US Business

Elon Musk’s decision to pull Twitter off the stock market allows him to make major changes quickly, but it also takes the company more heavily into debt, a risky choice for a money-losing business.

It is a long-established strategy with notable successes and failures, from computer manufacturer Dell (a success) to toy stores Toys “R” Us (a failure). 

But Twitter “is very different from a traditional buyout” of a company that delists from the market, said Steven Kaplan of the University of Chicago Booth School of Business.

Most such takeovers are of companies with positive cash flows, Kaplan said, but the social network is losing money — having posted losses in the first two quarters of 2022.

The equation is further complicated by Elon Musk’s $13 billion in loans, which will have to be repaid by the San Francisco company, not by the entrepreneur personally.

According to a calculation made by AFP, Twitter will have to disburse a little less than $1 billion from the first year as interest and principal, a high amount for a group whose turnover reached only $5 billion in 2021.

“That debt is tricky when you’re losing money. So there’ll be a lot of pressure to cut costs and increase revenue so that they can make debt payments,” said Kaplan, a finance professor. Otherwise, Musk will need to find funds to avoid bankruptcy.

The entrepreneur on Friday laid off about half of Twitter’s employees and is seeking new sources of revenue, including an optional subscription fee of $8 per month for those wanting a verified account.

Further development of Twitter may require an infusion of capital, more difficult to raise, in theory, by a unlisted company.

“I don’t think you can raise any more debt,” said Erik Gordon, an entrepreneurship expert at the University of Michigan Ross School of Business, but in this case “there is a Musk factor… You tweet a few times and you know, bring in the money.”

– ‘Radical changes’ –

Another idiosyncratic element is that most such deals “are initiated either by a financial logic or an industrial logic,” whereas Elon Musk “didn’t have one,” he said.

“He just was unhappy with the way Twitter was treating free speech” and concluded that he could “manage it better,” Gordon said.

As a general rule, an exit from the market is followed by “radical changes” at a company, said Sreedhar Bharath, professor of finance at Arizona State University, and those changes may not be readily apparent because the company no longer has an obligation to communicate publicly.

“The company is shielded from the punishment meted out by financial markets if they do not like the changes,” he said. “Some might say the markets have an excessive focus on the next quarter results” and managers of newly privatized firms can “pursue long-term goals” without fretting about the short term.

“But with the high public profile of Twitter, key decisions are likely to become public,” noted Jagadeesh Sivadasan of the University of Michigan’s Ross School of Business. “This was evident for the post-acquisition decisions regarding firing of key officers.”

A study published in 2019 by two researchers at California State Polytechnic University that looked at nearly 500 deals between 1980 and 2006, found that about 20 percent of large companies undergoing leveraged buyouts filed for bankruptcy within 10 years, compared with two percent for a sample of other companies.

“Most of them have done better than public companies,” said Gordon, “but they don’t get a lot of publicity… The big failures get a lot of attention and create this idea that the debt kills the company.”

“Most of the time, it works which is why people keep doing it,” Gordon added. 

“Musk is one of the most creative people on the planet,” able to build three totally different companies, PayPal, Tesla and SpaceX, all of which have reached more than $100 billion in valuation, Kaplan said.

“He’s a talent magnet… He’s going to attract (to Twitter) real talent that hasn’t been there for a while… I wouldn’t bet against him.”

The whirlwind week that Elon Musk took over Twitter began with sleepless nights for company engineers — and ended with half the staff getting the axe.

“It was a strange week,” said one former employee speaking on condition of anonymity.

“Executives were getting fired or were resigning, but there was basically no official communication until 5 pm Thursday,” some seven days after the deal was officialized.

The employees received a first email Thursday informing them that they would know their fate the next day. On Friday, the second email confirmed the rumors: 50 percent of the staff lost their jobs.

The cull hit the marketing department hard, took two-thirds of the design department, and maybe 75 percent of managers. Content moderation was somewhat spared, with a layoff rate of only 15 percent, according to Yoel Roth, head of safety at the platform.

