FT : Unilever investors toasting Buffett and Krafty krew

Unilever investors toasting Buffett and Krafty krew

Marmite manufacturer is not a national champion and shareholders should be free to sell

Time to raise a Magnum Black to Warren Buffett and his Krafty krew. In a single month, they have added £20bn to the wealth of Unilever shareholders, without our having to do anything, let alone agonise over whether Dove is a national treasure or a commercial enterprise.

The share price is now above the (presumably) sighting shot of $50, which shows how clever Mr Buffett was to spot an undervalued business. Whether by luck or judgment, Unilever CEO Paul Polman had his defences in place, allowing him to set off a fine display of defensive fireworks without breaking Takeover Panel rules.

We don’t need Kraft; we have our own version of zero budgeting; we’ve got plans to bring the future nearer and we’ve got so much capital that we could borrow to give some away. This is called “making the balance sheet more efficient” and next to an actual takeover, it’s what investment bankers like to do best.

What’s more, it can be worth doing for the company too. Unfortunately for the bankers’ bonuses, it’s hard to see why in this case. Risk capital allows more risk, to reap higher long-term rewards. The chart of the Unilever share price looks less like one for a steady supplier of soaps and fats to the world than that of a dotcom rocket, only measured in decades rather than months. Over the years, investors who have taken their capital out of the business have lived to regret it.

Yet despite this record, Mr Polman still feels Unilever has had a lucky escape from the ravening beasts of Kraft. The takeover rules are strict about forward-looking statements, and he was fortunate to have sufficiently worked-through plans to respond immediately without breaking them.

Now he wants those rules to be tilted towards the defence of “national champions”. Never mind that Unilever’s structure already makes it a dual-nationality champion, this is a thin argument. The Marmite manufacturer is not a national champion but a commercial business owned by its shareholders. If they collectively decide to sell it, they may be misguided but should be free to do so.

There are always things that a big company can do better, and jolts like this provide the impetus to find them. Mr Polman should thank Mr Buffett and keep Unilever looking to the long term. It seems to work.

Our money down the drain

Macquarie is finally cashing in its Thames Water chips. The investment bank has made a stonking return from a low-risk investment, although exactly how stonking is hard to say. Infrastructure consultant Martin Blaiklock, a careful analyst of opaque utilities, puts it between 20 and 27 per cent annualised over the decade of ownership.

He can’t be more accurate, he says, because it’s unclear about a little matter of where a £500m dividend went when Macquarie bought the business from RWE. Then, the last vestiges of transparency disappeared via the Cayman Islands, leaving Thames Water Utilities, which actually runs the water, submerged under seven corporate layers.

The steady replacement of equity with debt contributed to Thames’ inability to pay for the super-sewer now starting to grind its way under the river. A separate company, also Macquarie, was needed, offering the prospect of more specialist, opaque financial engineering now the Thames Water game is over. Not for nothing is Macquarie dubbed Australia’s version of Goldman Sachs.

He’s blue as well as purple

It’s hard to blame the executives at Purplebricks, the new model estate agent, for selling a slug of their holdings. The shares had more than doubled since Christmas when in February the company announced plans to conquer America, raising £50m at 220p a share, a small discount, to pay for the adventure.

The price carried on, mysteriously, all the way to 360p ahead of this week’s shareholders’ meeting to approve selling the new shares to outsiders rather than to existing owners. They’ve since come back to 307p and on Thursday the executives placed £24m-worth at 300p. Spare a thought, though, for lettings director Richard Jacques. On January 20, he sold 35,000 shares at 160p. Seven days later, after the price hit 193p, the company issued a “no idea why” statement. How true.

