Companies in the news ... and how they were assessed
Snap: fading snapshot
Most trendy tech start-ups “can withstand the red ink as long as they keep attracting more people to use their services”, said Jennifer Saba on Reuters Breakingviews. But after reporting its second consecutive quarter of disappointing results, Snap – the company behind the disappearing message app Snapchat – is worrying the market. Investors last week ignored the good news that revenue has jumped by some 150% year-on-year and focused instead on Snap’s “slowing user growth” and “widening” $443m losses. The upshot is that a third of its market value has been “erased” since its glitzy market debut in March – a poor omen for other “brand-name unicorns”, such as Spotify and Vice, currently waiting to float. Not so long ago, Snap was seen as “a feisty young challenger to Facebook”, thought capable of toppling “the social media giant from its perch”, said Rory Cellan-jones on BBC News online. That confidence now appears misplaced. Having used its “deep pockets” to buy up Instagram and Whatsapp, Facebook “has relentlessly copied any challenger it couldn’t buy” – in Snap’s case, its popular “stories” feature. It seems that the “big winners of the past decade” – Google, Amazon, Facebook and Apple – are now using their growing stranglehold on ad revenues to cement their technological lead. “Disruption is over” in the tech industry – “and Facebook won”.
J Sainsbury/nisa: convenience carry-on
When Tesco launched a surprise £3.7bn swoop on Booker in January, it jolted Britain’s grocery market “into a frenzied state of consolidation”, said Ashley Armstrong in The Daily Telegraph. Tesco’s plan to take over Booker – whose roll call of convenience shop brands includes Londis, Budgens, Happy Shopper and Premier – prompted a knee-jerk reaction; Sainsbury’s opened discussions with rival chain Nisa. Now the supermarket has performed a U-turn, announcing this week that it is “shelving” the £130m bid, potentially leaving the way free for another big player, such as the Co-op, to muscle in. Big mistake? Not necessarily, said Nils Pratley in The Guardian. “Convenience stores are the industry’s current obsession because they work well in the age of online and top-up shopping.” But the pressure is off Sainsbury’s now that the Competition and Markets Authority has rightly concluded that it needs to take “a long, hard look” at the proposed Tesco/booker combo. If Nisa is still available “when the dust settles”, fine. But if it “hops off” to the Co-op, it’s “not a disaster” for Sainsbury’s. The latter currently has better things to do: “like ensuring the promising reboot of Argos continues”.
Uber/benchmark Capital: Kalanick sued
The recent ousting of Uber founder Travis Kalanick was supposed to draw a line under the ride-hailing company’s “tumultuous” year, said Katie Roof on Techcrunch.com. Yet the soap opera continues. Following reports that Kalanick has been plotting to regain the firm’s helm (as Steve Jobs once did at Apple), one of Uber’s earliest investors, Benchmark Capital, is now suing him for “fraud, breach of contract and breach of fiduciary duty”. Benchmark’s beef, said Business Insider, is that Kalanick has undermined the search for a new CEO and reneged on a promise to turn over Uber’s vacant boardroom seats to independent directors by delaying “signing the necessary paperwork”. Kalanick professes to be “baffled” by his former backer’s “hostile actions”. Expect more fireworks to come.