FT : Cancer fund failure highlights the dilemma of drug pricing

Cancer fund failure highlights the dilemma of drug pricing (Anjana Ahuja)
The challenge is to keep treatments affordable but still encourage innovation

The Cancer Drugs Fund was a trophy for politicians, a bottomless trough for public money and, worst of all, a tragedy for patients. The fund was set up in 2010 by the UK government as a way of expediting access to high-cost medicines for patients who did not have time on their side. It was supposed to cost £50m a year but ended up swallowing £1.3bn over six years.

In the measured language of an analysis published last week, the fund “failed to deliver meaningful value to patients or society” before it closed in 2016. Two years earlier, the CDF, designed to placate patient advocacy groups, was described by this newspaper as a “costly mistake”. Anyone who had oversight of the fund, from the National Audit Office to the influential parliamentary public accounts committee, condemned it as unsustainable. What happened is better characterised as a scandal.

The selling point of the CDF, which has since been radically reformed, was that it offered access to drugs that had either failed or not yet completed cost-benefit analysis by the National Institute for Health and Care Excellence. According to the paper published in the Annals of Oncology, only 18 of 47 available treatments offered any survival benefit. Some patients may have suffered toxic side-effects. The ringfenced fund, which elevated the financing of drugs above other factors that influence survival such as diagnostics and surgery, turned out to be a straitjacket, locking clinicians into paying inflated prices for therapies of dubious benefit.

The postmortem is essential reading for high-income countries grappling with the growing dilemma of drug pricing. Namely, how do governments settle on prices that are low enough to avoid bankrupting the economy but sufficiently high to encourage innovation?

The lead authors, at the London School of Hygiene and Tropical Medicine and Columbia University in New York, conclude that untouchable pots of money are unwise because they remove the imperative for drug companies to lower prices. Decisions should instead be made by bodies such as Nice, which operate without political interference, “to ensure decisions maximise value for cancer patients and society as a whole”.

Nice has threatened to stop recommending certain drugs unless companies slash prices, a tactic it deployed successfully with AstraZeneca’s ovarian cancer drug Olaparib. Its bargaining power derives from its ability to make decisions on behalf of the National Health Service. The reformed CDF came under Nice’s wings last year.

The challenge is this: the NHS, which offers free taxpayer-funded healthcare, must control costs at a time when the pharmaceutical sector looks vibrant. The UK, home to GlaxoSmithKline and AstraZeneca as well as a host of biotech start-ups, is in the curious position of having a pipeline of new cancer medicines feeding into a healthcare system that can barely afford them. This demands creative thinking, perhaps reimbursement contingent on outcome, or revamped post-licensing assessment regimes that mean drugs spend less time snarled up in regulatory limbo.

Otherwise, says Kapil Dhingra, an associate editor of the Annals of Oncology and former Roche executive, the UK risks becoming a nation of guinea pigs, with patients receiving treatments only in a clinical trial but not after licensing because of the sky-high costs. “That’s the kind of thing that used to happen in developing countries like India,” he said at a briefing in London last week.

Britain’s possible departure from the European Medicines Agency, which grants EU-wide marketing authorisation for new drugs, might also hamper timely access to novel therapies. Dr Dhingra said some companies might even shun the UK market, as a tiny slice of the increasingly affluent Indian and Chinese markets could offer more lucrative returns. This would be another avoidable tragedy in the making.

The writer is a science commentator

Recode.net : A federal court will not rehear the telecom industry’s net neutrali

A federal court will not rehear the telecom industry’s net neutrality challenge
Judges said the FCC under Chairman Ajit Pai plans to gut the rules anyway.

A federal court on Monday denied a request by the nation’s telecom giants to rehear arguments challenging the FCC’s net neutrality rules, citing the fact that the agency is now trying to scrap the Obama administration’s work.

In March 2015, the likes of AT&T, Comcast* and Verizon — acting through their Washington lobbying groups — sued the FCC for adopting open-internet protections that subject internet service providers to some of the same regulations that long have applied to traditional telephone companies.

A three-judge panel on the D.C. circuit initially ruled last June in the FCC’s favor, prompting USTelecom and its allies in the wireless and cable industries to seek a rehearing before the full court.

After a lengthy wait, though, the judges on Monday denied that request, specifically pointing to actions by new FCC Chairman Ajit Pai, who just last week unveiled his plans to eliminate and potentially replace the agency’s net neutrality rules.

