International

Manufacturing, Big Tech And Valuations Among Davos Day One Focus

World Economic Forum

The first day of Davos — the annual meeting of the World Economic Forum held in Switzerland — featured panels and commentary about business and economics, as has been customary.

And during the kickoff to a confab that is home to big ideas, big names and perhaps no shortage of controversy, seismic changes in industry and Big Tech got some time in the spotlight — and so did valuations and IPOs.

During one presentation, as reported by Bloomberg, Nokia Oyj CEO Rajeev Suri said there will be “massive productivity growth” that could top 35 percent beginning in 2028. Those gains, geographically speaking, will materialize in the U.S. and then will be seen in China, India and the European Union. Productivity will increase on the heels of digitization and technologies that include artificial intelligence, robotics and the Internet of Things.

There will be the advent of “layoutless factories” that will be marked by autonomous vehicles and Nokia itself is getting ready for 5G technology that will bolster connectivity. In one example, at a Nokia factory cited by Suri, productivity increased by 30 percent on the heels of automation.

The Economy

Separately, The Wall Street Journal reported that a number of CEOs at Davos were sanguine about the trade pact struck between China and the U.S., among other initiatives — but perhaps less optimistic about economic growth.

As reported, a survey of CEO sentiment, conducted by PwC, found that more than half of respondents — at 53 percent — see a slowdown in global economic growth this year, a reading that tops the 29 percent who forecast a slowdown last year and a mere 5 percent doing so in 2018.

Tech Too

Beyond the macro backdrop, technology was in focus during a panel discussion that saw David Solomon, chief executive of Goldman Sachs, weigh in on WeWork’s failed bid to come to market last year.

“I’m not sure that we got it so wrong,” Solomon said at that discussion, as reported by Yahoo Finance, while giving the nod to high valuations amid the tech companies that are known as unicorns. He said that in the case of unicorns, low interest rates have helped lead to a gap between public and private valuations, in an environment where “money has basically been free” and where the values ascribed to companies “overvalue growth and undervalue the future value of earnings that a company may provide.” Against that backdrop, the Goldman Sachs CEO maintained that there needs to be “rebalancing” and more of a focus on profitability.

“I think we’ve seen a little bit of a rebalancing where the need to really think about a path to profitability is coming more sharply into focus than it might have been 18 months ago,” Solomon said.

On the same panel, William Ford, CEO of private equity firm General Atlantic, said investors pursued “growth at all costs.”

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