Tuesday 15/09/20

  1. In TECH NEWS, Nvidia/Arm and Oracle/TikTok face more scrutiny while Huawei tries to appeal to developers
  2. In CONSUMER/RETAIL NEWS, London renters move to the ‘burbs, shopper numbers fall and retailers call for continued VAT relief for overseas shoppers, Aldi does click-and-collect, Domino’s offers new jobs, New Look faces a big test and Amazon aims for more hires
  3. In INDIVIDUAL COMPANY NEWS, Nikola allegations prove to be true and UBS/Credit Suisse explore options while City Airport and Emirates talk about job cuts
  4. AND FINALLY, I bring you something you’ve probably never heard of but I love…



So the Nvidia/Arm and Oracle/TikTok deals face scrutiny while Huawei courts app developers…

Further to what I said yesterday, Nvidia secures control of key global tech with $40bn Arm deal (Financial Times, Kana Inagaki, Richard Waters and Patrick McGee) highlights yesterday’s deal as a mammoth one for the semiconductor industry as it gives the US company control over the tech behind mobile devices and data centres. It also gives Nvidia access to more mainstream computing, broadening its horizons from expertise based on graphics chips. Nvidia/Arm: SoftBank no more (Financial Times, Lex) suggests that this new combination needs to finally deliver on Arm’s early promises of being big in the Internet of Things. Number 10 vows to probe ‘close detail’ of Arm sale (Daily Telegraph, Matthew Field and James Titcomb) shows that the government is keen to at least look like it is addressing concerns of losing a national champion to the US. * SO WHAT? * Although the acquisition sounds reasonable on a strategic basis from Nvidia’s point of view, you can understand why there are concerns about what will happen to the HQ etc. under foreign ownership (e.g. it gets moved to the US, people lose their jobs etc.). Then again, they should have thought of that four years ago when Arm was sold to SoftBank! As things stand, Nvidia has promised to protect jobs and keep Arm’s HQ in Cambridge.

Oracle deal with TikTok to undergo US national security review (Wall Street Journal, Aaron Tilley) heralds the next stage of Oracle’s journey of “partnering up” with TikTok (not buying it) as it tries to avoid a US ban. Blow for London as TikTok HQ heads for US (Wall Street Journal, Laurence Dodds) shows that British hopes for a European TikTok HQ have taken a dent as US Treasury Secretary Steven Mnuchin said he’d received a “commitment…to create TikTok Global as a US headquartered company with 20,000

jobs”. In the deal, Oracle is expected to host TikTok’s US user data and take a stake in the company rather than buy it outright from Chinese parent ByteDance. TikTok/Oracle: out of sync (Financial Times, Lex) makes the point that if ByteDance maintains an interest in the company, it could mean that TikTok US may be able to keep the all-important algorithms as they aren’t being sold per se (so they won’t be covered by Chinese recently imposed rules that AI tech can’t be exported) on the one hand, but the deal will fall short of the full sale that the US government was looking for on the other. If the US government allows this semi-deal to go ahead it would be difficult to see what was achieved (apart from maybe a lower price!) given that security concerns won’t really go away. It would seem that Microsoft could have had a lucky escape here.

Meanwhile, Huawei courts app makers despite sanctions threat to its devices (Financial Times, Yuan Yang and Qianer Liu) shows that Huawei is still appealing to its longtime partners to make apps for its devices despite not knowing how much longer they’ll be able to make smartphones. From today, Huawei will not be able to buy any chips that were made using US technology due to the latest sanctions – which will mean that they will have to change their current smartphone designs completely. There is a very real possibility that it will have no phones to ship anywhere in the second half of 2021. Its new proprietary operating system, Harmony OS, is due to launch on smartphones next year. * SO WHAT? * Huawei’s position as being at the forefront of mobile telephony has been put in jeopardy by the US sanctions and its rivals have been making the most of Huawei’s weakness. Xiaomi overtook Huawei’s sales in Europe in the second quarter of this year and in September, Oppo hiked its sales target for the second half of this year by 30%. Some believe that BBK Electronics, which owns Oppo, Vivo, OnePlus and Realme could be net gainers from Huawei’s demise as its portfolio of brands covers different regions and may benefit from patriotism.



