Comic book legend Stan Lee, who co-created some of the world's best-known
superheroes, including Spider-Man, X-Men and the Hulk, has been recruited to
create a new line of characters for Sir Richard Branson’s upstart Virgin
Comics. Source: Latest Business News from Times Online | 22 Apr 2008 | 7:37 pm
More than six months in to the credit crunch and the Bank of England announced that it would lend Britain's high street banks an unprecedented £50bn in an effort to flush out the sub-prime toxic in the country's banking system. Source: Telegraph Business | 22 Apr 2008 | 12:45 pm
AT&T (T) had a good quarter, powered by its wireless service. For the quarter ended March 31, 2008, AT&T’s revenues totaled $30.7 billion, up 6.1 percent versus reported results in the year-earlier quarter. The company reported first-quarter 2008 net income totaled $3.5 billion, up 21.5 percent from $2.8 billion in the year-earlier first quarter, and reported earnings per diluted share totaled $0.57, up 26.7 percent from $0.45 in the first quarter of 2007. Total wireless revenues increased 18.3 percent versus the year-earlier first quarter to $11.8 billion. Wireless service revenues, which exclude handset and accessory sales, grew 17.1 percent to...
The government will review the economic regulation of the UK's airport system amid calls for it to be shaken up. Source: BBC News | Business | World Edition | 22 Apr 2008 | 12:30 pm
Yahoo! is keeping Silicon Valley on tenterhooks today, eagerly awaiting the internet search giant's first quarter results, ahead of a Saturday deadline that Microsoft has set for its $42bn bid for the company. Source: Telegraph Business | 22 Apr 2008 | 12:30 pm
Royal Bank of Scotland’s decision to take a much more conservative view on both capital and write-downs could indicate more pain for the likes of Barclays and HBOS in coming months, according to analysts.
WASHINGTON (Reuters) - JetBlue Airways Corp posted a narrower-than-expected loss on Tuesday as stronger revenue partially offset skyrocketing fuel costs.
BAA, the world’s largest airport operator, may be forced to sell some of its assets after a U.K. antitrust regulator said its dominance of the market appears to be restricting competition.
Lehman Brothers has initiated major technology companies in new analyst coverage this morning. The broker has a mixed call in the sector. Overweight rated stocks are Apple, Inc. (NASDAQ: AAPL) with a $195.00 target; IBM (NYSE: IBM) with a $144.00 price target; and Hewlett-Packard (NYSE: HPQ) with a $59.00 price target. Equal-Weight rated stocks are Dell, Inc. (NASDAQ: DELL), EMC Corp. (NYSE: EMC), Network Appliances (NASDAQ: NTAP), and Sun Microsystems (NASDAQ: JAVA). So far, almost all of these names are close to unchanged in quiet pre-market trading. Jon C. Ogg April 22, 2008 Jon Ogg is a producer of and...
LONDON (Reuters) - Royal Bank of Scotland unveiled a record 12 billion pound ($24 billion) rights issue to cover a potential 5.9 billion pound writedown on the value of toxic assets and help rebuild a stretched balance sheet.
McDonald's (MCD) had a blow-out quarter. Global comparable sales increased 7.4%, Revenue rose 6% to $5.615 billion. Operating income was up 24% to $1.463 billion. Earnings per share were $0.81, up 31% versus $0.62 in 2007, and included $0.05 per share of currency benefit. For the quarter, Europe and Asia/Pacific, Middle East and Africa both delivered double-digit revenue and operating income growth. Europe's revenues rose 23%. McDonald's U.S. delivered solid quarterly results with comparable sales up 2.9% and operating income increasing 5% Douglas A. McIntyre
AT&T Inc. on Tuesday reported first-quarter earnings jumped 22%, as the giant phone company added 1.3 million net wireless customers and was largely unaffected by a slowing U.S. economy.
NEW YORK (Reuters) - Top U.S. phone company AT&T Inc on Tuesday reported a rise in quarterly profit led by strong growth in its wireless business, although traditional phone subscriptions fell.
Among the companies whose shares are expected to see active trade in Tuesday’s session are the oil-services companies Baker Hughes, Nabors, and Smith International, as well as CME, Crane, DuPont, Equifax, Fifth Third, Intrepid Potash, Journal Communications, Lockheed Martin, Netflix, News Corp., Rohm & Haas, SunTrust, Texas Instruments and Yahoo.
Modesto, Calif. has the highest rate of auto theft per capita of any metropolitan area in the country, according to data from the National Insurance Crime Bureau.
These are some of the top analyst calls that we are focusing on this Tuesday morning in pre-market trading hours: Alliance Data (NYSE: ADS) raised to Overweight at JPMorgan. Garmin Ltd. (NASDAQ: GRMN) started as Neutral at JPMorgan. Host Hotels & Resorts (NYSE: HST) Cut To Hold From Buy By Deutsche Bank. Jefferies Group (NYSE: JEF) Cut to Neutral at Banc of America. Medco Health Solutions (NYSE: MHS) raised to Buy at Jefferies. National City (NYSE: NCC) raised to Buy at Deutsche Bank; Downgraded to Underperform at Bear Stearns. Red Hat (NYSE: RHT) started as Buy at Piper Jaffray. Salesforce.com...
Banks trade mostly lower in London amid growing speculation that Royal Bank of Scotland will be the first of many to turn to its shareholders for capital.
Engineering conglomerate FKI has recommended a £478m, 81p-a-share cash and paper offer from turnaround vehicle Melrose. Source: Telegraph Business | 22 Apr 2008 | 11:59 am
Engineering conglomerate FKI has recommended a 478m, 81p-a-share cash and paper offer from turnaround vehicle Melrose. Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 11:59 am
Reuters - Health insurer UnitedHealth Group Inc
on Tuesday posted a lower-than-expected first-quarter
profit, hurt by weakness in its business serving employers and
lower investment income, and slashed its full-year earnings
forecast by 10 percent. Source: Yahoo! News: Business | 22 Apr 2008 | 11:54 am
What makes a Ford a Ford? The question is simple, and a 105-year-old company should know how it wants its cars to look, feel, and drive: the resistance in the steering wheel, the spring in the seats, the rumble from the exhaust. But Ford is still struggling to find an answer. So on a blustery spring morning, CEO Alan Mulally and 25 top executives from the United States and Europe meet at a test track near company headquarters in Dearborn, Mich., to tease that question out, one component at a time.
U.S. stock futures edged lower on Tuesday, as markets failed to get a footing before earnings from AT&T, McDonald’s and other corporate titans as well as data that could show existing-home sales back on the decline.
Reuters - CIT Group Inc , a commercial
finance company trying to raise cash amid the global credit
crisis, on Tuesday said it sold $1.5 billion of common stock
and convertible preferred stock, 50 percent more than planned,
in offerings that dilute existing shareholders. Source: Yahoo! News: Business | 22 Apr 2008 | 11:45 am
NEW YORK (Reuters) - CIT Group Inc , a commercial finance company trying to raise cash amid the global credit crisis, on Tuesday said it sold $1.5 billion of common stock and convertible preferred stock, 50 percent more than planned, in offerings that dilute existing shareholders.
NEW YORK (Reuters) - Wyeth on Tuesday said its first-quarter net profit fell slightly, hurt by the sudden launch early this year of a generic form of its Protonix ulcer drug, but surprisingly strong sales enabled the company to beat Wall Street profit forecasts.
NEW YORK (Reuters) - Lockheed Martin Corp said on Tuesday quarterly profit rose 6 percent, helped by higher sales of its electronic, information and space systems.
NEW YORK (Reuters) - Lockheed Martin Corp said on Tuesday quarterly profit rose 6 percent, helped by higher sales of its electronic, information and space systems. Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:34 am
TOKYO (Reuters) - Nomura Holdings , Japan's largest brokerage house, said on Tuesday that it had fired an employee at the centre of an insider trading ring and warned the fallout could harm Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:33 am
Reuters - Stock index futures were little
changed on Tuesday as earnings painted a mixed picture, after
microchip maker Texas Instruments Inc forecast results
below Wall Street estimates, offsetting robust profits from
chemical company DuPont Co .
NEW YORK (Reuters) - Stock index futures were little changed on Tuesday as earnings painted a mixed picture, after microchip maker Texas Instruments Inc forecast results below Wall Street estimates, offsetting robust profits from chemical company DuPont Co .
Alitalia flew into the unknown on Tuesday after Air France-KLM withdrew its takeover offer, leaving Italy's long-struggling flagship airline with little choice but to contemplate bankruptcy Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:25 am
Reuters - Oil rose to a record high above $118 on
Tuesday, boosted by a jump in oil demand last month from China,
the world's second biggest energy consumer, and worries about
supply from key producers Russia and Nigeria.
