Nasdaq 'Tech Wreck' Cuts Web Giants' Value

Is Tech Stock Slide A New Dot Com Bubble?

Updated: 1:37pm UK, Tuesday 08 April 2014

By Tom Cheshire, Technology Correspondent

Ouch: Tech stocks are taking a beating.

Let me bombard you with some bad figures.

Companies including Twitter, Amazon, Facebook, LinkedIn and Netflix have lost at least 20% of their value from their 2014 high.

Between them, Facebook and Google have lost £28.5bn in their market capitalisation.

The recent stock market flotation of King.com - the makers of Candy Crush - was the worst IPO debut this year.

On the other side of the world, Samsung cut its January to March profit forecast by 4.3%, and dropped the price of its new flagship S5 phone.

Meanwhile, Chinese internet giant Tencent has lost a fifth of its value.

Is this a new technology bubble - and is it bursting?

Technology stocks are still well below the valuations at the height of the first bubble in 2000.

The internet has become part of everyone's lives, rather than an early adopter's toy: 479 million people were online in June 2001; today, around three billion are.

The companies going to IPO are not offering vague promises, but solid profits: King.com had pure profit of $568m (£340m) in 2014.

And sure, Twitter might not make a profit yet - but neither did Facebook and Google when they had their IPOs.

Now both companies earn more money than they know what to do with.

That may have pushed prices higher.

The supermarket sweeps of Facebook and Google - spending billions on companies like Whatsapp, Oculus Rift and Nest - certainly drove up prices, but both Silicon Valley giants could easily afford the cost.

Investors have to be more circumspect.

What we're seeing is a re-adjustment - one which has been due for a while.

King.com is an extremely well-run gaming company, but probably did not warrant a $7bn (£4.2bn) valuation.

Investors in stocks like Amazon and Netflix were waiting and hoping on higher earnings reports: when these were published in February and March, they've been shifting their money to less expensively valued companies.

But this is good news. Investors are treating tech like proper stocks, rather than the magic beans they did back in 2000.

Technology analysts Oppenheimer & Co actually say that, as a result, the sector is now an opportunity.

This is a bump, rather than a bubble.

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Asda Plans 12,000 New Jobs Over Five Years

By George! Why Asda Jobs Fit UK Recovery

Updated: 3:34pm UK, Monday 07 April 2014

By Poppy Trowbridge, Consumer Affairs Correspondent

It is not every day a company, albeit a major employer, confirms plans to create 12,000 jobs in the UK.

That's clearly a significant amount of badly needed new work.

But as unemployment across the UK is coming off uncomfortable highs hit during the recession, some economists and many politicians are concerned that the jobs being created are the wrong kind: temporary, badly paid, with little security.

Despite the UK's reputation for the wrong kind of snow, the wrong kind of rain etc these jobs, for the most part, are the right kind.

The 12,000 positions represent full-time roles. So, even if split by part-timers, the number of jobs simply multiplies.

The job creation has already begun in the North of England, the company having opened 14 new stores already in 2014, and will pick up pace significantly in the two years to 2018 as Asda makes its presence felt in London and the South East.

While the majority will be shop floor spots, Asda's plan to expand with superstores, supermarkets and 'click and collect' locations will require a variety of skilled back office staff, managers, accountants and logistics personnel.

Asda does not offer zero-hours contracts, which means employees can bank on a certain income stream, even if not top of the range.

So, the 12,000 promised spots look somewhat more secure, dispersed across the country, and come with the promise of accelerated creation.

That counts for quality these days.

And if Asda delivers on these promises, we should not turn our noses up at it.

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Samsung Pins Profit Hopes On New Galaxy S5

Samsung Electronics has admitted it is expecting to confirm its second consecutive quarter of declining profits, just days ahead of the global launch of its new smartphone.

The South Korean firm estimated its January-March operating profit at $7.96bn (£4.8bn) - a fall of 4.3% - in its guidance to investors ahead of the release of its full quarterly figures, due on April 25.

The figure was slightly below that expected by analysts who said the company's efforts to stave off the threat of a decline in annual profits would depend on its cost-saving measures but also the success of the Galaxy S5 - launched worldwide on Friday.

