European Stocks Drop After G-20 Fails to Agree on IMF Funding

By Corinne Gretler - Nov 4, 2011 11:53 PM GMT+0700

European stocks fell, capping the first weekly decline in six weeks, after the Group of 20 failed to agree on boosting the International Monetary Fund’s resources and German factory data fueled concern the region is slipping into recession.

Alcatel-Lucent SA, France’s largest telecommunications equipment maker, slumped to the lowest price in more than two years as it cut its full-year profit margin forecast. Commerzbank AG (CBK) dropped 6.3 percent after reporting a bigger- than-estimated quarterly loss on Greek-debt writedowns.

The benchmark Stoxx Europe 600 Index fell 1 percent to 239.76 at the close in London. The gauge has retreated 3.7 percent this week, the first weekly drop since Sept. 23, as Greek Prime Minister George Papandreou’s now-abandoned referendum call spurred concern the country may go into disorderly default.

“Investors will certainly need to digest the latest developments in Greece and the outcome of the latest G-20 summit over the weekend,” said Jean-Maurice Ladure, head of investment strategy at Coutts & Co Ltd. in Zurich. “Hence, investors are likely to remain in ‘wait-and-see’ mode.”

Global policy makers are awaiting more details of a week- old rescue package before they commit fresh cash to the IMF which could then lend to Europe’s bailout facility, German Chancellor Angela Merkel said at the end of a G-20 summit in Cannes, France. French President Nicolas Sarkozy said it may take until February for a deal.

German Manufacturing

German factory orders unexpectedly plunged in September as demand from the euro region slumped, adding to signs the debt crisis is damping growth in Europe’s largest economy.

Orders, adjusted for seasonal swings and inflation, fell 4.3 percent from August, when they dropped 1.4 percent, the Economy Ministry in Berlin said in a statement today. It’s the third straight month orders have declined. The median economist forecast was for a 0.1 percent increase in September, according to a Bloomberg News survey.

“The decline in German factory orders is stunning,” said Manish Singh, the London-based head of investment at Crossbridge Capital, which has more than $2 billion under management. “The risk of a recession in Europe has increased, if it hasn’t already started.”

Zero Growth

European Central Bank Executive Board member Juergen Stark said in a speech in Frankfurt today that the euro-area economy may not grow at all in the fourth quarter.

In the U.S., a Labor Department report showed that the unemployment rate in the world’s largest economy fell to a six- month low of 9 percent from 9.1 percent. Employment climbed in October at the slowest pace in four months, illustrating the “frustratingly slow” progress cited by Federal Reserve Chairman Ben S. Bernanke this week.

Papandreou is facing a confidence vote in parliament today that will determine whether he survives or elections are called.

Papandreou abandoned his planned referendum on his country’s bailout after it split his party, roiled financial markets and drew warnings from euro leaders that it may cost Greece its membership in the 17-nation currency club.

National benchmark indexes retreated in all but three of the 18 western European markets. France’s CAC 40 dropped 2.3 percent and Germany’s DAX declined 2.7 percent. The U.K.’s FTSE 100 slid 0.3 percent.

Alcatel-Lucent

Alcatel-Lucent retreated 17 percent to 1.67 euros, the lowest price since July 2009. The company cut its full-year profit margin forecast to about 4 percent, from its earlier projection of 5 percent.

Commerzbank declined 6.3 percent to 1.64 euros. Germany’s second-largest lender reported a third-quarter loss as it wrote down the value of Greek government-debt holdings. The bank reported a net loss of 687 million euros after a 113 million- euro profit a year earlier, missing the average 679 million-euro analyst estimate.

Fiat SpA, Italy’s biggest automaker, lost 5.5 percent to 4.14 euros as a gauge of European carmakers was the worst performer of the 19 industry groups in the Stoxx 600, sliding 3.5 percent.

Hermes International (RMS) SCA, the French maker of Birkin bags and silk scarves, advanced 3.1 percent to 252.20 euros after raising its full-year revenue growth target to a range of 15 percent to 16 percent at constant exchange rates, from its previous forecast for an increase of as much as 14 percent.

Lundin Petroleum AB (LUPE) rose 2.6 percent to 173.50 kronor, the highest price since at least September 2001.

Royal Bank of Scotland Group Plc (RBS) rose 1.3 percent to 23.09 pence, after saying job cuts are “in the offing.” Britain’s biggest government-controlled bank is “actively working” on cost cuts after third-quarter profit fell 63 percent, Group Finance Director Bruce van Saun said.

Rheinmetall AG, the maker of defense equipment and car parts, jumped 5.8 percent to 37.15 euros after Juergen Pieper, an analyst at Bankhaus Metzler, upgraded the company’s shares to “buy” from “sell.”

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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S&P 500 Poised for First Weekly Drop Since Sept.

By Rita Nazareth - Nov 4, 2011 11:44 PM GMT+0700

U.S. stocks fell, sending the Standard & Poor’s 500 Index toward its first weekly drop since September, as concern about European financing offset an unexpected decrease in the American unemployment rate.

All 10 groups in the S&P 500 slid as financial and industrial shares had the biggest losses. Bank of America Corp. (BAC) tumbled 4.8 percent as a plan to bolster its balance sheet renewed concern that shareholders may see their stakes diluted. American International Group Inc. (AIG) slumped 4.3 percent after the bailed-out insurer posted its biggest loss since 2009. Groupon Inc. advanced 45 percent in its initial day of trading.

The S&P 500 sank 1.3 percent to 1,245.08 as of 12:40 p.m. New York time. The benchmark gauge for American equities was down 3.1 percent this week. The Dow Jones Industrial Average slumped 150.15 points, or 1.3 percent, to 11,894.32 today.

“Today’s jobs report does little to alleviate concern,” Mohamed A. El-Erian, the chief executive officer at Pacific Investment Management Co. in Newport Beach, California, said in an e-mail. His firm runs the biggest bond fund. “Initial indications suggest that G-20 leaders are having difficulties agreeing on the relatively easy items on their agenda. This bodes badly for the more difficult issues that also need coordinated measures on the part of the G-20.”

Global stocks slumped as the Group of 20 nations failed to agree on increasing the resources of the International Monetary Fund, dashing the hopes of European governments keen to tap more foreign aid. In the U.S., the unemployment rate fell to a six- month low of 9 percent from 9.1 percent, even as the labor force expanded. The 80,000 increase in payrolls followed gains in the prior two months that were revised up by 102,000.

‘Bottom Line’

“The bottom line is we’re making progress on the jobs front, but not enough to offset concerns about Europe,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a telephone interview. “The jobs report was reasonably good, especially when you throw in the revisions. Still, Europe is a story that doesn’t go away.”

The S&P 500 rose for a second day yesterday as Greece moved closer to accepting a bailout and the European Central Bank unexpectedly lowered interest rates. Earlier this week, a two- day slump sent the S&P 500 to the level where three rallies stopped in August and September, the top of a price range that prevailed for 10 weeks. The index rose above that level last week amid progress on Europe’s bailout plans.

American banks slumped, following a tumble in European lenders. The KBW Bank Index dropped 2 percent as all its 24 companies declined.

Improve Capital Levels

Bank of America retreated 4.8 percent to $6.58. The bank said it may exchange preferred securities for a total of $6 billion of common shares and debt, a plan that could cut interest and dividend costs and improve capital levels. The firm may issue 400 million shares and $3 billion of senior notes, according to a regulatory filing, taking advantage of lower prices for the bank’s existing securities.

“It looks like this will be dilutive to shareholders, but that’s the minor issue,” Richard Bove, an analyst with Rochdale Securities LLC in Lutz, Florida, said in a telephone interview. “The major issue is they said they wouldn’t issue stock, and this may be one too many statements to investors that didn’t turn out true.”

AIG sank 4.3 percent to $23.56. The quarterly loss casts doubt on the insurer’s ability to benefit from more than $25 billion in assets that can be used to lower future tax bills. The company posted a $4.11 billion third-quarter loss that wiped out profit from the first six months of the year.

Transportation Stocks

Concern about the pace of global growth sent the Morgan Stanley Cyclical Index down 1.2 percent. The Dow Jones Transportation Average lost 1.6 percent. FedEx Corp. (FDX), operator of the world’s biggest cargo airline, retreated 1.7 percent to $80.98. General Electric Co. (GE) decreased 2.5 percent to $16.26.

