WPP chief Sir Martin Sorrell is urging Taylor Nelson Sofres shareholders to put pressure on the board to open its books to the advertising and media group after its £1bn bid was rebuffed within 24 hours over the weekend. Source: Telegraph Business | 6 May 2008 | 2:25 pm
Home sales are falling through at a “significantly higher” rate, Bovis Homes warned today, as British lenders make mortgages harder to secure. The housebuilder said that conditions in the housing market have deteriorated sharply in recent weeks, with the number of sales agreed tumbling 30pc so far this year, and the number of deals actually completed on the rise. Source: Telegraph Business | 6 May 2008 | 1:50 pm
NEW YORK (Reuters) - Telephone company Qwest Communications International Inc reported a 34.6 percent fall in quarterly earnings on Tuesday, hurt by increased tax expense, charges for job cuts and weakness in its long-distance phone business.
Fannie Mae, largest buyer of mortgages in the US, recorded a first quarter loss of $2.2bn, posted credit loss provisions of $3.1bn and said it will seek to raise $6bn in new capital as the deteriorating US housing market extracted a heavy toll Source: FT.com - US homepage | 6 May 2008 | 1:38 pm
AP - Fannie Mae reported losses of $2.2 billion in the first quarter and the nation's largest buyer of home loans said Tuesday it would cut its dividend and raise $6 billion in new capital, with expectations that the housing slump will persist into next year. Source: Yahoo! News: Business | 6 May 2008 | 1:35 pm
Goldman Sachs (NYSE: GS) has come out and updated its "oil super-spike" prices today. In fact, it ponders whether or not the super-spike end game has begun. We covered part of this yesterday, and today the full details were sent out. The firm now notes that we could see $150 to $200 per barrel of oil in the next six to 24 months. The note says the current energy crisis may be coming to a head. It cites lack of adequate supply growth and this notes that a needed demand rationing in the OECD areas (in particular the U.S.). This...
A review into business practices at BAE Systems recommends tougher anti-bribery measures. Source: BBC News | Business | World Edition | 6 May 2008 | 1:32 pm
Shares in Lloyds TSB, Britain's fifth largest bank, fell by 2.15 per cent
today after it revealed £1.1 billion worth of writedowns in the first
quarter but insisted that its balance sheet was robust and it would not seek
extra funding through a rights issue. Source: Latest Business News from Times Online | 6 May 2008 | 1:30 pm
NEW YORK (Reuters) - Yahoo Inc chief Jerry Yang was set to meet staff on Tuesday after signaling a more open stance towards a takeover by Microsoft Corp.
Israeli stocks dropped 1% on the last trading day of a holiday-shortened week, as two big drugmakers are off after reporting earnings and two big chemicals companies are bucking the trend.
Reuters - Wachovia Corp , the
fourth-largest U.S. bank, on Tuesday nearly doubled the size of
its previously reported first-quarter loss because of a
write-down on three contracts in its life insurance portfolio. Source: Yahoo! News: Business | 6 May 2008 | 1:26 pm
NEW YORK (Reuters) - Wachovia Corp , the fourth-largest U.S. bank, on Tuesday nearly doubled the size of its previously reported first-quarter loss because of a write-down on three contracts in its life insurance portfolio.
NEW YORK (Reuters) - Estee Lauder Cos Inc on Tuesday reported a 4 percent drop in quarterly profit as the weak U.S. retail environment took a toll on sales of its cosmetics, fragrances and hair-care products.
Spectra Energy Corp. on Tuesday said its profit rose 56% on high commodity prices and a strong Canadian dollar from its operations north of the border as its board approved a $600 million stock buyback and lifted its dividend.
A Goldman Sachs analyst predicted Tuesday that oil prices could reach $150 to $200 a barrel over the next six months to two years, but said that how far prices could climb still "remains a major uncertainty."
Mortgage-finance giant Fannie Mae reports a much greater-than-expected first-quarter loss of $2.2 billion, as credit-related expenses took a bite out of its bottom line.
Gold futures traded marginally higher early Tuesday after rallying in the previous session, as softness in the U.S. dollar underpinned the precious metal.
NEW YORK (Reuters) - Fannie Mae, the largest provider of U.S. home financing, on Tuesday posted its third straight quarterly loss as the U.S. housing crisis took another turn for the worse during the first quarter of 2008.
Qwest Communications International Inc. on Tuesday reported lower first-quarter sales and profit, hurt by the U.S. housing slump as well as stiff competition in the long-distance phone market.
US stocks were poised for a lower start on Tuesday, as investors digested more bad news from the financial sector, as Fannie Mae reported a big loss, and looked with trepidation to earnings reports from Cisco and Disney Source: FT.com - US homepage | 6 May 2008 | 1:04 pm
The Swiss bank is to cut another 2,600 investment banking jobs in a further reaction to losses from the subprime crisis, part of a package to reduce the total workforce by about 5,500 by the middle of next year Source: FT.com - US homepage | 6 May 2008 | 12:53 pm
Reuters - Stock index futures fell on Tuesday as
oil prices hovered around $120, keeping pressure on consumers
and energy-dependent industries, and Fannie Mae
reported a big loss, underscoring the troubles in the U.S.
housing and credit markets.
NEW YORK (Reuters) - Stock index futures fell on Tuesday as oil prices hovered around $120, keeping pressure on consumers and energy-dependent industries, and Fannie Mae reported a big loss, underscoring the troubles in the U.S. housing and credit markets.
The Blackstone Group (NYSE:BX) has announced the closing of three newly created collateralized loan obligation funds totaling $1.3 billion. Yep, CLO's. These were all created over the past month. In March, Blackstone merged its existing CLO group with the team from its newly acquired GSO Capital Partners. This 35 person CLO team has offices in New York and London. The combined CLO group now manages $14 billion across 26 funds in the US and Europe. The new CLOs closed by the group were as follows: Columbus Park ($400 million) on April 3rd, Riverside Park ($500 million) on April 15th, and...
Fannie Mae posted a far worse-than-expected loss in the first quarter, as the mortgage finance giant announced plans Tuesday to slash its dividend and raise additional capital.
NEW YORK (Reuters) - Molson Coors Brewing Co , maker
of Molson Canadian and Coors Light beer, reported sharply
higher quarterly profit on Tuesday, helped by higher sales
volume and cost-cutting.
NEW YORK (Reuters) - D.R. Horton Inc , the largest U.S. home builder, posted a large quarterly loss on Tuesday after a $834.1 million charge for the lower value of land and inventory of unsold homes and aggressive price cuts to move unsold homes.
Reuters - Fannie Mae , the largest
provider of U.S. home financing, on Tuesday posted its third
straight quarterly loss as the U.S. housing crisis took another
turn for the worse during the first quarter of 2008.
