FRANKFURT (Reuters) - Stock index futures fell before the start of Wall Street trading on Monday with eyes on a manufacturing survey for signals of further Fed rate cuts, and on Boeing after the aircraft maker lost a big contract.
LONDON (Reuters) - HSBC's profits rose 10 percent last year as buoyant growth in Hong Kong and elsewhere in Asia helped Europe's biggest bank absorb $17.2 billion in bad debts as the U.S. housing crisis deepened.
ALGIERS (Reuters) - U.S. based private investment firm Colony Capital LLC's deal to buy a controlling stake in Libya's European refiner Tamoil is off, the Libyan Investment Authority (LIA) chairman said on Monday.
British manufacturers increased prices at a record rate last month as the
sector reported better than expected growth while experiencing soaring costs
for raw materials. Source: Latest Business News from Times Online | 3 Mar 2008 | 12:27 pm
LONDON (Reuters) - Miner Xstrata posted a 13 percent rise in annual net profit on Monday on strong output and said it was still scouting for other acquisitions during takeover talks with suitor Vale of Brazil.
Reuters - HSBC's profits rose 10 percent
last year as buoyant growth in Hong Kong and elsewhere in Asia
helped Europe's biggest bank absorb $17.2 billion in bad debts
as the U.S. housing crisis deepened.
Reuters - Warren Buffett on Monday said the U.S.
economy is in recession and that "stocks are not cheap." Source: Yahoo! News: Business | 3 Mar 2008 | 12:18 pm
Reuters - World stocks tumbled while the dollar
plumbed record lows on Monday as fresh concerns about the
health of the banking sector and a U.S. recession drove
investors to safe-haven gold and government bonds.
LONDON (Reuters) - World stocks tumbled while the dollar plumbed record lows on Monday as fresh concerns about the health of the banking sector and a U.S. recession drove investors to safe-haven gold and government bonds.
Shares of EADS soar after the Pentagon's decision to bypass Boeing Co. and award a $35 billion contract to build a new U.S. Air Force tanker to the European defense giant and its U.S. partner Northrop Grumman.
U.S. stock futures dropped on Monday, ahead of data on manufacturing that could show industrial activity on the wane as the dollar fell to its worst level against a basket of currencies since 1973.
LONDON (Reuters) - Oil prices fell more than a dollar on Monday, pressured by concerns over the ailing U.S. economy, but supported by a weak dollar and expectations OPEC will not change oil output when it meets this week in Vienna.
The U.S. dollar was mixed against other major currencies in European trading Monday morning. Gold rose. The euro traded at $1.5172, down from $1.5194 late Friday in New York. Other... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 12:08 pm
Hey you! Dozing at your desk! Wake up, go home and get more sleep! That could be the message from a survey released Monday by the National Sleep Foundation. The survey of 1,000 people... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 12:07 pm
Shares of Airbus' parent company surged Monday after the French planemaker snatched a $40 billion U.S. Air Force contract from its American rival, the Boeing Co. Shares of European... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 12:05 pm
Although you won't find it listed on your calendar, we're approaching the anniversary of an epochal event. No, it has nothing to do with the NCAA basketball tournament. It's a different kind of March Madness: The end of the bull market that lasted for a generation and changed the way that Americans think about stocks.
PHILADELPHIA (Reuters) - E*Trade Financial Corp. plans to give Chairman Donald Layton the additional role of chief executive officer, The Wall Street Journal reported on Sunday. Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 12:00 pm
Indonesia threatened to terminate the operating contract of Newmont Mining Corp. after the U.S. gold-producing giant failed to meet a Monday deadline to divest a 10 percent stake in one... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 12:00 pm
Banking stocks once more dominated the selling, despite solid earnings from HSBC, amid concerns of fresh subprime-related losses. Gold continued to close in on $1,000 and the dollar fell Source: FT.com - US homepage | 3 Mar 2008 | 11:59 am
U.S. stock futures pointed to further declines Monday as investors awaited figures on manufacturing and construction spending to gain a better sense of how the economy is faring. Wall... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 11:57 am
Stocks looked set to kick off the first trading day of March on a downbeat note, as worries about the slowing economy and weak dollar continued to stalk investors.
