Friday, July 21, 2017

Cloud earns big profit for Microsoft; Change management as a precise science; Oil declines as supplies surge

1 Cloud earns big profit for Microsoft (khaleej Times) Microsoft reported that its quarterly earnings was lifted on the back of its shift to focusing on computing services hosted in the Internet cloud. The US technology giant said it made a profit of $6.5 billion in the recently-ended quarter as revenue rose to $23.3 billion.

About $7.4 billion of the revenue in the quarter came from "intelligent cloud" offerings that are part of Microsoft shedding its legacy of packaged software and embracing a future in which computing power is hosted online as a service. "Innovation across our cloud platforms drove strong results this quarter," Microsoft chief executive Satya Nadella said in a statement.

Microsoft uses the term "intelligent cloud" to refer to services that let businesses take advantage of computing power online in its data centres, coupled with insights or analysis by artificial intelligence software.

The pioneering software firm had more than 121,000 employees worldwide at the end of March, according to its website. It is seeking to be a first port-of-call for businesses relying on cloud computing, as the industry moves away from packaged software. Microsoft's cloud computing platform will be used outside China for collaboration by members of a self-driving car alliance formed by Chinese Internet search giant Baidu, the companies announced this week.

2 Change management as a precise science (Aisha Sarwari in Dawn) Change management in an ever changing world is perhaps the most important thing a corporation can invest in today. Fast-paced changes in organisational structure and mission, objectives and goals need rapid response from senior management and this is where the doctrine of change management graduates from an art into a precise science.

You can never over-communicate when you ask your organisation to change. Employees are fearful and apprehensive of change. Few executives realise that change communication is less about driving change within an organisation than it is about the models of communication used to convey messages to the target stakeholders. The bottom line is that the old methods no longer work.

What should this communication aim to achieve? First it must counter resistance from the employees and align them to the overall strategic direction of the organisation. This can be achieved by providing counselling to overcome change-related fears or apprehensions.

Secondly, it should inform the stakeholders about the reasons why the change is being effected, the benefits of successful implementation of such change as well as the details of the change (the modalities and logistics of change). The communication must also devise an implementable plan for re-training and re-educating key members of the organisation.

3 Oil declines as supplies surge (Gulf News) Oil declined after tanker-tracker Petro-Logistics SA said Opec’s supply in July will be the highest this year. Futures fell as much as 0.5 per cent in New York, erasing a weekly gain. Supply from Opec members is set to exceed 33 million barrels a day this month, more than 600,000 barrels a day higher than the first-half average, according to Petro-Logistics.

The data could reinforce scepticism about the effectiveness of the Organisation of Petroleum Exporting Countries’ production cuts as officials from the group gather for meetings in St. Petersburg, Russia.

Oil remains in a bear market on concern that growing output in the US, Libya and Nigeria is offsetting other producers’ curbs, meaning stockpiles aren’t shrinking fast enough. The report from Petro-Logistics found that Saudi Arabia, the UAE and Nigeria are behind the extra barrels. The latter is exempt from making cuts as it tries to recover from disruption due to theft, sabotage and attacks by rebels.

Thursday, July 20, 2017

AI could double Singapore growth rate by 2035; Tight budgets trigger lipstick sales; Netflix subscribers cross 100m

1 AI could double Singapore growth rate by 2035 (Straits Times) Artificial intelligence (AI) could nearly double Singapore's annual economic growth rates by 2035, according to research by global professional services firm Accenture.

The research also found that Singapore is at the forefront to integrate innovation and technologies into the wider economy, ahead of the largest economies in the world such as the US, Germany, UK and Japan.

Accenture Research, in collaboration with Frontier Economics, modelled the impact of AI in 33 economies that together generate more than 80 per cent of the world's economic output. The research compared the size of each country's economy in 2035 in a baseline scenario, which shows expected economic growth under current assumptions, and an AI scenario which shows expected growth once the impact of AI has been absorbed into the economy.

AI was found to yield the largest uplift in economic growth for Singapore, potentially increasing its annual growth rate from 3.2 per cent to 5.4 per cent by 2035, translating to an additional $$215 billion in gross value added (GVA). This is ahead of other large economies such as the US, with AI potentially adding $$8.3 trillion in GVA by 2035, increasing its annual growth rate from 2.6 per cent to 4.6 per cent by 2035.

The potential to significantly boost the productivity of labour will be driven by innovative AI technologies that enable people to make more efficient use of their time and do what humans do best - create, imagine and innovate new things, said the report. With the adoption of AI, Singapore would only require 13 years for its economy to double in size, while without AI, it will take the country 22 years, it said.

