• Amazon challenges Pentagon's cloud award to Microsoft
    Reuters Videos

    Amazon challenges Pentagon's cloud award to Microsoft

    U.S. Defense Secretary Mark Esper on Friday rejected allegations by Amazon that it lost out on a lucrative Pentagon project for political reasons. (SOUNDBITE) (ENGLISH) U.S. SECRETARY OF DEFENSE, MARK ESPER, SAYING: "As you know I recused myself from involvement on the competition, but I am confident that it was conducted freely and fairly without any type of outside influence." Amazon cried foul after the government awarded a $10 billion dollar cloud computing contract to rival Microsoft. President Donald Trump has long criticized Amazon and its founder Jeff Bezos. Amazon filed notice last week saying it would formally protest the decision and in a company-wide meeting this week - Amazon Web Services' CEO Andy Jassy said awarding a contract objectively would be challenging for an agency when the president is disparaging one of the applicants. The project, known as Jedi, is part of a broad digital modernization initiative by the Pentagon. In a new book, a former navy commander recounts a tale where Trump called then-defense secretary Jim Mattis and directed him to "screw Amazon" by preventing it from bidding on the Jedi contract. "We're not going to do that," Mattis later told Pentagon officials, according to the book. His successor, Mark Esper, recused himself because his son works at IBM, one of the original contract applicants.

  • Alibaba gets strong demand for IPO - sources
    Reuters Videos

    Alibaba gets strong demand for IPO - sources

    On Monday (November 11) it notched sales of 38 billion dollars in its latest Singles' Day shopping fest. Now Alibaba looks certain to shift 13.4 billion dollars of shares in its upcoming IPO. Sources have told Reuters that order books for the sale have been covered many times over. The e-commerce giant plans to list in Hong Kong on November 26. It's currently marketing the deal to investors around the world. . Sources say an earlier attempt at an IPO was abandoned due to the city's political unrest. This time Alibaba looks certain to press ahead. Not coincidentally, perhaps, the offering will be fully automated and paperless. That avoids the potential publicity nightmare of investors queuing to submit applications as protests rage around them. The share sale will be Hong Kong's biggest this year. Pricing for the shares will be announced on November 20th.

  • 'Friends' reboot? Why streaming giants are cashing in on revivals
    Yahoo Finance

    'Friends' reboot? Why streaming giants are cashing in on revivals

    “Friends” might be getting a reboot on HBO Max while Netflix secures a one-time licensing deal with Paramount for the fourth installment of “Beverly Hills Cop." Why reboots are all the rage as platforms look to beat out streaming competitors.

