Categories
Gadgets

Samsung Electronics Q2 profit likely up 38% on strong chip prices


People wears masks in front of a Samsung store at a main shopping area as the country is hit by an outbreak of the new coronavirus in downtown Shanghai, China February 21, 2020. REUTERS/Aly Song/File Photo

  • Q2 operating profit estimated at 11.3 trln won
  • Surging chip prices, shipments boost profit
  • Revenue estimated up 15.4%
  • Smartphones shipments likely fell on quarter

SEOUL, July 6 (Reuters) – Samsung Electronics Co Ltd (005930.KS) likely saw a 38% surge in profit for the April-June quarter thanks to strong chip prices and demand spurred by a pandemic-led consumer appetite for electronics as well as recovering investment in data centres.

Operating profit for the world’s biggest memory chip and smartphone maker likely jumped to 11.3 trillion won ($10 billion), according to a Refinitiv SmartEstimate drawn from 20 analysts and weighted toward those who are more consistently accurate.

The South Korean tech giant’s strong performance – coming despite it shipping fewer smartphones than in January-March – underscores the stratospheric demand for chips that has depleted stockpiles and filled production capacity.

The result would be up 20% from the first quarter and mark Samsung’s highest operating income for the second quarter since 2018. Revenue likely rose 15.4%.

Samsung is scheduled to announce preliminary second-quarter results on Wednesday.

The company’s chip division likely benefited from memory chip price hikes that exceeded market estimates, analysts said, while shipments grew as well.

Prices of DRAM chips, widely used in servers, mobile phones and other computing devices, jumped 27% compared to the March quarter, while those of NAND flash chips that serve the data storage market rose 8.6%, according to research provider Trendforce.

Profit also improved at Samsung’s chip-contract manufacturing and logic chip design business, partly because operations at its storm-hit Texas factory returned to normal, analysts said.

They estimated the chip division’s operating profit in April-June rose about 22% from the year-earlier period to about 6.6 trillion won.

Still, Samsung’s smartphone shipments dropped to about 59 million in April-June from about 76 million in the first quarter, according to Shinyoung Investment & Securities, as sales slowed for its latest flagship model, launched in mid-January.

Reduced demand from India, hard hit by the pandemic during the quarter, as well as tight supply for some mobile processor chips may also have affected shipments, analysts said, estimating the mobile business’ operating profit at about 2.9 trillion won.

($1 = 1,129.2800 won)

Reporting by Joyce Lee; Additional reporting by Heekyong Yang; Editing by Sayantani Ghosh and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.



Source link

Categories
Gadgets

U.S. opens $3 billion aviation manufacturing wage subsidy program


A United Airlines passenger jet takes off with New York City as a backdrop, at Newark Liberty International Airport, New Jersey, U.S. December 6, 2019. REUTERS/Chris Helgren/File Photo

WASHINGTON, June 15 (Reuters) – The U.S. Transportation Department said Tuesday it had launched a $3 billion aviation manufacturing payroll subsidy program that will cover up to half of eligible companies’ compensation costs for as long as six months.

The program, funded by Congress, requires companies to commit to not conducting furloughs without employee consent or laying off employees covered by subsidies during the six-month period. Applications must be filed by July 13.

Companies eligible include aircraft, engine, propeller or component manufacturers and companies that repair or overhaul airplanes and parts.

The subsidy program cannot cover more than 25% of an employer’s total U.S. workforce as of April 2020 and can only cover employees with total annual compensation of $200,000 or less.

To qualify, a company must have involuntarily furloughed or laid off at least 10% of its total workforce, or have experienced at least a 15% decline in 2020 total operating revenues.

More than 100,000 jobs have been lost in the aerospace industry since the start of the COVID-19 pandemic, according to the Transportation Department. Before then, the U.S. aerospace industry was estimated to employ approximately 2.2 million workers, including 1.2 million who worked in various parts of the supply chain nationwide.

Boeing Co (BA.N), which has had extensive job cuts, Raytheon Technologies (RTX.N) and Spirit Aerosystems (SPR.N) did not immediately respond to questions about whether they are considering applying. General Electric’s (GE.N) aviation unit said it would not seek assistance from the program.

The International Association of Machinists and Aerospace Workers had strongly urged Congress to fund the program.

Congress has provided assistance to other aviation industry firms, including giving U.S. airlines $54 billion for payroll since March 2020 and that funding will continue to pay much of airline workers’ salaries through Sept. 30.

Reporting by David Shepardson
Editing by Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.



Source link

Categories
Gadgets

Google loosens its search engine grip on Android devices in Europe


Google (GOOGL.O) has bowed to pressure from rivals and will let them compete for free to be the default search engines on Android devices in Europe, widening a pledge to EU antitrust regulators two years ago.

The move by the world’s most popular internet search engine comes as the 27-country bloc considers rules that could be introduced next year to force Google, Amazon (AMZN.O), Apple (AAPL.O) and Facebook (FB.O) to ensure a level playing field for competitors.

