Investors ask how the Bezos divorce will affect Amazon
UNTV News • January 14, 2019 • 1524
NEW YORK (Reuters) – Amazon.com Inc (AMZN.O) shares seesawed on Thursday as investors questioned how the impending divorce of company founder Jeff Bezos would affect his control of the most valuable company on Wall Street and its ambitious expansion plans.
Bezos, whom Forbes lists as the world’s richest person, worth an estimated $136.2 billion, said via Twitter on Wednesday that he and his wife of 25 years, MacKenzie, will divorce. Amazon shares were down 0.5 percent in afternoon trading on Thursday, after gaining earlier in the session.
The split throws into question how the couple will split their fortune, which includes an approximately 16 percent ownership stake in Amazon’s roughly $811.4 billion market capitalization. Divorce laws in Washington state, where they live, hold that property acquired during a marriage is generally divided equally between spouses.
Most analysts and fund managers are largely sanguine and say the divorce will not lead to any significant change in the company’s leadership or its growth prospects.
Prominent short-seller Doug Kass, however, who runs hedge fund Seabreeze Partners, said he sold his stake in Amazon on news of the divorce. That was after initially buying a stake in late December and naming Amazon among his “best ideas list.”
“Is it premature to ask what happens to Amazon when Jeff Bezos chooses to turn over the day-to-day running of the company he founded?” he said. “His announced divorce gives me pause for thought.”
The couple has multiple residences across the country, so there is a possibility the divorce could be filed in a state where marital property is not presumed to be divided equally.
New York matrimonial lawyer Bernard Clair said in that case a judge would likely determine MacKenzie Bezos’ share of Amazon stock based on her contribution to her husband’s success, which could include helping him make important business decisions or raising their children so he could focus on work.
Any transfer of Jeff Bezos’ stock would be subject to U.S. Securities and Exchange Commission disclosure requirements. As an officer and director at the company, Bezos could be required to file an SEC Form 4 within two business days of any transfer, though former SEC lawyer Broc Romanek noted a provision of U.S. securities laws exempts share transfers made pursuant to a domestic relations order.
Even if Bezos were exempted from filing a Form 4, he would be required to update promptly the record of his Amazon holdings on file with the SEC if his position in the company changed by 1 percent or more, said D.C. securities lawyer Thomas Gorman. MacKenzie Bezos would also need to file a similar record if she received more than 5 percent of Amazon stock.
Peter Henning, a securities law professor at Wayne State University, noted that Amazon, unlike fellow tech giants Facebook Inc. (FB.O) and Google Inc (GOOGL.O), does not give its founder’s shares greater voting rights. If MacKenzie Bezos is given a large block of shares, she could have a big say at the company.
Gorman agreed. “She could wind up with some sort of control block, and get herself a directorship,” he said. “It depends on what she wants to do.”
Any effort to dilute MacKenzie Bezos’ voting rights by creating a separate class of shares would require a shareholder vote, said Gorman, though he added that he thought such a move unlikely.
“Nobody wants to run their divorce through a shareholder meeting,” he said.
Robert Bacarella, portfolio manager of the Monetta fund, said that while he is not changing his investment in Amazon, he expects other growth-focused portfolio managers may trim their stakes due to concerns about the divorce’s impact.
“This is such an over-owned company and this gives them an excuse to say ‘Maybe I’ll trim some back because it adds a new question mark’,” he said.
Bacarella, however, said he is not concerned because even if MacKenzie Bezos liquidated a stake that could be as high as 8 percent, there would be no fundamental reason behind the sale. Any impact would be short-term in nature.
“Unless you worry that he will get so distracted by the divorce that he cannot manage the company, this will be a non-event,” said Michael Pachter, an analyst at Wedbush Securities in Los Angeles. “He is given control of the company because shareholders like him and his vision, not because he has 50 percent of the stock.”
