UBS Tells Clients It ‘Remains Strong’

By Meera Louis and Laura Marcinek - Sep 17, 2011 3:07 AM GMT+0700
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A Swiss flag flies above a UBS AG bank in Zurich. Photographer: Chris Ratcliffe/Bloomberg

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Sept. 16 (Bloomberg) -- Kweku Adoboli, the trader arrested yesterday after UBS AG said it discovered unauthorized trades that caused a $2 billion loss, was charged with fraud and false accounting by London police. The 31-year-old appeared at the City of London magistrates' court with his lawyer, Louise Hodges, to face the charges. Bloomberg's Ryan Chilcote reports. (Source: Bloomberg)

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Sept. 16 (Bloomberg) -- Wolfgang Matejka, founder of Matejka & Partner AM GmbH, talks about banking regulation after UBS AG lost $2 billion through unauthorized trading. He speaks from Vienna with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)

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Sept. 16 (Bloomberg) -- Ralph Silva, an analyst at Silva Research Network, talks about the outlook for banking regulation after a $2 billion loss reported by UBS AG yesterday from unauthorized trading. He speaks with Owen Thomas on Bloomberg Television's "Countdown." (Source: Bloomberg)

UBS AG (UBSN), the Swiss lender that says it sustained a $2 billion loss from unauthorized trading at its investment bank, told clients it “remains strong” and will scrutinize how it monitors risks.

While the loss “is disappointing, UBS remains strong, well-capitalized and committed to serving you,” executives at UBS Financial Services wrote yesterday in an e-mail to customers. Karina Byrne, a spokeswoman for the Zurich-based firm, confirmed a copy of the message obtained by Bloomberg News.

Kweku Adoboli, 31, a trader on the Delta One desk at UBS’s investment bank, was charged in the U.K. today with fraud and false accounting. UBS Chief Executive Officer Oswald Gruebel called the loss “unauthorized” and “distressing” in an e- mail to employees yesterday, without giving details.

“UBS is taking this incident very seriously,” the firm said in the e-mail to customers. “In addition to cooperating with the authorities, UBS will thoroughly review its risk management and control processes.”

To contact the reporter on this story: Meera Louis in Washington at mlouis1@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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Gold Jumps Most in a Week as European Debt Concerns Boost Demand for Haven

By Debarati Roy and Nicholas Larkin - Sep 17, 2011 1:29 AM GMT+0700

Gold rose the most in a week on renewed concern that Europe’s debt crisis will threaten economies, boosting demand for a haven.

European finance ministers ruled out efforts to prop up the faltering economy and gave no indication of providing aid for lenders at a meeting today. Gold has jumped 28 percent this year, reaching a record $1,923.70 an ounce on Sept. 6, on mounting signs the global economy will slow.

“People realize that the background problems have not disappeared, and the crisis in Europe has not been resolved,” William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview.

Gold futures for December delivery rose $33.30, or 1.9 percent, to settle at $1,814.70 on the Comex at 1:49 p.m. in New York, the biggest gain since Sept. 8.

Still, prices declined 2.4 percent this week. Yesterday, the European Central Bank said it will coordinate with other central banks to ensure euro-area lenders have enough dollars.

“They’re only really geared to put out spot fires and play brinkmanship, rather than to deliver a killer package that will actually resolve all their issues,” Tom Price, an analyst at UBS AG, said by telephone from Sydney. “In that environment, the problem drags on for years, not months, and it’s a great environment for gold.”

Eighteen months of crisis-fighting and 256 billion euros ($352 billion) in aid for Greece, Ireland and Portugal have failed to stabilize markets as the turmoil spread to Italy and Spain.

‘Orderly Default’

“They are moving to facilitate an orderly default for Greece, and then rallying around the remaining countries and banking system,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in a telephone interview. “They can’t fix a problem that has no answer, but they can get rid of some of the degree of uncertainty by acting.”

Silver futures for December delivery rose $1.33, or 3.4 percent, to settle at $40.831 an ounce on the Comex. The metal retreated 1.9 percent this week, a second straight loss.

On the New York Mercantile Exchange, platinum futures for October delivery climbed $33.30, or 1.9 percent, to $1,813.90 an ounce, the biggest jump since Aug. 9. Palladium futures for December delivery rose $9.45, or 1.3 percent, to $732.95 an ounce.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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Crude Oil Futures Decline Most in a Week in New York on European Concern

By Margot Habiby and Mark Shenk - Sep 17, 2011 2:44 AM GMT+0700

Crude oil dropped the most in a week in New York, trimming a fourth consecutive weekly gain, on concern that European leaders meeting today haven’t taken sufficient steps to contain the region’s debt crisis.

Futures fell 1.6 percent as the euro halted a two-day advance against the dollar on signs that an agreement to bail out Greece may be hindered by demand from Finland for collateral. Technical resistance at about $90 a barrel also caused prices to retreat after yesterday’s rally.

“Everyone has their eye on Europe at the moment,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “We want to see if there is serious progress in solving the debt crisis. If there isn’t, we could see prices move a lot lower next week.”

Crude for October delivery fell $1.44 to settle at $87.96 a barrel on the New York Mercantile Exchange. Futures gained 0.8 percent this week and have fallen 3.7 percent this year.

Brent crude oil for November settlement dropped 8 cents to $112.22 a barrel on the London-based ICE Futures Europe Exchange. Brent rose 1.2 percent this week.