The S5 counts a pedometer and heart monitor among its features

It got off to a weak start at home, with its South Korean debut marred by a temporary ban on mobile carriers selling handsets and criticism that it lacks eye-catching new features.

Underscoring the challenges, Samsung has priced the S5 about 10% cheaper than the S4 even though main rival Apple is not widely expected to update its line-up until September.

It also dialled back on marketing glitz to keep margins stable.

Pricing has become a major issue given the growing pressure from cheaper Chinese rivals in the Asian market particularly.

Its share price is nearly 12% off the record high it hit in January last year, weighed by worries over high-end market saturation and the competition from low-end phones made by the likes of Huawei.

Such headwinds may increase pressure on the company to use its cash holdings to boost languishing share prices.

The firm said in January that it would raise dividend payouts after hiking them by 79% last year.

IM Investment analyst Lee Min-hee said: "High dividends give the impression that the company is no longer growing, and the most important thing for technology companies is growth.

"Samsung has repeated this message. Given that fact, I don't think there will be a major share buyback or a dramatic increase in dividend payout."

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Top Locations Named But How Does London Fare?

Paris, New York and Prague are among the glamour capitals pipped to the post by London as a favourite traveller destination.

The UK capital is placed third in the global rankings compiled by TripAdvisor from millions of reviews, with only Istanbul and Rome edging ahead.

On people's favourite world city, London beat the top two destinations from 2013 - Paris and New York - which fell to 7th and 12th places respectively.

Fourth in the world list was Beijing, with Prague fifth and Marrakech in Morocco sixth.

London beat both Paris and New York in the destination rankings

Meanwhile, the traditional seaside resort of Torquay in Devon, came behind only London and Edinburgh as the best destination within the UK.

It saw off competition from the likes of York, Bristol, Leeds and Birmingham.

Manchester, Glasgow and Blackpool all dropped out of the top 10.

TripAdvisor spokesman James Kay said: "These awards are based on millions of reviews and ratings by those that really matter - travellers themselves.

"There is no doubt the birth of the royal baby helped keep the eyes of the world on London in 2013, but the capital's continued appeal among travellers around the world surpasses any one event."

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Firms 'Need Migrants Amid Skills Shortage'

A lack of skills among the UK's long-term unemployed means the Government must consider easing visa restrictions for migrant workers, according to a jobs study.

The call was made by the Recruitment and Employment Confederation (REC) as two separate reports, released on Tuesday, warned of threats to the UK's economic recovery.

They were published hours before new official figures showed the manufacturing sector growing at its best pace for three years in the 12 months to February.

While the studies - by the REC and British Chambers of Commerce (BCC) - all contained positive messages on jobs and output, they also maintained pressure on the Government to do more to support growth.

The REC, along with auditors KPMG, pointed to starting salaries for permanent employees rising faster in March than at any time since July 2007.

The study also showed that vacancies continued to increase but said a shortage of qualified candidates highlighted skills shortages, particularly among the long-term unemployed.

The REC's director of policy, Tom Hadley, said: "The trend of growth in people finding jobs across all industrial sectors and regions continues.

"Starting salaries and hourly pay rates are up as employers battle to entice the talent they need.

"However worsening candidate shortages mean that the number of people available to fill both temporary and permanent jobs is falling at the sharpest rate in nearly a decade.

"As well as 'up skilling' UK workers, the Government needs to take a joined up approach to immigration.

"A priority is addressing the restrictions on visas for highly skilled workers, which would allow businesses to access the people they need to grow and create jobs for more British workers."

He made his plea just a day after experts in the construction industry told Sky News a 'brawn drain' to New Zealand and Australia during the recession meant a skills shortage was now hitting the building of new homes in the UK.

The BCC pointed to strong service sector and manufacturing growth in its latest quarterly economic update.

However the survey of 8,000 firms also warned the recovery must become more balanced in the months ahead as it is still too reliant on consumer spending.

The report also continued to demand better access to finance for businesses as they look to expand.

BCC Director General John Longworth said: "Confidence is high and our members are determined to continue driving the recovery.

