WSJ : Blackberry's CEO Takes Long-Term View

Blackberry's CEO Takes Long-Term View
John Chen, who took over at the company in November, discusses his high-stakes plan to return to profit.

Just five years ago, BlackBerry Ltd. BB.T -1.87% accounted for roughly half of the smartphone market in North America. Today its share is a mere 0.6%, according to research firm IDC. As consumers have flocked to Apple AAPL +1.48% and Android-powered phones world-wide, the Waterloo, Ontario-based firm has faltered. For its fiscal fourth quarter ended March 1, the company reported a net loss of $423 million.

Chief Executive John Chen was drafted to take over the company in November, and is tasked with reversing the decline.

Mr. Chen has implemented a high-stakes plan to return BlackBerry to profit by outsourcing much of its hardware business to Taiwan's Hon Hai Precision Industry Co. 2317.TW +0.23% , known as Foxconn, which produces most of the world's iPhones and iPads.

BlackBerry's enterprise business—which provides secure phones and software to businesses and governments—has also been under pressure. It is unclear if the company can woo everyday customers to its new low-cost smartphone, which it released Tuesday in Indonesia, one of its last remaining strongholds.

In an interview in Jakarta at the launch event for the new Z3 phone, the 58-year-old Mr. Chen—a Hong Kong native who came to the U.S. to attend prep school in Massachusetts—discussed BlackBerry's long-term prospects, how his background in advanced mathematics helps to solve technology problems and his love for symphonies.

Edited excerpts:

WSJ: BlackBerry's market share has fallen globally while Android's has surged. Why should consumers buy a BlackBerry phone?

Mr. Chen: Android's strength isn't really the quality of the phone, which BlackBerry has. BlackBerry phones are always well put together. We have a great BlackBerry Messenger experience, a great operating system. And it's the most secure phone. Secure not only in data but in personal identity. Younger consumers love all kinds of apps, and BlackBerry runs 98% of all the Android apps. All BlackBerry die-hards know they can run Android apps.

WSJ: Are you convinced that BlackBerry can have a presence in the consumer phone space and not simply be enterprise-focused?

Mr. Chen: With our relationship with Foxconn and the ability to build a competitively priced phone with our operating system, it's an easy way for us to tell our consumers that we do care and we would like to pay back their loyalty. Also, in developing countries in Asia, today's consumer is tomorrow's enterprise. I'm really building a presence in the market that allows us to move up into the enterprise space.

I know there's been a lot of negative news about BlackBerry. I came in as a turnaround guy, so by definition, it isn't good. I've said it will take me a while to fix this stuff. But what people may not recognize and appreciate is that the company is really focused on execution. We're building great technology and software.

WSJ: The Z3 is approximately $191 dollars. Will you release an even cheaper, sub-$100 smartphone?

Mr. Chen: I'm not going to go down to a sub-$100 phone, at least not anywhere in the near future. I'd like to add more features. Someone asked me, could you ever sell a $400 phone again? The answer is yes, depending on what's in the phone.

WSJ: Five years from now, will BlackBerry be a global player or a more niche, enterprise-focused firm?

Mr. Chen: No, why would I do a niche thing? I got a lot of CEO offers before. I'd like to become a strong software and infrastructure provider of everything that connects to each other. Why would people buy from BlackBerry? Partly because of the know-how, patents and security. Today I'm building toward those goals. It will take a while but I have to first return the company to profitability.

WSJ: Is it personally difficult to run a company that is seen to be struggling?

Mr. Chen: A turnaround CEO is like an emergency room doctor. You have to act quickly, be decisive, not be phased by negative things. And you can't be emotionally involved. You have to be clinical. Because once you're emotionally involved you start not making the right decisions quick enough. Is it difficult? That's my job. That's what I do. My constitution is I love working on complex, high-risk, high-reward puzzles. It's actually exciting.

WSJ: How do you tackle technology-related problems?

Mr. Chen: The problems I'm solving are dynamic, they're not static. Everything from consumer preferences to enterprise priorities in terms of security or risk management. I studied electrical engineering, and this is like when you study nonlinear differential equations. The answer to those problems often times is a model, not an absolute. I love that. I know I'm dealing with fast-moving models.

