The Economist - USA (2020-02-01)

(Antfer) #1

8 The EconomistFebruary 1st 2020
The world this week Business


Theproblemsmountedat
Boeing, as it more than dou-
bled the cost it expects to incur
from the grounding of the 737
maxairliner, to $18.6bn. The
aerospace company reported a
net loss of $636m for 2019, its
first annual loss in 22 years.
The amount of debt it holds is
ratcheting up. And it is cutting
production of the Dreamliner.
To cap it all, Boeing took a
$410m charge in the fourth
quarter because its Starliner
unmanned spacecraft failed to
dock with the International
Space Station on its maiden
voyage.

By contrast,Applereported
record quarterly sales and
profit figures. Revenue was up
by 9% in the last three months
of 2019 compared with the
same quarter a year earlier, to
$91.8bn. That generated a net
profit of $22.2bn. Sales of the
iPhone rebounded after several
quarters of moribund growth;
Apple is expected to release its
first 5gphones later this year.
The company’s share price
jumped, pushing its market
capitalisation above $1.4trn.

Along with many other compa-
nies, Apple warned about the
potential impact of the
coronaviruson its business. It
has mitigation plans to coun-
ter the loss of production from
its suppliers in Wuhan, the
centre of the virus, but is un-
certain about its supply from
elsewhere in China. Foxconn,
which assembles most of
Apple’s iPhones in China, saw
its share price plunge.

Jerome Powell, the chairman of
the Federal Reserve, said that
the spreading coronavirus
would probably cause “some
disruption” to the global econ-
omy, but that it was unclear

howfarthatwouldextend.The
Fedleftitsbenchmarkinterest
rateunchangedata rangeof
between1.5%and1.75%.

TheJapanesegovernmentsent
a strongsignalthatit remains
committedtoitsprogrammeof
quantitative-easingandnega-
tiveinterestratesbynominat-
ingAdachiSeiji tothepolicy
boardoftheBankofJapan. Mr
Adachiisanardentreflation-
ist,whowantstoeasemone-
tarypolicyevenfurtherin
ordertoachievethecentral
bank’s2%inflationtarget.But
asinothercountries,the
financialindustryisbecoming
louderinpointingoutthe
drawbackstoitsbusinessof
long-termnegativerates.

The quarterly pounder
McDonald’ssaid that like-for-
like sales rose by 5.9% last year,
the biggest such jump in a
decade. The fast-food chain
has revamped its menu and
outlets, and has benefited from
being included on a growing
number of food-delivery apps.

Britain decided that it would
not ban “high-risk vendors”
from parts of its 5gnetwork.
Despite the generic language,
the decision is mostly about
Huawei, which will thus be
able to continue supplying

equipment despite an intense
lobbying effort by American
officials to block the Chinese
firm on national-security
grounds. Half-recognising that
concern, Britain will monitor
Huawei’s equipment and bar it
from parts of the network
deemed critical for security or
safety. Elsewhere its market
share will be limited to 35%.

Facebookprovided details of
Mark Zuckerberg’s “vision” to
overhaul the oversight of
content on the social-media
platform. A new independent
board will hear appeals from
users who have had content
taken down, for hate speech
say. If Facebook ignores the
board’s judgment it will have to
explain why. The cost of
spending more on privacy and
security were in part to blame
for a sharp rise in expenses in
Facebook’s quarterly report.
Revenues grew at the slowest
pace since it became a public
company in 2012.

A bullish earnings report from
Tesladelighted investors. The
electric-car maker made its
second consecutive quarterly
profit, even if, at $105m, it was
25% lower than in the same
quarter a year earlier. It also
raised its production guidance
and now expects to deliver
500,000 this year. The com-

pany’s share price has risen by
130% since October.

Renaultappointed Luca de
Meo as its new chief executive,
its second since the fall of
Carlos Ghosn in November


  1. Until recently Mr de Meo
    used to run seat, a Spanish
    carmaker owned by Volks-
    wagen. He starts his job at
    Renault in July.


Northern Fail
In Britain it was announced
that Northern Rail, is to be
nationalised in March, follow-
ing two years of chaos for
passengers under the train
company’s current operator.
Coming soon after the bail-out
of Flybe, this is the new gov-
ernment’s second big interven-
tion in regional transport
infrastructure.

The share price of the company
that owns Victoria’s Secret
surged after it was reported
that its chief executive might
step down and possibly sell the
lingerie retailer. Les Wexner
has run L Brands for 57 years
and is the longest-serving ceo
of any s&p 500company. Last
year he faced embarrassing
questions over his link to
Jeffrey Epstein, a dead sex-
trafficker who managed Mr
Wexner’s financial assets.

Boeing
Net profit/loss, $bn

Source:Bloomberg

12
9
6
3
0


  • 122010 14 191816

Free download pdf