Daily News Digest- 23rd July'14

Thought of the Day:

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Following made the Headlines:

India:

• Flipkart Sets a New Benchmark, Raises $1 B in Fresh Funds: Flipkart will announce possibly as early as next week that it has raised over $1 billion (Rs. 6,000 crore), the biggest ever fund-raising by an Indian e-commerce company, two people aware of the development said. Half of the amount will come from existing investors Tiger Global, Russian billionaire Yuri Milner's DST and Accel Partners while the rest will come from several new investors. Among those who are said to be interested in investing in India's largest online retailer are Singapore's sovereign wealth fund GIC and US based investment firm T Rowe Price. With this latest deal, India's biggest online retailer will have raised over $1.7 billion, valuing it at over $5 billion.

• India tops consumer confidence index: Survey: Consumer confidence level in India jumped by seven points during the second quarter of this year, bringing India to the top globally with the change in government at the Centre, global information and insights provider Nielsen has said. According to a global consumer confidence index study by Nielsen, India which was ranked second in the first quarter of 2013 is now the most optimistic country , followed by Indonesia and the Philippines. Consumer confidence in India was indexed at 128 in Q2 2014, a seven-point increase from Q1 2013 (121). “Consumers in India have indicated increased levels of confidence in the second quarter when the country's general elections were taking place,“ Nielsen India Region President Piyush Mathur said. “This buoyancy is yet to translate into increased consumption across sectors. Despite the ongoing inflationary trend and expectations of a poor monsoon, consumers are likely to open their purse strings as we head into the festive season in response to savvy marketing stimulus,“ he added.

• Indian Tech Troika that Powers Google's Engine: Nikesh Arora -till recently Google's chief business officer, and also its highest paid executive -is moving on, but an influential tech troika of Indian engineers will continue to shape the future of the $60-billion global search giant. Amit Singhal, Sundar Pichai and Sridhar Ramaswamy are responsible for the nuts and bolts that power Google. The trio reports directly to Google co-founder & CEO Larry Page. They are part of what is popularly called the L-Team at Google ­ `Larry's team', not leadership team. They drive innovation, are responsible for new products and most of Google's 40,000 employees report to them. All three are senior vice-presidents, as was Arora. They are among the top eight executives at Google. Ramaswamy , who is responsible for all the engineering behind Google's ad products, has the largest team of engineers under him. Advertising is basically how Google makes all its money Singhal, who runs search, is also a `Google Fellow,' a much revered designation within Google given only to its top scientists. He is building intelligence into the search algorithm to ensure that results are as accurate as possible. Pichai runs the current hot businesses: Chrome, Android and Apps and is responsible for their development and building global partnerships to market them. who was once considered as a contender for Microsoft's top job, which went to insider Satya Nadella in February this year -was put in charge of Android in 2013, making him one of the most powerful technology executives in the world. Android, the mobile operating system is used by more than 70% of world smart phones.

• Merc to double assembly of cars in India to 20k units: Mercedes Benz has decided to step on the gas in India and is doubling vehicle assembly capacity at its Pune factory while locally-assembling more models, including the CLA sedan, as it expects a second year of double-digit growth in 2014. The German maker is set to unleash a host of products which include the entry-level SUV , the GLA, and the new-generation C-Class. The company hopes that the new cars, including the Aand B-Class hatchbacks, will contribute as much as 40% to overall sales, MD & CEO Eberhard Kern said after it launched the AMG version of the CLA priced at Rs 68.5 lakh (ex-showroom Delhi). “We are doubling the annual assembly capacity to 20,000 units at Pune and this should be done in the next few weeks,” Kern told TOI. He said the company’s investments will rise to Rs 850 crore after this phase of expansion. The higher capacity is required as the company will be adding new models to its lineup and would prefer to assemble them in India instead of importing them as the latter route involves paying a hefty import duty, which is over 150%.

• Facebook India profit rises 63%: Facebook Inc.’s India business reported a 63% rise in profits during the 2013 financial year, driven mainly by India’s booming online advertising market, while its investments in India have also grown several fold since the social networking giant entered the country. However, despite India being Facebook’s second largest market globally in terms of users, after the US, the company’s revenues from the country are a fraction of what it generates globally.

