Tuesday 11/06/19

  1. In TECH-RELATED NEWS, Salesforce buys Tableau in a $15.7bn deal and Tencent’s PUBG Mobile becomes the world’s top-earning game
  2. In CAR-RELATED NEWS, we see that UK output is hit by car factory shutdowns, that our EV charging network has a long way to go and that Aston Martin is unveiling a new plant for its 4×4
  3. In RETAIL/HIGH STREET NEWS, Tesco ups its wages, Ocado eyes vertical farms and Thomas Cook confirms a takeover
  4. In OTHER NEWS, I bring you a cautionary tale. For more details, read on…



So Salesforce agrees to buy Tableau and Tencent’s PUBG Mobile goes top…

Salesforce to buy analytics platform Tableau (Wall Street Journal, Asa Fitch and Kimberly Chin) heralds the latest (and biggest) acquisition for Salesforce as it has agreed to pay a chunky $15bn in stock for data analytics platform Tableau to enhance its existing offering. The customer relationship management software-supremo is paying an eye-watering 42% premium over Tableau’s closing price on Friday in order to stay ahead of the likes of Adobe and Microsoft. Salesforce’s shares fell by 5.2% on the news as investors balked at the price and share dilution given that the deal was all-stock. Tableau software enables companies to build databases, spreadsheets, graphs and maps from their data. The deal is expected to complete by the end of October. * SO WHAT? * This sounds like a natural development given other tech companies’ efforts to enhance their business-intelligence and data analytics capabilities. Only last week, Alphabet bought Looker for $2.6bn to help it do more with its data and Microsoft has been on the acquisition trail to enhance its cloud business offering, called Azure. The only thing is the price and the fact that it’s all paper. However, it is expected to enhance

Salesforce’s revenue by $350-400m in the current fiscal year.

In Tencent’s ‘PUBG Mobile’ becomes top-earning global game (Financial Times, Tom Hancock) we see that Tencent’s PUBG Mobile game where players battle to the death with virtual weapons earned $146m last month to overtake the earnings of its previous smash hit Honour of Kings, which earned $125m in the same time period but was launched back in 2015. This points to a recovery of sorts for the gaming giant which has suffered over the last year from being on the Chinese government’s naughty step, meaning that new game title approvals have slowed right down. Interestingly, Tencent had to change the Chinese version of the PUBG Mobile game (called Game For Peace, lol) to have less violence and more than one winner. Many thought this would lose it users although that doesn’t appear to be the case at the moment. * SO WHAT? * After a period of being stuck in the wilderness, it seems that Tencent could be back on track with its gaming business. It has had a host of other game titles approved by Beijing since late last year (the authorities had been cracking down on gaming companies saying that their games were too addictive and damaging for young people) which means that its gaming revenues should climb. Tencent pushes its games through the big social networking chat app WeChat as well as a number of app stores that it controls. Given its near-monopoly status, you would have thought that 2019 is looking a lot better already.



Auto maker shutdowns hit UK output, our EV charging network is shown to be lacking and Aston Martin unveils its new factory in Wales…

Shutdowns in car industry shock GDP (The Times, Philip Aldrick and Benedict George) cites the latest figures from the Office for National Statistics which showed disappointing UK GDP growth figures for April. This was the second consecutive month of GDP contraction and the headline figure was hit badly by a 24% fall in vehicle production (the biggest fall since 1995) as car factories brought forward their summer shutdowns to coincide with the original Brexit deadline. Growth in the first quarter had been high due to domestic and foreign manufacturers stockpiling, but this is now unwinding.

Switch to electric cars hit by ‘poor’ charging infrastructure (Financial Times, Nathalie Thomas and Peter Campbell) is something that shouldn’t really be a surprise to anyone as 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”. Sales of electric-only vehicles in the UK were up by 63% in April versus the same time last year, but still represent a paltry 0.9% of new car sales. At the moment, vehicle charging on the UK’s motorway network is dominated by Ecotricity with 300 chargers and last week, Dutch company Fastned opened a new 350kW EV fast-charger in Sunderland (which no cars currently sold in the UK can use!) with plans for five more 50kW chargers in the area. BP and Shell have also invested in charging companies and are rolling out fast chargers on petrol station forecourts and Tesla continues to invest in its own supercharger network (although only Tesla drivers can use these). * SO WHAT? * It seems to me that we are reaching

a real sticking point. Would-be drivers are put off by fears of a poor network, electricity providers want to provide more charging but worry about whether the grid can take it etc.etc. As Graeme Cooper, project director for electric vehicles at National Grid, put it, a “really grown up discussion” needs to happen between the energy industry, the transport sector, the government and Ofgem about the size of investment that would be needed to cope with EVs – and I think it needs to happen SOON!

