Netflix is launching a new, low-cost plan that will allow customers in India to only stream content on mobile devices.
The plan will roll out within the next three months, the company announced in a letter to investors on Wednesday.
Netflix said that the new plan “will be an effective way to introduce a larger number of people in India to Netflix and to further expand our business in a market where Pay TV ARPU (average revenue per user) is low (below $5).” The company did not announce how much the plan will cost, but it has been testing a $4 a month mobile-only plan in India and a few other Asian countries since March.
The announcement comes at the same time that Netflix suffered its first major loss of US subscribers in the last eight years. The streaming service lost about 130,000 subscribers in the United States from April through June, and blamed it on price hikes and its slate of original content failing to click with customers.
Netflix declined to comment on whether it's trying to make up for the loss of subscribers in the US by offering the service cheaply in India, a notoriously price-sensitive market. But sources familiar with the company’s thinking said that the launch of the low-cost plan in India was not a reaction to the drop in US subscribers, but the result of months of testing.
Experts, however, say that the fact that Netflix announced both things at the same time is telling.
“Netflix need to finds growth in emerging markets to drive subscribers,” said Tarun Pathak, an analyst at the technology industry analysis firm Counterpoint Research. “India is a mobile-first nation where many first-time users experience the internet on their phones, so the mobile-only plan in India will absolutely help Netflix increase their subscriber base.”
Video streaming has exploded in India over the last two years where data prices are relatively inexpensive.
Netflix has remained a niche player in the country because of its high pricing compared to competitors. Amazon Prime Video and Disney-owned Hotstar, for instance, are available for about $15 a year each.
The company added 2.7 million new subscribers in the second quarter of 2019, according to its earnings report released Wednesday. That's just over half of 5 million new subscribers that analysts had been expecting.
Netflix(NFLX) shares are set to fall 11% when US markets open.
It's a blow to the company at a time when competition with companies such as Disney(DIS) and CNN parent AT&T(T) is heating up.
Both rivals are expected to launch their own streaming services in the next year, causing Netflix to lose access to some popular shows like "Friends."
Next up among American tech giants: Microsoft(MSFT), which releases its results for the three months ending in June after US markets close.
2. Trade and earnings: Rising trade tensions are hurting Europe's most valuable tech company.
German business software group SAP(SAP) said Thursday that second quarter profits dropped 21% to €827 million ($930 million) because of restructuring costs and trade uncertainty.
SAP said that revenue from software licenses dipped 5% due to "trade-related uncertainty in Asia."
Investors had been expecting better results, and shares in the company dropped 7% in Frankfurt despite the group reiterating its full-year outlook.
It's the latest company to take a hit from the trade war between the United States and China. Car companies are particularly worried about tariffs at a time when auto sales are slowing.
3. Market dip: Markets are sliding as resurfaced trade concerns eat into investor optimism.
The Dow could fall 90 points, or 0.3%, when US markets open. The S&P 500 is poised to drop 0.3%, and the Nasdaq is tracking 0.4% lower.
European markets opened in the red. Britain's FTSE 100 dropped 0.7% in early trading, while Germany's DAX shed 0.9%.
That follows a tough trading session for stocks in Asia. Hong Kong's Hang Seng dropped 0.5%, while Japan's Nikkei shed 2%.
The Dow closed down 0.4% on Wednesday. The S&P 500 lost 0.7% and the Nasdaq fell 0.5%.
4. Coming this week: Thursday — Japan inflation; Morgan Stanley(MS), Philip Morris(PM), Honeywell(HON), Microsoft(MSFT) earnings Friday — American Express(AXP) and BlackRock(BLK) earnings; University of Michigan consumer sentiment
ELKHART, Ind. (Reuters) - Carrie Gray points to a stack of unwelcome mail on a conference table at the offices of Renegade RV, one of the leading U.S. manufacturers of high-end recreational vehicles. She’s buried in bad news from most of her about 350 suppliers.
