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(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Huawei Technologies Co.’s founder Ren Zhengfei warned in an internal memo the company is at a “live or die moment” and advised underutilized employees to form “commando squads” to explore new projects. Workers who fail will have their salaries cut every few months and may lose their jobs, the billionaire said yesterday.Since May, Huawei has occupied the uncomfortable position of being both an established global technology brand and a member of the United States Entity List, which bars it from trading with American suppliers. Despite a series of 90-day reprieves, the latest of which came yesterday, the uncertainty caused by American sanctions has already cost the company a great deal. Even if Huawei is eventually brought in from the cold, the impact of this summer’s upheaval will be widespread and painful.The most immediate of Huawei’s losses is the international smartphone market. The company’s internal estimates show it expects to sell 60 million fewer phones in 2019 than it would have done without the U.S. impositions. In 2018, Huawei grew its mobile shipments by 34% to 206 million, according to IDC data, and in the first quarter of 2019 its pace accelerated to a 50% improvement while rivals Samsung Electronics Co. and Apple Inc. both saw shrinking sales. By the second quarter, partially affected by U.S. sanctions, Huawei’s growth had been slashed to 8.3%.Having successfully penetrated the European mobile market, Huawei was on a path to becoming the world’s biggest phone vendor, however the loss of Google’s Android, the brains inside its handsets, and the related Play Store app ecosystem made Huawei devices undesirable outside of China.Ren warned in his memo that redundant staff need to find a way to make themselves useful.“They either form a ‘commando squad’ to explore new projects -- in which case they could be promoted to company commander if they do well,” he wrote. “Or they can find jobs in the internal market. If they fail to find a role, their salaries will be cut every three months.”Read more: Huawei’s Founder Wants an ‘Invincible Iron Army’ to Fight U.S.The consumer division is, according to Huawei itself, its growth engine. Accounting for 45% of its revenue last year, the business that sells phones and other gadgets is instrumental to Huawei’s future health, and it’s taken a substantial reputation blow from all the allegations and sanctions levied against Huawei. That won’t be repaired anytime soon.On the same front is Huawei’s loss of software engineering time as it’s had to scramble to create a potential Android substitute. In the wake of the U.S. ban, the company switched to 24-hour days, working as many as 10,000 developers across three shifts and three offices to eliminate the need for American software and circuitry. Huawei ended up hurrying its HarmonyOS out this month, just to demonstrate it can code its own operating system, though it convinced very few people that it has anything approaching an Android alternative waiting in the wings.Less quantifiable but still significant will be the talent drain that Huawei suffers from the tarnishing of its global reputation and the overwork that’s resulted from its efforts to recover. The company has downsized its workforce in response to its new circumstances.Ren wrote that the company’s priorities are for employees to make “meritorious deeds” and for management “to promote outstanding employees as soon as possible and infuse new blood to our organization.”In explaining the fresh extension to Huawei’s reprieve from U.S. sanctions, Commerce Secretary Wilbur Ross said that some American telecoms are “dependent” on Huawei tech and need time to wean themselves off it. So while the Washington authorities are giving Huawei a little more breathing room, the company’s situation is still very much precarious, as its founder has indicated.Without the U.S. trade intervention, Huawei would be threatening Samsung for the crown of the world’s most prolific smartphone vendor and it would be capitalizing on its lead in 5G technology instead of counting the cost of lost customers. The company remains in a strong position, but the dynamism of its growth and the luster of its cutting-edge technology have both been diminished by the measures taken by the American government.To contact the reporters on this story: Vlad Savov in Tokyo at firstname.lastname@example.org;Gao Yuan in Beijing at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Peter Elstrom, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Kim Sung-joo was seemingly handed a poisoned chalice two years ago when he was appointed chair of South Korea’s National Pension Service — the world’s third-largest pension fund. The sovereign fund, which has Won700tn ($578bn) under management, had just been embroiled in a corruption scandal that led to the jailing of Mr Kim’s predecessor as well as South Korea’s former president Park Geun-hye and Lee Jae-yong, heir-apparent to the Samsung group. Now the NPS is embarking on a drive to boost foreign assets — a move that will see it hunt for hundreds of billions of dollars in offshore deals over the next five years — and Mr Kim is at pains to reassure that worries over undue influence from South Korea’s political and business elite are in the past.
Trump said Cook "made a good case" that tariffs could hurt Apple, given that Samsung's products would not be subject to those same tariffs. Tariffs on an additional $300 billion worth of Chinese goods, including consumer electronics, are scheduled to go into effect in two stages on Sept. 1 and Dec. 15.
President Donald Trump began the month by delivering a kick to the collective gut: a tweet promising to extend tariffs to all Chinese imports to the US. This week brought a second blow, with signs that the trade war with China is finally weighing on the global economy — and denting the prospects of many parts of the tech sector. The latest twist in the 18-month trade war was at least tempered by a presidential concession, with the White House saying that smartphones and laptops would be among the consumer products temporarily exempted from the new levy.
OnePlus, China’s upstart smartphone maker, is preparing a global rollout of its new 5G device this year, as it looks to expand in the US and win more customers from Huawei, Apple and Samsung. OnePlus has managed to buck the smartphone market’s decline this year, after winning rave reviews for its latest device, the 7 Pro, which sports a pop-out camera and smooth-scrolling technology.
