Brazil may shift jurisdiction of Chevron case
By Jeb Blount and Joshua Schneyer
RIO DE JANEIRO | Fri Mar 23, 2012 9:16pm EDT
(Reuters) - A judge in Campos, Brazil, could shift the criminal charges filed against Chevron and drill-rig operator Transocean to Rio de Janeiro, a decision that would remove a crusading prosecutor from the case.
Eduardo Santos de Oliveira, a federal prosecutor based in Campos, in Rio de Janeiro's interior, told Reuters on Friday a jurisdictional review is under way, which could delay any formal criminal indictment of the firms and their employees for weeks.
Oliveira filed criminal charges against Chevron, Transocean and 17 of their employees in Brazil this week for alleged crimes related to a November offshore oil spill in Brazil's Frade field, which Chevron operates.
He pledged to seek maximum prison sentences of 31 years against the firms' executives.
Federal judge Claudio Girão Barreto will consider whether the companies must post bonds in Campos or whether the case should be moved to Rio de Janeiro. The judicial review normally takes around ten calendar days.
The review does not alter the content of the criminal charges, but it could remove the case from Oliveira's turf and hand it to another team of prosecutors.
The question of jurisdiction stems from the location of the alleged crimes in a deep-sea oil field beyond Brazil's territorial waters but within its 200-nautical-mile "exclusive economic zone."
Oliveira said the judge had asked him to appear in court on Monday with more details about the case.
"I think moving the case to Rio de Janeiro would be a mistake," said Oliveira in a telephone interview. "Chevron and Transocean want you to believe this happened on some foreign ship or platform in international waters. But the crime happened under the seabed, in physical Brazilian territory."
Some Brazilian officials, including Senator Jorge Viana of the government's ruling party, have called Oliveira's charges over-aggressive. Viana told Reuters this week that the case could damage Brazil's oil industry.
A 20 billion reais ($11 billion) civil suit filed earlier by Oliveira in Campos against Chevron and Transocean, its drilling contractor at Frade, has already been shifted to Rio de Janeiro's capital. A judge ruled in January that Campos wasn't the proper jurisdiction for the civil case, Brazil's largest-ever environmental lawsuit.
Chevron's November leak of 2,400 to 3,000 barrels of oil at the Frade field was the result of a pressure kick during drilling. Oliveira has said Chevron's drilling was reckless and unsafe. The companies deny the charges.
(Editing by Brad Haynes, Gary Hill)
full story
RIO DE JANEIRO | Fri Mar 23, 2012 9:16pm EDT
(Reuters) - A judge in Campos, Brazil, could shift the criminal charges filed against Chevron and drill-rig operator Transocean to Rio de Janeiro, a decision that would remove a crusading prosecutor from the case.
Eduardo Santos de Oliveira, a federal prosecutor based in Campos, in Rio de Janeiro's interior, told Reuters on Friday a jurisdictional review is under way, which could delay any formal criminal indictment of the firms and their employees for weeks.
Oliveira filed criminal charges against Chevron, Transocean and 17 of their employees in Brazil this week for alleged crimes related to a November offshore oil spill in Brazil's Frade field, which Chevron operates.
He pledged to seek maximum prison sentences of 31 years against the firms' executives.
Federal judge Claudio Girão Barreto will consider whether the companies must post bonds in Campos or whether the case should be moved to Rio de Janeiro. The judicial review normally takes around ten calendar days.
The review does not alter the content of the criminal charges, but it could remove the case from Oliveira's turf and hand it to another team of prosecutors.
The question of jurisdiction stems from the location of the alleged crimes in a deep-sea oil field beyond Brazil's territorial waters but within its 200-nautical-mile "exclusive economic zone."
Oliveira said the judge had asked him to appear in court on Monday with more details about the case.
"I think moving the case to Rio de Janeiro would be a mistake," said Oliveira in a telephone interview. "Chevron and Transocean want you to believe this happened on some foreign ship or platform in international waters. But the crime happened under the seabed, in physical Brazilian territory."
Some Brazilian officials, including Senator Jorge Viana of the government's ruling party, have called Oliveira's charges over-aggressive. Viana told Reuters this week that the case could damage Brazil's oil industry.
A 20 billion reais ($11 billion) civil suit filed earlier by Oliveira in Campos against Chevron and Transocean, its drilling contractor at Frade, has already been shifted to Rio de Janeiro's capital. A judge ruled in January that Campos wasn't the proper jurisdiction for the civil case, Brazil's largest-ever environmental lawsuit.
Chevron's November leak of 2,400 to 3,000 barrels of oil at the Frade field was the result of a pressure kick during drilling. Oliveira has said Chevron's drilling was reckless and unsafe. The companies deny the charges.
(Editing by Brad Haynes, Gary Hill)
full story
Japan regulator strips AIJ registration: minister
TOKYO | Thu Mar 22, 2012 10:09pm EDT
(Reuters) - Japan's financial regulator has stripped AIJ Investment Advisors of its registration as an asset manager after the company was unable to account for the bulk of $2.4 billion in pension funds, Financial Services Minister Shozaburo Jimi said.
The Financial Services Agency has also ordered Tokyo-based brokerage ITM Securities to suspend operations for six months in relation to AIJ, the minister said.
Jimi said Japan's Securities and Exchange Surveillance Commission (SESC) raided the head office of Tokyo-based AIJ and other related locations on Friday.
In one of Japan's worst financial scandals, AIJ is under investigation for falsifying performance records on roughly 200 billion yen ($2.42 billion) in pension money.
Nearly all of the money is believed to have disappeared, dealing a blow to the 84 pension co-operatives representing 880,000 employees that entrusted it with funds.
The FSA, under fire for failing to prevent the scandal, has launched an investigation into all 265 discretionary asset managers in Japan.
($1 = 82.4950 Japanese yen)
(Reporting by Emi Emoto and Chikafumi Hodo; Editing by Richard Pullin)
full story
(Reuters) - Japan's financial regulator has stripped AIJ Investment Advisors of its registration as an asset manager after the company was unable to account for the bulk of $2.4 billion in pension funds, Financial Services Minister Shozaburo Jimi said.
The Financial Services Agency has also ordered Tokyo-based brokerage ITM Securities to suspend operations for six months in relation to AIJ, the minister said.
Jimi said Japan's Securities and Exchange Surveillance Commission (SESC) raided the head office of Tokyo-based AIJ and other related locations on Friday.
In one of Japan's worst financial scandals, AIJ is under investigation for falsifying performance records on roughly 200 billion yen ($2.42 billion) in pension money.
Nearly all of the money is believed to have disappeared, dealing a blow to the 84 pension co-operatives representing 880,000 employees that entrusted it with funds.
The FSA, under fire for failing to prevent the scandal, has launched an investigation into all 265 discretionary asset managers in Japan.
($1 = 82.4950 Japanese yen)
(Reporting by Emi Emoto and Chikafumi Hodo; Editing by Richard Pullin)
full story
HK's Sun Hung Kai Properties says executive arrested over suspected bribery
Mon Mar 19, 2012 10:30pm EDT
(Reuters) - An executive of Sun Hung Kai Properties Ltd (0016.HK) has been arrested by Hong Kong's anti-graft body over suspected bribery, the developer announced in a statement late on Monday.
The company, Asia's largest property developer by market value, said Thomas Chan had informed it that he had been arrested by Hong Kong's Independent Commission Against Corruption (ICAC) in relation to allegations of bribery.
The arrest "has not affected and will not affect" the normal business and operations of the company, the developer said.
The statement did not list the amount of money involved in the probe, but said it has set up a special committee to handle the investigation being undertaken by the ICAC.
Chan was responsible for project planning and China operations, which develop property in Hong Kong and mainland China and holds a portfolio of office space including Hong Kong's tallest building, the International Commerce Centre.
Sun Hung Kai Properties reported February an underlying profit of HK$11.8 billion ($1.52 billion) for the fiscal first half ended December 31, up 13 percent from a year earlier, slightly exceeding expectations.
The number of property deals in Hong Kong fell 33.1 percent in 2011 from the previous year as the government imposed a series of measures to stamp out property speculation and cool the city's housing market.
(Reporting By Sisi Tang; Editing by Michael Perry)
full story
(Reuters) - An executive of Sun Hung Kai Properties Ltd (0016.HK) has been arrested by Hong Kong's anti-graft body over suspected bribery, the developer announced in a statement late on Monday.
The company, Asia's largest property developer by market value, said Thomas Chan had informed it that he had been arrested by Hong Kong's Independent Commission Against Corruption (ICAC) in relation to allegations of bribery.
The arrest "has not affected and will not affect" the normal business and operations of the company, the developer said.
The statement did not list the amount of money involved in the probe, but said it has set up a special committee to handle the investigation being undertaken by the ICAC.
Chan was responsible for project planning and China operations, which develop property in Hong Kong and mainland China and holds a portfolio of office space including Hong Kong's tallest building, the International Commerce Centre.
Sun Hung Kai Properties reported February an underlying profit of HK$11.8 billion ($1.52 billion) for the fiscal first half ended December 31, up 13 percent from a year earlier, slightly exceeding expectations.
The number of property deals in Hong Kong fell 33.1 percent in 2011 from the previous year as the government imposed a series of measures to stamp out property speculation and cool the city's housing market.
(Reporting By Sisi Tang; Editing by Michael Perry)
full story
Ford: 1,700 workers take early retirement offer
By Deepa Seetharaman
DETROIT | Fri Mar 16, 2012 6:53pm EDT
(Reuters) - About 1,700 Ford Motor Co's (F.N) workers accepted early retirement buyouts that were offered last fall as part of the No. 2 U.S. automaker's labor contract with the United Auto Workers union, a Ford spokeswoman said on Friday.
About 920 of those who accepted the buyouts were higher-paid skilled-trades workers, Ford spokeswoman Marcey Evans said on Friday. The majority of Ford workers taking the payouts will leave the company by June 1.
In all, workers taking the buyout represent 4 percent of the 41,000 UAW workers employed by Ford. The buyouts allow Ford to hire entry-level workers who begin at $15.78 an hour, about half the wage of a veteran UAW worker.
Under Ford's UAW contract, eligible production workers who take an early retirement package will get a $50,000 bonus, while skilled-trades workers will receive a $100,000 payout.
In October, Ford said it expected up to 1,000 skilled-trades workers would take the buyout offer.
Ford also has 250 workers on indefinite layoff, who can also be rehired to fill the vacant spots.
Ford projects lower-paid workers will make up about 8 percent of its factory workforce by 2015, up from fewer than 100 workers when negotiations with the UAW began last summer.
Ford's payout was far richer than the early retirement packages offered by its larger rival General Motors Co (GM.N).
In the last contract talks, GM offered a $10,000 bonus for eligible workers who retire by 2013 and $65,000 to skilled-trades employees who voluntarily quit by March 31.
(Reporting By Deepa Seetharaman; Editing by Richard Chang, Bernard Orr)
full story
DETROIT | Fri Mar 16, 2012 6:53pm EDT
(Reuters) - About 1,700 Ford Motor Co's (F.N) workers accepted early retirement buyouts that were offered last fall as part of the No. 2 U.S. automaker's labor contract with the United Auto Workers union, a Ford spokeswoman said on Friday.
About 920 of those who accepted the buyouts were higher-paid skilled-trades workers, Ford spokeswoman Marcey Evans said on Friday. The majority of Ford workers taking the payouts will leave the company by June 1.
In all, workers taking the buyout represent 4 percent of the 41,000 UAW workers employed by Ford. The buyouts allow Ford to hire entry-level workers who begin at $15.78 an hour, about half the wage of a veteran UAW worker.
Under Ford's UAW contract, eligible production workers who take an early retirement package will get a $50,000 bonus, while skilled-trades workers will receive a $100,000 payout.
In October, Ford said it expected up to 1,000 skilled-trades workers would take the buyout offer.
Ford also has 250 workers on indefinite layoff, who can also be rehired to fill the vacant spots.
Ford projects lower-paid workers will make up about 8 percent of its factory workforce by 2015, up from fewer than 100 workers when negotiations with the UAW began last summer.
Ford's payout was far richer than the early retirement packages offered by its larger rival General Motors Co (GM.N).
In the last contract talks, GM offered a $10,000 bonus for eligible workers who retire by 2013 and $65,000 to skilled-trades employees who voluntarily quit by March 31.
(Reporting By Deepa Seetharaman; Editing by Richard Chang, Bernard Orr)
full story
Exclusive: U.S., Britain set to agree on emergency oil stocks release
By Richard Mably
LONDON | Thu Mar 15, 2012 6:38pm EDT
(Reuters) - Britain is poised to cooperate with the United States on a release of strategic oil stocks that is expected within months, two British sources said, in a bid to prevent fuel prices choking economic growth in a U.S. election year.
A formal request from the United States to the UK to join forces in a release of oil from government-controlled reserves is expected "shortly" following a meeting on Wednesday in Washington between President Barack Obama and Prime Minister David Cameron, who discussed the issue, one source said.
Britain would respond positively, the two sources said, and Cameron said a release was worth considering.
"We didn't make any decision, this has to be discussed broadly. We've got to look at this issue carefully, it's something worth looking at. Short-term should we look at reserves? Yes, we should," Cameron said during a meeting with students in New York.
"We'd both like to see global oil prices at a lower level than they are."
Details of the timing, volume and duration of a new emergency drawdown have yet to be settled but a detailed agreement is expected by the summer, one of the sources said.
Other countries may also be approached by Washington to contribute, a further source said,Japan among them.
White House spokesman Jay Carney said Obama and Cameron discussed rising oil prices, but he declined to comment on whether the leaders discussed a release of reserves. He said no deal had been reached on a release or timetable for such a move.
"As has been the case every time I'm asked about that issue (the Strategic Petroleum Reserve), I'm not going to discuss specifics about it," Carney said.
"I can tell you that among the many topics of discussion that the British prime minister and the president had were energy issues and the situation globally with the rise in the price of oil."
Rising world oil prices have pushed the cost of gasoline in the U.S. up sharply, threatening to stall economic recovery ahead of Obama's bid for re-election in November.
Brent crude has gained more than 15 percent since January to a peak of over $128 a barrel, in a repeat of last year's spike in fuel costs when the loss of Libyan oil supplies during civil war triggered a coordinated International Energy Agency (IEA) stock drawdown.
Brent for May tumbled $1.98 to settle at $122.60 a barrel on Thursday, while U.S. crude fell 32 cents to $105.11.
Previous emergency oil releases have been coordinated by the Paris-based IEA to meet its mandate to cover substantial supply disruptions on the world oil market.
The IEA has declined to coordinate a broader release among its 28 industrialized members, but says that countries may legitimately decide to release oil unilaterally.
"The Obama administration can only take so much political pain from rising gasoline prices, which pose a serious threat to the economy and the president's re-election," said Bob McNally, a former White House energy adviser and head of U.S. energy consultancy Rapidan.
"SPR (Strategic Petroleum Reserve) use is more a matter of when than if. The administration strongly desires international support and coordination from other strategic stock holders, but is encountering stiff resistance from some IEA members who think strategic stocks should only be used for severe supply disruptions," McNally said.
Top U.S. officials including Energy Secretary Steven Chu and Treasury Secretary Timothy Geithner have said publicly in recent weeks that a U.S. oil release is among the options the government is considering.
While there is no significant disruption of world oil supplies at the moment, sanctions on Iran are expected to cut its output when a European Union embargo takes effect from July.
Minor stoppages from South Sudan, Yemen and Syria also have contributed to the rise in oil prices.
"At the moment there is no need to use it," IEA executive director Maria van der Hoeven said of reserves at an industry conference in Kuwait on Wednesday.
"There is more supply coming to the market from OPEC countries. There is no price trigger for the stocks release, the trigger is a disruption in physical supplies."
"There is no real supply disruption, this is just price management", said Olivier Jakob from Vienna-based consultancy Petromatrix.
OPEC's biggest producer Saudi Arabia, the only oil producer with any spare capacity, has said it is prepared to fill a supply gap but will only do so to meet additional demand, rather than as a preventative measure.
While the U.S. release would be of crude oil from the national SPR, the UK contribution is likely to come from a reduction of the minimum reserves of crude and refined products that UK commercial oil companies are required to hold.
The United States has sold crude oil directly from the 700-million barrel SPR only a handful of times, almost always in conjunction with the IEA.
In addition, the U.S. Department of Energy has arranged unilateral short-term loans from the reserve about a dozen times since it was filled in the 1980s, typically in much smaller amounts.
(Additional reporting by Matt Falloon and Joshua Schneyer in New York, Humeyra Pamuk in Kuwait, Zaida Espana in London; Editing by Anthony Barker and Jim Marshall)
full story
LONDON | Thu Mar 15, 2012 6:38pm EDT
(Reuters) - Britain is poised to cooperate with the United States on a release of strategic oil stocks that is expected within months, two British sources said, in a bid to prevent fuel prices choking economic growth in a U.S. election year.
A formal request from the United States to the UK to join forces in a release of oil from government-controlled reserves is expected "shortly" following a meeting on Wednesday in Washington between President Barack Obama and Prime Minister David Cameron, who discussed the issue, one source said.
Britain would respond positively, the two sources said, and Cameron said a release was worth considering.
"We didn't make any decision, this has to be discussed broadly. We've got to look at this issue carefully, it's something worth looking at. Short-term should we look at reserves? Yes, we should," Cameron said during a meeting with students in New York.
"We'd both like to see global oil prices at a lower level than they are."
Details of the timing, volume and duration of a new emergency drawdown have yet to be settled but a detailed agreement is expected by the summer, one of the sources said.
Other countries may also be approached by Washington to contribute, a further source said,Japan among them.
White House spokesman Jay Carney said Obama and Cameron discussed rising oil prices, but he declined to comment on whether the leaders discussed a release of reserves. He said no deal had been reached on a release or timetable for such a move.
"As has been the case every time I'm asked about that issue (the Strategic Petroleum Reserve), I'm not going to discuss specifics about it," Carney said.
"I can tell you that among the many topics of discussion that the British prime minister and the president had were energy issues and the situation globally with the rise in the price of oil."
Rising world oil prices have pushed the cost of gasoline in the U.S. up sharply, threatening to stall economic recovery ahead of Obama's bid for re-election in November.
Brent crude has gained more than 15 percent since January to a peak of over $128 a barrel, in a repeat of last year's spike in fuel costs when the loss of Libyan oil supplies during civil war triggered a coordinated International Energy Agency (IEA) stock drawdown.
Brent for May tumbled $1.98 to settle at $122.60 a barrel on Thursday, while U.S. crude fell 32 cents to $105.11.
Previous emergency oil releases have been coordinated by the Paris-based IEA to meet its mandate to cover substantial supply disruptions on the world oil market.
The IEA has declined to coordinate a broader release among its 28 industrialized members, but says that countries may legitimately decide to release oil unilaterally.
"The Obama administration can only take so much political pain from rising gasoline prices, which pose a serious threat to the economy and the president's re-election," said Bob McNally, a former White House energy adviser and head of U.S. energy consultancy Rapidan.
"SPR (Strategic Petroleum Reserve) use is more a matter of when than if. The administration strongly desires international support and coordination from other strategic stock holders, but is encountering stiff resistance from some IEA members who think strategic stocks should only be used for severe supply disruptions," McNally said.
Top U.S. officials including Energy Secretary Steven Chu and Treasury Secretary Timothy Geithner have said publicly in recent weeks that a U.S. oil release is among the options the government is considering.
While there is no significant disruption of world oil supplies at the moment, sanctions on Iran are expected to cut its output when a European Union embargo takes effect from July.
Minor stoppages from South Sudan, Yemen and Syria also have contributed to the rise in oil prices.
"At the moment there is no need to use it," IEA executive director Maria van der Hoeven said of reserves at an industry conference in Kuwait on Wednesday.
"There is more supply coming to the market from OPEC countries. There is no price trigger for the stocks release, the trigger is a disruption in physical supplies."
"There is no real supply disruption, this is just price management", said Olivier Jakob from Vienna-based consultancy Petromatrix.
OPEC's biggest producer Saudi Arabia, the only oil producer with any spare capacity, has said it is prepared to fill a supply gap but will only do so to meet additional demand, rather than as a preventative measure.
While the U.S. release would be of crude oil from the national SPR, the UK contribution is likely to come from a reduction of the minimum reserves of crude and refined products that UK commercial oil companies are required to hold.
The United States has sold crude oil directly from the 700-million barrel SPR only a handful of times, almost always in conjunction with the IEA.
In addition, the U.S. Department of Energy has arranged unilateral short-term loans from the reserve about a dozen times since it was filled in the 1980s, typically in much smaller amounts.
(Additional reporting by Matt Falloon and Joshua Schneyer in New York, Humeyra Pamuk in Kuwait, Zaida Espana in London; Editing by Anthony Barker and Jim Marshall)
full story
Capital One to sell $1.25 billion in stock
Wed Mar 14, 2012 5:13pm EDT
(Reuters) - Capital One Financial Corp (COF.N) said it would sell $1.25 billion of its common stock to pay for a portion of its acquisition of HSBC's (HSBA.L) U.S. credit card business.
Last August, the credit card company turned U.S. bank agreed to buy HSBC's domestic card business, including its $30 billion credit card portfolio, and had said it would raise capital to pay for the deal.
Separately, Capital One said in the first quarter it expects earnings per share from continuing operations of at least $2.50.
The company earned $2.21 a share in the year-ago quarter.
Capital One also said it expects its Tier 1 common ratio -- a measure of bank stability -- to be well above 11 percent at the end of the first quarter.
(Reporting by Jochelle Mendonca in Bangalore; Editing by Supriya Kurane)
full story
(Reuters) - Capital One Financial Corp (COF.N) said it would sell $1.25 billion of its common stock to pay for a portion of its acquisition of HSBC's (HSBA.L) U.S. credit card business.
Last August, the credit card company turned U.S. bank agreed to buy HSBC's domestic card business, including its $30 billion credit card portfolio, and had said it would raise capital to pay for the deal.
Separately, Capital One said in the first quarter it expects earnings per share from continuing operations of at least $2.50.
The company earned $2.21 a share in the year-ago quarter.
Capital One also said it expects its Tier 1 common ratio -- a measure of bank stability -- to be well above 11 percent at the end of the first quarter.
(Reporting by Jochelle Mendonca in Bangalore; Editing by Supriya Kurane)
full story
No decision yet on bonuses: MF Global trustee
By Nick Brown
Mon Mar 12, 2012 6:59pm EDT
(Reuters) - The trustee managing MF Global Holdings Ltd's assets in bankruptcy told a lawmaker he has made no decision on whether to seek bonuses for the top executives of the collapsed commodities firm.
In a letter on Monday to Sen. Jon Tester, D-Mont., trustee Louis Freeh said he has "not made ... any decisions on the subject" of bonuses, "notwithstanding reports to the contrary that have appeared in the media."
Sources close to Freeh told Reuters last week the trustee planned to ask a bankruptcy judge for approval of a retention plan that would include performance-based incentives for Operating Officer Bradley Abelow, General Counsel Laurie Ferber and Chief Financial Officer Henri Steenkamp.
The potential payouts were first reported by the Wall Street Journal in its Friday editions. The three executives could get bonuses of as much as several hundred-thousand dollars each under the plan being finalized, the newspaper said, citing sources familiar with the matter.
Tester was among a handful of legislators to cry foul over the news. In a letter to Freeh on Friday, Tester called it "outrageous" to "sanction the award of performance-based compensation" while customers of MF Global's broker-dealer unit are still missing much of their money.
Sens. Chuck Grassley, R-Iowa, and Amy Klobuchar, D-Minn., also issued statements on Friday criticizing the plan.
Ferber, Abelow and Steenkamp were kept on the payroll to help Freeh recover assets for creditors of MF Global's parent company.
That operation is separate from efforts by a different trustee, James Giddens, to recover money for customers of the broker-dealer unit who were burned when the MF parent collapsed.
The firm imploded after revealing it bet billions on European sovereign debt, a disclosure that led to credit-rating downgrades and unnerved investors. CEO Jon Corzine resigned days later.
It is not uncommon for bankrupt firms to try to retain key executives by offering bonuses tied to performance that increases value for creditors.
But pay issues are prickly in the case of MF Global, whose commodities customers are missing an estimated $1.6 billion that investigators say was improperly removed from their accounts in the days leading up to the company's downfall.
HIGH BAR
In any case, Freeh may have to meet a high legal bar under a set of 2005 amendments to bankruptcy laws that govern executive bonuses.
One section of the law requires a showing that an employee is essential to the company's operation - a tough argument in the case of MF Global, which is not really an operating company, said Peter Morgenstern, a bankruptcy partner at law firm Butzel Long.
"The company is dead," said Morgenstern, who is not involved in the case.
Another part of the law requires a showing that an employee has another job offer on the table and needs to be incentivized not to take it.
But creative lawyers have been able to get around those rules by tying the bonuses to performance incentives, said David Skeel, a bankruptcy expert and professor at the University of Pennsylvania Law School.
"What the provision prohibits is pay-to-stay," Skeel said. "It doesn't say you can't have performance-based incentives. That's still not quite squared with the spirit of the provision, but that's what's been done."
Judge Glenn granted performance-based incentives in Borders Group Inc's restructuring, but that was an "entirely different situation," Morgenstern said.
"In that case, there was an ongoing business and they were trying to preserve value either to restructure or to sell the company."
Morgenstern believes Judge Glenn would take a harder line in MF Global, requiring testimony, affidavits and other evidence showing incentives were required to get executives to cooperate with Freeh's recovery efforts.
"I would think that the judge will require they show that these people are providing something other than information that could be obtained through legal processes" such as discovery or document subpoenas, he said.
Federal authorities have been investigating the company's collapse and the huge hole in customer funds. Investigators should be able to compel important information from executives, Morgenstern said.
Lawyers for the executives could not be immediately reached.
The bankruptcy is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059.
(Reporting By Nick Brown; editing by Andre Grenon)
Full Story
Mon Mar 12, 2012 6:59pm EDT
(Reuters) - The trustee managing MF Global Holdings Ltd's assets in bankruptcy told a lawmaker he has made no decision on whether to seek bonuses for the top executives of the collapsed commodities firm.
In a letter on Monday to Sen. Jon Tester, D-Mont., trustee Louis Freeh said he has "not made ... any decisions on the subject" of bonuses, "notwithstanding reports to the contrary that have appeared in the media."
Sources close to Freeh told Reuters last week the trustee planned to ask a bankruptcy judge for approval of a retention plan that would include performance-based incentives for Operating Officer Bradley Abelow, General Counsel Laurie Ferber and Chief Financial Officer Henri Steenkamp.
The potential payouts were first reported by the Wall Street Journal in its Friday editions. The three executives could get bonuses of as much as several hundred-thousand dollars each under the plan being finalized, the newspaper said, citing sources familiar with the matter.
Tester was among a handful of legislators to cry foul over the news. In a letter to Freeh on Friday, Tester called it "outrageous" to "sanction the award of performance-based compensation" while customers of MF Global's broker-dealer unit are still missing much of their money.
Sens. Chuck Grassley, R-Iowa, and Amy Klobuchar, D-Minn., also issued statements on Friday criticizing the plan.
Ferber, Abelow and Steenkamp were kept on the payroll to help Freeh recover assets for creditors of MF Global's parent company.
That operation is separate from efforts by a different trustee, James Giddens, to recover money for customers of the broker-dealer unit who were burned when the MF parent collapsed.
The firm imploded after revealing it bet billions on European sovereign debt, a disclosure that led to credit-rating downgrades and unnerved investors. CEO Jon Corzine resigned days later.
It is not uncommon for bankrupt firms to try to retain key executives by offering bonuses tied to performance that increases value for creditors.
But pay issues are prickly in the case of MF Global, whose commodities customers are missing an estimated $1.6 billion that investigators say was improperly removed from their accounts in the days leading up to the company's downfall.
HIGH BAR
In any case, Freeh may have to meet a high legal bar under a set of 2005 amendments to bankruptcy laws that govern executive bonuses.
One section of the law requires a showing that an employee is essential to the company's operation - a tough argument in the case of MF Global, which is not really an operating company, said Peter Morgenstern, a bankruptcy partner at law firm Butzel Long.
"The company is dead," said Morgenstern, who is not involved in the case.
Another part of the law requires a showing that an employee has another job offer on the table and needs to be incentivized not to take it.
But creative lawyers have been able to get around those rules by tying the bonuses to performance incentives, said David Skeel, a bankruptcy expert and professor at the University of Pennsylvania Law School.
"What the provision prohibits is pay-to-stay," Skeel said. "It doesn't say you can't have performance-based incentives. That's still not quite squared with the spirit of the provision, but that's what's been done."
Judge Glenn granted performance-based incentives in Borders Group Inc's restructuring, but that was an "entirely different situation," Morgenstern said.
"In that case, there was an ongoing business and they were trying to preserve value either to restructure or to sell the company."
Morgenstern believes Judge Glenn would take a harder line in MF Global, requiring testimony, affidavits and other evidence showing incentives were required to get executives to cooperate with Freeh's recovery efforts.
"I would think that the judge will require they show that these people are providing something other than information that could be obtained through legal processes" such as discovery or document subpoenas, he said.
Federal authorities have been investigating the company's collapse and the huge hole in customer funds. Investigators should be able to compel important information from executives, Morgenstern said.
Lawyers for the executives could not be immediately reached.
The bankruptcy is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059.
(Reporting By Nick Brown; editing by Andre Grenon)
Full Story
TPG seeks sale of Iasis Healthcare-report
Fri Mar 9, 2012 8:52pm EST
(Reuters) - Private equity group TPG Capital TPG.UL is exploring the sale of Iasis Healthcare Corp IASIS.UL and enlisted Bank of America Corp (BAC.N) to search for buyers, Bloomberg said, citing people familiar with the matter.
TPG, which has investments in variety of industries including technology, financial services and retail, is looking at a valuation of about $2.4 billion, the report said.
The U.S.-based private equity firm founded in 1992, may sell the company to another private equity firm as few industry competitors have expressed interest, the sources told Bloomberg.
Iasis, acquired by TPG in 2004, operates hospitals in Arizona, Colorado, Florida, Louisiana, Nevada, Texas and Utah.
Officials at neither Iasis Healthcare or TPG Capital could be reached for comment.
(Reporting by Durba Ghosh in Bangalore)
full story
(Reuters) - Private equity group TPG Capital TPG.UL is exploring the sale of Iasis Healthcare Corp IASIS.UL and enlisted Bank of America Corp (BAC.N) to search for buyers, Bloomberg said, citing people familiar with the matter.
TPG, which has investments in variety of industries including technology, financial services and retail, is looking at a valuation of about $2.4 billion, the report said.
The U.S.-based private equity firm founded in 1992, may sell the company to another private equity firm as few industry competitors have expressed interest, the sources told Bloomberg.
Iasis, acquired by TPG in 2004, operates hospitals in Arizona, Colorado, Florida, Louisiana, Nevada, Texas and Utah.
Officials at neither Iasis Healthcare or TPG Capital could be reached for comment.
(Reporting by Durba Ghosh in Bangalore)
full story
Starbucks to sell single-serve coffee brewers
By Lisa Baertlein
DETROIT | Thu Mar 8, 2012 10:13pm EST
(Reuters) - Starbucks Corp (SBUX.O) said it will launch its own single-cup coffee and espresso drink machine later this year, putting it in direct competition with partner Green Mountain Coffee Roasters Inc (GMCR.O), seller of the popular Keurig home brewers.
Shares of Green Mountain plunged as much as 24 percent in after-hours trade, but regained some ground after Starbucks said on a conference call that it would continue to supply Green Mountain with Starbucks-branded single-serve coffee pods called K-cups. Starbucks shares rose 3 percent to $51.87.
The world's biggest coffee chain, whose "Verismo system by Starbucks" will make both brewed coffee and espresso beverages such as lattes, is the latest player to beef up its presence in the fast-growing single-serve coffee market dominated by Green Mountain's Keurig brewer in the United States and Nestle SA (NESN.VX) around the world.
"With Green Mountain's patents expiring this fall, Starbucks' entry is part of the competitive onslaught hitting Green Mountain," said hedge fund manager David Einhorn, who has been one of the most outspoken critics of Green Mountain.
Green Mountain did not immediately respond to requests for comment on the Starbucks announcement.
Companies like Sara Lee (SLE.N) and Nestle (NESN.VX) have recently indicated they are ready to ramp up their presence in single-cup coffee. Even the world's largest retailer Wal-Mart Stores Inc (WMT.N) said it would add the relatively unknown Esio Beverage System to its shelves.
The increased competition comes during a year when Green Mountain's patents covering its coffee packs called K-Cup are due to expire. The patent expiry may allow other companies to sell coffee on the Keurig machines without paying royalty to Green Mountain.
Last month, Green Mountain said it would sell a premium line of Keurig brewers called the "Vue" to help fend off increased competition. Starbucks' proposed premium line of machines may be a direct rival to the Vue which is priced at about $250.
Joshua Brown, vice president of investments at investment advisory firm Fusion Analytics, said Starbucks' move was inevitable.
"There was no way that Starbucks and Dunkin' Donuts (DNKN.O) were going to see this niche coffee market take off and not want a bigger share of it," Brown said.
"A lot of people thought Starbucks was going to play nice and just sell K-Cups through the Keurig. But Starbucks doesn't do anything where they are going to be the No. 2 or the No. 3 player," added Brown, whose firm has no position in either stock.
Single-portion coffee, known as cups, discs or pods, make up only 8 percent of total worldwide coffee sales, according to data supplied by Euromonitor International in January. Still, category bulls say that percentage should grow as more people take advantage of its convenience.
Single-serve brewers, which can range from about $50 to about $800, make fresh cups of coffee, or even barista-worthy espresso drinks, in seconds.
Starbucks said that the "Verismo system by Starbucks" will make both brewed coffee and espresso beverages such as lattes.
The system will be sold online at select Starbucks shops and at specialty retailers in the United States, Canada and some other international markets, it said.
Pricing on the machine will not be announced until closer to launch, Starbucks said.
"This is a positive for Starbucks, it gives them better penetration into the at-home market," said Lazard Capital Markets analyst Matthew DiFrisco, adding that the move leverages Starbucks' strength in the espresso and latte category.
SUPPORTING BOTH SYSTEMS
Green Mountain controls more than three-quarters of the U.S. market for single-cup coffee. That dominance has been fueled by the large network of coffee brands that provide coffee cups compatible with Keurig machines, including Starbucks, Dunkin' Donuts (DNKN.O), Newman's Own, Caribou Coffee Co (CBOU.O) and Folgers, made by J.M. Smucker (SJM.N).
Despite the introduction of Verismo, Starbucks plans to continue its partnership with Green Mountain.
"We will support both systems and we will continue to support and honor the relationship we have with Green Mountain," Howard Schultz, Starbucks' co-founder and chief executive, said on a conference call with analysts.
Single-serve coffee is most popular in Western Europe and the United States.
The global leader is Nestle SA (NESN.VX), whose Nespresso system holds a 35 percent share, according to Euromonitor.
Other popular single-cup brewing systems include Tassimo by Kraft Foods Inc (KFT.N), Senseo by Sara Lee (SLE.N), and Flavia by Mars. At the end of this month, Senseo will be discontinued in the United States, except on select websites.
A spokesmen for Sara Lee and Kraft declined to comment on Starbucks' move. A spokeswoman for Nespresso was not immediately available.
Consumer Edge Research analyst Robert Dickerson has estimated that a cup of coffee made at home by a one-cup brewer costs on average about 5 times more than traditionally brewed coffee.
(Additional reporting by Martinne Geller and Jennider Ablan in New York, Mihir Dalal in Bangalore and Jessica Wohl in Chicago; Writing by Martinne Geller; Editing by Tim Dobbyn, Bernard Orr)
DETROIT | Thu Mar 8, 2012 10:13pm EST
(Reuters) - Starbucks Corp (SBUX.O) said it will launch its own single-cup coffee and espresso drink machine later this year, putting it in direct competition with partner Green Mountain Coffee Roasters Inc (GMCR.O), seller of the popular Keurig home brewers.
Shares of Green Mountain plunged as much as 24 percent in after-hours trade, but regained some ground after Starbucks said on a conference call that it would continue to supply Green Mountain with Starbucks-branded single-serve coffee pods called K-cups. Starbucks shares rose 3 percent to $51.87.
The world's biggest coffee chain, whose "Verismo system by Starbucks" will make both brewed coffee and espresso beverages such as lattes, is the latest player to beef up its presence in the fast-growing single-serve coffee market dominated by Green Mountain's Keurig brewer in the United States and Nestle SA (NESN.VX) around the world.
"With Green Mountain's patents expiring this fall, Starbucks' entry is part of the competitive onslaught hitting Green Mountain," said hedge fund manager David Einhorn, who has been one of the most outspoken critics of Green Mountain.
Green Mountain did not immediately respond to requests for comment on the Starbucks announcement.
Companies like Sara Lee (SLE.N) and Nestle (NESN.VX) have recently indicated they are ready to ramp up their presence in single-cup coffee. Even the world's largest retailer Wal-Mart Stores Inc (WMT.N) said it would add the relatively unknown Esio Beverage System to its shelves.
The increased competition comes during a year when Green Mountain's patents covering its coffee packs called K-Cup are due to expire. The patent expiry may allow other companies to sell coffee on the Keurig machines without paying royalty to Green Mountain.
Last month, Green Mountain said it would sell a premium line of Keurig brewers called the "Vue" to help fend off increased competition. Starbucks' proposed premium line of machines may be a direct rival to the Vue which is priced at about $250.
Joshua Brown, vice president of investments at investment advisory firm Fusion Analytics, said Starbucks' move was inevitable.
"There was no way that Starbucks and Dunkin' Donuts (DNKN.O) were going to see this niche coffee market take off and not want a bigger share of it," Brown said.
"A lot of people thought Starbucks was going to play nice and just sell K-Cups through the Keurig. But Starbucks doesn't do anything where they are going to be the No. 2 or the No. 3 player," added Brown, whose firm has no position in either stock.
Single-portion coffee, known as cups, discs or pods, make up only 8 percent of total worldwide coffee sales, according to data supplied by Euromonitor International in January. Still, category bulls say that percentage should grow as more people take advantage of its convenience.
Single-serve brewers, which can range from about $50 to about $800, make fresh cups of coffee, or even barista-worthy espresso drinks, in seconds.
Starbucks said that the "Verismo system by Starbucks" will make both brewed coffee and espresso beverages such as lattes.
The system will be sold online at select Starbucks shops and at specialty retailers in the United States, Canada and some other international markets, it said.
Pricing on the machine will not be announced until closer to launch, Starbucks said.
"This is a positive for Starbucks, it gives them better penetration into the at-home market," said Lazard Capital Markets analyst Matthew DiFrisco, adding that the move leverages Starbucks' strength in the espresso and latte category.
SUPPORTING BOTH SYSTEMS
Green Mountain controls more than three-quarters of the U.S. market for single-cup coffee. That dominance has been fueled by the large network of coffee brands that provide coffee cups compatible with Keurig machines, including Starbucks, Dunkin' Donuts (DNKN.O), Newman's Own, Caribou Coffee Co (CBOU.O) and Folgers, made by J.M. Smucker (SJM.N).
Despite the introduction of Verismo, Starbucks plans to continue its partnership with Green Mountain.
"We will support both systems and we will continue to support and honor the relationship we have with Green Mountain," Howard Schultz, Starbucks' co-founder and chief executive, said on a conference call with analysts.
Single-serve coffee is most popular in Western Europe and the United States.
The global leader is Nestle SA (NESN.VX), whose Nespresso system holds a 35 percent share, according to Euromonitor.
Other popular single-cup brewing systems include Tassimo by Kraft Foods Inc (KFT.N), Senseo by Sara Lee (SLE.N), and Flavia by Mars. At the end of this month, Senseo will be discontinued in the United States, except on select websites.
A spokesmen for Sara Lee and Kraft declined to comment on Starbucks' move. A spokeswoman for Nespresso was not immediately available.
Consumer Edge Research analyst Robert Dickerson has estimated that a cup of coffee made at home by a one-cup brewer costs on average about 5 times more than traditionally brewed coffee.
(Additional reporting by Martinne Geller and Jennider Ablan in New York, Mihir Dalal in Bangalore and Jessica Wohl in Chicago; Writing by Martinne Geller; Editing by Tim Dobbyn, Bernard Orr)
Mega-deals possible, but not a priority: Nasdaq
By John McCrank
NEW YORK | Wed Mar 7, 2012 5:28pm EST
(Reuters) - Nasdaq OMX Group (NDAQ.O) said on Wednesday that while it does not believe mega-deals among global exchanges are dead, it is likely to keep its focus on small and mid-sized acquisitions.
In the past year, a number of large exchange takeovers have been stopped by regulators, including an $11 billion bid by Nasdaq, along with IntercontinentalExchange Inc (ICE.N), for NYSE Euronext (NYX.N).
"We don't believe that mega-consolidation is dead," Lee Shavel, chief financial officer of Nasdaq, said at the Citi 2012 Financial Services Conference.
But due to the regulatory environment, along with uncertainty from an economic and from a markets perspective, Nasdaq, which runs U.S. and Nordic markets, will not likely pursue any large deals in the near-term, he said.
"It's something that we monitor, we look at, but our primary focus and the most likely M&A activity that you'll see from us are going to be for small and mid-sized bolt-on acquisitions that we know we can integrate into the business and generate good returns from," he said.
A number of firms have recently submitted bids for the London Metals Exchange, the world's biggest marketplace for industrial metals, which analysts and industry sources have valued at 500 million to 1.5 billion pounds ($800 million-$2.4 billion).
The bidders include CME Group Inc, along with ICE, Hong Kong Exchanges and Clearing Ltd, and NYSE Euronext, sources have said.
Shavel did not comment on LME specifically.
(Reporting By John McCrank; Editing by Bernard Orr)
NEW YORK | Wed Mar 7, 2012 5:28pm EST
(Reuters) - Nasdaq OMX Group (NDAQ.O) said on Wednesday that while it does not believe mega-deals among global exchanges are dead, it is likely to keep its focus on small and mid-sized acquisitions.
In the past year, a number of large exchange takeovers have been stopped by regulators, including an $11 billion bid by Nasdaq, along with IntercontinentalExchange Inc (ICE.N), for NYSE Euronext (NYX.N).
"We don't believe that mega-consolidation is dead," Lee Shavel, chief financial officer of Nasdaq, said at the Citi 2012 Financial Services Conference.
But due to the regulatory environment, along with uncertainty from an economic and from a markets perspective, Nasdaq, which runs U.S. and Nordic markets, will not likely pursue any large deals in the near-term, he said.
"It's something that we monitor, we look at, but our primary focus and the most likely M&A activity that you'll see from us are going to be for small and mid-sized bolt-on acquisitions that we know we can integrate into the business and generate good returns from," he said.
A number of firms have recently submitted bids for the London Metals Exchange, the world's biggest marketplace for industrial metals, which analysts and industry sources have valued at 500 million to 1.5 billion pounds ($800 million-$2.4 billion).
The bidders include CME Group Inc, along with ICE, Hong Kong Exchanges and Clearing Ltd, and NYSE Euronext, sources have said.
Shavel did not comment on LME specifically.
(Reporting By John McCrank; Editing by Bernard Orr)
Wall Street marks first big loss of 2012
By Angela Moon
NEW YORK | Tue Mar 6, 2012 6:05pm EST
(Reuters) - The Dow dropped more than 200 points on Tuesday, handing Wall Street its worst day in three months on renewed fears of a disorderly default in Greece and concerns that China's slowdown would hit global growth.
Analysts have expected a pullback for weeks, citing an overstretched market. Despite the day's decline, the S&P 500 is still up almost 7 percent for the year. If fourth-quarter gains are included, the benchmark index is still up almost 20 percent since September 30.
Wall Street's anxiety gauge, the CBOE Volatility Index or VIX .VIX, jumped about 16 percent to near 21, rising above its 50-day moving average for the first time since November. About 10 stocks fell for every one that rose the New York Stock Exchange, with bank and miner shares among the top decliners.
Equities' recent rally has continued without a substantial pullback since December, supported in part by expectations that Europe's credit crisis would be contained and China's economy could avoid a hard landing.
"It might be just time we have a bit of a pullback here as this market begins to reassess what the future growth prospects for the year look like," said Burt White, managing director and chief investment officer at LPL Financial in Boston.
The Dow Jones industrial average .DJI slid 203.66 points, or 1.57 percent, to close at 12,759.15. The Standard & Poor's 500 Index .SPX dropped 20.97 points, or 1.54 percent, to 1,343.36. The Nasdaq Composite Index.IXIC fell 40.16 points, or 1.36 percent, to end at 2,910.32.
It was the Dow's first drop of more than 200 points since November 23. The last time the S&P 500 fell more than 1 percent was in late December.
Apple Inc (AAPL.O) shares fell, but outperformed the broader market after volatile swings in recent days. The stock closed down 0.5 percent at $530.26 on Tuesday.
Europe's downturn appeared ready to turn into a full-fledged recession due to a collapse in household spending, exports and manufacturing in the final months of 2011, the European Union said.
Brazil's gross domestic product expanded by a meager 2.7 percent in 2011, data showed Tuesday, adding to concerns after China cut its growth outlook earlier in the week. Expected growth in emerging markets has been a main catalyst for equities' gains.
A group representing Greek bondholders warned a default could cause more than 1 trillion euros ($1.3 trillion) of damage to the region. Creditors have until Thursday night to accept a bond swap in which they would lose almost three-quarters of the value of their bonds.
As part of a reassessment of possible collateral damage if the Greek deal with private debt holders collapses, traders sold the stocks of large banks on concern about their exposure to Greece.
The S&P financial sector index .GSPF dropped 2.5 percent and the KBW bank index .BKX fell 2.7 percent. Morgan Stanley (MS.N) lost 5.3 percent to $17.32.
Greece has no plans to extend the deadline on its bond-swap offer to private creditors, officials said, dismissing market rumors that the date may be changed to increase participation in the offer.
Basic materials stocks also tumbled as commodity prices fell, pressured further by a stronger U.S. dollar.
Aluminum producer Alcoa Inc (AA.N) lost 4.1 percent to $9.47 and Freeport-McMoRan Copper & Gold Inc (FCX.N) fell 2.5 percent to $39.44.
Utilities, a traditional defensive play, were the best-performing S&P sector during Tuesday's slide. An S&P utility sector index .GSPU ended the day down 0.5 percent.
Volume was slightly heavy with about 7.6 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 6.9 billion.
(Reporting By Angela Moon; Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)
NEW YORK | Tue Mar 6, 2012 6:05pm EST
(Reuters) - The Dow dropped more than 200 points on Tuesday, handing Wall Street its worst day in three months on renewed fears of a disorderly default in Greece and concerns that China's slowdown would hit global growth.
Analysts have expected a pullback for weeks, citing an overstretched market. Despite the day's decline, the S&P 500 is still up almost 7 percent for the year. If fourth-quarter gains are included, the benchmark index is still up almost 20 percent since September 30.
Wall Street's anxiety gauge, the CBOE Volatility Index or VIX .VIX, jumped about 16 percent to near 21, rising above its 50-day moving average for the first time since November. About 10 stocks fell for every one that rose the New York Stock Exchange, with bank and miner shares among the top decliners.
Equities' recent rally has continued without a substantial pullback since December, supported in part by expectations that Europe's credit crisis would be contained and China's economy could avoid a hard landing.
"It might be just time we have a bit of a pullback here as this market begins to reassess what the future growth prospects for the year look like," said Burt White, managing director and chief investment officer at LPL Financial in Boston.
The Dow Jones industrial average .DJI slid 203.66 points, or 1.57 percent, to close at 12,759.15. The Standard & Poor's 500 Index .SPX dropped 20.97 points, or 1.54 percent, to 1,343.36. The Nasdaq Composite Index.IXIC fell 40.16 points, or 1.36 percent, to end at 2,910.32.
It was the Dow's first drop of more than 200 points since November 23. The last time the S&P 500 fell more than 1 percent was in late December.
Apple Inc (AAPL.O) shares fell, but outperformed the broader market after volatile swings in recent days. The stock closed down 0.5 percent at $530.26 on Tuesday.
Europe's downturn appeared ready to turn into a full-fledged recession due to a collapse in household spending, exports and manufacturing in the final months of 2011, the European Union said.
Brazil's gross domestic product expanded by a meager 2.7 percent in 2011, data showed Tuesday, adding to concerns after China cut its growth outlook earlier in the week. Expected growth in emerging markets has been a main catalyst for equities' gains.
A group representing Greek bondholders warned a default could cause more than 1 trillion euros ($1.3 trillion) of damage to the region. Creditors have until Thursday night to accept a bond swap in which they would lose almost three-quarters of the value of their bonds.
As part of a reassessment of possible collateral damage if the Greek deal with private debt holders collapses, traders sold the stocks of large banks on concern about their exposure to Greece.
The S&P financial sector index .GSPF dropped 2.5 percent and the KBW bank index .BKX fell 2.7 percent. Morgan Stanley (MS.N) lost 5.3 percent to $17.32.
Greece has no plans to extend the deadline on its bond-swap offer to private creditors, officials said, dismissing market rumors that the date may be changed to increase participation in the offer.
Basic materials stocks also tumbled as commodity prices fell, pressured further by a stronger U.S. dollar.
Aluminum producer Alcoa Inc (AA.N) lost 4.1 percent to $9.47 and Freeport-McMoRan Copper & Gold Inc (FCX.N) fell 2.5 percent to $39.44.
Utilities, a traditional defensive play, were the best-performing S&P sector during Tuesday's slide. An S&P utility sector index .GSPU ended the day down 0.5 percent.
Volume was slightly heavy with about 7.6 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 6.9 billion.
(Reporting By Angela Moon; Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)
AIG to sell $6 billion in AIA stock to repay bailout
By Denny Thomas and Clare Baldwin
HONG KONG | Mon Mar 5, 2012 3:19pm EST
(Reuters) - American International Group is selling part of its stake in AIA Group to raise about $6 billion, which will help the insurer repay part of its government bailout.
Markets reacted favorably, with AIG shares rising to their highest levels in 10 months on the news.
AIG is looking to sell about 1.7 billion AIA shares at HK$27.15 to HK$27.50 each, according to a term sheet Reuters saw on Monday. That would be a discount of up to 7 percent to Friday's closing price.
The shares will go to institutional investors. AIG expects to use the net proceeds to reduce the balance of the U.S. Treasury Department's preferred interest in a special-purpose vehicle that holds the AIA shares. As of last month, those preferred interests were worth about $8.4 billion.
The Treasury also owns 77 percent of AIG's common stock following a massive $182 billion bailout in the wake of the 2008 global financial crisis.
At Friday's close, AIG's one-third stake in AIA was worth $14.9 billion. Following the share sale, the U.S. company will hold about 19 percent of AIA.
Institutions are expected to buy into the offering because of AIA's strong performance since the company's $20.5 billion Hong Kong IPO in 2010 -- Asia's third-largest public listing. But a big run-up in the stock price may have some feeling that the current offer is expensive.
With such a large sale and AIA's free float increasing, though, the company's weighting on benchmark indexes should rise, making the stock a target for fund managers tracking the Hang Seng and the Hang Seng Finance Index.
"The issue of getting the deal through shouldn't be a problem, plus there should be some index buying," said the head of a large U.S.-based asset manager in Hong Kong who was not authorized to speak publicly on the AIA sale.
Kenneth Yue, a Hong Kong-based analyst at CCB International Securities, said the sale looked well timed.
"If you look at AIA's new business growth last year, it went up 40 percent," he said. "I believe they've gone to the peak already -- it would be very challenging for them to increase their new business value going forward by 40 percent every year."
Pricing of the AIA share sale will occur no later than Tuesday, AIG said.
BANK CREDIT
Deutsche Bank and Goldman Sachs are the "active" joint global coordinators, according to two sources with direct knowledge of the process. Both requested anonymity because they are not authorized to speak publicly on the matter.
Deutsche and Goldman were among the four banks that led AIA's IPO, along with Citigroup and Morgan Stanley. The sources said Citi and Morgan Stanley were taking "passive" roles in the current AIG sell-down.
The distinction is important, not just for the fees that such a large offering brings, but also in the league table credit that can help a bank's external marketing. For the AIA sell-down, the banks will get equal league table credit, but Deutsche and Goldman will take home the fatter fees, according to one of the sources.
The deal should be "well distributed" among different investors, instead of large chunks going to just a handful, the source noted.
Shares of AIA, headed by former Prudential Plc executive Mark Tucker, have risen 47 percent since early October and touched a seven-month high last week. The stock closed at HK$29.20 on Friday.
AIG has been on a similar run, gaining 46 percent over the same period. Its shares rose 1.2 percent to $30.16 in afternoon trading, their highest level since last May. Fitch Ratings said on Tuesday that the sale would improve AIG's focus on its core operations and would help its credit rating profile.
CROWN JEWEL
AIA was founded in Shanghai in 1919 by U.S. entrepreneur C.V. Starr. Twenty years later, Starr temporarily relocated to the United States to avoid political instability in Asia and, following World War II, decided to run his U.S. businesses from New York. They came to be known as AIG, whose shares began trading in New York in 1984.
Now Asia's third-largest insurer, AIA has built a sprawling and successful business across the region, with an army of hundreds of thousands of agents.
AIG was forced to spin off AIA, widely considered its crown jewel, and other assets following the bailout by the U.S. government.
AIG Chief Executive Robert Benmosche has said little about his plans for the AIA stake. As recently as February 24, AIG said it had not decided what to do with the stake and had earlier hinted it may even increase its holding.
But the company appears to have opted instead to start paying the government back and focus on other parts of its business.
(Additional reporting by Fiona Lau, Elzio Barreto and Ben Berkowitz; Writing by Michael Flaherty; Editing by Ed Davies, Ian Geoghegan, Lisa Von Ahn and Mark Porter)
HONG KONG | Mon Mar 5, 2012 3:19pm EST
(Reuters) - American International Group is selling part of its stake in AIA Group to raise about $6 billion, which will help the insurer repay part of its government bailout.
Markets reacted favorably, with AIG shares rising to their highest levels in 10 months on the news.
AIG is looking to sell about 1.7 billion AIA shares at HK$27.15 to HK$27.50 each, according to a term sheet Reuters saw on Monday. That would be a discount of up to 7 percent to Friday's closing price.
The shares will go to institutional investors. AIG expects to use the net proceeds to reduce the balance of the U.S. Treasury Department's preferred interest in a special-purpose vehicle that holds the AIA shares. As of last month, those preferred interests were worth about $8.4 billion.
The Treasury also owns 77 percent of AIG's common stock following a massive $182 billion bailout in the wake of the 2008 global financial crisis.
At Friday's close, AIG's one-third stake in AIA was worth $14.9 billion. Following the share sale, the U.S. company will hold about 19 percent of AIA.
Institutions are expected to buy into the offering because of AIA's strong performance since the company's $20.5 billion Hong Kong IPO in 2010 -- Asia's third-largest public listing. But a big run-up in the stock price may have some feeling that the current offer is expensive.
With such a large sale and AIA's free float increasing, though, the company's weighting on benchmark indexes should rise, making the stock a target for fund managers tracking the Hang Seng and the Hang Seng Finance Index.
"The issue of getting the deal through shouldn't be a problem, plus there should be some index buying," said the head of a large U.S.-based asset manager in Hong Kong who was not authorized to speak publicly on the AIA sale.
Kenneth Yue, a Hong Kong-based analyst at CCB International Securities, said the sale looked well timed.
"If you look at AIA's new business growth last year, it went up 40 percent," he said. "I believe they've gone to the peak already -- it would be very challenging for them to increase their new business value going forward by 40 percent every year."
Pricing of the AIA share sale will occur no later than Tuesday, AIG said.
BANK CREDIT
Deutsche Bank and Goldman Sachs are the "active" joint global coordinators, according to two sources with direct knowledge of the process. Both requested anonymity because they are not authorized to speak publicly on the matter.
Deutsche and Goldman were among the four banks that led AIA's IPO, along with Citigroup and Morgan Stanley. The sources said Citi and Morgan Stanley were taking "passive" roles in the current AIG sell-down.
The distinction is important, not just for the fees that such a large offering brings, but also in the league table credit that can help a bank's external marketing. For the AIA sell-down, the banks will get equal league table credit, but Deutsche and Goldman will take home the fatter fees, according to one of the sources.
The deal should be "well distributed" among different investors, instead of large chunks going to just a handful, the source noted.
Shares of AIA, headed by former Prudential Plc executive Mark Tucker, have risen 47 percent since early October and touched a seven-month high last week. The stock closed at HK$29.20 on Friday.
AIG has been on a similar run, gaining 46 percent over the same period. Its shares rose 1.2 percent to $30.16 in afternoon trading, their highest level since last May. Fitch Ratings said on Tuesday that the sale would improve AIG's focus on its core operations and would help its credit rating profile.
CROWN JEWEL
AIA was founded in Shanghai in 1919 by U.S. entrepreneur C.V. Starr. Twenty years later, Starr temporarily relocated to the United States to avoid political instability in Asia and, following World War II, decided to run his U.S. businesses from New York. They came to be known as AIG, whose shares began trading in New York in 1984.
Now Asia's third-largest insurer, AIA has built a sprawling and successful business across the region, with an army of hundreds of thousands of agents.
AIG was forced to spin off AIA, widely considered its crown jewel, and other assets following the bailout by the U.S. government.
AIG Chief Executive Robert Benmosche has said little about his plans for the AIA stake. As recently as February 24, AIG said it had not decided what to do with the stake and had earlier hinted it may even increase its holding.
But the company appears to have opted instead to start paying the government back and focus on other parts of its business.
(Additional reporting by Fiona Lau, Elzio Barreto and Ben Berkowitz; Writing by Michael Flaherty; Editing by Ed Davies, Ian Geoghegan, Lisa Von Ahn and Mark Porter)
AIG sells $500 million Blackstone stake: source
NEW YORK | Fri Mar 2, 2012 10:31am EST
(Reuters) - Bailed-out insurer American International Group Inc (AIG.N) sold its entire $500 million stake in private equity firm Blackstone Group LP (BX.N) on Friday, according to a source familiar with the situation.
AIG, which is majority owned by the U.S. government after it was bailed out during the financial crisis of 2008, had acquired the stake before Blackstone went public in 2007, the source said.
The sale is part of AIG's ongoing effort to monetize non-core assets, reduce risk and deleverage, another source said.
AIG and Blackstone declined to comment.
Blackstone's shares fell 1.9 percent to $15.43 during morning trading on the New York Stock Exchange, while AIG's shares fell 0.1 percent to $29.42.
CNBC earlier reported the stake sale.
(Reporting By Paritosh Bansal; Editing by Gerald E. McCormick)
full story
(Reuters) - Bailed-out insurer American International Group Inc (AIG.N) sold its entire $500 million stake in private equity firm Blackstone Group LP (BX.N) on Friday, according to a source familiar with the situation.
AIG, which is majority owned by the U.S. government after it was bailed out during the financial crisis of 2008, had acquired the stake before Blackstone went public in 2007, the source said.
The sale is part of AIG's ongoing effort to monetize non-core assets, reduce risk and deleverage, another source said.
AIG and Blackstone declined to comment.
Blackstone's shares fell 1.9 percent to $15.43 during morning trading on the New York Stock Exchange, while AIG's shares fell 0.1 percent to $29.42.
CNBC earlier reported the stake sale.
(Reporting By Paritosh Bansal; Editing by Gerald E. McCormick)
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Daiichi Sankyo, GlaxoSmithKline set up Japan JV
TOKYO | Thu Mar 1, 2012 7:38pm EST
(Reuters) - Japan's Daiichi Sankyo Co said on Friday it will form a 50-50 joint venture with Britain's GlaxoSmithKline PLC to bring new vaccines to the Japanese market, which is known for its slow acceptance of vaccines.
Japan's No.3 drugmaker said in a statement the venture, to be calledJapan Vaccine Co, would sell vaccines marketed by Glaxo and Daiichi Sankyo, and the firms plan to expand the business as new vaccines in the development pipeline are approved.
Japan has been slow to approve vaccines such as the combinations used abroad to cover diphtheria, pertussis, tetanus, polio and haemophilus influenzae type B in a single injection, and this under-developed market presents a commercial opportunity for drugmakers.
Daiichi said the venture will aim to improve access to vaccines in Japan and create more combination vaccines by bringing together the two companies' products and technologies.
The joint venture will launch in July, and will market products including Glaxo's cervical cancer vaccine Cervarix and rotavirus vaccine Rotarix?and Daiichi's seasonal flu vaccine.
Shares of Daiichi Sankyo were up 1.2 percent at 1,518 yen after the announcement, which was flagged in a Nikkei business report the previous day, outperforming a 0.8 percent rise in the benchmark Nikkei average.
(Reporting by Nobuhiro Kubo and Chris Gallagher; Editing by Michael Watson and John Mair)
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(Reuters) - Japan's Daiichi Sankyo Co said on Friday it will form a 50-50 joint venture with Britain's GlaxoSmithKline PLC to bring new vaccines to the Japanese market, which is known for its slow acceptance of vaccines.
Japan's No.3 drugmaker said in a statement the venture, to be calledJapan Vaccine Co, would sell vaccines marketed by Glaxo and Daiichi Sankyo, and the firms plan to expand the business as new vaccines in the development pipeline are approved.
Japan has been slow to approve vaccines such as the combinations used abroad to cover diphtheria, pertussis, tetanus, polio and haemophilus influenzae type B in a single injection, and this under-developed market presents a commercial opportunity for drugmakers.
Daiichi said the venture will aim to improve access to vaccines in Japan and create more combination vaccines by bringing together the two companies' products and technologies.
The joint venture will launch in July, and will market products including Glaxo's cervical cancer vaccine Cervarix and rotavirus vaccine Rotarix?and Daiichi's seasonal flu vaccine.
Shares of Daiichi Sankyo were up 1.2 percent at 1,518 yen after the announcement, which was flagged in a Nikkei business report the previous day, outperforming a 0.8 percent rise in the benchmark Nikkei average.
(Reporting by Nobuhiro Kubo and Chris Gallagher; Editing by Michael Watson and John Mair)
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United Air set to move to single booking system
By Kyle Peterson
Wed Feb 29, 2012 2:44pm EST
(Reuters) - The public face of Continental Airlines will vanish for good this weekend when the carrier and United Airlines adopt a single passenger reservation system, a step that -- at least in the public eye -- will finally cement their 2010 merger.
The move to a unified platform is by far the most significant change customers will experience since the merger of United and Continental to form the world's largest airline, known as United Airlines and owned by United Continental Holdings Inc (UAL.N).
"This, from the customer perspective, is probably the biggest thing that they will see," Martin Hand, United's senior vice president of customer experience, said on Wednesday.
"This truly brings the two carriers together from the customer side," he said.
Hand said United Airlines has adopted the reservation platform of the former Continental Airlines and has spent months training about 15,000 employees -- including reservations agents -- on the software.
United has already moved millions of passenger records to the Continental platform and has notified its frequent flyers of the upcoming change.
"That will come to a culmination overnight Friday night to Saturday morning," Hand said.
Early Saturday morning, the Continental.com website will disappear in favor of the United branded site.
Hand said the company chose the Continental platform over United partly because it offered more flexibility to users making reservations on the site.
He declined to disclose the cost of migrating to the single platform.
United and Continental closed their $3.17 billion merger more than a year ago. Former Continental Chief Executive Jeff Smisek leads the combined carrier.
The new United Continental spent much of 2011 rebranding itself and combining some of its customer service functions to slowly erase the line separating the two airlines. The company won government approval last year to operate as a single carrier.
United Continental has painted most of the old Continental planes in the United livery and is finishing the rest.
Out of public view, however, United Continental faces the tall order of blending its separate unionized work forces and achieving joint labor contracts.
Migration to a single reservation system comes with risk, as US Airways Group (LCC.N) learned in 2007 when it attempted to combine the reservation systems of the former America West Airlines and US Airways. The two airlines merged in 2005.
A glitch in their combined system caused the self-service kiosks to fail, forcing passengers to stand in extraordinarily long lines and check in with ticket agents. Thousands of travelers waited in the lines and about 500 travelers at the Charlotte, North Carolina, hub missed their flights.
Hand said United consulted US Airways, its partner in the global Star Alliance, about the pitfalls of moving to a single reservation system.
Delta Air Lines (DAL.N) had a much smoother transition to a single reservation system following its 2008 merger with Northwest Airlines.
"Whenever you combine different technology there's risk," said Ray Neidl, an aerospace analyst at Maxim Group.
"In the case of United, they have done a lot of planning. But you never can tell," he said. "At the last minute, there's always likely to be some bugs that pop up."
(Reporting By Kyle Peterson; editing by John Wallace)
full story
Wed Feb 29, 2012 2:44pm EST
(Reuters) - The public face of Continental Airlines will vanish for good this weekend when the carrier and United Airlines adopt a single passenger reservation system, a step that -- at least in the public eye -- will finally cement their 2010 merger.
The move to a unified platform is by far the most significant change customers will experience since the merger of United and Continental to form the world's largest airline, known as United Airlines and owned by United Continental Holdings Inc (UAL.N).
"This, from the customer perspective, is probably the biggest thing that they will see," Martin Hand, United's senior vice president of customer experience, said on Wednesday.
"This truly brings the two carriers together from the customer side," he said.
Hand said United Airlines has adopted the reservation platform of the former Continental Airlines and has spent months training about 15,000 employees -- including reservations agents -- on the software.
United has already moved millions of passenger records to the Continental platform and has notified its frequent flyers of the upcoming change.
"That will come to a culmination overnight Friday night to Saturday morning," Hand said.
Early Saturday morning, the Continental.com website will disappear in favor of the United branded site.
Hand said the company chose the Continental platform over United partly because it offered more flexibility to users making reservations on the site.
He declined to disclose the cost of migrating to the single platform.
United and Continental closed their $3.17 billion merger more than a year ago. Former Continental Chief Executive Jeff Smisek leads the combined carrier.
The new United Continental spent much of 2011 rebranding itself and combining some of its customer service functions to slowly erase the line separating the two airlines. The company won government approval last year to operate as a single carrier.
United Continental has painted most of the old Continental planes in the United livery and is finishing the rest.
Out of public view, however, United Continental faces the tall order of blending its separate unionized work forces and achieving joint labor contracts.
Migration to a single reservation system comes with risk, as US Airways Group (LCC.N) learned in 2007 when it attempted to combine the reservation systems of the former America West Airlines and US Airways. The two airlines merged in 2005.
A glitch in their combined system caused the self-service kiosks to fail, forcing passengers to stand in extraordinarily long lines and check in with ticket agents. Thousands of travelers waited in the lines and about 500 travelers at the Charlotte, North Carolina, hub missed their flights.
Hand said United consulted US Airways, its partner in the global Star Alliance, about the pitfalls of moving to a single reservation system.
Delta Air Lines (DAL.N) had a much smoother transition to a single reservation system following its 2008 merger with Northwest Airlines.
"Whenever you combine different technology there's risk," said Ray Neidl, an aerospace analyst at Maxim Group.
"In the case of United, they have done a lot of planning. But you never can tell," he said. "At the last minute, there's always likely to be some bugs that pop up."
(Reporting By Kyle Peterson; editing by John Wallace)
full story
UnitedHealth to buy two Florida health plans
By Lewis Krauskopf
Tue Feb 28, 2012 10:41am EST
(Reuters) - UnitedHealth Group Inc (UNH.N) plans to buy two Florida health plans to increase its U.S. market-leading position in providing Medicare plans for the elderly.
Health insurers have been striking deals to boost their Medicare operations as the baby boom generation born after World War II becomes eligible for the government program, swelling its ranks.
UnitedHealth's acquisitions fortify its strong position in Florida, where about 10 percent of all Medicare beneficiaries live, according to Goldman Sachs analyst Matthew Borsch.
The largest U.S. health insurer by market value is buying Preferred Care Partners and Medica HealthCare Plans, which operate in the central and southern regions of the state. Both companies are privately held, and UnitedHealth did not announce financial terms of the separate deals.
Miami-based Preferred Care serves about 50,000 Medicare Advantage members, as well as 5,000 members in Medicaid plans for low-income citizens. Preferred Care also operates six primary care centers.
Coral Gables-based Medica has about 35,000 Medicare Advantage members and 7,200 Medicaid beneficiaries, and runs two medical centers.
Susquehanna Financial Group analyst Chris Rigg estimated the two Florida plans generate combined annual revenue of $1.3 billion to $1.5 billion. UnitedHealth reported $101.9 billion in revenue for last year.
Goldman's Borsch said UnitedHealth will have 27 percent of Florida's Medicare Advantage market after the deals close, which is expected later this year.
"The acquisitions further the pattern of industry consolidation as health reform increases current and expected economies of scale," Borsch said in a research note.
UnitedHealth shares were up 4 cents at $55.77 in morning trading on the New York Stock Exchange.
(Reporting by Lewis Krauskopf in New York; Editing by Lisa Von Ahn)
full story
Tue Feb 28, 2012 10:41am EST
(Reuters) - UnitedHealth Group Inc (UNH.N) plans to buy two Florida health plans to increase its U.S. market-leading position in providing Medicare plans for the elderly.
Health insurers have been striking deals to boost their Medicare operations as the baby boom generation born after World War II becomes eligible for the government program, swelling its ranks.
UnitedHealth's acquisitions fortify its strong position in Florida, where about 10 percent of all Medicare beneficiaries live, according to Goldman Sachs analyst Matthew Borsch.
The largest U.S. health insurer by market value is buying Preferred Care Partners and Medica HealthCare Plans, which operate in the central and southern regions of the state. Both companies are privately held, and UnitedHealth did not announce financial terms of the separate deals.
Miami-based Preferred Care serves about 50,000 Medicare Advantage members, as well as 5,000 members in Medicaid plans for low-income citizens. Preferred Care also operates six primary care centers.
Coral Gables-based Medica has about 35,000 Medicare Advantage members and 7,200 Medicaid beneficiaries, and runs two medical centers.
Susquehanna Financial Group analyst Chris Rigg estimated the two Florida plans generate combined annual revenue of $1.3 billion to $1.5 billion. UnitedHealth reported $101.9 billion in revenue for last year.
Goldman's Borsch said UnitedHealth will have 27 percent of Florida's Medicare Advantage market after the deals close, which is expected later this year.
"The acquisitions further the pattern of industry consolidation as health reform increases current and expected economies of scale," Borsch said in a research note.
UnitedHealth shares were up 4 cents at $55.77 in morning trading on the New York Stock Exchange.
(Reporting by Lewis Krauskopf in New York; Editing by Lisa Von Ahn)
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Investors eye new hedge funds but move cautiously
Mon Feb 27, 2012 12:51pm EST
(Reuters) - Investors play it safe and allocate far less money to new hedge funds than to more seasoned portfolios, even though research shows newcomers often perform better, according to data released by Citigroup Inc (C.N) on Monday.
More than six dozen investors polled by the bank said that between 2009 and 2011, they put an average $16 million with each new manager they funded, less than half the average $37.7 million check they wrote to firms with a longer track record.
Overall, the 78 investors surveyed by Citi Prime Finance said that during the period 2009-2011, they allocated $12.4 billion to new funds within the first 12 months of their launch.
Investors "risked significantly less money on new funds than with proven managers," the survey's authors wrote.
While much research shows that upstart funds are often hungrier and take riskier bets to ultimately deliver better returns, the survey results suggest investors are extremely cautious. These investors are making selections at a time when hedge fund investments are becoming more popular but also at a time when big blowups and heavy losses during and after the financial crisis have given many customers reason to be careful.
Investors that allocate money to new hedge funds tend to have bigger investment teams of their own to carefully review the fund they might put money with, the survey found. They pay particular attention to a new manager's previous experience and track record, plus the stability of the investment team and the fund's operational infrastructure.
"It is not just a matter of transparency and reduced fees anymore," Chris Greer, global head of capital introductions at Citi Prime Finance, said in a statement. "We found investors also want more two-way dialogue with the new funds management and portfolio teams."
(Reporting By Svea Herbst-Bayliss in Boston; editing by John Wallace)
full story
(Reuters) - Investors play it safe and allocate far less money to new hedge funds than to more seasoned portfolios, even though research shows newcomers often perform better, according to data released by Citigroup Inc (C.N) on Monday.
More than six dozen investors polled by the bank said that between 2009 and 2011, they put an average $16 million with each new manager they funded, less than half the average $37.7 million check they wrote to firms with a longer track record.
Overall, the 78 investors surveyed by Citi Prime Finance said that during the period 2009-2011, they allocated $12.4 billion to new funds within the first 12 months of their launch.
Investors "risked significantly less money on new funds than with proven managers," the survey's authors wrote.
While much research shows that upstart funds are often hungrier and take riskier bets to ultimately deliver better returns, the survey results suggest investors are extremely cautious. These investors are making selections at a time when hedge fund investments are becoming more popular but also at a time when big blowups and heavy losses during and after the financial crisis have given many customers reason to be careful.
Investors that allocate money to new hedge funds tend to have bigger investment teams of their own to carefully review the fund they might put money with, the survey found. They pay particular attention to a new manager's previous experience and track record, plus the stability of the investment team and the fund's operational infrastructure.
"It is not just a matter of transparency and reduced fees anymore," Chris Greer, global head of capital introductions at Citi Prime Finance, said in a statement. "We found investors also want more two-way dialogue with the new funds management and portfolio teams."
(Reporting By Svea Herbst-Bayliss in Boston; editing by John Wallace)
full story
Exclusive: Eyeing Yahoo deal, Alibaba may take HK unit private
By Prakash Chakravarti
HONG KONG | Fri Feb 10, 2012 12:15pm EST
(Reuters) - Chinese e-commerce group Alibaba plans to take its Hong Kong-listed unit private, two sources familiar with the matter said, as part of a complex deal that would strengthen founder Jack Ma's control and give key stakeholder Yahoo cash and a direct stake in one of Alibaba's operating businesses.
Alibaba Group, the online business-to-business group set up in 1999 by former tour guide and now billionaire Ma, plans to buy back most of the 40 percent stake in it that Yahoo purchased for about $1 billion in 2005.
Under the plans being discussed, Alibaba Group would use bank loans and cash plus an asset swap to buy back about a 25 percent stake, leaving Yahoo holding 15 percent, the sources said. The U.S. group's 40 percent holding is worth an estimated $13 billion to $14 billion, based on recent deal valuations.
Alibaba Group, one of the three leading players in the world's largest Internet market, plans to pay a third of the consideration through a stake in one of its operating assets -- making a deal tax-free for Yahoo -- and the rest, around $6 billion, in cash, the sources said. It is looking to raise a loan of about $3 billion to help fund the deal.
The sources said taking Alibaba.com private was just one of the proposals under discussion and was not a pre-condition of any Yahoo deal. Any final agreement could be several weeks away, they added.
Alibaba Group's plans are part of an overall deal being discussed by Yahoo, an Internet pioneer under pressure from investors to turn around a lackluster performance. Last month, Yahoo appointed Scott Thompson as CEO to replace Carol Bartz, who was fired in September, and co-founder Jerry Yang quit the company.
Yahoo shareholders are frustrated at stakeholders' apparent indecision over how to handle investments in Alibaba and other Asian assets.
"Alibaba.com's share price has been quite bumpy since its listing," said Wendy Huang, head of regional Internet and media research at RBS in Hong Kong. "Probably taking it private will make it more flexible for the group to do the transformation that it's going through."
Trading in Alibaba.com shares was halted on Thursday pending an announcement regarding its parent. Alibaba.com, which is about 73 percent-owned by Alibaba Group, has a market value of nearly $6 billion, making the remaining stake in it worth around $1.6 billion.
Alibaba.com is the most likely operating unit in which Yahoo may be offered a stake, one of the sources said. Both parties have an understanding on this arrangement, but have not signed any formal deal yet, the source added.
Other Alibaba Group assets that could be used in a swap deal with Yahoo could include Taobao.com, often dubbed "China's e-Bay", Taomall, Yahoo (China) and Alipay, an e-payment business, sources said, adding Yahoo would get to choose which assets it wants.
The sources requested anonymity because the discussions were private. An Alibaba Group spokesman declined to comment. A representative for Yahoo declined to comment.
Sources previously told Reuters that under a "cash rich split" plan being discussed, Yahoo would effectively transfer most of its 40 percent Alibaba stake back to the Chinese company, and all of its more than one-third stake in Yahoo Japan to Softbank Corp in return for cash and assets.
The idea behind the deal is twofold for Yahoo, sources previously said. Most of the company's value is locked up in its Alibaba and Yahoo Japan stakes, so selling them down would simplify its ownership structure. That in turn would make it easier for potential buyers to value Yahoo's U.S. operations and provide for a cleaner transaction should one come to fruition.
Secondly, Yahoo can use the more than $6 billion in cash it will generate from the two deals to return money to shareholders in the form of a dividend or share buyback. Yahoo's shareholders have been clamoring for some kind of liquidity event since the company turned down Microsoft's $44 billion takeover offer four years ago this month.
Yahoo shares were up 1.8 percent at $16.29 in midday Nasdaq trading.
Shares in Softbank jumped more than 4 percent to a 5-week high of 2,319 yen on Friday. Softbank has an indirect stake of 31 percent to 32 percent in Alibaba.com as it holds close to a third of Alibaba Group and owns 58 percent of Alibaba Japan.
Yahoo had also entertained separate proposals from private equity firms TPG and Silver Lake about minority investments in the company, but those offers fell short of Yahoo's expectations.
(Additional reporting by Stephen Aldred, Kazunori Takada, Saeed Azhar, Melanie Lee, Chyen Yee Lee and Alexei Oreskovic; Editing by Muralikumar Anantharaman, Ian Geoghegan and Lisa Von Ahn)
full story
HONG KONG | Fri Feb 10, 2012 12:15pm EST
(Reuters) - Chinese e-commerce group Alibaba plans to take its Hong Kong-listed unit private, two sources familiar with the matter said, as part of a complex deal that would strengthen founder Jack Ma's control and give key stakeholder Yahoo cash and a direct stake in one of Alibaba's operating businesses.
Alibaba Group, the online business-to-business group set up in 1999 by former tour guide and now billionaire Ma, plans to buy back most of the 40 percent stake in it that Yahoo purchased for about $1 billion in 2005.
Under the plans being discussed, Alibaba Group would use bank loans and cash plus an asset swap to buy back about a 25 percent stake, leaving Yahoo holding 15 percent, the sources said. The U.S. group's 40 percent holding is worth an estimated $13 billion to $14 billion, based on recent deal valuations.
Alibaba Group, one of the three leading players in the world's largest Internet market, plans to pay a third of the consideration through a stake in one of its operating assets -- making a deal tax-free for Yahoo -- and the rest, around $6 billion, in cash, the sources said. It is looking to raise a loan of about $3 billion to help fund the deal.
The sources said taking Alibaba.com private was just one of the proposals under discussion and was not a pre-condition of any Yahoo deal. Any final agreement could be several weeks away, they added.
Alibaba Group's plans are part of an overall deal being discussed by Yahoo, an Internet pioneer under pressure from investors to turn around a lackluster performance. Last month, Yahoo appointed Scott Thompson as CEO to replace Carol Bartz, who was fired in September, and co-founder Jerry Yang quit the company.
Yahoo shareholders are frustrated at stakeholders' apparent indecision over how to handle investments in Alibaba and other Asian assets.
"Alibaba.com's share price has been quite bumpy since its listing," said Wendy Huang, head of regional Internet and media research at RBS in Hong Kong. "Probably taking it private will make it more flexible for the group to do the transformation that it's going through."
Trading in Alibaba.com shares was halted on Thursday pending an announcement regarding its parent. Alibaba.com, which is about 73 percent-owned by Alibaba Group, has a market value of nearly $6 billion, making the remaining stake in it worth around $1.6 billion.
Alibaba.com is the most likely operating unit in which Yahoo may be offered a stake, one of the sources said. Both parties have an understanding on this arrangement, but have not signed any formal deal yet, the source added.
Other Alibaba Group assets that could be used in a swap deal with Yahoo could include Taobao.com, often dubbed "China's e-Bay", Taomall, Yahoo (China) and Alipay, an e-payment business, sources said, adding Yahoo would get to choose which assets it wants.
The sources requested anonymity because the discussions were private. An Alibaba Group spokesman declined to comment. A representative for Yahoo declined to comment.
Sources previously told Reuters that under a "cash rich split" plan being discussed, Yahoo would effectively transfer most of its 40 percent Alibaba stake back to the Chinese company, and all of its more than one-third stake in Yahoo Japan to Softbank Corp in return for cash and assets.
The idea behind the deal is twofold for Yahoo, sources previously said. Most of the company's value is locked up in its Alibaba and Yahoo Japan stakes, so selling them down would simplify its ownership structure. That in turn would make it easier for potential buyers to value Yahoo's U.S. operations and provide for a cleaner transaction should one come to fruition.
Secondly, Yahoo can use the more than $6 billion in cash it will generate from the two deals to return money to shareholders in the form of a dividend or share buyback. Yahoo's shareholders have been clamoring for some kind of liquidity event since the company turned down Microsoft's $44 billion takeover offer four years ago this month.
Yahoo shares were up 1.8 percent at $16.29 in midday Nasdaq trading.
Shares in Softbank jumped more than 4 percent to a 5-week high of 2,319 yen on Friday. Softbank has an indirect stake of 31 percent to 32 percent in Alibaba.com as it holds close to a third of Alibaba Group and owns 58 percent of Alibaba Japan.
Yahoo had also entertained separate proposals from private equity firms TPG and Silver Lake about minority investments in the company, but those offers fell short of Yahoo's expectations.
(Additional reporting by Stephen Aldred, Kazunori Takada, Saeed Azhar, Melanie Lee, Chyen Yee Lee and Alexei Oreskovic; Editing by Muralikumar Anantharaman, Ian Geoghegan and Lisa Von Ahn)
full story
Exclusive: Fee rise row could hurt London Metal Exchange value
By Susan Thomas and Saeed Azhar
LONDON/SINGAPORE | Thu Feb 9, 2012 12:47pm EST
(Reuters) - A row over the London Metal Exchange's (LME) plans to raise revenues with a new fee could deter potential bidders for the exchange as any revision could dent projected extra revenue included in its valuation, industry sources said.
The rare public dispute between users of the exchange and the LME over the fee it announced in December has forced the exchange to go back to its board on February 23 to review the backlash. The LME, the biggest market for metals such as copper and aluminum, could make concessions.
Potential bidders are watching closely how the disagreement develops, a source with knowledge of the matter said.
Non-binding bids are due around the middle of this month in response to the exchange's announcement in September it had received more than 10 expressions of interest from potential suitors.
"It will be a concern for most of the bidders if the price increase does not happen," the top industry source said.
Bidders were keenly interested in how the LME would implement the fee, despite the opposition from members, the source said.
"We won't be remotely ready to put the fees in place by March 1," said the head of one brokerage. "We're still working on the basis that we'll be able to head this thing off."
Well-placed sources told Reuters that the LME's new trading fee, scheduled to start on March 1, could account for up to two thirds of its total valuation. Some metal industry sources have estimated a bid could be worth a potential 1 billion pounds ($1.58 billion).
A second source with knowledge of the matter said the potential extra revenue that could flow from higher fees had been highlighted to possible suitors.
Those suitors include CME Group (CME.O), the InterContinental Exchange (ICE.N) and a consortium of the London Stock Exchange (LSE.L) and the Singapore Stock Exchange (SGXL.SI), three sources said.
The LME declined to comment on the impact a revision of the fees could have on valuations.
The CME said it did not comment on speculation. An SGX spokesman declined to comment on whether the exchange had submitted a bid. An LSE spokeswoman said: "We do not comment on market speculation."
A spokesman for ICE declined to comment late last month on a possible bid for the LME. ICE was not immediately available to comment on Thursday.
UK-based broker ICAP (IAP.L), the Hong Kong Stock Exchange, and Deutsche Boerse-owned Eurex (DB1Gn.DE) are also potential suitors.
VOLUMES SOAR
The LME operates on a constrained-profit model, and has so far kept fees low for the trading houses and banks that own the exchange and use the market.
That is reflected in the LME's profits. Pre-tax profit in 2010, limited by the low fees, fell 28 percent to 12.5 million pounds, according to figures on the LME website.
But volume at the exchange jumped 22 percent last year to record of 146.6 million lots. The total value traded at the LME, which accounts for 80 percent of traded volume in global metal futurestransactions, rose 32.8 percent to $15.4 trillion.
An LME trade known as tom-next, a spread between tomorrow and the cash date, accounted for up to 29 percent of LME futures turnover last year, depending on the contract.
A key feature of tom-next is that brokers normally absorb the client component fee, which can be as low as one penny. From March 1, the LME levy component of a tom-next spread trade rises to 50 pence per leg per lot.
The gross fee calculation is more complex than that. But either way, some of biggest clients have said they do not want to pay, metals market sources said.
"The hedge funds and the big traders don't want to take the extra costs," said one head of metals trading on the LME. "The big boys don't pay much anyway."
"Clients are pushing back," said another head of metals trading.
Several metals industry sources said the opposition means the LME could make concessions on tom-next, possibly exempting it from the fee.
"Members made a number of constructive proposals around the detailed timing of the fee increase and its implementation - including, for example, whether client tom/next trades should be charged at the new rate," the LME said in an emailed statement.
"Suggestions from the meeting will be discussed at the board on February 23."
The LME has said it needs to increase fees to generate more revenue to update technology and systems and meet increasing regulatory requirements.
Some LME members who attended a meeting with LME Chief Executive Martin Abbott this week said the exchange had yet to spell out why it wanted the cash and how much it aimed to raise.
"The LME needs to explain the rationale behind the fee increase," said the head of a company that trades on the exchange. "In general people wanted to know why and they didn't understand the timing."
Another said the LME needed to be more transparent. "They're keeping it (information) so close to them," he said.
($1 = 0.6322 British pounds)
(Additional reporting by Josephine Mason in New York; Editing by Veronica Brown and Anthony Barker)
full story
LONDON/SINGAPORE | Thu Feb 9, 2012 12:47pm EST
(Reuters) - A row over the London Metal Exchange's (LME) plans to raise revenues with a new fee could deter potential bidders for the exchange as any revision could dent projected extra revenue included in its valuation, industry sources said.
The rare public dispute between users of the exchange and the LME over the fee it announced in December has forced the exchange to go back to its board on February 23 to review the backlash. The LME, the biggest market for metals such as copper and aluminum, could make concessions.
Potential bidders are watching closely how the disagreement develops, a source with knowledge of the matter said.
Non-binding bids are due around the middle of this month in response to the exchange's announcement in September it had received more than 10 expressions of interest from potential suitors.
"It will be a concern for most of the bidders if the price increase does not happen," the top industry source said.
Bidders were keenly interested in how the LME would implement the fee, despite the opposition from members, the source said.
"We won't be remotely ready to put the fees in place by March 1," said the head of one brokerage. "We're still working on the basis that we'll be able to head this thing off."
Well-placed sources told Reuters that the LME's new trading fee, scheduled to start on March 1, could account for up to two thirds of its total valuation. Some metal industry sources have estimated a bid could be worth a potential 1 billion pounds ($1.58 billion).
A second source with knowledge of the matter said the potential extra revenue that could flow from higher fees had been highlighted to possible suitors.
Those suitors include CME Group (CME.O), the InterContinental Exchange (ICE.N) and a consortium of the London Stock Exchange (LSE.L) and the Singapore Stock Exchange (SGXL.SI), three sources said.
The LME declined to comment on the impact a revision of the fees could have on valuations.
The CME said it did not comment on speculation. An SGX spokesman declined to comment on whether the exchange had submitted a bid. An LSE spokeswoman said: "We do not comment on market speculation."
A spokesman for ICE declined to comment late last month on a possible bid for the LME. ICE was not immediately available to comment on Thursday.
UK-based broker ICAP (IAP.L), the Hong Kong Stock Exchange, and Deutsche Boerse-owned Eurex (DB1Gn.DE) are also potential suitors.
VOLUMES SOAR
The LME operates on a constrained-profit model, and has so far kept fees low for the trading houses and banks that own the exchange and use the market.
That is reflected in the LME's profits. Pre-tax profit in 2010, limited by the low fees, fell 28 percent to 12.5 million pounds, according to figures on the LME website.
But volume at the exchange jumped 22 percent last year to record of 146.6 million lots. The total value traded at the LME, which accounts for 80 percent of traded volume in global metal futurestransactions, rose 32.8 percent to $15.4 trillion.
An LME trade known as tom-next, a spread between tomorrow and the cash date, accounted for up to 29 percent of LME futures turnover last year, depending on the contract.
A key feature of tom-next is that brokers normally absorb the client component fee, which can be as low as one penny. From March 1, the LME levy component of a tom-next spread trade rises to 50 pence per leg per lot.
The gross fee calculation is more complex than that. But either way, some of biggest clients have said they do not want to pay, metals market sources said.
"The hedge funds and the big traders don't want to take the extra costs," said one head of metals trading on the LME. "The big boys don't pay much anyway."
"Clients are pushing back," said another head of metals trading.
Several metals industry sources said the opposition means the LME could make concessions on tom-next, possibly exempting it from the fee.
"Members made a number of constructive proposals around the detailed timing of the fee increase and its implementation - including, for example, whether client tom/next trades should be charged at the new rate," the LME said in an emailed statement.
"Suggestions from the meeting will be discussed at the board on February 23."
The LME has said it needs to increase fees to generate more revenue to update technology and systems and meet increasing regulatory requirements.
Some LME members who attended a meeting with LME Chief Executive Martin Abbott this week said the exchange had yet to spell out why it wanted the cash and how much it aimed to raise.
"The LME needs to explain the rationale behind the fee increase," said the head of a company that trades on the exchange. "In general people wanted to know why and they didn't understand the timing."
Another said the LME needed to be more transparent. "They're keeping it (information) so close to them," he said.
($1 = 0.6322 British pounds)
(Additional reporting by Josephine Mason in New York; Editing by Veronica Brown and Anthony Barker)
full story
Japan firms talk on system chip tie in reform drive: sources
By Reiji Murai and Maki Shiraki
TOKYO | Wed Feb 8, 2012 3:54am EST
(Reuters) - Renesas Electronics and two other big Japanese chip makers are in talks to combine their struggling system chip operations in a government-backed deal, sources said, as pressure mounts for drastic reforms to confront stiff global competition.
Fujitsu Ltd, Panasonic Corp and Japan's government-backed Innovation Network Corp, an investment fund, would also be part of the deal, which could outsource production to privately held chip maker GlobalFoundries, sources familiar with the matter said.
Japan's once high-flying chip sector has been forced into a series of mergers and restructuring drives over the past decade to keep up with aggressive competitors in the United States, South Korea and Taiwan, led by Intel Corp and Samsung Electronics.
Under the latest plan, the new company will develop system chips, which serve as the brains of electronic gadgets and automobiles, but outsource production.
The move would revamp a money-losing division for Renesas, a market leader in system chips by sales ahead of Intel and Broadcom Corp, and allow Panasonic and Fujitsu to focus on more profitable businesses.
"This is just one of many options under consideration," one of the sources said, adding that other areas of the chip sector were also under discussion and there could be further twists and turns as talks proceed.
As part of the deal, the sources said California-based GlobalFoundries could also buy cash-strapped Elpida Memory's chip production plant in Hiroshima, while the Nikkeibusiness daily said Elpida, which has been battered by a strong yen and tumbling memory chip prices, would move its DRAM chip production to Taiwan.
The news sparked a surge in chipmaker shares, with Renesas jumping as much as 14 percent to a three-month high of 576 yen and Elpida climbing to an intraday high of 374 yen, up nearly 10 percent. Fujitsu rose 5 percent to 399 yen.
"The first observation is that it looks good for every company -- Elpida, Fujitsu, Panasonic and Renesas," said Yasuo Sakuma, portfolio manager at Bayview Asset Management.
But he remained skeptical.
"It's like the bad parts of a banana, apple and orange getting put together in a mixer to make juice. If you drink that it may taste good the first time. But the juice will go bad in a couple of days."
BAD JUICE?
Renesas, Fujitsu and Panasonic said separately that no decisions had been taken regarding their chip businesses, while Elpida said the report on the sale of the Hiroshima plant was incorrect, but gave no details.
The Nikkei said the three companies were expected to hammer out a basic agreement by the end of March and would aim to set up a new company by the end of this year. But one of the sources suggested the time frame was too ambitious, especially given that various options were under review.
Haruo Sato, senior analyst at Tokai-Tokyo Securities, saw potential snags to an agreement.
"The top management of the three companies would have to reach agreements on tough issues such as allocation of resources, including job cuts. I think it will be extremely hard for them to reach a compromise," he said.
The Japanese government is wary of allowing technology know-how to disappear overseas and used its Innovation Network fund in a similar move last year, announcing plans to merge the small to medium sized liquid crystal display (LCD) panel operations of three firms into a new company.
Japanese chipmakers have been hit hard over the past year by a sluggish economy and a strong yen, with many falling into the red on an operating basis.
Renesas, itself the product of successive mergers of the chip divisions of Hitachi, Mitsubishi Electric and NEC Corp, reported an operating loss of 33.2 billion yen ($430 million) for the nine months to December 31.
Elpida, set up to take over the struggling DRAM operations of several Japanese chipmakers a decade ago and now scrambling to meet debt repayment deadlines in late March and early April, last week posted a wider-than-expected 43.8 billion yen operating loss for the October-December quarter.
Speculation has swirled that Elpida was seeking a rescue deal with U.S. DRAM maker Micron Technology and its Taiwanese technology partner, Nanya Technology, although Elpida President Yukio Sakamoto has played down the need for an immediate equity tie-up.
Japanese chip industry leader Toshiba which has largely remained above the merger fray in recent years, cut its full-year operating profit forecast by one-third to 200 billion yen after posting a 72 percent drop in third-quarter profit.
($1 = 76.95 yen)
(Additional reporting by Nobuhiro Kubo, Miki Kayaoka, Dominic Lau, Emi Emoto and Chikafumi Hodo in Tokyo; Writing by Edmund Klamann, Editing by Richard Pullin)
full story
TOKYO | Wed Feb 8, 2012 3:54am EST
(Reuters) - Renesas Electronics and two other big Japanese chip makers are in talks to combine their struggling system chip operations in a government-backed deal, sources said, as pressure mounts for drastic reforms to confront stiff global competition.
Fujitsu Ltd, Panasonic Corp and Japan's government-backed Innovation Network Corp, an investment fund, would also be part of the deal, which could outsource production to privately held chip maker GlobalFoundries, sources familiar with the matter said.
Japan's once high-flying chip sector has been forced into a series of mergers and restructuring drives over the past decade to keep up with aggressive competitors in the United States, South Korea and Taiwan, led by Intel Corp and Samsung Electronics.
Under the latest plan, the new company will develop system chips, which serve as the brains of electronic gadgets and automobiles, but outsource production.
The move would revamp a money-losing division for Renesas, a market leader in system chips by sales ahead of Intel and Broadcom Corp, and allow Panasonic and Fujitsu to focus on more profitable businesses.
"This is just one of many options under consideration," one of the sources said, adding that other areas of the chip sector were also under discussion and there could be further twists and turns as talks proceed.
As part of the deal, the sources said California-based GlobalFoundries could also buy cash-strapped Elpida Memory's chip production plant in Hiroshima, while the Nikkeibusiness daily said Elpida, which has been battered by a strong yen and tumbling memory chip prices, would move its DRAM chip production to Taiwan.
The news sparked a surge in chipmaker shares, with Renesas jumping as much as 14 percent to a three-month high of 576 yen and Elpida climbing to an intraday high of 374 yen, up nearly 10 percent. Fujitsu rose 5 percent to 399 yen.
"The first observation is that it looks good for every company -- Elpida, Fujitsu, Panasonic and Renesas," said Yasuo Sakuma, portfolio manager at Bayview Asset Management.
But he remained skeptical.
"It's like the bad parts of a banana, apple and orange getting put together in a mixer to make juice. If you drink that it may taste good the first time. But the juice will go bad in a couple of days."
BAD JUICE?
Renesas, Fujitsu and Panasonic said separately that no decisions had been taken regarding their chip businesses, while Elpida said the report on the sale of the Hiroshima plant was incorrect, but gave no details.
The Nikkei said the three companies were expected to hammer out a basic agreement by the end of March and would aim to set up a new company by the end of this year. But one of the sources suggested the time frame was too ambitious, especially given that various options were under review.
Haruo Sato, senior analyst at Tokai-Tokyo Securities, saw potential snags to an agreement.
"The top management of the three companies would have to reach agreements on tough issues such as allocation of resources, including job cuts. I think it will be extremely hard for them to reach a compromise," he said.
The Japanese government is wary of allowing technology know-how to disappear overseas and used its Innovation Network fund in a similar move last year, announcing plans to merge the small to medium sized liquid crystal display (LCD) panel operations of three firms into a new company.
Japanese chipmakers have been hit hard over the past year by a sluggish economy and a strong yen, with many falling into the red on an operating basis.
Renesas, itself the product of successive mergers of the chip divisions of Hitachi, Mitsubishi Electric and NEC Corp, reported an operating loss of 33.2 billion yen ($430 million) for the nine months to December 31.
Elpida, set up to take over the struggling DRAM operations of several Japanese chipmakers a decade ago and now scrambling to meet debt repayment deadlines in late March and early April, last week posted a wider-than-expected 43.8 billion yen operating loss for the October-December quarter.
Speculation has swirled that Elpida was seeking a rescue deal with U.S. DRAM maker Micron Technology and its Taiwanese technology partner, Nanya Technology, although Elpida President Yukio Sakamoto has played down the need for an immediate equity tie-up.
Japanese chip industry leader Toshiba which has largely remained above the merger fray in recent years, cut its full-year operating profit forecast by one-third to 200 billion yen after posting a 72 percent drop in third-quarter profit.
($1 = 76.95 yen)
(Additional reporting by Nobuhiro Kubo, Miki Kayaoka, Dominic Lau, Emi Emoto and Chikafumi Hodo in Tokyo; Writing by Edmund Klamann, Editing by Richard Pullin)
full story
UBS says rogue trader not material for inflows
ZURICH | Tue Feb 7, 2012 2:24am EST
(Reuters) - UBS (UBSN.VX) said a $2 billion rogue trading scandal is not affecting inflows at its flagship private bank.
"The trading incident is not something clients are talking to us about today," UBS financial head Tom Naratil told journalists after fourth-quarterearnings. Instead, activity by wealthy clients is affected by issues such as uncertainty affecting the euro zone, Naratil said.
UBS's private bank posted 3.1 billion Swiss francs ($3.36 billion) in net new money in the quarter.
($1 = 0.9227 Swiss francs)
(Reporting By Katharina Bart)
full story
(Reuters) - UBS (UBSN.VX) said a $2 billion rogue trading scandal is not affecting inflows at its flagship private bank.
"The trading incident is not something clients are talking to us about today," UBS financial head Tom Naratil told journalists after fourth-quarterearnings. Instead, activity by wealthy clients is affected by issues such as uncertainty affecting the euro zone, Naratil said.
UBS's private bank posted 3.1 billion Swiss francs ($3.36 billion) in net new money in the quarter.
($1 = 0.9227 Swiss francs)
(Reporting By Katharina Bart)
full story
China growth could halve if Europe crisis worsens: IMF
BEIJING | Mon Feb 6, 2012 8:33am EST
(Reuters) - China's annual economic growth could be cut nearly in half this year if Europe's debt crisis tips the world economy into a recession, putting pressure on Beijing to unveil "significant" fiscal stimulus, the International Monetary Fund said.
The Fund outlined its central scenario for China's 2012 growth outlook in its global outlook in January, cutting its forecast for 2012 growth from 9 percent to 8.2 percent.
The China Economic Outlook published on Monday showed that under the IMF's "downside" forecast for the global economy, China's growth rate may be cut by around 4 percentage points from the fund's current forecast of 8.2 percent in 2012.
"In the unfortunate event such a downside scenario becomes reality, China should respond with a significant fiscal package, executed through central and local government budgets," it said.
Stimulative measures could include cuts in consumption taxes, subsidies for consumers, corporate incentives to expand investment, fiscal support for smaller firms and more spending on low-cost housing social safety nets, the fund said.
Such fiscal stimulus, adding up to 3 percent of GDP, would help mitigate declines in economic output, it said.
A Reuters poll in January showed China's economic growth is likely to moderate to 8.4 percent from 2011's 9.2 percent as demand at home and abroad slackens.
Falling inflation will enable the People's Bank of China to fine-tune policy to support growth through its open market operations in the coming weeks, the IMF said. It said the central bank could opt to cut banks' reserve requirement ratio again if capital inflows remain subdued.
The central bank announced a cut in the amount of cash that banks have to hold as reserves -- the first such cut in three years -- at the end of November. More reserve ratio cuts are expected in coming months.
(Reporting by Kevin Yao; editing by Patrick Graham)
full story
(Reuters) - China's annual economic growth could be cut nearly in half this year if Europe's debt crisis tips the world economy into a recession, putting pressure on Beijing to unveil "significant" fiscal stimulus, the International Monetary Fund said.
The Fund outlined its central scenario for China's 2012 growth outlook in its global outlook in January, cutting its forecast for 2012 growth from 9 percent to 8.2 percent.
The China Economic Outlook published on Monday showed that under the IMF's "downside" forecast for the global economy, China's growth rate may be cut by around 4 percentage points from the fund's current forecast of 8.2 percent in 2012.
"In the unfortunate event such a downside scenario becomes reality, China should respond with a significant fiscal package, executed through central and local government budgets," it said.
Stimulative measures could include cuts in consumption taxes, subsidies for consumers, corporate incentives to expand investment, fiscal support for smaller firms and more spending on low-cost housing social safety nets, the fund said.
Such fiscal stimulus, adding up to 3 percent of GDP, would help mitigate declines in economic output, it said.
A Reuters poll in January showed China's economic growth is likely to moderate to 8.4 percent from 2011's 9.2 percent as demand at home and abroad slackens.
Falling inflation will enable the People's Bank of China to fine-tune policy to support growth through its open market operations in the coming weeks, the IMF said. It said the central bank could opt to cut banks' reserve requirement ratio again if capital inflows remain subdued.
The central bank announced a cut in the amount of cash that banks have to hold as reserves -- the first such cut in three years -- at the end of November. More reserve ratio cuts are expected in coming months.
(Reporting by Kevin Yao; editing by Patrick Graham)
full story
Analysis: No check-in queue as global airlines wary of India
By Anurag Kotoky
NEW DELHI | Fri Feb 3, 2012 5:12am EST
(Reuters) - Just because foreign airlines may soon be allowed to invest in India's battered carriers doesn't mean they will.
New Delhi's expected move to allow global airlines to own up to 49 percent in Indian carriers has been welcomed by investors as a potential lifeline for an industry mired in $20 billion of debt and on course to rack up $3 billion in annual losses.
But aviation industry experts say any celebration is premature.
"There's absolutely no reason to be bullish on airlines," said a Mumbai-based analyst with a local brokerage, who did not wish to be identified.
"Unless fuel and other dollar-denominated costs come down, nobody's going to invest in these companies, they're in such bad shape," he said, referring to a 16 percent decline in the rupee in 2011, which has driven up costs for local carriers.
Five of the country's six main operators are loss-making.
Taxes in India make jet fuel far more expensive than for global competitors. State-owned Air India, which is trying to restructure $4 billion in debt, has slashed fares, forcing competitors to follow suit.
Two carriers, IndiGo and Go Air, have between them ordered about 200 planes for more than $23 billion, adding capacity to a market where dozens of planes already sit grounded.
And changing ownership rules will do little to alter India's unappealing market dynamics or regulatory environment.
"Every airline will be interested in India because it's such a big market. But the environment should be conducive to the proper business processes," Akbar Al Baker, CEO of Qatar Airways, told Reuters recently.
India boasts the fastest growing passenger market in major economies, up 17 percent to almost 61 million people last year, and the potential is huge. With a comparable population, China's domestic air passenger market is five times the size of India's.
"This is going to be the most important market for the next two to three decades. They (foreign players) need to have a very credible India story," said Kapil Kaul, regional head of the Centre for Asia Pacific Aviation (CAPA), an aviation consulting firm.
But, while global giants like British Airways (ICAG.L), Singapore Airlines (SIAL.SI) and fast-growing carriers from the Gulf covet an Indian presence, they may see little advantage in committing capital without further regulatory and competitive changes.
Meanwhile, the global airline industry is not in the rudest of health as high fuel prices and sluggish economies in the United States and Europe crimp travel demand.
In December, the International Air Transport Association (IATA) warned airlines faced over $8 billion in overall losses this year if Europe's debt crisis spirals, and, even in a best-case scenario, the global industry was likely to see profits halve this year from nearly $7 billion in 2011.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
India's airline growth link.reuters.com/zum46s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
TOUGH MARKET
Indian carriers, burdened with debt, are desperately seeking foreign partners, which would not only provide funds but technical expertise and an enhanced route-map.
Kingfisher Airlines (KING.NS) is in the most need of a deep-pocketed partner. Controlled by liquor baron Vijay Mallya, it has failed in efforts to bring in fresh equity. Its banks own a quarter of its shares and State Bank of India (SBI.NS), its lead bank, refuses to lend more without an equity injection.
Kingfisher said last month it was in talks with Hong Kong-based distressed debt firm SC Lowy Financial for a possible investment. [ID:nL3E8CJ1G7]
The prospect of foreign funds flowing in has boosted shares of India's airlines, with Kingfisher up 7 percent since mid-January, when India's aviation ministry said it favored allowing foreign airlines to own up to 49 percent of local carriers. Shares in budget carrier Spicejet (SPJT.BO) are up 20 percent, and market leader Jet Airways (JET.NS) 29 percent.
But caution remains.
Citigroup said the probability of foreign carriers investing up to 49 percent is limited, given already sizeable market shares on key international routes into India and existing code-sharing agreements with major domestic carriers.
"In the short term, the only advantage of this news flow is that it could improve the perception of the credit quality of the aviation sector," Citi said in a research note.
The poor health of the nation's airlines prompted the federal government to take the first steps to open up the sector, even after it retreated from a similar plan that would have opened the supermarket segment to foreign investment.
The cabinet meets next week to decide the fate of the aviation ministry's proposal.
USUAL SUSPECTS
British Airways has long been touted as a candidate to pick up a stake in Kingfisher, which will this month join the UK-based airline in the global Oneworld alliance. Gulf-based Etihad, Emirates EMIRA.UL and Qatar Airways are also seen as potential investors in India.
"I think Kingfisher is going to attract more FDI attention because it is already into an air alliance, it's already partnering with international airlines. So I think any airline in that group can come up and pick up a stake," said Sharan Lillaney, an aviation analyst at Angel Broking in Mumbai.
CAPA's Kaul said once Kingfisher finds funding in the near-term -- it needs at least $400 million, he figures -- it will be easier to attract money in the future from foreign sources.
Malaysian long-haul budget carrier AirAsia (AIRA.KL), which plans to scrap unprofitable routes to Europe and India, could be interested in re-entering the Indian market, analysts said.
"Companies who want to create a global airline group, like Lufthansa (LHAG.DE), Singapore Airlines and Cathay Pacific (0293.HK), and Middle East carriers like Emirates and Etihad, I think most of these will be interested in entering India," Kaul said.
British Airways, Singapore Airlines and Lufthansa said separately they favor liberalized foreign investment rules in India, but could not comment on their potential interest before the proposal becomes law.
(Additional reporting by Tjibbe Hoekstra in AMSTERDAM, Praven Menon in DUBAI, Adveith Nair in LONDON, Maria Sheahan in FRANKFURT and Harry Suhartono in SINGAPORE; Editing by Tony Munroe and Ian Geoghegan)
full story
NEW DELHI | Fri Feb 3, 2012 5:12am EST
(Reuters) - Just because foreign airlines may soon be allowed to invest in India's battered carriers doesn't mean they will.
New Delhi's expected move to allow global airlines to own up to 49 percent in Indian carriers has been welcomed by investors as a potential lifeline for an industry mired in $20 billion of debt and on course to rack up $3 billion in annual losses.
But aviation industry experts say any celebration is premature.
"There's absolutely no reason to be bullish on airlines," said a Mumbai-based analyst with a local brokerage, who did not wish to be identified.
"Unless fuel and other dollar-denominated costs come down, nobody's going to invest in these companies, they're in such bad shape," he said, referring to a 16 percent decline in the rupee in 2011, which has driven up costs for local carriers.
Five of the country's six main operators are loss-making.
Taxes in India make jet fuel far more expensive than for global competitors. State-owned Air India, which is trying to restructure $4 billion in debt, has slashed fares, forcing competitors to follow suit.
Two carriers, IndiGo and Go Air, have between them ordered about 200 planes for more than $23 billion, adding capacity to a market where dozens of planes already sit grounded.
And changing ownership rules will do little to alter India's unappealing market dynamics or regulatory environment.
"Every airline will be interested in India because it's such a big market. But the environment should be conducive to the proper business processes," Akbar Al Baker, CEO of Qatar Airways, told Reuters recently.
India boasts the fastest growing passenger market in major economies, up 17 percent to almost 61 million people last year, and the potential is huge. With a comparable population, China's domestic air passenger market is five times the size of India's.
"This is going to be the most important market for the next two to three decades. They (foreign players) need to have a very credible India story," said Kapil Kaul, regional head of the Centre for Asia Pacific Aviation (CAPA), an aviation consulting firm.
But, while global giants like British Airways (ICAG.L), Singapore Airlines (SIAL.SI) and fast-growing carriers from the Gulf covet an Indian presence, they may see little advantage in committing capital without further regulatory and competitive changes.
Meanwhile, the global airline industry is not in the rudest of health as high fuel prices and sluggish economies in the United States and Europe crimp travel demand.
In December, the International Air Transport Association (IATA) warned airlines faced over $8 billion in overall losses this year if Europe's debt crisis spirals, and, even in a best-case scenario, the global industry was likely to see profits halve this year from nearly $7 billion in 2011.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
India's airline growth link.reuters.com/zum46s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
TOUGH MARKET
Indian carriers, burdened with debt, are desperately seeking foreign partners, which would not only provide funds but technical expertise and an enhanced route-map.
Kingfisher Airlines (KING.NS) is in the most need of a deep-pocketed partner. Controlled by liquor baron Vijay Mallya, it has failed in efforts to bring in fresh equity. Its banks own a quarter of its shares and State Bank of India (SBI.NS), its lead bank, refuses to lend more without an equity injection.
Kingfisher said last month it was in talks with Hong Kong-based distressed debt firm SC Lowy Financial for a possible investment. [ID:nL3E8CJ1G7]
The prospect of foreign funds flowing in has boosted shares of India's airlines, with Kingfisher up 7 percent since mid-January, when India's aviation ministry said it favored allowing foreign airlines to own up to 49 percent of local carriers. Shares in budget carrier Spicejet (SPJT.BO) are up 20 percent, and market leader Jet Airways (JET.NS) 29 percent.
But caution remains.
Citigroup said the probability of foreign carriers investing up to 49 percent is limited, given already sizeable market shares on key international routes into India and existing code-sharing agreements with major domestic carriers.
"In the short term, the only advantage of this news flow is that it could improve the perception of the credit quality of the aviation sector," Citi said in a research note.
The poor health of the nation's airlines prompted the federal government to take the first steps to open up the sector, even after it retreated from a similar plan that would have opened the supermarket segment to foreign investment.
The cabinet meets next week to decide the fate of the aviation ministry's proposal.
USUAL SUSPECTS
British Airways has long been touted as a candidate to pick up a stake in Kingfisher, which will this month join the UK-based airline in the global Oneworld alliance. Gulf-based Etihad, Emirates EMIRA.UL and Qatar Airways are also seen as potential investors in India.
"I think Kingfisher is going to attract more FDI attention because it is already into an air alliance, it's already partnering with international airlines. So I think any airline in that group can come up and pick up a stake," said Sharan Lillaney, an aviation analyst at Angel Broking in Mumbai.
CAPA's Kaul said once Kingfisher finds funding in the near-term -- it needs at least $400 million, he figures -- it will be easier to attract money in the future from foreign sources.
Malaysian long-haul budget carrier AirAsia (AIRA.KL), which plans to scrap unprofitable routes to Europe and India, could be interested in re-entering the Indian market, analysts said.
"Companies who want to create a global airline group, like Lufthansa (LHAG.DE), Singapore Airlines and Cathay Pacific (0293.HK), and Middle East carriers like Emirates and Etihad, I think most of these will be interested in entering India," Kaul said.
British Airways, Singapore Airlines and Lufthansa said separately they favor liberalized foreign investment rules in India, but could not comment on their potential interest before the proposal becomes law.
(Additional reporting by Tjibbe Hoekstra in AMSTERDAM, Praven Menon in DUBAI, Adveith Nair in LONDON, Maria Sheahan in FRANKFURT and Harry Suhartono in SINGAPORE; Editing by Tony Munroe and Ian Geoghegan)
full story
They're not Facebook, but social media stocks run up anyway
By Angela Moon and Doris Frankel
NEW YORK | Thu Feb 2, 2012 4:30pm EST
(Reuters) - The hype over Facebook's initial public offering has excited investors revisiting other social media companies, even though most of those stocks have plunged since the fanfare of their own IPOs.
Trading volume and options activity in stocks like Renren Inc, often called "the Facebook of China" and Quepasa Corp, a social media technology company focused on Latin audiences, have soared since the IPO news of the world's largest social network on Friday.
Neither company has the reach of Mark Zuckerberg's massively successful Facebook, but being in a similar business has been enough to bring investors looking to profit on quick trades.
Analysts warn that these other social media companies face significant headwinds and the sudden interest in related companies could hurt investors later.
"It's like the bright light on a hot summer night, attracting all the bugs," said James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania. Dailey does not own these stocks.
Facebook Inc filed for an initial public offering Wednesday that could value the social network between $75 billion and $100 billion, putting the company on track for one of the biggest U.S. stock-market debuts of all time.
The action in social media stocks of late may be instructive more in terms of the kind of frenzy that will erupt when Facebook actually starts trading, rather than a changed belief in the fundamentals of the other companies.
"Facebook will dwarf the combined capitalization of these names. Nonetheless, watching the demand for, and pricing of, out of the money calls in these names may be a proxy for the reception Facebook receives as it approaches listing," said Ralph Edwards, director of derivatives strategy at ITG Inc.
Quepasa, with a market capitalization of just $150 million, is up 20 percent since Friday to $4.40, after rising as much as 33 percent on the day of the news. Trading volume topped 354,624 shares the following Monday, a five-fold jump from its daily average of about 63,922 in the past 25 days.
Similarly, Renren shares are up about 31 percent since Friday, lately trading at $5.47. Trading volume surged to as much as 4.2 million shares earlier this week, compared to a daily average of 744,062 in the past 25 days.
Renren has lost 70 percent in stock value since its public trading debut on May 4. The company has a market capitalization of $2.2 billion.
"The speculative juice is ramping up, but I think investors are getting ahead of themselves," Dailey said.
LinkedIn Corp shares have also gained 6 percent since Friday, trading at $76.81. The stock is down about 19 percent from its NYSE debut on May 19.
OPTIONS GET EXPENSIVE
In the options market, the value of calls - contracts that give the investor the right to buy shares at a fixed price any time up until expiration - in Quepasa, Renren and other more well-known names like LinkedIn have become pricey.
In Quepasa, premiums in May $5 calls, one of the most actively traded options in the name over the past few days, rose as high as $1.10 a contract earlier in the week, compared to about 20 cents leading up to the Facebook IPO news, according to Interactive Brokers Group options analyst Caitlin Duffy. They stood at around 65 cents on Wednesday.