The Citigroup Economic Surprise Index for the U.S., which measures the rate at which data is beating or trailing economists’ forecasts, is at 18.7, the highest since April. The index has rebounded from minus 117.2 on June 3, when it showed economic data was trailing estimates by the most since January 2009.

Groupon, trading under the symbol GRPN, soared 45 percent to $28.91. It surged as much as 56 percent earlier. The company sold 35 million shares at $20 each, the largest initial public offering by a U.S. Internet company since Google Inc. raised $1.9 billion in its 2004 initial offering.

LinkedIn Tumbles

LinkedIn Corp. tumbled 8 percent to $80.52 as spending on research and development drove the professional-networking website to a loss. The company, which first sold shares to the public in May, is increasing spending on research, sales and marketing, and office expansions to boost the company’s global presence and attract more recent college graduates to the site.

Genworth Financial Inc. (GNW) surged 18 percent, the most in the S&P 500, to $7.27. The company said it will sell a stake in its Australian mortgage-guaranty business next year and may buy back stock. As much as 40 percent of the Australian unit may be sold in an IPO set for the second quarter of 2012, the Richmond, Virginia-based company said late yesterday.

Starbucks Corp. (SBUX) rallied 7.5 percent to $44.51. The world’s largest coffee-shop operator said fourth-quarter profit rose 29 percent as U.S. sales increased. Chief Executive Officer Howard Schultz has sought to boost sales by selling Via instant coffee that customers can brew at home.

McGraw-Hill Cos., CME Group and News Corp.’s Dow Jones agreed to join their index businesses, bringing the Standard & Poor’s 500 Index and Dow Jones Industrial Average under common ownership. McGraw-Hill, the New York-based finance and publishing company that’s splitting in two, will own 73 percent of the business. Chicago-based CME, the world’s second-largest exchange operator by market value, will control 24.4 percent and News Corp. will have the rest, the companies said.

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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G-20 Fails to Agree on IMF Resources

By Simon Kennedy and Sandrine Rastello - Nov 4, 2011 11:35 PM GMT+0700

World leaders balked at writing new checks to help bail out the euro-area, demanding its own governments first do more to fix the two-year-old debt crisis.

Global policy makers are awaiting more details of a week- old rescue package before they commit fresh cash to the International Monetary Fund which could then lend to Europe’s bailout facility, German Chancellor Angela Merkel said at the end of a Group of 20 summit in Cannes, France. French President Nicolas Sarkozy said a deal may not come before February.

“The worst thing to do would be to try and cook up a number without being clear who was agreeing to what,” British Prime Minister David Cameron told reporters. “The job of the IMF is to help countries in distress, not to support currency systems.”

The refusal of major economies to stump up money now reflected irritation with Europe’s failure to resolve its crisis alone and foiled investor hopes that the summit would mark a turning point. The turmoil is instead flaring again as Greece’s government lurches toward collapse and Italian Prime Minister Silvio Berlusconi said he refused an offer of IMF aid.

“There really are hardly any countries here that said they will join up” with the European Financial Stability Facility, Merkel told reporters, as she committed Europe to speeding up implementation of an Oct. 27 accord to boost the power of its EFSF rescue fund, recapitalize banks and write-down Greece’s debt.

Euro, Stocks Fall

European and U.S. stocks fell as did the euro. The Stoxx Europe 600 Index declined 1 percent to 239.78 at 4:20 p.m. in London, after rising as much as 0.6 percent earlier today. The euro erased gains and fell 0.5 percent to $1.3758.

In a statement which blamed Europe for fanning financial market tensions, the G-20 said it would ensure the IMF “continues to have resources to play its systemic role” and left it to its finance chiefs to debate how to provide more funds if needed.

Leaders also named Deutsche Bank AG and BNP Paribas SA as among 29 lenders facing new capital surcharges and agreed to limit the risks posed by so-called “too big to fail” banks. They called on regulators to examine the effect of credit- default swaps on bond prices and said they would better manage capital flows.

Chinese Yuan

Beefing up their language on exchange rates, they vowed to “move more rapidly toward market-determined” currencies, and in an appendix welcomed China’s “determination” to increase the yuan’s flexibility. The group made progress on a future financial-transaction tax, Sarkozy said.

Europe’s bosses had planned to showcase their new crisis- fighting plan on the French Riviera and secure outside support for a doubling of the EFSF’s 440 billion euro ($603.8 billion) spending strength to protect bigger economies such as Italy from contagion. That strategy blew up on the eve of the meeting as Greek Prime Minister George Papandreou called a referendum he later retracted and as Italy came under the spotlight of investors.

“Markets are constantly searching for good news and opportunities,” Canadian Prime Minister Stephen Harper said. “The sooner European leaders and others can simply confirm they’re moving forward, I think that would be the quickest way to get us out of this crisis of confidence.”

U.S. President Barack Obama said he’d had a “crash course” in European politics in Cannes and that it’s important for its governments to send a “clear signal that the European project is alive and well.”

Holding Off

The chaos in Europe led countries from China to Russia and Brazil to say they would hold off pledging money to Europe’s cause even as they signaled a potential willingness to eventually do so through the IMF. The Washington-based lender can attach strings to its aid.

The BRICS group of emerging economies, comprising Brazil, Russia, India, China and South Africa, will decide on a “financial contribution” to the euro region in “coming weeks,” the economic adviser to Russian President Dmitry Medvedev said. Brazilian President Dilma Rousseff said she “has no plans or intentions to make any direct contribution” to Europe and that China told her it would also rather use the IMF.

IMF Options

Options for bolstering the IMF’s $391 billion war chest when the time comes include opening a trust fund or not rolling back a 2009 cash increase. They also discussed increasing the amount of the fund’s Special Drawing Rights. The G-20 agreed to have the IMF create a new, six-month line of credit for countries “with strong policies and fundamentals.”

Athens remained a focal point today as Papandreou struggled to cling on to power and politicians tried to map out a plan to put in place a new government to ratify last week’s rescue package. With European leaders freezing 8 billion euros in assistance that his country needs to dodge default, Papandreou faces a midnight confidence vote and opposition leader Antonis Samaras is refusing to share power with the premier.

Papandreou’s Oct. 31 decision to hold a ballot on the bailout backfired by splitting his party, roiling markets and drawing taboo-breaking warnings from EU powers that it could cost Greece its euro membership.

Prodded by counterparts, Italian Prime Minister Silvio Berlusconi accepted IMF monitoring of efforts to cut the euro area’s second-largest debt burden after Greece. While he has promised steps such as a higher retirement age and state-asset sales, investors say they don’t go far enough and his ability to push legislation through Parliament is hampered by yesterday’s defection of two lawmakers from the ruling party.

“Berlusconi is conscious of the doubts that surround his plan,” Sarkozy said. The Italian premier said the surveillance had been “requested, not imposed” and that he turned down an offer of IMF money.

“We have thanked them and said we didn’t need those funds,” he said.

To contact the reporters on this story: Simon Kennedy in Cannes, France, at skennedy4@bloomberg.net; Sandrine Rastello in Cannes, France srastello@bloomberg.net

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

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Corzine Resigns From MF Global

By Matthew Leising and Cristina Alesci - Nov 4, 2011 11:39 PM GMT+0700

Jon Corzine, who joined MF Global Holdings Ltd. (MF) 20 months ago to transform the futures broker into an investment bank, quit today amid regulatory probes and after the firm filed the eighth-largest bankruptcy in U.S. history.

Corzine, the former co-chief executive officer of Goldman Sachs Group Inc. (GS), quit as chairman and CEO, New York-based MF Global said today in an e-mailed statement. Corzine, 64, who was paid more than $4 million since joining the firm, won’t seek severance pay, the company said.

“I have voluntarily offered my resignation to the Board of Directors of MF Global,” Corzine said in a separate statement. “This was a difficult decision, but one that I believe is best for the firm and its stakeholders.”

His resignation came four days after the bankruptcy filing as the company’s bets on European sovereign debt rattled investors. The Commodity Futures Trading Commission is investigating $633 million in missing customer accounts. The regulator sent a subpoena seeking information about the money to MF Global’s auditor, PricewaterhouseCoopers LLP, a person briefed on the matter said yesterday, asking not to be named because the matter isn’t public.

