:00:00. > :00:07.This is Business Live from BBC News with Ben Thompson
:00:08. > :00:11.Snap judgement - investors punish the firm behind
:00:12. > :00:13.Snapchat as the messaging app's results disappoint,
:00:14. > :00:19.its shares plunging in afterhours trade.
:00:20. > :00:21.Live from London, that's our top story on Thursday,
:00:22. > :00:41.In its first results since listing, Snap's net losses soar to billions
:00:42. > :00:44.of dollars as its struggles to attract new users.
:00:45. > :00:51.BT, the UK's biggest telecoms group, says it will cut 4,000 jobs
:00:52. > :01:02.worldwide over the next two years in a major restructuring.
:01:03. > :01:07.All eyes on the Bank of England as it unveils its quarterly economic
:01:08. > :01:11.update later. Interest rates are set to stay on hold of a record low of
:01:12. > :01:13.0.25%. And the company that
:01:14. > :01:14.created Photoshop, we'll be speaking to the boss
:01:15. > :01:17.of the software firm Today we want to know,
:01:18. > :01:21.do you use Snapchat? I know that Tanya is a user of
:01:22. > :01:47.Snapchat, I have seen the selfies! And we start with Snap, the company
:01:48. > :01:51.behind the messaging app Snapchat. It lets you send photo messages that
:01:52. > :01:54.disappear after a few seconds. But it seems the confidence
:01:55. > :01:56.of investors has gone Snap's shares plunged in after-hours
:01:57. > :02:00.trading on its first set of financial results since that huge
:02:01. > :02:04.flotation back in March. Snap lost $2.21 billion in the first
:02:05. > :02:09.three months of the year. That's way more than
:02:10. > :02:11.the same time last year. Well, mostly because of huge
:02:12. > :02:16.pay-outs to staff with stock But here's the number investors
:02:17. > :02:28.are really looking at. By the end of March
:02:29. > :02:31.166 million people were That's up over 36%
:02:32. > :02:42.on the same time last year. But it was a few million less
:02:43. > :02:45.than investors had been hoping for and a big slowdown from growth
:02:46. > :02:48.seen in previous quarters. It also pales in comparison
:02:49. > :02:50.when you look at this. Facebook has around 1.3
:02:51. > :02:53.billion daily users. And almost 2 billion use it
:02:54. > :02:56.at least once a month. Even its version of Snapchat,
:02:57. > :02:57.Instagram Stories, has Investors were quick to pile
:02:58. > :03:01.into shares when Snap went Shares rose by as much as 50%
:03:02. > :03:05.in the first days of trading, but look how that enthusiasm has
:03:06. > :03:27.waned on concerns about When it went public in March, Snap
:03:28. > :03:34.at to answer two questions, the first if it could attract a enough
:03:35. > :03:38.new users to give investors happy, and could it survive an onslaught
:03:39. > :03:42.from Facebook, copying its ideas and giving it to its users? So far, the
:03:43. > :03:48.answer to both questions seems to be no. User growth seems to have been
:03:49. > :03:51.too small, and while Snapchat is still very popular with teenagers,
:03:52. > :03:58.there has not been an increasing engagement that investors wanted.
:03:59. > :04:01.One investor asked the chief executive if there were new products
:04:02. > :04:06.coming up to give investors cause for hope. It's fair to say he did
:04:07. > :04:10.not have too many bright ideas. He also said he was not worried by
:04:11. > :04:12.Facebook, but, on the evidence of these results, he probably should
:04:13. > :04:15.be. I'm joined by Mike Weston, Founder
:04:16. > :04:27.of marketing agency Radiate B2B. that investors are quite skittish.
:04:28. > :04:32.We see some very big numbers in terms of subscriber growth and the
:04:33. > :04:36.losses. But that is nothing new for this particular sector. What is
:04:37. > :04:41.particularly upsetting investors? Well, the first is the concern that
:04:42. > :04:46.growth has significantly slowed. A year ago, growth rate was 52%, daily
:04:47. > :04:53.average user growth. That is the key metric. Ahead of these numbers that
:04:54. > :04:56.pundits in the states were talking about, anything below about 9
:04:57. > :05:00.million growth in that number would be punished by the stock market.