After 24 hours without addressing the layoffs, Musk finally tweeted that “unfortunately there is no choice when the company is losing over $4M/day” and that all those who lost their jobs were “offered three months of severance.”

The layoff decision did not come as a surprise to employees — rumors had been growing — but they were shocked by how brutally it was carried out.

“People would find out not by any phone call or any email… but just by seeing their work laptop automatically reboot and just to go blank,” Emmanuel Cornet, a French engineer who had been at Twitter for a year and a half, told AFP on Friday.

– Class-action suit –

Cornet was dismissed Tuesday after being told in an email he had “violated” several company policies, without further explanation, after spending an entire weekend in the office on projects launched by edict of the new owner.

“I’m still trying to find out what the actual reason is,” he said.

The Tesla chief executive had engineers from his flagship company parachute in to assess the work of Twitter developers, examining in particular the volume of code produced by each, Cornet said. 

He is one of five former Twitter employees who filed a class-action suit against the company on the grounds that they had not received the 60-day notice required by the 1988 federal Warn Act in the event of a plant closing or mass layoff.

The French expat said many laid-off colleagues were in an unenviable “position in terms of health insurance or visas.”

“Some were on parental leave. One colleague gave birth yesterday, only to be laid off today.”

Those laid off must continue to abide by the company’s rules during the notice period. Many fear that the new management will look for excuses to accuse them of misconduct and not pay them severance.

“If anyone says something disparaging, or does anything they can use to dismiss them for cause they’ll do that instead of severance,” said the former employee speaking anonymously.

– A summer exodus –

For six months, the platform’s employees were preparing for the possibility that the world’s richest man might take control. 

He is preceded by his reputation, from the punishing work rates in his plants to his rejection of telecommuting, which is highly popular in the tech sector, and his absolutist vision of free speech, which his detractors claim can only lead to harassment, disinformation and a tolerance for hate speech.

This summer, more than 700 people left on their own, even before they knew whether the $44 billion acquisition would go through.

The radical change in corporate culture was confirmed as early as last Friday, when teams of engineers were mobilized to redesign certain features in a very short time, with their jobs on the line.

“There probably was too many layers of management… Twitter was not a well-oiled, efficient machine,” said the anonymous ex-employee. “But I don’t know if (the mass layoffs) is gonna fix it.”

“I think lots of people who remain now will leave, and maybe that’s what Elon wants,” he added.

“I feel sorry for anyone who didn’t get fired (to be honest). Elon will run those left into the ground with his hare-brained ideas,” reacted James Glynn, a London-based content moderation team leader who was laid off.

“Any kind of Twitter we knew before is dead.”

President Joe Biden, Democratic superstar Barack Obama and Republican firebrand Donald Trump all converged Saturday on Pennsylvania to push their parties to the finishing line in a race Biden said marks a “defining” moment for US democracy.

The battle of the serving and two former presidents marked the start of a final crescendo before Tuesday when Americans will decide who controls Congress during the last two years of Biden’s first term.

Polls put Republicans well ahead in the fight for the House of Representatives and also show them gaining momentum in the Senate races as voters, riled up by culture wars around gay rights and abortion, seek to take out frustration over four-decades-high inflation and rising illegal immigration.

With Pennsylvania one of the handful of swing states that will decide the overall balance of power, both sides brought out their big guns — and the contrasts were dramatic.

Biden and Obama rallied in Philadelphia alongside Senate hopeful John Fetterman and governor candidate Josh Shapiro.

Trump — who was defeated by Biden in 2020 but has spent the interval promoting conspiracy theories and plotting a possible White House comeback — flew to Latrobe to boost Fetterman’s opponent, TV celebrity doctor Mehmet Oz, and Shapiro’s far-right opponent Doug Mastriano.

Speaking to thousands in a Philadelphia arena, Biden and the Democratic candidates labeled the Republicans as the party of the wealthy and emphasized their support for trade unions, social security and abortion access.

