:00:08. > :00:10.This is Business Live from BBC News with Ben Thompson
:00:11. > :00:17.After years of awesome growth and bumper sales,
:00:18. > :00:23.sales of its biggest earner, the iPhone are falling.
:00:24. > :00:27.Live from London, that's our top story today, Wednesday,
:00:28. > :00:40.The iPhone is the most profitable product in history but as sales slip
:00:41. > :00:42.for the first time ever, we'll assess what lies
:00:43. > :00:53.Top bosses are expected to resign after after the car maker admits
:00:54. > :00:58.using inaccurate fuel data for 25 years.
:00:59. > :01:04.They are now down more than 50% since the crisis began.
:01:05. > :01:06.Elsewhere this is how markets are looking ahead of interest rate
:01:07. > :01:16.How do you justify selling a pair of beach shorts
:01:17. > :01:29.And what happens if celebs you don't want to see wearing them,
:01:30. > :01:37.We ask the boss of swimwear brand Vilebrequin.
:01:38. > :01:40.And as Apple reports that fall in iPhone sales we want to know -
:01:41. > :01:42.are you upgrading your smartphone less these days?
:01:43. > :01:44.Are you making your old one last longer?
:01:45. > :01:57.An Australian with French pronunciation! We will make more
:01:58. > :02:00.about that later! It is the most valuable
:02:01. > :02:06.company in the world, Last night it gave us an update
:02:07. > :02:11.on sales and profits for the first And as many predicted,
:02:12. > :02:15.sales of the iPhone were down. The technology giant reported
:02:16. > :02:19.a revenues of $50.6 billion - It's a fall of 13%
:02:20. > :02:31.on the same period last year. And it was sales of it's flagship
:02:32. > :02:34.product, the iPhone, They dropped more than 16% compared
:02:35. > :02:38.to the same time last year. And that's vital because Apple makes
:02:39. > :02:40.nearly 70% of its profits from the iphone
:02:41. > :02:45.as Dave Lee explains. With me is our technology
:02:46. > :02:53.correspondent, Rory Cellan-Jones. Apple, I mean let's start with it.
:02:54. > :02:58.The numbers came out, confirmed what you and I were talking about
:02:59. > :03:05.yesterday. We were right, weren't we? We were spot on. For the iPhone
:03:06. > :03:09.sales, this is a story, the world is saturated with the smartphones now?
:03:10. > :03:15.2007, Steve Jobs unveils the first iPhone. It has gone on to be the
:03:16. > :03:18.most extraordinarily profitable product in history. I was trying to
:03:19. > :03:24.think the other day what's made more profit? The jumbo jet or Coke? One
:03:25. > :03:28.single product and it has gone higher and higher every year. This
:03:29. > :03:34.quarter they were comparing with last year was an amazing quarter in
:03:35. > :03:39.2015. They got this new bigger iPhone, they do a release a year and
:03:40. > :03:44.one year, it is a brand-new model and the next year it is a tweaked
:03:45. > :03:52.one. Last year was the brand-new one, the iPhone 6 S, this year it is
:03:53. > :03:55.the iPhone 6 last year and iPhone 6S this year and it was all about China
:03:56. > :03:59.where people were going mad for this thing. So it is against that
:04:00. > :04:04.background, but I think it is worrying because the figure, the
:04:05. > :04:09.drop between this year and last, 10 million fewer iPhones sold. So much
:04:10. > :04:12.depending on this and no clear route really to the future in terms of
:04:13. > :04:17.another blockbuster product to replace it. In a nutshell, some will
:04:18. > :04:21.say Apple's big problem is the fact that it needs to come out with a new
:04:22. > :04:25.product that is going to knock our socks off and it hasn't, Apple
:04:26. > :04:30.hasn't done that since Steve Jobs passed away? That's true and every
:04:31. > :04:33.time people said, oh, dear this is not going too well, they have not
:04:34. > :04:37.got a new product, they have managed to squeeze more and more profits out
:04:38. > :04:43.of the iPhone. The big question is has that growth finally come to an
:04:44. > :04:48.end? There is talk of other blockbuster products, there is talk
:04:49. > :04:52.of a car, but that would be a long time away and that's an incredibly
:04:53. > :04:57.ambitious product. People are getting to point of saying I'm not
:04:58. > :05:00.going to hand over $600, $700 for a phone, yes, they are smartphones,
:05:01. > :05:03.they do more things now, but there are more alternatives out there that
:05:04. > :05:08.do the same thing and unless they come out with a killer app or a
:05:09. > :05:11.killer bit of tech on that phone, people are less willing to hand over
:05:12. > :05:15.so much money? I'm not sure that's true. A lot of people are willing to
:05:16. > :05:19.hand over that sort of money. The market has stopped growing. The
:05:20. > :05:24.overall smartphone market is a bit static at the moment. It maybe just
:05:25. > :05:28.getting to the point of saturation. So that means, you know, you have
:05:29. > :05:32.got to tweak things and give people something new. Some reason to
:05:33. > :05:35.upgrade and Apple will be looking to September when it will launch an
:05:36. > :05:39.iPhone 7 which will look different and they will be hoping that really
:05:40. > :05:45.does the trick. OK. Rory, I'm sure we will speak to you again about
:05:46. > :05:47.this! Rory's is so much bigger than mine. It is not about size, Aaron.
