World Business News Headlines for November 6, 2008

Barack Obama, America's first black president, turns focus to challenges ahead

Wal-Mart October same-store sales rise (Reuters)

Reuters - Wal-Mart Stores Inc on Thursday reported a 2.4 percent rise in October sales at U.S. stores open at least a year, beating analysts' targets, as it attracted more shoppers to its discount stores.

Source: Yahoo! News: Business | 6 Nov 2008 | 1:44 pm

Store sales hammered but Wal-Mart escapes

The nation's retailers had a terrible October - with the exception of discounter Wal-Mart - as more Americans cut their shopping budgets in an economic downturn.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 1:44 pm

UK, Europe central banks cut key rates

European and British central banks cut interest rates on Thursday, responding to the increasing concern about economic conditions throughout the world.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 1:42 pm

Bruised stocks set for weak open

U.S. stock futures declined Thursday as worries about corporate results and the weak economy hung over the market.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 1:41 pm

Robert Peston

Who will benefit from the surprise rate cut?
Source: BBC News | Business | World Edition | 6 Nov 2008 | 1:40 pm

Jobless Figures, Ominous For Tomorrow's Unemployment

We have just seen the figure for weekly jobless claims, and it is an ugly prelude to tomorrow's unemployment and non-farm payroll data. The good news is that worker productivity came in better than expected, but as the unit labor costs are running up so much you have to wonder if management will decide that it can keep firing the worker bees.

The weekly figures came in at 481,000 versus expectations of 479,000. Last week's numbers were also revised higher to 485,000 from 479,000. Is there any comfort that this has not come in at over 500,000 yet?

Continuing jobless claims grew again and now sits at 3.84 million from a revised 3.72 million.

Productivity came in at +1.1% rather than +0.4% and unit labor costs came in at +3.6% rather than the 3.0% expected.

Unemployment is expected to come in at 6.3% tomorrow after a 6.1% reading the prior month. Non-Farm Payrolls are also expected to come in -200,000.

Forget morale, the beatings must continue.

Jon C. Ogg
November 6, 2008

Source: 24/7 Wall St. | 6 Nov 2008 | 1:39 pm

Eurozone rates lowered to 3.25%

The European Central Bank lowers interest rates to 3.25% in an attempt to prevent a eurozone-wide recession.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 1:38 pm

Jobless claims fell 4,000 last week (Reuters)

Reuters - The number of U.S. workers filing new claims for jobless benefits fell by 4,000 last week to 481,000, according to a Labor Department report on Thursday that still showed the job market under severe strain.
Source: Yahoo! News: Business | 6 Nov 2008 | 1:36 pm

Put Gap (GPS) Out Of Its Misery: Auction Off The Parts

Being a Gap (GPS) shareholder has been a long nightmare and that got worse today.

Gap's same store sales in October fell 16%. The retailer reported net sales of $1.08 billion for the four-week period ended November 1, 2008, which is a decrease of 12% compared with net sales of $1.23 billion for the same period ended November 3, 2007.

Sales at the already dead Banana Republic division fell 17% and at Old Navy North America the drop was 20%.

Gap continues to cut costs, but to get back on track it will have to close hundreds of the most underperforming outlets among its 3,100 stories

Douglas A. McIntyre

Source: 24/7 Wall St. | 6 Nov 2008 | 1:31 pm

Earnings Watch: Updates, advisories and surprises

A roundup of the latest corporate earnings reports and what companies are saying about future quarters.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 1:31 pm

UK interest rates slashed to 3%

The Bank of England slashes interest rates by one-and-a-half percentage points in a bid to stimulate the economy.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 1:31 pm

Economic Report: Continuing jobless claims hit 25-year high

The number of U.S. residents collecting state unemployment benefits reached the highest level in 25 years, rising by 122,000 to a seasonally adjusted 3.84 million in the week ending Oct. 25, the Labor Department reports.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 1:31 pm

Economic Report: Workers' hours slashed to keep productivity rising

U.S. firms cut back their employees’ working hours in the third quarter at the fastest rate in six years, keeping productivity growth rising more than expected, according to Labor Department data.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 1:31 pm

Stock futures drop on economic worry; Cisco slides

NEW YORK (Reuters) - Stock index futures fell on Thursday as disappointing outlooks from companies including technology bellwether Cisco Systems pointed to a deepening global economic downturn.

Source: Reuters: Business News | 6 Nov 2008 | 1:27 pm

Stock futures drop on economic worry; Cisco slides (Reuters)

Reuters - Stock index futures fell on Thursday as disappointing outlooks from companies including technology bellwether Cisco Systems pointed to a deepening global economic downturn.

Source: Yahoo! News: Business | 6 Nov 2008 | 1:27 pm

Cisco sales jump 8%, but profit flat

NEW YORK (MarketWatch) - Cisco Systems Inc. on Wednesday reported an 8% jump in fiscal first-quarter revenue, but net income was flat and the company warned that sales are slowing.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 1:27 pm

Britain slashes interest rates, ECB also cuts (Reuters)

Reuters - Britain slashed borrowing costs by a surprising 1.5 percentage points on Thursday and the European Central Bank (ECB) also cut rates as part of concerted efforts to revive world commerce and ward off deep recession.

Source: Yahoo! News: Business | 6 Nov 2008 | 1:23 pm

Britain slashes interest rates, ECB also cuts

LONDON (Reuters) - Britain slashed borrowing costs by a surprising 1.5 percentage points on Thursday and the European Central Bank (ECB) also cut rates as part of concerted efforts to revive world commerce and ward off deep recession.

Source: Reuters: Business News | 6 Nov 2008 | 1:23 pm

Wal-Mart October same-store sales rise

NEW YORK (Reuters) - Wal-Mart Stores Inc on Thursday reported a 2.4 percent rise in October sales at U.S. stores open at least a year, beating analysts' targets, as it attracted more shoppers to its discount stores.

Source: Reuters: Business News | 6 Nov 2008 | 1:21 pm

Economy worries push stocks lower

Concerns about the state of the world economy send Asian and European shares sharply down, reversing gains made ahead of the US election.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 1:20 pm

BOE slashes key rate, leading round of European cuts

LONDON (MarketWatch) -- The Bank of England took drastic action Thursday in the face of a potentially severe and long-lasting economic contraction, slashing its key interest rate 1.5 percentage points to 3%.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 1:19 pm

Retailers report steep sales declines in October (AP)

AP - The nation's retailers saw their sales plummet last month to what is likely the weakest October level in decades, as the financial crisis and mounting layoffs left shoppers too scared to shop.