  • Political Unpredictability Is Now the New Normal: Weekend Reads
    Bloomberg

    Political Unpredictability Is Now the New Normal: Weekend Reads

    (Bloomberg) -- Want to receive this post in your inbox every day? Sign up for the Balance of Power newsletter, and follow Bloomberg Politics on Twitter and Facebook for more.The U.S. impeachment hearings, the chaos in Bolivia and Britain’s snap elections have one thing in common: They all underscore how leaders who test the limits of traditional political norms can trigger unpredictable results that aren’t easy to fix.With Donald Trump, witnesses gave evidence exposing a pursuit of personal interests and disdain of custom that have turned years of work from career officials on its head. The decision by Bolivia’s Evo Morales to step down as president, after facing accusations of electoral fraud he denies, has created a rift among Latin American governments. And U.K. Prime Minister Boris Johnson has pushed his country into a ballot that could open the way to Britain leaving the U.K., a new referendum that could scrap Brexit, or further political deadlock.Meanwhile in Hong Kong, lawmakers fear that increasingly violent protests against the mainland’s influence may fuel a deeper crackdown by Beijing, and Spain’s acting prime minister needs the help of a man behind bars if he wants to form a new government. We hope you enjoy these and other stories from this edition of Weekend Reads.Trump’s Shadow Ukraine Policy Laid Bare in Impeachment OpenerThe first public impeachment hearing against Donald Trump laid out how a handful of loyalists led by Rudy Giuliani wrested control of U.S. policy from seasoned diplomats, all to achieve the president’s political ends, Nick Wadhams reports.Read Ryan Teague Beckwith’s list of all the ways the GOP has come to Trump’s defense.How Trump’s Trade War Went From Method to MadnessIt started with a carefully calibrated algorithm targeting Chinese products to rebalance trade between the world’s two biggest economies. As Shawn Donnan and Jenny Leonard report, however, the model didn’t account for the unpredictability of Trump.Jared Kushner Helped Put Cadre on the Map, Then Held It BackWhen Cadre, which styles itself as the Amazon of real-estate, hooked the interest of SoftBank, it thought it had finally got its chance. But the refusal of co-founder Jared Kushner, Trump’s son-in-law, to divest killed the opportunity, Caleb Melby, Gillian Tan and David Kocieniewski report.Battle Lines Are Drawn in Boris Johnson's Big Election GambleThe U.K. is about to hold a once-in-a-lifetime election in one of the most charged political climates anyone can recall. And as this deep dive lays out, almost everything about this vote is unusual and unpredictable. Morales Exit Throws Political Hand Grenade Into Latin AmericaThe toppling of Evo Morales in Bolivia is creating shock waves from Buenos Aires to Washington and pitting governments against each other. Juan Pablo Spinetto reports how the crisis is widening differences between Latin America’s socialists and conservatives.The Man to Put Sanchez Back in Power Is Sitting in Catalan JailPedro Sanchez faces an unusual obstacle in forming a new government in Spain. Rodrigo Orihuela tells the story of Catalan separatist leader Oriol Junqueras, who’s serving 13 years in jail but still has the ultimate word on how his party will vote.Pressure Grows on Britain to Return Its Last African ColonyAt a time when British politicians are evoking the U.K.’s imperial past as it prepares to quit the European Union, the country is under international pressure to give up its last African colony. Pauline Bax walks us through this sign of diminished U.K. power. Hong Kong Protest Violence Risks Empowering Hawks in BeijingHong Kong lawmaker Lam Cheuk-Ting took a drastic measure to resist a growing crackdown on elected leaders. Blake Schmidt, Iain Marlow, and Aaron Mc Nicholas report on Lam’s fears it could get worse as the protests there become more violent. Devastating Fires Fail to Shake Australia Climate Change InertiaAustralia’s record on climate change is getting tougher for Prime Minister Scott Morrison to defend. Jason Scott reports how his government is refusing to discuss whether global warming has contributed to a longer dry season as bushfires ravage the country’s east coast.And finally … At the Shenzhen headquarters of the Chinese genetics company BGI Group, there’s no excuse for poor health: Co-founder Wang Jian, a 65-year-old geneticist Wang Jian, wants the more than 6,000 employees to be walking advertisements for their genetic research. BGI Group is now racing toward a world where your DNA informs your medical — and maybe some personal — decisions. As Matthew Campbell and Dong Lyu explain, things could get weird. To contact the author of this story: Michael Winfrey in Prague at mwinfrey@bloomberg.netTo contact the editor responsible for this story: Karl Maier at kmaier2@bloomberg.netFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Financial Times

    Twitter and targeting

    To get you up to speed: Facebook, casting itself as a bastion of free speech, last month said it would let political advertising remain on the platform unchecked. from numerous Democrats, who warned that bad politicians would abuse the system while Facebook continued to cash their cheques. On Friday, the group announced some carve-outs to the policy — namely that it would continue to allow campaign groups to advertise on political issues, while businesses can do so as long as the adverts are not connected with specific legislation or elections.

