Twitter CEO Jack Dorsey unveils his road map to get the social media company back on track.]]> |||
San Francisco - Twitter said Tuesday it was slashing eight percent of its workforce as newly returned chief executive Jack Dorsey outlined his “road map” to boost users and revenues at the money-losing messaging platform.
The cuts - which amount to 336 jobs - come less than a week after Dorsey, one of the founders of Twitter, returned to the job of CEO on a permanent basis as part of an effort to revive growth at the San Francisco-based social network.
“Made some tough but necessary decisions that enable Twitter to move with greater focus and reinvest in our growth,” Dorsey said in a tweet announcing the plan.
In a letter to employees, Dorsey said his team is working “to produce a streamlined road map” for Twitter and its other services including video-sharing platforms Vine and Periscope.
“The road map is focused on the experiences which will have the greatest impact,” he said in the letter.
“The road map is also a plan to change how we work, and what we need to do that work.”
One of the key elements unveiled last week was “Moments” a feature that promises to let uses quickly tune in to “the best of Twitter” in an effort to leverage its connections in real-time news.
The San Francisco-based one-to-many messaging platform, which has not yet turned a profit, has struggled to expand its user base above 300 million, lagging rival networks such as Instagram and well behind the much larger Facebook.
Twitter said the layoffs will result in $10 million to $20 million in severance costs, and total restructuring expenses are estimated at $5 million to $15 million. The overall costs may be lower than severance due to recovery of unvested stock awards.
Twitter shares gained one percent to close at $29.06, after trading up as much as five percent during the day. The stock had jumped above $70 two years ago but slumped this year below the 2013 offering price of $26.
Lou Kerner, founder and manager of the Social Internet Fund and a partner in venture investment firm Flight.vc, said the re-organisation was “a very positive sign that Dorsey is serious about making the changes, even if they're hard, to make Twitter a great company again”.
“It's a big challenge, because he'll have to make some audacious changes to engage those users who have already tried Twitter and not found it compelling, without upsetting the users who already love Twitter,” Kerner told AFP.
“But given Dorsey's context and his immense talent, I think he's the most qualified person to give it a shot.”
Dorsey ran the company in 2007-2008 and was named interim chief executive after Dick Costolo resigned in June. He will continue to run digital payments service Square, which he founded about five years ago.
Analyst Youssef Squali at Cantor Fitzgerald said that “this is the right decision in our view and what's required to reverse the languishing user growth and engagement metrics”.
Shebly Seyrafi, analyst at FBN Securities, said in a research note that Twitter shares are “attractive” with the company seeking new growth prospects.
“We regard this move as 'one-time' to clean the slate and rightsize the company under Mr Dorsey's leadership,” Seyrafi said.
“We also note that Moments (formerly Project Lightning) was just introduced, and has been receiving generally positive reviews.”
But Mark Mahaney at RBC Capital Markets sounded a note of caution over the re-organisation.
“Our take is that this is potentially concerning given our position that Twitter should be focused on growth (audience, engagement, and especially the top line) and not efficiency at this stage in its life cycle,” he said in a research note.
“We are a bit concerned that some of the cuts are in engineering, which could hamper Twitter's ability to continue growing at a robust pace.”
In its most recent quarterly update, Twitter said that the number of people using the one-to-many messaging service monthly climbed 15 percent to 316 million compared to the same three-month period a year earlier.
But growth has stalled in the key US market, and Twitter's losses mounted despite revenue growth from new advertising features.
The deal between AB InBev and SABMiller faces months of scrutiny that may yet derail the transaction.]]> |||
London - SABMiller shares traded 10 percent below the price Anheuser-Busch InBev agreed to pay for the beermaker, a bigger discount than often seen in takeovers, because the deal faces months of scrutiny by antitrust regulators around the world that may yet derail the transaction.
Typically, when a deal is expected to sail through to completion, the shares of a target trade just below the offer. In this case, many traders who speculate on the outcome of merger agreements are shunning the deal because it will take too long for the transaction to close, and there are better opportunities in other takeovers, said Jean-Francois Comte, co-manager of the $144 million Lutetia Patrimoine arbitrage fund in Paris.