LONDON (Reuters) - Oil rose to a record high above $118 on Tuesday, boosted by a jump in oil demand last month from China, the world's second biggest energy consumer, and worries about supply from key producers Russia and Nigeria.
LogicaCMG, the troubled Anglo-Dutch group, announced today that it would cut
1,300 jobs, including 500 in the UK, after the new chief executive of the IT
services group conducted a company-wide review. Source: Latest Business News from Times Online | 22 Apr 2008 | 11:17 am
BAA owning seven UK airports may not be good for airlines or passengers, the Competition Commission says. Source: BBC News | Business | World Edition | 22 Apr 2008 | 11:14 am
NEW YORK (Reuters) - CIT Group Inc , a commercial finance company hit hard by the global credit crisis, on Tuesday said it sold $1.5 billion of common stock and convertible preferred stock, Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:14 am
The Food and Drug Administration is making progress in conducting more inspections of foreign drug manufacturers, but still inspects relatively few facilities. The agency conducted 30... Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:11 am
NEW YORK (Reuters) - Wyeth said on Tuesday its first-quarter profit fell, hurt by the sudden launch early this year of a generic form of its blockbuster Protonix ulcer medicine. Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:11 am
Samsung Group Chairman Lee Kun-hee said Tuesday he was stepping down after 20 years as chief of South Korea's biggest conglomerate in the aftermath of his indictment on tax evasion and... Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:07 am
UnitedHealth said Tuesday that diminishing investment income and declining membership cut first-quarter profits to "unacceptable" levels, and the insurer slashed its full-year profit... Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:05 am
Exchanges operator CME Group says its profit more than doubled in the first quarter as volume increased by a third. The operator of the Chicago Mercantile Exchange and the Chicago Board Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:01 am
Japan's workforce may shrink by more than one-third by 2050 if the country fails to halt a declining birthrate, the government said Tuesday in a report. The report outlined... Source: Infocious RSS raw feed - channel BNewsBusiness | 22 Apr 2008 | 11:00 am
Manganese Bronze, one of the makers of the iconic London black cab, signs a deal to produce a battery-powered taxi. Source: BBC News | Business | World Edition | 22 Apr 2008 | 10:58 am
Royal Bank of Scotland, the UK's second-biggest bank, asks shareholders for £12bn to bolster its finances. Source: BBC News | Business | World Edition | 22 Apr 2008 | 10:51 am
After the Bank of England's positive efforts yesterday to fix the essential plumbing of the financial system we were brought back down to earth this morning with a reminder from Sir Fred Goodwin of the rubbish that still needs to be flushed through the pipes. Source: Telegraph Business | 22 Apr 2008 | 10:45 am
After the Bank of England's positive efforts yesterday to fix the essential plumbing of the financial system we were brought back down to earth this morning with a reminder from Sir Fred Goodwin of the... Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 10:45 am
Shares in Indian software giant Tata Consultancy Services fall after it reports disappointing earnings. Source: BBC News | Business | World Edition | 22 Apr 2008 | 10:43 am
Wall Street may be hurting, but a banker or a trader can now pick up a silk scarf, a diamond necklace, or even a BMW on a lunch break—something that wasn't so easy during past boom times.
What was once a barren business district has been enlivened by some of the same high-end brands that anchor the famous retail stretches of upper Fifth and Madison avenues. Hermès, Thomas Pink, and Tiffany & Co. all opened locations in the financial district last year, while Canali, Tumi, and Whole Foods are set to arrive in 2008.
The timing of this retailing invasion may seem unfortunate given that banks have been retrenching and cutting tens of thousands of jobs amid a credit crunch. Bonuses, which can account for most of a professional's compensation, will certainly be substantially reduced at the end of the year.
But the influx also shows how much Lower Manhattan has changed, becoming more residential and less dependent on the financial services industry.
"I'm not really concerned with the state of Wall Street," says Christina Minardi, president of Whole Foods–Northeast Region, which has a new store at 270 Greenwich Street. "There's so much new construction in the area, and the economy doesn't seem to be hurting our New York stores so far."
By the end of this year, the residential population of the area south of Chambers Street will have doubled from 2003 levels to 58,000 residents, according to the Alliance for Downtown New York.
Twenty-one new residential buildings opened in 2007, and 35 more projects are in the works.
Luxury units dominate the building pipeline as the area's occupants get older and wealthier. The median income for Lower Manhattan residents has increased 47 percent since 2004, to $163,000, and is now nearly three times greater than the median Manhattan household income.
Liz Berger, the Downtown Alliance's director, says that Tiffany & Co. and Hermès are doing "very well."
"We're an increasingly growing residential market and predominantly luxury market," she says. "Our challenge now is getting residents to live their lives and do their shopping in Lower Manhattan."
And while firms are cutting jobs, some are also expanding their presence downtown. When completed, the new World Trade Center towers, a new Goldman Sachs headquarters, and a J.P. Morgan Chase office tower are expected to add 13 percent to the area's workforce.
An influx of marketing, law, and creative-services firms, meanwhile, has made the neighborhood more diverse. While financial services accounted for 47 percent of employment in 1993, that number was down to 30 percent at the end of 2006.
Robert Cohen, an executive vice president at Robert K. Futterman & Associates, a retail brokerage company, estimates that retail rents in prime retail areas of Lower Manhattan—like those on Wall and Broad streets—have climbed in recent years from $100 to between $250 and $400 per square foot but will probably hold there for the time being.
That's still a bargain compared with average 2007 retail rents per square foot on upper Fifth Avenue of $1,500 and Madison Avenue of $1,091, according to Cushman & Wakefield.
Yet it would still seem to be bad timing to be opening a luxury store on Wall Street.
Merrill Lynch, the largest private-sector employer in Lower Manhattan, announced 3,000 layoffs worldwide last week. Citigroup also said that it would cut 9,000 jobs worldwide, adding to the 4,000 layoffs announced earlier this year. A number of those cuts will be jobs in Lower Manhattan. Goldman Sachs, Deutsche Bank, J.P. Morgan Chase, and Morgan Stanley all operate offices downtown and have announced significant job cuts as well.
And for those left standing at the various firms, 2008 bonus figures are likely to be paltry in comparison with record-breaking sums in recent years.
On a recent weekday afternoon, traffic in the Thomas Pink and Tiffany stores on Wall Street was sluggish before picking up some steam during the postwork rush.
A salesperson at Pink says that the store does its biggest business in the morning, replacing forgotten ties or stained shirts for the harried executives in the area; a Tiffany employee said that the jeweler has found more traction at lunchtime and in the evening and has adjusted store hours accordingly.
"If you rented a space four or five months ago at $400 per square foot on Wall Street, you might be second-guessing it," Cohen says.
He says that the neighborhood's growing population will help retailers but acknowledges that "given the layoffs and nervousness relating to financial markets, it continues to be a market that many people are watching."
Reuters - Chemical company DuPont Co said
on Tuesday that first-quarter earnings rose, spurred by strong
results from its agricultural business. Source: Yahoo! News: Business | 22 Apr 2008 | 10:26 am
Markets in Europe were up modestly. The FTSE rose .3% to 6,069. Barclays (BCS) fell 4.1% to 458.75. RBS (RBS) fell 4% to 357.75. The DAXX was up .3% to 6,807. Deutsche Bank (DB) was off 1.3% to 75.52. VW was up 2.2% to 190.63. The CAC 40 moved up .3% to 4,926. France Telecom (FTE) rose 1.2% to 20.23. Societe Generale fell 1.5% to 72.78. Data from Reuters Douglas A. McIntyre
Outsourcing, already regarded as a threat to Western jobs, is set to get
cheaper: India's largest IT outsourcing group is to give away services for
free in an effort to lure large clients such as Wall Street's beleaguered
banks to sign off big contracts. Source: Latest Business News from Times Online | 22 Apr 2008 | 10:02 am
Royal Bank of Scotland (RBS) will raise as much as $24 billion to bolster its capital position, a dubious record which US banks will not want to match anytime soon. The big UK bank will write-down close to $6 billion in bad assets and cut its balance sheet. The bank's shares sold off on the news. According to Bloomberg, RBS said it forecast was ``inevitably clouded'' by market turmoil sparked by the U.S. subprime mortgage market meltdown. And, why not? Subprime mortgage failures are likely to rise this summer as more ARMs reset and homeowners lose jobs due to the...
