US Business News Q4 2018

Welcome to the Q4 edition of US Business News Magazine! Providing you with all the latest information on new M&A activity and deals to corporate issues and trends, and everything in between.

In recent news, leading supplier of optical transport equipment and router solutions for service providers and telecom operators, EKINOPS has just announced the opening of a new North America Headquarters in Rockville, Maryland, USA. The new facility marks the next phase in the company’s North American expansion following its acquisition of OneAccess Networks in September 2017.

Elsewhere in this edition, an international survey’s findings revealed a continued upward trend in consumers planning online purchases over the November-December holiday period. The survey, which was conducted by One Hour Translation, analyzed the responses of over 6,600 consumers in nine leading economies: the U.S., Japan, Germany, France, Britain, Canada, Spain, Brazil and Mexico.

Also in this issue, we discover how Cowlines, a mobility-as-a-service (MaaS) app, has announced that it is now available for iOS download to 190 million people across 62 cities in the United States and in Canada including the metro regions of Seattle, Portland, Los Angeles, San Francisco, San Jose, Oakland, San Diego, Toronto, NYC and others. We take a closer look at how the firm have now unveiled its app across North America in one of the largest and most ambitious app roll-outs in recent years.

Here at US Business News, we hope that you enjoy reading this month’s issue of the publication and we wish you all the best for the New Year!

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Latin America News Q4 2018

Welcome to the Q4 issue of Latin America News! Showcasing the latest news, up to the minute features and cutting-edge opinion pieces from across Latin America region.

In recent news, InfoReach has just announced the expansion of its South America operations with the opening of a new office in São Paulo, Brazil. From this office InfoReach will work to expand its global reach into Latin America’s largest economy.

Recently, Butterfield & Robinson, one of the world’s premier active travel company, has just launched three new private trips to Mexico for 2019. The three new private tours highlight history, aquatic wildlife and incredible cuisine which have been designed to excite foodies, families and adventure-seekers.

Elsewhere in this edition, we take a look at how Beat, a leading ride-hailing app formerly known as Taxibeat, announced that it will extend service to Mexico City in Q1 2019. Backed by Daimler Mobility Group, Beat is opening its offices in Mexico City and anticipates recruiting thousands of drivers by launch in time for the new year.

Also in this issue, FARMFOLIO, a Cayman Islands-based agriculture development firm, has closed the second round of funding for its Colombian farming operation, Pietrasanta. The project encompasses 570 acres of organic coconut development and Colombia’s first certified coconut nursery opting for a more sustainable future.

Here at Latin America News, we hope that you enjoy reading this edition and look forward to seeing you in the New Year!

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SIX WAYS TO IMPROVE THE CONSUMER MOBILE EXPERIENCE IN ORDER TO ENHANCE LOYALTY AND REINFORCE BUSINESS OBJECTIVES

By Adam Stone, founder and CEO of Rokk

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Customer expectations are increasing, this coupled with the fact interactions are becoming more complex at every stage in the purchase cycle presents an issue for retailers in terms of meeting these expectations. Personalisation, speed and ease is crucial in order to deliver a robust consumer experience (CX) across channels and mobile application is where the leverage lies.

The average user spends at least three hours per day browsing on their smartphone and therefore brands need to ensure that their mobile apps deliver tremendous user experience (UX) quality. In fact, user experience quality is so powerful that a faulty user experience can result in a mass exodus.

Ultimately, there are steps that brands can take to ensure that they are delivering the best customer-centric experience.

Appropriate platform design

If applying design to both IOS and Android, both of these operating systems work with unique standards and conventions. Differences include: the variable sizes and resolutions differ, as do the feel and appeal of UI components. Android is designed to support devices with a dedicated back button and offers tabs at the top of the page as does IOS (at the top of the screen).

These are just some of the small differences between the two operating systems, however the impact the they have on the end user experience is huge. Consumers are hugely engaged with their smartphones and the operating system is a massive part of this. Any app that doesn’t sync with the dynamics of the operating platform may be left by the wayside as the average app loses 77 per cent of its users in the first three days. With the stakes so high it is vital for app developers to ensure that the app gels well with the platform it is made for, to lay the foundations for a superior customer-centric experience.

