FT : Smartphone makers look to other products as saturation looms

The growth of smartphone sales in developed countries is slowing or has even peaked, according to research, giving further impetus for strategic shifts by companies such as Apple and Samsung into services, content and products such as wearable devices.
The combination of already high smartphone ownership and a lack of real innovation means that fewer people feel the need to buy new handsets, making the once-crucial release of the latest models less important for telecoms executives.
Sales of smartphones have already peaked this year in Korea and Japan, according to IDC, the analyst group, while growth is slowing in western Europe as well as the US.

“As penetration grows, smartphone shipments continue to experience slower growth and will even decline soon. Some European countries have already experienced declines in shipments,” said Francisco Jeronimo, research director at IDC.
“This will become a challenge for most top vendors as revenues will drop rapidly, and a problem for those vendors making no money. Their market shares will not allow them to compensate lower revenues and lower operating margins with higher volumes.”
While developed markets remain important – not least because the customers are more loyal and can often better afford premium products – IDC forecasts a flattening curve of shipments to these countries over the next five years.
This will mark a divergence between the volumes sold in developed and emerging economies, where sales of smartphones are still increasing rapidly as more people use mobile networks as their primary means of internet access.
Asia and Africa will generate a much higher share of global sales by 2020, which is why companies such as Apple have been keen on increasing customer numbers in such regions.

China will account for almost a third of smartphone shipments by 2018 according to IDC – making it the world’s most valuable mobile phone market – while shipments will more than double between now and 2018 in markets such as India, Indonesia and Russia.
However, these markets are also dominated by low-cost Android smartphones that offer similar functions as more expensive Apple or Nokia devices. This trend is also occurring in western markets, according to analysts, where a number of new vendors such as France’s Wiko have joined cheaper Asian brands such as Huawei and ZTE.
“Given an already large installed base of smartphones and lengthening replacement rates, shipment growth is slowing in western markets and vendors are lowering price points in order to maintain volumes,” says Adrian Baschnonga, telecoms analyst at EY.
The shift in the market is having an impact on operator strategies in countries such as the UK, where smartphone handset sales through the leading mobile operators fell by a quarter in the 12 months to March, according to data seen by the Financial Times compiled by GFK.
Sim-only contracts grew 9 per cent, meanwhile, as more people moved from smartphone contracts to cheaper tariffs using existing devices.
Operators are changing their marketing to emphasise the quality of networks or competing on data allowances and services such as free TV and music streaming, according to one telecoms executive. He says that network operators no longer just want to be the carrier for another company’s devices.
“We are trying to make network quality and coverage the star,” he says, pointing out that the sort of advantage gained by O2’s exclusive sales contract for the first iPhone in the UK was no longer possible. “Not so long ago it was about getting the latest iPhone to someone’s hands.”
Mr Jeronimo pointed to the opportunity for a “second wave of smartphone adopters”, which is being driven by those consumers who do not need or want a smartphone but end up buying one because there are not many other options available.
Operators have told IDC that their customers care less about the brand if they can get a device at half the price with a good design, good performance and a good camera.
The shift in the market means that handset makers are faced with trying to develop a new “disruptive” concept or only adding incremental value by cutting prices. This, the executive says, explains why Apple, Samsung, Sony, LG, Huawei and others have developed or are rumoured to be developing portfolios of wearable devices such as smart watches.
“The hardware market is now open to anyone – the same quality of components are available at low prices – so now its about what you can build on top,” he adds. “Leading vendors such as Samsung are looking to diversify their product portfolios by tapping new waves of demand in related categories such as wearable devices and connected TV services.”

FT : Fed looks at exit fees on bond funds

Fed looks at exit fees on bond funds

Federal Reserve officials have discussed imposing exit fees on bond funds to avert a potential run by investors, underlining regulators’ concern about the vulnerability of the $10tn corporate bond market.
Officials are concerned that bond-fund investors, as with bank depositors, can withdraw their money on demand even though the assets held by their funds are long-term debt and can be hard to sell in a crisis. The Fed discussions have taken place at a senior level but have not yet developed into formal policy, according to people familiar with the matter.
“So much activity in open-end corporate bond and loan funds is a little bit bank like,” Jeremy Stein, a Fed governor from 2012-2014 told the Financial Times last month, just before he stepped down. “It may be the essence of shadow banking is ... giving people a liquid claim on illiquid assets.”

