The feverish anticipation surrounding the fourth Indiana Jones film looks set to prompt the biggest movie opening of all time for blockbuster veterans George Lucas and Steven Spielberg. Source: Telegraph Business | 20 May 2008 | 2:00 pm
BOSTON (Reuters) - Microsoft Corp has proposed to buy Yahoo Inc's search business and take a minority stake in the Web pioneer, stopping short of a full-out merger, a person familiar with the discussions said on Monday.
NEW YORK (Reuters) - U.S. stocks opened lower on Tuesday after data on rising core producer prices in April added to worries that the Federal Reserve might have to raise interest rates to contain inflation.
Russian security services search the Moscow HQ of oil giant BP - the second time the firm has been targeted. Source: BBC News | Business | World Edition | 20 May 2008 | 1:37 pm
Crude-oil futures travel to a new record high above $128 a barrel after Monday’s record high close, as investors bet that increasing demand will exceed supply, despite increased production by Saudi Arabia.
WASHINGTON (MarketWatch) -- It is time for the Federal Reserve to pull over to the shoulder and pause from its aggressive rate-cutting campaign, Fed Vice Chairman Donald Kohn said Tuesday.
NEW YORK (Reuters) - Target Corp reported a 7.5 percent decline in quarterly profit on Tuesday as shoppers passed over clothes and jewelry in favor of basics like food, hurting the retailer's margins.
WASHINGTON (Reuters) - Benchmark U.S. interest rates are at the right level now to help the sputtering U.S. economy, but elevated inflation and uncertainty about housing and financial markets remain worrying, Federal Reserve Vice Chairman Donald Kohn said on Tuesday.
1. Tom Selleck was George Lucas's original choice for the role but had to turn it down due to commitment to Magnum PI. Source: Telegraph Business | 20 May 2008 | 1:30 pm
NEW YORK (Reuters) - Goldman Sachs , Morgan Stanley
and UBS said on Tuesday they will allow their
clients to access each other's non-displayed liquidity pools,
known as dark pools, in an effort to increase chances of
trading orders being filled.
US stocks were set for a lower start on Tuesday after a leading banking analyst said the credit crisis will extend well into 2009 and possibly beyond and a rise in core inflation threatened to trim corporate profits and consumer spending Source: FT.com - US homepage | 20 May 2008 | 1:23 pm
Reuters - Producer prices rose by a
smaller-than-expected 0.2 percent in April after gasoline
prices sank, government data showed on Tuesday, but core
inflation at the producer level posted a larger advance.
WASHINGTON (Reuters) - Producer prices rose by a smaller-than-expected 0.2 percent in April after gasoline prices sank, government data showed on Tuesday, but core inflation at the producer level posted a larger advance.
Medtronic Inc. said Tuesday its fourth-quarter profit was flat compared with last year, when the medical device maker recorded a tax gain of about $129 million. The results beat Wall... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 1:20 pm
AP - Inflation at the wholesale level slowed in April following a huge increase in March although prices for a number of items from prescription drugs to pasta shot upward.
Reuters - Stock index futures extended losses on
Tuesday after a report showed that producer prices, excluding
volatile food and energy, grew at a faster-than-expected pace
in April, adding to fears of greater inflation.
Reuters - AutoZone Inc , the largest U.S.
auto parts retailer, reported higher quarterly earnings
Tuesday, topping Wall Street forecasts, on stronger sales to
commercial customers, sending its shares up almost 7 percent in
premarket trade. Source: Yahoo! News: Business | 20 May 2008 | 1:11 pm
Oppenheimer now puts out a negative report on banks stocks every other day, like clock work. Today's reports says that money center financial firms "may write off more than $170 billion of additional reserves by the end of 2009," according to Bloomberg. If that is the case, several banks stocks which have recovered over 50% from their lows, are overvalued. Assuming that Oppenheimer is right, and it has been before, banks could retest their lows from earlier this year. That means that Citigroup (C) could move back toward $18 and Bank of America back to $33. Douglas A. McIntyre
Inflation at the wholesale level slowed in April following a huge increase in March although prices for a number of items from prescription drugs to pasta shot upward. The Labor... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 1:06 pm
U.S. stock futures dropped Tuesday as wholesale prices outside of food and energy rose the most in around 17 years, a key Federal Reserve official gave a sign of a pause in interest rates and Home Depot reported a 66% profit fall on the back of a troubled housing market.
Wholesale prices rose a smaller-than-expected 0.2% in April after seasonable adjustments, with food prices flat and energy prices falling, the Labor Department reports.
Wholesale prices rose a smaller-than-expected 0.2% in April after seasonable adjustments, with food prices flat and energy prices falling, the Labor Department reports.
ATLANTA (Reuters) - Upscale retailer Saks Inc reported a higher quarterly profit on Tuesday as promotions helped draw shoppers during a difficult economic environment.
Target says it first quarter profit dropped almost 8 percent due to higher costs and softer-than-expected sales. The company still beat Wall Street earnings estimates. The... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 12:53 pm
Wall Street tilted toward a lower open on Tuesday after a government report showed inflation at the wholesale level rose more than forecast after stripping out food and fuel prices. ... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 12:52 pm
Target Corporation (NYSE:TGT) has reported its Q1 net income of $602 million, down from $651 million in the same quarter in 2007. It saw a 1.4% drop in earnings per share to $0.74 EPS on store sales of $14.3 Billion; total revenues after credit card receivables of $500 million were listed as $14.802 Billion. First Call had estimates lowered over the last quarter and estimates for today were $0.71 EPS and $14.92 Billion. The company's new stores contributed to make a 5% total sales growth, which offset its -0.6% decline in same store sales. Target also noted that it repurchased...
Bertelsmann AG says it has named Markus Dohle as head of its New York- based publisher Random House. The German media company said Tuesday that Dohle replaces Peter W. Olson, who held... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 12:47 pm
Wall Street is heading for a lower opening after the Labor Department issued a report suggesting inflation on the wholesale level continues to pressure the economy. The department said Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 12:46 pm
Michael Spencer, the chief executive of Icap, said today that the world's
largest interdealer broker was firmly in the market for acquisitions,
despite early indications that the volatility that drives its profits is
returning to more normal levels. Source: Latest Business News from Times Online | 20 May 2008 | 12:44 pm
Wall Street is heading for a lower opening after the Labor Department issued a report suggesting inflation on the wholesale level continues to pressure the economy. The department said Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 12:44 pm
The retailer Saks Inc. says its first-quarter profit rose but says increased discounting hurt profit margins. The New York-based operator of Saks Fifth Avenue said Tuesday it earned... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 12:39 pm
Inflation at the wholesale level slowed in April following a huge increase in March although prices for a number of items from prescription drugs to pasta shot upward. The Labor... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 12:34 pm
Inflation at the wholesale level slowed in April following a huge increase in March although prices for a number of items from prescription drugs to pasta shot upward. The Labor... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 May 2008 | 12:31 pm
Birmingham City said today it more than doubled its first-half turnover but warned that relegation from the Premier League would have a "significant financial effect" on the club. Source: Telegraph Business | 20 May 2008 | 12:30 pm
Birmingham City said today it more than doubled its first-half turnover but warned that relegation from the Premier League would have a "significant financial effect" on the club. Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 12:30 pm
NEW YORK (Reuters) - American International Group Inc Chief Executive Martin Sullivan on Tuesday told investors that the insurance company's recent issue of equity and debt raised in the region of $20 billion, far more than initially expected.
