:00:07. > :00:09.This is Business Live from BBC News with Ben Bland and Alice Baxter.
:00:10. > :00:11.2 billion friends - soaring profits -
:00:12. > :00:14.and a big thumbs up from Wall Street.
:00:15. > :00:16.But how much bigger can Facebook grow?
:00:17. > :00:38.Live from London, that's our top story on Thursday the 27th of July.
:00:39. > :00:40.Revenues and profits soar at Facebook -
:00:41. > :00:42.as advertising dollars pour into the world's most
:00:43. > :00:50.The E-commerce giant Amazon launches a delivery service in Singapore -
:00:51. > :00:59.going head to head with its Chinese rival Alibaba.
:01:00. > :01:07.Here is how the European markets look at the start of the trading
:01:08. > :01:08.day. The FTSE is a negative territory. We will have a look at
:01:09. > :01:11.the markets later. We'll be looking at the growing
:01:12. > :01:16.trend of virtual network operators and ask who's winning -
:01:17. > :01:23.the consumer or the company? And as Facebook earnings surge 71%
:01:24. > :01:26.and its number of friends today we want to know -
:01:27. > :01:55.are you a Facebook friend I have just sent to a friend
:01:56. > :01:57.request, I hope it will be accept it!
:01:58. > :02:02.We start in Silicon Valley where it seems there is no stopping
:02:03. > :02:06.Facebook has seen another huge jump in profits as advertising revenues
:02:07. > :02:09.keep on rising - let's show you just how big.
:02:10. > :02:12.In the three months to the end of June, Facebook made a net
:02:13. > :02:18.That's a jump of 71% on the same period last year -
:02:19. > :02:21.and better than Wall Street was expecting.
:02:22. > :02:24.In June, the number of active monthly users crossed
:02:25. > :02:33.That means more than one in every four people on the planet use
:02:34. > :02:38.And according to these latest results it's still rising.
:02:39. > :02:47.Not surprisingly - so is Facebook's share price.
:02:48. > :02:50.It has climbed by more than 40% since January -
:02:51. > :02:53.giving the company a stock market value of getting on
:02:54. > :02:58.That's more than five times its value when it
:02:59. > :03:20.Thank you and I have just accepted your friend request to add to those
:03:21. > :03:25.numbers! Lets talk to Peter Veash from The BIO Agency. Can the numbers
:03:26. > :03:29.continue to grow? Has it hit a ceiling? It is pretty phenomenal
:03:30. > :03:33.numbers and they have got there by going into the developing countries.
:03:34. > :03:39.They have optimised resolution to make it work where it is not so good
:03:40. > :03:44.to connect to your mobile device and for android users. They are doing
:03:45. > :03:48.that by launching a lighter app? Correct. It has got to point where I
:03:49. > :03:53.think you could go further. The question is how you could make money
:03:54. > :03:59.from those markets. How do they go further in terms of making money,
:04:00. > :04:04.monetising those other segments of the business. How did they make
:04:05. > :04:09.money from Instagram, WhatsApp and the other hugely popular apps they
:04:10. > :04:14.have bought up. A lot of revenues come from developing countries and
:04:15. > :04:21.also from video streams. Facebook is jammed from many advert placements.
:04:22. > :04:25.Instagram has some way to go. Messenger and WhatsApp have not been
:04:26. > :04:29.touched. The reason they can rake in this much run advertising is because
:04:30. > :04:34.of the numbers using it. If they started using adverts on platforms
:04:35. > :04:41.like WhatsApp, if it annoys people and they switched to other apps,
:04:42. > :04:45.they risk undoing the good work. But we had the same concerns when they
:04:46. > :04:51.started putting ads in to Facebook and it is still growing. I think
:04:52. > :04:54.consumers will get over it, understand it and adopted. When you
:04:55. > :04:59.look at the numbers, and one in four people is an very least once a
:05:00. > :05:02.month, it feels like they are maybe reaching saturation but they seem to
:05:03. > :05:06.be aware of that and they are pushing in developing markets with
:05:07. > :05:15.this lighter model, the two G version of the app. They are going
:05:16. > :05:18.new audiences and stretching the demographic. There is still some way
:05:19. > :05:21.to go with the numbers on Facebook but they have other platforms.