London renters move out, shop footfall drops, retailers call for VAT relief, Aldi does click-and-collect, Domino’s offer new jobs, New Look teeters and Amazon announces more hiring plans…

So in terms of the current state of the UK consumer, Renters leave central London as commuting takes back seat (The Guardian, Hilary Osborne) cites the latest data from Rightmove which shows that there is an exodus of sorts as renters leave central London in search of more space in the suburbs. There was also a tendency for more tenants to move to bigger properties with at least one extra bedroom. Maybe all this house hunting is leaving less time for shopping as Retailers hit by first weekly fall in shoppers since lockdown (The Guardian, Richard Partington) cites the latest figures from Springboard which show a loss of momentum in the high street, although this is normal as kids start going back to school.  Still, it’s not great for the shops and UK retailers look to challenge scrapping of VAT relief for overseas visitors (Financial Times, Daniel Thomas) shows that UK retailers, tourism companies and airport operators are fighting to keep these buying incentives alive after the government’s decision last week to withdraw the VAT retail export scheme for non-EU visitors from the end of December 31st. Visitors have used this incentive to get a refund on VAT on goods bought in the UK and taken back home. As you can imagine, retailers

in places like London’s West End as well as outlets like Bicester Village are particularly exposed to this and, given the current climate you can understand their fears. * SO WHAT? * The bad news for retailers continues unabated, with the odd exception. The VAT retail export scheme thing is going to be particularly devastating for some (what about Watches of Switzerland, for instance??) – given that international visitors account for around 50% of footfall in the West End, you can see how much of an impact this is going to have. As if things weren’t bad enough already!

Elsewhere in retail, Aldi gets with the programme in Aldi tests its first click and collect service (Daily Telegraph, Laura Onita) as it introduces the service in the UK for the first time (it’s still got a long way to go in terms of online grocery shopping capability!). Neither Aldi nor Lidl currently offer a full online shopping service because they argue that it dents profit margins – and they are, of course, known for their low prices. I know it’s not a retailer, but I thought I’d mention Domino’s offers 5,000 new jobs as deliveries boom (Daily Telegraph) as its shows that there is some good news out there while Landlords put New Look’s plans on ‘knife-edge’ (The Times, Louisa Clarence-Smith) shows that New Look’s future is really hanging in the balance as it faces a landlord vote on its latest CVA today, with the prospect of British Land – one of its biggest landlords – minded to object to its proposals. Hammerson also intends to vote against the restructuring and together, they own about 55% of New Look’s UK store sites. Tricky. Meanwhile, Amazon to hire 100,000 in US and Canada (Wall Street Journal, Ben Otto and Sebastian Herrera) gives more proof, as if more was needed, that Amazon continues to go from strength to strength.



The Nikola allegations ring true, UBS and Credit Suisse moot a combo and the airline industry suffers more blows…

Nikola admits rolling truck down hill as it counters ‘fraud’ claims (Financial Times, Peter Campbell and Claire Bushey) shows that allegations made recently by Hindenburg Research are proving to be true, despite initial protestations by Nikola’ chief exec to the contrary. * SO WHAT? * This is an absolute shocker and if this continues, you do wonder whether it can survive. I bet GM, who took a 10% stake in it last week, is consulting its lawyers and thinking of ways to back out. What a nightmare.

UBS tests the water over Credit Suisse mega-merger (Daily Telegraph, Lucy Burton) highlights a potential mega-deal that could create a serious Swiss investment banking champion. If it went ahead, it would be the biggest bank merger since the financial crisis – but talks are currently at an informal stage. * SO WHAT? * This merger has been mooted loads of times in the past – but the fact is that both companies have businesses that greatly overlap, so if they DID get together jobs losses would be huge IMO.

The gloom in the airline industry continues in London City airport to make more than a third of staff redundant (The Guardian, Gwyn Topham) after being shut down for three months at the peak of the pandemic and Emirates warns UK-based staff of cuts to workforce (Daily Telegraph, Oliver Gill). The tough times continue.



…in other news…

Today, I thought I’d introduce you to something I had as a kid – and still love to this day. This is a story about FURIKAKE (“foo-ree-kah-kay”) and it makes boring rice taste great: Seiji holds the Grand Prix of Marumiya Furikake【Taste Test】(SoraNews24, Krista Rogers)

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Some of today’s market, commodity & currency moves (as at 0737hrs 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 **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)