Home Depot posted a 66% drop in quarterly profit Tuesday, as it paid to close stores and cut back on expansion plans amid the housing slump, although the results topped analysts' forecasts.
Marks and Spencer says annual profits rose 4.3% to £1bn but is cautious about the coming year's prospects. Source: BBC News | Business | World Edition | 20 May 2008 | 12:16 pm
CNBC just hosted oil magnate T. Boone Pickens this morning in a sit down interview with Becky Quick. Now that his $125 target on oil has been hit, he's making a new prediction on oil prices. He said oil prices are continuing to go up as 85 million barrels per day is as good as supply can get and 87 million barrels per day is the demand. He also said the president wasted his time going to Saudi Arabia asking for more oil. Pickens just said he thinks oil could and will likely go to $150 per barrel this year,...
NEW YORK (Reuters) - Staples Inc , the No. 1 office supplies retailer, reported a higher quarterly profit on Tuesday that matched Wall Street's expectations, due in part to strong sales in international markets.
First Direct, the online and telephone lender owned by HSBC, has started
selling mortgages again to new customers after withdrawing from the market
seven weeks ago. Source: Latest Business News from Times Online | 20 May 2008 | 12:12 pm
Home Depot's first-quarter earnings tumbled by 65 per cent after the world's largest home improvement retailer was hit by costs from store closings and scrapping new stores, as well as a worsening housing... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 12:11 pm
Home Depot reported a 66% drop in quarterly profit as the US housing meltdown hurt sales and the retailer took a charge to close stores and cut back expansion plans Source: FT.com - US homepage | 20 May 2008 | 12:11 pm
Reuters - Home Depot reported a 66 percent
drop in quarterly profit on Tuesday as the U.S. housing
meltdown hurt sales and it took a charge to close stores and
cut back expansion plans.
ATLANTA (Reuters) - Home Depot reported a 66 percent drop in quarterly profit on Tuesday as the U.S. housing meltdown hurt sales and it took a charge to close stores and cut back expansion plans.
In theory, NexCen Brands is a brilliant business model: a portfolio of fashion and retail brands that can be leveraged by a savvy finance company.
And it is headed by an innovative executive: Robert D'Loren, who helped Bill Blass and Oscar de la Renta raise money by bundling their trademarks and licensing revenue to back bonds. D'Loren was once described as the Michael Milken of fashion securitization.
Yet his brilliant plan, as the British would say, has now gone all pear shaped.
NexCen, which owns Bill Blass, Athlete's Foot, Waverly, and other brands, has warned that it may not survive.
The problem is that the company faces a $30 million debt payment by October 17, stemming from its January acquisition of the Great American Cookie Co. Given the current credit market, that will be difficult. "These features of the January 2008 amendments…have raised significant concerns about the company's liquidity and capital resources," NexCen said in a filing with the Securities and Exchange Commission.
Shares of NexCen plunged 85 percent on Monday.
The company says it is exploring the possible sale of one or more of its businesses, among other options, and is holding discussions with its lender.
Vicki Young of Women's Wear Dailysays that the Blass and the Waverly brands were the most likely to be sold quickly to raise cash, adding that Tharanco and NRDC Equity Partners are being seen as possible buyers of Blass.
Michael Barbaro of the New York Timesnotes that "the troubles at NexCen have riveted New York's fashion community, because of the uncertainty regarding Bill Blass. NexCen had promised to revive the clothing brand, which has struggled since Mr. Blass' death in 2002."
NexCen was created in 2006 by the merger of a former wireless company whose business evaporated when the bubble in telecommunications burst and UCC Capital, D'Loren's investment bank.
From the beginning, the company has had its believers.
Indeed, until Monday, all four of the analysts that covered the company had "buy" ratings on the stock.
Reuters - Staples Inc , the No. 1 office
supplies retailer, reported a higher quarterly profit on
Tuesday that matched Wall Street's expectations, due in part to
strong sales in international markets.
Goldman Sachs has noted that an analyst named Brad Cragin has left the firm, and his former targets and ratings in specialty apparel names are no longer in effect. These are some of the specialty apparel names that have been dropped from coverage: Columbia Sportswear Co. (NASDAQ: COLM), Nike Inc. (NYSE: NKE), Under Armour (NYSE: UA), lululemon athletica inc. (NASDAQ: LULU), There were also many names in footwear and shoe retailing that were dropped: Foot Locker (NYSE: FL) Genesco (NYSE: GCO) Finish Line (NASDAQ: FINL) K-Swiss Inc. (NASDAQ: KSWS). As a reminder, these are not true downgrades. This coverage was...
Northern Rock, the Newcastle-based nationalised lender, pledged today that it
will repay the entire £26.9 billion taxpayer emergency by 2011, even if the
British housing market slumps into a 1992-style recession. Source: Latest Business News from Times Online | 20 May 2008 | 11:43 am
Agency workers will be given the same employment rights as permanent staff after 12 weeks under new plans. Source: BBC News | Business | World Edition | 20 May 2008 | 11:43 am
In a call overseas earlier this morning, Lehman Brothers decided to cut its target prices on some select European investment banks. Here are three of the investment bankers that are traded in the U.S.: UBS (NYSE: UBS) target cut 6% to 31CHF. Credit Suisse (NYSE: CS) target cut almost 2% to 64CHF. Deutsche Bank (NYSE: DB) target cut about 5% to 66EURO. What is interesting here is that Lehman noted that the worst for these may be over as far as credit losses and writedowns from subprime loan exposure. Lehman still believes that additional losses from from markdowns and weak...
These are not the only analyst calls out there, but these are ten calls affecting stocks this Tuesday morning: ASM Intl NV (NASDAQ: ASMI) started as Underperform at Jefferies. ATA Inc. (NASDAQ: ATAI) started as Outperform at Oppenheimer. Crown Castle (NYSE: CCI) started as Buy at Merriman Curhan Ford. EMC (NYSE: EMC) Cut To Market Perform from Outperform at Bernstein; stock indicated down 2%. Gerdau AmeriSteel (NYSE: GNA) started as Buy at Citigroup. Netflix (NASDAQ: NFLX) Raised to Overweight at Lehman Brothers; stock indicated up 2%. NRG Energy (NYSE: NRG) cut to Neutral at Credit Suisse; stock indicated down 1%....
