27/07/2012 World Business Report

headlines. Now for the latest financial news in World Business

Hello. Welcome to the program. A chance to catch up on all the

latest in the world of business and money. Let's take a look at the

headlines. Facebook loses more friends on Wall Street as its first

financial results disappoint, sending shares plunging further.

Record quarterly profit for the world's largest mobile-phone maker.

Plus, is America's economic recovery stalling? Growth may have

weakened to its slowest pace in a We will catch up with Sharanjit

Leyl shortly and talk about those Facebook numbers. First, let's talk

US. Is America's economic recovery stalling? It is expected to show

that the world's biggest economy, growing at about 1.5%. If that is

the case, it will be the slowest pace in one year. We will hopefully

have a report on that in a while. First, we look at Samsung. It is

the world's largest maker of mobile phones, televisions, etc. It posted

record profits. Sharanjit Leyl, what do you say about this company?

It is a big one and it appears people cannot get enough of

everything Samsung! It appears they cannot get enough

in terms of its mobile phones. It was mainly due to the surge in

smartphone sales and better profits as well in its TV business. And it

has put a big smile on the face of today as they celebrate. Profits

came in at about $5.9 billion. That is about a 79% jump from one year

earlier. Samsung makes the Galaxy smartphones and that is making it

the world's biggest maker of mobile phones. It is really the strength

of the phone business that will offset the sales of TV and other

electronic devices. The biggest risk to Samsung are the painter and

issues and the various legal tussles with Apple. It is expected

to be Samsung's biggest competitor. Apple will not announce yet when

the latest iPhone will be launched. That could bring up sales of the

galaxy smartphones as well. I am sure the battle will continue.

Thank you. That was Sharanjit Leyl from Singapore.

The -- They were some of the most hotly anticipated financial results

on Wall Street for many years and it seems that Facebook has failed

to come up with the goods. In its first earnings report since its

$100 billion flotation, Facebook posted a loss of $157 million,

mainly due to one off-expenses associated with its IPO. But it was

the news about slowing growth that sent its shares tumbling.

It was the party scene at the headquarters when Mark Zuckerberg

took the company public. But with its shares down about 35%, pressure

is mounting on the young chief executive. The social network's

first set of earnings as a public company did little to calm a

sceptical Wall Street. Facebook has 955 million users worldwide and its

revenue for the last three months rose 32% from one year ago. But its

growth, particularly in the US, appears to be slowing. And this is

worrying because it makes most of its money from uses in the US and

Canada. The social network has also been played with questions about

whether it can be drought had to make money off the growing number

of people using the site on mobile devices. Facebook's IKEA was the

most anticipated since Google. But shares in technology companies have

all performed poorly. And there are concerns about growth persisting

which will be unlikely to change any time soon.

Shervin Pishevar is Managing Director of Menlo Ventures, a

venture capital firm based, like Facebook, in Menlo Park California.

He is also a Facebook shareholder. Those results, they didn't exactly

break the bank. As shareholders, you must be looking at it and think,

I bought it at $38 per share and now it is worth $24 per share?

markets are interesting. Facebook hit their numbers and those that

did and also went down. Facebook is an historic company, like Google

was. If you look at the growth of it, all of it will marvel. One of

the most outstanding thing I saw was that over 7% of the human

population is using Facebook on their mobile phones. The future of

the Facebook is on mobile. That is what I think the hope is and where

the transition, in terms of their business model, will go. They are

just experimenting with the mobile phone ads. Because they have to do

that, some critics will say. You mentioned close to 1 billion users

on Facebook but there is always the question about how the company will

generate money. How it will make $1 from all of its users. If you look

at the mobile, which has been causing a bit of a problem, because

people have been turning to Facebook on their mobile devices.

That activity has surged 67%. They have got to get in quickly! If you

think about it this way, from a logic perspective, everybody is

excited about Apple and iPhone and everything else. If you look at the

numbers of iPhones out there, it is amazing. But nobody is forcing

anyone to go to Facebook. People are engaged across hundreds of

millions of mobile phones around the world. This is just the

beginning. There innovation, that they can apply to mobile

advertising, and also to payments, is really exciting. OK. We will

keep our eyes on that. Thank you. We have to move on. I mentioned

whether America's economic recovery is stalling. We should get the

first reading of second-quarter growth numbers out soon.

Welcome to an upstate area in New York. The town could do with a lick

of paint and more new jobs. It is unlikely to get them from this

local electronics firm. It employs 35 people, making printed circuit

boards. There is a recessionary element in manufacturer in in our

products. Many of our customers buy products from the whole world. So

if there is an area that is paralysed, as far as economic

decisions and investments go, it will come back and trickle-down

through my customers. And too well floor. This bit of kit is only nine

months old and costs nearly $1 million. The boss says he probably

still would buy it now, if he had to make the choice, despite the

uncertainty of the business climate. But there are many other companies

that wouldn't take that risk. The latest figures are likely to show

that growth in the US economy has slowed from an annual rate of just

below 2% in the first quarter to 1.5% or less, between April and

June. This is the recovery of fits and starts. There are periods we

see some acceleration and growth -- in growth and activity and that

quickly gets pushed down and we see a slowdown as well. Having survived

the recession that followed the global financial crisis, this

business at least believes it can cope. This is the way life is going

to be. There will be financial debacles, different elements of

legislative gridlock and that sort of thing. Uncertainty has become

the certainty. With the eurozone in crisis and US policy-making

gridlocked for the presidential election, businesses are hankering

down, crossing their fingers and hoping for the best.

Barclays reports second quarter earnings in just over an hour. It

is still reeling from the resignations of its top executives

over the LIBOR interest rate fixing scandal. The LIBOR rate is the

interest rate that banks set and charge each other to lend and

borrow money. Apart from the $450 million in fines it has received

from US and UK regulators, what is the broader financial impact on

Barclays likely to be? Ralph Silva is a banking analyst at SRN. Before

we talk about the actual numbers, where does Barclays sit today?

is actually the biggest investment bank on a global level, where there

are bigger investment banks in the US but it is a very international

organisation. It is important for us to look at Barclays because it

gives us an idea of the international banking area. We will

talk about what we are expecting out of their numbers. But upfront

financially, we know it has cost Barclays $450 million in a fine.

But could the affair cost... Be more costly to Barclays as it moves

forward? Absolutely. It will be a ten-year period before it recovers

over the problems they have had. That period will see them lose a

massive amount of business. But they already know that. They are

making over $2.5 billion every quarter. The $400 million they are

losing is actually find. It all eyes are on the market, what will

we hear from them? I believe they will do better. That is what we

hear. Which means the investment banking business may be taking a

turn around. It will not be a massive improvement, but a slight

improvement. And even that is great at the moment. Can I quickly ask

you, while we are talking about the rate fixing scandal, 13 other banks

are currently under investigation. They range from that -- Japanese to

American. What to expect the outcome to be? They are the world's

biggest banks which is a very scary prospect. But the regulators have

slowed it down and are not doing it all at once, which is a positive

thing. We will probably hear one or two banks every quarter and it will

come up slowly. That is probably the most responsible way to do it.

Thank you. Let's take a quick look in Asia.

Asian stocks charged higher Friday after the European Central Bank's

chief vowed to save the euro chief vowed to save the euro