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tv   BBC Business Live  BBC News  July 27, 2017 8:30am-9:01am BST

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this is business live from bbc news with ben bland and alice baxter. 2 billion friends — soaring profits — and a big thumbs up from wall street. but how much bigger can facebook grow? live from london, that's our top story on thursday the 27th ofjuly. revenues and profits soar at facebook — as advertising dollars pour into the world's most popular social media site. also in the programme. the e—commerce giant amazon launches a delivery service in singapore — going head to head with its chinese rival alibaba. here is how the european markets look at the start of the trading day. the ftse is a negative
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territory. we will have a look at the markets later. and piggy—backing a mobile network. we'll be looking at the growing trend of virtual network operators and ask who's winning — the consumer or the company? and as facebook earnings surge 71% and its number of friends swell to over 2 billion, today we want to know — are you a facebook friend or foe and why? let us know. just use the hashtag bbcbizlive. i have just sent to a friend request, i hope it will be accept it! hello and welcome to business live. we start in silicon valley where it seems there is no stopping the world's biggest social network. facebook has seen another huge jump in profits as advertising revenues keep on rising — let's show you just how big.
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in the three months to the end ofjune, facebook made a net profit of $3.89 billion. that's a jump of 71% on the same period last year — and better than wall street was expecting. injune, the number of active monthly users crossed the two billion mark. that means more than one in every four people on the planet use the site at least once a month. and according to these latest results it's still rising. not surprisingly — so is facebook‘s share price. it has climbed by more than 40% since january — giving the company a stock market value of getting on for half a trillion dollars. that's more than five times its value when it floated back in 2012. thank you and i have just accepted your friend request to add to those numbers! lets talk to peter veash
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from the bio agency. can the numbers continue to grow? has it hit a ceiling? it is pretty phenomenal numbers and they have got there by going into the developing countries. they have optimised resolution to make it work where it is not so good to connect to your mobile device and for android users. they are doing that by launching a lighter app? correct. it has got to point where i think you could go further. the question is how you could make money from those markets. how do they go further in terms of making money, monetising those other segments of the business. how did they make money from instagram, whatsapp and the other hugely popular apps they
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have bought up. a lot of revenues come from developing countries and also from video streams. facebook is jammed from many advert placements. instagram has some way to go. messenger and whatsapp have not been touched. the reason they can rake in this much run advertising is because of the numbers using it. if they started using adverts on platforms like whatsapp, if it annoys people and they switched to other apps, they risk undoing the good work. but we had the same concerns when they started putting ads in to facebook and it is still growing. i think consumers will get over it, understand it and adopted. when you look at the numbers, and one in four people is an very least once a month, it feels like they are maybe reaching saturation but they seem to be aware of that and they are pushing in developing markets with this lighter model, the two g version of the app. they are going
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new audiences and stretching the demographic. there is still some way to go with the numbers on facebook but they have other platforms. instagram is a third of the size and that could gross admit openly in those markets as well. a note of caution, they keep telling investors it cannot last forever. at some point it will plateau but we think there is traction in the other platforms. thank you, peter veash from the bio agency. let's take a look at some of the other stories making the news. president trump has been hailing a $10 billion dollar investment by taiwanese electronics giant foxconn — as proof his america first policy is making a difference. at a press conference at the white house, foxconn‘s ceo unveiled plans for a new plant in wisconsin making lcd screens — creating 3000 jobs. samsung electronics is on track to make record profits this year after its best ever set of second quarter earnings. they were up over 72% to more
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than $12 billion in the three months to the end ofjune. the financial success comes as samsung's boss faces a corruption trial and the company recovers from a massive recall of its flagship smartphone. profits at german car—maker volkswagen more than doubled in the last quarter. the strong earnings were a result of cost cuts and sales in new, higher—margin models. the results come a day after volkswagen defended alleged collusion in the car industry, saying cooperation with rivals like bmw and daimler actually helps customers. lots going on on the these live —— web page. also news about how the
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stock market is doing, and astrazeneca stock is diving. the story doing the rounds, lloyds doing mortgage arrears charges. it has set aside £283 million to look at mortgage arrears issues. for the first time ever e—commerce giants — alibaba and amazon — are going head to head. today amazon is launching its fresh food service in alibaba's back yard — singapore. the two are trying to get a foothold in the south east asian market which boasts up to 600 million people, which could be worth at least 70 billion dollars by the end of the decade. our asia business correspondent karishma vashwani has more. tell us how this is going to take
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shape. i was at the amazon facility, thatis shape. i was at the amazon facility, that is the word they use here in singapore today. they launched their prime now delivery service. it means you can get stuff from them in just two hours. imagine that, what would you need in just two hours. imagine that, what would you need injust two hours' time, frankly? it is a 100,000 square feet facility. it is meant to be the largest urban facility that amazon has in the entire world. everything from eggs, tvs, baby strollers, whatever your heart fancies, you can get there. the south asian online retail market could be worth $70 billion in the next few years. that is why there is this big e—commerce war waiting to begin here in asia. amazon going head—to—head with china's rival alibaba for the very first time in asia. many in our audiences will know the name lasada
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which is owned by alibaba. they own an online groceries provider in singapore. so it is getting very competitive in this tiny market of just 5 million people. you might ask why do these big names come to singapore? according to amazon, what they said to me earlier today, it has a tech savvy customer base, and it generally, what works in singapore might work in southeast asia. but logistics and infrastructure will be major challenges as they try and expand in the region. thank you. let's have a look at the markets. japan's nikkei inched up, reflecting a rally in riskier assets around the world. a sharpjump in game maker nintendo helped too — on the back of stronger—than—expected profits. the rally in stocks was driven by the federal reserve keeping interest rates on hold in the us and investors sensing that they may not rise again this year.