Opening up the UK postal service has offered "no significant benefit" for homes and small firms, a study says. Source: BBC News | Business | World Edition | 6 May 2008 | 12:30 pm
Playboy Enterprises, Inc. (NYSE: PLA) has reported a net loss for the first quarter of $3.1 million, or -$0.09 per basic and diluted share, on and 8% decline in revenues to $78.5 million. Unfortunately, First Call had estimates pegged at $0.06 EPS on $84.8 million in revenues. Playboy Chairman & CEO Christie Hefner said: "The quarter's results reflected the dual challenges of structural transformation in our traditional media business and a difficult U.S. economy...." She might as well have just said, "A soft economy is hurting sales, and people can get enough nude pictures and adult videos for free on...
The price of a barrel of crude oil passes the $119 mark for the first time in London trading. Source: BBC News | Business | World Edition | 6 May 2008 | 12:17 pm
Jerry Yang, co-founder and chief executive of Yahoo!, last night hinted he
would be prepared to re-open talks if Microsoft "had anything new to say". Source: Latest Business News from Times Online | 6 May 2008 | 12:15 pm
Vodafone has won a contract to sell Apple's iPhone in 10 countries across the globe, after losing the battle with O2 to supply the popular gadget in the UK last year. Source: Telegraph Business | 6 May 2008 | 12:15 pm
The housing and subprime mortgage market claimed another victim today as Fannie Mae (FNM) reported a dismal quarter, cut its dividend and said it would raise $6 billion. Fannie Mae says it lost $2.2 billion in Q1. The loss was equivalent to $2.57 a share. It earned 85 cents a share a year earlier. According to the company "The latest quarter included $4.4 billion in fair value losses, reflecting markdowns on the value of Fannie’s derivatives holdings and trading positions." Shares fell 15% ahead of the open. Douglas A. McIntyre
Rangoon announced that more than 22,000 have died as the international community mobilised aid for the 1m survivors after the military regime made a rare appeal for international help and postponed a referendum on a new constitution in disaster-struck parts of the country Source: FT.com - US homepage | 6 May 2008 | 12:07 pm
LONDON (Reuters) - Oil stood firm on Tuesday after setting a new record high of nearly $121 a barrel, the latest spurt in an advance that has seen prices double over the past 12 months.
A mortgage broker from South London is banned for submitting fraudulent mortgage applications. Source: BBC News | Business | World Edition | 6 May 2008 | 11:59 am
These are the top 10 analyst calls that we are focusing on this Tuesday morning: AGCO Corp. (NYSE: AG) raised to Overweight at Goldman Sachs. HSBC Holdings (NYSE: HBC) cut to Neutral at UBS CNH Global NV (NYSE: CNH) cut to Neutral at Goldman Sachs. Methanex (NASDAQ: MEOH) raised to Buy at UBS. Omniture (NASDAQ: OMTR) raised to Buy at Piper Jaffray. ProLogis (NYSE: PLD) cut to Outperform from Top Pick at RBC Capital Markets. Ryanair (NASDAQ: RYAAY) cut to Sell from Hold at Deutsche Bank. SLM Corp (NYSE: SLM) raised to Overweight at Lehman Brothers. Southern Copper (NYSE: PCU)...
The wave of foreclosures sweeping the nation are driven in part by a nearly unprecedented decline in home prices and require a concerted government and private-sector response, Ben Bernanke, chairman of the Federal Reserve, said Monday.
Reuters - UBS axed 5,500 jobs and sold
billions of dollars of ailing assets on Tuesday in a bid to
break free from the subprime crisis, but its shares dropped as
investors feared its earning power might be permanently
stunted.
ZURICH (Reuters) - UBS axed 5,500 jobs and sold billions of dollars of ailing assets on Tuesday in a bid to break free from the subprime crisis, but its shares dropped as investors feared its earning power might be permanently stunted.
As outsourcing projects go it is rather fantastic: the Oscar-winning special
effects for The Golden Compass, the Hollywood blockbuster that took
$370 million ($£187.7 million) at the box office last Christmas were put
together in a thatched village hut in India. Source: Latest Business News from Times Online | 6 May 2008 | 11:45 am
How a slump in housing prices in poor neighborhoods in the United States has wreaked havoc on a giant Zurich bank that caters to the wealthy may be the most vivid illustration of the breadth of the subprime crisis.
Underlining its status as the biggest subprime victim still standing, UBSannounced today that it was cutting 5,500 jobs, or about 7 percent of its workforce, as it recorded a loss of $17.3 billion. UBS' investment bank will bear the brunt of the axe: 2,600, or 12 percent of the workforce. Overseeing a leaner investment bank is Jerker Johansson, a longtime Morgan Stanley executive who was hired by UBS earlier this year.
Most of those cuts will be felt in London and the New York region. And there may be a sign that more cuts are on their way on Wall Street. Last month, Citigroup announced that it was eliminating 9,000 jobs worldwide after an earlier reduction of 4,000 jobs. Lehman Brothers is reducing its workforce by 5 percent, and Morgan Stanley is cutting several thousand jobs. And perhaps as many as two thirds of Bear Stearns' 14,000 employees will lose their jobs when J.P. Morgan Chase completes its takeover of the firm.
The Financial Times' Alphaville blog, however, points out that the UBS cuts are not as drastic as they appear because the bank had ramped up employment not too long ago. The investment-banking unit's employment peaked at 22,833 in the middle of last year and is currently at 21,600, so slimming down to 19,000 won't be quite so rough.
Still, the cuts come on top of earlier reductions of 1,500 announced earlier by UBS.
The bank is also planning to sell a $15 billion portfolio of securities tied to subprime mortgages to BlackRock, the U.S. money-management firm that is currently advising the Federal Reserve Bank of New York on Bear Stearns' debt assets.
The sale is being seen by UBS as a sign that perhaps the worst of the subprime crisis is over.
"We see clearly that there are sophisticated investors coming into this market, and this in itself we view as strong support," Marcel Rohner, UBS chief executive, said in a conference call with reporters, according to Reuters.
Yet this is a bank that has announced write-down after write-down on its holdings, or more than $37 billion since October. Clearly more work needs to be done.
Jeffrey Goldfarb on BreakingViews.com notes that "even after unloading $15 billion of subprime assets, UBS will be left with $17.7 billion of them, not to mention another $30 billion of monoline bond insurance, reference-linked notes, leveraged loans, and commercial real estate exposure."
