Tech earnings, French politics
The FT looks at some of the big stories of the coming week, including US tech earnings, the French Socialist party primary and eurozone economic data.
Written by Richard Waters, Claire Jones, Anne-Sylvaine Chassany. Filmed by Rod Fitzgerald and Nicola Stansfield. Edited by Petros Gioumpasis. Produced by Seb Morton-Clark.
SEB MORTON-CLARK: Hello and welcome to "The Week Ahead" from the "Financial Times" in London. Here are some of the big stories we'll be watching in the coming days-- US tech giants report earnings, France's socialist party holds a critical primary in preparation for presidential elections in the spring, Eurozone economic data will show whether the good performance at the end of last year is continuing. First, three of the giant US tech companies, with a combined market value of more than a trillion dollars, will report earnings on Thursday, and when they do, the focus will be on how some of the industry's biggest names are handling the transition to mobile and cloud computing.
The three businesses in question include Google's parent company Alphabet, which is expected to cap a year of rebounding growth with an 18% revenue advance in the final quarter; Microsoft, where revenues for the final quarter are expected to have edged down slightly from the year before; and the world's biggest chip maker by revenue Intel is also expected to shrug off the worst effects of declining PC sales thanks to strong sales of server chips. From San Francisco, the FT's Tom Braithwaite has more.
TOM BRAITHWAITE: Google needs to keep sucking in online advertising to support its massive $560 billion market cap. At earnings on Thursday, we'll be looking for any weaknesses. Desktop search is expected to decline this year, so it's crucial that Google manages the shift to mobile and improves on video. Otherwise, how much money is it burning on self-driving cars?
Microsoft is forecast to make almost $6.2 billion in net income, which would be the best quarter in three years. We want to know more about LinkedIn, though, which it bought last year, especially given Microsoft's patchy track record on M&A. And what about the cloud, which accounts for almost 30% of revenues? Growth is needed to keep Microsoft's share price elevated.
Qualcomm has just been hit with a lawsuit from US anti-trust regulators. Intel is laying off more than 10% of its staff. But the underlying financial performance of both of those chip makers is not expected to be too bad, with revenues increasing by more than 5%.
SEB MORTON-CLARK: This spring, France goes to the polls to vote for a new president, the winner of which will be decisive, not only for the country, but for the European project as a whole. This week, the French socialist party is holding the first round of a primary to choose its nominee for the national vote. The result of the socialist primary could have a significant impact on the chances of Emmanuel Macron, the former economy minister, who is running for president as an independent and has surged to third place in the race behind Marion Le Pen, the far right leader, and Francois Fillon, the centre right candidate.
Mr. Fillon is expected to visit Germany this week to meet Chancellor Angela Merkel. Talks will revolve around his plans for the EU, which he says should focus on defence, security, and a tighter Eurozone. Mr. Macron was also in Germany recently. Here's some of what he had to say at a speech in Berlin.
EMMANUEL MACRON: The dysfunctioning of Europe is a good news for Germany, I have to say. You benefit from this dysfunctioning. Parts of your success is due to your reforms, but in the same time, the dysfunctioning of the Eurozone creates [INAUDIBLE] reactions and favour a sort of productive centre against the rest of the Zone. Why? Because euro, today, is a sort of weak Deutschmark, which favours the German industry.
SEB MORTON-CLARK: And finally, Brexit, terror attacks, a migrant crisis, and increasing political uncertainty-- 2016 was a challenging year for the Eurozone. Despite that, evidence suggests that the area's economy ended the year on the high, but has momentum continued in 2017? Well this week, we'll see published two sets of data that should give us some clues. Here's our Frankfurt bureau chief Claire Jones to tell us what they are.
CLAIRE JONES: The two clues will be the purchasing managers index for January, which comes out on Tuesday. And then on Wednesday, we have the Ifo business index, a survey of German companies, which will show how they're reacting to issues such as protectionism and the weaker euro.
SEB MORTON-CLARK: The poll from the Munich-based Ifo think tank has suggested that growth in Germany has remained strong, despite the climate of political uncertainty. But businesses in the country are concerned about Donald Trump's protectionist rhetoric, the fear of being that if rhetoric turns into policy, it could hit the country's export model. And the purchasing managers index will also be closely watched by, among others, policymakers at the European Central Bank. The index finished last year at its highest level since 2011, with December's PMI showing a big rise in orders. And that's what the week ahead looks like from the "Financial Times" in London. See you again next time.