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A growing economy coupled with new applications and convenience of online shopping could provide a catalyst to businesses that sell merchandise through online channels.
Alibaba Group Holding Limited
Ctrip.com International, Ltd.
Expedia Group, Inc.
Vipshop Holdings Limited
Liquidity Services, Inc.
Nike Direct President Heidi O’Neil joined Yahoo Finance’s YFi AM to talk about the swoosh brand’s continued push into digital and why it ended its pilot with Amazon.
Today we found 3 cloud stocks utilizing our Zacks Stock Screener that tech investors might want to consider buying with the stock market at new highs in November...
(Bloomberg) -- Peloton Interactive Inc., the unprofitable fitness company whose stock has been skidding, plans to introduce two new pieces of workout equipment next year in a further expansion beyond cycling.The company is working on a new treadmill that will cost less than the current $4,000 model, as well as a rowing machine, according to people familiar with their development. Peloton has also explored apps for Amazon.com Inc.’s Fire TV and the Apple Watch to complement its smartphone software, though the status of those projects is unclear, said one of the people, who asked not to be identified because they weren’t authorized to discuss the information publicly.The new pieces of hardware will likely be the first introductions for the company in at least two years, when the original treadmill debuted. But people familiar with the plans said the release timing could change. Peloton’s stock jumped as much as 9% in intraday trading on the news.Jessica Kleiman, a spokeswoman for Peloton, declined to comment on products in development. “Our R&D team is always working on ideas,” she wrote in an email.In the almost two months since Peloton went public, investors have called for the company to reevaluate its expensive growth ambitions and focus on turning a profit, much like with other technology companies that have gone public this year. Peloton’s initial public offering fell flat, and the stock is down 15% since then. John Foley, the chief executive officer, said on a conference call with analysts last week that management is convinced now is the time to spend on expansion. “If we pull back on growth, we could be profitable tomorrow, but that is not what the board and the leadership at Peloton believe we should do,” he said.Foley helped start Peloton with a Kickstarter campaign in 2013, pitching live and on-demand cycling classes streamed to the home. The main hardware product is a $2,245 stationary bike affixed to an iPad-like device. It has recently expanded to Canada and Germany and is also building fitness studios in New York and London.Peloton now offers a variety of classes, including boot camp-style workouts, meditation and yoga, through apps that don’t require pricey equipment. More than 500,000 people take Peloton classes, which require a membership costing at least $19 a month. The company describes itself as the “largest interactive fitness platform” in the world.Foley has fashioned Peloton as a tech company, which has helped boost its market value to $7 billion today. Executives emphasize user engagement as a key business metric. The company said last week the average user was nearly a dozen workouts on Peloton each month, up from nine in the same period last year. Executives see the addition of new kinds of workouts as a way to increase engagement. In 2018, Peloton introduced its first treadmill at the Consumer Electronics Show in Las Vegas. The bulkiness of the equipment and $4,000 price tag have made it a niche product, though Foley has said he’s happy with sales of the treadmill.To increase sales, Peloton has looked for various ways to make its products more affordable. It offers monthly installment plans on equipment purchases through a startup called Affirm and acquired an engineering firm this year that previously designed devices for Google and Facebook Inc. Foley said in an interview last week that the acquisition would give Peloton cost advantages and potentially speed up production.Foley aspires to create the Apple Inc. of fitness and has taken many cues from the world’s most valuable public company. One of those is product secrecy. During the IPO roadshow, Foley would only answer questions about new products by saying Peloton could have a “better, best” strategy, suggesting it may sell multiple models of bikes or treadmills at different prices. In an interview with Bloomberg TV on the day of the IPO, Foley declined to answer questions about new products. When asked specifically about the potential for a rowing machine, Foley responded with a smirk: “I think rowing is a fantastic workout.”(Updates with share move in the third paragraph.)\--With assistance from Jason Kelly.To contact the reporters on this story: Julie Verhage in New York at email@example.com;Mark Gurman in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Mark Milian at email@example.com, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Alibaba Group Holding Ltd. started taking investor orders for its Hong Kong share sale, which could raise more than $11 billion in the city’s largest equity offering since 2010.The New York-listed tech giant is offering 500 million new shares, according to terms for the deal obtained by Bloomberg on Wednesday. The base offering could raise about $11.7 billion based on Alibaba’s Tuesday close in New York, though it’s possible the stock will be priced at a discount. Alibaba’s American depositary shares, which represent 8 ordinary shares of the internet company, rose 0.1% to $186.97 in U.S. trading Tuesday. The shares fell 1.8% on Wednesday.Asia’s largest corporation is proceeding with what could be this year’s biggest stock offering globally despite violent pro-democracy protests gripping the city. Alibaba aims to price the offering before U.S. market open on Nov. 20 and start trading in Hong Kong on Nov. 26, the terms show.Alibaba plans to use the offering proceeds to drive user engagement, improve operational efficiency and fund continued innovation, according to the terms. Deal underwriters have a so-called greenshoe option to sell an additional 75 million shares. Alibaba said