Company News

Swiggy is reportedly closing on a deal to acquire Uber Eats, the food delivery arm of online cab booking company Uber. The business was launched in January 2017 and is currently worth over $330 million.

At the time of launch, Uber India had high hopes from Uber Eats, however stiff competition from established giants like Zomato, and Swiggy made the journey quite difficult. Therefore, the San Francisco based company has decided to sell the ailing business to curb losses. The move will also help the Uber go for IPO with a targeted valuation of $120-$150 billion. Apart from Swiggy, reports have suggested that Gurugram based Zomato is also in contention to acquire Uber Eats. Swiggy and Zomato are arch-rivals in the online food delivery space; both of them are fighting very hard to increase their market share.

Uber Eats India is currently executing around 150,000 to 250,000 deliveries per day, generating around $200-$300 million in sales. On the other hand, Swiggy and Zomato manage to squeeze out business almost four or five times of Uber’s numbers. Uber’s delivery arm is currently ranked 3rd, ahead of Foodpanda, owned by rival ride-booking company Ola.

Uber reported a loss $1.8 billion for 2018, and it desperately wants to shed loss-making units away before it goes for the IPO in India. Reports have surfaced that Uber Eats in India was losing about $15 to $20 million per month. Contrasting to the recent developments, Uber Eats had said last year that India is one of the fastest growing markets, claiming that it was adding 4,500 delivery personnel per week, an adding 100 restaurants a day in the country.

India is one of the markets where Uber still suffers high losses. It has already sold businesses in China, Russia, and Southeast Asia to rivals, to curb losses. Contrastingly the market leaders, Swiggy and Zomato are reportedly losing $30-$40 million each month. The two main reasons for these losses are the regular discounts given to customers to attract them, and high incentives to delivery personnel.

Experts have been projecting a market consolidation, sooner or later. The food delivery space offers razor-thin margins; large scale competition is causing companies to bleed. Uber Eats was also rumored to consolidate with Ola’s Foodpanda, as both have a common investor in Softbank which holds substantial shares in both firms.

The transaction, if completed, will be the first move towards sector consolidated of food delivery space in India. Though Zomato is trying too, Swiggy is expected to close the deal as early as next month. This will be the Bangalore based company’s largest acquisition till date, and will also be Uber’s first divestment of its food business globally. Uber its is estimated to be valued at around $20 billion, and the business generates $1.5 billion in revenues.

The transaction is most likely to be structured as a share-swap deal, with Uber accepting shares in Swiggy as contract remuneration. Uber is expected to get 10% shares in Swiggy. The Indian food delivery service company is valued at around $3.3 billion.

Trading News

The world’s biggest manufacturer of computers, Lenovo Group, shrugged off the United China-China trade tensions to post a handsome profit in its quarterly results. The Chinese companies results beat the estimates of analysts, and this is an important development since many would have expected the computer maker’s results to be disappointing due to the trade war. Following the results, the Lenovo stock rose sharply and at one point rose by more than 11%.

The average of the estimates by 10 analysts pegged the company’s net profit at $207 million for the quarter, but Lenovo beat these numbers comfortably with a net profit of $233 million. The quarterly results show the sort of turnaround that Lenovo has enjoyed. In the same quarter last year, they had posted a $289 million loss. The company’s revenues stood at $14.04 billion, which reflects a handsome rise of 8.5%.

Lenovo announced that its foothold of the global computer market now stood at 24.6% and in addition to that, the companies smaller smartphone business also recorded a profit. The mobile phone unit recorded a profit of $3 million, before taxes. On the other hand, the company’s loss-making data center unit reduced its losses by a big margin in the latest quarter. It recorded a loss of $55 million, which is a healthy 31% drop from a disappointing $86 million loss in the same quarter last year.

All this is particularly heartening for a Chinese company, which delivered this strong result at a time when many other companies have gone into a bit of a meltdown. According to Gartner, which tracks the personal computer industry, shipments fell in 1.3 percent during the course of 2018, and despite that, Lenovo managed to grow its market share to 24.6%.

