Uber to Suspend Operations in Taiwan Citing Fines

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Uber Technologies has decided to suspend its services in Taiwan from February 10 with an eye on the exorbitant fines that have been imposed on the ride-hailing service company.

Damian Kassabgi, director of Uber’s public policy in Asia-Pacific, commented in an email statement that the company’s services had been suspended in the island nation “until the president and her government find a solution”.

Uber termed its decision as a “difficult” one. It added that the company had helped facilitate almost 15 million trips during its four years of operation in the East Asian country.

Uber’s move is inspired by the recent string of fines imposed on it by Taiwanese authorities. A recent surge in fines against unlicensed ride-sharing services –believed to be primarily aimed at Uber– comes after the San Francisco-based online transportation network company had been slapped with fines amounting to 328.59 million New Taiwan dollars (USD 10.57 million) thus far. Half of that sum has been imposed since January 6 this year, with penalties increasing to a whopping NT$25 million for every infringement. According to Taiwan’s Ministry of Transportation and Communications, Uber has paid NT$68.25 million in fines to date. Taiwan has, for some time now, maintained that Uber’s business is illegal.

The issue stems from the fact that Taiwanese authorities have seen Uber’s internet-based technology operations as a “misrepresentation” of its transportation activities. They have maintained that Uber only has permission to function as a tech company in the country, and not provide transportation services. Uber has, meanwhile, continuously defended its model while always criticizing the fines. The company’s open letter to President Tsai Ing-wen in November last year seemed to have had little effect as the fines kept going through the roof.

In its statement, the company expressed its hope that the decision to withdraw would force the country’s leadership to give it another thought. According to Uber, the company has more than 10,000 driver-partners, most of whom are locals, registered on its platform in Taiwan. The company added that it has offered them the opportunity to earn money, besides criticizing the Taiwanese government for failing to embrace innovation.

“We have not made this decision lightly, as we know it will have a significant impact on hundreds of thousands of drivers and riders,” Uber said. “Unfortunately, the government has moved further and further away from embracing innovation and setting the stage for a 21st century transportation policy.”

“We hope that pressing (the) pause (button) will reset the conversation and inspire President Tsai to take action,” Uber commented, without mentioning the period of suspension.

The setback in Taiwan will only add to the company’s woes as it faces a severe backlash from labor groups and governments all across the globe. The company was forced to sell its business to rival Didi Chuxing in China last year. It had also decided to pull out of Macau owing to huge fines. The plans were, however, dropped later citing support from locals. The company has also faced stiff resistance in Japan. An ongoing legal battle and widespread public criticism in Argentina sum up how the American startup is struggling to find its feet around the world.

Trump-era Starts in Splendid Fashion for Private Sector Workers

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The human resource departments of US companies have had a busy time of late, with an ADP survey showing that private businesses created 246,000 jobs last month, way more than the 151,000 recruitment’s in December last year. The survey has come just days before the first new jobs report since President Donald Trump assumed office less than two weeks ago.

The ADP report has put the number of new recruits in private sector far above the 165,000-mark estimated by the economists surveyed by Reuters. The encouraging number, if it is to be believed, would also mean that January added the most new workers since June last year.

“I don’t recall ever seeing such a discrepancy between print and estimate in this survey but ADP is saying there was [sic] seasonal issues with retail and moderate weather helped too,” commented Peter Boockvar, chief market analyst at The Lindsey Group.

Although the service sector still remained dominant, it has received a tough challenge from other sectors like construction and manufacturing, which have added jobs at a decent pace. Goods-producing companies hired 46,000 workers, while construction jobs fared well, too, with 25,000 new employees. The manufacturing sector added 15,000 new workers, followed by natural resources and mining at 6,000. This is in keeping with Trump’s electoral campaign during which he promised to bring back blue-collar jobs, especially the ones in the mining industry. Retailers, shipping firms and utility companies accounted for an impressive 63,000.

According to the ADP report, the manufacturing sector has recorded a two-year best. Other measures of manufacturing output show that the sector has come a long way after bouncing back from a strong dollar and slower overseas growth, which are believed to have been the prime reasons behind steady job losses for about two years.

The construction industry also registered its four-month best figures. Experts believe that the numbers were boosted by a warmer-than-usual weather.

White-collar jobs in the technical sector, which generally includes handsomely-paid jobs like engineers and architects, seemed to be lagging behind at 8,000 jobs.

The ADP data only covers private companies and often throws up figures that are at variance with government’s job report, which is due this Friday. Data provider FactSet has predicted an increase of 175,000 in the official report.

If ADP figures turn out to be true –or at least anywhere close to it– it would mean that the employers would have to lighten their pockets as the unemployment rate is already low at 4.7%. A higher pay and more incentives would act as catalysts in boosting the income growth.

