Economic Calendar

Thursday, January 5, 2012

Oil Trades Near Eight-Week High on Concern Iran Supplies May Be Restricted

By Grant Smith and Ben Sharples - Jan 5, 2012 8:42 PM GMT+0700

Jan. 5 (Bloomberg) -- Simon Wardell, director and oil analyst at IHS CERA, discusses Nigerian oil supplies, crude prices and the prospect of Europe imposing an embargo on Iranian oil. He speaks with Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)

Jan. 5 (Bloomberg) -- Ric Deverell, head of commodities research at Credit Suisse Group AG, talks about the outlook for global commodity markets and food prices. Deverell speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

Oil traded near the highest in almost eight weeks in London as speculation that sanctions against Iran will curb crude supplies countered concern that Europe’s debt crisis will worsen and slow demand.

European Union governments are moving closer to halting oil purchases from the Islamic republic in response to its nuclear program. A ban by the EU, which received 18 percent of Iran’s crude oil and condensate exports in the first half of last year, could send Brent crude to $125 a barrel, according to Societe Generale SA. Concern the European crisis will spread increased after Greece said deeper income cuts are the only way for the country to keep the euro and avert economic collapse.

“What we’re seeing is a fundamental tug-of-war, if you like, between two competing forces,” Ric Deverell, head of commodities research for Credit Suisse Group AG said in a Bloomberg Television interview in Singapore. “We have the oil market in a volatile range at the moment that’s likely to persist for some time.”

Brent oil for February settlement was unchanged at $113.70 a barrel on the London-based ICE Futures Europe exchange as of 1:39 p.m., after rising to $114.64 a barrel, the highest intraday level since Nov. 14.

On the New York Mercantile Exchange, crude for February delivery was at $102.9, 29 cents lower, in electronic trading. Yesterday the contract climbed to $103.22, the highest close since May 10. Prices advanced 8.2 percent in 2011, their third annual increase.

The European benchmark contract’s premium to New York- traded West Texas Intermediate was at $10.77 after widening to $11.25, the most since Dec. 16. The spread surged 14 percent yesterday and rose to a record $27.88 on Oct. 14 as the uprising in Libya choked off supplies of similar-quality crude.

Iran Threat

French Foreign Minister Alain Juppe said yesterday he hopes Europe will decide to embargo Iranian oil as part of sanctions against the country’s nuclear program. EU foreign ministers aim to announce harsher sanctions on Iran’s energy and banking industries at their next meeting on Jan. 30, EU spokesman Michael Mann said in Brussels yesterday. Greece lifted its objections to an embargo Jan. 3.

Crude is trading above $100 a barrel for a fourth day in New York after European leaders moved to increase pressure on Iran and the Middle East producer threatened to retaliate by shutting the Strait of Hormuz, a transit point for a fifth of the world’s crude. The risk of supply cuts is competing with the prospect of weakening demand should Europe’s financial crisis afflict global economic growth.

Strait of Hormuz

An EU boycott would require about 600,000 barrels a day of replacement supply from Saudi Arabia, depleting the country’s spare capacity, according to Mike Wittner, Societe Generale’s head of oil market research.

A halt of Iranian supplies into Europe could be offset by the restoration of output from Libya. Libya’s crude production now exceeds a million barrels a day and will return to normal by the middle of the year, Nuri Berruien, chairman of state-run National Oil Corp., said Dec. 24.

The head of Iran’s army, Ataollah Selhi, warned the U.S. on Jan. 3 against sending an aircraft carrier back to the Persian Gulf after the USS John C. Stennis traveled through the Strait of Hormuz. Iran denies that it is seeking to build atomic weapons and says it’s pursuing nuclear technology to generate electricity.

U.S. crude inventories dropped 4.43 million barrels to 334.5 million in the seven days ended Dec. 30, according to data from the industry-funded American Petroleum Institute yesterday. An Energy Department report today will probably show they declined 1 million barrels (DOEASCRD) to 326.5 million, according to the median of 13 analyst estimates in a Bloomberg News survey.

‘Global Weakness’

Gasoline supplies rose 3.38 million barrels, the API data showed. The Energy Department report will probably show they increased 1 million barrels, according to the survey (DOEASMGS). Stockpiles of distillate fuel, a category that includes diesel and heating oil, climbed 5.25 million barrels compared with a projected 1 million barrel gain.

“We’re going to see further global weakness in the first half of the year,” said Jeremy Friesen, a commodity strategist at Societe Generale in Hong Kong who forecasts New York crude will average $98.50 a barrel in the first half of the year. “The U.S. data could continue to be good near term, but ultimately the U.S. isn’t going to decouple from Europe.”

France plans to sell as much as 8 billion euros ($10.4 billion) of debt today in the country’s first test this year of investor appetite for its bonds as credit companies threaten to cut the nation’s AAA rating.

Figures from the U.S. Labor Department tomorrow may show the economy generated 150,000 jobs in December after 120,000 the prior month, according to economists surveyed by Bloomberg News. The unemployment rate rose to 8.7 percent after falling to 8.6 percent a month earlier, according to the forecasts.

To contact the reporters on this story: Ben Sharples in Melbourne at; Grant Smith in London at

To contact the editor responsible for this story: Stephen Voss on


Initial Jobless Claims in U.S. Fall to 372,000

By Alex Kowalski - Jan 5, 2012 8:30 PM GMT+0700

Fewer Americans filed claims for unemployment insurance payments last week, showing the labor market is starting 2012 on better footing than a year earlier.

Applications for jobless benefits (INJCJC) decreased 15,000 in the week ended Dec. 31 to 372,000, Labor Department figures showed today. The median estimate of 38 economists in a Bloomberg News survey forecast 375,000 claims. The average over the past four weeks declined to the lowest level in more than three years.

The decrease in firings indicates employers may be getting more comfortable with their headcounts and their economic outlooks as the year begins. Economists forecast a Labor Department report tomorrow will show hiring picked up and joblessness held below 9 percent in December.

“The trend continues to be one of improving numbers on the labor market front,” Millan Mulraine, a senior U.S. strategist at TD Securities in New York, said before the report. “We are distancing ourselves from the period of uncertainty which we had over the late summer months and the upswing in claims that came with it.”

Claims estimates ranged from 365,000 to 390,000 in the Bloomberg survey. The Labor Department initially reported the prior week’s applications at 381,000.

A Labor Department official today said there were no special issues affecting last week’s figures.

The four-week moving average (INJCJC4), a less-volatile measure, decreased to 373,250, the lowest since June 2008, from 376,500.

Continuing Claims

The number of people continuing (INJCSP) to collect jobless benefits fell by 22,000 in the week ended Dec. 24 to 3.6 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 5,400 to 3.5 million in the week ended Dec. 17.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, dropped to 2.8 percent in the week ended Dec. 24, today’s report showed. Forty states and territories reported an increase in claims, while 13 had a decrease.

Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.

“Conditions in the labor market seemed to have improved somewhat,” central bank policy makers noted in the minutes of the Federal Open Market Committee’s Dec. 13 gathering released this week. “Initial claims for unemployment insurance moved down, on net, since early November but were still at a level consistent with only modest employment gains, and indicators of job openings and businesses’ hiring plans were little changed.”

More Hiring

Employers probably increased payrolls by 150,000 workers in December after adding 120,000 the prior month, according to the median forecast of economists surveyed by Bloomberg. The unemployment rate rose to 8.7 percent from 8.6 percent, the lowest level since March 2009, the economists project.

Job cuts announced by U.S. employers rose in December from a year earlier, according to another report today. Planned firings (CHALTOTL) climbed 31 percent to 41,785 last month from 32,004 in December 2010, which was the lowest monthly total in 10 years, according to Chicago-based Challenger, Gray & Christmas Inc.

Government budget cuts and diminished business prospects are still leading companies to trim head counts. Boeing Co. (BA) announced yesterday it would close a facility in Wichita, Kansas, that employs more than 2,160 workers. Job cuts will begin in the third quarter of 2012, the Chicago-based planemaker said in a statement.

To contact the reporter on this story: Alexander Kowalski in Washington at

To contact the editor responsible for this story: Christopher Wellisz at


Yahoo CEO Aims at Turnaround as Outlook Dims

By Brian Womack - Jan 5, 2012 12:01 PM GMT+0700

As president of EBay Inc. (EBAY)’s PayPal unit, Scott Thompson used an eye for detail and a push into mobile payments to more than double revenue and boost the user base to more than 100 million. He’ll face a bigger challenge at the helm of Yahoo! Inc (YHOO).

Thompson, 54, must lure users and advertisers back to a company besieged by declining sales and shrinking market share. His appointment yesterday as chief executive officer makes it less likely that Yahoo, the biggest U.S. Web portal, will continue to pursue strategic options such as selling the entire company, said Clayton Moran, an analyst at Benchmark Co.

