Uber will aggressively invest in SE Asia, won’t let SoftBank rule it

Dara Khosrowshahi, CEO of Uber Technologies, speaks with the media in New Delhi on Thursday. (Reuters)
Updated 22 February 2018
0

Uber will aggressively invest in SE Asia, won’t let SoftBank rule it

NEW DELHI: Uber Technologies Inc’s chief executive pledged to continue investing aggressively in Southeast Asia even though the US ride hailing firm expects to lose money in the fast growing market due to costly battles with rivals such as Grab.
SoftBank’s 15 percent stake purchase in Uber last month has opened up the possibility of combining Uber with other ride-hailing assets the Japanese group owns across Asia.
SoftBank has stakes in Singapore-based Grab and India’s Ola.
At the time of the investment, SoftBank said it wants Uber to focus on growing in the US, Europe, Latin America and Australia — not Asia, which has been among the most costly and competitive regions for the ride-services firm, a source had told Reuters.
Uber is preparing to sell its Southeast Asia ride-hailing business to Grab in return for a substantial stake in the company, CNBC reported earlier this month, citing sources familiar with the matter.
But Dara Khosrowshahi seemed to dismiss that strategy on Thursday in his first official visit to Asia since he became Uber CEO last year.
“We expect to lose money in Southeast Asia and expect to invest aggressively in terms of marketing, subsidies etc,” Khosrowshahi told reporters in New Delhi, adding there is huge potential in the region thanks to a big population and fast Internet user growth.
“From a competitive standpoint we think we can improve,” he said.
Khosrowshahi said that a decade from now he expects 80 percent of growth at Uber to be organic and some through acquisitions.
“We will look at anything ... But right now the plan for Southeast Asia is to go forward, lean forward and to invest.”
Khosrowshahi said SoftBank is an investor but Uber, which has a valuation of around $68 billion, will take any final decisions along with the board on mergers and partnerships. He said he does not expect any change in Uber’s India operations following the deal with SoftBank.
India is one of Uber’s fastest-growing international markets and accounts for more than 10 percent of Uber’s trips globally, but it’s not making money yet, Khosrowshahi said.
Uber and India’s market leader Ola have been locked in a fierce battle, pumping in millions of dollars of investors’ money for a bigger piece of the country’s $12 billion taxi market.
“The greatest value that we can create here is to continue to invest and grow our business here, not just for India but the role it is going to play in shaping our product for the rest of the world,” he said.
Khosrowshahi declined to comment on specific investments for India but said “it is a lot” and will continue to increase.
“We as a company need to have a balanced profile in terms of growth and investment. There are developed markets that we are going to continue to invest in that are going to be more profitable ... and we should actively be investing in markets like India and Latin America that have huge growth ahead of us.”
Khosrowshahi, who took the helm in August after former CEO Travis Kalanick was asked to step down amid a litany of regulatory problems, driver and consumer scandals and court cases, has pledged to make a clean break with past practices that have lead to accusations of a toxic work culture.
Uber has faced bans, restrictions and protests around the world as it disrupts conventional taxi services and Khosrowshahi is tackling this head-on by working with regulators, putting an end to the take-no-prisoners culture he inherited.
He said that the company has a responsibility to local governments and regulators, and it needs to have a dialogue with them.


Boeing abandons 2019 outlook after 737 MAX aircraft groundings

Updated 25 min 49 sec ago
0

Boeing abandons 2019 outlook after 737 MAX aircraft groundings

  • Boeing’s core earnings fell to $1.99 billion, or $3.16 per share
  • The planemaker said it faced $1 billion in increased costs in the first-quarter ended March 31

Boeing missed sharply-lowered Wall Street estimates for revenue and cashflow in the first quarter and suspended its 2019 outlook, as the world’s largest planemaker continued to suffer from the grounding of its 737 MAX jets.

The company said it faced $1 billion in increased costs in the first-quarter ended March 31, related to the 737 aircraft as it halted deliveries of the grounded planes to customers around the globe.

The company also said it was halting share buybacks.

The fallout of a second deadly crash within months in March has seen Boeing cut production of the jets to 42 aircraft per month, down from 52, and its operating cash flow in the first quarter was around $350 million lower than a year earlier.

Boeing is also spending on developing a fix for an anti-stall software known by the acronym MCAS, which has been a common link in the separate chains of events leading to the two crashes within a span of five months.

The company said it would be issuing a new forecast in the future when it has more clarity around the issues surrounding the 737 MAX.

First-quarter operating cash flow declined to $2.79 billion, from $3.14 billion, missing the Wall Street’s average estimate of $2.82 billion.

Revenue fell 2 percent to $22.92 billion, below analysts’ average estimate of $22.98 billion.

Excluding certain items, Boeing said its core earnings fell to $3.16 per share, in the quarter from $3.64 per share, a year earlier. Analysts had expected Boeing to earn $3.16 per share.