Daily News Digest- 6th Aug'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• India ranked no. 8 on global list of multi-millionaires: India has more multi-millionaires than Australia, Russia or France. The latest wealth index by New World Wealth that looks at multi-millionaires globally -an individual with net assets of at least $10 million -has ranked India eighth in the global rich list below countries like US, China, Germany and UK but higher than Singapore and Canada. India is home to 14,800 multi-millionaires of which Mum bai is home to the highest number -2,700 -as many as in Munich. Interestingly, Mumbai is the only Indian entry in the top 30 cities for multi-millionaires. Hong Kong is the city with the largest number of multimillionaires -5,400 followed by New York (14,300), London (9,700), Moscow (7,600), Los Angeles (7,400) and Singapore (6,600).

• Armoury Full, Big Boys of E-tail Prepare for Battle: Days after mopping up $1 billion (₹ 6,000 crore) in funding, India's top online retailer Flipkart said it has hired a former venture capitalist to lead its mergers and acquisition team. Rivals Amazon and Snapdeal too in recent weeks have brought in former investors to direct a similar charge as the big boys of Indian online retail prepare to go shopping themselves. Nishant Verman, earlier an associate in the Delhi office of Silicon Valley venture firm Canaan Partners, will now lead the charge at Flipkart to acquire companies and also invest in startups.

• Ratan Tata may invest in Snapdeal: Ratan Tata is said to be considering a personal investment in Snapdeal, an ecommerce firm, at a time when online retail is generating investor euphoria on the back of exponential growth. In a move that would signal his interest in India's emerg ing consumer internet story, the 76-year-old chairman emeritus of Tata Sons may buy out an early investor through a secondary sale, people familiar with the development said. Kunal Bahl, co-founder of Snapdeal, did not respond to TOI’s query while an email questionnaire to Tata’s office remained unanswered till the time of going to press. Tata, who transformed India’s largest private sector conglomerate with a string of marquee global acquisitions, is expected to be a minority investor in his personal capacity in the e-tailer. TOI could not ascertain the exact stake Tata would hold if and when the transaction is completed. While his holding may not be high, its significance would lie in the buzz it would create for Snapdeal. Tata has always had an interest in technology; even so, a deal would mark the ultimate coming together of the old and new guard.

• Nokia India head P Balaji resigns: PBalaji, managing director of Nokia India – now called Microsoft Devices Group – has resigned from the company. He will continue as an advisor to Microsoft Devices Group till October. “After spending almost two years with Nokia and now in Microsoft Devices Group, P Balaji has decided to move on from the organisation for personal reasons,” the company said in a statement. Balaji joined Nokia India in October 2012 as managing director. He was instrumental in driving the momentum behind Lumia, building the X family of phones as well as strengthening Nokia’s retail execution in the country. After completing his B Tech in electronics and communication from the University of Roorkee (now IIT- Roorkee), he started his career with Tata Steel, Jamshedpur as a graduate trainee. He has also worked in AT& T Switching Systems, a joint venture between AT& T and Tata Group, and with Tata Lucent Technologies, according to reports.

• Online Threat: Cos Tighten Offline Screws: Sony, Samsung, Panasonic and other top electronics brands are trying to crack down on brick-and-mortar stores selling their products online, threatening to cut off supplies or penalise them financially as they look to curb the practice of `predatory' discounts. Lenovo and Canon, along with the three named above, have issued trade advisories banning stores from selling cellphones and other items made by them online directly or indirectly via e-commerce companies. The yawning gap between prices quoted by popular online shopping sites such as Flipkart, Amazon and Snapdeal and their offline counterparts has added to woes of electronic goods makers in India, some of which are grappling with slipping sales at their brick-and-mortar stores. Manufacturers of electronic goods allege that while some offline traders and distributors list products on online marketplaces and sell them at lower margins, others list products at the manufacturer recommended price, but the host website ends up offering deep discounts by way of coupons and cashback schemes, creating a wide gap in pricing between products available online and offline. 

• Blink & Miss Xiaomi Mi3 Sale Disappoints Buyers: Chinese handset maker Xiaomi sold out all its 15,000 Mi3 devices online in two seconds flat on Tuesday , beating the record five-second flash sale last month, but a large number of customers were left disappointed because of the limited stocks offered compared to far larger demand. More than 150,000 customers pre-registered for the third flash sale which started at 2 pm Tuesday and an equal number of unregistered customers had logged on at that time to buy the Mi3 smartphone, priced at ₹ 13,999, on online retailer Flipkart's website.

• Microsoft to set up data centre in India to accelerate growth: In a move that is likely to be followed up by several global technology majors, Microsoft is planning to set up a local data centre in India. The move would help Microsoft offer its cloud offerings to several industry sectors, especially banking, financial services and insurance sector, which is the biggest consumer of technology. Jim Dubois, Microsofts corporate vice- president and chief information officer, confirmed the move.