• Apple Suppliers Asked to Make 80m Big iPhones: Apple has asked suppliers to manufacture between 70 million and 80 million of its two forthcoming large-screen iPhones by the end of the year, its largest initial production run of iPhones, the Wall Street Journal reported, citing people familiar with the matter. Its forecast for the iPhones with 4.7-inch and 5.5-inch displays is much larger than the initial order last year of between 50 million and 60 million for iPhone 5S and 5C models, the people told the Journal. Foxconn and Pegatron plan to start mass producing the 4.7-inch iPhone model next month, and Hon Hai Precision Industry , whose parent is Foxconn, will begin making the 5.5-inch version exclusively in September, the people said. Both iPhone 6 screens will be larger than the 4.0-inch panels on Apple's iPhone 5s and 5c models. The new phone models are also expected to feature metal cases similar to the iPhone 5s and likely come in multiple colors, the people said. Both iPhone 6 screens are expected to use in-cell touch panel technology , allowing for thinner construction. than with standard touch panel films, that was introduced with the iPhone 5, sources told Reuters in March.

• Motorola to Focus on Affordability: Motorola Mobility won't be launching a sub-$100 smartphone in India, but will focus on affordable handsets and possibly introduce a smartwatch in the second half of the year. “We are one of the most recognised brands in India and we want to be a dominant brand here,“ head of India operations Amit Boni told ET. “We're hoping to have a much better second half this year with a fairly exciting line of products coming up in India as well as globally, including Moto 360,“ he said. The Moto 360 smartwatch has been touted as a tough competitor to Apple's iWatch. India is one of the most im portant markets for Motorola. However, it will not follow competitors that are launching devices at sub-$100 devices, and instead offer high quality devices at affordable prices. “We're not into price war. It's not a strategy for us at all,“ Boni said, adding Motorola will not bring in new smartphones at less than realistic prices. 

• Beauty Queen, Loaders Turn Pilots at AirAsia: In his latest visit to India, AirAsia founder Tony Fernandes pointed to an airhostess and announced the company will help her “realise her dream“ of becoming a pilot. By his side sat AirAsia India CEO Mittu Chandilya, a former model, and among the audience was India finance chief Vijay Gopalan, who has previously sung for and acted in Tamil movies. While, AirAsia India's fate in a turbulent sky of cut-throat competition is unknown, its quirky hiring has certainly caught the industry's attention. “It's true AirAsia has made some unusual choices,“ said Manish Sabharwal, chairman of staffing firm Teamlease Services. “This is something that AirAsia does globally too, and a different pair of eyes always makes things interesting,“ he added. Out-of-the-box appointments across the board have been integral to the AirAsia story , almost as much as its aggressive fares. Bo Lingam, Air Asia's chief of operations, Kathleen Tan, its regional commercial head, and Tassapon Bijleveld, CEO of Thai AirAsia, have all joined the airline from Warner Music International, the music company that Fernandes quit as Southeast Asian regional vice-president to launch AirAsia back in 1993.

• Mounting losses fail to deter aviation entrepreneurs: Aviation has always beckoned adventurers and entrepreneurs,” says G.R. Gopinath , who founded India’s first low fare airline Air Deccan, which started off by selling air tickets at Rs. 1. The original low-cost airline man is responding to the government’s decision to approve six more airlines. Add Tata Sons Ltd’s low-cost joint venture (JV) with Air Asia Berhad that has already started flights and its joint venture with Singapore Airlines Ltd (SIA) for a premium airline, expected to launch operations in October, and the number rises to eight. On Tuesday, Mint reported that three of the new approvals are for national airlines, a move likely to stoke competition, leading to lower fares for consumers, and at the same time improve connectivity across the country. The six airlines are Air One Aviation Pvt. Ltd, Zexus Air and Premier Air, that are seeking to become national airlines; and Turbo Megha, Air Carnival and Zav Airways that want to take to the skies as regional airlines that operate with restrictions on where they can fly to.

• Mahindra Retail in consolidation mode, identifies growth areas: After a challenging 2013, when its ambitious expansion drive coupled with a subdued demand environment led to the shutdown of over 10 stores, Mahindra Retail Pvt. Ltd, part of the $16.7 billion Mahindra Group, is now in consolidation mode and has identified key areas of growth, said chief executive officer K. Venkataraman. Mahindra Retail sells specialty children and maternity products including apparel, toys and wellness items at the Mom and Me and Beanstalk chains. “We have been in consolidation stage since the beginning of 2014. Going forward, we will work on three target areas of growth for the company: merchandising, asset-light franchising model and a well-rounded online strategy,” Venkataraman said.

