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Now it is time for World Business Report. | :00:00. | :00:18. | |
Snap judgement - investors punish the firm behind Snapchat. | :00:19. | :00:20. | |
As the messaging app's results disappoint, its shares plunge 23%. | :00:21. | :00:23. | |
Businesses in Northern Ireland fear for the future | :00:24. | :00:33. | |
Also coming up: A strong year for Japanese tech giant Softbank. | :00:34. | :00:43. | |
We start with Snap, the company behind the messaging app Snapchat. | :00:44. | :00:58. | |
In case you aren't familiar with it, it lets you send photo messages | :00:59. | :01:02. | |
which disappear after a few seconds, and it seems the confidence | :01:03. | :01:05. | |
of investors has gone missing almost as fast. | :01:06. | :01:07. | |
Snap's shares have plunged in after-hours trading, | :01:08. | :01:09. | |
on its first set of financial results since that huge flotation | :01:10. | :01:12. | |
This is how much they lost in the first three months | :01:13. | :01:19. | |
That is a massive jump on the losses this time last year. | :01:20. | :01:24. | |
It is mostly because of huge stock option payouts to staff in the IPO. | :01:25. | :01:28. | |
But here is the number investors are really looking at. | :01:29. | :01:31. | |
By the end of March, 166 million people were using | :01:32. | :01:33. | |
That is up over 36% on the same time last year, but it was a few million | :01:34. | :01:39. | |
less than investors had been hoping, and a big slowdown from growth seen | :01:40. | :01:42. | |
It also pales in comparison when you look at this. | :01:43. | :01:46. | |
Facebook has around 1.3 billion daily users, | :01:47. | :01:48. | |
and almost 2 billion who use it at least once a month. | :01:49. | :01:51. | |
Even its version of Snapchat, Instagram Stories, has 200 | :01:52. | :01:53. | |
Investors were quick to pile into shares when Snap went public | :01:54. | :02:04. | |
The share price rose by as much as 50% in the first couple | :02:05. | :02:08. | |
But look how that enthusiasm has waned on concerns about competition | :02:09. | :02:12. | |
from Facebook, and its shares are likely to plunge | :02:13. | :02:15. | |
They were down 23% in after-market trading, towards $17. | :02:16. | :02:18. | |
That would take the shares pretty much back to their flotation price. | :02:19. | :02:22. | |
From San Francisco, here is Dave Lee. | :02:23. | :02:36. | |
When Snap went public in March it had to answer two big questions. The | :02:37. | :02:43. | |
first was, could attract enough new users to keep investors happy, and | :02:44. | :02:47. | |
the second question, probably a bigger question, was caught it | :02:48. | :02:50. | |
survive an onslaught from Facebook which has been copying Snapchat's | :02:51. | :02:54. | |
best ideas and giving them to its users instead. Well, so far the | :02:55. | :02:58. | |
answer to both of those questions seems to be no. User growth has been | :02:59. | :03:02. | |
too small, revenue has been too small, and while Snapchat is still | :03:03. | :03:06. | |
very popular with teenagers, there hasn't been an increasing engagement | :03:07. | :03:10. | |
that perhaps investors would have wanted. Indeed, on an earnings call | :03:11. | :03:13. | |
after results were published, one investor asked the chief executive | :03:14. | :03:17. | |
whether there were new products coming which could give investors | :03:18. | :03:21. | |
cause for hope. He didn't have too many bright ideas. He also said he | :03:22. | :03:26. | |
wasn't worried by Facebook, but on the evidence of these results, he | :03:27. | :03:28. | |
probably should be. Colin Jacobs is managing director | :03:29. | :03:30. | |
of Immediate Future, an independent social | :03:31. | :03:32. | |
media consultancy. Let's start with the immediate | :03:33. | :03:44. | |
concern that people seem to have about Snapchat, and this is this | :03:45. | :03:47. | |
competition from Facebook, whether it really is a sustainable model as | :03:48. | :03:52. | |
it is, and can sustain interest. Facebook are not going to go | :03:53. | :03:56. | |
anywhere, they are thriving at the moment, the numbers you have just | :03:57. | :04:00. | |
read out underlined that. It is quite an interesting position he | :04:01. | :04:05. | |
takes, when Facebook lies a company as it tried to do with Snapchat, -- | :04:06. | :04:12. | |
by the company. If he fails, he worked overtime, and that is what we | :04:13. | :04:16. | |
