Great Portland Estates, the London West End commercial property company, warned capital values could fall further after posting a 2pc fall in its net asset value. Source: Telegraph Business | 21 May 2008 | 2:05 pm
US stocks were set for a slightly lower open on Monday as oil broke through $130 a barrel before easing back, overshadowing news that Time Warner is to spin off its cable division Source: FT.com - US homepage | 21 May 2008 | 1:19 pm
NEW YORK (Reuters) - Stocks were poised to open little changed on Wednesday as record oil prices heightened fears about inflation and reduced consumer spending a day after Wall Street had its worst slide in two weeks.
Oil prices push past $130 a barrel for the first time, on increased worries about supply and the weaker dollar. Source: BBC News | Business | World Edition | 21 May 2008 | 1:11 pm
Maurice R. "Hank" Greenberg, the former chief executive of American International Group Inc, could face civil charges for his alleged role in an effort to improperly boost the insurer’s financials, The Wall Street Journal reported Wednesday.
TOKYO (Reuters) - Honda Motor Co said on Wednesday it would launch a new, low-cost hybrid car in Japan, North America and Europe in early 2009 as it seeks to cut the lead of Toyota Motor Corp in the green car race.
Crude-oil futures broke through another key level on Wednesday, this time topping $130 a barrel on the familiar fears that supplies can’t keep up with growing demand from emerging markets.
NEW YORK (MarketWatch) -- Gold futures edged higher to trade near $922 an ounce early Wednesday, bolstered by weakness in the U.S. dollar and soaring oil prices.
NEW YORK (Reuters) - Time Warner Inc will completely split with Time Warner Cable Inc by the end of the year, in a $10.9 billion transaction to separate its content and distribution businesses.
LONDON (MarketWatch) -- U.K. building materials supplier Wolseley said Wednesday that U.S. and U.K. markets have continued to deteriorate as it revealed another 250 job losses, with more cuts to be announced soon.
With the traditional summer doldrums of TV programming looming, the major networks are introducing programs they think will keep audiences tuning in. Audiences—faced with a glut of second-rate reality shows and competition series—may beg to differ.
The summer viewing season typically starts the Thursday before Memorial Day weekend and ends in mid- to late-September. Fox kicks things off tomorrow with a two-hour season premiere of So You Think You Can Dance, the network’s dance-choreography competition and, by our count, one of three dance shows on network TV this year—not including Bravo’s Step It Up And Dance. NBC’s summer standby Last Comic Standing debuts the same night. In early June, CBS will roll out a Regis Philbin game show, Million Dollar Password and ABC will dig up The Mole to keep reality fans well-fed.
More on the networks’ summer schedules below. But if the mish-mash of competitions, celebrities, and "American"-themed reality shows fills your heart with dread, remember that it wasn’t until recently that networks even bothered to air original programming over the summer, says Brad Adgate, senior vice president at media-planning and buying agency Horizon Media.
"If you go back 10 years ago it was all repeats or returning specials," he says.
Of course, nowadays, the summer is fertile ground for testing shows that networks may later bring into the regular fall rotation. American Idol, Dancing with the Stars, and Survivor—three reality shows that soon became ratings blockbusters—all aired for the first time over the summer months. And the networks are no doubt hoping that one of the many reality series they have lined up this summer will take off in similarly dramatic fashion.
But cable networks, whose most successful recent summer offerings have included The Closer (TNT), Damages (FX), Mad Men (AMC), Burn Notice and Psych (both USA)—all of which are scheduled to return with new episodes this summer—are offering stronger competition to network TV over the summer months than ever. Last summer’s two most buzzed about shows—The Sopranos finale on HBO, and Disney’s High School Musical 2—were both cable shows, says Adgate.
With network programming heavily affected by the writers’ strike, and a surfeit of reality shows as a result, reality-fatigue could have more viewers than ever channel surfing to cable. According to Nielsen, last summer, basic cable attracted more than double the viewers of the six major broadcast channels.
ABC already started its summer programming, premiering The Bachelorette on Monday night this week, and tomorrow, it airs new episodes of hits Ugly Betty and Grey’s Anatomy, hoping to steal viewers from the other net’s reality show premieres.
Among the networks, CBS is alone in debuting two new dramas, Swingtown (June 5) and Flashpoint (July 11), this summer. The network’s first summer offering, Million Dollar Password, premieres June 1. And along with the return of summer series Big Brother (July 13), CBS is debuting a much-hyped reality canine competition, Greatest American Dog (July 10). Jingles (July 27), a Mark Burnett reality show revolving around commercial tunes, is new this summer as well.
This summer, however, the must-see TV event will almost certainly be the Beijing Olympics, which start on Friday, Aug. 8. That’s the hope of NBC, anyway, and the network is packaging the Games up with a bevy of other America-themed shows for what it is calling "NBC’s All-American Summer." The network started the season earlier this month with the premier of American Gladiators. Fear Itself, a horror anthology series, will begin May 29, and Nashville Star, a country-singing competition, kicks off June 9. Celebrity Circus, a celebrity talent competition (June 11), America’s Got Talent, a talent show for regular folks (June 24), and, The Baby Borrowers, a reality show that places kids with young couples (June 25), round out the schedule.
Over at Fox, Tuesday night will feature new episodes of reality game-show The Moment of Truth (May 27), followed by Gordon Ramsay’s Hell’s Kitchen. New episodes of Are You Smarter Than a 5th Grader will air starting June 12.
In addition to The Bachelorette, ABC is bringing back competition series The Mole this summer (June 2). Starting June 24, the network will air two competition shows, both inspired by Japanese shows: Wipeout, which sends contestants through a degrading obstacle course and I Survived a Japanese Game Show. Next comes Dance Machine (June 27), another dance-off series. And the network is taking advantage of Disney’s hit High School Musical by rolling out a reality show based on it, High School Musical: Get In the Picture (July 20). Wanna Bet, a new celebrity game show, airs the next day.
It’s almost enough to make Americans want to—gasp—leave their houses and enjoy the sunny weather.
A coding error at Moody’s Corp. boosted the investment ratings of a particular class of debt instrument and wasn’t immediately corrected after it was uncovered, according to a published report.