Douglas McIntyre on 24/7 Wall St. says the UBS news is even more ominous: "It is beginning to dawn on the people who created the mortgage-backed securities market that the first wave of defaults on subprime loans is now being followed by a second, and perhaps larger, tranche with a huge number of adjustable-rate mortgages resetting this summer. "
RAB Capital, the London-listed hedge fund, gave warning today that volatile
markets would mean profits in the first half would be "significantly
lower" than the same period last year, in a shock alert that sent its
shares tumbling more than 14 per cent. Source: Latest Business News from Times Online | 6 May 2008 | 11:15 am
Britain's services industry expanded at the slowest rate in five years last month, adding pressure on the Bank of England to cut interest rates this week Source: Telegraph Business | 6 May 2008 | 11:10 am
NYSE Euronext said Tuesday its profit more than tripled in the first quarter, reflecting the addition of Euronext NV's activities to those of the parent of the New York Stock Exchange... Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 11:06 am
The owner of Tropicana casinos in Atlantic City and Las Vegas has filed for Chapter 11 bankruptcy protection, nearly five months after New Jersey regulators stripped the Tropicana Casino... Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 11:06 am
Britain's biggest defence contractor will have to publish and implement a global code of ethical business conduct, as well as appoint a senior executive to oversee the programme, a report by senior retired judge Lord Woolf recommends Source: FT.com - US homepage | 6 May 2008 | 11:04 am
French engineering group Alstom denies it is being investigated into allegations of making bribe payments. Source: BBC News | Business | World Edition | 6 May 2008 | 11:03 am
Yahoo! chief executive Jerry Yang said yesterday he would have been prepared to negotiate over the price of a possible takeover by Microsoft but the software giant walked away before he had chance. Source: Telegraph Business | 6 May 2008 | 11:00 am
For one of its latest advertising campaigns, T-Mobile enlisted a creative team that it believed would best reach its young peer-influenced customer—its users.
"With so many ways for companies to reach them, they're almost overloaded," said Melinda McCrocklin, T-Mobile's advertising manager. "We want to make sure our message breaks through."
So McCrocklin and her team in Bellevue, Washington, created a contest that invites customers to build 30-second spots using graphics, music, and footage of basketball stars Charles Barkley and Dwayne Wade that T-Mobile provided in its site. The lure? A promise to broadcast the winning short during this season's NBA playoffs.
"We look at this as getting another creative idea," McCrocklin said. "And if something's there, we'll explore."
While the holy grail of advertising has long thought to be data targeting—finding the right ad for the right viewer—some brands are literally handing the reins to customers, letting viewers create their own ad messages, or even pick the spots they want to watch.
Not surprisingly, two emerging TV networks, one on cable and one on the Web, are pioneering this ad trend.
Current TV, Al Gore's youth-oriented cable network launched viewer-created advertising messages, or VCAMs, as soon as the channel went live in August 2005. They give viewers the opportunity to help create the ad message served to them.
Then NBC Universal and News Corp. joined forces to build Hulu.com, which streams top shows like Heroes and Medium, as well as more shelf-worn movies like Mulholland Drive to viewers for free. It went live last month, and soon plans to let viewers pick the ads they watch from a pool offered by a single brand, say a car company or cosmetics giant.
Jean-Paul Colaco, senior vice president of advertising with Hulu.com, said that a major car company will be the first to test the waters. He declined to name the sponsor.
"Users will define the advertising experience they want," Colaco said. "If you increase the amount of choice, [brands] can get direct feedback on the ads, and know within the first two days if it's successful."
Hulu declined to elaborate on what it charges its clients for this new service. But it seems safe to assume that advertisers are being asked to pay a premium for this kind of targeted result—particularly since it can take 12 to 16 weeks to create the user-driven contest and get it on the air.
Current TV marketing executive Joshua Katz said that clients who want to run a VCAM on his channel "have to bring a certain amount of money to us."
Since YouTube's skyrocketing success, it's easy to find young, Web-savvy users willing to make short clips they hope their peers will laud. The difference with VCAMs is that the shorts are ads that brands usually have to pay a lot to create.
Current has run 26 VCAM contests since launching in August 2005, and attract anywhere between 100 to 600 submissions, says Katz. One such spot included Tyson Ibele's winning spot in 2005 for Sony that featured the technology giant's products robotically morphing into each other.
It's easy to see why Ibele won. The ad has all the simplicity of a MacBook Air but evokes the fun of a Transformer toy—a cultural touchstone for the target audience.
For this spot, Ibele walked away with the grand sum of $1,000—about what a commercial television director earns in one hour on a set. Now a film studies and production major at Victoria University in New Zealand, Ibele, a Canadian, works part-time building animation for the Minneapolis-based online creative agency MAKE.
Ibele acknowledges that his Sony ad generated some nice professional buzz for him—although he notes that Sony made off fairly well, too. "Companies are definitely getting a free ride," he said. "They pay—what, $100,000?—to make a 30-second spot, and here paid 1 percent of that as a prize."
Companies can pay a whole lot more than that for a concept that runs across all media—such as advertising agency TBWA's "PC and Mac" campaign for Apple. Still, even the ad giant plucked an iPod spot off YouTube last fall, created in a day by an 18-year-old in Britain, and retooled it for network television.
Notably, though, Apple hasn't fired its agency in favor of YouTube contributors—yet. However fans with creative ideas, and some digital production ability, now have several avenues they can use to push their ideas in front of brands—and bypass those Herman Miller-designed agencies.
Brands can already pick up a bargain or two right now at Current. Since Ibele's win, the channel has raised its rates a bit—now paying winners $2,500 for their spot, according to Katz. If the ad runs on another Web site, it earns the creator another $5,000. If it airs during a commercial break for Gossip Girl, a budding ad maker can count on $15,000. (Current caps its payouts at $60,000.)
"We have the right to exploit [the VCAM], but with every conceived usage you get compensation," says Katz. Still even he admits that $60,000 for a full campaign is a bargain-basement fee. "If advertisers could hit upon an idea for all platforms for just $60,000?" Katz asks. "They'd be running to me."
The million-dollar question is, of course, do these viewer-created ads actually work? And do viewers really pay any more attention to ads they’ve selected over those they’re spoon fed? Katz says viewers pick Content's VCAMs nine to one over regular spots, according to its proprietary research.
Hulu says the launch of its movie selector option, which went live when the site did last month, has been an overwhelming success with viewers preferring to watch a movie ad of their choice instead of regular commercials breaks while streaming a video from Hulu's library.
Proponents and viewers of user-created programs, whether it's entertainment or advertising, believe this is a trend that's just beginning.