Voters face “a choice between two vastly different visions of America,” Biden said.

But citing Trump Republicans’ growing support for conspiracy theories, Biden said an even bigger agenda is at stake.

“Democracy is literally on the ballot. This is a defining moment for the nation and we all, we all must speak with one voice,” Biden said.

In a rambling speech, Trump claimed the country is run by “communists” and repeatedly said that his attempts to overturn the 2020 election were justified, before urging Republicans to deliver “a humiliating rebuke.”

“If you want to stop the destruction of our country and save the ‘American Dream,’ then this Tuesday you must vote Republican in a giant red wave,” he said.

– Democratic star –

Obama, who had also addressed an earlier rally in Pittsburgh, got the loudest cheers of the night in Philadelphia, repeatedly urging supporters to make sure they vote.

“A lot of folks don’t pay a ton of attention to politics the way they do in a presidential year. Maybe they don’t think Congress matters as much. Maybe they don’t think their vote will matter,” he said.

But “fundamental rights…, reason and decency are on the ballot,” he said, attacking Republicans as increasingly averse to everything from science to respect for rules.

“Democracy itself is on the ballot. The stakes are high,” Obama said in an echo of Biden’s warning, his voice going hoarse.

Still the party’s most bankable star six years after leaving the White House, Obama hopes his support will give Fetterman the crucial extra shove.

Although Fetterman faces the added challenge of recovering from a serious stroke, he and Oz are in a dead heat.

– Trump’s comeback bid –

In Latrobe, Trump was tapping into support from a working class region that delivered him big margins in the 2016 and 2020 presidential elections.

Success for candidates he supports on Tuesday would help Trump launch his own comeback campaign, despite facing serious legal threats over attempts to overturn his 2020 defeat and the hoarding of top secret documents from the White House at his Florida golf resort.

In a speech laden with immigrant baiting, lies about supposed election fraud, and lurid claims that he and his supporters are victims of a “police state,” Trump also continued to drop hints that he will soon declare a new presidential run.

In a “very, very, very short period” his fans will be “so happy,” he said.

One supporter in Latrobe, Shawn Ecker, 44, voiced excitement about a possible Trump candidacy for 2024 “because we need our country back. We really do. And it’s not going to happen if someone doesn’t stand up like he is.”

A Singaporean businessman wanted by the United States for violating sanctions on North Korea is currently in the city-state where he is under investigation, the Singapore police said.

In a statement issued late Saturday, the Singapore Police Force (SPF) said they have sought clarification from their US counterparts over the reward as they have kept them informed about the ongoing probe by local authorities.

The US State Department on Thursday offered $5 million for information on businessman Kwek Kee Seng, blaming him for numerous fuel deliveries to North Korea and ship-to-ship transfers as well as money laundering through front companies.

Federal prosecutors in New York in 2021 issued an arrest warrant for Kwek, a year after one of his oil tankers, the M/T Courageous, was seized by Cambodia on a US request over purported sanctions violations.

Kwek, 62, owns the Swanseas Port Services shipping company based in the city-state.

The State Department’s Rewards for Justice program had said his exact location was not known and that he has also been identified as being in North Korea, Cambodia, Taiwan and Thailand as well as Cameroon and the tiny Caribbean nation of Saint Kitts and Nevis.

But Singapore’s police said in their statement that “Kwek is presently in Singapore”.

He has been under investigation since April last year by the Commercial Affairs Department — the city’s white-collar crime investigation agency — and his passport has been impounded.

The Singapore police said the investigation was launched after the US Justice Department announced a criminal complaint had been filed against Kwek for  “allegedly conspiring to evade economic sanctions” on North Korea and for money laundering.

Police added that they have shared information about their investigation of Kwek with US law enforcement authorities.

“Since then, there were several more exchanges. Due to the nature and complexity of the case, investigations are still ongoing,” police said.

“On 4 November 2022, the SPF wrote to our US counterparts to seek clarification, given that we had been in active communication with our US counterparts on Kwek’s case,” it added.