“This makes it clear that they want to remain independent and try to drive a turnaround, which as we’ve seen over the years has been very difficult to achieve,” Moran said.

Thompson, whose past jobs include overseeing global technology for Visa Inc. (V), is an accountant and engineer who helped turn PayPal’s online payments into EBay’s fastest-growing business. Still, he may lack the advertising chops he’ll need to reverse fortunes at Yahoo, once the largest Internet-search provider, now an also-ran in search behind Google Inc. (GOOG) and a laggard in social media to Facebook Inc.

“He’s not a proven media executive,” Moran said. “Yahoo is an advertising-driven business. So I’m a bit surprised that they again went outside the industry to tap a new leader.”

Yahoo said yesterday Thompson will join the company Jan. 9, after leading PayPal since January 2008. Thompson steps in after a failed turnaround effort by former Yahoo CEO Carol Bartz, who was fired in September after less than three years at the helm.

Leveraging Talent

In an interview yesterday, Thompson said he enjoys working through complex problems and breaking down the challenges to be tackled. Yahoo already has plenty of folks with experience in fields such as advertising, he said.

“My job is to leverage all of that talent, experience that exists in the organization already,” he said. “I know there are some things we need to change and fix, and I love it. I think that’s part of what attracted me to come here -- that it’s going to be fast-paced, fun, hard, complex with a great team of people.”

That focus should help Yahoo execute Thompson’s plan to turn around its core assets, said Herman Leung, an analyst at Susquehanna Financial Group, who has a “neutral” rating on the stock and doesn’t own it.


“Scott is actually different from the predecessor CEOs, because the other CEOs were actually more big-picture focused and less hands-on,” he said. “I think Scott is probably the most hands-on and execution-focused type CEO that Yahoo can get.”

On a conference call yesterday, Thompson said his priorities are boosting revenue and putting the company at the forefront of innovation. Yahoo will turn its attention increasingly to mobile devices, such as tablet computers and smartphones, Thompson said. Rivals such as Facebook and Google likewise aim to take advantage of the shift to mobile computing.

“I just won’t rest until we’ve positioned this business and start to succeed,” Thompson said in the interview.

When it ousted Bartz, Yahoo undertook a review of its strategic options. One decision that is still on the “front burner” is a possible divestment of the company’s Asian assets, including its stakes in China and Japan, Moran said.

The company has been under investor pressure to realize value from its international assets, including a stake of about 40 percent in Alibaba Group Holding Ltd. (ALIBABZ) and co-ownership of Yahoo Japan with Softbank Corp. (9984) In October, Yahoo estimated the Alibaba stake was worth about $14 billion on a pretax basis.

Jack Ma ‘Interested’

After Sunnyvale, California-based Yahoo announced the strategic review, its advisers received inquiries from “multiple parties” interested in various unspecified options, according to a September memo to employees from co-founder Jerry Yang. Later, Alibaba Chairman Jack Ma said he was “very interested” in buying Yahoo.

Yahoo also has considered offers for a minority stake from bidders including TPG Capital and a group led by Silver Lake, people familiar with the matter said in November.

Under Bartz, who joined Yahoo in 2009, the company lost market share in the display-advertising businesses, an area that it has traditionally led. The company’s piece of the $12.3 billion U.S. market fell to 13.1 percent in 2011, from 14.4 percent the previous year, according to EMarketer Inc. The New York-based researcher said Yahoo lost its No. 1 position to Facebook last year.

Revenue Challenge

While Yahoo has been cutting costs, revenue growth has eluded the company as users drift to other sites where marketers are spending money. Yahoo’s third-quarter sales (YHOO), excluding revenue passed on to partner sites, declined 4.6 percent to $1.07 billion. U.S. Internet surfers spent 9.3 percent of their online time on Yahoo sites in November, down from 11 percent two years earlier, according to ComScore Inc. (SCOR)

Yahoo shares (YHOO) fell 3.1 percent to $15.78 at the close in New York yesterday. The stock has gained 22 percent since Bartz’s departure on Sept. 6.

PayPal, owned by San Jose, California-based EBay, has services that help retailers and individuals exchange funds for purchases or payments, even without a credit card. As president, Thompson contributed to an increase of the payment service’s users from 50 million to more than 100 million, helping it close in on a goal of revenue as high as $7 billion by 2013, compared with about $3.3 billion (EBAY) in 2010.

Thompson also engineered the company’s expansion to online daily deals and mobile payments. His Web-industry experience may give him a better chance for success than Bartz, whose previous firm specialized in software for engineers and architects, said Sameet Sinha, an analyst at B. Riley & Co. in San Francisco.

“He’s from the Internet industry,” Sinha said. “He is always around those sort of people who are in advertising. He can easily learn. Will it take longer to learn? Sure.”

To contact the reporter on this story: Brian Womack in San Francisco at

To contact the editor responsible for this story: Tom Giles at


China to Start U.S. Channel in Cultural Push

By Mark Lee - Jan 5, 2012 3:31 PM GMT+0700

China will start airing a 24-hour television channel to homes in New York in the first quarter, the nation’s latest effort to expand state-controlled media overseas as it seeks to wield greater cultural influence.

“It’s our role to propagate information about China overseas,” Yan Xinxia, a director at the State Council Information Office’s China Internet Information Center, told reporters in Hong Kong today. The center will partner with CMMB Vision Holdings Ltd. (471) for the TodayChina channel, which will be distributed free using digital TV technology in New York City.

China is expanding the reach of state media overseas and strengthening control of local television and Internet content as President Hu Jintao seeks to curb the spread of foreign influence on Chinese society. The West is using cultural means to divide China, which needs to be alert to this threat, Hu said in comments published this week.

“International forces are trying to Westernize and divide us by using ideology and culture,” Hu said in an October speech that was reprinted as a signed essay in Qiushi, a magazine backed by the ruling Communist Party, and published on the government’s website on Jan. 1.

The new channel will feature news and entertainment content in English and Chinese with English subtitles, CMMB Vision Chairman Charles Wong said. China’s government supports state media projects to expand overseas, Yan said. The China Internet Information Center offers content in 10 languages, she said.

CMMB Vision climbed 1.6 percent to 6.4 Hong Kong cents at the close of Hong Kong trading. The stock has lost (471) 26 percent in the past year, compared with a 21 percent decline for the benchmark Hang Seng Index.

Following Xinhua

In 2010, China’s state-owned Xinhua News Agency started broadcasting a 24-hour TV channel overseas and the Ministry of Commerce funded production of commercials aired on Time Warner Inc.’s CNN and the British Broadcasting Corp. that year as the government sought a greater voice internationally.

Broadcasters in China must cut the number of entertainment shows during prime time by more than two-thirds, Xinhua reported this week, citing the State Administration of Radio, Film and Television. The government is seeking to assert more control of the media and Internet as it grapples with rising social unrest over work conditions and government corruption.

Internet Surveillance

The country with the most cultural influence will gain a competitive advantage in a globalized world, in which people are exposed to many ideologies and values, Hu said in the speech that Qiushi published as an essay.

China’s system of Internet surveillance, also known as the “Great Firewall,” requires domestic operators including Baidu Inc. (BIDU) and Tencent Holdings Ltd. (700) to self-censor content deemed unacceptable to the government, and blocks overseas services such as Google Inc. (GOOG)’s YouTube, Facebook Inc. and Twitter Inc.

China had 485 million Internet users at the end of June, according to government data. That’s more than the combined populations of the U.S. and Japan.

The China Internet Information Center, founded in 2000, operates the portal, and has more than 40 employees working to produce multimedia content including video, Yan said.

To contact the reporter on this story: Mark Lee in Hong Kong at

To contact the editor responsible for this story: Michael Tighe at


China Telecom May Expand to France, Germany After Starting U.K. Service

By Bloomberg News - Jan 5, 2012 8:47 AM GMT+0700

China Telecommunications Corp. (728), the nation’s largest fixed-line phone company, plans to expand into more European markets after starting its first overseas wireless service in the U.K.

The service, aimed at Chinese residents, will begin in the U.K. by the end of March and expand to Germany and France if it’s successful, Ou Yan, managing director for China Telecom Europe, said in an e-mail yesterday. There are 2 million Chinese living in western Europe, Liu Changhai, the China Telecom executive responsible for regional development, said yesterday.

In the U.K., China Telecom will target the more than half a million Chinese citizens living in the country and the tourists that will flock to the Olympic Games in London in June. In China, intensifying competition has led companies including China United Network Communications Group Co. (CHTZ) to cut international roaming fees by as much as 90 percent.

“Our target customers are the Chinese communities,” Liu said in an e-mailed response to questions. “We are exploring a new market.”