are seeing with the new features coming online. Facebook's position | :04:17. | :04:20. | |
is stronger because of their user growth, there is no doubt about | :04:21. | :04:25. | |
that, and revenues they are currently generating a reportedly ?8 | :04:26. | :04:29. | |
billion, which is significant. And Snapchat are moving on. Yes, and | :04:30. | :04:33. | |
they are moving in the right direction and have some nice product | :04:34. | :04:36. | |
coming online. So just for the viewers, what we understand Snapchat | :04:37. | :04:42. | |
to do is to take a photograph, apply a filter and it lends itself to | :04:43. | :04:45. | |
advertising various products, however they need to do more. They | :04:46. | :04:49. | |
need to do more but they have had some products in test, and the | :04:50. | :04:54. | |
signals are encouraging. There was a reporter couple of weeks ago when | :04:55. | :04:58. | |
they analyse their user growth and within the report showing that 80% | :04:59. | :05:01. | |
of us are snapping in restaurants and 66% are snapping in balls, they | :05:02. | :05:05. | |
released early signals on the product which looked for a long | :05:06. | :05:09. | |
time... Social has played around with a term called click to break. | :05:10. | :05:13. | |
Can we show that there is engagement in social that drives revenue at a | :05:14. | :05:18. | |
location. Snapchat claim they have a product which does this. They had a | :05:19. | :05:23. | |
trial with Wendy's restaurants, 42,000 people visited within seven | :05:24. | :05:27. | |
days of acting on a filter. If they bring that product to market there | :05:28. | :05:30. | |
is no doubt retailers and consumers will have great interest in it. In | :05:31. | :05:34. | |
fact we are exploring it without consumer clients already. So the | :05:35. | :05:39. | |
battle for these social media Company is his first business of | :05:40. | :05:42. | |
user growth, because the more users you have the better it is in terms | :05:43. | :05:46. | |
of potential conversion but the other thing is absolutely monetising | :05:47. | :05:49. | |
it. Many social media companies have struggled in this department and | :05:50. | :05:52. | |
Snapchat is no exception. And if you go back far enough, this is exactly | :05:53. | :05:56. | |
the fight that Facebook had. Not long ago it was quite a revelation | :05:57. | :06:00. | |
when parents suddenly joined Facebook. The younger demographic | :06:01. | :06:04. | |
was quite shocked, my father now on Facebook. That is where Snapchat a | :06:05. | :06:08. | |
rat today. The challenges, are they going to be able to grow their user | :06:09. | :06:12. | |
base to truly monetise? Because the big revenues will only come if they | :06:13. | :06:17. | |
have a far more inclusive user base, there is no doubt about that. | :06:18. | :06:19. | |
Also, as the EU's chief Brexit negotiator, Michel Barnier, | :06:20. | :06:22. | |
prepares to address the Irish Parliament, | :06:23. | :06:23. | |
we are on the border between the Republic of Ireland | :06:24. | :06:26. | |
and Northern Ireland, where Brexit talks will be closely followed. | :06:27. | :06:29. | |
That is because, of course, it will represent Britain's land | :06:30. | :06:32. | |
frontier with the EU once it leaves, and businesses there are worried | :06:33. | :06:35. | |
about what that border will be like, as the BBC's | :06:36. | :06:37. | |
This is what we will be once Britain leaves the European Union. The main | :06:38. | :06:49. | |
land border between the two. They might not look like it, but the | :06:50. | :06:56. | |
tranquil waters here are actually an international frontier. Over here | :06:57. | :06:59. | |
the Republic of Ireland and hear the United Kingdom. It wasn't always | :07:00. | :07:03. | |
this peaceful, of course. It used to be a militarised border with | :07:04. | :07:07. | |
checkpoints. Now businesses here are worried about Britain's bow to the | :07:08. | :07:10. | |
European Union, and what happens next. Another busy lambing season | :07:11. | :07:15. | |
just finished... Some of the most worried farmers and food processors | :07:16. | :07:18. | |
in the north who have forged deep relationships in the Republic. The | :07:19. | :07:22. | |
chief executive of the farmers cooperative says his organisation | :07:23. | :07:26. | |
makes constant use of the open border. We process livestock in | :07:27. | :07:31. | |
