Author: Charlotte Gill

How much money does Mark Zuckerberg donate to charity?

Posted on by Charlotte Gill

Despite America’s ongoing economic pressures, it appears that the country’s rich have thrown caution to wind somewhat this past year and parted with more philanthropic donations than they did in 2012. The Chronicle of Philanthropy reports that the top 50 donors contributed a combined total of $7.7bn in 2013, a four percent gain on last year’s lesser sum.

Heading the pack was Mark Zuckerberg and wife Priscilla Chan, whose donations exceeded the likes of Bill and Melinda Gates and Warren Buffett

Heading the pack was Mark Zuckerberg and wife Priscilla Chan, whose donations exceeded the likes of Bill and Melinda Gates and Warren Buffett, along with various others who have featured high on up the list for some time now. The California couple donated 18 million Facebook shares worth in excess of $970m to the Silicon Valley Community Foundation (SVCF), an organisation charged with identifying philanthropic solutions in the surrounding area.

The donations have boosted the organisation’s credentials by quite some margin, so much so that it has come to rank amongst the US’s largest foundations. The SVCF’s financial report reveals that the organisation gave more to charities than any other community foundation in the country.

The SVCF is primarily concerned with offering advice and guidance to leaders in the region on how it is they can engage with philanthropic causes and emerging challenges. The organisation’s end goal is to build and energise a community of philanthropists who can together works towards a common good. “From initial vision to implementation, we help Silicon Valley’s most innovative and globally-recognised companies achieve their unique philanthropic goals,” according to the SVCF’s website.

Zuckerberg’s contribution to the SVCF is indicative of the growing pains that have befallen the area in recent years as a result of the tech boom. As numerous tech companies have come to call Silicon Valley their home, rents have skyrocketed and long-time residents have been displaced, in effect pushing some to the brink of poverty.

The Facebook founder’s donations are indicative of a wider trend in the region, this being that many are choosing to contribute a great deal more to those who have been disadvantaged as a result of their being there.

Sony considers kissing PC division goodbye

Posted on by Charlotte Gill

Once one of the leading and stylish PC brands, Sony’s Vaio computer division has struggled in recent years as part of the move by consumers towards tablets and other mobile devices. Such has been the decline in the business that Sony is in discussions with a Japanese investment fund over its potential sale.

In a profit warning announced on Wednesday, Sony revealed that it expected a loss for the last year of Y110bn. Just last month the company saw its credit rating downgraded by Moody’s. In light of the downward turn in results, the company is planning on a major restructuring of its operations. This includes the selling off of the Vaio PC unit and the cutting of around 5,000 jobs.

In a profit warning announced on Wednesday, Sony revealed that it expected a loss for the last year of Y110bn

The Vaio division has been making considerable losses in recent years, and the rumoured sale for just Y50bn to Japan Industrial Partners reflects a business that has declined massively since its heyday a decade ago. At the beginning of the millennium, Sony Vaio’s were by far and away the most stylishly designed PC computers, coming close to the hugely popular, if expensive, laptops from Apple.

The company is struggling to remain relevant in a world dominated by the likes of Google, Apple and Samsung. While it plans to remain in the smartphone, television and video games businesses, Japan’s largest electronics company has needed to gain more focus in recent years.

The announced restructuring is welcome, and a focus on living room-based consumer electronics – where it is widely praised – is clearly something that it should stick with. However, the smartphone division, Sony Ericsson, is still muddled. Unsure whether to stick with Google’s Android OS or Microsoft’s Windows platform, the business has seen little uptake from consumers that prefer a more consistent offering.

Bernanke’s last call: Fed to slash stimulus programme by $10bn

Posted on by Charlotte Gill

Regardless of a recent spat of volatility in emerging markets, the Fed is reducing its stimulus programme by a further $10bn, bringing the value of asset purchases back to $65bn per month.

“Beginning in February, the committee will add to its holdings of agency mortgage-backed securities at a pace of $30bn per month rather than $35bn per month, and will add to its holdings of longer-term Treasury securities at a pace of $35bn per month rather than $40bn per month,” the institution said in a statement.

[I]t can be surmised that the Fed believes the losses in emerging market assets to be of insufficient scale to trouble the US economy

The Fed’s announcement neglected to mention the turmoil in emerging markets, though the taper will no doubt up the pressure on countries such as Turkey and South Africa, whose central banks have already raised interest rates to bolster their enfeebled currencies. From this it can be surmised that the Fed believes the losses in emerging market assets to be of insufficient scale to trouble the US economy.

The reduction is equal to December’s $10bn cut and many analysts expect the reductions to continue at quite the same pace from hereon, in effect bringing the institution’s bond-buying programme to a close by year’s end.

