Visa Inc., the San Francisco-based payments network operator, reported a 7% increase in earnings in the fourth quarter of 2016 backed by increased payment volume as shoppers enhanced usage of credit and debit to make payments.

The company reported an earnings figure of $2.07 billion translating to 0.86 cents per share against analysts’ estimate of 78 cents per share. Last year’s fourth quarter earnings figure was $1.94 billion translating to 80 cents per share.

The earnings increase in 4Q16 was also helped by the acquisition of Visa Europe. The company reported that it processed payments of $1.8 trillion in the last three months of 2016 which is a 39% YoY increase, calculated at constant dollar basis. The company also confirmed that a large portion of this increase in payments volume is contributed by the newly Visa Europe.

However, even with the absence of Visa Europe’s figures, Visa’s payments increase was substantial. In the US alone, which is the company’s biggest market, it processed $803 million in payments in the last quarter, a Year-on-Year increase of 12%.

The US accounted for 45% of the total payments volume while Europe contributed to 20% of the total in the fourth quarter of 2016. The number of processed transactions increased 44% to 27.3 billion while cross-border payments went up 140% on an unchanged dollar basis.

The reason why payments made by Visa debit or credit cards are so important for the world’s largest payment processor’s revenue figures is because it collects a small fee for every transaction it processes.

The fee that Visa collects is usually about 2% of the transaction amount. And backed by these increased payments, the company posted revenue of $4.46 billion in the fourth quarter of 2016.
The net operating revenue for the company also rose 25% to $4.46 billion, again topping analysts’ estimates of 44.29 billion.

Alfred Kelly, CEO of Visa who took over from Charles Scharf on December 1, 2016, said, “Visa’s fiscal 2017 is off to a terrific start,” referring to the payments volume growth globally. Charles Scharf, the ex-CEO of Visa, was responsible for the company’s reunion with Visa Europe.

The company’s Chief Financial Officer, Vasanth Prabhu said, “The battle between strong business fundamentals and unfavorable exchange rate shifts will drive our results as we look ahead to the rest of FY 2017.”

MasterCard, the second largest payments processor in the world after Visa, on the other hand, reported revenues lower than analysts’ estimates primarily due to increased rebates, a robust US dollar, and increased incentives.

Visa along with its competitor MasterCard Inc., are trying to capture the market in China which is presently dominated by the government-run China UnionPay Co Ltd.
Visa affirmed its long-term commitment in China and said it would formally submit a license application to operate in China.

On the back of good revenue numbers and good future prospects, Visa’s share price climbed over 5% since the start of this year as against an increase of 2% for Standard & Poor’s index.

March 7th, 2017

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After having been the most valuable brand in the world for five straight years, Apple will have to be content with coming second best to Google, according to a report by leading valuation and strategy consultancy firm Brand Finance. Meanwhile, Denmark-based Lego dethroned Ferrari as the most powerful brand.

The annual Global 500 rankings released by Brand Finance calculate the world’s most valuable and powerful brands. The report says that Google’s monetary value witnessed an overall increase of 24% to stand at $109.5 billion at the end of last year. On the other hand, consumer electronics giant Apple saw its value dip from $145.9 billion at the end of 2015 to finish 2016 at $107.1 billion, allowing Google to regain the position it had last held in 2011 before Apple ended its reign at the top.

The report attributes Apple’s fall to No. 2 spot as a result of not having lived up to its billing as an innovative company. “Apple has failed to maintain its technological advantage and has repeatedly disillusioned its advocates with tweaks when material changes were expected,” the study’s authors commented. They added that the California-based company had “over-exploited the goodwill” of its customers. With the Apple Watch not having yielded the high revenues it was expected to, and no new and innovative products in sight, the study laid into Apple’s inability to “demonstrate that genuinely innovative technologies desired by consumers are in the pipeline.” With the company losing its grip on customers and an ever-increasing list of competitors in the market, Apple has its task cut out.

As for Google, the search giant “remains largely unchallenged in its core search business, which is the mainstay of its advertising income,” the report added. For a company that is already witnessing a surge in revenues, an improved brand strength score played an equally important role in helping it pip the iPhone maker by $2.4 billion. The study indicated that Google’s brand strength score had gone up by two points, which will ultimately help the Silicon Valley giant to retain customers and command a better price for its services.

Google’s parent company Alphabet reported an increase of 22% in its fourth quarter revenue, largely on account of mobile search, video ads, and its foray into uncharted territories such as cloud computing. Quarterly revenues of $26 billion and a net income of $5.33 billion indicate that the company is well placed to consolidate its position at the top.

