The R&D World Index (RDWI) for the week ending August 12, 2022, closed at 2,554.82 for the 25 companies in the RDWI. The Index was up 2.56% (or 63.80 basis points) from the week ending August 5, 2022. Twenty-three of the 25 RDWI members gained value from 0.13% (Novartis) to 9.48% (General Motors). Two of the 25 RDWI members lost value last week from -3.32% (Johnson & Johnson) to -10.74% (Sanofi SA).
RDW Index member Microsoft, Redmond, Washington, announced last week that it was laying off 200 workers from its Modern Life Experiences (MLX) group, a customer-focused group created in 2018 with the goal of “winning back consumers.” The employees were told to look for other jobs within Microsoft within the next 60 days or face severance. Microsoft laid off 1% or 1,800 employees in July in a company-wide office and product division event. The company has also slowed hiring in its Windows, Teams and Office groups. The MLX team initially built the first version of the Family Safety apps for iOS and Android systems. It also launched Money in Excel, a template for automatically connecting bank, credit card, investments and load accounts to Excel. This app is currently scheduled to be shut down in June 2023. Other organizations which have laid off or slowed hiring in the current economic slowdown include Google, Meta (Facebook), Oracle, Twitter, Nvidia, Intel and Salesforce, among others.
Microsoft was noted as asking its development teams across the company to cut expenses as the company tries to control costs in the current economic environment. Cuts have been made in travel budgets, outside training, advertising, and company gatherings. Most of these typical costs were covered by the company in the past and are now often being paid for by group managers.
The U.S. Department of Energy (DOE), Washington, D.C., is looking for public input into how $675 million of R&D funding should best be spent for its Critical Materials R&D Demonstration and Commercialization Program. The program involves rare-earth elements, nickel, cobalt and lithium as they are utilized in manufacturing clean energy technologies from electric vehicle (EV) batteries, solar photovoltaic modules and wind turbines. The Request for Information (RFI) is open through September 9, 2022.
Following thousands of lawsuits from users of its baby powder made with talc, RDW Index member Johnson & Johnson, New Brunswick, New Jersey, announced last week that it will stop selling this product globally in 2023. The company stopped selling the product in the U.S. and Canada in 2020 amid safety concerns about one of its most famous and popular products. The company is transitioning from the talc-based product to an all-cornstarch-based baby powder portfolio.
The U.S. Department of Labor (DOL) announced last week that the Consumer Price Index (CPI) rose 8.5% in July from the same month in 2021, down from 9.1% in June. Price pressures for energy and used cars abated in July, while prices for groceries and dining out increased. This slowdown in price rate increases is likely not enough to temper future planned Federal Reserve interest rate increases, according to economic analysts.
A collaboration between RDW Index member Merck & Co., Kenilworth, New Jersey, and biotechnology startup Cerevance, Boston, was announced last week to research new treatments for Alzheimer’s Disease. Under the deal, Merck will pay Cerevance $25 million upfront and up to $1 billion more in success-based payments. Cerevance could also earn royalties on sales of drugs emerging from the collaboration. Cerevance has seen recent positive results from a mid-stage clinical trial it is developing for Parkinson’s disease patients.
Several semiconductor chip makers, including Micron Technology, Boise, Idaho, announced last week that they are preparing for a sharp slowdown in their sales, even as the semiconductor companies prepare to invest billions of dollars on new global device factories. Part of this reaction is due to auto makers becoming more cautious consumers of electronic devices after struggling for the past several years to secure adequate supplies. Advanced Micro Devices and Nvidia have also issued similar sales warnings over the past month.
The inflation bug has hit RDW Index member Ford Motor Company, Dearborn, Michigan, which last week announced 7% to 18% price increases just four months after it started shipping its highly anticipated electric F-150 Lightning pickup truck. The cheapest version of the Lighting will now start at about $47,000, about $7,000 higher than its originally promoted price tag. Ford stated its price adjustments were based on higher material costs and other factors. In July, Ford stated it had secured enough battery supplies to build 600,000 EVs globally by 2023.
U.S. shale oil producers are warning that inflationary pressures are leading them to increase their production spending. The producers are seeing substantial price increases in their drilling rigs, diesel-powered fracking units and steel for oil well inserts. A survey of frackers revealed budget increases due to inflation from 2% to 18% over last year.
More signs of slowing economies were revealed last week. In Russia, its gross domestic product declined by 4% in 2Q, according to data published by the country’s federal statistics agency. In the U.K., its GDP contracted by 0.6% in June while consumer spending fell by 0.2% and services activity fell by 0.4%. The Bank of England stated last week that the U.K. would enter a recession in the final three months of 2022 and won’t recover until 2024.
R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2020 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies) and ICT (9 companies) who invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ, NYSE and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World Index.