An assembly line worker works on the production line at Renegade RV manufacturing plant in Bristol, Indiana, U.S., April 16, 2019. Photo taken April 16, 2019. REUTERS/Tim Aeppel
“We got letters from 75 percent of them demanding tariff-related price increases,” explains Gray, Renegade’s materials manager.
About 85% of the recreational vehicles sold in the United States are built in and around Elkhart County, making it a popular stop for politicians to tout their visions for U.S. manufacturing – including President Donald Trump, who staged a rally here last May.
And yet this uniquely American manufacturing sector has been caught in the crossfire of Trump’s trade war, according to interviews with industry insiders and economists, along with data showing a steep sales decline amid rising costs and consumer prices. The industry has taken hits from U.S. tariffs on steel and aluminum and other duties on scores of Chinese-made RV parts, from plumbing fixtures to electronic components to vinyl seat covers.
Shipments of RVs to dealers have fallen 22% percent in the first five months of this year, compared to the same period last year, after slipping 4% in 2018, according to the Recreational Vehicle Industry Association.
The RV industry’s woes illustrate how even the most “American” of manufacturers, the kind of industries Trump has vowed to protect, can be heavily exposed to tariffs in a world of globalized supply chains.
Tariff-related price hikes have forced manufacturers to pass on some of the increased costs though higher RV prices, which in turn has contributed to slower sales. As dealers cut orders, many plants furloughed workers or reduced hours, including Renegade, which has reduced its headcount of 160 by about 10 workers since May at its two factories here.
Michael Hicks, a Ball State University economist who tracks the industry, said its decline is far worse than he or other analysts expected and could signal a wider economic downturn. RV shipments have fallen sharply just before the last three U.S. recessions. (For a graphic on RV sales and past recessions, see: tmsnrt.rs/2XCPbL2 )
“The RV industry is a great bellwether of the economy,” said Hicks, because the vehicles are an expensive and discretionary purchase, easily delayed by consumers who start to worry about their financial stability.
The Commerce Department said in a statement that it has “met with private industry” to hear concerns about steel and aluminum tariffs and that it has granted most U.S. companies’ requests for tariff exemptions among the applications it has fully processed. The department referred questions about tariffs on Chinese goods to the office of the United States Trade Representative, which did not respond to requests for comment.
The RV industry may have contributed to its own problems by building too many factories during a sales boom in recent years, leading to an oversupply now. But tariffs were the pivotal factor in the industry’s decline, said managers at RV manufacturers and suppliers.
“The tariff price increases are what tipped the RV business — it started the landslide, no question,” said Tom Bond, the materials and purchasing manager at Adnik Manufacturing, an Elkhart-based division of Norco Industries that has been hit with higher costs on metals it uses to make components such as seat frames.
Sitting in an office near the front of the Adnik factory, Bond and Ronald Dick, the company’s brand manager, spent an hour griping about the speed and scope of their materials costs increases. And yet, like many in this region that strongly supported Trump’s election, they often added the caveat that they support the larger goal of the tariffs to protect U.S. factories from unfair foreign competition.
“It’s good for our country in the long haul,” said Dick, “but it’s going to hurt.”
Thor Industries Inc - which controls nearly half the RV market - said its sales in North America fell about 23% in its fiscal third quarter, which ended in April, compared to a year ago. The company said in a release that it has cut production and shifted to four-day weeks at some North American plants.
Workers such as Demiris Jahmal Williams are bracing for bumpy times. He has worked for a division of Thor for the last seven years, often working as many hours as he wanted. But his hours were cut recently, and his factory’s normal week-long shutdown in July was extended to three weeks.
“This is the worse I’ve seen it,” he said.
The unemployment rate in Elkhart county has risen to 2.6%, up from a post-recession low of 2.1% last April. During the last recession, the jobless rate in Elkhart County soared to more than 19%.