Mortgage arrears are growing at one of the UK's biggest mortgage lenders, the Bradford and Bingley . Source: BBC News | Business | World Edition | 22 Apr 2008 | 9:49 am
Lee Kun-hee, Samsung Groups chairman, indicted on tax evasion charges, announced that he would step down after 20 years of leadership. Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 9:47 am
RBS has confirmed plans to launch a £12bn rights issue, cut in its dividend and sell a series of assets to shore up its ailing balance sheet. Source: Telegraph Business | 22 Apr 2008 | 9:45 am
Sir Fred Goodwin and Sir Tom McKillop, Royal Bank of Scotland's chief executive and chairman, spoke publicly for the first time this morning about the bank's plans to raise £12bn of capital to shore up its balance sheet.' Source: Telegraph Business | 22 Apr 2008 | 9:40 am
Sir Fred Goodwin and Sir Tom McKillop, Royal Bank of Scotland's chief executive and chairman, spoke publicly for the first time this morning about the bank's plans to raise 12bn of capital to shore up... Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 9:40 am
The mid-month reports on short interest in NYSE shares showed that many short sellers moved out of big financial stocks but made large bets against airlines and auto companies. With the prices in these industries already at multi-year lows, some shorts have to be betting that one or more of the big companies will fill Chapter 11. The short interest in Citigroup (C) fell 7.6 million shares to 120.2 million. Shares short in Wachovia (WB) dropped 3.7 million to 102.8 million. The short interest in NCC (NCC) dropped 4.7 million to 59.9 million. Short interest in Wells Fargo (WFC) and...
Britain's biggest buy-to-let lender, Bradford & Bingley, said it is weathering the crisis in the credit markets by hiking its mortgage rates and cutting back on customers with bad credit ratings. Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 9:30 am
Britain's biggest buy-to-let lender, Bradford & Bingley, said it is weathering the crisis in the credit markets by hiking its mortgage rates and cutting back on customers with bad credit ratings. Source: Telegraph Business | 22 Apr 2008 | 9:30 am
FRANKFURT, April 21 (Reuters) - Germany's BdB banking association has taken control of property lender Duesseldorfer Hypothekenbank and plans to sell it, after the lender ran into problems linked to the... Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 9:23 am
Air France-KLM on Monday night withdrew its offer to buy Alitalia, presenting the incoming government of Silvio Berlusconi with the prospect of persuading an unwilling Italian consortium to take over the... Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 9:05 am
The chairman of Samsung, the most powerful tycoon in South Korea, has fallen
on his sword after an unprecedented investigation of his business affairs. Source: Latest Business News from Times Online | 22 Apr 2008 | 8:55 am
Resource stocks helped London equities recover from opening losses on Tuesday after Royal Bank of Scotland detailed terms of Europe's biggest ever rights issue.The FTSE 100 ticked 0.3 per cent higher to... Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 8:19 am
Royal Bank of Scotland has this morning unveiled plans to raise £12bn through selling new shares as the credit crisis forces Britain's second-biggest bank to write down more than £4bn. Source: Telegraph Business | 22 Apr 2008 | 8:16 am
NEW YORK, April 21 - Tribune Co has reached agreement in principle to sell Newsday to News Corp for about $580 million in what would be a joint venture, according to a source familiar with the matter... Source: Infocious RSS raw feed - channel BNPaperBusiness | 22 Apr 2008 | 8:16 am
NEW YORK, April 21 - Tribune Co has reached agreement in principle to sell Newsday to News Corp for about $580 million in what would be a joint venture, according to a source familiar with the matter.
According to Reuters, earnings from Texas Instruments (TXN) disappointed investors and the company issued a weak forecast. Reuters report that RBS (RBS) will raise $24 billion to help the bank which is likely to write-down $6 billion in assets. Reuters writes that the net rose at Boston Scientific (BSX) due to cost cuts. Reuters writes that Tribune plans to sell the huge newspaper Newsday to News Corp (NWS). The Wall Street Journal writes that banks will have to raise more money to cover loan loss reserves. The Wall Street Journal reports that Air France will drop its bid for Alitalia....
The executive editor of The Wall Street Journal has resigned. Marcus Brauchli had been in his post about one year. The Wall Street Journal is owned by News Corp (NWS) Douglas A. McIntyre
Markets in Asia were mixed The Nikkei fell 2% to 13,548. NIkon was off 3.8% to 2915 Nomura was down 3.9% to 1639. The Hang Seng was off .1% to 24,704. China Mobile (CHL) was off 2.5% to 131.3.China Petroleum (SNP) was up 3% to 7.69. The Shanghai Composite rose 1% to 3,148. Data from Reuters Douglas A. McIntyre
Royal Bank of Scotland has this morning unveiled its plan to raise £12bn through selling news shares as the credit crisis forces it to write-down more than £4bn. Source: Telegraph Business | 22 Apr 2008 | 7:25 am
BAA, the owner of Heathrow's disastrous Terminal 5, could be forced to sell
some of its seven UK airports after the Competition Commission said that it "may
not be serving well the interests of either airlines or passengers". Source: Latest Business News from Times Online | 22 Apr 2008 | 7:06 am
The Mortgage Bankers Assn. says the measure would raise interest rates, but critics contend this claim is based on faulty data.
Sherrie Floyd says she was able to handle the first reset on the $505,000 mortgage she had taken out to refinance her Vallejo, Calif., home. And the second.
BofA's profit plummets and National City reports a loss for the quarter. Crude closes above $117 a barrel.
Cautious investors led Wall Street to mixed results Monday after Bank of America and National City released disappointing news and oil prices went on another record-breaking tear.
The Air Force and Lockheed Martin are giving a secret retirement send-off to the world's first radar-evading fighter.
They were born shrouded in mystery in a windowless building in Burbank. They flew combat missions over Serbia and Iraq virtually invisible to enemy radar. And today, the black, bat-like F-117A Night Hawks will fly quietly into the night as stealthily as they came.
Costs will probably keep rising as past oil price increases trickle down to the pump and the summer driving season revs up.
With oil and gasoline touching all-time highs again Monday, raging energy-price fever showed no sign of breaking. Before it's over, oil could cost at least $125 a barrel and gasoline more than $4 a gallon in California.
Sir Fred Goodwin, the chief executive of RBS, faced growing pressure today
over his future with Britain's second-largest lender after revealing plans
to raise £12 billion through a rights issue to shore up its balance sheet. Source: Latest Business News from Times Online | 22 Apr 2008 | 6:27 am
Japan's workforce is shrinking rapidly, a report says, blaming a failure to attract women and the elderly into work. Source: BBC News | Business | World Edition | 22 Apr 2008 | 6:23 am
The Shanghai Composite Index falls more than 3% to take it to 50% below the peak reached in October 2007. Source: BBC News | Business | World Edition | 22 Apr 2008 | 6:07 am
The New Zealand dollar closed well bid today despite fresh weakness in equity markets that dampened demand for carry trade currencies like the kiwi.
It closed virtually on its opening at US79.43c and slightly up on yesterday's... Source: New Zealand Herald - Business | 22 Apr 2008 | 5:56 am
Normally, investors study earnings reports for their numbers. Not so with Yahoo. When the internet veteran delivers its first-quarter earnings after the stock markets close today, Wall Street will be watching instead the latest episode in the hostile-takeover soap opera starring Yahoo and Microsoft.
Business headlines on Yahoo's earnings read like a program summary out of TV Guide:
Such tension, common enough in sports and politics, is rare in business. Financial writers have to make hay while they can.
Analysts, too, are talking plot twists.
"The most important elements of the earnings announcement will center on Yahoo's defense against the hostile-takeover bid announced by Microsoft," Stifel Nicolaus analyst George Askew said.
Needham's Mark May, meanwhile, is expecting no surprises, but added that even earnings in line with expectations "will tilt negotiating power in the Microsoft takeover bid toward Yahoo."
So for Yahoo, the drama is trumping the numbers. But this is Wall Street, where the numbers get the final say—and the numbers say that even a blowout quarter for Yahoo isn't going to have any lasting effect on its stock price.
There is, however, really only one number driving Yahoo's stock these days, and it has nothing to do with profits or revenue. It's the $31 a share that Microsoft bid for Yahoo back in February. That offer was so lavish—a 62 percent premium above Yahoo's actual market value—that Yahoo would have to perform a miraculous turnaround to deserve it.
Yahoo's stock has been trading around $28 and $29 a share, pricing in a chance the deal will fall through. But arbitrageurs betting that Microsoft will prevail haven't tolerated much more of a deviation than that. And that makes an independent Yahoo absurdly expensive.
Wall Street is expecting Yahoo to earn 44 cents this year and 55 cents a share next year. That means Yahoo is trading at 52 times its estimated 2008 earnings. Google, by contrast, is trading at 22 times its earnings next year—even after Google's 20 percent rally since its strong earnings last week.
