News Archive


Moment of truth for Google as record EU antitrust fine looms

BRUSSELS (Reuters) – Google (GOOGL.O) is set to face a record-busting EU antitrust fine this week over its Android mobile operating system but rivals hoping that an order to halt unfair business practices will help them may be disappointed.

FILE PHOTO: Silhouettes of laptop and mobile device users are seen next to a screen projection of Google logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

The European Commission’s decision, delayed by a week by U.S. President Donald Trump’s visit to a NATO summit in Brussels last week, is expected on Wednesday.

It comes just over a year after the Commission slapped a landmark 2.4-billion-euro ($2.8 billion) penalty on Google, a unit of Alphabet Inc, for favoring its shopping service over those of competitors.

The EU penalty is likely to exceed the 2017 fine because of the broader scope of the Android case, sources familiar with the matter have told Reuters.

The EU sanction comes in the midst of a trade conflict between the United States and the EU, which has hit back against U.S. tariffs on European steel and aluminum by targeting $3.2 billion in American exports with higher duties.

European Commission President Jean-Claude Juncker will meet Trump in Washington D.C. on the trade issue next week.

The Android decision is the most important of a trio of antitrust cases against Google. With the company able to make its ads show up in more smartphone apps than any other tech rival, Google’s app network has quietly become a huge growth engine.

The company’s high payouts to app developers, coupled with its entrenched relationship with millions of advertisers, has turned Google into the main revenue source for many apps. Its Play Store accounts for more than 90 percent of apps downloaded on Android devices in Europe.

Its popularity in turn could mean an uphill battle for EU antitrust regulators seeking to level the playing field for Google’s rivals by ensuring that users can download from competing app stores and that smartphone makers are free to choose pre-installed apps.

Regulators say Google has tilted the field in its favor by forcing smartphone makers to pre-install Google Search together with its Play Store and Chrome browser, sign agreements not to sell devices on rival Android systems and also pay smartphone makers to only pre-install Google Search on devices.

Google has denied the charges, saying that bundling search with its Google Play allows it to offer the entire package for free, and that smartphone makers and users have a wide choice.

Regulatory action is probably too late because of Google’s entrenched position, said analyst Richard Windsor at research company Radio Free Mobile.

“Users in the EU are now completely accustomed to using Google services and have come to prefer them,” he said.

“Hence, I think separating Google Play from the rest of Google’s Digital Life services would have very little impact as users would simply download and install them from the store,” Windsor said.

The Android case was triggered by a 2013 complaint by lobbying group FairSearch whose members at the time included competitors such as Oracle (ORCL.N), Nokia (NOKIA.HE) and Microsoft (MSFT.O).

Reporting by Foo Yun Chee; Editing by Adrian Croft

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/X_xzuoSAr4s/moment-of-truth-for-google-as-record-eu-antitrust-fine-looms-idUSKBN1K61Z1

Goldman to formally name David Solomon next CEO early this week

(Reuters) – Goldman Sachs Group Inc (GS.N) is expected to name its president, David Solomon, its next chief executive officer early this week, the New York Times reported here on Sunday.

David M. Solomon, President and Chief Operating Officer, Goldman Sachs, speaks at the Milken Institute’s 21st Global Conference in Beverly Hills, California, U.S. April 30, 2018. REUTERS/Lucy Nicholson/File Photo

The announcement could be made as soon as Monday, the paper reported on Sunday citing sources, and will formally establish Solomon as the successor to Lloyd Blankfein.

Blankfein told CNBC earlier this year that he expected Solomon to succeed him when he decides to leave. The Wall Street Journal reported in March that Blankfein could step down as chief executive at the end of the year.

Blankfein, one of the longest-serving CEOs on Wall Street, will stay on for an interim period, the New York Times report said.

Goldman Sachs declined to comment.

Solomon, who joined the investment bank as a partner in 1999, is currently president and chief operating officer of the bank.

Reporting by Shubham Kalia in Bengaluru; Editing by Gopakumar Warrier and Saumyadeb Chakrabarty

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ycGXq2GMezE/goldman-to-formally-name-david-solomon-next-ceo-early-this-week-nyt-idUSKBN1K6051

Britain to unveil model of new fighter jet, earmark funds: source

Farnborough, ENGLAND (Reuters) – Britain’s Defence Minister Gavin Williamson will unveil a model of the country’s proposed new fighter jet at the Farnborough International Airshow and earmark 2 billion pounds ($2.65 billion) in funding for the project, a source said on Monday.

