(TechCrunch) How Apple could become a $1 trillion company

How Apple could become a $1 trillion company

Apple reported its earnings this week, and with a surprisingly positive report the shares spiked again as Apple signaled a potential huge iPhone release.

With that jump, Apple’s market cap is now over $800 billion. This year alone, shares of Apple are up almost 35%. If Apple’s promise plays out — or exceeds — what Wall Street hopes for the September quarter, we may soon be asking ourselves whether or not Apple really will fulfill the promise of a company that could hit a market cap of $1 trillion. The company is of course one of a very long list of companies benefittings from a massive run up in the public markets, but there is still quite a bit to do.

With a potentially huge quarter on the way, a cash pile of hundreds of billions of dollars, an ever expanding line of products and a ton of good will heading into the back half of the year, we may see that question answered sooner rather than later. So let’s run through a couple key factors that Apple is going to have to address if it’s going to hit that largely symbolic but massive milestone nonetheless.

Get a blockbuster iPhone out

This is an obvious one. Apple’s core business is the glass slate in your pocket. It’s how you interact with the Internet, with every online service, and your core communications channel to the rest of the world. But even as we potentially move toward an end point for the smartphone — as in, if we’ve potentially already perfected the form factor and use case — Apple still has to come out with a fresh look and design.

Apple has the luxury of a consistent customer base and can wait while other companies discover new user experiences that it can wrap into the phone and then adopt the best of those. You could argue that, prior to iOS 7, Apple didn’t explicitly need to overhaul the interface into something with a more modern look. It didn’t have to ditch the green felt in the Game Center. But customers still crave new as both a status symbol and a feeling of new novel user experiences. Apple was arguably behind in the people-like-big-phones movement, and then when it finally caught up it unlocked an insane amount of customer demand that delivered some of the company’s best quarters in its history.

This feeds, critically, into the second point…

Lock people into buying the iPhone as a “hub” with an expanding portfolio of edge products

We’ve started to see a lot of moves by Apple to expand into new product categories like the Apple Watch. But with the emergence of newer products like the HomePod and the AirPods, it seems more and more likely that Apple could morph into a company with a portfolio of niche products that keep people locked into iOS. All of these products are powered by your phone, and as more and more of the computational user experience moves into a distributed environment — voice, wrist and such — Apple can make a very strong case for the iPhone as the hub of this universe of distributed products.

That, like everything else, forces lock-in as people have to buy the hub. The iPhone continues to become more and more powerful, but even with redesigns and upgrades, it’s still a multi-functional glass slate. New user experiences are starting to blossom into a movement that could change the way we interact with the Internet. But again, you still need to own the hub, and the hub is Apple’s core business.

Grow those incremental edge businesses, even if they’re niches

While Apple will probably always be a phone company, each incremental product that’s able to operate at a profit by nature will expand Apple’s value. Altering the calculus of the company’s operations (going from a “phone” company to an “everything internet” company) will require a reassessment of how to value it. Google, for example, at one point jumped ahead of Apple to become the most valuable company in the world but more or less has returned to the reality that it’s an advertising company and hasn’t shown the promise of becoming something more full-stack in terms of how we interface with the internet just yet.

Amazon, Google and company are all working to pick off niches of this area. Amazon is where you buy things, and you can do so with your voice (with the added benefit of asking questions). Google is where you search for things. Microsoft is, well, Microsoft, and so on and so forth. While Google is the arbiter of Android — which powers most devices on the planet — it’s not really in the same scope as Apple which is uniquely a device company. Each additional device or service, which creates that positive feedback loop of locking a user further and further down its rabbit hole, has the opportunity of adding incremental value to the company.

Services can become a Fortune 100 business, but the success of the HomePod (and its seeming perception as a speaker before an interface) would be like adding a Sonos. Apple can choose to try to own the full stack of content, music or other experiences from the actual human sensation to where it’s stored on the Internet. The company will always be gauged differently and will probably always be greater than the sum of its parts (in this case, the sum of the niches). But, each of those successful niches will create additional value regardless.

Build out a massive services business that surprises Wall Street

Apple has a huge edge here because it’s able to basically will content deals into existence. One of the great things about building this kind of a business is that it can be wildly consistent and continue to grow methodically. Certain elements can be hits-driven, such as original content, but Apple has so much power and weight that it can strong-arm exclusive music deals. Facebook was able to create a massive messaging ecosystem with Facebook Messenger by simply funneling people to the app, and Apple can do the same with products like Apple Music.

Consistent is good. Very good. It means that even when Apple might stumble on certain quarters it can generally rely on that amount of revenue — or income — to buoy its results. You can look at Amazon as an example case, where its retail business has some of the tightest margins in the universe but its server business continues to be very efficient at generating actual profit for the company. With that, Amazon could basically point to it on an earnings report and explain that it can have a portfolio of business lines that can in the future become billion-dollar-plus revenue streams.