“Singapore will continue to assist the US authorities within the ambit of our laws and international obligations.”

The reward comes as the US urges strict enforcement of United Nations sanctions on North Korea after it launched a volley of missiles, including one that landed close to South Korea’s waters.

He may not be on the ballot in the upcoming US midterm elections, but Donald Trump was still the main draw for Pennsylvania’s Republicans Saturday ahead of what they hope will be a “red wave” sweeping control of Congress.

Trump fans gathered at a rally in the city of Latrobe in the battleground state to hear the former president speak and voice their hopes that he will run again for the White House in 2024. 

Leslie Boswell, in a red “Trump 2020” T-shirt, said she came to “have fun and vote for Trump” — or, at least, for Republicans in Tuesday’s elections.

The midterms, held two years after the presidential election, are usually seen as a referendum on the current occupant of the White House, and determine control of the House of Representatives and the Senate — as well as many state governors and other officials.

For Trump’s supporters, a Republican victory on Tuesday will help pave the path for their hero to make his triumphant return to power. 

“He’s the only one that is worth the presidency,” Boswell, 39, says. 

“I love Trump because he just supports everything that I believe in … He’s bringing back God in our country, he put down our prices, he did everything that he has said he was going to do,” she told AFP.

“I really hope he reruns,” agreed a woman who only gave her name as Janine and who wore a t-shirt in the red, white and blue of the American flag. 

She drove four hours to hear Trump speak. “He is what America stands for, what America was before,” she says, without defining what she means by “before.”

“In three days we’ll have a red wave, baby,” the 52-year-old says. 

– Inflation a red flag –

The former president is pushing hard in the final days of the campaign, visiting Iowa and Florida as well as Pennsylvania.  

He was to address supporters Saturday evening from the airport tarmac in Latrobe, near Pittsburgh, the industrial heartland of Pennsylvania.

On Saturday, Trump was supporting Republican Senate candidate Mehmet Oz, a slick and famous TV doctor who is running against Democrat John Fetterman, currently the state’s lieutenant governor.

With the Senate evenly divided between Republicans and Democrats — Vice President Kamala Harris, a Democrat, holds the tie-breaking vote — the winner in Pennsylvania could determine control of the upper house of Congress and thus the fate of President Joe Biden’s agenda. 

Before Trump took to the stage among hundreds of supporters and countless flags, local candidates took turns rallying their followers with one watchword: inflation, inflation, inflation. 

Prices are “outrageous” says Norm Volpe, who came with his biker group for Trump. The United States is currently grappling with inflation levels not seen since the 1980s, with Americans struggling to pay for everything from food to gas. 

And, Volpe says, the Democrats should be punished for that. “Seems like everything went up after they took over,” he tells AFP. 

For this 57-year-old metal worker, Trump is a man of his word.

“I believe he did everything he campaigned on, at least he’s doing it and tried to do it,” Volpe says.

Therapist Jacqueline Smythe fears her rights as a woman will be on the line if Republicans win back control of the US Congress during Tuesday’s midterm election.

Three days before the vote, Smythe, 30, was gathered with thousands of other supporters of the Democratic Party of President Joe Biden at a rally in Philadelphia, where the Declaration of Independence was signed.

She voiced fears that her personal independence will be stripped back in the case of a Republican victory.

“We don’t have Roe v Wade anymore,” she told AFP, referring to the 1973 case enshrining the right to abortion in US law.

It was overturned by the Supreme Court earlier this year.

Smythe said it was “terrifying” to know that, should she become pregnant, “I don’t have the right to choose potentially, depending on how the election goes on Tuesday.”

The vote “means everything,” she said in the long line at the arena where Biden and his former boss, Barack Obama, were rallying supporters Saturday. “Everything is on the line.”

“The Republican Party is kind of turning almost into a dictatorship,” she said. “They are pointing fingers and saying, that’s gone, that’s gone. That’s gone.”

