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Phuket Business: Get your head in the clouds

Legacy Phuket Gazette

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Phuket Business: Get your head in the clouds | The Thaiger

PHUKET: Information technology (IT) has dramatically changed the way people communicate and do business. Changes in information technology are rapidly taking place and investors who are able to spot the newest trends can profit from those trends greatly. One continually evolving trend is “cloud computing”.

Investors focused on IT growth stocks and exchange-traded funds (ETFs) have several options when it comes to investing in this sector.

First, let us define “cloud computing”. When you think of cloud computing, think of Google or Yahoo! mail, the Web-based email messaging services that allow you to use the software and hardware resources of those companies at no cost.

These Web-based applications use remote servers, which may be housed anywhere in the world. In addition to free public email accounts as examples of cloud computing, you may have also used other internet-based applications, such as Google Docs. These applications provide free software, server space, or platform infrastructure to create and share your work online.

On Google Docs you can create, manage, and access presentations, spreadsheets and other documents from anywhere in the world in real time.

This means that cloud computing services are available on demand, provide a wide network access and have an elastic scale. Public cloud computing has revolutionized the way people and businesses use the Internet to create, store, and manage their data.

However, it has also become an effective way to reduce investment and overhead costs for corporations and public institutions. As businesses and public institutions continue to seek ways to cut costs, cloud computing appears to be an excellent solution to achieve efficiency. However, this will require cloud computing providers to ensure a high degree of integrity and security for the information managed or stored on a shared network.

For example, Google views its ‘high-security’ reputation as a key determinant of success. Some companies apply international security standards (ISO27001), which provides for a third-party audit. Others adhere to the principles governing security of information and network systems under the standards of the Organization for Economic Development and Cooperation (OECD).

With all this in mind, higher demand for cloud computing will be a major boom for private-sector providers who can provide a high level of integrity and supplement it with appropriate resource support services. Cloud computing has already experienced exceptional growth. Gartner Inc sees the cloud service market growing in compounded rates by 16.85% annually through 2014. This will boost cloud computing revenues to US$148.8 billion by 2014. That represents a cumulative increase of more than 217%. More than half of the cumulative revenues will accrue to the US Market.

So, how do you take advantage of this growth? Three stocks, namely Oracle (Nasdaq: ORCL), BMC Software (Nasdaq: BMC), and Informatica (Nasdaq: INFA), look best positioned to benefit from the high growth in the sector. The three companies provide a combination of public and private cloud computing services. They all have low debt-to-equity (D-E) ratios; in fact, Informatica is debt-free.

This assures that the three prospective winners in the sector are not burdened by excessive credit that could stifle their growth prospects.

While their P-E (Price to Earnings) ratios may look relatively high compared to those of some other IT companies, revenue and earnings growth expectations make them appealing.

What’s more, they have teamed up with similar companies: Oracle with Amazon and BMC Software with salesforce.com, so as to achieve synergies that can assure robust growth.

For investors who prefer a broad exposure to the sector, there is the Vanguard Information Technology ETF (VGT), with a broad exposure to the IT sector, including Oracle as one of the fund’s largest holdings.

Another ETF, which tracks the Dynamic Networking Intellidex Index and contains many cloud computing stocks, is PXQ- PowerShares Dynamic Networking.

It is comprised of networking stocks and is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.

As of November 5, the top holdings are: Citrix Systems, Amphenol Corp, F5 Networks, Vmware, Juniper Networks, Symantec, Cisco Systems, Opnet Technologies, Motorola Solutions and Qualcom.

Investing in cloud computing is investing in the future of the web-based information technology. That future is now and taking part in it may prove to be a good investment choice for many investors.

Don Freeman is President of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC). He provides personal financial planning and investment advice to expatriates and teaches financial courses across SE Asia and the United States. For more information visit: freemancapital.net or call +66 (089) 970-5795.

— Don Freeman

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Business

Thai Airways under pressure to deliver workable business plan

May Taylor

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Thai Airways under pressure to deliver workable business plan | The Thaiger

Thai Airways is coming under more pressure, after being given 30 days to deliver its new rehabilitation and business plans.

Thaworn Senniam, the Deputy Transport Minister, gave the instruction yesterday while meeting with the executive of the national carrier for an update on its financial status.

He says the business plan must provide clear information on how the fortunes of the airline can be turned around, with a focus on making it profitable once more, while improving customer satisfaction.

The order comes after Thai Airways President, Sumeth Damrongchaitham, denied last week that the airline was experiencing a liquidity crunch, claiming it had sufficient cash flow “for present and future operations”.

Minister Thaworn has previously said he does not believe Thai Airways’ existing rehabilitation plan will help it succeed in a turnaround. He has also ordered a monthly progress report on the carrier’s plans to buy new aircraft.

In September, the directors of Thai Airways asked the Executive Board to review a plan to order 38 additional aircraft, worth a total of 156 billion baht.