Although the Fed recognised a good few weaknesses, namely a slower recovery in the housing sector, below-par inflation and weaker-than-expected jobs data, the taper is evidence that the institution believes the economy is on track.

“The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate.”

The decision will be Bernanke’s last as chairman, as he prepares to hand over his role to Janet Yellen in February. The changeover will mark the end of Bernanke’s eight year term as chair, through which he has negotiated the worst financial crisis since the Great Depression and succeeded in returning the economy to a reasonable standard of health.

Top 5: Google’s year in acquisitions

Posted on by Charlotte Gill

Nest

Google kicked off the new year with a $3.2bn splurge on Nest Labs, manufacturers of the Learning Thermostat and pioneers of the “conscious home”. The deal will see the technology giant enter consumers’ day-to-day lives like never before, and gain a foothold in the emerging smart home market.

Waze

At the mid-point of last year, Google acquired the crowdsourced GPS navigation app Waze for $966m, and introduced a social element to its mapping business. Google Maps now integrates its comprehensive mapping network with real-time traffic reports, and has cemented its standing as the market leader in this space.

[T]he partnership has since turned sour, culminating in the app’s removal from the App Store and Google Play in January

Bump

Google shed of $30m for the file-sharing application Bump last September; however, the partnership has since turned sour, culminating in the app’s removal from the App Store and Google Play in January. The app was introduced in 2009 and allowed users to share smartphone data by physically bumping their phones, a feature that has since become somewhat redundant.

Boston Dynamics

Google made a number of acquisitions in the robotics space last year, the most notable being Boston Robotics, a company responsible for the design and construction of US military robots. Given that the Google’s past efforts have focused principally on software, the acquisition marks an unusual step into the world of robotics hardware.

Makani Power

Google’s burgeoning interest in the clean tech space can best be seen in the May acquisition of Makani Power. The green energy start-up, which specialises in building airborne wind turbines, has already received upwards of $15m investment from Google and appears to be closely in keeping with the company’s commitment to clean energy.

Davos update: Google Chairman Eric Schmidt talks job automation

Posted on by Charlotte Gill

Google Chairman Eric Schmidt addressed leaders at the World Economic Forum in Davos yesterday, where he delivered a speech warning new technologies could threaten increasing numbers of middle class jobs. He also questioned whether workers have the right skills to compete in an increasingly tough market.

Schmidt argued that as technology evolves, the workforce needs to be equipped with the necessary skills. Currently, many workers are lacking the technological expertise to be re-hired, a problem Schmidt believes is likely to endure for the next two to five decades.

“It’s a race between computers and people, and people need to win,” he told the crowd, according to the BBC.

“As more routine tasks are automated this will lead to much more part-time work in caring and creative industries. The classic 9-5 job will be redefined.”

Tech companies have long since bemoaned the lack of a skilled workforce from which to hire from

The idea that rapidly advancing technologies will be a big threat to jobs in the future is by no means a new one – but the fact that a senior tech exec like Schmidt is raising the issue is significant.

Tech companies have long since bemoaned the lack of a skilled workforce from which to hire from, and some have even advocated for a change in the skills young people are taught in basic education.

Conversely, Schmidt insisted that it would be a huge mistake not to take full advantage of the efficient new technologies being developed. Jobs must be created.

For the former Google CEO, increasingly jobs will be created by smaller firms, and therefore these entrepreneurs need more support in order to continue hiring- otherwise the situation would only get worse.

“It’s clear to me that we can get full employment, but wages are still depressed,” said the chairman.

Schmidt’s analysis is somewhat worrisome because in a way it officialises the trend of companies striving to cut wage bills, and replacing staff with automation technologies whenever possible.

As a result wages as percentage of economies are likely to continue decreasing, which will ultimately mean demand in the economy will remain low.

Davos update: leaders discuss Europe’s long-term competitiveness

Posted on by Charlotte Gill

A panel, comprising members of the political spectrum, business community and public servants gathered at the World Economic Forum (WEF) meeting in Davos yesterday to discuss the ways in which European leaders can craft a long-term strategy for competitiveness. As the region moves tentatively on from crisis response mode and onto stability, a plan must now be decided upon if Europe is to return to its former glories.

“We need to keep the momentum on reforms,” said José Manuel Barroso, President of the European Commission, who stressed that leaders must keep that sense of urgency if they are to continue to instrument growth and improvement. “There may be a temptation to sit back and relax,” he added, “yet there remains a great deal of work to be done on the structural front.”

You’re talking about a pretty tough situation that we’re coming out of, and we’re only just emerging

“You should not underestimate the capacity of people to learn from their own mistakes,” said Angel Gurría, Secretary-General of the OECD. “Europe is rebuilding itself, redesigning itself, reinventing itself, strengthening itself, and this is happening all the time. You’re talking about a pretty tough situation that we’re coming out of, and we’re only just emerging.” The Secretary-General admitted that there are still a lot of downside risks and institutional issues for Europe, but was confident that Europe was heading in the right direction.

