Inflation accelerates to 8.1% in December

By Keisha B. Ta-asan, Reporter

INFLATION ACCELERATED to a fresh 14-year high in December, as prices of food, particularly vegetables, surged during the holiday season, the Philippine Statistics Authority (PSA) said on Thursday.

Preliminary PSA data showed annual inflation quickened to 8.1% in December, from 8% in November and 3.1% in December 2021. This was the fastest since the 9.1% print in November 2008.

Inflation was below the 8.3% median estimate in a BusinessWorld poll of 11 analysts conducted last week and within the 7.8-8.6% estimate given by the Bangko Sentral ng Pilipinas (BSP). 

December also marked the ninth month in a row that inflation breached the BSP’s 2-4% target range.

“This is consistent with the assessment of elevated inflation could peak in December 2022 before decelerating in the succeeding months due to easing global oil and non-oil prices, negative base effects, and as the impact of BSP’s cumulative policy rate adjustments work its way to the economy,” the central bank said in a statement.

Full-year average inflation settled at 5.8%, matching the BSP’s forecast, but faster than the 3.9% average in 2021. It also marked the highest since 2008’s 8.2%.

Meanwhile, December core inflation, which discounted volatile prices of food and fuel, picked up to 6.9% from 6.5% in November. This was the fastest pace since the 7.2% print in November 2008.

For the entire year, core inflation averaged 3.9%, quicker than the 3% print in 2021.

At a press briefing, National Statistician Claire Dennis S. Mapa noted a slowdown in inflation on a monthly basis. Month on month, the consumer price index (CPI) inched up by 0.3%. Stripping out the seasonality effects on prices, inflation slipped to 0.3% in December from November’s 0.7%.

“We are really seeing a slowdown in terms of incremental increases both in the raw form and the seasonal adjusted form… That seems to be good news. However, there are still threats like the price of vegetables that contributed really substantially in the inflation, as well as other food items,” Mr. Mapa said.

December inflation was driven by the 10.2% year on year growth in the food and non-alcoholic beverages index, faster than the 10% seen in November.

Food inflation quickened to 10.6% in December, from 10.3% in November and 1.6% a year ago, as vegetable prices skyrocketed amid supply shortages due to typhoon damage.

Vegetable inflation surged 32.4% in December (from 25.8% in November), which Mr. Mapa said was the highest since the 44% in February 1999.

Mr. Mapa noted the prices of onions, as a single commodity item, contributed 0.3 percentage point in December’s overall headline inflation.   

The price of red onions rose to as much as P720 per kilo in December, while white onions cost as much as P800 per kilo. This prompted the Agriculture department to implement a suggested retail price for onions.

In a statement, the National Economic and Development Authority (NEDA) said the higher prices of vegetables was due to crop damage from weather disturbances in the past months, disrupting the farmers’ planting calendar.

Also, December inflation was driven higher by the restaurants and accommodation services index, which climbed to 7% in December (from 6.5% in November), reflecting continued “revenge spending” by Filipinos during the holiday season.

Another driver was the housing, water, electricity, gas and other fuels index, which rose to 7% in December from 6.9% in November.

“The government will continue to prioritize addressing the impact of inflation as it remains to be a challenge not only in the country, but throughout the globe,” NEDA Secretary Arsenio M. Balisacan said.

Out of 13 commodity groups, nine reported faster inflation in December, including alcoholic beverages (10.7% from 10.6% in November), clothing and footwear (3.9% from 3.6%), furnishings and household equipment (4.8% from 4.5%) and health (3.1% from 2.8%).

Meanwhile, a slower rate of increase was seen in transport (11.7% from 12.3% in November), while the annual inflation rate for education services (3.6%) and financial services (0%) were unchanged.

Annual headline inflation rates in the Philippines

Inflation for the bottom 30% income households, which still use the 2012-based prices, rose to 7.9% in November. This was faster than the 7.7% print in October and 3.3% last year.

Year to date, the average inflation for this income group stood at 5.3%.

PSA’s Mr. Mapa also announced the rebasing of its CPI for the bottom 30% income households to a 2018 base from 2012, starting next month for the reporting of January inflation.

Inflation in the National Capital Region (NCR) rose to 7.6% in December, faster than the 7.5% print in November and 2.1% a year ago.

Outside of NCR, consumer prices rose 8.2% from 8% in November and 3.4% in the same month of 2021.

INFLATION SLOWDOWN
PSA’s Mr. Mapa said the December inflation print “could be a peak,” but there is a risk that prices may still surge in January.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said that with the transport index slowing down, inflation may have reached its peak in 2022. 

“Upcoming prints will likely reflect more the recent stabilization of oil prices. However, we still expect a gradual decline in inflation considering the supply and production issues in the agriculture sector,” he said.

Mr. Neri noted volatility in food prices will continue to be a recurring problem if the structural problems in the agriculture sector are not addressed.

In a note on Thursday, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said December may have been the peak for this inflation episode.

“Storm damage to crops may have helped fan price pressures for basic food items but elevated transport and utility costs for nearly a year may have also contributed to price pressures spreading across the CPI basket,” Mr. Mapa said.

“Meanwhile, resurgent demand reflected in the stronger-than-expected GDP growth, fanned inflation even further with notable increases in inflation for the services sector. All of these suggest that despite inflation peaking late last year, we could see inflation face only a slow grind lower in 2023,” he added.

For Security Bank Corp. Chief Economist Robert Dan J. Roces, faster core inflation shows that price increases are not just limited to food and energy sectors.

“Rising core inflation indicates that price increases were more widespread and are not just limited to certain sectors or goods, as businesses may have taken advantage of strong demand during the peak holiday season,” Mr. Roces said.

He added that inflation may average 4.5% this year, still above the central bank’s 2-4% target.

HAWKISH OUTLOOK
The BSP said that the risks to the inflation outlook are “tilted to the upside” for this year, citing volatility in food prices due to weather disturbances, transport fare hike petitions, and potential wage adjustments.

Risks to the inflation outlook remains “broadly balanced” in 2024.

“Meanwhile, the impact of a weaker-than-expected global economic recovery continues to be the primary downside risk to the outlook,” the BSP added.

The BSP forecasts inflation at 4.5% this year, still above the 2-4% target band, before easing to 2.8% in 2024. Mr. Medalla last month said the goal is to bring down inflation closer to 3% by the third quarter of 2023.

Meanwhile, the still-elevated inflation in December bolstered economists’ expectations that the BSP still has room to raise rates this year.

“There will be a post-holiday consumption slowdown, and favorable base effects from the high inflation levels since March 2022 are expected to set in and the rate will fall within the 2%-4% inflation target by the middle of the year,” Mr. Roces said.

“This gives the central bank some wiggle room to diminish the size of hikes so as not to slow down domestic growth too much while still driving home the inflation fight,” he said.

After cutting rates by 200 basis points (bps) in 2020 to support the pandemic-hit economy, the BSP raised policy rates by 350 bps to 5.5% in 2022 in order to curb inflation.

“With this, the current headline and core inflation print suggests that the BSP can opt for a 25-bp hike in its next policy meeting in Feb. 16, following an expected similar-sized hike by the US Federal Reserve Bank,” Mr. Roces added.

ING’s Mr. Mapa also expects the Philippine central bank to remain hawkish in early 2023.

“We could see BSP roll out additional rate hikes to match moves by the Fed. However, once the Fed carries out its much-anticipated ‘pivot’ we believe Governor Medalla could consider a pause of his own as policy rates are currently already in restrictive territory,” he said.

The Federal Open Market Committee (FOMC) has raised a total of 425 bps in 2022, bringing its own policy rate to 4.25-4.5%.

“If a recession in the US happens, the FOMC might decide to take back some of their hikes and bring down the Fed funds rate closer to 3%. In this scenario, the BSP policy rate might peak at around 6.5% in 2023,” Mr. Neri said.

“The BSP will likely deliver their own cuts following the Fed, but still maintaining the 100 to 200 bps differential with US rates. The BSP policy rate could go down to 4.75% in the latter part of 2023 if this happens,” he added.

The Monetary Board’s next policy-setting meeting is on Feb. 16.

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Foreign investors pull out Sh24 billion from NSE in 2022

Economy

Foreign investors pull out Sh24 billion from NSE in 2022


Nairobi Securities Exchange (NSE) on the trading floor of the Exchange building. PHOTO | SALATON NJAU | NMG

Foreign investors yanked Sh23.9 billion out of the Nairobi Securities Exchange (NSE) in 2022, the highest outflows in three years, as they took flight from the market on heightened global risks.

The annualised portfolio outflow from domestic equities was the highest since 2020 when foreign investors withdrew Sh28.6 billion from local stocks on Covid-19 shocks.

The net selling position is the third in consecutive years with the last year of net inflows coming in 2019.

Exits by foreign investors served to drive down stock valuations with blue-chip companies leading the way in losses for the year.

For instance, Safaricom which represents the largest stock at the NSE by average market capitalisation, shed 36.4 percent of its value to close 2022 with a share price of Sh24.15 from a closing price of Sh37.95 a year earlier.

