, check out more Opening Bid. All right, let's fire up, uh, my stock of the day. The Trump administration is reportedly in talks with Intel to have the US government take a stake. Uh, Intel declined to comment specifically on this to me, but they did say this, uh, quote, Intel's deeply committed to supporting President Trump's efforts to strengthen US technology and manufacturing leadership. Uh, the questions here are many though. One, why would the administration even want to stake in an Intel that is scary behind chief rivals Nvidia and AMD? President Trump has interacted a lot with Nvidia CEO Jensen Huang and has got a taste as to what it means to be a leader in semiconductors. Two, why would Intel want to get in bed with the government at a time in which CEO Lipu Tang and the board must act quickly to reorganize the company. I find it hard to believe the government will be a quiet minority shareholder. There's a lot of stake here, as Intel is and should be a beacon of US chip making, not the punching bag it has become. The company's financials have taken a major hit with sales down for more than three straight years and earnings evaporating in the process. A lot going on there. Still with me, my round table, Kenny, Paul Kerry, uh, Slate Stone Wealth chief market strategist, David Seif, Nomora chief economist, and Yahoo Finance reporter, senior reporter, Allie Canal. Kenny, I want to go over to you. Um, any interest in going long in Intel on news like this, uh, even in the, uh, keeping the back of your mind, or maybe just putting the front of your mind that this is a fundamentally, uh, just wrong company. I mean, nothing's going right for them. Uh, uh, agree. So Intel's not a name that I've ever owned, uh, and we don't own it here. But look, I it's certainly has a pop because of the news. But is the pop temporary? I'm not even sure. And I agree with you. Why would you want to get, why would the government want to now be partners with Intel? Why would Intel want to be partners with the government? And what does that say about future opportunities? Is the government now going to start this Trump going to start the stick his hand in other companies? Kenny, it's like the auto bailout. I mean, it reminds me of when they took a stake in GM, what, 15, 20 years ago. 100%. And so I'm a little bit I'm a little bit confused about that. But Intel's not a name that I ever owned at all. I think there's other places to put your money in the space. But so this news does nothing in terms of getting me excited about, oh, I got to jump on this Intel bandwagon. I do not. David, does the, does it benefit, um, the US economy to have a healthy Intel? Or at this point, the semiconductor industry led by Nvidia, AMD, and of course, Taiwan semiconductor, they have just passed this company by, and our economy can go chugging along relying on chips from these three companies. Yeah, I mean, you know, I don't have much to say about individual companies, but certainly, um, you know, the US has a multi-century track record of doing well by sort of not sticking its nose into things and allowing, allowing the private market to go where it may. Um, to the extent that Intel has been lagging behind, uh, it it may be the best thing for the economy to simply allow it to, uh, continue to either wither or sink or swim, so to speak, um, and allow the current leaders to continue to lead and only lose their lead if they actually get out competed. Uh, Allie, uh, we're just about almost two weeks away from that Nvidia earnings report. And it will look starkly different to what Intel put up a few weeks ago. And it's night and day. I mean, these are, these companies both might be making computer chips, but they couldn't be more different. Couldn't be more different. And Intel, I just feel like it's too late for the company to really catch up to AMD, to Nvidia. Of course, for the Trump administration, they're viewing this as an issue of national security, that they really want to make sure that Intel can survive through this volatile time. We did have the that CEO meeting with President Trump, and really we've seen that across the board of big tech, right? Apple CEO, Tim Cook, met with Trump recently. And then out of that meeting was a $100 billion investment in the US. So that is President Trump's goal. He wants to bring manufacturing production, all the things, including all the chip makers back onto the domestic soil. But they also have other types of agreements that they're rolling out that are very unique and really unprecedented. One of those being that revenue share agreement with Nvidia and AMD. They're letting them sell some of their chips to China for a kickback, for some of the revenue to the federal government. So there's just a lot of moving parts and moving pieces to this. It's still an unconfirmed report. Intel did say that they are looking forward to working with the government, but they didn't confirm whether or not this was actually happening. So it feels like the US is just going to continue to be involved in some of these companies, at least throughout the term of Trump's presidency. What ultimately comes from that and the legacy that leads and how it really changes what we view the the chip supply chain as at this current moment, that remains to be seen. Related Videos How Trump's meeting with Putin impacts investors Buffett's Berkshire Hathaway sold Apple shares. Should you? Intel Soars as Trump Considers US Stake in Chipmaker 3 AI chip stocks that are best positioned right now Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
5 minutes ago
- CNBC
Government Intel intervention is 'essential' for national security, tech analyst says
A government intervention in struggling chipmaker Intel is "essential" for the sake of national security, analyst Gil Luria said Friday, following a report that the Trump administration is weighing taking a stake in the company. "We're all capitalists," Luria, head of technology research at D.A. Davidson, said in an interview with CNBC's "Squawk Box." "We don't want government to intervene and own private enterprise, but this is national security." Bloomberg reported Thursday that the Trump administration is considering having the U.S. government take a stake in Intel. The news sent Intel shares higher, and the stock climbed again Friday. Intel previously declined to comment on the report. Luria said such a deal is needed to revive Intel and reduce the country's reliance on companies like Samsung and Taiwan Semiconductor to manufacture chips. President Donald Trump has called for more chips and high-end technology to be made in the U.S. How the White House could structure such an intervention is still in question. Bloomberg reported Friday that the administration has discussed using funds from the CHIPS Act. "Intel has had many opportunities over decades to get it right, and it hasn't. So we need to intervene," Luria said. "The government's going to come in and it's going to give Intel unfair advantages, and if it's going to do that, it wants a piece of the business." Intel CEO Lip-Bu Tan met with Trump at the White House on Monday after the president called for his resignation based on allegations that he has ties to China. Luria pointed to OpenAI CEO Sam Altman and Meta CEO Mark Zuckerberg's comments that the rise of superintelligent AI could be "the next wave of nuclear proliferation," as evidence that direct intervention by the government is needed. "We can't rely on somebody else making shell casings for our nuclear arsenal," Luria said. "We have to get it right."