In a rare bit of positive news for the automotive industry (and particularly the automotive industry in Wales, unfortunately), Aston rallies City with £150,000 4×4 (The Times, Robert Lea) highlights a nice jolly for 20 analysts from the City to see Aston Martin’s new production facility in St Athan, south of Cardiff, which will be making its new 4×4 DBX model that is to be formally launched in December. Chief exec Andy Palmer expects full production of the DBX to be 5,000 a year from 2021, with initial production starting from Spring 2020. To give you an idea of scale, Gaydon currently produces 6,400 vehicles per year. * SO WHAT? * This is part of a charm offensive by Aston, whose shares have been hit badly since the share price has tanked badly post its stock market flotation last year. Basically, analysts have been worried about whether Aston can deliver on a new model AND get a new plant on track at the same time and part of the intention of this jolly was to convince them that this could be done. There’s also increased competition in the luxury 4×4 space with the £140,000 Bentley Bentayga, the £165,000 Lamborghini Urus and the £250,000 Rolls-Royce Cullinan as well as Ferrari’s upcoming effort and the usual high-end Range Rovers and Porsche Cayennes and so Aston has got a tough job on its hands. Let’s hope that Aston can turn it around and that they can take on at least some of the Ford Bridgend workers who will be losing their jobs. Everyone will be chomping at the bit to see what the DBX order book is looking like given that there’s so much riding on the success of this model. 



Tesco ups its wages, Ocado invests in vertical farms and Thomas Cook confirms a takeover bid…

Tesco raises wages for store and warehouse workers by 10.45% (The Guardian, Sarah Butler) sounds quite good as the company said it would raise wages from September by 10.45% over the next two years to £9.30 an hour, BUT it said that it would abandon the annual bonus. This will just bring the minimum hourly pay for its store and warehouse workers in line with current rates paid at Lidl and Asda and ahead of Morrisons – although Morrisons staff get an annual bonus equivalent to 3% of their annual salary. * SO WHAT? * This just sounds like a bit of reshuffling to me – but supermarkets are being forced to pay their staff more given the tightness of the labour market at the moment. It’s a shame that the bonus will be cut, but then again given that supermarket non-management bonuses are capped at roughly 3-3.5% anyway, I would have thought that an improved hourly wage would be better on a practical basis. Mind you, the danger here is that if a supermarket had a bad year, it can cut the bonus before cutting jobs – but if everyone’s getting paid a better salary, there is less wiggle room before they start having to cut people.

M&S may offer ‘pick your own’ salad under Ocado deal (Daily Telegraph, Natasha Bernal) is an eye-catching story doing the rounds today as Ocado announced that it had just invested £17m in “vertical farming” which could mean you could get “pick your own salad” aisles in M&S stores! * SO WHAT? * Vertical farms produce food indoors and crops are grown on stacked levels in a controlled environment. The £17m has gone into a joint venture called Infinite Acres, along with 80 Acres Farms and Priva Holding, with each of the three having a third. Ocado added that it had bought a 58% stake in Jones Food Company – Europe’s largest operating vertical farm – and foresees a day where “consumers’ vegetables are harvested hours before they are packed, metres from where they are shipped”. Wow! How amazing would that be??

Then in Thomas Cook confirms takeover bid talks with Fosun (Daily Telegraph, Michael O’Dwyer) we see that the 178 year-old travel company’s tour operator business is close to being bought by Chinese conglomerate Fosun, which already has an 18% stake. TC’s shares spiked initially but it’s not yet a done deal. Fosun is not allowed to buy Thomas Cook’s airline (which it had put up for sale earlier this year) because of EU rules which say that airlines should be majority owned a and majority controlled by Europeans. * SO WHAT? * This is good news, but TC is absolutely rife with problems. A Chinese sugar daddy like Fosun could help with its huge debt and it is also hoped that a takeover could boost its exposure to Chinese tourists.



And finally, in other news…

I thought I’d leave you today with a cautionary tale in 34-year-old woman has to be cut free from toddler’s plastic car with a bread knife (Metro, Jen Mills https://tinyurl.com/y2crg4dv). Don’t try this at home, folks!