Archives for August 2021

TOKYO (AP) — Nintendo’s April-June profit declined 13% from the same period the previous year, when the hit game “Animal Crossing: New Horizons” dramatically boosted sales.

Nintendo Co.’s profit for the fiscal first quarter totaled 92.7 billion yen ($843 million), down from 106 billion yen, the Japanese maker of “Super Mario” and “Pokemon” games said Thursday.

Quarterly sales fell 10% to 322.6 billion yen ($2.9 billion).

Sales of the Switch consoles dropped nearly 22% during the quarter to 4.45 million units, mainly because of the sales decline of the smaller Switch Lite, dedicated to handheld playing. The regular Switch works for both traditional at-home and portable play.

“Animal Crossing,” released in March last year, didn’t sell as well this year as it did in the April-June quarter the previous year, when 10 million units were snatched up.

“Animal Crossing” sales totaled 1.26 million in April-June, for cumulative sales of 33.9 million.

More than 89 million of the Switch machines have been sold so far around the world, according to Nintendo.

Kyoto-based Nintendo has been a primary example of a Japanese company that received a boost from people turning to at-home entertainment during the coronavirus pandemic.

But analysts don’t expect such fortunes to last as normal activities resume with vaccine rollouts. That change is expected to hurt Nintendo, which tends to attract casual game users, more than rivals such as Sony and Microsoft, which have products that draw so-called core gamers.

A closure to pandemic times may also coincide with a peak in the life cycle, or duration of consumer appeal, of the Switch.

Questions also remain about Nintendo’s ability to profit from the growing mobile game sector, as well as from next-generation consoles that may evolve with new technology such as virtual reality.

A big plus for Nintendo is its wealth in intellectual property, which means lucrative merchandizing and theme parks.

Nintendo kept its forecasts unchanged for the full fiscal year through March 2022 at 340 billion yen ($3.1 billion) in profit on 1.6 trillion yen ($14.5 billion) in sales.

That marks a 29% profit drop and a 9% sales decline from the previous year.

The Switch platform continues to drive sales, according to Nintendo, with 2.07 million units of the “New Pokemon Snap” software sold during the April-June period.

Games in the works for the fiscal year include “The Legend of Zelda: Skyward Sword HD” and “Mario Party Superstars,” as well as Pokemon games.

Nintendo said it’s also adding a Switch model with “a vibrant OLED display” to attract buyers.

It said digital downloads of games decreased nearly 25% on year for the quarter, while its mobile business was little changed.

“In regard to business risk, the extended impact of both COVID-19 and the global semiconductor shortage creates a state of continued uncertainty, with the possibility of future impact on production and shipping,” Nintendo said.

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Yuri Kageyama is on Twitter at https://twitter.com/yurikageyama

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FRANKFURT, Germany (AP) — Germany’s Siemens AG raised its outlook for the year Thursday, joining other major European industrial companies in signaling that the economic recovery from the coronavirus pandemic is gathering pace despite parts shortages and concerns over the spread of the delta variant.

Rebounding global demand for infrastructure and manufacturing software led to a sharp increase in orders in the April-June quarter at Munich-based Siemens AG, with an order from U.S. rail company Amtrak a large contributor.

Siemens said orders saw “double-digit growth in all industrial businesses and reporting regions.”

The engineering and manufacturing company raised its outlook for its fiscal year, joining Volkswagen and Airbus in raising their predictions for business performance amid a global recovery from the worst of the pandemic shutdowns in the April-June quarter a year ago.

Siemens cautioned that its business could be affected by the same shortage of semiconductors for electronic components that has forced production cutbacks among automakers. It said it was also seeing higher costs for raw materials, parts and freight services.

The company said its order book increased by 47% to 20.5 billion euros ($24.2 billion). The figure was boosted by 2.8 billion euros in contracts awarded by Amtrak for 73 trains to be built at the company’s factory in Sacramento, California.

The order book also benefitted from an order for passenger coaches in the Czech Republic and a signaling system in Taiwan. In addition, Siemens saw strong increases in orders for industrial software. Part of the current strong manufacturing demand was due to companies increasing production to fill inventories and reserves to mitigate risks that their supply chains might be disrupted.