Northern Ireland and the Republic of Ireland. We employ 1200 people in | :07:32. | :07:36. | |
the Republic, we employ 1400 in Northern Ireland. From our | :07:37. | :07:39. | |
perspective, we are hugely concerned about the potential impact of a hard | :07:40. | :07:43. | |
order. We hope that they will not the one. But we cannot rule that | :07:44. | :07:47. | |
out. Therefore, for business planning purposes, we have to | :07:48. | :07:51. | |
consider the worst-case scenario. And for our company that would be | :07:52. | :07:55. | |
very significant disruption. Not all businesses in the North think Rex it | :07:56. | :08:03. | |
is bad news. Some think it is the best thing that has ever happened. | :08:04. | :08:07. | |
The ministers in Northern Ireland have less influence over fisheries | :08:08. | :08:10. | |
policy in the Irish Sea than a government minister from Slovakia or | :08:11. | :08:14. | |
any other part of the European Union. The thing about the Irish | :08:15. | :08:20. | |
Sea, 75% of the Irish Sea is within UK territorial waters but UK | :08:21. | :08:25. | |
fishermen really only have the opportunity to carry catch about | :08:26. | :08:32. | |
40%. Future here is linked to the outcome of the Brexit negotiations, | :08:33. | :08:36. | |
which are themselves uncertain. But businesses in the north and south | :08:37. | :08:40. | |
will be hoping that the politics of peace which dismantled the hard | :08:41. | :08:43. | |
border in the first place will triumph over the politics of Brexit. | :08:44. | :08:51. | |
To Asia now, where Japanese telecoms and internet giant Softbank has | :08:52. | :08:54. | |
revealed some of its best profits ever. | :08:55. | :08:56. | |
Softbank is a complicated company to follow. | :08:57. | :08:58. | |
It runs a mobile phone network in Japan, but also invests heavily | :08:59. | :09:01. | |
It owns US mobile company Sprint, and has recently bought UK chip firm | :09:02. | :09:06. | |
ARM, which designs chips for the iPhone. | :09:07. | :09:08. | |
It also has a huge stake in Chinese ecommerce giant Alibaba. | :09:09. | :09:11. | |
Rico Hizon is following this in Singapore for us. | :09:12. | :09:18. | |
It is indeed a confusing company. And Softbank doesn't help that be | :09:19. | :09:29. | |
understood any more, the name. That's right, it is very diversify. | :09:30. | :09:34. | |
They are into e-commerce, taxi hailing applications, but looking at | :09:35. | :09:38. | |
the overall numbers, the second best ever for Softbank, operating profit | :09:39. | :09:42. | |
for the year, until the end of March, rising 30% to $9 billion. And | :09:43. | :09:48. | |
again it was due basically to cost-cutting and a rise in the | :09:49. | :09:52. | |
number of subscribers in its US mobile business, Sprint, which it | :09:53. | :09:59. | |
hopes to merge with rival the third largest wireless carrier, seen as a | :10:00. | :10:07. | |
potential kingmaker in the sector, as companies like Sprint have | :10:08. | :10:10. | |
ambitions of being the largest in the field. The diversify | :10:11. | :10:15. | |
conglomerate also has the investments in China. It recently | :10:16. | :10:21. | |
confirmed $5 billion investment in the so-called Uber of China, which | :10:22. | :10:29. | |
has some 400 million users across 400 cities in the mainland. It | :10:30. | :10:33. | |
acquired Uber China in August last year. Lots of businesses which are | :10:34. | :10:40. | |
profitable. That is what we like to hear. Let's look at what has been | :10:41. | :10:43. | |
happening on the markets. A couple of driving in fact is. There is an | :10:44. | :10:48. | |
impression in the markets for reasons I won't go into that we will | :10:49. | :10:52. | |
see further rate hikes in the US. That has strengthened the dollar, | :10:53. | :10:55. | |
but also oil inventory is moving down fast and that has been helpful | :10:56. | :10:59. | |
for commodity prices generally. These are the Asian markets, as you | :11:00. | :11:04. | |
can see, picking up on a strong performance we saw on Wall Street. | :11:05. | :11:10. | |
Here we go. You can see the NASDAQ moving up and the Dow. We take a | :11:11. | :11:17. | |
look at what has been happening on the European markets? I don't think | :11:18. | :11:21. | |
it is going to play with me, but we are seeing a stronger dollar this | :11:22. | :11:23. | |
morning. Don't forget you can get | :11:24. | :11:24. | |
in touch with me and some | :11:25. | :11:28. |