Britain’s Secretary of State for Defence Gavin Williamson arrives in Downing Street in London, June 26, 2018. REUTERS/Toby Melville

The aircraft, which will eventually replace the Typhoon fighter jet, will be developed and built by partners BAE Systems (BAES.L), Rolls-Royce (RR.L) and Leonardo (LDOF.MI), the source said.

Reporting by Sarah Young, editing by Paul Sandle

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/cB0WRf8WlN8/britain-to-unveil-model-of-new-fighter-jet-earmark-funds-source-idUSKBN1K60L8

Boeing kickstarts air show with order for jets worth $4.7 billion

(Reuters) – Boeing Co (BA.N) said on Monday it won an order for 14 freight aircraft for a value of $4.7 billion, firing the opening salvo against rival Airbus SE (AIR.PA) in a contest for business on day one of the Farnborough Airshow.

FILE PHOTO: The Boeing logo is seen on a Boeing 787 Dreamliner airplane in Long Beach, California March 14, 2012. REUTERS/Lucy Nicholson/File Photo

Logistics group DHL placed the order for the 777 freighters and acquired purchase rights for seven more freighters, the U.S planemaker said.

Boeing and Airbus are expected to make several announcements on the first day of the July 16-22 event, as they seek to bolster their already bulging order books.

The latest order follows Boeing’s deal with FedEx Corp (FDX.N) unit FedEx Express (FDX.N) in June for 24 medium and large freighters.

While global trade tensions are escalating, the industry is counting on e-commerce continuing to soar, with more people buying products online for quick delivery.

Air freight demand is expected to increase 4 percent this year, according to the International Air Transport Association (IATA).

Last year was the best for cargo since 2010, with traffic growth more than doubling to 9 percent, three times the growth in capacity.

Boeing’s latest order will double the size of DHL’s global 777 fleet, the companies said. The delivery of the first four planes is expected to be completed in 2019, DHL said in a separate statement.

The Farnborough Airshow is the industry’s biggest event this year. It alternates with the Paris Airshow and, collectively, they account for over a quarter of industry order intake each year.

Reporting by Shubham Kalia in Bengaluru; Editing by Saumyadeb Chakrabarty

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/PkrLvxXJyIQ/boeing-kickstarts-air-show-with-order-for-jets-worth-4-7-billion-idUSKBN1K60HK

ZTE stock surges as U.S. supplier ban lifted though outlook remains uncertain

HONG KONG (Reuters) – Investors on Monday cheered the lifting of a U.S. supplier ban on China’s ZTE Corp (0763.HK), pushing its shares up 17 percent, though analysts cautioned the telecommunications equipment maker still faced many challenges as it works to revive its business.

FILE PHOTO: A ZTE smart phone is pictured in this illustration taken April 17, 2018. REUTERS/Carlo Allegri/Illustration/File Photo

The U.S. Commerce Department on Friday lifted a crippling ban on American firms selling parts to ZTE – imposed in relation to a U.S. sanctions case – after the Chinese company deposited $400 million in escrow as part of a settlement reached last month. The settlement also included a $1 billion penalty paid to the U.S. Treasury in June.

“It’s a long way back for ZTE. Not just to win back customer confidence and assure them, but also work hard to find substitutes to U.S. suppliers such as Avnet, Qualcomm, Broadcom etc (to reduce reliance),” said Nikhil Batra, senior research manager at consultancy IDC.

“Essentially, this would mean going back to the drawing board and rethinking its overall design strategy.”

ZTE’s Hong Kong-listed stock opened up 5.5 percent on Monday, rising over 17 percent to HK$16.12 by noon. That was still 37 percent lower than its last price in April when trading of the stock was suspended for two months following the ban.

ZTE’s Shenzhen shares jumped by their 10 percent daily limit early on Monday, as investors brushed off ZTE’s forecast on Friday a net loss of up to 9 billion yuan ($1.35 billion) for the first half of 2018 due to the fine.

Jefferies analyst Edison Lee estimated ZTE had an operating loss of up to 4 billion yuan for April-June due to suspending business when the ban was imposed.

Lee said he expected ZTE to go to each of its non-Chinese telecommunications customers “and offer incentives of varying degrees to compensate for their hardship and reward their patience and loyalty”.

People familiar with the matter told Reuters that ZTE started reaching out to clients over the weekend with a letter promising to ramp up operations as quickly as possible.

Many U.S. lawmakers see ZTE as a national security threat and, on Thursday, a group of Republican and Democratic U.S. senators urged ZTE’s penalties be reinstated.