To fall in line with Google's valuation, Yahoo would have to earn $1.30 a share next year—more than double what Wall Street is expecting.
Yet Yahoo has little choice but to convince Wall Street it's worth $31 a share on its own. Last month, executives made its case with a presentation to investors arguing that the Street's estimates were significantly wrong. Yahoo said revenue would grow 25 percent next year to $7.1 billion. Analysts are looking for only $6.4 billion.
Few were persuaded by Yahoo's optimism—the stock didn't budge, and many analysts maintain a "hold" rating on the stock. Yahoo is actually doing a good job of turning the company around, but its value is nowhere near what Microsoft can guarantee to pay.
Jeffrey Lindsay, a Sanford Bernstein analyst, said Yahoo will be pulling out all the stops to deliver strong first-quarter numbers. If so, that could trigger a short rally, but the stock is likely to revert to its pre-earnings range.
On Wednesday, Microsoft will report earnings—and surely rebut any bullish message from Yahoo. Microsoft has already said it will turn up the heat on the takeover if Yahoo doesn't acquiesce by Saturday.
So Yahoo's best hope is to offer just enough leverage to push Microsoft into a higher bid. That would almost certainly drive up Yahoo's stock. But the catch is, a disappointing report would give Microsoft reason to lower its bid.
That would be bad for Yahoo's investors. But not as bad as if Yahoo got what it wants most: If the merger falls through, it will wreak havoc on Yahoo's stock. Factor out Microsoft's premium and you're left with a company that's worth a lot less than its stock is trading for right now. Related Links Stop Whining, Start Winning Why Google Might Want a Microsoft-Yahoo Merger Dangerous Liaison
The international credit crunch will sock New Zealanders with a one-two punch of higher interest rates and a return to the bad old days of going cap-in-hand to your bank for a loan, head of banking and finance at KPMG, Godfrey Boyce,... Source: New Zealand Herald - Business | 22 Apr 2008 | 4:52 am
The departure of the managing editor of the Wall Street Journal has sparked new doubts about whether Rupert Murdoch is honoring a pledge to maintain the independence of the newspaper's news-gathering operation four months after Murdoch took control of Dow Jones.
Marcus Brauchli, 46, is expected to resign today after less than a year on the job, according to a number of reports.
Jeff Bercovici notes that while there had been reports that Murdoch would bring in his own editor at some point "more recently it appeared that Brauchli had weathered the transition comfortably." But a report on Time magazine's web site suggests that Brauchli was less comfortable than he let on, saying he "tried to find a middle path between the paper's traditionalists and Murdoch's new vision for the paper."
"Emphasis on the ‘tried, presumably," Bercovici says.
Both Murdoch and Brauchli were at a dinner of the Atlantic Council in Washington on Monday night. A speech that Murdoch gave is an op-ed article in the Journal today.
Richard Perez-Pena of the New York Times reports that calls by Murdoch and Thomson to reduce the number of editors at the Journal had been resisted by Brauchli. "Two people briefed on Mr. Brauchli's thinking said that had become a major point of contention," the Times says.
John Gapper of the Financial Timesspeculates: "My sense is that Journal staff are uncomfortable about Mr. Murdoch's enthusiasm for taking on the New York Times by broadening the political coverage. Even if it does the job well, it will inevitably lose some focus."
The Journalreports that its publisher, Robert Thomson, "may" serve as interim managing editor. Thomson, a former editor for the Financial Times in the United States and recently chief of Murdoch's the Times newspaper in London, already oversees newsgathering operations at the Journal as well the Dow Jones newswires and Barron's weekly newspaper.
If Thomson does serve as interim managing editor—the highest news job at the paper—he would have direct control of the Journal's news operation. And when a permanent replacement is found—the Journal said the search would consider candidates inside and outside the paper—that person would be Murdoch's pick.
Brauchli, who succeeded former Journal managing editor Paul E. Steiger shortly before News Corp. announced its bid for Dow Jones last May, "is expected to remain with News Corp.," Murdoch's global media conglomerate, the Journal reported. What he might do there was not clear Monday night.
Murdoch's influence over his media properties, including his history of putting his business interests before editorial objectivity, has been a source of controversy as the merger has been contemplated. (See related Portfolio.com essay by former Sunday Times editor Andrew Neil here.)
The Wall Street Journal is widely viewed as a pillar of integrity, and Murdoch will now directly determine the fate of its editorial independence.
As Murdoch negotiated with Dow Jones' controlling shareholders, the Bancroft family, to buy the company, the two sides agreed to appoint a five-member committee to ensure that editorial independence remains intact at the Dow Jones publications. The initial members of the committee will be Louis Boccardi, Thomas Bray, Jennifer Dunn, Jack Fuller, and Nicholas Negroponte.
The fate of that committee is also not clear.
Almost as soon as Dow Jones shareholders signed off on the $5 billion deal in December, Murdoch started to assert his control over the Journal by taking the unusual step of putting the newspaper's publisher in charge of newsgathering, then appointing Thomson to the job.
In the past, the Journal's publisher had been in charge of the business side of the newspaper, and the managing editor was in command of newsgathering.
The chairman of South Korean firm Samsung quits less than a week after he was charged with tax evasion. Source: BBC News | Business | World Edition | 22 Apr 2008 | 3:03 am
Up to one in five Australian households under mortgage stress will lose their homes, according to new figures.
The findings in the monthly Anatomy of Australian Mortgage Stress to be released on Thursday show that about 20 per... Source: New Zealand Herald - Business | 22 Apr 2008 | 12:38 am
The Daily Telegraph's Most Powerful UK Business People list ranks the most influential figures in British business by sector. Here is a list of the top retailers. Source: Telegraph Business | 22 Apr 2008 | 12:01 am
AP - National City Corp. announced Monday it secured a $7 billion capital infusion from equity investors to help it survive the home mortgage crisis, at least temporarily quashing speculation the nation's 10th-largest bank would have to be sold.
Warburg Pincus, the US-based private equity group, will announce it has raised $15bn for its new global fund, shrugging off the credit squeeze that has made life harder for many of its buy-out rivals Source: FT.com - US homepage | 21 Apr 2008 | 11:06 pm
UBS, the investment bank, spelt out in painful detail yesterday the failures
that contributed to its $37.4 billion ($£18.8 billion) of sub-prime
writedowns. The failures included a rushed set-up of its hedge fund
business, an over- aggressive growth plan and lack of risk management in
investment banking. Source: Latest Business News from Times Online | 21 Apr 2008 | 11:00 pm
Alan Brown, the new chief executive of Rentokil, rejected calls last night for
the parcels and pest control group to be broken up, after the company issued
another profits warning for its City Link business. Source: Latest Business News from Times Online | 21 Apr 2008 | 11:00 pm
The Bank of England has finally unveiled the bucket with which some had hoped
it would bail out the mortgage market. It is small, expensive and full of
holes. Source: Latest Business News from Times Online | 21 Apr 2008 | 11:00 pm
The sharemarket weakened in early trading today as top stock Telecom fell 10c to 368.
The signal from Wall Street was mixed with blue chip stocks easing on new concerns about the finance sector but tech stocks ended higher.
The... Source: New Zealand Herald - Business | 21 Apr 2008 | 11:00 pm
Investor's Business Daily - The Chicago Fed's National Activity Index rose to -0.78 in March from a downwardly revised -1.28 in Feb. Stronger industrial output offset weakness in employment and housing. The index has been negative since Aug. '07, indicating below-trend growth. Its 3-month average rose to -0.86 last month from -0.92 in Feb. Still, readings below -0.70, after a period of economic expansion, suggest an "increasing likelihood that a recession has begun," the Chicago Fed said. Source: Yahoo! News: Business | 21 Apr 2008 | 10:32 pm
In the aftermath of Lombard Finance's failure, New Zealand Exchange has moved to improve the information disclosed by the remaining handful of listed finance companies.
