Category Archives: Companies

(Independent) Google to be fined record €4.3bn EU fine over Android – reports

(Independent)

EU commissioners are due to discuss an antitrust probe on Wednesday morning1
EU commissioners are due to discuss an antitrust probe on Wednesday morning

Google is expected be fined around €4.3bn by the European Union over Android apps today, setting a new record for antitrust penalties, according to a person familiar with the EU decision.

The fine, to be announced about midday on Wednesday, ends an EU probe into Google’s contracts with smartphone manufacturers and telecoms operators.

According to Bloomberg reports, Google Chief Executive Officer Sundar Pichai had a call with EU Competition Commissioner Margrethe Vestager late Tuesday for a so-called state of play meeting.

This is a usual step to alert companies of an impending penalty, according to one of the people, who asked not to be named because the discussion is private.

EU commissioners are due to discuss an antitrust probe on Wednesday morning, according to an online agenda.

The European Commission fine will exceed last year’s then-record €2.4bn penalty following an investigation into Google’s shopping-search service. Google owner Alphabet Inc. and the commission both declined to comment on the Android fines.

(Forbes) Is Outsystems Portugal’s Latest Unicorn?

(Forbes) Mr. Madrinha is a journalist with Forbes Portugal and Mr. Leitao is the editor-in-chief of Forbes Portugal and Forbes Angola.

Paulo Rosado, CEO, OutsystemsVICTOR MACHADO

There are those who think “outside of the box” and there are those who think outside of the system that contains the box. Paulo Rosado of Outsystems is one of the rare later types.

This article appeared in FORBES Portugal

When Paulo Rosado moved to the United States in the mid-1990s on a Fulbright Master’s Degree grant to study computational science at Stanford University, the future plans of the recent IT engineering graduate from Lisbon’s Nova University were focused on a career in academia. After just a few minutes talking with him, it is easy to see that he would likely have been successful in that arena. Unlike most engineers, Paulo is very much at ease communicating with humans and manages to get them to immerse themselves in the world of software without knowledge of Java, C++, HTML or any other odd digital language—and two FORBES writers can confirm this.

But academia was set aside, as the airs of Silicon Valley proved too sweet. “I remember perfectly the day when I changed what I wanted,” says Rosado. “It was four in the morning, I was at a workstation – a type of university co-working facility – finishing off a project, myself and four Chinese students, when suddenly it seemed as though a lightning bolt flashed through my head and I thought: this is not the life that I want.” That night, a potentially great professor was lost, but a fine Portuguese business manager was born.

Today, 17 years after founding the Portugal-based enterprise software firm Outsystems, Rosado’s enterprise is believed to have the capacity to achieve the scale of huge companies like SAP or Oracle. Outsystems is the first low-code platform for application development. Shamit Mehta, a lead analyst at the risk capital fund Guidepost Growth Equity, which invested around $55 million in Outsystems in 2016, told FORBES that “the ingredients are all there.”

But this is just the beginning, he says. Mehta estimates that the market for “low-code” software development platforms, the field in which Outsystems operates, will amount to 22 billion Euros in 2022. This reality places the company—the current market leader and supplier of the best product according to the prestigious technological consultancies Gartner and Forrester—on the verge of becoming the next Portuguese unicorn.

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In March, when FORBES Portugal published a cover story about Rosado we pegged Outsystems’ value at around 600 million Euros (around $700 million), based on recent expansion rates and the potential for market growth. Shamit Mehta preferred not to comment on this figure but Joaquim Sérvulo Rodrigues, manager at Armilar Venture Partners, Outsystems third largest shareholder at that time, showed no hesitation in affirming that the figure “represents a conservative evaluation.”

Recently, Outsystems announced it has raised $360 million in investment capital from KKR and Goldman Sachs. The funding values the company at more than $1 billion. The money will be used to accelerate business expansion and for R&D in software automation.

Steve Rotter, CMO, OutsystemsVICTOR MACHADO

In 2001, due to hangover from the North American technology bubble burst, raising capital was not expected to be an easy task but, as the popular saying goes, “fortune favors the brave.” One month after 9/11, Rosado raised one million euros. “We got in through a crack in the door. Six months later, the market closed,” he said while laughing, highlighting that you also need to be lucky. In the case of Outsystems, this luck came after more than 40 pitches Rosado made to potential investors, at the end of which he would often receive responses such as “impossible” or “madness.”

During the the company’s last “Sales Kickoff” at the Hotel Grande Real Villa Itália, in Cascais, at the beginning of February—an event that brought together more than 200 Outsystems employees for a week—Carlos Alves, Rosado’s right-hand man and ‘chief people officer’ at the company, recalls an episode that well reflects Rosado’s determination. “In 2004, the two of us went off to make a pitch to one of the top analysts at a company in the market. At the end, the analyst told us that Outsystems would not survive more than three years because the market would get eaten up by IBM and the other giants. Paulo did not spare his words in response and left the meeting absolutely certain that the guy was wrong and that we would prevail.”

With a product ready for launch, Outsystems designed a business model that started out by targeting the telecommunications sector. It secured its first client, the Portuguese telecommunications company Optimus, which would be crucial to the survival of the firm, before landing the Spanish operator Telefónica, and then another operator in the Netherlands. However, the sector then suddenly went into recession due to high prices for 3G licenses and the market dried up. The needs of the hour required ingeniousness in the product and financial model.

If your business is selling yogurt, you know there is going to be demand to a greater or lesser extent. However, if your field is electric cars, the assumption of demand changes. “Now there is demand for electric vehicles, if a manufacturer had tried to move into the market at the beginning of the century, then they would have had serious difficulties surviving,” explained Rosado. When reaching a market with a very different product with no demand, companies go through a phase often termed “the evangelic sales phase,” in which company leadership must attempt change and create opinions in people about their product. “In these cases, the idea is to get to market two or three years before demand rockets. We arrived twelve years before,” Rosado exclaimed before confessing that over this period Outsystems twice teetered on the verge of bankruptcy.

One of the darkest days, with collapse looming, took place just shortly after its foundation. The business model planned for initial fund raising of one million Euros followed by another round raising three million Euros 18 months later. However, the states of both of its telecommunications clients, and of the capital markets, were not at all favorable. And this is where the importance of Optimus comes in. Due to its agility, the Sonae group telecommunications operator had begun using the platform to come up with internal applications. “Let’s sell this to companies as a solution for making applications,” thought Rosado. And thus it happened. Outsystems won over the toll-road company Brisa, and then ANA – Aeroportos de Portugal – two large companies that were then followed by 20 more clients that enabled Outsystems to break even. “We spent three years spinning out that one million Euros,” says Rosado. “Nobody knew but we were practically out of cash in the bank. That was the time when I lost all of my hair.”

Fresh capital would only appear in 2005 when the company managed to raise 2.2 million Euros, and again in 2007 when ES Ventures, today Armilar Venture Partners, invested 3.2 million Euros. Joaquim Sérvulo Rodrigues, responsible for the Portuguese fund manager, had initially been a naysayer . “I remember commenting to my colleagues that Outsystems was planning to do the impossible,” he recalls.

Eleven years ago, the way companies worked on their information technology systems was the same as they’d done at the beginning of the century when Outsystems was founded. Companies would purchase software packages and then contract large consultancies such as Deloitte or Accenture, for example, to develop a tailored application that would change on a monthly basis in keeping with the dynamics of the business. “One thing was being able to get a market niche and another was changing the functional model in a gigantic industry,” said Rodrigues. Then Outsystems risked everything by changing the way it monetized its business, differentiating itself from competitors.

In 2011, with business still far from any great leap forward, Rosado made the decision to change the pricing model, giving up on the sale of open-ended licenses to begin selling software subscriptions instead. With this change, that he confessed was done “in an act of madness,” the company sought to boost experimentation with the platform and thus gain more clients. However, this would lead to a sharp downturn in earnings as the value of a subscription was far lower than a lifelong license.

Rosado was thus expecting to lose some revenue but he did not predict anything quite as dramatic as what happened. “We thought that we would lower our turnover by three times but instead the drop was six times,” he said. Time, however, would justify the decision. Today, practically every company in every sector has switched from one-off license sales to annual subscription models. In the case of Outsystems, the company went from employing 134 staff members in 2011 to over 600. “Within the space of four years we made the shift from a traditional company to a cloud company,” says Rosado.

Despite having reached the 100 million euros revenue benchmark, Outsystems operates in a market with a potential value of 22 billion euros. Moving forward, one challenge may be resisting a potential takeover bid. With the company having already attracted clients such as Toyota Motors, Siemens and the insurer Axa, and gaining market share in the United States, it is natural and legitimate for software giants to feel threatened. Rosado told FORBES that this he has no plans to make such an exit. “Money was never my objective,” he says.