Australian miner Oxiana Ltd. will buy rival Zinifex Ltd. in a share swap worth $5.8 billion, the two companies said Monday, creating the world's second-largest producer of zinc. The... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 11:55 am
Game Group, whose top two directors sold most of their shares last week, said
today that sales of consoles had been strong and this year's pre-tax profit
would be at least £74 million, slightly more than it had previously
indicated. Source: Latest Business News from Times Online | 3 Mar 2008 | 11:51 am
European and Asian stock markets tumbled Monday as investors reacted nervously to a steep decline on Wall Street Friday after disappointing economic and corporate news rekindled worries... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 11:50 am
Banking group HSBC Holdings PLC said Monday that profit rose 21 percent in 2007 in the face of hefty impairments on subprime and other loans in North America. The company reported a... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 11:48 am
levels last week, as European and Asian stock markets slid on worries about the U.S. economy. At the same time, the oil and commodities market was supported by the continuing weakness... Source: Infocious RSS raw feed - channel BNewsBusiness | 3 Mar 2008 | 11:43 am
European shares fell sharply on the first trading day of March, as another sell-off in the dollar served to highlight ongoing fears about the state of U.S. economy, although shares in EADS bucked the trend after it and partner Northrop Grumman won a U.S. government contract worth more than $35 billion.
Reuters - Volkswagen will take majority
control of Swedish truck maker Scania (SCVb.ST) in a $4 billion
deal announced on Monday that will bring it a major step closer
to its goal of creating Europe's truck market leader. Source: Yahoo! News: Business | 3 Mar 2008 | 11:37 am
GENEVA (Reuters) - Volkswagen will take majority control of Swedish truck maker Scania in a $4 billion deal announced on Monday that will bring it a major step closer to its goal of creating Europe's truck market leader.
Computer games retailer Games Group cheered investors today by predicting that a range of new video game titles will help the group shrug off the slowdown on the high street. Source: Telegraph Business | 3 Mar 2008 | 11:30 am
A review calls for a free independent money advice service to help consumers with financial matters. Source: BBC News | Business | World Edition | 3 Mar 2008 | 11:21 am
The chief executive of Britain’s most successful independent wine retailer is
stepping down after nearly two decades in charge. Source: Latest Business News from Times Online | 3 Mar 2008 | 11:19 am
The FTSE 100 fell more than 100 points on Monday morning as heavy overnight losses on Asian markets followed Friday's steep losses on Wall Street.The financials led the fallers, despite news of record... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 11:11 am
Gamblers on particularly bad losing streaks helped Paddy Power, Ireland's
biggest betting group, achieve a 53 per cent rise in pre-tax profit to £75.8
million for 2007. Source: Latest Business News from Times Online | 3 Mar 2008 | 11:05 am
Pearson, the education publisher and owner of the Financial Times, beat analysts' expectations with adjusted pre-tax profits of 549m in 2007 in its preliminary full-year results released on Monday.The... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 11:05 am
Gazprom, Russia's gas monopoly, cuts supplies to Ukraine by 25% after talks end in failure. Source: BBC News | Business | World Edition | 3 Mar 2008 | 11:02 am
Mining company Xstrata said that it was still in talks about a possible takeover by Brazilian rival Vale, as it shrugged off fears that a downturn in the US would hit growth in its key markets, including China. Source: Telegraph Business | 3 Mar 2008 | 11:00 am
HSBC has revealed a record $17.2bn (£8.1bn) of bad debts but sought to reassure investors that it is containing the sub-prime crisis by lifting its dividend in line with its banking peers. Source: Telegraph Business | 3 Mar 2008 | 11:00 am
Shares in Europe and Asia fall sharply on continued concerns about the health of the US economy. Source: BBC News | Business | World Edition | 3 Mar 2008 | 10:59 am
Reuters - Stock index futures fell before the
start of Wall Street trading on Monday with eyes on a
manufacturing survey for signals of further Fed rate cuts, and
on Boeing after the aircraft maker lost a big contract.
After Friday's market meltdown, Portfolio.com sought out the advice of Dani Hughes, the president and founder of Divine Capital Markets, a boutique investment firm. Here's her take on what the markets could bring this week and a few spots where investors might actually make some money.
Back in the good old days, bad news could only send the market higher; sub prime writedowns, a credit crisis, $200 billion in writeoffs would have all been seen as good, healthy stuff.
Not this time. Friday was a wake up call to the realities of an economic slowdown and looming inflation, and we expect to see the market follow through on that idea this week. The month of March historically starts out strong and loses strength; it's also usually the weakest month of an election year.
This week the market will get a spate of economic reports that will most likely be soft—January construction spending on Monday and weekly Jobless claims on Wednesday primary among them—but the bad news they're expected to carry will stick to the market instead of sliding off its back.
The housing sector was poised for a fall for two years before the subprime mess pushed Humpty Dumpty off the wall. The slicing and scrambling of mortgages—both subprime and otherwise—prevented investors from truly understanding the risk those investments presented.
