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BW Businessworld

In Negative Zone

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Britain’s inflation rate unexpectedly fell below zero for the first time in more than half a century, as the drop in the food and energy prices depressed the cost of living. Consumer prices declined 0.1 per cent in April from a year earlier, the Office for National Statistics said. Economists had forecast the rate to be zero, according to the median of 35 estimates in a news survey. Core inflation slowed to 0.8 per cent, the lowest since 2001. With inflation so far below the Bank of England’s 2 per cent target, policy makers are under pressure to raise the key interest rate from a record-low of 0.5 per cent for now. Governor Mark Carney said any period of falling prices will be temporary and an expected pickup in inflation at the end of the year means the next move in borrowing costs is likely to be an increase.
 
Exit Eventuality
Deutsche Bank has set up a “working group” to review whether to move bulk of its UK divisions to Germany, if Britain were to exit the EU, following a referendum that Prime Minister David Cameron has pledged to hold by 2017. “It is early days and no decisions have been made,” said a spokesperson for the German lender. Cameron has promised a referendum on the UK’s EU membership by the end of 2017, and prospects of an exit have become commonly referred to as “Brexit”. Deutsche Bank’s UK business is based out of the financial district in London, known as the City. It employs 9,000 people in the UK, where it has its operations since 1873.
 
Quid Pro Quo
Greece is near a cash-for-reforms deal with its euro zone partners and the International Monetary Fund that would help it meet debt repayments next month, the country’s finance minister said, as worries persist over a possible bankruptcy. Athens has been defending its “red lines” in talks with lenders, refusing to yield on further pension cuts and more labour market liberalisation to clinch a deal that would release remaining bailout aid, despite a pressing cash crunch. “I think, we are very close (to a deal) ... let’s say in a week,” Greece finance minister Yanis Varoufakis said. “Another currency is not on our radar, not in our thoughts.”
 
Legal Trouble
Alibaba has been sued by Kering, a luxury brands group that includes Gucci and Yves Saint Laurent, over counterfeits on its popular e-commerce platforms. The lawsuit, filed in New York, alleges that Alibaba and its related companies “knowingly encourage, assist, and profit from the sale of counterfeits on their online platforms...(and) make it possible for an army of counterfeiters to sell their illegal wares throughout the world”. Counterfeits have long been a headache for Alibaba, which operates China’s most popular e-commerce shopping platforms Taobao and Tmall. Co-founder Jack Ma has even called fakes a “cancer” to the company.
 
OS Envy
The global smartphone race is largely a two-horse race between two US firms, Apple and Google — and the Russian government isn’t happy. The Russian minister of communications has announced plans to develop a new, Russian-built mobile operating system (OS). Currently, Android and iOS collectively take up more than 95 per cent of the Russian smartphone market, but minister Nikolai Nikifori wants to get that figure below 50 per cent within 10 years. The new OS will be based on Sailfish.
 
Total Recall
Takata is nearly doubling the size of its massive recall for faulty airbags, making it the largest auto recall in history. It recalled airbags used in about 18 million vehicles. This move will bring that number up to 34 million autos. That is nearly one out of every seven cars on US roads. The recall is one of the largest consumer product recalls ever. At least five deaths have been tied to the faulty airbags. But Takata has previously resisted demands by regulators to get all the affected airbags off the road. The airbags have been known to explode and send shrapnel into the face and body of both the driver and front seat passenger.
 
Smart Battle
Apple was handed a mixed ruling by a US appeals court in the latest twist in a blockbuster intellectual property battle with Samsung Electronics, as a prior patent infringement verdict was upheld but a trademark finding that the iPhone’s appearance could be protected was thrown out. That means up to 40 per cent of a $930-million verdict, which had been won by Apple, must be reconsidered. In the ruling stemming from the global smartphone wars, the Federal Circuit in Washington upheld patent infringement violations including one which protects the shape and colour of its iPhone as well as the damages awarded for those violations.
 
Sales Surge
Britain’s Vodafone posted a rise in its quarterly sales measurement for the first time in nearly three years, helped by improving trends in its key European markets and demand for 4G mobile services. The world’s second-largest mobile operator said the rise in fourth-quarter organic service revenue of 0.1 per cent, which followed 10 quarters of declines, meant that its overall earnings could also stabilise in 2016. The group, which has been hit hard by the constraints on consumer spending in its big European markets and by regulator-imposed price cuts, forecast a range for 2015-16 core earnings of £11.5-12 billion.
Tech Theft
Federal prosecutors charged six Chinese nationals with stealing trade secrets from US tech companies Avago and Skyworks. The US Department of Justice charged the suspects with economic espionage and theft of trade secrets in a 32-count indictment. Prosecutors allege this was part of a long-running scheme to provide an edge to universities and companies controlled by the People’s Republic of China. The indictment “reveals a methodical and relentless effort by foreign interests to obtain and exploit sensitive and valuable US technology through the use of individuals operating within the US”, according to David Johnson, Special Agent in Charge of the FBI’s San Francisco division.
 
(This story was published in BW | Businessworld Issue Dated 15-06-2015)


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