In the wake of the financial crisis, tougher rules on capital and the abolition of in-house trading operations at major US banks have resulted in Wall Street pulling back from helping big funds buy and sell corporate bonds. Bank inventories of bonds have fallen almost three-quarters from their pre-crisis peak of $235bn, according to Fed data.
At the same time, US retail investors have pumped more than $1tn into bond funds since early 2009. This has created a boom environment for fixed income money managers, but raises the prospect of a massive disorganised flight of money out of the industry should interest rates rise sharply in the coming years.
Exit fees would seek to discourage retail investors from withdrawing funds, thereby making their claims less liquid and making a fire sale of the assets more unlikely.
Introducing exit fees would require a rule change by the Securities and Exchange Commission, which some commissioners would be expected to resist, according to others familiar with the matter.
Such fees could be highly unpopular with retail investors unable to access funds without paying a fee. But some in the industry would welcome them; BlackRock, the world’s largest asset manager, has called for international rules setting exit fees on some funds.

Even as regulators worry about the potential of a sharp correction in the bond market, some investors are building a war chest to take advantage of it. BlueMountain Capital, the New York-based alternative asset manager, has stockpiled funds ready to be deployed when bond prices fall.
“If credit markets were to become stressed due to heavy mutual fund outflows, our funds with patient capital and flexible mandates would be in a position to capitalise on any dislocation,” said Andrew Feldstein, co-founder and chief executive of BlueMountain.
Investors like Mr Feldstein and regulators like Mr Stein have a similar vision of how the dislocation could arrive. “A big theme post-crisis is a significant shift of credit risk from banks to mutual funds,” said Mr Feldstein.
“Mutual funds aren’t leveraged like banks are, so they probably don’t create the same degree of systemic risk. But they do offer daily redemptions, and so they engage in a maturity transformation similar to banks, which could result in significant market stress in heavy outflow scenarios.”

>>> Closing Commodities: Crude Ends Three Cents Higher, Gold Rises 0.1%

Closing Commodities: Crude Ends Three Cents Higher, Gold Rises 0.1%

- Aug gold traded in a consolidative pattern near the unchanged level after pulling back from its session high of $1283.00 per ounce set in morning action. Unable to gain momentum, it settled 0.1% higher at $1275.30 per ounce.
- July silver touched a session high of $19.75 per ounce moments after floor trade opened and dipped to a session low of $19.58 per ounce later in morning action. The precious metal eventually settled with a 0.4% gain at $19.72 per ounce.
- July crude oil traded in a tight range near the unchanged level today. It touched a session high of $107.17 per barrel in early morning action and brushed a session low of $106.61 per barrel before settling at $106.88 per barrel, or 3 cents higher.
- July natural gas touched a session high of $4.78 per MMBtu after trading as low as $4.67 per MMBtu in morning action. However, it retreated back into the red ahead of the close and settled with a 0.8% loss at $4.70 per MMBtu.

RTR - Telefonica to win EU approval for $11 billion E-Plus bid - sources

Telefonica to win EU approval for $11 billion E-Plus bid - sources

(Reuters) - Telefonica will win EU approval for its 8.6-billion-euro ($11.7 billion) bid for KPN's German unit E-Plus after agreeing to let smaller rivals in Germany piggyback on its mobile network, two people with knowledge of the matter said.

Faced with its fifth year of sales decline and the need for expensive upgrade networks for high-speed broadband, the telecoms industry has been looking to mergers to boost revenues.

But some operators and analysts say regulatory demands to assist smaller rivals in return for clearing mergers could dampen consolidation sentiment.