Other large-cap stocks which felt the heat of a falling market and retreating foreign investors were Equity, KCB and Co-operative which shed 15.6, 16.2 and five percent of their share prices.

READ: America rate hikes push NSE to biggest fall in history

Absa, Standard Chartered Bank, NCBA, BAT and Stanbic Holdings however defied the trend to record gains of 3.8, 11.3, 56.2, 4.2 and 16.9 percent respectively in the period.

The five stocks were part of market outliers that largely covered small caps including Car & General, Crown Paints, Olympia Capital and Limuru Tea which also closed 2022 with positive returns.

But the NSE closed 2022 in a bear territory as the all-share index (NASI) booked losses of 23.42 percent to settle at 127.47 points.

The accelerated foreign investor exits from a net selling position of Sh10.2 billion has largely been attributed to interest rate hikes in advanced economies which handed incentive to the investors to hold government securities in their home markets and domestic concerns on macroeconomic deterioration.

Across 2022, central banks in advanced economies lifted interest rates to quell ballooning inflation off the back of a spike in global commodity prices.

The US Federal Reserve for instance affected seven rate hikes across the year as inflation set a new 40-year high leaving the Federal Funds Rate at 4.5 percent from a low of 0.25 percent at the start of the year.

The Bank of England (BOE) in the UK meanwhile had eight rate hikes bringing its effective benchmark interest rate to 3.5 percent at the end of 2022, a 3.25 percent annualised increase.

While the rate hikes suggest a return to home markets by investors in frontier and emerging markets, gains in alternative markets within African bourses have brought forward a different perspective.

“Other than these factors, foreign investors are not really moving back home but playing in frontier markets. There were better returns from markets such as Nigeria, Zimbabwe and Mauritius,” noted AIB-AXYS Africa Research Analyst Solomon Kariuki.

At the same time, Mr Kariuki said the relative availability of dollars in Kenya despite ensuing FX challenges including shortages has allowed foreign investors to exit.

Going forward, Mr Kariuki has tipped the portfolio flows to largely hold as challenges in the operating environment persist.

“I don’t think there will be anything different as there are still going to be challenges evolving in both the domestic and global economy. The key thing is where the return will be, foreign investors are likely to follow,” he said.

The slowdown and potential termination of interest rate hikes by advanced economies and low stock values are however factors tipped to favour a slowdown in portfolio exits and a potential flow reversal.

READ: NSE is Africa’s third worst performing stock market

“This year, rate hikes will be quite contained which will help stabilize portfolio flows by foreign investors. This year portends some attractive entry points for foreign investors with low stock valuations across African bourses,” Churchill Ogutu, an economist at IC Asset Managers said.

Like Mr Kariuki however, Mr Ogutu notes evolving idiosyncratic risks in emerging markets including elections in markets such as Nigeria and persistent dollar shortages could further depress foreign investor inflows in emerging markets such as Kenya.

The withdrawal of foreign investors has left behind sharply undervalued share prices with the main NSE market for instance trading at a price-to-earnings ratio of 9.35 times from a higher ratio of 22.49 times in 2021.

The foreign investors’ flight has however not just left holders of shares in blue-chip companies in losses with the trading bourse-the NSE having itself issued a profit warning on expected 2022 full-year results.

In a trading statement issued in November last year, the NSE indicated that it expected its profit for the year to fall by at least 25 percent on reduced trading across its equities and debt securities counters.

“Over the course of 2022, the company’s performance was impacted by reduced trading in the equity and debt markets occasioned by continued economic challenges both locally and internationally,” the NSE said in a statement.

“Key among them the rising inflation, increase in interest rates in local and international markets and re-allocation of funds from the frontier to developed markets, on the back of rising interest rates.”

Despite traditionally offsetting losses in equities, the NSE secondary bond market was also on the decline in 2022, recording a 22.5 percent turnover decline to Sh741 billion from Sh956 billion in 2021.

The losses for the secondary bond market were primarily driven by soaring yields which hold an inverse relationship to prices which left holders of the papers exposed and reduced holdings of government bonds by banks who instead favoured private sector lending in the year.

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Macau casinos deal themselves a tough hand with big non-gaming investment pledges

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HONG KONG — As casinos in Macau begin new licenses to operate in the world’s biggest gambling hub on Jan. 1, the stakes are high on whether they will be able to successfully deliver on a government mandate to diversify away from their cash-cow: gambling.

For the last 20 years, Sands China, Wynn Macau , MGM China, Galaxy Entertainment, Melco Resorts and SJM Holdings, have raked in billions of dollars from their casinos in the Chinese special administrative region, turning the once sleepy fishing village into a glitzy boomtown.

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But their 10-year, shortened contracts come at a time when COVID-19 restrictions have decimated Macau’s gambling revenues, with 2022 the worst annual performance on record. Industry net debt is surging and operators face a new era of government oversight and control over their operations.

The recent easing of coronavirus restrictions in mainland China and Macau in December has also resulted in a wave of infections across the city, including many staff.

UPPING THE ANTE

Casinos have committed to investing a total of $15 billion in the coming decade, 90% of which must be spent on non-gaming.

But operators will find it hard to monetise their non-gaming ventures given their poor track record since 2001, when the former Portuguese colony first liberalized the industry, executives and analysts said.

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Non-gaming revenues, which averaged around 5% of overall gaming revenues pre-COVID, must grow to more than 30% in the next decade, said Ben Lee, founder of Macau gaming consultancy IGamiX.

“For the past 20 years, none of the operators have managed to establish any significant progress in non-gaming.”

“Contrary to the vaunted Las Vegas model, non-gaming in Asia does not carry the same profit margin as spending behavior is quite different over here,” Lee said, while adding that Galaxy, Melco and Sands were likely to fare better at diversifying based on their track record and management team.

Macau’s visitors have traditionally been male gamblers aged 30 and older, but more young families and women have started visiting in recent years.

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Macau, a densely packed territory located on China’s southern coast, is the only place in the country where gambling in casinos is legal.

In December, following the formal awarding of their contracts, casinos unveiled non-gaming plans including indoor waterparks, health and wellness centers, art exhibitions and a large garden attraction by Sands, similar to Singapore’s Gardens by the Bay.

KEY CHALLENGES

Macau’s current non-gaming attractions have focused on retail and dining, with some entertainment offerings such as Melco’s nightclubs, Galaxy’s cinema, Sands’ themed Venetian and Parisian properties and its exhibition arena.

But it pales in comparison to Las Vegas, which boasts daily entertainment and draws an international crowd. More than 90% of Macau’s visitors are from greater China, prompting the government to require operators to attract foreign tourists as part of their new contracts.

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New rules also stipulate that companies must routinely submit to the government the progress of their investment projects, the value of their investments and the execution period.

Increased regulatory oversight comes as Macau casinos face much higher debt levels versus 2019. Net debt increased four-fold to $23 billion in 2022 and it may only peak by end 2023 at $24 billion, Morgan Stanley said in a December note.

Compounding casinos’ challenges, Macau lacks connectivity with international markets, has dilapidated infrastructure and a shortage of skilled labor, as well as reputational damage over its COVID management, executives said.

Macau has few direct flights from potential markets outside China, while transport within the city is limited to move large groups of people around, said David Green, head of Macau gaming consultancy Newpage.

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“There is no indication that I have seen that the government is, or intends to address these weaknesses. Given the serial mismanagement of public works…it leaves concessionaires with a less than optimal host attraction proposition.”

A lack of land also hinders further development, while competition to hold conferences and exhibitions is rife from cities like Hong Kong and Singapore and within China itself.

Alidad Tash, who worked as a senior executive in Macau’s casinos since 2006 and now runs consultancy 2nt8, said the biggest challenge for operators was that mainland Chinese already have access to conventions, restaurants, shows and shopping in their own cities.

“What they come to Macau primarily for is the one thing that is not legally allowed within China: gambling.” (Reporting by Farah Master; Editing by Kim Coghill)

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6 Health Startups to Follow this 2023

Health startups have been making waves in the industry in recent years, as they have the potential to break new ground, overhaul global healthcare, and introduce innovative methods.

In 2022 alone, these companies garnered $6 billion in funding, demonstrating the strong demand for the value of their services. For one, many health startups are focused on developing new diagnostic tools that have the potential to revolutionize traditional treatments. By introducing novel technologies and approaches, these companies can help to address unmet needs and improve outcomes for patients.

Moreover, health startups can also disrupt obsolete practices by challenging the status quo and forcing the healthcare industry to evolve. By introducing new methods and approaches that are more efficient or effective, these companies can help to drive change and improve the way that healthcare is delivered.

These 6 health startups are key players in the global healthcare revamp in introducing new forms of treatments and providing accessibility to healthcare worldwide:

Evinature

Evinature is focused on the development and distribution of integrative therapies for the treatment of inflammatory bowel disease (IBD). Through the use of nutraceuticals that have been clinically proven to be effective in the treatment of IBD, the company aims to provide patients with access to accurate diagnosis and treatment. This is accomplished through the use of the company’s proprietary online platform, which guides patients through the CurQD™ Protocol.