That, however, doesn’t seem to reflect in the economic growth. The economy registered a modest growth of 1.9 percent in the final quarter of last year, with an overall annual growth of a meager 1.6 percent, the slowest yearly performance in five years.

The last time the economy clocked the 3-percent-mark was way back in 2005. With the new Trump administration already having projected job creation as one of its main goals, better things are expected to follow – at least for now.

Nestle USA Announces Plans to Shift its Headquarters from Glendale to Virginia

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Nestle USA, a subsidiary of the Swiss food giant, Nestle S.A., announced plans to shift its headquarters, currently in Glendale, to Virginia. Nestlé’s headquarters at Glendale has been in existence for over three decades when in 1990, its parent company acquired Carnation, a Los Angeles-based company dealing in dairy business.

The move to Virginia is part of Nestlé’s strategy to keep all of its stateside operations and businesses closer to each other. It said that the move will improve operational efficiency as 85% of Nestle USA’s top customers and 75% of its factories are in the eastern part of the USA.

The chief executive of Nestle USA, Paul Grimwood, said in a statement, “This location allows us to be closer to our business operations, our customers and other important stakeholders.” 

The shifting of the headquarters of the makers of Hot Pockets and Butterfingers from 800 N.Brand Boulevard, Glendale to Virginia entails the transfer of about 1200 jobs to Virginia and Ohio. The transfer is expected to start now and be completed by the end of 2018.

About 750 jobs are expected to be relocated to the new location in Rosslyn, Virginia and about 300 jobs are expected to go to Solon, Ohio, as announced by the company’s spokesperson, Edie Burge.

Virginia would now be the new home for Nestle USA’s corporate operations and its drink and food business. The company expects to move out completely from Glendale by the end of 2018.
The decision of Nestle to move out of Glendale could land a heavy blow on Glendale which had been touting the presence of the food giant in its city manifestos.

The Chief Executive of Glendale Chamber of Commerce, Judee Kendall, said, “We’re very disappointed to see them go. They’ve been great corporate neighbors and an important part of the city.”

The deputy director of Glendale Chamber of Commerce, Darlene Sanchez, further added that they were aware that the company has been planning the shift for many years and they were able to gauge the closing in on the event based on recent lease contracts signed completed by Nestle.

The deputy director said that while they were sorry to see Nestle leave California, this is also a great opportunity to attract other businesses and strive to enhance diversification in Glendale’s corporate space.

Tom Lorenz, the spokesperson for the city, said in a statement that Glendale would have been happy to negotiate with Nestle but had not been approached by the company. They had heard about the move indirectly.

He said that while Nestlé’s relocation signals “the closing of one chapter,” his sentiments echoed the optimism of the deputy director with regard to scouting for new tenants for the freed up space totaling to 518,302 square feet.

The employees in the Glendale headquarters said that they have not yet decided on plans to shift. One employee said that they are waiting for individual communication from their company before weighing options.

Nestle is moving out of downtown Glendale only. The company still maintains 5,500 employees across California including multiple facilities in the southern part of the state under Nestle Waters division.

Herbalife CEO Johnson to Step Down Next Year

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herbalifeHerbalife Chief Executive Officer Michael Johnson, who has led the company through tough times to significantly drive up its sales, will be quitting his position in 2017.

The nutritional supplement company announced on Tuesday that Johnson will step down from a CEO position he has held since 2003 next June. He is to be replaced by Chief Operating Officer Richard Goudis, a close ally of Johnson who has been with Herbalife for 12 years.

Johnson, who believes it is the right time for him to leave the chief executive job, will become the executive chairman of the company under a planned succession program for management.

“Our mission of improving people’s nutrition and health is what attracted me to Herbalife Nutrition more than 13 years ago, and I am extremely proud that we have made incredible strides in bringing our mission to bear around the globe,” the Herbalife chief executive said in a statement by the company.

He has expressed his confidence in the ability of Goudis to lead the company, saying the Herbalife COO has shown “extraordinary integrity, judgment and passion for making Herbalife Nutrition a great company.”

Johnson said he was not quitting his position because of the disagreement with hedge fund manager William Ackman, who has taken a $1 billion short bet against the nutritional supplement maker as running a pyramid scheme.

He expressed his pleasure at having been able to grow Herbalife sales from $1 billion in 2003 to $5 billion this year.

One of the Los Angeles-based company’s major investors, Carl Icahn, has praised Johnson for the great job he has done. The billionaire investor also stated he was in support of the succession plan put in place by the company.