The price of oil rose to an all-time high of $130.47 today as demand for fuel
grows and the dollar weakened to a one month-low against the euro.$ Source: Latest Business News from Times Online | 21 May 2008 | 12:48 pm
Allianz paved the way for a round of German banking consolidation today as the
owner of Dresdner Bank said it was actively involved in merger talks with
unnamed parties in the country. Source: Latest Business News from Times Online | 21 May 2008 | 12:47 pm
Reuters - Oil climbed to a life-time high above
$130 a barrel on Wednesday, driven higher by a combination of
long-term production worries and a near-term focus on tight
fuel stocks.
LONDON (Reuters) - Oil climbed to a life-time high above $130 a barrel on Wednesday, driven higher by a combination of long-term production worries and a near-term focus on tight fuel stocks.
HERZLIYA, Israel (Reuters) - Microsoft Corp is not looking to bid to buy all of Yahoo Inc but is in talks about other types of deals with the U.S. No. 2 search engine, Microsoft CEO Steve Ballmer said on Wednesday.
Israel and Syria have started indirect talks with the aim of signing a comprehensive peace agreement, the first attempt in eight years to end the decades-old conflict between the two neighbours. Source: FT.com - US homepage | 21 May 2008 | 12:37 pm
Stock market futures slipped lower, giving up early gains, as crude-oil futures rallied past $130 a barrel, with Time Warner among the companies in focus after it said it will receive over $9 billion from the separation of its cable arm.
NBA Commissioner David Stern flashed the tiniest of smiles when I asked him if he looked forward to the possibility of a championship series consisting of the time-honored rivals, the Los Angeles Lakers and the Boston Celtics.
The credit rating agencies have come under fire for being asleep at the wheel as the credit quality of mortgages deteriorated while the Wall Street securitization machine roared on.
As Roger Lowenstein detailed recently in the New York Times Magazine, Moody's and Standard & Poor's "are a central culprit in the mortgage bust, in which the total loss has been projected at $250 billion and possibly much more."
To the accusations of willful blindness in the pursuit of profits, a new culprit for the blunders of ratings agencies can be added: computer error.
Sam Jones, Gillian Tett and Paul Davies of the Financial Times today deliver a stunning report on how a mistake in coding at Moody's led to triple-A ratings being incorrectly assigned to billions of dollars worth of a type of complex debt product.
Moody's discovered the glitch early in 2007, the paper reports, but the products—constant proportion debt obligations—remained triple A until January 2008.
Moody's says it is "conducting a thorough review" of the rating of the derivatives.
Felix Salmon calls it a "scandal." But The Wall Street Journal, strangely, in following the Financial Times, seems to play down the story nearly to the point of pooh-poohing it.
Yves Smith on the Naked Capitalism blog says "while banks have rogue traders, it appears rating agencies have rogue computer models."
Tanta on the Calculated Risk Blog is disturbed by the implication in the Financial Times report that Moody's may have tweaked its computer model to arrive at the same ratings as Standard & Poor's in order to keep business as a "second opinion."
Moody's says it is "conducting a thorough review" of the rating of the derivatives.
BAA, the airports operator, was under increased pressure today to refinance
debts after rating agency Moody's threatened to downgrade the group to junk
status. Source: Latest Business News from Times Online | 21 May 2008 | 12:23 pm
Japan's shoppers face paying about 20% more for rice in the coming months than they did a year ago. Source: BBC News | Business | World Edition | 21 May 2008 | 12:14 pm
U.K. credit checking firm Experian Group on Wednesday revealed a 5.4% dip in annual profit and stepped up cost-cutting plans as it attempted to balance continued weakness in financial markets.
The Securities and Exchange Commission (SEC), America’s chief financial
regulator, has obtained a court order freezing the assets of a British
citizen linked to an alleged US hedge fund fraud. Source: Latest Business News from Times Online | 21 May 2008 | 12:09 pm
Reuters - Stock futures slipped on Wednesday
after oil surged to a record above $130 a barrel, heightening
fears about inflation and a drop in consumer spending a day
after Wall Street had its worst slide in two weeks.
Reuters - Talbots Inc posted sharply
lower quarterly profit on Wednesday as the women's apparel
retailer was hurt by the closing of its children's, men's and
British businesses and restructuring charges. Source: Yahoo! News: Business | 21 May 2008 | 12:06 pm
NEW YORK (Reuters) - Talbots Inc posted sharply lower quarterly profit on Wednesday as the women's apparel retailer was hurt by the closing of its children's, men's and British businesses and restructuring charges.
It could hardly be clearer now that the Bank of England is on a crusade against inflation. The minutes to its latest meeting suggest that it regards a housing market slump and a possible recession as prices worth paying to keep inflation under control in the long term. Source: Telegraph Business | 21 May 2008 | 12:05 pm
Corporate Express, the Dutch office-supplies group fending off a takeover bid from Staples, on Wednesday offered 1.7 billion euros ($2.7 billion) to buy closely held French peer Lyreco.
These are ten of the analyst calls we are focusing on this morning: Central Garden (NASDAQ: CENT) raised to Buy at Piper Jaffray. China Sunergy (NASDAQ: CSUN) raised to Hold at Jefferies. El Paso (NYSE: EP) Cut to Neutral from Buy By Goldman Sachs. First Solar (NASDAQ: FSLR) Cut To Underperform From Mkt Perform By FBR. Intuit (NASDAQ: INTU) Cut To Hold From Buy By Citigroup. Medtronic (NYSE: MDT) Raised to Buy from Neutral at Goldman Sachs. Micron Technology (NYSE: MU) Raised to Buy from Hold at Deutsche Bank. National Oilwell Varco (NYSE: NOV) Cut to Add from Buy at...
Experian, the world's largest credit checking agency, has given warning that
revenue may fall in the first quarter because of continuing financial
turmoil in the US and the UK. Source: Latest Business News from Times Online | 21 May 2008 | 11:58 am
Richard Hayward is boss of Richard Hayward Associates (RHA), a Cardiff-based property investment company with a value of £260m. The group has a substantial shareholding in Hawtin, the AIM-listed property developer where Hayward is chief executive. Source: Telegraph Business | 21 May 2008 | 11:50 am
The beige 2003 Honda Civic sat on Mike Haile's used car lot in Atlanta for only three days before he sold it for $8,200. And that was $300 more than the asking price. The car, with... Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 11:47 am
NEW YORK (Reuters) - BJ's Wholesale Club Inc , the No. 3 U.S. warehouse club operator, on Wednesday reported a 26 percent jump in quarterly profit, beating Wall Street expectations, as shoppers headed to its stores for discounts on food and fuel.