in a regulatory filing that New York will continue to be its primary listing venue.China International Capital Corp. and Credit Suisse Group AG are joint sponsors of the offering, while Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley are joint global coordinators. HSBC Holdings Plc and ICBC International Holdings Ltd. are also helping arrange the sale, the terms show.Alibaba’s share sale marks a triumph for the Hong Kong stock exchange, which lost many of China’s brightest technology stars to U.S. rivals. The city’s bourse has introduced new rules that allow dual-class shares after resisting such a change for a decade. Efforts to lure Alibaba went all the way to the top of Hong Kong’s government, with Chief Executive Carrie Lam exhorting billionaire Jack Ma to consider a listing in the city.Alibaba has considered a Hong Kong listing for a long time, even as far back as five years ago when it was scouting for its initial public offering, said Michael Yao, head of corporate finance at Alibaba, on a call with investors. “We viewed Hong Kong as strategically important to us. It’s one of the most important financial centers. And this listing will allow more of our users and stakeholders in the Alibaba digital economy across Asia the ability to invest in and participate in the fruits of our growth,” Yao said.The New York-listed Chinese giant had aimed to list over the summer before pro-democracy protests rocked the financial hub, while trade tensions between Washington and Beijing clouded the market’s outlook. It’s unclear if the violence will affect the listing process, given growing resentment toward mainland Chinese influence as well as the country’s most visible corporate symbols.Yao said the deal size hasn’t changed as a result of the protests. “This has always been our deal size,” he said, adding that the company wants to ensure there is ample liquidity in the market.Listing closer to home has been a long-time dream of Ma’s-- a move that curries favor with Beijing and hedges against trade war risks. A successful Hong Kong share sale could also help finance a costly war of subsidies with Meituan Dianping in food delivery and travel, and divert investor cash from rivals like Meituan and WeChat operator Tencent Holdings Ltd.A successful Hong Kong debut will be another feather in the cap for Daniel Zhang, who took over as chairman from Ma in September. The former accountant is now spearheading the company’s expansion beyond Asia but also into adjacent markets from cloud computing to entertainment, logistics and physical retail.(Updates with comments from executive from seventh paragraph)\--With assistance from Manuel Baigorri, Crystal Tse and Julia Fioretti.To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at firstname.lastname@example.org;Kiuyan Wong in Hong Kong at email@example.com;Carol Zhong in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Peter Elstrom at email@example.com, ;Fion Li at firstname.lastname@example.org, Ben ScentFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Nike Inc. is breaking up with Amazon.com Inc.The athletic brand will stop selling its sneakers and apparel directly on Amazon’s website, ending a pilot program that began in 2017.The split comes amid a massive overhaul of Nike’s retail strategy. It also follows the hiring of ex-EBay Inc. Chief Executive Officer John Donahoe as its next CEO -- a move that signaled the company is going even more aggressively after e-commerce sales, apparently without Amazon’s help.“As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail,” the company said in a statement. “We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally.”Some big brands shun Amazon’s platform, where fakes flourish and unauthorized sellers undercut prices -- a recipe that diminishes the value of sought-after labels. The unraveling of the Nike arrangement threatens to reinforce retailers’ unease. Under the pilot program, Nike acted as a wholesaler to Amazon, rather than just letting third-party merchants hawk its products on the site.Amazon operates an online marketplace, essentially a digital mall where merchants can sell products. More than half of all goods sold on Amazon come from independent merchants who pay the Seattle-based company a commission on each sale. Amazon also operates as a traditional retailer, buying goods from wholesalers and selling them to customers.Nike said it will continue to use Amazon’s cloud-computing unit, Amazon Web Services, to power its apps and Nike.com services.Amazon, through a spokeswoman, declined to comment. The company has been preparing for the move, according to two people familiar with the matter. It has been recruiting third-party sellers with Nike products so that the merchandise is still widely available on the site, they said. Amazon has also been working to stem the flow of counterfeits on the site through various initiatives, including one project that lets brands put unique codes on their products to make it easier to identify fakes.Nike shares rose as much as 1.4% in New York trading Wednesday, while Amazon was off as much as 0.6%.‘Enormous Reach’The question now is whether other Amazon partners follow Nike’s lead. Few other brands possess the kind of muscle Nike has, so it may be harder for them to leave.“Nike has enormous reach and its products are in demand, so it can afford to be selective about where its products are distributed because customers will come find Nike where it is offered,” said Neil Saunders, an analyst at GlobalData Retail. “I don’t think as many brands can be as selective as Nike.”For years, the only Nike products sold on Amazon were gray-market items -- and counterfeits -- sold by others. Nike had little control over how they were listed, what information about the product was available and whether the products were even real.That changed in 2017, when Nike joined Amazon’s brand registry program. Executives hoped the move would give them more control over Nike goods sold on the e-commerce site, more data on their customers and added power to remove fake Nike listings. The news of the Amazon tie-up, which Nike executives called a “small pilot,” sent shoe-retailer stocks tumbling and left many wondering if other major Amazon holdouts would quickly follow.But Nike reportedly struggled to control the Amazon marketplace. Third-party sellers whose listings were removed simply popped up under a different name. Plus, the official Nike products had fewer reviews, and therefore received worse positioning on the site.Leaving Amazon won’t necessarily solve Nike’s problems, which represent a big brand struggling to adapt to selling products in the digital age, said James Thomson, a former Amazon employee who now helps brands sell products online through Buy Box Experts.