Furthermore, he also confessed to being the target of massive interest from new investors. Were a takeover to happen, Rosado’s blessing would be an important factor. As Rodrigues explains, “despite a majority of shareholders being able to make this decision, to go against the will of the founder would involve an enormous loss of value.” Rodrigues added that Armilar Venture Partners would always side with Rosado in whatever he decides.

Rosado, meanwhile, remains concentrated on growth, in revenue and talent. “We want to sharpen our cutting edge and clean out any fat,” he says. Rosado lets a smile of pride emerge when talking about his people and does not hesitate to admit that he regularly comes across work done by staff that surpasses his own capabilities. “You need to give the freedom so that innovation can naturally emerge. You cannot do anything on your own,” he says. For example, despite maintaining a top product on the market, Rosado is aware that the engineering could be four times better, which fuels Outsystems’ search for quality personnel.

This explains the hiring of Steve Rotter (considered one of the world’s 100 most influential persons in the field of marketing and digital marketing and has won various international awards) as chief marketing officer and Mike Lambert as sales director in 2017, both professionals with experience in facilitating growth. According to Rodrigues, a year ago the great challenge for Outsystems was to grow in the United States at the same pace it had in other regions, but this no longer remains the case due to the recent policy for contracting people with “advanced experience” in the american market.

In the last six years, Outsystems has recorded soaring rates of growth with turnover spiking by an annual average of 41%. Last year revenue was up by 63%, surpassing 100 million Euros. Currently, over 80% of this turnover comes from outside Portugal with a particular emphasis on the United States – in 2010, the portuguese market accounted for 53% of company income.

Outsystems now has two major challenges, Rodrigues says: maintaining a culture of innovation and convincing the major consultancies, such as Accenture, KPMG and Deloitte, to adopt the company platform, which requires them to cannibalize a business area that has hitherto been extremely profitable. This is a Herculean task but Rosado says he’s ready. “We are already setting up a new cycle so as not to fall into the stereotype of a mature company,” he explains. “I do not like managing mature businesses, as afterwards it is all about price and operations. They bore me.”

(BBG) Titans of Junk: Behind the Debt Binge That Now Threatens Markets

(BBG) Masayoshi Son and Elon Musk leveraged their dreams to the hilt. Patrick Drahi stockpiled debt to build a global cable empire. Michael Dell loaded his computer company with risky loans to buy out activists threatening his control. And a group of Chinese developers borrowed big to expand in the nation’s booming property market.

Call them the titans of junk.

They’re the headliners in a decade-long, $11 trillion corporate borrowing frenzy, fueled by central banks that flooded the global financial system with ultra-cheap money. Investors have been lending to virtually anyone willing to pay a decent yield. But now the easy money is coming to an end. Policy makers, after driving interest rates to unprecedented lows, are hiking those rates for the first time in 10 years. For many companies, it will bring new financial pressures. And for some of them, those pressures could trigger disaster.

Bloomberg News delved into corporate filings, debt offerings, M&A deal tables and bond indexes to find the biggest beneficiaries of this decade of loose lending. The search identified 69 companies spanning the globe that have boosted their debt levels by 50 percent or more in the past five years and now have at least $5 billion of debt. Together, they’re sitting on almost $1.2 trillion of bonds and loans, most of it rated junk and the majority due within the next seven years.

While many are household names like Dell Technologies Inc. and Tesla Inc., others are privately held entities that avoid the scrutiny of the S&P 500 crowd—companies such as specialty-chemicals maker Avantor Inc. and IT firm BMC Software Inc.

But chances are that anyone who socked away cash into a retirement account during the past five years has lent them money. Investors have parked trillions of dollars in mutual funds and exchange-traded funds that buy junk bonds. Pension funds in Canada have started leveraged-finance lending operations. Insurance companies have helped bankroll leveraged buyouts. And, in an echo of the subprime mortgage bubble a decade ago, investors from Sydney to Seattle snapped up hundreds of billions of dollars in AAA rated securities known as collateralized loan obligations that are actually backed by the debt of junk-rated companies.

The central banks that enabled the borrowing will now have to manage a precarious dance: weaning markets off their stimulus without triggering a stampede from one of the most crowded trades in a generation. That could culminate in a full-blown crisis.

“There can be a self-fulfilling prophecy here,” said Christian Stracke, global head of credit research at Pacific Investment Management Co. in Newport Beach, California. “These companies really do require confidence, and if you have a mix of market volatility with unexpected fundamental weakness, then that could create a much more difficult situation than investors are expecting.”

Until then, there are few signs that the borrowing is slowing down. But there are plenty of signals that its only getting riskier. In the past 18 months, institutional investors have snapped up $1.6 trillion of leveraged loans in the U.S. alone, data compiled by Bloomberg show. That’s more than the three previous years combined. What’s more is that private-equity funds, which typically use junk debt to fund the bulk of their buyouts, are sitting on record amounts of money earmarked for such deals. In other words, more junk-debt titans are likely to emerge before it’s over.

“Where this ends is so difficult to say precisely because of the amount of dry powder that’s been raised,” said Danielle DiMartino Booth, founder of Quill Intelligence and a former adviser to the Federal Reserve Bank of Dallas who also writes for Bloomberg Opinion. “You could have the inadvertent effect of prolonging a very dangerous credit cycle.”

For empire builders, the easy money has been the perfect source of cheap funding. Here’s how several companies are now trying to manage their debt burden:

SoftBank Group Corp.

Son, the big-dreaming billionaire founder of Japan’s SoftBank  has gained attention the past few years for raising the world’s biggest tech startup fund, the Vision Fund that’s targeting $100 billion. But that number is dwarfed by the more than $149 billion of debt that the company has also amassed, an almost four-fold increase over the past five years. As Son wrote checks for billions of dollars to fund companies including office-sharing startup WeWork Cos. and ride-sharing company Uber Technologies Inc., SoftBank was also tapping debt markets for tens of billions to fund acquisitions including U.K. chipmaker ARM Holdings and U.S. asset manager Fortress Investment Group.

Photo: Akio Kon/Bloomberg via Getty Images

Even many of the startups that Son funded are now joining in the borrowing bonanza. WeWork, which lost $934 million last year amid a rapid global expansion, issued $702 million of junk bonds in April. Uber raised $1.5 billion from a leveraged loan in March, and demand was so high that it returned to the market two months later to shave half a percentage point off the interest payments off an existing loan.Son’s view is that SoftBank’s leverage should be seen as negligible because of big investment gains, mostly fueled by its 29 percent stake in Alibaba. When including cash and liquid assets and excluding debt for which the holding company isn’t responsible, SoftBank’s borrowings are just 29 percent of its total holdings, spokeswoman Hiroe Kotera said. “This is a safe enough level that even if the stock market crashes, we should be able to deal with it easily,” she said, adding that the company has enough liquidity to handle bond maturities for the next three years.

That’s not helping to ease the minds of creditors who are concerned that SoftBank’s ability to repay its debt has become tied too closely to the whims of the stock market.

“Tech companies’ stock prices can fall sharply at bad times,” said Takahiro Oashi, senior fund manager at Asahi Life Asset Management. “They are more vulnerable to a double whammy of economic downturn and interest rate increases than regular, conventional companies.”

Plenty of other companies have convinced debt investors to suspend what used to be standard demands, like a track record of generating cash flows. (Lenders stand to gain little of the upside but face a ton of downside if a borrower’s projections fail to materialize.)

Netflix Inc.

Netflix , the video-streaming company that eclipsed Walt Disney Co. this year to become the most valuable media company, has tapped the junk-bond market for more than $6 billion over the past five-and-a-half years to help it keep churning out shows for its subscribers.Netflix, which didn’t respond to a request for comment, burned through more than $4 billion of cash the past four years as its debt load grew to more than seven times its Ebitda (earnings before interest, taxes, depreciation and amortization). And analysts expect more to come. Morgan Stanley is predicting that Netflix will return to the debt market this year.

Tesla

Then there’s Musk’s Tesla . When the electric-car maker asked junk-bond investors to lend it $1.5 billion last August, it brought one of its long-awaited Model 3s to the courtyard of the New York Palace Hotel. The company was burning through the equivalent of $8,000 a minute to ramp up production of the car, intended to be Tesla’s first electric vehicle for the masses. But within a few hours, it had orders for $600 million of bonds. After a week, there was so much demand for the debt that Tesla raised an extra $300 million, pushing the company’s total debt load to more than $10 billion.

Photo: Joshua Lott/Getty Images

Tesla ended up paying 5.3 percent on the bonds. To put that into perspective: it’s about what bond investors were earning from 10-year Treasuries in mid-2007 before the Fed started trying to fight the financial crisis by slashing rates.Unfortunately for the buyers of the Tesla bonds, the losses came almost immediately as a series of setbacks fueled doubts that Tesla could meet its production goals. By April, the debt was trading at 87 cents on the dollar. Two months later, with the bonds still deeply discounted and doubts persisting over the company’s manufacturing capabilities, Musk announced the biggest job cuts in Tesla’s 15-year history as part of a broader effort to dial back the company’s frenzied spending. A spokesman for Tesla declined to comment.

