Nintendo shares plummet 17.7%
A statement made on Friday by Nintendo saying that revenues from Pokémon Go would not impact its profits sent company shares tumbling as it revealed it has no control over the production nor ownership of the game.
The statement said that Pokémon Go “is developed and distributed by Niantic Inc” to which “the income reflected on the company’s consolidated business results is limited”
The news shocked investors around the world as the statement made clear that Nintendo would not be enjoying significant profits made due to the global phenomenon. Instead, the profits will go to US firm Niantic in partnership with Google.
Immediate reaction meant that the Kyoto-based company saw its biggest decline since October 1990 with its stock price plummeting down to 17.7% to its daily limit at (5,000 yen) having more than doubled in market value since its release earlier this month.
Despite the record fall, shares in the company remain up 60% as its market cap stands at 3.29bn.
The statement had little impact on the Nikkei 225 which closed at 16,620.20 -6.96 (-0.04%) in broadly flat trade.
Nintendo is due to report its first quarter results this week but said in its statement that “the company is not modifying the consolidated financial forecast for now”
Nintendo does however claim ownership to a 32% stake in the company and may see an overturn in profits produced with its up and coming release of Pokémon Go Plus this summer. However, Nintendo have stated that profits from this have been included in its 2016/17 fiscal year predictions.
25/07/2016
Vodafone records earnings increase in Q1
Vodafone records an increase in earnings in the quarter ending 30th June.
In the release this Friday, Vodafone reported its’ total organic service revenue for the past 3 months at €12.3 billion. The figure is 2.2% up from last quarter and beating analysts estimates.
The increase was driven by a 7.7% rise in earnings in Africa, the Middle East and the Asia Pacific region [AMAP]. In India Vodafone added 1.4 million mobile customers and reported on 3,300 new G3 sites which represents a rise to 96% population coverage in targeted urban areas. The group also expanded greatly into Turkey, Egypt and Ghana.
Organic based service growth, a metric which takes into account access charges and roaming fees but leaves out sales of handsets, is the companies preferred measure of sales success. However, strong organic growth this quarter was offset by an adverse impact from movement in the foreign exchange market, depressing revenues from growing markets such as Turkey, Egypt, India and South Africa.
Although regulatory pressures to lower roaming charges weighed down on European revenues, the company achieved organic service growth of 0.3% in the European market. Earnings grew by 1.6% in Germany and 1.2% in Italy as well as Spain but a contraction was reported in the Dutch market.
The group continues to struggle in the United Kingdom, where service revenues declines 3.2%. In March Vodafone became the most-criticised monthly mobile provider in the country, as the Financial Times reports. More than three times the average 10 complaints per 100,000 customers within the past three months of 2015 where recorded.
Vittorio Colao, Group Chief Executive, commented on the earnings report:
“We continued to make good progress during the first quarter. In Europe, our growth remains stable despite regulatory pressure on roaming revenue, with good performance in Germany, Spain and Italy while we are focused on improving our performance in the UK. Our growth momentum in AMAP remains strong, with excellent performance in South Africa, Turkey and Egypt and ongoing recovery in India. Customers in multiple markets are attracted by our ‘more-for-more’ commercial offerings of larger data bundles and extra services, while we are seeing continued success with our fixed broadband and enterprise strategies.’’
Shares rose over 4% by the close of play on Friday afternoon.