Apple likes to say that its Services business will be the size of a Fortune 100 company soon enough. That’s not out of the realm of possibility, as every developer has to build for the App Store and Apple is able to get out these additional services like Apple Music that it has always executed well. If this business continues or begins to outperform, it’s an incremental addition to the company.

Keep Wall Street off its back

This is going to be a small sticking point as Apple is going to perpetually be a massive target for investors. Most won’t be successful in forcing the company to alter its strategy, but it is not unprecedented. Activist investor Carl Icahn pressured Apple to return more of its massive (and still increasing) cash pile to investors back in 2013.

These little piecemeal tributes are important when it comes to investors, as even the long plays are still looking for some kind of incremental returns over time. That can come in the form of stock repurchases and dividends, which offers investors an opportunity to capture some of the value of an increasing stock price while they watch it continue its march forward.

To hit $1 trillion, Apple is probably going to have to excel at every single one of these. The notion of adding $200 billion to its market cap isn’t outlandish, but it’s going to be a huge undertaking to do so. Apple’s stock jump earlier this week may have just been a setup for the next quarter — which could end up performing exactly as expected and halting that rise. It has to either continue to add valuable businesses to its portfolio or force a rethinking of what Apple is as a company and the multiples it gets based on its earnings.

At the end of the day, Apple is still ways off from $1 trillion. And companies across the board could take a nosedive for any number of reasons. But it wasn’t really that long ago when we were asking ourselves whether Apple would become the most valuable company in the world. Its iPhone business stalled and the company entered a holding pattern in the past year or so, but then signaled that it might have a huge next quarter with the next iPhone on the horizon. Basically, there is so much pent up demand from all the leaks and the possible radical redesign of the phone — especially as it morphs into the hub of a user’s Internet experience — that it could help Apple continue its march forward.

Apple became the largest company in the world, and now it’s time to start asking the next question: is Apple really going to become a $1 trillion company? All eyes are on the next quarter.

FT : Investors fear use of clever accounting to trip bonuses

Investors fear use of clever accounting to trip bonuses
Gap between stated and adjusted profits for FTSE 100 companies at widest in a decade

Large investors fear FTSE 100 companies are using clever accounting techniques to trigger high executive bonuses and mask poor financial performance.

The concerns come as research shows the difference between stated and adjusted operating profits for the UK’s top-100 quoted companies is at 51 per cent — the widest gap in a decade. In 2007 the split was just 15 per cent.

Russ Mould, investment director at AJ Bell, the investment company that carried out the research, said the figures suggested equity markets were nearing “the top of a cycle”.

“As growth gets harder to generate, there is a temptation to employ different financial tactics to generate it, either to appease return-hungry shareholders or hit bonus triggers,” he said.

“If a share price suddenly turns and the economic cycle turns with it, investors [will be left] wondering why something that looked like a sound investment on paper is now a terrible one in reality.”



Companies adjust profit figures to take into account one-off expenses such as acquisitions, restructuring costs or fines. The revised figures are typically higher than actual profits booked, and are an important metric when determining executive bonuses.

The growing use of revised profit figures have made shareholders and analysts increasingly wary of these numbers, according to Andrew Millington, head of UK equities at Standard Life Investments, one of Britain’s largest fund companies.

“This is on our radar, and it is a concern,” he said. “There is a real danger if you are investing without actually going back to the accounts.”

The FTSE 100 companies that posted the biggest gap between stated and adjusted profits over the past 10 years were mining group Glencore (15,175 per cent gap), housebuilder Taylor Wimpey (736 per cent) and Lloyds Bank (393 per cent).

Glencore said its profit gap was large due to the near $11bn of impairments the company took on completing its acquisition of Xstrata in May 2013.

Mr Millington blamed the growth in the use of adjusted profits on pay for management teams increasingly being linked to revised earnings, and low interest rates supporting an M&A boom.

“We would hope to see the gap [between stated and adjusted profits] start to close for the market as a whole. In the meantime investors have to be sceptical of using adjusted numbers,” he said.

Companies that substantially adjust profits over extended periods have frequently underperformed for shareholders, the research also showed.

The five FTSE 100 companies that generated the worst total shareholder returns over the past decade had large net profit gaps of between 58 per cent and 1,000 per cent over that period. They include supermarket chain Tesco; UK banks Barclays, RBS and Lloyds; and mining group Anglo-American.

By contrast four of the best five in terms of total shareholder return over the period — Ashstead, Hargreaves Lansdown, Croda and Randgold Resources — had small net profit gaps of less than 10 per cent.

