01/02/2018 BBC Business Live

This is Business Live from BBC News

with Susannah Streeter

and Sally Bundock.

Facebook's overhaul of its news Feed

has reduced the amount of time

people spend on the site -

but profits at the social media

giant are still up.

Live from London, that's our top

story on Thursday 1st

February.

2.1 billion friends and counting -

and more profit than ever.

But Facebook users are spending less

time on the network.

And 20 million new toilets -

will this giveaway from India's

latest budget be enough

to keep voters happy ahead

of a general election?

And are friends electric: we'll be

getting the inside track

on the internet of things.

This is how the markets are looking

in Europe.

What exactly is the internet of

things and will it change our lives?

And are we turning

into machines ourselves?

It sounds spooky,

into machines ourselves?

It sounds spooky, as

into machines ourselves?

It sounds spooky, as does

into machines ourselves?

It sounds spooky, as does the

into machines ourselves?

It sounds spooky, as does the latest

into machines ourselves?

It sounds spooky, as does the latest

move from Amazon.

Amazon has patented a wristband that

tracks its warehouse

workers' movements.

Today we want to know -

is this a useful tool,

or is it an increase

in surveillance at work?

Let us know what you think.

Just use the hashtag #BBCBizLive.

Hello and welcome to Business Live.

We start with Facebook -

the world's biggest social network

has got bigger still,

with another massive jump

in the amount of money it's making -

as yet more people around

the world sign up.

But despite some more

mind boggling figures -

Facebook revealed its users

are spending less

time on the network.

Revenue in the last three months

of 2017 came in at almost

$13 billion - mostly

from advertising - and around

a third of that was profit.

This represents huge growth again -

up 47% on the same period last year.

Facebook now has 2.13

billion users who log

on at least once a month -

up 14% in a year.

That's well over a quarter of

the world's 7.5 billion population.

But Facebook's massive reach has

also increased scrutiny -

with concerns about its effect

on users' mental health,

and on democracy -

with its role in spreading so called

"fake news".

At the start of the year,

Chief Executive Mark Zuckerberg said

the company is changing

its algorithms to shift the focus

But now he's warned

investors that this is already

making people spend

less time on Facebook -

a total of 50 million fewer

hours per day.

Fergus Hay, the Managing Director

of marketing and advertising

firm Leagas Delaney, is with me.

What did you make of what they said

overnight? The markets went 5% down,

and then up before the close. It was

almost like investors didn't know

what to take from this.

That's

right. This question is the long

term value of Facebook. The decline

in hours per day shows us that they

have challenges. As a media company,

they rely on quantity and quality of

consumers on their platform, but

that consumer base has aged with

Zuckerberg. The consumers under 30

are much more discerning about their

own value as media vehicle.

So this

is a long term issue for Facebook,

as opposed to a blip out what was

the end of a tough year, which is

what Mark Zuckerberg said?

Fundamentally, their businesses

based on trading media. If Brand see

that the lost generation, the young

consumer of the future, who isn't

currently under platform, then

brands will put their money

elsewhere. That undermines a

business model that is based on 98%

of their revenue from media sales.

So instead, perhaps these younger

users are on Snapchat or Instagram.

How can Facebook integrate those

users within the platform?

That is

the fundamental business strategy

challenge for Facebook. If you look

at their competitors, there is one

in China that has built a business

based on customer experience. They

have a series of services that are

e-commerce enabled, using one piece

of doom which enables consumers to

have a frictionless experience of

purchasing products. Facebook are a

media vertical company. They must

think about how they can use a

payment platform to have a customer

experience across all of the

elements that gives a frictionless

experience.

So what are we looking

at in terms of the future for

Facebook? Will it still be a

dominant a player as it is now, or

are others crowding in and taking

their market share?

Scale is a great

thing and they have enormous scale.

Would you bet against Zuckerberg? Am

not sure I would, but they do have

to think aggressively about how they

change their fundamental business

model. I wouldn't imagine that they

couldn't do it, but do they have a

dilemma where the modern uses have

outdone them and are they a

monolithic and sterile media

business?

I mean, he is 33! I have

to remind myself that he was just a

student starting up a platform for

his mates at uni.

Quite a smart one,

though!

What do you think about

Facebook? Get in touch.

Let's take a look at some of

the other stories making the news.

Royal Dutch Shell's profit more

than doubled in 2017 -

to $16 billion.

The Anglo-Dutch company benefited

from stronger oil and gas prices.

It also reported a sharp rise

in cash flow as the effect of years

of cost cuts and the integration

of BG Group filtered through.