The credit crunch began to impact the wider economy last month as growth in
Britain's services sector, which includes hotels, restaurants and banks,
fell to a five-year low. Source: Latest Business News from Times Online | 6 May 2008 | 10:55 am
The dollar eased against major currencies in thin trading Tuesday ahead of interest rate decisions this week in the eurozone and Britain, dealers said. In early European... Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 10:55 am
BAE Systems, Britain's biggest defence company which has been dogged by corruption allegations, has admitted failing to "pay sufficient attention" to ethical standards which could have damaged its reputation. Source: Telegraph Business | 6 May 2008 | 10:55 am
Chrysler LLC Chairman and Executive Bob Nardelli said Monday the automaker should be able to meet its job-cutting goals without antagonizing the United Auto Workers. Chrysler also... Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 10:52 am
Wall Street headed for a modestly lower open Tuesday as investors awaited more first-quarter earnings reports and watched oil prices hit a new record near $121 a barrel. With oil and... Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 10:52 am
Growth in Britain's services sector unexpectedly slowed to the weakest pace in five years last month as the problems in the credit markets hit the economy. Source: Telegraph Business | 6 May 2008 | 10:50 am
Tuesday, May 6, 2008: Oil hits record $120.93 on fear of tight supply VIENNA, Austria (AP) _ Oil futures rose to an all-time high near $121 a barrel Tuesday with new concerns about a Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 10:49 am
Markets in Europe were off modestly at 6.40 AM New York time. The FTSE dropped .6% to 6,181. British Airways was off 3.8% to 239.25. GlaxoSmithKline (GSK) was off 1.8% to 1131. The DAXX fell .7% to 7,005. Commerzbank was down 2.5% to 23.04. Infineon was up 5.1% to 6,64. SAP (SAP) was down 1.6% to 32, The CAC 40 was down .5% to 5,038. Credit Agricole was of 2.3% to 21.97. Societe Generale was down 2.9% to 76.15. Data from Reuters Douglas A. McIntyre
Oil futures rose to an all-time high near $121 a barrel Tuesday with new concerns about a threat to supply and a weaker dollar. The surge in oil prices was also fueled by hopes that the Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 10:41 am
Big Pharma continues to throw ballast out of the balloon in the hopes of staying aloft. The latest victim of declining fortunes in the industry is Merck (MRK), which seems to have had every drug which it submitted to the FDA this year turned down. Merck's cholesterol medicine Cordaptive got the thumbs down last week. Researchers are also questioning the value of its Vytorin product, another cholesterol treatment which does not seem to work. According to The Wall Street Journal, Merck will cut 1,200 sales jobs. There are more to come. The problems Merck has replacing drugs which are coming...
HOME: Crestview Hills, Ky. HOLDINGS: 11 casino-hotel properties in Nevada, Mississippi, Louisiana, Indiana and New Jersey. EMPLOYEES: 11,000. PROBLEMS: Lost New Jersey casino... Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 10:36 am
Lord Woolf, one of Britain's most distinguished judges, has recommended that defence company BAE Systems introduces an annual ethical audit and strengthen its anti-bribery measures. Source: Telegraph Business | 6 May 2008 | 10:29 am
The transatlantic stock and derivatives exchange group said quarterly earnings more than tripled, as record volumes at its Liffe futures unit offset its declining market share in US cash equities Source: FT.com - US homepage | 6 May 2008 | 10:27 am
The UK services sector grew at its slowest rate in nearly five years in April as costs rose, a survey suggests. Source: BBC News | Business | World Edition | 6 May 2008 | 10:25 am
All of the rumored good news out of Sprint (S) took the stock on a magic carpet ride yesterday. First there were reports that Deutsche Telekom (DT) might buy the whole company. Then there were rumors Sprint might spin-off its failing NexTel division. It is not clear why anyone would want it, but that is beside the point. Now word comes that Verizon Wireless, a joint venture of Verizon (VZ) and Vodafone (VOD), has gotten the franchise to sell wireless service to all of Qwest's (Q) customers. Qwest is a big phone company which covers fourteen states, but it does...
French engineering group Alstom has been under investigation since November for suspected "corruption" in winning contracts abroad, a judicial source said on Tuesday. The... Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 10:25 am
Italy has become the first country to sell the iPhone on a non-exclusive
basis, suggesting that Apple's strategy of tying its device to one network
in each territory may be unravelling. Source: Latest Business News from Times Online | 6 May 2008 | 10:25 am
President Susilo Bambang Yudhoyono said Tuesday that Indonesia was considering quitting the Organization of Petroleum Exporting Countries because it was no longer a net oil exporter. ... Source: Infocious RSS raw feed - channel BNewsBusiness | 6 May 2008 | 10:06 am
Edward S. Lampert, billionaire and hedge fund manager, arrived at the Recession about six months late. The chairman of zombie retailer Sears (SHLD) "said the retailer is taking a conservative stance amid weak consumer spending, cutting its work force and paring budgets in response to an uncertain outlook." Wall St. retail experts have watched large chains cut fat, and perhaps bone, as their say same-store sales turned against them last year. If anything, the market has gotten worse, and expense reductions have picked up speed. Lampert is making his moves to cut Sears costs much later than many competitors. Lampert's...
UBS (UBS) telegraphed all ships in the known world as it sank into the Atlantic like the Titanic. The big bank will fire 5,500 poor souls and sell $15 billion of its subprime mortgage securities portfolio to Blackrock (BLK). If the financial crisis worsens, Blackrock may rue the day it cut the deal. According to The Wall Street Journal "UBS, which is whittling down its mortgage holdings, said it will continue efforts to offload the sizable book of distressed assets." One of the things observers can count on from Wall St. is that when there is smoke there is fire....
Opec member Indonesia is considering leaving the oil cartel to concentrate on domestic production. Source: BBC News | Business | World Edition | 6 May 2008 | 9:45 am
Oil prices rallied to fresh highs this morning, after an analyst at Goldman
Sachs warned that prices could rise to $200 a barrel within two years.$ Source: Latest Business News from Times Online | 6 May 2008 | 9:28 am
Reuters - Adecco posted a
forecast-beating 3 percent rise in first-quarter net profit,
lifting shares, but cautioned that economic weakness would
weigh on its sales growth goal in 2008.