:05:01. > :05:06.That is exactly what has happened. Why does it matter? It matters
:05:07. > :05:10.because it really needs to monetise the users they have got. It is quite
:05:11. > :05:16.a bloodthirsty market, particularly in North America, where most of the
:05:17. > :05:19.revenue comes from. Can we compete with TV audiences? If they are not
:05:20. > :05:24.getting to the bulk numbers that someone like Facebook has, they are
:05:25. > :05:27.going to struggle. The comparison with TV audiences is advertising?
:05:28. > :05:36.Absolutely, that is where the revenue comes from. Snap, making it
:05:37. > :05:40.popular as an app, getting is used to taking pictures with filters,
:05:41. > :05:43.Facebook arrives with Instagram and makes Instagram stories, they have
:05:44. > :05:47.the user base already and that is a big challenge, taking on a huge
:05:48. > :05:54.organisation with a massive user base? Yes, he will not afraid to
:05:55. > :05:59.copy. I loved Eric Speigel's comments, the founder of Snapchat,
:06:00. > :06:03.just because Yahoo put a search box on their page, it doesn't make them
:06:04. > :06:08.Google. Trying to draw that comparison which was quite punchy.
:06:09. > :06:12.He is quite secretive about his next creative move. In the end, as you
:06:13. > :06:15.say, it has to be monetised, it does not matter how many users you have,
:06:16. > :06:22.you have to make enough money out of them. Snapchat does that. When you
:06:23. > :06:29.take a photograph and your tongue goes... I don't do it, of course!
:06:30. > :06:34.When it goes gold, or you get horns and looked like a devil, it is
:06:35. > :06:39.normally advertising something. It is not sufficiently monetised
:06:40. > :06:42.though, to satisfy investors? They have shown massive growth,
:06:43. > :06:47.year-on-year, an advertising revenue, but it is still short of
:06:48. > :06:50.what Wall Street was expecting. That is disappointing. If the user growth
:06:51. > :06:55.is not there, you need to increase the amount of revenue per user that
:06:56. > :07:01.you are getting, and it is not happening. That is worrying for
:07:02. > :07:04.stockholders and investors. Nice to see you. Lots of you getting in
:07:05. > :07:08.touch already. We asked the question at the start of the programme, do
:07:09. > :07:15.you use it? Ian says he hardly uses it now that Instagram has Stories.
:07:16. > :07:20.Occasionally use it for face swapping, we will not even get into
:07:21. > :07:24.that! A whole other minefield. Damian says he has an account but I
:07:25. > :07:29.have not been using it lately, it does not really offer much more than
:07:30. > :07:31.Instagram. Keep comments coming in. We will talk about them later.
:07:32. > :07:34.Let's take a look at some of the other stories making the news.
:07:35. > :07:37.BT, Britain's biggest telecoms group, says it plans cut 4,000 jobs
:07:38. > :07:42.over the next two years in a major restructuring.
:07:43. > :07:45.The telecoms giant said the posts would be going in back-office
:07:46. > :07:47.and managerial sectors as it simplifies its Global
:07:48. > :07:55.It said technology trends meant it was less dependent on owning
:07:56. > :07:59.physical network assets around the world.
:08:00. > :08:01.Boeing has temporarily halted test flights of its new 737 MAX aircraft
:08:02. > :08:03.due to possible issues with the engine.
:08:04. > :08:06.The stoppage came days before the US planemaker was due to make its first
:08:07. > :08:09.delivery of the aircraft to a customer.