However, the Chief Executive Officer of Lenovo, Yang Yuanqing pointed out that there is still scope for massive growth for the company in China. He stated that despite being the world’s biggest market for smartphones, China has not yet toppled the United States when it comes to personal computers and that is not ‘not consistent’ with the population of the country. He went on to state that the company would look for more consolidation and have a bigger focus on the premium personal computer business. That being said, the shadow of the US-China trade talks looms large over most companies, and Yang stated that it is something that hurts all companies. He said, “Definitely we don’t want to see more trade war, political tension. If that continues, that will affect everyone, not just us, all multinationals.”

Company News

With the recent enactment of EU’s Payment Service Directive (P2D2) requirement for banks to create APIs that let third parties initiate payments on behalf of consumers. Adyen has become an early adapter to this by introducing a new open banking payments method that will enable authentication of payments between the consumer and the bank avoiding chargebacks generated due to card frauds or an inability to capture funds. Upon selecting the payment type, the customers will be redirected to their bank’s online environment to securely confirm the transaction. Adyen with its latest financial technology will handle the payment flow between banks and merchants. Their latest offering is suggested to decrease transaction processing costs for higher value transactions while at the same time open banking will offer real-time credit transfers guaranteeing payments and enabling merchants to confirm payments and ship orders immediately.

It is constantly striving to innovate and simplify the payments process for consumers and merchants. Adyen is a unique payment solution provider that is the choice for many of the world’s leading companies. Fraud protection has been an increasing priority in today’s digital economy. Traditional card transactions are slow, charge higher processing costs and are prone to frauds. With this latest addition in the company’s offerings, Adyen has become the first payments provider to offer a fully compliant, direct payment solution in the UK and it has been continuously working with Open Banking Implementation Entities to bring the benefits of a digitized payments system to consumers and merchants alike.

“It is exciting to see another great example of open banking powering innovation and leading to new services which ultimately help drive efficiencies in payments,” said Imran Gulamhuseinwala OBE, Trustee of OBIE (Open Banking Implementation Entity). “Adyen is a great example of how consumers and organizations can benefit from increased collaboration and secure data sharing between financial institutions.”

Dutch airline KLM is the first major brand to roll out the new offering. The service is now live and accessible to all UK customers. After Brexit, UK has become the most important foreign market for EU nation companies. “It is great to see that KLM is the first airline to offer this open banking payment option to our UK customers. BY working with Adyen’s payment initiative, we are offering customers a wider choice of payment options securely and seamlessly,” said Pieter Groeneveld, Senior Vice President at KLM Royal Dutch Airlines.

Company News

Air France and KLM have to manage to agree on strengthening ties between the airlines, putting an end to a power struggle that had been bothering the Dutch government, staff, and shareholders.

In the process, Air France has secured a salary agreement with pilots after an elongated protest which saw them college strike last year, which caused €335 million ($380 million) to evaporate from the 2018 profits. The truce between the two airlines was declared on Wednesday morning by company officials.

Specifics of the deals, however, weren’t released, though the group Chief Financial Official Frederic Gaygey stated that the Air France-KLM plans would boost both the companies’ prospects despite high fuel prices and other obstacles ahead. Gaygey also said that the group was “absolutely not” considering a merger between the two airlines completely.

The Franco-Dutch airline group pledged new efficiency games to tackle higher fuel costs this year with a motive to deepen cooperation between two of its main careers, Air France and KLM. While presenting 2018 earnings of the group, Chief Executive Officer Ben Smith assured Better coordinated network and fleets after subsiding KLM resistance against closure integration with Air France in a new deal. Smith said these achievements pave the way for the group’s ambition to regain a leading position in Europe and across the globe.

Rivals like Lufthansa and British Airways continue to maintain a profitability lead on Air France and KLM due to restrictive French union deals, and strikes that took away a substantial chunk of profits last year forcing out the previous CEO. Ben Smith joined the group, hit by internal conflicts in September 2018. Smith, an ex-Air Canada veteran, has successfully resolved labor issues by granting wage hikes in return for increased flexibility, which now give hopes to make better and more profitable use of the group aircraft and networks.

