November 23, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Okay, the records don’t go back that far, Gartner has been compiling statistics on mobile phone sales since 2001. Even so, a 22% rise in one quarter is impressive.

Western Europe, especially Germany and Italy as well as Asia Pacific and South America all saw big surges in sales. Markets in North America and Japan were more subdued.

In total, world wide mobile phone sales came in at 205.4 million. Gartner now estimates that total mobile phone sales for this year will be 810millon.

Total sales in Western Europe were 40million. In Eastern Europe and Middle East sales were 39.7% up on last year to 39.7million units. Sales in Latin America were up 46% to 26.1million (Brazil accounting for a third of all sales.)

Further East, Asia Pacific saw a 27% rise to 52.2million, but in Japan sales were up by just 0.6%.

As for companies, Nokia led the pack with its market share jumping from 31% to 32.6%. In terms of percentage growth Motorola did even better, but it was a lacklustre period for Siemens - seeing its market share falling from 7.6% to 4.6%.

The question is though, why is it that the North American and Japanese market did not do so well? Maybe, it’s got something to do with the popularity of other accessories. Mobile phones as replacement products are after all fashion items. As such they are in direct competition with other electronic toys, such as iPods.

November 23, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

A report published by Deloitte yesterday brought bad news for the traditional High Street, predicting a fall in spending on Christmas gifts this season, coupled with a rise in spending in large supermarkets.

Deloitte interviewed 1,000 adults for its report, and discovered that they expect to spend 3% less on Christmas presents this year. If the Deloitte report proves prescient then it will mean the first fall in spending on Christmas gifts in ten years.

Mind you the results will only be accurate if the good people of East Anglia prove typical, because that’s where the survey was carried out. It found that the average Christmas gifts bill per adult in the region will fall from £310 to £266. That extrapolates out to a fall to £14.7bn nationally, from £15.1bn last Christmas.

For traditional retailers the report had more bad news. The number of people who expect to carry out most of their shopping at supermarkets rose from 6% to 8%.

Investment and Business News is based near Milton Keynes. The local branch of Tesco has now been expanded yet again - it’s now commensurate in scale to a reasonably sized shopping centre. The town has also recently seen the launch of a new co-branded 109,000sq feet Asda/Wal Mart store. The largest of its kind, it further represents a big move into the world of shopping for everything from the one store.

With retail spending at best only rising very slightly, if the giant supermarkets expand, then something else must give. If the Deloitte report proves accurate, and actually Christmas gift shopping will fall this year, then for the non-supermarkets it seems difficult to predict anything but gloom.

The Deloitte report had some more bad news for traditional retailers. Christmas shopping over the net is set to surge again. The report found 6% of shoppers expect to make at least some of their purchases online, and in all Internet Christmas shopping is set to jump by 50%.

Yet if all this means traditional retailers are set to suffer, and you are looking for examples, then it would appear you should avert your eyes from John Lewis. Yesterday its boss Charlie Mayfield delivered news of a 5.8% rise in sales last week, not surprisingly leaving the store’s MD “feeling positive.” The cold weather is helping, as Mr Mayfield said, “We have the perfect conditions for selling clothing”. He added “I am really encouraged by the way things are coming together.”

Perhaps one should look for that whipping boy of the High Street, Marks and Spencer. Yet here too there’s been good news of late. Profits before tax were up 74.3% in the six months to 1 October, and the company is making all kinds of bullish noises.

So put that altogether and what does it mean? Bad Christmas for the gift market unless you are Tesco, Asda, M&S, John Lewis or an Internet retailer?

November 22, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

There’s been a fall in the number of unsold properties on estate agent books. From a peak of 73 in May, to a mere 69 this month. And that, says Rightmove, is part of the “most unusual turnaround of the property market in the last 12 months.”

Rightmove says, “Volumes of sales plummeted in the latter part of 2004, leading to the lowest volumes of completed transactions at the start of this year since 1996. This has forced painful realism upon sellers and their estate agents, causing the flat trend in asking prices over the last 7 months. With the economic fundamentals being markedly different from the last crash, buyers and sellers have responded remarkably well to this pricing stability. The result has been the best September month in terms of completed transactions in 17 years. This is not a return to a boom market, but the arrival of the long-awaited ‘‘soft landing’. It is also a reflection of the unseasonably high sales reported by estate agents during the summer months working through to completion.”