:08:10. > :08:11.But Boeing said it was sticking with plans to begin MAX
:08:12. > :08:13.deliveries this month, adding that production
:08:14. > :08:19.Profits at 21st Century Fox dipped in the first three months
:08:20. > :08:22.of the year, weighed down by flat cable advertising and less
:08:23. > :08:28.The Rupert Murdoch controlled firm said profits fell 5% to $799m
:08:29. > :08:36.compared with the same period last year.
:08:37. > :08:39.Fox though said it remains confident that its bid to take full
:08:40. > :08:52.Loads of other stories for you, we can't fit them all on here, but they
:08:53. > :08:59.are on the website. Nissan says profits will fall. The Japanese
:09:00. > :09:03.in profit due to higher raw material in profit due to higher raw material
:09:04. > :09:06.costs. We should get used to hearing that, inflation rising in many parts
:09:07. > :09:12.of the world, we have seen a big number of manufacturers reporting
:09:13. > :09:13.that. Nissan one of the first to say it could have a huge impact on
:09:14. > :09:17.operating profits. To Asia now where Japanese
:09:18. > :09:19.telecoms and internet giant Softbank has revealed some
:09:20. > :09:24.of its best profits ever. Softbank runs a mobile phone network
:09:25. > :09:27.in Japan but also invests It owns US mobile company
:09:28. > :09:35.Sprint and has recently bought UK chip firm ARM -
:09:36. > :09:48.which designs chips for the iPhone. I said don't be fooled by the name,
:09:49. > :09:53.you might assume it is a bank? That's right, Softbank is an
:09:54. > :09:57.incredibly fascinating company, Howard has transformed itself from
:09:58. > :10:00.just a Japanese telco to one of the world's biggest technology companies
:10:01. > :10:07.is something people should look into. Today it recorded its second
:10:08. > :10:11.best profit of $26 billion. Profit tripled largely thanks to the sale
:10:12. > :10:16.of a very lucrative stake it had in the Chinese e-commerce giant Eilidh
:10:17. > :10:27.Barbour, and as well as the sale of a Finnish game maker. -- e-commerce
:10:28. > :10:32.giant Alibaba. It is enigmatic founder is setting up a $100 billion
:10:33. > :10:43.technology fund with Saudi Arabia. Last July, you mentioned already at
:10:44. > :10:51.bought ARM. It also sunk money into Sprint, as well as the Indian
:10:52. > :10:54.e-commerce site Snap Deal. These were all big investments, but the
:10:55. > :11:01.three I just mentioned are loss-making. Whether they pay off
:11:02. > :11:04.like Alibaba, that is a big question mark. Do you use a Snapchat? I am
:11:05. > :11:18.quite old school, no. Just Facebook. This is what happened in Asia,
:11:19. > :11:22.surprise that markets rose. There was concern yesterday, all of the
:11:23. > :11:26.destruction about President Trump, the sacking of the FBI chief, what
:11:27. > :11:30.it would mean in terms of policies regarding tax, is it a distraction
:11:31. > :11:39.from that about cutting tax for business? We saw some reaction to
:11:40. > :11:42.that. Let me take you to Asia. This is what is happening. Not a huge
:11:43. > :11:45.amount happening across the board, in the UK, a big day because we get
:11:46. > :11:49.a quarterly update from the Bank of a quarterly update from the Bank of
:11:50. > :11:57.England about what it expects the economy to do over the coming
:11:58. > :11:58.quarter. Interest rates set to stay up at record low. Let's head to the
:11:59. > :12:03.US. Samira has the details. Retail will take centre
:12:04. > :12:06.stage on Thursday as US department stores Macy's,
:12:07. > :12:07.Kohl's and Nordstrom Now, all three companies
:12:08. > :12:10.are struggling with falling sales amid growing competition and have
:12:11. > :12:15.resorted to cutting costs by closing stores and selling
:12:16. > :12:17.or leasing their real estate, Macy's and Kohl's are already
:12:18. > :12:24.predicting that sales will fall this year,
:12:25. > :12:25.while Nordstrom believes Also happening on Thursday,
:12:26. > :12:30.Wells Fargo usually holds But it is holding one