The board of Air France-KLM has also agreed to reappoint Pieter Elbers as KLMs chief executive officer.

Ben Smith met with the Dutch government Ministers of Finance and infrastructure last week to discuss the future of the Air France-KLM alliance. Dutch Prime Minister Mark Rutte, while addressing journalists in a press conference on Friday, said that it was extremely important for the Dutch economy that KLM functions well. However, he refrained from giving out any details from the discussion between his Ministers and Ben Smith. He further added that the esteemed organization was out of danger though not functioning as brilliantly as other airlines.

As per the new deal, Air France pilots will get a 4.3% hike in return for concessions including extended flexibility on leave and sharing routes with KLM. The dominant SNPL pilots union signed the deal after received 85% support in a ballot.

Conflicts between the two flagship airlines began last year as Smith, after his appointment in September, started pushing for a more concerted decision making between the two brands as well as his seat on the KLM board. This development encountered resistance from KLM’s workforce, including CEO Pieter Elbers. Due to this, a possible departure of Elbers started to hover especially after his contract would expire in April. This led to a show of public support by the Dutch career’s employees last week, which triggered talks between Smith and Dutch ministers.

Trading News

Declaring the annual financial report card for 2018, HSBC on Tuesday admitted falling short of expectations on several fronts, following a challenging fourth quarter. Markets across the globe experienced sharp falls in business activity during the last quarter.

Europe’s largest bank’s reported pre-tax profits for 2018 stood at $19.89 billion, a 15.9% jump from the previous year. Total revenue reported for the last year was $53.78 billion, 4.5% higher than in 2017. However, the London based bank’s pre-tax profit for the year gone by was expected to be at $21.26 billion, a 23.8% hike from 2017. Revenue projections were at $54.674 billion, 6.28% higher than the previous year.

The lender bank warned that it might have to scale down investment plans to avoid missing a key target known as ‘positive jaws,’ tracks whether banks are growing revenues faster than costs, for a second straight year. The share prices of HSBC fell by 3%. The bank has attributed the shortfall of expectations to the slowing trade in China and the UK.

HSBC CEO John Flint said on Tuesday that the bank would be proactive in managing costs and investments to meet risk to growth ratios where necessary. However, he assured that they wouldn’t take short term decisions that would hurt business interests in the longer run. He stated that the key focus would be to moderate investments and not to cancel or change the shape of investments.

The Chinese economy has slowed down to a 28-year low at 6.6%. This has challenged HSBC’s plans to increase investments in Asia, from where the banking giant accumulates 90% of its total profits. One of the major reasons for the slowdown of China is its elongated trade tussle with the United States. And if Beijing and Washington don’t reach the point of mutual consent, businesses will continue to suffer in both countries.

Asian markets contributed $17.8 billion to the bank’s profits, 16% more than what they did in 2017. Flint said that though the profits from Asia would continue to grow, the growth rate will dip a little due to the Sino-US trade war.

On the other hand, business back home continues to suffer. The sword of a no-deal Brexit is hanging on the UK as the deadline for Britain’s exit from the European Union is approaching. HSBC recently set aside $165 million against possible future bad loans in Britain, which reflected potential economic suffering due to a no-deal Brexit. Commenting of UK figures, Flint said that the longer uncertainty hovers around, the worse situations will continue to be for their customers. Due to uncertainty, the majority of the bank’s customers are postponing investments, which has resulted in the slowdown of the UK economy.

The core capital ratio of HSBC dropped to 14% for December 2018, a 0.5% drop from the previous year’s corresponding period, mainly due to adverse foreign exchange movements. Nonetheless, the bank has announced that it will be paying the yearly dividend at $0.51 per share, which is more or less in line with what markets analysts had predicted.

Company News

The Chief Executive Officer of Nordea Bank Abp Casper von Koskull has called on the critics of Finland based back to show patience and added that bank is well on its way to staging a turnaround in the fiscal year 2020. Nordea Bank has been in doldrums for some time, and in recent years, the bank went on an aggressive cost-cutting spree. The bank laid off workers, embraced technology and generally tried to turn it into a much more efficient organization.

