※ Global Morning Briefing is a roundup of international news compiled by The Seoul Economic Daily.
SpaceX Chief Executive Elon Musk formally confirmed his intention to pursue a merger with Tesla during the company's third-quarter earnings call. On the same day, SpaceX said revenue jumped 161% from a year earlier to $14.58 billion, turning a quarterly profit just four months after its listing.
Musk said a deal is not guaranteed but that a full merger makes sense given the two companies' semiconductor, artificial intelligence and software businesses. At shareholders' request, each company has formed a special committee made up mainly of outside directors, and Musk has recused himself citing conflicts of interest. Terafab, their chip joint venture, plans to produce test chips around May or June next year and begin mass production in the third quarter of 2028.
The earnings showed sharp gains in the AI business, which SpaceX reports as SI. Revenue in the segment reached $7.56 billion, a ninefold increase in a year, overtaking the Starlink-centered communications unit at $5.25 billion. Operating profit, however, was far higher in communications at $2.37 billion, against $431 million for AI. Overall operating profit came to $2.8 billion and net profit to $4.4 billion, both beating market expectations. Third-quarter capital spending was $19.6 billion and is expected to swell to between $35 billion and $40 billion this quarter. Musk projected annualized revenue of $500 billion to $1 trillion next year.
The key hurdle is approval from Tesla shareholders. Musk's stake in Tesla stands at just 19.8%, and disagreements could emerge over the share exchange ratio. Tesla's market capitalization is currently about $1.5 trillion and SpaceX's $2 trillion, for a combined $3.5 trillion. Fortune estimated that Musk would hold roughly one-third of the merged company.
Greece Swings to Surplus While France Sinks Deeper Into Deficit
Southern European countries once called the continent's problem children have become fiscal front-runners, while France, long a leader of the eurozone, is being shaken by deteriorating public finances. On the 20th, the yield on France's 10-year government bond rose above 5% during trading for the first time since 2002.
France's national debt ratio is projected at 119.3% this year and 121.7% next year. Last year's fiscal deficit was 5.1% of gross domestic product, or 152.5 billion euros, far above the European Union's 3% threshold. Greece and Portugal, by contrast, posted fiscal surpluses of 1.7% and 0.7%. On the same day, 10-year yields stood at 4.248% for Greece, 3.884% for Portugal and 4.516% for Italy, all below France.
Those countries endured public spending cuts, tax increases and labor market overhauls as the price of bailouts, with unemployment at one point exceeding 27% in Greece and 16% in Portugal. French government spending equals 57.2% of GDP, 7.4 percentage points above the eurozone average, but efforts to cut welfare have run into public resistance and a divided parliament. President Emmanuel Macron's pension overhaul, which would raise the retirement age to 64 from 62, met large-scale strikes, and Prime Minister Sebastien Lecornu suspended its implementation. The tax burden ratio of 43.5% also exceeds the Organisation for Economic Co-operation and Development average of 34.1%, leaving little room for higher taxes.
Safety nets are scarce as well. Unlike in 2012, when former European Central Bank President Mario Draghi calmed markets, the ECB now attaches strict conditions to government bond purchases. There are also concerns that Japanese capital could flow out as the Bank of Japan raises rates. Professor Paul Krugman said France may have grown too large even to rescue. The French government plans to deploy military troops on the 24th in preparation for further mass protests.
Losing Ground to TikTok and Shorts, Netflix Finds Binge-Watching No Longer Works
Netflix beat market expectations on third-quarter net profit and earnings per share but disappointed investors with its slowest revenue growth in three years. In after-hours trading immediately following the earnings release on the 20th, the stock fell about 6% to $64.66, more than 40% below its level a year earlier.
Third-quarter net profit was $3.66 billion, up about 44% from a year earlier, and earnings per share came to $0.87, above the $0.82 estimate. Revenue, however, rose just 12% to $12.9 billion, in line with expectations. The advertising business also fell short, prompting the company to cut its full-year ad revenue forecast to $2.7 billion from $3 billion, which it attributed to delays in launching some ad product features. Netflix projected fourth-quarter revenue of $13.44 billion, up more than 11%, but lowered its annual revenue outlook to $51.1 billion, a 13% increase.
Market watchers say the competitive landscape itself has shifted. YouTube and TikTok do not pay directly for content production, and tools such as Seedance, the AI video generation model ByteDance unveiled in June, can create a 30-second clip from a single prompt. Some analysts say viewers accustomed to short videos are reluctant to binge-watch long-form series.
Netflix nevertheless says it will continue large-scale investment in flagship series, films, live events and games. At the same time, it has begun cutting 1,000 jobs, or about 6% of its workforce, its largest reduction in four years, and replaced Chief Content Officer Bela Bajaria, who had overseen content for a decade, with Peter Rice, a veteran of Disney and 21st Century Fox.
