Companies in the news ... and how they were assessed
Dixons Carphone: smartphone fatigue
Talk about an August electric storm, said Ashley Armstrong in The Daily Telegraph. Nearly a third of the value of Dixons Carphone was wiped out last week after the group – one of Europe’s largest electricals and telecoms retailers – shocked the City with a surprise profit warning. The chief cause, according to CEO Seb James, was a slowdown in the UK’S smartphone market, exacerbated by “the weakness of sterling since the Brexit vote” which, he claimed, had made handsets 16% more expensive. The upshot is that punters are holding on to their phones for longer, “replacing them after 29 months rather than 24”: and that has dire consequences for the group’s bottom line. “The warning marks a sharp reversal in fortunes for the FTSE 250 group” behind Carphone Warehouse, PC World and Currys, said The Times. As recently as June, Dixons had beaten market expectations with a record £501m annual profit, confounding critics who’d derided the 2014 merger with Carphone as “two drunks propping each other up”. Britain’s cashstrapped consumers, it seems, are baulking at paying “£600 or more for a smartphone”, said The Observer. The ever-optimistic James, who retains a sizeable City fan club, reckons this month’s Apple iphone 8 launch will reignite the market. Along with other board members, he has been snapping up the bombed-out shares.
Dalian Wanda: mounting pressure
Beijing’s “tightening control” on capital outflows overseas is already making itself felt in London’s property market, said Donny Kwok and Clare Jim on Reuters. Last week, the giant Dalian Wanda conglomerate, run by one of China’s richest men, Wang Jianlin, abruptly scrapped plans to buy into Nine Elms Square in Battersea, one of London’s high-profile residential developments. Fortunately for the seller, the Ftse-listed developer St Modwen, two of Hong Kong’s largest property developers, C.C. Land Holdings and Guangzhou R&F Properties, stepped into the breach and bought the £470m 10-acre site. These are troubling times for Wanda, whose international “empire-building” has been “visibly reined in this year” after attracting the attention of China’s regulators, said Don Weinland and Hudson Lockett in the FT. “The company is the latest to be hit by rumours of a disappearing or detained chairman.” Wanda has dismissed reports that Wang has been forbidden to leave China as “vicious rumours”. But a 10% dive in shares of the group’s Hong Kong unit indicates that nervous investors clearly aren’t convinced.
UK bookies: endangered cash cow
Britain’s gambling sector has seen “several happy unions of late” as players scramble to pool their positions in a rapidly consolidating market, said Rob Davies in The Observer. The latest would appear to be GVC, owner of brands including bwin and Sportingbet: it has been “sidling up to Ladbrokes like a prime racing stud eyeing a comely mare”, in hopes of reviving a previously shelved deal worth up to £3.6bn. What is really agitating Britain’s bookies is the threat to “the industry’s cash-cow”, fixed odds betting terminals, ahead of a likely clampdown on maximum stakes in the Government’s forthcoming gambling review. Those odds have shortened following a new report by the Gambling Commission indicating that more than two million people in Britain are addicted to gambling or at risk of developing a problem. For once it seems “the house might lose”.