2 Tight budget triggers lipstick sales (Sarah Butler in The Guardian) With disposable income under pressure, shoppers are holding off on buying big ticket household items like sofas, beds and washing machines. But tough times also encourage shoppers to treat themselves, and history has shown that sales of cheap thrills – from lipstick to takeaway coffee, expensive perfume, skin cream and sparkling wine – can do well in a downturn.

“The backdrop is very uncertain and it was made worse by the tragic events that happened across British cities over the last few months,” said Paula Nickolds, managing director of the John Lewis department stores chain, referring to the terror attacks in London and Manchester.

She said John Lewis’s middle England customers were now feeling “uncertain and worried about what the circumstances will mean for their future financial prosperity” and so are beginning to change their shopping behaviour.

Nickolds said trading in “spontaneous” categories, was holding up robustly. Beauty product sales are up more than 7% on last year and womenswear is up 4.4%. Sales of lipstick rose 31% in the three months to the end of June against the same period last year with Instagram-friendly brightly coloured summer lip shades especially highly sought after.

The link between make-up and economic times is an old one. When an executive at Est̩e Lauder noted that sales of expensive lipsticks soared in the wake of the 9/11 terror attacks, he dubbed it the Lipstick Index Рan alternative economic indicator that sees make-up sales rise in a downturn. In the four years from 1929 to 1933, industrial production in the US halved, but sales of cosmetics rose.

3 Netflix subscribers cross 100m (BBC) Netflix shares surged after the video streaming firm said it had about 104 million subscribers. The US company said the better-than-expected number was a sign that investment in new shows and movies was paying off.

Netflix has produced shows such as 13 Reasons Why, about teen suicide, political drama House of Cards and The Crown. Boss Reed Hastings said it was "the rewards of doing great content". The firm said it added about 5.2 million members during the quarter, mostly from overseas. International members now account for about half of its subscriber total.

Netflix has cultivated those audiences with movies such as Okja, a film made by one of South Korea's top directors about a young girl's quest to recover a giant companion from a multi-national corporation. The growth helped Netflix to report a 32% rise in second quarter revenues to $2.8bn, and it expects revenues to reach nearly $3bn in the third quarter.

Profits for the three months to June were $65.6m, up about 60% compared with the same period last year. Creating new content was critical to competing against other online rivals such as Amazon and YouTube, as well as broadcast television networks, Netflix said.

Monday, July 17, 2017

Robot advisers to rock investment world; Govts must invest in 4th industrial revolution; Federer's 8th Wimbledon crown

1 Robot advisers to rock investment world (Goh Eng Yeow in Straits Times) Robo advisers may prove the biggest game changer in the world of investing, playing a key role in shaping people's financial future.

Robo advisers (robos for short) offer a cheap, automatic version of the services provided by an expensive financial adviser to pick the stocks and bonds you invest your savings in. They are able to do so by using a computer which can perform a much more sophisticated job than its human equivalent - at the touch of a button.

And if they become a part of our lives, we will find that rather than try to figure out by ourselves which stocks to buy or sell, we can use robos to get a diversified exposure to thousands of global stocks and bonds - and if all goes well, end up financially better as well.

So far, robos are largely confined to much larger markets such as the USs where start-ups are beginning to assert themselves - disrupting the space now occupied by the traditional fund management industry.

In a recent article, Business Insider observed that the global assets managed by robos reached $200 billion last year and may hit as much as $600 billion this year. The journal also estimated that if this pace of growth continues unabated, robos will grow their assets to a whopping $8.1 trillion by 2020.

2 Govts must invest in 4th industrial revolution (Larry Elliott in The Guardian) The first industrial revolution was about water and steam. The second was about electricity and mass production. The third harnessed electronics and information technology to automate production. Now it is the turn of artificial intelligence, nanotechnology, biotechnology, materials science, 3D printing and quantum computing to transform the global economy.

“The speed of current breakthroughs has no historical precedent”, the WEF said. “When compared with previous industrial revolutions, the fourth is evolving at an exponential rather than a linear pace.”

But if this really is the dawning of a new age, it seems somebody forgot to tell the people with the power to turn ideas into products. The multinational companies that bankroll the WEF’s annual meeting in Davos are awash with cash. Profits are strong. The return on capital is the best it has been for the best part of two decades. Yet investment is weak. Companies would rather save their cash or hand it back to shareholders than put it to work.

One possible explanation for this corporate caution is that businesses think bad times are just around the corner. If innovation is going on apace (which it is) and companies have cash in the bank (which they do), one solution is simply to wait for the moment when entrepreneurs rediscover what Keynes called their animal spirits.