Thomas Forte, an analyst at D.A. Davidson, said questions about the future of the company due to the divorce are legitimate due to Jeff Bezos’ outsized influence on its value. Should he leave the company for any reason, its shares would likely immediately fall more than 10 percent, he said.
“His influence on the company is as a significant as if he had super-voting shares because of his track record and the way he runs the company as if he owned the whole thing,” he said.
Reporting by David Randall and Jan Wolfe; editing by Anthony Lin and Dan Grebler
San Francisco, USA – The United States tech multinational Amazon announced Thursday that it would protest the Pentagon’s award to Microsoft of a cloud computing contract valued at up to $10 billion.
Amazon’s cloud unit Amazon Web Services had been the favorite to win and already had a contract with the Central Intelligence Agency.
Its founder Jeff Bezos is often a target of US President Donald Trump’s ire. Bezos also the Washington Post – one of the news outlets most critical of the president’s administration and which has been the subject of his outbursts.
The Seattle company said in a statement that “numerous aspects of the JEDI (Joint Enterprise Defense Infrastructure) evaluation process contained clear deficiencies, errors, and unmistakable bias, and it’s important that these matters be examined and rectified.”
“We also believe it’s critical for our country that the government and its elected leaders administer procurements objectively and in a manner that is free from political influence,” AWS said.
The comment appeared to be directed at Trump, who on July 19 called for an investigation of the Pentagon contract.
“I’m getting tremendous complaints about the contract with the Pentagon and Amazon,” Trump told reporters at the time. “I will be asking them to look very closely to see what’s going on,” he added, according to EFE/Dow Jones.
The Pentagon has more than 500 separate clouds. The JEDI contract is designed to serve as an umbrella system to rationalize that number and provide the military with access to services that better keep up with the pace of technology in civilian markets.
In addition to the economic value of the deal itself, its importance goes even further as the Pentagon’s largest technology contract in history is seen as a pioneer that other government agencies would follow.
At the time of announcing the award, the Department of Defense assured that all parties “were treated fairly and evaluated consistently with the solicitation’s stated evaluation criteria.” – EFE-EPA
Firefighters battling raging wildfires in Bolivia were evacuated to hospitals in Santa Cruz on Thursday (September 19) after they collapsed from exhaustion.
Blazes have burned unabated across vast swaths of hilly forest and savannah near Bolivia’s border with Paraguay and Brazil. More than a million hectares, or approximately 3,800 square miles, have been impacted by the fires, officials have said.
The fires have left behind an uncountable death toll of flora and fauna. These animals in this refuge are the lucky ones.
This anteater has its paws bandaged after they were burnt by hot earth.
Bolivia is one of the poorest nations in the western hemisphere, but one of the richest in biodiversity. Swathes of the country has been left charred, barren from the fires and will be unable to sustain animal life for a while to come.
A Human Rights Watch report on Tuesday (September 17) found that more than 300 people have been killed over the past decade in conflicts over the use of land and resources in the Amazon, many by organized criminal networks profiting from illegal deforestation.
Of those cases, only 14 were tried in court, the non-profit said the report was based on 170 interviews.
“This really shows the level of impunity,” Cesar Munoz, a senior investigator at Human Rights Watch told Reuters on the sidelines of an event in Sao Paulo to discuss the report.
About 60% of the Amazon rainforest, considered a crucial barrier against climate change, lies in Brazil. Destruction of the forest has surged this year, and the highest number of fires since 2010 has drawn worldwide condemnation of the policies of President Jair Bolsonaro, who advocates opening the Amazon to development.
Human Rights Watch traveled to several Brazilian states between 2017 and the first half of this year to research the report, which showed that almost half of the murders linked to deforestation took place in the Northern state of Para.
Bolsonaro has weakened Brazil’s environmental enforcement agency Ibama, cut its budget by 25% and restricted the ability of field agents to torch the equipment of those found committing environmental crimes, Reuters has reported.
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