European finance ministers ruled out efforts to prop up the faltering economy and gave no indication of providing aid for lenders to go along with yesterday’s liquidity lifeline from the European Central Bank. Clashing with U.S. Treasury Secretary Timothy F. Geithner, finance chiefs from the euro region said the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy near stagnation.

The ECB said yesterday it would lend euro-area banks dollars to help tame the debt crisis and coordinate the action with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank.

Euro Falls

The euro fell 0.6 percent against the dollar, reducing the appeal of commodities priced in the U.S. currency, after Finland Finance Minister Jutta Urpilainen said an agreement on collateral is unlikely to be reached at today’s trans-Atlantic finance meeting in Wroclaw, Poland.

The European single currency traded at $1.3790 at 3:01 p.m. in New York, compared with $1.3877 yesterday. Earlier, it dropped as much as 0.9 percent.

The 17 euro nations accounted for about 12 percent of global oil demand in 2010, according to Bloomberg calculations based on BP Plc’s Statistical Review of World Energy.

“Persistent concerns about the euro-zone’s problems continue to dominate the markets,” said Myrto Sokou, an analyst at Sucden Financial Ltd. in London. “The current economic and political conditions look fairly tentative at the moment.”

$90 Resistance Level

Oil has tested $90 a barrel in intraday trading the past two days before settling lower. It settled at $90.21 on Sept. 13, the highest level since Aug. 3.

“The market continues to run into resistance at $90 and doesn’t seem to have enough to hold above it,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The uncertain economic picture is likely to strengthen the resistance for the market up there.”

Brent oil settled at a premium of $24.04 to West Texas Intermediate November futures, compared with a record $26.87 on Sept. 6 based on front-month closing prices. Brent may be headed for $150 a barrel, according to chart analysis by Citigroup Inc.

“Crude oil looks to be a coiled spring,” Tom Fitzpatrick, the bank’s New York-based chief technical analyst, said in a research note dated yesterday. A weekly close above $117.60 a barrel “would suggest a breakout and the possibility of a move toward at least $150.”

Price Volatility

Price fluctuations throughout the financial markets were expected to be bigger than usual today because of so-called quadruple witching, or the quarterly expiration of stock index futures, options on index futures, stock options and stock futures, McGillian said. Quadruple witching occurs once every three months.

Prices are also volatile before next week’s meeting of Federal Reserve policy makers, said Jason Schenker, the president of Prestige Economics, an energy advisory company in Austin, Texas.

“There should be a great deal of volatility going into next week as we wait for the Fed meeting,” he said. “What they say will be absolutely critical for the stock market and commodities, especially oil.”

Oil may decline next week on concern that Europe’s debt crisis will hurt global economic growth and the demand for fuel, a Bloomberg News survey showed. Eighteen of 40 analysts, or 45 percent, forecast oil will decline through Sept. 23, while 13 respondents, or 33 percent, predicted prices will increase. Nine estimated there will be little change. Last week, 50 percent of the surveyed analysts projected a drop.

Oil volume in electronic trading on the Nymex was 563,804 contracts as of 3:01 p.m. in New York. Volume totaled 669,730 contracts yesterday, 0.1 percent below the average of the past three months. Open interest was 1.45 million contracts.

To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Mark Shenk in New York at mshenk1@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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AT&T, T-Mobile Antitrust Suit Joined by 7 States

By Sara Forden and Tom Schoenberg - Sep 17, 2011 11:01 AM GMT+0700
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The U.S. lawsuit seeking to block AT&T Inc. (T)’s acquisition of T-Mobile USA Inc. was joined by seven states as their attorneys general said the proposed $39 billion deal would hurt competition and raise wireless telephone prices. Photographer: Daniel Acker/Bloomberg

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Randall Stephenson, chairman and chief executive officer of AT&T Inc., left to right, Rene Obermann, chief executive officer of Deutsche Telekom AG, and Steven Berry, president and chief executive officer of the Rural Cellular Association, are sworn in at a House Judiciary Committee hearing on telecommunications competition in Washington on May 26, 2011. Photographer: Andrew Harrer/Bloomberg

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T-Mobile USA Inc. and AT&T Inc. signage is displayed on stores in New York. Photographer: Stephen Yang/Bloomberg

The U.S. lawsuit seeking to block AT&T Inc.’s acquisition of T-Mobile USA Inc. was joined by seven states as their attorneys general said the proposed $39 billion deal would hurt competition and raise wireless telephone prices.

The states joining the amended complaint filed yesterday by the U.S. Justice Department in federal court in Washington were New York, California, Massachusetts, Washington, Ohio, Pennsylvania and Illinois.

Participation by the states bolsters the Justice Department’s position and means any negotiated settlement of the case would have to win the states’ approval, said Herbert Hovenkamp, a professor and antitrust expert at the University of Iowa College of Law.

“If the federal government wants to go for a settlement and the states don’t like it, they can hold out,” Hovenkamp said in an interview. “The judge would have to listen to their complaints.”

The government’s antitrust suit claims that the merger of the two companies, which would make Dallas-based AT&T the biggest wireless carrier in the U.S. and cut the number of national competitors to three from four, is anticompetitive.

Michael Balmoris, a spokesman for AT&T, said 11 state attorneys general support the deal.

‘Expedited Hearing’

“We will continue to seek an expedited hearing on the Justice Department’s complaint,” he said in an e-mail. “On a parallel path, we have been, and remain, interested in a solution that addresses the department’s issues with the T- Mobile merger.”

