December 12, 2017

Chipping Away at the Smartphone Leaders

For several years, these two companies have dominated the mobile phone-making business, successively one-upping each other with ever sleeker, more technologically sophisticated iPhones and Galaxy handsets that left would-be rivals grasping. But now the competition is stirring, and consumers are giving another look to brands they once ignored.

Those challenges were evident in the latest earnings report from Samsung on Friday, when the company said it expected competition in the smartphone business to stiffen in the third quarter, with new models pending from LG and other rivals.

Already, the combined share of the worldwide smartphone market controlled by Apple and Samsung Electronics slipped to 43 percent in the second quarter from 49 percent a year earlier, IDC, a research firm, reported Friday.

Some of the companies that are chipping away at the leaders are familiar names attempting comebacks, like Sony, Nokia and HTC. Others are relative newcomers like LG, Lenovo, ZTE and Huawei.

“The story is no longer Apple versus Samsung,” said Bryan Wang, an analyst at Forrester Research. “Going forward, they will both face similar challenges.”

Analysts say buyers are more willing to look at alternatives to Apple or Samsung because the differences among smartphones are becoming less pronounced.

The proportion of phones running Google’s Android operating system keeps growing and technical specifications are converging. Like Samsung’s Galaxy S4, for example, a number of other phones, including Sony’s Xperia Z, also include high-definition, 5-inch screens.

That makes price, where LG and the Chinese smartphone makers have an edge, an increasingly important selling point.

Samsung remains a powerhouse, reporting big gains Friday in sales and earnings for its latest quarter. Net income rose 50 percent, to 7.77 trillion won, or $6.9 billion, from 5.19 trillion won a year earlier. Revenue rose to 57.46 trillion won from 47.6 trillion won. On Tuesday, Apple likewise posted quarterly net income of $6.9 billion, while revenue was roughly flat at $35.3 billion.

Strategy Analytics, a research firm, said Friday that Samsung had passed Apple for the first time to become the world’s most profitable maker of mobile handsets. Samsung, which does not break out results for its handset-making business, generated $5.2 billion in quarterly operating profit from the unit, Strategy Analytics estimated, compared with $4.6 billion for Apple.

Samsung had previously pulled ahead of Apple in market share, and its gains continued in the second quarter, when it controlled 30.4 percent of global smartphone shipments, compared with 13.1 percent for Apple, according to IDC.

But Samsung also showed signs of having to work harder to achieve those gains. Big-ticket promotional events like an introductory gala for its flagship model, the Galaxy S4, at Radio City Music Hall have driven up marketing costs. And while the S4 has been selling at a brisk pace, it has fallen short of some analysts’ expectations. “The strong growth streak for the smartphone market is expected to continue in the third quarter, albeit at a slower pace,” Samsung said in a statement.

Like Samsung, Apple sold more phones in its latest quarter — 31.2 million, up from 26 million a year earlier. But investors had grown accustomed to bigger gains, and the share prices of both companies have taken a beating this year.

“In a way, Apple and Samsung have become victims of their own success,” said Pete Cunningham, an analyst at the research firm Canalys. “When these companies report many billions of profits every quarter, it’s hard to say they are doing anything wrong.”

Together, Samsung and Apple still collect more than 90 percent of the profit in smartphones, analysts say. Yet that success has also emboldened more and more companies to try to challenge them.

Article source: http://www.nytimes.com/2013/07/27/business/global/chipping-away-at-the-smartphone-leaders.html?partner=rss&emc=rss

Lobbying, a Windfall and a Leader’s Family

The survival of Ping An Insurance was at stake, officials were told in the fall of 1999. Direct appeals were made to the vice premier at the time, Wen Jiabao, as well as the then-head of China’s central bank — two powerful officials with oversight of the industry.

“I humbly request that the vice premier lead and coordinate the matter from a higher level,” Ma Mingzhe, chairman of Ping An, implored in a letter to Mr. Wen that was reviewed by The New York Times.

Ping An was not broken up.

The successful outcome of the lobbying effort would prove monumental.

Ping An went on to become one of China’s largest financial services companies, a $50 billion powerhouse now worth more than A.I.G., MetLife or Prudential. And behind the scenes, shares in Ping An that would be worth billions of dollars once the company rebounded were acquired by relatives of Mr. Wen.

The Times reported last month that the relatives of Mr. Wen, who became prime minister in 2003, had grown extraordinarily wealthy during his leadership, acquiring stakes in tourist resorts, banks, jewelers, telecommunications companies and other business ventures.

The greatest source of wealth, by far, The Times investigation has found, came from the shares in Ping An bought about eight months after the insurer was granted a waiver to the requirement that big financial companies be broken up.

Long before most investors could buy Ping An stock, Taihong, a company that would soon be controlled by Mr. Wen’s relatives, acquired a large stake in Ping An from state-owned entities that held shares in the insurer, regulatory and corporate records show. And by all appearances, Taihong got a sweet deal. The shares were bought in December 2002 for one-quarter of the price that another big investor — the British bank HSBC Holdings — paid for its shares just two months earlier, according to interviews and public filings.