WSJ: Are you an autocratic leader or more of a democratic leader?

Mr. Chen: I believe there's a time to discuss and a time to act. I don't like to confuse the two. I have a cadence with our management team where we put up problems, everyone goes to collect data and analysis, and when we come together every two weeks to tackle the decision points, I get advice from everyone, and then I decide. I like getting knowledge from my team, but like a model, the right decision changes with time. If you stay on a problem long enough, especially in technology, it changes. A nondecision is always wrong.

WSJ: What do you do to relax?

Mr. Chen: I used to read a lot and play a lot of golf. I now just play a lot of golf. I have a bad back and when I read I have bad posture. But I do like to read. I've been reading a lot of Chinese literature. I grew up in Hong Kong, and Chinese was somewhat forced on me. I never really appreciated that these people who died 3,000 years ago have something to say. Now I don't have to study it and I really appreciate it.

WSJ: What are your hobbies?

Mr. Chen: I go to a lot of symphonies. My entire family is quite keen on music. I always find that I can enjoy the piece much more if I understand when it was written by the composer and what was going through his life. You might hear a piece that sounds chaotic and angry, and if you know the composer was having a difficult time through war or with the passing of a loved one, you can really understand. Not everything is 1812 Tchaikovsky.

WSJ: What would a symphony of your life right now sound like? Would it be chaotic?

Mr. Chen: Oh no, I consider myself a very happy person. I'm very privileged and thankful. Being born in Asia and giving me an appreciation for the cultures here, and then studying in the U.S., I couldn't be better trained in being an entrepreneur. The opportunity of being a first-generation immigrant in the tech world centered around Silicon Valley in the 1980s and 1990s, I don't think anyone could have been luckier living through that era.

FT : Deutsche’s capital ‘hunger march’ resumes

Deutsche’s capital ‘hunger march’ resumes

Just 13 months after it last tapped investors for more money, Deutsche Bank has again been forced to admit it does not have enough capital. And the German lender’s €8bn equity fundraising, announced late on Sunday night, puts investors in a difficult position.
On the one hand, fresh capital will go some way toward plugging a hole in Deutsche’s balance sheet that has unnerved shareholders ahead of European Central Bank stress tests this summer.

On the other, the €6.3bn rights issue that will deliver the bulk of the new capital comes at a time when the bank’s share price is already in the doldrums, having fallen nearly 25 per cent since mid-January.
For some investors, this will raise the question of trust in Deutsche Bank’s top management. Last year, Anshu Jain, the co-chief executive, declared that the bank’s “hunger march” for capital was at an end, after Deutsche raised €3bn from investors.
Senior executives have been stressing in recent weeks that Deutsche always had a “Plan B” in mind, involving a fresh equity raising – if its original plan to raise capital “organically” proved insufficient.
Some have also pointed out that Mr Jain and his co-chief executive Jürgen Fitschen have had to deal with new and onerous regulation neither could possibly have predicted when they set out a cost-cutting, capital-strengthening plan in 2012.
Among these regulations are rules from the European Banking Authority on how banks should value illiquid assets. These alone are expected to cause a €2bn capital shortfall for Deutsche. There are also concerns that the ECB could impose stricter accounting standards than Deutsche’s current German regulator.
There are also some investors who have declared themselves happy to endure a dilutive capital raising if it means Deutsche’s capital strength problem could finally be put to bed.
A capital increase would give Deutsche the firepower to compete against US banks in fixed income, currencies and commodity (FICC) trading – an area where most other large banks including Barclays and UBS are embarking on a retrenchment. Senior executives have said the bank is trying to cling on as the only remaining European player in a trading area challenged by a drop in revenues and tighter regulation.
Following news of the fundraising on Sunday, one analyst said: “With a €8bn capital increase they can shut people up ... but they would still have to be tight on their balance sheet and they would not be able to use much for a reinvestment into FICC.”
Meanwhile, the Qatari royal family’s involvement in the capital raising, by taking a €1.75bn stake in Deutsche through its Paramount fund, will make it a sizeable shareholder in another large European bank.
Qatar Holding and Challenger, an investment vehicle of Sheikh Hamad bin Jassim bin Jabr al-Thani, the former prime minister of Qatar, injected £6.1bn into Barclays in 2008, allowing the bank to escape a government bailout. Qatar also owns a more than 5 per cent stake in Credit Suisse, in which it also invested at the height of the financial crisis.
But questions remain as to whether even €8bn in fresh capital will be enough to plug Deutsche’s capital hole. Analysts at Berenberg and Mediobanca have both estimated that he bank has a €10bn capital shortfall.
Others have been sceptical about the bank’s prospects of using a higher capital base to improve returns.
“If you raise capital, you automatically have a lower return on equity so that is a tough sell to the market,” one senior analyst said.
He also pointed to structural challenges in bond trading. “It was only because of banks’ ability to fund themselves cheaply and to leverage themselves up that they could turn a thin-margin business into something with a decent return.”
Speaking before the news of the rights issue broke, one Deutsche Bank shareholder said: “I think it would be quite complicated to make [a rights issue] look good. What you’re asking shareholders is to give more money to support a business that has not proven yet it can adapt to a new regulatory environment.”

