27/07/2017 BBC Business Live

This is Business Live from BBC News with Ben Bland and Alice Baxter.

2 billion friends - soaring profits -

and a big thumbs up from Wall Street.

But how much bigger can Facebook grow?

Live from London, that's our top story on Thursday the 27th of July.

Revenues and profits soar at Facebook -

as advertising dollars pour into the world's most

The E-commerce giant Amazon launches a delivery service in Singapore -

going head to head with its Chinese rival Alibaba.

Here is how the European markets look at the start of the trading

day. The FTSE is a negative territory. We will have a look at

the markets later. We'll be looking at the growing

trend of virtual network operators and ask who's winning -

the consumer or the company? And as Facebook earnings surge 71%

and its number of friends today we want to know -

are you a Facebook friend I have just sent to a friend

request, I hope it will be accept it!

We start in Silicon Valley where it seems there is no stopping

Facebook has seen another huge jump in profits as advertising revenues

keep on rising - let's show you just how big.

In the three months to the end of June, Facebook made a net

That's a jump of 71% on the same period last year -

and better than Wall Street was expecting.

In June, the number of active monthly users crossed

That means more than one in every four people on the planet use

And according to these latest results it's still rising.

Not surprisingly - so is Facebook's share price.

It has climbed by more than 40% since January -

giving the company a stock market value of getting on

That's more than five times its value when it

Thank you and I have just accepted your friend request to add to those

numbers! Lets talk to Peter Veash from The BIO Agency. Can the numbers

continue to grow? Has it hit a ceiling? It is pretty phenomenal

numbers and they have got there by going into the developing countries.

They have optimised resolution to make it work where it is not so good

to connect to your mobile device and for android users. They are doing

that by launching a lighter app? Correct. It has got to point where I

think you could go further. The question is how you could make money

from those markets. How do they go further in terms of making money,

monetising those other segments of the business. How did they make

money from Instagram, WhatsApp and the other hugely popular apps they

have bought up. A lot of revenues come from developing countries and

also from video streams. Facebook is jammed from many advert placements.

Instagram has some way to go. Messenger and WhatsApp have not been

touched. The reason they can rake in this much run advertising is because

of the numbers using it. If they started using adverts on platforms

like WhatsApp, if it annoys people and they switched to other apps,

they risk undoing the good work. But we had the same concerns when they

started putting ads in to Facebook and it is still growing. I think

consumers will get over it, understand it and adopted. When you

look at the numbers, and one in four people is an very least once a

month, it feels like they are maybe reaching saturation but they seem to

be aware of that and they are pushing in developing markets with

this lighter model, the two G version of the app. They are going

new audiences and stretching the demographic. There is still some way

to go with the numbers on Facebook but they have other platforms.

