Companies in the news ... and how they were assessed
Samsung Electronics: ditch the pilot?
“There’s a new king in the semiconductor business,” said The Economist. After almost a quarter-century as the world’s largest chipmaker, Intel has had the title stolen by Samsung, following “a surge in demand for the memory chips it produces for phones and household gadgets that connect to the internet”. The South Korean titan is currently riding so high that it even “leapfrogged Apple as the world’s most profitable technology company” last quarter, with net earnings of $10bn, said Jonathan Soble and Jeyup S. Kwaak in The New York Times – not bad for an outfit whose “de facto leader”, Lee Jae-yong, is in jail awaiting the verdict of a bribery trial that has also enmeshed the country’s former president, Park Geun-hye. If convicted, he faces up to 12 years in jail. As well as coping with “the legal problems of its controlling family”, Samsung also appears to have shrugged off the debacle surrounding its “fire-prone” smartphone, the Galaxy Note 7, which had to be mothballed last year. South Korea’s new president has vowed “to weaken dynastic control” of the conglomerates, or “chaebol”, that dominate the Korean economy. “A big question for Samsung’s future”, therefore, is “whether the Lee family can maintain its hold – and whether that would be good for business”. On the evidence so far, Samsung “appears to be doing just fine without its boss”.
Paddy Power Betfair: novice stakes
Investors in Paddy Power Betfair “were nursing heavy losses” this week on news that the bookie has been forced into a leadership change at a crucial moment in its history, said Dominic Walsh in The Times. Just 18 months after masterminding a bold merger between Paddy Power and Betfair to create a £7bn Anglo-irish powerhouse, Breon Corcoran has abandoned “Betty Power”. He leaves behind a transformed landscape: the 2016 deal triggered a wave of further consolidations in the sector. It seems that Corcoran, 46, “wants a shot” at another big job and worries that he needs to bag one before he turns 50, said Kate Burgess in the Financial Times. Investors worry he’s quitting before he’s completed the integration job. After 16 years in the two halves of the business, Corcoran’s longing “for fresh adventures” is understandable, said Nils Pratley in The Guardian. But his replacement, Worldpay boss Peter Jackson, has no experience of the gambling world beyond four years as a non-executive. There’s “no golden rule that bookies must appoint hardened bookmakers”, but you can understand why investors took fright. “Paddy Power Betfair is the biggest online gambling firm in the world on some measures, and its new jockey is merely a promising newcomer.”
Tesla: insatiable appetite
Following the razzmatazz of the unveiling of the Model 3, Tesla’s first mass-market electric car, the firm is getting down to brass tacks, said the FT. This week Tesla boosted its cash reserves by another $1.5bn in a bond sale: it’s the first time that founder Elon Musk has turned to the market for an issue of straight debt to fund his “electric-car dream”. Tesla certainly needs the cash, said James Dean in The Times. Having “burnt through $13m a day in the second quarter”, it is expected “to go through” a total £2bn this year as it ramps up production of the Model 3 to cope with demand. Musk aims to make 500,000 vehicles next year, “a target that many analysts believe is unachievable”.