27/04/2016 BBC Business Live


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This is Business Live from BBC News with Ben Thompson


After years of awesome growth and bumper sales,


sales of its biggest earner, the iPhone are falling.


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


The iPhone is the most profitable product in history but as sales slip


for the first time ever, we'll assess what lies


Top bosses are expected to resign after after the car maker admits


using inaccurate fuel data for 25 years.


They are now down more than 50% since the crisis began.


Elsewhere this is how markets are looking ahead of interest rate


How do you justify selling a pair of beach shorts


And what happens if celebs you don't want to see wearing them,


We ask the boss of swimwear brand Vilebrequin.


And as Apple reports that fall in iPhone sales we want to know -


are you upgrading your smartphone less these days?


Are you making your old one last longer?


An Australian with French pronunciation! We will make more


about that later! It is the most valuable


company in the world, Last night it gave us an update


on sales and profits for the first And as many predicted,


sales of the iPhone were down. The technology giant reported


a revenues of $50.6 billion - It's a fall of 13%


on the same period last year. And it was sales of it's flagship


product, the iPhone, They dropped more than 16% compared


to the same time last year. And that's vital because Apple makes


nearly 70% of its profits from the iphone


as Dave Lee explains. With me is our technology


correspondent, Rory Cellan-Jones. Apple, I mean let's start with it.


The numbers came out, confirmed what you and I were talking about


yesterday. We were right, weren't we? We were spot on. For the iPhone


sales, this is a story, the world is saturated with the smartphones now?


2007, Steve Jobs unveils the first iPhone. It has gone on to be the


most extraordinarily profitable product in history. I was trying to


think the other day what's made more profit? The jumbo jet or Coke? One


single product and it has gone higher and higher every year. This


quarter they were comparing with last year was an amazing quarter in


2015. They got this new bigger iPhone, they do a release a year and


one year, it is a brand-new model and the next year it is a tweaked


one. Last year was the brand-new one, the iPhone 6 S, this year it is


the iPhone 6 last year and iPhone 6S this year and it was all about China


where people were going mad for this thing. So it is against that


background, but I think it is worrying because the figure, the


drop between this year and last, 10 million fewer iPhones sold. So much


depending on this and no clear route really to the future in terms of


another blockbuster product to replace it. In a nutshell, some will


say Apple's big problem is the fact that it needs to come out with a new


product that is going to knock our socks off and it hasn't, Apple


hasn't done that since Steve Jobs passed away? That's true and every


time people said, oh, dear this is not going too well, they have not


got a new product, they have managed to squeeze more and more profits out


of the iPhone. The big question is has that growth finally come to an


end? There is talk of other blockbuster products, there is talk


of a car, but that would be a long time away and that's an incredibly


ambitious product. People are getting to point of saying I'm not


going to hand over $600, $700 for a phone, yes, they are smartphones,


they do more things now, but there are more alternatives out there that


do the same thing and unless they come out with a killer app or a


killer bit of tech on that phone, people are less willing to hand over


so much money? I'm not sure that's true. A lot of people are willing to


hand over that sort of money. The market has stopped growing. The


overall smartphone market is a bit static at the moment. It maybe just


getting to the point of saturation. So that means, you know, you have


got to tweak things and give people something new. Some reason to


upgrade and Apple will be looking to September when it will launch an


iPhone 7 which will look different and they will be hoping that really


does the trick. OK. Rory, I'm sure we will speak to you again about


this! Rory's is so much bigger than mine. It is not about size, Aaron.