• IBM, Wipro Lead Race to Rs 1,200-cr RCom Deals Bag: Anil Ambani-headed Reliance Communications has shortlisted IBM and Wipro among five companies each for two contracts worth a combined upto ` . 1,200 crore to upgrade technology across its call centre operations as well as to outsource those back office operations, a top official at the telco said. IBM, Wipro, Tech Mahindra, Aegis and Vertex are those in the fray for the call centre outsourcing contract while IBM, Wipro, Cisco, Genesys and Avaya are in the running for the technology upgradation deal, the official told ET, asking not to be named. “The two contracts worth a total . 1,200 crore will be . 1,000 crore to ` ` awarded to one company each. The deals are likely to be finalised next week,“ the official added. The two contracts are a part of India's fourth largest telecom company's plans to exit non-core businesses and reduce costs to boost profitability which has been under pressure for several years now due to huge debt taken for buying spectrum and for network expansion. Under the plans, RCom aims to slash as much as 37% of its 15,000strong workforce by July-end by outsourcing its call centre and shared services operations to two third parties, which will result in some 6,000 employees exiting the company's rolls.

• Spectrum Sharing Last Choice for Telcos?: Telecom operators are likely to use spectrum sharing only to plug gaps in their networks after exhausting other options of building their own networks and trading in airwaves to add to their bandwidth holdings, say industry executives and analysts. On Monday , the sector regulator proposed allowing two telcos to share any category of similar spectrum in a circle, including airwaves allotted at administrative prices, and liberalised a cap on bandwidth that can be pooled in, suggestions that could ensure efficient use of resources, and lead to cheaper voice and data services for users. It proposed that leasing of airwaves shouldn't be allowed and suggested increase in spectrum usage charge (SUC) by 0.5% for those who share bandwidth. “Overall, the recommendations provide additional options to operators for bridging their spectrum deficit,“ said Jaideep Ghosh, partner at KPMG, who tracks the telecom market in India. Large operators such as Bharti Airtel, Vodafone India and Idea Cellular, which between them offer services to over 514 million customers, or 56.4% of 910 million mobile users in India, will be inclined to use spectrum sharing to increase capacity in dense subscriber locations that require more bandwidth.

• When E-Portals Open Windows of Opportunity for Offline Stores: Product discovery portals are becoming allies of brick-and-mortar stores which are battling competition from online retailers. While sites such as Zopper and Findable are targeting retailers across segments, there are specialist players like Pricebaba and Travel Triangle also emerging in the space. New Delhi-based startup Reviews42 which started as a product review portal has pivoted to become Zopper. The new-look company offers shoppers information on avail ability and pricing of products, ranging from laptops to apparel, in their local mom and pop stores by detecting a shopper's location through mobile. “While product, merchant and price discovery will continue to happen online, a majority of shopping happens offline,“ said Neeraj Jain, founder of Zopper. While e-tailing has been a fast growing channel in the Indian retailing landscape, the bulk of retail sales happen through brick and mortar stores. Retail advisory Technopak estimates that 97% of retail comes through the offline stores while only 3% is online. It is this large category that these online platforms are going after.

• Reliance Retail shifts focus to profitability: Reliance Industries Ltd’s retail unit, which posted its first annual profit in the last fiscal year, will focus on improving profitability now that revenue growth has stabilized. As part of its efforts to boost margins, Reliance Retail Ltd shut “low-performing” stores across its different formats, the company told analysts post its quarterly earnings release on Saturday. Reliance Retail’s revenue grew 15% in the quarter ended 30 June. During the quarter ended 30 June, Reliance Retail closed 137 stores under its so-called value format. It, however, opened 169 stores in high-margin or scalable categories. The net addition to stores during the quarter stood at 32.

• Tata-SIA Gets Ready for Proving Flight in September: Tata-SIA Airlines has told the aviation regulator that it would be ready to conduct a demonstration in September to prove that it can operate passenger flights, an official at the Directorate General of Civil Aviation (DGCA) said. Its plan to carry out the proving flight in midor end-September means the joint venture between the Tata Group and Singapore Airlines would miss its initial target to launch flight operations on September 1. Tata-SIA representatives conveyed the plan on the proving flight to the DGCA on Monday . “They have told us that the proving flight can be conducted either in middle or end-September and they are expecting their first aircraft in the first week of September,“ said the DGCA official. An airline spokesperson confirmed the development. Tata Sons, the holding company of the Tata Group, owns a 51% stake in the joint venture to operate a full-service airline. Singapore Airlines holds the remaining 49%. 