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that caused a sharp fall in the value of the dollar to its lowest level in more than a year — but it helped push the us markets higher, to fresh record highs. the dow gaining almost 0.5% after boeing shares soared nearly 10% after a strong earnings report from the plane maker. let's ta ke let's take a look at the european markets. with the exception of paris, they are in the red. the ftse is feeling a bit of a drag from astrazeneca shares in particular. their biggest one—day fall over. they are down 15%, more than offsetting the games by dhea, the drinks maker, whose shares were up by 5% after a strong profits report —— diageo. what will happen on wall street? investors might be able to draw breath after facebook‘s announcement before they turn attention to
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another social media giant. twitter is expected to reveal falling revenue. also important will be the day trip shares about how many users who has, and that is just the beginning of a very busy day. the new york times, and procter & gamble are other big names reporting earnings. all may be overshadowed by amazon. it recently saw its market value go past half $1 trillion and is set to unveil another increase in revenue. investors also want to hear any use on its recent move into the supermarket business with the ta keover of supermarket business with the takeover of whole foods. that was samira in the united states. richard hunter is head of research at wilson king investment management. ben was talking through some of the movements on the us markets and the currency markets, particularly the drop in the dollar. that was largely
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due to comments from janet yellin. where would you place your money on the possibility of a third rate hike this year? i think at the moment december is just about on the cards. one of the problems at the moment is the complete lack of inflation. there is nothing wrong with the economy in itself. there is a global recovery. i think investors know they will not hike rates too quickly. they will not want to derail the economic recovery in the states but possibly be more in just in which then mentioned which is the rundown of the qbe programme and the bond buying they have been doing. they can either sell the bonds back in the market or they can let their mature. simply letting the mature would be a quieter way to do it and i think would be a quieter way to do it and ithink in would be a quieter way to do it and i think in terms of real investor interest, we will move down that
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road. qeis road. q e is quantity of easing. the reaction seems to be to push the dollar lower and push the markets higher? we had a very good set of first—quarter earnings in the united states and so far so good in terms of the second quarter or half yearly earnings. they are even better. this gives markets a lot of comfort. this is what is happening on the ground and there is no doubt technology shares in particular are having a whale of a time at the moment. we had a spate of second quarter earnings numbers out today. richard will be with us later. thank you. still to come: piggy—backing a mobile network. we'll be looking at the growing trend of virtual network operators and ask who's winning — the consumer or the company? you're with business live from bbc news. lloyds banking group has set aside another £700 million in compensation
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for mis—selling payment protection insurance, and £283 million for its mistreatment of customers in mortgage arrears. it came as the bank reported half—year profits of £2.5 billion, its biggest in eight years and 4% higher than a year ago. theo leggett is in our business newsroom. talk us through the conversation. what is it for and will it draw a line under things for lloyds? you have to hope so. there is an awful lot of legal garbage, if you like, that lloyds has been trying to work its way through. it has set aside £283 million to compensate customers for how it handled its mortgage arrears. and it has acknowledged that when customers fell into arrears, they did not always do enough to understand the
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circumstances of those customers, to be confident that those arrears payments were affordable and sustainable. as a result, it will refu nd sustainable. as a result, it will refund all the fees charged from january 2009 and january 2016th when it stopped imposing these charges. it will also make payments for potential distress and inconvenience, and any other losses that people may have experienced as a result of not being able to keep up a result of not being able to keep up with payment plans. that is the mortgage arrears. it is also setting aside £1 billion for pp! insurance claims. but a £700 million more than expected. it says this is for reactive claims. despite this, the half—year earnings have been very strong, 4% up on the same period a year ago. what is it doing to the share price? the markets do not know what to make of it. it fell sharply and now it has climbed back up. a next mixture of —— mixed
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picture from lloyds but the earnings figures are good. not a great day for estate agents, both at countrywide and foxton's. and foxton's tumbling 64%. much more on the tablet as well, on the bbc news website, and also on our business live page. theo, who we werejust hearing from, has written up on a number of the stories, so yes, just head online for much more normal fees. —— much more on all of these stories. you're watching business live. our top story: revenues and profits have soared at facebook, as advertising dollars pour into the world's most popular social media site. more than two billion people — more than a quarter of the world's population — log into the site every month. a quick look at how the european