“The board of directors at MF Global is going to be getting some very serious questions in the next few weeks,” said Bruce Weber, dean of the Lerner College of Business & Economics at the University of Delaware. Weber cited lack of segregation of customer money from the firm’s funds among the concerns.

The trustee liquidating MF Global Inc. was given authority to investigate the firm’s officers, directors, affiliates, lenders and investors, U.S. Bankruptcy court judge Martin Glenn ruled today.

Board Support Eroded

While Corzine ultimately made the decision to resign, board members had indicated to him in discussions during the past two days that he should consider stepping down, according to a person with direct knowledge of the talks who declined to be identified, citing lack of authorization to speak publicly. The board’s support for Corzine eroded once talks to sell the company collapsed, the person said.

“I feel great sadness for what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others,” Corzine said in his statement. He said he would continue to assist the company in responding to regulatory inquiries and in the “disposition of the firm’s assets.”

Corzine, a former governor of New Jersey who helped run Goldman Sachs from 1994 to 1999, sought to transform MF Global into a mid-size investment bank after arriving there in March 2010. He increased the firm’s risk and used its own money to trade, including investments in European sovereign debt.

European Bond Bets

As of Oct. 25, MF Global owned $6.3 billion of Italian, Spanish, Belgian, Portuguese and Irish debt, the company said at the time in a presentation. Concerns that it might lose money on the holdings amid Europe’s debt crisis led to credit downgrades, margin calls and demands from regulators to boost capital before the bankruptcy filing.

U.S. regulators questioned MF Global’s use of so-called repo-to-maturity transactions as early as March, concerns that eventually led them to demand the brokerage come up with more capital. Repurchase trades are a form of collateralized lending.

The Securities and Exchange Commission sent a letter to MF Global on March 16 asking the firm to justify how it accounted for the repo-to-maturity transactions in the year ending March 31, 2010, according to the letter signed by Jennifer Monick, an SEC senior staff accountant. Monick also asked the firm to disclose how the accounting treatment affected its financial metrics and ratios, according to the letter, which was included in MF Global’s public filings with the agency.

Repo Transactions

In a March 30 response, MF Global said its repo-to-maturity transactions for that year increased net revenue by $2 million and the underlying collateral for such trades were U.S. Treasury securities, according to the letter, also filed with the SEC.

In June, the Financial Industry Regulatory Authority, the brokerage industry’s self-funded regulator, noticed the company’s use of European sovereign debt as collateral in similar repo-to-maturity transactions, according to a person with direct knowledge of the situation. Finra objected and told the firm to build up its capital, the person said.

Instead of lessening risk as regulators probed the investments, the firm added to the positions, Weber said.

As of March 31, MF Global had $7.6 billion repo-to-maturity transactions related to European sovereign debt, which climbed to $11.5 billion by June 30, according to a quarterly filing.

“They had their foot on the pedal,” Weber said. “They weren’t backing out of risky positions, they were increasing them.”

Severance Conditions

Corzine was in line for $12.1 million in severance and pro- rated bonus and benefits payments if he left for “good reason” or was fired “without cause,” according to an MF Global proxy statement filed in July. Of that, $9 million was to have been severance payments, according to the filing, which said the company’s compensation committee found Corzine’s performance had been “exemplary” since joining the firm.

Corzine took home $4.28 million in salary and cash bonuses for the two fiscal years that ended March 2011, according to the firm’s proxy statement. During fiscal 2011, Corzine agreed to lower his guaranteed annual cash pay to $750,000 a year from $2 million. He received 2.5 million options to buy MF Global stock when he joined the firm, according to the proxy.

MF Global’s customer funds have a shortfall of $633 million, or about 11.6 percent, out of a segregated fund requirement of about $5.4 billion, the Commodity Futures Trading Commission said yesterday. MF Global’s trustee won permission to transfer 50,000 accounts in which customers of the failed brokerage have 3 million positions and a notional value of more than $100 billion at stake, saying the move will help avoid liquidations.

‘Apparent Shortfall’

CME Group Inc., the world’s largest futures exchange that has regulatory authority to audit MF Global’s customer positions, said it had more than enough collateral to cover the firm’s positions at the exchange. The funds in question are those held by MF Global, CME Group said earlier this week.

Referring to an “apparent shortfall” in segregated customer funds at MF Global, CME said the funds may have been transferred after a CME audit of the funds, in violation of regulatory rules.

“It now appears that the firm made subsequent transfers of customer segregated funds in a manner that may have been designed to avoid detection,” as the transactions weren’t reported to regulators until Oct. 31, it said.

Under U.S. law, customer money may not be mixed with the funds of a futures broker such as MF Global.

In his 24-year career at Goldman Sachs, Corzine made a name for himself as an intrepid trader who pushed the limits of risk.

When Corzine, after almost a decade as a U.S. senator and governor, was named chairman and CEO of MF Global, his plan for expanding the futures and commodities trader involved taking more risk. Less than 20 months later, the company is bankrupt, days after posting a $192 million quarterly loss.

With Corzine unable to find a buyer, MF Global filed for protection from creditors on Oct. 31, saying it had $41 billion in assets.

To contact the reporters on this story: Matthew Leising in New York at mleising@bloomberg.net

Cristina Alesci in New York at calesci2@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net; Steve Dickson at sdickson1@bloomberg.net.

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Groupon Surges After Pricing IPO Above Range

By Lee Spears and Douglas MacMillan - Nov 4, 2011 11:27 PM GMT+0700

Groupon Inc. jumped as much as 56 percent in its trading debut after the online-coupon company raised $700 million in an initial public offering that limited the amount of shares typically available to investors.

The shares of the Chicago-based company, listed under the symbol GRPN, climbed $7.22, or 36 percent, to $27.22 at 12:07 p.m. New York time in Nasdaq Stock Market trading, after surging to $31.14. Yesterday, Groupon sold 35 million shares at $20 each, the biggest IPO by a U.S. Internet company since Google Inc. (GOOG) raised $1.9 billion in its 2004 initial offering.

Groupon’s IPO attracted interest even as internal missteps, unprofitability and an expensive valuation compared with its peers made some investors skeptical. Groupon is now more expensive than Microsoft Corp. or Amazon.com Inc. (AMZN), based on projected 2012 sales.

“The market continues to have high expectations of growth for Groupon,” said Larry Levine, Chicago-based managing director at RSM McGladrey Inc. “If you miss your growth estimates, the stock price will decline precipitously.”

Today’s trading gave Groupon a market capitalization of as much as $20 billion, or almost double the value the company sought in the offering. Groupon had discussed an IPO valuation of as much as $25 billion with bankers, people said this year, and it rejected a buyout offer from Google in 2010 that would have valued it at $6 billion.

Groupon had initially offered 30 million shares for $16 to $18 apiece, or as much as $540 million. While the company said in its prospectus that it won’t need to use the proceeds from the IPO for at least a year and has no urgent cash needs, the company owed almost twice as much to merchants at the end of September as it held in cash. Marketing costs rose 37 percent in the latest quarter, four times as quickly as its cash pile.

Amazon, LivingSocial

There are also competitive pressures. Amazon.com, Google and LivingSocial all offer group discounts and are giving more favorable terms to merchants. That’s led Groupon to accept lower margins to avoid losing business.

Advisers to Groupon based the price range for the IPO on a projection that the company will have sales of about $2.1 billion next year, people familiar with the matter said last week. The $17 midpoint valued the company at $10.8 billion, or about 5 times that sales prediction, making Groupon more expensive than Amazon.com, the world’s largest online retailer, which traded at about 1.5 times estimated 2012 revenue yesterday.

Co-founders Andrew Mason, Bradley Keywell and Eric Lefkofsky will collectively own more than a third of Groupon’s common stock, according to the prospectus. They will also share more than 58 percent of the voting power by virtue of their Class B shares, which have 150 votes each. Class A stockholders get a single vote.

Lefkofsky, the chairman, told Bloomberg News in June that he expected the company to be “wildly profitable,” a statement the company later asked investors to disregard in a regulatory filing. Company executives are forbidden from talking about financials during the so-called quiet period before an IPO.

Restated Results

In September, the company restated its revenue figures to exclude sales passed on to merchants and announced the departure of its second operating chief in six months. It had a net loss of $214.5 million for the first three quarters of 2011.

Groupon floated a record-low percentage of its total outstanding shares among U.S. Internet companies, helping to stoke demand. Only 4.7 percent of the stock was made available to the public, based on the offering terms. That’s less than in any U.S. Internet company IPO of more $200 million since at least 2000, Bloomberg data show.

