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Amazon, Apple and Facebook Scheduled for Anti-Trust Hearing

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The Controversies Surrounding Tech’s Biggest Players Demand Resolution

The three tech giants have been summoned to testify at Capitol Hill next week. This anti-trust hearing will bring simmering Democratic and Republican frustrations with Silicon Valley into public view. This event can potentially set the stage for regulation of an industry that has long insisted that its size doesn’t harm neither its rivals nor consumers. Although for different reasons, both Republicans and Democrats have expressed exasperation with the big tech giants.

House lawmakers embarked on their quest to regulate Silicon Valley in June, alarming that “dominant, unregulated platforms have extraordinary power over commerce, communication and information online.” They pledged to review Apple (NYSE: AAPL), Amazon (NYSE: AMZN), Facebook (NYSE: FB) and Google (NYSE: GOOGL) but also the government’s own competition laws as part of an effort to determine if the industry had come to wield dangerous “monopoly power” without repercussion. Last week, President Trump launched his latest attack at the industry, suggesting the U.S. government “should be suing Google and Facebook,” potentially on antitrust grounds.  His Democratic rivals have sounded similar as Senator Elizabeth Warren has called repeatedly for breaking up major tech companies and pledged she would apply a tougher hand to the industry if she’s elected president in 2020.

As the latest sign of major shifts taking place, Apple also announced that its chief designer Jony Ive is leaving the company and this signals the end of Steve Jobs era as Ive and Jobs were close friends, bonding over frequent lunches and a similar sensibility for design. The iPhone maker is facing a maturing smartphone market and Rosenblatt analyst Jun Zhang expects the company to face “fundamental deterioration” in the next six to 12 months. From Apple TV Plus to its chief designer leaving the boat, Apple is unavoidably becoming a different company. For the past couple of decades, Apple has gone through one of the most dramatic stories in business history, making it a Silicon Valley legend. The company grew to become one of the world’s most profitable and highly valued companies worth nearly $1 trillion, a lot of it thanks to its iPhone. But iPhone sales have begun to decline, and though anyone would love to have Apple’s problems, a mere $58 billion in sales and $11.5 billion in profits as reported for the quarter ended March 30, it appears the age where the iPhone ruled has passed.

Apple also officially stopped selling the 12-inch MacBook today, a computer that hasn’t had an update since June 2017, so it definitely seems to be stuck as innovation is concerned. Apple is surely pushing its consumers’ boundaries, raising prices on iconic devices without offering much in the way of innovation. Its core businesses are mature and Apple is no longer the leading-edge company it once was. Apple is reaping what it has sown over the years with vendor lock-in prices, designing laptops that users cannot repair themselves, designing its phones so Google Voice would not work, etc. There is a lot more of such behavior that seems to be a of a dinosaur trying to survive its way to modern ages, and surely not of an industry leader.

Bill Gates, Microsoft’s co-founder (NASDAQ:MSFT) said that his former rival was able to “mesmerize” the people who worked for him to ensure that Apple could survive, although this intense management style is surely not for everyone. Meanwhile, Microsoft is drifting away from consumer-facing products and focusing on enterprise solutions. This move that was identified after the company shut down HealthVault , its personal health record system, in April. Microsoft sees healthcare as a growth opportunity for Azure Cloud services, whose overall market share is being outshined by Amazon Web Services. But it has a lot of work ahead in its attempt to dethrone Amazon.

Meanwhile, Facebook has a huge privacy problem that has blown up recently with revelations that the company has been violating a 2012 consent ruling with the Federal Trade Commission. There may be a huge multi-billion-dollar settlement in the future but according to recent news reports, some FTC officials are contemplating naming founder and CEO Mark Zuckerberg as a respondent in any litigation. The problem is so big and even more complex that it’s hard to see how the company can survive the current storm without some sort of fundamental reorganization or breakup. Facebook is expected to pay a $5 billion penalty for its work with a consultancy firm Cambridge Analytica, which obtained data from millions of Facebook users without their permission. Cambridge Analytica was also hired by President Donald Trump for his 2016 U.S. presidential election campaign.

Google’s problems are perhaps even more complex. The company is dealing with complaints of “contrived and artificial distinctions” to avoid paying corporate taxes, being accused of manipulating search results to exclude competing ad platforms and copyright infringement in its Google Books and Library projects. Most recent is the waterfall of complaints regarding YouTube ranging from censorship to enabling hate speech and child porn. Google’s choices are rather limited if the company wants to avoid an avalanche of lawsuits and settlements.