He’s not the only junk-debt titan who’s had to check his ambitions.

Altice

After a torrent of deals that helped him amass cable assets from Israel to Portugal to the Dominican Republic, Drahi’s companies were left with a pile of almost $60 billion in junk-rated bonds and loans. The Moroccan-born billionaire has gloated that the wide-open debt markets have allowed him to grow Altice with little risk to himself. His borrowing binge included two of the biggest junk-bond offerings ever.

Photo: Christophe Morin/ IP3/Getty Images

But Altice’s efforts to turn around one of its biggest acquisitions, French telecom company SFR, were stunted amid competition from cheaper mobile plans. A profit warning in 2017 spooked shareholders and at one point wiped out a third of its market value. As part of an effort to shore up its ailing European unit, Altice decided last year to spin off its U.S. business, splitting its massive debt load between two entities—Altice Europe and Altice USA.Drahi’s companies will need to keep pushing out debt maturities in the coming years to avoid getting into trouble, said Mark Chapman, a senior analyst at CreditSights Inc. in London. With $9 billion of Altice Europe’s debt maturing in 2022, the company will need to convince bondholders they can generate enough cash.

“The size of the structure is so big and the dynamics that are affecting it are quite complicated,” Chapman said. “Fundamentally the leverage structure doesn’t really work at too-high rates.”

Representatives for Altice Europe and Altice USA declined to comment.

For some companies, the strains are already materializing. In China, where the government has been seeking to curb real estate speculation and rein in unprecedented borrowing in its corporate sector, developers such as China Evergrande Group and Country Garden Holdings Co. have been battered in debt markets in recent weeks. And the U.S.-China trade war isn’t helping matters.

But many other companies say they’ve been aggressively seeking to pay down their debt. Dell, which boosted its debt load to about $49 billion after its 2013 buyout and 2016 takeover of EMC Corp., has since whittled that number to below $40 billion. The company, which is also planning to take itself public again, told investors this month that it’s committed to paying down enough debt to win back an investment-grade rating.

It’s not as if regulators didn’t attempt to keep the borrowing in check. The three primary entities that oversee the U.S. banking system—the Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.—began cracking the whip in 2013 on banks that underwrote debt that they considered too risky. One no-no: any loan deal that loaded a company with debt more than six times its Ebitda would get extra scrutiny, and barring any offsetting factors, those banks often were slapped with warnings.

But that barely made a dent. Even as the big banks turned away the riskiest borrowers, a host of firms that fell outside the purview of banking regulators—securities brokers, boutique investment banks and even pension funds—swooped in to underwrite those loans. Instead of capping leverage in the market, it continued to grow.

That’s particularly been the case in the leveraged loan market, which has overtaken junk bonds as the biggest source of risky corporate debt. A decade ago, there were only about 60 firms arranging leveraged loans, data compiled by Bloomberg show. By last year, that number had ballooned to 151 as smaller, less-regulated firms like Jefferies Group, Antares Capital and Australia’s Macquarie snapped up market share from top-tier lenders including Bank of America Corp. and JPMorgan Chase & Co. Even private-equity firms—whose buyout targets were often the ones borrowing to fund the deals—started underwriting shops to get in on the act.

With more underwriters falling outside regulatory oversight, leverage in M&A-related deals tracked by debt-research firm Covenant Review climbed from 6.4 times Ebitda in the first quarter of 2015 to more than 7.7 times during the first three months of 2018—well over the regulators’ old cap of six times.

And even those figures could prove to be larger than they seem, thanks to accounting adjustments that let companies ratchet up the earnings projections that are used to convince prospective lenders that their investments will be safe. Companies funding buyouts and takeovers are lowering their projected leverage ratios with cost savings or income that may or may not materialize. That practice, referred to as “add-backs” allows companies to pile on greater amounts of debt relative to earnings.

Consider Avantor Inc., a Pennsylvania-based company backed by private equity firm New Mountain Capital LLC that supplies materials to the biotech and healthcare industries. Avantor borrowed $7.5 billion last year to fund the purchase of VWR Corp., telling lenders that the combined companies would generate more than $1 billion a year in Ebitda.

But almost half of that number came from so-called add-backs that allowed the company to include expected cost savings or increased sales. One example: the company included sales it expected to reap by convincing VWR customers to buy Avantor’s products instead of competitors’. The boosted earnings projections allowed the company to market the deal with a leverage ratio of seven times Ebitda. Moody’s Investors Service, which gave the loan a rating six levels below investment-grade, said the company was unlikely to meet those earnings projections, and it estimated the debt at nine times Ebitda.

Such lofty projections are becoming increasingly common in the fine print of loan documents. Covenant Review, which scrutinizes the risks in loan terms for its investor clients, says that about 30 percent of the Ebitda figures used to calculate leverage in loan deals this year was made up of add-backs. That’s up from just 10 percent in the first quarter of 2015.

All of this means that when markets do turn, investors may be in for a rude awakening.

The bonds they own may end up being worth less than they expect. Companies may find that the lines of investors clamoring for their debt may not be there the next time around. And if panic ensues, regulators who have been laser-focused on preventing another meltdown in the banking sector will suddenly have a new group of shadow lenders to worry about.

Moody’s has already started to warn that investors could end up recovering substantially less in bankruptcies than they have historically. One of the reasons leveraged loans have attracted so many buyers is that they have always been viewed as the safest type of debt you can buy because they are the first in line to be repaid when a company goes bust. Problem is, as companies increasingly tap that market for their borrowings, those lenders are finding that there’s no one left behind them to cushion the blow.

“The effect of that when it happens will be larger than people expect because it’s like a coiled spring,” said Dan Zwirn, chief executive officer at Arena Investors, which manages about $1 billion in investments including loans to small-to-mid-sized companies. When yield-chasing investors “finally feel that shock, whatever that shock is, they’ll be surprised about the actual underlying credit quality of what they own—and then realize that what they thought was liquid actually has no bid. Then we’ll see fire and brimstone.”

(BBG) Facebook Faces U.K. Fine Over Cambridge Analytica Inquiry

(BBG) Facebook Inc. could be fined a symbolic 500,000 pounds ($664,000) by the U.K.’s privacy regulator after the social network giant failed to prevent key user data falling into the hands of a political consultancy that helped get President Donald Trump elected.

The U.K. Information Commissioner’s Office is threatening the company with the maximum penalty allowed, it said Wednesday when issuing its first findings in a probe that looked at some 30 organizations, including social media platforms such as Facebook. The tech giant is accused of not properly protecting user data and not sharing how people’s data was harvested by others.

In its report the ICO also said several overseas regulators and agencies had requested updates to help move their own investigations forward.

“Given this, and the high public interest issues raised by this work, this report has been put together to consistently inform all parties as to our progress at this time,” the ICO said.

On a call with reporters, the U.K.’s Information Commissioner Elizabeth Denham said the fine “sends a clear signal that I consider this a significant issue, especially when you look at the scale and the impact of this kind of data breach.”

“Facebook has failed to provide the kinds of protections they’re required to do under data protection laws,” she said.

The revelations that data belonging to as many as 87 million Facebook users and their friends may have been misused is a “game changer” in the world of data protection, Denham said. Her office is leading the European investigations into how such an amount of data — most belonging to U.S. and U.K. residents, she says — could have ended up in the hands of a consulting firm that worked on Donald Trump’s U.S. presidential campaign.

Read a QuickTake explaining the Facebook-Cambridge Analytica scandal

Facebook will get a chance to respond to the proposed penalties before the ICO releases a final decision.

“As we have said before, we should have done more to investigate claims about Cambridge Analytica and take action in 2015,” said Erin Egan, Facebook’s chief privacy officer. “We have been working closely with the ICO in their investigation of Cambridge Analytica, just as we have with authorities in the U.S. and other countries. We’re reviewing the report and will respond to the ICO soon.”

Bigger Fines

The ICO’s findings show “the scale of the problem and that we are doing the right thing with our new data protection rules,” EU Justice Commissioner Vera Jourova said Wednesday, referring to Europe’s new General Data Protection Regulation, in place since May 25.

Under the law, the ICO could have levied a much higher penalty. Violations of GDPR rules may lead to fines of as much as 4 percent of a company’s global annual sales. For the year ending Dec. 31 2017, Facebook’s revenue totaled $40.65 billion, meaning it could have faced a maximum fine of about $1.6 billion.

But GDPR only applies to violations committed on or as of May 25 and not retro-actively. Instead, a 500,000-pound fine equates to less than 1 percent of the $114 million the company generated per day in 2017.