Tim Sullivan, CEO of REV Group, Renegade’s parent company, said U.S. suppliers have raised prices alongside their foreign counterparts because tariffs have sparked a rush of demand for U.S. parts.
“It’s been a total feeding frenzy,” he said.
Michael Happe, CEO of Winnebago Industries Inc, said he expects tariffs will add more than $10 million to the company’s costs this fiscal year, ending in August.
The upshot, he said, is that most RV manufacturers have had to boost prices they charge dealers.
“Those make their way to the end customer,” he said.
CUTTING WORKERS AS STEEL PRICES RISE
Despite its all-American image, the RV industry relies on imports for everything from air compressors and appliances to bedding fabrics and the LED light strings that have become a popular interior feature.
The cost of metals surged dramatically after sweeping tariffs on steel and aluminum were imposed last year. Those prices have since moderated, but manufacturers say many of the price increases on the metal parts they buy haven’t gone away.
Elkhart’s RV industry anchors a large network of related transport equipment companies, including utility trailer makers and specialty bus manufacturers, who rely on the same supply chains. Matt Arnold, president of utility trailer manufacturer Look Trailers based in Middlebury, Ind., said the axles he buys had three price hikes and are now 28% higher than before tariffs, while his Chinese tire rims were hit with a 65% tariff.
(For a graphic on how tariffs drive up trailer costs, see: tmsnrt.rs/2O3HLvO )
His rim supplier shifted to a source in Vietnam, but those still cost 8% more than he was paying before. In response, he boosted his trailer prices by about 20%, but that tanked sales. So far, he’s had to shutter his Georgia factory, laying off 80 people, and cut about 10% of his workforce in Indiana.
RISING RV PRICES, SLOWING SALES
Tariffs have so far translated into a 5% increase in RV sticker prices for consumers, estimates Gregg Fore, chief revenue officer at trade magazine RV Business and the former owner of an RV parts supplier, based on anecdotal reports and proprietary sales data he has seen.
“That doesn’t sound like a lot, until you start to talk about adding $1,000 to the price of a $20,000 vehicle,” he said.
Many RVs cost far more. Renegade, for instance, sells models that cost as much as $750,000 and can come with multiple bathrooms, heated tile floors and cedar closets.
Slideshow (30 Images)
Some industry leaders say the business will stabilize once dealers reduce excess stocks. But many of the region’s leaders are worried, including Jackie Walorski, the Republican who represents the area in Congress.
Walorski is an outspoken critic of President Trump’s tariffs, although she steps lightly. In a statement, she praised the President’s tax cuts and other policies for helping fuel economic growth.
“At the same time, I have not been afraid to stand up for Hoosiers when tariffs and retaliatory measures have put those gains at risk,” she said, using a common nickname for Indiana residents. “As I’ve told the president, we need to put a stop to China’s unfair trade practices by using a scalpel, not an axe.”
Reporting by Timothy Aeppel; Editing by Brian Thevenot
The company added 2.7 million new subscribers in the second quarter of 2019, according to its earnings report released Wednesday. That's just over half of 5 million new subscribers that analysts had been expecting.
Netflix(NFLX) shares are set to fall 11% when US markets open.
It's a blow to the company at a time when competition with companies such as Disney(DIS) and CNN parent AT&T(T) is heating up.
Both rivals are expected to launch their own streaming services in the next year, causing Netflix to lose access to some popular shows like "Friends."
Next up among American tech giants: Microsoft(MSFT), which releases its results for the three months ending in June after US markets close.
2. Trade and earnings: Rising trade tensions are hurting Europe's most valuable tech company.
German business software group SAP(SAP) said Thursday that second quarter profits dropped 21% to €827 million ($930 million) because of restructuring costs and trade uncertainty.
SAP said that revenue from software licenses dipped 5% due to "trade-related uncertainty in Asia."
Investors had been expecting better results, and shares in the company dropped 7% in Frankfurt despite the group reiterating its full-year outlook.