Microsoft has opened a new front in the battle with Google, the search engine
group, in the increasingly ferocious struggle for control of the online
services market. Source: Latest Business News from Times Online | 21 May 2008 | 11:36 am
It continues to dance around Yahoo without proposing anything that would satisfy Yahoo shareholders. It also plans to announce today, according to several reports, a service that pays customers who buy products they find through Microsoft's search—a direct challenge to Google.
So does it need Yahoo in any way or not?
Microsoft's chief executive, Steve Ballmer, has been criticized for being seemingly wishy-washy about his pursuit of Yahoo. Shares of Microsoft have slipped, and advertisers have been lukewarm about the company's internet strategy.
Nearly adding injury to insults, Ballmer was the target of a young man throwing eggs at him. Speaking before a class at Corvinus University in Budapest, a young man stood up, yelled some incoherent rant about Microsoft stealing from the Hungarian people, and threw eggs at Ballmer. Unlike Bill Gates, who got pied several times, Ballmer took no hits, successfully ducking behind the podium. (See a video here.)
An acquisition for Yahoo is off the table. Ballmer underscored today that the company was not interested in making another acquisition push for Yahoo, despite the wishes of Carl Icahn and several prominent hedge fund followers.
"We are not bidding to buy Yahoo," Ballmer said at the opening of a new research and development center in Israel, Reuters reported.
"Yet, we are trying to have discussions about deals with Yahoo that might create value, but not a whole acquisition of the company," he said.
Microsoft has reportedly offered to buy the search business of Yahoo, but what Icahn and John Paulson and Dan Loeb and other investors are looking for is a return of the $31-per-share offer for the entire company.
And perhaps Microsoft will decide that it does not need any part of Yahoo or an alliance with it.
The cash-back service plan is a way to reclaim some of the most profitable searches from Google.
Michael Arrington on TechCrunch says, "Microsoft's hope is to lure advertisers with a promise to pay only if a purchase is made, unlike Google's pay-per-click model that carries more risk because a searcher may not complete a transaction. And by offering a percentage of the fee collected from advertisers, Microsoft hopes to convince searchers to take the last mile to a transaction through the Live.com search engine, generating more advertising revenue for Microsoft and simultaneously hurting archrival Google."
Henry Blodget on Silicon Alley Insider offers three reasons why the plan won't hurt Google.
First, he says, Microsoft will probably not offer enough cash to draw users.
"One million $1 clicks generate $1 million of revenue for Google, but even if Microsoft gives 50 percent cash back on each click, that's only 50 cents per user per transaction," Blodget notes. If you're buying a $5 item, 50 cents is a nice refund, but if you're buying, say, a $25 item, it's chump change."
Blodget also questions whether there will be enough retailers with enough breadth to make the program appealing. And if all else fails, Google can come back with its own cash-back plan "and its economics will always be far better than Microsoft."
The government is quietly negotiating to help cell phone customers avoid expensive fees when they cancel contracts with wireless companies, The Associated Press has learned. Cell phone Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 11:28 am
Soleil has downgraded the airlines industry from "outperform" from "neutral". The call is not only about six months late, the downgrade should be to "sell". The firm did have the sense to downgrade AMR (AMR) to "sell" along with United (UAUA). Continental (CAL) was only dropped to "hold". It is the worst research call of the month. Douglas A. McIntyre
Nigeria's President Umaru Yar'Adua demands two major oil companies pay the government $2bn. Source: BBC News | Business | World Edition | 21 May 2008 | 11:24 am
BJ's Wholesale Club Inc. says its first-quarter profit rose nearly 26 percent amid a tough economy that's helping discount retailers entice increasingly budget-conscious shoppers. The... Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 11:22 am
AP - German business confidence posted an unexpected increase for May, bouncing back after sinking to its lowest level in more than two years in the previopus month, a closely watched survey showed Wednesday. Source: Yahoo! News: Business | 21 May 2008 | 11:10 am
German business confidence posted an unexpected increase for May, bouncing back after sinking to its lowest level in more than two years in the previopus month, a closely watched survey... Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 11:10 am
The Bank of England is charged with setting UK interest rates and keeping inflation low with a target of 2pc. The Bank’s Monetary Policy Committee meet for two days every month to decide whether to cut interest rates, hold them at their current level, or increase them. Source: Telegraph Business | 21 May 2008 | 11:05 am
Dutch office supplies company Corporate Express plans to buy France's Lyreco to repel a hostile takeover by Staples. Source: BBC News | Business | World Edition | 21 May 2008 | 11:03 am
Oil prices rose above $130 a barrel for the first time Wednesday in Asia as supply concerns mounted and the dollar weakened. Light, sweet crude for July delivery swept to a trading... Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 10:58 am
Wall Street looked to extend its losses Wednesday as oil prices shot up above $130 a barrel for the first time. Crude prices rose to another trading record overnight as supply concerns Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 10:57 am
Reuters - Microsoft Corp is not
looking to bid to buy all of Yahoo Inc but is in talks
about other types of deals with the U.S. No. 2 search engine,
Microsoft CEO Steve Ballmer said on Wednesday.
Specialist mortgage lender Paragon has indicated that the era of making a quick kill on the buy-to-let market is over, as the credit crunch rids the market of speculative landlords. Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 10:40 am
Specialist mortgage lender Paragon has indicated that the era of making a quick kill on the buy-to-let market is over, as the credit crunch rids the market of speculative landlords. Source: Telegraph Business | 21 May 2008 | 10:40 am
Time Warner will receive a higher than expected $9.25bn dividend from the spin-off of Time Warner Cable, it said on Wednesday as it confirmed plans for a "complete legal and structural separation" of the... Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 10:36 am
Time Warner confirmed plans for a 'complete legal and structural separation' of the two companies, the biggest strategic step by Jeff Bewkes since he became chief executive in January Source: FT.com - US homepage | 21 May 2008 | 10:36 am
Reuters - Dutch office supplier Corporate
Express is seeking to buy French rival Lyreco for 1.4
billion euros ($2.2 billion) in cash and equity, as it fends
off a hostile bid from U.S. rival Staples Inc. .
PARIS/AMSTERDAM (Reuters) - Dutch office supplier Corporate Express is seeking to buy French rival Lyreco for 1.4 billion euros ($2.2 billion) in cash and equity, as it fends off a hostile bid from U.S. rival Staples Inc. .