One of Europe’s most outspoken privacy regulators, Johannes Caspar in Hamburg, Germany, said in an email that his office also started an infringement procedure under the previous data protection law against Facebook’s unit in Ireland, its European headquarters. Any decisions here could lead to a maximum fine of 300,000 euros, he said.

Political Parties

Denham said her office is now combing through “hundreds of terabytes of data” it gathered at the offices of Cambridge Analytica during searches in March after reports that the firm had obtained swathes of data from a researcher who transferred the information without Facebook’s permission.

The ICO also plans to send warning letters to 11 political parties and will call on them to agree to audits of their privacy practices. Enforcement notices are planned against Cambridge Analytica affiliate company SCL Elections and Canadian company Aggregate IQ, all of which worked closely together.

While Facebook earlier said the data of as many as 2.7 million Europeans might have been shared with Cambridge Analytica, the company last month told EU lawmakers that private data about its European users may not have fallen into the hands of the U.K.-based data-crunching venture after all. Facebook said it wouldn’t be able to make any firm conclusions on the matter until it conducts its own audit.

U.K. lawmaker Damian Collins, head of a parliament committee investigating the impact of social media on recent elections, said Facebook needs to be more transparent.

“Given that the ICO is saying that Facebook broke the law, it is essential that we now know which other apps that ran on their platform may have scraped data in a similar way,” Collins said in a statement. “This cannot be left to a secret internal investigation at Facebook.”

(BBG) Cristiano Ronaldo’s Move to Italy Is a Big Score for Jeep

(BBG) Italy’s Juventus Football Club SpA is paying a total of more than $130 million to nab star player Cristiano Ronaldo from Spanish soccer giant Real Madrid Football Club. The Italian team won’t be the only one trying to cash in on the Portuguese footballer’s fame.

Fiat Chrysler Automobiles NV, whose Jeep logo is plastered across the chests of Juventus’ black-and-white-striped jerseys, could get a huge advertising boost in the deal. If Ronaldo can lead Juventus to the UEFA Champions League finals, the media exposure for that one year will be worth about $58.3 million, according to Eric Smallwood, president of Apex Marketing Group Inc. That would be quite a return on the $20 million Fiat Chrysler pays each year for its Juventus sponsorship, according to SportsPro.

Jeep, which makes the iconic Jeep Wrangler, is the crown jewel in Fiat Chrysler’s stable of auto brands. The company forecasts global sales of 1.9 million this year, more than double the 730,000 sold five years ago. Chief Executive Officer Sergio Marchionne wants to bump that to 3.3 millionby 2022, a goal Ronaldo could aid, especially with Hispanic soccer fans, said Chris Chaney, senior vice president at San Diego-based brand consultancy Strategic Vision.

“I can see the fit and where it will help strengthen things,” Chaney said. “The freedom and the adventure, the openness that Jeep represents, it’s appealing to everybody, but it’s particularly appealing to Hispanic new-car buyers.”

Both Turin-based Juventus and Fiat Chrysler are controlled by Italy’s Agnelli family. A spokesman for Fiat Chrysler declined to comment on the value of the soccer deals.

The Agnelli family, which has owned Juventus for more than 90 years, controls Ferrari NV and Fiat Chrysler through its holding company, Exor NV, which owns 64 percent of Juventus. Andrea Agnelli, the cousin of Exor CEO John Elkann, has been chairman of Juventus since 2010. Beyond Jeep, Juventus sponsors such as Adidas, Allianz and Samsung are poised to benefit from Ronaldo’s move.

Juventus in January 2017 presented a new branding strategy to expand revenue from sales of merchandising internationally. Its efforts come as some of its rivals have been sold to Chinese investors, highlighting the value of Italian soccer teams. Juventus, winner of a record seven consecutive Serie A championships, has seen its share pricerise about 35 percent since talk of a deal for the star player surfaced last week.

Ronaldo scored 451 goals in 438 games since he joined Real Madrid in 2009, helping the club to win four Champions League titles, and La Liga, Spain’s top soccer division, twice. Also the UEFA Champions League’s all-time top scorer, Ronaldo earned $61 million dollars in salary and bonuses last year, plus an extra $47 million via endorsements, according to Forbes, making him the third-highest paid athlete in the world behind FC Barcelona star Lionel Messi and American boxer Floyd Mayweather.

His value to marketers is compounded by his huge presence on social media. He has 74.5 million followers on Twitter, compared with 6 million for Juventus and less than 1 million for Jeep. On Instagram, he has 134 million followers, compared with about 10 million for Juventus.

(Reuters) Altice, Huawei tie-up aims to make Portugal a European leader in 5G

(Reuters) The Portuguese unit of telecoms firm Altice, the country’s largest operator, is working with Chinese electronics giant Huawei to make Portugal a leader within Europe in the development and roll-out of next-generation 5G networks.

“I believe that the Portuguese market will be one of the first globally to be able to use this (5G) technology,” said Alexandre Fonseca, CEO of Altice Portugal, after the first demonstration of the technology on Wednesday using a prototype Huawei router with a top speed of 1.5 gygabytes per second.

Fonseca expects the first commercial devices to crop up in Portugal in 2019 or 2020, although regular users are unlikely to have access to the technology before 2021 or 2022, “because various questions need answers, such as investment versus profitability of the business”.

An advertising board is seen during the first demonstration of the technology 5G in Lisbon, Portugal June 4, 2018. REUTERS/Rafael Marchante

At a global level, the first commercial 5G projects are expected to launch in the United States this year, followed by Japan and South Korea in 2019 and China in 2020.

Providers across Europe are also working to roll out services. Vodafone, whose Portuguese unit competes with Altice Portugal, said last month it will begin testing 5G mobile networks in seven of Britain’s 10 largest cities later in 2018, before starting limited deployments in some markets next year.

In Italy, communications regulator AGCOM said the government would auction frequencies for 5G mobile services in September.

Portugal is no stranger to world-class technological innovation. The world’s first prepaid mobile phones were launched here, as were single, country-wide electronic motorway tolls. It has a dense fiber network, which makes it a fertile ground for the development of the new telecoms standard.

Wednesday’s demonstration followed two years of research and testing, which Fonseca says puts the partners ahead of their competition in Portugal.

When implemented on a larger scale, with a denser network of smaller antennae than the current 4G standard, the 5G technology will allow data transfer speeds 50 to 100 times faster than now.

Dutch-based Altice bought the assets of former telecoms monopoly Portugal Telecom in 2015. Altice’s fiber networks, which will help deliver the 5G service, cover 4.3 million homes in Portugal out of the total of 5.3 million, and Altice expects to cover the remainder by early 2020.

“This is extraordinary and does not happen in other European countries, such as Germany,” said Chris Lu, head of Huawei in Portugal. He projects that his company will develop a 5G smartphone prototype by next year or in 2020.

Industry analysts expect 5G upgrades to kick in next decade for faster phones, fixed wireless video and new industrial business uses. So far, there has been no clear game-changing device or service to emerge to drive 5G network demand.

(S-E) Fiat factory workers are angry at Juventus signing Cristiano Ronaldo

(S-EThey are angry that the company, which owns shares in Juventus, have the money to sign Cristiano but not to increase their worker’s wages

After Portugal and Cristiano Ronaldo were knocked out of the World Cup by Uruguay, the striker has been the main focus in the media after being linked with a Real Madrid exit. In the last few days the idea he could end up at Juventus is gathering pace and they’ve moved ahead of other teams such as Manchester United and Paris Saint-Germain.

However, there’s a problem emerging for the Italian side. The car manufacturing giant FIAT owns 29.18% of the Agnelli family’s businesses via Exor N.V., who own the majority of the shares – 63.77% – in Juventus. In fact, Juventus’ current president, Andrea Agnelli, was one of the founding members in the mentioned company, which also includes Ferrari and The Economist Group.

Juventus are willing to pay €100m in transfer fees plus another €120m in wages across his four seasons at the club. This investment of €220m is in order to finally win the Champions League again. However this huge quantity of money has generated a problem for the workers at the FIAT car manufacturing plant. “After Higuain, now Cristiano Ronaldo is coming? It’s embarrassing. The workers at FIAT haven’t had a wage increase in ten years. With Cristiano’s wages, you could give every worker a €200 pay rise. In these ten years we’ve lost 10.7% due to inflation that we’ve never gotten back. And now Fiat Chrysler Automobiles, FCA, is spending €126m annualy in sponsorship, of which €26.5 is for Juventus,” criticised Gerardo Giannone of the DER agency.

(Reuters) U.S. offers German car bosses ‘zero tariffs’ solution to trade row – Handelsblatt

(Reuters) The U.S. ambassador to Germany has told German car bosses that President Donald Trump would suspend threats to impose tariffs on cars imported from the European Union if the bloc lifted duties on U.S. cars, a German newspaper reported on Wednesday.

