Friday 29/03/19

1. In TECH/SOCIAL MEDIA NEWS, Huawei posts strong results but is slammed by a UK intelligence panel and Grindr is forcibly sold
2. In CAR-RELATED NEWS, there’s consolidation among German autoparts makers and Lyft sets a high price
3. In INDIVIDUAL COMPANY NEWS, Grindserve has plans to power up, Franco Manca’s owners show how it’s done and Wow Air is the latest airline to go bust
4. In OTHER NEWS, I bring you the world’s most popular Airbnb. For more details, read on…

So Huawei benefits on the one hand and gets slammed on the other, Grindr gets forcibly sold and Line moves into payments…

Huawei shakes off US offensive to post strong results (Wall Street Journal, Dan Strumpf) highlights the fact that the Chinese tech giant’s revenues shot up by 20% last year to $107bn despite a US-led anti-Huawei campaign that went global. The company is actually privately held but it does release an annual report that gives a glimpse into its financial performance. But then in UK intelligence panel warns on Huawei security flaws (Financial Times, David Bond and Nic Fildes) we see that a report published yesterday by the UK watchdog set up to examine Huawei products came to a damning conclusion on the security risks posed by them – so damning, in fact, that it puts their future involvement in Britain’s mobile network into doubt. Huawei had already promised to spend $2bn to address concerns, but the UK watchdog said that it “has not seen anything to give it confidence in Huawei’s ability to bring about change via its transformation programme and will require sustained evidence of better software engineering and cyber security quality”. * SO WHAT? * You will recall that the US embarked on what could be described as an anti-Huawei roadshow last year where it approached governments around the world telling them that Huawei’s equipment could be used for spying or cyberattacks from China. This is a particularly sensitive time to be doing something like that as everyone is gearing up globally to roll out 5G networks and the US’s warnings were taken so seriously that members of the Five Eyes intelligence alliance (not to be confused with Five Guys, that sells burgers – this is an intelligence-sharing alliance between the US, UK, Canada, New Zealand and Australia) have all at least partially blocked the company from their respective

infrastructures. The official position thus far in the UK is that the risks can be mitigated, but a final official view is to be published by the government in the next few weeks. If Huawei equipment is banned, networks warn that a UK 5G roll out would be delayed and would also cost the industry hundreds of millions of pounds to replace older Huawei equipment with newer 5G-compliant equipment from an alternative supplier.

Talking about security concerns, Chinese firm seeks to sell Grindr dating app over US security concerns (The Guardian) highlights the enforced sale of gay dating app Grindr by the Chinese company that’s owned it since 2016. This follows an assessment by the Committee on Foreign Investment in the United States (CFIUS) which concluded that Beijing Kunlun Tech’s ownership of Grindr constitutes a national security risk, although there weren’t many details forthcoming on that. Interestingly, the US has been focusing on app developers regarding safety of the personal data they handle particularly when it involves military or intelligence personnel. Opportunities for blackmail are obvious given that the app collects personal data including photos, location, age, sexual preferences and HIV status. Kunlun had been preparing to float Grindr, but it will now sell it via an auction process conducted by US investment bank Cowen in order to extricate itself more quickly. * SO WHAT? * Dating apps are big business. According to Dating apps/trade war: Grindr’s keepers (Financial Times, Lex), Tinder saw its revenues double last year and shares in its owner Match Group have gone up by 70% since the start of 2018 so Grindr is bound to be on its radar (or “radr”?). However, Facebook has expressed an interest in the dating arena and has very deep pockets, so the auction could get interesting. From a wider perspective, this rare intervention by the CFIUS into a deal that has already been completed throws some doubt over Chinese ownership of social networking companies in general. It will also put the mockers on any ambitions for social media start-ups of getting Chinese investment. 

There’s consolidation among German autoparts makers and Lyft decides on a chunky flotation price…

German auto parts maker ZF buys Wabco for $7bn (Financial Times, Eric Platt and James Fontanella-Khan) highlights yet more consolidation within the auto industry, this time with car parts makers. * SO WHAT? * The strengths of both groups should slot quite nicely together as Wabco is good at commercial vehicle safety – which includes things like sensors that can slow or stop a car and keep it in lane – and ZF is good at driveline and chassis technologies. This acquisition will help to boost ZF’s expertise in autonomous technologies, which is obviously a red-hot area right now (and will be even moreso in the

future) and Wabco said that it needed to combine with ZF in order to compete with new rivals like Alphabet’s Waymo.

Lift-off for tech floats as taxi app priced high (The Times, James Dean) shows that Lyft has decided to price its shares at $72 versus the $62-$68 range it talked about at the beginning of this month and the $70-72 it spoke about on Wednesday this week. It will float on the NASDAQ today and is set to raise a chunky $2.3bn from its IPO that will value the whole company at $24.3bn. * SO WHAT? * This is the first of a slew of big tech listings since Snap (which owns Snapchat) floated in 2017. Uber is expected to come to market soon with a $120bn valuation, Slack (the corporate messaging service and “e-mail killer”) could be valued at around $13bn and Pinterest at $12bn. This feels like a massive bubble to me given the chunky valuations of loss-making companies that continue to promise jam tomorrow. But hey, investors just want to jump on that bandwagon! M&A bankers will be looking forward to bumper bonuses on the back of these listings…

Grindserve (not Grindr!) announces more power, Franco Manca owner shows how it’s done and Wow Air is the latest airline to go bust…

Grindserve charges into solar-powered electric car stations (Daily Telegraph, Jillian Ambrose) heralds some great news for fans of electric cars as Grindserve announced plans to build solar-powered forecourts capable of charging up taxis, buses and delivery vehicles in under 30 minutes and passenger vehicles in under 10 minutes. It will also include supermarkets and coffee shops to take advantage of the driver downtime. Grindserve’s fantastically-named boss and founder, Toddington Harper, said that “the latest generation of electric vehicles are awesome, and ready for mainstream adoption, but drivers still worry about if or where they can charge, how long it will take and what it will cost”. The company will build its first site this year and expects to build 100 by 2025. * SO WHAT? * This sounds like brilliant news but won’t really reach mass-consciousness until LOADS of them are knocking around. Until then, I suspect that punters will continue to be cautious on range, charging times etc. It’s a step in the right direction, though – and should be very good news for solar panel and battery makers at the very least! 

Generally speaking, high street restaurants have a very tough time of things, but Franco Manca owner ready to give investors a taste of its success (Daily Telegraph, Oliver Gill) shows that the owner of Franco Manca and The Real Greek – Fulham Shore – is about to start paying dividends to shareholders after both sales and profits continue to rise. Yesterday’s upbeat trading update contrasts rather sharply with the carnage surrounding it, with competitors like Gourmet Burger Kitchen, Carluccio’s, Prezzo and Gaucho all being forced into CVAs due to a combination of rising rents, high business rates and higher wages.

Then Wow Air leaves thousands stranded after collapse (Daily Telegraph, Oliver Smith and Hugh Morris) shows the latest collapse of a budget carrier as the Icelandic company made the announcement yesterday morning. It is the fifth airline to collapse this year and follows the likes of Primera Air, Cobalt Air and Flybmi, with blame being put on higher fuel costs and tight competition.

And finally, in other news…

I thought I’d leave you today with this: The most popular Airbnb in the world is a “mushroom dome” in California (Quartz, Rosie Spinks https://tinyurl.com/yymt4a96). I think it looks a bit pokey if you ask me ????…