– ‘Scary’ for women – 

Smythe is not alone in her fears. In the stands, under huge American flags, 26-year-old Ashley Rubio is caught up in the music filling the arena — Daft Punk, Whitney Houston and Beyonce.

“It’s scary as a woman these days,” she says. “We thought we were past all that.”

Beyond abortion, she fears a challenge to insurance, ever a flashpoint in the US health care system — Democrats tend to favor more government support, while Republicans prefer it privatized. 

“You know, I just want to be able to go to a doctor,” she says. 

In the battleground state of Pennsylvania, where Philadelphia is located, all eyes are on the vote for a Senate seat.

Currently Republicans and Democrats both hold 50 seats in the house — Vice President Kamala Harris, a Democrat, is the tie-breaking vote. That means that losing just one seat could lose Democrats control of the upper house of Congress.

In Pennsylvania the vote is on a knife-edge. Mehmet Oz, a famously slick TV doctor endorsed by former president Donald Trump, is running for Republicans.

Democratic hopes rest on John Fetterman, currently the state’s lieutenant governor who served as mayor of a small town hit hard by deindustrialization, and who is more often spotted in a trademark hoodie.

The race has tightened in favor of the Republican. Fetterman, 53, suffered a stroke in May which upended his campaign, and struggled at times during a recent televised debate with Oz. 

“He was brave enough to appear. And you should get points to be courageous enough to do that,” says Michael Cooperman, a 54-year-old teacher with a white shirt and sunglasses on his nose.

He is nostalgic for Obama, who he says made an “impressive” speech in Philadelphia in 2006; and says Biden’s election after the Trump years was “a vote for the restoration of normalcy and decency.”

With the midterms usually seen as a referendum on the sitting president, which way America goes this time remains to be seen. 

Aaron Carter, the American singer who soared to fame at the turn of the millennium with his hit album “Aaron’s Party (Come Get It),” died Saturday, TMZ said. He was 34 years old. 

The entertainment outlet reported that the brother of Backstreet Boy Nick Carter was found dead in his tub at his residence in Lancaster, California.

A police spokesperson told AFP that officers responded to Carter’s home at 10:58 am and found a deceased body, but were not yet able to publicly identify the person.

Carter’s manager did not immediately respond to an AFP query.

The artist born December 7, 1987 in Tampa, Florida began performing at age seven, releasing his debut album at age nine in 1997.

His sophomore effort “Aaron’s Party (Come Get It)” sold three million copies stateside, propelling him to teen heartthrob status. He became a regular on preteen Nickelodeon and Disney shows, including an appearance on the popular “Lizzie McGuire.”

Carter toured with the boy band The Backstreet Boys — his elder brother is a member — as well as Britney Spears, and saw his next album, “Oh Aaron,” go platinum.

As he aged the musician’s star began to fade but Carter remained in the public eye, appearing on a number of reality shows and off-Broadway productions, and releasing some new music online.

But his personal life struggles became tabloid fodder, including apparent strife among the five Carter siblings and family fights over money.

In 2011 it was revealed that Carter had entered a treatment facility, with the star telling his fans that “the main thing in life is not to be afraid of being human.”

After leaving rehab the artist began doing one-off shows, and later a Canadian tour. He released another album in 2018.

He had filed a bankruptcy petition in 2013 over millions in debt, much of it tax-related. Carter also faced several run-ins with the law primarily over possession charges and reckless driving.

In 2017 he began discuss publicly his arrests and skinny appearance that had fueled rumors of illness or illegal drug use.

He admitted himself to another treatment center over prescription drug use aimed at anxiety and sleep issues, reporting improvement in 2018.

Earlier this year he told the Daily Mail he vied to no longer be seen as a “train wreck.”

“I am not how some people try to paint me,” he told the outlet. “If somebody wants to call me a train wreck, well I’ve been a train that’s been wrecked multiple times and derailed by many different things.”

The music world descended on Los Angeles Saturday for a star-studded concert gala honoring the Rock and Roll Hall of Fame’s newest class of top artists, among them Dolly Parton and Eminem.