David McCann, an analyst at brokerage Numis, said more companies were reporting adjusted profit figures as “it is becoming harder to deliver growth in a low return environment”.

“Companies are looking for ways of showing optical growth so they don’t have to report declining results. Manager pay is increasingly being linked to earnings-based measures, so there is increasing motivation to boost those measures,” he said.

WSJ : The Men Who Trade ISIS Loot

The Men Who Trade ISIS Loot
The middlemen who buy and sell antiquities looted by ISIS from Syria and Iraq explain how the smuggling supply chain works

A stream of plundered antiquities flowing out of Syria and Iraq to Western art collectors is dependent on men like Muhammad hajj Al-Hassan.

Mr. Al-Hassan, a 28-year-old Syrian, says he started to trade antiquities in 2015 after being contacted by a top official of Islamic State who sought his archaeological expertise to find Western buyers.

Later, he became cog in an international supply chain smuggling art looted by ISIS.

ISIS’s territorial grip is fading fast: Iraq has declared victory over the terrorist group in Mosul and ISIS is fighting to hold its self-proclaimed Syrian capital Raqqa—the last major city under its control. But the group’s legacy of looting will linger for many years, law-enforcement officials say, in much the same way that art looted by the Nazis continues to surface 70 years later. The ancient statues, jewelry and artifacts that ISIS has stolen in Syria and Iraq, are already moving underground and may not surface for decades, according to these officials and experts in the trade.

“Once looted in Syria and Iraq, objects enter a gray market shrouded in secrecy,” said Michael Danti, an archaeologist who directs the Boston-based Cultural Heritage Initiatives and advises the U.S. State Department on the looting of antiquities in Syria. “It’s a problem that will stay with us for years to come.”

Western security officials say they expect revenue from looted antiquities from Iraq and Syria to become an increasingly important source of money for ISIS if its other revenue streams, such as oil, continue to dwindle.

“ISIS is increasing pressure on this line of trafficking to compensate for the loss of petroleum revenue,” a French security official said.

While it’s impossible to know how much money these stolen artifacts provide to ISIS annually—estimates range from the low tens of millions by Mr. Danti to $100 million by another French security official—the income is considered noteworthy.

The Wall Street Journal interviewed Syrian art traders, recent ISIS defectors who worked in antiquities, and law-enforcement officials in the U.S., France, Switzerland, and Bulgaria to piece together how the international antiquities smuggling operation works.

Their accounts describe a pattern of trafficking in which ancient objects make their way from archaeological sites in Iraq and Syria, across borders with Turkey and Lebanon, to warehouses in Europe and Asia to await sale to dealers in the West.

Last month, Oklahoma City-based arts-and-crafts retailer Hobby Lobby settled claims with the U.S. government by paying a $3 million fine and surrendering artifacts believed stolen in 2010 and smuggled from Iraq. In response to the claims, which are related to allegations of trading items looted prior to the emergence of ISIS, Hobby Lobby said it would surrender the artifacts, pay the fine and adopt new procedures for buying cultural property.


ISIS hasn’t commented on the trade in antiquities.

Mr. Al-Hassan and another Syrian art trader, Omar Al-Jumaa, said they agreed to speak to the Journal in person to denounce ISIS and draw attention to the group’s role in the antiquities trade.

Like others involved in antiquities smuggling, Mr. Al-Hassan trades under an alias. He identified himself by his trading name, Mohamed al-Ali, in an interview for a May 2017 Wall Street Journal video about looted art.
In more recent interviews, Mr. Al-Hassan declined to say whether he is currently active in the trade. Mr. Al-Jumaa said he is currently selling looted objects.

Before the civil war, Mr. Al-Hassan said he was an English-language student who had begun studying archaeology in his spare time, inspired by a friend’s father. His knowledge in that field became an asset when the rebel Free Syrian Army took control of his region of Eastern Syria in 2013 and he began regularly digging antiquities for the group.

When the territory passed into the hands of Islamic State in June 2014, Mr. Al-Hassan said he and other young men were arrested by the terror group and accused of collaborating with the FSA. Mr. Al-Hassan said he and four other men, including his neighbor, were blindfolded by a Tunisian ISIS commander and lined up in a school. Everyone in the group, except for Mr. Al-Hassan, was shot in the head, he said. Mr. Al-Hassan says he was spared when ISIS officials told him they had no proof of his connection with the FSA.

One year later, he says, he was contacted by Abu Laith Al-Dairi, the ISIS official in charge of antiquities, to sell artifacts looted by the group. “We have a lot of objects,” Mr. Al-Hassan remembers Mr. Laith Al-Dairi saying over the phone. “I need you to find European buyers.”