If Microsoft (MSFT) can't make up ground on Google (GOOG) the old fashion way, they can pay people to use their search product. Redmond will give consumers who use its search products to find goods and services they can buy a little piece of that money back. Like airline miles. Douglas A. McIntyre
Media conglomerate Time Warner and Time Warner Cable say their boards have approved the companies' legal separation, with Time Warner Cable expected to pay a hefty $10.9 billion one-time... Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 10:27 am
Crude oil prices are shooting further into record territory, breaking above $130 a barrel for the first time on persistent supply concerns and a weaker dollar. The July contract for... Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 10:25 am
Introducing new car models is now all about the environment. Too much gas is bad for the ozone, global warming, and Al Gore. The race to create hybrids and vehicles which use ethanol is on. Ethanol has become a bit of a problem as the price of corn has spiked up. Honda (HMC) is the latest company to come to market with a car which uses both gas and electricity. It will be sold in the US, Europe, and several other markets starting next year. According to the AP, “In addition to the new hybrid, Honda will introduce several other...
The US government is told to change the size or texture of dollars as it is difficult for blind people to tell them apart. Source: BBC News | Business | World Edition | 21 May 2008 | 10:22 am
Barack Obama moved to the brink of the Democratic presidential nomination after a victory in the Oregon primary election that brought him within 100 delegates of the total needed to win the race Source: FT.com - US homepage | 21 May 2008 | 10:22 am
Barnes & Noble (BKS), the No.1 bricks and mortar bookseller, is looking at a buy-out of No.2 player Borders (BGP). Neither company has done especially well as readers have turned to Amazon (AMZN) and other places to buy books online. While both of the book chains have web sales operations, they are not large enough to offset the trend to stay out of stores. Adding to their troubles is the fact that younger Americans do not read, perhaps because they don’t know how. According to The Wall Street Journal, “Barnes & Noble has about 20% to 22% of the retail...
Supporters of Carl Icahn's proxy battle for Yahoo buy up shares in the search engine and online advertising firm. Source: BBC News | Business | World Edition | 21 May 2008 | 10:09 am
The dollar fell sharply against the yen in Asian trade on Wednesday after a slump on Wall Street and a spike in oil prices added to concerns about the outlook for the US economy, dealers... Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 10:08 am
A leading think tank says that Labour's temporary tax concessions will lead to 18 million losers next year. Source: BBC News | Business | World Edition | 21 May 2008 | 10:08 am
Oil prices rose to another intraday trading record Wednesday in Asia as supply concerns mounted and the dollar weakened. The dollar had become less of a factor as attention turned to... Source: Infocious RSS raw feed - channel BNewsBusiness | 21 May 2008 | 10:07 am
Paragon, the buy-to-let mortgage specialist, suffered a sharp slump in first
half profits after the seizure in the wholesale markets forced it to cut its
new lending by more than half. Source: Latest Business News from Times Online | 21 May 2008 | 10:07 am
European equity markets were higher on Wednesday as energy and commodities stocks clawed back lost ground their worst sell off since March.In late morning trade, the benchmark pan European FTSE Eurofirst... Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 10:06 am
Carl Icahn is known as much for his mistakes as his successes. His process for making money is based on forcing management to do the right thing. He cannot, however, control the forces of the fates and furies, the trends which wreck businesses or old decisions which can come back to haunt the living. Most notable among Icahn’s recent errors are Blockbuster (BBI), a movie rental chain which is part of the Stone Age of media, and Motorola (MOT), where the handset operation died so quickly that it did not even make it to the door of an emergency room....
Fears of a shortage within five years propelled long-term oil futures prices to almost $140 a barrel, further stoking inflationary pressures in the global economy Source: FT.com - US homepage | 21 May 2008 | 9:57 am
Conditions in the UK housing market will "get worse before they get better",
with mortgage lending expected to fall by 21 per cent this year while house
prices will decline by 7 per cent. Source: Latest Business News from Times Online | 21 May 2008 | 9:51 am
Most Asia-Pacific markets fell on Wednesday as investors worried about the effect of the credit crisis on bank profits after Japan's largest bank said earnings would not grow this year. But shares in Hong... Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 9:49 am
The Bank of England voted eight to one to keep interest rates on hold at 5%, its latest minutes show. Source: BBC News | Business | World Edition | 21 May 2008 | 9:42 am
Time Warner (TWX) plans to spin-off its cable company, Time Warner Cable (TWC), to shareholders. In the process, the parent will get a payment of $9.25 billion as part of a one-time dividend. It will also let most of its debt go to the cable company, improving the balance sheet by a factor which should matter to shareholders. According to The Wall Street Journal, “Time Warner could use its windfall to cut its debt further, buy back shares or make an investment.” Leaving aside the big debt which the cable company will have to handle, well over $23 billion, Time...
Shares in the insurer AIG fall on news of that it is raising more money than had been expected. Source: BBC News | Business | World Edition | 21 May 2008 | 9:30 am
Some of the worst economic conditions in the country are where John McCain can least afford them -- in electoral battleground states crucial to Republicans' chances of hanging onto the White House.
The euro surged to a one-month high against the dollar on Wednesday after a surprise rise in German business confidence dented expectations for a near-term cut in eurozone interest rates. The Ifo institute's... Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 9:28 am
It turns out that Moody’s (MCO) may be more than incompetent. After missing most of the risks in subprime paper and keeping “Aaa” ratings on the municipal bond ratings agencies for too long, the firm also had computer problems which caused some debt to be rated too high. According to the FT, “Moody’s awarded incorrect triple-A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models.” Moody’s did not seem to want to come clean about the matter. Some members of Moody’s management appear to have known about the...
Wolseley, the plumbing and building materials company, is slashing costs and preparing to make job cuts in the UK as the downturn pushes profits down 30pc. Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 9:17 am
Wolseley, the plumbing and building materials company, is slashing costs and preparing to make job cuts as the downturn pushes profits down 30pc. Source: Telegraph Business | 21 May 2008 | 9:17 am
Honda Motor on Wednesday announced plans for a dramatic increase in the production of petrol-electric hybrid vehicles and said it would launch a hybrid-only model early next year.Japan's second-largest... Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 9:15 am
Honda Motor Co on Wednesday announced plans for a dramatic increase in production of petrol-electric hybrid vehicles and said it would launch a hybrid-only model early next year.Japan's second-largest... Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 9:15 am
UBS, the sub-prime stricken European banking group, has successfully offloaded
about $22 billion ($£11 billion) worth of mortgage securities for $15 billion
to BlackRock and lent the US money manager more than three quarters of the
total purchase price.$ Source: Latest Business News from Times Online | 21 May 2008 | 9:08 am
London equities recovered on Wednesday, with strengthening resource stocks tracking bullish commodities markets after oil prices held above the $129 per barrel mark. Traders were unperturbed as hopes... Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 9:00 am
Last year, borrowers took out more than 132,000 reverse mortgages - 50% more than the year before and almost 10 times as many as five years ago. Such loans, as you may already know, allow you to draw down your home equity if you're 62 or older without repaying it as long as you stay in your house.