• Flagging start-ups alter strategies to stay afloat: Till three months back, Mumbai-based quick service restaurant chain Rocket Sandwiches ran a small but profitable business. It had five outlets from where it had delivered more than 120,000 sandwiches to its customers. But Vivek Jha, chief executive and founder of Rocket Sandwiches, along with co-founder Tenzin Thargay, realized that they could not scale up their business with just 70-80 sandwiches orders a day. “Sandwiches are not the kind of meal that people have for lunch, and we realized we didn’t have the money to make customers build a new habit,” said Jha, who raised approximately Rs.4 crore from Indian investors, India Quotient and Unilazer Ventures Pvt. Ltd, in late 2013. So Rocket Sandwiches decided to “pivot”, or alter its strategy, because “giving up seemed too easy”, Jha said.

• Food chains drive upcountry as realty bites: High real estate costs in metros and tier 1 cities are driving several restaurant chains to smaller towns. With tier 2 and non-metro cities offering restaurants better returns on their real estate investments, and since the customer base and market potential are almost the same as in metro cities, quick service restaurant (QSR) chains and casual dining restaurants are looking closely at smaller towns for expansion. However, they also continue to expand in metros to maintain the growth they have achieved. A restaurant chain would invest about Rs 3 lakh for a store in a metro against Rs 50,000 for a store of a similar size in a smaller city. With more people travelling within the country and abroad, they have exposure to different cuisines, which assures restaurants a good market in small towns, say restaurant owners. Oriental Cuisines, which runs the French Loaf bakery and casual dining restaurants like Wangs Kitchen, Benjarong and Teppan, is soon moving into non metros.

International:

• Target sharply lowers 2Q profit outlook, announces $110M breach charge: Target Corp. got some of the bad news out of the way before its new CEO starts next week. The Minneapolis-based retailer on Tuesday sharply lowered its second-quarter profit forecast, citing the deep promotions it has used to win back customers following last year’s massive data breach. Target also said investors should expect “essentially flat” sales in the May-to-July quarter as shoppers continued to curb spending. Meanwhile, its Canadian stores, which have been bleeding money since their big rollout there last year, had “softer-than-expected” sales. The performance warning, which sent shares down 4 percent Tuesday, came out exactly a week before Brian Cornell, a former PepsiCo and Sam’s Club executive, takes over as Target’s new CEO. Then on Aug. 20, Target will release its full results for the quarter that just ended Saturday.

• 21st Century Fox withdraws bid for Time Warner: Rupert Murdoch's 21st Century Fox has withdrawn its bid to purchase US entertainment giant Time Warner for an estimated $80bn (£47bn). Time Warner rejected Fox's initial offer in July. The company wrote in a statement that Time Warner had "refused to engage with us to explore an offer which was highly compelling". It added that the reaction in the company's share price since the proposal was unveiled undervalued Fox. Fox's share price has declined by 11% since news of the takeover was revealed. Meanwhile shares in Time Warner plunged more than 11% in after-hours trading after the surprise news of the withdrawal was announced. "Time Warner's Board and management team are committed to enhancing long-term value and we look forward to continuing to deliver substantial and sustainable returns for all stockholders," said Time Warner in a statement.

• Euro Zone June Retail Sales Show Strongest Year/Year Rise in Seven Years: Euro zone retail sales rose at the fastest rate in seven years in June — and twice as fast as expected — thanks to strong sales of both food and non-food products, data showed on Tuesday. Compared with the same period last year, the volume of retail sales in the 18 countries sharing the euro surged by 2.4 percent after a downwardly revised 0.6 rise in May, posting its strongest growth since March 2007, data from the EU's statistics office Eurostat showed. Retail sales, a proxy for household demand, rose in line with expectations by 0.4 percent on the month in June after an upwardly revised 0.3 percent rise in May, data showed.

• Coke, Pepsi try to fatten bottom line with smaller servings: About a year ago, Texas rancher George Krueger worried about his weight, and decided it was time to downsize - his Coke cans, that is. Like increasing numbers of U.S. consumers, Krueger bet that by switching from regular-sized soda cans to 7.5 ounce "mini"-sized ones, he could make a dent in his daily calorie intake. U.S. soft drink companies are betting that soda drinkers like Krueger and their willingness to buy smaller cans, even for a higher unit price, will be a potential antidote to weak sales as consumers shift away from sugary soft drinks. The mini-can is the latest move by food and beverage companies to boost their product offerings of smaller portion sizes that supposedly help consumers limit their caloric intake - even if there are signs that some end up reaching for another package or can.

• J.C. Penney to Open in Brooklyn: J. C. Penney Co. is opening its first store in Brooklyn, in phase two of Gateway Center, which the retailer said will feature unique design elements and innovative features not found in any other Penney store, including a new shoe format, large murals of Brooklyn landmarks, open sell areas, energy efficiencies and sleek finishing touches. "The new Brooklyn store not only solidifies our presence in New York, it also signifies another milestone in JCPenney's turnaround," Myron E. (Mike) Ullman, III, chief executive officer said. "This location displays our commitment to mindful store growth in high potential markets, and will perfectly complement our other New York City locations in Manhattan, the Bronx, Queens and Staten Island." The 124,000-square-foot, single-level store in south Brooklyn, near Jamaica Bay, will have its grand opening on Aug. 29.