Source: Yahoo! News: Business | 6 Nov 2008 | 1:18 pm

Soured consumer confidence haunts retailers

Consumer confidence at a record low haunted retailers’ sales in October, as most turned in another ugly month, signaling a dreary outlook ahead for the crucial holiday season.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 1:15 pm

ECB cuts rates by 50 basis points, more action expected

FRANKFURT (Reuters) - The European Central Bank slashed interest rates by 50 basis points on Thursday, hoping to breathe life into the euro zone economy as it faces its first recession.

Source: Reuters: Business News | 6 Nov 2008 | 1:14 pm

World markets cash in on Obama win

LONDON (AP) -- Most world markets traded lower Wednesday despite strong gains in Asia overnight as investors booked profits after Barack Obama won the U.S. presidential election and the Democrats took a firmer hold on Congress.

Source: L.A. Times - Business | 6 Nov 2008 | 1:12 pm

Bank Of England Cuts 1.5% To 3%

A little note from the Bank of England:

"The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 1.5 percentage points to 3%.

The past two months have seen a substantial downward shift in the prospects for inflation in the United Kingdom. There has been a very marked deterioration in the outlook for economic activity at home and abroad. Moreover, commodity prices have fallen sharply.

Since mid-September, the global banking system has experienced its most serious disruption for almost a century. While the measures taken on bank capital, funding and liquidity in several countries, including our own, have begun to ease the situation, the availability of credit to households and businesses is likely to remain restricted for some time. As a consequence, money and credit conditions have tightened sharply. Equity prices have fallen substantially in many countries."

"In the United Kingdom, output fell sharply in the third quarter. Business surveys and reports by the Bank’s regional Agents point to continued severe contraction in the near term. Consumer spending has faltered in the face of a squeeze on household budgets and tighter credit. Residential investment has fallen sharply and the prospects for business investment have weakened. Economic conditions have also deteriorated in the UK’s main export markets.

CPI inflation rose to 5.2% in September. The substantial rise since the beginning of the year largely reflects the impact of higher energy and food prices. But commodity prices have fallen sharply since mid-summer, with oil prices down by more than a half. Inflation should consequently soon drop back sharply, as the contribution from retail energy and food prices declines, notwithstanding the fall in sterling. Pay growth has remained subdued. And measures of inflation expectations have fallen back.

Since the beginning of the year, the Committee has set Bank Rate to balance two risks to the inflation outlook. The downside risk was that a sharp slowdown in the economy, associated with weak real income growth and the tightening in the supply of credit, pulled inflation materially below the target. The upside risk was that above-target inflation persisted for a sustained period because of elevated inflation expectations. In recent weeks, the risks to inflation have shifted decisively to the downside. As a consequence, the Committee has revised down its projected outlook for inflation which, at prevailing market interest rates, contains a substantial risk of undershooting the inflation target. At its November meeting, the Committee therefore judged that a significant reduction in Bank Rate was necessary now in order to meet the 2% target for CPI inflation in the medium term, and accordingly lowered Bank Rate by 1.5 percentage points to 3.0%."

Douglas A. McIntyre

Source: 24/7 Wall St. | 6 Nov 2008 | 1:08 pm

Indications: U.S. stock futures drop as Cisco cuts sales forecast

U.S. stock futures dropped Thursday, as the lowered sales outlook from Cisco Systems and largely grim retail sales underlined the economic pressures that helped President-elect Barack Obama win the election.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 1:06 pm

Yahoo up after CEO says Microsoft best option

NEW YORK (Reuters) - Shares of Yahoo Inc rose 5.7 percent to $14.72 before the bell on Thursday after the company's CEO said a deal with Microsoft remained its best option.

Source: Reuters: Business News | 6 Nov 2008 | 1:05 pm

All Hail Wal-Mart (WMT)

The magnificence of being big and having extraordinary buying power put Wal-Mart (WMT) at the head of the retailing industry again. It can cut prices to consumers in a way that would ruin its competition.

Those factors showed up in same-store sales for October.

The impovement over October of last month was 2.4%. Most analysts expected a little better than half of that.

"Customer comparable traffic is higher and our seasonal merchandising events are delivering improved sales," said Eduardo Castro-Wright, Walmart U.S. president and chief executive officer. "Highly competitive pricing, especially on basics throughout the store, is driving these results."

And, the rest of the industry can go to hell.

WMT shares look ready to move up at the open.

Douglas A. McIntyre

Source: 24/7 Wall St. | 6 Nov 2008 | 1:04 pm

Budget dismays City and industry despite cut in lending rate

Source: Latest Business News from Times Online | 6 Nov 2008 | 1:02 pm

Constellation operating earnings tumble

NEW YORK (Reuters) - Constellation Energy on Thursday said third-quarter operating profit tumbled due to poor results from its merchant business, which was hit by poor results from its...
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 1:02 pm

Constellation operating earnings tumble

Source: Reuters: Business News | 6 Nov 2008 | 1:02 pm

Money-Market and City Intelligence.

Source: Latest Business News from Times Online | 6 Nov 2008 | 1:01 pm

Movers & Shakers: Thursday's biggest gaining and declining stocks

The retailers -- including chains like AutoNation, Big Lots, Costco, Mother's Work, Stage and Wal-Mart -- will be in sharp focus on Thursday, as they report comparable-store sales for October. In addition, other companies whose shares are expected to move significantly in trading include AMD, Cadence, Cisco, Greenbrier, Lamar Advertising, News Corp., Pfizer, SXC Health, Synchronoss, Teva, Tyco Electronics, and Whole Foods.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 1:01 pm

Ugh, What a Feeling, Toyota

As the U.S. auto industry begs for assistance from Washington, a report from Toyota Motor helps make the case that Detroit's woes are not just its own doing.

The world's leading automaker, Toyota Motor, has cut its forecast for full-year profit in half—a stark illustration of how a global economic slump is battering manufacturers.

"The financial crisis is negatively impacting the real economy worldwide, and the automotive markets, especially in developed countries, are contracting rapidly," said Mitsuo Kinoshita, a Toyota executive vice president. "This is an unprecedented situation."

The automaker reported a 69 percent decline in earnings for the third quarter. Sales worldwide fell 3.5 percent, to 2.064 million vehicles.