For that reason, a rehearing on the rules “would be particularly unwarranted at this point in light of the uncertainty surrounding the fate of the FCC’s Order,” wrote Judges Sri Srinivasan and David Tatel.

“In that light, the en banc court could find itself examining, and pronouncing on, the validity of a rule that the agency had already slated for replacement,” they wrote.

* Comcast, through its NBCU arm, is an investor in Vox Media, which owns this website.

NYT : Apple’s Stock Races Ahead as Investors Bet on New iPhones

Apple’s Stock Races Ahead as Investors Bet on New iPhones

SAN FRANCISCO — A year ago, many investors had given up on Apple, whose stock price had fallen more than 30 percent from its 2015 peak. Apple’s once-unstoppable growth had come to a crashing halt: The number of iPhones sold was down 13 percent, and the company posted its first revenue decline in 13 years.

Today, Apple’s business remains sluggish, but that hasn’t stopped investors, including the famously tech-averse Warren E. Buffett, from falling in love with it again. Shares of the tech giant — the most valuable company in the United States by market value — have repeatedly hit new highs this year. On Friday, they closed at $143.65, up nearly 60 percent from last May’s trough.

What’s driving the stock, say skeptics and fans alike, is hope — hope that the new iPhones due in September, on the 10th anniversary of the original iPhone’s introduction, will be dazzling enough to inspire existing iPhone users to upgrade and prompt others to switch from Android phones made by Samsung, Huawei and other manufacturers.

“Everyone expects Apple to cure cancer with their next product launch,” said Kevin Landis, chief executive of Firsthand Funds, who has managed tech-focused mutual funds through many ups and downs.

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Investors will get more data about Apple’s performance, and perhaps some clues about its future, on Tuesday, when the company reports its results for the financial quarter that ended in March. Analysts expect the company to report a slight increase in iPhone sales and overall revenue.

Apple declined to comment ahead of its earnings report.

Mr. Landis sold most of Firsthand’s Apple position near last year’s bottom, but he said he had no regrets despite the stock’s recent gains. He expects Apple to continue churning out incremental improvements rather than shake up the industry. The biggest change in last fall’s iPhone 7, he noted, was the elimination of the headphone jack.

Apple is expected to make more exciting updates in its next high-end iPhone, including a high-resolution screen that covers the phone’s entire face. But the company has also suggested that much of its future growth will come from services like Apple Music, Apple Pay and the cut that Apple takes from application sales and subscriptions in the app store.

Apple executives, who are fond of using the word “revolutionary” to describe their products, have also acknowledged some missteps. After watching iPad unit sales spiral downward for 12 quarters in a row, the company introduced a cheaper model in March to win over schools that were flocking to Chromebooks. Apple is also likely to update its Pro models for businesses this year.

Apple also admitted that the striking cylindrical design of the Mac Pro, a personal computer that is important to its most demanding customers, turned out to be a mistake that limited its upgrade potential. A completely redesigned Mac Pro will be released next year, Apple executives said in early April during an unusual meeting with tech journalists to discuss the computer’s shortcomings.

“We made something bold that we thought would be great for the majority of our Mac Pro users. And what we discovered was that it was great for some and not others,” Philip Schiller, Apple’s senior vice president for marketing, said at the meeting. “We’re sorry for that, what happened with the Mac Pro, and we’re going to come out with something great to replace it.”

Investors appear to be relieved that Apple sales have stabilized after last year’s drop, said Neil Cybart, an independent analyst who writes about Apple at the website Above Avalon. “There is at least increased confidence in what Apple can do in the future,” he said.

Kevin Walkush, a portfolio manager at Jensen Investment Management who loaded up on Apple shares near last year’s lows, is one of those confident investors. “Apple is turning into the big Caddy that’s going to cruise down the freeway, and there’s a certain class of investors that are really comfortable with that. And we’re that kind of investor,” he said.

Heavy buying of Apple shares by Mr. Buffett’s company, Berkshire Hathaway, and by Apple itself has also helped support the stock price, accounting for one month’s trading volume in the shares, according to Mr. Cybart’s calculations. Berkshire is now Apple’s fifth-largest shareholder, owning 2.61 percent of the company as of Feb. 27.

In recent years, as United States phone carriers have stopped subsidizing the purchase of new phones, consumers have been holding on to their old smartphones longer than the typical two-year upgrade cycle. The last time that Apple made big changes to its phone lineup was in 2014, when it first introduced models with larger screens.