There we go, thank you. Twitter's latest earnings have


disappointed investors, coming in below expectations


as the firm struggles with weak Twitter said it had 310 million


monthly users in the first quarter and revenues came


in at $595 million, Shares in Twitter slumped 13.6%


on that news. A strike over pay at airports


in Germany is likely to cause Lufthansa, Germany's largest


carrier, has already cancelled nearly 900 flights at airports


including Frankfurt and Munich. The strike by workers


including ground services, security checks, fire


fighting and check-in staff, is likely to severely limit


operations at German airports. Getty Images says it will file a


lawsuit against Google. Getty argues that changes to Google's picture


search promotes piracy and gives the tech giant unfair advantages in


traffic and advertising. The company has in the past dismissed


allegations that it used its dominant position to stifle


competition. I call it the massacre at Mitsubishi


Motors. The Mitsubishi Motors


saga continues. Yesterday, we brought


you the breaking news that the company admitted errors


going back 25 years. Last week, it admitted to falsifying


fuel efficiency numbers Investors are not pleased -


shares fell another 2% today - but since the news was made public


last week, the company's value Tim McDonald is in our


Asia Business Hub in Singapore. Tim, that fall from grace really is


staggering and one that will be felt particularly keenly amongst the


bosses who we now expect will face tough decisions about their future?


Yeah, they certainly will. Mitsubishi closed down again and it


is only 2.8% which, you know, isn't bad considering the week they have


had, but of course, that comes as you mentioned on a huge drop-out, a


lost half its value over the past week or so. The Japanese media is


reporting the company's top two executives are likely to step down


over the scandal. Reportedly after its results are issued and that's


due to happen any minute now. So we will keep an eye on that. The issue


company's admissions that it cheat company's admissions that it cheat


on its full efficiency data. Mitsubishi admitted that could have


been going on for a quarter of a century. This noncompliant data as


it terms it. It is not the first time Mitsubishi has been in trouble.


About a decade ago it survived a defect cover-up scandal through


albail out by its sister companies. Mitsubishi is a huge con Great


Ormond Street Hospital lat and cars are just one part of the business so


we will see if this time around, if there is any appetite to bail


Mitsubishi Motors out a second time. Yeah, that's the big question, Tim.


We will follow that story closely. We will be back with you when there


is more. Tim McDonald in Singapore. Japanese stocks, falling again. A


third straight day after disappointing corporate earnings and


the uncertainty over whether the Bank of Japan will deliver further


stimulus at the policy meeting this week.


In the US - that's how Wall Street closed -


with Apple and Twitter both disappointing with latest results.


Incidentally, Apple shares were down 8% in after hours trading,


erasing a whopping $46 billion off its value.


European markets lower at the open after that weak lead from the US.


They'll be looking ahead to that gathering of US policy-makers


But it's Facebook that's in the spotlight stateside today -


Facebook reports its results on Wednesday and expectations are high.


We often talk about a slowing growth in its user numbers in the United


States, but the company has been looking to emerging markets for more


new users and digital and mobile spending is still in high demand


especially video across Facebook and Instagram will be monitoring how


much mobile accounted for its revenue. Last quarter it was 80% and


it is expected to have risen and markets will be monitoring the


Federal Reserve's monetary policy decision. The cost of borrowing.


Interest rates are expected to be kept on hold, but the Fed might be


more upbeat on the economic outlook which might give us a few more hints


as to when they might raise the interest rates again.


Richard Dunbar, Investment Director at Aberdeen Asset Management.


Let's get cracking. The Bank of Japan. Let's start with that. There


is huge expectation that they're going, they need to do something,


right? There is big expectation. The growth numbers out of Japan have


continually been poor for the last 20 years. They have pulled every


scarks lever possible and the expectation is they will do more in


their version of quantitative easing and possibly more on fiscal policy,


taxation policy to really get that economy motoring, but they have


tried virtually everything so far... There is no sense that what they


have tried, all the arrows, haven't really worked? Well, the first arrow


was monetary policy, the quantitative easing, the second


arrow was fiscal policy trying to put more money into people's pockets


and the third arrow was restructuring and that economy is in


need of restructuring, we have seen some evidence of that, but not


enough to get the economy motoring. No exchange expected at the Fed


regarding rates, but there is no press conference today? There is


just a press release, as ever, we will pour over every word of that


press release. The phrase we will study today wrth is the balance of


risk? Is the economy running too hot or too cold?" They Do they need to


put interest rates up? Good stuff. I know you'll talk us through the


papers, but for now, thank you. Let's look at our Business Live


page. It is a crack website. Check it out!


I know we've already mentioned this. You and I will chat and let the


camera do its thing. If you are planning of flying


Lufthansa check out the website. They have cancelled 900 flights.


