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Ericsson tops forecasts as 5G lifts off

Ericsson beat fourth-quarter core earnings forecasts on Friday, helped by strong sales of 5G equipment and the ban on Chinese rival Huawei in several countries.

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STOCKHOLM (Reuters) – Ericsson beat fourth-quarter core earnings forecasts on Friday, helped by strong sales of 5G equipment and the ban on Chinese rival Huawei in several countries.

FILE PHOTO: The Ericsson logo is seen at the Ericsson’s headquarters in Stockholm, Sweden June 14, 2018. REUTERS/Olof Swahnberg

The Swedish company’s shares jumped 7% in early trading.

Not only is Ericsson is selling more, but it is also earning more from each sale, with gross margins rising to 40.6% in the quarter from 36.8% a year earlier. Margins are now at levels of a decade ago, having recovered from the low-20%s in 2017.

In particular, the core Networks business saw margins at 43.5% from 41.1% a year earlier, on a 20% rise in sales.

“The competition in our industry is always cut-throat and the trick is to be ahead of the cost curve,” Chief Financial Officer Carl Mellander told Reuters. “A lot of the money we invest in R&D not only goes into making better functionality and features, but also to reduce the cost structure.”

The company said its operating margin of 12.5% in 2020 reached the 2022 group target range of 12-14% two years early.

“The 2022 goals are simply too low,” said Christer Gardell, co-founder of Ericsson shareholder Cevian Capital. “Ericsson has much more to give.”

The company’s quarterly adjusted operating earnings rose to 11 billion Swedish crowns ($1.3 billion) from 6.5 billion crowns a year earlier, beating analysts’ mean forecast of 8.58 billion crowns, according to Refinitiv estimates.

Total revenue rose 5% to 69.6 billion crowns, beating estimates of 68.35 billion crowns.

“This reflects continued high activity levels in North America and North East Asia, and also in Europe where we further increased the market share,” Chief Executive Börje Ekholm said.

North East Asia includes China, where Ericsson, unlike Nordic rival Nokia, got 5G radio equipment contracts from China’s three largest telecom operators.

Nokia reports earnings next week.

Ericsson has warned Sweden’s move to exclude Chinese vendors from its 5G networks may create problems for it in China. But Mellander said it hadn’t seen a material impact so far.

Ericsson has criticised the Swedish ban, and there have even been reports it has threatened to leave Sweden over the matter.

Mellander denied there was any talk of this. “We will remain a Swedish domiciled company,” he told Reuters.

($1 = 8.3643 Swedish crowns)

Reporting by Supantha Mukherjee and Helena Soderpalm in Stockholm. Editing by Shri Navaratnam and Mark Potter

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Source: https://www.reuters.com/article/us-ericsson-results/ericsson-tops-forecasts-as-5g-lifts-off-idUSKBN29Y0JJ?il=0

Reuters

Stellantis makes 30 billion euro wager on electric vehicle market

Stellantis (STLA.MI), the world’s No. 4 automaker, said on Thursday it plans to invest more than 30 billion euros ($35.54 billion) through 2025 on electrifying its vehicle lineup.

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A view shows the logo of Stellantis at the entrance of the company’s factory in Hordain, France, July 7, 2021. REUTERS/Pascal Rossignol/Files

MILAN/DETROIT, July 8 (Reuters) – Stellantis (STLA.MI), the world’s No. 4 automaker, said on Thursday it plans to invest more than 30 billion euros ($35.54 billion) through 2025 on electrifying its vehicle lineup.

The company, formed in January from the merger of Italian-American automaker Fiat Chrysler and France’s PSA, said its strategy will be supported by five battery plants in Europe and North America as it gears up to compete with electric vehicle (EV) leader Tesla (TSLA.O) and other automakers globally.

“This transformation period is a wonderful opportunity to reset the clock and start a new race,” Stellantis Chief Executive Carlos Tavares said on a webcast during the company’s “EV Day 2021” event. “The group is at full speed on its electrification journey.”

Dario Duse, of consulting firm AlixPartners, said the 30 billion euros earmarked for the EV program were a “conspicuous amount.”

“Former PSA Group already had a good electrified offer that Stellantis will surely try to leverage at best and even the former FCA made steps ahead recently, so the big step up in electrification by 2025 seems achievable,” he said.

Stellantis said it is targeting more than 70% of sales in Europe and over 40% in the United States to be low-emission vehicles – either battery or hybrid electric – by 2030. It aims to make the total cost of owning an EV equal to that of a gasoline-powered model by 2026.

It said all 14 of its vehicle brands – including Peugeot, Jeep, Ram, Fiat and Opel – will offer fully electrified vehicles. Another focus will be electrifying its commercial vehicle lineup, and rolling out hydrogen fuel-cell medium vans by the end of 2021.