Expectations are high that the new iPhones coming out this year will have enough improvements to prompt a big wave of new purchases. “People are excited about a feature-rich launch,” said Timothy Arcuri, a technology analyst at Cowen & Company.

But as Apple pushes the innovation envelope, there are risks. The company has been having difficulty with the new type of fingerprint reader needed for its most advanced iPhone, which is expected to have a screen that runs edge to edge, with no physical home button, Mr. Arcuri said.

He said Apple had just a few more weeks to work out the kinks if it hoped to meet its traditional September release date. Otherwise, it will have to delay the new phones or put the fingerprint reader on the back of the phone — a clunky solution adopted by Samsung for its Galaxy S8 phone that has been panned by reviewers.

“They’re wringing their hands,” Mr. Arcuri said of Apple.

Even if Apple’s new iPhones fail to deliver a large sales increase, investors are also hoping for changes in tax law that will benefit Apple. Last week, the Trump administration proposed a broad-based cut in the corporate tax rate and hinted at a possible tax break for profits held overseas that could prompt Apple to bring back tens of billions of dollars in foreign profits and distribute them to shareholders.

Potential breakthroughs are also in the works.

The company is developing augmented reality technology, including eyeglasses, that will overlay real objects with digital ones. Some expect a rudimentary form of augmented reality to show up in the next iPhone.

And two weeks ago, Apple received a permit from California regulators to begin testing self-driving cars on public roads.

Technological leaps like those would win back skeptics like Mr. Landis. “History says that Apple does great but they never shake up the world,” he said. “I need them to surprise me.”

NYT : Murdochs’ TV Deal in Britain Hinges on 3 Words: ‘Fit and Proper’

Murdochs’ TV Deal in Britain Hinges on 3 Words: ‘Fit and Proper’

LONDON — For most of the last 10 years, the Murdoch family, which controls 21st Century Fox, has wanted one thing for its global media empire above all else: the complete ownership of the popular and highly profitable Sky satellite and cable network.

Sky is the dominant pay television system here, a hub for Premier League soccer, movies, and networks like Fox News, MTV and Zee Punjabi. It was Rupert Murdoch who founded Sky, and 21st Century Fox already owns part of it.

Owning it outright, however, would give the Murdochs an important new cash generator to feed the rapacious appetite for growth and conquest that has made their family business the most influential media conglomerate in the world — one that helped hasten Britain’s “Brexit” from the European Union and helped deliver Donald J. Trump to the White House.

But three words threaten to stand in the way: “fit and proper.”

“Fit and proper” is that so-perfectly British standard by which regulators here decide whether a company should be allowed to gain and retain broadcast licenses.

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It’s based on the premise that those who control news, information and entertainment options on television and radio should be held to high ethical standards, and that doing so determines “the kind of country we are,” as Jane Bonham-Carter, a member of Parliament, recently put it.

Understanding just how important the Sky deal would be for the Murdochs’ personal and global ambitions, and the complications that “fit and proper” could present to them, is vital to understanding the head-spinning developments at Fox News these past few months.

A fit and proper corporate culture — or one that wants to show it’s fit and proper — acts quickly to oust a division chairman when he is publicly accused of having sexually harassed various women over many years, no matter how wildly successful he is, and despite his denials. That’s what 21st Century Fox did with Roger Ailes last summer.

But would a fit and proper company have been so blind for so long to such serious alleged misbehavior at the top of one of its most important divisions, to the extent that the United States attorney’s office is now investigating whether it properly accounted for sexual harassment settlements?

Likewise, nothing says “fit and proper” like firing your highest-rated star after The New York Times reported that sexual harassment allegations against him had led to at least $13 million in settlements. (Yes, I’m talking about Bill O’Reilly, who also denies the accusations.)

But does a fit and proper company renew the star’s contract — to the tune of $25 million a year — just months after striking settlement deals with two women who had made allegations against him, ousting him only when public scrutiny was brought to bear?

The regulators at the Office of Communications here, known as Ofcom, will now have to answer those questions.

And the answers should matter to anyone who lives in a place touched by the Murdochs’ unique combination of political, cultural and journalistic power.

There’s no way to overstate how much this will matter to the Murdochs, and not just because of the 12 to 15 percent earnings accretion that the London firm Enders Analysis says the deal would bring within two or three years.