Another would be for governments to say enough is enough. If, despite the lowest ever borrowing costs and repeated cuts in corporate taxation, the private sector won’t invest in the fourth industrial 
revolution, the public sector will. 

3 Federer’s 8th Wimbledon (Martyn Herman in Johannesburg Times) Ruthless Roger Federer thrashed suffering Croat Marin Cilic 6-3 6-1 6-4 to become the first man to win eight Wimbledon singles crowns on Sunday, five years after landing his seventh.

The Swiss maestro, appearing in his 11th Wimbledon final, was challenged early on but once he broke a nervous Cilic in the fifth game of the opening set the match became a no-contest. Not that Federer was concerned as, 23 days before his 36th birthday, the father of four became the oldest men's singles champion at Wimbledon in the professional era -- doing so without dropping a set throughout a glorious fortnight.

For Cilic, his first final on Centre Court became a nightmare broadcast to hundreds of millions around the globe. After a reasonably solid start he became discombobulated and after falling 3-0 behind in the second set he slumped on his courtside chair and could be seen sobbing as a physio and tournament referee attended him.

For a moment it looked as though the final might end in a retirement for the first time since 1911. Given sympathetic cheers by the Federer-favouring 15,000 crowd, the 28-year-old managed to regain his composure but there was no chance of Federer letting up as he accelerated towards a record-extending 19th grand slam title.

Sunday, July 9, 2017

Iraq claims Mosul victory; Rental bargains in Dubai; When one job doesn't pay the bills

1 Iraq claims Mosul victory (Straits Times) The loss of its two largest cities will not spell a final defeat for the Islamic State in Iraq and Syria - also known as ISIS and Daesh - according to analysts and US and Middle Eastern officials.

The group has already shifted back to its roots as an insurgent force, but one that now has an international reach and an ideology that continues to motivate attackers around the world. Iraqi Prime Minister Haider al-Abadi has claimed victory over ISIS in Mosul after nearly nine months of fighting. A coalition force is also fighting to drive ISIS out of its Syrian stronghold of Raqqa.

"These are obviously major blows to ISIS because its state-building project is over, there is no more caliphate, and that will diminish support and recruits," said senior fellow Hassan Hassan at the Tahrir Institute for Middle East Policy in Washington who has co-authored a book on the terror group.

"But ISIS today is an international organisation. Its leadership and its ability to grow back are still there." ISIS has overshadowed its militant precursors like Al-Qaeda by not just holding territory, but also running cities and their hinterlands for an extended period, winning the group credibility in the militant world and allowing it to build a complex organisation.

So even while its physical hold slips, its surviving cadres - middle managers, weapons technicians, propagandists and other operatives - will invest that experience in the group's future operations. And even though its hold on crucial urban centres is being shaken, ISIS is in no way homeless yet. In Iraq, the group still controls Tal Afar, Hawija, other towns and much of Anbar province.

2 Rental bargains in Dubai (Manoj Nair in Gulf News) If their current landlords are not negotiating, Dubai’s tenants are better off scouting around among the new homes being delivered in the city for the right deals.

Market sources confirm that while most landlords with older properties seem unwilling to drop rents, those with new properties are more willing to give in to market and tenant sentiments. Many of them would have existing mortgage or instalment pay-offs to consider, and they would rather have a confirmed tenant signed up now than leave the property vacant for weeks or months.

The second-half of the year should see the great tenant churn — where they ditch their current premises and move to new locations — pick up further. It is then up to the tenants to search for — and negotiate — terms that are more favourable to them.

“Many existing tenants have taken this opportunity to renegotiate lease terms”, said John Stevens, Managing Director of Asteco. “This has resulted in an increased churn of tenants. “As with the sales market, there has been an increase in the number and range of incentives available,” the Asteco report says.

“Landlords are increasingly offering enticements such as furnishings [without increment], rentals inclusive of Dewa bills, or rent-free periods of up to two months.” Those rent-free periods can be a big help with residents keen to keep the cost of shifting as low as possible.

3 When one job doesn’t pay the bills (Angelique Arde in Johannesburg Times) Self-employment may be on the decline, but more employed people are setting up sideline businesses to supplement their income, the latest Old Mutual Savings & Investment Monitor shows.

The monitor is a survey of urbanworking South Africans, examining their levels of savings and investment as well as their attitudes to finances. This year's monitor shows that self-employment has decreased from 12% to 8%.

Priya Naicker, advice manager for Old Mutual Personal Finance, said this was largely due to limited support for entrepreneurs and uncertainty in a tough economic environment.