For many Syrian traders and smugglers, antiquities are one of the few ways they can earn a living. “They are destroying our history,” said Mr. Al-Hassan. But “traffickers love them because they can make money.”

The Journal couldn’t verify some details of Messrs. Al-Hassan and Al-Jumaa’s stories about their lives in Syria. But their accounts of the antiquities trade squared broadly with those of law-enforcement officials. Mr. Al-Hassan, for instance, told the Journal last year about a Roman-era ring that ISIS’s Mr. Al-Dairi was trying to sell. Later, in December, the U.S. Justice Department filed a civil complaint seeking the recovery of that object and other Syrian-looted artifacts from the group and named Mr. Al-Dairi as a key figure in the trade.

Islamic State seizes antiquities from Syria and Iraq by giving licenses to locals to dig for them, according to people involved in the trade. The digging operation is often overseen by the group’s cadre of foreign jihadists, which the organization considers more loyal than locals.

Initially, ISIS didn’t charge for the licenses but demanded loyalty from diggers and 20% of the estimated value of each object they excavated, these people say. Now, however, ISIS demands that diggers sell all discovered items to the group at a 20% discount of their estimated market value; ISIS then resells the objects itself, according to Mr. Al-Hassan. As ISIS loses territory, such rules are applied unevenly depending on the local leader, Mr. Danti said.

The illegal trade is “not just for funding the [terrorist] group itself, but for creating ways to bring funds to its subjected population, whose hearts and minds Islamic State is trying to win,” Yaya Fanusie, director of the Washington-based counterterrorism think tank Foundation for Defense of Democracies, told a U.S. congressional hearing last year.

A network of independent intermediaries buy artifacts from ISIS and carries them out of Syria and Iraq, often blending in with humanitarian convoys and refugees, Western officials and ISIS antiquity traders say. They are also hidden in exports such as cotton, fruit and vegetables.

Outside Syria and Iraq, the intermediaries then sell to middlemen such as Messrs. Al-Hassan and Al-Jumaa.

Mr. Al-Hassan said he recently sold two antique bibles looted by Islamic State from a site in Eastern Syria to a Russian buyer in a city in Southern Turkey for €10,000 ($11,800). The Russian then smuggled the bibles out of Turkey, hidden in a truck with vegetables, he said. Mr. Al-Hassan said he kept a commission of 25% and gave the rest to the trader who had brought the object to Turkey.

Other smugglers employ different ways to hide their cargo.

Mr. Al-Jumaa, said he paid $1,000 to a local Syrian woman wearing a long black robe known as an abaya to carry a bronze Roman statue across the Turkish border from Syria in her bag. The statue, of a warrior with winged helmet and a shield, had originally come from Raqqa, he said. The Turkish border police rarely check on women for religious reasons, Mr. Al-Jumaa said.

Mr. Al-Jumaa said he picked up the statue from the woman on the Turkish side of the border and drove it to a city in Turkey, where he said he is currently looking for a buyer. (Mr. Al-Jumaa said he later discovered that the object may be a reproduction made in the 1920s.)

Like Mr. Al-Hassan, Mr. Al-Jumaa has reason to hate Islamic State. He said he was jailed in 2014 after assaulting a member of the group who had refused to let him take a cousin badly burned in an air attack by the Syrian regime to Damascus for treatment. Every morning, an Islamic State jail warden put a large kitchen knife to his throat and said the group would execute him that day.

But after escaping to Turkey he said he began trading for the group. “I don’t feel happy selling our history, but I need the money,” said Mr. Al-Jumaa, who was a law student when the war broke out.

Despite ISIS’s territorial losses, the trader says his business is doing well because so many items plundered by the group are now in circulation. Last week, he said he was set to meet four Lebanese men he had communicated with over WhatsApp who were traveling to Turkey to buy a cut emerald he said was looted by the organization in Mosul in 2014. Mr. Al-Jumaa is asking $600,000 for the precious stone, he said, but negotiations with a British trader to sell for that amount failed in March.

Mr. Al-Hassan said an Iraqi-Kurdish trader on July 30 was trying to sell a 3rd-century Palmyrene limestone statue of a woman after bringing it to Istanbul. On Aug. 1, traders on the Syrian side of the border were offering an ancient Greek silver pendant and antique Hebrew coins looted in Western Syria, as they tried to smuggle them into Turkey, Mr. Al-Hassan said.

In the majority of cases, artifacts from Iraq and Syria are first smuggled into Turkey or Lebanon, European and U.S. officials say, calling those countries key smuggling hubs. From there they often pass through southeastern European countries like Bulgaria and Romania and then into Western Europe, in particular Germany and Switzerland, according to the officials.

Bulgarian police once searched a shipment of clothes from an undisclosed location and found ancient coins disguised as buttons on jackets, according to a December report written by the Organized Crime Unit of Bulgaria’s Interior Ministry and seen by the Journal.