Toyota slashed its profit forecasts to levels last seen in the 1990s. It reduced its operating profit estimate by 63 percent, to 600 billion yen ($6 billion.)

"I was very much stunned," Koji Endo, an analyst with Credit Suisse, told Reuters. "First-half profit was already more than 580 billion yen, so that means the company is looking at virtually no profit in the second half."

Toyota, like all other automakers, has been hurt by the plunge in sales in the recession-gripped United States. Earlier this week, Toyota reported a 23 percent decline in U.S. vehicle sales for October.

But Toyota is a global auto company, with a strong presence in many emerging markets. But now even those markets—in China, India, and Latin America—are slowing, as the American financial crisis reverberates throughout the global economy.

The bleak forecast comes as General Motors, Ford Motor, and Chrysler are scrambling to stop the bleeding and to demonstrate they can survive. Democratic lawmakers are fearful of the impact of one, two, or even three auto bankruptcies and are considering steps to aid Detroit, including another $25 billion in low-cost loans, the Wall Street Journal reports.

Douglas McIntyre of 24/7 Wall St. says, "Perhaps news that Toyota is in trouble will convince the administration that the failure of the auto industry is not a 'local' problem."

Source: Portfolio.com: Top 5 | 6 Nov 2008 | 1:00 pm

Top Pre-Market Analyst Downgrades (AMZN, DOX, BRY, CNQ, CEO, CFX, DVN, EOG, GGP, MDR, NWS, PCP, SPWRA, SVR)

These are some of the many analyst downgrades we have seen on Wall Street this Thursday morning:

Amazon.com (AMZN) Cut to Hold at Citigroup.
Amdocs (DOX) Cut to Neutral at Baird.
Berry Petroleum (BRY) Cut to Sell at Goldman Sachs.
Canadian Natural Resources (CNQ) Cut to Sell at Goldman Sachs.
CNOOC (CEO) Cut to Neutral at Credit Suisse.
Colfax (CFX) Cut to Neutral at Baird.
Devon Energy (DVN) Cut to Market Perform at FBR; Cut to Neutral at Goldman Sachs.
EOG Resources (EOG) Cut to Neutral at Goldman Sachs.
General Growth Properties (GGP) Cut to Neutral at UBS.
McDermott (MDR) Cut to Hold at Jefferies; Cut to Neutral at Credit Suisse.
News Corp. (NWS) Cut to Neutral at JPMorgan.
Precision Castparts (PCP) Cut to Neutral at UBS.
SunPower (SPWRA) Cut to Neutral at Merriman Curhan Ford.
Syniverse (SVR) Cut to Neutral at Baird.

Jon C. Ogg
November 6, 2008

Source: 24/7 Wall St. | 6 Nov 2008 | 12:58 pm

InBev sticks to Bud deal, third quarter just above forecasts

BRUSSELS (Reuters) - World number-two brewer InBev insisted on Thursday its $52 billion takeover of Anheuser-Busch was on track after third-quarter results slightly exceeded expectations despite rocketing costs.

Source: Reuters: Business News | 6 Nov 2008 | 12:57 pm

ECB cuts rates by 50 basis points, more action expected

FRANKFURT (Reuters) - The European Central Bank slashed interest rates by 50 basis points on Thursday, hoping to breathe life into the euro zone economy as it faces its first recession.
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:53 pm

Europe Markets: Europe stocks move off lows following BoE's drastic cut

European stocks Thursday moved considerably off lows of the day after the Bank of England stunned markets with a 1.5 percentage point rate slash, a cut far bigger than what markets had anticipated.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 12:52 pm

Cost of borrowing falls further

Lending rates remained near historically low levels Wednesday as banks struggle to put the credit crisis behind them.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 12:50 pm

Molson Coors mulling deal to buy Fosters: report

Molson Coors Brewing Co.’s announcement that it has acquired an indirect interest in Foster's Group Ltd. has raised speculation that it may consider some kind of a deal with the Australian brewer, according to a report Thursday.

Source: MarketWatch.com - Top Stories | 6 Nov 2008 | 12:50 pm

Yahoo up after CEO says Microsoft best option (Reuters)

Reuters - Shares of Yahoo Inc rose 5.7 percent to $14.72 before the bell on Thursday after the company's CEO said a deal with Microsoft remained its best option.

Source: Yahoo! News: Business | 6 Nov 2008 | 12:49 pm

Yahoo up after CEO says Microsoft best option

NEW YORK (Reuters) - Shares of Yahoo Inc rose 5.7 percent to $14.72 before the bell on Thursday after the company's CEO said a deal with Microsoft remained its best option.
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:49 pm

ECB cuts interest rates to 3.25%

Eurozone interest rates have been slashed by a half percentage point to their lowest level since October 2006 - as the European Central Bank responds to the region's rapid plunge into recession. Despite some speculation that a deeper cut might be announced, the ECB seems to have decided that such a move might appear to be a panic reaction
Source: FT.com - US homepage | 6 Nov 2008 | 12:45 pm

Top Pre-Market Analyst Upgrades (EAC, EQT, HNT, SOV, WFMI, XTO)

These are some of the early upgrades we are seeing on Wall Street this Thursday morning:

Encore Acquisition (EAC) Raised to Buy at Goldman Sachs.
Equitable Resources (EQT) Started as Outperform at Credit Suisse.
Health Net (HNT) Raised to Neutral at Goldman Sachs.
Sovereign Bancorp (SOV) Raised to Buy at Citigroup.
Whole Foods (WFMI) Raised to Hold from Underperform at Jefferies.
XTO Energy (XTO) Raised to Buy at Goldman Sachs.

Jon C. Ogg
November 6, 2008

Source: 24/7 Wall St. | 6 Nov 2008 | 12:45 pm

Virgin Media gains £24m a year from Sky deal

Virgin Media this morning revealed that rival BSkyB had agreed to pay it £24 million a year more to carry its Living to Trouble portfolio of cable channels, as it reported that customer numbers had dipped for the second consecutive quarter.
Source: Latest Business News from Times Online | 6 Nov 2008 | 12:40 pm

Deutsche Telekom sees 3Q profit soar

Deutsche Telekom AG reported a strong rise in third-quarter net profit on Thursday, buoyed by lower taxes and a cost-cutting program. The Bonn-based telecommunications company, Europe's...
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:40 pm

Oil extends loss below $64 after UK rate cut

LONDON (Reuters) - Oil slipped further below $64 a barrel on Thursday after the Bank of England cut interest rates by an unprecedented 150 basis points, highlighting deepening fears of a demand-crushing global recession.

