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WSJ.D B4 | BUSINESS EDUCATION B7 | WEATHER B9
BUSINESS & TECH.
Falloff in Asian Freight
Sends Worrisome Signal
Dollar Drives U.S. Students
To B-Schools Abroad
TRADE | B6
© 2015 Dow Jones & Company. All Rights Reserved.
BUSINESS EDUCATION | B7
THE WALL STREET JOURNAL.
*****
Thursday, September 3, 2015 | B1
Apple’s Challenge: Top Its Success
After a year of strong
iPhone 6 sales, analysts
predict muted growth
for coming models
three quarters from a year earlier.
Now comes the hard part. Such
growth rates are “mathematically
unsustainable,” said Toni Sacconaghi, an analyst with Bernstein
Research. He forecasts iPhone
sales to grow 3% to 237.6 million
units in the fiscal year starting
October. “It’s highly debatable
whether there will be any iPhone
growth next year,” said Mr. Sacconaghi. “The market realities will
catch up with Apple.”
An Apple spokeswoman declined to comment.
One reason for the caution: The
changes in the newest iPhones
won’t be as dramatic as last year,
when Apple offered larger-screen
models for the first time. Apple is
expected to unveil the new phones
on Sept. 9 in San Francisco.
Apple tends to release new
iPhones in a “ticktock” cycle. In a
BY DAISUKE WAKABAYASHI
As Apple Inc. prepares to introduce its latest iPhones next
week, the company’s biggest
challenge is one of its making:
how to top its own success.
Apple’s bigger-screen iPhone 6
and iPhone 6 Plus, introduced a
year ago, reignited sales growth for
the smartphone, propelled the
company to record profits and solidified Apple’s standing in China.
Apple has been gaining market
share, despite more expensive offerings. IPhone unit sales grew
more than 30% in each of the past
“tick” year, it offers a major redesign, such as last year’s bigger displays. In the following “tock” year, it
refines the design and sometimes
makes bigger software changes.
This is a tock year, when growth
typically is more moderate. In the
30%
Unit growth that iPhone sales
have exceeded in each of the
past three quarters.
first full quarter after Apple introduced the iPhone 5S in September
2013, iPhone unit sales rose 7%—
one of only two quarters since the
iPhone’s introduction in 2007
when growth was below 10%.
The new iPhones will have the
same screen sizes as last year’s
models, according to people familiar with the matter. Those people
said Apple plans to introduce a
fourth color—a metallic pink—
alongside gray, silver and gold.
The main improvements, according to the people, are underthe-hood changes such as a faster
processor and a sharper camera.
They said the phones would feature Apple’s Force Touch technology that can distinguish between
a light tap and deep press, allowing users to control the device by
how hard they push on the screen.
The iPhone is Apple’s most important product, accounting for
nearly two-thirds of its revenue.
The results of the past year set
a high bar. IPhone revenue grew
at its fastest rate in two years,
even as the rest of the smartphone
market was starting to slow.
Apple learned the price of
Rising Temperatures
Annual medical costs for United
Auto Workers have sharply
increased during the current contract.
missing outsize expectations in
July, when it said fiscal thirdquarter iPhone sales rose 35%
from the prior year, short of
some forecasts. Shares plunged.
At the time, Apple Chief Executive Tim Cook said the iPhone still
had ample room for growth. He
said only 27% of customers had upgraded to the iPhone 6 and 6 Plus,
while many others were switching
from Android phones.
Some analysts agree. Carolina
Milanesi of Kantar Worldpanel
wrote Wednesday that U.S. smartphone users replace their phones
on average every 22 months, suggesting many haven’t yet considered the larger iPhone 6 or 6 Plus.
Patrick Moorhead, principal
analyst at Moor Insights & Strategy, said, “while the hype may
not be as high, the sales opportunity is just as high.”
2011
2015 estimate
$800 million
600
400
200
0
GM
Ford Fiat Chrysler
UAW
members 50,000 52,000
39,000
Source: the companies
THE WALL STREET JOURNAL.
