On today's blog:
- Packer's house isn't winning, it's tanking
- Will Hillary run for US president?
- will.i.am ventures into the wearable tech market with Puls
- Just how big is high frequency trading in Australia?
- Three graphics that explain the notorious 'double Irish' tax loophole
- What Ebola could do to international traffic
- Apple iPad leak looks like a coy attempt to steal Google's Thunder
- Three things you need to know this morning
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3.50pm - Packer's House isn't winning, it's tanking
Lucky high rollers and weak consumer confidence are hurting Crown’s performance, according to billionaire chairman James Packer.
“Trading so far this year has been mixed at best,” Packer told the Crown Resorts annual general meeting in Perth.
Waning consumer sentiment continued to impact the trading performance of its Perth and Melbourne casinos, and its high roller businesses were also suffering, Mr Packer said.
“Our VIP businesses are almost $100 million below the theoretical result less than four months into the financial year, due to an adverse win rate, or put simply, bad luck,” he said.
“The punters are killing us.”
Crown’s profit grew 66 per cent to $656 million in the 2013/14 year, with strong growth from its Macau joint venture helping to offset a flat performance from its Australian casinos.
Here's an infographic on the size of Australia gambling market by The Economist.
3.10pm - Will Hillary run for US president?
By Jackson Hewett
Showing all the deftness she displayed in her four years as US Secretary of State, Hillary Clinton dead-batted back an attempt to get her to announce whether or not she would run for candidacy for the 2016 presidential race.
In an interview at the Dreamforce software conference with World Economic Forum President, Klaus Schwab, Schwab read to her verbatim a question he asked her in 1999 about when she thought the US would see its first female leader.
"As a country," she said "we are less racist, less homophobic, less sexist. But we are less able to get along politically."
Ironically, the woman who set the most punishing schedule of any Secretary of State, traveling almost 1 million miles to visit 112 countries in her four year tenure, laments the rushed nature of political decision making in an era where the 24 hour news cycle puts out plenty of content but very little in the way of actual news.
Jackson Hewett attended the Dreamforce conference as a guest of Salesforce.
2.20pm - will.i.am ventures into the wearable tech market with Puls
This is an excerpt from Jackson Hewett’s report. Read the full story here.
Multi-platinum selling singer will.i.am has boldly stepped into the wearables market with the launch a smart device called Puls.
The device, which he said is not a watch but a “cuff” is designed to be a fashion forward product.
The device which the front man of the Black Eyed Peas launched at the Dreamforce conference in San Francisco, doesn’t rely on being linked to a smartphone but instead has its own chip to connect to a cellular network.
In a spectacular one and half hour launch featuring music, models even a grateful student from will.i.am’s program to help disadvantaged kids from his poor neighbourhood in Los Angeles, will.i.am announced partnerships with mobile phone providers in the US and UK. There is no announcement yet on its availability in Australia, or what the watch would be priced at.
The five centimetre wide ‘cuff’ comes with a number of apps including the ability to send SMS, emails, play music and check social networks but it also has a number of unique features including an app that is able to read the mood of the wearer by detecting changes in voice tones.
The device will also rely on more natural commands, allowing wearers to access their contacts with phrases like “call that girl I met yesterday.” It will feature a Siri-like service call ‘AneedA’ – as in “I need-ta know how long it will take to get to the next meeting,” will.i.am said.
Jackson Hewett attended the Dreamforce conference as a guest of Salesforce.
2pm - A new milestone for the Medibank Private float
From our M&A site Dataroom:
Pre-registration interest in the Medibank Private float, estimated to be worth over $4 billion, has exceeded expectations, the government said today.
So far 750,494 Australians have formally lodged their interest in the offer, including 278,732 eligible policyholders, federal Finance Minister Mathias Cormann said in an emailed statement.
The prospectus for the health insurer’s initial public offering is expected to be lodged next Monday.
“This indicates a strong level of interest in the Medibank Private Share Offer,” Mr Cormann said.
For some more background on this rather momentous listing, here’s some past commentary pieces on the issue. We’ve posted excerpts below, but you need to be a Business Spectator subscriber to access these stories. Sign up here.
The argument against privatisation of the business used to be that Medibank could be used to discipline price increases, but the experience of health insurance and health inflation would suggest that hasn’t happened.
Conversely, a privatised and listed Medibank would have greater incentives to further improve its efficiency and profitability and compete even more aggressively with the vast array of competitor funds, which could help drive innovation and sector-wide efficiency gains.
In any event, Medibank will be a strong addition to the stock exchange lists, as one of only two listed health insurers (NIB is the other), with relatively limited downside given the way the sector is currently regulated and considerable near-term potential upside from efficiency gains.
The biggest part of the value in Medibank Private is its huge customer base. Those customers are to be given a priority in the float, which will mean that any Medibank customer who wants a small parcel of shares will have the chance to subscribe at the retail price. A very large number will do so.
This is a very sensible strategy for Savvides but carries obvious rewards and risks. If the shares go to a premium and the Medibank customers can “brag” about their investment decision it locks in the goodwill and they will be very hard for rival funds to poach.
On the other hand, if Medibank proves to be a poor investment then there will be a sour taste for a large portion of the Medibank customer base. They will then be plum targets for rivals. In addition in these floats, the finance minister and the government also wins goodwill if the public issue they promote goes well.
12.15pm - Just how big is high frequency trading in Australia?
Today’s KGB interview with ASX chief executive and managing director Elmer Funke Kupper put a ball park figure on the high frequency trading trend in Australia: it’s sitting at around the 20 per cent mark.
