Mark Zuckerberg may have been feeling vindicated on Wednesday.
After what’s been a horrible year for his company’s reputation, Facebook surprised Wall Street by posting record profits for its fourth quarter, and revenues that beat expectations.
The company reported earnings per share of $2.38, up from the $1.44 it reported a year earlier and also ahead of forecasts for $2.17. Net earnings for the quarter totalled $6.9 billion.
The company’s shares were up more than 8% to $162.3 in after-hours trading in New York, which will come as some relief to investors—Facebook’s stock has declined by roughly 30% in the past six months.
“We’ve fundamentally changed how we run this company,” Zuckerberg said on an earnings call, adding that Facebook had invested “billions of dollars in security.”
Wednesday’s results were in strong contrast to the flurry of criticism levelled at the company recently around its privacy practices, including from tech giant Apple. This week the iPhone maker blocked Facebook from distributing internal iOS apps that its staff used for testing new services, a major shot across the bow in what’s becoming a tense battle over privacy standards.
But none of that seems to matter to Wall Street right now. Not only is Facebook’s bottom line rising, its user base is still growing too, countering much of the recent discourse about an exodus of users from the platform.
The company said Wednesday that 2.32 billion people were active each month across its platforms, including WhatsApp and Instagram, versus 2.27 billion the previous quarter.
The number of people using Facebook daily was up 9% from last year to 1.52 billion, led by growth in India, Indonesia and the Philippines, the company’s chief financial officer David Wehner said on an earnings call on Wednesday.
Wehner also sought to downplay the impact of critical press articles over the past year on Facebook’s business and growth. “I’d let the numbers stand for themselves,’ he said. “We are growing in all regions.”
Zuckerberg said that the Stories feature on Facebook and Instagram would be where some of the greatest potential lay for generating more advertising dollars, by also using artificial intelligence-powered software to target Facebook users more accurately. “Stories on FB is growing quickly,” he said, though he also admitted, “We started a bit later and execution wasn’t as great as it needed to be.”
Wehner evaded a question on the earnings call about how much time people spent on Facebook versus Instagram, sidestepping concerns that its flagship network is falling out of favor.
“The daily active user trends that we’re giving do paint the picture, which is stability in the developed markets and growth for Facebook Blue in developing markets,” Wehner said. “Time spent is not our focus, and our focus is meaningful social interactions. Daily active user trends tell the story broadly.”
Advertisers, however, tend to spend more money on targeting users in developed markets, so even while signups to Facebook are growing in developing markets and even in the U.S., there may still be some concerns about return on investment if users in North America and Europe are spending only fleeting moments on the site. For now though, investors seem pleased enough with the growth numbers and the revenue beat.
–Parmy Olson Forbes Staff
Haute-Couture Designer Karl Lagerfeld Has Died
Haute-couture designer Karl Lagerfeld has died at the age of 85, French media reported on Tuesday.
German haute-couture designer Karl Lagerfeld, artistic director at Chanel and an icon of the global fashion industry for over half a century, has died, a source at the French fashion house Chanel said on Tuesday. He was 85.
Lagerfeld, instantly recognizable in his dark suits, pony-tailed white hair and tinted sun glasses, was best known for his association with Chanel but simultaneously delivered collections for LVMH’s Fendi and his own eponymous label.
French celebrity online magazine Purepeople said Lagerfeld died on Tuesday morning after being rushed to a hospital in Neuilly-sur-Seine just outside Paris the night before.
A spokesman for Chanel was not immediately available for comment.
Lagerfeld was artistic director at Chanel. A spokesman for Chanel was not immediately available for comment. -Reuters
– Sudip Kar-Gupta
The Coffee Farmers Betting On Blockchain To Boost Business
On a bustling street near the shiny new international airport in Ethiopia’s capital is a small coffee roastery with big dreams.
Nearly 40 Ethiopians – a third of them women – sift, roast and package prized Arabica beans for export to Europe under the Moyee brand, founded by a Dutch social entrepreneur.
The roastery, together with the innovative use of blockchain technology to ensure the supply chain is transparent, represents an attempt to keep as much of the profits as possible in Ethiopia, one of the world’s poorest countries.
“It’s the world’s favorite drink. We drink over 2 billion cups a day,” said Killian Stokes, who set up the Irish branch of Moyee.
“The industry’s worth $100 billion and yet 90 percent of coffee farmers in Ethiopia live on less than $2 a day.”