However, the recent fourth quarter result has not gone down well with key investors and angry investors even went on to state that the less than satisfactory results were a sign that enough progress had not been made. Sampo, which holds around 20% of the bank’s shares, stated that the bank’s most important ‘performance indicators’ did not meet the standards of Nordic banks. Another investor simply said that the profit recorded by the bank in the fourth quarter was too low.

The bank’s CEO has now taken a swing at the investors and called them impatient during the course of an interview. Koskull said, “When I look at 2019, my clear ambition is that we have growing income and reduced costs. Markets are always impatient.” He went on to state that the bank is going to stage a comeback in 2019 and Nordea’s asset management division is going to have a big say in it. The CEO stated that the asset management business is poised to swing into profits.

The bank’s income has gone down drastically and has dropped to 9 billion Euros in 2018. However, Koskull has assured that the bank is looking at plenty of new avenues through which income could be boosted. Other than asset management, he believes the bank has the chance to get into segments in which it did not venture before. For instance, private banking in Norway and Sweden is one of the options he spoke about. He went on to state that the bank has a huge room for improvement and growth is around the corner. He said that in 2018, the bank’s traditionally strong asset management earnings did not go as planned and that gives Nordea an excellent opportunity to raise income in the coming year. Koskull is bullish about his hopes regarding the asset management business. He said, “I’m convinced we can get the asset management that has been shrinking. We will get that back; now we have a new starting point. We have the products, the capabilities in place. It doesn’t need magic to get that back.”

News

The uncertainty surrounding Brexit and a gloomy job outlook have plunged the household income outlook index in the United Kingdom to an 11-month low. The IHS Markit’s Household Finance Index tracks the sentiments of people regarding their income expectations, and it is indicative that the index has plunged to its 11-month low just as the Brexit deadline approaches on 29th of March. The index is created after gathering information from respondents through a survey. Needless to say, the slowdown in the British economy is much to blame regarding the income outlook for many households. In 2018, the economic growth slowed to a dead stop at one point, and the growth rate was the lowest since the dark days of 2012.

The index reached its lowest in January, and it has plunged again this month, despite the fact that unemployment levels in the UK are currently at record lows. Joe Hayes, an economist at IHS Markit, said that worries about job security and Brexit uncertainty are the reason behind the current state of the index. He said, “The impact on confidence caused by Brexit uncertainty continues to pose a notable risk to the domestic economy, also highlighted by job security perceptions becoming increasingly negative in February.”

According to the Bank of England, the British central bank, the growth rate of the UK economy is going to slow down drastically, and there are fears that the rate of growth might be as slow as that in 2009. In addition to that, the great of the UK exiting the European Union without a deal is very much there, and if that happens, then the economy is expected to plunge into complete chaos. The trade tensions between the United States and China and a global economic slowdown has not helped matters either for the British economy. Additionally, many companies which had set up operations in the UK are planning to move jobs abroad, and it is hardly a surprise that the British citizens are worried about their employment in a post-Brexit world.

However, it needs to be stressed that the sentiments expressed in the index are largely to do with some of the most recent events that have been plaguing the economy. According to analysts, the official government data that is going to be published on Tuesday is all set to reflect the fastest wage growth in a decade, and maybe the situation might not be as gloomy once everything blows over.

Company News

Apple’s former lawyer was charged by the U.S. Department of Justice for insider trading ahead of six of the iPhone maker’s quarterly earnings this Wednesday

Reports say Gene Levoff exploited his position as corporate secretary, head of corporate law and co-chairman of a committee that reviewed draft copies of Apple’s financial results to trade illegally between 2011 and 2016.

Levoff was sole in charge of Apple’s insider-trading policy and was Apple’s named representative on many of its corporate acquisitions and subsidiaries. Levoff was familiar with the company’s trading policies, routinely sending emails to workers, reminding them not to buy and sell stock amid earnings announcements, the SEC said.

Prosecutors said that before Apple terminated his decade-long employment in September, Levoff made around $604,000 in illegal gains, including realized profit and avoided losses.

