10/08/2017 BBC Business Live


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This is Business Live from BBC News with Ben Thompson and Sally Bundock.


Embattled electronics giant Toshiba has finally


reported its long-awaited earnings, but with losses mounting does


Live from London, that's our top story on the 10th of August.


Analysts warn the 140-year-old iconic Japanese firm is still facing


serious challengers. We'll talk you through Toshiba's latest


revelations. And Facebook versus YouTube. The social media giant goes


all out to woo TV viewers. Markets in Europe are open and trading but


very mixed. We are going to find out how one man used his skills


combating insurgents in the army can now sell us all sorts of things


including the FT. As Facebook launches a new video service, we


want to know what would you watch on social networks? What TV shows would


you watch? Let us know. Welcome to the programme. As usual


it's action packed. Toshiba has reported


its much-delayed earnings - finally reducing the risk it will be


de-listed from the The embattled electronics firm


posted a loss of $8.8 billion It follows an accounting scandal


and massive writedowns. So, what's gone wrong


for the 140-year-old Japanese giant? Two years ago an accounting scandal


was revealed that led to the resignation of several


members of the firm's senior The company was found to have


inflated the previous seven years Problems came to a head again this


year, when Toshiba's US nuclear unit, Westinghouse,


was forced to file for bankruptcy protection after suffering


a $13 billion cost overrun. It's proving pretty difficult


to find a buyer for Westinghouse. In a desperate move,


Toshiba has been forced to put up This is a major part of its business


- making memory chips It's been valued


at about $18 billion. This has taken its toll


on the company's share price which has effectively halved,


and in April Toshiba actually warned With me is Pelham Smithers,


Managing Director of A lotto details about why we are


where we are with Toshiba. But some relief I suppose today that they


have finally posted the earnings. This is just one of their


challenges. That's right. They faced separate problems. The first is


whether there are accounts would be qualified by the accountants. The


other question is an ongoing investigation by the Tokyo stock


exchange into whether or not the company has been improving its


internal controls. They've overcome the first hurdle, they've got the


second to come. It doesn't mean their future is secure? It doesn't.


Even if they manage to get the Tokyo stock exchange to agree their


controls have improved, they still have the problem that they have a


negative net worth, so they need to reverse that situation. The only way


they have of doing that is to sell their memory business. We've seen


the dithering about trying to sell that and who they might sell it to.


Let's talk about Westinghouse, that's been the bone of contention


for Toshiba and the source of the problems. Cost overruns, delays,


talk us through it. It started off when they paid too much for it in


the first place. They then became aggressive in bidding for nuclear


contracts around the world. Having been aggressive they then got hit,


first by the earthquake which caused construction costs to go up and


greater safety requirements. It also meant several countries decided not


to go ahead with plans limiting them to a handful of important projects.


Those projects run into trouble because they used a new untested


technology and guess what, production costs went through the


roof. In some respects, putting out the figures they've put a barrier


around that. We know the cost associated with it and they can


hopefully move on. Again, the future of Toshiba isn't assured. They have


ring fenced the cost overruns to date but that doesn't necessarily


mean there won't be any more in the future. They have a big issue in the


UK with Moorside and the cost of that going up. While they are


negotiating that project that's fine, but imagine if the costs went


up after they fixed it. Everyone is very excited about the sale of


memory chips but that is incredibly cyclical business. Where will it be


this time next year? It's fascinating and you realise how a


giant like Toshiba can face such problems putting its future into


question. Thank you. Let's take a look at some of


the other stories making the news. The owner of Fox News and 21st


Century Fox movie studio looks Fox said revenues were up 1.5%


to $6.8 billion in the fourth quarter after ratings at its cable


TV business improved and drew Toy brick maker Lego is to appoint


its second boss this year. 61-year-old Brit Bali Padda has been


pushed aside by the Danish company after just eight months in the hot


seat to be replaced He said he was never expected to


stay in the post long term. The new chief will be 51-year-old


Niels B Christiansen. Zurich Insurance has posted a 21%


rise in Q2 net earnings. The Swiss insurer set out


a turnaround plan last year and its latest numbers suggest it's


already reaping the rewards. Net profit for for the three


months to the end of June climbed to $896 million,


That beat the average analyst Facebook has announced plans


for a new TV service - putting it head to head


with services like YouTube and Netflix - but could this also


help the social network crack Asia? What is Facebook actually doing now?


