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Softbank’s $4bn profit on US tech bets hasn’t impressed investors | Nils Pratley | Business

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Would you trust Masayoshi Son, the man who did so much to promote and finance the WeWork silliness, to take huge short-term punts on your behalf on the value of US technology stocks?

Retail shareholders in Softbank, the Japanese firm founded and led by Son, clearly do not. Softbank’s value fell by almost $9bn (£6.8bn), or 7%, on the Tokyo market on Monday after the company was revealed over the weekend to be the “whale” that had been making big bets on US tech stocks using derivatives. Softbank’s buying of call options – the right to buy a financial instrument at a fixed price at a future date – was reported by the FT to have reached a notional value of $30bn over the summer.

Retail investors’ scepticism, note, was despite Softbank’s paper profits from its adventure reportedly having reached $4bn, a credible figure given the performance of the tech-heavy Nasdaq in the last couple of months. Ordinary owners of Softbank stock, it seems, believe either that Son’s gambling luck won’t hold, or that the company shouldn’t be behaving like a drunken hedge fund.

On both scores, one can sympathise. Son lost $70bn in the turn-of-the-century dotcom crash, so his record on timing market movements over short periods does not impress. Second, Softbank, after the WeWork debacle, in which it was joined by outside investors in its Vision fund, was meant to be clawing its way back towards normality by sifting its portfolio for disposals.

The “whale” escapade suggests Son prefers the fun of leveraged bets and short-term risk-taking; and an absurdly loose governance set-up seems to allow him to seek such sugar rushes. He cannot, though, grumble if his own investors are appalled by the absence of anything resembling a long-term strategy. Rather like the WeWork escapade, the whole affair feels wildly out of control.

Dip in the pound doesn’t suggest no-deal panic

A fall of 1% in sterling in a single day is a notable event, but let’s not overstate matters. The pound had risen 15% against the dollar since the middle of March when, amid Covid confusion, international investors were seeking sanctuary in the US currency.

Given that backdrop, any fresh threat of a no-deal Brexit was likely to have some level of impact. The same applies with the euro, against which the pound was down by about 1% on Monday at €1.12. But, again, context is important: sterling remains roughly in the middle of a tight range that has prevailed since the middle of May.

None of which is to deny that currency markets would throw a tantrum if no deal grew likely in the days before 15 October, the prime minister’s declared deadline to finalise a free trade agreement. Dutch bank ING, for example, forecasts the pound would fall to parity with the euro without a deal.

Financial markets are often terrible at reading political events, one must always remember – they certainly failed to see Brexit coming. But, for now, and despite Downing Street’s apparently aggressive manoeuvre over the Northern Ireland protocol, we can say this: investors still expect a Brexit deal.

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Primark: the strong get stronger after the lockdown

A post-lockdown recovery in trading at Primark had been flagged by owner Associated British Foods, and arrived slightly stronger than advertised. Operating profits at the cheap clothing chain will be “at least” at the top end of the £300m-£350m range mentioned in July.

Do not, though, expect a V-shaped experience to be the norm in retail-land. The pandemic is widening the gap between the industry’s winners, such as Primark and Next, and the rest. Pent-up demand is flowing disproportionately to places where it was previously strong; note Primark’s claim that its market share in the UK in the past four weeks was the highest it has ever been for the time of year.

Primark is exceptional in any case because it doesn’t sell online. It is a poor guide to the general climate. That is also why AB Foods’ relaxed stance on city centres – “not remotely dead” – should also be treated with care. That’s easy for it to say: it’s big, lives also in out-of-town retail parks and can afford to wait for tourists and office workers to return. Not every retail chain is in that happy position.

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Sky to open network of high street stores across UK | Business

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Sky is to launch a network of high street stores across the UK, saying it wants them to become “social hubs for shoppers”, with the first one opening in Liverpool on Monday despite tier 3 coronavirus restrictions.

The plan to start a network of stores, each of which will have a music venue-style “access all areas” stage to host various interactive experiences for customers, comes amid the closure of hundreds of shops as the pandemic takes its toll on the retail sector.