  • Alibaba's Hong Kong Share Sale Is Feeling Lucky
    Bloomberg

    Alibaba's Hong Kong Share Sale Is Feeling Lucky

    (Bloomberg Opinion) -- Hong Kong is doing everything it can to ensure Alibaba Group Holding Ltd.'s listing is a roaring success. That's turning the $12 billion mega-sale into a hot item — if you can get your hands on the shares.Alibaba will initially offer only 2.5% of the offering to individual investors, a quarter of the allocation specified in Hong Kong’s listing rules and half the 5% level typically allowed for sales valued at more than HK$10 billion ($1.3 billion). The retail portion may be increased to as much as 10% depending on the level of demand, though that’s still well below the 50% that the listing rules require for the most heavily subscribed offers.The effect of squeezing down the retail offering may be to increase the perceived rarity value of Alibaba shares, magnifying the buzz around what may be Hong Kong’s biggest share sale since 2010. For example, an allocation that is barely covered at 10% would be four times subscribed at 2.5% with the same level of demand.Hong Kong Exchanges & Clearing Ltd. has done its utmost to accommodate Alibaba, introducing rules that allow dual-class shares after resisting change for a decade — and losing the company’s $25 billion initial public offering to New York in 2014. The word “waiver” appears 80 times in Alibaba’s prospectus.With Hong Kong’s economy and markets rocked by protests, there’s much riding on a successful sale. After the listing, HKEX will be home to Asia’s two largest technology companies in Alibaba and Tencent Holdings Ltd. That could help the exchange attract more tech plays such as Southeast Asian ride-hailing giants Grab Holdings Inc. and Gojek.There are reasons to expect Alibaba’s Hong Kong stock to do well. Many mainland Chinese investors will get their first chance to buy shares of the country’s most valuable corporation, once Alibaba is included in the “stock connect” trading pipes that link Hong Kong with the Shanghai and Shenzhen exchanges. Capital controls prevent Chinese investors from easily accessing overseas stock markets, meaning that only those with money parked outside the mainland can trade Alibaba’s U.S. stock. And Chinese technology companies often attract higher valuations on local exchanges than overseas.Alibaba is at the forefront of China’s digital and consumer economies, with its Taobao and Tmall sites continuing to thrive as weakening growth prompts more people to seek bargains online. The company reported record sales for its Singles’ Day shopping festival on Nov. 11 and posted a 40% surge in September-quarter revenue. Its New York-traded stock had risen 33% this year as of Thursday’s close, and 54 of 55 analysts tracked by Bloomberg rate the stock a buy (the other is a hold).Institutions are sure to support the sale, encouraged by expectations of a wall of Chinese money joining them. Demand will come from Asian funds that have overlooked Alibaba previously because they want to trade in their own time zone. Hedge funds also sense opportunity. An expected price gap between Alibaba’s New York and Hong Kong shares is fueling a colossal arbitrage trade, Fox Hu and Carol Zhong of Bloomberg News reported Nov. 14. Alibaba will raise as much as $13.4 billion if an over-allotment option is exercised. The institutional offering will be priced on Nov. 20.In a possible fillip for retail demand, the offering will be Hong Kong’s first fully paperless listing, according to Reuters. Whether by accident or design, that means individuals won’t have to line up at banks or brokerages to obtain application forms — a potential deterrent given the unrest. Even the numbers associated with the listing are auspicious. Alibaba has capped the per-share price for individual investors at HK$188 apiece — double eight is particularly lucky in Chinese. And the company will trade under the stock code 9988, which sounds like “forever prosperous.” It looks like no one is leaving anything to chance. To contact the author of this story: Nisha Gopalan at ngopalan3@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Macy's Q3 Earnings Preview: Is the Department Store's Decline Set to Continue?
    Zacks

    Macy's Q3 Earnings Preview: Is the Department Store's Decline Set to Continue?

    Macy's and other department stores have not been able to find success or inspire much Wall Street confidence. Can it turn things around in Q3?