The social media giant is hot on the heels of other companies, Netflix


and YouTube, as well as traditional TV networks. It will first launch in


the US but eventually friends from across the globe will be able to see


a range of shows including a safari programme from National Geographic


and professional sports like women's basketball. Users will also have a


chance to connect with other friends and dedicated groups. They hinted


last year something bigger was in the pipeline. It has been reported


Facebook has signed deals with groups like Buzzfeed. It is expected


to open up new revenue potential for Facebook and programme makers in


Asia and around the world, that could mean you will have to sit


through commercials in between the show and before the show begins.


There you go. We know what that's like!


Tell us what you think about that story. We are asking what you would


be watching on Facebook but also what you think about that. Give us


your thoughts. Now the markets. Flat for Japan.


Toshiba is a story that has dominated the day. Elsewhere it big


loss in Hong Kong. In Europe right now it's a fairly similar picture.


Markets are in a funny place. It's the middle of August so many are


away on holiday. Trading volumes are thin. We've also got this sabre


rattling going on between the United States and North Korea which is


causing everyone to put their money in safe places during what is often


a volatile time. When things happen they tend to be really exaggerated.


Let's have a look at the day ahead on Wall Street.


Rising tensions between the US and North Korea gave the market


Now, this follows a period of record highs for US stocks.


Investors, though, will have more than geopolitics


One question - is the retail sector ready for a comeback?


Several big department stores, from Macy's to Nordstrom to Kohl's,


all reports second-quarter results, and they're struggling


with competition from online retailers, as well as discount


shops, and that has led to less people going to the mall.


Add to that the big picture, which has been weak -


retail sales have fallen for two months of the second world,


so expectations, it's fair to say, aren't high.


On the tech front, Snap reports results.


Since it went public, there have been concerns


that it is not doing as well as rival Instagram,


so expect investors to eye Snap's daily active user numbers for any


Joining us is Maike Currie, investment director


Nice to see you. Sally called it sabre rattling and it really has


rattled markets, these tensions between North Korea and the US.


Markets have been shaken out of the summer lull. We saw yesterday that


move into safe haven assets. That has cooled down a bit today but


there's still some nervousness. There is a question over whether we


will see a correction or even a bigger market collapse. What are you


saying about that at Fidelity? There is a real debate going on. There is


still a lot of money in cash and fixed income and bonds. There's a


lot of money on the sidelines. We really need to see that money moves


into the market before we can talk about a correction. The painful


thing is it's in these final stages where investors can actually make


the best profits. As always, you can never call the end of the market.


But a lot of them are a way, it's one of the quietest times of year


right now. Is that the danger zone, is that the time when a lot can go


on? Absolutely. We saw this two years ago in China. In the summer in


August, when a wasp in trading going on and we had the tensions and


worries about debt levels in China, it really rattled markets. We will


see if the tensions between North Korea and the US has the same


impact. Thank you. You'll be back later to talk about Lego.


Still to come - using psyops to sell baby products.


We speak to the man using military intelligence skills to run


You're with Business Live from BBC News.


We are in earnings mode in the UK still. We've had news from the


Co-op. The Co-operative Bank has posted


a ?135 million loss in its first earnings report since a rescue


package ended plans But the bank continues


to lose customers. Our business editor, Simon Jack,


has been going through the numbers. Simon, loving the trainers! Talk us


through the Co-op. I've just got off the train! The Co-op bank, is it


turning the corner? Yes and no. It's still losing money. It is narrower


than the loss they made last year. They've been spending a lot of money


on trying to knock it into shape. It had a near death experience in 2013


when it discovered a ?1.5 billion hole in its finances. That led some


of its investors to pump in additional money. In February they


said they aren't turning it around, they were putting it up for sale.


