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Chinese retailer PDD takes $55bn share hit after warning of ‘inevitable’ profit decline

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Chinese retailer PDD takes bn share hit after warning of ‘inevitable’ profit decline

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PDD Holdings, the owner of ecommerce apps Pinduoduo and Temu, has warned of an “inevitable” decline in profitability, leading shares to fall 29 per cent in New York.

The warning comes as PDD’s ecommerce apps face rising competition in China and around the world, and as the tech sector has to tread a careful line in Beijing, where authorities are prioritising high-end manufacturing.

In an hour-long call with investors and Wall Street analysts on Monday in New York, PDD’s executives said they were “committed to high-quality development”, parroting Beijing’s current policy priority.

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The company’s management said it would spend Rmb10bn ($1.4bn) in the first year of a new programme to lower fees for “high-quality merchants” and “focus on creating a healthy and sustainable platform ecosystem”.

The share price plunge wiped $55bn off PDD Holdings’ market value. Investors continued to ditch their shares during the hour-long briefing after the release of financial results for the second quarter ending in June.

In recent years, Chinese authorities have carried out a crackdown on the country’s tech giants, and merchants recently protested over mistreatment at a PDD office in southern China.

Co-chief executive Zhao Jiazhen said while profits might fluctuate in the near term, “in the long run the decline in our profitability is inevitable”.

Co-chief executive Chen Lei added that it was “not an appropriate time” to pay dividends or buy back shares and that “in the foreseeable years ahead, we also do not see such a need”.

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PDD reported Rmb32bn in quarterly net profit, up 144 per cent year on year, and a cash balance of Rmb285bn. Most of its Chinese tech peers have begun using their ample cash to reward shareholders with capital return programmes.

The ecommerce giant also warned of rising competition. At home, it faces a renewed push by reigning giant Alibaba to win back market share. Abroad, Amazon has launched a new discount programme.

The company’s revenue of Rmb97bn missed analyst expectations, though it was up 86 per cent over the past year.

PDD Holdings faced a major public relations crisis in July when hundreds of Temu merchants descended on its Guangzhou offices to protest heavy fines and penalties levied by the company as punishment for customer returns, resulting in a swarm of police descending on the area.

The blunt messaging by PDD executives on Monday produced headlines more favourable to its standing in Beijing.

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PDD is “investing billions to support new quality merchants, continuously helping merchants improve quality and efficiency”, read one headline on the official news agency Xinhua.

The company’s tumbling share price came with one silver lining for founder Colin Huang, who in recent weeks had topped China’s rich list, a spot that comes with unwanted attention in Xi Jinping’s “common prosperity” era.

In 2020, Huang gave away billions of dollars’ worth of PDD shares to charity and to other PDD executives as his name climbed to the forefront of the country’s wealthy ranks. People familiar with his thinking at the time said the move was in part driven by his desire to maintain a lower profile.

By the end of day on Monday, Huang had fallen to become the fourth richest Chinese person, according to a Bloomberg list.

Additional reporting by Tina Hu in Beijing

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Video: The rise of Pinduoduo and Temu: profits and secrets | FT Film
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Judge orders pause on Biden program offering legal status to spouses of U.S. citizens

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Judge orders pause on Biden program offering legal status to spouses of U.S. citizens

President Joe Biden speaks during an event with the National Governors Association in the East Room of the White House in February.

Evan Vucci/AP


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Evan Vucci/AP

McALLEN, Texas (AP) — A federal judge in Texas on Monday paused a Biden administration policy that would give spouses of U.S. citizens legal status without having to first leave the country, dealing at least a temporary setback to one of the biggest presidential actions to ease a path to citizenship in years.

The administrative stay issued by U.S. District Judge J. Campbell Barker comes just days after 16 states, led by Republican attorneys general, challenged the program that could benefit an estimated 500,000 immigrants in the country, plus about 50,000 of their children. The states accused the administration of bypassing Congress for “blatant political purposes.”

