27/01/2016 BBC Business Live


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This is Business Live from BBC News with Ben Thompson and Sally Bundock.


No longer a hyper growth company - Apple says iPhone sales are slowing


and the next quarter will be tougher.


Live from London, that's our top story on Wednesday,


So if Apple can't rely on ever-growing sales of its iphone


or a booming market in China - what next for the tech giant?


Also in the programme: What's not to like about Facebook's


We'll explain why it's been given a thumbs down.


And shares in Tokyp soared today, ending the session 2.7% higher


with investors concentrating on central bank meetings in Japan


and the US and shaking off worries over that slumping oil price.


We'll be getting a totally different take on the world economy from a man


Professor Steve Keen will explain why he supports so-called


people's quantitative easing


As reports suggest Facebook is resisting attempts by the UK


to claim back taxes - we want to know - is it time


the treasury got tough with the tech giants.


Technology giant Apple has reported the biggest ever quarterly profit


It came in at a staggering $18.4 billion.


But while that exceeded expectations for both revenue and profit,


For the first time ever, iPhone sales are slowing


and it's directly reflecting the slowdown in China.


The company's sold 74.8 million iPhones for the quarter -


That's a big slowdown on the same time last year when sales


And it warns sales will fall for the first time later this year.


Apple's share price hit a high six months ago -


just above $132 now it's below $100 mark.


Apple's sales in Greater China - defined by the company as China,


Hong Kong and Taiwan - rose 14%, but that was much slower


He's the Global President for digital marketing company,


The money is coming in but the iPhone sales are slowing. Your


response to this news we got overnight? It is tough, isn't it? On


the one hand you've delivered record numbers, record revenue, record


profit, unbelievable margin, something like 40%, but your core


product is a product that represents the lion's share of what you sell,


68% of what you sell, that's slowing down and that's what spooked


investors in the markets. We have highlighted the sales in China. A


massive drop off, but at the same time, it is not that long ago that


Apple did the deal with China Mobile and presumably lots of people in


China got their iPhones, they are not going to upgrade quickly, are


they? They're not cheap. China is 25%, more than Europe, 25% of what


Apple sell. And remember, 68% of that is the iPhone. The challenge is


lots of consumers, lots of those consumers in China are becoming


middle-class and they have moved in and bought product and there is no


incentive for them to upgrade. The difference between the iPhone 6 and


the iPhone 6 S wasn't great. All eyes are going to be on the new


this year. There is going to have to this year. There is going to have to


be a step change in that product to persuade consumers to step out of


the iPhone 6. We are obsessing about sales figures and they are still


growing and most companies would be glad of sales figures are that


growing. You touched on it, they are waiting for their next big thing? Is


it the iPhone or something different? There is lots that Apple


can do. The iPhone has been that killer product for the last few


years. But let's think about the advances it is making in other


areas. It bought Beats. It has really interesting potential in the


head phone market, the speaker market, it is thinking about cars,


people are exciting about an operating system to control the car


and perhaps going into manufacturing cars themselves. There is lots that


Apple can do, of course. But it is that iPhone, it is that core product


that everybody is looking at. Let's remember the watch that everyone was


excited about last year. That's clustered by Apple into a category


it calls, "Other" With a few other product and other represents 6% of


total sales. So, I think, we are all looking to see what's next, whether


it will be a substantial step up in terms of the iPhone and in terms of


innovation or whether it will be a new product that we don't know about


yet. Ben, thank you very much for coming in and giving us your


thoughts on Apple. There is more on our website too about Apple


including analysis from our technology correspondents.


The share price skirting with that $100, it is worth watching to see


what happens next. Toyota has clung onto its status


as the world's top-selling carmaker The Japanese firm says it sold


nearly 10.2 million vehicles in 2015 compared to VW's 9.9 million


and Gm's 9.8 million. Toyota, which also makes the Prius


hybrid and Lexus luxury models, has forecast sales at 10.1


million vehicles this year. Profits are up - slightly -


at the eurozone's biggest bank, It's posted a 0.3% rise


in fourth-quarter profits boosted by better than expected


lending income. The Spanish bank, which makes


the biggest portion of its profits in the UK and Brazil,


said that income came in at $8.6 It is the big lenders that are


moving markets in London today. The FTSE 100 being dragged down by Royal


Bank of Scotland. RBS shares down over 4%. It had a lot of things to


say, didn't it? Really putting their house in order. RBS is owned by the


UK taxpayer after the bail out at the height of the financial crisis.