London-based China Telecom Europe is a subsidiary of the state-owned parent company and isn’t part of publicly traded China Telecom Corp., said Jacky Yung, a Hong Kong-based spokesman for the listed unit.

The U.K. service will run on the network of Everything Everywhere, the joint venture between France Telecom SA (FTE) and Deutsche Telekom AG (DTE), the company said yesterday. The company will become the first Chinese operator to start a mobile virtual network outside China, Liu said.

Roaming Rates

Setting up a mobile virtual network will help China Telecom, the nation’s third-largest wireless carrier, compete on international roaming rates with China United, according to Neil Juggins, a Hong Kong-based analyst at JI Asia Research Ltd.

China Telecom will lease capacity from Everything Everywhere. It also held talks with Vodafone Group Plc (VOD)’s wholesale business, people familiar with the matter said in September.

China Telecom signed a strategic agreement with France Telecom in October to provide services for business customers across each other’s networks.

China Telecom’s wireless service ranks behind China Mobile Ltd. (941) and China Unicom (Hong Kong) Ltd. in the world’s largest mobile market by users. China had 975 million mobile subscribers at the end of November, according to the Ministry of Industry and Information Technology.

To contact Bloomberg News staff for this story: Jonathan Browning in London at; Edmond Lococo in Beijing at

To contact the editors responsible for this story: Kenneth Wong at; Michael Tighe at


Google Complaint Decision Hasn’t Been Reached by EU’s Antitrust Regulator

By Aoife White - Jan 5, 2012 7:03 PM GMT+0700

European Union regulators haven’t decided whether they should file a formal complaint against Google Inc. (GOOG) over possible discrimination against rivals in search results, the EU’s antitrust chief said.

“The commission is to date not in a position to say whether its investigation will lead to issuing a statement of objections,” EU Competition Commissioner Joaquin Almunia said in a statement published on the European Parliament’s website in Brussels dated yesterday.

The EU is investigating Google over claims it discriminated against other services in its search results and stopped some websites from accepting rival ads. Microsoft Corp. (MSFT) is among companies that asked the agency to examine the Mountain View, California-based search engine.

“A thorough assessment of the several categories of allegations of infringements of competition rules brought forward by several complainants is necessary,” Almunia said in a written response to a question from an EU lawmaker.

The Association of Spanish Newspaper Publishers is the latest to complain to regulators about Google’s behavior. The group said on Dec. 23 that it wrote to the commission to raise concerns that Google “abuses its dominant position” by using news content without paying for it.

If news providers opt out of appearing in Google’s search results, they effectively “disappear from the Internet,” the association said. It declined to comment further today.

Belgian Newspaper Case

Al Verney, a spokesman for Google in Brussels, declined to immediately comment.

The commission is still considering whether to treat the Spanish letter as a formal complaint, said a press officer who couldn’t be identified in line with official policy.

Google dropped some Belgian content from its online news site last year after an appeals court ruling blocked it from publishing links to local newspapers. It removed and later restored their stories from its search engine after an agreement with their copyright management group.

To contact the reporter on this story: Aoife White in Brussels at

To contact the editor responsible for this story: Anthony Aarons at


Nokia Said to Favor Siilasmaa as Chairman

By Diana ben-Aaron - Jan 5, 2012 8:12 PM GMT+0700

Nokia Oyj (NOK1V) considers Risto Siilasmaa, the founder of software maker F-Secure Oyj, a frontrunner to succeed Chairman Jorma Ollila this year, a person familiar with the matter said.

No decision has been made because Nokia’s nomination committee hasn’t met to recommend a new chairman, said the person, who asked not to be identified because the plan isn’t public. Nokia declined to comment. The company typically announces board changes in conjunction with its fourth-quarter results, scheduled this year for Jan. 26.

Siilasmaa, 45, is chairman of F-Secure (FSC1V@FH) and of telephone company Elisa Oyj. Known in Finland as a representative for entrepreneurs and business investors, he joined Nokia’s board in 2008. If elected chairman, he’ll oversee Chief Executive Officer Stephen Elop’s efforts to restore Espoo, Finland-based Nokia’s fortunes in the smartphone segment after the world’s biggest handset maker lost two thirds of its market share in four years and more than 60 billion euros ($77 billion) in market value.

“Siilasmaa is one of the few people on the board with a technology background and should be able to support and challenge the CEO,” Sami Sarkamies, an analyst at Nordea Bank, said by telephone. “He has probably been instrumental in the company’s strategic change so far, and can’t really be blamed for past mistakes as he’s only been there for three years.”

Siilasmaa declined to comment in an e-mail to Bloomberg. Helsingin Sanomat newspaper reported the news today.

Shares Climb

Nokia climbed as much as 5.9 percent in Helsinki trading after blogger Eldar Murtazin wrote that Nokia and Microsoft Corp. (MSFT) executives will meet soon to discuss a potential transaction involving the sale of Nokia’s smartphone unit to Microsoft.

Nokia spokesman Tomi Kuuppelomaeki declined to comment. Frank Shaw, a spokesman for Microsoft, didn’t immediately return calls seeking comment before regular business hours. The shares were up 4.8 percent at 4.07 euros as of 3:03 p.m. Nokia’s stock plummeted 51 percent last year, its fourth annual fall since soaring 71 percent in 2007.

Speculation that Nokia could be acquired by Microsoft resurfaced repeatedly after Google Inc. acquired Motorola Mobility Inc. last year. Elop has rebutted the speculation and said on Finnish television last month that Nokia headquarters will remain in Finland as long as he is CEO. Danske Bank said in December that the mobile-phone maker could sell the smartphone business to Microsoft.


Credit Suisse analysts today raised Nokia to “outperform” from “underperform” and increased its price estimate to 6 euros from 4 euros. The bank said it “fundamentally” believes Nokia’s focus on Windows will allow it to drive a recovery this year in both sales and earnings.

Ollila, 61, said at Nokia’s annual general meeting on May 3 last year that he was willing to continue as chairman until this year’s shareholder meeting. As CEO from 1992 to 2006, he transformed Nokia from an industrial conglomerate to the world’s top mobile-phone maker. He has been chairman since 1999. Last year he replaced hand-picked CEO successor Olli-Pekka Kallasvuo with Elop, a Microsoft executive, to reverse the tailspin.

“Siilasmaa doesn’t have that much global experience but he’s a fast mover,” said Helena Nordman-Knutson, an analyst at Pareto Oehman in Stockholm. The Finnish base is the main source of continuity for investors, she said.

2007 iPhone Debut

Other Finns on the Nokia board are busy as CEOs of their own companies, making a choice of Siilasmaa logical, she said. Matti Alahuhta, the CEO of elevator maker Kone Oyj and an executive vice president at Nokia during Ollila’s time as CEO, would also have been a good choice, she added. Alahuhta said in December that he will remain as CEO of Kone.

After Apple Inc. introduced the iPhone in 2007, Nokia’s slow-moving product organization was unable to keep up with consumer demands for user-friendliness and integration with Internet content. The company’s smartphone market share fell from 50.8 percent at the iPhone’s debut to 16 percent in the third quarter of 2011, according to Gartner Inc.

It remains the world’s largest maker of mobile phones overall, with factories around the world churning out as many as a million handsets a day. Elop has adopted Microsoft’s Windows Phone software for the company’s latest smartphone line, called Lumia, and deepened the partnership with the Redmond, Washington software maker.

Siilasmaa founded F-Secure, originally called Data Fellows, in 1988 as a student at the Finnish technology institute that is now Aalto University. The company listed shares on the Helsinki stock exchange in 1999, the last major high-tech company to join the stock exchange in the Nordic country.

Startup Investor

His lack of experience at companies on the scale of Nokia is a weakness and is the main reason Siilasmaa wasn’t seen as a shoo-in for the chairman job earlier, Nordea’s Sarkamies said.

Siilasmaa owned 39.73 percent of F-Secure as of Dec. 31, according to the company’s website. He has invested in Finnish startups including online shopping portal Fruugo Oy, together with Ollila, and micropayment supplier Ape Payment Oy, and worked with the Finnish government to establish startup incubators.

Siilasmaa serves on Nokia’s corporate governance and nominations committee, along with former SAP AG CEO Henning Kagermann and Pearson Plc CEO Marjorie Scardino, who is also vice chairwoman.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at

To contact the editor responsible for this story: Kenneth Wong at


Japanese Sushi Chain Pays Record $730,000 for Tuna to Outbid Foreigners

By Cheng Herng Shinn and Yasumasa Song - Jan 5, 2012 4:57 PM GMT+0700

A Japanese sushi chain will take a more than $600,000 loss on the most expensive fish ever sold at Tokyo’s Tsukiji market as it sells $74 pieces of tuna for $5 apiece.