:05:48. > :05:50.There we go, thank you. Twitter's latest earnings have
:05:51. > :05:52.disappointed investors, coming in below expectations
:05:53. > :05:54.as the firm struggles with weak Twitter said it had 310 million
:05:55. > :05:58.monthly users in the first quarter and revenues came
:05:59. > :06:00.in at $595 million, Shares in Twitter slumped 13.6%
:06:01. > :06:09.on that news. A strike over pay at airports
:06:10. > :06:12.in Germany is likely to cause Lufthansa, Germany's largest
:06:13. > :06:15.carrier, has already cancelled nearly 900 flights at airports
:06:16. > :06:23.including Frankfurt and Munich. The strike by workers
:06:24. > :06:25.including ground services, security checks, fire
:06:26. > :06:28.fighting and check-in staff, is likely to severely limit
:06:29. > :06:47.operations at German airports. Getty Images says it will file a
:06:48. > :06:51.lawsuit against Google. Getty argues that changes to Google's picture
:06:52. > :06:53.search promotes piracy and gives the tech giant unfair advantages in
:06:54. > :06:56.traffic and advertising. The company has in the past dismissed
:06:57. > :07:07.allegations that it used its dominant position to stifle
:07:08. > :07:10.competition. I call it the massacre at Mitsubishi
:07:11. > :07:15.Motors. The Mitsubishi Motors
:07:16. > :07:16.saga continues. Yesterday, we brought
:07:17. > :07:21.you the breaking news that the company admitted errors
:07:22. > :07:23.going back 25 years. Last week, it admitted to falsifying
:07:24. > :07:25.fuel efficiency numbers Investors are not pleased -
:07:26. > :07:29.shares fell another 2% today - but since the news was made public
:07:30. > :07:32.last week, the company's value Tim McDonald is in our
:07:33. > :07:37.Asia Business Hub in Singapore. Tim, that fall from grace really is
:07:38. > :07:40.staggering and one that will be felt particularly keenly amongst the
:07:41. > :07:44.bosses who we now expect will face tough decisions about their future?
:07:45. > :07:49.Yeah, they certainly will. Mitsubishi closed down again and it
:07:50. > :07:52.is only 2.8% which, you know, isn't bad considering the week they have
:07:53. > :07:58.had, but of course, that comes as you mentioned on a huge drop-out, a
:07:59. > :08:02.lost half its value over the past week or so. The Japanese media is
:08:03. > :08:06.reporting the company's top two executives are likely to step down
:08:07. > :08:09.over the scandal. Reportedly after its results are issued and that's
:08:10. > :08:13.due to happen any minute now. So we will keep an eye on that. The issue
:08:14. > :08:17.company's admissions that it cheat company's admissions that it cheat
:08:18. > :08:20.on its full efficiency data. Mitsubishi admitted that could have
:08:21. > :08:26.been going on for a quarter of a century. This noncompliant data as
:08:27. > :08:30.it terms it. It is not the first time Mitsubishi has been in trouble.