The U.S. Senate paved the way for a showdown with U.S. President Donald Trump over the issue last month, when it passed an annual defense policy bill with an amendment that could reverse ZTE’s settlement.

The fate of the amendment remains unclear as the Senate and House have yet to reconcile their different versions. There is bipartisan support for the measure among members of Congress, but Republicans control both the Senate and House and party leaders rarely break from Trump’s policies.

“The political nature of the issue and the fact that members of the U.S. Senate are not on board this decision makes it very tricky. Anything could happen,” said Batra.

Others agreed the prospect of ZTE continuing as before was unlikely.

“In terms of carrier business, we think ZTE is still a competitive telecom equipment supplier, especially in the 5G era, and its return to business may help China’s 5G development to be back on track,” Nomura analysts wrote in a note to clients on Monday. “However, we think it remains uncertain as to what extent ZTE can win back the existing customers and explore new businesses.”

The ban had been a source of friction between the U.S. and Chinese governments at a time of escalating trade tension. The ban was imposed in April after Commerce Department officials said ZTE made false statements about disciplining 35 employees after it pleaded guilty last year to violating U.S. sanctions by illegally shipping U.S. goods and technology to Iran.

Uncertainty over the ban battered ZTE shares, wiping nearly $11 billion from the company’s market valuation.

As part of the deal to lift the ban, ZTE agreed to remove all members of its leadership at or above senior vice president level, along with any executives associated with the wrongdoing within 30 days.

Reporting by Sijia Jiang; Additional reporting by Anne Marie Roantree and Donny Kwok; Editing by Muralikumar Anantharaman and Christopher Cushing

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/9nbRSl-YBZk/zte-stock-surges-as-u-s-supplier-ban-lifted-though-outlook-remains-uncertain-idUSKBN1K602N

Rebates protect Canada’s auto industry from retaliatory tariffs

TORONTO (Reuters) – Canadian government customs provisions are expected to soften the blow on the country’s powerful automotive industry from retaliatory tariffs on U.S. steel, according to trade lawyers and industry leaders bracing for higher costs.

FILE PHOTO: Ford and Lincoln vehicles are parked outside the Oakville Assembly Plant in Oakville, Ontario, Canada, November 6, 2016. REUTERS/Chris Helgren/File Photo

Decades-old programs reduce or refund import duties on supplies like steel when companies in Canada can show the material is used in export products. They could protect the auto industry’s supply contracts covering raw materials and parts, which often cross borders several times before a vehicle is finished.

While imposing tariffs against a long list of U.S. products this month, Canada clarified that “duties relief” and “duty drawback” programs would be available to Canadian exporters.

“That provision in the notice is overwhelmingly directed at the auto industry,” said Jesse Goldman, a trade lawyer at Borden Ladner Gervais. Without drawbacks, Goldman said, the Canadian retaliation would have “very significantly and very quickly” hurt the industry.

Some 85 percent of vehicles built in Canada in 2016 were exported, meaning duty relief programs could refund roughly 85 percent of retaliatory tariffs paid by automakers.

Canada has vowed to defend the steel and aluminum industries, but vehicle manufacturing employs some 136,000, according to Statistics Canada, whereas only about 22,000 work in the steel sector, giving the government an incentive to shelter vehicle and parts makers from rising costs.

“These existing programs continue to be in place and any changes would be done in consultation with the relevant stakeholders,” federal Finance Department spokesman Jack Aubry said when asked whether the programs would continue.

BIG OPERATORS

Automakers with operations in Canada include General Motors Co (GM.N), Ford Motor Co (F.N), Fiat Chrysler Automobiles (FCHA.MI), Toyota Motor Corp (7203.T) and Honda Motor Co (7267.T) which assemble vehicles, as well as parts makers Magna International (MG.TO) and Linamar Corp (LNR.TO).

Linamar Chief Executive Linda Hasenfratz said in an emailed statement the drawback programs are of particular benefit to her company, Canada’s second largest auto parts maker, since substantially all the steel that the company imports is later exported.

Honda said it was still assessing the impact of the tariffs. GM, Fiat Chrysler and Magna declined to comment. Ford and Toyota did not respond to requests for comment.

The Canadian Vehicle Manufacturers’ Association needs to do more analysis before commenting on whether drawbacks could protect his industry, President Mark Nantais said. “There are various options that could be used – that would be one of them,” he added.

But any relief would be temporary if U.S. President Donald Trump imposes tariffs on Canadian-made vehicles after the administration’s Section 232 national security probe into autos wraps up. The rebate programs limit the impact of tariffs on raw materials, not finished products.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said some companies that make stainless steel parts or hardened steel tools in Canada could benefit.

