The running of the world’s best known AI business and share price falls for FTSE 100-listed Compass and Ashtead are in focus today.
ChatGPT maker OpenAI said it would hire the former boss of Twitch as its new CEO, with ousted boss Sam Altman moving to lead investor Microsoft.
In today’s corporate developments, Compass shares are under pressure after annual results while equipment rental firm Ashtead fell on downgraded guidance.
What the Sam Altman/OpenAI debacle tells us about the AI industry
Monday 20 November 2023 19:26 , Simon Hunt
When Geoffrey Hinton, the so-called ‘Godfather of AI’ abruptly quit Google in May, among his motivations was his view that the senior team at Google had ceased to be a “proper steward” of AI technologies and an apparent fear that they were being led astray by commercial motivations.
Last week, a board member of UK-based Stability AI quit the firm, furious at his colleagues’ view that it was acceptable to use copyrighted work without permission to train its products.
We don’t know for certain why Sam Altman was sacked by the OpenAI board – his replacement, Emmett Shear, insists it was not over safety concerns – but it could well be a similar kind of worry.
Sale of Telegraph Group "still wide open" -- bankers
Monday 20 November 2023 12:55 , Simon Hunt
THE race to land ownership of The Telegraph Group remains wide open City bankers insist in the face of reports that an Abu-Dhabi backed fund is close to taking control.
The group that also owns The Spectator has been up for sale for weeks after Lloyds Bank grew frustrated at a debt pile of £1 billion that owners the Barclays family had failed to pay down despite, reportedly, repeated promises.
Today The Telegraph itself reported that RedBird IMI, with a loan from the Manchester City owner Mansour bin Zayed Al Nahyan, would allow the Barclays family to repay the debts.
RedBird IMI, led by former CNN executive Jeff Zucker, would then take charge. It is assumed that an Abu-Dhabi backed deal would allow the Barclays to retain at least some level of interest in the business. Lloyds declined to comment.
City Comment: New LSE chief faces battle with misconceptions
Monday 20 November 2023 12:28 , Simon Hunt
Best of luck to Michel-Alain Proch, today unveiled as the next chief financial officer of the London Stock Exchange Group. He may need it.
Proch replaces the departing Anna Manz, who can expect a couple of million quid on the way out. Proch, on a salary of £850,000, can expect the same on the way in since he will be granted “buyout awards” to compensate for bonuses he might have got from present employer Publicis.
Truly, executive land is a whole other planet.
One issue for Proch and his CEO, the American David Schwimmer, is the perception people in the City have of what the London Stock Exchange Group does.
Mostly, it’s a data company that sells analytics tools to investors around the world. The business of running an exchange that trades shares is about 4% of the revenues of what is a giant entity with operations in 190 countries.
There’s a fairly vocal crowd in the City and a smaller one in Westminster which hates this idea. As far as it is concerned, the 300-year old LSE is at the vital heart of everything the Square Mile does, even if the numbers indicate this is no longer true.
Another problem for Proch and Schwimmer is the perception that London shares are undervalued. And that all the good new floats therefore go to New York.
Schwimmer said the other day that this just isn’t so. Individual companies — lately Smurfit Kappa and YouGov, might have their own reasons for moving to Wall Street.
In general, these tend to be about more relaxed attitudes to executive pay than higher share prices though, says Schwimmer.
Proch probably doesn’t want to make his first point of business to demand that London CEOs get paid more, lest anyone thinks a man educated at Toulouse Business School misunderstands the concerns of the smaller brokers who feel the LSE doesn’t appreciate their needs.
Perhaps he and Schwimmer can do more to persuade us and CEOs looking to float that London still has nearly everything going for it.
Diploma shares lead FTSE 100, AstraZeneca under pressure
Monday 20 November 2023 10:30 , Graeme Evans
Diploma shares have made an instant impression after the industrial services firm posted its first set of results as a FTSE 100 company.
The group, which joined the top flight in September, boasts a 15-year record of growing earnings per share (EPS) by an average of 15% a year.
Today’s EPS figure for the year to 30 September lifted by a better-than-expected 18% to 126.5p. Annual revenues rose 19% to £1.2 billion and operating profits by 24% to £237 million.
Chief executive Johnny Thomson said the momentum continued into the new financial year, helping Diploma shares to rise 6% or 188p to 3208p.
The performance came as the FTSE 100 index followed Friday’s 1.3% jump with a fall of 12.30 points to 7491.95.
Other industrial-focused stocks in favour included Halma, which rose 38p to 2091p after acquiring a Houston-based surgical innovations business for an initial £72 million.
BP and Shell shares offered support ahead of this weekend’s OPEC+ meeting, when oil ministers are expected to signal further production cuts. Brent Crude today stood at $81.32, having rebounded by 4% on Friday.
Stocks weighing on the FTSE 100 included AstraZeneca after a decline of 174p to 10,086p, while fellow market heavyweight Glencore shed 8.4p to 459.25p.