All of the shares in the offering were sold by Groupon, and net proceeds at the midpoint of the marketed range were estimated at $479 million.

Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse Group AG led the IPO.

Groupon has granted the underwriters a 30-day option to purchase up to an additional 5.25 million shares of Class A common stock to cover over-allotments, if any, the company said in a statement.

To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Douglas Macmillan in New York at dmacmillan3@bloomberg.net

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

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Corzine Resigns From MF Global After Bankruptcy

By Cristina Alesci and Matthew Leising - Nov 4, 2011 8:18 PM GMT+0700

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Nov. 4 (Bloomberg) -- MF Global Holdings Ltd. said Chairman and Chief Executive Officer Jon Corzine has resigned from all posts in the company, according to an e-mailed statement today. Scarlet Fu, Stephanie Ruhle and Michael McKee report on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

Jon Corzine resigned as chairman and chief executive officer of MF Global Holdings Ltd. (MF), the broker- dealer that filed the eighth-largest bankruptcy in U.S. history this week and is being probed by regulators.

Corzine, the former co-CEO of Goldman Sachs Group Inc. (GS), quit all of his posts, New York-based MF Global said today in an e-mailed statement. Corzine, 64, won’t seek severance pay, the company said.

“I have voluntarily offered my resignation to the Board of Directors of MF Global,” Corzine said in a separate statement. “This was a difficult decision, but one that I believe is best for the firm and its stakeholders.”

His resignation came four days after the bankruptcy filing as the company’s bets on European sovereign debt rattled investors. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said yesterday. The Commodity Futures Trading Commission sent a subpoena seeking information about the money to MF Global’s auditor, PricewaterhouseCoopers LLP, the person said, asking not to be named because the matter isn’t public.

While Corzine ultimately made the decision to resign, board members had indicated to him in discussions during the past two days that he should consider stepping down, according to a person with direct knowledge of the talks who declined to be identified because they weren’t authorized to speak publicly. The board’s support for Corzine eroded once talks to sell the company collapsed, the person said.

‘Great Sadness’

“I feel great sadness for what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others,” Corzine said in his statement. He said he would continue to assist the company in responding to regulatory inquiries and in the “disposition of the firm’s assets.”

Corzine, a former governor of New Jersey who helped run Goldman Sachs from 1994 to 1999, sought to transform MF Global into a mid-size investment bank after arriving there in March 2010. He increased the firm’s risk and used its own money to trade, including investments in European sovereign debt.

As of Oct. 25, MF Global owned $6.3 billion of Italian, Spanish, Belgian, Portuguese and Irish debt, the company said at the time in a presentation. Concerns that it might lose money on the holdings amid Europe’s debt crisis led to credit downgrades, margin calls and demands from regulators to boost capital before the bankruptcy filing.

Severance Conditions

Corzine was in line for $12.1 million in severance and pro- rated bonus and benefits payments if he left for “good reason” or was fired “without cause,” according to an MF Global proxy statement filed in July. Of that, $9 million was to have been severance payments, according to the filing, which said the company’s compensation committee found Corzine’s performance had been “exemplary” since joining the firm.

Corzine took home $4.28 million in salary and cash bonuses for the two fiscal years that ended March 2011, according to the firm’s proxy statement. During fiscal 2011, Corzine agreed to lower his guaranteed annual cash pay to $750,000 a year from $2 million. He received 2.5 million options to buy MF Global stock when he joined the firm, according to the proxy.

In his 24-year career at Goldman Sachs, Corzine made a name for himself as an intrepid trader who pushed the limits of risk.

When Corzine, after almost a decade as a U.S. senator and governor, was named chairman and CEO of MF Global, his plan for expanding the futures and commodities trader involved taking more risk. Less than 20 months later, the company is bankrupt, days after posting a $192 million quarterly loss.

With Corzine unable to find a buyer, MF Global filed for protection from creditors on Oct. 31, saying it had $41 billion in assets.

To contact the reporter on this story: Cristina Alesci in New York at calesci2@bloomberg.net

Matthew Leising in New York at mleising@bloomberg.net

To contact the editors responsible for this story: Steve Dickson at sdickson1@bloomberg.net; David Scheer at dscheer@bloomberg.net

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European Stocks Drop After Merkel Says No Pact on IMF Resources

By Corinne Gretler - Nov 4, 2011 7:10 PM GMT+0700

European stocks declined, erasing earlier gains, after German Chancellor Angela Merkel said Group of 20 leaders failed to agree on International Monetary Fund resources.

The Stoxx Europe 600 Index declined 0.3 percent to 241.4 at 12:03 p.m. in London, after earlier rising as much as 0.6 percent on Greece’s cancellation of a referendum on euro-area’s bailout package. The gauge has retreated 3 percent so far this week as the debt crisis deepened and concern of a recession in Europe resurfaced. The MSCI Asia Pacific Index jumped 2.5 percent. Standard & Poor’s 500 Index futures dropped 0.5 percent after Merkel’s statement today.

Group of 20 leaders meeting in the French resort of Cannes failed to agree on International Monetary Fund resources, Merkel told reporters today.

Earlier, stocks pared their gains after German factory orders unexpectedly plunged in September as demand from the euro region slumped, adding to signs the region’s debt crisis is damping growth in Europe’s largest economy.

Orders, adjusted for seasonal swings and inflation, fell 4.3 percent from August, when they dropped 1.4 percent, the Economy Ministry in Berlin said today. It’s the third straight month orders have declined. Economists forecast a 0.1 percent increase for September, according to the median of 34 estimates in a Bloomberg News survey. In the year, orders rose 2.4 percent when adjusted for work days.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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Stocks Rise, Commodities Climb for Third Day

By Stephen Kirkland - Nov 4, 2011 7:20 PM GMT+0700

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Nov. 4 (Bloomberg) -- Amit Rajpal, a Hong Kong-based portfolio manager at Marshall Wace LLP, talks about his investment strategy for China's banks. Rajpal also discusses Europe's debt crisis and banking industry. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

European stocks and U.S. index futures fell after the Group of 20 leaders failed to agree on boosting the International Monetary Fund’s resources to fight the debt crisis. Treasuries and the dollar gained.

The Stoxx Europe 600 Index lost 0.2 percent at 8:10 a.m. in New York, after gaining as much as 0.6 percent. Standard & Poor’s 500 Index futures slipped 0.1 percent as data indicated Canada lost the most jobs since 2009 last month. The yield on the 10-year Treasury fell one basis point and the Dollar Index rebounded, rising 0.2 percent. The yield on the Greek two-year note climbed 47 basis points to 102.77 percent.

Governments are awaiting further details of Europe’s own week-old rescue package before they commit cash, German Chancellor Angela Merkel said on the final day of a Group of 20 summit in Cannes, France. U.S. employers probably took on fewer workers in October, economists said before today’s Labor Department report.

Stocks gained earlier after Greek Prime Minister George Papandreou scrapped the referendum on a bailout approved by European leaders last week to avert a split in his party.

The Stoxx 600 has declined 3 percent this week, snapping a five-week winning streak.

The S&P 500 index (SPX) has gained 3.5 percent in the past two days. Groupon Inc. shares start trading today under the symbol GRPN after the biggest online-coupon provider raised $700 million in its initial public offering. LinkedIn Corp. sank 11 percent in German trading after the biggest professional- networking website reported a third-quarter loss.

A report at 8:30 a.m. in Washington is likely to show that U.S. payrolls increased by 95,000 workers last month after a 103,000 increase in September, according to the median forecast of 65 economists surveyed by Bloomberg News.

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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Anglo American Ends De Beers Dynasty

By Jana Marais and Thomas Biesheuvel - Nov 4, 2011 6:59 PM GMT+0700
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A 52.06 Carats D flawless diamond is displayed at the new De Beers store in Hong Kong, China. The transaction will increase Anglo’s stake in the world’s leading diamond miner to 85 percent. Photographer: Paul Hilton/Bloomberg

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Nov. 4 (Bloomberg) -- Cynthia Carroll, chief executive officer of Anglo American Plc, talks about the agreement to buy the Oppenheimer family's 40 percent stake in diamond producer De Beers for $5.1 billion in cash. She speaks with Francine Lacqua on Bloomberg Television's "Countdown." (Source: Bloomberg)

Anglo American Plc (AAL) agreed to buy the Oppenheimer family’s 40 percent stake in De Beers for $5.1 billion in cash, ending the dynasty’s 80-year ownership in the world’s largest diamond miner.