Kiyomura K.K. paid a record 56 million yen ($730,000) for the fish at the market’s first auction in 2012. Chefs carved it into about 10,000 pieces of sushi that were sold at the restaurants’ normal prices of between 134 yen and 418 yen instead of the 5,649 yen needed for the chain to break even.

“It is not just about the money, as there will be positive ripple effects from buying the fish,” said Hiroshi Umehara a spokesman for the chain. “It is also about the Japanese spirit.”

Foreign companies have outbid Kiyomura at the auction in the past three years, according to Umehara. Japanese eat more fish per capita than any other developed country, consuming 56.7 kilograms (128 pounds) annually, compared with a global average of 17.1 kilograms, according to the United Nation’s Food and Agriculture Organization. Fish accounts for 23 percent of protein in the daily Japanese diet, compared with four percent in the U.S.

“We really wanted to provide good tuna to the locals after losing to overseas rivals in the past three years,” said Umehara. “We don’t think this is a proper price.”

The price Kiyomura paid for the first tuna of the year, touted as an auspicious prize, also comes to 210,000 yen per kilogram, compared with the 14,962 yen per kilogram highest price paid for Dec. 29 and the 26,932 yen maximum on Dec. 30.

Japanese ‘Stamina’

“The purchase shows that Japanese companies still have stamina,” Masao Morita, Sony Pictures Entertainment Japan representative director, said today in Tokyo at a New Year’s party for Keidanren, the nation’s most influential business lobby. “It’s not just about the cost, it’s about added-value.”

The tuna offered at the first auction of the year over the past 15 years at the Tsukiji fish market sold for an average 11.8 million yen, according to the Tokyo Metropolitan Central Wholesale Market website. The previous record price was set last year at 32.5 million yen, the market’s data shows.

“We would definitely like to be one of the companies to be able to make such a winning bid,” Takeshi Niinami, president of Lawson Inc., Japan’s second-biggest convenience store chain, said at the Keidanren event.

4 a.m. Fish Market

Tsukiji is listed among Japan’s most popular attractions by the Japan National Tourism Organization. An estimated 500 visitors a day gather as early as 4 a.m. at the market to observe tuna auctions, where buyers use hand signals to bid for fish that are later sliced with meter-long carbon-steel knives. Tsukiji, the size of 43 football fields, is crammed with stalls selling giant crabs, bright red octopus, and fugu, a type of blow fish that is deadly if incorrectly prepared.

Tokyo boasts the most Michelin stars of any city in the world, with more of the coveted awards than Paris and New York combined. At Sushiyabashi Jiro, which has three stars, a course can cost more 35,000 yen ($460).

To contact the reporter on this story: Yasumasa Song in Tokyo at

To contact the editor responsible for this story: Bret Okeson at


France’s Borrowing Costs Rise at Bond Sale

By Mark Deen and Paul Dobson - Jan 5, 2012 5:25 PM GMT+0700

France sold 7.96 billion euros ($10.2 billion) of debt today, with borrowing costs rising in its first bond auction of the year as credit companies threaten to cut the nation’s AAA rating.

The government sold 4.02 billion euros of benchmark 10-year bonds at an average yield of 3.29 percent from 3.18 percent in an auction on Dec. 1. The 10-year debt bid-to-cover ratio, or the number of bids received for each unit of debt sold, fell to 1.64 from 3.05. France also sold debt maturing in 2023, 2035 and 2041.

France needed to “sell longer-term debt because that’s what investors and ratings agencies are watching in terms of a signal of confidence,” Michael Leister, a fixed-income strategist at DZ Bank AG in Frankfurt, said before the auction results were announced. “The market is wary of the financing agency going for the easy option.”

The euro extended its decline against the dollar after French borrowing costs rose at a sale of bonds. The 17-nation common European currency was 0.9 percent weaker at $1.2832 at 10:08 a.m. London time.

The French sale came a day after Germany sold 4.1 billion euros of bonds, getting more bids than its maximum target of 5 billion euros. The German sale kicked off a rush for funding that may determine whether euro-area leaders can save the 13- year-old single currency. Italy and Spain are among countries that in the coming weeks will sell debt that may reach 262 billion euros in the first quarter, according to Deutsche Bank AG forecasts.

To contact the reporters on this story: Mark Deen in Paris at; Paul Dobson in London at

To contact the editors responsible for this story: Vidya Root at Daniel Tilles at


Papademos Warns Fellow Greeks Economic Collapse Looms Without Sacrifice

By Maria Petrakis and Natalie Weeks - Jan 5, 2012 4:51 PM GMT+0700

Prime Minister Lucas Papademos told Greeks that cuts in income are the only way to stay in the euro and get more financing (GKCPIUHY) from international creditors to avert an economic collapse that may otherwise come as soon as March.

“We have to give up a little so we don’t lose a lot,” Papademos said, according to an e-mailed transcript of his statements to union and business leaders yesterday. Talks later this month with officials from the European Union, International Monetary Fund and European Central Bank, the so-called troika, will focus on a “credible” economic plan for 2012 to 2015.

“Without this agreement with the troika and subsequent financing, Greece in March faces the immediate risk of a disorderly default,” he said.

Appointed in early November to lead an interim government to secure a second financing package, Papademos is racing to complete a voluntary swap of debt with private bondholders, part of the new rescue plan for the country, which also includes 130 billion euros ($167 billion) of public funds. Under the terms of Greece’s second bailout, investors would take a 50 percent hit on the nominal value of 206 billion euros of privately owned debt. The country redeems 14.4 billion euros of bonds March 20.

Bond Yields Rise

Greece’s ASE benchmark stock index (ASE) gained 0.1 percent to 662.79 at the start of Athens trading at 10:32 a.m. today. The yield on the 10-year Greek bond added 9 basis points to 34.96 percent. Two-year note yields rose 19 basis points to 134.49 percent.

The premier will hold a Cabinet meeting at 3:30 p.m. Athens time today on an omnibus bill that will include opening up so- called closed professions, including taxis, and regulation on settling outstanding taxes. The legislation is intended to tackle pledges that the troika has said aren’t being implemented effectively or promptly enough to allow the economy to become more competitive and return to growth.

Despite two years of wage cuts and tax increases, the IMF expects Greece’s deficit (EUBDGRCE) to be about 9 percent of gross domestic product last year compared with 10.6 percent in 2010. The economy was expected to shrink about 6 percent of gross domestic product last year, according to the latest IMF estimates.

‘Belt Tightening’

“Greece has not much room for maneuver, but must rely on further austerity and belt tightening, while extracting as much as it can from sovereign debt holders in current debt swap negotiations,” said Thomas Costerg, an economist at Standard Chartered Bank Plc in London. “Risks are definitely on the rise: there is bailout fatigue in the north, and austerity fatigue in the south, especially in Greece, where GDP shows no sign of bottoming.”

Papademos, 64, assumed office after Germany and France warned Greece last year they would cut all aid to the country until it signs up to a bailout plan agreed to in Brussels on Oct. 26.

Former Prime Minister George Papandreou, who told his socialist Pasok party yesterday that he would step down as leader and won’t seek re-election as premier, handed off to Papademos after at least five austerity packages whittled down support for his government and his majority in parliament.

Elections Call

Political leaders like Antonis Samaras, the head of the second-biggest party, New Democracy, are keeping up the pressure on Papademos to resolve the debt swap and call elections. While Finance Minister Evangelos Venizelos has said elections will be held at the end of April, according to a Dec. 27 report by state-run Athens News Agency, Samaras has said elections can be held at the end of March.

New Democracy, which is calling for no more wage cuts or tax increases, had 21 percent voter support, compared with 13 percent for Papandreou’s Pasok, according to 1,004 people surveyed Dec. 28-29 by Kapa Research. Nearly eight in 10 Greeks say the country’s leaders should do whatever is needed to remain in the euro, according to that poll.

Papademos said the troika had pointed to a range of issues to be tackled. They include adjustments to the minimum wage, abolition of Christmas and summer vacation bonuses and automatic wage increases.

Yannis Panagopoulos, the head of Greece’s biggest private- sector union group GSEE and the driving force behind seven general strikes last year, said he was willing to discuss how to reduce non-wage costs to protect jobs.

Union Rejects Cuts

The organization won’t consider changes to national labor accords such as cutting the minimum wage and the so-called 13th and 14th annual wages, Panagopoulos said in comments on NET TV.

Greece’s debt is forecast to balloon to almost double the size of its shrinking economy this year without the write-off, the European Commission estimates. The swap is aimed at helping reduce debt to 120 percent of gross domestic product by 2020. A successful swap will reduce the deficit this year to 5.4 percent of GDP, in part by savings on debt servicing costs, according to Greece’s 2012 budget.

