Thursday, July 28, 2016
Alphabet beats earnings forecast; Amazon boss is third richest man; Globalisation, as we know it, is over
1 Alphabet beats earnings forecasts (San Francisco Chronicle) Alphabet Inc. on Thursday reported second-quarter earnings of $4.88 billion. The California-based company said it had profit of $7 per share. Earnings, adjusted for stock option expense, came to $8.42 per share.
The results surpassed Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of $8.07 per share.
The Internet search leader posted revenue of $21.5 billion in the period. After subtracting Alphabet's advertising commissions, revenue was $17.52 billion.
2 Amazon boss is third richest man (BBC) Strong earnings from Amazon and a boost to the company's stock have made its founder, Jeff Bezos, the world's third richest man, according to Forbes. Mr Bezos's owns 18% of Amazon's shares. Forbes estimated his fortune to be $65.3bn.
Amazon's revenue beat analysts' expectations, climbing 31% from last year to $30.4bn in the second quarter. Profit for the e-commerce giant was $857m, compared with $92m in 2015. Amazon had developed a reputation for announcing little or no profit each quarter, but appeared to hit a turning point last year and has seen improving earnings since.
Amazon shares have spiked 50% since February. Amazon's Prime membership, which offers extra services including free shipping for an annual fee, saw impressive international growth. In June, Amazon launched Prime in India to take advantage of the country's large consumer market.
Amazon's cloud computing unit also spiked. Revenue for Amazon Web Services (AWS), climbed 58.2% to $2.89bn, beating analysts' exceptions of $2.83bn. Sales growth for the unit in North America climbed 10% and 8% in the rest of the world. Amazon has grown its market share in cloud computing compared with rivals such as Microsoft and Google.
3 Globalisation, as we know it, is over (Ruchir Sharma in The Guardian) Inside Europe the political earthquake is receding, with the installation of a new UK prime minister who, ostensibly, did not want to leave the EU. Yet even if Brexit does not herald the unravelling of Europe or of the global economy, it is the most important sign yet that the era of globalisation as we have known it is over. Deglobalisation will be the new buzzword.
The world has entered what I call the AC era – after the crisis of 2008. It is already marked by much more upheaval than prevailed in the era before the crisis, and many of the policies and leaders that nations have embraced, hoping to ease the pain, have only made matters worse.
Worldwide, an anti-establishment revolt has been raging since the crisis. In 30 of the major democracies, the incumbent has been winning in as few as a third of national elections each year since 2008, down from two-thirds before that year. In the 20 top emerging and developed nations, the median approval rating of the incumbent leader has fallen from a high of 54% in the years before 2008, to just 37%.
Anger at incumbent governments is now widely seen as a boon to rightwing populists such as Donald Trump, Marine Le Pen, and some of the leaders of the Brexit campaign. This, however, is a revolt against the establishment, not an ideology, left or right.
The period since 2008 has seen weak wage growth but spectacular returns for the wealthy: in Britain, wages are up 13%, but the stock market is up 115%. This story repeats itself in country after country. In a recent study of 46 major economies, Credit Suisse found that prior to 2007, wealth inequality was on the rise in 12 of them; but after 2007, that number more than doubled to 35.
The hype for globalisation that excited the era before the crash has given way now to fears of deglobalisation. Global capital flows fell from a peak of 16% of global GDP in 2007 to just 1.6% – a level last seen in the 1980s. This retreat will act as a drag on economic growth, suggesting that every country needs to downsize its ambitions, or face new outbreaks of frustration.
Unfettered globalisation lifted millions of people out of poverty in the emerging world, but it also frayed the social fabric of many western nations. Brexit is just one manifestation of the anti-globalisation backlash in the post-2008 era. The champions of that backlash are pushing policies that are likely only to exacerbate the global economic slowdown.
But the message from Brexit and similar movements is clear: economic growth may have to take a back seat while political leaders work to address the anger of those who believe that globalisation has left them behind.