Watson’s Weekly 14-06-2019

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily. You will need a FULL SUBSCRIPTION to be able to click through all the links which take you to the relevant articles.


  • US chipmaker Broadcom said that the Huawei trading ban would hit it sales by $2bn annually (Friday) making it one of the first chipmaking majors to quantify the impact of the US-China trade war. On the China side of the divide, Huawei is already suffering (Friday) as it has had to postpone the launch of its new laptop as well as production in its PC business due to restrictions in buying US products like Intel chips and Microsoft Windows
  • Alibaba filed listing paperwork this week (Friday), bringing it closer to a secondary listing in Hong Kong. This move is likely to be a way of mitigating any US-China trade negotiation fallout, giving it an “escape route” for if things get too heated. There’s been no official word, but the rumour is that Alibaba will be looking to raise around $20bn


  • United Technologies announced a deal to merge with Raytheon (Monday) to form a combined aerospace and defence company – to be called Raytheon Technologies – worth over $100bn, making it the world’s second largest defence contractor by revenue. Given that there isn’t much of an overlap between the businesses, it’s thought to be unlikely to meet with much antitrust resistance. Having said that, Trump expressed his own misgivings about the enlarged group shortly after the news was announced, saying that it could have too much power in a sector that is known for having only a few players with proper pricing power
  • Salesforce announced plans to buy analytics platform Tableau (Tuesday) in a chunky $15bn all-stock offer to enhance its existing offering in business intelligence and data analytics capabilities. Investors balked at the price, but the strategy sounds fairly reasonable


  • In UK supermarket news, we saw that Tesco promised to raise staff wages (Tuesday) but sales growth slowed right down (Friday), Morrisons announced a further rollout of the “Morrisons at Amazon” super-fast delivery service (Friday), Ocado invested in “vertical farms” (Tuesday) meaning that customers could in future pick their own salad and Lidl announced plans to open stores in London (Thursday)
  • In apparel retailing, Arcadia started to wield the axe on stores and employee numbers (Friday) after winning the crucial vote with creditors this week, Ted Baker had a profit warning (Wednesday) for the second time in less than six months, Zara-owner Inditex benefited from Brazilian online sales (Thursday) and an improving balance between its offline and online offering and Boohoo.com enjoyed a very strong start to the financial year (Thursday) with sales in the UK (which account for over 50% of revenues) up by 27% and international sales up by over 50% as its cheap fast fashion hits a cord with shoppers


  • Despite weakening car sales, auto makers are still targeting China (Monday) in the hope that if they get the EV offering right there, they can roll it out in to other markets. Mind you, government subsidies for EVs are being cut by about 65% (Thursday), which is likely to kill sales and cause bankruptcies. It will probably also force consolidation among the EV makers in a bid to drive down production costs and preserve margins
  • Closer to home, Parliament’s business, energy and industrial strategy select committee has officially concluded that Britain’s current charging infrastructure is “poor” and “lacking in size and geographical coverage” (Tuesday), which will obviously be a drag on the take-up of EVs in the UK. However, VW and Goldman announced $1bn investment in Swedish battery project (Thursday) to create a European battery making champion called Northvolt to rival Tesla and Asian makers. Other investors include Ikea (!) and BMW


This week, I’m going to leave you with an event that I would like to have a go at someday in Blood, sweat but no tears: Japan’s office chair racing (Reuters, https://tinyurl.com/y4eqjawx). Happy weekend!