So how big is high frequency trading in the US? . A graph from StockTwix indicates that the trend peaked at 60 per cent of market volume in 2009, and has been falling since.
Here’s what Funke Kupper had to say.
EF: An example is something called maker-taker pricing. So, in the US an exchange is allowed to pay people to trade. In Australia we charge buyers and sellers. So someone takes liquidity, someone posts liquidity, we charge both sides. In America they charge the people who take the liquidity, usually real investors, more than they do in Australia and they pay the high frequency traders to sit on the other end. So, while in our case, everybody pays, in the US, real investors pay more and high frequency traders get paid. We think paying people to provide liquidity, paying people for order flow in the equity markets, is a highly dysfunctional way of operating. We’ve advocated very strongly for it to be banned in Australia and today it is banned. That’s a very important difference because remember high frequency traders are nothing if not rational. They don’t care about what the company does. They only care about the mathematics and the algorithms and the opportunity. So, if you take economic opportunity away or limit economic opportunity, you limit the trading opportunity, you limit the void that they do. And as a consequence, high frequency trading in Australia is less than half of what it is in the US.
RG: What would it be as a percentage?
EF: Well, it’s probably in the lower 20s percentage points, but more importantly what people call predatory high frequency trading is very, very small in Australia, if it exists at all, and it is because the economic opportunity isn’t there. Now, there is high frequency trading. There is intermediation in transactions that is not necessary, but of course once you’ve got two exchanges, you’ve given up on a single queue of orders, haven’t you? So, once you fragment, that’s where it all starts. Once you’ve got two exchanges, you’ve fragmented the market, you’ve given up.
*This post was updated after publication to reflect new data we found on high frequency trading.
11.35am - Three graphics that explain the notorious ‘double Irish’ tax loophole
Ireland recently moved to close its ‘double Irish’ tax loophole. As reported by the WSJ:
Ireland will change its tax code to require that all Irish-registered companies be tax residents in Ireland within the next six years, slowly ending a tax-optimisation structure known as the “Double Irish,” Irish Finance Minister Michael Noonan said in a parliamentary address to introduce the 2015 budget.
Confused? Here’s a quick primer.
Secondly, here’s how Apple structured itself to benefit from Ireland’s tax system. We found this chart in the EU’s preliminary investigation into Apple relationship with Ireland. The report (pdf) came out a week ago.
And finally, here’s a rather old, but still very good video from the International Council of Investigative Journalists explaining the implications of global profit shifting.
So, will Ireland's latest law change plug the loophole? Here's why the law change may do little to hurt Google or Apple.
By Chris Kohler, BusinessNow
In case you’ve been underestimating how bad the spread of Ebola could be for various sectors, here’s what the SARS outbreak did to international traffic in 2003.
Yesterday, Macquarie said it held fears for Qantas and the Australian aviation industry because of escalating concern over Ebola.
A bonus tweet: Here's a map of the Ebola outbreak and its casualties outside of Africa.
10.10am - Apple's iPad leak looks like a coy attempt to steal Google’s thunder
If you can’t beat them, join them. It seems Apple has learned a thing or two from Sonny Dickson – the teenage Australian who has an unparalleled success rate at leaking crucial product details before launch.
In what looks like an attempt to steal the spotlight from Google and its new line of Nexus phone and tablets, Apple has seemingly leaked the details of its new iPad launch. This graphic, first reported by 9to5 Mac, hit iTunes a couple of hours ago.
As we’ve come to expect from Apple, it’s yet to reply to requests for comment on the matter. So we don’t know if this is a mistake or a deliberate move.
But, in context, the leak actually seems like somewhat of a smart tactic from the tech giant. iPad launches traditionally garner significantly less attention than its iPhone event, simply because the tablet market is fairly stagnant. Apple struck success with its first couple of iPads -- the iPad 2 is still the most popular model used in Australia -- but the longevity of the product has ironically made it harder to for the tech giant to push newer models. Case in point: this global iPad shipments growth graph from Quartz.
Dickson’s leaks may frustrate Apple, but they also draw attention and media coverage. This latest iPad leak internet has whet the internet appetite for Apple news, now it’s up to the tech giant to deliver on something that will get us talking at tomorrow’s event.
9am - Three things you need to know this morning
Read something fascinating on the web? Send or tweet in a link and, if it passes the bar, we’ll include it in our morning ‘from elsewhere’ section. And if you like, we’ll also attribute you.
Anyway, on to today’s top stories:
1. More than a third of chief financial officers want the Abbott government to prepare a mini-budget to up the rate of fiscal repair, a Deloitte survey has found.
2. Google has ramped up its mobile arsenal, upgrading its Nexus line with a new tablet and smartphone, and unveiling its revamped Android software, to be dubbed "Lollipop".
3. San Francisco-based online recruiter 1-Page has floated on the Australian Stock Exchange, leading what it says may be a new trend for Silicon Valley tech companies.
The power of a public apology. Now a popular media strategy, has the idea of saying sorry to the cameras lost all meaning?
Supermarkets beware: Google is getting into the grocery home delivery business in the US, and reviewers are loving it.
Iggy Pop’s advice to budding musicians: keep your passion for the industry high and your remuneration expectations low. (via Paul Pennay)
Twitter’s stock is overvalued and we’ll have self-driving cars by 2022. The US top tech CEOs tell all in this survey
The language of business is lost between corporate jargon and social media colloquialisms. LOL, no synergies here.