While tech companies maintained their status as the most valuable companies, banking, telecom, retail and automobile industries have fared well, too. Amazon took the third spot with its brand value pegged at $106.4 billion. Telecommunications conglomerate AT&T was sitting firmly at the fourth position at $87 billion while Microsoft and Samsung stood fifth and sixth with their values determined at $76.3 billion and $66.2 billion, respectively. New Jersey-based Verizon came seventh at $65.9 billion, followed by Wal-Mart and Facebook at $62.2 billion and $61.9 billion, respectively. Chinese multinational banking company ICBC rounded off the top 10 with a value of $47.8 billion.

February 27th, 2017

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Facebook, the social media giant, reported 4Q16 revenue of $8.81 billion with Earnings per Share (EPS) of $1.31 beating market expectations of $8.51 billion with an EPS of $1.41. Moreover, its ad revenue from mobile contributed to 84% of the total revenue signaling its successful transition to the mobile platform.

Facebook reported a profit of $3.568 billion for its 4th quarter of 2016, a year-on-year (YoY) increase of 177%. Last quarter’s profit figure for Facebook was $2.379 billion. The YoY revenue for the 4the quarter witnessed a growth of 51% as against last quarter’s 56% and 59% in the second quarter of 2016.

The total revenue garnered by Facebook in 2016 was $27.6 billion. Although the revenue did slip in 4Q16 for the company, investors still were optimistic about its prospects as the share price reflected an overall increase of 0.94% on the day the results were announced. Moreover, the company did anticipate a lower revenue because its predicts were expected to exhaust their ad space by mid-2017.

The daily active users figure for the social media giant reached 1.23 billion in the 4th quarter, a YoY growth of 18%. However, despite these positive numbers, Facebook’s user growth in the US and in Canada is beginning to slow down. In these countries, it added only 2 million monthly and daily users in the last quarter of 2016 reaching 231 million monthly users and 180 million daily users.

Yet, the stickiness factor (which measures the percentage of monthly users who visit daily) remained unchanged for this last quarter at 66% which is a positive sign.

The huge ad revenue collected by Facebook is indicative of the success of its ad targeting and user engagement activities. The average revenue per user (ARPU) in Canada and the US was $19.81, a YoY increase of 44%. The global ARPU was a more modest $4.83, a YoY growth of 29.85%.

These high revenue figures speak of huge growth potential that Facebook has in terms of its ability to get increased revenue per user in the already established Western markets and its growing market in developing nations.

Mark Zuckerberg, the CEO of Facebook, when queried on the status of the company’s video content strategy, said that it is intending to start with the shorter format of video content.

He added that the company needs to construct a sustainable revenue sharing model so that professional creators in that segment can be compensated adequately. However, he did make a note of the video and audio sharing via Facebook messenger that is used by 400 million users every month.

The last quarter was fairly tumultuous for Facebook after being hit by allegations that fake news built on its platform helped Donald Trump win the US Presidential election.

Experts feel that the key to Facebook’s growth and sustenance in the market will be to leverage its expansion plans in the chat segment via Whatsapp and Messenger along with virtual reality through collaboration with Oculus.

Moreover, they feel that Facebook has a strong and robust core business strength that it can rely on to continue its dominance in social media.

February 20th, 2017

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Philadelphia Transit WorkersTransit workers in Philadelphia have gone on strike after failing to reach a deal with the Southeastern Pennsylvania Transportation Authority (SEPTA), raising concerns that voters’ movement could be impacted on Election Day.

A union, which represents around 4,700 workers, called out its members on a strike early Tuesday. It accused the SEPTA of not yielding to demands it had been making for several month, even when such were unlikely to cost it any money.

Union members will not be reporting for regular duty on Tuesday, but for picket duty, according to TWU Local 234 President Willie Brown.

“Despite months of constructive and innovative proposals from our side of the table, management has refused to budge on key issues including safety issues that would save lives and not cost SEPTA a dime,” Brown said.

The union president revealed that the transit workers had voted to go on strike after the midnight of October 31 if no new contract agreement was reached.

“There is no new agreement, so we are on strike,” he added.

The strike will shut down bus, trolley and subway transportation, which provides roughly 900,000 rides on an average day. But it will not impact services of commuter rail lines outside the confine of the city.

The SEPTA provides transportation for about 60,000 students in public, private and charter schools, which are to remain open even as the strike goes on.

Schools, businesses and hospitals have been making alternative plans since last week in preparation for a likely transit shutdown.

The two sides have not been able to reach an agreement on matters related to pension and health care of workers, according to union officials. The workers are also looking to iron out issues such as schedules, driver fatigue and break time.

In a statement released after the commencement of the strike, SEPTA expressed its willingness and readiness to continue with the contract talks if the workers’ union was ready.