Speculators played "flip this house," banks played "flip this mortgage"—moving money around too quickly for the rest of us to fathom. Finally, Mommy Fed and Catch-Up Congress both stepped in. They advised desperate homeowners to refinance and promised everyone a few hundred dollars to spend at the mall.
What's come out of this crisis is that the market's trading range has narrowed, and participation has decreased. While traders and speculators churn out the last bits of spread waiting for the market to respond, investors have stayed resolutely on the sidelines.
Still, with the global economy still booming, smart market pros are looking to pick their spots. Here are some stocks and exchange-traded funds that I own and my firm recommends:
Despite moderating demand in consumer and computer markets, semiconductor maker Diodes Inc. produced record revenue, expanding gross margins, consolidated operations and a mix of higher margin products.
We expect Corning's financial strength to continue to improve, the debt to recede, the dividend to increase and the credit rating to move from BBB+ to A-. Five of the company's operating segments achieved lowest cost in Southeast Asia. Its net sales could continue to expand 10 percent to 15 percent.
To profit from the real estate bust and credit crunch, watch Ultra Short ETF's gain momentum with investors; Ultra Short Financialsand Ultra Short Real Estate are two standouts. PowerShares DB Agriculture has been a popular ETF with those who believe agricultural prices will continue to rise in this environment.
Reuters - Miner Xstrata posted a 13 percent rise
in annual net profit on Monday on strong output and said it was
still scouting for other acquisitions during takeover talks
with suitor Vale of Brazil. Source: Yahoo! News: Business | 3 Mar 2008 | 10:23 am
The management agency behind Simon Cowell and Ant & Dec has been snapped
up by the company that represents Wayne Rooney and provides financial advice
to Oasis and Bjork. Source: Latest Business News from Times Online | 3 Mar 2008 | 10:22 am
Europe joined equity market sell-off on Monday, as the dollar fell to a fresh low against the yen and commodity prices remained close to record levels.As European stock markets opened for business, gold... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 10:21 am
Leave it to Warren Buffett to find a way to make millions - perhaps billions - of dollars in profits by selling the instruments he once termed "financial weapons of mass destruction."
The UK's biggest bank, HSBC, unveils a $17.2bn (£8.7bn) loss after the decline in the US housing market. Source: BBC News | Business | World Edition | 3 Mar 2008 | 10:09 am
SYDNEY (Reuters) - Australian miner Oxiana Ltd launched an agreed A$6.1 billion ($5.7 billion) takeover offer for Zinifex Ltd on Monday, looking to diversify to benefit from booming global minerals demand.
European stocks fell on Monday morning as investors followed on from jittery trading last week by retreating from the banking sector amid fears of yet more writedowns due to sub-prime exposure.UBS, led... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 10:06 am
Israeli troops pulled out of the Gaza Strip after a US appeal to end days of fighting that killed more than 100 Palestinians and rescue peace talks. Israel
's incursion was the biggest offensive in years against Hamas Source: FT.com - US homepage | 3 Mar 2008 | 9:49 am
HSBC on Monday reported record pre-tax profits of $24.2bn for 2007 despite a sharp increase in bad debts that almost wiped out profits in its North American division.The bank, which is under fire from... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 9:48 am
The UK's biggest bank reported a rise in annual profits to $24.2bn despite a collapse in US earnings on the back of $11.7bn of loan losses. In aa apparent concession to critics of the bank's corporate governance three-non execs go and execs in Hong Kong and Asia are promoted to the board Source: FT.com - US homepage | 3 Mar 2008 | 9:48 am
HSBC on Monday reported a 21% rise in profit for 2007, driven by growth in Hong Kong and Asia, even as its earnings from North America were virtually wiped out by an ill-fated push into the subprime-mortgage market.
A surge in the yen, an insider dealing scandal and signs that America's
sub-prime crisis has spread to the Japanese consumer lending industry
triggered a huge sell-off of Tokyo stocks and sent the Nikkei 225 Index into
a 4 per cent nose-dive. Source: Latest Business News from Times Online | 3 Mar 2008 | 9:32 am
Xstrata on Monday said it was still talking with Brazil’s Vale on a deal after reporting that its profit more than tripled for the year, helped by the $18 billion acquisition of Canada’s Falconbridge and by ravenous emerging-markets demand for metals.
United Technologies Corp. proposed to acquire Diebold Inc., the producer of automatic teller machines, voting terminals, retailing systems and other technology, for $40 a share, or $2.63 billion.
