Thursday, February 2, 2017

UK growth forecast raised sharply; Snapchat files for $3bn IPO; Amazon wants to be its own deliveryman

1 UK growth forecast raised sharply (Katie Allen in The Guardian) The Bank of England has painted a brighter outlook for the UK economy this year, with faster growth, lower unemployment and a more modest rise in inflation.

After further signs that consumers and businesses have shrugged off the Brexit vote, the Bank revised its earlier gloomy forecasts to predict the economy would grow 2% this year - matching its 2016 performance.

That forecast was above the 1.4% figure policymakers had pencilled in for 2017 in November. It was also in stark contrast to the sharp slowdown predicted by the Bank and others in the immediate aftermath of the vote to leave the EU.

But despite more optimistic forecasts, the central bank highlighted risks ahead. It expects business investment to fall and consumer spending to slow as rising inflation eats into household budgets. It also raised concerns about households becoming overstretched, as it predicted people would use savings to spend.

At its rate-setting meeting the Bank’s monetary policy committee, led by governor Mark Carney, voted unanimously to hold interest rates at the record low of 0.25% and to continue with a programme of electronic money printing known as quantitative easing.

2 Snapchat files for $3bn IPO (Straits Times) Snap Inc, the maker of the disappearing photo app Snapchat, filed publicly for an initial offering, the first US social-media company to do so since Twitter more than three years ago.

The company filed with an initial size of $3 billion, a placeholder amount used to calculate fees that may change. Snap plans to raise as much as $4 billion in the IPO, people familiar with the matter have said, for a market value of as much as $25 billion.

The company's net loss widened to $515 million in 2016, on revenue of $404 million, according to the prospectus filed Thursday. That compares with a loss of $382 million in 2015, on revenue of $59 million.

Snapchat has more than 158 million daily active users. Quarterly average revenue per user on a global basis climbed to $1.05 in the fourth quarter of 2016, compared with 31 cents in the fourth quarter of 2015. Snap plans to use proceeds from the offering for general corporate purposes, which may include acquisitions.

The company said it relies on Alphabet Inc's Google for most of its computing, storage and bandwidth, and any disruptions to Google's cloud functioning could "seriously" hurt its business. Snap said it plans to spend $2 billion with Alphabet over the next five years to use Google's cloud-computing services.

In addition to Google and Apple, Snap named Facebook Inc, including its WhatsApp and Instagram applications, and Twitter as significant competitors. 

3 Amazon wants to be its own deliveryman (San Francisco Chronicle) Amazon isn't content just being the "everything store." Increasingly, it looks like it wants to be its own deliveryman, too. Its announcement of a new air cargo hub in Kentucky is merely Amazon's latest foray into building out its own shipping and logistics unit.

If successful, the move could ultimately mean lower costs for Amazon — and possibly faster delivery and low prices for consumers. But it could also pit Amazon against package deliverers like FedEx and UPS.

Amazon has long plowed its profits back into its business investments. In order to speed up its delivery, it has invested in opening new distribution centers and leasing fleets of trucks. In May, Amazon leased 40 Boeing jets from Atlas Air Worldwide Holdings and Air Transport Services Group Inc., a fleet it dubbed "Prime Air."

The moves comes e-commerce continues to outpace retail sales. Amazon said the number of items it sold in the fourth quarter rose 24 percent compared with a year ago. Its revenue rose 22 percent to $43.74 billion, slightly missing analyst expectations. Profit rose 36 percent to $749 million, or $1.54 per share, ahead of expectations.

If Amazon succeeds in building out its delivery infrastructure, it could ultimately reduce package volume for companies like FedEx and UPS, Roberson said. On the other hand, ecommerce volume is growing so fast there may be room for everyone, she said. For example, UPS reported that 55 percent of its fourth-quarter deliveries — and 63 percent of those in December — were directly to consumers, setting records in both cases.

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