Auto Union
Pushes Plan
For Health
Care Group
BY CHRISTINA ROGERS
AND ANNA WILDE MATHEWS
THEMBA HADEBE/ASSOCIATED PRESS
The United Auto Workers
union is pushing Detroit car
makers to put all their employees under one health-care umbrella, creating a powerful purchasing group that could upend
traditional health care markets.
The union’s idea would create
a joint purchasing group for the
three largest U.S. auto makers
that would cover factory and
white-collar workers and unionaffiliated retirees. The group
could total nearly 1 million members, a scale it believes would
have unprecedented leverage in
negotiating directly with hospitals, drug companies and others.
Assuming the idea even gets
off the ground, it could take one
to two years to set up and longer to generate significant savings, health-care experts said.
Ford Motor Co., Fiat Chrysler Automobiles NV and General Motors Co. largely rely now
on health insurers to negotiate
deals with hospitals, doctors and
other medical providers for their
workers’ and white-collar retirees’ plans. A separate UAW-affiliated trust fund manages health
care expenses and benefits for
about 750,000 hourly retirees
and their dependents.
UAW President Dennis Williams previously has described
the plan as a way for auto makers to gain more control over
health-care expenses and win
cost savings. He wants the purchasing group overseen by a
board of union and auto industry
executives. A prior effort to pull
together employees of the three
stalled in 2011 because auto
makers weren’t interested in
pursuing it.
It is unclear how insurers like
Blue Cross Blue Shield of Michigan—which handles much of the
Detroit auto makers’ health care
business—would fit into this
new model. Blue Cross Blue
Shield of Michigan declined to
comment.
A Ford spokesman said even
if it were to negotiate directly
with providers “we still need a
Please see UAW page B2
South Africa once dominated global gold production, but now even the country’s largest producers are flailing. Its only fully mechanized gold mine, Gold Fields’ South Deep, isn’t profitable.
South Africa Gold Mining Digs Itself Into Hole
40
–2%
Gold Fields
–29%
20
0
Sibanye Gold
–30%
–20
–40
Harmony
Gold Mining
–52%
–60 2015
J
F
M
A
M
J
J
A
S
THE WALL STREET JOURNAL.
Source: FactSet
Small Firms Slow to Add
New Chip-Card System
Many small businesses aren’t
racing to update their checkout
systems ahead of an Oct. 1 shift
that will put merchants on the
hook for some fraudulent card
charges.
That is the date
SMALL
when retailers are
BUSINESS
expected to begin
using new security technology
that accepts credit and debit
cards with microchips, and for
banks to have replaced magnetic
stripe cards with cards that use
chip-enabled technology.
After the October date, merchants that haven’t switched to
point-of-sale systems meeting
the new EMV—short for Europay,
MasterCard and Visa—standard
will generally be liable for losses
when they physically accept
counterfeit credit cards.
Losses tied to counterfeit
cards are expected to hit a re-
cord $3.6 billion this year, estimates Aite Group, a financial
services research firm, from $1.7
billion in 2011. Banks that issue
credit cards currently cover
these charges.
About 10% of U.S. small businesses were victims of payment
fraud, including the type of
credit-card fraud the switch aims
to prevent, in 2013, the most recent data available, according to
Javelin Strategy & Research.
iHospital, a Tampa, Fla.-based
owner of seven Apple repair
stores, began switching to the
new chip-card system in August.
“We are in the technology business and we wanted to be ahead
of the game,” said iHospital Chief
Executive Ross Newman. The
new readers accept the Apple
Pay mobile-payment service, another plus, he added.
Small businesses typically will
pay $150 to $600 for each new
payment terminal, industry offiPlease see CARDS page B6
Composite
BY RUTH SIMON
BY ALEXANDRA WEXLER
WESTONARIA, South Africa—
At Sibanye Gold Ltd.’s Kloof mine
in the heart of the world’s largest
known gold reserve, more than
10,000 workers toil daily at
depths of around two miles—a
striking image of the scale and
ambition of an industry that until
recently yielded plentiful profits
and production.
