Monday 25/02/19

1. In TRADE WAR NEWS, Trump decides to push out the tariff deadline
2. In NEW INNOVATION NEWS, Microsoft makes AR strides and Huawei is the latest to announce a bendy phone
3. In CAR-RELATED NEWS, BMW-Daimler’s ride-hailing unit has big expansion aspirations and Aston Martin is about to publish its first full-year numbers
4. In INDIVIDUAL COMPANY NEWS, Roche nears a big deal and KKR eyes up Asda
5. In OTHER NEWS, I bring you two friends reunited. For more details, read on…

So Trump delays the tariff deadline for China…

Trump to delay Tariff increases on Chinese imports (Wall Street Journal, Bob Davis and Lingling Wei) heralds a significant move by President Trump who said yesterday that he would push out the deadline for tariffs on Chinese goods that was originally scheduled for the end of this week. He didn’t say what the new deadline was, but he did say that there had been “substantial progress” on sticky

issues including “intellectual property protection, technology transfer, agriculture, services, currency, and many other issues”. He also intimated that if things were to continue to progress, the US would meet with President Xi Jinping to “conclude an agreement” that could run to over 100 pages. * SO WHAT? * It ain’t over till it’s over – and there is still a lot to sort out. The other major issue is how each side can monitor compliance with any kind of agreed deal because China has thus far had a poor record in following through on its promises. We’ll just have to see how this pans out. Chinese markets were up a bit in early trading on this development.

Microsoft makes advances in AR and Huawei is the latest company to reveal a bendy phone…

Microsoft proves pioneer in ‘augmented reality’ with Hololens 2 (Financial Times, Tim Bradshaw) shows continued advances in wearable tech as Microsoft edges ahead of a pack including the likes of Apple, Facebook and Snap – who are all trying to develop augmented reality glasses (remember Google Glass and the ridicule attached to the “glassholes” who wore them?) – as it unveiled the latest version of its “mixed reality” HoloLens headset at the Mobile World Congress in Barcelona yesterday. Microsoft is aiming this creation squarely at corporate and commercial consumers and it combines physical and digital worlds through its transparent visor – the first version of which is currently being used by factory, warehouse and other industrial workers who can’t sit behind a PC. One really interesting example of this at work is Thyssenkrupp, which has given its elevator repair engineers the HoloLens so they can see schematics in the display and communicate with colleagues back at the office whilst remaining handsfree. The HoloLens 2 will be commercially available later this year for $3,500 and comes with a new optical system which more than doubles the field of view versus the older version, is less bulky and has faster chips. * SO WHAT? * This sounds very exciting, no? Demand for industrial use is certainly there and a more

user-friendly product is good news but it would seem that we are still quite a way from such devices being more prevalent for consumer use given tech and cost restraints. However, I would have thought that industrial usage could increase to an extent that any future advances will eventually filter through to a cheaper and more comfortable consumer version. Google Glass was definitely ahead of its time!

Only days after Samsung unveiled its bendy phone, Huawei unveils Mate X foldable phone at Mobile World Congress (Financial Times, Tim Bradshaw) shows that the race is on to persuade rich punters to part with over $2,000 for a phone (the Mate X will cost an eye-watering $2,600). Richard Yu, chief exec of the company’s consumer business group, said that it was the “world’s fastest foldable 5G phone” due to its in-house processor and modem and was much slimmer than Samsung’s Galaxy Fold (11mm versus Samsung’s 17mm). * SO WHAT? * Sounds great, but this is surely way too expensive for ordinary punters to buy. The interesting thing here is that attendees were allowed to handle the phone – something that Samsung did not allow – which has prompted some observers to say that they think the Galaxy Fold is not quite ready versus Huawei’s offering. As I said before, if Samsung and now Huawei are offering bendy phones at this price point, I dread to think how much Apple’s version will cost when it comes out! I like the overall idea, however, as this sort of technical innovation could really prompt people to upgrade their phones – just not at this price.