Increasingly, objects are being shipped to Southeast Asian nations, like Singapore and Thailand, before making their way back to Western Europe, Brian Daniels, a research associate at the Smithsonian Institution told the House Financial Services Committee at a hearing in June.

That’s because Asian markets are less closely monitored by customs officials, European officials say. If the objects arrive in the West from Asia, that may help cover their Middle-Eastern origin as they cross borders, Western security officials say.

In March 2016, police in Paris seized stolen steles from a marble altar as it transited from Lebanon to Thailand. The artifact originated in the middle area of the Euphrates Valley, which spans Syria and Iraq and was largely controlled by ISIS at the time, French customs officials said. It was being shipped via Asia to help mask a suspected final destination in the U.S., according to French security officials familiar with the matter. French authorities tracked the sender to an address in North Lebanon but are still trying to find that person’s identity, they say.

Once a smuggled artifact lands with an art dealer in Europe or the U.S., the journey is still not over. To “launder” their origin, smuggled artifacts can be stored in warehouses for years and an ownership history is fabricated, according to a French security official and the Bulgarian report.

In the June House Committee hearing, Mr. Daniels said that it could take six to nine years for the art now being smuggled to hit public sale. A U.S. security official involved in investigations into art trafficking said it could take over 10 years in some cases.

Traffickers often use old typewriters to backdate certificates of ownership, another French official said. Objects are also moved from dealer to dealer to create a fake paper trail that makes their ownership harder to prosecute, said Mr. Danti, the director at the Cultural Heritage Initiatives.

There are around 20 major art galleries and trading houses in Western European cities that offer smuggled artifacts, the Bulgarian report said, without naming them. “The trade’s main target buyers are, ironically, history enthusiasts and art aficionados in the United States and Europe—representatives of the societies which ISIS has pledged to destroy,” Ms. Fanusie told Congress last April.

The FBI has a $5 million reward for any information about looted materials coming into the U.S. from Syria and Iraq. No one has come forward to claim a reward, law-enforcement officials say.

WSJ : Saudi Crown Prince and U.A.E. Heir Forge Pivotal Ties

Saudi Crown Prince and U.A.E. Heir Forge Pivotal Ties
A desert camping trip helped cement a friendship seen as central to a shift in Saudi policies

The heirs to the throne in Saudi Arabia and the United Arab Emirates hardly knew each other until they enjoyed a beloved Gulf pastime together—an overnight camping trip in the vast Saudi desert, accompanied by trained falcons and a small entourage.

The outing about a year and a half ago, equivalent to a round of presidential golf, was a turning point in the burgeoning friendship between Prince Mohammed bin Salman, the son of the Saudi king, and Sheikh Mohammed bin Zayed, the Emirati crown prince, according to people familiar with the excursion.

Oil-rich and ultraconservative Saudi Arabia is aligning its policies with its smaller and more liberal and economically-diverse neighbor. And the relationship between the two princes, widely known by their initials as MBS and MBZ, is being seen as central to the Saudi shift.

The Saudis are taking bolder steps to curb religious extremism at home and toughening their stance toward Islamist groups abroad, something the U.A.E. has long advocated.

Saudi Arabia is also embracing a more aggressive foreign policy, most recently by leading efforts with the U.A.E. to impose an embargo on Qatar, another small Gulf neighbor. Qatar has supported Islamist groups such as the Muslim Brotherhood in Egypt and Hamas in the Gaza Strip and maintained ties to extremist groups, drawing the U.A.E.’s ire.

“MBS and MBZ have created this situation,” Andreas Krieg, a former adviser to Qatar’s government and a Gulf expert at King’s College, London, said of the embargo crisis.

Until recently, he said, the Saudi prince got on well with Qatar’s ruling emir. “But because Qatar and the U.A.E. are 180 degrees apart from each other, Saudi Arabia had to make a choice,” Mr. Krieg said.

The Saudi leadership was divided over how to handle Qatar, according to several people close to the royal court. Saudi and U.A.E. officials said the decision on Qatar was made jointly. The Saudi royal court didn’t respond to a request for comment.

The growing alignment between Riyadh and Abu Dhabi has far-reaching implications for the region and for the U.S. The Trump administration has taken a hard line against Iran and welcomed closer cooperation with Saudi Arabia and the U.A.E. against their common rival.

At the same time, the more aggressive Saudi-U.A.E. posture poses challenges for Washington. The Trump administration is spearheading efforts to resolve their feud with Qatar, which is home to America’s largest military base in the Middle East and used by aircraft involved in fighting Islamic State in Iraq and Syria.

