1 Google sales disappoint (David Streitfeld in The New
York Times) Alexander the Great is said to have wept because he ran out of
kingdoms to conquer. Google is eager to avoid such a miserable fate. Its core
digital advertising business is so dominant that analysts are questioning just
how much it can continue to grow. So Google is unleashing its vast cash hoard
on robotics, artificial intelligence, smart thermostats and, just this week,
high-altitude drone satellites. The only thing all these acquisitions have in
common is a focus on the future — often, the distant future.
The risk in thinking about what will be big in 2050,
however, is that you can lose sight of 2014. Google’s first-quarter earnings
report surprised Wall Street. The company has traditionally gushed profits
without breaking a sweat. Now it takes more of an effort. One big reason was a
problem of several years’ standing: Internet users are migrating to mobile
devices, but ads on phones and tablets still do not have the familiarity and
appeal they do on bigger computers. And they are not as profitable for Google.
Google’s ad volume jumped 26 percent in the quarter, which sounds good but is
less than expected, while the amount advertisers pay dropped 9 percent, which
sounds bad and is.
There
were other potentially worrisome notes. Operating expenses were 35 percent of
revenue, compared with 31 percent in the first quarter of 2013. One reason:
acquiring companies at a rapid clip entails specialist fees and other costs. Then
there were real estate and construction costs, as Google races with Amazon to
build out the computing cloud for potential customers.
In absolute terms, Google is doing very well. Here is
one way to measure its heft: The company is projected to increase its digital
ad revenue this year by more than $5 billion, which is more than the total ad
revenue of Yahoo or Microsoft. The only viable threat to Google comes from
Facebook, whose ad revenue is forecast by eMarketer to jump 50 percent this
year. Facebook’s revenue is about a quarter of Google’s. Google’s position on
the decline in its profits for mobile ads? Don’t worry about it.
http://www.nytimes.com/2014/04/17/technology/google-revenue-jumps-but-misses-forecasts.html?hpw&rref=business
2 Why China is doing better (Linda Yueh on BBC) Economic
growth of 7.4% in the first quarter is in line with China's 2014 annual
year-on-year target of about 7.5% growth. The slowdown from the 7.7% GDP growth
registered in the past two years is due to the government rebalancing the
economy, shifting away from credit-fuelled investment and towards more
consumption supported by income.
By the
gauge of incomes and not the headline GDP figure, the economy is doing better,
not worse, than last year. It is possible for the greater development of the
services economy to create more jobs and raise incomes, since it is more
labour-intensive than the capital-focused investment sector.
But as an
economy slows, there will be less demand - and it is an open question as to
whether China can create the seven million jobs a year needed for its new
graduates and another 10 million for rural migrants moving to cities as part of
the government's urbanisation drive. Chinese Premier Li Keqiang has said that a
growth rate of at least 7% is needed for that level of employment creation.
This is why China unleashed a fiscal stimulus package earlier this month, to
cushion the slowdown induced by the rebalancing of its economy.
If China
can manage the tricky balance between achieving a more sustainable growth model
while sustaining a high enough rate of growth to create jobs, then it would be
doing better than its headline GDP figures indicate. For now, it's what the
government is claiming to have achieved already.
http://www.bbc.com/news/business-27045529
Just how badly are the communists doing? According to Delhi's Centre for the Study of Developing Societies, the vote share of the so-called Left Front communist alliance—which hovered near 10% for much of the 1970s and '80s and was a respectable 8% in 2004—appears likely to fall below 5% this time. This would give the Left Front only 14 to 20 seats in India's 543-member lower house of Parliament, about a third of the 59 they snagged 10 years ago.
Media attention is understandably focused on the frontrunner, the opposition Bharatiya Janata Party, predicted to win upward of 200 Parliament seats and lead the next government. But over time the demise of Indian communism may end up mattering as much as the BJP's rise. A weak communist showing sharply reduces the chances that India will be saddled with a so-called Third Front government. This ragtag coalition of regional parties is united only by their desire for power and their opposition to both the BJP and the ruling Congress Party. Since 1989, no Third Front coalition has managed to form a government without the communists winning at least 50 seats in Parliament.
There are many reasons for the communists' rapid slide into irrelevance. Over the years, West Bengal and Kerala have become bywords for militant labour unions and hostility to investment. Their brightest people head overseas or to other parts of India for employment. Two decades into liberalization, the manifesto of the Communist Party of India (Marxist) reads like a parody cooked up in the Soviet Union circa 1974. While most Indians are anxious for jobs amidst a sharp economic slowdown, the CPI (M) frets about workers being "the main target of exploitation by the neo-liberal regime.
" In foreign policy, it calls for "South-South cooperation and multipolarity," and complains that India has tilted toward the US and Israel. When it comes to terrorism, the communists seem to think the biggest problem facing India isn't Lashkar-e-Taiba or the Indian Mujahideen but "the bias and targeting of innocent Muslim youth." With views like this, the most surprising thing for India's communists shouldn't be the historic defeat they face, but that it's taken this long for Indians to reject them.
http://online.wsj.com/news/articles/SB10001424052702304311204579505204029485482
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