Siemens CEO Roland Busch said in a statement that the company was benefitting from “the strong economic recovery in our key industrial verticals. These include, for example, the automotive industry, machine building and electronics, but also the infrastructure market, including areas such as power distribution, data centers and transportation.”

Siemens raised its forecast for net income this year to 6.1 billion-6.4 billion euros, from the earlier outlook for 5.7 billion-6.2 billion euros. Net profit for the most recent quarter, the company’s fiscal third, was 1.48 billion euros, up from 535 million in the year-ago quarter.

The net income figure benefited from a positive swing in income from discontinued operations, which showed a loss of 403 million euros in the year-earlier quarter.

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DETROIT (AP) — The Biden administration wants automakers to raise gas mileage and cut tailpipe pollution between now and model year 2026, and it has won a voluntary commitment Thursday from the industry that electric vehicles comprise up to half of U.S. sales by the end of the decade.

The moves are big steps toward President Joe Biden’s pledge to cut emissions and battle climate change as he pushes a history-making shift in the U.S. from internal combustion engines to battery-powered vehicles. They also reflect a delicate balance to gain both industry and union support for the environmental effort, with the future promise of new jobs and billions in new federal investments in electric vehicles.

The administration on Thursday announced there would be new mileage and anti-pollution standards from the Environmental Protection Agency and Transportation Department. It said the auto industry had agreed to a goal that 40% to 50% of new vehicle sales be electric by 2030.

Both the regulatory standards and the voluntary target will be included in an executive order that Biden plans to sign later Thursday.

The standards, which still have to go through the regulatory process including public comments, would reverse fuel economy and anti-pollution rollbacks done under President Donald Trump. At that time, the increases were reduced to 1.5% annually through model year 2026.

The White House didn’t release information on the proposed annual increases late Wednesday, but Dan Becker, director of the safe climate campaign for the Center for Biological Diversity, said an EPA official gave the numbers during a presentation on the plan.

The official said the standards would be 10% more stringent than the Trump rules for model year 2023, followed by 5% increases in each model year through 2026, according to Becker. That’s about a 25% increase over the four years.

Last week, The Associated Press and other news organizations reported that the Biden administration was discussing weaker mileage requirements with automakers, but they apparently have been strengthened. The change came after environmental groups complained publicly that they were too weak to address a serious problem.

Transportation is the single biggest U.S. contributor to climate change. Autos in the U.S. spewed 824 million tons (748 million metric tons) of heat-trapping carbon dioxide in 2019, about 14% of total U.S. emissions, according to the EPA.

The voluntary deal with automakers defines an electric vehicle as plug-in hybrids, fully electric vehicles and those powered by hydrogen fuel cells.

Environmental groups praised the higher standards but said the administration should be moving faster.

“This proposal helps get us back on the road to cleaning up tailpipe pollution,” Simon Mui of the Natural Resources Defense Council said in a statement. “But given how climate change has already turned our weather so violent, it’s clear that we need to dramatically accelerate progress.”

Scientists say human-caused global warming is increasing temperatures, raising sea levels and worsening wildfires, droughts, floods and storms globally.

“We urgently need to cut greenhouse gas pollution, and voluntary measures won’t cut it,” Becker wrote in an email.

Several automakers already have announced similar electric vehicle sales goals to those in the deal with the government. Last week, for instance, Ford’s CEO said his company expects 40% of its global sales to be fully electric by 2030. General Motors has said it aspires to sell only electric passenger vehicles by 2035. Stellantis, formerly Fiat Chrysler, also pledged over 40% electrified vehicles by 2030.

The Trump rollback of the Obama-era standards would require a projected 29 mpg in “real world” stop-and-start driving by 2026. It wasn’t clear what the real world mileage would be under the Biden standards. Under Obama administration rules, it would have increased to 37 mpg.

Automakers said they would work toward the 40% to 50% electric vehicle sales goal.

“You can count on Toyota to do our part,” said Ted Ogawa, the company’s North America CEO.

General Motors, Stellantis and Ford said in a joint statement that their recent electric-vehicle commitments show they want to lead the U.S. in the transition away from combustion vehicles.

But they said the change is a “dramatic shift” from the U.S. market today, and can only happen with a policies that include incentives for electric vehicle purchases, adequate government funding for charging stations and money to expand electric vehicle manufacturing and the parts supply chain.

