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Zalando ponders opening stores in major cities: Manager Magazin

BERLIN Online fashion retailer Zalando (ZALG.DE) is pondering opening stores in major cities such as London, Paris or Berlin, the company’s co-chief executive told Germany’s Manager Magazin.

“We have proper fans in the metropolises who spend much time with us and order a lot,” co-Chief Executive Rubin Ritter said in an interview published on Saturday.

“It could be interesting for them to also experience the brand offline,” he said.

Founded in Berlin in 2008, Zalando has grown rapidly to become one of the German capital’s biggest employers, delivering 1,500 brands in 15 countries from huge out-of-town warehouses.

Zalando’s purchase in 2015 of the Berlin-based fashion trade fair “Bread Butter” marked a first step to offer services that go beyond pure e-commerce, said Ritter, also citing Zalando’s acquisition last month of streetwear retailer Kickz.

Separately, Zalando is mulling introducing 3D printing for smaller and medium fashion labels, said Ritter, noting it would be economically beneficial to use the technology to reprint top-selling sneakers in Berlin.

(Reporting by Andreas Cremer; Editing by Toby Chopra)

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Google gets Australian tax office demand to pay more, says to fight it

SYDNEY Alphabet Inc’s (GOOGL.O) Google said it will challenge amended tax assessments issued by the Australian Taxation Office (ATO), which is trying to claw back billions of dollars from multinational corporations citing unpaid taxes.

The ATO has increased scrutiny over how much tax multinationals operating in Australia pay. In December, it said it was pursuing seven global businesses over A$2 billion ($1.50 billion) in unpaid tax.

While the ATO has not named the businesses it is pursuing, Google’s Australia unit said in accounts filed with the Australian Securities and Investments Commission that it will “lodge an objection” to the tax demand from the ATO.

“The company will continue to uphold its positions against any and all such claims,” Google said in the financial statement released on Friday. The search giant did not disclose how much the ATO has demanded it pay in taxes.

Google and the ATO declined to comment on how much the company’s amended tax bill was.

Treasurer Scott Morrison said in April the country expected to claw back A$2.9 billion from companies under the legislation.

Australia enacted the Multinational Anti-Avoidance Law in December 2015 and the ATO has introduced new guidelines for foreign trading hubs.

Google Australia restructured its operations effective January 1 of last year to comply with the legislation and its financial statement reveals an increase in revenue and tax for the 2016 calendar year as a result.

Revenue surged to A$1.14 billion in 2016 from A$498 million in 2015, while total income tax rose to A$16 million from A$2.8 million in 2015, the accounts show.

(Reporting by Harry Pearl; Editing by Muralikumar Anantharaman)

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Amazon’s moves beyond retail get Wall Street thumbs up, for now

SAN FRANCISCO Inc’s ventures far beyond online retail, from cloud computing to movie making, are raising questions among corporate strategy experts about its focus.

The Seattle-based company wowed Wall Street again this week with a 23 percent jump in sales, pushing its shares to an all-time high. But there are concerns that if blockbuster growth stops, investors may come to regard the company more like a conglomerate stock – worth less than the sum of its pieces.

“High growth covers a lot of sins,” said Harry Kraemer, a partner at private equity firm Madison Dearborn Partners and a professor at Northwestern University’s Kellogg School of Management.

“Picture yourself running the company where one minute we’re talking about how we’re going to operate air cargo, and the next minute we’re going to talk about artificial intelligence,” he said. “I don’t think it’s sustainable.”

So far, analysts have balked at the idea of calling Amazon a conglomerate because its businesses, although varied, all relate in some way to retail. Warehouses, trucks and planes bring packages to shoppers’ doorsteps. Amazon Web Services sells the very cloud-computing services to enterprises that were built to meet the technology needs of

“It’s not like General Electric Co having financial services and making aircraft engines,” Baird Equity Research analyst Colin Sebastian said.