Crowd2Fund launches AI feature for investment
Crowd2Fund launches new automated investment feature – Smart-Invest
One of the UK’s leading peer-to-peer investment platforms, Crowd2Fund has launched a new IA feature which will allow investors to automate their crowd lending activities through artificial intelligence. Smart-Invest will make it possible for investors, who have set up an Innovative Investment ISA, to use an automated service to allocate their portfolio holdings across the platform to different businesses tailored to their own risk appetite and savings plan. The new feature is set to save investors time and make it easier to ensure maximum returns to savings. In regards to client safety, Crowd2Fund has put measures in place to ensure “all businesses eligible for Smart-Invest have been hand-picked and reviewed against our strict criteria.” The company assured that undertaken research and consultation with leading academics as well as industry leaders into the use of artificial intelligence will secure investors to enjoy the greatest benefits from the new feature. In a statement, Chris Hancock, CEO and founder of Crowd2Fund said: “This is the start of a very exciting journey into AI with more technology led developments for Crowd2Fund in the coming months. Smart- Invest is aimed at retail investors looking to maximise their return on investment and their financial goals. Our intelligent automated feature means that investors can get on with their day-to-day lives whilst the platform manages their portfolio and returns for them. The combination of Smart-Invest and the IF ISA government scheme continues to demonstrate our commitment in helping our investors grow their savings whilst supporting great British businesses.” The company launched its’ crowdfunding platform in the September 2014 and has grown to become one of the UK’s leading crowdfunding services. It connects lenders and debtors over rewards, equity, lending and donations. Since the platforms launch Crowd2Fund has backed 15 UK based businesses across different sectors and funded over £2m in deals since the start of 2015.Post-Brexit UK Manufacturing Data hits record low
The Chartered Institute of Purchasing & Supply and the Markit Economics published their indices on the economic situation in Manufacturing and Services for July this morning. The data shows the first indicators of economic activity in the UK since last month’s Brexit vote and the fallout is worse than expected.
Experts predicted that the Markit Manufacturing PMI for July would fall by 2.1 points to 50. However, the actual figure came in 3 whole points lower than last month’s figure, standing at 49.1. Rather than indicating a slowdown in growth in manufacturing, the figure shows a contraction of economic activity in the industry.
The Markit Services PMI compounded the weakness, falling from 52.3 to 47.4, 1.8 points lower than expected. This represents levels of contraction in the industry that haven’t been since 2009.
Bloomberg News noted that the biggest drops in activity came from cuts in construction, while other sectors suffered to a lesser degree.
The data is likely to indicate that the UK will slip into further recession in the coming months.
Market responses
Stock markets had fallen just prior to the publishing of the data and jumped up at the release of the unexpectedly negative figures. The FTS100 stood at its morning’s lowest of 6,663.72 minutes before the statistics were published at 9.30am. It jumped 0.79 percentage points to 6,716.62 by 9.45am, as traders started to price in expectations of BoE stimulus. As you would expect, the data had bearish effects on the sterling. GBP/USD is down 0.95% and GBP/EUR is 0.82% weaker.Euro-Zone Services and Manufacturing Data
The rise of the Euro against the Pound was also supported by the Euro-Zone services and manufacturing data for July, which was published half an hour prior to the UK data release. The Markit Services PMI performed better than expected. It dropping only 0.1 percentage point to last month’s pre-Brexit figure, to stand at 52.7, 0.2 percentage points higher than expected. The Markit Manufacturing PMI dropped by 0.9 percentage points to 51.9. Although 0.1 percentage point lower than predicted the figure still represents an expansion in the industry.UK retail sales miss expectations
UK retail sales fell in June 0.9% versus an expected drop of 0.6% as shoppers held back in the wake of the vote to leave the EU.
Despite the drop from a month earlier, UK retail sales are 3.9% up from June last year. However, this also missed expectation and was 0.9% lower than expected and represents a 1.3% reduction in growth rates from last month’s measures. Retail sales including fuel increased at a rate of 4.3% to last year. This figure is 0.7% lower than expected and 1.4% lower than last month’s figure.
The figures are representative of pre-Brexit vote hesitation in the behaviour of UK consumers. Experts fear that post-Brexit economic uncertainty will further depress rates in next month’s data.
Since the release of the UK retail data, the FX market has responded with sterling falling against the green back. The USD/GBP rate hit a low of 1.3154 and has since settled around the 1.32 mark.
Mario Draghi leaves rates unchanged
In today’s decision on lending and borrowing rates the president of the European Central Bank, Mario Draghi, has left all rates unchanged.
The Central Bank’s interest rate will remain at 0% and the deposit rate stays at -0.4%. The marginal lending facility is held at 0.25%.
The move to keep rates at low levels had been expected. Mario Draghi has frequently confirmed that his policies to lead the recovery of the Euro Area will be focused on adding liquidity to the markets.
Draghi started his credit easing measures in June 2014. He stressed that the ECB’s QE program will continue to run until at least March 2017 and all rates will remain at low levels for an extended period.
In his opening statement to today’s session Draghi stated: “…the recovery of the euro area economy gained momentum at the start of the year. It is expected to proceed at a moderate but steady pace, supported by solid domestic demand and the effective pass-through of our monetary policy measures to the real economy.”