:05:22. > :05:26.Instagram is a third of the size and that could gross admit openly in
:05:27. > :05:30.those markets as well. A note of caution, they keep telling investors
:05:31. > :05:38.it cannot last forever. At some point it will plateau but we think
:05:39. > :05:42.there is traction in the other platforms. Thank you, Peter Veash
:05:43. > :05:45.from The BIO Agency. Let's take a look at some of
:05:46. > :05:48.the other stories making the news. President Trump has been hailing
:05:49. > :05:50.a $10 billion dollar investment by Taiwanese electronics giant
:05:51. > :05:53.Foxconn - as proof his America First At a press conference
:05:54. > :05:56.at the White House, FoxConn's CEO unveiled plans for a new plant
:05:57. > :05:59.in Wisconsin making LCD screens - Samsung Electronics is on track
:06:00. > :06:06.to make record profits this year after its best ever set
:06:07. > :06:08.of second quarter earnings. They were up over 72% to more
:06:09. > :06:11.than $12 billion in the The financial success comes
:06:12. > :06:16.as Samsung's boss faces a corruption trial and the company recovers
:06:17. > :06:18.from a massive recall Profits at German car-maker
:06:19. > :06:25.Volkswagen more than doubled The strong earnings were a result
:06:26. > :06:31.of cost cuts and sales in new, The results come a day
:06:32. > :06:37.after Volkswagen defended alleged collusion in the car industry,
:06:38. > :06:40.saying cooperation with rivals like BMW and Daimler
:06:41. > :07:09.actually helps customers. Lots going on on the these live --
:07:10. > :07:20.web page. Also news about how the stock market is doing, and
:07:21. > :07:37.AstraZeneca stock is diving. The story doing the rounds, Lloyds doing
:07:38. > :07:40.mortgage arrears charges. It has set aside ?283 million to look at
:07:41. > :07:45.mortgage arrears issues. For the first time ever
:07:46. > :07:50.e-commerce giants - Alibaba and Amazon -
:07:51. > :07:52.are going head to head. Today Amazon
:07:53. > :07:54.is launching its fresh food service in Alibaba's back yard -
:07:55. > :07:56.Singapore. The two are trying to get a foothold
:07:57. > :07:59.in the South East Asian market which boasts up to 600 million
:08:00. > :08:02.people, which could be worth at least 70 billion dollars
:08:03. > :08:04.by the end of the decade. Our Asia business correspondent
:08:05. > :08:10.Karishma Vashwani has more. Tell us how this is going to take
:08:11. > :08:16.shape. I was at the Amazon facility, that is the word they use here in
:08:17. > :08:21.Singapore today. They launched their Prime now delivery service. It means
:08:22. > :08:26.you can get stuff from them in just two hours. Imagine that, what would
:08:27. > :08:31.you need in just two hours' time, frankly? It is a 100,000 square feet
:08:32. > :08:37.facility. It is meant to be the largest urban facility that Amazon
:08:38. > :08:40.has in the entire world. Everything from eggs, TVs, baby strollers,
:08:41. > :08:48.whatever your heart fancies, you can get there. The South Asian online
:08:49. > :08:53.retail market could be worth $70 billion in the next few years. That
:08:54. > :08:58.is why there is this big e-commerce war waiting to begin here in Asia.
:08:59. > :09:03.Amazon going head-to-head with China's rival Alibaba for the very
:09:04. > :09:12.first time in Asia. Many in our audiences will know the name Lasada
:09:13. > :09:19.which is owned by Alibaba. They own an online groceries provider in
:09:20. > :09:23.Singapore. So it is getting very competitive in this tiny market of
:09:24. > :09:29.just 5 million people. You might ask why do these big names come to
:09:30. > :09:34.Singapore? According to Amazon, what they said to me earlier today, it
:09:35. > :09:41.has a tech savvy customer base, and it generally, what works in
:09:42. > :09:45.Singapore might work in Southeast Asia. But logistics and
:09:46. > :09:51.infrastructure will be major challenges as they try and expand in
:09:52. > :09:54.the region. Thank you. Let's have a look at the markets.