No one wins a trade war in the end. A spat between South Korea and Japan, triggered by a row over compensation for wartime forced labour, will be no exception. In the latest escalation, both countries have removed one another from trade whitelists and South Korea’s national pension fund has threatened to disinvest from Japanese companies.
Apple Inc. (NASDAQ: AAPL ) shares traded higher on Wednesday despite the company missing consensus analyst expectations for iPhone revenue in its fiscal third quarter. The iPhone revenue miss comes after ...
Here is how the Chinese tech giant has been grappling with its U.S. blacklisting on its home turf. An exclusive look inside Huawei's sprawling campus in Dongguan, China and a sit-down interview with CEO Ren Zhengfei.
Despite all the talk about Services and other devices, Apple (NASDAQ: AAPL) stock is still all about the iPhone. Apple needs iPhone sales to be at least stable while it works to develop other sources of long-term revenue growth. Unfortunately for the owners of AAPL stock, one recent survey suggests Apple's massive trove of global iPhone users may be getting less loyal to AAPL. iPhone Loyalty DroppingSource: Shutterstock A recent survey by BankMyCell found that only 73% of iPhone users who are upgrading their devices in 2019 plan to get another iPhone. While that is still relatively high, it's the lowest iPhone loyalty rate since 2011. In fact, loyalty to the device has apparently dropped 18 percentage points since 2018.The same study found that 26.2% of iPhone X users switched to a phone made by another company when they upgraded their devices. Only 7.7% of Samsung (OTC: SSNLF) Galaxy 9 users switched to iPhones during that same stretch. In the month of June alone, BankMyCell found that 18% of iPhone users who upgraded their devices had switched to Samsung.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn the most recent reported quarter, 53.5% of Apple's total revenue came directly from iPhone sales. Sure, Apple's news, video, watches and its other projects will slowly diversify the company's revenue. But make no mistake about it: Apple stock price will continue to be mostly based on iPhone for the foreseeable future.Apple has a critical iPhone upgrade cycle ahead in 2020, when it is expected to launch its first family of 5G network phones. Every product cycle is important for Apple, but establishing its dominance in the 5G era will be particularly critical. If the BankMyCell numbers represent a trend and not an outlier, now is a terrible time for Apple to be losing the loyalty of its customers. Critical Upgrade Cycle AheadApple's efforts to acquire the Intel (NASDAQ: INTC) 5G modem business for $1 billion is evidence of just how seriously Apple is taking 5G upgrades. However, Wedbush analyst Daniel Ives says the owners of AAPL stock shouldn't simply write off the next 12 to 18 months before 5G arrives. Ives says there are roughly 330 million iPhones due to be upgraded worldwide at some point in the next 12 to 18 months. If Apple retains just 73% of those users rather than 90%, the company's bottom line may be meaningfully lowered, hurting AAPL stock."The installed base of Apple remains the golden jewel and key to the valuation and our bullish thesis, as with 900 million active iPhones worldwide and roughly 1/3 of those poised to be in the window of an upgrade over the next 12 to 18 months, Cupertino now has a key opportunity to catalyze these consumers into their next iPhone with a trifecta of new smartphones set to be unveiled in the early September timeframe," Ives says.He is optimistic about the upcoming upgrade cycle, despite his concerns about the U.S.-China trade war."So far the bark is worse than the bite on the China iPhone front, although there clearly is a discernible nationalistic move among some in China to buy from domestic suppliers," Ives says. AAPL Stock Is Still CompellingThe good news for the owners of AAPL stock is that the stock is the most defensive play of all the U.S. tech giants. Apple stock trades at a forward PE of just 16.6, a slight discount to the S&P 500's average PE ratio of 17.5. During the last reported quarter, Apple said it returned $27.5 billion to its shareholders. Apple said it would spend another $75 billion on buybacks in the following quarter.The $1 billion Intel deal wouldn't even put a dent in Apple's massive $225 billion cash pile. Apple has one of the healthiest balance sheets in the world. The company has nearly unlimited financial flexibility.Even if Apple loses more iPhone users than expected over the next few quarters, it's difficult to make an argument that Apple stock price is overvalued. However, it may become equally difficult to argue that it's undervalued.Apple reported a 5% decline in total revenue last quarter. Those who are bullish on AAPL stock argue that plateauing iPhone sales are fine as long as Services picks up the slack. If Apple can better monetize its existing customers, it can grow its high-margin Services revenue without iPhone unit sales growth.But that bull case is contingent on Apple retaining its existing customers. If iPhone users start jumping ship, not even an increase in average revenue per user can offset the losses.For now, I'd recommend AAPL stock investors take the latest iPhone upgrade data with a grain of salt. The company is still doing just fine and has a major product launch cycle coming in September. But in the longer term, if declines in iPhone loyalty become a trend, it could be a major cause for concern for the owners of Apple stock.As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 5G Stocks to Connect Your Portfolio To * 7 Stocks to Sell This Summer Earnings Season * 6 Upcoming IPOs for July The post iPhone Loyalty Trends Are Bad News for Apple Stock appeared first on InvestorPlace.
Yahoo Finance's Heidi Chung, Sibile Marcellus, and Dan Roberts discuss Samsung's new bitcoin capabilities on its smartphones.