The Ministry of Defence is set to sign a £4bn deal to build two aircraft carriers with BAE Systems and VT Group. Source: BBC News | Business | World Edition | 20 May 2008 | 11:09 am
Oil showed little sign of receding from recent highs on Tuesday, with the price supported by fears of supply disruptions and a weak dollar in spite of news the United States was beginning to wean itself... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 11:09 am
Britain has yet to feel the worst effects of the credit crunch, the
billionaire investor George Soros has warned. Source: Latest Business News from Times Online | 20 May 2008 | 11:02 am
The FTSE 100 fell back on Tuesday from levels not seen since the beginning of the year as mining companies fell to a bout of profit taking.A combination of takeover speculation, rising metals prices and... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 11:02 am
Marks and Spencer is about to break with tradition by selling non own brand, "must have" products in some of its stores. Source: Telegraph Business | 20 May 2008 | 11:00 am
Marks and Spencer is about to break with tradition by selling non own brand, "must have" products in some of its stores. Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 11:00 am
Rising energy costs meant German producer prices were 5.2% higher in April than a year ago, figures show. Source: BBC News | Business | World Edition | 20 May 2008 | 10:56 am
Macquarie Group, the prominent investor in British infrastructure, admitted
today that volatile credit markets might break its 16-year run of rising
profits next year even as it said that the credit squeeze appeared to be
easing. Source: Latest Business News from Times Online | 20 May 2008 | 10:52 am
Marks and Spencer ended a difficult year by hitting 1bn in pre-tax profit a return to earnings achieved a decade ago but current trading showed there was little prospect of a repeat performance next... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 10:46 am
Just how creative were AOL's attempts to cajole customers to buy $1 billion in advertising they neither wanted nor needed?
So creative, according to federal officials, that even Scott Sullivan, the former chief financial officer of WorldCom who is now serving a five-year prison sentence for his role in the biggest accounting fraud in history, saw a sham.
"This has turned into a money-changing scheme, and it can't continue," reads a November 2001 email from WorldCom cited in a complaint filed in federal district court in Manhattan on Monday.
The email was written by Sullivan and sent to three AOL executives, said Scott Friestad, associate director of the Securities and Exchange Commission's enforcement division.
It has been six years since securities regulators began investigating AOL's attempts to parlay the creativity of the advertising industry to the rules of accounting.
Monday's lawsuit, expected to be the final chapter in a story that began during the dotcom bubble, accuses eight former AOL executives of committing fraud.
AOL Time Warner's former chief financial officer, John Kelley, will contest the allegations, along with Joseph Ripp, the former C.F.O. of the AOL division, and two others.
Kelly "flatly denies" the government's claims and questions the "significant length of time that has passed since the events in question," said his lawyer, Jonathan Tuttle.
Four others, including AOL's former controller, James MacGuidwin, agreed to settle without admitting or denying wrongdoing, though they will pay millions of dollars in penalties and face other sanctions.
AOL founder Steve Case and Bob Pittman, the former No. 2 of AOL Time Warner, are apparently safe. The S.E.C. has no plans to bring further complaints against the company, now known as Time Warner, or any former or current employees, Friestad said.
The commission had extracted a $300 million settlement from Time Warner in 2005.
The nexus of WorldCom and AOL was a new revelation from Monday's lawsuit.
In the arrangement that prompted a rebuke from Sullivan, WorldCom twice agreed to waive penalties that AOL owed on an unrelated contract. AOL employees, seizing an opportunity to generate revenue, pushed WorldCom to let it pay the penalties and then return the money by buying advertising that it didn't want, officials allege.
"If you want $17 million in advertising, then pay $17 million instead of the credit and we will place ads, even though we don't need them," a clearly frustrated Sullivan wrote, according to the S.E.C. "If you want $25 million in advertising, then pay $17 million instead of the credit, pay another $8 million and we will place the ads, even though we don't need them."
Friestad described the complaint as outlining "one of the most egregious accounting frauds in recent memory."
"The conduct was so outrageous that even Worldcom's C.F.O. Scott Sullivan was troubled by what AOL was doing," Friestad said.
Friestad said the complexity of the case required the S.E.C. to move deliberately on an investigation into events dating back to the period of 2000 to 2002. The S.E.C. will hold fraud perpetrators accountable "even if it takes a while to investigate and examine that conduct because of the complexity of the transactions at issue," said Friestad.
Another S.E.C. official, speaking on condition of anonymity, said it could be "a number of years" before trials begin in the cases of the four former executives who did not settle. That raises the possibility of a 2010 trial in which witnesses will give testimony about events from 10 years earlier.
AOL's sometimes clumsy attempts to generate advertising revenue, a key metric watched by the company's accountants, involved a technique known as roundtripping that was popular in the days of the dotcom bubble but no longer prevalent.
In one example from November 2000, emails and instant messages obtained by the government show AOL employees rushing to turn a negotiated discount on telecom services from a supplier, Telefonica, into advertising revenue. Telefonica agreed to buy AOL ads with the money it would have returned as a rebate.
In order to book the revenue before the financial quarter that ended December 31 of that year, AOL created "its own purported ads" for Telefonica that misspelled the company's name as Telephonica and linked to a dead webpage. "No graphics, no links, no nuthin! LOL," an unnamed AOL employee wrote in an instant message. Replies another colleague: "Welcome to the new world of e-commerce."
Friestad, who oversaw the investigation, said the case remains relevant to investors and analysts who rely on performance measurements from outside of the closely regulated world of generally accepted accounting principles. To AOL, for instance, it was critical to classify as much as it could as advertising revenue, even though the classification would be irrelevant to its cash flow.
"The metrics sometimes change over time, but the conduct here involved a metric that was important to analysts and investors," he said. "The conduct was fraudulent then, and it would be fraudulent if it happened today."
An attorney for Jay Rappaport said the former AOL senior manager was "pleased this matter has been resolved" without restrictions on his ability to be a future corporate officer of a public company. Attorneys for the others named in the suit did not return calls for comment.
A spokeswoman for Time Warner's AOL division said the company no longer employed any of those charged, but had no further comment.
It was impossible for Home Depot (HD) to post good earnings. It relies too much on the troubled housing industry. But, its earnings were cut by a huge amount, a signal that home building and upgrading may be much worse than thought and that the downturn in those business could be longer and harder than imagined. HD said that had fiscal 2008 first quarter net earnings of $356 million, or $0.21 per diluted share, compared with $1.0 billion in the same quarter last year. Revenues for the first quarter totaled $17.9 billion, a 3.4 percent decrease from the first quarter...
Part of the long-term thinking at GE (GE) has been that, as the US economy slowed, emerging markets in Asia would drive double-digit returns. GE's international business would more than make up for any trouble in its home market. The idea was good until it wasn't. As the global economy gets hit with slower growth, the one big earnings lever that GE hoped would work has fallen on relatively hard times. Business in China and India are starting to fray. According to the FT. "Nani Beccalli, head of GE International, forecast economic growth would slow in the two Asian countries."...
Asia-Pacific shares fell on Tuesday to end a six-day rally. Oil prices stayed close to record levels and financial and property shares tumbled as profits at Macquarie, the Australian investment bank, fell... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 10:10 am
In many homes, the TV is topped by a cable box, a DVR, a satellite box, a PC, a Slingbox, and an Unbox from Amazon (AMZN). Netflix (NFLX) thinks that television can hold the weight of one more gadget. But, it is a pretty good one. The movie rental firm is offering a $99 device which will give consumers instant access to thousand of movies in the Netflix (NFLX) library. The best part of the deal is that current Netflix subscribers don't have to pay more for the service. Netflix has one big advantage over many of its competitors in...
