Companies in the news
... and how they were assessed
Amazon: Scamazon?
Apple may have won the race to become the world’s first trillion-dollar fully public company, but snapping at its heels is Amazon, whose market cap hit $884bn as investors cheered record quarterly sales last week. Cue another tax row in Britain, said Catherine Neilan in City AM. The latest figures show that while profits at Amazon UK Services trebled to £72m in 2017, it incurred a corporation tax bill of only £4.6m – down by a third on the year before. Once share options for employees were deducted, the sum paid was a trifling £1.7m. “Scamazon” is “making a mockery of the British government” even as it sucks “the life out of high streets”, said The Times. Jeff Bezos’s “acolytes” insist the retailer is complying with the letter of the law. What about the spirit? Embarrassingly for ministers, it turns out that the Government spends way more on Amazon’s web services (£11.8m in Q1 alone) than the behemoth pays in tax. “We might get angry with Amazon”, but “frankly we should be just as angry” with the politicians who let them get away with it, said Richard Murphy in The Guardian. We have no idea how much Amazon actually makes in Britain because so much business is processed through its Luxembourg-based operating company. Without transparency on all Amazon’s UK activities, we cannot hope to have “a meaningful debate” about its tax affairs.
IWG/WEWORK: office politics
“Maybe IWG, the serviced office company that used to be called Regus, should give its tenants free beer or throw a few cheese-tasting parties,” said Nils Pratley in The Guardian. “The gimmicky stuff has worked wonders” for IWG’S “fashionable” (though still loss-making) US rival, Wework, which is said to be seeking new funds valuing it at an astonishing $35bn. In contrast, dowdy old IWG – a profit-making, quoted UK firm that has been around for 30 years – “cannot land a buyer willing to pay £2.8bn-ish”. Six different suitors have lined up to buy IWG in the past few months, and all have walked away, said Patrick Hosking in The Times. The rejection is a dent in the pride of the company’s founder, Mark Dixon – a “former hotdog salesman”, who clearly had a “rosier view” of IWG’S worth than his potential buyers. As a 25% shareholder, he’s also now £141m poorer on paper: shares dived 21% this week on news of the no sale. IWG still has fans in the market who say Dixon should keep his eye on the long game – particularly as the company also has “its own funky, millennial-friendly shared offices offshoot”, dubbed Spaces. If Wework is really worth $35bn, then IWG is in possession of “a hidden gem that the stock market is undervaluing”.
RBS: alive and awake
“It is a staple of the three-hanky weepy: friends and family huddling around a comatose patient. Then the fingers start to twitch. Eyelids flicker.” Something rather like that affecting scene is now in play at Royal Bank of Scotland, says Lex in the FT. The stateowned bank has just announced its first dividend “since the Government induced a coma” a decade ago. “Never mind that the planned payout is just tuppence”, or that RBS’S “core operation looks as frail and pale as you’d expect it to be after ten years on its back”. It is at least “awake and in the room” and, as this dividend shows, “beginning to act like a proper business again”.