The CurQD™ Protocol is a natural, tailored treatment regime that has been successfully implemented into standard clinical practice in leading medical centers in Israel and has had a transformative impact on the way that IBD patients are treated.

SonderMind

SonderMind is a company that connects mental health providers with networks of new patients and helps with various aspects of the healthcare process, including payor credentialing, billing and claims management, and guaranteed instant payment on claims.

SonderMind’s licensed therapists are in-network with many major insurance providers, including HSA, FSA, and Medicare plans. The goal of the company is to make it easier for individuals to access mental healthcare by eliminating waitlists and the need to search through outdated directories. SonderMind believes that therapy can be an effective treatment option, and it is committed to redesigning mental healthcare to make it more accessible and convenient for patients.

CareRev

CareRev is dedicated to building a sustainable future for healthcare professionals. Through its modern marketplace platform, CareRev offers healthcare professionals the freedom to choose how and when they work, as well as access to tools and training to help them develop their careers and pursue personalized growth opportunities.

CareRev is a rapidly growing team of nursing leaders, engineers, customer advocates, talent managers, and designers who are all working towards the common goal of creating a more flexible and efficient workforce in healthcare. The company’s mission is to provide facilities and clinicians with staffing solutions that enable them to adapt to changing demands and provide the best possible care for their patients. By supporting the growth and development of healthcare professionals, CareRev is helping to create a more sustainable and effective healthcare system.

Modern Fertility

Modern Fertility is a reproductive health company that is committed to making personalized fertility information more accessible. To achieve this goal, the company offers a range of fertility hormone essentials, including at-home tests, digital tools, and an online community for women, whether they are trying to have children or not.

The goal of Modern Fertility is to empower individuals to make informed decisions about their reproductive health and to give them more agency over their bodies and their futures. By providing comprehensive resources and support, Modern Fertility helps individuals understand their fertility hormones and make informed choices about their reproductive health, now and in the future.

Novoic

Novoic uses AI to detect subtle cognitive impairment and Alzheimer’s neuropathology based on how people speak. The company is focused on scaling access to early detection of Alzheimer’s disease, which is an important factor in effective treatment. By using speech-based testing, Novovic aims to provide scalable access to early detection for anyone. The company is collaborating with the Alzheimer’s Disease Neuroimaging Initiative and more than 50 medical centers to support early detection in underserved communities.

Novoic’s audio-verbal assessment is a fully automated experience that has been tested on thousands of users. It is a self-assessment tool that is easy to use and has proven to be effective. In addition, the company’s speech-based tests are the first to successfully predict amyloid PET positivity, with performance that is comparable to plasma tests.

Hinge Health

Hinge Health is pioneering the development of the most patient-centered digital musculoskeletal (MSK) clinic in the world. Its innovative solutions have been chosen by a large majority of employers and health plans that offer digital MSK solutions. The company’s approach to MSK care combines advanced wearable sensors and computer vision technology with a comprehensive clinical care team of doctors of physical therapy, physicians, and board-certified health coaches.

The Hinge Health digital MSK clinic is connected with over 750,000 in-person providers and enables real-time interventions that have been shown to reduce medical claims. The company is committed to providing patients with high-quality, personalized care that is designed to help them achieve optimal health and well-being.



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From Pepsi via Apple to digital healthcare

Three important movies have portrayed the character of John Sculley, former CEO of Apple and former president of PepsiCo. He has been played by Jeff Daniels in “Steve Jobs”, by Matthew Modine in “Jobs “, and by Allan Royal – in “Pirates of the Silicon Valley”. For his part, Sculley is baffled at the way he’s been depicted.

“They always showed me as if I was 60 years old, when I was actually 40 years old,” he recalls. “And in all these movies, I wear a suit, although I never wore a suit to the Apple offices. Sometimes they have me drinking expensive wines, even though I don’t drink at all. When I mentioned these to Aaron Sorkin [who wrote “Steve Jobs”], he told me, “I’m not a documentary filmmaker. I have to tell a story.”

The story about Sculley that the film world insists upon telling is a story of the corporate business man, the responsible adult who came from buttoned-up PepsiCo to lively young Apple, and banished its brilliant inventor, Steve Jobs. From that moment on, the story goes, the company began to deteriorate until Jobs the genius returned to save it. Sculley has a different version but to understand it, we must go back a bit.

“The Pepsi Challenge drove Coca-Cola crazy “

At the age of 30, after graduating from design and architecture studies and a degree in business administration, Sculley arrived at PepsiCo. At the time, its market share was one-tenth that of Coca-Cola. “In 1970, I was appointed vice president of marketing for PepsiCo, a small company that had to compete with Coca-Cola, then the strongest brand in the world. I conducted the company’s first market research: we went to 550 consumers’ homes once a week, and brought them a few bottles of whatever beverage they wanted from our selection. What was amazing was that no matter how much they ordered, when we got there, all the bottles were empty. For nine weeks, they drank whatever we provided. So, we realized that in order to sell more cola, we simply needed our consumer to have more cola at home.”

Then he had the idea that to some extent determined Pepsi’s success. “I said: you can’t compete with Coca-Cola on their playing field. But their bottles are very small.”

At the time, Coke was only sold in glass bottles. Sculley instructed Pepsi to produce one-and-a-half-liter plastic bottles. (If you’ve been looking for who’s to blame – here’s your man.) “It’s not easy. The bottle has to be safe to use while containing CO2 under pressure, so that there is no aftertaste in the beverage, and also be convenient for production in the existing factories.” The solution developed by manufacturer DuPont, was a small bottle that could be produced with the existing machinery, and then inflated to the desired size.

When the change was implemented, Coca-Cola didn’t really understand what was going on, Sculley says. “Three and a half years after we launched the plastic bottle, we received an award for the largest increase in market share ever [measured for the first time by volume and not in number of bottles sold], and Coca-Cola said, What are you talking about? We don’t see it.”

The defining moment was the Pepsi Challenge campaign. “It drove Coca-Cola crazy,” Sculley takes pleasure in recounting. As part of the challenge, Pepsi actually conducted and recorded blind taste tests, revealing to the world that the public could not actually tell the difference between the two companies’ beverages. “We started in Texas, where Coca-Cola unquestionably ruled and most of the public had never tasted Pepsi in their lives. The video camera launched in 1975, and it became much easier and more convenient to create a testimonial ad. Up until then, all advertisements said ‘Look how big I am’. We were the first to focus on consumers”.

The verdict Steve Jobs wouldn’t accept

Pepsi’s success was apparent to Jobs. Already in the early 80s, Jobs wanted to be Apple CEO, after the departure of its first CEO Michael Scott. “Steve founded Apple and was the largest shareholder, but the board of directors thought he wasn’t ready yet. To appease him, they said: You pick the CEO. When he didn’t like any of the candidates, they suggested he choose someone from a completely different industry.”

So began Jobs’ courtship of Sculley, which lasted five months. “We formed a bond. We would meet every weekend; I would fly to California or he would meet me on the East Coast. There was one day, in late March 1983 when I took him to the Metropolitan Museum of Art in New York City, where I knew, for a change, he wouldn’t be an expert. He took me to Tower Records, to introduce me to new music that he liked. Then we got to his apartment, which today belongs to Bono, the U2 singer. As we were looking at sunset over the Hudson River, I told him: I won’t come on board. I really like our relationship. We have fun together. I’ll advise you for free. But I’m staying here.

“Steve at that time had these deep black eyes and black hair, and he comes up to me with that black turtleneck sweater of his, looks me in the eye and says: ‘Do you want to sell sugar water for the rest of your life or come with me and change the world?”.

It was this sentence that changed Sculley’s mind. “He had this way of telling each person things in a way that would convince them.”

How did you get from that place, where he recruited you with such enthusiasm, to a place where he goes, you stay and you never speak again? The story goes that you fired him.

“I want to make something clear: I didn’t fire him. He wasn’t fired at all. Around 1984, he was depressed. He wanted to launch the Macintosh Office, a Mac computer with a laser printer, but the processors in those days weren’t good enough. The graphics weren’t operating, printing took a whole minute. The market related to the product as a toy and not as a work tool.

“I told him: You’re up against a technological brick wall. It’s not so bad. In a few years, processors will improve, their prices will drop, and this product will be everything you dreamed of.” But nonetheless, Jobs launched Macintosh with great fanfare, and the launch was a failure. “He told me, ‘It’s your fault. The pricing is too high.’”

Jobs did not want to accept the verdict. Macintosh was his baby. He no longer believed in the Apple 2 with its text-based interface, even though it generated most of Apple’s revenue. He already envisioned a future where all computers had only a graphical interface.

“He wanted to transfer the entire marketing budget to the Mac. I told him: I’m afraid this will cause the company to go bankrupt. A situation arose in which we were seen as two camps, the Apple 2 camp and the Mac camp. After all, when he recruited me, he mainly wanted me to market the Apple 2 against Microsoft, and even Commodore and Atari who were competitors, and I succeeded. In the meantime, he built the Macintosh in another building.”