Impressions matter

First impressions are important and therefore a well thought out on-boarding process is crucial to make the most out of an initial mobile interaction and bring the customer closer to the business goal, such as signing up for a newsletter or using additional services. On-boarding should be seamless and efficient, making it as easy as possible for the consumer. Information should be clear and concise with a quick interface tour to remove any ambiguity. The on-boarding process should also be easy to skip if the customers so wishes, therefore making the user journey as simple as possible.

It’s all about context

Context should always come first when maximising consumer interactions on mobile apps. Businesses that understand user profiles, such as the way that they interact, are able to deliver far better customer experiences. Understanding target audience, whether customers are experienced mobile users and what triggers their mobile interactions, should give businesses the tools they need to design a high-level customer journey on mobile applications and websites that helps consumers to reach their goal.

Make it interactive

Better mobile interactions that engage users can help to enhance the quality of their experience which is certainly true when a customer feels in control when interacting with a brand’s mobile website or application. Generally speaking people follow brands who actively interact with them and adapt to their needs. Mobile app developers should be looking at building web interfaces that are aligned with anticipated consumer behaviours through leveraging consumer principles and well thought out actions which appeal to the user.

Make it accessible and search-friendly

Customer experience-based designs are the way forward for mobile app designers, coupled with clear and succinct navigation which is over a much smaller surface area compared with desktop. Essentially, the content must remain the same across all platforms as navigation should not hamper the customer experiences on mobile sites versus their desktop counterparts. Beneficial features include: accounting for spelling mistakes that still allow users to find what they are looking for and including intelligent autofill suggestions and alternative search queries. Filters can also help, allowing to users to get to core content far more quickly – this is especially helpful when the product base is vast.

Testing, testing, testing

Lessons learned from analytics and A/B testing can be invaluable in helping businesses to define aspects of the customer experience that matter the most whilst interacting with your brand on a mobile app. Mobile user testing can fine tune mobile websites and apps in order to maximise the customer experience, examine customer bounce rates and highlight which customers use which functionalities, which is integral to the bottom line.

Ultimately, the stakes are high and upping the mobile app game means investing in resources to understand and improve the customer experience in order to meet business objectives.

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Cyber attacks leave Telcos on hold for two days

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EfficientIP’s 2018 DNS Threat Report reveals telecom organizations took average of 18 hours to mitigate each attack 


EfficientIP, a leading specialist in network security, today revealed in its 2018 Global DNS Threat Report that the telecommunications sector ranks as one of the worst businesses sectors in its handling of cyber threats. The report revealed that 43% of telco organizations suffered from DNS-based malware over the past 12 months. The report also highlighted 81% took three days or more to apply a critical security patch after notification.

Time & Money
DNS attacks cost telco organizations significant time and money. According to this year’s report, telcos took too long to mitigate an attack, requiring an average of 3 employees to collectively spend over 17 hours per attack. Due to how time-intensive the mitigation process can be, the average cost per DNS attack is rising for the telco sector. Last year, a single DNS attack cost a telco organization $622,100. This year the research shows telcos lose an average of $886,560 from each DNS attack, an increase of 42% in just 12 months.

Commenting on the reason behind these attacks, David Williamson, CEO of EfficientIP states:

“Telco organizations attract complex, sophisticated cyber attacks as they hold sensitive customer data, and are also critical for providing unified communication services to businesses With a large part of their customer base operating online, strong network security has become a business necessity for the entire telco sector in general. Ensuring consistency and reliability in service is a crucial step towards providing elevated customer satisfaction.”

Brand Erosion
The 2018 Global DNS Threat Report also revealed the ramifications on telcos’ brands while undergoing cyber attacks. Brand reputation was likely to suffer due to service issues:

45% had to close down specific affected processes and connections. 
38% suffered cloud service downtime.
33% reported a compromised website. 
31% endured in-house application downtime.
30% reported sensitive customer information stolen.
Recommendations for telcos
Working with some of the world’s largest telecommunication brands such as Orange and Vodafone to protect their networks, EfficientIP recommends five best practices:

Rethink and simplify DNS architectures by replacing intermediary security layers with an adapted DNS security solution. 
As well as reducing administration and maintenance costs, this helps guarantee availability of service.

Augment your threat visibility using real-time, context-aware DNS transaction analytics for behavioral threat detection. Businesses can detect all threat types, and prevent data theft to help meet regulatory compliance such as GDPR and US CLOUD Act.