>>> Swedish ministers express concern on effects Pfizer's possible acquisition o

Swedish ministers express concern on effects Pfizer's possible acquisition of AstraZeneca may bring to Sweden 

Swedish government ministers, Anders Borg, Annie Loof and Jan Bjorklund, have expressed their concerns regarding American Pfizer’s possible acquisition of the UK pharmaceutical company, AstraZeneca, according to Dagens Industri.

The Swedish business daily reported that the Swedish ministers of finance, commerce and education, respectively, on Friday talked at a press conference about the consequences a deal with Pfizer could bring. They mentioned a risk of reduced Swedish medical research, the detrimental effects a deal may have on Sweden’s position as a research country, significant redundancies and decreased tax revenues.

Borg said that short-term tax efficiency is not necessarily a good reason for business deals, and pointed out that when a deal is driven for tax reasons, costs are usually cut significantly and research and future opportunities may be lost.

Meanwhile, Borg told the paper that he believes the US Senate and House of Representatives are currently looking at the possibility of introducing retroactive laws to stop these types of tax-driven deals but he had no further details regarding the matter. He added that he hopes Pfizer will consider whether a possible AstraZeneca deal is reasonable.

The item noted that AstraZeneca has 5,900 employees in Sweden compared to 6,700 in the UK. The paper wrote that the UK-based company’s Swedish business corresponds to 75% of Sweden’s pharma export and generates annual tax revenues of around SEK 4.4bn (EUR 489m).

The Swedish ministers also raised their concerns in an article in the Wall Street Journal late last week. They pointed to the fact that Pfizer has gained 124,000 employees via acquisitions since 1999 but that the American company’s net increase in employees since the same year is 25,000 which indicates that almost 100,000 employees have been made redundant. They also wrote that Swedish Phamacia had 4,000 employees when it was acquired by Pfizer in 2003 and the staff now comes to 500.

The ministers stated that Sweden has previously been skeptical towards EU laws which would investigate the public interest aspect of business deals but that past deals as well as Pfizer’s possible plans for AstraZeneca are weakening this reluctance.

The ministers finally urged AstraZeneca’s owners to consider rejecting Pfizer if no further information about the consequences of a deal is given.

Meanwhile, the Swedish daily Svenska Dagbladet reported that Sweden was never mentioned by Pfizer’s CEO, Ian Read, when he answered questions by the UK parliament last week, which has caused Swedish political concern.


Source Dagens Industri, Wall Street Journal, Svenska Dagbladet

FT : Facebook working on a video chat app to take on Snapchat

Facebook working on a video chat app to take on Snapchat

Facebook is going head to head with rival Snapchat in the video-chat app market as the social networking group scrambles to win back users from the popular ephemeral messaging app.
Facebook has been working for several months on the app, known internally as Slingshot, with a simple and speedy user interface, according to people familiar with its plans.