The United Auto Workers union, which has voiced concerns about being too hasty with an EV transition because of the potential impact on industry jobs, did not commit to endorsing a 40% to 50% EV target. But UAW said it stands behind the president to ”support his ambition not just to grow electric vehicles but also our capacity to produce them domestically with good wages and benefits.”

Under a shift from internal combustion to electric power, jobs that now involve making pistons, fuel injectors and mufflers will be supplanted by the assembly of lithium-ion battery packs, electric motors and heavy-duty wiring harnesses.

Many of those components are now built overseas, such as China. Biden has made the development of a U.S. electric vehicle supply chain a key part of his ambitious plan to create more auto industry jobs.

“We are in a global competition for who gets to make the clean cars of the future, and President Biden’s leadership means that we’ll develop that manufacturing and those supply chains right here in America,” said Sen. Tom Carper, D-Del., who chairs the Senate Environment and Public Works Committee. He praised the announcement Thursday as “good news for our planet and our auto industry.”

In the infrastructure bill awaiting passage in the Senate, there is $7.5 billion allocated for grants to build charging stations, about half of what Biden originally proposed. He wanted $15 billion for 500,000 stations, plus money for tax credits and rebates to entice people into buying electric vehicles.

Only 2.2% of new vehicle sales were fully electric vehicles through June, according to Edmunds.com estimates. That’s up from 1.4% at the same time last year.

The Alliance for Automotive Innovation, a large industry trade group, said in a statement it will work with the administration to reach zero carbon emissions from transportation. But it said the best opportunity for environmental benefits will come after 2026 as more electric vehicles are sold.

The industry, it said, will invest more than $300 billion in electrification by 2025, producing 130 electric models by 2026. Only about 50 are available today.

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Associated Press writers Hope Yen and Seth Borenstein in Washington contributed to this report.

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SALEM, Ore. (AP) — The future ownership of an Israeli spyware company whose product has been used to hack into the cellphones of journalists, human rights workers and possibly even heads of state is up in the air.

Major investors in a private equity firm that has majority ownership of NSO Group, the maker of the Pegasus spyware, are in discussions about what action to take. The Oregon state employee pension fund is one of the largest investors, if not the largest, having committed $233 million to Novalpina Capital, the private equity firm, in 2017.

Novalpina Capital has been saddled with both an internal dispute among its founding partners and an explosive report showing NSO Group’s spyware has been widely misused around the globe.

Oregon State Treasury spokeswoman Rachel Wray told The Associated Press in an email Wednesday the department is getting involved. State officials previously said investors have limited say in private equity investments once they are completed.

“I can confirm that, consistent with our fiduciary duties to Oregon beneficiaries, and along with other limited partners, (Oregon State) Treasury is involved in discussions related to our investment in Novalpina,” Wray said Wednesday.

The development comes amid a serious disagreement among the three co-founders of London-based Novalpina Capital that, according to press reports from Britain, resulted in investors moving to strip control of the fund after concluding that relations between the three had deteriorated so much that they could no longer work together.

Sky News reported the dispute was about future deployment of Novalpina’s 1 billion euro ($1.18 million) fund.

On top of that internal strife, an investigation published in July by the global media consortium Forbidden Stories showed that at least 180 journalists around the world have been selected as targets by clients of NSO Group. In one case highlighted by the Guardian, Mexican reporter Cecilio Pineda Birto was assassinated in 2017 a few weeks after his cellphone number appeared on a leaked list of more than 50,000 cellphone numbers.

French President Emmanuel Macron is one of several world leaders who may have been targeted using the spyware that is capable of checking a cellphone’s emails and other data and turning on its microphone and cameras.

NSO Group denied that it has ever maintained “a list of potential, past or existing targets.” In a separate statement, it called the Forbidden Stories report “full of wrong assumptions and uncorroborated theories.”

The company insists it only sells to “vetted government agencies” for use against terrorists and major criminals and that it has no visibility into its customers’ data. Critics have provided evidence that NSO directly manages the high-tech spying.

Oregon State Treasurer Tobias Read, who serves as the state’s chief investment officer, “is following and (is) concerned about the reporting surrounding Novalpina and the NSO Group,” Wray said.