:08:31. > :08:34.About a decade ago it survived a defect cover-up scandal through
:08:35. > :08:37.albail out by its sister companies. Mitsubishi is a huge con Great
:08:38. > :08:40.Ormond Street Hospital lat and cars are just one part of the business so
:08:41. > :08:44.we will see if this time around, if there is any appetite to bail
:08:45. > :08:48.Mitsubishi Motors out a second time. Yeah, that's the big question, Tim.
:08:49. > :08:54.We will follow that story closely. We will be back with you when there
:08:55. > :08:58.is more. Tim McDonald in Singapore. Japanese stocks, falling again. A
:08:59. > :09:02.third straight day after disappointing corporate earnings and
:09:03. > :09:06.the uncertainty over whether the Bank of Japan will deliver further
:09:07. > :09:10.stimulus at the policy meeting this week.
:09:11. > :09:13.In the US - that's how Wall Street closed -
:09:14. > :09:16.with Apple and Twitter both disappointing with latest results.
:09:17. > :09:19.Incidentally, Apple shares were down 8% in after hours trading,
:09:20. > :09:23.erasing a whopping $46 billion off its value.
:09:24. > :09:31.European markets lower at the open after that weak lead from the US.
:09:32. > :09:33.They'll be looking ahead to that gathering of US policy-makers
:09:34. > :09:40.But it's Facebook that's in the spotlight stateside today -
:09:41. > :09:48.Facebook reports its results on Wednesday and expectations are high.
:09:49. > :09:53.We often talk about a slowing growth in its user numbers in the United
:09:54. > :09:58.States, but the company has been looking to emerging markets for more
:09:59. > :10:05.new users and digital and mobile spending is still in high demand
:10:06. > :10:09.especially video across Facebook and Instagram will be monitoring how
:10:10. > :10:14.much mobile accounted for its revenue. Last quarter it was 80% and
:10:15. > :10:17.it is expected to have risen and markets will be monitoring the
:10:18. > :10:21.Federal Reserve's monetary policy decision. The cost of borrowing.
:10:22. > :10:25.Interest rates are expected to be kept on hold, but the Fed might be
:10:26. > :10:29.more upbeat on the economic outlook which might give us a few more hints
:10:30. > :10:34.as to when they might raise the interest rates again.
:10:35. > :10:39.Richard Dunbar, Investment Director at Aberdeen Asset Management.
:10:40. > :10:46.Let's get cracking. The Bank of Japan. Let's start with that. There
:10:47. > :10:50.is huge expectation that they're going, they need to do something,
:10:51. > :10:54.right? There is big expectation. The growth numbers out of Japan have
:10:55. > :10:59.continually been poor for the last 20 years. They have pulled every
:11:00. > :11:02.scarks lever possible and the expectation is they will do more in
:11:03. > :11:06.their version of quantitative easing and possibly more on fiscal policy,
:11:07. > :11:10.taxation policy to really get that economy motoring, but they have
:11:11. > :11:15.tried virtually everything so far... There is no sense that what they
:11:16. > :11:19.have tried, all the arrows, haven't really worked? Well, the first arrow
:11:20. > :11:23.was monetary policy, the quantitative easing, the second
:11:24. > :11:27.arrow was fiscal policy trying to put more money into people's pockets
:11:28. > :11:32.and the third arrow was restructuring and that economy is in
:11:33. > :11:38.need of restructuring, we have seen some evidence of that, but not
:11:39. > :11:42.enough to get the economy motoring. No exchange expected at the Fed
:11:43. > :11:46.regarding rates, but there is no press conference today? There is
:11:47. > :11:49.just a press release, as ever, we will pour over every word of that
:11:50. > :11:54.press release. The phrase we will study today wrth is the balance of
:11:55. > :11:59.risk? Is the economy running too hot or too cold?" They Do they need to
:12:00. > :12:06.put interest rates up? Good stuff. I know you'll talk us through the
:12:07. > :12:09.papers, but for now, thank you. Let's look at our Business Live
:12:10. > :12:16.page. It is a crack website. Check it out!
:12:17. > :12:23.I know we've already mentioned this. You and I will chat and let the
:12:24. > :12:34.camera do its thing. If you are planning of flying
:12:35. > :12:42.Lufthansa check out the website. They have cancelled 900 flights.