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markets are faring earlier in the day. the ftse 100 markets are faring earlier in the day. the ftse100 picking up a bit, despite a drag from astrazeneca shares, which saw their biggest one—day fall after a failure of a lung cancer drug trial. a lot of earnings around today, thursday, the heaviest day of european earnings, watch the markets closely, quite a bit of markets butt movement. now the inside track on the battle between the big mobile phone networks. last month the european union abolished overseas roaming charges. there was just another development in an industry that has seen development in an industry that has seen calls, texts and data fall to rock bottom prices. gift gaffe, one of the growing number of so—called
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virtual network providers, unlike traditional network operators virtual networks don't own the mobile infrastructure used by their customers. instead they negotiate with existing companies, such as vodafone and telefonica. mike sherman it is the chief executive of gift gaffe. —— ten one. hejoins us now. wonderful to see you. we were mentioning earlier in the introduction to you that giffgaff is a virtual mobile operator, you effectively piggyback on 02's network. how does that work, and does it actually work for the consumers involved ? does it actually work for the consumers involved? it works by us having a contract with o2, and we buy our share of the network. that is not unusual, mobile virtual operators have been in existence in this country to nearly 20 years. instead of us having to worry about building a network and running it,
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it allows us to focus on differentiated propositions, in our case, what makes us very different apart from the fact we don't offer contracts and operate only online, we rely on our members to actually run large parts of our business through us through our online forum. sounds a little bit like a 21st—ce ntu ry sounds a little bit like a 21st—century of the old corporative model. a little bit like that, yes. most of our member services are done by our members, in an online forum they will answer queries and they do an amazing job. we can tear the experience with a traditional setup where you might call up a phone line, on the uk on average it takes 17 minutes to get through a call like that. with our forum, the first response usually comes back in less than 90 seconds. although it is a slightly different way of operating, we think it is a very good way of serving our members. that all sounds very nice but in practice does it actually work for the majority of consumers out there? the fact it is
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all online, no physical shops, consumers out there? the fact it is all online, no physicalshops, no call centre to call up, presumably you are targeting a very specific demographic. our proposition does not appeal to everyone, mainly the younger generation who have grown up with the likes of facebook and doing everything online. we do believe it works. we have been rated independently by the institute of customer service and as being in the top ten companies in the uk for customer service. so top ten companies in the uk for customer service. so independent feedback tells us that it is working. there must be some challenges because if four example a network runs its own infrastructure, it can make decisions on what it sees as priorities. they might decide it wants to up the speed in towns and cities or improve coverage. if you are relying on them, you can't make those decisions, you are very much at their mercy. we rely on our network provider, 02, infact their mercy. we rely on our network provider, 02, in fact we are owned by 02. they make significant networks in the network, over £1.5
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million a day to invest in the network and by the end of the year their 4g coverage is set to be known to percent of the country. can you influence whether one to put that money or are you very much at... we are wholly owned by 02 uk, and we share some company directors, so we have a measure of influence over that but we are very confident in the quality of the network they provide to us. as you say, you weren't the first virtual mobile operator when you launched in 2009, and since you launched the number internationally particularly has ballooned, particularly in parts of the developing world. are you concerned about the level of competition out there, is this the way forward for mobile operators? generally as markets mature, the share that nbn now pole have gross. in underdeveloped markets like china, it may be less than one or 2% was not as markets mature, more and more people have phones and there is
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room in the market for differentiated products. to come out and be successful. we are just an example of that. we tend to be at the head of that trend. we will have to leave it there, thank you very much. more now on the drinks giant deer geo, the maker ofjohnnie walker whiskey and smirnoff vodka is testing a very successful year. sales were up to $15.8 billion profits, also up 25%. earlier the boss explained why. we have driven strong productivity to reinvest back into it, which is why today we have been able to up our profit guidance over the next three years, and we have initiated a share buy—back because the cash flow is strong and consistent in the company now. people around the world are drinking better, and diageo does well when
