Continental Appeals ‘Absurd’ Concorde Verdict

By Heather Smith - Mar 8, 2012 8:23 PM GMT+0700

Toshihiko Sato/AP

Air France flight 4590 takes off from Charles de Gaulle airport in Paris, on July 25, 2000.

Continental Airlines Inc. will ask an appeals court near Paris to overturn its manslaughter conviction for the deaths of 113 people in the crash of Air France’s Concorde supersonic jet almost 12 years ago.

Now part of United Continental Holdings Inc. (UAL), the world’s largest airline, Continental and a maintenance engineer dispute their December 2010 convictions and will show the court new evidence the deaths weren’t their fault.

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March 8 (Bloomberg) -- Air France-KLM Group Chief Financial Officer Philippe Calavia talks about the company's full-year loss and increasing productivity. Europe's biggest airline had a net loss of 809 million euros ($1.06 billion) versus a pro forma 289 million-euro profit in 2010. Calavia speaks with Bloomberg Television's Caroline Connan in Paris. (Source: Bloomberg)

“Neither the company nor its employees were responsible for the Concorde accident,” Continental said in an e-mailed statement. “To blame the crash on a small strip of metal from another aircraft is absurd.”

The Concorde crashed soon after take-off on July 25, 2000, when a fireball was ignited after the jet ran over a metal strip that fell from a prior Continental flight, investigators said. The probe found the strip tore one of the plane’s tires and sent debris into its fuel tanks. Continental has disputed that scenario, telling the court the fire began before the jet hit the strip. The airline said it will present new evidence to the Versailles appeals court to support its claim.

“The court was mistaken” in holding Continental liable, the carrier’s lawyer, Olivier Metzner, said before today’s hearing began. “The plane was already on fire when it hit this metal strip -- the accident was unavoidable,” he said, calling the Concorde a plane of “extreme fragility.”

Prosecution Appeal

Prosecutors also appealed the 2010 verdict by the lower court, meaning four men who were cleared must again face manslaughter charges. One of them, a former official at France’s civil aviation authority named Claude Frantzen, filed a constitutional challenge arguing they can’t appeal a verdict that followed the trial prosecutor’s recommendations. The court will need to consider his challenge “immediately,” said his lawyer, Daniel Soulez-Lariviere.

The lower court ordered Continental to pay 1.2 million euros ($1.6 million) in damages and fines and also held a mechanic named John Taylor responsible, saying he ignored the risk of using the wrong materials in maintenance. Taylor received a suspended sentence.

The crash hastened the demise of the Concorde. Flights were grounded for 16 months afterwards and the plane went back into service just as demand for air travel fell after the Sept. 11, 2001, terrorist attacks. The Concorde’s last commercial flight was in 2003.

Air France Response

Air France, now part of Air France-KLM Group (AF), is participating in the appeals process “because Continental hasn’t stopped arguing it was Air France’s responsibility,” said the carrier’s lawyer, Fernand Garnault. “Air France wants to be there to be able to respond.”

Henri Perrier, another defendant cleared by the lower court, is too ill to attend and will also ask to postpone the appeal hearings, set to run through May, until he recovers. He worked at Aerospatiale, the Concorde’s former French manufacturer that is now part of European Aeronautic, Defence & Space Co. (EAD)’s Airbus SAS.

Garnault said Perrier was “essential” to the trial because of his historical knowledge of the aircraft and Metzner called his absence “obviously regrettable.”

EADS was held “civilly liable” with Continental and the mechanic, and ordered to pay victims 195,000 euros. The company has also appealed the civil liability finding.

United Airlines parent UAL Corp. and Continental merged in 2010 to form Chicago-based United Continental Holdings.

To contact the reporter on this story: Heather Smith in Paris at hsmith26@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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European Stocks Gain Before Greek Debt-Swap Deadline; EADS Rises on Payout

By Peter Levring - Mar 8, 2012 8:38 PM GMT+0700

European stocks climbed the most in a month as the deadline on Greece’s debt swap approached and Germany’s industrial output increased more than forecast. Asian shares and U.S. index futures also advanced.

European Aeronautic, Defence & Space Co. rallied to a five- year high after doubling its dividend and predicting earnings will climb. Aviva Plc added 2.7 percent as the U.K.’s second- biggest insurer by market value reported operating profit that exceeded estimates. Enel SpA (ENEL), Italy’s largest energy company, sank 5.4 percent after cutting its dividend.

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Aviva Plc climbed 1.9 percent as the U.K.’s second-biggest insurer by market value reported operating profit that exceeded estimates. Photographer: Simon Dawson/Bloomberg

The Stoxx Europe 600 Index (SXXP) advanced 1.3 percent to 263.41 at 1:37 p.m. in London, the biggest increase since Feb. 3. The gauge has surged 7.7 percent this year as the European Central Bank lent more than 1 trillion euros ($1.3 trillion) for three years to the region’s banks to ease liquidity.

“Investors will be able to draw a line under Greece that has been going on for too long,” said Mike Lenhoff, chief strategist at Brewing Dolphin Securities Ltd. in London. “In the U.S., economic news flow has been very encouraging. The overall trend of employment has been positive.”

Standard & Poor’s 500 Index futures added 0.8 percent today. The MSCI Asia Pacific Index (MXAP) advanced 1.3 percent as Japan’s economy contracted less than initially estimated last quarter.

Greek Debt

Investors with about 60 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate, putting the country on the verge of the biggest sovereign restructuring in history. The offer, which ends at 10 p.m. Athens time today, aims to reduce the 206 billion euros of privately held Greek debt by 53.5 percent.

In Germany, industrial output increased more than economists forecast in January as construction activity jumped. Production rose 1.6 percent from December, when it fell 2.6 percent, the Economy Ministry in Berlin said today. Economists forecast a January increase of 1.1 percent, according to the median of 39 estimates in a Bloomberg News survey.

Stocks pared their gains as a U.S. report showed the number of Americans filing claims for jobless benefits rose to 362,000 last week. Applications for unemployment insurance payments increased by 8,000 in the week ended March 3, Labor Department figures showed today. The average over the past four weeks held close to a four-year low.

EADS rallied 8.6 percent to 29.15 euros, the highest price since May 2006. The maker of Airbus passenger jets agreed to pay a dividend of 45 cents a share, more than doubling the payout from last year and exceeding analyst estimates for a 30-cent dividend. Earnings before interest, taxes and one-time items will increase to more than 2.5 billion euros in 2012, from 1.8 billion euros last year, EADS said.

Aviva Advances

Aviva (AV/) rose 2.5 percent to 359.90 pence. The insurer reported operating profit that fell 2 percent to 2.5 billion pounds, surpassing the 2.45 billion-pound median estimate of analysts in a Bloomberg survey.

Bayerische Motoren Werke AG gained 1.6 percent to 69.34 euros after the world’s largest maker of luxury vehicles reported record profit in 2011 of 8.02 billion euros buoyed by demand for the X3 sport-utility vehicle.

Profit compared with an 8.04 billion-euro average estimate of 20 analysts surveyed by Bloomberg. Revenue climbed 14 percent to 68.8 billion euros.

Gemalto NV (GTO) jumped 4.2 percent to 45.02 euros as the inventor of the smart chip used in bank and phone cards forecast revenue and operating profit will increase this year.

Klepierre Gains

Klepierre SA (LI) climbed 5.1 percent to 24.58 euros. Simon Property Group Inc., the biggest U.S. mall owner, agreed to pay BNP Paribas SA 28 euros a share for a 28.7 percent stake in France’s second-largest publicly traded owner of shopping centers, in a deal worth about 1.52 billion euros. BNP shares jumped 4 percent to 37.09 euros.

