Microsoft profits rise 30% in Q3

SILICON VALLEY: Microsoft on Tuesday (Wednesday in Manila) said its profit in the recently ended quarter continued to soar as the pandemic boosted a trend toward business being taken care of in the internet cloud.

The US technology titan's profit rose to $13.9 billion, up 30 percent from the same quarter last year, according to earnings figures. Revenue in the quarter climbed 12 percent to $37.2 billion.

"Demand for our cloud offerings drove a strong start to the fiscal year," said Microsoft chief financial officer Amy Hood. Microsoft took in $15.2 billion in revenue from cloud computing offerings for businesses, up 31 percent from the same period last year, according to Hood.

Demand for software, services, and data storage hosted online at datacenters that had been steadily growing for years has rocketed during the pandemic as shopping, learning, work and more are tended to online due to the pandemic.

Businesses are under pressure to engage customers online or lose them, according to Microsoft. "The next decade of economic performance for every business will be defined by the speed of their digital transformation," said Microsoft chief executive Satya Nadella.

Revenue was also up from the company's Office suite of software; LinkedIn career-centric social network, and the Xbox video game unit.

The Microsoft Surface line of laptop computers also had a "blowout" quarter, with revenue up 37 percent, noted analyst Patrick Moorhead of Moor Insights and Strategy. Microsoft "delivered big time by beating expectations," according to Moorhead.

"Enterprises are transitioning from Covid-19 triage to starting to renew their digital transformation plans with a focus on hybrid work," the analyst said, referring to employees staying connected to offices but not necessarily being there to get jobs done.

"Microsoft is taking advantage of this phenomenon." The shift to the cloud and work-from-home appears to be "here to stay," with Microsoft positioned to benefit with its Azure computing platform and Office 365 online software, according to Wedbush analyst Dan Ives.

While quarterly earnings topped estimates, Microsoft shares slipped more than a percent on word the company expects to bring in less money than analysts expected in the current quarter.

Microsoft forecast revenue this quarter of between $39.5 billion and $40.4 billion. The Redmond, Washington based company also revealed that revenue from search ads dropped during the recently-ended quarter in a potential bad sign for Google.

BSP sees deeper PH GDP fall

The Bangko Sentral ng Pilipinas (BSP) sees a deeper contraction of the Philippine economy this year.


BSP Governor Benjamin Diokno. (Photo from the Bangko Sentral ng Pilipinas)
During the general membership meeting of Bank Marketing Association of the Philippines held on Tuesday, BSP Governor Benjamin Diokno said the country's gross domestic product (GDP) is likely to shrink by 7 to 9 percent this year.

Upon clarification, Diokno told The Manila Times in a message that the figure is "the BSP's unofficial estimate based on first semester's actual performance."

It can be noted that the Philippines plunged into a technical recession after domestic output fell by a record 16.5 percent in the second quarter and 0.7 percent in the first. This brought the contraction in GDP to 9 percent in the first half.

The central bank's latest estimate is worse than the government's adjusted assumption of a 5.5-percent GDP contraction for 2020.

It also surpasses World Bank's -6.9 percent, Sun Life Philippines' -6.5 percent, MUFG Bank Ltd.'s -6.3 percent, HSBC Private Bank's -3.9 percent, International Monetary Fund's -3.6 percent, and ING Bank Manila's -2.9 percent.

But it is better than S&P Global Ratings' -9.5 percent, Fitch Solutions and ANZ Research's -9.1 percent.

Meanwhile, the Bangko Sentral's estimate compares with the International Monetary Fund's -8.3 percent, Fitch Ratings' -8 percent, Capital Economics' -8 percent, Asian Development Bank's -7.3 percent, Moody's Investors Service's -7 percent, and Rizal Rizal Commercial Banking Corp.'s -5 to -7 percent.

Despite this, Diokno said that latest indicators suggested that the Philippine economy already approached what he called its "inflection point" amid the coronavirus disease 2019 (Covid-19) pandemic.

Financial website Investopedia defines an inflection point as "an event that results in a significant change in the progress of a company, industry, sector, economy or geopolitical situation and can be considered a turning point after which a dramatic change, with either positive or negative results, is expected to result."

"At this point, I can report that the worst is over. While we're not out of the woods yet, there has been progress as the economy gradually opens up from the strict lockdown in March to June to less stringent quarantine measures," Diokno added.

For instance, he pointed out that the country's Purchasing Managers' Index moved past the growth threshold of 50 as it settled at 50.1 in September, while foreign direct investment net inflows also sustained its uptrend in July as it recorded a rise of 35.2 percent year-on-year to $797 million.

