A picture taken on November 10, 2019, shows an Iranian flag in Iran’s Bushehr nuclear power plant, during an official ceremony to kick-start works on a second reactor at the facility.
ATTA KENARE | AFP via Getty Images
U.S. Special Envoy for Iran Robert Malley said on Sunday he was not confident that a nuclear deal between world powers and Iran was imminent, dampening expectations after 11 months of talks in Vienna that have stalled.
The failure of efforts to restore the pact, which would curb Tehran’s nuclear programme in exchange for lifting tough sanctions, could carry the risk of a regional war, or lead to more harsh Western sanctions and further rises in world oil prices, analysts say.
“I can’t be confident it is imminent.. a few months ago we thought we were pretty close as well,” Malley said at the Doha Forum international conference.
“In any negotiations, when there’s issues that remain open for so long, it tells you something about how hard it is to bridge the gap.”
His assessment of the negotiations in Vienna to revive a 2015 nuclear accord came after Kamal Kharrazi, a senior advisor to Iran’s Supreme Leader Ayatollah Ali Khamenei, said a deal could come soon.
“Yes, it’s imminent. It depends on the political will of the United States,” Kharrazi told the conference.
Then-U.S. President Donald Trump abandoned the nuclear pact in 2018, prompting Tehran to start violating nuclear limits set under the deal about a year later, and months of on-and-off talks to revive it paused earlier this month after Russia presented a new obstacle.
Russia later said it had received written guarantees that it would be able to carry out its work as a party to the deal, suggesting Moscow could allow it to be resuscitated.
Kharrazi said in order for the deal to be revived it was vital for Washington to remove the foreign terrorist organisation (FTO) designation against Iran’s Islamic Revolutionary Guard Corps (IRGC), an elite unit which reports to Khamenei.
The IRGC, created by the Islamic Republic’s late founder Ayatollah Ruhollah Khomeini during the 1979 revolution, is more than just a military force.
It is also an industrial empire with enormous political clout. It was listed by Washington as a specially designated global terrorist (SDGT) and sanctioned under the Countering America’s Adversaries Through Sanctions Act (CAATSA) in 2017.
The IRGC’s foreign operations arm, the Quds Force, was labelled an SDGT in 2007. The Trump administration put the IRGC organization on the FTO list in April of 2019.
The Quds Force helps Iran spread its influence in the Middle East through proxies.
“IRGC is a national army and a national army being listed as a terrorist group certainly is not acceptable,” said Kharrazi.
Asked about any potential redesignation, Malley said: “Regardless of what happens to the IRGC issue that you raise, our view of the IRGC is many other sanctions on the IRGC will remain. This is not a deal that intends to resolve that issue.”
Tehran has also been pushing for guarantees that any future U.S. president would not withdraw from the deal, which would curb Tehran’s nuclear programme in exchange for lifting tough sanctions which have hammered Iran’s economy.
The extent to which sanctions would be rolled back is another sensitive subject.
The United States’ allies in the Gulf and Israel view the nuclear talks with misgivings and see Tehran as a security threat.
Israel and the United States will cooperate in preventing a nuclear-armed Iran despite differences over any nuclear deal, Israel’s foreign minister said on Sunday.
“We have disagreements about a nuclear agreement and its consequences, but open and honest dialogue is part of the strength of our friendship,” Yair Lapid said in Jerusalem during a joint press conference with visiting U.S. Secretary of State Antony Blinken.
Goldman Sachs CEO David Solomon gets 29% pay cut to $25 million
David Solomon, Chairman & CEO of Goldman Sachs, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 23rd, 2023.
Adam Galica | CNBC
The package includes a $2 million base salary and variable compensation of $23 million, New York-based Goldman said in the filing. Most of Solomon’s bonus— 70%, or $16.1 million, is in the form of restricted shares tied to performance metrics, while the rest is paid in cash, the bank said.
Solomon’s pay, while large by most any measure, is about 29% lower than the $35 million he was granted for his 2021 performance. Meanwhile, Goldman’s full year earnings fell by 48% to $11.3 billion, thanks to sharp declines in investment banking and asset management revenue, the company said last week.
While the bank was primarily hit by industrywide slowdowns in capital markets activity as the Federal Reserve raised interest rates, Solomon also faced his own set of issues last year. Goldman was forced to scale back its ambitions in consumer finance and lay off nearly 4,000 workers in two rounds of terminations in recent months.
Fiji fires police commissioner and end security deal with China
Police operate a security check point in the Fijian capital of Suva in December following general elections. The Pacific island nation has played an important regional role amid competition between China on the one side and Australia, New Zealand and the United States on the other.
Saeed Khan | Afp | Getty Images
Fiji’s president on Friday suspended the commissioner of police following a general election saw the first change in government in the Pacific island nation in 16 years, after the military earlier warned against “sweeping changes.”
President Ratu Wiliame Katonivere said Commissioner of Police Sitiveni Qiliho had been suspended on the advice of the Constitutional Offices Commission, “pending investigation and referral to and appointment of, a tribunal.”