Instagram is a third of the size and that could gross admit openly in

those markets as well. A note of caution, they keep telling investors

it cannot last forever. At some point it will plateau but we think

there is traction in the other platforms. Thank you, Peter Veash

from The BIO Agency. Let's take a look at some of

the other stories making the news. President Trump has been hailing

a $10 billion dollar investment by Taiwanese electronics giant

Foxconn - as proof his America First At a press conference

at the White House, FoxConn's CEO unveiled plans for a new plant

in Wisconsin making LCD screens - Samsung Electronics is on track

to make record profits this year after its best ever set

of second quarter earnings. They were up over 72% to more

than $12 billion in the The financial success comes

as Samsung's boss faces a corruption trial and the company recovers

from a massive recall Profits at German car-maker

Volkswagen more than doubled The strong earnings were a result

of cost cuts and sales in new, The results come a day

after Volkswagen defended alleged collusion in the car industry,

saying cooperation with rivals like BMW and Daimler

actually helps customers. Lots going on on the these live --

web page. Also news about how the stock market is doing, and

AstraZeneca stock is diving. The story doing the rounds, Lloyds doing

mortgage arrears charges. It has set aside ?283 million to look at

mortgage arrears issues. For the first time ever

e-commerce giants - Alibaba and Amazon -

are going head to head. Today Amazon

is launching its fresh food service in Alibaba's back yard -

Singapore. The two are trying to get a foothold

in the South East Asian market which boasts up to 600 million

people, which could be worth at least 70 billion dollars

by the end of the decade. Our Asia business correspondent

Karishma Vashwani has more. Tell us how this is going to take

shape. I was at the Amazon facility, that is the word they use here in

Singapore today. They launched their Prime now delivery service. It means

you can get stuff from them in just two hours. Imagine that, what would

you need in just two hours' time, frankly? It is a 100,000 square feet

facility. It is meant to be the largest urban facility that Amazon

has in the entire world. Everything from eggs, TVs, baby strollers,

whatever your heart fancies, you can get there. The South Asian online

retail market could be worth $70 billion in the next few years. That

is why there is this big e-commerce war waiting to begin here in Asia.

Amazon going head-to-head with China's rival Alibaba for the very

first time in Asia. Many in our audiences will know the name Lasada

which is owned by Alibaba. They own an online groceries provider in

Singapore. So it is getting very competitive in this tiny market of

just 5 million people. You might ask why do these big names come to

Singapore? According to Amazon, what they said to me earlier today, it

has a tech savvy customer base, and it generally, what works in

Singapore might work in Southeast Asia. But logistics and

infrastructure will be major challenges as they try and expand in

the region. Thank you. Let's have a look at the markets.

Japan's Nikkei inched up, reflecting a rally in riskier

A sharp jump in game maker Nintendo helped too - on the back

The rally in stocks was driven by the Federal Reserve keeping

interest rates on hold in the US and investors sensing that they may

That caused a sharp fall in the value of the dollar

to its lowest level in more than a year - but it helped push

the US markets higher, to fresh record highs.

The Dow gaining almost 0.5% after Boeing shares soared nearly

10% after a strong earnings report from the plane maker.

Let's take a look at the European markets. With the exception of

Paris, they are in the red. The FTSE is feeling a bit of a drag from

AstraZeneca shares in particular. Their biggest one-day fall over.

They are down 15%, more than offsetting the games by DHEA, the

drinks maker, whose shares were up by 5% after a strong profits report

-- Diageo. What will happen on Wall Street?

Investors might be able to draw breath after Facebook's announcement

before they turn attention to another social media giant. Twitter

is expected to reveal falling revenue. Also important will be the

day trip shares about how many users who has, and that is just the

beginning of a very busy day. The New York Times, and Procter Gamble

are other big names reporting earnings. All may be overshadowed by

Amazon. It recently saw its market value go past half $1 trillion and

is set to unveil another increase in revenue. Investors also want to hear

any use on its recent move into the supermarket business with the

takeover of Whole Foods. That was Samira in the United

States. Richard Hunter is Head

of Research at Ben was talking through some of the

movements on the US markets and the currency markets, particularly the

drop in the dollar. That was largely due to comments from Janet Yellin.

Where would you place your money on the possibility of a third rate hike

this year? I think at the moment December is just about on the cards.

One of the problems at the moment is the complete lack of inflation.

There is nothing wrong with the economy in itself. There is a global

recovery. I think investors know they will not hike rates too

quickly. They will not want to derail the economic recovery in the

States but possibly be more in just in which then mentioned which is the

rundown of the QBE programme and the bond buying they have been doing.

They can either sell the bonds back in the market or they can let their

mature. Simply letting the mature would be a quieter way to do it and

I think in terms of real investor interest, we will move down that

road. Q E is quantity of easing. The

reaction seems to be to push the dollar lower and push the markets

higher? We had a very good set of first-quarter earnings in the United

States and so far so good in terms of the second quarter or half yearly

earnings. They are even better. This gives markets a lot of comfort. This

is what is happening on the ground and there is no doubt technology

shares in particular are having a whale of a time at the moment. We

had a spate of second quarter earnings numbers out today. Richard

will be with us later. Thank you. Still to come: piggy-backing

a mobile network. We'll be looking at the growing

trend of virtual network operators and ask who's winning -

the consumer or the company? You're with Business

Live from BBC News. Lloyds Banking Group has set aside

another ?700 million in compensation for mis-selling payment protection

insurance, and ?283 million for its mistreatment of customers

in mortgage arrears. It came as the bank reported

half-year profits of ?2.5 billion, its biggest in eight years and 4%

higher than a year ago. Theo Leggett is in our

business newsroom. Talk us through the conversation.