"We are brilliant at services and very successful at exporting our knowledge-based industries all over the world.

"This includes everything from accountancy and marketing through to literature and the IT sector.

"In addition, our dynamic, high-value manufacturing sector is once again confounding expectations, and going from strength to strength.

"But UK firms are ambitious, and more support is needed if we are to place the recovery on a sustainable, broader footing in the medium-term.

"We have witnessed many false dawns during the recovery, and external shocks still loom on the horizon. Given that over the next year or so we face political change at home and abroad, long-term policies that support our businesses as they look to grow and invest are crucial."

The studies by the BCC and REC were released as the Office for National Statistics (ONS) boosted hopes of a greater rebalancing of the economy during 2014.

The ONS measured month-on-month manufacturing growth of 1% in February.

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Power To The Regions: Miliband's £4bn Pledge

An extra £4bn will be given to local councils in an attempt to bridge the prosperity gap between London and the rest of the country, under plans from Ed Miliband.

By seizing back power from Whitehall, the Labour leader said, regions would be able to help create jobs and improve business opportunities outside the capital.

In a speech in Birmingham, Mr Miliband warned that UK prosperity was built "far too much" on London.

Tories accused of ignoring Lord Hestletine's review

He said: "We need a prosperous London, but we also need to build prosperity outside it. Today, every region outside London is below the national average when it comes to productivity, while London is 40% above it.

"Britain will never tackle the cost of living crisis and create the new private sector jobs that are essential to doing so unless we break this pattern, reverse a century of centralisation, and change from an economy based on the success of one city to all of our country's great towns and cities: a truly One Nation economy."

The devolution pledge will be included in the Labour manifesto as the party leader attempts to "reverse a century of centralisation".

Mr Miliband also attacked the Tories for failing to take restoring power to the regions seriously by ignoring a review carried out by the Tory grandee Lord Hestletine.

He said: "Michael Heseltine's review called for a massive devolution of funding from Whitehall to the cities."

Mr Miliband said that he had asked the former Labour minister Lord Adonis to "examine every line" of the report to see what more could be done.

Under his proposals cities and towns will be able to put together an economic blueprint for their future and have new powers to allow them to fund infrastructure and economic development projects.

Sir Richard Leese of Manchester City Council welcomes the proposals

They will be able to invest in transport, housing and things like apprenticeships.

The proposal was welcomed by Sir Richard Leese, leader of Manchester City Council. He said: "Independent forecasts for our cities demonstrate that, with more local freedom, we could deliver an additional £222bn and 1.3 million jobs into the economy by 2030. We therefore welcome the direction of travel set out in the statement by the Labour leader today."

Conservative Party chairman Grant Shapps said: "Once again Ed Miliband is talking about a problem which the Labour government he was at the centre of created.

"Labour's great recession made people who work hard poorer, and their unbalanced economy saw just one job created in the North and Midlands for every 10 created in the South."

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Tesco Sidelines Top Marketer As Share Slides

By Mark Kleinman, City Editor

Tesco is poised to sideline its marketing head in a fresh sign of the ongoing management turmoil at Britain's biggest retailer.

Sky News understands that Philip Clarke, Tesco's chief executive, has decided to appoint a new chief marketing officer in place of Matt Atkinson, who has been in the role for just over a year.

The news comes just days after the supermarket group's chief financial officer, Laurie McIlwee, resigned amid a strained relationship with Mr Clarke.

It is unclear whether Mr Atkinson will remain at Tesco in another role or will leave the company. Mr Clarke is understood to have identified a new chief marketing officer to replace him.

The role is particularly influential at Tesco because it has oversight of the company's advertising strategy as well as the Clubcard loyalty scheme, which was a potent tool during its dominance of the 1990s and 2000s in helping to shape promotional activity.

Mr Atkinson was also an important figure in the development and launch last year of the Hudl, a tablet device designed to take on Amazon's Kindle and Apple's iPad.

The decision to sideline Atkinson has emerged as data published on Tuesday by Kantar Worldpanel, a research agency, showed that Tesco's share of UK grocery spending declined from 29.7% in the 12 weeks to March 30, 2013 to 28.6% in the equivalent period this year.