AT&T Inc. and the U.S. Justice Department yesterday filed an agreed-upon proposal for managing the case, with the exception of a dispute over a trial date. AT&T is pushing to start on Jan. 16 while the U.S. proposes March 19, according to the filing.

The case management plan sets deadlines for submitting witness lists, taking sworn statements and exchanging documents. Depositions of witnesses will be limited to 30 per side, according to the agreement.

U.S. District Judge Ellen Segal Huvelle has set a hearing for Sept. 21 on the scheduling and told the parties to be prepared to discuss settlement options.

The bipartisan group of state officials provided “invaluable assistance” in the probe that led to the lawsuit’s filing on Aug. 31, the department said in a statement.

Democrats, Republicans

The attorneys general of New York, California, Massachusetts and Illinois are Democrats while their counterparts in Ohio, Pennsylvania and Washington are Republicans.

“Blocking this acquisition protects consumers and businesses against fewer choices, higher prices, less innovation, and lower quality service,” Illinois Attorney General Lisa Madigan said in an e-mailed statement.

New York Attorney General Eric Schneiderman, who helped coordinate the states’ group, said the proposed merger would also reduce access to “low-cost options.”

Tom Sugrue, T-Mobile senior vice president of government affairs, said the Bellevue, Washington-based company remains confident the acquisition will proceed because of the benefits it offers consumers, businesses, and the U.S. economy. The merged company will spur “greater innovation, enhanced competition and increased jobs,” he said in a statement.

Sprint Nextel

Sprint Nextel Corp., the industry’s third-largest player and which filed its own suit opposing the deal, welcomed the attorneys general’s move, Vonya McCann, Sprint’s senior vice president for government affairs, said in an e-mailed statement.

Yesterday, Sprint filed court motions asking to be included in coordinated proceedings with the Justice Department, as well as motions about how confidential evidence should be handled in the case and scheduling issues.

If the judge approves Sprint’s request, it will put all the cases “on the same track so related matters can be dealt with efficiently by the court and all concerned parties to the suit,” said company spokesman John Taylor.

Connecticut Attorney General George Jepsen said in a statement he applauds the states joining the suit and stayed out only to conserve his office’s resources for other matters.

The case is U.S. v. AT&T Inc. (T), 11-cv-01560, U.S. District Court, District of Columbia (Washington).

To contact the reporters on this story: Sara Forden in Washington at sforden@bloomberg.net; Tom Schoenberg in federal court in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net;

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Silver Lake Is Said to Consider Acquiring Yahoo, Then Selling Asian Assets

By Brian Womack and Cristina Alesci - Sep 17, 2011 5:00 AM GMT+0700
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Yahoo! Inc. logos are displayed on computer screens in Tiskilwa, Illinois. Photographer: Daniel Acker/Bloomberg

Private-equity investor Silver Lake is considering a bid for Yahoo! Inc., the Web company that ousted Chief Executive Officer Carol Bartz, two people involved in the deliberations said.

As part of a deal, Silver Lake would sell off Yahoo’s Asian assets and then attempt to turn around the main operations or find a buyer for that business, said the people, who asked not to be named because the matter is private. Representatives of Silver Lake have approached other companies to gauge interest in purchasing Yahoo’s main business, one person said.

Yahoo Chairman Roy Bostock fired Bartz last week after her efforts to fend off Google Inc. and Facebook Inc. fell short. Asian assets that include a 43 percent stake in Alibaba Group Holding Ltd., combined with a slumping share price, make the company a possible takeover candidate, said analysts at Deutsche Bank Securities and such investors as Di Zhou, an analyst at Thornburg Investment Management.

Representatives of Yahoo and Silver Lake didn’t return phone messages seeking comment.

Yahoo’s board met yesterday to hear a presentation from investment bank Allen & Co. on the company’s options and deliberate the search for a successor to Bartz, another person familiar with the matter said earlier this week.

A range of companies have been preparing possible bids for Yahoo and have gotten in touch with the company’s board in recent days, the technology blog AllThingsDigital reported this week. Silver Lake is among potential buyers, it reported.

Alibaba, Softbank

A private-equity company would likely seek a buyer for Yahoo’s stakes in Alibaba and Yahoo Japan Corp. (4689), which according to Gabelli & Co., account for about 80 percent of the company’s market value. Alibaba Group Chairman Jack Ma tried to repurchase the stake from Bartz and was rebuffed.

Other Yahoo assets include e-mail, instant messaging and news and information portals that generate revenue from advertising and, according to ComScore Inc., were viewed by 674 million people in July. Yahoo also owns the No. 2 U.S. Web- search engine, after Google’s.

Yahoo’s directors are under pressure from investors such as Third Point LLC, which urged the board to resign last week after buying a 5.2 percent stake. The investment firm said directors erred in spurning a takeover bid from Microsoft Corp. in 2008 and hired a CEO who wasn’t up to the job.

The “board of directors has made a number of decisions that have directly harmed the company and resulted in a stock price far below the company’s intrinsic value,” New York-based Third Point said in a filing.

Yahoo shares rose 8 cents to $14.97 at 4 p.m. New York time on the Nasdaq Stock Market. The stock has dropped 10 percent this year.