Source: Reuters: Business News | 6 Nov 2008 | 12:40 pm

OfficeMax swings to 3rd-quarter loss

Office supply chain OfficeMax says it swung to a third-quarter loss because of a larger-than-expected charge tied to the bankruptcy of Lehman Brothers. OfficeMax lost $432.7 million, or...
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:38 pm

Swiss central bank cuts interest a half point

The Swiss National Bank has cut its key interest rate by half a percentage point to 2 percent, only its second reduction since March 2003. The central bank said its move Thursday is...
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:38 pm

Many retailers report steep sales drop in October

The nation's retailers are reporting what are expected to be the weakest October sales in decades as an intensifying financial meltdown and mounting layoffs leave Americans too scared to...
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:38 pm

Wal-Mart October same-store sales rise

Wal-Mart Stores says its low-price focus and sales of Halloween merchandise boosted its October same-store sales by 2.4 percent, ahead of expectations. Analysts surveyed by Thomson...
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:37 pm

BoE slashes interest rates to 3 percent

The Bank of England has slashed its benchmark interest rate by 1.5 percentage points to 3 percent. The cut announced Thursday exceeded economists' expectations and is the biggest trim in
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:36 pm

Vodafone wins control of South Africa's Vodacom

Mobile phone giant Vodafone said Thursday it had taken control of South African peer Vodacom after increasing its stake to 65 percent from 50 in a cash deal costing 1.4 billion pounds.
Source: Infocious RSS raw feed - channel BNewsBusiness | 6 Nov 2008 | 12:30 pm

Bank Rate Down To 3 Per Cent.

The Bank of England has reduced the interest rate in an effort to aid industry
Source: Latest Business News from Times Online | 6 Nov 2008 | 12:22 pm

Bank of England slashes rates to 3%

The Bank of England's Monetary Policy Committee slashed its key rate by an unprecedented 1.5 percentage points to 3 per cent, underscoring the Bank's deepening concern over a contracting economy
Source: FT.com - US homepage | 6 Nov 2008 | 12:19 pm

Bank of England cuts interest rate by 1.5% to 54-year low

The Bank of England today took decisive action to shore up the economy and stave off a deep recession by ordering an aggressive cut in interest rates by 1.5 per cent to 3 per cent, taking the base rate to its lowest level in more than half a century.
Source: Latest Business News from Times Online | 6 Nov 2008 | 12:02 pm

Toyota halves outlook

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 11:57 am

Oil falls below $65 on demand fears

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 11:55 am

If Detroit Goes Down, So Do Three Million Jobs (GM)(F)

Every industry has its blue chip think tank, In the case of cars it is The Center for Automotive Research.

The research operation has come out with a new and disturbing study.

Based on forecasts which look at The Big Three, the foreign competition making cars in the US, auto parts companies, and other related industries, a collapse of the US auto industry would cost three million jobs. US personal income would drop almost $400 billion over three years.

If only half of Detroit's capacity was compromised, the number of jobs lost would still be over two million when the ripple effects to other parts of the economy are taken into account.]

In the worst case, the government would lose over $150 billion in 2009, 2010, 2011. If those numbers are right, it leaves Congress and the administration one question. How much are they willing to spend to keep all that tax income?

GM (GM), Ford (F)

Douglas A. McIntyre

Source: 24/7 Wall St. | 6 Nov 2008 | 11:45 am

Gulf stocks down on global recession fears (AFP)

AFP - Stock markets in the oil-rich Gulf region closed lower on Thursday as they followed global markets which plunged on fears of a deep global recession.

Source: Yahoo! News: Business | 6 Nov 2008 | 11:36 am

Yahoo! admits it is open to new Microsoft bid

Tech Central: Jerry Yang confronts the difficult questions
Source: Latest Business News from Times Online | 6 Nov 2008 | 11:35 am

Yahoo! (YHOO) Turns To Microsoft (MSFT) For Help

Now that Google (GOOG) has walked away from a deal to sell search advertising for Yahoo! (YHOO), the portal company has to come up with a way to replace all that money. Yahoo! could go through another round of lay-offs, but at some point, who is left?

No one would argue that the best deal for Yahoo! was always the deal to sell to Microsoft (MSFT). Yahoo! is sending signals that it is open to talk.

According to Reuters, "After nearly a year spent seeking alternatives to Microsoft Corp's buyout offer, Yahoo Inc's Chief Executive Jerry Yang said he believes a deal between the two is still the best option for the beleaguered Internet company."

Too bad for Yang and his shareholders that Steve Ballmer has watched Yahoo!'s share price drop from the $33 he offered to $14. It is hard to imagine a new offer will be even close to $20.

Douglas A. McIntyre

Source: 24/7 Wall St. | 6 Nov 2008 | 11:34 am

Old Mutual admits further bad debts at US business

Old Mutual, the Anglo-South African insurer, has admitted that bad debts at its troubled US life business are even higher than expected.
Source: Latest Business News from Times Online | 6 Nov 2008 | 11:27 am

Toyota (TM) Catches Cold

Toyota (TM) reduced its earnings estimates by more than 50%, making it the last large global car company to admit that there is nothing to be done about salvaging this year or next. Declining consumer spending has ruined the car industry, and even the most successful operator cannot do a thing.

Investors thought that Toyota might dodge trouble by having large customer bases in Europe, Japan, and emerging nations such as India and China. But, by many estimates China's auto sales will be flat in the last quarter of the year.

The Center for Automotive Research, which is the leading authority on the economics of the car industry, believes that one or more of the American car companies will falter and have to take its production offline next year. It has done a model to show what happens if all three fail. The consequence is three million lost jobs and hundreds of billions of personal income destroyed.

The effect of Detroit going under would compromise the US tax base and wipe it out in states such as Michigan.

The Toyota news could not come at a worse time for The Big Three, or, perhaps it comes at the best time. While Chapter 11 is a real possibility for Ford (F), GM (GM) and Chrysler, Washington has turned a deaf ear. Perhaps news that Toyota is in trouble will convince the administration that the failure of the auto industry is not a "local" problem.

Douglas A. McIntyre

Source: 24/7 Wall St. | 6 Nov 2008 | 11:20 am

5 toys that will beat the retail slump

With recession looming, the National Retail Federation is predicting growth of 2.2% at best this holiday season. Toymakers hope that a few standout toys can rescue holiday sales. Here are five toys that experts think picky parents will buy.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 11:17 am

Cisco's (CSCO) Consumer Push Costs It

The sound out of Cisco (CSCO) has been so fine for so long that its was an assault to hear that the company would have a drop in revenue in the current quarter. By the reckoning of management, it could be as much as 10%.