Well, today more provisions. Provisions for its pension fund and


provisions for mis-selling of payment protection insurance, that


scandal that rumbles on and on. The US mortgage drama of 2008 is hitting


Royal Bank of Scotland. There you could see the Chief Executive. Also


on the BBC live page, other stories as well. It is looking at the


iPhone, of course. It says it is the most expensive smartphone in the


world. Interesting Apple sales in India went up by 76% in the quarter,


but many are asking how many people in India, ie the mass market in


India can actually afford one of these phones?


Hot on the heels of Apple, we will get an update from Facebook later


today and one of the company's key projects is providing free internet


access to people who haven't been able to afford it.


But critics say it goes against the principal of so-called


net neutrality and India's telecom regulator has stopped it for now.


Simon Atkinson is live for us in Delhi.


S Bring us up-to-date on the day that Facebook releases its earnings.


That's right. In the past year or so, Facebook has been on something


of a charm offensive really, trying to launch its free basics programme


here in India. This is something which exists in about three dozen


countries already. It has been introduced without too much


controversy, but here that hasn't been the case. There has been


protest in the big tech cities and the big comedy troop as well led a


protest against it. Now we are in a situation where India's telecom


regulator ordered the provider of the service, who Facebook tied up


with, to suspend it. Free basics isn't available in India. So what do


you think will happen next? Well, I think to be honest, we will expect


more of these charm offensive. Mark zuker burg has been in India. He has


been meeting the Prime Minister and he makes the point, he says, that


getting millions more people on to the internet is important to help


lift people out of poverty, but he has got his back against the wall


because of the strength of protest there has been from campaigners who


say that free basics goes against net neutrality, the idea that every


website should be accessible for the same price at the same speed and it


is all going to come down to the telecoms regulator. It is consulting


on it, we will get a verdict on what it is going to allow to happen in


the next few months, but it is a big market. India, lots of growing


internet users and one that Facebook is keen to increase its presence.


Simon, good stuff, thank you very much. Simon Atkinson for us in


Delhi. Shares in Tokyo ended up 2.7% today


with the focus firmly on central banks meetings


in Japan and the US - Stocks were higher yesterday too -


after oil staged another comeback, RBS dragging shares lower in London


- they're down more than 4% as it announces major clean-up plan


and puts more money aside for PPI Michelle Fleury has


the details in NY. America's Central Bank wraps up its


first policy making meeting of 2016 with the release of its statement


later this Wednesday. No one expects a change in interest rates, but what


will officials say about the future? Is the Fed still on track to raise


rates four times this year? Or will they use the statement as a chance


to reassess the US economy, given the rough start to this year? More


evidence, of course, on the health of the economy, will come on Friday


with the release of the latest growth figures, but until then,


there is plenty of corporate news. Social media giant, Facebook,


releases its fourth quarter profits as well as the usual focus on its


monthly active users, watch out for any updates on how much time people


are spending watching videos on the site. This is because it is a


potential area for advertising growth and therefore, a future


profits source. Some other big names reporting also include Beauing,


PayPal and eBay. Joining us is Colin McLean,


managing director at fund managers Good morning. Good morning. So there


is quite a bit going on. We've got big names in the world of business


reporting their earnings and telling us how they're doing. The Americans


companies are interesting with the strength of the dollar and the other


issues going on and the meetings of Central Bank. Your thoughts. Well, I


think we've since the Fed raised rates, we have had a lot of cooling


of the global economy. I don't think there is any appetite for doing more


just now. I don't think the market is worried about that, but some of


the company earnings show they are facing head winds. There is low


inflation, there is disinflation, slowing growth, so the biggest


companies, that get the headlines are generally struggling a bit,


yeah. It is interesting when you look at what the investors are


thinking about about the market. It is the old adage, spot something


signe and they get focussed. There is no consistency really in their


response and certainly what they are interested in hearing? Very often


when markets are turbulent, you know, volatile just now, people try


and correlate particular announcements, but as we saw in


2008, there is something else bubbling underneath, it was


sub-prime and other things going on, and bubbling under we have got this


US company debt, the corporate credit market and some of the debt


funds, the disinflation, there are things not in the headlines and they


are bubbling under. For the viewers thinking what does that mean?