“Just because Nike walks away from Amazon doesn’t mean its products walk away from Amazon and doesn’t mean its brand problems disappear,” Thomson said. “Even if every single Nike product isn’t on Amazon, there will be enough of a selection that someone looking for Nike on Amazon will find something to buy.”Fewer PartnersShortly after its Amazon pilot began, Nike unveiled plans to overhaul its retail strategy. With more attention aimed at direct-to-consumer avenues, particularly the Nike app and Nike.com, executives said the company would drastically reduce the number of retailers it partnered with.In 2017, Nike did business with 30,000 retailers around the world. Elliott Hill, currently the company’s head of consumer and marketplace operations, told investors that year that Nike would focus its future efforts primarily on about 40 partners.Nike wasn’t specific on what would separate those 40 partners from what it called “undifferentiated retail.” Reading between the lines, it appeared to want partners that gave its Nike brand separate space -- such as Nordstrom Inc.’s “Nordstrom x Nike” shop on its website -- and was less interested in retailers that just placed Nike alongside its smaller competitors.The Wall Street Journal reported at the time that Amazon was one of those 40 that Nike intended to prioritize.Analysts said physical sporting-goods retailers would benefit from Nike’s departure from Amazon. The pilot program was an “overhang” to the stock valuation of Foot Locker Inc. that’s now removed, Raymond James analyst Matthew McClintock wrote in a note. Michael Baker of Nomura Instinet called Nike’s decision a modest positive for Dick’s Sporting Goods Inc.Foot Locker was down 0.4% at 9:51 a.m. Wednesday in New York trading, while Dick’s was up 0.6%.What Bloomberg Intelligence Says“Nike’s decision to end its wholesale pilot with Amazon.com is likely aimed at putting more focus on its own direct-to-consumer business, which is a key pillar of its Triple Double strategy. We still believe Nike’s goal for 33% of sales to be digital could be attained ahead of 2022.”\--Poonam Goyal, senior retail analystClick here to read the research.About 68% of Nike’s annual sales come from wholesale channels, down from 81% in 2013. Though wholesale is still the bulk of the company’s sales, in that span Nike’s direct business has grown three times faster than top-line revenue.Nike’s departure will rob Amazon’s brand registry program of a big name -- and potentially stoke the concerns of its partners. Nike’s participation had signaled that Amazon was taking the concerns of major brands seriously.Such brands have expressed frustration that Amazon doesn’t do enough to fight counterfeits. They also fear that giving Amazon too much control over prices will devalue their products.Amazon’s foray into private-label products has added to the fears. The company now sells everything from batteries to mattresses to snacks, further complicating the relationship between Amazon and brands.(Updates with shares in ninth paragraph, analyst comments in 21st paragraph.)\--With assistance from Robert Williams.To contact the reporters on this story: Eben Novy-Williams in New York at email@example.com;Spencer Soper in Seattle at firstname.lastname@example.orgTo contact the editors responsible for this story: Nick Turner at email@example.com, ;Jillian Ward at firstname.lastname@example.org, John J. Edwards III, Cécile DauratFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- It’s getting harder to believe in Tencent Holdings Ltd.’s comeback.The Chinese social media goliath’s profit plummeted 13% last quarter -- worse than the most pessimistic analyst anticipated -- after an economic downturn depressed advertising and prompted charges within its huge portfolio of investments. Marketers fled to nurse shrinking budgets. And costs jumped 21% as Tencent hoovered up pricey content to feed its Netflix-style service. Shares in Prosus NV, which groups largest shareholder Naspers Ltd.’s internet holdings, fell as much as 4%.Tencent was supposed to hit the comeback trail this year after a nine-month freeze on game approvals gutted its most profitable business in 2018. But a sharp Chinese economic slowdown, competition from up-and-comer ByteDance Inc. for internet traffic and advertising, and now tricky political considerations is snarling that recovery. That’s a key reason its stock has vastly under-performed arch-rival Alibaba Group Holding Ltd. this year, creating a gap of roughly $90 billion in their market valuation. But after a brutal couple of years, its long-awaited turnaround may come down to a game -- good thing that game is Call of Duty, one of the best-selling franchises in industry history.On Wednesday, Tencent reported net income of 20.4 billion yuan ($2.9 billion) in the September quarter. That came alongside a 90% drop in one-time gains -- an item that tracks its vast portfolio of startups around the world -- after swallowing charges for investments in connected automobiles.“The results were unbearable,” said David Dai, a Hong Kong-based analyst with Bernstein. “Games and media advertising were especially bad.”Read more: Tencent Falls $90 Billion Behind Alibaba After NBA China RowChina’s economic slowdown is dousing revenue growth across Tencent’s platforms, dampening appetite for advertising among large brands as well as subscriptions to its video and music streaming services. Sales from media advertising, including on the Netflix-like Tencent Video service, plummeted 28% as marketers cut spending while major shows got delayed. Beijing’s decision to cap playing time for underage users is also prompting Tencent to spend more on producing AAA-rated mobile titles that appeal to a global audience.The company is also grappling with a potential suspension of National Basketball Association game broadcasts -- which drew half a billion viewers last year -- after Houston Rockets General Manager Daryl Morey triggered a media blackout in China by tweeting support for Hong Kong’s pro-democracy protests. The company had paid $1.5 billion for five years of exclusive streaming rights. Tencent President Martin Lau said however he foresaw no long-lasting impact.