“We would like to applaud Michael Johnson for doing a superb job navigating the company through a number of libelous attacks during this period,” Icahn said in a statement. “I am glad he intends to stay meaningfully involved in the company and I fully support the Board’s choice of Rich Goudis becoming CEO while Michael remains actively engaged as executive chairman.”

The Federal Trade Commission reportedly spent about two years probing into the operations of Herbalife to determine if it was running a pyramid scheme. The verdict from that investigation was mixed.

The nutritional supplement company was able to avoid being charged for running a pyramid scheme and being compelled to shut down in July. It agreed to a payment of $200 million in consumer relief, while also promising to improve on its business practices.

Johnson told CNBC that he wants to ensure that Herbalife complies with FTC regulations to the letter.

The leadership change announcement came as the company reported results for the third quarter, which beat Wall Street expectations for earnings.

Herbalife posted adjusted earnings of $1.21 a share, surpassing estimate of $1.09 per share forecast by analysts in an S&P Global Market Intelligence survey.

But revenues came in slightly lower than expected at $1.12 billion, compared to average analysts’ estimate of $1.14 billion.

CNBC reports that Herbalife shares were down 2 percent in extended trade on Tuesday following the announcements.

Internet Based Payday Loan Business Taken Down by Supreme Court

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court-gavelWell, one state body isn’t taking it on the chin when it comes to Internet payday loan businesses.

The Georgia Supreme Court announced on Monday that it is giving the go ahead to state officials to proceed with a lawsuit that targets an out-of-state payday lender that is violating state laws.

In 2013, Attorney General Sam Olens filed a lawsuit against Western Sky Financial LLC, a Native American tribal Internet payday lender located in South Dakota. The lawsuit alleges that the business violated the state’s 2004 law that aims to crack down on short-term, small-dollar, high-interest payday loans.

At the time, the payday lender was looking to dismiss the case because it had claimed tribal immunity from lawsuits submitted under federal law. Moreover, Western Sky Financial alluded to a loophole in the 2004 legislation that defines payday lending that “does not encompass loans involving interstate commerce.” It seems that the state felt despair, but Monday’s ruling gave them the momentum.

Georgia Supreme Court Justice Robert Benham wrote that lawmakers did not actually take out payday loans by out-of-state businesses from the legislation, and it wouldn’t make any sense if they did. While there are legit internet payday loan businesses services like Western Sky Financial LLC are making it very tough for them.

“If that were so, the act would be virtually meaningless because it would prohibit nothing,” Benham wrote. “Instead, we are persuaded that this language is simply a legislative finding of fact that is obviously factually inaccurate.”

When it comes to the claim of tribal sovereignty, the judge noted that Native Americans often conduct business beyond reservation boundaries. This means that they are required to comply with criminal and civil laws. So a Native American tribe would be mandated to face the court system over allegations.

In the end, the supreme court did not reject the lawsuit. In fact, it ordered the online payday lender to pay more than $15 million, which is the sum the business has received from Georgia borrowers since the lawsuit was initiated. This could cause the business to shut down its operations.

Many outside of the legal system are celebrating.

Liz Coyle, head of Georgia Watch, a consumer advocacy group, which tipped off the attorney general regarding Western Sky Financial, said that predatory lenders are having a negative effect on Georgia.

“We know what a detrimental effect on Georgians and Georgia families these predatory lenders have, so it’s fortunate that Georgia does have a strong ban on payday lenders and a department of law that enforces that ban,” said Coyle. “Unfortunately the state still has small dollar lending through title pawn loans that trap Georgians in the same cycle of debt as payday lending and end up with rates as high as 300 percent APR.”

Because the federal and state governments are looking to prohibit or restrict payday loan stores from opening or operating, a lot of lenders are setting up shop on the Internet to hand out costly loans without fear of reprisal from the government.

Sony Quarterly Profit Tumbles Almost 86 Percent

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sonyProfits of electronics maker Sony plummeted heavily during its fiscal second quarter, hurt by a stronger yen and charges from the sale of its battery unit.

The Japanese company reported on Tuesday that net income for the July-September quarter was 4.8 billion yen ($45.8 million), plunging roughly 86 percent from 33.6 billion yen posted a year ago.

It reported a 48 percent slump in its operating profit which stood at 45.7 billion yen (about $436 billion), down from 88 billion yen from a year earlier and missing analysts’ estimate in a Thomson Reuters poll by 1.2 percent.

Sony had on Monday trimmed its annual profit outlook, citing losses from the sale of its battery business. It reduced its profit forecast for the full year to 270 billion yen, a drop of 10 percent from a previous estimate of 300 billion yen.

The slump in operating profit during the second quarter was largely driven by an impairment charge of 32.8 billion yen from the sale of the manufacturer’s battery unit.