In Renren, premiums on actively traded Feb $6 calls rose as high as $1.15 on Tuesday, after trading at just 5-10 cents prior to the news. That's a hefty profit for an investor that bought calls at the cheap price and sold later at the higher value. The premium was at 30 cents on Wednesday.
Calls in Zynga Inc, which is about four times Renren in market capitalization, were also popular. On Monday, Zynga option volume was 2.5 times the average daily levels with 8,702 calls and 7,068 puts traded, Trade Alert said.
Zynga has been rallying of late because Facebook derives 12 percent of its revenue from the company.
Both Renren and Quepasa are viewed as companies highly susceptible to a short squeeze, according to Thomson Reuters StarMine.
"Although they are in a hot sector, it is hard to see how either of these stocks would benefit significantly from the Facebook IPO. Also, the fundamentals of these individual companies provide significant headwinds," said TD Ameritrade chief derivatives strategist J.J. Kinahan.
As of Wednesday's close, options volume on Renren was 2.7 times the average daily level with about 20,000 calls and 9,249 puts traded, data from options analytics Trade Alert showed.
In Quepasa, 837 calls and 201 puts changed hands on Wednesday. Quepasa is typically a thinly traded options name, averaging 471 calls and 82 puts per day, figures from Trade Alert showed.
"This (Quepasa) is not a stock that I look at everyday. I've never seen the volume surge like this before, and this will probably be the only time," Duffy said.
(Reporting By Angela Moon; Editing by Andrew Hay)
full story
NEW YORK | Thu Feb 2, 2012 4:30pm EST
(Reuters) - The hype over Facebook's initial public offering has excited investors revisiting other social media companies, even though most of those stocks have plunged since the fanfare of their own IPOs.
Trading volume and options activity in stocks like Renren Inc, often called "the Facebook of China" and Quepasa Corp, a social media technology company focused on Latin audiences, have soared since the IPO news of the world's largest social network on Friday.
Neither company has the reach of Mark Zuckerberg's massively successful Facebook, but being in a similar business has been enough to bring investors looking to profit on quick trades.
Analysts warn that these other social media companies face significant headwinds and the sudden interest in related companies could hurt investors later.
"It's like the bright light on a hot summer night, attracting all the bugs," said James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania. Dailey does not own these stocks.
Facebook Inc filed for an initial public offering Wednesday that could value the social network between $75 billion and $100 billion, putting the company on track for one of the biggest U.S. stock-market debuts of all time.
The action in social media stocks of late may be instructive more in terms of the kind of frenzy that will erupt when Facebook actually starts trading, rather than a changed belief in the fundamentals of the other companies.
"Facebook will dwarf the combined capitalization of these names. Nonetheless, watching the demand for, and pricing of, out of the money calls in these names may be a proxy for the reception Facebook receives as it approaches listing," said Ralph Edwards, director of derivatives strategy at ITG Inc.
Quepasa, with a market capitalization of just $150 million, is up 20 percent since Friday to $4.40, after rising as much as 33 percent on the day of the news. Trading volume topped 354,624 shares the following Monday, a five-fold jump from its daily average of about 63,922 in the past 25 days.
Similarly, Renren shares are up about 31 percent since Friday, lately trading at $5.47. Trading volume surged to as much as 4.2 million shares earlier this week, compared to a daily average of 744,062 in the past 25 days.
Renren has lost 70 percent in stock value since its public trading debut on May 4. The company has a market capitalization of $2.2 billion.
"The speculative juice is ramping up, but I think investors are getting ahead of themselves," Dailey said.
LinkedIn Corp shares have also gained 6 percent since Friday, trading at $76.81. The stock is down about 19 percent from its NYSE debut on May 19.
OPTIONS GET EXPENSIVE
In the options market, the value of calls - contracts that give the investor the right to buy shares at a fixed price any time up until expiration - in Quepasa, Renren and other more well-known names like LinkedIn have become pricey.
In Quepasa, premiums in May $5 calls, one of the most actively traded options in the name over the past few days, rose as high as $1.10 a contract earlier in the week, compared to about 20 cents leading up to the Facebook IPO news, according to Interactive Brokers Group options analyst Caitlin Duffy. They stood at around 65 cents on Wednesday.
In Renren, premiums on actively traded Feb $6 calls rose as high as $1.15 on Tuesday, after trading at just 5-10 cents prior to the news. That's a hefty profit for an investor that bought calls at the cheap price and sold later at the higher value. The premium was at 30 cents on Wednesday.
Calls in Zynga Inc, which is about four times Renren in market capitalization, were also popular. On Monday, Zynga option volume was 2.5 times the average daily levels with 8,702 calls and 7,068 puts traded, Trade Alert said.
Zynga has been rallying of late because Facebook derives 12 percent of its revenue from the company.
Both Renren and Quepasa are viewed as companies highly susceptible to a short squeeze, according to Thomson Reuters StarMine.
"Although they are in a hot sector, it is hard to see how either of these stocks would benefit significantly from the Facebook IPO. Also, the fundamentals of these individual companies provide significant headwinds," said TD Ameritrade chief derivatives strategist J.J. Kinahan.
As of Wednesday's close, options volume on Renren was 2.7 times the average daily level with about 20,000 calls and 9,249 puts traded, data from options analytics Trade Alert showed.
In Quepasa, 837 calls and 201 puts changed hands on Wednesday. Quepasa is typically a thinly traded options name, averaging 471 calls and 82 puts per day, figures from Trade Alert showed.
"This (Quepasa) is not a stock that I look at everyday. I've never seen the volume surge like this before, and this will probably be the only time," Duffy said.
(Reporting By Angela Moon; Editing by Andrew Hay)
full story
Sony names Hirai to replace Stringer as CEO
By Yoko Kubota and Liana B. Baker
TOKYO/NEW YORK | Wed Feb 1, 2012 3:40pm EST
(Reuters) - Sony Corp named Kazuo Hirai as chief executive, succeeding Howard Stringer at the helm of the iconic gadget maker as it struggles with persistent losses and stalled efforts to re-energize its once-dominant brand.
Hirai, a 28-year company veteran known for overseeing the phenomenal rise of the PlayStation gaming system in the United States, takes over as CEO and president on April 1.
Hirai, 51, was effectively anointed as Stringer's successor last March when he was promoted to head the company's consumer products and services businesses, which produce the bulk of Sony's $85 billion in annual sales.
"They've been grooming him for a while," said Dan Ernst, Hudson Square analyst. "I think he will carry on the plan for Sony -- as difficult as it is."
That plan hinges on turning around the company that has come under fire for losing the innovative edge behind products like the Walkman and Playstation, and ceding ground to rivals such as Apple Inc and Samsung Electronics as consumers snapped up their iPhones, iPods and Galaxy gadgets.
A chief concept in the strategy hinges on merging Sony's robust roster of entertainment properties -- including singers Kelly Clarkson and Michael Jackson, and the "Spider-Man" and "Men in Black" film franchises -- with its Vaio, Bravia and other electronics brands, in an effort to boost sales.
"He is fully on board with that plan," Ernst said of Hirai. "He implemented a lot of that in the PlayStation group and probably more than anyone at Sony."
Sony announced the changes ahead of its earnings report on Thursday, which is expected to show a net loss for the fourth year in a row as its TV division bleeds red ink.
The last year has been brutal for many Japanese companies, hit by a strong yen that hurt exports, and two natural disasters -- the March earthquake in Japan and record floods in Thailand.
Stringer will remain chairman of the company until June, when he will become chairman of the board of directors, a separate post that will not be directly involved in company management, Sony spokeswoman Mami Imada said. The are no plans to replace him in the chairman's role, she added.
The urbane Hirai will have to plot a course to revitalize the electronics giant as consumers lose interest in its products and gravitate instead towards smartphones and tablet PCs from other brand names.
Sony's shares have lost nearly two-thirds of their value since Welsh-born Stringer, who turns 70 later this month, took the helm as CEO and chairman in 2005 and the role of president in 2009.
In contrast, Apple shares have bounded ahead more than 1,000 percent, while Samsung, a maker of smartphones, flat panels and computer chips, is up more than 100 percent over the same period.
ANOINTED SUCCESSOR
Hirai made his name in the PlayStation video games division, once a key profit driver for Sony that fell into the red for four consecutive years until he took the reins and pulled it back into the black two years ago.
"The path we must take is clear," he said in a statement on Wednesday. "To drive the growth of our core electronics businesses -- primarily digital imaging, smart mobile and games; to turn around the television business; and to accelerate the innovation that enables us to create new business domains."
Stringer, a former journalist who ran U.S. broadcast company CBS, was brought in as a rare foreign CEO at a top Japanese company to shake things up and restore its innovative edge in consumer electronics. Many analysts, however, see his major achievement as cost cutting.
Stringer's restructuring efforts included selling off TV factories in Spain, Slovakia and Mexico and outsourcing more than half of its production to other companies, including Hon Hai Precision Industry, the contract electronics maker that also has Apple as its key customer.
In recent months, Sony exited an LCD panel joint venture with Samsung, which will allow it to procure screens for its TVs more cheaply.
It also agreed to buy out Ericsson's half of their smartphone venture for $1.5 billion to shore up its position in a market where Apple and Samsung have become leaders.
Sony's share of the flat-panel television market has been eroded by the rise of Samsung and a host of nimbler Asian players, while a hacking scandal last year undermined confidence in its management.
Many of Japan's other electronics titans have also stumbled in recent years. In the current reporting season, Nintendo and Sharp Corp both issued bigger-than-expected loss projections for the full year.
South Korean rivals such as Samsung have been particularly aggressive in investment and blessed with favorable currency movements, while Apple has stolen much of the innovative thunder that once emanated from Japan.
Sony reports third-quarter earnings on Thursday, when it is also due to brief the media on the management reshuffle.
Analysts polled by Thomson Reuters I/B/E/S gave a consensus forecast of just 8.8 billion yen ($115.41 million) in operating profit for the key October-December quarter, when consumers spend heavily on gadgets for year-end gift giving, and 8.2 billion yen for the full financial year to March.
Sony's shares listed in the U.S. rose 0.6 percent on Wednesday while its shares in Japan closed trading about 2 percent lower at 1364 yen. ($1=76.25 yen)
(Additional reporting by Reiji Murai, Nobuhiro Kubo; Writing by Franklin Paul, Editing by Ed Klamann, Gunna Dickson and Mark Porter)
full story
TOKYO/NEW YORK | Wed Feb 1, 2012 3:40pm EST
(Reuters) - Sony Corp named Kazuo Hirai as chief executive, succeeding Howard Stringer at the helm of the iconic gadget maker as it struggles with persistent losses and stalled efforts to re-energize its once-dominant brand.
Hirai, a 28-year company veteran known for overseeing the phenomenal rise of the PlayStation gaming system in the United States, takes over as CEO and president on April 1.
Hirai, 51, was effectively anointed as Stringer's successor last March when he was promoted to head the company's consumer products and services businesses, which produce the bulk of Sony's $85 billion in annual sales.
"They've been grooming him for a while," said Dan Ernst, Hudson Square analyst. "I think he will carry on the plan for Sony -- as difficult as it is."
That plan hinges on turning around the company that has come under fire for losing the innovative edge behind products like the Walkman and Playstation, and ceding ground to rivals such as Apple Inc and Samsung Electronics as consumers snapped up their iPhones, iPods and Galaxy gadgets.
A chief concept in the strategy hinges on merging Sony's robust roster of entertainment properties -- including singers Kelly Clarkson and Michael Jackson, and the "Spider-Man" and "Men in Black" film franchises -- with its Vaio, Bravia and other electronics brands, in an effort to boost sales.
"He is fully on board with that plan," Ernst said of Hirai. "He implemented a lot of that in the PlayStation group and probably more than anyone at Sony."
Sony announced the changes ahead of its earnings report on Thursday, which is expected to show a net loss for the fourth year in a row as its TV division bleeds red ink.
The last year has been brutal for many Japanese companies, hit by a strong yen that hurt exports, and two natural disasters -- the March earthquake in Japan and record floods in Thailand.
Stringer will remain chairman of the company until June, when he will become chairman of the board of directors, a separate post that will not be directly involved in company management, Sony spokeswoman Mami Imada said. The are no plans to replace him in the chairman's role, she added.
The urbane Hirai will have to plot a course to revitalize the electronics giant as consumers lose interest in its products and gravitate instead towards smartphones and tablet PCs from other brand names.
Sony's shares have lost nearly two-thirds of their value since Welsh-born Stringer, who turns 70 later this month, took the helm as CEO and chairman in 2005 and the role of president in 2009.
In contrast, Apple shares have bounded ahead more than 1,000 percent, while Samsung, a maker of smartphones, flat panels and computer chips, is up more than 100 percent over the same period.
ANOINTED SUCCESSOR
Hirai made his name in the PlayStation video games division, once a key profit driver for Sony that fell into the red for four consecutive years until he took the reins and pulled it back into the black two years ago.
"The path we must take is clear," he said in a statement on Wednesday. "To drive the growth of our core electronics businesses -- primarily digital imaging, smart mobile and games; to turn around the television business; and to accelerate the innovation that enables us to create new business domains."
Stringer, a former journalist who ran U.S. broadcast company CBS, was brought in as a rare foreign CEO at a top Japanese company to shake things up and restore its innovative edge in consumer electronics. Many analysts, however, see his major achievement as cost cutting.
Stringer's restructuring efforts included selling off TV factories in Spain, Slovakia and Mexico and outsourcing more than half of its production to other companies, including Hon Hai Precision Industry, the contract electronics maker that also has Apple as its key customer.
In recent months, Sony exited an LCD panel joint venture with Samsung, which will allow it to procure screens for its TVs more cheaply.
It also agreed to buy out Ericsson's half of their smartphone venture for $1.5 billion to shore up its position in a market where Apple and Samsung have become leaders.
Sony's share of the flat-panel television market has been eroded by the rise of Samsung and a host of nimbler Asian players, while a hacking scandal last year undermined confidence in its management.
Many of Japan's other electronics titans have also stumbled in recent years. In the current reporting season, Nintendo and Sharp Corp both issued bigger-than-expected loss projections for the full year.
South Korean rivals such as Samsung have been particularly aggressive in investment and blessed with favorable currency movements, while Apple has stolen much of the innovative thunder that once emanated from Japan.
Sony reports third-quarter earnings on Thursday, when it is also due to brief the media on the management reshuffle.
Analysts polled by Thomson Reuters I/B/E/S gave a consensus forecast of just 8.8 billion yen ($115.41 million) in operating profit for the key October-December quarter, when consumers spend heavily on gadgets for year-end gift giving, and 8.2 billion yen for the full financial year to March.
Sony's shares listed in the U.S. rose 0.6 percent on Wednesday while its shares in Japan closed trading about 2 percent lower at 1364 yen. ($1=76.25 yen)
(Additional reporting by Reiji Murai, Nobuhiro Kubo; Writing by Franklin Paul, Editing by Ed Klamann, Gunna Dickson and Mark Porter)
full story
Apple hires Dixons chief to drive global retail
By James Davey and Poornima Gupta
LONDON/SAN FRANCISCO | Tue Jan 31, 2012 6:21pm EST
(Reuters) - Apple Inc has hired Dixons Chief Executive John Browett, who revived the British electronics retailer by emphasizing customer service, to lead the iPad maker's global retail expansion.
Apple chief Tim Cook, making his first high-profile hire since taking the helm of the world's largest technology company, lured the well-regarded industry executive to fill a critical post once held by Ron Johnson, another outsider who left Target Corp to join Apple in 2000.
Johnson resigned from Apple last November to join retailer J.C. Penney Co Inc as chief executive.
Browett, Dixons' CEO since 2007, was previously chief executive of Tesco Plc's successful online shopping site. He will oversee Apple's retail strategy and the expansion of its stores around the world, from the current total of around 300.
The executive, credited with freshening Dixons' image with innovative marketing -- including an advertising campaign featuring Darth Vader -- joins Apple as the Silicon Valley giant eyes markets abroad to sustain its growth.
"An outsider with international experience will help guide Apple's global expansion strategy," said RBC Capital Markets analyst Mike Abramsky. "His experience includes localizing stores for multiple countries."
On Johnson's watch, Apple opened its first retail outlet -- in McLean, Virginia -- in May 2001. It now has a chain of more than 300 stores, which generated an average of $34.1 million each in fiscal 2010 and accounted for 15 percent of the company's net sales.
"(Browett)'s got big shoes to fill," said BGC Partners analyst Colin Gillis. "Ron Johnson drove the Apple store as a customer experience with a positive halo effect for the business."
Wall Street views Apple's stores as an important advantage in competing with rivals Google Inc and Amazon.com Inc as well as other traditional PC makers.
"Our retail stores are all about customer service, and John shares that commitment like no one else we've met," said Cook.
INTERNATIONAL EXPANSION
Apple's retail success is likely to keep growing over the next few quarters as huge numbers of consumers continue to snap up the company's popular iPhones and iPads. Apple sold 37 million iPhones and more than 15 million iPads during the last quarter, and its cash balance swelled to nearly $100 billion by the end of 2011.
Last week, Apple posted quarterly results ahead of market expectations.
Browett's appointment has sparked speculation in some quarters that Apple may be planning a push in its retail operations in Europe, where his expertise is greatest.
But Gillis said that while Browett's international experience is helpful, he did not appear to have the relevant expertise in Apple's key growth markets in Asia.
In October, Best Buy abandoned plans for a chain of European megastores, while Kesa Electricals, Europe's No. 3 player, effectively paid a bidder to take the British money-losing Comet chain off its hands.
Both companies, as well as Home Retail's Argos business, have struggled to compete with Dixons in the UK as Browett revamped stores, focused on more popular megastores and improved product ranges with a mantra of improving the shopping trip for customers.
Shares of Dixons Retail, Europe's second-largest electronics retailer and owner of the Currys and PC World chains in Britain, fell on Tuesday following the news that Browett would leave in April to join the world's leading smartphone maker as senior vice president of retail, based in California.
Dixons, which also runs Elkjop in Nordic countries, UniEuro in Italy and Kotsovolos in Greece, said Sebastian James would succeed Browett.
James, who was instrumental in executing much of Dixons' turnaround plan, is the company's operations director and a former strategy director at mother and baby products retailer Mothercare.
"We understand that the (Dixons) board had already carried out external bench-marking as part of its succession plans, and had decided that internal candidates would provide the best solution," said Investec analyst David Jeary.
Dixons shares, which rose more than 50 percent in the last month after the well-received Christmas trading update, were down 8.7 percent at 13.95 pence. Apple was up 0.25 percent at $454.12 in afternoon Nasdaq trading in New York.
(Additional reporting by Yinka Adegoke in New York and Juhi Arora in Bangalore; Editing by Elaine Hardcastle, Chris Wickham and Lisa Von Ahn)
full story
LONDON/SAN FRANCISCO | Tue Jan 31, 2012 6:21pm EST
(Reuters) - Apple Inc has hired Dixons Chief Executive John Browett, who revived the British electronics retailer by emphasizing customer service, to lead the iPad maker's global retail expansion.
Apple chief Tim Cook, making his first high-profile hire since taking the helm of the world's largest technology company, lured the well-regarded industry executive to fill a critical post once held by Ron Johnson, another outsider who left Target Corp to join Apple in 2000.
Johnson resigned from Apple last November to join retailer J.C. Penney Co Inc as chief executive.
Browett, Dixons' CEO since 2007, was previously chief executive of Tesco Plc's successful online shopping site. He will oversee Apple's retail strategy and the expansion of its stores around the world, from the current total of around 300.
The executive, credited with freshening Dixons' image with innovative marketing -- including an advertising campaign featuring Darth Vader -- joins Apple as the Silicon Valley giant eyes markets abroad to sustain its growth.
"An outsider with international experience will help guide Apple's global expansion strategy," said RBC Capital Markets analyst Mike Abramsky. "His experience includes localizing stores for multiple countries."
On Johnson's watch, Apple opened its first retail outlet -- in McLean, Virginia -- in May 2001. It now has a chain of more than 300 stores, which generated an average of $34.1 million each in fiscal 2010 and accounted for 15 percent of the company's net sales.
"(Browett)'s got big shoes to fill," said BGC Partners analyst Colin Gillis. "Ron Johnson drove the Apple store as a customer experience with a positive halo effect for the business."
Wall Street views Apple's stores as an important advantage in competing with rivals Google Inc and Amazon.com Inc as well as other traditional PC makers.
"Our retail stores are all about customer service, and John shares that commitment like no one else we've met," said Cook.
INTERNATIONAL EXPANSION
Apple's retail success is likely to keep growing over the next few quarters as huge numbers of consumers continue to snap up the company's popular iPhones and iPads. Apple sold 37 million iPhones and more than 15 million iPads during the last quarter, and its cash balance swelled to nearly $100 billion by the end of 2011.
Last week, Apple posted quarterly results ahead of market expectations.
Browett's appointment has sparked speculation in some quarters that Apple may be planning a push in its retail operations in Europe, where his expertise is greatest.
But Gillis said that while Browett's international experience is helpful, he did not appear to have the relevant expertise in Apple's key growth markets in Asia.
In October, Best Buy abandoned plans for a chain of European megastores, while Kesa Electricals, Europe's No. 3 player, effectively paid a bidder to take the British money-losing Comet chain off its hands.
Both companies, as well as Home Retail's Argos business, have struggled to compete with Dixons in the UK as Browett revamped stores, focused on more popular megastores and improved product ranges with a mantra of improving the shopping trip for customers.
Shares of Dixons Retail, Europe's second-largest electronics retailer and owner of the Currys and PC World chains in Britain, fell on Tuesday following the news that Browett would leave in April to join the world's leading smartphone maker as senior vice president of retail, based in California.
Dixons, which also runs Elkjop in Nordic countries, UniEuro in Italy and Kotsovolos in Greece, said Sebastian James would succeed Browett.
James, who was instrumental in executing much of Dixons' turnaround plan, is the company's operations director and a former strategy director at mother and baby products retailer Mothercare.
"We understand that the (Dixons) board had already carried out external bench-marking as part of its succession plans, and had decided that internal candidates would provide the best solution," said Investec analyst David Jeary.
Dixons shares, which rose more than 50 percent in the last month after the well-received Christmas trading update, were down 8.7 percent at 13.95 pence. Apple was up 0.25 percent at $454.12 in afternoon Nasdaq trading in New York.
(Additional reporting by Yinka Adegoke in New York and Juhi Arora in Bangalore; Editing by Elaine Hardcastle, Chris Wickham and Lisa Von Ahn)
full story
Japanese carmaker Honda's Q3 seen hit by disasters, yen
By Chang-Ran Kim
TOKYO | Mon Jan 30, 2012 5:29pm EST
(Reuters) - Honda Motor Co (7267.T) is expected to report a double-digit slide in quarterly operating profit on Tuesday and forecast a still larger drop for the full year, as natural disasters in Japan and Thailand hit it harder than rivals.
Japan's No.3 automaker was the slowest to recover from supply-chain disruptions after the earthquake and tsunami in March, while it was alone in having a car factory inundated by the historic floods in Thailand, Southeast Asia's export hub.
That is expected to push Honda's October-December operating profit down 35 percent to 81 billion yen ($1.06 billion), according to a poll of nine analysts by Reuters.
Honda's announcement is being closely watched after the company withdrew its guidance in October citing uncertainty over when production could resume in Thailand. Honda is the first Japanese automaker to report third-quarter earnings, and is also expected to provide an update on Thai production on Tuesday.
In 2011, Honda's global output dropped by a fifth to 2.909 million cars, slipping below 3 million for the first time in eight years. All other Japanese automakers, except Nissan Motor Co (7201.T), built fewer cars also, but the falls were much smaller than at Honda.
For the year to March 31, 2012, forecasts from 24 analysts polled by Thomson Reuters I/B/E/S put Honda's annual operating profit at 283 billion yen, down 50 percent from 2010-11 when it was hit by the yen's rise against the dollar and euro.
The consensus forecast is slightly higher than the 270 billion yen Honda projected in August.
With production steadily recovering in the final months of 2011, investors have turned their attention to an anticipated jump in sales as Honda restocks its depleted inventory.
So far this year, its shares are the best performer among Japanese automakers, rising 14.2 percent as of Monday. Tokyo's auto sector index .ITEQP.T has gained 8.9 percent.
LONGER-TERM WORRIES
Still, concern has lingered over whether Honda might be losing its edge after a new version of its top-selling Civic was heavily criticized for its styling and interior in the United States, its biggest market, last year.
Competition in the United States is set to heat up this year as resurgent local giants Ford Motor Co (F.N) and General Motors Co (GM.N) and South Korea's fast-rising Hyundai Motor Co (005380.KS) flex their muscles in the sedan segment previously dominated by Honda and Toyota Motor Corp (7203.T).
While acknowledging the criticisms of the revamped Civic, Honda Chief Executive Takanobu Ito stressed this month that the car had topped the country's compact sedan segment in the latest quarter, outselling Toyota's Corolla.
Honda is targeting a 25 percent jump in its U.S. sales this calendar year. To this aim, it is shoring up its struggling Acura premium brand.
Honda is scheduled to announce its results at 3 p.m. (0600 GMT) in Tokyo.
Domestic rivals Toyota and Nissan are scheduled to announce third-quarter earnings on February 7 and 8, respectively. ($1 = 76.7350 Japanese yen)
(Editing by Muralikumar Anantharaman)
full story
TOKYO | Mon Jan 30, 2012 5:29pm EST
(Reuters) - Honda Motor Co (7267.T) is expected to report a double-digit slide in quarterly operating profit on Tuesday and forecast a still larger drop for the full year, as natural disasters in Japan and Thailand hit it harder than rivals.
Japan's No.3 automaker was the slowest to recover from supply-chain disruptions after the earthquake and tsunami in March, while it was alone in having a car factory inundated by the historic floods in Thailand, Southeast Asia's export hub.
That is expected to push Honda's October-December operating profit down 35 percent to 81 billion yen ($1.06 billion), according to a poll of nine analysts by Reuters.
Honda's announcement is being closely watched after the company withdrew its guidance in October citing uncertainty over when production could resume in Thailand. Honda is the first Japanese automaker to report third-quarter earnings, and is also expected to provide an update on Thai production on Tuesday.
In 2011, Honda's global output dropped by a fifth to 2.909 million cars, slipping below 3 million for the first time in eight years. All other Japanese automakers, except Nissan Motor Co (7201.T), built fewer cars also, but the falls were much smaller than at Honda.
For the year to March 31, 2012, forecasts from 24 analysts polled by Thomson Reuters I/B/E/S put Honda's annual operating profit at 283 billion yen, down 50 percent from 2010-11 when it was hit by the yen's rise against the dollar and euro.
The consensus forecast is slightly higher than the 270 billion yen Honda projected in August.
With production steadily recovering in the final months of 2011, investors have turned their attention to an anticipated jump in sales as Honda restocks its depleted inventory.
So far this year, its shares are the best performer among Japanese automakers, rising 14.2 percent as of Monday. Tokyo's auto sector index .ITEQP.T has gained 8.9 percent.
LONGER-TERM WORRIES
Still, concern has lingered over whether Honda might be losing its edge after a new version of its top-selling Civic was heavily criticized for its styling and interior in the United States, its biggest market, last year.
Competition in the United States is set to heat up this year as resurgent local giants Ford Motor Co (F.N) and General Motors Co (GM.N) and South Korea's fast-rising Hyundai Motor Co (005380.KS) flex their muscles in the sedan segment previously dominated by Honda and Toyota Motor Corp (7203.T).
While acknowledging the criticisms of the revamped Civic, Honda Chief Executive Takanobu Ito stressed this month that the car had topped the country's compact sedan segment in the latest quarter, outselling Toyota's Corolla.
Honda is targeting a 25 percent jump in its U.S. sales this calendar year. To this aim, it is shoring up its struggling Acura premium brand.
Honda is scheduled to announce its results at 3 p.m. (0600 GMT) in Tokyo.
Domestic rivals Toyota and Nissan are scheduled to announce third-quarter earnings on February 7 and 8, respectively. ($1 = 76.7350 Japanese yen)
(Editing by Muralikumar Anantharaman)
full story
Eastman Chemical to buy Solutia for $3.4 billion
By Matt Daily and Vaishnavi Bala
Fri Jan 27, 2012 11:26am EST
(Reuters) - Eastman Chemical (EMN.N) is buying Solutia Inc (SOA.N), chemicals provider for products from iPads to tires, for about $3.4 billion in cash and stock in a bid to drive its sluggish growth and focus on emerging markets, particularly the Asia-Pacific region.
The deal values Solutia shares at a 42 percent premium over Thursday's closing price and was viewed as a good deal by Eastman investors, lifting its shares by 6 percent in morning trading on the New York Stock Exchange.
Solutia, which emerged from bankruptcy in 2008, generated about 30 percent of its revenue in Asia-Pacific countries last year, and it expects that to grow by a third by 2015.
"I don't think people expected it," said Eric Green, senior managing partner at Penn Capital Management, which owns 0.6 percent of Solutia shares.
"The stock is cheap and business is getting better. ... They are leveraged to the Chinese auto market which is continuously getting better," he added.
After years of modest growth, Eastman is now expanding its lucrative specialty plastics and wood applications businesses, and its shares are up about 15 percent in the past 12 months.
"Solutia has transformed itself into a financially strong, innovative performance materials and specialty chemicals company, with enviable market leading positions in virtually every market it serves," Eastman Chief Executive Officer Jim Rogers said in a statement announcing the deal.
The deal calls for Eastman to pay $22.00 in cash and 0.12 of a share for each Solutia share, or about $27.65 based on Thursday's close.
Solutia has 122 million shares outstanding, according to Thomson Reuters data, which would mean Eastman is paying about $2.69 billion in cash and $690 million in stock for the company.
The merger would add to earnings immediately, Eastman said, and the combined company would save about $100 million a year in costs by the end of 2013. The companies expect the deal to close around midyear.
Eastman said it now expects 2012 earnings to be around $5 a share, excluding acquisition-related costs and charges. It raised its 2013 earnings forecast to more than $6 per share.
Jefferies analyst Laurence Alexander said in a research note that the deal, along with Westlake Chemical's (WLK.N) recent bid for Georgia Gulf Corp (GGC.N), reflects a move toward consolidation among specialty chemical companies.
Alexander said that other companies generally thought to also be takeover candidates include Albemarle (ALB.N), Celanese (CE.N), Cytec (CYT.N), Huntsman (HUN.N), OMNOVA Solutions (OMN.N), and W.R. Grace (GRA.N).
Including debt, the Solutia deal is valued at about $4.7 billion, Eastman said. It plans to pay for Solutia with cash on hand, shares and debt.
The deal does not include a financing contingency, Eastman said, meaning the company would have to close on the deal even if it is not able to get banks to fund the purchase. Solutia would have to pay a break-up fee of $102 million if it walks away from the deal.
Eastman Chemical was formed in 1994, when Eastman Kodak (EKDKQ.PK) spun off its chemical business to help pay down debt. Kodak filed for bankruptcy earlier this month.
Citi (C.N) and Barclays Capital (BARC.L) are financial advisers to Eastman, while Deutsche Bank Securities (DBKGn.DE), Moelis & Co LLC and The Valence Group advised Solutia.
Shares in Eastman were up 6.1 percent to $50.00, while Solutia shares rallied 40 percent to $27.30.
(Reporting by Matt Daily in New York and Vaishnavi Bala in Bangalore, Additional reporting byMichael Erman in New York; Editing by Sriraj Kalluvila, Lisa Von Ahn and Mark Porter)
full story
Fri Jan 27, 2012 11:26am EST
(Reuters) - Eastman Chemical (EMN.N) is buying Solutia Inc (SOA.N), chemicals provider for products from iPads to tires, for about $3.4 billion in cash and stock in a bid to drive its sluggish growth and focus on emerging markets, particularly the Asia-Pacific region.
The deal values Solutia shares at a 42 percent premium over Thursday's closing price and was viewed as a good deal by Eastman investors, lifting its shares by 6 percent in morning trading on the New York Stock Exchange.
Solutia, which emerged from bankruptcy in 2008, generated about 30 percent of its revenue in Asia-Pacific countries last year, and it expects that to grow by a third by 2015.
"I don't think people expected it," said Eric Green, senior managing partner at Penn Capital Management, which owns 0.6 percent of Solutia shares.
"The stock is cheap and business is getting better. ... They are leveraged to the Chinese auto market which is continuously getting better," he added.
After years of modest growth, Eastman is now expanding its lucrative specialty plastics and wood applications businesses, and its shares are up about 15 percent in the past 12 months.
"Solutia has transformed itself into a financially strong, innovative performance materials and specialty chemicals company, with enviable market leading positions in virtually every market it serves," Eastman Chief Executive Officer Jim Rogers said in a statement announcing the deal.
The deal calls for Eastman to pay $22.00 in cash and 0.12 of a share for each Solutia share, or about $27.65 based on Thursday's close.
Solutia has 122 million shares outstanding, according to Thomson Reuters data, which would mean Eastman is paying about $2.69 billion in cash and $690 million in stock for the company.
The merger would add to earnings immediately, Eastman said, and the combined company would save about $100 million a year in costs by the end of 2013. The companies expect the deal to close around midyear.
Eastman said it now expects 2012 earnings to be around $5 a share, excluding acquisition-related costs and charges. It raised its 2013 earnings forecast to more than $6 per share.
Jefferies analyst Laurence Alexander said in a research note that the deal, along with Westlake Chemical's (WLK.N) recent bid for Georgia Gulf Corp (GGC.N), reflects a move toward consolidation among specialty chemical companies.
Alexander said that other companies generally thought to also be takeover candidates include Albemarle (ALB.N), Celanese (CE.N), Cytec (CYT.N), Huntsman (HUN.N), OMNOVA Solutions (OMN.N), and W.R. Grace (GRA.N).
Including debt, the Solutia deal is valued at about $4.7 billion, Eastman said. It plans to pay for Solutia with cash on hand, shares and debt.
The deal does not include a financing contingency, Eastman said, meaning the company would have to close on the deal even if it is not able to get banks to fund the purchase. Solutia would have to pay a break-up fee of $102 million if it walks away from the deal.
Eastman Chemical was formed in 1994, when Eastman Kodak (EKDKQ.PK) spun off its chemical business to help pay down debt. Kodak filed for bankruptcy earlier this month.
Citi (C.N) and Barclays Capital (BARC.L) are financial advisers to Eastman, while Deutsche Bank Securities (DBKGn.DE), Moelis & Co LLC and The Valence Group advised Solutia.
Shares in Eastman were up 6.1 percent to $50.00, while Solutia shares rallied 40 percent to $27.30.
(Reporting by Matt Daily in New York and Vaishnavi Bala in Bangalore, Additional reporting byMichael Erman in New York; Editing by Sriraj Kalluvila, Lisa Von Ahn and Mark Porter)
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Netflix wins over Wall Street with subscriber growth
Thu Jan 26, 2012 1:34pm EST
(Reuters) - Netflix Inc won back Wall Street's affections on Thursday after adding more U.S. subscribers than expected in the fourth quarter, a rebound that prompted analyst upgrades and the company's biggest one-day stock jump in two years.
The Los Gatos, California-based company's shares soared 23.5 percent to $117.40 in afternoon trading. Shares had dropped to a year's low of $62.37 on November 30.
Analysts at Citigroup, Barclays and J.P. Morgan Securities raised their price targets for Netflix. The fourth-quarter gain of more than 600,000 U.S. customers may help alleviate concerns about the company's ability to gain new business after a series of high-profile missteps, they said.
Citigroup also upgraded the stock to "buy" from "neutral."
Other analysts maintained their price targets, urging caution in the face of growing competition including a potential stand-alone offering of Amazon.com Inc's video streaming product at a lower price.
"We believe Netflix was a bit dismissive of the potential competitive threat here, but the degree of risk almost entirely depends on whether Amazon would approach such a service with its existing content library, or whether it would be willing to step up spending dramatically to acquire more content," JP Morgan analyst Doug Anmuth said in a client note.
He said that in the end, competition with Amazon would not be good for the shares of either company.
On Wednesday, Netflix management acknowledged the competitive landscape. In a letter to shareholders, Netflix Chief Executive Reed Hastings shrugged off the threat from Amazon.com and Hulu Plus and said both services offered far less content. The greatest competition will come from cable networks going mobile, he said.
Thursday's share gains represented the biggest one-day jump for Netflix since January 2010, when the stock rose 23 percent after better-than-expected earnings and a bullish subscriber forecast.
Still, it would take a major positive run for Netflix to return to its former heights as a Wall Street darling, as recently as seven months ago when its shares peaked at $304 on July 13.
Netflix, which outraged customers with a surprising price increase and a botched attempt to split off its DVD-by-mail service in 2011, added 610,000 net new subscribers in its home U.S. market in the fourth quarter, helping revenue leap 47 percent to $876 million.
Total U.S. subscribers stood at 24.4 million at the end of December, still below the 24.6 million the company boasted at the end of June.
As the company shifts customers from its DVD-by-mail service onto instant streaming, Netflix has been writing ever-heftier checks to acquire more TV programs and movies for its streaming service. The company said it will operate with a loss for a few quarters this year while it expands in Latin America, Britain and Ireland.
(Reporting by Supantha Mukherjee in Bangalore, Yinka Adegoke in New York and Lisa Richwine in Los Angeles; Editing by Maureen Bavdek and Gunna Dickson)
full story
(Reuters) - Netflix Inc won back Wall Street's affections on Thursday after adding more U.S. subscribers than expected in the fourth quarter, a rebound that prompted analyst upgrades and the company's biggest one-day stock jump in two years.
The Los Gatos, California-based company's shares soared 23.5 percent to $117.40 in afternoon trading. Shares had dropped to a year's low of $62.37 on November 30.
Analysts at Citigroup, Barclays and J.P. Morgan Securities raised their price targets for Netflix. The fourth-quarter gain of more than 600,000 U.S. customers may help alleviate concerns about the company's ability to gain new business after a series of high-profile missteps, they said.
Citigroup also upgraded the stock to "buy" from "neutral."
Other analysts maintained their price targets, urging caution in the face of growing competition including a potential stand-alone offering of Amazon.com Inc's video streaming product at a lower price.
"We believe Netflix was a bit dismissive of the potential competitive threat here, but the degree of risk almost entirely depends on whether Amazon would approach such a service with its existing content library, or whether it would be willing to step up spending dramatically to acquire more content," JP Morgan analyst Doug Anmuth said in a client note.
He said that in the end, competition with Amazon would not be good for the shares of either company.
On Wednesday, Netflix management acknowledged the competitive landscape. In a letter to shareholders, Netflix Chief Executive Reed Hastings shrugged off the threat from Amazon.com and Hulu Plus and said both services offered far less content. The greatest competition will come from cable networks going mobile, he said.
Thursday's share gains represented the biggest one-day jump for Netflix since January 2010, when the stock rose 23 percent after better-than-expected earnings and a bullish subscriber forecast.
Still, it would take a major positive run for Netflix to return to its former heights as a Wall Street darling, as recently as seven months ago when its shares peaked at $304 on July 13.
Netflix, which outraged customers with a surprising price increase and a botched attempt to split off its DVD-by-mail service in 2011, added 610,000 net new subscribers in its home U.S. market in the fourth quarter, helping revenue leap 47 percent to $876 million.
Total U.S. subscribers stood at 24.4 million at the end of December, still below the 24.6 million the company boasted at the end of June.
As the company shifts customers from its DVD-by-mail service onto instant streaming, Netflix has been writing ever-heftier checks to acquire more TV programs and movies for its streaming service. The company said it will operate with a loss for a few quarters this year while it expands in Latin America, Britain and Ireland.
(Reporting by Supantha Mukherjee in Bangalore, Yinka Adegoke in New York and Lisa Richwine in Los Angeles; Editing by Maureen Bavdek and Gunna Dickson)
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Morgan Stanley CEO sees better markets in 2012
NEW YORK | Wed Jan 25, 2012 12:14pm EST
(Reuters) - Capital markets in 2012 are better than they were in 2011, Morgan Stanley Chief Executive James Gorman said on Wednesday, adding that his bank is in a "very good position for Basel III standards."
Gorman, speaking to CNBC from Davos, Switzerland, said confidence will rise after euro zone stability improves, while stressing that Morgan Stanley (MS.N) is in a very solid position. "If you had all sovereigns, all corporates and all financial institutions blow up in Europe at the same time, Morgan Stanley would still be fine," he said.
Gorman also said Morgan Stanley would not need to raise capital in the near term. Morgan Stanley's capital levels have been a concern for investors because it will need to comply with new, stricter rules set by the Basel Committee and U.S. regulators.
The Basel III accord, agreed to by the Basel Committee, an international group of regulators, will require banks to hold at least 7 percent of core Tier 1 capital in the form of retained earnings or pure equity.
There are also concerns because Morgan Stanley may need a big chunk of cash to purchase the next stake of its Morgan Stanley Smith Barney venture from Citigroup Inc (C.N).
Morgan Stanley currently owns 51 percent of the wealth management business and has the option to buy another 14 percent in May at fair market value. Gorman reiterated his commitment to buy the business on Wednesday, a purchase he said will take a priority over stock buybacks or dividends in the near-term.
full story
(Reuters) - Capital markets in 2012 are better than they were in 2011, Morgan Stanley Chief Executive James Gorman said on Wednesday, adding that his bank is in a "very good position for Basel III standards."
Gorman, speaking to CNBC from Davos, Switzerland, said confidence will rise after euro zone stability improves, while stressing that Morgan Stanley (MS.N) is in a very solid position. "If you had all sovereigns, all corporates and all financial institutions blow up in Europe at the same time, Morgan Stanley would still be fine," he said.
Gorman also said Morgan Stanley would not need to raise capital in the near term. Morgan Stanley's capital levels have been a concern for investors because it will need to comply with new, stricter rules set by the Basel Committee and U.S. regulators.
The Basel III accord, agreed to by the Basel Committee, an international group of regulators, will require banks to hold at least 7 percent of core Tier 1 capital in the form of retained earnings or pure equity.
There are also concerns because Morgan Stanley may need a big chunk of cash to purchase the next stake of its Morgan Stanley Smith Barney venture from Citigroup Inc (C.N).
Morgan Stanley currently owns 51 percent of the wealth management business and has the option to buy another 14 percent in May at fair market value. Gorman reiterated his commitment to buy the business on Wednesday, a purchase he said will take a priority over stock buybacks or dividends in the near-term.
full story
Italy's Salini weighs bid for Impregilo: source
By Danilo Masoni
MILAN | Tue Jan 24, 2012 8:00am EST
(Reuters) - Italian builder Salini is considering bidding for its billion-euro rival Impregilo (IPGI.MI) if they can't agree a merger to create a national champion in the construction sector, a source close to the matter said.
Salini Chief Executive Pietro Salini said in an interview in December that his family-controlled group was studying a plan to merge with Impregilo to create an entity that was technically and financially fit for international markets.
Though it has built a stake of 15 percent over the last few months, Salini's ambitions are opposed by the Gavio family, which controls Impregilo with the Benettons and has close links to powerful investment bank Mediobanca (MDBI.MI).
"Salini is absolutely open to involving the Gavios. It would be natural for everyone to consider other proposals that can pave the way for an agreement," the source told Reuters on condition of anonymity, adding that so far Salini and Gavio had not met to discuss the plans.
"A takeover is certainly one of the alternatives. An option that can be (financially) handled," the source said.
Salini declined to comment.
Another option for Salini is to seek shareholder support for its plan at the next annual meeting in spring, the source said.
The Italian construction sector is highly fragmented and some bankers say consolidation may help builders better cope with aggressive competition abroad and a recession at home.
A Salini takeover of Italy's biggest construction group would likely trigger a sale of Impregilo's controlling stake in Brazilian motorway group Ecorodovias (ECOR3.SA) and of its loss-making Fisia engineering unit.
A study by a global consultancy firm hired by Salini estimated recurrent annual merger synergies of 100 million euros, from a combination of more accurate bid pricing, central cost cuts and higher bidding success in three years, two sources said.
A combined Salini-Impregilo, worth roughly 2 billion euros ($2.6 billion), would be among Europe's 15 biggest builders by capitalization, on a ladder where Vinci (SGEF.PA) and Bouygues (BOUY.PA) of France and ACS (ACS.MC) of Spain occupy the top three rungs.
A Salini-Impregilo group would see construction revenues reaching 5 billion euros in 2015, according to the study, while Vinci is expected to have generated total revenues of more than 36 billion euros in 2011.
STRATEGY DIVERGENCES
The battle between Salini and Gavio is also about strategy.
While Impregilo runs both construction and concessions, Salini wants to turn the group into a pure construction player with little concession business.
As a result, Salini could look at selling Impregilo's 29 percent stake in Ecorodovias, whose $4 billion market value makes it the second-biggest motorway group in Brazil after CCR
SA (CCRO3.SA).
"The (Salini) plan for Impregilo does not view the investment in Ecorodovias as a value. The plans foresees a valorization of the stake," the source said.
The source said Salini would also be keen on selling or isolating into a "bad company" its Fisia unit. Fisia, which makes and runs incinerators, has been locked in legal troubles linked to waste contracts in the Naples area, hitting results.
Impregilo, once famous for helping rescue the Abu Simbel temples in Egypt in the sixties, boasts the Panama Canal expansion contract with Spain's Sacyr (SVO.MC) in its 9.6 billion euro construction order book.
The complex web of interests surrounding the fight for Impregilo is likely to take weeks or more before it crystallizes into either a hostile confrontation or an agreed solution.
One banker who has received approaches for M&A advisory and structured finance in the case said it would take at least a couple of weeks for the situation to become clearer.
Impregilo is controlled by vehicle company IGLI, with a 30 percent stake. The Gavios, owners of motorway company Autostrade Torino Milano (ATMI.MI), hold their share of IGLI through holding company Argo Finanziaria, while the Benettons' stake is held through Atlantia (ATL.MI), Italy's No. 1 motorway company.
The Benettons have said they will decide in March whether to waive a right to buy 5 percent of Impregilo from Gavio held through IGLI. [ID:nL6E8CI27D]
If waived, the Gavios would have a 20 percent stake in Impregilo, after they bought out a fellow investor in IGLI in a deal valuing each share at 3.65 euros.
One source familiar with the situation said he expected the Benettons to renew their shareholder pact in IGLI, accepting a dilution of their stake in exchange for a Gavio motorway asset in Chile.
Shares in Impregilo have risen about 60 percent since the end of September when Salini started to build its stake, while Milan's .FTITLMS all-share index has risen 12 percent.
($1 = 0.7740 euros)
(Reporting By Danilo Masoni; Editing by Lisa Jucca; Editing by Will Waterman)
full story
MILAN | Tue Jan 24, 2012 8:00am EST
(Reuters) - Italian builder Salini is considering bidding for its billion-euro rival Impregilo (IPGI.MI) if they can't agree a merger to create a national champion in the construction sector, a source close to the matter said.
Salini Chief Executive Pietro Salini said in an interview in December that his family-controlled group was studying a plan to merge with Impregilo to create an entity that was technically and financially fit for international markets.
Though it has built a stake of 15 percent over the last few months, Salini's ambitions are opposed by the Gavio family, which controls Impregilo with the Benettons and has close links to powerful investment bank Mediobanca (MDBI.MI).
"Salini is absolutely open to involving the Gavios. It would be natural for everyone to consider other proposals that can pave the way for an agreement," the source told Reuters on condition of anonymity, adding that so far Salini and Gavio had not met to discuss the plans.
"A takeover is certainly one of the alternatives. An option that can be (financially) handled," the source said.
Salini declined to comment.
Another option for Salini is to seek shareholder support for its plan at the next annual meeting in spring, the source said.
The Italian construction sector is highly fragmented and some bankers say consolidation may help builders better cope with aggressive competition abroad and a recession at home.
A Salini takeover of Italy's biggest construction group would likely trigger a sale of Impregilo's controlling stake in Brazilian motorway group Ecorodovias (ECOR3.SA) and of its loss-making Fisia engineering unit.
A study by a global consultancy firm hired by Salini estimated recurrent annual merger synergies of 100 million euros, from a combination of more accurate bid pricing, central cost cuts and higher bidding success in three years, two sources said.
A combined Salini-Impregilo, worth roughly 2 billion euros ($2.6 billion), would be among Europe's 15 biggest builders by capitalization, on a ladder where Vinci (SGEF.PA) and Bouygues (BOUY.PA) of France and ACS (ACS.MC) of Spain occupy the top three rungs.
A Salini-Impregilo group would see construction revenues reaching 5 billion euros in 2015, according to the study, while Vinci is expected to have generated total revenues of more than 36 billion euros in 2011.
STRATEGY DIVERGENCES
The battle between Salini and Gavio is also about strategy.
While Impregilo runs both construction and concessions, Salini wants to turn the group into a pure construction player with little concession business.
As a result, Salini could look at selling Impregilo's 29 percent stake in Ecorodovias, whose $4 billion market value makes it the second-biggest motorway group in Brazil after CCR
SA (CCRO3.SA).
"The (Salini) plan for Impregilo does not view the investment in Ecorodovias as a value. The plans foresees a valorization of the stake," the source said.
The source said Salini would also be keen on selling or isolating into a "bad company" its Fisia unit. Fisia, which makes and runs incinerators, has been locked in legal troubles linked to waste contracts in the Naples area, hitting results.
Impregilo, once famous for helping rescue the Abu Simbel temples in Egypt in the sixties, boasts the Panama Canal expansion contract with Spain's Sacyr (SVO.MC) in its 9.6 billion euro construction order book.
The complex web of interests surrounding the fight for Impregilo is likely to take weeks or more before it crystallizes into either a hostile confrontation or an agreed solution.
One banker who has received approaches for M&A advisory and structured finance in the case said it would take at least a couple of weeks for the situation to become clearer.
Impregilo is controlled by vehicle company IGLI, with a 30 percent stake. The Gavios, owners of motorway company Autostrade Torino Milano (ATMI.MI), hold their share of IGLI through holding company Argo Finanziaria, while the Benettons' stake is held through Atlantia (ATL.MI), Italy's No. 1 motorway company.
The Benettons have said they will decide in March whether to waive a right to buy 5 percent of Impregilo from Gavio held through IGLI. [ID:nL6E8CI27D]
If waived, the Gavios would have a 20 percent stake in Impregilo, after they bought out a fellow investor in IGLI in a deal valuing each share at 3.65 euros.
One source familiar with the situation said he expected the Benettons to renew their shareholder pact in IGLI, accepting a dilution of their stake in exchange for a Gavio motorway asset in Chile.
Shares in Impregilo have risen about 60 percent since the end of September when Salini started to build its stake, while Milan's .FTITLMS all-share index has risen 12 percent.
($1 = 0.7740 euros)
(Reporting By Danilo Masoni; Editing by Lisa Jucca; Editing by Will Waterman)
full story
Obama to tout natural gas benefits in State of Union
By Ayesha Rascoe and Richard Cowan
WASHINGTON | Mon Jan 23, 2012 7:40pm EST
(Reuters) - President Barack Obama will encourage the country's booming natural gas output in his State of the Union address on Tuesday, while defending his administration's energy record, according to sources familiar with the matter.
Obama was expected to devote a significant portion of his speech slated for 9 p.m. EST Tuesday calling for a "new era for American energy," which will include promoting domestic natural gas production, according to documents provided to Democratic party sources.
U.S. natural gas output has grown sharply in recent years thanks to advances in drilling techniques that have unlocked massive shale reserves.
Obama has repeatedly stressed the importance of domestic natural gas output, pointing to natural gas as a possible area of compromise for Democrats and Republicans.
But, the administration has also raised the ire of the oil and gas industry by moving forward with new regulations of the drilling that companies argue could hamper future development. He has also twice delayed the Canada-to-Texas Keystone oil sands pipeline.
Environmentalists and some landowners near shale gas wells argue that the recent shale boom is polluting air and water and needs greater federal oversight.
Obama administration officials have said that while natural gas production is important to the U.S. energy future, it must be done safely.
The White House is weighing including a natural gas production goal the speech, according to a report from the Wall Street Journal.
Obama's address will also focus on the importance of not sacrificing environmental protections and investments in clean energy during this time of budget constraints and concerns about job creation, said Elgie Holstein, senior director for strategic planning at the Environmental Defense Fund.
"We're anticipating that the president will make a pointed defense of the fact that taking care of our environment and building clean energy future is another form of investment in America's economic future," Holstein said.
Transforming the U.S. economy by investing in clean energy innovation has been a central theme for the administration since Obama took office in 2009.
Republicans have blasted Obama for focusing on clean energy sources, such as wind and solar, to the detriment of fossil fuels, which they argue are still needed to fuel the U.S. economy.
The high profile collapse of Solyndra, the solar panel maker, after receiving more than $500 million in loan aid from the Obama administration also provided ammunition to critics who say the government should not be in the business of picking winners and losers in the energy sector.
Still, Obama officials contend that the United States can not afford to fall behind developing nations such as China and India when it comes to green energy.
Facing an election in November, Obama will likely tout his commitment to energy independence.
"President Obama can tell a very positive story about his energy policies," said Daniel Weiss, a senior fellow at the liberal think tank, Center for American Progress.
Heather Zichal, a White House adviser on energy and climate change, released an editorial last week highlighting rising domestic oil and natural gas production, as well as falling oil imports under Obama.
Zichal highlighted proposed fuel economy standards that would push average fuel efficiency to 54.5 miles per gallon across U.S. fleets in the coming decade, cutting oil consumption by an estimated 2.2 million barrels a day by 2025.
full story
WASHINGTON | Mon Jan 23, 2012 7:40pm EST
(Reuters) - President Barack Obama will encourage the country's booming natural gas output in his State of the Union address on Tuesday, while defending his administration's energy record, according to sources familiar with the matter.
Obama was expected to devote a significant portion of his speech slated for 9 p.m. EST Tuesday calling for a "new era for American energy," which will include promoting domestic natural gas production, according to documents provided to Democratic party sources.
U.S. natural gas output has grown sharply in recent years thanks to advances in drilling techniques that have unlocked massive shale reserves.
Obama has repeatedly stressed the importance of domestic natural gas output, pointing to natural gas as a possible area of compromise for Democrats and Republicans.
But, the administration has also raised the ire of the oil and gas industry by moving forward with new regulations of the drilling that companies argue could hamper future development. He has also twice delayed the Canada-to-Texas Keystone oil sands pipeline.
Environmentalists and some landowners near shale gas wells argue that the recent shale boom is polluting air and water and needs greater federal oversight.
Obama administration officials have said that while natural gas production is important to the U.S. energy future, it must be done safely.
The White House is weighing including a natural gas production goal the speech, according to a report from the Wall Street Journal.
Obama's address will also focus on the importance of not sacrificing environmental protections and investments in clean energy during this time of budget constraints and concerns about job creation, said Elgie Holstein, senior director for strategic planning at the Environmental Defense Fund.
"We're anticipating that the president will make a pointed defense of the fact that taking care of our environment and building clean energy future is another form of investment in America's economic future," Holstein said.
Transforming the U.S. economy by investing in clean energy innovation has been a central theme for the administration since Obama took office in 2009.
Republicans have blasted Obama for focusing on clean energy sources, such as wind and solar, to the detriment of fossil fuels, which they argue are still needed to fuel the U.S. economy.
The high profile collapse of Solyndra, the solar panel maker, after receiving more than $500 million in loan aid from the Obama administration also provided ammunition to critics who say the government should not be in the business of picking winners and losers in the energy sector.
Still, Obama officials contend that the United States can not afford to fall behind developing nations such as China and India when it comes to green energy.
Facing an election in November, Obama will likely tout his commitment to energy independence.
"President Obama can tell a very positive story about his energy policies," said Daniel Weiss, a senior fellow at the liberal think tank, Center for American Progress.
Heather Zichal, a White House adviser on energy and climate change, released an editorial last week highlighting rising domestic oil and natural gas production, as well as falling oil imports under Obama.
Zichal highlighted proposed fuel economy standards that would push average fuel efficiency to 54.5 miles per gallon across U.S. fleets in the coming decade, cutting oil consumption by an estimated 2.2 million barrels a day by 2025.
full story
Regulators back AmeriGas deal with conditions
Wed Jan 11, 2012 12:14pm EST
(Reuters) - The Federal Trade Commission on Wednesday cleared AmeriGas Partners LP's proposed acquisition of a rival propane distributor, Energy Transfer Partners LP's Heritage Propane, under the condition that it exclude the company's cylinder exchange business.
The deal, as proposed, would have reduced competition and raised prices in the market for the cylinders consumers use to fuel barbecue grills and patio heaters, the FTC said.
The deal, valued at $2.8 billion when it was signed in October, was designed to help the largest U.S. propane retailer nearly double its customers and cash in on a price increase for the heating fuel.
But the deal would have combined the second- and third- largest players in the United States market for small, portable tanks pre-filled with propane, the FTC said.
Consumers exchange the empty tanks for pre-filled ones.
The original deal would have reduced competition in both the nationwide market and in several regional markets, the FTC said.
Heritage Propane Express played a key role as a "maverick" in the industry, the FTC said, because it offered lower prices and better terms to retailers than its competitors did.
According to the settlement, Energy Transfer Partners has to maintain the viability of Heritage Propane Express for two years, or clear any sale of the unit with the FTC.
AmeriGas serves 1.3 million customers with 1,200 propane distribution facilities in all 50 states, and sells more than one billion gallons of propane a year, the FTC said.
A spokesman for AmeriGas did not immediately respond to a request for a comment.
(Reporting By Aruna Viswanatha; Editing by Gerald E. McCormick and Tim Dobbyn)
full story
(Reuters) - The Federal Trade Commission on Wednesday cleared AmeriGas Partners LP's proposed acquisition of a rival propane distributor, Energy Transfer Partners LP's Heritage Propane, under the condition that it exclude the company's cylinder exchange business.
The deal, as proposed, would have reduced competition and raised prices in the market for the cylinders consumers use to fuel barbecue grills and patio heaters, the FTC said.
The deal, valued at $2.8 billion when it was signed in October, was designed to help the largest U.S. propane retailer nearly double its customers and cash in on a price increase for the heating fuel.
But the deal would have combined the second- and third- largest players in the United States market for small, portable tanks pre-filled with propane, the FTC said.
Consumers exchange the empty tanks for pre-filled ones.
The original deal would have reduced competition in both the nationwide market and in several regional markets, the FTC said.
Heritage Propane Express played a key role as a "maverick" in the industry, the FTC said, because it offered lower prices and better terms to retailers than its competitors did.
According to the settlement, Energy Transfer Partners has to maintain the viability of Heritage Propane Express for two years, or clear any sale of the unit with the FTC.
AmeriGas serves 1.3 million customers with 1,200 propane distribution facilities in all 50 states, and sells more than one billion gallons of propane a year, the FTC said.
A spokesman for AmeriGas did not immediately respond to a request for a comment.
(Reporting By Aruna Viswanatha; Editing by Gerald E. McCormick and Tim Dobbyn)
full story
Japan state fund sees rise in overseas M&A
By Taiga Uranaka and Taro Fuse
TOKYO | Tue Jan 10, 2012 5:13am EST
(Reuters) - A Japanese state-sponsored fund behind a string of headline-grabbing deals said its investment in overseas acquisitions by Japanese companies is likely to increase this year, helped by a stronger yen and an increase in asset sales abroad.
"We have been receiving a lot of (requests for investment in) overseas acquisitions. We are likely to see a substantial number of such deals this year," Kimikazu Noumi, CEO of Innovation Network Corp of Japan (INCJ), said in an interview on Tuesday.
"There are many asset sales given the situation in Europe, and Japanese companies, with a record amount of cash at hand, are not seeing many attractive investments at home," he said, adding that a stronger yen is also encouraging the trend.
The government-backed private equity fund, armed with a 1.9 trillion yen ($24.7 billion) war chest, including funds already committed to investments, has been aggressively chasing after deals with the aim of boosting the competitiveness of Japanese businesses in global markets.
The INCJ provides financing for Japanese companies' overseas acquisitions through equity participation. Last year it decided to invest $680 million to acquire a 40 percent stake in Swiss-based meter maker Landis+Gyr, with the rest provided by Toshiba.
The fund is also investing in acquisitions of water supply businesses inAustralia and Chile by Japanese consortiums including Mitsubishi Corp (8058.T) and Marubeni Corp (8002.T).
"There are many deals (involving overseas acquisitions) in our pipeline, including those in the service sector. We may be able to announce something concrete within a few months," Noumi said.
The fund has invested or committed to invest in 20 deals totaling 355 billion yen ($4.6 billion) since it was set up in 2007.
The INCJ is best known for engineering a deal that will merge small display panels of Sony (6758.T), Toshiba (6502.T) and Hitachi (6501.T). The fund will invest 200 billion yen to acquire a 70 percent stake in the venture, Japan Display.
Asked if the gigantic state-backed fund is undercutting private competition, Noumi said some of the deals could not otherwise be done, including Japan Display, which took about a year and a half for a deal to be agreed after the fund first broached it.
"It is not about distressed businesses or companies. And rivals do not want to show their hands to others. A neutral equity (provider) is needed in such a situation," he said.
Given its growing deal pipeline, Noumi said the fund is expanding its staff, recruiting M&A lawyers and bankers. Currently it has about 80 employees.
"We need global talent, people who can work in a global business environment," he said, adding that it received hundreds of applications for positions.
WON'T TAKE ZOMBIE COMPANIES
Noumi, 66, is a former executive at Norinchukin Bank. An agriculture major at college, he joined the lender for Japan's farm co-op system in 1969 and rose through its ranks including a stint in New York. He became later chairman of Aozora Bank (8304.T).
Known for his down-to-earth personality, he occasionally shows the feisty side of a student activist-turned-banker.
He said his fund is not a state-backed bailout body to keep alive "zombie companies," mindful of public criticism of other government-sponsored entities such as the Industrial Revitalisation Corp of Japan.
Noumi said the mission of his fund is to provide financing to businesses with growth potential, not to fund corporate turnarounds with taxpayers' money.
"A variety of people may express a variety of wishes to us, but we cannot do deals that do not match our mission," he said. ($1 = 76.8500 Japanese yen)
(Editing by Michael Watson)
full story
TOKYO | Tue Jan 10, 2012 5:13am EST
(Reuters) - A Japanese state-sponsored fund behind a string of headline-grabbing deals said its investment in overseas acquisitions by Japanese companies is likely to increase this year, helped by a stronger yen and an increase in asset sales abroad.
"We have been receiving a lot of (requests for investment in) overseas acquisitions. We are likely to see a substantial number of such deals this year," Kimikazu Noumi, CEO of Innovation Network Corp of Japan (INCJ), said in an interview on Tuesday.
"There are many asset sales given the situation in Europe, and Japanese companies, with a record amount of cash at hand, are not seeing many attractive investments at home," he said, adding that a stronger yen is also encouraging the trend.
The government-backed private equity fund, armed with a 1.9 trillion yen ($24.7 billion) war chest, including funds already committed to investments, has been aggressively chasing after deals with the aim of boosting the competitiveness of Japanese businesses in global markets.
The INCJ provides financing for Japanese companies' overseas acquisitions through equity participation. Last year it decided to invest $680 million to acquire a 40 percent stake in Swiss-based meter maker Landis+Gyr, with the rest provided by Toshiba.
The fund is also investing in acquisitions of water supply businesses inAustralia and Chile by Japanese consortiums including Mitsubishi Corp (8058.T) and Marubeni Corp (8002.T).
"There are many deals (involving overseas acquisitions) in our pipeline, including those in the service sector. We may be able to announce something concrete within a few months," Noumi said.
The fund has invested or committed to invest in 20 deals totaling 355 billion yen ($4.6 billion) since it was set up in 2007.
The INCJ is best known for engineering a deal that will merge small display panels of Sony (6758.T), Toshiba (6502.T) and Hitachi (6501.T). The fund will invest 200 billion yen to acquire a 70 percent stake in the venture, Japan Display.
Asked if the gigantic state-backed fund is undercutting private competition, Noumi said some of the deals could not otherwise be done, including Japan Display, which took about a year and a half for a deal to be agreed after the fund first broached it.
"It is not about distressed businesses or companies. And rivals do not want to show their hands to others. A neutral equity (provider) is needed in such a situation," he said.
Given its growing deal pipeline, Noumi said the fund is expanding its staff, recruiting M&A lawyers and bankers. Currently it has about 80 employees.
"We need global talent, people who can work in a global business environment," he said, adding that it received hundreds of applications for positions.
WON'T TAKE ZOMBIE COMPANIES
Noumi, 66, is a former executive at Norinchukin Bank. An agriculture major at college, he joined the lender for Japan's farm co-op system in 1969 and rose through its ranks including a stint in New York. He became later chairman of Aozora Bank (8304.T).
Known for his down-to-earth personality, he occasionally shows the feisty side of a student activist-turned-banker.
He said his fund is not a state-backed bailout body to keep alive "zombie companies," mindful of public criticism of other government-sponsored entities such as the Industrial Revitalisation Corp of Japan.
Noumi said the mission of his fund is to provide financing to businesses with growth potential, not to fund corporate turnarounds with taxpayers' money.
"A variety of people may express a variety of wishes to us, but we cannot do deals that do not match our mission," he said. ($1 = 76.8500 Japanese yen)
(Editing by Michael Watson)
full story
Dell to use cash flows to make acquisitions: CEO
BANGALORE | Mon Jan 9, 2012 11:39am EST
(Reuters) - Dell Inc (DELL.O), the world's number three personal computer maker, will use its "strong cash flows" to make acquisitions to boost growth, Chief Executive Michael Dell said on Monday.
Dell could acquire small and medium size companies that would give it access to new technologies, he said at a business event in southern Indian city of Bangalore.
Dell, which has long-depended on government, corporate and consumer technology spending worldwide, has been diversifying from hardware into higher-margin services, but at a slower pace than some rivals.
"You will see us be a serial acquirer using our strong cash flows to enhance our growth and add to our development capability," Dell said.
He said that the smartphones and tablets were unlikely to dent demand for personal computers.
"If you look at the tablet, it's a very interesting and exciting device. It's basically an additional device," Dell said.
"In other words, if I get a tablet I don't get rid of my smartphone. If I get a smartphone, I don't get rid of the PC either."
In November, Dell reported quarterly revenue that missed Wall Street estimates, and the computer maker warned that full-year revenue could be hurt by an industry-wide shortage of hard drives.
The company lost market share during the third quarter to Asian rival Lenovo Group (0992.HK) which vaulted past it to claim the No. 2 ranking in PCs behind market leader Hewlett-Packard (HPQ.N).
(Reporting by Harichandan Arakali; Writing by Sumeet Chatterjee; Editing by Jane Merriman)
full story
(Reuters) - Dell Inc (DELL.O), the world's number three personal computer maker, will use its "strong cash flows" to make acquisitions to boost growth, Chief Executive Michael Dell said on Monday.
Dell could acquire small and medium size companies that would give it access to new technologies, he said at a business event in southern Indian city of Bangalore.
Dell, which has long-depended on government, corporate and consumer technology spending worldwide, has been diversifying from hardware into higher-margin services, but at a slower pace than some rivals.
"You will see us be a serial acquirer using our strong cash flows to enhance our growth and add to our development capability," Dell said.
He said that the smartphones and tablets were unlikely to dent demand for personal computers.
"If you look at the tablet, it's a very interesting and exciting device. It's basically an additional device," Dell said.
"In other words, if I get a tablet I don't get rid of my smartphone. If I get a smartphone, I don't get rid of the PC either."
In November, Dell reported quarterly revenue that missed Wall Street estimates, and the computer maker warned that full-year revenue could be hurt by an industry-wide shortage of hard drives.
The company lost market share during the third quarter to Asian rival Lenovo Group (0992.HK) which vaulted past it to claim the No. 2 ranking in PCs behind market leader Hewlett-Packard (HPQ.N).
(Reporting by Harichandan Arakali; Writing by Sumeet Chatterjee; Editing by Jane Merriman)
full story
Small business payrolls rise 55,000 in December
WASHINGTON | Wed Jan 4, 2012 12:32am EST
(Reuters) - Small businesses created 55,000 jobs in December and increased working hours for employees, further evidence the labor market was strengthening.
In addition, workers at small businesses saw a rise in their paychecks last month, said payrolls processing company Intuit on Wednesday.
December's gain compared to November's upwardly revised 70,000 count, which was previously reported as an increase of 55,000.
The jobs market is showing signs of firming, with the unemployment rate dropping to a 2-1/2-year low of 8.6 percent in November. In addition, first-time applications for state unemployment benefits are hovering near 3-1/2-year lows.
Households' perceptions of the labor market are also improving, with measures of jobs "plentiful" and "hard to get" in the Conference Board's December consumer sentiment survey yielding their best readings since January 2009.
The revision to Intuit's small business payrolls in November suggests that the government's nonfarm employment count for that month could be raised from 120,000 when figures for December are released on Friday.
December nonfarm payrolls are expected have increased 150,000 according to a Reuters survey, with the unemployment rate seen edging up to 8.7 percent.
The government has been revising the prior months' nonfarm payrolls figures higher and analysts say the Bureau of Labor Statistics' model tends to delay the count of small business employment.
The Intuit survey is based on responses from about 72,000 small businesses with fewer than 20 employees that use the Intuit Online Payroll system. It covered the period from November 24 to December 23.
The average work week for small business employees rose 0.4 percent to 25.4 hours, while the average monthly salary increased 0.4 percent to $2,706.
"All of the figures we track show a stronger small business environment in December," said Susan Woodward, the economist who helped to create the index.
However, she noted increased volatility in the seasonally adjusted series for employment, hours worked, and compensation over the last four months, compared to earlier in 2011.
"This volatility in the small business indicators parallels, with a slight lag, the increase in volatility in the stock market. All suggest that while a mild recovery is underway, it is fragile," said Woodward.
(Reporting By Lucia Mutikani; Editing by James Dalgleish)
full story
(Reuters) - Small businesses created 55,000 jobs in December and increased working hours for employees, further evidence the labor market was strengthening.
In addition, workers at small businesses saw a rise in their paychecks last month, said payrolls processing company Intuit on Wednesday.
December's gain compared to November's upwardly revised 70,000 count, which was previously reported as an increase of 55,000.
The jobs market is showing signs of firming, with the unemployment rate dropping to a 2-1/2-year low of 8.6 percent in November. In addition, first-time applications for state unemployment benefits are hovering near 3-1/2-year lows.
Households' perceptions of the labor market are also improving, with measures of jobs "plentiful" and "hard to get" in the Conference Board's December consumer sentiment survey yielding their best readings since January 2009.
The revision to Intuit's small business payrolls in November suggests that the government's nonfarm employment count for that month could be raised from 120,000 when figures for December are released on Friday.
December nonfarm payrolls are expected have increased 150,000 according to a Reuters survey, with the unemployment rate seen edging up to 8.7 percent.
The government has been revising the prior months' nonfarm payrolls figures higher and analysts say the Bureau of Labor Statistics' model tends to delay the count of small business employment.
The Intuit survey is based on responses from about 72,000 small businesses with fewer than 20 employees that use the Intuit Online Payroll system. It covered the period from November 24 to December 23.
The average work week for small business employees rose 0.4 percent to 25.4 hours, while the average monthly salary increased 0.4 percent to $2,706.
"All of the figures we track show a stronger small business environment in December," said Susan Woodward, the economist who helped to create the index.
However, she noted increased volatility in the seasonally adjusted series for employment, hours worked, and compensation over the last four months, compared to earlier in 2011.
"This volatility in the small business indicators parallels, with a slight lag, the increase in volatility in the stock market. All suggest that while a mild recovery is underway, it is fragile," said Woodward.
(Reporting By Lucia Mutikani; Editing by James Dalgleish)
full story
U.S. options trading tops 4 billion in record 2011
CHICAGO | Tue Jan 3, 2012 7:03pm EST
(Reuters) - U.S. options volume rose 17 percent in 2011 to hit a record high, as investors increasingly looked to insure assets and generate income with options in a turbulent year that left the S&P 500 index almost where it started.
Trading volume for U.S.-listed options last year totaled 4.56 billion contracts, up from the previous peak of 3.89 billion contracts bought and sold in 2010, the Options Industry Council said on Tuesday.
It was the ninth consecutive year of annual record volume, the OIC said in a statement.
The Standard & Poor's 500 .SPX finished out 2011 almost unchanged, down just 0.003 percent, the closest to unchanged since 1947, according to S&P. [ID:nL1E7NU5CA].
U.S. equity options trading reached 4.22 billion contracts in 2011, up 17.01 percent from the 3.6 billion contracts the previous year.
Volume in December, however, fell to 320.3 million options contracts, , down 6.12 percent 341.2 million contracts in December 2010, OIC said.
CBOE Holdings' (CBOE.O) main market, the Chicago Board Options Exchange, and its all-electronic venue C2 together captured 26.41 percent of all U.S. option trading for 2011, options clearinghouse OCC data showed.
Nasdaq OMX Group (NDAQ.O), which operates PHLX and NOM,
handled 25.81 percent of total industry volume for the year. A great deal of the equity volume in the PHLX is linked to stock dividend trades.
NYSE Euronext (NYX.N) came in at No. 3, with its two options venues together capturing 24.42 percent of the total trading. Deutsche Boerse AG's (DB1Gn.DE) International Securities Exchange followed with 17.05 percent. ISE said it was the third largest equity options exchange in 2011 with market share of 19.1 percent, excluding dividend trades.
Separately, the OCC said 2011 included six of the 10 highest -ever volume days and the first time options trading exceeded 40 million contracts in one day.
The OCC said $1.5 trillion in options premium changed hands in 2011, behind the record in 2008 of $1.9 trillion.
August 8 was the biggest single trading day in 2011 for total options with 41.5 million contracts and also the best day ever for equity options, with 37.9 million contracts, the OCC said.
The average daily total options volume last year was a record 18.1 million contracts.
More details on historical options trading data are available at www.optionseducation.org.
The OIC is an industry cooperative funded by the U.S. options exchanges and OCC.
(Reporting by Doris Frankel; Editing by Leslie Adler)
full story
(Reuters) - U.S. options volume rose 17 percent in 2011 to hit a record high, as investors increasingly looked to insure assets and generate income with options in a turbulent year that left the S&P 500 index almost where it started.
Trading volume for U.S.-listed options last year totaled 4.56 billion contracts, up from the previous peak of 3.89 billion contracts bought and sold in 2010, the Options Industry Council said on Tuesday.
It was the ninth consecutive year of annual record volume, the OIC said in a statement.
The Standard & Poor's 500 .SPX finished out 2011 almost unchanged, down just 0.003 percent, the closest to unchanged since 1947, according to S&P. [ID:nL1E7NU5CA].
U.S. equity options trading reached 4.22 billion contracts in 2011, up 17.01 percent from the 3.6 billion contracts the previous year.
Volume in December, however, fell to 320.3 million options contracts, , down 6.12 percent 341.2 million contracts in December 2010, OIC said.
CBOE Holdings' (CBOE.O) main market, the Chicago Board Options Exchange, and its all-electronic venue C2 together captured 26.41 percent of all U.S. option trading for 2011, options clearinghouse OCC data showed.
Nasdaq OMX Group (NDAQ.O), which operates PHLX and NOM,
handled 25.81 percent of total industry volume for the year. A great deal of the equity volume in the PHLX is linked to stock dividend trades.
NYSE Euronext (NYX.N) came in at No. 3, with its two options venues together capturing 24.42 percent of the total trading. Deutsche Boerse AG's (DB1Gn.DE) International Securities Exchange followed with 17.05 percent. ISE said it was the third largest equity options exchange in 2011 with market share of 19.1 percent, excluding dividend trades.
Separately, the OCC said 2011 included six of the 10 highest -ever volume days and the first time options trading exceeded 40 million contracts in one day.
The OCC said $1.5 trillion in options premium changed hands in 2011, behind the record in 2008 of $1.9 trillion.
August 8 was the biggest single trading day in 2011 for total options with 41.5 million contracts and also the best day ever for equity options, with 37.9 million contracts, the OCC said.
The average daily total options volume last year was a record 18.1 million contracts.
More details on historical options trading data are available at www.optionseducation.org.
The OIC is an industry cooperative funded by the U.S. options exchanges and OCC.
(Reporting by Doris Frankel; Editing by Leslie Adler)
full story
JP Morgan buys more sway in LME takeover battle
By Eric Onstad and Susan Thomas
LONDON | Thu Nov 24, 2011 11:17am EST
(Reuters) - JP Morgan (JPM.N) has dramatically boosted its influence in the battle to acquire the London Metal Exchange by increasing its stake this week to become the biggest shareholder.
JP Morgan Chase now has stronger input into any changes proposed by suitors while making a tidy profit from any sale, but retains the option to team up with others to block a takeover, analysts and industry sources said.
The U.S. investment bank won a bidding process to buy a 4.7 percent stake in the LME, the world's dominant market for industrial metals trading, held by defunct broker MF Global Holdings (MFGLQ.PK).
J.P. Morgan was not immediately available to comment on the reasons for its purchase.
The sale gives JP Morgan a stake of 1.4 million shares or 10.9 percent, jumping ahead of the former dominant shareholder, Goldman Sachs (GS.N), which owns 9.5 percent.
The No. 3 shareholder Metdist has 9.4 percent, followed by UBS AG (UBSN.VX) with 4.3 percent.
The LME, one of the last bastions of open outcry trading, has said at least 10 parties have expressed interest in buying the exchange and it is due to open its data room next month.
Any change in ownership needs approval from members holding 75 percent of ordinary shares.
"It's a win-win situation...I think in a way, it is a hedge against all those uncertain events," said analyst Robin Bhar at Credit Agricole in London. "They may also be taking a view that it could be a quick and profitable investment."
HEADING OFF GOLDMAN?
KPMG, the administrators of MF Global, said there was a great deal of interest in the shares and some industry sources said one motivation for JP Morgan to put in a strong bid was to keep rival Goldman Sachs from increasing its stake even further.
"I'm sure Goldman Sachs would have been interested in building their stake further, others like that who would have been trying to gain a bigger seat at the table for when it comes to make decision," said a high-level source at another LME member with a shareholding.
A takeover by another exchange -- such as the CME Group (CME.O) or IntercontinentalExchange (ICE.N) -- could mean big changes for the LME, which has kept fees low for its members who also own the business.
Members like JP Morgan, one of 11 LME members allowed to trade in the ring, could be hit by an increase in running costs if a new owner decides to boost profits at the exchange by hiking fees.
In that case, members would have to weigh if a one-off profit from selling their stakes at a sharp premium compensates for higher costs in the longer term.
Another issue is whether floor trading would continue at the LME under a new owner.
"If one of the other exchanges, which are all electronic succeed with a bid, then the days of the floor could be numbered. JP being a floor member might try and say "No, we want to keep it open'," Bhar said.
Goldman Sachs is not a ring-dealing member.
Both JP Morgan and Goldman Sachs have acquired warehousing companies in recent years, sparking controversy from critics who have said there is a conflict of interest.
They could have an interest in heading off stricter rules that may be imposed by a new owner regarding LME trading members that also own warehouses, industry sources said.
"The fact that JP Morgan and Goldman Sachs are involved in all the aspects of the LME, brokerage, warehousing and now as shareholders, clearly that throws up some challenges with regards to how the exchange wants to manage that in terms of its conflicts," said the source at another LME member.
KMPG did not say how much JP Morgan paid for the LME stake, but sources familiar with the situation pegged the price at 25 million pounds, which would imply a total value for the exchange at around 530 million pounds.
The price works out at 41.67 pounds per share, a premium of nearly ninefold from the last traded price of LME ordinary shares, 4.925 pounds, in July.
"In terms of value, personally it is where I would have thought value would be. Puts total value around say $750 million, sounds like enough money. So to me they don't sound cheap," said an executive at another ring-dealing member.
Some industry players have forecast that a bidding battle could further boost the price of the LME to 1 billion pounds.
(Additional reporting by Melanie Burton)
full story
LONDON | Thu Nov 24, 2011 11:17am EST
(Reuters) - JP Morgan (JPM.N) has dramatically boosted its influence in the battle to acquire the London Metal Exchange by increasing its stake this week to become the biggest shareholder.
JP Morgan Chase now has stronger input into any changes proposed by suitors while making a tidy profit from any sale, but retains the option to team up with others to block a takeover, analysts and industry sources said.
The U.S. investment bank won a bidding process to buy a 4.7 percent stake in the LME, the world's dominant market for industrial metals trading, held by defunct broker MF Global Holdings (MFGLQ.PK).
J.P. Morgan was not immediately available to comment on the reasons for its purchase.
The sale gives JP Morgan a stake of 1.4 million shares or 10.9 percent, jumping ahead of the former dominant shareholder, Goldman Sachs (GS.N), which owns 9.5 percent.
The No. 3 shareholder Metdist has 9.4 percent, followed by UBS AG (UBSN.VX) with 4.3 percent.
The LME, one of the last bastions of open outcry trading, has said at least 10 parties have expressed interest in buying the exchange and it is due to open its data room next month.
Any change in ownership needs approval from members holding 75 percent of ordinary shares.
"It's a win-win situation...I think in a way, it is a hedge against all those uncertain events," said analyst Robin Bhar at Credit Agricole in London. "They may also be taking a view that it could be a quick and profitable investment."
HEADING OFF GOLDMAN?
KPMG, the administrators of MF Global, said there was a great deal of interest in the shares and some industry sources said one motivation for JP Morgan to put in a strong bid was to keep rival Goldman Sachs from increasing its stake even further.
"I'm sure Goldman Sachs would have been interested in building their stake further, others like that who would have been trying to gain a bigger seat at the table for when it comes to make decision," said a high-level source at another LME member with a shareholding.
A takeover by another exchange -- such as the CME Group (CME.O) or IntercontinentalExchange (ICE.N) -- could mean big changes for the LME, which has kept fees low for its members who also own the business.
Members like JP Morgan, one of 11 LME members allowed to trade in the ring, could be hit by an increase in running costs if a new owner decides to boost profits at the exchange by hiking fees.
In that case, members would have to weigh if a one-off profit from selling their stakes at a sharp premium compensates for higher costs in the longer term.
Another issue is whether floor trading would continue at the LME under a new owner.
"If one of the other exchanges, which are all electronic succeed with a bid, then the days of the floor could be numbered. JP being a floor member might try and say "No, we want to keep it open'," Bhar said.
Goldman Sachs is not a ring-dealing member.
Both JP Morgan and Goldman Sachs have acquired warehousing companies in recent years, sparking controversy from critics who have said there is a conflict of interest.
They could have an interest in heading off stricter rules that may be imposed by a new owner regarding LME trading members that also own warehouses, industry sources said.
"The fact that JP Morgan and Goldman Sachs are involved in all the aspects of the LME, brokerage, warehousing and now as shareholders, clearly that throws up some challenges with regards to how the exchange wants to manage that in terms of its conflicts," said the source at another LME member.
KMPG did not say how much JP Morgan paid for the LME stake, but sources familiar with the situation pegged the price at 25 million pounds, which would imply a total value for the exchange at around 530 million pounds.
The price works out at 41.67 pounds per share, a premium of nearly ninefold from the last traded price of LME ordinary shares, 4.925 pounds, in July.
"In terms of value, personally it is where I would have thought value would be. Puts total value around say $750 million, sounds like enough money. So to me they don't sound cheap," said an executive at another ring-dealing member.
Some industry players have forecast that a bidding battle could further boost the price of the LME to 1 billion pounds.
(Additional reporting by Melanie Burton)
full story
DealTalk: India PE, listed firms find mutual attraction
By Indulal PM
MUMBAI | Wed Nov 23, 2011 7:45am EST
MUMBAI (Reuters)- Listed Indian companies and private-equity investors are being pushed into each other's arms by the plunge in equity markets and the rising cost of credit.
The marriage of convenience lets private equity funds deploy some of their $20 billion in uninvested capital in liquid holdings at increasingly attractive valuations in a country where buyouts are rare and companies go public early.
More such deals are on the way, with at least $750 million being raised by funds that target listed Indian equities.
"Unfortunately, Indian companies tend to go public much faster, much earlier in the stage of growth. So yes, India is more conducive in terms of public deals," Akhil Gupta, India chairman and managing director for U.S. buyout giant Blackstone Group (BX.N) told the Reuters India Investment Summit.
That means many companies in India looking for late-stage growth capital are already listed.
Washington-based Carlyle Group CYL.UL recently picked up 9 percent of Indian financial services firm India Infoline (IIFL.NS), a stake with a market value of about $38 million at the time.
"If you look at the size of the investments we look to make, a lot of the companies we evaluate would end up being in the listed space," said Devinjit Singh, a Mumbai-based managing director at Carlyle.
Private equity investments in listed firms more than doubled in the first nine months of 2011 to $1.34 billion in 44 deals compared to $562 million in 33 deals a year earlier, according to KPMG, outpacing the 31 percent growth in overall India private equity deals to $7.89 billion in the same period.
Earlier this year, Apollo Global Management LLC (APO.N) invested $500 million in Welspun Group, of which $290 million went into listed Welspun Corp. (WGSR.NS).
In May, International Finance Corp and Kohlberg Kravis Roberts & Co (KKR.N) invested $98.25 million in non-banking finance company, Magma Fincorp (MAGM.NS). In July, the private equity arm of Standard Chartered (STAN.L) bought 12 percent in Redington India (REDI.NS) for about $98 million.
NEED DRIVEN
Private equity investors say listed companies are increasingly attractive relative to unlisted firms, whose controlling shareholders tend to demand valuations that do not reflect the plunge in public markets.
"Why would an investor accept the additional penalty of having no liquidity without some benefit in valuation," said Parag Saxena, founding general partner and chief executive of New Silk Route, an Asia-focused private equity fund.
Indian shares are down 23 percent in 2011, making them the worst performers in Asia and shutting down the public markets as an option for raising equity capital. Interest rates have surged, meanwhile, after 13 policy rate hikes by the central bank since early 2010.
Public equity investments for private equity firms also allow for easy exits, an attraction when IPO markets have all-but dried up. That's a key motivator in a country where 85 percent of private equity exits are made through public offers.
For listed companies, bringing in private equity investors provides stable institutional funding, as well as expertise. Carlyle, for example, will be represented on IIFL's board.
PIPELINE
More such deals are expected.
In August, WestBridge Capital, set up by four founding partners at the India unit of Sequoia Capital, raised $500 million to invest in listed and later-stage private companies.
Avendus PE Investment Advisors, a unit of Indian financial services firm Avendus Capital, is raising up to $200 million to invest in mid-sized listed firms.
"The fall in equity markets has provided cheaper valuations. You would have probably paid a higher valuation for the same companies a year back," said Manoj Thakur, chief executive at Avendus Private Equity.
Avendus has invested in mid-cap companies such as V-Guard (VGUA.NS), TTK Prestige (TTKL.NS) and Camline (CAML.NS) through creeping acquisitions in the open market.
Most Indian companies are small and operate below the radar of institutional coverage, which means private equity firms need to do their homework to find attractive deals and justify the high fees their charge their investors.
Of more than 7,000 listed Indian firms, fewer than 1,000 have access to institutional capital, which makes them hungry for private equity money, said Charles Daugherty, managing partner at Stanwich Advisors, which connects private equity funds and limited partners.
"The opportunity is real and potentially large," he had said in October. "However, the only way PE investment in PIPEs (private investment in public equity) will be supported by institutional investors is if the fund can deliver an increase in sustainable operating value." ($1 = 52.37 Indian Rupees)
(Editing by Tony Munroe)
full story
MUMBAI | Wed Nov 23, 2011 7:45am EST
MUMBAI (Reuters)- Listed Indian companies and private-equity investors are being pushed into each other's arms by the plunge in equity markets and the rising cost of credit.
The marriage of convenience lets private equity funds deploy some of their $20 billion in uninvested capital in liquid holdings at increasingly attractive valuations in a country where buyouts are rare and companies go public early.
More such deals are on the way, with at least $750 million being raised by funds that target listed Indian equities.
"Unfortunately, Indian companies tend to go public much faster, much earlier in the stage of growth. So yes, India is more conducive in terms of public deals," Akhil Gupta, India chairman and managing director for U.S. buyout giant Blackstone Group (BX.N) told the Reuters India Investment Summit.
That means many companies in India looking for late-stage growth capital are already listed.
Washington-based Carlyle Group CYL.UL recently picked up 9 percent of Indian financial services firm India Infoline (IIFL.NS), a stake with a market value of about $38 million at the time.
"If you look at the size of the investments we look to make, a lot of the companies we evaluate would end up being in the listed space," said Devinjit Singh, a Mumbai-based managing director at Carlyle.
Private equity investments in listed firms more than doubled in the first nine months of 2011 to $1.34 billion in 44 deals compared to $562 million in 33 deals a year earlier, according to KPMG, outpacing the 31 percent growth in overall India private equity deals to $7.89 billion in the same period.
Earlier this year, Apollo Global Management LLC (APO.N) invested $500 million in Welspun Group, of which $290 million went into listed Welspun Corp. (WGSR.NS).
In May, International Finance Corp and Kohlberg Kravis Roberts & Co (KKR.N) invested $98.25 million in non-banking finance company, Magma Fincorp (MAGM.NS). In July, the private equity arm of Standard Chartered (STAN.L) bought 12 percent in Redington India (REDI.NS) for about $98 million.
NEED DRIVEN
Private equity investors say listed companies are increasingly attractive relative to unlisted firms, whose controlling shareholders tend to demand valuations that do not reflect the plunge in public markets.
"Why would an investor accept the additional penalty of having no liquidity without some benefit in valuation," said Parag Saxena, founding general partner and chief executive of New Silk Route, an Asia-focused private equity fund.
Indian shares are down 23 percent in 2011, making them the worst performers in Asia and shutting down the public markets as an option for raising equity capital. Interest rates have surged, meanwhile, after 13 policy rate hikes by the central bank since early 2010.
Public equity investments for private equity firms also allow for easy exits, an attraction when IPO markets have all-but dried up. That's a key motivator in a country where 85 percent of private equity exits are made through public offers.
For listed companies, bringing in private equity investors provides stable institutional funding, as well as expertise. Carlyle, for example, will be represented on IIFL's board.
PIPELINE
More such deals are expected.
In August, WestBridge Capital, set up by four founding partners at the India unit of Sequoia Capital, raised $500 million to invest in listed and later-stage private companies.
Avendus PE Investment Advisors, a unit of Indian financial services firm Avendus Capital, is raising up to $200 million to invest in mid-sized listed firms.
"The fall in equity markets has provided cheaper valuations. You would have probably paid a higher valuation for the same companies a year back," said Manoj Thakur, chief executive at Avendus Private Equity.
Avendus has invested in mid-cap companies such as V-Guard (VGUA.NS), TTK Prestige (TTKL.NS) and Camline (CAML.NS) through creeping acquisitions in the open market.
Most Indian companies are small and operate below the radar of institutional coverage, which means private equity firms need to do their homework to find attractive deals and justify the high fees their charge their investors.
Of more than 7,000 listed Indian firms, fewer than 1,000 have access to institutional capital, which makes them hungry for private equity money, said Charles Daugherty, managing partner at Stanwich Advisors, which connects private equity funds and limited partners.
"The opportunity is real and potentially large," he had said in October. "However, the only way PE investment in PIPEs (private investment in public equity) will be supported by institutional investors is if the fund can deliver an increase in sustainable operating value." ($1 = 52.37 Indian Rupees)
(Editing by Tony Munroe)
full story
Blackstone eyes $500-$720 million deals a year in India
By Indulal PM and Tony Munroe
MUMBAI | Tue Nov 22, 2011 7:21am EST
(Reuters) - U.S. private-equity giant Blackstone Group (BX.N) expects to invest roughly $500 million to $720 million a year in India over the next few years, a top official said on Tuesday.
Weak markets are prompting capital-hungry entrepreneurs to knock on the doors of private-equity investors, and valuations are coming down, Akhil Gupta, chairman and managing director of Blackstone India, told the Reuters India Investment Summit.
"Not just ourselves, but the entire fraternity is extremely busy right now," he said.
The firm expects to do five or six deals a year in India of roughly $100 million to $120 million each, he said.
Gupta declined to comment on media reports that Blackstone was in talks along with rival Carlyle Group CYL.UL to buy the telecoms tower unit of debt-laden cellular carrier Reliance Communications (RLCM.NS).
While Blackstone has been a big investor in infrastructure in India, he said the telecoms sector, crowded with more than a dozen cellular carriers, remains plagued by regulatory uncertainty.
"I can give you lots of scenarios where telecom may be a great buy, but it will depend on how the regulations unfold, and I have no certainty that regulations unfold the way it should unfold," Gupta said.
Private-equity investments in India jumped 31 percent to $7.89 billion in the first three quarters of 2011, according to data from auditing and consultancy firm KPMG.
While Blackstone is one of a handful of private-equity players to complete a takeover deal for an Indian company, Gupta said he expects the sector to remain dominated by minority investments as controlling family shareholders are reluctant to part with their companies.
"There is a big cultural issue about buyouts," he said.
"In Brazil, you sell your company, you celebrate, everybody thinks you're a hero," said Gupta, who previously worked with Indian conglomerate Reliance Industries (RELI.NS) and has an MBA degree from Stanford University in California.
"Here if you sell your company, unless you get the valuation that Ajay Piramal got, there's a stigma attached to that sale. You want to give it to your children.
Last year, India's Piramal Healthcare (PIRA.NS) sold its branded generics business for $3.72 billion to U.S.-based Abbott Laboratories (ABT.N).
India's benchmark stock index .BSESN is down about a fifth this year, and 13 rate increases since early 2010 by the central bank have pushed up borrowing costs.
Blackstone, which manages about $128 billion globally according to Thomson Reuters data, is one of the most active private-equity investors in India, where it has invested nearly $1.8 billion since 2006.
While Blackstone does not focus on specific sectors, its investments in India have mostly been in infrastructure, especially power, where it has spent over $800 million on companies that have already have land, captive sources of coal and regulatory clearances.
Many big power projects in India have been hamstrung by environmental clearances and lack of access to coal.
While many investors seek to capitalize on rising spending by increasingly wealthy India, Blackstone has largely limited its direct exposure to Indian consumers to its $50 million investment in Jagran Prakashan (JAGP.NS), a leading media house.
($1 = 52.7 Indian Rupees)
(For summit blog: blogs.reuters.
(Summit desk: +91 22 6636-9138 )
(Reporting by Indulal PM and Tony Munroe; Editing by Ranjit Gangadharan and Aradhana Aravindan)
full story
MUMBAI | Tue Nov 22, 2011 7:21am EST
(Reuters) - U.S. private-equity giant Blackstone Group (BX.N) expects to invest roughly $500 million to $720 million a year in India over the next few years, a top official said on Tuesday.
Weak markets are prompting capital-hungry entrepreneurs to knock on the doors of private-equity investors, and valuations are coming down, Akhil Gupta, chairman and managing director of Blackstone India, told the Reuters India Investment Summit.
"Not just ourselves, but the entire fraternity is extremely busy right now," he said.
The firm expects to do five or six deals a year in India of roughly $100 million to $120 million each, he said.
Gupta declined to comment on media reports that Blackstone was in talks along with rival Carlyle Group CYL.UL to buy the telecoms tower unit of debt-laden cellular carrier Reliance Communications (RLCM.NS).
While Blackstone has been a big investor in infrastructure in India, he said the telecoms sector, crowded with more than a dozen cellular carriers, remains plagued by regulatory uncertainty.
"I can give you lots of scenarios where telecom may be a great buy, but it will depend on how the regulations unfold, and I have no certainty that regulations unfold the way it should unfold," Gupta said.
Private-equity investments in India jumped 31 percent to $7.89 billion in the first three quarters of 2011, according to data from auditing and consultancy firm KPMG.
While Blackstone is one of a handful of private-equity players to complete a takeover deal for an Indian company, Gupta said he expects the sector to remain dominated by minority investments as controlling family shareholders are reluctant to part with their companies.
"There is a big cultural issue about buyouts," he said.
"In Brazil, you sell your company, you celebrate, everybody thinks you're a hero," said Gupta, who previously worked with Indian conglomerate Reliance Industries (RELI.NS) and has an MBA degree from Stanford University in California.
"Here if you sell your company, unless you get the valuation that Ajay Piramal got, there's a stigma attached to that sale. You want to give it to your children.
Last year, India's Piramal Healthcare (PIRA.NS) sold its branded generics business for $3.72 billion to U.S.-based Abbott Laboratories (ABT.N).
India's benchmark stock index .BSESN is down about a fifth this year, and 13 rate increases since early 2010 by the central bank have pushed up borrowing costs.
Blackstone, which manages about $128 billion globally according to Thomson Reuters data, is one of the most active private-equity investors in India, where it has invested nearly $1.8 billion since 2006.
While Blackstone does not focus on specific sectors, its investments in India have mostly been in infrastructure, especially power, where it has spent over $800 million on companies that have already have land, captive sources of coal and regulatory clearances.
Many big power projects in India have been hamstrung by environmental clearances and lack of access to coal.
While many investors seek to capitalize on rising spending by increasingly wealthy India, Blackstone has largely limited its direct exposure to Indian consumers to its $50 million investment in Jagran Prakashan (JAGP.NS), a leading media house.
($1 = 52.7 Indian Rupees)
(For summit blog: blogs.reuters.
(Summit desk: +91 22 6636-9138 )
(Reporting by Indulal PM and Tony Munroe; Editing by Ranjit Gangadharan and Aradhana Aravindan)
full story
Pearson to buy English teaching firm in China
By Paul Hoskins and Georgina Prodhan
LONDON | Mon Nov 21, 2011 5:25am EST
(Reuters) - British publishing group Pearson Plc (PSON.L) agreed to buy China's Global Education and Technology Group (GEDU.O), which prepares students for English-language tests, for $155 million in cash, extending its reach in China from eight cities to 60.
Pearson is rapidly building on its 2009 acquisition of the Wall Street English language centers in China and has used much of the $2 billion it collected from the 2010 sale of data provider IDC for education acquisitions in China and India.
"Through organic investment and complementary acquisitions, we're learning a lot about the very significant growth opportunities we see in China and about the value of combining our content and technology with high-quality school networks," John Fallon, Chief Executive of Pearson's International Education Business, said in a statement on Monday.
Global Education and Technology Group, which teaches children and adults, has a network of 450 test preparation and training centers in China, of which it owns about 115 with the remainder run as franchises.
Shares in Pearson were unchanged at 1103 pence at 0935 GMT, the only members of the European media index .SXMP not in negative territory.
"As well as continuing the process of EPS upgrades from deploying cash, we see this deal as strategically positive too," UBS analyst Alastair Reid wrote in a note.
"Pearson trades at 8x 2012e EBITDA -- we view this as far too cheap for the only global player in a global structural growth industry," added Reid, who has a "buy" recommendation and 1,450 pence target price on the stock.
Pearson said its offer of $11.006 per American depositary share valued Global Education at $294 million with almost half the cost mitigated by the Nasdaq-listed group's estimated $139 million cash balance.
Shares in Global Education closed almost 28 percent higher at $5.37 on Friday, taking their gains over the last three trading sessions to 60 percent.
Pearson, which also owns the Financial Times and Penguin books, runs the world's biggest educational business, which brings in the bulk of its revenues.
(Reporting by Paul Hoskins and Georgina Prodhan; Editing by Sarah Young and Jane Merriman)
full story
LONDON | Mon Nov 21, 2011 5:25am EST
(Reuters) - British publishing group Pearson Plc (PSON.L) agreed to buy China's Global Education and Technology Group (GEDU.O), which prepares students for English-language tests, for $155 million in cash, extending its reach in China from eight cities to 60.
Pearson is rapidly building on its 2009 acquisition of the Wall Street English language centers in China and has used much of the $2 billion it collected from the 2010 sale of data provider IDC for education acquisitions in China and India.
"Through organic investment and complementary acquisitions, we're learning a lot about the very significant growth opportunities we see in China and about the value of combining our content and technology with high-quality school networks," John Fallon, Chief Executive of Pearson's International Education Business, said in a statement on Monday.
Global Education and Technology Group, which teaches children and adults, has a network of 450 test preparation and training centers in China, of which it owns about 115 with the remainder run as franchises.
Shares in Pearson were unchanged at 1103 pence at 0935 GMT, the only members of the European media index .SXMP not in negative territory.
"As well as continuing the process of EPS upgrades from deploying cash, we see this deal as strategically positive too," UBS analyst Alastair Reid wrote in a note.
"Pearson trades at 8x 2012e EBITDA -- we view this as far too cheap for the only global player in a global structural growth industry," added Reid, who has a "buy" recommendation and 1,450 pence target price on the stock.
Pearson said its offer of $11.006 per American depositary share valued Global Education at $294 million with almost half the cost mitigated by the Nasdaq-listed group's estimated $139 million cash balance.
Shares in Global Education closed almost 28 percent higher at $5.37 on Friday, taking their gains over the last three trading sessions to 60 percent.
Pearson, which also owns the Financial Times and Penguin books, runs the world's biggest educational business, which brings in the bulk of its revenues.
(Reporting by Paul Hoskins and Georgina Prodhan; Editing by Sarah Young and Jane Merriman)
full story
Dealtalk: European telco consolidation seen stymied for now
By Kate Holton
BARCELONA, Spain | Fri Nov 18, 2011 9:43am EST
(Reuters) - Increasing demands by mobile operators for consolidation across Europe are unlikely to be fulfilled anytime soon as the tough financial conditions forcing the need for change make deals difficult to agree.
Regulators are also reluctant to wave through deals which might threaten the competition and low prices they see as more urgent than the need for operator investment in ever faster networks.
Consolidation is likely to take place in Greece and perhaps Portugal first, but the wider shake-up that operators believe they need in their larger Western European markets still faces many challenges, not least differing opinions on valuations and wider group strategies.
"We are in a capital intense business, where you can only make investment if there is a limited number of players," the deputy chief executive of France Telecom (FTE.PA), Gervais Pellissier, said this week.
The need for consolidation across Europe has been a key talking point at the annual Morgan Stanley Technology, Media and Telecoms conference, with executives arguing that combining low pricing with increased investment is becoming untenable in maturing markets.
Pellissier pointed to his domestic market as an exemplar.
France is about to go against the grain with the impending launch of a fourth operator Iliad (ILD.PA), which Pellissier said had already forced prices lower as the existing operators squared up to the new competitive environment.
"In France eventually, probably at the end of the decade, we will come back to three operators, but we will have to wait for some time ... before convincing the regulator," he said.
The pulse of the regulator is most likely to be taken first in Greece, where the second and third operators in the three-player market -- Vodafone (VOD.L) and Wind Hellas -- have opened talks about some kind of merger.
With consumers in Greece slashing spending due to higher taxes and increasing unemployment, the two groups have said they have little choice but to try.
Perhaps more surprisingly, the largest operator in the market OTE (OTEr.AT) said this week that it would support the deal and expected the regulator to agree, even though it would likely result in a stronger competitor.
A shake up in Portugal could also take place if the state-owned bank decides to sell stakes it owns as part of a country-wide drive to pay down debt.
FURTHER PAIN
The more complicated problems come in the more mature and highly competitive Western European markets such as Spain, Italy and Germany, where consumers are also feeling the pinch.
The head of Dutch operator KPN (KPN.AS) said a deal between his E-Plus business in Germany and Telefonica's (TEF.MC) O2 Germany would make huge sense but said neither appeared willing to sell.
"There is clearly value to be created in in-country consolidation in Germany," Eelco Blok said.
Morgan Stanley analyst Nick Delfas told Reuters that an exit from Germany for Telefonica would refocus attention on its performance in the Spanish market, which has been hit hard by the economic downturn. Telefonica is also constrained from a cash perspective in any deals it would like to make.
Possible partners could consider a 50-50 joint venture to pool network and investment costs, similar to the one formed in Britain between France Telecom and Deutsche Telekom, but that is also unlikely to suit either player.
Germany is proving a vital market for KPN as it struggles at home and the group is unlikely to want to give up control without a large fee.
In Spain, analysts have said France Telecom's Orange could buy TeliaSonera's (TLSN.ST) Yoigo but TeliaSonera said it felt under no pressure to leave the market, where it has mostly held up well in the tough conditions.
Orange is also in talks to exit Switzerland, where the regulator blocked a previous plan to merge with Sunrise (SRTI.PK), and it wishes to exit Portugal and Austria but has said it will be difficult in the current market.
Vodafone Chief Executive Vittorio Colao, who has withdrawn from several markets in the last year where it did not control assets, said consolidation was needed in European markets if operators were to be able to invest in new networks.
He suggested that perhaps just two operators would build high quality data networks in each country and Russian group Vimpelcom (VIP.N), which has recently bought into Italy, agreed that the network build-out would determine much of the debate.
"In a country like Greece or Portugal there is definitely an argument that to allocate more capital in the current circumstances, it makes sense to have consolidation, with certain consumer safeguards," analyst Delfas said.
"In other markets the return on capital of the marginal players is low. So there's an inevitable consolidation that is going to occur."
(Additional reporting by Georgina Prodhan; Editing by David Cowell)
full story
BARCELONA, Spain | Fri Nov 18, 2011 9:43am EST
(Reuters) - Increasing demands by mobile operators for consolidation across Europe are unlikely to be fulfilled anytime soon as the tough financial conditions forcing the need for change make deals difficult to agree.
Regulators are also reluctant to wave through deals which might threaten the competition and low prices they see as more urgent than the need for operator investment in ever faster networks.
Consolidation is likely to take place in Greece and perhaps Portugal first, but the wider shake-up that operators believe they need in their larger Western European markets still faces many challenges, not least differing opinions on valuations and wider group strategies.
"We are in a capital intense business, where you can only make investment if there is a limited number of players," the deputy chief executive of France Telecom (FTE.PA), Gervais Pellissier, said this week.
The need for consolidation across Europe has been a key talking point at the annual Morgan Stanley Technology, Media and Telecoms conference, with executives arguing that combining low pricing with increased investment is becoming untenable in maturing markets.
Pellissier pointed to his domestic market as an exemplar.
France is about to go against the grain with the impending launch of a fourth operator Iliad (ILD.PA), which Pellissier said had already forced prices lower as the existing operators squared up to the new competitive environment.
"In France eventually, probably at the end of the decade, we will come back to three operators, but we will have to wait for some time ... before convincing the regulator," he said.
The pulse of the regulator is most likely to be taken first in Greece, where the second and third operators in the three-player market -- Vodafone (VOD.L) and Wind Hellas -- have opened talks about some kind of merger.
With consumers in Greece slashing spending due to higher taxes and increasing unemployment, the two groups have said they have little choice but to try.
Perhaps more surprisingly, the largest operator in the market OTE (OTEr.AT) said this week that it would support the deal and expected the regulator to agree, even though it would likely result in a stronger competitor.
A shake up in Portugal could also take place if the state-owned bank decides to sell stakes it owns as part of a country-wide drive to pay down debt.
FURTHER PAIN
The more complicated problems come in the more mature and highly competitive Western European markets such as Spain, Italy and Germany, where consumers are also feeling the pinch.
The head of Dutch operator KPN (KPN.AS) said a deal between his E-Plus business in Germany and Telefonica's (TEF.MC) O2 Germany would make huge sense but said neither appeared willing to sell.
"There is clearly value to be created in in-country consolidation in Germany," Eelco Blok said.
Morgan Stanley analyst Nick Delfas told Reuters that an exit from Germany for Telefonica would refocus attention on its performance in the Spanish market, which has been hit hard by the economic downturn. Telefonica is also constrained from a cash perspective in any deals it would like to make.
Possible partners could consider a 50-50 joint venture to pool network and investment costs, similar to the one formed in Britain between France Telecom and Deutsche Telekom, but that is also unlikely to suit either player.
Germany is proving a vital market for KPN as it struggles at home and the group is unlikely to want to give up control without a large fee.
In Spain, analysts have said France Telecom's Orange could buy TeliaSonera's (TLSN.ST) Yoigo but TeliaSonera said it felt under no pressure to leave the market, where it has mostly held up well in the tough conditions.
Orange is also in talks to exit Switzerland, where the regulator blocked a previous plan to merge with Sunrise (SRTI.PK), and it wishes to exit Portugal and Austria but has said it will be difficult in the current market.
Vodafone Chief Executive Vittorio Colao, who has withdrawn from several markets in the last year where it did not control assets, said consolidation was needed in European markets if operators were to be able to invest in new networks.
He suggested that perhaps just two operators would build high quality data networks in each country and Russian group Vimpelcom (VIP.N), which has recently bought into Italy, agreed that the network build-out would determine much of the debate.
"In a country like Greece or Portugal there is definitely an argument that to allocate more capital in the current circumstances, it makes sense to have consolidation, with certain consumer safeguards," analyst Delfas said.
"In other markets the return on capital of the marginal players is low. So there's an inevitable consolidation that is going to occur."
(Additional reporting by Georgina Prodhan; Editing by David Cowell)
full story
S.Korea to pick advisers for Daewoo stake sale next
By Ju-min Park
SEOUL | Thu Nov 17, 2011 9:18am EST
(Reuters) - South Korea plans to pick advisers next month for the sale of the 19.1 percent stake in Daewoo Shipbuilding & Marine Engineering Co Ltd (042660.KS) held by state-run Korea Asset Management Corp (KAMCO), a source familiar with the situation said, part of efforts to recoup public funds injected after the Asian financial crisis.
KAMCO aimed to unload the stake worth 980 billion won ($862.2 million) at Thursday's closing price by the end of November next year, the source added, as well as its 9.9 percent stake in unlisted Kyobo Life Insurance.
A KAMCO spokesman said the government's public funds oversight committee would convene a meeting this week and next to decide on the sale particulars.
"We need to cash in as much as we can by next November to maximize the collection of public funds," the spokesman said.
State-run Korea Development Bank (KDB)KDB.UL, the shipbuilder's biggest shareholder with a 31.3 percent stake, did not appear ready to resume a full-scale sale process in near future, the source added.
The source said KAMCO would look for options to hold its stake divestment separately from KDB, such as via a block sale.
KDB and KAMCO have jointly sought a new owner for one of the world's top three shipbuilders but failed to sell their controlling stake in early January 2009, when preferred bidder Hanwha group pulled out due to funding worries.
($1=1136.600 won)
(Editing by Chris Lewis)
full story
SEOUL | Thu Nov 17, 2011 9:18am EST
(Reuters) - South Korea plans to pick advisers next month for the sale of the 19.1 percent stake in Daewoo Shipbuilding & Marine Engineering Co Ltd (042660.KS) held by state-run Korea Asset Management Corp (KAMCO), a source familiar with the situation said, part of efforts to recoup public funds injected after the Asian financial crisis.
KAMCO aimed to unload the stake worth 980 billion won ($862.2 million) at Thursday's closing price by the end of November next year, the source added, as well as its 9.9 percent stake in unlisted Kyobo Life Insurance.
A KAMCO spokesman said the government's public funds oversight committee would convene a meeting this week and next to decide on the sale particulars.
"We need to cash in as much as we can by next November to maximize the collection of public funds," the spokesman said.
State-run Korea Development Bank (KDB)KDB.UL, the shipbuilder's biggest shareholder with a 31.3 percent stake, did not appear ready to resume a full-scale sale process in near future, the source added.
The source said KAMCO would look for options to hold its stake divestment separately from KDB, such as via a block sale.
KDB and KAMCO have jointly sought a new owner for one of the world's top three shipbuilders but failed to sell their controlling stake in early January 2009, when preferred bidder Hanwha group pulled out due to funding worries.
($1=1136.600 won)
(Editing by Chris Lewis)
full story
Canada private equity deals tumble in quarter
By Pav Jordan
TORONTO | Wed Nov 16, 2011 11:55am EST
(Reuters) - The value of Canadian deals funded by private equity tumbled in the third quarter, though the level remained well above the trough reached two years ago, according to an industry report.
Private equity deals worth C$1.34 billion ($1.31 billion), were reported in the quarter, a 40 percent drop from the same period last year.
The report, released on Wednesday, was compiled by the Canadian Venture Capital and Private Equity Association (CVCA) in partnership with Thomson Reuters.
Even so, private equity deal-making has already outpaced 2010 levels, and activity is beginning to approach levels reached in the years leading up to the global economic crisis.
From January through September, there were C$9.1 billion worth of deals in Canada, compared with C$6.2 billion in 2010 and C$4.2 billion in 2009. In 2007, private equity investments touched C$27.2 billion, before dropping to C$16.5 billion in 2008, according to CVCA data.
The number of deals also dropped, with 39 completed in the third quarter this year compared with 48 in the same period last year. Average deal sizes werelower, with most worth less than C$500 million.
"Canadian private equity investment returned to its mid-market roots in the third quarter," CVCA President Gregory Smith said in a statement. "Much of this activity involves acquisitiosn of, or significant equity investments in, small and medium-sized enterprises."
Top deals in the quarter included a C$287 million investment in Laricina Energy Ltd, a Calgary-based company, by the Canada Pension Plan Investment Board (CPPIB) and Lime Rock partners.
Private equity fundraising remained strong, despite bumpy global markets, with C$2.7 billion in new capital commitments going to Canadian buyout, mezzanine and other private equity funds. The figure compares with C$3.2 billion raised in all of 2010.
Buyout and private equity fund realizations, where funds exit investments, were tracking lower in the year-to-date, with just 40 at the end of September, compared with 77 for all of 2010, the CVCA said.
(Reporting by Pav Jordan; editing by Frank McGurty)
full story
TORONTO | Wed Nov 16, 2011 11:55am EST
(Reuters) - The value of Canadian deals funded by private equity tumbled in the third quarter, though the level remained well above the trough reached two years ago, according to an industry report.
Private equity deals worth C$1.34 billion ($1.31 billion), were reported in the quarter, a 40 percent drop from the same period last year.
The report, released on Wednesday, was compiled by the Canadian Venture Capital and Private Equity Association (CVCA) in partnership with Thomson Reuters.
Even so, private equity deal-making has already outpaced 2010 levels, and activity is beginning to approach levels reached in the years leading up to the global economic crisis.
From January through September, there were C$9.1 billion worth of deals in Canada, compared with C$6.2 billion in 2010 and C$4.2 billion in 2009. In 2007, private equity investments touched C$27.2 billion, before dropping to C$16.5 billion in 2008, according to CVCA data.
The number of deals also dropped, with 39 completed in the third quarter this year compared with 48 in the same period last year. Average deal sizes werelower, with most worth less than C$500 million.
"Canadian private equity investment returned to its mid-market roots in the third quarter," CVCA President Gregory Smith said in a statement. "Much of this activity involves acquisitiosn of, or significant equity investments in, small and medium-sized enterprises."
Top deals in the quarter included a C$287 million investment in Laricina Energy Ltd, a Calgary-based company, by the Canada Pension Plan Investment Board (CPPIB) and Lime Rock partners.
Private equity fundraising remained strong, despite bumpy global markets, with C$2.7 billion in new capital commitments going to Canadian buyout, mezzanine and other private equity funds. The figure compares with C$3.2 billion raised in all of 2010.
Buyout and private equity fund realizations, where funds exit investments, were tracking lower in the year-to-date, with just 40 at the end of September, compared with 77 for all of 2010, the CVCA said.
(Reporting by Pav Jordan; editing by Frank McGurty)
full story
Neuberger Berman raises $720 million fund of PE funds
HONG KONG | Tue Nov 15, 2011 7:45am EST
(Reuters) - International fund management company Neuberger Berman Group said on Tuesday it has raised about $720 million for a global fund for investment in private equity funds.
"We see attractive investment opportunities in private equity in the coming years," the company said in a press release, adding that the fund of funds will invest in buyouts, distressed and venture capital funds globally.
Since January 2010, Neuberger Berman has raised over $1.5 billion in private equity fund of funds.
Neuberger Berman said it managed approximately $17 billion in alternatives assets for institutional and individual investors as of the end of September. The company invests in private equity funds as well as hedge funds.