What is it for and will it draw a line under things for Lloyds? You

have to hope so. There is an awful lot of legal garbage, if you like,

that Lloyds has been trying to work its way through. It has set aside

?283 million to compensate customers for how it handled its mortgage

arrears. And it has acknowledged that when customers fell into

arrears, they did not always do enough to understand the

circumstances of those customers, to be confident that those arrears

payments were affordable and sustainable. As a result, it will

refund all the fees charged from January 2009 and January 20 16th

when it stopped imposing these charges. It will also make payments

for potential distress and inconvenience, and any other losses

that people may have experienced as a result of not being able to keep

up with payment plans. That is the mortgage arrears. It is also

setting aside ?1 billion for PPI insurance claims. But a ?700 million

more than expected. It says this is for reactive claims. Despite this,

the half-year earnings have been very strong, 4% up on the same

period a year ago. What is it doing to the share price? The markets do

not know what to make of it. It fell sharply and now it has climbed back

up. A next mixture of -- mixed picture from Lloyds but the earnings

figures are good. Not a great day for estate agents, both at

Countrywide and Foxton's. And Foxton's tumbling 64%. Much more on

the tablet as well, on the BBC news website, and also on our Business

Live page. Theo, who we were just hearing from, has written up on a

number of the stories, so yes, just head online for much more normal

fees. -- much more on all of these stories.

Our top story: Revenues and profits have soared at Facebook,

as advertising dollars pour into the world's most

More than two billion people - more than a quarter

of the world's population - log into the site every month.

A quick look at how the European markets are faring earlier in the

day. The FTSE 100 picking up a bit, despite a drag from AstraZeneca

shares, which saw their biggest one-day fall after a failure of a

lung cancer drug trial. A lot of earnings around today, Thursday, the

heaviest day of European earnings, watch the markets closely, quite a

bit of markets Butt movement. Now the inside track on the battle

between the big mobile phone networks. Last month the European

Union abolished overseas roaming charges. There was just another

development in an industry that has seen calls, texts and data fall to

rock bottom prices. Gift gaffe, one of the growing number of so-called

virtual network providers, unlike traditional network operators

virtual networks don't own the mobile infrastructure used by their

customers. Instead they negotiate with existing companies, such as

Vodafone and Telefonica. Mike Sherman it is the Chief Executive of

gift gaffe. -- ten one. He joins us now. Wonderful to see you. We were

mentioning earlier in the introduction to you that giffgaff is

a virtual mobile operator, you effectively piggyback on 02's

network. How does that work, and does it actually work for the

consumers involved? It works by us having a contract with O2, and we

buy our share of the network. That is not unusual, mobile virtual

operators have been in existence in this country to nearly 20 years.

Instead of us having to worry about building a network and running it,

it allows us to focus on differentiated propositions, in our

case, what makes us very different apart from the fact we don't offer

contracts and operate only online, we rely on our members to actually

run large parts of our business through us through our online forum.