The market operator and regulator said that "in the current... Source: New Zealand Herald - Business | 21 Apr 2008 | 10:30 pm
Gordon Brown meets Labour MPs to outline plans to help those worst hit by the abolition of the 10p tax rate. Source: BBC News | Business | World Edition | 21 Apr 2008 | 9:52 pm
Banks haven't been doing so well this earnings season, to put it gently. But a good number of companies, from drug maker Merck to toy maker Hasbro -- have been doing well. What do they have in common? Customers overseas. Alisa Roth reports. Source: Marketplace | 21 Apr 2008 | 9:30 pm
Some of the world's poorest consumers in Africa and Asia have rioted recently over rising prices of wheat and rice. Economist Jeffrey Sachs, author of "Common Wealth," talks with host Kai Ryssdal about how more food riots and skyrocketing energy costs may be on the way. Source: Marketplace | 21 Apr 2008 | 9:29 pm
American businesses save tons of money buying parts and products from overseas suppliers. But sometimes they're buying worries, too -- from tainted pet food to poisonous toothpaste -- which have led some to work on ethical supply chains. Curt Nickisch reports. Source: Marketplace | 21 Apr 2008 | 9:29 pm
A low-budget comedy movie in France with no big-name stars and little marketing is setting box-office records. Critics say the response to its feel-good message is a backlash against President Sarkozy's flamboyance, or to fears of globalization. John Laurenson reports. Source: Marketplace | 21 Apr 2008 | 9:29 pm
Commentator and economist Peter Lindert says that for all the talk about a Social Security crisis, the real problem is with private pensions and the risks they hold for retirement. Source: Marketplace | 21 Apr 2008 | 9:29 pm
It would stand to reason that countries with oil would be trying to increase production so they could cash in on the increasing prices. But that's not the case, as Jeff Tyler reports. Source: Marketplace | 21 Apr 2008 | 9:29 pm
Ohio-based National City bank, the nation's 10th largest, says it's going to be seeking $7 billion in new capital. It will be looking to private equity firms and hedge funds for help. Ashley Milne-Tyte explains how the mortgage crisis is moving to Main Street. Source: Marketplace | 21 Apr 2008 | 9:29 pm
Citigroup has turned to HP, the information technology group, for advice on how to revive its fortunes without breaking up the company – a novel move that underlines Citi's efforts to defend its controversial business model Source: FT.com - US homepage | 21 Apr 2008 | 9:04 pm
The housing market will not see a return to profligate mortgage lending practices, the Bank of England governor said as he announces a massive operation to support liquidity Source: FT.com - US homepage | 21 Apr 2008 | 9:01 pm
US stocks slipped back in a subdued session of trading, narrowly breaking a four-day winning streak after Bank of America said profit plunged in the first quarter and investors received a mixed batch of earnings from other leading corporations Source: FT.com - US homepage | 21 Apr 2008 | 8:39 pm
Wall Street may be hurting, but a banker or trader can now pick up a silk scarf, a diamond necklace, or even a BMW on a lunch break - something that wasn't so easy during past boom times.
What was once a barren business district has been enlivened with the some of the same high-end brands that anchor the famous retail stretches of Upper Fifth and Madison avenues. Hermes, Thomas Pink, and Tiffany & Co all opened locations in the financial district last year, while Canali, Tumi, and Whole Foods are set to arrive in 2008.
The timing of this retailing invasion may seem unfortunate given that banks have been retrenching, cutting tens of thousands of jobs, amid a credit crunch. Bonuses, which can account for most of a professional's compensation, will certainly be substantially reduced at the end of the year.
But the influx also shows how much lower Manhattan has changed, becoming more residential and less dependent on the financial services industry.
"I'm not really concerned with the state of Wall Street," says Christina Minardi, president of the Northeast region for Whole Foods, which has a new store at 270 Greenwich Street. "There's so much new construction in the area, and the economy doesn't seem to be hurting our New York stores so far."
By the end of this year, the population of the area south of Chambers Street will have doubled to 58,000 residents from 2003, according to the Alliance for Downtown New York, by the end of 2008 the residential population will have doubled from 2003 levels to 58,000 residents.
Twenty-one new residential buildings opened in 2007, and thirty-five more projects are in the works,
Luxury units dominate the building pipeline as the area's occupants get older and wealthier. The median income for Lower Manhattan residents has increased 47 percent to $163,000 since 2004, and is now nearly three times greater than the median Manhattan household income.
Liz Berger, the director of the Alliance for Downtown Manhattan, says that Tiffany and Hermes are doing "very well."
"We're an increasingly growing residential market and predominantly luxury market," she says. " Our challenge now is getting residents to live their lives and do their shopping in lower Manhattan."
And while firms are cutting jobs, some are also expanding their presence downtown.. When completed, the World Trade Center towers, a new Goldman Sachs headquarters, and a J.P. Morgan Chase office tower are expected to add 13 percent to the area's workforce.
An influx of marketing, law, and creative services firms, meanwhile, have made the neighborhood more diverse. While financial services accounted for 47 percent of employment in 1993, that number is down to 30 percent at the end of 2006.
Robert Cohen, an executive vice president with Robert K. Futterman & Associates, a retail brokerage company, estimates that retail rents in prime retail areas of lower Manhattan - like those on Wall Street and Broad Street - have climbed in recent years from $100 per square foot to $250 - $400 per square foot, but will probably hold there for the time being.
That's still a bargain compared with 2007 average retail rents on Upper Fifth Avenue of $1,500 per square foot and Madison Avenue at $1,091 per square foot, according to Cushman & Wakefield.
Liz Berger, the director of the Alliance for Downtown Manhattan, says that Tiffany and Hermes are doing "very well."
"We're an increasingly growing residential market and predominantly luxury market," she says. " Our challenge now is getting residents to live their lives and do their shopping in lower Manhattan."
Yet it would still seem to be bad timing to be opening a luxury store on Wall Street.
Merrill Lynch, the largest private sector employer in lower Manhattan, announced 3,000 layoffs worldwide last week. Citigroup also said it would cut 9,000 jobs worldwide, adding to the 4,000 layoffs announced earlier this year. A number of those cuts will be jobs downtown. Goldman Sachs, Deutsche Bank, J.P. Morgan Chase, and Morgan Stanley all operate offices downtown and have announced significant job cuts as well.
And for those left standing at the various firms, 2008 bonus figures are likely to be paltry in comparison to record-breaking sums in recent years.
One recent weekday afternoon, traffic in the Thomas Pink and Tiffany stores on Wall Street was sluggish before picking up some steam during the post-work rush.
A salesperson at Pink says that the store does its biggest business in the morning, remedying a forgotten tie or stained shirt for the harried executives in the area; a Tiffany's employee said the jeweler has found more traction at lunchtime and in the evening, and have adjusted store hours accordingly.
"If you rented a space four or five months ago at $400 per square foot on Wall Street, you might be second guessing it," Cohen of Robert K. Futterman says.
He says that the neighborhood's growing population will help retailers, but acknowledges that "given the layoffs and nervousness relating to financial markets, it continues to be a market that many people are watching."
To: Jeffrey Immelt From: Jack Flack Subject: Free to Be Jeff’s G.E.
Few C.E.O.'s understand business spin as well as you do. But after last week’s fun, I can’t resist offering three observations and three recommendations.
Let’s start the observations.
1. It’s now about you.
Until last week, the G.E. story concentrated on a once-vaunted company treading water in the new century. Analysts, shareholders and journalists may have increasingly questioned whether the massive conglomerate model was still appropriate, but your leadership was not doubted, even in immediate aftermath of the earnings miss.
But then your mentor went on CNBC and personalized things, howling that you had lost credibility, and giving the Wall Street Journal, the New York Times and the rest of the pack perfect reason to do the same. I know he backtracked after he was criticized. But once the story has been forwarded, you can’t rewind it, and you’ll have to keep it moving.
2. The story needed to change anyway.
G.E.’s golden past has become a steel cage. The 40-plus price-to-earnings multiple came from a nutty euphoria generated by recurring Fortune covers, Six-Sigma fever, unnaturally consistent earnings and Welch’s need to publicly front the narrative. A revered story about the G.E. formula was created, and now you and your company are its prisoners.
Understand that you will not deliver the shareholder returns of the 1990s by employing the strategies of the 1990s, no matter how nicely those strategies have been incrementally improved.
You know G.E. was never as good as it was hyped, and you understand what had to happen every quarter to deliver the required numbers. You also know that G.E. is far stronger than its current valuation, but that strength is somehow not being properly recognized by the Street. That’s because…
Yes, you have dramatically changed the components, creating a much better portfolio of businesses. But the overall model is still that of a mass conglomerate. That approach might well work, in terms of operational performance. But it can’t win, at least in terms of stock price appreciation.
Why? Because the Street has decided to you are too big and complicated for either management or industrial analysts to understand, and that you’ve got businesses with completely different fundamentals that cannot be properly valued within the hull of the aircraft carrier.
That shallow logic undoubtedly irks you, because you appreciate the competitive value of unmatched scale. You likely resent the psychology of the Street, because it undervalues so many things you understand from actually having run the business. But unless you are content with the stock continuing to under-perform the business, the only way you’ll start winning the valuation game is to change the game itself.