To secure EU approval for the E-Plus deal, Telefonica - Europe's biggest telecoms provider by revenue - will allow some smaller operators to lease at least a fifth of the combined company's network capacity, the sources said.

"The European Commission will clear the deal," said one of the people, who declined to be named because the European Union decision is not yet public.

The concessions could help up to three smaller operators, so-called mobile virtual networkoperators (MVNOs), following regulator concerns that the merger would reduce competition in Europe's biggest telecoms market, the sources said.

MVNOs are operators which do not own networks and instead rent access to established rivals' infrastructure. They tend to sell cheaper mobile plans, often without a long-term contract.

The sources said that Telefonica is now seeking to clinch deals with German rivals Freenet, United Internet and Drillisch. The companies could not be immediately reached for comment outside of office hours.

The Commission spokesman for competition policy, Antoine Colombani, declined to comment. A spokesman for Telefonica Deutschland, the subsidiary of Telefonica that is buying E-Plus, also declined to comment, saying only: "The Commission will decide on the merger clearance by July 10 at the latest."

WARNING

The Commission's decision, expected by July 2, has already created dismay in the German cartel office. The sources said the German regulator had written both to European Competition Commissioner Joaquin Almunia and fellow agencies across Europe, warning against the merger.

"We sent a letter to the Commission in May regarding remedies on the table at that time. We had some concerns at that time," said Kay Weidner, spokesman at the German cartel office.

The Commission will brief national competition regulators on the proposed merger on Wednesday but is not expected to change its mind.

The concessions would be broadly similar to those offered by Hong Kong-based Hutchison Whampoa for its acquisition of Telefonica's O2 Ireland unit which received the regulatory green light last month.

Reacting to the Hutchison approval last month, Vodafone warned that MVNOs have few incentives to roll out their own network or make use of available spectrum.

(BFW) Uber European Revenue Doubles Every Six Months: Business Insider

Uber European Revenue Doubles Every Six Months: Business Insider
2014-06-16 16:22:08.217 GMT


By Adam Cataldo
     June 16 (Bloomberg) -- Uber’s Pierre-Dimitri Gore-Coty
speaks in an interview with Business Insider.
Link to story: {NSN N79RT6BE07I9<Go>}

Link to Company News:{0084207D US <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story:
Adam Cataldo at +1-212-617-5227 or
acataldo@bloomberg.net

RTR - Exclusive: Shire hires Citi as braces for takeover bids - sources

Exclusive: Shire hires Citi as braces for takeover bids - sources

(Reuters) - London-listed drugmaker Shire has hired investment bank Citi as an adviser, expecting to receive takeover approaches following a wave of deals in the healthcare sector, sources familiar with the matter told Reuters.

Much of the dealmaking has been fueled by U.S. companies seeking lower tax rates abroad. With its tax base in Ireland - where effective corporate tax rates are among the lowest in the world - and a mid-sized market value of around $35 billion, Shire could be a prime target, analysts and bankers believe.

"Something could happen this year," said one of the sources on condition of anonymity because the matter is private.

Shire, which specializes in treatments for attention deficit hyperactivity disorder (ADHD) and a range of rare diseases, was not immediately available to comment. Citi declined to comment.

Shire, which was founded in 1986 in Britain but conducts most of its business in the United States, has been domiciled in Ireland for tax purposes since 2008.

It has already been approached by Botox-maker Allergan months before the U.S. group itself became a takeover target for Valeant, Reuters reported earlier this year.

That approach did not lead to serious discussions between the two parties and there are currently no talks with Allergan, one source said.

Shire is a relative rarity in being a mid-sized drugmaker with no controlling shareholder, making it a perennial subject of takeover speculation.

Sector bankers think it could appeal to U.S. pharmaceutical and biotech firms such as Bristol-Myers Squibb, Amgen, Abbvie, Gilead and Biogen.

But Shire's reliance on ADHD drugs has put off potential bidders in the past, as using stimulants to treat ADHD in children is controversial in some doctors' eyes, they added.