Volpe said just over half of Canadian-made auto parts are exported.

John Boscariol, who leads McCarthy Tetrault’s international trade and investment law group, said access to the duty relief programs had not been a foregone conclusion before the government’s notice, because Canada’s retaliation is technically a “surtax,” not a normal duty.

Some uncertainty remains as companies must apply individually for the refunds, and carefully document how imports are used, he added.

“It introduces costs and complications, and it introduces a likelihood that you might not get that relief,” Boscariol said. “That’s not without cost.”

Reporting by Allison Martell; Editing by Denny Thomas and Richard Chang

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/l7IQOL6MjyU/rebates-protect-canadas-auto-industry-from-retaliatory-tariffs-idUSKBN1K60CC

Asian shares fall on soft China data, trade war fears

SHANGHAI (Reuters) – Asian shares fell on Monday as new data showed China’s economy slowed slightly in the second quarter, compounded by fears of a full-scale Sino-U.S. trade war looming over markets.

FILE PHOTO: An investor holds onto prayer beads as he watches a board showing stock prices at a brokerage office in Beijing, China, July 6, 2015. REUTERS/Kim Kyung-Hoon/File Photo

Official data showed China’s economy grew 6.7 percent in the second quarter of 2018, cooling from the 6.8 percent growth registered in each of the previous three quarters.

While the GDP figures were in line with market expectations, the new data also showed slower-than-expected growth in China’s industrial output, pointing to slowing momentum and prompting some analysts to call for stronger government measures to support growth.

Taken together, the data show an economy continuing to slow under the influence of a multi-year crackdown on excessive financial risk, even as trade war headwinds gather.

But Jim McCafferty, head of equity research, Asia ex-Japan at Nomura, said China’s underlying economic data “appears to be quite robust”.

“I would be incredulous if China’s GDP growth could continue at the level it’s been historically. So I think there’s always been an anticipation of some gradual slowdown, but the slowdown of the growth rate is probably less than the market really wants to believe,” he said.

He said concerns over the trade war were dragging down markets, with investors spooked by the ratcheting up of trade war tensions.

“That’s why I think markets are nervous, because there’s no precedent for this type of behavior,” he said.

After briefly moving higher on early gains in China’s share markets, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.3 percent.

The Shanghai Composite Index .SSEC and the blue-chip CSI300 index .CSI300 fell 0.5 percent.

Hong Kong’s Hang Seng index .HSI was down less than 0.1 percent, but the China Enterprises Index .HSCE took a bigger hit, falling 0.6 percent.

Australian shares were down 0.3 percent, and Seoul’s Kospi .KS11 lost 0.1 percent. Shares in Taiwan were mostly flat.

Japan’s markets are closed for a holiday.

The soft China data undermined a boost to sentiment from Friday’s gains on Wall Street, which were underpinned by strong profits from industrial and energy firms and helped offset investor concerns over the U.S.-China trade war.

U.S. stock futures touched a fresh five-month high on Monday. SP500 e-mini futures ESc1, the world’s most liquid equity index futures, rose 0.2 percent in early Asian trade to hit their highest level since Feb. 2.

Around 0335 GMT, SP500 e-mini futures were up 0.1 percent at 2806.25.

The dollar rose 0.1 percent against the yen to 112.48 JPY=.

The euro EUR= was flat on the day at $1.1681, and the dollar index .DXY, which tracks the greenback against a basket of six major rivals, was also flat at 94.740.

Major currencies have been in a holding pattern in recent days thanks in part to a lull in China-U.S. trade skirmishing. Investors had also been awaiting the China data, and are still looking to June U.S. retail sales figures, to gauge the state of global growth.

The U.S. Federal Reserve reiterated on Friday in its semi-annual Monetary Policy Report to the U.S. Congress that it expected “further gradual increases” in interest rates due to “solid” economic growth.

ANZ analysts said in a note Monday that the Fed’s report “yielded few surprises,” but noted that trade tensions continue to weigh on commodity markets and U.S. consumer confidence.

U.S. crude CLc1 dipped 0.5 percent at $70.69 a barrel, weighed by easing concerns about supply disruptions that had pushed prices higher. Brent crude LCOc1 was 0.5 percent lower at $74.895 per barrel.