For Mr. Murdoch, approval would mean finally attaining the full fruits of a satellite television business that he began with his own grit and foresight, and at considerable risk — taking on a crushing debt load that forced him into a partnership with a direct rival, BSB, and ultimately cost him his majority stake.

It would also cap a remarkable comeback from the phone hacking scandal at his British newspaper division, where reporters were caught breaking into the voice mail accounts of royals, celebrities, athletes and crime victims.

That brought criminal investigations, humbling appearances by Mr. Murdoch and his son James at parliamentary hearings, and the final humiliation: a call from Prime Minister David Cameron, Rupert Murdoch’s political beneficiary, to drop the Sky bid, which he did.

Six years later, Mr. Murdoch is, if anything, at the height of his political power, given his special relationship with President Trump and the architects of the successful Leave campaign in Britain.

The Murdoch media stable showed just how little its political muscle had atrophied on the day of the European Union referendum, using the front page of The Sun to promote both the imminent release of its “Independence Day: Resurgence” movie and the Leave campaign with a headline that read, “Independence Day: Britain’s Resurgence.”

Now Mr. Murdoch has a chance to bring it all full circle with a successful Sky deal.

For James Murdoch, a Sky deal would solidify his hold on a business he’s credited with adroitly expanding to Germany and Italy and into broadband. But there’s something more at stake: “a chance at full corporate redemption,” as the London-based analyst Claire Enders put it to me last week, “after his perilously close brush in 2011.”

That brush is most closely associated with his testimony that he did not know the extent of the hacking inside the newspaper division that fell under his purview at the time. An email unearthed by investigators showed that a top editor had informed him that the hacking was more widespread than the company had acknowledged. (He said he had not read the email in full.)

But much of the judicial inquiry that followed centered on whether the Sky bid he led at the time had too aggressively sought to trade on the company’s political sway.

As he pursued the Sky deal, James Murdoch appeared to be an adept student of his father’s use of power and influence.

In 2009 he gave a speech calling the BBC, his biggest competitor, and Ofcom “unaccountable institutions” that were bucking the free market’s rules of Darwinian evolution.

A few months later, The Sun swung its support to the Conservative Party leader, Mr. Cameron — who had said Ofcom “as we know it” would cease to exist under Conservatives — and away from the Labour Party leader, Gordon Brown, who promised no such thing. (James Murdoch delivered the news to Mr. Cameron personally.)

After the endorsement, Jeremy Hunt, a member of the Conservative Party, declared that a Conservative government would “rip up” the BBC’s royal charter.

Mr. Cameron and the Murdochs denied Labour Party charges that there had been a quid pro quo; a judicial investigation known as the Leveson inquiry did not find that there was one, and Sky went through the expected regulatory scrutiny.

But the inquiry reported inappropriately close contact between the Murdochs’ lobbyist and Mr. Hunt, the key cabinet minister overseeing the process, and noted it was “regrettable” that James Murdoch had not sought to halt it.

That was in line with the findings of Ofcom, which cleared him of any wrongdoing related to hacking but said he “repeatedly fell short of the exercise of responsibility to be expected of him as C.E.O. and chairman.”

That critique came up again this year when the culture secretary, Karen Bradley, alerted 21st Century Fox that she might refer the Sky deal for regulatory review.

21st Century Fox says it’s confident it will win approval. It’s certainly hoping that regulators will focus on improvements James Murdoch and his brother, Lachlan, have ushered in at the company, like enhanced benefits and a new emphasis on diversity.

While some old opponents remain steadfast, like the consumer group Hacked Off, one former opponent, Ms. Enders, the analyst, is not opposed this time.

In an interview, Ms. Enders pointed to James Murdoch’s successful work in expanding Sky’s business — while placing a large number of women in senior positions — and a speech he gave at a conference in which he spoke warmly about the BBC.

“He’s understood the error of his ways,” she said, adding that he is now “20 times more cautious, anxious, obsessed with the corporate governance of Fox.”

Few are predicting where Ofcom will come down, though Wall Street seemed to think Mr. O’Reilly’s ouster helped the deal’s chances, given the boost in Sky’s stock price that followed it. The agency will have to determine whether the move against Mr. O’Reilly came from typical Murdochian pragmatism or from something Wall Street doesn’t necessarily reward: the fit and proper commitment to doing what’s right.