Finally, there is Amazon, the world’s beloved source for online shopping. Amazon may look like an e-tailer, but it’s really a logistics and delivery service. Yet also, a company accused of monopolistic behavior. The company has been hit with criticism for working conditions in its warehouses, speculation that it is selling its facial recognition technology to U.S. immigration authorities, and the flawed way in which it handled its search for a second headquarters. And there are also spats with Google. Amazon’s business continues to thrive, but that’s because its Amazon Web Services subsidiary is hugely profitable as only last year, AWS generated about half of Amazon’s operating income.

Apple, Google, Facebook, and Amazon shouldn’t be able to run the world but the truth is that they do. How can imagine their daily life without them?! But it doesn’t mean they will continue doing so. The Great Recession has taught us that there is no such thing as ‘too big to fail’. What is certain is that the pressuring controversies surrounding all four companies will soon enough demand a focus away from domination but rather at actual contribution to the world we live in.

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Earnings

Toyota’s News: Redesigned Corolla, New Investments and Partnerships

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Toyota Stock Market News

Toyota Motor Corporation (NYSE: TM) is managing something other automakers only dream of. The company is honouring its values while achieving sustainable growth for over a decade. The dependable Japanese giant continues to deliver on its promises as it prepares for an electric future.

A new sturdy yet sporty Corolla

On September 17th, the company announced a completely redesigned Corolla that now goes beyond just being a practical buying decision. The newly evolved Corolla has a sporty design, offering pleasurable driving and advanced safety equipment. Being built on Toyota New Global Architecture (TNGA), Corolla is ready to evolve to meet customers’ needs, according to Yasushi Ueda, chief engineer in charge of development.

Since its debut in 1966, this car is nothing less than adored by consumers all over the world and now, it will have its first hybrid version available to U.S. customers.

Hybrid strategy is actually paying off

Just like Honda Motor Co. (NYSE:HMC) with its 2020 CR-V Hybrid, Toyota is using its hybrid technology to position itself for future growth and transition to an all-electric future, despite the fact these energy saving vehicles do not qualify for government subsidies. But, this strategy is paying off as hybrid demand skyrocketed and the company proudly revealed in February that Lexus reached its 10 millionth vehicle sales milestone since its launch, with its 2018 sales performance achieving several ‘best-ever records’. And it is thanks to these figures that the Chinese government is also starting to see the potential of such vehicles so things can only get even better for Toyota. As the saying goes, persistence is the key to success and these two companies have been quite brave in sticking to HEVs.

New Investment – $391 Million Goes to Texas’ San Antonio Plant

This will be Toyota’s first expansion in nine years at the plant that produces its Tundra and Tacoma pickup trucks. It is the part of the company’s strategy to invest $13 billion in its U.S. operations over the period of five years, ending in 2021.

Future Investment – $243.29 million to Produce New Vehicle in Sao Paulo

Toyota is also about to get an even stronger presence in Brazil as it will hire 300 new employees at the Sorocaba Plant to start the production of a new vehicle.

Partnership

And let’s not forget the ground-breaking partnership of Japan’s leading automakers that was revealed in August as Toyota and Suzuki Motor Co. (OTC: SZKMF) announced they will collaborate on developing autonomous car technology. This deal is cementing the bond that the two automakers kicked-off in 2016. They might seem like an odd couple as Suzuki is a everything but a big player, yet its strong presence in India is only one of the things that will greatly benefit Toyota. Although Suzuki admitted defeat on the world’s biggest playgrounds, China and the U.S., it cracked the code for emerging markets. And this is exactly where future global sales growth is expected to come from.

Inventing a car that will run forever?

According to Bloomberg, Toyota aims to go far further than electric by teaming up with Sharp Corporation (OTC:SHCAY) and Japanese governmental organization NEDO that encourages the development of innovative technologies. Considering that Toyota is a company that has even used the economic crisis and recession to only come out stronger, it’s not unlikely that it is set to out do the impossible by mixing the most efficient batteries with solar panels. The company’s strong financial performance and track record show that if anyone can do it, it’s Toyota Motor Co.

 

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Nike Exceeds Wall Street Expectations With Q1 Earnings for FY2020

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Direct-to-consumer sales and digital momentum strategies did the trick for Nike

When Nike (NYSE:NKE) released its better-than-expected first quarter of the fiscal 2020 results late Tuesday. Naturally shares jumped more than 5% to reach $91.80. The reported revenue increased 7.2% year comparing to last year, achieving $10.7 billion, greater than the expected $10.44 billion. Net income soared more than 28%, making adjusted earnings per share $0.86, also smashing expectations of $0.70 per share.