In all Rightmove had asking prices rising by 0.8% in November, from a 0.5% rise in October.

As readers of this newsletter will realize by now, we don’t get this ’soft landing’ theory. For decades house prices were carried upwards by their own momentum. The long-term implications of a market which witnesses minimal change for a sustained period of time are completely unknown. Rightmove says the economic fundamentals are markedly different from the last crash. Only time will tell whether the environment of low inflation, low growth, likely rises in tax, and energy prices under pressure, is a good or bad thing for house prices.

In the Sunday Times this weekend, much was made of the fact the UK rate of interest is likely to be lower than the US rate soon, and that the ECB rate too, is likely to move upwards. It was suggested this could lead to a severe crash in the pound. A possibility we have warned of many times. If this was to occur, then it seems likely the Bank of England would be forced into upping rates again - and house prices would be the casualty.

We are not saying house prices will crash - merely that they are vulnerable to changes. And change is a fact of economic life. How anyone can be so confident of a soft landing lasting many years is beyond us.

November 22, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Those shareholders in GlaxoSmithKline who suffer from asthma no doubt needed their puffers yesterday, as shares in the UK’s largest, and the world’s second largest, pharmaceutical company took a plunge.

It was all down to the dreaded the US FDA (Food and Drug Administration) - dreaded, that is, by the drug companies. On Friday the FDA said that the company needed to change the labelling of its top selling asthma treatment Advair (known as Seretide in Europe) to make it clear that the drug was only recommended for use when other treatments have not worked.

It is a blow for GSK. The drug accounts for around 15% of its turnover, and around half of its sales are in the US.

GSK issued a statement saying it disagreed with the FDA decision. “Patient safety is of paramount concern to GSK, which is why we disagree with the FDA’s proposed labelling changes,” said Dr. Kathy Rickard, GSK Vice President of Clinical Development and Medical Affairs. “These proposed labelling changes would reserve the most effective asthma treatment — the combination of inhaled corticosteroids and long-acting beta agonists — until after a patient has failed on other treatment options and therefore may be at risk for severe outcomes, such as exacerbations and potentially death.”

But while shares crashed and GSK slammed the FDA, others suggested that actually the issue is not as serious as the fall in shares would suggest. And the changes the FDA wants would merely mean the wording on the packaging in the US would be similar to what is already stated on the European product. In Europe however, sales have jumped 17% over the last quarter, so before there’s any more panic, maybe speculators should inhale that piece of information first.

November 22, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Every time there’s a step up in video game technology, the industry becomes that little bit bigger, its relevance to the rest of the word that little bit more pronounced, and the application beyond just playing games a lot more important.

There was a time when in the UK they used to talk about the computer games market being worth £100mn. But to show how far things have changed, Microsoft is thought to have lost forty times that much from its XBox console to date and yet continues to pump in the mega bucks.

Today in the US the new Xbox360 goes on sale. And of course, it’s a humdinger of a machine offering graphics and processing capability that gamers could have only dreamt of a few years ago.

For all that, the next generation Sony, not due to be launched until next year, is the product which has got pulses racing. And it comes down to this: what’s the most important - being first or having the best technology?

These days of course, there is more to video games machines than playing games. The PS2 was also a DVD player, and before DVD players fell so drastically in price, for many homes the console also doubled up as a DVD player.

This time the two combatants will offer much much more, and media convergence will reach new heights.

Tivo, the company behind the Tivo digital video recorder - not big in the UK, but a hugely important product across the pond, yesterday announced that its technology will be available for allowing owners of portable PlayStations (PSP) and video iPods to watch TV from the night before.

And the new Xbox and PlayStations will boast digital TV and video capability, digital music, and via a Wi Fi adaptor, access to the internet, with the ability to download the latest movies, tunes and the rest of new generation Internet media.

Perhaps the battle can be best illustrated by looking at the iPod. The new Xbox, despite the fact that Microsoft has its own rival format to the Apple music machine, will be iPod compatible.

We are not sure about the new PlayStation, but our guess is that it won’t be. Sony too has its own MP3 standard with the latest Walkman. In our opinion this is the most aesthetically appealing of all the music players and could well become the next must have accessory. Sony, which to date has been all about proprietary technology, is unlikely to change. The new PlayStation will also come equipped with the new Blu-Ray DVD. A risky move, because the jury is still out on what format will become the next generation DVD standard, Sony’s Blue Ray or NEC and Toshiba’s HD DVD.