(Reporting by Charlie Zhu and Stephen Aldred; Editing by Hans-Juergen Peters)
full story
(Reuters) - International fund management company Neuberger Berman Group said on Tuesday it has raised about $720 million for a global fund for investment in private equity funds.
"We see attractive investment opportunities in private equity in the coming years," the company said in a press release, adding that the fund of funds will invest in buyouts, distressed and venture capital funds globally.
Since January 2010, Neuberger Berman has raised over $1.5 billion in private equity fund of funds.
Neuberger Berman said it managed approximately $17 billion in alternatives assets for institutional and individual investors as of the end of September. The company invests in private equity funds as well as hedge funds.
(Reporting by Charlie Zhu and Stephen Aldred; Editing by Hans-Juergen Peters)
full story
Factbox: Glencore poised to be S.Africa's No. 4 coal player
By Jacqueline Cowhig
LONDON | Thu Nov 10, 2011 2:41pm EST
(Reuters) - Glencore will make a leap to one of South Africa's top coal players with around 10 million tonnes a year of its own export grade thermal coal if it gains control of Optimum Coal Holdings (OCH) and marketing rights to its output.
Total coal exported by Glencore would grow to almost twice that much if coal handled by its marketing arm was included, industry sources said.
Glencore, the world's largest commodity trader, is bidding for a controlling stake in OCH, South African's sixth largest coal producer. It has so far secured almost 24 percent of the shares but has a commitment to sell from shareholders representing at least 49 percent of OCH [ID:nL5E7K614B].
A successful takeover of the firm and its marketing deals would lift Glencore to the No. 4 ranking of South African coal producer/exporters after Anglo American, BHP Billiton and Xstrata.
Below are details of South African coal producers and exports.
OPTIMUM/GLENCORE AND RIVALS
OCH will export roughly 5-5.5 million tonnes in 2011, based on its share of privately-owned Richards Bay Coal Terminal (RBCT), which ships almost all of South Africa's export coal.
Glencore this year will export around 1.5 million tonnes of coal produced by its subsidiary Shanduka Coal plus 2-2.7 million tonnes bought on a spot basis from smaller miners, a total of 4.2 million, sources close to the company said.
South African coal exports are forecast at 63 million tonnes this year from RBCT, a figure which includes 4 million from the Quattro junior miners' export scheme. The remaining 59 million tonnes will be split between RBCT's shareholders.
In comparison, the two currently largest coal shippers, Anglo Coal and BHP Billiton with their RBCT share holdings of 25.94 percent and 23.54 percent respectively, will ship roughly 15.3 million and 13.9 million tonnes in 2011, industry sources said.
Xstrata, in which Glencore owns a 35 percent stake, will ship around 11.6 million tonnes from South Africa this year.
Glencore and Xstrata separately market their production but Xstrata pays Glencore 50 U.S. cents a tonne for marketing advisory services on every tonne shipped from South Africa.
MARKETING AGREEMENT
BHP, which developed the Optimum and Koornfontein mines, but sold them in 2005, has a long-term offtake agreement for Optimum's export coal. Mercuria Energy Trading has a long-term deal to market output from Koornfontein, also part of OCH.
If Glencore gains OCH plus the marketing contracts, Glencore will secure a substantial tonnage of export coal.
Initial steps have already been taken toward this although sources close to the company said last week that Glencore's interest in OCH was not contingent upon gaining the marketing rights [ID:nL5E7K12C7].
DOMINANT POSITION?
Some junior miners have actively lobbied for authorities to block Glencore's bid for OCH on the basis that the firm will have too dominant a position in the South African coal industry.
But Glencore firmly believes that this acquisition does not have a negative impact on competition in the South African coal market, sources close to the company said.
Some of the controversy over just how big a role Glencore plays in the South African coal industry stems from the company's trading activities.
Glencore buys much more coal than it mines from a broad spectrum of other producers and sells it FOB Richards Bay in the same way as international trader competitors including Vitol, Cargill, Mercuria, Noble and Gunvor, but on a bigger scale.
"I make it just a touch below 20 million tonnes in Glencore's hands if they get Optimum -- it is a big number," a senior industry source said.
"I remember in 2000 they (Glencore) loaded one out of three ships at Richards Bay and that was before they owned any mines," another senior industry source said.
Not all the junior players are complaining. Glencore's move has been welcomed by other junior and some major players because Glencore is committed to long-term investment in mining in the country, unlike most of the big miners.
"It's good to see someone from outside the country investing and backing South Africa. Glencore has for years provided a service to the juniors to allow a lot of coal to leave the country, to have it marketed, which otherwise would not have done so," the mining source said.
RBCT currently has a nominal capacity of 72 million tonnes a year, rising to 91 million when the Phase V capacity awarded to junior miners comes into operation, at which point Glencore's 20 million tonnes will be a smaller percentage, unless the company has absorbed more mines by then.
(Reporting by Jacqueline Cowhig)
full story
LONDON | Thu Nov 10, 2011 2:41pm EST
(Reuters) - Glencore will make a leap to one of South Africa's top coal players with around 10 million tonnes a year of its own export grade thermal coal if it gains control of Optimum Coal Holdings (OCH) and marketing rights to its output.
Total coal exported by Glencore would grow to almost twice that much if coal handled by its marketing arm was included, industry sources said.
Glencore, the world's largest commodity trader, is bidding for a controlling stake in OCH, South African's sixth largest coal producer. It has so far secured almost 24 percent of the shares but has a commitment to sell from shareholders representing at least 49 percent of OCH [ID:nL5E7K614B].
A successful takeover of the firm and its marketing deals would lift Glencore to the No. 4 ranking of South African coal producer/exporters after Anglo American, BHP Billiton and Xstrata.
Below are details of South African coal producers and exports.
OPTIMUM/GLENCORE AND RIVALS
OCH will export roughly 5-5.5 million tonnes in 2011, based on its share of privately-owned Richards Bay Coal Terminal (RBCT), which ships almost all of South Africa's export coal.
Glencore this year will export around 1.5 million tonnes of coal produced by its subsidiary Shanduka Coal plus 2-2.7 million tonnes bought on a spot basis from smaller miners, a total of 4.2 million, sources close to the company said.
South African coal exports are forecast at 63 million tonnes this year from RBCT, a figure which includes 4 million from the Quattro junior miners' export scheme. The remaining 59 million tonnes will be split between RBCT's shareholders.
In comparison, the two currently largest coal shippers, Anglo Coal and BHP Billiton with their RBCT share holdings of 25.94 percent and 23.54 percent respectively, will ship roughly 15.3 million and 13.9 million tonnes in 2011, industry sources said.
Xstrata, in which Glencore owns a 35 percent stake, will ship around 11.6 million tonnes from South Africa this year.
Glencore and Xstrata separately market their production but Xstrata pays Glencore 50 U.S. cents a tonne for marketing advisory services on every tonne shipped from South Africa.
MARKETING AGREEMENT
BHP, which developed the Optimum and Koornfontein mines, but sold them in 2005, has a long-term offtake agreement for Optimum's export coal. Mercuria Energy Trading has a long-term deal to market output from Koornfontein, also part of OCH.
If Glencore gains OCH plus the marketing contracts, Glencore will secure a substantial tonnage of export coal.
Initial steps have already been taken toward this although sources close to the company said last week that Glencore's interest in OCH was not contingent upon gaining the marketing rights [ID:nL5E7K12C7].
DOMINANT POSITION?
Some junior miners have actively lobbied for authorities to block Glencore's bid for OCH on the basis that the firm will have too dominant a position in the South African coal industry.
But Glencore firmly believes that this acquisition does not have a negative impact on competition in the South African coal market, sources close to the company said.
Some of the controversy over just how big a role Glencore plays in the South African coal industry stems from the company's trading activities.
Glencore buys much more coal than it mines from a broad spectrum of other producers and sells it FOB Richards Bay in the same way as international trader competitors including Vitol, Cargill, Mercuria, Noble and Gunvor, but on a bigger scale.
"I make it just a touch below 20 million tonnes in Glencore's hands if they get Optimum -- it is a big number," a senior industry source said.
"I remember in 2000 they (Glencore) loaded one out of three ships at Richards Bay and that was before they owned any mines," another senior industry source said.
Not all the junior players are complaining. Glencore's move has been welcomed by other junior and some major players because Glencore is committed to long-term investment in mining in the country, unlike most of the big miners.
"It's good to see someone from outside the country investing and backing South Africa. Glencore has for years provided a service to the juniors to allow a lot of coal to leave the country, to have it marketed, which otherwise would not have done so," the mining source said.
RBCT currently has a nominal capacity of 72 million tonnes a year, rising to 91 million when the Phase V capacity awarded to junior miners comes into operation, at which point Glencore's 20 million tonnes will be a smaller percentage, unless the company has absorbed more mines by then.
(Reporting by Jacqueline Cowhig)
full story
Ex-CEO says Olympus money trail still hides secrets
By Kirstin Ridley
LONDON | Wed Nov 9, 2011 2:36am EST
(Reuters) - The former chief executive of Japan's embattled Olympus said on Tuesday the company's partners should come under close scrutiny after the camera and endoscope maker admitted it hid securities investment losses for two decades.
Michael Woodford, who was fired on October 14 after persistently asking why the company had spent around $1.3 billion on obscure fees and acquisitions, said questions remained to be answered about the money trail.
"You need forensic accountants going in there to find out where the money has gone, who has worked with Olympus, who has cooperated with Olympus, who has received fees from Olympus," he told Reuters Insider.
"Those are questions we need answered. And then we need an impairment test."
Woodford said he "absolutely" expected further revelations after the dramatic Olympus u-turn on Tuesday, at which President Shuichi Takayama blamed former chairman Tsuyoshi Kikukawa, Vice-President Hisashi Mori and internal auditor Hideo Yamada for a cover-up.
"You've got the world's most eminent media organizations, you've got external enforcement and regulatory agencies involved in this. I think we will see things move very quickly."
Woodford expects Britain's Serious Fraud Office (SFO) to decide within days whether to launch a formal investigation alongside the U.S. Department of Justice (DoJ), the Securities and Exchange Commission, the Federal Investigation Bureau (FBI) and Japan's Securities and Exchange Surveillance Commission.
An SFO spokesman said only that the SFO was continuing to consider the matter, although he added that the agency was considering a public announcement on its decision -- a move lawyers believe points to a likely investigation.
Woodford said it was "ludicrous" and "offensive" that Kikukawa and Mori remained company directors despite admitting to their part in the scandal. But he said Takayama was also compromised, as was the rest of the board, for not heeding his demands for answers.
"A teenager could work out you don't pay nearly three quarters of a billion dollars in fees to an unknown party ... The quiet men are just as bad as the noisy ones in this story," he said.
Although Kikukawa resigned last month as president and chairman and Mori was fired earlier on Tuesday, both remain directors unless they resign from the board or are fired by shareholders. Woodford also remains a board director.
Woodford brushed off questions about whether he might also be personally investigated. "Why would I have any motive? I have no fears whatsoever," he said.
"I don't want to indulge in my own feelings, but it's proven what I was saying was true."
(Reporting by Kirstin Ridley; Editing by Jon Loades-Carter)
full story
LONDON | Wed Nov 9, 2011 2:36am EST
(Reuters) - The former chief executive of Japan's embattled Olympus said on Tuesday the company's partners should come under close scrutiny after the camera and endoscope maker admitted it hid securities investment losses for two decades.
Michael Woodford, who was fired on October 14 after persistently asking why the company had spent around $1.3 billion on obscure fees and acquisitions, said questions remained to be answered about the money trail.
"You need forensic accountants going in there to find out where the money has gone, who has worked with Olympus, who has cooperated with Olympus, who has received fees from Olympus," he told Reuters Insider.
"Those are questions we need answered. And then we need an impairment test."
Woodford said he "absolutely" expected further revelations after the dramatic Olympus u-turn on Tuesday, at which President Shuichi Takayama blamed former chairman Tsuyoshi Kikukawa, Vice-President Hisashi Mori and internal auditor Hideo Yamada for a cover-up.
"You've got the world's most eminent media organizations, you've got external enforcement and regulatory agencies involved in this. I think we will see things move very quickly."
Woodford expects Britain's Serious Fraud Office (SFO) to decide within days whether to launch a formal investigation alongside the U.S. Department of Justice (DoJ), the Securities and Exchange Commission, the Federal Investigation Bureau (FBI) and Japan's Securities and Exchange Surveillance Commission.
An SFO spokesman said only that the SFO was continuing to consider the matter, although he added that the agency was considering a public announcement on its decision -- a move lawyers believe points to a likely investigation.
Woodford said it was "ludicrous" and "offensive" that Kikukawa and Mori remained company directors despite admitting to their part in the scandal. But he said Takayama was also compromised, as was the rest of the board, for not heeding his demands for answers.
"A teenager could work out you don't pay nearly three quarters of a billion dollars in fees to an unknown party ... The quiet men are just as bad as the noisy ones in this story," he said.
Although Kikukawa resigned last month as president and chairman and Mori was fired earlier on Tuesday, both remain directors unless they resign from the board or are fired by shareholders. Woodford also remains a board director.
Woodford brushed off questions about whether he might also be personally investigated. "Why would I have any motive? I have no fears whatsoever," he said.
"I don't want to indulge in my own feelings, but it's proven what I was saying was true."
(Reporting by Kirstin Ridley; Editing by Jon Loades-Carter)
full story
Yelp picks banks for IPO: report
Tue Nov 8, 2011 6:25pm EST
(Reuters) - Yelp, which runs a website for online reviews, has picked Goldman Sachs (GS.N) and Citigroup Inc (C.N) as the lead underwriters for an IPO that would value the company at up to $2 billion, according to a report in the Wall Street Journal.
Goldman and Citi declined to comment. Yelp was not immediately available to comment.
(Reporting by Clare Baldwin in New York and Alistair Barr in San Francisco)
full story
(Reuters) - Yelp, which runs a website for online reviews, has picked Goldman Sachs (GS.N) and Citigroup Inc (C.N) as the lead underwriters for an IPO that would value the company at up to $2 billion, according to a report in the Wall Street Journal.
Goldman and Citi declined to comment. Yelp was not immediately available to comment.
(Reporting by Clare Baldwin in New York and Alistair Barr in San Francisco)
full story
Morgan Stanley says warned on $6 billion mortgage debt
Mon Nov 7, 2011 6:05pm EST
(Reuters) - Morgan Stanley said a group of investors believes the bank may have sold defective mortgage bonds contained in more than $6 billion of trusts, signaling that it may face litigation over its involvement.
Gibbs & Bruns, a law firm representing the investors, alleged in a letter received on October 18 that a large number of residential mortgage-backed securities issued by trusts that the bank sponsored or underwrote was based on false or fraudulent information, the bank said in its quarterly report.
The law firm also accused Morgan Stanley of failing to prudently service mortgage loans in the trusts, the filing said.
A Morgan Stanley spokeswoman declined to comment. A Gibbs & Bruns lawyer did not immediately return a request for comment. Morgan Stanley revealed the letter's contents in a discussion of legal proceedings that could prove material.
Gibbs & Bruns is the same law firm that spearheaded a proposed $8.5 billion nationwide investor settlement with Bank of America Corp over losses tied to mortgages by the former Countrywide Financial Corp.
That accord requires court approval, and is being handled by a Manhattan federal judge after many investors not involved in the negotiations questioned its fairness.
The letter represents just the latest legal headache for Morgan Stanley in the aftermath of the financial crisis.
In its quarterly report, Morgan Stanley also outlined six class-action lawsuits and a dozen other legal matters.
Lawsuits are piling up for large banks before statutes of limitation for potential civil claims on subprime mortgage products expire.
Morgan Stanley said it has entered tolling agreements with potential litigants to forgo statutes of limitation "on a case-by-case basis." Companies can enter such agreements in an attempt to settle, rather than be forced to rush to court.
Investors represented by Gibbs & Bruns collectively hold at least 25 percent of the voting rights in the 17 mortgage trusts discussed in the October 18 letter, Monday's filing said. That is the required benchmark for taking significant legal action for breach-of-contract lawsuits.
(Reporting by Lauren Tara LaCapra and Jonathan Stempel in New York, editing by Matthew Lewis)
full story
(Reuters) - Morgan Stanley said a group of investors believes the bank may have sold defective mortgage bonds contained in more than $6 billion of trusts, signaling that it may face litigation over its involvement.
Gibbs & Bruns, a law firm representing the investors, alleged in a letter received on October 18 that a large number of residential mortgage-backed securities issued by trusts that the bank sponsored or underwrote was based on false or fraudulent information, the bank said in its quarterly report.
The law firm also accused Morgan Stanley of failing to prudently service mortgage loans in the trusts, the filing said.
A Morgan Stanley spokeswoman declined to comment. A Gibbs & Bruns lawyer did not immediately return a request for comment. Morgan Stanley revealed the letter's contents in a discussion of legal proceedings that could prove material.
Gibbs & Bruns is the same law firm that spearheaded a proposed $8.5 billion nationwide investor settlement with Bank of America Corp over losses tied to mortgages by the former Countrywide Financial Corp.
That accord requires court approval, and is being handled by a Manhattan federal judge after many investors not involved in the negotiations questioned its fairness.
The letter represents just the latest legal headache for Morgan Stanley in the aftermath of the financial crisis.
In its quarterly report, Morgan Stanley also outlined six class-action lawsuits and a dozen other legal matters.
Lawsuits are piling up for large banks before statutes of limitation for potential civil claims on subprime mortgage products expire.
Morgan Stanley said it has entered tolling agreements with potential litigants to forgo statutes of limitation "on a case-by-case basis." Companies can enter such agreements in an attempt to settle, rather than be forced to rush to court.
Investors represented by Gibbs & Bruns collectively hold at least 25 percent of the voting rights in the 17 mortgage trusts discussed in the October 18 letter, Monday's filing said. That is the required benchmark for taking significant legal action for breach-of-contract lawsuits.
(Reporting by Lauren Tara LaCapra and Jonathan Stempel in New York, editing by Matthew Lewis)
full story
PepsiCo sells China bottling assets to Tingyi
By Rachel Lee and Martinne Geller
HONG KONG/NEW YORK | Fri Nov 4, 2011 5:52pm EDT
(Reuters) - PepsiCo Inc (PEP.N) agreed to sell its interest in 24 soft drink bottlers in China to Hong Kong-listed Tingyi Holdings Corp (0322.HK), an acknowledgment that its strategy in China was not working.
PepsiCo will initially receive only 5 percent of Tingyi-Asahi Beverages (TAB), Tingyi's joint venture with Japan's Asahi Group Holdings Ltd (2502.T), a stake the companies valued at about $55 million. PepsiCo has the option of increasing its stake to 20 percent by 2015, when China is projected to become the world's largest market for bottled drinks.
PepsiCo's bottling business in China, which has a book value of $600 million, has lost money for the past two years amid soaring raw material costs and intense competition from Coca-Cola Co (KO.N), whose share of the Chinese market is more than triple that of Pepsi.
Coca-Cola's sales volume rose 11 percent in China in the most recent quarter, fueled by its Minute Maid Pulpy, a drink Coke developed specifically for China that recently crossed the $1 billion sales threshold.
"Obviously, Coke is winning," said Michael Yoshikami, CEO of YCMNET Advisors. "When you're in China, Coke is very, very dominant."
He said Pepsi likely realized the boost its brands would get from linking up with Tingyi was a better way forward than "slugging it out with Coke."
"Is this a sign that Pepsi is retreating; that they can't contend with Coke one-on-one in a face-off to take over the biggest market in the world? Well, it sure looks that way," said Bevmark Consulting CEO Tom Pirko.
Analysts said the deal was good for Tingyi, since it lets the maker of Master Kong instant noodles and bottled tea expand its beverage offerings without hurting its balance sheet.
They also said it was good for PepsiCo, since it broadens its distribution, allows it to unload those loss-making operations and gives it a stake in a company poised for faster growth than Pepsi alone.
A combined Pepsi and Tingyi would control about 20 percent of the Chinese soft drink market, according to data from Euromonitor International, overtaking Coke, which has market share of nearly 17 percent. PepsiCo is currently fourth with a 5.5 percent stake.
"But (it) could also be viewed as a capitulation, as PepsiCo is surrendering some of the upside in one of its key growth markets and admitting the need for a partner," Levy said.
She also noted the similar arrangement PepsiCo has in Japan with Suntory Holdings Ltd SUNTH.UL has not resulted in significant market share in that market.
CAPITULATION
China's massive billion-plus population has long been enticing to foreign brands, keeping most of the focus on inward investment from overseas.
The Pepsi/Tingyi tie-up marks a rare case in the consumer sector of a Chinese company acquiring a foreign stake within its own borders and not the other way around, as brands seek to seize market share and tap China's growing middle class, widening tastes and purchasing power.
Lois Olson, a marketing professor at San Diego State University who specializes in China, said the deal could be seen as evidence of the growing power of Chinese companies.
"There is an increasing power, leverage and sheer might in Chinese companies. They're getting a lot better at what they do," she said.
Still, she added the move probably had more to do with Coke than China.
"There aren't a lot of duopolies in the world and this is a huge, powerful duopoly. Coke really does dominate there," she said, noting the huge success in China of Yum Brands Inc (YUM.N), which runs the KFC and Pizza Hut chains and used to be part of PepsiCo, has not translated into success for PepsiCo.
Attempts by overseas businesses to enter China have not always been successful. Coca-Cola was blocked by regulators in its $2.4 billion bid in 2009 for Huiyuan Juice, which raised concerns among investors that such deals were effectively off the table.
Nestle, though, is currently eyeing a possible $2.6 billion deal to buy candy maker Hsu Fu Chi International Ltd (HSFU.SI). And Diageo, the world's largest spirits group, took a major step forward in June toward taking control of Sichuan Shuijingfang Co Ltd (600779.SS), China's fourth-largest white spirits group.
Under the alliance, TAB would work with PepsiCo's current bottlers to manufacture and distribute PepsiCo's drinks, while PepsiCo would keep responsibility for branding and marketing. TAB would begin co-branding its juice products under the Tropicana brand name.
The deal is subject to review and approval under China's Anti-Monopoly Law and approval of Tingyi shareholders.
A PepsiCo spokesman said the company would begin seeking those approvals immediately and said it would be inappropriate to speculate on how long the process would take.
Tingyi, which owns the Master Kong brand of instant noodles, drinks and snacks, has a market capitalization of $15 billion after a roughly 20-fold increase in its share price in the past 10 years on rising consumer demand in China.
PepsiCo said last year it would invest $2.5 billion in its food-and-beverage businesses in China over the next three years. It had said it planned to open 10-12 new plants in China to manufacture soft drinks, noncarbonated beverages and snacks and would install additional production lines at existing facilities.
UBS advised PepsiCo on the deal, while J.P. Morgan advised Tingyi.
PepsiCo shares closed down 1.3 percent at $61.99 on the New York Stock Exchange on Friday.
(Writing by Charlie Zhu; additional reporting by Donny Kwok and Denny Thomas; editing by Neil Fullick, Chris Lewis; Matthew Lewis and Andre Grenon)
full story
HONG KONG/NEW YORK | Fri Nov 4, 2011 5:52pm EDT
(Reuters) - PepsiCo Inc (PEP.N) agreed to sell its interest in 24 soft drink bottlers in China to Hong Kong-listed Tingyi Holdings Corp (0322.HK), an acknowledgment that its strategy in China was not working.
PepsiCo will initially receive only 5 percent of Tingyi-Asahi Beverages (TAB), Tingyi's joint venture with Japan's Asahi Group Holdings Ltd (2502.T), a stake the companies valued at about $55 million. PepsiCo has the option of increasing its stake to 20 percent by 2015, when China is projected to become the world's largest market for bottled drinks.
PepsiCo's bottling business in China, which has a book value of $600 million, has lost money for the past two years amid soaring raw material costs and intense competition from Coca-Cola Co (KO.N), whose share of the Chinese market is more than triple that of Pepsi.
Coca-Cola's sales volume rose 11 percent in China in the most recent quarter, fueled by its Minute Maid Pulpy, a drink Coke developed specifically for China that recently crossed the $1 billion sales threshold.
"Obviously, Coke is winning," said Michael Yoshikami, CEO of YCMNET Advisors. "When you're in China, Coke is very, very dominant."
He said Pepsi likely realized the boost its brands would get from linking up with Tingyi was a better way forward than "slugging it out with Coke."
"Is this a sign that Pepsi is retreating; that they can't contend with Coke one-on-one in a face-off to take over the biggest market in the world? Well, it sure looks that way," said Bevmark Consulting CEO Tom Pirko.
Analysts said the deal was good for Tingyi, since it lets the maker of Master Kong instant noodles and bottled tea expand its beverage offerings without hurting its balance sheet.
They also said it was good for PepsiCo, since it broadens its distribution, allows it to unload those loss-making operations and gives it a stake in a company poised for faster growth than Pepsi alone.
A combined Pepsi and Tingyi would control about 20 percent of the Chinese soft drink market, according to data from Euromonitor International, overtaking Coke, which has market share of nearly 17 percent. PepsiCo is currently fourth with a 5.5 percent stake.
"But (it) could also be viewed as a capitulation, as PepsiCo is surrendering some of the upside in one of its key growth markets and admitting the need for a partner," Levy said.
She also noted the similar arrangement PepsiCo has in Japan with Suntory Holdings Ltd SUNTH.UL has not resulted in significant market share in that market.
CAPITULATION
China's massive billion-plus population has long been enticing to foreign brands, keeping most of the focus on inward investment from overseas.
The Pepsi/Tingyi tie-up marks a rare case in the consumer sector of a Chinese company acquiring a foreign stake within its own borders and not the other way around, as brands seek to seize market share and tap China's growing middle class, widening tastes and purchasing power.
Lois Olson, a marketing professor at San Diego State University who specializes in China, said the deal could be seen as evidence of the growing power of Chinese companies.
"There is an increasing power, leverage and sheer might in Chinese companies. They're getting a lot better at what they do," she said.
Still, she added the move probably had more to do with Coke than China.
"There aren't a lot of duopolies in the world and this is a huge, powerful duopoly. Coke really does dominate there," she said, noting the huge success in China of Yum Brands Inc (YUM.N), which runs the KFC and Pizza Hut chains and used to be part of PepsiCo, has not translated into success for PepsiCo.
Attempts by overseas businesses to enter China have not always been successful. Coca-Cola was blocked by regulators in its $2.4 billion bid in 2009 for Huiyuan Juice, which raised concerns among investors that such deals were effectively off the table.
Nestle, though, is currently eyeing a possible $2.6 billion deal to buy candy maker Hsu Fu Chi International Ltd (HSFU.SI). And Diageo, the world's largest spirits group, took a major step forward in June toward taking control of Sichuan Shuijingfang Co Ltd (600779.SS), China's fourth-largest white spirits group.
Under the alliance, TAB would work with PepsiCo's current bottlers to manufacture and distribute PepsiCo's drinks, while PepsiCo would keep responsibility for branding and marketing. TAB would begin co-branding its juice products under the Tropicana brand name.
The deal is subject to review and approval under China's Anti-Monopoly Law and approval of Tingyi shareholders.
A PepsiCo spokesman said the company would begin seeking those approvals immediately and said it would be inappropriate to speculate on how long the process would take.
Tingyi, which owns the Master Kong brand of instant noodles, drinks and snacks, has a market capitalization of $15 billion after a roughly 20-fold increase in its share price in the past 10 years on rising consumer demand in China.
PepsiCo said last year it would invest $2.5 billion in its food-and-beverage businesses in China over the next three years. It had said it planned to open 10-12 new plants in China to manufacture soft drinks, noncarbonated beverages and snacks and would install additional production lines at existing facilities.
UBS advised PepsiCo on the deal, while J.P. Morgan advised Tingyi.
PepsiCo shares closed down 1.3 percent at $61.99 on the New York Stock Exchange on Friday.
(Writing by Charlie Zhu; additional reporting by Donny Kwok and Denny Thomas; editing by Neil Fullick, Chris Lewis; Matthew Lewis and Andre Grenon)
full story
Snap analysis: Fed stays course, sees economic improvement
WASHINGTON | Wed Nov 2, 2011 1:12pm EDT
(Reuters) - The Federal Reserve on Wednesday said economic growth had strengthened somewhat and made no changes to its ultra-easy money policies.
One policymaker dissented against the stand-pat decision, saying the central bank should expand efforts to booth growth.
Below is a side-by-side of key phrases from the Fed's September and November policy statements and what they mean:
SEPTEMBER: Economic growth remains slow.
NOVEMBER: Economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of temporary factors.
TAKE-AWAY: Policymakers see evidence a weak recovery is strengthening after it looked like it might falter over the summer and early fall.
SEPTEMBER: Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.
NOVEMBER: Same language
TAKE-AWAY: There will continue to be an active debate at the Fed about taking further easing steps as long as it is falling short of making progress in meeting its full employment mandate.
SEPTEMBER: The committee discussed the range of policy tools available to promote a stronger economic recovery.
NOVEMBER: No reference to a discussion of policy tools.
TAKE-AWAY: Ideas floated by policy doves such as expanding mortgage-backed securities purchases, targeting a growth rate, or efforts to clarify further the Fed's commitment to an extended period of low rates remain in the development phase.
SEPTEMBER: Voting against the action were Richard W. Fisher, Narayana Kocherlakota, Charles I. Plosser, who did not support additional policy accommodation at this time.
NOVEMBER: Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.
TAKE-AWAY: Fed hawks are resigned to current policies, including portfolio rebalancing, and are willing to see them through. The pressure within the Fed on Chairman Ben Bernanke comes now on the side of further easing.
SEPTEMBER: The committee continues to expect a moderate pace of growth.
NOVEMBER: The committee continues to expect some pickup in the pace of recovery.
TAKE-AWAY: Despite a modestly more rosy outlook, Fed officials don't expect growth to accelerate dramatically.
SEPTEMBER: There are significant downside risks to the economic outlook, including strains in global financial markets.
NOVEMBER: Same language.
TAKE-AWAY: The fluid situation in Europe remains a concern that could deal a blow to the U.S. economy.
SEPTEMBER: Inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate.
NOVEMBER: Same language.
TAKE-AWAY: Policymakers remain vigilant to the possibility that deflation risks could resurface.
(Reporting by Mark Felsenthal; Editing by Andrea Ricci)
full story
(Reuters) - The Federal Reserve on Wednesday said economic growth had strengthened somewhat and made no changes to its ultra-easy money policies.
One policymaker dissented against the stand-pat decision, saying the central bank should expand efforts to booth growth.
Below is a side-by-side of key phrases from the Fed's September and November policy statements and what they mean:
SEPTEMBER: Economic growth remains slow.
NOVEMBER: Economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of temporary factors.
TAKE-AWAY: Policymakers see evidence a weak recovery is strengthening after it looked like it might falter over the summer and early fall.
SEPTEMBER: Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.
NOVEMBER: Same language
TAKE-AWAY: There will continue to be an active debate at the Fed about taking further easing steps as long as it is falling short of making progress in meeting its full employment mandate.
SEPTEMBER: The committee discussed the range of policy tools available to promote a stronger economic recovery.
NOVEMBER: No reference to a discussion of policy tools.
TAKE-AWAY: Ideas floated by policy doves such as expanding mortgage-backed securities purchases, targeting a growth rate, or efforts to clarify further the Fed's commitment to an extended period of low rates remain in the development phase.
SEPTEMBER: Voting against the action were Richard W. Fisher, Narayana Kocherlakota, Charles I. Plosser, who did not support additional policy accommodation at this time.
NOVEMBER: Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.
TAKE-AWAY: Fed hawks are resigned to current policies, including portfolio rebalancing, and are willing to see them through. The pressure within the Fed on Chairman Ben Bernanke comes now on the side of further easing.
SEPTEMBER: The committee continues to expect a moderate pace of growth.
NOVEMBER: The committee continues to expect some pickup in the pace of recovery.
TAKE-AWAY: Despite a modestly more rosy outlook, Fed officials don't expect growth to accelerate dramatically.
SEPTEMBER: There are significant downside risks to the economic outlook, including strains in global financial markets.
NOVEMBER: Same language.
TAKE-AWAY: The fluid situation in Europe remains a concern that could deal a blow to the U.S. economy.
SEPTEMBER: Inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate.
NOVEMBER: Same language.
TAKE-AWAY: Policymakers remain vigilant to the possibility that deflation risks could resurface.
(Reporting by Mark Felsenthal; Editing by Andrea Ricci)
full story
For snow and lawn machines, gasoline remains king
By John D. Stoll
LOUISVILLE, Kentucky | Fri Oct 28, 2011 9:54pm EDT
(Reuters) - In America's quest for cleaner fuel, at least one major U.S. industry is holding on to the sputter and grime of the internal combustion engine.
From log splitters to snow blowers, the $15 billion outdoor power equipment industry sells tens of millions of oil-powered machines a year to U.S. landscapers, loggers, homeowners and a litany of other buyers.
While lawn mowers get faster, snow blowers cover more ground and handheld products get lighter, their propulsion has barely changed beyond getting more mileage out of gasoline.
This week, at the annual Green Industry and Equipment Expo in Louisville, Kentucky, manufacturers will once again unveil new equipment with some promise of a cleaner, greener future.
"We do anticipate the trend moving in the direction of alternative energy," said Jeff Salamon, director of marketing at MTD Products Inc. "Some customers do like the experience of being unencumbered by exhaust and gasoline."
However, the answers offered will likely be more of the same.
"Gas engines, by and large, are the most efficient way to go," Briggs & Stratton Corp Chief Executive Todd Teske told Reuters in an interview shortly after a press conference to unveil the company's latest engine. Briggs & Stratton sells electric mowers, but only in Australia.
NOT YOUR FATHER'S MACHINE
For decades, garden and snow machines were a poster child for harmful emissions. In fact, when auto executives were confronted by regulators for their contributions to pollution, they pointed to the lawn industry as a more offensive culprit.
In the mid-1990s, that began to change as the Environmental Protection Agency began pressuring engine makers with tougher standards.
"These aren't your father's lawn machines," Kris Keiser, president of the Outdoor Power Equipment Institute, said.
At Briggs & Stratton, for example, Teske said emissions have been cut by 75 percent since the mid-1990s thanks to manufacturing upgrades and design improvements. Another 35 percent reduction will come in 2012.
The auto and other industries are under constant pressure to raise fuel economy or tap new technologies because their customers often burn through dozens or more gallons of gasoline each month. As gas prices rise, so does the strain on pocketbooks.
But outdoor equipment users don't face these pressures.
"People who use our products typically use no more than five gallons of gasoline per year," Keiser said. This lessens the likelihood that customers will demand huge advances in fuel economy or solutions that lessen their operating expenses.
Even commercial landscapers here in Louisville don't seem to be budging, despite high weekly fuel costs.
"THIS CUSTOMER IS DIFFERENT"
Wang Xiaoguang, general manager of Wenling Leo Garden Machinery Co -- which claims to be the largest exporter of Chinese garden machines -- is learning this lesson first hand.
Standing at his exhibition booth, he talks about Leo's successful business of exporting electric mowers to Europe.
"This customer is different," Wang said of the U.S. market which Leo has yet to crack. "They have different standards."
But some companies, including a handful of start-ups, aren't waiting for customers to change their minds.
Lincoln Jore, a 28-year-old entrepreneur from Ronan, Montana, launched a new "GasLess" outdoor equipment company called Core Outdoor Power on Thursday aimed at commercial landscapers and higher-end homeowners.
His first product, a $249 weed whacker weighing 11 pounds, is powered by an unconventional motor and lithium-ion battery that slips in and out of the machine so it can be charged on a separate dock. It will begin appearing at independent U.S. dealers early next year.
The "market has missed the mark on developing alternative energy products that meet performance expectations," he said.
By 2013, Jore plans to have a broader range of products, including a lawn mower and leaf blower that don't use gas.
TWICE THE PRICE
But even the most established global players are finding it hard to turn the tide.
Honda Motor Co sells thousands of hybrid snow blowers in Japan annually and is bringing a hybrid model to the United States. This model promises to be the Cadillac of its class, capable of clearing 83 tons of snow in an hour and sweep a city sidewalk in one pass.
But, at $8,000, this machine is twice as expensive as the company's previous top-of-the-line model, and hybrid technology is driving up the cost. Honda's expectations for sales of the Japan-built hybrid are extremely modest, but it wants to test the market before committing to other alternative-energy models.
If Wisconsin-based Ariens Co's experience during last year's tough winter is any indication, there may be hope for Honda. Ariens put on sale an electric snow blower priced 60 percent higher than a conventional model. The company sold out of its limited quantity of electric snow blowers amid heavy snowfall and tight industry capacity.
Stihl Inc, which says it is the No. 1 seller of handheld outdoor power devices, is also branching out. It has a new lineup of chainsaws, leaf blowers, weed whackers and hedge trimmers that are powered by lithium-ion batteries.
The products cost 30 percent more than conventional gas-powered versions and, while initial demand has outstripped expectations, the company said it is too early to break out specific sales results.
Cub Cadet, a brand owned by MTD, has a lithium-ion-powered product line on display similar to those sold by Stihl, but demand so far is only from a "faction" of customers, Salamon said.
Still, Cub Cadet is poised for a shift at some point, even if it is slow going, he noted.
(Editing by Richard Chang)
full story
LOUISVILLE, Kentucky | Fri Oct 28, 2011 9:54pm EDT
(Reuters) - In America's quest for cleaner fuel, at least one major U.S. industry is holding on to the sputter and grime of the internal combustion engine.
From log splitters to snow blowers, the $15 billion outdoor power equipment industry sells tens of millions of oil-powered machines a year to U.S. landscapers, loggers, homeowners and a litany of other buyers.
While lawn mowers get faster, snow blowers cover more ground and handheld products get lighter, their propulsion has barely changed beyond getting more mileage out of gasoline.
This week, at the annual Green Industry and Equipment Expo in Louisville, Kentucky, manufacturers will once again unveil new equipment with some promise of a cleaner, greener future.
"We do anticipate the trend moving in the direction of alternative energy," said Jeff Salamon, director of marketing at MTD Products Inc. "Some customers do like the experience of being unencumbered by exhaust and gasoline."
However, the answers offered will likely be more of the same.
"Gas engines, by and large, are the most efficient way to go," Briggs & Stratton Corp Chief Executive Todd Teske told Reuters in an interview shortly after a press conference to unveil the company's latest engine. Briggs & Stratton sells electric mowers, but only in Australia.
NOT YOUR FATHER'S MACHINE
For decades, garden and snow machines were a poster child for harmful emissions. In fact, when auto executives were confronted by regulators for their contributions to pollution, they pointed to the lawn industry as a more offensive culprit.
In the mid-1990s, that began to change as the Environmental Protection Agency began pressuring engine makers with tougher standards.
"These aren't your father's lawn machines," Kris Keiser, president of the Outdoor Power Equipment Institute, said.
At Briggs & Stratton, for example, Teske said emissions have been cut by 75 percent since the mid-1990s thanks to manufacturing upgrades and design improvements. Another 35 percent reduction will come in 2012.
The auto and other industries are under constant pressure to raise fuel economy or tap new technologies because their customers often burn through dozens or more gallons of gasoline each month. As gas prices rise, so does the strain on pocketbooks.
But outdoor equipment users don't face these pressures.
"People who use our products typically use no more than five gallons of gasoline per year," Keiser said. This lessens the likelihood that customers will demand huge advances in fuel economy or solutions that lessen their operating expenses.
Even commercial landscapers here in Louisville don't seem to be budging, despite high weekly fuel costs.
"THIS CUSTOMER IS DIFFERENT"
Wang Xiaoguang, general manager of Wenling Leo Garden Machinery Co -- which claims to be the largest exporter of Chinese garden machines -- is learning this lesson first hand.
Standing at his exhibition booth, he talks about Leo's successful business of exporting electric mowers to Europe.
"This customer is different," Wang said of the U.S. market which Leo has yet to crack. "They have different standards."
But some companies, including a handful of start-ups, aren't waiting for customers to change their minds.
Lincoln Jore, a 28-year-old entrepreneur from Ronan, Montana, launched a new "GasLess" outdoor equipment company called Core Outdoor Power on Thursday aimed at commercial landscapers and higher-end homeowners.
His first product, a $249 weed whacker weighing 11 pounds, is powered by an unconventional motor and lithium-ion battery that slips in and out of the machine so it can be charged on a separate dock. It will begin appearing at independent U.S. dealers early next year.
The "market has missed the mark on developing alternative energy products that meet performance expectations," he said.
By 2013, Jore plans to have a broader range of products, including a lawn mower and leaf blower that don't use gas.
TWICE THE PRICE
But even the most established global players are finding it hard to turn the tide.
Honda Motor Co sells thousands of hybrid snow blowers in Japan annually and is bringing a hybrid model to the United States. This model promises to be the Cadillac of its class, capable of clearing 83 tons of snow in an hour and sweep a city sidewalk in one pass.
But, at $8,000, this machine is twice as expensive as the company's previous top-of-the-line model, and hybrid technology is driving up the cost. Honda's expectations for sales of the Japan-built hybrid are extremely modest, but it wants to test the market before committing to other alternative-energy models.
If Wisconsin-based Ariens Co's experience during last year's tough winter is any indication, there may be hope for Honda. Ariens put on sale an electric snow blower priced 60 percent higher than a conventional model. The company sold out of its limited quantity of electric snow blowers amid heavy snowfall and tight industry capacity.
Stihl Inc, which says it is the No. 1 seller of handheld outdoor power devices, is also branching out. It has a new lineup of chainsaws, leaf blowers, weed whackers and hedge trimmers that are powered by lithium-ion batteries.
The products cost 30 percent more than conventional gas-powered versions and, while initial demand has outstripped expectations, the company said it is too early to break out specific sales results.
Cub Cadet, a brand owned by MTD, has a lithium-ion-powered product line on display similar to those sold by Stihl, but demand so far is only from a "faction" of customers, Salamon said.
Still, Cub Cadet is poised for a shift at some point, even if it is slow going, he noted.
(Editing by Richard Chang)
full story
Sony buys Ericsson out of mobile phone venture
By Tarmo Virki, European Technology Correspondent
LONDON | Thu Oct 27, 2011 12:40pm EDT
(Reuters) - Sony Corp is to take over its mobile phone joint venture with Ericsson for 1.05 billion euros ($1.5 billion), as it seeks to exploit its music and video to help it catch smartphone leaders such as Apple Inc.
The deal to buy out its Swedish partner will enable Sony to better integrate smartphones and other devices with its array of content, from its music label whose stars include Beyonce and Britney Spears, its movie studio whose current hits include Spider Man and Anonymous and its Playstation video games such as Legends of Norrah.
"Its the beginning of something which I think is quite magical," Sony Chairman Sir Howard Stringer told a news conference in London. "We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment".
Until now Sony's tablets, games and other consumer electronics devices have been kept separate from the phones sold and created by Sony Ericsson.
"Sony is looking to do the same as Apple and meet users' demands through linking various devices with similar interfaces and operating systems," said analyst Nobuo Kurahashi of Mizuho Investors' Securities in Tokyo.
"Smartphones look to become more important products for Sony ... and they will probably become the main device people use to connect to the Internet."
Smartphone sales have been surging since Apple launched its first iPhone in 2007 and despite a slowdown in the overall consumer electronics market, strong demand is set to continue.
"More and more people are watching content on smartphones. TV is not going to go away, but they watch it on smartphones and they watch it on tablets," Stringer said.
STRUGGLES AHEAD
The deal will give Sony ownership of certain handset patents held by Ericsson and will enable it to cut costs in the Sony Ericsson business, with Stringer pointing to savings in operations, R&D and marketing.
The takeover of Sony Ericsson by the Japanese group had long been talked of and a source with knowledge of the matter told Reuters this month a deal was in the offing.
"Sony now has all the components to compete with Samsung and Apple. The big question now is ... can it execute?," said Pete Cunningham of consultancy Canalys, adding Japanese company takeovers in Europe and the United States had often struggled.
"Based on history I am sceptical, but I would not say it cannot be done," he added.
Founded in 2001, Sony Ericsson employs some 7,500 and last year took around 2 percent of the global cellphone market with sales of 6.3 billion euros. Initially it thrived with an array of camera and music phones but it lost out in the smartphone race.
"Sony had to make this deal as it had run out of options, but integration challenges could prove to be a major hurdle," said Ben Wood, head of research at consultancy CCS Insight.
"As a major consumer electronics player, lack of mobile assets had become a liability for Sony, particularly when compared with Samsung, whose telecommunication business creates nearly half of its profits," he said.
Ericsson said the deal provides Sony with a broad intellectual property cross-licensing agreement covering all the Japanese company's products and services, as well as ownership of five essential patent families relating to wireless handset technology.
Shares in Ericsson, which as a result of the deal increases its focus on the wireless network business in which it is the world's largest manufacturer, were up 5 percent at 70 crowns by 1153 GMT. The STOXX Europe 600 technology index was up 3.4 percent.
Ericsson Chief Executive Hans Vestberg told Reuters the company would use the cash payment to strengthen its balance sheet and had no plans to pay it out to shareholders. ($1=0.724 euros)
(Additional reporting by Veronica Ek, Olaf Swahnberg and Patrick Lannin in Stockholm, with James Topham in Tokyo; Editing by Greg Mahlich and David Holmes)
full story
LONDON | Thu Oct 27, 2011 12:40pm EDT
(Reuters) - Sony Corp is to take over its mobile phone joint venture with Ericsson for 1.05 billion euros ($1.5 billion), as it seeks to exploit its music and video to help it catch smartphone leaders such as Apple Inc.
The deal to buy out its Swedish partner will enable Sony to better integrate smartphones and other devices with its array of content, from its music label whose stars include Beyonce and Britney Spears, its movie studio whose current hits include Spider Man and Anonymous and its Playstation video games such as Legends of Norrah.
"Its the beginning of something which I think is quite magical," Sony Chairman Sir Howard Stringer told a news conference in London. "We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment".
Until now Sony's tablets, games and other consumer electronics devices have been kept separate from the phones sold and created by Sony Ericsson.
"Sony is looking to do the same as Apple and meet users' demands through linking various devices with similar interfaces and operating systems," said analyst Nobuo Kurahashi of Mizuho Investors' Securities in Tokyo.
"Smartphones look to become more important products for Sony ... and they will probably become the main device people use to connect to the Internet."
Smartphone sales have been surging since Apple launched its first iPhone in 2007 and despite a slowdown in the overall consumer electronics market, strong demand is set to continue.
"More and more people are watching content on smartphones. TV is not going to go away, but they watch it on smartphones and they watch it on tablets," Stringer said.
STRUGGLES AHEAD
The deal will give Sony ownership of certain handset patents held by Ericsson and will enable it to cut costs in the Sony Ericsson business, with Stringer pointing to savings in operations, R&D and marketing.
The takeover of Sony Ericsson by the Japanese group had long been talked of and a source with knowledge of the matter told Reuters this month a deal was in the offing.
"Sony now has all the components to compete with Samsung and Apple. The big question now is ... can it execute?," said Pete Cunningham of consultancy Canalys, adding Japanese company takeovers in Europe and the United States had often struggled.
"Based on history I am sceptical, but I would not say it cannot be done," he added.
Founded in 2001, Sony Ericsson employs some 7,500 and last year took around 2 percent of the global cellphone market with sales of 6.3 billion euros. Initially it thrived with an array of camera and music phones but it lost out in the smartphone race.
"Sony had to make this deal as it had run out of options, but integration challenges could prove to be a major hurdle," said Ben Wood, head of research at consultancy CCS Insight.
"As a major consumer electronics player, lack of mobile assets had become a liability for Sony, particularly when compared with Samsung, whose telecommunication business creates nearly half of its profits," he said.
Ericsson said the deal provides Sony with a broad intellectual property cross-licensing agreement covering all the Japanese company's products and services, as well as ownership of five essential patent families relating to wireless handset technology.
Shares in Ericsson, which as a result of the deal increases its focus on the wireless network business in which it is the world's largest manufacturer, were up 5 percent at 70 crowns by 1153 GMT. The STOXX Europe 600 technology index was up 3.4 percent.
Ericsson Chief Executive Hans Vestberg told Reuters the company would use the cash payment to strengthen its balance sheet and had no plans to pay it out to shareholders. ($1=0.724 euros)
(Additional reporting by Veronica Ek, Olaf Swahnberg and Patrick Lannin in Stockholm, with James Topham in Tokyo; Editing by Greg Mahlich and David Holmes)
full story
Greece may return to markets sooner than 2021, PM says
ATHENS | Wed Oct 26, 2011 11:46pm EDT
(Reuters) - Greece may be able to return to bond markets sooner than in 2021, the year in which it is expected to do so by the International Monetary Fund, the Greek prime minister said on Thursday.
"If we manage to implement reforms fast, it (a return to markets) will not be 10 years, it will be much faster," Prime Minister George Papandreou told a news conference after EU leaders agreed on a 50-percent haircut for private sector investors in Greek bonds.
In a debt sustainability report compiled earlier this month, the IMF had said that the country may not be able to sell bonds to private investors for 10 years.
(Reporting by Harry Papachristou; editing by Rex Merrifield)
full story
(Reuters) - Greece may be able to return to bond markets sooner than in 2021, the year in which it is expected to do so by the International Monetary Fund, the Greek prime minister said on Thursday.
"If we manage to implement reforms fast, it (a return to markets) will not be 10 years, it will be much faster," Prime Minister George Papandreou told a news conference after EU leaders agreed on a 50-percent haircut for private sector investors in Greek bonds.
In a debt sustainability report compiled earlier this month, the IMF had said that the country may not be able to sell bonds to private investors for 10 years.
(Reporting by Harry Papachristou; editing by Rex Merrifield)
full story
Nasdaq executive sees up to 20 IPOs in U.S. by year-end
By Elzio Barreto
HONG KONG | Tue Oct 25, 2011 10:56pm EDT
(Reuters) - Nasdaq OMX Group (NDAQ.O) expects between 15 and 20 more U.S. initial public offerings (IPOs) this year despite volatility in global markets that has dampened deal volume in recent months, a top executive at the company told Reuters.
The company had initially expected 100-120 IPOs in 2011, but the final tally could be about 80 percent of this as companies delay listing due to a global markets slump, said Bruce Aust, Nasdaq's executive vice president, corporate client group.
"We've still got a very strong pipeline of companies," said Aust, who is in charge of Nasdaq's global listing business. "We anticipate that anywhere between 15 and 20 companies could price before the end of the year."
Global IPO volume is down 7 percent since the start of the year as investors remain wary of equity markets due to lingering concern over Europe's debt troubles and an ailing U.S. economy.
Companies from fast-growing Asian markets to Europe and the U.S. have put fundraising plans on hold, but issuance could pick up in 2012 as investors venture back into equity markets.
"I don't think anybody anticipated the volatility in markets, (or) obviously what's going on in Europe," Aust said in an interview.
"It's all subject to market conditions and volatility. But I would say that with 105 companies actively filed and registered to go public, we feel encouraged that if markets return to some sense of normalcy in 2012 we'll see a very, very robust IPO market."
Chinese companies could account for three or four of the remaining IPOs in the U.S. this year Aust said.
Companies from China make up the bulk of foreign issuers in the Nasdaq, followed by those from Israel, but more listings from Russia and India are expected, he added.
Demand for Chinese IPOs listing in the United States should continue, although a series of accounting and corporate governance scandals have turned investor sentiment against many China-related stocks. Even Chinese companies that have not disclosed accounting issues have been hit by selloffs amid investor concern over the entire sector, including NetQin Mobile Inc (NQ.N), Trunkbow International Holdings Ltd (TBOW.O) and E-Commerce China Dangdang Inc (DANG.N).
"Any time there is some uncertainty, or investors feel there is some unease or lack of transparency around the companies they're investing in, they will at least pause to make sure they know where they're investing," Aust said.
"There's definitely an appetite from U.S. markets for Chinese investments.
"When you look at the growth potential for China over the next 10 years, it's tremendous. So when you have companies that are doing the majority of their business in China, you can understand that growth is going to come from those companies."
(Editing by Will Waterman and David Hulmes)
FULL STORY
HONG KONG | Tue Oct 25, 2011 10:56pm EDT
(Reuters) - Nasdaq OMX Group (NDAQ.O) expects between 15 and 20 more U.S. initial public offerings (IPOs) this year despite volatility in global markets that has dampened deal volume in recent months, a top executive at the company told Reuters.
The company had initially expected 100-120 IPOs in 2011, but the final tally could be about 80 percent of this as companies delay listing due to a global markets slump, said Bruce Aust, Nasdaq's executive vice president, corporate client group.
"We've still got a very strong pipeline of companies," said Aust, who is in charge of Nasdaq's global listing business. "We anticipate that anywhere between 15 and 20 companies could price before the end of the year."
Global IPO volume is down 7 percent since the start of the year as investors remain wary of equity markets due to lingering concern over Europe's debt troubles and an ailing U.S. economy.
Companies from fast-growing Asian markets to Europe and the U.S. have put fundraising plans on hold, but issuance could pick up in 2012 as investors venture back into equity markets.
"I don't think anybody anticipated the volatility in markets, (or) obviously what's going on in Europe," Aust said in an interview.
"It's all subject to market conditions and volatility. But I would say that with 105 companies actively filed and registered to go public, we feel encouraged that if markets return to some sense of normalcy in 2012 we'll see a very, very robust IPO market."
Chinese companies could account for three or four of the remaining IPOs in the U.S. this year Aust said.
Companies from China make up the bulk of foreign issuers in the Nasdaq, followed by those from Israel, but more listings from Russia and India are expected, he added.
Demand for Chinese IPOs listing in the United States should continue, although a series of accounting and corporate governance scandals have turned investor sentiment against many China-related stocks. Even Chinese companies that have not disclosed accounting issues have been hit by selloffs amid investor concern over the entire sector, including NetQin Mobile Inc (NQ.N), Trunkbow International Holdings Ltd (TBOW.O) and E-Commerce China Dangdang Inc (DANG.N).
"Any time there is some uncertainty, or investors feel there is some unease or lack of transparency around the companies they're investing in, they will at least pause to make sure they know where they're investing," Aust said.
"There's definitely an appetite from U.S. markets for Chinese investments.
"When you look at the growth potential for China over the next 10 years, it's tremendous. So when you have companies that are doing the majority of their business in China, you can understand that growth is going to come from those companies."
(Editing by Will Waterman and David Hulmes)
FULL STORY
Japan sounds intervention alarm on strong yen
By Stanley White and Kaori Kaneko
TOKYO | Mon Oct 24, 2011 1:53pm EDT
(Reuters) - Japan's finance minister put traders on alert for possible currency intervention on Monday as the yen's rise to a record high against the dollar threatened to further squeeze exporters' profits and hold back economic recovery.
Japan's export growth showed signs of resilience, slowing less than expected in September, finance ministry data showed, but economists warn that persistent yen strength and Europe's sovereign debt woes pose increasing risks to external demand.
The Bank of Japan, which meets on Thursday, will probably cut its economic forecasts because of slowing global growth but keep monetary policy unchanged unless disappointment over Europe's plans to solve its crisis roils markets.
Even if the BOJ keeps policy unchanged this week, Japan's government and central bank may not be able to hold off from taking action much longer as safe-haven flows keep the yen stubbornly high against the U.S. currency.
"The dollar/yen rate fell sharply, to between 75 and 76 yen, in a short time. This is an utterly speculative move and not reflecting the economic fundamentals at all. This is regrettable," Finance Minister Jun Azumi told reporters.
"If this move becomes excessive, we have to take decisive action. I already instructed my staff on Saturday to be prepared to take action."
Azumi added that the strong yen would have a major impact on Japan's export sector, especially the auto industry, and could dent the country's economic recovery from a slump triggered by the March 11 earthquake and tsunami.
Azumi spoke after the dollar hit a record low of 75.78 yen on trading platform EBS on Friday. That surpassed its previous record low of 75.94 yen in August and brought back into focus the possibility of intervention to weaken the Japanese currency.
The dollar rose slightly after Azumi's remark but later ceded ground to trade around 76.25 yen.
Japan's biggest business lobby echoed Azumi's concern about exports and on Monday urged intervention by the authorities even if they have to go it alone.
"I would like to see firm action by Japan, including steps such as intervention on its own," Nippon Keidanren Chairman Hiromasa Yonekura said at a news conference.
UNILATERAL INTERVENTION
Analysts do not rule out intervention, most likely unilateral, if the yen continues to rise.
"Japan may intervene in the currency market if dollar/yen stays below 76 or falls below 75. Unless it intervenes, the yen may continue to rise and verbal warnings alone may not be able to reverse that trend," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
Traders in Tokyo, however, were skeptical whether the latest market action would serve as a trigger for intervention, citing a broad sell-off in the dollar as the main driver and data showing that margin traders have recently built up long dollar/yen positions.
Since September of last year, the government has intervened twice on its own and once jointly with other Group of Seven rich nations to weaken the yen, but the effects of intervention have proved short-lived.
The government needs to be ready to respond if the pace of speculative currency move picks up, Vice Finance Minister Fumihiko Igarashi warned.
Japan's exports rose 2.4 percent in September from a year earlier, boosted by shipments of cars and car parts. That compared with a median forecast for a 1.0 percent increase, and followed a 2.8 percent climb in the year to August.
Imports increased 12.1 percent in September, against a forecast of a 12.6 percent rise.
The trade balance turned to a surplus of 300.4 billion yen ($3.95 billion) following the previous month's deficit. That compared with a median forecast of a 198.8 billion yen surplus.
Exports to Asia, which account for more than half of Japan's total exports, edged up 0.2 percent from a year earlier, with China taking in 2.7 percent more Japanese goods than a year ago, while exports to the United States were up 0.4 percent.
The Japanese economy probably rebounded in the third quarter from the damage caused by the March 11 disaster but is expected to slow to a crawl in the final quarter due to an intensifying euro-zone debt crisis that threatens to drag down the world economy, a Reuters poll shows.
Euro zone leaders are striving to agree on new steps to reduce Greece's debt, strengthen the capital of banks with exposure to troubled euro zone sovereigns and leverage the euro zone's rescue fund to stem contagion to bigger economies.
($1=76.13 yen)
(Editing by Tomasz Janowski and Neil Fullick)
full story
TOKYO | Mon Oct 24, 2011 1:53pm EDT
(Reuters) - Japan's finance minister put traders on alert for possible currency intervention on Monday as the yen's rise to a record high against the dollar threatened to further squeeze exporters' profits and hold back economic recovery.
Japan's export growth showed signs of resilience, slowing less than expected in September, finance ministry data showed, but economists warn that persistent yen strength and Europe's sovereign debt woes pose increasing risks to external demand.
The Bank of Japan, which meets on Thursday, will probably cut its economic forecasts because of slowing global growth but keep monetary policy unchanged unless disappointment over Europe's plans to solve its crisis roils markets.
Even if the BOJ keeps policy unchanged this week, Japan's government and central bank may not be able to hold off from taking action much longer as safe-haven flows keep the yen stubbornly high against the U.S. currency.
"The dollar/yen rate fell sharply, to between 75 and 76 yen, in a short time. This is an utterly speculative move and not reflecting the economic fundamentals at all. This is regrettable," Finance Minister Jun Azumi told reporters.
"If this move becomes excessive, we have to take decisive action. I already instructed my staff on Saturday to be prepared to take action."
Azumi added that the strong yen would have a major impact on Japan's export sector, especially the auto industry, and could dent the country's economic recovery from a slump triggered by the March 11 earthquake and tsunami.
Azumi spoke after the dollar hit a record low of 75.78 yen on trading platform EBS on Friday. That surpassed its previous record low of 75.94 yen in August and brought back into focus the possibility of intervention to weaken the Japanese currency.
The dollar rose slightly after Azumi's remark but later ceded ground to trade around 76.25 yen.
Japan's biggest business lobby echoed Azumi's concern about exports and on Monday urged intervention by the authorities even if they have to go it alone.
"I would like to see firm action by Japan, including steps such as intervention on its own," Nippon Keidanren Chairman Hiromasa Yonekura said at a news conference.
UNILATERAL INTERVENTION
Analysts do not rule out intervention, most likely unilateral, if the yen continues to rise.
"Japan may intervene in the currency market if dollar/yen stays below 76 or falls below 75. Unless it intervenes, the yen may continue to rise and verbal warnings alone may not be able to reverse that trend," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
Traders in Tokyo, however, were skeptical whether the latest market action would serve as a trigger for intervention, citing a broad sell-off in the dollar as the main driver and data showing that margin traders have recently built up long dollar/yen positions.
Since September of last year, the government has intervened twice on its own and once jointly with other Group of Seven rich nations to weaken the yen, but the effects of intervention have proved short-lived.
The government needs to be ready to respond if the pace of speculative currency move picks up, Vice Finance Minister Fumihiko Igarashi warned.
Japan's exports rose 2.4 percent in September from a year earlier, boosted by shipments of cars and car parts. That compared with a median forecast for a 1.0 percent increase, and followed a 2.8 percent climb in the year to August.
Imports increased 12.1 percent in September, against a forecast of a 12.6 percent rise.
The trade balance turned to a surplus of 300.4 billion yen ($3.95 billion) following the previous month's deficit. That compared with a median forecast of a 198.8 billion yen surplus.
Exports to Asia, which account for more than half of Japan's total exports, edged up 0.2 percent from a year earlier, with China taking in 2.7 percent more Japanese goods than a year ago, while exports to the United States were up 0.4 percent.
The Japanese economy probably rebounded in the third quarter from the damage caused by the March 11 disaster but is expected to slow to a crawl in the final quarter due to an intensifying euro-zone debt crisis that threatens to drag down the world economy, a Reuters poll shows.
Euro zone leaders are striving to agree on new steps to reduce Greece's debt, strengthen the capital of banks with exposure to troubled euro zone sovereigns and leverage the euro zone's rescue fund to stem contagion to bigger economies.
($1=76.13 yen)
(Editing by Tomasz Janowski and Neil Fullick)
full story
Bain Capital to buy Skylark for $2.1 billion
TOKYO | Fri Oct 21, 2011 8:03am EDT
(Reuters) - U.S. private equity firm Bain Capital said it agreed to buy restaurant chain Skylark from Nomura Holdings (8604.T) and other investors for $2.1 billion in equity, marking the largest buyout by a private equity firm in Japan since the financial crisis.
Bain and Nomura began talks on Skylark last year but negotiations were put on hold after Japan's massive March earthquake. They were delayed again in August after an outbreak of dysentery traced to outlets of Skylark's Gusto restaurant chain.
Sources had told Reuters earlier this month that Bain was close to finalizing the deal for about 260 billion yen ($3.4 billion), including debt. Bain only disclosed the equity portion of the transaction.
Nomura Principal, the private equity unit of Nomura, originally invested in Skylark in 2006 through a management buyout with UK private equity firm CVC Capital Partners.
CVC gave a stake to a private equity fund owned by Chuo Mitsui Trust Holdings in 2009 in return for not having to pay back loans made to purchase the stake.
Nomura said on Friday it sold its holdings in Skylark for 128 billion yen in common and preferred shares.
Mizuho Corporate Bank, Bank of Tokyo Mitsubishi UFJ, Morgan Stanley, Nomura Capital Investment and Shinsei Bank are among the banks which agreed to provide financing for Bain's purchase of Skylark, Bain Capital said. ($1 = 76.870 Japanese Yen)
(Reporting by Junko Fujita; Editing by Chris Gallagher)
full story
(Reuters) - U.S. private equity firm Bain Capital said it agreed to buy restaurant chain Skylark from Nomura Holdings (8604.T) and other investors for $2.1 billion in equity, marking the largest buyout by a private equity firm in Japan since the financial crisis.
Bain and Nomura began talks on Skylark last year but negotiations were put on hold after Japan's massive March earthquake. They were delayed again in August after an outbreak of dysentery traced to outlets of Skylark's Gusto restaurant chain.
Sources had told Reuters earlier this month that Bain was close to finalizing the deal for about 260 billion yen ($3.4 billion), including debt. Bain only disclosed the equity portion of the transaction.
Nomura Principal, the private equity unit of Nomura, originally invested in Skylark in 2006 through a management buyout with UK private equity firm CVC Capital Partners.
CVC gave a stake to a private equity fund owned by Chuo Mitsui Trust Holdings in 2009 in return for not having to pay back loans made to purchase the stake.
Nomura said on Friday it sold its holdings in Skylark for 128 billion yen in common and preferred shares.
Mizuho Corporate Bank, Bank of Tokyo Mitsubishi UFJ, Morgan Stanley, Nomura Capital Investment and Shinsei Bank are among the banks which agreed to provide financing for Bain's purchase of Skylark, Bain Capital said. ($1 = 76.870 Japanese Yen)
(Reporting by Junko Fujita; Editing by Chris Gallagher)
full story
U.S. urges Europe needs to leverage bailout fund
By Glenn Somerville and Doug Palmer
WASHINGTON | Thu Oct 20, 2011 5:35pm EDT
(Reuters) - Europe must find a way to give its bailout fund the firepower it needs to become a firewall that will block its financial crisis from spreading, a senior U.S. Treasury Department official said on Thursday.
Testifying before the Senate Finance Committee, Under Secretary for International Affairs Lael Brainard said the 440-billion-euro ($600 billion) European Financial Stability Facility (EFSF) provides "quite substantial resources" that could be given more strength by leveraging it to make it more forceful.
Europe should leverage the EFSF "to be credible in the market, and it needs to give them that overwhelming force where it takes the threat of defaults and bank runs off the table," she said.
She added that there were a number of ways of doing so but did not specify a preferred method.
France has argued the most effective way of leveraging the fund is to turn it into a bank that could use funding from the European Central Bank to guarantee some of the debts of struggling euro zone countries. But the ECB and Berlin oppose this and the proposal appears to be dead.
An alternative would use the EFSF to guarantee a portion of potential losses on new euro zone debt and so aim to restore market confidence and convince investors that the debt of Italy and Spain remains safe to buy.
European leaders will use a summit on Sunday to try to work out their differences.
Brainard, who attended a Group of 20 finance ministers' meeting in Paris last week that focused on the European financial crisis, said it posed the most serious risk to the global recovery and also created "headwinds" for a fragile U.S. recovery.
She told lawmakers, in response to questions about chances of overcoming it, that it was "a good sign" that European leaders were "intensively engaged" in trying to come up with a method for containing it.
"I think they know ... this is an issue that the world cares a great deal about," Brainard said, adding it will be "the most important priority" when political leaders from the G20 meet in Cannes, France, on November 3-4.
U.S. FEELING THE IMPACT
Brainard said U.S. interest in Europe's well-being stems partly from the fact that U.S. recovery "remains fragile and all too vulnerable to disruption beyond our shores." More stability in Europe would bolster consumer and investment confidence that was shaken during the summer by a contentious debate over raising the U.S. debt limit and hurt more as the European crisis intensified.
Brainard also pointed to China in discussing what is needed for the global economy to get on sounder footing.
"With demand in the advanced economies likely to remain weak, it is essential for emerging economic powers, such as China, to play a bigger role in bolstering and sustaining global growth," she said.
Countries with big current account surpluses should encourage more domestic consumption, she added, in a further clear reference to China.
She also addressed the value of China's currency, which has been a topic of heated debate in the United States.
Many U.S. lawmakers say China keeps its currency artificially low, giving it an unfair trade advantage. The Senate this month approved legislation to try to force Beijing to let the yuan rise, but Republican leaders in the House of Representatives have signaled opposition to the measure.
Brainard said Treasury has "worked aggressively to pressure China" into letting its yuan currency appreciate more rapidly, which would likely encourage more consumption by Chinese consumers.
"We have seen some progress on this front, with appreciation of over 10 percent in real terms bilaterally since June 2010 and 38 percent since 2005, but more is needed," she said. She said the yuan was still substantially undervalued.
Brainard urged Congress to back U.S. support for international lenders like the International Monetary Fund and World Bank.
"Our leadership at the international financial institutions could be at risk if Congress does not act to support our commitments to these institutions," she said. "Other nations, particularly China, are eager to take up our shares in these institutions if we do not meet our commitments."
(Reporting by Glenn Somerville; Editing by Chizu Nomiyama)
full story
WASHINGTON | Thu Oct 20, 2011 5:35pm EDT
(Reuters) - Europe must find a way to give its bailout fund the firepower it needs to become a firewall that will block its financial crisis from spreading, a senior U.S. Treasury Department official said on Thursday.
Testifying before the Senate Finance Committee, Under Secretary for International Affairs Lael Brainard said the 440-billion-euro ($600 billion) European Financial Stability Facility (EFSF) provides "quite substantial resources" that could be given more strength by leveraging it to make it more forceful.
Europe should leverage the EFSF "to be credible in the market, and it needs to give them that overwhelming force where it takes the threat of defaults and bank runs off the table," she said.
She added that there were a number of ways of doing so but did not specify a preferred method.
France has argued the most effective way of leveraging the fund is to turn it into a bank that could use funding from the European Central Bank to guarantee some of the debts of struggling euro zone countries. But the ECB and Berlin oppose this and the proposal appears to be dead.
An alternative would use the EFSF to guarantee a portion of potential losses on new euro zone debt and so aim to restore market confidence and convince investors that the debt of Italy and Spain remains safe to buy.
European leaders will use a summit on Sunday to try to work out their differences.
Brainard, who attended a Group of 20 finance ministers' meeting in Paris last week that focused on the European financial crisis, said it posed the most serious risk to the global recovery and also created "headwinds" for a fragile U.S. recovery.
She told lawmakers, in response to questions about chances of overcoming it, that it was "a good sign" that European leaders were "intensively engaged" in trying to come up with a method for containing it.
"I think they know ... this is an issue that the world cares a great deal about," Brainard said, adding it will be "the most important priority" when political leaders from the G20 meet in Cannes, France, on November 3-4.
U.S. FEELING THE IMPACT
Brainard said U.S. interest in Europe's well-being stems partly from the fact that U.S. recovery "remains fragile and all too vulnerable to disruption beyond our shores." More stability in Europe would bolster consumer and investment confidence that was shaken during the summer by a contentious debate over raising the U.S. debt limit and hurt more as the European crisis intensified.
Brainard also pointed to China in discussing what is needed for the global economy to get on sounder footing.
"With demand in the advanced economies likely to remain weak, it is essential for emerging economic powers, such as China, to play a bigger role in bolstering and sustaining global growth," she said.
Countries with big current account surpluses should encourage more domestic consumption, she added, in a further clear reference to China.
She also addressed the value of China's currency, which has been a topic of heated debate in the United States.
Many U.S. lawmakers say China keeps its currency artificially low, giving it an unfair trade advantage. The Senate this month approved legislation to try to force Beijing to let the yuan rise, but Republican leaders in the House of Representatives have signaled opposition to the measure.
Brainard said Treasury has "worked aggressively to pressure China" into letting its yuan currency appreciate more rapidly, which would likely encourage more consumption by Chinese consumers.
"We have seen some progress on this front, with appreciation of over 10 percent in real terms bilaterally since June 2010 and 38 percent since 2005, but more is needed," she said. She said the yuan was still substantially undervalued.
Brainard urged Congress to back U.S. support for international lenders like the International Monetary Fund and World Bank.
"Our leadership at the international financial institutions could be at risk if Congress does not act to support our commitments to these institutions," she said. "Other nations, particularly China, are eager to take up our shares in these institutions if we do not meet our commitments."
(Reporting by Glenn Somerville; Editing by Chizu Nomiyama)
full story
Samsung, Google unveil phone for revamped Android
By Lee Chyen Yee and Hyunjoo Jin
HONG KONG/SEOUL | Wed Oct 19, 2011 5:37am EDT
(Reuters) - Samsung Electronics unveiled the first smartphone running on Google's latest version of the Android operating system, which combines software used in tablets and smartphones, as they step up competition against Apple.
The global launch of the Galaxy Nexus kicks off in November and comes as competition intensifies between Samsung and Apple Inc to win market share in the booming tablets and smartphones industry.
Samsung and Google introduced the high-end model at an event in Hong Kong, after delaying the launch last week as a tribute to the late Apple co-founder Steve Jobs. Apple is Samsung's biggest customer for microprocessors.
"This will be our strategic product for year-end holiday season, as (Apple's) iPhone 4S just came into the market," JK Shin, president and head of Samsung's mobile communications business, said in a pooled report with reporters ahead of a packed product launch in Hong Kong.
This also marks the first major rollout from Google since it announced plans in August to acquire Motorola Mobility Holdings for $12.5 billion.
The deal had raised concerns among hardware makers that Google may favor Motorola over other handset vendors such as Samsung, HTC and LG Electronics Inc that rely on the free software.
Google's Android mobile software -- already the world's most-used smartphone platform -- powers 190 million devices, up from 135 million in mid-July.
The latest version of Android, named Ice Cream Sandwich, is designed to unite tablet and smartphone platforms, potentially attracting more application developers and consumers to the Android camp, which has fewer applications available than Apple's.
Samsung, the top seller of Android phones and the biggest challenger to Apple, said the phone will have access to more than 300,000 applications and games, versus over 425,000 apps from Apple's App Store.
The release comes after Apple unveiled its latest operating system earlier this month which allows much-touted voice-recognition technology dubbed "Siri."
Technology websites ran live blogs of the event, indicating the buzz generated for the new Android software and Nexus.
During the launch in Hong Kong, executives demonstrated several features of the new gadget, including Android beam that allows two phones to connect back-to-back to share news articles on the Internet and Google maps.
Samsung's new device, which touts a 4.65-inch high-definition "super" AM-OLED display and a 1.2 GHz dual-core processor, features such new functions as face recognition to unlock the phone.
The world's No.2 handset maker said it also plans to introduce a version of the Galaxy Nexus that runs on faster Long-Term Evolution (LTE) networks.
Samsung's event came less than a day after Apple reported quarterly results that missed expectations for the first time in years, blaming rumors of the new iPhone for hurting demand in the September quarter.
Apple and Samsung have been locked in an acrimonious legal dispute in 10 countries involving smartphones and tablet computers as they jostle for the top spot in the fast-growing markets.
Analysts said they expect Apple and Samsung to remain dominant in their rankings.
"I don't see Apple and Samsung getting kicked out of their positions anytime soon (in the next year or so)," said Melissa Chau, research manager for client devices at research firm IDC.
"It will be a very close race between Apple and Samsung mainly because I think Apple is in a high-end and more niche category than Samsung, whereas Samsung can certainly bring that scale all the way down in price."
Samsung said on Monday that sales of its Galaxy S and Galaxy S II smartphones topped 30 million units, with the once-smartphone-laggard expected to overtake Apple as the world's biggest smartphone vendor in the third quarter. [
By 0615 GMT, shares in Samsung were trading up 0.3 percent versus a 0.9 percent rise in the broader market.
(Additional reporting by Huang Yuntao and Jonathan Gordon in HONG KONG; Editing by Jonathan Hopfner, Anshuman Daga and Miyoung Kim)
full story
HONG KONG/SEOUL | Wed Oct 19, 2011 5:37am EDT
(Reuters) - Samsung Electronics unveiled the first smartphone running on Google's latest version of the Android operating system, which combines software used in tablets and smartphones, as they step up competition against Apple.
The global launch of the Galaxy Nexus kicks off in November and comes as competition intensifies between Samsung and Apple Inc to win market share in the booming tablets and smartphones industry.
Samsung and Google introduced the high-end model at an event in Hong Kong, after delaying the launch last week as a tribute to the late Apple co-founder Steve Jobs. Apple is Samsung's biggest customer for microprocessors.
"This will be our strategic product for year-end holiday season, as (Apple's) iPhone 4S just came into the market," JK Shin, president and head of Samsung's mobile communications business, said in a pooled report with reporters ahead of a packed product launch in Hong Kong.
This also marks the first major rollout from Google since it announced plans in August to acquire Motorola Mobility Holdings for $12.5 billion.
The deal had raised concerns among hardware makers that Google may favor Motorola over other handset vendors such as Samsung, HTC and LG Electronics Inc that rely on the free software.
Google's Android mobile software -- already the world's most-used smartphone platform -- powers 190 million devices, up from 135 million in mid-July.
The latest version of Android, named Ice Cream Sandwich, is designed to unite tablet and smartphone platforms, potentially attracting more application developers and consumers to the Android camp, which has fewer applications available than Apple's.
Samsung, the top seller of Android phones and the biggest challenger to Apple, said the phone will have access to more than 300,000 applications and games, versus over 425,000 apps from Apple's App Store.
The release comes after Apple unveiled its latest operating system earlier this month which allows much-touted voice-recognition technology dubbed "Siri."
Technology websites ran live blogs of the event, indicating the buzz generated for the new Android software and Nexus.
During the launch in Hong Kong, executives demonstrated several features of the new gadget, including Android beam that allows two phones to connect back-to-back to share news articles on the Internet and Google maps.
Samsung's new device, which touts a 4.65-inch high-definition "super" AM-OLED display and a 1.2 GHz dual-core processor, features such new functions as face recognition to unlock the phone.
The world's No.2 handset maker said it also plans to introduce a version of the Galaxy Nexus that runs on faster Long-Term Evolution (LTE) networks.
Samsung's event came less than a day after Apple reported quarterly results that missed expectations for the first time in years, blaming rumors of the new iPhone for hurting demand in the September quarter.
Apple and Samsung have been locked in an acrimonious legal dispute in 10 countries involving smartphones and tablet computers as they jostle for the top spot in the fast-growing markets.
Analysts said they expect Apple and Samsung to remain dominant in their rankings.
"I don't see Apple and Samsung getting kicked out of their positions anytime soon (in the next year or so)," said Melissa Chau, research manager for client devices at research firm IDC.
"It will be a very close race between Apple and Samsung mainly because I think Apple is in a high-end and more niche category than Samsung, whereas Samsung can certainly bring that scale all the way down in price."
Samsung said on Monday that sales of its Galaxy S and Galaxy S II smartphones topped 30 million units, with the once-smartphone-laggard expected to overtake Apple as the world's biggest smartphone vendor in the third quarter. [
By 0615 GMT, shares in Samsung were trading up 0.3 percent versus a 0.9 percent rise in the broader market.
(Additional reporting by Huang Yuntao and Jonathan Gordon in HONG KONG; Editing by Jonathan Hopfner, Anshuman Daga and Miyoung Kim)
full story
Analysis: Rise of the machines: America's jobs challenge
By Jason Lange
WASHINGTON | Wed Oct 19, 2011 8:36am EDT
(Reuters) - For decades, American workers and their machines advanced in tandem. As companies invested in technology, more workers were needed to operate machines.
That relationship is now looking unsteady.
Since 1999, business investment in equipment and software has surged 33 percent while the total number of people employed by private firms has changed little.
The gap between man and machine widened even further after the 2008-09 recession, helping explain why the United States is struggling to bring down an unemployment rate stuck above 9 percent.
The revolution in information technologies is taking a deeper and deeper hold in the U.S. economy.
Throughout history, technology revolutions have paved the way to forms of employment: Britain's 19th century industrial revolution threw artisans out of work but eventually created mass employment in factories.
But a decade-long drought in jobs in the United States is raising questions whether there is a fundamental shift in the structure of the labor market.
"Labor and capital are out of sync," said Tyler Cowen, an economist at George Mason University in Fairfax, Virginia. "It seems be a growing and strengthening trend... (and) suggests there is this longer-term structural change."
To be sure, some of the struggles of the U.S. labor market reflects displacement rather than the disappearance of jobs, as improvements in technology have spawned the outsourcing of operations ranging from call centers to engineering departments in lower-wage countries.
But the spread of IT from America's factory floors to the massive service sector creates a double-whammy for workers, Cowen said.
Retailers are in the midst of the technology revolution. Research firm VDC Research estimates retailers worldwide will spend 12 percent more on installing self-check-out kiosks -- which require fewer staff -- by 2015.
In Massachusetts, supermarket chain Stop & Shop is piloting a program that allows shoppers to use their smart phones to scan groceries as they pull them off the shelves -- a move that could lead to even fewer check-out clerks.
The advance of technology throughout the economy poses a challenge for policy makers fighting high unemployment. As technology reduces the number of workers needed to produce the same amount of goods and services, the economy must grow at an even faster pace if new jobs are to be created.
JOBLESS RECOVERIES
In the 1990s, the rate at which companies boosted equipment and software investments more than doubled and output per hour surged. Employment growth generally tracked the higher rates of productivity for a time, as it had for generations.
Then something happened. After the 2001 recession, private employment growth essentially flat-lined while technology investment continued its giddy rise.
Since the Great Recession, technology investment has rebounded even more strongly and is growing more rapidly as a share of the economy than in any recovery in at least six decades.
Private employment, however, is not rebounding in tandem. At the current pace of job creation, it would take years for employment to return to pre-recession levels -- let alone absorb new entrants to the labor market.
The travel industry is a key example of how on-line technology has revolutionized a business sector.
The chief executive of Travelocity, a privately held company based in Dallas, noted how the company can sell dramatically more airline tickets and hotels rooms with fewer employees than an old-fashioned travel agent.
Online retailers also can innovate rapidly. Just a few employees with computer skills can change a market with dizzying speed.
"With the Internet, five people in a room can get together on something and put it up to 1 percent of your visitors to test and see how it goes," said Carl Sparks, Travelocity's CEO.
The reshaping of commerce has extended far beyond online retailing. Bar code scanners made by Honeywell International Inc have sped up passenger check-ins at airports and improved the tracking of goods in warehouses.
The U.S. manufacturer expects its scanners will increasingly be adopted in hospitals, improving the productivity of nurses administering drugs, said the firm's product management director, Taylor Smith.
The rapid pace of technological advances has led some economists to speculate that information technology is a factor behind the recent trend of jobless recoveries.
"The technology now is different," said Mark Thoma, an economist at the University of Oregon. "We're way more able to replace people with smart equipment, and it's going up into new levels of the population. It's not just the manufacturing workers. It's white collar workers, too."
FUTURE JOBS
Innovation is nothing new. Nor are job layoffs as companies cut employees during recessions -- part of what economists call the "creative destruction" process that eventually rechannels less productive resources into the jobs of the future.
The labor market stagnation over the last two years is also probably due in large part to the ferocity of the recent recession, the worst to hit the United States since the Great Depression, economists say.
But the growing gap between technology investment and job growth over the past decade suggests that the traditional link between capital investment and employment is under duress.
The chairman of Google Inc, Eric Schmidt, has called the labor market a "national emergency" and argues that the U.S. government should urgently find a way to stimulate demand.
Higher profits due to technology advances are not enough to spur hiring, he said. As a nation, he said, "We're stuck."
On-line travel firms, however, show a glimmer of how technology can help create fresh demand -- essential for the creation of new jobs.
The industry has embraced smart phones and iPads in the newest twist to push last-minute travel deals -- perhaps spurring consumers to take an extra trip and boost business for airlines and hotels.
It's a technology trend that could help the whole travel market grow, albeit incrementally.
"We are hiring more engineers in the mobile space to build more mobile products," said Travelocity's Sparks. "We hire more people in marketing to handle that."
(Editing by Leslie Adler)
full story
WASHINGTON | Wed Oct 19, 2011 8:36am EDT
(Reuters) - For decades, American workers and their machines advanced in tandem. As companies invested in technology, more workers were needed to operate machines.
That relationship is now looking unsteady.
Since 1999, business investment in equipment and software has surged 33 percent while the total number of people employed by private firms has changed little.
The gap between man and machine widened even further after the 2008-09 recession, helping explain why the United States is struggling to bring down an unemployment rate stuck above 9 percent.
The revolution in information technologies is taking a deeper and deeper hold in the U.S. economy.
Throughout history, technology revolutions have paved the way to forms of employment: Britain's 19th century industrial revolution threw artisans out of work but eventually created mass employment in factories.
But a decade-long drought in jobs in the United States is raising questions whether there is a fundamental shift in the structure of the labor market.
"Labor and capital are out of sync," said Tyler Cowen, an economist at George Mason University in Fairfax, Virginia. "It seems be a growing and strengthening trend... (and) suggests there is this longer-term structural change."
To be sure, some of the struggles of the U.S. labor market reflects displacement rather than the disappearance of jobs, as improvements in technology have spawned the outsourcing of operations ranging from call centers to engineering departments in lower-wage countries.
But the spread of IT from America's factory floors to the massive service sector creates a double-whammy for workers, Cowen said.
Retailers are in the midst of the technology revolution. Research firm VDC Research estimates retailers worldwide will spend 12 percent more on installing self-check-out kiosks -- which require fewer staff -- by 2015.
In Massachusetts, supermarket chain Stop & Shop is piloting a program that allows shoppers to use their smart phones to scan groceries as they pull them off the shelves -- a move that could lead to even fewer check-out clerks.
The advance of technology throughout the economy poses a challenge for policy makers fighting high unemployment. As technology reduces the number of workers needed to produce the same amount of goods and services, the economy must grow at an even faster pace if new jobs are to be created.
JOBLESS RECOVERIES
In the 1990s, the rate at which companies boosted equipment and software investments more than doubled and output per hour surged. Employment growth generally tracked the higher rates of productivity for a time, as it had for generations.
Then something happened. After the 2001 recession, private employment growth essentially flat-lined while technology investment continued its giddy rise.
Since the Great Recession, technology investment has rebounded even more strongly and is growing more rapidly as a share of the economy than in any recovery in at least six decades.
Private employment, however, is not rebounding in tandem. At the current pace of job creation, it would take years for employment to return to pre-recession levels -- let alone absorb new entrants to the labor market.
The travel industry is a key example of how on-line technology has revolutionized a business sector.
The chief executive of Travelocity, a privately held company based in Dallas, noted how the company can sell dramatically more airline tickets and hotels rooms with fewer employees than an old-fashioned travel agent.
Online retailers also can innovate rapidly. Just a few employees with computer skills can change a market with dizzying speed.
"With the Internet, five people in a room can get together on something and put it up to 1 percent of your visitors to test and see how it goes," said Carl Sparks, Travelocity's CEO.
The reshaping of commerce has extended far beyond online retailing. Bar code scanners made by Honeywell International Inc have sped up passenger check-ins at airports and improved the tracking of goods in warehouses.
The U.S. manufacturer expects its scanners will increasingly be adopted in hospitals, improving the productivity of nurses administering drugs, said the firm's product management director, Taylor Smith.
The rapid pace of technological advances has led some economists to speculate that information technology is a factor behind the recent trend of jobless recoveries.
"The technology now is different," said Mark Thoma, an economist at the University of Oregon. "We're way more able to replace people with smart equipment, and it's going up into new levels of the population. It's not just the manufacturing workers. It's white collar workers, too."
FUTURE JOBS
Innovation is nothing new. Nor are job layoffs as companies cut employees during recessions -- part of what economists call the "creative destruction" process that eventually rechannels less productive resources into the jobs of the future.
The labor market stagnation over the last two years is also probably due in large part to the ferocity of the recent recession, the worst to hit the United States since the Great Depression, economists say.
But the growing gap between technology investment and job growth over the past decade suggests that the traditional link between capital investment and employment is under duress.
The chairman of Google Inc, Eric Schmidt, has called the labor market a "national emergency" and argues that the U.S. government should urgently find a way to stimulate demand.
Higher profits due to technology advances are not enough to spur hiring, he said. As a nation, he said, "We're stuck."
On-line travel firms, however, show a glimmer of how technology can help create fresh demand -- essential for the creation of new jobs.
The industry has embraced smart phones and iPads in the newest twist to push last-minute travel deals -- perhaps spurring consumers to take an extra trip and boost business for airlines and hotels.
It's a technology trend that could help the whole travel market grow, albeit incrementally.
"We are hiring more engineers in the mobile space to build more mobile products," said Travelocity's Sparks. "We hire more people in marketing to handle that."
(Editing by Leslie Adler)
full story
Dow Jones Indexes launches indexes for Asia, Europe
HONG KONG | Mon Oct 17, 2011 10:26pm EDT
(Reuters) - Dow Jones Indexes, majority-owned by CME Group Inc (CME.O), launched two new regional indexes for Asia and Europe on Tuesday, applying a similar methodology to that used for the Dow Jones Industrial Average .DJIA in the United States.
The indexes, dubbed the Asia Dow and the Europe Dow, each comprise 30 stocks with financials the biggest sectoral weight.
"A 30-stock index is not necessarily ideal as a benchmark for asset managers but it does lend itself well to investible products such as ETFs, for which there is a lot of demand from mutual funds and other investors," said John Prestbo, editor and executive director of Dow Jones Indexes. "We see the index as a shorthand expression of the regional market."
Seven of the component stocks on the Asia Dow are based in Japan, the most of any nation in the index followed by Australia, China and Hong Kong with four each.
Toyota Motor Corp (7203.T), and the Hong Kong listings of Industrial & Commercial Bank of China Ltd (1398.HK) and HSBC Holdings Plc (0005.HK) are some of the large Asian blue-chips included in the Asian index.
The Asia Dow takes a slightly different approach from others in that Japanand Australia are also included in a Pan-Asian index.
Traditionally, the regional investment landscape has been split into Japan and Asia excluding Japan, partly because of the developed nature and larger size and depth of the Japanese equity market compared with the rest of Asia.
"We are sensitive to Japan's size, but I think there is a countervailing trend here of looking at the region as a single equity market which would include Japan," said Prestbo.
Southeast Asia also finds representation in the Asia Dow with one company each from Indonesia, Malaysia and Singapore, namely Astra International (ASII.JK), CIMB Group Holdings Bhd (CIMB.KL) and Jardine Matheson Holdings Ltd (JARD.SI).
(Reporting by Vikram Subhedar; Editing by Chris Lewis)
full story
(Reuters) - Dow Jones Indexes, majority-owned by CME Group Inc (CME.O), launched two new regional indexes for Asia and Europe on Tuesday, applying a similar methodology to that used for the Dow Jones Industrial Average .DJIA in the United States.
The indexes, dubbed the Asia Dow and the Europe Dow, each comprise 30 stocks with financials the biggest sectoral weight.
"A 30-stock index is not necessarily ideal as a benchmark for asset managers but it does lend itself well to investible products such as ETFs, for which there is a lot of demand from mutual funds and other investors," said John Prestbo, editor and executive director of Dow Jones Indexes. "We see the index as a shorthand expression of the regional market."
Seven of the component stocks on the Asia Dow are based in Japan, the most of any nation in the index followed by Australia, China and Hong Kong with four each.
Toyota Motor Corp (7203.T), and the Hong Kong listings of Industrial & Commercial Bank of China Ltd (1398.HK) and HSBC Holdings Plc (0005.HK) are some of the large Asian blue-chips included in the Asian index.
The Asia Dow takes a slightly different approach from others in that Japanand Australia are also included in a Pan-Asian index.
Traditionally, the regional investment landscape has been split into Japan and Asia excluding Japan, partly because of the developed nature and larger size and depth of the Japanese equity market compared with the rest of Asia.
"We are sensitive to Japan's size, but I think there is a countervailing trend here of looking at the region as a single equity market which would include Japan," said Prestbo.
Southeast Asia also finds representation in the Asia Dow with one company each from Indonesia, Malaysia and Singapore, namely Astra International (ASII.JK), CIMB Group Holdings Bhd (CIMB.KL) and Jardine Matheson Holdings Ltd (JARD.SI).
(Reporting by Vikram Subhedar; Editing by Chris Lewis)
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Hedge funds bet against US prime RMBS
By Adam Tempkin
Fri Oct 14, 2011 9:50pm EDT
by Adam Tempkin
NEW YORK, Oct 14 (IFR) - Hedge funds might have just found the next "greatest trade ever" as they begin betting against US prime RMBS via a synthetic index tied to the bonds.
Markit's PrimeX indices, which allow investors to synthetically gain exposure to non-agency prime RMBS collateral, have been gradually losing ground since September, and dropped below par over the last two weeks.
This means that there has recently been a significant sell-off of prime RMBS, despite the recent so-called "bear rally" in stocks and other segments of the fixed income markets.
The drop in prices means that more market players are making bearish bets on prime mortgage collateral.
The PrimeX, which was created in April 2010, was meant to be the prime market sibling of the ABX, which was created in 2006 to allow investors to gain exposure to subprime RMBS. The PrimeX index was meant to serve as a standardized, diverse, and liquid tool referencing securitized non-agency fixed-rate or hybrid ARM loans.
But many in the blogosphere this past week expressed concern that the recent PrimeX price moves echo too closely the sharp drop in the ABX in 2007 that was a harbinger of the financial crisis.
Others disputed the comparison, noting that the rating agencies have already downgraded US prime RMBS heavily over the last three years -- meaning that increasing delinquencies have already been priced into the market -- and that the thinly traded, illiquid market was instead likely impacted by a handful of hedge funds taking a negative view on prime collateral.
"There are bearish fast-money accounts coming to the plate, including private equity accounts, who think that lightning will hit the same place again, as it did in 2007 with the success of shorting subprime through the ABX index," said Ying Shen, an RMBS researcher at Deutsche Bank.
"But the difference is that now, very few people want to take the long position on that bet. The decrease in PrimeX is more likely due to the general 'risk-off' in the broader market and a bet on the possibility of further home price declines."
Shen noted that home prices are likely to decline between 3% and 12% over the next year, while Fitch addressed the threat from defaults.
Prime jumbo mortgage performance has continued to erode for the last three years, according to the agency, and more than 12% of all prime borrowers are seriously delinquent.
"Default rates are expected to remain elevated over the near term, as home prices fall further and unemployment levels remain high", said Rui Pereira, the head of RMBS ratings at Fitch .
Moreover, more than a third of all performing prime borrowers are currently in a negative equity position. This dynamic, coupled with limited refinancing alternatives for borrowers, will continue to be a major driver of defaults over the near term, Pereira said.
Some securitization specialists say that the decline in the PrimeX might have been precipitated by Fitch's completion in early October of its review of 1,154 US prime RMBS transactions based on an overhaul of its prime loan-loss model criteria, which it introduced in February.
As a result of the ratings review, Fitch either affirmed or upgraded 58% of prime RMBS ratings, but downgraded 42%.
While it seems that a variety of factors led to the recent PrimeX decline, the comparison to the precipitous ABX decline in 2007 that preceded the financial crisis might be a bit overstated, some say.
For one thing, it costs much more to short the PrimeX index than it does to short the ABX index -- a factor which may prevent other market players from voting against prime mortgage bonds.
"Buying insurance on these indices is not free; you have to pay a premium," said Deutsche Bank's Shen. "On the ABX, that policy is cheap; but the PrimeX is not cheap at all. It's in the range of Libor plus 500bp to short that index."
(Adam Tempkin is a senior IFR analyst)
full story
Fri Oct 14, 2011 9:50pm EDT
by Adam Tempkin
NEW YORK, Oct 14 (IFR) - Hedge funds might have just found the next "greatest trade ever" as they begin betting against US prime RMBS via a synthetic index tied to the bonds.
Markit's PrimeX indices, which allow investors to synthetically gain exposure to non-agency prime RMBS collateral, have been gradually losing ground since September, and dropped below par over the last two weeks.
This means that there has recently been a significant sell-off of prime RMBS, despite the recent so-called "bear rally" in stocks and other segments of the fixed income markets.
The drop in prices means that more market players are making bearish bets on prime mortgage collateral.
The PrimeX, which was created in April 2010, was meant to be the prime market sibling of the ABX, which was created in 2006 to allow investors to gain exposure to subprime RMBS. The PrimeX index was meant to serve as a standardized, diverse, and liquid tool referencing securitized non-agency fixed-rate or hybrid ARM loans.
But many in the blogosphere this past week expressed concern that the recent PrimeX price moves echo too closely the sharp drop in the ABX in 2007 that was a harbinger of the financial crisis.
Others disputed the comparison, noting that the rating agencies have already downgraded US prime RMBS heavily over the last three years -- meaning that increasing delinquencies have already been priced into the market -- and that the thinly traded, illiquid market was instead likely impacted by a handful of hedge funds taking a negative view on prime collateral.
"There are bearish fast-money accounts coming to the plate, including private equity accounts, who think that lightning will hit the same place again, as it did in 2007 with the success of shorting subprime through the ABX index," said Ying Shen, an RMBS researcher at Deutsche Bank.
"But the difference is that now, very few people want to take the long position on that bet. The decrease in PrimeX is more likely due to the general 'risk-off' in the broader market and a bet on the possibility of further home price declines."
Shen noted that home prices are likely to decline between 3% and 12% over the next year, while Fitch addressed the threat from defaults.
Prime jumbo mortgage performance has continued to erode for the last three years, according to the agency, and more than 12% of all prime borrowers are seriously delinquent.
"Default rates are expected to remain elevated over the near term, as home prices fall further and unemployment levels remain high", said Rui Pereira, the head of RMBS ratings at Fitch .
Moreover, more than a third of all performing prime borrowers are currently in a negative equity position. This dynamic, coupled with limited refinancing alternatives for borrowers, will continue to be a major driver of defaults over the near term, Pereira said.
Some securitization specialists say that the decline in the PrimeX might have been precipitated by Fitch's completion in early October of its review of 1,154 US prime RMBS transactions based on an overhaul of its prime loan-loss model criteria, which it introduced in February.
As a result of the ratings review, Fitch either affirmed or upgraded 58% of prime RMBS ratings, but downgraded 42%.
While it seems that a variety of factors led to the recent PrimeX decline, the comparison to the precipitous ABX decline in 2007 that preceded the financial crisis might be a bit overstated, some say.
For one thing, it costs much more to short the PrimeX index than it does to short the ABX index -- a factor which may prevent other market players from voting against prime mortgage bonds.
"Buying insurance on these indices is not free; you have to pay a premium," said Deutsche Bank's Shen. "On the ABX, that policy is cheap; but the PrimeX is not cheap at all. It's in the range of Libor plus 500bp to short that index."
(Adam Tempkin is a senior IFR analyst)
full story
Problems plague Apple iCloud, iOS launch
By Poornima Gupta and Jim Finkle
SAN FRANCISCO | Thu Oct 13, 2011 7:39pm EDT
(Reuters) - Apple Inc rolled out its new iCloud service and latest mobile software to a chorus of user complaints this week, after glitches led to email access problems and long delays in installation.
Some users reported losing their email access as Apple formally launched iCloud, an online communications, media storage and backup service, on Wednesday.
Apple's new operating system for the iPhone, iPad and iPod Touch -- iOS 5 -- also annoyed many users who encountered hours-long delays in downloading and installation.
Investors have high hopes for iCloud, which replaces MobileMe, a collection of Web-based products that have failed to impress critics or generate substantial revenues for a company that has had success in most other ventures over the past decade.
"It failed in a very nasty way in that mail sometimes vanished, sometimes appeared then vanished, and often there was a user and/or password-incorrect message plus some rather obscure additional error messages," said David Farber, a professor of engineering and public policy with Carnegie Mellon University.
"The behavior suggests program problems," added Farber, a well-known computer scientist.
But the iCloud problems are especially embarrassing for Apple, as the company introduced the new online service with much fanfare in June at its annual developer forum.
Co-founder Steve Jobs, who died last Wednesday, said "it just works" when he introduced the service in June. The software is key to the new iPhone 4S, which will be launched on Friday in seven countries.
The problems also come as rival Research in Motion deals with an international outage of its email and messaging services.
"Some users were experiencing intermittent authentication errors when trying to use mail," Apple said in a status update on its webpage for iCloud support. "Normal service has been restored. We apologize for any inconvenience."
Other problems Apple reported as having resolved included: intermittent slowness when signing in to iCloud, users unable to back up their data, and delays receiving verification emails from Apple.
Apple spokespersons did not immediately return calls seeking comment.
Users took to Twitter to complain about the problems during the roll-out.
"iCloud would be great if the email would freaking recognize my password," wrote Leanna Lofte, or "@llofte", on Twitter.
"Apple Mail's still offline, everything's out of sync here between my devices, and what a mess," Matt Peckham, or "@mattpeckham", wrote on Twitter.
(Reporting by Poornima Gupta in San Francisco and Jim Finkle in Boston; Editing by Richard Chang)
full story
SAN FRANCISCO | Thu Oct 13, 2011 7:39pm EDT
(Reuters) - Apple Inc rolled out its new iCloud service and latest mobile software to a chorus of user complaints this week, after glitches led to email access problems and long delays in installation.
Some users reported losing their email access as Apple formally launched iCloud, an online communications, media storage and backup service, on Wednesday.
Apple's new operating system for the iPhone, iPad and iPod Touch -- iOS 5 -- also annoyed many users who encountered hours-long delays in downloading and installation.
Investors have high hopes for iCloud, which replaces MobileMe, a collection of Web-based products that have failed to impress critics or generate substantial revenues for a company that has had success in most other ventures over the past decade.
"It failed in a very nasty way in that mail sometimes vanished, sometimes appeared then vanished, and often there was a user and/or password-incorrect message plus some rather obscure additional error messages," said David Farber, a professor of engineering and public policy with Carnegie Mellon University.
"The behavior suggests program problems," added Farber, a well-known computer scientist.
But the iCloud problems are especially embarrassing for Apple, as the company introduced the new online service with much fanfare in June at its annual developer forum.
Co-founder Steve Jobs, who died last Wednesday, said "it just works" when he introduced the service in June. The software is key to the new iPhone 4S, which will be launched on Friday in seven countries.
The problems also come as rival Research in Motion deals with an international outage of its email and messaging services.
"Some users were experiencing intermittent authentication errors when trying to use mail," Apple said in a status update on its webpage for iCloud support. "Normal service has been restored. We apologize for any inconvenience."
Other problems Apple reported as having resolved included: intermittent slowness when signing in to iCloud, users unable to back up their data, and delays receiving verification emails from Apple.
Apple spokespersons did not immediately return calls seeking comment.
Users took to Twitter to complain about the problems during the roll-out.
"iCloud would be great if the email would freaking recognize my password," wrote Leanna Lofte, or "@llofte", on Twitter.
"Apple Mail's still offline, everything's out of sync here between my devices, and what a mess," Matt Peckham, or "@mattpeckham", wrote on Twitter.
(Reporting by Poornima Gupta in San Francisco and Jim Finkle in Boston; Editing by Richard Chang)
full story
Gold falls on uncertainty over Slovak vote
By Frank Tang and Jan Harvey
NEW YORK/LONDON | Tue Oct 11, 2011 3:38pm EDT
(Reuters) - Gold dropped on Tuesday, giving up some of the previous day's gains as bullion investors sold on uncertainty ahead of a key vote in Slovakia on expanding the euro zone rescue fund.
Bullion fell with industrial metals led by copper ahead of the Slovakia results, the only country of the 17-member bloc which has not yet ratified a pact to boost the size and powers of the European Financial Stability Facility. Wall Street seesawed to trade flat after recent rallies.
Trading of U.S. gold futures was extremely thin for the second straight day, indicating indecision by some bullion investors after the metal has moved in sync with risk assets with its traditional safe-haven status absent.
"There is an incredible amount of headline risk at the moment because of the unclarity behind all the news out of the EU that may underpin gold or cause gold to sell off," said Fred Schoenstein, precious metals trader of Heraeus Precious Metals Management.
"There is no real clear direction in which gold should trade."
Spot gold was down 0.6 percent at $1,664.99 an ounce by 3:04 p.m. EDT. During the past five sessions, bullion was still 2 percent higher as economic optimism has lifted the equity markets as well as gold.
A day after a broad rally of the so-called riskier assets such as equities and commodities, copper fell 2 percent Tuesday on demand worries over the euro zone debt crisis, which also weighed down on gold.
U.S. gold futures for December delivery settled down $9.80 an ounce at $1,661. Trading volume was higher than Monday's but more than 50 percent below its 30-day norm.
Commerzbank said in a note that gold futures investors are more interested in speculating on bullion's upside than buying the metal as a safe haven.
"It is also therefore by no means certain that the gold price would benefit should the eurozone debt crisis escalate again. We regard the upward potential for gold as exhausted in the short term," the bank said.
On weekly charts, gold should remain under pressure due to a bearish double-top pattern, which could only be offset until prices rise above $1,700 an ounce, said Adam Sarhan, chief executive of Sarhan Capital.
(Graphic: r.reuters.com/mad44s)
Bullion investors are also more cautious after news that hedge fund manager John Paulson lost more money in September.
More liquidation could be possible in the gold market as Paulson's investors now have less than one month left to decide whether to pull their money out of the firm's biggest Advantage Funds by the October 31 notice deadline, traders said.
PHYSICAL DEMAND BRISK
The precious metal is still seeing good physical demand at lower prices, particularly from major buyers China and India. But it has struggled to gain traction as prices rise, analysts said.
Demand for physical gold picked up considerably as prices fell more than 20 percent from last month's record highs above $1,920 an ounce.
Premiums for gold bars in Hong Kong stood at around $3 an ounce, their highest since at least February, while the premium in Tokyo held at 50 cents, dealers said.
Higher premiums on physical gold products could reflect supply tightness in regional markets.
Among other precious metals, silver was up 0.4 percent at $32.15 an ounce. Spot platinum was down 1 cent at $1,516.49 an ounce, while spot palladium was down 1.3 percent at $602.22 an ounce.
3:04 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL US Gold DEC 1661.00 -9.80 -0.6 1655.40 1686.70 100,799 US Silver DEC 31.998 0.018 0.1 31.350 32.580 27,985 US Plat JAN 1518.80 -6.30 -0.4 1511.10 1547.50 5,289 US Pall DEC 604.30 -10.00 -1.6 597.85 619.00 1,382
Gold 1664.99 -9.95 -0.6 1654.70 1684.36 Silver 32.150 0.120 0.4 31.380 32.490 Platinum 1516.49 -0.01 0.0 1512.15 1541.24 Palladium 602.22 -8.06 -1.3 599.77 615.50
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 106,442 228,510 203,914 35.7 1.55 US Silver 29,649 57,157 83,385 58.49 -3.51 US Platinum 5,328 12,211 7,656 25 2.00 US Palladium 1,387 4,009 4,545
(Editing by Bob Burgdorfer and Sofina Mirza-Reid)
full story
NEW YORK/LONDON | Tue Oct 11, 2011 3:38pm EDT
(Reuters) - Gold dropped on Tuesday, giving up some of the previous day's gains as bullion investors sold on uncertainty ahead of a key vote in Slovakia on expanding the euro zone rescue fund.
Bullion fell with industrial metals led by copper ahead of the Slovakia results, the only country of the 17-member bloc which has not yet ratified a pact to boost the size and powers of the European Financial Stability Facility. Wall Street seesawed to trade flat after recent rallies.
Trading of U.S. gold futures was extremely thin for the second straight day, indicating indecision by some bullion investors after the metal has moved in sync with risk assets with its traditional safe-haven status absent.
"There is an incredible amount of headline risk at the moment because of the unclarity behind all the news out of the EU that may underpin gold or cause gold to sell off," said Fred Schoenstein, precious metals trader of Heraeus Precious Metals Management.
"There is no real clear direction in which gold should trade."
Spot gold was down 0.6 percent at $1,664.99 an ounce by 3:04 p.m. EDT. During the past five sessions, bullion was still 2 percent higher as economic optimism has lifted the equity markets as well as gold.
A day after a broad rally of the so-called riskier assets such as equities and commodities, copper fell 2 percent Tuesday on demand worries over the euro zone debt crisis, which also weighed down on gold.
U.S. gold futures for December delivery settled down $9.80 an ounce at $1,661. Trading volume was higher than Monday's but more than 50 percent below its 30-day norm.
Commerzbank said in a note that gold futures investors are more interested in speculating on bullion's upside than buying the metal as a safe haven.
"It is also therefore by no means certain that the gold price would benefit should the eurozone debt crisis escalate again. We regard the upward potential for gold as exhausted in the short term," the bank said.
On weekly charts, gold should remain under pressure due to a bearish double-top pattern, which could only be offset until prices rise above $1,700 an ounce, said Adam Sarhan, chief executive of Sarhan Capital.
(Graphic: r.reuters.com/mad44s)
Bullion investors are also more cautious after news that hedge fund manager John Paulson lost more money in September.
More liquidation could be possible in the gold market as Paulson's investors now have less than one month left to decide whether to pull their money out of the firm's biggest Advantage Funds by the October 31 notice deadline, traders said.
PHYSICAL DEMAND BRISK
The precious metal is still seeing good physical demand at lower prices, particularly from major buyers China and India. But it has struggled to gain traction as prices rise, analysts said.
Demand for physical gold picked up considerably as prices fell more than 20 percent from last month's record highs above $1,920 an ounce.
Premiums for gold bars in Hong Kong stood at around $3 an ounce, their highest since at least February, while the premium in Tokyo held at 50 cents, dealers said.
Higher premiums on physical gold products could reflect supply tightness in regional markets.
Among other precious metals, silver was up 0.4 percent at $32.15 an ounce. Spot platinum was down 1 cent at $1,516.49 an ounce, while spot palladium was down 1.3 percent at $602.22 an ounce.
3:04 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL US Gold DEC 1661.00 -9.80 -0.6 1655.40 1686.70 100,799 US Silver DEC 31.998 0.018 0.1 31.350 32.580 27,985 US Plat JAN 1518.80 -6.30 -0.4 1511.10 1547.50 5,289 US Pall DEC 604.30 -10.00 -1.6 597.85 619.00 1,382
Gold 1664.99 -9.95 -0.6 1654.70 1684.36 Silver 32.150 0.120 0.4 31.380 32.490 Platinum 1516.49 -0.01 0.0 1512.15 1541.24 Palladium 602.22 -8.06 -1.3 599.77 615.50
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 106,442 228,510 203,914 35.7 1.55 US Silver 29,649 57,157 83,385 58.49 -3.51 US Platinum 5,328 12,211 7,656 25 2.00 US Palladium 1,387 4,009 4,545
(Editing by Bob Burgdorfer and Sofina Mirza-Reid)
full story
Wall Street extends rally on euro-zone hopes
By Caroline Valetkevitch
NEW YORK | Mon Oct 10, 2011 8:07pm EDT
(Reuters) - Stocks jumped 3 percent on Monday, extending gains into a second week as a pledge by German and French leaders boosted hopes that the euro-zone debt crisis may be resolved.
The gains lifted the S&P 500 above its 50-day moving average for the first time since late July, a bullish technical signal. The S&P 500 is now up about 11 percent since its low on Tuesday, when it briefly fell into bear-market territory.
Financials, the most beaten-down stocks during the recent slide, led the rally. The KBW bank index jumped 5.3 percent, with JPMorgan Chase & Co up 5.2 percent at $32.30 and Bank of America up 6.4 percent at $6.28.
The gains, however, came on the second-lightest day of trading since July and may not be indicative of a long-term trend. The advance has been driven by short-covering and managers buying stocks as they try to catch up to the sharp rally built on headlines out of Europe.
"There's basically a rally coming off deeply oversold levels," said Fred Dickson, chief market strategist at The Davidson Cos. in Lake Oswego, Oregon.
"What's happening is traders are shorting the dollar, and using funds there, and piling into risk-based assets," including equities, he said. The euro, with which the S&P 500 has had a strong correlation, rose the most in 15 months against the dollar.
German Chancellor Angela Merkel and French President Nicolas Sarkozy promised on Sunday to unveil a comprehensive new package to ease the euro zone's debt crisis.
Earnings season is set to begin with Alcoa's report tomorrow after the closing bell and will likely become a driver for stocks in coming weeks.
The Dow Jones industrial average surged 330.06 points, or 2.97 percent, to end at 11,433.18. The Standard & Poor's 500 Index climbed 39.43 points, or 3.41 percent, to 1,194.89. The Nasdaq Composite Index shot up 86.70 points, or 3.50 percent, to close at 2,566.05.
The S&P 500's next resistance levels are 1,200 and 1,230.
Adding to optimism that there may be a resolution of the euro zone's problems, a move to nationalize Franco-Belgian bank Dexia was seen as an indication that governments would step in and keep large lenders from failing.
The energy and materials sectors also ranked among the day's strongest-performing sectors, while the Dow Jones Transportation Average gained 3.9 percent. Tech provided another source of strength, with the Philadelphia semiconductor index up 2.8 percent.
The materials and energy sectors are forecast to have had the highest earnings growth rates for the third quarter, Thomson Reuters data showed. Shares of aluminum company Alcoa, which is one of the 30 Dow industrials, jumped 3.9 percent to $10.09.
Volume was lighter than average, possibly affected by the U.S. Columbus Day holiday. Government offices and the Treasury bond market were closed for the holiday.
About 6.82 billion shares were traded on the New York Stock Exchange, NYSE Amex and Nasdaqfor the day, below the year's daily average so far of 8.03 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of nearly 11 to 1, while on the Nasdaq, advancers beat decliners by nearly 5 to 1.
(Reporting by Caroline Valetkevitch; Additional reporting by Rodrigo Campos; Editing by Jan Paschal)
full story
NEW YORK | Mon Oct 10, 2011 8:07pm EDT
(Reuters) - Stocks jumped 3 percent on Monday, extending gains into a second week as a pledge by German and French leaders boosted hopes that the euro-zone debt crisis may be resolved.
The gains lifted the S&P 500 above its 50-day moving average for the first time since late July, a bullish technical signal. The S&P 500 is now up about 11 percent since its low on Tuesday, when it briefly fell into bear-market territory.
Financials, the most beaten-down stocks during the recent slide, led the rally. The KBW bank index jumped 5.3 percent, with JPMorgan Chase & Co up 5.2 percent at $32.30 and Bank of America up 6.4 percent at $6.28.
The gains, however, came on the second-lightest day of trading since July and may not be indicative of a long-term trend. The advance has been driven by short-covering and managers buying stocks as they try to catch up to the sharp rally built on headlines out of Europe.
"There's basically a rally coming off deeply oversold levels," said Fred Dickson, chief market strategist at The Davidson Cos. in Lake Oswego, Oregon.
"What's happening is traders are shorting the dollar, and using funds there, and piling into risk-based assets," including equities, he said. The euro, with which the S&P 500 has had a strong correlation, rose the most in 15 months against the dollar.
German Chancellor Angela Merkel and French President Nicolas Sarkozy promised on Sunday to unveil a comprehensive new package to ease the euro zone's debt crisis.
Earnings season is set to begin with Alcoa's report tomorrow after the closing bell and will likely become a driver for stocks in coming weeks.
The Dow Jones industrial average surged 330.06 points, or 2.97 percent, to end at 11,433.18. The Standard & Poor's 500 Index climbed 39.43 points, or 3.41 percent, to 1,194.89. The Nasdaq Composite Index shot up 86.70 points, or 3.50 percent, to close at 2,566.05.
The S&P 500's next resistance levels are 1,200 and 1,230.
Adding to optimism that there may be a resolution of the euro zone's problems, a move to nationalize Franco-Belgian bank Dexia was seen as an indication that governments would step in and keep large lenders from failing.
The energy and materials sectors also ranked among the day's strongest-performing sectors, while the Dow Jones Transportation Average gained 3.9 percent. Tech provided another source of strength, with the Philadelphia semiconductor index up 2.8 percent.
The materials and energy sectors are forecast to have had the highest earnings growth rates for the third quarter, Thomson Reuters data showed. Shares of aluminum company Alcoa, which is one of the 30 Dow industrials, jumped 3.9 percent to $10.09.
Volume was lighter than average, possibly affected by the U.S. Columbus Day holiday. Government offices and the Treasury bond market were closed for the holiday.
About 6.82 billion shares were traded on the New York Stock Exchange, NYSE Amex and Nasdaqfor the day, below the year's daily average so far of 8.03 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of nearly 11 to 1, while on the Nasdaq, advancers beat decliners by nearly 5 to 1.
(Reporting by Caroline Valetkevitch; Additional reporting by Rodrigo Campos; Editing by Jan Paschal)
full story
New York crime ring was sweet on Apple: police
By Aman Ali
NEW YORK | Fri Oct 7, 2011 6:16pm EDT
(Reuters) - A New York-based crime ring that used forged credit cards to mainly buy and resell Apple products overseas has been busted, police said on Friday in what was described as the largest identity fraud case in U.S. history.