Levoff has one count of securities fraud, carrying a maximum 20-year prison term and a $5 million fine.

However, the U.S. Securities and Exchange Commission filed related civil charges in the case as this was one of the rare instances of a senior lawyer at a major U.S. company being implicated in a crime. According to the filing, Levoff exploited his well-placed position to manage his Apple shares trading privately. He would gain access to the company’s periodic earnings results and draft public filing before release.

Antonia Chion, an associate director of the SEC’s enforcement division, said in a statement, “Levoff’s alleged exploitation of his access to Apple’s financial information was particularly egregious given his responsibility for implementing the company’s insider trading compliance policy.”

Apple said in its statement that they have terminated Levoff after an internal probe.

Authorities also quoted that Levoff belonged to Apple’s general counsel and has long been a corporate officer of most of the major subsidiary of the Cupertino, a California-based company.

According to authorities, Levoff helped Chief Executive Officer Tim Cook and his predecessor, Steve Jobs, ensuring the timeliness, accuracy and proper oversight of the company’s disclosures, including financial results.

The SEC mentioned that Levoff had broken Apple’s insider-trading policies on at least three accounts. For instance, in July 2015, he had allegedly learned about Apple’s poor iPhone sales report. At that time, Levoff almost sold his entire Apple holding, which was worth $10 million. After Apple released the quarterly report, its share plunged by over 4 percent. To that end, Levoff avoided a potential loss of approximately $345,000.

Apart from this, prosecutors also claimed Levoff bought and sold more than $14 million of Apple stock, including $10 million in July 2015 alone, after being given draft earnings materials but before the results were made public.

Apple confirmed that Levoff conducted illegal trades during his tenure at their company.

The tech giant clarified that it had initiated an internal investigation against Levoff after receiving a tip from the SEC in 2017. They ended up terminating him in September 2018 after placing him on a two-month leave.

Josh Rosenstock, Apple’s spokesperson, told Bloomberg that, “After being contacted by authorities last summer, we conducted a thorough investigation with the help of outside legal experts, which resulted in termination.”

The US attorney has also filed criminal charges against Levoff which could have him face up to 20 years in jail and a $5 million fine.

Charges against Levoff were levied in New Jersey, where authorities said the servers were located for firms that handled Levoff’s illegal trades.

The cases are the U.S. v. Levoff, U.S. District Court, District of New Jersey, No. 19-mag-03507; and SEC v. Levoff in the same court, No. 19-05536.

These allegations are a black spot for Apple, which mostly had a clean record over financial reporting issues.

Company News

The earnings report of the previous year was released on Thursday evening, and it revealed that Canopy, the leading pot seller, showed a 300% growth in revenue. The company’s shares also rose by 4.4% the same day following the announcement of the earnings report.

Co-Chief Executive Bruce Linton came out saying that the company hoped to continue being the leading pot producer in the world. He also says that they have a clear plan to stay at the top.

He caught up with MarketWatch on the phone the Friday morning and revealed the top three priorities that would help the company to achieve its targets.

According to him, a combination of the right people, good capital expenditures, and appropriate allocation of the company’s supply of cannabis will make the business hit all the necessary heights.

Those three things go together — they have a synchronizing effect,” Linton said.

Canopy has reportedly invested largely in increasing its employee base. The number of employees grew from 700 to 27,00 which is a whopping 285% growth.

“You do what can be done, by a group of people,” Linton said. “We are constantly scanning for new personnel — working against evolving priorities. There is never a week that goes by that we don’t.”

The recent success of the company is due to the legalization of recreational Marijuana in Canada last year.

Revenue for the fiscal third quarter hit as high as 282% compared to the previous year. Chairman and Co-CEO Linton said that the key to succeeding in the market was to make early calculated investments that would help the company to grab the share of the market while the law took effect.

Canopy Growth had claimed a wider loss this year following its heavy investment on research, development, and marketing. However, this did not bother the investors as the company’s stock rose 4% Friday. The shares are up by 80% this year.

Last year, the company managed to lock down a third of its rising recreational cannabis market. The company was confident that the investments and product development campaigns would keep it in that position.