And until you do, the dynamic will get worse, not better. The company’s revenue is now more than twice the size of the G.E. you inherited, and you will likely double its size at an even quicker rate in the years ahead. As the company gets bigger, you simply will not be able to deliver results that sparkle enough to convert the disbelievers in your “totality” argument.
So what’s the way forward? Here are my three recommendations:
1. Embrace the Welch outburst as a turning point.
Nobody in business has more media mileage than Welch, and so you should understand the incident was not a careless mistake. It was an intuitive signal from someone who is highly invested in G.E.’s past. He defended the business model and attacked you, effectively notifying the world that you and G.E. are not inseparable.
He actually did you a favor by implicitly demonstrating that the old G.E. magic has clearly passed its sell-by date. If that doesn’t give you permission to create your own model, nothing will.
2. Change your language.
Quit saying you don’t want to be defensive or stubborn about the strategy, which only confirms you’re being defensive and stubborn about the strategy. Instead say, at the upcoming shareholder meeting, say something like, “We believe our current business model carries unique benefits, and we would never abandon those competitive advantages unless there were compelling benefits for our shareholders.” The analysts will assume that you’re at least evaluating the possibilities, which will loosen things up considerably.
3. Take it back to the core.
The only way to really change the game to one you can win is to change your structure. Specifically, you must refocus the company on Industrial and Infrastructure. Not by coincidence, those are not only the businesses G.E. understands best, but also the ones that attract the best multiples.
Here’s how the story will play best.
Sell NBC Universal to an entertainment player. Stop assuming you can get NBC back to its glory days, and get the deal done before the Olympics if you can. I know owning a network, not to mention having the Squawk Box guys on staff, is nice. But the longer you hang onto a show biz operation that is so different from your other sectors, the more it will be perceived as an irrational vanity holding.
Bundle G.E. Finance and G.E. Money together and spin them off to your shareholders as a separate entity (without “G.E.” in the name). This will allow the natural P/E of your core businesses to shine through, without having to sell during a buyer’s market.
Nobody really understands your Healthcare business, so you can get rid of it however Wanchoo sees fit.
You’ll be surprised how taking things back to the core will energize your people and the stock, as your strongest numbers will better shine through. You will also put yourself in a far better position to make “Ecomagination” the theme that defines your G.E.
Oh, one last thing. You obviously need to have a man-to-man chat with Welch. He genuinely believes he was trying to help, which indicates how much he’s lost perspective. Humbly explain you need him to be as loyal to you and your future as you have been to him and his past.
Will healthy people pay between $1,000 and $2,500 to find out if they might have a higher-than-average risk of suffering a heart attack or developing diabetes or Alzheimer’s?
Is it ethical—or even legal—to offer this service directly to consumers online without a physician?
New York health officials have offered an answer to the last question by issuing letters to at least six companies involved in online genetic testing. The letters warn that offering DNA tests without a physician’s approval is illegal in New York and could lead to fines and jail time.
No one has been arrested or accused of breaking any laws, say officials, but companies that do not heed the warnings could be referred to the New York attorney general’s office.
In California, health officials are investigating consumer complaints about unnamed online genetic-testing companies for potentially violating a similar law that requires the involvement of a doctor in such testing. California has taken no action to date.
Letter recipients in New York include Navigenics and 23andMe, both high-profile companies based in the San Francisco Bay Area. Navigenics is financed by top venture capital firms such as Kleiner Perkins Caufield & Byers, and 23andMe was co-founded by Anne Wojcicki, wife of Google co-founder Sergey Brin.
New York also issued letters to Illumina and Affymetrix, both based in California, which produce the testing platforms used by the websites, though they do not directly offer or market the tests themselves.
New York regulators have not sent a letter to one major online genetic-testing company, deCODEme, based in Reykjavik, Iceland, though this may have been an oversight by the state.
The companies discount the regulators' warnings, saying that their tests are for informational purposes only. "We are not offering medical diagnosis," Navigenics C.E.O. Mari Baker said in an interview with Portfolio.com.
Critics of the companies say that consumers may not understand the distinction. "Telling a person they have Alzheimer’s online is not the best way to deliver this information," geneticist and entrepreneur Jonathan Rothberg said.
Rothberg's former company, 454 Life Sciences, sequenced the entire genome of DNA pioneer James Watson.
Navigenics also offers live genetic counseling service over the phone to its customers—a feature not proffered by its major rivals. Navigenics, which launched its business earlier this month, has put its New York customers on a waiting list while it sorts out the legal issues in the state, according to Forbes.com, which also reported that 23andMe plans to hire doctors to approve tests if the state requires it.
The proliferation of genetic tests in recent months has put pressure on the Food and Drug Administration to investigate regulating testing services that operate with few rules. A recent essay in the New England Journal of Medicine said the services are "premature attempts at popularizing genetic testing," adding that more research is needed to make the tests relevant to individual patients.
For now, online testing companies show no signs of surrendering to these regulatory challenges and every sign of planning to continue to exploit the vacuum between a new, rapidly advancing science and the ability of governments and mainstream medicine to oversee it.
Hillary Clinton needs a big win in Pennsylvania if she is to raise enough cash to keep her campaign on the road, according to election analysts and a breakdown of her own filings to the Federal Election Commission Source: FT.com - US homepage | 21 Apr 2008 | 7:12 pm
Apartment owners in Auckland's large-scale Beaumont Quarter housing complex will meet next Tuesday to discuss how to oppose big ground rent increases.
Landowner Beaumont Partners has valued the ground under 258 apartments off Beaumont... Source: New Zealand Herald - Business | 21 Apr 2008 | 7:10 pm
New Zealanders were more inclined to leave their credit cards in their wallets last month - further evidence that the going is getting harder for the retail sector.
Reserve Bank figures out yesterday showed that $2.12 billion in... Source: New Zealand Herald - Business | 21 Apr 2008 | 6:50 pm
Oil hit a new record yesterday, supported by worries of supply disruptions in Nigeria and comments by the oil producers' organisation that it saw no need to increase production.
US light crude for May delivery rose US5c to US$116.74... Source: New Zealand Herald - Business | 21 Apr 2008 | 6:30 pm
A single investor spent $111 million on Telecom New Zealand shares yesterday but the off-market transaction had a limited effect on the company's wallowing price.
The shares changed hands between two parties - possibly with one... Source: New Zealand Herald - Business | 21 Apr 2008 | 6:10 pm
When a bank loses money and is forced to raise capital, should it still pay its shareholders a dividend?
That's the question many large banks are being asked these days, as they face a tricky balancing act: Risk the stigma attached to cutting a dividend and use the money to bolster badly needed reserves instead, or keep doling out funds to investors even as the balance sheets and income statements suffer.
So far, there has been little consistency among the big banks in their strategies, but that may change as regulators step up the pressure on them to preserve their capital.
Last week, Citigroup announced that it lost $5 billion during the first quarter after losing $10 billion during the fourth quarter. While it did cut its dividend late last year, Oppenheimer analyst Meredith Whitney thinks Citigroup should consider eliminating it altogether.
Whitney estimates that the bank will earn $1.73 per share less this year than it will pay its shareholders in dividends. "How anyone, let alone [Citigroup's] management and the board, can believe that [Citigroup's] dividend is safe given this earnings scenario is beyond our comprehension," she wrote in a report this morning.
Bank of America announced this morning that despite its write-downs and trading losses, it still managed to report a profit during the first quarter, albeit one that's 77 percent lower than last year. But it did not announce plans to cut its dividend in order to preserve capital.
The bank's $11.8 billion in annual dividends amounts to a whopping 6.8 percent yield. "If B of A trimmed its dividend by a bit over 20 percent, to the level it paid out just two years ago, it could save around $2.5 billion a year," Cass writes.
Of course, cutting a dividend is never a welcome option. Shareholders come to rely on the quarterly payments, and once a company begins paying one, shareholders expect it to only grow—not shrink.
National City and Washington Mutual both chose to nearly eliminate their dividends as they've been forced to turn to investors for more capital. Both are maintaining a nominal payment of just a penny per share.
When asked during a conference call why it bothered to keep such a paltry dividend, WaMu chief executive Kerry Killinger explained that it's to prevent certain income-oriented shareholders (such as dividend-based mutual funds) from being forced to liquidate their holdings.
The dividend cuts among struggling commercial banks may have only just begun. In her Citigroup report, Whitney explains that if losses persist, the banks will need to get permission from their regulators in order to keep paying a dividend at all.
Seeking to make money from mistyped website names, some of the United States' largest ISPs instead created a massive security hole that allowed hackers to use web addresses owned by eBay, PayPal, Google and Yahoo, and virtually any other large site.