“What we’re trying to do is to work through this difficult period and maintain the positive engagement of sport between the users and the sports franchise, and over time hope the problem will solve itself,” Lau told analysts on a conference call.Tencent’s Greatest Strength? It’s Not Alibaba: Tim CulpanTencent might see light at the end of the tunnel in the fourth quarter. It hit pay-dirt with its smartphone adaptation of Call of Duty. The game garnered more than 100 million downloads in the first week, putting it ahead of Nintendo Co.’s Mario Kart Tour. That was four times more than Fortnite’s mobile version managed. That strong debut positioned it to join the other mega cash-cows in Tencent’s stable: old favorite Honour of Kings and 2019’s standout hit, Peacekeeper Elite.Longer term, Tencent owns stakes in some of the biggest U.S. game studios and publishers, including the outfits that created household names Fortnite, League of Legends and World of Warcraft. The Chinese company is now counting on converting popular PC content for smartphones to re-kindle growth. The pipeline for such content stretches into 2022, the company says.While Call of Duty downloads surged right out the gate, the trick now for Tencent is to get players spending in-game. It needs that revenue boost to offset pain in other parts of its business. Revenue still rose a respectable 21% in the September quarter, to 97.2 billion yuan, helped by a fintech division that grew sales 36%.Despite a tumultuous year, Lau said in February the company won’t scale back on investment. The company has sunk money into more than 700 portfolio companies, including 122 that have become unicorns worth $1 billion or more. In China, its portfolio companies are worth roughly $107 billion, according to data compiled by Bloomberg. But it’s likely a chunk of those associated startups face the same sort of external pressures as their giant backer.“Video ads and subscribers remain under pressure,” Jerry Liu, a Hong Kong-based analyst at UBS, said in a report. “Investors are pricing in lower structural growth in gaming, pressure in advertising growth due to macro and competition, and more regulatory headwinds in online content.”(Updates with executive’s comments from the seventh paragraph)\--With assistance from Zheping Huang.To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- To understand how different China’s two largest internet companies are, take a look at the revenue breakdown for Tencent Holdings Ltd. As a provider of social media, games and financial services, Shenzhen-based Tencent merely dabbles in advertising. E-commerce giant Alibaba Group Holding Ltd. is built on it. That divergence could end up being Tencent’s greatest strength as it seeks to climb out of a prolonged funk that’s seen revenue slow and profit fall.While Alibaba and other Chinese internet companies such as Baidu Inc. and startup ByteDance Inc. battle it out for a share of advertising in an increasingly competitive market, Tencent has the chance to leverage its core strengths of games and social networking. That can make it less beholden to the ad business, which was its largest area of weakness in what was a very tepid quarter for the company.Tencent posted third-quarter revenue growth of 21% late Wednesday. That’s not the worst on record, but it wasn’t great. Ads contributed 19% of revenue, down from 20.2% a year earlier. In fact, that prior figure was a record. As recently as three years ago, ads accounted for just 12.3% of the top line. Alibaba, on the other hand, gets half its sales from advertising and around 22% from commissions.Advertising was the biggest area of weakness for Tencent, climbing a relatively lackluster 13%. It was hurt by a slowdown in the auto sector while “uncertain content scheduling and lower sponsorship” brought down revenue from ads placed alongside its various streaming services such as sports and self-produced drama series.Investors can expect this to turn around, but thankfully they won’t need to rely on it because Tencent is so diversified.The Alibaba versus Tencent divide worked against the latter’s share price over the past few months because investors remained concerned about its ability to sail through regulatory and economic storms. Clouds hang over the gaming business as the Chinese government continues a campaign against addiction that’s forced companies to implement stricter controls. Alibaba, on the other hand, benefited from an anticipated Hong Kong IPO and revenue growth that was largely driven by recent acquisitions. It’s understandable that investors remained gun-shy after last year’s crackdown on games, which prevented companies from monetizing new titles. Tencent management was pragmatic enough to ease up on marketing at that time, recognizing that there wouldn’t be a lot of business to chase as long as Chinese regulators put the brakes on that sector. With online games being the company’s largest division, at a third of revenue, even reduced expenditure couldn’t prevent the fiscal pain.The social-networks unit, at around 23% of sales, was also affected since it includes mobile games and other offerings such as video subscriptions and sports broadcasts. While controversy over the NBA forced Tencent to halt some basketball broadcasts last month, a bigger risk to Tencent Video is increasing censorship that will encroach on self-developed productions. Management hinted at such troubles by referencing “the unexpected delay of certain top-tier drama series” in its August investor conference, which it pointed to again in this earnings statement.And yet, Tencent’s management team has become experts in navigating Beijing’s political whims. It implemented the “Healthy Gameplay System” two years ago to combat addiction, which gave it the confidence