Google’s Android mobile operating system runs on about four-fifths of the world’s smartphones. The U.S. tech giant said in 2019 that rivals would have to pay via an auction for appearing on a choice screen on new Android devices in Europe from which users select their preferred search engine.

Google’s change of heart followed a 4.24 billion euro ($5.16 billion) fine handed out by the European Commission, the EU antitrust authority, in 2018 for unfairly using Android to cement the dominance of its search engine.

“We are now making some final changes to the Choice Screen including making participation free for eligible search providers. We will also be increasing the number of search providers shown on the screen,” Google director Oliver Bethell wrote in a blog post on Tuesday.

The changes will come into effect in September, the blog added.

The Commission said it had discussed possible changes with Google following concerns raised by a number of its rivals, adding that those announced were positive developments.

Google said the five most popular eligible search engines in each EU country according to StatCounter, including Google, would be displayed in random order at the top of the screen while up to seven will be shown at the bottom.

The logo of Google is seen on a building at La Defense business and financial district in Courbevoie near Paris, France, September 1, 2020. REUTERS/Charles Platiau

It had previously only allowed four competitors, chosen in separate auctions for each EU country, to be displayed on Android screens.

However DuckDuckGo, a rival search engine that has long complained about the auction process, said Google should go further.

“Google is now doing what it should have done three years ago: a free search preference menu on Android in the EU,” CEO Gabriel Weinberg tweeted.

“However, it should be on all platforms, eg also desktop Chrome, accessible at all times, ie not just on factory reset, and in all countries.”

Search engine Ecosia, which together with four other rivals complained about Google’s initial proposal to the Commission last year, welcomed the changes.

“With this, we have something that resembles a level playing field in the market,” its CEO Christian Kroll said in a statement.

“Search providers now have a chance to compete more fairly in the Android market, based on the appeal of their product, rather than being shut out by monopolistic behaviour.”

($1 = 0.8211 euros)

Our Standards: The Thomson Reuters Trust Principles.



Source link

Categories
Reviews

Toshiba unit hacked by DarkSide, conglomerate to undergo strategic review


A Toshiba Corp (6502.T) unit said it was hacked by the DarkSide ransomware group, overshadowing an announcement of a strategic review for the Japanese conglomerate under pressure from activist shareholders to seek out suitors.

Toshiba Tec Corp (6588.T), which makes products such as bar code printers and is valued at $2.3 billion, was hacked by DarkSide – the group widely believed to be behind the recent Colonial Pipeline attack, its French subsidiary said.

It added, however, that only a minimal amount of work data had been lost.

“There are around 30 groups within DarkSide that are attempting to hack companies all the time, and they succeeded this time with Toshiba,” said Takashi Yoshikawa, a senior malware analyst at Mitsui Bussan Secure Directions.

Employees accessing company computer systems from home during pandemic lockdowns have made firms more vulnerable to cyber attacks, he added.

Screenshots of DarkSide’s post provided by the cybersecurity firm said more than 740 gigabytes of information was compromised and included passports and other personal information.

Reuters could not access DarkSide’s public-facing website on Friday. Security researchers said DarkSide’s multiple websites had stopped being accessible.

Ransomware attacks have increased in number and amount of demands, with hackers encrypting data and seeking payment in cryptocurrency to unlock it. They increasingly release stolen data as well, or threaten to unless they are paid more.

Ireland’s health service said on Friday it had shut down its IT systems after what it described as a “significant” ransomware attack. read more

Investigators in the U.S’s Colonial case say the attack software was distributed by DarkSide, which includes Russian speakers and avoids hacking targets in the former Soviet Union. DarkSide lets “affiliates” hack into targets elsewhere, then handles the ransom negotiation and data release. read more

STRATEGIC REVIEW

Amid calls from shareholders to explicitly seek offers from potential suitors after dismissing a $20 billion take-private bid from CVC Capital this year, Toshiba said it was setting up a strategic review committee and had appointed UBS (UBSG.S) as financial adviser.

Reporters raise their hands for a question during a Toshiba news conference at the company headquarters in Tokyo, Japan, June 23, 2017. REUTERS/Issei Kato

The review will be conducted by independent directors and is designed to help the board consider a new business plan to be put forward by management by October.

The CVC offer faced strong opposition within the company. Its plan to retain management was perceived by some as aimed at shielding former CEO Nobuaki Kurumatani from activist shareholders.

At a briefing by the company on Friday, 3D Investment Partners and Farallon Capital Management, its No. 2 and No. 3 shareholders respectively, both criticised Toshiba for appearing reluctant to consider offers to go private.

Chief Executive Satoshi Tsunakawa responded that the company has “no reluctance to consider various proposals to increase corporate value, including going private.”

Sources have said other private equity investors such as KKR & Co Inc (KKR.N) and Bain Capital are interested in Toshiba. read more

However, the Asahi newspaper reported on Friday that Bain Capital is not considering buying Toshiba, citing an interview with Yuji Sugimoto, the head of Bain Capital’s Japan operations.