Financier George Soros has warned that the UK economy has yet to feel the full impact of the global credit crisis. Source: Telegraph Business | 20 May 2008 | 10:00 am
The euro hit a three-week high against the dollar on Tuesday after surging German wholesale prices reinforced the view that the European Central Bank would maintain its hawkish stance on interest rates... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 10:00 am
Financier George Soros has warned that the UK economy has yet to feel the full impact of the global credit crisis. Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 10:00 am
The euro hit a three-week high against the dollar on Tuesday after surging German wholesale prices reinforced the view that the European Central Bank would maintain its hawkish stance on interest rates... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 May 2008 | 10:00 am
Banks are supposed to be one another's friends. The all have the same problems now. They are all lobbying for the same relief. They often share customers. When they compete, the Marguess of Queensbury rules are always observed. But, money is money, especially when one firm loses a lot. Citigroup (C) is being sued by Wachovia (WB) and Fifth Third Bank due to hedge fund losses. According to The Wall Street Journal "The problems stem from Citigroup's Falcon Strategies hedge fund, a fixed-income vehicle whose value has plunged more than 75%." The smaller banks say that they were told that...
South Korean prosecutors try again to sentence the Hyundai boss convicted of embezzlement to prison. Source: BBC News | Business | World Edition | 20 May 2008 | 9:34 am
Yell shares plunged by nearly 22 per cent this morning after the debt-laden
Yellow Pages publisher said it would halve its dividend to help shore up its
balance sheet. Source: Latest Business News from Times Online | 20 May 2008 | 9:14 am
Steelmaker Arcelor Mittal reveals plans to raise $3bn by selling bonds, which will be used to reduce its debt. Source: BBC News | Business | World Edition | 20 May 2008 | 8:45 am
The EU is to announce plans to reform its hugely expensive rural payments system, the Common Agricultural Policy. Source: BBC News | Business | World Edition | 20 May 2008 | 8:24 am
ICAP, the world's largest broker of transactions between banks, has seen full-year profits surge almost a third to a record after the credit crisis fuelled trading in currencies, bonds and derivatives. Source: Telegraph Business | 20 May 2008 | 8:20 am
Farm leaders in Argentina agree to suspend nationwide stoppages and protests over export taxes on food exports. Source: BBC News | Business | World Edition | 20 May 2008 | 8:18 am
Imperial Tobacco says it wants to raise £4.9bn through a rights issue to pay for its recent acquisition of Altadis. Source: BBC News | Business | World Edition | 20 May 2008 | 8:01 am
British Land, Britain's second largest commercial property company, has
written down the value of its shops and offices by £1.9 billion as it
slumped to a £1.6 billion loss and gave warning of a further decline in
property values for the year ahead. Source: Latest Business News from Times Online | 20 May 2008 | 7:54 am
Imperial Tobacco today launched one of Britain's biggest rights issues asking shareholders for £4.9bn to repay some of the debt it owes following the acquisition of Altadis. Source: Telegraph Business | 20 May 2008 | 7:51 am
Shares of Imperial Tobacco lost almost 3 per cent in early trading today after
the world's fourth largest cigarette maker launched a 43 per cent discounted
rights issue to raise £4.9 billion. Source: Latest Business News from Times Online | 20 May 2008 | 7:44 am
Peter Mandelson, the European Trade Commissioner, said last night that the
European Union (EU) was just two or three sticking points away from
completing a trade deal with the Gulf. Source: Latest Business News from Times Online | 20 May 2008 | 7:41 am
Marks & Spencer has seen its pre-tax profits top £1bn but Britain's biggest high street retailer warned that the next 18 months will be much tougher Source: Telegraph Business | 20 May 2008 | 7:20 am
Store staff at Marks & Spencer have seen their bonus payout halved this
year, despite profits at the retailer hitting £1 billion, their highest
level for a decade. Source: Latest Business News from Times Online | 20 May 2008 | 6:47 am
Reuters - Microsoft Corp has proposed to
buy Yahoo Inc's search business and take a minority
stake in the Web pioneer, stopping short of a full-out merger,
a person familiar with the discussions said on Monday.
The New Zealand dollar remained subdued today, weakening against the Australian dollar, which received a boost from its central bank.
By 5pm, the kiwi was little changed at US77.22c from US77.21c late yesterday afternoon. The currency... Source: New Zealand Herald - Business | 20 May 2008 | 5:40 am
The Reserve Bank of Australia (RBA) has admitted there is a possibility of more interest rate hikes across the Tasman.
In the newly released minutes of its board's monetary policy meeting held two weeks ago, the RBA reiterated... Source: New Zealand Herald - Business | 20 May 2008 | 2:45 am
Goldman Sachs, Morgan Stanley and UBS are set to link their private stock trading operations, enabling their clients to use each others' interbank or intra-bank platforms Source: FT.com - US homepage | 20 May 2008 | 2:00 am
Congressional efforts to tackle the US housing crisis with new legislation were bolstered when a bipartisan agreement was reached in the Senate on the terms of the intervention Source: FT.com - US homepage | 20 May 2008 | 1:15 am
US regulators announced fraud charges stemming indirectly from the merger of Time Warner and AOL, the largest union in US corporate history and a symbol of the dotcom boom and bust of the early part of this decade Source: FT.com - US homepage | 20 May 2008 | 1:00 am
The International Monetary Fund today urged New Zealand to keep monetary policy on hold until there is clarity over where the economy is headed, amid rising inflation and global credit market woes.
In its annual assessment of New... Source: New Zealand Herald - Business | 20 May 2008 | 12:30 am
The number of overseas visitors arriving in this country dropped sharply in April, with the timing of Easter appearing to be a major factor in the fall.
Figures out today from Statistics New Zealand show 179,400 visitor arrivals... Source: New Zealand Herald - Business | 20 May 2008 | 12:30 am
Fletcher Building shares took a hammering this morning after it said it expects a full year net profit between $450 million and $460 million - provided there is no significant change in economic conditions in the rest of the year.
Shares... Source: New Zealand Herald - Business | 20 May 2008 | 12:25 am
New migration stats released this morning show no sign of the Kiwi flight to Australia easing.
Statistics New Zealand said that the number of permanent and long term arrivals to New Zealand exceeded departures by just 400 in April.... Source: New Zealand Herald - Business | 20 May 2008 | 12:10 am
Japanese-owned brewer Lion Nathan said today its New Zealand operations had returned to growth after two static years despite the sluggish economy.
The Australian-based company said its half year group operating net profit rose... Source: New Zealand Herald - Business | 20 May 2008 | 12:05 am
The CBI president, Martin Broughton, will warn the Government today not to make business the "fall guy" as it tries to calm anger among the electorate over the country's worsening economic conditions. Source: Telegraph Business | 20 May 2008 | 12:01 am
BG Group is thought to have lined up a preferred buyer for the 51.4 per cent of Contact Energy owned by takeover target Origin Energy.
British-based BG has made a A$12.9 billion ($16.1b) takeover proposal for Origin Energy, Australia's... Source: New Zealand Herald - Business | 20 May 2008 | 12:00 am
The fallout from the global credit crisis is not over yet, US investor Warren Buffett said this morning.