It's the latest company to take a hit from the trade war between the United States and China. Car companies are particularly worried about tariffs at a time when auto sales are slowing.
3. Market dip: Markets are sliding as resurfaced trade concerns eat into investor optimism.
The Dow could fall 90 points, or 0.3%, when US markets open. The S&P 500 is poised to drop 0.3%, and the Nasdaq is tracking 0.4% lower.
European markets opened in the red. Britain's FTSE 100 dropped 0.7% in early trading, while Germany's DAX shed 0.9%.
That follows a tough trading session for stocks in Asia. Hong Kong's Hang Seng dropped 0.5%, while Japan's Nikkei shed 2%.
The Dow closed down 0.4% on Wednesday. The S&P 500 lost 0.7% and the Nasdaq fell 0.5%.
4. Coming this week: Thursday — Japan inflation; Morgan Stanley(MS), Philip Morris(PM), Honeywell(HON), Microsoft(MSFT) earnings Friday — American Express(AXP) and BlackRock(BLK) earnings; University of Michigan consumer sentiment
MINEE EATS' mukbang videos on YouTube this month featured the uploader eating warabi mochi, top, and kiri mochi. Screen capture from YouTube
By Ko Dong-hwan
The MINEE EATS operator is introduced on YouTube as Kim Min-hee and is based in Georgia, in the U.S. Screen capture from YouTube
A Korean YouTuber who uploaded videos of herself eating Japanese food has drawn flak amid the ongoing South Korea-Japan trade war. The mukbang uploader of MINEE EATS posted the video on July 14, in which she ate warabi mochi, a jelly-like confection covered with sweet toasted soybean flour. The video sparked online criticism that it ignored the Korea-wide anti-Japan movement that involves boycotts of Japanese products at supermarkets and major shopping centers. The movement emerged after Japanese Prime Minister Shinzo Abe excluded South Korea from its "white list," restricting Japanese exports of semiconductor-building materials to South Korea, the world's chip-making industry leader. Hours later, she removed the video. She said the move reflected "many Korean viewers who were disgusted by the video," adding that her eating the mochi "by no means had any notion of my political proclivity." Two days before, she posted a video of herself eating malatang with kiri mochi, another Japanese confection similar to warabi mochi. Before her latest mochi videos, she had attracted criticism for calling gimbap "Korean sushi." Gimbap, hand-rolled steamed rice and various ingredients in dried seaweed, has been one of Korea's most popular street foods. She also aroused controversy for calling Korean traditional glutinous rice cake "chapssaltteok" a mochi. The uploader, according to the video platform, is Kim Min-hee, who is based in Marietta, Georgia, in the United States. She has over 1.3 million subscribers. Kim calls herself a "food lover" and "ASMR (autonomous sensory meridian response) specialist" on YouTube, referring to the video content genre where food-eating sounds are exaggerated to provoke viewers' responses. MINEE EATS has been posting the mukbang content since 2017.
Don’t be misled by the message from Facebook’s stock (FB) running up a borderline insane 55% so far this year — this is one wildly risky tech investment.
If not the riskiest among the FAANG (Facebook, Apple, Amazon, Netflix and Alphabet’s Google) cohort because of heightened scrutiny by worried lawmakers.
“There is going to be an enormous amount of focus on how Facebook polices content during the upcoming election — which is why I personally think they are the riskiest of the tech names from a policy perspective,” Isaac Boltansky, Compass Point director of policy research, said on Yahoo Finance’s The First Trade. “I think any struggles they have in policing the election are going to be front page items and there will be intense focus on Capitol Hill.”
Boltansky continued, “So from that end of the political sphere, they have the most risk out of all the Big Tech names.”
It’s hard to argue with Boltansky’s sentiment.
Nonetheless, a strong bid remains under Facebook’s stock price into its second quarter earnings release on July 24. Most on Wall Street Yahoo Finance has chatted with are upbeat on Facebook’s user growth potential and retention. Lost in all these conversations is a sense of fear around the stock price from ongoing backlash in DC that could lead to profit crushing regulation on Facebook.