Deutsche Post AG (DPW) advanced 5.8 percent to 13.67 euros. Europe’s largest postal service said profit in 2012 will rise as much as 6.6 percent as growth in global trade helps the company’s DHL express and freight business.

Enel retreated 5.4 percent to 2.87 euros after the utility cut its dividend payout by a third to 40 percent of ordinary net income as it seeks to raise funds to cut debt.

Annual net income fell to 4.15 billion euros from 4.4 billion euros a year earlier, hurt by a windfall-profit tax imposed in Italy, the company said. That missed the 4.3 billion- euro average estimate of 17 analysts surveyed by Bloomberg.

Wirecard AG (WDI) retreated 2.2 percent to 14.09 euros after the German provider of software and systems for online payments raised 139.5 million euros selling shares at 13.70 euros apiece.

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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

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Stocks Advance for Second Day on German Output; Euro Strengthens on Greece

By Stephen Kirkland and Lynn Thomasson - Mar 8, 2012 8:40 PM GMT+0700

Stocks (MXWD) rose for a second day and commodities gained after Germany’s industrial output increased more than forecast and Japan’s economy shrank less than initially estimated. The euro strengthened and Italian bonds advanced as Greece moved closer to completing its debt swap.

The MSCI All-Country World Index (MXWD) added 0.9 percent at 8:35 a.m. in New York. Standard & Poor’s 500 Index futures increased 0.7 percent. The euro appreciated 0.7 percent to $1.3238, while the yen weakened against all 16 of its most-traded peers. The yield on the 10-year Italian bond slid 14 basis points to 4.80 percent. The S&P GSCI gauge of commodities climbed 0.7 percent, led by gains in industrial metals.

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Japan’s gross domestic product shrank an annualized 0.7 percent in the fourth quarter, compared with an earlier estimate for a 2.3 percent contraction. Photographer: Tomohiro Ohsumi/Bloomberg

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March 8 (Bloomberg) -- Marino Valensise, chief investment officer at Baring Asset Management Ltd., discusses Greece's debt problems, China's economic growth and the outlook for emerging market stocks. He speaks with Susan Li on Bloomberg Television’s "First Up." (Source: Bloomberg)

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March 8 (Bloomberg) -- Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, talks about the outlook for global financial markets and his investment strategy. Mahendran speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

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March 8 (Bloomberg) -- Geoffrey Yu, a currency analyst at UBS AG, discusses participation in the Greek debt swap, the outlook for the euro and European Central Bank monetary policy. He speaks with Caroline Hyde and Linda Yueh on Bloomberg Television's "First Look." (Source: Bloomberg)

German production rose 1.6 percent in January, the government said before Labor Department data showed U.S. jobless claims increased. Japan’s gross domestic product shrank an annualized 0.7 percent in the fourth quarter, compared with an earlier estimate for a 2.3 percent contraction, the government said. Investors with about 60 percent of eligible Greek bonds have agreed to participate in the world’s biggest sovereign debt restructuring.

“We have space to rally,” Marino Valensise, chief investment officer at Baring Asset Management Ltd. said in a Bloomberg Television interview from Hong Kong. The firm oversees $46 billion. “Greece is okay for now, but this is a short-term solution to a longer-term problem.”

The Stoxx Europe 600 Index climbed 1.3 percent as 10 shares advanced for every one that fell. European Aeronautic, Defence & Space Co. (EAD) rallied 8.8 percent to a five-year high after doubling its dividend and predicting earnings will climb. Gemalto NV jumped 4.3 percent as the inventor of the smart chip used in bank and phone cards forecast revenue and operating profit will increase this year.

Jobless Claims

The increase in S&P 500 futures indicated the U.S. gauge will climb for a second day. Applications for unemployment insurance payments increased to 362,000 last week, Labor Department figures showed. Economists forecast 352,000 claims, according to the median estimate in a Bloomberg News survey. The Labor Department will report monthly jobs data tomorrow, which economists forecast will show an increase of 225,000 private jobs and total non-farm payrolls growth of 210,000.

The 17-nation euro appreciated 1.5 percent against the yen, rising for the second consecutive day versus the Japanese and U.S. currencies. The pound rose 0.4 percent versus the dollar as the Bank of England kept the benchmark rate at 0.5 percent and maintained its bond purchase target.

Bunds Fall

The extra yield investors demand to hold Italian 10-year debt instead of benchmark German bunds fell 18 basis points, with the Spanish-German yield spread narrowing eight basis points. The yield on the bund advanced four basis points, snapping a two-day decline.

The cost of insuring against default on European sovereign debt fell for a second day. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments dropped five basis points to 349.

Copper advanced 1.2 percent and New York oil increased 0.8 percent to $107.01 a barrel. Lead jumped 2.3 percent.

The MSCI Emerging Markets Index (MXEF) rose 1.2 percent, snapping a three-day slump. Hon Hai Precision Industry Co. (2317) led Apple Inc. suppliers higher after the U.S. company introduced a new version of its IPad. The ISE National 100 Index (XU100) gained 1.5 percent in Istanbul and China’s Shanghai Composite Index (IFB1) increased 1.1 percent. Vietnam’s VN Index (VNINDEX) sank 2.8 percent, the biggest drop among major stock benchmarks tracked by Bloomberg, after the government raised gasoline prices.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net

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

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S&P 500 Gets 9% Cheaper

By Inyoung Hwang and Lu Wang - Feb 24, 2012 4:39 AM GMT+0700

Profits in the Standard & Poor’s 500 Index are rising faster than its price, leaving the gauge 9 percent cheaper than it was in April even after American equities climbed within 0.1 percent of last year’s high.

The S&P 500 rose 0.4 percent to 1,363.46 today following a rally since October that added as much as $3.2 trillion to share values, according to data compiled by Bloomberg. While the index is just shy of its 2011 peak of 1,363.61, expanding income has pushed the price-earnings ratio to 14.1 from 15.4 in April.

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

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Feb. 22 (Bloomberg) -- Leon Cooperman, chief executive officer of Omega Advisors Inc., talks about investment strategy and President Barack Obama's policies. Cooperman spoke with Bloomberg's Erik Schatzker yesterday. (Source: Bloomberg)

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Feb. 23 (Bloomberg) -- Liam Dalton, chief executive officer at Axiom Capital Management Inc., talks about reasons for favoring Transocean Ltd., Caterpillar Inc. and gold stocks. Dalton speaks with Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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

Economic growth that has been slower than any post- recession period since at least the 1940s is keeping investors from paying more for earnings even after stocks doubled in three years. The best January for the S&P 500 in 15 years has coincided with a decline in New York Stock Exchange trading volume to the lowest level since 1999 and record deposits with investment-grade bond funds.

“The world is profoundly underinvested in U.S. equities,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a phone interview on Feb. 21. His firm manages $300 billion. “The public is bombarded with all these negatives. Greece this, Portugal that, dysfunctional governments. The retail investor is frozen.”

Topping Estimates

Corporate profits have topped analyst estimates for 12 straight quarters. Analysts that cover companies in the S&P 500 project earnings will rise this year to $104.40 a share, the highest level ever, according to data compiled by Bloomberg. That would represent a 70 percent increase in earnings since 2009, compared with the 22 percent rally in the index in the past two years. Earnings for S&P 500 companies from Priceline.com Inc. to MasterCard Inc. and Lorillard Inc. are estimated to jump 9.8 percent from last year.

The S&P 500 has recovered 24 percent since its low on Oct. 3. Its price-earnings ratio of 14.1 matches the average level last year. The valuation has trailed the five-decade average of 16.4 for the longest stretch since the 13-year period beginning in 1973, according to Bloomberg data.