Asian markets were battered on the first day of trading in March as pessimism extended across across the region after an onslaught of bad news on Friday compounded fears of a US recession and concerns... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 9:06 am
HSBC signalled that it was prepared to sell off peripheral assets today as
booming annual profits were hit by a $17.2 billion ($£8.7 billion) writedown
on bad debts and credit losses driven by its embattled American operation. Source: Latest Business News from Times Online | 3 Mar 2008 | 9:00 am
The rush into secure (?) havens has accelerated over the past few weeks as US Treasury Bond yields slip below 2pc and Gold and other precious metals reach for the sky. Source: Telegraph Business | 3 Mar 2008 | 9:00 am
Close Brothers said on Monday it planned to continue to expand its current business as interim profits at the banking, corporate finance, asset management and securities trading group slumped following... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 8:58 am
Australian miner Oxiana has launched an agreed A$6 billion ($£2.8 billion)
takeover offer for local rival Zinifex in a bid to create the world's
second-largest producer of zinc. Source: Latest Business News from Times Online | 3 Mar 2008 | 8:55 am
Xstrata on Monday sought to demonstrate its superiority over peers as it reported full-year earnings before interest, tax, depreciation and amortisation up 7 per cent at some $11.3bn.The Swiss-based miner... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 8:51 am
HSBC has revealed a record $17.2bn (£8.1bn) of bad debts but sought to reassure investors that it is containing the sub-prime crisis by lifting its dividend in line with its banking peers. Source: Telegraph Business | 3 Mar 2008 | 8:45 am
Barclays shrugged off the political uncertainties swirling through Russia as
it unveiled a $745 million ($£373 million) deal to buy Expobank, a retail and
commercial bank concentrated in Moscow and St Petersburg in the country's
western region. Source: Latest Business News from Times Online | 3 Mar 2008 | 8:44 am
Pearson, the education publisher and owner of the <i>Financial Times</i>,
today announced strong profits for last year but its shares dropped sharply
due to investor concern about the group's reliance on the US economy. Source: Latest Business News from Times Online | 3 Mar 2008 | 8:34 am
Barclays on Monday agreed to buy Expobank, a small Russian retail and commercial banking group operating in Moscow and St Petersburg, for 373m ($745m).The bank, which has 32 branches and one of the biggest... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 8:26 am
Volkswagen, Europe's largest carmaker, on Monday was on the verge of becoming the continent's biggest truckmaker too as it agreed to buy a majority stake in Sweden's Scania. The move by VW to buy the 31... Source: Infocious RSS raw feed - channel BNPaperBusiness | 3 Mar 2008 | 8:19 am
Barclays has bought Russian bank Expobank for £373m in a bid to boost its presence in emerging markets. Source: Telegraph Business | 3 Mar 2008 | 8:10 am
An investor might shrug off one gloomy reading on the job market, service sector or manufacturing as an anomaly, but two starts to smell like a trend. With fears of recession at their highest levels yet, Wall Street hopes this week's economic reports don't turn the remaining optimists into doomsayers.
Technological advances reflect the need for mechanical helpers to replenish the workforce as the country's population gets older.
At a university lab in a Tokyo suburb, engineering students are wiring a rubbery robot face to simulate six basic expressions: anger, fear, sadness, happiness, surprise and disgust.
Justices could shield FDA-backed drugs from suits, as they did for devices. Critics say the agency is fallible.
Years of high-profile court battles over drugs such as Vioxx and Celebrex, along with billion-dollar settlements and jury verdicts, could soon be a thing of the past.
The sub-prime debacle is spurring a big-money litigation free-for-all.
Insurance lawyer David Grais has been poring over equations in finance books to get up to speed on his new specialty: lawsuits stemming from the sub-prime mortgage debacle.
The Will Ferrell comedy is No. 1 with $15.3 million, but it was expected to shoot much higher.
The gloomiest week in New Line Cinema's 40-year history ended with a clunk as the Will Ferrell basketball comedy "Semi-Pro" opened to an estimated $15.3 million, below box-office expectations for about $10 million more.
The retailer's scores are set by an in-house critic, raising concerns over whether they are advice or ads.
Walk down the aisle of any Beverages & More store and you'll be confronted by boxes and bottles of wine -- and a bevy of wine scores. There are 89 points for the Sterling Napa Valley Sauvignon Blanc and 90 points for a Beaulieu Vineyards Rutherford Cabernet Sauvignon.
Consumers and global companies benefited, but critics see pitfalls.
Four campaign seasons have come and gone since presidential hopeful H. Ross Perot warned that NAFTA would create a "giant sucking sound" of jobs going to Mexico, and the trade pact is still generating plenty of noise. Calls to renegotiate the 14-year-old deal are rising from both sides of the border.