The BSP chief added the unemployment rate improved from a record high of 17.7 percent in April — which was the height of the lockdown — to 10 percent in July.

Contraction of imports slowed down from 65.3 percent in April to 22.6 percent in August. And the decline in exports eased from 49.9 percent in April to 18.6 percent over the same period, he also said.

"Major indicators suggest that financial markets are responding well to our policy responses," Diokno said, adding that the Philippine Stock Exchange index reached 6,941.19 last October 26.

He also stressed the strength of the Philippine peso, which remains market-driven and supported by sound macroeconomic fundamentals.

On Tuesday the local currency closed at P48.37 to a dollar, gaining 2 centavos from the P48.39:$1 finish the previous day.

"With all these developments as backdrop, we expect an even firmer economic recovery next year," Diokno added.

For 2021, the government sees the economy recovering by 6.5 to 7.5 percent, taking into consideration the availability of Covid-19 vaccines by the middle of next year.

Mining and economic recovery

During the bi-annual meeting of the nine-person Advisory Council (where I serve as a member) of the Asian Development Bank Institute (ADBI) held early October, I raised the concern that the huge stimulus funds created by most countries to stave off economic recession due to the coronavirus disease 2019 (Covid-19) pandemic gave rise to two serious financial challenges: one is the growing indebtedness of developing countries (DCs); and two is the difficulty in raising additional revenues by DCs to pay their future debt obligation and finance their development projects.

ADBI is a key think tank organization of the Asian Development Bank (ADB) located in Tokyo, Japan and is recognized as one of the best publicly-funded think tanks in the world. Its advisory council reviews and recommends future research and training activities for
ADBI.

Applying my concern to the Philippine case, our debt to gross domestic product (GDP) ratio is projected to rise from around 40 percent in 2010 to more than 50 percent of our GDP this year (the highest recorded was in 2004 at 71.6 percent), and that our budget deficit will increase from around 4 percent in 2019 to hover around 9 to 10 percent of our GDP this year. Undeniably, the question I raised in the ADBI meeting is a key macroeconomic issue that will soon confront countries in the Asia-Pacific region. Other eminent members of the council from various countries around the world agreed.

I believe that this is the context by which the Department of Finance (DoF) raised the issue last week that we need to take a second look at our mining industry as a possible source of revenue, given serious revenue shortfalls as a result of the severe contraction of our economy caused by the pandemic.

The Philippines is one of the richest mineral resource-endowed country in the world as it is geologically located at the ring of fire that stretches from the north of Japan down to the south of the Indonesian archipelago. The country is ranked the world's fifth most mineral-rich country. It has the world's third largest gold reserve deposits, and accounts for 6.4 percent of the world's estimated reserves of nickel as of 2018. According to the Board of Investments (BOI) and the Mines and Geosciences Bureau (MGB), the Philippines has the potential to be among the top ten largest mining powers in the world as (in terms of occurrence per unit area) it ranks fourth in copper, fifth in nickel and sixth in chromite resources. Out of its 30 million hectares of land area, 30 percent (or 9 million hectares) has been found to be geologically prospective for metallic minerals, while an additional 17 percent (or 5 million hectares) of its total land area is potentially rich in non-metallic deposits.

The Department of Environment and Natural Resources estimated in 2012 the country's metallic reserves at around 14.5 billion metric tons and the non-metallic reserves at 67.66 billion metric tons with a total value appraised at $1.4 trillion. Gold, nickel and copper contribute roughly about three fourths of the appraised value. Mindanao island has more than 70 percent of the country's gold reserves and 62 percent of copper; while Luzon is rich in nickel (53 percent), zinc (85 percent), and chromite (47 percent). Despite these potentials, only 703,090 hectares have been awarded mining permits and exploration permits as of 2019, corresponding to only 7.8 percent of the 9 million hectares that are potentially geologically mineral endowed.

Opposition to mining development

The doctoral dissertation of Karlo S. Adriano (our eldest son) titled "Mining the Mining Industry" listed a number of economic reasons, besides its adverse environmental impacts, for the strong opposition against the development of the mining industry. Among which are as follows:

a. Contribution to the country's gross value added (GVA) is minimal;

b. Share of mineral exports to total exports is negligible;

c. Limited job creation because of its capital-intensive nature;

d. Mining investments had the smallest contribution to foreign direct investments (FDI);

e. Government revenues from mining are low compared to countries in Africa, Latin America, among others, where a substantial mining industry operates; and

f. Fully developing the sector will result in the so-called "resource curse" phenomenon.

