Connect with us

Published

on

Signage at a Byju’s Tuition Center, operated by Think & Learn Pvt., in Mumbai, India, on Friday, Feb. 2, 2024. A unit of Byju’s, once one of India’s hottest tech startups, was put into bankruptcy in the US by a court-appointed agent who took over the shell company after it defaulted on $1.2 billion in debt. Photographer: Dhiraj Singh/Bloomberg via Getty Images

Dhiraj Singh | Bloomberg | Getty Images

Byju’s, once India’s most valuable startup, has seen a sharp reversal in its fortunes after a series of setbacks, including alleged accounting irregularities and purported mismanagement.

Valued at $22 billion in 2022, the Indian edtech startup’s valuation has since plummeted 95% after investors cut their stakes in multiple rounds. It was most recently slashed to $1 billion, after BlackRock downsized its holdings in Byju’s last month, according to media reports.

The company, which offers services ranging from online tutorials to offline coaching, attracted billions of dollars from investors across the world during the Covid-19 pandemic when online education services were on high demand.

Last Friday, major Byju’s shareholders, including Netherlands-based global investment group Prosus, voted to oust founder Byju Raveendran as chief executive officer.

Investors who attended an extraordinary general meeting “unanimously passed all resolutions put forward for vote,” which also sought to change the board, according to a statement Prosus sent CNBC.

“These included a request for the resolution of the outstanding governance, financial mismanagement and compliance issues at Byju’s; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of [Think & Learn Private Limited]; and a change in leadership of the company,” said the statement issued last Friday.

However, Byju’s rejected the resolutions, saying the extraordinary general meeting was “invalid and ineffective” due to a low turnout attended only by a “small cohort of select shareholders.”

“The passing of the unenforceable resolutions challenges the rule of law at worst,” the Bengaluru-headquartered firm said in a statement to CNBC.

“Byju’s emphasizes that the Honorable Karnataka High Court had granted interim relief, clearly stating that any decisions made during the meeting would not be given effect until the next hearing,” it said.

“As the founders did not participate in the meeting, the quorum was never legitimately established, rendering the resolutions null and void.”

History of Byju’s

In 2011, Raveendran — a teacher and engineer — founded Think and Learn Private Limited, the parent company of Byju’s. Raveendran was born into a family of teachers in Azhikode, a small village in southern India.

The company claimed that the launch of its flagship product, Byju’s — The Learning App, saw two million downloads within three months of its rollout in 2015. The app offers interactive videos, games and quizzes to help students with everyday classes as well as exam preparation.

The Covid-19 pandemic brought exponential growth to Byju’s when traditional classrooms shuttered, leading to skyrocketing demand for online learning.

In November, Byju’s co-founder Divya Gokulnath told CNBC the company had more than 100 million monthly students on its platform.

Byju’s growth attracted global investors and significant funding rounds including a $1.2 billion in debt financing in November 2021, according to company database service Crunchbase.

Byju's co-founder on the Indian tech startup's turnaround plan

Flush with funds, Byju’s went on an acquisition spree between 2017 and 2021.

Some of Byju’s biggest acquisitions include Aakash Educational Services, a leading test-prep company in India, which it reportedly paid about $950 million for in 2021.

Other strategic acquisitions include U.S-based kids’ digital reading platform Epic ($500 million), educational games maker Osmo ($120 million) and online coding school WhiteHat Jr.

“2022 would be the year of maximum acquisitions, nine big ones. So the pandemic was great, because it solved the biggest challenge of people not knowing about how online education can be a part of mainstream learning,” Gokulnath told CNBC in November last year.

“But the disadvantage was also that we had to grow at a frenetic pace. We had to grow to ensure that we were able to meet the demand,” she added.

So what went wrong?

The end of pandemic restrictions saw a slowdown in online learning and Byju’s had to let go of at least 1,000 employees in June last year, according to tech jobs tracker layoffs.fyi.

In the same month, the company’s auditor Deloitte and three of its prominent board members severed ties with Byju’s, as questions loomed around the company’s financial health and governance practices, according to a Reuters report.

Byju’s filed its financials for 2022 in November last year, after a year-long delay due to governance issues and its auditor’s resignation. Operating losses came to 24 billion Indian rupees (about $290 million) for its core online education business.

Byju's $300mn acquisition of coding startup WhiteHat Jr. is a 'no-brainer': Byju's CEO

“One thing that we should have focused on earlier is governance,” Gokulnath told CNBC in the November interview. “That’s something that we’re constantly building on to the next one year. I’m hopeful that we’re also able to stand on the governance side.”