Separately, Yahoo said today that it raised interim CEO Tim Morse’s base pay. His salary increased to $750,000 from $600,000. The raise, approved by the board, took effect yesterday, Yahoo said in a regulatory filing.

To contact the reporters on this story: Brian Womack in San Francisco at Bwomack1@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Technology Companies’ Gender Disparity Seen Hampering U.S. Competitiveness

By Danielle Kucera - Sep 17, 2011 11:01 AM GMT+0700

The lack of women in technology will hinder U.S. companies’ global competitiveness, leaving a valuable source of female workers untapped, Cisco Systems Inc. (CSCO) executive Kathy Hill said yesterday at an Asia-Pacific Economic Cooperation conference in San Francisco.

Companies should overhaul policies starting at the training level to ensure a balance between the sexes, Hill said at the APEC meeting, which was attended by U.S. Secretary of State Hillary Clinton. APEC represents 21 economies that account for more than 55 percent of global gross domestic product.

“Technology has to play a role,” said Hill, a senior vice president of development strategy and operations at San Jose, California-based Cisco, the world’s largest maker of networking equipment. “Technology makes a lot more money than other businesses, and we’ve got job growth.”

While women hold about half the jobs in the broader U.S. economy, they account for less than 25 percent of science, technology, engineering and math positions, according to the U.S. Department of Commerce.

“We need to unlock a vital source of growth that can power our economy in the decades to come, and that vital source of growth is women,” Clinton said yesterday at the conference. “By increasing women’s part in the economy and enhancing their efficiency and productivity, we can bring about a dramatic effect to the competitiveness and growth of our economies.”

Technical Majors

The disparity begins in college. More than 31,000 men graduated with bachelor’s degrees in computer and information sciences, outnumbering women by more than fourfold, according to a 2008-2009 study by the National Center for Education Statistics. Males who graduated with technological engineering degrees during that period dwarfed female counterparts by almost ninefold, the study found.

Females who start in science, technology, engineering and math concentrations often switch to other fields before graduating, said Marilyn Nagel, chief executive officer of Watermark, a Palo Alto, California-based, 4,000-member organization for professional women. Corporations and universities should make efforts to retain women in those majors throughout the students’ college careers, she said.

That means supporting them when they’re most likely to switch from math to another major -- between freshman and sophomore year -- and bringing them into corporate environments so they can visualize what they will be doing in their careers.

‘Business Imperative’

“It’s a business imperative to increase diversity,” Nagel, 62, said in an interview. “A homogeneous team is not going to be as innovative and is not going to produce the same level of well-thought-out results as a diverse team.”

Design skills also may help women break into technology, said Weili Dai, the 50-year-old co-founder of Marvell Technology Group Ltd. (MRVL), which makes chips for personal computers and mobile phones. The iPad and iPhone have spotlighted the need for practical, elegant designs, she said.

”Technology used to be boring, but now technology is fashion,” Dai said in an interview at the conference.

Companies need to make sure female mentors are accessible to younger employees, she said. That allows women to more easily see themselves in top positions, Dai said.

Just 12 percent of the students majoring in electrical engineering and computer science at the University of California, Berkeley, are women, said Claire Tomlin, a professor who oversees those majors at the school.

The college is working with middle-school girls to spark interest in engineering at a young age, and it invites females from other schools to the campus for summer programs to cultivate more interest in the field, she said.

Companies in the U.S., where the overall population is 51 percent female, will be more profitable if they foster collaboration between the sexes, Dai said.

“In my company, any function could be done by a man or woman,” she said. “How do we leverage the natural attributes and talents of women?”

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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S&P 500 Index Posts Longest Rally Since July

By Rita Nazareth - Sep 17, 2011 3:44 AM GMT+0700
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Trader George Ettinger works on the floor of the New York Stock Exchange on Sept. 16, 2011. Photographer: Richard Drew/AP

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Sept. 16 (Bloomberg) -- Bloomberg's Cali Carlin reports on the performance of the U.S. equity market today. U.S. stocks advanced for a fifth straight day, the longest rally since July for the Standard & Poor’s 500 Index, amid optimism that European leaders will make further progress on controlling the region’s debt crisis. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)

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Sept. 16 (Bloomberg) -- Michael Vogelzang, chief investment officer at Boston Advisors LLC, talks about the U.S. stock market's performance and outlook. Vogelzang also discusses Europe's sovereign debt crisis, emerging-market stocks and his investment strategy. He speaks with Lisa Murphy, Adam Johnson and Sheila Dharmarajan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

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Sept. 16 (Bloomberg) -- Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC, discusses the European debt crisis and investment strategy. He speaks with Scarlet Fu on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)

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Traders work at the New York Stock Exchange in New York. Photographer: Scott Eells/Bloomberg

U.S. stocks advanced for a fifth straight day, the longest rally since July for the Standard & Poor’s 500 Index, amid optimism that European leaders will make further progress on controlling the region’s debt crisis.

Amazon.com Inc. (AMZN) jumped 5.5 percent to a record, while Procter & Gamble Co. (PG) gained 2.5 percent as a report showed that confidence among U.S. consumers rose. Textron Inc. (TXT), Tyco International Ltd. (TYC) and Rockwell Collins Inc. (COL) added more than 3.1 percent after a report that United Technologies Corp. is lining up financing for an acquisition. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) slumped at least 1.1 percent.