The S&P 500’s valuation shrank as much as 27 percent in 2011 as S&P stripped the U.S. of its AAA credit rating, President Barack Obama and Congress debated deficit cuts and Europe was forced to bail out Greece. The European Central Bank’s three-year lending program for banks and the Federal Reserve’s pledge to keep benchmark interest rates low through at least 2014 have failed to bolster investor confidence enough to boost valuations.

‘Powerful Recovery’

“The powerful recovery in earnings thus far has allowed market averages to rise without pushing the P/E higher,” David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., said in a Feb. 21 e-mail. His firm oversees $600 billion. “Many investors are either not convinced that this price rally and earnings recovery are for real, or they simply do not care, having been burned too badly in the downturn.”

U.S. gross domestic product expanded an average 2.4 percent a quarter in the 2 1/2 years since the recession ended in 2009, data compiled by Bloomberg show. The world’s largest economy hasn’t had a smaller post-recession recovery rate since at least the 1940s, the data show. In the 2003 bull market, GDP rose 2.7 percent on average, before the S&P 500 surged 102 percent. For the 1982 rally, the rate was 5.7 percent. Equities more than tripled in that cycle.

Biggest Swings

Stocks saw unprecedented swings last year as global economic concerns overshadowed S&P 500 fundamentals. The index moved an average 1.3 percent each day from April 2011 through the end of the year, compared with the 50-year average of 0.6 before the September 2008 collapse of Lehman Brothers Holdings Inc., according to data compiled by Bloomberg. The Dow Jones Industrial Average (INDU) alternated between losses and gains of 400 points on four days in August, the longest streak on record.

The swings took a toll on professional and retail investors. A total of 21 percent of 525 global fund categories tracked by Morningstar Inc. topped their benchmark indexes last year, the fewest since at least 1999. A Hedge Fund Research Inc. index (HFRIFWI) of industry performance fell 5.2 percent in 2011, only the third annual loss since 1990 and the biggest decline since 2008, when it plunged 19 percent, according to the Chicago-based firm.

Trading by individuals has been slowing since the 2008 financial crisis. Daily average volume slipped 9 percent last quarter compared with a year ago, according to data from E*Trade (ETFC) Financial Corp., TD Ameritrade Holding Corp. and Charles Schwab Corp. At E*Trade (ETFC), daily trading volume is 35 percent lower than it was at the end of 2008. Revenue-generating trades are down 14 percent in the same period at Schwab.

‘Hard to Jump In’

“When you have a market that has done so well so fast, it’s really hard to jump in,” Brian Culpepper, a portfolio manager at James Investment Research Inc. in Xenia, Ohio, which oversees $3.2 billion, said in a telephone interview on Feb. 21. “Everybody is pretty skittish right now on this overall rally. There is by far a better chance for the market to head down than there is for heading up here.”

Trading (MVOLUSE) at the New York Stock Exchange declined to the lowest level since 1999 last month, with the average volume over the 50 days ending Jan. 25 slowing to 838.4 million shares, according to data compiled by Bloomberg. The value of stock changing hands dropped to $24.9 billion, a 50-day average not seen since at least 2005.

Record-low interest rates have failed to keep investors from putting money in bonds. The S&P 500’s earnings yield is at 7.1 percent, close to the highest on record when compared with the 10-year Treasury (USGG10YR) rate, according to data compiled by Bloomberg since 1962. U.S. investment-grade bond mutual funds saw a record $3.3 billion in inflows during the week ended Feb. 15, while American equity funds had outflows of $1.9 billion, according to data by EPFR Global and Bank of America Corp.

Unduly Punished

Companies with business focused in the U.S., such as hospital operator Community Health Systems Inc., have been unduly punished, according to Ed Maran, a portfolio manager at Thornburg Investment Management Inc. in Santa Fe, New Mexico, which oversees $80 billion. Community Health trades at 7 times earnings in the past 12 months, compared with the average of 28.5 since it went public in 2000, according to Bloomberg data.

“The uncertainty at the global level probably should not be reflected so greatly in the prices of these types of companies,” Maran said. “As long as we have a resolution of the European sovereign debt problem that’s orderly, stocks are very cheap relative to other investment alternatives.”

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Lu Wang in New York at lwang8@bloomberg.net

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

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Tablet by Any Other Name Not as Sweet as ’IPad’

By Sarah Frier - Mar 8, 2012 12:01 PM GMT+0700
That’s the message Apple Inc. (AAPL) conveyed yesterday when it unveiled the third version of its tablet computer, calling it only...iPad.

After naming the previous version iPad 2, Apple abandoned a number-based nomenclature, surprising pundits who speculated that the company might name its new tablet “iPad 3” or “iPad HD,” referring to its high-definition screen.

Failing to set apart the new tablet by name could lead to brand confusion for consumers who own the original device, also called iPad, or for buyers of later versions, said Matt Gordon, director of naming and writing for Landor Associates, a brand consulting firm based in San Francisco.

“It does complicate things after the purchase,” he said. “It’s also confusing with the original iPad, down the road, as people have multiple generations of this device.”

Sticking with the original name of a device is hardly new for Cupertino, California-based Apple. The company updated the iPod multiple times without attaching numbers to the digital music player. Ditto for MacBook laptops and iMac desktops.

Naming the device iPad 3 “would be so predictable,” Phil Schiller, Apple’s senior vice president of worldwide marketing, said in remarks to reporters. “We’ve had many products where we’ve never used numbers. Sometimes we do, sometimes we don’t.”

The move stands to reinforce Apple’s dominance of the tablet category, said Stephen Baker, vice president for industry analysis at NPD Group. According to market research firm Gartner Inc., Apple will account for two-thirds of the 103.5 million tablet devices sold in 2012.

‘Thumb In Eye’

“It’s more of a thumb in the eye of everyone else, like, ‘We don’t have to put numbers behind our products, because everyone knows what ours is,’” Baker said.

Apple gets about 20 percent of its sales from the iPad, attracting consumers as well as business users. It outfitted the newest version with a sharper screen and faster chip designed to help the company widen its lead over Amazon.com Inc., Microsoft Corp. and Google Inc. in tablets.

“This move sets up an interesting decision in terms of branding when a new iteration comes out and the current model starts to sell at a lower price,” said Bill Kreher, an analyst at Edward Jones in St. Louis, who has a “buy” rating on Apple. Still, he added, “I appreciate the simplicity of using just the iPad name.”

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

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

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Stock Futures Rise as Greece Nears Swap

By Rita Nazareth - Mar 8, 2012 8:36 PM GMT+0700

U.S. stock futures rose, indicating the Standard & Poor’s 500 Index will gain for a second straight day, as Greece moved closer to completing its debt swap.

Morgan Stanley and Citigroup Inc. (C) added at least 1.1 percent, following a rally in European lenders. Freeport-McMoRan Copper & Gold Inc. (FCX) and Alcoa Inc. (AA) advanced more than 1.6 percent as the S&P GSCI index of 24 commodities gained 0.7 percent. American International Group Inc. lost 2 percent as the U.S. Treasury Department is selling $6 billion in shares.

S&P 500 futures expiring in March added 0.7 percent to 1,362.70 at 8:35 a.m. New York time. Dow Jones Industrial Average futures rose 68 points, or 0.5 percent, to 12,909.

“The market bounces on optimism that Greek creditors will mostly agree to exchange their bonds for new ones,” Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, wrote in a note. “This thus sets the stock market up for a major test when the official news is out as the market tries to retest last week’s high.”

The S&P 500 has risen 7.6 percent this year amid better- than-estimated economic data and expectations Europe would tame its debt crisis. On Feb. 24, the index advanced to the highest level in almost four years. The Dow last week closed above 13,000 (INDU) for the first time since May 2008.