Authorities said waiters and service sector workers stole customers' personal information and syndicates in Africa, the Middle East, Europe and Asia then used the data to issue credit cards that financed an estimated $13 million shopping spree.
"The schemes and the imagination of these thieves is mind-boggling," New York City Police Commissioner Raymond Kelly said at a press conference.
"These crimes are getting more sophisticated and thieves have amazing knowledge of how to use technology," Kelly said.
A total of 111 people from five criminal enterprises operating out of Queens, New York were indicted with identity theft, forgery, robbery and other crimes as part of a two-year investigation dubbed "Operation Swiper," police said.
They said crime bosses received blank credit cards from suppliers in Russia, Libya, Lebanon andChina and hired "skimmers" to pose as retail workers who used electronic devices to steal the credit card data from customers.
The information was then programed into the magnetic strips of blank credit cards, according to the indictment. In some cases, printing machines were used to forge credit cards and matching state drivers licenses.
Police said "crew leaders" oversaw the illicit nationwide shopping and that the goods purchased were mostly resold to customers overseas. The thieves, however, apparently focused on Apple products.
"This is primarily an Apple case," New York Police Department Deputy Inspector Gregory Antonsen said. "Apple is a big ticket item and a very easy sell."
Police seized Apple products worth tens of thousands of dollars, $850,000 worth of stolen computer equipment, $650,000 in cash, handguns and a truck full of electronics, designer shoes, watches, identity theft equipment and other goods.
The enterprise was worth an estimated $13 million, according to police, who said they used court-approved wiretaps on dozens of phones to build their case. Detectives spent hours translating conversations in Russian, Mandarin and Arabic as part of the probe.
Eighty-six of the 111 people indicted for the crimes were in custody, police said.
(Editing by Paul Simao)
full story
NEW YORK | Fri Oct 7, 2011 6:16pm EDT
(Reuters) - A New York-based crime ring that used forged credit cards to mainly buy and resell Apple products overseas has been busted, police said on Friday in what was described as the largest identity fraud case in U.S. history.
Authorities said waiters and service sector workers stole customers' personal information and syndicates in Africa, the Middle East, Europe and Asia then used the data to issue credit cards that financed an estimated $13 million shopping spree.
"The schemes and the imagination of these thieves is mind-boggling," New York City Police Commissioner Raymond Kelly said at a press conference.
"These crimes are getting more sophisticated and thieves have amazing knowledge of how to use technology," Kelly said.
A total of 111 people from five criminal enterprises operating out of Queens, New York were indicted with identity theft, forgery, robbery and other crimes as part of a two-year investigation dubbed "Operation Swiper," police said.
They said crime bosses received blank credit cards from suppliers in Russia, Libya, Lebanon andChina and hired "skimmers" to pose as retail workers who used electronic devices to steal the credit card data from customers.
The information was then programed into the magnetic strips of blank credit cards, according to the indictment. In some cases, printing machines were used to forge credit cards and matching state drivers licenses.
Police said "crew leaders" oversaw the illicit nationwide shopping and that the goods purchased were mostly resold to customers overseas. The thieves, however, apparently focused on Apple products.
"This is primarily an Apple case," New York Police Department Deputy Inspector Gregory Antonsen said. "Apple is a big ticket item and a very easy sell."
Police seized Apple products worth tens of thousands of dollars, $850,000 worth of stolen computer equipment, $650,000 in cash, handguns and a truck full of electronics, designer shoes, watches, identity theft equipment and other goods.
The enterprise was worth an estimated $13 million, according to police, who said they used court-approved wiretaps on dozens of phones to build their case. Detectives spent hours translating conversations in Russian, Mandarin and Arabic as part of the probe.
Eighty-six of the 111 people indicted for the crimes were in custody, police said.
(Editing by Paul Simao)
full story
Apple's lead over rivals could narrow without Jobs
By Miyoung Kim, Hyunjoo Jin and Bill Rigby
SEOUL/SEATTLE | Thu Oct 6, 2011 8:40pm EDT
(Reuters) - If the death of Apple's inspirational leader means a slowdown in the company's blistering pace of innovation, it could give breathless rivals like Microsoft and Samsung a chance to catch up.
The extinguishing of the creative force behind the iPod, iPhone and iPadmeans a host of competitors -- already closing the gap in some markets -- will redouble efforts to counter the domination of Apple Inc in consumer electronics.
"No question, competitors like Microsoft will try and capitalize on any weakness, stumble or oversight to shift the public's attention away from Apple and toward their own offerings," said Todd Lowenstein, portfolio manager at HighMark Capital Management.
"Apple is still the unquestioned leader, but competitors like Android and Microsoft are coming to market with compelling offerings and seemingly are starting to close the gap."
Luminaries of the tech world paid tribute to Apple co-founder Steve Jobs after his death on Wednesday, from Microsoft Corp Chairman Bill Gates and Google Inc chief Larry Page to Samsung Electronics' CEO G.S. Choi and Sony head Howard Stringer.
But investors said emotion will not take any edge off fierce competition with Apple.
"The downturn in the economy will likely spur more and more competitors with more and more mimicry products," said Stanley Crouch, chief investment officer at fund manager Aegis, pointing to Amazon.com's new low-cost tablet computer as a recent example.
"When you get this incredible pressure from low-cost entrants, it's very tough to maintain market share and margins," said Crouch.
SAMSUNG'S CHANCE
South Korean conglomerate Samsung is one of the best placed companies to deliver something fresh and exciting to rival Apple, analysts said.
It already makes the closest competitor by sales to Apple's iPad tablet and the two companies are scrapping for top spot in the smartphone market, having overtaken Nokia, the market leader for the past decade, earlier this year.
Apple is also Samsung's biggest customer through the sale of mobile chips and display screens. The relationship and rivalry has helped Samsung become a top global brand over the past decade with a stock market value of $115 billion, a third of Apple's.
But the two are also involved in a bitter dispute over mobile devices, suing each other in 10 countries involving more than 20 cases since April.
Samsung's Galaxy range of smartphones and tablet computers run on Google's Android operating system, which Jobs believed to be a blatant copy of Apple's mobile interface.
"Steve Jobs was particularly passionate about the enforcement of Apple's intellectual property," said Florian Mueller, an intellectual property expert. "From a strategic point of view, Mr. Jobs' successor doesn't have a choice other than to fight equally hard."
The global scrap between Apple and Samsung -- with both sides trying to ban the sale of each others' products in several countries -- is not likely to cool, said Colleen Chien, assistant professor at Santa Clara University's School of Law.
"I don't see that's going to disappear just because of the passing of Steve Jobs," she said. "Jobs was a very competitive person and the patent lawsuits were an extension of the company's strategy of getting more aggressive."
COMPETITIVE FIRE STORM
Jobs, the man known for minimalist design and marketing genius, handed the reins of Apple to long-time operations chief Tim Cook in August.
Cook unveiled the latest version of Apple's iPhone this week, in a launch that, unusually, failed to wow fans.
The iPhone -- introduced in 2007 with the touchscreen template now adopted by its rivals -- is still the gold standard in the booming smartphone market, and its sales have dealt a blow to the ambitions of many competitors.
But phones based on Google's Android, which is available for free to handset vendors such as Samsung, HTC, LG and Motorola now have a greater combined market share than Apple's iPhone.
"Apple is facing a competitive fire storm from not just one company but a coalition of rivals that are trying to beat it, including some of the largest consumer electronics companies on the planet," said Ben Wood, head of research at British mobile consultancy CCS Insight.
Microsoft is set to release a new generation of Windows phones in the next few months in partnership with Nokia, and has its sights set on Windows-based tablets flooding the market next year, marking the next great tech battleground.
"Industry eyes will inevitably turn to the iPad 3 launch next year to see whether Apple can continue the company's impressive legacy of innovation created by Steve Jobs," said analyst Neil Mawston from Strategy Analytics.
In a sign of more immediate competition, Amazon took the wraps off its Kindle Fire tablet last week, tacking on a mass market-friendly $199 price tag that analysts said poses a serious threat to the iPad.
Jobs liked to make him competitors uncomfortable. Rivals were "flummoxed" by the iPad, he declared in March when he took the stage to unveil Apple's latest tablet.
"They went back to the drawing boards. They tore up their designs because they weren't competitive," Jobs said.
Lee Seung-woo, technology analyst at Shinyoung Securities, said Apple had transformed the industry, but its influence would wane without Jobs at the helm.
"Under Jobs, Apple consolidated segmented IT sectors into one big consumer market and claimed so many victims," Lee said. "Without Jobs, Apple's rivals now have some time to step up and majors such as Google, Samsung, Microsoft and Facebook will try to fill the gap."
(Additional reporting by Tarmo Virki in HELSINKI, Rafael Nam in HONG KONG and Faith Hung in TAIPEI; Writing by Anshuman Daga; Editing by Neil Fullick, Elaine Hardcastle and Bernard Orr)
full story
SEOUL/SEATTLE | Thu Oct 6, 2011 8:40pm EDT
(Reuters) - If the death of Apple's inspirational leader means a slowdown in the company's blistering pace of innovation, it could give breathless rivals like Microsoft and Samsung a chance to catch up.
The extinguishing of the creative force behind the iPod, iPhone and iPadmeans a host of competitors -- already closing the gap in some markets -- will redouble efforts to counter the domination of Apple Inc in consumer electronics.
"No question, competitors like Microsoft will try and capitalize on any weakness, stumble or oversight to shift the public's attention away from Apple and toward their own offerings," said Todd Lowenstein, portfolio manager at HighMark Capital Management.
"Apple is still the unquestioned leader, but competitors like Android and Microsoft are coming to market with compelling offerings and seemingly are starting to close the gap."
Luminaries of the tech world paid tribute to Apple co-founder Steve Jobs after his death on Wednesday, from Microsoft Corp Chairman Bill Gates and Google Inc chief Larry Page to Samsung Electronics' CEO G.S. Choi and Sony head Howard Stringer.
But investors said emotion will not take any edge off fierce competition with Apple.
"The downturn in the economy will likely spur more and more competitors with more and more mimicry products," said Stanley Crouch, chief investment officer at fund manager Aegis, pointing to Amazon.com's new low-cost tablet computer as a recent example.
"When you get this incredible pressure from low-cost entrants, it's very tough to maintain market share and margins," said Crouch.
SAMSUNG'S CHANCE
South Korean conglomerate Samsung is one of the best placed companies to deliver something fresh and exciting to rival Apple, analysts said.
It already makes the closest competitor by sales to Apple's iPad tablet and the two companies are scrapping for top spot in the smartphone market, having overtaken Nokia, the market leader for the past decade, earlier this year.
Apple is also Samsung's biggest customer through the sale of mobile chips and display screens. The relationship and rivalry has helped Samsung become a top global brand over the past decade with a stock market value of $115 billion, a third of Apple's.
But the two are also involved in a bitter dispute over mobile devices, suing each other in 10 countries involving more than 20 cases since April.
Samsung's Galaxy range of smartphones and tablet computers run on Google's Android operating system, which Jobs believed to be a blatant copy of Apple's mobile interface.
"Steve Jobs was particularly passionate about the enforcement of Apple's intellectual property," said Florian Mueller, an intellectual property expert. "From a strategic point of view, Mr. Jobs' successor doesn't have a choice other than to fight equally hard."
The global scrap between Apple and Samsung -- with both sides trying to ban the sale of each others' products in several countries -- is not likely to cool, said Colleen Chien, assistant professor at Santa Clara University's School of Law.
"I don't see that's going to disappear just because of the passing of Steve Jobs," she said. "Jobs was a very competitive person and the patent lawsuits were an extension of the company's strategy of getting more aggressive."
COMPETITIVE FIRE STORM
Jobs, the man known for minimalist design and marketing genius, handed the reins of Apple to long-time operations chief Tim Cook in August.
Cook unveiled the latest version of Apple's iPhone this week, in a launch that, unusually, failed to wow fans.
The iPhone -- introduced in 2007 with the touchscreen template now adopted by its rivals -- is still the gold standard in the booming smartphone market, and its sales have dealt a blow to the ambitions of many competitors.
But phones based on Google's Android, which is available for free to handset vendors such as Samsung, HTC, LG and Motorola now have a greater combined market share than Apple's iPhone.
"Apple is facing a competitive fire storm from not just one company but a coalition of rivals that are trying to beat it, including some of the largest consumer electronics companies on the planet," said Ben Wood, head of research at British mobile consultancy CCS Insight.
Microsoft is set to release a new generation of Windows phones in the next few months in partnership with Nokia, and has its sights set on Windows-based tablets flooding the market next year, marking the next great tech battleground.
"Industry eyes will inevitably turn to the iPad 3 launch next year to see whether Apple can continue the company's impressive legacy of innovation created by Steve Jobs," said analyst Neil Mawston from Strategy Analytics.
In a sign of more immediate competition, Amazon took the wraps off its Kindle Fire tablet last week, tacking on a mass market-friendly $199 price tag that analysts said poses a serious threat to the iPad.
Jobs liked to make him competitors uncomfortable. Rivals were "flummoxed" by the iPad, he declared in March when he took the stage to unveil Apple's latest tablet.
"They went back to the drawing boards. They tore up their designs because they weren't competitive," Jobs said.
Lee Seung-woo, technology analyst at Shinyoung Securities, said Apple had transformed the industry, but its influence would wane without Jobs at the helm.
"Under Jobs, Apple consolidated segmented IT sectors into one big consumer market and claimed so many victims," Lee said. "Without Jobs, Apple's rivals now have some time to step up and majors such as Google, Samsung, Microsoft and Facebook will try to fill the gap."
(Additional reporting by Tarmo Virki in HELSINKI, Rafael Nam in HONG KONG and Faith Hung in TAIPEI; Writing by Anshuman Daga; Editing by Neil Fullick, Elaine Hardcastle and Bernard Orr)
full story
Exclusive: Dozens of states probe Medco/Express Scripts deal
By Diane Bartz
WASHINGTON | Wed Oct 5, 2011 5:30pm EDT
(Reuters) - Over two dozen states are scrutinizing Express Scripts' (ESRX.O) proposed acquisition of Medco Health Solutions (MHS.N), as pharmacists stoke fears that the $22 billion deal would propel the companies' aggressive tactics.
More than 25 states have formed a group concerned about the potential merger of the two massive pharmacy benefit managers, said James Donahue of the Pennsylvania state attorney general's office, who declined to name the states.
Connecticut and Iowa are among those concerned, according to officials from those states.
The states do not have a direct say in the review by the Federal Trade Commission, whose role is to make sure the deal complies with antitrust law.
But they will likely add pressure on the FTC to give tough scrutiny to the merger, and could hand the agency evidence that would potentially serve as ammunition to challenge it.
The states could also challenge the deal on their own.
The deal, announced in July, would combine two of the three largest U.S. pharmacy benefit managers (PBMs) that are big enough to manage prescription drug benefits for large, nationwide companies. It would create an industry leader with nearly one-third of the market.
The FTC is already getting an earful from community and specialty pharmacists who feel bullied by Medco and Express Scripts as the companies negotiate drug prices for employers and other clients worried about spiraling healthcare costs.
There are allegations that the PBM industry drives a hard bargain but largely pockets the savings. There have also been complaints that the PBMs unfairly pressure doctors and patients to switch to their own in-house pharmacies.
The pharmacy groups opposed to the deal have met with staff at the FTC and with individual commissioners at least five times since the deal was announced, said David Balto, a former FTC policy director who is working with the pharmacists.
The FTC is in the early stages of its probe, said Balto. The FTC declined to comment on its review.
"They were very interested in our thoughts," said Russell Gay, executive director of the Independent Specialty Pharmacy Coalition. "We are asking for it to be blocked."
Shares of Medco have continued to trade below the value implied by Express Scripts' cash and stock offer, closing at a 20 percent discount on Wednesday, suggesting investors are concerned the deal may not win approval.
PHARMACISTS COMPLAIN
Specialty pharmacists -- who provide medicines for chronic, serious ailments like hemophilia or hepatitis C and provide some patient oversight -- say that Express Scripts is contacting patients' doctors and asking them to switch patients from their usual specialty pharmacy to CuraScript, a specialty pharmacy company which Express bought in 2004.
PBMs that own specialty pharmacies contact patients' doctors thousands of times a day to urge that the patients be shifted to the PBM-owned pharmacy, said Gay. "We're constantly fighting these days in order to get authorization for patients we have today."
Express Scripts described the effort as a way to keep rising health care costs under control.
"Moving patients to the lowest cost, clinically equivalent treatment is a core PBM tool, and the country absolutely needs this sort of benefit management," said Express Scripts spokesman Brian Henry in an email. "Whether or not to use CuraScript, just like mail order, is a plan sponsor decision."
Some specialty pharmacists say Express Scripts subjects them to abusive audits as it tries to move into the business.
"Express Scripts audits almost every single claim from (a health care plan)," said one specialty pharmacist who asked not to be named and questioned if the company audits itself as aggressively.
EXPRESS SCRIPTS DEFENDS PRACTICES
Express Scripts said the audits were needed. "Pharmacy audits that ensure proper payments save plan sponsors and patients money," said Henry.
"We're committed to working with FTC, and we welcome their questions," he added.
Community pharmacists, already facing stiff challenges from big-box store pharmacies like Wal-Mart (WMT.N), fear powerful pharmacy benefits managers will push for consumers to get many drugs, like blood pressure medicines, by mail.
They fear a replay of the fight with CVS Caremark (CVS.N), the largest U.S. prescription drug provider and second-largest drugstore chain, which has been accused of using Caremark data to steer customers to mail order or to CVS retail pharmacies.
CVS said in November 2009 that the FTC was investigating its business practices.
The FTC was an early supporter of PBMs, on the grounds that a strong drug distributor would be able to negotiate good prices with pharmaceutical manufacturers.
But the three big pharmacy benefits manager companies -- Express Scripts, Medco and Caremark, before its merger with CVS in 2007, have been in hot water with regulators.
All three settled with states angered by the companies urging doctors and patients to switch medications, saying it would benefit the patient or plan. In fact, usually it was the PBM which benefited in the form of rebates given to the PBM by the drug company, said a source who spoke privately.
Medco reached a multi-state agreement that cost it $29.3 million in 2004, while Caremark and Express Scripts made similar settlements in 2008 for $41 million and $9.5 million, respectively.
Express Scripts said on Wednesday it never admitted to wrongdoing in the settlement.
If regulators find that abusive practices are rife throughout the industry, they may be reluctant to allow a merger that would create a U.S. powerhouse in managing prescription drug benefits.
full story
WASHINGTON | Wed Oct 5, 2011 5:30pm EDT
(Reuters) - Over two dozen states are scrutinizing Express Scripts' (ESRX.O) proposed acquisition of Medco Health Solutions (MHS.N), as pharmacists stoke fears that the $22 billion deal would propel the companies' aggressive tactics.
More than 25 states have formed a group concerned about the potential merger of the two massive pharmacy benefit managers, said James Donahue of the Pennsylvania state attorney general's office, who declined to name the states.
Connecticut and Iowa are among those concerned, according to officials from those states.
The states do not have a direct say in the review by the Federal Trade Commission, whose role is to make sure the deal complies with antitrust law.
But they will likely add pressure on the FTC to give tough scrutiny to the merger, and could hand the agency evidence that would potentially serve as ammunition to challenge it.
The states could also challenge the deal on their own.
The deal, announced in July, would combine two of the three largest U.S. pharmacy benefit managers (PBMs) that are big enough to manage prescription drug benefits for large, nationwide companies. It would create an industry leader with nearly one-third of the market.
The FTC is already getting an earful from community and specialty pharmacists who feel bullied by Medco and Express Scripts as the companies negotiate drug prices for employers and other clients worried about spiraling healthcare costs.
There are allegations that the PBM industry drives a hard bargain but largely pockets the savings. There have also been complaints that the PBMs unfairly pressure doctors and patients to switch to their own in-house pharmacies.
The pharmacy groups opposed to the deal have met with staff at the FTC and with individual commissioners at least five times since the deal was announced, said David Balto, a former FTC policy director who is working with the pharmacists.
The FTC is in the early stages of its probe, said Balto. The FTC declined to comment on its review.
"They were very interested in our thoughts," said Russell Gay, executive director of the Independent Specialty Pharmacy Coalition. "We are asking for it to be blocked."
Shares of Medco have continued to trade below the value implied by Express Scripts' cash and stock offer, closing at a 20 percent discount on Wednesday, suggesting investors are concerned the deal may not win approval.
PHARMACISTS COMPLAIN
Specialty pharmacists -- who provide medicines for chronic, serious ailments like hemophilia or hepatitis C and provide some patient oversight -- say that Express Scripts is contacting patients' doctors and asking them to switch patients from their usual specialty pharmacy to CuraScript, a specialty pharmacy company which Express bought in 2004.
PBMs that own specialty pharmacies contact patients' doctors thousands of times a day to urge that the patients be shifted to the PBM-owned pharmacy, said Gay. "We're constantly fighting these days in order to get authorization for patients we have today."
Express Scripts described the effort as a way to keep rising health care costs under control.
"Moving patients to the lowest cost, clinically equivalent treatment is a core PBM tool, and the country absolutely needs this sort of benefit management," said Express Scripts spokesman Brian Henry in an email. "Whether or not to use CuraScript, just like mail order, is a plan sponsor decision."
Some specialty pharmacists say Express Scripts subjects them to abusive audits as it tries to move into the business.
"Express Scripts audits almost every single claim from (a health care plan)," said one specialty pharmacist who asked not to be named and questioned if the company audits itself as aggressively.
EXPRESS SCRIPTS DEFENDS PRACTICES
Express Scripts said the audits were needed. "Pharmacy audits that ensure proper payments save plan sponsors and patients money," said Henry.
"We're committed to working with FTC, and we welcome their questions," he added.
Community pharmacists, already facing stiff challenges from big-box store pharmacies like Wal-Mart (WMT.N), fear powerful pharmacy benefits managers will push for consumers to get many drugs, like blood pressure medicines, by mail.
They fear a replay of the fight with CVS Caremark (CVS.N), the largest U.S. prescription drug provider and second-largest drugstore chain, which has been accused of using Caremark data to steer customers to mail order or to CVS retail pharmacies.
CVS said in November 2009 that the FTC was investigating its business practices.
The FTC was an early supporter of PBMs, on the grounds that a strong drug distributor would be able to negotiate good prices with pharmaceutical manufacturers.
But the three big pharmacy benefits manager companies -- Express Scripts, Medco and Caremark, before its merger with CVS in 2007, have been in hot water with regulators.
All three settled with states angered by the companies urging doctors and patients to switch medications, saying it would benefit the patient or plan. In fact, usually it was the PBM which benefited in the form of rebates given to the PBM by the drug company, said a source who spoke privately.
Medco reached a multi-state agreement that cost it $29.3 million in 2004, while Caremark and Express Scripts made similar settlements in 2008 for $41 million and $9.5 million, respectively.
Express Scripts said on Wednesday it never admitted to wrongdoing in the settlement.
If regulators find that abusive practices are rife throughout the industry, they may be reluctant to allow a merger that would create a U.S. powerhouse in managing prescription drug benefits.
full story
IBM buys Q1 Labs to expand in security software
By Saqib Iqbal Ahmed
Tue Oct 4, 2011 1:53pm EDT
(Reuters) - IBM Corp (IBM.N) will buy security software provider Q1 Labs as it looks to expand in a market which has seen recent high-profile cyber attacks on victims from Sony Corp (6758.T) to the British police.
Last year, Intel Corp (INTC.O) paid $7.68 billion for data security firm McAfee Inc, and Hewlett-Packard (HPQ.N) bought security software company ArcSight Inc for $1.5 billion.
Also on Tuesday, McAfee said it would buy NitroSecurity, a privately-owned provider of security information and event management tools. NitroSecurity and Q1 Labs, which is also privately owned, make software to help businesses analyze security logs and spot hacking threats and attacks.
IBM, which did not say how much it was paying for Q1 Labs, sees the security software and services business as a $94 billion market opportunity and has been buying analytics companies to beef up its security offerings.
In five years, it has spent more than $14 billion on 25 deals focused on analytics to help customers deal with the huge volumes of unstructured data from sources such as social media, biometrics and criminal databases.
In August, it bought British security analytics software firm i2, also for an undisclosed sum, and last month acquired Toronto-based risk analytics software firm Algorithmics for $387 million in cash.
Symantec Corp (SYMC.O), with a 19 percent share, dominated the global security software market -- worth $14.7 billion by revenue -- last year, according to research firm Gartner. McAfee followed with about a 10 percent share, ahead of Trend Micro (4704.T) and IBM, with 5 percent.
Waltham, Massachusetts-based Q1 Labs -- which provides software for collecting, storing, analyzing and querying log, threat, vulnerability and risk-related data -- will become part of IBM's newly-formed security systems division.
Q1 Labs, founded in 2001, has more than 1,800 clients globally, and counts Polaris Venture Partners, Menlo Ventures, BDC Venture Capital and Globespan Capital Partners among its investors.
Q1 Labs CEO Brendan Hannigan will head up the new IBM division, helping clients tackle corporate security breaches, growing mobile security concerns and advanced security threats.
IBM shares were down 1.3 percent at $171.04 on Tuesday on the New York Stock Exchange, underperforming the broader share market .DJI, which was down 1 percent.
(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Ian Geoghegan)
full story
Tue Oct 4, 2011 1:53pm EDT
(Reuters) - IBM Corp (IBM.N) will buy security software provider Q1 Labs as it looks to expand in a market which has seen recent high-profile cyber attacks on victims from Sony Corp (6758.T) to the British police.
Last year, Intel Corp (INTC.O) paid $7.68 billion for data security firm McAfee Inc, and Hewlett-Packard (HPQ.N) bought security software company ArcSight Inc for $1.5 billion.
Also on Tuesday, McAfee said it would buy NitroSecurity, a privately-owned provider of security information and event management tools. NitroSecurity and Q1 Labs, which is also privately owned, make software to help businesses analyze security logs and spot hacking threats and attacks.
IBM, which did not say how much it was paying for Q1 Labs, sees the security software and services business as a $94 billion market opportunity and has been buying analytics companies to beef up its security offerings.
In five years, it has spent more than $14 billion on 25 deals focused on analytics to help customers deal with the huge volumes of unstructured data from sources such as social media, biometrics and criminal databases.
In August, it bought British security analytics software firm i2, also for an undisclosed sum, and last month acquired Toronto-based risk analytics software firm Algorithmics for $387 million in cash.
Symantec Corp (SYMC.O), with a 19 percent share, dominated the global security software market -- worth $14.7 billion by revenue -- last year, according to research firm Gartner. McAfee followed with about a 10 percent share, ahead of Trend Micro (4704.T) and IBM, with 5 percent.
Waltham, Massachusetts-based Q1 Labs -- which provides software for collecting, storing, analyzing and querying log, threat, vulnerability and risk-related data -- will become part of IBM's newly-formed security systems division.
Q1 Labs, founded in 2001, has more than 1,800 clients globally, and counts Polaris Venture Partners, Menlo Ventures, BDC Venture Capital and Globespan Capital Partners among its investors.
Q1 Labs CEO Brendan Hannigan will head up the new IBM division, helping clients tackle corporate security breaches, growing mobile security concerns and advanced security threats.
IBM shares were down 1.3 percent at $171.04 on Tuesday on the New York Stock Exchange, underperforming the broader share market .DJI, which was down 1 percent.
(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Ian Geoghegan)
full story
Iconic for decades, time running out for Kodak
By Franklin Paul
NEW YORK | Fri Sep 30, 2011 8:00pm EDT
(Reuters) - Its legacy spans 13 decades, and boasts many American firsts, but Eastman Kodak, best known for cameras and photography, maybe running out of options and time.
Concerns about the company's future boiled over on Friday, after it hired a law firm well-known for bankruptcy cases, sending its shares down 54 percent to 78 cents per share.
Although Kodak said it has "no intention" of filing for bankruptcy, the fact that its shares closed under $1, and market capitalization shrank to less than $300 million suggests that even the most die-hard investors may have lost faith.
The picture began to fade in September 2003. Film sales were dying, and Kodak slashed its dividend by 70 percent, hoping to gain flexibility as it beefed up spending on commercial and inkjet printers, medical imaging devices and other digital systems. It stopped investing in traditional consumer film.
The next year, billionaire financier Carl Icahn ended a brief, but profitable stint as a Kodak shareholder, saying that the company's business model would not work, especially since it needed to shift gears while its primary revenue source, film, was in decline.
"(What Kodak is doing) certainly might not be enough," he said. "I think it is possibly too late."
In January 2004, the company said it would trim costs by shrinking manufacturing, and cutting some 15,000 jobs, or about 20 percent of its work force, over three years. Its work force has since been pared to about 18,800 -- 9,600 in the United States -- at the end of 2010, down from 86,000 in 1998.
Kodak has been an iconic name in American business. The company's history stretches back to inventor George Eastman's Eastman Dry Plate Company in 1881. By 1885 he had introduced the first transparent photographic film. The "Kodak" camera hit the market in 1888, with the slogan, "You press the button - we do the rest."
It rolled out Kodachrome, the first commercially successful amateur color film, in 1935, but George Eastman was unable to see its debut. The ailing Eastman, a pioneering inventor and prolific philanthropist, committed suicide in 1932.
Nearly a century later -- 1981 -- its sales topped $10 billion. It even got in early to the digital camera movement, with its Professional Digital Camera System in 1991 that enabled photojournalists to take an electronic picture with a camera equipped with Kodak's 1.3 megapixel sensor.
Daniel Carp took over as CEO in 2000, right around the time that digital cameras started to become an affordable alternative to film cameras. Taking pictures without the use of film and the option to forgo printing proved a crippling blow to the company, which sold film, photo paper, and the systems that develop film into prints.
Veteran Hewlett Packard executive Antonio Perez joined the company in 2003, and became CEO two years later. Perez was instrumental in Kodak's shift to digital devices and services, hoping to outpace plummeting demand for film.
But some say that was already too late, since consumers had become enamored with the ease of digital cameras, which allowed then to snap hundreds of photos without film or the need to make prints.
Today, most snapshots are taken with phones and viewed on Facebook, and its tough to remember when Kodak's brand was stronger than that of the social media site. Most iPhone-toting teens have never purchased a roll of film, and have no interest in carting around a stand-alone camera.
In recent years the company has relied on licensing of patents related to photography and printing, as well as sales of commercial and consumer printing systems. In July, Perez said Kodak would sell part of its patent portfolio, which is estimated to be worth more than $2 billion in its entirety.
A dearth of news about the patent sale has contributed to the stock's weakness. The fact that no sale has been announced, shows that the patent's values are a fraction of Kodak's hopes, according to a source close to the matter.
(Additional reporting by Nadia Damouni in New York; Editing by Bob Burgdorfer)
full story
NEW YORK | Fri Sep 30, 2011 8:00pm EDT
(Reuters) - Its legacy spans 13 decades, and boasts many American firsts, but Eastman Kodak, best known for cameras and photography, maybe running out of options and time.
Concerns about the company's future boiled over on Friday, after it hired a law firm well-known for bankruptcy cases, sending its shares down 54 percent to 78 cents per share.
Although Kodak said it has "no intention" of filing for bankruptcy, the fact that its shares closed under $1, and market capitalization shrank to less than $300 million suggests that even the most die-hard investors may have lost faith.
The picture began to fade in September 2003. Film sales were dying, and Kodak slashed its dividend by 70 percent, hoping to gain flexibility as it beefed up spending on commercial and inkjet printers, medical imaging devices and other digital systems. It stopped investing in traditional consumer film.
The next year, billionaire financier Carl Icahn ended a brief, but profitable stint as a Kodak shareholder, saying that the company's business model would not work, especially since it needed to shift gears while its primary revenue source, film, was in decline.
"(What Kodak is doing) certainly might not be enough," he said. "I think it is possibly too late."
In January 2004, the company said it would trim costs by shrinking manufacturing, and cutting some 15,000 jobs, or about 20 percent of its work force, over three years. Its work force has since been pared to about 18,800 -- 9,600 in the United States -- at the end of 2010, down from 86,000 in 1998.
Kodak has been an iconic name in American business. The company's history stretches back to inventor George Eastman's Eastman Dry Plate Company in 1881. By 1885 he had introduced the first transparent photographic film. The "Kodak" camera hit the market in 1888, with the slogan, "You press the button - we do the rest."
It rolled out Kodachrome, the first commercially successful amateur color film, in 1935, but George Eastman was unable to see its debut. The ailing Eastman, a pioneering inventor and prolific philanthropist, committed suicide in 1932.
Nearly a century later -- 1981 -- its sales topped $10 billion. It even got in early to the digital camera movement, with its Professional Digital Camera System in 1991 that enabled photojournalists to take an electronic picture with a camera equipped with Kodak's 1.3 megapixel sensor.
Daniel Carp took over as CEO in 2000, right around the time that digital cameras started to become an affordable alternative to film cameras. Taking pictures without the use of film and the option to forgo printing proved a crippling blow to the company, which sold film, photo paper, and the systems that develop film into prints.
Veteran Hewlett Packard executive Antonio Perez joined the company in 2003, and became CEO two years later. Perez was instrumental in Kodak's shift to digital devices and services, hoping to outpace plummeting demand for film.
But some say that was already too late, since consumers had become enamored with the ease of digital cameras, which allowed then to snap hundreds of photos without film or the need to make prints.
Today, most snapshots are taken with phones and viewed on Facebook, and its tough to remember when Kodak's brand was stronger than that of the social media site. Most iPhone-toting teens have never purchased a roll of film, and have no interest in carting around a stand-alone camera.
In recent years the company has relied on licensing of patents related to photography and printing, as well as sales of commercial and consumer printing systems. In July, Perez said Kodak would sell part of its patent portfolio, which is estimated to be worth more than $2 billion in its entirety.
A dearth of news about the patent sale has contributed to the stock's weakness. The fact that no sale has been announced, shows that the patent's values are a fraction of Kodak's hopes, according to a source close to the matter.
(Additional reporting by Nadia Damouni in New York; Editing by Bob Burgdorfer)
full story
North Street Capital to buy Spyker cars: source
AMSTERDAM | Wed Sep 28, 2011 7:59pm EDT
(Reuters) - U.S.-based private equity firm North Street Capital has agreed to buy Dutch luxury car maker Spyker from its parent company Swedish Automobile (SWAN.AS), the Financial Times newspaper reported on Wednesday.
Dutch-listed Swedish Automobile had initially agreed in February to sell Spyker to CPP Global Holdings, the UK holding company of Russian businessman Vladimir Antonov, a former Spyker shareholder, for an initial 15 million euros.
But Swedish Automobile, which also owns Saab, said at the end of August that it was putting the planned sale of Spyker cars to Antonov temporarily on hold.
Saab won protection from its creditors last week.
The talks with CPP have collapsed, the Financial Times reported, citing a person familiar with a new agreement to sell Spyker cars to North Street Capital. The newspaper did not give any financial details of the latest transaction.
The Financial Times said it had seen a draft announcement from North Street about the deal.
Swedish Automobile chief executive Victor Muller declined to comment on the report when contacted by phone by Reuters.
(Reporting By Aaron Gray-Block; editing by Carol Bishopric)
full story
(Reuters) - U.S.-based private equity firm North Street Capital has agreed to buy Dutch luxury car maker Spyker from its parent company Swedish Automobile (SWAN.AS), the Financial Times newspaper reported on Wednesday.
Dutch-listed Swedish Automobile had initially agreed in February to sell Spyker to CPP Global Holdings, the UK holding company of Russian businessman Vladimir Antonov, a former Spyker shareholder, for an initial 15 million euros.
But Swedish Automobile, which also owns Saab, said at the end of August that it was putting the planned sale of Spyker cars to Antonov temporarily on hold.
Saab won protection from its creditors last week.
The talks with CPP have collapsed, the Financial Times reported, citing a person familiar with a new agreement to sell Spyker cars to North Street Capital. The newspaper did not give any financial details of the latest transaction.
The Financial Times said it had seen a draft announcement from North Street about the deal.
Swedish Automobile chief executive Victor Muller declined to comment on the report when contacted by phone by Reuters.
(Reporting By Aaron Gray-Block; editing by Carol Bishopric)
full story
Apple expected to unveil new iPhone next week
By Poornima Gupta
SAN FRANCISCO | Tue Sep 27, 2011 1:51pm EDT
(Reuters) - Apple Inc looks set next week to unveil its much-awaited new iPhone, which analysts say will have a bigger screen and work better with remote computing services.
Apple on Tuesday invited media to a "special event" called "Let's talk iPhone" on October 4 at its Cupertino, California headquarters, an unusual location for a company that typically introduces major products at larger venues in San Francisco.
The invitation did not have any other details, and an Apple spokesman would not provide further information.
"This is the iPhone 5," ThinkEquity analyst Mark McKechnie said of the event.
The new iPhone would be the first major product launch under Tim Cook, who took over full-time as chief executive after co-founder Steve Jobs resigned last month.
It was unclear if Jobs, who is now chairman, will take the stage at the event.
Though a good product, the current iPhone 4 could use some improvements, McKechnie said. "We talked about it having a bigger screen, a dual core processor, and probably integrates pretty well with the iCloud."
The iPhone -- introduced in 2007 with the touchscreen template now adopted by its rivals -- remains the gold standard in the booming smartphone market.
The new model, which some have dubbed the iPhone 5, will have a bigger touch screen, better antenna and an 8-megapixel camera, one source with knowledge of the matter told Reuters in August.
Hon Hai Precision Industries Co Ltd and Pegatron Corp of Taiwan will make the new phone, and have been told to gear up capacity for up to 45 million units in total, the source said.
NEW VOICE FEATURES?
Apple launched the iPhone 4 in June 2010 in black 16 gigabyte and 32 gigabyte versions, and added white ones in April. The company typically refreshes its iPhone lineup during its developer event in June, but delayed the new model this year.
Apple sold 20.34 million iPhones in the third quarter ended June 25, which analysts say helped it vault past Nokia and Samsung Electronics to become the world's biggest smartphone maker.
Some analysts are expecting another version of the iPhone 4 to be launched along with the next model.
"The new (iPhone) 4 will tackle the prepaid market and the (iPhone) 5 will have the A5 chip that's in the iPad and be faster, thinner and possibly with a bigger screen," Colin Gillis, analyst with BGC Partners said. He cited possible voice-recognition features as well.
Shares of Apple rose 0.6 percent to $405.66 on Nasdaq early Tuesday afternoon.
(Reporting by Poornima Gupta, Alexei Oreskovic and Alistair Barr; Editing by Lisa Von Ahn andRichard Chang)
full story
SAN FRANCISCO | Tue Sep 27, 2011 1:51pm EDT
(Reuters) - Apple Inc looks set next week to unveil its much-awaited new iPhone, which analysts say will have a bigger screen and work better with remote computing services.
Apple on Tuesday invited media to a "special event" called "Let's talk iPhone" on October 4 at its Cupertino, California headquarters, an unusual location for a company that typically introduces major products at larger venues in San Francisco.
The invitation did not have any other details, and an Apple spokesman would not provide further information.
"This is the iPhone 5," ThinkEquity analyst Mark McKechnie said of the event.
The new iPhone would be the first major product launch under Tim Cook, who took over full-time as chief executive after co-founder Steve Jobs resigned last month.
It was unclear if Jobs, who is now chairman, will take the stage at the event.
Though a good product, the current iPhone 4 could use some improvements, McKechnie said. "We talked about it having a bigger screen, a dual core processor, and probably integrates pretty well with the iCloud."
The iPhone -- introduced in 2007 with the touchscreen template now adopted by its rivals -- remains the gold standard in the booming smartphone market.
The new model, which some have dubbed the iPhone 5, will have a bigger touch screen, better antenna and an 8-megapixel camera, one source with knowledge of the matter told Reuters in August.
Hon Hai Precision Industries Co Ltd and Pegatron Corp of Taiwan will make the new phone, and have been told to gear up capacity for up to 45 million units in total, the source said.
NEW VOICE FEATURES?
Apple launched the iPhone 4 in June 2010 in black 16 gigabyte and 32 gigabyte versions, and added white ones in April. The company typically refreshes its iPhone lineup during its developer event in June, but delayed the new model this year.
Apple sold 20.34 million iPhones in the third quarter ended June 25, which analysts say helped it vault past Nokia and Samsung Electronics to become the world's biggest smartphone maker.
Some analysts are expecting another version of the iPhone 4 to be launched along with the next model.
"The new (iPhone) 4 will tackle the prepaid market and the (iPhone) 5 will have the A5 chip that's in the iPad and be faster, thinner and possibly with a bigger screen," Colin Gillis, analyst with BGC Partners said. He cited possible voice-recognition features as well.
Shares of Apple rose 0.6 percent to $405.66 on Nasdaq early Tuesday afternoon.
(Reporting by Poornima Gupta, Alexei Oreskovic and Alistair Barr; Editing by Lisa Von Ahn andRichard Chang)
full story
Yahoo received inquiries from many parties: memo
By Alexei Oreskovic
SAN FRANCISCO | Fri Sep 23, 2011 7:38pm EDT
(Reuters) - Yahoo Inc has received inquiries from multiple parties about "potential options," but the struggling Web company expects to take months to decide its future, the company's co-founders and chairman said in a letter to employees on Friday.
"Our advisers are working with us to develop ideas that we will pursue proactively," read the letter, a copy of which was obtained by Reuters.
Yahoo retained Allen & Co to help it conduct a "strategic review" after it fired Chief Executive Carol Bartz earlier this month.
"They are fielding inquiries from multiple parties that have already expressed interest in a number of potential options," read the letter on Friday, signed by Chairman Roy Bostock and co-founders Jerry Yang and David Filo.
Private equity firm Silver Lake Partners is among the parties that have been in touch with Allen & Co, according to a source familiar with the matter.
Yahoo's board has started a search for a permanent CEO, the letter said, but provided no details on the progress of the search, or whether the company has hired an executive recruiting firm to oversee the search.
At an all-hands meeting the day after Bartz was fired, Yang said the company was not for sale, according to another source familiar with the matter. Although Friday's note did not explicitly mention a sale of the company, it said the company was exploring various options to "structure the best approach for the company."
"While we will move with a sense of urgency, this process will take time," the letter said. "Months, not weeks."
A Yahoo spokesman declined to comment on the memo.
(Reporting by Alexei Oreskovic; editing by Andre Grenon)
full story
SAN FRANCISCO | Fri Sep 23, 2011 7:38pm EDT
(Reuters) - Yahoo Inc has received inquiries from multiple parties about "potential options," but the struggling Web company expects to take months to decide its future, the company's co-founders and chairman said in a letter to employees on Friday.
"Our advisers are working with us to develop ideas that we will pursue proactively," read the letter, a copy of which was obtained by Reuters.
Yahoo retained Allen & Co to help it conduct a "strategic review" after it fired Chief Executive Carol Bartz earlier this month.
"They are fielding inquiries from multiple parties that have already expressed interest in a number of potential options," read the letter on Friday, signed by Chairman Roy Bostock and co-founders Jerry Yang and David Filo.
Private equity firm Silver Lake Partners is among the parties that have been in touch with Allen & Co, according to a source familiar with the matter.
Yahoo's board has started a search for a permanent CEO, the letter said, but provided no details on the progress of the search, or whether the company has hired an executive recruiting firm to oversee the search.
At an all-hands meeting the day after Bartz was fired, Yang said the company was not for sale, according to another source familiar with the matter. Although Friday's note did not explicitly mention a sale of the company, it said the company was exploring various options to "structure the best approach for the company."
"While we will move with a sense of urgency, this process will take time," the letter said. "Months, not weeks."
A Yahoo spokesman declined to comment on the memo.
(Reporting by Alexei Oreskovic; editing by Andre Grenon)
full story
BofA in talks to sell stake in NPC International: report
SINGAPORE/LONDON | Thu Sep 22, 2011 7:45pm EDT
(Reuters) - UBS (UBSN.VX) CEO Oswald Gruebel will on Friday attempt to convince his board the Swiss bank has a future in investment banking and can bounce back from a $2.3 billion crisis around rogue trading.
UBS, thrown into turmoil a week ago by the discovery that an alleged rogue trader, Kweku Adoboli, had taken a massive unauthorized position, has been locked in talks on whether the crisis will force it to quit or scale-back its investment banking operation.
At the least, it is expected to accelerate plans to streamline the business.
With his job on the line after the scandal, Gruebel will fight to maintain the investment bank as part of the group's business alongside wealth management, sources told Reuters on Thursday.
The 67-year-old German, a former bond trader himself, has been delivering "a consistent message" throughout the week, despite twin British and Swiss investigations into how Adoboli evaded UBS's compliance department, sources said.
Adoboli was "sorry beyond words" and "appalled at the scale of the consequences of his disastrous miscalculations," his lawyer said at a brief court appearance in London on Thursday.
The crisis has left Gruebel facing not only strategic issues, such as whether the bank should stick to its safer core wealth management business, but also concern about his management team and lax risk supervision.
UBS's board meeting, one of four regular meetings per year, coincides with the Singapore Formula One motor racing Grand Prix, of which UBS is a major sponsor.
(Editing by Jon Loades-Carter)
full story
(Reuters) - UBS (UBSN.VX) CEO Oswald Gruebel will on Friday attempt to convince his board the Swiss bank has a future in investment banking and can bounce back from a $2.3 billion crisis around rogue trading.
UBS, thrown into turmoil a week ago by the discovery that an alleged rogue trader, Kweku Adoboli, had taken a massive unauthorized position, has been locked in talks on whether the crisis will force it to quit or scale-back its investment banking operation.
At the least, it is expected to accelerate plans to streamline the business.
With his job on the line after the scandal, Gruebel will fight to maintain the investment bank as part of the group's business alongside wealth management, sources told Reuters on Thursday.
The 67-year-old German, a former bond trader himself, has been delivering "a consistent message" throughout the week, despite twin British and Swiss investigations into how Adoboli evaded UBS's compliance department, sources said.
Adoboli was "sorry beyond words" and "appalled at the scale of the consequences of his disastrous miscalculations," his lawyer said at a brief court appearance in London on Thursday.
The crisis has left Gruebel facing not only strategic issues, such as whether the bank should stick to its safer core wealth management business, but also concern about his management team and lax risk supervision.
UBS's board meeting, one of four regular meetings per year, coincides with the Singapore Formula One motor racing Grand Prix, of which UBS is a major sponsor.
(Editing by Jon Loades-Carter)
full story
Finnish startup aims to change Web advertising
By Tarmo Virki, European Technology Correspondent
HELSINKI | Wed Sep 21, 2011 5:33am EDT
(Reuters) - Finnish technology startup Kiosked aims to change the way money moves on the Internet, adding links to advertisements to web content like pictures and replacing advertising banners.
The company on Wednesday opened its growing archive of some 5 million photos, which can be used on the Internet by anyone. Pictures are tagged with related advertisements, which can be clicked, and when these lead to sales, the copyright owner, content provider and Kiosked get a small cut.
A picture of a Ferrari car for instance in a blog about a trip to the company's hometown Maranello could include ads offering a flight there, renting a hotel or a car.
"We will turn the Web upside down," co-founder Micke Paqvalen told Reuters in an interview. "We will turn the Internet into what it was originally intended to be -- the world's largest marketplace, without annoying banners."
Analysts said it will take time before Kiosked could gain wide adoption, and they see some risks in linking editorial content and advertisement so closely.
"I'm sure that publishers and advertisers will experiment with it, but it won't kill off banner advertising any time soon," said analyst Nitesh Patel from Strategy Analytics.
"Publishers will need to evaluate in order to be sure to make more money through this model versus banner adverts, and this will take time," Patel said.
Globally, online advertising is expected to overtake newspapers as the second-largest advertising medium by next year, and is forecast to reach $129 billion in 2016, according to advertising group Magna.
Kiosked has trailed the technology in Finland with media groups including publishing company Sanoma. Paqvalen said the trials had shown that by making pictures in a photo archive available for free online use boosts revenue per picture by 20 to 50 times.
Kiosked has so far been funded by founders Paqvalen and Antti Pasila, but it will seek outside capital as it expands beyond Finland.
(Reporting by Tarmo Virki; Editing by David Holmes and Hans-Juergen Peters)
full story
HELSINKI | Wed Sep 21, 2011 5:33am EDT
(Reuters) - Finnish technology startup Kiosked aims to change the way money moves on the Internet, adding links to advertisements to web content like pictures and replacing advertising banners.
The company on Wednesday opened its growing archive of some 5 million photos, which can be used on the Internet by anyone. Pictures are tagged with related advertisements, which can be clicked, and when these lead to sales, the copyright owner, content provider and Kiosked get a small cut.
A picture of a Ferrari car for instance in a blog about a trip to the company's hometown Maranello could include ads offering a flight there, renting a hotel or a car.
"We will turn the Web upside down," co-founder Micke Paqvalen told Reuters in an interview. "We will turn the Internet into what it was originally intended to be -- the world's largest marketplace, without annoying banners."
Analysts said it will take time before Kiosked could gain wide adoption, and they see some risks in linking editorial content and advertisement so closely.
"I'm sure that publishers and advertisers will experiment with it, but it won't kill off banner advertising any time soon," said analyst Nitesh Patel from Strategy Analytics.
"Publishers will need to evaluate in order to be sure to make more money through this model versus banner adverts, and this will take time," Patel said.
Globally, online advertising is expected to overtake newspapers as the second-largest advertising medium by next year, and is forecast to reach $129 billion in 2016, according to advertising group Magna.
Kiosked has trailed the technology in Finland with media groups including publishing company Sanoma. Paqvalen said the trials had shown that by making pictures in a photo archive available for free online use boosts revenue per picture by 20 to 50 times.
Kiosked has so far been funded by founders Paqvalen and Antti Pasila, but it will seek outside capital as it expands beyond Finland.
(Reporting by Tarmo Virki; Editing by David Holmes and Hans-Juergen Peters)
full story
Hulu sale at risk even as new bids are due
NEW YORK | Fri Sep 16, 2011 10:40pm EDT
(Reuters) - The auction of online video site Hulu has been slowed by recent developments which could derail it completely, according to sources familiar with the process.
Among the issues are conflicts over complicated digital rights, a wide bid-ask gap, and Yahoo being sidelined as a potential buyer by its own issues. Moreover, NBC Universal's hiring of Morgan Stanley banker Stuart Epstein, who was involved in the sale process for the bank, as its chief financial officer complicates a potential deal.
And then there is the lack of commitment to sell by Hulu's owners -- News Corp, Walt Disney Co, Comcast Corp's NBC Universal and Providence Equity Partners.
News Corp Chief Operating Officer Chase Carey even acknowledged during the company's third-quarter earnings call last month that a Hulu sale might not happen.
A new round of bids are due next week and price will be in a key issue in whether the auction moves forward, according to a source close to the situation.
Other sources with knowledge of the talks said an unusually wide gap has developed in recent weeks between the price bidders are offering and what the Hulu owners are willing to accept. Hulu's owners are becoming more steadfast about the price and feel enough strategic alternatives are available to reject low-ball offers, sources said.
Bids have ranged from as low as $500 million to as much as $2 billion. The most serious suitors include Google Inc, Amazon.com Inc, DirecTV Group Inc and DISH Network Corp.
Yahoo Inc had been viewed as one of the most enthusiastic likely bidders, but that was before its leadership imploded last week with the firing of CEO Carol Bartz. The company is likely to be too preoccupied with its own issues to digest a multibillion dollar deal. Moreover, Hulu's owners would be reluctant to sell to a company undergoing an internal upheaval.
As with any sale, the situation is fluid and there remains a chance Google or another party could swoop in with a rich offer. Reports have suggested Google was planning an offer, but company insiders are uncertain Hulu's media owners would sanction a sale to the search engine giant -- at least not without caveats such as blocking piracy searches, for example.
After intense initial interest due to Hulu's huge and growing popularity, the sale has stalled as bidders questioned what they would get for their money.
One senior media executive said the nature of Hulu's content deals is key to whether a deal happens or not.
"I guess the brand and technology are worth something, but probably not for that asking price because digital companies could develop a site on their own," the executive said, who asked not to be identified speaking about a partner company.
CBS Corp boss Les Moonves openly questioned Hulu's value during an interview at a Paley Media Center event on Thursday.
"What are they getting and how long are they getting it?" asked Moonves, whose company is not a Hulu owner or content provider. "Are they buying two years of programs for $2 billion? I don't know. I shouldn't say more, I'll get in trouble."
The issue of rights, particularly on newer platforms such as the Web and mobile, are both unclear and complicated, adding to the potential deal's complexity.
BTIG analyst Richard Greenfield said a recent decision by NBC Universal to offer programs for free via an iPhone and iPad app without requiring a cable subscription effectively undermines the value of the rights Hulu's owners are trying to sell. The move also potentially conflicts with News Corp unit Fox TV's strategy of allowing Hulu users to access only the latest TV shows if they are a pay-TV subscriber.
"It gets more challenging to push through the Hulu sale, given what NBC just did," said Greenfield.
Comcast agreed, as part of the regulatory restrictions attached to its takeover of NBCU, that NBCU would abstain from key management decisions at Hulu.
If the sale falls apart, it will mark the second time its owners have fashioned a full or partial exit strategy that has failed. After nearly six months of planning, the owners ditched an initial public offering last December to raise up to $300 million. Such an IPO would have valued the company at about $2 billion.
But the decision to ditch the IPO in favor of a sale prompted industry observers to wonder whether media companies should risk handing over their future online to digital rivals such as Google and Amazon. Greenfield has described the plan to sell Hulu as a mistake of "epic proportions."
"Hulu appears to be the perfect weapon for networks and content creators to embrace so they can grow revenues and profits, even if the current multichannel ecosystem becomes unglued over the next decade," said Greenfield in his client-targeted blog.
(Reporting by Yinka Adegoke; Editing by Peter Lauria and Richard Chang)
full story
(Reuters) - The auction of online video site Hulu has been slowed by recent developments which could derail it completely, according to sources familiar with the process.
Among the issues are conflicts over complicated digital rights, a wide bid-ask gap, and Yahoo being sidelined as a potential buyer by its own issues. Moreover, NBC Universal's hiring of Morgan Stanley banker Stuart Epstein, who was involved in the sale process for the bank, as its chief financial officer complicates a potential deal.
And then there is the lack of commitment to sell by Hulu's owners -- News Corp, Walt Disney Co, Comcast Corp's NBC Universal and Providence Equity Partners.
News Corp Chief Operating Officer Chase Carey even acknowledged during the company's third-quarter earnings call last month that a Hulu sale might not happen.
A new round of bids are due next week and price will be in a key issue in whether the auction moves forward, according to a source close to the situation.
Other sources with knowledge of the talks said an unusually wide gap has developed in recent weeks between the price bidders are offering and what the Hulu owners are willing to accept. Hulu's owners are becoming more steadfast about the price and feel enough strategic alternatives are available to reject low-ball offers, sources said.
Bids have ranged from as low as $500 million to as much as $2 billion. The most serious suitors include Google Inc, Amazon.com Inc, DirecTV Group Inc and DISH Network Corp.
Yahoo Inc had been viewed as one of the most enthusiastic likely bidders, but that was before its leadership imploded last week with the firing of CEO Carol Bartz. The company is likely to be too preoccupied with its own issues to digest a multibillion dollar deal. Moreover, Hulu's owners would be reluctant to sell to a company undergoing an internal upheaval.
As with any sale, the situation is fluid and there remains a chance Google or another party could swoop in with a rich offer. Reports have suggested Google was planning an offer, but company insiders are uncertain Hulu's media owners would sanction a sale to the search engine giant -- at least not without caveats such as blocking piracy searches, for example.
After intense initial interest due to Hulu's huge and growing popularity, the sale has stalled as bidders questioned what they would get for their money.
One senior media executive said the nature of Hulu's content deals is key to whether a deal happens or not.
"I guess the brand and technology are worth something, but probably not for that asking price because digital companies could develop a site on their own," the executive said, who asked not to be identified speaking about a partner company.
CBS Corp boss Les Moonves openly questioned Hulu's value during an interview at a Paley Media Center event on Thursday.
"What are they getting and how long are they getting it?" asked Moonves, whose company is not a Hulu owner or content provider. "Are they buying two years of programs for $2 billion? I don't know. I shouldn't say more, I'll get in trouble."
The issue of rights, particularly on newer platforms such as the Web and mobile, are both unclear and complicated, adding to the potential deal's complexity.
BTIG analyst Richard Greenfield said a recent decision by NBC Universal to offer programs for free via an iPhone and iPad app without requiring a cable subscription effectively undermines the value of the rights Hulu's owners are trying to sell. The move also potentially conflicts with News Corp unit Fox TV's strategy of allowing Hulu users to access only the latest TV shows if they are a pay-TV subscriber.
"It gets more challenging to push through the Hulu sale, given what NBC just did," said Greenfield.
Comcast agreed, as part of the regulatory restrictions attached to its takeover of NBCU, that NBCU would abstain from key management decisions at Hulu.
If the sale falls apart, it will mark the second time its owners have fashioned a full or partial exit strategy that has failed. After nearly six months of planning, the owners ditched an initial public offering last December to raise up to $300 million. Such an IPO would have valued the company at about $2 billion.
But the decision to ditch the IPO in favor of a sale prompted industry observers to wonder whether media companies should risk handing over their future online to digital rivals such as Google and Amazon. Greenfield has described the plan to sell Hulu as a mistake of "epic proportions."
"Hulu appears to be the perfect weapon for networks and content creators to embrace so they can grow revenues and profits, even if the current multichannel ecosystem becomes unglued over the next decade," said Greenfield in his client-targeted blog.
(Reporting by Yinka Adegoke; Editing by Peter Lauria and Richard Chang)
full story
TARP for Europe; more stimulus for U.S.: bankers
By Steven C. Johnson and Daniel Bases
NEW YORK | Thu Sep 15, 2011 9:01pm EDT
(Reuters) - Europe must take immediate and decisive action to safeguard its banking system, while the U.S.economy is at stall speed and needs a dose of fiscal stimulus, top bankers and investors said on Thursday.
The troubles on both sides of the Atlantic have cast a pall over the prospects for global growth in recent weeks and have undermined confidence among investors, business and consumers.
Some European banks have had trouble accessing short-term loans to fund operations because investors fear they are too heavily exposed to government debt from troubled euro zone countries such as Greece.
Europe's worsening debt crisis and the strain it has put on its banks topped a list of concerns at the Bloomberg Markets 50 Summit of top money managers and bankers on Thursday.
"It is very strongly in our interests, and by that I mean U.S. interests, to avoid having Europe, in particular its banking system, collapse, especially when the U.S. economy is right at stall speed," said Peter Orszag, vice chairman of global banking at Citigroup and a former head of the Office of Management and Budget in the Obama administration.
The European Central Bank said on Thursday it would work with other major central banks and conduct three-month dollar liquidity operations in the fourth quarter to help banks through the year-end period.
European and U.S. shares rose after the central bank announcement, but several investors said more needed to be done, including more aggressive capital injections for banks that are overexposed to heavily indebted euro zone countries.
A EUROPEAN TARP?
Wilbur Ross, chairman of private equity firm WL Ross & Co, said the euro zone needs to imitate the U.S. Troubled Asset Relief Program, a view echoed by others.
The TARP was adopted in 2008 to help recapitalize U.S. banks and underpin the financial system following the collapse of investment bank Lehman Brothers.
"There has to be some mechanism to inject capital into banks," said Dino Kos, managing director at Hamiltonian Associates.
Thursday marked the third anniversary of Lehman's failure, which occurred as doubts about the firm's solvency caused other banks to stop providing short-term loans, leaving Lehman unable to conduct business.
Its collapse nearly brought down the U.S. banking system and sent shock waves through the world economy that are still being felt today.
The trouble European banks have had in accessing short-term loans has invoked uncomfortable memories of that time.
"I think everyone is incredibly wary of allowing that first domino to fall in Europe because once that falls, it is not easy to limit it to one (institution) and prop up every other one and it becomes fantastically more expensive once the first event has occurred," said Ralph Schlosstein, president and CEO of Evercore Partners.
U.S. FISCAL POLICY NEEDED
In the years after the Lehman collapse, the Federal Reserve pumped trillions of dollars into the U.S. financial system to ensure solvency and to spur lending and investment.
But that failed to inject much life into the broader economy. Growth has slowed sharply in the first half of 2011 and the jobless rate remains stuck above 9 percent.
Bob Doll, chief equity strategist at BlackRock Inc, said the United States needs to use fiscal as well as monetary policy to convince cash-rich corporations to hire and invest.
He said companies are more likely to raise their dividends or buy back shares than to invest and hire because they do not know what policy to expect from Washington.
President Barack Obama has proposed a $447 billion job stimulus program, but it remains unclear how much will be approved by a Republicans in Congress intent on unseating him.
Some lawmakers have objected to more government spending for fear it will swell an already large budget deficit currently running at nearly 10 percent of output.
The inability of U.S. lawmakers to agree on measures to reduce federal debt prompted Standard & Poor's to strip the United States of its AAA rating last month.
John Chambers, head of the agency's sovereign ratings committee, said the downgrade and the large U.S. debt burden reflected that "there will be less ability to stimulate the economy with fiscal measures going forward."
But others said reducing the deficit should be a long-term goal and urged the government to take advantage of super low borrowing costs to boost near-term spending.
"If the world continues to be willing to lend us money at 2 percent for 10 years, for crying out loud, if there was ever a time to spend, this is the time," said Don Brownstein, chief investment officer at Structured Portfolio Management.
(Editing by Dan Grebler)
full story
NEW YORK | Thu Sep 15, 2011 9:01pm EDT
(Reuters) - Europe must take immediate and decisive action to safeguard its banking system, while the U.S.economy is at stall speed and needs a dose of fiscal stimulus, top bankers and investors said on Thursday.
The troubles on both sides of the Atlantic have cast a pall over the prospects for global growth in recent weeks and have undermined confidence among investors, business and consumers.
Some European banks have had trouble accessing short-term loans to fund operations because investors fear they are too heavily exposed to government debt from troubled euro zone countries such as Greece.
Europe's worsening debt crisis and the strain it has put on its banks topped a list of concerns at the Bloomberg Markets 50 Summit of top money managers and bankers on Thursday.
"It is very strongly in our interests, and by that I mean U.S. interests, to avoid having Europe, in particular its banking system, collapse, especially when the U.S. economy is right at stall speed," said Peter Orszag, vice chairman of global banking at Citigroup and a former head of the Office of Management and Budget in the Obama administration.
The European Central Bank said on Thursday it would work with other major central banks and conduct three-month dollar liquidity operations in the fourth quarter to help banks through the year-end period.
European and U.S. shares rose after the central bank announcement, but several investors said more needed to be done, including more aggressive capital injections for banks that are overexposed to heavily indebted euro zone countries.
A EUROPEAN TARP?
Wilbur Ross, chairman of private equity firm WL Ross & Co, said the euro zone needs to imitate the U.S. Troubled Asset Relief Program, a view echoed by others.
The TARP was adopted in 2008 to help recapitalize U.S. banks and underpin the financial system following the collapse of investment bank Lehman Brothers.
"There has to be some mechanism to inject capital into banks," said Dino Kos, managing director at Hamiltonian Associates.
Thursday marked the third anniversary of Lehman's failure, which occurred as doubts about the firm's solvency caused other banks to stop providing short-term loans, leaving Lehman unable to conduct business.
Its collapse nearly brought down the U.S. banking system and sent shock waves through the world economy that are still being felt today.
The trouble European banks have had in accessing short-term loans has invoked uncomfortable memories of that time.
"I think everyone is incredibly wary of allowing that first domino to fall in Europe because once that falls, it is not easy to limit it to one (institution) and prop up every other one and it becomes fantastically more expensive once the first event has occurred," said Ralph Schlosstein, president and CEO of Evercore Partners.
U.S. FISCAL POLICY NEEDED
In the years after the Lehman collapse, the Federal Reserve pumped trillions of dollars into the U.S. financial system to ensure solvency and to spur lending and investment.
But that failed to inject much life into the broader economy. Growth has slowed sharply in the first half of 2011 and the jobless rate remains stuck above 9 percent.
Bob Doll, chief equity strategist at BlackRock Inc, said the United States needs to use fiscal as well as monetary policy to convince cash-rich corporations to hire and invest.
He said companies are more likely to raise their dividends or buy back shares than to invest and hire because they do not know what policy to expect from Washington.
President Barack Obama has proposed a $447 billion job stimulus program, but it remains unclear how much will be approved by a Republicans in Congress intent on unseating him.
Some lawmakers have objected to more government spending for fear it will swell an already large budget deficit currently running at nearly 10 percent of output.
The inability of U.S. lawmakers to agree on measures to reduce federal debt prompted Standard & Poor's to strip the United States of its AAA rating last month.
John Chambers, head of the agency's sovereign ratings committee, said the downgrade and the large U.S. debt burden reflected that "there will be less ability to stimulate the economy with fiscal measures going forward."
But others said reducing the deficit should be a long-term goal and urged the government to take advantage of super low borrowing costs to boost near-term spending.
"If the world continues to be willing to lend us money at 2 percent for 10 years, for crying out loud, if there was ever a time to spend, this is the time," said Don Brownstein, chief investment officer at Structured Portfolio Management.
(Editing by Dan Grebler)
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Huawei targets enterprise deals at $7 billion by 2012
By Lee Chyen Yee and Huang Yuntao
DALIAN, China/HONG KONG | Wed Sep 14, 2011 11:48pm EDT
(Reuters) - Huawei Technologies Co Ltd, the world's No.2 network equipment maker, expects its deals in the enterprise sector to total more than $7 billion by next year, banking on demand from key markets such as China, a senior executive said.
Huawei also plans to triple staff numbers at its enterprise unit to about 30,000 in the next three years from 10,000 expected by the end of this year, to compete with the likes of Cisco Systems Inc and Hewlett-Packard Co, with half in research and development.
The enterprise unit provides equipment such as hubs, routers and switches that run networks transferring data across corporations.
Huawei signed contracts worth $2 billion last year and aimed to double that figure to $4 billion this year and $7 billion next year, William Xu, president of Huawei's enterprise business group division, told Reuters in an interview late on Wednesday at the World Economic Forum in the northeastern Chinese port city of Dalian.
The Shenzhen-based company aimed to expand its enterprise business aggressively in coming years, targeting contract sales worth $15-20 billion by 2015, Xu said.
"Cloud computing is a revolution in the IT sector and gives information and communications technology suppliers such as Huawei new opportunities to get into the enterprise sector," the Shenzhen-based executive said.
"Our key clientele used to be network carriers, but we're expanding into vertical markets in various sectors," he said, adding that Huawei would actively target sectors such as energy and transport, in which China is actively investing.
Huawei was restructured this year into three main units - one that supplies equipment to network carriers, another that makes consumer devices such as cell phones and tablet PCs and the third, the enterprise division led by Xu.
In the telecommunications sector, Huawei competes with market leader Ericsson and smaller local rival ZTE Corp in providing infrastructure equipment to network carriers.
Huawei derives its revenue, which totaled 185.2 billion yuan ($28 billion) in 2010, mainly from network equipment sales, but has been actively marketing consumer devices because of growing global demand for smartphones and tablet PCs.
Although Europe, one of its key markets, is embroiled in debt problems, Xu said the crisis had little impact on Huawei's revenue.
"We didn't see reduced spending in the ICT sector as corporates are investing in cloud computing," Xu said. "Some chief information officers, such as those in the financial sector, prefer to spend the same amount, but they are now demanding more for their money, especially since the economic climate is tough."
However, the United States has been a difficult market for Huawei to crack as some politicians are wary of the company's secretive founder and Chief Executive Ren Zhengfei, a former military officer.
But Xu said it was more an issue of familiarity that hampered Huawei from clinching deals in the United States.
"Clients in the North America are not familiar with the Huawei name. In the enterprise sector, many people haven't heard of Huawei, so that is something we have to work on with our partners," he said.
(Additional reporting by Li Ran; Editing by Chris Lewis)
full story
DALIAN, China/HONG KONG | Wed Sep 14, 2011 11:48pm EDT
(Reuters) - Huawei Technologies Co Ltd, the world's No.2 network equipment maker, expects its deals in the enterprise sector to total more than $7 billion by next year, banking on demand from key markets such as China, a senior executive said.
Huawei also plans to triple staff numbers at its enterprise unit to about 30,000 in the next three years from 10,000 expected by the end of this year, to compete with the likes of Cisco Systems Inc and Hewlett-Packard Co, with half in research and development.
The enterprise unit provides equipment such as hubs, routers and switches that run networks transferring data across corporations.
Huawei signed contracts worth $2 billion last year and aimed to double that figure to $4 billion this year and $7 billion next year, William Xu, president of Huawei's enterprise business group division, told Reuters in an interview late on Wednesday at the World Economic Forum in the northeastern Chinese port city of Dalian.
The Shenzhen-based company aimed to expand its enterprise business aggressively in coming years, targeting contract sales worth $15-20 billion by 2015, Xu said.
"Cloud computing is a revolution in the IT sector and gives information and communications technology suppliers such as Huawei new opportunities to get into the enterprise sector," the Shenzhen-based executive said.
"Our key clientele used to be network carriers, but we're expanding into vertical markets in various sectors," he said, adding that Huawei would actively target sectors such as energy and transport, in which China is actively investing.
Huawei was restructured this year into three main units - one that supplies equipment to network carriers, another that makes consumer devices such as cell phones and tablet PCs and the third, the enterprise division led by Xu.
In the telecommunications sector, Huawei competes with market leader Ericsson and smaller local rival ZTE Corp in providing infrastructure equipment to network carriers.
Huawei derives its revenue, which totaled 185.2 billion yuan ($28 billion) in 2010, mainly from network equipment sales, but has been actively marketing consumer devices because of growing global demand for smartphones and tablet PCs.
Although Europe, one of its key markets, is embroiled in debt problems, Xu said the crisis had little impact on Huawei's revenue.
"We didn't see reduced spending in the ICT sector as corporates are investing in cloud computing," Xu said. "Some chief information officers, such as those in the financial sector, prefer to spend the same amount, but they are now demanding more for their money, especially since the economic climate is tough."
However, the United States has been a difficult market for Huawei to crack as some politicians are wary of the company's secretive founder and Chief Executive Ren Zhengfei, a former military officer.
But Xu said it was more an issue of familiarity that hampered Huawei from clinching deals in the United States.
"Clients in the North America are not familiar with the Huawei name. In the enterprise sector, many people haven't heard of Huawei, so that is something we have to work on with our partners," he said.
(Additional reporting by Li Ran; Editing by Chris Lewis)
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Gold drops 2.5 percent as investors cover equity losses
By Frank Tang and Amanda Cooper
NEW YORK/LONDON | Mon Sep 12, 2011 4:41pm EDT
(Reuters) - Gold dropped 2.5 percent on Monday, falling further from last week's record highs, as mounting fears about the European debt crisis prompted investors to sell bullion to cover losses in equity markets.
Spot gold has recoiled since jumping to a record high last Tuesday of $1,920.30. While viewed as a safe haven, gold often falls during a stock market sell-off as investors tap the liquid gold market to meet equities margin calls.
Fears of a potential Greek default that could spread through global markets slammed stock markets, triggering heavy liquidation in gold. U.S. equities rebounded in late trade to close higher, lifted by a technology merger agreement and hopes China might purchase Italian government debt.
But Wall Street's bounce did not lift bullion from sharp early losses, traders said.
Some warned that technical signals pointed to more downside for gold.
"We have some technical selling now coming into the market. If we poke our head below the $1,800 level, we can see a fairly rapid downward acceleration that might carry us back down to $1,700," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
Spot gold was down 2.3 percent at $1,814.39 an ounce by 3:42 p.m. (1942 EDT). It fell more than 1 percent last week, its sharpest weekly decline since late June.
U.S. December gold futures settled down $46.20 at $1,813.30 an ounce. Trading volume was in line with its 30-day average, Reuters data showed.
Silver was down 3 percent at $40.10 an ounce.
"We had a similar situation in 2008, when stock markets dropped and pulled gold lower, as some hedge funds had to compensate loses by liquidating gold positions," said Peter Fertig, a consultant at Quantitative Commodity Research.
"Depending on whether the situation in stock markets calms down, this could go on for another couple of days," he said.
Greece confirmed on Monday that it had cash for only a few more weeks. [ID:nL5E7KC0F1] Investor confidence also was rattled by concerns that Moody's Investors Service could downgrade the credit-worthiness of French banks, which are widely exposed to Greek bonds.
GOLD VOLATILITY SPIKES
Gold options' implied volatility -- a measure of how much traders expect prices to move, either up or down, in the future -- has surged to its highest in over two years, more than double its level of early July.
In addition, more gold option traders are using puts to hedge against downside risks after the metal failed to extend gains above a record above $1,900 an ounce last week, and for the second time in past three weeks.
Volatility in other markets also affects gold. The CBOE Volatility Index, also known as the Wall Street fear gauge, jumped almost 10 percent to over 40 on Monday.
Early in the session, gold priced in euros rose to a record 1,373.92 euros an ounce as the European currency fell sharply against the dollar and the Japanese yen.
The gold price has risen by a third so far this year and by 22 percent in the third quarter alone, its largest quarterly gain since 1986, driven by a push by investors seeking an alternative to sinkingcurrencies and volatile stocks.
In platinum group metals, platinum fell 1.2 percent to $1,807 an ounce, and palladium fell 3.1 percent to $700.18 an ounce.
(Additional reporting by Jan Harvey in London; Editing by Bob Burgdorfer and David Gregorio)
full story
NEW YORK/LONDON | Mon Sep 12, 2011 4:41pm EDT
(Reuters) - Gold dropped 2.5 percent on Monday, falling further from last week's record highs, as mounting fears about the European debt crisis prompted investors to sell bullion to cover losses in equity markets.
Spot gold has recoiled since jumping to a record high last Tuesday of $1,920.30. While viewed as a safe haven, gold often falls during a stock market sell-off as investors tap the liquid gold market to meet equities margin calls.
Fears of a potential Greek default that could spread through global markets slammed stock markets, triggering heavy liquidation in gold. U.S. equities rebounded in late trade to close higher, lifted by a technology merger agreement and hopes China might purchase Italian government debt.
But Wall Street's bounce did not lift bullion from sharp early losses, traders said.
Some warned that technical signals pointed to more downside for gold.
"We have some technical selling now coming into the market. If we poke our head below the $1,800 level, we can see a fairly rapid downward acceleration that might carry us back down to $1,700," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
Spot gold was down 2.3 percent at $1,814.39 an ounce by 3:42 p.m. (1942 EDT). It fell more than 1 percent last week, its sharpest weekly decline since late June.
U.S. December gold futures settled down $46.20 at $1,813.30 an ounce. Trading volume was in line with its 30-day average, Reuters data showed.
Silver was down 3 percent at $40.10 an ounce.
"We had a similar situation in 2008, when stock markets dropped and pulled gold lower, as some hedge funds had to compensate loses by liquidating gold positions," said Peter Fertig, a consultant at Quantitative Commodity Research.
"Depending on whether the situation in stock markets calms down, this could go on for another couple of days," he said.
Greece confirmed on Monday that it had cash for only a few more weeks. [ID:nL5E7KC0F1] Investor confidence also was rattled by concerns that Moody's Investors Service could downgrade the credit-worthiness of French banks, which are widely exposed to Greek bonds.
GOLD VOLATILITY SPIKES
Gold options' implied volatility -- a measure of how much traders expect prices to move, either up or down, in the future -- has surged to its highest in over two years, more than double its level of early July.
In addition, more gold option traders are using puts to hedge against downside risks after the metal failed to extend gains above a record above $1,900 an ounce last week, and for the second time in past three weeks.
Volatility in other markets also affects gold. The CBOE Volatility Index, also known as the Wall Street fear gauge, jumped almost 10 percent to over 40 on Monday.
Early in the session, gold priced in euros rose to a record 1,373.92 euros an ounce as the European currency fell sharply against the dollar and the Japanese yen.
The gold price has risen by a third so far this year and by 22 percent in the third quarter alone, its largest quarterly gain since 1986, driven by a push by investors seeking an alternative to sinkingcurrencies and volatile stocks.
In platinum group metals, platinum fell 1.2 percent to $1,807 an ounce, and palladium fell 3.1 percent to $700.18 an ounce.
(Additional reporting by Jan Harvey in London; Editing by Bob Burgdorfer and David Gregorio)
full story
SAP reaches plea deal in Oracle criminal case
By Dan Levine
OAKLAND, California | Thu Sep 8, 2011 9:20pm EDT
(Reuters) - SAP AG agreed to plead guilty to unspecified charges in a criminal case involving unauthorized access to computers maintained by software rival Oracle Corp, according to a court filing.
U.S. Department of Justice prosecutors on Thursday charged SAP's defunct TomorrowNow Inc unit with 11 counts of unauthorized access to an Oracle computer, and one count of criminal copyright infringement, according to a separate filing.
The filing lists TomorrowNow as the sole defendant in the criminal case. No individuals were charged.
Sentencing in the case is scheduled for September 14, court documents show.
"We have been working with the DOJ and we have reached an agreement to resolve the matter. With the agreement we now look forward to what we think is a fair and final resolution of the matter," SAP spokesman Jim Dever said by phone.
He declined to give details of the plea agreement.
Eric Goldman, a professor at Santa Clara University School of Law, said it is difficult to understand what will be accomplished by bringing criminal charges against one defunct company.
"What can they do to TomorrowNow that the marketplace hasn't already done?" Goldman said. "DOJ may have felt they had to do something, because this was such a high profile example of putatively criminal behavior that they couldn't ignore it."
A Justice Department representative declined to comment on the case.
The charges are the latest in a long-running legal controversy involving SAP and Oracle. Last year a civil jury awarded Oracle $1.3 billion over accusations that SAP subsidiary TomorrowNow wrongfully downloaded millions of Oracle files.
A judge has since reduced that award to $272 million.
SAP acquired TomorrowNow in 2005 after Oracle took over PeopleSoft. TomorrowNow provided third party maintenance and support services to companies that used software licensed from Oracle.
According to the criminal charges, TomorrowNow employees repeatedly gained access to Oracle's computers in 2006 and 2007 using log-in credentials from other companies.
For instance, on December 13, 2006, TomorrowNow employees obtained updates for Oracle real estate management software by using credentials from Merck & Co.
"We are very pleased that the Department of Justice brought criminal charges against SAP for their widespread and systematic theft of Oracle's intellectual property to which SAP has repeatedly confessed," Oracle spokeswoman Deborah Hellinger said.
An Oracle representative may wish to address the court at sentencing next week in an Oakland federal courtroom, prosecutors and TomorrowNow said in a joint court filing.
The criminal case in U.S. District Court, Northern District of California is United States of America v. TomorrowNow Inc., 11-cr-0642.
(Additional reporting by Peter Henderson; Editing by Gary Hill)
full story
OAKLAND, California | Thu Sep 8, 2011 9:20pm EDT
(Reuters) - SAP AG agreed to plead guilty to unspecified charges in a criminal case involving unauthorized access to computers maintained by software rival Oracle Corp, according to a court filing.
U.S. Department of Justice prosecutors on Thursday charged SAP's defunct TomorrowNow Inc unit with 11 counts of unauthorized access to an Oracle computer, and one count of criminal copyright infringement, according to a separate filing.
The filing lists TomorrowNow as the sole defendant in the criminal case. No individuals were charged.
Sentencing in the case is scheduled for September 14, court documents show.
"We have been working with the DOJ and we have reached an agreement to resolve the matter. With the agreement we now look forward to what we think is a fair and final resolution of the matter," SAP spokesman Jim Dever said by phone.
He declined to give details of the plea agreement.
Eric Goldman, a professor at Santa Clara University School of Law, said it is difficult to understand what will be accomplished by bringing criminal charges against one defunct company.
"What can they do to TomorrowNow that the marketplace hasn't already done?" Goldman said. "DOJ may have felt they had to do something, because this was such a high profile example of putatively criminal behavior that they couldn't ignore it."
A Justice Department representative declined to comment on the case.
The charges are the latest in a long-running legal controversy involving SAP and Oracle. Last year a civil jury awarded Oracle $1.3 billion over accusations that SAP subsidiary TomorrowNow wrongfully downloaded millions of Oracle files.
A judge has since reduced that award to $272 million.
SAP acquired TomorrowNow in 2005 after Oracle took over PeopleSoft. TomorrowNow provided third party maintenance and support services to companies that used software licensed from Oracle.
According to the criminal charges, TomorrowNow employees repeatedly gained access to Oracle's computers in 2006 and 2007 using log-in credentials from other companies.
For instance, on December 13, 2006, TomorrowNow employees obtained updates for Oracle real estate management software by using credentials from Merck & Co.
"We are very pleased that the Department of Justice brought criminal charges against SAP for their widespread and systematic theft of Oracle's intellectual property to which SAP has repeatedly confessed," Oracle spokeswoman Deborah Hellinger said.
An Oracle representative may wish to address the court at sentencing next week in an Oakland federal courtroom, prosecutors and TomorrowNow said in a joint court filing.
The criminal case in U.S. District Court, Northern District of California is United States of America v. TomorrowNow Inc., 11-cr-0642.
(Additional reporting by Peter Henderson; Editing by Gary Hill)
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China faces downgrade if bank asset quality worsens: Fitch
TAIPEI | Wed Sep 7, 2011 11:47pm EDT
(Reuters) - China's local currency debt rating could face a downgrade over the next 12 to 24 months if an expected deterioration in asset quality materializes, according to ratings agency Fitch.
Fitch put its China local currency debt AA minus rating on negative outlook in April, citing concern over financial stability after a lending surge.
"We expect a material deterioration in bank asset quality," Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch, told Reuters in an interview. "If the problems in the banking system pan out as we expect or are even worse over the next 12 to 24 months, then that would incline us to take the rating downwards."
(Reporting by Jonathan Standing; Editing by Chris Lewis)
full story
(Reuters) - China's local currency debt rating could face a downgrade over the next 12 to 24 months if an expected deterioration in asset quality materializes, according to ratings agency Fitch.
Fitch put its China local currency debt AA minus rating on negative outlook in April, citing concern over financial stability after a lending surge.
"We expect a material deterioration in bank asset quality," Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch, told Reuters in an interview. "If the problems in the banking system pan out as we expect or are even worse over the next 12 to 24 months, then that would incline us to take the rating downwards."
(Reporting by Jonathan Standing; Editing by Chris Lewis)
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Yahoo's Bartz fired by chairman over phone: source
SAN FRANCISCO | Tue Sep 6, 2011 7:59pm EDT
(Reuters) - Yahoo Inc Chief Executive Carol Bartz on Tuesday said she had been fired over the phone by Chairman Roy Bostock, a source familiar with the matter quoted an internal company email as saying.
A second source said that Bartz had been dismissed by the board and replaced, on an interim basis, by Chief Financial Officer Tim Morse.
That followed a report by tech blog AllThingsD, which cited company sources.
Yahoo representatives were not immediately available for comment.
(Editing by Carol Bishopric)
full story
(Reuters) - Yahoo Inc Chief Executive Carol Bartz on Tuesday said she had been fired over the phone by Chairman Roy Bostock, a source familiar with the matter quoted an internal company email as saying.
A second source said that Bartz had been dismissed by the board and replaced, on an interim basis, by Chief Financial Officer Tim Morse.
That followed a report by tech blog AllThingsD, which cited company sources.
Yahoo representatives were not immediately available for comment.
(Editing by Carol Bishopric)
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D.Telekom could miss fee if AT&T deal fails: source
By Peter Maushagen
FRANKFURT | Mon Sep 5, 2011 6:55am EDT
(Reuters) - Deutsche Telekom AG (DTEGn.DE) could miss out on a multi-billion dollar break fee if regulatory hurdles cause the failure of its $39 billiondeal to sell T-Mobile USA to AT&T (T.N), a person familiar with the matter said.
"There are a number of options under which the (break fee) contract will not come into effect," the person, who is familiar with the contract, told Reuters on Monday.
Deutsche Telekom declined comment.
The U.S. government last week sued to block AT&T's purchase of T-Mobile USA, a deal that would vault the combined company above Verizon Wireless as the No. 1 player in the United States.
As part of the AT&T deal, Deutsche Telekom had secured a break fee comprising $6 billion in cash and other assets should regulators reject the deal.
But the source said on Monday that AT&T will only have to pay that fee if certain conditions are met.
For instance, the acquisition has to receive regulatory approval within a certain timeframe, the source said. Otherwise, the contract is void.
Also, the value of T-Mobile USA may not fall below a certain level, the person said. That could happen, for instance, if regulators demand that parts of the company be sold as a condition for approval of the deal.
Shares of Deutsche Telekom fell 1.8 percent to 8.58 euros by 0920 GMT (5:20 a.m. ET). The stock has lost about 17 percent of its value over the past month.
AT&T's Frankfurt-listed shares (T.F) were down 1.5 percent.
A German government official said on Thursday a deal for AT&T to buy T-Mobile USA could still be reached as the U.S. Department of Justice is holding talks with the two companies.
AT&T is expected to soon present a proposed solution to U.S. antitrust regulators to salvage the deal, people close to the matter said last week.
(Writing by Maria Sheahan; Editing by David Holmes)
full story
FRANKFURT | Mon Sep 5, 2011 6:55am EDT
(Reuters) - Deutsche Telekom AG (DTEGn.DE) could miss out on a multi-billion dollar break fee if regulatory hurdles cause the failure of its $39 billiondeal to sell T-Mobile USA to AT&T (T.N), a person familiar with the matter said.
"There are a number of options under which the (break fee) contract will not come into effect," the person, who is familiar with the contract, told Reuters on Monday.
Deutsche Telekom declined comment.
The U.S. government last week sued to block AT&T's purchase of T-Mobile USA, a deal that would vault the combined company above Verizon Wireless as the No. 1 player in the United States.
As part of the AT&T deal, Deutsche Telekom had secured a break fee comprising $6 billion in cash and other assets should regulators reject the deal.
But the source said on Monday that AT&T will only have to pay that fee if certain conditions are met.
For instance, the acquisition has to receive regulatory approval within a certain timeframe, the source said. Otherwise, the contract is void.
Also, the value of T-Mobile USA may not fall below a certain level, the person said. That could happen, for instance, if regulators demand that parts of the company be sold as a condition for approval of the deal.
Shares of Deutsche Telekom fell 1.8 percent to 8.58 euros by 0920 GMT (5:20 a.m. ET). The stock has lost about 17 percent of its value over the past month.
AT&T's Frankfurt-listed shares (T.F) were down 1.5 percent.
A German government official said on Thursday a deal for AT&T to buy T-Mobile USA could still be reached as the U.S. Department of Justice is holding talks with the two companies.
AT&T is expected to soon present a proposed solution to U.S. antitrust regulators to salvage the deal, people close to the matter said last week.
(Writing by Maria Sheahan; Editing by David Holmes)
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BNY Mellon grants ex-CEO Kelly $33.8 million in pay
NEW YORK | Fri Sep 2, 2011 6:50pm EDT
(Reuters) - Bank of New York Mellon Corp (BK.N) has agreed to pay $33.8 million in severance and benefits to Robert Kelly, who stepped down as chief executive this week after disagreeing with the board over how to manage the company.
Kelly, 57, will receive a $2 million in severance pay, as well as a prorated bonus targeted at $4 million, which will be adjusted based on Bank of New York Mellon's performance for the full year.
He will also be able to cash in on restricted stock awards for past service totaling $11.2 million and a bested supplemental pension annuity valued at about $16.6 million.
Kelly stepped down on Thursday in a surprise move due to what Bank of New York Mellon described as "differences in approach to managing the company." He was replaced by Gerald Hassell, the bank's 59-year-old president, who took over as chairman and CEO.
(Reporting by Lauren Tara LaCapra; editing by Gunna Dickson)
full story
(Reuters) - Bank of New York Mellon Corp (BK.N) has agreed to pay $33.8 million in severance and benefits to Robert Kelly, who stepped down as chief executive this week after disagreeing with the board over how to manage the company.
Kelly, 57, will receive a $2 million in severance pay, as well as a prorated bonus targeted at $4 million, which will be adjusted based on Bank of New York Mellon's performance for the full year.
He will also be able to cash in on restricted stock awards for past service totaling $11.2 million and a bested supplemental pension annuity valued at about $16.6 million.
Kelly stepped down on Thursday in a surprise move due to what Bank of New York Mellon described as "differences in approach to managing the company." He was replaced by Gerald Hassell, the bank's 59-year-old president, who took over as chairman and CEO.
(Reporting by Lauren Tara LaCapra; editing by Gunna Dickson)
full story
Bonds hold most of their gains after jobless data
NEW YORK | Thu Sep 1, 2011 8:42am EDT
(Reuters) - U.S. Treasuries prices held on to most of their earlier gains on Thursday after the latest report on jobless claims suggested the U.S. labor market remains sluggish and unemployment would stay high.
U.S. workers who filed for unemployment benefits for the first time totaled 409,000 in the week ended August 27, compared with a revised 421,000 the previous week, the U.S. Labor Department said. The latest figure was close to the median forecast of 410,000 among economists polled by Reuters.
Prices on benchmark 10-year Treasury notes last traded up 7/32 with a yield of 2.21 percent. They were up 11/32 in price with a 2.20 percent yield shortly before the release of the claims data.
(Reporting by Richard Leong, Editing by W Simon )
full story
(Reuters) - U.S. Treasuries prices held on to most of their earlier gains on Thursday after the latest report on jobless claims suggested the U.S. labor market remains sluggish and unemployment would stay high.
U.S. workers who filed for unemployment benefits for the first time totaled 409,000 in the week ended August 27, compared with a revised 421,000 the previous week, the U.S. Labor Department said. The latest figure was close to the median forecast of 410,000 among economists polled by Reuters.
Prices on benchmark 10-year Treasury notes last traded up 7/32 with a yield of 2.21 percent. They were up 11/32 in price with a 2.20 percent yield shortly before the release of the claims data.
(Reporting by Richard Leong, Editing by W Simon )
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White House to release budget review Thursday
By Alister Bull
WASHINGTON | Wed Aug 31, 2011 6:13pm EDT
(Reuters) - The White House will release its delayed midsession budget review Thursday, updating projections for the economy ahead of a congressional review to lower the deficit by $1.5 trillion over 10 years.
An administration official said Wednesday that the semi-annual review of President Barack Obama's budget proposal for fiscal 2012 will revise estimates of the budget deficit, growth and unemployment until 2021.
"The midsession review will be a reality test to see if the president's forecast matches the gloomy outlook of the private sector," said Alex Brill, a senior fellow at the American Enterprise Institute in Washington.
A Reuters poll on August 9 predicted GDP growth this year of 1.9 percent followed by 2.5 percent in 2012, down from estimates of 2.5 and 2.9 percent polled a month earlier, before the U.S. AAA credit rating was cut and stock markets slumped.
The nonpartisan Congressional Budget Office released its own midsession review last week, predicting the deficit and debt as a share of GDP would fall over the next 10 years, provided a range of tax breaks were allowed to expire.
It also forecast unemployment would remain stuck above 8 percent and growth would be tepid through the 2012 elections, as the country struggles to recover from the deepest recession since the 1930s. Unemployment was 9.1 percent in July.
The midsession review will incorporate the $1.2 trillion in deficit cuts mandated under the law Obama signed earlier this month to lift the debt ceiling
But the review will not be able to predict if lawmakers achieve those reductions through spending cuts, tax hikes or a mixture of the two, as that decision rests with a congressional commission which has not yet begun its work.
"The thing that matters is what the commission is going to do," said Chad Stone, chief economist with the Center on Budget and Policy Priorities, a think-tank based in Washington.
Congress must seek $1.5 trillion in deficit reduction measures over the next 10 years. If it fails to act before late December, mandatory spending cuts of $1.2 trillion will be imposed equally on defense and non-defense spending, kicking in from 2013 and running through 2021.
Obama wants Congress to seek deeper deficit cuts than the $1.5 trillion identified in the debt ceiling deal.
He has not yet laid out a detailed set of recommendations, but has talked about measures to boost revenues by reforming the tax code to close some loopholes, and taking steps to reduce the long-term costs of popular entitlement programs like Social Security and Medicare for older Americans.
"We'd have some additional stimulus in the early part of the period, made up by balanced tax and spending measures to achieve the target for a 10-year deficit reduction. But that is a policy that doesn't seem to have any Republican votes on the commission," said Stone, speaking of what he would recommend.
The White House announced in June that it would delay release of its updated economic and budget projections beyond a July 16 deadline, in part because lawmakers took until the middle of the year to agree a budget for fiscal 2011.
The deficit debate has dominated Washington politics all year, with Republicans determined to cut spending while Obama's Democrats push to preserve programs for poorer Americans and urge reforms to increase revenue from taxes.
The president wants to address a rare joint session of Congress next week to lay out a package of measures to boost growth and hiring while underlining the importance of controlling the deficit.
Obama asked for the joint session at 8 p.m. Wednesday but Republican Speaker of the House of Representatives John Boehner wrote back and suggested the president do it a day later.
(Reporting by Alister Bull; Editing by Cynthia Osterman)
full story
WASHINGTON | Wed Aug 31, 2011 6:13pm EDT
(Reuters) - The White House will release its delayed midsession budget review Thursday, updating projections for the economy ahead of a congressional review to lower the deficit by $1.5 trillion over 10 years.
An administration official said Wednesday that the semi-annual review of President Barack Obama's budget proposal for fiscal 2012 will revise estimates of the budget deficit, growth and unemployment until 2021.
"The midsession review will be a reality test to see if the president's forecast matches the gloomy outlook of the private sector," said Alex Brill, a senior fellow at the American Enterprise Institute in Washington.
A Reuters poll on August 9 predicted GDP growth this year of 1.9 percent followed by 2.5 percent in 2012, down from estimates of 2.5 and 2.9 percent polled a month earlier, before the U.S. AAA credit rating was cut and stock markets slumped.
The nonpartisan Congressional Budget Office released its own midsession review last week, predicting the deficit and debt as a share of GDP would fall over the next 10 years, provided a range of tax breaks were allowed to expire.
It also forecast unemployment would remain stuck above 8 percent and growth would be tepid through the 2012 elections, as the country struggles to recover from the deepest recession since the 1930s. Unemployment was 9.1 percent in July.
The midsession review will incorporate the $1.2 trillion in deficit cuts mandated under the law Obama signed earlier this month to lift the debt ceiling
But the review will not be able to predict if lawmakers achieve those reductions through spending cuts, tax hikes or a mixture of the two, as that decision rests with a congressional commission which has not yet begun its work.
"The thing that matters is what the commission is going to do," said Chad Stone, chief economist with the Center on Budget and Policy Priorities, a think-tank based in Washington.
Congress must seek $1.5 trillion in deficit reduction measures over the next 10 years. If it fails to act before late December, mandatory spending cuts of $1.2 trillion will be imposed equally on defense and non-defense spending, kicking in from 2013 and running through 2021.
Obama wants Congress to seek deeper deficit cuts than the $1.5 trillion identified in the debt ceiling deal.
He has not yet laid out a detailed set of recommendations, but has talked about measures to boost revenues by reforming the tax code to close some loopholes, and taking steps to reduce the long-term costs of popular entitlement programs like Social Security and Medicare for older Americans.
"We'd have some additional stimulus in the early part of the period, made up by balanced tax and spending measures to achieve the target for a 10-year deficit reduction. But that is a policy that doesn't seem to have any Republican votes on the commission," said Stone, speaking of what he would recommend.
The White House announced in June that it would delay release of its updated economic and budget projections beyond a July 16 deadline, in part because lawmakers took until the middle of the year to agree a budget for fiscal 2011.
The deficit debate has dominated Washington politics all year, with Republicans determined to cut spending while Obama's Democrats push to preserve programs for poorer Americans and urge reforms to increase revenue from taxes.
The president wants to address a rare joint session of Congress next week to lay out a package of measures to boost growth and hiring while underlining the importance of controlling the deficit.
Obama asked for the joint session at 8 p.m. Wednesday but Republican Speaker of the House of Representatives John Boehner wrote back and suggested the president do it a day later.
(Reporting by Alister Bull; Editing by Cynthia Osterman)
full story
Lehman payout plan OK'd for creditor vote
By Nick Brown
NEW YORK | Tue Aug 30, 2011 4:30pm EDT
(Reuters) - Creditors of Lehman Brothers Holdings Inc (LEHMQ.PK) will be allowed to vote on the failed bank's $65 billion payback plan, clearing a major hurdle in the path to ending the biggest bankruptcy in U.S. history.
U.S. Bankruptcy Judge James Peck in Manhattan said he would enter an order approving the outline of Lehman's plan and send it to creditors for a November 4 vote, overruling a handful of objections from corporate creditors.
The disclosures in the plan outline are "abundant and adequate as to the issues in this too-big-to-fail enterprise," Peck told a packed courtroom.
Lehman faced a relatively small list of objections after negotiating support from several powerful critics -- including distressed investors and former trading partners -- prior to the hearing.
The Wall Street firm, crippled by bad mortgage bets, filed for bankruptcy on September 15, 2008, with $639 billion in assets, and its collapse was a catalyst of the financial crisis. Barclays Plc (BARC.L) took over a large part of its investment banking business in a rushed deal following the bankruptcy.
Lehman has been unloading assets and unwinding operations while in bankruptcy, a case that has provided work for an army of lawyers, advisers and accountants. Only after the company formally emerges from bankruptcy can it begin to pay back creditors.
In court on Tuesday, Lehman attorney Harvey Miller invoked Winston Churchill, telling the judge he hoped that the hearing would represent the "beginning of the end" of Lehman's three-year Chapter 11 odyssey, rather than the "end of the beginning."
Among supporters of Lehman's payback plan were two creditor groups that hold a combined $100 billion in claims, more than one-fourth of the roughly $360 billion in claims against Lehman.
Those groups include bondholders led by hedge fund Paulson & Co, and derivatives creditors such as Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N). Asian affiliates holding about $20 billion in claims have also pledged support.
Peck overruled objections from investment fund Mason Capital Management LLC, Centerbridge Credit Advisors LLC and others, praising a "compelling" compromise on payout terms supported by the vast majority of Lehman's 110,000 creditors.
ORDERLY HEARING
The swiftness of the hearing surprised even Peck, who had budgeted two days for the matter and told those gathered in his courtroom on Tuesday to prepare for a "long day."
But Tuesday's brisk pace may not foreshadow a simple exit from bankruptcy.
If creditors accept Lehman's plan, the matter would go back to Peck for a final approval hearing that could take between two and three weeks due to the complexities of certain objections the company is likely to face at the confirmation stage, Miller said.
The parties tentatively scheduled that hearing to begin on December 6.
Some of those objections may come from international affiliates, said Stephen Lubben, a bankruptcy law professor at Seton Hall Law School.
"There is still the international component to this case, and it's getting to the point where everyone may have to face up to that component, which I think they've been avoiding," Lubben said.
In general, he added, the process of managing objections will be difficult in a case as complex as Lehman's. The company will tweak its plan to the extent that it can resolve objections, he said.
"But if you tweak it too much, you have to resolicit and creditors have to vote again, so there's a trade-off," he said.
Even after creditors and the court approve a plan, Lehman must meet certain financing and other conditions, a process that could take additional days, weeks or months, a company spokeswoman said last week. Lehman has said it hopes to begin creditor payouts in the first quarter of 2012.
Lehman had hoped to continue post-bankruptcy through its Legacy Asset Management Co, an asset management company created to manage its real estate and other assets, but shelved the idea earlier this month after creditors opposed it.
Since the Chapter 11 filing, Lehman's pre-bankruptcy accounting practices have been under particular scrutiny, especially its use of the so-called Repo 105 method in which a company moves assets on and off its balance sheet. The company and its former executives, including ex-Chief Executive Richard Fuld, face investor lawsuits over their conduct ahead of the firm's collapse.
full story
NEW YORK | Tue Aug 30, 2011 4:30pm EDT
(Reuters) - Creditors of Lehman Brothers Holdings Inc (LEHMQ.PK) will be allowed to vote on the failed bank's $65 billion payback plan, clearing a major hurdle in the path to ending the biggest bankruptcy in U.S. history.
U.S. Bankruptcy Judge James Peck in Manhattan said he would enter an order approving the outline of Lehman's plan and send it to creditors for a November 4 vote, overruling a handful of objections from corporate creditors.
The disclosures in the plan outline are "abundant and adequate as to the issues in this too-big-to-fail enterprise," Peck told a packed courtroom.
Lehman faced a relatively small list of objections after negotiating support from several powerful critics -- including distressed investors and former trading partners -- prior to the hearing.
The Wall Street firm, crippled by bad mortgage bets, filed for bankruptcy on September 15, 2008, with $639 billion in assets, and its collapse was a catalyst of the financial crisis. Barclays Plc (BARC.L) took over a large part of its investment banking business in a rushed deal following the bankruptcy.
Lehman has been unloading assets and unwinding operations while in bankruptcy, a case that has provided work for an army of lawyers, advisers and accountants. Only after the company formally emerges from bankruptcy can it begin to pay back creditors.
In court on Tuesday, Lehman attorney Harvey Miller invoked Winston Churchill, telling the judge he hoped that the hearing would represent the "beginning of the end" of Lehman's three-year Chapter 11 odyssey, rather than the "end of the beginning."
Among supporters of Lehman's payback plan were two creditor groups that hold a combined $100 billion in claims, more than one-fourth of the roughly $360 billion in claims against Lehman.
Those groups include bondholders led by hedge fund Paulson & Co, and derivatives creditors such as Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N). Asian affiliates holding about $20 billion in claims have also pledged support.
Peck overruled objections from investment fund Mason Capital Management LLC, Centerbridge Credit Advisors LLC and others, praising a "compelling" compromise on payout terms supported by the vast majority of Lehman's 110,000 creditors.
ORDERLY HEARING
The swiftness of the hearing surprised even Peck, who had budgeted two days for the matter and told those gathered in his courtroom on Tuesday to prepare for a "long day."
But Tuesday's brisk pace may not foreshadow a simple exit from bankruptcy.
If creditors accept Lehman's plan, the matter would go back to Peck for a final approval hearing that could take between two and three weeks due to the complexities of certain objections the company is likely to face at the confirmation stage, Miller said.
The parties tentatively scheduled that hearing to begin on December 6.
Some of those objections may come from international affiliates, said Stephen Lubben, a bankruptcy law professor at Seton Hall Law School.
"There is still the international component to this case, and it's getting to the point where everyone may have to face up to that component, which I think they've been avoiding," Lubben said.
In general, he added, the process of managing objections will be difficult in a case as complex as Lehman's. The company will tweak its plan to the extent that it can resolve objections, he said.
"But if you tweak it too much, you have to resolicit and creditors have to vote again, so there's a trade-off," he said.
Even after creditors and the court approve a plan, Lehman must meet certain financing and other conditions, a process that could take additional days, weeks or months, a company spokeswoman said last week. Lehman has said it hopes to begin creditor payouts in the first quarter of 2012.
Lehman had hoped to continue post-bankruptcy through its Legacy Asset Management Co, an asset management company created to manage its real estate and other assets, but shelved the idea earlier this month after creditors opposed it.
Since the Chapter 11 filing, Lehman's pre-bankruptcy accounting practices have been under particular scrutiny, especially its use of the so-called Repo 105 method in which a company moves assets on and off its balance sheet. The company and its former executives, including ex-Chief Executive Richard Fuld, face investor lawsuits over their conduct ahead of the firm's collapse.
full story
Analysis: History shows iconic CEOs tough act to follow
By Bill Rigby
SEATTLE | Fri Aug 26, 2011 8:30am EDT
(Reuters) - How does a company recover from the loss of an iconic leader like Steve Jobs at Apple Inc (AAPL.O)?
Sometimes, it doesn't.
Sony Corp (6758.T) has never regained the dominance in consumer electronics it built under co-founder Akio Morita. Microsoft Corp's (MSFT.O) stock price hasn't budged in the decade since Bill Gates stepped down as CEO.
The jury is still out on Jeff Immelt's stewardship of General Electric (GE.N) after taking over from legendary boss Jack Welch.
The question has vexed Apple shareholders since Jobs resigned as CEO on Wednesday.
While he will stay on as chairman, investors are parsing how much of Apple's success was due to Jobs' day-to-day leadership, and how much of his approach has become part of the fabric of the company, ensuring future success.
"Every major company survives the passing of the founder," said Peter Cappelli, Professor of Management at The Wharton School, University of Pennsylvania. "But Jobs seems to have played a particularly unusual role in the company, actively making the final decisions on a lot of the innovations. The question is whether the company can keep operating like that with a different CEO."
History shows that is a tricky proposition. Iconic, hands-on leaders like Jobs are by definition irreplaceable, and companies need a plan for surviving without them, experts said.
"You're not going to find another Steve Jobs," said Charles Elson, law professor and corporate governance expert at the University of Delaware. "The key for a board is that the company itself is perpetual and human beings are mortal. They come and go. You have to always prepare for the fact that someone is not going to be there because the company lives on."
RISKS ON EITHER SIDE
A major risk is trying to replicate the iconic CEO. Sometimes a complete change of personality and skills is called for.
"Sam Walton at Wal-Mart (WMT.N) had a famously large personality and charisma, so he tried to groom a successor that lacked that," said Michael Carrier, a professor at Rutgers School of Law in New Jersey, who has written extensively on innovation. "He showed that it didn't matter, you could still have a very successful Wal-Mart."
Instilling a culture over the years -- rather than projecting personality -- is key to successful evolution, said Bruce Avolio, Professor of Management at the University of Washington's Foster School Business in Seattle.
"A lot is often done before these events happen for companies to remain successful -- building the bench strength of leadership over the years," he said. "One thing we learn is the values of founders often become part of the fabric of the way the organization operates, and from what I can tell that is true of Apple."
Often the people who follow these charismatic founders are not necessarily charismatic themselves, he added. They tend to focus on organizing the next stage of the company's development rather than reinventing it.
The methodical Immelt may fall into that category. He is regarded as an able successor to the more fiery Welch at GE, even though the company's share price is still less than half what it was when he took over in 2001.
Apple's new CEO Tim Cook, an understated leader without Jobs knack for drama, may also follow that approach, and is not expected to turn himself into an imitation of Jobs.
The opposite risk is that Apple may come to miss Jobs' tireless need to question and reinvent.
That -- along with the implosion of Japan' economy -- was a major reason for the stagnation of Sony in the late stages of the reign of co-founder Morita, who stepped down in 1994, some industry watchers believe.
"There's a sense that Sony became a different company afterwards," Wharton's Cappelli said. "It started to miss out on innovations. It's not clear that's inevitable, but it's clear they didn't do so well."
Conservative Japanese culture may have compounded the problem.
"There may have been a resistance to challenging the things that he (Morita) put in place because it would have been seen as disrespectful," University of Washington's Avolio said. "Though I don't think that's the case at Apple."
AFTER GATES
Microsoft may be suffering a similar malady since Gates handed over the CEO job to Steve Ballmer in 2000, and gave up day-to-day involvement in the company in 2008 -- although he remains the chairman.
"When you are in such a dominant position in a market, it's very difficult for folks in those organizations to challenge and redirect in any significant way," Avolio said. "Microsoft still has talented people, but perhaps it hasn't really challenged the fundamental assumptions about the businesses that have been their success."
Some argue that the risk of betting on an Apple without Jobs may be less risky than an Apple with him making the decisions.
"Jobs bet the farm several times and won each time," Cappelli said. "Is this a guy who could have kept doing this forever? Or would one of these bets have failed? In which case the company would have done worse than a Sony? It's hard to know."
With or without iconic leaders, companies go through stages, and the best they can do is ensure some kind of continuity of approach, experts agreed.
"What was good a few years back may not be necessary going forward," University of Delaware's Elson said. "That's why you want a board of directors that is independent of management and objective, to evaluate the direction the company needs to take."
(Reporting by Bill Rigby; Editing by Derek Caney)
full story
SEATTLE | Fri Aug 26, 2011 8:30am EDT
(Reuters) - How does a company recover from the loss of an iconic leader like Steve Jobs at Apple Inc (AAPL.O)?
Sometimes, it doesn't.
Sony Corp (6758.T) has never regained the dominance in consumer electronics it built under co-founder Akio Morita. Microsoft Corp's (MSFT.O) stock price hasn't budged in the decade since Bill Gates stepped down as CEO.
The jury is still out on Jeff Immelt's stewardship of General Electric (GE.N) after taking over from legendary boss Jack Welch.
The question has vexed Apple shareholders since Jobs resigned as CEO on Wednesday.
While he will stay on as chairman, investors are parsing how much of Apple's success was due to Jobs' day-to-day leadership, and how much of his approach has become part of the fabric of the company, ensuring future success.
"Every major company survives the passing of the founder," said Peter Cappelli, Professor of Management at The Wharton School, University of Pennsylvania. "But Jobs seems to have played a particularly unusual role in the company, actively making the final decisions on a lot of the innovations. The question is whether the company can keep operating like that with a different CEO."
History shows that is a tricky proposition. Iconic, hands-on leaders like Jobs are by definition irreplaceable, and companies need a plan for surviving without them, experts said.
"You're not going to find another Steve Jobs," said Charles Elson, law professor and corporate governance expert at the University of Delaware. "The key for a board is that the company itself is perpetual and human beings are mortal. They come and go. You have to always prepare for the fact that someone is not going to be there because the company lives on."
RISKS ON EITHER SIDE
A major risk is trying to replicate the iconic CEO. Sometimes a complete change of personality and skills is called for.
"Sam Walton at Wal-Mart (WMT.N) had a famously large personality and charisma, so he tried to groom a successor that lacked that," said Michael Carrier, a professor at Rutgers School of Law in New Jersey, who has written extensively on innovation. "He showed that it didn't matter, you could still have a very successful Wal-Mart."
Instilling a culture over the years -- rather than projecting personality -- is key to successful evolution, said Bruce Avolio, Professor of Management at the University of Washington's Foster School Business in Seattle.
"A lot is often done before these events happen for companies to remain successful -- building the bench strength of leadership over the years," he said. "One thing we learn is the values of founders often become part of the fabric of the way the organization operates, and from what I can tell that is true of Apple."
Often the people who follow these charismatic founders are not necessarily charismatic themselves, he added. They tend to focus on organizing the next stage of the company's development rather than reinventing it.
The methodical Immelt may fall into that category. He is regarded as an able successor to the more fiery Welch at GE, even though the company's share price is still less than half what it was when he took over in 2001.
Apple's new CEO Tim Cook, an understated leader without Jobs knack for drama, may also follow that approach, and is not expected to turn himself into an imitation of Jobs.
The opposite risk is that Apple may come to miss Jobs' tireless need to question and reinvent.
That -- along with the implosion of Japan' economy -- was a major reason for the stagnation of Sony in the late stages of the reign of co-founder Morita, who stepped down in 1994, some industry watchers believe.
"There's a sense that Sony became a different company afterwards," Wharton's Cappelli said. "It started to miss out on innovations. It's not clear that's inevitable, but it's clear they didn't do so well."
Conservative Japanese culture may have compounded the problem.
"There may have been a resistance to challenging the things that he (Morita) put in place because it would have been seen as disrespectful," University of Washington's Avolio said. "Though I don't think that's the case at Apple."
AFTER GATES
Microsoft may be suffering a similar malady since Gates handed over the CEO job to Steve Ballmer in 2000, and gave up day-to-day involvement in the company in 2008 -- although he remains the chairman.
"When you are in such a dominant position in a market, it's very difficult for folks in those organizations to challenge and redirect in any significant way," Avolio said. "Microsoft still has talented people, but perhaps it hasn't really challenged the fundamental assumptions about the businesses that have been their success."
Some argue that the risk of betting on an Apple without Jobs may be less risky than an Apple with him making the decisions.
"Jobs bet the farm several times and won each time," Cappelli said. "Is this a guy who could have kept doing this forever? Or would one of these bets have failed? In which case the company would have done worse than a Sony? It's hard to know."
With or without iconic leaders, companies go through stages, and the best they can do is ensure some kind of continuity of approach, experts agreed.
"What was good a few years back may not be necessary going forward," University of Delaware's Elson said. "That's why you want a board of directors that is independent of management and objective, to evaluate the direction the company needs to take."
(Reporting by Bill Rigby; Editing by Derek Caney)
full story
Bloomberg to buy legal research firm for $990 million
NEW YORK | Thu Aug 25, 2011 12:45pm EDT
(Reuters) - Bloomberg LP plans to buy legal tax andregulatory research company BNA for about $990 million as it shores up its legal business in a direct aim at rivals Thomson Reuters (TRI.N) (TRI.TO) and Reed Elsevier (REL.L) (ELSN.AS).
The deal announced on Thursday for $39.50 per share in cash will be the largest acquisition Bloomberg has made and is part of a larger effort by the news and financial information company to expand its legal and government services business.
Owned by current and former employees who must approve the transaction, Arlington, Virginia-based BNA provides editorial products for the legal, tax and accounting, human resources and health and safety industries.
"They will no doubt be looking to use (BNA's) information product as a way to further push the Bloomberg Law offering into legal firms," said Paul Sullivan, an analyst with Barclays Capital.
Bloomberg Law competes with the Westlaw legal database of Thomson Reuters and with Reed Elsevier's LexisNexis.
"In the context of Westlaw, (BNA) is still a niche information provider but it signals an intent of Bloomberg to get more aggressive in the space," Sullivan said.
BNA reported $331 million in revenue for 2010 while revenue at the legal division of Thomson Reuters was $3.6 billion for the same year.
Bloomberg said it will operate BNA as stand-alone subsidiary. The transaction is expected to close this year.
Evercore Partners (EVR.N) advised BNA on the deal.
(Reporting by Jennifer Saba, editing by Maureen Bavdek and Matthew Lewis)
full story
(Reuters) - Bloomberg LP plans to buy legal tax andregulatory research company BNA for about $990 million as it shores up its legal business in a direct aim at rivals Thomson Reuters (TRI.N) (TRI.TO) and Reed Elsevier (REL.L) (ELSN.AS).
The deal announced on Thursday for $39.50 per share in cash will be the largest acquisition Bloomberg has made and is part of a larger effort by the news and financial information company to expand its legal and government services business.
Owned by current and former employees who must approve the transaction, Arlington, Virginia-based BNA provides editorial products for the legal, tax and accounting, human resources and health and safety industries.
"They will no doubt be looking to use (BNA's) information product as a way to further push the Bloomberg Law offering into legal firms," said Paul Sullivan, an analyst with Barclays Capital.
Bloomberg Law competes with the Westlaw legal database of Thomson Reuters and with Reed Elsevier's LexisNexis.
"In the context of Westlaw, (BNA) is still a niche information provider but it signals an intent of Bloomberg to get more aggressive in the space," Sullivan said.
BNA reported $331 million in revenue for 2010 while revenue at the legal division of Thomson Reuters was $3.6 billion for the same year.
Bloomberg said it will operate BNA as stand-alone subsidiary. The transaction is expected to close this year.
Evercore Partners (EVR.N) advised BNA on the deal.
(Reporting by Jennifer Saba, editing by Maureen Bavdek and Matthew Lewis)
full story
Samsung gets boost from Dutch court, Jobs resignation
SEOUL | Wed Aug 24, 2011 11:36pm EDT
(Reuters) - Samsung Electronics shares rose sharply on Thursday, amid a rally in South Korean large capstocks and analysts said it received a boost from a Dutch patent ruling and the decision by Apple's Steve Jobs to step down.
Apple and Samsung are fighting a series of legal battles over patents with U.S. market leader Apple and South Korea's Samsung slugging it out in courtrooms spanning the United States, Europe and Asia. At the center of the disputes are claims and counterclaims of patent infringements on smartphone and tablet designs and copyright issues.