• Brick and Mortar Wins, But Discounts Are Key: When it comes to back-to-school, brick-and-mortar stores still rule — but at a price. While digital and online are playing a bigger role in influencing purchasing decisions, the mainstay of where parents and students will buy still occurs in the physical store. But there’s a hitch: Forget full-price selling now that b-t-s sets have been unveiled as more families are shopping later in the season. So after a tough first half at retail, the amount of discounting during the b-t-s season could place further pressure on firms’ margins in the second half. The trends were revealed in surveys by Accenture, Brand Keys and Deloitte on how the b-t-s selling season could shape up. The conclusions regarding the general role of brick-and-mortar are similar to the ones reached by A.T. Kearney last month in its survey “On Solid Ground: Brick-and-Mortar Is the Foundation of Omnichannel Retailing.” The survey noted that while omnichannel might be the buzz word, it’s still brick-and-mortar that plays the pivotal role in value creation.

• OVS Inches Closer to Its IPO: Italian mass-market retailer OVS SpA late last week filed paperwork to be listed on the Milan Stock Exchange to regulatory body Consob. The initial public offering of OVS, which would be the first fashion IPO in Italy since Moncler’s listing in December, is expected by the end of the year. Banca IMI, UniCredit, Goldman Sachs International and Bank of America Merrill Lynch will act as global coordinators, while Credit Suisse and HSBC Bank will act as joint book runners. Banca IMI will also be in charge of the listing and a sponsor. Parent company Gruppo Coin is slated to spin off OVS between August and September as a step toward the IPO. Gruppo Coin, the largest clothing retailer in Italy, last year reported sales of 1.66 billion euros, or $2.2 billion at average exchange, up 0.6 percent compared to 2012.

Tech:

• Apple said to debut new bigger-screen iPhone at 9 September event: Apple Inc. is preparing to introduce bigger-screen iPhones at an event on 9 September, a person familiar with the plans said. The Cupertino, California-based company is set to introduce two new models: one with a 4.7-inch screen, and another with a 5.5-inch screen, people with knowledge of the plans have said. Anticipation for bigger-screen iPhones has analysts predicting that Apple will sell a record number of handsets and investors have responded by sending the stock up 18% this year. Samsung Electronics Co. Ltd and other smartphone vendors have used larger screen sizes to gain market share, particularly in Asian markets where bigger phones are more popular. Apple’s planned event on the second Tuesday in September is in keeping with a strategy of releasing new iPhone models in that month, kicking off a broader reboot of its product lineup in time for the holiday shopping season. Last year’s iPhone 5s and 5c also debuted on the second Tuesday of September.

• Google under threat as forked Android devices rise to 20% of smartphone shipments: Android dominates the world’s smartphone market. A new report from analyst firm Strategy Analytics pegs the Google-owned operating system’s global market share at 85 percent. That means that nearly nine in ten phones shipped are built on Android. That domination is colossal. But while Google has ‘won’ the smartphone market share war — revenue is different, iOS is far ahead — the company faces a growing issue: the rise of non-Google Android.

• Apple and Samsung agree to drop cases outside the US: Apple and Samsung have agreed to withdraw all legal cases against each other outside the United States. The two rivals have sued each other over a range of patent disputes in nine countries outside the US, including the UK, South Korea, Japan and Germany. Samsung said the agreement "does not involve any licensing arrangements", and the firms will continue "to pursue the existing cases in US courts". The two firms are the biggest players in the smartphone and tablet PC market.

• Sony gives up on selling e-readers: Sony has given up selling its line of Reader devices for e-books after failing to find a big enough market. "We do not have plans to develop a successor Reader model at this time," the Japanese firm told the BBC. The PRS-T3 was the last version made and will exist as long as supplies remain in Europe. Earlier this year, Sony pulled out of selling e-books and directed its users in the US and Europe to the e-bookstore of rival Kobo. North American customers using Sony Readers have been directed to buy books from Kobo since February this year, and European and Australian customers since May, a Sony spokeswoman said. But users in Japan, Sony's home country, can continue to still get its line of Readers and access Sony's Reader Store.

• Uber begins offering taxi cab bookings in Tokyo: It’s turning into an interesting week for Uber in Asia. The company launched a peer-to-peer ride service in Beijing — which is also, strangely, a non-profit — and now it has expanded to cover regular taxi cab bookings in Tokyo. Unlike other Uber services, ‘uberTAXI’ will connect customers with licensed taxis in Japan’s capital city, in the same way that rival service Grabtaxi does across Southeast Asia. Uber launched a similar cab service in London in June, at the same time that taxi drivers were protesting against its service. That makes Tokyo the second city to get this service, which is aptly being announced on ‘Japan Taxi Day’.