But the golden era for South
Africa’s producers now appears to
be over. Beset by a toxic combination of falling prices, intensifying
labor disputes and the surging
cost of ever-deeper exploration,
the country’s largest producers
are flailing. Amid tumbling profits
and a lackluster outlook for gold
prices, several of South Africa’s
biggest gold producers are even
dialing back expectations for the
lifespan of their operations.
“This is an industry that’s mature, old and in some degree of
distress,” said Dawie Mostert,
Sibanye’s senior vice president of
organizational effectiveness. “We
need to make sure that there’s
sustainability” for the future.
Sibanye’s nearly 50-year-old
Kloof mine is expected to close
in 2033. Meanwhile, the company faces increasing headwinds
after reporting a 70% drop in net
profit in the first half of the year.
Things aren’t looking much
better for Sibanye’s peers. In August, AngloGold Ashanti Ltd., the
world’s No. 3 gold producer, reported a net loss of $142 million
for the three months ended June,
compared with a loss of $80 million a year earlier. South African
miner Harmony Gold Mining Co.
Ltd. reported a net loss of $352
million for its fiscal year ended
June 30, while Gold Fields Ltd.
reported an annual fall in secondquarter profit of 40%.
Although mining—and commodities in general—is often described as a cyclical business, the
troubles that gold producers face
in South Africa are more profound.
If South Africa’s largest gold
miners are going to survive beyond
the next few decades, a radical reshaping of the industry is necessary, companies say. Most are investing heavily in new technologies
to reduce labor costs, become
more efficient at gold extraction
and be able to work 24 hours a day,
365 days a year. Currently, miners
in South Africa work about twothirds of the day, 275 days a year.
“All of the producers are working hard on things that they can
Please see MINES page B2
Silicon Valley Ramps Up EU Lobbying
BY TOM FAIRLESS
BRUSSELS—This city of bureaucrats has become a place of
pilgrimage for West Coast technology firms.
From Amazon.com Inc. to
Uber Technologies Inc., the giants of Silicon Valley are bulking
up in the European Union’s de
facto capital, hiring lobbyists and
jostling for the favor of the
Web’s most ambitious regulators.
Smaller U.S. firms are showing up, too, drawn by a muscular
antitrust agency that has meted
out billions of dollars in fines to
tech giants such as Intel Corp.
and Microsoft Corp.
Google Inc., which is under
particular pressure in Brussels,
more than doubled its outlays on
lobbying of EU institutions last
year from 2013, according to figures disclosed publicly in an EU
database.
EU regulators this spring accused Google of skewing results
to favor its comparison-shopping
service, and demanded it change
YVES HERMAN/REUTERS
Share price performance this year
of South Africa’s four major gold
mining companies
60
AngloGold
Ashanti
The EU has few qualms about taking on global technology heavyweights.
how its search engine functions.
The company is also facing a second EU antitrust inquiry over its
Android mobile-operating system, which powers roughly
three-quarters of the world’s
smartphones.
The battles being fought out
in Brussels could determine the
future shape of the Internet and
help decide competitive struggles among companies based
halfway across the world.
“Brussels is the most important place in the world from a
tech policy standpoint,” said Luther Lowe, head of public policy
at business-review website Yelp
Inc. in San Francisco, which has
filed a separate complaint with
P2JW246000-5-B00100-1--------XA
Stocks Lose Glitter
80 %
EU authorities over Google’s
search practices. Mr. Lowe said
he has spent seven months of the
past two years in Belgium’s capital, and recently appointed a fulltime lobbyist here.
Casey Oppenheim, a San Francisco-based Internet entrepreneur, planned his family vacation
this year around a trip to Brussels. Mr. Oppenheim filed a complaint here in June alleging that
Google had unfairly pulled a privacy application created by his
firm, Disconnect Inc., from its
Play mobile app store last year.
Google said the app, which aims
to stop other apps from collecting
data on users, violated a policy
prohibiting software that interferes with other apps. Disconnect
is available on Apple Inc.’s iOS
App Store, Mr. Oppenheim said.
At a time when Europe often
struggles to project power beyond its own borders—and even
within them—its muscular Internet policy stands out.
In the past four months alone,
Please see EUROPE page B10
MAGENTA
BLACK
CYAN
YELLOW