:09:55. > :09:56.Japan's Nikkei inched up, reflecting a rally in riskier
:09:57. > :10:00.A sharp jump in game maker Nintendo helped too - on the back
:10:01. > :10:04.The rally in stocks was driven by the Federal Reserve keeping
:10:05. > :10:07.interest rates on hold in the US and investors sensing that they may
:10:08. > :10:11.That caused a sharp fall in the value of the dollar
:10:12. > :10:14.to its lowest level in more than a year - but it helped push
:10:15. > :10:16.the US markets higher, to fresh record highs.
:10:17. > :10:19.The Dow gaining almost 0.5% after Boeing shares soared nearly
:10:20. > :10:29.10% after a strong earnings report from the plane maker.
:10:30. > :10:35.Let's take a look at the European markets. With the exception of
:10:36. > :10:39.Paris, they are in the red. The FTSE is feeling a bit of a drag from
:10:40. > :10:44.AstraZeneca shares in particular. Their biggest one-day fall over.
:10:45. > :10:49.They are down 15%, more than offsetting the games by DHEA, the
:10:50. > :10:58.drinks maker, whose shares were up by 5% after a strong profits report
:10:59. > :11:03.-- Diageo. What will happen on Wall Street?
:11:04. > :11:07.Investors might be able to draw breath after Facebook's announcement
:11:08. > :11:11.before they turn attention to another social media giant. Twitter
:11:12. > :11:17.is expected to reveal falling revenue. Also important will be the
:11:18. > :11:21.day trip shares about how many users who has, and that is just the
:11:22. > :11:27.beginning of a very busy day. The New York Times, and Procter Gamble
:11:28. > :11:33.are other big names reporting earnings. All may be overshadowed by
:11:34. > :11:38.Amazon. It recently saw its market value go past half $1 trillion and
:11:39. > :11:44.is set to unveil another increase in revenue. Investors also want to hear
:11:45. > :11:51.any use on its recent move into the supermarket business with the
:11:52. > :11:52.takeover of Whole Foods. That was Samira in the United
:11:53. > :11:53.States. Richard Hunter is Head
:11:54. > :12:03.of Research at Ben was talking through some of the
:12:04. > :12:08.movements on the US markets and the currency markets, particularly the
:12:09. > :12:15.drop in the dollar. That was largely due to comments from Janet Yellin.
:12:16. > :12:20.Where would you place your money on the possibility of a third rate hike
:12:21. > :12:26.this year? I think at the moment December is just about on the cards.
:12:27. > :12:31.One of the problems at the moment is the complete lack of inflation.
:12:32. > :12:36.There is nothing wrong with the economy in itself. There is a global
:12:37. > :12:42.recovery. I think investors know they will not hike rates too
:12:43. > :12:46.quickly. They will not want to derail the economic recovery in the
:12:47. > :12:52.States but possibly be more in just in which then mentioned which is the
:12:53. > :12:56.rundown of the QBE programme and the bond buying they have been doing.