Battered by accounting scandals, massive writedowns for its U.S. nuclear business as well as the sale of its chip unit, Toshiba is a shadow of its former self.

But it remains one of Japan’s few manufacturers of nuclear power reactors and makes defence equipment, meaning any sale of would require government approval.

Toshiba on Friday forecast a 63% rise in annual operating profit to 170 billion yen ($1.6 billion), rebounding from pandemic-induced pain in the last year and as restructuring measures bear fruit. That follows a 20% slide in profit last year.

Toshiba also nominated four new board members after Kurumatani resigned last month. Kurumatani had been under fire due to allegations that investors were pressured before a shareholder meeting last year to support desired board nominations.

Shareholders in March successfully voted for an independent investigation into those allegations, marking a watershed victory for corporate governance in Japan. The probe is due to conclude before this year’s annual general meeting on June 25.

The board nominations announced on Friday included George Olcott, a former UBS banker who is also an independent board member at Japanese beer maker Kirin Holdings (2503.T).

Our Standards: The Thomson Reuters Trust Principles.



Source link

Categories
Reviews

Review: Blockbuster’s demise had many culprits


The Blockbuster movie rental store is open for business in the Denver suburb of Broomfield, Colorado April 6, 2011. REUTERS/Rick Wilking

In early 2000 Reed Hastings and his partner traveled to Blockbuster’s headquarters in Dallas. The Netflix (NFLX.O) founder tried to pitch the video rental behemoth on a deal to buy his fledging DVD-by-mail startup for $50 million. Blockbuster declined. Two decades later Netflix, now a streaming-video giant worth $243 billion, is broadcasting a documentary about the fall of its one-time desired suitor. The schadenfreude is cinematic. Yet while Netflix played a role in killing Blockbuster, its demise has many culprits.

“The Last Blockbuster” examines how the once-mighty corporate juggernaut went belly up through the eyes of its charming hero, Sandi Harding. She is the gatekeeper of the last Blockbuster store of the film’s title in Bend, Oregon. While the documentary includes lots of crunchy financial details it never gets bogged down in them. Meanwhile a cast of oddball characters and B-list actors including “Clerks” director Kevin Smith and Ione Sky, the object of John Cusack’s boom box serenade in the 1989 rom-com “Say Anything,” round out the story with their reflections on life before on-demand television.

Harding, who started working at Blockbuster in 2004 when the chain had about 9,000 stores and 60,000 employees, is known as the “Blockbuster mom” because she has employed so many of Bend’s teenagers. She pours her energy into keeping the video rental dream alive. It’s a store frozen in time: the cheerful yellow and blue schematic, bright lights, displays of candy and popcorn, computer systems that run on floppy discs, and racks and racks of DVDs. Her devotion to the business is so fierce that she knits hats in Blockbuster colors to sell to customers who flock from all over the world in search of a bit of nostalgia.

The documentary intersperses Harding’s efforts to retain the rights to the Blockbuster name – currently owned by Charlie Ergen’s Dish Network (DISH.O) – with details of the company’s history. The video rental empire was founded in the mid-1980s by a Texas-based oil and gas software engineer who developed an ingenious database to keep track of movie titles, allowing him to offer consumers a bigger selection. The concept of a clean family-friendly video rental destination was a smash hit. At one point Blockbuster was opening a new store every 17 hours.

The company caught the attention of mogul Sumner Redstone, who was locked in an epic takeover fight with rival Barry Diller over movie studio Paramount. In a surprise move Redstone’s Viacom and Blockbuster in 1994 agreed to an $8.4 billion merger. Blockbuster become the media company’s piggy bank, as Redstone drew on its cash flows to sweeten his bid for Paramount. Though Redstone got the studio, the rationale for owning a chain of stores was a flop.

Several disastrous corporate decisions added to the cash drain. To better compete with scrappy newcomer Netflix, Blockbuster decided to spend $400 million to eliminate late fees on rentals and build an online presence. Its inventory of DVDs declined because customers no longer had an incentive to return movies. Eventually, Viacom spun off Blockbuster after loading it up with nearly $1 billion in debt. The stock fell. Activist investor Carl Icahn launched a distracting proxy fight.

When Netflix launched its streaming service in 2007, the rental chain’s revenue of $5 billion was still more than 4 times that of its upstart rival. But as former Blockbuster executive Tom Casey explains, the financial crisis marked the beginning of the end. The company’s rental business faced fierce competition from retailers like Walmart (WMT.N) and Target (TGT.N), which were selling ever-cheaper DVDs. With capital markets frozen at the beginning of 2009, Blockbuster’s $780 million of debt proved fatal. It filed for bankruptcy a year later.

Netflix’s ascendancy pushed Blockbuster towards the grave. But as “The Last Blockbuster” shows, it took corporate raiders, a series of bad decisions and a global financial panic to nail the lid on its coffin.

On Twitter https://twitter.com/jennifersaba

CONTEXT NEWS

– “The Last Blockbuster” started streaming on Netflix March 15.

– For previous columns by the author, Reuters customers can click on

Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.





Source link