Sculley asked the company’s board of directors to decide on the matter, and after conducting market research, it was decided to continue investing advertising money in Apple 2. Legend has it that, at this stage, Sculley acted to distance Jobs and diminish his role, and some argue the opposite. But Sculley claims neither is true. “Steve was so hurt by the decision to allocate most of the advertising budget to Apple 2, that he himself announced a sabbatical, and then a resignation.” Be that as it may, it was Jobs who found himself on the outside, and soon after founded NeXT, which dealt in both computer hardware and software.

He later said it was the best thing that ever happened to him.

“Not for Apple. Maybe the decision about Apple 2 was the right one, but the price of losing someone like Steve was too high.”

“Steve had a Version 1.0 and Version 2.0 of himself “

As we know, in the end the same Mac that Jobs conceived and designed enabled Apple’s golden age. But in those days, the company launched other products for uses such as desktop publishing, designed for printing advertising materials at home, desktop presentation (the early version of Power Point), and the PowerBook — “A computer designed just like today’s laptops,” says Sculley, “which were considered innovative and high-quality, and managed to command amazing premium prices and very high profit margins.”

But it was also important for Sculley to show that Apple had not lost its creative edge along with Jobs’ departure, and launched products like the Knowledge Navigator, a kind of tablet. Knowledge Navigator came with a simulation video that today, “When people see it, they immediately say – that’s the iPad!”. Apple also launched the first handheld computer.

But it was precisely then, in 1993, after a ten-year tenure, that Sculley decided to leave.

It sounds like everything was going well. So, why did you leave?

“The significant change occurred when Microsoft joined forces with Intel, and they developed an operating system that could run on very inexpensive computers that emulated Apple’s graphical interface. Steve told Bill [Gates] that he stole the interface from him. Bill said: ‘You know we both saw it at Xerox PARC.’” [Xerox’s Palo Alto Research Center is the campus where legendary technologies were developed, some of which are still used by Apple and Microsoft today].

Apple’s board of directors began to examine the possibility of imitating Microsoft and making the operating system available for use on other computers as well. “I said, ‘Sorry, but this is a stupid idea. Apple is known for our beautiful products.’ On this basic principle, Steve was right. I wouldn’t agree to be a part of it – and I left.”

After Sculley left, Jobs returned when Apple bought NeXT in 1996, “And that’s what started the next generation of Apple.”

Like Apple as a whole, he says, Jobs also had a Version 1.0 and a Version 2.0. “I knew the first version, when he was the genius we all know, but didn’t know marketing or management. In the second version, he was the best marketing person imaginable.”

At this point there was no longer any contact between you.

“No. When he left the company, he didn’t want to exchange a word with me. Not even afterwards. Looking back, I wonder how it is that I never said to him, both when he was at the company and after he left: let’s plan together the way you’ll eventually replace me as CEO. We never had that conversation and I’m sorry about that.”

According to the owner of a sushi restaurant in Japan, which was a favorite of Jobs, Sculley entered the restaurant one day, and upon seeing Jobs’ autograph on the wall, shed a tear and said, “Today, as older people, we could take a break and go spend some time together. But he died [from cancer in 2011], and that won’t happen.”

“Looking back, I’m ashamed that we marketed so much sugar”

Besides PepsiCo and Apple, Sculley has been involved over the years in founding and managing IT communications companies, as well as being a partner in companies in online commerce, cyber, a company for training entrepreneurs, and even a company that improves the taste of wine using magnets.

In recent years, his great passion has been healthcare. One of the main companies in which he is involved and serves as chairman is India-based Nirvana Health, which has developed a cloud platform for the health sector. “They’ve created something that did not exist in the health system – a cloud that connects all the way from the pharmacy to the hospital, and stores patient data so that all aspects are synchronized. There is no other cloud like it. Over the last decade, what’s made Apple, Alphabet, and Amazon so big is the cloud. Steve Jobs took Apple up a level with the iPhone, Tim Cook raised the value ten levels with the App Store, and today these companies are buying more and more clouds. But they haven’t managed to make a health cloud.”

How is it that Nirvana has succeeded where the giants have failed?

“There is a unique challenge in connecting all of the elements along the chain, and we solved it using a technology called RPA, where different cloud units connect to each other like Lego. But the technology is the easy part. The hard parts are the regulations for every illness, which are different for each country, even within the US, and also understanding who should be receiving payment at any given moment. These problems can be solved by companies that are already rooted in the health world, like Nirvana.”

As part of Nirvana Health, Sculley also has a business partnership with Carelon Digital Platforms, a unit of leading US health insurance company Elevance Health. In recent years, Elevance recognized it had the opportunity to expand far beyond just providing insurance, and could take ownership of patient healthcare management through the data. Collecting information makes it possible to prevent diseases proactively, monitor and treat patients at home or in clinics, rather than in hospitals, all of which should save insurance companies costs on each patient.

“Elevance is not originally a technology company, but it may become the largest technology company in the health field. It has 119 million policyholders. One day, it will make the biggest change of the decade. CEO Gail Boudreaux understood that as a health insurance company she needed to take healthcare a step back to holistic, preventive medicine that will actually make people healthier.”

Both of these examples, Sculley says, are part of a larger trend of taking healthcare out of hospitals; as treatments become more preventative and less invasive, they can be performed in clinics or even at home. “Look at what’s happening in the health market. In all sectors, company valuations are declining, and there are no mergers and acquisitions. Healthcare is the only sector where values are rising and mergers are continuing. Everyone knows that medicine is coming out of the hospital and everyone wants a piece.

“25% of the healthcare system costs are fraudulent, wasteful, unnecessary costs. If we solve these problems, we will really change the world. That’s why I’m involved in a company like Nirvana, which deals with the behind-the-scenes of paying for medicine. That’s where the money is.”

Where do technology companies like Apple and Google fit in this story?

“To date, the tech companies have only entered the sidelines. They haven’t been able to reach the core areas – the medical treatment itself, payment for it – because everything there is so complex in terms of regulation, and companies must manage relationships with the consumer in order to win there. But they’ll have to safeguard against losing talents to healthcare technologies. Some of the companies that will win in this area are yet to be founded.”


One thing Sculley foresees for this market is interfacing with blockchain. “If you’re referring to payment management in healthcare, I believe that blockchain will be involved. This way, we can track consumers when they switch between insurances, and continue compensating the insurance company that kept them healthy, at the next company as well.”

Sculley definitely views health technologies as the future of high-tech. “For those in search of a direction, I suggest studying molecular biology, not mathematics or programming, because those are subjects that artificial intelligence will soon replace. The future lies in synthetic biology, the production of living substances artificially.

“I founded a cord blood stem cells company [Celularity) and we are developing solutions for replacing cartilage and treating cancer using stem cells. We built a factory with an investment of $75 million. I’m happy that I am in this sector and not trying to build the metaverse.”

In the past you sold sugary drinks, not a very healthy product. How did you make the move to the opposite side?

“They don’t let me forget that, and rightly so. Pepsi marketed soft drinks and snacks, and led to increased consumption of these products. And when I look back, I’m embarrassed and ashamed. But in the 70s, we really didn’t know the impact of sugar and snacks. Today, Pepsi and Coke are trying to do things differently “.

Shaping future health with Israeli startups

When Sculley is asked how he views current US technological development relationships, he answers with a triangle: “If in the past, the special relationship was the one between the US and Great Britain, today the special relationship is, at least in the technological world, US-Israel-India. Indians have taken lead in our tech sector. They understand how to scale-up quickly, they get it to work on the first try. They’re not smarter than Israelis, but they understand size.”

In Sculley’s opinion, Indians also understand complexity – which is especially important in health technologies. “This is a far more complex sector than a classic technology field. If health were as simple as technology, Amazon and Alphabet would be leading the sector. But the regulations, protocols, lobbying, it’s really very complex, and Indians love complex processes. They know how to simplify them and lead them.”

According to Sculley, one person who best exemplifies this is Rajeev Ronanki, Senior Vice President of Elevance Health and President of Carelon Digital Platforms. Ronanki is responsible for solving many of the company’s challenges. This week, the two came to visit the company’s development center in Israel. “Our goal is to connect all the components of the digital health world on one platform,” Ronanki explains, “Including monitoring, decision support systems, disease prediction and prevention systems, and more. According to this plan, Elevance will own the brand as well as the data. If this plan is successful, it will contain both the relationship with the consumer and the information, and will have enormous power in the future digital health world.”

Elevance also collaborates with Israeli start-ups in the health sector, that, following guidance, integrate the technology into their systems. The most advanced is K Health. “It is already integrated with us at scale with 7 million insured clients,” says Ronanki. ” When Elevance clients open the app, they can choose to have a K Health virtual doctor as their family doctor. Alternatively, if they already have a family doctor, they can get a solution to a specific problem or urgent care from a virtual doctor, and the next day their regular doctor will receive an update about what happened.