But "while those who run their own businesses are in the minority, this doesn't mean to say that there's no appetite for it", said Lynette Nicholson, research manager at Old Mutual. "On the contrary, 27% of those who are not self-employed - in other words, people with jobs - say they think about starting their own business all the time or a lot of the time."

Respondents to the survey said the main barrier to starting their own business was lack of funding, followed by lack of confidence, and uncertainty about the type of business they would like to own. Fear of losing a steady income was holding 14% back.

An additional survey among city dwellers found that 37% have a sideline business or job. Old Mutual calls them "slashers" - referring to the "slash" between their job titles. For example, beautician/baker. This was a global phenomenon, Nicholson said. But in South Africa, it seems to be a trend among people in the middle- to upper-income bands.

Saturday, July 8, 2017

US jobs growth faster than forecast; South Africa sees retail job losses; GM back as US' most valued carmaker

1 US jobs growth faster than forecast (BBC) US employment rose by more than expected last month, but wage growth remained subdued, latest figures show. The economy added 222,000 jobs in June, the US Department of Labor said, and job creation in April and May was higher than previously estimated.

However, despite the job gains and a low 4.4% unemployment rate, wage growth remained tepid. Average wages rose 2.5% year-on-year, which analysts said was a sign the market still had room to improve.

Economists have expected job growth to slow and wages to rise, as more people are employed and firms have a harder time hiring. Some of the strongest employment growth in June came in the fields of health care and social assistance, financial activities and mining. Government employment also increased.

But there are still more than five million Americans working part-time who would like to have full-time work, according to the Labor Department's report.

2 South Africa sees retail job losses (Palesa Vuyolwethu Tshandu in Johannesburg Times) As retail and consumer businesses continue to see margins freeze, industry pundits warn that job losses may be on the horizon for what were once the darling stocks of the JSE.

Rod Salmon, a consumer and retail analyst at Barclays, said the retail industry was expected to see job cuts. "If you look at how many jobs Edcon cut, they are going to have the same in Woolworths, Truworths and TFG ... everyone will cut jobs to become more efficient."

He added that for retailers the two biggest costs were rent and staff and to create greater efficiencies retailers would now have to start shedding in those key areas. Edcon CEO Bernie Brookes has not been immune to job losses, having closed down 100 stores last year, with 150 more expected to close this year.

Retail is one of the biggest employers in the country, with consumption contributing about 63% of the country's GDP. According to the Quarterly Labour Force Survey, in the first quarter 3.2 million people were employed in the trade sector. This makes the sector the second-largest employer after the government.

On a quarterly basis 15 000 jobs were lost in the sector, which could be an early indication of worse to come or could be explained by a temporary increase in seasonal workers over the festive season. On an annual basis 49 000 more people were employed in the trade sector.

Andre Kriel, general secretary at the South African Clothing and Textile Workers' Union (Sactwu), said the organisation was concerned about the state of retail, as most of Sactwu's members were in manufacturing and were affected by retail's struggles.

3 GM back as US’ most valued carmaker (Khaleej Times) After three months as the nation's most valuable automaker, a bad week in an otherwise stellar year has knocked Tesla from the top perch. Over the first six months of the year, Tesla shares gained more than 50 per cent and the electric car company passed General Motors and Ford in market cap.

But shares have plunged almost 15 per cent this week, translating to lost market value of $8.7 billion. GM has regained the top spot with a value of $52.67 billion compared with $50.74 billion for Tesla. Tesla has been hit by a trifecta of bad news.

Tesla's gains this year are still noteworthy. The shares are still up more than 40 per cent. GM shares gained about two per cent in the same period, while Ford's have declined.

Thursday, July 6, 2017

Record quarterly profit for Samsung; Untreatable 'superbug' spreading; A robot waitress in Pakistan

1 Record quarterly profit for Samsung (BBC) Samsung Electronics has posted its biggest ever quarterly profit thanks to surging global demand for memory chips. The South Korean tech giant reported an operating profit of $12bn in the three months to June, up 72% on a year earlier.

Sales climbed 18% to 60 trillion won, buoyed by strong sales of smartphones including the new flagship Galaxy S8. Analysts say the results indicate Samsung has recovered from the disastrous Galaxy Note 7 recall. That handset was axed after a battery fault led to some devices catching fire.

Samsung also launched a new phone in South Korea using parts form the Note 7 to "minimise the environmental impact" of its high-profile flop. Some research firms predict that Samsung is set to overtake Intel as the world's biggest chipmaker by sales this year.

2 Untreatable 'superbug' spreading (The Guardian) The World Health Organization has warned of the spread of totally untreatable strains of gonorrhoea after discovering at least three people with the superbug. Giving details of studies showing a “very serious situation” with regard to highly drug-resistant forms of the sexually transmitted disease (STD), WHO experts said it was “only a matter of time” before last-resort gonorrhoea antibiotics would be of no use.