Sounds a little bit like a 21st-century of the old corporative

model. A little bit like that, yes. Most of our member services are done

by our members, in an online forum they will answer queries and they do

an amazing job. We can tear the experience with a traditional setup

where you might call up a phone line, on the UK on average it takes

17 minutes to get through a call like that. With our forum, the first

response usually comes back in less than 90 seconds. Although it is a

slightly different way of operating, we think it is a very good way of

serving our members. That all sounds very nice but in practice does it

actually work for the majority of consumers out there? The fact it is

all online, no physical shops, no call centre to call up, presumably

you are targeting a very specific demographic. Our proposition does

not appeal to everyone, mainly the younger generation who have grown up

with the likes of Facebook and doing everything online. We do believe it

works. We have been rated independently by the Institute of

customer service and as being in the top ten companies in the UK for

customer service. So independent feedback tells us that it is

working. There must be some challenges because if four example a

network runs its own infrastructure, it can make decisions on what it

sees as priorities. They might decide it wants to up the speed in

towns and cities or improve coverage. If you are relying on

them, you can't make those decisions, you are very much at

their mercy. We rely on our network provider, O2, in fact we are owned

by O2. They make significant networks in the network, over ?1.5

million a day to invest in the network and by the end of the year

their 4G coverage is set to be known to percent of the country. Can you

influence whether one to put that money or are you very much at... We

are wholly owned by O2 UK, and we share some company directors, so we

have a measure of influence over that but we are very confident in

the quality of the network they provide to us. As you say, you

weren't the first virtual mobile operator when you launched in 2009,

and since you launched the number internationally particularly has

ballooned, particularly in parts of the developing world. Are you

concerned about the level of competition out there, is this the

way forward for mobile operators? Generally as markets mature, the

share that NBN now Pole have gross. In underdeveloped markets like

China, it may be less than one or 2% was not as markets mature, more and

more people have phones and there is room in the market for

differentiated products. To come out and be successful. We are just an

example of that. We tend to be at the head of that trend. We will have

to leave it there, thank you very much.

More now on the drinks giant deer Geo, the maker of Johnnie Walker

whiskey and Smirnoff vodka is testing a very successful year.

Sales were up to $15.8 billion profits, also up 25%. Earlier the

boss explained why. We have driven strong productivity to reinvest back

into it, which is why today we have been able to up our profit guidance

over the next three years, and we have initiated a share buy-back

because the cash flow is strong and consistent in the company now.

People around the world are drinking better, and Diageo does well when

that happens. Environments like Brazil and Nigeria are not easy, and

we do have challenges. We have worked through a year where markets

have had a degree of volatility, but we are driving consistent growth,

and that's what gives us the confidence to reaffirm our outlook

among single digit organic growth, continued margin expansion, strong

cash flow, and that is why we have also initiated a share buy-back. The

chief executive of Diageo who was speaking to me on world business

report a little earlier. At the beginning of the programme, we asked

you to tweak in and let us now if you are a fan of Facebook or a bit

of a foe. They have had a huge surge in profits and we have learned that

their membership numbers have swelled beyond 2 billion. Graham has

got in touch, saying it is getting frustrating now, too political, too

many ads and lots of fake info being shared. A big issue during the US

election. Julie says she is able to keep in touch with family and

friends across the world and it has many positives when used

responsibly. Claire says not a fan, life has been some advertisement

Ashok my account. Richard, friend or foe? I am not one of the 2 billion,

so no comment. You must be in their sights, they are growing their

monthly users, perhaps? I have heard too many stories about some of the

trivia posted on Facebook. I am more towards Twitter just for the news

value. I like that tweak you head saying that WhatsApp was an oasis of

calm in comparison. Yes, that was James Comey said he would be

slightly reluctant if it was suddenly bombarded with adverts.

Tech giants generally, Seattle Times, home to the HQ of Amazon,

running this headline, Amazon's $500 billion, its status as a corporate

titan. As Amazon entered the Golden glove? I think yes. It certainly

has. It is amazing there are now four company is worth $500 billion,

half a trillion, if you prefer, the other three are Microsoft, Alphabet,

Google as was, and Apple. A good pub quiz question. Do we want to have a

look at the other of the next paper, no, we don't have time. It always

goes quickly. Richard, thank you very much. That is it from Business

Live, more throughout the day on the website. The key for watching.

The weather pattern is not going to change a great deal over the next

few days. Low pressure will keep things fairly unsettled, and for

today, and for