ADHD medicines account for around 40 percent of Shire’s sales. The firm also sells pricey drugs to treat rare genetic disorders and is building up a portfolio of treatments in ophthalmology and other speciality disease areas.

The current imperative for major drugmakers to keep up with rivals in terms of a low tax rate and to use offshore cash that would otherwise be taxed punitively if brought back home, could now be changing the calculation, some industry watchers believe.

INVERSION DEALS

"The benefits of lower taxation is a key M&A driver in this cross-border wave of U.S./EU healthcare deals," said one pharmaceuticals analyst on condition of anonymity.

"Shire would make another attractive target despite the fact that it is a niche business and sells amphetamines."

The race to strike so-called "inversion" deals offering lower tax rates was underscored at the weekend when U.S. medical device maker Medtronic agreed to buy Covidien for $42.9 billion and move its base to Ireland.

Ireland is a particularly attractive destination for such transactions since it has a 12.5 percent corporate tax rate, compared with 35 percent in the United States.

A Reuters review showed about 50 such inversion deals had been done in the past 25 years, with half occurring since the 2008-2009 financial crisis abated.

"Any halfway decent, EU-based company will be looked at very seriously. The latest deals have upped the ante. The metric of purely strategic rationale has been put aside – anything is possible," said one sector banker, who added that two or three more possible inversion deals could happen soon.

Some U.S. lawmakers are concerned the deals erode government revenue by giving corporations a tax-avoiding loophole. Two bills in the U.S. Congress and a White House proposal would make inversions harder to do, but neither has gained much traction. That could change if another major U.S. company or two tried to conduct inversions, tax lawyers and analysts said last week.

U.S.-based Pfizer's $118 billion bid for British drugmaker AstraZeneca was rejected last month, scuppering what would have been the largest such inversion deal, but there is speculation talks may yet revive.

Under British takeover law, the UK firm can approach Pfizer at the end of August to discuss a sweetened bid, or Pfizer can try again in November.

WSJ : Siemens Bids to Buy Alstom Gas Turbine Business

Siemens Bids to Buy Alstom Gas Turbine Business German Move Potentially Spoils $17 Billion Bid From General Electric

An Alstom employee inspects the wiring on a turbine at Alstom SA's turbine refurbishment plant in Rugby, U.K,. The battle for Alstom intensified after Siemens AG said Monday it had officially bid for the gas turbine business. Bloomberg News FRANKFURT—German engineering company Siemens AG SIE.XE +0.02% Monday said it had officially bid to buy the gas turbine business of French rival Alstom SA, ALO.FR -0.90% potentially spoiling a rival $17 billion bid for all of Alstom's energy business from U.S. industrial giant General Electric Co. GE -1.02%

More At a Glance: Takeover Saga Siemens said it had offered Alstom roughly €3.9 billion ($5.3 billion) for its gas turbine business, including related service contracts, and proposed establishing joint ventures in other sectors and transfer of its rail business to Alstom as elements of the bid. The announcement confirms preliminary terms of the offer reported by The Wall Street Journal on Sunday.

"Our offer preserves the brand Alstom in substantial parts and altogether it's about €1 billion better financially [than GE's bid]," said Siemens Chief Executive Joe Kaeser.

The Siemens offer is part of a broader deal that also involves Japanese peers Mitsubishi Heavy Industries Ltd. 7011.TO -3.67% and Hitachi Ltd. 6501.TO 0.00% , which have a joint venture in power systems that they are proposing would invest in several of Alstom's power plant component and transmission businesses.

The German-Japanese offer for one of France's industrial leaders comes after weeks of uncertainty whether Siemens would place a formal bid. Alstom and GE in April revealed they were near to a deal for GE to buy Alstom's energy business. The plan was opposed by politicians in Paris who fear letting an American company take control of a strategic national asset and so invited Siemens to make a counteroffer for Alstom.

The chief executives of Siemens and Mitsubishi will on Tuesday address a French parliamentary committee to explain their proposal.

GE has set a deadline of next Monday for Alstom to formally accept or reject its offer.