Barclays’ Smoke & Mergers Will Not Deflect Tough Questions – Nils Pratley

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Chairmen, especially those embarrassed by the share price on their watch, feel obliged to examine any old merger or acquisition idea. But there are limits to what counts as credible and Barclays’ John McFarlane was seriously off-piste if he thought shareholders would be remotely interested in a corporate combination with Standard Chartered.

The idea provoked inevitable derision in the City. First, Barclays’ entire strategy for the past three years has been to reinvent itself as a US-UK “transatlantic bank”, minus its former African business. Merging with Standard, which operates almost exclusively in Asia and Africa, would be a U-turn too far. Second, regulators would probably demand substantially bigger capital buffers, thereby negating the appeal of Standard’s Asian deposit base. Third, the potential to rip out costs, banks’ usual justification for big mergers, would barely exist.

Barclays’ “exploratory conversations”, according to the FT’s report, were prompted by the perceived need to have a plan B to hand when the unsmiling agitator Edward Bramson turns rough. Bramson’s Sherborne fund has bought a 5.4% interest in Barclays and a confrontation of some form is inevitable because that is how activists justify their fees.

McFarlane and colleagues should drop their “blue sky” bumbling. Barclays’ share price, stuck around the 210p mark, is unimpressive but a panicky mega-deal could make things worse. Their thinking should be simple. If the board trusts the chief executive, Jes Staley, to grind out higher returns over time, let the strategy run. If it doesn’t, it should not have approved his plans in the first place.

Bramson’s beef is assumed to be about Barclays’ investment bank. Should the bank even be in a capital-hungry business dominated by big American firms? Bramson will probably offer a few sharp criticisms and, actually, it’s right that Barclays should be made to explain why dismantling its unreliable investment bank is supposedly too expensive to contemplate. But give the detailed rebuttal, don’t play silly games of fantasy mergers.

Most of all, remember that Bramson is merely a 5% short-termist punter who may have overreached in trying to call the tune at a large regulated bank. He should not be a source of terror.

M&S has time to save itself

It was a “historic day” for Marks & Spencer, declared the chairman, Archie Norman, and he wasn’t talking about the record £514m “adjusting item” hit to profits, which beat even last year’s £437m whack. Rather, M&S was offering the first warts-and-all assessment of its troubles for ages, Norman said.

The list of woes was certainly long: too many stores; stores in the wrong places; a website that is too slow; a distribution centre that cannot cope with peak demand; dated IT systems; an inefficient supply chain in food; and, as the chief executive, Steve Rowe, put it, a corporate culture that was “top heavy” and “inward looking”. Given that none of those items can be considered minor, you can understand why the promised turnaround is pitched as a “three-to-five-year” job.

The share price rose 5%, probably reflecting M&S’ confidence in a same-again dividend of 18.7p. The yield is 6% if you believe the annual distribution is permanently safe. That’s not the worst long-term gamble in a horrible retail sector, even if one suspects more than 100 stores will eventually have to close. M&S still has time to save itself.

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New Technologies Allow You to Do Business (and Compete) From Anywhere – Amarillo

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Everyone knows just how much of an impact technology has had on global business, but if there’s one segment that has benefited the most from technological innovation it’s entrepreneurs. With mobile phones, cloud computing, do-it-yourself accounting software and ubiquitous connectivity, business owners can now create successful companies quickly and from anywhere.

However, with so much technology out there, it can be hard to know what programs and tools are essential for getting a company off the ground and growing. There are some must-haves, though, including these five types of tech.

Super-Size Your Storage

In today’s world, most budding businesses need far more storage than their computers can provide. Things like high-resolutions photos, data-heavy PowerPoints and an endless stream of documents will max out CPU storage in no time. Fortunately, cloud-based companies like Dropbox, Box, Apple and Google offer several terabytes of data for a reasonable monthly cost.

These programs also make collaboration easier as you can quickly share files and folders with contractors and employees. Thanks to these storage sites that many small companies can create a global workforce from the start.

Keep Up With Collaboration

Whether you’re in an office or have a remote workforce located in different cities, being able to collaborate and connect with staffers quickly is a must. Over the last few years, sites like Slack, Basecamp, Trello and others have revolutionized the way small business employees interact with one another.

Forget e-mail–you can now send messages to individuals or teams in an instant, you can work together, in real-time, on complex projects, and you can even build camaraderie by creating “channels” dedicated to more social communication. Messages and files are also easily searchable, making it difficult to lose something important.

Crunch The Numbers

As excited you may be about your brilliant idea, you still need to run a business. That means keeping receipts, adding up bills, doing taxes and other more mundane work. While it may still be a good idea to have an accountant nearby, technology can, and should, take care of most of this work.