Apply adaptive countermeasures relevant to threats. The result is ensured business continuity, even when the attack source is unidentifiable, and practically eliminates risks of blocking legitimate users.

Decentralize DNS architecture to cope with heavy growth of traffic. In addition to enhancing user experience, placing purpose-built, high performance DNS servers in points of presence significantly improves security against DDoS attacks.

Incorporate DNS into a global network security solution to recognize unusual or malicious activity and inform the broader security ecosystem. This allows holistic network security to address growing network risks and protect against the lateral movement of threats.
Notes to Editors – The 2018 Global DNS Threat Report 
The report was conducted by Coleman Parkes from January to April 2018. The results are based on 1,000 respondents in three regions – North America, Europe and Asia Pacific. Respondents included CISOs, CIOs, CTOs, IT Managers, Security Managers and Network Managers. 96 telco organizations were interviewed across 9 countries for the survey. 

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Top Employees: Hold on to what you’ve got

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Dick Bucci, principal consultant at Pelorus Associates, explores eight ways to retain top employees by humanizing the workplace in an eBook in association with workforce management company Teleopti. 

“Attracting and retaining top quality customer service representatives has never been more important to the success of customer engagement”

The customer care business is going through an evolution driven by digitalization. Given the buzz about customer self-service and virtual assistants you might think that unemployed customer service representatives (CSRs) would be flocking to learn new crafts. But this has not been the case. 
According to the US Bureau of Labor Statistics, in 2016 the number of people employed as CSRs increased by 4.3% compared to only 2.6% for the overall workforce. This highlights how people-led customer service and support is far from dead. 

So how do you hold onto employees that deliver personalized outstanding service – whether it’s in person, via call, through email or over chat?

Teleopti, a global leader in workforce management software, has long understood the strong correlation between agent satisfaction and customer satisfaction. Teleopti’s tagline is “Humanize the Workplace.” This is not a jab at robotics and artificial intelligence – Teleopti is a leader in those fields as well. It’s about applying technology to complement the human touch.

We know that for complex queries people simply prefer to talk to other people. (Machines are a little weak on the empathy scale and often can’t handle complicated matters). And we know the world is getting more complex. After extensive research and in collaboration with Teleopti we have identified the following eight ways to retain top employees by humanizing the workplace.

•Self-Driven Career Development – provide the tools and support to help employees manage their own career development 

•Culture – maintain a culture that values employee satisfaction, fosters work-life balance and supports the customer experience

•Empowerment – empower your employees to solve customer problems, let them influence scheduling decisions and involve them in decisions on how to improve contact center performance

•Personalization – to the extent practicable, structure work schedules and training that respect the personal needs of employees

•Stress reduction – contact centers can be stressful environments, which contributes to turnover. Create a work environment that eliminates or sharply reduces unnecessary stress

•Team building – the contact center environment presents a unique opportunity to build a spirit of teamwork and camaraderie. Management can harness the natural spirit of friendly competition to boost morale and improve performance

•Automation – diverting routine tasks to self-service boosts morale and reduces stress by relieving agents from mundane activities

•Technology – from the mechanical ACDs of the 1970s to today’s AI-powered chatbots, contact centers have long been incubators of advanced technology. Today’s millennial employees embrace new technology and seek out employers that are on the leading edge. 

Attracting and retaining top quality customer service representatives has never been more important to the success of customer engagement than it is today. 

Teleopti’s eBook offers some terrific ways to hold onto your top people and help them to perform even better. Humanize the Workplace: 8 Ways to Retain Your Top Talent 

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Travel Trends Latin America, free new trade title launches

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Travel Trends Latin America, has now launched, published by APL Media Limited, in association with LATA, the Latin American Travel Association. Free to UK travel industry professionals, the new 76-page publication is the first of a new brand, Travel Trends, launched to assist the trade sell destinations and sectors of travel with new analysis, reports and expert opinions. 

Examining the latest travel industry trends with input from industry experts and written by experienced travel writers, the title also features a travel directory highlighting the best places to explore and stay around the world. Travel Trends is presented in a beautiful, high-quality format and is accompanied by inspirational photography. It is specifically targeting the trade distributed to tour operators, travel agents, travel professionals and tourist boards. 

Travel Trends Latin America reports on key trends and developments in the region and includes analysis, new routes and itinerary ideas. Together with custom content created in partnership with hotels and operators across the region, this will enable the trade to sell with confidence and authority. 

