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Apple Lowers Revenue Forecast, Govt Announces Angel Tax Relief, SC Revives Case Against Maggi, China’s Chang’e-4 lands on Moon et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 3, 2019 2:34 PM 3 min read
Editorial

Apple lowers quarterly revenue forecast for the first time in more than 15 years. Govt announces angel tax relief for startups. 
Maggi in trouble. China’s Chang’e-4 lands on Moon.

 

Now to Today's Top Business News Stories in Our End Of Day Wrap Up:

 

Apple Lowers Revenue Forecast, Govt Announces Angel Tax Relief, SC Revives Case Against Maggi, China’s Chang’e-4 lands on Moon et al.

COMPANIES

Apple lowers quarterly revenue forecast for the first time in more than 15 years. Tesla shares drop as it cuts prices for Model 3.

Apple: Lower than anticipated iPhone revenue, primarily in Greater China has pushed Apple to lower its quarterly revenue forecast for the first time in more than 15 years bringing it to $84bn (vs. $91.5bn as per consensus). 

Why though?: China accounts for nearly 20% of Apple’s sales. In light of the ongoing trade war with US and a weakening consumer sentiment, it is likely that China would have turned away from expensive iPhones and towards cheaper models. Apple’s shares dropped 7% during the day on back of the announcement.

Read CEO Tim Cook’s letter to Apple investors here.

Tesla: Tesla’s shares fell 6.8% on Wednesday to $310 on back of rising concerns regarding demand for the Model 3, as the electric-car maker cut prices on it’s new compact sedan model.

 

ECONOMY

Govt announces angel tax relief for startups. NHAI to raise INR10,000cr via Bharatmala bonds.
 
Angel Tax India: As per an Economic Times report, companies facing a 30% tax bill due to "valuation premiums" may get a reprieve as govt asks officials not to examine such transactions.
 
Perspective: The news comes after several early-stage startups recently received notices to clear taxes on angel funding raised by them. In certain cases, the taxes-cum-penalty amounted to c. 50% of the funds raised.

Connecting India: Bharatmala Pariyojana is a govt- funded project for the development of highways which includes about 65,000 km of border roads, international connectivity roads, coastal roads, port connectivity roads, ring roads, among others. The amount is part of INR62,000cr approved by the govt last year.

 

MARKETS

Fed unlikely to raise interest rates in 2019, as per popular sentiment.

The What: As per a WSJ article, investors increasingly believe that another rate hike is unlikely in 2019 as the Federal Reserve expects US growth to moderate this year on back of slower growth abroad and waning government stimulus measures.

Zoom Out: Fed ticked up short-term interest rates by 25bps with the benchmark federal-funds rate ranging between 2.25% to 2.50% when they met on December 19. As such, this was the fourth such rate hike last year.

 

CONSUMER

SC revives case against Maggi. Govt introduces Bill to amend the Aadhaar Act. Users of fixed and wireless broadband internet decline on back of increased focus on broadband penetration.
 

Maggi in trouble: The Supreme Court has revived the case against Nestle India seeking a compensation of INR640cr alleging unfair trade practices, false labelling and misleading advertisements.

Big Picture: Stocks of Maggi were recalled on 5 June 2015, when the Food Safety and Standards Authority of India (FSSAI) alleged that some samples of the noodles contained monosodium glutamate (MSG) and excess lead.

Aadhaar: The govt has introduced a Bill in the Lok Sabha to amend the Aadhaar Act to provide legislative framework for voluntary seeding of biometric Aadhaar ID with mobile numbers and bank accounts.

Zoom Out: This development comes shortly after the Supreme Court’s Aadhaar judgement, which disallowed private companies from asking for Aadhaar authentication for eKYC from users.

Last Word: As per a Quartz India report, users of fixed and wireless broadband internet grew c. 45 % YoY in 2018.

Perspective: This is the lowest growth since 2014. Govt’s increased focus on broadband penetration and roll out of Reliance Jio is touted as the main reasons for the slump.

Apple Lowers Revenue Forecast, Govt Announces Angel Tax Relief, SC Revives Case Against Maggi, China’s Chang’e-4 lands on Moon et al.

SPACE

China’s Chang’e-4 lands on Moon to probe the far side.

Mission Statement: The mission aims to take detailed measurements of the moon’s terrain and mineral composition, examining the far side of the Moon – the hemisphere that faces away from the earth.

A Giant Leap?: This makes China the first country ever to land on the far side.

 

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