Shares fell across Asia-Pacific as oil prices stayed close to a fresh high of $120.30 a barrel. Banks were unnerved by falls in profit from lenders in Australia and South Korea, and advice from an analyst... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 9:12 am
Bovis Homes has become the latest housebuilder to warn that the slowdown in the housing market will hit profits. Source: Telegraph Business | 6 May 2008 | 9:10 am
Lloyds TSB's decision to be more prudent than some of its banking peers in investing in exotic treasury assets paid off in the first quarter of 2008, when it suffered less severely from falls in the values... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 8:51 am
Fresh concerns about oil supplies pushed the price for a barrel of crude to a fresh record on Tuesday. Optimism that the economic downturn in the US may not be as severe as previously feared added to crude's... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 8:35 am
Fresh concerns about oil supplies pushed the price for a barrel of crude to a fresh record as investors bet the economic downturn in the US would not be a bad as previously feared Source: FT.com - US homepage | 6 May 2008 | 8:35 am
Still red-faced from his flops at Sears and Kmart, billionaire investor Eddie Lampert got hit with more shareholder grumbling at yesterday's annual meeting, but couldn't offer much hope. A line of investors,... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 8:26 am
Sprint Nextel rose as much as 9.6 percent yesterday on reports that Deutsche Telekom is mulling a possible takeover bid. A combination could make the German company's T-Mobile USA unit the biggest wireless... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 8:26 am
The summer is looking super for Viacom and Marvel Entertainment following a $100 million opening weekend at the US box office for "Iron Man," their new comic-adapted hero pic. For Viacom, "Iron Man" -... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 8:26 am
IT is so easy to make the econ omy look better - even when it really isn't. All it took last Friday to slow the pace of job losses was the addition of 267,000 positions that don't really exist. These... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 8:26 am
Nike sneaker billionaire Philip Knight is leading the pack in the tycoon cash-out sweepstakes with a $1.05 billion windfall - made in just one month. The 70-year-old Nike founder has done hundreds of... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 8:26 am
The Minneapolis Star Tribune, one of the nation's top newspapers, confirmed it has hired The Blackstone Group to restructure its balance sheet amid falling revenue and a heavy debt load. The paper, known... Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 May 2008 | 8:26 am
Gordon Brown is hosting a conference to encourage business to do more for development, particularly in Africa. Source: BBC News | Business | World Edition | 6 May 2008 | 8:25 am
The cyclone that has devastated Burma is not only set to push world rice
prices higher but may have jeopardised the country’s long-term ability to
feed its own population, Asian food experts say. Source: Latest Business News from Times Online | 6 May 2008 | 8:21 am
Lord Woolf, one of Britain's most distinguished judges, has recommended that defence company BAE Systems introduces an annual ethical audit and strengthen its anti-bribery measures. Source: Telegraph Business | 6 May 2008 | 8:10 am
Bovis Homes has become the latest British housebuilder to suggest a major
downturn in the British property market, warning that its profits for the
first half of the year may not meet expectations. Source: Latest Business News from Times Online | 6 May 2008 | 8:06 am
The 30-year-old, who had been both bodyguard and companion of the executive's three children, is found in contempt after refusing to testify.
Stephen L. Otten was part of the first Navy SEAL platoon behind enemy lines in Afghanistan after the 9/11 attacks, earning a Navy and Marine Corps Commendation Medal for "courage and expertise while conducting a flawless reconnaissance under the harshest conditions."
Some worry that a proliferation of high-end projects will bury the charm of the storied area's golden past.
Construction cranes hover over Hollywood as the movie industry's historic home undergoes another sweeping -- and sometimes wrenching -- transformation. ¶ More than a dozen multimillion-dollar projects have been announced, launched or just completed that promise new shopping and restaurants, thousands of new apartments and condominiums and towers of glass and steel. ¶ Glitzy clubs dot once-sketchy street corners. Residents swim atop the former Broadway department store at Hollywood and Vine. Construction projects cuddle up to Grauman's Chinese Theatre and are popping up in the shadow of the landmark Capitol Records tower. ¶ The changes can be both impressive and alarming to those who know Hollywood best. Residents and business owners marvel at the improvements around them. Yet they prize the lingering charm of Hollywood's golden past and fear that the place they love is slipping away.
The situation is growing desperate as Central America is hit by soaring global prices for grains and fuel.
There is no shortage of good things to eat in the open-air Wholesale Market here in Nicaragua's capital. Canvas sacks groan with rice and lentils. White eggs are stacked neatly, 30 to a box, fresh from the hens that laid them.
The Web search giant, which fought the Microsoft-Yahoo deal, is likely to boost its online ad dominance.
In the now-suspended takeover fight between software titan Microsoft Corp. and Internet poster child Yahoo Inc. , the winner was a heckler in the audience.
Swiss bank UBS, which has suffered large sub-prime losses, says it is to cut up to 5,500 jobs. Source: BBC News | Business | World Edition | 6 May 2008 | 6:42 am
As they battled at the 11th hour for blue-collar voters in the Indiana and North Carolina primaries Tuesday, Democratic presidential candidates Barack Obama and Hillary Clinton conducted much of their debate via paid ads.
Though winning points for intellectual honesty in rejecting Clinton's proposal for a gas-tax holiday, Obama's message appeared to put him on the wrong side of the old expression that "those who can't do, teach."
As she had done in Pennsylvania, Hillary (who, unlike then, is now able to match Obama's spending) started in Indiana with an ad, "Dreams," emphasizing her regional roots. The ad was completely positive, but drew an implicit contrast to the incendiary return of Reverend Jeremiah Wright.
Obama also aired a "roots" ad, "Next Door," but was bogged down clarifying his relationship with his ex-minister, a story that dominated the news.
Clinton pivoted to her gas-tax proposal last Tuesday, showing herself as a leader who is ready to take action for the middle class. In "Trouble," about her mortgage and gas-tax proposals, she hit Obama for opposing both. It was one of the year's most effective ads.
Along with Obama, economists and newspapers slammed Clinton's gas-tax holiday as an election-year stunt that would do little to help consumers. But campaign ads are aimed at the least-attentive voters. Clarity is key—and it helps to have a simple message: I'm taking action, while my opponent says no.
Automotive issues—gas prices, insurance rates, and registration fees—are easy for voters to visualize and have galvanized several high-profile campaigns in recent years.
To denounce Clinton's plan, Obama channeled his inner law professor. Excerpting a stump speech, "Truth," he took 60 seconds to respond to Hillary's crisp 30-second message. It was heavy on abstractions about the governing process: We don't need to suspend the gas tax, we need to "change Washington."
Obama's admen clearly believe their complex message is more convincing if it's cheered on by an arena filled with sign-waving supporters. But the busy voters who see the ad while rushing to make dinner may feel less of a common bond with those rally-goers than the campaign imagines.
The Washington Postrecently profiled Obama's chief strategist, David Axelrod, as a lifelong political fan now making ads for his ideal candidate. Obama's team, heavy on true believers, may have trouble inhabiting the mind-set of the politically disengaged voters they need to win over.
By Friday, Obama had sharpened his message into a much more effective 30-second spot, "Pennies." Still, before offering his own tangible solutions, such as a $1,000 tax cut, it detoured into a critique of process: Hillary's "pandering" and "poll-driven gimmickry"—not exactly hot-button issues for Hoosiers stretched by higher prices at the pump.
Likewise, Obama's citation of experts and editorials in his speeches and ads (while Hillary scorned economists who disparaged her idea in favor of their "elite" ideas) was a bit tone deaf, considering his downscale target audience. It also shifted emphasis from his own proposals.
In the 1992 Florida primary, Paul Tsongas had tried Obama's approach against a different Clinton—Bill—whom he memorably dubbed "Pander Bear" for proposing a middle-class tax cut. Despite winning nearly every newspaper endorsement in the state—featured proudly in his ads—his I'm-not-Santa-Claus campaign of hard truths lost decisively.
Democrats' happy memories of the economy during Clinton years, as Hillary reminded them on the stump, complicate Obama's efforts to portray Hillary's gas-tax proposal as one more empty promise by politicians who never deliver.
