What We Learned This Week

Cleaning House: David Calhoun, the CEO of Boeing, is set to step down at the end of this year, as announced by the company. Additionally, the board chairman will not seek reelection, and the president of its commercial airlines division will retire immediately. This move signals a significant restructuring within the company, aimed at addressing recent quality issues and reputational damage, notably highlighted by the Alaska Airlines incident. Pressure from major customers for substantial changes has been mounting, evidenced by recent meetings between top airline executives and Boeing's board. Regardless of Calhoun's leadership qualities, this was the only option. The focus now shifts to who will fill the CEO position, a critical decision for Boeing's future trajectory. It will be a thankless job (at least in the near term) with no room for error. Despite challenges, Boeing retains a strong market position, but this is a make-or-break moment.

Apple’s Walled Garden Under Fire: One recent headline-making waves is the lawsuit filed by the DOJ and several states against Apple, alleging monopolistic practices. The complaint accuses Apple of leveraging its market dominance to stifle competition and promote so-called “superapps”, adversely affecting consumer experience and interoperability with other platforms (e.g., the green text bubble issue). A favorable ruling could potentially reshape the Apple ecosystem or even lead to the company's breakup. Apple has responded by emphasizing its commitment to delivering exceptional user experiences and argues that legal intervention would impede its ability to maintain these standards. While issues like the green bubble may irk some users, the broader concern is whether consumers truly desire this intervention. This lawsuit appears to be driven more by political motives than genuine consumer advocacy, likely leading to protracted legal battles before any resolution is reached. Ultimately, we would expect Apple to weather this storm.

Donut Burgers: This week, McDonald's was in the news with the announcement of its plan to introduce Krispy Kreme doughnuts across all its locations by the end of 2026. After testing the concept in select markets over the past year, it seems to have met the criteria for a broader rollout and partnership. This development is significant in the ongoing competition for dominance during breakfast hours and represents a major win for Krispy Kreme (its stock jumped 30%+ on the news). McDonald's has long sought ways to enhance its higher-margin morning specialty drinks and coffee business, making this partnership a potentially lucrative opportunity. Despite increasing health consciousness, Krispy Kreme has maintained strong consumer demand and market presence. However, similar collaborations, like Wendy's introduction of Cinnabon in its breakfast offerings, have seen varying levels of success. Given McDonald's franchise-heavy structure, the rollout will likely take time, but its scale and reach may facilitate its success.