Finance

Finance

Netflix magic market number larger than big cable company’s magic market number

Netflix’s market cap is now larger than Comcast, which is pretty much just a symbolic thing given that the companies are valued very differently but is like one of those moments where Apple was larger than Exxon and may be some kind of watershed moment for technology. Or not. A couple notes on this largely symbolic and not really important thing: Netflix users are going up. That’s a number that people look at. It’s why Netflix’s magic market number is going up. People are cutting cable TV cords. Netflix has no cable TV cords. It does, however, require a cord connected to the internet. So it still needs a cord of some sort, unless everything goes wireless. Netflix is spending a lot of money on content. People consume content. Cable is also content, but it is expensive content. Also, Comcast...

Dear oil helps some emerging economies and harms others

When they are not fretting about the American dollar or Chinese debt, policymakers in emerging economies keep a close eye on the oil market. The price of Brent crude has risen by nearly 50% in the past year to around $80 a barrel. It ranks as the 11th-biggest spike in the past 70 years (adjusted for inflation), according to UBS, a bank. So should emerging markets now worry that oil prices will carry on rising above $100, or that they will tumble below $50? The answer is yes. Get our daily newsletter Upgrade your inbox and get our Daily Dispatch and Editor’s Picks. Many emerging economies import oil; others export it. As a rule, higher prices hurt the first group and lower ones hurt the second. But it can be more complicated than that. Indonesia, for example, is a net importer of oil,...

What is an audit for?

AUDITS get noticed only when things go wrong. Last week British MPs issued a scathing attack on KPMG, an auditor, for failing to avert the collapse of Carillion, a contracting company. South African authorities are looking into Deloitte’s audit of Steinhoff, a retailer. PwC, another auditor, could face a court-damages verdict for hundreds of millions of dollars for not spotting fraud at Colonial Bank, a failed American lender. It is also fighting a $3bn lawsuit in Ukraine and a two-year ban in India. Investors are also waking up to audits. They almost never vote against management’s choice of auditor. But last month over a third of shareholders at General Electric, an industrial conglomerate, voted against the reappointment of KPMG. Investors in Steinhoff are suing the company and Deloitte...

American firms reveal the gulf between bosses’ and workers’ pay

HOW much should company bosses be paid relative to their employees? It depends who you ask. Plato argued that the richest members of society should earn no more than four times the pay of the poorest. John Pierpont Morgan, a banker from America’s gilded age, reckoned that bosses should earn at most 20 times the pay of their underlings. Investors today hold chief executives in vastly higher esteem. According to new filings submitted to the Securities and Exchange Commission (SEC), America’s largest publicly listed firms (those worth at least $1bn) on average paid their chief executives 130 times more than their typical workers in 2017. The figures are being disclosed by firms in their financial filings for the first time this year. Get our daily newsletter Upgrade your inbox and get our Dai...

As Tesla’s share price falls, it becomes an inviting takeover target

A RECENT tweet from Elon Musk, the boss of Tesla, an electric-car firm, shows footage of a Model X undergoing rollover testing. The SUV is propelled rapidly sideways on a trolley before encountering a sand trap that stops it suddenly, tipping the car. The Tesla teeters between ending up on its roof or settling back on its wheels. It is an apt metaphor for a firm hovering between fulfilling its promise and succumbing to financial woes. In April Adam Jonas of Morgan Stanley, a bank, said the next three months would be the “most critical time in Tesla’s history” since launching its upmarket Model S six years ago. The move from a niche in expensive electric cars to bringing battery power to the masses has been troublesome, to say the least. The firm had once hoped to be making 10,000 of its ch...

Revolut adds Ripple and Bitcoin Cash support

Fintech startup Revolut is adding Bitcoin Cash and Ripple to its cryptocurrency feature. While cryptocurrency isn’t really Revolut’s focus point, it’s a good way to get started with cryptocurrencies. If you have a Revolut account, you can now buy and hold Bitcoin, Litecoin, Ethereum, Ripple and Bitcoin Cash. Behind the scene, the startup has partnered with Bitstamp to process the transactions. Revolut currently charges a 1.5 percent fee for cryptocurrency transactions. There are currently 100,000 cryptocurrency transactions per day. Compared to a traditional cryptocurrency exchange, you can’t send or receive cryptocurrencies from your Revolut account. You don’t get a bitcoin address for instance. All you can do is buy tokens in the app. If you want to transfer those tokens somewhere else, ...