Samsung scored what it claims is a partial victory in the Netherlands on Wednesday after a court ruled its smartphones Galaxy S, S II and Ace had broken just one of three patents at issue. The court said it found no infringement for Samsung's tablets.
The resignation of Jobs, Apple's visionary founder and chief executive officer, could also benefit the Korean company in the sense that Apple could lose direction, analysts said.
"Jobs' resignation has a positive impact on market sentiment toward Samsung...Investors were concerned about whether Samsung will be able to continue to fare well in the smartphone market as Apple is growing market share," said Jeon Nam-joong, a fund manager at Consus Asset Management.
"But Job's resignation will offer opportunities to Samsung for a longer term, although it will not have an immediate impact."
By 0310 GMT, shares in Samsung, the world's biggest technology firm by revenue, had risen 3.4 percent after rising as much as 4.2 percent earlier and beating a 1.9 percent rise in the wider market.
INTERCONTINENTAL PATENT WARS
Apple and Samsung have filed lawsuits against each other in Germany, the Netherlands, Japan and South Korea. One of Samsung's defenses in the United States centers on Stanley Kubrick's "2001: Space Odyssey." Samsung said in legal filings that Apple's iPad is modeled in part on electronic equipment depicted in the film, and therefore do not qualify as original designs.
The sales injunction on the three smartphone models in some European countries will not be effective until at least October 13 and the patent violation could be resolved by making technical changes to the smartphones, the court said. This would then allow sales to go forward.
Samsung is the nearest rival to Apple in smartphones and its shipments in the second quarter were just 1 million units short of Apple's 20.3 million unit sales, according to market data. But it is a distant second in the booming tablet market.
Apple and Samsung are vying for the world's top spot in the smartphone market after Nokia, the market leader for a decade, was ousted by Apple in the second quarter.
(Reporting by Miyoung Kim; Additional reporting by Hyunjoo Jin and Ju-min Park; Editing by Jonathan Hopfner, Ken Wills and Matt Driskill)
full story
(Reuters) - Samsung Electronics shares rose sharply on Thursday, amid a rally in South Korean large capstocks and analysts said it received a boost from a Dutch patent ruling and the decision by Apple's Steve Jobs to step down.
Apple and Samsung are fighting a series of legal battles over patents with U.S. market leader Apple and South Korea's Samsung slugging it out in courtrooms spanning the United States, Europe and Asia. At the center of the disputes are claims and counterclaims of patent infringements on smartphone and tablet designs and copyright issues.
Samsung scored what it claims is a partial victory in the Netherlands on Wednesday after a court ruled its smartphones Galaxy S, S II and Ace had broken just one of three patents at issue. The court said it found no infringement for Samsung's tablets.
The resignation of Jobs, Apple's visionary founder and chief executive officer, could also benefit the Korean company in the sense that Apple could lose direction, analysts said.
"Jobs' resignation has a positive impact on market sentiment toward Samsung...Investors were concerned about whether Samsung will be able to continue to fare well in the smartphone market as Apple is growing market share," said Jeon Nam-joong, a fund manager at Consus Asset Management.
"But Job's resignation will offer opportunities to Samsung for a longer term, although it will not have an immediate impact."
By 0310 GMT, shares in Samsung, the world's biggest technology firm by revenue, had risen 3.4 percent after rising as much as 4.2 percent earlier and beating a 1.9 percent rise in the wider market.
INTERCONTINENTAL PATENT WARS
Apple and Samsung have filed lawsuits against each other in Germany, the Netherlands, Japan and South Korea. One of Samsung's defenses in the United States centers on Stanley Kubrick's "2001: Space Odyssey." Samsung said in legal filings that Apple's iPad is modeled in part on electronic equipment depicted in the film, and therefore do not qualify as original designs.
The sales injunction on the three smartphone models in some European countries will not be effective until at least October 13 and the patent violation could be resolved by making technical changes to the smartphones, the court said. This would then allow sales to go forward.
Samsung is the nearest rival to Apple in smartphones and its shipments in the second quarter were just 1 million units short of Apple's 20.3 million unit sales, according to market data. But it is a distant second in the booming tablet market.
Apple and Samsung are vying for the world's top spot in the smartphone market after Nokia, the market leader for a decade, was ousted by Apple in the second quarter.
(Reporting by Miyoung Kim; Additional reporting by Hyunjoo Jin and Ju-min Park; Editing by Jonathan Hopfner, Ken Wills and Matt Driskill)
full story
Dollar slides as investors look to Fed move
By Wanfeng Zhou
NEW YORK | Tue Aug 23, 2011 4:17pm EDT
(Reuters) - The U.S. dollar fell on Tuesday on hopes the Federal Reserve will ease policy further to stimulate a flagging U.S. economy, while better-than-expected German and Chinese factory data tempered worries about global growth.
Fed Chairman Ben Bernanke will speak at the central bank's annual retreat in Wyoming on Friday. At last year's speech, he prepared marketsfor a $600 billion bond-buying program.
Such measures increase the amount of dollars in the system, driving down the currency's value, which helps U.S. exports, and prompting investors to seek higher returns elsewhere. U.S. stocks, under pressure since late July, rallied on Tuesday.
"There is growing expectation, or rather hope," that Bernanke's speech "may contain some reference to a potential third round of quantitative easing," said Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston.
"However, we would continue to caution that risk appetite remains very tentative for now as global growth stalls and further monetary stimulus via potential QE3 in the U.S. may not materialize given underlying price pressures."
The euro last traded up 0.6 percent at $1.4443 after climbing as high as $1.45 on trading platform EBS, the top of a tight $1.40-$1.45 range that has held firm since early July.
Europe's debt and banking crisis has had some investors wondering whether the European Central Bank will soon have to adopt some monetary easing of its own, but a solid German manufacturing index eased some of those fears.
The German data, taken with a report showing China's factory sector held up better than expected in August, helped investors overlook a separate report showing a sharp fall in German economic sentiment.
Commodity-linked, growth-sensitive currencies such as the Australian and New Zealand dollars gained ground.
The Australian dollar rose 1.2 percent to $1.0518. Strong Australian-Chinese trade links make the Aussie sensitive to Chinese economic data. The New Zealand dollar jumped 1.3 percent to $0.8344.
INTERVENTION STILL ON RADAR
Investors remained wary that the Swiss National Bank could reenter markets to curb recent franc strength. The euro climbed as high as 1.1430 francs earlier and was last up 0.7 percent at 1.1431 francs.
The SNB has cut interest rates to zero, flooded the banking system with francs and intervened in the forward market to make returns on francs less attractive to potential investors.
In the options market, implied volatility in euro/Swiss dipped below 18 percent from 20 percent on Monday as tighter ranges in spot suggested the recent SNB measures were taking effect.
Against the yen, the dollar dipped 0.2 percent to 76.68 yen, although market players remained wary of yen-selling intervention by Japanese authorities.
Bank of Japan data suggested Japan sold roughly 4.5 trillion yen in currency intervention on August 4, its biggest one-day yen-selling intervention ever.
But the yen ended up rising back to levels seen before intervention a few days later, thanks largely to hedge fund buying, said Citigroup analyst Todd Elmer in New York.
A strong earthquake that struck the U.S. East Coast on Tuesday afternoon and was felt as far away as Canada had little impact on the currency market.
(Additional reporting by Steven C. Johnson; Editing by Leslie Adler)
full story
NEW YORK | Tue Aug 23, 2011 4:17pm EDT
(Reuters) - The U.S. dollar fell on Tuesday on hopes the Federal Reserve will ease policy further to stimulate a flagging U.S. economy, while better-than-expected German and Chinese factory data tempered worries about global growth.
Fed Chairman Ben Bernanke will speak at the central bank's annual retreat in Wyoming on Friday. At last year's speech, he prepared marketsfor a $600 billion bond-buying program.
Such measures increase the amount of dollars in the system, driving down the currency's value, which helps U.S. exports, and prompting investors to seek higher returns elsewhere. U.S. stocks, under pressure since late July, rallied on Tuesday.
"There is growing expectation, or rather hope," that Bernanke's speech "may contain some reference to a potential third round of quantitative easing," said Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston.
"However, we would continue to caution that risk appetite remains very tentative for now as global growth stalls and further monetary stimulus via potential QE3 in the U.S. may not materialize given underlying price pressures."
The euro last traded up 0.6 percent at $1.4443 after climbing as high as $1.45 on trading platform EBS, the top of a tight $1.40-$1.45 range that has held firm since early July.
Europe's debt and banking crisis has had some investors wondering whether the European Central Bank will soon have to adopt some monetary easing of its own, but a solid German manufacturing index eased some of those fears.
The German data, taken with a report showing China's factory sector held up better than expected in August, helped investors overlook a separate report showing a sharp fall in German economic sentiment.
Commodity-linked, growth-sensitive currencies such as the Australian and New Zealand dollars gained ground.
The Australian dollar rose 1.2 percent to $1.0518. Strong Australian-Chinese trade links make the Aussie sensitive to Chinese economic data. The New Zealand dollar jumped 1.3 percent to $0.8344.
INTERVENTION STILL ON RADAR
Investors remained wary that the Swiss National Bank could reenter markets to curb recent franc strength. The euro climbed as high as 1.1430 francs earlier and was last up 0.7 percent at 1.1431 francs.
The SNB has cut interest rates to zero, flooded the banking system with francs and intervened in the forward market to make returns on francs less attractive to potential investors.
In the options market, implied volatility in euro/Swiss dipped below 18 percent from 20 percent on Monday as tighter ranges in spot suggested the recent SNB measures were taking effect.
Against the yen, the dollar dipped 0.2 percent to 76.68 yen, although market players remained wary of yen-selling intervention by Japanese authorities.
Bank of Japan data suggested Japan sold roughly 4.5 trillion yen in currency intervention on August 4, its biggest one-day yen-selling intervention ever.
But the yen ended up rising back to levels seen before intervention a few days later, thanks largely to hedge fund buying, said Citigroup analyst Todd Elmer in New York.
A strong earthquake that struck the U.S. East Coast on Tuesday afternoon and was felt as far away as Canada had little impact on the currency market.
(Additional reporting by Steven C. Johnson; Editing by Leslie Adler)
full story
Layoffs sweep Wall Street, along with low morale
By Lauren Tara LaCapra
NEW YORK | Sun Aug 21, 2011 12:42pm EDT
(Reuters) - In early summer, before layoffs began sweeping across Wall Street, billboard-sized photos of employees were plastered on the walls, pillars and elevator banks of Credit Suisse Group AG's offices in the United States and abroad.
The museum-quality prints, depicting workers from administrative assistants to senior executives, were emblazoned with motivational words like "Proactive" and "Partner." By mid-July, however, the photos disappeared and the Swiss banking giant began laying off 2,000 employees.
Security guards prevented employees from taking cell-phone pictures as the posters were stripped away, according to one employee who was present.
"It sent an entirely wrong message," said an employee, who was not authorized to speak publicly. "Management literally threw away that kind of money on something so trivial, while planning to cut thousands of jobs."
A bank spokeswoman declined to comment on the internal campaign or the employee's comments.
Credit Suisse's timing illustrates the unanticipated dangers of rampant job-cutting, which tend to run in cycles on Wall Street. Employee morale often plummets at a time when survivors are asked to pick up more responsibility and customer relations can suffer as service and relationships deteriorate.
CUTTING 'MUSCLE AND BONE'
What's more, layoffs inartfully constructed can come across to shareholders as Band-Aid solutions that at best temporarily cut expenses and at worst pare away reserves of talented people.
"They finished cutting the fat and now they're into the muscle and bone," said Tim White, a managing partner who specializes in wealth management at the recruiting firm Kaye/Bassman International in Dallas.
Credit Suisse has plenty of company in its cost-cutting campaign. HSBC, Barclays PLC, Goldman Sachs Group Inc and Bank of New York Mellon Corp have announced plans to ax thousands of workers in recent months. On Thursday, Bank of America Corp Chief Executive Brian Moynihan sent a memo to senior executives outlining plans to cut another 3,500 jobs.
The planned cuts at Bank of America have pushed the number of financial sector layoffs this year to 18,252 -- 6 percent higher than in the comparable period in 2010, according to Challenger, Gray & Christmas, an outplacement firm that keeps a daily tab on layoff announcements.
Some companies began the culling earlier this year -- HSBC has already axed about 5,000 employees, with 25,000 more set to get pink slips by the end of 2012 -- and others, such as Goldman Sachs, said that cuts will come by year's end.
That is not good for morale.
BITING INTO CLIENT SERVICE
Hours have become longer, trading floors have more open seats and fresh young faces are taking over offices where high-level personnel once sat. The highest-paid people can be easy targets for layoffs now, given the cost of keeping them employed and the eagerness of younger workers to take on their roles, even at less pay, executive recruiters said.
Changes in pay structures mandated in part by the Dodd-Frank financial reform laws have exacerbated the problem.
Banks that used to pay modest base salaries supplemented by opulent stock-and-option packages that encouraged meeting short-term performance goals now are weighting compensation toward base salary.
Managing directors at investment banks have seen a typical base salary double to $400,000, said Paul Sorbera, president of Alliance Consulting. Meanwhile, 2011 bonuses are expected to fall by up to 30 percent for top earners, according to pay consulting firm Johnson Associates.
The shift erodes Wall Street's former flexibility to lower end-of-year bonuses in bad times and forces a heavier reliance on layoffs.
The danger is that client service suffers.
"Banking clients abhor relationship-manager turnover," said Heather Hammond, a senior member of Russell Reynolds' financial services practice.
Investors, for their part, tend to view cost-cutting as a short-term solution that fails to address fundamental issues relating to capital, strategy and the ability to endure through hard economic times.
At Credit Suisse, some senior jobs have been consolidated as executives have been escorted toward early retirement with offers of bonus bridges and other payments, sources familiar with the matter say.
Managing directors in businesses that have missed revenue targets have been told to reduce millions of dollars' worth of headcount expenses, according to a managing director who received such a request. In some areas, including operations, legal and technology, more work is being outsourced and mid-level employees are being replaced by consultants.
"People are leaving resumes on the printers, hoping someone picks it up," the Credit Suisse employee said.
Some sources believe that banks are repeating their typical hiring strategy: Cutting staff levels too deeply in bad times only to rush out with open checkbooks when markets recover.
"When people are getting hired, fired, hired, fired, every two years, it's very difficult to run a business," said Conrad Ciccotello, a finance professor at Georgia State University who has studied the issue. "There is precious human capital destroyed in vicious boom-and-bust cycles that is costly to replace."
(Reporting by Lauren Tara LaCapra; Editing by Richard Chang and Jan paschal)
full story
NEW YORK | Sun Aug 21, 2011 12:42pm EDT
(Reuters) - In early summer, before layoffs began sweeping across Wall Street, billboard-sized photos of employees were plastered on the walls, pillars and elevator banks of Credit Suisse Group AG's offices in the United States and abroad.
The museum-quality prints, depicting workers from administrative assistants to senior executives, were emblazoned with motivational words like "Proactive" and "Partner." By mid-July, however, the photos disappeared and the Swiss banking giant began laying off 2,000 employees.
Security guards prevented employees from taking cell-phone pictures as the posters were stripped away, according to one employee who was present.
"It sent an entirely wrong message," said an employee, who was not authorized to speak publicly. "Management literally threw away that kind of money on something so trivial, while planning to cut thousands of jobs."
A bank spokeswoman declined to comment on the internal campaign or the employee's comments.
Credit Suisse's timing illustrates the unanticipated dangers of rampant job-cutting, which tend to run in cycles on Wall Street. Employee morale often plummets at a time when survivors are asked to pick up more responsibility and customer relations can suffer as service and relationships deteriorate.
CUTTING 'MUSCLE AND BONE'
What's more, layoffs inartfully constructed can come across to shareholders as Band-Aid solutions that at best temporarily cut expenses and at worst pare away reserves of talented people.
"They finished cutting the fat and now they're into the muscle and bone," said Tim White, a managing partner who specializes in wealth management at the recruiting firm Kaye/Bassman International in Dallas.
Credit Suisse has plenty of company in its cost-cutting campaign. HSBC, Barclays PLC, Goldman Sachs Group Inc and Bank of New York Mellon Corp have announced plans to ax thousands of workers in recent months. On Thursday, Bank of America Corp Chief Executive Brian Moynihan sent a memo to senior executives outlining plans to cut another 3,500 jobs.
The planned cuts at Bank of America have pushed the number of financial sector layoffs this year to 18,252 -- 6 percent higher than in the comparable period in 2010, according to Challenger, Gray & Christmas, an outplacement firm that keeps a daily tab on layoff announcements.
Some companies began the culling earlier this year -- HSBC has already axed about 5,000 employees, with 25,000 more set to get pink slips by the end of 2012 -- and others, such as Goldman Sachs, said that cuts will come by year's end.
That is not good for morale.
BITING INTO CLIENT SERVICE
Hours have become longer, trading floors have more open seats and fresh young faces are taking over offices where high-level personnel once sat. The highest-paid people can be easy targets for layoffs now, given the cost of keeping them employed and the eagerness of younger workers to take on their roles, even at less pay, executive recruiters said.
Changes in pay structures mandated in part by the Dodd-Frank financial reform laws have exacerbated the problem.
Banks that used to pay modest base salaries supplemented by opulent stock-and-option packages that encouraged meeting short-term performance goals now are weighting compensation toward base salary.
Managing directors at investment banks have seen a typical base salary double to $400,000, said Paul Sorbera, president of Alliance Consulting. Meanwhile, 2011 bonuses are expected to fall by up to 30 percent for top earners, according to pay consulting firm Johnson Associates.
The shift erodes Wall Street's former flexibility to lower end-of-year bonuses in bad times and forces a heavier reliance on layoffs.
The danger is that client service suffers.
"Banking clients abhor relationship-manager turnover," said Heather Hammond, a senior member of Russell Reynolds' financial services practice.
Investors, for their part, tend to view cost-cutting as a short-term solution that fails to address fundamental issues relating to capital, strategy and the ability to endure through hard economic times.
At Credit Suisse, some senior jobs have been consolidated as executives have been escorted toward early retirement with offers of bonus bridges and other payments, sources familiar with the matter say.
Managing directors in businesses that have missed revenue targets have been told to reduce millions of dollars' worth of headcount expenses, according to a managing director who received such a request. In some areas, including operations, legal and technology, more work is being outsourced and mid-level employees are being replaced by consultants.
"People are leaving resumes on the printers, hoping someone picks it up," the Credit Suisse employee said.
Some sources believe that banks are repeating their typical hiring strategy: Cutting staff levels too deeply in bad times only to rush out with open checkbooks when markets recover.
"When people are getting hired, fired, hired, fired, every two years, it's very difficult to run a business," said Conrad Ciccotello, a finance professor at Georgia State University who has studied the issue. "There is precious human capital destroyed in vicious boom-and-bust cycles that is costly to replace."
(Reporting by Lauren Tara LaCapra; Editing by Richard Chang and Jan paschal)
full story
Twice rejected, Icahn wants all Clorox board seats
By Jessica Wohl
CHICAGO | Fri Aug 19, 2011 1:58pm EDT
(Reuters) - Carl Icahn wants to scrub the Clorox Co (CLX.N) board clean.
In a letter to Clorox on Friday, Icahn said he wants to nominate himself, his son and nine other people for election to the board at its next annual shareholder meeting.
Last month, the bleach maker's board unanimously rejected two offers from the billionaire investor, who is Clorox's largest shareholder.
The attempt to replace the entire board differs from tactics Icahn has used with other companies, where he targeted only a small number of seats. He nominated four people to Forest Laboratories Inc's (FRX.N) then nine-member board in June. On Thursday, Forest Labs won its showdown with Icahn as its shareholders backed the company's slate of 10 board members over the nominees Icahn proposed.
"People typically will nominate less than a majority slate so that they send a signal to the board and have an impact on the board to create value without seeking control," said Charles Elson, director of the University of Delaware's Weinberg Center for Corporate Governance.
"When you try to seek control, the focus becomes what you'll do with control as opposed to the failings of the earlier management team."
Clorox stood by the work its board has done, such as doubling the dividend in the past five years and pushing its household name brands to gain more market share than competitors in its categories over the last three years.
Icahn's most recent offer to buy the company for $80 per share was rejected as "inadequate" by Clorox on July 26. Icahn already owns about 9.37 percent of Clorox's shares.
"We believe that Mr. Icahn is nominating candidates solely to advance his own agenda," said Clorox, noting that 10 of its 11 directors are independent and that all are elected annually.
The company, whose other products include Brita water filters, Burt's Bees lotions, Glad bags and wraps and Hidden Valley Ranch dressing, has not announced a date for its annual meeting. It is typically held in mid-November.
"His plans for the board are clear, but his plans to improve the company and shareholder value are still opaque," said Sanford Bernstein analyst Ali Dibadj.
"We would like to see Icahn provide much more clarity to all shareholders on what he has in mind."
Clorox shares were up 0.3 percent at $64.34 in afternoon trading, more than $15 below Icahn's July 20 offer and below the stock's closing price of $68.43 on July 14, the day before Icahn made public his first bid of $76.50 per share.
The shares have not hit even the first offer price, suggesting investors do not anticipate a deal.
ICAHN AND SON
When Icahn made his first offer, he suggested that some of Clorox's rivals should buy the company for more than he was offering. No one has stepped up.
"We continue to believe there is little chance other strategic buyers for (Clorox) will emerge," said Wells Fargo Securities analyst Tim Conder, who sees "little potential" for a bid above Icahn's $80 offer.
Icahn would like to see his son Brett and nine other men on the board: A.B. Krongard, David Schechter, William Leidesdorf, Vincent Intrieri, James Nelson, Jack Wasserman, Daniel Ninivaggi, Glenn Zander and Randolph Read. Brett Icahn, Schechter, Intrieri and Ninivaggi work for entities affiliated with Carl Icahn.
While Icahn's latest attempt at Forest Labs fell short, he got seats on the boards of companies such as Mentor Graphics Corp (MENT.O), Biogen Idec Inc (BIIB.O) and Take-Two Interactive Software Inc (TTWO.O). He also urged Motorola Mobility Holdings Inc (MMI.N) to consider splitting off its patent business in July, weeks before Google Inc (GOOG.O) said on August 15 it would buy the company for $12.5 billion.
Oakland, California-based Clorox said it would review Icahn's nominations to ensure they comply with its governing documents and the law.
(Reporting by Jessica Wohl in Chicago and Phil Wahba in New York; editing by Gerald E. McCormick, Dave Zimmerman, Robert MacMillan and Andre Grenon)
full story
CHICAGO | Fri Aug 19, 2011 1:58pm EDT
(Reuters) - Carl Icahn wants to scrub the Clorox Co (CLX.N) board clean.
In a letter to Clorox on Friday, Icahn said he wants to nominate himself, his son and nine other people for election to the board at its next annual shareholder meeting.
Last month, the bleach maker's board unanimously rejected two offers from the billionaire investor, who is Clorox's largest shareholder.
The attempt to replace the entire board differs from tactics Icahn has used with other companies, where he targeted only a small number of seats. He nominated four people to Forest Laboratories Inc's (FRX.N) then nine-member board in June. On Thursday, Forest Labs won its showdown with Icahn as its shareholders backed the company's slate of 10 board members over the nominees Icahn proposed.
"People typically will nominate less than a majority slate so that they send a signal to the board and have an impact on the board to create value without seeking control," said Charles Elson, director of the University of Delaware's Weinberg Center for Corporate Governance.
"When you try to seek control, the focus becomes what you'll do with control as opposed to the failings of the earlier management team."
Clorox stood by the work its board has done, such as doubling the dividend in the past five years and pushing its household name brands to gain more market share than competitors in its categories over the last three years.
Icahn's most recent offer to buy the company for $80 per share was rejected as "inadequate" by Clorox on July 26. Icahn already owns about 9.37 percent of Clorox's shares.
"We believe that Mr. Icahn is nominating candidates solely to advance his own agenda," said Clorox, noting that 10 of its 11 directors are independent and that all are elected annually.
The company, whose other products include Brita water filters, Burt's Bees lotions, Glad bags and wraps and Hidden Valley Ranch dressing, has not announced a date for its annual meeting. It is typically held in mid-November.
"His plans for the board are clear, but his plans to improve the company and shareholder value are still opaque," said Sanford Bernstein analyst Ali Dibadj.
"We would like to see Icahn provide much more clarity to all shareholders on what he has in mind."
Clorox shares were up 0.3 percent at $64.34 in afternoon trading, more than $15 below Icahn's July 20 offer and below the stock's closing price of $68.43 on July 14, the day before Icahn made public his first bid of $76.50 per share.
The shares have not hit even the first offer price, suggesting investors do not anticipate a deal.
ICAHN AND SON
When Icahn made his first offer, he suggested that some of Clorox's rivals should buy the company for more than he was offering. No one has stepped up.
"We continue to believe there is little chance other strategic buyers for (Clorox) will emerge," said Wells Fargo Securities analyst Tim Conder, who sees "little potential" for a bid above Icahn's $80 offer.
Icahn would like to see his son Brett and nine other men on the board: A.B. Krongard, David Schechter, William Leidesdorf, Vincent Intrieri, James Nelson, Jack Wasserman, Daniel Ninivaggi, Glenn Zander and Randolph Read. Brett Icahn, Schechter, Intrieri and Ninivaggi work for entities affiliated with Carl Icahn.
While Icahn's latest attempt at Forest Labs fell short, he got seats on the boards of companies such as Mentor Graphics Corp (MENT.O), Biogen Idec Inc (BIIB.O) and Take-Two Interactive Software Inc (TTWO.O). He also urged Motorola Mobility Holdings Inc (MMI.N) to consider splitting off its patent business in July, weeks before Google Inc (GOOG.O) said on August 15 it would buy the company for $12.5 billion.
Oakland, California-based Clorox said it would review Icahn's nominations to ensure they comply with its governing documents and the law.
(Reporting by Jessica Wohl in Chicago and Phil Wahba in New York; editing by Gerald E. McCormick, Dave Zimmerman, Robert MacMillan and Andre Grenon)
full story
Angry Birds exec says company worth billions: report
HELSINKI | Thu Aug 18, 2011 7:42am EDT
(Reuters) - An executive of Rovio, developer of the mobile game Angry Birds popular among users of Apple Inc's iPhone, said the company was worth several billion dollars, according to Finnish magazine Kauppalehti Optio.
Rovio Chief Marketing Officer Peter Vesterbacka told the magazine that a valuation of between $700 million and $1 billion, given in a Forbes report in July, was too low.
The company should instead be worth several billion dollars, he was quoted as saying, noting Facebook games company Zynga was estimated to be worth between $20 billion and $25 billion.
"We are not selling though -- unless somebody offers enough," Vesterbacka was quoted saying in the interview published on Thursday.
Sky-high valuations of Internet-related and other technology stocks have come into focus particularly since the flotation of LinkedIn Corp, whose strong first-day premium helped spark talk of a repeat of the tech-stock bubble which burst in early 2000.
Rovio's chief executive told Reuters earlier this year that the company was aiming for a stock market listing in New York in two to three years.
The company has raised $42 million from venture capital firms Accel Partners, Atomico Ventures -- the firm started by Skype co-founder Niklas Zennstroem -- and Felicis Ventures.
(Reporting by Helsinki Newsroom; Editing by David Holmes)
full story
(Reuters) - An executive of Rovio, developer of the mobile game Angry Birds popular among users of Apple Inc's iPhone, said the company was worth several billion dollars, according to Finnish magazine Kauppalehti Optio.
Rovio Chief Marketing Officer Peter Vesterbacka told the magazine that a valuation of between $700 million and $1 billion, given in a Forbes report in July, was too low.
The company should instead be worth several billion dollars, he was quoted as saying, noting Facebook games company Zynga was estimated to be worth between $20 billion and $25 billion.
"We are not selling though -- unless somebody offers enough," Vesterbacka was quoted saying in the interview published on Thursday.
Sky-high valuations of Internet-related and other technology stocks have come into focus particularly since the flotation of LinkedIn Corp, whose strong first-day premium helped spark talk of a repeat of the tech-stock bubble which burst in early 2000.
Rovio's chief executive told Reuters earlier this year that the company was aiming for a stock market listing in New York in two to three years.
The company has raised $42 million from venture capital firms Accel Partners, Atomico Ventures -- the firm started by Skype co-founder Niklas Zennstroem -- and Felicis Ventures.
(Reporting by Helsinki Newsroom; Editing by David Holmes)
full story
Southern Union backs Energy Transfer's takeover bid
NEW YORK | Wed Aug 17, 2011 4:59pm EDT
(Reuters) - Pipeline operator Southern Union Co (SUG.N) said on Wednesday it continues to back a takeover offer from Energy Transfer Equity (ETE.N), a day after rival bidder Williams Cos (WMB.N) said it was still prepared to pay $5.5 billion in cash for Southern Union.
Southern Union's special committee said it determined that Williams' $44 a share cash bid "neither constitutes nor is reasonably likely to result in a superior offer."
Williams wrote to Southern Union on Tuesday to let it know that its cash bid -- originally offered last month -- still stood, as it attempts to pry the pipeline company out of its deal with Energy Transfer.
Williams said its bid was better than the Energy Transfer deal, because the value of the cash and stock transaction has fallen during the market turmoil.
Energy Transfer and Williams have been in a bidding war for Southern Union since June, when the company initially agreed to be bought by Energy Transfer for $33 a share.
Companies such as Southern Union rarely come to the market, giving it a scarcity value that makes it attractive to rivals. It owns and runs more than 20,000 miles of pipelines in the U.S. Southeast, Midwest and Great Lakes regions, as well as in Texas and New Mexico.
Despite weak natural gas prices NGc1, production has been rising as energy companies pile into shale fields -- underground rock formations rich in oil and gas.
Increased production from shale such as the Marcellus in the eastern United States has benefited natural gas transporters and processors such as Williams, Southern Union and Energy Transfer. Acquiring Southern Union would nearly double Energy Transfer's pipeline capacity and position it for future demand.
Southern Union's shares closed up 2.5 percent at $42.65 on the New York Stock Exchange on Wednesday.
(Reporting by Michael Erman; Additional reporting by Sumit Jha in Bangalore; Editing by Roshni Menon and Gunna Dickson)
full story
(Reuters) - Pipeline operator Southern Union Co (SUG.N) said on Wednesday it continues to back a takeover offer from Energy Transfer Equity (ETE.N), a day after rival bidder Williams Cos (WMB.N) said it was still prepared to pay $5.5 billion in cash for Southern Union.
Southern Union's special committee said it determined that Williams' $44 a share cash bid "neither constitutes nor is reasonably likely to result in a superior offer."
Williams wrote to Southern Union on Tuesday to let it know that its cash bid -- originally offered last month -- still stood, as it attempts to pry the pipeline company out of its deal with Energy Transfer.
Williams said its bid was better than the Energy Transfer deal, because the value of the cash and stock transaction has fallen during the market turmoil.
Energy Transfer and Williams have been in a bidding war for Southern Union since June, when the company initially agreed to be bought by Energy Transfer for $33 a share.
Companies such as Southern Union rarely come to the market, giving it a scarcity value that makes it attractive to rivals. It owns and runs more than 20,000 miles of pipelines in the U.S. Southeast, Midwest and Great Lakes regions, as well as in Texas and New Mexico.
Despite weak natural gas prices NGc1, production has been rising as energy companies pile into shale fields -- underground rock formations rich in oil and gas.
Increased production from shale such as the Marcellus in the eastern United States has benefited natural gas transporters and processors such as Williams, Southern Union and Energy Transfer. Acquiring Southern Union would nearly double Energy Transfer's pipeline capacity and position it for future demand.
Southern Union's shares closed up 2.5 percent at $42.65 on the New York Stock Exchange on Wednesday.
(Reporting by Michael Erman; Additional reporting by Sumit Jha in Bangalore; Editing by Roshni Menon and Gunna Dickson)
full story
HTC says Google-Motorola bid would not affect its ties
TAIPEI | Mon Aug 15, 2011 9:55pm EDT
(Reuters) - HTC, the world's No.5 smartphone maker, said on Tuesday the proposed bid by Google to acquire Motorola Mobility would not affect its partnership with Google.
"This a positive development to the Android ecosystem, which we believe is beneficial to HTC's promotion of Android phones," HTC said in a statement. "The partnership between HTC and Google remains strong and will not be affected by this acquisition."
At around 0145 GMT, shares of HTC rose 1.45 percent, beating the broader market's 0.26 percent gain.
(Reporting by Clare Jim and Faith Hung; Editing by Ken Wills)
full story
(Reuters) - HTC, the world's No.5 smartphone maker, said on Tuesday the proposed bid by Google to acquire Motorola Mobility would not affect its partnership with Google.
"This a positive development to the Android ecosystem, which we believe is beneficial to HTC's promotion of Android phones," HTC said in a statement. "The partnership between HTC and Google remains strong and will not be affected by this acquisition."
At around 0145 GMT, shares of HTC rose 1.45 percent, beating the broader market's 0.26 percent gain.
(Reporting by Clare Jim and Faith Hung; Editing by Ken Wills)
full story
Google and Facebook face-off in social games
By Alexei Oreskovic
SAN FRANCISCO | Thu Aug 11, 2011 8:36pm EDT
(Reuters) - Facebook is not the only game in town anymore.
The world's largest Internet social network moved on Thursday to shore up support with game developers such as Zynga, who provide one of Facebook's biggest draws, on the same day that Google Inc introduced games on its recently-launched social network.
With the two Web giants competing to attract users to their respective online services, the dueling social gaming announcements underscored what could emerge as a key battleground between the two companies.
"It turns out that people like to play games, and it's core to the social networking use case," said Jeremy Liew, a partner at venture capital firm Lightspeed Venture Partners. Liew, who has invested in social game companies including Playdom, which was acquired by the Walt Disney Co last year, was commenting on Google's games announcement.
On Thursday, Google said it would offer 16 games from third party developers on Google+, including Zynga Poker and the popular Angry Birds game. Google, which previously made an unspecified investment in Zynga, said it will roll out games gradually on Google+, and will make the game feature available to everyone "soon."
Facebook, which is hosting 100 game developers at an event at its Palo Alto. California headquarters on Thursday evening, announced a handful of new features to improve the gaming experience on its website, as well as a new policy loosening restrictions on how developers can market their games on the social network.
The changes will expand the types of notifications that Facebook users see when their friends are playing games on the website, rolling back restrictions made last year that provoked grumbles among some game developers.
Social games, such as Zynga's Farmville, are some of the most popular activities on Facebook. More than 200 million users play games on Facebook every month, and the company takes a 30 percent cut of the sale of virtual goods that are bought by users as part of the game experience.
"Our games ecosystem has continued to grow. But there's no question that we want to grow it faster in a more high quality way for our users and developers," Facebook head of games Sean Ryan told Reuters in an interview.
Google launched its social networking site in June, signing up more than 10 million users in the first two weeks.
Google's move to offer games on its social network provides game developers with a compelling alternative to Facebook, said Lightspeed's Liew.
But he said the most important consideration for game makers is which social network has the most users.
"Right now no one is going to be willing to give up Facebook because it's where the users are Today. Google+ got a terrific start but it's got a ways to go," he said.
Among the new gaming features introduced by Facebook on Thursday are the ability to expand the size of the window in which games are played on Facebook's site, new ways for users to create bookmarks for their favorite games and a scrolling "ticker" that highlights the games a person's friends are playing, their recent scores and achievements.
In loosening restrictions on game updates within Facebook's general newsfeed, the company must walk a fine line between helping developers promote their games on the network and irking users that are not avid gamers.
Facebook's newsfeed - which displays a rolling stream of messages, photos and updates from friends - is a vital distribution channel for gamemakers, allowing companies like Zynga, Electronic Arts Inc's Playfish and Playdom to reach vast numbers of users. But is has caused some backlash among Facebook's non-gaming users, who found the constant notifications about their friends progress within various games to be irrelevant and annoying.
Last year, Facebook clamped down on the practice, so that Facebook users would receive notifications only about games which they had also installed. Under the new policy, Facebook users will see notifications about any game their friends are playing.
But Ryan said the company had developed special algorithms that will only display updates if Facebook has a reason to believe they are relevant to the person. If the person shows no interest in certain types of games, Facebook won't serve them updates in the newsfeed.
"No one wants to go back to the bad old days of people being very unhappy about gaming because they feel like they're being spammed all the time," said Ryan.
"That's the key which we really spent months and months working on, is that tricky balance of trying to expose a lot more games to people, but only to the people who we think want to play those games."
(Reporting by Alexei Oreskovic. Editing by Andre Grenon, Robert MacMillan and Carol Bishopric)
full story
SAN FRANCISCO | Thu Aug 11, 2011 8:36pm EDT
(Reuters) - Facebook is not the only game in town anymore.
The world's largest Internet social network moved on Thursday to shore up support with game developers such as Zynga, who provide one of Facebook's biggest draws, on the same day that Google Inc introduced games on its recently-launched social network.
With the two Web giants competing to attract users to their respective online services, the dueling social gaming announcements underscored what could emerge as a key battleground between the two companies.
"It turns out that people like to play games, and it's core to the social networking use case," said Jeremy Liew, a partner at venture capital firm Lightspeed Venture Partners. Liew, who has invested in social game companies including Playdom, which was acquired by the Walt Disney Co last year, was commenting on Google's games announcement.
On Thursday, Google said it would offer 16 games from third party developers on Google+, including Zynga Poker and the popular Angry Birds game. Google, which previously made an unspecified investment in Zynga, said it will roll out games gradually on Google+, and will make the game feature available to everyone "soon."
Facebook, which is hosting 100 game developers at an event at its Palo Alto. California headquarters on Thursday evening, announced a handful of new features to improve the gaming experience on its website, as well as a new policy loosening restrictions on how developers can market their games on the social network.
The changes will expand the types of notifications that Facebook users see when their friends are playing games on the website, rolling back restrictions made last year that provoked grumbles among some game developers.
Social games, such as Zynga's Farmville, are some of the most popular activities on Facebook. More than 200 million users play games on Facebook every month, and the company takes a 30 percent cut of the sale of virtual goods that are bought by users as part of the game experience.
"Our games ecosystem has continued to grow. But there's no question that we want to grow it faster in a more high quality way for our users and developers," Facebook head of games Sean Ryan told Reuters in an interview.
Google launched its social networking site in June, signing up more than 10 million users in the first two weeks.
Google's move to offer games on its social network provides game developers with a compelling alternative to Facebook, said Lightspeed's Liew.
But he said the most important consideration for game makers is which social network has the most users.
"Right now no one is going to be willing to give up Facebook because it's where the users are Today. Google+ got a terrific start but it's got a ways to go," he said.
Among the new gaming features introduced by Facebook on Thursday are the ability to expand the size of the window in which games are played on Facebook's site, new ways for users to create bookmarks for their favorite games and a scrolling "ticker" that highlights the games a person's friends are playing, their recent scores and achievements.
In loosening restrictions on game updates within Facebook's general newsfeed, the company must walk a fine line between helping developers promote their games on the network and irking users that are not avid gamers.
Facebook's newsfeed - which displays a rolling stream of messages, photos and updates from friends - is a vital distribution channel for gamemakers, allowing companies like Zynga, Electronic Arts Inc's Playfish and Playdom to reach vast numbers of users. But is has caused some backlash among Facebook's non-gaming users, who found the constant notifications about their friends progress within various games to be irrelevant and annoying.
Last year, Facebook clamped down on the practice, so that Facebook users would receive notifications only about games which they had also installed. Under the new policy, Facebook users will see notifications about any game their friends are playing.
But Ryan said the company had developed special algorithms that will only display updates if Facebook has a reason to believe they are relevant to the person. If the person shows no interest in certain types of games, Facebook won't serve them updates in the newsfeed.
"No one wants to go back to the bad old days of people being very unhappy about gaming because they feel like they're being spammed all the time," said Ryan.
"That's the key which we really spent months and months working on, is that tricky balance of trying to expose a lot more games to people, but only to the people who we think want to play those games."
(Reporting by Alexei Oreskovic. Editing by Andre Grenon, Robert MacMillan and Carol Bishopric)
full story
Transatlantic bids tighten, Buffett watch still on
By Ben Berkowitz and Paritosh Bansal
NEW YORK | Wed Aug 10, 2011 1:28pm EDT
(Reuters) - The spread between two of the dueling offers for reinsurer Transatlantic Holdings (TRH.N) virtually disappeared on Wednesday amid a fresh market rout, as deal-watchers waited for any sign as to what late entrant Berkshire Hathaway (BRKa.N) might do next.
As of 12:20 p.m. ET, the gap between Transatlantic's accepted offer from Allied World (AWH.N) and its hostile offer from Validus Holdings (VR.N) was about $70,000 in Allied's favor. At one point, Validus's mid-July bid was nearly $400 million better than the Allied offer, which Transatlantic accepted in June.
At the time each was made, the Allied World offer was worth $3.2 billion and the Validus offer was worth $3.5 billion.
Validus has lost more than a fifth of its value over the last month since making its bid, which has narrowed the spread substantially. Both bids remain at a sharp discount to Transatlantic's share price and book value, though.
On the other hand, the surprise $52-a-share offer from Warren Buffett's National Indemnity unit still stands at a premium. One analyst following Transatlantic said Berkshire stood a good chance of winning just on that premium alone.
"I look at it and have a hard time seeing how it doesn't go to Warren at some point," said Larry Greenberg, an insurance analyst at Janney Capital Markets unit Langen McAlenney.
"It probably comes down to price. We don't know if Warren's price was cash, they left that ambiguous. I think for some shareholders that is a consideration in being able to participate in any potential upside, but given the spread between Warren's offer and what the others suggest at this point, and looking at where Transatlantic is trading, I kind of think it comes down to economics."
There are many who agree with his logic, though there are just as many who doubt Validus or Allied World will give up without a fight.
Stifel Nicolaus, in a research note Monday, said Berkshire's entry helped prove the merit of Validus's bid, and that Validus could easily raise its bid without spending more by cutting the amount it plans to infuse into Transatlantic's reserves after closing.
NO REACTION YET
Transatlantic said Monday night that it would stick with the Allied bid but that National Indemnity's offer could lead to a superior proposal -- the same language it once used with Validus, before the sides failed to agree on confidentiality terms and Validus went to shareholders.
Berkshire has not given any reaction yet to Transatlantic's offer to hold confidential talks. Berkshire investors, however, doubt that the company has any interest in a bidding war and have said it is likely being opportunistic with a "take-it-or-leave-it" offer well below book value.
With the values getting close, though, sources close to Allied World are hoping it would lead to shareholders picking their deal over the rivals.
"They are better off doing a transaction than not doing a transaction. 'I am getting synergies, the benefits of a global non-U.S. domiciled reinsurer, and I am getting my fair share of book value per share split,'" a source close to Allied World said, referring to Transatlantic shareholders.
"At the end of the day, between doing no deal or something to that nature, I think they will choose to do something," the source said.
Validus, on the other hand, said Allied was the wrong long-term choice for a number of reasons, including its growth strategy in the U.S. casualty market.
"We continue to believe that our proposal offers superior value and greater potential for future upside to Transatlantic stockholders," a Validus spokeswoman said.
Shares in Transatlantic fell 2.5 percent to $49.48, shares in Allied were off 1.1 percent at $52.27 and Validus shares declined 2.2 percent to $24.43. All three outperformed the S&P insurance index .GSPINSC, which dropped more than 5 percent.
(Editing by Dave Zimmerman)
full story
NEW YORK | Wed Aug 10, 2011 1:28pm EDT
(Reuters) - The spread between two of the dueling offers for reinsurer Transatlantic Holdings (TRH.N) virtually disappeared on Wednesday amid a fresh market rout, as deal-watchers waited for any sign as to what late entrant Berkshire Hathaway (BRKa.N) might do next.
As of 12:20 p.m. ET, the gap between Transatlantic's accepted offer from Allied World (AWH.N) and its hostile offer from Validus Holdings (VR.N) was about $70,000 in Allied's favor. At one point, Validus's mid-July bid was nearly $400 million better than the Allied offer, which Transatlantic accepted in June.
At the time each was made, the Allied World offer was worth $3.2 billion and the Validus offer was worth $3.5 billion.
Validus has lost more than a fifth of its value over the last month since making its bid, which has narrowed the spread substantially. Both bids remain at a sharp discount to Transatlantic's share price and book value, though.
On the other hand, the surprise $52-a-share offer from Warren Buffett's National Indemnity unit still stands at a premium. One analyst following Transatlantic said Berkshire stood a good chance of winning just on that premium alone.
"I look at it and have a hard time seeing how it doesn't go to Warren at some point," said Larry Greenberg, an insurance analyst at Janney Capital Markets unit Langen McAlenney.
"It probably comes down to price. We don't know if Warren's price was cash, they left that ambiguous. I think for some shareholders that is a consideration in being able to participate in any potential upside, but given the spread between Warren's offer and what the others suggest at this point, and looking at where Transatlantic is trading, I kind of think it comes down to economics."
There are many who agree with his logic, though there are just as many who doubt Validus or Allied World will give up without a fight.
Stifel Nicolaus, in a research note Monday, said Berkshire's entry helped prove the merit of Validus's bid, and that Validus could easily raise its bid without spending more by cutting the amount it plans to infuse into Transatlantic's reserves after closing.
NO REACTION YET
Transatlantic said Monday night that it would stick with the Allied bid but that National Indemnity's offer could lead to a superior proposal -- the same language it once used with Validus, before the sides failed to agree on confidentiality terms and Validus went to shareholders.
Berkshire has not given any reaction yet to Transatlantic's offer to hold confidential talks. Berkshire investors, however, doubt that the company has any interest in a bidding war and have said it is likely being opportunistic with a "take-it-or-leave-it" offer well below book value.
With the values getting close, though, sources close to Allied World are hoping it would lead to shareholders picking their deal over the rivals.
"They are better off doing a transaction than not doing a transaction. 'I am getting synergies, the benefits of a global non-U.S. domiciled reinsurer, and I am getting my fair share of book value per share split,'" a source close to Allied World said, referring to Transatlantic shareholders.
"At the end of the day, between doing no deal or something to that nature, I think they will choose to do something," the source said.
Validus, on the other hand, said Allied was the wrong long-term choice for a number of reasons, including its growth strategy in the U.S. casualty market.
"We continue to believe that our proposal offers superior value and greater potential for future upside to Transatlantic stockholders," a Validus spokeswoman said.
Shares in Transatlantic fell 2.5 percent to $49.48, shares in Allied were off 1.1 percent at $52.27 and Validus shares declined 2.2 percent to $24.43. All three outperformed the S&P insurance index .GSPINSC, which dropped more than 5 percent.
(Editing by Dave Zimmerman)
full story
Capital One nears HSBC US cards buy: sources
LONDON/NEW YORK | Tue Aug 9, 2011 9:21am EDT
(Reuters) - HSBC Holdings Plc (HSBA.L) is nearing adeal to sell its $30 billion-plus U.S. credit card business to Capital One Financial Corp (COF.N), sources familiar with the situation said on Tuesday.
HSBC confirmed talks to sell the business but did not name the buyer. A deal could be announced soon, the sources said.
Such a deal would mark the second time Capital One has swooped for unwanted U.S. assets from a retreating European bank in recent months. The McLean, Virginia-based firm said in June it was buying ING's (ING.AS) U.S. online bank for $9 billion in cash and stock.
HSBC said in May it was looking to sell its U.S. card arm, which has about $31 billion of loans, as part of a radical overhaul and $3.5 billion cost-cutting plan under new Chief Executive Stuart Gulliver.
Capital One has been seen as a motivated buyer for the business as it looks to bulk up on assets after the ING Direct deal. Wells Fargo & Co (WFC.N) was also interested in buying the portfolio, sources have said previously.
"These discussions are ongoing and no decision has yet been made to proceed with any transaction," HSBC said in a statement on Tuesday. Gulliver said last week the bank was making progress in the planned sale.
HSBC, Europe's biggest bank, last week said it will shed nearly half of its underperforming U.S. branch network, selling 195 branches to First Niagara Financial Group Inc (FNFG.O) for $1 billion and closing 13 more.
HSBC has been criticized for spreading itself too widely, gathering roughly 95 million customers across 87 markets, and Gulliver is aiming to put focus back on profitability.
Bankers have called HSBC's U.S. cards a tough sale because not many buyers remain for such large credit card portfolios since the financial crisis.
A regulatory crackdown has made it harder to turn a profit, and industry observers have said it could be difficult for HSBC to get the premium it wants for the value of the business on its books.
Since 2007, both Citigroup Inc (C.N) and General Electric Co (GE.N) have tried -- and failed -- to sell similar large U.S. credit card portfolios.
Gulliver has said that HSBC will wind down the credit card business if it cannot find a buyer.
HSBC's London-listed shares were down 2.2 percent by 1310 GMT, recovering some losses after touching their lowest level for two years.
Capital One spent much of the past decade transforming from a specialty credit card lender that mainly funded itself in the bond market, into a bank that relies heavily on deposits.
Now, facing weakened loan demand after the financial crisis, the bank is again looking for deals to expand its business.
(Reporting by Steve Slater in London, Paritosh Bansal in New York, and Denny Thomas in Hong Kong; Editing by Chris Lewis, Andrew Callus, Dave Zimmerman)
full story
(Reuters) - HSBC Holdings Plc (HSBA.L) is nearing adeal to sell its $30 billion-plus U.S. credit card business to Capital One Financial Corp (COF.N), sources familiar with the situation said on Tuesday.
HSBC confirmed talks to sell the business but did not name the buyer. A deal could be announced soon, the sources said.
Such a deal would mark the second time Capital One has swooped for unwanted U.S. assets from a retreating European bank in recent months. The McLean, Virginia-based firm said in June it was buying ING's (ING.AS) U.S. online bank for $9 billion in cash and stock.
HSBC said in May it was looking to sell its U.S. card arm, which has about $31 billion of loans, as part of a radical overhaul and $3.5 billion cost-cutting plan under new Chief Executive Stuart Gulliver.
Capital One has been seen as a motivated buyer for the business as it looks to bulk up on assets after the ING Direct deal. Wells Fargo & Co (WFC.N) was also interested in buying the portfolio, sources have said previously.
"These discussions are ongoing and no decision has yet been made to proceed with any transaction," HSBC said in a statement on Tuesday. Gulliver said last week the bank was making progress in the planned sale.
HSBC, Europe's biggest bank, last week said it will shed nearly half of its underperforming U.S. branch network, selling 195 branches to First Niagara Financial Group Inc (FNFG.O) for $1 billion and closing 13 more.
HSBC has been criticized for spreading itself too widely, gathering roughly 95 million customers across 87 markets, and Gulliver is aiming to put focus back on profitability.
Bankers have called HSBC's U.S. cards a tough sale because not many buyers remain for such large credit card portfolios since the financial crisis.
A regulatory crackdown has made it harder to turn a profit, and industry observers have said it could be difficult for HSBC to get the premium it wants for the value of the business on its books.
Since 2007, both Citigroup Inc (C.N) and General Electric Co (GE.N) have tried -- and failed -- to sell similar large U.S. credit card portfolios.
Gulliver has said that HSBC will wind down the credit card business if it cannot find a buyer.
HSBC's London-listed shares were down 2.2 percent by 1310 GMT, recovering some losses after touching their lowest level for two years.
Capital One spent much of the past decade transforming from a specialty credit card lender that mainly funded itself in the bond market, into a bank that relies heavily on deposits.
Now, facing weakened loan demand after the financial crisis, the bank is again looking for deals to expand its business.
(Reporting by Steve Slater in London, Paritosh Bansal in New York, and Denny Thomas in Hong Kong; Editing by Chris Lewis, Andrew Callus, Dave Zimmerman)
full story
Chinese foreign minister to meet Sudan's Bashir
KHARTOUM/BEIJING | Mon Aug 8, 2011 10:59am EDT
(Reuters) - China's foreign minister was due to meet Sudanese President Omar Hassan al-Bashir Monday for the highest-level talks between the two allies in the Sudanese capital since South Sudan seceded to form an independent state.
Yang Jiechi met north Sudanese Foreign Minister Ali Ahmed Karti in Khartoum and announced that China was giving North Sudan a 100 million yuan ($15.60 million) interest-free loan, a Sudanese government statement said.
Yang said Monday that China will not alter its policy to develop friendly relations with Sudan no matter how Khartoum's internal situation and regional situation may change, the Chinese foreign ministry said in a statement on its website.
"We are willing to step up the cooperation in oil industry and encourage and support more qualified Chinese companies to invest in Sudan," he said.
North Sudan was the sixth-largest source of Chinese oil imports in 2010. China has maintained close ties with North Sudan throughout a U.S. trade embargo.
Beijing called on the world to normalize relations with Khartoum after South Sudan seceded last month and has also been keen to build a relationship with leaders in the south.
Yang said China will continue its efforts with the international community to find a final solution for the issue of the disputed area of Abyei.
North Sudan and South Sudan both hope to include Abyei in their territory, but Khartoum and Juba have yet to agree on who will control Abyei, stirring fears a long-running quarrel over the region could sour the secession and spark a broader conflict.
Yang said China is paying attention to the ongoing violence in Southern Kordofan, a volatile and oil-rich Sudan border territory.
"China is following the recent development of the situation in South Kordofan State and it has exerted efforts with the concerned parties to calm the situation there," Yang said, adding that China supports the mediation efforts led by the African Union.
Southern Kordofan is in Sudan but includes large populations which sided with the south during a 20-year civil war. Armed groups in the state have been fighting Khartoum government troops since early June.
Yang said the Darfur issue could only be resolved through elimination of poverty and through development, which would lead to peaceful co-existence among the tribes in the Darfur region.
U.N. peacekeepers have said North Sudan has carried out air strikes in Darfur, killing one civilian, in the first confirmed strike since Khartoum signed a peace deal with small rebel group Liberation and Justice Movement (LJM) in July.
(Reporting by Khalid Abdelaziz in Khartoum and Sui-Lee Wee in Beijing, Writing by Sherine El Madany; Editing by Ed Lane)
full story
(Reuters) - China's foreign minister was due to meet Sudanese President Omar Hassan al-Bashir Monday for the highest-level talks between the two allies in the Sudanese capital since South Sudan seceded to form an independent state.
Yang Jiechi met north Sudanese Foreign Minister Ali Ahmed Karti in Khartoum and announced that China was giving North Sudan a 100 million yuan ($15.60 million) interest-free loan, a Sudanese government statement said.
Yang said Monday that China will not alter its policy to develop friendly relations with Sudan no matter how Khartoum's internal situation and regional situation may change, the Chinese foreign ministry said in a statement on its website.
"We are willing to step up the cooperation in oil industry and encourage and support more qualified Chinese companies to invest in Sudan," he said.
North Sudan was the sixth-largest source of Chinese oil imports in 2010. China has maintained close ties with North Sudan throughout a U.S. trade embargo.
Beijing called on the world to normalize relations with Khartoum after South Sudan seceded last month and has also been keen to build a relationship with leaders in the south.
Yang said China will continue its efforts with the international community to find a final solution for the issue of the disputed area of Abyei.
North Sudan and South Sudan both hope to include Abyei in their territory, but Khartoum and Juba have yet to agree on who will control Abyei, stirring fears a long-running quarrel over the region could sour the secession and spark a broader conflict.
Yang said China is paying attention to the ongoing violence in Southern Kordofan, a volatile and oil-rich Sudan border territory.
"China is following the recent development of the situation in South Kordofan State and it has exerted efforts with the concerned parties to calm the situation there," Yang said, adding that China supports the mediation efforts led by the African Union.
Southern Kordofan is in Sudan but includes large populations which sided with the south during a 20-year civil war. Armed groups in the state have been fighting Khartoum government troops since early June.
Yang said the Darfur issue could only be resolved through elimination of poverty and through development, which would lead to peaceful co-existence among the tribes in the Darfur region.
U.N. peacekeepers have said North Sudan has carried out air strikes in Darfur, killing one civilian, in the first confirmed strike since Khartoum signed a peace deal with small rebel group Liberation and Justice Movement (LJM) in July.
(Reporting by Khalid Abdelaziz in Khartoum and Sui-Lee Wee in Beijing, Writing by Sherine El Madany; Editing by Ed Lane)
full story
HP offers TouchPad on discount month after launch
SAN FRANCISCO | Fri Aug 5, 2011 4:35pm EDT
(Reuters) - Hewlett Packard is offering a hefty discount on its TouchPad tablet a month after it launched the WebOS-based mobile device in a booming market dominated by Apple Inc's iPad.
The company is offering an instant rebate of $100 on its website for both its 16 GB and 32 GB tablet versions, bringing their price down to $400 and $500, respectively.
This makes the TouchPad $100 cheaper than Apple's entry-level iPad.
HP has not revealed any sales figures on the tablet that launched in July along with a celebrity-studded marketing campaign. But the 9.7-inch tablet got off to a tepid start after critics assailed the TouchPad for poor battery life, slow processing speed and paucity of apps.
HP representatives were not immediately available for comments.
The entry-level TouchPad is also being offered on Woot.com, a daily-dealsite, at a further discount of $20.
Much of a mobile device's success is based on a robust ecosystem of apps, and HP is far behind Apple or Google's Android platform in the number of apps available.
The tablet was launched following HP's $1.2 billion acquisition of Palm and its WebOS platform last year with the hope the operating software will be incorporated into all the company's mobile devices and applications.
Shares of HP ended up 9 cents at $32.63 in a wildly volatile day on the New York Stock Exchange and other markets.
(Reporting by Poornima Gupta, editing by Bernard Orr)
full story
(Reuters) - Hewlett Packard is offering a hefty discount on its TouchPad tablet a month after it launched the WebOS-based mobile device in a booming market dominated by Apple Inc's iPad.
The company is offering an instant rebate of $100 on its website for both its 16 GB and 32 GB tablet versions, bringing their price down to $400 and $500, respectively.
This makes the TouchPad $100 cheaper than Apple's entry-level iPad.
HP has not revealed any sales figures on the tablet that launched in July along with a celebrity-studded marketing campaign. But the 9.7-inch tablet got off to a tepid start after critics assailed the TouchPad for poor battery life, slow processing speed and paucity of apps.
HP representatives were not immediately available for comments.
The entry-level TouchPad is also being offered on Woot.com, a daily-dealsite, at a further discount of $20.
Much of a mobile device's success is based on a robust ecosystem of apps, and HP is far behind Apple or Google's Android platform in the number of apps available.
The tablet was launched following HP's $1.2 billion acquisition of Palm and its WebOS platform last year with the hope the operating software will be incorporated into all the company's mobile devices and applications.
Shares of HP ended up 9 cents at $32.63 in a wildly volatile day on the New York Stock Exchange and other markets.
(Reporting by Poornima Gupta, editing by Bernard Orr)
full story
Miner Rio Tinto's profit jumps 35 percent, expands buyback
SYDNEY | Thu Aug 4, 2011 3:23am EDT
(Reuters) - Global miner Rio Tinto (RIO.L) reported a 35 percent jump in first-half profit on Thursday, but it missed market expectations and sweetened the result with a $2 billion expansion of its existing share buyback program.
Booming iron ore sales to China helped propel underlying profit to $7.8 billion for the six months ended June, a record for the first half but short of analysts' consensus forecast of $8.03 billion and also below the previous half-year's result.
"The numbers look a bit weak... It's not very encouraging," said resources analyst Hayden Bairstow of CLSA.
Rio Tinto also boosted its interim dividend to 54 U.S. cents per share from 45 cents a year earlier.
Rio Tinto joins major rivals Anglo-American Plc (AAL.AX) and Xstrata Plc (XTA.L) in overcoming spiraling costs and restive labor unions to report profit growth of a third or more over the past week, thanks to surging commodity prices.
But with the global economy on edge, bedeviled by debt crises in Europe and the United States, the outlook remains uncertain, with investors worried about a return to global financial turmoil and a knock-on effect for commodity prices.
"We remain positive for the remainder of 2011 and into 2012, in particular given the context of the industry struggling to bring new production onstream," Chief Executive Tom Albanese said in the results statement.
"However there are important risks to this outlook related to the pace of credit tightening in developing countries and the threat of financial crises arising from sovereign debt problems in Europe and the United States which could destabilize commodity markets."
Iron ore net earnings, which accounted for 78 percent of Rio Tinto's group profit, surged 44 percent in the first half, while aluminum profits edged 3.5 percent higher.
Earnings from the energy division, which includes coal and uranium, tumbled 39 percent, partly reflecting flooding at its Australian collieries and at the operations of its Australian uranium subsidiary, Energy Resources of Australia (ERA.AX).
The strong Australian dollar also weighed heavily on Rio Tinto's earnings.
(Reporting by Mark Bendeich; Editing by Balazs Koranyi and Ed Davies)
full story
(Reuters) - Global miner Rio Tinto (RIO.L) reported a 35 percent jump in first-half profit on Thursday, but it missed market expectations and sweetened the result with a $2 billion expansion of its existing share buyback program.
Booming iron ore sales to China helped propel underlying profit to $7.8 billion for the six months ended June, a record for the first half but short of analysts' consensus forecast of $8.03 billion and also below the previous half-year's result.
"The numbers look a bit weak... It's not very encouraging," said resources analyst Hayden Bairstow of CLSA.
Rio Tinto also boosted its interim dividend to 54 U.S. cents per share from 45 cents a year earlier.
Rio Tinto joins major rivals Anglo-American Plc (AAL.AX) and Xstrata Plc (XTA.L) in overcoming spiraling costs and restive labor unions to report profit growth of a third or more over the past week, thanks to surging commodity prices.
But with the global economy on edge, bedeviled by debt crises in Europe and the United States, the outlook remains uncertain, with investors worried about a return to global financial turmoil and a knock-on effect for commodity prices.
"We remain positive for the remainder of 2011 and into 2012, in particular given the context of the industry struggling to bring new production onstream," Chief Executive Tom Albanese said in the results statement.
"However there are important risks to this outlook related to the pace of credit tightening in developing countries and the threat of financial crises arising from sovereign debt problems in Europe and the United States which could destabilize commodity markets."
Iron ore net earnings, which accounted for 78 percent of Rio Tinto's group profit, surged 44 percent in the first half, while aluminum profits edged 3.5 percent higher.
Earnings from the energy division, which includes coal and uranium, tumbled 39 percent, partly reflecting flooding at its Australian collieries and at the operations of its Australian uranium subsidiary, Energy Resources of Australia (ERA.AX).
The strong Australian dollar also weighed heavily on Rio Tinto's earnings.
(Reporting by Mark Bendeich; Editing by Balazs Koranyi and Ed Davies)
full story
Authorities say online child pornography network dismantled
By James Vicini
WASHINGTON | Wed Aug 3, 2011 4:13pm EDT
(Reuters) - Authorities said on Wednesday they have dismantled an online bulletin board allegedly used by 600 people around the world to trade graphic images and videos of child sex abuse.
More than 70 people have been charged in connection with the private site, which was called "Dreamboard" and gave members varying access to the material. Board members who molested children themselves getting the most coveted "Super VIP" access to pictures and videos, they said.
"To put it simply, we have charged that these individuals shared a dream -- to create the preeminent online community for the promotion of child sexual exploitation," Attorney General Eric Holder told reporters. "But for the children they victimized, this was nothing short of a nightmare."
U.S. officials called it the largest prosecution of people who participated in an online child exploitation enterprise operated for the purpose of promoting child sexual abuse, disseminating child pornography and evading law enforcement.
The bulletin board, created in 2008, folded in the spring of this year when members became aware of the U.S. government's investigation, Justice Department officials said.
The 600 members of Dreamboard offered to trade images and videos of infants and children 12 and younger, contained in some 27,000 posts, the authorities said.
"The nature of this crime is abhorrent. These are some of the most disturbing images I think you will ever see," Holder said, adding that some victims were in obvious pain and crying.
Homeland Security Secretary Janet Napolitano said digital media recovered from those arrested in the United States included more than 1 million images of child pornography.
Of those charged in the United States, 43 have been arrested in this country and nine foreign nationals have been arrested overseas, including accused bulletin board administrators located in Canada and France, the officials said.
The board's three other administrators have yet to be identified and authorities were seeking to identify other members and the victims, they said. About one-third of the members were in the United States and the rest were overseas.
Arrests also took place in Denmark, Ecuador, Germany, Hungary, Kenya, the Philippines, Qatar and Serbia, among other countries.
"The dismantling of Dreamboard is another stark warning to would-be child predators who think they can trade in child pornography," said John Morton, director of U.S. Immigration and Customs Enforcement, which conducted the investigation.
The board's administrators required prospective members to upload child pornography when applying for membership, the officials said. The more content the members provided, the more child pornography they could access.
Members used encryption programs, proxy servers to disguise a user's location, and aliases rather than their real names in an effort to avoid detection, the officials said.
Some of the criminal charges carry sentences ranging from 20 years to life in prison. The officials said 13 of those charged in the United States have already pleaded guilty.
(Additional reporting by Jeremy Pelofsky; Editing by Vicki Allen and Bill Trott)
full story
WASHINGTON | Wed Aug 3, 2011 4:13pm EDT
(Reuters) - Authorities said on Wednesday they have dismantled an online bulletin board allegedly used by 600 people around the world to trade graphic images and videos of child sex abuse.
More than 70 people have been charged in connection with the private site, which was called "Dreamboard" and gave members varying access to the material. Board members who molested children themselves getting the most coveted "Super VIP" access to pictures and videos, they said.
"To put it simply, we have charged that these individuals shared a dream -- to create the preeminent online community for the promotion of child sexual exploitation," Attorney General Eric Holder told reporters. "But for the children they victimized, this was nothing short of a nightmare."
U.S. officials called it the largest prosecution of people who participated in an online child exploitation enterprise operated for the purpose of promoting child sexual abuse, disseminating child pornography and evading law enforcement.
The bulletin board, created in 2008, folded in the spring of this year when members became aware of the U.S. government's investigation, Justice Department officials said.
The 600 members of Dreamboard offered to trade images and videos of infants and children 12 and younger, contained in some 27,000 posts, the authorities said.
"The nature of this crime is abhorrent. These are some of the most disturbing images I think you will ever see," Holder said, adding that some victims were in obvious pain and crying.
Homeland Security Secretary Janet Napolitano said digital media recovered from those arrested in the United States included more than 1 million images of child pornography.
Of those charged in the United States, 43 have been arrested in this country and nine foreign nationals have been arrested overseas, including accused bulletin board administrators located in Canada and France, the officials said.
The board's three other administrators have yet to be identified and authorities were seeking to identify other members and the victims, they said. About one-third of the members were in the United States and the rest were overseas.
Arrests also took place in Denmark, Ecuador, Germany, Hungary, Kenya, the Philippines, Qatar and Serbia, among other countries.
"The dismantling of Dreamboard is another stark warning to would-be child predators who think they can trade in child pornography," said John Morton, director of U.S. Immigration and Customs Enforcement, which conducted the investigation.
The board's administrators required prospective members to upload child pornography when applying for membership, the officials said. The more content the members provided, the more child pornography they could access.
Members used encryption programs, proxy servers to disguise a user's location, and aliases rather than their real names in an effort to avoid detection, the officials said.
Some of the criminal charges carry sentences ranging from 20 years to life in prison. The officials said 13 of those charged in the United States have already pleaded guilty.
(Additional reporting by Jeremy Pelofsky; Editing by Vicki Allen and Bill Trott)
full story
Government hankers for hackers
By Tabassum Zakaria
WASHINGTON | Tue Aug 2, 2011 10:57am EDT
(Reuters) - The National Security Agency has a challenge for hackers who think they're hot stuff: prove it by working on the "hardest problems on Earth."
Computer hacker skills are in great demand in the U.S. government to fight the cyber wars that pose a growing national security threat -- and they are in short supply.
For that very reason an alphabet soup of federal agencies -- DOD, DHS, NASA, NSA -- are descending on Las Vegas this week for Defcon, an annual hacker convention where the $150 entrance fee is cash only -- no registration, no credit cards, no names taken. Attendance is expected to top 10,000.
The National Security Agency is among the keen suitors. The spy agency plays both offense and defense in the cyber wars. It conducts electronic eavesdropping on adversaries and protects U.S. computer networks that hold super secret material -- a prize target for America's enemies.
"Today it's cyber warriors that we're looking for, not rocket scientists," said Richard "Dickie" George, technical director of the NSA's Information Assurance Directorate, the agency's cyber-defense side.
"That's the race that we're in today. And we need the best and brightest to be ready to take on this cyber warrior status," he told Reuters in an interview.
The NSA is hiring about 1,500 people in the fiscal year which ends September 30 and another 1,500 next year, most of them cyber experts. With a workforce of just over 30,000, the Fort Meade, Maryland-based NSA dwarfs other intelligence agencies, including the CIA.
It also engages in cyber-spying and other offensive operations, something it rarely, if ever, discusses publicly.
But at Defcon, the NSA and other "Feds" will be competing with corporations looking for hacking talent too.
The NSA needs cyber security experts to harden networks, defend them with updates, do "penetration testing" to find security holes and watch for any signs of cyber attacks.
The NSA is expanding its fold of hackers, but George said there is a shortage of those skills. "We are straining to hire the people that we need."
MISFITS OR FIT-INS?
It might seem to be an odd-couple fit -- strait-laced government types with their rules and missions trying to recruit hackers who by definition want to defy authorities.
George said the NSA is actually an environment where the hacker mindset fits right in to work with "a critical mass of people that are just like them."
But what about culture rifts?
"When I walk down the hall there are people that I see every day and I never know what color their hair's going to be," George said. "And it's a bonus if they're wearing shoes. We've been in some sense a collection of geeks for a long, long time."
The agency has long been known for its brilliant, but sometimes eccentric, mathematicians and linguists.
Jeff Moss, a hacker known as Dark Tangent, knows something about bridging the two worlds. He founded Defcon and the companion Black Hat conference for security professionals and is now a member of the Department of Homeland Security's Advisory Council, which advises the government on cyber security.
"They need people with the hacker skill set, hacker mind-set. It's not like you go to a hacker university and get blessed with a badge that says you're a hacker. It's a self-appointed label -- you think like one or you don't," Moss told Reuters.
He drew a distinction between hackers with skills and computer criminals. Of the latter he says with a laugh: "It would not be good to let them in your front door."
Moss worries about young hackers who might cross lines and end up breaking laws that did not exist when he got his first computer in the early 1980s.
"You can absolutely learn the same skills without breaking any law," he said.
While U.S. intelligence agencies' computer systems are believed to be relatively secure, a wave of recent cyber attacks has hit the Pentagon, major defense contractors and others such as the International Monetary Fund.
The NSA's tasks include helping the Homeland Security department secure civilian U.S. government networks.
One government bureaucratic hindrance that can impede hiring top-flight experts is the security clearance process that can take six months, by which time a candidate may have found other employment. For the NSA, prospective employees must pass a lie-detector test, be drug-free for one year and undergo an extensive background check.
BEWARE 'ANKLE BITERS'
Unlike the threat from nuclear weapons where it is clear which countries have that capability, cyber attacks can come from anywhere.
"So we need to worry about everybody," George said. "In fact we need to worry about significant adversaries hiding among the ankle biters."
He explained that it was like finding a single needle in a pile of needles -- much more difficult than in a haystack. Among constant pings from teenagers just fooling around, "the real bad guy can hide in that noise," George said. "That's a big problem for us, trying to identify the real threat from among all the stuff that's not really threatening."
George would not name countries that pose high threats but other intelligence officials have expressed concern about China's growing cyber-warfare capabilities, as well as Russia's.
The NSA can attract hackers to work within its cloistered walls by dazzling them with the latest technology, appealing to their competitive nature, and giving them a sense of working for the greater good, George said.
"We have a wonderful atmosphere, we have great people and we have the hardest problems on Earth. And we need help, the country needs help," he said.
But there is one big difference about winning bragging rights at public competitions versus inside the NSA enclosure.
"You're not going to make yourself famous working here, that's the downside. You can be internally famous, but you can't be externally famous," George said.
The NSA's secretive nature also brings a positive side-effect in striking a work-life balance.
"If you come here you really can't take work home with you," George said. "That's a bonus."
(Editing by Warren Strobel and Christopher Wilson)
full story
WASHINGTON | Tue Aug 2, 2011 10:57am EDT
(Reuters) - The National Security Agency has a challenge for hackers who think they're hot stuff: prove it by working on the "hardest problems on Earth."
Computer hacker skills are in great demand in the U.S. government to fight the cyber wars that pose a growing national security threat -- and they are in short supply.
For that very reason an alphabet soup of federal agencies -- DOD, DHS, NASA, NSA -- are descending on Las Vegas this week for Defcon, an annual hacker convention where the $150 entrance fee is cash only -- no registration, no credit cards, no names taken. Attendance is expected to top 10,000.
The National Security Agency is among the keen suitors. The spy agency plays both offense and defense in the cyber wars. It conducts electronic eavesdropping on adversaries and protects U.S. computer networks that hold super secret material -- a prize target for America's enemies.
"Today it's cyber warriors that we're looking for, not rocket scientists," said Richard "Dickie" George, technical director of the NSA's Information Assurance Directorate, the agency's cyber-defense side.
"That's the race that we're in today. And we need the best and brightest to be ready to take on this cyber warrior status," he told Reuters in an interview.
The NSA is hiring about 1,500 people in the fiscal year which ends September 30 and another 1,500 next year, most of them cyber experts. With a workforce of just over 30,000, the Fort Meade, Maryland-based NSA dwarfs other intelligence agencies, including the CIA.
It also engages in cyber-spying and other offensive operations, something it rarely, if ever, discusses publicly.
But at Defcon, the NSA and other "Feds" will be competing with corporations looking for hacking talent too.
The NSA needs cyber security experts to harden networks, defend them with updates, do "penetration testing" to find security holes and watch for any signs of cyber attacks.
The NSA is expanding its fold of hackers, but George said there is a shortage of those skills. "We are straining to hire the people that we need."
MISFITS OR FIT-INS?
It might seem to be an odd-couple fit -- strait-laced government types with their rules and missions trying to recruit hackers who by definition want to defy authorities.
George said the NSA is actually an environment where the hacker mindset fits right in to work with "a critical mass of people that are just like them."
But what about culture rifts?
"When I walk down the hall there are people that I see every day and I never know what color their hair's going to be," George said. "And it's a bonus if they're wearing shoes. We've been in some sense a collection of geeks for a long, long time."
The agency has long been known for its brilliant, but sometimes eccentric, mathematicians and linguists.
Jeff Moss, a hacker known as Dark Tangent, knows something about bridging the two worlds. He founded Defcon and the companion Black Hat conference for security professionals and is now a member of the Department of Homeland Security's Advisory Council, which advises the government on cyber security.
"They need people with the hacker skill set, hacker mind-set. It's not like you go to a hacker university and get blessed with a badge that says you're a hacker. It's a self-appointed label -- you think like one or you don't," Moss told Reuters.
He drew a distinction between hackers with skills and computer criminals. Of the latter he says with a laugh: "It would not be good to let them in your front door."
Moss worries about young hackers who might cross lines and end up breaking laws that did not exist when he got his first computer in the early 1980s.
"You can absolutely learn the same skills without breaking any law," he said.
While U.S. intelligence agencies' computer systems are believed to be relatively secure, a wave of recent cyber attacks has hit the Pentagon, major defense contractors and others such as the International Monetary Fund.
The NSA's tasks include helping the Homeland Security department secure civilian U.S. government networks.
One government bureaucratic hindrance that can impede hiring top-flight experts is the security clearance process that can take six months, by which time a candidate may have found other employment. For the NSA, prospective employees must pass a lie-detector test, be drug-free for one year and undergo an extensive background check.
BEWARE 'ANKLE BITERS'
Unlike the threat from nuclear weapons where it is clear which countries have that capability, cyber attacks can come from anywhere.
"So we need to worry about everybody," George said. "In fact we need to worry about significant adversaries hiding among the ankle biters."
He explained that it was like finding a single needle in a pile of needles -- much more difficult than in a haystack. Among constant pings from teenagers just fooling around, "the real bad guy can hide in that noise," George said. "That's a big problem for us, trying to identify the real threat from among all the stuff that's not really threatening."
George would not name countries that pose high threats but other intelligence officials have expressed concern about China's growing cyber-warfare capabilities, as well as Russia's.
The NSA can attract hackers to work within its cloistered walls by dazzling them with the latest technology, appealing to their competitive nature, and giving them a sense of working for the greater good, George said.
"We have a wonderful atmosphere, we have great people and we have the hardest problems on Earth. And we need help, the country needs help," he said.
But there is one big difference about winning bragging rights at public competitions versus inside the NSA enclosure.
"You're not going to make yourself famous working here, that's the downside. You can be internally famous, but you can't be externally famous," George said.
The NSA's secretive nature also brings a positive side-effect in striking a work-life balance.
"If you come here you really can't take work home with you," George said. "That's a bonus."
(Editing by Warren Strobel and Christopher Wilson)
full story
Goldman sells $479 million worth of ICBC shares for client
HONG KONG | Mon Aug 1, 2011 9:47pm EDT
(Reuters) - Goldman Sachs International sold HK$3.73 billion ($478.7 million) worth of shares in Industrial and Commercial Bank of China Ltd, the world's largest lender by market value, in what it said was a transaction to help a client hedge its position in the bank.
Goldman sold 638.06 million Hong Kong-traded shares of ICBC (1398.HK) at a price of HK$5.84 each, a 2.5 percent discount to Monday's closing price of HK$5.99, according to a term sheet of the transaction sent to investors late on Monday.
A source familiar with the deal told Reuters on Monday that Goldman acted on behalf of American Express (AXP.N).
American Express held 638.06 million shares in ICBC, equivalent to a 0.74 percent stake, at the end of December, according to Thomson Reuters data.
The term sheet said Goldman was acting on behalf of a client to facilitate a hedging transaction, without disclosing the name of the client. The U.S. firm was the sole bookrunner for the deal.
(Reporting by Elzio Barreto; Editing by Ken Wills)
full story
(Reuters) - Goldman Sachs International sold HK$3.73 billion ($478.7 million) worth of shares in Industrial and Commercial Bank of China Ltd, the world's largest lender by market value, in what it said was a transaction to help a client hedge its position in the bank.
Goldman sold 638.06 million Hong Kong-traded shares of ICBC (1398.HK) at a price of HK$5.84 each, a 2.5 percent discount to Monday's closing price of HK$5.99, according to a term sheet of the transaction sent to investors late on Monday.
A source familiar with the deal told Reuters on Monday that Goldman acted on behalf of American Express (AXP.N).
American Express held 638.06 million shares in ICBC, equivalent to a 0.74 percent stake, at the end of December, according to Thomson Reuters data.
The term sheet said Goldman was acting on behalf of a client to facilitate a hedging transaction, without disclosing the name of the client. The U.S. firm was the sole bookrunner for the deal.
(Reporting by Elzio Barreto; Editing by Ken Wills)
full story
Vodafone to pay out $3.3 billion in Verizon windfall
By Sarah Young
LONDON | Fri Jul 29, 2011 8:35am EDT
(Reuters) - Vodafone (VOD.L) shareholders will get $3.3 billion from a long-awaited Verizon Wireless dividend, raising hopes for regular payouts from the U.S. company after a six-year drought.
Shares in Vodafone, the world's biggest mobile phone operator by revenue, rose as much as 5.7 percent on Friday after Verizon Wireless said it would pay $10 billion to the British company and co-owner Verizon Communications (VZ.N).
"Verizon's attempt to squeeze Vodafone has resoundingly failed, they now have no choice but to pay the cash," analyst Robin Bienenstock at brokerage Bernstein said, predicting regular dividends.
Vodafone has not received a payout from Verizon Wireless, in which it holds 45 percent, since 2005, partly because Verizon had hoped to force Vodafone out of the joint venture by not paying a dividend, say analysts.
The development is the latest victory in a campaign by Chief Executive Vittorio Colao's campaign to make Vodafone's sprawling portfolio more effective.
In the last year, Vodafone has resolved several shared-ownership issues, including buying Essar out of an Indian joint venture for $5.46 billion and selling a stake in China Mobile (0941.HK) for $6.5 billion.
Newbury, England-based Vodafone said its shareholders would receive 2 billion pounds ($3.3 billion) from its $4.5 billion share of the windfall via a special 4 pence-a-share dividend to be paid in February, with the balance used to pay down debt.
Shares in Vodafone were up 4.5 percent, or 7.2 pence, at 172.6 pence by 1033 GMT, having earlier risen as high as 174.9 pence to levels not seen since May. It was the biggest gainer on Britain's blue-chip FTSE 100 index .FTSE.
"We believe this will mark the resumption of regular dividend flows from VZW (Verizon Wireless)," Investec analysts wrote in a note to clients, adding it may also prove a turning point in Vodafone's relationship with its U.S. partner.
"Verizon Wireless is the cash cow for Verizon (Communications) and in order that Verizon can sustain its dividends to shareholders, we believe the cash must continue to flow from VZW," they wrote, reiterating a "buy" recommendation on Vodafone shares.
Vodafone had flagged in May that it expected to receive a dividend from Verizon next year.
"The timing of this announcement is pleasingly early and Vodafone immediately saying exactly what it will do with it is also welcome news," MF Global analyst John Karidis said.
"This 4 pence special dividend may well happen every year, and it may well grow."
Bernstein's Bienenstock noted that including the special dividend, the effective yield on Vodafone next year would be 14.5 percent, putting the mobile operator ahead of many of its competitors in the sector such as Deutsche Telekom (DTEGn.DE), on 6.5 percent, and BT (BT.L) on 3.7 percent.
The $4.5 billion payment to Vodafone is $1 billion less than the amount the British company's chief financial officer said he expected on June 30, but analysts at Deutsche Bank said it was higher than their base case expectations.
($1 = 0.612 British Pounds)
(Additional Reporting by Georgina Prodhan; Writing by Paul Hoskins; Editing by David Hulmes)
(This story is corrected to change headline to Vodafone to pay out from pays out)
full story
LONDON | Fri Jul 29, 2011 8:35am EDT
(Reuters) - Vodafone (VOD.L) shareholders will get $3.3 billion from a long-awaited Verizon Wireless dividend, raising hopes for regular payouts from the U.S. company after a six-year drought.
Shares in Vodafone, the world's biggest mobile phone operator by revenue, rose as much as 5.7 percent on Friday after Verizon Wireless said it would pay $10 billion to the British company and co-owner Verizon Communications (VZ.N).
"Verizon's attempt to squeeze Vodafone has resoundingly failed, they now have no choice but to pay the cash," analyst Robin Bienenstock at brokerage Bernstein said, predicting regular dividends.
Vodafone has not received a payout from Verizon Wireless, in which it holds 45 percent, since 2005, partly because Verizon had hoped to force Vodafone out of the joint venture by not paying a dividend, say analysts.
The development is the latest victory in a campaign by Chief Executive Vittorio Colao's campaign to make Vodafone's sprawling portfolio more effective.
In the last year, Vodafone has resolved several shared-ownership issues, including buying Essar out of an Indian joint venture for $5.46 billion and selling a stake in China Mobile (0941.HK) for $6.5 billion.
Newbury, England-based Vodafone said its shareholders would receive 2 billion pounds ($3.3 billion) from its $4.5 billion share of the windfall via a special 4 pence-a-share dividend to be paid in February, with the balance used to pay down debt.
Shares in Vodafone were up 4.5 percent, or 7.2 pence, at 172.6 pence by 1033 GMT, having earlier risen as high as 174.9 pence to levels not seen since May. It was the biggest gainer on Britain's blue-chip FTSE 100 index .FTSE.
"We believe this will mark the resumption of regular dividend flows from VZW (Verizon Wireless)," Investec analysts wrote in a note to clients, adding it may also prove a turning point in Vodafone's relationship with its U.S. partner.
"Verizon Wireless is the cash cow for Verizon (Communications) and in order that Verizon can sustain its dividends to shareholders, we believe the cash must continue to flow from VZW," they wrote, reiterating a "buy" recommendation on Vodafone shares.
Vodafone had flagged in May that it expected to receive a dividend from Verizon next year.
"The timing of this announcement is pleasingly early and Vodafone immediately saying exactly what it will do with it is also welcome news," MF Global analyst John Karidis said.
"This 4 pence special dividend may well happen every year, and it may well grow."
Bernstein's Bienenstock noted that including the special dividend, the effective yield on Vodafone next year would be 14.5 percent, putting the mobile operator ahead of many of its competitors in the sector such as Deutsche Telekom (DTEGn.DE), on 6.5 percent, and BT (BT.L) on 3.7 percent.
The $4.5 billion payment to Vodafone is $1 billion less than the amount the British company's chief financial officer said he expected on June 30, but analysts at Deutsche Bank said it was higher than their base case expectations.
($1 = 0.612 British Pounds)
(Additional Reporting by Georgina Prodhan; Writing by Paul Hoskins; Editing by David Hulmes)
(This story is corrected to change headline to Vodafone to pay out from pays out)
full story
Nokia Siemens says still has deal with LightSquared
HELSINKI | Thu Jul 28, 2011 9:05am EDT
(Reuters) - Nokia Siemens Networks NOKI.UL said it will still build a core network for telecom start-up LightSquared, despite speculation their deal will be called off after a new pact between LightSquared and U.S. carrier Sprint Nextel (S.N).
A spokesman for Nokia Siemens said the company would deliver an independent core network for LightSquared, but declined to say how much of the original contract would remain.
Last July the company unveiled an eight-year contract worth more than $7 billion -- covering core network, radio network and services -- which analysts said might be the largest order seen in the mobile telecoms gear industry.
Nokia Siemens was expected to lose most of that deal due to a new pact between LightSquared, which is backed by Philip Falcone's Harbinger Capital hedge fund, and Sprint. The U.S. firms confirmed the $9 billion deal on Thursday.
Sprint also has a major outsourcing deal with NSN's bigger rival Ericsson (ERICb.ST), which was valued at $5 billion when it was signed in 2009.
(Reporting by Tarmo Virki; Editing by David Hulmes)
full story
(Reuters) - Nokia Siemens Networks NOKI.UL said it will still build a core network for telecom start-up LightSquared, despite speculation their deal will be called off after a new pact between LightSquared and U.S. carrier Sprint Nextel (S.N).
A spokesman for Nokia Siemens said the company would deliver an independent core network for LightSquared, but declined to say how much of the original contract would remain.
Last July the company unveiled an eight-year contract worth more than $7 billion -- covering core network, radio network and services -- which analysts said might be the largest order seen in the mobile telecoms gear industry.
Nokia Siemens was expected to lose most of that deal due to a new pact between LightSquared, which is backed by Philip Falcone's Harbinger Capital hedge fund, and Sprint. The U.S. firms confirmed the $9 billion deal on Thursday.
Sprint also has a major outsourcing deal with NSN's bigger rival Ericsson (ERICb.ST), which was valued at $5 billion when it was signed in 2009.
(Reporting by Tarmo Virki; Editing by David Hulmes)
full story
Bison gas line in West US still shut in-TransCanada
Wed Jul 27, 2011 12:29pm EDT
* Work on damage to pipeline continues
* No timeline for restart plan approved
* Gas volumes remain shut in
NEW YORK, July 27 (Reuters) - TransCanada Corp (TRP.TO) on Wednesday said its 330-mile, 30-inch diameter interstate Bison natural gas pipeline in the western United States remained shut in following a rupture in a remote area of Wyoming last week.
Repair work was underway and should be complete by mid-week. However, gas could not be transported until a plan was approved by regulators, a company spokesman said.
"We do not yet have a timeline on when that will occur," spokesman James Millar said in an email.
A preliminary assessment determined the line break was the result of mechanical damage -- something contacted the pipe -- but the company did not yet know what or when the damage occurred.
There were no injuries.
Volumes on the line prior to the break had been running at about 365 million cubic feet per day. Total capacity on the line, which began service in late January, is about 407 mmcf per day.
Bison begins in northeastern Wyoming and travels northeast through Montana and North Dakota before connecting with Northern Border Pipeline in North Dakota. (Reporting by Eileen Moustakis; Editing by Lisa Shumaker)
full storyhttp://www.reuters.com/article/2011/07/27/pipelines-operations-transcanada-bison-idUSN1E76Q12E20110727weeblylink_new_window
* Work on damage to pipeline continues
* No timeline for restart plan approved
* Gas volumes remain shut in
NEW YORK, July 27 (Reuters) - TransCanada Corp (TRP.TO) on Wednesday said its 330-mile, 30-inch diameter interstate Bison natural gas pipeline in the western United States remained shut in following a rupture in a remote area of Wyoming last week.
Repair work was underway and should be complete by mid-week. However, gas could not be transported until a plan was approved by regulators, a company spokesman said.
"We do not yet have a timeline on when that will occur," spokesman James Millar said in an email.
A preliminary assessment determined the line break was the result of mechanical damage -- something contacted the pipe -- but the company did not yet know what or when the damage occurred.
There were no injuries.
Volumes on the line prior to the break had been running at about 365 million cubic feet per day. Total capacity on the line, which began service in late January, is about 407 mmcf per day.
Bison begins in northeastern Wyoming and travels northeast through Montana and North Dakota before connecting with Northern Border Pipeline in North Dakota. (Reporting by Eileen Moustakis; Editing by Lisa Shumaker)
full storyhttp://www.reuters.com/article/2011/07/27/pipelines-operations-transcanada-bison-idUSN1E76Q12E20110727weeblylink_new_window
Novo Nordisk hit with US lawsuit over overtime pay
Tue Jul 26, 2011 4:27am EDT
* California labour law firm files class-action lawsuit
* Claims Novo Nordisk failed to pay for overtime
COPENHAGEN, July 26 (Reuters) - A Californian labour law firm has filed a suit against Danish drugmaker Novo Nordisk (NOVOb.CO) alleging it failed to pay drug sales representatives for overtime as required by state law.
Blumenthal, Nordrehaug & Bhowmik said in a July 25 statement that it filed the lawsuit in Sacramento Superior Court.
It did not say how many employees or how much money was involved in the Brown v. Novo Nordisk suit.
"According to the wage and hour class-action complaint filed against the drug company, Novo Nordisk violated California overtime laws by failing to pay pharmaceutical sales representatives for overtime hours worked," the law firm said.
Novo Nordisk's spokesman said he had no immediate comment.
"The drug sales rep overtime class action suit is one of many that has been recently filed against pharmaceutical companies," the law firm said.
It said it was also representing drug salesmen in overtime class-action suits against Merck and Merck's Schering-Plough. (Editing by Will Waterman)
full story
* California labour law firm files class-action lawsuit
* Claims Novo Nordisk failed to pay for overtime
COPENHAGEN, July 26 (Reuters) - A Californian labour law firm has filed a suit against Danish drugmaker Novo Nordisk (NOVOb.CO) alleging it failed to pay drug sales representatives for overtime as required by state law.
Blumenthal, Nordrehaug & Bhowmik said in a July 25 statement that it filed the lawsuit in Sacramento Superior Court.
It did not say how many employees or how much money was involved in the Brown v. Novo Nordisk suit.
"According to the wage and hour class-action complaint filed against the drug company, Novo Nordisk violated California overtime laws by failing to pay pharmaceutical sales representatives for overtime hours worked," the law firm said.
Novo Nordisk's spokesman said he had no immediate comment.
"The drug sales rep overtime class action suit is one of many that has been recently filed against pharmaceutical companies," the law firm said.
It said it was also representing drug salesmen in overtime class-action suits against Merck and Merck's Schering-Plough. (Editing by Will Waterman)
full story
Water-oil mixture spills at BP Alaska facility
By Yereth Rosen
ANCHORAGE, Alaska, July 25 | Mon Jul 25, 2011 9:17pm EDT
(Reuters) - A spill of about 200 gallons of an oil-water mixture has prompted a temporary shutdown of an oil-separation facility at the BP(BP.L)-operated Prudhoe Bay oil field, the Alaska Department of Environmental Conservation reported on Monday.
The spilled material amounts to about 70 percent produced water and 30 percent crude oil, the department said in a statement. The material flowed into gravel-bermed, water-filled containment pits that encircle the flow station's flares.
The spill was discovered on Thursday, but only made public on Monday. The cleanup launched in response required shutdown of the facility, known as Flow Station 2, the Department of Environmental Conservation said. The shutdown is expected to last for at least another four days, the department said.
The facility is one of three flow stations on the eastern operating area of Prudhoe Bay. The flow stations, along with the three gathering stations on the western side of Prudhoe Bay, separate the crude oil, gas and water that are pumped out of wells.
A BP spokesman said there will be a small reduction in overall field output, but that it will be difficult to quantify. "We expect that there will be some minor short-term impact here. But production impacts are going to be minimal due to other ongoing maintenance activities," BP spokesman Steve Rinehart said.
Several facilities are undergoing annual maintenance in the brief North Slope summer, he said. "This is the time of year when facilities are going off-line and coming on-line all summer," he said.
Total North Slope production has averaged 453,351 barrels per day so far in July, according to the Alaska Oil and Gas Conservation Commission. That is roughly 70 percent of normal winter production rates, according to state records. (Editing by Bill Rigby and Carol Bishopric)
full story
ANCHORAGE, Alaska, July 25 | Mon Jul 25, 2011 9:17pm EDT
(Reuters) - A spill of about 200 gallons of an oil-water mixture has prompted a temporary shutdown of an oil-separation facility at the BP(BP.L)-operated Prudhoe Bay oil field, the Alaska Department of Environmental Conservation reported on Monday.
The spilled material amounts to about 70 percent produced water and 30 percent crude oil, the department said in a statement. The material flowed into gravel-bermed, water-filled containment pits that encircle the flow station's flares.
The spill was discovered on Thursday, but only made public on Monday. The cleanup launched in response required shutdown of the facility, known as Flow Station 2, the Department of Environmental Conservation said. The shutdown is expected to last for at least another four days, the department said.
The facility is one of three flow stations on the eastern operating area of Prudhoe Bay. The flow stations, along with the three gathering stations on the western side of Prudhoe Bay, separate the crude oil, gas and water that are pumped out of wells.
A BP spokesman said there will be a small reduction in overall field output, but that it will be difficult to quantify. "We expect that there will be some minor short-term impact here. But production impacts are going to be minimal due to other ongoing maintenance activities," BP spokesman Steve Rinehart said.
Several facilities are undergoing annual maintenance in the brief North Slope summer, he said. "This is the time of year when facilities are going off-line and coming on-line all summer," he said.
Total North Slope production has averaged 453,351 barrels per day so far in July, according to the Alaska Oil and Gas Conservation Commission. That is roughly 70 percent of normal winter production rates, according to state records. (Editing by Bill Rigby and Carol Bishopric)
full story
FX OUTLOOK-Dollar may fall as US debt ceiling deadline nears
Fri Jul 22, 2011 4:22pm EDT
* Drawn-out political battle increases risks to dollar
* U.S. default seen unlikely but downgrade risk remains
* Ratings cut may see dollar weaken most vs yen, franc
By Wanfeng Zhou
NEW YORK, July 22 (Reuters) - The U.S. dollar may fall next week on concern the United States may lose its top-notch credit rating with politicians nowhere close to reaching an agreement on lifting the U.S. debt ceiling as an Aug. 2 deadline looms.
Fears of a full-blown euro zone debt crisis have subsided for now after the announcement of a second bailout for Greece and the focus is shifting to Washington where efforts to avoid a U.S. default enter crunch time.
The drawn-out battle has dented risk appetite in recent weeks and led ratings agencies to warn of a potential downgrade. Such a move, some fear, could send interest rates soaring and erode the dollar's reserve currency status.
Dollar investors have so far been complacent as the U.S. currency rose against the euro EUR= and a basket .DXY on Friday. Most investors expect some sort of deal by Aug. 2 to avoid a default, although some fear that failure to reach a major deficit cut plan could lead to a credit ratings cut. That worry is set to grow as time is running out.
"If the markets don't hear anything going into the weekend, I think the first instinct will be to sell first and ask questions later," said Boris Schlossberg, director of currency research at GFT in New York.
"There's much less cooperation amongst the U.S. legislators than there is amongst the Europeans. That kind of dichotomy could begin to hurt the dollar ..."
While efforts to craft a $3 trillion deficit-reduction deal gained traction on Thursday, the White House and Republicans have not broken their impasse over higher taxes, which are opposed by the Republicans, who control the lower house.
The White House initially set a July 22 target for a deal that would leave enough time to get it through the legislative process. But it has backed off that timeframe.
"It's brinkmanship and no one's going to blink until they really have to," said Mark McCormick, currency strategist at Brown Brothers Harriman in New York. "The market would really like to see a big deal, something along the lines of $3 to $4 trillion that really addresses the structural problems of the U.S. economy."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Full coverage of U.S. budget and debt [ID:nUSBUDGET]
Possible outcomes for U.S. debt talks [ID:nN1E76I10Y]
Anything possible if U.S. downgraded [ID:nN1E76I1M8]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
RISK OF DOWNGRADE
Standard & Poor's said on Thursday there is a 50-50 chance the U.S. AAA credit rating could be cut within three months.
"The potential for the U.S. to lose its triple-A rating is definitely there," said Andrew Busch, global currency and public policy strategist at BMO Capital Markets in Chicago. "That is going to be problematic for the markets, which would cause the market probably to sell the U.S. dollar."
Analysts expect the dollar to weaken especially against the safe-haven Japanese yen and Swiss franc.
The debt ceiling impasse has also whipsawed 30-year Treasury bonds lately, as the long-dated debt is most vulnerable if the country fails to reduce its deficit.
A downgrade to AA will likely hurt Treasuries, though most fund managers are not thought to be restricted by the government debt's ratings and thus are unlikely to be forced to sell the debt.
Thomas Higgins, global macro strategist at Standish Mellon Asset management, said that ironically, in the event of a U.S. default, which is highly unlikely, investors may want to be overweight Treasuries in the short term because of the negative implications for economic growth. Standish oversees $80 billion in assets.
SINGING KUMBAYA
The euro last traded down 0.4 percent at $1.4361 EUR=. The dollar also rose 0.3 percent to 0.8178 Swiss franc, off a record low of 0.8034 CHF=EBS set on Monday. It also rebounded from an earlier four-month trough of 78.22 yen JPY=EBS to last trade at 78.43 yen.
"The dollar has remained largely unmoved thus far because no one wants to be caught with a short position in the event that Congress starts singing 'kumbaya'," said Karl Schamotta, senior market strategist at Western Union Business Solutions. "The markets have already largely discounted a positive outcome."
Some analysts are skeptical how much the dollar could benefit even if politicians make notable progress on a deal.
Alan Ruskin, global head of G10 currency strategy at Deutsche Bank in New York, said while a rally in the first 24 hours is possible, the dollar could come under renewed pressure as an increase in global risk appetite encourages investors to use the dollar as a funding currency. (Additional reporting by Nick Olivari, Gertrude Chavez-Dreyfuss and Karen Brettell; Editing by James Dalgleish)
full story
* Drawn-out political battle increases risks to dollar
* U.S. default seen unlikely but downgrade risk remains
* Ratings cut may see dollar weaken most vs yen, franc
By Wanfeng Zhou
NEW YORK, July 22 (Reuters) - The U.S. dollar may fall next week on concern the United States may lose its top-notch credit rating with politicians nowhere close to reaching an agreement on lifting the U.S. debt ceiling as an Aug. 2 deadline looms.
Fears of a full-blown euro zone debt crisis have subsided for now after the announcement of a second bailout for Greece and the focus is shifting to Washington where efforts to avoid a U.S. default enter crunch time.
The drawn-out battle has dented risk appetite in recent weeks and led ratings agencies to warn of a potential downgrade. Such a move, some fear, could send interest rates soaring and erode the dollar's reserve currency status.
Dollar investors have so far been complacent as the U.S. currency rose against the euro EUR= and a basket .DXY on Friday. Most investors expect some sort of deal by Aug. 2 to avoid a default, although some fear that failure to reach a major deficit cut plan could lead to a credit ratings cut. That worry is set to grow as time is running out.
"If the markets don't hear anything going into the weekend, I think the first instinct will be to sell first and ask questions later," said Boris Schlossberg, director of currency research at GFT in New York.
"There's much less cooperation amongst the U.S. legislators than there is amongst the Europeans. That kind of dichotomy could begin to hurt the dollar ..."
While efforts to craft a $3 trillion deficit-reduction deal gained traction on Thursday, the White House and Republicans have not broken their impasse over higher taxes, which are opposed by the Republicans, who control the lower house.
The White House initially set a July 22 target for a deal that would leave enough time to get it through the legislative process. But it has backed off that timeframe.
"It's brinkmanship and no one's going to blink until they really have to," said Mark McCormick, currency strategist at Brown Brothers Harriman in New York. "The market would really like to see a big deal, something along the lines of $3 to $4 trillion that really addresses the structural problems of the U.S. economy."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Full coverage of U.S. budget and debt [ID:nUSBUDGET]
Possible outcomes for U.S. debt talks [ID:nN1E76I10Y]
Anything possible if U.S. downgraded [ID:nN1E76I1M8]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
RISK OF DOWNGRADE
Standard & Poor's said on Thursday there is a 50-50 chance the U.S. AAA credit rating could be cut within three months.
"The potential for the U.S. to lose its triple-A rating is definitely there," said Andrew Busch, global currency and public policy strategist at BMO Capital Markets in Chicago. "That is going to be problematic for the markets, which would cause the market probably to sell the U.S. dollar."
Analysts expect the dollar to weaken especially against the safe-haven Japanese yen and Swiss franc.
The debt ceiling impasse has also whipsawed 30-year Treasury bonds lately, as the long-dated debt is most vulnerable if the country fails to reduce its deficit.
A downgrade to AA will likely hurt Treasuries, though most fund managers are not thought to be restricted by the government debt's ratings and thus are unlikely to be forced to sell the debt.
Thomas Higgins, global macro strategist at Standish Mellon Asset management, said that ironically, in the event of a U.S. default, which is highly unlikely, investors may want to be overweight Treasuries in the short term because of the negative implications for economic growth. Standish oversees $80 billion in assets.
SINGING KUMBAYA
The euro last traded down 0.4 percent at $1.4361 EUR=. The dollar also rose 0.3 percent to 0.8178 Swiss franc, off a record low of 0.8034 CHF=EBS set on Monday. It also rebounded from an earlier four-month trough of 78.22 yen JPY=EBS to last trade at 78.43 yen.
"The dollar has remained largely unmoved thus far because no one wants to be caught with a short position in the event that Congress starts singing 'kumbaya'," said Karl Schamotta, senior market strategist at Western Union Business Solutions. "The markets have already largely discounted a positive outcome."
Some analysts are skeptical how much the dollar could benefit even if politicians make notable progress on a deal.
Alan Ruskin, global head of G10 currency strategy at Deutsche Bank in New York, said while a rally in the first 24 hours is possible, the dollar could come under renewed pressure as an increase in global risk appetite encourages investors to use the dollar as a funding currency. (Additional reporting by Nick Olivari, Gertrude Chavez-Dreyfuss and Karen Brettell; Editing by James Dalgleish)
full story
Euro zone private sector growth slumps in July: PMI
By Jonathan Cable
LONDON | Thu Jul 21, 2011 5:20am EDT
(Reuters) - The euro zone's private sector grew at its weakest pace in almost two years this month as demand from abroad fell and the region's ongoing debt crisis weighed on minds at home, business surveys showed on Thursday.
In a fresh sign economic growth is slowing fast, the 17-nation bloc's manufacturing sector virtually ground to a halt in July while its dominant service sector grew at its slowest rate in 22 months.
"It's very disappointing. It's across the board, there is a widespread weakness. Excluding France and Germany activity fell for the second month running," said Markit's Chief Economist Chris Williamson.
The Flash Markit Eurozone Services Purchasing Managers' Index (PMI) sank to 51.4 this month from 53.7 in June, its lowest level since September 2009.
The index, which measures the activities of companies ranging from banks to restaurants, fell far short of expectations for 53.0 but has been above the 50 mark that divides growth from contraction for nearly two years.
A similar slump was seen in the flash manufacturing PMI, which fell to 50.4 from 52.0 in June, its lowest reading since September 2009 and missing consensus expectations in a Reuters poll for 51.5.
Output in the sector, which drove a large part of the recovery in the euro zone, shrank for the first time in two years, with the index falling to 49.5 from 52.5, its lowest since July 2009.
Factories also saw new orders falling for the second month running, with the index sliding to 47.6 from 49.8, its lowest reading since June 2009.
"Exports fell for the first time since July 2009 so we have a continuation of weakness in overseas markets generally and at the same time home markets are being squeezed by worries in relation to the sovereign debt crisis," Williamson said.
The glum indexes meant the euro zone composite PMI, a broader measure of the private sector which combines the services and manufacturing data, collapsed to 50.8 from 53.3, well below forecasts for 52.6.
The composite index is often used as a guide to growth and Markit said if the PMIs remained at current levels there would be no economic growth in the third quarter.
Economists polled by Reuters this month predicted growth of 0.4 percent this quarter.
DEBT DEFYING
A debt crisis, which has so far seen Greece, Ireland and Portugal seeking bailouts, has continued to roil the bloc and in recent weeks fears have grown that it will engulf Italy and Spain as well.
Euro zone officials and bankers have been struggling to pin down a package of measures to persuade markets that Greece can be saved from default and the rest of the euro zone from contagion.
An earlier release from Germany, Europe's largest economy, saw its composite PMI staging the biggest one month fall since late 2008, slumping to 52.2 from June's 56.3.
The picture was little better in France, where the composite index fell to a 23-month low of 52.8 from June's 54.9.
But in the face of the intensifying debt crisis and an onslaught of downbeat data the ECB raised interest rates earlier month for the second time this year, and signaled another hike is likely later in the year.
Economists expect the ECB to raise rates one more time this year, to 1.75 percent, followed by another hike in the first three months of 2012.
Despite this, service sector firms increased prices faster than last month, with the output price index rising to 53.0 from June's 52.4, matching April's 33-month high.
"That was very surprising and I am not convinced it will continue to increase as there is so much competitive pressure out there and the fact that input prices rose at their weakest rate for seven months," said Williamson.
In one bright spot for policymakers businesses continued to take on new workers, and at a slightly faster rate than in June, with the composite employment index rising to 52.2 from June's 8-month low of 52.0.
(Editing by Toby Chopra)
full story
LONDON | Thu Jul 21, 2011 5:20am EDT
(Reuters) - The euro zone's private sector grew at its weakest pace in almost two years this month as demand from abroad fell and the region's ongoing debt crisis weighed on minds at home, business surveys showed on Thursday.
In a fresh sign economic growth is slowing fast, the 17-nation bloc's manufacturing sector virtually ground to a halt in July while its dominant service sector grew at its slowest rate in 22 months.
"It's very disappointing. It's across the board, there is a widespread weakness. Excluding France and Germany activity fell for the second month running," said Markit's Chief Economist Chris Williamson.
The Flash Markit Eurozone Services Purchasing Managers' Index (PMI) sank to 51.4 this month from 53.7 in June, its lowest level since September 2009.
The index, which measures the activities of companies ranging from banks to restaurants, fell far short of expectations for 53.0 but has been above the 50 mark that divides growth from contraction for nearly two years.
A similar slump was seen in the flash manufacturing PMI, which fell to 50.4 from 52.0 in June, its lowest reading since September 2009 and missing consensus expectations in a Reuters poll for 51.5.
Output in the sector, which drove a large part of the recovery in the euro zone, shrank for the first time in two years, with the index falling to 49.5 from 52.5, its lowest since July 2009.
Factories also saw new orders falling for the second month running, with the index sliding to 47.6 from 49.8, its lowest reading since June 2009.
"Exports fell for the first time since July 2009 so we have a continuation of weakness in overseas markets generally and at the same time home markets are being squeezed by worries in relation to the sovereign debt crisis," Williamson said.
The glum indexes meant the euro zone composite PMI, a broader measure of the private sector which combines the services and manufacturing data, collapsed to 50.8 from 53.3, well below forecasts for 52.6.
The composite index is often used as a guide to growth and Markit said if the PMIs remained at current levels there would be no economic growth in the third quarter.
Economists polled by Reuters this month predicted growth of 0.4 percent this quarter.
DEBT DEFYING
A debt crisis, which has so far seen Greece, Ireland and Portugal seeking bailouts, has continued to roil the bloc and in recent weeks fears have grown that it will engulf Italy and Spain as well.
Euro zone officials and bankers have been struggling to pin down a package of measures to persuade markets that Greece can be saved from default and the rest of the euro zone from contagion.
An earlier release from Germany, Europe's largest economy, saw its composite PMI staging the biggest one month fall since late 2008, slumping to 52.2 from June's 56.3.
The picture was little better in France, where the composite index fell to a 23-month low of 52.8 from June's 54.9.
But in the face of the intensifying debt crisis and an onslaught of downbeat data the ECB raised interest rates earlier month for the second time this year, and signaled another hike is likely later in the year.
Economists expect the ECB to raise rates one more time this year, to 1.75 percent, followed by another hike in the first three months of 2012.
Despite this, service sector firms increased prices faster than last month, with the output price index rising to 53.0 from June's 52.4, matching April's 33-month high.
"That was very surprising and I am not convinced it will continue to increase as there is so much competitive pressure out there and the fact that input prices rose at their weakest rate for seven months," said Williamson.
In one bright spot for policymakers businesses continued to take on new workers, and at a slightly faster rate than in June, with the composite employment index rising to 52.2 from June's 8-month low of 52.0.
(Editing by Toby Chopra)
full story
Intel option players price in near 4 pct earning move
Wed Jul 20, 2011 1:11pm EDT
* Intel to report 2nd-quarter results after market close
* Weekly options imply nearly 4 percent percent move
* Intel weekly July $23 calls, July $22 puts stand out
CHICAGO, July 20 (Reuters) - Option traders are pricing in a near 4 percent move in Intel after its earnings report based on contracts expiring Friday.
Intel Corp (INTC.O), the world's largest chipmaker, is slated to report second-quarter earnings after the close.
The stock is in an interesting spot. It was once regarded as a bellwether for all of technology but shares have been in a range for several years. The stock is up more than 9 percent so far in 2011.
A quarter ago, Intel handily beat earnings expectations and said it expected 2011 worldwide PC sales to grow in the "low double digits," well above consensus, saying independent forecasters were missing millions of PCs now being built by small manufacturers in China and other emerging markets.
But many investors remain skeptical and believe Intel will be forced to reduce its PC growth outlook by around half either Wednesday or later this year. For details see [ID:nN1E76H0U0].
Sentiment is not clear cut, judging by the near-term activity in Intel options heading into earnings. Speculators have been betting on upside while others seek protection if Intel falls short of expectations.
"It looks like option traders are expecting a less than 4 percent move on the stock based on earnings data," said TD Ameritrade chief derivatives strategist J.J. Kinahan.
Trading has been very heavy in the weekly July $23 calls and July $22 puts. Both contracts go off the board on Friday.
"Although a less than 4 percent move is indicated, there are many speculators playing this stock for an upside move after earnings," Kinahan said.
Pre-earnings flow in Intel is running above its pace for early afternoon trading with about 94,000 calls and 54,000 puts traded, according to options analytics firm Trade Alert.
The largest block of the day was an opening customer buyer of $23 strike calls expiring Friday, for 50 cents when shares were near $23.14, suggesting a possible move upward after results come out, said Trade Alert president Henry Schwartz.
The July weekly $23 calls have seen heavy activity in new positions, with 19,850 contracts traded against 11,000 in open interest. The July weekly $22 puts traded 19,037 contracts against 6,600 in open interest, Trade Alert data shows.
The stock usually moves 3.28 percent on the day after earnings, judging by the last four quarters, according to Bespoke Investment Group of Harrison, New York.
Traders often look at option prices on the straddle to estimate the option market's view of the potential range of a stock going into an event like earnings. A long straddle involves buying a put and a call with the same strike price and maturity date and is a bet on volatility.
Intel's revenue in the current quarter is seen increasing about 5 percent over the second quarter, according to Thomson Reuters I/B/E/S -- less than normal growth of around 8 percent for this time of year. (Reporting by Doris Frankel; Editing by James Dalgleish)
full story
* Intel to report 2nd-quarter results after market close
* Weekly options imply nearly 4 percent percent move
* Intel weekly July $23 calls, July $22 puts stand out
CHICAGO, July 20 (Reuters) - Option traders are pricing in a near 4 percent move in Intel after its earnings report based on contracts expiring Friday.
Intel Corp (INTC.O), the world's largest chipmaker, is slated to report second-quarter earnings after the close.
The stock is in an interesting spot. It was once regarded as a bellwether for all of technology but shares have been in a range for several years. The stock is up more than 9 percent so far in 2011.
A quarter ago, Intel handily beat earnings expectations and said it expected 2011 worldwide PC sales to grow in the "low double digits," well above consensus, saying independent forecasters were missing millions of PCs now being built by small manufacturers in China and other emerging markets.
But many investors remain skeptical and believe Intel will be forced to reduce its PC growth outlook by around half either Wednesday or later this year. For details see [ID:nN1E76H0U0].
Sentiment is not clear cut, judging by the near-term activity in Intel options heading into earnings. Speculators have been betting on upside while others seek protection if Intel falls short of expectations.
"It looks like option traders are expecting a less than 4 percent move on the stock based on earnings data," said TD Ameritrade chief derivatives strategist J.J. Kinahan.
Trading has been very heavy in the weekly July $23 calls and July $22 puts. Both contracts go off the board on Friday.
"Although a less than 4 percent move is indicated, there are many speculators playing this stock for an upside move after earnings," Kinahan said.
Pre-earnings flow in Intel is running above its pace for early afternoon trading with about 94,000 calls and 54,000 puts traded, according to options analytics firm Trade Alert.
The largest block of the day was an opening customer buyer of $23 strike calls expiring Friday, for 50 cents when shares were near $23.14, suggesting a possible move upward after results come out, said Trade Alert president Henry Schwartz.
The July weekly $23 calls have seen heavy activity in new positions, with 19,850 contracts traded against 11,000 in open interest. The July weekly $22 puts traded 19,037 contracts against 6,600 in open interest, Trade Alert data shows.
The stock usually moves 3.28 percent on the day after earnings, judging by the last four quarters, according to Bespoke Investment Group of Harrison, New York.
Traders often look at option prices on the straddle to estimate the option market's view of the potential range of a stock going into an event like earnings. A long straddle involves buying a put and a call with the same strike price and maturity date and is a bet on volatility.
Intel's revenue in the current quarter is seen increasing about 5 percent over the second quarter, according to Thomson Reuters I/B/E/S -- less than normal growth of around 8 percent for this time of year. (Reporting by Doris Frankel; Editing by James Dalgleish)
full story
Google to "wind down" Google Labs
Wed Jul 20, 2011 7:32pm EDT
* Move is part of plan to prioritize product efforts
* Some Labs projects to end, some moving to other products
* Company says no changes to "20 percent time" policy
By Alexei Oreskovic
SAN FRANCISCO, July 20 (Reuters) - Google Inc (GOOG.O) will shut down a website that offered public access to experimental products, the latest step by the company to refocus resources under Chief Executive Larry Page.
Google said it will "wind down" Google Labs, ending many of the projects offered on the site, in a move to "prioritize its product efforts," the company said on its corporate blog on Wednesday.
Google said that many of the products and technology from Google Labs would be incorporated into some of the company's other products, which range from the world's No. 1 search engine to its popular Android smartphone operating system.
Google Labs functions as a central hub for the various projects created by Google employees, who are allowed to spend up to 20 percent of their time working on side-projects. Google Labs products were available as prototypes that users could try out and provide feedback on, while Google made ongoing changes and adjustments.
Among the products listed as "alumni" of Google Labs on the Labs website are Google Maps, Google Alerts and Google Transit.
A Google spokesman said the closure of Google Labs was unrelated to the company's 20 percent time policy .