Explain why it is a concern. In the US we're seeing a company borrowing


rates likely to increase and it is because some of the lending has gone


into energy firms. Ones that are being hit by all this shale oil


collapse. One or two of the businesses that are linked to


commodities are suffering and the lenders into that are suffering too


and that's the linkage into financials. Interesting. Thank you


for sharing that and Colin will return in five minutes to talk us


through some other stories out there in the press today.


Still to come: We meet the rebel economist who says we shouldn't be


pumping money into the financial system but into our pockets instead.


Professor Steve Keen tells us why austerity is wrong and why


quantitative easing for the people and giving ourselves a financial


bail out is the only way to kick start the economy.


You're with Business Live from BBC News


The story regarding Royal Bank of Scotland. It has announced a major


clean-up plan and put aside more money for PPI mis-selling and


scandal and bad debts. The Chief Executive says he is determined to


put the issues of the past behind them. Kamal Ahmed has the details.


Kamal flesh this out for us. What are the details we have of the many


announcements made by RBS this morning? It is remarkable that so


long after the 2008 financial crisis, the Royal Bank of Scotland


is still announcing some of those legacy issues. Two big numbers we


need to focus on. One is they are provisioning billions of pounds more


to deal with problems they have in America connected to mortgage-backed


securities. They are facing lots of legal actions there. The other


number is payment protection insurance, Mr selling here in the


United Kingdom. They have provisioned another 500 million for


that. There are another couple of bits in this clean-up operation. One


is around the pensions deficit, PPI has a huge pensions deficit. It will


accelerate its payments into its pensions fund to try to sort some of


that out. Also, it has written down the value of its private bank


Coutt's in the UK. It is writing down the value of that private bank


in the UK, which is not performing at the same value it once was. Quite


the big clean-up by Ross McEwen in preparation, at some point, for some


sort of major stake sale by the government. What does this mean for


that major sale? It is going to be slow and steady and probably


delayed. Let's look at the share price this morning. It has come down


a few pence. The government sold a 5% stake here when the share prices


went down by quite a lot more since then. It is now right down here.


What is called to be in price, the Price paid by the government, it is


now ?2 57. Long way off what government pay. A sale will be slow


and steady and over a number of years. The notion of a retail sold


to the general public, I think, is a long way off. Thank you very much.