The tie-up between the two companies will be reviewed by competition authorities in the US and China, where SABMiller operates joint ventures with local partners. The combined entity will control about 50 percent of global beer profits and sell one third of the world’s brew. AB InBev will need to sell more than $16 billion of assets to win approval, said Wim Hoste of KBC Securities. SABMiller raised antitrust concerns in spurning AB InBev’s earlier offers, prompting the would-be acquirer to agree to pay the target $3 billion if regulators block the deal.
“There is a residual but misplaced fear the deal won’t happen,” said Andrew Holland, an analyst at Societe Generale. “Given the size of the break fee, there is a huge onus on AB InBev to make this deal happen.”
SABMiller rose 9 percent to close at 39.48 pounds in London after the world’s second-largest brewer said it would recommend AB InBev’s cash offer of 44 pounds a share to stockholders. The companies have an agreement in principle, and under UK takeover rules they have until October 28 to forge a formal deal.
Usually the discount in a target’s share price narrows to about 1 percent by the end of trading in the day a friendly bid is announced, said Christopher Kummer, head of the Vienna-based Institute of Mergers, Acquisitions and Alliances.
For bigger deals, the spread is often wider. On the day Royal Dutch Shell Plc agreed to buy BG Group in April for about $70 billion, the target finished the day at a 10 percent discount to the value of the bid.
AB InBev said last week that it’s “done significant work on regulatory matters and has identified solutions that provide a clear path to closing”. Without divestitures, London-based SABMiller’s stake in the MillerCoors US joint venture would boost AB InBev’s market share to 75 percent, and the combined company would produce about 40 percent of the beer China consumes, said KBC’s Hoste.
Analysts anticipate that Molson Coors Brewing Company, SABMiller’s joint venture partner in the US, will buy SABMiller’s stake in MillerCoors. Shares in Molson Coors jumped 10 percent to $86.82 at 12.05pm in New York trading, bringing their advance to 26 percent in the five weeks since AB InBev confirmed its intention to acquire SABMiller. The target also holds a 49 percent stake in CR Snow, China’s largest brewer, with the rest held by state-controlled China Resources Enterprise.
In announcing the tentative agreement, the companies didn’t say how long they expect it to take to win regulatory and shareholder approval and then close the deal. AB InBev also is working with about 10 banks to arrange as much as $70 billion in financing.
“We’re now in the middle of October; a lot of event-driven and risk-arbitrage funds have not had great results so far this year,” said Comte. “The appetite from the arbitrage side is limited for this deal because a lot of people want shorter durations at this point, and when you have a lot of opportunities in deals closing before December with decent spreads, why would I rush into putting my money into the ABI/SAB spread if it has a year longer to run out?”
The discount also reflects the size of the deal, which at almost 69 billion pounds ($106 billion) would be the biggest acquisition of a UK company and the largest ever in the brewing industry. Often when a deal is announced, long-term shareholders who don’t want to wait for it to close sell at a slight discount to the takeover price. The buyers often are arbitragers, who try to capture the spread between the price they paid and the price the acquirer will pay at closing.
“In a deal of this scale, arbitrage buyers probably do not have the firepower to tighten the discount,” said Richard Marwood, who oversees about 10 billion pounds at Axa Investment Managers, including SABMiller stock.
Woolies has recalled 12 ice cream and sorbet products which were not labelled with the necessary allergen warnings.]]> |||
Cape Town - Retail giant Woolworths on Tuesday recalled 12 ice cream and sorbet products which were not labelled with the necessary peanut allergen warnings.
“The labelling ‘product made in a factory which uses peanuts’ provides potentially allergic customers with guidance to make informed buying decisions. This labelling has been omitted from some of these products in error,” said the spokesperson speaking on behalf of Woolworths, Meropa Communications’ Sam Logan.
The labelling, which had been omitted on the 12 products, indicates the possibility that the product could have come into contact with food allergens during production.
