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Apple’s coronavirus problem



Coronavirus is an increasingly dark cloud over Apple.

TF International Securities analyst Ming-Chi Kuo said this week that Apple may have iPhone production problems in China. Apple’s main iPhone 11 production facility in Zhengzhou was supposed to reopen this week, but it was delayed at least a week over continued coronavirus fears.

Meanwhile, Apple said this week that it would only reopen five of its stores in China. Around 35 other stores across the country are still closed, with no word on when they’ll reopen.

Also this week, the Federal Trade Commission (FTC) said it wants to review acquisitions that several tech giants, including Apple, have made in recent years. And in a worrisome report, security firm Malwarebytes said malware threats are increasingly targeting Mac users.

Coronavirus impact

Coronavirus, which has infected tens of thousands of people globally, is affecting iPhone production in a big way, TF International Securities analyst Ming-Chi Kuo said this week. He told investors that Apple manufacturing partner Foxconn was planning to reopen a plant in Zhengzhou this month, but was forced to delay it because of coronavirus fears. Pegatron, another Apple manufacturing partner, was able to open its iPhone 11 production facility in Shanghai earlier this month, but has delayed the reopening of another iPhone manufacturing facility in Kushan. It’s still unclear when Apple’s China production will return to full capacity.

What about iPhone 12?

Apple has stopped sending engineers to China to work on the company’s next iPhone, supply chain site Digitimes reported this week. However, the site’s sources said that Apple’s next iPhone, which could be known as iPhone 12, will still be introduced on time later this year. The site noted that Apple will begin iPhone 12 production in the summer, and as long as coronavirus is under control by then, Apple should be able to produce enough devices.

Foxconn responds

Coronavirus has significantly affected Foxconn, which is expected to be operating at only 50% capacity by the end of February, and 80% capacity by the end of March, Reuters reported this week. In a statement, Foxconn called the Reuters claim “not factual,” but it didn’t say what its current and future production capacity would be. The company’s comment spawned more questions than answers about the broader impact that coronavirus is having on Foxconn’s business.

An eye on Apple Store

Apple shut down its China retail stores in response to Coronavirus earlier this month and said they would all reopen on February 10. However, Apple said this week that only five stores have reopened, and they would operate with reduced hours from 11 a.m. to 6 p.m. local time. Apple didn’t say when its other China stores would open.

HomePod still trails Echo, Home

Apple is still behind its top competitors in the smart speaker market, researcher Strategy Analytics said this week. Apple shipped 2.6 million HomePod speakers in the fourth quarter, earning the company just 4.7% market share. Amazon shipped 15.8 million Echo devices during the period, giving it the top spot with 28.3% market share. Google’s slate of Home devices had 13.9 million shipments and a 24.9% market share. Several Chinese companies, including Baidu, Alibaba, and Xiaomi, made up the rest of the field.

FTC looks at Apple acquisitions

The FTC is investigating acquisitions by major tech companies, including Apple, Facebook, and Microsoft, made from 2010 to 2019. In a statement, FTC chairman Joe Simons said the inquiry will allow the agency to “evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition.” The FTC will only look at acquisitions the companies made that were too small to be reported to regulators.

Mac malware is growing

Apple’s Mac is becoming a bigger target for hackers, security firm Malwarebytes said this week in its 2020 State of Malware Report. Malwarebytes found 11 malware threats per Mac device, compared to 5.8 threats per Windows machine. Most of the threats facing Mac users are adware programs that bombard users with annoying ads. In its report, Malwarebytes said it’s time for Mac users to “finally get serious” about their security.

One more thing…

For the first time ever, Amazon has topped Apple in a study measuring how strong of a connection customers have with top brands. The study, which was released this week by branding agency MBLM, found that Amazon has the strongest “brand intimacy” of any major company, topping Disney and Apple, which landed in the second and third spots, respectively. Brand intimacy, a measure of consumers’ emotional connection to a company, matters because companies with stronger emotional bonds with customers generate more revenue and profits than those with less of a bond. You can read more about it here.

