02/02/2018 BBC Business Live

This is Business Live from BBC News

with Alice Baxter and David Eades.

Another record quarter for Apple,

but is the Silicon Valley

giant still on track to become

the world's first

trillion dollar company?

Live from London,

that's our top story

on Friday second February.

Apple reports another

bumper set of numbers -

but is the winning streak set

to continue despite

a drop in iPhone sales?

And the UK Government hails

a successful trip to China,

but at home the Prime Minister faces

some tough questions.

We'll hear from Theresa May later

in the programme.

European shares have opened

flat to slightly lower

following a mixed session in Asia.

It's been another roller-coaster

week for Bitcoin.

We'll guide you through the highs

and lows with our technology

guru Rory-Cellan Jones.

Today, we want to know -

as the Premier League Football TV

Rights auction looms once more -

would you pay more to keep

watching the footie?

Let us know.

Just use the #BBCBizLive.

We start in Silicon Valley

where the giants of the technology

world have been reporting

their latest results.

The biggest of them all -

Apple - has been hailing

its best ever quarter.

That mean's it's edging ever closer

to becoming the world's

first trillion dollar tech company

by stock market value.

Let's show you the numbers

because they are staggering.

Apple made revenues

of more than $88 billion

in the three months to the end

of December, the all important

holiday shopping season.

20 billion of that was profit.

That was up 12.6%

on the previous year -

setting a new earnings

record for the firm.

Apple sold 77.3 million

iPhones in the quarter.

That was down slightly

on last year -

raising concerns the iPhone's

popularity is waning.

But remember - many sales

were of the more expensive

and profitable iPhone X

and we should put this in context -

according to research just out,

global sales of all smartphones

were down 9% in the quarter -

the biggest fall ever -

as the market gets saturated.

Revenues are up 13% because the

iPhone tent is more expensive.

Some analysts might be worried the

iPhone which is two thirds of the

revenue could be stalling. If that

keeps going up, the company remained

strong.

In terms of selling the hardware,

there is a saturation point being

breached and it is worse for other

mobile phone makers. That does drive

Apple towards having to depend on

its services.

It has to make this work. Services

was 10% of revenue, usually a larger

proportion. This quarter it is high

because of Christmas. Apple is

building its services business with

230 million active sub --

subscribers.

If there is a risk, where is it?

Where do they think we have to watch

that over the horizon?

Apple is the biggest smartphone

maker by revenues, the biggest risk

is augmented reality, things like

Google Glass, a pair of glasses with

artificial intelligence, you can

voice activate it. It is a

smartphone in your head. If Apple do

not invest heavily to become a

leader in augmented reality, it

could fall, just as Nokia did with

touch screens.

The race to the $1 trillion value

mark, what about Apple versus

Amazon? Amazon are flying at the

moment.

It is 850 billion now. Alphabet and

Google aren't far behind, neither

Microsoft.

Because they have all the

characteristics that give them the

strength to grow in five years, that

is because if you look at the tech

themes, boys, cloud, artificial

intelligence, automation, you need a

certain number of characteristics to

be successful. Cloud infrastructure,

a high number of users, they each

have 800,000. And you need cash to

invest.

They all have it.

Thank you very

much indeed.

Let's take a look at some of

the other stories making the news.

Japan's financial regulator

has raided the offices

of the crypto-currency exchange

Coincheck.

They say they were checking

their systems following last week's

cyber attack which saw

the firm lose more than $500

million of virtual assets.

The regulator said security gaps

in Coincheck's systems were among

the reasons it didn't have

approval to operate.

Shares in the toymaker Mattel have

fallen sharply after it reported

a surprise loss of $252 million

in the last three months of 2017

which includes the all-important

holiday season.

Sales of its best known

brand Barbie were up.

However, overall sales fell

because of children's growing

preference for video

games and electronics

over traditional toys.

Europe's biggest investment bank

Deutsche Bank has reported a loss

of almost $1.7 billion in the last

three months of last year.

The bank says it was heavily

affected by Donald Trump's US tax

reforms and actually made a pre-tax

profit of more than $1.6 billion

for the year as a whole.

It's been trying to restructure

itself after years of losses.