At an investor presentation in February, Tesco said it would reduce capital expenditure to less than £2.5bn annually for the next three years as it cuts its investment in store openings.

Executives say they want to re-establish Tesco as the market leader on price, range, quality and service despite the growing threat from heavy discounters such as Aldi and Lidl.

Mr Clarke's latest change to his team of senior executives may raise further questions about his leadership because he appointed Mr Atkinson to the top marketing role in December 2012.

Mr Atkinson's predecessor, Tim Mason, was one of the architects of the Clubcard scheme, before moving to the US to launch its ultimately failed attempt to break into the grocery market there.

The finance director's departure, meanwhile, leaves Mr Clarke as the only executive director on Tesco's board, and The Sunday Times reported at the weekend that City investors were applying pressure to ensure that Mr McIlwee's successor was capable of replacing the chief executive.

Tesco, which declined to comment, will announce its annual results next week, with profits forecast to fall sharply and the company's share price already at their lowest level for ten years.

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Former Comet Owner Has Eyes Down For Gala Bid

By Mark Kleinman, City Editor

The controversial former owner of the electrical goods retailer Comet is assembling an offer to gain control of the Gala chain of bingo halls.

Sky News understands that Henry Jackson, founder of the investment firm Opcapita, has contacted Gala Coral to register his interest in bidding for the business, which is expected to be put up for sale later this year.

Mr Jackson's involvement in the auction will pit him against private equity groups and individuals including Luke Johnson, the former Channel 4 chairman, whose firm Risk Capital Partners is among the other likely bidders.

Prospective buyers have stepped up their interest in Gala since the surprise move by George Osborne, the Chancellor, to announce a halving of bingo duty in last month's Budget.

Gala Coral's board has appointed Lazard, the investment bank, to oversee an auction of Gala, which operates approximately 140 sites across the UK.

Analysts believe the business is likely to fetch in the region of £250m, although the actual figure may be higher following the Chancellor's Budget pronouncement.

Mr Jackson's name has attracted controversy since the collapse of Comet in November last year, which caused thousands of job losses.

It prompted Vince Cable, the Business Secretary, to launch an inquiry into the circumstances surrounding the chain's failure, while Opcapita is understood to have made £70m from its investment in the retailer.

Opcapita has also owned retailers including MFI, the kitchens chain, and is a current investor in Game Group, which is preparing a stock market listing in the coming months.

The investment firm has tended to raise money to fund its deals on an individual basis, but has more recently been trying to raise a longer-term fund.

The Comet inquiry undertaken by the Department for Business, Innovation and Skills has yet to be concluded and it is unclear whether or when its findings will be made public.

Mr Jackson, who frequently appears in tabloid newspapers alongside his musician wife Stacey, sold MFI just two months before it fell into administration in 2008.

A former executive at Deutsche Bank, he is understood to have amassed personal wealth running to millions of pounds from a string of deals.

A spokeswoman for Opcapita declined to comment.

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Sports Direct Slips As Ashley Sells Stake

Shares in Mike Ashley's Sports Direct took a big tumble on the FTSE 100 on Tuesday after he sold a block of shares worth more than £200m.

It emerged late on Monday that the tycoon had offloaded 25 million shares just days after shareholders blocked his target-related £73m all-share bonus.

He has never taken a salary at Sports Direct.

Mr Ashley's share sale, through investment bank Goldman Sachs, took place as a separate investment in House of Fraser by Sports Direct was called into question by the department store chain ahead of the expected completion of its sale to Chinese firm Sanpower Group.

Mike Ashley founded Sports Direct in 1982

It emerged last weekend that Mr Ashley, who also owns Newcastle United, had snapped up an 11% stake in House of Fraser from business partner Sir Tom Hunter - a purchase that could be potentially reversed amid allegations it may not meet City rules.

House of Fraser complained: "We have sent legal letters to both parties, reminding them of the proper procedures to transfer shares, which have not been followed.

"This situation has no impact on our plans to sell to Sanpower and we will be making an announcement in due course."