The 12 products recalled were Extremely Creamy Madagascan Vanilla Dairy Ice Cream, 32 Italian kisses, Extremely Creamy Pistachio Dairy Ice Cream, Extremely Creamy Belgian Chocolate Dairy Ice Cream, Slimmers Choice Fruit Sorbet Mini Lollies, 6 mini Almond Solos, 6 mini Vanilla Solos, Mixed Berry Sorbet, Granadilla Sorbet, Mango Sorbet, Hazelnut Dairy Ice Cream, and Lemon sorbet.
Woolworths said no other ice creams or other products were affected.
“As an absolute precaution, Woolworths has taken a decision to rather remove all these products from their store shelves to avoid potentially putting peanut allergic customers at risk,” said Logan.
Woolworths customers who had purchased any of the recalled products were advised to check if their products lacked the required labels. If so, they could return the products to Woolworths for a full refund.
“Woolworths apologises for any inconvenience caused and, should customers want further information, they can contact the customer care line 0860 022 002,” said Logan.
All details of the country’s proposed nuclear build programme -including the cost - remain classified, MPs were told.]]> |||
Parliament - While South Africa’s National Treasury has completed most of the preliminary work into the country’s proposed nuclear build programme, all the details, including the cost to the fiscus, remained classified, MPs were told on Tuesday.
Briefing Parliament’s standing committee on Finance, Treasury director general Lungisa Fuzile said he was not cleared to share any of the specifics of the reports compiled on the nuclear build, most notably the cost implications.
“There are several pieces of work we have done on this. Most of them have been conducted actually,” said Fuzile.
“The latest one is what we have been doing with the department of energy…which is the working out in a little bit more detail the financial implications, costing model or financing model for instance. Even cabinet hasn’t seen it.”
Democratic Alliance MP David Maynier insisted on transparency and asked that Finance Minister Nhlanhla Nene brief the committee on what the nuclear build would cost the country before the end of the year, as government has indicated it would make a decision on where it would procure its nuclear technology from before December 31.
“We have to force the issue,” said Maynier.
Committee chairman Yunus Carrim reminded his fellow committee members that transparency in the nuclear deal was not just a DA imperative, but that his own party, the African National Congress, also insisted on the public interest being taken into account before a nuclear deal is concluded.
“I don’t know anywhere in the world where you can have nuclear and just go ahead and do it in a constitutional democracy,” said Carrim.
“This very weekend (during the ANC National General Council) there was a decision that the cost benefit analysis of nuclear must be considered.”
Fuzile confirmed that it was unlikely that decisions on spending on a nuclear deal could be made without Parliament having a say.
“In so far as we bring it home, I usually say to people anything that will cost money, at some point it must be set out in the three year expenditure framework and Parliament has an opportunity to consider it.”
Telkom has unveiled its redesigned wholesale and networks division, which it has called Openserve.]]> |||
Johannesburg - SA’s fixed line utility Telkom has unveiled its redesigned wholesale and networks division, which it has called Openserve.
Telkom has been migrating towards a functional split of the company to separate its retail and wholesale. This will also see the operator, majority owned by SA’s government, move towards an open-access network in line with government’s stated aim to be open-access.
The company, which has been battling dwindling revenues and falling fixed-line penetration, is being forced to reinvent itself in a world that is increasingly becoming digital. As part of this, it is cutting costs and unveiling a new way of thinking that embraces competition.
In a statement, the telco says Openserve will be a distinct business unit within the Telkom Group.
It says the unit has been “formed as part of the company’s ongoing efforts to strengthen customer focus through a more flexible and agile operating model”.
Telkom adds: “The separation heralds a new era in the Telkom Group as it prepares to welcome a more open-access environment and all the opportunities it offers. This move is also in line with Telkom’s turnaround strategy to separate its wholesale and retail divisions to facilitate greater focus, accountability and most importantly, customer-centricity.”
CEO Sipho Maseko notes the company’s turnaround strategy, which has seen it cutting costs and letting go of staff, has delivered positive results, but it is not yet complete.
“We have tackled inefficiency, complexity and high costs and our quest to improve our customer experience remains a primary focus. But to fundamentally change the way we do business, while also working to take up a meaningful and impactful role in an increasingly open-access environment, we have had to review our operating model.”
Telkom hopes Openserve will enable more choice, increased innovation and greater service-provider competition.