The transaction will increase Anglo’s holding in De Beers to as much as 85 percent, the London-based company said today in a statement. The deal will add to underlying earnings in the first year of acquisition, Anglo said.

“De Beers has the largest resources and reserves in the world today,” Cynthia Carroll, chief executive officer of Anglo, said in an interview with Francine Lacqua on Bloomberg Television’s “Countdown.” “The market is very, very strong. Demand will outstrip supply.”

Diamond miners are struggling to keep pace with growing consumption in emerging economies as older mines are exhausted and producers lack new discoveries. Supplies of rough diamonds, which are turned into polished gems, are forecast to remain flat in the next five years and will fail to match demand driven by China and India, according to RBC Capital Markets.

“We’re seeing in the first half of this year a tremendous increase in demand coming out of emerging countries as well as developed countries,” Carroll said. “In 2005, India and China represented about 8 percent of demand. By 2015, India, China and the Gulf will represent about close to 40 percent.”

Biggest Deal

The acquisition is Anglo’s biggest since its purchase of the Minas Rio iron-ore project in Brazil for about $5.5 billion in 2008, according to data compiled by Bloomberg. Anglo climbed as much as 4 percent to 2,452 pence in London trading, and was at 2,436 pence as of 11:06 a.m. local time.

The company will fund the deal with its existing cash and a $3.5 billion credit line that’s undrawn, Finance Director Rene Medori said on a conference call. Anglo signed the five-year revolving credit in 2010, agreeing to pay interest ranging from 60 to 120 basis points above the London interbank offered rate, according to Bloomberg data. A basis point is 0.01 percentage point. Anglo has $2.2 billion of cash at hand, Medori said.

A price of $5.1 billion “is probably a bit on the cheap side, but for the Oppenheimers there was only one buyer,” said Des Kilalea, a London-based analyst at RBC, who said it was about 25 percent lower than their valuation. “It was a clumsy structure that this cleans up.”

‘Looks a Good Deal’

The acquisition “looks like a very good deal” for Anglo, Liberum Capital Markets said in a note to investors. Liberum estimates that Anglo is paying 9.1 times price-to-projected 2012 earnings. That compares with the 9.8 times and 8.5 times valuations it places on Petra Diamonds Ltd. and Gem Diamonds Ltd. respectively.

“They came to us with an offer,” De Beers Chairman Nicky Oppenheimer said in a phone interview. “We thought it was a fair offer on the table, and we took time to think carefully about it. The family decided unanimously to accept their offer.”

Founded by British colonialist Cecil John Rhodes more than 120 years ago, De Beers is 40 percent owned by the Oppenheimers, 45 percent by Anglo and 15 percent by the Botswana government.

Botswana has pre-emptive rights over the Oppenheimer shares held by CHL Group and has an option to increase its interest to 25 percent, Anglo said in the statement. Botswana has until the deal is concluded to decide, giving the government nine to 12 months, Oppenheimer said.

Revenue Gains

De Beers, which mines diamonds by itself and in joint ventures in South Africa, Canada, Botswana and Namibia, reported a 33 percent jump in first-half sales to a record as demand in India and China drove up prices.

“The diamond operations have recently returned to profit with very nice profit margins,” Clinton Duncan, an analyst at Avior Research, said in a phone interview in Johannesburg. “The deal is not a bad idea. Anglo could now divest the operations to finally realize the value of De Beers. It could list De Beers in its own right.”

Anglo is focusing on the “next stage of development” at De Beers, Carroll said in the interview, declining to comment on whether there’s a plan to list the diamond producer. “This is a unique opportunity in consolidating the control of the world’s largest diamond company.”

De Beers sells its diamonds at 10 events each year known as “sights” for customers from Belgium, Israel and other countries known for diamond-cutting.

‘Ghastly Club’

“I hope it will be liberating,” said Charles Wyndham, a former De Beers sales director and founder of WWW International Diamond Consultants Ltd. “Hopefully they will move away from the old business model, treat diamonds as the commodity they are, and get down to being a proper business rather than a ghastly little club.”

Founded in Kimberley, where diamond diggings established South Africa’s mining industry, De Beers was named after a nearby farm. Ernest Oppenheimer, who founded Anglo in 1917, took control in the 1920s. His son and grandson, Harry and Nicky, built De Beers into a business that now supplies about a third of the world’s rough diamonds.

The Oppenheimers sold about 64 million pounds ($102 million) of Anglo shares last December, leaving their stake in the company at about 1.9 percent. In 2006, they sold 1.13 percent of Anglo to billionaire Larry Yung’s China Vision Resources for about $803 million.

Keeping Anglo Stake

The family has “no intention at this stage” of further reducing its holding, James Teeger, managing director of E. Oppenheimer & Son Group, said today by phone from Johannesburg.

Anglo said in February that Nicky Oppenheimer would leave the company, marking the first time a member of the family hasn’t sat on the board since the company was founded.

“Anglo American is the natural home for our stake as they have been major shareholders in De Beers since 1926 and have a deep knowledge of the diamond business,” Oppenheimer said in today’s statement.

The deal is subject to regulatory and government approvals and is expected to close in the second half of 2012. No management changes will be made before completion and Philippe Mellier will remain as CEO of De Beers, Anglo said.

Nomura International Plc and UBS AG are advising Anglo American.

To contact the reporters on this story: Jana Marais in Johannesburg at jmarais@bloomberg.net; Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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Corzine Resigns From MF Global After Bankruptcy

By Cristina Alesci - Nov 4, 2011 7:04 PM GMT+0700

Jon Corzine resigned as chairman and chief executive officer of MF Global Holdings Ltd. (MF), the broker- dealer that filed the eighth-largest bankruptcy in U.S. history this week.

Corzine, 64, the former co-CEO of Goldman Sachs Group Inc. (GS), quit all of his posts, New York-based MF Global said today in an e-mailed statement. Corzine won’t seek severance pay, the company said.

“I have voluntarily offered my resignation to the Board of Directors of MF Global,” Corzine said in a separate statement. “This was a difficult decision, but one that I believe is best for the firm and its stakeholders.”

His resignation came four days after the bankruptcy filing as the company’s bets on European sovereign debt rattled investors. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said yesterday. The Commodity Futures Trading Commission sent a subpoena seeking information about the money to MF Global’s auditor, PricewaterhouseCoopers LLP, the person said, asking not to be named because the matter isn’t public.

Corzine, a former governor of New Jersey who helped run Goldman Sachs from 1994 to 1999, sought to transform MF Global into a mid-size investment bank after arriving there in March 2010. He increased the firm’s risk and used its own money to trade, including investments in European sovereign debt.

MF Global owns $6.3 billion of Italian, Spanish, Belgian, Portuguese and Irish debt, the company said in an Oct. 25 presentation. Concerns that it might lose money on the holdings amid Europe’s debt crisis led to credit downgrades, margin calls and demands from regulators to boost capital before the bankruptcy filing.

“I feel great sadness for what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others,” Corzine said in his statement. He said he would continue to assist the company in responding to regulatory inquiries and in the “disposition of the firm’s assets.”

To contact the reporter on this story: Cristina Alesci in New York at calesci2@bloomberg.net

To contact the editors responsible for this story: Steve Dickson at sdickson1@bloomberg.net; David Scheer at dscheer@bloomberg.net

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G-20 Urges EU to End Crisis as Greek Government Teeters

By Simon Kennedy and James G. Neuger - Nov 4, 2011 3:44 PM GMT+0700

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Nov. 4 (Bloomberg) -- Canadian Finance Minister Jim Flaherty talks about the meeting of Group of 20 leaders in Cannes, France, and the outlook for the European sovereign-debt crisis. Flaherty speaks with Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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Nov. 4 (Bloomberg) -- Steven Major, global head of fixed-income research at HSBC Holdings Plc, discusses the Greek debt crisis and the European Central Bank's decision to cut interest rates to 1.25 percent. Major talks with Francine Lacqua and Linda Yueh on Bloomberg Television's "Countdown." (Source: Bloomberg)

World leaders expressed impatience and irritation with Europe’s inability to defeat its two-year financial crisis as they urged swift resolution for the sake of the global economy.