The British Prime Minister

is concluding her three-day visit

to China where the UK has signed

trade deals worth around

$13 billion and reportedly creating

around 2,500 jobs.

At home, though, she's

coming under increasing

pressure over Brexit.

Our political editor

Laura Kuenssberg spoke

to her in Shanghai

and asked her about

Britain's relationship

with Europe and the world.

My choice is very simple.

We take back control of our money,

we take back control of our borders,

we take back control of our laws.

We want that free trade agreement -

we negotiate a free trade agreement

with the European Union.

We want that to be on as

tariff-free and frictionless

a basis as possible.

That will be good for jobs the UK,

but that also gives us the freedom

to negotiate and to sign up trade

deals around the rest of the world,

and that's good for prosperity

and jobs and people in Britain too.

That was Theresa May speaking to our

Political Editor Laura Kuenssberg

at the end of her three day

visit to China.

The two countries have

pledged to intensify

a "golden era" in relations

between London and Beijing.

Robin Brant is in Shanghai.

If you look at the figures in terms

of trade, still more of a bronze era

and a golden era.

China seems to be the world's

biggest economy. Only the UK's

eighth biggest export market, so

there is a huge room for

improvement. A nation of 1.4 billion

people, and ever growing middle

class, the potential is huge. The UK

and thinks it is impossible from an

economic point of view to avoid

that. She has come here on this trip

and will be content heading home.

Trade deals of $13 billion from

companies like BP, Aston Martin. She

has had reassurances from China

whatever happens with Brexit, they

believed the relationship with the

UK and China will not change. For

China, there is an eye on deepening

the strategic longer term plans.

Asian markets swung around on Friday

with some recovering from early

losses but traders remaining on edge

as US Treasury yields

rise to four-year highs.

In particular, Tokyo stocks closed

lower on worries over the US economy

as investors dabbled in a bit

of profit taking amid a number

of corporate earnings and mindful

of some upcoming US jobs data.

This comes after equity traders

around the world having been firing

on all cylinders in recent months,

sending markets to record

or multi-year highs.

So a slight cooling off on global

markets now in evidence.

All eyes will be on the jobs numbers

today as the labour department

will release its employment report.

In December the number

of new jobs created had come

in well below forecast,

but in January it is expected

to have risen to 180,000.

The unemployment rate is not

likely to have changed.

It's expected to remain at 4.1%.

This

It's held at that level

since October, the lowest

it's been in 17 years.

The commerce department will release

data for factory orders in December,

and those are expected to have gone

up compared to a month earlier.

In corporate earnings,

major companies from the energy

sector will be reporting results.

Profits at oil producer Exxon Mobile

are expected to have gone up by 18%

in the last quarter of 2017.

Chevron is also likely to post

a strong performance.

Lawrence Gosling is editor in chief

of Investment Week magazine.

is good to see you. Another big

market story, the head of the US

Federal reserve, officially her last

day in office. As I said, equity

markets have been running at a pace,

the UK economy has been doing very

well. Donald Trump has been taking

credit. If you had to share the

awards, what would you say?

Donald Trump has been in for only 12

months, but she has headed the

Federal reserve for a lot longer.

What has driven things is

quantitative easing. She has been an

architect of that and if you go back

to the Lehmans Brothers crisis, it

would be fair to say the second half

of this bid she has done a good job

steadying the markets. Arguably the

job growth we have seen is down to

her policies. Donald Trump is

claiming credit but probably hasn't

contributed much.

Choppy waters all the time, we are

back on that deadline for the US

budget. Will they be thrown back

into chaos?

The markets, note the conciliation

in the state of the nation. The

sense is it will be easier to get a

solution this time around.

Thank you.

Still to come.

This week, we've seen a drop in user

numbers for Facebook,

and the price of Bitcoin has yet

again taken a tumble.

Later in the programme we'll get

a review of the week

with our tech guru

Rory Cellan-Jones.

You're with Business

Live from BBC News.

Amid all this tech news,

Telecoms giant BT has

also published its results,

reporting a 3% drop in sales

in the third quarter,

although pre-tax profits were up.

Our own Theo Leggett

is here to tell us more.

What should we make

of these figures from BT?