Swiss bank UBS sells a bundle of debts - with a nominal value of about $22bn - to Black Rock for $15bn. Source: BBC News | Business | World Edition | 21 May 2008 | 8:34 am
Chris Bell, the chief executive of Ladbrokes, is refusing to allow any of his
14,000 staff to fly with British Airways on business after the airline tried
to force his teenage daughter and her friend off a flight back from
Barbados. Source: Latest Business News from Times Online | 21 May 2008 | 7:59 am
According to Reuters, Microsoft's (MSFT) Steve Ballmber said his company will not bid for Yahoo! (YHOO). Reuters writes that HP's (HPQ) operating margin rose to 10% in the last quarter. Reuters writes that Lehman (LEH) will cut 1,300 jobs. Reuters reports that GM (GM) reaced a deal with striking worker in Kansas. Reuters reports that another hedge fund joined Carl Icahn's bid to controll Yahoo!. The Wall Street Journal writes that AIG (AIG) ex-CEO Hank Greenberg may face SEC charges. The Wall Street Journal writes that Time Warner (TWX) plans to spin-out Time Warner Cable (TWC) and get a $9.25...
ArcelorMittal, the world's top steelmaker, has entered talks about a transaction with Australia's Macarthur Coal after paying $604m (A$630m) for a near 15 per cent stake in the company, sending the coal... Source: Infocious RSS raw feed - channel BNPaperBusiness | 21 May 2008 | 7:38 am
Markets in Asia were mixed. The Nikkei fell 1.7% to 13,926. Honda (HMC) fell 2.1% to 3350. KDDI fell 3.2% to 668000. The Hang Seng improved .8% to 25,371. China Petroleum (SNP) was up 4.6% to 7.59. CNOOC was up 5.6% to 15.86. Data from Reuters Douglas A. McIntyre
NEW YORK (Reuters) - Lehman Brothers Holdings Inc is cutting roughly 1,300 positions globally, or nearly 5 percent of its work force, amid difficult market conditions, a person briefed on the matter said on Tuesday.
(Reuters) - Maurice "Hank" Greenberg, former chief executive of American International Group Inc , may face civil charges for his alleged role in an effort to improperly boost the insurer's financials, the Wall Street Journal said on Wednesday.
In the span of just a few weeks, two titans of the drug industry have endorsed a couple of big ideas that Big Pharma has long resisted: GlaxoSmithKline has adopted "tiered pricing," and Eli Lilly & Co. has promised "full disclosure."
While this isn't as stunning as, say, the National Rifle Association accepting the idea of regulating handguns, it is an example of how enlightened self-interest seems to be taking hold in at least two pharmaceutical companies.
Drugmaking in an industry that has been rocked by scandals, recalls, plummeting numbers of new drug approvals, and falling stock prices. Pharmaceuticals companies have also seen their public image plummet from beloved to distrusted in less than 25 years.
As recently as the 1980s, a large majority of Americans adored them. Last year, only 27 percent trusted drugmakers somewhat or a great deal, according to a Harris Poll. This compares to 20 percent who trust Congress, and the current 28 percent approval rating for President Bush.
This decline has occurred even as the industry has produced numerous wonder drugs, from cholesterol-lowering statins such as Pfizer's Lipitor to cancer-busting drugs such as Genentech's Avastin—though the output of late has been slowing.
Now comes London-based Glaxo announcing the abandonment of a central orthodoxy of its peers: that the entire world should pay First World prices for most drugs. Instead, Glaxo has been experimenting with charging much less in developing countries, running pilot projects in South Africa, Morocco, and India to sell drugs at prices the local markets can bear. Internally at Glaxo the project has been dubbed "tearing down the barriers."
The goal is to continue to charge high prices in wealthy nations, which will continue to be the primary source of revenues to cover costs and to generate profits, while emerging markets will pay much less. This will not only provide drugs to those who cannot now afford them, but also will give Glaxo a boost in building new markets in emerging economies from North Africa to China.
One fear of a tiered-pricing model has been that middlemen will buy drugs at the lower price and resell them in a "gray market" at the higher price. Glaxo has found that this practice is minimal in their pilot studies. They also have created different packaging, colors and branding of the same medicines.
As volume begins to offset lower prices in India, China, and other vast new markets, prices might even come down in the West as companies maintain or possibly increase profits.
This is what I mean by "enlightened self-interest."
Meanwhile, back in the U.S., Eli Lilly also broke through another sacrosanct barrier. Last week it announced its support of a proposal in Congress to require drug and medical-device companies to disclose all payments—including gifts, honoraria, and travel reimbursements—that it gives to physicians.
Lilly executives told the Indianapolis Star that a national registry revealing payments and links is needed to help restore the image of the industry and its relationship with doctors. "We believe that being transparent is one way to help reestablish that trust," Dr. Jack Harris, vice president of Lilly's U.S. Medical Division.
A recent study in the New England Journal of Medicine found that three-quarters of physicians surveyed had accepted free samples, food, or tickets to events; one-third had accepted free continuing education; and one-third had been paid fees for speaking and for enrolling patients in clinical trials.
A bill in the U.S. Senate would fine drug companies from $1,000 to $50,000 per violation for failing to disclose payments to doctors of $500 or more. The measure would also preempt state laws, some of which are more strict.
Lilly threw in its support after the bill's sponsors—Republican Chuck Grassley of Iowa and Democrat Herb Kohl of Wisconsin—agreed to soften some provisions, such as lowering the maximum fine and raising the reporting threshold to $500 from $25.
Critics of the drug industry have said that the bill could be stronger, but most are satisfied that a national registry is an important first step. For Lilly, the effort was worth it, in part to fend off a stronger bill that might have more seriously affected its marketing efforts; it also is perhaps recognition that the industry's low esteem with the public should not be ignored.
These actions by Glaxo and Lilly are long-overdue steps in the right direction for an industry that is still in need of far-reaching reforms and restructuring, and still has a ways to go to restore public trust.