On the other hand, "changing Washington" is a pledge blue-collar voters have heard many times before, and may find dubious—particularly after the Wright controversy raised doubts about the messenger.
Later that Friday, Hillary parried with a new attack, "Gas Tax," that was again more direct than Obama's. Here, the emphasis was on making the oil companies pay for the summer tax holiday with their "windfall profits." Making the energy industry pay now is more vivid, and timely, than Obama's promise to take them on after he is elected.
On Sunday, Obama shot back with "Boost," another ad with a density problem, weighted more toward Hillary's "pandering" and "gimmicks" than his own proposals, and wedging in an explanation of the Clinton gas-tax plan's flaws.
A closing-argument spot reflected the Obama team's inability to edit. Titled "Minute," it actually took two full minutes as it vouched for Obama's ability to bring people together, recapped his gas-tax argument, and listed proposals on Iraq, taxes, and a promise to "change the world"—all set to the backdrop of another boisterous crowd.
On Monday, a day before the voting (and theoretically the best day to reach late-deciding voters), Hillary issued "What's Happened," her most direct attack. It accused Obama of opposing her gas-tax holiday because he lacks a plan of his own.
Obama responded with "Hometown," clearly prepared in advance since it made no specific rebuttal, hitting Hillary for "attacks that do nothing but harm." It was less effective than the Obama ads that were already running, and it may have been intended mainly for the final evening newscasts.
Regardless of the outcome, the ad war gave Clinton the simpler and likely stronger positioning: She offered immediate action, while Obama offered "truth-telling."
But Obama's team made their task harder by insisting on trying to educate those voters who are least interested in policy details. This explains much of Hillary's enduring advantage in the campaign's air war: She wants you to vote for her, while Obama first wants you to understand—and cheer—his logic.Related Links Is $97K A Year Rich? The Phony Populist, Part II Obama Bucks
Motorola chief executive Greg Brown drew fire from disgruntled shareholders at the company's annual meeting in Chicago after management admitted 2007 had been a "punishing year" Source: FT.com - US homepage | 6 May 2008 | 3:26 am
The Fed chairman says failure to act could destabilize communities, reduce property values and lower tax revenues.
As the House prepared to take aggressive steps to stem the wave of home foreclosures, Federal Reserve Chairman Ben S. Bernanke on Monday night endorsed the need for government intervention, saying that letting markets take their own course could "destabilize communities, reduce the property values of nearby homes and lower municipal tax revenues."
AP - Wal-Mart Stores Inc., the world's largest retailer, announced Monday it would expand its discounted prescription drug program to offer 90-day supplies for $10 and add several women's medications at a discount. It also said it would lower the price of more than 1,000 over-the-counter drugs.
A Federal Reserve report indicates the number of banks imposing stricter borrowing standards hit near-record levels, suggesting continued worsening of the credit crisis Source: FT.com - US homepage | 6 May 2008 | 1:43 am
The internet company might have been prepared to accept a lower price rather than see the proposed acquisition collapse, indicated Jerry Yang in an interview with the FT Source: FT.com - US homepage | 6 May 2008 | 1:15 am
UK manufacturers are less confident about prospects amid the worsening economic outlook, a survey says. Source: BBC News | Business | World Edition | 5 May 2008 | 11:19 pm
Many homeowners are frantic to refinance as their home values drop. But on the other side of the equation are buyers who are refusing to jump in until the market hits bottom. How will they know when it does? Dave DeWitt reports. Source: Marketplace | 5 May 2008 | 10:38 pm
New York state is requiring online retailers to charge sales tax if they have marketing agreements with businesses in the state. It's prompted an Amazon lawsuit. But commentator Michael Mazerov says Internet retailers should play by the same rules as the shop on the corner. Source: Marketplace | 5 May 2008 | 10:38 pm
The Associated Press and 100 of its member newspapers have launched a service that will allow you better access to local news on the go. Lisa Napoli explains. Source: Marketplace | 5 May 2008 | 10:38 pm
One thing the presidential candidates haven't been talking about is a space policy. Jeremy Hobson takes a look at whether the candidates have any plans for the final frontier. Source: Marketplace | 5 May 2008 | 10:38 pm
New York City's art auction season opens today. Sotheby's and Christie's are hoping to sell $1.8 billion worth of works -- 25% more than last year. Jill Barshay reports on the art bubble that's just getting larger, despite a struggling U.S. economy. Source: Marketplace | 5 May 2008 | 10:38 pm
Chinese President Hu Jintao leaves Tuesday for a five-day visit of Japan aimed at healing tensions between Asia's two biggest rivals. They're expected to unveil a plan for managing their economic interests in the coming years. Scott Tong reports. Source: Marketplace | 5 May 2008 | 10:38 pm
Investors in the insurance company Aflac have become the first shareholders of a major U.S. company to vote on top executives' salaries. They overwhelmingly rubber-stamped a pay package put together by the board of directors. John Dimsdale reports. Source: Marketplace | 5 May 2008 | 10:37 pm
Microsoft has finally given up on wooing Yahoo into a long-term relationship. And today shareholders punished Yahoo with a 15% price drop. Host Tess Vigeland talks with C-Net's Ina Fried about what happened. Source: Marketplace | 5 May 2008 | 10:37 pm
The withdrawal of Microsoft's offer for Yahoo has unleashed a torrent of analysis, second-guessing, high fives, and Bronx cheers.
Just wait until the lawyers get involved.
The expected wave of shareholder lawsuits against Yahoo will have one firm riding the crest: Bernstein Litowitz Berger & Grossman of New York.
The firm has been pursuing a class action against Yahoo since February 21, has been named lead counsel for seven consolidated lawsuits pending at the Delaware Court of Chancery, and has a court order stipulating that it will be the lead law firm for any more suits filed in that court.
"We have been prosecuting it night and day for the last two-and-a-half months," said Gerald Silk of Bernstein Litowitz.
In other words, Bernstein Litowitz and its clients—two retirement funds for municipal workers in Detroit—are in the driver's seat. Lawyers from the firm acknowledge that complaints could be filed in other jurisdictions, but they point out that California cases have already been stayed in deference to the class action in Delaware, where Yahoo (and most other big American companies are incorporated).
Bernstein Litowitz is planning to file an amended complaint later this afternoon, based not only on information learned over the weekend, including Microsoft C.E.O Steven Ballmer's detailed and lengthy letter to Jerry Yang of Yahoo, but also pointing out the myriad problems involved in Yahoo's proposed deal to outsource advertising to Google.
"Yahoo turns around and basically takes the heart of its business and puts it in the hands of Google. How can you rationalize that?" said Mark Lebovitch, the Bernstein partner handling the case.
"We have developed a lot of evidence," he said, and "not just relating to the market's response" this morning to the Ballmer about-face. The firm has deposed Yahoo employees and consultants. "We think we have quite a story to tell, and claims to prosecute," he said. The full story will remain unknown for now: The complaint will be filed under seal because it contains confidential information.