They didn't get any buyers said the existing bondholders have agreed to


sink ?700 million of extra capital into the bank. That will see the


Co-op group, the ethical mutual group which used to own the Co-op


bank, C at stake reduced from 20% down to nearly 0%. The question is


is this still the same Co-op a lot of customers like with its ethical


stance? We've seen some of that in customer numbers, 25,000 customers


out of 1.4 million current account holders decided to close accounts.


That's not a stampede but it is a trickle. I was listening to the


management talking today and they are at pains to stress they will


continue their ethical stance. It's the one thing that sets the Co-op


apart. It may not be the Co-op we know and love but they say it will


look and feel the same. We've got to hope now this uncertainty is over,


they are going to get an infusion of new capital in September, that the


bank will be safe and behave like it always has, and they will be able to


hang on to customers. In total both got 4 million with either a council


mortgages. You get the impression this story is going to run and run!


He's got the right shoes on! You don't want to know what I am


wearing under the desk! You know why I am standing today!


News on the website that Blockbuster films have boosted cinema revenues


by nearly 20%. You're watching Business Live,


our top story - Japanese industrial giant Toshiba has met a deadline


to report its long-awaited earnings results, which may


save it from being delisted That is after a major accountancy


scandal that was revealed two years ago. By publishing them, it will


save them from being delisted from the Tokyo stock exchange, which was


a real worry. The figures are not great, but it means that for now it


remains on the Tokyo stock exchange. Markets in Europe have been trading


for 45 minutes, and they are all headed lower, following the same


mood in Asia today, and the night before on Wall Street, real concern,


as we have mentioned, with what is happening with regards to North


Korea and the United States, something that is very relevant for


our next conversation. Here's a question -


does getting inside the mind of a potential radical extremist


and persuading someone to buy a brand of washing powder require


the same set of skills? He's a former UK army military


intelligence reservist He's now runs marketing agencies


Global Influence and Verbalisation. Using counterinsurgency


skills to sell products, he has built up a client list


that ranges from the FT to Nice to see you. We sort of hashtag


away through that interview, trying to explain what you do, maybe you


can do it better! It is a really fascinating area, trying to explain


people to do things by talking to them in a language they understand


ultimately, but there are clever ways you can do that. Essentially,


there is a science of behaviour change, and using language to affect


behaviour change, so really what my companies do is better and stand the


target audience, using scientific techniques, to then verbally


engineer language to increase empathy, really, between the


audience and the product and message they are trying to bring to the


audience. And language has become more important, hasn't it?


Especially through social media, more so than perhaps images. Not


least here we are sitting in a BBC studio, the 24 hour news cycle gets


people, obviously, hooked on hearing more information, talking about more


information. The difference between being informed and being


well-informed is fundamentally important, and that is why we work


with commercial brands such as the Times, who believe very firmly in a


difference between informed and well-informed. You started the


company six years ago, you described to me earlier that you had an


epiphany in a trench - explain. Yes, in Afghanistan, we were having to


power down at the bottom of a trench because of a situation going on


around us, and as we were talking at the bottom of the trench, a group of


soldiers and myself, we saw a little blue triangle on the floor, and it


was only later that we worked out that they were arrowheads from


Alexander the great. Fundamentally, we hadn't progressed in Afghanistan.


A thousand years by using those techniques. That was sort of the


moment when I thought we needed to create a business to help us with


dialogue over division. Explain what you have done with dialogue over


division in terms of work with young people, trying to prevent them from


signing up to organisations like so-called Islamic State. One area of


the company, of the two companies, is focused on helping charities and


NGOs to intervene when people are being radicalised, to understand the


language patterns that so-called Islamic State might be using to


recruit these people, and then to create interventions, often online,


to counteract that process. So, again, understanding the audience,


decoding the psychology of the audience, and verbally engineering a


more effective way to disrupt the messaging or provide a more dialogue


based messaging step. And we might come into contact with this more


than we expect, because marketers are using this as well. There is a


slight difference, the marketing industry is using a certain kind of


insight, a certain kind of insight methodologies that is not


linguistically based. What we bring to the market is something pinpoint


targeted at language analysis and the use of words more effectively.