Some initiatives, though, such as a television studio in Hollywood, seem further afield. Amazon says the video foray has allowed it to stream unique programming to members of its Prime shopping club, thereby increasing sign-ups for a program that encourages people to buy more goods, more often.

The financial success of the investment is difficult to assess. Revenue from Prime membership fees and other media subscriptions rose 49 percent in the first quarter to $1.9 billion, the company reported on Thursday. It does not disclose the costs of content for its Prime Video service, but they were estimated by an analyst to be more than $3 billion in 2016.

Amazon did not respond to a request for comment.


These days, conglomerates like GE are out of fashion in the corporate world. By a standard method of valuation – comparing a company’s share price to its earnings per share – Amazon is worth about 10 times more than storied conglomerates Berkshire Hathaway Inc and United Technologies Corp.

Investors discount conglomerate stocks partly because diverse businesses are tough to manage, and partly because they believe the market allots money across industries better than a company can.

Indeed, a 2012 report by McKinsey Co consultants found that conglomerates’ revenue on average grew by 6.3 percent per year from 2002 to 2010, while “focused” companies grew by 9.2 percent.

Amazon has acknowledged its pursuits point in many directions, but stresses they are for the long-term, not for quick gains.

Chief Financial Officer Brian Olsavsky rattled off a lengthy list of investments from retail in India to drones and artificial intelligence on the company’s earnings conference call on Thursday, in an attempt to explain why its operating profit margin had thinned in North America.

“I know I’m drifting a bit from North America, but it’s all part of the same theme,” he told analysts.

For now at least, Amazon is being treated as a special case in part from the halo effect around its billionaire founder Jeff Bezos, the second-richest person alive. Many view Bezos as an entrepreneurial genius; he’s already extended his reach beyond Amazon to start a space exploration company and purchase the Washington Post.

“Bezos gets a longer leash to wander around than the typical CEO,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. But he was not convinced it was entirely justified.

“You hesitate to bet on this being the singular team that can do something that history has shown – over and over again – is really hard to do,” said Gordon. Referring to Walt Disney Co’s CEO, he said: “Leave the movie making to Bob Iger.”

(Reporting by Jeffrey Dastin in San Francisco; Additional reporting by Supantha Mukherjee in Bengaluru; Editing by Jonathan Weber and Bill Rigby)

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Tesla must complete brake fix to regain top safety rating: Consumer Reports

DETROIT Tesla Inc needs to complete fixing its Model S sedan emergency braking system to regain Consumer Reports’ top safety rating, the magazine said on Friday, noting that a recent update by the luxury electric car maker was not enough.

The magazine, which provides an annual rating of vehicles sold in the United States, said on Wednesday the sedan had lost its top ranking in the ultra-luxury car category for failing to install the feature that it had promised to owners as standard equipment.

The Model S fell to third place in Consumer Reports’ ratings behind the Lexus LS made by Toyota Motor Corp and the BMW 7 Series.

Consumer Reports said both Tesla models previously came with standard automatic emergency braking (AEB), a feature that helps reduce accidents. The software issue affects more recent vehicles built since late October 2016.

The magazine said Friday that the Model S sedan it owns had received an automatic emergency braking software update Thursday, but the new version only operates up to 28 miles per hour (45 km).

That is far less than the current 90 mile per hour limit for the prior Tesla AEB system included on vehicles built before late October.

The magazine cited a statement from Tesla that “over the next several weeks” the car maker would increase the speed limit “until it is the most capable of any vehicle in the world.”

The California automaker last week recalled 53,000 Model S and Model X vehicles to fix an unrelated parking brake issue.

Earlier this month, Tesla briefly edged out General Motors Co to become the most valuable U.S. car maker.

(Reporting by Nick Carey; Editing by Richard Chang)

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Shaw Communications explores selling ViaWest: sources

Shaw Communications (SJRb.TO) is looking for a buyer for ViaWest, the U.S. data center company it bought three years ago, according to people familiar with the matter, as the Canadian cable company continues to shed assets it considers non-core.