Japan's Fujifilm Holdings

is set to take over Xerox

in a $6.1 billion deal.

The acquisition comes as Xerox has

been under pressure to find

new sources of growth amid waning

demand for office printing.

Fujifilm hopes the purchase

will boost its revenues

to $18 billion annually.

eBay plans to drop its

long-time partner PayPal -

instead, hiring Dutch company Adyen

for its payments business.

eBay said the shift will result

in lower payment processing

costs for merchants.

PayPal shares plummeted by 10%

after the news was announced.

Before coming to add, we were

talking about the fact that there

are so many companies with a

earnings out that we can't cover

them all, but they are all on our

website.

Let's go to the Indian

capital New Delhi now,

where the Finance Minister has been

announcing this year's budget.

Arun Jaitley is under pressure

to keep voters happy in the run up

to a general election,

but also reassure investors

who are concerned about the state

of the government's finances.

Devina Gupta is in New Delhi.

Tell us more about this giveaway -

20 million new toilets, I

understand?

Absolutely. It was a

pretty predictable budget on that.

It is part of the rural economy

overhaul, with the rural

infrastructure, electrification and

cleanliness in focus for the

government, which has faced a

backlash from the rural voters. They

have also given additional funds to

farmers. We will be seeing a social

scheme for a national health policy

for 100 million families in this

budget. Employment is another area

where the government was facing

pressure. They have been able to

give socks to younger employees,

with pensions benefits -- sops. For

politicians, they may also come

under criticism for spending. The

fiscal deficit, a measure of

government expenditure, has gone up

to 3.5% of GDP, missing the target

of 3.2%. To compensate, the finance

minister has said there would be

more taxation on health, education

and those investing in stock

markets. The slight good news for

small and medium enterprises is that

corporate tax has reduced. But the

overall industry, there hasn't been

much tax relief.

Lets check in with the

financial markets now.

There is a bit of

a mixed bag globally.

Japan's Nikkei rose

1.7% from a four week

low the previous day.

The Hang Seng in Hong Kong is lower

partly over concerns

about rising interest rates -

that was prompted by comments

made by Janet Yellen -

the outgoing chair of the fed

at her last meeting as chair

of the US central bank -

she indicated that higher inflation

is expected, so there would be

further interest rate

tightening later this year,

with higher inflation expected.

The BSE benchmark Sensex was trading

much higher earlier,

but has slipped back

as investors digested

what the giveaway budget

from finance minister Arun Jaitley

means for the indian economy.

This is how European indices

are looking since opening.

And Yogita Limaye has the details

about what's ahead on Wall Street

Today.

Another day of big

corporate earnings.

Apple will be releasing its results

and profits are likely to have

increased during the last

quarter of 2017.

But I think what investors

will really be looking out

for is the company's forecast

for the month and year ahead,

because of the concerns

about sluggish demand

for the iPhone X.

E-commerce giant Amazon will also

be reporting earnings,

and those are expected to be

good as well.

Analysts will be watching for more

details of the company's plans

to tie up with Berkshire Hathaway

and JP Morgan Chase

to cut health care

costs for their employees.

Apart from that, we have Google's

parent company Alphabet, Visa,

MasterCard and Time Warner,

to name just a few, who will reveal

how they performed from October

to December last year.

There will be some

economic data too.

Car sales numbers will be out,

which are likely to have

dipped in January compared

to a month earlier.

Joining us is Tom Stevenson

from Investment Director

at Fidelity International.

Such a busy week. Let's start with

the Fed, Janet yellow and overseeing

her last meeting as Fed chair. Looks

like we have rates going up in

March?

Yes, that is the implication

of what she had to say. She can look

back on the past four years and be

proud of what she has achieved, the

twin mandates of the Fed to keep

inflation in check and keep

unemployment low. She has definitely

achieved that.

And unravelled

quantitative easing.

Yes, so she has

set her successor up with a good

position.

And that really has been

digestive in the markets. There has

been nervousness in the global

market about the impact of this. If

rates continue to go higher, what

about those low-cost loans that so

many industries have relied on,

particularly retail?

That is the big

concern. The market is high, and for

good reason. If we look at the

fourth-quarter results, and we have

lots coming out, they are pretty

strong. We are expecting growth of

14% for the fourth quarter. The tax

reforms are coming through. But as

you say, the shadow hanging over

that is where next for interest

rates? It is going to tighten costs

for companies and it will make

alternative investments more

attractive.

And on earnings, we are

hearing from lots of companies like

Microsoft. We have Alphabet, Amazon

and Apple. The Triple-A! What is

your sense of where we are going

with these?