NYT : John Paulson’s Fall From Hedge Fund Stardom

John Paulson’s Fall From Hedge Fund Stardom

John A. Paulson is one of the best-known names in the hedge fund industry. But these days, Mr. Paulson is having more success in the political realm than he is managing his business.

Mr. Paulson, 61, was one of the first people on Wall Street to back Donald J. Trump’s bid for the presidency. He counseled Mr. Trump on economic matters during the campaign. He gave $250,000 to Mr. Trump’s inaugural committee. And he recently visited President Trump at the White House for a “C.E.O. Town Hall.”

But his investors are unlikely to be impressed by his political access. His firm, Paulson & Company, has recorded nearly double-digit losses in several of its larger funds as of the end of March.

That dismal record is a far cry from nearly a decade ago, when Mr. Paulson made nearly $15 billion betting on the collapse of the housing market. Back then, state pension funds and investors around the world rushed to give him their money to manage. Even Mr. Trump became an investor with Mr. Paulson — and eventually lost money.

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Mr. Paulson’s struggles come after a gut-wrenching 2016, when he recorded even steeper losses in those funds, partly because of several wrong-footed bets on drug makers, including the troubled Valeant Pharmaceuticals. That followed a painful 2015, when investors first balked and began pulling their money from his firm.

A representative of Mr. Paulson declined a request for an interview with him. His funds are said to have performed better in April, said a person with knowledge of the firm who spoke on the condition of anonymity.

Despite his mounting losses, there is little indication that Mr. Paulson, who donated $400 million to Harvard University’s school of engineering in 2015, is throwing his hands up and walking away.

“It is clear that Paulson has dug in with both heels and committed to steering the firm through this period,” said David Black, founder of Quadra Advisors, a recruiting firm for hedge funds and other investment firms.

Nonetheless, his assets under management continue shrinking. Paulson & Company manages just under $10 billion today, down from $36 billion in 2011. Nearly two years ago, some Wall Street banks began to recommend that investors redeem some of their money from the firm.

And while Mr. Paulson is not the only hedge fund manager to see large investors pull their money in recent years, he has become a symbol of what some pension funds have taken issue with for the industry at large: big fees for little reward and little originality.

Mr. Paulson has remained upbeat with investors, according to two people who have seen recent investor letters but spoke on the condition of anonymity.

“While we are disappointed in performance in 2016, we believe we have a path to a recovery,” Mr. Paulson told investors in one letter.

But it has not been smooth sailing. In another letter to investors of a merger arbitrage fund that declined by 49 percent last year, Mr. Paulson called 2016 “the most challenging year since inception.” In May, Mr. Paulson will address his investors at a meeting in London at Claridge’s Hotel in London.

Mr. Paulson’s fall from stock-trading stardom underscores a common disclaimer in industry parlance: Past performance is no guarantee of future returns.

In early 2007, Mr. Paulson, who started his firm in 1994, was still a relatively unknown hedge fund manager. A former Bear Stearns investment banker, he had a reputation for running a solid if boring hedge fund that made bets on the outcomes of various mergers and acquisitions.

But as the housing market began to show signs of overheating, Mr. Paulson had a hunch that home loans to borrowers with spotty credit histories — which were ballooning at the time — were about to go sour. He positioned his firm to benefit in the event of a huge failure of the subprime mortgage market.

It was a bet that few were willing to take, but one that resulted in a major payday for him and his firm, and was later referred to as “The Greatest Trade Ever,” in a book by the reporter Gregory Zuckerman.

After the financial crisis, investors flocked to Mr. Paulson’s firm, which is in Midtown Manhattan, a stone’s throw from Rockefeller Center.

For several years, Paulson & Company continued to make money for some of his investors, but the performance increasingly grew bumpy. This was particularly true for the firm’s flagship Advantage fund. It lost 36 percent in 2011 and plunged another 14 percent in 2012, but rallied to post a 26 percent gain in 2013, according to an HSBC industry report and people with knowledge of the firm’s performance. The losses were amplified in Advantage Plus, a version of the fund that uses leverage to enhance returns.

Over the last three years, Advantage has consecutively recorded double-digit losses. Some of Mr. Paulson’s merger funds, credit funds and gold funds have posted positive returns, but the overall picture has not been pretty.

But Mr. Paulson soldiered on and even began to raise money in 2015 for a private equity fund and one focused on health care stocks.

Health care bets, in particular those on pharmaceutical companies, have proved especially punishing for Mr. Paulson and his investors. Losing wagers on economic recoveries in Greece and Puerto Rico haven’t helped.