House of Fraser claimed that pre-emption rights meant Sir Tom was obliged to formally offer his shares to existing shareholders before selling to an outside party.

Neither Mr Ashley nor Sir Tom have commented on the complaint.

Mr Ashley's motivation for the purchase is not known but there was speculation he was interested in using the department store chain as an alternative vehicle for his sportswear brands in the future.

His sell-off of Sports Direct stock on Monday takes his holding to 57.7% - worth almost £2.8bn.

Sports Direct shares, which have more than doubled in value in a year, were down 10.1% at 14:15 BST on Tuesday - wiping more than £500m off its market cap.

It is suggested that Mr Ashley's sale of Sports Direct shares was not linked to the House of Fraser acquisition but instead designed to increase the free float in Sports Direct shares based on demand from institutional investors.

It was his second major share offload of the year following a similar move in February.

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IMF Sees UK Growth Remaining Fastest In G7

By Ed Conway, Economics Editor, In Washington DC

The International Monetary Fund (IMF) has raised its forecast for Britain's economic growth more than any other major economy for the third time in a row, in a boost to the Chancellor's fortunes.

The Fund said it expected Britain's economy to expand by 2.9% this year – faster than any other G7 economy, and a significant upgrade from the 2.4% rate it predicted only three months ago.

The upgrade, which is likely to be seized on by the Chancellor as further evidence of British success, comes one year on from the IMF chief economist's warning that George Osborne was "playing with fire" with his austerity policies.

At that stage, Britain was facing the prospect of a possible triple-dip recession.

Now, the Fund says that not only is growth strong in the UK, there is a significant chance of an "upside risk" - in other words even stronger growth than its central prediction.

George Osborne was accused of 'playing with fire' by the IMF a year ago

However, the Fund added that the growth was being fuelled by the same imbalanced elements - consumer spending and credit - that contributed to the crisis.

"Growth has rebounded more strongly than anticipated in the United Kingdom on easier credit conditions and increased confidence," the report said.

"However, the recovery has been unbalanced, with business investment and exports still disappointing."

It pointed out that as a result, interest rates would be likely to rise sooner in the UK than in the US or Europe.

The Fund recommended that the Bank of England keep monetary policy "accommodative" - keeping rates low for the time being.

It added that "the Government's efforts to raise capital spending while staying within the medium-term fiscal envelope should help bolster recovery and long- term growth."

Labour's Ed Balls has accused the Government of complacency

The benign tone of the report, which forecast only slightly milder growth of 2.5% in 2015, is likely to be regarded within the Treasury as a victory over the Fund and Olivier Blanchard, who repeatedly urged the Chancellor to change course on austerity in recent years.

However, the Fund itself is likely to point towards the fact that the pace of Mr Osborne's spending cuts has been reduced in recent years - such that by some accounts he has already adopted a "plan B" on austerity.

A Treasury spokesperson responded: "The IMF forecast the UK to be the fastest growing major advanced economy this year.

"This is further evidence that the Government's long term economic plan is working, providing economic security for hardworking people.

"But the job is not done. Budget 2014 set out the next stage of the plan that is creating a more resilient economy through support to businesses, savers, and exporters.

"The biggest risk now to the recovery would be abandoning the plan that's delivering a brighter economic future."

Ed Balls, Labour's shadow chancellor, said: "These forecasts are welcome news after three damaging years when the economy flatlined and growth forecasts were repeatedly downgraded.

"Yet millions of working people, who are on average £1,600 a year worse off since 2010, are still not feeling any recovery at all.

"The IMF is right to warn about an unbalanced recovery and it is concerning that growth is expected to slow down next year.

"The Government should also heed the IMF's warnings about surging house prices by taking action to boost housing supply, as we have called for. 

"Instead of complacently trying to claim that everything is going well, we need a Government which understands that there is a deep-seated cost-of-living crisis and will act to tackle it."

The Fund said it expected the world economy to grow by 3.6% this year and 3.9% in 2015.

Among the countries facing a downgrade was Russia, whose growth prospects were cut by 0.6%, reflecting the economic impact of its involvement in Ukraine.

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