Boeing’s Plea Deal, Amazon at 30, and More!
Editor’s Note: Happy Wednesday, dear reader! I hope you’re having a great week so far.
Let’s get to it!
Boeing Says It Will Plead Guilty
Troubled aerospace giant Boeing (NYSE: BA) has agreed to plead guilty to charges of criminal fraud connected with two fatal crashes in 2018 and 2019.
Investigators accused the company of conspiracy to defraud the U.S. government by “bullying” regulators into approving its 737 Max jets despite lax construction standards.
“This airplane is designed by clowns who in turn are supervised by monkeys,” one internal Boeing communication said of the model. The 737 Max was involved in the two crashes, which killed nearly 350 people.
According to the U.S. Justice Department, the company violated a settlement with the families of the crash victims reached in 2021. Under the settlement, Boeing agreed to pay $2.5 billion to the victims’ family members. In exchange, the company would be shielded from prosecution for three years.
As luck would have it, the settlement was set to expire only two days after a panel blew off a Boeing 737 Max 9 jet during an Alaska Airlines (NYSE: ALK) flight.
This incident kicked off a new crisis for Boeing — especially after safety officials discovered that the panel had not been properly secured to the aircraft.
Thanks to Boeing’s new deal, the guilty plea will allow the company to avoid a public trial — which could damage its reputation even further. Boeing has desperately been trying to convince regulators, investors, and the public that it is working to correct the quality-control issues that have plagued its planes.
However, the guilty plea won’t be without its own negative consequences.
Apparently, Boeing will face a fine of as much as $587.2 million — however, the Justice Department has recommended that the company be credited for the $243.6 million it already paid under the settlement. That would slash the fine in half.
In addition, the guilty plea may make it harder for Boeing to receive government contracts as a felon — which could have a serious impact on the company’s revenues.. Boeing’s defense, space, and security unit was responsible for roughly 32% of the company’s income last year.
Still, the news of the plea deal pleased investors, and Boeing’s stock shot up in morning trading on Monday. However, BA shares are still down by roughly 25% year to date.
Corning Predicts AI Profits
Here’s an unlikely beneficiary of the buzz concerning artificial intelligence (AI): Corning (NYSE: GLW).
Yes, the glassmaker behind your favorite old casserole dish is apparently critical to AI development.
That’s because Corning — which supplies Apple (NSDQ: GOOGL) with its Gorilla screen glass — also offers many fiber-optic products critical to the networks that run generative AI applications.
“We’ve invented new fibers, new cables, new connectors, and new custom integrated optical solutions to dramatically reduce installation costs, overall time and space, and carbon footprint,” Corning CEO Wendell Weeks recently told CNBC’s Squawk Box.
According to the company, Corning has forecast second-quarter sales of $3.6 billion. That’s higher than the previously issued guidance of $3.4 billion,
In addition, Corning noted that it’s expecting earnings per share (EPS) to fall “at the high end or slightly above” the guided range of 42 cents to 46 cents.
“These results reinforce our confidence in ‘Springboard’ — Corning’s plan to add more than $3 billion in annualized sales in the next three years as cyclical factors and secular trends combine,” Week said in a statement.
According to Corning, it’s anticipating its first-quarter sales — which showed a 6% year-over-year decline — to be the lowest of 2024.
As a result of all this positive news, shares of Corning are on the rise.
In the past five days, shares of the glassmaker have risen by more than 14%. However, year to date, Corning has handed investors gains of more than 45%.
Amazon at 30: Looking Toward $3T
Last Friday, July 5, marked the 30th anniversary of the founding of Amazon (NSDQ: AMZN). Initially created as an online bookstore in 1994, Amazon quickly expanded its product offerings to include various types of merchandise.
Shares of the company began trading publicly in May 1997 during the dot-com boom. At the time, it was valued at $438 million.
Now Amazon’s market cap is poised above $2 trillion… and analysts believe it could reach $3 trillion before too long.
If you had purchased Amazon’s stock way back in 1997 and held on over the decades, you would be sitting on a pretty pile today. An investment worth $1,000 back then would be worth about $2.5 million today.
Take a look:
You will find more infographics at Statista
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