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • AVXS +11.3%, FATE +7.8%, VSLR +7.3%, OMER +6%, ADBE +5.2%, FF +4.9%, CATB +4.1%, TIF +3.5%
  • AGRO +3.3%, MNKD +2.9%, STLD +2.7%, STNG +2.3%, CALA +1.1%, ONCS +0.8%, WLB +0.5%
M&A news:
  • CLBS +47.5% (sells stake in PCT to Hitachi Chemical for $75 mln; also reported earnings)
  • THLD +39.4% (will merge with Molecular Templates in an all-stock transaction)
  • NSAT +14.9% (announces Privet Fund Management provided a non-binding letter of interest to acquire NSAT for $10.25/share - shares halted)
Select shipping related names showing strength:
  • ESEA +9.1%, TOPS +7.7%, DCIX +4.3%, DRYS +2.7%, STNG +2.3%
Other news:
  • GALE +21.1% (presents final analysis from the GALE-301 (E39) investigator-sponsored Phase 1/2a clinical trial)
  • ABUS +8.8% (Licenses to Alexion Pharmaceuticals (ALXN) its proprietary lipid nanoparticle technology for exclusive use in one of Alexion's rare disease programs)
  • FNJN +8.1% (Positive patent ruling)
  • VRX +4.4% (ValueAct adds 3 mln shares, now holds 5.2% stake)
  • GOOS +4% (Positive Jim Cramer mention)
  • AUPH +2.3% (To present 48-week results from its AURION open-label study of voclosporin for the treatment of lupus nephritis at the International Congress on Systemic Lupus Erythematosus on March 27)
  • AGRX +1.9% (Announces a poster presentation of data from the SECURE Phase 3 clinical trial for its lead product candidate, Twirla; plans to resubmit its new drug application in the first half of 2017)
  • NVDA +1% (continued strength)
  • TSLA +1% (prices upsized 1.34 mln common stock offering at $262/share)
Analyst comments:
  • FIVN +2.8% (upgraded to Overweight from Sector Weight at Pacific Crest)
  • RBS +2.5% (upgraded to Buy from Reduce at Natixis)
  • DF +2.3% (upgraded to Overweight from Neutral at JP Morgan)
  • HIMX +1.8% (upgraded to Buy from Neutral at ROTH Capital)
  • BCS +1.1% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • PUK +1.1% (upgraded to Neutral from Underweight at JP Morgan)
  • BHP +1% (upgraded to Buy from Hold at Investec)

Recode.net : Uber’s autonomous cars drove 20,354 miles and had to be taken over

Uber’s autonomous cars drove 20,354 miles and had to be taken over at every mile, according to documents
A first look at Uber’s progress.


Some of Uber’s self-driving cars aren’t driving as smoothly as the company hoped they would. Documents circulated throughout the company’s self-driving group, which Recode obtained, gives us a first look at the progress of the ride-hail company’s robot cars in Pennsylvania, Arizona and California.
The top line: Uber’s robot cars are steadily increasing the number of miles driven autonomously. But the figures on rider experience — defined as a combination of how many times drivers have to take over and how smoothly the car drives — are still showing little progress.
It’s still early in Uber’s testing. Alphabet’s self-driving company, Waymo, has been working on its own autonomous tech since 2009, for instance, and while it has vastly improved year over year, the system still sees a handful of what are known as “disengagements”: Basically, when a driver has to take over for the computer.
We’ve reached out to Uber for comment.
Successfully creating self-driving technology has become a crucial factor to Uber’s profitability. It would allow Uber to generate higher sales per ride since it would keep all of the fare. Uber has currently suffered losses in some markets partly because of having to offer subsidies to attract drivers. Computers are cheaper in the long run.

As a whole, Uber’s self-driving system is putting on many more miles than it did in January. Last week, the company’s 43 active cars drove 20,354 miles autonomously, according to the documents. This is only the second time since late December 2016 that its cars have driven more than 20,000 miles in a week.
In January, the cars only drove 5,000 miles. At that point, however, the company only had about 20 active vehicles, mainly in Pittsburgh. By February, the company’s cars were driving themselves around 18,000 miles a week.


Uber passengers took around 930 rides in these autonomous cars in Pittsburgh last week and around 150 rides in Phoenix. To be clear, these vehicles still had a driver at the wheel to take over if needed.

In Pittsburgh, where Uber launched its commercial self-driving pilot in September, the company has been performing around 800 or more UberX trips per week in semi-autonomous mode since the middle of February.
Though Uber has more cars on the road this month than last month and has increased its weekly autonomous mileage — both good developments — the company’s human drivers are still taking over the system more times than they did in January.
Uber uses several different metrics to determine how its systems have progressed. Those include:
  • The average number of miles a car drives itself before a driver has to take over for any reason
  • The average number of miles between “critical” interventions — when a driver has to avoid causing harm, such as hitting pedestrians or causing material property damage
  • The average number of autonomous miles between “bad experiences” — things like jerky motions or hard braking, which are more likely to cause discomfort than damage
For example: During the week ending March 8, the 43 active cars on the road only drove an average of close to 0.8 miles before the safety driver had to take over for one reason or another.

This metric, called miles per intervention, includes all the times drivers have had to take back control from the system over the course of a week.
The reasons for these interventions can vary, but that can include navigating unclear lane markings, the system overshooting a turn or driving in inclement weather. The stat excludes “accidental disengagements, end-of-route disengagements and early takeovers.”
That’s a modest decline from earlier this year. At the end of January, the driver had to take over closer to once per 0.9 miles; Uber hit the one-mile mark the first week of February.