Market fears that American International Group might make more big credit-related writedowns rose after the troubled insurance group revealed it would raise about $20bn in new capital to protect its balance sheet Source: FT.com - US homepage | 21 May 2008 | 1:40 am
James Hall continues his national tour, this time stopping in the Welsh capital to see how it is coping with the credit crisis Source: Telegraph Business | 21 May 2008 | 12:01 am
Suez, the French power and water company, has appeared to rule itself out of any immediate bid for British Energy (BE), saying that its key priority was completing the planned merger with Gaz de France (GdF). Source: Telegraph Business | 21 May 2008 | 12:01 am
Marks & Spencer has achieved full-year profits of over £1bn for the first time in a decade, but the strong results were tempered by news that most staff will lose out on their annual bonuses after missing internal targets. Source: Telegraph Business | 21 May 2008 | 12:01 am
One of the world's most powerful financial traders has warned that the world is enduring its "worst financial crisis" since the Great Depression and that Britain is heading for a recession. Source: Telegraph Business | 21 May 2008 | 12:01 am
Figures from across the US political spectrum showered praise on Edward Kennedy, the torchbearer of the Kennedy dynasty, after it was revealed that he was suffering from a malignant brain tumour Source: FT.com - US homepage | 21 May 2008 | 12:00 am
The White House National Security Council ignored concerns raised by the Federal Bureau of Investigation over interrogation techniques used at Guantánamo Bay Source: FT.com - US homepage | 20 May 2008 | 11:47 pm
Moody's awarded incorrect triple-A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models, a Financial Times investigation has discovered Source: FT.com - US homepage | 20 May 2008 | 10:36 pm
Investor's Business Daily - Rob Lloyd has positioned his $2.37 billion mutual fund to weather what he believes is a mild recession. Source: Yahoo! News: Business | 20 May 2008 | 10:05 pm
Automotive writer Dan Neil and Kai Ryssdal go for a quiet spin around downtown L.A. in one of the newest electric automobiles, the ZENN (Zero Emissions No Noise). Source: Marketplace | 20 May 2008 | 9:02 pm
Lenders are selling off thousands of houses they've foreclosed on for pennies on the dollar. And now the neighborhoods where those homes are located are crumbling. Mhari Saito reports from Cleveland. Source: Marketplace | 20 May 2008 | 9:02 pm
This week we're asking three future economists a simple question. Why take up a discipline that's been called the dismal science? For Andra Ghent it's because in a world full of idealists, economists are the hard-boiled truth-tellers. Source: Marketplace | 20 May 2008 | 9:02 pm
Cell-phone sales have fallen for the first time in a couple of years. The number of new customers signing up has taken a double-digit dive, too. Market saturation is one reason. The slowing economy is another. Stacey Vanek-Smith reports. Source: Marketplace | 20 May 2008 | 9:02 pm
John McCain and the Republican Party are going to take on the eventual Democratic winner with a lot less cash than the GOP is used to. Politico writer Jeanne Cummings shares the details with Kai Ryssdal. Source: Marketplace | 20 May 2008 | 9:02 pm
The Labor Department says businesses paid more for goods at the wholesale level last month -- and that's not counting food and energy. If businesses are paying higher prices for everything else, eventually the rest of us will, too. John Dimsdale reports. Source: Marketplace | 20 May 2008 | 9:02 pm
US stocks took a beating this morning as sentiment took a hit from worrying inflation data and a weak earnings report from Home Depot that highlighted troubles in the housing market.
A rise in crude oil futures to a record high... Source: New Zealand Herald - Business | 20 May 2008 | 8:30 pm
AP - For U.S. retailers, the phrase "challenging environment" has become a shared refrain for one of the toughest quarters in decades. And merchants expect the climate to remain rough for the rest of the year as higher gas and food costs as well as slumping home prices weigh on shoppers.
Industrial action by aircraft engineers planned for this Friday could have a big impact on Air New Zealand's business.
Three international airlines have cancelled heavy maintenance checks by Air New Zealand because of the industrial... Source: New Zealand Herald - Business | 20 May 2008 | 8:20 pm
The US economy is in "uncharted waters," Federal Reserve vice-chairman Don Kohn said, warning that both financial and economic recovery was likely to be slow Source: FT.com - US homepage | 20 May 2008 | 8:08 pm
It is always a mistake to read much significance in one day's market movement, but the sharp decline in stocks today may be an indication that investors have woken up to the fact that sky-high oil prices are a real problem for the U.S. economy.
The tipping point was oil climbing above $129 a barrel, heading toward $130. With the data on producer prices showing other costs rising, the prospects of inflation accelerating and the economy contracting are hard to wish away.
Stocks have been strong over the last two months, even with oil prices over $120 a barrel. The benchmark Standard & Poor's 500 Index is up nearly 7 percent since the beginning of March.
But that rally has had a hollow ring to it. It has come amid signs that higher gasoline and fuel costs are having an impact on consumer spending and indications that inflation is building. At the same time, financial institutions are still digging themselves out from the collapse of the subprime mortgage market.
Some of the main market movers have been energy stocks. Bloomberg News reported on Monday that when the earnings of the big oil producers over the last two quarters are excluded, profits of companies in the S&P 500 fell 26 percent in the first quarter and 30 percent in the second.
On top of a 34 percent rise in crude oil prices, there is growing concern about other costs rising. Earlier today, the Labor Department reported that prices paid to producers and other manufacturers rose 0.2 percent in April, less than expected. But when energy and food costs are stripped out, producer prices rose 0.4 percent, 3 percent year over year, the fastest pace since 1991.
"That's not a good indication," Peter Cardillo, chief market economist with Avalon Partners, said of the Producer Price Index, according to TheStreet.com. "It says that higher oil prices are having an effect across the board, and it's being passed onto the consumers to a certain degree."
And the energy component in the Producer Price Index can be deceiving because of the way the government accounts for seasonal changes. If gasoline rises slower than usual in April, that be adjusted into a decline even when drivers are seeing higher prices at the pump.
Investors were also shaken by indications that the credit crisis has not yet bottomed out. The insurance giant American International Group said it would seek to raise another $7 billion in capital, while the closely followed analyst Meredith Whitney of Oppenheimer said that the credit crisis will "extend well into 2009 and perhaps beyond."
A.I.G. shares fell to levels not seen since 1998.
The selling in financial shares came even as one indication of lending confidence, the TED spread, improved.
The TED spread, the difference between the yield on the three-month Treasury bill and the London interbank offered rate, or Libor, shrank to its lowest since August, when the credit crisis fully erupted.