They are disappointing but not

dreadful. Pre-tax profits were up by

25%, that sounds great but compare

it with the same quarter last year,

that was when Beattie was grappling

with the outcome of a major

accounting scandal at its Italian

unit and had to make big payments.

Take the adjusted earnings figure,

sales fell 3%, adjusted earnings

dropped down to £1.8 billion. That

is not dreadful. The company says it

is a lot to do with investment in

mobile, trying to pay off pensions

deficits. Shares this morning down

about 2.8%. This company has big

challenges. The pensions deficit is

rather large, £8 billion. The

company is looking at ways to deal

with it and it is reported at some

point it will have to get rid of its

final salary pension scheme.

Lots of changes going

on at BT at recently -

the channel-sharing deal with Sky

and the Openreach superfast

broadband roll-out.

What impact will these

have on the business?

Last year, it agreed to legally

separate Openreach and turn it into

a stand-alone unit. Openreach at the

moment is ploughing forward with an

ambitious programme to bring

ultrafast broadband to 10 million

homes by 2025, as opposed to

superfast broadband which is in 95%

of homes but not that fast by modern

standards.

The channel sharing deal with Sky

looks good, they will carry each

other's channels. It brings BT Sport

to a wider audience and those

channels are gathering viewers fast.

Thank you. Much more on the BBC

website and much more online so had

their

for more. Thank you, Theo

Leggett.

You're watching Business Live.

Our top story - Apple has reported

record sales figures

for the latest quarter.

The company sold slightly

fewer iPhones compared

to the same time last year,

yet Apple was still able to post

a 12% increase in revenue.

Earlier we spoke about Apple

and Amazon, but earlier in the week

Facebook also reported its latest

set of financial results.

And elsewhere in the world of tech,

it's been an eventful week

for cryptocurrency investors.

One of which joins us in the studio!

Here's our technology

correspondent, Rory Cellan-Jones.

I did buy a tiny amount about 18

months ago when I did a story about

Bitcoin, forgot about it, then found

out it was worth more than $1500,

and sold a chunk of it, I have to

say, and I have been watching it

obviously very closely over recent

weeks. The big story right now this

week is a growing realisation that

the sheer extent of fraud around

this whole cryptocurrency area, we

said earlier it was like the wild

West, but no, the wild West had more

rules and regulations are available

than in the cryptocurrency world.

Two major things this week. The

Japanese financial regulators raided

a cryptocurrency exchange, Coin

Check, which revealed a few days ago

it had been subject to what looked

like the biggest bank raid in

history, $530 million stolen by

hackers. Regulators are finding out

they are not very carefully

regulated, safeguarded, those

assets, and there is also a huge

amount of fraud. I read a report

just out on, and this is somehow the

cybercriminals' new area of

expertise and adventure, they are

doing e-mails to encourage you to

get into these things, pump and dump

exercises, where they ramp up the

value of a currency using fake news,

then spread that over a social media

very quickly and then get out before

the price plunges, saw a lot of

concerns and from there.

You

couldn't paint a bleak picture

really, with Bitcoin and

cryptocurrency, so what do you think

is the way ahead? They have to have

a future somewhere.

Everybody says the basic idea, and

perhaps the underlying technology,

which has got a huge amount of

enthusiasm around it, is interesting

and that there will be winners

eventually.

It's just that it is so beset with

fraud, so beset with every kind of

Haque merchant at the moment that

you have to say to people, just be

very careful out there -- every hike

merchant.

And you're not one of

them!

LAUGHTER

You're not surprised by the big drop

off we have seen in January at the

start of this year?

What we saw the

Bitcoin last year was this huge

acceleration up to nearly $20,000,

then it came back down to around

$10,000 to $15,000 to the month of

January, and we now seem to be

seeing another acceleration

downwards, trading around $8,000 at

the moment. It is looking the

classic bubble pattern, but the

question is is this the end of the

bubble or will we see another spate?

Also on the subject of Facebook --

will we see another spike?

Yes, we

have been talking about the tech

giants, Google, Amazon, Apple, they

all have enormous power and all

heading for this trillion dollar

evaluation you have been talking

about. Facebook managed an

extraordinary feat the other night,

going into their conference call

their shares had started to dip and

people were worried about this and

then somehow listening to Mark

Zuckerberg for and our convinced the

analysts and they went back up

again.