Mark Zuckerberg, Facebook’s chief, has been overseeing the top-secret project after failing to woo Snapchat’s creators Evan Spiegel and Bobby Murphy with a $3bn takeover offer late last year.
The app allows users to send short video messages with just a couple of taps of the screen. Slingshot could be launched this month, one person said, while cautioning that Facebook might still decide not to proceed with the product.
Slingshot is likely to stand alone from Facebook Messenger, its popular texting app, as part of Mr Zuckerberg’s strategy of unbundling the group’s social network into standalone mobile services.
Facebook’s first attempt to take on Snapchat directly came in December 2012 with Poke, an app that copied its rival’s format of photos and videos that disappear up to 10 seconds after viewing. However, Poke failed to mimic Snapchat’s popularity, and Facebook removed it from the App Store this month.
The latest effort to take on Snapchat comes despite Facebook’s subsequent acquisition of WhatsApp Messenger, another popular chat app with more than 500m regular users, for an initial outlay of $14.6bn in cash and stock, based on Friday’s closing price.
Analysts see the fast rise of simple messaging apps, such as WeChat, Line and KakaoTalk, as one of Facebook’s biggest competitive threats, especially among younger users, where the social network has admitted it is seeing some signs of declining usage.
“Snapchat over-indexes with the very segment where Facebook has cited falling engagement: teenagers,” said Geoff Blaber, mobile analyst at CCS Insight. “The continued introduction of new services, either organically or by acquisition, is essential to maintaining user engagement.”
This month Snapchat updated its app to include text messaging and video calling, in addition to the ability to send short videos or photos that “disappear” soon after viewing.
In 16 years of teaching I can’t think of anything that has ever disrupted my classroom more than today’s Snapchat update
- Tracie Schroeder, high-school teacher
The app was so popular among teenagers that some American schoolteachers said they had to confiscate students’ smartphones to avoid distraction in class.
“In 16 years of teaching I can’t think of anything that has ever disrupted my classroom more than today’s Snapchat update,” tweeted Tracie Schroeder, a Kansas high-school science teacher.
Slingshot takes a different approach. It is said to resemble TapTalk, a new video-messaging app from Berlin-based Wit Dot Media released last month, in which users tap or hold a contact’s profile picture to instantly send a photo or short video, which can be viewed only once by the recipient.
“When you look at how people are using Facebook, it’s increasingly as a means of direct person-to-person communication,” said Mr Blaber, rather than sharing status updates, photos or videos with all their friends at the same time.
Nonetheless, he said Facebook might again struggle to catch up with Snapchat in the latter’s particular style of more casual and intimate messaging.
“When you’re coming to market late and trying to compete with what is already a service with a very large user base, it becomes very difficult to close that gap, even for a company like Facebook,” Mr Blaber said.

(BFW) Deutsche Bank to Raise EU8b in Share Sale as Qatar Takes Stake

BFW 05/18 17:37 *DEUTSCHE BANK TO RAISE EU8B IN SHARE SALE AS QATAR TAKES STAKE
 BN 05/18 17:37 *DEUTSCHE BANK TO RAISE EU8B IN SHARE SALE AS QATAR TAKES STAKE
Deutsche Bank to Raise EU8b in Share Sale as Qatar Takes Stake
2014-05-18 17:41:55.687 GMT


By Andrea Snyder
     May 18 (Bloomberg) -- Capital increase to include an ex-
rights issue of EUR 1.75b, which has already been placed with an
anchor investor, Deutsche Bank says in statement.
  * Rights issue expected to raise EU6.3b of new equity:
    Deutsche Bank

Link to Company News:{DBK GR <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:
Andrea Snyder at +1-202-624-1831 or
asnyder5@bloomberg.net

>>> What to look at this week end.



Keep an eye on :
- ADP FP : ADP, TAV to Submit La Guardia Bid May 20, ADP CEO Says: Investir
- ADS GY : Adidas May Need Longer for 2015 Targets, CEO Tells Sueddeutsche
- AIR FP : EU May Challenge U.S. Tax Break in Boeing-Airbus Dispute:Reuters
- AIR FP : Airbus Part of Group Discussing EU Drones With Governments: Welt
- AIR FP : China Southern Airlines orders 80 Airbus aircraft - China pressChina Southern will take delivery of 30 A320 and 50 A320neo aircraft between 2016 to 2020, which will increase the airline's capacity by 12%.
- ALO FP : France May Extend Its Review of GE-Alstom Takeover: WSJ Link
- ALO FP : Siemens seen making formal Alstom bid as early as this week - RTR
- AZN LN : Pfizer Considers Last-Minute AstraZeneca Bid Hike: Sunday Times
- BKIA SM : psoitive article in the barrons on bad bank
- GYC GY : Grand City Properties 1Q FFO, Net, Rental, Op. Income Jump
- HOLN VX : Holcim's Aebischer Sees Much Buyer Interest for Assets: AWP
- PTC PL : Oi, Telemar Participacoes Holders to Meet in Sept., October
- RIO LN : Rio Tinto would consider ‘attractive’ offers for any asset
- ROG VX : Roche Antibody Gets FDA Orphan Status to Treat PVNS/TGCT

