Apple, Amazon ‘in talks to set up in KSA’

The tech giant Apple has three retail stores in the UAE and visitor centers in locations like California, pictured. (Reuters)
Updated 28 December 2017
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Apple, Amazon ‘in talks to set up in KSA’

LONDON: Apple and Amazon are in discussions with Saudi authorities about investing in the Kingdom, two sources told Reuters on Thursday.
A third source confirmed that Apple was in talks with SAGIA, Saudi Arabia’s foreign investment authority, which authorizes licenses to do business in the Kingdom.
The source told Reuters that Amazon’s discussions are being led by cloud computing division Amazon Web Services (AWS), a move that could act as a stepping-stone for launching the US tech giant’s retail services in Saudi Arabia.
A licensing agreement for Apple stores with SAGIA is expected by February, with an initial retail store targeted for 2019, two sources familiar with the discussions told Reuters.
Amazon’s talks are in earlier stages and no specific date has been set for investment plans, they said.
Prashant ‘PK’ Gulati, a technology investor based in Dubai and president of TIE Dubai, told Arab News that he “wasn’t surprised” that Amazon would be investing through AWS in Saudi Arabia.
“They are looking to get a foot in the door and engage with the region’s young, tech savvy population,” he said.
Home to a population of just over 32 million, Saudi Arabia currently has the highest per-capita YouTube use of any country in the world and over 21 million smartphone users in 2017, according to research firm Statista.
Under the reforms spearheaded by Saudi Crown Prince Mohammed bin Salman, Riyadh has been easing regulatory impediments, including limits on foreign ownership.
Apple and Amazon have both been on a Saudi priority list of foreign firms which officials hope to attract to further the reforms, one of the sources told Reuters.
Both Amazon and Apple already sell products in Saudi Arabia via third parties but they have yet to establish a direct presence unlike in the neighboring UAE, where AWS set up its first Middle East office in 2017 and Apple already has three retail stores.
Amazon also acquired Dubai-based online retailer Souq.com earlier in 2017, opening access for Amazon to sell retail goods in the Kingdom.
Luring tech bellwethers such as Apple and Amazon to the Kingdom has the potential to boost the crown prince’s reform plans, said Gulati.
“This move shows that the country is open for business and that international businesses are open to investing in the Arab region,” he said.
Gulati said the government’s plans for the $500 billion tech city Neom “sits well” with the news that Apple and Amazon could enter the Kingdom for the first time.
“It is good for our region. It shows they are looking forward. A country the size of Saudi Arabia demands deeper engagement from multinational companies.”
The tech investor added that the move may also be an incentive for global tech giants to “Arabize” their products in an attempt to fit into the market and further entice the Kingdom’s young and affluent population.
Referring to the fate of the Kingdom’s incumbent tech players, such as STC and Mobily, Gulati said that competition would be good for the market and help to “grow the size of the pie.”
Both Apple and Amazon declined to comment when contacted by Arab News.


Slack primed as latest unicorn to make market debut

Updated 19 June 2019
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Slack primed as latest unicorn to make market debut

  • Slack is a cloud-based software company that markets online tools for information sharing and workflow management
  • Current customers include Nordstrom, Ford and HSBC and the company has more than 95,000 paid customers overall

NEW YORK: The 2019 parade of big new Wall Street entrants continues this week with the debut of Slack Technologies, underscoring investor hunger for new companies in spite of some high-profile stumbles.
Nearly halfway through the year, US markets are on track for one of the biggest IPO seasons ever in terms of money raised following a stream of offerings from former “unicorns,” private companies worth more than $1 billion.
Yet two of this year’s biggest names — Uber and Lyft — currently trade below their IPO price, along with Snapchat, which has lagged its initial price for most of the time since it went public in March 2017.
Still, there have also been plenty of prominent companies that have risen since their initial public offerings, including jeans company Levi’s, Tradeweb Markets, which builds electronic marketplaces, Zoom Video Communications, and mobile application and software system Pinterest.
The most dramatic jump has been in food company Beyond Meat, which now trades at more than six-fold its entering price.
“The public has a huge interest” in new companies, said JJ Kinahan, chief market strategist at TD Ameritrade, adding that the mixed performance of the 2019 ex-unicorn class is comparable to that of the broader market.
“There aren’t a lot of other choices besides IPOs for investors seeking growth,” said Gregori Volokhine, president of Meeschaert Financial Services, who attributes the rush of funds in part to central bank policies promoting liquidity.
“There’s an excess of underinvested funds worldwide,” he said.
In terms of sheer volume, the number of IPOs in 2019 so far — 93 — is roughly equal to last year’s figure, according to Dealogic.
But the funds raised, $34.5 billion, stand 13.6 percent above last year’s sum and the highest for the comparable period since 2000, according to Dealogic data.

Direct listing
A cloud-based software company that markets online tools for information sharing and workflow management, San Francisco-based Slack parts ways from the other big companies this year by opting for a direct listing instead of an IPO.
This approach, which was also employed by Spotify last year, cuts down on fees to investment bankers in IPOs. Although existing shares can be sold, a direct listing does not issue new shares, averting share dilution but also forgoing the new funds raised in an IPO.
The process can also be riskier in terms of share price volatility compared with an IPO, where underwriters line up investors in advance. In a direct listing, shares are exposed more directly to the open market.
Slack chief executive and co-founder Stewart Butterfield described the company’s technologies as a “brand new category of software” that replaces email in a company.
Current customers include Nordstrom, Ford and HSBC and the company has more than 95,000 paid customers overall.
“It turns email to messages and organizes them into team, project and topic based channels instead of individual in-boxes,” Butterfield said in a June 10 earnings conference call.
“It’s a team-first approach to communication, in contrast to email’s individual first approach. It creates a rich, searchable, permanent body of information that’s widely available across an organization, even for people who just joined the team.”
 

Unprofitable three years
The company, which is expected to be valued at around $17 billion when it enters the market on Thursday, reported revenues of $134.8 million in the quarter ending April 30, up 66.7 percent from the year-ago period.
But Slack, which has been unprofitable the last three years, reported a $33.3 million loss during the period, 34 percent more than last year’s loss.
Of course, many unprofitable companies have gone public and done well in markets for years. Yet the heavy losses and murky profit outlook at Uber and Lyft have been seen as factors in their lackluster performance since going public.
But investors remain keen on growth stories following the success of Amazon, Facebook and other tech giants that have emerged in recent decades.
A key beneficiary of this desire has been Beyond Meat, which has multiplied in value many times since going public May 3 at $25 and currently is priced at $168.92. The company has been seen as a main beneficiary of the growing alternative protein market, which some analysts think could top $100 billion in the coming decade or so.
Kinahan said in general investors have wised up after the early 2000s Internet bubble but that “it’s just unnatural” for stocks like Beyond Meat to move in an unbroken straight line upwards.
“There’s a healthy bit of skepticism in the market,” he said. “However, certain companies have maybe gotten a little ahead of themselves.”