- In TECH NEWS, China bans Microsoft’s Bing and Apple cuts staff working on Project Titan
- In CARS NEWS, Ford’s profits get dinged and JLR announces a production shut down
- In RETAIL NEWS, Starbucks sees sales growth, New Look slides deeper and shopping centre owner Capital & Regional cites a fall in the value of its portfolio
- In OTHER NEWS, I bring you some epic shoe throwing. For more details, read on…
So China removes the last foreign search engine and Apple cuts staff from its “secret” division…
China blocks Bing access in curb on last foreign search engine (Financial Times, Yuan Yang) heralds the latest development in China’s clampdown on access to information as Microsoft’s Bing search engine has now been blocked nine years after Google quit the country in 2010. It has become the latest American tech company to be shut out in China since WhatsApp was blocked in 2017. Apparently, state-owned telecoms company China Unicom got an order from the government to block Bing for “illegal content”, a blanket category to justify censorship. * SO WHAT? * Even though Bing only had a 2% market share in China versus local hero Baidu with 70%, I guess it’s the idea of the state having such overt control over information access for its citizens that’s concerning. No doubt this is all part of the whole US-China trade war – and China is turning the screws. A pain for Microsoft, though.
In Apple’s self-driving car project stalls (Daily Telegraph, Tom Hoggins) we see that Apple has axed 200 staff from its super-secretive self-driving car team, known internally as “Project Titan”. The project was said to have involved over 5,000 employees at its height directly or indirectly, but it seems that the project has been subject to some internal shuffling, or as an Apple spokesman put it, “As the team focuses their work on several key areas for 2019, some groups are being moved to projects in other parts of the company, where they will support machine learning and other initiatives, across all of Apple”. * SO WHAT? * This is no great shakes from an Apple perspective, but I think it is somehow indicative of just how difficult things really are with driverless vehicles. I continue to believe that we are YEARS away from any semblance of it being widely available. I think that, with regard to cars, hybrid is now and for the next five years, electric in the next five to ten years (and by that, I mean PROPERLY adopted, not just by the few) and driverless somewhere towards the back end of that. Tech FROM driverless, however, will continue to drip-feed its tech to “normal” cars in the form of improving driver aids.
Ford takes a beating and Jaguar Land Rover announces a shut down…
Ford profits halve in 2018 as losses in China and Europe bite (Financial Times, Patti Waldmeir) shows how weaknesses in two major markets dragged the company’s profits down by over 50% last year, in complete contrast to the company’s profitable domestic business. Bob Shanks, Ford’s CFO, had a difficult year in 2018 as he had to deal with $750m in tariff-related costs, $1.1bn in commodity costs, $750m in adverse currency moves and $775m related to Takata airbag recalls. Chief exec Jim Hackett talked a good game for 2019 but didn’t really give many details about how this was going to happen. * SO WHAT? * You can see why Ford announced its recent alliance with VW given its weakness in Europe. Car sales in Europe and China look like they will continue to be weak and so unless consumer confidence gets a massive bounce in the near term I don’t see where growth is going to come from. I was
thinking the other day about my “fantasy” car manufacturer combo – VW and Tesla. My argument for this would be that a combination of Tesla’s tech knowhow and VW’s production muscle would be tough to beat – and if you combined that with Ford as well, then that would surely be a killer combination! Who knows – maybe desperation will drive them all together?
Jaguar Land Rover plans to halt production in April (Daily Telegraph, Alan Tovey) details the ongoing travails of the embattled JLR as it announced that it would stop production lines for a week in April as it continues to struggle with the sales slowdown. Staff will be paid, but will have to put in extra hours when the production lines are up and running again. * SO WHAT? * This comes shortly after the company announced it would be cutting 10% of the workforce, which followed production cuts last year. The company is trying to cope with the fact that it has had overexposure to China (where sales have been slowing down) and diesel (which everyone now hates). Production and employee cuts are short-term fixes IMHO – the company really needs to get its strategy sorted quickly otherwise it will be curtains.
Starbucks has good news, but it’s less good for New Look and UK shopping centres…
Starbucks beats expectations with focus on operations (Wall Street Journal, Julie Jargon) highlights some improved results from the company as revenue and earnings beat expectations following bit of a refresh from chief exec Kevin Johnson, who has streamlined the number of outlets, rejigged product line-ups and broadened its distribution in partnership with Nestle. Starbucks is also rolling out delivery in more US cities and growing its digital offering, with the number of active loyalty programme members increasing by 14% in the same quarter a year ago. It’s also expanding in China (it now has almost 3,700 outlets there) and is now working with Alibaba there on delivery. * SO WHAT? * It’s good to see that the company is experiencing some positive growth – but I have to say that I expect increased competition in China with the likes of mega-growth domestic chains like Luckin Coffee.
New Look on the rack, with refinancing plans likely to force sale (Daily Telegraph, Sarah Butler) appears to be on the brink of putting itself up for sale following a year where
it closed 86 stores after announcing massive losses. The company is in the throes of a financial restructuring but sent a note to bondholders saying that the company “may be required to launch a sale process for the group in which other interested parties could participate”. * SO WHAT? * More woes for the embattled clothing retailer that suffered from losing focus on what its customers wanted and an international over-expansion.
You may recall the other day when I highlighted British Land’s change of focus for its retail estate, well Shopping centre owner counts cost of downturn (The Times, Louisa Clarence-Smith) provides more evidence as to the current state of affairs in retail real estate as Capital & Regional announced that the value of its properties outside London fell by over 10% in the second half of 2018. * SO WHAT? * C&R owns or has stakes in eight shopping centres in the UK and said that its rental income in 2018 took a hit when 20 of its retail tenants closed stores or reduced rents via CVAs. Debenhams is currently in discussions about reducing the size of some of its stores and M&S just announced the closure of its Luton store in C&R’s Mall shopping centre. That said, its trading update was actually OK but surely the prospect of more suffering in the retail sector isn’t boding well for them as things could snowball in a bad way if retailers think that downward negotiation in rents is becoming more common.
And finally, in other news…
I thought I’d leave you today with the very skillful lady in Mum throws shoe at teen from huge distance – but can’t believe what happens next (The Mirror, Courtney Pochin https://tinyurl.com/ybgmte23). This is brilliant (and, on balance, I don’t think it’s fake!). It reminds me a bit of that scene in Crocodile Dundee when the driver uses that thing stuck on the back of his limo as a boomerang.
Some of today’s market, commodity & currency moves (as at 0828rs 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 **|
|6,819 (-0.35%)||24,553 (-0.09%)||2,642 (+0.14%)||7,073||11,130 (+0.53%)||4,872 (+0.65%)||20,774 (+0.97%)||2,602 (+0.39%)|
|Oil (WTI) p/b||Oil (Brent) p/b||Gold Per t/oz||£/$||€/$||$/¥||£/€||$/₿|
(markets with an * are at yesterday’s close, ** are at today’s close)