The sale of ViaWest would be Shaw’s latest step to streamline its operations. Last year it sold its media assets to sister company Corus Entertainment Inc (CJRb.TO) for C$2.65 billion, and used some of the proceeds for its C$1.6 billion purchase of Wind Mobile.

Shaw is working with Toronto-Dominion Bank (TD.TO) on an auction for ViaWest, the people said on Friday, asking not to be identified because the matter is confidential. There is no guarantee a sale will occur, the sources added.

Shaw is hoping to fetch for ViaWest well over the $1.2 billion it paid to acquire it in 2014 from private equity firms Oak Hill Capital Partners and GI Partners, according to the sources.

Shaw declined to comment, while TD Bank did not immediately respond to a request for comment.

Analysts had been calling on Shaw to sell its data centers after U.S. telecommunications firms Verizon Communications Inc (VZ.N) and CenturyLink Inc (CTL.N) reaped several billions of dollars in sales after agreeing to sell their portfolios last year.

“ViaWest is an asset that has potentially material value but currently relatively low cash flow,” Macquarie Research analyst Greg MacDonald said.

However, data center divestitures can also be challenging, because they involve separating assets that are deeply integrated into a telecommunications network. ATT Inc (T.N), for example, scrapped an earlier plan to sell its data centers.

Shaw has been investing in its wireless business and rebranded Wind last year as Freedom Mobile, Canada’s fourth largest wireless company, although it is much smaller than the wireless units of BCE Inc (BCE.TO), Rogers Communications Inc (RCIb.TO) and Telus Corp (T.TO), Shaw’s main rivals in Canada’s western provinces.

Shaw’s business infrastructure services division, which consists of primarily ViaWest, last year generated C$123 million in operating income before restructuring costs and amortization, according to its annual report.

Private equity firms or companies that specialize in data centers, such as Equinix Inc (EQIX.O) and Digital Realty Trust Inc (DLR.N), have been active buyers of assets.

ViaWest owns about 30 data centers in several U.S. states including Colorado, Nevada, and Minnesota, according to its website. Under Shaw, ViaWest has made small acquisitions to bulk up the unit in recent years, including a deal to buy information technology provider INetU Inc for $162.5 million last year.

(Reporting by Liana B. Baker in San Francisco and John Tilak in Toronto; Additional reporting by Alastair Sharp in Toronto; Editing by Jonathan Oatis)

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U.S. Congress passes short-term bill to avert government shutdown

WASHINGTON The Republican-led Congress averted a U.S. government shutdown on Friday and gave lawmakers another week to work out federal spending through Sept. 30, with tricky issues like defense spending still unresolved.

The Senate passed a stopgap spending bill by voice vote without opposition after the House earlier approved it by a tally of 382-30. The measure now goes to President Donald Trump to sign into law, preventing a shutdown of many parts of the federal government on Saturday, his 100th day in office.

The bill provides federal funding through May 5, allowing lawmakers to hammer out legislation in the coming days to keep the government funded for the rest of the fiscal year ending Sept. 30.

Congress for months has been tied in knots trying to untangle $1 trillion in spending priorities. Lawmakers were supposed to have taken care of the current fiscal year appropriations bills by last Oct. 1.

Democrats backed the stopgap bill a day after House Republican leaders again put off a vote on major healthcare legislation sought by Trump and opposed by Democrats to dismantle the 2010 Affordable Care Act, dubbed Obamacare, after Republican moderates balked at provisions added to entice hard-line conservatives.

Republicans, already facing accusations from the opposition Democrats that they are unable to govern even though they control Congress and the White House, are motivated to avert the first government shutdown since 2013, but contentious matters remain on a spending bill covering the final five months.

With Trump seeking $30 billion in new defense spending in the measure and Democrats arguing that other domestic programs also need more money, congressional negotiators are moving toward a compromise.

