Companies in the news ... and how they were assessed
Netflix: $20bn gut punch
After a barnstorming run, which caused shares to more than double in the year to date, Netflix investors have been dealt “a nasty surprise”, said Hannah Boland in The Daily Telegraph. Shares in the TV and movie streamer, which in late May “surpassed Disney as the most valuable media company in the world”, slumped by more than 14% on Monday after it missed its own forecasts for subscriber growth by more than one million users. Netflix’s “stock lives and dies on subscriber growth”, said Ashley Rodriguez on Quartz, and “it has now missed on its forecast three times in the past ten quarters” – enough to thoroughly spook some investors. One analyst called it a “gut punch”. Netflix’s content bill “has ballooned” of late: it expects to spend a “staggering” $10bn on programming and marketing this year. That splurge will pay off if it can keep adding new punters, but this “miss” – combined with “a thoroughly dull quarter”, content-wise – casts doubt on its ability to withstand competition from rivals including Amazon, Hulu, HBO and Disney, which will shortly join the streaming fray. The anxiety knocked $20bn off Netflix’s value, said Jennifer Saba on Reuters Breakingviews. Doubtless “that will comfort Disney and Comcast as they wage costly battles for Fox and Sky”. But with 130 million customers already glued to its screens, Netflix will still take some catching.
Unilever/space NK: bidding for glamour
There’s growing unrest among Unilever’s British investors over the Anglo-dutch consumer group’s plan to move its HQ to the Netherlands, said the Financial Times. Far less controversial are reports that Unilever is in the running to buy the high-end beauty chain Space NK, which has been put up for sale by its US private-equity owner, Manzanita Capital. The “beauty apothecary”, which began life under Nicky Kinnaird, its founder, as a single store in Covent Garden, now has some 60 shops in Britain and 29 in America, said Laura Onita in the London Evening Standard. Manzanita (itself owned by the Fisher family, who started Gap) has owned a 90% stake since 2007, but is now in “advanced talks” to sell. Acquiring Space NK would mark a decided departure for Unilever, whose toiletry brands – Dove, Sure and Vaseline – are not renowned for their glamour. But the company is “thought to be looking to move into the more upmarket beauty arena”. Last year, it was rumoured to be tabling a bid for Estée Lauder.
Apprenticeships: back to the drawing board
Official data published last week revealed a 34% drop in the number of people starting apprenticeships in the first nine months of 2017-18, said Ben Marlow in The Sunday Telegraph – “yet more evidence that the deeply unpopular apprenticeship levy isn’t working”. At this rate, the Government’s target of “three million starts” by 2020 looks “fanciful at best”. Employers large and small dislike the scheme, arguing that it is “too complex to navigate, and inflexible, making it hard for companies to source the training they need”. The boss of one FTSE 100 company reckons it is “so useless and ineffective that he simply writes off the millions of pounds he is forced to pay every year”. British firms are suffering “a huge skills crisis” and “employers are desperate to plug the gap”. But that won’t happen if the levy continues in its present form. “The Government must swallow its pride and rethink the whole system.”