Quicken, the classic accounting software, is still popular for tax work, but other programs like Wave Accounting, Xero and Zoho Books come with a variety of features like invoicing, payroll, bill payments and other mission critical applications and fall well within the budgets of most small businesses.

Show Your Face

Instant messaging and email only goes so far. In many cases, you still want to see clients or employees face-to-face–maybe you have to walk them through a presentation or just want to catch up. That’s why having a good video program is critical for small businesses today.

You’ll want to find software that allows you hold meetings with multiple participants, share files with people on a call and you may want to be able to record conferences for future viewing. Google Hangouts, Skype for Business, Zoom.us and GoToMeeting are just some of the popular video conferencing sites to choose from. While it may not be quite as good as a face-to-face meeting, it saves a fortune in travel costs and wear and tear.

Set Up A Store

There was once a time when creating a consumer-focused e-commerce website was a painstaking process. Now, though, sites like Shopify and Tictail let even the smallest companies create sleek websites with all the e-commerce fixings. Companies like these have been a boon to entrepreneurs-

They let users create online shops in snap and take a variety of payment options, such as credit card and PayPal, so that every potential customer can buy what you’re selling. It only takes a few hours to get a store up and running and turn your company into a potentially global business.

While there are plenty of other useful technologies out there–security software, customer relationship management programs and so on–incorporate these five tools into your budding business and you could find yourself ahead of the competition in no time.

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Why Sweden’s iZettle Sold To PayPal For $2.2 Billion Rather Than IPO

iZettle co-founders Jacob De Geer (left) and Magnus Nilsson

The announcement just 10 days ago that Sweden’s iZettle was planning to go public provoked cheers among European tech boosters, but that excitement proved to be short-lived. Instead of celebrating the rise of an independent tech company, we’re watching yet another local startup be gobbled up by a U.S. tech giant.

In this case, the deep pockets belong to PayPal, which announced it is paying $2.2 billion for the Swedish fintech company. That price tag offers the first clue as to why iZettle took the money rather than pursuing the IPO, which was expected to give the payment company a valuation just north of $1.1 billion.

iZettle cofounder Jacob de Geer penned a note explaining the decision, ticking off the usual boxes about how the companies have similar cultures and visions and how the deal will allow iZettle to go further faster.

“By joining the PayPal family, we’ll become iZettle with superpowers and jump on a fast track to realise our vision,” he wrote. “The opportunity to become part of PayPal was too good to pass up. Not only because of what it means for iZettle and for iZettle’s employees, but because of what we can offer to our merchants.”

That may turn out to be true, though tech mergers as a whole typically tend to start off with such optimistic sentiments only to run into sobering realities. There’s always a chance that the iZettle-PayPal hookup will be an exception, but success is far from guaranteed.

Given that iZettle is in 12 countries compared to PayPal’s 200, the latter can certainly help it deal more quickly with the various regulatory issues needed to expand into new geographies. But just how iZettle will be integrated (or not integrated) with PayPal’s own competing point-of-sale payment services remains to be seen.

Still, the IPO likely posed even greater risks for iZettle. On May 8, the company announced its intention to list on the Swedish stock exchange but had only provided preliminary financial details. In fact, iZettle had not published a more detailed prospectus before the PayPal deal was announced.

Naturally, the numbers iZettle disclosed were bullish. The company is on track for $165 million in revenue this year, up 60 percent from a year ago, while losses appear to be narrowing.

With that momentum, the company had said it hoped to raise about $227 million with the IPO. But it hadn’t gotten around to detailing, for instance, how much of that might go to insiders who were selling shares, nor how much would go to the corporate treasury.

Speaking of which, iZettle raised a total of $150 million in venture capital over the years, including a round of $47 million just last December. But at least $83 million of that was debt funding. Between paying off that debt and possibly watching some money go to insiders, an IPO looked a lot less like a possible corporate windfall.

Of course, the company was itching to get its hands on that money, having watched another U.S. competitor, Square, enter the U.K. market last year and talk up its European ambitions. With a market cap of about $22 billion, Square likely had the brand awareness and financial resources to give iZettle a good run for its core point-of-sale market.

The prospect of battling Square and PayPal for the hearts and minds and wallets of retailers — and with far fewer financial resources —  meant iZettle executives would have had to do one hell of a selling job to make the IPO a success, let alone ensure the company would continue growing and reach profitability.

So when PayPal came calling, it’s no surprise iZettle was willing to listen. The $2.2 billion price tag will certainly make this one of the biggest European deals to date, and it’s PayPal’s biggest acquisition by a huge margin, though PayPal has still not detailed how much of that figure is cash or stock, or whether it includes assumption of iZettle’s existing debts.

For iZettle’s part, the company appears to be retaining some independence, and de Geer will continue to run operations in Stockholm. But European tech boosters will have to be content with iZettle becoming yet another significant branch of a U.S. tech company.