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Reeling World Economy Slammed by Dangerous Disinflationary Shock



(Bloomberg) — The sinking global economy is suffering through a colossal disinflationary shock that could briefly push it into dangerous deflation territory for the first time in decades.With many national economies all but shutting down in an effort to contain the coronavirus, prices on everything from oil and copper to hotel rooms and restaurant take-out are tumbling.“A powerful disinflationary tide is now rising,” said Joseph Lupton, global economist at JPMorgan Chase & Co.That’s worrying because it could lengthen what may be the deepest recession since the Great Depression. Ebbing pricing power makes it harder for companies that piled on debt in the good times to meet their obligations. This could prompt them to make additional cuts in payrolls and investment or even default on their debts and go bankrupt.While weak or falling prices may seem like an unalloyed good for consumers, a widespread deflationary price decline can be deleterious for the whole economy. Households hold off buying in anticipation of ever lower prices, and companies postpone investments because they see limited profit opportunities.Even after the coronavirus crisis eases, the scars from the shutdown — elevated unemployment, shattered consumer and company confidence, and staggered returns to work — may keep price pressures in check, prompting central banks to hold interest rates at rock-bottom levels for a protracted period.“They’re at zero for at least the next two years,” Ethan Harris, head of global economic research for Bank of America Corp., said of the Federal Reserve.Monetary LargessFurther down the road, though, there’s a chance that all the monetary largess — coupled with a massive outpouring of government debt to pay for measures to fight the virus — could spawn a build-up in price pressures.“It’s possible that the response to this over the longer term could have an inflationary consequence,” former New York Federal Reserve Bank of New York President Bill Dudley told an April 2 webinar organized by Princeton University. “But in the near term, it’s very definitely on the disinflationary/deflationary side.”Lupton and his fellow JPMorgan economists forecast that their global consumer-price index will temporarily fall below its year-ago level sometime around the middle of 2020, the first time that’s happened in many decades.Much of that is due to plunging oil prices. Even with their rebound last week on reports of potential production cutbacks, they’re still down about 55% since Jan. 1.But other prices are also slipping, including for services. They have long been resistant to the downward tug that prices for internationally traded goods have been subject to, but now service-sector businesses are being slammed by the shutdowns. Lupton sees worldwide core inflation — excluding food and energy costs — falling below 1% and says there’s a risk it could stay there.Disinflationary Force“The overwhelming disinflationary force is quite large,” Diane Swonk, chief economist at Grant Thornton in Chicago, told Bloomberg Radio on April 3.While industrial countries — with the exception of Japan — avoided falling into deflation in the wake of the 2008-09 financial crisis, they’re entering this one with inflation already at depressed levels.Perhaps the world’s biggest source of deflation right now is China, where producer prices registered a 0.4% decline in February compared with a year ago after rising 0.1% in January. That’s a drag on the price of goods being shipped overseas from the world’s biggest trading nation.But China isn’t the only country in pain.Chain restaurants across Japan have rolled out discount plans for takeout menus, including Yoshinoya Co., which serves bowls of beef on rice and is running a 15%-off campaign.Read more: Deflation a Real Risk for Japan, Former BOJ Economy Chief SaysThe British Retail Consortium reported on April 1 that shop prices fell 0.8% in March, the biggest decline since May 2018, following a 0.6% February drop.And in the U.S., domestic air fares plunged by an average of 14% between March 4 and March 7, according to booking site Average revenue per hotel room plummeted 80% during the March 22-28 week from year-ago levels, hospitality-data firm STR reported.“In terms of our business, COVID-19 is like nothing we’ve ever seen before,” Marriott International Inc. Chief Executive Officer Arne Sorenson said in March 19 video. “For a company that’s 92 years old, that’s borne witness to the Great Depression, World War II and many other economic and global crises, that’s saying something.”Investors seem to be looking for a long period of very low inflation, according to trading in inflation-protected securities, although some analysts caution the readings may be distorted by a dash for cash.Even before the crisis, monetary-policy makers were worried inflation was too low for the good of their economies. Now they have even more reason for concern.“Deflation cannot be ruled out, but I refuse to make an estimate,” European Central Bank Governing Council member Robert Holzman said. “If deflation is due to a slump in the real economy, it will be difficult to solve this through monetary-policy instruments alone.”Some economists think it’s inflation, not deflation, that’s the problem.“What will then happen as the lock down gets lifted and recovery ensues, following a period of massive fiscal and monetary expansion?” London School of Economics Emeritus Professor Charles Goodhart and Talking Heads Macroeconomics founder Manoj Pradhan wrote for VOX on March 27. “The answer, as in the aftermath of wars, will be a surge in inflation, quite likely more than 5% and even in the order of 10% in 2021.Former chief White House economist Jason Furman said faster inflation should be welcomed, not worried about.“I don’t think we should be afraid of getting inflation,” Furman, who is now a professor at Harvard University, told Bloomberg Radio on April 2. “If we get inflation that would be good. That would be a good sign that we have adequate demand.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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The first American small-batch whiskey made specifically for French consumers