“The result will be increased broadband access. Telkom intends to play a substantial role in lowering the barrier to entry for new players and to increase the competitiveness of smaller players.”
SAP and Apple have teamed up with the American rock group Imagine Dragons to raise funds for the United Nations High Commission for Refugees.]]> |||
Cape Town - In a very modern, feel-good story SAP and Apple have teamed up with the American rock group Imagine Dragons to raise funds for the United Nations High Commission for Refugees.
In our increasingly wired world it is hard to escape any big news event, even here at the southern tip of Africa. We have recently been bombarded with news and heart-breaking images of the refugees crisis unfolding in the Middle East and Europe.
And now the news coming down those same wires is that two leading tech companies have joined forces with a rock band to raise money to help.
The band has released a new single, I Was Me, through iTunes, Apple’s music delivery service, and all funds raised will be donated to support refugees.
The idea originated from an employee at SAP, the leading enterprise application software company, which has pledged to donate an additional 10 cents per purchase up to five million downloads, possibly raising another $500 000.
Funds raised for the campaign, titled the One4 Project, will be used by the UN’s refugee agency in their efforts to provide aid and assistance to the increasing numbers of people forced to flee their homes due to conflict and violence.
In a video statement after the song was released on Monday, the band’s frontman Dan Reynolds said: “The refugee crisis is incredibly urgent in terms of the number of vulnerable people being affected every single day. As a band we wanted to get involved and decided to partner with SAP and Apple to try and make a difference.”
AFRICAN NEWS AGENCY]]>
Weak economic growth, public sector wage bill and financial support for SOE’s beyond what is currently budgeted for are SA’s main risks.]]> |||
Cape Town - South Africa's weak economic growth, the public sector wage bill and financial support for state-owned companies beyond what is currently budgeted for, are the three main risks to the fiscal outlook, the National Treasury said.
Increased debt levels in a low-growth environment would only add to debt-service costs and raise the risk of sovereign credit rating downgrades to sub-investment grade, the Treasury said in a document made available to the media on Tuesday.
“Accumulation of debt in the context of a low-growth environment is unsustainable,” the Treasury said, noting that this would further raise debt-service costs which were already the fastest growing item of expenditure.
“It also increases the risk of sovereign credit rating downgrades to sub-investment grade,” it added.
In August, Finance Minister Nhlanhla Nene said the government was concerned that an economic downturn would make it harder to raise revenue and that it would have to look at spending curbs.
Africa's most developed economy expects a budget deficit of 3.9 percent of GDP for the 2015/2016 financial year, but is keen to limit borrowing, partly to appease ratings agencies which have downgraded emerging market peers like Brazil.
Faced with huge cost of cleaning up dieselgate, VW will cut spending on cars, technology and facilities.]]> |||
Berlin - Volkswagen will cut investment plans at its core brand by 1 billion euros (R15.3bn) a year and step up development of electric vehicles, it said on Tuesday, as it battles to cope with the fallout from its cheating of diesel emissions tests.
The German company also said it would speed up cost cutting at the VW division and put only the latest and “best environmental technology” in diesel vehicles.
Europe's largest carmaker is battling the biggest business crisis in its 78-year history after admitting last month it installed software in diesel vehicles to deceive US regulators about the true level of their toxic emissions.
The scandal has wiped about a quarter off its market value, forced out its long-time chief executive and rocked both the global car industry and the German economy.
Some analysts have said the group could ultimately face a bill of as much as 35 billion euros (R535bn) for refitting vehicles, regulatory fines, lawsuits and other costs.
WHERE WILL THEY SAVE MONEY?
Volkswagen will cut spending on models, technology and production facilities at the VW brand by 1 billion euros (R15.3bn) a year through 2019 from its previous plans, a spokesman said. He declined to say which future models and factories would be affected.
In November, Volkswagen announced 85.6 billion euros (R1.3 trillion) of investments across the group between 2015 and 2019, with half earmarked for modernising and expanding the model range.
Other brands within the group, which includes Audi, Porsche, Seat and Skoda, are working on similar efficiency-boosting programmes, the spokesman said, without giving details.
Volkswagen said last year that it planned to increase cost savings at the VW division, where profit margins lag much of the rest of the group as well as major rival Toyota, to 5 billion euros (R76.5bn) a year by 2017.