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that happens. environments like brazil and nigeria are not easy, and we do have challenges. we have worked through a year where markets have had a degree of volatility, but we are driving consistent growth, and that's what gives us the confidence to reaffirm our outlook among single digit organic growth, continued margin expansion, strong cash flow, and that is why we have also initiated a share buy—back. cash flow, and that is why we have also initiated a share buy-back. the chief executive of diageo who was speaking to me on world business report a little earlier. at the beginning of the programme, we asked you to tweak in and let us now if you to tweak in and let us now if you are a fan of facebook or a bit ofa you are a fan of facebook or a bit of a foe. they have had a huge surge in profits and we have learned that their membership numbers have swelled beyond 2 billion. graham has got in touch, saying it is getting frustrating now, too political, too many ads and lots of fake info being shared. a big issue during the us
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election. julie says she is able to keepin election. julie says she is able to keep in touch with family and friends across the world and it has many positives when used responsibly. claire says not a fan, life has been some advertisement ashok my account. richard, friend or foe? i am not one of the 2 billion, so no comment. you must be in their sights, they are growing their monthly users, perhaps?” sights, they are growing their monthly users, perhaps? i have heard too many stories about some of the trivia posted on facebook. i am more towards twitter just for the news value. i like that tweak you head saying that whatsapp was an oasis of calm in comparison. yes, that was james comey said he would be slightly reluctant if it was suddenly bombarded with adverts. tech giants generally, seattle times, home to the hq of amazon,
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running this headline, amazon's $500 billion, its status as a corporate titan. as amazon entered the golden glove ? titan. as amazon entered the golden glove? i think yes. titan. as amazon entered the golden glove? ithink yes. it titan. as amazon entered the golden glove? i think yes. it certainly has. it is amazing there are now four company is worth $500 billion, half a trillion, if you prefer, the other three are microsoft, alphabet, google as was, and apple. a good pub quiz question. do we want to have a look at the other of the next paper, no, we don't have time. it always goes quickly. richard, thank you very much. that is it from business live, more throughout the day on the website. the key for watching. the weather pattern is not going to
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change a great deal over the next few days. low pressure will keep things fairly unsettled, and for today, and for the next few days or so, today, and for the next few days or so, sunny today, and for the next few days or so, sunny spells and showers could sum it up. this area of low pressure, which has been with us over the last 2a and is, will stay with us over the next 2a and is, 48 hours or so, bringing with it some fairly gusty winds and elsewhere across england and wales, showers will be bit more widespread into the afternoon. but, while many of us are at risk of seeing a shower today, not all of us will. some good sunny spells between now showers. if you do catch one, it could be on the heavy side, the odd rumble of thunder as well. gusty winds associated with the heaviest of them but sunny spells in between. the scotland, northern ireland, again showers a bit more frequent throughout the day, particularly in
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the north and west. but again, some sunny spells in between and maximum temperature is about 17 to 20 celsius. through this evening and the night, some of the showers tend to fizzle away. you notice scotland, northern ireland, they will keep on going well throughout the night into the early hours of tomorrow morning. low pressure still with us, keeping things fairly unsettled. overnight temperatures down about 12 to 13 degrees. friday, then, fairly starts off drive with frequent showers for scotland, northern ireland, late in the day when it rain will spread up from south—west england in through wales, midlands, south east england as well. generally speaking, i think southern parts of northern england, the northern extent of that, further north, it is expected to be brighter. that is the reason for the rain, this weather system here, it will push away during saturday. but you notice this area of low pressure is still with us as we go through saturday and indeed in the sunday as well. that keeps things unsettled,
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again, a mixture of sunny spells and showers. towards the south—east, chance of staying quite cloudy, some outbreaks of rain through the day as well but in between dry and brighter. there is that low pressure system again for sunday, quite breezy conditions, could be a mixture of sunny spells and showers, maximum temperature is about 17 to 22 celsius, feeling quite cool where you get the cloud, the showers and the strong winds. i'm chloe tilley, welcome to the programme. more than 12 months after the referendum, the government is commissioning a study of the costs and benefits of eu migrants on our economy and it's going to take more than a year to carry out. the charity women's aid is calling on the government to sign off changes to court guidelines which aim to protect children from violent fathers during custody battles — they say the delays are putting lives at risk. to actually be physically attacked,
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almost killed, and then be thrown into a system that does not believe you or somehow you're held responsible for the violence that you've had, it isjust hideous.
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