The U.A.E. sees a stable and moderate Saudi Arabia as a top national-security priority largely because of its position as the birthplace of Islam, say people close to the Emirati leadership. Saudi Arabia and its fellow regional powerhouse Egypt influence the Muslim world far beyond their borders.


“They are the two centers of gravity for Islam. If they are not moderate, we could lose Islam to more radical Islamic ideologies,” said a senior Emirati official. “For us to protect Islam, Saudi Arabia and Egypt need to succeed.”

The Emirati leadership sees Mohammed bin Salman as the best bet to prevent instability in Saudi Arabia, say the people close to the U.A.E. leadership. Mohammed bin Salman, who is 31, ascended rapidly through the Saudi leadership after his father became king in early 2015, taking over the defense and economic portfolios. In June, he was named crown prince.

Mohammed bin Zayed, who is 56 and his country’s effective ruler, helped orchestrate President Donald Trump’s trip to Saudi Arabia in May and he and other senior Emirati officials played a key role in lobbying the new U.S. administration in favor of Mohammed bin Salman, say people familiar with the relationship.

“Mohammed bin Zayed sees in Mohammed bin Salman someone who is a modernizer and who understands the importance of Saudi Arabia in the world,” said one of the people close to the Emirati leadership.

Mohammed bin Salman is spearheading an ambitious program aimed at overhauling Saudi Arabia’s economy, ending its dependence on oil and gradually opening up Saudi society.

The kingdom has looked to the U.A.E. for guidance on issues ranging from how to develop an indigenous defense industry to overhauling its sovereign-wealth fund, say people close to the leadership of both countries.

The U.A.E. unveiled a similar plan to diversify its economy a decade ago, and Saudi Arabia turned to some of the same banks and consultancy firms for assistance in formulating the Saudi plan.

The Emirati city of Dubai, which has little oil of its own, in recent decades transformed itself into a regional trade and tourism hub.

Saudi Arabia now wants to develop its own tourism industry. On Tuesday, the kingdom announced plans to develop its Red Sea coastline and some 50 islands into a sprawling tourist site, which foreigners of most nationalities could eventually visit visa-free. In a country that currently doesn’t even issue tourist visas, the project would mark an unprecedented opening to foreign visitors.

The ties between Mohammed bin Salman and Mohammed bin Zayed represent “a new dynamic that is really reshaping the region, not just now but also in the future,” said Danny E. Sebright, a former U.S. Defense Department official and president of the U.S.-U.A.E. Business Council.

>>> Ufinet could be sold by Cinven for over EUR 1bn

Ufinet could be sold by Cinven for over EUR 1bn - report (translated)
06 AUG 2017
PE fund Cinven is mulling putting up Ufinet Telecom, the Spain-based telecom infrastructure company, for sale for around EUR 1bn, El Economista reported citing market sources.
Proceedings will probably start in the following weeks with the mandate to an undisclosed advisor to sound out the market, the item went on citing sources consulted by the newspaper. According to these sources, there are already several potential bidders, both from the industrial sector as well as large investment funds, El Economista pointed..
Ufinet is currently one of the world's largest fiber optic operators with over 56,500 km in 20 countries. Spain. France and Portugal are among the European countries where the company operates. LatAm market is of vital importance for the company and represents 50% of Ufinet's revenues, the Spanish-language paper said.
Cinven became Ufinet's shareholder in 2014 with a nearly EUR 510m investment, and the operator has grown between 10% and 15% in the last financial years. This growth has been both on an organic and inorganic basis. In this sense, Ufinet has acquired six companies since Cinven's entry into the company, one in Spain and the remaining five in LatAm, the item added.

>>> Glencore approached by bankers offering to finance offer for Bunge - reports

Glencore approached by bankers offering to finance offer for Bunge - reports
06 AUG 2017
Glencore [LON:GLEN], a Switzerland-based commodities trader, has been sounded out by several banks offering financing for a takeover bid for the White Plains, New York-based agricultural commodities group Bunge Limited[NYSE:BG], The Mail on Sunday reported. The newspaper cited senior City sources for the information.
Glencore disclosed in May that it had approached Bunge informally about a potential takeover offer.
Bunge has said it was not talking to Glencore about a deal, the item added.
The banks offering financing may be hoping to win advisory mandates on a renewed offer for Bunge, the report continued.
Whether Glencore has formally hired any banks as advisers remains unclear, the item said. However, it is understood that Bunge has hired banks to advise on a defence against any hostile offer from Glencore, the article added.
Glencore is thought unlikely to make a formal takeover bid until the summer is over, the newspaper said.
The Sunday Times’ Agenda column noted market speculation that Glencore chief executive Ivan Glasenberg is still interested in a deal with Bunge. The report did not cite a source.
Bunge’s market capitalisation stood at USD 10.73bn (EUR 9.11bn) at the close of trading in New York on Friday, 4 August.