“We are proud to see our shops opening at a challenging time for the UK high street,” said Stephen van Rooyen, the chief executive of Sky UK and Europe. “We’ll bring service, innovation and convenience all in one place, under one roof, at a time when keeping people connected has never been more important.”

The media group said: “All shops will operate in line with the government’s Covid-19 safety measures, including strict social distancing, mandatory face masks and hand sanitiser available across the sho.”

In May, Virgin Media said it would shut its last 53 retail stores and disappear from the UK high street. The cable TV company, which had 140 stores in 2016, said the pandemic had accelerated a shift towards online customer service.

Sky said the stores would differ from those of its rivals, going beyond simply operating as a sales point for its TV, mobile and broadband packages. It wants them to become a new social hub for shoppers.

It plans to launch about five of the stores this year, with further openings in 2021. The shops will also offer a mobile repair service through a partnership with iSmash, the technology repair chain that has 31 stores in 10 UK cities.


Despite the pandemic, there is still demand among customers seeking an in-store experience, particularly as technology becomes more complex and expensive.

Many consumers buying an iPhone for about £1,000 , for example, will want to go further than a website or phone call to make sure they are making the right choice.

Last October, BT launched a revamp its 615 retail stores across the UK using its high street presence to push its goal of being viewed as a British “national champion”. The relaunch of the EE store chain – BT acquired the mobile company for £12.5bn in 2015 – with co-branding marked the first time the BT brand has been on store fronts since 2004.


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Snap results signal an online advertising ‘bonanza’ for tech companies

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Snap Inc. chief strategy officer, Imran Khan, takes a photograph on the floor of the New York Stock Exchange (NYSE) while waiting for Snap Inc. to post their IPO in New York, U.S., March 2, 2017.

Brendan McDermid | Reuters

Shares of tech companies in the advertising space rose Wednesday after Snap’s third-quarter results signaled strength in the ad market after a difficult year because of the coronavirus pandemic. 

Shares of Snap surged more than 21% in premarket trading as investors continued to rally around the company’s unexpected third-quarter earnings beat and strong advertising momentum. Shares in tech companies Pinterest, Facebook, Google-parent Alphabet and Twitter were also up. 

Deutsche Bank analysts wrote in a Wednesday note Snap’s results implied a “bonanza for online advertising.” 

Snap Chief Business Officer Jeremi Gorman said Tuesday the company saw positive momentum in the ad market, including in brand advertising, which was weak during the early days of the coronavirus pandemic. Snap’s ad revenue growth was 52% year-over-year. 

“We saw the beginnings of a recovery from brand advertisers, and continued resilience from direct response advertisers, reinforcing our confidence in the long-term positioning of our business,” Gorman said on the company’s earnings call. 

Deutsche Bank analysts said the results bode well for companies in the online ad space, and especially for Twitter, because of Snap’s comments on the acceleration of spend on the brand side.

Twitter’s business is especially driven by brand advertising and would see the benefit of a rebound in that spend. It’s viewed as a place for advertisers to appear alongside big events and sports, and less a place for direct-response advertising, in part because of technological issues it’s faced with the suite of products it uses for that capability. Twitter stock was up more than 5% Wednesday morning. 

Shares of Pinterest also jumped more than 8.5% in premarket trading, after both Goldman Sachs and Bank of America upgraded shares of the company to buy from neutral due to Snap’s earnings beat. Both of the firms said it viewed Snap’s strong quarter as a good sign for Pinterest. 

Snap’s results signal how advertisers are behaving in their spending on platforms outside of the behemoths of Facebook and Google. 

“Our field checks, along with Snap’s 3Q results, suggest that advertiser demand strengthened over the course of the quarter, particularly for smaller platforms like Pinterest, Twitter, and Snap,” Goldman Sachs said in the note. 

Facebook shares were up nearly 5% pre-market, while Google’s were up nearly a percent. 

–CNBC’s Michael Bloom contributed reporting.

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Apple iPad Air 2020 review: A big upgrade

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Apple iPad Air 2020 review: A big upgrade