08/11/2017 Business Briefing

This is Business Briefing.

I'm Sally Bundock.

Snapchat shares plunge as it reveals

it is struggling to attract users

and turn a profit.

It also warns the months ahead

will be challenging -

we talk you through what's at stake.

The US President heads to China

as he continues his tour of Asia.

He's criticised Beijing's

trade policy in the past,

but will he soften his tone

as he looks for support

in the far East?

And on the markets.

A pause in the rally in Asia and the

price of oil has fallen a touch.

We

will talk you through the market

moving stories.

Shares in the parent company behind

Snapchat have plunged 20%

in after-hours trading.

Third quarter losses more

than trebled to over $400m

in the last quarter.

Even before this latest set

of results, the company had already

lost nearly two fifths of its value

since Snap went public

back in March.

Hoxton Ventures is a venture capital

firm which invests in early

stage technology companies.

I'm joined by one of its

co-founders, Hussein Kanji.

In terms of Snapchat, what did they

say in terms of their earnings?

They

do not save very much and that is

part of the problem. The number of

people is down from previous

estimates and they came far below

that which is one of the reasons the

stock has plummeted. No one thought

it was going to be this bad.

The

issue is its business model is quite

unusual when comparing it to

Facebook or Twitter. In the sense

that things disappear very quickly

and the user base is a very

specific.

It is not that different

from Facebook from a business model

perspective. These are devices and

applications people are using and

you can put advertising in front of

them. It is the existential

equation. Facebook has declared war

on the company and has copied

practically everything. Instagram

has doubled the amount of users that

Snapchat wants.

Facebook wanted to

buy it. They said no thanks. And

Facebook has pretty much a declared

war but will each win the war? Will

Snapchat still exist in a few years

time?

Kennett become an Independent

company? It looked like it was going

down that road but it does not look

like it is a very sustainable

company as a public company.

Facebook makes about $5 per viewer

Snapchat makes about one.

We were

all talking about shares plunging

after Facebook went public...

Correct. They are giving Snapchat a

little bit of flexibility because it

is not immediately obvious if you

can become sustainable but with

these numbers, profitability is

down, numbers is down. The only good

news is that it sold for 2 billion

cash so it can sustain these losses

for a while.

Twitter has expanded to

240 characters.

What difference will

it make? Twitter itself is searching

for reinvention. It is of the same

problem as Facebook. It is not as

healthy as Facebook. We will see if

it makes much of a difference. A

small group of folks wanted more

characters but the bigger problem is

can they turn this into an affect if

business.

A question we have been

asking for a long time. Thank you

for the analysis. You have sent in a

lot of use and most of you saying

you are more of a Facebook kind of

people rather than Snapchat. We will

discuss that more in detail later.

In the next few hours,

President Trump will meet

with his Chinese

counterpart Xi Jinping.

The nuclear threat posed

by North Korea is set to top

the agenda, but Mr Trump is also

expected to take aim at the trade

relations between China

and the United States.

Let's cross over to our Asia

business hub to speak to

Sharanjit Leyl.

Tell us about how significant this

trip is from the point of view of

reasons and trade?

Well, massively

significant because when he lands in

China today, he will be joined by

the losses of more than two dozen

American businesses and during this

visit they are looking to strike

billions of dollars worth of deals

but we know there are many sticking

points in leading the huge trade

deficit America has with China. Also

issues as intellectual but he first

and market access. This trade

delegation hopes for contract

signing is aimed at reducing the

massive trade deficit. They are

mainly large companies such as

bowling. They acknowledge such deals

will do little to address a trade

issues between the two. China has a

number of rules preventing

foreigners from taking stakes in

their industry without a local

partner, restrictions in the

financial services and insurance

industry. They argue that if US

firms were allowed access, this

would help China financial industry

gain maturity. But a coring to

analysts I have been speaking to, it

will not be seen to benefit the

Chinese firms in the long run and it

will take really a long time, as it

did with the Japanese, for the US

and China to narrow their very wide

trade imbalance.

Thank you very much

indeed. We will update you as the

trip continues.

Exactly a year ago, India's

government withdrew almost ninety

percent of bank notes

in circulation.

The surprise measure was aimed

at restricting the country's shadow

economy, but the move

disrupted life across India,

especially in rural areas.

So one year on, has

it been a success?

Yogita Limaye reports.

At an event in December of last

year, the government announced that

this village, up 100 kilometres from

Mumbai, was going cashless. The

first time ever, people were shown

how to use a card machine and it

doesn't be distributed to small

businesses in the area. One year on,

cash is king again. Even though the

post outside this shop proudly says

that digital payments are the

future, most of his customers use

cash.

TRANSLATION: The network is up

and down and there are power cars so

there are many Thaisa cannot use the

card machine. Only 15% of

transaction are use.

After the cash

ban last year, businesses were hit

hard at the government hoped that

making this village cashless would

help control the chaos. This is the

only bank in the area and people

from this village and 70 other have

their accounts in this one branch

and so when the government with two

major currency notes, the queue

waiting to withdraw money extended

all the way down to the street. The

government said its objective was to

cut down on illegal cash holdings

but it exposed just how many people

in India are cut off from financial

networks. Things have not changed

much in the small tribal villages

like this one. Many people here are

an educated so they are not given

that all credit cards. They had been

given bank accounts but the brunch

is a faraway and every trip costs

money. This man, a social activist

that works in this area, says Ariza

potential solution. Most villages

have smartphones and the government

has launched an easy-to-use

application.

We spent so much money

on infrastructure...

In a country

like India where two thirds of the

population still live in villages,

progress is slow and getting people

into the banking system is one

mighty task, getting them to use it

is another altogether.

Now let's brief you some other

business stories ...

Google's self-driving car division

has become the first company

in the US to test vehicles

on a public road without a human

in the driver's seat.

Waymo says that passengers

in Phoenix, Arizona will be offered

a fully autonomous taxi service

in the next few months.

Sky has threatened to shut down

its news channel in order

to facilitate its takeover

by Rupert Murdoch's

21st Century Fox.

Fox already owns 39% of Sky,

but regulators are investigating

the deal amid concerns that

Mr Murdoch's media empire

could become too powerful.

And now, what's trending

in the business news this morning...

Stocks slightly lower across Asia.

The price of oil going down and also

the dollar as well. We have more in

the News briefing coming up. I will

see you soon.