Then there’s what the company calls “critical” interventions. This is how many times a safety driver had to take over to avoid harmful events — incidents that would have resulted in a car hitting a person or causing more than around $5,000 in property damage if a driver didn’t take over.
The good news is the number of miles between these “critical” interventions has recently improved. Last week, the company’s cars drove an average of approximately 200 miles between those types of incidents that required a driver to take over.
While that’s an improvement from the prior week, which was about 114 miles between critical interventions, that progress hasn’t been steady. That means the cars aren’t yet necessarily getting increasingly safer.
At the end of January, drivers only needed to take over after an average of 125 miles driven, but that dropped to about once per 50 miles the first week of February. Those numbers then increased over the following two weeks but dropped again in the first week of March.
Part of that can be attributed to the cars being introduced in new places and on new routes, like parts of Arizona, or having to navigate around objects or road markings they don’t recognize. In short: The systems are still learning.


The cars have also had more “bad experiences” during the week ending on March 8 than in January. The miles driven between things like auto-detected hard decelerations or abrupt car jerks and movement has dropped from more than four miles in January to less than two miles as of last week.
In other words, cars only went an average of two miles without some sort of sudden movement or otherwise bad experience. These incidents have less to do with safety and more to do with the total rider experience and how smoothly the car is able to drive itself. Still.


In another document that specifically analyzed cars in Arizona, Uber’s self-driving team wrote that the rider experience in one part of the state, Scottsdale Road, was “not great.” The cars only drove 0.67 miles between interventions and two miles between so-called bad events.
The company has yet to let riders into vehicles along that route and said they would have to re-evaluate whether that route is ready after the autonomy team worked on some of the bugs, according to the email.
While Uber has yet to publicly report its self-driving miles and disengagements, all the other companies operating in California have had to submit their reports for the last two years.
However, it’s not exactly fruitful to compare the reports side by side. That’s primarily because each company is at a different stage in its self-driving development and has performed different levels of testing on public roads.

Recode.net : Uber’s autonomous cars drove 20,354 miles and had to be taken over

Uber’s autonomous cars drove 20,354 miles and had to be taken over at every mile, according to documents
A first look at Uber’s progress.

Uber’s semi-autonomous Volvos getting ready to be shipped to Arizona
Uber
Some of Uber’s self-driving cars aren’t driving as smoothly as the company hoped they would. Documents circulated throughout the company’s self-driving group, which Recode obtained, gives us a first look at the progress of the ride-hail company’s robot cars in Pennsylvania, Arizona and California.
The top line: Uber’s robot cars are steadily increasing the number of miles driven autonomously. But the figures on rider experience — defined as a combination of how many times drivers have to take over and how smoothly the car drives — are still showing little progress.
It’s still early in Uber’s testing. Alphabet’s self-driving company, Waymo, has been working on its own autonomous tech since 2009, for instance, and while it has vastly improved year over year, the system still sees a handful of what are known as “disengagements”: Basically, when a driver has to take over for the computer.
We’ve reached out to Uber for comment.
Successfully creating self-driving technology has become a crucial factor to Uber’s profitability. It would allow Uber to generate higher sales per ride since it would keep all of the fare. Uber has currently suffered losses in some markets partly because of having to offer subsidies to attract drivers. Computers are cheaper in the long run.

As a whole, Uber’s self-driving system is putting on many more miles than it did in January. Last week, the company’s 43 active cars drove 20,354 miles autonomously, according to the documents. This is only the second time since late December 2016 that its cars have driven more than 20,000 miles in a week.
In January, the cars only drove 5,000 miles. At that point, however, the company only had about 20 active vehicles, mainly in Pittsburgh. By February, the company’s cars were driving themselves around 18,000 miles a week.


Uber passengers took around 930 rides in these autonomous cars in Pittsburgh last week and around 150 rides in Phoenix. To be clear, these vehicles still had a driver at the wheel to take over if needed.

In Pittsburgh, where Uber launched its commercial self-driving pilot in September, the company has been performing around 800 or more UberX trips per week in semi-autonomous mode since the middle of February.
Though Uber has more cars on the road this month than last month and has increased its weekly autonomous mileage — both good developments — the company’s human drivers are still taking over the system more times than they did in January.
Uber uses several different metrics to determine how its systems have progressed. Those include:
  • The average number of miles a car drives itself before a driver has to take over for any reason
  • The average number of miles between “critical” interventions — when a driver has to avoid causing harm, such as hitting pedestrians or causing material property damage
  • The average number of autonomous miles between “bad experiences” — things like jerky motions or hard braking, which are more likely to cause discomfort than damage
For example: During the week ending March 8, the 43 active cars on the road only drove an average of close to 0.8 miles before the safety driver had to take over for one reason or another.