The S&P 500 rose 0.6 percent to 1,216.01 at 4 p.m. New York time. The index gained 5.4 percent since Sept. 9, its third- biggest weekly rally since 2009. The Dow Jones Industrial Average added 75.91 points, or 0.7 percent, to 11,509.09. The rally trimmed the gauge’s drop this year to 0.6 percent.

“The stock market is extremely undervalued,” David Goerz, the San Francisco-based chief investment officer at Highmark Capital Management Inc., which oversees $17.2 billion, said in a telephone interview. “As things begin to improve, the market can rise back to a more normal valuation. The fact that we got some moderation in terms of thinking about the ECB and how it’s going to address the crisis helped reduce some of the risk. In addition, the most recent data points suggest that this pause in economic activity is in fact transitory.”

The S&P 500 lost 18 percent between April 29 and Aug. 8 amid concern that Europe’s crisis threatened the global economy. The decline left the index trading at 12.2 times earnings last month, the cheapest since 2009, according to data compiled by Bloomberg. Since then, the index rose 8.6 percent.

Most-Indebted

Equities rose yesterday as the European Central Bank and international policy makers coordinated to lend dollars to banks to tame the credit crisis. Earlier this week, French and German leaders confirmed they will support Greece’s continued participation in the shared euro currency. Ministers began meeting today in Wroclaw, Poland, to discuss ways of shoring up Europe’s most-indebted nations, with U.S. Treasury Secretary Timothy Geithner also in attendance.

European finance ministers ruled out efforts to prop up the faltering economy and gave no indication of providing aid for lenders to go along with yesterday’s liquidity lifeline from the ECB. Clashing with Geithner, finance chiefs from the euro region said the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation.

‘Hostage’

“We’re hostage to the European crisis,” Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management LLC, said in a telephone interview. The firm manages $3.4 billion. “The fear is that there will be another systemic move that will put us into a recession. Sentiment has gotten too negative. There’s a case to be made that any pullback is going to be a buying opportunity.”

Household product and retail companies had the two biggest gains in the S&P 500 within 24 industries, rallying at least 1.7 percent. Amazon, the world’s largest online retailer, jumped 5.5 percent to $239.30, the highest level since it went public in 1997. Procter & Gamble, the world’s largest consumer-products company, climbed 2.5 percent, the most in the Dow, to $64.33.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 57.8 this month from 55.7 in August. The median estimate of economists surveyed by Bloomberg News called for a reading of 57. The group’s measure of consumer expectations six months from now dropped to the lowest level since May 1980.

Seeking Financing

United Technologies, the maker of Sikorsky helicopters and Carrier air conditioners, is seeking financing that may exceed $20 billion for a major U.S. acquisition, a person familiar with the matter said. The person wasn’t authorized to speak publicly because the details are confidential. John Moran, a spokesman for United Technologies, declined to comment.

Reuters reported the financing search earlier today, citing people it didn’t identify. The story said Goodrich Corp. and Rockwell Collins were attractive targets, according to people not directly involved in the matter, and said Textron and Tyco International were among companies mentioned in the past. Rockwell climbed 7.8 percent, the most in the S&P 500, to $56.21. Textron increased 6.8 percent to $18.63, while Tyco rose 3.1 percent to $43.70.

Banks had the biggest decline in the S&P 500 within 24 industries, falling 0.4 percent as a group. Bank of America, the biggest U.S. lender by assets, retreated 1.4 percent to $7.23. JPMorgan retreated 1.1 percent to $33.43.

Losing Ground

Research In Motion Ltd. (RIM) tumbled 19 percent to $23.93 after missing analyst estimates as sales of BlackBerry smartphone models slowed and the company shipped fewer PlayBook tablet computers than projected. The company is losing ground in that market to Apple Inc.’s iPhone and devices that use Google Inc.’s Android software. It has made little progress with its PlayBook in the tablet computer market, shipping just one device for every 46 iPads that Apple sold in the latest quarter.

“RIM is on a path to becoming a niche player,” said Ted Schadler, an analyst for Forrester Research Inc. “RIM has to essentially retrench its strategy. It has to focus on what about its products make them different or better than Apple or Google products.”

A gauge of energy shares in the S&P 500 dropped 0.1 percent, the only decline among 10 industries, as crude oil slumped the most in a week. Schlumberger Ltd. (SLB), the world’s largest oilfield-services provider, fell 1.9 percent to $72.84.

Today was the expiration for U.S. futures and options contracts on indexes and individual stocks. So-called quadruple witching occurs once every three months.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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RIM Chiefs Lose Billionaire Status as Stock Drops by Half on Lower Sales

By Sarah Frier - Sep 17, 2011 11:01 AM GMT+0700
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RIM President and Co-Chief Executive Officer Mike Lazaridis delivers a keynote address at the BlackberryDevCon 2010 in San Francisco. Photographer: Justin Sullivan/Getty Images

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Sept. 16 (Bloomberg) -- Jennifer Fritzsche, an analyst at Wells Fargo Securities LLC, talks about Research In Motion Ltd.'s earnings and outlook. RIM, the maker of Blackberry smartphones, yesterday reported a fiscal second-quarter profit, excluding some costs, of 80 cents a share. Fritzsche speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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RIM’s earnings reports have disappointed investors for three consecutive quarters as the company struggles to gain ground from Apple Inc.’s iPhone and iPad. Photographer: Indranil Mukherjee/AFP/Getty Images

Jim Balsillie and Mike Lazaridis, Research In Motion Ltd. (RIMM)’s largest shareholders and co-chief executive officers, have lost their status as billionaires from the stock this year as it has shed more than half its value.

