Friday 09/08/19

  1. In RIDE-HAILING NEWS, Lyft prospers while Uber has a ‘mare
  2. In STREAMING/ONLINE NEWS, UK consumers push through the £100m a week barrier on digital entertainment services, the esports market continues to boom and Roku punches above its weight
  3. In INDIVIDUAL COMPANY NEWS, Samsung works with Windows, Carlsberg raises profit guidance and KraftHeinz has a shocker
  4. In OTHER NEWS, I bring you some cathedral fun…



So Lyft delights and Uber disappoints…

Lyft: theory test (Financial Times, Lex) follows on from what I said yesterday about Lyft’s latest results, which showed positive momentum for the ride-hailing company that benefits from being “not Uber”. However, there are some clouds on the horizon as legislators are currently considering whether to classify their drivers as employees – which will increase Lyft’s costs and potentially negate any price rises or scaling back of sales and marketing. Although the company is sticking with the US and Canada, avoiding more broad-based geographical expansion and throwing vast amounts of money at the world of food delivery, future profitability will very much depend on it being able to charge much higher prices and/or being able to rely on a fleet of driverless vehicles. I think that most people would agree that neither of those things is likely to happen in the near term. In the meantime, the company will stay permanently in loss territory.

Uber posts record quarterly loss of $5bn after listing charge (Daily Telegraph, Olivia Rudgard) highlights the cost of a stock market flotation for the already-loss making company as $3.9bn of its loss was a charge related to stock-based compensation to staff. The ride-hailer also unveiled its slowest-ever growth rate, which undershot analyst expectations and so the company’s share price fell by 12% in after-hours trading – a record low since its May IPO. * SO WHAT? * I really think that ride-hailers (and especially Uber, because of its geographic reach and exposure to other expensive businesses like food delivery) are a massive and never-ending money pit. They bang on about expansion and promise great things, but the fact is they don’t make any money! Scale is a key factor in reducing costs, but when you have a company like Uber with a bro-culture history, an obsession with food delivery and a tendency to funnel vast amounts of money into things that may-or-may-not work (like driverless taxis) surely you just have a recipe for disaster that will collapse very quickly if people get tired of throwing money at it. At least Lyft is sticking to its knitting and keeping things real in terms of geographical expansion – mind you, even they are operating on fantasy and need to put their fares up to proper levels sharpish.



UK consumers’ love for digital entertainment grows, the esports market continues to boom and Roku’s David does well against the Goliaths…

Streaming helps UK pass £100m digital milestone (The Guardian, Mark Sweney) cites the latest figures from the Entertainment Retailers Association (ERA) which show that UK consumers spent over £100m per week on digital entertainment services, including Netflix, Amazon, Spotify and Apple Music over the first half of this year. This is especially notable considering that the first half is supposed to be the weaker half for entertainment sales (the second half includes Christmas, for instance!). Digital music and video sales are more than compensating for the continued decline in CD and DVD sales – echoing the trend in video games as digital downloads are more than making up for sales of physical copies of games. * SO WHAT? * I don’t think any of you would be surprised by this, but the report does give some concrete evidence of the trend we all probably expected anyway.

Similarly, Booming European esports market pulls in £212m revenue (Daily Telegraph, Matthew Field) cites a report from Deloitte which confirms a trend we all probably suspected – that the market for esports is growing, as it is

now €50m higher than it was in 2017. Tournaments for games such as Fortnite pulled in over 86m in Europe last year and this audience is forecast to rise to 105m next year. The report also suggests that European revenues are expected to shoot up by 23% by 2023. * SO WHAT? * This is an area with huge potential. I also think that the advent of 5G – and particularly the speeds it offers – will  turbo-charge the popularity of gaming on all devices. Having big tournaments will keep gamers enthused and make them want to play more so they too can hit the big time. We are in the early stages of something really massive!

In Tiny Roku fends off Amazon and thrives by selling ads (Wall Street Journal, Abigail Summerville) we see that the streaming device maker reported quarterly earnings above expectations on the back of particularly strong advertising sales. Although its media-streaming sticks and and boxes continue to outsell those from the likes of Apple, Google and Amazon, advertising revenues are where it’s at. The company’s share price shot up by 20% after the earnings announcement. * SO WHAT? * The beauty for Roku is that it doesn’t have its own content, so it can pretty much partner up with anyone. Roku already has deals in place with Netflix, Amazon Prime, Hulu and others while services that are on the cusp of launching (like Disney+, Apple TV+ and HBO Max) are expected to jump on board the Roku fun bus. For the moment, Roku hasn’t strayed much from its own backyard in the States, but it sounds like it is considering an international expansion strategy. I think that it looks very well placed to take advantage of the ongoing streaming frenzy!



Samsung tries to go seemless, Carlsberg raises a glass and KraftHeinz has a shocker…

Samsung phones to share seamlessly with Windows PCs (Financial Times, Tim Bradshaw) shows that Samsung has announced a broad alliance with Microsoft that will mean users will be able to wirelessly synchronise files and notifications to their Windows PC (much like Apple does with its devices). Samsung will also promote Microsoft’s apps like OneDrive and Outlook email. Samsung also unveiled its new Note 10. The company is extending its lead as the world’s biggest smartphone maker, according to data from IHS Markit, with Apple falling into the #4 spot behind China’s Huawei and Oppo. * SO WHAT? * This is an important development as the ability of Apple’s products to operate seemlessly across apps and devices has been key to keeping its customers loyal. No doubt it is hoped that this tie-up will do the same for Samsung and Microsoft. This will be a powerful partnership IMO.

Carlsberg cheers investors as it raises profit guidance (Financial Times, Richard Milne) heralds reason for cheer as shares in the world’s #3 brewer rose by 10% yesterday on the back of a solid performance and the hiking up of its

guidance for the full year. The company has been in turnaround mode under its Dutch chief exec Cees’t Hart, who has built up a reputation for underpromising and over-delivering on profit guildance, and is reaping the benefits of concentrating on craft beer and Asia. * SO WHAT? * Carlsberg’s upbeat assessment caught analysts and investors by surprise as they were still reeling from news of Heineken’s first half profit-miss only a few days previously. It certainly seems to be bucking the trend of European companies reigning in profit guidance due to ongoing economic uncertainty and wobbles in global trade.

Kraft Heinz writes down $1.2billion as brands wither (Wall Street Journal, Heather Haddon and Micah Maidenburg) highlights more disappointment for the food making giant as it announced that sales had fallen again and that it had to write down the value of its brands for the second time in six months. The stock was down 9% yesterday, but an altogether chunkier 34% this year. * SO WHAT? * Kraft Heinz is not alone in its gloom as General Mills, Kellog Co. and Campbell Soup Co are just some of its competitors who have also been suffering from an overall trend of consumers moving towards healthier and less-processed food. Competition has also been fierce from own-label products and higher ingredient and input costs. The company has tried to launch new products and marketing campaigns in the last few months but I guess it is too soon to see the benefits at the moment.



And finally, in other news…

I thought I’d leave you today with ways to have fun in a cathedral in Norwich Cathedral: Helter-skelter offers new experience (BBC, which follows on from the recent Rochester Cathedral’s crazy golf course divides opinion (BBC, Fun in cathedrals?? What’s going on??

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Some of today’s market, commodity & currency moves (as at 0854hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq**DAX *CAC-40 *Nikkei **Shanghai **
7,286 (+1.21%)26,378 (+1.43%)2,938 (+1.88%)8,03911,845 (+1.68%)5,388 (+2.31%)20,685 (+0.44%)2,775 (-0.71%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)