“K is our main partner in this model, but there are others such as AmWell (American Well, a US-based telemedicine company founded by Israelis Ido and Roy Sheinberg). The goal is to create a network of companies like these, who will share information with one another through us. From the customer’s point of view, it will be a seamless experience. They will be able to receive specialist treatment from AmWell and emergency response from K in addition to their physical family doctor. Already today, the system is improving the treatment experience of our clients.”


Another Israeli partner is TytoCare, which has developed a system that allows routine family medicine tests, such as ear or throat examinations, to be performed remotely. In Israel, HMO Clalit Health Services offers TytoCare to its members. In the future, more complex tests will be able to be performed at home, saving on visits to the clinic. “We’ve distributed 20,000 Tyto products in the US,” says Ronanki.

Also on the list: Diagnostics Robotics, led by founder and CEO Dr. Kira Radinsky, which analyzes medical files, identifies patients who are on the verge of chronic illness, and intervenes to prevent their conditions from worsening; and MDI Health, which helps patients manage complex or multi-drug therapy, and issues warning about drug counter-indications.

Is there any tension between you and these companies regarding the question of who owns the patient data collected?

“The patient is the owner of the information and must grant permission for us to use it. Our agreements with partner companies gives us access to all data collected, and after we connect it from all sources, we share those elements that will enable the companies to improve their algorithm. We have a ‘sandbox’ that contains a lot of data that all our partners can practice on.”

Udi Goori – Country Manager, Israel, Carelon Digital Platforms notes: “Up until about two years ago, we operated each system separately, as a pilot. Now we’re starting to operate them all together. If we didn’t, it wouldn’t be the new world of health.”

What pieces are still missing from the puzzle?

“More predictive capabilities, technologies that allow more home tests and diagnoses, optimizing doctors and health teams time, and handling customer churn,” says Ronanki.

In recent years, insurance companies have been labeled the “bad guy” of the US health care system. Policy prices have increased and so have deductibles, in a way that sometimes prevents policy-holders from receiving coverage. “We’re among the cheapest companies per use because of our size,” says Ronanki, “and we hope that the solutions we’ve discussed will further reduce costs, thanks to holistic care.”

Published by Globes, Israel business news – en.globes.co.il – on January 3, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.


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Land & Buildings spots a chance to build value in a real estate play with Six Flags

Customers are socially distanced on rides like the Wonder Woman: Lasso of Truth at Six Flags Great Adventure in Jackson, New Jersey.

Kenneth Kiesnoski/CNBC

Company: Six Flags Entertainment (SIX)

Business: Six Flags is the largest regional theme park operator in the world and the largest operator of water parks in North America. They generate revenue primarily from selling admission to their parks and from the sale of food, beverages, merchandise and other products and services within the parks.

Stock Market Value: $1.9B ($23.25 per share)

Activist: Land & Buildings Investment Management

Percentage Ownership: about 3.0%

Average Cost: n/a

Activist Commentary: Land & Buildings is a real estate focused long-short hedge fund that will try to engage with management on a friendly basis when it sees deep value. It invests in deeply discounted real estate in the public markets and select corporate engagements. The firm’s positions are often under the 5% 13D reporting threshold. It’s prepared to nominate directors and has received board seats at American Campus Communities, Brookdale Senior Living, Felcor Lodging Trust, Life Storage, Macerich, Mack-Cali (now Veris Residential) and Taubman Centers.

What’s Happening?

On Dec. 21, Land & Buildings issued a presentation detailing a potential operational and strategic turnaround of Six Flags Entertainment, which includes monetizing the company’s real estate assets and considering a sale-leaseback.

Behind the Scenes

Land & Buildings (“L&B”) is a real estate focused investor, and this is primarily a real estate play. The firm is suggesting that Six Flags separate its real estate holdings, which L&B believes are worth more than the current enterprise value of the company. L&B has extensive knowledge and experience in this area. In 2015, the hedge fund commenced an activist campaign at MGM Resorts International, which ultimately led to the formation of an MGM real estate investment trust acquired by VICI Properties and significant margin enhancement at the operating company. Recent private transaction comps for gaming real estate, as well as public gaming REIT valuations, point to a 6% to 7% cap rate and mid-teens multiple for assets like theme parks. L&B believes there would be many interested acquirers.

In its analysis, L&B assumes a 7.25% cap rate and a $2.8 billion value for the real estate. A sale-leaseback of the real estate could decrease earnings before interest, taxes, depreciation and amortization from $520 million to $315 million and assuming a 7x EBITDA multiple (SIX’s current multiple is 8x), the operating company would have a $2.2 billion enterprise value. With $2.8 billion in cash and $2.4 billion in debt, that would equate to a $2.6 billion asset value or market cap. With 83 million shares outstanding, that would equal a $31.32 share price, or a 34% upside to Six Flags’ current stock price (47% upside from the company’s unaffected stock price prior to the L&B plan being made public). L&B performed the same analysis on 2024/2025 EBITDA goals, which led to a $6.8 billion value and a 150% upside. Moreover, the hedge fund’s analysis assumes the $2.8 billion stays on the company’s balance sheet. If it is used to buy back shares around where they are trading now,, the return would even be greater.

L&B believes that a sale of Six Flags’ real estate would allow the company to increase share buybacks, reinstate its dividend (which was eliminated at the beginning of the Covid pandemic) and pay down debt. Moreover, this is a shareholder base with many like-minded investors (HG Vora, H Partners, Long Pond Capital) and a relatively new CEO (November 2021) who may be amenable to a plan like this.  

Getting a plan like this done would give the CEO a lot of time and capital (both real and figurative) to do what really needs to be done – fix the operational issues. When Selim Bassoul was appointed as Six Flags’ CEO in November 2021, he embarked on a strategy of trying to enhance the guest experience and create a more profitable, higher margin business by migrating to a more affluent, family-oriented customer base. This new strategy, which included getting rid of several customer perks, led to a significant drop in attendance, alienation of many current customers and subsequent price underperformance to peers. However, the jury is still out on whether it is working. If it results in a higher attendance at higher prices in 2023, then it worked and nothing will need to be done operationally. However, if attendance continues to lag through 2023, Bassoul may have to start giving back many of the perks he had taken away, such as modified dining passes. He may even have to consider lowering prices to their prior levels. Without stabilizing operations, the real estate strategy can only create so much shareholder value. However, optimizing attendance and stabilizing operations will magnify any value created by the real estate strategy.

We would expect that Land & Buildings would want to have some sort of board representation to help with this strategy. Frankly, Six Flags should want the firm’s help if they choose to monetize the real estate. So, it would not be surprising to see an amicable settlement for a board seat or two. However, the director nomination window is between Jan. 11, 2023 and Feb. 10, 2023. If there is no settlement by then, L&B is almost certain to nominate directors, even if it is just to preserve the firm’s rights while it continues to talk with management. Should this go to a proxy fight, the like-minded investors mentioned above — H Partners (13.5%), HG Vora (4.2%) and Long Pond Capital (5.7%) — could be potential supporters of L&B.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and he is the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Squire is also the creator of the AESG™ investment category, an activist investment style focused on improving ESG practices of portfolio companies. 

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Top 10 agro-commodities exported by Nigeria in 2022

Cocoa beans, sesamum seeds, cashew, and seven others top the list of agricultural commodities Nigeria exported in 2022, generating N427.6 billion in revenue in nine months, latest data from the National Bureau of Statistics (NBS) show.

On a year-on-year, the value of the top agricultural commodities exported increased by 14.9 percent compared to the N372.2 billion recorded in the corresponding period of 2021.

The NBS data also showed that Nigeria’s agricultural export is steadily declining in relation to its contribution to total exports for the year.

In the third quarter of 2022, agricultural exports accounted for 1.42 percent (N84.21 billion) of the total exports valued at N5.93 trillion.

In Q2, agric exports accounted for 1.91 percent (N141.77 billion) of total exports valued at N7.41 trillion, compared to 2.40 percent in Q3 and 2.84 percent in Q1.

BusinessDay identified the top 10 agro-commodities that were exported to other countries in 2022. The analysis was based on the most recent data from NBS.

Cocoa beans

Cocoa is a revenue and foreign exchange earner for Nigeria, and the country is the fourth largest grower of the crop with 250,000 metric tonnes, according to data from the International Cocoa Organization.

According to the NBS, the value of superior-quality cocoa beans exported in nine months stood at N119.69 billion, accounting for 27.99 percent of total agricultural exports in the country within the same period.

The commodity was mainly exported to the Netherlands, Belgium, Germany, Indonesia, the United States, Malaysia, and Canada.

Sesamum seeds

Nigeria’s exportation of sesame seeds from January to September stood at N101.29 billion, accounting for 23.69 percent of the country’s total agric exports within the period reviewed.

The country is among the top growers of sesame seeds globally, thus making the seed an important component of Nigeria’s diversification plan.

China was the biggest importer of sesame seeds from Nigeria in the period under review. Other export destinations were China, Japan, Vietnam, Turkey, Greece, and Germany.

Sesame seeds could play a vital role in the country’s quest to earn substantial dollars as global demand for the crop continues to rise.