Jo Fletcher-Cross, editor, Travel Trends, said: “This new publication is an excellent resource for the trade. Research from LATA in 2017 found that when asked how confident travel agents felt when selling trips to key destinations, Latin America came at the bottom of the list. And when asked what one factor would help sell more holidays to Latin America, 52% said a better knowledge of the destination. Travel Trends Latin America addresses this knowledge gap and we hope it will give travel agents the information they need to sell this region.”

Travel-trends.co.uk, the brand website, soft-launched earlier this year, features regularly updated original content, covering travel trends all around the world and over multiple sectors. 

Colin Stewart, chairman of LATA, said: “We are delighted to have been given the opportunity to partner with APL Media on the new Travel Trends Latin America publication, which draws on key market information and research and provides a valuable overview on how the Latin American travel sector is performing and developing. The publication offers useful insight into how to reach new customers and to grow the number of UK visitors travelling to the Latin American region.”

Future issues of Travel Trends will feature Travel Trends Adventure, in association with ATTA, the Adventure Travel Trade Association, published in November 2018, and Travel Trends Pacific Asia, in association with PATA, the Pacific Asia Travel Association, scheduled for March 2019.

Travel industry professionals can request a print or digital copy of the magazine at travel-trends.co.uk/subscribe

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PLANET COMPUTERS NAMED AS CES 2019 INNOVATION AWARDS HONOUREE

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Planet Computers today announced that it has been named a CES® 2019 Innovation Awards Honouree for the Cosmo Communicator. The announcement was made during CES Unveiled New York, an invite-only tech event bringing together top media, exhibitors and industry leaders for a sneak peek of the products and trends expected at CES 2019, which will run January 8-11, 2019 in Las Vegas, NV. 

“We are also pleased to be a part of promoting UK design and innovation on the worldwide stage”.

An annual program that celebrates outstanding design, the CES Innovation Awards recognises honourees across 28 product categories. A panel of judges, including designers, engineers and members of the tech media, reviews submissions based on design, functionality, consumer appeal, engineering and how the products compare with competition. 

Designed to be a true all-in-one communicator, Cosmo has a number of features engineered for smartphone users who are also keen to benefit from the productivity offered by a physical keyboard – these include:

• Full backlit physical keyboard
• Primary 6” colour touchscreen
• Secondary 2” external colour touchscreen 
• Android 9 (Pie) OS and Linux support
• 24MP external camera
• Fingerprint sensor
• NFC capability
• Wi-Fi and dual-4G connectivity

Powered by an 8-Core Mediatek P70 processor, with 6GB of RAM and 128GB of internal memory (extendable via a microSD card), Cosmo has a uniquely designed chassis that now includes two support feet for the hinge when the device is open. 

Taking inspiration from popular PDA devices from the 1990s, such as the Psion 5, Sharp Netwalker and Nokia Communicator, Cosmo enables users to benefit from the productivity offered by a physical keyboard without needing to carry a secondary mobile device or laptop.

Building on the success of Gemini, Cosmo also features a large battery for up to two days of use, dedicated voice assist controls, 6-inch internal colour screen, dual 4G SIM capability (physical and eSIM), stereo speakers, two USB-C ports for charging and connecting peripherals, and an advanced ARM Mali G72 graphics processor.

Dr Janko Mrsic-Flogel, CEO of Planet Computers, comments: “Winning a CES Innovation award for the second consecutive year is a defining moment. Following the early success of our Indiegogo campaign for the Cosmo Communicator, we are now looking ahead to exhibiting our first prototypes at CES in January and distributing the finished product to backers later in 2019. We are also pleased to be a part of promoting UK design and innovation on the worldwide stage.”

The CES Innovation Awards are sponsored by the Consumer Technology Association (CTA)™, owner and producer of CES, the world’s largest and most influential technology event. CTA has been recognising achievements in product design and engineering since 1976.

Planet Computer’s Cosmo Communicator will be on display in the Innovation Awards Showcase at the upcoming CES 2019. The complete list of CES 2019 Innovation Honourees, including product descriptions and photos, can be found at CES.tech/Innovation.