"I'll talk about the United States. I don't think the effects of the credit crunch are far from over at all," he told a news... Source: New Zealand Herald - Business | 19 May 2008 | 11:30 pm
A 5 per cent fall in Fletcher Building to a two-year low dragged down the sharemarket in early trading today.
The company reaffirmed it expected a full-year net profit of between $450 million and $460m, including $58m of one-off... Source: New Zealand Herald - Business | 19 May 2008 | 10:55 pm
Investor's Business Daily - RPG Consultants, a 401(k) plan administrator, is speaking to two ETF providers about getting exchange traded funds into 401(k) plans. Source: Yahoo! News: Business | 19 May 2008 | 10:45 pm
Microsoft has proposed a deal to Yahoo that goes further than a partnership, although it still stops short of a full buy-out of the internet concern, according to a person familiar with the situation Source: FT.com - US homepage | 19 May 2008 | 10:35 pm
Businesses have always put a lot of money and effort into political campaigns. A business lobbying group in Orlando, Fla., is going one step further. It's training local businesspeople to be politicians. Judith Smelser reports. Source: Marketplace | 19 May 2008 | 10:01 pm
High prices, more efficient cars and the use of ethanol significantly cut the share of oil imported into the US for the first time since 1977 Source: FT.com - US homepage | 19 May 2008 | 9:13 pm
The governor of Pennsylvania might celebrate this evening by adding a little manchego cheese to his Philly cheesesteak.
The reason? Citigroup and the Barcelona-based infrastructure firm Abertis won the auction for a 75-year lease on the Pennsylvania turnpike with their $12.8 billion bid. The Pennsylvania legislature, much of which has expressed skepticism about the privatization of the state's 537-mile turnpike, still has to approve the deal struck by Governor Ed Rendell.
While $12.8 billion sounds like a lot—indeed, it would be the biggest privatization of a U.S. infrastructure asset to date—it's far from certain that the state would emerge a winner in this deal.
Just last week, Morgan Stanley announced it had raised $4 billion for a new infrastructure investment fund, exceeding its $2.5 billion target. Also last week, the private equity firm Kohlberg Kravis Roberts & Co. announced it has formed a global infrastructure practice.
It's easy to see why there is interest. Infrastructure, which includes public projects like turnpikes, water treatment facilities and airports, holds the promise of stable revenue streams, consistent returns, and almost no concern about competitive forces. Investors are promised worry-free, stable returns. Portfolio.com's own Felix Salmon is a fan of infrastructure privatization.
In private hands, the theory goes, tolls can be raised without political backlash, and the private turnpike operators can maintain roads with more efficiency and fewer obstacles.
But if the returns are so great, why are states scrambling to unload these assets? One reason is that they want to capitalize on the interest while it's here—the more money that's raised for these investments, the more bids submitted at auction, and the higher the prices.
But the Pennsylvania turnpike auction doesn't show signs of unreasonable froth. While the first bid came in much lower, at $8.1 billion, the final offer of $12.8 billion is still on the low end of what Morgan Stanley valued it at when it was hired as an adviser to the state of Pennsylvania. Morgan Stanley estimated the turnpike's worth at $12 billion to $18 billion. And just a year ago, sources told BusinessWeek the turnpike could fetch as much as $30 billion.
Indeed, the Philadelphia Inquirerreports that some members of the legislature are disappointed with the offer. "To be quite candid, the number is less than overwhelming," said Representative Keith McCall, head of the Democratic majority. "It's certainly not dead on arrival, but it's something we do need to discuss with the entire caucus."
States should weigh these deals very carefully. While the windfall would certainly satisfy immediate cash needs for municipalities facing shortfalls during this period of economic upheaval, they might also be sacrificing long-term gains for short-term fiscal solutions.
They might be wise to follow the money instead. After all, if the so-called "smart money" is fighting over infrastructure for its promise of stable returns, chances are that similar returns could also be realized if they stayed in the public domain. Provided, of course, it has the financial competency to run them.
Running a Saudi Arabian company that turns petroleum into plastic pellets may seem far afield from overseeing the finances of a personal computer company, but as Dell Computer founder Michael Dell knows, there are important similarities.
Brian Gladden
That's why Dell today hired Brian T. Gladden, chief executive of Sabic Innovative Plastics, as his new finance chief as he tries to shave $3 billion a year in costs off his ailing personal computer maker.
Plastics are a key component in laptops and other PC's, so it's likely that some of Gladden's former customers will now become his suppliers. And both plastics and PCs are global businesses dominated by the economics of global supply chains.
"It's an interesting transition, certainly, from an upstream raw materials business to a consumer product technology and electronics business, but some of the fundamentals are very much the same," said Howard Rappaport, global business director for plastics at the consulting firm Chemical Market Associates. "There certainly is some overlap there that bodes well for running the business at Dell."
Part of the overlap comes in controlling spiraling costs, particularly as oil prices stay above $120 a barrel. A typical laptop may contain $50 to $150 worth of metal and plastics; one-half to two-thirds of that amount will come from plastics, according to iSuppli, a technology research firm in El Segundo, California.
More important, however, is how the plastic is used. Savvy workmanship with plastics can help a PC company create an impression that its device is more than a bundle of commodity parts. Andrew Rassweiler, an iSuppli analyst, calls this the Apple effect.
Dell's decision to hire a plastics executive may be "a recognition of how the aesthetics of the enclosures and packaging for an otherwise commoditized product" will drive sales, Rassweiler said.
In his former job at a division of Saudi Basic Industries Corp., Gladden oversaw one of the most profitable companies in the chemicals and plastics business, said Rappaport, who consults for the company and others in the industry.
"When you look at the Sabic business model around the world, the emphasis on low-cost, diverse, and lean manufacturing operations is similar in both entities," Rappaport said.
Gladden will be "familar with the pace and requirements of Dell's business," Dell spokesman David Frink said. The computer maker, he said, sought a C.F.O. with experience at a multinational public company, a background in finance, and a firm grounding in technology, and found those traits in Gladden, he said.
In 20 years at General Electric, Gladden served as chief financial officer of GE Plastics and general manager of the division's resins business. He moved to Sabic when G.E. sold its plastics division to the Saudi company in 2007 for $11.6 billion. He has a bachelor's degree from Millersville University in Pennsylvania.
Gladden will become Dell's third finance chief officer since the end of 2006. That's when Carty was tapped to steer the company through an accounting investigation, replacing James Schneider.
Carty, who also came from an unrelated industry—he was the former head of American Airlines—didn't have what it took to be a permanent finance chief, said Shaw Wu, an analyst with American Technology Research.
"We didn't think he was really the right guy from the beginning," Wu said. "I'm sure he has a lot of experience and wisdom but in our opinion he was more of an interim C.F.O."
When he takes over next month, Gladden will be asked to make good on Carty's promise to cut costs by $3 billion by 2011. "We have instituted a maniacal focus and discipline around all costs," Carty said on a conference call with financial analysts last month, according to a transcript.