The earnings are looking

strong. At this stage to still be

growing earnings in double digits,

14% expected growth is very

encouraging. It could keep the

market bubbling.

We will be talking

to you later about the Amazon

tracker. People already know where I

am and my job!

Still to come...

Are friends electric: we'll be

getting the inside track

on the internet of things.

What exactly is it and will

it change our lives?

You're with Business

Live from BBC News.

The Northern Powerhouse project

was launched to redress the economic

imbalance between the north

and south of England.

But four years on, a new report has

found that children in the North

are on average one GCSE behind those

in the south.

Our economics editor Kamal Ahmed met

with Lord Jim O'Neill,

former treasury minister

and architect of the

Northern Powerhouse, to ask

whether it is still a priority

for the Government.

For the past couple of years,

the North West part

of the Northern Powerhouse has been

outperforming the whole country.

Whether that's because of policies

to do with Northern Powerhouse,

I suspect some of it is,

or other stuff, is

obviously debatable.

I suspect it is.

But it is really an encouraging

basis for so many of the things

to build on, to take us to this

long-term Holy Grail of closing

the productivity gap.

Which, importantly,

in a national context,

it is not just important from those

from the north and passionate

about the north, it would change

the game for the economy nationally.

But how important is that

for the general strength

of the UK economy?

London is a huge contributor,

financially, to the

rest of the country.

It's not really, ultimately,

that good for London or the rest

of the country if we are dependent

on hand-outs in London.

If you have your own local engine

that is economically

as powerful as London,

it is a game changer for the nation.

Do you think that Theresa May

and Theresa May's government

has the same commitment

to the Northern Powerhouse

that George Osborne,

when you were Treasury Minister,

had to the Northern Powerhouse?

I don't think it can be

as strong as when I was there

with George Osborne,

because it was sort of like my baby.

And it became a huge, top five

priority for the government.

Is it still?

It's not as big.

What I would say,

more encouragingly,

is if you go right back

to the Prime Minister's

first speech on Downing

Street's steps, it is very

clear that she is sympathetic

to the whole goal of doing something

like the Northern Powerhouse.

Lord Jim O'Neill. There are lots of

results out today. We have the story

about sales up at the Irn-Bru maker.

They have climbed, despite the

decision to cut the sugar in its

strengths. That is up 7.5% on the

previous year. You are watching

Business Line.

Our top story, Facebook's overhaul

of the news feed has reduced the

amount of time users are spending on

the site, but the profits are still

going up and up, also the number of

users that are joining them is

increasing. Let's take a look at how

the financial markets are faring so

far today, since the European

markets open. You can see the FTSE

is up, as is the DAX and the track

-- but on. Two

Now, technology is going to make

all of our lives easier -

be it at home or at work -

at least that's the promise

of all tech companies.

Many of us have welcomed

technology into our homes -

or will - in the form

of the internet of things.

That's using internet

to control everything

from your lights, to the kettle,

to the dishwasher timer.

Alexa and Google Home are two

examples you probably know.

And the global market is expected

to grow from $157 billion

in 2016 to $457 billion by 2020.

And at work augmented reality

is being used at some

of the biggest companies -

like Boeing, Ford and DHL.

It's helping in anything

from 3D modelling

to logistics, to training.

One company involved in both

of these technologies is PTC

and its Chief Executive Jim

Heppleman is here

good to have you on the programme.

Just explain how your company works

within the internet of things?

We

are a software company, we provide

enabling technologies to help

companies achieve this connectivity

and build applications that make

companies more efficient.

You are

business to business, providing

software applications for other

companies?

Yes.

How much of this is

overtaking what you do?

This new

business is about a quarter of new

sales and is growing quite fast. It

has lifted the overall growth rate

of the company substantially. It is

quickly becoming our core business.

When we talk about the internet of

things, it is an all-encompassing

phrase. We are talking about

augmented reality, tracking devices,

all sorts. One we mentioned is

Amazon's idea. It is

all-encompassing?

It means

connecting physical objects that are

not computers or smartphones to the

internet, so we can get data from

them. Augmented reality is the

opposite, it is taking digital data

and bringing it back into the

physical world, where we can adapt

to what we see in the physical

world.

We have this magazine, Sally

is holding the tablet just above it.

You can actually see the page

leaping out at you.

This is a

digital overlay on a paper magazine

to bring the story to life and add a

level of precision, detail and

understanding that it's hard to

guess just from the paper.

There are

real concerns about the algorithms

used. Is there much regulation?

People are quite rightly concerned

about just how much data is being

gathered on us at every moment,

really. And whether there are the

right protections in place?