Nike managed to achieve a turnaround

The biggest contributor to total sales was Nike’s North American segment that increased 4% comparing to last year. But China sales also continue to grow and by double digit percentages: 22% to be exact, topping $1.68 billion. Overall, these are fantastic news for investors. Especially since the company’s rare earnings miss for the final quarter of the previous fiscal year. The company attributed this to increased marketing costs and a higher tax rate. But highly anticipated new product launches and solid results for continuing lines, along with efforts to draw new customers to the Nike SNKRS app, did their magic.

Digital momentum is key

Digital movement is transforming and amplifying everything Nike does and in Q1, Nike Digital grew 42% on a currency neutral basis. This growth is driven by enhanced digital services and the international expansion of its app ecosystem. Moreover, The Nike app and SNKRS app are now both live in over 20 countries, with more expansion coming throughout the year.

There are literally no weak spots for investors

Arguably, there are no weak spots for prudent investors to dig in as far as this quarter’s report is concerned. The company is literally firing on all cylinders. The company’s management attributes these results to “the depth and balance of the company’s complete offense, building on the strengths of its foundational business drivers and capitalizing on the untapped dimensions of its portfolio”. Management has also dismissed any concerns that US-China trade conflicts could harm its operations, disclosing no impact has been seen up to date.

Nike showed it can even handle the increased tariffs

Earlier this year Nike joined over 200 other footwear companies urging President Trump not to increase tariffs on footwear imported from China, calling the move “catastrophic for our consumers, our companies, and the American economy as a whole.” But while those tariffs are certainly catastrophic for small players, Nike seems more than capable of mitigating the consequences of this added expense.

Poor macroeconomic conditions are only masking Nike’s true power

The company made it clear that its figures would have been even stronger had it not been for macroeconomic challenges which are manifesting through tariffs and foreign-exchange rates. They implied that the weakening economic climate is essentially masking Nike’s true strength. And in addition to children, women are also a big opportunity for the company that Nike will continue exploiting. This is why Nike expects better-than-planned growth in its higher-margin NIKE Direct channels and international segments and consequently, its full-year gross margin. One thing is for sure: Nike has turned itself into so much more than a ‘sneaker-company’.

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Apple Will Be Making Its MacBook Pros in the US

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With a newly granted “federal product exclusion,” enabling it to import some Mac Pro parts without paying tariffs, Apple (NASDAQ: AAPL) will be able to save enough money to make US assembly worthwhile. The company announced on Monday that it will manufacture the new version of its Mac Pro desktop computer in Austin, Texas. It’s also a big political win for Apple, since President Trump has for years called on the company to make more products in the US. Tim Cook clearly made a compelling case during his meetings with President Trump. Apple described the decision to keep Mac Pro production in Austin as part of its “commitment to US economic growth.”

Macroeconomic climate is not favourable

The September figures around the world are simply awful. The uncertainty brought on by intensifying trade wars, the outlook for the car industry and Brexit are paralyzing investors, with September seeing some of the worst performance since the financial crisis in 2009, leading many to worry about whether yet another crisis is upon us. On a brighter note, Apple’s stock went up 0.2% after Bloomberg reported that ten of its 15 requests for an exemption from tariffs on imports from China had been approved.

New investments

Apple previously disclosed plans to spend $350 billion in the U.S. by 2023, a figure that includes new and existing investments. Its Apple TV+ is set to launch on November 1, with stars like Oprah Winfrey bringing her famed book club streaming show to the company’s subscription service. Among documentaries that will be released, there will even be a multi-series about mental health, featuring no other than Prince Harry himself. Apple’s subscription service will cost only $4.99 a month and will be available in 100 countries and regions at launch. Also, customers who buy a new Apple device will also get a free year of Apple TV+.

Competitors

Netflix (NASDAQ: NFLX) is still the leader when it comes to U.S. streaming, along with Amazon Prime (NASDAQ:AMZN), AT&T’s HBO (NYSE: T) and upcoming Disney+ (NYSE:DIS), it is certain that competition will be intense. Netflix’s stock has been dropping since July, which was the first time the number of subscribers fell. Moreover, Netflix’s stock price has now officially wiped out any gains it’s made over the year so far and both Disney and Apple have a shot at beating Netflix at its own game.

Apple is still facing impending import duties and innovation difficulties

Let’s not forget that the company still faces import duties scheduled for Dec. 15 that could affect nearly all of its major products including iPhones, iPads, MacBooks and Apple Watches. And more importantly, it is thought by many as facing an innovation problem so it heavily relies on customer loyalty that will continue driving its sales. We’ll just have to wait for November 1st launch of Apple TV+ to see the impact of Apple’s new streaming subscription service.

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