With Greece’s debt-ridden government at risk of collapsing as soon as today, Group of 20 chiefs meeting in Cannes, France, yesterday pushed European authorities to flesh out and enact a week-old rescue plan that has already shown signs of unraveling.

“We are grappling with a lack of confidence in markets that leaders will act,” Australian Prime Minister Julia Gillard said in the French seaside resort. “It is therefore very important for leaders to act.”

Such calls -- echoed by the U.S., Britain, China and Russia -- highlight international disappointment that Europe missed the G-20’s deadline of this week to deliver a fix for its fiscal woes. German Chancellor Angela Merkel and French President Nicolas Sarkozy sought to regain the initiative by keeping aid for Greece on ice and demanding Italy accelerate austerity.

“The euro zone must absolutely send a message of credibility to the whole world,” Sarkozy told reporters. “When we take decisions they must be applied, when we set rules they must be respected.”

Confidence Vote

Athens will remain a focal point for policy makers and investors today as Prime Minister George Papandreou faces a confidence vote in parliament. He yesterday yanked his planned referendum on his country’s bailout after it split his party, roiled financial markets and drew unprecedented warnings from euro leaders that it may cost Greece its membership in the 17- nation currency club. Opposition leader Antonis Samaras rejected sharing power with Papandreou and called on the premier to quit.

Whether Greece will need to quit the 12-year-old bloc -- designed by its founders as permanent -- was discussed by the G-20, said Canadian Prime Minister Stephen Harper, who predicted “cooler heads will prevail.” Leaders monitored their BlackBerries through their talks to keep up with fast-moving events in Greece, according to U.K. officials.

As European Central Bank President Mario Draghi cut interest rates and warned a recession is looming, the euro area may find some support after Russian President Dmitry Medvedev said the BRICS group of emerging markets is ready to stump up cash. European policy makers are looking beyond their borders to more than double the spending strength of their 440 billion-euro ($608 billion) rescue fund.

‘Preserving the Euro’

“We have to help preserve one of the world’s leading currencies,” Medvedev said. “We are all interested in preserving the euro.”

Brazil, Russia, India, China and South Africa would contribute to Europe in line with their current voting rights at the International Monetary Fund, Medvedev said. In return, they expect Western powers to give them a bigger say at the Washington-based lender, he said.

The IMF may receive a broader fillip after the U.K. backed an increase in the fund’s $391 billion war chest to give it a bigger crisis-fighting role. Options include raising the amount of Special Drawing Rights, opening a trust fund or not rolling back a 2009 cash increase, an EU official said.

Greek Aid

In a draft of a statement to be released today, officials also pressed the fund to “expedite” a new liquidity line for economies “with strong policies and fundamentals facing” outside shocks.

“When the world is in crisis, it’s right that you consider boosting the IMF,” U.K. Prime Minister David Cameron said.

After browbeating Papandreou on the eve of the talks, Merkel returned to the theme yesterday by saying Europe will withhold 8 billion euros of fresh aid until Greece meets its fiscal promises.

“What counts for us is actions,” Merkel said. “So far, I don’t really see those actions.”

Greece, whose two-year bond yield topped 100 percent yesterday, faces the “real danger” of a disorderly default, risking a run on banks at home and abroad, billionaire investor George Soros said in an speech in Budapest yesterday.

Italian Efforts

Merkel and Sarkozy also teamed up to urge Italian Prime Minister Silvio Berlusconi, who oversees the euro area’s second largest debt load after Greece, to forge ahead with budget cuts. In a sign investors are unimpressed with the emergency steps he has taken so far, they yesterday pushed Italian bond yields to a euro-era record.

The IMF may be tasked with monitoring Italy’s budget- cutting efforts, an EU official said. Berlusconi’s government may first have to request the surveillance.

“For me, Europe is all about Italy right now,” said Jurrien Timmer, who co-manages Fidelity Investments’ $219 million Global Strategies Fund in Boston. “The real issue is contagion, and Italy seems to be the line in the sand. Italy is really too big to fail. It’s the third largest bond market in the world, and it needs to be ring-fenced.”

To contact the reporters on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net; James G. Neuger in Brussels at jneuger@bloomberg.net

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

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U.S. Payrolls Rose in October; Jobless Rate 9%

By Shobhana Chandra - Nov 4, 2011 7:48 PM GMT+0700

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Nov. 4 (Bloomberg) -- U.S. payrolls rose 80,000 in October at the slowest pace in four months, following gains in the prior two months that were revised up by 102,000, Labor Department figures showed today in Washington. The unemployment rate fell to a six-month low of 9 percent from 9.1 percent even as the labor force expanded. Lizzie O'Leary and Michael McKee report on Bloomberg Television's "In the Loop." (Source: Bloomberg)

U.S. employment climbed in October at the slowest pace in four months, illustrating the “frustratingly slow” progress cited by Federal Reserve Chairman Ben S. Bernanke this week.

The 80,000 increase in payrolls was less than forecast and followed gains in the prior two months that were revised up by 102,000, Labor Department figures showed today in Washington. The unemployment rate fell to a six-month low of 9 percent from 9.1 percent even as the labor force expanded.

The crisis in Europe and looming deadline on U.S. budget talks may be prompting companies to hold back on concern failure to reach resolutions will put the global recovery at risk. Fed policy makers project the jobless rate won’t drop under 8 percent until 2013 at the earliest, one reason why Bernanke this week said additional stimulus “remains on the table.”

“We’re making progress at a very slow pace,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected an 85,000 gain in payrolls. “It indicates continued consumer spending, getting a little better over time. The labor market is consistent with moderate economic growth.”

The median estimate in a Bloomberg News survey was for a gain of 95,000. Payroll estimates of 91 economists ranged from increases of 50,000 to 150,000.

Stock-index futures trimmed earlier losses and Treasuries fell after the report. The contract on the Standard & Poor’s 500 Index expiring next month fell 0.2 percent to 1,252.8 at 8:46 a.m. in New York. The yield on the benchmark 10-year note climbed to 2.10 percent from 2.07 percent late yesterday.

Long-term Unemployment

The data also showed a pickup in hourly earnings, a drop in long-term joblessness and a decrease in so-called under- employment.

Sustained payroll increases of around 150,000 a month are needed to bring unemployment down about half a percentage point over a year, according to Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

Private hiring, which excludes government agencies, rose to 104,000 after a revised gain of 191,000. It was projected to rise by 125,000, the survey showed.

The unemployment rate was forecast to hold at 9.1 percent, according to the survey median. Estimates ranged from 8.9 percent to 9.2 percent. The jobless rate has exceeded 8 percent since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948.

Payroll Revisions

The payroll revisions for September and August put those numbers closer to the bigger gains in hiring seen in the separate survey of households. The latter showed a 277,000 gain in employment for October, raising the odds that last month’s payroll figures will also be revised up.

Factory payrolls increased by 5,000, the first increase in three months.

Employment at service-providers increased 90,000 after a 129,000 gain. Construction companies cut 20,000 jobs and retailers added 17,800 employees, the most in three months.

Government payrolls decreased by 24,000. State and local governments cut employment by 22,000, while the federal government trimmed 2,000 workers.

Faster hiring would spur bigger gains in incomes and bolster confidence, helping cushion against declines in home prices and allowing households to sustain their spending. Purchases grew at a 2.4 percent annual rate in the third quarter and the economy expanded at a 2.5 percent pace, the Commerce Department reported last week.

Holiday Hiring

Retailers like Macy’s Inc. (M) are adding staff, while companies including Whirlpool Corp. (WHR) plan to cut workers, evidence of an uneven economic recovery.

Macy’s is among those betting last quarter’s gain in spending will be sustained during the November-December holiday shopping season. The second-biggest U.S. department-store chain is stepping up hiring of mostly part-time employees by 4 percent for the period. Kohl’s Corp. (KSS), the fourth-largest U.S. department-store chain, plans to add more than 40,000 holiday workers, a 5 percent gain from 2010.

Whirlpool, the world’s largest maker of household appliances, said it planned to cut more than 5,000 jobs and trimmed its earnings forecast. The reductions will be primarily within North America and Europe and include the closure of the refrigeration manufacturing site in Fort Smith, Arkansas, by mid-2012.

‘Challenging’ Economy

“We are taking necessary actions to address a much more challenging global economic environment,” Chief Executive Officer Jeff Fettig said in a statement on Oct. 28.