He further reported that since the new easing programs have been initiated, bank lending rates fell by over 80 basis points and reached historically low levels in April this year. Draghi said, the ECB will continue on their current path hoping to encourage economic activity in the Euro through these practices.
In the press conference that followed the release of the decision, Draghi said that European banks are in a better position than in 2009 which to some part was influenced by the ECB’s efforts to strengthen the sector and ensure solvency.
He commented on Brexit noting that European financial markets responded with “encouraging resilience” to the UK vote to leave the EU. This comes only two days after ZEW indicators on European economic sentiment showed pessimistic investor outlook.
In regards to Turkey’s failed coup attempt and how it may affect the Euro zone recovery, he stated that it is difficult to tell how big geo-political issues will impact the economy and with Turkey in particular, it will be very difficult to gauge immediate near term influences on the European economic recovery.
The ECB has indicated that more stimulating monetary measures may still be used as Mario Draghi repeated he will use all tools available to him. He said the ECB will closely watch economic development of the region over the coming months to formulate a appropriate strategy of response. This approach rings the same as the Bank of England’s recent decision to postpone changes to policy measures until post-Brexit movements in the economy become more clear.
Market effects
Before the decision of the ECB became public, stock markets suffered losses on the caution of investors ahead of the news. In unison with poor data on UK retail sales published earlier this morning, the uncertainty over the new ECB monetary policy measures lead to a 0.33% drop in the German DAX30 index. The UK’s FTSE index also incurred losses of 0.48%. The French CAC 40 index lowered 0.57% and the pan European Stoxx 50 index was down 0.57%, this morning at 11am.Mastercard seals deal to buy 92.4% of VocaLink
Mastercard Inc (NYSE:MA) today announced that it has agreed to buy London based VocaLink Holdings Ltd for £700m with the prospect of adding £169m if performance targets are met.
The US based card issuer is the world’s second largest payment network provider and its latest move to acquire a London based firm shows its growing presence on the UK market. Mastercard will buy a 92.4% stake in VocaLink in a deal that will see VocaLink shareholders retain a 7.6% stake in the company for a minimum of three years once the transaction has been processed.
VocaLink is a system that processes automated payments for banks, government agencies and businesses handling in total up to £6 trillion UK payments a year. It operates as a collection of 18 banks all induced in shared ownership including Barclays, HSBC, Lloyds, RBS and Santander.
Royal Bank of Scotland has one of the highest stakes in VocaLink at 21.4% and is expected to see profits of up to £150m. Other owners, such as Barclays, who today announced they will share the majority of their 15.2% stake, will earn up to £133m from the sale. Co-op Bank, one of the smaller shareholders of 3.3%, will earn up to £28.3m.
Mastercard chief executive Ajay Banga said:
“We’re excited about the opportunity to play a bigger role in payments in the UK, a very strategic market for us,”
Brexit and terror threats hit EasyJet as revenue slides
EasyJet (LON:EZJ) today released its trading statement for the third quarter reporting a ‘difficult and uncertain operating environments’, the negative language used in the release has led to a 6% fall in shares.
EasyJet reported that total revenue in its Q3 ending June 30 had dipped 2.6% to £1.196m driven by the impact of sale cancellations across the markets. The airline had however increased passengers carried by 5.8% to 20.2m as capacity rose by 5.5% to 21.9m seats.
As a result of the dip in revenue, total revenue per seat (yields) fell 7.7% reporting a constant currency basis at £54.54 per seat.
The company recently reported that air traffic control strikes and a disruption in bookings in the aftermath of the Egyptair plane crash had knock on effects in its revenue per seat outcome. In what has been a difficult period for the Luton based company, increasing threat of terror attacks across Europe as well as Brexit has sent company’s shares down 39% over the last six months.
EasyJet faces further geo political challenges as it reports that the recent terror attacks in Nice, France and the recent failed coup in Turkey have highly impacted passenger activity. The airline suffered a total 1,121 cancellation in its Q3 compared to 726 in the same period last year. It states that these cancellations were mainly driven by runway closures at Gatwick, severe weather and air traffic congestion issues costing up to £20m.
One of the company’s biggest challenges was its short haul flight capacity due to its short range distance to destinations such as France, where it operates a margin of 65% capacity as well as an exposure of 37% in London’s airspace. As a result of flight cancellations and air traffic congestion, the airline experienced a 350% increase in delay minutes from June last year.