"We don't have any changes to announce regarding 20 percent time. We'll continue to devote a subset of our time to newer and experimental projects. In fact, we'll be focusing this same creative energy on bigger bets, with bigger potential long-term payoffs," the Google spokesman said in an emailed statement.
The closure of Google Labs comes a few months after Google co-founder Page took the CEO reins in April.
Last month Google said it was pulling the plug on a pair of products that let consumers monitor their home energy consumption and keep track of their personal health records.
On Google's second-quarter earnings conference call last week, Page said the company was moving to put "more wood behind fewer arrows."
The Google spokesperson said the company did not have any specific timing for the end of Google Labs, but said it would provide updates on the Google Labs website. (Reporting by Alexei Oreskovic; Editing by Gary Hill)
full story
* Move is part of plan to prioritize product efforts
* Some Labs projects to end, some moving to other products
* Company says no changes to "20 percent time" policy
By Alexei Oreskovic
SAN FRANCISCO, July 20 (Reuters) - Google Inc (GOOG.O) will shut down a website that offered public access to experimental products, the latest step by the company to refocus resources under Chief Executive Larry Page.
Google said it will "wind down" Google Labs, ending many of the projects offered on the site, in a move to "prioritize its product efforts," the company said on its corporate blog on Wednesday.
Google said that many of the products and technology from Google Labs would be incorporated into some of the company's other products, which range from the world's No. 1 search engine to its popular Android smartphone operating system.
Google Labs functions as a central hub for the various projects created by Google employees, who are allowed to spend up to 20 percent of their time working on side-projects. Google Labs products were available as prototypes that users could try out and provide feedback on, while Google made ongoing changes and adjustments.
Among the products listed as "alumni" of Google Labs on the Labs website are Google Maps, Google Alerts and Google Transit.
A Google spokesman said the closure of Google Labs was unrelated to the company's 20 percent time policy .
"We don't have any changes to announce regarding 20 percent time. We'll continue to devote a subset of our time to newer and experimental projects. In fact, we'll be focusing this same creative energy on bigger bets, with bigger potential long-term payoffs," the Google spokesman said in an emailed statement.
The closure of Google Labs comes a few months after Google co-founder Page took the CEO reins in April.
Last month Google said it was pulling the plug on a pair of products that let consumers monitor their home energy consumption and keep track of their personal health records.
On Google's second-quarter earnings conference call last week, Page said the company was moving to put "more wood behind fewer arrows."
The Google spokesperson said the company did not have any specific timing for the end of Google Labs, but said it would provide updates on the Google Labs website. (Reporting by Alexei Oreskovic; Editing by Gary Hill)
full story
Market Chatter -- Corporate finance press digest
BANGALORE, July 19 | Tue Jul 19, 2011 12:18am EDT
(Reuters) - The following corporate finance-related stories were reported by media on Tuesday:
* U.S. insurer American International Group is looking to sell part of its airplane-leasing business through an initial public offering, the Wall Street Journal reported, citing people familiar with the matter.
* HNA Group, China's fourth-largest airline group, has emerged as a front-runner to buy General Electric Co's co-owned container leasing business GE SeaCo, the Financial Times reported.
* China's Huaibei Coal Group, the second-largest miner in southeastern Anhui province, is planning an initial public offering to help fund 8.5 billion yuan ($1.31 billion) worth of new projects, a newspaper reported.
* Private equity firm CVC Capital is close to a deal to buy ConvergEx, a software provider for brokerage and investment technology firms, for $1.9 billion, Bloomberg reported on Monday.
For Deals of the day click on (Compiled by Suzannah Benjamin)
M&ABONDS NEWSBONDSIPOSMARKETSFUNDS NEWSETFS NEWSPRIVATE CAPITALBASIC MATERIALSFINANCIALSINDUSTRIALS
(Reuters) - The following corporate finance-related stories were reported by media on Tuesday:
* U.S. insurer American International Group is looking to sell part of its airplane-leasing business through an initial public offering, the Wall Street Journal reported, citing people familiar with the matter.
* HNA Group, China's fourth-largest airline group, has emerged as a front-runner to buy General Electric Co's co-owned container leasing business GE SeaCo, the Financial Times reported.
* China's Huaibei Coal Group, the second-largest miner in southeastern Anhui province, is planning an initial public offering to help fund 8.5 billion yuan ($1.31 billion) worth of new projects, a newspaper reported.
* Private equity firm CVC Capital is close to a deal to buy ConvergEx, a software provider for brokerage and investment technology firms, for $1.9 billion, Bloomberg reported on Monday.
For Deals of the day click on (Compiled by Suzannah Benjamin)
M&ABONDS NEWSBONDSIPOSMARKETSFUNDS NEWSETFS NEWSPRIVATE CAPITALBASIC MATERIALSFINANCIALSINDUSTRIALS
Egypt to sell first domestic bonds since uprising
CAIRO, July 18 | Mon Jul 18, 2011 8:15am EDT
(Reuters) - Egypt's finance ministry will sell 3 billion Egyptian pounds ($503.8 million) in two-year bondsnext week, the first domestic bonds it has offered since Egypt's political uprising erupted on Jan. 25.
Egypt has relied on treasury bills with a maximum maturity of one year for its borrowing needs since the uprising.
The government needs to sell 50-55 billion pounds in securities each month to roll over existing debt as well as meet its 120 billion pound funding target from the domestic debt market, according to a Reuters estimate.
Bankers say there is some appetite in the market for longer-terms securities as banks seek to match assets with liabilities.
The bonds will be sold at an auction on July 25 for settlement the next day, the central bank said on Monday . They will mature on July 26, 2013.
The bank sold about 48 billion pounds of treasury bills in May, 40 billion pounds in June and 25.5 billion pounds so far in July. (Reporting by Mohamed Samir) ($1 = 5.9546 Egyptian pounds) To view related displays double click on the following codes: Rates of deposits auctions <EGYTA) Egypt T-bill auction results from to CBE certificates&CBE deposits sale Bonds auctions results TO Deposit & Lending rates Central Bank of Egypt Development bonds <0#EGDEV=CA> Housing bonds <0#EGHOUS=CA> Treasury bonds <0#EGTSY=CA> Corporate bonds <0#EGCORP=CA> RELATED NEWS AND OTHER TOPICS Egypt news - Egypt diary - Press review - Emergingmarkets news - Egypt money and debt news - All Rtrs debt news - Index of summaries - SPEED GUIDES ($1=5.487 Egyptian Pound)
full story
(Reuters) - Egypt's finance ministry will sell 3 billion Egyptian pounds ($503.8 million) in two-year bondsnext week, the first domestic bonds it has offered since Egypt's political uprising erupted on Jan. 25.
Egypt has relied on treasury bills with a maximum maturity of one year for its borrowing needs since the uprising.
The government needs to sell 50-55 billion pounds in securities each month to roll over existing debt as well as meet its 120 billion pound funding target from the domestic debt market, according to a Reuters estimate.
Bankers say there is some appetite in the market for longer-terms securities as banks seek to match assets with liabilities.
The bonds will be sold at an auction on July 25 for settlement the next day, the central bank said on Monday . They will mature on July 26, 2013.
The bank sold about 48 billion pounds of treasury bills in May, 40 billion pounds in June and 25.5 billion pounds so far in July. (Reporting by Mohamed Samir) ($1 = 5.9546 Egyptian pounds) To view related displays double click on the following codes: Rates of deposits auctions <EGYTA) Egypt T-bill auction results from to CBE certificates&CBE deposits sale Bonds auctions results TO Deposit & Lending rates Central Bank of Egypt Development bonds <0#EGDEV=CA> Housing bonds <0#EGHOUS=CA> Treasury bonds <0#EGTSY=CA> Corporate bonds <0#EGCORP=CA> RELATED NEWS AND OTHER TOPICS Egypt news - Egypt diary - Press review - Emergingmarkets news - Egypt money and debt news - All Rtrs debt news - Index of summaries - SPEED GUIDES ($1=5.487 Egyptian Pound)
full story
FOREX-Euro flat vs dollar; stress test does little to sway
Fri Jul 15, 2011 2:11pm EDT
* European bank stress tests show 8 failures out of 90
* U.S. consumer sentiment worsens in July
* Swiss franc seen good hedge vs euro, dollar (Updates prices, adds quotes and graphics, changes byline)
By Julie Haviv
NEW YORK, July 15 (Reuters) - The euro traded unchanged against the dollar on Friday as investors shrugged off European bank stress-test results and remained focused on contagion risks of peripheral debt.
Europe's banks grabbed the spotlight in the afternoon when the European Banking Authority released its widely anticipated stress-test results, showing eight banks failed a test of their ability to withstand a prolonged recession. For story [ID:nL6E7IF19G] [ID:nBANKTESTS]
The stress test made on 90 lenders came in slightly below expectations that around 10 to 15 lenders would fail.
"To be honest, I am pretty skeptical of the results and find it hard to believe that only 8 failed," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"Furthermore, the assumptions used are not as realistic as they could have been, and they did not discount for haircuts on Greece or other sovereign debt."
In early afternoon New York trading, the euro EUR= was nearly unchanged at $1.4146, still above a four-month low of $1.38376 EUR=EBS hit this week when fears of contagion risks fears were running high.
The more investors fear that heavily indebted euro-zone governments will be unable to repay their debts, the more the yields on their bonds rise, dragging down their value in banks' balance sheets, erasing their capital, and increasing the need for yet more bank bailouts by stronger euro-zone governments. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Euro zone debt crisis: r.reuters.com/hyb65p
TAKE A LOOK: European bank stress tests
[ID:nL6E7IE0W0] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
An unexpected contraction in a New York state manufacturing index in July and a drop in U.S. consumer sentiment had earlier boosted the safe-haven greenback. For a wrap-up of U.S. economic data, see [ID:nN1E76E0B9].
The ICE dollar index .DXY was last down 0.1 percent at 75.147. The core reading of the U.S. Consumer Price Index for June was up 0.3 percent, higher than forecast, but that did not hurt the dollar. The data suggested another round of Federal Reserve quantitative easing was not imminent.
The impasse on the U.S. debt ceiling talks should remain a headwind for the U.S. dollar. Standard & Poor's earlier said there was a one-in-two chance it could cut the United States' credit ratings if no deal was reached on raising the government's debt ceiling. [ID:nL3E7IF03A]
The euro's outlook was also shaky on worries about whether Europe could find a solution to the debt crisis in Greece and prevent contagion to larger countries such as Italy, highlighted by the rising cost of insuring peripheral euro- zone debt against default. [GVD/EUR]
With prospects for both the euro and dollar muddied by major concerns about debt in the euro zone and the United States, some analysts recommended buying the safe-haven Swiss franc as a hedge against risks to both the euro and the dollar.
Implied volatility in euro/Swiss one-month implied vols EURCHF1MO= rose higher than Aussie/dollar one-month implied vols AUD1MO= for the first time, which analysts said reflected a continued search for safer alternatives as the euro zone's debt crisis rages.
Shaun Osborne, chief currency strategist at TD Securities in Toronto, favored buying the Swedish krona against the euro. The euro was nearly unchanged at 9.1948 krona EURSEK=.
"The outlook for higher rates, large current account surpluses, firm growth and local tolerance for (krona) appreciation suggest that its recent slump versus the euro should start to reverse." (Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Jan Paschal)
full story
* European bank stress tests show 8 failures out of 90
* U.S. consumer sentiment worsens in July
* Swiss franc seen good hedge vs euro, dollar (Updates prices, adds quotes and graphics, changes byline)
By Julie Haviv
NEW YORK, July 15 (Reuters) - The euro traded unchanged against the dollar on Friday as investors shrugged off European bank stress-test results and remained focused on contagion risks of peripheral debt.
Europe's banks grabbed the spotlight in the afternoon when the European Banking Authority released its widely anticipated stress-test results, showing eight banks failed a test of their ability to withstand a prolonged recession. For story [ID:nL6E7IF19G] [ID:nBANKTESTS]
The stress test made on 90 lenders came in slightly below expectations that around 10 to 15 lenders would fail.
"To be honest, I am pretty skeptical of the results and find it hard to believe that only 8 failed," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"Furthermore, the assumptions used are not as realistic as they could have been, and they did not discount for haircuts on Greece or other sovereign debt."
In early afternoon New York trading, the euro EUR= was nearly unchanged at $1.4146, still above a four-month low of $1.38376 EUR=EBS hit this week when fears of contagion risks fears were running high.
The more investors fear that heavily indebted euro-zone governments will be unable to repay their debts, the more the yields on their bonds rise, dragging down their value in banks' balance sheets, erasing their capital, and increasing the need for yet more bank bailouts by stronger euro-zone governments. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Euro zone debt crisis: r.reuters.com/hyb65p
TAKE A LOOK: European bank stress tests
[ID:nL6E7IE0W0] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
An unexpected contraction in a New York state manufacturing index in July and a drop in U.S. consumer sentiment had earlier boosted the safe-haven greenback. For a wrap-up of U.S. economic data, see [ID:nN1E76E0B9].
The ICE dollar index .DXY was last down 0.1 percent at 75.147. The core reading of the U.S. Consumer Price Index for June was up 0.3 percent, higher than forecast, but that did not hurt the dollar. The data suggested another round of Federal Reserve quantitative easing was not imminent.
The impasse on the U.S. debt ceiling talks should remain a headwind for the U.S. dollar. Standard & Poor's earlier said there was a one-in-two chance it could cut the United States' credit ratings if no deal was reached on raising the government's debt ceiling. [ID:nL3E7IF03A]
The euro's outlook was also shaky on worries about whether Europe could find a solution to the debt crisis in Greece and prevent contagion to larger countries such as Italy, highlighted by the rising cost of insuring peripheral euro- zone debt against default. [GVD/EUR]
With prospects for both the euro and dollar muddied by major concerns about debt in the euro zone and the United States, some analysts recommended buying the safe-haven Swiss franc as a hedge against risks to both the euro and the dollar.
Implied volatility in euro/Swiss one-month implied vols EURCHF1MO= rose higher than Aussie/dollar one-month implied vols AUD1MO= for the first time, which analysts said reflected a continued search for safer alternatives as the euro zone's debt crisis rages.
Shaun Osborne, chief currency strategist at TD Securities in Toronto, favored buying the Swedish krona against the euro. The euro was nearly unchanged at 9.1948 krona EURSEK=.
"The outlook for higher rates, large current account surpluses, firm growth and local tolerance for (krona) appreciation suggest that its recent slump versus the euro should start to reverse." (Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Jan Paschal)
full story
Brent crude pares loss, US turns higher after data
NEW YORK, July 14 | Thu Jul 14, 2011 8:46am EDT
(Reuters) - Brent crude futures initially pared losses and U.S. crude turned higher in choppy trading after data showed initial jobless claims fell more than expected last week in the United States.
Separate reports showed U.S. June retail sales rose 0.1 percent, against an expectation sales would be down that much, while producer prices fell more than expected in June.
ICE Brent August crude LCOQ1, expiring on Thursday, fell 49 cents to $118.29 a barrel by 8:42 a.m. EDT (1242 GMT), trading from $117.73 to $118.96.
On the New York Mercantile Exchange, August crude CLQ1 rose 22 cents to $98.27 a barrel, trading from $97.54 to $98.57. (Reporting by Robert Gibbons; Editing by John Picinich)
full story
(Reuters) - Brent crude futures initially pared losses and U.S. crude turned higher in choppy trading after data showed initial jobless claims fell more than expected last week in the United States.
Separate reports showed U.S. June retail sales rose 0.1 percent, against an expectation sales would be down that much, while producer prices fell more than expected in June.
ICE Brent August crude LCOQ1, expiring on Thursday, fell 49 cents to $118.29 a barrel by 8:42 a.m. EDT (1242 GMT), trading from $117.73 to $118.96.
On the New York Mercantile Exchange, August crude CLQ1 rose 22 cents to $98.27 a barrel, trading from $97.54 to $98.57. (Reporting by Robert Gibbons; Editing by John Picinich)
full story
TABLE-Foreign trading in South Korean stocks
SEOUL, July 13 | Wed Jul 13, 2011 3:33am EDT
(Reuters) - Daily net trading in shares on South Korea's main stock exchange by three major categories of investor as of 0720 GMT, in billions of South Korean won. A negative figure indicates net selling.
FOREIGNERS INSTITUTIONS RETAIL July 13 -191.7 -46.2 340.4 July 12 -385.5 -33.1 472.1 July 11 109.5 -258.3 120.1 July 8 1,720.0 -1,553.8 2.1 July 7 538.0 130.4 -626.5 July 6 170.2 -69.0 -77.6 July 5 374.9 215.1 -572.2 July 4 160.9 120.9 -373.5 July 1 166.1 369.4 -579.3 June 30 183.0 148.4 -330.4 June 29 421.5 90.4 -549.7 June 28 -34.5 16.6 -216.9 June 27 -102.8 217.8 397.3 June 24 52.8 513.3 -638.4 June 23 -132.4 65.7 157.0 Month to date 2,662.3 -1,124.5 -1,294.4 Year to date 545.2 -1,429.9 2,303.5 Source: The Korea Exchange
(Compiled by Joonhee Yu)
full story
(Reuters) - Daily net trading in shares on South Korea's main stock exchange by three major categories of investor as of 0720 GMT, in billions of South Korean won. A negative figure indicates net selling.
FOREIGNERS INSTITUTIONS RETAIL July 13 -191.7 -46.2 340.4 July 12 -385.5 -33.1 472.1 July 11 109.5 -258.3 120.1 July 8 1,720.0 -1,553.8 2.1 July 7 538.0 130.4 -626.5 July 6 170.2 -69.0 -77.6 July 5 374.9 215.1 -572.2 July 4 160.9 120.9 -373.5 July 1 166.1 369.4 -579.3 June 30 183.0 148.4 -330.4 June 29 421.5 90.4 -549.7 June 28 -34.5 16.6 -216.9 June 27 -102.8 217.8 397.3 June 24 52.8 513.3 -638.4 June 23 -132.4 65.7 157.0 Month to date 2,662.3 -1,124.5 -1,294.4 Year to date 545.2 -1,429.9 2,303.5 Source: The Korea Exchange
(Compiled by Joonhee Yu)
full story
Italy borrowing costs surge as euro crisis spreads
MILAN | Tue Jul 12, 2011 8:15am EDT
(Reuters) - The main measure of Italy's borrowing costs broke above 6 percent for the first time in 14 years before easing back on Tuesday as the euro zone's third largest economy was sucked into the bloc's debt crisis.
Italian 10-year yields at one stage soared more than 30 basis points on the day to leap above 6 percent -- the highest since 1997 -- getting closer to the 7 percent level most market players see as being unsustainable for Italy's borrowing costs given its huge debt pile.
The cost of insuring Italian debt against default also rose as prolonged efforts to agree a second bailout for Greece, where the crisis began, eroded investor confidence in policymakers' ability to hold the bloc together.
Analysts say confusion over the Italian government's deficit-cutting and fears it may be watered down by parliament are adding to investors' concerns and making the country an easy target for those looking to hedge against the sustainability of the euro.
"Basically we believe Italy is being used as a liquid proxy on a euro-break up view," Credit Suisse First Boston analysts said in a research note.
The 10-year bond yield fell back again to 5.79 percent after the Treasury managed to sell 6.75 billion euros ($9.6 billion) of 12-month bills, although risk-averse investors demanded a high price to pick up the paper.
At 3.67 percent, the auction's gross yield was the highest since September 2008, when benchmark interest rates were much higher than they are now.
"Italy is by far the country with the greatest sensitivity to rising debt servicing costs and particularly in terms of rolling over debt. This is not a situation it can afford to have going on for any sustained period of time," said Marc Ostwald, strategist at Monument Securities in London.
Italy has one of the world's highest levels of public debt. At around 120 percent of gross domestic product, it is second only to Greece in the euro zone. A total of 176 billion euros ($250 billion) in Italian government paper will come due by the end of the year.
Still, markets breathed a sigh of relief that Rome was able to place the full amount of short term bills on Tuesday. A more challenging test of Italy's ability to fund itself will be on Thursday when it offers between 3 billion euros and 5 billion euros of long-term BTP bonds.
UniCredit (CRDI.MI) and other Italian banking shares, which have born the brunt of a three-day market sell-off because of their vast government debt holdings, pared early losses in very volatile trading, briefly dragging the blue-chip index into positive territory.
"The positive outcome of the auction has given some relief to markets and spreads are narrowing," a Milan-based trader said.
UniCredit -- which has fallen 26 percent over the past six sessions -- was up 1.7 percent at 1059 GMT after earlier being suspended for excessive losses.
Traders also cited talk that the European Central Bank was buying Italian and Spanish paper to stem the losses although bond traders who usually see those transactions said they had not spotted such trades.
Another factor supporting the market, which has been waiting for some reaction by Italian government officials to the slide in bond and stock prices, was news that Economy Minister Giulio Tremonti was rushing back to Rome to wrap up a 40 billion euro austerity budget.
Despite its high debt and anemic economic growth, Italy had long seemed exempt from the turmoil sweeping euro zone peers like Greece, Ireland and Portugal.
But with problems mounting for Athens, markets have started to question the longstanding assumption that Italy's relatively modest budget deficit, its conservative banking system and its high level of private savings would keep it out of trouble.
"There's a confidence problem. What is happening is a collateral effect of the Greek crisis, but there's also a problem of confidence toward the Italian government," said Armand de Coussergues, fund manager at investment management firm Financiere de l'Echiquier in Paris.
"For the current confidence crisis to ease, you would need two things: first, that the Greek crisis gets resolved, that will have an immediate effect on Italian spreads. But we also need more confidence vis-a- vis the Italian executive."
(Additional reporting by Michel Rose, Ian Simpson, Valentina Za in Milan; Emelia Sithole and government bond team in London; Editing by Ruth Pitchford)
full story
(Reuters) - The main measure of Italy's borrowing costs broke above 6 percent for the first time in 14 years before easing back on Tuesday as the euro zone's third largest economy was sucked into the bloc's debt crisis.
Italian 10-year yields at one stage soared more than 30 basis points on the day to leap above 6 percent -- the highest since 1997 -- getting closer to the 7 percent level most market players see as being unsustainable for Italy's borrowing costs given its huge debt pile.
The cost of insuring Italian debt against default also rose as prolonged efforts to agree a second bailout for Greece, where the crisis began, eroded investor confidence in policymakers' ability to hold the bloc together.
Analysts say confusion over the Italian government's deficit-cutting and fears it may be watered down by parliament are adding to investors' concerns and making the country an easy target for those looking to hedge against the sustainability of the euro.
"Basically we believe Italy is being used as a liquid proxy on a euro-break up view," Credit Suisse First Boston analysts said in a research note.
The 10-year bond yield fell back again to 5.79 percent after the Treasury managed to sell 6.75 billion euros ($9.6 billion) of 12-month bills, although risk-averse investors demanded a high price to pick up the paper.
At 3.67 percent, the auction's gross yield was the highest since September 2008, when benchmark interest rates were much higher than they are now.
"Italy is by far the country with the greatest sensitivity to rising debt servicing costs and particularly in terms of rolling over debt. This is not a situation it can afford to have going on for any sustained period of time," said Marc Ostwald, strategist at Monument Securities in London.
Italy has one of the world's highest levels of public debt. At around 120 percent of gross domestic product, it is second only to Greece in the euro zone. A total of 176 billion euros ($250 billion) in Italian government paper will come due by the end of the year.
Still, markets breathed a sigh of relief that Rome was able to place the full amount of short term bills on Tuesday. A more challenging test of Italy's ability to fund itself will be on Thursday when it offers between 3 billion euros and 5 billion euros of long-term BTP bonds.
UniCredit (CRDI.MI) and other Italian banking shares, which have born the brunt of a three-day market sell-off because of their vast government debt holdings, pared early losses in very volatile trading, briefly dragging the blue-chip index into positive territory.
"The positive outcome of the auction has given some relief to markets and spreads are narrowing," a Milan-based trader said.
UniCredit -- which has fallen 26 percent over the past six sessions -- was up 1.7 percent at 1059 GMT after earlier being suspended for excessive losses.
Traders also cited talk that the European Central Bank was buying Italian and Spanish paper to stem the losses although bond traders who usually see those transactions said they had not spotted such trades.
Another factor supporting the market, which has been waiting for some reaction by Italian government officials to the slide in bond and stock prices, was news that Economy Minister Giulio Tremonti was rushing back to Rome to wrap up a 40 billion euro austerity budget.
Despite its high debt and anemic economic growth, Italy had long seemed exempt from the turmoil sweeping euro zone peers like Greece, Ireland and Portugal.
But with problems mounting for Athens, markets have started to question the longstanding assumption that Italy's relatively modest budget deficit, its conservative banking system and its high level of private savings would keep it out of trouble.
"There's a confidence problem. What is happening is a collateral effect of the Greek crisis, but there's also a problem of confidence toward the Italian government," said Armand de Coussergues, fund manager at investment management firm Financiere de l'Echiquier in Paris.
"For the current confidence crisis to ease, you would need two things: first, that the Greek crisis gets resolved, that will have an immediate effect on Italian spreads. But we also need more confidence vis-a- vis the Italian executive."
(Additional reporting by Michel Rose, Ian Simpson, Valentina Za in Milan; Emelia Sithole and government bond team in London; Editing by Ruth Pitchford)
full story
Crude oil slides, dented by euro zone fears
By Simon Falush
LONDON | Tue Jul 12, 2011 7:29am EDT
(Reuters) - Oil fell sharply on Tuesday on fears that politicians will be powerless to stop the debt crisis in Europe from spreading to Italy and Spain, reinforcing fears about the outlook for the global economy.
Ministers from the 17 countries that share the euro vowed on Monday to safeguard stability and promised new measures shortly, but set no deadline after another day of turmoil across financial markets.
Brent crude fell $1.95 to $115.29 a barrel by 1105 GMT, while U.S. crude for August slid $1.10 to $94.05. Both contracts fell more than $1 on Monday as well. U.S. crude was heading for its lowest close in two weeks.
"The euro has come off against the dollar and (the European debt worries) seem to be pushing down all risky assets, and that's influenced prices of oil," said Harry Tchilingurian, head of commodity market strategy at BNP Paribas.
The euro slumped to an all-time low against the Swiss franc and fell to a four-month trough against the dollar. The dollar's strength makes oil priced in other currencies relatively expensive.
Disappointing U.S. employment data and falling crude imports in Chinaalso soured the mood in the oil market over the past two trading sessions.
This has dented Brent's rally from about $102, a low reached after the June 23 announcement by the International Energy Agency (IEA) of a coordinated emergency stockpile release.
But Brent is still above its level before the IEA said it would release 60 million barrels from emergency reserves of oil.
The IEA on Monday said the amount of oil made available from emergencystocks would be slightly less than earlier stated after sales by member countries met with mixed demand.
There is technical support near current levels for Brent that should protect to some extent against further weakness, said Rob Montefusco, a trader at Sucden Financial.
"There's a mini head-and-shoulders formation under $115, so we could see a slight dip, but there is a big band of support around $114, the $114.05 34 day moving average should support," Montefusco said.
IEA LIMITATIONS
Even after today's slip, Brent crude's strength shows the limitations of the IEA's power to affect supply, analysts said.
"The recent Brent strength suggests that the IEA release has so far been an unsuccessful attempt to alleviate the ongoing pressures in the oil market," Bank of America Merrill Lynch said in a note.
"This is mostly because the IEA release in Europe has consisted of petroleum products, particularly distillates, not crude oil," the note said, adding that crude stocks were already held by the industry in most cases.
Oil available under the plan will amount to 59.
Output from the world's largest oil exporter, Saudi Arabia, hit a high for the year so far of around 9.5-9.6 million barrels per day (bpd) in June, up nearly 800,000 bpd from May, industry sources said on Monday.
U.S. crude oil inventories probably fell by 2 million barrels in their sixth straight weekly drop, a Reuters poll showed before an industry report later on Tuesday and government figures due Wednesday.
Gasoline stockpiles were projected to have risen by 400,000 barrels, while distillate stockpile including heating oil and diesel were expected to have risen by 600,000 barrels.
Crude imports by China will recover in July from a downward blip as refiners crank up production to meet rising demand after a heavy maintenance program led to the first decline in six months in June.
But demand growth at the world's second-largest oil consumer is expected to slow this year from last as higher interest rates pare consumption.
(Additional reporting by Alejandro Barbajosa in Singapore, editing by Jane Baird)
full story
LONDON | Tue Jul 12, 2011 7:29am EDT
(Reuters) - Oil fell sharply on Tuesday on fears that politicians will be powerless to stop the debt crisis in Europe from spreading to Italy and Spain, reinforcing fears about the outlook for the global economy.
Ministers from the 17 countries that share the euro vowed on Monday to safeguard stability and promised new measures shortly, but set no deadline after another day of turmoil across financial markets.
Brent crude fell $1.95 to $115.29 a barrel by 1105 GMT, while U.S. crude for August slid $1.10 to $94.05. Both contracts fell more than $1 on Monday as well. U.S. crude was heading for its lowest close in two weeks.
"The euro has come off against the dollar and (the European debt worries) seem to be pushing down all risky assets, and that's influenced prices of oil," said Harry Tchilingurian, head of commodity market strategy at BNP Paribas.
The euro slumped to an all-time low against the Swiss franc and fell to a four-month trough against the dollar. The dollar's strength makes oil priced in other currencies relatively expensive.
Disappointing U.S. employment data and falling crude imports in Chinaalso soured the mood in the oil market over the past two trading sessions.
This has dented Brent's rally from about $102, a low reached after the June 23 announcement by the International Energy Agency (IEA) of a coordinated emergency stockpile release.
But Brent is still above its level before the IEA said it would release 60 million barrels from emergency reserves of oil.
The IEA on Monday said the amount of oil made available from emergencystocks would be slightly less than earlier stated after sales by member countries met with mixed demand.
There is technical support near current levels for Brent that should protect to some extent against further weakness, said Rob Montefusco, a trader at Sucden Financial.
"There's a mini head-and-shoulders formation under $115, so we could see a slight dip, but there is a big band of support around $114, the $114.05 34 day moving average should support," Montefusco said.
IEA LIMITATIONS
Even after today's slip, Brent crude's strength shows the limitations of the IEA's power to affect supply, analysts said.
"The recent Brent strength suggests that the IEA release has so far been an unsuccessful attempt to alleviate the ongoing pressures in the oil market," Bank of America Merrill Lynch said in a note.
"This is mostly because the IEA release in Europe has consisted of petroleum products, particularly distillates, not crude oil," the note said, adding that crude stocks were already held by the industry in most cases.
Oil available under the plan will amount to 59.
Output from the world's largest oil exporter, Saudi Arabia, hit a high for the year so far of around 9.5-9.6 million barrels per day (bpd) in June, up nearly 800,000 bpd from May, industry sources said on Monday.
U.S. crude oil inventories probably fell by 2 million barrels in their sixth straight weekly drop, a Reuters poll showed before an industry report later on Tuesday and government figures due Wednesday.
Gasoline stockpiles were projected to have risen by 400,000 barrels, while distillate stockpile including heating oil and diesel were expected to have risen by 600,000 barrels.
Crude imports by China will recover in July from a downward blip as refiners crank up production to meet rising demand after a heavy maintenance program led to the first decline in six months in June.
But demand growth at the world's second-largest oil consumer is expected to slow this year from last as higher interest rates pare consumption.
(Additional reporting by Alejandro Barbajosa in Singapore, editing by Jane Baird)
full story
Nikkei hurt by US data but 10,000 line holds before earnings
Mon Jul 11, 2011 3:13am EDT
* Investors eye Japanese, U.S. earnings this week
* Retail sector in focus, especially Fast Retailing
* Banks weaken on euro-zone debt crisis worry
* Volume one of the lowest in 2011 amid economic jitters
* Elpida tumbles on share issuance news
By Antoni Slodkowski
TOKYO, July 11 (Reuters) - The Nikkei average fell on profit-taking on Monday after three weeks of gains, hurt by weak U.S. and Chinese economic data, but it held the 10,000 line as investors avoided building large positions with the U.S. corporate earnings season starting.
Shares of laggard financials led decliners ahead of an emergency meeting of top officials dealing with euro-zone debt, reflecting concern that the crisis could spread to Italy, with banks tracking losses made by their Italian and Wall Street peers on Friday.
The market avoided any broad sell-off in the Nikkei, though it is still down 3.5 percent since the March 11 earthquake, with some investors saying inflation in China may have passed its peak and others awaiting the start if U.S. corporate earnings reports this week.
"Many people still expect fairly strong U.S. earnings despite poor jobs data as U.S. firms restructure and boost growth without taking on new employees," said Yuuki Sakurai, CEO and president of Fukoku Capital Management in Tokyo.
"So even if the economy improves, I don't think we can expect American companies to start employing more people," said Sakurai.
The benchmark Nikkei closed down 0.7 percent at 10,069.53, while the broader Topix shed 0.5 percent to 870.16, outperforming Asia-Pacific shares outside Japan , which fell more than 1 percent.
With traders pondering their next move, volume faltered to one of the lowest levels this year with 1.51 billion shares changing hands on the first section, below the last week's average of 1.83 billion.
Losses on the Nikkei were limited as investors covered short positions in utilities, pushing the electric and gas subindex up 1 percent after the government said Japan's idled nuclear reactors could resume operations if they pass the first stage of two-step post-Fukushima safety checks.
GETTING ATTENTION
"While there are still uncertainties for the global economy's recovery speed, stocks such as retailers that reflect domestic demand are gaining attention," said Hiroyuki Fukunaga, chief executive of Investrust.
Fast Retailing , which operates the Uniqlo casual-clothing chain and is expected to benefit from demand for light summer clothing as the nation strives to cut down on power use during the summer heat, added 2 percent to 13,550 yen.
The firm, which reports its March-May earnings on Thursday, has outperformed the Nikkei since the earthquake, gaining 7.4 percent while the index has shed 3.5 percent.
Rival Ryohin Keikaku , the operator of Muji stores, jumped 6.9 percent to 4,185 yen after hiking its earnings outlook for the current business year citing a quicker-than-expected recovery in sales after the March disaster.
Thomson Reuters Starmine showed the stock is trading at a 26 percent discount to its peers, with its price-to-book ratio at 1.2, below its 10-year historical median of 2.0 and the average PBR for its peers is 1.9.
Investrust's Fukunaga said retail sales are being helped by a campaign dubbed "Super Cool Biz" encouraging male office workers to shed jackets and ties to cut use of air-conditioning.
The U.S. earnings season starts with aluminium producer Alcoa Inc reporting on Monday. S&P 500 components' earnings expected to have increased an average of 7.3 percent in the second quarter from a year earlier, down from first-quarter growth of 18.9 percent, Thomson Reuters data showed.
But the number could jump if most companies beat analysts' forecasts. Early estimates for first-quarter profit growth were at about 13 percent.
Mitsubishi UFJ Financial Group , Japan's largest bank by assets, fell 1.5 percent to 409 yen, while Sumitomo Mitsui Financial Group shed 1.9 percent to 2,520 yen. They were among the most actively traded stocks on the main board.
Japanese banks still trade at valuations near or below historic lows, but nevertheless remain one of the most severely underperforming sectors since the March 11 events, down 10 percent compared with pre-quake levels.
Elpida Memory , the world's No.3 maker of DRAM memory, tumbled 13.3 percent to 787 yen after three sources close to the matter told Reuters the company plans to raise 80 billion yen ($992 million) by issuing new shares and convertible bonds.
U.S. non-farm payrolls rose by only 18,000 jobs in June, well below expectations and at odds with encouraging labour market numbers earlier in the week.
On Saturday, data showed annual inflation in China accelerated to a three-year high in June with the consumer price index up 6.4 percent from a year earlier, slightly above analysts' expectations. ($1 = 80.640 Japanese Yen) (Additional reporting by Ayai Tomisawa; Editing by Michael Watson)
full story
* Investors eye Japanese, U.S. earnings this week
* Retail sector in focus, especially Fast Retailing
* Banks weaken on euro-zone debt crisis worry
* Volume one of the lowest in 2011 amid economic jitters
* Elpida tumbles on share issuance news
By Antoni Slodkowski
TOKYO, July 11 (Reuters) - The Nikkei average fell on profit-taking on Monday after three weeks of gains, hurt by weak U.S. and Chinese economic data, but it held the 10,000 line as investors avoided building large positions with the U.S. corporate earnings season starting.
Shares of laggard financials led decliners ahead of an emergency meeting of top officials dealing with euro-zone debt, reflecting concern that the crisis could spread to Italy, with banks tracking losses made by their Italian and Wall Street peers on Friday.
The market avoided any broad sell-off in the Nikkei, though it is still down 3.5 percent since the March 11 earthquake, with some investors saying inflation in China may have passed its peak and others awaiting the start if U.S. corporate earnings reports this week.
"Many people still expect fairly strong U.S. earnings despite poor jobs data as U.S. firms restructure and boost growth without taking on new employees," said Yuuki Sakurai, CEO and president of Fukoku Capital Management in Tokyo.
"So even if the economy improves, I don't think we can expect American companies to start employing more people," said Sakurai.
The benchmark Nikkei closed down 0.7 percent at 10,069.53, while the broader Topix shed 0.5 percent to 870.16, outperforming Asia-Pacific shares outside Japan , which fell more than 1 percent.
With traders pondering their next move, volume faltered to one of the lowest levels this year with 1.51 billion shares changing hands on the first section, below the last week's average of 1.83 billion.
Losses on the Nikkei were limited as investors covered short positions in utilities, pushing the electric and gas subindex up 1 percent after the government said Japan's idled nuclear reactors could resume operations if they pass the first stage of two-step post-Fukushima safety checks.
GETTING ATTENTION
"While there are still uncertainties for the global economy's recovery speed, stocks such as retailers that reflect domestic demand are gaining attention," said Hiroyuki Fukunaga, chief executive of Investrust.
Fast Retailing , which operates the Uniqlo casual-clothing chain and is expected to benefit from demand for light summer clothing as the nation strives to cut down on power use during the summer heat, added 2 percent to 13,550 yen.
The firm, which reports its March-May earnings on Thursday, has outperformed the Nikkei since the earthquake, gaining 7.4 percent while the index has shed 3.5 percent.
Rival Ryohin Keikaku , the operator of Muji stores, jumped 6.9 percent to 4,185 yen after hiking its earnings outlook for the current business year citing a quicker-than-expected recovery in sales after the March disaster.
Thomson Reuters Starmine showed the stock is trading at a 26 percent discount to its peers, with its price-to-book ratio at 1.2, below its 10-year historical median of 2.0 and the average PBR for its peers is 1.9.
Investrust's Fukunaga said retail sales are being helped by a campaign dubbed "Super Cool Biz" encouraging male office workers to shed jackets and ties to cut use of air-conditioning.
The U.S. earnings season starts with aluminium producer Alcoa Inc reporting on Monday. S&P 500 components' earnings expected to have increased an average of 7.3 percent in the second quarter from a year earlier, down from first-quarter growth of 18.9 percent, Thomson Reuters data showed.
But the number could jump if most companies beat analysts' forecasts. Early estimates for first-quarter profit growth were at about 13 percent.
Mitsubishi UFJ Financial Group , Japan's largest bank by assets, fell 1.5 percent to 409 yen, while Sumitomo Mitsui Financial Group shed 1.9 percent to 2,520 yen. They were among the most actively traded stocks on the main board.
Japanese banks still trade at valuations near or below historic lows, but nevertheless remain one of the most severely underperforming sectors since the March 11 events, down 10 percent compared with pre-quake levels.
Elpida Memory , the world's No.3 maker of DRAM memory, tumbled 13.3 percent to 787 yen after three sources close to the matter told Reuters the company plans to raise 80 billion yen ($992 million) by issuing new shares and convertible bonds.
U.S. non-farm payrolls rose by only 18,000 jobs in June, well below expectations and at odds with encouraging labour market numbers earlier in the week.
On Saturday, data showed annual inflation in China accelerated to a three-year high in June with the consumer price index up 6.4 percent from a year earlier, slightly above analysts' expectations. ($1 = 80.640 Japanese Yen) (Additional reporting by Ayai Tomisawa; Editing by Michael Watson)
full story
Obama, lawmakers aim for "big" things in debt talks
By Andy Sullivan
WASHINGTON | Thu Jul 7, 2011 9:01am EDT
(Reuters) - After weeks of impasse, President Barack Obama and top congressional leaders are aiming for "something big" as they resume budget talks on Thursday to avert an imminent default.
With Republicans showing new flexibility on taxes, Democrats say Obama will push negotiators to double their target to $4 trillion in budget savings over 10 years.
That would be an ambitious goal, but there have been a few hints of progress since talks hit a brick wall two weeks ago.
Obama and House of Representatives Speaker John Boehner, the top Republican in Washington, have discussed broadening the deal to tackle politically sensitive reforms to the tax code and popular benefits like Social Security, Medicare and Medicaid, a Republican aide said.
The meeting, which takes place at the White House, is due to start at 11 a.m. EDT (1500 GMT) and last about an hour.
Negotiators are trying to craft a deal that would allow lawmakers to say they are taking steps to keep the national debt under control even as they sign off on further borrowing.
Failure to raise the $14.3 trillion debt ceiling by August 2 could force the country to default on debt service and other obligations, a move that could push the country back into recession and send shock waves through financial markets across the globe.
A small team of Treasury officials are discussing options to stave off default if Congress fails to raise the debt limit by the August 2 deadline, sources familiar with the matter told Reuters.
Senior officials, including Treasury Secretary Timothy Geithner, have repeatedly said there are no contingency plans if lawmakers do not give the government the authority to borrow more money.
But the sources said the Treasury was looking at a number of options, including whether the administration can delay payments to try and manage cash flows after August 2.
"SOMETHING BIG"
By the end of last week, lawmakers were weighing a scaled-back deal that would cover the country's borrowing needs in the short term but force Congress to confront the issue again in a few months, when the 2012 election season will make politically painful decisions even more difficult.
Obama dismissed that idea on Tuesday, two days after he met secretly with Boehner.
"We've got a unique opportunity to do something big," he said at a news conference, where he invited top congressional leaders to Thursday's White House meeting.
Obama's goal of $4 trillion in savings matches the figure that budget experts say is needed to keep the debt at a sustainable level.
That would probably require further cuts to popular benefit programs that Democrats have resisted, as well as new tax revenue that Republicans have ruled out.
The two sides have discussed adjusting a measure of inflation to restrain the growth of Social Security benefits and tax breaks, an approach that could save roughly $300 billion over 10 years.
In earlier sessions, negotiators identified roughly $2 trillion in spending cuts that could form the basis of a deal. Republicans walked out of those talks after Democrats called for an additional $400 billion in budget savings by ending a range of tax breaks that benefit wealthy people and certain businesses, like the oil and gas industry.
The two Republicans who were involved in those talks indicated that they could accept some "revenue raisers" in a deal.
Senator Jon Kyl, the No. 2 Republican in the Senate, said his side had backed measures that would generate between $150 billion and $200 billion in new revenue generated by selling assets such as broadband spectrum and raising user fees.
His counterpart in the House, Majority Leader Eric Cantor, said Republicans could support ending some of the tax breaks that Democrats have proposed in return for tax cuts elsewhere.
Obama and Boehner have discussed closing some of those tax breaks in return for lowering rates overall, according to a Republican aide.
But Republicans have been adamant that the deal not raise tax rates on wealthy households, as Obama has proposed.
"There are no tax increases on the table," said Boehner spokesman Michael Steel.
Aside from Cantor and Kyl, the meeting will include Boehner, Senate Republican leader Mitch McConnell, Senate Democratic leader Harry Reid and House Democratic leader Nancy Pelosi.
Democrats believe a deal needs to be in place by July 22 in order to ensure that Congress can raise the debt limit by August 2. Thursday's meeting could determine whether that is possible.
(Additional reporting by Richard Cowan, Rachelle Younglai, Tim Reid and Caren Bohan; Editing byEric Beech and Vicki Allen)
full story
WASHINGTON | Thu Jul 7, 2011 9:01am EDT
(Reuters) - After weeks of impasse, President Barack Obama and top congressional leaders are aiming for "something big" as they resume budget talks on Thursday to avert an imminent default.
With Republicans showing new flexibility on taxes, Democrats say Obama will push negotiators to double their target to $4 trillion in budget savings over 10 years.
That would be an ambitious goal, but there have been a few hints of progress since talks hit a brick wall two weeks ago.
Obama and House of Representatives Speaker John Boehner, the top Republican in Washington, have discussed broadening the deal to tackle politically sensitive reforms to the tax code and popular benefits like Social Security, Medicare and Medicaid, a Republican aide said.
The meeting, which takes place at the White House, is due to start at 11 a.m. EDT (1500 GMT) and last about an hour.
Negotiators are trying to craft a deal that would allow lawmakers to say they are taking steps to keep the national debt under control even as they sign off on further borrowing.
Failure to raise the $14.3 trillion debt ceiling by August 2 could force the country to default on debt service and other obligations, a move that could push the country back into recession and send shock waves through financial markets across the globe.
A small team of Treasury officials are discussing options to stave off default if Congress fails to raise the debt limit by the August 2 deadline, sources familiar with the matter told Reuters.
Senior officials, including Treasury Secretary Timothy Geithner, have repeatedly said there are no contingency plans if lawmakers do not give the government the authority to borrow more money.
But the sources said the Treasury was looking at a number of options, including whether the administration can delay payments to try and manage cash flows after August 2.
"SOMETHING BIG"
By the end of last week, lawmakers were weighing a scaled-back deal that would cover the country's borrowing needs in the short term but force Congress to confront the issue again in a few months, when the 2012 election season will make politically painful decisions even more difficult.
Obama dismissed that idea on Tuesday, two days after he met secretly with Boehner.
"We've got a unique opportunity to do something big," he said at a news conference, where he invited top congressional leaders to Thursday's White House meeting.
Obama's goal of $4 trillion in savings matches the figure that budget experts say is needed to keep the debt at a sustainable level.
That would probably require further cuts to popular benefit programs that Democrats have resisted, as well as new tax revenue that Republicans have ruled out.
The two sides have discussed adjusting a measure of inflation to restrain the growth of Social Security benefits and tax breaks, an approach that could save roughly $300 billion over 10 years.
In earlier sessions, negotiators identified roughly $2 trillion in spending cuts that could form the basis of a deal. Republicans walked out of those talks after Democrats called for an additional $400 billion in budget savings by ending a range of tax breaks that benefit wealthy people and certain businesses, like the oil and gas industry.
The two Republicans who were involved in those talks indicated that they could accept some "revenue raisers" in a deal.
Senator Jon Kyl, the No. 2 Republican in the Senate, said his side had backed measures that would generate between $150 billion and $200 billion in new revenue generated by selling assets such as broadband spectrum and raising user fees.
His counterpart in the House, Majority Leader Eric Cantor, said Republicans could support ending some of the tax breaks that Democrats have proposed in return for tax cuts elsewhere.
Obama and Boehner have discussed closing some of those tax breaks in return for lowering rates overall, according to a Republican aide.
But Republicans have been adamant that the deal not raise tax rates on wealthy households, as Obama has proposed.
"There are no tax increases on the table," said Boehner spokesman Michael Steel.
Aside from Cantor and Kyl, the meeting will include Boehner, Senate Republican leader Mitch McConnell, Senate Democratic leader Harry Reid and House Democratic leader Nancy Pelosi.
Democrats believe a deal needs to be in place by July 22 in order to ensure that Congress can raise the debt limit by August 2. Thursday's meeting could determine whether that is possible.
(Additional reporting by Richard Cowan, Rachelle Younglai, Tim Reid and Caren Bohan; Editing byEric Beech and Vicki Allen)
full story
Dollar rises to session highs vs yen, euro on ADP
NEW YORK | Thu Jul 7, 2011 8:28am EDT
(Reuters) - The dollar extended gains versus the yen and euro on Thursday after a report showed the U.S. private sector added far more jobs than expected in June.
The dollar climbed as high as 81.41 yen after the number compared with 81.18 yen earlier. It was last at 81.35 yen, up 0.5 percent on the day.
The euro fell to a session low of $1.4232 and last traded at $1.4243, down 0.5 percent on the day.
(Editing by James Dalgleish)
full story
(Reuters) - The dollar extended gains versus the yen and euro on Thursday after a report showed the U.S. private sector added far more jobs than expected in June.
The dollar climbed as high as 81.41 yen after the number compared with 81.18 yen earlier. It was last at 81.35 yen, up 0.5 percent on the day.
The euro fell to a session low of $1.4232 and last traded at $1.4243, down 0.5 percent on the day.
(Editing by James Dalgleish)
full story
Prosecutors: Request to quit DSK case lacks merit
NEW YORK, July 6 | Wed Jul 6, 2011 8:36pm EDT
(Reuters) - Manhattan prosecutors said on Wednesday that a request they quit the sexual assault case against former IMF chief Dominique Strauss-Kahn and appoint a special prosecutor was "wholly without merit."
Lawyers representing the hotel maid who accused Strauss-Kahn of attempted rape and sexual assault sent a letter to Manhattan District Attorney Cyrus Vance earlier on Wednesday, saying Vance should recuse himself in part because his top aide leaked damaging information about the woman.
"We strongly disagree with how the office and the work of the assistant district attorneys have been characterized. Any suggestion that this office should be recused is wholly without merit," Erin Duggan, chief spokeswoman for the Manhattan District Attorney's office, said in a statement. (Reporting by Noeleen Walder; Editing by Daniel Trotta and Philip Barbara)
full story
(Reuters) - Manhattan prosecutors said on Wednesday that a request they quit the sexual assault case against former IMF chief Dominique Strauss-Kahn and appoint a special prosecutor was "wholly without merit."
Lawyers representing the hotel maid who accused Strauss-Kahn of attempted rape and sexual assault sent a letter to Manhattan District Attorney Cyrus Vance earlier on Wednesday, saying Vance should recuse himself in part because his top aide leaked damaging information about the woman.
"We strongly disagree with how the office and the work of the assistant district attorneys have been characterized. Any suggestion that this office should be recused is wholly without merit," Erin Duggan, chief spokeswoman for the Manhattan District Attorney's office, said in a statement. (Reporting by Noeleen Walder; Editing by Daniel Trotta and Philip Barbara)
full story
GLOBAL MARKETS-World stocks off 5-wk highs; oil rallies
Tue Jul 5, 2011 12:29pm EDT
* China, euro zone data weigh on global stocks
* Oil rallies after Barclays raises price forecasts
* Safe-haven dollar, Swiss franc, Treasuries advance (Updates prices)
By Wanfeng Zhou
NEW YORK, July 5 (Reuters) - World stocks fell from five-week highs on Tuesday, while the euro dropped broadly as concerns about further monetary tightening in China and soft euro-zone economic data made investors cautious.
Oil jumped more than $1 per barrel after Barclays Capital raised its 2012 forecasts for crude oil, outweighing worries over the global economy.
Media reports about a possible rate rise in China and a Moody's report saying the scale of problem loans at local governments in China may be much bigger than previously thought dented demand for risky assets. For more, see [nL3E7I507Y]
In the euro zone, a survey showed growth in the region's dominant service sector slowed for a third straight month in June, by more than an initial estimate, with sluggish new orders dimming the outlook. [nL3E7I5105]
Investors were also cautious about taking on more risk after the recent run-up in equities, with world stocks posting their best weekly gain in a year last week. U.S. stocks had their best week in two years last week.
"The market certainly could be headed for some sort of a pullback. We've had a strong performance over the past week and any slight disappointment would invite some profit-taking," said Peter Cardillo, chief market economist at Avalon Partners in New York.
World stocks as measured by the MSCI world equity index .MIWD00000PUS fell 0.2 percent on the day after earlier hitting their highest since June 1. The index has risen almost 5 percent since January.
U.S. stocks were little changed. At noon (1600 GMT), the Dow Jones industrial average .DJI was up 1.06 points, or 0.01 percent, at 12,583.83. The Standard & Poor's 500 Index .SPX was down 1.46 points, or 0.11 percent, at 1,338.21. The Nasdaq Composite Index .IXIC was up 5.05 points, or 0.18 percent, at 2,821.08.
Volume is expected to remain low in the holiday-shortened week, with all eyes on Friday's U.S. monthly jobs data. Markets were closed on Monday for the U.S. Independence Day holiday.
European stocks .FTEU3 ended slightly higher in thin volume. Emerging market stocks .MSCIEF fell 0.2 percent.
In the oil market, ICE Brent futures for August LCOc1 rose to a high of $113.47 before easing back to around $113.26, up $1.87. U.S. crude CLc1 was up $1.82 at $96.77 per barrel.
Barclays Capital raised its 2012 forecast for Brent by $10, to $115 per barrel, and upgraded its 2012 forecast for U.S. crude by $4, to $110.
"The increase in expectations is due to a forecast further reduction in global spare capacity in 2012, together with a significant intensification of the geopolitical background to the oil market," Barclays Capital said.
SAFE-HAVEN ASSETS IN DEMAND
Concerns about China and the global economy boosted demand for safe-haven assets such as the Swiss franc, gold and U.S. government bonds.
The euro earlier dropped 1 percent to a low of 1.22059 Swiss francs EURCHF=EBS, retreating from a five-week high hit on Monday. It was last down 0.8 percent at 1.2227 francs.
Worries about Greece persisted even as Athens averted an immediate default following the approval by euro zone finance ministers of a 12 billion euro loan.
Greece suffered another setback on Monday after Standard & Poor's warned it would treat a possible rollover of privately held Greek debt as a selective default. [ID:nL6E7I408N]
The country needs a second aid package worth some 110 billion euros, which euro zone financeministers said would be finalized by mid-September.
Against the dollar, the euro fell 0.5 percent to $1.4472 EUR=EBS, after gaining more than 2 percent last week in its best weekly rise since January.
Losses in the euro were limited by expectations the European Central Bank would raise rates to 1.5 percent on Thursday and signal more tightening.
But Boris Schlossberg, director of currency research at GFT in New York, said the latest data from the region suggests that "growth has slowed significantly and may force (ECB President Jean-Claude) Trichet to re-evaluate any further tightening for the rest of the year."
Jitters over Greece pushed U.S. government debt prices higher and helped put on the back burner, for now, concerns over the risk of a possible U.S. default. The benchmark 10-year note US10YT=RR was up 8/32 for a yield of 3.15 percent.
Spot gold XAU= was bid at $1,508.94 an ounce, against $1,495.54. (Additional reporting byNatsuko Waki and Christopher Johnson in London and Gertrude Chavez-Dreyfuss, Edward Krudy and Richard Leong in New York; Editing by Dan Grebler)
full story
* China, euro zone data weigh on global stocks
* Oil rallies after Barclays raises price forecasts
* Safe-haven dollar, Swiss franc, Treasuries advance (Updates prices)
By Wanfeng Zhou
NEW YORK, July 5 (Reuters) - World stocks fell from five-week highs on Tuesday, while the euro dropped broadly as concerns about further monetary tightening in China and soft euro-zone economic data made investors cautious.
Oil jumped more than $1 per barrel after Barclays Capital raised its 2012 forecasts for crude oil, outweighing worries over the global economy.
Media reports about a possible rate rise in China and a Moody's report saying the scale of problem loans at local governments in China may be much bigger than previously thought dented demand for risky assets. For more, see [nL3E7I507Y]
In the euro zone, a survey showed growth in the region's dominant service sector slowed for a third straight month in June, by more than an initial estimate, with sluggish new orders dimming the outlook. [nL3E7I5105]
Investors were also cautious about taking on more risk after the recent run-up in equities, with world stocks posting their best weekly gain in a year last week. U.S. stocks had their best week in two years last week.
"The market certainly could be headed for some sort of a pullback. We've had a strong performance over the past week and any slight disappointment would invite some profit-taking," said Peter Cardillo, chief market economist at Avalon Partners in New York.
World stocks as measured by the MSCI world equity index .MIWD00000PUS fell 0.2 percent on the day after earlier hitting their highest since June 1. The index has risen almost 5 percent since January.
U.S. stocks were little changed. At noon (1600 GMT), the Dow Jones industrial average .DJI was up 1.06 points, or 0.01 percent, at 12,583.83. The Standard & Poor's 500 Index .SPX was down 1.46 points, or 0.11 percent, at 1,338.21. The Nasdaq Composite Index .IXIC was up 5.05 points, or 0.18 percent, at 2,821.08.
Volume is expected to remain low in the holiday-shortened week, with all eyes on Friday's U.S. monthly jobs data. Markets were closed on Monday for the U.S. Independence Day holiday.
European stocks .FTEU3 ended slightly higher in thin volume. Emerging market stocks .MSCIEF fell 0.2 percent.
In the oil market, ICE Brent futures for August LCOc1 rose to a high of $113.47 before easing back to around $113.26, up $1.87. U.S. crude CLc1 was up $1.82 at $96.77 per barrel.
Barclays Capital raised its 2012 forecast for Brent by $10, to $115 per barrel, and upgraded its 2012 forecast for U.S. crude by $4, to $110.
"The increase in expectations is due to a forecast further reduction in global spare capacity in 2012, together with a significant intensification of the geopolitical background to the oil market," Barclays Capital said.
SAFE-HAVEN ASSETS IN DEMAND
Concerns about China and the global economy boosted demand for safe-haven assets such as the Swiss franc, gold and U.S. government bonds.
The euro earlier dropped 1 percent to a low of 1.22059 Swiss francs EURCHF=EBS, retreating from a five-week high hit on Monday. It was last down 0.8 percent at 1.2227 francs.
Worries about Greece persisted even as Athens averted an immediate default following the approval by euro zone finance ministers of a 12 billion euro loan.
Greece suffered another setback on Monday after Standard & Poor's warned it would treat a possible rollover of privately held Greek debt as a selective default. [ID:nL6E7I408N]
The country needs a second aid package worth some 110 billion euros, which euro zone financeministers said would be finalized by mid-September.
Against the dollar, the euro fell 0.5 percent to $1.4472 EUR=EBS, after gaining more than 2 percent last week in its best weekly rise since January.
Losses in the euro were limited by expectations the European Central Bank would raise rates to 1.5 percent on Thursday and signal more tightening.
But Boris Schlossberg, director of currency research at GFT in New York, said the latest data from the region suggests that "growth has slowed significantly and may force (ECB President Jean-Claude) Trichet to re-evaluate any further tightening for the rest of the year."
Jitters over Greece pushed U.S. government debt prices higher and helped put on the back burner, for now, concerns over the risk of a possible U.S. default. The benchmark 10-year note US10YT=RR was up 8/32 for a yield of 3.15 percent.
Spot gold XAU= was bid at $1,508.94 an ounce, against $1,495.54. (Additional reporting byNatsuko Waki and Christopher Johnson in London and Gertrude Chavez-Dreyfuss, Edward Krudy and Richard Leong in New York; Editing by Dan Grebler)
full story
Montana governor reviewing oil, gas pipeline safety
Mon Jul 4, 2011 10:11pm EDT
(Adds federal investigation, details)
By Laura Zuckerman and Emilie Ritter
(Reuters) - Montana Governor Brian Schweitzer on Monday said authorities will review safety of all oil and gas pipelines that cross waterways in the state and close those that did not meet standards.
"We'll make the decision over the next couple of days whether to shut off some pipelines," Schweitzer told Reuters in a telephone interview. "The last thing I want is for another pipeline to break."
Schweitzer said he made the move after a spill early Saturday from an Exxon Mobil pipeline released into the rain-swollen Yellowstone River near Billings up to 1,000 barrels of oil, or 42,000 gallons.
Schweitzer said the pipeline inspections -- the second round he has called for in as many months -- will assess the risk of ruptures and leaks in 88 sections of pipeline that cross rivers and streams in the state.
The review will gauge factors including the pipelines' age, thickness and corrosion, and the condition and operation of all shut-off valves.
Exxon Mobil Corp (XOM.N) said on Monday that the spill appeared to be concentrated within a 15-mile stretch of the river between Billings and the nearby town of Laurel, although Tim Thennis, Montana Disaster and Emergency Services duty officer, said he had received reports of oil near the community of Hysham, about 75 miles downstream from Billings.
Gary Pruessing, the president of the company's pipeline unit, said Exxon still did not know the cause of the leak that spilled oil into the river and added that it may change the way it conducts pipeline safety reviews.
"This will give us additional information to think about when we consider doing risk assessments on any line that has a river crossing anywhere in the country," Pruessing said during a news conference in Laurel, Montana.
By Monday afternoon, Exxon had received 71 calls from nearby residents asking questions or reporting damage from the spill.
PREVIOUS SAFETY CONCERNS
The spill came just weeks after the company shut down the pipeline in May after the city of Laurel had safety concerns due to the rising levels of the river from rain and runoff.
"At the time we shut down the line ... and went down and did a further risk assessment to make sure the site, based on technical knowledge we had, was something we'd feel comfortable to run," Pruessing said. "We restarted the line feeling like we had a safe operation."
The U.S. pipeline safety regulator weighed in on the spill on Monday, saying it had warned the company about problems with the pipeline and had begun its own investigation.
"Inspectors are on site and have initiated an investigation into the cause of failure," said a spokeswoman with the Transportation Department's Pipeline and Hazardous Materials Safety Administration.
After inspecting the pipeline in July 2009, PHMSA issued a warning letter to Exxon a year later about oil leaking from some of the valves on the pipeline.
The agency said the valves did not have a means for clearly indicating whether they were open or closed. "There was fresh crude oil on the soil immediately adjacent to the valves," PHMSA said in its warning letter.
It also faulted Exxon for not following up in a timely manner on atmospheric corrosion issues that were identified during three years of corrosion surveys on the pipeline.
HEALTH, ENVIRONMENTAL IMPACT EYED
As Exxon fielded a team of 200 workers to mop up oil using absorbent booms and pads, the first reports on Monday came in of a resident downstream on the Yellowstone River sickened by the spill.
Mike Scott, co-owner of a goat ranch inundated by the rupture, said his wife, Alexis Bonogofsky, was briefly hospitalized Monday after suffering from what doctors diagnosed as acute hydrocarbon exposure, a condition linked to exposure to petroleum chemicals.
"She started getting shortness of breath, dizziness; we took her to the hospital and they took an X-ray," said Scott, who also works for the Sierra Club, an environmental group.
Medical staff declined to discuss the diagnosis, citing patient confidentiality.
The Yellowstone River, the longest undammed river in the United States, is renowned for its trout fishing and bird life.
A team of six experts from International Bird Rescue began arriving in Montana on Sunday to work with state and federal wildlife agencies to coordinate the rescue and rehabilitation of birds tarred by the spill.
"There is definitely concern, there is a wonderful riparian habitat there," said Amy Cilimburg of the Montana Audubon Society. (Reporting by Laura Zuckerman; Additional reporting by Ilaina Jonas in New York, Tom Doggett in Washington and Emilie Ritter in Montana; Writing by Tim Gaynor; Editing by Peter Bohan, Gary Crosse and Steve Orlofsky)
full story
(Adds federal investigation, details)
By Laura Zuckerman and Emilie Ritter
(Reuters) - Montana Governor Brian Schweitzer on Monday said authorities will review safety of all oil and gas pipelines that cross waterways in the state and close those that did not meet standards.
"We'll make the decision over the next couple of days whether to shut off some pipelines," Schweitzer told Reuters in a telephone interview. "The last thing I want is for another pipeline to break."
Schweitzer said he made the move after a spill early Saturday from an Exxon Mobil pipeline released into the rain-swollen Yellowstone River near Billings up to 1,000 barrels of oil, or 42,000 gallons.
Schweitzer said the pipeline inspections -- the second round he has called for in as many months -- will assess the risk of ruptures and leaks in 88 sections of pipeline that cross rivers and streams in the state.
The review will gauge factors including the pipelines' age, thickness and corrosion, and the condition and operation of all shut-off valves.
Exxon Mobil Corp (XOM.N) said on Monday that the spill appeared to be concentrated within a 15-mile stretch of the river between Billings and the nearby town of Laurel, although Tim Thennis, Montana Disaster and Emergency Services duty officer, said he had received reports of oil near the community of Hysham, about 75 miles downstream from Billings.
Gary Pruessing, the president of the company's pipeline unit, said Exxon still did not know the cause of the leak that spilled oil into the river and added that it may change the way it conducts pipeline safety reviews.
"This will give us additional information to think about when we consider doing risk assessments on any line that has a river crossing anywhere in the country," Pruessing said during a news conference in Laurel, Montana.
By Monday afternoon, Exxon had received 71 calls from nearby residents asking questions or reporting damage from the spill.
PREVIOUS SAFETY CONCERNS
The spill came just weeks after the company shut down the pipeline in May after the city of Laurel had safety concerns due to the rising levels of the river from rain and runoff.
"At the time we shut down the line ... and went down and did a further risk assessment to make sure the site, based on technical knowledge we had, was something we'd feel comfortable to run," Pruessing said. "We restarted the line feeling like we had a safe operation."
The U.S. pipeline safety regulator weighed in on the spill on Monday, saying it had warned the company about problems with the pipeline and had begun its own investigation.
"Inspectors are on site and have initiated an investigation into the cause of failure," said a spokeswoman with the Transportation Department's Pipeline and Hazardous Materials Safety Administration.
After inspecting the pipeline in July 2009, PHMSA issued a warning letter to Exxon a year later about oil leaking from some of the valves on the pipeline.
The agency said the valves did not have a means for clearly indicating whether they were open or closed. "There was fresh crude oil on the soil immediately adjacent to the valves," PHMSA said in its warning letter.
It also faulted Exxon for not following up in a timely manner on atmospheric corrosion issues that were identified during three years of corrosion surveys on the pipeline.
HEALTH, ENVIRONMENTAL IMPACT EYED
As Exxon fielded a team of 200 workers to mop up oil using absorbent booms and pads, the first reports on Monday came in of a resident downstream on the Yellowstone River sickened by the spill.
Mike Scott, co-owner of a goat ranch inundated by the rupture, said his wife, Alexis Bonogofsky, was briefly hospitalized Monday after suffering from what doctors diagnosed as acute hydrocarbon exposure, a condition linked to exposure to petroleum chemicals.
"She started getting shortness of breath, dizziness; we took her to the hospital and they took an X-ray," said Scott, who also works for the Sierra Club, an environmental group.
Medical staff declined to discuss the diagnosis, citing patient confidentiality.
The Yellowstone River, the longest undammed river in the United States, is renowned for its trout fishing and bird life.
A team of six experts from International Bird Rescue began arriving in Montana on Sunday to work with state and federal wildlife agencies to coordinate the rescue and rehabilitation of birds tarred by the spill.
"There is definitely concern, there is a wonderful riparian habitat there," said Amy Cilimburg of the Montana Audubon Society. (Reporting by Laura Zuckerman; Additional reporting by Ilaina Jonas in New York, Tom Doggett in Washington and Emilie Ritter in Montana; Writing by Tim Gaynor; Editing by Peter Bohan, Gary Crosse and Steve Orlofsky)
full story
Google hires 12 lobby firms in wake of FTC probe
By Diane Bartz
WASHINGTON | Fri Jul 1, 2011 3:19pm EDT
(Reuters) - Search giant Google Inc, facing a broad antitrust probe into its business practices, has hired 12 lobbying firms, a spokeswoman from the company said on Friday.
The Federal Trade Commission, which investigates violations of antitrust law, is expected to look into complaints that Google's search results favor the company's other services, among other issues. Google, which runs an estimated 69 percent of Web searches worldwide, can make or break a company depending on its search ranking.
The 12 newly hired lobbying companies are Akin, Gump; Bingham; Capitol Legislative Strategies; Chesapeake Group; Crossroad Strategies; Gephardt Group; Holland & Knight; Normandy Group; Prime Policy; The First Group; The Madison Group; and The Raben Group.
"We have a strong story to tell about our business and we've sought out the best talent we can find to help tell it," the spokeswoman said.
Google, which has an office in Washington, previously hired six other lobbying firms: Crowell Strategies, Dutko Worldwide, Franklin Square Group, McBee Strategic Consulting, Podesta Group, and RB Murphy & Associates, according to government filings.
The firms will be working on the FTC investigation as well as on several other issues that Google is interested in, the spokeswoman said.
Government filings show Google has lobbied on issues as disparate as copyright, taxes, cybersecurity, privacy and patent reform.
Veteran antitrust regulators say hiring lobbyists will not affect the FTC's investigation.
"I don't think it matters, quite frankly," said Robert Doyle, at the law firm Doyle, Barlow and Mazard PLLC. "I don't care who they hire or how many they hire. Having spent 20 years at the FTC, I know the staff will look at this fairly, honestly and objectively."
(Reporting by Diane Bartz; Editing by Tim Dobbyn and John Wallace)
full story
WASHINGTON | Fri Jul 1, 2011 3:19pm EDT
(Reuters) - Search giant Google Inc, facing a broad antitrust probe into its business practices, has hired 12 lobbying firms, a spokeswoman from the company said on Friday.
The Federal Trade Commission, which investigates violations of antitrust law, is expected to look into complaints that Google's search results favor the company's other services, among other issues. Google, which runs an estimated 69 percent of Web searches worldwide, can make or break a company depending on its search ranking.
The 12 newly hired lobbying companies are Akin, Gump; Bingham; Capitol Legislative Strategies; Chesapeake Group; Crossroad Strategies; Gephardt Group; Holland & Knight; Normandy Group; Prime Policy; The First Group; The Madison Group; and The Raben Group.
"We have a strong story to tell about our business and we've sought out the best talent we can find to help tell it," the spokeswoman said.
Google, which has an office in Washington, previously hired six other lobbying firms: Crowell Strategies, Dutko Worldwide, Franklin Square Group, McBee Strategic Consulting, Podesta Group, and RB Murphy & Associates, according to government filings.
The firms will be working on the FTC investigation as well as on several other issues that Google is interested in, the spokeswoman said.
Government filings show Google has lobbied on issues as disparate as copyright, taxes, cybersecurity, privacy and patent reform.
Veteran antitrust regulators say hiring lobbyists will not affect the FTC's investigation.
"I don't think it matters, quite frankly," said Robert Doyle, at the law firm Doyle, Barlow and Mazard PLLC. "I don't care who they hire or how many they hire. Having spent 20 years at the FTC, I know the staff will look at this fairly, honestly and objectively."
(Reporting by Diane Bartz; Editing by Tim Dobbyn and John Wallace)
full story
Analysis: BlackBerry under attack in corporate cradle
By Roy Strom
NEW YORK | Fri Jul 1, 2011 3:23pm EDT
(Reuters) - The BlackBerry, once ubiquitous in business, faces deep challenges in that market as more companies allow employees to pick their own smartphones and add third-party security applications.
One of the BlackBerry's main selling points has been Research in Motion's top-tier security and management features, which appeal to IT managers eager to control what workers do with corporate information and protect business systems from cyber attacks.
But with companies such as Good Technology and MobileIron offering applications that could untether IT managers from their BlackBerrys, analysts say that consumer-market pressures could intrude into RIM's mainstay corporate market.
Only two of nine major U.S. companies contacted by Reuters said they exclusively use the BlackBerry, namely Boeing and Exxon Mobil.
The remaining seven -- Alcoa, Caterpillar, DuPont, Kraft Foods, PepsiCo, Microsoft and Verizon Communications -- support at least one other brand, such as Apple's iPhone or phones that run Google's Android or Microsoft Windows.
"I would say their enterprise base has been besieged really, first by Apple, then by Android," John Jackson, a mobile device analyst at CCS Insight, said of RIM. "What's happening in the consumer market is repeating itself in the enterprise market. They've been materially hurt in their core enterprise market."
RIM's share of the U.S. smartphone market stood at 25 percent in April, down from 35 percent in October last year, pushing BlackBerry to third place from first place in the market, according to research firm comScore.
Most of RIM's problems, analysts say, can be traced to their delay in rolling out new phones to compete with the iPhone or Android phones sold by Samsung, HTC and Motorola.
Chemical company DuPont, which has 67,000 employees, started to give some workers the option to use the iPhone in the fourth quarter of last year. In a few months, iPhones grew to about a quarter of Dupont's smartphones, according to Eric Smith, a telecommunications manager at the company.
"The technology that people have available in their personal and daily lives, they want to use at work. People had their own iPhones and iPads, and they said, 'Hey, why can't we use these for work?'" said Smith.
SECURING PERSONAL PHONES
RIM shares are down 60 percent from their year high, and dropped sharply in mid-June when it released dismal quarterly results and postponed a new operating system and touchscreen version of the Bold phone aimed at companies.
These delays pile pressure on IT managers to support additional phone platforms, which can be costly -- or risk security breaches if they say no and employees use their own phones anyway for company matters.
To help IT managers, there is a growing number of third-party security options, such as email encryption and technology, that allow IT managers to remotely control data on personal phones. For example, they can wipe corporate data from lost or virus-infected phones.
As employees get more choices, they take on more responsibility for security, said Bob Tinker, CEO of MobileIron, which raised $20 million in a fourth round of private funding in May.
"It's much more of an adult model, where you're given the latitude to do what you need to do, but if you cross the boundary, there are consequences," Tinker said.
The influence IT managers have over phone selection is shrinking. Company-bought smartphones fell to 7 percent of the market in 2010 from 15 percent in 2009, according to research and accounting firm Strategy Analytics.
Neil Mawston, a London-based analyst at Strategy Analytics, calls the trend consumerization. "BlackBerry has really been the one that's been hit really hard by that trend," he said.
Another survey by research firm Yankee Group found that 55 percent of IT managers cited RIM as their preferred operating system, but that fell to 34 percent when they were asked what they will prefer in two years.
Boeing has not found a security option that it trusts other than BlackBerry, said the aircraft maker's spokesman Kenn Johnson, adding that it was feeling pressure to allow more phone choices. "We always know there's a desire for that cool aspect, but it can't be at the fault of security," he said.
Jackson, the mobile analyst at CCS Insight, said it was imperative for RIM to develop more exciting phones.
"Unless you can outsex Apple, you're going to have a problem," he said.
(Additional reporting by Eunju Lie. Editing by Robert MacMillan)
full story
NEW YORK | Fri Jul 1, 2011 3:23pm EDT
(Reuters) - The BlackBerry, once ubiquitous in business, faces deep challenges in that market as more companies allow employees to pick their own smartphones and add third-party security applications.
One of the BlackBerry's main selling points has been Research in Motion's top-tier security and management features, which appeal to IT managers eager to control what workers do with corporate information and protect business systems from cyber attacks.
But with companies such as Good Technology and MobileIron offering applications that could untether IT managers from their BlackBerrys, analysts say that consumer-market pressures could intrude into RIM's mainstay corporate market.
Only two of nine major U.S. companies contacted by Reuters said they exclusively use the BlackBerry, namely Boeing and Exxon Mobil.
The remaining seven -- Alcoa, Caterpillar, DuPont, Kraft Foods, PepsiCo, Microsoft and Verizon Communications -- support at least one other brand, such as Apple's iPhone or phones that run Google's Android or Microsoft Windows.
"I would say their enterprise base has been besieged really, first by Apple, then by Android," John Jackson, a mobile device analyst at CCS Insight, said of RIM. "What's happening in the consumer market is repeating itself in the enterprise market. They've been materially hurt in their core enterprise market."
RIM's share of the U.S. smartphone market stood at 25 percent in April, down from 35 percent in October last year, pushing BlackBerry to third place from first place in the market, according to research firm comScore.
Most of RIM's problems, analysts say, can be traced to their delay in rolling out new phones to compete with the iPhone or Android phones sold by Samsung, HTC and Motorola.
Chemical company DuPont, which has 67,000 employees, started to give some workers the option to use the iPhone in the fourth quarter of last year. In a few months, iPhones grew to about a quarter of Dupont's smartphones, according to Eric Smith, a telecommunications manager at the company.
"The technology that people have available in their personal and daily lives, they want to use at work. People had their own iPhones and iPads, and they said, 'Hey, why can't we use these for work?'" said Smith.
SECURING PERSONAL PHONES
RIM shares are down 60 percent from their year high, and dropped sharply in mid-June when it released dismal quarterly results and postponed a new operating system and touchscreen version of the Bold phone aimed at companies.
These delays pile pressure on IT managers to support additional phone platforms, which can be costly -- or risk security breaches if they say no and employees use their own phones anyway for company matters.
To help IT managers, there is a growing number of third-party security options, such as email encryption and technology, that allow IT managers to remotely control data on personal phones. For example, they can wipe corporate data from lost or virus-infected phones.
As employees get more choices, they take on more responsibility for security, said Bob Tinker, CEO of MobileIron, which raised $20 million in a fourth round of private funding in May.
"It's much more of an adult model, where you're given the latitude to do what you need to do, but if you cross the boundary, there are consequences," Tinker said.
The influence IT managers have over phone selection is shrinking. Company-bought smartphones fell to 7 percent of the market in 2010 from 15 percent in 2009, according to research and accounting firm Strategy Analytics.
Neil Mawston, a London-based analyst at Strategy Analytics, calls the trend consumerization. "BlackBerry has really been the one that's been hit really hard by that trend," he said.
Another survey by research firm Yankee Group found that 55 percent of IT managers cited RIM as their preferred operating system, but that fell to 34 percent when they were asked what they will prefer in two years.
Boeing has not found a security option that it trusts other than BlackBerry, said the aircraft maker's spokesman Kenn Johnson, adding that it was feeling pressure to allow more phone choices. "We always know there's a desire for that cool aspect, but it can't be at the fault of security," he said.
Jackson, the mobile analyst at CCS Insight, said it was imperative for RIM to develop more exciting phones.
"Unless you can outsex Apple, you're going to have a problem," he said.
(Additional reporting by Eunju Lie. Editing by Robert MacMillan)
full story
As QE2 ends, market debates Fed's next move
By Steven C. Johnson
NEW YORK | Thu Jun 30, 2011 12:56am EDT
(Reuters) - The Federal Reserve ends its $600 billion bond-buying program, known as QE2, on Thursday and has yet to offer any hints of more monetary easing to come.
That hasn't stopped investors from wondering what new tricks the central bank may have in its repertoire should the U.S. economy's struggles continue in the second half of 2011.
Bill Gross, manager of PIMCO, the world's largest bond fund, said last week the Fed may signal as soon as August that it stands ready to print more money if the economy worsens and recession starts looking like a real possibility.
"I'm surprised at how quickly talk has turned to QE3. It began even before QE2 had ended," said Gregory Whiteley, who manages the government debt portfolio at DoubleLine Capital, a Los Angeles-based fund with some $12 billion in assets.
"But it's a bit like automakers who offer incentives to buy. People get hooked on them, and before one program ends, they're thinking about when the next one will come along."
Not everyone thinks the Fed will act quite so quickly. Including QE2, the central bank's unprecedented policies in recent years have pumped $2.3 trillion into the financial system.
After a recent run of weak economic data, Fed chief Ben Bernanke said last week that "a little bit of time to see what happens would be useful" before taking more policy decisions.
In a Reuters poll of 24 fixed income strategists this month, the median probability of QE3 was 20 percent. A poll of 46 economists in May had even longer odds of 15 percent.
But timing for the Fed has not been ideal. The end of QE2 comes just as the U.S. economy is losing steam. Growth slowed sharply in the first quarter and data has yet to signal a quick recovery. The jobless rate remains above 9 percent.
"Part of the Fed's mandate is to support full employment, so they will have to stay involved," said Quincy Krosby, investment strategist at Prudential Financial, with $859 billion in assets. "They will have to get more imaginative."
GRADING QE2
How the Fed would do that depends largely on whether one thinks QE2 and all its side effects were worth the trouble.
The policy was launched late last year to keep a fragile U.S. economy that had just endured the worst recession since World War II from falling back into recession.
The risks at the time were real. Recovery had stalled, prices were falling, the jobless rate was rising and stocks had gone into a multi-month swoon.
"QE2 was an extraordinary policy tool designed to stave off deflation and it has clearly worked," said Alan Wilde, who helps manage $50 billion at Baring Asset Management in London.
"I'm surprised central bankers have not tried to take more credit for getting some inflation back into the system. They should be shouting this from the rooftops."
But while all that cheap money sparked a stock market rally -- the benchmark S&P 500 is up some 25 percent since August 26, 2010, the day before Bernanke hinted QE2 was coming -- it also helped boost oil prices, which hurt consumers and did little to encourage job growth or revive a moribund housing market.
It weakened the dollar, which makes U.S. exports cheaper and theoretically helps growth. But that has stoked inflation abroad and, some say, threatens to raise U.S. prices as well.
Greg Michalowski, chief currency analyst at FXDD, said the mixed results may make the Fed think twice about another round.
"I think maybe one of the reasons why they're not doing QE3 is because, well, you know, (QE2) didn't work." he said. "Oil prices went up. Money went into speculative things. It (hasn't) gone to lending. It's going to speculation."
'NUCLEAR OPTION'
Wilde said he thinks "QE3 is still a long shot," but added that persistent below-trend growth or rising unemployment mean "a further round (of easing) cannot be ruled out completely."
One method could be what BofA-Merrill Lynch economist Ethan Harris terms "the nuclear option:" buying enough Treasuries to cap yields at a certain level to stoke growth.
The idea seems extreme but has garnered attention. Gross said last week that the Fed could do this by purchasing as many two- or three-year Treasuries as it takes to cap rates.
Back in 2002, before he was Fed chairman, Bernanke also staked out that ground, saying a Fed facing deflation could announce explicit ceilings for Treasury yields.
Harris said this could prove more effective than QE2 because it would amount to an open-ended commitment to buy as many Treasuries as it takes to cap yields.
"I do think they have ammunition left," he said. "If we start to slide quickly toward recession and the unemployment rate steadily goes up, they can act."
But DoubleLine's Whiteley said speculators would challenge and ultimately break the Fed's resolve. "It's like trying to defend a currency -- market forces push it to the limit and the central bank often relents."
He also said yields could fall anyway once the Fed ends QE2 and private buyers pick up the slack. With growth slow, he said the 10-year yield at 2.50 percent is not inconceivable.
STRONG GROWTH CURES ALL
Of course, if the economy regains its footing, talk of QE3 will fade just as quickly, analysts say.
For one thing, higher inflation may tie the Fed's hands. Core consumer prices, which strip out food and energy, rose 1.5 percent in the year to May. That's not alarmingly high but it is near 2 percent, the top of the Fed comfort zone, and well above a frighteningly low 0.6 percent in October.
What's more, the Fed will likely remain the biggest Treasury buyer as it reinvests principal payments from the government and mortgage debt it owns.
More than $110 billion of Treasuries held on the Fed's balance sheet are set to mature in the next 12 months, and analysts predict it could reinvest up to $190 billion from maturing mortgage-backed bonds over that time. With deflation no longer a clear and present danger, that may be enough.
Political opposition to more easing is also running high.
To get around that, Prudential's Krosby said the move last week by industrialized countries to release 60 million barrels of oil from emergency reserves may have been a QE3 substitute: an alternative way to take pressure off consumers and small businesses and jump-start growth.
After nearing $115 a barrel in May, a 2-1/2-year high, oil slipped to around $95 this week.
BofA-Merrill Lynch expects the S&P 500 to do just fine without QE2. The bank's official year-end target is 1,400, but head equity strategist David Bianco expects strong earnings could push it as high as 1,500.
Even if it falls short, Harris said, the Fed will disappoint those investors who expect the central bank to rush in immediately and protect them from big losses.
"People may think there's a 'Bernanke put' out there," he said, referring to the put options used by traders to protect against price declines. "But they are not going to like the strike price."
(Additional reporting by Burton Frierson; editing by Dan Grebler)
full story
NEW YORK | Thu Jun 30, 2011 12:56am EDT
(Reuters) - The Federal Reserve ends its $600 billion bond-buying program, known as QE2, on Thursday and has yet to offer any hints of more monetary easing to come.
That hasn't stopped investors from wondering what new tricks the central bank may have in its repertoire should the U.S. economy's struggles continue in the second half of 2011.
Bill Gross, manager of PIMCO, the world's largest bond fund, said last week the Fed may signal as soon as August that it stands ready to print more money if the economy worsens and recession starts looking like a real possibility.
"I'm surprised at how quickly talk has turned to QE3. It began even before QE2 had ended," said Gregory Whiteley, who manages the government debt portfolio at DoubleLine Capital, a Los Angeles-based fund with some $12 billion in assets.
"But it's a bit like automakers who offer incentives to buy. People get hooked on them, and before one program ends, they're thinking about when the next one will come along."
Not everyone thinks the Fed will act quite so quickly. Including QE2, the central bank's unprecedented policies in recent years have pumped $2.3 trillion into the financial system.
After a recent run of weak economic data, Fed chief Ben Bernanke said last week that "a little bit of time to see what happens would be useful" before taking more policy decisions.
In a Reuters poll of 24 fixed income strategists this month, the median probability of QE3 was 20 percent. A poll of 46 economists in May had even longer odds of 15 percent.
But timing for the Fed has not been ideal. The end of QE2 comes just as the U.S. economy is losing steam. Growth slowed sharply in the first quarter and data has yet to signal a quick recovery. The jobless rate remains above 9 percent.
"Part of the Fed's mandate is to support full employment, so they will have to stay involved," said Quincy Krosby, investment strategist at Prudential Financial, with $859 billion in assets. "They will have to get more imaginative."
GRADING QE2
How the Fed would do that depends largely on whether one thinks QE2 and all its side effects were worth the trouble.
The policy was launched late last year to keep a fragile U.S. economy that had just endured the worst recession since World War II from falling back into recession.
The risks at the time were real. Recovery had stalled, prices were falling, the jobless rate was rising and stocks had gone into a multi-month swoon.
"QE2 was an extraordinary policy tool designed to stave off deflation and it has clearly worked," said Alan Wilde, who helps manage $50 billion at Baring Asset Management in London.
"I'm surprised central bankers have not tried to take more credit for getting some inflation back into the system. They should be shouting this from the rooftops."
But while all that cheap money sparked a stock market rally -- the benchmark S&P 500 is up some 25 percent since August 26, 2010, the day before Bernanke hinted QE2 was coming -- it also helped boost oil prices, which hurt consumers and did little to encourage job growth or revive a moribund housing market.
It weakened the dollar, which makes U.S. exports cheaper and theoretically helps growth. But that has stoked inflation abroad and, some say, threatens to raise U.S. prices as well.
Greg Michalowski, chief currency analyst at FXDD, said the mixed results may make the Fed think twice about another round.
"I think maybe one of the reasons why they're not doing QE3 is because, well, you know, (QE2) didn't work." he said. "Oil prices went up. Money went into speculative things. It (hasn't) gone to lending. It's going to speculation."
'NUCLEAR OPTION'
Wilde said he thinks "QE3 is still a long shot," but added that persistent below-trend growth or rising unemployment mean "a further round (of easing) cannot be ruled out completely."
One method could be what BofA-Merrill Lynch economist Ethan Harris terms "the nuclear option:" buying enough Treasuries to cap yields at a certain level to stoke growth.
The idea seems extreme but has garnered attention. Gross said last week that the Fed could do this by purchasing as many two- or three-year Treasuries as it takes to cap rates.
Back in 2002, before he was Fed chairman, Bernanke also staked out that ground, saying a Fed facing deflation could announce explicit ceilings for Treasury yields.
Harris said this could prove more effective than QE2 because it would amount to an open-ended commitment to buy as many Treasuries as it takes to cap yields.
"I do think they have ammunition left," he said. "If we start to slide quickly toward recession and the unemployment rate steadily goes up, they can act."
But DoubleLine's Whiteley said speculators would challenge and ultimately break the Fed's resolve. "It's like trying to defend a currency -- market forces push it to the limit and the central bank often relents."
He also said yields could fall anyway once the Fed ends QE2 and private buyers pick up the slack. With growth slow, he said the 10-year yield at 2.50 percent is not inconceivable.
STRONG GROWTH CURES ALL
Of course, if the economy regains its footing, talk of QE3 will fade just as quickly, analysts say.
For one thing, higher inflation may tie the Fed's hands. Core consumer prices, which strip out food and energy, rose 1.5 percent in the year to May. That's not alarmingly high but it is near 2 percent, the top of the Fed comfort zone, and well above a frighteningly low 0.6 percent in October.
What's more, the Fed will likely remain the biggest Treasury buyer as it reinvests principal payments from the government and mortgage debt it owns.
More than $110 billion of Treasuries held on the Fed's balance sheet are set to mature in the next 12 months, and analysts predict it could reinvest up to $190 billion from maturing mortgage-backed bonds over that time. With deflation no longer a clear and present danger, that may be enough.
Political opposition to more easing is also running high.
To get around that, Prudential's Krosby said the move last week by industrialized countries to release 60 million barrels of oil from emergency reserves may have been a QE3 substitute: an alternative way to take pressure off consumers and small businesses and jump-start growth.
After nearing $115 a barrel in May, a 2-1/2-year high, oil slipped to around $95 this week.
BofA-Merrill Lynch expects the S&P 500 to do just fine without QE2. The bank's official year-end target is 1,400, but head equity strategist David Bianco expects strong earnings could push it as high as 1,500.
Even if it falls short, Harris said, the Fed will disappoint those investors who expect the central bank to rush in immediately and protect them from big losses.
"People may think there's a 'Bernanke put' out there," he said, referring to the put options used by traders to protect against price declines. "But they are not going to like the strike price."
(Additional reporting by Burton Frierson; editing by Dan Grebler)
full story
Euro gains as Greek debt issue seen under control
By Naomi Tajitsu
Thu Jun 30, 2011 8:20am EDT
LONDON, June 30 - The euro rose to a three-week high against the dollar on Thursday, swept higher by month-end demand which helped it extend a rally after Greece moved a step closer to securing international aid.
The single currency was also buoyed after comments from European Central Bank President Jean-Claude Trichet reinforced speculation that the ECB will raise interest rates next week, helping it to a 15-month high versus sterling.
Markets cheered the Greek parliament's passage of tough austerity measures on Wednesday, enabling the debt-stricken country to secure more emergency funding from the EU and the International Monetary Fund and staving off the threat of a debt default for now.
The euro hit a high of $1.4522 versus the dollar on trading platform EBS and analysts said further gains could propel it toward $1.5000. However, many remained wary about whether Greece will be able to implement such harsh measures and expected the euro's rise to be limited.
It failed to sustain a move above $1.4500, with traders saying demand from a semi-official European name and model funds ran into offers from sovereign names ahead of a reported options barrier at $1.4550.
"Euro zone rates are more likely to rise than those in the U.S. and the UK and this will keep the euro supported against the dollar and sterling," said Richard Wiltshire, chief FX broker at ETX Capital.
"But I can't see a huge reason to buy the euro as Greece is not out of the woods yet."
Athens on Thursday is expected to pass another vote on how to implement the plan, clearing the last obstacle to the release of 12 billion euros ($17.3 billion) of funding, which is essential to meet debt payments by mid-July.
It was last up 0.2 percent at $1.4460 against the dollar, with bids in the mid-$1.44 region seen as acting as support.
ETX's Wiltshire said the euro's gains were helped by hefty month-end buying of euro/sterling, some of which could reverse on Friday or next week.
The single currency was up 0.5 percent against the pound at 90.30 pence, having hit a 15-month high of 90.70 pence.
ECB RATE OUTLOOK
Bolstering the euro was the view that the European Central Bank will raise interest rates by 25 basis points to 1.5 percent next week, which would increase the single currency's rate advantage over the dollar.
Some analysts also saw further scope for short-term gains as talks progress on a second aid package for Greece, with investors taking the view that the euro zone debt crisis is under control for the time being.
"In the short term, at least, a Greece default is unlikely, and this is positive for the euro and also other risky assets," said You-Na Park, currency strategist at Commerzbank in Frankfurt, adding the euro could test $1.50 in the near term.
Others said more encouraging data in the U.S., including recent housing figures, and signs the Japanese economy may be recovering more quickly from its earthquake than expected, were helping to improve the broad outlook for the global economy through the second half of 2011.
Deutsche currency strategist Henrik Gullberg said this view would further stoke risk appetite, prompting investors to take on more long euro positions -- or bets to buy the currency -- after cutting back on those positions recently.
"Uncertainty about the global outlook, as well as Greece, has meant that a lot of long positions in risky currencies have been scaled back," he said.
At the same time, increasing concerns about the U.S. debt situation may sour sentiment for the dollar as Washington struggles to raise its budget limit.
Gains in the euro and other currencies considered higher risk, including the Australian and New Zealand dollars -- the latter hitting a post-float high in earlier trade -- knocked the dollar lower versus a currency basket.
The dollar index .DXY traded 0.25 percent lower as 74.503, having hit 74.255, its weakest since mid-June. It slipped 0.4 percent on the day to 80.40 yen.
(Additional reporting by Jessica Mortimer; Editing by Anna Willard)
full story
Thu Jun 30, 2011 8:20am EDT
LONDON, June 30 - The euro rose to a three-week high against the dollar on Thursday, swept higher by month-end demand which helped it extend a rally after Greece moved a step closer to securing international aid.
The single currency was also buoyed after comments from European Central Bank President Jean-Claude Trichet reinforced speculation that the ECB will raise interest rates next week, helping it to a 15-month high versus sterling.
Markets cheered the Greek parliament's passage of tough austerity measures on Wednesday, enabling the debt-stricken country to secure more emergency funding from the EU and the International Monetary Fund and staving off the threat of a debt default for now.
The euro hit a high of $1.4522 versus the dollar on trading platform EBS and analysts said further gains could propel it toward $1.5000. However, many remained wary about whether Greece will be able to implement such harsh measures and expected the euro's rise to be limited.
It failed to sustain a move above $1.4500, with traders saying demand from a semi-official European name and model funds ran into offers from sovereign names ahead of a reported options barrier at $1.4550.
"Euro zone rates are more likely to rise than those in the U.S. and the UK and this will keep the euro supported against the dollar and sterling," said Richard Wiltshire, chief FX broker at ETX Capital.
"But I can't see a huge reason to buy the euro as Greece is not out of the woods yet."
Athens on Thursday is expected to pass another vote on how to implement the plan, clearing the last obstacle to the release of 12 billion euros ($17.3 billion) of funding, which is essential to meet debt payments by mid-July.
It was last up 0.2 percent at $1.4460 against the dollar, with bids in the mid-$1.44 region seen as acting as support.
ETX's Wiltshire said the euro's gains were helped by hefty month-end buying of euro/sterling, some of which could reverse on Friday or next week.
The single currency was up 0.5 percent against the pound at 90.30 pence, having hit a 15-month high of 90.70 pence.
ECB RATE OUTLOOK
Bolstering the euro was the view that the European Central Bank will raise interest rates by 25 basis points to 1.5 percent next week, which would increase the single currency's rate advantage over the dollar.
Some analysts also saw further scope for short-term gains as talks progress on a second aid package for Greece, with investors taking the view that the euro zone debt crisis is under control for the time being.
"In the short term, at least, a Greece default is unlikely, and this is positive for the euro and also other risky assets," said You-Na Park, currency strategist at Commerzbank in Frankfurt, adding the euro could test $1.50 in the near term.
Others said more encouraging data in the U.S., including recent housing figures, and signs the Japanese economy may be recovering more quickly from its earthquake than expected, were helping to improve the broad outlook for the global economy through the second half of 2011.
Deutsche currency strategist Henrik Gullberg said this view would further stoke risk appetite, prompting investors to take on more long euro positions -- or bets to buy the currency -- after cutting back on those positions recently.
"Uncertainty about the global outlook, as well as Greece, has meant that a lot of long positions in risky currencies have been scaled back," he said.
At the same time, increasing concerns about the U.S. debt situation may sour sentiment for the dollar as Washington struggles to raise its budget limit.
Gains in the euro and other currencies considered higher risk, including the Australian and New Zealand dollars -- the latter hitting a post-float high in earlier trade -- knocked the dollar lower versus a currency basket.
The dollar index .DXY traded 0.25 percent lower as 74.503, having hit 74.255, its weakest since mid-June. It slipped 0.4 percent on the day to 80.40 yen.
(Additional reporting by Jessica Mortimer; Editing by Anna Willard)
full story
Business lobby helps scuttle immigration curbs in Texas
LSE's Rolet confident TMX merger vote will succeed
LONDON | Tue Jun 28, 2011 7:19am EDT
(Reuters) - The London Stock Exchange (LSE.L) will proceed as planned with this week's vote on its takeover of Canadian group TMX (X.TO) and is confident shareholders will back the deal, chief executive Xavier Rolet said on Tuesday.
"Yes, absolutely," Rolet told Reuters when asked if he was confident the deal will win shareholder backing on Thursday.
There was no reason why the vote should not go ahead as planned, Rolet said. He would not comment on whether the LSE and TMX will need to offer more sweeteners to get the deal through.
The LSE, which has made a friendly bid for TMX Group, faces a rival offer from the Maple Group, a consortium of Canadian financial institutions and pension funds.
(Reporting by Huw Jones; Editing by Dan Lalor)
full story
(Reuters) - The London Stock Exchange (LSE.L) will proceed as planned with this week's vote on its takeover of Canadian group TMX (X.TO) and is confident shareholders will back the deal, chief executive Xavier Rolet said on Tuesday.
"Yes, absolutely," Rolet told Reuters when asked if he was confident the deal will win shareholder backing on Thursday.
There was no reason why the vote should not go ahead as planned, Rolet said. He would not comment on whether the LSE and TMX will need to offer more sweeteners to get the deal through.
The LSE, which has made a friendly bid for TMX Group, faces a rival offer from the Maple Group, a consortium of Canadian financial institutions and pension funds.
(Reporting by Huw Jones; Editing by Dan Lalor)
full story
Oaktree to invest $175.5 million in First BanCorp
Tue Jun 28, 2011 10:36am EDT
(Reuters) - First BanCorp (FBP.N) said private equity firm Oaktree Capital Management agreed to invest about $175.5 million, making it the second private equity firm to invest in the bank in less than two months, sending the company's shares up 13 percent.
Private equity firm Thomas H Lee Partners had agreed to invest $180 million in the Puerto Rico-based bank in May.
Oaktree will buy shares of First BanCorp, the holding company for FirstBank, at $3.50 per share, a 3.3 percent discount to the stock's Monday closing.
The private equity firm will own a quarter of the bank, once the $425 million preferred shares held by the U.S. Treasury are converted into common stock.
The lender said the transaction, which gives Oaktree the right to a board seat, is contingent on it raising a minimum of $500 million, but not more than $550 million.
First BanCorp has also entered into agreements with institutional investors and other private equity firms for the issuance of around $164 million of the company's stock, which, together with the Thomas H Lee and Oaktree investments, total $515 million in commitments, the company said in a statement.
In June last year, First BanCorp said it would raise $500 million in equity after banking regulators asked it to boost its capital ratios.
The bank had previously announced that it will also begin a $35 million rights offering, giving existing shareholders the right to purchase common stock at $3.50 per share.
The $35 million raised through the rights offering would count toward the $500-$550 million capital raise.
First BanCorp has been battered by a decline in value of residential and commercial real estate properties in Florida and Puerto Rico in the wake of the financial crisis.
Shares of First BanCorp were trading up 13 percent at $4.10 in early trade on Tuesday on the New York Stock Exchange.
(Reporting by Tanya Agrawal in Bangalore; Editing by Sriraj Kalluvila)
full story
(Reuters) - First BanCorp (FBP.N) said private equity firm Oaktree Capital Management agreed to invest about $175.5 million, making it the second private equity firm to invest in the bank in less than two months, sending the company's shares up 13 percent.
Private equity firm Thomas H Lee Partners had agreed to invest $180 million in the Puerto Rico-based bank in May.
Oaktree will buy shares of First BanCorp, the holding company for FirstBank, at $3.50 per share, a 3.3 percent discount to the stock's Monday closing.
The private equity firm will own a quarter of the bank, once the $425 million preferred shares held by the U.S. Treasury are converted into common stock.
The lender said the transaction, which gives Oaktree the right to a board seat, is contingent on it raising a minimum of $500 million, but not more than $550 million.
First BanCorp has also entered into agreements with institutional investors and other private equity firms for the issuance of around $164 million of the company's stock, which, together with the Thomas H Lee and Oaktree investments, total $515 million in commitments, the company said in a statement.
In June last year, First BanCorp said it would raise $500 million in equity after banking regulators asked it to boost its capital ratios.
The bank had previously announced that it will also begin a $35 million rights offering, giving existing shareholders the right to purchase common stock at $3.50 per share.
The $35 million raised through the rights offering would count toward the $500-$550 million capital raise.
First BanCorp has been battered by a decline in value of residential and commercial real estate properties in Florida and Puerto Rico in the wake of the financial crisis.
Shares of First BanCorp were trading up 13 percent at $4.10 in early trade on Tuesday on the New York Stock Exchange.
(Reporting by Tanya Agrawal in Bangalore; Editing by Sriraj Kalluvila)
full story
Madoff trustee triples JPMorgan suit to $19 bln
Fri Jun 24, 2011 9:11pm EDT
* Damages request rises to $19 billion from $5.4 billion
* Trustee Irving Picard seeks additional $900 million
* JPMorgan, Madoff's main bank, calls lawsuit meritless (Adds details from complaint, JPMorgan statement)
By Jonathan Stempel and Jochelle Mendonca
NEW YORK, June 24 (Reuters) - The trustee seeking money for Bernard Madoff's victims is now demanding $19 billion in damages from JPMorgan Chase & Co (JPM.N), more than tripling what he hopes to recover from what had been the main bank for the now-imprisoned Ponzi schemer.
The amended complaint by the trustee Irving Picard adds new charges and was filed three days after the second-largest U.S. bank agreed to pay $153.6 million to settle U.S. Securities and Exchange Commission fraud charges. [ID:nN1E75K13Z]
Picard maintained that JPMorgan was "thoroughly complicit" in Madoff's fraud and ignored red flags. In his original complaint, made public in February, he had sought $6.4 billion, including $5.4 billion of damages and $1 billion for fraudulent transfers and claims. [ID:nN16236764]
"JPMorgan Chase chose to enable Madoff's fraud, not just through the various ways it participated in its activity, but by helping to cover Madoff's naked theft with the imprimatur of a globally recognized financial institution," the 155-page amended complaint said.
The higher damage request reflects "life-to-date damages," or what the trustee considers the minimum losses over the entirety of Madoff's Ponzi scheme.
Picard is also seeking at least $500 million that JPMorgan made "off the backs of Madoff's victims," and more than $400 million of alleged fraudulent transfers.
Tasha Pelio, a JPMorgan spokeswoman, repeated in an email the bank's earlier statement that Picard's lawsuit is meritless and distorts the facts and law.
"JPMorgan did not know about or in any way become a party to the fraud orchestrated by Bernard Madoff," she said. "At all times, JPMorgan complied fully with all laws and regulations governing bank accounts."
Picard has filed roughly 1,050 lawsuits seeking more than $100 billion for former investors at Bernard L. Madoff Investment Securities LLC.
"BEFORE THEIR VERY EYES"
The amended JPMorgan complaint adds new allegations that another financial services company around 1997 investigated nearly daily transfers of $1 million to $10 million between Madoff's account there and his account at Chase.
It said that company questioned Madoff's employees about the suspicious back-and-forth transfers. Having failed to be satisfied about them, they closed Madoff's account, it said.
"JPMorgan Chase's bankers literally watched the fraud unfold before their very eyes," Deborah Renner, a lawyer representing Picard, said in a statement. Both are partners at the law firm Baker & Hostetler.
The amended complaint also discusses Madoff's longtime relationship with Sterling Equities, a private banking customer of JPMorgan founded by Fred Wilpon and Saul Katz, owners of the New York Mets baseball team.
Picard has sued the Mets' owners for $1 billion, prompting them to enter talks to sell part of the team to hedge fund manager David Einhorn for $200 million. [ID:nN26247232] The owners have denied knowing Madoff was committing fraud.
In a regulatory filing last month, JPMorgan estimated that as of March 31 it might have to pay out as much as $4.5 billion more for litigation than it had set aside for that purpose. It also said it faced more than 10,000 legal proceedings.
Tuesday's SEC accord resolved charges that JPMorgan did not tell investors that a hedge fund helped shape -- and then bet against -- complex mortgage securities they bought.
HSBC, BANK MEDICI, UNICREDIT ALSO SUED
Picard's case against JPMorgan is being overseen by U.S. District Judge Colleen McMahon.
It is one of three high-profile Madoff lawsuits that have been moved to federal district court, where juries can hear cases, from bankruptcy court, where Picard originally sued.
U.S. District Judge Jed Rakoff is reviewing some issues in Picard's $9 billion case against HSBC Holdings Plc. (HSBA.L)
Rakoff is also considering whether the trustee can invoke racketeering law in a $58.8 billion lawsuit against Italy's UniCredit SpA (CRDI.MI), Austria's Bank Medici AG and its founder Sonja Kohn, and other defendants.
JPMorgan has until Aug. 1 to respond to the amended complaint, Picard said.
Madoff, 73, was arrested on Dec. 11, 2008, and after pleading guilty is serving a 150-year prison sentence.
JPMorgan shares fell 16 cents in after-hours trading, after closing Friday's session down 58 cents at $39.49.
The cases are Picard v. JPMorgan Chase & Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04932; and Picard v. JPMorgan Chase & Co et al, U.S. District Court, Southern District of New York, No. 11-00913. (Reporting by Jonathan Stempel in New York and Jochelle Mendonca in Bangalore; editing by Andre Grenon, Gary Hill)
* Damages request rises to $19 billion from $5.4 billion
* Trustee Irving Picard seeks additional $900 million
* JPMorgan, Madoff's main bank, calls lawsuit meritless (Adds details from complaint, JPMorgan statement)
By Jonathan Stempel and Jochelle Mendonca
NEW YORK, June 24 (Reuters) - The trustee seeking money for Bernard Madoff's victims is now demanding $19 billion in damages from JPMorgan Chase & Co (JPM.N), more than tripling what he hopes to recover from what had been the main bank for the now-imprisoned Ponzi schemer.
The amended complaint by the trustee Irving Picard adds new charges and was filed three days after the second-largest U.S. bank agreed to pay $153.6 million to settle U.S. Securities and Exchange Commission fraud charges. [ID:nN1E75K13Z]
Picard maintained that JPMorgan was "thoroughly complicit" in Madoff's fraud and ignored red flags. In his original complaint, made public in February, he had sought $6.4 billion, including $5.4 billion of damages and $1 billion for fraudulent transfers and claims. [ID:nN16236764]
"JPMorgan Chase chose to enable Madoff's fraud, not just through the various ways it participated in its activity, but by helping to cover Madoff's naked theft with the imprimatur of a globally recognized financial institution," the 155-page amended complaint said.
The higher damage request reflects "life-to-date damages," or what the trustee considers the minimum losses over the entirety of Madoff's Ponzi scheme.
Picard is also seeking at least $500 million that JPMorgan made "off the backs of Madoff's victims," and more than $400 million of alleged fraudulent transfers.
Tasha Pelio, a JPMorgan spokeswoman, repeated in an email the bank's earlier statement that Picard's lawsuit is meritless and distorts the facts and law.
"JPMorgan did not know about or in any way become a party to the fraud orchestrated by Bernard Madoff," she said. "At all times, JPMorgan complied fully with all laws and regulations governing bank accounts."
Picard has filed roughly 1,050 lawsuits seeking more than $100 billion for former investors at Bernard L. Madoff Investment Securities LLC.
"BEFORE THEIR VERY EYES"
The amended JPMorgan complaint adds new allegations that another financial services company around 1997 investigated nearly daily transfers of $1 million to $10 million between Madoff's account there and his account at Chase.
It said that company questioned Madoff's employees about the suspicious back-and-forth transfers. Having failed to be satisfied about them, they closed Madoff's account, it said.
"JPMorgan Chase's bankers literally watched the fraud unfold before their very eyes," Deborah Renner, a lawyer representing Picard, said in a statement. Both are partners at the law firm Baker & Hostetler.
The amended complaint also discusses Madoff's longtime relationship with Sterling Equities, a private banking customer of JPMorgan founded by Fred Wilpon and Saul Katz, owners of the New York Mets baseball team.
Picard has sued the Mets' owners for $1 billion, prompting them to enter talks to sell part of the team to hedge fund manager David Einhorn for $200 million. [ID:nN26247232] The owners have denied knowing Madoff was committing fraud.
In a regulatory filing last month, JPMorgan estimated that as of March 31 it might have to pay out as much as $4.5 billion more for litigation than it had set aside for that purpose. It also said it faced more than 10,000 legal proceedings.
Tuesday's SEC accord resolved charges that JPMorgan did not tell investors that a hedge fund helped shape -- and then bet against -- complex mortgage securities they bought.
HSBC, BANK MEDICI, UNICREDIT ALSO SUED
Picard's case against JPMorgan is being overseen by U.S. District Judge Colleen McMahon.
It is one of three high-profile Madoff lawsuits that have been moved to federal district court, where juries can hear cases, from bankruptcy court, where Picard originally sued.
U.S. District Judge Jed Rakoff is reviewing some issues in Picard's $9 billion case against HSBC Holdings Plc. (HSBA.L)
Rakoff is also considering whether the trustee can invoke racketeering law in a $58.8 billion lawsuit against Italy's UniCredit SpA (CRDI.MI), Austria's Bank Medici AG and its founder Sonja Kohn, and other defendants.
JPMorgan has until Aug. 1 to respond to the amended complaint, Picard said.
Madoff, 73, was arrested on Dec. 11, 2008, and after pleading guilty is serving a 150-year prison sentence.
JPMorgan shares fell 16 cents in after-hours trading, after closing Friday's session down 58 cents at $39.49.
The cases are Picard v. JPMorgan Chase & Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04932; and Picard v. JPMorgan Chase & Co et al, U.S. District Court, Southern District of New York, No. 11-00913. (Reporting by Jonathan Stempel in New York and Jochelle Mendonca in Bangalore; editing by Andre Grenon, Gary Hill)
ful
Clearwire up on optimism about Sprint partnership
NEW YORK | Wed Jun 22, 2011 3:26pm EDT
(Reuters) - Shares in Clearwire Corp (CLWR.O) rose almost 10 percent on Wednesday, as investors bet that it is in a good position to forge a closer relationship with Sprint Nextel Corp (S.N)
Clearwire, which is 54 percent owned by Sprint, does not have enough cash to expand its high-speed wireless service alone, but a Sprint network deal would reduce costs as it would allow both operators to share network equipment and broadcast towers.
Some investors have worried that Clearwire could become less important to Sprint because Sprint has also discussed a network agreement with Harbinger Capital-backed rival LightSquared. Sprint currently depends on Clearwire's network to offer its own brand of high-speed wireless service.
Harbinger's high-profile manager Philip Falcone sent investors a letter last week saying that LightSquared had signed a Sprint deal, according to reports.
But because of GPS interference issues that LightSquared needs to resolve, analysts are now questioning whether LightSquared is a good partner for Sprint's efforts to build its next generation high-speed wireless services known as 4G.
LightSquared said on Monday that it would use different airwaves than originally planned to help combat interference problems with GPS services, such as airline navigation systems, but the GPS industry immediately rejected the proposal.
This gave Clearwire investors new hope.
"Sprint's 4G option with Clearwire could move to the fore as LightSquared sees interference," was the title for a June 22 research note from JPMorgan analyst Philip Cusick.
"With LightSquared facing GPS interference ... we think Sprint could increasingly focus on retaining Clearwire as a long-term wholesale option," Cusick said.
Clearwire shares were up 37 cents or 9.8 percent to $4.14 on Nasdaq after Cusick released his report.
Any uncertainty about LightSquared is seen as good news among Clearwire investors, according to Credit Suisse analyst Jonathan Chaplin.
"The more alternatives that exist, the more (Clearwire) investors are nervous," Chaplin said. "Alternatives going away is good for Clearwire's equity."
(Reporting by Sinead Carew; editing by Gerald E. McCormick)
full story
(Reuters) - Shares in Clearwire Corp (CLWR.O) rose almost 10 percent on Wednesday, as investors bet that it is in a good position to forge a closer relationship with Sprint Nextel Corp (S.N)
Clearwire, which is 54 percent owned by Sprint, does not have enough cash to expand its high-speed wireless service alone, but a Sprint network deal would reduce costs as it would allow both operators to share network equipment and broadcast towers.
Some investors have worried that Clearwire could become less important to Sprint because Sprint has also discussed a network agreement with Harbinger Capital-backed rival LightSquared. Sprint currently depends on Clearwire's network to offer its own brand of high-speed wireless service.
Harbinger's high-profile manager Philip Falcone sent investors a letter last week saying that LightSquared had signed a Sprint deal, according to reports.
But because of GPS interference issues that LightSquared needs to resolve, analysts are now questioning whether LightSquared is a good partner for Sprint's efforts to build its next generation high-speed wireless services known as 4G.
LightSquared said on Monday that it would use different airwaves than originally planned to help combat interference problems with GPS services, such as airline navigation systems, but the GPS industry immediately rejected the proposal.
This gave Clearwire investors new hope.
"Sprint's 4G option with Clearwire could move to the fore as LightSquared sees interference," was the title for a June 22 research note from JPMorgan analyst Philip Cusick.
"With LightSquared facing GPS interference ... we think Sprint could increasingly focus on retaining Clearwire as a long-term wholesale option," Cusick said.
Clearwire shares were up 37 cents or 9.8 percent to $4.14 on Nasdaq after Cusick released his report.
Any uncertainty about LightSquared is seen as good news among Clearwire investors, according to Credit Suisse analyst Jonathan Chaplin.
"The more alternatives that exist, the more (Clearwire) investors are nervous," Chaplin said. "Alternatives going away is good for Clearwire's equity."
(Reporting by Sinead Carew; editing by Gerald E. McCormick)
full story
Fed stance lifts dollar, sterling turns ugly
By Antoni Slodkowski and Ian Chua
TOKYO | Thu Jun 23, 2011 2:02am EDT
(Reuters) - The dollar extended its gains from the previous day on Thursday as sovereign Asian players bought it back after the Federal Reserve confirmed it was ceasing its $600 billion bond-buying program at the end of June and gave no hint of further economic stimulus.
Sterling slumped to three-month lows against the greenback after the Bank of England raised the prospect of offering more stimulus, in contrast to the Fed.
The dollar index .DXY, which tracks the U.S. currency's moves against six major currencies, hovered above the Ichimoku cloud and investors said it could approach resistance at its 100-day moving average at 75.63 in coming weeks.
"But it all hinges on interest rates. Investors are buying back the dollar for now, and there even may be some who are going long, but yields on U.S. Treasuries would have to rise to help it break the downward trendline off its 2010 highs," said Teppei Ino, currency analyst at Bank of Tokyo-Mitsubishi UFJ.
The closely watched 10-year Treasury yield was still below the crucial 3 percent line, although it rose 2/32 in price to yield about 2.973 percent, staying almost unchanged from 2.974 percent in late U.S. trade on Wednesday.
The dollar index has lost more than 15 percent in the last year as dollar interest rates hovered at record lows and as some investors saw the greenback as an attractive funding currency.
Other market players said they were now eyeing a June 16 high, with many suggesting that if the dollar could decisively break above the 76.02 hit that day, it may post further gains in coming months.
"Taking a step back, I would say that at this stage the dollar has stopped its long-term fall, and investors need to wait for more signals about the U.S. economy to pile more aggressively into it," Ino said.
The Fed reiterated it would continue to reinvest principal payments from its holdings and that the U.S. recovery should gradually pick up heading into 2012, even as it cut its forecasts for economic growth.
Analysts said unless the economic situation deteriorated markedly, another round of stimulus from the Fed looked highly unlikely.
The dollar last traded at 80.45 yen, pulling up from Wednesday's trough around 79.98, having hit the session's peak of 80.65 after triggering stop losses around 80.50 and as importers chased it higher at the local fixing.
Some traders cited Asian sovereign players scooping up the dollar across the board, while a US bank was seen buying USD/JPY, with a dollar offer by a major Japanese bank capping gains.
