Boeing estimates cost of 737 MAX troubles at a billion dollars and counting

Boeing estimates cost of 737 MAX troubles at a billion dollars and counting

5:05pm, 24th April, 2019
Boeing’s first 737 MAX makes its way through the assembly plant in Renton, Wash., in 2015. (Boeing Photo) Boeing’s first-quarter financial stats took a serious hit in the wake of two fatal crashes involving its bestselling plane, the 737 MAX. The company estimated the additional costs associated with grounding the 737 MAX fleet at $1 billion, but more uncertainty lies ahead. Boeing executives held off on providing updated financial guidance until the impact of the 737 MAX issue becomes clearer. Revenue: Boeing reported first-quarter revenue of $22.9 billion, which is 2 percent below the year-ago figure but in line with analysts’ expectations. The shortfall is due primarily to fewer deliveries of 737 jets. Earnings: Net earnings for the quarter amounted to $2.15 billion, which translates to adjusted earnings per share of $3.16. That’s 13 percent below what they were a year ago but from Zacks Investment Research. Word from the top: “Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public,” Boeing CEO Dennis Muilenburg said in the company’s . “As we work through this challenging time for our customers, stakeholders and the company, our attention remains on driving excellence in quality and performance and running a healthy sustained growth business built on strong, long-term fundamentals.” Word on the Street: Boeing’s share price rose 0.36 percent to close at $375.46, apparently reflecting investor relief that the quarterly results weren’t worse. The stock’s value has fallen about 8.5 percent since the beginning of March, just before the fatal crash of an Ethiopian Airlines 737 MAX. Quarter highlights Boeing said the $1 billion in additional costs comes primarily from reducing the 737 production rate from 52 to 42 airplanes a month, a move that spreads fixed costs over a smaller number of planes. That toll could rise if the uncertainty surrounding the 737 MAX’s fate continues into the long term. Muilenburg said Boeing is making “steady process on the path to final certification for a software update for the 737 MAX.” That update is meant to address problems with an automatic flight control system that has been linked to the Ethiopia crash as well as last October’s fatal crash of a Lion Air jet in Indonesia. Muilenburg said the fix has been tested on more than 135 flights but didn’t give a timetable for winning certification from the Federal Aviation Administration. This week as saying certification could come as early as late May, potentially leading to a return to flight in mid-June. The process that led to the 737 MAX’s certification in 2017 is the subject of multiple investigations, including inquiries by the FAA, the Justice Department and the FBI, and a panel of experts convened by Boeing. But Muilenburg said “there was no surprise, or gap, or unknown here, or something that somehow slipped through a certification process.” Because of the focus on the 737 MAX situation, Muilenburg said Boeing hasn’t yet decided whether to go ahead with plans for a next-generation midsize airplane known as the New Mid-Market Airplane, the NMA or 797. But 777X production is moving ahead as planned, with the model’s first flight expected within months and the first 777X delivery due next year. Boeing Global Services, which was broken out as a separate business unit in 2017, brought in glowing financial results. First-quarter revenue increased 17 percent over the year-ago figure, to $4.6 billion. Boeing said the increase was driven primarily by higher volume across the portfolio, including , an aerospace parts distributor. Boeing Defense, Space & Security also served as a bright spot in the quarterly report: Revenues for that business unit amounted to $6.6 billion, which represents a 2 percent increase over the previous year’s first-quarter figures. The first seven KC-46 tankers were during the quarter — a milestone dimmed only slightly by . Boeing said its CST-100 Starliner space taxi has gone through “successful environmental testing,” calls for an uncrewed Starliner to make its first demonstration flight to the International Space Station for NASA no earlier than August, with the first crewed flight to follow by as early as late 2019.
New unicorn in Seattle: Outreach raises massive $114M round, pushing valuation above $1 billion

New unicorn in Seattle: Outreach raises massive $114M round, pushing valuation above $1 billion

11:31am, 16th April, 2019
(Outreach Photo) Seattle has a new unicorn. Outreach CEO Manny Medina. (Outreach Photo) Sales automation startup has reeled in a huge $114 million investment round that pushes its valuation to $1.1 billion, joining an elite club of other fast-growing companies also valued above $1 billion. “That’s right: Outreach is officially a ‘unicorn’ and the only one in the rapidly growing sales engagement space,” Outreach CEO wrote in a . Outreach has been on a roll for the past few years with its software that uses machine learning to help customers such as Cloudera, Adobe, Microsoft, Docusign, and others automate and streamline communication with sales prospects. The technology offers one system to track all touch points, from phone calls to emails to LinkedIn messages, and integrates with existing tools including Salesforce and Gmail. Outreach more than doubled its revenue in 2018 and met all goals and metrics, Medina told GeekWire earlier this year. The company now has more than 3,300 customer accounts and 50,000-plus users. It employs 315 people and plans to reach 450 by the end of 2019. Medina said the company will continue to invest in its hometown, with a goal of becoming “the next enterprise beacon of Seattle.” Lone Pine Capital, a Greenwich, Conn.-based hedge fund manager, led the Series E round. Meritech Capital Partners and Lemonade Capital joined the round, as did existing investors DFJ Growth, Four Rivers Group, Mayfield, Microsoft Ventures, Sapphire Ventures, Spark Capital and Trinity Ventures. Lone Pine Capital previously invested in Convoy, another Seattle startup that . Other companies with valuations north of $1 billion in the Seattle region include Rover and OfferUp. (Outreach Photo) The $114 million round for Outreach follows a $65 million round that came in this past May. Total funding to date is $239 million. “This financing will enable us to infuse every aspect of the customer journey with the power of machine learning so organizations can identify the actions that move the needle in order to make better, faster decisions,” Medina wrote in the blog post. “We will also expand in the coming months by doubling our machine learning team, increasing our international footprint, and investing in our partner ecosystem, Galaxy, as well as our recently announced integration with Microsoft’s Dynamics 365 for Sales.” Medina told GeekWire in February that “this upcoming year we will make more investments in scaling the business efficiently and prepare for an IPO a few years out.” Medina, a former director at Microsoft, originally launched a recruiting software startup called GroupTalent in 2011 with his co-founders Andrew Kinzer, Gordon Hempton, and Wes Hather. But the entrepreneurs in 2014 to focus on building tools for salespeople. “Outreach is one of my favorite stories,” Founders Co-op’ Managing Partner Chris DeVore, an early Outreach investor, . “The business they set out to build wasn’t working, but because they stuck together as a founding team and kept adapting and learning, they figured out how to find a productive thing. But that wasn’t because of where they started or the early metrics. It was because as humans, they were so committed and resilient and so gritty that they figured it out.” Outreach is ranked No. 23 on the , our index of top Pacific Northwest startups. Outreach is also a finalist for Next Tech Titan, a category at the upcoming that highlights future dominant forces in the Pacific Northwest tech scene. Last year, Outreach to upgrade its headquarters and made its It was the only Seattle company to crack the top 25 in list for 2018. and previously predicted that Outreach would reach unicorn status. There are 341 unicorn companies worldwide, according to , with nearly 30 startups reaching that milestone in 2019. reported that 57 companies became unicorns in 2017.