Italy’s Minister of Economy and Finance, Fabrizio Saccomanni, encouraged the region’s leaders to “reopen the chapter of economic and institutional reforms” aside from fiscal and monetary policy, believing that there remains a great deal to be done yet.

The panel also conceded that Europe still has a competitiveness problem on the energy and digital front. President and CEO of Siemens Joe Kaeser said of the supposed European recovery, “are we really there yet?” and referenced the unemployment problem as testament to the region’s many structural shortfalls. “Is it really a recovery or is it about easing the pain?”

Although the panel agreed that Europe’s situation is improved from that of a year previous, they also agreed that there are numerous structural inadequacies that need to be addressed if the region is to up its competitiveness.

Davos update: Abbott argues for reduced government spending

Posted on by Charlotte Gill

The G20 conference will be landing in Brisbane this November, and Prime Minister Tony Abbott used his speech at the WEF to outline what he perceived as a chance for Australia to promote free-market economics across the world.

[Abbott] told the audience at Davos that Australia will be making the case for reduced government spending

He told the audience at Davos that Australia will be making the case for reduced government spending and the development of sustainable private sectors as well.

“Even though the crisis was the gravest economic challenge the world has faced since the 1930s, it’s important to remember that it was not a crisis of markets, but one of governance,” said Abbott. “Then it was the G20 which helped to coordinate the actions which prevented another Great Depression.

“The challenge as we continue to work through the weaknesses that brought on the crisis is to strengthen governance without suppressing the vitality of capitalism. The crisis after all has not changed any of the basic laws of economics.”

Abbott outlined his vision of a G20 in which business activity is key.

“Stronger economic growth is the key to addressing almost every global problem. Stronger growth requires lower, simpler and fairer taxes that don’t stifle business creativity,” he said.

“And stronger growth requires getting government spending under control so that taxes can come down and reducing regulation so that productivity can rise. In the decade prior to the crisis, consisitent surpluses and a preference for business helped my country, Australia, to become one of the world’s best performing economies.”

Abbott took the Davos stage after Iranian President Hassan Rouhani, and called for an end to the on-going violence in Syria.

Davos update: Iran President’s charm offensive at WEF today

Posted on by Charlotte Gill

Hassan Rouhani, Iran’s new and supposedly Western-friendly President, spoke today at the World Economic Forum in Davos of his hopes that the country would be welcomed back into the international fold. In a much-anticipated speech, President Rouhani also spoke of his desire that Iran would be able to develop certain industries through foreign investment, now that sanctions were being eased.

Highlighting the global financial crisis, he said that it was better for increased cooperation between countries to solve economic issues. “The events of the last six years have shown that nobody can live alone. No power can regard its dominance as permanent. Globalisation amid the financial crisis has shown that we’re all on the same boat.”

[H]e said that it was better for increased cooperation between countries to solve economic issues

He added that the recent deal with global leaders of the country’s nuclear development was a “major development”*. “Iran’s relations with Europe will be normalised. Relations with the United States have entered a new phase. Last month for the first time politicians from both countries have negotiated and exchanged views and have made decisions to resolve differences in relation to the nuclear issue.”

* For more on the deal, read the latest issue of World Finance. 

Davos update: Matt Damon receives Crystal Award at WEF

Posted on by Charlotte Gill

Award-winning US actor Matt Damon was given an award at the World Economic Forum (WEF) meeting today in Davos for his social and environmental work. The star has been widely praised for his founding of the charity Water.org, which helps struggling communities around the world build sustainable water supply systems.

Speaking after receiving the Crystal Award, Damon talked of the urgent need to address the global water supply problem during the coming years. “For me, ensuring that every human being has access to safe water and the dignity of a toilet – two incredibly basic and inextricably linked requirements for survival – is one of the most urgent and pressing causes in the world today. The good news is that there are solutions that work. I’m convinced that we can overcome the global water crisis in our lifetime.

I’m convinced that we can overcome the global water crisis in our lifetime

The WEF often sees attendees from outside the typical political and business spheres. Campaigning musician and lead singer of U2 Bono is frequently seen at the event, alongside other, perhaps more conventional, figures.

Another of the attendees this year is former US Vice President Al Gore, who is expected to discuss climate change. Gore is likely to urge political and business leaders to step up efforts in tackling global warming, after many countries have stepped back from ambitious targets in recent years.

Cutting costs: IBM bosses to forgo bonuses after poor results

Posted on by Charlotte Gill

Following a seventh consecutive quarterly decline in sales, IBM executives and senior management are to forgo their bonuses for the past year.