SEPTA spokesperson Andrew Busch told NBC 10 that, by leaving the bargaining table, Brown “walked away from a contract offer that would have provided his members pay raises, enhanced pension benefits, maintained health care coverage levels and continued job security, while also remaining fair and affordable for the taxpayers and riders who fund SEPTA,”

City officials are worried that the strike could make things hard for potential voters who would want to use public transport for commuting to and from work on Nov. 8 while also creating time to vote in the process.

Following the announcement of the strike, Democratic governor of Pennsylvania, Tom Wolf, urged the two sides to continue their discussions toward reaching a deal. In a statement, he said the “inability of TWU and SEPTA to reach an agreement is devastating” for hundreds of thousands residents of the state who rely on SEPTA for movement to and from work every day.

Meanwhile, SEPTA has stated that it could reach a tentative agreement with the transit workers’ union so that their strike does not hinder intending voters from casting their ballots on the Election Day.

The union approved a two-year contract in 2014, preventing a threatened walkout, according to the Associated Press. SEPTA workers had embarked on a six-day strike in 2009.

November 23rd, 2016

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Money down the drainBoth public officials and the payday loan industry warned a couple of years ago that if the Financial Conduct Authority (FCA) were to impose new rules and regulations on payday lenders then it would impact businesses across the country, and lead to the losses of thousands of jobs.

After two years of reining in the payday loan industry, are the prognostications right? A simple yes would suffice.

According to a new report from the Consumer Finance Association (CFA), the number of payday loans declined from 10 million in 2014 to 1.8 million in 2016. Also, the number of payday lenders has decreased from 240 to a tepid 60. Overall, payday lending has gone down as much as 70 percent. Many of these loan companies that offer extra cash have moved their business online to cut cost and increase revenue.

Russell Hamblin-Boone, CEO of CFA, said in the report, using new figures from the FCA, that a majority of short-term, high-interest loan companies and stores have exited the British market completely.

New regulations, controls and restrictions have been installed since 2014 as part of stringent efforts to shield borrowers from exorbitant fees, additional charges and debt traps. With the new rules in place, borrowers have not had to incur extra fees. Also, interest rates are not above 0.8 percent a day.

Simply put: much of the new regulations in place meant that payday loans aren’t as profitable.

“Margins are very small now and we have seen a reduction in the market as a result of the regulation and price control,” he said in a statement.

Is there any way that payday lending can return to prominence and serve the most vulnerable? Hamblin-Boone thinks it can, and it starts with rewarding good payday loan borrowers.

“What we need to look at to prevent financial exclusion is rewarding people with good borrowing behavior regardless of the type of lending they choose,” he said. “If a payday customer pays back a loan well, why isn’t the credit reference agency saying, ‘well that’s good’, enabling them to move into more mainstream products?”

Despite the crackdowns and the reduction in the number of payday loans, the Financial Ombudsman is still receiving thousands of complaints. Over the last 12 months, the organization received 3,216 complaints, which is up 177 percent from the previous year. And this is being attribute to consumers knowing their rights and being more aware about unscrupulous activities of certain lenders.

This comes as a new report has found that more than 500,000 British consumers have had their payday and automobile finance loans written off after city officials discovered “unfair practices” by a debt collection firm known as Motormile Finance.

The FCA confirmed that these customers would have approximately $500 million worth of debt written off because the debt buyers, which acquire debt from payday loan companies in the hopes of recovering the owed funds, failed to perform the necessary research and due diligence, which then “led to unfair and unsuitable customer contact for recovery of those sums.”

“We have agreed this package, and previous action, to protect the customers of Motormile from unfair practices. We have worked closely with Motormile, and are now satisfied with their progress and the way that they will address their previous mistakes,” said Jonathan Davidson, director of supervision for retail and authorization at the FCA, in a statement.

Motormile issued an apology, and thanked FCA for informing them of the matter.

November 21st, 2016

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HondaNet profit of Honda Motor Co. surged during its fiscal second quarter on the back of strong sales in China, making the company raise profit forecast for the full year.

The Japanese automaker (HMC) revealed on Monday that its net profit soared to 177 billion ($1.7 billion) during the July-September quarter, a jump of 39 percent from the same period a year ago. This was driven by enhanced demand for its sport utility vehicles (SUVs) in China, it second-largest market.

Honda says it now expects to sell 4.98 million vehicles in the fiscal year ending March 31, up from the previous estimate of 4.92 million.

Operating profit is now expected to come in at 650 billion yen for the year, up from an earlier estimate of 600 billion. Net profit forecast for the fiscal full year has been boosted to 415 billion yen ($3.96 billion), up from the estimate of 390 billion yen provided in May.