Cashew nuts in shell

The Nigerian Export Promotion Council (NEPC) has described Nigeria as a major and growing player in the cashew industry, with a rising market share in global cashew production and an annual average production increase of 5 percent.

The currently produces 220,000 to 240,000 tonnes of cashew in the shell, lower than when compared to its African peers like Côte d’Ivoire, and Guinea Bissau, according to the NEPC.

It exported cashew nuts in shells to the tune of N60.89 billion in the nine-month period, accounting for 14.24 percent of the country’s total agric exports within the period reviewed.

Standard quality cocoa

The total value of standard-quality cocoa exported to Germany, Malaysia, Netherlands, Indonesia, Belgium, and Italy in the nine-month period was N24.15 billion.

The product accounted for 5.65 percent of the total agricultural exports in the country between January and September.

Nigeria’s climate supports the production and supply of cocoa beans from October to June. This is a relatively long cocoa production period where 1.4 million hectares of farmland is cultivated. Herewith, the country can always guarantee supply.

Cashew nuts shelled

Globally, Nigeria ranks among the top countries for sourcing cashew. Nigeria, according to the NEPC, is a leading exporter of premium quality raw cashew nuts, with an average 48 kernel yield out-turn.

Nigeria earned a sum of N16.93 billion from the exportation of cashew nuts shelled between January and September 2022. It accounted for 3.96 percent of the total agric export value in the period under review.

According to the National Cashew Association of Nigeria, the country earned about N14 billion from the export of cashew in 2021 and is in the process of doubling the annual production of the commodity to 1,000,000 metric tonnes per annum.

Nigeria exported shelled cashew nuts to Vietnam, India, the United Kingdom, the United States, and Nepal within the period considered.

Dessicated coconuts

Desiccated coconut is the grated and dehydrated coconut meat, usually drier than shredded coconut, and is mainly used in the bakery and confectionery industries.

Desiccated coconuts amounting to N13.86 billion were exported to Vietnam and India in the first six months of 2022, accounting for 3.24 percent of the total agricultural exports in the period. The country did not export the commodity in Q3.

Read also: Fuel, wheat, ‘tokunbo’ vehicles top imports in 2022

Ginger, neither crushed nor ground

Ginger valued at N11.32 billion was exported from January to September. Its exports accounted for 2.65 percent of the N427.6 billion total agro-foods exports in the period.

Citing statistics from the Food and Agriculture Organisation, the NEPC said Nigeria accounts for 40 percent of global ginger production, producing almost 523,000 metric tonnes annually.

According to the NBS, ginger is one of Nigeria’s main agricultural export products, and it has ranked steadily as the fourth- or fifth-highest.

Natural cocoa butter

The NEPC has said there is a lot of additional export potential for Nigerian cocoa butter. According to the council, the most promising market would be the Netherlands. Additional export potential is estimated at $28.2 million up to 2021. Other interesting markets for increasing cocoa butter exports include France, Canada, Turkey and Poland.

Nigeria exported natural cocoa butter to the tune of N11.17 billion from January to September 2022, to Germany, Netherlands, and Estonia, accounting for 2.61 percent of total agricultural exports.

Other frozen shrimps and prawns

Frozen shrimps and prawns accounted for 2.46 percent of total agricultural exports in the period under review.

Nigeria exported frozen shrimps and prawns at a value of N10.53 billion in the period.

Exported to the Netherlands, France, Belgium, the United States, and the UK, frozen shrimp is an essential ingredient for seafood meals; it can be added to salad, pasta, and other meals.

Other cut flowers and flower buds of kind suitable ornamental purposes fresh, dried, dyed

These were exported in the nine-month period, generating N10.45 billion and accounting for 2.44 percent of total agric exports within the period.

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Universal Music Group is worth nearly three times as much as Spotify (NYSE: SPOT)

It’s a hoary old debate in media circles: Which is the king of the entertainment industries – content or distribution?

In the music business, the markets appear to have given a resounding response to that question in 2022, with Spotify – the world’s largest music streaming subscription platform – seeing its value fall significantly below that of major music rightsholders.

At the close of trading on the New York Stock Exchange today (December 30), the final trading day of the year, Spotify’s share price stood at USD $78.95, equivalent to a market cap of $15.26 billion.

That was significantly lower than the market cap of Warner Music Group (WMG), which has traded on the NASDAQ since summer 2020.

WMG’s share price at the end of trading today stood at $35.02, equivalent to a public market cap of $18.03 billion. That’s nearly $3 billion bigger than Spotify’s equivalent public market value.

Perhaps the most painful comparison for Spotify, however, comes via music’s largest global rightsholder – Universal Music Group.

UMG ended its 2022 trading today on the Amsterdam Euronext with a €22.51 share price, equivalent to a market cap of EUR €40.82 billion.

At current exchange rates, that EUR market cap for Universal is worth USD $43.70 billion.

In other words, UMG’s current public valuation is worth nearly three times that of Spotify’s.



Spotify vs. Universal and Warner: the big difference in 2022

This is all a far cry from a year ago this month, when MBW was asking: ‘Universal vs. Spotify: Which of music’s two giants will be worth more at the end of 2021?’ 

On December 6, 2021, Spotify and UMG’s valuations were remarkably close, with UMG worth EUR €45.20 billion on the Amsterdam Euronext, and Spotify worth USD $44.44 billion on the NYSE.

On the same date (December 6, 2021), Warner Music Group’s market cap on the NASDAQ weighed in at USD $21.46 billion… less than half that of Spotify’s.

Things look very different today – and that’s largely to do with the performance of Universal and Warner’s stock in the second half of 2022.



Amid macroeconomic turbulence, Universal Music Group’s share price on the Euronext is down this calendar year by 8.0%, from €24.47 at Euronext’s close on January 4 to €22.51 today.

That single-digit percentage drop looked, at one point in 2022, like it would be far steeper: As recently as October 11, UMG was trading at a share price of €17.25, down by nearly a third on the company’s opening share price in January this year.

Over the past two months, however, UMG’s share price has rallied, bouncing up by a whopping 30.5% vs. that October 11 low-point to its value today.

This story of rapid share price recovery has been mirrored at Warner.

Warner Music Group’s share price started life on the NASDAQ this year by closing at USD $42.95 on January 3. That figure had crashed by to $22.35 at the close of October 10 – down 48% vs. the start of the year.

Since that October 10 trough, however, WMG’s share price, like that of Universal’s, has surged back with a bang: By finishing 2022 at $35.02, it’s rebounded by 57% vs. that October 10 low-point.

As a result, WMG’s calendar year share price decline in 2022 – like Universal’s – is far less severe than some may have predicted, down 18.5%.


Both Warner Music Group and Universal Music Group’s share prices have seen double-digit jumps since hitting low-points in the first half of October 2022 (Source: Google Finance)

The Spotify difference

It’s been a very different story at Spotify.

SPOT began 2022 with a share price of $244.16 on the NYSE. At the close of today (December 30), that share price was down by 67.7% YTD.

Unlike Universal and Warner, there has been no bump for Spotify investors in the second half of 2022: SPOT’s share price hit an all-time low of $72.36 on December 15, and hasn’t managed to recover much since.

Indeed, after a precipitous fall in value in the first half of 2022, Spotify’s share price (and market cap value) has continued to slump into something of a flatline (see below).

To put it bluntly: Right now, Spotify’s share price ($78.95) is worth close to a fifth of its equivalent worth ($364.59) when Spotify’s value was at its peak in February 2021.



growing tension?

What might be perplexing to some in the music industry when it comes to SPOT’s share price decline is that, according to many of its Key Performance Indicators (KPIs), Spotify has had an impressive year in 2022.

That’s especially true considering the macroeconomic climate that many feared would damage growth in music streaming subscriptions globally.

At the close of Q3 2022, Spotify counted net global subscriber additions this calendar year of 15 million. At the same period of 2021, Spotify’s net calendar year subscriber additions stood at 17 million.

(Like-for-like, those numbers would be roughly the same: In April 2022, Spotify said that it has disconnected 1.5 million subscribers in Russia in Q1 following the country’s invasion of Ukraine; it expected a further loss of 600,000 subscribers in the territory in Q2.)

What’s more, thanks to some timely price rises, Spotify’s subscription revenue in 2022 has actually grown faster than it has in previous years, despite the obvious macroeconomic headwinds.

In the first nine months of 2022 (to end of September), according to Spotify’s fiscal figures, the firm generated EUR €7.53 billion from premium subscriptions – up by €1.37 billion year-on-year (vs. the same nine months of 2021).

In the first nine months of 2021, Spotify generated €6.17 billion from premium subs – up by €917 million year-on-year (see below).




So why are the markets punishing Spotify’s share price so heavily despite this performance? In a word: Margin.

Spotify’s gross margin in Q3 2022 stood at 24.7%, missing the firm’s own guidance of 25.2%. SPOT’s quarterly operating loss in Q3 stood at €228 million; its YTD operating loss (across the nine months to end of September) stood at €428 million.