One of the states leading the challenge is Texas, which in the lawsuit claimed the state has had to pay tens of millions of dollars annually from health care to law enforcement because of immigrants living in the state without legal status.

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President Joe Biden announced the program in June. The court order, which lasts for two weeks but could be extended, comes one week after the Department of Homeland Security began accepting applications.

“The claims are substantial and warrant closer consideration than the court has been able to afford to date,” Barker wrote.

Barker was appointed by former President Donald Trump in 2019 as a judge in Tyler, Texas, which lies in the 5th U.S. Circuit Court of Appeals, a favored venue for advocates pushing conservative arguments.

The judge laid out a timetable that could produce a decision shortly before the presidential election Nov. 5 or before a newly elected president takes office in January. Barker gave both sides until Oct. 10 to file briefs in the case.

The policy offers spouses of U.S. citizens without legal status, who meet certain criteria, a path to citizenship by applying for a green card and staying in the U.S. while undergoing the process. Traditionally, the process could include a years-long wait outside of the U.S., causing what advocates equate to “family separation.”

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The Department of Homeland Security did not immediately return an email seeking comment on the order.

“The court’s decision tonight to halt the federal government from providing relief is devastating to the thousands of Texas families that could have benefited from this program,” Jessica Cisneros, an attorney for the advocacy organization the Texas Immigration Law Council, said Monday.

Several families were notified of the receipt of their applications, according to attorneys advocating for eligible families who filed a motion to intervene earlier Monday.

“Texas should not be able to decide the fate of hundreds of thousands of U.S. citizens and their immigrant spouses without confronting their reality,” Karen Tumlin, the founder and director of Justice Action Center, said during the press conference before the order was issued.

The program has been particularly contentious in an election year where immigration is one of the biggest issues, with many Republicans attacking the policy and contending it is essentially a form of amnesty for people who broke the law.

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Republican Texas Attorney General Ken Paxton cheered the order.

“This is just the first step. We are going to keep fighting for Texas, our country, and the rule of law,” Paxton posted on the social media platform X.

To be eligible for the program, immigrants must have lived continuously in the U.S. for at least 10 years, not pose a security threat or have a disqualifying criminal history, and have been married to a citizen by June 17 — the day before the program was announced.

They must pay a $580 fee to apply and fill out a lengthy application, including an explanation of why they deserve humanitarian parole and a long list of supporting documents proving how long they have been in the country.

If approved, applicants have three years to seek permanent residency. During that period, they can get work authorization.

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Before this program, it was complicated for people who were in the U.S. illegally to get a green card after marrying an American citizen. They can be required to return to their home country — often for years — and they always face the risk they may not be allowed back in.

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Apple’s top finance executive to step down at the end of 2024

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Apple’s top finance executive to step down at the end of 2024

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Apple chief financial officer Luca Maestri will step down from the role at the beginning of next year, ending a more than decade-long stint as the iPhone-maker’s top finance executive.

Maestri will be succeeded by Kevan Parekh, Apple’s vice-president for financial planning and analysis, the company said on Monday.

Maestri is a core member of Apple’s close-knit top leadership team and a close confidante of chief executive Tim Cook. He will stay at the company to lead its corporate services teams. 

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He has been a familiar face to investors, participating alongside Cook on the company’s quarterly earnings calls. Maestri joined Apple from Xerox in 2013, and previously worked at Nokia Siemens Networks.

On Monday Cook praised Maestri for being “an extraordinary partner in managing Apple for the long term”, pointing to the company’s financial performance during his tenure. 

During Maestri’s tenure Apple has grown in to one of the world’s most valuable companies. Its share price increased from about $20 at the start of 2014 to about $227 today, with its market cap eclipsing $3tn.

The company has also accumulated billions of dollars in cash on hand, despite Maestri announcing the goal of making Apple “net-cash neutral” in 2018. Apple launched a fresh $110bn share buyback in June.

Maestri said in a statement that it had been “the greatest privilege of my professional life” to serve as CFO at the company, adding that he has “enormous confidence in Kevan as he prepares to take the reins”.