Gazprom is enjoying a sales boom in Europe

FEW firms have more power to heat up the cauldron of global geopolitics than Gazprom, the state-backed Russian energy producer. It supplies more than a third of the natural gas that Europeans use for power generation, heating and cooking, creating what many—especially Americans—see as an unhealthy dependence (see chart). It has used its strength to bully countries which are out of favour with the Kremlin, such as Ukraine and Poland. And it is engaged in a growing rivalry with American exporters of liquefied natural gas (LNG) to Europe and China, a competition which potentially adds to the world’s trade tensions. Get our daily newsletter Upgrade your inbox and get our Daily Dispatch and Editor’s Picks. The firm also revels in its bad-boy image. When its boss, Alexei Miller, was put on...

Markets may be underpricing climate-related risk

AS A citizen, Dave Jones worries that climate change may imperil his two children, and theirs in turn. What exercises him, as California’s insurance commissioner, is the way in which a transition to a low-carbon economy might affect the financial health of his other charges—the state’s 1,300-odd insurers. On May 8th Mr Jones unveiled an examination of how well the investment portfolios of the 672 insurers with $100m or more in annual premiums align with the Paris climate agreement of 2015, in which world leaders vowed to keep global warming below 2°C relative to pre-industrial times. The answer is, not very. In the next five years carbon-intensive firms in the insurers’ portfolios plan to produce more internal combustion engines and coal-fired electricity than the maximum the International...

The sexual harassment of flight attendants is a massive problem

OVER the past year, there have been myriad stories in the press about airlines mistreating passengers. Last April David Dao, a passenger on a domestic United Airlines flight from Chicago to Louisville, was violently dragged off the plane to accommodate crew for another flight. This month United hit the headlines again when a Nigerian passenger accused it of racial discrimination after she was thrown off a flight. But among the sea of shocking headlines about how flight crews abuse passengers, it is easy to forget that the reverse occurs far more frequently. A new study published earlier this month shows just how common the harassment of flight attendants by flyers is. The Association of Flight Attendants, the union representing American cabin crew, asked more than 3,500 flight attendants f...

Boeing’s antics at the World Trade Organisation risk a trade war

GULLIVER’S regular readers might be interested in an article in this week’s print edition about Boeing’s partial victory in a case at the World Trade Organisation, brought in retaliation for subsidies that the European Union is alleged to have given Airbus, its European planemaking rival.  On May 15th the WTO’s final appeals body upheld parts of a previous ruling, finding that the European Union wrongly provided subsidies to Airbus to develop new aircraft. That, it concluded, had hit sales of Boeing’s jets. As soon as the WTO gives the go-ahead America will have the right to impose retaliatory tariffs on EU imports. Trade experts warn they could be the highest in the WTO’s history. Get our daily newsletter Upgrade your inbox and get our Daily Dispatch and Editor’s Picks. But this cou...

McKinsey manages to get itself sued for racketeering

MOBSTERS, gangsters and bent cops have all been tried under America’s Racketeer Influenced and Corrupt Organisations (RICO) Act. Might consultants be next? McKinsey, a management consultancy, is being sued under the law by Jay Alix, the founder of AlixPartners, a competitor in the field of bankruptcy advice. Mr Alix alleges that McKinsey knowingly misled courts in order to land clients. The firm denies any wrongdoing. Bankruptcy is lucrative, for those doling out the advice. According to Debtwire, a data provider, corporate bankruptcies generated $1.3bn in fees in 2016, with lawyers taking home over half, and the rest going to consultants, accountants and financiers. McKinsey is a relative newcomer: it set up its restructuring arm, which turns around companies in financial distress, in 201...

Toyota takes a winding road to autonomous vehicles

UBER’s fleet of autonomous vehicles has been parked up since one of its self-driving cars struck and killed a woman in Tempe, Arizona in March. That death highlighted once again the industry’s rush to develop self-driving cars. Waymo, a sister company of Google, plans to launch a robotaxi service in Arizona this year. General Motors says it will launch a fully autonomous taxi service, using cars with no steering wheel or pedals, in an American city in 2019. Volkswagen will make autonomous vehicles available through its new ride-hailing service, Moia, in 2021. Ford says it will be mass-producing fully autonomous cars by then, too. But not every carmaker is going at the same speed. Toyota, one of only three car companies that sells over 10m vehicles a year, has made no equivalent commitments...