WSJ Europe's Car-Parts Sector Set to Overtake Its Customers


Europe's Car-Parts Sector Set to Overtake Its Customers

European auto stocks may need a pit stop after rallying on recovery hopes. But investors could buckle up with auto-parts suppliers for the next lap.
Shares in European auto makers have risen 40% on average over the past 12 months, as investors have bet on a pickup in sales of new cars.
The recovery may struggle to live up to such high expectations: Sales in Russia and Brazil are under pressure, and growth in the U.S. market is slowing. But as car manufacturers cram vehicles with ever more technology designed to improve safety and fuel efficiency, auto-parts makers should continue to benefit.
Take France's Valeo: About 70% of its product portfolio by sales is aimed at helping auto makers reduce emissions of carbon dioxide, notes Société Générale. Manufacturers must meet tougher emissions limits for new passenger cars in Europe by 2021, after mandatory standards were first imposed in 2009. The U.S. and China also are tightening or introducing measures to reduce emissions.
One option is stop-start engine technology, which automatically switches off the car when stationary. Here Valeo is the largest in a three-player market. In Europe, one in three new cars already is fitted with the technology. Were the U.S. to reach this level, Asia to slightly exceed it and European penetration to double by 2018, the number of cars incorporating the technology would increase 35% annually, estimates Société Générale.
Car makers also can comply with emissions standards by making vehicles lighter, substituting plastic for some steel content. French midcap Plastic Omnium, which makes bumpers for marques like the Porsche Macan, reckons that sales of its new products such as plastic tailgates and cleaner fuel systems that reduce nitrogen emissions will quadruple to reach €800 million ($1.1 billion) by 2017.
Safety systems, which include features like blind-spot recognition, also are becoming more common in new vehicles. Sales could more than double to $5.6 billion by 2016, estimates Continental. Deutsche Bank reckons Valeo has a 20% share of this market.
Of course, suppliers' sales still are linked to global car production and suffer during downturns. But suppliers also have become more diversified, offering some protection through the twists and turns of the industry cycle.
Valeo has an expanding aftermarket business, selling spare parts, which is more profitable and less cyclical than its original equipment business. Plastic Omnium's exposure to Western Europe has roughly halved to 37% over the past decade, while more profitable regions such as North America and Asia now account for just under half of sales, notes Natixis.
That could mean faster, more reliable growth than at many auto makers. Valeo's €15 billion order book implies annual sales growth of about 8% through 2016, translating into earnings-per-share growth in the high teens. Plastic Omnium's earnings per share are expected to rise 27% a year through 2016.
With auto makers like Volkswagen unlikely to generate much more than 10% earnings growth in the next few years, their suppliers could offer the more exciting ride.
—Renée Schultes
Write to Renée Schultes at renee.schultes@wsj.com

(BFW) Grand City Properties 1Q FFO, Net, Rental, Op. Income Jump

DBF 05/18 18:48 DGAP-News: Grand City Properties S.A.,: continues its growth path in first quarter 2014 staying highly profitable with a well
 BN 05/18 18:49 *GRAND CITY PROPERTIES CONTINUES GROWTH PATH IN 1Q 2014
 BN 05/18 18:49 *GRAND CITY PROPERTIES CONTINUES GROWTH PATH IN 1Q 2014 XXXXX
Grand City Properties 1Q FFO, Net, Rental, Op. Income Jump
2014-05-18 19:01:46.172 GMT