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Parekh has also been at Apple for more than a decade, working closely with Maestri in Apple’s finance team.

“From our perspective, Apple filling the role with an internal candidate should make the transition a bit smoother, particularly given Mr Parekh’s experience at the company,” Piper Sandler analyst Matt Farrell said in a note on Monday. “However, any change of this magnitude does create some level of uncertainty, especially given the consistency and the history of execution from Mr. Maestri.”

Maestri’s scheduled departure coincides with another recent shake-up in Apple’s management, with one of its top App Store executives, Matt Fischer, announcing his departure last week.

Apple is gearing up to launch its latest smartphone, the iPhone 16, in September, with the company heading into a new era of devices powered by generative AI features.

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Trump takes shots at ABC hosts, suggests he could pull out of debate

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Trump takes shots at ABC hosts, suggests he could pull out of debate

Former President Trump indicated he might pull out of the scheduled debate against Vice President Kamala Harris with ABC News on September 10 after watching the network’s Sunday shows. 

Trump attacked ABC as “the single worst network for unfairness” during remarks Monday at a campaign stop in Falls Church, Virginia and suggested ABC should be “shut out.” He added he felt CNN was fair in the first debate he had with President Biden.

“I watched this weekend and it’s the worst of all networks,” Trump said of ABC. “George Slopadopalous and all the different people. The worst.” 

Trump also brought up the spat between his and Harris’ campaign over the rules of the debate, which in part concern whether microphones will be cut off for candidates who have finished their allotted speaking times.

Former President Trump is suing ABC News and George Stephanopoulos for defamation after the host said several times on air that the former president was “found liable for rape” during a March 10 interview with Rep. Nancy Mace, R-S.C. 

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Former President Trump is suing George Stephanopoulos for defamation. (Getty Images)

“They had this Jonathan Karl, who is a lightweight,” he said of the ABC Chief Washington Correspondent. “He was asking questions of Tom Cotton, who was fantastic, by the way. Only a total pro could have gotten through that interview.” 

TRUMP, HARRIS CAMPAIGNS CLAHS OVER DEBATE RULES: ‘WE SAID NO CHANGES’

“I watched that group talking to Biden about vanilla ice cream and I watched the way they went after Tom Cotton and Tom Cotton handled it like easy. When you see Jonathan Karl who’s terrible, I mean, he’s just terrible, just an average person,” he added. “But they tell him what to do.”

He then slammed Sunday’s round table on “This Week,” which included former Democratic National Committee interim chair Donna Brazile, whom he called out for feeding Hillary Clinton topics for a town hall ahead of time during the 2016 campaign.

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Brazile wrote in an essay for Time magazine in 2017 that she shared potential topics for a CNN town hall with the Hillary Clinton campaign while she served as the DNC vice chair, Politico reported. CNN dropped Brazile as a contributor after the news was published. 

Trum also noted Dana Walden, a senior Disney executive whose portfolio includes ABC News, as one of Harris’ closest friends. Walden and Harris have known each other since 1994, while their husbands, Matt Walden and Doug Emhoff, have known each other since the 1980s. 

Kamala Harris / Dana Walden

Kamala Harris / Dana Walden

36 DAYS: VP HARRIS REFUSES TO REVEAL POLICY POSITIONS, GIVE NEWS CONFERENCES OR INTERVIEWS

Trump said the “hostility” he watched this weekend made him question why he agreed to a debate with ABC. 

“Let’s do it with another network. I want to do that.” he said. “You know, I won because of debates, ask Biden.”

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“I want to have a fair debate and you know, they can ask me tough questions,” he added. “I don’t mind. I think I’ve heard them all from you, I hear them every day. But, I think it’s very unfair, the single worst network for unfairness. I think worse than CNN, worse than NBC, which is really hard to believe and CBS is probably the best of the group.”

The network’s primetime debate is set for Sept. 10, and will be moderated by ABC anchors David Muir and Linsey Davis. 

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