BMO Capital Markets released a note on Friday saying that Canopy’s sales volume in terms of recreational Marijuana showed a market share of 30%.

Mr. Linton was asked if this was the position the company was expecting to hold on to in the coming years. He said that talk in the coming quarters would shift more towards the possibility of converting cannabis into more consumer products.

Meanwhile, there is a visible inclination towards legalization of recreational Marijuana in the United States. More states are legalizing the drug’s use for recreation. Besides, many brokerage firms have shown interest in the companies too.

Company News

Reports and speculation about Apple’s video streaming subscription where going around the corners for years now and finally Apple is all set to launch its new TV subscription service. Reports say that Apple is expecting to launch its new service in April or in May.

Apple currently is working in the final development phase and getting its new video streaming services ready for deployment. The new video streaming services include free original content feature basically for device owners and offer subscription service for users to subscribe to other digital services. Subscription TV series are offered by Viacom Inc., CBS and Lions Gate Corp’s Starz along with its original content.

Major video streaming partners like Netflix and HBO are not expected to be the part of it, while the services of Netflix Inc. and Amazon.com Inc. Prime video is most likely to be damaged, reports according to a few reliable persons.

Apple had planned about the new video services and is spending almost $2 billion in Hollywood to form its video content and singing content with star-like Oprah Winfrey. The new video streaming is to be launched worldwide.

The main goal of the service is to enable customers to sign up for the existing streaming products and allow them to access it on their iOS TV application, just like Amazon’s Prime Video Channels. Apple seeks to simplify the mobile video viewing feature by assembling all video content in a single app rather than allowing the user to install various apps for every service. It is quite an important step to counter its rivals Amazon’s Prime and Netflix Inc.

According to Bloomberg, Apple is expected to launch both of its service namely, new video service and subscription service on March 25 at a service event. Apple Inc. has already invited big Hollywood celebrities like Reese Witherspoon, Jennifer Aniston, director JJ Abrams and Jennifer Garner for the event.

The service is likely to be distributed across the various Apple App stores and will be available in 100 + countries.

Apple Inc. is careful about the plans and how is it going to distribute the shows is still a secret. The investors have started to focus on the revenue from the paid subscriptions as an alternative means for the increase in iPhone sales. From the holiday season onwards there is a decline in the sale of iPhone’s for the first time in its history during last year.

Some people say that Apple Inc. is negotiating with HBO, WarnerMedia owned by AT&T Inc. to be a part of its new service, although it is not yet been decided and may take a call before the launch of the new service while HBO has not rendered with the same terms that Amazon Inc. has offered it.

Apple Inc. has developed its own service segment which helped them for the plan to launch the television service; the service segment brought $37.1 billion during 2018 fiscal.

The accurate details about the disagreement between Apple Inc. and HBO are not known; however, media companies are worried about the data sharing and revenue split as Apple tries to offer the existing services to the customers in all new way.

Those customers who will subscribe for top video service by using it new streaming services will be applicable for 30 percent cut and Apple is pushing this plan forward. At present, Apple Inc. takes 15 percent cut on revenue from the users who have signed up to HBO Now and Netflix and also other video streaming apps via the App store, people mentioned.

People also say that neither Netflix nor Hulu are part of the Amazon Prime Video Channels and they are even not going to be the part of Apple’s product.

However, CBS, HBO, Starz, Viacom, and Netflix have not responded to the comments.

Apple has worked with various media companies for over the years now, only to access its content. Apple CEO Tim Cook, last month during its earnings conference call has viewed the new service offering.

The customer behavior has changed over time and is currently changing, we believe the change will be significant in the years to come, and there will be a decrease in the use of the cable bundle. We believe that the change will take place at a much faster level during the year, Tim Cook mentioned. We will be stepping into original content world.

We have signed a long partnership deal with Oprah, and as of now, I don’t want to go in-depth about the conversation. Highly motivated people have been hired who are superb confident enough and will be able to talk more on it later.

Apple has decided to play various movies and series on its new service which includes animated movies, reality shows, dramas and comedies which will be collected by Macworld.