“iZettle will become a center of excellence for PayPal’s in-store product and services offerings for small businesses going forward, which I’m really excited about,” de Geer wrote. “Creating a center of excellence in Stockholm with a global reach means a lot to me.”

By: @obrien  

Walmart has long-term plans for Flipkart

Walmart CEO Doug McMillon (left) with Flipkart co-founder Binny Bansal. Walmart is viewing Flipkart as a long-term bet that may take years, or even decades, to yield excellent financial returns. Photo: PTI

Bengaluru: A Flipkart IPO is unlikely to happen for many years to come, as Walmart Inc. will have to invest heavily to make its $16-billion acquisition work.

Last week, Walmart agreed to buy a 77% stake in Flipkart for $16 billion with the rest being held by minority investors, chiefly Tiger Global Management, Tencent Holdings, Microsoft and co-founder Binny Bansal. It also said it supported Flipkart’s ambition to go public.

Walmart has told Flipkart’s leadership team to not worry about an IPO anytime soon, according to two people familiar with the matter. Walmart is viewing Flipkart as a long-term bet that may take years, or even decades, to yield excellent financial returns, these people said. Both of them requested anonymity.

“They have said they are taking a 20-year view on Flipkart. An IPO is not going to happen any time soon,” one of the people cited above said.

On Friday, Walmart had said in a regulatory filing in the US that Flipkart’s board or its minority shareholders could force the company to go for an initial share sale four years after the deal closes.

However, there is an important clause that can prevent minority shareholders from forcing an IPO—if after four years, Walmart owns over 85% of Flipkart, minority shareholders of the latter will lose their veto rights on business decisions and transactions at Flipkart.

Walmart has already indicated that it may end up investing an additional $3 billion in the Indian e-commerce company within the first year of the deal closing.

According to the filing, Walmart has the right to appoint five directors to Flipkart’s board, which will have three other members—Binny Bansal and nominees from Tiger Global and Tencent. Walmart may increase the board size to nine members later.

For Walmart, a lot is riding on Flipkart, its biggest acquisition yet. But the hammering that its stock received on Wednesday after the buyout was announced may just be the beginning of the challenges that the retailer faces in making its Indian acquisition work.

Cutting Flipkart’s massive losses while keeping Amazon India at bay, building up the company’s depleted senior leadership team, retaining key middle managers and making the combination of Binny Bansal and CEO Kalyan Krishnamurthy work are some of the immediate challenges that Walmart faces.

In any case, it’s evident that the looming battle with Amazon, which was in the race to buy Flipkart, in the $18 billion e-commerce market will require billions of dollars in fresh investments.

But Walmart’s investors will not be that forgiving.

During a conference call with investors after the Flipkart-Walmart deal, the US firm’s top management team was grilled by analysts and investors on whether it would cut the e-commerce company’s massive losses anytime soon, with some of them even wondering whether Flipkart would ever turn profitable.

The US-based retail giant’s top management put up a brave face and defended the acquisition, saying that it was a long-term bet in a market that was too large to ignore.

Apple key In Effort To Commercialize Aluminum Production Without Greenhouse Gas Emissions

Aluminum is Apple’s go-to material for making many of its products sleek and durable, and now the company is taking serious steps to ensure using its favorite metal is also good for the planet.

Two major aluminum producers are announcing a “joint venture to commercialize patented technology that eliminates direct greenhouse gas emissions from the traditional smelting process,” and Apple played a key role in getting to this step.

Alcoa Corporation and Rio Tinto Aluminum have formed a new joint venture called Elysis that is working to further develop and share a process for creating aluminum that uses a method which releases oxygen instead of greenhouse gases.

Elysis is focused on making the new process fit “for larger scale production and commercialization, with a package planned for sale beginning in 2024.”

Apple played a crucial role in bringing the two aluminum producers together, and the company is part of a $144 million investment to support development of the clean aluminum production process along with Elysis and the Governments of Canada and Quebec.

Apple’s involvement in the effort started three years ago when the company sent engineers in search of a cleaner way to produce aluminum. The team discovered Alcoa Corporation which knew how to produce aluminum using a method that eliminates greenhouse gas emission, but recognized that Alcoa needed a partner to bring the method to the rest of the world.

Members of Apple’s business development team introduced Rio Tinto Aluminum as a partner with a “robust worldwide presence as well as deep experience in smelting technology development and international sales and commercialization.”

After orchestrating the creation of the new joint venture and making a financial investment into its development, Apple says it will remain involved in the effort:

Apple will continue to provide technical support as well. The patent-pending technology is already in use at the Alcoa Technical Center, outside Pittsburgh, and this project will invest more than $30 million in the United States.

Read more about the ongoing development process in Apple’s Newsroom announcement.

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