CONVINCING GREEKS
The dollar also firmed against the euro, which fell 0.4 percent to $1.4305, well off Wednesday's high near $1.4441. Immediate support is seen around $1.4300, a 38.2 percent retracement of the June 16-22 rise.
The outlook for the single currency remains tied to developments in Greece, with markets now squarely focused on a meeting of European leaders on Thursday and Friday.
They will try to convince Greeks and financial markets that they have a workable plan to help Athens avoid a debt default and return to financial stability.
A trader for a Japanese brokerage said the market may still be long in the wake of its rise the previous day, after the Greek government won a vote of confidence. "I think it may be better to try to sell the euro on rallies," the trader said.
The dollar also strengthened against commodity currencies like the Australian dollar. The Aussie dipped to $1.0553, down about a cent from Wednesday's high.
It came back up after being offloaded to the session's low of 1.0533 after China's purchasing managers' survey showed factory-sector growth was close to stalling in June even as price pressures eased, reflecting the impact of tightening in monetary policy and slack global demand.
TURNING UGLY
Sterling sagged to three-month lows after minutes of the BoE June meeting released on Wednesday signaled UK interest rates were unlikely to rise from their record low 0.5 percent this year and flagged a greater chance of the BoE opting instead for more quantitative easing.
The very idea of the BoE printing more money saw sterling promptly fall to $1.6050, lows not seen since April 1. It later lost more ground, falling to as low as 1.6017.
It also declined against the euro, which at one point rose to a two-week high of 89.53 pence, on track to test its June 8 high of 89.76 pence.
"The pound, in the process, has inherited the mantle of 'worst currency in Europe'," said Kit Juckes, strategist at Societe Generale.
(Additional reporting by Chikafumi Hodo in Tokyo and Masayuki Kitano in Singapore)
full story
TOKYO | Thu Jun 23, 2011 2:02am EDT
(Reuters) - The dollar extended its gains from the previous day on Thursday as sovereign Asian players bought it back after the Federal Reserve confirmed it was ceasing its $600 billion bond-buying program at the end of June and gave no hint of further economic stimulus.
Sterling slumped to three-month lows against the greenback after the Bank of England raised the prospect of offering more stimulus, in contrast to the Fed.
The dollar index .DXY, which tracks the U.S. currency's moves against six major currencies, hovered above the Ichimoku cloud and investors said it could approach resistance at its 100-day moving average at 75.63 in coming weeks.
"But it all hinges on interest rates. Investors are buying back the dollar for now, and there even may be some who are going long, but yields on U.S. Treasuries would have to rise to help it break the downward trendline off its 2010 highs," said Teppei Ino, currency analyst at Bank of Tokyo-Mitsubishi UFJ.
The closely watched 10-year Treasury yield was still below the crucial 3 percent line, although it rose 2/32 in price to yield about 2.973 percent, staying almost unchanged from 2.974 percent in late U.S. trade on Wednesday.
The dollar index has lost more than 15 percent in the last year as dollar interest rates hovered at record lows and as some investors saw the greenback as an attractive funding currency.
Other market players said they were now eyeing a June 16 high, with many suggesting that if the dollar could decisively break above the 76.02 hit that day, it may post further gains in coming months.
"Taking a step back, I would say that at this stage the dollar has stopped its long-term fall, and investors need to wait for more signals about the U.S. economy to pile more aggressively into it," Ino said.
The Fed reiterated it would continue to reinvest principal payments from its holdings and that the U.S. recovery should gradually pick up heading into 2012, even as it cut its forecasts for economic growth.
Analysts said unless the economic situation deteriorated markedly, another round of stimulus from the Fed looked highly unlikely.
The dollar last traded at 80.45 yen, pulling up from Wednesday's trough around 79.98, having hit the session's peak of 80.65 after triggering stop losses around 80.50 and as importers chased it higher at the local fixing.
Some traders cited Asian sovereign players scooping up the dollar across the board, while a US bank was seen buying USD/JPY, with a dollar offer by a major Japanese bank capping gains.
CONVINCING GREEKS
The dollar also firmed against the euro, which fell 0.4 percent to $1.4305, well off Wednesday's high near $1.4441. Immediate support is seen around $1.4300, a 38.2 percent retracement of the June 16-22 rise.
The outlook for the single currency remains tied to developments in Greece, with markets now squarely focused on a meeting of European leaders on Thursday and Friday.
They will try to convince Greeks and financial markets that they have a workable plan to help Athens avoid a debt default and return to financial stability.
A trader for a Japanese brokerage said the market may still be long in the wake of its rise the previous day, after the Greek government won a vote of confidence. "I think it may be better to try to sell the euro on rallies," the trader said.
The dollar also strengthened against commodity currencies like the Australian dollar. The Aussie dipped to $1.0553, down about a cent from Wednesday's high.
It came back up after being offloaded to the session's low of 1.0533 after China's purchasing managers' survey showed factory-sector growth was close to stalling in June even as price pressures eased, reflecting the impact of tightening in monetary policy and slack global demand.
TURNING UGLY
Sterling sagged to three-month lows after minutes of the BoE June meeting released on Wednesday signaled UK interest rates were unlikely to rise from their record low 0.5 percent this year and flagged a greater chance of the BoE opting instead for more quantitative easing.
The very idea of the BoE printing more money saw sterling promptly fall to $1.6050, lows not seen since April 1. It later lost more ground, falling to as low as 1.6017.
It also declined against the euro, which at one point rose to a two-week high of 89.53 pence, on track to test its June 8 high of 89.76 pence.
"The pound, in the process, has inherited the mantle of 'worst currency in Europe'," said Kit Juckes, strategist at Societe Generale.
(Additional reporting by Chikafumi Hodo in Tokyo and Masayuki Kitano in Singapore)
full story
Safran ready to pay 4 billion euro for Avio: report
PARIS | Tue Jun 21, 2011 7:14am EDT
(Reuters) - French aerospace and defense group Safran (SAF.PA) is ready to pay 4 billion euros ($5.74 billion) for Italy's Avio, a propulsion specialist, French weekly La Lettre de L'Expansion reported.
A Safran spokeswoman was not immediately available for comment.
(Reporting by Lionel Laurent and Blaise Robinson)
full story
(Reuters) - French aerospace and defense group Safran (SAF.PA) is ready to pay 4 billion euros ($5.74 billion) for Italy's Avio, a propulsion specialist, French weekly La Lettre de L'Expansion reported.
A Safran spokeswoman was not immediately available for comment.
(Reporting by Lionel Laurent and Blaise Robinson)
full story
Analysis: Thai army takes sides as divisive election nears
China's Huawei storms into tablet PC sector
By Eveline Danubrata and Harry Suhartono
SINGAPORE | Mon Jun 20, 2011 8:07am EDT
(Reuters) - China's Huawei Technologies unveiled a 7-inch Android-based tablet PC in Singapore on Monday and said it was also developing a 10-inch device, putting it in competition with Apple and Samsung Electronics.
Victor Xu, the chief marketing officer of Huawei unit Huawei Device, told Reuters in an interview that the company plans to be among the top five handset vendors in three years time, a market currently dominated by the likes of Nokia, Samsung and Apple.
"We are also developing a 10-inch tablet...We hope to launch it this year," Xu told Reuters. However, he declined to give more details and also would not reveal the likely price of the newly introduced 7-inch tablet, the MediaPad.
The company, the world's second-biggest supplier of telecommunications equipment behind Ericsson, has not specified any sales target for the MediaPad which will be commercially available in the third quarter this year through retail stores as well as telecom operators.
Huawei Device is a division of Huawei Technologies that makes cell phones, smartphones and tablet PCs.
It said the MediaPad will run on the Android operating system from Google Inc and use a dual-core 1.2 GHz processor from Qualcomm. It will also come with pre-installed applications such as Facebook and Twitter.
Huawei competes with Ericsson, Nokia Siemens Networks and ZTE Corp in global network gear and is increasingly pushing into the mobile devices sector.
"We believe we can enter into the top five vendors in the global handset market over the next three years," Xu said.
The firm had said in April it expects revenue to reach the $100 billion mark in a decade, driven by sales of telecom devices and smartphones.
However, Huawei's MediaPad faces an uphill task. Apple sold 4.7 million iPads -- which command an 80 percent share of a burgeoning tablet market -- in its quarter ended March amid roaring global demand.
In China, apart from Apple, Huawei's tablet PCs also compete with Lenovo and ZTE.
Xu told Reuters in April that Huawei aims to ship one million tablet PCs this year after selling more than 200,000 units since launching its tablet PCs late last year.
In the smartphones sector, Huawei is betting on Google's Android operating system to compete with Apple's iPhone.
ZTE, China's no. 2 network equipment maker, plans to launch its smartphones based on Microsoft's Mango operating system in the United States early next year, its U.S. CEO Cheng Lixin told Reuters in an interview in May.
Huawei's overseas expansion plans in the network equipment sector have hit roadblocks on suspicions that the company maintains links with China's military.
Ren Zhengfei, Huawei's low-profile founder who started the company with just 21,000 yuan ($3,200), served in the People's Liberation Army until 1983.
(Reporting by Eveline Danubrata and Harry Suhartono; Editing by Muralikumar Anantharaman)
Full Story
SINGAPORE | Mon Jun 20, 2011 8:07am EDT
(Reuters) - China's Huawei Technologies unveiled a 7-inch Android-based tablet PC in Singapore on Monday and said it was also developing a 10-inch device, putting it in competition with Apple and Samsung Electronics.
Victor Xu, the chief marketing officer of Huawei unit Huawei Device, told Reuters in an interview that the company plans to be among the top five handset vendors in three years time, a market currently dominated by the likes of Nokia, Samsung and Apple.
"We are also developing a 10-inch tablet...We hope to launch it this year," Xu told Reuters. However, he declined to give more details and also would not reveal the likely price of the newly introduced 7-inch tablet, the MediaPad.
The company, the world's second-biggest supplier of telecommunications equipment behind Ericsson, has not specified any sales target for the MediaPad which will be commercially available in the third quarter this year through retail stores as well as telecom operators.
Huawei Device is a division of Huawei Technologies that makes cell phones, smartphones and tablet PCs.
It said the MediaPad will run on the Android operating system from Google Inc and use a dual-core 1.2 GHz processor from Qualcomm. It will also come with pre-installed applications such as Facebook and Twitter.
Huawei competes with Ericsson, Nokia Siemens Networks and ZTE Corp in global network gear and is increasingly pushing into the mobile devices sector.
"We believe we can enter into the top five vendors in the global handset market over the next three years," Xu said.
The firm had said in April it expects revenue to reach the $100 billion mark in a decade, driven by sales of telecom devices and smartphones.
However, Huawei's MediaPad faces an uphill task. Apple sold 4.7 million iPads -- which command an 80 percent share of a burgeoning tablet market -- in its quarter ended March amid roaring global demand.
In China, apart from Apple, Huawei's tablet PCs also compete with Lenovo and ZTE.
Xu told Reuters in April that Huawei aims to ship one million tablet PCs this year after selling more than 200,000 units since launching its tablet PCs late last year.
In the smartphones sector, Huawei is betting on Google's Android operating system to compete with Apple's iPhone.
ZTE, China's no. 2 network equipment maker, plans to launch its smartphones based on Microsoft's Mango operating system in the United States early next year, its U.S. CEO Cheng Lixin told Reuters in an interview in May.
Huawei's overseas expansion plans in the network equipment sector have hit roadblocks on suspicions that the company maintains links with China's military.
Ren Zhengfei, Huawei's low-profile founder who started the company with just 21,000 yuan ($3,200), served in the People's Liberation Army until 1983.
(Reporting by Eveline Danubrata and Harry Suhartono; Editing by Muralikumar Anantharaman)
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Convicted ex-broker's term likely to stand -judge
Fri Jun 17, 2011 8:41pm EDT
* Says Eric Butler's sentence still likely 5 yrs in prison
* Judge says appellate reversal may be "Pyrrhic victory"
* Ex-Credit Suisse broker can waive objection to venue
* Judge warns that retrial could lead to harsher sentence
By Jessica Dye
NEW YORK, June 17 (Reuters) - An ex-Credit Suisse AG (CSGN.VX) broker convicted on multiple counts of defrauding institutional investors out of $1 billion is likely still to face a five-year prison term despite a recent appeals-court dismissal of one of his convictions, a federal judge said.
Eric Butler may ultimately find the dismissal "a Pyrrhic victory at best, or a disaster at worst," U.S. District Judge Jack Weinstein wrote in a memorandum released on Friday.
Butler was convicted by a Brooklyn federal jury in 2009 on charges of conspiracy to commit wire and securities fraud, as well as one count of securities fraud. He was sentenced to five years on each count, to be served concurrently.
On Wednesday, the 2nd U.S. Circuit Court of Appeals reversed the securities fraud conviction, ruling that prosecutors had erred in bringing the case in Brooklyn instead of Manhattan federal court. The appeals court also ordered the trial court to resentence Butler on the two conspiracy counts.
In his memorandum Weinstein said that "it is unlikely that the sentencing terms on (the conspiracy counts) will be changed from five years' imprisonment."
As for the dismissed count, Weinstein suggested that Butler "should consider whether he now wishes to (possibly retroactively) consent to venue" in the Brooklyn court.
If he does not consent, Weinstein warned, prosecutors could choose to re-indict him on that count in Manhattan, or possibly in Brooklyn once again, should Butler's co-defendant, who previously took the stand against him, provide new evidence to tie the crime to that venue.
If a second trial resulted in conviction, Butler could receive an even harsher sentence, Weinstein cautioned. Securities fraud carries a maximum sentence of 20 years in prison.
RETURNED TO PRISON
A resentencing hearing on the conspiracy counts is scheduled for June 28. On that date, Butler will be immediately returned to prison, in accordance with a request filed by the U.S. attorney's office on Wednesday. He has been free on bail since 2009 pending the appeal of his conviction.
The charges against Butler and co-defendant Julian Tzolov -- who previously pleaded guilty and cooperated with prosecutors in building the case against Butler -- related to a scheme that prosecutors said bilked institutional clients such as GlaxoSmithKline, Roche International LLC, and ST Microelectronics NV out of $1 billion by passing off investments in risky subprime-backed auction-rate securities as the more conservative purchases the clients had approved.
Tzolov was sentenced by Weinstein to two years in prison, in addition to the two years he has already spent behind bars awaiting sentencing.
An attorney for Butler, Steven Molo of MoloLamken, did not immediately return a request for comment.
The case is U.S. v. Tzolov et al, in the U.S. District Court for the Eastern District of New York, no. 08-00370. (Reporting by Jessica Dye; Editing by Gary Hill)
full story
* Says Eric Butler's sentence still likely 5 yrs in prison
* Judge says appellate reversal may be "Pyrrhic victory"
* Ex-Credit Suisse broker can waive objection to venue
* Judge warns that retrial could lead to harsher sentence
By Jessica Dye
NEW YORK, June 17 (Reuters) - An ex-Credit Suisse AG (CSGN.VX) broker convicted on multiple counts of defrauding institutional investors out of $1 billion is likely still to face a five-year prison term despite a recent appeals-court dismissal of one of his convictions, a federal judge said.
Eric Butler may ultimately find the dismissal "a Pyrrhic victory at best, or a disaster at worst," U.S. District Judge Jack Weinstein wrote in a memorandum released on Friday.
Butler was convicted by a Brooklyn federal jury in 2009 on charges of conspiracy to commit wire and securities fraud, as well as one count of securities fraud. He was sentenced to five years on each count, to be served concurrently.
On Wednesday, the 2nd U.S. Circuit Court of Appeals reversed the securities fraud conviction, ruling that prosecutors had erred in bringing the case in Brooklyn instead of Manhattan federal court. The appeals court also ordered the trial court to resentence Butler on the two conspiracy counts.
In his memorandum Weinstein said that "it is unlikely that the sentencing terms on (the conspiracy counts) will be changed from five years' imprisonment."
As for the dismissed count, Weinstein suggested that Butler "should consider whether he now wishes to (possibly retroactively) consent to venue" in the Brooklyn court.
If he does not consent, Weinstein warned, prosecutors could choose to re-indict him on that count in Manhattan, or possibly in Brooklyn once again, should Butler's co-defendant, who previously took the stand against him, provide new evidence to tie the crime to that venue.
If a second trial resulted in conviction, Butler could receive an even harsher sentence, Weinstein cautioned. Securities fraud carries a maximum sentence of 20 years in prison.
RETURNED TO PRISON
A resentencing hearing on the conspiracy counts is scheduled for June 28. On that date, Butler will be immediately returned to prison, in accordance with a request filed by the U.S. attorney's office on Wednesday. He has been free on bail since 2009 pending the appeal of his conviction.
The charges against Butler and co-defendant Julian Tzolov -- who previously pleaded guilty and cooperated with prosecutors in building the case against Butler -- related to a scheme that prosecutors said bilked institutional clients such as GlaxoSmithKline, Roche International LLC, and ST Microelectronics NV out of $1 billion by passing off investments in risky subprime-backed auction-rate securities as the more conservative purchases the clients had approved.
Tzolov was sentenced by Weinstein to two years in prison, in addition to the two years he has already spent behind bars awaiting sentencing.
An attorney for Butler, Steven Molo of MoloLamken, did not immediately return a request for comment.
The case is U.S. v. Tzolov et al, in the U.S. District Court for the Eastern District of New York, no. 08-00370. (Reporting by Jessica Dye; Editing by Gary Hill)
full story
Indicted John Edwards smiles in police mug shot
WASHINGTON | Wed Jun 15, 2011 3:20pm EDT
(Reuters) - Former senator and vice presidential nominee John Edwards could face prison time if convicted of violating campaign finance laws, but he is smiling in a mug shot released on Wednesday by federal officials.
The pictures were obtained by Reuters through a Freedom of Information Act request to the U.S. Marshals Service.
Edwards was indicted on federal charges in North Carolina on June 3 for using nearly $1 million in illegal campaign funds to help cover up an extramarital affair he had while seeking the 2008 Democratic presidential nomination.
He has pleaded not guilty to charges including conspiracy, taking illegal campaign contributions and making false statements.
The indictment accuses Edwards of secretly getting the money to help hide his affair with a campaign worker, Rielle Hunter, knowing that revelations of the liaison and her pregnancy would destroy his political aspirations.
Prosecutors said the gifts were an attempt to circumvent election laws. Edwards' attorneys dispute that any laws were broken, saying the gifts were an attempt to keep the affair hidden from his now-deceased wife, Elizabeth.
"There's no question that I've done wrong and I take full responsibility for having done wrong, and I will regret for the rest of my life the pain and the harm that I've caused to others," Edwards said after his initial court hearing.
"But I did not break the law and I never, ever thought that I was breaking the law."
(Reporting by Jeremy Pelofsky; Writing by Colleen Jenkins; Editing by Greg McCune)
full story
(Reuters) - Former senator and vice presidential nominee John Edwards could face prison time if convicted of violating campaign finance laws, but he is smiling in a mug shot released on Wednesday by federal officials.
The pictures were obtained by Reuters through a Freedom of Information Act request to the U.S. Marshals Service.
Edwards was indicted on federal charges in North Carolina on June 3 for using nearly $1 million in illegal campaign funds to help cover up an extramarital affair he had while seeking the 2008 Democratic presidential nomination.
He has pleaded not guilty to charges including conspiracy, taking illegal campaign contributions and making false statements.
The indictment accuses Edwards of secretly getting the money to help hide his affair with a campaign worker, Rielle Hunter, knowing that revelations of the liaison and her pregnancy would destroy his political aspirations.
Prosecutors said the gifts were an attempt to circumvent election laws. Edwards' attorneys dispute that any laws were broken, saying the gifts were an attempt to keep the affair hidden from his now-deceased wife, Elizabeth.
"There's no question that I've done wrong and I take full responsibility for having done wrong, and I will regret for the rest of my life the pain and the harm that I've caused to others," Edwards said after his initial court hearing.
"But I did not break the law and I never, ever thought that I was breaking the law."
(Reporting by Jeremy Pelofsky; Writing by Colleen Jenkins; Editing by Greg McCune)
full story
Carlyle IPO could raise $1 billion: source
By Megan Davies and Clare Baldwin
NEW YORK/LOS ANGELES | Wed Jun 15, 2011 6:11pm EDT
(Reuters) - Private equity giant Carlyle Group CYL.UL is moving closer to an initial public offering, and could raise around $1 billion based on what banks are pitching, one source familiar with the process said on Wednesday.
Carlyle, co-founded in 1987 by David Rubenstein, has yet to release any information about its profitability and management fees, making it impossible to accurately value how much it would be worth as a public company.
Carlyle was valued at $20 billion in September 2007, when an investment unit of the Abu Dhabi government bought a 7.5 percent stake in the company, before the credit crisis sent stock markets sliding.
It had an implied value of about $6 billion in June 2010 -- based on the $334 million value Calpers gave to its 5.5 percent stake, bought in 2001. Calpers discloses the figure in its annual investment report under the section "Expansion Capital".
If Carlyle's value had appreciated in line with rival Blackstone's -- which is up 60 percent since then -- it could be valued today at about $10 billion. A variant of this valuation method was previously reported by Fortune publication's Term Sheet blog.
An IPO would see Carlyle join rivals Blackstone Group (BX.N), Kohlberg Kravis Roberts & Co (KKR.N) and Apollo Global Management (APO.N) as publicly traded private equity firms.
Private equity firms saw the value of their portfolio companies diminish and their ability to strike new deals evaporate in the wake of the credit crisis. However, the outlook for both selling portfolio companies and striking new deals has since improved.
Publicly traded shares can help a company incentivize employees and provide a currency for acquisitions.
Carlyle hopes to file its IPO prospectus with the U.S. Securities and Exchange Commission in the third quarter, sources previously told Reuters.
Banks have been making pitches this week to underwrite the deal, two sources familiar with the process said on Wednesday.
An offering could be around $1 billion, based on what banks are pitching, one of the sources said. The second source said an offering of around $1 billion would be a reasonable size for Carlyle to target. CNBC earlier reported the IPO could total $750 million to $1.2 billion.
Carlyle declined to comment.
If Carlyle were to file for an IPO in the third quarter, it could realistically price an offering and begin trading some time after the September U.S. Labor Day, but before the December holiday season.
If it misses that window, it could wait until early 2012, after it finalizes its full-year 2011 financial statements.
EXPANDING BUSINESS MODEL
Carlyle, which has invested in companies including Dunkin Brands, Alliance Boots and Freescale Semiconductor, has been expanding its business model. In January, it struck a deal to buy Dutch-based private equity fund-of-funds AlpInvest Partners, Europe's largest, to bulk up its product menu and attract more money from investors.
The firm has assets under management of more than $106.7 billion according to its website. In February, Carlyle hired NASDAQ OMX Group Inc (NDAQ.O) Chief Financial Officer Adena Friedman as its CFO.
Blackstone Group blazed the trail for private equity firms going public in 2007 with its own high-profile IPO -- timed just before the market started to collapse.
Alongside it were hedge funds Och-Ziff Capital Management Group LLC (OZM.N) and Fortress Investment Group LLC (FIG.N) which all made their debuts on the New York Stock Exchange in the space of a year.
Rival buyout firms such as Apollo and KKR, which had also been planning to list, watched in the wings as their chance evaporated.
Since the economy and market started recovering, private equity firms have started looking again at going public.
KKR, which originally filed for a U.S. IPO in 2007, listed in Amsterdam instead. It moved its shares to the New York Stock Exchange in July. Apollo listed on the NYSE in March.
Separately, Carlyle said on Wednesday it had raised two funds totaling $1 billion to make investments in Brazil and elsewhere in South America.
(Reporting by Megan Davies, Clare Baldwin and Paritosh Bansal, editing by Gerald E. McCormick,Derek Caney and John Wallace)
full story
NEW YORK/LOS ANGELES | Wed Jun 15, 2011 6:11pm EDT
(Reuters) - Private equity giant Carlyle Group CYL.UL is moving closer to an initial public offering, and could raise around $1 billion based on what banks are pitching, one source familiar with the process said on Wednesday.
Carlyle, co-founded in 1987 by David Rubenstein, has yet to release any information about its profitability and management fees, making it impossible to accurately value how much it would be worth as a public company.
Carlyle was valued at $20 billion in September 2007, when an investment unit of the Abu Dhabi government bought a 7.5 percent stake in the company, before the credit crisis sent stock markets sliding.
It had an implied value of about $6 billion in June 2010 -- based on the $334 million value Calpers gave to its 5.5 percent stake, bought in 2001. Calpers discloses the figure in its annual investment report under the section "Expansion Capital".
If Carlyle's value had appreciated in line with rival Blackstone's -- which is up 60 percent since then -- it could be valued today at about $10 billion. A variant of this valuation method was previously reported by Fortune publication's Term Sheet blog.
An IPO would see Carlyle join rivals Blackstone Group (BX.N), Kohlberg Kravis Roberts & Co (KKR.N) and Apollo Global Management (APO.N) as publicly traded private equity firms.
Private equity firms saw the value of their portfolio companies diminish and their ability to strike new deals evaporate in the wake of the credit crisis. However, the outlook for both selling portfolio companies and striking new deals has since improved.
Publicly traded shares can help a company incentivize employees and provide a currency for acquisitions.
Carlyle hopes to file its IPO prospectus with the U.S. Securities and Exchange Commission in the third quarter, sources previously told Reuters.
Banks have been making pitches this week to underwrite the deal, two sources familiar with the process said on Wednesday.
An offering could be around $1 billion, based on what banks are pitching, one of the sources said. The second source said an offering of around $1 billion would be a reasonable size for Carlyle to target. CNBC earlier reported the IPO could total $750 million to $1.2 billion.
Carlyle declined to comment.
If Carlyle were to file for an IPO in the third quarter, it could realistically price an offering and begin trading some time after the September U.S. Labor Day, but before the December holiday season.
If it misses that window, it could wait until early 2012, after it finalizes its full-year 2011 financial statements.
EXPANDING BUSINESS MODEL
Carlyle, which has invested in companies including Dunkin Brands, Alliance Boots and Freescale Semiconductor, has been expanding its business model. In January, it struck a deal to buy Dutch-based private equity fund-of-funds AlpInvest Partners, Europe's largest, to bulk up its product menu and attract more money from investors.
The firm has assets under management of more than $106.7 billion according to its website. In February, Carlyle hired NASDAQ OMX Group Inc (NDAQ.O) Chief Financial Officer Adena Friedman as its CFO.
Blackstone Group blazed the trail for private equity firms going public in 2007 with its own high-profile IPO -- timed just before the market started to collapse.
Alongside it were hedge funds Och-Ziff Capital Management Group LLC (OZM.N) and Fortress Investment Group LLC (FIG.N) which all made their debuts on the New York Stock Exchange in the space of a year.
Rival buyout firms such as Apollo and KKR, which had also been planning to list, watched in the wings as their chance evaporated.
Since the economy and market started recovering, private equity firms have started looking again at going public.
KKR, which originally filed for a U.S. IPO in 2007, listed in Amsterdam instead. It moved its shares to the New York Stock Exchange in July. Apollo listed on the NYSE in March.
Separately, Carlyle said on Wednesday it had raised two funds totaling $1 billion to make investments in Brazil and elsewhere in South America.
(Reporting by Megan Davies, Clare Baldwin and Paritosh Bansal, editing by Gerald E. McCormick,Derek Caney and John Wallace)
full story
Nokia wins rare victory as Apple settles legal row
By Tarmo Virki, European Technology Correspondent
HELSINKI | Tue Jun 14, 2011 7:55am EDT
(Reuters) - Nokia notched up a rare victory against arch-rival Apple as the iPhone maker agreed to settle a long-running row over patents.
Nokia said on Tuesday the deal would boost second-quarter earnings, having warned at the end of May that it would miss targets.
Shares in the struggling cellphone maker rose 3 percent. Analysts welcomed the news and said
it would help Nokia concentrate on core business at a time when it faces huge challenges.
"This is the first positive news from Nokia for a long time. They can both focus on their businesses now, and the dispute was settled to Nokia's advantage," said Mikael Rautanen, analyst at Inderes in Helsinki.
Analysts said Nokia could be estimated to get between 1 and 2 percent of iPhone revenues, which are seen at around $43 billion this year according to a Reuters poll.
The figures demonstrate that while Nokia may have won a legal victory, it still faces a daunting task to catch up with Apple in the high end of the smartphone market, where it has fallen behind both Apple's iPhone and Google Inc's Android devices.
Earlier this week Nomura forecast Nokia would lose its position as the world's largest smartphone maker this quarter to Samsung Electronics and that Apple would surpass it next quarter.
Apple and Nokia have been locked in a legal tussle since October 2009, when Nokia sued Apple in the United States, arguing the iPhone-maker was getting a "free ride" on technologies patented by Nokia.
"The deal structure -- a one-time payment as well as running royalties -- suggests a fairly good outcome for Nokia," said Florian Mueller, independent specialist and blogger on patent battles.
"Maybe Nokia could have continued to play hardball and got an even better deal if it didn't face the challenges it undoubtedly has. But this looks like a fairly important victory," Mueller said.
An Apple spokesman confirmed the deal on Tuesday.
"We're glad to put this behind us and get back to focusing on our respective businesses," he said.
By 0914 GMT, Nokia shares were up 3.3 percent in Helsinki. Apple shares traded in Frankfurt were up 0.4 percent in low volumes.
APPLE PAYMENTS
Nokia said the deal -- which settles all litigation between the two and means both sides will withdraw complaints to the U.S. International Trade Commission -- would boost its second-quarter earnings, but said details were confidential.
"It is clear that Apple will be the payer here, and the sums will be significant," said Swedbank analyst Jari Honko.
Nokia warned on second quarter sales and profits at the end of May, abandoning hope of meeting key targets just weeks after setting them and raising questions over whether new CEO Stephen Elop can deliver on the turnaround he promised.
Following the warning analysts have slashed their estimates and expect the firm to report losses this quarter and next.
MORE BATTLES AHEAD
Legal battles have become increasingly common in the cellphone industry since Apple and Google carved out a large chunk of the lucrative and quickly expanding smartphone market at the expense of older players.
Nokia, which has said it will be more aggressive in licensing its patents, flagged further legal battles were ahead.
"This settlement .... enables us to focus on further licensing opportunities in the mobile communications market," CEO Elop said in a statement.
Analysts said makers of Google Android phones were the next likely target.
"Emerging victorious from such a war, Nokia is in a strong position to collect royalties from other industry players, particularly from makers of Android-based devices," Mueller said.
However, analysts warned the company still had a long way to go toward any recovery.
"This (the Apple deal) could cause the stock to have a bit of a relief rally today, but does very little to address the stark reality that the company is facing," said Richard Windsor, analyst at Nomura.
"Hence we see no reason to remain anything other than negative on the stock."
Technical analysts said Nokia shares had been in oversold territory since late May and momentum indicators had been signaling that it was ripe for at least a short-term, technical rebound.
The shares are still down about 25 percent since May 30, representing a 5.5 billion-euro wipeout in market capitalization for one of Europe's biggest technology companies.
(Additional reporting by Jussi Rosendahl in Helsinki, Poornima Gupta in San Francisco, Blaise Robinson in Paris and Dominic Lau in London; Editing by Sophie Walker)
full story
HELSINKI | Tue Jun 14, 2011 7:55am EDT
(Reuters) - Nokia notched up a rare victory against arch-rival Apple as the iPhone maker agreed to settle a long-running row over patents.
Nokia said on Tuesday the deal would boost second-quarter earnings, having warned at the end of May that it would miss targets.
Shares in the struggling cellphone maker rose 3 percent. Analysts welcomed the news and said
it would help Nokia concentrate on core business at a time when it faces huge challenges.
"This is the first positive news from Nokia for a long time. They can both focus on their businesses now, and the dispute was settled to Nokia's advantage," said Mikael Rautanen, analyst at Inderes in Helsinki.
Analysts said Nokia could be estimated to get between 1 and 2 percent of iPhone revenues, which are seen at around $43 billion this year according to a Reuters poll.
The figures demonstrate that while Nokia may have won a legal victory, it still faces a daunting task to catch up with Apple in the high end of the smartphone market, where it has fallen behind both Apple's iPhone and Google Inc's Android devices.
Earlier this week Nomura forecast Nokia would lose its position as the world's largest smartphone maker this quarter to Samsung Electronics and that Apple would surpass it next quarter.
Apple and Nokia have been locked in a legal tussle since October 2009, when Nokia sued Apple in the United States, arguing the iPhone-maker was getting a "free ride" on technologies patented by Nokia.
"The deal structure -- a one-time payment as well as running royalties -- suggests a fairly good outcome for Nokia," said Florian Mueller, independent specialist and blogger on patent battles.
"Maybe Nokia could have continued to play hardball and got an even better deal if it didn't face the challenges it undoubtedly has. But this looks like a fairly important victory," Mueller said.
An Apple spokesman confirmed the deal on Tuesday.
"We're glad to put this behind us and get back to focusing on our respective businesses," he said.
By 0914 GMT, Nokia shares were up 3.3 percent in Helsinki. Apple shares traded in Frankfurt were up 0.4 percent in low volumes.
APPLE PAYMENTS
Nokia said the deal -- which settles all litigation between the two and means both sides will withdraw complaints to the U.S. International Trade Commission -- would boost its second-quarter earnings, but said details were confidential.
"It is clear that Apple will be the payer here, and the sums will be significant," said Swedbank analyst Jari Honko.
Nokia warned on second quarter sales and profits at the end of May, abandoning hope of meeting key targets just weeks after setting them and raising questions over whether new CEO Stephen Elop can deliver on the turnaround he promised.
Following the warning analysts have slashed their estimates and expect the firm to report losses this quarter and next.
MORE BATTLES AHEAD
Legal battles have become increasingly common in the cellphone industry since Apple and Google carved out a large chunk of the lucrative and quickly expanding smartphone market at the expense of older players.
Nokia, which has said it will be more aggressive in licensing its patents, flagged further legal battles were ahead.
"This settlement .... enables us to focus on further licensing opportunities in the mobile communications market," CEO Elop said in a statement.
Analysts said makers of Google Android phones were the next likely target.
"Emerging victorious from such a war, Nokia is in a strong position to collect royalties from other industry players, particularly from makers of Android-based devices," Mueller said.
However, analysts warned the company still had a long way to go toward any recovery.
"This (the Apple deal) could cause the stock to have a bit of a relief rally today, but does very little to address the stark reality that the company is facing," said Richard Windsor, analyst at Nomura.
"Hence we see no reason to remain anything other than negative on the stock."
Technical analysts said Nokia shares had been in oversold territory since late May and momentum indicators had been signaling that it was ripe for at least a short-term, technical rebound.
The shares are still down about 25 percent since May 30, representing a 5.5 billion-euro wipeout in market capitalization for one of Europe's biggest technology companies.
(Additional reporting by Jussi Rosendahl in Helsinki, Poornima Gupta in San Francisco, Blaise Robinson in Paris and Dominic Lau in London; Editing by Sophie Walker)
full story
China data boosts stocks; Greek bond yields soar
By Jeremy Gaunt, European Investment Correspondent
LONDON | Tue Jun 14, 2011 8:15am EDT
(Reuters) - Evidence that China may avoid a hard landing for its high-flying economy lifted riskier assets such as stocks on Tuesday and Greece managed to raise short-term funds despite becoming S&P's lowest-rated sovereign borrower.
Wall Street looked set to open stronger.
Greece sold 1.625 billion euros ($2.33 billion) of 6-month T-bills a day after Standard & Poor's rated its debt extremely speculative.
It had to pay a higher yield -- 4.96 percent versus May's 4.88 percent -- but attracted a larger percentage of foreign buyers than the previous auction, reflecting market expectations Greece will secure a second rescue package to stave off default, at least over coming months.
The cost of insuring Greek debt against default over five years rose, as did the yield on Greek government bonds, to a record high.
But Greek stocks reversed losses to put in modest gains and European shares were otherwise buoyant.
Euro zone finance ministers were to meet in Brussels where the crisis and a disagreement between the European Central Bank and a clutch of euro zone states led by Germany over whether Greece should restructure will take center stage.
Financial markets were focused on data from China which was interpreted as negating the need for aggressive tightening by policymakers.
China's inflation accelerated in May to a 34-month high of 5.5 percent, while retail sales came in marginally higher than forecast and industrial output was slightly lower.
Although a little above expectations, the inflation data suggested Chinese price rises were not out of control and that growth was being managed.
After the data, China's central bank increased the ratio of reserves it requires its commercial lenders to hold by another 50 basis points, its sixth increase this year, extending its campaign to tame inflation.
"A measured slowdown in the Chinese economy is just what investors want, with today's figures providing some hope that this is just what is unfolding," said Keith Bowman, equity analyst at Hargreaves Lansdown. World stocks as measured by MSCI .MIWD00000PUS were up more than half a percent while the pan-European FTSEurofirst 300 .FTEU3 gained 0.6 percent.
Earlier, Japan's Nikkei .N225 closed barely changed from the previous day.
BUOYANT EURO
Greece's trials did little to discourage investors from buying the euro, which rose around 0.1 percent against the dollar to $1.4433.
Despite the debt crisis, the single currency has climbed 8 percent against the dollar this year, nearly 7 percent against the yen and 2.5 percent against the pound.
This is primarily due to differing expectations for interest rate rises. The ECB is expected to tighten policy for the second time this year in July while the U.S. economy is struggling, pointing to a continued period of ultra-low interest rates there.
"Clearly the markets are very concerned about the U.S. economy and the U.S. debt situation," said Greg Gibbs, strategist at RBS. "Those are the key factors preventing what would normally be a bigger (euro) fallout, given the amount of risk around the European situation."
Yields on core euro zone debt rose slightly with 10-year German Bunds offering 2.98 percent. Greece's 10-year bond yield climbed 60 basis points to 17.7 percent.
(Additional reporting by Atul Prakash and Neal Armstrong, editing by Mike Peacock, John Stonestreet, Ruth Pitchford)
full story
LONDON | Tue Jun 14, 2011 8:15am EDT
(Reuters) - Evidence that China may avoid a hard landing for its high-flying economy lifted riskier assets such as stocks on Tuesday and Greece managed to raise short-term funds despite becoming S&P's lowest-rated sovereign borrower.
Wall Street looked set to open stronger.
Greece sold 1.625 billion euros ($2.33 billion) of 6-month T-bills a day after Standard & Poor's rated its debt extremely speculative.
It had to pay a higher yield -- 4.96 percent versus May's 4.88 percent -- but attracted a larger percentage of foreign buyers than the previous auction, reflecting market expectations Greece will secure a second rescue package to stave off default, at least over coming months.
The cost of insuring Greek debt against default over five years rose, as did the yield on Greek government bonds, to a record high.
But Greek stocks reversed losses to put in modest gains and European shares were otherwise buoyant.
Euro zone finance ministers were to meet in Brussels where the crisis and a disagreement between the European Central Bank and a clutch of euro zone states led by Germany over whether Greece should restructure will take center stage.
Financial markets were focused on data from China which was interpreted as negating the need for aggressive tightening by policymakers.
China's inflation accelerated in May to a 34-month high of 5.5 percent, while retail sales came in marginally higher than forecast and industrial output was slightly lower.
Although a little above expectations, the inflation data suggested Chinese price rises were not out of control and that growth was being managed.
After the data, China's central bank increased the ratio of reserves it requires its commercial lenders to hold by another 50 basis points, its sixth increase this year, extending its campaign to tame inflation.
"A measured slowdown in the Chinese economy is just what investors want, with today's figures providing some hope that this is just what is unfolding," said Keith Bowman, equity analyst at Hargreaves Lansdown. World stocks as measured by MSCI .MIWD00000PUS were up more than half a percent while the pan-European FTSEurofirst 300 .FTEU3 gained 0.6 percent.
Earlier, Japan's Nikkei .N225 closed barely changed from the previous day.
BUOYANT EURO
Greece's trials did little to discourage investors from buying the euro, which rose around 0.1 percent against the dollar to $1.4433.
Despite the debt crisis, the single currency has climbed 8 percent against the dollar this year, nearly 7 percent against the yen and 2.5 percent against the pound.
This is primarily due to differing expectations for interest rate rises. The ECB is expected to tighten policy for the second time this year in July while the U.S. economy is struggling, pointing to a continued period of ultra-low interest rates there.
"Clearly the markets are very concerned about the U.S. economy and the U.S. debt situation," said Greg Gibbs, strategist at RBS. "Those are the key factors preventing what would normally be a bigger (euro) fallout, given the amount of risk around the European situation."
Yields on core euro zone debt rose slightly with 10-year German Bunds offering 2.98 percent. Greece's 10-year bond yield climbed 60 basis points to 17.7 percent.
(Additional reporting by Atul Prakash and Neal Armstrong, editing by Mike Peacock, John Stonestreet, Ruth Pitchford)
full story
Turkish police detain Anonymous members: Anatolian
ISTANBUL/MADRID | Mon Jun 13, 2011 10:31am EDT
(Reuters) - Turkish police detained 32 members of the Anonymous cyberactivism collective on suspicion of planning attacks on a number of websites, Turkish state-run news agency Anatolian reported.
The action came in response to a complaint from Turkey's Directorate of Telecommunications, whose website was taken down on Thursday as part of a protest against what Anonymous says is government censorship of the Internet.
Turkey, whose ruling AK Party won a parliamentary vote on Sunday, plans to introduce a new Internet filtering system in August, under which users will have to sign up for one of four filters -- domestic, family, children and standard.
Anonymous, a loose activist collective which has attacked many websites including those of Amazon and Mastercard in the name of Internet freedom, says the system will make it possible to keep records of people's online activity.
Eight of the 32 suspected cyberactivists detained on Sunday were minors, Anatolian said.
The police operation in Turkey follows the arrest of three so-called Anons in Spain on Friday on suspicion on organizing cyber attacks against the websites of Sony, banks and governments.
Anonymous said on its website (www.anonops.blogspot.com) and on a video posted on YouTube that the arrest had not shut down the leadership of its operations as claimed, because the group had no centralized leadership.
The group said it had taken down the Spanish national police website for some hours on Saturday in retaliation.
It said the arrests were part of a police attempt to distract attention from protesters dispersing in cities across Spain at the weekend after four weeks demonstrating against government austerity, reforms and unemployment.
The video featured a figure wearing the Guy Fawkes mask made popular by the graphic novel "V for Vendetta" which the group is known for wearing and expressed sympathy with the protesters, known as "indignados" (or indignant).
Anonymous members cripple websites by overwhelming their servers with traffic in so-called denial of service attacks. The group publicizes these campaigns on the Web, giving supporters the information to attack a targeted site.
(Reporting by Ece Toksabay in Istanbul and Nigel Davies in Madrid; Editing by David Cowell)
full story
(Reuters) - Turkish police detained 32 members of the Anonymous cyberactivism collective on suspicion of planning attacks on a number of websites, Turkish state-run news agency Anatolian reported.
The action came in response to a complaint from Turkey's Directorate of Telecommunications, whose website was taken down on Thursday as part of a protest against what Anonymous says is government censorship of the Internet.
Turkey, whose ruling AK Party won a parliamentary vote on Sunday, plans to introduce a new Internet filtering system in August, under which users will have to sign up for one of four filters -- domestic, family, children and standard.
Anonymous, a loose activist collective which has attacked many websites including those of Amazon and Mastercard in the name of Internet freedom, says the system will make it possible to keep records of people's online activity.
Eight of the 32 suspected cyberactivists detained on Sunday were minors, Anatolian said.
The police operation in Turkey follows the arrest of three so-called Anons in Spain on Friday on suspicion on organizing cyber attacks against the websites of Sony, banks and governments.
Anonymous said on its website (www.anonops.blogspot.com) and on a video posted on YouTube that the arrest had not shut down the leadership of its operations as claimed, because the group had no centralized leadership.
The group said it had taken down the Spanish national police website for some hours on Saturday in retaliation.
It said the arrests were part of a police attempt to distract attention from protesters dispersing in cities across Spain at the weekend after four weeks demonstrating against government austerity, reforms and unemployment.
The video featured a figure wearing the Guy Fawkes mask made popular by the graphic novel "V for Vendetta" which the group is known for wearing and expressed sympathy with the protesters, known as "indignados" (or indignant).
Anonymous members cripple websites by overwhelming their servers with traffic in so-called denial of service attacks. The group publicizes these campaigns on the Web, giving supporters the information to attack a targeted site.
(Reporting by Ece Toksabay in Istanbul and Nigel Davies in Madrid; Editing by David Cowell)
full story
Maple Group goes hostile for TMX
By Solarina Ho
TORONTO | Mon Jun 13, 2011 8:35am EDT
(Reuters) - The banks and pension funds with a C$3.7 billion hostile offer for the Toronto Stock Exchange touted their offer directly to shareholders on Monday, denying that it would curb competition and urging shareholders to vote for the made-in-Canada solution.
In its formal proposal for the stock market's parent, TMX Group, Maple Group said it was offering C$48 a share in cash for 70 percent of TMX shares, compared with 60 percent in the original proposal nearly a month ago.
That rivals a friendly C$3.5 billion bid from the London Stock Exchange Group, which TMX and LSE heads say different from other proposed Transatlantic exchange tie-ups in that it focuses on growth and building new businesses rather than cost and revenue savings.
Shareholders vote on the LSE-TMX deal on June 30. Maple urged shareholders to vote against that proposal -- Maple's bid dies if TMX shareholders vote for LSE's offer.
"TMX Group shareholders should be aware that Maple's offer can only proceed if the LSE take-over plan does not," Luc Bertrand, Maple's chief spokesman and vice-chairman of Quebec-based National Bank, said in a statement.
The takeover battle over TMX Group is part of a wave of attempts at consolidation sweeping the world's top exchanges. Singapore Exchange (SGX) Ltd's kicked things off last year with a failed attempt to buy Australian market operator ASX Ltd.
Maple comprises four Canadian leading banks, five top pension funds and four new institutional investors.
The C$3.7 billion price is based on C$48 multiplied by the number of fully diluted shares, Maple said. A previous C$3.6 billion value was calculated based on the number of basic shares outstanding.
Unlike LSE shareholders, TMX investors do not get a second vote if there are conditions attached to any regulatory approvals that may come after June 30.
In its circular, Maple said its bid offers cash to shareholders and would maintain TMX's current dividend. It disputed the line from the LSE/TMX partnership that the transatlantic tie-up would enhance liquidity for Canadian capital markets.
LSE's planned takeover must pass muster with the Canadian government, which will decide if it meets the terms of the Investment Canada Act, which says foreign takeovers must carry a "net benefit" to Canada.
"We think we're in quite good shape now," TMX Chief Executive Tom Kloet said on Friday, noting that the company was "in active dialogue" with the government over the deal.
THE MAPLE BOARD
Maple said on Monday it would maintain the current CEO and senior management at the TMX as well as existing commitments regarding TMX's board.
It listed a slate of directors that includes Bertrand as well as political and financial heavy hitters like CIBC senior executive vice-president and vice chairman Jim Prentice, who held key government posts like Minister of Industry until the start of this year.
One issue concerning shareholders has been the valuation of Alpha Group, Canada's main alternative trading platform and the CDS clearinghouse -- entities Maple says will be wrapped into the TMX Group as part of the deal.
Maple gave no price for the entities, but said it would form a special committee to reach a fair value.
Maple's deal would give it control of some 80 percent of Canadian stock trading by volume, making a review by competition authorities all the more important.
The group, whose four banks and one of the pension funds are owners of Alpha, said in its circular that the Alpha and CDSL transactions would benefit Canadian capital markets and not affect the competitive market for equities trading.
It said its own investors would sell their interests in Alpha and CDSL at whatever prices the committee recommends.
Maple Group added Desjardins Financial Group, GMP Capital Inc, Dundee Capital Markets and Manulife Financial to their ranks on Sunday.
Maple's original bank members are the Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada and Toronto Dominion Bank.
The pension funds are Alberta Investment Management Corp, Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, Fonds de solidarite des travailleurs du Quebec (FTQ) and Ontario Teachers' Pension Plan Board.
(Additional reporting by Pav Jordan and Euan Rocha; editing by Janet Guttsman)
full story
TORONTO | Mon Jun 13, 2011 8:35am EDT
(Reuters) - The banks and pension funds with a C$3.7 billion hostile offer for the Toronto Stock Exchange touted their offer directly to shareholders on Monday, denying that it would curb competition and urging shareholders to vote for the made-in-Canada solution.
In its formal proposal for the stock market's parent, TMX Group, Maple Group said it was offering C$48 a share in cash for 70 percent of TMX shares, compared with 60 percent in the original proposal nearly a month ago.
That rivals a friendly C$3.5 billion bid from the London Stock Exchange Group, which TMX and LSE heads say different from other proposed Transatlantic exchange tie-ups in that it focuses on growth and building new businesses rather than cost and revenue savings.
Shareholders vote on the LSE-TMX deal on June 30. Maple urged shareholders to vote against that proposal -- Maple's bid dies if TMX shareholders vote for LSE's offer.
"TMX Group shareholders should be aware that Maple's offer can only proceed if the LSE take-over plan does not," Luc Bertrand, Maple's chief spokesman and vice-chairman of Quebec-based National Bank, said in a statement.
The takeover battle over TMX Group is part of a wave of attempts at consolidation sweeping the world's top exchanges. Singapore Exchange (SGX) Ltd's kicked things off last year with a failed attempt to buy Australian market operator ASX Ltd.
Maple comprises four Canadian leading banks, five top pension funds and four new institutional investors.
The C$3.7 billion price is based on C$48 multiplied by the number of fully diluted shares, Maple said. A previous C$3.6 billion value was calculated based on the number of basic shares outstanding.
Unlike LSE shareholders, TMX investors do not get a second vote if there are conditions attached to any regulatory approvals that may come after June 30.
In its circular, Maple said its bid offers cash to shareholders and would maintain TMX's current dividend. It disputed the line from the LSE/TMX partnership that the transatlantic tie-up would enhance liquidity for Canadian capital markets.
LSE's planned takeover must pass muster with the Canadian government, which will decide if it meets the terms of the Investment Canada Act, which says foreign takeovers must carry a "net benefit" to Canada.
"We think we're in quite good shape now," TMX Chief Executive Tom Kloet said on Friday, noting that the company was "in active dialogue" with the government over the deal.
THE MAPLE BOARD
Maple said on Monday it would maintain the current CEO and senior management at the TMX as well as existing commitments regarding TMX's board.
It listed a slate of directors that includes Bertrand as well as political and financial heavy hitters like CIBC senior executive vice-president and vice chairman Jim Prentice, who held key government posts like Minister of Industry until the start of this year.
One issue concerning shareholders has been the valuation of Alpha Group, Canada's main alternative trading platform and the CDS clearinghouse -- entities Maple says will be wrapped into the TMX Group as part of the deal.
Maple gave no price for the entities, but said it would form a special committee to reach a fair value.
Maple's deal would give it control of some 80 percent of Canadian stock trading by volume, making a review by competition authorities all the more important.
The group, whose four banks and one of the pension funds are owners of Alpha, said in its circular that the Alpha and CDSL transactions would benefit Canadian capital markets and not affect the competitive market for equities trading.
It said its own investors would sell their interests in Alpha and CDSL at whatever prices the committee recommends.
Maple Group added Desjardins Financial Group, GMP Capital Inc, Dundee Capital Markets and Manulife Financial to their ranks on Sunday.
Maple's original bank members are the Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada and Toronto Dominion Bank.
The pension funds are Alberta Investment Management Corp, Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, Fonds de solidarite des travailleurs du Quebec (FTQ) and Ontario Teachers' Pension Plan Board.
(Additional reporting by Pav Jordan and Euan Rocha; editing by Janet Guttsman)
full story
Obama to nominate Gruenberg to head FDIC: White House
WASHINGTON | Fri Jun 10, 2011 7:50pm EDT
(Reuters) - President Barack Obama plans to nominate Martin Gruenberg to be the next chairman of the Federal Deposit Insurance Corp, a top banking regulator, the White House said on Friday.
Gruenberg, a Democrat, joined the FDIC board in 2005 and is now the regulator's vice chairman. He would replace Sheila Bair, whose term expires this summer.
The post requires Senate confirmation, where many Obama picks have been held up by Republicans.
"I am confident that his intellect and years of experience in financial services...will make him an outstanding chairman," said Democratic Senate Banking Committee Chairman Tim Johnson in a statement.
Bair leaves the job on July 8 and the administration had been expected to tap Gruenberg as her replacement.
In a statement on Friday, Bair said Gruenberg's "long tenure at the FDIC and significant expertise in financial services issues make him an outstanding selection for this position."
Gruenberg is said to have a muted style that will be in marked contrast to Bair, who has led the agency since 2006, navigating it through the financial crisis and the bailouts, calling out well-paid bankers and clashing with other regulators.
Since the mid-1980s, Gruenberg has been grinding away on banking issues, first as a top aide to one-time Senate Banking Committee Chairman Paul Sarbanes, a Democrat.
Washington and Wall Street are waiting for Obama to name his pick to lead the consumer financial protection agency, which opens its doors on July 21.
Democrats are pushing the administration to nominate Harvard law professor Elizabeth Warren for the job.
The Obama administration is considering nominating former banker Raj Date as head of the bureau, a source familiar with the decision-making said on Wednesday.
While Gruenberg's resume is rich with experience, his most desirable quality might be that he has a good chance of being confirmed -- a rarity in partisan Washington and a contrast to Warren, whose lack of congressional support has overshadowed her prospects to head Obama's new consumer watchdog.
(Reporting by Matt Spetalnick and Alister Bull; Editing by Peter Cooney)
full story
(Reuters) - President Barack Obama plans to nominate Martin Gruenberg to be the next chairman of the Federal Deposit Insurance Corp, a top banking regulator, the White House said on Friday.
Gruenberg, a Democrat, joined the FDIC board in 2005 and is now the regulator's vice chairman. He would replace Sheila Bair, whose term expires this summer.
The post requires Senate confirmation, where many Obama picks have been held up by Republicans.
"I am confident that his intellect and years of experience in financial services...will make him an outstanding chairman," said Democratic Senate Banking Committee Chairman Tim Johnson in a statement.
Bair leaves the job on July 8 and the administration had been expected to tap Gruenberg as her replacement.
In a statement on Friday, Bair said Gruenberg's "long tenure at the FDIC and significant expertise in financial services issues make him an outstanding selection for this position."
Gruenberg is said to have a muted style that will be in marked contrast to Bair, who has led the agency since 2006, navigating it through the financial crisis and the bailouts, calling out well-paid bankers and clashing with other regulators.
Since the mid-1980s, Gruenberg has been grinding away on banking issues, first as a top aide to one-time Senate Banking Committee Chairman Paul Sarbanes, a Democrat.
Washington and Wall Street are waiting for Obama to name his pick to lead the consumer financial protection agency, which opens its doors on July 21.
Democrats are pushing the administration to nominate Harvard law professor Elizabeth Warren for the job.
The Obama administration is considering nominating former banker Raj Date as head of the bureau, a source familiar with the decision-making said on Wednesday.
While Gruenberg's resume is rich with experience, his most desirable quality might be that he has a good chance of being confirmed -- a rarity in partisan Washington and a contrast to Warren, whose lack of congressional support has overshadowed her prospects to head Obama's new consumer watchdog.
(Reporting by Matt Spetalnick and Alister Bull; Editing by Peter Cooney)
full story
Pandora increases IPO value by 48 percent
By Jennifer Saba and Clare Baldwin
NEW YORK | Fri Jun 10, 2011 1:08pm EDT
(Reuters) - Online radio company Pandora Media Inc raised the proposed value of its initial public offering by almost 50 percent, hoping to catch the investor fever that has taken Internet companies such as LinkedIn to new heights.
The Oakland, California-based company wants to raise about $161.5 million, representing 14,684,000 shares priced at $10 to $12 each.
Last week, Pandora said in a filing that it planned to raise about $109.5 million with the sale of 13,684,000 shares offered at $7 to $9 each.
The increase in the value of Pandora's IPO is a sign that technology offerings are still a hot part of the market, despite a broader downturn and postponements of other large IPOs like Ally Financial.
The S&P 500 index has lost more than 7 percent from its recent peak early last month.
(For a Reuters Insider story, see: link.reuters.com/zur99r )
Other Internet companies such as social media job recruitment site LinkedIn, China's Renren and "Russia's Google" Yandex have had strong IPOs building on anticipation for potential offerings by Facebook and Twitter.
Still, there is a whiff of concern by critics that soaring IPO values are signs of another bubble, even though the companies going public this in this era make real money. For example, the business model of online daily deal site Groupon, which filed for a public offering last week, has been called into question since it is easily replicated.
Pandora, which runs an online service that allows users to stream free music based on feedback from the listener, has more than 90 million registered users.
But the company has yet to turn a profit. Pandora makes money mainly from advertising. For the three months ending April, Pandora reported revenue of $51 million with a net loss of $6.8 million.
(Reporting by Clare Baldwin and Jennifer Saba; Additional reporting by Rodrigo Campos. Editing by Lisa Von Ahn, Matthew Lewis and Robert MacMillan)
full story
NEW YORK | Fri Jun 10, 2011 1:08pm EDT
(Reuters) - Online radio company Pandora Media Inc raised the proposed value of its initial public offering by almost 50 percent, hoping to catch the investor fever that has taken Internet companies such as LinkedIn to new heights.
The Oakland, California-based company wants to raise about $161.5 million, representing 14,684,000 shares priced at $10 to $12 each.
Last week, Pandora said in a filing that it planned to raise about $109.5 million with the sale of 13,684,000 shares offered at $7 to $9 each.
The increase in the value of Pandora's IPO is a sign that technology offerings are still a hot part of the market, despite a broader downturn and postponements of other large IPOs like Ally Financial.
The S&P 500 index has lost more than 7 percent from its recent peak early last month.
(For a Reuters Insider story, see: link.reuters.com/zur99r )
Other Internet companies such as social media job recruitment site LinkedIn, China's Renren and "Russia's Google" Yandex have had strong IPOs building on anticipation for potential offerings by Facebook and Twitter.
Still, there is a whiff of concern by critics that soaring IPO values are signs of another bubble, even though the companies going public this in this era make real money. For example, the business model of online daily deal site Groupon, which filed for a public offering last week, has been called into question since it is easily replicated.
Pandora, which runs an online service that allows users to stream free music based on feedback from the listener, has more than 90 million registered users.
But the company has yet to turn a profit. Pandora makes money mainly from advertising. For the three months ending April, Pandora reported revenue of $51 million with a net loss of $6.8 million.
(Reporting by Clare Baldwin and Jennifer Saba; Additional reporting by Rodrigo Campos. Editing by Lisa Von Ahn, Matthew Lewis and Robert MacMillan)
full story
Dealtalk: Plenty of rumors but no real suitors for Nokia
By Victoria Howley and Tarmo Virki
LONDON/TALLINN | Thu Jun 9, 2011 6:04am EDT
(Reuters) - Nokia's (NOK1V.HE) plunging share price and persistent speculation it might be a takeover target is far from attracting real suitors interested in saving the struggling mobile phone company.
The handset maker's equity value has halved to 17 billion euros ($24.91 billion) since the leak in February of CEO Stephen Elop's memo comparing Nokia to a man standing on a burning oil platform.
But investors are afraid the company is losing market share so fast in both smartphones and low-end devices that it may never recover.
Another turn-off for investors and potential buyers alike may be that Nokia does not look like a cost-cutting opportunity because its main problems lie with technology.
One banker who advises technology companies was skeptical about any company wanting to buy Nokia, putting the likelihood of a bid for the entire company at below 10 percent.
"It would be like jumping into the ocean from 500 feet without a lifejacket," the banker said. "There is nobody driving strategy, most of the senior guys are gone. The company is firefighting."
The shares briefly rose last week on speculation that Microsoft could be interested in buying Nokia, but they fell back once Nokia denied they were in talks.
Talk of an offer from No. 2 phone maker Samsung Electronics (005930.KS) briefly surfaced on Wednesday. But the market appeared to shrug it off and the shares fell 4 percent.
"I don't think it's a viable target for Microsoft, and even less for Samsung. I don't see any value for Samsung in buying Nokia," said Canalys analyst Pete Cunningham.
Last week Nokia warned second quarter sales and profits would miss forecasts and abandoned hope of meeting key targets set just weeks earlier as it flails at mounting competition.
Samsung, by contrast, has built up a successful smartphone offering based mostly on Google's (GOOG.O) Android platform and took No. 1 position in Western Europe, Nokia's home market, in the first quarter, according to IDC.
Samsung is not an acquisitive company and hence an unlikely acquirer of Nokia, said a second banker, adding that Motorola Mobility (MMI.N) had only just turned the corner after its own restructuring and would be loath to take on another struggling company.
NOT MICROSOFT
Starting from late 2011 Nokia is switching to Microsoft's Windows Phone software from its own Symbian platform as part of an overhaul of its phone business set out by Elop four months ago.
While the partnership may have added to speculation about an acquisition, the second banker said a move for Nokia would not help Microsoft since it wants to move deeper into mobile services rather than handset production.
An acquisition could also complicate Microsoft's relationships with other handset makers, analysts say.
"I don't see many additional benefits for Microsoft from taking full control. They need to attract other companies to their platform," said Canalys' Cunningham.
Analysts and bankers said Nokia's brand, which has shed most of its value over the last three years, would still be of value for smaller phone vendors who are seeking to improve their position such as China's Huawei Technologies HWT.UL.
Huawei has started to aggressively build a consumer brand, marketing its new smartphones and tablet PCs in glitzy Beijing malls and even a Milan fashion show.
A banker said that interest from Huawei "was an outside chance" as Huawei was getting more comfortable with M&A.
TOO MUCH FOR PRIVATE EQUITY
A share price of just above 4 euros values Nokia's main cellphone business at almost zero.
Nokia had net cash of 6.4 billion euros ($9.38 billion) at end-March. It also owns top digital mapping firm Navteq, which it bought for $8.1 billion, and has a 50 percent stake in Nokia Siemens Networks NOKI.UL, also worth a few billions.
However, talk of raising close to $25 billion to support a private equity bid for the whole of Nokia was "dreaming," even taking into account a strong private equity market in the United States and Europe, said a banker who advises financial sponsors.
"Lenders would not be comfortable putting a huge amount of leverage on Nokia, which limits what you could do in the debt market," said the banker.
"You could be looking at funding up to half the price with equity, when the largest private equity firms are typically putting a maximum of about 500 million euros ($731 million) behind a single investment in Europe."
Bankers said that it was more likely that private equity firms would look at bidding for part of Nokia.
Nokia and Siemens are already letting two private equity groups look at the books of Nokia Siemens Networks as they try to sell the joint venture, other people said previously.
(Editing by David Cowell)
full story
LONDON/TALLINN | Thu Jun 9, 2011 6:04am EDT
(Reuters) - Nokia's (NOK1V.HE) plunging share price and persistent speculation it might be a takeover target is far from attracting real suitors interested in saving the struggling mobile phone company.
The handset maker's equity value has halved to 17 billion euros ($24.91 billion) since the leak in February of CEO Stephen Elop's memo comparing Nokia to a man standing on a burning oil platform.
But investors are afraid the company is losing market share so fast in both smartphones and low-end devices that it may never recover.
Another turn-off for investors and potential buyers alike may be that Nokia does not look like a cost-cutting opportunity because its main problems lie with technology.
One banker who advises technology companies was skeptical about any company wanting to buy Nokia, putting the likelihood of a bid for the entire company at below 10 percent.
"It would be like jumping into the ocean from 500 feet without a lifejacket," the banker said. "There is nobody driving strategy, most of the senior guys are gone. The company is firefighting."
The shares briefly rose last week on speculation that Microsoft could be interested in buying Nokia, but they fell back once Nokia denied they were in talks.
Talk of an offer from No. 2 phone maker Samsung Electronics (005930.KS) briefly surfaced on Wednesday. But the market appeared to shrug it off and the shares fell 4 percent.
"I don't think it's a viable target for Microsoft, and even less for Samsung. I don't see any value for Samsung in buying Nokia," said Canalys analyst Pete Cunningham.
Last week Nokia warned second quarter sales and profits would miss forecasts and abandoned hope of meeting key targets set just weeks earlier as it flails at mounting competition.
Samsung, by contrast, has built up a successful smartphone offering based mostly on Google's (GOOG.O) Android platform and took No. 1 position in Western Europe, Nokia's home market, in the first quarter, according to IDC.
Samsung is not an acquisitive company and hence an unlikely acquirer of Nokia, said a second banker, adding that Motorola Mobility (MMI.N) had only just turned the corner after its own restructuring and would be loath to take on another struggling company.
NOT MICROSOFT
Starting from late 2011 Nokia is switching to Microsoft's Windows Phone software from its own Symbian platform as part of an overhaul of its phone business set out by Elop four months ago.
While the partnership may have added to speculation about an acquisition, the second banker said a move for Nokia would not help Microsoft since it wants to move deeper into mobile services rather than handset production.
An acquisition could also complicate Microsoft's relationships with other handset makers, analysts say.
"I don't see many additional benefits for Microsoft from taking full control. They need to attract other companies to their platform," said Canalys' Cunningham.
Analysts and bankers said Nokia's brand, which has shed most of its value over the last three years, would still be of value for smaller phone vendors who are seeking to improve their position such as China's Huawei Technologies HWT.UL.
Huawei has started to aggressively build a consumer brand, marketing its new smartphones and tablet PCs in glitzy Beijing malls and even a Milan fashion show.
A banker said that interest from Huawei "was an outside chance" as Huawei was getting more comfortable with M&A.
TOO MUCH FOR PRIVATE EQUITY
A share price of just above 4 euros values Nokia's main cellphone business at almost zero.
Nokia had net cash of 6.4 billion euros ($9.38 billion) at end-March. It also owns top digital mapping firm Navteq, which it bought for $8.1 billion, and has a 50 percent stake in Nokia Siemens Networks NOKI.UL, also worth a few billions.
However, talk of raising close to $25 billion to support a private equity bid for the whole of Nokia was "dreaming," even taking into account a strong private equity market in the United States and Europe, said a banker who advises financial sponsors.
"Lenders would not be comfortable putting a huge amount of leverage on Nokia, which limits what you could do in the debt market," said the banker.
"You could be looking at funding up to half the price with equity, when the largest private equity firms are typically putting a maximum of about 500 million euros ($731 million) behind a single investment in Europe."
Bankers said that it was more likely that private equity firms would look at bidding for part of Nokia.
Nokia and Siemens are already letting two private equity groups look at the books of Nokia Siemens Networks as they try to sell the joint venture, other people said previously.
(Editing by David Cowell)
full story
Visa inks deals for mobile payments push
Thu Jun 9, 2011 8:28am EDT
(Reuters) - VISA Inc said it will acquire South African firm Fundamo for $110 million, and announced a five-year agreement with UK-based Monitise Plc, as it looks to grow its new technology-enabled payments business.
Payment processors -- such as Visa and rival Mastercard -- have been increasingly looking for growth through new gateways, including mobile phones and the Internet, faced with a saturated U.S. market for credit and debit cards.
Competition in the sector is heating up with telephone companies, bank majors and technology giants jostling for a piece of the pie. Last month, Google Inc, Citigroup, and Mastercard came together to enter the pay-by-phone system.
The Fundamo acquisition will help Visa, which operates the world's largest credit and debit card processing network, grow its mobile phone-based payment services in developing markets across Africa, Asia and Latin America.
It said the deal would hurt its earnings per share slightly for the year ending September 2011.
Fundamo Chief Executive Hannes van Rensburg and the its management team will continue with the company.
The deal with Monitise will help Visa expand the delivery of mobile financial services to its account holders both in the U.S. and outside.
With the agreement -- under which Monitise would get minimum annualized revenues of more than $10 million in the first three years, and potentially more in the last two -- Visa furthers its ties with the company.
It already owns about 14 percent of Monitise according to Thomson Reuters Data, and has a joint venture with it to develop mobile banking technology for the fast-growing Indian market.
Visa's shares closed at $76.71 on Wednesday on the New York Stock Exchange.
Shares of Monitise were up almost 7 percent at 27.95 pence at 1220 GMT on Thursday on the London Stock Exchange. (Reporting by Jochelle Mendonca in Bangalore; Editing by Joyjeet Das)
full story
(Reuters) - VISA Inc said it will acquire South African firm Fundamo for $110 million, and announced a five-year agreement with UK-based Monitise Plc, as it looks to grow its new technology-enabled payments business.
Payment processors -- such as Visa and rival Mastercard -- have been increasingly looking for growth through new gateways, including mobile phones and the Internet, faced with a saturated U.S. market for credit and debit cards.
Competition in the sector is heating up with telephone companies, bank majors and technology giants jostling for a piece of the pie. Last month, Google Inc, Citigroup, and Mastercard came together to enter the pay-by-phone system.
The Fundamo acquisition will help Visa, which operates the world's largest credit and debit card processing network, grow its mobile phone-based payment services in developing markets across Africa, Asia and Latin America.
It said the deal would hurt its earnings per share slightly for the year ending September 2011.
Fundamo Chief Executive Hannes van Rensburg and the its management team will continue with the company.
The deal with Monitise will help Visa expand the delivery of mobile financial services to its account holders both in the U.S. and outside.
With the agreement -- under which Monitise would get minimum annualized revenues of more than $10 million in the first three years, and potentially more in the last two -- Visa furthers its ties with the company.
It already owns about 14 percent of Monitise according to Thomson Reuters Data, and has a joint venture with it to develop mobile banking technology for the fast-growing Indian market.
Visa's shares closed at $76.71 on Wednesday on the New York Stock Exchange.
Shares of Monitise were up almost 7 percent at 27.95 pence at 1220 GMT on Thursday on the London Stock Exchange. (Reporting by Jochelle Mendonca in Bangalore; Editing by Joyjeet Das)
full story
Analysis: War unease makes Republicans less reliable hawks
By Susan Cornwell
WASHINGTON | Wed Jun 8, 2011 1:28pm EDT
(Reuters) - Republicans used to be reliable foreign policy hawks who voted in unison to back U.S. military action abroad.
Lately, not so much.
Recent votes in the House of Representatives on a measure rebuking President Barack Obama over his handling of the Libya conflict and on another urging him to produce a plan for U.S. troops to leave Afghanistanhave revealed a Republican Party much less in lock-step on America's wars.
What is happening, observers ask, when Tea Party darling Michele Bachmann and 86 other Republicans -- even more Republicans than Democrats -- support a resolution by Democrat Dennis Kucinich to pull the United States out of Libyan operations?
The Kucinich resolution failed to pass on June 3 but only after House Speaker John Boehner put up a less dramatic alternative that nonetheless castigated Obama for not offering a "compelling rationale" for involvement in the Libyan war.
The Wall Street Journal worried on its editorial page this week that House Republicans were turning "isolationist" on Libya and joining liberal Democrats who are veteran critics of U.S. military force abroad. The number of Republican skeptics on Afghanistan has grown too but at a much lower level.
As U.S. forces leave Iraq and look set to start withdrawing from Afghanistan this summer, analysts see a re-evaluation going on in both political parties of the American military's role in a time of economic crisis and global change.
They point out that the Afghan war has become ever more expensive, at about $110 billion a year, as concern grows about the U.S. national debt, now over $14 trillion.
The "Arab spring" shaking the Middle East and North Africa is bringing more challenges, including the Libya conflict where NATO is leading a coalition conducting air strikes to shield civilians from Muammar Gaddafi's forces.
"I don't think it is neo-isolationist to question what is happening there (in Libya) -- whether it really is serving the objective, whether there is a strategic purpose that will achieve decisive results," said Anthony Cordesman, a former defense official now at the Center for Strategic and International Studies.
Isolationism is "probably too simplistic a term" for what is going on in Congress, said Norman Orenstein, a long-time observer of the legislative branch and resident scholar at the American Enterprise Institute. "I don't think it affects the core, mainstream leaders of both parties."
But Orenstein said there are more lawmakers who want to cut government spending, including stalwarts of the Tea Party movement and libertarians like Ron Paul.
"They (the libertarians) don't think America should be very much involved around the world. They don't like government involvement at home," Orenstein said.
SENATE COMMITTEE POSTPONES VOTE ON LIBYA
Some Republicans continue to strongly support U.S. participation in NATO operations in Libya. John McCain, a Republican senator and war veteran who lost to Obama in the 2008 presidential election, has introduced a resolution supporting the U.S. intervention.
The Senate Foreign Relations Committee had scheduled a vote on the resolution for Thursday but that meeting was abruptly postponed on Tuesday after discussions over whether to rewrite parts of the McCain measure did not produce a consensus.
Critics of the way Obama has handled the Libya intervention include the committee's top Republican, Richard Lugar. He says that instead of the Senate passing a nonbinding resolution of support like McCain's, Obama should follow the Constitution and ask Congress to authorize war.
After years of war in Iraq and Afghanistan, Americans may simply be getting weary, said Sarah Kreps, assistant professor of government at Cornell University.
"There seems to be battle fatigue and debt fatigue in the country and the operation in Libya is just intensifying both of these sentiments," she said.
A Democratic measure calling for an Afghanistan pullout plan got 26 House Republican votes on May 26 -- not many but triple the number of Republicans who backed a similar proposal a year earlier. Popular among Democrats, the Afghanistan measure nearly passed, falling short with a vote of 204-215.
Orenstein said he thought the number of Republican critics of the Afghanistan war could still grow.
"I believe that over time, if Afghanistan proves to be more vexing, if we keep having (Afghan President Hamid) Karzai spitting in our eye, we may see more than 26 Republicans the next time," he said.
(Editing by Warren Strobel and John O'Callaghan)
full story
WASHINGTON | Wed Jun 8, 2011 1:28pm EDT
(Reuters) - Republicans used to be reliable foreign policy hawks who voted in unison to back U.S. military action abroad.
Lately, not so much.
Recent votes in the House of Representatives on a measure rebuking President Barack Obama over his handling of the Libya conflict and on another urging him to produce a plan for U.S. troops to leave Afghanistanhave revealed a Republican Party much less in lock-step on America's wars.
What is happening, observers ask, when Tea Party darling Michele Bachmann and 86 other Republicans -- even more Republicans than Democrats -- support a resolution by Democrat Dennis Kucinich to pull the United States out of Libyan operations?
The Kucinich resolution failed to pass on June 3 but only after House Speaker John Boehner put up a less dramatic alternative that nonetheless castigated Obama for not offering a "compelling rationale" for involvement in the Libyan war.
The Wall Street Journal worried on its editorial page this week that House Republicans were turning "isolationist" on Libya and joining liberal Democrats who are veteran critics of U.S. military force abroad. The number of Republican skeptics on Afghanistan has grown too but at a much lower level.
As U.S. forces leave Iraq and look set to start withdrawing from Afghanistan this summer, analysts see a re-evaluation going on in both political parties of the American military's role in a time of economic crisis and global change.
They point out that the Afghan war has become ever more expensive, at about $110 billion a year, as concern grows about the U.S. national debt, now over $14 trillion.
The "Arab spring" shaking the Middle East and North Africa is bringing more challenges, including the Libya conflict where NATO is leading a coalition conducting air strikes to shield civilians from Muammar Gaddafi's forces.
"I don't think it is neo-isolationist to question what is happening there (in Libya) -- whether it really is serving the objective, whether there is a strategic purpose that will achieve decisive results," said Anthony Cordesman, a former defense official now at the Center for Strategic and International Studies.
Isolationism is "probably too simplistic a term" for what is going on in Congress, said Norman Orenstein, a long-time observer of the legislative branch and resident scholar at the American Enterprise Institute. "I don't think it affects the core, mainstream leaders of both parties."
But Orenstein said there are more lawmakers who want to cut government spending, including stalwarts of the Tea Party movement and libertarians like Ron Paul.
"They (the libertarians) don't think America should be very much involved around the world. They don't like government involvement at home," Orenstein said.
SENATE COMMITTEE POSTPONES VOTE ON LIBYA
Some Republicans continue to strongly support U.S. participation in NATO operations in Libya. John McCain, a Republican senator and war veteran who lost to Obama in the 2008 presidential election, has introduced a resolution supporting the U.S. intervention.
The Senate Foreign Relations Committee had scheduled a vote on the resolution for Thursday but that meeting was abruptly postponed on Tuesday after discussions over whether to rewrite parts of the McCain measure did not produce a consensus.
Critics of the way Obama has handled the Libya intervention include the committee's top Republican, Richard Lugar. He says that instead of the Senate passing a nonbinding resolution of support like McCain's, Obama should follow the Constitution and ask Congress to authorize war.
After years of war in Iraq and Afghanistan, Americans may simply be getting weary, said Sarah Kreps, assistant professor of government at Cornell University.
"There seems to be battle fatigue and debt fatigue in the country and the operation in Libya is just intensifying both of these sentiments," she said.
A Democratic measure calling for an Afghanistan pullout plan got 26 House Republican votes on May 26 -- not many but triple the number of Republicans who backed a similar proposal a year earlier. Popular among Democrats, the Afghanistan measure nearly passed, falling short with a vote of 204-215.
Orenstein said he thought the number of Republican critics of the Afghanistan war could still grow.
"I believe that over time, if Afghanistan proves to be more vexing, if we keep having (Afghan President Hamid) Karzai spitting in our eye, we may see more than 26 Republicans the next time," he said.
(Editing by Warren Strobel and John O'Callaghan)
full story
U.S. cancer drugs shortage has doctors scrambling
By Debra Sherman and Julie Steenhuysen
CHICAGO | Tue Jun 7, 2011 1:41pm EDT
(Reuters) - Cancer medicines desperately needed by sick children and adults are in short supply, undermining the ability of U.S. doctors to administer treatments, top oncologists warned this week.
Many drugs are scarce because there is no incentive for drugmakers to manufacture low-cost generics, which have slim profit margins for pharmaceutical companies. Doctors do not expect that equation to change any time soon, making them scramble to find acceptable alternatives, or to ration or delay treatment when they cannot.
Generic chemotherapy drugs are in particularly tight supply at the nation's hospitals, including mainstay cancer treatments such as cisplatin, doxorubicin, cytarabine and leucovorin.
"These are chestnuts. These are not old-fashioned drugs. They remain incredibly important drugs which serve as the backbone for treating many of the most common and treatable cancers," said Dr. Robert Mayer of the Dana-Farber Cancer Institute in Boston and a past president of American Society of Clinical Oncology (ASCO) which held its annual meeting in Chicago this week.
Cisplatin is used to treat testicular, bladder and ovarian cancers that have spread. The drug, also used to treat lung cancers, is sold under multiple brand names, originally by Bristol-Myers Squibb. A generic form is sold by Teva Pharmaceutical Industries Ltd, among others.
Doxorubicin, also available under multiple brands and as a generic from Teva and others, is used to treat non-Hodgkin's lymphoma, multiple myeloma, acute leukemias and other cancers.
Cytarabine, produced by Hospira Inc and others, is used to treat certain types of leukemia. Leucovorin, also sold by Teva, is used along with certain chemotherapy drugs to treat colorectal, head and neck and other cancers.
Dr. Michael Link, a pediatric oncologist at the Mayo Clinic and current ASCO president, called it a disheartening crisis.
"Here we have highly effective drugs, they've been shown they work and to think we don't have them available is almost unconscionable," Link said. "We don't see an end in sight."
In some cases, doctors can substitute another drug for one that is in short supply.
"It's still uncomfortable to say that this is ideally what we'd like to do, but unfortunately we don't have it," Link said. "You can imagine the conversation and I'm sure they're going on all over -- doctors have to tell their patients or their patients' parents that we can't give them the proven drug because we don't have it."
NO SUBSTITUTE
For some of these medicines in short supply, there may not be acceptable alternatives.
"One could say that substituting Pepsi for Coca-Cola doesn't make a difference. Maybe it does and maybe it doesn't," Mayer said. "But more often it might be substituting 7-UP for Coca-Cola, and that might make a difference."
Leucovorin, a form of folic acid that is used to enhance the effectiveness of other chemotherapy drugs, is one example.
"This is the one that I hear the most about from my colleagues. If you don't have it, you just have to omit it. It certainly isn't in the best interest of patients. It is a very inexpensive drug," Mayer said.
Sophia Parhas, a pharmacy manager at Children's Memorial Hospital in Chicago, said if there is a shortage of the generic, the hospital will often buy the branded product.
"We make some substitutions ... so doctors will go back and forth between daunorubicin and doxorubicin, depending upon which one is short," she said.
Another option is for doctors to flip the order that drugs are given depending on the supply situation. Allen Vaida, executive vice president of the Institute for Safe Medical Practices, which has been tracking the shortage, said doctors have also been forced to delay or ration treatments.
"Patients are started on a therapy and they may go through four or five or six cycles. When a drug becomes short, your cycle may be coming up a month later than planned," he said.
"Oncologists, especially in major cancer centers, are in a quandary. 'Do I start my patient on therapy? Do I save what I have for patients who started two cycles ago?'"
Dr. Richard Schilsky, cancer specialist at the University of Chicago and a past ASCO president, said the shortages have been going on for about nine months with no sign of abating.
"When you talk to the drug companies, they say there are manufacturing problems or they are taking plants offline and then it takes a while to get them back up," he said.
"They point the finger at the FDA (Food and Drug Administration), saying the FDA is under-resourced and they can't get plants inspected to allow resumption of drug production. The drug suppliers are in the middle of this as well," he said.
But underlying all of this, he said, is a dearth of financial incentive to make the lower-cost cancer drugs, especially when new cancer drugs command huge premium prices.
"The return on investment of manufacturing generic drugs is pretty low. If something goes wrong, it may be that some manufacturers decide to pull out rather than fix the problem."
Hospira spokesman Dan Rosenberg said shortages arise for many reasons -- capacity constraints, commodity shortfalls, or when a competitor withdraws its product for some reason or when competitors have shortfalls. It is not always possible for Hospira to ramp up production that quickly, Rosenberg said.
"We are doing everything we can to ensure access to these products for clinicians and patients," he said. "Often, we continue manufacturing products at a loss because we realize there is a critical medical need and we are the only company that provides the medication."
A Teva spokesman said its California plant that makes injectable drugs, which was closed last year due to quality issues, is now back up. But the plant will not reach full capacity until the end of this year.
To address the shortages, U.S. senators Amy Klobuchar, a Democrat from Minnesota, and Robert Casey, a Democrat from Pennsylvania, introduced a bill in February that would make drug companies inform the FDA about supply problems or plans to stop making a drug. The FDA would then have time to work with other suppliers to make the drugs or arrange for imports.
"That is a canary in the coal mine," Schilsky said. "It doesn't really resolve the fundamental problem."
(Reporting by Debra Sherman and Julie Steenhuysen; Editing by Michele Gershberg and Matthew Lewis)
full story
CHICAGO | Tue Jun 7, 2011 1:41pm EDT
(Reuters) - Cancer medicines desperately needed by sick children and adults are in short supply, undermining the ability of U.S. doctors to administer treatments, top oncologists warned this week.
Many drugs are scarce because there is no incentive for drugmakers to manufacture low-cost generics, which have slim profit margins for pharmaceutical companies. Doctors do not expect that equation to change any time soon, making them scramble to find acceptable alternatives, or to ration or delay treatment when they cannot.
Generic chemotherapy drugs are in particularly tight supply at the nation's hospitals, including mainstay cancer treatments such as cisplatin, doxorubicin, cytarabine and leucovorin.
"These are chestnuts. These are not old-fashioned drugs. They remain incredibly important drugs which serve as the backbone for treating many of the most common and treatable cancers," said Dr. Robert Mayer of the Dana-Farber Cancer Institute in Boston and a past president of American Society of Clinical Oncology (ASCO) which held its annual meeting in Chicago this week.
Cisplatin is used to treat testicular, bladder and ovarian cancers that have spread. The drug, also used to treat lung cancers, is sold under multiple brand names, originally by Bristol-Myers Squibb. A generic form is sold by Teva Pharmaceutical Industries Ltd, among others.
Doxorubicin, also available under multiple brands and as a generic from Teva and others, is used to treat non-Hodgkin's lymphoma, multiple myeloma, acute leukemias and other cancers.
Cytarabine, produced by Hospira Inc and others, is used to treat certain types of leukemia. Leucovorin, also sold by Teva, is used along with certain chemotherapy drugs to treat colorectal, head and neck and other cancers.
Dr. Michael Link, a pediatric oncologist at the Mayo Clinic and current ASCO president, called it a disheartening crisis.
"Here we have highly effective drugs, they've been shown they work and to think we don't have them available is almost unconscionable," Link said. "We don't see an end in sight."
In some cases, doctors can substitute another drug for one that is in short supply.
"It's still uncomfortable to say that this is ideally what we'd like to do, but unfortunately we don't have it," Link said. "You can imagine the conversation and I'm sure they're going on all over -- doctors have to tell their patients or their patients' parents that we can't give them the proven drug because we don't have it."
NO SUBSTITUTE
For some of these medicines in short supply, there may not be acceptable alternatives.
"One could say that substituting Pepsi for Coca-Cola doesn't make a difference. Maybe it does and maybe it doesn't," Mayer said. "But more often it might be substituting 7-UP for Coca-Cola, and that might make a difference."
Leucovorin, a form of folic acid that is used to enhance the effectiveness of other chemotherapy drugs, is one example.
"This is the one that I hear the most about from my colleagues. If you don't have it, you just have to omit it. It certainly isn't in the best interest of patients. It is a very inexpensive drug," Mayer said.
Sophia Parhas, a pharmacy manager at Children's Memorial Hospital in Chicago, said if there is a shortage of the generic, the hospital will often buy the branded product.
"We make some substitutions ... so doctors will go back and forth between daunorubicin and doxorubicin, depending upon which one is short," she said.
Another option is for doctors to flip the order that drugs are given depending on the supply situation. Allen Vaida, executive vice president of the Institute for Safe Medical Practices, which has been tracking the shortage, said doctors have also been forced to delay or ration treatments.
"Patients are started on a therapy and they may go through four or five or six cycles. When a drug becomes short, your cycle may be coming up a month later than planned," he said.
"Oncologists, especially in major cancer centers, are in a quandary. 'Do I start my patient on therapy? Do I save what I have for patients who started two cycles ago?'"
Dr. Richard Schilsky, cancer specialist at the University of Chicago and a past ASCO president, said the shortages have been going on for about nine months with no sign of abating.
"When you talk to the drug companies, they say there are manufacturing problems or they are taking plants offline and then it takes a while to get them back up," he said.
"They point the finger at the FDA (Food and Drug Administration), saying the FDA is under-resourced and they can't get plants inspected to allow resumption of drug production. The drug suppliers are in the middle of this as well," he said.
But underlying all of this, he said, is a dearth of financial incentive to make the lower-cost cancer drugs, especially when new cancer drugs command huge premium prices.
"The return on investment of manufacturing generic drugs is pretty low. If something goes wrong, it may be that some manufacturers decide to pull out rather than fix the problem."
Hospira spokesman Dan Rosenberg said shortages arise for many reasons -- capacity constraints, commodity shortfalls, or when a competitor withdraws its product for some reason or when competitors have shortfalls. It is not always possible for Hospira to ramp up production that quickly, Rosenberg said.
"We are doing everything we can to ensure access to these products for clinicians and patients," he said. "Often, we continue manufacturing products at a loss because we realize there is a critical medical need and we are the only company that provides the medication."
A Teva spokesman said its California plant that makes injectable drugs, which was closed last year due to quality issues, is now back up. But the plant will not reach full capacity until the end of this year.
To address the shortages, U.S. senators Amy Klobuchar, a Democrat from Minnesota, and Robert Casey, a Democrat from Pennsylvania, introduced a bill in February that would make drug companies inform the FDA about supply problems or plans to stop making a drug. The FDA would then have time to work with other suppliers to make the drugs or arrange for imports.
"That is a canary in the coal mine," Schilsky said. "It doesn't really resolve the fundamental problem."
(Reporting by Debra Sherman and Julie Steenhuysen; Editing by Michele Gershberg and Matthew Lewis)
full story
Egyptians honor activist whose death sparked revolt
By Dina Zayed
CAIRO | Mon Jun 6, 2011 5:23pm EDT
(Reuters) - Hundreds of Egyptians took to the streets on Monday and stood in silence in memory of activist Khaled Said, beaten to death outside an Internet cafe exactly a year ago by two police officers in the coastal city Alexandria.
Pictures of the 28-year-old's battered face and body quickly spread via the Internet, sparking public anger in Egyptian cities that grew into the revolt that eventually toppled President Hosni Mubarak on February 11.
Mostly young Egyptians, draped with national flags, some clutching copies of the Koran, others holding the Christian cross, paid tribute to the man who became a symbol of their uprising and called for justice for victims of police brutality.
"Khaled Said died but brought the voice of justice to life," said Soha Fathy of the Cairo Institute for Human Rights Studies. "But a year has passed and his rights have not been returned."
Said posted a video that he said showed two policemen sharing the spoils of a drug bust. Witnesses say the policemen dragged Said out of an Internet cafe and beat him to death. Authorities said Said choked on illegal drugs he had swallowed.
Two policemen were put on trial last year, and a verdict is expected later this month.
"I hear the voice of a martyr calling, asking 'where are my rights and where are the rights of my nation,'" hundreds chanted outside Said's home in Alexandria, denouncing the slow progress of the investigation and trial.
"We feel great grief on this day because Khaled is not with us but it is also mixed with pride, because it was Khaled who sparked the revolution," said Zohra Said, Khaled's sister. "But we are still waiting for justice."
REJECTING TORTURE
Hundreds gathered outside the interior ministry in Cairo, a scene impossible to imagine before the uprising when the building was cordoned off and difficult even to walk past, chanting "do not worry Khaled, we have avenged your death."
"I'm here because this is the least I can do. It is not acceptable for people to die at the hands of security officers," Sara Hussein said, standing outside the building while activists climbed on walls to draw graffiti images of Said.
"We are reminding authorities that we will not stand for torture and brutality," Hussein said. "It isn't just about respecting his memory. We are sending the message to those who may think we will let the system return to what it was."
Protesters voiced concern that officials responsible for opening fire at protesters have not yet been held to account. At least 846 people died in the uprising and more than 6,000 were injured.
"We are calling not just for a faster trial of those officers responsible for the death of Said and others," but also a complete restructuring of the role of the police, said potential presidential candidate Ayman Nour said.
Last year, at the first rally after Said's death, activists stood with their back to the land and looked out to sea, often having to move because of harassment by security men.
On Monday, hundreds stood on Cairo's Qasr El Nile Bridge and hundreds more stood on the corniche in Alexandria, facing busy streets with pictures of Said in their hands.
"Last year, I stood with my back to the land because it was a message to the regime that we had lost hope. Today, I'm looking in, because I have faith and a will to build a new Egypt," activist Mohamed Abdel Kareem said.
(Additional reporting by Abdel Rahman Youssef in Alexandria and Amr Abdullah; Writing by Dina Zayed, editing by Tim Pearce)
full story
CAIRO | Mon Jun 6, 2011 5:23pm EDT
(Reuters) - Hundreds of Egyptians took to the streets on Monday and stood in silence in memory of activist Khaled Said, beaten to death outside an Internet cafe exactly a year ago by two police officers in the coastal city Alexandria.
Pictures of the 28-year-old's battered face and body quickly spread via the Internet, sparking public anger in Egyptian cities that grew into the revolt that eventually toppled President Hosni Mubarak on February 11.
Mostly young Egyptians, draped with national flags, some clutching copies of the Koran, others holding the Christian cross, paid tribute to the man who became a symbol of their uprising and called for justice for victims of police brutality.
"Khaled Said died but brought the voice of justice to life," said Soha Fathy of the Cairo Institute for Human Rights Studies. "But a year has passed and his rights have not been returned."
Said posted a video that he said showed two policemen sharing the spoils of a drug bust. Witnesses say the policemen dragged Said out of an Internet cafe and beat him to death. Authorities said Said choked on illegal drugs he had swallowed.
Two policemen were put on trial last year, and a verdict is expected later this month.
"I hear the voice of a martyr calling, asking 'where are my rights and where are the rights of my nation,'" hundreds chanted outside Said's home in Alexandria, denouncing the slow progress of the investigation and trial.
"We feel great grief on this day because Khaled is not with us but it is also mixed with pride, because it was Khaled who sparked the revolution," said Zohra Said, Khaled's sister. "But we are still waiting for justice."
REJECTING TORTURE
Hundreds gathered outside the interior ministry in Cairo, a scene impossible to imagine before the uprising when the building was cordoned off and difficult even to walk past, chanting "do not worry Khaled, we have avenged your death."
"I'm here because this is the least I can do. It is not acceptable for people to die at the hands of security officers," Sara Hussein said, standing outside the building while activists climbed on walls to draw graffiti images of Said.
"We are reminding authorities that we will not stand for torture and brutality," Hussein said. "It isn't just about respecting his memory. We are sending the message to those who may think we will let the system return to what it was."
Protesters voiced concern that officials responsible for opening fire at protesters have not yet been held to account. At least 846 people died in the uprising and more than 6,000 were injured.
"We are calling not just for a faster trial of those officers responsible for the death of Said and others," but also a complete restructuring of the role of the police, said potential presidential candidate Ayman Nour said.
Last year, at the first rally after Said's death, activists stood with their back to the land and looked out to sea, often having to move because of harassment by security men.
On Monday, hundreds stood on Cairo's Qasr El Nile Bridge and hundreds more stood on the corniche in Alexandria, facing busy streets with pictures of Said in their hands.
"Last year, I stood with my back to the land because it was a message to the regime that we had lost hope. Today, I'm looking in, because I have faith and a will to build a new Egypt," activist Mohamed Abdel Kareem said.
(Additional reporting by Abdel Rahman Youssef in Alexandria and Amr Abdullah; Writing by Dina Zayed, editing by Tim Pearce)
full story
TORONTO | Fri Jun 3, 2011 9:07am EDT
TORONTO (Reuters) - Former presidential candidate John Edwards, under criminal investigation for alleged campaign finance law violations to hide an extramarital affair, will likely be indicted today, CNN reported on its website on Friday, citing a source with knowledge of the investigation.
CNN said the indictment would come barring any last minute developments.
Edwards's attorney said on Wednesday his client had not broken the law.
"The government's theory is wrong on the facts and wrong on the law. It is novel and untested. There is no civil or criminal precedent for such a prosecution," the attorney, Gregory Craig, said.
Edwards, 57, a former U.S. senator from North Carolina and a Democratic presidential candidate in 2004 and 2008, has been under investigation for more than two years, legal sources said.
Much of the investigation centered on whether Edwards illegally spent campaign contributions to hide his affair with one-time campaign videographer Rielle Hunter and whether more than $1 million from supporters to keep her hidden amounted to illegal campaign contributions, they said.
Edwards eventually admitted the affair and that he had fathered a child with Hunter.
full story
Stocks edge higher at open
NEW YORK | Thu Jun 2, 2011 9:40am EDT
(Reuters) - Stocks rose at the open on Thursday, a day after suffering their biggest losses in nearly a year, as data showed a fall in weekly jobless claims, although short of expectations.
The Dow Jones industrial average .DJI gained 3.48 points, or 0.03 percent, to 12,293.62. The Standard & Poor's 500 Index .SPX added 1.20 points, or 0.09 percent, to 1,315.75. The Nasdaq Composite Index .IXICput on 4.62 points, or 0.17 percent, to 2,773.81.
full story
(Reuters) - Stocks rose at the open on Thursday, a day after suffering their biggest losses in nearly a year, as data showed a fall in weekly jobless claims, although short of expectations.
The Dow Jones industrial average .DJI gained 3.48 points, or 0.03 percent, to 12,293.62. The Standard & Poor's 500 Index .SPX added 1.20 points, or 0.09 percent, to 1,315.75. The Nasdaq Composite Index .IXICput on 4.62 points, or 0.17 percent, to 2,773.81.
full story
Buyout firm Gores in talks with Borders: report
NEW YORK | Thu Jun 2, 2011 5:39am EDT
(Reuters) - Private equity firm Gores Group is in talks to buy more than half of bankrupt bookseller Borders Group Inc's (BGPIQ.PK) remaining stores, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.
Borders, which filed for Chapter 11 bankruptcy protection in February, would be able to continue operating as a going concern, according to the report.
A Borders spokeswoman declined to comment and a representative for Gores Group did not immediately return a request for comment.
Before the bankruptcy filing, Borders operated more than 500 namesake superstores, as well as the Waldenbooks chain of smaller bookstores.
Borders contended with years of declining book sales in the years leading up to its bankruptcy filing. It has so far closed about 225 of its 500 superstores.
Other suitors are also talking with Borders, the Wall Street Journal's sources said. Liberty Media Corp.'s recent bid for Barnes & Noble Inc (BKS.N) renewed interest in Borders, according to one of the Journal's sources.
The case is In re: Borders Group Inc, U.S. Bankruptcy Court, Southern District of New York, No: 11-10614.
(Reporting by Phil Wahba; Editing by Gary Hill)
full story
(Reuters) - Private equity firm Gores Group is in talks to buy more than half of bankrupt bookseller Borders Group Inc's (BGPIQ.PK) remaining stores, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.
Borders, which filed for Chapter 11 bankruptcy protection in February, would be able to continue operating as a going concern, according to the report.
A Borders spokeswoman declined to comment and a representative for Gores Group did not immediately return a request for comment.
Before the bankruptcy filing, Borders operated more than 500 namesake superstores, as well as the Waldenbooks chain of smaller bookstores.
Borders contended with years of declining book sales in the years leading up to its bankruptcy filing. It has so far closed about 225 of its 500 superstores.
Other suitors are also talking with Borders, the Wall Street Journal's sources said. Liberty Media Corp.'s recent bid for Barnes & Noble Inc (BKS.N) renewed interest in Borders, according to one of the Journal's sources.
The case is In re: Borders Group Inc, U.S. Bankruptcy Court, Southern District of New York, No: 11-10614.
(Reporting by Phil Wahba; Editing by Gary Hill)
full story
Libya's oil chief Ghanem defects, now in Rome
ROME | Wed Jun 1, 2011 12:28pm EDT
(Reuters) - Libya's top oil official Shokri Ghanem appeared in Rome on Wednesday, saying he had defected in protest against bloodshed in Libya and to help build a democracy his country, in a blow to Muammar Gaddafi's rule.
A tired looking Ghanem, whose whereabouts had been unknown for several days, made a brief statement in Rome that he had left his position as National Oil Corp head because of the "unbearable" violence in Libya.
Ghanem, one of the most senior Libyan officials to have defected, said he had left Tripoli two weeks ago and had not seen Gaddafi "for months." He said he still hoped for a peaceful resolution to the conflict and Gaddafi.
"I left the country and decided also to leave my job and to join the choice of Libyan youth to create a modern constitutional state respecting human rights and building a better future for all Libyans," he said.
When asked what the mood within the Gaddafi government was, he said: "What's happening in Libya is that there is a lot of pressure from within and from outside."
Ghanem, who had normally led the Libyan delegation at OPEC, said oil production in Libya was "coming to a halt" because of the international embargo.
He added that in future he would not be representing Libya at OPEC in the future, and said he did not know who would from Gaddafi's side.
"It (oil production) is almost coming a halt, very little is produced because you cannot export -- if you cannot export, you cannot produce," he said.
Asked if he thought Gaddafi would be willing to negotiate, Ghanem said: "Well he is negotiating sometimes. A few days ago he met with the South African president but of course we don't know what is going to happen."
(Reporting by Deepa Babington)
full story
(Reuters) - Libya's top oil official Shokri Ghanem appeared in Rome on Wednesday, saying he had defected in protest against bloodshed in Libya and to help build a democracy his country, in a blow to Muammar Gaddafi's rule.
A tired looking Ghanem, whose whereabouts had been unknown for several days, made a brief statement in Rome that he had left his position as National Oil Corp head because of the "unbearable" violence in Libya.
Ghanem, one of the most senior Libyan officials to have defected, said he had left Tripoli two weeks ago and had not seen Gaddafi "for months." He said he still hoped for a peaceful resolution to the conflict and Gaddafi.
"I left the country and decided also to leave my job and to join the choice of Libyan youth to create a modern constitutional state respecting human rights and building a better future for all Libyans," he said.
When asked what the mood within the Gaddafi government was, he said: "What's happening in Libya is that there is a lot of pressure from within and from outside."
Ghanem, who had normally led the Libyan delegation at OPEC, said oil production in Libya was "coming to a halt" because of the international embargo.
He added that in future he would not be representing Libya at OPEC in the future, and said he did not know who would from Gaddafi's side.
"It (oil production) is almost coming a halt, very little is produced because you cannot export -- if you cannot export, you cannot produce," he said.
Asked if he thought Gaddafi would be willing to negotiate, Ghanem said: "Well he is negotiating sometimes. A few days ago he met with the South African president but of course we don't know what is going to happen."
(Reporting by Deepa Babington)
full story
Online network Viadeo eyes Africa after shelving IPO
By Bate Felix
DAKAR | Tue May 31, 2011 2:37pm EDT
(Reuters) - Viadeo, the world's second-biggest online networking site for professionals behind LinkedIn, plans to double its users in Africa within a year, its chief operating officer for the continent said on Tuesday.
Viadeo, which targets professionals, job seekers, recruiters and serves as a brainstorming platform for entrepreneurs, shelved plans for an initial public offering (IPO) early this month to focus on growth in emerging markets.
"I think we should be able to double the volume of members in Africa within a year," Chams Diagne, Viadeo's chief operating office for Africa, told Reuters in Dakar, referring to the current base of one million African users.
"If we put all our plans in place, I think that naturally, without effort, we should be able to generate many more members," he forecast.
Senegalese-born Diagne moved from France early this year, where he was in charge of a European unit, to build the company's presence and expansion on the continent.
"There is a market in Africa just like in China or India. At the moment everybody agrees there is a potential, that is why we decided to focus on the growth and be present here," he said.
"There is a huge appetite for social networks in Africa. If you look at the activities of our members, those from the continent are sometimes more active than in some European countries," Diagne said.
"They chat, share information on forums and seek expert advice, update their CVs and share information with peers."
Compared with LinkedIn's 100 million users worldwide, Viadeo has 35 million users, and until recently was mostly known in the French-speaking community due to its origins. It has gradually expanded its presence worldwide with offices and acquisitions in India, China and Mexico amongst others.
Diagne said the firm would look to grow its presence on the continent through acquisitions, targeting virtual and real-world associations and career groups while also building partnerships with professional associations.
But a lack of online payment options in Africa meant it would be a while before the company started generating revenues from the second of its business models which targets users of its premium content.
"We have two business lines. A business-to-business platform which we offer companies to advertise within Viadeo and another to recruit, those are our biggest revenue lines," he said.
For the business-to-consumer model, Diagne said the firm was still trying to find a better and secured payment tool because most people do not have credit cards.
"We know that half of Africa's population is under 25 years old, We know that at the moment it is difficult to monetise because of structural issues, but that will change," he said.
(Editing by Jane Merriman)
full story
DAKAR | Tue May 31, 2011 2:37pm EDT
(Reuters) - Viadeo, the world's second-biggest online networking site for professionals behind LinkedIn, plans to double its users in Africa within a year, its chief operating officer for the continent said on Tuesday.
Viadeo, which targets professionals, job seekers, recruiters and serves as a brainstorming platform for entrepreneurs, shelved plans for an initial public offering (IPO) early this month to focus on growth in emerging markets.
"I think we should be able to double the volume of members in Africa within a year," Chams Diagne, Viadeo's chief operating office for Africa, told Reuters in Dakar, referring to the current base of one million African users.
"If we put all our plans in place, I think that naturally, without effort, we should be able to generate many more members," he forecast.
Senegalese-born Diagne moved from France early this year, where he was in charge of a European unit, to build the company's presence and expansion on the continent.
"There is a market in Africa just like in China or India. At the moment everybody agrees there is a potential, that is why we decided to focus on the growth and be present here," he said.
"There is a huge appetite for social networks in Africa. If you look at the activities of our members, those from the continent are sometimes more active than in some European countries," Diagne said.
"They chat, share information on forums and seek expert advice, update their CVs and share information with peers."
Compared with LinkedIn's 100 million users worldwide, Viadeo has 35 million users, and until recently was mostly known in the French-speaking community due to its origins. It has gradually expanded its presence worldwide with offices and acquisitions in India, China and Mexico amongst others.
Diagne said the firm would look to grow its presence on the continent through acquisitions, targeting virtual and real-world associations and career groups while also building partnerships with professional associations.
But a lack of online payment options in Africa meant it would be a while before the company started generating revenues from the second of its business models which targets users of its premium content.
"We have two business lines. A business-to-business platform which we offer companies to advertise within Viadeo and another to recruit, those are our biggest revenue lines," he said.
For the business-to-consumer model, Diagne said the firm was still trying to find a better and secured payment tool because most people do not have credit cards.
"We know that half of Africa's population is under 25 years old, We know that at the moment it is difficult to monetise because of structural issues, but that will change," he said.
(Editing by Jane Merriman)
full story
Gold steady near four-week high; Greek crisis on focus
By Lewa Pardomuan
SINGAPORE | Mon May 30, 2011 10:33pm EDT
(Reuters) - Gold rose to its highest in almost four weeks on Tuesday as lingering fears about a Greek debt default overshadowed a rebound in the euro, while silver was heading for its biggest monthly decline since 2008.
A Wall Street Journal report that Germany could make concessions on efforts to put together a bailout for Greece lifted the single currency, but analysts said Greece's debt crisis deterred investors from searching out higher risk assets.
Spot gold added 89 cents to $1,538.84 an ounce by 10:10 p.m. ET hitting an intraday high around $1,540, its highest since May 4. Bullion is down 1.6 percent so far in May, hovering below a lifetime high around $1,575 touched in early in the month.
"It's crucial for markets to see whether Greece is actually sustainable and whether it can actually obtain the next 12 billion euros that is required for them to meet their funding needs in July," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
"I think silver was going up too fast and within too short a period of time. But I think on a longer-term basis after the sell off, you see that investors are slowly coming back."
Silver rose 22 cents to $38.27 an ounce, but the metal is down around 20 percent in May -- its biggest monthly decline since 2008. Silver struck record at $49.51 an ounce in April.
The European Union is racing to draft a second bailout package for Greece to release vital loans next month and avert the risk of the euro zone country defaulting, EU officials said on Monday.
Germany is considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans for Greece, the Wall Street Journal reported, citing people familiar with the matter.
The euro rose to as high as $1.4354, its highest in three weeks because of the report, rising above its 55-day moving average at $1.4333.
The physical market lacked activity, but some speculators could be tempted to cash in on gold's gains. Demand from top consumer India was likely to ease as the wedding season comes to an end.
Indian parents customarily give gold jewelry as gifts.
"It's a very quiet start," said a dealer in Singapore.
"But we saw two-way business yesterday. Thailand and Indonesia were sellers, while the Indians were the buyers. We also saw speculators buying silver."
(Reporting by Lewa Pardomuan; Editing by Ed Lane)
full story
SINGAPORE | Mon May 30, 2011 10:33pm EDT
(Reuters) - Gold rose to its highest in almost four weeks on Tuesday as lingering fears about a Greek debt default overshadowed a rebound in the euro, while silver was heading for its biggest monthly decline since 2008.
A Wall Street Journal report that Germany could make concessions on efforts to put together a bailout for Greece lifted the single currency, but analysts said Greece's debt crisis deterred investors from searching out higher risk assets.
Spot gold added 89 cents to $1,538.84 an ounce by 10:10 p.m. ET hitting an intraday high around $1,540, its highest since May 4. Bullion is down 1.6 percent so far in May, hovering below a lifetime high around $1,575 touched in early in the month.
"It's crucial for markets to see whether Greece is actually sustainable and whether it can actually obtain the next 12 billion euros that is required for them to meet their funding needs in July," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
"I think silver was going up too fast and within too short a period of time. But I think on a longer-term basis after the sell off, you see that investors are slowly coming back."
Silver rose 22 cents to $38.27 an ounce, but the metal is down around 20 percent in May -- its biggest monthly decline since 2008. Silver struck record at $49.51 an ounce in April.
The European Union is racing to draft a second bailout package for Greece to release vital loans next month and avert the risk of the euro zone country defaulting, EU officials said on Monday.
Germany is considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans for Greece, the Wall Street Journal reported, citing people familiar with the matter.
The euro rose to as high as $1.4354, its highest in three weeks because of the report, rising above its 55-day moving average at $1.4333.
The physical market lacked activity, but some speculators could be tempted to cash in on gold's gains. Demand from top consumer India was likely to ease as the wedding season comes to an end.
Indian parents customarily give gold jewelry as gifts.
"It's a very quiet start," said a dealer in Singapore.
"But we saw two-way business yesterday. Thailand and Indonesia were sellers, while the Indians were the buyers. We also saw speculators buying silver."
(Reporting by Lewa Pardomuan; Editing by Ed Lane)
full story
Euro at three-week high versus dollar, Japan data lifts Nikkei
SINGAPORE | Mon May 30, 2011 11:12pm EDT
(Reuters) - The euro hit a three-week high versus the dollar on Tuesday on a report that Germany could make concessions on efforts to put together a bailout for Greece, while Japanese shares rose on data suggesting industrial activity has begun to recover from the March earthquake.
The euro rose to $1.4354, its highest in three weeks, supported by a Wall Street Journal report that Germany is considering dropping its demand for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans for heavily-indebted Greece.
The European Union wants to draft a second bailout package for Greece to release vital loans next month and avert the risk of the euro zonecountry defaulting, EU officials said on Monday.
"The euro zone problems appear to be subsiding for now. Or putting it another way, the market appears to have stopped looking at them as a factor for now," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ, adding the market could focus on upcoming U.S. data releases. Key numbers including ISM manufacturing and payroll data are due this week.
In Japan, the Nikkei average rose more than 1 percent to 9615.54, boosted by industrial output figures.
Though an output increase of 1 percent in April was below expectations, manufacturers sharply increased their forecasts for May, predicting output will rise 8.0 percent compared with the previous 2.7 percent forecast, data from the Ministry of Economy, Trade and Industry showed.
Companies expect the recovery to continue in June, a sign they are making progress in recovering from the March earthquake.
"Investors got past the weak data in April and cheered the strong outlook by buying futures," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
Big gainers on the Nikkei included solar power firms, expected to win business as a result of Germany's decision to shut all its nuclear reactors by 2022, a switch in policy prompted by the Fukushima radiation scare in Japan.
Panel-maker Sharp Corp rose 3.0 percent to 762 yen and panel equipment manufacturer Ulvac surged 2.9 percent to 2,073 yen.
MSCI's index of Asia-Pacific stocks outside Japan was up 1.2 percent.
Brent crude oil for July delivery rose 97 cents to $115.65 a barrel, having slipped below $115 on Monday, when markets were closed in the United States and Britain. Prices are down around 9 percent in May, the biggest drop since May last year.
Gold ticked up to $1,538.80 per ounce by 0209 GMT, after closing at $1,597.95 on Monday in trade drastically thinned by market holidays in the U.S. and Britain.
Gold, one of the chief beneficiaries of worries about the security of currencies and other assets, set a record high of $1,575.79 per ounce in early May.
full storry
(Reuters) - The euro hit a three-week high versus the dollar on Tuesday on a report that Germany could make concessions on efforts to put together a bailout for Greece, while Japanese shares rose on data suggesting industrial activity has begun to recover from the March earthquake.
The euro rose to $1.4354, its highest in three weeks, supported by a Wall Street Journal report that Germany is considering dropping its demand for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans for heavily-indebted Greece.
The European Union wants to draft a second bailout package for Greece to release vital loans next month and avert the risk of the euro zonecountry defaulting, EU officials said on Monday.
"The euro zone problems appear to be subsiding for now. Or putting it another way, the market appears to have stopped looking at them as a factor for now," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ, adding the market could focus on upcoming U.S. data releases. Key numbers including ISM manufacturing and payroll data are due this week.
In Japan, the Nikkei average rose more than 1 percent to 9615.54, boosted by industrial output figures.
Though an output increase of 1 percent in April was below expectations, manufacturers sharply increased their forecasts for May, predicting output will rise 8.0 percent compared with the previous 2.7 percent forecast, data from the Ministry of Economy, Trade and Industry showed.
Companies expect the recovery to continue in June, a sign they are making progress in recovering from the March earthquake.
"Investors got past the weak data in April and cheered the strong outlook by buying futures," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
Big gainers on the Nikkei included solar power firms, expected to win business as a result of Germany's decision to shut all its nuclear reactors by 2022, a switch in policy prompted by the Fukushima radiation scare in Japan.
Panel-maker Sharp Corp rose 3.0 percent to 762 yen and panel equipment manufacturer Ulvac surged 2.9 percent to 2,073 yen.
MSCI's index of Asia-Pacific stocks outside Japan was up 1.2 percent.
Brent crude oil for July delivery rose 97 cents to $115.65 a barrel, having slipped below $115 on Monday, when markets were closed in the United States and Britain. Prices are down around 9 percent in May, the biggest drop since May last year.
Gold ticked up to $1,538.80 per ounce by 0209 GMT, after closing at $1,597.95 on Monday in trade drastically thinned by market holidays in the U.S. and Britain.
Gold, one of the chief beneficiaries of worries about the security of currencies and other assets, set a record high of $1,575.79 per ounce in early May.
full storry
Dealtalk: Buyout exits boost fund-raising hopes
By Megan Davies and Simon Meads
NEW YORK/LONDON | Fri May 27, 2011 12:33pm EDT
(Reuters) - Private equity firms are exiting a spurt of buyout-boom era deals and paying dividends back to long-suffering investors, turning paper profits into real cash distributions.
After a long period of not being able to sell or take investments public, the window is now open for buyout firms to clear the large backlog of companies bought years ago and distribute the proceeds to limited partners -- the pension and endowment funds which put money into their funds.
Recent banner deals are the sale of drugs maker Nycomed to Takeda (4502.T), Skype to Microsoft (MSFT.O) and diagnostics firm Phadia to Thermo Fisher (TMO.N), netting bumper returns for private equity firms by hooking cash-rich corporate buyers.
But many portfolio companies are set to languish for longer in aging portfolios and some wonder if returning money now is too little too late for investors already reshaping their portfolios.
"Investors want to see performance. You can show people mark-to-market performance and the valuation of your portfolio, but there is nothing like a cash exit," said Stuart McAlpine, partner at Cinven CINV.UL.
Some companies are being taken public at lower than their original deal value. Freescale Semiconductor Holdings (FSL.N) went public on Thursday but the value of the chipmaker remains far below the price that buyout firms paid for it at the height of the last credit boom.
Exiting investments at decent returns and paying limited partners frequent dividends are seen as essential for private equity firms looking to raise new funds.
"On the basis that capital is rationed, people understandably are more likely to choose those managers that have delivered in a definite way by exiting," said Billy Gilmore, investment director at Scottish Widows Investment Partnership (SWIP).
The rise in sales and IPOs frequently precedes efforts by firms to return to investors cap in hand for the next round of funds for new deals.
"I always grin when I get a handful of distributions quite close together because it always seems to be followed by someone launching a new product," said New York-based Palisades Hudson Asset Management Chief Investment Officer Jonathan Bergman.
TIP OF THE ICEBERG
Recent data from London-based research firm Preqin shows that there have been 201 PE-backed exits so far this quarter, valued at $85 billion. That is 5 percent higher than the record level reached in the fourth quarter of 2010, Preqin said.
But it's only the tip of the iceberg and private equity firms have their work cut out to clear the backlog of portfolio companies on their books.
Firms owned an all-time high of 5,994 U.S. companies at the end of 2010, according to data from private equity data firm Pitchbook. Their data also showed the median hold time of investments by private equity firms rising to five years in 2010, up from 3.5 years in 2007.
In Europe, private equity professionals estimate some 2,000 private equity-backed companies will come on the market within the next five years.