To contact the reporter responsible for this story: Maria Petrakis at Natalie Weeks in Athens at


European Stocks Drop for Second Day as Banks Slide on Concern Over Funding

By Peter Levring - Jan 5, 2012 7:17 PM GMT+0700

European stocks (SXXP)declined for a second day as UniCredit SpA led banks lower amid concern that more lenders will be forced to raise capital. U.S. index futures and Asian shares fell.

UniCredit, which announced a rights offer at a 43 percent discount yesterday, slumped to a 19-year low. Societe Generale (GLE) SA dropped 4.5 percent after announcing a cut in corporate- and investment-banking staff.

The Stoxx Europe 600 Index fell 0.7 percent to 247.77 at 12:15 p.m. in London. The gauge lost 11 percent last year as policy makers struggled to contain the region’s debt crisis. Futures on the Standard & Poor’s 500 Index (SPH2) retreated 0.7 percent. The MSCI Asia Pacific Index slid 0.7 percent.

“UniCredit’s capital call spooked investors and reduced confidence in banking short term,” said Torben Hoeyer, the chief equity adviser at Nordea Private Banking in Copenhagen. “Now rumors are going round other banks may also sell shares and that’s pushing stocks lower.”

Italy’s largest lender declined 11 percent to 4.81 euros, the lowest since September 1992. The bank announced a plan to sell new shares at a discount because of a deepening of the debt crisis, Chief Executive officer Federico Ghizzoni told Il Sole 24 Ore in an interview. He added that he expects other banks raising money to do the same.

French Bond Sale

France sold 7.96 billion euros ($10.2 billion) of debt today as borrowing costs rose. The government sold 4.02 billion euros of benchmark 10-year bonds at an average yield of 3.29 percent from 3.18 percent in an auction on Dec. 1. The nation also sold debt maturing in 2023, 2035 and 2041.

Germany yesterday sold 4.1 billion euros of bonds kicking off a rush for funding that may determine whether euro-area leaders can save the 13-year-old single currency. Italy and Spain will raise funds in the coming weeks. Sovereign-debt sales in the region may reach 262 billion euros in the first quarter, according to Deutsche Bank AG forecasts.

In Greece, Prime Minister Lucas Papademos said that deeper cuts in incomes are the only way for the country to remain in the euro area and receive more financing from international creditors. These steps are necessary to avert an economic collapse that may otherwise come as soon as March, he said.

In Germany, retail sales (GRFRIAMM), adjusted for inflation and seasonal swings, decreased 0.9 percent in November, the Federal Statistics Office in Wiesbaden said. Economists had forecast a gain of 0.2 percent in a Bloomberg News survey.

U.S. Economic Data

Service industries in the U.S. probably grew in December at the fastest pace in three months, showing the economy picked up as 2011 drew to a close, economists said before a report today.

The Institute for Supply Management’s index of non- manufacturing (NAPMNMI) industries, which account for about 90 percent of the economy, rose to 53 from 52 in November, according to the median projection of 65 economists surveyed by Bloomberg News. The number of applications for jobless benefits (INJCJC) fell last week, another report may show.

A gauge of European banks was the worst performer among the 19 industry groups (SXXP) on the Stoxx 600.

Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain’s biggest lenders, declined 3.3 percent to 5.60 euros and 4 percent to 6.37 euros respectively after the Financial Times cited Economy Minister Luis de Guindos as saying banks will have to allocate as much as 50 billion euros in further provisions for troubled real-estate assets.

Societe Generale Job Cuts

Societe Generale, France’s second-largest lender, dropped 4.5 percent to 16.23 euros after saying it will cut about 1,580 jobs at its corporate and investment bank, about 10 percent of the unit’s total staff.

Nokia Oyj rose 5.7 percent to 4.11 euros after Credit Suisse Group AG raised its recommendation to “outperform” from “underperform.” The company considers Risto Siilasmaa, the founder of security software maker F-Secure Oyj, as a frontrunner to become its next chairman, a person familiar with the matter said.

Petrofac Ltd. (PFC), the U.K. oil-services provider, advanced 1.9 percent to 1,493 pence after agreeing with Schlumberger Ltd. (SLB) to cooperate on production projects.

Lundin Petroleum AB, the Swedish oil explorer and producer, rose 1.4 percent to 178.20 kronor after raising reserve estimates by 21 percent.

Brenntag AG (BNR) fell 1.3 percent to 71.30 euros, its biggest drop since Dec. 7. Brachem Acquisition SCA sold an 8.7 percent stake in the chemical distributor to institutional investors for about 315 million euros.

CRH Plc (CRH) and HeidelbergCement AG (HEI) fell 2.1 percent to 15.15 euros and 3.4 percent to 33.41 euros, respectively. Credit Suisse lowered its recommendation on both companies to “underperform” and said volumes, prices and margins in the building-materials business will remain “challenged.”

To contact the reporter on this story: Peter Levring in Copenhagen at or

To contact the editor responsible for this story: Andrew Rummer in London at;


Hildebrand Stung by Wife’s Transactions

By Klaus Wille - Jan 5, 2012 2:53 PM GMT+0700

Philipp Hildebrand is under pressure to explain how he can act as guardian of the Swiss franc and allow his wife to trade the currency at the same time.

Hildebrand, head of the Swiss National Bank (SNBN), will today break his silence on his wife’s purchase of dollars in August, the SNB said. That trade came three weeks before policy makers announced their biggest franc intervention since the 1970s. While an SNB probe cleared him of wrongdoing, some lawmakers and academics say the 105 year-old institution must do more to move away from a culture of bank secrecy.

“The SNB’s information policy was not very fortunate and they underestimated the momentum,” said Georg Lutz, a political scientist at the University of Lausanne, Switzerland. “If Hildebrand can’t break free from this media mess, he must consider his resignation. The loss of confidence is so dramatic that he might become a reputation risk for the central bank.”

Hildebrand’s central bank only agreed to publish rules on personal financial ethics yesterday following days of speculation and local media alleging the former hedge fund manager of using insider knowledge to his advantage. While all three currency transactions that were investigated more closely were cleared, a dollar purchase over $504,000 carried out by Kashya Hildebrand without her husband’s knowledge was considered “sensitive,” according to an investigation carried out by PricewaterhouseCoopers LLP last year.

Political Opponents

The SNB president will hold a press conference at 4 p.m. in Zurich today.

The controversy is giving ammunition to Hildebrand’s political opponents led by billionaire Christoph Blocher from the Swiss People’s Party, who have tried to undermine tougher financial capital rules and have called for his resignation over 2010 attempts to stem the franc’s record ascent.

“Any central banker must be willing to pay the price of full transparency,” said Hannes Germann, a lawmaker in the upper house of parliament from the Swiss People’s Party. “The last thing the SNB needs right now is an erosion of credibility or doubts in its leadership.”

The SNB last month published a statement, saying an external probe into the conduct of Hildebrand showed he didn’t use privileged information for his personal enrichment and unspecified rumors were “unfounded.” While the central bank called the case closed, Bank Sarasin (BSAN), a Basel-based private bank, said 10 days later it fired an employee who passed confidential data on Hildebrand’s transactions to Blocher.

Dollar Transactions

Hildebrand was first informed about the allegations on Dec. 15, the day the central bank left the benchmark interest rate (SZLTTR) at zero and pledged to defend its minimum exchange rate of 1.20 francs versus the euro with unlimited currency purchases.

Documents released by the SNB yesterday show that Kashya Hildebrand spent 400,000 francs ($517,000) to buy dollars on Aug. 15 without informing her husband first, two days before the SNB stepped up liquidity provisions to the money market and three weeks before the currency cap was introduced.

Weltwoche magazine reported that Kashya Hildebrand reaped a gain of 75,000 francs on the transaction.

In March, the SNB president had carried out a currency transaction worth 1.1 million francs, following a Swiss property sale, with the report saying that “there’s no evidence of misuse of privileged information.” Under SNB compliance rules, board members are forced to maintain currency positions for at least six months. The investigation was carried out on transactions from Jan. 1 through Dec. 15.


The SNB’s policy until yesterday of withholding its ethics code contrasts with rules of other global central banks. The European Central Bank’s internal rules prevent council members from using “confidential information to which they have access” for “private financial transactions,” according to the bank’s website.

Federal Reserve Board members including Chairman Ben S. Bernanke are subject to U.S. ethics laws governing conflicts of interest and financial transactions. The Fed also has internal guidelines saying governors and regional reserve-bank presidents, along with their spouses, should avoid transactions that give “even the appearance of acting on confidential information.”