  • Bill Gates Tops Jeff Bezos as World’s Richest Person With Amazon Slide
    Bloomberg

    Bill Gates Tops Jeff Bezos as World’s Richest Person With Amazon Slide

    (Bloomberg) -- This time it’s official.Microsoft Corp. co-founder Bill Gates overtook Amazon.com Inc.’s Jeff Bezos as the world’s richest person on Friday, reclaiming the top ranking for the first time in more than two years.Gates may have been helped in part by the Pentagon’s surprise decision announced Oct. 25 to award a $10 billion cloud-computing contract to Microsoft over Amazon. Shares of Microsoft have since climbed 4%, giving Gates a $110 billion fortune, according to the Bloomberg Billionaires Index. Amazon’s stock is down about 2% since the announcement, putting Bezos’s net worth at $108.7 billion.Gates, 64, had briefly topped Bezos, 55, on an intraday basis last month after Amazon posted its first profit drop in two years, but shares of the world’s biggest online retailer pared the decline. The index, which tracks the wealth of the richest 500 people, is updated each trading day after U.S. markets close. Europe’s richest person, Bernard Arnault, is third with $102.7 billion.Read more: Microsoft Shares Surge After Controversial Pentagon Contract WinMicrosoft has surged 48% this year, boosting the value of Gates’s 1% stake. The rest of his wealth is derived from share sales and investments made over the years by his family office, Cascade.Bezos would be far richer if he and MacKenzie Bezos hadn’t divorced. The pair announced their split in January, with MacKenzie, 49, receiving a quarter of their Amazon holdings in July. Her net worth dipped to $35 billion on Friday. Gates, on the other hand, may have never relinquished the top spot were it not for his philanthropy. He has donated more than $35 billion to the Bill & Melinda Gates Foundation since 1994.Gates recently shared his thoughts on the wealth tax that’s been proposed by some Democratic presidential candidates, including Elizabeth Warren, saying he’s already paid more than $10 billion in taxes."If I’d had to pay $20 billion, it’s fine," he said. But "when you say I should pay $100 billion, then I’m starting to do a little math about what I have left over.”As of today, that would be $10 billion.(Updates with Gates comments on wealth tax starting in seventh paragraph.)\--With assistance from Sophie Alexander.To contact the reporter on this story: Tom Metcalf in London at tmetcalf7@bloomberg.netTo contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Peter Eichenbaum, Steven CrabillFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    Amazon Antitrust Complaint Lodged in U.S. Gets Attention in EU