Although the company is still the world’s biggest computer services provider, IBM’s performance has dipped lately, as customers have distanced themselves from hardware and resorted instead to cloud-computing networks. In response, the company, under CEO Ginni Rometty’s watch, has pushed to enter the low-margin but seemingly lucrative market of cloud-computing, and is steadily gaining momentum in this space.

The decline will no doubt spur Rometty on her way to restructuring the business

“While we made solid progress in businesses that are powering our future, in view of the company’s overall full year results, my senior team and I have recommended that we forgo our personal annual incentive payments for 2013,” said the company’s chairman, president and chief executive officer in a statement.

The American multinational’s revenues for the year, at $99.8bn, stopped two percent short of the last, and revenue for 2013’s fourth quarter slipped five percent. The clearest indication of waning demand for hardware – if ever there was need of one – is a dip of 26.1 percent in revenues for the company’s system and technology unit, which was the worst hit of all.

The decline will no doubt spur Rometty on her way to restructuring the business. The overhaul has so far resulted in excessive job cuts – or “workforce-rebalancing” –and an effort on the part of IBM to gain a foothold in the thriving cloud services market, which is forecast by IBM to be worth as much as $200bn by 2020.

On January 17 the company announced plans to commit over $1.2bn to “significantly expand its global cloud footprint,” which represents something of an earnings opportunity for the ailing IT giant.

“As we enter 2014, we will continue to transform our business and invest aggressively in the areas that will drive growth and higher value. We remain on track toward our 2015 roadmap for operating EPS of at least $20, a step in our long-term strategy of industry leadership and continuous transformation,” said Rometty.”

Shell issues profit warning

Posted on by Charlotte Gill

Royal Dutch Shell has warned that its fourth quarter results have fallen short of past performance, due to weak industry conditions, higher exploration expenses and lower downstream volumes. Based on a current cost of supplies basis, the Shell’s fourth quarter earnings are expected to amount to approximately $2.9bn, though are yet to be officially announced until the company’s annual report is made public on January 30.

“Our 2013 performance was not what I expect from Shell. Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery,” said the company’s CEO Ben van Beurden in a statement.

[S]hell’s full year earnings are expected to amount to approximately $16.8bn, far short of 2012’s $27bn

The company’s earnings, if expectations are anything to go by, represent a huge shortfall on the quarter previous, which came in at $4.5bn, and are 73 percent short of 2012’s fourth quarter, which equated to $5.6bn.

The company statement went on to add that its earnings have also been impacted by a weak Australian dollar, as well as the security situation in Nigeria, which remains a challenge to this very day.

The announcement went on to estimate that net capital investment in the fourth quarter was $15.8bn, bringing the full year total to $44.3bn. Elsewhere, cash flow from operating activities through the fourth quarter is believed to be $6bn, and the full year somewhere in the region of $40.4bn.

Although the audited results will only be made public once the company’s annual report is released, Shell’s full year earnings are expected to amount to approximately $16.8bn, far short of 2012’s $27bn and shorter still of 2011’s $28.6bn.

The news comes only a fortnight after van Beurden’s term as CEO began, and many will now be watching closely to see how the company veteran, who has been at Shell since 1983, will attempt to initiate a turnaround from hereon.

Yahoo COO Henrique de Castro dismissed by CEO Marissa Mayer

Posted on by Charlotte Gill

A mere 14 months on from his appointment, Yahoo COO Henrique de Castro has been dismissed following what many consider to be a largely unsuccessful stint in the role. The dismissal, which is effective as of today, will leave the company with a huge hole in its executive suite and a fat severance package to boot.

“I made the difficult decision that our COO, Henrique de Castro, should leave the company. I appreciate Henrique’s contributions and wish him the best in his future endeavors,” wrote the company’s Chief Executive Marissa Mayer in a confidential internal memo issued this morning and obtained by Recode.

The executive’s early departure was widely anticipated, however this is not to say it will come on the cheap

A report by Adweek last September commented on the mounting pressure for de Castro to deliver better results with regards to Yahoo’s advertising. Mayer poached de Castro from Google, also her former workplace, to boost the company’s underwhelming advertising business and keep apace with its competitors. However, display advertising revenue, which accounts for 40 percent of company sales, equated to $421m in 2013’s third quarter, representing a shortfall of seven percent year-on-year.

The executive’s early departure was widely anticipated, however this is not to say it will come on the cheap. The former executive’s employment letter reads that in the event if his “termination” he will be granted “an additional award of restricted stock units with a target valuation of $20,000,000.”

De Castro’s appointment to Yahoo was a real landmark signing by Mayer, and no doubt some will begin to call into question her thinking now the deal has turned sour. The former Google exec negotiated a $62m pay package over the course of four years on joining Yahoo in July, and whilst his early exit means his earnings will fall short of this, his severance pay combined with the $39.2m he earned in cash and stock in 2012 amounts to almost $60m worth.