Why was that? What was he

saying?

He's talking a good game,

frankly, saying it is all part of

the strategy. They have at this

changing strategy where they are

going to put less news into the news

feed and make it more about your

friends and family, baby pictures,

where I have been on holiday, less

about, you know, is the Pope

Catholic and other strange stories,

and that's a bit of an experiment.

Every time they change their news

feed it is an experiment. I think

there was one worrying figure, a

figure that suggested in America

obviously their core market usage

was getting a bit, and it's sort of

begs the question, is this an

eternal upwards path? That is her

these pictures have always been

priced...

Is less more? Looking at

them out of users...

Yes, a tiny

amount, but what will worry some

investors is whether that is the

beginning of a trend where that is

the sort of gold mine about that,

but we shouldn't forget, they

haven't just got Facebook, they've

got Instagram, they've got What's

App, huge unsuccessful company with

all sorts of strings to its bowl.

We're not talking about the demise

of Facebook yet. -- strings to its

bow.

In a moment we'll take a look

through the Business Pages but first

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Business Live, on TV and online -

what you need to know,

when you need to know.

What other business

stories has the media been

taking an interest in?

Lawrence Gosling is editor-in-chief

of Investment Week magazine

and is joining us again to discuss.

Let's start on a subject close to

your heart of course. It is footie

and was a huge amount of money. We

have the option for the Premier

League, TV rights, and that will go

up again.

It is bound to. Just to

remind people of the number, £5.1

billion was the price played last

time around, largely by Sky and BT,

and I think what is fascinating

people now, who else will come in to

try to push up the value of the

rights which is clearly what the

Premier League wants, so we have

seen Amazon take on Sky on ATP

tennis. Facebook? Talking about them

earlier, and there has been some

chatter as well about whether

someone like Netflix, were clearly

content is there a driving force,

whether they will come in. When you

look at the bidding rights, what is

really fascinating, it is the

overseas rights which is where the

Premier League have done really well

in attracting more revenue from

other parts of the world.

But they

could be doing so much better,

presumably?

Without a doubt. When

you think of the size of China, for

example, with the Prime Minister has

returned from, the appetite for

football there is extraordinary and

the Premier League are beginning to

do bespoke rights.

At the beginning

of the programme we asked people to

tweet in on whether potentially they

would be willing to pay more to

watch football. Some responses. Ben

is not prepared to pay more. "Ticket

Prices are in for the Premier League

fixtures. If you put prices up for

TV coverage fans will be taken away

from football. Without fans football

is nothing." Another one, Mike has

cancelled both Sky Sports and BT

sports. It is becoming stupidly

expensive. Alice nails it. No,

overpaid, overrated. But if you

follow the Premier League you're

probably prepared to keep paying,

for the moment. Most fans are not

going to want to lose what is such a

now that part of your social life,

isn't it?

I think the Premier League

is very aware there is a threshold

for everybody. We have seen quite a

lot of talking over the last 12

months about ticket prices at

matches, as one of your

contributors... And they are aware

they can't make the product too

expensive for the core audience in

the UK, so in terms of the price

that, say, whoever gets the UK

rates, maybe close to the threshold

so that 5.1 million may not go up

perhaps as much as a different last

run.

You have a sport that hasn't

quite caught on... Yes, a bit more

of a level playing field. The story

about Elon musk, who knew he had yet

another finger in yet another pie,

just selling flame-throwers, and

making $10 million.

The thought of

selling flame-throwers as an

alternative sport is a bit

extraordinary and extraordinary that

the company sells things like this

alongside baseball caps. The company

is probably a bit of a misnomer in

terms of what they do but the Home

Office in this country has pointed

out it is illegal to buy a

flame-thrower.

What is it?

A

flame-thrower.

Never quite got into

the market here. Lawrence, thank

you. Enjoy your weekend.

That's it from Business Live today.

There will be more business news

throughout the day on the BBC Live

web page and on World Business

Report.

Keep those tweets coming in as well

and we will be monitoring them as we

go. Goodbye.