Equity futures gained on speculation Greece will reach its participation target by the deadline of 10 p.m. in Athens. Holders of about 60 percent of the Greek bonds eligible for the deal, including Greece’s largest banks, most of the country’s pension funds and more than 30 European banks and insurers, have agreed to the offer.

Jobless Claims

The number of Americans filing claims for jobless benefits rose to 362,000 last week, a level consistent with an improving labor market. The Labor Department will report monthly jobs data tomorrow, which economists forecast will show an increase of 225,000 private jobs and total non-farm payrolls growth of 210,000.

Financial companies gained as a gauge of European lenders rallied 1.8 percent. Morgan Stanley (MS) added 1.8 percent to $18.20. Citigroup increased 1.1 percent to $33.60.

Energy and raw material producers gained as commodities rallied. Freeport-McMoRan climbed 1.6 percent to $39.60. Alcoa added 1.8 percent to $9.72.

AIG (AIG) slumped 2 percent to $28.85. The insurer plans to purchase as much as $3 billion of the sale, the Treasury said yesterday in a statement. Shares are being offered at $29 apiece and the books are still open, according to two people familiar with the matter, who declined to be identified because the process is private. The department sold 200 million shares of New York-based AIG in May -- also at $29 each -- cutting its stake to 77 percent.

Monster Worldwide

Monster Worldwide Inc. (MWW), the online recruiting service that has lost almost 90 percent of its value, is poised to extract a record takeover premium for investors.

Chief Executive Officer Salvatore Iannuzzi said last week he is weighing options to boost the company’s shares after Monster traded as low as 0.67 times the value of its net assets.

The world’s largest Internet jobs board, valued at more than $7.5 billion in 2006 before U.S. unemployment reached 10 percent and LinkedIn Corp. (LNKD) emerged as an alternative, could still fetch as much as $15 a share in a takeover by a competitor, said Matrix Asset Advisors Inc. Buyers would be paying an 80 percent premium -- the highest ever among similar- sized deals in the human resources and e-commerce services industries -- to get a hold of the New York-based company’s 23 percent international sales growth last year from operations in more than 50 countries.

“It should wrest a high premium,” David Katz, chief investment officer at New York-based Matrix, which oversees about $935 million and owned Monster shares as of February, said in a telephone interview. Acquirers would still be “getting it at a steal. It’s got a reasonable likelihood of happening because you can pay a nice premium and still everybody comes out having done well,” he 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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Greece Readies Record Debt Swap With 60% Commitments

By Maria Petrakis and Fabio Benedetti-Valentini - Mar 8, 2012 6:59 PM GMT+0700

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Greek Debt Crisis Timeline

Greece moved closer to sealing the biggest sovereign restructuring in history as investors indicated they’ll participate in the nation’s debt swap.

Holders of about 60 percent of the Greek bonds eligible for the deal, including Greece’s largest banks, most of the country’s pension funds and more than 30 European banks and insurers including BNP Paribas (BNP) SA and Commerzbank AG (CBK), have agreed to the offer so far. That brings the total to about 124 billion euros ($163 billion), based on data compiled by Bloomberg from company reports and government statements.

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Flags at a store in Athens on March 7, 2012. Photographer: Kostas Tsironis/Bloomberg

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The Acropolis in Athens. Photographer: Petros Giannakouris/AP

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Health workers demonstrate against the government's austerity measures in central Athens on Feb. 23, 2012. Photographer: Aris Messinis/AFP/Getty Images

The euro and stocks gained on speculation Greece will reach its participation target by the deadline of 10 p.m. in Athens today. The goal of the exchange is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years.

The swap “will go through” and markets won’t be jarred should a majority fall short of the targeted amount, Peter Bofinger, an economic adviser to the German government, said in an interview from Berlin today with Bloomberg Television.

Clauses

While Greece would prefer a voluntary deal, the government has said it will use collective action clauses to force holders of Greek-law bonds into the swap if the so-called private sector involvement falls short and it gets sufficient approval from investors to change the bonds’ terms.

“I think that the markets are aware of the risk that a majority for voluntary restructuring is not available, and so I think the surprise won’t be too big if tonight when they realize the collective action clauses will have to be applied,” Bofinger said.

Under the rules of the exchange, investors holding at least 50 percent of the eligible bonds must vote on the swap, and 66 percent of those must agree to amend the bonds to enable the government to impose the collective action clauses, Commerzbank AG (CBK)’s head of fixed-income strategy, Christoph Rieger, said in a note yesterday.

“Adding up the commitments to participate in the Greek PSI, it is now clear that the CAC hurdles will very likely be cleared,” Reiger said.

The 17-nation euro added 0.5 percent to $1.321, while the Stoxx Europe 600 Index gained 1.3 percent to 263.35 at 10:48 a.m. in London.

Deal Condition

Hans Humes, president of Greylock Capital Management, expects holders of more than 80 percent of Greece’s government bonds to accede to the swap, he said in a Bloomberg Television interview yesterday. Humes is a member of a committee of private bondholders that negotiated the deal with the government.

Niek Hoek, chief executive officer of Amsterdam-based Delta Lloyd NV, said today the insurer plans to take part in the swap deal on condition that the CAC clause applies to all parties.

“We have indicated we will participate if everyone else does,” he told reporters on a call. “Our base case expectation is the clause will be declared applicable and that the debt will be restructured in that fashion.”

Greece’s six largest banks, cumulatively the biggest private holders of the country’s debt, plan to accept the offer, the Finance Ministry said March 6. Greek pension funds with about 17 billion euros of bonds will also join, Finance Minister Evangelos Venizelos said on Real FM Radio yesterday.

Banks, Insurers

More than thirty banks and insurers that were on the private creditor-investor committee for Greece plan to accept the swap, according to an e-mailed statement from the Institute of International Finance yesterday. Those investors hold an aggregate 84 billion euros of bonds, the IIF said.

Investors who participate will get new bonds with a face value of less than half the previous securities, longer maturities and reduced interest rates, leading to a net present value loss of more than 70 percent. The new bonds do come with warrants that will provide extra income in years when Greek economic growth exceeds certain thresholds.

Greece expects holders to accept the offer and is ready to force them if necessary, Venizelos said in a Bloomberg Television interview in Athens this week. The government has said it wants participation above 90 percent and is seeking a minimum level of 75 percent, including with use of the collective action clauses.

Swaps Trigger

“I do fully expect to be part of the collective action clause,” Patrick Armstrong, managing partner at Armstrong Investment Managers in London, said yesterday in a Bloomberg Television interview. He won’t voluntarily join in the swap because of the “minuscule” chance his bond maturing March 20 will be redeemed at face value.

Compelling holdouts to take part will likely trigger insurance contracts on the debt known as credit default swaps.

“I can’t see any scenario where people are forced to participate against their will and they aren’t triggered,” Armstrong said.

The swap provides “a moment for a real turning of the page,” that should allow Greece to “regain some economic vitality,” IIF Managing Director Charles Dallara, who led negotiations for private creditors in the debt-swap discussions, said in a telephone interview yesterday. The Washington, D.C.- based IIF represents more than 450 financial firms globally.

The members of the IIF creditor-investor committee who agreed to participate are Ageas, Allianz SE, Alpha Bank SA, Axa SA (CS), La Banque Postale, Banco Bilbao Vizcaya Argentaria SA, Bank of Cyprus, BNP Paribas, CNP Assurances SA, Commerzbank AG, Credit Agricole SA, Credit Foncier, DekaBank Deutsche Girozentrale, Deutsche Bank AG (DBK), Dexia SA, Emporiki Bank of Greece SA, EFG Eurobank, Generali, Greylock, Groupama SA, HSBC Holdings Plc, ING Bank, Intesa Sanpaolo SpA (ISP), KBC Groep NV, Landesbank Baden-Wuerttemberg, Marfin Popular Bank Plc, Metlife Inc., National Bank of Greece SA (ETE), Piraeus Bank SA, Royal Bank of Scotland Group Plc, Societe Generale SA and UniCredit SpA.