CES 2019 will showcase life-changing technology across every major industry, featuring 4,500 exhibitors across 2.75 million net square feet (260K net square meters) of exhibit space. CES provides access to the very latest transformative tech, such as 5G connectivity, artificial intelligence, augmented and virtual reality, smart home, smart cities, sports tech, machine learning and more. 

Registration for CES 2019 is open. For the latest news and show announcements, visit CES.tech. 

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SonicWall Secures Hybrid Clouds by Simplifying, Enhancing Deployment for Enterprises, SMBs

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Company Expands Capture Cloud Platform to Include Zero-Touch Deployment, Secure SD-WAN, Personalized Threat Intelligence, Next-Gen Virtual Firewall for Public Cloud


Today, SonicWall announced new Capture Cloud Platform capabilities that include Zero-Touch Deployment and Secure SD-WAN (software-defined WAN) designed for distributed enterprises and organizations with hybrid cloud environments. The company also announced enhancements to the Capture Security Center with personalized Risk Meters that deliver company-specific, real-time threat intelligence and risk scoring, as well as Hyper-V, Azure and AWS support for its virtual firewall series.

“Organizations are invested in hybrid cloud strategies where they’re able to harness the power of both public and private clouds, but they require solutions that help simplify and secure their cloud migration initiatives,” said SonicWall President and CEO Bill Conner. “Whether they are pursuing the benefits of a vendor’s specific capabilities, looking to reduce the cost of hiring staff or seeking to reach compliance standards, SonicWall helps protect their migration while simultaneously giving more visibility and control of their environments.”

Reducing Cost with Zero-Touch Deployment
SonicWall Zero-Touch Deployment allows organizations to quickly and securely configure firewall hardware at new locations without requiring advanced and costly on-site personnel. Once new products are brought online in remote locations, administrators can manage local and distributed networks through a single pane-of-glass using Capture Security Center, SonicWall’s flagship cloud-based management and analytics SaaS platform.

“We are very excited about the recent addition of Zero-Touch and SD-WAN from SonicWall. Cerdant has been deploying SonicWall next-generation firewalls for over 15 years and these new additions will allow us to deliver even faster deployments for customers,” said Cerdant Vice President of Technology and Operations Joshua Skeens. “The agile and simplified deployment capabilities will help reduce labor costs with centralized cloud management.” 

To reduce wire clutter and the complexity associated with PoE injectors and switches, the company is introducing SonicWall TZ300P and TZ600P unified threat management (UTM) firewalls that provide power directly to connected PoE/PoE+ enabled devices, such as wireless access points, point-of-sale (POS) terminals, printers, cameras and other IP devices. 

Leveraging Public Networks Securely 
With strong and proven security provided by SonicWall, SD-WAN can be leveraged to use readily-available, low-cost public internet services to reduce the cost and complexity commonly associated with building distributed private networks based on MPLS technology. 

“SD-WAN is a highly effective technology for distributed organizations like retailers, banks, manufacturers and campuses to simultaneously improve performance and reliability while reducing operational overhead,” said 451 Research analyst Mike Fratto. “However, the use of the direct, connected public internet for business opens up security challenges for organizations. 

For SD-WAN to be a viable alternative to private WANs, enterprises need to ensure they have the same level of inspection and enforcement at the branch and remote sites as they have at the data center. Integrated security features with SD-WAN are table stakes for most enterprises adopting the technology.”

A new capability of SonicOS 6.5.3, the operating system for SonicWall next-generation firewalls, SonicWall Secure SD-WAN enables distributed organizations to safely deploy and connect branch and remote sites for sharing data, and enhancing the resiliency and performance of applications and services. 

SonicWall Secure SD-WAN ensures the consistent performance and availability of business-critical and SaaS applications with intelligent failover, application-based load balancing and quality of service (QoS) capabilities.

Personalized Threat Intelligence, Risk Scoring
The rising growth of applications, endpoints, mobile devices and databases also means a larger attack surface for cybercriminals. To shrink it, the SonicWall Capture Security Center Risk Meters service provides enterprises and SMBs with data-driven analysis about evolving threat vectors that include networks, web, clouds, applications, endpoints, mobile devices and databases. 

Because no two organizations are alike, SonicWall Risk Meters deliver personalized threat data and risk scores that are adapted to individual situations and environments, promoting immediate and precise defensive actions.

To better guide business and security objectives in a more timely manner, computed risk scores and threat levels are continuously updated based on live threat data relative to existing defense capabilities. Organizations can leverage their scores when performing security effectiveness planning, policy and budgeting decisions. 