In a nation with heavy consumption, Masdar City will ban cars and rely on solar power.
This Persian Gulf desert nation, one of the world's most environmentally unfriendly with its ubiquitous air conditioning, swimming pools and sport utility vehicles, may be looking to redeem itself. It has begun building what it calls the world's first zero-carbon city.
For years, JetBlue Airways Corp. turned up its nose at flying out of Los Angeles International Airport, saying that LAX was too big, too crowded and, well, that it just preferred to operate out of smaller hubs.
It's safe to say that no one at The New York Times Co. is happy about the need to compromise the company's greatest asset—the peerless news-gathering operation of its namesake newspaper—in the face of growing costs and shrinking revenues.
But that's not to say there aren't those who regarded last month's announcement of plans to downsize the newsroom by 100 positions as a victory of sorts.
According to a number of current and former New York Times employees, that decision marked the culmination of a period of heightened hostility between the paper's business side, which felt that it had made more than its share of sacrifices in previous round of cost-cutting, and the editorial leadership, which favored doing everything possible to protect the paper's competitiveness.
"It's been an ongoing tension for awhile," says one source close to the business management. "The business side believes they've taken the majority of the hits so far while the newsroom has stayed untouched."
Even the present round of cuts, notes the source, will do no more than restore the newsroom's staffing level to where it was three years ago, around 1,200—and that's not even counting journalists on the digital side.
"They just went too long without significant newsroom cuts," agrees a former editor. "And every time there were cuts, the business side got increasingly perturbed because the news department was so protected."
Of course, a tug-of-war between editorial and business interests is a fixture of every newspaper (and magazine, and TV network, and blog network...)—a point one source in Times management was quick to make.
"This is something that's persisted for years and years now," says the source, who like other employees agreed to speak candidly only if not identified. "Everybody in the newsroom, reporters as well as top management, understands the business environment. This isn't some marital dispute that's led to the baby being put up for adoption."
But a former executive insists the sense of aggrievement had, in fact, become acute. "There's always a natural tension" between the business side and the newsroom, he says. "This goes well beyond that. It had become more than just a normal debate."
In this source's view, the cuts under way now are as much about mending this rift as they are about improving the bottom line.
"It's symbolism," he says. "It's not like the $5 million or $10 million or whatever the number is is going to get them into significantly better business performance. I don't think the problem with the Times is that the newsroom is inefficient by 2 or 3 percent.
"The real issue is, What is the business side doing to monetize the content? Are they doing all that they can to operate in such a way that the business could be profitable enough to pay for all that great journalism?"
Of course, it's not as though the Times is alone in turning to head-count reduction to get through the present economic crunch. The Washington Post, Los Angeles Times, USA Today, and Newsday on Long Island have all recently announced workforce cuts including newsroom positions.
But the Times has never been just another newspaper, says Ben Bagdikian, emeritus professor at University of California at Berkeley's School of Journalism. Rather, it's the newspaper all other papers take their cues from. "Given the importance of the Times, any cutback is significant," he says.
And the Times faces some unique pressures. First, there are the two hedge funds that are aggressively pushing actions they consider necessary to improve profits—selling The Boston Globe and focusing more on digital growth. As of Friday, when the funds formally proposed four directors to the Times Co. board, it was unclear whether the company would have a proxy fight on its hands.
Then, of course, there's the hugely increased threat the Times faces from The Wall Street Journal, whose new owner, Rupert Murdoch, has made clear his intention to challenge the Times 's dominance in political news, cultural coverage and other areas.
"Having a big fat debate between the business side and the newsroom side while Murdoch's saying 'I'm going to take you out'—tell me how that's supposed to make sense," says the former executive. "They ought to be looking outward, at how they can work together."
And then there's also the added strain of covering a presidential election, two foreign wars and the Beijing Olympics all simultaneously.
"Since they're doing it in this context, they're obviously feeling a lot of pressure—or they've realized that they're overstaffed," says Charles Kaiser, a former Times reporter and Newsweek press critic.
In short, it's hardly a convenient time for the Times to be losing people like Linda Greenhouse, the longtime Supreme Court correspondent who accepted a $300,000 buyout. "A lot of people were shocked by that," says a veteran Times man.
Not as shocked as they may be in the near future, however. The deadline for accepting buyouts is tomorrow; if enough people don't step forward, Times management will resort to layoffs to make up the difference.
"It will be very shocking if they have to resort to layoffs," says long-tenured writer. "People here are used to the idea that that doesn't happen here."
Can buyout-king Ronald Perelman be trusted with a blank check?