“It would be a scandal” if Bernanke’s spouse traded currencies, said Mark Calabria, director of financial-regulation studies at the Cato Institute in Washington. “There would be calls for him to resign. But what’s illegal and what’s stupid aren’t always the same thing.”

Criminal Complaint

Kashya Hildebrand, a former hedge fund employee, said in a statement published on Swiss Television’s 10 vor 10 program on Jan. 3 that she purchased dollars because “it was at a record low and almost ridiculously cheap” at the time. She also said that up to 80 percent of transactions at her art gallery in the center of Zurich are in dollars.

Weltwoche magazine said that the Bank Sarasin employee has filed a criminal complaint against Hildebrand for alleged insider trading. An official for the state prosecutor in the Swiss canton of Zurich yesterday declined to comment on whether the prosecutor received a complaint.

Blocher, a former justice minister who had called the SNB’s 2010 currency interventions “senseless speculation,” declined to comment. The Swiss government late yesterday reiterated its confidence in Hildebrand.

To contact the reporter on this story: Klaus Wille in Zurich at

To contact the editor responsible for this story: Craig Stirling at


Paradise Lost for Aussie Surfboard Makers Amid China Imports

By Brendan Murray - Jan 5, 2012 3:04 PM GMT+0700

On Australia’s Gold Coast, a 22-mile- long (35-kilometer) stretch of beaches named Surfers Paradise and Rainbow Bay, Neil Rech opened a surf shop in December and unwittingly disturbed the peace.

His store, Sedition Surfboards, sells Chinese imports for A$250 ($258), one-third the cost of some Australian-made boards that competitors are offering. Rival retailers averse to discounts and upset about local job losses questioned his patriotism, and even threatened violence, he said.

“It’s quite heavy,” Rech, 34, said of the backlash. After teaching for two years in China before opening a store in Coolangatta, Queensland, “I realized how cheap you can actually get these boards so I thought it’d be a great opportunity to bring them here and sell them to the public cheaper.”

Inexpensive imports from Asia, coupled with a 55 percent jump in the local dollar since October 2008, are delivering a double dose of pain to one of Australia’s most iconic industries. The struggles at surfboard makers are playing out at manufacturers across a country where China’s demand for iron ore and fuel has spurred a mining boom while leaving non-resource businesses behind.

Manufacturers are on the wrong side of a divide in Australia’s economy, which has avoided a recession since 1991 and boasts an unemployment rate of 5.3 percent, about half the level in Europe. While the number of mining jobs (AULQMINN) soared 21 percent to 242,400 in the fourth quarter from a year earlier, manufacturing employment slumped 4.4 percent to 953,500 and retail positions sank 2.2 percent to 1.21 million.

‘Can’t Compete’

The nation’s currency has climbed 1.3 percent this year. It touched an all-time high of 80.15 euro cents today.

“Australia is certainly an economy in transition,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s biggest interdealer broker, who formerly worked at the Australian Treasury. “We can’t compete at the lower end of the chain.”

From Bells Beach to Brisbane, Australia’s board builders are facing a choice: close down, or try to preserve local designs and branding by applying them to products made abroad.

“We have to adapt,” said Michelle Blauw, co-owner of Currumbin, Queensland-based D’Arcy Surfboards and president of the Australian Surf Craft Industry Association. “You can’t always point the finger and blame everybody else for the situation that you’re in.”

Shares Slump

Manufacturers across Australia are grappling with rising costs and a strong currency that’s making their products less competitive overseas. BlueScope Steel Ltd. (BSL), the country’s biggest steelmaker, said in August it would stop exports, shut a mill and a blast furnace, and fire 1,000 workers. Its shares slid 79 percent (BSL) in 2011.

Weaker consumer spending is adding to the pinch, as the slowing global recovery hurts sales at companies including surf- accessory retailer Billabong International Ltd. (BBG) The Gold Coast- based surf-clothing maker’s stock plunged 78 percent last year. By comparison, Australia’s benchmark S&P/ASX 200 Index lost 15 percent.

D’Arcy sold its Gold Coast board-making facility in December after sales slowed because of the rising currency, cheap Asian imports and consumers’ belt tightening, Blauw said. The business is still running from her garage with two employees, down from a peak of 11, she said.

Closing Shop

Born in beach towns in the 1950s, the backyard nature of Australian surfboard manufacturing has become part of the challenge, according to Blauw. In a nation where a tenth of the 22.8 million inhabitants are recreational surfers, producing world surfing champions such as Layne Beachley and Mark Richards, there aren’t official statistics monitoring the board-making industry’s size, she said.

“Surfing is almost our national pastime,” Blauw said of the birthplace of the three-finned “thruster” surfboard in 1981, which changed maneuverability and revolutionized the sport. “But small manufacturers like ourselves are shutting down left, right and center.”

While the sale of board shorts and other surf wear has propelled companies such as California’s Quiksilver Inc. and Australia’s Rip Curl International Pty into global brands, many Aussie board makers haven’t been able to match that growth.

To protect Australia’s brand in the global market, Blauw is trying to organize manufacturers and craftsmen to push for mandated country-of-origin labeling so Australian-made boards are distinguishable from imports.

Australian board maker Ron Wade had a glimpse of the future when he saw Chinese boards six years ago.

Industry ‘Stuffed’

“I went, ‘Mate, if this is what’s going to come out of China, our industry’s stuffed,’” said Wade, 66, who started his company in Mona Vale, New South Wales, in 1967. “In the next 10 years, there will be a few factories around but they will be few and far between.”

Blauw said some Gold Coast board designers have recently gone to work in the mining industry in search of more income. Board companies that are staying afloat say the country is seeing the twilight of a cottage industry that reflected Australia’s reputation for laid-back lifestyles.

“The local manufacturers are losing some of that mystique,” said Mark Kelly, managing director of Global Surf Industries, who estimates that the global surfing-goods industry has grown to A$6 billion to A$7 billion a year. His Manly, New South Wales-based company sells more than 50,000 boards annually, including 15 brands that are made in China, Taiwan, Thailand and New Zealand. “It’s not a hobby anymore; it’s a real business.”

In Coolangatta, Rech said that while it may take time for his competitors to adjust to lower price tags on boards, Australia’s economy will be better off in the long run as the imports will benefit consumers.

“It’s like sticking a fat man on a treadmill,” he said. “First he doesn’t like it, but then he gets into it.”

To contact the reporter on this story: Brendan Murray in Sydney at

To contact the editor responsible for this story: Stephanie Phang at


Stocks, Euro Decline on Debt Crisis Concern

By Stephen Kirkland and Lynn Thomasson - Jan 5, 2012 5:47 PM GMT+0700

Stocks (MXWD) and the euro declined on concern Europe will struggle to contain the debt crisis. Hungarian shares tumbled and the forint declined as borrowing costs climbed at an auction today.

The Stoxx Europe 600 Index (SXXP) lost 0.8 percent at 10:45 a.m. in London as UniCredit SpA, Italy’s biggest bank, tumbled for a second day. Standard & Poor’s 500 Index futures slid 0.8 percent. French 10-year bond yields were little changed after a government debt sale. The euro weakened 0.8 percent to $1.2845. Hungary’s forint sank 0.4 percent to 321.61 versus the euro.

Greek Prime Minister Lucas Papademos said yesterday deeper cuts in incomes and an agreement on international aid are the only way for the country to avert economic collapse and a “disorderly default.” France sold 10-year bonds at an average yield of 3.29 percent, up from 3.18 percent in December, and the yield on Hungary’s one-year bills climbed to the highest level since 2009. The U.S. service industry probably grew last month and jobless claims fell last week, economists said before reports today.

“We expect the euro-zone recession to deepen early in the year and for European financial-market pressures to remain intense in the next few months,” said Dominic Wilson, chief market economist at Goldman Sachs Group Inc. in Frankfurt.

The decline in the Stoxx 600 extended yesterday’s 0.6 percent drop. UniCredit slid 8.9 percent to the lowest level since 1992 after yesterday plunging 15 percent on plans to sell shares in a rights offer at a 43 percent discount.

Banks Decline

Societe Generale SA retreated 4.6 percent as the French bank said it plans to cut about 1,580 jobs at its corporate and investment banking unit. Banco Comercial Portugues SA and Banco Espirito Santo SA lost more than 6 percent in Lisbon.

The decline in S&P 500 futures indicated the U.S. equities gauge will drop for the first time this year. The Institute for Supply Management’s non-manufacturing index, due for release at 10 a.m. New York time, rose to 53 in December from 52 the previous month, according to a Bloomberg survey of economists. Fifty is the dividing line between expansion and contraction in the services gauge.

A separate release may show the number of applications for jobless benefits fell last week. The data comes before tomorrow’s payrolls report from the Labor Department, which is forecast to show the U.S. economy generated 150,000 jobs last month, according to an economist survey.