Virtual Firewall Extended to Cloud Deployments
The SonicWall Capture Cloud Platform continues to deliver security for businesses of any size and now extends next-generation virtual firewall capabilities to cloud deployments, including Hyper-V, Azure and AWS, with the NSv Firewall Series. 

As an added benefit, new and existing customers using SonicWall NSa or NSsp next-generation firewalls and who also have active Advanced Gateway Security Suite (AGSS) or Comprehensive Gateway Security Suite (CGSS) services, will receive a SonicWall NSv firewall for one year at no additional cost.

SonicWall Zero-Touch Deployment is available immediately. The TZ300P Series, TZ600P and SonicOS 6.5.3 with Secure SD-WAN will be available in December 2018. 

About SonicWall
SonicWall has been fighting the cyber-criminal industry for over 27 years defending small, medium-size businesses and enterprises worldwide. Backed by research from SonicWall Capture Labs, our award-winning, real-time breach detection and prevention solutions secure more than a million business and mobile networks and their emails, applications and data. This combination of products and partners has enabled an automated real-time breach detection and over 215 countries and territories. These businesses can run more effectively and fear less about security. For more information, visit www.sonicwall.com or follow us on Twitter, LinkedIn, Facebook and Instagram.

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Consumers more aware than ever of ability to opt out of marketing communications, new research finds

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US consumers are now most likely to opt out according to the results of the latest international consumer research study from Eagle Eye.

Eagle Eye, a leading SaaS digital marketing provider, has today released results of international research on changing consumer attitudes to shopping and promotional marketing. 

The research study results, summarised in the latest Eagle Eye white paper entitled “The Digital Imperative: Harnessing the Power of ‘Now’ with Performance-Driven Marketing,” suggest shoppers in the US are most likely to say they are more likely to opt out of marketing communications, now compared to six months ago. These communications include:
• Social media marketing and promotions (44%)
• Email marketing and promotions (42%)
• Text (SMS-based) marketing and promotions (42%)
• In-app or online location tracking (42%)
• Online web tracking, i.e. using cookies (42%)

However, US shoppers are no more likely than those in other markets surveyed to have opted out of marketing communications in the last six months from the retail brands and companies they purchase from most often. A third (32%) in the US, 28% in the UK, and 34% in Canada and Australia, have opted out of email marketing and promotions from their most used brands.

Other key findings of the study included:
• Consumers are more likely to visit a website or app via a PC or laptop to carry out research before making a purchase (cited by 68%) than they were to visit a conventional store or shop (67%).

• However, a clear majority (69%) of consumers still prefer to complete purchases in a physical store.

• Price still has the most influence on a consumer’s choice of retailer. But this is closely followed by relevant and timely promotions, discounts or rewards second, while recognising them for their continued custom comes a close third.

• Utility, cost-savings and relevance were the most important factors in deciding whether to redeem such promotion, discount or reward offers respectively. 

The research confirms it is imperative that companies and brands operating across retail and hospitality sectors, markets and online or offline sales channel prioritise the digital transformation of their marketing execution and investment.

As a result of the study findings, The Digital Imperative analyses where and when retailers should collect customer data and the insights they should look to generate from it; as well as what action they should take based on these insights; and how these actions can drive increased footfall and sales, as well as foster greater loyalty and trust.

Miya Knights, Head of Industry Insight at Eagle Eye, said: “The importance of digitally transforming marketing engagement to satisfy tech-led consumer expectations and win in the digital age has never been clearer. An increased tendency among consumers to opt out of marketing communications, coupled with a heightened desire for relevant engagement that offers value and utility, as well as cost savings, also means marketing management and execution must evolve beyond mass, broadcast media and towards more personalised, real-time connections – at the right time and place.”

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Are share buybacks a key factor in the continued rise in US equities?

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Share buybacks are one of this year’s red hot topics in the US and regularly hit the headlines, amid claims that the bullish equity market is underpinned solely by this factor, or that it increases social inequalities. Without wishing to enter into this sterile debate, it transpires that the dominant belief on Wall Street is that US companies are buying-back their own shares in droves and thus contributing to the market advance. When a company buys back its own shares, it reduces the total number of shares in circulation and therefore increases earnings per share, thus remunerating remaining shareholders and theoretically triggering an increase in the share price. Given that three quarters of the S&P 500 component companies are currently implementing share buybacks, it would not be a great leap to conclude that these programmes have a major impact. Is this really the case?