In Germany, Munich Re, DZ Bank AG and KfW Group also said they will take part in the exchange. FMS Wertmanagement, the bad bank created to prevent the collapse of German property lender Hypo Real Estate Holding AG, and Erste Abwicklungsanstalt, the restructuring unit of state-owned lender WestLB AG, are both planning to take part in the exchange, according to people familiar with the matter. The two bad banks together hold as much as 9.8 billion euros in Greek debt.

To contact the reporters on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net; Maria Petrakis at mpetrakis@bloomberg.net

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Netflix Expands Apple TV Alliance in ITunes Billing Partnership

By Cliff Edwards and Andy Fixmer - Mar 8, 2012 4:43 AM GMT+0700

Netflix Inc. (NFLX) is deepening its ties with Apple Inc. (AAPL) by allowing owners of Apple TV set-top boxes to sign up for the video-streaming service directly and pay through their iTunes accounts.

The change takes effect today in all markets, Los Gatos, California-based Netflix said today in a blog post. The upgrade makes it simpler for Apple TV users to sign up and pay, Steve Swasey, a Netflix spokesman, said by telephone.

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Netflix envelopes at the San Francisco Post Office. Photographer: Justin Sullivan/Getty Images

Netflix is seeking to attract and retain customers by integrating its $7.99-a-month service with Web-based and pay- television partners. The company is considering partnerships with cable operators to offer the service as part of their premium lineup.

The Apple upgrade will take effect today in the U.S., Canada, Latin America, the U.K. and Ireland. Prospective customers will no longer be redirected to Netflix’s website to subscribe, Swasey said. He wouldn’t discuss terms.

Alliances with cable companies would help Netflix reach more customers and mollify concerns that the service threatens to cannibalize pay-TV, Hastings suggested at a Feb. 28 Morgan Stanley conference in San Francisco.

Netflix has held talks with cable providers, Reuters reported yesterday, citing people it didn’t identify.

“It’s not in the short term, but it’s the natural direction in the long term,” Chief Executive Officer Reed Hastings said then.

Netflix is gaining clout to make such deals because it is offering more exclusive content, following the lead of Time Warner Inc. (TWX)’s HBO channel, Hastings said. The biggest hurdle is how revenue is shared, he said.

Sidestepping Competition

“On one side, it’s a good move for Netflix because it helps them sidestep some of the coming competition” from pay-TV players, Tony Wible, an analyst with Janney Montgomery Scott, said in an interview. He has a “sell” rating on the stock. “On the bad side, the cable companies will take a cut of the revenue.”

Such agreements also could shield Netflix from potential moves by Internet service providers to switch from flat-rate monthly data fees to usage-based pricing. Netflix has argued against usage-based billing in Canada and has asked U.S. regulators to take a stand against such moves domestically.

Netflix also faces potential competition from online services planned by pay-TV providers including Verizon Communications Inc. (VZ) and by Comcast Corp. (CMCSA)’s Streampix.

“If we look at potential competitors, if we can share some of the margin with them and then they’re making money because they are upselling us through their ecosystem, that’s a good thing all around,” Hastings said.

Netflix lost 1.8 percent to $105.19 at the close in New York. The shares have gained 52 percent this year.

By the middle of 2013, the company will have five original series for streaming, according to Ted Sarandos, chief content officer.

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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Facebook Gets $8 Billion From Credit Line

By Michael Amato - Mar 8, 2012 6:28 AM GMT+0700

Facebook Inc. (FB) the operator of the world’s most popular social-networking website, got $8 billion in financing.

The loans consist of a $5 billion five-year revolving line of credit and a $3 billion 364-day bridge loan, the Menlo Park, California-based company said today in a regulatory filing.

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Facebook's office in Menlo Park, California. Photographer: Peter DaSilva/EPA/Lanodv

JPMorgan Chase & Co., Morgan Stanley, Goldman Sachs Group Inc., Bank of America Corp. and Barclays Plc arranged both facilities.

Borrowings under the revolver will pay interest at 1 percentage points more than the London interbank offered rate, according to the filing. Lenders in the deal will be paid a 10 basis point fee on any unused portions, according to the filing.

Facebook’s new five-year credit line will replace its existing $2.5 billion revolver.

Debt under the bridge loan will initially pay interest at 1 percent more than Libor, then it will increase to 1.25 percentage points after 180 days.

Facebook, led by co-founder Mark Zuckerburg, filed for an IPO last month, pursuing what may be the largest internet offering on record.

To contact the reporter on this story: Michael Amato in New York at mamato3@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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S&P 500 Rebounds on Employment Data

By Rita Nazareth - Mar 8, 2012 4:28 AM GMT+0700

U.S. stocks advanced, following the biggest decline in 2012 for the Standard & Poor’s 500 Index, after a private report showed American companies increased hiring and more investors signed on to a Greek debt swap.

Equities extended gains on a report that the Federal Reserve is discussing a new type of bond-buying program. Financial and industrial shares rose the most among 10 groups in the S&P 500. Bank of America Corp. (BAC) and Caterpillar Inc. (CAT) advanced at least 2.2 percent. Apple (AAPL) Inc. added 0.1 percent after introducing a new version of the iPad with a sharper screen.

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March 7 (Bloomberg) -- Bloomberg's Pimm Fox and Deborah Kostroun report on the performance of the U.S. equity market today. U.S. stocks advanced, following the biggest decline in 2012 for the Standard & Poor’s 500 Index, after a private report showed American companies increased hiring and more investors signed on to a Greek debt swap. (Source: Bloomberg)

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March 7 (Bloomberg) -- John Manley, chief equity strategist for Wells Fargo Advantage Funds, and David Tice, president of Tice Investments LLC, talk about the outlook for U.S. stocks and bonds, and investment strategy. They speak with Trish Regan, Lisa Murphy and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

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March 7 (Bloomberg) -- Kate Moore, senior global equity strategist at Bank of America Merrill Lynch, talks about the outlook for the U.S. stock market and investor sentiment. She speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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March 7 (Bloomberg) -- Ralph Schlosstein, president and chief executive officer of Evercore Partners Inc., talks about the results of the Super Tuesday primaries and caucuses, the February ADP employment report, and the equity market. Schlosstein, speaking with Betty Liu on Bloomberg Television’s “In the Loop,” also talks about the outlook for the 2012 presidential election. (Source: Bloomberg)

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March 7 (Bloomberg) -- Kyle Harrington, founder and managing partner of Harrington Capital Management, discusses his investment strategy and stock-market volatility. Harrington, speaking with Betty Liu, Joshua Lipton and Dominic Chu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

The S&P 500 rose 0.7 percent to 1,352.63 at 4 p.m. New York time, after slumping 1.5 percent yesterday. The Dow Jones Industrial Average added 78.18 points, or 0.6 percent, to 12,837.33. The Russell 2000 Index of small companies gained 1.1 percent to 795.95. About 6.1 billion shares changed hands on U.S. exchanges, or 9.1 percent below the three-month average.

“The market just wants to go up,” said Jack Ablin, who helps oversee $55 billion as chief investment officer at Harris Private Bank. “The ADP report was positive. The bigger participation in the Greek debt swap is encouraging. Plus, there’s a report that says that the Fed would continue to buy bonds, but they are not going to expand their balance sheet.”