The major market indexes ended off their lows of the day. The S&P 500 closed down nearly 1 percent, its biggest slump in two weeks. The Dow Jones industrial average fell 1.5 percent, its sharpest drop in five weeks.
New Zealand First is calling for a tax free threshold for up to $5200 to be set and for GST to be reduced to 10 per cent over three years.
Party leader Winston Peters told the Auckland Association Grey Power AGM in Auckland this... Source: New Zealand Herald - Business | 20 May 2008 | 7:00 pm
Gwendoline Harrison is plagued by nightmares about losing her home.
Since learning she owes more than $300,000 as a result of the Blue Chip collapse, the 90-year-old Tauranga pensioner dreams she is being dragged from her home,... Source: New Zealand Herald - Business | 20 May 2008 | 6:55 pm
Portraying New Zealand Inc's business mission to Tokyo as a move to "butter-up" the Japanese could be seen as rather crass.
But these are not normal times.
The ability of New Zealand to provide Japan with guaranteed supplies... Source: New Zealand Herald - Business | 20 May 2008 | 6:50 pm
South Canterbury Finance's latest bond offer is expected to close fully subscribed as investors rush to tap into higher returns as talk of an interest rate cut looms.
The $125 million secured bond offer, which opened yesterday,... Source: New Zealand Herald - Business | 20 May 2008 | 6:00 pm
Copper prices are booming, so thieves are boosting anything they can sell to scrap yards. Among other things they're tearing apart infrastructure, leaving cities and states with big repair bills when their budgets are already bleak. Jeff Tyler reports. Source: Marketplace | 20 May 2008 | 5:38 pm
Newly merged payment-technology company ProvencoCadmus expects an annual saving of $7.5 million from restructuring.
The company announced yesterday that it planned to shed about 100 jobs - a quarter of its total staff - as a result... Source: New Zealand Herald - Business | 20 May 2008 | 5:30 pm
Industrial real estate specialist Goodman Group has been the best-performing listed property entity in the past two years, according to international information service DataStream.
The performance of eight listed property stocks... Source: New Zealand Herald - Business | 20 May 2008 | 5:20 pm
The International Monetary Fund advises a cautious approach to tax cuts and the maintenance of firm monetary policy in its latest report on the New Zealand economy.
As in previous reports, the IMF staff have left New Zealand persuaded... Source: New Zealand Herald - Business | 20 May 2008 | 5:00 pm
Macquarie Group, Australia's top investment bank, posted a 1.4 per cent rise in second-half profit, and said it would be challenging, though possible, to repeat its record full-year profit.
The steady result is in contrast to the... Source: New Zealand Herald - Business | 20 May 2008 | 5:00 pm
The alleged plot reads like a film treatment for a spy thriller in the secretive and moneyed world of international private banking. The setting is Santiago, Chile.
A surveillance camera catches an executive from one international bank taking several boxes and bags of documents through the back door of a competitor's office. The mole is working in cahoots with two employees of the rival bank, who pass him off to other employees as a compliance officer from headquarters.
The scene is a slice of a pending lawsuit in federal court in Miami. In it, American Express Bank alleges that Credit Suisse conspired to poach rich clients with total assets of $127 million from A.E.B.'s Santiago office.
Further, American Express contends that Credit Suisse pulled off the bank job with the help of two A.E.B. private banking managers, Christian Echeverria and Jorge Salame.
The Credit Suisse operative named in the lawsuit, David Rosenkranz, is a Swiss citizen, born in 1960. The complaint, filed May 13, gives the number of his passport: F xxx2314.
Court records show that American Express accuses Rosenkranz of having posed as an A.E.B. compliance officer during a 10-day visit to Santiago in December 2007, working in a small conference room where he used flash drives and one of A.E.B.'s computer printers.
Fights over clients are not uncommon, said Christopher Stief, who runs the employee defection and trade secrets practice at the law firm Fisher & Phillips in Radnor, Pennsylvania. But they usually erupt when an employee jumps ship and tries to bring clients along.
"This is more like industrial espionage," Stief says. "There are two highly sophisticated players on each side. This is a highly unusual scene."
The prologue for this bit of corporate espionage began in February 2007, when American Express began negotiations to sell the A.E.B. to Standard Chartered, the London bank. They reached an agreement on September 16, 2007.
In the interim, though, Echeverria and Salame agreed to set up their own business and work for Credit Suisse as "external business managers." That, at least, was a plan laid out in a July 20, 2007, PowerPoint presentation that A.E.B. later discovered on its computers. The A.E.B. computers also contained July 20 letters in which Credit Suisse offered to hire Echeverria and Salame.
By December, when Rosenkranz visited Santiago, the plot thickened, according to the complaint: Not only did the Credit Suisse banker use a pen drive to copy A.E.B. documents, he also began telling A.E.B. clients that Standard Chartered "did not do private banking; was not interested in Latin America."
This falsehood, which was also disseminated by some A.E.B. employees working "in concert" with him, led some wealthy clients to conclude that "there would no longer be private-banking capabilities for A.E.B. clients in Chile," the complaint says.
A.E.B. clients were advised to close their accounts and transfer their considerable assets to Credit Suisse, and that—this is the delicious part—"they could come in to the A.E.B. office to sign papers to do so," documents say.
Apparently, nearly a quarter of A.E.B.'s Chilean business—more than 80 clients—bought this line, representing $127 million in assets as of May 9, 2008.
But there is no perfect crime, and, at least according to the A.E.B. complaint, there was a fatal flaw in this scheme: Lunch. Yes, lunch! While most of A.E.B.'s Chilean staff joined the renegades in their deed, according to the complaint, two A.E.B. employees photocopied Rosencranz's papers while he was at lunch.
"Many of these papers contained the Credit Suisse logo," according to the complaint.
The sale of A.E.B. to Standard Chartered closed on February 29, 2008. At that time, Echeverria traveled to A.E.B.'s Miami offices to talk about the deal, according to the complaint, which characterizes him as having been "evasive" at a meeting.
On April 3, A.E.B. fired Echeverria, as well as Salame and most of the rest of its employees who had joined the plot to steal clients. A day later, A.E.B. began to receive orders from clients, faxed from the new company and from some clients themselves, requesting the transfer of accounts to other institutions, primarily Credit Suisse.