to claim late Wednesday that “recent regulations that limit younger players’ game play will have limited additional impact to our business.”Tencent also returned from the games freeze with a new patriotic title called Homeland Dream, which topped the charts within days of its debut at the end of September. That helped push smartphone games revenue 25% higher in the third quarter. Expect the company to show similar pragmatic patriotism when it develops new drama series. I’d go so far as predicting that Tencent will say it wants to broadcast more Chinese sports leagues. Hint: President Xi Jinping is known to be a soccer fan.Harder to skirt, however, is an economic slowdown in China that’s impacting the advertising sector. This is worsened by increasing competition from upstarts like ByteDance’s Douyin short-video service (its international version is called TikTok).While many cheered Alibaba’s 40% increase in September-quarter sales, they missed the fact that China customer-management revenue (the company’s code phrase for ads) climbed just 25%. The remaining growth came chiefly from new businesses such as groceries and offline retail. By contrast, Tencent was able to lean not only on smartphone games, but also its fintech and business-services unit, where revenue rose 36%. I argued earlier this week that the company should spin off its fintech division, and these results bolster that thesis.It’s hard to argue that Tencent’s latest earnings are stellar. But at least its has a unique story to tell, one that doesn’t rely on it competing with a giant.To contact the author of this story: Tim Culpan at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.org, Beth WilliamsThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- At the Eugene Baby store in Hong Kong’s central business district, the usual flood of customers who shop for toys, pacifiers and strollers on their lunch breaks has turned into a trickle.On Wednesday, the aisles were mostly empty as a saleswoman spelled out the damage: Business was down 80% this week. Soon after she spoke, protesters began gathering a few blocks away -- at one point surrounding the city’s stock exchange as they geared up for a night of violent clashes with police.As Hong Kong endures one of its most turbulent weeks since anti-government demonstrations began five months ago, the city’s companies and employees are finding it increasingly difficult to work around the chaos.While past protests were mostly limited to weekends, the last three days have been marked by widespread transport shutdowns during morning rush hours, tear gas outside major office buildings and growing concern within multinational banks and other companies about worker safety. Some businesses are urging employees to cancel non-critical meetings and work from home. Many retailers, shopping malls and restaurants are closing early.Of course, lots of Hong Kong workers are backers of the demonstrations. Some even lined the streets of the central business district in office attire this week to show support for black-clad protesters.But with few signs of an end to the city’s political crisis, the worry is that continued disruptions to Hong Kong Inc. will drive up unemployment and plunge the economy deeper into recession.Without a long-term solution, the city risks losing its role as one of the world’s most important financial and commercial hubs. Some workers based overseas are already avoiding non-essential travel to the former British colony, in certain cases holding meetings across the border in Shenzhen.“What we are witnessing is very worrisome,” said Yiu Si-wing, a Hong Kong lawmaker who’s closely aligned with the city’s tourism industry. He said sales at Hong Kong hotels plunged about 50% in October and are on track to tumble at an even faster rate this month.The city’s latest bout of unrest follows the death on Nov. 8 of a 22-year-old student, who fell off the edge of a parking garage as police were clearing protesters with tear gas nearby. Hundreds of protesters seized on the incident to engage in battles with police that resulted in one person being shot on Monday, further inflaming tensions.Parts of the city have been paralyzed as protesters set up roadblocks and forced the closure of subway stations.Kimmy, who has a back-office job at a listed company in the central business district, worked just four hours on Monday after disruptions to public transport turned her 40-minute commute into a three-hour slog. Half of her colleagues in the company’s trading department didn’t even come into the office.Hao Hong, head of research at Bocom International, said he canceled meetings and struggled to get some tasks done as the protests left members of his team stuck in traffic or unable to come into the office. “For us to perform effectively, we have to be together,” Hong said. “But of course, safety first.”That sentiment was echoed by BNP Paribas SA in a memo to employees on Wednesday: “Where meetings are already planned, managers should not hesitate to cancel and reschedule depending on the evolution of the situation.”At JPMorgan Chase & Co.’s main Hong Kong offices, where some of this week’s worst clashes between protesters and police have taken place steps away, employees were reminded to make arrangements “in circumstances that require flexibility (e.g. family needs, school closures, transport issues.)”Some in the finance industry have carried on despite the protests. About 1,100 people attended a private equity and dealmaking conference at the Hong Kong Four Seasons this week, close to the same amount as last year, even as protesters and police in full riot gear battled each other nearby.Trading of stocks in Hong Kong’s benchmark Hang Seng Index was about 23% higher than the 30-day average on Wednesday. What’s more, the Hong Kong exchange approved Alibaba Group Holding Ltd.’s plans for a blockbuster share sale that could take place before year-end.