:12:31. > :12:36.for the second year in a row. It's trying to restore
:12:37. > :12:37.shareholder confidence, following its recent accounts
:12:38. > :12:41.scandal. The bank will provide
:12:42. > :12:45.new cost-cutting targets and leaders of the lender's major business units
:12:46. > :12:51.will discuss their outlook. Joining us is Lawrence Gosling,
:12:52. > :13:04.editor-in-chief of Investment Week. Quite a UK focus we have got going
:13:05. > :13:08.today. Let's start with the Bank of England. We are getting a regular
:13:09. > :13:12.inflation reports, a lot of reports on whether there is any hint of an
:13:13. > :13:15.interest rate rise. As Ben was saying earlier, virtually no
:13:16. > :13:18.expectation we will get an interest rate rise. It is almost a question
:13:19. > :13:23.of if we will get one before the end of the year. I would say almost
:13:24. > :13:31.certainly not. Or the end of next year? Even before the Brexit
:13:32. > :13:37.negotiations? We will still be here discussing it! We could make a case
:13:38. > :13:41.for not seeing an interest rate rise until the UK has got through the
:13:42. > :13:44.Brexit negotiations, it is the one piece of ammunition that the Bank of
:13:45. > :13:48.England has in the reserves to kick-start the economy. I think we
:13:49. > :13:52.will see some signs of slowing inflation, numbers should take up a
:13:53. > :13:56.little bit. We're getting used to higher energy prices, commodity
:13:57. > :14:00.prices, that kind of stuff, and the effect of weaker sterling for goods
:14:01. > :14:02.being imported into the UK. A quick look on the outlook, away from the
:14:03. > :14:08.interest rate decision, we will give you the update on what the economy
:14:09. > :14:13.is doing, and it is going to be the same issue, Brexit? They think it is
:14:14. > :14:16.often in, that is the view from most people running businesses, that the
:14:17. > :14:19.economy is starting to flat line a little bit, largely because we are
:14:20. > :14:26.getting nervous about the longer term consequences of negotiations
:14:27. > :14:28.might be. We will talk about the paper stories later. Thank you.
:14:29. > :14:31.Still to come, he's one of the most prominent names in tech
:14:32. > :14:34.at one of the sector's most important firms.
:14:35. > :14:36.Shantanu Narayen is the boss of Adobe and joins us
:14:37. > :15:39.You're with Business Live from BBC News.
:15:40. > :15:45.It ignores the elephant in the room which is the big accounting scandal
:15:46. > :15:53.in Italy that erupted earlier this year. The company said it cost more
:15:54. > :15:57.than ?500 million. Lots of people lost their jobs, the investigation
:15:58. > :16:01.was opened and the company's share price fell by more than 20%. The
:16:02. > :16:07.company is feeling the effects of that. There has been a problem in
:16:08. > :16:13.the UK with the scandal over open Reach, the broadband delivery part
:16:14. > :16:17.of BT. It was fined a record ?42 million by Ofcom for failing to pay
:16:18. > :16:23.compensation to customers who had to wait, business customers, who had to
:16:24. > :16:27.wait too long to have high-speed lines installed, for manipulating
:16:28. > :16:32.the rules. It has been a pretty rough year and that is why the chief
:16:33. > :16:37.executive is giving up his bonus. Quickly, it is a really tough market
:16:38. > :16:41.out there. All the telecoms firms have been warning on profits. They
:16:42. > :16:47.are trying to get new users and amidst all of this there is a lot of
:16:48. > :16:52.scandal for BT to content with. Yes, it is a tough market and BT is
:16:53. > :16:57.trying to restructure its business. Its global services business which
:16:58. > :17:02.provides IT solutions to business network solutions, not just in the
:17:03. > :17:05.UK, it is slimming back down. It says it does not need so much
:17:06. > :17:11.old-fashioned infrastructure and it is getting rid of 4000 back-office
:17:12. > :17:19.cuts to cut costs. A lot to content with there.