The Supervisor of Elections Mohammed Saneem was also suspended by the commission, the statement said.
Qiliho declined to comment to local media because he said he will face a tribunal over his conduct. He was seen as being close to former prime minister Frank Bainimarama, who led Fiji for 16 years before a coalition of parties narrowly won December’s election and installed Sitiveni Rabuka as leader of the strategically important Pacific nation.
The day before a coalition agreement was struck, Qiliho and Bainimarama called on the military to maintain law and order because they said the hung election result had sparked ethnic tensions, a claim disputed by the coalition parties.
The Pacific island nation, which has a history of military coups, has been pivotal to the region’s response to competition between China and the United States, and struck a deal with Australia in October for greater defence cooperation.
On Thursday, Fiji Times reported that Rabuka said his government would end a police training and exchange agreement with China.
“Our system of democracy and justice systems are different so we will go back to those that have similar systems with us,” the prime minister was quoted as saying, referring to Australia and New Zealand.
The prime minister’s office did not immediately respond to a request for comment.
Republic of Fiji Military Forces Commander Major General Jone Kalouniwai earlier this month warned Rabuka’s government against making “sweeping changes,” and has insisted it abide by a 2013 constitution which gives the military a key role.
Inventory glut and underused factories
Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.
Jonathan Ernst | Reuters
Investors hated it, sending the stock over 9% lower in extended trading, despite the fact that Intel did not cut its dividend.
The earnings report, which was the eighth under CEO Pat Gelsinger’s leadership, shows a legendary technology company struggling with many factors outside of its control, including a deeply slumping PC market. It also highlights some of Intel’s current issues with weak demand for its current products and inefficient internal performance, and underscores how precarious the company’s financial health has become.
“Clearly, the financials aren’t what we would hoped,” Gelsinger told analysts.
In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.
Here are some of the most concerning bits from Intel’s earnings report and analyst call:
Intel didn’t give full-year guidance for 2023, citing economic uncertainty.
But the data points for the current quarter suggest tough times. Intel guided for about $11 billion in sales in the March quarter, which would be a 40% year-over-year decline. Gross margin will be 34.1%, a huge decrease from the 55.2% in the same quarter in 2021, Gelsinger’s first at the helm.
But the biggest issue for investors is that Intel guided to a 15 cent non-GAAP loss per share, a big decline for a company that a year ago was reporting $1.13 in profit per share. It would be the first loss per share since last summer, which was the first loss for the company in decades.
Management gave several reasons for the tough upcoming quarter, but one theme that came through was that its customers simply have too many chips and need to work through inventory, so they won’t be buying many new chips.
Both the PC and server markets have slowed after a two-year boom spurred by remote work and school during the pandemic. Now, PC sales have slowed and the computer makers have too many chips. Gelsinger is predicting PC sales during the year to be around 270 million to 295 million — a far cry from the “million units-a-day” he predicted in 2021.
Now, Intel’s customers have to “digest” the chips they already have, or “correct” their inventories, and the company doesn’t know when this dynamic will shift back.
“While we know this dynamic will reverse, predicting when is difficult,” Gelsinger told analysts.
Underpinning all of this is that Intel’s gross margin continues to decline, hurting the company’s profitability. One issue is “factory load,” or how efficiently factories run around the clock. Intel said that its gross margin would be hit by 400 basis points, or 4 percentage points, because of factories running under load because of soft demand.
Ultimately, Intel forecasts a 34.1% gross margin in the current quarter — a far cry from the 51% to 53% goal the company set at last year’s investor day. The company says it’s working on it, and the margin could get back to Intel’s goal “in the medium-term” if demand recovers.
“We have a number of initiatives under way to improve gross margins and we’re well under way. When you look at the $3 billion reduction [in costs] that we talked about for 2023, 1 billion of that is in cost of sales and we’re well on our way to getting that billion dollars,” Gelsinger said.
Long-term investors have always closely watched how the company balances the near-term need to placate shareholders with the massive capital spending needed to stay competitive in the semiconductor manufacturing business.
If Intel is cutting costs and still needing to invest in chip factories to power its turnaround, analysts say it may want to reconsider its dividend. Intel spent $6 billion on dividends in 2022, but did not cut its dividend on Thursday.
Meanwhile, the company said it wants to cut $3 billion in costs for 2023 and analysts believe it wants to spend around $20 billion in capital expenditures to build out its factories.
Gelsinger was asked about this dynamic on Thursday.
“I’d just say the board, management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners and we are committed to maintaining a competitive dividend,” Gelsinger replied.
There was at least one bright spot for Intel on Thursday.
Mobileye, its self-driving subsidiary that went public during the December quarter, reported earlier in the day, showing adjusted earnings per share of 27 cents and revenue growth of 59%, to $656 million. It also forecast strong 2023 revenue of between $2.19 billion and $2.28 billion. Shares rose nearly 6% during regular trading hours Thursday.
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