By June 2004, the shares held by the Wen relatives had already quadrupled in value, even before the company was listed on the Hong Kong Stock Exchange. And by 2007, the initial $65 million investment made by Taihong would be worth $3.7 billion.

Corporate records show that the relatives’ stake of that investment most likely peaked at $2.2 billion in late 2007, the last year in which Taihong’s shareholder records were publicly available. Because the company is no longer listed in Ping An’s public filings, it is unclear if the relatives continue to hold shares.

It is also not known whether Mr. Wen or the central bank chief at the time, Dai Xianglong, personally intervened on behalf of Ping An’s request for a waiver, or if Mr. Wen was even aware of the stakes held by his relatives.

But internal Ping An documents, government filings and interviews with bankers and former senior executives at Ping An indicate that both the vice premier’s office and the central bank were among the regulators involved in the Ping An waiver meetings and who had the authority to sign off on the waiver.

Only two large state-run financial institutions were granted similar waivers, filings show, while three of China’s big state-run insurance companies were forced to break up. Many of the country’s big banks complied with the breakup requirement — enforced after the financial crisis because of concerns about the stability of the financial system — by selling their assets in other institutions.

Ping An issued a statement to The Times saying the company strictly complies with rules and regulations, but does not know the backgrounds of all entities behind shareholders. The company also said “it is the legitimate right of shareholders to buy and sell shares between themselves.”

In Beijing, China’s foreign ministry did not return calls seeking comment for this article. Earlier, a Foreign Ministry spokesman sharply criticized the investigation by The Times into the finances of Mr. Wen’s relatives, saying it “smears China and has ulterior motives.”

Article source: http://www.nytimes.com/2012/11/25/business/chinese-insurers-regulatory-win-benefits-a-leaders-family.html?partner=rss&emc=rss

Business Briefing | Company News: Lions Gate to Buy Summit Entertainment

Lions Gate Entertainment is buying Summit Entertainment, the maker of the hit “Twilight” series, for $412.5 million in cash and stock. The deal brings together two studios hoping to create a Hollywood powerhouse focused on young adult audiences. The “Twilight” franchise has grossed more than $2.5 billion worldwide since the first movie in late 2008, when hordes of fans of the Stephenie Meyer books rushed to theaters. Lions Gate plans its own four-part series based on Suzanne Collins’s young adult novels, “The Hunger Games,” beginning in March. Lions Gate said the majority of the purchase was financed with about $300 million in cash from Summit’s books. It paid $55 million from its cash reserves, took on new debt of $45 million and paid $50 million in stock. A further $20 million will be due in cash or stock within 60 days.

Article source: http://feeds.nytimes.com/click.phdo?i=89688affd52e2ea3353f73dfb6bc4f02

Off the Charts: In Europe, Even the German Powerhouse Is Losing Steam

In the second and third quarters of this year combined, Germany grew at an annual pace of just 1.6 percent. France, the second-largest economy in the euro zone, showed an annual rate of just 0.6 percent over the same six months.

Until recently, the euro zone seemed to be separated into three groups when it came to economic growth. Germany, and a few other Northern European countries, were doing the best, while economies in the peripheral countries were shrinking. In between were countries with moderate rates of growth.

But now it appears the in-between group is faltering, while the peripheral countries continue to struggle. In the third quarter, according to Eurostat, the European statistical agency, Belgium, which had been among the better performers, showed no growth at all. The same was true for Spain, and the Netherlands reported its real gross domestic product declined for the first time since 2009.

The accompanying charts show the change in gross domestic product figures for nine euro countries since the second quarter of 2009, as well as figures for the three largest industrial countries outside the bloc. Germany’s economy is 7.6 percent larger than it was at the bottom, a growth rate more than twice that of France. There is as yet no third quarter estimate for Italy, but its growth rate was tepid even before its borrowing costs began to rise.

One of the few relative bright spots is Ireland, whose economy appears to be finally growing after years of austerity and deflation. But there is no sign of recovery in Portugal, and the Greek economy continues to decline. Greece is not shown in the chart because it is currently unable to produce seasonally adjusted statistics. But Eurostat estimates that the Greek economy was 5.2 percent smaller in the third quarter than it had been a year earlier.

In the early months of recovery, Germany may have benefited from its neighbors’ weaknesses. Its companies were better positioned to export, both within Europe and outside it, thanks in part to Germany’s having held down the growth in labor costs. The euro was also weaker than an independent German mark would have been, providing more help for German exports.

But now it appears that the weakness of its trading partners may be slowing Germany’s economy, at the same time that borrowing costs are rising for those countries. A survey of German analysts this week showed investor expectations for the economy had fallen to the lowest levels since 2008.

The United States economy has grown 5.6 percent from the bottom, for an overall rate of 2.5 percent a year. That may seem good when compared with other countries, but by historical measures it is the weakest recovery since World War II. The economy grew 6.3 percent — a 2.7 percent annual rate — over the nine quarters following the 2001 economic bottom, in what had been the slowest pace until now.

Floyd Norris writes about finance and the economy at nytimes.com/economix.

Article source: http://feeds.nytimes.com/click.phdo?i=3ff90e6cff18a5c34e009575c4715ef1