    (Bloomberg) -- Amazon.com Inc.’s big push into logistics is getting scrutiny from European Union antitrust regulators who asked the U.S. to share an online merchant’s complaint against the retail giant, according to documents reviewed by Bloomberg and two people familiar with the matter.The merchant accused Amazon of rewarding those who pay for the company’s warehousing, packing and delivery services with better visibility on Amazon’s e-commerce website.The European Commission, which is already investigating Amazon’s double role as store and host to other retailers, asked a U.S. Congressional committee looking into big tech companies’ abuse of power to hand over a 62-page document from the long-time Amazon merchant made public by Bloomberg News last week. The paper is based on an analysis of thousands of Amazon transactions and accuses Amazon of “tying” its marketplace and logistics service together.The EU’s request could add a new strand to the antitrust probe it opened in July that’s looking into how Amazon’s retail arm uses data gathered on marketplace merchants to gain an advantage. The EU’s concerns focus on how Amazon might use rivals’ data to beat the “buy box” that prompts shoppers to pick a store to buy a product. While the buy box winner is chosen by an algorithm, understanding how to beat it allows retailers to mop up most transactions for a particular product.The merchant’s complaint suggests that using Amazon’s logistics service, Fulfillment by Amazon, might help a retailer win the algorithm. The merchant says he can’t pursue an antitrust case himself because he agreed to binding arbitration when he began selling products on Amazon. The person, who said he has paid Amazon tens of millions of dollars in fees in recent years, requested anonymity out of fear of losing business. The merchant alleged Amazon forced him and other online sellers to buy its logistics services even when more reliable and affordable options were available, which caused him to raise prices on shoppers.The allegations are gaining further attention in the U.S., as well. During a House Committee on Small Business hearing earlier this week, Representative Jared Golden, a Maine Democrat, said he heard similar concerns from a company in his state that sells home-heating efficiency products. The Maine business, which sells products on the site but doesn’t use the company’s logistics services, is losing sales to competitors who pay Amazon extra fees for shipping services, Golden said.Amazon Vice President Dharmesh Mehta responded by saying the company doesn’t design its search algorithms “to favor sellers or products based on who’s selling them or the fulfillment channel. We design them to prioritize what we think customers want most.”An Amazon spokesman Friday said the company “will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”In an emailed statement last week, the company disputed many of the merchants’ allegations, saying Amazon’s logistics prices are competitive and its sellers aren’t penalized for using other delivery options. “Amazon has invested tens of billions of dollars in developing a world-class fulfillment network and we offer that network to sellers at highly competitive fees when compared to other options available to sellers. In fact, our research shows other comparable options available to sellers are approximately 50-80% more expensive” than Amazon services, the company said.The European Commission and the House Judiciary Committee’s antitrust panel declined to comment.Tying extra services to Amazon sales isn’t the initial focus of the EU case, which is currently still gathering information that could allow regulators build up a charge sheet, called a “statement of objections.” The EU usually needs to have formed clear arguments before it sends those objections, which can eventually lead to fines and a finding that a company violated antitrust rules.Amazon this year managed to allay German antitrust worries that delivery programs could allow Amazon access to rivals’ inventories in logistics centers. The German Federal Cartel Office said in July that it dropped its concerns when the company explained “how it actually implemented the schemes and how sellers benefited from this.”To contact the reporters on this story: Spencer Soper in Seattle at ssoper@bloomberg.net;Aoife White in Brussels at awhite62@bloomberg.net;Ben Brody in Washington, D.C. at btenerellabr@bloomberg.netTo contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Molly Schuetz, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • 3 Semiconductor Stocks to Buy After Strong Earnings on 2020 Chip Growth
    Zacks

    3 Semiconductor Stocks to Buy After Strong Earnings on 2020 Chip Growth

    We searched for semiconductor stocks utilizing our Zacks Stock Screener that investors might want to consider buying ahead of what could be a strong year for chip companies in 2020...

