Friday 14/06/19

  1. In TECH NEWS, both Broadcom and Huawei suffer from the US ban while Facebook’s cryptocurrency gets closer to launch and Alilbaba gets closer to its Hong Kong listing
  2. In UK RETAIL NEWS, Morrisons rolls out fast delivery, Tesco’s sales growth slows, Majestic confirms multiple bidders and Arcadia wields the axe
  3. In INDIVIDUAL COMPANY NEWS, Tyson Foods gets on the meatless bandwagon
  4. In OTHER NEWS, I bring you the science behind why we yawn. For more details, read on…



So we look at both sides of the US ban on Huawei, Facebook closes in on its cryptocurrency launch and Alibaba closes in on its Hong Kong listing…

Broadcom to take $2billion hit from Huawei ban (Wall Street Journal, Asa Fitch) puts a figure on how much the US ban on exports to Chinese is costing as Broadcom said its sales would be $2bn lower annually. * SO WHAT? * Broadcom is one of the first chipmaking majors to quantify the financial impact of the ban and if it is indicative of what is to come elsewhere, smaller chip companies are bound to have it worse. Some, like Qorvo and Lumentum Holdings, have already lowered their quarterly revenue guidance as a result. Broadcom’s share price fell by 8% on the news while others like Qualcomm and Intel also fell. Chief exec Hock Tan warned that “The uncertainty of the [geopolitical] environment has put in place concerns about placing additional orders and active reduction of inventory out there”.

Huawei’s booming smartphone business is dealt a blow by US ban (Wall Street Journal, Dan Strumpf) shows the flip side of this as the world’s second biggest smartphone maker has had to postpone the launch of its new laptop as well as production in its PC business due to restrictions in buying US components like Intel chips and Microsoft Windows. * SO WHAT? * Huawei has been growing at breakneck speed over the years, powered by its offering of slick phones with quality camera tech at generally lower price points than Apple and Samsung. This growth was especially impressive given the general maturing of smartphone sales, but Huawei’s inclusion on the entity list is putting a stop to all that and the prospect of their phones not being able to update properly post the ban will certainly

hit sales hard. Consumer devices like handsets are the company’s biggest revenue generator, so this is a big deal. I have to say, even if this ban is lifted, Huawei’s reputation will be damaged for some time to come.

Meanwhile, Facebook’s new cryptocurrency, Libra, gets big backers (Wall Street Journal, AnnMaria Andriotis, Peter Rudegair and Liz Hoffman) highlights the heavy-hitters who are lining up to back its new cryptocurrency, Libra, that it will unveil next week and launch next year (I believe Libra is the official name of what had previously been referred to as “GlobalCoin”) that include the likes of Visa, Mastercard, PayPal and Uber. All of them are putting money together that will be used to fund the creation of a “coin” that will be pegged to a basked of proper currencies to avoid extremes in volatility experienced with other cryptocurrencies. * SO WHAT? * Bitcoin was born about ten years ago, but even now consumers hardly ever use it for “normal” transactions. When it’s up and running, Libra will be used across Facebook’s network and the internet more generally, bringing a newfound legitimacy to cryptocurrencies. It could go either way for the likes of Bitcoin or Ether, IMHO, because consumers could either abandon them for the more “legit” and stable Libra or there could be a halo effect of Libra that legitimises everything else. 

I have referred to this before but Alibaba’s $20bn Hong Kong listing to weather trade wars (Daily Telegraph, Hannah Boland) highlights the Chinese e-tailing giant’s latest step towards making a Hong Kong listing a reality as it filed the paperwork this week for a listing which many say will raise up to $20bn in new cash, although this amount isn’t official. * SO WHAT? * Although this hasn’t been said explicitly, Alibaba is no doubt making this move for a dual listing (it listed in New York in 2014) in order to give it distance from the US that will mitigate any collateral damage from the current US-China trade spat. It originally floated in New York because its listing rules were easier, but Hong Kong relaxed its listing rules last year in order to attract more tech companies.



Morrisons rolls out fast-delivery, Tesco sales disappoint, Majestic confirms bidder interest and Arcadia makes cut…

In a quick scoot around UK retailing today, Morrisons adds five cities to Amazon fast-delivery basket (The Times, Alex Ralph and Martin Strydom) heralds the expansion of a deal (called “Morrisons at Amazon”) between the two companies whereby customers get free delivery of groceries from Morrisons worth over £40 by Amazon within hours of placing the order. This service is currently available in Leeds, Manchester, Birmingham and some parts of London but will be extended to Glasgow, Newcastle, Liverpool, Sheffield and Portsmouth. Nice! * SO WHAT? * Is Amazon going to buy Morrisons and combine it with Whole Foods or what?!?

Tesco sales growth stalls as consumers tighten belts (Daily Telegraph, Michael O’Dwyer) highlights a slowdown in sales growth at the supermarket over the last quarter but it did say that it outperformed a “subdued” UK grocery market. Although growth had slowed, it still grew – for the

14th quarter in a row. Chief exec Dave Lewis remarked that “There’s some weakness in consumer sentiment in the UK. Clearly, part of that is down to the political situation. The other element is the weather”.

‘Multiple bidders’ for Majestic Wine stores (The Times, Dominic Walsh) gives us the latest on Majestic as it announced that it was suspending its final dividend but confirmed that it is in advanced talks with “multiple bidders” for its chain of retail stores. Majestic Wines owns Lay & Wheeler and Naked Wines in addition to its chain of stores and bidders for the latter are thought to include Opcapita, Fortress and Elliott Advisors. In essence, Majestic will change its name to Naked Wines, Lay & Wheeler will be sold separately while the shops will presumably still be called Majestic. Phew!

Then in Arcadia to cut head office jobs after staving off collapse with rescue plan (The Guardian, Sarah Butler) we see the beginnings of a major pruning operation at the owner of brands including Topshop, Topman, Evans, Miss Selfridge, Burton and Dorothy Perkins following the recent vote by creditors to go ahead with CVAs to keep Arcadia alive. So far, 50 stores are slated to close, 170 jobs will be cut at HQ and 1,000 shopfloor jobs are also likely to go. This is in addition to the 23 shops already targeted for closure. Will it all be enough??



Tyson gets on board with meatless…

In an interesting, but not-altogether unexpected development, Tyson Foods launches fightback against non-meat start-ups (Financial Times, Emiko Terazono) highlights a move by America’s biggest meat producer, Tyson Foods, to launch its own non-meat nuggets and burgers to take the fight to the likes of Beyond Meat and Impossible Foods. The company sold is stake (or “steak”??) in Beyond Meat just before the IPO (which was a bit silly in hindsight, given that Beyond’s share price has quintupled

since its flotation last month), but is now rejoining the fray with other “biggies” including Canada’s Maple Leaf Foods and Nestle in making efforts in alternative protein foods. Tyson’s Nuggets will be available in US retailers latest this summer and its burgers will follow on a bit later. It still has its hand in other alternative protein start-ups like MycoTechnology, Memphis Meats and Future Meat Technologies. * SO WHAT? * Yes, there is a lot of hype surrounding this area at the moment, but it IS real, the benefits are real and developments mean that these alternative protein sources are a REAL alternative. Will Tyson be able to “beat” the likes of Beyond with its superior production capabilities or will consumers trust Beyond more? Time will tell…



And finally, in other news…

I thought I’d leave you today with Why do we yawn? Contagious yawns help cool down the brain, scientists say (Newsweek, Kashmira Gander Well I never!