Stocks rose as companies added 216,000 workers to payrolls in February, according to ADP Employer Services. The report came two days before the Labor Department’s monthly jobs data. Consumer borrowing rose more than forecast in January. Optimism about Greece’s debt swap also helped lift stocks. Investors with 58 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate.

Money Printing

Equities extended gains as the Wall Street Journal said the Fed would print new money to buy long-term mortgage or Treasury bonds, then effectively tie up that money by borrowing it back for short periods at low rates.

“The Fed ought to be saving future bullets for a situation that requires a strategic intervention,” said Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion. “If the Fed does something now, what happens if six months from now, Greece does default and it does throw the world into a recession? What’s the Fed going to do then?”

Before today, the S&P 500 (SPX) had fallen for three straight days on concern that a rally that restored more than $3.2 trillion to U.S. equity value since October outpaced economic prospects. The benchmark gauge trades at 13.9 times reported earnings, below the average since 1954 of 16.4 times.

Banks Rally

Financial shares, which yesterday had the biggest loss among 10 groups in the S&P 500, led the gains today. Bank of America rose 4 percent, the most in the Dow, to $8.02. JPMorgan Chase & Co. (JPM) advanced 1.6 percent to $39.95.

Industrial shares had the second-biggest gain in the S&P 500. Caterpillar advanced 2.2 percent to $108.28. United Technologies Corp. climbed 1.5 percent to $82.57.

General Electric Co. (GE) increased 1.9 percent to $18.77. The world’s biggest maker of jet engines, power generation equipment, health-care imaging equipment and locomotives reiterated its forecast of earnings growth of at least 10 percent from industrial and capital units this year.

Apple rose 0.1 percent to $530.69, trimming a gain of as much as 1.4 percent. The new iPad will cost $499 to $829 and include an A5X chip that enables better graphics. It will also boast a 9.7-inch screen that has more pixels than traditional high-definition televisions and run on so-called long-term evolution, or LTE, wireless networks. The device will be available March 16, and Apple is taking orders starting today.

Significant Upgrade

Chief Executive Officer Tim Cook is making the most significant upgrade yet to Apple’s tablet months before Microsoft Corp. (MSFT) introduces software that will run on competing devices. The new version is also aimed at helping the company fend off competition from Google Inc. (GOOG)’s Android operating system, as well as Amazon.com Inc. (AMZN), whose $199 Kindle Fire is gaining traction among budget-conscious buyers.

Microsoft gained 0.9 percent to $31.84. Google added 0.3 percent to $606.80. Amazon.com rose 1.5 percent to $183.77.

Ciena Corp. (CIEN) surged 4.2 percent to $14.01. The maker of network equipment for phone companies forecast fiscal second- quarter revenue that topped some analysts’ estimates. Ciena, which last month said first-quarter results would suffer from delays in recording international sales, today predicted stronger operating results in the second half of the year.

Rival JDS Uniphase Corp. (JDSU), the largest maker of fiber-optic testing equipment, added 2.5 percent to $12.80.

Homebuilders Surge

A measure of homebuilders in S&P indexes jumped 4 percent. Lennar Corp. (LEN) increased 5.6 percent to $23.62. D.R. Horton Inc. climbed 3.9 percent to $13.99.

Hovnanian Enterprises Inc. (HOV) increased 2.5 percent to $2.46. The largest homebuilder in New Jersey reported a narrower first- quarter loss as it reduced writedowns and increased sales.

Wynn Resorts Ltd. (WYNN) added 2.4 percent to $122.27. The hotel and casino operator asked investors to approve the removal of Japanese billionaire Kazuo Okada as a director, after accusing him of making improper payments to Philippines gambling officials.

Kraft Foods Inc. (KFT) fell 1.2 percent to $37.83 for the biggest decline in the Dow. The company was cut to “hold” from “buy” by Jefferies Group Inc., which said the stock has little incentive to outperform this year.

Pandora Media Inc. (P) plunged 24 percent, the most in the Russell 1000 Index, to $10.86. The Internet radio pioneer forecast first-quarter results that missed analysts’ projections because of a seasonal lull in advertising sales.

Solar stocks declined as Canadian Solar Inc. (CSIQ)’s loss exceeded estimates. Canadian Solar fell 13 percent to $2.85. First Solar Inc. (FSLR) dropped 6.6 percent to $25.80 for the biggest decline in the S&P 500.

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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Wells Fargo Branches May Be Closed, Merged

By Dakin Campbell - Mar 8, 2012 5:33 AM GMT+0700

Wells Fargo & Co. (WFC), the most valuable U.S. lender, may close or consolidate outlets as it examines ways to trim costs, according to its chief financial officer.

Wells Fargo could shut branches near each other or move some wealth-management or mortgage employees into those offices, Timothy Sloan said today at a New York investor conference.

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Wells Fargo & Co. signage is displayed at a bank branch in New York. Photographer: Scott Eells/Bloomberg

“There are obviously some regulatory issues that you need to be mindful of when you combine a securities business and a deposit-taking business,” Sloan told analysts who follow the San Francisco-based company. “But from time to time, we are clearly going to look at opportunities to consolidate.”

Banks including Wells Fargo have fallen short in efforts to replace revenue lost to new financial rules such as those capping debit-card interchange fees. Chief Executive Officer John Stumpf has announced plans to trim $1.5 billion in quarterly costs by the end of this year. Sloan affirmed the goal while saying first-quarter expenses will remain elevated.

Wells Fargo has completed converting the former Wachovia Corp. network to its own brand, Sloan said, giving the bank 6,239 retail branches, 1,375 retail brokerage offices and 725 mortgage locations at the end of 2011, according to today’s presentation. That outpaces Bank of America Corp. for the largest U.S. network of outlets.

Retail Presence

“We continually make decisions on how best to increase the efficiency of our networks, which is focused on how to best serve our customers and meet their financial needs,” Wells Fargo spokesman Ancel Martinez said in an e-mailed statement. “While we may streamline or even expand our offices and stores in business areas such as in mortgage and brokerage and within various geographical locations, we certainly have no plans to reduce our retail presence.”

The lender closed 638 branches in 2010, when it decided to shutter its consumer-finance unit, Wells Fargo Financial, according to a July 6, 2010 statement. At the time of the announcement, the bank said it had 6,600 Wachovia and Wells Fargo branches, and 2,200 mortgage offices. The staff totals about 264,000.

Bank of America closed 154 branches in 2011, according to its fourth-quarter presentation, and ended the year with about 5,700 branches. The Charlotte, North Carolina-based lender told the Federal Reserve in June that it could reduce branches to bolster finances in an emergency, a person briefed on the discussions said earlier this year.

More Branches

JPMorgan Chase & Co., the largest U.S. bank by assets, is expanding its network. The New York-based company said it may open 900 “potential” new branch buildings in 2012, especially in California, Florida and Atlanta. JPMorgan had 5,508 branches at the end of the year, an increase of 240 from 2010, according to the fourth-quarter earnings statement.

Wells Fargo gained 1 percent to $30.41 as of 4:15 p.m. in New York. The company has the biggest market value among U.S. lenders at about $160 billion and ranks first in home lending and mortgage servicing. The retail brokerage ranks third by number of financial advisers, according to the company.

To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

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

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Investors With 60% of Greek Bonds Agree to Swap

By Maria Petrakis and Fabio Benedetti-Valentini - Mar 8, 2012 6:01 AM GMT+0700

Investors with about 60 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate, putting the country on the verge of the biggest sovereign restructuring in history.

Greece’s largest banks, most of the country’s pension funds, and more than 30 European banks and insurers including BNP Paribas (BNP) SA, Commerzbank AG (CBK) and Assicurazioni Generali SpA (G) have agreed to the offer. That brings the total to about 124 billion euros ($163 billion), based on data compiled by Bloomberg from company reports and government statements.

