08/07/2014 World Business Report

Samsung warns of falling profit as smartphone sales slide. Welcome. I

am Sally undocked. Also in the programme will look at the jobs

crisis that is deepening in France. But first it is shaping up to be one

of the biggest scandals that has rocked the world of football.

Tickets intended for and officials being illegally resold for vast

profits. Late Monday the chief executive of Match Hospitality, the

firm in charge of selling World Cup ticket packages, was arrested by

Brazilian police. That follows the 11 arrests last week and police say

more arrests could follow. The nephew of FIFAposmack chairman is

being investigated. Matchboxes are being charged with illegal ticket

touting and conspiracy. They could face up to four years in prison. Our

correspondence has the details. British national Ray Whelan being

unceremoniously detained Rio de Janeiro's Copacabana Palace Hotel.

The city's most prominent address where top officials of FIFA are

staying for the World Cup. He is a senior executive in one of FIFA's

official business partners. He is being questioned over his links to a

gang running a World Cup ticket scam. They are thought to have been

operating for the last four World Cups, obtaining and selling as many

as 1000 tickets per match. Prosecutors said they could have

made as much of $90 million this tournament alone. For several days,

Brazilian police insisted someone from close to or inside FIFA must

have been involved. Because of the number of VIP and hospitality

tickets being made available. TRANSLATION: The crimes are the

distribution of tickets to be sold by touts. It has a penalty of four

years in prison. And criminal association. FIFA has insisted its

high`tech name the ticketing policy makes swapping all reselling almost

impossible. But as the tournament nears its climax, the demand for

blackmarket tickets and the opportunity for criminal gangs to

make vast profits is huge. Samsung says profits shrank by one

quarter in recent months. Sales of smartphones fell in the three months

to the end of June. Ricoh he is on is in Singapore, lovely to have you

back. Tell us about Samsung. This is not good news.

Absolutely. It is facing three key problems. Sales are impacted by the

proliferation of cheaper Chinese smart phones. And the South Korean

currency has been strong against volume and low margin handsets. The

Chinese are making major inroads. Investors don't seem to be worried

because Samsung's stock price is up slightly as the company cautiously

expects a more positive outlet in `` outlook.

In France there is a crisis summit on jobs. The number of people out of

work is 3.4 million, a record high. The President is urging union bosses

to meet him to reach an agreement on cuts in conditions. The union wants

guarantees that business tax cuts will be used to create 500,000 new

jobs. I am joined by the head of strategy at the bank CIBC. Tell us

about the stalemate. This is not a good thing because France is seen as

an uncompetitive economy because of the strict labour laws? Absolutely.

Going back to the turn of the century the Germans were in a

similar situation. A number of changes to improve productivity,

lower labour costs and that allowed them to create their economy and

drive employment. The French labour market still regulated highly. The

government is trying to ease the restrictions. Talking about tax

credits in order to allow and encourage employers to add something

like 500,000 jobs. The question is whether the cuts can be

implemented. The difficulty, if trade unions are not willing to be

involved in the conversation then it is hard to move forward? It is. That

is where the stalemate comes in. The trade unions want to say they want

to make sure employment responsibilities are maintained. The

stalemate, the employers will not take on extra work if they feel it

is difficult to fire the workers if times become hard. That becomes the

inherent stalemate. The French government needs to break the logjam

because they need to encourage more employment to bring down the

problem. The President came into power saying he would definitely

increase growth in the French economy. He has got a socialist

background and I would imagine the labour unions would feel he is more

of an ear to them as opposed to eight Nicolas Sarkozy government,

for example. You would imagine the unions were hopeful that when he

came to power there would be a policy plan encouraging the them. He

needs to break the logjam, he needs to go against his political

orthodoxy. You need to deal with these restrictions in the first

instance and that is a difficult scenario to break through. Thank you

for your perspective. We are keeping an eye on how things go in France.

Another story that involves France, more travel disruption and head for

anyone hoping to use the Eurostar or shuttle services today. The 50

kilometre tunnel will partly reopen today at a number of services have

been cancelled. Eurotunnel says it is working to repair problems with

overhead cables that caused the breakdown of a train on Monday,

stranding dozens of passengers. If you are travelling on the tunnel

check before you set off. The Vatican bank gives its annual

performance report on Tuesday. It is under investigation for a number of

scandals. The Church is expected to announce sweeping reforms, closing

the investment arm and turning it into a much smaller institution. A

French businessman is expected to be appointed as the new chief.

Global markets are starting to get a little worried about when interest

rates in the US will start to go up. Since the latest jobs news was

released there is concern rates might go up. What will the new

earnings season tell us about the health of the economy in the US?

The balls are back on Wall Street. US stocks are at record highs and

investors are optimistic. The next test is the second quarter

earnings, when companies report profits and revenue. Strong

corporate numbers could push stocks even higher. Can America's chief

executives satisfy Wall Street? I think the earnings were going to

ramp up in the third and fourth quarter. Earnings for the S 500

index are expected to rise by 4.9% in the second quarter. Cutting costs

is one way companies have been able to maintain profit margins.

Improvements in Europe are also thought to have lifted. For others,

a rise in the dollar has been a hindrance. As those here who have

witnessed it, the Dow and the S 500 have lifted. Strong corporate

earnings could reinforce this. But there is a danger that if they

failed to live up to expectation, optimism of investors could be

dashed. It is a busy day ahead. Alcoa

earnings and also German trade figures, UK industrial figures as

well. In terms of how things are going in Asia, the markets have

dropped a little. We have a stronger yen today versus the US dollar. That

is because of concern US interest rates could go up sooner than we

might like. That is to close in the United States.

That is all from World Business Report, I will see you soon.

Many thanks to Sally for that. We will look at the papers in a moment

but first, a committee of MPs is calling for a public enquiry for the

safety of offshore helicopter flights. A creeping complacency may

be affecting safety standards. Our