How big you know, though, that your method of persuasion are working? If


we take a commercial client like the Times, they saw 200 36 cents


increase in their yields... But how do you know that young people are


not signing up to Islamic State because they watched a video you put


together? In that particular instance, with a film we put out, a


viral, there was a measure of the impact was the media reach, 500


million media impressions in seven days, but we can also track and


trace the conversations that our work influenced online. We have a


great deal of KPIs to show behaviour change in that instance. Some people


would call this a dark art, you are trying to convince somebody to do


something they are not aware of, and that is all too true of selling


stuff. Equally, when it comes to politicians, you know, a lot of


political messaging is about persuading us to vote when a certain


way, none more so than during the Brexit referendum. A lot of


criticism of the claims and counterclaims, it is a dark art,


isn't it? Not at all. First of all, if you have children, if you want, I


have got two children, if you want them to go to bed, you have to


understand the individual you are talking to. One of my children,


let's play a game, race upstairs. The other one is, look, daddy is


going to get angry if you don't go. You have to understand the audience


to speak more effectively to them. But there is no ulterior motive, but


if you are a political party with a particular persuasion, you want


people to vote the way you think. The first thing to do is communicate


your policy in an effective way. We lived through the area of Spain with


top-down messaging. We are advocating much more dialogue based,


empathy with the target audience, I think that is a good thing, not a


bad thing. I think we will leave at there, apps I could use your skills


in my home! I can't get my kids to bed ever! I go to bed before them


now! But then I do get up at two in the morning.


You have never mentioned that(!) A lot more to come in Business Live,


this is how to stay in touch. The Business Live page


is where you can stay ahead of all the day's


breaking business news. We'll keep you up-to-date


with all the latest details, with insight and analysis


from the BBC's team of editors Get involved on the BBC business


live web page, bbc.com/business, on Twitter @BBCBusiness and you can


find us on Facebook Business Live on TV and online,


whenever you need to know. Particularly about this story about


Facebook moving into the television arena, we would get into that in a


moment, but Maike is back, the story about the new boss of Lego going


after eight months, tell us more. It is interesting, because he is the


first non-Danish chief executive of Lego, he has only been in the job


for eight months. They have said this was always the deal, since he


was appointed they would start looking for a new chief executive,


so there may or may not be more to the story, but what is interesting


is that Lego is feeling the pressure. It dominates the


construction aisle, but their biggest competitor is moving into


that space. What do we know about this new guy? So interesting,


because the first guy was there just eight months, and then another Dane.


It does seem that way, but the new chief executive has got a very good


track record. Is he good at building?! He is a master builder!


Is good at increasing profits, which is what you want your chief


executive to do. Isn't it everybody's dream job?


We think it probably looks really easy to run.


Everything is awesome! But to keep up with current


trends... By the way, I'm just quoting a song from the Lego movie,


that is not the BBC opinion of Lego! Because it is such an iconic brand,


there is so much and tapped potential, and in this world of new


technologies, there is so much you could do, so you need someone very


forward thinking. That moves us nicely onto Facebook, we have been


asking your views about watching TV through Facebook. The journal is


talking about how Facebook squashes, edition from start-ups. All well and


good them coming up with good ideas, but Facebook I'd buys them or copies


them. These big tech giants can afford to sweep up the start-ups,


and it raises a few questions about the future of the tech sector, so we


have those big giants, Facebook, Google, Amazon, with deep pockets,


spending cash to buy up smaller companies like Snapchat, WhatsApp,


Instagram, to expand. Just to say, Snapchat's earnings are out today,


and in terms of your views on Facebook, Matt says, I'm worried it


will be the perfect forum for fake news and alternative facts. Alex


says, not at all, I want to sit on my sofa, not watch it on a tiny


screen. Bye-bye. I am pleased to say that this


morning is a much sunnier start than yesterday, some really quite heavy


rain in the south-east yesterday, rainfall totals


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