On Tuesday, the division said it would speed up those cuts and stop making the money-losing Phaeton luxury saloon, a pet project of former chairman Ferdinand Piech that has never met its original sales target of 20 000 cars a year.
The next-generation Phaeton, due to hit showrooms by about 2019-2020, will only be offered as a fully-electric vehicle, it said.
Analysts have warned Volkswagen's problems could cast a shadow over the entire diesel vehicle industry.
Although other carmakers do not appear to have used so-called defeat device software to cheat emissions tests, the scandal has highlighted differences between laboratory results and the on-road emissions of cars and vans often marketed to buyers as cleaner alternatives to using gasoline.
Tighter rules are being introduced that could hit the competitiveness of diesel vehicles. That would be a particular blow for manufacturers in Europe, where around a half of new car sales are diesels versus a small fraction in the United States.
Volkswagen said on Tuesday it would step up development of electric and plug-in hybrid cars.
The VW brand will work on a new toolkit that can be used to build compact electric passenger cars and light commercial vehicles across the group, it said.
“There is a real chance for VW to even extract something positive from the diesel fiasco,” said Stefan Bratzel, head of the Center of Automotive Management near Cologne.
“Funnelling more resources into electric mobility gives them a credible future perspective to try to overcome this crisis.”
If economic growth in South Africa this year is bad news, 2016 is set to be even worse, according to the International Monetary Fund.]]> |||
Johannesburg - If economic growth in South Africa this year is bad news, 2016 is set to be even worse, according to the International Monetary Fund.
Days before finance minister Nhlanhla Nene publishes revised growth forecasts, the Washington-based lender cut its estimatefor 2015 to 1.4 percent from 2 percent. More concerning was its projection that gross domestic product will expand just 1.3 percent next year, which would be the slowest pace since a recession in 2009.
China’s slump is hurting South Africa in two ways - curbing demand from its biggest trading partner and reducing revenue from platinum, iron ore and other metals that account for about half of the nation’s exports. With thousands of mining jobs threatened and an electricity shortage curbing output, business confidence is at a 22-year low.
“The IMF forecast is on the negative side, but I don’t think it’s necessarily far-fetched,” Johan Rossouw, group economist at Vunani Securities, said by phone from Cape Town. “We have an underlying problem on the demand side, a lack of confidence and everything that goes with that. But we also have a problem on the production side where we are not competitive enough and have capacity problems.”
The IMF’s projections are more pessimistic than those from the World Bank and South Africa’s central bank. The World Bank is forecasting GDP growth of 1.5 percent this year and 1.7 percent in 2016, while the Reserve Bank estimates 1.5 percent and 1.6 percent respectively.
Compared to previous bouts of currency depreciation, the rand’s 13 percent slide against the dollar this year has had a relatively muted effect on exports, mainly because of weak global demand and power shortages. The rand gained as much as 0.7 percent to 13.2586 per dollar on Monday.
Recession fears are also coming to the fore. While Reserve Bank Governor Lesetja Kganyago said last week he doesn’t expect GDP to contract for a second consecutive quarter in the three months through September, manufacturing output has declined in six of the first eight months of the year. The industry makes up 13 percent of the economy.
“We hope to avoid a recession, but whether we have one or not, we’ll probably still have a situation where next year will be the third year of growth being around 1.5 percent,” Elna Moolman, an economist at Macquarie Group, said by phone from Johannesburg. “That means you are not creating work and you are putting yourself in a very difficult fiscal position.”
Slower growth makes Nene’s fiscal targets more difficult to achieve. He is due to publish revised estimates in his mid-term budget on October 21 at a time when credit-rating companies scrutinize the nation’s finances for any slide away from fiscal tightening. Nene has pledged to narrow the budget deficit to 2.5 percent of GDP in the year through March 2018 from an estimated 3.9 percent this year.
“There’s immense pressure on the National Treasury right now, especially as we’re going into local government elections, and the global context which is much less supportive than before,” Peter Worthington, an economist at Barclays Africa Group’s Johannesburg-based investment-banking unit, told reporters on October 7.