“Protests haven’t disrupted the workflow too much,” Jim McCafferty, the joint head of equity research for Asia ex-Japan at Nomura Holdings Inc., said by phone on Tuesday. Employees who need to work from home have been able to do so, he said. “It’s absolutely possible to be geographically agnostic and work from anywhere.”Still, it’s far from business as usual in Hong Kong. While equity turnover in the city was buoyant on Wednesday, the action was dominated by sellers. The MSCI Hong Kong Index sank 2.4%, one of its biggest single-day losses since the protests began.And despite a relatively healthy market for initial and secondary stock offerings, M&A transactions have dried up. The pace of Hong Kong takeovers by Chinese companies has plunged 80% since June, according to data compiled by Bloomberg.Airy Lau, an investment director at Fair Capital Management Ltd., said he exited all his positions in Hong Kong stocks over the past few months because of the protests, shifting the money into mainland China. “There is just too much uncertainty,” he said.\--With assistance from Ina Zhou, Manuel Baigorri, Kari Lindberg, Kiuyan Wong and Hannah Dormido.To contact the reporters on this story: Jinshan Hong in Hong Kong at email@example.com;Elena Popina in Hong Kong at firstname.lastname@example.org;Alfred Liu in Hong Kong at email@example.comTo contact the editors responsible for this story: Michael Patterson at firstname.lastname@example.org, ;Rachel Chang at email@example.com, David ScheerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Netflix Inc. broke the cable-TV bundle. Now it’s time to put it back together again, and cable giants like Comcast Corp. look eager to help.It’s true that streaming has created more choices for consumers. You don’t necessarily need to subscribe to a $100-a-month cable package just to access kid-friendly Disney programs or re-runs of “The Big Bang Theory” (or pay extra for the ability to DVR the episodes you’ll miss). There are on-demand apps for both of those now — Disney+, which launched on Tuesday, and HBO Max, which becomes available in May. At the same time, one major consequence of the streaming wars is that they’ve caused a new kind of consumer frustration. It feels like everything is becoming segregated across various services with their own individual paywalls. That requires knowing which TV programs and movies reside where, having to toggle among those different apps — which isn’t as smooth as simply channel-surfing — and managing multiple monthly subscriptions. Sign up for enough of them, and it can easily add up to the cost of good old cable, especially given that a strong internet connection is a necessary component. It’s a situation that’s unsustainable, and already the media and cable giants seem to be eyeing the reintroduction of bundles to make things easier on consumers (and to make their subscriptions stickier).As Comcast’s Matthew Strauss put it, "The great un-bundling could give birth to the great re-bundling.” He should know. Strauss is the former executive vice president of Comcast's Xfinity Services; he was recently put in charge of Peacock, the company’s own streaming product set to launch in April with content provided by its NBCUniversal sports and entertainment division. It will join Netflix, Disney+, Apple TV+, Amazon Prime Video, HBO Max and many more in the new streaming marketplace."How could someone possibly navigate all these apps? That's not how you watch TV,” Strauss said in a phone interview in September. “My prediction is that we're going to come full circle."Strauss and I were on the topic because Comcast had just made something called Xfinity Flex free to customers who subscribe to the company’s internet services but not its cable-TV packages. Flex is essentially a dashboard where users can access streaming subscriptions. It’s a lot like the home screen shown when powering up a Roku, Apple TV or Amazon Fire TV Stick — a display of tiles teasing different programs or services. The Xfinity X1 cable service is still front and center for Comcast, but Flex is a sign that the company is at least exploring how to cater to what may some day be a mostly internet-only customer base. While it may not be a bundle, it’s not hard to make the leap and envision a day when Comcast tries to offer bundles of streaming apps to its internet subscribers, serving as the go-between for programmers and customers just like it does in the cable world. Walt Disney Co. is already providing some evidence that it’s thinking the same way. As I noted in my column Tuesday, the entertainment giant recognizes that many viewers want more than a single app dedicated to superhero flicks and G-rated content. That’s why, alongside the launch of Disney+, it also began offering a $13-a-month bundle that tacks on Hulu and ESPN+. While Apple Inc.’s own original works such as “The Morning Show” can be watched with an Apple TV+ subscription, the company also has separately taken to aggregating rival apps in Apple TV Channels, where users can sign up on an a-la-carte basis. Similarly, Amazon.com Inc. has Prime Video and Amazon Channels. These aggregation efforts could all be precursors to bundling.Charter Communications Inc. CEO Tom Rutledge, during a September investor conference, discussed the challenges for so-called direct-to-consumer businesses — such as Disney+, CBS All Access, and so on — that traditionally haven’t had to deal directly with subscribers because the cable giants had typically maintained those relationships. Suddenly, programmers are having to handle billing and service issues and come up with customer-retention strategies. (Disney got a taste of this Tuesday, when its brand-new app was hit by technological glitches.) “All of those activities we do on behalf of traditional pay-TV vendors,” Rutledge said. It’s very hard to get “economies of scale in the direct-to-consumer marketplace like we’ve gotten out of the historic business.” That certainly sounds like someone who’s ready to negotiate some new distribution partnerships. Direct-to-consumer is industry jargon referring to how a streaming app bypasses the traditional distributors — flying directly past Charter and Comcast to the end user. So wouldn’t it be something if the winners of the streaming wars turned out to be none other than the cable companies? At the very least, remnants of their bundling model are sure to live on in streaming.To contact the author of this story: Tara Lachapelle at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis 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.