Handelsblatt said Ambassador Richard Grenell told executives from Daimler (DAIGn.DE), Volkswagen (VOWG_p.DE) and BMW (BMWG.DE) during a meeting that in exchange Trump wanted the EU to annul duties on U.S. cars imported to the bloc.

Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry’s current business model for selling cars in the United States.

Handelsblatt cited people present at the meeting, which took place at the U.S. embassy in Berlin on Wednesday. It said the chief executives of Daimler, BMW and Volkswagen – Dieter Zetsche, Harald Krueger and Herbert Diess respectively – were in attendance.

Daimler and Volkswagen declined to comment. BMW was not immediately available for comment.

A spokeswoman for the German Economy Ministry also declined to comment on the report, saying issues related to the trade dispute with the United States were being handled by the European Commission in Brussels on behalf of EU member states.

A European Commission spokeswoman declined to comment on the report. She said Commission President Jean-Claude Juncker would discuss trade during talks with Trump in Washington later this month.

“This will be an opportunity to discuss the many issues of common interest, notably also relating to trade,” the spokeswoman said.

DAIGN.DEXETRA
+2.08(+3.69%)
DAIGn.DE
  • DAIGn.DE
  • VOWG_p.DE
  • BMWG.DE

Current U.S. import tariff rates on cars are 2.5 percent and on trucks 25 percent. The EU has a 10 percent levy on car imports from the United States.

Trump hit the EU, Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminum at the start of June, ending exemptions that had been in place since March.

The EU executive responded by imposing its own import duties of 25 percent on a range of U.S. goods, including steel and aluminum products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.

Trump’s protectionist trade policies, which also target Chinese imports, have raised fears of a full-blown and protracted trade war that threatens to damage the world economy.

(Revista Cargo) J. Martins Pereira Coutinho: “A TAP brasileira e a sua gestão”

(Revista Cargo)

É um facto que a TAP, desde o ano 2000, tem sido gerida por brasileiros, chefiados por Fernando Pinto. Na altura, o Governo de António Guterres decidiu privatizá-la e o então ministro Jorge Coelho escolheu Fernando Pinto para seu presidente-executivo. Uma escolha estranha, dado que tinha entrado na TAP como representante da Swissair, com a missão de desvalorizá-la antes de confirmar a sua compra, que não chegou a acontecer.

Mais tarde, uma revista brasileira elegeu Fernando Pinto como o salvador da companhia aérea ‘portuguesa’! E referia que «com cinco lições de gestão, o gaúcho Fernando Pinto transformou uma estatal agonizante em uma empresa lucrativa e pronta para ser privatizada».

TAP Air…Brasil?

Uma afirmação ultrajante, que a TAP nunca desmentiu… Segundo o entrevistador, Fernando Pinto conseguiu transformar a TAP num caso de sucesso do mundo da aviação. E acrescentou que, para ele aceitar o cargo, impôs levar mais três brasileiros que tinham trabalhado com ele na falida VARIG, nomeadamente Luiz Mór, Michael Connoly e Manuel Torres, que passaram a gerir a área comercial, as finanças e as operações da TAP.

fernando pinto tapOu seja, quatro brasileiros, em conluio, dominavam, em circuito fechado, toda a estrutura económica, financeira e operacional da TAP! Era uma equipa que funcionava como uma sociedade secreta, onde não se admitia a interferência de terceiros, incluindo representantes do accionista Estado.

Para além disso, segundo a revista, para trabalharem no nosso País, estes brasileiros contrataram professores para terem aulas de história, de negócios e cultura de Portugal.

Além desta iniciativa, estes ‘génios’ brasileiros foram diversas vezes à Bélgica, para conversarem com os advogados da AEA e conhecerem as leis locais… Tudo, aparentemente, para prepararem um plano que previa que a TAP apresentasse lucros nos dois anos seguintes. Porém, os anunciados lucros transformaram-se em prejuízos, que levaram a empresa à falência.

Política laboral portuguesa contra as pretensões brasileiras

Como desculpa do seu fracasso, Michael Conolly, o braço direito de Fernando Pinto, queixava-se de que «havia gente demais, fazendo pouco». E afirmava que era possível fazer a mesma operação, com menos 10% dos 9.000 trabalhadores da empresa. Ao mesmo tempo, lamentava não poder despedir pessoal em Portugal, como ele idealizava. Lembramos que, no Brasil, os despedimentos eram feitos na hora, sem aviso prévio e sem indemnização.

Michael Conolly tapNa entrevista, é também referido que o mercado brasileiro fez com que a TAP deixasse de ser local, para se tornar uma empresa internacional. Uma falsidade escandalosa, que Fernando Pinto não desmentiu. Além disso, omitiu um grave erro da sua danosa gestão, quando cancelou as tradicionais rotas da TAP para a África do Sul e Canadá, onde viviam centenas de milhares de portugueses, que ficaram sem ligações aéreas directas a Portugal. E, a nível doméstico, decidiu cancelar voos regulares de Lisboa para o Porto e Faro, que as companhias aéreas de baixo custo aproveitaram para crescer exponencialmente, à custa do abandono da TAP!

É, porém, estranho que não tenha havido uma investigação sobre as razões deste desprezo da TAP pelas comunidades portuguesas no estrangeiro e também pela preferência de Fernando Pinto pelo mercado brasileiro e pela decisão de comprar a brasileira VEM sem o aval do Estado, dono da TAP.

O início de tudo

A história lamentável deste negócio começou em 8 de Novembro de 2005, quando foi assinado um contrato de compra da VEM, no valor de 62 milhões de dólares. Uma empresa da falida VARIG, presidida por Fernando Pinto, antes de vir para a TAP. Para concretizar o negócio, a TAP formou o consórcio Aero LB com a Geocapital, administrada por Diogo Lacerda Machado, o melhor amigo do primeiro ministro António Costa, que o escolheu para administrador da TAP…

Apesar da mudança de nome para TAP Engenharia e Manutenção, a VEM é um poço de milhões de euros de prejuízos. Diogo Lacerda Machado, porém, ao arrepio do bom senso e da realidade dos factos, continua a defender a sua compra, como administrador da empresa. Uma estranha defesa, que o seu amigo Fernando Pinto certamente agradece…

Talvez por isso, no Congresso da APAVT, em Macau, Lacerda Machado tenha afirmado que «se a TAP não tem feito esse investimento absolutamente estratégico, decisivo para chegar onde chegou hoje, o tempo seria muito pior». Estranhamente, este amigo especial de António Costa não esclareceu «o que seria muito pior» e continuou a defender a sua dama, ignorando que a TAP SGPS teve prejuízos de 27,7 milhões de euros, além de 85 milhões em 2014 e 156 milhões, em 2015.

Que gestão?

Além desta realidade, no primeiro semestre de 2017, os resultados líquidos da empresa foram de 52 milhões de euros negativos, quando, no mesmo período homólogo de 2016, eram de 50.5 milhões de euros. No mesmo semestre de 2017, a TAP tinha um passivo de 2.282,6 milhões de euros, contra 2.126 milhões de euros no mesmo período de 2016, ou seja, mais 7,3%.

tap parpublicaSão números funestos, que constam do relatório e contas da Parpública, que, após a reversão da privatização, passou a controlar 50% do capital da TAP. Porém, a Parpública alega que não consolida as suas contas, por considerar que, «apesar de deter 50% dos direitos de voto na TAP, não detém o controlo, mas apenas uma influência significativa».

Esta denúncia de incompetência do Governo, parece não incomodar o primeiro-ministro António Costa e o seu amigo Lacerda Machado. Além disso, fingem desconhecer a gigantesca dívida da TAP, que cresceu durante a gestão de Fernando Pinto. Em 2017, apenas em juros, a TAP devia 130 milhões de euros, mas, por não poder pagar a dívida, a Banca aceitou o adiamento do seu pagamento, para 2022!

Por alguma razão, antes da privatização, Fernando Pinto anunciou que não havia dinheiro para pagar salários! E, em 2015, afirmou que estava à espera de investimentos para «a colocação do pedido de 53 aviões», porque, como acrescentou, «estávamos restritos em tesouraria». Ou seja, os cofres da TAP estavam vazios!

Em 2014, a TAP já tinha registado 512 milhões de euros de capitais próprios negativos, além de 700 milhões de euros em dívidas à Banca. Por isso, ou não, o accionista David Neeleman sublinhou, publicamente, que «o pior que pode acontecer é perder uma empresa que gera mais de 2 mil milhões de receitas para a economia portuguesa e da qual dependem 13 mil famílias».