The FTSE 250 outperformed the top flight with a gain of 42.82 points to 18,610.69, helped by a rise of 1.2p to 49.6p for Currys alongside several stronger property stocks.
Ashtead slides in weaker FTSE 100, Diploma up 3%
Monday 20 November 2023 08:32 , Graeme Evans
Ashtead shares have slumped 14% in the FTSE 100 index after the North America-focused equipment rental firm downgraded results guidance due to fewer hurricanes and the impact of recent Hollywood strikes.
The drop of 720p to 4524p for the Sunbelt owner came in a weaker session for London's top flight, with contract caterer Compass also down 126p to 1966p on the back of annual results.
The FTSE 100 index dropped 0.3% or 20.10 points to 7484.15, which included a fall of 130p to 10,130p for AstraZeneca.
Blue-chip newcomer Diploma led the risers board as full-year results by the seals, controls and life sciences business helped to send shares up 3% or 102p to 3122p.
Outside the top flight, merger speculation involving Halfords and van hire business Redde Northgate left the pair’s shares up 2.8p to 236.8p and down 5p to 359.5p respectively.
According to the report in the Sunday Telegraph, the parties were unable to reach agreement on price and that no talks are currently taking place.
Music Magpie could be about to be bought by BT
Monday 20 November 2023 07:39 , Simon Hunt
Music Magpie could be about to be bought by BT, the pre-owned tech seller has confirmed.
In a statement the company said its board "notes the recent speculation and confirms it is in early-stage discussions with both BT Group plc and Aurelius Group as to a possible offer to acquire the entire issued and to be issued share capital of musicMagpie."
"Discussions between the parties are ongoing and remain at a very early stage."
FTSE 100 steadies after Friday surge, Brent crude at $81 a barrel
Monday 20 November 2023 07:18 , Graeme Evans
A steady Wall Street session on Friday led the S&P 500 index to its third positive week in a row and highest closing level since early September.
Federal Reserve meeting minutes and Tuesday night’s results by semiconductor giant Nvidia are among this week’s potentially market-moving events.
The FTSE 100 index also registered a positive performance last week, aided by Friday’s rise of 1.3% or 93.28 points to 7504.25.
According to IG Index, futures markets are pricing in a slightly lower start to the week for London’s top flight.
In Asia, the Hang Seng index is 1.6% higher after property stocks rallied on speculation the sector will get fresh support from Chinese regulators.
Brent Crude stood near $81 a barrel after Friday’s jump of 4% on reports that OPEC+ plans to consider more supply cuts at its meeting this weekend.
Compass revenue surges 22%
Monday 20 November 2023 07:18 , Simon Hunt
Revenues at Compass surged by almost 22% to top £10 billion in the year to end September as the foodservice and catering group cheered "favourable market conditions, persistent inflation and our flexible operating model [which] continued to support strong balanced net new business growth across all our regions."
Operating profit rose 26% to £1.9 billion as Europe's biggest caterer saw growth of 19.5% in the region and even stronger growth of 23.1% in North America.
Compass said it expected underlying operating profit growth of around 13% in the year ahead.
CEO Dominic Blakemore said: "Despite some macroeconomic uncertainty, favourable market dynamics continue and, with a global market share of less than 15% and around 50% of the market still self-operated, we have an exciting structural growth opportunity."
Recap: Friday's top stories
Sunday 19 November 2023 20:11 , Simon Hunt
Good morning from the City desk of the Evening Standard.
The tech world was rocked over the weekend after the CEO of the world's best-known AI business was abruptly sacked.
Sam Altman, who has been involved in ChatGPT maker OpenAI since 2015, was suddenly told he would no longer be at the helm of the business, a move which triggered a string of staff resignations and panicked investors, who appear to be cooking up a plan to bring Altman back.
This morning it was revealed that Altman has been replaced by former Twitch boss Emmett Shear, despite Altman arriving at the San Francisco-based firm late on Sunday for talks in the hope of being reinstated.
And Balderton Capital partner James Wise wrote for the Standard yesterday about the wider governance issues at OpenAI.
Here's a summary of our other top headlines from Friday:
Nationwide profits jump from £980 million to £1.26 billion as member benefits hit record high. Here's our Finance Editor Simon English on why the building society is a much-needed two fingers to the big banks…despite those awful ads
Halloween shocker for the high street as retail sales fall unexpectedly in October - lowest level since Feb 2021, when there were lockdowns as 'golden quarter' featuring vital run-up to Christmas off to a bad start, after BOE's "higher for longer" rate hikes bite
Marstons CEO quits with immediate effect
Restructuring experts FRP says companies in construction, property, casual dining and food service, retail, administrative and support services have been most at risk as insolvencies soar this year - FRP's underlying profits up 34%
Bus company First Group to buy 1,000 batteries for £100m through new deal with Hitachi as it aims to be fully electric by 2035