Average hourly earnings rose 0.2 percent to $23.19, while hours worked held at 34.3 hours, today’s report showed.

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 16.2 percent from 16.5 percent.

The report also showed a decrease in long-term unemployed Americans. The number of people unemployed for 27 weeks or more decreased as a percentage of all jobless, to 42.4 percent from 44.6 percent. It was last lower in November 2010.

Temporary Help

The number of temporary workers increased 15,000. Payroll at temporary-help agencies often slow as companies seeing a steady increase in demand take on permanent staff.

Uncertainty over the amount and speed of reductions in government spending is weighing on businesses as the Nov. 23 deadline looms for the congressional supercommittee charged with cutting at least $1.2 trillion from the budget deficit. In the fiscal year ended Sept. 30, the government reported the second- highest annual deficit on record, $1.3 trillion.

Fed policy makers, who refrained from taking additional steps to ease monetary policy at their meeting this week, said in a statement that there are “significant downside risks to the economic outlook.”

The central bank’s latest forecasts showed less optimism about the economy and employment. Policy makers project growth next year of 2.5 percent to 2.9 percent, with unemployment in the 8.5 percent to 8.7 percent range. Joblessness in 2013 is forecast at 7.8 percent to 8.2 percent.

Additional stimulus “remains on the table,” Bernanke said at a Nov. 2 press conference in Washington, declining to specify conditions that would prompt a move. “While we still expect that economic activity and labor market conditions will improve gradually over time, the pace of progress is likely to be frustratingly slow.”

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Groupon Raises 30% More Than It Sought After Pricing U.S. IPO Above Range

By Lee Spears and Douglas MacMillan - Nov 4, 2011 12:50 PM GMT+0700

Groupon Inc. raised $700 million in its initial public offering, 30 percent more than it sought, valuing the biggest online-coupon provider at about $12.7 billion.

The Chicago-based company sold 35 million shares at $20 each, according to data compiled by Bloomberg, the biggest IPO by a U.S. Internet company since Google Inc. (GOOG) raised $1.9 billion in its 2004 initial offering. Groupon had offered 30 million shares for $16 to $18 apiece, or as much as $540 million.

Groupon’s IPO attracted interest even as internal missteps, unprofitability and an expensive valuation compared with its peers made some investors skeptical. The size and price were designed to benefit from a surge in first-day buying, said Sam Hamadeh, chief executive officer of New York researcher PrivCo.

“This is as much of a marketing event tonight and tomorrow as a financing event,” Hamadeh said after the pricing late yesterday. “Engineering a pop for Friday is positive buzz which the company needs.”

The shares will start trading today on the Nasdaq Stock Market under the symbol GRPN.

While Groupon said in its prospectus that it won’t need to use the proceeds from the IPO for at least a year and has no urgent cash needs, the company owed almost twice as much to merchants at the end of September as it held in cash. Marketing costs rose 37 percent in the latest quarter, four times as quickly as its cash pile.

Amazon, LivingSocial

There are also competitive pressures. Amazon.com Inc. (AMZN), Google Inc. and LivingSocial all offer group discounts and are giving more favorable terms to merchants. That’s led Groupon to accept lower margins to avoid losing business.

Advisers to Groupon based the price range for the IPO on a projection that the company will have sales of about $2.1 billion next year, people familiar with the matter said last week. The $17 midpoint valued the company at $10.8 billion, or about 5 times that sales prediction, making Groupon more expensive than Amazon.com, the world’s largest online retailer, which traded at about 1.5 times estimated 2012 revenue yesterday.

Co-founders Andrew Mason, Bradley Keywell and Eric Lefkofsky will collectively own more than a third of Groupon’s common stock, according to the prospectus. They will also share more than 58 percent of the voting power by virtue of their Class B shares, which have 150 votes each. Class A stockholders get a single vote.

Lefkofsky, the chairman, told Bloomberg News in June that he expected the company to be “wildly profitable,” a statement the company later asked investors to disregard in a regulatory filing. Company executives are forbidden from talking about financials during the so-called quiet period before an IPO.

Restated Results

In September, the company restated its revenue figures to exclude sales passed on to merchants and announced the departure of its second operating chief in six months. It had a net loss of $214.5 million for the first three quarters of 2011.

Groupon floated a record-low percentage of its total outstanding shares among U.S. Internet companies, helping to stoke demand. Only 4.7 percent of the stock was made available to the public, based on the offering terms. That’s less than in any U.S. Internet company IPO of more $200 million since at least 2000, Bloomberg data show.

All of the shares in the offering were sold by Groupon, and net proceeds at the midpoint of the marketed range were estimated at $479 million.

Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse Group AG led the IPO.

Groupon has granted the underwriters a 30-day option to purchase up to an additional 5.25 million shares of Class A common stock to cover over-allotments, if any, the company said in a statement.

To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Douglas Macmillan in New York at dmacmillan3@bloomberg.net

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

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Asia Stocks Snap Four-Day Loss Streak as ECB Cuts Rates, Greece Backs Down

By Jonathan Burgos - Nov 4, 2011 4:28 PM GMT+0700

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Nov. 4 (Bloomberg) -- Amit Rajpal, a Hong Kong-based portfolio manager at Marshall Wace LLP, talks about his investment strategy for China's banks. Rajpal also discusses Europe's debt crisis and banking industry. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Asian stocks rose for the first time in five days as Greece scrapped a plan to hold a referendum on a bailout package and the European Central Bank cut interest rates, reducing concern the debt crisis will spur a credit crunch.

HSBC Holdings Plc (HSBA), Europe’s No.1 lender by market value, climbed 3.2 percent in Hong Kong. Komatsu Ltd. (6301), Asia’s largest maker of construction equipment by market value, surged 6.9 percent after a report showed orders at American factories increased in September. China Petroleum & Chemical Corp. (386), China’s biggest oil refining company by sales, led the nation’s energy companies higher on speculation the government may allow the mainland’s fuel producers to adjust prices on their own.

“There’s less risk today because people are little less concerned that Greece will run on its own direction,” Michael Vogelzang, chief investment officer at Boston Advisors LLC, told Bloomberg Television. “It sounds like there is some progress and the markets moved up. We think the ECB moves were helpful. It’s better to aggressively attack these issues than sit idly by.”

The MSCI Asia Pacific Index increased 2.5 percent to 120.33 as of 6:25 p.m. in Tokyo, snapping four days of losses. The measure sank 3.5 percent this week, the most since Sept. 23. Stocks tumbled in the last four days after Prime Minister George Papandreou announced on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on Europe’s rescue pact.

Japan’s Nikkei 225 Stock Average gained 1.9 percent as it resumed trading following a holiday yesterday. South Korea’s Kospi Index climbed 3.1 percent. Australia’s S&P/ASX 200 jumped 2.6 percent. Hong Kong’s Hang Seng Index (HSI) increased 3.1 percent, while China’s Shanghai Composite Index added 0.8 percent.

‘Doves Increasing’

Futures on the Standard & Poor’s 500 Index were little changed today, erasing a loss of as much as 0.4 percent. In New York, the index climbed 1.9 percent yesterday, as ECB officials unanimously lowered benchmark interest rate by 25 basis points to 1.25 percent.

“The ECB cut interest rates and the doves are increasing in the U.S. Federal Reserve Board,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Expectations that monetary policies in Europe and the U.S. will be further relaxed would boost stock markets. We still don’t know Greece will accept Europe’s bailout plan so we need to determine this point.”

Financial stocks were the biggest contributors to the MSCI Asia Pacific Index’s advance today after Greek Finance Minister Evangelos Venizelos said the nation won’t hold a referendum.

HSBC, StanChart

HSBC climbed 3.2 percent to HK$67.60 in Hong Kong. Standard Chartered Plc (STAN), the U.K.’s second-largest lender by market value, gained 2.8 percent to HK$177.70.

Construction machinery makers and other industrial companies advanced after a report showed factory orders in the U.S. unexpectedly increased in September.

Komatsu surged 6.9 percent to 1,970 yen. Hitachi Construction Machinery Co., a maker of bulldozers and crawler cranes, climbed 5.6 percent to 1,537 yen. Fanuc Corp. (6954), which makes industrial robots, rose 4.3 percent to 12,880 yen.