:12:43. > :12:49.This is more the airport side. Lufthansa Had one strike after
:12:50. > :12:53.another. This could be significant. 900 flights and 60% of their daily
:12:54. > :12:59.typical traffic. This time, it involves all sorts of other workers
:13:00. > :13:03.including ground staff, security, and bags, check-in staff and that
:13:04. > :13:06.will have a severe knock-on effect across the rest of the week. If
:13:07. > :13:11.you're travelling today, make sure you check where you are going. We
:13:12. > :13:18.put out the question on Twitter about upgrading, do you upgrade less
:13:19. > :13:21.now? Can James has written in. He says, "Mobile contracts are now for
:13:22. > :13:26.at least two years. I once upgraded every year and then 18 months and
:13:27. > :13:34.now it is every two years." This one says, "I made a rule only to upgrade
:13:35. > :13:39.my equipment when the new stuff does something my old stuff does not." It
:13:40. > :13:41.is coming up with something that new that makes people to part with their
:13:42. > :13:45.cash. The boss of swimwear firm
:13:46. > :13:48.Vilebrequin tells us why paying $200 for a pair of swim shorts
:13:49. > :13:50.is an investment. You're with Business
:13:51. > :13:54.Live from BBC News. If Britain left the EU
:13:55. > :14:00.in its referendum in June, would it lead to an unravelling
:14:01. > :14:03.of the entire European Union? But one man knows what it's
:14:04. > :14:09.like to be at the centre Jose Manuel Barroso -
:14:10. > :14:16.the 11th President of the European Commission -
:14:17. > :14:19.in the top job between 2004 to 2014 - at the height of
:14:20. > :14:22.the financial crisis. This week he's in the UK and has
:14:23. > :14:25.been talking to the BBC. So what would happen
:14:26. > :14:38.if the UK voted for Brexit? It is difficult to predict all the
:14:39. > :14:42.consequences, but certainly the consequences would not be good,
:14:43. > :14:48.because Britain is one of the most important countries in the world,
:14:49. > :14:50.and if such an important country leaves the European Union, it will
:14:51. > :14:52.be detrimental for Europe, and it would be good news for those who do
:14:53. > :14:58.not like Europe who are also not not like Europe who are also not
:14:59. > :15:02.great admirers of Britain, because they like to see a weaker Europe and
:15:03. > :15:09.probably also a weaker United Kingdom. So that is why I think
:15:10. > :15:15.there would be consequences. There are difficult to anticipate at this
:15:16. > :15:18.moment, but certainly it would be negative from a European point of
:15:19. > :15:20.view. The big boss of the European Union. Let's talk about Barclays
:15:21. > :15:22.Bank! Barclays Bank has reported a 25%
:15:23. > :15:25.slump in pre-tax profits for the three months to the end
:15:26. > :15:28.of March to ?793 million from The bank took a bit of a beating
:15:29. > :15:36.in the quarter, as have many of its US rivals as profit
:15:37. > :15:38.from investment banking operations Home Retail Group,
:15:39. > :15:47.the owner of Argos, has made a full-year
:15:48. > :15:49.loss of ?804 million relating to the proposed
:15:50. > :15:52.takeover by Sainsbury's. Earlier this year, supermarket
:15:53. > :15:55.Sainsbury's struck a deal to acquire Argos for ?1.4 billion,
:15:56. > :15:58.and the deal is expected to be Sales at Argos came in flat,
:15:59. > :16:11.and fell 3% at Homebase. A quick reminder you can get all the
:16:12. > :16:15.other detail that you might need on the tablet, including more there on
:16:16. > :16:19.the Argos story making that loss, but also we have had news this
:16:20. > :16:21.morning about the promotions in supermarkets and the indications
:16:22. > :16:25.they have about whether they are misleading to customers. The
:16:26. > :16:38.regulator says that they are. ASDA vows to change.
:16:39. > :16:41.Our top story: After years of record growth, sales
:16:42. > :16:48.of Apple's biggest earner, the iPhone, are falling.