“Gonorrhoea is a very smart bug,” said Teodora Wi, a human reproduction specialist at the Geneva-based UN health agency. “Every time you introduce a new type of antibiotic to treat it, this bug develops resistance to it.“ The WHO estimates 78 million people a year get gonorrhoea, an STD that can infect the genitals, rectum and throat.

The infection, which in many cases has no symptoms on its own, can lead to pelvic inflammatory disease, ectopic pregnancy and infertility, as well as increasing the risk of getting HIV.

3 A robot waitress in Pakistan (San Francisco Chronicle) The owners of a pizza shop in Pakistan say business is booming now that they've introduced a robot waitress. Osama Jafri, the engineer who designed the 25-kilogram robot, says it can greet customers and carry pizzas to their tables.

The robot resembles a short, slender woman wearing a long dress and apron. He says he wrapped a scarf around the robot's neck so as not to offend conservative patrons.

He says sales at, in the town of Multan, have doubled since the robot was unveiled in February. Jafri's father Aziz, who owns the restaurant, says he has three more robot waitresses and plans to open a new branch.

Wednesday, July 5, 2017

An electric future for car makers; UK productivity below 2007 level; Signs of a Canadian housing bubble

1 An electric future for car makers (Adam Vaughan in The Guardian) Volvo’s decision to exclusively build electrified or hybrid cars is the beginning of the end of the company’s relationship with fossil fuels, according to one motoring organisation.

One Swedish car maker starting down the road to a zero emissions future will not solve global warming alone. But the whole automotive industry following suit would begin to make a serious difference in reducing oil demand and emissions.

Transportation accounts for 14% of global greenhouse gas emissions and, as the US Environmental Protection Agency notes, almost all of the energy – 95% – powering those cars, planes, trains and ships still comes from petrol and diesel.

Electric cars show a route off that dependence, but their take-up has repeatedly disappointed. There are now 2m globally, out of more than 1bn cars in total, showing the mountain that still needs to be climbed. Bloomberg predicts 41m electric car sales a year in 2040, while BP this year revised its prediction to a total of 100m on the roads by 2035.

Renault-Nissan has arguably led the way in 100% electric cars so far, with 350,000 sold in total. VW, looking to clean up its image after the diesel scandal, plans to sell 1m electric cars a year by 2025. Volvo’s target is to sell 1m electric vehicles – that includes plug-ins and hybrids as well as pure battery-powered cars – by 2025.

2 UK productivity below 2007 level (BBC) The productivity of UK workers has dropped back to pre-financial crisis levels, according to official figures. Hourly output fell 0.5% in the first three months of the year, the Office for National Statistics said.

At the end of 2016, productivity returned to the level seen before the downturn, overturning years of decline which has weighed on wages. But it has now slipped back again and is 0.4% below the peak recorded at the end of 2007, according to the ONS.

Economists have warned that the UK's productivity continues to lag behind its major trading partners such as the US, France and Germany.

3 Signs of a Canadian housing bubble (Matein Khalid in Gulf News) The Canadian housing bubble has gone so ballistic that the Ontario government is considering a 15 per cent tax on foreign buyers to cool down the speculative spiral in Toronto condominiums.

The smart money on Wall Street' latest trade is to short Canadian banks and property developers, the fabled hedge fund Great White Short. Canadian property prices have doubled in the past decade, thanks to low interest rates, high-end immigration, flight capital from China/Southeast Asia, with Toronto and Vancouver the epicentre of the housing bubble.

A housing bubble is a money-spinning feast for speculators since they only put down 10-25 per cent as an initial downpayment. Yet as some learnt the hard way, leverage wipes out investor equity when a housing bubble bursts, often taking down entire banking systems and consumer economies.

In countries that criminalise bankruptcy, the choice for a leveraged homeowner when a bubble bursts is to either face jail or flee. This is not the case in the US the Canada, where non-recourse mortgages make home price speculation a one-way bet when prices soar in a speculative bubble.

Canadian home prices have gone parabolic since 2010, up 60 per cent despite the plunge in crude oil prices and the election of a Liberal Party Prime Minister in Ottawa. Yet there are now unmistakable signs that the Canadian housing bubble is about to pop. New home sales have plunged even though prices are at record highs.

Ontario's Fair Housing Plan only tells me this time the wolf is here. The near collapse of subprime mortgage lender. Home Capital Group has eerie echoes of the failure of Lehman Brothers. Home Capital shares fell 90 per cent before Warren Buffet financed C$2.4 billion lifeboat.