In

certain pockets of the market, there

are regulations, like in the medical

industry. In general, no, it is a

bit like the wild West and companies

are able to do lots of great things,

and probably some of them might do

things we don't like.

Do you think

that over time we are going to see a

separation of those elements that we

just don't want, and those elements

that worry us about privacy, the

fact we are being watched or

listened to all the time? For

example, I was given an AI tool for

Christmas and I have unplugged it, I

am conscious that it is listening to

everything in my kitchen and

gathering data about my household?

I

would say in a business to business

context we are gathering data from a

lot of inanimate objects, elevate

us, escalators, robots on shop

floors, cattle in fields. I think

definitely from the consumer and

personal privacy space you have to

be careful, but I think the privacy

concerns are much less in business

to business settings than the

financial returns, which are much

greater than making it more

efficient.

You talked about smart

sensors in bins, so that refuse

collectors can go straight to one

that needs emptying. People fear

that technology could be used to

monitor what they are putting their

bin and potentially give them a

fine?

I think it would take a lot

more sensing to figure out what you

are putting in, than just to figure

out how full it is. But the world

can be much more efficient, much

greener, much more sustainable, if

we focus our energy on emptying

trash bins that are full, rather

than just running the same route

every day. We have two balance the

tremendous efficiencies with

legitimate privacy concerns.

Do you

think we'll get the point where all

companies have to embrace this, no

matter what kind of business they

are in? It is something that will

take them to the next level?

The

business benefits are profound.

Frankly, the barrier to entry is not

that high. Big companies need to

move fast, partly out of fear that

smaller companies will beat them to

the punch. It is something most

companies are doing and all

companies have to do.

This random

article is actually something you

have written? For the Harvard

Business Review?

I wrote that with

Professor Porter, a famous professor

from Harvard. They can find that in

PDF format on the website and take a

look at that.

Fascinating, I do like

my little AR moment. In a moment we

will go through the business pages,

first, a reminder of how to get in

touch.

Stay up-to-date with the business

news as it happens on the Business

Live page, with analysis from

editors around the globe. We want to

hear from you as well. Get involved

on the web page.

You can find us on Facebook, on Bbc

Live. What you need to know, when

you need to know.

Tom Stephenson is back, as promised,

and we are going to talk about this

story in the Guardian, Amazon

patenting a wristband tracking

warehouse workers' movements. That

is what we were discussing, a scary

story, or really useful?

Ceilidh,

very useful for Amazon. I would

suggest probably less useful for

people working there. A lot of

lower-level jobs around the world

are being replaced by robots,

clearly. That is a big concern. I

think this story takes this to a

whole new level. Essentially, the

workers are being turned into

robots. What this does, the tracker,

it's not just says where you are, it

actually nudges you with vibrations,

when your hand is moving in the

wrong place. It is designed to make

workers more efficient, in a way

that helps them to pick things out

of bins, but it is a bit scary.

It

could be really useful for people

with reduced mobility at home, a

type of wristband like this. It

depends on where these devices are

used?

Think that is true of all

technology. I mean, the technology

is neutral, it is how you use it

that matters.

Let's look at what you

think about this, we ask that the

beginning of the programme.

Christopher says it is both scary

and progress. It might start mainly

as a helping tool, but it will end

up as primarily surveillance. John

says it is an unacceptable increase

in surveillance. Another, Big

Brother, anyone? They are watching

you! Let's talk about Theresa May.

They two of her tour of China. The

problem is with regards to leaving

the European Union very much to the

fore. She has to respond to

questions wherever she goes about

Brexit. The latest discussion point

is about her strong stance, I guess

she would see it, on EU citizens

during a transition phase and their

rights?

That is right. Theresa May

probably went to China and she was a

bit relieved to get out of the

country for three days. There is so

much going on, all of this about the

leadership challenge, etc. We now

have a stand off with Europe and it

is getting to an intense phase. This

final year of negotiations is

absolutely crucial. She is, frankly,

in rather a weak position. From an

investor, market perspective, how I

look at it, it is quite interesting.

If we look at January, a fantastic

month in the markets, for markets

generally around the world. At the

UK absolutely lagged behind. A key

reason is Brexit uncertainty.

A lot

of talk about opportunities for the

UK outside the EU, that is why she

is visiting China but there is a lot

of competition there?

Yes, Britain

is not the only country in China to

do deals, and get a relationship

with China. You know, Germany is in

a fantastic position, and everybody

else is doing it as well.

Thanks so

much for being with us. Thank you

for your company. You can find out

about all the different results we

were talking about, corporate

earnings, on the BBC web page. Have

a really good day. We will see you

soon. Goodbye.