Gladden should know a thing or two about managing costs, since petroleum is the key feedstock for plastics. Because of its position as a Saudi company, Sabic has ready access to cheap petroleum, giving it one of the lowest cost positions in its industry—a hallmark of Dell's early successes.
He should also be familiar with the PC industry's interest in emerging markets. Sabic has a large presence in Asia, and is well positioned in China, Rappaport said.
Dell lost its position as the world's largest PC maker to Hewlett-Packard two years ago. It's shedding thousands of staff and partnering with lower-cost manufacturers to keep costs low, while developing more appealing laptops for the consumer market.
John McCain argued that low taxes and free markets were the best remedy for the US's slowing economy and cast Barack Obama as a traditional "big-government Democrat" who would raise taxes and stifle growth Source: FT.com - US homepage | 19 May 2008 | 8:00 pm
A.G. Lafley heads Procter & Gamble, the biggest consumer products company in the world, earning $82 billion a year. But eight years ago it was a different story when he took the top spot. He tells Kai Ryssdal about making changes to struggling brands. Source: Marketplace | 19 May 2008 | 7:57 pm
Millions of migrant workers from China's earthquake-ravaged Sichuan province who left home to work in cities to the east now must decide what to do. Should they return home to help or keep working and just send money? Scott Tong reports. Source: Marketplace | 19 May 2008 | 7:57 pm
Millions of Zimbabwe residents have fled to South Africa to escape the turmoil in their country. But their influx has touched off brutal riots in Johannesburg. Reporter Gretchen Wilson is there and describes the scene. Source: Marketplace | 19 May 2008 | 7:57 pm
The movie 'Speed Racer' was supposed to be a blockbuster. Warner Bros. put $250 million into making and marketing it. But so far it's earned less than $30 million at the box office. Stacey Vanek-Smith reports on the economics of a flop. Source: Marketplace | 19 May 2008 | 7:57 pm
The Conference Board's report of 10 leading economic indicators is forecasting an economy that will show some minimal growth in the next several months. Meantime, a survey of economists is predicting anemic growth. Nancy Marshall Genzer reports. Source: Marketplace | 19 May 2008 | 7:57 pm
Microsoft isn't taking No for an answer in its desire for at least a part of Yahoo. And Yahoo says it's willing to listen. So what could it be? Search? Advertising? Jeff Tyler reports on some of the possibilities. Source: Marketplace | 19 May 2008 | 7:56 pm
Steve Jobs wants to extend Apple's lead in online music sales to the mobile market, and the 3G iPhone expected next month positions them to make the iTunes store available everywhere you have signal. Jobs also wants in on the ringtone and ringback tones business -- thoroughly impulse buys which become feasible on the iPhone only if purchasing can be done outside of a hot spot.
Trouble is, he needs some new deals from the record labels to make this happen. The record labels have some demands of their own -- chief among them variable pricing. As music licensing negotiations between Apple and the labels continue, the labels hope to trade mobile delivery for variable pricing, according to a New York Times' record label executive source.
An Apple spokesperson told Wired.com, "We don't comment on rumors and speculation," but we got a couple of analysts to weigh in on the possibilities.
"All sorts of discussions happen over time as the contracts [between Apple and the labels] expire. All sort of issues get lumped in, and no doubt [OTA downloads are] going to be one of them," Michael Gartenberg, VP and research director of Jupiter Research told Wired.com. "Clearly Apple understands that its devices are dependent on getting content - music, games, movies, ringtones etc., and it's going to work hard to make that happen. Apple's track record with iTunes and the iPod suggests they probably will get the kind of cooperation they need."
Currently iPhone owners can buy iTunes content only when they are in a hot spot. The use of AT&T 3G makes broadband ubiquitous and that makes the OTA ringback and ringback tone business viable. However, Apple could be forced to cut AT&T in on music sales if it wants to pipe music over the company's wireless data networks to iPhone users.
Mobile is "clearly an opportunity Apple is missing," said Lewis Ward, research manager of mobile consumer services for IDC,via telephone. "And Apple is going to want to do it all themselves, but these OTA music storefronts have not sold very well. Maybe there's secret sauce Apple's thinking about, but the track record [of mobile music and ringtone stores that require a credit card rather than charging users via their cellphone bills] has not been impressive to date."
"The real issue is billing," said Ward. "People are much more comfortable with paying through a carrier [because] you don't have to enter a credit card number or be worried about security... that puts the carrier in the supply, and the carrier is going to want their cut, which means the margin for Apple goes lower."
As for the labels, they want iTunes to abandon its policy of selling songs at a flat rate of 99 cents in favor of a demand-based pricing system that would charge more for hot releases and less for other tracks. The labels have already tried to pressure Apple by withholding some of their music from the DRM-free section of the iTunes store, but these mobile licensing agreements give them even more negotiating leverage.
Apple already allows HBO to sell videos at various prices through iTunes; if Jobs wants a bigger piece of the mobile pie, he could soon be forced to cave to label demands for the same options. And that's not all.
At least one of the majors -- Universal Music Group -- also wants Apple to offer an "unlimited music" iPod that would allow device owners "a year or two" of subscription-style access to a large catalog in return for paying the labels an upfront fee with each iPod sold. (Will factory-replaceable batteries be the new DRM?)
Negotiations around these topics have been happening for a few weeks and are ongoing, according to the New York Times. IDC audio analyst Susan Kevorkian told us that Apple's practice of selling songs at a flat fee has already served its purpose, which was to show the music buying public how simple buying online could be.
If that's the case, Jobs could fold on the variable music pricing front to give Apple a bigger percentage of the mobile music market.
(As an aside, Apple has a strange ally during these negotiations: Eric Castro, whose recently-launched iPhone file sharing application increased pressure on the labels to license a service for OTA downloads to the iPhone.)
Europe's top banker sought to stiffen the resolve of policymakers in the fight against inflation in order to avoid the mass unemployment seen in the 1970s Source: FT.com - US homepage | 19 May 2008 | 6:08 pm
Sure, the internet and cable are siphoning off viewers, the slowing economy threatens to crimp revenue, and the writers' strike has interrupted program production. It'd be easy to write off TV as the world's primary ad medium.
Easy, but perhaps premature.
You'd hardly have considered the idea at the Upfronts last week in New York, where network executives presented their fall schedules to advertisers. While the week was more subdued than in years past, and there were plenty of references to digital and mobile ad platforms and the devastating writers' strike, the overall mood was upbeat and exceedingly pro-TV.
"More and more consumers access content in many ways," Jon Nesvig, Fox's president of sales, said at his network’s Upfront on Thursday. "But viewers still choose to view the majority of their content on TV sets." For every minute of TV or video that people stream online, he asserted, they still spend 14 hours in front of their TV's.
Fox's presentation was followed by a lavish party at the skating rink in Central Park, where Kiefer Sutherland and other network stars posed for pictures, pomegranate-champagne spritzers made the round on silver platters, and guests were treated to enormous buffet spreads of sushi, hamburgers, and Brazilian churrasco.
It was hardly a snapshot of an industry poised on the brink of ruin.
Of course, broadcast-television audiences are thinning. But analysts point out that the viewing audience for television in general—including basic and premium cable channels—is growing year over year. That's good news for conglomerates, like General Electric and Disney, that own cable channels along with traditional broadcast networks.