:16:49. > :16:53.They have also been falling in China, but they will be launching
:16:54. > :16:55.new products and are hoping to get more of us to part with our cash to
:16:56. > :16:57.buy them. And now, how do you convince
:16:58. > :17:00.customers to pay more than $200 The French brand Vilebrequin was set
:17:01. > :17:05.up in 1971 and specialises in luxury swimwear, with some of its items
:17:06. > :17:11.selling for thousands of dollars. It has 185 outlets worldwide,
:17:12. > :17:17.with its biggest markets being France, the US
:17:18. > :17:18.and the Caribbean. Its chief executive is Roland
:17:19. > :17:25.Herlory. After a career at luxury firm
:17:26. > :17:28.Hermes, he was persuaded to take But on one condition -
:17:29. > :17:35.that he could live and work from his Caribbean home
:17:36. > :17:37.on the island of St Barts. I caught up with him and asked
:17:38. > :17:54.what persuaded him to make the move. I joined the company because of him,
:17:55. > :17:58.and because I love the brand. I have been wearing Vilebrequin since I was
:17:59. > :18:06.18, by birthday gift when I was 18 was a pair of swim shorts. I spent
:18:07. > :18:11.my holiday in St Tropez as a kid, so Vilebrequin was part of my holidays.
:18:12. > :18:16.You are based in Saint Barts. You have design and manufacturer in
:18:17. > :18:21.France, offices in Geneva, how does that work? The only place I can work
:18:22. > :18:26.as the plane, the taxi on the lounge and the airport, so my office is
:18:27. > :18:34.already in that precisely patient. When I am physically in the office,
:18:35. > :18:40.it is GoToMeeting is, meeting the people,, explaining my job, I do it
:18:41. > :18:47.with the computer, the iPhone, wherever I am. In a very short time,
:18:48. > :18:52.you are from Hong Kong to New York, to Buenos Aires in Paris, so
:18:53. > :19:02.suddenly you are complete vision of what is happening in the world. It
:19:03. > :19:05.is very impressive not to listen, but to feel what is happening in all
:19:06. > :19:12.these parts of the world, and perhaps the biggest lesson in the
:19:13. > :19:14.world is that it is deeply diverse, that is the biggest lesson I have
:19:15. > :19:19.learned from all these years travelling. Every place is
:19:20. > :19:22.different, the people are different, the way of approaching life is
:19:23. > :19:27.different, the way of approaching business is different. This
:19:28. > :19:33.diversity for me is the biggest richness of our civilisation. Do you
:19:34. > :19:36.ever wake up in a morning in your house and think, I don't want to get
:19:37. > :19:42.on that plane, I don't want to go to another meeting? I never want to
:19:43. > :19:47.take a plane, I never want to leave, the moment I sit in a plane, I
:19:48. > :19:54.discover something different. You sell shorts for ?150. What would
:19:55. > :19:59.convince me to pay ?150 for what is essentially a pair of shorts? The
:20:00. > :20:05.yarn is from Italy, there is a woven process in Spain, then it is brushed
:20:06. > :20:08.to get that softness. Then it is rented in France and Italy. The
:20:09. > :20:15.whole process of the fabric, the touch, the rendering, it is
:20:16. > :20:20.something which is extremely rare. The net, the lining is in cotton,
:20:21. > :20:29.which would be the most fragile part, it is if it is damaged after a
:20:30. > :20:33.few years com you bring it back to the store, and it will be removed
:20:34. > :20:39.and change with a new one as you would with a good pair of shoes, you
:20:40. > :20:43.can change the soul after ten years. So you get a product you can keep
:20:44. > :20:49.for years and years. How much did you say? ?150? That not expensive.
:20:50. > :20:52.Talk me through the power of celebrity endorsement, the good and
:20:53. > :20:59.some bad. People you don't want to be seen wearing your shorts. I love
:21:00. > :21:05.when Jude Law or a Leonardo DiCaprio is wearing these shorts. But
:21:06. > :21:09.everybody is a prince, every client going into that store is a prince, a
:21:10. > :21:15.king that we must serve, because we are able to offer him the feeling of
:21:16. > :21:25.being a king. But there must be some people you see wearing your shorts
:21:26. > :21:29.and you just cringe? Honestly, no. I am open-minded, did you not notice?