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Flags at a store in Athens on March 7, 2012. Photographer: Kostas Tsironis/Bloomberg

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March 7 (Bloomberg) -- Hans Humes, president of Greylock Capital Management, talks about prospects for investor participation in Greece's debt swap and Greylock's interest in Irish debt. Humes speaks on Bloomberg Television’s “InBusiness With Margaret Brennan.” (Source: Bloomberg)

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March 7 (Bloomberg) -- Louise Cooper, an analyst at BGC Partners, talks about participation by private investors in Greece's debt swap and the outlook for interest rates and the economy in the U.K. She speaks on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)

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March 7 (Bloomberg) -- Patrick Armstrong, managing partner at Armstrong Investment Managers, talks about the debt swap deal between Greece and private investors. He speaks with Mark Barton on Bloomberg Television's "On the Move." (Source: Bloomberg)

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March 7 (Bloomberg) -- Societe Generale SA, France's second-biggest bank, Assicurazioni Generali SpA and UniCredit SpA joined firms saying they would participate in Greece's debt swap. Olivia Sterns reports on Bloomberg Television's "On the Move" with Mark Barton. (Source: Bloomberg)

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Health workers demonstrate against the government's austerity measures in central Athens on Feb. 23, 2012. Photographer: Aris Messinis/AFP/Getty Images

The goal of the exchange is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years. While Greece would prefer a voluntary deal, the government has said it will use collective action clauses to force holders of Greek-law bonds into the swap if the so-called private sector involvement falls short and it gets sufficient approval from investors to change the bonds’ terms.

“Adding up the commitments to participate in the Greek PSI, it is now clear that the CAC hurdles will very likely be cleared,” Commerzbank’s head of fixed-income strategy, Christoph Rieger, said in a note yesterday. Under the rules of the exchange, investors holding at least 50 percent of the eligible bonds must vote on the swap, and 66 percent of those must agree to amend the bonds to enable the government to impose the collective action clauses, Rieger said.

The offer ends at 10 p.m. Athens time today.

Pension Funds

Hans Humes, president of Greylock Capital Management, expects holders of more than 80 percent of Greece’s government bonds to accede to the swap, he said in a Bloomberg Television interview yesterday. Humes is a member of a committee of private bondholders that negotiated the deal with the government.

Greece’s six largest banks, cumulatively the biggest private holders of the country’s debt, plan to accept the offer, the Finance Ministry said March 6. Greek pension funds with about 17 billion euros of bonds will also join, Finance Minister Evangelos Venizelos said on Real FM Radio yesterday.

More than thirty banks and insurers that were on the private creditor-investor committee for Greece plan to accept the swap, according to an e-mailed statement from the Institute of International Finance yesterday. Those investors hold an aggregate 84 billion euros of bonds, the IIF said.

Default Swaps

Investors who participate will get new bonds with a face value of less than half the previous securities, longer maturities and reduced interest rates, leading to a net present value loss of more than 70 percent. The new bonds do come with warrants that will provide extra income in years when Greek economic growth exceeds certain thresholds.

Greece expects holders to accept the offer and is ready to force them if necessary, Venizelos said in a Bloomberg Television interview in Athens this week. The government has said it wants participation above 90 percent and is seeking a minimum level of 75 percent, including with use of the collective action clauses.

“I do fully expect to be part of the collective action clause,” Patrick Armstrong, managing partner at Armstrong Investment Managers in London, said yesterday in a Bloomberg Television interview. He won’t voluntarily join in the swap because of the “minuscule” chance his bond maturing March 20 will be redeemed at face value.

Compelling holdouts to take part will likely trigger insurance contracts on the debt known as credit default swaps.

“I can’t see any scenario where people are forced to participate against their will and they aren’t triggered,” Armstrong said.

Turning Page

The swap provides “a moment for a real turning of the page,” that should allow Greece to “regain some economic vitality,” IIF Managing Director Charles Dallara, who led negotiations for private creditors in the debt-swap discussions, said in a telephone interview yesterday. The Washington, D.C.- based IIF represents more than 450 financial firms globally.

The members of the IIF creditor-investor committee who agreed to participate are Ageas, Allianz SE, Alpha Bank SA, Axa SA (CS), La Banque Postale, Banco Bilbao Vizcaya Argentaria SA, Bank of Cyprus, BNP Paribas, CNP Assurances SA, Commerzbank AG (CBK), Credit Agricole SA, Credit Foncier, DekaBank Deutsche Girozentrale, Deutsche Bank AG (DBK), Dexia SA, Emporiki Bank of Greece SA, EFG Eurobank, Generali, Greylock, Groupama SA, HSBC Holdings Plc, ING Bank, Intesa Sanpaolo SpA (ISP), KBC Groep NV, Landesbank Baden-Wuerttemberg, Marfin Popular Bank Plc, Metlife Inc., National Bank of Greece SA (ETE), Piraeus Bank SA, Royal Bank of Scotland Group Plc, Societe Generale SA and UniCredit SpA.

In Germany, Munich Re, DZ Bank AG and KfW Group also said they will take part in the exchange. FMS Wertmanagement, the bad bank created to prevent the collapse of German property lender Hypo Real Estate Holding AG, and Erste Abwicklungsanstalt, the restructuring unit of state-owned lender WestLB AG, are both planning to take part in the exchange, according to people familiar with the matter. The two bad banks together hold as much as 9.8 billion euros in Greek debt.

To contact the reporters on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net; Maria Petrakis at mpetrakis@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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Apple Unveils New IPad to Widen Tablet Lead

By Adam Satariano and Peter Burrows - Mar 8, 2012 4:10 AM GMT+0700

Apple Inc. (AAPL) introduced a new version of the iPad, beefing up the two-year-old mobile computer with a sharper screen and faster chip to widen its lead over Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT) and Google Inc. in the tablet market.

The device will be called iPad, carry a price tag of $499 to $829 and include an A5X chip that enables better graphics, Apple said today at an event in San Francisco. It will also boast a 9.7-inch screen that has more pixels than traditional high-definition televisions and run on so-called long-term evolution, or LTE, wireless networks, which deliver data faster.

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Media view the new Apple iPad in San Francisco on March 7, 2012. Photographer: Tony Avelar/Bloomberg

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March 7 (Bloomberg) -- Tim Cook, chief executive officer of Apple Inc., Walter Piecyk, an analyst at BTIG LLC, and Eric Jackson, president and founder of Ironfire Capital LLC, offer their views on Apple's new iPad and the outlook for the company. The device will be called iPad, carry a price tag of $499 to $829 and include an A5X chip that enables better graphics, Apple said today at an event in San Francisco. Kevin Dede, technology analyst at Auriga USA, and Michael Holland, chairman of Holland & Co., also speak. (Source: Bloomberg)

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March 7 (Bloomberg) -- Tim Cook, chief executive officer of Apple Inc., introduces a new version of the iPad mobile computer and an update of the Apple TV set-top box. The new iPad, which will cost $499 to $829, includes an A5X chip that enables better graphics and boasts a 9.7-inch screen that has more pixels than traditional high-definition televisions. Apple's Phil Schiller, senior vice president of product marketing, and Eddy Cue, senior vice president of Internet software and services, also speak at the event in San Francisco. (Source: Bloomberg)

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March 7 (Bloomberg) -- Tim Cook, chief executive officer of Apple Inc., introduces a new version of the iPad, beefing up the company's two-year-old mobile computer with a 9.7-inch screen, a retina display like the one on the most recent iPhone, a faster chip and a body that’s similar to previous iPads. He speaks at an event in San Francisco. (This is an excerpt from the event. Source: Bloomberg)