Investors have long craved the chance to follow big-name moneymen like Perelman into deals. But plowing cash into the billionaire's MAFS Acquisition Corp.—one of a spate of so-called Special Purpose Acquisition Companies, or SPACs, about to hit the market—carries a host of financial risks, none of which have to do with his ex-wife Ellen Barkin.
Perelman is among a slew of financial titans and luminaries now looking to score with a SPAC, with everyone from Apple co-founder Steve Wozniak and Triarc C.E.O. Nelson Peltz to the retired C.I.A. director George Tenet and former Vice President Dan Quayle seeing opportunity to mint new riches.
The problem is that such gains may not trickle down to the hoi polloi. The market for SPACs, which are publicly traded corporate shell companies that hunt for merger opportunities, is getting crowded. Sponsors have been quietly watering down essential investor protections. And public investors in many SPACs have already seen dismal returns.
In fact, this strange corner of the market holds the increasing potential to leave SPAC shareholders with crumbs while their big name sponsors makes a mint on the I.P.O.
Such worries haven't slowed down the SPAC underwriting train. More than $12 billion in SPACs went to market last year, accounting for about one-quarter of all initial public offerings. Nearly $3 billion in SPACs went public over the first 45 days of 2008. This is close to the total $3.3 billion in SPACs that were priced in all of 2006, according to Dealogic.
The numbers continue to grow even as longtime SPAC underwriters worry that recent mega-SPACs have already sucked away the liquidity necessary to support them. Thirty-four SPACs, with an estimated combined value of about $7.9 billion, are in the pipeline.
And as the market has zoomed ahead recently, a curious thing has happened to some of the basic investor protections that were once standard fare in a SPACs prospectus. With a cut here and a rewording there, they've been reduced.
"They don't call these things blank-check companies anymore, but that is effectively what they are," says Dirk Jenter, professor of finance at Stanford University, adding that the first blank check companies floated in the 1980s worked wonderfully, as have many of the early SPACs.
But "the pattern you see in financial innovations always seems to run the same way. I'm worried that we might be right around the cusp where people made good money, but now the less sophisticated are getting involved and being offered worse deals and worse protections."
With the moribund I.P.O. market, it's easy to see why underwriters like SPACs—they generate hefty fees. Perelman's MAFS, for instance, expects to pay its underwriter, Citigroup Global Markets Inc., nearly $40 million in fees. That sort of money has attracted other bulge-bracket banks like UBS, Lazard, Bank of America, and Deutsche Bank to this former backwater.
The founders of SPACs like the deals because, in a time of tight credit, they are able to take large and controlling positions in a cash-rich acquisition vehicle for a few cents on the dollar.
This has obvious allure to Perelman who used a supermarket chain to gobble up a cosmetics giant, bought out a comic book empire using the remnants of a video-rental company, and turned a maker of licorice extract into a collection of businesses encompassing check printing, test scanning, and data management.
If MAFS successfully completes an acquisition, its sponsor and management team—essentially Perelman and his closely held company MacAndrews & Forbes Holdings Inc.—will control 20 percent of the shares.
Still, just because such investing whales do well for themselves, does not mean that those who follow will reap the same rewards—just ask those who've stuck with Perelman-controlled Revlon, which has gone from an iconic American brand to a financial life support, struggling under its own debt and a stock price that can barely lift its head above one dollar.
SPACs also have a spotty history. In the 1980s, scam artists running blind pools, a SPAC forerunner, fleeced many investors. When SPACs started percolating in 2005, attorneys general in several states protested the American Stock Exchange's willingness to list them.
Backers countered that SPACs had been reformed. Most SPACs, for instance, held at least 80 percent of the proceeds from an offering in trust until an acquisition was made. The companies acquired generally had to have a market value of at least 80 percent of the SPACs assets, and most SPACs required 80 percent of shareholders to approve an acquisition for it to go through. If no acquisition target was found within a set period, typically two years, then investors were supposed to get their money back with interest, minus expenses.
John Nestor, a spokesman for the Securities and Exchange Commission, says the S.E.C. currently has no concerns about the proliferation of SPACs, adding that most of them do "seek shareholder approval and offer shareholders the opportunity to get their money back instead of holding an interest in the combined entity."
But not all SPACs are created equal. The Financial Industry Regulatory Authority says it has open investigations in the area and that it is looking at how SPACs are both marketed and sold. State regulators have voiced concerns about price manipulation.
Meanwhile, several recent entrants have quietly chiseled away what were once standard protections outlined in their S.E.C. filings, protections at the very heart of SPACs current popularity boom.
