News round up: Apple, Tesco, Royal Bank of Scotland, News Corporation, Bank Bonuses.
Apple Inc's (NASDAQ:AAPL) latest results will face intense scrutiny today because investors are this month digesting a rare fall in the shares of the iPad maker. Apple's status as the world's most valuable company makes any decline in its share price painful for the wider stock market.
The iPad maker has the biggest weighting of any company in the S&P 500, accounting for 4.5pc of the overall index. Despite the 10pc drop over the last fortnight, the shares are still up just over 40pc this year after a run that prompted some Wall Street analysts to forecast that the shares will reach $1,000 (620 pounds) in 2013.
However, Verizon Wireless, America's second-largest mobile phone company, has said that it will start charging customers $30 to upgrade their phones, sparking fears that the telephone companies may start reducing the subsidies that have been vital to the success of the iPhone. Shareholders will also be eager to hear whether the new iPad, which went on sale in the US and the UK in March and a further 12 more countries last week, has been able to sustain its blistering start, writes the Telegraph.
Chief executive Philip Clarke’s attempts to revive Tesco’s fortunes suffered a setback yesterday as figures showed Britain’s biggest grocer continues to lose customers to its rivals. Tesco saw its market share slip to 30.7% in the 12 weeks to 15 April, from 30.9% a year earlier.
The company, until recently seen as an unstoppable growth engine threatening to engulf British retail, hit the rocks in January with a shock profit warning that sent shares tumbling. Last week Clarke vowed to get back to retail basics in order to stem the decline, pledging 8,000 more staff and a revamped, “warmer” décor in a £1bn bid to lure customers back, The Scotsman writes.
Royal Bank of Scotland
Royal Bank of Scotland could dramatically reduce the number of its outstanding shares in a 10-for-1 swap, instantly boosting their price to a level not seen since 2008. The state-backed bank is proposing to swap every 10 existing shares for one worth 10 times as much in a rare move that could help it shake off the stigma of its near collapse and government bailout during the financial crisis.
While largely cosmetic, the “reverse stock split” would restore the bank’s share price to a trading range more typical of the London market. On Tuesday’s closing price of 23.2p, the new share price would be £2.32, The Financial Times reports.
The movement to oust Rupert Murdoch as chairman of News Corporation gathered pace on Tuesday, after a major British shareholder group said it was planning to table a resolution against him. The Local Authority Pension Fund Forum (LAPFF), whose members control £100bn of investments, said those with top-tier Class B voting stock were preparing to file a motion jointly with American shareholder group Christian Brothers Investment Services.
They will call for an independent chairman to replace Mr Murdoch, to help address the "lax ethical culture and lack of effective board oversight" exposed by News Corporation’s "still emerging scandals," The Telegraph reports.
Bank bonuses should be subjected to longer deferral and claw-back periods to curb the excesses still prevalent in the City, a Bank of England policymaker has urged. Andrew Haldane, executive director for financial stability and a member of the Financial Policy Committee, said "while bank performance has fallen off a cliff, executive pay remains close to pre-crisis Himalayan heights".
He argued in a speech given in Berlin that bonus deferral, or claw-back periods, should be extended to 10 years or more on an internationally co-ordinated basis, from three or four years at present, to make bankers responsible and accountable for their decisions for longer, The Telegraph says.