The lawsuit as originally filed claimed, among other things, that Yahoo's board had breached its fiduciary duty to maximize value for shareholders when it instituted a severance package for current Yahoo employees, giving them windfall payments to leave the company if Microsoft succeeded in its bid, at a "cost of billions to shareholders," said Lebovitch. "It would create massive chaos for Microsoft in trying to do an acquisition. They were essentially poisoning the well beforehand."
The complaint sought damages and injunctive relief. "Now our focus turns to money damages and the financial harm that has flowed" from Yahoo's rejection of the Microsoft bid, he said.
Another plaintiffs' lawyer, Stuart Grant of Grant & Eisenhofer, in Wilmington, Delaware, who has been following the Yahoo lawsuits but has not filed one of his own on behalf of the firm's pension-fund clients, expects more cases to be filed and thinks they will have legs.
"The Yahoo board has got some serious problems on its hands," said Grant.
"Delaware law allows you to 'just say no,'" which was Yahoo's mantra during its protracted courtship dance with Microsoft.
The problem, he said, is that Yahoo argued that it was worth more. "On what basis are you going to get there? Have you showed us some long-term strategy that is going to get us there? I think it is difficult to say that this is a business judgment," Grant said.
Some law professors, however, are very skeptical about the potential for success of any breach of fiduciary duty lawsuit against Yahoo
In his letter walking away from the deal, Ballmer essentially equated Yahoo!'s planned linkup with Google to a poison pill. Larry Ribstein, a visiting professor at New York University School of Law who has posted on the deal maneuvers on his blog, said that unlike an actual poison pill plan, which makes a deal all but impossible, the Google linkup "didn't make the deal impossible." And at any rate, management is given leeway by the courts when putting poison pills into effect.
"Basically, the way the courts have interpreted poison pills under Delaware law is that if the board acted in good faith to block the deal, they are still okay," Ribstein said. "While we don't know all the facts, the fact is that Yang was still at the negotiating table: There was still a possible deal."
And while plaintiffs' lawyers play up the mantra that Yahoo!'s board was ignoring its responsibility to "maximize shareholder value," the relevant Delaware precedent is a case called Unocal Corp. v. Mesa Petroleum Co., which allows directors to consider the welfare of the corporation as a whole, including its employees. "Probably the Microsoft deal is better for Yahoo!, but there would have been significant problems in terms of meshing the workforce and employee morale," Ribstein said. The upshot? "I am extremely skeptical, based on what I know right now, that there is a successful shareholder suit here just in terms of the standard breach of fiduciary duty."
And Ribstein doubts that Ballmer is really walking away.
"Ballmer has got to have Yahoo" in Ribstein's view. Facebook or AOL seem very much second best by comparison. "And if that is the case, it is not at all irrational for Yang to play pretty hard ball, if he is the only game in town." So the fat lady has not yet sung in this opera, according to Ribstein. But that probably won't stop the plaintiffs' lawyers from rushing to courthouses to take their chances.
Shareholders of Aflac, the insurer best known for its quacking-duck TV commercials, have overwhelmingly signaled their satisfaction with top management's compensation, in the first "say on pay" resolution.
More than 93 percent of shareholders voted for the resolution, the company said. Only 2.5 percent expressed their dissatisfaction with the pay of the insurer's top five executives. Aflac is the first publicly traded U.S. company to give shareholders such a say.
Although the vote is nonbinding, the company has said that it plans to seriously consider shareholder suggestions if its pay proposal gets voted down.
"With only 2.5 percent voting no, I am pleased that we have earned the confidence and trust of the overwhelming majority of shareholders," Aflac's longtime C.E.O., Daniel Amos, said in a statement today.
The step comes amid increasing public outcry and political debate over lavish executive compensation. The average C.E.O. made 465 times what the average U.S. worker made in 2005, up from 54 times in 1980.
A number of shareholder activists, like the huge California pension Calpers, have supported calls for shareholder votes on executive pay. In Australia, Britain, Sweden, and the Netherlands, such votes are required for public companies.
Last year, the U.S. House of Representatives passed the Shareholder Vote on Executive Compensation Act, which would require companies to adopt an Aflac-like vote of approval on the pay of top executives; the bill is awaiting a vote in the Senate.
Indeed, while Aflac may be the first firm to implement this measure, other public companies, including Blockbuster, Verizon, and RiskMetrics Group, have agreed to introduce similar votes for the 2009 proxy season.
For his part, Amos acknowledges that he was surprised when the proposal from Boston Common first came to him, in 2006. "My initial reaction was, 'What have I done wrong?' " Amos recalls. But after discussing the proposal with Aflac's board of directors and talking to the company's institutional and individual shareholders, Amos decided that the measure would help increase transparency and show Aflac's responsiveness to shareholders, and he recommended to the board that the proposal be passed. The company, which provides health and life insurance to more than 40 million people around the world and is well-known for its ubiquitous duck, officially announced the new policy in early 2007.
Naturally, it's companies like Aflac, in which the C.E.O.'s and management teams have performed the best, that are most likely to be willing to subject their executives' pay to shareholder scrutiny. Amos, for example, made $14.8 million in 2007, which was about the average compensation for a C.E.O. at one of the country's 500 largest companies in 2006. But as the firm points out, Aflac's stock has had a total return of more than 3,800 percent since Amos became C.E.O., in August 1990, compared with 660 percent for the Dow Jones industrial average and 549 percent for the Standard & Poor's 500-stock index over the same time period.
"If you do it based on performance, I'd like to know, if we don't pass, then who would?" Amos asks. (Watch our video of Amos giving his take on other well-known pay packages and price tags.)
No Microhoo? Shareholders of Yahoo are clearly unhappy.
Shares of Yahoo fell as much as 19 percent before recovering a bit to end the day down 15 percent, at $24.37. It was the steepest drop in two years, although the shares are still above the level they were at before Microsoft made its $31-per-share offer on January 31.
"The only question is whether this is really the bottom," says Eric Savitz on the Tech Trader Daily blog.
Yahoo succeeded in fending off Microsoft. But it will be a pyrrhic victory, unless...
In lowering his rating on Yahoo shares to "sell," Mark Mahaney, an analyst at Citigroup, wonders why a deal was not forged. Noting that a price of $35-per-share (the midpoint between $33 and $37) amounted to only $3 billion, or 7 percent of the initial bid, "it's surprising that a 7 percent solution couldn't be found."
Henry Blodget on Silicon Alley Insider, says, "Despite Yahoo's suggestion to the contrary, we have yet to hear from a single Yahoo shareholder who publicly supports Yahoo's board's decision to hold fast at $37."
Yahoo shares have not been at $37 since January 2006.
Kara Swisher on All Things Digital says that some top Yahoo executives are also dismayed that merger discussions collapsed over the weekend.