Stief, for one, is not convinced that Credit Suisse managers were on board with the scheme. If Credit Suisse could establish Rosenkranz as a "rogue employee," that would go a long way toward mitigating the bank's main worry: the fear of punitive damages.
For Stief, this lawsuit triggers all sorts of wildness, not the least of which is that the Gramm-Leach-Bliley Act of 1999 requires financial institutions to protect customer data. "They are all sensitized to the fact that sending a guy into a competitors' office is a radical move," he says.
For now, A.E.B. has convinced U.S. District Judge William Hoeveler of its case: He granted the bank's motion for a temporary restraining order, finding that it "clearly appears" that Credit Suisse "has stolen A.E.B.'s trade secrets and other confidential and proprietary information" and "is making false and misleading statements about A.E.B."
The restraining order was granted May 14, and shall last 10 days. A.E.B. is seeking to extend the restraining order for another 10 days through the Memorial Day holiday.
Look out, Amazon. Napster just launched the largest digital rights management-free music store in the world, with six million songs that can be loaded onto just about any digital audio player -- a healthy advantage over the Amazon's five-million-track MP3 store.
Apple also has cause for concern. Two of its most widely-known competitors now offer DRM-free music the majors won't let Apple sell without DRM. Apple's latest figures on the topic (released in October) indicated that it only had two million DRM-free tracks.
Napster will continue selling songs for 99 cents a piece and albums for $10, except that now every song in its six-million-track catalog will be available in the unprotected MP3 format instead of the Microsoft's Playsforsure-protected format it had previously used to placate the record labels, before they became more afraid of Apple than they were of DRM-free music.
In a piece called "The Future of Online Music: Why Closed Platforms Will Fail," Napster's CTO Bill Pence wrote to Listening Post nearly two years ago, "I believe strongly that the market in the end must and will be based on interoperable digital formats, [and] if DRM is used to erect barriers to that goal, then there is no question it will be swept aside, and the industry may end up with what many have believed was the obvious choice from the beginning: open MP3 files." For Napster, that day has come -- at least as far as single song and album downloads go.
"Music fans have spoken and it's clear they need the convenience, ease of use and broad interoperability of the DRM-free MP3 format," said Napster CEO Chris Gorog, "and they want to be able to find both major label artists and independent music all in one place. Napster is delighted to deliver all of this and more with the world’s largest MP3 catalog."
However, Napster will continue to offer its monthly music subscription service using DRM in addition to the MP3 download store, making it the first to offer an unlimited music subscription that lets users buy the songs they hear without DRM attached. According to the company, the vast majority of the six million MP3s in its store are encoded at 256 Kbps.
"By offering millions of high quality, MP3-encoded DRM-free tracks from all of the major labels as well as independents," said Susan Kevorkian, audio analyst for IDC, "this service is well-positioned to appeal to the broad spectrum of music lovers, including iPod and iPhone owners."
Unlike Amazon, Napster doesn't offer any software for syncing purchased songs into iTunes so that users can easily transfer them onto their iPods. A Napster spokesman told Wired.com that the current solution for importing into iTunes or any other media player is to import them manually by either double-click the files after they've downloaded or dragging-and-dropping them into the player.
The Napster spokesman also told us that as with Amazon's MP3 service, some of Napster's songs will contain identifying watermarks. However, as with Amazon's situation, these watermarks only indicate which store the song was purchased from, rather than identifying the person who purchased it. (This is a key distinction. Otherwise, someone could steal your laptop, share your music and land you in a sticky infringement suit where you'd have to explain how a song you purchased ended up being shared all over the world.) Related Links Happy Birthday iTunes Apple Smackdown: Content vs. Hardware How Apple Got Everything Right By Doing Everything Wrong
It's safe to say that no one has fewer friends on Wall Street than Meredith Whitney.
But the Oppenheimer analyst doesn't seem bothered by that fact, so she relentlessly continues to throw cold water in the face of her banking brethren.
Her latest report on the financial sector did just that. If you thought the worst is behind us, or that the credit crisis hit bottom in the first quarter, or that there are signs that the loan market is coming back, or that Wall Street firms are finished with their capital raising, Meredith Whitney has three words for you: You are wrong.
In fact, Whitney, who established a name for herself when she correctly predicted Citigroup's dividend cut last fall, believes the credit crisis will "extend well into 2009 and perhaps beyond." She predicts there are still more shoes to drop, that banks will need to cover another $170 billion in loan losses by the end of next year, and that the earnings expectations for Wall Street firms are currently grossly underestimated.
"We believe the real harrowing days of the credit crisis are still in front of us and will prove more widespread in effect than anything seen," she wrote in a report published last night.
Whitney says that the banks used "bad math" to finance mortgages, and they relied too much on the securitization market. Now consumers are left with very little liquidity, which will keep the market for new securities essentially closed for business. She says that regulators' too-little-too-late reaction to the housing bubble will lead to knee-jerk lending legislation that could end up hurting consumers instead of helping them. Whitney predicts that credit card lines will be reduced by 45 percent in 2010. And lower consumer liquidity will only lead to more losses for the banking sector.
Banking chiefs, of course, have not painted such a dire picture. In fact, many of them have suggested in recent weeks that the worst is over and that there are signs that the credit markets are being revived.
Who can you believe? Investors are hearing Whitney's voice loud and clear, much to the chagrin of Wall Street's leaders. Financial stocks are getting hammered today, with Citigroup, J.P. Morgan, Morgan Stanley, Wachovia, and Merrill Lynch all off more than 2 percent.
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 - Oil climbed to a life-time high above
$130 a barrel on Wednesday, driven higher by a combination of
long-term production worries and a near-term focus on tight
fuel stocks.
Reuters - Stock futures slipped on Wednesday
after oil surged to a record above $130 a barrel, heightening
fears about inflation and a drop in consumer spending a day
after Wall Street had its worst slide in two weeks.
Reuters - Microsoft Corp is not
looking to bid to buy all of Yahoo Inc but is in talks
about other types of deals with the U.S. No. 2 search engine,
Microsoft CEO Steve Ballmer said on Wednesday.
Reuters - Dutch office supplier Corporate
Express is seeking to buy French rival Lyreco for 1.4
billion euros ($2.2 billion) in cash and equity, as it fends
off a hostile bid from U.S. rival Staples Inc. .
AP - For U.S. retailers, the phrase "challenging environment" has become a shared refrain for one of the toughest quarters in decades. And merchants expect the climate to remain rough for the rest of the year as higher gas and food costs as well as slumping home prices weigh on shoppers.