A round up of some of the week’s most significant corporate events and news stories.
Uber and Kitty Hawk lead drive towards flying taxis
Flying taxis have emerged as Silicon Valley’s latest fascination, drawing investment from companies ranging from Uber and Airbus to start-ups such as Kitty Hawk and Lilium, writes Tim Bradshaw in San Francisco.
This week saw several announcements suggesting that technologists believe the science-fiction fantasy of small, electric, perhaps self-piloting passenger aircraft can soon become reality, despite unsolved legal, technical and social problems.
Kitty Hawk, a Silicon Valley-based start-up backed by Google founder Larry Page, this week showed off the first prototype of its “flyer” — a single-person ultralight aircraft powered by eight electric rotors. Kitty Hawk said the “drone”-like craft, which is designed only to fly over water for now, would go on sale “by the end of this year”.
Also this week, Uber held its first “Elevate” conference in Dallas, Texas, bringing together aerospace executives and engineers with the hope of accelerating its vision of aerial urban taxi services.
Announcing partnerships with the vehicle developers Aurora, Embraer, Pipistrel and Bell Helicopter, as well as the battery provider Chargepoint, Uber said it planned to start testing an aerial taxi service in Dallas and Dubai as soon as 2020.
Uber envisages a network of “vertiports” from which vehicles designed for “vertical take-off and landing” (VTOL) fly small groups of passengers over congested highways to nearby locations. Uber believes that a 15-minute flight from San Francisco to San Jose could cost no more than in its “X” ride-sharing service does today.
● Analysis: Flying car contenders taxi for take-off
GM outpaces Detroit rivals with strong US showing
General Motors reported better than expected quarterly profits due to rising sales and margins in its core US division, in spite of expectations the market would fall this year and results earlier in the week from its main domestic rivals — Ford and Fiat Chrysler — showing falling performance, write Patti Waldmeir in Chicago and Peter Campbell in London.
GM, which owns the Cadillac, Chevrolet and Buick brands, announced adjusted pre-tax profits of $3.4bn for the three months, up by $700m on the same period last year. North American revenue was up 10.7 per cent to $29.3bn and adjusted North American operating profits were up 48.8 per cent to $3.4bn.
Its results came at the end of a week where carmakers broadly pointed to slowing US trading but continuing strength in the European market.
Ford and Fiat Chrysler both reported rising European sales while Fiat saw strong growth in profits and margins.
GM has pulled out of Europe by selling the Opel and Vauxhall brands to PSA, the French owner of Peugeot and Citroen. The Opel division made a loss of $200m in the quarter due to the weak British pound.
GM chief financial officer Chuck Stevens said earnings “continue to be led by strength in North America and China” — areas where Ford reported weakness in the first quarter.
But with an extended factory shutdown for model changeover looming in the US, GM will need strong sales in the second half of the year in the face of what is expected to be a weak market.
GM’s strong position in North America was at odds with Ford and Fiat, which both saw car sales fall in the region. Fiat Chrysler, which owns the Jeep, Ram, Maserati and Alfa Romeo brands, reported North American profits were down fractionally at €1.2bn, with revenues 4 per cent lower at €17bn. Ford’s profits for the region fell 35 per cent to $2bn.
Renault and PSA both released revenue statements during the week that showed strong European performances. Neither sells in the US.
Credit Suisse plans share sale to fund growth push
Credit Suisse abandoned plans to list its Swiss unit and instead launched a SFr4bn ($4bn) share sale as chief executive Tidjane Thiam sought to quash fears about the bank’s capital strength, writes Ralph Atkins in Zurich.
The move — subject to shareholder approval — would help Credit Suisse to fund expansion as it pressed ahead with a strategic overhaul launched in late 2015, Mr Thiam said.
“Nobody is more eager than me to get to 2018, to then see in 2019 what the bank can deliver,” he added.
Mr Thiam had originally planned to list a minority stake in the bank’s Swiss operations, but the board opted to take advantage of favourable financial market conditions to launch a share sale instead.
Although Credit Suisse had hinted at its change of mind, the timing of the move was a surprise, coming just days before its annual shareholder meeting, where the bank faced a revolt over executive bonuses.
Shareholders will be asked to approve the capital plans at an extraordinary meeting on May 18. The cash call came less than two years after the bank sold SFr6bn of fresh equity to shore up its balance sheet.
Mr Thiam is expanding Credit Suisse’s businesses managing the wealth of the world’s rich while reducing the scale of its investment bank operations.
First quarter pre-tax profits of SFr889m comfortably beat analysts’ expectations, with global markets, its most troubled division, swinging to a SFr339m pre-tax profit, helped by the buoyant market conditions.
Hayward pins hopes on Brazil as he leaves Genel
This week marked another hard goodbye for Tony Hayward, the former chief executive of BP, who signalled he would step down in June from Genel Energy, the Kurdistan-focused explorer he co-founded in 2011, writes Nathalie Thomas in London.
Genel has hardly brought the glory and FTSE 100 membership that was expected given Mr Hayward’s involvement. He teamed up with the British financier Nat Rothschild and two others to buy a Turkish energy group of the same name in 2011, and merged it with Vallares, their cash-rich investment vehicle, to create the London-listed company.
Mr Hayward, as chairman, and Mr Rothschild have seen the value of their Genel stakes plummet as the shares have dropped from a high of £11.44 in 2014 to just 77.25p yesterday after a run of problems, including with the quality of its main asset in the Kurdistan region of Iraq.
Genel has twice slashed its estimate of the number of barrels of oil that can be recovered from the Taq Taq field, south-east of Erbil.
That has added to wider difficulties linked to operating in the region; international oil companies active in Kurdistan have struggled to secure regular payments in exchange for crude exports.
Genel has had failed forays elsewhere — drilling for oil in Angola, the Ivory Coast and Malta with little to show for its efforts.
Mr Hayward resigned on Monday. He is working on an informal basis with private equity group Carlyle to scout for potential oil assets in countries such as Colombia, Brazil and Argentina. He can only hope Latin America brings him more luck.
Twitter’s user base rises but revenue retreats 8%
Twitter’s first-quarter earnings this week brought a tale of two numbers that have dogged the messaging platform for some time, writes Hannah Kuchler in San Francisco.
The first told a much-awaited positive story: user growth is accelerating, with the monthly user base up 6 per cent year on year and the daily user base rising 14 per cent since the same quarter in 2016.
Investors have been worried about the size of Twitter’s user base since shortly after it went public in 2013. They are anxious that marketers could reject Twitter’s diminutive 328m monthly users in favour of the giant of Facebook, which has 1.9bn users and owns Instagram, which announced the same day that its growth is accelerating and it had hit 700m.
What enticed the new users? The “Trump” effect — the US president’s mixture of official announcements and catty tweets? Livestreaming deals with sports, news and entertainment companies to encourage people to watch TV for free on the site? It is not clear.
The second told a much more negative story: revenue fell 8 per cent year on year, suggesting that investors’ worst fears had come true. The company is making changes to its advertising products as it tries to create a niche in a digital advertising market dominated by Google and Facebook.
After years of trouble for Twitter, the company had learned to warn investors and so both sales and its loss were better than expected.
Shareholders focused on the early signs of what could be a user revival and sent stock up by more than 10 per cent.
● Lex: Twitter — game of chicken
● News: UK says Twitter shirking responsibility in terror fight