Falta ou excesso de aviões?

azul aviaoCuriosamente, em 2016, a companhia aérea Azul, de David Neeleman, também enfrentava sérias dificuldades económicas e financeiras. No entanto, depois do negócio de aluguer de aviões novos e usados à TAP, a Azul recuperou em termos financeiros. Aparentemente, tinha aviões em excesso…

Em todo o caso, é indispensável esclarecer se os aviões eram mesmo necessários à operação da TAP e se a criação da ponte aérea Lisboa – Porto, não serviu de justificação para o aluguer de aviões. Além dos muitos slots que a TAP utiliza no Aeroporto da Portela, esta ponte aérea é uma fonte de prejuízos! Daí, a necessidade de conhecer as razões que levaram à sua criação e, também, se os aviões e motores alugados à Azul são, ou não, indispensáveis…

Entretanto, na rota São Paulo – Lisboa, a TAP desistiu de cinco voos semanais, a favor da companhia Azul, de David Neeleman. E também desistiu de comprar os aviões A350, devido à intervenção de David Neeleman… Em face destas estranhas cedências da TAP, é importante saber se os administradores escolhidos pelo primeiro-ministro António Costa actuaram, ou não, como marionetas de quem sabe de aviação e de negócios…

É, no entanto, indesmentível que quem manda na empresa são os brasileiros e não o accionista maioritário Estado. Isto confirma a incompetência do Governo PS/PCP/BE, cujo ministro das Infra-estruturas, Pedro Marques, apregoa, levianamente, que tudo passa por ele e pelo primeiro-ministro António Costa, que, ao reverter a privatização da TAP, vai ser um dos seus coveiros.

Aquando da reversão, consta que a dívida da TAP à Banca foi garantida pelo Estado. Curiosamente, os aviões que a TAP encomendou também têm o aval do Estado!

Lamentavelmente, é o resultado das ruinosas negociações na reversão da privatização da TAP, imposta por António Costa, com elevados custos para o Estado e para os contribuintes.

Por outro lado, se a TAP for à falência, o consórcio privado, liderado por David Neeleman, não será penalizado. E, entretanto, vai colhendo lucros com o aluguer de aviões novos e usados e o domínio na gestão da TAP, onde tem substituído portugueses qualificados por brasileiros da sua confiança, auferindo escandalosos ordenados.

Tudo em família…

antonoaldo neves tapRecentemente, depois de 18 anos de gestão ruinosa, Fernando Pinto também foi substituído pelo conterrâneo Antonoaldo Neves, ex-presidente da companhia Azul, de David Neeleman. No entanto, continua como consultor nos próximos dois anos e, aparentemente, com as mesmas mordomias e o fabuloso ordenado de presidente. Tudo em família!…

E tudo devido à ruinosa intransigência política do primeiro-ministro António Costa, que queria tomar 51% do capital da TAP, depois de ser privatizada em 61%! Um radicalismo ideológico que vai custar caro aos Portugueses, não só porque o Estado tem apenas 50% do capital, como os privados podem partir quando expirar o prazo do acordo, ou noutras situações…

Por algum motivo, depois de ameaçar anular o contrato com o consórcio privado, com acordo ou sem acordo – como faria qualquer ditador – o primeiro-ministro António Costa acabou cordeirinho, aceitando que os privados mandassem na TAP sem a intromissão dos seus boys, que agem como figurantes de um teatro onde os actores brasileiros brilham, na defesa dos seus interesses pessoais e empresariais…

(ZH) Facebook Wants To Spy On You Via Hidden Inaudible TV Ad Messages

(ZH)

Authored by Mac Slavo via SHTFplan.com,

Social media giant Facebook continues to ramp up the creepy factor. According to a recently filed patent, Facebook wants to spy on you by hiding inaudible messages in TV ads.

Facebook has filed a patent for a system that hides audio clips in TV commercials. These sounds would be so high-pitched that they are inaudible to human beings. They would then trigger your phone to record all the background noises in your home. The patent application is called “broadcast content view analysis based on ambient audio recording.”

According to The Daily Mail, these secret messages would force your phone to record the audio of the private conversations you have without you even knowing. According to a patent application by the social media platform, clips taken of your background conversations and your movements across a room would help advertisers determine whether or not you are watching their promotions.

According to the patent, originally discovered by Metrothe system would use “a non-human hearable digital sound” to activate your phone’s microphone. This noise, which could be a sound so high-pitched that humans cannot hear it, would contain a “machine recognizable” set of Morse code-style beeps. Once your phone “hears” or recognizes the trigger, it would begin to record the “ambient noise” in the home, such as the sound of your air conditioning unit, plumbing noises from your pipes, and even your movements from one room to another. Your phone would even listen in on “distant human speech” and “creaks from thermal contraction”, according to the patent.

Facebook is currently working on the controversial software too, said a patent application published on June 14 this year. If you’re like the rest of us, you might think this sounds like an Orwellian nightmare technology which will let Big Zucker intrude upon the lives of millions of unsuspecting people in unprecedentedly terrifying ways.

The tech is going to be used to monitor what people watch on their “broadcasting device” so that the adverts they are shown on Facebook are likely to appeal to them. This would also allow companies to get an accurate sense of the size of the audience which has viewed their promotion. That’s what Facebook says in its patent, however, there is absolutely no mention of spying on our private lives, invading our privacy, recording our intimate conversations, and forcing advertising into the heart of our homes whatsoever.

(Reuters) Rothschild firms sign deal to end dispute, unwind cross-shareholdings

(Reuters) Two key parts of the historic Rothschild family financial group said they had decided to end a previous legal dispute and would unwind their cross-shareholdings, ending an internal spat over branding.

The Edmond de Rothschild firm had started legal action against the Rothschild & Co arm over the matter, but those two parties said they had since agreed to resolve the dispute.

“The two groups have also agreed to work together to protect the family name in the banking sector,” the two firms said in a joint statement.

“They are thereby putting a definitive end to the litigation between them, before the Tribunal de Grande Instance in Paris. In addition, the two groups will unwind all of their cross-shareholdings,” they added.

Earlier this year, Alexandre de Rothschild replaced his father David as chairman of the family-controlled Rothschild & Co investment bank, maintaining a dynasty founded more than 200 years ago by Mayer Amschel Rothschild.

The Rothschilds, whose five arrows motif stems from the family’s roots in Austrian nobility, have worked on some of the biggest deals in history, including helping finance Britain’s war against French military leader Napoleon.

(CNBC) Debt for US corporations tops $6 trillion

(CNBC)

  • A huge $6.3 trillion in corporate debt should trouble Wall Street investors facing a stricter rate environment even as cash hoarding reaches a peak, according to S&P Global.
  • Speculative-grade borrowers have reached a new record-low cash-to-debt ratio of just 12 percent in 2017, below the 14 percent reported in 2008 during the Great Recession.
Corporate New York skyline

Scott Mlyn | CNBC

The debt load for U.S. corporations has reached a record $6.3 trillion, according to S&P Global.

The good news is U.S. companies also have a record $2.1 trillion in cash to service that debt.

The bad news is most of that cash is in the hands of a few giant companies.

And the riskiest borrowers are more leveraged than they were even during the financial crisis, according to S&P’s analysis, which looked at 2017 year-end balance sheets for non-financial corporations.

On first glance, total debt has risen roughly $2.7 trillion over the past five years, with cash as a percentage of debt hovering around 33 percent for U.S. companies, flat compared to 2016. But removing the top 25 cash holders from the equation paints a grimmer picture.

Speculative-grade borrowers, for example, reached a new record-low cash-to-debt ratio of just 12 percent in 2017, below the 14 percent reported in 2008 during the crisis.

GE on path to reduce debt by $25 billion

GE on path to reduce debt by $25 billion  

“These borrowers have $8 of debt for every $1 of cash,” wrote Andrew Chang, primary credit analyst at S&P Global. “We note these borrowers, many sponsor-owned, borrowed significant amounts under extremely favourable terms in a benign credit market to finance their buyouts at an ever-increasing purchase multiple without effectively improving their liquidity profiles.”

The trend persists even among highly rated borrowers: More than 450 investment-grade companies not among the top 1 percent of cash-rich issuers have cash-to-debt ratios more similar to those of speculative issuers, hovering around 21 percent.

This could lead to trouble for the economy as interest rates rise. The Federal Reserve, which has already hiked rates twice so far this year, has indicated that further increases may be needed to keep the economy in check later in 2018. It has also actively reduced the amount of purchases it is making in the Treasury and mortgage markets.

(IA) China nationalises troubled insurer Anbang

(IA) Insurance giant Anbang is entirely under government control after the country’s regulator confirmed it has seized over 98% of the formerly privately-held conglomerate.

Chinese bonds add diversification to global index

According to a statement seen by newspaper The Wall Street Journal, the China Banking and Insurance Regulatory Commission (CBIRC) approved the transfer of a 98.23% stake to the China Insurance Security Fund on 22 June.

Control of the insurer was seized in February 2018 by the China Insurance Regulatory Commission (CIRC), which rebranded as CBIRC in April.

