03/02/2017 BBC Business Live


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This is Business Live from BBC News with Rachel Horne


Snapchat files for a stock market flotation -


that could be the biggest tech IPO since Facebook.


Live from London, that's our top story on Friday 3rd February.


It's set to be a massive deal - Snapchat could be worth up


to $25 billion, but the photo messaging company


is yet to record a profit in its five year history.


Apple switches its focus to India following a slowdown in China -


The European markets have opened for for the latest.


The European markets have opened for trade and are holding pretty steady.


We will bring them to you when we get them.


Also in the programme: Brexit - round one.


As EU leaders gather in Malta - its Prime Minister calls


for a "fair deal" for Britain - but warns it will pay


And following the announcement that Snapchat will be listing


on the US stock market, today we want to know -


would you buy shares in a company with a limited track record


The value of Facebook has tripled since it went public in 2012,


but will Snapchat be a similar success?


In the last few hours the social networking company has filed


documents to float its shares on the New York Stock Exchange.


It's likely to be the biggest IPO in the technology world


For those of you who don't use it - it's kind of the opposite


of Facebook - instead of making a permanent record of your life it


lets you send picture messages that then disappear.


According to the company - 158 million people use Snapchat


every day to send picture messages or Snaps.


That's nothing compared to the almost 2 billion


But it's very popular among young people,


An estimated 41% of Americans aged 18-34 are on Snapchat.


Its users are young - and so are its founders.


It was set up by Evan Spiegel, on the left - now still only 26 -


Three years ago they turned down $3 billion


in cash for the company from Facebook boss Mark Zuckerberg.


We'll find out - Snapchat could have a stock market value


Making the founders multi-billionaires.


How does that sound? I want to cry.


With me is our Technology Correspondent Rory-Cellan Jones.


I could have got deja vu here because around five years ago we


would have been sitting in the BBC studio somewhere talking about


Facebook before it went public and gone how is it going to monetise its


ads and make money, and it's the same here, I will Snapchat make


money? It already is that you are right, there is a huge parallel with


Facebook but is there a parallel with Twitter? We have a company, it


is not aimed at you, and Rachel I am not even sure it is aimed at you.