Demand for the carmaker’s Vezel and XR-V SUV models was high during the quarter, with deliveries of each one raised by over 50 percent in China. This has caused the company to start considering further production expansion in the world’s largest auto market, with work to begin on a new plant in 2016.

The market in China was significantly boosted by the introduction of a tax cut for vehicles with smaller engines last year. Sales of smaller-engine vehicles accounted for a large part of the 26 percent expansion recorded by Honda in the Chinese market during the last quarter.

“Their redesigned models, especially the small crossovers, are giving them a strong boost,” explained Seiji Sugiura, a Tokai Tokyo Research Center analyst. “We expect the Chinese government to take some action, further supporting the industrywide growth, and Honda will continue to benefit.”

The sales tax cut, introduced after a slump in China’s automotive market last year, has led to a 15 percent jump in passenger-vehicle sales to 16.75 million units in the first three quarters of 2016. It is set to expire at the end of this year, but the government of the country is considering a possible expansion, according to Bloomberg.

Huge demand in China helped Honda to bounce back from a disappointing April-June quarter when its profit slumped by 6 percent, hurt by massive recalls of defective airbags at its supplier Takata Corp.

The Takata airbag inflators, which use ammonium nitrate to fill airbags, can deploy too forcefully in some cases, blowing a metal canister apart and spraying vehicle occupants with shrapnel. They have been linked to at least 15 deaths across the globe.

Honda said it was still unable to fully anticipate total costs of the airbag recalls.

The improved profits could have been even greater if not for a stronger domestic currency that dragged down sales to 3.26 trillion yen ($31.1 billion), nearly 10 percent down from a year ago.

The yen has appreciated roughly 15 percent against the American dollar in 2016, negatively impacting the repatriated earnings of Japanese exporters.

The Tokyo-based automaker said its operating income was cut by 178 billion yen during the first half of its fiscal year as a result of foreign exchange changes.

Honda sales have climbed 3.3 percent in the U.S. this year.

November 3rd, 2016

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CETAThe European Union and Canada have finally signed a protracted free trade agreement that will see them open up their respective markets to more competition with hopes of driving growth and generating jobs.

The trade deal was signed in Brussels on Sunday by Canadian Prime Minister Justin Trudeau and heads of EU institutions, including European Council President Donald Tusk, European Commission President Jean-Claude Juncker and Slovakian Prime Minister Robert Fico.

The signing of the Comprehensive Economic and Trade Agreement (CETA), which required the approval of all 28 EU countries, had previously been called off after Wallonia in southern Belgium decided to prevent its approval by the small European country through the use of veto power. The French-speaking minority of only 3.6 million people was concerned over increased competition in the agricultural sector.

Wallonia, a region which has lost a substantial number of industrial firms, withdrew its veto after the country’s government promised to protect farmers, among other concessions. This cleared the road for approval of the deal by regional parliament on Friday.

“Today’s decisions demonstrate that the disintegration of the Western Community does not need to become a lasting trend,” Tusk said. “Free trade and globalization have protected hundreds of millions of people from poverty and hunger. The problem is that few people believe this.”

The pact still has to be ratified by the legislature of each member state, giving room for opposition to further protest against it. It will cut tariffs on industrial goods as well as on farm and food items once ratified. It will also open up certain areas of the services sector, including finance and cargo shipping.

Some believe that the CETA deal in a way clears the road for a larger deal with the United States called the Transatlantic Trade and Investment Treaty (TTIP). Talks on the bigger deal have virtually stalled, with certain politicians in Germany and France describing it as dead. The proposed deal has been a major bone of contention with labor unions and other groups.

Protesters believe these deals will mainly protect the investments of multinational companies. Europeans, like many Americans, fear that domestic jobs and wages could be negatively impacted.

Several dozens of anti-globalization activists protested outside the venue of the CETA signing on Sunday, clashing with police and hurling red paint at the building.

CETA advocates, on the other hand, say the trade deal will boost volume of Canadian-EU trade by 20 percent, as reported by Reuters. It will also add €12 billion ($13 billion) and C$12 billion ($9 million) to the EU and Canadian economies respectively each year.

The trade agreement will enable Canada to reduce the level of its reliance on the U.S. as an export market. The country will be able to send more beef, pork and wheat to the European market.

The EU may also see the deal as a boost to its ability to still be able to make deals, having recently been hit by Britain’s decision to leave the bloc.

Partial implementation of the deal could begin early next year, if approved by the European parliament. This, Trudeau said, would unlock 98 percent of the agreement’s key measures.

Full implementation requires approval by both national and regional parliaments.

October 31st, 2016

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