The regulator said it would retain control of Anbang for one year, but this could be extended by another year if needed, a source told the WSJ.

Corruption concerns

An extravagant overseas shopping spree, that saw Anbang buy New York’s Waldorf Astoria hotel, drew regulatory scrutiny amid worries that the insurer had grown too risky.

The firm’s downfall started in April 2017, when it was forced to make statements illustrating its cash reserves and rebut rumours it was taking risky loans.

At the same time, the CIRC warned it was concerned about corruption in the sector.

The regulator is understood to have been overseeing the firm’s operations from as early as July 2017.

Cash injection

With control of the insurer in the hands of the regulators and its chairman facing a lengthy jail term, a cash injection worth RMB60.8bn (£7bn, $9.3bn, €8bn) was given by the China Insurance Security Fund (CISF) in March 2018.

A month later, chairman Wu Xiaohui was sentenced to 18 years in prison for fraud and embezzlement. He has since appealed his conviction.

At the time, it was stated that the CISF would temporarily hold shares in the group during its period under interim management.

The plan is to gradually transfer the fund’s shares in the insurer to maintain Anbang’s status as a private company.

(BBC) Online Retailers Can Be Forced to Collect Tax, High Court Rules

(BBC) The U.S. Supreme Court rules states can collect sales tax from online retailers.

The U.S. Supreme Court freed states and local governments to start collecting billions of dollars in new sales taxes from online retailers, overturning a ruling that had made much of the internet a tax-free zone and put traditional retailers at a disadvantage.

News of the ruling caused shares of Internet retailers including Amazon.com Inc. and Wayfair Inc. to fall.

The court’s 1992 decision involving catalog sales had shielded retailers from tax-collection duties if they didn’t have a physical presence in a state. Writing for the 5-4 court Thursday, Justice Anthony Kennedy said that ruling was obsolete in the e-commerce era.

Broader taxing power will let state and local governments collect an extra $8 billion to $23 billion a year, according to various estimates. All but five states impose sales taxes.

Wayfair plunged as much as 9.5 percent on the news, and was down 1 percent to $115.13 at 1:25 p.m. in New York trading. Amazon.com dropped as much as 1.9 percent; EBay Inc. dropped as much as 12.6 percent and Etsy Inc. fell as much as 5.7 percent.

The ruling will put new pressure on those companies and other internet retailers and marketplaces that don’t always collect taxes — including Overstock.com Inc.Newegg Inc.and thousands of smaller merchants. Overstock.com lost as much as 7.3 percent; while 1-800 Flowers.com Inc. dropped as much as 1.3 percent and online educational service Chegg Inc. dropped as much as 7.8 percent. Avalara Inc., which makes tax-processing software, rose 11.9 percent to $50.37 at 1:33 p.m.

Retailers Have One Less Excuse as States Can Tax Online Sales

Amazon, the biggest online retailer, wasn’t involved in the case. Amazon charges consumers in states that impose a sales tax, but only when selling products from its own inventory. About half its sales involve goods owned by millions of third-party merchants, many of which don’t collect tax.

A key question for Amazon will be how states will go about collecting taxes from those sellers. An Amazon spokeswoman declined to comment.

The ruling is a victory for South Dakota, whose law requires retailers with more than $100,000 in sales or 200 transactions annually in the state to pay a 4.5 percent tax on purchases.

Although the court left open the possibility that other arguments could be pressed against the South Dakota law, Kennedy’s majority opinion strongly suggested the measure was constitutional, in part because it has the $100,000 threshold and doesn’t try to impose retroactive taxation.

“South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce,” Kennedy wrote.

President Donald Trump told governors meeting at the White House Thursday that the ruling is “a big, big victory” for them and that it was a “good decision.” The Trump administration backed South Dakota in the case, urging that the 1992 ruling be overturned or at least limited to catalog sales.

Not a ‘Green Light’

Andy Pincus, a Washington lawyer who filed a brief on behalf of EBay and a group of small businesses, said the ruling wasn’t a “green light” for other states. “They’re going to have to meet some additional constitutional tests,” he said.

About 16 states already have laws similar to South Dakota’s that could let them require tax collection by internet retailers in the coming months, and more could follow quickly. Other states would have to revise their tax laws.

Traditional retailers declared victory.

“Retailers have been waiting for this day for more than two decades,” said Matthew Shay, chief executive officer of the National Retail Federation. “This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.”

Marketplaces such as EBay, which depend on millions of small merchants selling goods on their platforms, are now pushing for federal legislation providing exemptions for small businesses.

“Today’s ruling is limited to large online retailers and confirms that small businesses are clearly viewed differently by the court,” EBay said in an email. “Now is the time for Congress to provide clear tax rules with a strong small business exemption.”

Retroactive Taxes

Internet retailers say they are especially worried that tax collectors will try to impose years of retroactive liability, which the laws of many states allow. South Dakota and its allies say those concerns are overblown for practical and legal reasons.

Kennedy didn’t directly decide whether states could try to collect taxes retroactively, but he said that issue wasn’t a reason to keep the physical-presence rule. He said the court had other legal tools to ensure that sales taxes don’t become an “undue burden” on small businesses and startups.

Justices Clarence Thomas, Neil Gorsuch, Ruth Bader Ginsburg and Samuel Alito joined Kennedy in a majority that cut across ideological lines.

In dissent, Chief Justice John Roberts said the court should have left it to Congress to change the physical-presence rule.

‘Critical Segment’ of Economy

“Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress,” the chief justice wrote.

The South Dakota measure was opposed by Wayfair, Overstock and Newegg. They said small sellers would be hit with heavy costs of complying with rules for thousands of products in thousands of taxing jurisdictions.

Congress could still intervene. Amazon and Overstock are among the companies that say they support a nationwide law that would relieve retailers from dealing with a patchwork of state tax laws.

The 1992 ruling, Quill v. North Dakota, turned on the so-called dormant commerce clause, a judge-created legal doctrine that says states can’t unduly burden interstate commerce unless authorized by Congress.

Kennedy wrote that “each year, the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the states.”

‘Tax Shelter’

He added: “Quill has come to serve as a judicially created tax shelter for businesses that decide to limit their physical presence and still sell their goods and services to a state’s consumer.”

South Dakota urged the court to let sales taxes be imposed on companies with an “economic presence” in a state — a test South Dakota said its law would pass.

Grover Norquist, president of the anti-tax group Americans for Tax Reform, said in a statement, “Today the Supreme Court said yes — you can be taxed by politicians you do not elect and who act knowing you are powerless to object.”

The case is South Dakota v. Wayfair, 17-494.

(ZH) Intel CEO “Resigns” After Probe Finds Relationship With Employee

(ZH) Intel CEO Brian Krzanich has ‘resigned’ after an ongoing investigation by internal and external counsel has confirmed he had a past consensual relationship with an Intel employee – which is a violation of Intel’s non-fraternization policy.

At the same time – putting some lipstick on this pig – Intel raised Q2 revenue guidance from $16.3bn to $16.9bn.

Full Statement:

Intel Corporation today announced the resignation of Brian Krzanich as CEO and a member of the Board of Directors. The Board has named Chief Financial Officer Robert Swan Interim Chief Executive Officer, effective immediately.

Intel was recently informed that Mr. Krzanich had a past consensual relationship with an Intel employee. An ongoing investigation by internal and external counsel has confirmed a violation of Intel’s non-fraternization policy, which applies to all managers. Given the expectation that all employees will respect Intel’s values and adhere to the company’s code of conduct, the Board has accepted Mr. Krzanich’s resignation.

“The Board believes strongly in Intel’s strategy and we are confident in Bob Swan’s ability to lead the company as we conduct a robust search for our next CEO. Bob has been instrumental to the development and execution of Intel’s strategy, and we know the company will continue to smoothly execute. We appreciate Brian’s many contributions to Intel,” said Intel Chairman Andy Bryant.

Intel expects to deliver a record second quarter, with revenues of approximately $16.9 billion and non-GAAP EPS of approximately $0.99. With accelerating data-centric revenue, the company is off to an excellent start in the first half of the year and expects 2018 to be another record year. Intel will provide full second quarter results and an updated outlook for the full year on the second quarter earnings call on July 26.

As Interim CEO, Swan will manage operations in close collaboration with Intel’s senior leadership team. Swan has been Intel’s CFO since October 2016 and leads the global finance, IT, and corporate strategy organizations. He previously spent nine years as CFO of eBay Inc. Earlier, he was CFO of Electronic Data Systems Corp and TRW Inc. He has also served as CEO of Webvan Group Inc.

Swan added, “Intel’s transformation to a data-centric company is well under way and our team is producing great products, excellent growth and outstanding financial results. I look forward to Intel continuing to win in the marketplace.”

The Board has a robust succession planning process in place and has begun a search for a permanent CEO, including both internal and external candidates. The Board will retain a leading executive search firm to assist in the process.