Chinese tech giant Tencent posted falling profits in its third quarter as its top rival Alibaba pushes on to its home turf with an upcoming Hong Kong listing. The media and gaming giant saw its sales climb 21 per cent to Rmb97.2bn ($13.8bn) during the three-month period to September 30, which was short of analysts’ expectations. Tencent has been buffeted by a slowing economy, an increasingly crowded advertising market, and greater government regulation and censorship of its core gaming business as well as online video.
To the annoyance of some shareholders, Expedia Group (NASDAQ:EXPE) shares are down a considerable 31% in the last...
Chinese electric vehicle maker Xpeng Motors, backed by Alibaba and Foxconn, has raised $400m from investors, defying a sales slump in the world’s biggest market for clean energy vehicles. The Guangzhou-based company said Chinese smartphone maker Xiaomi participated in its Series C funding round, which comes as Xpeng prepares to launch its second model, the P7 sedan, early next year. The slowdown has resulted in a tough financing environment for China’s crowded electric vehicle market.
Investing.com – Wall Street opened lower on Wednesday as a trade deal between the U.S. and China seemed less likely, while trading was subdued as investors awaited testimony from Federal Reserve Chairman Jerome Powell on the central bank’s monetary policy.
Alibaba has won approval from the Hong Kong stock exchange for a secondary listing in the city to raise as much as $15bn, according to two people familiar with the matter, in what is set to be one of the world’s biggest fundraisings this year. The Chinese ecommerce company will start a week-long investor roadshow on Wednesday ahead of bookbuilding, after it secured approval for the mammoth fundraising from the Hong Kong stock exchange’s listing committee, said one of the people. Pricing is expected to be confirmed on November 20 with the shares to start trading on the Hong Kong exchange in the week of November 25, the person said.
(Bloomberg Opinion) -- For Kumar Mangalam Birla’s textile-to-telecom empire, adversity is a 100-year-old companion. In 1919, when the Indian businessman’s great-grandfather wanted to start a jute mill, the dominant British firm, Andrew Yule & Co., bought all the surrounding Calcutta land. The Imperial Bank, the forerunner of today’s State Bank of India, initially refused Birla a loan.(1)The government of post-independence India stymied the Birla conglomerate with kindness. Soviet-style planning and state socialism protected the family’s legacy licensed firms by keeping competition out. But they inhibited growth. Birla’s father, Aditya Vikram, went to Thailand, Indonesia and the Philippines because he wasn’t allowed to expand at home. “I for one fail to see where the concentration of economic power is: with the big business houses or with the government?” he wondered in 1979. Fast forward 40 years, and the 52-year-old current chairman of the group would be justified to reprise his late father’s frustration. The liberalizing spirit of the 1990s Indian economy has lost much of its force. After dismantling the license raj, a system of strict government-controlled production, and encouraging capitalism, New Delhi is gripped once more by a feverish statism that’s making Birla’s shareholders nervous. The slide began before Prime Minister Narendra Modi came to power in 2014, and was one of the reasons why businesses backed his call for “minimum government, maximum governance.” But five years later, relations between private enterprise and the government have turned even testier.Take telecommunications, the main source of investors’ anxiety. Ever since India opened up the state-run sector in the 1990s, the Aditya Birla Group has been an anchor investor. Partners and rivals like AT&T Inc., India’s Tata Group, and Li Ka-shing’s CK Hutchison Holdings Ltd. came and went, but Birla remained. Currently, the group owns 26% of the country’s largest mobile operator by subscribers, Vodafone Idea Ltd., with the British partner controlling 45%. An Indian court last month directed this bruised survivor of a nasty price war to pay 280 billion rupees ($4 billion) in past government fees, interest and penalties. Overall, India wants to gouge its shriveled telecom industry of $13 billion. The fund-starved government expects operators to cough up more at 5G auctions next year. How long can the Birla boss hang in? With Vodafone Idea saddled with losses and $14 billion in net debt, should he even bother?It’s doubtful whether partner Vodafone Group Plc will linger. This isn’t the first time it has been clobbered by unreasonable government demands. In 2012, India retrospectively changed its tax law to pursue a $2.2 billion withholding tax notice against the U.K. firm. Seven