A rising dollar drove gold prices to seven-month lows on Friday, but spot gold XAU= was up 0.2 percent on Monday, trading at $1243.46 per ounce. [GOL/]

Reporting by Andrew Galbraith; Editing by Shri Navaratnam and Eric Meijer

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/LHCpQ5FBPgU/asian-shares-fall-on-soft-china-data-trade-war-fears-idUSKBN1K600H

Planemakers to kickstart Farnborough jetliner order battle

FARNBOROUGH, England (Reuters) – Aerospace firms Airbus (AIR.PA) and Boeing (BA.N) will kickstart a contest for tens of billions of dollars of orders at the Farnborough Airshow on Monday, ensuring fireworks start early as they seek to bolster their already bulging order books.

FILE PHOTO: President, Chairman and CEO of The Boeing Company Dennis Muilenburg speaks at the “What’s Next?” conference in Chicago, Illinois, U.S., October 4, 2016. REUTERS/Jim Young/File Photo

The two rivals are expected to make several announcements on day one of the July 16-22 event, starting even before the gates open to tens of thousands of delegates, industry sources said.

There may be an intense battle for sales in the 100-150-seat market where Airbus and Boeing have forged new alliances.

Despite warnings from some analysts that the pace of orders could slow after an eight-year boom, there were signs of brisk activity as negotiators thronged London hotels on Sunday and some haggled over last-minute air show deals, observers said.

FILE PHOTO: A logo of Airbus is pictured at the entrance of the company’s delivery center in Colomiers near Toulouse, France, July 10, 2018. REUTERS/Regis Duvignau

However, bankers said they would be watching closely to see how many of the hundreds of orders anticipated this week were new and how many involved adjusting earlier business or switching models, something not always easy to spot at first.

Higher oil prices and interest rates are seen as a warning sign that the long-running aviation boom may be peaking.

The week is expected to confirm demand for narrowbody jets from airlines such as Mexico’s VivaAerobus, which is shopping for some 40 Airbuses, or lessors like Goshawk and Jackson Square, both seen interested in jets in the Boeing 737 MAX category. Major lessors Air Lease and Avolon are also in town.

But both Airbus and Boeing are under pressure to increase orders for some of their wide-body jets due to a recent slowdown in that part of the market. One exception is the Boeing 787, after a multi-year effort to end delays and cost overruns.

Airbus could secure an order for a new A350 customer in Taiwan and Boeing will be looking to reinvigorate 777X sales.

Demand for freighters could also feature.

The Farnborough Airshow is the industry’s biggest event this year. It alternates with the Paris Airshow and collectively they account for over a quarter of industry order intake each year.

British Prime Minister Theresa May will meanwhile seek to reassure aviation bosses that her under-fire Brexit plan won’t disrupt their supply chains. [nL8N1UB0FJ]

Boeing Chief Executive Dennis Muilenburg said on Sunday the performance of global supply chains was always under watch.

May’s words, to be delivered at the air show southwest of London on Monday, come at a crunch time as pro-Brexit lawmakers in her party oppose her EU exit strategy. [nL8N1UB03P]

Britain is also expected to make a major announcement on future combat air strategy, though Europe’s fragmented fighter industry is seen as far from ready to unify around one project.

Reporting by Tim Hepher, Eric M. Johnson, Sarah Young and Mike Stone in Farnborough, and William James in London; Editing by Daniel Wallis

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/7BUFlsVEksg/planemakers-to-kickstart-farnborough-jetliner-order-battle-idUSKBN1K515P

Brazil’s Embraer sees demand for 10,550 smaller jets in next 20 years

(Reuters) – Brazil’s Embraer (EMBR3.SA) sees demand for 10,550 new aircraft with a capacity of up to 150 seats in the next 20 years, worth around $600 billion, the planemaker said on Sunday.

FILE PHOTO: The logo of Brazilian planemaker Embraer SA is seen at the company’s headquarters in Sao Jose dos Campos, Brazil February 28, 2018. REUTERS/Roosevelt Cassio/File photo

In a statement from the Farnborough Airshow, Embraer said the fleet of aircraft of that size in service is expected to increase to 16,000 units over the period, compared to 9,000 currently in operation. Market growth will be responsible for 65 percent of that demand, while 35 percent will be to replace old aircraft, Embraer said.

The company said industry profits were eroding amid a rise in costs which is expected to continue.

Earlier this month, Boeing Co (BA.N) said it struck a tentative deal for a controlling stake in the commercial aircraft arm of Embraer, under a new $4.75 billion joint venture.

Writing by Alexandra Alper, Editing by Rosalba O’Brien

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/hMpU7SFI774/brazils-embraer-sees-demand-for-10550-smaller-jets-in-next-20-years-idUSKBN1K514Y