There is, then, a commercial see-saw going on as we head into the New Year: Spotify’s music industry performance in 2022 was an impressive one, adding more premium subscribers than many expected – and generating more subscription revenue growth than it’s managed in recent memory.

This was great news for the likes of Universal Music Group and Warner Music Group, whose own valuations have greatly benefitted from the continued bounce of the music subscription market in a recession-hit 2022.

However, Spotify’s investors want to see improved margin from the streamer… and they’re well aware that, on top of some huge bets on podcasting in recent years, its biggest consistent expense remains the royalty checks it doles out to music industry rightsholders.

The stage is set for an interesting next 12 months.Music Business Worldwide

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‘We will rebuild everything’: war, loss and faith in Ukraine

Early February 2022. In the city of M in the south of Ukraine, the threat is palpable — it looks like Russia will escalate the hybrid war, which is in its eighth year already. It is probable that the Russian occupiers will try to cut through the Donbas-Crimea land corridor and seize new territories. And it will definitely happen here.

V and his wife N, both 44, are scientists who have devoted their entire lives to the study of fish. They decide, just in case, to pack an emergency suitcase, and now, every morning when they go to work, they take documents, laptops and their savings with them.

They decide to send V’s 70-year-old mother to Kyiv. Their 19-year-old son also lives in the capital. At least he and his grandmother will be safe. After all, if Russia attacks, it will never dare to strike Kyiv. This would be madness, a destructive anachronism that is impossible to imagine.

V and N devise a plan of where, if necessary, they will have to evacuate to. It is two weeks before the invasion.


As I am writing this essay, the 10th month of the full-scale war with Russia is passing and the bloody year of 2022 is coming to an end. Since the invasion, I have answered the question “How are you?” hundreds of times. And dozens of times I have been asked: “How did the war change your life?” When people ask something, they expect to hear words. I can only howl and try to hide this howl behind a smile.

So when people ask me, “How did the Russian full-scale invasion change the lives of Ukrainians?”, I tell them the story of V and his wife N. I cannot give their real names, given the fact that Russia still exists.


February 24. V and N’s house is not far from the military airport. The couple wake up to the sound of rockets. N says the words that at that moment resounded throughout the country: “It has begun.” V goes out on to the porch and sees five rockets cutting through the sky and flying towards the airport.

The occupying forces are advancing rapidly. Ten hours after the start of the invasion, they are already 100 kilometres from the city of M.

V calls his son in Kyiv, who says that Russian rockets hit the capital as well.

An hour later, N unties their four-year-old shepherd dog, which they affectionately call Ice Cream, asks their neighbours to look after it and gives them the house keys. Deep in their souls, they believe that they will return in a few days.

V and N get into the car. All they have are the essentials: the things they are used to having with them at all times — documents, laptops and savings. One last look in the rear-view mirror. In addition to the beloved house, built with their own hands, it reflects something that cannot be seen in an ordinary mirror — normal life, dozens of research expeditions to the Sea of Azov and the Black Sea, a happy childhood and youth in the city of M, which in recent years has become better developed and equipped for a comfortable life. With the ice rink, new hospitals, parks, illuminated roads, you couldn’t imagine this place in ruins. They are leaving behind two businesses. One is to do with ecological management; the other is a tourist attraction in which they planned next year to open the “Museum of Berries”, a place where you could sample every type of berry there is.

The mirror at times shows the future, which used to be so clear but is now completely obscured by the fog of war.

V and N leave for Zaporizhzhia. The next day they will be reunited with their son. And the occupying Russian troops will enter the city of M.


As I am writing this essay, an explosion occurs in Madrid — an envelope sent from an unknown address explodes in the hands of an employee at the Ukrainian embassy. Envelopes with explosive devices are also received by a company that produces weapons for Ukraine, the Spanish prime minister’s office, the Spanish defence ministry, the Torrejón de Ardoz Air Base and the US embassy in Madrid.

Three days later, the Ukrainian embassies in Hungary, the Netherlands, Poland, Croatia and Italy report receiving bloodstained packages containing gouged animal eyes.

According to Dmytro Kuleba, Ukraine’s foreign minister, Ukrainian embassies have received a total of 31 such letters in 15 countries — with explosives or eyes.

illustration of fish jumping through water

At present it is not known who is behind the parcels. It is known only that this all resembles a badly staged cosplay of “The Godfather”. In the same spirit, a European parliament proposal last month to designate the Russian private military company Wagner a terrorist organisation was followed by a widely circulated video of one of the group’s associates presenting a violin case containing a sledgehammer smeared with fake blood.


While studying at university, V was faced with a choice — what to research: birds, amphibians or fish? V and a fellow student were sitting in a dormitory trying to determine their future. Finally, V’s friend said: “Let’s do fish. At least they do not talk. Everything else either bites or yaps.”

V has had a brilliant academic career. Ten years ago, at 34, he became a doctor of biological sciences — a young age for a Ukrainian scientist to obtain the highest scientific degree. His works are cited. He never thought that he would end up in the army.

V and his family come to Chernivtsi to stay with a friend, also a professor, an ichthyologist who the day before had volunteered for the Armed Forces of Ukraine. The first week of the full-scale invasion passes. Like tens of thousands of men and women across the country, V joins the Armed Forces and becomes an ordinary soldier. His new position, occupation and assignment is “driver”.

V finds himself in a military unit based on the site of an educational institution. He is settled in barracks converted from a student dormitory. Teachers become soldiers. A new reality begins, in which he and I finally cross paths.


As I am writing this essay, news continues to come from liberated Kherson. More and more evidence is illuminating exactly what the Russian occupation authorities have been doing under the slogan: “Russia is here for ever.” According to the Ukrainian authorities, the Russians set up at least 11 places where people were imprisoned, four of which were equipped for torture; approximately 600 people were being held in these torture chambers at any one time and thousands of people passed through.

For four days, Russians stripped the Kherson Art Museum. According to the museum’s administration, more than 60 people loaded the paintings on to trucks and sent them to Crimea. The Russians stole everything: ancient coins, gold jewellery, Greek amphorae, works by western artists and Ukrainian and Russian artists of the 18th and 19th centuries and Soviet times. The works of contemporary artists they left.

This has happened before. In 2014 in occupied Donetsk, Russian-backed separatists turned the Izolyatsia art centre into a prison, and art objects were used as practice targets for shooting. Russia is a country that is terrified of becoming “modern” or “contemporary”. It is a country that lives by archaisms, in the holy conviction that it will exist for ever.

One of those imprisoned by the Russian occupiers says that they were held without getting any news. And he survived only on prayers for Ukraine to be given weapons, and prayers for the Ukrainian military.

illustration of a makeshift candle using a tin can

In early spring I am standing guard at the airport with V. We meet on a piercingly cold dawn. The first birdsong is sung. By their sound and pitch, V unerringly distinguishes the types of birds, talks about them.

Another time, I ask him if he misses his past life and profession. V says that he constantly talks about this with a friend, another scientist with whom we serve. He says that now there is nothing more important than victory, and first and foremost it is necessary to win, and then everything else will follow.

On the other hand, V says that it is critically important to support scientists — a considerable number of them have gone abroad and are unlikely to return. It is important to continue doing research, because due to the war, environmental data series that Ukrainian scientists have been collecting for 50-60 years have been interrupted.

The real scale of damage from the invasion inflicted on Ukraine’s environment will be assessed by researchers at a later date. But it is already clear that almost half of all our national parks and nature reserves have been damaged. And what about our two seas — Azov and Black? What about dozens of rivers? What about fish? Only with time will we also learn about these real crimes of the Russians against ecology.


As I am writing this essay, the funeral of Ukrainian poet and children’s writer Volodymyr Vakulenko, who was abducted by the Russian occupiers back in March in his native village of Kapitolivka near Izyum, is taking place in Kharkiv.

All these months, and after the Russians were pushed out in September, the search for the writer continued. Finally the news came that Volodymyr’s body had been found in a mass grave in the Izyum forest, among hundreds of other victims. He was buried there in early May; two bullets from a Makarov pistol were found in his body, which had been left in the street for a month after he was shot.

Volodymyr lived in the village with his 14-year-old autistic son and was taking care of his father after a stroke. He kept a diary, which he buried in the garden near the house shortly before the abduction.

When the de-occupation of the Kharkiv region began, the diary was literally unearthed by Ukrainian writer Victoria Amelina. It is now being preserved in the Literary Museum in Kharkiv and its contents will soon be published.

This is the history of Ukrainian literature nowadays: when Ukrainian writers look for the bodies of other Ukrainian writers taken away by the Russians. It is when a writer with a shovel digs up the diary of another writer who has been murdered.

In his diary, Volodymyr Vakulenko records our faith, which keeps us going: “However, I believe in the Armed Forces of Ukraine. As in God, let Him not be angry with me.”

illustration of a soldier grilling fish over a fire

I spent 100 days in the barracks, together with V and other brothers-in-arms.

At the beginning of the summer, I was sent to Kyiv. V and the other guys were sent east, to the territories retaken from the Russian invaders.