Because Cisco has a wide spread of products from video conferencing to routers to cable set top boxes and does as much business overseas as in the US, the company is sending out a signal to shareholders at other firms as diverse and Microsoft (MSFT) and Oracle (ORCL).

For the quarter just over, Cisco had an 8% improvement in revenue to $10.3 billion. Net income was fairly flat at $2.2 billion.

Cisco's products did not used to touch the consumer directly, and that may be part of its problem. Its lower-level video conferencing is used by tens of thousand of businesses. Its set top boxes are in millions of homes.

Enterprise router sales are moving down because cable and telecom companies do no fell they have the capex to push out infrastructure improvements in a recession. But, Verizon (VZ) has a better balance sheet than the man with the satellite TV who just lost his job. Verizon will spend to put broadband into homes because it knows that it is a good long-term bet and one it can afford.

Cisco may look back and see that getting into consumer electronics was a bad move.

Douglas A. McIntyre

Source: 24/7 Wall St. | 6 Nov 2008 | 11:11 am

Toyota hacks forecasts as U.S. carmakers seek help

TOKYO (Reuters) - Toyota Motor Corp, the world's No.1 automaker, warned operating profits will sink to a 13-year low this year, as other carmakers sought more state help to ride out a financial crisis that is crippling demand and squeezing credit around the globe.

Source: Reuters: Business News | 6 Nov 2008 | 11:09 am

Finding the right green fund

Mutual funds are supposed to simplify investing, but it doesn't always work out that way. Let's say you're looking for a fund that invests in green technologies. There are dozens of choices, including exchange-traded funds (ETFs), which track narrow indexes in everything from wind power to potable water. The catch? Most are as new and unproven as the companies they invest in. So we set out to find funds with experienced managers and established records. First, we asked research firm Lipper to produce a list of green funds. Then we excluded those with less than five years' performance or less than $100 million in assets. That left us with just three contenders - a slim field, to be sure - but these veterans offer a range of options for different risk appetites.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 11:05 am

Toyota slashes profits forecast

Japanese car firm Toyota shocks analysts by announcing a 69% fall in quarterly profits and its 2008 profit forecast.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 11:03 am

Obama considers Geithner, Summers for Treasury

CHICAGO (Reuters) - President-elect Barack Obama, who will inherit the worst financial crisis in decades when he takes office, is expected to announce his pick for some key economic jobs soon and may reveal his Treasury Secretary selection as early as Thursday.

Source: Reuters: Business News | 6 Nov 2008 | 11:02 am

Cathay Pacific in profit warning

Shares in Hong Kong carrier Cathay Pacific plunge 14% after it warns of falling revenue and fuel hedging losses.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 10:51 am

Toyota Slashes Annual Profit Forecast

Toyota Motor slashed its annual profit forecast by more than half, warning of a long downturn in global auto markets.
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 10:51 am

Forecast 2009: Your home

Forget the old saw that all real estate is local. What's pummeling housing prices in your nabe is the same thing that's hurting them around the country: the credit crisis.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 10:35 am

UK new car sales in sharp decline

Sales of new cars in the UK fell in October at their fastest rate for 17 years, figures from the industry show.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 10:30 am

House prices dive 15% in record drop

British house prices fell by a record 15 per cent in the year to October as the country's deteriorating economy wiped £30,000 off the value of an average UK home.
Source: Latest Business News from Times Online | 6 Nov 2008 | 10:21 am

Bovis plans asset writedown as sales fall

Bovis Homes Group today warned that it will have to write down the value of its land and inventory of houses next month, following a sharp deterioration in selling prices since August.
Source: Latest Business News from Times Online | 6 Nov 2008 | 10:01 am

Jobs risk as airline axes flights

UK airline BMI is to stop long-haul flights from Manchester Airport, putting up to 140 jobs at risk.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 9:57 am

Jobs gasses up the Gulfstream

Apple chief Steve Jobs had a busy summer: Launching the iPhone 3G, introducing it into dozens of countries, and shipping almost 7 million of them. Oh, and lots of flying around in his private jet.

Source: Business and financial news - CNNMoney.com | 6 Nov 2008 | 9:26 am

Yahoo tells Microsoft: 'Buy us'

Yahoo's co-founder Jerry Yang tells a tech conference Microsoft should reconsider buying the company.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 9:08 am

Bovis warns of tough conditions

Housebuilder Bovis says the current trading environment in the UK property market is the worst for many years.
Source: BBC News | Business | World Edition | 6 Nov 2008 | 8:59 am

Asian Markets Retreat Sharply, and Europe Is Down

Asian stock markets retreated broadly as investors shrugged off the excitement of the U.S. elections, and European equities followed suit.
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 8:51 am

Toyota slashes outlook as global crisis bites

The world's biggest carmaker reported a 69% plunge in quarterly net profit and warned it would barely make money in its second half, owing to crumbling US vehicle sales and a surge in the yen
Source: FT.com - US homepage | 6 Nov 2008 | 8:50 am

Toyotas Quarterly Earnings Drop 69%

Toyota slashed its earnings forecast for the full year to less than a third of what it was the previous year.
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 8:45 am

Asian Markets Retreat Sharply

Asian stock markets declined across the board as investors shrugged off the excitement of the U.S. elections, and European equities were expected to follow.
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 8:02 am

Seniors and retirees step up hunt for jobs in bad economy

Dwindling financial resources are forcing many older people to stay in or return to the workforce.

It sounds like an oxymoron, but working in retirement is fast becoming the norm for many older Americans -- forced by dwindling financial resources and a recessionary economy to stay in or return to the job market.

Source: L.A. Times - Business | 6 Nov 2008 | 8:00 am

Earnings Roundup

NEWS CORP. Write-down contributes to 30% drop in profit

Source: L.A. Times - Business | 6 Nov 2008 | 8:00 am

Activision sees sales jump; rival THQ to cut 250 jobs

Both of Southern California's largest independent video game publishers post third-quarter losses. Activision is upbeat about holiday season sales. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 8:00 am

Earnings Roundup

NEWS CORP. Write-down contributes to 30% drop in profit
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 8:00 am

Prop. 2 unlikely to raise egg prices, study says

Yahoo back in hot water after Google pulls out of partnership

The ad deal is scuttled by Justice Department objections. Will Microsoft come calling again?