A stronger yen was another weakening factor. Sony’s earnings were hurt by appreciation of the Japanese currency against the U.S. dollar, rising to 104.76 on Tuesday from roughly 120, according to CNBC.

The Japanese company is enjoying increased demand for its imaging sensors which are used in mobile devices. This contributed immensely while the company was undergoing restructuring to shift focus from low-margin consumer products.

“Demand for (camera) sensors from smartphone manufacturers, including Chinese players, has been strong,” said Kenichiro Yoshida, chief financial officer at Sony. “We are also receiving many inquiries for the next year.”

Damage caused by the Kumamoto earthquake, which led to the closure of a major factory used for its money-spinning imaging sensor business, also contributed to the decline in profit.

The hit to sensor production by a series of earthquakes earlier in the second quarter of 2016 led to a loss in Sony’s semiconductor business. The division posted a loss of 4.2 billion yen in the second quarter, compared to 34.1 billion in operating profit a year earlier.

It took half a year for sensor shipments to return to normal, the company said.

Yoshida revealed that Sony was also considering diversifying into the auto market. He said auto parts supplier Denso Corp would adopt the company’s sensors, although the Sony CFO stated that “it will take three to five years before shipments of automotive sensors begin in earnest.”

The Japanese electronics manufacturer’s gaming business reported a 20 percent on-year decline in operating profit, partly as a result a stronger yen and fall in PlayStation 3 sales. But investors are expecting the recent launch of the PlayStation 4 Pro, an upgraded version of the company’s flagship game console, to boost sales during the coming holiday shopping season.

Sony has also released a virtual reality (VR) headset which is expected to perform well on the market, given how more friendly-priced it is compared to rival offerings.

The electronics giant, which has been working in recent years to focus its offerings in the smartphone market in the higher-end section, swung to profit in its mobile division. It posted a profit of 3.7 billion yen in the second quarter, compared to a 20.6 billion yen loss a year ago.

Shell Swings to Profit in Third Quarter

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ShellRoyal Dutch Shell Plc posted expectation-beating profit during the third quarter, helped by acquisition of BG Group Plc.

On Tuesday, the oil giant revealed that its profit during the last quarter came in at $1.4 billion on a current cost-of-supplies (CCS) basis, driven by increased production and lower operating costs. The figure marked a significant improvement on the $6.1 billion loss reported during the same period in 2015.

The CCS measure is considered equivalent to net income reported by companies in the United States. It is commonly used by companies that deal in commodities.

Earnings, when adjusted for inventory changes and one-time items, jumped to $2.79 billion, up about 17 percent from the $2.4 billion reported in the third quarter of 2015.

Shell’s profit (excluding identified items) smashed the company’s consensus estimate of $1.7 billion and an average estimate of $1.79 billion provided by analysts in a Bloomberg survey.

“Shell delivered better results this quarter, reflecting strong operational and cost performance,” Chief Executive Officer Ben van Beurden said in a statement. “But lower oil prices continue to be a significant challenge across the business, and the outlook remains uncertain.”

Van Beurden said the improved earnings “benefited from increased production volumes mainly from BG assets.”

Production of oil and gas gained 25 percent from a year ago, rising to 3.6 million barrels of oil equivalent per day, as reported by Bloomberg. The Hague-based oil giant swung to profit in its exploration and production business with earnings of $4 million, a reverse of the loss recorded during the same quarter last year.

Beurden completed the acquisition of BG in a record $54 billion deal in February. The transaction gave Shell a 20 percent share of the global market for liquefied natural gas. The company also gained some high-margin oil fields located in Brazil.

The results were also boosted by actions Van Beurden took to check the impact of the downturn in the global oil market.

The Shell chief executive has cut more than 12,000 jobs and renegotiated several contracts. He has also embarked on a massive asset-sale program that would see the multinational oil company sell off assets worth about $30 billion.

Shell generated $200 million from asset sales during the third quarter.

Aside cutting costs, Shell, like some other European oil companies, has also ramped up borrowings to guard dividends from falling as a result of the downturn. The company also added billions of dollars to its debt to enable it complete the BG acquisition.

Debt to capital stood at 29.2 percent in the third quarter, more than double the 12.7 percent posted in the same period a year ago.

Shell paid its shareholder $3.8 billion in dividends, with about $1.1 billion of these allocated in shares. Capital expenditure amounted to $7.7 billion.

Capital investments are expected to come in around the lower threshold of Shell’s guidance of $25 billion to $30 billion for 2017, down from $29 billion in the current year.

Van Beurden promised to enhance savings from the BG acquisition while also protecting dividends from the oil market slump.

The most-traded B shares of the company were trading higher in London on Tuesday morning. They have gained around 42 percent in 2016.