Addressing the criticisms

Each of these concerns was systematically tackled in Karlo's dissertation with the use of time-series data, simulations, and employment of a computable general equilibrium (CGE) model. There is not enough space in this column to discuss in detail his arguments.

But the elephant in the room, which our policy makers and anti-mining groups conveniently forget, is the operation of small-scale mining players. The "People's Small-Scale Mining Act of 1991" (Republic Act 7076) provides the legal framework for the operations of small-scale mines. They contribute around 35 percent of total mineral outputs (which are practically not taxed by the government), cause severe environmental degradation, a major source of corruption (including the 'revolutionary tax' imposed by the communist insurgents), particularly at the local government unit level, and operate with hardly any environmental monitoring done by the government.

'Small is beautiful'

In 1973, a book was written by a Leftist thinker, E.F. Schumacher, titled Small is Beautiful.

The book inspired many idealistic youth (including this author) to romanticize the virtue of being a small producer tending to one's family needs, producing without a tinge of greed that often characterized the operations of big corporations. This model well encapsulated Karl Marx's socialist utopia: "From each according to his ability; to each according to his needs."

The problem with the analysis is that it presupposes that greed is uniquely owned by big corporations and alien to small producers. Adam Smith's proposition that "man is by nature greedy" in his classic book Wealth of Nations proved to be a far realistic assumption about the nature of man than Marx's socialist utopia.

However, advances in welfare economics, which brought about the idea of "corporate social responsibility" (CSR), influenced big corporations to transform themselves to become partners in the country's economic development to gain more consumers' support. Many of the big responsible mining firms have made CSR an important component of their operations.

Along this line, my concrete suggestion, if we allow mining firms to fully develop in the country as a major revenue source, is that they contribute significant funds in the procurement of Covid-19 vaccine, once fully tested and publicly released, for free distribution particularly to the poor Filipinos.

Citi, JP Morgan destroy Amazon – report

The Philippine Center for Postharvest Development and Mechanization (PHilMech) has distributed, as of October 21, 1,512 pieces of farm machinery nationwide that form part of the P5 billion worth of machines that were bidded out and purchased by the agency for 2019.

In a virtual conference on Wednesday, PHilMech Executive Director Baldwin Jallorina said the agency was bidding out the next batch of machines worth at least P3 billion to complete the P10 billion required for 2019 and 2020. Earlier this year, PhilMech bidded out P2 billion worth of these machines.

Jallorina said the agency was stepping up the distribution of the machines under the Rice Competitiveness Enhancement Fund's (RCEF) Mechanization Program, so that rice farmers could cope better with the challenges posed by the coronavirus pandemic and rice imports.

He added that the initial success of PHilMech in distributing farm machines under RCEF and the positive feedback the agency received from farmer-recipients show that the Rice Tariffication Law (RTL) is beneficial to the rice sector.


"If there was no RTL, there would be no machines distributed to qualified farmers cooperatives and associations (FCAs) worth P5 billion every year from 2019 to 2024," Jallorina said.

The farm machines delivered as of last Wednesday were 213 four-wheel tractors; 220 hand tractors; 376 floating tillers; 52 precision seeders; 106 walk behind transplanters; 118 riding type transplanters; 103 reapers; 310 combine harvesters; and 14 mobile rice mills.

The top brands for the four-wheel tractors that are current supplying PHilMech include Yanmar, Kubota and Massey-Ferguson.

Jallorina said that, with the easing of lockdowns and ongoing quarantines, PHilMech can step up its distribution of farm machines nationwide. He added that the agency could also intensify its training of FCAs that were qualified to receive the machines under the mechanization program at no cost.

"PHilMech has been very active in training the members of FCAs who will receive the farm machines at no cost under the RCEF-Mechanization component, and the agency can step up the trainings with the easing of lockdowns and quarantines," he added.

The PhilMech director also said his agency would continue to be transparent in the bidding and acquisition of farm machines.

"We will continue to exercising transparency in the bidding process, with the proceedings are aired live over the official PHilMech Facebook page. Even the actual opening of the bids and the awarding are aired live," Jallorina said.

Under RTL, 50 percent of the annual P10-billion RCEF would go to PhilMech for the delivery of farm machineries and postharvest facilities to farmers through their FCAs.