When Ashley Donahey began thinking about a future producing her own bourbon whiskey, she was still gainfully employed at the State Department as an adviser to the U.S. ambassador-at-large for war crimes issues. Two Worlds Whiskey, the brand she launched this month, was still years away, but in some respects its creation was an inevitability. The former diplomat’s passion for bourbon stemmed from her Kentucky upbringing in a family whose heritage is at once intimately tied to the American Revolution and to the early days of whiskey distilling.

In 1777, the Marquis de Lafayette set sail for America to assist the American rebels in their fight for liberty. Donahey’s fifth great grandfather, William Downard, was among the rebels in Pennsylvania who went on to become victorious, thanks in part to France and the commitment of Lafayette. After moving to Kentucky after the war, Downard began distilling whiskey just as two French brothers, Jean and Louis Tarascon, had begun making a novel style of whiskey, one aged in charred oak barrels following the centuries-old tradition of aging cognac. A swift sensation among the French cognac aficionados living farther down the Ohio River in New Orleans, the new style earned the name bourbon whiskey as a nod to the French House of Bourbon—or so the legend holds.

Ashley Donahey, founder of Two Worlds Whiskey
Jesse Morgan

While it might be considered the ultimate homegrown American spirit,
bourbon’s origins are inextricably connected to France. Similarly, so were
Donahey’s family ties. During World War II, her grandfather fought along the
Normandy coast all the way to Cherbourg, where he remained until liberation. As
traumatic as wartime was, he looked back on his time living in France with
great fondness.

Growing up with such family memories was significant in leading Donahey down an academic and professional path—first studying French linguistics, then working in global diplomacy and business—that would permanently anchor her to France.

As for her hometown spirit, that affection stayed with Donahey throughout her career in Washington and became the foundation of a germinating idea. With even greater urgency following the radical shift in the U.S. administration in 2017, the idea became the catalyst for a total career change.

Two Worlds Whiskey is touted as the first “luxury” American whiskey crafted exclusively for France.
Jesse Morgan

That’s when she left behind a steady six-figure salary, moved to France (the No. 1 consumer of whiskey per capita), and enrolled in INSEEC business school to acquire the skills to launch a brand of her own. By 2018, Donahey was working as a brand ambassador for La Maison du Whiskey in Paris, traveling across France running tastings for bartenders, shop owners, and whiskey lovers. That’s when the startling realization hit: The French are well versed in whiskeys from Japan, Scotland, and Ireland, but they are virtually unaware of their country’s historic contributions to the creation and popularization of American whiskey.

“If they had any experience with bourbon, it was with entry-level mass market brands,” Donahey explains. “But they certainly didn’t know about the French ties nor did they have access to the best bottles.”

Donahey knew then that her brand would seek to reinforce the historic alliance between the U.S. and its first ally, France, and offer flavor profiles tailored to the sophisticated French palate.