  • Corbyn Energizes Labour, Scares Markets With Free Broadband Plan
    Bloomberg

    Corbyn Energizes Labour, Scares Markets With Free Broadband Plan

    (Bloomberg) -- Sign up to our Brexit Bulletin, follow us @Brexit and subscribe to our podcast.Jeremy Corbyn has been trying to shift his Labour Party’s election campaign off the thorny issue of Brexit and onto his radical plans to shake up the U.K. economy. He finally achieved it on Friday, drowning out Prime Minister Boris Johnson’s own media blitz in the process.The promise to provide universal free fiber broadband by nationalizing BT Group Plc’s Openreach unit dominated broadcasts and sent telecommunications shares plunging. It’s a continuation of Labour’s plan to take control of key utilities, with taxes from large multinational companies -- in this case the likes of Amazon.com Inc. and Facebook Inc. -- helping to foot the bill.“This is core infrastructure for the 21st century,” Corbyn said at a campaign event in Lancaster. “It’s too important to be left to the corporations.”It is the biggest new pledge of the campaign so far from Labour, with Corbyn comparing his proposed new British Broadband company to the establishment of the U.K.’s revered National Health Service. It also overshadowed Johnson’s own events, which included the launch of his campaign bus, a pledge to reopen railway lines closed since the 1960s and two interviews with the BBC.Johnson denounced Labour’s broadband plan as a “crazed communist scheme,” but the danger for the prime minister is that the proposal will cut through with the voters. Lack of broadband coverage, particularly in rural areas, is a popular complaint and the U.K. lags far behind economic rivals including South Korea, Japan and Spain.The ruling Conservative Party’s own plan is to incentivize private companies to extend their networks -- a revamp of a government program that has been criticized for failing to reach communities across the country.Battle Lines Are Drawn in Boris Johnson’s Big Election GambleLabour’s plan sent shock-waves through financial markets, especially after the party’s economy spokesman, John McDonnell, acknowledged it might need the broadband assets of other providers -- including Sky, TalkTalk and Virgin Media -- to make it work.“We’ll come to an agreement with them, and it will either be via an agreement on access arrangements, or working alongside us, or if necessary, yes, they can then come within the ambit of British Broadband itself,” McDonnell told the BBC on Friday. If no agreement could be reached, the government would pay compensation subject to “commercial negotiation,” he said.BT shares fell as much as 3.7% and TalkTalk Telecom Group Plc slipped 2.8% after it paused talks to sell its own fiber project, FibreNation Ltd., following Labour’s announcement.But there were other factors in play, including a record payment by BT to retain Champions League soccer rights. BT shares recouped most of their loss later as analysts played down Labour’s chances of winning the majority it would need to carry out its plan.There was also criticism of Labour’s plan to tax multinational companies based on the size of their U.K. activities. Technology companies often book their U.K. sales through countries such as Ireland or the Netherlands, making taxation based on sales difficult to enforce. Companies could take jobs to other countries to avoid the U.K. tax, analysts said.Nicky Morgan, the Conservative cabinet minister with responsibility for digital services, dismissed Corbyn’s plan in a statement as a “fantasy” that “would cost hardworking taxpayers tens of billions” of pounds.Still, Corbyn is unlikely to lose much sleep over the criticism at this stage of the campaign. Free broadband access and making big tech firms pay more tax have popular appeal, and trailing the Tories by double digits in many opinion polls, he needs some bold moves to cut through.In 2017, his promises to re-nationalize rail, water and mail services proved popular with voters and contributed to then Prime Minister Theresa May losing her parliamentary majority. Corbyn will be hoping for even better this time.\--With assistance from Thomas Seal, Thomas Pfeiffer and Giles Turner.To contact the reporter on this story: Greg Ritchie in London at gritchie10@bloomberg.netTo contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Stuart Biggs, Thomas PennyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • AUD/USD Weekly Price Forecast – Australian Dollar Continues To Fight
    FX Empire

    AUD/USD Weekly Price Forecast – Australian Dollar Continues To Fight

    The Australian dollar has fallen during most of the week but has also seen a nice bounce from previous areas of interest, suggesting that they are trying to build up enough momentum to turn this thing around.

  • AUD/USD Price Forecast – Aussie Dollar Bounces
    FX Empire

    AUD/USD Price Forecast – Aussie Dollar Bounces

    The Australian dollar has bounced a bit during the trading session on Friday, perhaps in a correction to the overreaction of the Australian employment figures. While we did break down due to those employment figures, the reality is that this pair is about US/China, and not much more.

  • Applied Materials (AMAT) Q4 Earnings & Sales Top Estimates
    Zacks

    Applied Materials (AMAT) Q4 Earnings & Sales Top Estimates

    Applied Materials (AMAT) reports strong fiscal fourth-quarter results due to an uptick in demand for semiconductor equipment and solid execution.

  • The Zacks Analyst Blog Highlights: Alphabet, Apple, Amazon, PayPal and Facebook
    Zacks

    The Zacks Analyst Blog Highlights: Alphabet, Apple, Amazon, PayPal and Facebook

    The Zacks Analyst Blog Highlights: Alphabet, Apple, Amazon, PayPal and Facebook

  • The Zacks Analyst Blog Highlights: Disney, Netflix, Apple, Roku and Amazon
    Zacks

    The Zacks Analyst Blog Highlights: Disney, Netflix, Apple, Roku and Amazon

    The Zacks Analyst Blog Highlights: Disney, Netflix, Apple, Roku and Amazon

  • Copart (CPRT) to Report Q1 Earnings: What's in the Cards?
    Zacks

    Copart (CPRT) to Report Q1 Earnings: What's in the Cards?