:12:57. > :13:01.They can either sell the bonds back in the market or they can let their
:13:02. > :13:04.mature. Simply letting the mature would be a quieter way to do it and
:13:05. > :13:09.I think in terms of real investor interest, we will move down that
:13:10. > :13:13.road. Q E is quantity of easing. The
:13:14. > :13:20.reaction seems to be to push the dollar lower and push the markets
:13:21. > :13:23.higher? We had a very good set of first-quarter earnings in the United
:13:24. > :13:28.States and so far so good in terms of the second quarter or half yearly
:13:29. > :13:36.earnings. They are even better. This gives markets a lot of comfort. This
:13:37. > :13:39.is what is happening on the ground and there is no doubt technology
:13:40. > :13:47.shares in particular are having a whale of a time at the moment. We
:13:48. > :13:48.had a spate of second quarter earnings numbers out today. Richard
:13:49. > :13:55.will be with us later. Thank you. Still to come: piggy-backing
:13:56. > :13:57.a mobile network. We'll be looking at the growing
:13:58. > :14:00.trend of virtual network operators and ask who's winning -
:14:01. > :14:02.the consumer or the company? You're with Business
:14:03. > :14:09.Live from BBC News. Lloyds Banking Group has set aside
:14:10. > :14:14.another ?700 million in compensation for mis-selling payment protection
:14:15. > :14:19.insurance, and ?283 million for its mistreatment of customers
:14:20. > :14:24.in mortgage arrears. It came as the bank reported
:14:25. > :14:28.half-year profits of ?2.5 billion, its biggest in eight years and 4%
:14:29. > :14:31.higher than a year ago. Theo Leggett is in our
:14:32. > :14:42.business newsroom. Talk us through the conversation.
:14:43. > :14:48.What is it for and will it draw a line under things for Lloyds? You
:14:49. > :14:52.have to hope so. There is an awful lot of legal garbage, if you like,
:14:53. > :14:57.that Lloyds has been trying to work its way through. It has set aside
:14:58. > :15:02.?283 million to compensate customers for how it handled its mortgage
:15:03. > :15:05.arrears. And it has acknowledged that when customers fell into
:15:06. > :15:08.arrears, they did not always do enough to understand the
:15:09. > :15:12.circumstances of those customers, to be confident that those arrears
:15:13. > :15:18.payments were affordable and sustainable. As a result, it will
:15:19. > :15:22.refund all the fees charged from January 2009 and January 20 16th
:15:23. > :15:27.when it stopped imposing these charges. It will also make payments
:15:28. > :15:30.for potential distress and inconvenience, and any other losses
:15:31. > :15:35.that people may have experienced as a result of not being able to keep
:15:36. > :15:47.up with payment plans. That is the mortgage arrears. It is also
:15:48. > :15:51.setting aside ?1 billion for PPI insurance claims. But a ?700 million
:15:52. > :15:55.more than expected. It says this is for reactive claims. Despite this,
:15:56. > :16:00.the half-year earnings have been very strong, 4% up on the same
:16:01. > :16:04.period a year ago. What is it doing to the share price? The markets do
:16:05. > :16:10.not know what to make of it. It fell sharply and now it has climbed back
:16:11. > :16:19.up. A next mixture of -- mixed picture from Lloyds but the earnings
:16:20. > :16:28.figures are good. Not a great day for estate agents, both at
:16:29. > :16:33.Countrywide and Foxton's. And Foxton's tumbling 64%. Much more on
:16:34. > :16:38.the tablet as well, on the BBC news website, and also on our Business
:16:39. > :16:41.Live page. Theo, who we were just hearing from, has written up on a
:16:42. > :16:48.number of the stories, so yes, just head online for much more normal
:16:49. > :16:49.fees. -- much more on all of these stories.
:16:50. > :16:55.Our top story: Revenues and profits have soared at Facebook,
:16:56. > :16:57.as advertising dollars pour into the world's most
:16:58. > :17:03.More than two billion people - more than a quarter
:17:04. > :17:10.of the world's population - log into the site every month.