Since the beginning of the current equity market cycle, share buyback programmes have been a recurrent theme in the US, chiefly on account of earnings growth, increased financial leverage and, more recently, tax reform. Over the past few years, the main source of equity demand in the US has stemmed from companies themselves, via share buyback programmes, which has exceeded demand from ETFs. According to JP Morgan, since 2008 share buybacks implemented in the US have totalled USD 4.5 trillion, i.e. the equivalent of 30% of the increase in market cap during this period, which provides a clear illustration of the scale of share buyback programmes. Over the past 12 months, we estimate the value of share buybacks to be USD 640 billion, 30% higher than  that of the previous 12 months. For the full year 2018, buybacks could even increase by over 40% compared to 2017 and exceed USD 800 billion. For 2019, Goldman Sachs estimates that buybacks should increase by over 20% to a new all-time high of almost USD 1 trillion. These colossal amounts are all the more significant as companies are expected to deploy the greatest proportion of their cash this year and in 2019 for share buybacks (more than for capex) for the first time since 2007. With cash-to-asset ratios close to their all-time highs of 12%, US companies have ample means to launch ambitious share buyback programmes.

The US tax reform introduced by the Trump administration in December 2017, which was one of the most significant in US history, has played a key role by reducing corporate tax from 35% to 21% and enabling multinational companies to repatriate an estimated USD 2.5 trillion of cash held abroad at a preferential tax rate. After nine months, it would appear that half of the total amount effectively repatriated has been used to either step-up or launch share buyback programmes, hence their spectacular increase during 2018 and 2019. As evidence, less than 15% of buybacks carried out in 2018 were financed by debt, compared to over 30% in 2017.

We do not share the prevailing enthusiasm for share buybacks, however. Firstly, over the past 12 months, almost 45% of the total amount have been repurchased by 20 companies, led by Apple, Oracle and JP Morgan. Such a high level of concentration cannot benefit the whole market. Secondly, although buyback totals are at an all-time high, it is also important to highlight that market value is also at record levels and that the market cap of the S&P 500 index breached USD 25 trillion for the first time just before the October correction. The value of equities bought back over the past 12 months, despite appearing to be an exorbitant amount, represents just 2.7% of the current market cap of the S&P 500, far below the peaks reached in 2007 and 2013 of over 5%. Lastly, a strategy focusing on shares with a generous buyback yield (trailing 12-month buyback amount / market cap) incurs high risks. Many of these companies have capitalised on the post-crisis low interest rate environment to finance ambitious share buyback programmes and are therefore now more heavily leveraged than average, as demonstrated by the net debt / EBITDA ratio of the S&P 500 Buyback index. In the current increasing interest rate context, these companies are beginning to lose favour with investors.

In theory, if share buybacks strongly support the markets, then the stocks with the highest buyback yields should outperform. Our tests have effectively demonstrated that a stock-picking strategy based on the 100 S&P 500 components with the highest buyback yield has been highly profitable since the beginning of the bull market cycle in March 2009. This strategy, in an equally-weighted version, outperformed the market by 11% annually, whereas a market-cap weighted version outperformed by 4%. However, these portfolios have a high tracking error to the S&P 500 index and their relative performance results chiefly from sector deviations. In order to better assess the intrinsic pertinence of share buybacks as a risk factor, we have divided the investment universe into quintiles based on buyback yield and neutralised sector weightings. This approach does not enable us to conclude that share buybacks add value. Only one of the four versions tested proved convincing in terms of its outperformance profile. Large-scale share buyback programmes alone no longer suffice for companies to beat the market.

Share buybacks are a technical factor, which although certainly positive, is currently only a small cog in the mechanism driving equities higher. Although their value in 2018 and 2019 has reached all-time highs and has also hit the headlines, they are concentrated among a few giant companies and remain moderate compared to the overall scale of the US equity market. The added value delivered by stock-picking strategies based on share buybacks is very probably attributable more to sector exposure than to the intrinsic value of this particular risk factor. Lastly, we believe that the continued rise in the market is based primarily on growth in sales and earnings and therefore on the strength of the economic cycle at a time when margins are already very high.

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