Google Inc. tossed floundering Internet rival Yahoo Inc. a life preserver four months ago when the two companies agreed to a search advertising deal. But with federal regulators ready to challenge the plan on antitrust grounds, Google abruptly cut the rope Wednesday, setting Yahoo adrift again.

Source: L.A. Times - Business | 6 Nov 2008 | 8:00 am

Prop. 2 unlikely to raise egg prices, study says

The state already imports one-third of shelled eggs consumed, points out the UC Davis report. The farm-animal welfare measure, approved resoundingly, doesn't take effect until 2015.

Californians voted resoundingly to free about 20 million egg-laying hens of tiny cages. But in passing Proposition 2, the farm animal welfare measure, did the state's consumers yoke themselves to higher egg prices?

Source: L.A. Times - Business | 6 Nov 2008 | 8:00 am

Online resources for older workers seeking jobs

Where to find help online
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 8:00 am

Schwarzenegger proposes 90-day freeze on pending home foreclosures

The plan is part of an economic stimulus package the governor expects to put before lawmakers to spur loan workouts.

Gov. Arnold Schwarzenegger on Wednesday proposed a 90-day freeze in pending home foreclosures to give California's financially pinched homeowners more time to get new or more affordable loans.

Source: L.A. Times - Business | 6 Nov 2008 | 8:00 am

Yahoo back in hot water after Google pulls out of partnership

The ad deal is scuttled by Justice Department objections. Will Microsoft come calling again? Google Inc. tossed...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 8:00 am

Global credit crunch hits independent filmmakers

Most of them do not have easy access to capital, and instead must cobble together a patchwork of financing to make one film at a time.

Producer William Keenan was about to close a deal on a movie about the early years of Jesus Christ recently when all hell broke loose on Wall Street.

Source: L.A. Times - Business | 6 Nov 2008 | 8:00 am

Seniors and retirees step up hunt for jobs in bad economy

Dwindling financial resources are forcing many older people to stay in or return to the workforce. It sounds like...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 6 Nov 2008 | 8:00 am

Stocks tumble as investors shift focus to economy

Gains from the election-day rally are more than erased, with the Dow losing nearly 500 points. Employment data intensify economic concerns.

So much for Wall Street's postelection afterglow.

Source: L.A. Times - Business | 6 Nov 2008 | 8:00 am

Downturn, deficit could hinder Obama's economic plan

The president-elect must match spending priorities to dismal conditions.

Barack Obama was elected with a mandate for economic change on a scale that hasn't been seen in decades.

Source: L.A. Times - Business | 6 Nov 2008 | 8:00 am

Currency: Dollar falls as risk aversion increases

The New Zealand dollar traded lower today as risk aversion increased. But it rallied a little after unemployment data was slightly better than expected. The NZ dollar was at US59.30c at 5pm, down from US60.48c yesterday. The...
Source: New Zealand Herald - Business | 6 Nov 2008 | 7:12 am

NZ stocks: Sharemarket down following US sell-off

The New Zealand sharemarket fell today along with markets around the world but its fall was less severe. The Dow tanked 5.05 per cent overnight in a sell-off late in the session as worries about the weakening global economy returned...
Source: New Zealand Herald - Business | 6 Nov 2008 | 7:09 am

U.S. approves loan rules, auto execs lobby for more (Reuters)

Reuters - The Bush administration cleared the way for distressed automakers to access up to $25 billion in loans for making more fuel efficient cars, but red tape could still constrain the flow of money and industry is pressing for more aid now to survive.

Source: Yahoo! News: Business | 6 Nov 2008 | 5:47 am

Worse to come despite good jobs news, says economist

New Zealand's unemployment rate increased to 4.2 per cent in the September quarter, the highest rate since the end of 2003, but data released today was less gloomy than expected. Despite the increase in the unemployment rate, with...
Source: New Zealand Herald - Business | 6 Nov 2008 | 3:30 am

Slowest sales month in a decade, says Barfoots

It's been the slowest October for Auckland property sales in 10 years, says real estate firm Barfoot & Thompson. Just 503 residential sales were recorded by the company during the month, compared to 796 in October last year. Average...
Source: New Zealand Herald - Business | 6 Nov 2008 | 3:00 am

Sky TV projecting flat profits

Pay TV operator Sky Network Television says it expects after tax profits for the 2009 year of between $90 million and $100m - largely unchanged from the $98m profit in the year to June 30. The company told shareholders at its annual...
Source: New Zealand Herald - Business | 6 Nov 2008 | 2:30 am

Investigation could lead to cheaper mobile rates

The Commerce Commission is to investigate whether mobile termination access services should be regulated. The services are the terms and conditions under which mobile phone companies terminate calls and text messages from other...
Source: New Zealand Herald - Business | 6 Nov 2008 | 1:30 am

Business Briefs - Wednesday

Corinthian touts enrollment gains. The for-profit educator said Q1 EPS rose 40% to 7 cents ex items, meeting views. Revenue grew 18% to $289.6...

Source: Investor's Business Daily: BUSINESS | 6 Nov 2008 | 12:32 am

After The Close - Wednesday

FTI CONSULTING (FCN), a consulting firm, said its Q3 ESP rose 2% to 51 cents, missing views by 9 cents. Revenue increased 29% to $325.5 mil, below...

Source: Investor's Business Daily: BUSINESS | 6 Nov 2008 | 12:32 am

In Brief - Wednesday

GMAC, jointly owned by Chrysler parent Cerberus Capital and GM (GM), lost $2.52 bil in Q3. It warned that its Residential Capital mortgage unit...

Source: Investor's Business Daily: BUSINESS | 6 Nov 2008 | 12:32 am

When The Economy Cools Off, Seats In Private Colleges Fill Up

As the subprime mortgage crisis began claiming victims late last year, Corinthian Colleges noticed a surge in new-student enrollments.