The country queen and rap agitator are joined by pop futurists Eurythmics, smooth rocker Lionel Richie, new wave Brits Duran Duran, confessional lyricist Carly Simon and enduring rock duo Pat Benatar and Neil Giraldo in entering the music pantheon.

The Cleveland-based Hall of Fame — which surveyed more than 1,000 musicians, historians and industry members to choose the entrants — will honor the seven acts in a gala at Los Angeles’s Microsoft Theater.

More supergroup concert than ceremony, the evening will see music legends honor their peers with performances of their time-tested hits.

The lineup is usually kept under wraps until showtime, but Rock Hall Chairman John Sykes spilled some of the guest appearances in an interview this week with Forbes.

Olivia Rodrigo and Alanis Morissette will be among the attendees, while Bruce Springsteen and Sheryl Crow are set to figure among those introducing the honorees, Sykes told the outlet.

– ‘Sound of young America’ –

Over the years, a number of rappers, pop, R&B and country stars have been brought into the hall’s fold.

“Rock and roll, like music culture itself, never stays in one place. It’s an ever-evolving sound to reflect culture,” Sykes said. 

“So you look at these different artists that you’re going to see inducted this year — they’re different genders, they’re different colors, they’re different sounds but they have one thing in common, they created the sound of young America.”

This year’s inclusion of Parton, 76, prompted a characteristically humble response from the beloved icon, who initially requested her name be taken out of the running, saying that she was far from a rock star.

But voting had already begun, and the organization explained to Parton — whose prolific body of work includes the classics “Jolene” and “I Will Always Love You” — that her body of work was worthy.

Sykes said Parton is now making a rock and roll album and will debut one of its songs during a performance Saturday.

Eminem’s manager Paul Rosenberg told Billboard the inclusion of rappers in the hall also reflected music’s continuous evolution.

“If it were just strictly rock and roll by traditional standards, I think they would be hard-pressed to find enough people to induct 10, 15, 20 years from now,” he said.

– Eclectic group –

The 2022 group of hall of famers is among the organization’s most eclectic in years.

Detroit rapper Eminem burst onto the world stage in the late 1990s with darkly comical hits off his major label debut “The Slim Shady LP” including “My Name Is.”

“The Marshall Mathers LP” cemented his superstar status, becoming one of the best-selling albums of all time and setting up the rapper as one of pop’s master provocateurs with a blistering flow.

He joins fellow rappers including Jay-Z, Tupac Shakur, Ice Cube and Grandmaster Flash along with his loyal producer and mentor Dr Dre in the hall.

Eminem gained the recognition in his first year of eligibility: acts can be inducted 25 years after their first commercial music release.

Lionel Richie, the crooner behind enduring love songs “All Night Long” and “Hello,” earned the distinction after already scoring the majority of music’s top honors.

The 73-year-old artist has been inducted into the Songwriters Hall of Fame as well as designated a Kennedy Center Honoree and a winner of the Gershwin Prize for Popular Song.

Eurythmics — the duo comprised of Annie Lennox and Dave Stewart — earlier this year also entered the Songwriters Hall of Fame.

The synthpop innovators behind “Sweet Dreams (Are Made Of This)” will now take their place among rock’s greatest.

Duran Duran is set to reunite with their former guitarists Andy Taylor and Warren Cuccurullo.

Simon, the singer-songwriter behind the 1970s classic “You’re So Vain,” will finally be inducted following almost two decades of eligibility.

And power couple Benatar and Giraldo, who dominated the 1980s with hits like “Hit Me With Your Best Shot,” will also finally get rock hall recognition for their vast output.

Judas Priest along with Jimmy Jam and Terry Lewis will also receive awards for musical excellence, while Harry Belafonte and Elizabeth Cotten will be recognized for early influence prizes.

The gala begins at 7:00 pm (0200 GMT Sunday), and will be broadcast on November 19 on HBO.