Aid Talks

Hungary’s BUX Index (BUX) fell 3 percent, taking its three-day decline to 5.7 percent. The average yield on Hungarian 12-month bills jumped to 9.96 percent from 7.91 percent at the last sale of the same maturity on Dec. 22, according to auction results on the state debt management agency’s Bloomberg page.

The yield on France’s 10-year bond was little changed at 3.31 percent. The extra yield (.FRANGER) investors demand to hold French 10-year debt instead of benchmark German bunds rose two basis points to 141 basis points.

The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, climbed 0.6 percent. The euro slid 0.7 percent against the yen, approaching an 11-year low, and depreciated 0.3 percent versus the pound.

Oil in New York fell 0.8 percent to $102.42 a barrel, the first decline in three days.

To contact the reporters on this story: Stephen Kirkland in London at; Lynn Thomasson in Hong Kong at

To contact the editor responsible for this story: Stuart Wallace at


Toyota Beats Estimates, Kia Leads Asia in U.S.

By Alan Ohnsman - Jan 5, 2012 8:38 AM GMT+0700

Toyota Motor Corp. (JDCSTYTA)’s December sales gain beat analysts’ estimates and Kia Motors Corp. (000270) had the biggest increase among Asia-based brands, capping the U.S. auto industry’s best year since 2008.

Sales rose 0.4 percent from a year earlier for Toyota, compared with the average 1 percent drop of five estimates compiled by Bloomberg. Deliveries increased 43 percent for Kia, 13 percent for affiliate Hyundai Motor Co. (005380) and 7.7 percent for Nissan Motor Co. (7201), according to statements yesterday. Honda Motor Co. (7267) reported a 19 percent drop, citing tight inventory.

Industrywide sales gained an estimated 8.7 percent as consumer confidence reached an eight-month high in December, and carmakers aired holiday ads and continued promotions begun in November. Kia’s December surge in the U.S. gave the Seoul-based company a 36 percent full-year increase, the largest for a major automaker.

“Kia has even more potential this year,” said Rebecca Lindland, a Norwalk, Connecticut-based analyst for IHS Automotive. “Our forecast is for them to be up 23 percent. Hyundai will be up by double digits again in 2012, but right now everything new from Kia is selling really well.”

Vehicle Shortage

For all of 2011, the U.S. market share for Japanese and South Korean automakers fell 2.6 percentage points from a year earlier to 43.7 percent, according to Autodata Corp., a research firm based in Woodcliff Lake, New Jersey. The share declined as Toyota (7203) and Honda ran short of vehicles because of Japan’s March earthquake and tsunami, as well as floods in Thailand late in the year that limited parts supplies.

For December, their share was 43.6 percent, a drop from 46.5 percent a year earlier, Autodata said.

Industrywide light-vehicle sales in 2011 rose an estimated 10.3 percent to 12.8 million units, according to Autodata. Sales figures weren’t available from all automakers.

Toyota gained 0.2 percent to 2,650 yen as of 10:02 a.m. in Tokyo trading, Honda climbed 1.3 percent to 2,475 yen and Nissan declined 1.1 percent to 691 yen. Hyundai rose 1.6 percent to 227,000 won in Seoul trading, and Kia slipped 0.2 percent to 68,600 won.

Toyota, Asia’s largest automaker, said December sales of Toyota, Lexus and Scion models totaled 178,131. The gain was led by the new Camry, which posted 33,506 in sales and was the best- selling U.S. car for a 10th year in a row, said Jim Lentz, the Toyota City, Japan-based company’s U.S. sales chief.

Toyota ‘Momentum’

“With consumer confidence continuing to show significant improvement, we believe this momentum will carry into 2012,” he said on a conference call yesterday.

Toyota’s 2011 U.S. sales shrank 6.7 percent to 1.64 million cars and light trucks. Its market share was 14.3 percent in December and 12.9 percent for the year, according to Autodata. The U.S. decline contributed to Toyota losing its top spot in global annual vehicle sales to General Motors Co. (GM)

Toyota will grow faster than the industry in the U.S. this year, with sales of about 1.9 million vehicles for a 15 percent increase from 2011, Lentz said.

That growth target won’t be easy to achieve, particularly because of tougher competition for Camry among midsize sedans, said Jeremy Anwyl, vice chairman of, an auto pricing and data provider in Santa Monica, California.

‘Uphill Battle’

“Toyota is looking to regain some market share, but I think that’s going to be an uphill battle,” he said in an interview on Bloomberg Television’s “Street Smart.”

For Toyota and Honda (7267), “segments they used to dominate are now incredibly competitive and that’s not going to change,” Anwyl said.

Toyota’s Lexus, which lost its top ranking for luxury sales in the U.S. in 2011, will be the fastest-growing in the category this year, said Mark Templin, the brand’s U.S. sales chief.

“We’ll have a huge volume swing especially because of the launch of nine new vehicles,” Templin said on a conference call. “It gives us a big push this year.”

Lexus sales will grow “well above 20 percent,” he said.

Honda sold 105,230 Honda and Acura vehicles last month and 1.15 million for the full year, down 6.8 percent from 2010. The Tokyo-based automaker curtailed production at plants in North America and Japan for months after the natural disaster in the Asian nation.

“As we eagerly close one of the most challenging years American Honda has weathered, we are well-positioned for a strong 2012,” John Mendel, executive vice president of the company’s U.S. sales unit, said in a statement.

Honda Models

The company is counting on its revamped CR-V small crossover and a redesigned Accord sedan and coupe due late in the year to boost sales, he said.

Honda’s market share for the year fell to 9 percent from 10.6 percent in 2010, according to Autodata. Its December share shrank to 8.5 percent, a drop of 2.8 percentage points.

Nissan sold 100,927 Nissan and Infiniti vehicles in December. The Yokohama, Japan-based carmaker was able to avoid significant production cuts in 2011, and boosted its annual U.S. sales 15 percent to 1.04 million vehicles.

“We were very fortunate this year that we didn’t really miss any production,” Al Castignetti, vice president of U.S. sales for Nissan North America, said in a telephone interview. “We had the opportunity to pick up some market share.”

Nissan’s U.S. share rose 0.4 percentage point to 8.2 percent for the year, according to Autodata. Its December share declined 0.1 point to 8.1 percent.

Altima Outsells Accord

The midsize Altima, Nissan’s highest-volume U.S. model, was second among cars in the U.S. in annual sales, behind Toyota’s Camry. The Altima outsold the Honda Accord for the first time.

“While Hyundai and Kia drew more attention last year, Nissan was a company that has been one of the quiet achievers in the market,” IHS Automotive’s Lindland said.

Hyundai, South Korea’s largest automaker, said U.S. sales rose to 50,765 in December. For the year, the Seoul-based company’s sales gained 20 percent to a record 645,691.

Kia, Hyundai’s affiliate, sold 43,390 cars and light trucks in December, and a record 485,492 for the year.

Combined sales for Hyundai and Kia, which share engines, platforms and a chairman, increased 25 percent in December, less than a 27 percent average estimate of four analysts surveyed by Bloomberg.

For the year, combined sales at the carmakers, which maintain separate U.S. operations, climbed 26 percent to 1.13 million vehicles, more than Nissan for the first time.

Japan’s Mazda Motor Corp. (7261) raised sales 4.1 percent last month and 9.1 percent for the year. Subaru, the auto brand of Toyota affiliate Fuji Heavy Industries Ltd., reported gains of 26 percent in December and 1.2 percent for the year.

Mitsubishi Motors Corp. (7211)’s sales rose 0.4 percent for the month and 42 percent in 2011, and Suzuki Motor Corp. (7269) had a 3.1 percent decline in December and an 11 percent increase for the year.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at

To contact the editor responsible for this story: Jamie Butters at


Asia Stocks, Aussie Drop on Europe Concern

By Lynn Thomasson - Jan 5, 2012 7:58 AM GMT+0700

Asian stocks (MXAP) and the Australian dollar weakened after Italy’s biggest bank said it needs to raise more capital, spurring concern that the European debt crisis is worsening.

The MSCI Asia Pacific Index (MXAP) fell 0.3 percent as of 9:56 a.m. in Tokyo after climbing 2.4 percent in the past two days. Standard & Poor’s 500 Index futures were little changed. The so- called Aussie retreated 0.4 percent to $1.0332. The euro was little changed at $1.2933 after yesterday’s 0.8 percent decline. Gold and oil were also little changed.

“Problems sparked by the European debt crisis are reigniting and people in the market have reaffirmed that the situation has not changed,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That’s weakening the euro and hurting exporters with a heavy reliance on Europe.”