That is partly because most exporters process the beans elsewhere, but also down to price fluctuations and other factors that make coffee growing a precarious business.
To make things fairer, Moyee has created unique digital identities for the 350 farmers it currently works with – meaning buyers can see exactly how much each individual grower is paid, with prices set at 20 percent above the market rate.
Now the brand, whose slogan is “radically good coffee”, wants to use blockchain to take that to the next level – allowing buyers to tip farmers, or fund projects such as a new planting program, through a mobile app.
The U.N. Food and Agriculture Organization (FAO) said in a recent report that blockchain had huge potential to address challenges smallholder farmers faced by “reducing uncertainty and enabling trust among market players”.
The technology, used to underpin cyber-currencies like Bitcoin, allows shared access to data that is maintained by a network of computers and can quickly trace the hundreds of parties involved in the production and distribution of food.
Once entered, any information cannot be altered or tampered with.
‘BIGGER THAN THE INTERNET’
Siobhan Kelly, an advisor to the Food Systems Programme at the FAO, said blockchain would ultimately be “much bigger than the internet”.
“Within 10 years – it’ll take probably 10 years – it’s going to be a major revolution, for everything,” said Kelly.
Fruit farmers in Caribbean nations are also looking at using blockchain to attract better-paying customers, bring traceability and build a credit trail.
“It’s an innovation that is poised to empower local farmers in the Caribbean region,” said Pamela Thomas, executive director of the Agriculture Alliance of the Caribbean (AACARI), a regional network of nearly 100,000 farmers.
AACARI’s project has two components: auditing by accredited professionals to ensure farmers adhere to the Global GAP (good agricultural practices) standards, and a digital marketplace where buyers can find detailed information about the produce.
Global GAP is a voluntary standard required by many European and U.S. supermarket chains.
Vijay Kandy, whose company is building the blockchain platform, said the auditing process would allow farmers to deal directly with buyers – bypassing the middlemen that many currently rely on – and make access to credit easier.
“One reason why buyers from faraway places or different countries go through middlemen is because they rely on them to make sure farmers are following these good practices,” he said.
One such buyer is London-based Union Hand-Roasted Coffee.
The company sources its coffee directly from growers’ cooperatives to ensure higher quality, pays farmers more than minimum price set by the global Fairtrade organization, and works with more than 40 producer groups in 14 countries.
“We currently undertake direct interviews to verify farmers have been paid, but it’s very time- and labor-intensive to do that and to record all that data,” said Steven Macatonia, who co-founded Union in 2001.
“So to have a much more simple system where we can get a confirmation that payment has been received and how much that is, that could be hugely beneficial,” he said.
Price fluctuations and the impact of climate change make coffee a particularly challenging crop to grow.
“Large companies’ profits usually increase when prices are low, but the profit for farmers does not, and in some cases it may cost them money to produce coffee,” said Aaron Davis, head of coffee research at Britain’s Royal Botanic Gardens at Kew.
Davis’s latest research shows climate change and deforestation are putting more than half of the world’s wild coffee species at risk of extinction.
Ethiopia – the birthplace of Arabica, the world’s most popular coffee – is of particular concern. Up to 60 percent of the land used to grow coffee could become unsuitable by the end of the century, Davis found.
“The more a farmer is paid, the more resources he will be able to devote to climate resilience,” he said.
Both Davis and the FAO’s Kelly however cautioned that blockchain technology was not going to be a “quick fix”, with farmers around the world facing multiple challenges.
“Farmers need access to affordable seeds, to affordable finance and credit when they need it … and these things are not going to be given by blockchain,” said Kelly. -Reuters
-Thin Lei Win @thinink
Morocco Looks To French As Language Of Economic Success
Morocco’s economy is getting lost in translation.
With so many students dropping out of university because they don’t speak French, the government has proposed reintroducing it as the language for teaching science, maths and technical subjects such as computer science in high schools.
It also wants children to start learning French when they start school.
The country’s official languages are Arabic and Amazigh, or Berber. Most people speak Moroccan Arabic – a mixture of Arabic and Amazigh infused with French and Spanish influences.
In school, children are taught through Arabic although they don’t use it outside the classroom. When they get to university, lessons switch to French, the language of the urban elite and the country’s former colonial masters. Confused? Many are.
Two out of three people fail to complete their studies at public universities in Morocco, mainly because they don’t speak French.
The linguistic morass has stymied economic growth and exacerbated inequalities in the North African country, where one in four young people are unemployed and the average annual income runs at approximately $3,440 per person, according to the International Monetary Fund (IMF) – less than a third of the world average.