"The new silver bullet that's going to overtake TV hasn't emerged," Lee Doyle, C.E.O. of Mediaedge:cia North America, a global communications company, said. "As much as consumer behavior is changing, TV remains one of the most powerful marketing tools to have."
That doesn't mean, of course, that networks aren't embracing digital innovations. Last week, executives from ABC, CBS, NBC, and Fox all emphasized a willingness to offer advertisers new platforms to reach viewers.
However, Rachel Mueller-Lust, executive vice president for networks at IAG Research, said "they don't feel they need to defensively do it because TV isn't working." She says TV executives simply realize advertisers want "360 degree exposure" across new media.
(To better serve clients like Toyota and Verizon, which were clamoring for such exposure, IAG, which measures the effectiveness of advertising, has introduced an internet practice and is developing a way to measure the effectiveness of mobile ads.)
Even as they begin to offer the bells and whistles of online and mobile platforms to advertisers, networks are increasingly tinkering with ways to keep advertising on TV effective.
ABC is introducing an "advertising-value index," which it says will let advertisers pick the audience metrics most important to them and weight them according to priority.
Fox promised to test two fall dramas with 50 percent less commercial time, hoping consumers will respond to shorter ad breaks.
NBCU is tacking content-oriented segments onto the beginnings and ends of its commercial breaks.
And the Turner cable network is experimenting with "contextual advertising," testing whether the material around an ad makes it more or less effective.
The big ideas don't end there. The most Big-Brotherish development, which Lee Doyle describes as the next holy grail of TV advertising, is something called addressable messaging.
The technology, which is about two years away from viability but is already being tested by Cablevision, lets advertisers research households and target consumers with specific, personally relevant ads. Automakers, for example, could send new-car ads to viewers with car leases about to expire.
In a recent assessment of consumers' changing viewing habits and disdain for commercials, Accenture concluded that TV is still the dominant mass-communication device. It also emphasized that content, not distribution channels, builds viewer loyalty. And that, it said, gives producers and networks the opportunity to create "new ways to interact with consumers and entirely new revenue streams."
In the end, it seems, TV is still king because content is king. That much was clear from the hush that overtook upfront audiences after the sales pitches ended and networks aired clips from their new fall shows.
The focus was on the characters, story lines, and gags from a whole new season of programs. And the networks were the ones pulling the rabbit out of the hat.
Three weeks before it embarked on its blundering attempt to acquire Yahoo, a Google-obsessed Microsoft agreed to pay a juicy $1.23 billion for a Norwegian tech company mired in enough accounting problems, regulatory probes, and conflicts of interest that it had become known as the Enron of Norway.
Fast Search and Transfer, which for a while was also known as the Google of Norway, had developed search engine technology that, according to industry experts, surpassed that of Google and could handle truly massive corporate projects. Goldman Sachs estimated last year that the company would grow its revenue 27 percent in 2007. Over the years, Fast appeared to benefit from big contracts with customers such as AT&T, Comcast and Disney.
Enter Microsoft. It has shifted its M&A strategy to an ethos distilled in the words of Microsoft chief executive Steve Ballmer, who reportedly told a defecting executive that he would "f***ing kill Google."
It announced a stunningly expensive $6 billion deal last May for digital advertising company aQuantive, just one month after Google said it would pay $3.1 billion for DoubleClick. And it sought to address a weakness in the crucial enterprise market by acquiring Fast, and ponying up a pricey 8.6 times revenue to do it.
Microsoft's M&A strategy reflects costly hair-trigger reactions to pressure from Google, according to I.T. consultant Stephen Arnold. The Fast deal, and the $6 billion acquisition of aQuantive, are just two examples, he said.
"Microsoft is a world-class knee-jerker in its response to Google. Google has been doing its thing unencumbered since 1998," Arnold said. "Microsoft has a great track record of flopping in online. Google just keeps rubbing it in and edging ever closer to Microsoft's crown jewel—enterprise revenue."
But aside from looking past a host of accounting woes that led to Fast's delisting from the Oslo exchange, the brain trust in Redmond ignored a host of other problems. The press in Norway said one director, Tomas Fussell, bought an unprofitable company called Hercules Communications and sold it to Fast for a huge profit, creating an apparent conflict of interest. Director Robert Keith reportedly said last year that he should have "shot" fellow director Oystein Spay Spatelan the first time he saw him. The Norwegian conglomerate Orkla ASA, a large Fast shareholder, forced Keith and Fussell from the board late last year.
Fast may have found a savior in Microsoft, which was intent on buying its way into the fast-growing enterprise search market. Its SharePoint product had a beachhead in the middle market but was being threatened by Google, which has quickly racked up $400 million in annual revenue from the business.
Fast, like Google, has its roots in academia. It was launched in 1997 by faculty and students from the computer and information science department at the Norwegian University of Science and Technology in Trondheim, led by chief executive John Markus Lervik, an intense former graduate student with a Ph.D. but not prone to small talk or jokes.
"He's never referred to as John, always, always John Markus," says Susan Feldman, a search expert at researcher Interactive Data Corp. who has known Lervik on a professional basis. Arnold, an industry consultant in the U.S., said Lervik, now 38, sometimes seemed bewildered by the ways of big, unfamiliar clients such as the U.S. government.
Still, Lervik's business appeared to grow steadily until the second quarter of 2007. The company reported revenues of $35 million, $20 million below forecasts, and an operating loss of $38 million. Financial regulators in Norway investigated, and the losses widened the following quarter. When trading in Fast was suspended on December 12, the company said it would review accounting for all of 2006 and 2007. The latest unaudited results show revenue growth of 7 percent for last year, which is far below Goldman's forecast. Steve Papa, CEO of rival search firm Endeca, characterized 2007 as "the frothiest year for enterprise search since 2000." Endeca, he said, grew 70 percent last year.
Goldman Sachs criticized Fast's habit of capitalizing an unusually high level of research and development costs and booking sales based on future licensing revenue, calling it "aggressive."
Consultant Arnold theorized that Fast's problems were related to the nature of large enterprise accounts typically worth $500,000 over a period of about three years. It can take a team of engineers three to six months to install the complex search software, but Fast was short of installation experts, in part because so many joined for Google, Arnold said. That led frustrated clients to delay payments that Fast had already booked as revenue, leading to huge revenue shortfalls and earnings restatements.
Rivals are resentful of Fast's accounting troubles. "It was tedious competing with a company whose success, growth and profitability were built on incorrect accounting. We obviously knew on the ground our technology was crushing them, and now it's clear in the numbers," said Andrew Kanter, chief operating officer of Autonomy Corp., a rival search company based in Cambridge, Britain.
A Microsoft spokesperson said, "Through publicly available information, Microsoft was aware of the review of Fast's historical accounting practices and their efforts to implement improved financial controls. With the closing of the acquisition, we will continue to review the company's financial reporting systems and make any additional changes that are necessary to bring the company's systems into line with Microsoft's high standards for financial reporting and controls."