years later, that dispute is far from resolved, and the unit has now been slapped with a new bill.In its half-yearly earnings reported Tuesday in London, Vodafone fully wrote down the book value of its India operations, and warned that the unit could be headed for liquidation. Vodafone’s 42% stake in a separate cellular tower company in the country, once sold, will get used largely to pay off the loan it took to pump capital into the main telecom venture. After that, the U.K. firm will have a little over $1 billion left to support Vodafone Idea, according to India Ratings & Research, a unit of Fitch Ratings. However, the India business would be required to find $5.5 billion just for interest- and spectrum-related payments until March 2022.Will Birla step into the breach?Out of the Indian group’s 26% in Vodafone Idea, about 11.6% is held by Grasim Industries Ltd., and another 2.6% is owned by Hindalco Industries Ltd. Hindalco, among the world’s largest aluminum makers, is battling weak metals demand and a complicated takeover of the U.S.-based Aleris Corp. The bulk of the burden of a telecom rescue — should there be one — would fall on Grasim. It acts as a holding company for Birla’s cement and financial services businesses, apart from directly owning factories that churn out wood-based fiber and chemicals like caustic soda used in soap and detergent.Mumbai-based Emkay Global Financial Services says that in the worst-case scenario, where the government doesn’t back down and Birla refuses to fold his telecom cards, a rescue mounted by by Grasim could cost it 187 rupees per share. If Birla refrains from throwing good money after bad, the value of everything else Grasim owns net of debt is 1,126 rupees a share, or 47% more than the current stock market price. Clearly, the overhang of the Vodafone uncertainty is playing on investor psyche. Once the U.S.-China trade war stops making global textile markets jittery, fiber prices will firm. Grasim, in investors’ view, is better off spending $2 billion on new capacities in fiber, chemicals and cement than wasting any more money trying to salvage the telecom venture.The Indian government should see the folly of effectively turning the telecom industry into a two-horse race between Reliance Jio Infocomm Ltd., controlled by Mukesh Ambani, the richest Indian, and Bharti Airtel Ltd., which, too, is staggering under a mountain of debt. As IIFL Securities put it, bankruptcy of Vodafone Idea would hurt all stakeholders. Vodafone and Birla would lose control, the government would forgo $1.7 billion in annual spectrum revenue and banks would take losses on their $4 billion-plus exposure.Such an outcome would cast a serious doubt on the ability of private entrepreneurs to flourish, especially if they — like Birla or Amazon.com Inc. boss Jeff Bezos — happen to find themselves in competition with Ambani in a tightly regulated industry. Future investors will think twice. The rift between the government and business wasn’t Modi’s creation, but to allow the mistrust to turn into a chasm would be one of his administration’s gravest mistakes.(1) See, “Aditya Vikram Birla: A Biography” by Minhaz Merchant, Penguin India, 1997To contact the author of this story: Andy Mukherjee at firstname.lastname@example.orgTo contact the editor responsible for this story: Patrick McDowell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Alibaba is in record-breaking mood. Fresh from the 38 billion dollars of sales at its Singles' Day shopathon confirmed on Monday (November 11) ... Sources tell Reuters it's to go for the world's biggest cross-border secondary share listing - in Hong Kong, as early as Thursday (November 14). It already holds the record for the biggest primary listing - for its 2014 Wall Street debut. At a possible 13.4 billion dollars, the new listing would be a bit smaller than the 15 billion expected back in August. Amid protests in Hong Kong, that's when the e-commerce giant temporarily shelved the plan. Despite a recent spike in violence, Alibaba is now - according to one source - confident it can overcome negative sentiment. Up to 500 million primary shares could be offered - diluting existing shareholdings by close to 3 per cent. Though the Hong Kong shares may come at a discount to their U.S. peers. They've seen a rise of 36 per cent this year. For an auspicious start in Hong Kong, Alibaba has reportedly chosen the stock code 9988. Combining two of the luckiest numbers for Chinese speakers - to symbolise long-lasting prosperity.
Nov.13 -- Alibaba Group Holding Ltd. has won approval to forge ahead with a Hong Kong share sale that could raise at least $10 billion, according to a person familiar with the matter. Bloomberg's Selina Wang has the details and what this means for the company and Hong Kong Exchange.