Background:
A Bloomberg Markets report on 2 August quoted Bunge chief executive Soren Schroder, who said the company was willing to consider opportunities for consolidation. Schroder added however that he would prefer to enter into regional partnerships for Bunge’s assets, such as its ports.
A Financial Times report on 5 June said Bunge had hired the investment bank JPMorgan Chase and the law firm Shearman & Sterling to advise on a defence against a potential offer from Glencore.

>>> Manchester United shareholders approached for sale; some Glazer family membe

Manchester United shareholders approached for sale; some Glazer family members could sell down stakes - report
06 AUG 2017
Some of Manchester United’s [NYSE:MANU] leading independent shareholders have been approached by an unidentified party from China about selling a stake in the UK Premier League football club, The Sunday Timesreported. The newspaper cited unspecified sources who said the discussions have not yet led to any formal talks but added that a large stake is sure to be sold at some point.
Intermediaries who claim to be acting for unidentified Chinese billionaires have sounded out United shareholders, according to the report.
The Glazer family holds an economic interest in about 80% of Manchester United, the article said, listing United’s Co-Chairmen Joel and Avram Glazer, their brother Bryan and Darcie, Edward and Kevin Glazer as the Glazer shareholders.
Of the Glazer family, Avram, Joel and Bryan want to retain their stakes in the club, while Darcie, Edward and Kevin are said to be looking to sell down their stakes, according to the report.
The item went on to cite one City source who said a US-based broker was trying to find a buyer for a stake of about 8% in Manchester United last week. The identity of the stake’s underlying owner was not clear, the report added.
Manchester United reported an operating profit of GBP 68.9m (USD 89.8m) on revenues of GBP 513.6m last year, the item noted.
A separate report in The Sunday Times on 6 August noted that Manchester United’s public investors include the investment management firms Baron, Fidelity and Jupiter as well as Lansdowne, a hedge fund.
The public shareholders own “class A” shares, the item continued, The Class A shares carry only 10% of the voting rights attached to the “class B” shares held by the Glazer family members, the report continued, adding that the ownership structure has prompted complaints from some investors who consider it to be heavily weighted in the Glazers’ favour.
Manchester United’s market capitalisation stood at USD 2.80bn (GBP 2.14bn) at the close of trading in New York on Friday, 4 August.

Background:
The Chinese-language website Titan Sports reported on 30 October 2015 that a consortium led by the Chinese investment firm planned to acquire a stake in Manchester United and that it had approached the club with a preliminary offer for an undisclosed stake.
CITIC categorically denied the speculation that it had offered to buy a stake in Manchester United, according to an unidentified source at CITIC cited by the Chinese-language news website Caijing.com on 31 October 2015.


>>> Barron’s cover story looks at tech giants threat to old media names; Positiv

Barron’s cover story looks at tech giants threat to old media names; Positive features on VOYA and DAL 
* Cover story: With their deep pockets, tech giants such as AMZN, FB, and GOOGL could begin to threaten the dominance of TV networks that broadcast football and other major sports; In a changing media landscape, the major broadcast networks—ABC, CBS, NBC, and Fox—are better positioned than cable rivals because of their strong in-house production operations. 

* Features: 1) A panel of experts—Jenny Van Leeuwen Harrington of Gillman Hill Asset Management, Richard Daskin of RSD Advisors, Maury Fertig of Relative Value Partners, and Michael Terwilliger of Resource Credit Income—discuss income investing and offer picks (HYD, BAB, BLW, EVG, DRA, Chimera Preferred Series B, MMP, SKT, HASI, WHF, AJX, BJ Wholesale Club Loans); 2) Positive on DAL: Shares are inexpensive for a carrier seeking to post double-digit earnings growth in coming years, and could rise by 35% in the next year or two; 3) Positive on VOYA: The company’s disappointing numbers mask the fact its core retirement and investment business is growing, and that management is taking steps to reduce risk. 

* Tech Trader: Positive on FNSR, LITE, IIVI, VIAV: Companies are among those that stand to benefit from the next version of AAPL’s iPhone, which is expected to include new technology such as augmented reality. 

* Trader: One stock, especially a high-priced one, can have an outsized impact on the Dow Jones Industrial Average, meaning it isn’t really a valid reflection of the market; Positive on SO: Shares haven’t done well this year, but the company’s nuclear reactor projects could make it a good bet for investors willing to take on more risk following the Westinghouse bankruptcy; The energy sector faces problems, but certain stocks should do well for investors despite industry turmoil (Positive on SU, CVX, CNQ, HCLP). 