Republican and Democratic negotiators have discussed a possible $15 billion defense spending hike, half of Trump’s request, according to two congressional aides familiar with the matter. It was unclear whether Democrats will continue to insist other domestic programs get a similar funding increase. Such equal treatment was at the core of some previous funding deals.

Unlike the simmering fights in Congress over healthcare and taxes, in which Republicans are pursuing purely partisan legislation, major spending bills generally need bipartisan support for passage, lending some optimism that the negotiations will end next week without a federal shutdown.

House and Senate appropriators were expected to work through this weekend, but there were no guarantees they would be able to find common ground that would prevent parts of the government from shutting down on May 6.

Congressional negotiators also have been struggling over funding to make a healthcare program for coal miners permanent and whether to plug a gap in Puerto Rico’s Medicaid program, the government health insurance program for the poor.


Senate Majority Leader Mitch McConnell said the stopgap bill, which kept funding at current levels, “will carry us through next week so that a bipartisan agreement can be reached.” McConnell said he expected the House by the middle of next week to approve and send to the Senate the spending bill for the remaining five months of the fiscal year.

Senate Democratic leader Chuck Schumer said there were still significant differences with Republicans over elements of the looming longer-term spending bill but “we’re willing to extend things for a little bit more time” in hope more progress can be made.

The No. 2 House Democrat, Steny Hoyer of Maryland, said he would oppose any more temporary spending bills for this year.

During debate in the House, lawmakers expressed frustration at the inability of Congress to take care of the basic functions of government in a timely manner.

“We are seven months into the fiscal year,” said Representative Nita Lowey of New York, the top Democrat on the House Appropriations Committee. “Federal departments and agencies have been operating on outdated funding levels and policies for more than half of the year. This is unacceptable and it cannot continue.”

Lowey noted that this was the third stopgap spending measure passed since the fiscal year began last October.

White House spokesman Sean Spicer told reporters aboard Air Force One the White House feels “very good” about getting the funding extension next week through the end of the fiscal year.

Trump earlier bowed to Democratic demands that the spending legislation for the rest of the fiscal year not include money to start building a wall along the U.S.-Mexico border he said is needed to fight illegal immigration and stop drug smugglers.

The Trump administration also agreed to continue funding for a major component of Obamacare despite Republican vows to end the program.

(Reporting by Rick Cowan; Additional reporting by Steve Holland aboard Air Force One and Patricia Zengerle, Amanda Becker and Susan Cornwell in Washington; Writing by Will Dunham; Editing by Jeffrey Benkoe and Jonathan Oatis)

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U.S. appeals court blocks Anthem bid to merge with rival Cigna

WASHINGTON A U.S. appeals court on Friday blocked health insurer Anthem Inc’s (ANTM.N) bid to merge with Cigna (CI.N), upholding a lower court’s decision that the $54 billion deal should not be allowed because it would lead to higher prices for healthcare.

The ruling will probably kill the proposed merger, which was opposed by the U.S. Justice Department, 11 states and a District Court judge after consumers, medical professionals and others objected to it. In the end, Cigna itself tried to back out.

Still, Anthem and Cigna have the option of trying to save the deal by asking the appeals court to re-consider the case or appealing straight to the U.S. Supreme Court.

Shares of Cigna closed Friday at $156.37, up 0.1 percent, while Anthem shares ended at $177.89, down 0.2 percent.

Anthem’s purchase of Cigna would create the largest U.S. health insurer. Rivals Aetna Inc (AET.N) and Humana Inc (HUM.N) had also sought to merge but that deal collapsed this year amid opposition from the federal government and states.

Insurers made the deals as they adjusted to new pressures from the insurance overhaul of Obamacare, officially known as the Affordable Care Act. They now face the potential for another remaking of the industry, though the exact changes are unclear because of Republican disagreements over how to repeal and replace Obamacare.

Anthem, said in a statement late Friday that it was disappointed by the appeals court’s decision. “We are committed to completing the transaction and are currently reviewing the opinion and will carefully evaluate our options,” the company said in a statement.