Perelman-controlled MAFS has continued to reduce the level of shareholder voting rights with every subsequent filing of its proposed $500 million I.P.O. As of Feb. 12, the registration statement notes that an acquisition will go through if as few as 60 percent of MAFS stockholders agree.
To make sure MAFS shareholders don't work together to stop an acquisition, any single stockholder, or stockholders acting as a "group," who controls more than 10 percent of the shares and votes against an acquisition, will be prohibited from converting more than 10 percent of their shares into cash.
The filing notes that the changes will make it easier for MAFS to finalize an acquisition, explaining that "we believe we have limited the ability of a small group of stockholders to unreasonably attempt to block a transaction which is favored by our other public stockholders."
A spokeswoman for Perelman declined to comment for this story, noting that MAFS is in its quiet period.
Confronted with the fact that SPAC investors have balked at several proposed mergers, sponsors see such loosening of restrictions as necessary to keep their SPAC from being greenmailed by hedge funds or other investors.
But Stanford's Jenter doesn't buy that argument. If a SPAC's investment team finds a good acquisition, he asks, "why wouldn't investors vote yes?" And even if there was a problem convincing some stockholders of the deal's merits, other investors would certainly see their folly and buy up shares in the open market.
Such restrictions on investor rights can raise serious questions about the sponsor's intentions, adds Donghang Zhang, an assistant professor of finance at the University of South Carolina who studies SPAC listings.
"It may not be the case that they used a technical loophole to avoid the regulations," he says. "But these deviations nevertheless are alarming in that the sponsors may find they can sell the deals without offering the protections."
The investor protections outlined in SPACs are of particular importance because sponsors face a host of potential conflicts. They are given wide latitude in choosing a deal, are sometimes allowed to buy companies in which they or their officers have an interest, and, perhaps most crucially, they can receive a big payoff whenever a deal is sealed, even if the company being bought is a bad fit, or was purchased at an inflated price.
An unhappy SPAC investor's main recourse in such cases is his ability to vote against a merger, or cash out his investment and walk away.
Service Acquisition Corp. International started life as a $7 stock. When it announced plans to purchase Jamba Juice, several institutions also ponied up $7.50 a share in a $200 million private placement to help cover what the SPACs original investors couldn't. Now Jamba Juice is barely holding at $2.75.
According to SPAC Analytics, a research firm, the annualized return for all SPACs that have completed an acquisition target since 2003 is a negative 1.4 percent, while those that end up being liquidated return a negative 2.3 percent. In an example of the premium paid for hope, SPACs that have yet to find a target have an annualized return of 1.7 percent.
A recent study by Vijay Jog and Chengye Sun, doctoral students at Ottawa-based Carleton University, put the chasm between management and investor in the SPAC universe in even greater relief.
Shareholders in the 62 blank-check I.P.O.'s they studied earned negative 3 percent annual returns, while management took home a whopping 1,900 percent annualized return.
The most recent MAFS filing makes clear the reason for such stark figures.
"Upon consummation of our offering, our sponsor will continue to exercise significant influence over us," it says, "and its interests in our business may be different than yours."
The New Zealand dollar continued its descent against major trading partners as the US dollar remained weak and investors shied away from risk.
The kiwi closed at US79.44c, from US81.52c on Friday, losing about half a US cent during... Source: New Zealand Herald - Business | 3 Mar 2008 | 5:52 am
WASHINGTON (Reuters) - The combined punch of subprime mortgage defaults and heavy debt remains the biggest risk to the health of the U.S. economy, a panel of business economists said on Monday.
Microsoft take the wraps off a new service designed to repel Google's incursion into one of its core markets, selling software applications to small and medium-sized businesses Source: FT.com - US homepage | 3 Mar 2008 | 5:03 am
People who are already shares scam victims are being targeted a second time round by fraudsters.
The Securities Commission today said that the overseas callers making the offers were part of a new wave of telephone share scams.
Fraudsters... Source: New Zealand Herald - Business | 3 Mar 2008 | 2:30 am
Sir Ron Brierley's Guinness Peat Group (GPG) has lifted its stake in fresh produce distributor and exporter Turners & Growers to 65.1 per cent.
GPG said today it had bought 1.86 million shares, or 1.93 per cent of Turners, from... Source: New Zealand Herald - Business | 3 Mar 2008 | 1:15 am
The world's biggest commercial airliner will begin services to Auckland from February next year.
Emirates will use the superjumbo Airbus A380 on its trans-Tasman route to link up with the rest of network from February 1.