Named for Lafayette, the “hero of two worlds,” Two Worlds Whiskey will produce several ranges, crafted with the help of The Spirits Group, a woman-run distilling consultancy in Louisville. La Victoire, the kickoff range launched with a preorder crowdfunding campaign, is a small-batch bourbon made from barrels of straight bourbon whiskey distilled and aged in the United States and bottled in Cognac. L’Alliance, the second range, also named for one of the three ships Lafayette sailed to reach America, will be distilled and aged in the U.S. but finished in France through secondary maturation in French wine or spirits casks.

From left: Donahey with chief barrel officer Monica Wolf and master blender Ashley Barnes.
Jesse Morgan

But it’s the third range, L’Hermione, that Donahey says makes her project completely novel. “It involves importing American whiskey distillate and doing the primary maturation in France, in French oak barrels, made by French coopers, in the South of France where the climate is similar to that of Kentucky,” she explains. “When it happens, it will be the very first French-American whiskey.”

That last range, the most ambitious arm of the project, will require
building an aging cellar in Provence and, as a result, bringing on outside
investors (thus far, the operation has been self-financed). For now, Donahey,
who is based in Paris, is working on selling the first 2,107 bottles of the
first batch—in a pandemic.

“Within 72 hours, I went from hosting a sold-out launch party at a prestigious venue in Paris, with guests flying in as far as Kentucky and Kenya, to hosting an impromptu Facebook Live in my living room,” Donahey says. “But I am grateful that I was still able to launch digitally and allow my supporters to reserve their bottles from the safety of their homes. I think everyone needs something to look forward to right now.”

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Food companies have 7 days to remove cargo from ports



CARGO owners, which include major food companies, now have seven days to withdraw reefers from Manila’s congested ports before these are forfeited in favor of the government. 

Joint Administrative Order No. 20-01 dated April 2 expedites the release of refrigerated containers and dry vans that have piled up in Manila ports amid the enhanced community quarantine (ECQ). 

The order, published in a newspaper on Sunday, included a list of  companies whose cargoes remain at the Manila ports. 

Under the order, cargo not withdrawn within the given timeframe will be considered abandoned or forfeited, and disposed of by the Bureau of Customs.

The order said that a list of reefer containers pending at ports, including the name of the consignee, will be published in government websites, social media, and leading newspapers to inform the public of the immediate need to withdraw the reefers.

“The public shall be informed that non-withdrawal within seven (7) days shall result to abandonment.”

Fastfood companies Jollibee Foods Corp. and Golden Arches Development Corp. (McDonalds Philippines) are included in the list.

Food and beverage companies San Miguel Foods, Inc.; Procter & Gamble Philippines, Inc.; The Purefoods Hormel Co., Inc.; Century Pacific Food, Inc.; Monde Nissin Corp.; Prime Pacific Foods Corp.; and Universal Robina Corp. also have cargo pending at Manila ports.

The Philippine Ports Authority (PPA) can impose penalties for refrigerated and chilled cargo that are not removed from the ports.

Within 24 hours after a decree of abandonment and forfeiture has been issued on these containers, the Bureau of Customs (BoC) will decide how these items will be disposed off. Goods that are fit for consumption will be donated to the Office of Civil Defense, once approved by the Finance secretary.

The PPA had earlier warned that cargo congestion at Manila ports may cause the terminals to shut down, and may lead to a shortage in food and other supplies.

The order was released in order to “ensure the availability of essential goods, in particular food and medicine, by adopting measures as may reasonably be necessary to facilitate and/or minimize disruption to the supply chain.”

The list also includes dozens of containers for fishery companies, including the Royale Fishing Corp., Silver Sea Star Fishing, and Maria Fe Fishing Corp.

Rustan Coffee Corp. (Starbucks Coffee Philippines), Foodsphere, Inc.; Fonterra Brands Philippines, Inc.; Happy Hunting Ground Farms Corp., and Consolidated Dairy and Frozen Food are also in the list, among many others.

Non-food companies like Glaxosmithkline Philippines, Inc.; Universal Power Solutions, Inc.; Rizal Commercial Banking Corp. also have cargo pending at the ports.

The order was signed by the Department of Trade and Industry, the Department of Agriculture, the Department of Finance, the Bureau of Customs, and the Philippine Ports Authority. — Jenina P. Ibanez

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