In a split decision, the U.S. Court of Appeals for the D.C. Circuit disagreed with Anthem’s contention that the Justice Department and lower court improperly rejected its assertions that the deal would lead to billions of dollars in medical savings.

“Anthem has not explained why these projected savings would even exist,” Judge Judith Rogers wrote in the opinion. “The record is clear that Anthem, unlike Cigna, has already achieved whatever economies of scale are available.”

In a dissent, Judge Brett Kavanaugh argued that the merger would benefit the biggest customers, mainly large companies with employees in many states. Kavanaugh argued that a combined Anthem/Cigna would require higher payments to manage the accounts but that would be offset by better negotiated rates paid to providers.

Kavanaugh, however, noted that the deal could be stopped based on monopsony arguments that the new company would have too much heft in negotiating with doctors and hospitals.

Anthem, a member of the Blue Cross Blue Shield Association, is the second biggest seller of medical insurance to big U.S. companies. Cigna is in third place.

Bill Baer, the former head of the Justice Department’s Antitrust Division who had made the decision to challenge both insurance mergers, said in an email that the ruling on the Anthem/Cigna deal “is a ringing endorsement of the importance of competition in health insurance markets.”

The Justice Department, now under President Donald Trump, also said that it was pleased by the decision.

Eric Schneiderman, attorney general of New York, which was among the states that had opposed the deal, also said he was pleased with the ruling.

“This is a red letter day for consumers,” said David Balto, an antitrust lawyer who opposed the deal.

In another obstacle, Anthem and Cigna have been at loggerheads for months and are suing each other. Cigna has sought to abandon the merger and force Anthem to pay a $1.85 billion breakup fee while Anthem filed a lawsuit to force its smaller rival to go through with the combination.

(Reporting by Diane Bartz; Editing by David Gregorio and Leslie Adler)

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Tesla recruiting engineers in Mexico for California plant

SAN FRANCISCO Tesla Inc (TSLA.O) is recruiting engineers from Mexico to work on robotics and other automated equipment at its California factory, according to LinkedIn postings viewed by Reuters, part of a hiring push to ready the plant for mass production of the upcoming Model 3.

The electric vehicle maker, which prides itself on its “Made in America” credentials, aims to build 500,000 cars a year by 2018 at its plant in Fremont, California, south of San Francisco. That would be a six-fold increase from 2016.

A recruiting poster published on LinkedIn by Tesla’s senior technical recruiter, David Johnson, listed 15 types of engineers the company would be seeking at a May 5-8 recruiting event in Monterrey, Mexico. (here:li:activity:6261290896936042496/)

Tesla did not immediately respond to a request for comment on its Mexico hiring plans.

The Silicon Valley carmaker is under the gun to accelerate production and save money as it readies for volume production of the Model 3 in September. The company’s future profitability hinges on its success, and high hopes for the mass-market vehicle have helped push Tesla shares up 47 percent since January.

Mexico boasts a substantial pool of educated manufacturing engineers, with 19 automotive plants owned by global automakers including General Motors Co (GM.N), Ford Motor Co (F.N), Fiat Chrysler Automobiles (FCHA.MI) and Volkswagen (VOWG_p.DE).

Tesla’s Johnson wrote in a post that he hoped to interview manufacturing and mechanical engineers with experience in “Body in White” (BIW) manufacturing. That is the stage of assembly in which sheet metal components are welded together to make up the outer frame of the car.

“Check this out if you are interested to work with the most complex and automated equipment in our Fremont plant! We are looking for controls, robotic and weld engineers!” posted another Tesla employee, Dominik Knapp, on his LinkedIn page.

Tesla has been actively hiring in the past few months for assembly-line jobs at the Fremont plant. But finding manufacturing engineers, who are in even shorter supply than software engineers in Silicon Valley, is a tougher challenge.