We are following this story. Qatar is ready to back the new Sainsbury's


bid. The deadline is looming. Our top story: US tech giant Apple


says iPhone sales are slowing and the next quarter


will be tougher. Full details of that story on our


website. Ever heard the phrase


"rebel economist"? And he's got a very different take


on the global economy. Professor Steve Keen claims


that mainstream economic theory is not only uncomfortable


to hear, but just plain wrong. and what he sees as a misguided


policy of austerity - on a misunderstanding


of the role of banks, governments and money


play in our society. And his slogan -


"Quantitative Easing for the people" He suggests creating money


but instead of pumping it into the financial system,


giving it to individuals instead. Alice Baxter has been


speaking with him, and started by asking him


to explain his assumption that all banks, and most importantly


central banks, have the ability The funny thing is, the laymen


are closer to knowing what reality is like than mainstream economists,


because the ironic reality is that, back in the 19th century,


mainstream economists thought they could model capitalism


as if it is a barter system, Economists assume that


banks just play a role They stand between somebody


who is a saver and somebody They then enable the exchange


to take place and they charge a fee Banks have not, and


virtually never, do that. They create money by doing lending


and they create additional demand. The mainstream continues to pretend,


and is quite indignant when I say And it is also these high levels


of private debt, relative to GDP, In global terms, we're


at the highest level of private debt, compared to GDP,


in the history of humanity. When it comes to the role


of the banks particularly, you describe yourself as a rebel,


and yet, in its quarterly report in the first quarter of 2014,


the Bank of England So why do you think mainstream


economists, the likes of Joe Stiglitz and Ben Bernanke,


the former Fed chief, why have they got it so wrong


and why have institutions like the Bank of England not pointed


this out more vociferously? I take my hat off to


the Bank of England. They stick their necks out,


virtually write a letter to the economic profession saying,


you've got it wrong, guys. It has got past the point


where it is an academic job. -- It has got past the point


where it is an academic joke. This is a large part of why


we are still on the slump. Looking to the UK, how should


we reduce the private debt burden How do we get around


the paradox of thrift? What you would have to do is use


this capacity of the one other institution in a society


which can create money, Rather than putting money


in the hands of the pension funds and insurance companies,


which is what they are doing now, rather than that, if you actually


made a direct injection into people's bank accounts,


irrespective of whether they were a saver or a debtor personally,


and then require the debtors to pay their debts down


while the savers continue with the cash injection,


that could enable us to cancel some of the debt created money,


make it government backed, So converting quantitative easing


as we've known it in this country since March 2009 into people's


quantitative easing, We are living in an age of austerity


right across Europe. We've been told by the Chancellor,


George Osborne, that we must turn the government's deficit


into a surplus in order It just drives me barmy that this


is put across as wisdom. Fundamentally, the government


is another form of bank. If the government runs a surplus,


that's like a bank that takes in more in repayments every year


than it makes out of loans, which means the money


supply shrinks. What you are saying by saying


the government is running a surplus, you are saying it's a really good


idea for the government to destroy That will make the economy


grow really well. It will either force individuals


to go to borrow from banks themselves instead, or it means


you have a collapse in demand. Or you've got to have a huge export


surplus and it's some time By the end of 2017, the UK


is scheduled to host The Prime Minister says he wants


to stay within a reformed European Union, but in your opinion,


when the time comes, should we vote for


or against a Brexit? The best thing England did


was not join the euro. It makes it less significant is not


to be in the European Union than it would be if they had


taken on the euro. Someone has to leave to wake


the Brussels beaurocrats up, to make them realise they have


created Frankenstein's monster. I'm tossing a coin to decide


which way I vote. The self titled global economist,


speaking to Alex. Interesting stuff, especially when it comes to Brexit.


The debate goes on and on. We have weeks and months for that to come.


What other business stories has the media been taking


Colin McLean, managing director at fund managers SVM


Asset Management, is joining us again to discuss.


Let's talk about Facebook. This is another story that is grabbing


attention. Facebook requests -- resists UK backpacks. This will


heighten the mood against Facebook heighten the mood against Facebook


in the UK. They are not willing to make any public concessions until


they have such is out privately. I would be surprised if they don't


agree the same sort of settlement we have already seen. It would possibly


be a small amount because Facebook has not been as profitable as long


as Google. I think there will be some settlement. It will come back


to how much they managed to claim. That is the issue. The Treasury was


hailing this Google deal as a great deal and a landmark deal, and when


people crunched the numbers, it turned out they would pay two or 3%


tax, rather than the standard rate. It is about getting a level right


and that it is seen to be fair. When you are asking was concessions from


companies, it is difficult to force them into big sums. You have to


remember the UK is quite a winner out of this low tax regime. We have


other international companies here you are paying less tax. It is


swings and roundabouts. We're losing for the text giants -- tech giants,


but winning for others. We ask your thoughts on this. Thank you. We have


been fairly vocal. For Greece says, yes, the UK should be much tougher


with those who are evading tax and tech giants should be more


cooperative. We have TV news in the dock. This is a viewer who is


watching in Geneva, who says, yes, governments need to collect these


taxes. They are playing one country's rebate against another's.


If not, it will be a taxpayer. That debate will go on and on like PPI.


Let's look at List now. It is like Uber. They will give people $12.5


million in compensation. -- 12 .25. It is not so much these back


payments, but once you are employed, you have to get a lot of other


rights, all the social rights, ranging from the holidays,


maternity, everything else. There is a real risk for Uber and four Lift.


They will have to treat their employee is differently. We talk


about rise of the robots. I love the phrasing in this article. Lift has


agreed to pay them 12.25 million dollars, given certain benefits, and


warned them when they are about to be deactivated. This means they will


no longer be required, they are deactivated, not fired, not let go,


not laid off. It is this automation of the industry that many find so


staggering. It shows what it must be like working for some of these


companies. Deactivation. UK property boom is bigger than the 2007 housing


bubble in the US. This is talking about concern about the buy to let


industry. Bigger measure by the appreciation we have seen over the


last 20 years, but was not absolutely bigger in size. The


government wants to cool down the buy to let area, which is one area


overheating in the UK economy. They can possibly stimulate other areas


will stop this is not an aim to cool the overall economy, but to prick


one bubble that is developing. We shall see if they manage to do this.


Thank you for coming in. Thank you, too, for your company, as


well. We will be back again tomorrow.


See you then. Goodbye.


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