The Sony product also boasts the new all powerful Cell processor, which is supposed to actually represent an acceleration of Moore’s Law - which says computer processors double in speed every 18 months.

If Sony is successful and wins this battle then it will have practically guaranteed success for its iteration of the new generation of DVD. If we are right, and the company chooses not to be iPod compatible, it will also gives the new MP3 Walkman a massive boost - quite possible to rival the Apple product. Sony will be back. It once boasted the second most well known brand name in the world - victory for the PS3 could see a return to those former glories.

But if they have got it wrong. If, by tying itself so much to proprietary technology, and if the consequential time lag between its launch and the Xbox proves fatal, then Sony could be licking its wounds for many years to come.

November 21, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

The graph is clear, the High Street downturn seems to be at an end.

According to the Office of National Statistics, “The volume of retail sales in the three months August to October 2005 was 0.7 per cent higher than in the previous three months. This follows growth of 0.4 per cent in the three months to September and compares with growth of 0.9 per cent at the same time in 2004.”

In all retail sales volumes in the three months to October were 1.1% up on a year ago.

1.1% growth in volume, especially at a time when prices pressure continues, does not make a booming High Street. But the trend is clear, things to seem to be picking up from the awful months earlier this year.

The pick up, which coincides with the recent rises in house prices, suggests the consumer is spending again

November 21, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

The Sunday papers engaged in their weekly round of Brown bashing yesterday, with much attention paid to the latest report from the Centre for Economics and Business Research, which has found that the UK has fallen to 19th place in the EU league for growth with only France, Poland, Italy, the Netherlands, Finland and Belgium performing worse.

And yet Gordon Brown can now say to his distracters: “told you so ” as the latest data from the Office of National Statistics reveals a big improvement in the UK’s public finances.

Mr Brown does things differently from other EU chancellors. Whereas the EU stability pact likes to limit governments’ borrowing to 3% of GDP, our next Prime Minister says that what matters is borrowing over the course of an economic cycle. He says borrowing is okay, providing we pay it back in the good years. To put it another way, our Gordon has come up with his golden rule. Borrowing on current account (that excludes capital spending on items such as schools, hospitals, new roads and controversially, road repairs) must balance over the course of an economic cycle.

For some time now it has felt as if every economic analyst and their dog has been predicting the breaking of the golden rule. “Taxes must rise,” they say, to fund the growing level of government borrowing, which in turn will doom the UK’s economic performance to the slow lane for many more years to come.

Some even went as far as to say there are two chancellors, the Dr Prudence of early years of his time at number 11, and the Mr Profligate since. But for his part our beloved chancellor has denied it, suggesting he knew things the rest were ignorant of.

In truth it will take many years before it is possible to objectively determine whether he was right or wrong, but the latest round belongs to Gordon.

Current account public expenditure posted a £4.1bn surplus in October. To put this in context this time last year the Office of National Statistics announced a £0.4bn surplus on current account for the month.

As for so far this financial year, government’s borrowing has been £10.8bn so far. That’s not too good, but much better than last year’s £18.4bn. It is better than the figures from the year before too.

Mr Brown is good with statistics. If his interpretation on official figures is to be believed, then he is always right.

Others will argue that this time he has gone too far, and that the only way he was able to avoid breaking his golden rule was by playing with numbers.

But actually, in broad terms, the latest data would suggest the UK is along the right lines. Public borrowing, at a time when it appears to be going out of control in the US and in many eurozone economies is still, more or less, under control.

The golden rule is not sacrosanct. To break it by a small margin will not bring calamity. Most of our economic partners are a long way short of being able to balance their books over the course of an economic cycle. To argue that public finances are in disarray, as some do, just because by some definitions it could be suggested that we will break the golden rule - is absurd.

Too much attention is paid to this rule. The trouble is though that Mr Brown is, in this sense, the architect of his own misfortune. He is the one who keeps talking about the rule, he is the one who keeps changing definitions to prove his is right. It’s no surprise then, that others are looking to prove he is wrong. He set the rule, it’s only right he should be measured by his ability to keep to it.