In particular, the description in the New York Times that some Yahoo executives "were high-fiving each other for defeating Microsoft's bid," caused consternation.
"That was very telling, if it was true," one executive told Swisher. "It shows a complete lack of connection to the balance of the company."
The proposed merger had drawn its share of critics, who charged that integration and cultural issues would outweigh potential benefits from combining the two. But now that the deal won't happen, the outlook for both companies is as dire as it was three months ago, before the merger was proposed.
"Without Yahoo, Microsoft has no compelling means of becoming the No. 2 player in online advertising," said Sandeep Aggarwal, an analyst at Collins Stewart. "And without Microsoft, Yahoo has no magic wand to lift its stock back above the mid-20s."
This much is certain: Yahoo's stock will take a hard tumble this week as arbitrageurs and others counting on a Microsoft buyout relinquish their shares at a steep discount to last week's levels. "The word crater comes to mind," said Rob Enderle, president of tech advisory firm Enderle Group.
Yahoo had already been facing at least one shareholder lawsuit after it refused to accept Microsoft's proposal. It's likely to face more lawsuits, as well as other pressure from activist investors.
One of them, Eric Jackson of Ironfire Capital, is urging Yahoo shareholders to vote against all of the company's board members when they are up for election later this year. Jackson says that he's started hearing from more Yahoo shareholders since Microsoft dropped its bid.
"They're surprised and extremely frustrated," Jackson said. "They were certain a friendly deal was going to happen."
To appease those shareholders, Yahoo needs to improve its financial performance dramatically. The company unveiled a plan in March showing how a new search technology and an open-source approach to software development would help boost its revenue and cash flow. But analysts and investors have signaled that they aren't impressed.
The best short-term hope for Yahoo to increase its cash flow is to ally itself with the very company that has put it in dire straits—Google. Yahoo and Google may enter into a limited ad partnership that will run Google ads on keywords where Yahoo makes less money.
That could help bring Yahoo new revenue in coming quarters. But it could also drive away advertisers who are on Yahoo precisely because its search engine, which is significantly less popular than Google's, charges less for keywords.
Shares of Microsoft are up nearly 3 percent today, and its stock will likely fare much better in the near term. But longer-term threats to its profit growth remain. Vista software sales are slowing; Apple is gaining market share in desktops and laptops; and Google is pushing free versions of office-productivity software, threatening Microsoft Office's cash cow.
Microsoft has invested heavily in online advertising, only to see its share of the search market—like Yahoo's—decline steadily. The division that includes Microsoft's online-ad business has posted steadily growing operating losses for nine straight quarters. In aggregate, it's racked up $1.7 billion in losses since early 2006.
Such pressures drove Microsoft to pursue Yahoo. The $31-a-share bid that Microsoft made in February offered a 62 percent premium over Yahoo's stock price at the time. But it also discounted 32 percent off the $41-a-share bid that Microsoft had previously made for Yahoo, a bid that was also rebuffed by Yahoo's board.
Last week, Microsoft raised its offer to $33 a share, but Yahoo's board held out for $37.
"I think Yahoo misread Microsoft," said Enderle. "People usually bid low and then raise their bids. But Microsoft didn't want talks to drag on, so its strategy was to get the deal done as quickly as possible." Yahoo, however, sensed that protracted talks could strengthen its hand, and so it held firm to a higher bid. "Yahoo thought Microsoft was lowballing it," Enderle said, "and they missed the boat."
So, like Yahoo, Microsoft must now scramble. Ballmer has outlined other possible acquisitions it could make if the Yahoo deal fell through: Facebook, Time Warner's AOL, and News Corp.'s MySpace. Facebook is also determined to remain independent, while AOL has talked with Yahoo about a deal. That leaves MySpace as the easiest partner for Microsoft.
Or Microsoft could simply bide its time and come back to Yahoo after its shareholders start screaming. In doing so, it would follow Larry Ellison's playbook in Oracle's acquisition of BEA Systems.
Oracle walked away from BEA after its bid was rejected, then talked a lot about how hard it pushed for its bid. Once BEA investors complained, Oracle came back with an additional $1.8 billion and quickly closed a deal.
"Microsoft can come back again," said Aggarwal, "especially if Yahoo doesn't do very well on its own."
Correction: This article originally misstated the terms of Oracle's successful takeover bid for BEA.
Government officials have stepped up an investigation into whether crimes were committed when the subprime-mortgage market collapsed.
The Federal Bureau of Investigation, the Internal Revenue Service, and federal prosecutors have formed a task force, report Lynnley Browning of the New York Times and Amir Efrati of the Wall Street Journal.
This new effort is apparently broader in scope than a task force formed by the F.B.I. in January that is looking at possible fraud in mortgage lending.
The Timessays, "While the new task force is focusing on the role of mortgage lenders and brokers in low- or no-documentation loans, it is also examining how the loans were bundled into securities."
The investigation has accelerated in recent weeks, the Times says, as a growing number of banks reported additional write-downs on their securities tied to mortgages.
The Wall Street Journalquotes a federal prosecutor in Brooklyn, Benton Campbell, who says the "jury is still out" on whether crimes will be uncovered in the securitization of mortgages, their trading, or their disclosure.
"There are market forces in play in that area, and that doesn't necessarily mean there is fraud," Campbell told the Journal.
The United States attorney's office in Brooklyn, the Journal notes, is already investigating the collapse of two Bear Stearns hedge funds last summer and questions over how UBS valued its mortgage-backed-securities portfolio.
Reuters - Stock index futures fell on Tuesday as
oil prices hovered around $120, keeping pressure on consumers
and energy-dependent industries, and Fannie Mae
reported a big loss, underscoring the troubles in the U.S.
housing and credit markets.
Reuters - Fannie Mae , the largest
provider of U.S. home financing, on Tuesday posted its third
straight quarterly loss as the U.S. housing crisis took another
turn for the worse during the first quarter of 2008.
Reuters - UBS axed 5,500 jobs and sold
billions of dollars of ailing assets on Tuesday in a bid to
break free from the subprime crisis, but its shares dropped as
investors feared its earning power might be permanently
stunted.
Jerker Johansson, a longtime Morgan Stanley executive who was hired by UBS earlier this year.
Reuters - Adecco posted a
forecast-beating 3 percent rise in first-quarter net profit,
lifting shares, but cautioned that economic weakness would
weigh on its sales growth goal in 2008.
Reuters - Yahoo Inc chief Jerry Yang was set to
meet staff on Tuesday after signaling a more open stance
towards a takeover by Microsoft Corp.
AP - Wal-Mart Stores Inc., the world's largest retailer, announced Monday it would expand its discounted prescription drug program to offer 90-day supplies for $10 and add several women's medications at a discount. It also said it would lower the price of more than 1,000 over-the-counter drugs.