This collective bullish group perhaps should be more closely watching how Facebook is faring on Capitol Hill this week. Indeed it hasn’t been pretty.
Heavy criticism of Facebook’s crypto plans
The social media giant has been blasted this week amid fears its new cryptocurrency project Libra would harm consumers (among other negatives to it). In two days of testimony, lawmakers have used Libra concerns to stoke fresh worries on Facebook’s power.
At times, the testimony has been contentious to say the very least.
The top Democratic Senator on the Banking Committee Sherrod Brown told Yahoo Finance’s Jessica Smith Facebook should be broken up. Brown certainly pulled no punches on his broader views on the company’s position in society.
“They wreaked too much havoc on our economy 10 years ago because of their market power, and we're seeing the same in the tech companies. That's why people in this country went from loving the tech companies over the last many years until the last four or five years to being very suspicious to the point of so many people now say, ‘break them up,’ because they have too much market power,” said Brown.
Amazon said it sold more than 175 million items during this year's Prime Day shopping event, more than its sales for the past Black Friday and Cyber Monday combined.
It also said that on Monday and Tuesday it sold more Amazon devices — like the Echo Dot, the Fire TV Stick and Alexa Voice Remote — over a two-day period than it ever has before.
A "record number" of Prime members in the U.S., which pay an annual fee of $119 to get perks like free shipping and access to Prime Day, shopped the event this year, Amazon said. It said it added more new Prime members on July 15 than it ever has before on a single day. And it said almost as many people signed up again on July 16.
Amazon disclosed for the first time last April that it had more than 100 million paying Prime members worldwide. It hasn't provided an update to that figure since then.
"We want to thank Prime members all around the world," Amazon CEO Jeff Bezos said in a statement. "Members purchased millions of Alexa-enabled devices, received tens of millions of dollars in savings by shopping from Whole Foods Market and bought more than $2 billion of products from independent small and medium-sized businesses. Huge thank you to Amazonians everywhere who made this day possible for customers."
Amazon has recently started rolling out a one-day shipping option across the country for Prime members, and it called this year's Prime Day "the fastest ever." Previously, the default shipping option for Prime members was for two days.
Amazon said it sold over 100,000 laptops, 200,000 televisions, 300,000 headphones, 350,000 luxury beauty products and more than 1 million toys on Prime Day this year.
In the U.S., it said top-selling items were the LifeStraw Personal Water Filter, the Instant Pot DUO60 and 23andMe Health + Ancestry kits.
A boost to all
Prime Day 2019 also delivered a boost to sales for Amazon's rivals, many of which have been touting their own deals all week to compete.
The 48-hour shopping extravaganza gave large retailers a boost in online sales of 68%, on average, according to Adobe Analytics, which measures the transactions of 80 of the top 100 internet retailers in the U.S. Adobe classifies large retailers as companies that make more than $1 billion in annual revenues.
Niche retailers, which Adobe classifies as those that bring in less than $5 million in annual sales, saw a 28% lift in digital sales, according to the firm. Last year, niche retailers saw a decrease in sales, Adobe said.
Walmart, Target, eBay, Macy's and Best Buy have all been running deals this week. Target pushed discounts for its in-house home goods brands. Walmart is expected to run deals, on everything from Google Home smart speakers to Instant Pots, through Wednesday.
"Prime Day has become an indisputable summer shopping holiday, greatly benefiting online retailers that can attract consumers to their site through compelling email campaigns or offering value-add services like buy online, pick up in-store," said Jason Woosley, vice president of Adobe's Commerce Product division.
Amazon's website also experienced a major glitch during Prime Day 2018, potentially giving rivals an even bigger boost when shoppers couldn't order through Amazon. But that wasn't the case this year.
Catchpoint, which monitors websites' performance rates, said Amazon "did an amazing job staying technically available and loading fast under heavy traffic during Prime Days."