Fast suffered staff problems too. Former president Ali Riaz left in 2006 after six years and has started his own company, Attivio. "I left because after six years of outperformance, I and many other people did not have an equitable stake in the company. It was heavily weighted toward earlier investors, instead of people who actually built the company. I didn't feel it was right," Riaz says. Many of the employees he brought on board and trained left shortly after he did, some having since joined Attivio.
Controversy notwithstanding, Fussell and Keith made a killing on the sale of Fast, closing out their positions in April. Fussell owned 3.2 percent of the company and Keith owned 3.47 percent of the company, according to the 2006 annual report. That means their direct ownership, minus the value of any options of stakes in funds that might have owned Fast shares, was about $40 million each. Lervik, now vice president of enterprise search at Microsoft, had direct ownership of just over 1 percent as of 2006, worth a little more than $12 million.
The legal wrangling over the Clear Channel buyout was a big, messy Texas-New York affair. But it looks like the Canadian sequel could turn out to be even more gruesome.
The New York Timesreports that the Bell Canada buyout is in jeopardy after the banks financing the deal sought new lending terms with the buyers. The $51.8 billion buyout, which was proposed last July, will be the biggest leveraged buyout deal in history.
Or it could be, if it actually happens. But with a cast of characters that includes the same litigious, embattled banks, conflicting private equity interests, and a whole lot of politically sensitive pension money, the B.C.E. buyout could end up being an even uglier clash than the one over Clear Channel.
Indeed, the banks may have been merely testing the waters with their Clear Channel fight, which ended last week when the banks and private equity firms agreed on a settlement to finance the deal. Three of the banks involved in that deal—Citigroup, Deutsche Bank, and Royal Bank of Scotland—are also behind the B.C.E. financing. And the peacemaker that brought the Clear Channel negotiations to an end, Morgan Stanley, is conspicuously absent this time around.
And while it's clear that some of the B.C.E. buyers will have the stomach for a long legal fight over the telecommunications giant, it's not certain that they all will. The group is comprised of the Ontario Teachers' Pension Plan, Providence Equity Partners, Madison Dearborn Partners, Merrill Lynch Global Private Equity, and Toronto Dominion Bank.
Moreover, Providence isn't afraid to go to court over what it believes it's rightfully entitled to. When Providence was taking the television unit of Clear Channel private earlier this year, one of the banks financing the deal sued the private equity firm after it renegotiated buyout terms. Providence countersued, and the two parties eventually settled.
But over at PEHub.com, Dan Primack suggests that another member of the buyer group might not be ready for the fight. Madison Dearborn is reportedly "having a heck of a time" raising a $10 billion fund. "The B.C.E. money is allocated from an existing vehicle, but bailing on the deal might help sway a number of limited partners who have expressed significant reservations about re-upping," Primack writes. "[Madison Dearborn] has indicated strong interest in closing B.C.E., but it may not fight the strong fight if enough [limited partners] propose a quid pro quo."
And then there's the pension money involved in the B.C.E. buyout. There's nothing quite like teachers' retirement money to influence a court in a battle over money.
But it turns out that Ontario teachers aren't the only public servants with a dog in this fight. Caisse de dépôt et placement du Québec, Canada's biggest pension plan, disclosed last week that it had doubled its stake in B.C.E. to 5.3 million shares, or more than $170 million.
Interestingly, Caisse was part of another buyers group that sought to buy B.C.E. last year, but it withdrew its bid a week before the Ontario Teachers' buyout won.
It's unclear if Caisse was just trying to capitalize on a deal it believed would go through as planned, or if it is positioning itself for opportunity should the deal fall through.
Whatever the case, retirees are losing money, as B.C.E. shares are down nearly 6 percent today. This B.C.E. buyout battle is surely going to be one for the history books, one way or another.
The futility of President Bush's visit to Saudi Arabia on Friday has been underscored by a new benchmark: $4 for a gallon of gasoline.
The Lundberg Survey tallied 7,000 retail gasoline prices around the nation last week and found an average price of $3.79, up 17 cents in the last two weeks. In Chicago and on Long Island, prices reached $4 a gallon for the first time.
And $4 could soon be the national average, she said. Gas consumption typically increases significantly after Memorial Day.
"The refinery margin on gasoline is so poor, I think the upward pressure on the refining margin will push up the price at the pump, even if crude oil does not," she told Reuters.
Crude-oil prices continue to climb today, approaching $128 a barrel.
On Friday, President Bush asked the Saudis to produce more oil. The Saudis say they have been pumping 300,000 barrels more a day in response to demand from buyers since early May, but that increase is not expected to have any impact on prices.
Here is a snapshot of gasoline prices in some other markets, from CNN:
Wall Street often cuts jobs with a ruthlessness and cold-bloodedness that Stalin might admire.
People have been gathered in meeting rooms for mass firings. There are stories about how employees learned of their dismissal through letters explaining how they can extend their health benefits under Cobra. Or of employees who came into work and found that their ID card or their computer log-in no longer worked.
In an article describing the current wave of stealth layoffs on Wall Street, Louise Story and Eric Dash of the New York Timesnoted how investment bankers at Lehman Brothers "found out their jobs were in peril when they saw cardboard boxes and dumpster bins in the hallways in March."
Then there is J.P. Morgan Chase, which is again doing things just a little bit differently than the rest of Wall Street.
In an effort to minimize the pain and mute any public criticism of its takeover of Bear Stearns, J.P. Morgan is making an unusual effort to help Bear employees who are losing their jobs.
Francesco Guerrera of the Financial Timesreports that Jamie Dimon, J.P. Morgan's chief executive, has been writing to clients, vendors, and even rivals, asking them try to take on former employees. He is planning to write 100 such letters.
The bank has also asked more than 1,800 companies for a list of their vacancies, the paper reports.
At a UBS conference last week, Dimon said that the bank had found jobs at J.P. Morgan for about 40 percent of Bear's 14,000 employees. J.P. Morgan is also cutting about 2,000 jobs from its ranks.
Some entire Bear businesses will largely disappear, including asset management and currency trading. The acquisition of Bear is expected to close next month.
Perhaps there is an out-of-work Bear trader who wants try his (or her) hand at blogging?
Reuters - Producer prices rose by a
smaller-than-expected 0.2 percent in April after gasoline
prices sank, government data showed on Tuesday, but core
inflation at the producer level posted a larger advance.
AP - Inflation at the wholesale level slowed in April following a huge increase in March although prices for a number of items from prescription drugs to pasta shot upward.
Reuters - Stock index futures extended losses on
Tuesday after a report showed that producer prices, excluding
volatile food and energy, grew at a faster-than-expected pace
in April, adding to fears of greater inflation.
Reuters - Home Depot reported a 66 percent
drop in quarterly profit on Tuesday as the U.S. housing
meltdown hurt sales and it took a charge to close stores and
cut back expansion plans.
Reuters - Staples Inc , the No. 1 office
supplies retailer, reported a higher quarterly profit on
Tuesday that matched Wall Street's expectations, due in part to
strong sales in international markets.
Reuters - Microsoft Corp has proposed to
buy Yahoo Inc's search business and take a minority
stake in the Web pioneer, stopping short of a full-out merger,
a person familiar with the discussions said on Monday.