Sadly not, just out the bracket! It is aimed at 15 to 24-year-olds, I


have just done a little Snap which features us fooling around with


fresh. It's about reinventing the camera which is what the company


say, injecting fun into the way kids interact. People who understand this


understand it brilliantly and use it all day, but the rest of us struggle


with it. If it is going to be worth what the market thinks it's worth it


has two continue growing its audience. There are some quite


worrying charts in the IPO document released overnight, one of them


shows the growth tailing off a little just as they are coming to


market. You don't want to see that. That reflects they are up against


the gorilla in the room, Facebook, which has been taking their ideas


and putting them into Instagram which it owns and winning over some


of that audience. Rachel wants to come in but can I bring that end,


you said it, Mark Zuckerberg says here is $3 billion, they did not


take it so he went and bought Instagram, thinking if I cannot have


you nobody will. Mark Zuckerberg was offered billions at quite an early


stage in his early 20s, for Facebook, he was brave, rejected all


offers and said I will do it my way. The Snapchat guys are doing exactly


what Mark Zuckerberg did. The question is if they can follow the


same path but I think a lot of people will be spooked by slowing


user growth. In the listings they talk about themselves as a camera


company, what is that about, are they trying to monetise through


hardware? They released spectacles. Yes, they have released these things


were you record instant video. They are trying to stress the difference


between them and Facebook and Twitter. They are not about text,


they are about images and they think they have tapped into something real


and powerful amongst that group, the millennial is that love to


communicate and have fun. They think it's powerful to advertisers. Always


a pleasure, we have two wrap it up but let's put you on the spot to


revisit in five years, will it be Twitter or Facebook? I think it will


be Twitter. Sad. The Chief Executive and co-founder


of Uber, Travis Kalanick, has quit President Donald Trump's


business advisory group. The boss of the ride hailing service


has been coming under mounting pressure over the Trump


administration's Critics included Uber drivers, many


of whom are themselves immigrants - and a social media campaign urging


users to delete the Uber app. The e-commerce giant Amazon has


reported record sales of $43.7bn However that was short of market


expectations so it's shares have The US based firm said growing costs


would hit future profits. Apple is to start making iPhones


in India this year as the firm looks to tap into a booming middle class,


as sales in China slow. The chief executive Tim Cook said


this week the company intends to "invest significantly" in India -


where they only have a 2% share Isn't the issue with these Apple


iPhone's, are they not just too expensive for the market?


Absolutely, it's beyond the reach of many ordinary citizens. They did


ship about 2.5 million iPhone's, a record for Apple, but in the Indian


market which consumes about 300 million smartphones in a year it is


only in tenth place. One of the problems is that it is so expensive


because they are not manufacturing or assembling in India. They have


just had a meeting with IT officials in a southern state to express the


intention to maybe assemble and in the long-term manufacturer there. I


spoke to the local IT minister who confirmed they had this meeting and


they are hopeful they might start as soon as April this year. Apple has


tied up with a company from Thailand and they might start making these


iPhones very soon. If they want to scale up they also have


manufacturing facilities in India so it will be an easy job. There are


challenges ahead because Apple want a lot of concessions which India has


not agreed to and already other manufacturers are protesting. Great


explanation, thank you. So lets take a look at the markets


and in Asia there was a bit of a shock when China's central bank


announced plans to raise the cost of short term borrowing -


no official word on why they've done this but analysts think


the government is worried about the huge amount of lending


that has been going on - concerned about a property bubble


so tightening policy. The Chinese markets had been closed


for a week because of lunar new year and when they opened they fell


posting their biggest losses for two weeks -


and that followed on from what investors called


a cautious day on Wall Street. The Dow closing ever so slightly


down. In Europe markets


were expected to continue that cautious trend -


but lots of figures due out today - services PMI for germany


and france and a key US Jobs report - so lets go


to Wall Street and see It's the first Friday of a new month


which means we are expecting the latest American job numbers. The


unemployment rate is currently at 4.7%, the lowest in almost a decade.


This particular report will be closely watched by the Federal


reserve and of course the new Trump administration. Something delicious


will be happening on Friday, the maker of her shoes and Reese 's


peanut butter cups will be reporting earnings, they have raised their


full-year profit forecast in October because demand strengthened in the


United States and they spent less on advertising. It also expects new


products to help boost sales during the holiday season. Funny that I now


fancy some chocolate. I always fancied some chocolate.


Joining us is Michael Hewson, Chief Market Analyst, CMC Markets.


Good to have you with us, the Chinese, the lunar New Year holiday,


the centre back coming back saying let's surprise them, are they


worried about a real estate bubble in China? I think they have been for


quite some time and I don't think this slight tightening of policy


will make that much difference. There are wider issues at play,


financial conditions are tightening across the world. We see it


reflected in bond yields, rising inflation, maybe they are concerned


about that, Chinese factory gate prices have rebounded massively.


Maybe they are sounding a note of caution with reserve to that, the


Bank of England yesterday was resident about upgrading inflation


forecasts, I think inflation will run a lot hotter than a lot of


people think it will do and I think this is maybe a reflection of that


and also there is a concern with Donald Trump in the White House they


do not want to weaken the currency at the moment. American job figures


out later today, people say it might be about a hundreds 2000, you think


it may be 200,000? I think it could be above 200,000, the private


payroll report, generally there is a close correlation over the last 12


months between the two, never more than a 30,000 discrepancy, 246,000,


I think as President Obama's legacy... These are his last


numbers. I think we should get an number in excess of 200,000. We


shall find out. Also in the programme:


Brexit - round one. As EU leaders gather in Malta -


its Prime Minister calls for a "fair deal" for Britain -


but warns it will pay You're with Business


Live from BBC News. Some supermarket's are rationing


some vegetables to customers - blaming poor growing conditions


in Europe for a shortage Both Tesco and Morrisons


are limiting shoppers, following a UK courgette shortage


last month, after wet and cold weather in southern


Europe devastated crops. Our business correspondent


Theo Leggett joins us now Did I hear this right, some


supermarkets are limiting iceberg lettuce to three? When is the last


time somebody bought three? There is a point to this that I will get to


but yes Tesco are limiting customers to three iceberg lettuce's per


person, Morrisons with the same limit and they are limiting people


to three florets of broccoli per person as well, I think that is the


right term, broccoli is not my specialist subject. A lot of this


vegetables over the winter come some southern Spain where you can get a


winter crop, grown in regions near Valencia, but there has been


appalling weather in that region over Christmas. Whites bled


flooding, crops ruined, fields out of action. When the young crops were


coming through there was also frost and snow, the coldest weather in


decades. So the crop from Spain has been drastically reduced which has


greeted the shortage. This shortage has been made worse by supermarkets


because you have catering companies and restaurants and corner shops


running out of supplies and heading down to the supermarkets to stop up.


It is them those rules are aimed at, because if I go into a supermarket I


am not going to buy three iceberg lettuces what a catering company


that is thinking all my goodness the normal supplier cannot get us what


we need, they will go down to the supermarket and clear the shelves.


Letters and broccoli, also courgettes. Go and get your quarter.


Have you ever bought three... You have got it?


Yes, but they don't eat a whole iceberg each!


It is a lot for your hamburgers! Too much.


Our top story - the social networking company Snapchat has


filed documents to float its shares on the New York Stock Exchange.


It's likely to be the biggest IPO in the technology world


The company is yet to return a profit in its five-year history,


but Snapchat could still be worth up to $25 billion when it goes public.


Staggering. That is a lot of money.


Let's cross over to the Maltese capital Valletta now -


EU leaders are gathering for their first summit of the year


two days after the British parliament voted overwhelmingly


Prime Minister Theresa May will be holding one-on-one talks


with various EU leaders - so what is she up against?


Malta holds the rotating presidency of the EU.


Its Prime Minister, Joseph Muscat, has been clear Britain can't


He has told the European Parliament, "We want a fair deal


But "that deal necessarily needs to be inferior to membership".


Assuming Britain formally gives its two-year leaving


notice next month - known as triggering Article 50


of the Lisbon Treaty - Mr Muscat says they must agree


That's so it has time to be ratified by member states


and the European Parliament before the UK is formally out.


Then there's the small matter of this - the UK's bill


As much as 60 billion euros is what Britain will owe -


according to some in Europe - taking into account its share


of budget commitments, pensions, spending on UK-based projects, etc.


That bill, that's likely to be the subject of a lot of wrangling.


Thomas, you are an independent analyst, great happy with us. They


are going to be discussing all sorts of things, including... President


Trump. In what way could he be a threat to the EU? We have seen


comments prior to and since inauguration saying he thinks other


countries might want to leave the EU said there is a fear among the


member states that after the EU -- that after Britain leaving, there is


a certain fear about that, so they are concerned and we saw this


manifest in President Donald Tusk, the president of the European


Council, in his statement to the European ladies, saying, United we


stand, divided we fall. The future of the EU will be discussed at the


afternoon session of the meeting today.