When the internet connection permitted, V would send short messages, stating that everything was fine. Everything was good. Nothing out of the ordinary. I knew from other friends that this was not the case. But that is V and his resilience.

When I speak to V in early December, it turns out that the internet and communications of my brothers-in-arms in the field are better than ours in the historical centre of Kyiv, where blackouts are common. The Russians continue to shell critical infrastructure across the country: they want to leave the civilian population without electricity, without heat, without water.

One day, when V is talking to me, I hear the sound of a projectile from my speaker. The conversation stops for a moment, until it becomes clear that it has missed.

I ask if anything is known about his house and offices in the city of M. Friends and neighbours look after the house and estate. The city is full of the Chechen warlord Ramzan Kadyrov’s forces and Russian soldiers who are strengthening the defence line that will run near his house and where the “Museum of Berries” was supposed to be. Well, the occupiers have already broken into his office in the city of M, destroyed all the equipment and occupied it for their own needs.

I ask V what the war revealed to him about the Ukrainians. V says he feels proud to be Ukrainian. V is proud that together with many thousands of people who had never served in the army before, he took a machine gun in his hands and stood up to defend his homeland. V says that we should be proud that we did not break, but became united.

V is proud of his son, who wanted to join the army with him. As his father, he could stop him only by saying that if necessary his turn would come. Now his son is a volunteer and helps in the liberated territories. The only thing V asks of him is to wear a helmet and not to walk along roadsides that may be mined. This is now a common request for Ukrainian parents to make of their children.

V is proud of his wife N and her steadfastness and ability to support others in need.

illustration of a soldier looking at a fleeing person in the distance

I tell V that when a Russian shell destroyed our townhouse in Hostomel, near Kyiv, in the first week of the invasion, I was greatly supported by his words: “We will rebuild everything. We are young. We have to live on regardless of what happens to us.”

N always wanted to have a winter garden with large glass windows. And in this new house, which will have to be built, she and V will create a winter oasis and will be reunited with a dog named Ice Cream.


As I was writing this essay, a dinner with a delegation of famous foreign writers took place. They declared that the purpose of their trip was “to demonstrate support for Ukrainian colleagues”. At some point, a Ukrainian guest told them that he had recently returned from abroad, where he had the opportunity to communicate with people who remembered the horrors of the Yugoslav wars, and how easy it was to find a common language with them through our now common experience. To which a western writer replied: “Of course it was, but the siege of Sarajevo lasted three years, 10 months, three weeks, and three days. No electricity, no water, no food. And what you have got here cannot be compared with what had happened there.”

At times like these, words fail me. It is as if we are invited to participate in a kind of competition, in which we must prove that the Russian invasion is a horror. And it has been that way since 2014. This is a competition in which we should expose our physical and mental wounds, testifying — look, here is our collective trauma.

For professional journalists, this is not the first war they have seen and it won’t be the last. However, for us, this is our only life and our only reality. And we keep looking for the answer: how to define genocide? How many people should be killed and tortured?


When I think about V’s story, when I try to comprehend the fate of my friends and what happened to us this year, I cannot help but think of the biblical story of Job, who had lost everything, but did not lose his faith. And then I think: if a modern-day Job joined the army, he would have to identify himself over radio or phone with a military call sign. What would it be? At the end of the summer, half an hour before leaving for the east, an urgent order came: immediately submit call lists. V smiles cheerfully. His call sign is Lucky. Lucky guy. V says: “Being happy in the army is cool. I hope this will help me to survive in these conditions.”

We do too, friend. We do too.

About the author

Oleksandr Mykhed is a writer and curator of art projects. His non-fiction book I Will Mix Your Blood with Coal, an exploration of the Donbas and the Ukrainian east, is forthcoming in English translation and is available in German, published by Ibidem. He is a member of PEN Ukraine

Illustrations by Jenya Polosina

Translation by Marina Gibson

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Business group expects economic gains from Marcos’ state visit to China

THE PHILIPPINES should expect more partnerships with China in trade, tourism, agriculture, public housing, and security after President Ferdinand R. Marcos, Jr.’s state visit next week, a Filipino-Chinese business group said on Wednesday.

“We are hopeful for enhanced Philippines-China economic and development partnership, especially in areas of agriculture, trade, infrastructure, energy, tourism, and people-to-people exchanges,” Henry Lim Bon Liong, president of the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. (FFCCCII), told a public forum on Wednesday.

“Likewise, there are opportunities to explore technological cooperation in telecoms, bioscience, medical science, energy, mining, and industrial development,” he added.

Mr. Marcos is scheduled to meet Chinese President Xi Jingping during his state visit to China, which starts on Jan. 3. The FFCCCII will be part of the Philippine business delegation to China.

Mr. Lim Bon Liong said the Philippines should also consider fisheries cooperation between rural coastal fishing communities, as well as partnerships in security, disaster preparedness, public housing and public health.

“We hope this state visit shall pave the way for more infrastructure cooperation, especially since China is now the world leader in modern and high-speed trains, in bridge and other construction technologies,” he said.

China has funded several Philippine projects such as the Estrella-Pantaleon Bridge and the Binondo-Intramuros Bridge.

Citing China’s “growing consumer market,” Mr. Lim Bon Liong said Beijing would need sources of tropical fruits like banana, pineapple, durian, avocado and mango.

“Let us export and sell more to China,” he said.

The Philippines should also take advantage of the opportunity to attract more tourists from China, which is further easing coronavirus disease 2019 (COVID-19) restrictions from next month.

China was the second largest source of inbound travelers to the Philippines before the pandemic. In 2019, 1.74 million Chinese tourists visited the Philippines, up 38.58% from 1.25 million in 2018.

“We in the Philippines have already opened our doors to foreign tourists and we hope this state visit of President Marcos can help us woo affluent China tourists again to visit our country as they reopen for travel,” Mr. Lim Bon Liong said.

Hotel owners are hoping to welcome more inbound travelers from China by the first quarter of 2023.

China is set to reopen its borders that have been mostly closed since 2020. Starting Jan. 8, China will stop requiring inbound travelers to quarantine, and is set to allow Chinese citizens to resume travel overseas.

“With this development in China, we’re hoping that by the first quarter, we can see some movements into the country already. But, of course, this will depend largely on the protocols that will be determined by health authorities,” Philippine Hotel Owners Association Executive Director Benito C. Bengzon, Jr. told One News’ BusinessWorld Live program.

Flag carrier Philippine Airlines (PAL) announced on Dec. 23 that it would resume flights between Manila and Xiamen beginning Jan. 13.

“Starting with one flight per week, operating every Friday, the PAL route to Xiamen will build up frequencies over time, in line with the easing of restrictions and applicable government authorizations,” PAL said in an e-mailed statement.

PAL also said that it would work towards resuming flights to more cities in China.

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Meanwhile, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said Filipino exporters would likely benefit from Mr. Marcos’ visit to China.

“We should expect more exports to China, which is among the country’s biggest export destinations,” he said in a Messenger chat.

Mr. Ricafort said improved foreign relations between the two countries — against the backdrop of the South China Sea dispute — would be “helpful” to the country’s business transactions with China.

China claims more than 80% of the South China Sea, which is believed to contain massive oil and gas deposits and through which billions of dollars in trade passes each year. It has ignored a 2016 ruling of a United Nations-backed arbitration court that voided its claim based on a 1940s map.

The Philippines has been unable to enforce the ruling and has since filed hundreds of protests over what it calls encroachment and harassment by China’s coast guard and its vast fishing fleet.

Terry L. Ridon, a public investment analyst, said Manila should get clarity from Beijing on the status of joint exploration plans in the disputed waterway and other commitments made during former President Rodrigo R. Duterte’s term.

Mr. Marcos should ensure that revenue-sharing arrangements are “more favorable” to the Philippines, he said in a Messenger chat.

Mr. Duterte led a foreign policy pivot toward China and away from the US, the Philippines’ oldest security ally.

Mr. Marcos, who took office in June, has vowed to make the Philippines a “friend to all” and “an enemy to none.”

“The President must ensure that economic concessions made during the Beijing trip should in no manner diminish our victory in the Hague ruling. It is a red line that the Philippine delegation should never cross,” Mr. Ridon said.

He also said the Philippine government clarify the status of ongoing and prospective development loans made under the previous administration and “determine whether Beijing remains committed to contributing to the country’s development.”

In July, the Transport department announced that the Philippine government had scrapped its loan applications with state-owned China Eximbank for three multibillion-peso railway projects undertaken under the previous administration.

“Beijing has to do more in developing relations with the Philippines,” Mr. Ridon said, noting that China’s advocates in the Philippine business sector tout enhanced bilateral relations but Chinese coastal militia continue to harass Filipino fishermen within the country’s exclusive economic zone.

Last month, a Chinese coast guard vessel allegedly took by force a rocket debris that was being towed by a Philippine Navy ship in the South China Sea.

Following the incident, Mr. Marcos had questioned why Chinese account was so different from the Philippine Navy report. He previously said his January visit to China could be an opportunity to find a way to avoid further incidents. — Kyle Aristophere T. Atienza and Arjay L. Balinbin

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