The Valeant trade resulted in a nearly $2 billion loss for the firm — bad, but not as disastrous as it was for another famed investor, William A. Ackman, whose firm Pershing Square Capital Management lost $4 billion on Valeant.

Some of Mr. Paulson’s top talent have moved on. Putnam Coes, his former chief operating officer, left the firm in September. Soon after, John Reade, a senior vice president who was based in London, left.

Despite his losses, Mr. Paulson is still making new and speculative investments. In November, Paulson made an investment in Didi Chuxing, a fast-growing Chinese ride-hailing firm that signed a deal to acquire Uber Technologies’ operations in China.

One bright spot could be a bet on Fannie Mae and Freddie Mac.

Steven T. Mnuchin, the Treasury secretary, has pledged to return the mortgage finance giants to free-standing publicly traded companies, a development that could make Mr. Paulson’s funds big profits. Mr. Paulson and Mr. Mnuchin, a former hedge fund manager, once worked together to pull OneWest Bank out of the wreckage of IndyMac, a lender that the federal government seized in 2008.

Several new funds the firm has started are posting positive returns, too.

“We remain confident in the long-term relationship we have with Paulson,” said Christopher Zook of CAZ Investments, a Texas wealth management firm that recently rotated out of the poorly performing Paulson Special Situations fund into a newer Paulson fund.

And Mr. Paulson and other hedge fund managers stand to be big beneficiaries of Mr. Trump’s plans to slash taxes.

Yet 2017 is shaping up as another rough one for Mr. Paulson. The Advantage fund was down 9.7 percent as of the end of March and the Partners Enhanced fund continues to sink — falling just over 8 percent after last year’s 49 percent plunge.

Even after several years of losing money for his investors, Mr. Paulson remains one of the richest men in the world — with a net worth of about $7.9 billion, according to Forbes.

But, as the financial magazine recently noted, he is now $2 billion poorer.

9to5 : Analysts expect AAPL to deliver on Q2 guidance, tough quarter ahead, opti


One day ahead of Apple’s announcement of its Q2 earnings, the prevailing analyst view appears to be that there will be no surprises. The company is expected to deliver close to the top end of its revenue guidance, with most expecting revenue of around $53B.
Analysts also expect the company to show year-on-year growth in iPhone sales …

Philip Elmer-DeWitt, who continues the analyst roundup he previously conducted for Fortune, reports an overall average across 25 analysts of $53.05B revenue. Two separate roundups compiled by MarketWatch echo the same figure of approximately $53B, with other surveys doing the same.
MarketWatch reports that the consensus expectation is for iPhone sales to hit 52M for the quarter, up 1M from the same quarter last year, generating a 4.3% boost in revenue. Profit is expected to be around $10.54B. Earnings per share is predicted to be in the $2.02 to $2.06 range, up from $1.90 last year.
Quarter 3 is expected to be a tough one for the company, ahead of the launch of this year’s iPhones.
Analysts will have their eye on Apple’s forecast for the third fiscal quarter, typically its worst for iPhone sales as customers wait for the customary September reveal of a new model. This quarter could be even tougher, with Samsung this week boasting of record preorders for the Galaxy S8, its first product launch since the exploding-phone saga last fall.
Analysts also note the recent reports suggesting delays to the iPhone 8, with the obvious impact this would have on the following quarter.
The longer-term outlook remains bullish, with big expectations of a super-cycle prompted by the iPhone 8. The NY Times says that the stock has repeatedly hit new highs on the basis of this optimism.
What’s driving the stock, say skeptics and fans alike, is hope — hope that the new iPhones due in September, on the 10th anniversary of the original iPhone’s introduction, will be dazzling enough to inspire existing iPhone users to upgrade and prompt others to switch from Android phones made by Samsung, Huawei and other manufacturers.
“Everyone expects Apple to cure cancer with their next product launch,” said Kevin Landis, chief executive of Firsthand Funds.
Growing recurring income from Services also lends comfort, analysts expecting the company to report more than $7B in services revenues for the quarter.

FT : Metro has ‘no plan B’ even as demerger faces legal challenge

Metro has ‘no plan B’ even as demerger faces legal challenge
Chief of German retailer plays down threat to quash plans to split company

The head of Metro, Germany’s largest listed retailer, has “no plan B” if a billionaire shareholder is successful in a legal challenge to its plans to split the company in two.