The executives, who each own about 5 percent of the BlackBerry maker, had the value of their stakes drop to about $640 million yesterday from about $1.9 billion in February.

RIM’s earnings reports have disappointed investors for three consecutive quarters as the company struggles to gain ground from Apple Inc. (AAPL)’s iPhone and iPad. Waterloo, Ontario- based RIM missed analysts’ estimates Thursday for profit and shipments of the Blackberry and PlayBook tablet computer.

“These guys have misexecuted,” said Matthew Thornton, an analyst for Avian Securities LLC in Boston. “They have been very late with the new products. They’ve missed their own forecasts. They’ve done nothing to reassure Wall Street that they’re going to get more competitive against Apple and Google’s Android products.”

RIM fell 19 percent to $23.93 on the Nasdaq Stock Market at 4 p.m. New York time yesterday, down 66 percent from a 2011 peak and 84 percent from its record in June 2008.

The plunge in RIM’s stock price this year marks a reversal in the fortunes of a company that dominated the U.S. smartphone market after introducing the BlackBerry in 1999. The stock rose more than 70-fold between 1999, when it began trading on the Nasdaq, and its 2008 peak.

Wireless Pioneer

Lazaridis founded RIM in 1984 when he was a senior at the University of Waterloo in Canada. The company began working on wireless products three years later, developing a pager that evolved into what is known as the BlackBerry. Balsillie, a 1989 graduate of Harvard Business School, joined RIM in 1992.

The company’s smartphone market share started eroding after Apple introduced the iPhone in 2007 and phones running Google Inc. (GOOG)’s Android software gained popularity. In the second quarter, RIM’s share of the global smartphone market dropped to 12 percent from 19 percent a year earlier, according to Gartner Inc. In the same period, Apple climbed to 18 percent from 14 percent, and Google’s Android rose to 43 percent.

This month, investor Jaguar Financial Corp. asked RIM to consider selling itself or spinning off its patents to boost investor returns.

“Given today’s stock action, you’ll get more activists going in and seeing what’s the strategic direction, and does it make sense,”, Jeff Fidacaro, an analyst at Susquehanna International Group in New York, said yesterday in a telephone interview. “Everything is on the table.”

-- Editors: Ville Heiskanen, Peter Elstrom

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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Banks ‘Quietly’ Lobby BRICs for Greece Aid

By Christine Harper - Sep 17, 2011 4:41 AM GMT+0700

A group that represents the world’s biggest banks is trying to persuade Brazil, Russia, India, China and others to lend 20 billion euros ($27.6 billion) to supplement a debt refinancing package for Greece.

The Institute of International Finance Inc. has been “quietly exploring” whether the so-called BRIC countries and others would be willing to participate, IIF Deputy Managing Director Hung Tran said today in a telephone interview. The plan would add to a July 21 agreement that included debt buybacks and bond exchanges, he said.

“If you have the extra 20 billion which we are seeking from other countries, that of course would increase the amount of debt retirement that Greece can have,” Tran said. “We have been in preliminary discussions with some countries and the reaction we received is an open mind and request for more information and discussion.”

The IIF, which represents more than 400 of the world’s banks, insurers and investment companies, has also shared its proposal with the International Monetary Fund, Tran said. Conny Lotze, a spokeswoman for the IMF in Washington, declined to comment. Dow Jones Newswires reported on the proposal earlier.

About half of the IIF’s members are European-based financial institutions and the Washington-based organization’s chairman is Josef Ackermann, chief executive officer of Deutsche Bank AG (DBK), Germany’s largest bank. European banks are some of the biggest holders of Greek debt and the July 21 package includes a bond exchange that would lead to writedowns on the banks’ Greek debt.

Government Debt

Concerns about lenders’ potential losses on their holdings of government debt from Greece and other so-called peripheral European countries such as Portugal, Ireland, Italy and Spain have weighed on their stock prices. The 46-company Bloomberg Europe Banks and Financial Services Index has dropped 32 percent this year, led by banks in Portugal, Germany, Italy, France and Spain.

Finance ministers from Brazil, Russia, India, China and South Africa will meet in Washington on Sept. 22 to discuss whether they will assist Europe. Tran said the meeting is a positive sign that the countries, which have some of the fastest-growing economies in the world, understand that the crisis in Europe could also affect them.

“It shows awareness among countries in the global economy that the sovereign debt crisis in Greece and other peripheral countries of Europe do have an impact on the well being of the global economy and therefore should be resolved as quickly as possible,” he said.

Tran said an IMF aid package to Latin American countries in the late 1980s also included co-financing from Japan’s Export- Import Bank. “So we want to use that as a template to try to explore if other countries are willing to do the same vis-a-vis Greece this time,” Tran said.