Stellantis said on Thursday that one of the five battery plants will be at its engine facility in Termoli, Italy, joining previously announced factories in Germany and France. The automaker also is in final steps of securing a partner in North America. A source told Reuters that Samsung SDI (006400.KS) may build a U.S. battery cell plant and has been in talks with automakers, including Stellantis. read more

Battery partners include Automotive Cells Co, a Stellantis joint venture with TotalEnergies (TTEF.PA); Contemporary Amperex Technology Co Ltd (CATL) (300750.SZ), BYD Co Ltd (002594.SZ), SVOLT, Samsung SDI and LG Chem’s (051910.KS) wholly-owned battery subsidiary LG Energy Solution.

Stellantis said it wants to secure more than 130 gigawatt hours (GWh) of battery capacity by 2025 and more than 260 GWh by 2030. It said it has signed memorandums of understanding with two lithium geothermal brine process partners in North America and Europe to ensure supplies of lithium, a critical raw material for batteries.

Stellantis said it aims to cut battery pack costs by more than 40% from 2020 to 2024 and by more than an additional 20% by 2030. It plans to use two battery chemistries by 2024 – a high energy-density option and a nickel cobalt-free alternative. By 2026, it intends to introduce solid-state batteries.

The automaker said its EVs will be built on four electric platforms and have driving ranges of 500 to 800 km (300 to 500 miles) on a single charge and fast charging capability of 32 km (20 miles) per minute.

“Stellantis seems to have put in place quite rapidly a unified platform strategy, same thing for the powertrain modularity, which will allow the company to benefit as fast as possible from scale effects,” IHS analyst Romain Gillet said, adding that the company’s targets are in line with its competitors.

MERGER SYNERGIES

At a separate EV strategy event last week, French rival Renault (RENA.PA) said 90% of its main brand models would be all-electric by 2030, whereas previously it had included hybrids in its target. read more

Germany’s Volkswagen (VOWG_p.DE), the world’s second-biggest automaker after Toyota (7203.T), expects all-electric vehicles to account for 55% of its total sales in Europe by 2030, and more than 70% of sales at its Volkswagen brand. read more

General Motors Co (GM.N) said last month it planned to spend $35 billion through 2025 on electric and self-driving vehicles. It has set a target of selling all new light cars and trucks with zero tailpipe emissions by 2035. read more

Earlier on Thursday, Stellantis flagged that 2021 got off to a better-than-expected start despite a global semiconductor chip shortage.

Stellantis said its margins on adjusted operating profits in the first half of 2021 were expected to exceed an annual target of between 5.5% and 7.5%, despite production losses due to the semiconductor supply crunch.

It said synergies from its merger were well on track to exceed the first year’s target and would help to contribute to a positive cash flow for the year as a whole. Stellantis has promised more than 5 billion euros ($5.9 billion) in annual synergies.

Shares of Stellantis extended losses after the automaker’s EV announcement and were last down about 3.9% in Milan.

($1 = 0.8442 euros)

Additional reporting by Clement Martinot, Stephen Jewkes in Milan, Gilles Guillaume in Paris and Heekyong Yang in Seoul; Editing by Agnieszka Flak, David Clarke and Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

“Former PSA Group already had a good electrified offer that Stellantis will surely try to leverage at best and even the former FCA made steps ahead recently, so the big step up in electrification by 2025 seems achievable,” he said.

Source: https://www.reuters.com/business/autos-transportation/stellantis-says-h1-margin-expected-top-annual-target-55-75-2021-07-08/

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EXCLUSIVE Weibo chairman, state firm plan to take China’s Twitter private – sources

Nasdaq-listed Weibo Corp’s (WB.O) chairman and a Chinese state investor plan to take China’s answer to Twitter private, sources told Reuters, sending its shares as much as 50% higher on Tuesday.

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The booth of Sina Weibo is pictured at the Beijing International Cultural and Creative Industry Expo, in Beijing, China May 29, 2019. REUTERS/Stringer/Files

HONG KONG, July 6 (Reuters) – Nasdaq-listed Weibo Corp’s (WB.O) chairman and a Chinese state investor plan to take China’s answer to Twitter private, sources told Reuters, sending its shares as much as 50% higher on Tuesday.

A deal could value Weibo at more than $20 billion, facilitate shareholder Alibaba’s exit and see Weibo eventually relist in China to capitalise on higher valuations, the sources said.

Chairman Charles Chao’s holding company New Wave, Weibo’s top stakeholder, is teaming up with a Shanghai-based state company to form a consortium for the deal, three sources said, without disclosing the state firm’s identity.

The consortium is looking to offer about $90-$100 per share to take Weibo private, two of the sources said, representing a premium of 80%-100% to the stock’s $50 average price over the past month.

The group aims to finalise the deal this year, they said.

Weibo said in a statement that Chao and a state investor being in talks to take the company private was untrue. It cited Chao as saying he had had no discussion with anyone regarding delisting the company.