The... Source: New Zealand Herald - Business | 3 Mar 2008 | 1:05 am
Barack Obama looks increasingly likely to secure
the Democratic party's presidential nomination in Tuesday's key primary elections with polls showing him ahead of Clinton in Texas and reducing his deficit in Ohio to 4 percentage points Source: FT.com - US homepage | 3 Mar 2008 | 1:01 am
The Australian stock market has followed the downward trend of the NZX and opened three per cent lower today following large falls on Wall Street on Friday.
At 1010 A Source: New Zealand Herald - Business | 3 Mar 2008 | 1:00 am
CANBERRA - Economic growth in Australia could struggle to reach three per cent over the next decade, well short of expectations, new research has found.
But in some good news for the government, the Australian Industry Group (Ai... Source: New Zealand Herald - Business | 3 Mar 2008 | 1:00 am
UK financial regulators must beef up the way they monitor banks, a report into the credit crunch says. Source: BBC News | Business | World Edition | 3 Mar 2008 | 12:56 am
Glass Earth Gold is reporting that exploration in Otago has led it to new major gold-bearing structures.
The structures were similar to that at Oceana Gold's Otago Macraes gold mine, the company said in a progress report on its... Source: New Zealand Herald - Business | 3 Mar 2008 | 12:30 am
Shares in Cobham are expected to rise this morning following the Pentagon's surprise decision to award one of the largest defence contracts in history to a European backed consortium rather than Boeing, writes Russell Hotten. Source: Telegraph Business | 3 Mar 2008 | 12:01 am
Veuve Clicquot chief executive with a passion for corporate and social responsibility sees no reason to open her company's awards to the opposite sex, writes Sophie Brodie. Source: Telegraph Business | 3 Mar 2008 | 12:01 am
Moss Bros chairman Keith Hamill has laid into the menswear retailer's founding families, calling their decision to speak out against a £40m bid approach from Icelandic retailer Baugur "bizarre" and "damaging". Source: Telegraph Business | 3 Mar 2008 | 12:01 am
The Bank of England is facing one of the biggest dilemmas in its history as it meets this week to consider whether to cut rates to shore up Britain's rapidly slowing economy. Source: Telegraph Business | 3 Mar 2008 | 12:01 am
With the economic news out of the United States growing ever more gloomy, the New Zealand sharemarket started the week awash in red ink.
By 10.10am today the benchmark NZSX-50 was down 25.33 points, or 0.7 per cent, to 3557.39... Source: New Zealand Herald - Business | 2 Mar 2008 | 11:00 pm
Tensions between the radical government of Venezuela and pro-US Colombia reached new heights battalions to move to the frontier between the two countries Source: FT.com - US homepage | 2 Mar 2008 | 10:26 pm
Commodities prices posted their biggest monthly gains in February since the oil crisis of the 1970s and have enjoyed their strongest start to any year for half a century Source: FT.com - US homepage | 2 Mar 2008 | 10:07 pm
Protectionist pressures are increasing across Europe, even among political forces traditionally committed to free markets, says José Manuel Barroso, European Commission president Source: FT.com - US homepage | 2 Mar 2008 | 10:01 pm
European banks, unlike their US counterparts, borrowed heavily from other banks to fund a spurt in lending to companies in the run-up to a global credit crunch, the Bank for International Settlements said.
The scale of borrowing... Source: New Zealand Herald - Business | 2 Mar 2008 | 10:00 pm
Reserve Bank-watchers see no chance at all that Governor Alan Bollard will cut the official cash rate from 8.25 per cent on Thursday.
Instead they will scrutinise the language of the March monetary policy statement, and the forecasts... Source: New Zealand Herald - Business | 2 Mar 2008 | 9:00 pm
Senior US politicians lashed out at the decision to award EADS, the European defence group, a $35bn contact to supply refuelling tankers to the air force instead of American rival Boeing Source: FT.com - US homepage | 2 Mar 2008 | 8:21 pm
Billionaire investor Warren Buffett hits back at US critics of sovereign wealth funds. Source: BBC News | Business | World Edition | 2 Mar 2008 | 7:08 pm
Iran's Mahmoud Ahmadi-Nejad became the first regional head of state to visit Iraq since the 2003 US-led invasion, underlining Tehran's close relations with its former enemy and staging a symbolic show of defiance of the US Source: FT.com - US homepage | 2 Mar 2008 | 2:39 pm
Reuters - HSBC's profits rose 10 percent
last year as buoyant growth in Hong Kong and elsewhere in Asia
helped Europe's biggest bank absorb $17.2 billion in bad debts
as the U.S. housing crisis deepened.
Reuters - World stocks tumbled while the dollar
plumbed record lows on Monday as fresh concerns about the
health of the banking sector and a U.S. recession drove
investors to safe-haven gold and government bonds.