This is more the airport side. Lufthansa Had one strike after


another. This could be significant. 900 flights and 60% of their daily


typical traffic. This time, it involves all sorts of other workers


including ground staff, security, and bags, check-in staff and that


will have a severe knock-on effect across the rest of the week. If


you're travelling today, make sure you check where you are going. We


put out the question on Twitter about upgrading, do you upgrade less


now? Can James has written in. He says, "Mobile contracts are now for


at least two years. I once upgraded every year and then 18 months and


now it is every two years." This one says, "I made a rule only to upgrade


my equipment when the new stuff does something my old stuff does not." It


is coming up with something that new that makes people to part with their


cash. The boss of swimwear firm


Vilebrequin tells us why paying $200 for a pair of swim shorts


is an investment. You're with Business


Live from BBC News. If Britain left the EU


in its referendum in June, would it lead to an unravelling


of the entire European Union? But one man knows what it's


like to be at the centre Jose Manuel Barroso -


the 11th President of the European Commission -


in the top job between 2004 to 2014 - at the height of


the financial crisis. This week he's in the UK and has


been talking to the BBC. So what would happen


if the UK voted for Brexit? It is difficult to predict all the


consequences, but certainly the consequences would not be good,


because Britain is one of the most important countries in the world,


and if such an important country leaves the European Union, it will


be detrimental for Europe, and it would be good news for those who do


not like Europe who are also not not like Europe who are also not


great admirers of Britain, because they like to see a weaker Europe and


probably also a weaker United Kingdom. So that is why I think


there would be consequences. There are difficult to anticipate at this


moment, but certainly it would be negative from a European point of


view. The big boss of the European Union. Let's talk about Barclays


Bank! Barclays Bank has reported a 25%


slump in pre-tax profits for the three months to the end


of March to ?793 million from The bank took a bit of a beating


in the quarter, as have many of its US rivals as profit


from investment banking operations Home Retail Group,


the owner of Argos, has made a full-year


loss of ?804 million relating to the proposed


takeover by Sainsbury's. Earlier this year, supermarket


Sainsbury's struck a deal to acquire Argos for ?1.4 billion,


and the deal is expected to be Sales at Argos came in flat,


and fell 3% at Homebase. A quick reminder you can get all the


other detail that you might need on the tablet, including more there on


the Argos story making that loss, but also we have had news this


morning about the promotions in supermarkets and the indications


they have about whether they are misleading to customers. The


regulator says that they are. ASDA vows to change.


Our top story: After years of record growth, sales


of Apple's biggest earner, the iPhone, are falling.


They have also been falling in China, but they will be launching


new products and are hoping to get more of us to part with our cash to


buy them. And now, how do you convince


customers to pay more than $200 The French brand Vilebrequin was set


up in 1971 and specialises in luxury swimwear, with some of its items


selling for thousands of dollars. It has 185 outlets worldwide,


with its biggest markets being France, the US


and the Caribbean. Its chief executive is Roland


Herlory. After a career at luxury firm


Hermes, he was persuaded to take But on one condition -


that he could live and work from his Caribbean home


on the island of St Barts. I caught up with him and asked


what persuaded him to make the move. I joined the company because of him,


and because I love the brand. I have been wearing Vilebrequin since I was


18, by birthday gift when I was 18 was a pair of swim shorts. I spent


my holiday in St Tropez as a kid, so Vilebrequin was part of my holidays.