By Claudia Rach
     May 18 (Bloomberg) --
  * 1Q rev. up 280% to EU60.2m
  * 1Q rental, op income rises 188% to EU45.7m
  * 1Q net profit up 419% to EU70.3m
  * 1Q FFO up 761% to EU16.4m
Link to Statement:{NSN N5S9LM3PWT1D <GO>}
Link to Company News:{GYC GR <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:
Claudia Rach at +49-30-70010-6219 or
crach1@bloomberg.net

FT : The public interest argument on AstraZeneca is overdone

The public interest argument on AstraZeneca is overdone

While the case against a Pfizer deal is weak, the tax case for it is compelling, says Tony Jackson
It is unsurprising that Pfizer’s takeover offer for the UK drug company AstraZeneca has raised a political storm. These are not the best of times, after all, for red-toothed capitalism. The trouble is that in this specific case, the arguments for the public interest are mainly misdirected.
Let us take as our opening text a recent statement on the bid from the UK prime minister David Cameron. “The most important intervention we can make,” he said, “is to back British jobs, British science [and] British research.”

In the matter of jobs, it seems a little late. AstraZeneca employs 6,700 people in the UK, 13 per cent of its global workforce. This compares with 11,000 five years ago.
And science? In its preliminary bid defence, AstraZeneca named 13 drugs as central to its development pipeline. Only two were conceived in the UK. The rest came from the US, mainly from Medimmune, a biotech company AstraZeneca bought for $16bn seven years ago.
This recalls another aspect of the debate. As with Kraft’s bid for Cadbury five years ago, there have been assertions from UK politicians of all stripes that the US would never allow its companies to be taken over in this manner.
The Medimmune example suggests otherwise. As for Cadbury, its various US acquisitions included America’s second-biggest maker of chewing gum – bought, as chance would have it, from Pfizer.
What we have here are not plucky British champions being picked off but aggressive US-focused multinationals falling prey to others of their kind.
But AstraZeneca, some would say, differs from Cadbury in one vital respect. It supplies the National Health Service, which is funded by the British taxpayer. And it exploits tax-funded research in government laboratories and universities.
True enough; but a little context is in order. Of AstraZeneca’s global sales, only 7 per cent are in the UK, against 40 per cent in the US. Pfizer has the same percentage of its sales in the US; and while it does not disclose a UK figure, I would bet it is similar to AstraZeneca’s.
That is how global drug companies work; efficacious drugs are sold everywhere, so the pattern of each company’s sales tends to mirror that of world drug markets.
How much extra revenue the UK might get from Pfizer is anyone’s guess; but the fact that its global tax provision last year was $4.3bn suggests it might not be trivial
So from a strict NHS perspective, there is no logical reason to worry more about AstraZeneca than any other global supplier. As for licensing the discoveries of state-funded laboratories, I am not aware that UK drug companies are given preferential terms over foreign ones. If they were, I would, as a taxpayer, be faintly concerned.
Speaking of taxpayers, an explicit motive for Pfizer’s bid is its intention to move to the UK for tax purposes. This reminds us of an awkward truth: that behind the recent outcry over global companies avoiding UK tax, UK government policy is aimed at minimising the amount of corporate tax pinched by other countries, while maximising the amount pinched from them. How much extra revenue the UK might get from Pfizer is anyone’s guess; but the fact that its global tax provision last year was $4.3bn suggests it might not be trivial.
One final point. It is evident that Big Pharma globally has become progressively worse at finding new drugs, so revenues shrink as old drugs come off patent.
The pace is startling: over the past three years Pfizer’s global revenues in dollar terms have fallen 16 per cent and AstraZeneca’s 23 per cent.
In any other industry this would be a death spiral. Perhaps Big Pharma can reverse the trend but it would not do to count on it.
The time-honoured response for industries in this plight is amalgamation, if only to cut costs. It thus seems likely that AstraZeneca will have to merge eventually, whether as acquirer or acquiree. So UK jobs and science are liable to take a hit either way.
But let us not end too negatively. If the UK is blessed with top-flight drug researchers, they would be far better employed not in the barren fields of Big Pharma but in the small outfits where the breakthroughs are being made.
In other words, the government should abandon vain attempts to stop the clock, and concentrate instead on fostering the drug industry of the future. That is not going to be easy but it may in the end be the only way.