According to their second-quarter 2019 filing to the Stock Exchange of Thailand, Thai Airways and its subsidiaries reported a net loss of 6.878 billion baht, compared to a loss of 3.086 billion baht over the same period last year.

SOURCE: The Nation

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World Economic Forum says lack of critical thinking in Thailand affecting competitiveness

May Taylor

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World Economic Forum says lack of critical thinking in Thailand affecting competitiveness | The Thaiger

PHOTO: AFP

Thailand’s competitiveness ranking has dropped two places in the Global Competitiveness Index just released by the World Economic Forum (WEC) in Switzerland. The country has dropped from 38 to 40 out of a total of 141 global economies ranked.

The WEC claims that a lack of critical thinking in teaching in Thailand, along with its failure to dominate in any markets, plus its unsafe drinking water, is affecting the country’s competitiveness.

The Nation reports that Singapore has come top in the ranking, overtaking the U.S. and Vietnam has shot up 10 places to 67.

The deputy secretary general to the PM for political affairs, Kobsak Pootrakool, responded to the findings, saying that as other countries improved their rankings, Thailand needed to work harder to ensure their progress didn’t cause it to slip backwards.

“It’s like a running competition – if our pace is slower, others will overtake us, so we have to run faster.”

The dean of the Chulalongkorn Business School, Assistant Professor Wilert Puriwat believes he knows what the country must do to improve competitiveness.

“The survey found that skills among new university graduates have declined, especially in the area of critical thinking. We’ve failed the exam and it can’t be fixed by simply retaking the test – we need to restart learning.”

Assistant Professor Wilert says Thailand needs to change the way students are taught, adding that the country’s score on critical thinking in the classroom was the world’s lowest at 37 out of 100 points. Finland comes first, with 89 points.

Wilert points out that Thai students routinely perform poorly on tests compared to foreign counterparts, which can be blamed on an old-school reliance on rote learning through memorisation.

The WEF is urging Thailand to adapt a model that encourages creative and critical individual thinking in the classroom instead. It also recommends improvements be made in staff training in Thailand, and more fostering of digital skills.

SOURCE: The Nation

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Business

Samsung Electronics flags 56% fall in third quarter profits

The Thaiger

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Samsung Electronics flags 56% fall in third quarter profits | The Thaiger

“Samsung took advantage of the US trade ban against Chinese rival Huawei.”

PHOTO: CNBC

Samsung Electronics says it expects operating profits to drop more than 50% in Q3 amid a continued slump in the global chip market. Operating profits for July to September was expected to reach 7.7 trillion won (US$6.4 billion), down 56.2% from a year earlier – this from the world’s largest maker of smartphones and memory chips.

It marks the fourth consecutive quarter in which the South Korean tech company has recorded a drop in profits in the face of falling semiconductor prices and weakening demand for its mobile devices. Sales for the third quarter were expected to drop 5.3% from the same period last year.

The South Korean tech titan leads the global smartphone market with a 23% share of the sector, trailed by Chinese competitors Huawei and Oppo, with Apple in fourth place, according to sales tracker IHS Markit.

Samsung withholds net profit and sector-by-sector business performance until it releases its final earnings report, which is expected later this month.

The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world’s 11th-largest economy, and it is crucial to South Korea’s economic health. Analysts voiced optimism for the coming months, noting that falling inventory levels for semiconductors – which account for more than half of Samsung’s profit – will help stabilise chip prices after double-digit drops this year.

Sujeong Lim, an analyst at Counterpoint Research, said, that in the mobile business, Samsung took advantage of the US trade ban against Chinese rival Huawei, “replacing a strong competitor in crisis” with its mid-to-low tier Galaxy A handsets.

“The new A series has turned out to be an effective weapon to take share from its Android competitors.”

Samsung appealed to high-end users with the launch of its first foldable smartphone last month after faulty screens forced an embarrassing delay in April. The firm also rolled out its flagship Note 10 devices which analysts say have sold far better than its previous models, giving Samsung a much-needed boost in its mobile sales.

The premium smartphone market has grown fiercely competitive and overall sales have cooled as a lack of major innovation has caused people to wait longer before upgrading to new models. Samsung has also been caught up in a trade war between Japan and South Korea stemming from World War II disputes.

The row saw Tokyo impose tough restrictions on exports crucial to South Korean tech giants in July, and Samsung vice chairman Lee Jae-yong – who called the situation a “crisis” – has visited Tokyo to secure materials. Adding to Samsung’s woes, Lee is currently facing retrial over his role in a massive corruption scandal that brought down former president Park Geun-hye.

He was initially jailed for five years in 2017 on multiple convictions including bribery, which was reduced to a suspended sentence on appeal, only for the Supreme Court in August to order a retrial.

SOURCE: Agence France-Presse

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