Source: Investor's Business Daily: BUSINESS | 6 Nov 2008 | 12:32 am

Wells Fargo to sell $10bn in stock

Wells Fargo said it planned to sell at least $10bn of stock to fund its acquisition of Wachovia, the troubled east coast lender, to create the fourth-largest US bank by assets
Source: FT.com - US homepage | 6 Nov 2008 | 12:24 am

What some voters had to say

The turnout on election day was huge -- highest in 45 years. So voters clearly were passionate about this election. Some of them told us what they want to see in the new Obama administration.
Source: Marketplace | 6 Nov 2008 | 12:06 am

Unwilling buyers face court action from Whisper Cove receiver

Receivers of a $250 million failed housing project at Snells Beach north of Auckland are taking court action against reluctant buyers who are attempting to escape from deals to buy into the seaside settlement. Mark Sandelin of...
Source: New Zealand Herald - Business | 6 Nov 2008 | 12:00 am

News Corp cuts forecast as ad revenues fall

Rupert Murdoch has sharply cut forecasts for his media empire, predicting News Corp will suffer double-digit declines in operating income for this fiscal year, rather than the 4-6% growth previously forecast
Source: FT.com - US homepage | 5 Nov 2008 | 11:35 pm

Locked-in investors now find a way out

More than $2 billion of investors' money in frozen funds will be tradeable again today as an online secondary market goes live. Trademyunits.co.nz - set up by Auckland-based entrepreneurs Martin
Source: New Zealand Herald - Business | 5 Nov 2008 | 11:30 pm

Obama hits the ground running

Barack Obama moved swiftly to capitalise on the momentum from his historic victory by announcing a string of senior appointments aimed at reassuring the markets and ensuring a confident transition to the presidency in January
Source: FT.com - US homepage | 5 Nov 2008 | 11:29 pm

NZ Shares: Market down after US sell-off

The New Zealand sharemarket continued to follow the United States lead today opening down almost two per cent. US stocks fell overnight in a rapid sell-off late in the session as worries about the weakening global economy returned...
Source: New Zealand Herald - Business | 5 Nov 2008 | 10:40 pm

Fuld Fired

The Wall Street salary scrunch is on. Among the first to be squeezed appears to be Richard Fuld, chief executive of the failed Lehman Brothers, who will be let go without the customary multimillion C.E.O. bonus or severance.

That’s what Lehman’s chief bankruptcy lawyer, Harvey Miller, told Bloomberg News during a break today at a federal bankruptcy court hearing in Manhattan.

“He is being terminated,” Miller said. "He will receive no severance or bonuses."

It’s quite a financial slide for Fuld, 62, who last year was paid $34.4 million. He has been Lehman’s C.E.O. since 1993, making him the longest-serving chief executive of a major investment bank.

Despite the company’s collapse in September, he has continued as chief executive as Lehman’s assets are being divided as a result of the bankruptcy.

Fuld will stay on to help with the bankruptcy through the end of the year, Miller said. A Lehman spokesman, Jonathan Doorley, added that Fuld would not have “any claim to severance or other bonus payment at the end of his employment.”

It’s not as though Fuld is suffering, however. Lehman has paid him nearly $500 million since 2000. He testified at a congressional hearing last month that it was closer to $250 million because it included a large chunk of Lehman stock which is worthless now.

Still, not a bad paycheck. Plus, he's staying on as chairman of Lehman’s board, which pays its non-management members about $350,000 a year in cash and stock.

Even so, Fuld is likely to be embroiled in one of the three federal criminal investigations by U.S. attorneys who are looking into any illegal activities that Lehman may have engaged in prior to its fall.Related Links
Salvaging the Wreckage
Lehman: No Chapter 7, Yet
Lehman: Is Bankruptcy an Option?

Source: Portfolio.com: Top 5 | 5 Nov 2008 | 10:30 pm

IEA predicts oil price to rebound to $100

Oil prices will rebound to $100 a barrel as soon as the world economy recovers and the era of cheap oil is over, the world's energy watchdog will say in a flagship report next week
Source: FT.com - US homepage | 5 Nov 2008 | 10:26 pm

VIX Index of U.S. Stock Option Prices Advances 14.3% to 54.56

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 10:22 pm

LWR employees 'surprised' at job losses

Sixty employees are "surprised" they face losing their jobs as textile and garment manufacturer Lane Walker Rudkin (LWR) considers relocating its Christchurch textiles division to Auckland. Chief executive Malcolm Walkinshaw...
Source: New Zealand Herald - Business | 5 Nov 2008 | 10:13 pm

Heilmann Retrospective, Highclere Castle, Mayer's Book

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 10:10 pm

Dean Baker Likes Sheila Bair as Next Treasury Secretary

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 9:19 pm

Google jilts Yahoo rather than face legal fight

Google walked away from its controversial search advertising alliance with Yahoo after US antitrust authorities indicated that they would sue to block the deal
Source: FT.com - US homepage | 5 Nov 2008 | 8:55 pm

Historian Larson Discusses `Tumult' of U.S. Election in 1800

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 7:54 pm

Three-year note heads US Treasury debt sale

The Treasury said it would sell $55bn in new debt next week, led by the return of the three-year note, sending a tough message to bond traders about repo market problems
Source: FT.com - US homepage | 5 Nov 2008 | 7:54 pm

Lombard Street's Dumas Sees ECB Interest-Rate Cuts

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 7:51 pm

Gartman Sees Fewer Moderate and Conservative Democrats

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 7:49 pm

Strategas's Clifton Says Obama Will Be `Consumed' by Crisis

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 7:45 pm

Levitt Sees Possibility of Volcker, Geithner as Treasury Head

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 7:43 pm

Stanford's Mathias Says Obama Has Close to a Mandate

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 7:38 pm

Will 'free the chickens' crusade spread?

The egg-laying chickens of California will get roomier accommodations under Proposition 2, which passed by a wide margin. Sarah Gardner reports on what could be the start of a national animal rights movement.
Source: Marketplace | 5 Nov 2008 | 7:29 pm

Steve Forbes Says President-Elect Obama Should Support Dollar

Source: Bloomberg - All Podcasts | 5 Nov 2008 | 7:19 pm

Rich prepare for Obama's tax plan

Barack Obama's promise to raise taxes on top income earners has businesses and wealthy individuals rushing to take advantage of tax breaks before new rules take effect. Jeff Tyler has more.
Source: Marketplace | 5 Nov 2008 | 7:17 pm

In Europe, it's Obama-mania

International opinion widely favored Sen. Barack Obama. So now that he's been elected, how is the rest of the world reacting? Kai Ryssdal gets feedback from London Bureau Chief Stephen Beard.
Source: Marketplace | 5 Nov 2008 | 7:17 pm

Markets suffer post-election slump

A post-election good mood could be felt around the country, but what's Wall Street all grumpy about? To figure out why the markets retreated, Kai Ryssdal called trader Bernie McSherry.
Source: Marketplace | 5 Nov 2008 | 7:17 pm