Byju’s has reportedly struggled to repay a $1.2 billion loan and is said to be struggling with staff salaries as well. The firm said in January it is raising a $200 million rights issue of shares to clear “immediate liabilities” and for other operational costs.

The company’s U.S. unit Alpha filed for Chapter 11 bankruptcy proceedings in a Delaware court on Feb. 1.

Byju’s did not respond to CNBC’s request for comment.

On whether Byju’s has lost the confidence of shareholders, Gokulnath said in November: “We would like to believe that we have not, because at all time, we’ve kept the interest of our students, parents, employees and shareholders in mind and what we are doing, we are doing to build this back together.”

Continue Reading

Technology

Trump aims to cut $6 billion from NASA budget, shifting $1 billion to Mars-focused missions

Published

on

By

Trump aims to cut  billion from NASA budget, shifting  billion to Mars-focused missions

The Trump administration has floated a plan to trim about $6 billion from the budget of NASA, while allocating $1 billion of remaining funds to Mars-focused initiatives, aligning with an ambition long held by Elon Musk and his rocket maker SpaceX.

A copy of the discretionary budget posted to the NASA website on Friday said that the change focuses NASA’s funding on “beating China back to the Moon and on putting the first human on Mars.”

NASA also said it will need to “streamline” its workforce, information technology services, NASA Center operations, facility maintenance, and construction and environmental compliance activities, and terminate multiple “unaffordable” missions, while reducing scientific missions for the sake of “fiscal responsibility.”

Janet Petro, NASA’s acting administrator, said in an agency-wide email on Friday that the proposed lean budget, which would cut about 25% of the space agency’s funding, “reflects the administration’s support for our mission and sets the stage for our next great achievements.”

Petro urged NASA employees to “persevere, stay resilient, and lean into the discipline it takes to do things that have never been done before — especially in a constrained environment,” according to the memo, which was obtained by CNBC. She acknowledged the budget would “require tough choices,” and that some of NASA’s “activities will wind down.”

The document on NASA’s website said it’s allocating more than $7 billion for moon exploration and “introducing $1 billion in new investments for Mars-focused programs.”

SpaceX, which is already among the largest NASA and Department of Defense contractors, has long sought to launch a manned mission to Mars. The company says on its website that its massive Starship rocket is designed to “carry both crew and cargo to Earth orbit, the Moon, Mars and beyond.”

Musk, who is the founder and CEO of SpaceX, has a central role in President Donald Trump’s administration, leading an effort to slash the size, spending and capacity of the federal government, and influencing regulatory changes through the Department of Government Efficiency (DOGE).

Musk, who frequently makes aggressive and incorrect projections for his companies, said in 2020 that he was “highly confident” that SpaceX would land humans on Mars by 2026.

Petro highlighted in her memo that under the discretionary budget, NASA would retire the SLS (Space Launch System) rocket, the Orion spacecraft and Gateway programs.

It would also put an end to its green aviation spending and to its Mars Sample Return (MSR) Program, which sought to use rockets and robotic systems to “collect and send samples of Martian rocks, soils and atmosphere back to Earth for detailed chemical and physical analysis,” according to a website for NASA’s Jet Propulsion Laboratory.

Some of the biggest reductions at NASA, should the budget get approved, would hit the space agency’s space science, Earth science and mission support divisions.

Petro didn’t name any specific aerospace and defense contractors in her agency-wide email. However SpaceX, ULA and Jeff Bezos’ Blue Origin are positioned to continue to conduct launches in the absence of the SLS. Boeing is currently the prime contractor leading the SLS program.

“This is far from the first time NASA has been asked to adapt, and your ability to deliver, even under pressure, is what sets NASA apart,” she wrote.

President Trump’s nominee to lead NASA, tech entrepreneur Jared Isaacman, still has to be approved by the U.S. Senate. His nomination was advanced out of the Senate Commerce Committee on Wednesday.

WATCH: CNBC’s interview with NASA’s astronauts on their nine months in space

Continue Reading

Technology

Temu halts shipping direct from China as de minimis tariff loophole is cut off

Published

on

By

Temu halts shipping direct from China as de minimis tariff loophole is cut off

Nurphoto | Nurphoto | Getty Images

Chinese bargain retailer Temu changed its business model in the U.S. as the Trump administration’s new rules on low-value shipments took effect Friday.

In recent days, Temu has abruptly shifted its website and app to only display listings for products shipped from U.S.-based warehouses. Items shipped directly from China, which previously blanketed the site, are now labeled as out of stock.