• Shopping `Kart' Flips Over as Xiaomi's Phone Goes on Sale: Indian shopping site Flipkart crashed temporarily on Tuesday, minutes after Xiaomi’s Mi 3 went on sale, as customers rushed to order the Chinese vendor’s much-awaited Rs 13,999 smartphone. The phone, which is only being offered through the site, was sold out in under 40 minutes, according to Xiaomi. At around noon, when sales began, Flipkart site showed a 404 error, meaning the webpage wasn’t found. An hour later it showed an out-ofstock message on the page promoting the device. The price offered by the online retailer is about Rs 1,000 lower than the Rs 14,999 Xiaomi had announced at the launch earlier in the month. According to Xiaomi’s Facebook page Mi India, the company got more than 100,000 registrations until July 21 from people seeking to purchase the Mi 3. The Flipkart site said registrations for the phone will restart on July 28 and sales at noon on July 29. “We will ensure that customers who missed out on today’s sale are automatically registered to buy a Mi 3 on 29th,” Manu Jain, Xiaomi’s India head, said in a statement.

International:

• Facebook now lets app developers target their ads to specific smartphone and tablet models: Facebook is giving advertisers and developers the ability to target ads at specific smartphones and tablets. The new parameters will allow them to specify not only a specific mobile OS, such as Android or iOS, but also individual devices and the firmware version being used. As an example, an advertiser or developer would be able to deliver ads only to people who are using an iPad mini with Retina Display – and target devices that are running at least iOS 7 or higher. In addition, Facebook will also allow developers to target devices with specific connectivity, such as Wi-Fi-only. The new targeting options should appeal to app developers in particular. Updates are often limited to specific devices – Facebook Home, for instance, is only available on a small range of Android smartphones – so being able to tailor ads accordingly should give them a greater return on investment.

• US and European airlines halt Israel flights: US and European airlines suspended flights to Israel's Ben Gurion airport after a rocket landed one mile (1.6km) away. The US Federal Aviation Administration (FAA) ordered three US carriers that fly to Israel - Delta, United and US Airways - to halt flights for 24 hours. Europe's aviation regulator is also urging airlines not to fly to Tel Aviv. The suspension prompted Israeli Prime Minister Benjamin Netanyahu to ask the US to renew flights to Israel. Mr Netanyahu asked US Secretary of State John Kerry for help lifting the FAA ban, which comes amidst heightened scrutiny over flights near conflict zones.

• Microsoft profit falls 7% on Nokia loss: Technology giant Microsoft reported a 7% fall in profit during the second quarter. The company said profit during the March to June period was $4.6bn (£2.7bn), compared with $4.97bn during the same period last year. Microsoft said its Nokia division, which it acquired in April, lost $692m. Last week, Microsoft announced it would cut 18,000 jobs - the biggest round of job cuts in the company's 39-year history. Around 12,500 of those positions will be eliminated in the Nokia phone business.

• Apple earnings boosted by strong iPhone sales: Apple has reported quarterly profits of $7.75bn (£4.5bn) - up 12% on the same period last year. The company sold 35.2 million iPhones from March to June, an increase of 13% from the same time in 2013. The company is seeing strong growth in BRICS countries - Brazil, Russia, India, South Africa, and especially China where iPhone sales rose by 48%. However, sales of its iPad tablet computer fell for the second quarter in a row, down 9% to 13.3 million. In a statement, Apple chief executive Tim Cook said he was "incredibly excited" about new operating systems for iPhones and computers as well as "new products and services that we can't wait to introduce".

• Harley-Davidson shares hit by shipment warning: Shares in Harley-Davidson have fallen more than 6% after the motorbike maker warned it would ship fewer bikes this year than previously forecast. The company also said it sold fewer bikes between April and June than expected due both to poor weather and weak sales of its Sportster model. Higher margins and revenue did, however, drive profits higher. Net profits for the quarter were $354m (£208m), up 30% on a year ago. Revenue was up about 10% at $2bn.

• YouTube star Michelle Phan sued over copyright breach: A leading YouTube entrepreneur is facing legal action for alleged copyright infringement in her videos. Ultra Records, which has musicians Kaskade, deadmau5 and Calvin Harris on its books, is suing Michelle Phan. The label and its publishing arm claim she has used about 50 of their songs without permission in her YouTube videos and on her own website. But one of the artists whose work she is alleged to have used has said he supports Ms Phan. Kaskade, whose work features most prominently in the record label's complaint, said: "Copyright law is a dinosaur, ill-suited for the landscape of today's media." He expressed his disbelief on Twitter that his own record label was suing Ms Phan for copyright infringement. "And the kicker... they're citing her using my songs for the suit. Come. On," he wrote on the site.