Gauges of raw material producers and energy companies led the advance among the 10 industry groups in the Asian benchmark index after a gauge of six metals including copper and aluminum rose for a second day in London yesterday. Crude oil for December delivery gained 1.7 percent in New York.

China Fuel Prices

BHP Billiton Ltd. (BHP), the world’s biggest mining company, advanced 3.9 percent to A$37.95 in Sydney. Glencore International Plc, the world’s largest commodities trader, rose 2.7 percent to HK$54.30 in Hong Kong. Jiangxi Copper Co., China’s No. 1 producer of the metal, increased 5.1 percent to HK$19.44.

China’s energy companies rallied in Hong Kong after the China Securities Journal reported the mainland government, which controls fuel prices, would allow oil refiners to independently make “appropriate” price changes.

Sinopec, as the oil refiner is known, surged 8.3 percent to HK$7.92. PetroChina Co., the nation’s biggest energy company, advanced 3.9 percent to HK$10.04.

“Oil companies will for the first time be allowed to adjust prices by themselves, which could certainly help them cut refining losses,” said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co. “The new mechanism is a step forward from the old one, providing more certainty and transparency to the market and oil companies.”

Missed Estimates

The MSCI Asia Pacific Index declined 15 percent this year through yesterday, compared with a 0.3 percent gain by the S&P 500 and a 12 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 12.5 times estimated earnings on average, compared with 12.7 times for the S&P 500 and 10.4 times for the Stoxx 600.

Asian stocks have fallen this week as companies from Panasonic Corp. to Sony Corp. (6758) predicted losses. Of the 430 companies in the regional benchmark index that reported results since Oct. 11, 205 missed analysts’ estimates, while 150 exceeded expectations, according to data compiled by Bloomberg.

Sony, Japan’s biggest exporter of consumer electronics, tumbled 7.9 percent to 1,400 yen, the most since March 15. The company predicted a full-year loss of 90 billion yen ($1.2 billion) because of a strong yen, waning television sales and flooding in Thailand.

“The fundamental issue is not external factors, but rather the need to create products and a business model that can differentiate Sony from the competition,” Yoshiharu Izumi, an analyst with JPMorgan Chase & Co. said in a report. He cut the company’s rating to “neutral” from “overweight.”

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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Greek ‘Shocker’ Stiffens Irish, Portuguese Resolve

By Dara Doyle and Joao Lima - Nov 4, 2011 7:01 AM GMT+0700

As Greece dices with its status in the euro region, Ireland and Portugal say they will do whatever it takes to remain wedded to the single currency.

European leaders raised the specter of a Greek exit this week when Prime Minister George Papandreou called for a referendum on the country’s latest bailout package. While he later signaled there would be no vote, governments in Dublin and Lisbon spent yesterday distancing themselves from Greece and proving their mettle as euro region members.

“If Greece left the euro region, they’d do everything to keep the currency region together,” Christoph Weil, a senior economist at Commerzbank AG in Frankfurt, said in an interview. “The example of Greece would be such a shocker that nobody else would want to follow voluntarily.”

Traditionally among the continent’s poorest countries, European Union membership helped lift the Irish, Greeks and Portuguese out of poverty before the euro cemented their new prosperity. All three have since been forced to turn to the EU and International Monetary Fund for financial aid.

Irish Prime Minister Enda Kenny said Nov. 2 that not fulfilling the bailout program would be a “disaster” for a country relying on overseas investment to escape the worst recession in its modern history. Portuguese premier Pedro Passos Coelho said his country doesn’t need a vote on the latest European rescue plan inked last week.

Not Greece

“We do not want to be confused with what is going on in Greece,” Passos Coelho said in comments broadcast yesterday by television station SIC Noticias.

UBS AG (UBS) estimates a weak nation leaving the currency would cost as much as 11,500 euros ($15,819) for every person in the country, or 50 percent of gross domestic product in the first year alone. It would probably amount to as much as 4,000 per person in subsequent years, the bank said in a Sept. 6 report.

In Portugal, which joined the EU in 1986, income per head has risen about 30 percent since 2000. In Ireland, a member since 1973, it’s up 25 percent in the same time, even after the economy shrank by about 15 percent in the past three years.

“We’re too small a country to stand alone,” Brendan Hanratty, 65, a semi-retired farmer, said in Dublin. “For a small country, I don’t think they would be able to run the country without the euro. If Europe hadn’t given us the cash, we wouldn’t have the roads or the motorways, we’d have nothing.”

Greek Opposition

Papandreou reached out to the opposition yesterday about setting up a transitional government, indicating an agreement would secure aid and remove the need for a referendum on the euro. Finance Minister Evangelos Venizelos, who had opposed Papandreou’s vote plan, ruled out a plebiscite.

Ireland sought an international bailout in November when its banking crisis became too big to handle alone, six months after Greece’s first rescue package. Portugal then asked for aid after investors grew concerned that its economy wouldn’t grow quickly enough to allow it to pay debts.

Since then, both countries have hit the targets set for them, while Papandreou’s government struggled as riots broke out across Athens in protest at austerity measures. Neither Ireland nor Portugal has witnessed any serious violence.

“We should continue in the euro,” said Ana Maria Negrao, 66, a retiree, speaking in Lisbon. “It would be a disaster for the country to return to the escudo.”

Not Mediterranean

Both Ireland and Portugal have sought to define themselves by their differences with Greece.

“We have succeeded in the last couple of months in breaking the perception that somehow or another we were some kind of displaced Mediterranean country in the North Atlantic,” Irish Finance Minister Michael Noonan said in a speech in Dublin on Oct. 27. “We are not. We are a North European economy.”

Noonan said that any debt restructuring, let alone a euro exit, may hurt Ireland’s ability to attract overseas investment. Internet search engine Google Inc. (GOOG) and drugmaker Pfizer Inc. are among the U.S. companies operating in Ireland, driving the export growth that’s keeping the economy afloat after a real estate bubble burst in 2008.

“One has to keep in mind that the Greek situation is exceptional and unique,” European Central Bank President Mario Draghi said yesterday after he announced a surprise cut in interest rates. “We’re confident that the Irish government could comply with the measures announced and the Irish government said they would do whatever it takes.”

To contact the reporter on this story: Dara Doyle at ddoyle1@bloomberg.net; Joao Lima in Lisbon at jlima1@bloomberg.net;

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net

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Sony Falls Most in Eight Months After Forecasting Fourth Annual Net Loss

By Kyung Bok Cho and Kazuyo Sawa - Nov 4, 2011 4:14 PM GMT+0700

Sony Corp. (6758), Japan’s largest exporter of consumer electronics, fell the most in almost eight months in Tokyo trading after forecasting a full-year loss because of a strong yen, waning TV sales and flooding in Thailand.

Sony declined 7.9 percent, the biggest drop since March 15, to 1,400 yen at the close of trading today. The benchmark Nikkei 225 Stock Average gained 1.9 percent. Markets were closed yesterday for a holiday.

The company, based in Tokyo, said Nov. 2 it will lose 90 billion yen ($1.2 billion) in the year ending March, compared with a previous projection for a 60 billion yen profit, as it contends with competition from Apple Inc. and Samsung Electronics Co. The loss will be Sony’s fourth in a row.

“The fundamental issue is not external factors, but rather the need to create products and a business model that can differentiate Sony from the competition,” Yoshiharu Izumi, an analyst with JPMorgan Chase & Co. said in a report. He cut the company’s rating to “neutral” from “overweight.”

The world’s No. 3 TV maker slashed television sales targets after the yen reached a postwar high and floods in Thailand cut production. The maker of Bravia TVs lowered its annual sales projection to 20 million televisions from 22 million. It is also taking a 50 billion-yen charge for streamlining its TV operation.

Sony cut annual sales targets for personal computers, compact cameras and Blu-ray DVD players. The company has declined 52 percent this year in Tokyo trading, compared with a 15 percent decline by the index.

“Revised guidance is worse than expected,” Yuji Fujimori, a Tokyo-based analyst at Barclays Plc, wrote in a note to clients yesterday. “Sony’s share price upside potential has diminished, even allowing for earnings recovery capacity in the next fiscal year.”

Fujimori lowered his rating on Sony to “ equal weight” from “overweight”. His target price was cut to 1,600 yen from 2,500 yen.

To contact the reporters responsible for this story: Kyung Bok Cho at kcho7@bloomberg.net; Kazuyo Sawa in Tokyo at ksawa3@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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