PHilMech ups farm machine distribution

The Philippine Center for Postharvest Development and Mechanization (PHilMech) has distributed, as of October 21, 1,512 pieces of farm machinery nationwide that form part of the P5 billion worth of machines that were bidded out and purchased by the agency for 2019.

In a virtual conference on Wednesday, PHilMech Executive Director Baldwin Jallorina said the agency was bidding out the next batch of machines worth at least P3 billion to complete the P10 billion required for 2019 and 2020. Earlier this year, PhilMech bidded out P2 billion worth of these machines.

Jallorina said the agency was stepping up the distribution of the machines under the Rice Competitiveness Enhancement Fund's (RCEF) Mechanization Program, so that rice farmers could cope better with the challenges posed by the coronavirus pandemic and rice imports.

He added that the initial success of PHilMech in distributing farm machines under RCEF and the positive feedback the agency received from farmer-recipients show that the Rice Tariffication Law (RTL) is beneficial to the rice sector.


"If there was no RTL, there would be no machines distributed to qualified farmers cooperatives and associations (FCAs) worth P5 billion every year from 2019 to 2024," Jallorina said.

The farm machines delivered as of last Wednesday were 213 four-wheel tractors; 220 hand tractors; 376 floating tillers; 52 precision seeders; 106 walk behind transplanters; 118 riding type transplanters; 103 reapers; 310 combine harvesters; and 14 mobile rice mills.

The top brands for the four-wheel tractors that are current supplying PHilMech include Yanmar, Kubota and Massey-Ferguson.

Jallorina said that, with the easing of lockdowns and ongoing quarantines, PHilMech can step up its distribution of farm machines nationwide. He added that the agency could also intensify its training of FCAs that were qualified to receive the machines under the mechanization program at no cost.

"PHilMech has been very active in training the members of FCAs who will receive the farm machines at no cost under the RCEF-Mechanization component, and the agency can step up the trainings with the easing of lockdowns and quarantines," he added.

The PhilMech director also said his agency would continue to be transparent in the bidding and acquisition of farm machines.

"We will continue to exercising transparency in the bidding process, with the proceedings are aired live over the official PHilMech Facebook page. Even the actual opening of the bids and the awarding are aired live," Jallorina said.

Under RTL, 50 percent of the annual P10-billion RCEF would go to PhilMech for the delivery of farm machineries and postharvest facilities to farmers through their FCAs.

Citi, JP Morgan destroy Amazon – report

SEATTLE: Major US monetary corporations are helping fund environmental destruction and indigenous rights abuses inside the full-size Amazon rainforests with billions of dollars in investments in questionable companies, in step with a file published Tuesday (Wednesday in Manila).

Six pinnacle firms — BlackRock, Citigroup, JPMorgan Chase, Vanguard, Bank of America and Dimensional Fund Advisors — have invested greater than $18 billion over the past three years in mining, agribusiness and electricity companies involved in a "collection of abuses" in the international's largest rainforest, discovered the report by using the environmental institution Amazon Watch and the Association of Brazil's Indigenous Peoples (APIB).

"Major financiers… are the usage of their customers' cash to allow the deltamarket reviews   wanton behavior of corporations related to indigenous rights violations and the devastation of the Amazon rainforest," said Amazon Watch application director Christian Poirier.

"This monetary complicity in destruction contradicts the weather and human rights pledges touted by some of those companies, exposes their investors to big threat and contributes dramatically to the world's growing biodiversity and climate crises," he said in a announcement.

The report investigates the corporations' investments in nine Brazilian and multi-country wide agencies accused of abuses in the Amazon, consisting of mining corporations Vale and Anglo American, agribusiness businesses Cargill and JBS, and power company Eletronorte.

It accuses those groups of dangerous practices which include land seizures, violence in opposition to indigenous agencies, unlawful deforestation and the use of harmful insecticides.

It says for instance that JBS, the arena's biggest meat processing agency, sourced cattle from ranches that encroached on Brazil's Uru-Eu-Wau-Wau and Kayabi indigenous reserves.

Mining giant Vale meanwhile faces accusations of contaminating water and failing to comply with its agreements to mitigate the impact of its activities on indigenous lands, says the report.

Such conflicts round land are fueling a surge in violence towards indigenous peoples within the Amazon, which include an annual increase of 135 percent remaining 12 months in the quantity of land invasions and the homicide of seven indigenous leaders, it says.

Many of the organizations denied the accusations. Firms which includes Vale, Anglo American, Cargill and JBS presented evidence they stated contradicted the file's findings of abuses.
Financial corporations making an investment in them additionally denied wrongdoing.