The IIF will hold an annual membership meeting in Washington from Sept. 23 to Sept. 25 that will coincide with the IMF and World Bank Group’s annual meetings there.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

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Europe Rules Out Stimulus, Shuns Geithner’s Plea

By James G. Neuger and Rebecca Christie - Sep 17, 2011 5:00 AM GMT+0700
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Timothy Geithner, U.S. treasury secretary, second right, leaves the RTCB building at the start of Europe's Economic and Financial Affairs Council, known as Ecofin, in Wroclaw, Poland, on Sept. 16, 2011. Photographer: Bartek Sadowski/Bloomberg

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Sept. 16 (Bloomberg) -- Fred Bergsten, director of the Peterson Institute for International Economics, talks about the European economy and sovereign-debt crisis. Bergsten speaks with Lisa Murphy and Adam Johnson on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Sept. 16 (Bloomberg) -- Trevor Williams, chief economist at Lloyds Bank Corporate Markets, discusses the outcomes from today's European finance ministers meeting in Poland and the outlook for the euro. He speaks from London with Andrea Catherwood on Bloomberg Television's "Last Word." (Source: Bloomberg)

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Luxembourg Prime Minister Jean-Claude Juncker said, “We have slightly different views from time to time with our U.S. colleagues when it comes to fiscal stimulus packages.” Photographer: Bartek Sadowski/Bloomberg

European finance ministers ruled out efforts to spur the faltering economy and showed no signs of taking up a proposal by U.S. Treasury Secretary Timothy Geithner to increase the firepower of the debt crisis rescue fund.

Inviting Geithner to a euro meeting for the first time, the European finance chiefs said the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation.

“We have slightly different views from time to time with our U.S. colleagues when it comes to fiscal-stimulus packages,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing the meeting yesterday in Wroclaw, Poland. “We don’t see any room for maneuver in the euro area which could allow us to launch new fiscal stimulus packages. That will not be possible.”

Europe’s economy will barely grow in the second half of 2011, a casualty of the debt buildup that 256 billion euros ($353 billion) in aid for Greece, Ireland and Portugal has failed to extinguish.

Geithner made little headway with a call for Europe to boost the capacity of the 440 billion-euro rescue fund, known as the European Financial Stability Facility, by enabling it to tap the European Central Bank.

‘Non-Member’

Juncker said there was no discussion of expanding the fund today -- at least not while the American guest was in the room.

“We are not discussing the increase or the expansion of the EFSF with a non-member of the euro area,” he said. German Finance Minister Wolfgang Schaeuble spoke of a “very intensive but friendly discussion” and Austrian Finance Minister Maria Fekter found it “peculiar” to be lectured by the U.S., a country with higher aggregate debt than the euro area.

Instead, the ministers recommitted to a July 21 decision to empower the fund to buy bonds in the primary and secondary market, offer precautionary credit lines and create a bank- recapitalization facility. The target for completing national approvals of the new powers slipped to mid-October.

Geithner preached the lessons of the emergency banking support provided by the Treasury and Federal Reserve in reaction to the collapse of Lehman Brothers Holdings Inc., mixing it with criticism of Europe’s crisis-management coordination.

‘Permanent Message’

Europe projects an image of “ongoing conflict” between national governments and the central bank, hampering efforts to put the economy on a sounder footing, Geithner said at a banking conference in between euro meetings.

“Your financial challenges in Europe are eminently in your capacity to manage financially, you just have to choose to do it,” he said.

Echoes of that appeal came from ECB President Jean-Claude Trichet, six weeks from the end of an eight-year term as the overseer of euro interest rates.

“Our permanent message is of course to be ahead of the curve,” Trichet told reporters. “All that I heard goes in this direction. But the problems are not words, the problems are deeds.”

The ECB was in the forefront again this week, joining other major central banks in offering dollar loans to ease a liquidity crunch that had confronted European banks with the highest costs for obtaining the U.S. currency in almost three years.

Finance chiefs stuck by the view that commercial banks have enough capital to ride out the turbulence that has driven the bonds of Greece, the epicenter of the crisis, to less than half their nominal value.

‘Substantial Improvement’

Trichet hailed an accord between governments and the European Parliament that will tighten the euro area’s economic management and make it easier to impose sanctions on countries that overstep the budget-deficit limit of 3 percent of gross domestic product.

The new rules, to take effect by Jan. 1, mark a “substantial improvement,” Trichet said.

The debt overhang is taking its toll on the wider economy, the European Commission says. It cut its growth forecast this week to 0.2 percent for the third quarter and 0.1 percent in the fourth, down from projections of 0.4 percent for both periods.

“Recovery is stalling in the second half of the year, but we do not forecast a return to recession,” European Union Economic and Monetary Commissioner Olli Rehn said. “Uncertainty and stress in financial markets is now having negative ramifications in the real economy and is hampering our growth prospects.”

Greek Aid

Greece is now looking to the ministers’ next meeting, on Oct. 3, for a decision on the release of an 8 billion-euro aid installment. The loan would be disbursed by mid-October, enabling the government to pay its bills through the end of the year.

The fate of future Greek loans remains tied up by a demand by Finland, one of Europe’s six AAA rated countries, that it receive collateral, potentially in the form of real estate or shares in nationalized Greek banks.

While a final agreement eluded them, the ministers agreed on the principle that collateral must carry a cost, with the goal of limiting its use to Finland.

“There is unity that collateral, first of all, must be open to all and, second, must cost something,” Austria’s Fekter said.

On personnel matters, the officials set a Sept. 27 deadline for nominations to replace Germany’s Juergen Stark on the ECB’s Executive Board. Stark, an opponent of the bank’s bond-purchase program, said last week he will quit before his term ends in May 2014.

The only candidate so far is German Deputy Finance Minister Joerg Asmussen.