The vulnerability was a dream scenario for phishers and cyber attackers looking for convincing platforms to distribute fake websites or malicious code.
The hole was quickly and quietly patched Friday after IOActive security researcher Dan Kaminsky reported the issue to Earthlink and its technology partner, a British ad company called Barefruit. Earthlink users, and some Comcast subscribers, were at risk.
Kaminsky warns that the underlying danger lingers on.
"The entire security of the internet is now dependent on some random ad server run by some British company," Kaminsky said.
At issue is a growing trend in which ISPs subvert the Domain Name System, or DNS, which translates website names into numeric addresses.
When users visit a website like Wired.com, the DNS system maps the domain name into an IP address such as 72.246.49.48. But if a particular site does not exist, the DNS server tells the browser that there's no such listing and a simple error message should be displayed.
But starting in August 2006, Earthlink instead intercepts that Non-Existent Domain (NXDOMAIN) response and sends the IP address of ad-partner Barefruit's server as the answer. When the browser visits that page, the user sees a list of suggestions for what site the user might have actually wanted, along with a search box and Yahoo ads.
The rub comes when a user is asking for a nonexistent subdomain of a real website, such as http://webmale.google.com, where the subdomain webmale doesn't exist (unlike, say, mail in mail.google.com). In this case, the Earthlink/Barefruit ads appear in the browser, while the title bar suggests that it's the official Google site.
As a result, all those subdomains are only as secure as Barefruit's servers, which turned out to be not very secure at all. Barefruit neglected basic web programming techniques, making its servers vulnerable to a malicious JavaScript attack. That meant hackers could have crafted special links to unused subdomains of legitimate websites that, when visited, would serve any content the attacker wanted.
The hacker could, for example, send spam e-mails to Earthlink subscribers with a link to a webpage on money.paypal.com. Visiting that link would take the victim to the hacker's site, and it would look as though they were on a real PayPal page.
Kaminsky demonstrated the vulnerability by finding a way to insert a YouTube video from 80s pop star Rick Astley into Facebook and PayPal domains. But a black hat hacker could instead embed a password-stealing Trojan. The attack might also allow hackers to pretend to be a logged-in user, or to send e-mails and add friends to a Facebook account.
Earthlink isn't alone in substituting ad pages for error messages, according to Kaminsky, who has seen similar behavior from other major ISPs including Verizon, Time Warner, Comcast and Qwest. Earlier this month, Network Solutions, one of the net's largest domain name registrars, was caught creating link farms on nonexistent subdomains of websites owned by its own customers.
DNS expert Paul Vixie, who is the president of the nonprofit Internet Systems Consortium, says the problem Kaminisky found isn't with the core internet protocols, which he could fix, but instead is a "problem exacerbated by inappropriate monetization of certain DNS features."
Vixie compared this ISP behavior to Verisign's 2003 Site Finder project, which it unilaterally launched in September 2003 and then shut down a month later.
In that case, VeriSign, which controls the sales of .com and .net top-level domains through a contract with the U.S. government, began directing users who mistyped domains names to its own servers, where it presented paid search results.
The move outraged the technical community and eventually led to an ICANN commission report (.pdf) condemning the practice and an unsuccessful VeriSign lawsuit against ICANN.
"Sitefinder showed that [Non-Existent] domain re-mapping is bad for the community," Vixie said. "This would be an example of why it is bad."
While Barefruit fixed the immediate JavaScript hole, the underlying problem -- that large ISPs are ignoring a core internet practice to make money and pretending to be sites that don't exist -- means every site on the net remains vulnerable in ways they have no control over, according to Kaminsky.
Kaminsky said he'd talked this week to many internet companies who were pissed, though not at him.
"I can't secure the web as long as ISPs are injecting other content into web pages," he said.
The hole shows the risks of allowing ISPs to violate Net Neutrality principles that seek to keep the internet a series of dumb pipes, according to Kaminsky.
"There's no contractual obligation for ISPs not to change content and inject ads," Kaminsky notes.
For its part, Earthlink says the Barefruit ad pages are useful to users.
"We offer DNS error functionality for our customers through Barefruit to enhance our users' experience, and we work closely with Barefruit to provide a safe and convenient way for them to find the destination they're looking for online," Earthlink spokesman Chris Marshall said via e-mail. "We believe that the service provides a positive experience for our Internet users."
Barefruit echoes the sentiment.
"Barefruit endeavors to ensure online security while providing an improved internet user interface by replacing unhelpful and confusing error messages with alternatives relevant to what the user was seeking," Barefruit's Dave Roberts said via e-mail.
For Vixie, however, the issue is simple.
"I really feel if someone goes to a website that does not exist, they ought to see an error message," Vixie said.
Earthlink customers who do not wish to use the service can instead use different Earthlink DNS servers. Anyone can also use OpenDNS, a start-up that also provides ad pages on domains that don't resolve, but does so without pretending to be the other site.
The news of the massive security breach by compromising net neutrality for profit comes just two days after the Federal Communication Commission held a hand-wringing public forum at Stanford University over whether it should punish Comcast for its violation of standard internet practices. The broadband provider was caught sending fake packets to its users in order to reduce the bandwidth consumed by peer-to-peer applications.
Oil surged to a record above the $117 a barrel level, amid growing doubts about the outlook for short and long term supply growth from Opec, the oil cartel Source: FT.com - US homepage | 21 Apr 2008 | 5:24 pm
Did a Rupert Murdoch company go too far and hire hackers to sabotage rivals and gain the top spot in the global pay-TV war?
This is the question a jury will be facing in a spectacular five-year-old civil lawsuit that is finally being tried this month in California but which has, oddly, received little notice from U.S. media.
The case involves a colorful cast of characters that includes former intelligence agents, Canadian TV pirates, Bulgarian and German hackers, stolen e-mails and the mysterious suicide of a Berlin hacker who had been courted by the Murdoch company not long before his death.
On the hot spot is NDS Group, a UK-Israeli firm that makes smartcards for pay-TV systems like DirecTV. The company is a majority-owned subsidiary of Murdoch's News Corporation. The charges stem from 1997 when NDS is accused of cracking the encryption of rival NagraStar, which makes access cards and systems for EchoStar's Dish Network and other pay-TV services. Further, it’s alleged NDS then hired hackers to manufacture and distribute counterfeit NagraStar cards to pirates to steal Dish Network's programming for free.
NagraStar and one of its parent companies, EchoStar, are seeking about $101 million for damages for piracy, copyright infringement, misconduct and unfair competition. The list of witnesses in the case includes EchoStar's founder and CEO Charlie Ergen; several hackers and pirates; and Reuven Hazak, an Israeli who heads security for NDS and is a former deputy head of Shabak, or Shin Bet, Israel's domestic security agency (the equivalent of Britain's MI5).
The case, which began April 9 in the U.S. District Court's Central Division in Santa Ana, California, could conceivably result in an award of hundreds of millions of dollars, although neither side is expected to emerge unscathed from testimony that threatens to expose the messy underbelly of the high-stakes pay-TV industry.
As if to emphasize this point, U.S. District Judge David O. Carter said after the proceedings began that he was concerned that the case would hinge on testimony from known lawbreakers like hackers and pirates, who have been employed by the companies on both sides of the lawsuit. The judge urged the plaintiffs and defendant to settle rather than face potentially devastating harm to their reputations.
EchoStar wouldn't comment on the case while it's ongoing, but Jim Davis, a senior analyst with the 451 Group, a market research firm, said the company isn't likely to settle.
"It gets taken very personal when your security product has been hacked," he said. "And to have a competitor do that through, allegedly, the services of a known hacker, has got to be particularly galling to NagraStar."
As for NDS, which currently has more than 75 million access cards on the market, Davis says the company probably sees the trial as an opportunity to defend against the image that it is "simultaneously promoting a product that secures networks while working with folks that work outside the law [to break networks]."
The company said in a statement to Wired.com: "We are confident our position will be upheld at a trial."
According to court documents, the scheme began to unravel in 2000 when law-enforcement agents in Texas seized suspicious packages containing CD and DVD players stuffed with more than $40,000 in cash. Parcels similar to this were being sent almost daily from Canada, via Texas, to a hacker in California named Christopher Tarnovsky, who was working for NDS as an engineer. The money was allegedly part of the conspiracy between Tarnovsky and NDS Group to sabotage NagraStar's cards.
As laid out in the allegations, NDS' hacking is said to have begun in 1997 after its own access cards were cracked and it was at risk of losing clients like DirecTV, which was being hit hard from pirates who were selling unfettered access to its system.