Temu made a name for itself in the U.S. as a destination for ultra-discounted items shipped direct from China, such as $5 sneakers and $1.50 garlic presses. It’s been able to keep prices low because of the so-called de minimis rule, which has allowed items worth $800 or less to enter the country duty-free since 2016.

The loophole expired Friday at 12:01 a.m. EDT as a result of an executive order signed by President Donald Trump in April. Trump briefly suspended the de minimis rule in February before reinstating the provision days later as customs officials struggled to process and collect tariffs on a mountain of low-value packages.

Read more CNBC tech news

The end of de minimis, as well as Trump’s new 145% tariffs on China, has forced Temu to raise prices, suspend its aggressive online advertising push and now alter the selection of goods available to American shoppers to circumvent higher levies.

A Temu spokesperson confirmed to CNBC that all sales in the U.S. are now handled by local sellers and said they are fulfilled “from within the country.” Temu said pricing for U.S. shoppers “remains unchanged.”

“Temu has been actively recruiting U.S. sellers to join the platform,” the spokesperson said. “The move is designed to help local merchants reach more customers and grow their businesses.”

Before the change, shoppers who attempted to purchase Temu products shipped from China were confronted with “import charges” of between 130% and 150%. The fees often cost more than the individual item and more than doubled the price of many orders.

Temu advertises that local products have “no import charges” and “no extra charges upon delivery.”

The company, which is owned by Chinese e-commerce giant PDD Holdings, has gradually built up its inventory in the U.S. over the past year in anticipation of escalating trade tensions and the removal of de minimis.

Shein, which has also benefited from the loophole, moved to raise prices last week. The fast-fashion retailer added a banner at checkout that says, “Tariffs are included in the price you pay. You’ll never have to pay extra at delivery.”

Many third-party sellers on Amazon rely on Chinese manufacturers to source or assemble their products. The company’s Temu competitor, called Amazon Haul, has relied on de minimis to ship products priced at $20 or less directly from China to the U.S.

Amazon said Tuesday following a dustup with the White House that had it considered showing tariff-related costs on Haul products ahead of the de minimis cutoff but that it has since scrapped those plans.

Prior to Trump’s second term in office, the Biden administration had also looked to curtail the provision. Critics of the de minimis provision argue that it harms American businesses and that it facilitates shipments of fentanyl and other illicit substances because, they say, the packages are less likely to be inspected by customs agents.

— CNBC’s Gabrielle Fonrouge contributed to this report.

WATCH: Trump tariffs mean higher prices, big losses for Amazon sellers

Trump tariffs are raising prices on Amazon and threatening to ruin U.S. sellers who source in China

Continue Reading

Technology

Jeff Bezos discloses plan to sell up to $4.8 billion in Amazon stock

Published

on

By

Jeff Bezos discloses plan to sell up to .8 billion in Amazon stock

Jeff Bezos, founder and executive chairman of Amazon and owner of The Washington Post, takes the stage during The New York Times’ annual DealBook Summit, at Jazz at Lincoln Center in New York City, Dec. 4, 2024.

Michael M. Santiago | Getty Images

Amazon founder Jeff Bezos plans to sell up to 25 million shares in the company over the next year, according to a financial filing on Friday.

Bezos, who stepped down as CEO in 2021 but remains Amazon’s top shareholder, is selling the shares as part of a trading plan adopted on March 4, the filing states. The stake would be worth about $4.8 billion at the current price.

The disclosure follows Amazon’s first-quarter earnings report late Thursday. While profit and revenue topped estimates, the company’s forecast for operating income in the current quarter came in below Wall Street’s expectations.

The results show that Amazon is bracing for uncertainty related to President Donald Trump’s sweeping new tariffs. The company landed in the crosshairs of the White House this week over a report that Amazon planned to show shoppers the cost of the tariffs. Trump personally called Bezos to complain, and Amazon clarified that no such change was coming.

Bezos previously offloaded about $13.5 billion worth of Amazon shares last year, marking his first sale of company stock since 2021.

Since handing over the Amazon CEO role to Andy Jassy, Bezos has spent more of his time on his space exploration company, Blue Origin, and his $10 billion climate and biodiversity fund. He’s used Amazon share sales to help fund Blue Origin, as well as the Day One Fund, which he launched in September 2018 to provide education in low-income communities and combat homelessness.

WATCH: Amazon has levers to pull with tariffs

Amazon has 'levers' to pull in tariff war, says strategist

Continue Reading

Trending