In September Metro confirmed plans to spin off its food businesses into a new company, which would keep the name Metro, leaving a business built around its Media-Saturn electronics arm, to be renamed Ceconomy.

Metro said in March that four suits had been served in a German court against its plan. One of the suits was filed by Convergenta, the investment vehicle of billionaire Erich Kellerhals, who founded and still owns 21.6 per cent of Media-Saturn, and has clashed frequently with Metro’s management in recent years.

“I think the likelihood is almost negligible,” Olaf Koch, Metro’s chief executive, told the Financial Times. “You should never say never, but in this case I dare to say it.”

Last year, a mediator was appointed to help the two sides resolve their differences. Mr Koch said no negotiations were taking place, but Ralph Becker, managing director of Convergenta, said the two groups had held talks in March, and that he was hopeful of a further round soon.


Metro said there would be no more talks until the court in Düsseldorf had reached a decision on a so-called “clearance procedure”. This would allow the demerger to be registered long before a final decision had been reached on the merits of the complaints. A court date has been scheduled for late June.

In February shareholders approved the split at the annual meeting by an overwhelming majority of 99.95 per cent.

Convergenta’s aim was to resolve all its outstanding disputes with Metro, Mr Becker added, as well as the bigger question of Mr Kellerhals’ long-term involvement with Media-Saturn.

An attempt to reach a deal failed last summer, but there have been various attempts to revive it since. The deal discussed last year involved the Kellerhals family selling its stake in Media-Saturn to Metro in exchange for a cash consideration as well as the right to keep operating the business in two or three markets, and a similar structure was still an option, Mr Becker said.

The split marks the most ambitious move in Mr Koch’s efforts to turn Metro round since 2012. He has sold off businesses, including the Galeria Kaufhof network of department stores, exited markets, reduced debt and trialled new formats for its retail arm.

Mr Koch said he had done no contingency planning for a ruling in favour of the dissident shareholders because the likelihood of such an outcome was so small.

Although the shares have risen from €23.76 in April 2012 to €30.21 now, they are well down from their peak of €36.88 in 2013. Meanwhile, like-for-like sales in the most recent quarter barely rose, and Mr Koch acknowledged that Metro had moved too slowly to adapt to a fast-changing competitive environment.

“We are not making enough of an impact and we need to intensify our efforts on our core businesses,” he said.

But he said the split of the business would allow managers to focus better on strategic priorities, and that it did not mark the end of his restructuring efforts at the company.

“When we say ‘we’re done, we’re finished’, then the next scheme needs to come into play,” he said. “We’ll never be done.”

Mr Koch said the first priority, however, was to show that the demerger had made a difference and to maintain the new companies’ credit ratings.

>>> Unilever bidders may be deterred by new demands on jobs from European works

Unilever bidders may be deterred by new demands on jobs from European works council

Unilever's [LON:ULVR] [AMS:UNA] European works council is demanding job guarantees from the Anglo-Dutch consumer goods group as part of the company’s proposed sale of its spreads unit, The Daily Telegraph reported. This could lessen interest in the sale from bidders in the private-equity sector eager to strip out costs, industry sources warned.
Works council Chairman Hermann Soggeberg said more than 11,000 workers in Europe will be affected by the proposed GBP 6bn (USD 7.8bn) sale of margarine brands and the organisation will be pushing for three-year commitments on jobs. A Unilever spokesperson said the company has started meeting with employee organisations and will take their feedback into account, the item reported.
The works council is influential and previously won similar commitments on jobs when Unilever disposed of its Birdseye business, the report noted.
The private-equity firms Clayton Dubilier & Rice, Bain and CVC are among those considering bids for the spreads unit, the item reported.

Reuters - Mnuchin sees U.S. growth reaching 3 percent in time, tax cuts to help

Mnuchin sees U.S. growth reaching 3 percent in time, tax cuts to help

U.S. Secretary of the Treasury Steve Mnuchin said on Monday that it could take up to two years to have economic growth reach three percent and that tax cuts and regulatory relief will help get there.

"There are very attractive opportunities," Mnuchin said at the Milken Institute Global Conference, speaking less than one week after the Trump administration unveiled plans for aggressive tax cuts.

He said the tax cuts can be paid for by "plenty of other ways". Mnuchin also said he has had weekly meetings with congressional leaders and said "we'd like to see bipartisan support" for tax cuts.