Obama needs to work with Bush team

Voters supported Obama as the leader to bring change and fix the economy. Commentator David Frum notes the political advantage of waiting until Jan. 1 to get into the financial work, but warns the country can't afford to wait.
Source: Marketplace | 5 Nov 2008 | 7:17 pm

Obama can't change Washington alone

Americans spoke loudly for change, particularly in D.C. politics. That includes lobbyists and pork seekers. Commentator Robert Reich urges Obama to enlist his campaign network and grassroots activists for the job.
Source: Marketplace | 5 Nov 2008 | 7:16 pm

What Obama can do to create jobs

Throughout the campaign, voters voiced concern about jobs and rising unemployment. Nancy Marshall Genzer looks at what the Obama administration might do to help create employment opportunities.
Source: Marketplace | 5 Nov 2008 | 7:16 pm

The new president's unenviable job

Tremendous economic problems await the new president, from the deficit to unemployment. To find out what President Obama's to-do list is going to look like, we're joined by Washington Bureau Chief John Dimsdale.
Source: Marketplace | 5 Nov 2008 | 7:16 pm

Blog: The basics on Obama's plans for taxes, economy

Source: L.A. Times - Business | 5 Nov 2008 | 5:48 pm

Google: No Deal

Google is walking away from its search-advertising deal with Yahoo.

The pact always seemed doubtful. How could regulators approve a deal that would have involved 90 percent of the market? And the compromises that were reportedly being offered undercut the incentives for doing the deal in the first place.

On the official Google blog, David Drummond, the company's chief legal officer, declared that enough was enough: "After four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn't have been in the long-term interests of Google or our users, so we have decided to end the agreement."

Henry Blodget on Silicon Alley Insider says: "Yahoo's last little bit of leverage in a potential search deal with Microsoft just evaporated."

What is Yahoo's Plan C?

Related Links
Googling an Antitrust Deal
Yahoo Explains Tie-up With Google
California Eyeing Yahoo/Google Too

Source: Portfolio.com: Top 5 | 5 Nov 2008 | 3:00 pm

G.M.A.C. Whacked

Here comes the next big financial blowup.

G.M.A.C., caught in a perfect storm of a housing slump, a plunge in auto sales, and credit crunch, says its third-quarter loss has swelled to $2.52 billion from $1.6 billion. And it warned that its mortgage business might not survive.

The mortgage unit, ResCap, once a major player in the subprime market, has lost more than $9 billion over the last two years, including a loss of $1.9 billion for the quarter. G.M.A.C., which is majority owned by private equity firm Cerberus Capital Management, said, "Adverse market conditions have made it difficult for ResCap to maintain adequate capital and liquidity levels. As a result, absent economic support from G.M.A.C., substantial doubt exists regarding ResCap's ability to continue as a going concern."

The auto-loan business, which finances 10 percent of General Motors' sales, lost $294 million in the quarter.

It is difficult to imagine a happy ending here. G.M.A.C. has announced that it is seeking to convert to a bank holding company. That would allow it to try to tap the Treasury's $700 billion emergency financial-rescue program.

Yet such a conversion probably depends on a merger happening between General Motors and Chrysler. G.M., which has a 49 percent stake in G.M.A.C., would need to get that down to below 25 percent to avoid being subject to capital restrictions at a time when its own position and liquidity are being challenged.

Many obstacles remain to a merger, but even if it succeeded, it might not help G.M.A.C. Antony Currie and Rob Cox noted earlier on Breakingviews.com that "Though a combined G.M.A.C.-Chrysler Finance would be leaner, it would still be enslaved to the fortunes of the car business and with no better means of funding itself."

A bank conversion might help G.M.A.C. raise capital, but Moody's Investors Service and others have been skeptical about such a move as well.

Help from Washington is very unlikely. If Treasury is not going to help the auto industry, it's not going to help the auto-finance industry, especially when it is controlled by a private equity firm.

The gates of financial hell are open, and this is one dog that has lost its bark.

Related Links
Corporate Lobbying and the Supbrime Crisis
New Home for a Fallen Housing Giant
Parsing Paulson: It's a Systemic Thing

Source: Portfolio.com: Top 5 | 5 Nov 2008 | 2:30 pm

The Joker in Time Warner's Pack

Media companies are being battered by a growing slowdown in advertising and by a wrenching transition to the digital age.

Either crisis would be more than enough for a company. Both happening at the same time could be the most difficult challenge big media has ever faced.

Thanks to some movie and television hits, Time Warner has weathered the storm fairly well, but its sinking stock price, like those of other media companies, indicates that few believe it can continue to do so for long. Today, the largest media conglomerate lowered its earnings outlook for the full year, citing restructuring charges and "the challenging economic environment."

The company is taking an additional $100 million to $125 million in restructuring charges, mainly at the magazine unit Time Inc., as it cuts about 6 percent of the workforce. It has already announced $182 million in charges as the Warner Bros. unit absorbs New Line Cinema. The total bill for layoffs and restructuring could easily top $300 million.

As a result, Time Warner says adjusted operating profit will increase 5 percent, compared with an earlier forecast of 7 to 9 percent.

Time Inc. faces "some serious cyclical headwinds," and a reorganization to focus on internet publishing should eventually pay off, Chris Marangi, an analyst at Gabelli & Co., told Bloomberg News.

For the third quarter, Time Warner reported earnings of $1.07 billion, or 30 cents per share, compared with $1.09 billion, or 29 cents per share, in the quarter a year earlier. Revenue was essentially flat, at $11.7 billion.

Cable and television production (HBO, Turner) continued to be very strong businesses. Magazines and AOL were the problem children.

Movies were just so-so, despite the box office success of The Dark Knight and the home-video release of Sex and the City: The Movie. Revenue declined 9 percent and earnings rose just 2.6 percent. The quarter a year ago featured Harry Potter and the Order of the Phoenix, Rush Hour 3, Hairspray, and the video release of 300.

There was no news on what will be done with AOL, despite some signs earlier this fall of a possible merger with Yahoo. The online business continues to bleed: Revenue fell 17 percent, profit slumped 9 percent, and the number of subscribers fell 26 percent for the quarter.

Related Links
Jeffrey Bewkes
And What About AOL?
Big Media. Bad Idea

Source: Portfolio.com: Top 5 | 5 Nov 2008 | 1:30 pm

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