• Electronic Arts earnings surge 51%: US video game publisher Electronic Arts (EA) has reported a 51% jump in profit for the April-to-June quarter, boosted by strong sales of titles like Titanfall and FIFA 2014. Net profit rose to $335m (£196m) for the period, up from $222m a year ago, EA has also benefitted from the launch of gaming consoles, which has driven up demand for its video game titles. However, the firm said it was delaying the launch of its title Battlefield Hardline from October to early 2015. It said it was looking to make improvements to the game based on user suggestions and feedback on the test version. Andrew Wilson, chief executive of the firm, said in a statement the firm was "testing and implementing several new features that will help to make Battlefield Hardline a game that players can enjoy for many years to come".

• Boohoo.com Launches in Germany: Boohoo.com, the British own brand online fashion retailer that floated in March, has extended its international presence with the launch of a German language website, it said on Tuesday. The new site, which will be supported by a marketing campaign in Germany, will see the firm compete in another market with bigger rivals Zalando and ASOS. It is the firm's third foreign language site following the launch of a French site in October 2013 and a Spanish site in May this year. For boohoo's year to Feb. 28 2014, international sales accounted for 35 percent of its total sales of 109.8 million pounds ($187.5 million).

• Lord & Taylor Set to Launch Two Concept Shops: While retailers generally don’t get high marks for fashion innovation, Lord & Taylor is working to raise its rating by cooking up two new concept shops for fall launches — Birdcage and Brand Assembly. “We are looking to really inject newness and fashion relevance,” Liz Rodbell, president of Lord & Taylor and Hudson’s Bay, told WWD. “We’re testing new concepts in our flagship. It’s a great place to bring new exciting ideas.” The Birdcage and Brand Assembly shops will both showcase emerging talent on the second floor of Lord & Taylor’s Fifth Avenue flagship, right off the escalator, and will have their own micro sites. Lord & Taylor and Hudson’s Bay are divisions of the Hudson’s Bay Co., based in Toronto, though Birdcage and Brand Assembly are projects for Lord & Taylor only.

• Fenwick Unveils New Shoe Dept. at Bond Street Flagship: British department store Fenwick unveiled a 1 million pound, or $1.71 million, shoe department on the ground floor of its Bond Street flagship. Designed by Shayne Brady of BradyWilliams, the 4,150-square-foot space, known as the Shoe Corner, spans three rooms and has a decor inspired by the boutiques of Twenties London, and specifically the original Mayfair Fenwick town house at 63 New Bond Street. More than one-third of the brands on offer are new to the store, including Lanvin, Valentino, Marni, Alexander Wang and Nicholas Kirkwood. Others include Salvatore Ferragamo, Tod’s, Tory Burch, Ugg, Kurt Geiger, Carvela, Michael Kors and Pretty Ballerinas.

• Baring Asia Buys Stake in Cath Kidston: Baring Private Equity Asia has taken a “significant” stake in Cath Kidston, the British accessories, clothing and home ware brand, although the terms of the deal have not been disclosed. Baring Asia acquired its stake from Cath Kidston’s existing majority shareholder, TA Associates, and members of the company’s management team. Baring Asia will now have an equal ownership with TA, the company said Tuesday. A high street brand known for its kitschy, Fifties-inspired prints that cover everything from oven mitts, sewing kits and key chains to sneakers, dresses, and children’s pajamas, Kidston has 100 international stores, skewed toward Asia.

• Frederic Cumenal to Succeed Michael Kowalski at Tiffany's: Michael J. Kowalski, Tiffany’s chief executive officer for 15 years, will retire from the company on March 31. Succeeding him on April 1 will be Frederic Cumenal, the company’s president. The change will have Tiffany following a recent trend to separate out the positions of ceo and chairman, as Kowalski will stay on as non-executive chairman. Although shares of Tiffany slipped 0.6 percent to close at $99.09 on Monday in trading on the Big Board, Citigroup’s Oliver Chen said the news of the executive change is a “strong next step in driving global brand growth.” The analyst has a “buy” rating on the stock and a price target of $110 a share.