Receptive public markets and cash-rich corporate buyers are helping restore numerous exit options for firms that were largely reliant on selling to rivals last year.
Investors are also receiving payouts from recapitalizations and dividends, said Bergman, who said he had seen the pace of distributions increase in the last 3-4 months.
"I'm just happy to see cash arriving," said Bergman.
But Triago, a Paris-based company that helps buyout firms raise money, predicts that the spate of exits would not lead to a distribution boom, as the bulk of the overhang in portfolio companies from the boom years is not going to get cleared anytime soon.
A number of the largest leveraged buyouts, such as Energy Future Holdings, the Texas power company formerly known as TXU, and media company Clear Channel Communications remain on private equity firms' books to exit.
Even with money returning to investors, many of those pension funds and endowments are questioning whether they should put quite so much money into private equity in the future.
"(Fund-raising) has improved somewhat but in many cases there has been a real reevaluation on behalf of investment committees in terms of how important private equity ought to be in a portfolio," said Josh Lerner, a Harvard Business School professor specializing in private equity. "It is definitely good news -- but is it good enough?"
(Editing by Phil Berlowitz)
full story
NEW YORK/LONDON | Fri May 27, 2011 12:33pm EDT
(Reuters) - Private equity firms are exiting a spurt of buyout-boom era deals and paying dividends back to long-suffering investors, turning paper profits into real cash distributions.
After a long period of not being able to sell or take investments public, the window is now open for buyout firms to clear the large backlog of companies bought years ago and distribute the proceeds to limited partners -- the pension and endowment funds which put money into their funds.
Recent banner deals are the sale of drugs maker Nycomed to Takeda (4502.T), Skype to Microsoft (MSFT.O) and diagnostics firm Phadia to Thermo Fisher (TMO.N), netting bumper returns for private equity firms by hooking cash-rich corporate buyers.
But many portfolio companies are set to languish for longer in aging portfolios and some wonder if returning money now is too little too late for investors already reshaping their portfolios.
"Investors want to see performance. You can show people mark-to-market performance and the valuation of your portfolio, but there is nothing like a cash exit," said Stuart McAlpine, partner at Cinven CINV.UL.
Some companies are being taken public at lower than their original deal value. Freescale Semiconductor Holdings (FSL.N) went public on Thursday but the value of the chipmaker remains far below the price that buyout firms paid for it at the height of the last credit boom.
Exiting investments at decent returns and paying limited partners frequent dividends are seen as essential for private equity firms looking to raise new funds.
"On the basis that capital is rationed, people understandably are more likely to choose those managers that have delivered in a definite way by exiting," said Billy Gilmore, investment director at Scottish Widows Investment Partnership (SWIP).
The rise in sales and IPOs frequently precedes efforts by firms to return to investors cap in hand for the next round of funds for new deals.
"I always grin when I get a handful of distributions quite close together because it always seems to be followed by someone launching a new product," said New York-based Palisades Hudson Asset Management Chief Investment Officer Jonathan Bergman.
TIP OF THE ICEBERG
Recent data from London-based research firm Preqin shows that there have been 201 PE-backed exits so far this quarter, valued at $85 billion. That is 5 percent higher than the record level reached in the fourth quarter of 2010, Preqin said.
But it's only the tip of the iceberg and private equity firms have their work cut out to clear the backlog of portfolio companies on their books.
Firms owned an all-time high of 5,994 U.S. companies at the end of 2010, according to data from private equity data firm Pitchbook. Their data also showed the median hold time of investments by private equity firms rising to five years in 2010, up from 3.5 years in 2007.
In Europe, private equity professionals estimate some 2,000 private equity-backed companies will come on the market within the next five years.
Receptive public markets and cash-rich corporate buyers are helping restore numerous exit options for firms that were largely reliant on selling to rivals last year.
Investors are also receiving payouts from recapitalizations and dividends, said Bergman, who said he had seen the pace of distributions increase in the last 3-4 months.
"I'm just happy to see cash arriving," said Bergman.
But Triago, a Paris-based company that helps buyout firms raise money, predicts that the spate of exits would not lead to a distribution boom, as the bulk of the overhang in portfolio companies from the boom years is not going to get cleared anytime soon.
A number of the largest leveraged buyouts, such as Energy Future Holdings, the Texas power company formerly known as TXU, and media company Clear Channel Communications remain on private equity firms' books to exit.
Even with money returning to investors, many of those pension funds and endowments are questioning whether they should put quite so much money into private equity in the future.
"(Fund-raising) has improved somewhat but in many cases there has been a real reevaluation on behalf of investment committees in terms of how important private equity ought to be in a portfolio," said Josh Lerner, a Harvard Business School professor specializing in private equity. "It is definitely good news -- but is it good enough?"
(Editing by Phil Berlowitz)
full story
Shell could become Rosneft's Arctic partner: Putin
NOVO-OGARYOVO, Russia | Fri May 27, 2011 10:26am EDT
(Reuters) - Royal Dutch Shell could become a partner in Arctic oil exploration of Russia's biggest producer Rosneft, Prime Minister Vladimir Putin said on Friday.
British major BP is not out of the picture, he added, speaking to journalists at his residence outside of Moscow.
Asked whether Shell could join Rosneft to search for oil in the Arctic offshore, Putin said: "It can. We have worked with Shell comfortably for a long time."
But Putin said it is was up to state-controlled Rosneft to decide which companies it wanted and did not want to work with.
"Problems should be solved on the corporate level...For us in the government it is not important which company will work in this or any given project."
Earlier this month, state-controlled Rosneft's offshore Arctic deal with BP collapsed, opening the door for other major oil companies to fill its place.
Shell CEO Peter Voser came to Moscow earlier this week to discuss Arctic cooperation with Russia's Deputy Prime Minister Igor Sechin and Rosneft's head Eduard Khudainatov, sending a signal that Shell could replace BP for oil exploration in the Kara Sea.
Rosneft has said that oil majors Exxon, Chevron, China's CNPC, Malaysia's Petronas and Brazil's Petrobras are other candidates for Arctic deals.
(Reporting by Gleb Bryanski; writing by Jessica Bachman; editing byDouglas Busvine and Anthony Barker)
full story
(Reuters) - Royal Dutch Shell could become a partner in Arctic oil exploration of Russia's biggest producer Rosneft, Prime Minister Vladimir Putin said on Friday.
British major BP is not out of the picture, he added, speaking to journalists at his residence outside of Moscow.
Asked whether Shell could join Rosneft to search for oil in the Arctic offshore, Putin said: "It can. We have worked with Shell comfortably for a long time."
But Putin said it is was up to state-controlled Rosneft to decide which companies it wanted and did not want to work with.
"Problems should be solved on the corporate level...For us in the government it is not important which company will work in this or any given project."
Earlier this month, state-controlled Rosneft's offshore Arctic deal with BP collapsed, opening the door for other major oil companies to fill its place.
Shell CEO Peter Voser came to Moscow earlier this week to discuss Arctic cooperation with Russia's Deputy Prime Minister Igor Sechin and Rosneft's head Eduard Khudainatov, sending a signal that Shell could replace BP for oil exploration in the Kara Sea.
Rosneft has said that oil majors Exxon, Chevron, China's CNPC, Malaysia's Petronas and Brazil's Petrobras are other candidates for Arctic deals.
(Reporting by Gleb Bryanski; writing by Jessica Bachman; editing byDouglas Busvine and Anthony Barker)
full story
Stocks, oil fall; euro gives back gains
By Richard Leong and Caroline Valetkevitch
NEW YORK | Thu May 26, 2011 11:57am EDT
(Reuters) - Stocks and oil dipped after disappointing U.S. economic data, while the euro gave back earlier gains amid renewed euro-zone worries.
Comments from Eurogroup president Jean-Claude Juncker, raising doubts over an IMF disbursement of financial support to Greece in June, put markets on edge, with the Dow and S&P 500 stock indices briefly adding to losses and U.S. bonds adding to gains after the news.
Gold prices also fell, led by a fall in euro-priced bullion.
Investor desire to own stocks, commodities, and other risky assets remains fragile as U.S. economic growth shows signs of slowing further and European policy-makers deal with the persistent debt problems in Greece, Portugal and Ireland.
"Most people have been baking into their assumptions that this recovery won't be too robust," said Randy Bateman, chief investment officer of Huntington Asset Management in Columbus, Ohio, which oversees $14.5 billion.
The Standard & Poor's 500 index .SPX was down 0.2 percent while the FTSEurofirst 300 index.FTEU3 was down 0.07 percent.
In its second estimate of first quarter U.S. economic performance, the government did not upwardly revise its first-quarter growth of 1.8 percent as forecast by economists. Adding to the latest batch of disappointing U.S. data was a surprise rise in weekly jobless claims.
Against the U.S. dollar, the euro was last at $1.4094, up 0.1 percent, helped by a news report that suggests Asia is willing to help ease Europe's debt woes.
The Financial Times quoted the head of the European Financial Stability Facility (EFSF) as sayingChina and other Asian investors were expected to buy a "strong proportion" of Portuguese bailout bonds when the euro zone's rescue fund starts auctioning them next month.
The U.S. dollar .DXY was down 0.2 percent against a basket of major currencies.
Ten-year Treasury notes were trading 16/32 higher in price to yield 3.077 percent.
In the oil market, U.S. crude oil was down $1.10 at $100.22 while Brent crude was down 27 cents at $114.66.
Spot gold was down 0.4 percent at $1,517.84 an ounce, after hitting $1,532.00 on Wednesday, its strongest since May 4.
Tokyo's Nikkei .N225 closed 1.5 percent higher, following Tuesday's in U.S. and European equities.
(Additional reporting by Ryan Vlastelica in New York, and Natsuko Waki and Jessica Mortimer in London)
full story
NEW YORK | Thu May 26, 2011 11:57am EDT
(Reuters) - Stocks and oil dipped after disappointing U.S. economic data, while the euro gave back earlier gains amid renewed euro-zone worries.
Comments from Eurogroup president Jean-Claude Juncker, raising doubts over an IMF disbursement of financial support to Greece in June, put markets on edge, with the Dow and S&P 500 stock indices briefly adding to losses and U.S. bonds adding to gains after the news.
Gold prices also fell, led by a fall in euro-priced bullion.
Investor desire to own stocks, commodities, and other risky assets remains fragile as U.S. economic growth shows signs of slowing further and European policy-makers deal with the persistent debt problems in Greece, Portugal and Ireland.
"Most people have been baking into their assumptions that this recovery won't be too robust," said Randy Bateman, chief investment officer of Huntington Asset Management in Columbus, Ohio, which oversees $14.5 billion.
The Standard & Poor's 500 index .SPX was down 0.2 percent while the FTSEurofirst 300 index.FTEU3 was down 0.07 percent.
In its second estimate of first quarter U.S. economic performance, the government did not upwardly revise its first-quarter growth of 1.8 percent as forecast by economists. Adding to the latest batch of disappointing U.S. data was a surprise rise in weekly jobless claims.
Against the U.S. dollar, the euro was last at $1.4094, up 0.1 percent, helped by a news report that suggests Asia is willing to help ease Europe's debt woes.
The Financial Times quoted the head of the European Financial Stability Facility (EFSF) as sayingChina and other Asian investors were expected to buy a "strong proportion" of Portuguese bailout bonds when the euro zone's rescue fund starts auctioning them next month.
The U.S. dollar .DXY was down 0.2 percent against a basket of major currencies.
Ten-year Treasury notes were trading 16/32 higher in price to yield 3.077 percent.
In the oil market, U.S. crude oil was down $1.10 at $100.22 while Brent crude was down 27 cents at $114.66.
Spot gold was down 0.4 percent at $1,517.84 an ounce, after hitting $1,532.00 on Wednesday, its strongest since May 4.
Tokyo's Nikkei .N225 closed 1.5 percent higher, following Tuesday's in U.S. and European equities.
(Additional reporting by Ryan Vlastelica in New York, and Natsuko Waki and Jessica Mortimer in London)
full story
Hedge fund star Einhorn calls for Microsoft's Ballmer to go
By Svea Herbst-Bayliss and Bill Rigby
NEW YORK/SEATTLE | Thu May 26, 2011 11:45am EDT
(Reuters) - Influential hedge fund manager David Einhorn has called for Microsoft Corp Chief Executive Steve Ballmer to step down, saying the world's largest software company's leader is stuck in the past.
"His continued presence is the biggest overhang on Microsoft's stock," Einhorn said in reference to Ballmer.
The comments by outspoken Einhorn, who made his name warning about Lehman Brothers' financial health before the investment bank's collapse, are the most pointed yet from a high-profile investor against Microsoft's leadership.
Microsoft shares, which have been static for over a decade, gained 0.87 percent in after-hours trading after Einhorn's comments, the most of any Dow Jones industrial average component.
The software giant, which was the largest U.S. company by market value in the late 1990s, has since been overtaken by Apple Inc and IBM in market value, and is no longer seen as a dominating force in technology after a failure to capitalize on new Internet and mobile computing markets.
The stock is down 6 percent in the last two weeks alone after Microsoft agreed to pay $8.5 billion for Internet phone service Skype, a move which mystified many investors.
Speaking at the annual Ira Sohn Investment Research Conference in New York on Wednesday, Einhorn said it was time for Ballmer -- who succeeded co-founder Bill Gates in 2000 -- to step aside and "give someone else a chance."
Einhorn's comments echo what some investors have said for some years in private.
A Microsoft spokesman declined comment on Einhorn's remarks.
RECENT BUYER
Einhorn's Greenlight Capital hedge fund has been a recent buyer of Microsoft stock, which at under 10 times expected earnings is regarded by many as undervalued.
Greenlight held about 9 million shares in Microsoft, or 0.11 percent of the company's outstanding shares, at the end of the first quarter, according to Thomson Reuters data.
Einhorn also said it was time for Microsoft to consider strategic alternatives for its money-losing online business, which has so far failed to win share from online search leader Google Inc.
The online services unit, which runs the Bing search engine and MSN web portal, had a loss of $726 million last quarter and has now lost $7 billion in four years.
Bing has made some progress, raising its U.S. Internet search market share to 14 percent from 8 percent in the two years since launch, but has not taken any share from Google, which has held on to its 65 percent share, according to research firm comScore.
Einhorn declined to comment further.
OLD FOES APPLE, IBM REVIVED
On Tuesday, Microsoft was overtaken by IBM in market value for the first time in 15 years, chiefly because of Microsoft's static share price. Apple roared past it last year to become the world's most valuable tech company.
(Graphic showing market value of Apple, IBM and Microsoft over time: r.reuters.com/jaw69r )
An investor who put $100,000 into Microsoft stock 10 years ago would now have about $69,000 worth.
Einhorn, the president of Greenlight Capital, which had $7.8 billion of assets as of January 1, made his name with the prescient call on Lehman's accounting troubles.
In the spring of 2008, Einhorn said Lehman -- and its then-Chief Financial Officer Erin Callan -- had understated its own problems and needed to raise capital to support a balance sheet peppered with risky assets.
Einhorn's public speeches on the matter in April and May 2008 -- including one at the Ira Sohn conference that year -- touched a nerve with other investors and are widely credited as leading to Callan's departure from the company a few months before its collapse.
Microsoft shares, which gained 4 cents in normal trading, ended up a further 12 cents at $24.31 in after-hours activity.
(Reporting by Bill Rigby, Svea Herbst and Edwin Chan; Editing by Steve Orlofsky, Lisa Shumakerand Carol Bishopric)
full story
NEW YORK/SEATTLE | Thu May 26, 2011 11:45am EDT
(Reuters) - Influential hedge fund manager David Einhorn has called for Microsoft Corp Chief Executive Steve Ballmer to step down, saying the world's largest software company's leader is stuck in the past.
"His continued presence is the biggest overhang on Microsoft's stock," Einhorn said in reference to Ballmer.
The comments by outspoken Einhorn, who made his name warning about Lehman Brothers' financial health before the investment bank's collapse, are the most pointed yet from a high-profile investor against Microsoft's leadership.
Microsoft shares, which have been static for over a decade, gained 0.87 percent in after-hours trading after Einhorn's comments, the most of any Dow Jones industrial average component.
The software giant, which was the largest U.S. company by market value in the late 1990s, has since been overtaken by Apple Inc and IBM in market value, and is no longer seen as a dominating force in technology after a failure to capitalize on new Internet and mobile computing markets.
The stock is down 6 percent in the last two weeks alone after Microsoft agreed to pay $8.5 billion for Internet phone service Skype, a move which mystified many investors.
Speaking at the annual Ira Sohn Investment Research Conference in New York on Wednesday, Einhorn said it was time for Ballmer -- who succeeded co-founder Bill Gates in 2000 -- to step aside and "give someone else a chance."
Einhorn's comments echo what some investors have said for some years in private.
A Microsoft spokesman declined comment on Einhorn's remarks.
RECENT BUYER
Einhorn's Greenlight Capital hedge fund has been a recent buyer of Microsoft stock, which at under 10 times expected earnings is regarded by many as undervalued.
Greenlight held about 9 million shares in Microsoft, or 0.11 percent of the company's outstanding shares, at the end of the first quarter, according to Thomson Reuters data.
Einhorn also said it was time for Microsoft to consider strategic alternatives for its money-losing online business, which has so far failed to win share from online search leader Google Inc.
The online services unit, which runs the Bing search engine and MSN web portal, had a loss of $726 million last quarter and has now lost $7 billion in four years.
Bing has made some progress, raising its U.S. Internet search market share to 14 percent from 8 percent in the two years since launch, but has not taken any share from Google, which has held on to its 65 percent share, according to research firm comScore.
Einhorn declined to comment further.
OLD FOES APPLE, IBM REVIVED
On Tuesday, Microsoft was overtaken by IBM in market value for the first time in 15 years, chiefly because of Microsoft's static share price. Apple roared past it last year to become the world's most valuable tech company.
(Graphic showing market value of Apple, IBM and Microsoft over time: r.reuters.com/jaw69r )
An investor who put $100,000 into Microsoft stock 10 years ago would now have about $69,000 worth.
Einhorn, the president of Greenlight Capital, which had $7.8 billion of assets as of January 1, made his name with the prescient call on Lehman's accounting troubles.
In the spring of 2008, Einhorn said Lehman -- and its then-Chief Financial Officer Erin Callan -- had understated its own problems and needed to raise capital to support a balance sheet peppered with risky assets.
Einhorn's public speeches on the matter in April and May 2008 -- including one at the Ira Sohn conference that year -- touched a nerve with other investors and are widely credited as leading to Callan's departure from the company a few months before its collapse.
Microsoft shares, which gained 4 cents in normal trading, ended up a further 12 cents at $24.31 in after-hours activity.
(Reporting by Bill Rigby, Svea Herbst and Edwin Chan; Editing by Steve Orlofsky, Lisa Shumakerand Carol Bishopric)
full story
Wall Street advances on technical bounce
By Chuck Mikolajczak
NEW YORK | Wed May 25, 2011 2:11pm EDT
(Reuters) - U.S. stocks rose modestly on Wednesday after days of selling produced a technical rebound and investors were lured by attractive share prices.
Stocks reversed losses on manufacturing data pointing to a slowing in the U.S. economic recovery.
Energy shares were among the best performers, gaining on higher oil prices. <O/R> Homebuilders also advanced.
The S&P 500 index hit its lowest level on an intraday basis since April 19 after closing below its 50-day moving average for a second straight day on Tuesday.
The benchmark index had fallen for three consecutive sessions, dropping 2 percent over that time, with market internals showing declining stocks outnumbering advancers.
"It's more of a technical bottom -- the constant selling just got exhausted," said Rick Meckler, president of investment firm LibertyView Capital Management, in New York.
"You've had an awful lot of consecutive days of hard selling. It seems like, at least temporarily, that has come to an end."
Bespoke Investment Group said breadth in the S&P 500 was very close to extremely oversold levels, noting the last time those levels were reached on March 16 "turned out to be an attractive buying opportunity."
The Dow Jones industrial average .DJI gained 36.90 points, or 0.30 percent, to 12,393.11. The Standard & Poor's 500 Index .SPX added 4.40 points, or 0.33 percent, to 1,320.68. The Nasdaq Composite Index .IXIC rose 13.85 points, or 0.50 percent, to 2,760.01.
Higher oil prices lifted energy companies Chevron Corp (CVX.N) gained 1 percent to $103.27 and Exxon Mobil Corp (XOM.N) added 1 percent to $82.13. The PHLX oil service sector index .OSX rose 2.2 percent.
Homebuilders also advanced after luxury builder Toll Brothers Inc (TOL.N) said orders rose in the latest quarter as low home prices induced its target market of the affluent to start buying again. The stock climbed 3.5 percent to $20.98. The Dow Jones U.S. home construction index .DJUSHB advanced 1.9 percent.
New orders for long-lasting durable goods posted their largest decline in six months in April as aircraft and motor vehicle orders tumbled, a government report showed.
Recent weak U.S. data, including soft manufacturing figures from the Atlantic region and disappointing New York and Philadelphia Fed manufacturing surveys, pointed to a slowdown in the pace of economic growth.
American International Group Inc (AIG.N) shares fell 3.7 percent to $28.36, below the $29 offer price of the 300 million shares being sold by the U.S. Treasury and the bailed-out insurance company.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)
reuters.com
NEW YORK | Wed May 25, 2011 2:11pm EDT
(Reuters) - U.S. stocks rose modestly on Wednesday after days of selling produced a technical rebound and investors were lured by attractive share prices.
Stocks reversed losses on manufacturing data pointing to a slowing in the U.S. economic recovery.
Energy shares were among the best performers, gaining on higher oil prices. <O/R> Homebuilders also advanced.
The S&P 500 index hit its lowest level on an intraday basis since April 19 after closing below its 50-day moving average for a second straight day on Tuesday.
The benchmark index had fallen for three consecutive sessions, dropping 2 percent over that time, with market internals showing declining stocks outnumbering advancers.
"It's more of a technical bottom -- the constant selling just got exhausted," said Rick Meckler, president of investment firm LibertyView Capital Management, in New York.
"You've had an awful lot of consecutive days of hard selling. It seems like, at least temporarily, that has come to an end."
Bespoke Investment Group said breadth in the S&P 500 was very close to extremely oversold levels, noting the last time those levels were reached on March 16 "turned out to be an attractive buying opportunity."
The Dow Jones industrial average .DJI gained 36.90 points, or 0.30 percent, to 12,393.11. The Standard & Poor's 500 Index .SPX added 4.40 points, or 0.33 percent, to 1,320.68. The Nasdaq Composite Index .IXIC rose 13.85 points, or 0.50 percent, to 2,760.01.
Higher oil prices lifted energy companies Chevron Corp (CVX.N) gained 1 percent to $103.27 and Exxon Mobil Corp (XOM.N) added 1 percent to $82.13. The PHLX oil service sector index .OSX rose 2.2 percent.
Homebuilders also advanced after luxury builder Toll Brothers Inc (TOL.N) said orders rose in the latest quarter as low home prices induced its target market of the affluent to start buying again. The stock climbed 3.5 percent to $20.98. The Dow Jones U.S. home construction index .DJUSHB advanced 1.9 percent.
New orders for long-lasting durable goods posted their largest decline in six months in April as aircraft and motor vehicle orders tumbled, a government report showed.
Recent weak U.S. data, including soft manufacturing figures from the Atlantic region and disappointing New York and Philadelphia Fed manufacturing surveys, pointed to a slowdown in the pace of economic growth.
American International Group Inc (AIG.N) shares fell 3.7 percent to $28.36, below the $29 offer price of the 300 million shares being sold by the U.S. Treasury and the bailed-out insurance company.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)
reuters.com
Microsoft revamps phone software, adds handset makers
NEW YORK | Tue May 24, 2011 11:36am EDT
(Reuters) - Microsoft Corp launched an update of its Windows phone software on Tuesday, hoping a host of new features will help it close the gap on smartphone leaders Google Inc and Apple Inc.
The updated software, code-named Mango, will appear on new Windows phones beginning this autumn, and be available for existing Windows phone users before that, although Microsoft has not set a timetable for making the update available.
The update -- announced eight months after the launch of Windows Phone 7 -- involves 500 new features, including Internet Explorer 9 as the mobile browser, integrated Twitter and LinkedIn feeds, automated Facebook check-ins, and access to more than 17,000 downloadable applications.
The update improves Microsoft's distinctive "live tiles", which allow users to see real-time information on the phone screen without actually opening an application, and allows more than one application to run at the same time.
Microsoft said Acer Inc, Fujitsu Ltd and ZTE Corp were planning to bring new Windows phone devices to market, joining established handset makers Samsung Electronics, HTC Corp and LG Electronics.
The new Windows phone handsets will be exclusively powered by Qualcomm Inc's second-generation Snapdragon mobile processors, the chip-maker said.
Microsoft is banking on the new version of its phone software to get its recent alliance with Nokia off to a strong start. The first phones made by Nokia using Windows software are expected late this year or early in 2012.
The two have some work to do to catch up with Google's Android, which now runs 36 percent of smartphones sold globally, followed by Apple with 17 percent, according to research firm Gartner.
Last quarter, Microsoft held only 4 percent of the smartphone operating system market, but was looking to convert the 27 percent market share held by Nokia's Symbian, which will be replaced by the Windows system in most of Nokia's new phones.
(Reporting by Bill Rigby; Editing by Maureen Bavdek and Tim Dobbyn)
reuters.com
(Reuters) - Microsoft Corp launched an update of its Windows phone software on Tuesday, hoping a host of new features will help it close the gap on smartphone leaders Google Inc and Apple Inc.
The updated software, code-named Mango, will appear on new Windows phones beginning this autumn, and be available for existing Windows phone users before that, although Microsoft has not set a timetable for making the update available.
The update -- announced eight months after the launch of Windows Phone 7 -- involves 500 new features, including Internet Explorer 9 as the mobile browser, integrated Twitter and LinkedIn feeds, automated Facebook check-ins, and access to more than 17,000 downloadable applications.
The update improves Microsoft's distinctive "live tiles", which allow users to see real-time information on the phone screen without actually opening an application, and allows more than one application to run at the same time.
Microsoft said Acer Inc, Fujitsu Ltd and ZTE Corp were planning to bring new Windows phone devices to market, joining established handset makers Samsung Electronics, HTC Corp and LG Electronics.
The new Windows phone handsets will be exclusively powered by Qualcomm Inc's second-generation Snapdragon mobile processors, the chip-maker said.
Microsoft is banking on the new version of its phone software to get its recent alliance with Nokia off to a strong start. The first phones made by Nokia using Windows software are expected late this year or early in 2012.
The two have some work to do to catch up with Google's Android, which now runs 36 percent of smartphones sold globally, followed by Apple with 17 percent, according to research firm Gartner.
Last quarter, Microsoft held only 4 percent of the smartphone operating system market, but was looking to convert the 27 percent market share held by Nokia's Symbian, which will be replaced by the Windows system in most of Nokia's new phones.
(Reporting by Bill Rigby; Editing by Maureen Bavdek and Tim Dobbyn)
reuters.com
Gold hits two-week high on euro debt worries
By Silvia Antonioli
LONDON | Tue May 24, 2011 10:53am EDT
(Reuters) - Gold rose to its highest in nearly three weeks on Tuesday as concerns about a spreading EU debt crisis fueled safe haven buying, while a softer dollar provided support.
Spot gold hit $1,527.45 a troy ounce, its highest since May 4. It was bid at $1,526.50 an ounce at 1408 GMT from $1,516.05 late in New York on Monday.
Portugal and Ireland would be at risk of multi-notch credit downgrades, pushing their ratings into junk territory in the event of a default by Greece, Moody's EMEA chief credit officer told Reuters.
"There is so much uncertainty that the downside risk for gold is low in the short term," said VTB Capital analyst Andrey Kryuchenkov.
"People are still frightened about Portugal and about a possible restructuring of the Greek debt so safe haven flows will continue," he said.
But in the long term there may be headwinds for the precious metal such as a possible decision of the U.S. Federal Reserve to increase interest rates, Kryuchenkov said.
Low interest rates help gold which competes with yield-bearing assets for investors' cash.
"We expect gold prices to continue to climb in 2011 as the resumption of quantitative easing should keep U.S. real interest rates low," Goldman Sachs said in a note.
"However ... we expect U.S. real interest rates to begin to rise into 2012, likely causing gold prices to peak in 2012."
A lower U.S. currency, which makes commodities priced in dollars cheaper for holders of other currencies, was also supporting gold.
Gold prices in British pounds hit a record high of at 944.18 pounds an ounce. Gold denominated in euros hit a record high of 1,081.76 euros.
"We like (gold in euros) right now, considering the breadth and depth of risk-sapping variables that currently prevail," UBS said in a note.
RENEWED INTEREST
Renewed investor interest in gold was reflected in holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust, which rose 0.63 percent to above 38.88 million ounces on Monday from Friday.
Holdings in the largest silver-backed ETF, New York's iShares Silver Trust, fell 0.15 percent to around 325.9 million ounces on Monday.
Spot silver touched $36.365 an ounce, its highest since May 13. It was bid at $36.30 an ounce from $35.04 late on Monday and platinum at $1,763.24 from $1,748.35.
"Everyone is cautiously optimistic about PGMs (platinum group metals). We certainly don't expect strong gains but they will move up gradually," Kryuchenkov said.
"There are many supportive factors (PGMs). You can still justify their prices with fundamentals, and the recovery in the automotive sector is under way."
Spot palladium was bid at $740.47 an ounce from $727.99 late on Monday.
Both platinum and palladium are used to make catalytic converters for cars, production of which is expected to rise this year and next.
(Additional reporting by Pratima Desai; Editing by Jason Neely and Anthony Barker)
reuters.com
LONDON | Tue May 24, 2011 10:53am EDT
(Reuters) - Gold rose to its highest in nearly three weeks on Tuesday as concerns about a spreading EU debt crisis fueled safe haven buying, while a softer dollar provided support.
Spot gold hit $1,527.45 a troy ounce, its highest since May 4. It was bid at $1,526.50 an ounce at 1408 GMT from $1,516.05 late in New York on Monday.
Portugal and Ireland would be at risk of multi-notch credit downgrades, pushing their ratings into junk territory in the event of a default by Greece, Moody's EMEA chief credit officer told Reuters.
"There is so much uncertainty that the downside risk for gold is low in the short term," said VTB Capital analyst Andrey Kryuchenkov.
"People are still frightened about Portugal and about a possible restructuring of the Greek debt so safe haven flows will continue," he said.
But in the long term there may be headwinds for the precious metal such as a possible decision of the U.S. Federal Reserve to increase interest rates, Kryuchenkov said.
Low interest rates help gold which competes with yield-bearing assets for investors' cash.
"We expect gold prices to continue to climb in 2011 as the resumption of quantitative easing should keep U.S. real interest rates low," Goldman Sachs said in a note.
"However ... we expect U.S. real interest rates to begin to rise into 2012, likely causing gold prices to peak in 2012."
A lower U.S. currency, which makes commodities priced in dollars cheaper for holders of other currencies, was also supporting gold.
Gold prices in British pounds hit a record high of at 944.18 pounds an ounce. Gold denominated in euros hit a record high of 1,081.76 euros.
"We like (gold in euros) right now, considering the breadth and depth of risk-sapping variables that currently prevail," UBS said in a note.
RENEWED INTEREST
Renewed investor interest in gold was reflected in holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust, which rose 0.63 percent to above 38.88 million ounces on Monday from Friday.
Holdings in the largest silver-backed ETF, New York's iShares Silver Trust, fell 0.15 percent to around 325.9 million ounces on Monday.
Spot silver touched $36.365 an ounce, its highest since May 13. It was bid at $36.30 an ounce from $35.04 late on Monday and platinum at $1,763.24 from $1,748.35.
"Everyone is cautiously optimistic about PGMs (platinum group metals). We certainly don't expect strong gains but they will move up gradually," Kryuchenkov said.
"There are many supportive factors (PGMs). You can still justify their prices with fundamentals, and the recovery in the automotive sector is under way."
Spot palladium was bid at $740.47 an ounce from $727.99 late on Monday.
Both platinum and palladium are used to make catalytic converters for cars, production of which is expected to rise this year and next.
(Additional reporting by Pratima Desai; Editing by Jason Neely and Anthony Barker)
reuters.com
Analysis: Too soon to call time on China's economic boom
By Alan Wheatley, Global Economics Correspondent
BEIJING | Mon May 23, 2011 10:10am EDT
(Reuters) - Back in 2007, Premier Wen Jiabao called the Chinese economy increasingly unstable, unbalanced, uncoordinated and ultimately unsustainable. He has used the same language this year and there's every chance the description will still apply in another four years.
The timing of when China's growth model will "ultimately" run out of steam is probably the most critical question facing the world economy.
Mature economies such as the United States and Germany are lucky to grow faster than around 3 percent. China, by contrast, has expanded 10.1 percent a year on average since 1978.
Its gross domestic product, measured in dollars at market exchange rates, has doubled in four years, boosting oil and commodity prices and reshaping swathes of the global economic landscape in the process.
So the trajectory of China's growth -- a gradual deceleration or an abrupt full stop -- matters far beyond its borders.
Li Daokui, an adviser to the central bank, reckons the economy can maintain annual growth of 9 percent for the next five years.
But some economists see the day of reckoning approaching fast. Nouriel Roubini of New York University has warned of a sharp slowdown, most likely after 2013, once it becomes impossible for China to keep increasing fixed investment, the main driver of growth.
The odds are that China can keep the show on the road for some time yet and will not be forced to overhaul its growth model until much later in the decade.
"Everything that is happening in China today is unsustainable at the current pace. That's not good or bad. It's just an observation," said Andy Rothman, China macro strategist in Shanghai for CLSA, a brokerage.
The breakneck growth of China's iron ore consumption five years ago could not last, Rothman said. Nor could the 2010 pace of car sales. The same will be true at some point of negative real interest rates, house price growth and inequality.
"But none of these things being unsustainable over the long term mean they have to come crashing down," he added. "If you were a real bear, you would argue that some day just everything will collapse. But it's hard for me to see that scenario playing out."
BANKS UNDER SCRUTINY
China's economy is nothing if not resilient. In recent years it has defied predictions of a hard landing due to everything from bad loans to investment-led overheating, food inflation that exceeded 20 percent in early 2008, the threat of protectionism and the global financial crisis.
China's response to that crisis is grist to the mill of both bulls and bears. The former point to the success of massive and rapid pump-priming, made possible by the Communist Party's ownership of the banks.
Skeptics say the state-directed investment binge is simply storing up problems by saddling the banks with huge, incipient bad debts as a result of lax lending to local governments.
Jason Bedford with accounting and consultancy firm KPMG in Beijing acknowledged the risks to banks in the event of a big slump in the property and land they hold as collateral for loans.
But he played down specific worries about a souring of home mortgages, since home buyers in China must make a down payment of at least 30 percent.
"I certainly don't envisage the potential for anything approaching the destructive nature of the collapse in the U.S. real estate market, simply because, if there is a bubble here, it is not a debt-financed real estate bubble," Bedford said.
MOMENTUM
Another objection to the argument that China can keep expanding at 7-8 percent a year for some time to come is that Japan, South Korea and Taiwan all tended to slow after about 30 years of turbo-charged growth.
But China's development surge started from a much lower level. Its GDP per capita of $4,200 in 2010 was still only 9 percent of that in the United States. China's standard of living today is comparable to that of Japan in 1954, Taiwan in 1972 and South Korea in 1976, according to Ting Lu with Bank of America Merrill Lynch.
Despite the image of a country sweeping all before it, China has a lot of ground to make up. It must boost the skills of its work force; ramp up innovation and research; raise the capital base of the poorer interior; move another 250 million or so farmers into cities; and meet the needs for transport, clean water and myriad other public goods and services.
"The tailwinds of growth are so strong. You've still got a lot of growth that can come in a fairly straightforward manner through completing infrastructure and heavy industry and urbanization," said Arthur Kroeber, managing director at GaveKal Dragonomics, a consultancy in Beijing.
"As long as you have a model where simply accumulating capital is your main source of growth and the efficiency with which that capital is used is not important, then all of these processes can continue unimpeded and they don't really obstruct growth," he said.
Once efficiency becomes imperative, however, China will struggle to convince vested interests, notably big state-owned companies that have benefited disproportionately from subsidies and stunted competition, of the need for reform.
"I would say that's a very, very serious risk because you don't have the kinds of institutions like a free press or regulatory agencies or NGOs that act as a check on these kinds of concentrations of financial power," Kroeber said.
"But that's more on a decade horizon than on a five-year horizon."
(Editing by Mathew Veedon)
reuters.com
BEIJING | Mon May 23, 2011 10:10am EDT
(Reuters) - Back in 2007, Premier Wen Jiabao called the Chinese economy increasingly unstable, unbalanced, uncoordinated and ultimately unsustainable. He has used the same language this year and there's every chance the description will still apply in another four years.
The timing of when China's growth model will "ultimately" run out of steam is probably the most critical question facing the world economy.
Mature economies such as the United States and Germany are lucky to grow faster than around 3 percent. China, by contrast, has expanded 10.1 percent a year on average since 1978.
Its gross domestic product, measured in dollars at market exchange rates, has doubled in four years, boosting oil and commodity prices and reshaping swathes of the global economic landscape in the process.
So the trajectory of China's growth -- a gradual deceleration or an abrupt full stop -- matters far beyond its borders.
Li Daokui, an adviser to the central bank, reckons the economy can maintain annual growth of 9 percent for the next five years.
But some economists see the day of reckoning approaching fast. Nouriel Roubini of New York University has warned of a sharp slowdown, most likely after 2013, once it becomes impossible for China to keep increasing fixed investment, the main driver of growth.
The odds are that China can keep the show on the road for some time yet and will not be forced to overhaul its growth model until much later in the decade.
"Everything that is happening in China today is unsustainable at the current pace. That's not good or bad. It's just an observation," said Andy Rothman, China macro strategist in Shanghai for CLSA, a brokerage.
The breakneck growth of China's iron ore consumption five years ago could not last, Rothman said. Nor could the 2010 pace of car sales. The same will be true at some point of negative real interest rates, house price growth and inequality.
"But none of these things being unsustainable over the long term mean they have to come crashing down," he added. "If you were a real bear, you would argue that some day just everything will collapse. But it's hard for me to see that scenario playing out."
BANKS UNDER SCRUTINY
China's economy is nothing if not resilient. In recent years it has defied predictions of a hard landing due to everything from bad loans to investment-led overheating, food inflation that exceeded 20 percent in early 2008, the threat of protectionism and the global financial crisis.
China's response to that crisis is grist to the mill of both bulls and bears. The former point to the success of massive and rapid pump-priming, made possible by the Communist Party's ownership of the banks.
Skeptics say the state-directed investment binge is simply storing up problems by saddling the banks with huge, incipient bad debts as a result of lax lending to local governments.
Jason Bedford with accounting and consultancy firm KPMG in Beijing acknowledged the risks to banks in the event of a big slump in the property and land they hold as collateral for loans.
But he played down specific worries about a souring of home mortgages, since home buyers in China must make a down payment of at least 30 percent.
"I certainly don't envisage the potential for anything approaching the destructive nature of the collapse in the U.S. real estate market, simply because, if there is a bubble here, it is not a debt-financed real estate bubble," Bedford said.
MOMENTUM
Another objection to the argument that China can keep expanding at 7-8 percent a year for some time to come is that Japan, South Korea and Taiwan all tended to slow after about 30 years of turbo-charged growth.
But China's development surge started from a much lower level. Its GDP per capita of $4,200 in 2010 was still only 9 percent of that in the United States. China's standard of living today is comparable to that of Japan in 1954, Taiwan in 1972 and South Korea in 1976, according to Ting Lu with Bank of America Merrill Lynch.
Despite the image of a country sweeping all before it, China has a lot of ground to make up. It must boost the skills of its work force; ramp up innovation and research; raise the capital base of the poorer interior; move another 250 million or so farmers into cities; and meet the needs for transport, clean water and myriad other public goods and services.
"The tailwinds of growth are so strong. You've still got a lot of growth that can come in a fairly straightforward manner through completing infrastructure and heavy industry and urbanization," said Arthur Kroeber, managing director at GaveKal Dragonomics, a consultancy in Beijing.
"As long as you have a model where simply accumulating capital is your main source of growth and the efficiency with which that capital is used is not important, then all of these processes can continue unimpeded and they don't really obstruct growth," he said.
Once efficiency becomes imperative, however, China will struggle to convince vested interests, notably big state-owned companies that have benefited disproportionately from subsidies and stunted competition, of the need for reform.
"I would say that's a very, very serious risk because you don't have the kinds of institutions like a free press or regulatory agencies or NGOs that act as a check on these kinds of concentrations of financial power," Kroeber said.
"But that's more on a decade horizon than on a five-year horizon."
(Editing by Mathew Veedon)
reuters.com
Takeda to buy Swiss drugmaker Nycomed for $13.7 billion
By James Topham and Ben Hirschler
TOKYO/LONDON | Thu May 19, 2011 3:50pm EDT
(Reuters) - Japan's largest drugmaker Takeda Pharmaceutical (4502.T) is buying privately held Nycomed for 9.6 billion euros ($13.7 billion), boosting its presence in emerging markets and adding a newly approved lung-disease drug.
The agreed deal is the biggest overseas purchase by a Japanese company since Japan Tobacco (2914.T) paid $19 billion for Britain's Gallaher, and is Takeda's second major buy after its $8.8 billion deal for Millennium Pharmaceuticals in 2008.
The acquisition gives Takeda, a mainly Asian- and U.S.-focused maker of drugs, a new treatment for "smoker's lung" called Daxas and a portfolio of over-the-counter products.
Swiss-based Nycomed will help Takeda expand in Europe and emerging markets, providing an immediate source of stable cashflow at a time when its top-selling diabetes drug Actos faces the upcoming expiry of its U.S. patent.
"We have a strong European backbone and, even more importantly, a very strong and rapidly growing emerging markets presence -- that, I think, was the key," Nycomed Chief Executive Hakan Bjorklund told Reuters.
Emerging markets are set to become the main driver for the global pharmaceuticals industry as patents run out on many top drugs and sales in Western markets stall.
"In the long-term, this is a strategic fit. The question of how to strengthen their presence in emerging markets is one that all major drug firms face," said Atsushi Seki, pharmaceuticals analyst at Barclays Capital.
"But in terms of Takeda's goal to return to last year's earnings level by the year ending March 2016, I don't think this deal quite gets them to the point where they are filling in the gap left by Actos' patent expiry."
Nycomed is well-placed in Russia and Brazil and last year bought a majority stake in a Chinese firm. Emerging markets made up nearly two-fifths of its revenue in 2010 and should make up 60 percent of sales by 2015.
PAY-DAY FOR PRIVATE EQUITY
The deal allows Nycomed's owners to sell their entire stake now, instead of facing a long wait for a flotation where they would initially have to retain significant stakes. A listing had long been mooted by Nycomed management but it was unlikely to have occurred before 2012.
Nycomed is majority owned by four private equity firms, led by Nordic Capital with a 41 percent. Credit Suisse's (CSGN.VX) DLJ Merchant Banking has 25.6 percent, Coller International Partners 9.7 percent and Avista 8.9 percent.
After paying off debt, the shareholders will pocket some 6 billion euros.
Bjorklund said returns would vary between different firms and even between different funds, but his investors were "very satisfied" with the money made on the deal.
Takeda is paying 3.4 times 2010 sales -- excluding a U.S. dermatology business, which accounts for 10 percent of turnover and is not included -- and 12.5 times adjusted earnings before interest, tax, depreciation and amortization (EBITDA).
That compares to 2.13 and 5.86 times sales and EBITDA paid by Teva (TEVA.O) for Cephalon (CEPH.O), and 2.28 and 8.27 paid by Pfizer (PFE.N) for King, according to Thomson Reuters data.
Takeda's cash payment is inclusive of Nycomed's net debt, which stood at 3.6 billion euros at end-2010, and it will be financed in part with a 600-700 billion yen ($7.3-$8.5 billion) loan. The deal had been expected after being flagged by sources last week.
Nordic Capital managing partner Kristoffer Melinder said in a telephone interview that the shareholders had no immediate plans to sell the U.S. dermatology business.
OTHER DEALS POSSIBLE
The deal lifts Takeda's global ranking to No. 12 from No. 16 and Chief Executive Yasuchika Hasegawa said the drugmaker was open to more acquisitions.
"There will be opportunities but it's the same as fishing, you don't know if you will be able get partners just like you don't know if you will be able to bring home fish," he told a news conference.
Barclay's Seki noted Takeda has said it could borrow up to 1 trillion yen and if its funds on hand were added to this, the company still had another 700 billion yen to play with.
Moody's and Standard & Poor's said they might lower their credit ratings on Takeda in view of the Nycomed acquisition.
Takeda said the deal would double European sales, resulting in an increase in annual revenue of more than 30 percent and an increase in annual operating income, excluding special factors derived from the acquisition, of more than 40 percent.
It expects integration to be relatively straightforward, given the limited overlap between the two business, and sees 30 billion yen of cost synergies annually in three years.
HOPES FOR DAXAS
Nycomed's lung drug roflumilast, known as Daxas in Europe and Daliresp in the United States, is the first in a new class of treatment for chronic obstructive pulmonary disease, a common breathing disorder often caused by smoking.
After some delays, it won U.S. approval in March where Forest Laboratories (FRX.N) has the marketing rights. In Europe, Merck & Co (MRK.N) has marketing rights.
Takeda's shares ended 0.5 percent higher ahead of the statement in a Nikkei benchmark .N225down 0.4 percent. Despite the size of the Nycomed deal, its shares have fallen only 2 percent since talk of the deal emerged with some analysts noting that Takeda is maintaining an annual dividend of 180 yen.
Takeda has unsuccessfully looked at buying other European drugmakers previously, including Organon and Sweden's Meda AB (MEDAa.ST), according to sources familiar with the matter.
Deutsche Bank was financial adviser to Takeda while Goldman Sachs and Credit Suisse advised Nycomed.
(Additional reporting by Edwina Gibbs and Ritsuko Shimizu in Tokyo, and Simon Meads in London; Editing by David Cowell)
Reuters.com
TOKYO/LONDON | Thu May 19, 2011 3:50pm EDT
(Reuters) - Japan's largest drugmaker Takeda Pharmaceutical (4502.T) is buying privately held Nycomed for 9.6 billion euros ($13.7 billion), boosting its presence in emerging markets and adding a newly approved lung-disease drug.
The agreed deal is the biggest overseas purchase by a Japanese company since Japan Tobacco (2914.T) paid $19 billion for Britain's Gallaher, and is Takeda's second major buy after its $8.8 billion deal for Millennium Pharmaceuticals in 2008.
The acquisition gives Takeda, a mainly Asian- and U.S.-focused maker of drugs, a new treatment for "smoker's lung" called Daxas and a portfolio of over-the-counter products.
Swiss-based Nycomed will help Takeda expand in Europe and emerging markets, providing an immediate source of stable cashflow at a time when its top-selling diabetes drug Actos faces the upcoming expiry of its U.S. patent.
"We have a strong European backbone and, even more importantly, a very strong and rapidly growing emerging markets presence -- that, I think, was the key," Nycomed Chief Executive Hakan Bjorklund told Reuters.
Emerging markets are set to become the main driver for the global pharmaceuticals industry as patents run out on many top drugs and sales in Western markets stall.
"In the long-term, this is a strategic fit. The question of how to strengthen their presence in emerging markets is one that all major drug firms face," said Atsushi Seki, pharmaceuticals analyst at Barclays Capital.
"But in terms of Takeda's goal to return to last year's earnings level by the year ending March 2016, I don't think this deal quite gets them to the point where they are filling in the gap left by Actos' patent expiry."
Nycomed is well-placed in Russia and Brazil and last year bought a majority stake in a Chinese firm. Emerging markets made up nearly two-fifths of its revenue in 2010 and should make up 60 percent of sales by 2015.
PAY-DAY FOR PRIVATE EQUITY
The deal allows Nycomed's owners to sell their entire stake now, instead of facing a long wait for a flotation where they would initially have to retain significant stakes. A listing had long been mooted by Nycomed management but it was unlikely to have occurred before 2012.
Nycomed is majority owned by four private equity firms, led by Nordic Capital with a 41 percent. Credit Suisse's (CSGN.VX) DLJ Merchant Banking has 25.6 percent, Coller International Partners 9.7 percent and Avista 8.9 percent.
After paying off debt, the shareholders will pocket some 6 billion euros.
Bjorklund said returns would vary between different firms and even between different funds, but his investors were "very satisfied" with the money made on the deal.
Takeda is paying 3.4 times 2010 sales -- excluding a U.S. dermatology business, which accounts for 10 percent of turnover and is not included -- and 12.5 times adjusted earnings before interest, tax, depreciation and amortization (EBITDA).
That compares to 2.13 and 5.86 times sales and EBITDA paid by Teva (TEVA.O) for Cephalon (CEPH.O), and 2.28 and 8.27 paid by Pfizer (PFE.N) for King, according to Thomson Reuters data.
Takeda's cash payment is inclusive of Nycomed's net debt, which stood at 3.6 billion euros at end-2010, and it will be financed in part with a 600-700 billion yen ($7.3-$8.5 billion) loan. The deal had been expected after being flagged by sources last week.
Nordic Capital managing partner Kristoffer Melinder said in a telephone interview that the shareholders had no immediate plans to sell the U.S. dermatology business.
OTHER DEALS POSSIBLE
The deal lifts Takeda's global ranking to No. 12 from No. 16 and Chief Executive Yasuchika Hasegawa said the drugmaker was open to more acquisitions.
"There will be opportunities but it's the same as fishing, you don't know if you will be able get partners just like you don't know if you will be able to bring home fish," he told a news conference.
Barclay's Seki noted Takeda has said it could borrow up to 1 trillion yen and if its funds on hand were added to this, the company still had another 700 billion yen to play with.
Moody's and Standard & Poor's said they might lower their credit ratings on Takeda in view of the Nycomed acquisition.
Takeda said the deal would double European sales, resulting in an increase in annual revenue of more than 30 percent and an increase in annual operating income, excluding special factors derived from the acquisition, of more than 40 percent.
It expects integration to be relatively straightforward, given the limited overlap between the two business, and sees 30 billion yen of cost synergies annually in three years.
HOPES FOR DAXAS
Nycomed's lung drug roflumilast, known as Daxas in Europe and Daliresp in the United States, is the first in a new class of treatment for chronic obstructive pulmonary disease, a common breathing disorder often caused by smoking.
After some delays, it won U.S. approval in March where Forest Laboratories (FRX.N) has the marketing rights. In Europe, Merck & Co (MRK.N) has marketing rights.
Takeda's shares ended 0.5 percent higher ahead of the statement in a Nikkei benchmark .N225down 0.4 percent. Despite the size of the Nycomed deal, its shares have fallen only 2 percent since talk of the deal emerged with some analysts noting that Takeda is maintaining an annual dividend of 180 yen.
Takeda has unsuccessfully looked at buying other European drugmakers previously, including Organon and Sweden's Meda AB (MEDAa.ST), according to sources familiar with the matter.
Deutsche Bank was financial adviser to Takeda while Goldman Sachs and Credit Suisse advised Nycomed.
(Additional reporting by Edwina Gibbs and Ritsuko Shimizu in Tokyo, and Simon Meads in London; Editing by David Cowell)
Reuters.com
Thermo Fisher to buy Phadia for $3.5 billion
Thu May 19, 2011 12:06pm EDT
Lewis Krauskopf and Toni Clarke
(Reuters) - Laboratory equipment maker Thermo Fisher Scientific Inc (TMO.N) said it would buy Swedish diagnostics company Phadia for $3.5 billion to expand its portfolio of allergy and autoimmune disease tests.
Thermo said the deal would add 26 to 30 cents a share to its 2012earnings. That would amount to a roughly 6 percent boost to analysts' average profit forecast of $4.68 a share, according to Thomson Reuters I/B/E/S.
Thermo shares rose 3.6 percent in midday trading Thursday.
"It's a decent deal for them," said Peter McDonald, an analyst at Auriga USA. "It fits well with their specialty diagnostics business, it leverages some of their infrastructure and it will probably do well."
The seller is European private equity firm Cinven CINV.UL.
The market for specialty diagnostics, which include tests for complex diseases such as cancer, infections and allergies, is growing about 10 percent a year, Thermo Chief Executive Marc Casper said in an interview.
That compares with growth of 4 to 5 percent in the broader blood test market.
On Monday, Thermo completed its $2.1 billion acquisition of Dionex Corp DNEX.O, which specializes in chromatography instruments, software and services, expanding Thermo's capabilities in environmental analysis, water testing and food safety.
Casper said Thermo has the capacity to make more acquisitions if an asset were to come along that strengthened the company strategically, benefited customers and added to earnings.
The Phadia transaction does all those things, he said, giving Thermo a better growth profile, higher margins and a strong earnings per share outlook.
The Wall Street Journal reported on Wednesday that Thermo was involved in the auction for diagnostic test maker Gen-Probe Inc (GPRO.O). Casper declined to discuss specific potential transactions, saying the company is focusing on digesting Dionex and now Phadia.
Phadia had 2010 sales of about $525 million and has increased revenue by about 10 percent annually, on average, for the last three years on a constant-currency basis. Thermo currently generates about $1.4 billion a year from specialty diagnostics.
Phadia specializes in tests for airborne, food and pet allergies, as well as tests for autoimmune diseases such as rheumatoid arthritis.
Casper said Thermo aims to expand its presence in emerging markets. It currently gets 13 percent of its revenue from Asia and about 4 percent from other emerging markets. Phadia is under-represented in emerging markets, he said, and Thermo can use its presence in these markets to expand sales of Phadia's products.
That is part of Thermo's modus operandi.
"Thermo has very good distribution," McDonald said. "They like to buy these products and pump them through their channels, so I think this is not a bad use of their cash. It's expensive, but that's what you have to pay to be in this space."
Thermo intends to use about $3 billion of committed debt financing from Barclays Capital and about $500 million cash on hand to pay for Phadia.
Barclays is advising Thermo Fisher, while Goldman Sachs is acting as financial advisor to Phadia.
The transaction is expected to close in the fourth quarter.
Thermo shares rose 3.6 percent to $65.02 in midday trading on the New York Stock Exchange.
(Reporting by Toni Clarke in Boston and Lewis Krauskopf in New York; editing by John Wallace)
Reuters.com
Lewis Krauskopf and Toni Clarke
(Reuters) - Laboratory equipment maker Thermo Fisher Scientific Inc (TMO.N) said it would buy Swedish diagnostics company Phadia for $3.5 billion to expand its portfolio of allergy and autoimmune disease tests.
Thermo said the deal would add 26 to 30 cents a share to its 2012earnings. That would amount to a roughly 6 percent boost to analysts' average profit forecast of $4.68 a share, according to Thomson Reuters I/B/E/S.
Thermo shares rose 3.6 percent in midday trading Thursday.
"It's a decent deal for them," said Peter McDonald, an analyst at Auriga USA. "It fits well with their specialty diagnostics business, it leverages some of their infrastructure and it will probably do well."
The seller is European private equity firm Cinven CINV.UL.
The market for specialty diagnostics, which include tests for complex diseases such as cancer, infections and allergies, is growing about 10 percent a year, Thermo Chief Executive Marc Casper said in an interview.
That compares with growth of 4 to 5 percent in the broader blood test market.
On Monday, Thermo completed its $2.1 billion acquisition of Dionex Corp DNEX.O, which specializes in chromatography instruments, software and services, expanding Thermo's capabilities in environmental analysis, water testing and food safety.
Casper said Thermo has the capacity to make more acquisitions if an asset were to come along that strengthened the company strategically, benefited customers and added to earnings.
The Phadia transaction does all those things, he said, giving Thermo a better growth profile, higher margins and a strong earnings per share outlook.
The Wall Street Journal reported on Wednesday that Thermo was involved in the auction for diagnostic test maker Gen-Probe Inc (GPRO.O). Casper declined to discuss specific potential transactions, saying the company is focusing on digesting Dionex and now Phadia.
Phadia had 2010 sales of about $525 million and has increased revenue by about 10 percent annually, on average, for the last three years on a constant-currency basis. Thermo currently generates about $1.4 billion a year from specialty diagnostics.
Phadia specializes in tests for airborne, food and pet allergies, as well as tests for autoimmune diseases such as rheumatoid arthritis.
Casper said Thermo aims to expand its presence in emerging markets. It currently gets 13 percent of its revenue from Asia and about 4 percent from other emerging markets. Phadia is under-represented in emerging markets, he said, and Thermo can use its presence in these markets to expand sales of Phadia's products.
That is part of Thermo's modus operandi.
"Thermo has very good distribution," McDonald said. "They like to buy these products and pump them through their channels, so I think this is not a bad use of their cash. It's expensive, but that's what you have to pay to be in this space."
Thermo intends to use about $3 billion of committed debt financing from Barclays Capital and about $500 million cash on hand to pay for Phadia.
Barclays is advising Thermo Fisher, while Goldman Sachs is acting as financial advisor to Phadia.
The transaction is expected to close in the fourth quarter.
Thermo shares rose 3.6 percent to $65.02 in midday trading on the New York Stock Exchange.
(Reporting by Toni Clarke in Boston and Lewis Krauskopf in New York; editing by John Wallace)
Reuters.com
Angry Birds maker Rovio aims for IPO in two to three years
PARIS | Wed May 18, 2011 9:58am EDT
(Reuters) - Rovio Mobile, creator of hit iPhone game Angry Birds, is aiming for a stock market listing in New York in two to three years, its chief executive told Reuters.
The Finnish company, which has grown from 12 to 100 people in just over a year, raised $42 million from investors led by Accel Partners in March and named Skype co-founder Niklas Zennstroem to its board.
"In terms of time line, probably two years, two to three years down the line is realistic," CEO Mikael Hed told the Reuters Global Technology Summitin Paris on Wednesday.
"I see that this is only beneficial for us in terms of making the company more structured and more focused on creating it into a proper large organization, having grown from a company of 12," he said.
Hed added that Rovio expected to make revenue of 50 to 100 million euros ($72-$143 million) this year and said the company was "very, very profitable."
($1=.7011 Euro)
(Reporting by Georgina Prodhan; Editing by James Regan)
reuters.com
(Reuters) - Rovio Mobile, creator of hit iPhone game Angry Birds, is aiming for a stock market listing in New York in two to three years, its chief executive told Reuters.
The Finnish company, which has grown from 12 to 100 people in just over a year, raised $42 million from investors led by Accel Partners in March and named Skype co-founder Niklas Zennstroem to its board.
"In terms of time line, probably two years, two to three years down the line is realistic," CEO Mikael Hed told the Reuters Global Technology Summitin Paris on Wednesday.
"I see that this is only beneficial for us in terms of making the company more structured and more focused on creating it into a proper large organization, having grown from a company of 12," he said.
Hed added that Rovio expected to make revenue of 50 to 100 million euros ($72-$143 million) this year and said the company was "very, very profitable."
($1=.7011 Euro)
(Reporting by Georgina Prodhan; Editing by James Regan)
reuters.com
Mobile hacking sets off security gold rush
By Leila Abboud and Marie Mawad
PARIS | Wed May 18, 2011 10:33am EDT
(Reuters) - Hackers are increasingly aiming attacks at smartphones, touching off a race among software giants, startups and telecom operators seeking to cash in on ways to help consumers protect themselves.
As the previously fragmented smartphone market coalesces around big operating systems like Apple's iPhone and Google's Android, it has become a more attractive target for hackers seeking to maximize damage with one hit.
That's creating a big business opportunity for everyone from traditional antivirus players like Intel's McAfee to mobile operators like FranceTelecom and handset makers like Nokia.
Market research firm Infonetics forecasts sales of mobile security software will grow 50 percent a year through 2014 to hit $2 billion.
"The mobile security market will one day be bigger than that of computers," Neil Rimer, co-founder of Geneva-based fund Index Ventures, said at the Reuters Global Technology Summit. "It's a no-brainer that people will pay to protect their devices, and the market will not be owned by one big player."
Rimer's fund has invested in three-year-old startup Lookout Mobile Security, which has racked up more than 2 million users by selling its software on Google's Android Market and via partnerships with operators like Verizon.
Hackers attack mobiles in a myriad of ways. They can force phones to send hundreds of texts to paying services, steal account information when a person uses their bank website, or make fake phone calls to long distance numbers.
The "app' craze in which people download small bits of software to do everything from play games to search movie times has also opened up new opportunities for cyber-criminals to infect phones.
Unlike Apple, which reviews and approves all the offerings on its App Store, Google's Android Market allows developers to post their apps directly. That more open approach could leave Android more vulnerable to attack, according to security experts.
The first significant security breach hit the Android Market in March when hackers added malicious code, known as a Trojan, to 58 popular apps and quickly infected 250,000 phones. According to a blog post from Google's Android security head, the company was forced to use its 'kill switch' to remotely erase the apps from users' phones and issued an update to its Android Market to patch the hole the hackers exploited.
A recent study by telecom gear maker Juniper Networks found a fourfold increase in malware targeted at Android's operating system from June last year through January, while overall mobile attacks more than doubled.
"We've seen issues on all platforms, Nokia's Symbian, Apple's iOS and Android," said John Hering, Lookout's founder.
Some industry executives believe that the creators of operating systems bear much of the responsibility to safeguard smartphones.
"The platform itself needs to provide a sufficient level of security then we can help with software," said Florian Seiche, who heads the European region for Taiwanese smartphone maker HTC.
Meanwhile telecom operators are also trying to take a piece of the mobile security pie. Some 40 telecom operators including Vodafone and TeliaSonera have signed deals with mobile security specialist F-Secure to offer anti-virus software and anti-theft protections to smartphone customers.
"Operators are very interested in offering security as a service to their customers as a way to generate revenue and promote customer retention," explained Sean Obrey, F-Secure's head of operator business development.
These packages can cost anywhere from 5 to 10 euros a month, said Obrey.
Eric Edelstein, head of Internet and mobile security at France Telecom said the group was tailoring its mobile security products and services to its different markets.
The group, which markets its services under the brand name Orange, pre-packages security software on some smartphones in Britain, sends text messages to users with infected phones in Poland, and offers security services to its French customers for 3 to 9 euros a month.
But some think it will take a major virus or worm on mobiles before consumers will be willing to pay extra for security protection on their phones as they do on their personal computers.
"When you start asking them what's your willingness to pay for a solution, if they're not a little frightened, their willingness to pay is nothing," said John Stankey, the head of AT&T's enterprise business.
AT&T plans to start marketing a security offering to consumers next year, Stankey said at the Reuters summit.
"It'll take a little time for this to go mass market."
(Additional reporting by Sinead Carew; Editing by Hans Peters)
reuters.com
PARIS | Wed May 18, 2011 10:33am EDT
(Reuters) - Hackers are increasingly aiming attacks at smartphones, touching off a race among software giants, startups and telecom operators seeking to cash in on ways to help consumers protect themselves.
As the previously fragmented smartphone market coalesces around big operating systems like Apple's iPhone and Google's Android, it has become a more attractive target for hackers seeking to maximize damage with one hit.
That's creating a big business opportunity for everyone from traditional antivirus players like Intel's McAfee to mobile operators like FranceTelecom and handset makers like Nokia.
Market research firm Infonetics forecasts sales of mobile security software will grow 50 percent a year through 2014 to hit $2 billion.
"The mobile security market will one day be bigger than that of computers," Neil Rimer, co-founder of Geneva-based fund Index Ventures, said at the Reuters Global Technology Summit. "It's a no-brainer that people will pay to protect their devices, and the market will not be owned by one big player."
Rimer's fund has invested in three-year-old startup Lookout Mobile Security, which has racked up more than 2 million users by selling its software on Google's Android Market and via partnerships with operators like Verizon.
Hackers attack mobiles in a myriad of ways. They can force phones to send hundreds of texts to paying services, steal account information when a person uses their bank website, or make fake phone calls to long distance numbers.
The "app' craze in which people download small bits of software to do everything from play games to search movie times has also opened up new opportunities for cyber-criminals to infect phones.
Unlike Apple, which reviews and approves all the offerings on its App Store, Google's Android Market allows developers to post their apps directly. That more open approach could leave Android more vulnerable to attack, according to security experts.
The first significant security breach hit the Android Market in March when hackers added malicious code, known as a Trojan, to 58 popular apps and quickly infected 250,000 phones. According to a blog post from Google's Android security head, the company was forced to use its 'kill switch' to remotely erase the apps from users' phones and issued an update to its Android Market to patch the hole the hackers exploited.
A recent study by telecom gear maker Juniper Networks found a fourfold increase in malware targeted at Android's operating system from June last year through January, while overall mobile attacks more than doubled.
"We've seen issues on all platforms, Nokia's Symbian, Apple's iOS and Android," said John Hering, Lookout's founder.
Some industry executives believe that the creators of operating systems bear much of the responsibility to safeguard smartphones.
"The platform itself needs to provide a sufficient level of security then we can help with software," said Florian Seiche, who heads the European region for Taiwanese smartphone maker HTC.
Meanwhile telecom operators are also trying to take a piece of the mobile security pie. Some 40 telecom operators including Vodafone and TeliaSonera have signed deals with mobile security specialist F-Secure to offer anti-virus software and anti-theft protections to smartphone customers.
"Operators are very interested in offering security as a service to their customers as a way to generate revenue and promote customer retention," explained Sean Obrey, F-Secure's head of operator business development.
These packages can cost anywhere from 5 to 10 euros a month, said Obrey.
Eric Edelstein, head of Internet and mobile security at France Telecom said the group was tailoring its mobile security products and services to its different markets.
The group, which markets its services under the brand name Orange, pre-packages security software on some smartphones in Britain, sends text messages to users with infected phones in Poland, and offers security services to its French customers for 3 to 9 euros a month.
But some think it will take a major virus or worm on mobiles before consumers will be willing to pay extra for security protection on their phones as they do on their personal computers.
"When you start asking them what's your willingness to pay for a solution, if they're not a little frightened, their willingness to pay is nothing," said John Stankey, the head of AT&T's enterprise business.
AT&T plans to start marketing a security offering to consumers next year, Stankey said at the Reuters summit.
"It'll take a little time for this to go mass market."
(Additional reporting by Sinead Carew; Editing by Hans Peters)
reuters.com
Senators want price-fixing probe on oil refiners
By Tom Doggett
WASHINGTON | Tue May 17, 2011 1:27pm EDT
(Reuters) - Democratic senators said on Tuesday they want the Federal Trade Commission to probe whether U.S. oil refiners are cutting back on gasoline production in order to keep pump prices high.
The request for the price-fixing probe is the latest congressional slap against big oil companies, which Democrats have portrayed as being out of touch with consumers paying high fuel costs and not worthy of billions of dollars in federal tax breaks.
The senators seeking the FTC investigation, including Senate Majority Leader Harry Reid, cited recent Energy Department data showing that U.S. refiners are operating only at about 82 percent capacity.
"Why are they producing less gasoline for the American consumer?" asked Senator Claire McCaskill. "Maybe it's because they decided to reduce supply in order to increase price."
Senator Charles Schumer said the profit margins of some refiners have not been this high since Hurricane Katrina in 2005, when supply disruptions caused fuel prices to spike.
Schumer said it does not make sense for refiners to have low production levels and also export record amounts of petroleum when U.S. prices are high.
"Sounds like a recipe to keep prices high. We don't know if this is a smoking gun but it sure requires a close look," he said.
The National Petrochemical and Refiners Association, the trade group for U.S. oil refiners called the senators' accusations of price-fixing baseless.
"Dozens of investigations of gasoline price fixing over the years have generated plenty of headlines and political hyperbole, but have failed again and again to find any evidence of wrongdoing," said NPRA President Charles Drevna. "This is political theater."
US GASOLINE INVENTORIES HIGH
While refiners are operating at lower capacity levels, U.S. gasoline inventories remain high, rising almost 1.3 million barrels to about 206 million barrels, based on the department's most recent weekly data.
"We're seeing a pretty well supplied market, so it doesn't make sense to run at full capacity and keep on stockpiling if you don't have an end user to supply to," said Rob Kurzatkowski, futures analyst with OptionsXpress in Chicago.
Bill Day, a spokesman at Valero Energy Corp, the largest U.S. independent refiner, said oil plant capacity is low now because refiners do annual maintenance in the spring to gear up for higher demand during the summer driving season.
Refiners would be missing out on big profits right now if they were holding back their gasoline production, because profit margins for making oil products are high.
"It would be self defeating to limit production at a time of high margins," he said.
U.S. refinery margins in the Gulf Coast for example were $32.91 per barrel last week, much higher than they were last year according to Credit Suisse.
(Graphic showing refinery rates this year compared to the five-year average and the past three years: link.reuters.com/huw59r)
The FTC is already part of a new government task force requested by President Barack Obama to go after fraud and manipulation in energy markets.
Senate Republican Leader Mitch McConnell, while not responding directly to allegations of price-fixing by refiners, criticized Democrats for not taking action to boost domestic oil production to lower gasoline prices.
The request for an FTC investigation comes as U.S. gasoline prices fell for the first time in eight weeks, according to government data released on Monday.
Energy analysts said they expected retail gasoline prices to fall significantly over the next few weeks, possibly as much as 50 cents a gallon.
The savings for consumers is due to the sharp decline in U.S. crude oil prices, which have fallen about $16 a barrel since the beginning of the month.
U.S. wholesale gasoline prices on Monday fell below $3 a gallon for the first time since March on concerns of weaker demand and signs that oil refiners would be spared from flooding along the Mississippi River.
(Additional reporting by Timothy Gardner in Washington; and Matthew Robinson and Selam Gebrekidan in New York Editing by Lisa Shumaker)
WASHINGTON | Tue May 17, 2011 1:27pm EDT
(Reuters) - Democratic senators said on Tuesday they want the Federal Trade Commission to probe whether U.S. oil refiners are cutting back on gasoline production in order to keep pump prices high.
The request for the price-fixing probe is the latest congressional slap against big oil companies, which Democrats have portrayed as being out of touch with consumers paying high fuel costs and not worthy of billions of dollars in federal tax breaks.
The senators seeking the FTC investigation, including Senate Majority Leader Harry Reid, cited recent Energy Department data showing that U.S. refiners are operating only at about 82 percent capacity.
"Why are they producing less gasoline for the American consumer?" asked Senator Claire McCaskill. "Maybe it's because they decided to reduce supply in order to increase price."
Senator Charles Schumer said the profit margins of some refiners have not been this high since Hurricane Katrina in 2005, when supply disruptions caused fuel prices to spike.
Schumer said it does not make sense for refiners to have low production levels and also export record amounts of petroleum when U.S. prices are high.
"Sounds like a recipe to keep prices high. We don't know if this is a smoking gun but it sure requires a close look," he said.
The National Petrochemical and Refiners Association, the trade group for U.S. oil refiners called the senators' accusations of price-fixing baseless.
"Dozens of investigations of gasoline price fixing over the years have generated plenty of headlines and political hyperbole, but have failed again and again to find any evidence of wrongdoing," said NPRA President Charles Drevna. "This is political theater."
US GASOLINE INVENTORIES HIGH
While refiners are operating at lower capacity levels, U.S. gasoline inventories remain high, rising almost 1.3 million barrels to about 206 million barrels, based on the department's most recent weekly data.
"We're seeing a pretty well supplied market, so it doesn't make sense to run at full capacity and keep on stockpiling if you don't have an end user to supply to," said Rob Kurzatkowski, futures analyst with OptionsXpress in Chicago.
Bill Day, a spokesman at Valero Energy Corp, the largest U.S. independent refiner, said oil plant capacity is low now because refiners do annual maintenance in the spring to gear up for higher demand during the summer driving season.
Refiners would be missing out on big profits right now if they were holding back their gasoline production, because profit margins for making oil products are high.
"It would be self defeating to limit production at a time of high margins," he said.
U.S. refinery margins in the Gulf Coast for example were $32.91 per barrel last week, much higher than they were last year according to Credit Suisse.
(Graphic showing refinery rates this year compared to the five-year average and the past three years: link.reuters.com/huw59r)
The FTC is already part of a new government task force requested by President Barack Obama to go after fraud and manipulation in energy markets.
Senate Republican Leader Mitch McConnell, while not responding directly to allegations of price-fixing by refiners, criticized Democrats for not taking action to boost domestic oil production to lower gasoline prices.
The request for an FTC investigation comes as U.S. gasoline prices fell for the first time in eight weeks, according to government data released on Monday.
Energy analysts said they expected retail gasoline prices to fall significantly over the next few weeks, possibly as much as 50 cents a gallon.
The savings for consumers is due to the sharp decline in U.S. crude oil prices, which have fallen about $16 a barrel since the beginning of the month.
U.S. wholesale gasoline prices on Monday fell below $3 a gallon for the first time since March on concerns of weaker demand and signs that oil refiners would be spared from flooding along the Mississippi River.
(Additional reporting by Timothy Gardner in Washington; and Matthew Robinson and Selam Gebrekidan in New York Editing by Lisa Shumaker)
Apple plans smaller SIM card
By Leila Abboud and Georgina Prodhan
PARIS | Tue May 17, 2011 1:42pm EDT
(Reuters) - Apple has proposed a standardized SIM card smaller than those it currently uses in the iPhone and iPad to be able to produce thinner devices, an Orange executive told Reuters on Tuesday.
The move by Apple to work with operators is symptomatic of warming relations as Apple, no longer a new market entrant, depends on mobile carrier subsidies to help it maintain high volumes of iPhone sales.
A spokesman for European telecoms standards body (ETSI) confirmed Apple had made the proposal for the new standard for SIM cards, but decision on starting the standardization work, which can take more than a year, was not yet made.
"This process may take some time, up to a year or more, if there is strong disagreement between industry players. However, when there is broad consensus among the companies participating in the standards committee, the process can be accelerated to a number of months," he said.
Orange said it, and other operators, welcomed the move.
"We were quite happy to see last week that Apple has submitted a new requirement to ETSI for a smaller SIM form factor -- smaller than the one that goes in iPhone 4 and iPad," said Anne Bouverot, Orange's head of mobile services.
"They have done that through the standardization route, through ETSI, with the sponsorship of some major mobile operators, Orange being one of them," she told the Paris leg of the Reuters Global Technology Summit.
She said first devices using such SIM cards could come out next year. If the smaller SIMs become standardized, other phone makers are also likely to adopt them.
"At some point other vendors will follow as size and weight will be crucial for smartphones," said analyst Francisco Jeronimo of technology research firm IDC.
Apple was not immediately available for comment.
Apple was a divisive force in the mobile industry when it launched its first iPhone in 2007, releasing the coveted device only through selected partners and effectively forcing operators to offer unlimited data plans.
Bouverot said: "As long as it supports the requirements that we have for the SIM card, which is a very important asset for operators, which we absolutely want to continue to support, then we're happy that this is a development."
"It's certainly showing that they're willing to work with the standardization bodies and with the operators, which we welcome," Bouverot added. "We're discussing how to improve our relationship."
Apple shares were down 0.3 percent at 1724 GMT. France Telecom shares closed down 0.4 percent.
(Reporting by Leila Abboud, Georgina Prodhan, Marie Mawad and Tarmo Virki; Editing by James Regan and Jon Loades-Carter)
PARIS | Tue May 17, 2011 1:42pm EDT
(Reuters) - Apple has proposed a standardized SIM card smaller than those it currently uses in the iPhone and iPad to be able to produce thinner devices, an Orange executive told Reuters on Tuesday.
The move by Apple to work with operators is symptomatic of warming relations as Apple, no longer a new market entrant, depends on mobile carrier subsidies to help it maintain high volumes of iPhone sales.
A spokesman for European telecoms standards body (ETSI) confirmed Apple had made the proposal for the new standard for SIM cards, but decision on starting the standardization work, which can take more than a year, was not yet made.
"This process may take some time, up to a year or more, if there is strong disagreement between industry players. However, when there is broad consensus among the companies participating in the standards committee, the process can be accelerated to a number of months," he said.
Orange said it, and other operators, welcomed the move.
"We were quite happy to see last week that Apple has submitted a new requirement to ETSI for a smaller SIM form factor -- smaller than the one that goes in iPhone 4 and iPad," said Anne Bouverot, Orange's head of mobile services.
"They have done that through the standardization route, through ETSI, with the sponsorship of some major mobile operators, Orange being one of them," she told the Paris leg of the Reuters Global Technology Summit.
She said first devices using such SIM cards could come out next year. If the smaller SIMs become standardized, other phone makers are also likely to adopt them.
"At some point other vendors will follow as size and weight will be crucial for smartphones," said analyst Francisco Jeronimo of technology research firm IDC.
Apple was not immediately available for comment.
Apple was a divisive force in the mobile industry when it launched its first iPhone in 2007, releasing the coveted device only through selected partners and effectively forcing operators to offer unlimited data plans.
Bouverot said: "As long as it supports the requirements that we have for the SIM card, which is a very important asset for operators, which we absolutely want to continue to support, then we're happy that this is a development."
"It's certainly showing that they're willing to work with the standardization bodies and with the operators, which we welcome," Bouverot added. "We're discussing how to improve our relationship."
Apple shares were down 0.3 percent at 1724 GMT. France Telecom shares closed down 0.4 percent.
(Reporting by Leila Abboud, Georgina Prodhan, Marie Mawad and Tarmo Virki; Editing by James Regan and Jon Loades-Carter)
Canada banks' TMX bid tops LSE
May 16 (Reuters) - A group of Canadian banks and pension funds are hoping their C$3.6 billion ($3.7 billion) offer for TMX Group will keep the nation's largest stock market from falling into foreign hands, but questions remained on Sunday whether that is reason enough to succeed.
The C$48 per share offer for TMX from a consortium calling itself the Maple Group Acquisition Corp topped a $3 billion friendly bid for the exchange operator from the London Stock Exchange.
Maple Group includes banks that have opposed the LSE deal, arguing it would put control of TMX into foreign hands and threaten Toronto's growing status as a world financial center.
But experts said the Maple Group's bid appeared to have the sole purpose of blocking the LSE deal from going through and questions remained about the rationale of such a move.
"The onus is on them to show us why they are doing this," said Alison Crosthwait, director of global trading strategy at Instinet. "They are going to have to make a case for doing this other than just blocking the LSE bid."
Maple said it plans to combine TMX with alternative trading system Alpha Group and clearing hub Clearing and Depository Services Inc to broaden the exchange operator's business, create growth opportunities and generate cost savings.
It said a deal would create an integrated trading and clearing exchange for equities, bonds, energy products and derivatives in exchange-traded and over-the-counter markets, following a model used by others such as Germany's Deutsche Boerse.
In some respects the offer goes counter to attempts by other exchange operators to diversify internationally through consolidation. Deutsche Boerse has a deal to buy NYSE Euronext, although that's being challenged by Nasdaq OMX and IntercontinentalExchange.
LSE and TMX had also touted their deal, announced in February, as creating a more diversified and international company.
Still, the Maple offer puts LSE in a tight spot, forcing it to fend off the rival bid as it seeks to rejuvenate its centuries-old business.
If LSE boss Xavier Rolet were to better his terms, it would undermine claims the LSE and TMX are equal merger partners in their deal, something Rolet has stressed in the past to soothe nationalist nerves in Canada.
Ontario-based TMX has said its board is analyzing the Maple proposal but it is continuing to pursue the regulatory permits required for the LSE deal. Besides the Toronto Stock Exchange, TMX also owns TSX Venture Exchange for small-cap stocks and the Montreal Exchange for derivatives trading.
'MADE IN CANADA' SOLUTION
The all-Canadian bid is seen facing fewer regulatory hurdles than the one from London, which must pass regulatory muster at federal and provincial levels and which has come under fire from the banks, mining companies and politicians.
The Maple proposal would have to be approved by the Canadian Competition Bureau, but would not face review under the net benefit to Canada test that foreign acquirers face.
"I expect the worse that could happen here is that they would demand certain conditions be put in place," said a lawyer from one of Canada's largest corporate law firms who has been watching the situation. He asked to remain anonymous because it was against his company's policy to comment on such matters.
"I would expect this 'made in Canada' solution to be approved."
Neither the acquisition of TMX Group, nor a subsequent combination of Alpha or CDS, requires approval under the Investment Canada Act.
Instinet's Crosthwait said there would be an issue with banks buying the exchange operator.
"The same people who are advising and structuring securities will now also own the exchange where they are listed," Crosthwait said. "But this is not insurmountable."
MAPLE BID
Banks in the Maple group include CIBC World Markets, National Bank Financial, Scotia Capital and TD Securities Inc. The same banks are advising on the deal.
Maple also consists of five pension funds -- including Alberta Investment Management Corporation, Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, Fonds de solidarite des travailleurs du Quebec (F.T.Q.) and Ontario Teachers' Pension Plan Board.
Under the terms of its proposal, Maple Group would acquire all shares of TMX for C$48 in cash per TMX share or one common share of Maple per TMX share, in each case subject to proration.
The maximum cash payable under the proposal is C$2.5 billion and the maximum number of Maple shares issuable is 22.5 million.
On a prorated basis, Maple said each TMX Group share would be exchanged for C$33.52 in cash plus 0.3016 of a Maple share. It said the proposal represented a 24 percent premium to the implied value of the LSE's offer.
On completion of the transaction, shareholders of TMX would own about 40 percent of Maple's outstanding shares. Pension fund investors would own about 35 percent and the bank-owned investment dealers would own 25 percent.
No shareholder of Maple would own more than 10 percent of Maple's total shares outstanding, Maple said.
(Reporting by Pav Jordan in Toronto; Editing by Richard Chang and Paritosh Bansal)
The C$48 per share offer for TMX from a consortium calling itself the Maple Group Acquisition Corp topped a $3 billion friendly bid for the exchange operator from the London Stock Exchange.
Maple Group includes banks that have opposed the LSE deal, arguing it would put control of TMX into foreign hands and threaten Toronto's growing status as a world financial center.
But experts said the Maple Group's bid appeared to have the sole purpose of blocking the LSE deal from going through and questions remained about the rationale of such a move.
"The onus is on them to show us why they are doing this," said Alison Crosthwait, director of global trading strategy at Instinet. "They are going to have to make a case for doing this other than just blocking the LSE bid."
Maple said it plans to combine TMX with alternative trading system Alpha Group and clearing hub Clearing and Depository Services Inc to broaden the exchange operator's business, create growth opportunities and generate cost savings.
It said a deal would create an integrated trading and clearing exchange for equities, bonds, energy products and derivatives in exchange-traded and over-the-counter markets, following a model used by others such as Germany's Deutsche Boerse.
In some respects the offer goes counter to attempts by other exchange operators to diversify internationally through consolidation. Deutsche Boerse has a deal to buy NYSE Euronext, although that's being challenged by Nasdaq OMX and IntercontinentalExchange.
LSE and TMX had also touted their deal, announced in February, as creating a more diversified and international company.
Still, the Maple offer puts LSE in a tight spot, forcing it to fend off the rival bid as it seeks to rejuvenate its centuries-old business.
If LSE boss Xavier Rolet were to better his terms, it would undermine claims the LSE and TMX are equal merger partners in their deal, something Rolet has stressed in the past to soothe nationalist nerves in Canada.
Ontario-based TMX has said its board is analyzing the Maple proposal but it is continuing to pursue the regulatory permits required for the LSE deal. Besides the Toronto Stock Exchange, TMX also owns TSX Venture Exchange for small-cap stocks and the Montreal Exchange for derivatives trading.
'MADE IN CANADA' SOLUTION
The all-Canadian bid is seen facing fewer regulatory hurdles than the one from London, which must pass regulatory muster at federal and provincial levels and which has come under fire from the banks, mining companies and politicians.
The Maple proposal would have to be approved by the Canadian Competition Bureau, but would not face review under the net benefit to Canada test that foreign acquirers face.
"I expect the worse that could happen here is that they would demand certain conditions be put in place," said a lawyer from one of Canada's largest corporate law firms who has been watching the situation. He asked to remain anonymous because it was against his company's policy to comment on such matters.
"I would expect this 'made in Canada' solution to be approved."
Neither the acquisition of TMX Group, nor a subsequent combination of Alpha or CDS, requires approval under the Investment Canada Act.
Instinet's Crosthwait said there would be an issue with banks buying the exchange operator.
"The same people who are advising and structuring securities will now also own the exchange where they are listed," Crosthwait said. "But this is not insurmountable."
MAPLE BID
Banks in the Maple group include CIBC World Markets, National Bank Financial, Scotia Capital and TD Securities Inc. The same banks are advising on the deal.
Maple also consists of five pension funds -- including Alberta Investment Management Corporation, Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, Fonds de solidarite des travailleurs du Quebec (F.T.Q.) and Ontario Teachers' Pension Plan Board.
Under the terms of its proposal, Maple Group would acquire all shares of TMX for C$48 in cash per TMX share or one common share of Maple per TMX share, in each case subject to proration.
The maximum cash payable under the proposal is C$2.5 billion and the maximum number of Maple shares issuable is 22.5 million.
On a prorated basis, Maple said each TMX Group share would be exchanged for C$33.52 in cash plus 0.3016 of a Maple share. It said the proposal represented a 24 percent premium to the implied value of the LSE's offer.
On completion of the transaction, shareholders of TMX would own about 40 percent of Maple's outstanding shares. Pension fund investors would own about 35 percent and the bank-owned investment dealers would own 25 percent.
No shareholder of Maple would own more than 10 percent of Maple's total shares outstanding, Maple said.
(Reporting by Pav Jordan in Toronto; Editing by Richard Chang and Paritosh Bansal)
Oil falls more than $1 on euro zone, growth worries
May 16 (Reuters) - Oil fell more than $1 per barrel on Monday as worries over the restructuring of euro zone debt and doubts about the pace of global growth encouraged investors to reduce risk.
The euro dropped to its lowest since March ahead of a meeting of euro zone finance ministers on Monday to try to sort out the bloc's debt crisis and on how to handle Greece, which investors fear is at risk of default.
Silver and other commodities fell while European stock markets opened lower and U.S. Treasuries markets rose as risk aversion spread through global markets.
President Barack Obama warned Congress in remarks broadcast on Sunday that failing to raise the U.S. debt limit could lead to a worse financial crisis and recession than 2008-09 if investors began doubting U.S. credit-worthiness.
U.S. crude futures for June fell almost $2 per barrel to a low of $97.71 before recovering slightly to trade around $98 by 7 a.m. EDT. Brent crude for June was down $1.38 at $112.45.
The euro fall was compounded by news IMF chief Dominique Strauss-Kahn had been charged with sexual assault, increasing uncertainty on aid for Greece and other indebted euro zone countries.
"The arrest of the IMF chief obviously weakens the perspective of the euro, given the bank's massive involvement in bailout measures. And with a strengthening dollar, oil prices come under pressure," said David Wech from JBC Energy.
Dollar-denominated commodities often move inversely to the dollar and a stronger U.S. currency typically pressures oil.
BAILOUTS
"The rise of the dollar and weakness of the euro are conditioning all financial markets today," said Carsten Fritsch, commodity analyst at Commerzbank. "The market is less worried about Middle East unrest now and is focusing on oil demand, and there are signs that it is being undermined by high prices."
Both Brent and U.S. oil futures are technically neutral, according to Reuters market analyst Wang Tao, but Brent is biased to fall toward $105.21 per barrel and U.S. oil is trapped within a range of $95.40-$100.75 per barrel.
Euro zone finance ministers are likely to back a bailout package for Portugal on Monday. The meeting was also expected to pressure Greece to announce more austerity steps to secure further emergency funding.
"Concern over the European economy is weighing on the euro and supporting the dollar," said Jonathan Barratt, managing director at Commodity Broking Services. "A stronger dollar in turn is weighing on commodity prices."
Investors were also looking at monetary tightening by China to gauge the impact on global oil demand.
China has lifted bank reserve requirements eight times and raised interest rates four times since October in a bid to put a lid on rising prices. But it needs to raise rates further to rein in inflation, Li Daokui, an adviser to the People's Bank of China, said on Monday.
Unrest in the Middle East and North Africa is helping support oil and investors still worry the turmoil could spread to other oil-exporting nations in the region.
Gunmen on motorcycles attacked a car belonging to the Saudi Arabian consulate in the Pakistanicity of Karachi on Monday killing a Saudi diplomat, police and the Saudi ambassador said.
Saudi Arabia is the world biggest oil exporter and any signs that its security is threatened could have an impact on global oil prices.
Investors were also watching flooding on the Mississippi after U.S. Army engineers opened a key spillway to relieve flooding along the river.
(Additional reporting by Manash Goswami in Singapore; editing by Jason Neely)
By Christopher Johnson
The euro dropped to its lowest since March ahead of a meeting of euro zone finance ministers on Monday to try to sort out the bloc's debt crisis and on how to handle Greece, which investors fear is at risk of default.
Silver and other commodities fell while European stock markets opened lower and U.S. Treasuries markets rose as risk aversion spread through global markets.
President Barack Obama warned Congress in remarks broadcast on Sunday that failing to raise the U.S. debt limit could lead to a worse financial crisis and recession than 2008-09 if investors began doubting U.S. credit-worthiness.
U.S. crude futures for June fell almost $2 per barrel to a low of $97.71 before recovering slightly to trade around $98 by 7 a.m. EDT. Brent crude for June was down $1.38 at $112.45.
The euro fall was compounded by news IMF chief Dominique Strauss-Kahn had been charged with sexual assault, increasing uncertainty on aid for Greece and other indebted euro zone countries.
"The arrest of the IMF chief obviously weakens the perspective of the euro, given the bank's massive involvement in bailout measures. And with a strengthening dollar, oil prices come under pressure," said David Wech from JBC Energy.
Dollar-denominated commodities often move inversely to the dollar and a stronger U.S. currency typically pressures oil.
BAILOUTS
"The rise of the dollar and weakness of the euro are conditioning all financial markets today," said Carsten Fritsch, commodity analyst at Commerzbank. "The market is less worried about Middle East unrest now and is focusing on oil demand, and there are signs that it is being undermined by high prices."
Both Brent and U.S. oil futures are technically neutral, according to Reuters market analyst Wang Tao, but Brent is biased to fall toward $105.21 per barrel and U.S. oil is trapped within a range of $95.40-$100.75 per barrel.
Euro zone finance ministers are likely to back a bailout package for Portugal on Monday. The meeting was also expected to pressure Greece to announce more austerity steps to secure further emergency funding.
"Concern over the European economy is weighing on the euro and supporting the dollar," said Jonathan Barratt, managing director at Commodity Broking Services. "A stronger dollar in turn is weighing on commodity prices."
Investors were also looking at monetary tightening by China to gauge the impact on global oil demand.
China has lifted bank reserve requirements eight times and raised interest rates four times since October in a bid to put a lid on rising prices. But it needs to raise rates further to rein in inflation, Li Daokui, an adviser to the People's Bank of China, said on Monday.
Unrest in the Middle East and North Africa is helping support oil and investors still worry the turmoil could spread to other oil-exporting nations in the region.
Gunmen on motorcycles attacked a car belonging to the Saudi Arabian consulate in the Pakistanicity of Karachi on Monday killing a Saudi diplomat, police and the Saudi ambassador said.
Saudi Arabia is the world biggest oil exporter and any signs that its security is threatened could have an impact on global oil prices.
Investors were also watching flooding on the Mississippi after U.S. Army engineers opened a key spillway to relieve flooding along the river.
(Additional reporting by Manash Goswami in Singapore; editing by Jason Neely)
By Christopher Johnson
Good News on Gas Prices: A Sharp Drop Is Just Ahead
See full article from
May 13 With security concerns in the Middle East receding and the bubble in commodities deflating, oil prices are headed sharply lower. Motorists will finally have something to cheer about: Gas prices should be about 25 cents a gallon cheaper in the next few days.
"My sense is we're going sharply lower in prices," says Tom Kloza, chief analyst of the Oil Price Information Service. "I'm not sure if it will be six days or 16 days, but six weeks from today, I suspect it will be $3.25 to $3.75 a gallon across the country."
Michael Lynch, president of Strategic Energy and Economic Research, a Winchester, Mass.-based consulting firm, says he expects gas prices to decline about 25 cents in the next week, with a target of $3.60 to $3.70 by Memorial Day.
According to the AAA, the current national average price for a gallon of unleaded regular gasoline is about $3.98, about the same as it was a week ago. A month ago it was $3.79.
A River Runs Through the Forecast
The one wrinkle that could still hold up a sharp fall in prices at the pump is the rising Mississippi River, which is flooding parts of several states, and threatens Louisiana between Baton Rouge and New Orleans. It's possible some refineries in the area might have trouble receiving oil shipments, but most analysts discount that issue.
"The market is pretty slack, so there are refineries that could come online and replace those affected by the floods," says Lynch.
The price decline is being driven by several factors. One is that the unusually high price in the last few weeks has itself caused consumers to cut back on driving. According to Lynch, demand for gasoline is down by 300,000 barrels a day, about 3% less demand than last year.
"That's a significant decline," Lynch says. "When you have this kind of run up, you do see consumers start to respond."
At the Top of an Annual Cycle
Kloza says that at the same time, the speculation in oil seems to have been cooled by investors' realization that there are adequate supplies.
"The truth is oil prices are very tidal, and there is always a high tide that tends to occur around May 5," Kloza says. "This year it was probably a little higher than normal."
Many investors were also expecting the turmoil in Libya to spread to Persian Gulf countries, notably Saudi Arabia after demonstrations in nearby Bahrain, but those upheavals didn't materialize. There have also been a series of unlucky setbacks at U.S. refineries, including power failures, storms and maintenance issues.
Kloza noted that the combination of problems drove up crude oil prices to $115 a barrel domestically and $130 in world markets. That number has recently come down by about $15 a barrel.
"It's more than a drift lower," Kloza says. "Once we get through this notion of possible flooding, it's sharply lower at the pump." The trend will be sharpest in California and other Western states which were the first to feel the sharp increases, he says.
Lynch says he expects to see gas prices sink lower throughout the summer and probably end it below $3.50 a gallon.
The sharp drop will be a help to hard-pressed consumers just as the summer driving season begins. It will also give a needed shot in the arm to the lackluster recovery, which has been dragging at least in part due to high energy prices.
ByCharles Wallace
See full article from DailyFinance:http://srph.it/mqa0c0
Money Advice from the World's Most Beautiful Woman: Aishwarya Rai
May 13 CANNES, France -- Exploring the intersection of celebrity, glamor and personal finance is theraison d'etreforThe Price of Fame-- so who better than Aishwarya Rai as a subject? The Bollywood actress and model has $35 million to her name, according tocelebritynetworth.com, and60 Minutesdubbed her themost beautiful woman in the world.
TPOF caught up with Rai, 37, at the Cannes Film Festival on Friday to discuss money. After some gentle encouragement, Rai revealed that the most important financial advice she has learned is to adapt her expectations for each project, from low-budget to blockbuster. "You have to take each film for what it is, rather than having a rule book," she said. "That's what we actors do."
Rai, onthe Croisetteto promote her new movie,Heroine, operates in a different economic stratosphere than most of us. Her fortune, already considerable when she was a single woman, is even greater now that she's married to Bollywood hero Abhishek Bachchan, from India's premier acting family. Still, TPOF couldn't resist asking whether she was a saver or a splurger.
"I'm realistic and I'm practical," Rai replied.
Maybe her middle-class upbringing is still an influence. Rai had no inkling that she wanted to be part of show business as a child. She was on track to receive an architectural degree until she entered the Miss World Pageant on a whim at age 21 and won. Film and modeling offers poured in, and she rapidly rose to become the most recognizable face of Indian cinema. She has appeared in 44 films, according toIMDB. Rai is best known stateside as the face of L'Oreal (LRLCY) cosmetics and for her role in 2009'sThe Pink Panther 2and 2004'sBride and Prejudice. InHeroine, she will play close to type as an Indian cinema icon who endures ups and downs. But she insists the movie is not autobiographical.
While the fun and glitz of Cannes help create a "cinema village" built on the love of movies, she said, she never forgets why she's here. "This an industry."
ByRon Dicker
See full article from DailyFinance:http://srph.it/lXghy1
Obama urges companies to hire, studies housing moves
May 12 (Reuters) - President Barack Obama urged businesses to "step up" and hire workers, pressing banks and other corporations to do more to help an economy that he said would take "several years" to recover fully.
In a town-hall style meeting conducted by CBS News on Wednesday, Obama said the weak housing market and high gasoline prices were the biggest "headwinds" dragging on the economy.
"We've got a lot more work to do to get businesses to invest and to hire," he told the audience in remarks broadcast on Thursday.
"It's going to take us several years for us to get back where we need to be."
The strength of the U.S. economy is likely to be the main factor that determines whether Obama will succeed in holding on to the White House next year.
He said businesses and banks that reaped the rewards of extraordinary measures to pull the country out of a deep recession had a responsibility now to invest hordes of cash into U.S. jobs.
"It is time for companies to step up," Obama said. "American taxpayers contributed to that process of stabilizing the economy. Companies have benefited from that, and they're making a lot of money, and now's the time for them to start betting on American workers and American products."
U.S. companies created jobs at the fastest pace in five years in April, according to the Labor Department, pointing to underlying strength in the economy even as the jobless rate hit 9.0 percent.
Obama said his administration was looking at ways to extend programs to help people struggling with mortgage payments on houses that had lost much of their value.
"We're going to continue to work with Congress to see if we can propose more legislation to encourage longer loan modifications," he said. "We are trying to expand the loan modification program to reach more people."
OIL PRICES, REGULATION
Obama said the White House studied oil price movements every day and some increase in fuel prices was inevitable because the economy had improved, boosting demand for energy.
"When the economy started growing again, worldwide demand for oil went back up," he said, noting that disruptions in the Middle East, especially Libya, had affected oil prices.
But he said his administration hoped to see gasoline prices down significantly by the summer and was working to crack down on speculation and price gouging.
"As oil prices on the world markets go down, we want to make sure that's reflected in the pump," he said.
Obama pressed his case that his administration's work to improve the economy had paid dividends, saying the manufacturing sector was especially strong in part because of his decision to rescue the auto industry.
In response to concerns from small businesses about needless regulation, Obama indicated his administration would announce changes in the coming weeks in regulations to ease the burden of excessive paperwork.
By Jeff Mason
In a town-hall style meeting conducted by CBS News on Wednesday, Obama said the weak housing market and high gasoline prices were the biggest "headwinds" dragging on the economy.
"We've got a lot more work to do to get businesses to invest and to hire," he told the audience in remarks broadcast on Thursday.
"It's going to take us several years for us to get back where we need to be."
The strength of the U.S. economy is likely to be the main factor that determines whether Obama will succeed in holding on to the White House next year.
He said businesses and banks that reaped the rewards of extraordinary measures to pull the country out of a deep recession had a responsibility now to invest hordes of cash into U.S. jobs.
"It is time for companies to step up," Obama said. "American taxpayers contributed to that process of stabilizing the economy. Companies have benefited from that, and they're making a lot of money, and now's the time for them to start betting on American workers and American products."
U.S. companies created jobs at the fastest pace in five years in April, according to the Labor Department, pointing to underlying strength in the economy even as the jobless rate hit 9.0 percent.
Obama said his administration was looking at ways to extend programs to help people struggling with mortgage payments on houses that had lost much of their value.
"We're going to continue to work with Congress to see if we can propose more legislation to encourage longer loan modifications," he said. "We are trying to expand the loan modification program to reach more people."
OIL PRICES, REGULATION
Obama said the White House studied oil price movements every day and some increase in fuel prices was inevitable because the economy had improved, boosting demand for energy.
"When the economy started growing again, worldwide demand for oil went back up," he said, noting that disruptions in the Middle East, especially Libya, had affected oil prices.
But he said his administration hoped to see gasoline prices down significantly by the summer and was working to crack down on speculation and price gouging.
"As oil prices on the world markets go down, we want to make sure that's reflected in the pump," he said.
Obama pressed his case that his administration's work to improve the economy had paid dividends, saying the manufacturing sector was especially strong in part because of his decision to rescue the auto industry.
In response to concerns from small businesses about needless regulation, Obama indicated his administration would announce changes in the coming weeks in regulations to ease the burden of excessive paperwork.
By Jeff Mason
High oil prices slow world's thirst: IEA
(Reuters) - High prices are holding back oil demand growth and threaten economic recovery in the West, the International Energy Agency said on Thursday, meaning lofty crude prices could continue to topple.
The energy advisor to industrialized nations trimmed its global oil demand growth estimates to 1.29 million barrels per day, or 1.5 percent, from 1.43 million bpd in its previous report.
"We clearly have seen demand growth slowing compared to last year's level and we're seeing it very much concentrated where the price feed through is most direct, notably in North America in terms of gasoline," said David Fyfe, head of the IEA's Oil Industry and Markets division.
Gasoline prices of near $4 a gallon in the United States will lead to fewer road trips this year than last, the IEA said.
Preliminary March data showed a marked slowdown in global oil demand, although the IEA warned the data could be distorted by the devastating earthquake in Japan and the Easter holiday period.
"Persistently high prices at this stage of the economic cycle may ultimately sow the seeds of their own destruction. Until then, the market confronts fundamentals that still look likely to tighten in the second half of 2011," it said in the report.
This makes the Paris-based agency the most pessimistic of among leading industry forecasters.
The Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration converged on 1.4 million barrels, after the EIA cut its assessment on Tuesday.
SUBSIDIES CUSHION THE BLOW
The IEA said that worries about the economic impact of strong prices together with weak economic data from the United States, China and Germany had contributed to the profit taking which took oil prices down sharply over the last week.
"But as the dust settles, prices have again begun to creep higher," it said. "The market bull run may have legs for a while longer."
But demand from developing economies including China was likely to remain unaffected as government subsidies cushioned the end-consumer from strong outright prices.
"So long as you have price support in these emerging markets, you can still have robust oil demand growth even in the face of $100-plus oil," Fyfe told Reuters.
Chinese demand rose by 0.89 million bpd in March -- the single largest contributor to total non-OECD demand -- accounting for 74 percent of Asia's increased demand and 55 percent of non-OECD growth.
"Governments in Russia, Brazil and China face difficulties fully passing on recent price rises to consumers, helping to sustain robust demand growth in the non-OECD countries," the IEA said.
Ahead of OPEC's Vienna meeting on June 8, the agency said the cartel's supply of crude fell by 0.235 million bpd in April to 28.75 million bpd, due to lost Libyan output.
"Despite expectations that OPEC would increase output to replace lost Libyan supplies, the group's production is now running 1.3 million bpd below the pre-Libya crisis level of 30.1 million bpd posted in January," the report said.
Although the agency said a formal OPEC agreement to increase output at the June meeting was unlikely, it hoped an informal pact to increase production could emerge.
"OPEC's apparently relaxed attitude toward increasing production to offset lost Libya supplies may also lead to sharply tighter markets later this summer once refiners are back in full swing, following extensive turnaround schedules," it said.
The IEA expected seasonal demand in the third quarter would mean a call for OPEC's oil at 30.1 million bpd in that period.
Oil stockpiles in the Organization for Economic Co-operation and Development fell by 9.2 million barrels to equal 58.8 days of forward cover.
(Reporting by Zaida Espana and Claire Milhench; editing by William Hardy)
The energy advisor to industrialized nations trimmed its global oil demand growth estimates to 1.29 million barrels per day, or 1.5 percent, from 1.43 million bpd in its previous report.
"We clearly have seen demand growth slowing compared to last year's level and we're seeing it very much concentrated where the price feed through is most direct, notably in North America in terms of gasoline," said David Fyfe, head of the IEA's Oil Industry and Markets division.
Gasoline prices of near $4 a gallon in the United States will lead to fewer road trips this year than last, the IEA said.
Preliminary March data showed a marked slowdown in global oil demand, although the IEA warned the data could be distorted by the devastating earthquake in Japan and the Easter holiday period.
"Persistently high prices at this stage of the economic cycle may ultimately sow the seeds of their own destruction. Until then, the market confronts fundamentals that still look likely to tighten in the second half of 2011," it said in the report.
This makes the Paris-based agency the most pessimistic of among leading industry forecasters.
The Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration converged on 1.4 million barrels, after the EIA cut its assessment on Tuesday.
SUBSIDIES CUSHION THE BLOW
The IEA said that worries about the economic impact of strong prices together with weak economic data from the United States, China and Germany had contributed to the profit taking which took oil prices down sharply over the last week.
"But as the dust settles, prices have again begun to creep higher," it said. "The market bull run may have legs for a while longer."
But demand from developing economies including China was likely to remain unaffected as government subsidies cushioned the end-consumer from strong outright prices.
"So long as you have price support in these emerging markets, you can still have robust oil demand growth even in the face of $100-plus oil," Fyfe told Reuters.
Chinese demand rose by 0.89 million bpd in March -- the single largest contributor to total non-OECD demand -- accounting for 74 percent of Asia's increased demand and 55 percent of non-OECD growth.
"Governments in Russia, Brazil and China face difficulties fully passing on recent price rises to consumers, helping to sustain robust demand growth in the non-OECD countries," the IEA said.
Ahead of OPEC's Vienna meeting on June 8, the agency said the cartel's supply of crude fell by 0.235 million bpd in April to 28.75 million bpd, due to lost Libyan output.
"Despite expectations that OPEC would increase output to replace lost Libyan supplies, the group's production is now running 1.3 million bpd below the pre-Libya crisis level of 30.1 million bpd posted in January," the report said.
Although the agency said a formal OPEC agreement to increase output at the June meeting was unlikely, it hoped an informal pact to increase production could emerge.
"OPEC's apparently relaxed attitude toward increasing production to offset lost Libya supplies may also lead to sharply tighter markets later this summer once refiners are back in full swing, following extensive turnaround schedules," it said.
The IEA expected seasonal demand in the third quarter would mean a call for OPEC's oil at 30.1 million bpd in that period.
Oil stockpiles in the Organization for Economic Co-operation and Development fell by 9.2 million barrels to equal 58.8 days of forward cover.
(Reporting by Zaida Espana and Claire Milhench; editing by William Hardy)
New York governor drives same-sex marriage debate
(Reuters) - In a push to legalize same-sex marriage, New York Governor Andrew Cuomo has emerged as a closed-door strategist, allowing gay rights groups to own the public campaign and also the loss that could result if legislation fails this year.
Cuomo, a Democrat in his first year in office, has vowed to make same-sex marriage a priority in the coming final weeks of the legislative session.
The state-by-state battle over gay marriage has become one of the most contentious U.S. social issues ahead of the 2012 presidential and congressional elections.
Connecticut, Iowa, Massachusetts, New Hampshire, Vermont and the District of Colombia allow same-sex marriage, and 10 states allow civil unions.
Needing support from Republican senators on the gay marriage issue, Cuomo has political capital to spend with them after closing a $10 billion budget gap without raising taxes.
The issue may also help Cuomo solidify his liberal base after he alienated many with an austere budget that cut spending on education, healthcare and social programs. He also angered progressives by opposing the extension of an income tax surcharge on the state's wealthiest residents.
Cuomo has stopped short of making himself the public face of the campaign, instead leaving on-the-ground organizing to groups that have lobbied for marriage equality for years.
He pulled those disparate groups together in closed-door sessions at the Capitol, and they came out forming an umbrella group called New Yorkers United for Marriage.
SEND IN THE LIEUTENANT GOVERNOR
In an example of Cuomo's caution, he did not appear at a major rally at the Capitol on Monday, instead sending his lieutenant governor to speak.
"Sending in his top lieutenant is an indication that he has all the interest in the world, but without over-committing," said Bill O'Reilly, a Republican strategist. "He's letting the groups go out front and run the campaign, but the governor has not invested too much capital in it in case it doesn't pass."
A recent Siena poll found 58 percent of New Yorkers support same-sex marriage. Siena pollster Steve Greenberg credited Cuomo with creating a triad of legislative priorities that includes ethics reform and a cap on property tax increases.
"The governor is pursuing an agenda that is popular with the public and individually appeals to virtually every constituency of New York voters," Greenberg said. "He's getting behind marriage equality in a way that does not hurt him politically."
One gay-rights supporter argued that Cuomo deserved more credit as a champion of same-same marriage, saying no other state governor could match his activism.
"The problem we've had in other states is that the best we've gotten from political leaders is lukewarm support. If same-sex marriage happens in New York, it will be because of Governor Cuomo's leadership," said Richard Socarides, president of national gay-rights group Equality Matters.
Same-sex marriage enjoys wide support in the Democrat-dominated Assembly, where it has passed easily in recent years. In the Republican-led Senate, however, only 26 of 62 members have publicly indicated their support.
(Editing by Daniel Trotta and Vicki Allen)
Cuomo, a Democrat in his first year in office, has vowed to make same-sex marriage a priority in the coming final weeks of the legislative session.
The state-by-state battle over gay marriage has become one of the most contentious U.S. social issues ahead of the 2012 presidential and congressional elections.
Connecticut, Iowa, Massachusetts, New Hampshire, Vermont and the District of Colombia allow same-sex marriage, and 10 states allow civil unions.
Needing support from Republican senators on the gay marriage issue, Cuomo has political capital to spend with them after closing a $10 billion budget gap without raising taxes.
The issue may also help Cuomo solidify his liberal base after he alienated many with an austere budget that cut spending on education, healthcare and social programs. He also angered progressives by opposing the extension of an income tax surcharge on the state's wealthiest residents.
Cuomo has stopped short of making himself the public face of the campaign, instead leaving on-the-ground organizing to groups that have lobbied for marriage equality for years.
He pulled those disparate groups together in closed-door sessions at the Capitol, and they came out forming an umbrella group called New Yorkers United for Marriage.
SEND IN THE LIEUTENANT GOVERNOR
In an example of Cuomo's caution, he did not appear at a major rally at the Capitol on Monday, instead sending his lieutenant governor to speak.
"Sending in his top lieutenant is an indication that he has all the interest in the world, but without over-committing," said Bill O'Reilly, a Republican strategist. "He's letting the groups go out front and run the campaign, but the governor has not invested too much capital in it in case it doesn't pass."
A recent Siena poll found 58 percent of New Yorkers support same-sex marriage. Siena pollster Steve Greenberg credited Cuomo with creating a triad of legislative priorities that includes ethics reform and a cap on property tax increases.
"The governor is pursuing an agenda that is popular with the public and individually appeals to virtually every constituency of New York voters," Greenberg said. "He's getting behind marriage equality in a way that does not hurt him politically."
One gay-rights supporter argued that Cuomo deserved more credit as a champion of same-same marriage, saying no other state governor could match his activism.
"The problem we've had in other states is that the best we've gotten from political leaders is lukewarm support. If same-sex marriage happens in New York, it will be because of Governor Cuomo's leadership," said Richard Socarides, president of national gay-rights group Equality Matters.
Same-sex marriage enjoys wide support in the Democrat-dominated Assembly, where it has passed easily in recent years. In the Republican-led Senate, however, only 26 of 62 members have publicly indicated their support.
(Editing by Daniel Trotta and Vicki Allen)
Study Finds Positive Results from Credit Card Law
Banks and some pundits had predicted that credit card users would face skyrocketing interest rates, a spike in annual fees and a plethora of other negatives after stringent new rules on cards kicked in last year.
That is not what happened, according to a new look at the policies associated with credit cards issued by major banks and credit unions. The Pew Charitable Trusts Safe Credit Cards Project found instead that interest rates are steady with those charged last year, while most fees have dropped.
The stabilization of interest rates is key, because banks sharply raised rates in 2009 following the law's passage but before its implementation.
"Whatever increases in advertised interest rates we saw going into 2010 have not continued into 2011," said Nick Bourke, director of the Safe Credit Cards Project.
Median advertised interest rates for purchases on cards issued by banks are ranging from 12.99 percent to 20.99 percent, depending on a customer's credit history, according to the Pew study being released Tuesday. Credit union rates increased slightly from last year to between 9.99 percent and 17 percent. Penalty interest rates charged to those who make late payments, and cash advance interest rates have also held steady.
One caveat the study doesn't address, however, is that most credit cards now carry variable rates, so if the prime rate starts to rise, that would lead to consumers paying higher rates on their cards.
After examining credit card offers made in January compared with those of prior years, Pew also found that transaction surcharges for cash advances, balance transfers and international purchases changed only slightly. The study reviewed offers from the 12 largest banks and 12 largest credit union card issuers. Together those institutions control more than 90 percent of the outstanding credit card debt in the country.
"Consumers are enjoying safer, more transparently priced credit cards - and banks and credit unions are able to compete on a more level playing field," Bourke said. The credit card regulations "created a new equilibrium where a number of policies the organization found "unfair or deceptive" a year ago have disappeared.
Among the study's findings:
- Penalty fees have dropped.
A provision in the law that requires penalty fees to be "reasonable and proportional" for violations such as late payments led the Federal Reserve to cap penalty fees at $25, or up to $35 if it happens a second time in six months. That pushed the cost of fees down from a previous median of $39. Credit union cards remain at $25. More than 95 percent of cards charge late fees if payments don't arrive on time.
- Overlimit fees are now rare.
Only 11 percent of bank-issued credit cards now have fees for charging more than the limit on a card, down from 23 percent a year ago. The largest credit unions have eliminated overlimit fees altogether.
- Annual fees did not proliferate
The widespread expectation that most banks would start charging card users annual fees to make up for lost revenue was off the mark, although the number did rise significantly. Researchers found that 21 percent of banks charge an annual fee, up from 14 percent a year ago. The rate for credit unions remains stable at 14 percent.
ByThe Associated Press
See full article from DailyFinance:http://srph.it/mr3NYM
That is not what happened, according to a new look at the policies associated with credit cards issued by major banks and credit unions. The Pew Charitable Trusts Safe Credit Cards Project found instead that interest rates are steady with those charged last year, while most fees have dropped.
The stabilization of interest rates is key, because banks sharply raised rates in 2009 following the law's passage but before its implementation.
"Whatever increases in advertised interest rates we saw going into 2010 have not continued into 2011," said Nick Bourke, director of the Safe Credit Cards Project.
Median advertised interest rates for purchases on cards issued by banks are ranging from 12.99 percent to 20.99 percent, depending on a customer's credit history, according to the Pew study being released Tuesday. Credit union rates increased slightly from last year to between 9.99 percent and 17 percent. Penalty interest rates charged to those who make late payments, and cash advance interest rates have also held steady.
One caveat the study doesn't address, however, is that most credit cards now carry variable rates, so if the prime rate starts to rise, that would lead to consumers paying higher rates on their cards.
After examining credit card offers made in January compared with those of prior years, Pew also found that transaction surcharges for cash advances, balance transfers and international purchases changed only slightly. The study reviewed offers from the 12 largest banks and 12 largest credit union card issuers. Together those institutions control more than 90 percent of the outstanding credit card debt in the country.
"Consumers are enjoying safer, more transparently priced credit cards - and banks and credit unions are able to compete on a more level playing field," Bourke said. The credit card regulations "created a new equilibrium where a number of policies the organization found "unfair or deceptive" a year ago have disappeared.
Among the study's findings:
- Penalty fees have dropped.
A provision in the law that requires penalty fees to be "reasonable and proportional" for violations such as late payments led the Federal Reserve to cap penalty fees at $25, or up to $35 if it happens a second time in six months. That pushed the cost of fees down from a previous median of $39. Credit union cards remain at $25. More than 95 percent of cards charge late fees if payments don't arrive on time.
- Overlimit fees are now rare.
Only 11 percent of bank-issued credit cards now have fees for charging more than the limit on a card, down from 23 percent a year ago. The largest credit unions have eliminated overlimit fees altogether.
- Annual fees did not proliferate
The widespread expectation that most banks would start charging card users annual fees to make up for lost revenue was off the mark, although the number did rise significantly. Researchers found that 21 percent of banks charge an annual fee, up from 14 percent a year ago. The rate for credit unions remains stable at 14 percent.
ByThe Associated Press
See full article from DailyFinance:http://srph.it/mr3NYM