To contact the reporters on this story: James G. Neuger in Wroclaw, Poland at jneuger@bloomberg.net; Rebecca Christie in Wroclaw, Poland at rchristie4@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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United Technologies Exploring Goodrich Takeover

By Jeffrey McCracken, Rachel Layne and Serena Saitto - Sep 17, 2011 11:09 AM GMT+0700
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A visitor looks at a United Technologies Corp. Pratt & Whitney PurePower PW1000G engine on display on the third day of the Farnborough International Airshow on July 21, 2010. Photographer: Simon Dawson/Bloomberg

United Technologies Corp. (UTX) is in talks to buy aerospace equipment maker Goodrich Corp. as it looks to expand through a major acquisition, according to three people with knowledge of the matter.

A deal may be announced as soon as next week, said one of the people, who weren’t authorized to speak publicly. Goodrich is the most likely candidate of takeover targets being studied by Hartford, Connecticut-based United Technologies, one person said. Goodrich jumped 23 percent in late trading yesterday, adding to a market value of $11.6 billion.

United Technologies is seeking to raise financing, the people said. Chief Executive Officer Louis Chenevert signaled his interest in acquisitions in March when he named William Brown as senior vice president of corporate strategy. Brown completed more than 40 purchases as head of UTC Fire & Security.

“The fit is not bad,” said Howard Rubel, an analyst with Jefferies & Co. in New York. “From a distribution channel basis, from a mentality basis, from a customer focus basis, it’s all there.”

Talks continue with Charlotte, North Carolina-based Goodrich, and a deal may not be reached, the people said.

John Moran, a spokesman for United Technologies, declined to comment. Goodrich’s Andrew Martin didn’t immediately respond to a voice mail and e-mail request for comment about the takeover talks.

Helicopters, Nacelles

United Technologies’ aviation businesses include Hamilton Sundstrand aerospace electric systems, helicopter maker Sikorsky Aircraft and Pratt & Whitney, a producer of jet engines. Goodrich is the world’s biggest manufacturer of landing gear, and its products include nacelles, the casings that house jet engines, and de-icing systems used on planes.

Goodrich rose to $113.89 in late trading yesterday from a close of $92.89 in New York Stock Exchange composite trading. Rockwell Collins Inc. (COL), Textron Inc. (TXT) and Tyco International Ltd. (TYC) also gained yesterday on speculation they may be targets.

United Technologies fell 11 cents to $75.50 and was little changed after the end of regular trading. The company closed with a market value of $68.6 billion, according to data compiled by Bloomberg.

An acquisition of Goodrich may be valued at more than $17 billion, including $1.9 billion of net debt, based on previous deals in the U.S. aerospace and defense industry. That’s about $122 a share.

Industry Takeovers

Takeovers in the sector greater than $500 million in the last five years have fetched a median of 12.3 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. Goodrich had Ebitda of $1.4 billion in the past 12 months.

Goodrich would be the largest acquisition attempted by United Technologies since 2000, when it sought to buy Honeywell International Inc. (HON) only to be outbid by General Electric Co. (GE) GE’s $45 billion deal was later rebuffed by the European Union.

Chenevert, 54, hasn’t made a large aerospace purchase since becoming CEO in 2008 after running Pratt & Whitney. Adding commercial aerospace revenue would be a boost after the engine unit’s geared turbofan model failed to win placement on Boeing Co. (BA)’s upgraded 737, the world’s most widely flown jetliner.

United Technologies had $5.4 billion in cash and near-cash items at the end of last quarter, and posted sales of $54.3 billion in 2010. Goodrich reported revenue of $6.97 billion last year.

Goodrich History

CEO Marshall Larsen, 63, has led Goodrich since April 2003. He joined the former B.F. Goodrich Co. in 1977 and rose through the ranks, adding the chairmanship six months after taking the top spot.

Benjamin Franklin Goodrich founded the rubber maker bearing his name in 1870. As the company branched into aviation, its innovations included the first pressure suit in 1934 for pilots for high-altitude flight and the first gas turbine fuel injector in 1951 for jet aircraft, according to an online corporate history.

The company exited the tire industry in 1988, and then changed its name to Goodrich Corp. (GR) after selling its specialty chemical business to focus on aerospace and industrial products.

Its largest customers include the U.S. government, Airbus SAS parent European Aeronautic Defence & Space Co. and Boeing, according to data compiled by Bloomberg.

Boosting Production

“When you look at Goodrich and what they do, it’s only 30 percect military or government, and 40 percent-plus aftermarket revenue,” said Sterne Agee & Leach analyst Ben Elias, who told his salesforce yesterday Goodrich was the most likely target. “It’s very good exposure to Airbus as well as Boeing.” He rates United Technologies a “buy.”

Boeing is boosting production by about 50 percent over the next three years, and Airbus is raising its output rates as well as both planemakers work off record order backlogs.

United Technologies’ industrial operations include Otis Elevator and air conditioner maker Carrier. The company’s most recent deal was buying J&T Systems Inc., a provider of building- systems management, on Sept. 1. No terms were disclosed.

The company continued to build its security division last year with the purchase of GE Security for $1.8 billion. It bought Kidde Plc and Chubb Plc in the last decade.

United Technologies paid an average premium of 18 percent in almost 30 deals for which terms were disclosed since 2001, according to data compiled by Bloomberg. The company paid a median multiple of 12 times earnings before interest, taxes, depreciation and amortization in 10 of the deals, the data show.

To contact the reporters on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Rachel Layne in Boston at rlayne@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Ed Dufner at edufner@bloomberg.net

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