:17:11. > :17:17.A quick look at how the European markets are faring earlier in the
:17:18. > :17:20.day. The FTSE 100 picking up a bit, despite a drag from AstraZeneca
:17:21. > :17:31.shares, which saw their biggest one-day fall after a failure of a
:17:32. > :17:34.lung cancer drug trial. A lot of earnings around today, Thursday, the
:17:35. > :17:36.heaviest day of European earnings, watch the markets closely, quite a
:17:37. > :17:49.bit of markets Butt movement. Now the inside track on the battle
:17:50. > :17:54.between the big mobile phone networks. Last month the European
:17:55. > :17:58.Union abolished overseas roaming charges. There was just another
:17:59. > :18:04.development in an industry that has seen calls, texts and data fall to
:18:05. > :18:08.rock bottom prices. Gift gaffe, one of the growing number of so-called
:18:09. > :18:13.virtual network providers, unlike traditional network operators
:18:14. > :18:16.virtual networks don't own the mobile infrastructure used by their
:18:17. > :18:21.customers. Instead they negotiate with existing companies, such as
:18:22. > :18:31.Vodafone and Telefonica. Mike Sherman it is the Chief Executive of
:18:32. > :18:37.gift gaffe. -- ten one. He joins us now. Wonderful to see you. We were
:18:38. > :18:41.mentioning earlier in the introduction to you that giffgaff is
:18:42. > :18:46.a virtual mobile operator, you effectively piggyback on 02's
:18:47. > :18:52.network. How does that work, and does it actually work for the
:18:53. > :18:57.consumers involved? It works by us having a contract with O2, and we
:18:58. > :19:00.buy our share of the network. That is not unusual, mobile virtual
:19:01. > :19:04.operators have been in existence in this country to nearly 20 years.
:19:05. > :19:08.Instead of us having to worry about building a network and running it,
:19:09. > :19:11.it allows us to focus on differentiated propositions, in our
:19:12. > :19:16.case, what makes us very different apart from the fact we don't offer
:19:17. > :19:20.contracts and operate only online, we rely on our members to actually
:19:21. > :19:26.run large parts of our business through us through our online forum.
:19:27. > :19:30.Sounds a little bit like a 21st-century of the old corporative
:19:31. > :19:33.model. A little bit like that, yes. Most of our member services are done
:19:34. > :19:40.by our members, in an online forum they will answer queries and they do
:19:41. > :19:43.an amazing job. We can tear the experience with a traditional setup
:19:44. > :19:46.where you might call up a phone line, on the UK on average it takes
:19:47. > :19:52.17 minutes to get through a call like that. With our forum, the first
:19:53. > :19:55.response usually comes back in less than 90 seconds. Although it is a
:19:56. > :19:59.slightly different way of operating, we think it is a very good way of
:20:00. > :20:02.serving our members. That all sounds very nice but in practice does it
:20:03. > :20:08.actually work for the majority of consumers out there? The fact it is
:20:09. > :20:11.all online, no physical shops, no call centre to call up, presumably
:20:12. > :20:17.you are targeting a very specific demographic. Our proposition does
:20:18. > :20:20.not appeal to everyone, mainly the younger generation who have grown up
:20:21. > :20:26.with the likes of Facebook and doing everything online. We do believe it
:20:27. > :20:31.works. We have been rated independently by the Institute of
:20:32. > :20:34.customer service and as being in the top ten companies in the UK for
:20:35. > :20:38.customer service. So independent feedback tells us that it is
:20:39. > :20:42.working. There must be some challenges because if four example a
:20:43. > :20:45.network runs its own infrastructure, it can make decisions on what it
:20:46. > :20:49.sees as priorities. They might decide it wants to up the speed in
:20:50. > :20:52.towns and cities or improve coverage. If you are relying on
:20:53. > :20:58.them, you can't make those decisions, you are very much at
:20:59. > :21:04.their mercy. We rely on our network provider, O2, in fact we are owned
:21:05. > :21:08.by O2. They make significant networks in the network, over ?1.5
:21:09. > :21:13.million a day to invest in the network and by the end of the year
:21:14. > :21:16.their 4G coverage is set to be known to percent of the country. Can you
:21:17. > :21:24.influence whether one to put that money or are you very much at... We
:21:25. > :21:27.are wholly owned by O2 UK, and we share some company directors, so we
:21:28. > :21:31.have a measure of influence over that but we are very confident in
:21:32. > :21:36.the quality of the network they provide to us. As you say, you
:21:37. > :21:42.weren't the first virtual mobile operator when you launched in 2009,
:21:43. > :21:45.and since you launched the number internationally particularly has
:21:46. > :21:47.ballooned, particularly in parts of the developing world. Are you
:21:48. > :21:52.concerned about the level of competition out there, is this the
:21:53. > :21:59.way forward for mobile operators? Generally as markets mature, the
:22:00. > :22:04.share that NBN now Pole have gross. In underdeveloped markets like
:22:05. > :22:07.China, it may be less than one or 2% was not as markets mature, more and
:22:08. > :22:12.more people have phones and there is room in the market for
:22:13. > :22:16.differentiated products. To come out and be successful. We are just an
:22:17. > :22:20.example of that. We tend to be at the head of that trend. We will have
:22:21. > :22:22.to leave it there, thank you very much.