* Profile: Todd Beiley, co-manager of the Virtus KAR Small-Cap Growth fund, seeks companies with durable businesses and significant competitive barriers (top 10 holdings: OLLI, ATHM, FOXF, IBKR, Heico, ODFL, MELI, Natonal Research, ABAX, CPRT). 

* Follow-Up: Cautious on TSLA: The company’s cars may be good investments, but investors should be wary of the shares, “which have outrun most analysts’ reasoned cases for buying.” 

* European Trader: San Diego-based Brandes Investment Partners consider Brexit fears overdone, and are investing in British retailers and property-services companies (Positive on TSCO, SBRY, MRW, MKS, DEB, KGF, LSL CWD). 

* Asian Trader: London-based, Asia-focused banks Standard Chartered and HSBC pose different opportunities for investors, but the latter’s immediate prospects look better, and its business is more profitable. 

* Emerging Markets: Individual investors are increasingly moving into bonds that emerging markets issue in their own currencies, which offer strong yields but come with risk because of the dollar’s volatility. 

* Commodities: Copper is enjoying its biggest rally in months amid growing global confidence and a weaker U.S. dollar, but some investors suggest waiting to see if the optimism is justified. 

* Streetwise: Mike O’Rourke of Jones Trading says that “Failing to recognize the structural shift in the U.S. economy at the turn of the century, the Fed has been mistakenly chasing 20th century 3.5% GDP growth in a 2% GDP growth economy.”

FT : US haul from credit crisis bank fines hits $150bn

US haul from credit crisis bank fines hits $150bn
Reckoning continues 10 years after housing downturn became market meltdown

Financial institutions have paid more than $150bn in fines in the US relating to the credit crisis, passing a significant milestone a decade after it became clear American subprime woes had become a global problem.

Ten years ago this week, France’s BNP Paribas barred investors from accessing money in funds with subprime mortgage exposure, citing a “complete evaporation of liquidity”. The date — August 9, 2007 — is pegged by many as the moment the financial crisis began.

Financial institutions have largely recovered from the Great Recession that followed, but the crisis profoundly reshaped economies and markets, and the effects on politics and society are still being felt. Dealing with banks’ alleged misdeeds from the era also remains unfinished business.

The public outcry for accountability ushered in an era where the US government was willing to penalise financial institutions sharply, yet most crisis-related actions were civil rather than criminal. Much of the public remained unsatisfied because few bankers went to prison.



A trio of multibillion-dollar settlements with European banks this year has netted $19bn for the Department of Justice and regulators, including $5.5bn paid by RBS of the UK last month — taking the total over the landmark figure.

A single bank, Bank of America, has paid more than one-third of all recoveries to US authorities, according to an analysis by the Financial Times. Its $56bn in settlements with state and federal regulators and the DoJ cover its own mortgage sales and actions by two companies it acquired, subprime mortgage lender Countrywide and broker Merrill Lynch. 

JPMorgan Chase, which acquired Bear Stearns and Washington Mutual, has paid the second-largest amount, with $27bn in fines and relief.


The FT analysis of fines against banks, rating agencies and other institutions covers conduct ranging from the faulty underwriting of mortgages, improper foreclosure practices and discriminatory lending to the mismarking of auction rate securities. The bulk of the $150.1bn total — $89.1bn — was to settle allegations that institutions misled buyers of securities backed by mortgages.

New cases related to the crisis are still being filed and investigations continue, suggesting the $150bn total could grow. Barclays is fighting a DoJ lawsuit alleging it misled buyers of mortgage-backed securities. 

“You can argue that the fines are too high or too low. Nobody would argue that the non-compliance behaviour needs to be addressed,” said Gerold Grasshoff, a senior partner with Boston Consulting Group.


Prosecutors have demanded guilty pleas from banks for crimes ranging from money laundering to violations of US sanctions law. Including those settlements, financial institutions have paid more than $321bn worldwide from 2007 until the end of 2016 for all types of misdeeds, according to a report by Boston Consulting. 

“We expect fines and penalties by regulators in Europe and Asia to rise in coming years,” the report concluded.

Some authorities have said the lack of cases against top Wall Street executives reflects the difficulty in proving criminal intent, since they were often several levels removed from the fraud or insulated by lawyers. Others suggest the DoJ was unwilling to pursue cases they might not win. 


“Our nation cannot afford to take our eye off the ball when it comes to crime or other illegal practices inside banks that require law enforcement response,” said Christy Goldsmith Romero, the inspector general of Sigtarp, the federal agency overseeing government bailout funds. 

“If a corporation is engaged in illegal practices they should not be able to buy themselves out of accountability. The recoveries are important because there must be a cost,” Ms Goldsmith Romero added. “DoJ has to be willing to step outside of its comfort zone. They have to be willing to put the evidence in the hands of the jury.”