But rather than deal with its security breach, NDS hired Tarnovsky and other pirates who had compromised its system to help the company hack and pirate its competitors' cards and even out the playing field, it is alleged.
In addition to Tarnovsky, the company also hired Oliver Kommerling, a hacker known for writing the primer on cracking smartcards. Kommerling has acknowledged in an affidavit that he helped NDS set up a research lab in Haifa, Israel, where NagraStar's smartcard was allegedly cracked by NDS engineers.
NDS didn't hire only hackers, however. According to EchoStar/NagraStar, it also hired a handful of other people with colorful pasts who they say had a role in hacking and pirating EchoStar/NagraStar. There was Reuven Hazak, who had been deputy head of Israel's Shin Bet during the notorious Bus 300 incident (when two Palestinian terrorists who hijacked an Israeli bus were killed in custody by a Shin Bet agent. Hazak eventually blew the whistle on the subsequent cover-up).
NDS also hired a former U.S. Navy intelligence officer named John Norris and a former Scotland Yard commander named Ray Adams. Finally, it hired a former would-be terrorist, Yossi Tsuria, who became chief technical officer of its lab in Israel. Tsuria was part of a radical group of Jewish Israelis in the 1980s that plotted to bomb the Dome of the Rock -- a shrine that sits on the Temple Mount in Jerusalem, a holy site for both Jews and Muslims.
NDS has maintained in public statements that Hazak, Norris and its other security officers were hired to help it track down hackers and pirates and get them arrested. But EchoStar and NagraStar allege that Hazak and Norris played central roles in committing hacking and piracy as well.
In late 1997, NDS researchers in Israel reportedly cracked the NagraStar card after about six months of effort, using an electron microscope.
NagraStar became aware its card was hacked in late 1998 when meeting with DirecTV to discuss the pay-TV company's desire to switch from the hacked NDS cards to NagraStar's cards. But DirecTV employees surprised NagraStar at the meeting when they informed NagraStar that its cards had also been hacked.
EchoStar/NagraStar claim that NDS, aware that DirecTV was about to abandon its cards in favor of NagraStar cards, cracked NagraStar's card to discourage DirecTV from making the switch.
After NDS cracked its rival's card, Tarnovsky and his associates allegedly created and sold counterfeit NagraStar cards through a piracy site based in Canada, among others, that allowed pirates to access Dish Network programs for free. Tarnovsky is also accused of later posting on the Canadian site the code, secret keys and instructions for hacking the microprocessor on EchoStar's access cards, allowing pirates to flood the market with even more cards. He has denied the allegations. Hazak and Norris are accused of providing Tarnovsky with the code so he could post it online, but NDS maintains this didn't happen.
According to court documents, the sabotage scheme worked remarkably well throughout 1998 and 1999 as counterfeit NagraStar cards flooded the market.
It was around this time, however, that a German hacker in Berlin known as Boris Floricic, aka Tron, disappeared while walking home from his parents' home one day. He was found several days later hanging from a belt in a park.
Among his possessions, authorities found correspondence from NDS. NDS later said it had offered Boris a job, which he had rejected. Prior to his death, Boris had obtained source code and information about hacking access cards that were being used in a German satellite TV system. His friends in the German hacker group, Chaos Computer Club, were convinced that he'd met with foul play.
Although his death was officially ruled a suicide, there were enough details around it to create suspicion. Floricic's feet were on the ground when he was found hanging, for example, and other evidence suggested that his body might have been placed in the park after he died.
During this time, NagraStar wasn't the only alleged victim of NDS hacking and piracy. In 2002, the French pay-TV service Canal Plus filed a damages suit against NDS, from which the EchoStar/NagraStar case emerged. In an affidavit from that case, Kommerling disclosed that NDS had cracked the Canal Plus cards using a method he had taught its engineers in Israel. Then, he revealed, the company instructed Tarnovsky to post the Canal Plus code on the internet.
The Canal Plus suit fizzled after its parent company, Vivendi Universal, struck a business deal with News Corporation that included a condition that Canal Plus would drop its suit against NDS. This is when EchoStar joined the litigation.
Before Canal Plus's case against NDS died, Tarnovsky indicated to the company that Reuven Hazak had given him the Canal Plus code to post it on the internet. He reportedly told the French firm he would testify in the case, but later backed out, citing fear for his life and his family.
In May 2002, two months after Canal Plus filed its suit, someone broke into the car of one of its U.K. employees and stole the hard drive from his laptop, making off with thousands of NDS documents and e-mails. EchoStar/NagraStar say the e-mails provide proof of NDS' hacking and piracy activities. NDS has suggested that the e-mails might be fabricated and has battled to keep them out of the court proceedings.
NDS has denied the lawsuit allegations. The company maintains that it was simply engaging in reverse-engineering, as any company would do to understand rivals and compete in the marketplace, but that it did not distribute cards or information about hacking NagraStar's encryption to pirates.
In an e-mail statement to Wired.com, the company took a dig at its competitor's competence and touted its superior skills.
"The hacking of EchoStar was the result of inferior technology arising from inadequate investment in research and development by [NagraStar]," said the statement. "NDS, on the other hand, invests heavily in research and development ... we reinvested over 30 percent of our revenues into R&D -- and the result is that we have zero piracy and the platforms of our customers are completely secure."
SYDNEY - Wesfarmers has turned to equity to refinance most of the bridging loan set up to support its A$20 billion ($23.7 billion) acquisition of Coles, following the turbulence in global credit markets.
It said it would raise... Source: New Zealand Herald - Business | 21 Apr 2008 | 5:00 pm
Is there a top in sight for the rally in oil prices?
Crude oil futures are up more than 20 percent so far this year, and today oil climbed to nearly $118 a barrel, with no sign that a major retreat may be near.
Much has been made of the speculative element in the rise of oil and other commodities, as investors around the world seek alternatives to equities and other investments. And certainly the weakness of the dollar is playing a role.
But the oil story is primarily one of demand—and by two countries in particular: China and India, the two most populous nations. Their economic booms are drawing off inventories even as the world's biggest economy, the United States, slows.
Jad Mouawad in a Week in Review article in the New York Timessays supply problems may only get worse in the future.
"Consider a few numbers: The planet's population is expected to grow by 50 percent to nine billion by sometime in the middle of the century. The number of cars and trucks is projected to double in 30 years—to more than two billion—as developing nations rapidly modernize. And twice as many passenger jetliners, more than 36,000, will in all likelihood be crisscrossing the skies in 20 years."
The rise in oil today was triggered by number of events that underscored how nervous investors are about any disruptions to supply.
Several pipelines in the oil-rich delta region of southern Nigeria were reportedly blown up and a Japanese oil tanker was attacked off the coast of Yemen.
And the president of the Organization of Petroleum Exporting Countries indicated that the group would not raise its production quotas.
"The price seems to be rising inexorably towards $120,'' Bill Farren-Price, director of energy at Medley Global Advisors in London, told Bloomberg News. "OPEC has a very limited amount of spare capacity left, and maybe they're trying to keep that in case there's actual physical disruption.''
To be sure, things can quickly change in commodities. James Burkhard, managing director of Cambridge Energy Research Associates' global oil group, noted this in testimony earlier this month before the Senate Energy Committee.
"Just when the future seems preordained in the oil market, the unexpected can unfold. It did in the decade following 1998, just as it had several times since 1970. This year will be a stiff test for the new oil-price era that dawned on the world several years ago."
Bank of America slammed by writedowns and rising credit costs, said earnings dropped nearly 80 per cent in the first quarter to $1.2bn Source: FT.com - US homepage | 21 Apr 2008 | 12:00 pm
AFP - European equities struggled on Monday, despite a sharp rally earlier in Asia, as London investors digested a 100-billion-dollar Bank of England plan to get British banks lending again.
Reuters - Stock index futures were little
changed on Tuesday as earnings painted a mixed picture, after
microchip maker Texas Instruments Inc forecast results
below Wall Street estimates, offsetting robust profits from
chemical company DuPont Co .
Reuters - Oil rose to a record high above $118 on
Tuesday, boosted by a jump in oil demand last month from China,
the world's second biggest energy consumer, and worries about
supply from key producers Russia and Nigeria.
AP - Oil prices rose Tuesday to a all-time highs above $118 a barrel on concerns over supplies from some key producers.
AP - National City Corp. announced Monday it secured a $7 billion capital infusion from equity investors to help it survive the home mortgage crisis, at least temporarily quashing speculation the nation's 10th-largest bank would have to be sold.
AFP - European equities struggled on Monday, despite a sharp rally earlier in Asia, as London investors digested a 100-billion-dollar Bank of England plan to get British banks lending again.