:22:23. > :22:31.More now on the drinks giant deer Geo, the maker of Johnnie Walker
:22:32. > :22:36.whiskey and Smirnoff vodka is testing a very successful year.
:22:37. > :22:43.Sales were up to $15.8 billion profits, also up 25%. Earlier the
:22:44. > :22:48.boss explained why. We have driven strong productivity to reinvest back
:22:49. > :22:53.into it, which is why today we have been able to up our profit guidance
:22:54. > :22:57.over the next three years, and we have initiated a share buy-back
:22:58. > :23:08.because the cash flow is strong and consistent in the company now.
:23:09. > :23:13.People around the world are drinking better, and Diageo does well when
:23:14. > :23:18.that happens. Environments like Brazil and Nigeria are not easy, and
:23:19. > :23:23.we do have challenges. We have worked through a year where markets
:23:24. > :23:26.have had a degree of volatility, but we are driving consistent growth,
:23:27. > :23:33.and that's what gives us the confidence to reaffirm our outlook
:23:34. > :23:36.among single digit organic growth, continued margin expansion, strong
:23:37. > :23:42.cash flow, and that is why we have also initiated a share buy-back. The
:23:43. > :23:46.chief executive of Diageo who was speaking to me on world business
:23:47. > :23:49.report a little earlier. At the beginning of the programme, we asked
:23:50. > :23:54.you to tweak in and let us now if you are a fan of Facebook or a bit
:23:55. > :23:58.of a foe. They have had a huge surge in profits and we have learned that
:23:59. > :24:03.their membership numbers have swelled beyond 2 billion. Graham has
:24:04. > :24:06.got in touch, saying it is getting frustrating now, too political, too
:24:07. > :24:12.many ads and lots of fake info being shared. A big issue during the US
:24:13. > :24:15.election. Julie says she is able to keep in touch with family and
:24:16. > :24:20.friends across the world and it has many positives when used
:24:21. > :24:24.responsibly. Claire says not a fan, life has been some advertisement
:24:25. > :24:32.Ashok my account. Richard, friend or foe? I am not one of the 2 billion,
:24:33. > :24:38.so no comment. You must be in their sights, they are growing their
:24:39. > :24:43.monthly users, perhaps? I have heard too many stories about some of the
:24:44. > :24:49.trivia posted on Facebook. I am more towards Twitter just for the news
:24:50. > :24:56.value. I like that tweak you head saying that WhatsApp was an oasis of
:24:57. > :25:00.calm in comparison. Yes, that was James Comey said he would be
:25:01. > :25:06.slightly reluctant if it was suddenly bombarded with adverts.
:25:07. > :25:12.Tech giants generally, Seattle Times, home to the HQ of Amazon,
:25:13. > :25:17.running this headline, Amazon's $500 billion, its status as a corporate
:25:18. > :25:24.titan. As Amazon entered the Golden glove? I think yes. It certainly
:25:25. > :25:28.has. It is amazing there are now four company is worth $500 billion,
:25:29. > :25:38.half a trillion, if you prefer, the other three are Microsoft, Alphabet,
:25:39. > :25:49.Google as was, and Apple. A good pub quiz question. Do we want to have a
:25:50. > :25:53.look at the other of the next paper, no, we don't have time. It always
:25:54. > :25:59.goes quickly. Richard, thank you very much. That is it from Business
:26:00. > :26:11.Live, more throughout the day on the website. The key for watching.
:26:12. > :26:18.The weather pattern is not going to change a great deal over the next
:26:19. > :26:20.few days. Low pressure will keep things fairly unsettled, and for
:26:21. > :26:21.today, and for