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Schwartz to retire from Goldman, Solomon to serve as sole president

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David Solomon, co-president and co-chief operating officer of Goldman Sachs Group Inc., gives a thumbs-up during a discussion at the Goldman Sachs 10,000 Small Businesses Summit in Washington, D.C., on Tuesday, Feb. 13, 2018.

Andrew Harrer | Bloomberg | Getty Images

David Solomon, co-president and co-chief operating officer of Goldman Sachs Group Inc., gives a thumbs-up during a discussion at the Goldman Sachs 10,000 Small Businesses Summit in Washington, D.C., on Tuesday, Feb. 13, 2018.

Goldman began actively considering Blankfein’s successor after he was diagnosed with a treatable form of lymphoma in 2015, for he received chemotherapy and was cancer-free by October 2016. He has not indicated a time when he will step down, and there’s been speculation that he could hold off until 2019 and perhaps stay on as chairman even after leaving the CEO position.

The decision was made at a Feb. 20-21 board meeting, sources told CNBC.

“The board has been intensely focused on this for a couple years,” said a source familiar with the board’s thinking. Blankfein will be leaving “sooner rather than later,” and no one else has been seriously considered as his successor beyond Schwartz and Solomon, the source added.

Goldman shares, which have underperformed for much of Blankfein’s tenure, were up 1.4 percent after the announcement to a record high. Analysts generally reacted positively to the news.

“David Solomon ran the best growing part of Goldman for the decade before assuming the COO position 15 months ago,” Wells Fargo analyst Mike Mayo said in a note. “The challenge and opportunity, in our opinion, is for Goldman to better monetize its corporate CEO relationships for deeper activities with both banking and trading.

Vertical Group analyst Dick Bove, who has called repeatedly for Blankfein’s ouster, said the moves announced Monday showed that the board “understands that the company was pursuing the wrong business model. … The firm is now likely to go ‘all-in’ to investment banking and lending. Selecting David Solomon to lead this new charge is absolutely the right decision. He is a highly qualified banker in a firm with a superb investment banking business.”

KBW analyst Brian Kleinhanzl added, “We have met with David Solomon in the past and we believe him to be a capable leader at GS with significant experience running the investment bank and a longstanding member of GS’ management committee.”

With trading volumes drying up and regulators still honing in on big banks, it’s been a difficult time for Wall Street institutions like Goldman.

The firm is expected to refine its focus on investment banking and has been encouraged to take over small competitors to expand its base.

“Lloyd managed to steer it fine,” said Christopher Whalen, head of Whalen Global Advisors. “If you look back over that period, they really didn’t take huge lumps and they managed to avoid most of the risk.”

Schwartz has been with Goldman for 20 years, moving from securities and investment banking up to the chief financial officer position and most recently as president and co-chief operating officer with Solomon.

Solomon, who has been with Goldman since 1999, served 10 years as co-head of the investment banking division before ascending to his current position. (Outside Goldman, he’s also known as a DJ D-Sol.)

“We expect the transition to go smoothly,” said Charles Peabody, an analyst at Compass Point Research. “We expect no change in strategic direction. If there is a risk, it’s largely likely to be confined to cultural, and not financial or strategic, issues.”

—With reporting by Andrew Ross Sorkin.



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Tesla hires new chief financial officer for China

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Elon Musk, Chairman, CEO and Product Architect of Tesla Motors, addresses a press conference to declare that the Tesla Motors releases v7.0 System in China on a limited basis for its Model S, which will enable self-driving features such as Autosteer for a select group of beta testers on October 23, 2015 in Beijing, China.

VCG | Getty Images

Elon Musk, Chairman, CEO and Product Architect of Tesla Motors, addresses a press conference to declare that the Tesla Motors releases v7.0 System in China on a limited basis for its Model S, which will enable self-driving features such as Autosteer for a select group of beta testers on October 23, 2015 in Beijing, China.

Tesla Inc on Friday announced a number of key executive hires including former GE and General Motors executive James Zhou as its China CFO and Neeraj Manrao, a former Apple executive, as director of energy manufacturing.

Zhou previously served as CFO for Asia Pacific and India for Ingersoll Rand.

“We’re excited to welcome a group of such talented people as we continue to ramp (up) Model 3,” Tesla said in a blog post, adding it would announce more hires in the coming days.

China contributed around 17 percent of Tesla’s total revenue in 2017 and the electric carmaker has said it plans to build a gigafactory in the country.

The company on Wednesday slashed up to $14,000 off its Model X in China after Beijing announced major tariff cuts for imported automobiles.

Tesla has seen the departure of several senior executives and is also flattening its management structure as it seeks to improve efficiency and clear up production bottlenecks related to its new Model 3 sedan.



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Foot Locker shares are jumping 16% after a blowout earnings report

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Shoppers and pedestrians pass in front of a Foot Locker store on the Third Street Promenade in Santa Monica, California.

Patrick T. Fallon | Bloomberg | Getty Images

Shoppers and pedestrians pass in front of a Foot Locker store on the Third Street Promenade in Santa Monica, California.

Shares of shoe retailer Foot Locker surged Friday after the company reported earnings well ahead of Wall Street expectations.

The stock rallied more than 16 after the New York-based company reported adjusted earnings per share at $1.45 for the first quarter, above consensus estimates of $1.25 from FactSet.

The shoe store posted revenue of $2.03 billion, which also beat forecasts.

“The flow of premium product continues to improve, with increasing breadth and depth in the most sought-after styles from our key vendors,” CEO Richard Johnson said in a statement. “This led to first quarter results which were above our expectations. With the strength of our strategic vendor partnerships and our central position in youth culture, we continue to believe that we are poised to inflect to positive comparable-store sales growth.”

Foot Locker has been in hot water in recent months as Wall Street grows increasingly concerned with retailers. Fears that e-commerce giant Amazon may seek to expand into apparel have made it a tough year for Foot Locker shares, now down more than 22 percent over the past 12 months.

Last June, popular shoemaker Nike confirmed plans to sell a limited product assortment on Amazon’s U.S. website.

According to a 2017 survey by UBS, 13 percent of respondents indicated that they prefer to purchase Nike products on Amazon compared with the 9 percent who said they prefer to purchase the same products at Foot Locker.



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Roku shares jump after short-seller Citron reverses negative call

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People pass by a video sign display with the logo for Roku Inc, a Fox-backed video streaming firm, that held it's IPO at the Nasdaq Marketsite in New York, U.S., September 28, 2017.

Brendan McDermid | Reuters

People pass by a video sign display with the logo for Roku Inc, a Fox-backed video streaming firm, that held it’s IPO at the Nasdaq Marketsite in New York, U.S., September 28, 2017.

Shares of Roku spiked Friday after short-seller Citron Research said it is reversing its negative view on the maker of streaming players, given a major shift away from the traditional cable television subscription model.

“The move to cutting the cord and [over-the-top] advertising is real and it is a megatrend that Citron not only does not want to be short, but at this valuation I want to be long,” the research firm, headed by Andrew Left, said in a report Friday.

Roku shares briefly climbed more than 4.5 percent before paring gains to trade around $37 a share. The stock is down 28 percent for the year so far.

After the company went public in late November, the stock soared above $50 and Citron said it tweeted the stock would fall back to $28.

“BUT NOW EVERYTHING HAS CHANGED, AND IT IS TIME TO REEVALUATE,” the report said, in red capital letters.



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