For now investors have no idea what to make if it – the initial algo dump was met with a wall of buying…

(CNBC) GE shares drop after blue chip is booted from the Dow after 110 years

(CNBC)

General Electric to leave the Dow Jones index

General Electric to leave the Dow Jones index  

General Electric shares were lower early Wednesday, a day after news that the industrial conglomerate would be replaced on the Dow Jones industrial average by Walgreens Boots Alliance.

Shares of GE, which has been in the blue-chip benchmark continuously since November 1907, fell more than 2 percent in premarket trading Wednesday to around $12.70 per share. The stock closed at $12.95 on Tuesday.

GE, with a market cap of more than $112 billion, has seen its shares fall more than 55 percent over the past year, on investors’ concern about the value of GE’s businesses declining.

GE Chairman and CEO John Flannery is in the midst of an aggressive turnaround plan and restructuring.

Flannery replaced GE chief executive Jeff Immelt in the latter half of 2017. Immelt’s departure capped a rocky 16-year run at the helm that saw GE stock lose about 38 percent of its value.

Deutsche Bank’s John Inch had warned back in January that GE would likely be dropped from the Dow this year and that such a move would hurt its shares.

“We believe headline risk to be the most significant risk factor if GE were to be dropped from the Dow – potentially amplified by GE’s high mix of retail investors (roughly 40% of GE’s common stock is held by retail investors),” the analyst wrote.

Nicholas Heymann, a multi-industry analyst William Blair & Co., told CNBC on Wednesday he believes GE’s stock should be trading between $14 and $21 depending on earnings.

“Asset sales are going to come through,” Heymann said in a “Squawk Box” interview, adding the industrial giant is “obviously” going through a transition phase.

“There’s been serial capital misallocation here for a long time,” since 2004 in the early years of Immelt’s tenure, Heymann said.

When Immelt took over at General Electric in 2001 from venerable GE boss Jack Welch, the stock was already turning over, as the dotcom bubble of the 1990s burst and took the broader stock market lower as well. Immelt navigated GE through the aftermath of the Sept. 11, 2001, terrorist attacks and the 2008 financial crisis.

(ECO) Bloomberg: Altice vai vender torres da Meo ao Morgan Stanley

(ECOA Altice deverá anunciar em breve a venda das torres de telecomunicações da Meo ao Morgan Stanley, avança a Bloomberg.

A Altice estará prestes a fechar a venda das torres de telecomunicações da Meo ao ramo de investimento do Morgan Stanleyavançou a Bloomberg (acesso condicionado). A agência refere que a transação poderá ser anunciada ainda esta quarta-feira e confirma a informação revelada pela Reuters de que a empresa deverá vender ao grupo KKR uma participação minoritária na subsidiária que gere estas infraestruturas em França.

É oficial: Prisa mantém a TVI. Oferta da Altice perde o efeito

Estes ativos, considerados um investimento imobiliário de longo prazo (a Altice só está a vender as estruturas metálicas onde estão instalados os equipamentos), estão avaliados em 700 milhões de euros. A dona da Meo também quis vender o portefólio de torres em França, mas deverá alienar apenas uma pequena percentagem da sua subsidiária que gere as infraestruturas no país ao grupo KKR, avaliada em 1,7 mil milhões de euros.

O portefólio português de torres de telecomunicações inclui 3.000 torres em Portugal. Em França, estão em causa 10.000 torres, anunciou a empresa recentemente.

As empresas recusaram comentar as informações, mas a Bloomberg cita “fontes conhecedoras do processo”. A Altice quis vender estes ativos depois de anunciar um travão nas compras perto do final do ano passado. Em causa, a dívida avultada que, neste momento, ronda os 32,2 mil milhões de euros.

(CNBC) Audi CEO arrested in Germany over diesel scandal

(CNBC

Audi S3 automobile

Akos Stiller | Bloomberg | Getty Images
Audi S3 automobile

The head of Volkswagen’s luxury arm Audi was arrested on Monday, the most senior company official so far to be taken into custody over the German carmaker’s emissions test cheating scandal.

Munich prosecutors said Rupert Stadler was being detained due to fears he might hinder an ongoing investigation into the scandal, plunging Volkswagen (VW) into a leadership crisis.

News of the arrest comes as VW’s new group CEO Herbert Diess is trying to introduce a new leadership structure, which includes Stadler, and speed up the group’s shift towards electric vehicles in the wake of its emissions scandal.

“As part of an investigation into diesel affairs and Audi engines, the Munich prosecutor’s office executed an arrest warrant against Mr Professor Rupert Stadler on June 18, 2018,” the Munich prosecutor’s office said in a statement.

A judge in Germany has ordered that Stadler be remanded in custody, it said, to prevent him from obstructing or hindering the diesel investigation.

Audi and VW confirmed the arrest and reiterated there was still a presumption of innocence for Stadler. Stadler himself was not immediately available for comment.

A spokesman for Porsche SE, the company that controls VW and Audi, said Stadler’s arrest would be discussed at a supervisory board meeting on Monday.

VW admitted in September 2015 to using illegal software to cheat U.S. emissions tests on diesel engines, sparking the biggest crisis in the company’s history and leading to a regulatory crackdown across the auto industry.

The United States filed criminal charges against former VW CEO Martin Winterkorn in May, but he is unlikely to face U.S. authorities because Germany does not extradite its nationals to countries outside the European Union.

The Munich prosecutors said Stadler’s arrest was not made at the behest of U.S. authorities. The executive was arrested at his home in Ingolstadt, in the early hours on Monday, they said.

(DW) VW ordered to pay €1 billion fine for Dieselgate in Germany

(DW) Public prosecutors have ordered the auto giant to pay for falsifying their vehicles’ emissions test results. VW has said it “accepts responsibility” and will pay the fine without contesting it.

  
Symbolbild: Volkswagen (picture-alliance/dpa/J. Stratenschulte)

Volkswagen was handed a fine of €1 billion ($1.18 billion) on Wednesday by district prosecutors in the central German city of Braunschweig, close to VW’s headquarters in Wolfsburg.

“Volkswagen accepts this fine and acknowledges its responsibility,” for the Dieselgate emissions scandal, the company said in a press release.

The penalty is for “between the years of 2007 and 2015, allowing some 10.7 million vehicles on the road with unreliable emissions software… in the US, Canada and worldwide.”

Volkswagen slapped with another billion euro fine

The company expressed optimism that paying the fine would partly set right its wrongdoing, and serve as a deterrent for any similar behavior in the future.

News of the emissions scandal broke in September 2015 when US researchers discovered that millions of Volkswagen diesel cars had been installed with faulty software that made the vehicles appear to pass emissions standards, though their pollution levels were actually higher than regulations allowed.

The scandal helped prompt mass recalls, significant damage to VW’s reputation and the resignations of several of the firms’ top employees.

It has since transpired that several other car manufacturers had employed similar software to dupe tests on their diesels, especially in order to pass particularly stringent US standards for nitrogen oxide emissions.

VW boss: Carmaker must become ‘more open’

Volkswagen is also facing fines or investigations from 19 other countries including the US, Canada, India, Brazil, China and Australia.

The move by the Braunschweig prosecutors to file a claim of an administrative offense is one of the few ways that VW can be made to pay for the scandal inside Germany, as it mostly affected cars being sold abroad. There are however still several lawsuits from German consumers pending against the company.

(Reuters) Google faces EU antitrust fine over Android case in July: sources

(Reuters) Google is expected to be hit with a second EU antitrust fine in mid-July for using its dominant Android mobile operating system to squeeze out rivals, three people familiar with the matter said.

The European Commission, which has been investigating the case involving the unit of Alphabet since 2015, could issue its decision in the week of July 9, although the timing might change.

As a deterrent to others, the EU penalty is likely to top the record 2.4-billion-euro ($2.8 billion) fine handed out to Google last year for unfairly favoring its shopping service, sources told Reuters last year.

The EU competition enforcer will also tell Google to stop its anti-competitive practices such as licensing deals which prevent smartphone makers from promoting alternatives to apps such as Google Search and Maps.

Android is the most important of three EU cases against world No. 1 internet search engine Google because of its huge growth potential.

EU-mandated changes however may have little impact on Google because of its market power and the benefits of sticking with the company, industry executives, analysts and even its critics have said.

The Commission declined to comment. Google pointed to a 2016 blog by its general counsel Kent Walker who rejected the EU charges.

Google recently sought a closed-door hearing in a bid to present its case to senior Commission officials and national competition agencies after being told of new details and evidence which the regulator plans to use against the company, other people with direct knowledge of the matter said.

Its request was denied.

A third case where Google was accused of blocking rivals in its online AdSense search advertising in 2016 is likely to drag on to the end of the year or even later, other people said. The company has since stopped its alleged anti-competitive behavior.