BMW-Daimler’s ride-hailing venture has big ambitions and Aston Martin is on the verge of reporting its first full-year numbers…

BMW-Daimler ride hailing unit plans ‘tenfold’ expansion (Financial Times, Patrick McGee) highlights the ambitions of Free Now, the $1bn “urban mobility” joint venture between German carmakers BMW and Daimler, as it announced plans for a roll-out in almost 90 cities this year and to 900 in the next three years. The two big rivals have invested €1bn in joint ventures that cover areas including ride-hailing (Free Now, five brands in 130 cities), scooters (Hive, currently in Lisbon but expanding to Athens, Vienna and Paris shortly), car rentals (Share Now with 4m customers in over 30 cities), parking (Park Now with 27m users across 1,100 cities in North America and Europe), electric car charging (Charge Now, which is a payment app for electric car charging with over 100,000 charging stations across Europe) and booking public transport (Reach Now) and believe that the key to success is building scale. * SO WHAT? * Clearly this venture isn’t doing things by halves and I guess that by broadening its offering at this stage it is allowing itself to see what works and what doesn’t. I thought it was very interesting to see the head of Free Now saying “If we really want to get cars off the street and we really want people to stop buying their own cars, we have to have a much denser network”, which sounds quite

surprising given who Free Now’s owners are! Still, car manufacturers around the world are in various stages of preparation for what seems to be a car ownership apocalypse where consumers opt not to own cars but to hire them instead. This has led to them investing in all sorts of transportation-related ventures in a bid to find profitable areas that will offset the negative impact of the abandonment of its traditional model. I guess if you throw enough mud, some of it will stick because at the moment, I think the companies are effectively chucking money into a void. Still, I suppose that they have to be seen to be doing something!

Aston Martin to publish first full-year figures since float (The Guardian, Rob Davies) looks ahead to the company’s first full-year figures due out this Thursday as focus will turn to their performance following a 36% share price fall since it floated in October. Although the share price has been disappointing, the company has performed pretty well since the float with third quarter figures showing an 81% increase in year-on-year revenue with a 93% increase in underlying profit with the company on course to meet full-year targets. * SO WHAT? * It’ll be interesting to see how the company performs – especially with Brexit (which CFO Mark Wilson said could be “semi-catastrophic” for the company) around the corner. Although you could say that the company will be insulated against worsening economic conditions due to the wealth of their clientele, uncertainty on the macro outlook is never good. The company has made contingency plans for a no-deal but, as is the case with everyone, no-one knows what’s going to happen and we will just have to sit tight and wait.

Roche closes in on a $5bn acquisition and KKR appears to be eyeing Asda…

Roche agrees to buy biotech firm Spark Therapeutics (Wall Street Journal, Dana Cimilluca, Dana Mattioli and Jonathan D. Rockoff) heralds the acquisition by the Swiss drugmaker of Philadelphia biotech company Spark Therapeutics for about $4.8bn in an effort to boost its treatment capabilities in gene therapies. The deal is expected to close in the second quarter and was struck at a 122% premium to Spark’s closing price after Friday training. * SO WHAT? * This is an example of how advances in gene therapy have attracted increasing amounts of attention as the likes of Pfizer and Novartis have also been trying to expand their offerings of such

treatments. For example, Spark’s Luxturna treats a condition that can cause blindness and was the first gene therapy for an inherited disease to get FDA approval and it is currently developing a gene therapy to treat inherited blood disorder haemophilia. How amazing is this?? Anyway, I suspect there will be more biotech acquisitions by big pharma companies as they try to restock their drug pipelines.

Following all the recent “Sasda” drama, KKR eyes bid for Asda (The Times, Gurpreet Narwan) shows that the American private equity group is circling the supermarket following the potential imminent collapse of its deal with Sainsbury’s. It is said to be working with Tony De Nunzio, a former Asda chief exec, who would become chairman if a KKR bid came to fruition. * SO WHAT? * If KKR managed to snap up Asda, it would be the first ever time that a big four supermarket chain has fallen into private equity ownership. A sign of the times as supermarkets continue to suffer??

And finally, in other news…

Alas, I don’t have an amusing story to end with today – but I do have a heart-warming one in the form of Slovak-speaking parrot found on airport runway reunited with owner (Sky, Lucia Binding https://tinyurl.com/y36o98zt). Ahhhhhhh!