European shares snapped a four-day streak of gains yesterday as UniCredit SpA’s plan to sell shares fueled concern that banks need to raise capital to weather the debt crisis. Australia’s services industry shrank for a third straight month as consumer spending weakened, according to a private survey. Data later today may show that the Institute for Supply Management’s non-manufacturing index expanded in December at the fastest pace in three months, based on a Bloomberg survey of economist estimates.

To contact the reporter on this story: Lynn Thomasson in Hong Kong at

To contact the editor responsible for this story: James Poole at


China Telecom May Expand to France, Germany

By Bloomberg News - Jan 5, 2012 8:47 AM GMT+0700

China Telecommunications Corp. (728), the nation’s largest fixed-line phone company, plans to expand into more European markets after starting its first overseas wireless service in the U.K.

The service, aimed at Chinese residents, will begin in the U.K. by the end of March and expand to Germany and France if it’s successful, Ou Yan, managing director for China Telecom Europe, said in an e-mail yesterday. There are 2 million Chinese living in western Europe, Liu Changhai, the China Telecom executive responsible for regional development, said yesterday.

In the U.K., China Telecom will target the more than half a million Chinese citizens living in the country and the tourists that will flock to the Olympic Games in London in June. In China, intensifying competition has led companies including China United Network Communications Group Co. (CHTZ) to cut international roaming fees by as much as 90 percent.

“Our target customers are the Chinese communities,” Liu said in an e-mailed response to questions. “We are exploring a new market.”

London-based China Telecom Europe is a subsidiary of the state-owned parent company and isn’t part of publicly traded China Telecom Corp., said Jacky Yung, a Hong Kong-based spokesman for the listed unit.

The U.K. service will run on the network of Everything Everywhere, the joint venture between France Telecom SA (FTE) and Deutsche Telekom AG (DTE), the company said yesterday. The company will become the first Chinese operator to start a mobile virtual network outside China, Liu said.

Roaming Rates

Setting up a mobile virtual network will help China Telecom, the nation’s third-largest wireless carrier, compete on international roaming rates with China United, according to Neil Juggins, a Hong Kong-based analyst at JI Asia Research Ltd.

China Telecom will lease capacity from Everything Everywhere. It also held talks with Vodafone Group Plc (VOD)’s wholesale business, people familiar with the matter said in September.

China Telecom signed a strategic agreement with France Telecom in October to provide services for business customers across each other’s networks.

China Telecom’s wireless service ranks behind China Mobile Ltd. (941) and China Unicom (Hong Kong) Ltd. in the world’s largest mobile market by users. China had 975 million mobile subscribers at the end of November, according to the Ministry of Industry and Information Technology.

To contact Bloomberg News staff for this story: Jonathan Browning in London at; Edmond Lococo in Beijing at

To contact the editors responsible for this story: Kenneth Wong at; Michael Tighe at


Verizon Wireless IPhone Sales Doubled to 4.2 Million Units Last Quarter

By Scott Moritz - Jan 5, 2012 4:43 AM GMT+0700

Verizon Wireless, the largest U.S. mobile carrier, sold 4.2 million Apple Inc. (AAPL) iPhones in the fourth quarter, more than doubling from the third quarter, said Fran Shammo, finance chief of the company’s parent.

The iPhone sales will narrow gross margins at the wireless business by 500 to 600 basis points, Shammo, chief financial officer of Verizon Communications Inc. (VZ), said today at a Citigroup Inc. event in San Francisco. U.S. carriers sell smartphones such as the iPhone to subscribers at a loss to get them to sign up for contracts that typically run for two years.

The demand suggests Verizon Wireless is winning an increasing share of new iPhone users, after gaining rights to offer the handset to its subscribers last year. In the third quarter, Verizon added 2 million customers for the device, trailing the 2.7 million iPhone activations at AT&T Inc. (T), which has offered the handset since 2007.

Even with lower iPhone activations, Verizon Wireless has outpaced AT&T in total subscriber gains, helped by demand for handsets that run on Google Inc.’s Android operating system. Verizon Wireless, jointly owned by New York-based Verizon Communications and Vodafone Group Plc (VOD), added 882,000 contract, or postpaid, subscribers in the third quarter, compared with 319,000 at Dallas-based AT&T.

Verizon shares (VZ) fell 1.3 percent to $39.21 at the close in New York. The stock advanced 12 percent last year, compared with a 2.9 percent gain by AT&T. AT&T added 0.2 percent to $30.43 today and Cupertino, California-based Apple rose 0.5 percent to $413.44.

To contact the reporter on this story: Scott Moritz at

To contact the editor responsible for this story: Peter Elstrom at


No Deal of the Day for Groupon Investors

By Ari Levy and Danielle Kucera - Jan 5, 2012 1:03 AM GMT+0700

Groupon Inc. (GRPN)’s shares, which have fallen below the company’s initial public offering price, show that both merchants and investors are having second thoughts about the nascent daily-deal industry.

About half the businesses that have offered an online deal- of-the-day in the past aren’t planning to do so again in the next six months, according to a survey published on Jan. 2. The study, by Susquehanna Financial Group and daily-deal aggregator Yipit, showed that merchants were concerned about a low rate of repeat business from new customers gained through such offers.

“The risk factors are enormous” for daily-deal companies, said Sucharita Mulpuru, an analyst at Forrester Research Inc. in Cambridge, Massachusetts. “Their cost of merchant acquisition is going to get higher over time.”

To keep growing, the industry, which researcher BIA/Kelsey estimates may more than double to $4.17 billion by 2015, will probably agree to charge businesses less. Groupon, in fact, said in a June IPO filing that offering merchants more favorable terms may cut into its profits.

Margins are already shrinking. The amount of billings Groupon booked as revenue narrowed to 37 percent in the third quarter from 42 percent in the prior period and 44 percent in the first quarter. Chicago-based Groupon attributes the decline to getting into new products, such as travel and event tickets.

The company’s shares slipped 2.6 percent to $18.77 at 1:01 p.m. New York time. Yesterday, Groupon dropped 6.6 percent after the release of the Susquehanna and Yipit survey, which collected data from more than 100 merchants. This week marks the second time that Groupon stock has fallen below the $20 IPO (GRPN) price since its Nov. 3 debut.

Merchant Feedback

Groupon is the biggest Internet-deal provider, delivering discounts on restaurants, hotels, spa treatments, and other goods and services. Rivals include Washington-based LivingSocial and Seattle-based Inc., and Groupon also lists Google Inc. and Microsoft Corp. as competitors in its prospectus.

While 80 percent of the survey’s respondents were satisfied with daily-deal companies, about 52 percent of merchants said they’re not planning to offer a discount through such sites in the next six months.

“People are scrutinizing it a little more because of all the merchant feedback,” said Herman Leung, a Susquehanna analyst based in San Francisco. He has a “neutral” rating on Groupon’s stock. “About 76 percent of the merchants plan to do zero or one deal over the next six months. They’re seeing sufficient demand on their own as the economy is getting better.”

Julie Mossler, a spokeswoman for Groupon, declined to comment.

Small Business Market

Groupon created the online daily-deal market in 2008 and in the first three quarters of 2011 featured deals from more than 190,000 merchants worldwide, according to its prospectus. That leaves plenty of room for growth, as there were 5.9 million businesses with employees in the U.S. alone in 2009, according to the U.S. Small Business Administration.

Brendan Lewis, a spokesman for LivingSocial, said that even within the Susquehanna and Yipit survey, the numbers are encouraging.

“It shows the vast majority of merchants who have run deals are happy with their experience, and nearly half plan to run another deal in the immediate future,” Lewis said in an e- mail. “You’d be hard-pressed to find an 80 percent satisfaction rate among merchants for any other marketing channel in use today.”

Still, LivingSocial put off its IPO plans last year as Groupon and other Internet companies faced turbulent debuts in the public markets. The company instead lined up $400 million in private funding at a valuation of about $6 billion, a person with knowledge of the matter said in December.

Post-IPO Scrutiny

Staying private has allowed LivingSocial to shore up its finances without the scrutiny of the public markets. Groupon, meanwhile, has been criticized for its ballooning marketing expenses (GRPN), which have led to rising losses.

The company has more than 10,000 employees, up from 37 in June 2009. It spent $613.2 million on marketing in the first nine months of last year, resulting in a net loss of $238.1 million. Marketing costs will increase in the coming months as stores become less inclined to offer Groupons because they aren’t seeing users return, Mulpuru said.

“It’s been like a marketing blitzkrieg that’s grown the business to the size that it is,” Mulpuru said. “They were using investor money to subsidize these offers for so long. Then what merchants start recognizing is, ‘We’re just not getting new customers.’”

To contact the reporters on this story: Ari Levy in San Francisco at; Danielle Kucera in San Francisco at

To contact the editor responsible for this story: Tom Giles at