    Copart (CPRT) first-quarter fiscal 2020 earnings and revenues are likely to have increased year over year.

  • Singles' Day Bonanza a Prelude to Holiday Season: 5 Picks
    Zacks

    Singles' Day Bonanza a Prelude to Holiday Season: 5 Picks

    After a successful Singles' Day, American retailers expect a smashing holiday season.

  • Kroger, Ocado to Open Sixth Fulfillment Center in Wisconsin
    Zacks

    Kroger, Ocado to Open Sixth Fulfillment Center in Wisconsin

    Kroger (KR) partners with Ocado for the second time to open another CFC in Wisconsin. The move will facilitate faster grocery delivery and enhance omnichannel strategies.

  • The Zacks Analyst Blog Highlights: Apple, Facebook, Alphabet and Amazon
    Zacks

    The Zacks Analyst Blog Highlights: Apple, Facebook, Alphabet and Amazon

    The Zacks Analyst Blog Highlights: Apple, Facebook, Alphabet and Amazon

  • Warren Buffett Finds Wrong Elephant
    Bloomberg

    Warren Buffett Finds Wrong Elephant

    (Bloomberg Opinion) -- Warren Buffett’s Berkshire Hathaway Inc. has $128 billion of cash. There is almost no purchase too large for the company — in fact, large is exactly what investors are waiting for. And yet, the only stock Berkshire bought last quarter was a dinky retailer, RH.Berkshire disclosed in a regulatory filing Thursday that it took a $212 million stake in RH, a California-based home-furnishings chain valued at $3.3 billion. Buffett could even buy the entire company and it’d still be a puny deal for him. But it was a big deal for RH, because the shares surged 9% in after-hours trading and held near that level early Friday morning.I admit I didn’t even recognize the retailer’s name at first. RH used to be called Restoration Hardware, a place that sells $6,000 linen sofas and elongated wooden dining tables with “forthright silhouettes.” The company shrank its name and supersized its stores, an effort to target a more upscale clientele. It’s even installed some on-site restaurants, a little nourishment to help one ponder a new addition to the ski house. That’s partly what makes RH such a funny investment for Buffett. Not only is the billionaire known for his down-to-earth lifestyle — he’s lived in the same fairly modest house for more than 60 years — but he’s also usually drawn to businesses that mirror the America he sees from his unassuming Omaha office: railroads, truck stops, Dairy Queens, the Nebraska Furniture Mart. Furthermore, Berkshire tends not to waste time on minority stakes in small, specialty chains; its only other retail holdings are Amazon.com Inc. and Costco Wholesale Corp., companies valued at $870 billion and $134 billion, respectively. RH was the only new position Berkshire took in the latest quarter, aside from buying common shares of Occidental Petroleum Corp., in which it already purchased $10 billion of preferred equity (part of a financing deal to assist the oil and gas explorer in its takeover of Anadarko Petroleum Corp.). All in all, it was another dull period for Berkshire, whose last splashy stock pick was Amazon earlier in the year. With U.S. equities still on the rise, Buffett, 89, and his investing deputies are struggling to find cheap candidates. Whoever made the call on RH — Todd Combs, Ted Weschler or the Oracle himself — he may have had prescient timing. At the end of May, RH’s price-to-earnings ratio hit a low, and the shares have doubled since then, taking a big leg up in September. That said, RH’s overnight gains drove the shares above analysts’ average target level, which is $181 apiece. “The business remains tough to predict and we believe expectations may now be somewhat elevated,” Bobby Griffin, an analyst for Raymond James & Associates who has the equivalent of a “hold” rating on RH, wrote in a Sept. 11 report, citing the China tariffs and a slowdown in high-end U.S. housing. Similarly, Gordon Haskett Research Advisors wrote to clients Sept. 10 that the firm finds other retailers such as Wayfair Inc., Williams-Sonoma Inc. and At Home Group Inc. more attractive. At the end of the day, though, no matter how RH performs, it won’t have much of an impact on Berkshire’s portfolio. Another quarter has passed without a major acquisition by Berkshire, its cash pile hitting a record yet again. RH may sell a $449 wool felt elephant, but it isn’t the kind of elephant Buffett is after. The wait continues.To contact the author of this story: Tara Lachapelle at tlachapelle@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Jeremy Corbyn Wants to Nationalize the Internet
    Bloomberg