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March 7 (Bloomberg) -- Tim Cook, chief executive officer of Apple Inc., says the company has "its feet firmly planted in the post-PC future." He speaks at an event in San Francisco. (This is an excerpt from the event. Source: Bloomberg)

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March 7 (Bloomberg) -- Tim Cook, chief executive officer of Apple Inc., and Eddy Cue, senior vice president of Internet software and services, unveil an update of the Apple TV set-top box, which features a new user interface and a so-called mirroring function that allows video from a user’s mobile devices be played on TV. They speak at an event in San Francisco. (This is an excerpt from the event. Source: Bloomberg)

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March 7 (Bloomberg) -- Phil Schiller, senior vice president of product marketing at Apple Inc., outlines features of a new version of the iPad, which comes with a 9.7-inch screen, a retina display like the one on the most recent iPhone, a faster chip and a body that’s similar to previous iPads. He speaks at an event in San Francisco. (This is an excerpt from the event. Source: Bloomberg)

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March 7 (Bloomberg) -- Scott Galloway, a professor at New York University's Stern School of Business and a Bloomberg contributing editor, and Bloomberg Industries analyst Anand Srinivasan talk about Apple Inc.'s new iPad. The device will be called iPad, carry a price tag of $499 to $829 and include an A5X chip that enables better graphics, Apple said today at an event in San Francisco. They speak with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

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March 7 (Bloomberg) -- Michael Holland, chairman of Holland & Co., and Eric Jackson, president and founder of Ironfire Capital LLC, talk about Apple Inc.'s new version of the iPad and the outlook for the company. (Source: Bloomberg)

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March 7 (Bloomberg) -- David Kirkpatrick, author of "The Facebook Effect: The Inside Story of the Company That Is Connecting the World," talks about the outlook for Apple Inc. and the technology industry. He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

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March 7 (Bloomberg) -- Walter Piecyk, an analyst at BTIG LLC, talks about technology stocks including Apple Inc., Google Inc. and Pandora Media Inc. Piecyk, speaking with Tom Keene on Bloomberg Television's "Surveillance Midday," also talks about delays in government allocation of spectrum and the impact on consumers. (Source: Bloomberg)

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March 7 (Bloomberg) -- Dave McQueen, an analyst at Informa Telecoms & Media, previews Apple Inc.'s launch of its new iPad. He talks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)

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March 7 (Bloomberg) -- Heather White, a network fellow at Harvard University's Edmond J. Safra Center for Ethics, talks about working conditions at Apple Inc. supplier Foxconn Technology Group. White speaks with Scarlet Fu on Bloomberg Television's "Money Moves." (Source: Bloomberg)

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Tim Cook, chief executive officer of Apple Inc., in San Francisco on March 7, 2012. Photographer: David Paul Morris/Bloomberg

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Apple Inc.'s newest version of the iPad. Apple Inc. introduced the new version of the iPad, beefing up its two-year-old mobile computer with a sharper screen to widen its lead over Amazon.com Inc., Microsoft Corp. and Google Inc. in the tablet market. Source: Apple Inc. via Bloomberg

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Members of the media look at the new version Apple Inc.'s iPad during an Apple event in San Francisco. Photographer: Tony Avelar/Bloomberg

Chief Executive Officer Tim Cook is making the most significant upgrade yet to Apple’s tablet months before Microsoft introduces new software that will run on competing devices. The new version is also aimed at helping the company fend off competition from Google (GOOG)’s Android operating system, as well as Amazon.com, whose $199 Kindle Fire is gaining traction among budget-conscious buyers.

“This product refresh allows Apple to maintain its leadership position in the quickly-growing tablet market,” said Bill Kreher, an analyst at Edward Jones in St. Louis, who has a “buy” rating on Apple.

The new iPad will be available March 16, and Apple is taking orders starting today. AT&T Inc. (T) and Verizon Wireless will be the first U.S. wireless carriers to sell the new device. Telus Corp. (T), Rogers Communications Inc. (RCI/B) and BCE Inc. (BCE) will carry the new iPad in Canada.

Shares of Cupertino, California-based Apple gained less than 1 percent to $530.69 at the close in New York.

Apple TV

The overhaul will help draw both new customers and existing owners who want new features, said Carl Howe, an analyst at Yankee Group.

Apple gets about 20 percent of its sales from the iPad, attracting consumers as well as business users. With the device’s mix of touch-screen capabilities and computing power that puts it on par with some laptops, Apple has created a new category of consumer-electronics devices.

Cook also unveiled an update of the Apple TV set-top box with a new interface and a so-called mirroring function that lets video from a user’s mobile devices be played on TV. Photos taken from an iPhone will wirelessly synch using Apple TV. The device will cost $99 and also go on sale March 16.

Apple cut the price on the low end version of its existing iPad to $399 from $499. That may put a squeeze on the Kindle Fire, said Chris Jones, an analyst at Canalys, a research firm.

Price ‘Pressure’

“It will put pressure on those who are trying to undercut the iPad on price,” said Jones. “The market has changed in the past few months with the arrival of Amazon.”

Apple has sliced the price of older models to attract bargain-hunting shoppers when unveiling a new product aimed at the high end, a pincer movement used with success on the most recent iPhone. When Apple introduced the iPhone 4S in October, it reduced the iPhone 4 price to $99 and the made the iPhone 3GS free, with a two-year wireless contract.

According to market research firm Gartner Inc., 103.5 million tablet devices will be sold in 2012, with Apple accounting for two-thirds of those. The figure will rise to 326.3 million in 2015.

The company’s share will drop to 46 percent by 2015 as Google’s Android gains customers and Microsoft enters the market.

Amazon’s Gains

Tablets introduced by Research In Motion Ltd. (RIMM), Samsung Electronics Co. (005930) and Hewlett-Packard Co. (HPQ) haven’t gained much interest. Amazon’s Kindle Fire, on sale since November, has lured buyers because of its lower price, and Amazon’s website gives it a sales channel on par with Apple’s retail stores, said Sarah Rotman Epps, an analyst at Forrester Research Inc. Amazon’s selection of movies, music and applications also is appealing to customers, she said.

“Tablets are about services,” said Rotman Epps. “That’s why Amazon has succeeded where others have failed.”

A new wave of tablets will be entering the market with Microsoft’s introduction of Windows 8, a remake of the company’s flagship operating system intended to work more easily with smartphones and tablets. Hewlett-Packard has said it will introduce a tablet using the software, which analysts expect will be released later this year.

While Windows 8-based products are being completed, Apple may sell 11.3 million iPads in the quarter ending March 31, more than double unit sales from a year earlier, according to Brian Marshall, an analyst at ISI Group in San Francisco.

Microsoft’s Delay

Microsoft, based in Redmond, Washington, will eventually become a strong competitor, though the longer Windows 8 takes to hit the market, the harder it will be to gain traction with customers, said Rotman Epps.

Apple may sell 60 million iPads in all of 2012, ISI predicts, about 50 percent more than last year. Apple is the largest maker of personal computers if the iPad is included in the count, according to Canalys.

The iPad has helped make Apple the world’s most valuable company, worth $494.8 billion based on today’s closing stock price. Since the device went on sale in April 2010, Apple’s stock has risen 125 percent and quarterly sales have almost tripled.

One reason Apple has been able to maintain a dominant share of the tablet market is that wireless carriers don’t play as prominent a role in sales as they do with smartphones, Howe said. Customers visiting a Verizon Wireless or Sprint Nextel Corp. (S) store are often steered to a smartphone running Google’s Android software instead of an iPhone, he said.

Apple also benefits from its chain of more than 360 retail stores and the thousands of applications that are tailored specifically for the iPad, said Forrester’s Rotman Epps.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Peter Burrows in San Francisco at pburrows@bloomberg.net

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