Editors note: Gordon’s first high profile change to his golden rule came when it was announced that the rule requires government borrowing to balance over the course of an economic cycle as a percentage of GDP, not in monetary terms. Significant because GDP has grown each year and the deficits of recent years have taken up a smaller proportion of GDP as a similar sized surplus of a few years ago. Then the Office of National Statistics announced road repairs had wrongly been classified as a current account item. This change drastically improved finances, and more recently Mr Brown changed the date at which this economic cycle is likely to end. Had he not done so, then despite all the other changes he would have broken the golden rule.

November 21, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

It’s easy to be cynical about the long term weather forecasts; there was a day in August which was supposed to be the hottest ever recorded in the UK, which in fact it turned out to be a damp squid of day. In the end we had to wait until October 27 before we saw any records broken.

Now they are predicting it will be an unusually cold winter. If the last week is anything to go by, maybe this time they will be right. /

And that could be a problem, with CBI director general Sir Digby Jones predicting a possible return to the three day week, as our overstretched gas supply struggles to cope.

If the gas switch off does occur, it will only be a temporary problem. Only with North Sea gas running low, most of the replacement pipelines from abroad are not yet ready and at the moment we are vulnerable to a sudden upsurge in gas use at peak times.

It’s not a new problem. It’s just that last winter was mild and it never became an issue.

The gas crisis in waiting comes at a time when more eyes are turning to the UK’s target for green house gas emissions. The smart money is saying that the UK has no chance of meeting its 2010 target, largely because green house efficient nuclear power stations are generating less power and in their place carbon gas thirsty energy is pumping out more global warming gases into the atmosphere.

Now a growing chorus of voices are calling for nuclear energy to make a return. The UK currently has 14 nuclear power stations generating a fifth of our energy. But by 2015 only half the plants will be left, and by 2030 there will only be one.

It’s amazing how things come around in circles. Nuclear energy was heralded as the solution to the planet’s energy problems, until a growing lobby warned of safety repercussions. This was dismissed at the time until the Chernobyl disaster, since then nucleur energy has gone out of fashion.

In this age of growing concern over nuclear arms proliferation, at a time of ambiguity over Iran’s plans to generate nuclear power or create weapons of mass destruction, it is difficult to reconcile these concerns with the growth of nuclear power again,

But maybe the answer lies in Scotland. Now new technology, backed by the Scottish Enterprise’s Intermediate Technology Institute Energy, is under development which could prove to be the panacea for the future of energy.

In all £9.3mn has been invested into a company called Plurion which has ideas for developing a battery which can store up to four hours. The Plurion technology facilitates a battery the size of a small room supplying enough energy for 50 homes. It is said that the market could be worth £1bn by 2020. Presumably the technology could be applied to unpredictable energy sources such as wind power.

As ever there’s a fly in the ointment. A company with a similar name, Plurion Systems, was also into technology for electrical storage. The company enjoyed sizeable funding too, until two years or so ago, when its management decided that “commercial success was unlikely.”

November 18, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

As expected, the St Gobain purchase of plasterboard manufacturer BPB has been confirmed. The trouble is BPB’s boss, Richard Cousins, made such a robust defence against the bid, clearly not to the liking of St Gobain’s management, that it is difficult to see how he could work with the new owners moving forward. Sure enough, yesterday it was confirmed that Mr Cousins, who has led the company threw a period of rapid growth, is to leave once the takeover has gone through.

November 18, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

“Reality and regulators is an oxymoron,” said the Royal Mail chairman Allan Leighton yesterday.

At the beginning of next year, the postal market opens up to full competition, and Mr Leighton reckons the regulator is giving the Royal Mail a raw deal.

The Royal Mail is a different company these days. Under the leadership of Leighton and former FA man Adam Crozier, who is chief executive at Royal Mail, a £1m a day loss in 2002 has been turned into a half yearly profit of £159m, announced yesterday.

But the Royal Mail, thanks to mistakes made in the past, has a £4bn pension deficit.

Mr Leighton said, “In just over a month’s time the postal market opens to full competition and Royal Mail is facing the prospect of the regulator imposing a price control which will undo the remarkable turnaround achieved in the past three years by our people.

We are dealing with a legacy from the past, if we could wipe that clear we could get on with running a profitable company. We are generating £500m cash a year and may have to put twice that into the pension fund. If you don’t have enough cash you go bankrupt.”

In total, the Royal Mail says it needs £6b in funding,

For the first time in quite a while there was a reduction in the amount of letters and parcels delivered during the last six months. Royal Mail blames the economic slowdown and the increased use of e-mail.