Wray said she cannot get into specifics about the discussions among Novalpina’s investors because of confidentiality restrictions and Oregon’s obligations as a limited partner. Read declined an interview request.

Oregon was Novalpina’s first major investor. Stephen Peel and Stefan Kowski, two founding Novalpina Capital partners, showed up at Oregon treasury offices in the Portland suburb of Tigard in November 2017 to make a pitch to the Oregon Investment Council, which oversees the state’s $90 billion pension fund.

“As investors, we assume we have to be contrarian,” Peel told the council. “We have to find deals that other people don’t see or don’t want to do for various reasons.”

The Oregon Investment Council unanimously approved a $233 million commitment. It has so far provided to the fund $65.7 million, according to the most recent statistics. The Alaska Permanent Fund Corporation and England’s South Yorkshire Pensions Authority invested $59 million and $33 million respectively.

In 2019, Novalpina Capital and the founders of NSO Group acquired a majority stake in NSO Group from another private equity firm, Francisco Partners, that the Oregon pension fund had previously invested in.

Novalpina’s largest investors are now considering picking Berkeley Research Group to replace Novalpina, the Financial Times reported. If appointed, the California-based global consulting firm would be given a mandate to return investors’ money by selling the three companies Novalpina owns, including NSO, for the highest possible price, the London newspaper said.

Berkeley Research Group did not respond to a request for comment. The group’s website says it “helps leading organizations advance in three key areas: disputes and investigations, corporate finance, and performance improvement.”

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SILVER SPRING, Md. (AP) — The chairman of the Securities and Exchange Commission said that investors need more protection in the cryptocurrency market, which he said is “rife with fraud, scams and abuse.”

Gary Gensler, appointed by President Joe Biden to lead the body that regulates securities markets, listed several areas where crypto needed to be reigned in or regulated, particularly with regard to money laundering, sanctions, tax collection and extortion via ransomware.

“Right now, we just don’t have enough investor protection in crypto,” Gensler said in remarks to the Aspen Institute’s forum on security, “Frankly, at this time, it’s more like the Wild West.”

Digital currencies, like Bitcoin, have been left largely unregulated by major governments up to this point. In June, China ordered cryptocurrency mining operations shut down and banks started refusing to help customers with Bitcoin transactions. Although the SEC has brought and won dozens of cases against fraudsters, Gensler said the agency needs more authority from Congress — and more resources — to regulate the crypto markets.

Gensler has been viewed as receptive toward cryptocurrency and other new financial technologies after a stint as a professor at MIT, where he focused his research and teaching on public policy as well as digital currencies and blockchain, the global running ledgers of digital currency transactions.

Beyond the problems, Gensler said innovation in digital currencies “has been and could continue to be a catalyst for change in the fields of finance and money.”

A Goldman Sachs employee for 20 years, Gensler surprised many with his toughness as a regulator at the Commodity Futures Trading Commission during the Obama administration.

Gensler opened his remarks by saying he was not speaking on behalf of the SEC or its staff, but that he personally believes that regulation of cryptocurrencies would fall under his agency’s purview.

Currencies such as the dollar or euro fulfill several key functions, Gensler said; they are a store of value, a unit of account and medium of exchange. By contrast, Bitcoin and other cryptocurrencies are for now mostly “highly speculative” investments.

When Congress defined what a security was in the 1930s, Gensler said, one of those definitions was as an investment contract — when “a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

That definition, which Gensler says should apply to cryptocurrency, has been tested and reaffirmed by the Supreme Court. Gensler noted that his predecessor at the SEC, Jay Clayton, testified in 2018 that he believed ICOs, or initial coin offerings, were securities and that “we have jurisdiction, and our federal securities laws apply.”

Gensler said many crypto tokens are unregistered securities and don’t come with market oversight or proper disclosures to educate investors. That leaves prices open to manipulation and investors unprotected, he said.

“These products are subject to the securities laws and must work within our securities regime,” Gensler said. “If we don’t address these issues, I worry a lot of people will be hurt.”

The combined market capitalization of all cryptocurrencies is currently more than $1.5 trillion.

Tuesday’s event marked the first time the non-profit Aspen Institute included a discussion about cryptocurrency in the forum on national security.

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