This metric, called miles per intervention, includes all the times drivers have had to take back control from the system over the course of a week.
The reasons for these interventions can vary, but that can include navigating unclear lane markings, the system overshooting a turn or driving in inclement weather. The stat excludes “accidental disengagements, end-of-route disengagements and early takeovers.”
That’s a modest decline from earlier this year. At the end of January, the driver had to take over closer to once per 0.9 miles; Uber hit the one-mile mark the first week of February.


Then there’s what the company calls “critical” interventions. This is how many times a safety driver had to take over to avoid harmful events — incidents that would have resulted in a car hitting a person or causing more than around $5,000 in property damage if a driver didn’t take over.
The good news is the number of miles between these “critical” interventions has recently improved. Last week, the company’s cars drove an average of approximately 200 miles between those types of incidents that required a driver to take over.
While that’s an improvement from the prior week, which was about 114 miles between critical interventions, that progress hasn’t been steady. That means the cars aren’t yet necessarily getting increasingly safer.
At the end of January, drivers only needed to take over after an average of 125 miles driven, but that dropped to about once per 50 miles the first week of February. Those numbers then increased over the following two weeks but dropped again in the first week of March.
Part of that can be attributed to the cars being introduced in new places and on new routes, like parts of Arizona, or having to navigate around objects or road markings they don’t recognize. In short: The systems are still learning.


The cars have also had more “bad experiences” during the week ending on March 8 than in January. The miles driven between things like auto-detected hard decelerations or abrupt car jerks and movement has dropped from more than four miles in January to less than two miles as of last week.
In other words, cars only went an average of two miles without some sort of sudden movement or otherwise bad experience. These incidents have less to do with safety and more to do with the total rider experience and how smoothly the car is able to drive itself. Still.


In another document that specifically analyzed cars in Arizona, Uber’s self-driving team wrote that the rider experience in one part of the state, Scottsdale Road, was “not great.” The cars only drove 0.67 miles between interventions and two miles between so-called bad events.
The company has yet to let riders into vehicles along that route and said they would have to re-evaluate whether that route is ready after the autonomy team worked on some of the bugs, according to the email.
While Uber has yet to publicly report its self-driving miles and disengagements, all the other companies operating in California have had to submit their reports for the last two years.
However, it’s not exactly fruitful to compare the reports side by side. That’s primarily because each company is at a different stage in its self-driving development and has performed different levels of testing on public roads.

>>> Tiffany & Co beats by $0.07, reports revs in-line; guides FY18 towards high

--> TIF +1.36% low volume
Tiffany & Co beats by $0.07, reports revs in-line; guides FY18 towards high end of expectations
  • Reports Q4 (Jan) earnings of $1.45 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $1.38; revenues rose 1.3% year/year to $1.23 bln vs the $1.22 bln Capital IQ Consensus.
  • Comparable store sales were unchanged from the prior year. On a constant-exchange-rate basis, worldwide net sales rose 2% and comparable store sales were unchanged from the prior year.
  • Reported holiday comps down 2% on Jan 17.
    • In the Americas, total sales declined 5% to $1.8 billion in the full year and 3% in the fourth quarter to $587 million, and comparable store sales declined 6% and 2%, respectively.
    • In the Asia-Pacific region, total sales of $1 billion in the full year were ~equal to the prior year and total sales of $284 million in the fourth quarter were 9% above the prior year, benefitting from the opening of new stores, with comparable store sales declining 9% and 2%, respectively.
    • In Japan, total sales rose 12% to $604 million in the full year and 15% to $185 million in the fourth quarter; comparable store sales increased 16% and 19%, respectively, while wholesale sales declined in both periods.
    • In Europe, total sales of $458 million in the full year and $146 million in the fourth quarter were 10% and 7%, respectively, below the prior year and comparable store sales declined 14% and 9%, respectively.
  • Mgmt's FY17 outlook calls for: (i) worldwide net sales increasing over the prior year by a low-single-digit percentage (consensus +1.9%) and by a mid-single-digit percentage on a constant-exchange-rate basis and (ii) net earnings per diluted share increasing by a high-single-digit percentage over 2016's earnings per diluted share of $3.55 and by a mid-single-digit-percentage over 2016's earnings per diluted share (excluding charges) of $3.75 (+5% to $3.94 vs. $3.86 consensus). These expectations are approximations and are based on the Company's plans and assumptions, including: (i) worldwide gross retail square footage increasing 3%, net through 11 store openings, nine relocations and six closings; (ii) operating margin above the prior year entirely due to an expected increase in gross margin, with SG&A expenses increasing slightly faster than sales growth; (iii) interest and other expenses, net of ~$40 million; (iv) an effective income tax rate consistent with the prior year; (v) the U.S. dollar in 2017 stronger overall than other foreign currencies on a year-over-year basis; and (vi) minimal benefit to net earnings per diluted share from share repurchases..