EasyJet Chief Executive, Carolyn McCall said:
“The economic and operating environment has been difficult in the third quarter due to a number of factors including air traffic control strikes and other industrial action, runway closures at London Gatwick and severe weather.
These factors combined with industry capacity growth in short haul continue to have an impact on industry yields at a peak time of year. More recently currency volatility as a result of the UK’s referendum decision to leave the EU as well as the recent events in Turkey and Nice continue to impact consumer confidence”
The disruption comes just as company is due to expect the summer vacation season to take full swing and is hoping that this will boost its sales performance, casting a shadow over the ability of the airline to meet full year targets.
21/07/16
Delays in Japan Pokémon Go launch affect stock markets
Japanese Pokémon Go launch delayed dragging down Nintendo shares
The smash hit app Pokémon Go, which allows people to catch Pokémon in their real-life surroundings before training them up to battle others, has taken the world by storm. The app already launched in 30 countries world wide. Japan was supposed to become the first Asian country to have access to the app this morning. The launch was however delayed to the afternoon after a leak of confidential emails between app developer Niantic, the Pokémon Company and McDonalds – publicised that McDonalds restaurants are to become the game’s first official sponsored locations. Later in the day the re-planned launch was also cancelled due to concerns that the servers may overload. An immense influx of users is to be expected in Japan since the country is home to the creators of Pokémon and likely to be one of the countries with the greatest hype around the new game. Game developer Niantic has said they are working hard on ensuring sufficient server capacity for the expected user load. They are confident that the game will be able to accommodate huge user capacity once the it launches. The new launch date is expected to be as soon as Thursday. Disappointment over the delays sent Nintendo shares down 10 percent this morning. This ended a ten-day rally in which the owner of intellectual property rights to Pokémon doubled the market value of its stocks. McDonalds Holdings Japan stock prices have however entered into another day of appreciation. Yesterday, in the first day of trading since McDonalds Japan started selling Pokémon Toys in their Happy Meals, stocks had already gained 5.2 percent, reaching its’ highest levels since late 2001. Since it has become public that the 3,000 McDonalds restaurants in Japan will become Pokémon gyms (virtual arenas where players can come to battle one another) shares have jumped another 14 percent to its highest on Wednesday. At close on Wednesday share price stood 9.84 percent higher than the day before. Shares are expected to rise further for all three company participants in the deal once the game launches in Japan and expands further into Asia.Microsoft shares rally as profits rise $3.1bn
Microsoft Corporation (NASDAW:MSFT) today reported of a strong growth in its commercial cloud computing business that have boosted Microsoft’s Q4 revenue way above Wall Street expectations sending shares rallying +4%
The boost in revenue comes from a $12.1 billion ‘run rate’ growth in commercial cloud revenue, a high margin influx from $8 million recorded a year earlier.
Revenue for the ‘intelligent cloud’ business which included it’s Azure cloud platform climbed 7% to $6.7 billion as revenue for the cloud platform grew by an astonishing 102%.
Despite revenues running high, operating profit dropped 17% down to $2.19 billion.
Microsoft’s Chief executive, Satya Nadella said:
“This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations, the Microsoft Cloud is seeing significant customer momentum and we’re well positioned to reach new opportunities in the year ahead.”
Overall adjusted revenue for the biggest technology firm in the world increased by $420 million to $22.6 billion on top of a $3.1 billion profit for the three months ending June levelling out to 39 cents per share. This marks an improvement from last year’s results which saw the company lose $3.2 billion – 40 cents per share – as sales in the Nokia phone purchase fell 70% resulting in a $7bn loss.
Microsoft therefore beat estimates of 58 cents per share, reporting a total income of 69 cents per share.
Microsoft stated that the 7% drop in year-over-year revenue standing at $20.6 billion, was due to the net revenue deferral from windows 10 of $2 billion. Yet revenues still attained a high figure as numbers on the online version of Office increased 59%. The highs meant that sales in PC software took a hit of 4%.
For the full fiscal year, Microsoft reported earnings per share of $2.10 GAAP as non GAAP revenue stood at $92 billion alongside an operating income of $27.9 billion.
At 10:35am EDT Microsoft traded at 56.35 + 3.26 (6.13%)
20/07/2016