You are based in Saint Barts. You have design and manufacturer in


France, offices in Geneva, how does that work? The only place I can work


as the plane, the taxi on the lounge and the airport, so my office is


already in that precisely patient. When I am physically in the office,


it is GoToMeeting is, meeting the people,, explaining my job, I do it


with the computer, the iPhone, wherever I am. In a very short time,


you are from Hong Kong to New York, to Buenos Aires in Paris, so


suddenly you are complete vision of what is happening in the world. It


is very impressive not to listen, but to feel what is happening in all


these parts of the world, and perhaps the biggest lesson in the


world is that it is deeply diverse, that is the biggest lesson I have


learned from all these years travelling. Every place is


different, the people are different, the way of approaching life is


different, the way of approaching business is different. This


diversity for me is the biggest richness of our civilisation. Do you


ever wake up in a morning in your house and think, I don't want to get


on that plane, I don't want to go to another meeting? I never want to


take a plane, I never want to leave, the moment I sit in a plane, I


discover something different. You sell shorts for ?150. What would


convince me to pay ?150 for what is essentially a pair of shorts? The


yarn is from Italy, there is a woven process in Spain, then it is brushed


to get that softness. Then it is rented in France and Italy. The


whole process of the fabric, the touch, the rendering, it is


something which is extremely rare. The net, the lining is in cotton,


which would be the most fragile part, it is if it is damaged after a


few years com you bring it back to the store, and it will be removed


and change with a new one as you would with a good pair of shoes, you


can change the soul after ten years. So you get a product you can keep


for years and years. How much did you say? ?150? That not expensive.


Talk me through the power of celebrity endorsement, the good and


some bad. People you don't want to be seen wearing your shorts. I love


when Jude Law or a Leonardo DiCaprio is wearing these shorts. But


everybody is a prince, every client going into that store is a prince, a


king that we must serve, because we are able to offer him the feeling of


being a king. But there must be some people you see wearing your shorts


and you just cringe? Honestly, no. I am open-minded, did you not notice?


I told you about the diversity of the world, that is my credo, that is


what I believe. There is no cringe, I do not have that feeling. Cringe,


no cringing. I wonder what the French word is for that? I would


imagine that there must be. There are certain people you do not need


to see in swim shorts, no matter what brand they are. Did you touch


the midfield? Are they worth ?150? I put it to him about this move to a


very niche brands, so people now rather than this mass-market thing,


we have seen it from retailers on the high street because people have


a certain category of brands they want to go to, so they will pick and


choose bits rather than getting everybody for one retailer, that is


good news for companies like that, they have the quality and if you


want to pay for it, they will last longer.


And no, I'm not wearing a pair! A quick response to upgrading your


iPhones. Chinese phones are catching up in quality, maybe Apple shouldn't


have gone cheap on the product abroad, giving away secrets. Huawei


and so on. The design is not unique, it is all


about coming up with something different, and you are right, the


Chinese issue is one that many people are raising, the Chinese


rivals are much more able to offer new technology. That go straight


into the newspapers. Mitsubishi yesterday basically told consumers


it has been tricking them for 25 years, some saying it doesn't have


the deep pockets that Volkswagen has, and this could be the end of


the road. It has already cost Mitsubishi half its market value,


and investors are assuming that this is Volkswagen -esque in its delivery


in the sense that it started as a big problem and looks like it is


going to get into an even bigger problem for Mitsubishi. I'm not sure


it believes these fuel tests and numbers. There is an added layer of


complication that they looks like the Japanese government which has


given tax cuts for fuel efficiency... Is there a risk but


around the world, car-makers are going to get the same reputation as


the bankers, that they cannot be trusted, and they will need a big PR


effort to increase the trust? I think we have already arrived at


that point. Every car-maker is having to prove that they haven't


done this sort of thing. The costs are enormous, and other car


companies will come under the same scrutiny. Let's move on. This is the


New York Times, this is fascinating. This is helping police officers


using art. Policemen are being taken into Art galleries to look at art


and to try to look at heart without expectation, without any prejudice


and looking at it and saying, what is in that picture, and it has broad


implications, or tort to look without prejudice and expectation.


There are brilliant quotes in this article. One of them says, this


appears to be a painting of some men with horses. No points there for


observation. The next one says, it is a scene of semi-chaos, horses are


driven to market. And when someone says, it is daytime, the horses


appear to be travelling from left to right. I wouldn't want these guys to


me by police officer! I suspect when the great artists painted these, I


think they put a little more detail in the policemen have pulled out,


but every time we look something, we come to it with bias or expectation


of what we think it is going to be like or would like it to be like,


and they need to learn to look and say, without bias, what is it. That


is valuable. Better observation from the markets,


thank you! What on earth is going on with the


weather, he'd cry! One moment, blue skies, the next minute, your


daffodils are struggling with this unseasonably cold weather. We


continue with that vein of


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