:17:20. > :17:32.BT is to shed 4000 jobs. It is a new overhaul.
:17:33. > :17:38.Our top story, shares in Snapchat's owner have plunged in after hours
:17:39. > :17:41.trading after it reported disappointing growth in the first
:17:42. > :17:52.Let's quickly check on what the European markets are doing and it is
:17:53. > :17:57.not a lot, as we have just discussed with Lawrence. All eyes will be on
:17:58. > :18:01.the Bank of England as far as the inflation report is concerned. The
:18:02. > :18:02.interest rate decision will be at midday in the UK.
:18:03. > :18:07.Think of tech names that are known around the world and Adobe is one
:18:08. > :18:21.in 1982, the firm has created many industry changing products that
:18:22. > :18:31.It makes products many of you will be familiar with
:18:32. > :18:32.like Acrobat, Photoshop and the Flash video
:18:33. > :18:36.Adobe has largely produced software for the arts,
:18:37. > :18:38.design and film industries which have been used on blockbuster
:18:39. > :18:41.Its products have also powered innovation in TV too.
:18:42. > :18:44.It helped build the BBC's successful iPlayer TV on demand service.
:18:45. > :18:49.So what's it like to lead a global technology firm amid so much change?
:18:50. > :18:54.Shantanu Narayen is the boss of the company and joins us now.
:18:55. > :18:59.Welcome to the programme. This is a company which in a way has tracked
:19:00. > :19:04.the development of technology and the changes in the sector, so could
:19:05. > :19:08.you highlight what those have been during its journey and during the
:19:09. > :19:14.time you have been there? Thank you for having me on your show. You are
:19:15. > :19:21.right, we have been known for fundamental innovations that have
:19:22. > :19:26.changed the world of publishing. The first was the ability to print what
:19:27. > :19:32.you see on the screen. After that we created the first applications that
:19:33. > :19:38.allowed people to use applications like Illustrator. But the seminal
:19:39. > :19:41.products have been the ones you mention, photo shop, Acrobat. More
:19:42. > :19:46.importantly we are looking at the new forms of media people are using.
:19:47. > :19:52.What is so interesting, like we have seen with Hoover and vacuum
:19:53. > :19:56.cleaners, photo shop is now a verb. It is so commonplace and mainstream
:19:57. > :20:02.people use it in everyday language. That gives you a incredible power,
:20:03. > :20:05.doesn't it? If you look at the technology industry, the whole
:20:06. > :20:11.landscape is littered with people who rests on their laurels. Photo
:20:12. > :20:16.shop has been an incredible success. We are so focused on how we make
:20:17. > :20:21.sure that the billions of pictures people are taking, that photo shop
:20:22. > :20:25.continues to evolve at an innovative pace. People are using their cell
:20:26. > :20:30.phones to deal with pictures and the magnitude of pictures is amazing. I
:20:31. > :20:34.mentioned technology has undergone fundamental change, as we have seen
:20:35. > :20:39.the entrance of Facebook into the advertising world and the publishing
:20:40. > :20:43.world. You have entered publishing as well. At one point you are
:20:44. > :20:49.interested in being a journalist. There has been a huge merging within
:20:50. > :20:55.technology and broadcasting. How do you see the changes next? What has
:20:56. > :20:58.happened is everybody has had a story to tell. The ability to tell
:20:59. > :21:04.that story used to be restricted to a few people at the top of the
:21:05. > :21:08.pyramid. And what companies like us or Facebook are doing is
:21:09. > :21:13.democratising who is able to tell the story. Distribution is now
:21:14. > :21:18.available if you have a video and a story to tell. What is happening is
:21:19. > :21:24.the confluence of technology and media and publishing is causing all
:21:25. > :21:28.these new entrants to emerge. It makes design and aesthetics and
:21:29. > :21:33.storytelling even more important. And the barriers to entry for new