Doug Patton, president of SAE International, a professional association of automotive engineers headquartered in Pennsylvania, said Tesla’s search for engineers in Mexico underscored a dearth of talent in the industry.

“There are many more jobs than engineers, this is an engineering problem across the board,” he said.

U.S. automakers and suppliers will sometimes bring employees from Mexican plants to the United States for short-term assignments, but Patton said he had not heard of any company recruiting on a “wholesale basis” as Tesla appeared to be doing.

Tesla’s vice president of production, Peter Hochholdinger, has experience in Mexico, having been involved in the launch of Audi’s high-tech plant in Puebla.

(Editing by Jonathan Weber and Matthew Lewis)

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Bombardier rejects Boeing trade claim, shares slide

MONTREAL/NEW YORK Canada’s Bombardier Inc (BBDb.TO) hit back on Friday at rival U.S. planemaker Boeing Co’s (BA.N) claim that it sold jets well below cost to win market share in the United States, the latest sign of increasing trade tensions between the two countries.

The risk of the United States imposing a tariff, which would likely depress sales of Bombardier’s newest jet, and concern over how big that tariff might be, unsettled investors, sending the Canadian company’s shares down just over 4 percent.

Boeing wants the U.S. government to investigate what it describes as rock-bottom prices for Bombardier’s new CSeries aircraft, including an “absurdly low” sum of $19.6 million it says Delta Air Lines Inc (DAL.N) paid for a jet costing $33 million to build.

“The allegation is absurd,” Bombardier spokesman Bryan Tucker said, in response to numbers contained in a petition sent to the U.S. Commerce Department by Boeing on Thursday.

The spat comes days after Washington imposed duties averaging 20 percent on imports of Canadian softwood lumber, prompting claims in Canada that Boeing was taking advantage of the Trump administration’s tougher stance on trade.

Boeing spokesman Dan Curran said the filing against Bombardier was “an initiative we chose to take ourselves”.

He declined to say whether Boeing also planned to ask the United States to pursue Canada through the World Trade Organization, as it has against European rival Airbus. (AIR.PA)

Domestic cases, where companies can petition for duties on specific products, typically take around a year. That is much quicker than a 13-year-old transatlantic battle on jetliner subsidies at the WTO, an international forum open only to nations.

Planemakers “often sell below costs to break into a new market or with a new product, particularly if it involves a significant launch customer,” said U.S.-based trade policy expert Joel Johnson.

Such tactics cause long-term harm by creating momentum that rivals find hard to reverse, Boeing’s petition said, although industry analysts say Boeing and Airbus both regularly offer discounts of 50 percent or more.

Boeing has said it competed for last year’s Delta order against the CSeries CS100 with used 717s, which it no longer makes, and used jets from Brazil’s Embraer (EMBR3.SA), since Delta was only ready to pay a low price and wanted smaller jets than its more modern 737.

But it said Bombardier’s actions could upset the wider market and erode future sales of its best-selling 737.

Still, its complaint puzzled some analysts and trade lawyers, since Canada is in talks to sign a deal later this year or in early 2018 to acquire 18 Boeing fighter jets. “It’s certainly the right political climate for a trade complaint. But I’m not sure this is the best idea,” said aerospace analyst Richard Aboulafia.

Canada has rejected Boeing’s accusations and says the CSeries uses many U.S. parts and generates thousands of U.S. jobs. Around half of the 110 to 130 seat CSeries is made in the United States, including the engine, cockpit control panels and avionics. Trade experts say an investigation could result in Delta and other buyers having to pay extra duties on future deliveries, effectively raising the price but not benefiting Bombardier.

Canadian trade lawyer Mark Warner said Canada could challenge final decisions at the WTO or through NAFTA.

Delta did not respond to requests for comment.

(Additional reporting by Fergal Smith in Toronto, David Ljunggren in Ottawa, Brad Haynes in Sao Paulo and Tim Hepher in Paris.; Editing by Bernadette Baum, Tom Brown and Bill Rigby)

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