    Jeremy Corbyn Wants to Nationalize the Internet

    (Bloomberg Opinion) -- Jeremy Corbyn’s Labour Party is behind in the polls for the U.K. election so it’s unsurprising that he’s chucking out more giveaways to voters. The policy to nationalize BT Group Plc’s fixed-telecoms networks business and provide free fiber broadband to every British household is a humdinger nonetheless.Of course, the chances of this becoming reality are slim given that Corbyn’s best hope of becoming prime minister is a coalition with more moderate political parties. Yet the idea has stimulated even more debate than Labour’s previous plans to re-nationalize the railways and the energy utilities, so it’s at least worth thinking about. Taking it at face value, the policy would be a huge mistake that would achieve the opposite of its stated aim of accelerating Britain’s sluggish rollout of fiber broadband.First, there’s the cost. A Labour government would add 15 billion pounds ($19 billion) to an existing 5 billion pound broadband spending pot, according to Shadow Chancellor John McDonnell. Even assuming that would cover the required capital expenditure — a big assumption — it would cost at least the same again to nationalize Openreach, BT’s networks division.McDonnell says the state would pay for the acquisition by giving BT’s shareholders government bonds as compensation. Yet why would investors, especially those outside the U.K. protected by treaties against asset expropriation, exchange an 8.1% annual dividend yield from their BT stock for the less than 1% returns from U.K. gilts? The network spending itself would be funded by an increased tax on the likes of Facebook Inc., Alphabet Inc. and Amazon.com Inc. But the G-20 will probably adopt new international tax standards next year to try to curb Big Tech’s avoidance tactics. So a Labour government might not even be able to whomp up these levies without breaching the new guidelines.Then there’s the speed of rolling out the networks. While the U.K. is well behind the pace on high-speed broadband rollout (it’s 10th in the European Union’s 2019 connectivity rankings), a tortured nationalization process isn’t the answer. BT would have no incentive to keep investing during that period.The same’s true for private competitors such as John Malone’s Virgin Media, Vodafone Group Plc and Comcast Corp.’s Sky. Increased competition has at least accelerated the pace of the rollout: The proportion of homes with fiber access has doubled in two years.Infrastructure investors have also been attracted by the returns promised by fiber, prompting a flurry of investment from KKR & Co., Macquarie’s infrastructure fund and Goldman Sachs Group Inc. McDonnell’s comments have certainly caused some consternation. TalkTalk Telecom Group Plc. said it had paused talks to sell a fiber project, for which Goldman-backed CityFibre Ltd. was the lead bidder. Should Labour ever get the chance to offer free broadband to everyone through a state-owned provider, tens of thousands of private sector jobs would be jeopardized. How would other companies be able to compete?And full-fiber broadband might not even really be necessary. The adoption of next-generation 5G mobile networks promises the ability to transmit far more data at far greater speeds. That would make fiber to every home redundant in parts of the country.There are better and more thoughtful ways to get fiber installed sooner: Making it easier to get permits to build the network; permanently reducing business tax rates for new fiber; and making it obligatory for customers to accept fiber upgrades. If McDonnell is willing to hand over 15 billion pounds to BT shareholders to snap up Openreach, why not use the funds to subsidize the rollout directly?To contact the author of this story: Alex Webb at awebb25@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.