:21:34. > :21:38.firms are much lower. There was a time when you had to buy one of your
:21:39. > :21:42.products you had to buy it on disk or a CD-ROM and now everything is in
:21:43. > :21:46.the cloud. Wherever you are in the world you can access it, but that
:21:47. > :21:52.also means your competitors can do the same. We were very early in
:21:53. > :21:57.pioneering and believing the cloud would enable us to attract even more
:21:58. > :22:02.of a set of customers. The upfront price was considered prohibitive, so
:22:03. > :22:09.we went to a monthly subscription. That caused us to get 30% more
:22:10. > :22:14.customers. For ?9 99, if you have access to all the photo shop Magic
:22:15. > :22:18.it has brought so many people into the platform. But even from a
:22:19. > :22:21.competitive point of view it allows us to compete better because we can
:22:22. > :22:29.innovate at the pace of which our product people are focus. And it is
:22:30. > :22:34.always updated in the cloud. That is right and you can benefit from
:22:35. > :22:38.making sure it is perfect. I want to briefly ask you about India which
:22:39. > :22:43.has developed enormously on the back of the technology wave. How do you
:22:44. > :22:46.perceive it now? Mobile is transforming everything and emerging
:22:47. > :22:50.markets like India get to leapfrog countries like the UK or the US and
:22:51. > :22:57.they are taking advantage of that. Thank you so much for joining us. In
:22:58. > :23:01.a minute we will look through the business pages, but here is a
:23:02. > :23:14.reminder of how to get in touch with us. We will keep you up-to-date with
:23:15. > :23:18.all the inside news with analysis from around the world. We want to
:23:19. > :23:28.hear from you as well. Get involved on the web page. We are on Twitter
:23:29. > :23:34.and you can find us on Facebook. Business live on TV and online,
:23:35. > :23:39.whenever you need to know. Lawrence is here to take us through the
:23:40. > :23:50.papers. If you pick up a copy on the way to work this morning in the UK
:23:51. > :23:54.or in New York, the chances are it is from Pret a Manger, which was
:23:55. > :24:00.founded in the UK and they are looking to float on Wall Street.
:24:01. > :24:14.Largely because the central evaluation would be a lot higher. If
:24:15. > :24:20.you explore that multiple, it could be worth ?3.5 billion sterling. This
:24:21. > :24:26.is the value of the share price at which it floats. Correct. That is
:24:27. > :24:33.normally some sort of multiple according to the sector of the
:24:34. > :24:38.earnings. 40 times would be a bit frothy. Frothy in cappuccino terms.
:24:39. > :24:43.If we were going towards the Americana, it would be 15. Yes,
:24:44. > :24:49.towards the filter coffee, a sensible price for a business like
:24:50. > :24:53.this which is growing steadily, particularly in the States. Can I
:24:54. > :24:59.pick up on that love of triangular sandwiches. We were told it was a
:25:00. > :25:04.British obsession. No one else in the world does this. Clearly this is
:25:05. > :25:12.proof that it has a future. They also sell bread to the French these
:25:13. > :25:17.days. It was very early in the casual dining sector, in fact it
:25:18. > :25:22.almost kicked it off. I remember it in the 90s. It is a 30-year-old
:25:23. > :25:25.business. And it has had an ethical stance and it gives away its fresh
:25:26. > :25:29.food at the end of the day to homeless people which has resonated
:25:30. > :25:35.with people. And an interesting hiring policy. Yes, they have got
:25:36. > :25:40.the big EU workforce. It tried to offer free sandwiches for unpaid
:25:41. > :25:45.internships but it has withdrawn that because it was pushing it a bit
:25:46. > :25:50.too far. On that note we will all go and have a copy.
:25:51. > :25:54.There will be more business news throughout the day on the BBC Live
:25:55. > :25:56.webpage and on World Business Report.
:25:57. > :26:17.After days and weeks of dry weather, many of us are desperate for some
:26:18. > :26:18.rain and it looks