Weibo and Alibaba did not respond to Reuters requests for further comments. Chao did not respond to request for comment via Weibo parent company Sina.

Shares in Weibo, which operates a platform similar to Twitter (TWTR.N), surged more than 50% in premarket trading after the Reuters report. Those gains have shrunk to just over 6% after the opening bell.

BEIJING DRIVE

Three separate sources with knowledge of the matter told Reuters the plans stem from Beijing’s drive to have Alibaba Group Holding Ltd (9988.HK) and affiliate Ant divest their media holdings to rein in their sway over Chinese public opinion.

All the sources declined to be named due to confidentiality constraints.

Reuters reported in February that Weibo had hired banks to work on a Hong Kong secondary listing in the final half of 2021. Sources said this is no longer the plan. read more

Alibaba held 30% of Weibo as of February, the latter’s annual report showed, which was worth $3.7 billion as of Friday’s close.

REGULATORY CRACKDOWN

Beijing has looked to rein in Chinese billionaire Jack Ma’s Alibaba business empire by unleashing a series of investigations and new regulations since last year.

The crackdown followed Ma’s public criticism of regulators in a speech in October last year and has swept across China’s money-spinning internet sector in recent months.

E-commerce giant Alibaba has invested in nearly 30 media and entertainment firms including Hong Kong’s flagship English-language newspaper South China Morning Post, Refinitiv data shows.

Chao’s mooted deal would likely see it exit Weibo, two of the sources said.

The plan also reflects China’s efforts to tighten control over private media and internet businesses, sources added.

U.S.-listed Chinese firms also face heightened scrutiny and potentially stricter audit requirements from U.S. regulators, amid political tensions between Beijing and Washington.

A number of Chinese companies have already opted out of U.S. stock exchanges, by going private or returning to equity markets closer to home via second listings.

There were 16 announced delistings of U.S.-listed Chinese companies worth $19 billion last year, Dealogic data showed, compared to just five such deals worth $8 billion in 2019.

China’s cabinet said on Tuesday that it would step up supervision of firms listed offshore citing the need to improve regulation of cross-border data flows and security. read more

FIERCE COMPETITION

Weibo has grown at a fast clip since its launch in 2009 in a market where Twitter is blocked by the government. More than 500 million Chinese use Weibo to opine on everything from Korean soap operas to China’s latest political intrigue.

Alibaba acquired an 18% stake in Weibo in 2013 via a $586 million investment as its first big move into selling advertisement on China’s social networks. It has since raised its stake.

Weibo, which went public on the Nasdaq in 2014, makes most of its revenue from online advertising.

That has worried investors as the growth rate of Chinese online advertising slows and Weibo has also lost ground amid competition with other tech giants such as ByteDance and Tencent (0700.HK).

The Beijing-based company advertising and marketing revenue fell 3% last year to $1.5 billion.

Its shares were up 33% this year, after a fall of 12% in 2020.

Reporting by Julie Zhu and Pei Li in Hong Kong; Editing by Sumeet Chatterjee, Jason Neely and David Goodman

Our Standards: The Thomson Reuters Trust Principles.

The consortium is looking to offer about $90-$100 per share to take Weibo private, two of the sources said, representing a premium of 80%-100% to the stock’s $50 average price over the past month.

Source: https://www.reuters.com/technology/exclusive-weibo-chairman-state-firm-plan-take-chinas-twitter-private-sources-2021-07-06/

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Germany seeks to ban British travellers from EU – The Times

Germany will attempt to ban British travellers from the European Union regardless of whether or not they have had a COVID-19 vaccine, The Times reported on Monday.

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Passengers walk at the Terminal 5 departures area at Heathrow Airport in London, Britain, June 10, 2021. REUTERS/Hannah McKay

June 28 (Reuters) – Germany will attempt to ban British travellers from the European Union regardless of whether or not they have had a COVID-19 vaccine, The Times reported on Monday.

The German chancellor wants to designate Britain as a “country of concern” because the Delta variant of the coronavirus is so widespread, the newspaper said.

The plans will be discussed by senior European and national officials on the EU’s integrated political crisis response committee and will be resisted by Greece, Spain, Cyprus, Malta and Portugal, the newspaper added.

German chancellor Angela Merkel is due to meet British Prime Minister Boris Johnson at Chequers next week.

Britain plans to unveil plans next month to allow fully vaccinated people to travel unrestricted to all countries except those with the highest COVID-19 risk. read more

Reporting by Sabahatjahan Contractor in Bengaluru; Editing by Himani Sarkar

Our Standards: The Thomson Reuters Trust Principles.

German chancellor Angela Merkel is due to meet British Prime Minister Boris Johnson at Chequers next week.

Source: https://www.reuters.com/world/europe/germany-seeks-ban-british-travellers-eu-covid-19-variant-worries-times-2021-06-27/

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