Theresa May will be there this morning and then leave that


lunchtime, then this afternoon the other states will discuss the future


of the EU. What do you think will be on the agenda? This morning Pospert


procession and the afternoon session are inextricably linked, this


morning is about migration, specifically the mortar and Libya


Brut, yesterday there were talks with Donald Tusk and the Italian


Prime Minister to see how they can improve operations with Libyans on


the ground and stop the migration flows. We know that in regular


migration has been an issue in many European election campaigns, also in


the Brexit referendum last year, so that brings us on to the future of


the EU and how to take things forward. Donald Tusk essentially


saying to all EU leaders, the EU 27, because Theresa May will not be


there, we need a firm start, we have the migration crisis, we have


Russia, we have the US administration which we are not sure


where they are going with that, radical terrorism, populism, all


these issues we need to take a stance. They can all very well sit


there all these leaders and do the talking but the people in their


respective countries may do the talking for them and they may not be


the leaders any more? Very good point. That is the issue they will


be facing, Netherlands, France, Germany elections. Exactly, go back


to 2007, the 50th anniversary of the European Community which became the


EU. Back in 2007 no-one would have said that ten years onward beat this


crisis, the Ihenacho crisis, the social crisis and now the political


crisis. This is something they will be whereof, they may welcome up with


suggestions how to tackle migration, take the EU forward, but at the end


of the date a lot of them will be concerned about domestic electoral


issues closer to home. And whether they have a job or not! Thomas, we


appreciate your time, we will talk to soon.


In a moment we'll take a look through the Business Pages but first


here's a quick reminder of how to get in touch with us.


The Business Live page is where you can stay


ahead with all the day's breaking business news.


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Get involved on the BBC Business Live web page,


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Business Live on TV and online, whenever you need to know.


Michael is back. Snapchat. I don't.


Neither do I, we are far too old! Remember the press conference


earlier this year where someone was caught doing bunnies, misbehaving?


We asked our audience to send us a text, a Tweet! That his owl -- that


is how old I am! To ask whether it will take off.


I'm 26 and just signed up. Tut, it is confusing, don't see why it has


spread outside millennials. Ryan things Snapchat will be a fad,


a waste of money and people will look stupid in 12 months' time.


A lot of people are saying, wait and see. There are so many of these


social media instant gratification apps, Instagram, Twitter has just


dropped Vine, which was six second videos, I'm not sure how different


Snapchat is, $25 billion, hasn't made a profit, you have no voting


rights with the shares. Investors need to decide whether or not to buy


it, they cannot wait and see. What do you think will happen when it


floats? I think initially there will be a bit of a pop but automatically


when you look at the company you look at the commercials, and


ultimately even though revenue growth is going the right way, user


growth is starting to slow and that, for me, is the problem Twitter is


having, they cannot monetise their user base. If Snapchat cannot


monetise its user base, it will ultimately be a flash in the pan. Or


a snap... Your household must be a barrel of


laughs! This story is amazing, could you


imagine UK, Brits, even Aussies, chipping into their own pockets to


help out the Government? I am buying a house next week so I guess I am


helping out the Government! Mongolian citizens offering cash,


jewellery and horses to pay Government debt. Mongolia is a


victim of the crash in property prices, it is a resource rich


nation. What commodities do they have? Copper, gold, easily extract a


ball, so it should be a rich country but the government went on a


spending boom just as monetary conditions in China started to


tighten and ultimately they spent more than they had coming in, so now


IMF and their citizens have decided IMF and their citizens have decided


to offer cash, jewellery, horses to help. That is lovely! Help your


Government even though it has been completely incompetent. That is


true! I don't think it would happen over here, somehow. Nordstrom, very


nice department store in the United States, they have dropped Ivanka


Trump's brand. Yes, this is a hashtag campaign that was started in


October asking brands not to stock trump brands because of his


rhetoric... But Nordstrom has said this is based only on performance?


They have to say that, they don't want to be seen to be giving in to


the politics. Michael, always a pleasure, have a great weekend and


thank you for joining us. There will be more business news


throughout the day on the BBC live webpage and on World Business


Report. And unsettled spell of weather


continues with some strong wind and heavy rain in the forecast today.


Yesterday was a blustery, windy day, this was the scene around the Irish


Sea coast, taken by one of our Weather Watchers,


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