:21:30. > :21:35.I told you about the diversity of the world, that is my credo, that is
:21:36. > :21:43.what I believe. There is no cringe, I do not have that feeling. Cringe,
:21:44. > :21:51.no cringing. I wonder what the French word is for that? I would
:21:52. > :21:54.imagine that there must be. There are certain people you do not need
:21:55. > :22:03.to see in swim shorts, no matter what brand they are. Did you touch
:22:04. > :22:10.the midfield? Are they worth ?150? I put it to him about this move to a
:22:11. > :22:12.very niche brands, so people now rather than this mass-market thing,
:22:13. > :22:15.we have seen it from retailers on the high street because people have
:22:16. > :22:20.a certain category of brands they want to go to, so they will pick and
:22:21. > :22:23.choose bits rather than getting everybody for one retailer, that is
:22:24. > :22:26.good news for companies like that, they have the quality and if you
:22:27. > :22:28.want to pay for it, they will last longer.
:22:29. > :22:38.And no, I'm not wearing a pair! A quick response to upgrading your
:22:39. > :22:42.iPhones. Chinese phones are catching up in quality, maybe Apple shouldn't
:22:43. > :22:52.have gone cheap on the product abroad, giving away secrets. Huawei
:22:53. > :22:56.and so on. The design is not unique, it is all
:22:57. > :23:01.about coming up with something different, and you are right, the
:23:02. > :23:03.Chinese issue is one that many people are raising, the Chinese
:23:04. > :23:12.rivals are much more able to offer new technology. That go straight
:23:13. > :23:17.into the newspapers. Mitsubishi yesterday basically told consumers
:23:18. > :23:20.it has been tricking them for 25 years, some saying it doesn't have
:23:21. > :23:25.the deep pockets that Volkswagen has, and this could be the end of
:23:26. > :23:29.the road. It has already cost Mitsubishi half its market value,
:23:30. > :23:33.and investors are assuming that this is Volkswagen -esque in its delivery
:23:34. > :23:36.in the sense that it started as a big problem and looks like it is
:23:37. > :23:40.going to get into an even bigger problem for Mitsubishi. I'm not sure
:23:41. > :23:52.it believes these fuel tests and numbers. There is an added layer of
:23:53. > :23:58.complication that they looks like the Japanese government which has
:23:59. > :24:05.given tax cuts for fuel efficiency... Is there a risk but
:24:06. > :24:08.around the world, car-makers are going to get the same reputation as
:24:09. > :24:14.the bankers, that they cannot be trusted, and they will need a big PR
:24:15. > :24:17.effort to increase the trust? I think we have already arrived at
:24:18. > :24:22.that point. Every car-maker is having to prove that they haven't
:24:23. > :24:24.done this sort of thing. The costs are enormous, and other car
:24:25. > :24:33.companies will come under the same scrutiny. Let's move on. This is the
:24:34. > :24:45.New York Times, this is fascinating. This is helping police officers
:24:46. > :24:49.using art. Policemen are being taken into Art galleries to look at art
:24:50. > :24:55.and to try to look at heart without expectation, without any prejudice
:24:56. > :25:04.and looking at it and saying, what is in that picture, and it has broad
:25:05. > :25:07.implications, or tort to look without prejudice and expectation.
:25:08. > :25:12.There are brilliant quotes in this article. One of them says, this
:25:13. > :25:17.appears to be a painting of some men with horses. No points there for
:25:18. > :25:23.observation. The next one says, it is a scene of semi-chaos, horses are
:25:24. > :25:26.driven to market. And when someone says, it is daytime, the horses
:25:27. > :25:33.appear to be travelling from left to right. I wouldn't want these guys to
:25:34. > :25:36.me by police officer! I suspect when the great artists painted these, I
:25:37. > :25:39.think they put a little more detail in the policemen have pulled out,
:25:40. > :25:43.but every time we look something, we come to it with bias or expectation
:25:44. > :25:50.of what we think it is going to be like or would like it to be like,
:25:51. > :25:51.and they need to learn to look and say, without bias, what is it. That
:25:52. > :25:55.is valuable. Better observation from the markets,
:25:56. > :26:13.thank you! What on earth is going on with the
:26:14. > :26:16.weather, he'd cry! One moment, blue skies, the next minute, your
:26:17. > :26:22.daffodils are struggling with this unseasonably cold weather. We
:26:23. > :26:23.continue with that vein of