The plans to broaden the teaching of French go to the heart of Morocco’s national identity.
They would overturn decades of Arabisation after independence from France in 1956 and have triggered a furor in parliament, where members of the Islamist PJD party, the senior partner in the coalition government, and the conservative Istiqlal party view them as a betrayal.
The disagreement has delayed a vote on the changes.
“Openness to the world should not be used as an excuse to impose the primacy of French,” said Hassan Adili, a PJD lawmaker.
Proponents say the changes reflect the reality that French reigns supreme in business, government and higher education, giving those who can afford to be privately schooled through French a huge advantage over the majority of the country’s students.
“In the Moroccan job market, mastery of French is indispensable. Those who do not have command of French are considered illiterate,” said Hamid El Otmani, head of talent and training at the Confederation of Moroccan Employers.
Even before parliament votes on the changes, Education Minister Said Amzazi has okayed the roll-out of French in some schools, declaring its use in teaching scientific subjects as an “irreversible choice”.
Like many Moroccan politicians, his children received a private education.
“When decision-makers start sending their children to public schools, only then can we say that we have a successful education system,” said Jamal Karimi Benchekroun of the co-ruling socialist PPS party.
Amzazi did not respond to a request for comment.
Frustration over jobs and poverty has fueled periodic protests in Morocco, but the country has avoided the sort of instability suffered by other North African states, where pent-up anger has triggered uprisings and provided fertile ground for Islamist extremism.
King Mohammed VI, the ultimate power in Morocco, has proven adept at introducing limited reforms in response to popular protest. He has spoken publicly about the need to teach foreign languages to students to reduce unemployment and has made the economy a top priority.
Last year, he sacked the minister for finance after calling on the government to do more to boost investment.
C’EST LA VIE
Problems with language are not unique to Morocco. In neighboring Algeria, another former French colony, students are also schooled in Arabic only to be greeted “en francais” in university and the workplace.
French’s pre-eminence reflects Paris’ continuing influence in the region. France is the biggest foreign direct investor in Morocco and large companies such as carmakers Renault and Peugeot employ tens of thousands of people.
Privately-run universities such as the International University of Rabat (UIR) have courses geared toward high-growth industries such as aerospace and renewable energy and offer tuition in French and English.
But a year at UIR can cost up to $10,000 in fees, way beyond the budget of most Moroccans. They go instead to non-fee paying public universities, where the abrupt transition to studying in French is frequently a burden for students and their lecturers.
“Sometimes we find ourselves giving French language courses during economy classes,” said Amine Dafir, economy professor at Hassan II University, a public institution in Mohamedia, near Casablanca.
Hamid Farricha, 37, dropped out of his applied physics and computer science degree at Hassan II University during the first year. He dreamed of becoming an engineer but the language barrier meant he struggled to keep up.
Trying to find Arabic translations for French scientific words was a drain on his time.
He switched instead to studying mechanics at a vocational school. He still had to master French to get hired.
“The biggest challenge after earning my diploma was writing a CV and sitting for job interviews in French,” Farricha said.
He got a job as a technician at a plant repairing car frames, paid below Morocco’s minimum monthly salary of 2570 dirhams, or $270.
Farricha was one of the lucky ones. Morocco’s economy cannot absorb all the young people looking for work. Around 280,000 graduates entered the labor force last year but only 112,000 jobs were created.
The unemployment rate for graduates is 17 percent, above the national rate of 9.8 percent, according to data from Morocco’s planning agency.
Morocco’s reliance on small and medium-sized companies which do not typically employ graduates, and austerity drives which have cut public sector jobs are part of the reason for the high rate of graduate unemployment.
The education system is also failing to prepare students for work.
In addition to high dropout rates, Moroccan students score badly compared to peers on international tests, and at university level, students oversubscribe to social science fields at the expense of technical subjects, according to an IMF report in late 2017. That means many don’t have the skills employers are looking for when they graduate.
Even for roles not requiring a degree, French is a must. On the French website of Morocco’s job promotion agency, almost all employers were looking for French speakers, including for jobs as guards, waiters, cooks and drivers.
Determined to get ahead, Farricha worked on his French while employed at the plant. He read newspapers and books in his spare time and gave himself a daily list of new expressions and vocabulary to learn.
He went back to university in 2014 for a degree in French law and is studying for a masters in diplomacy and international arbitration.
To meet his living costs, he teaches French to other students. -Reuters
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