27/07/2017 BBC Business Live


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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


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