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

By Sara Forden and Tom Schoenberg - Sep 17, 2011 11:01 AM GMT+0700
Enlarge image

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

Enlarge image

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

Enlarge image

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

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

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

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

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

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

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

‘Expedited Hearing’

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

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

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

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

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

Democrats, Republicans

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

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

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

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

Sprint Nextel

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

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

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

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

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

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

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

Read more...

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

By Brian Womack and Cristina Alesci - Sep 17, 2011 5:00 AM GMT+0700
Enlarge image

Yahoo! Inc. logos are displayed on computer screens in Tiskilwa, Illinois. Photographer: Daniel Acker/Bloomberg

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

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

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

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

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

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

Alibaba, Softbank

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

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

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

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

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

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

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

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

Read more...

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

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

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

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

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

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

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

Technical Majors

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

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

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

‘Business Imperative’

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

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

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

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

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

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

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

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

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

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

Read more...

S&P 500 Index Posts Longest Rally Since July

By Rita Nazareth - Sep 17, 2011 3:44 AM GMT+0700
Enlarge image

Trader George Ettinger works on the floor of the New York Stock Exchange on Sept. 16, 2011. Photographer: Richard Drew/AP

Play Video

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

Play Video

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

Play Video

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

Enlarge image

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

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

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

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

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

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

Most-Indebted

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

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

‘Hostage’

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

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

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

Seeking Financing

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

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

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

Losing Ground

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

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

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

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

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

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

Read more...

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

By Sarah Frier - Sep 17, 2011 11:01 AM GMT+0700
Enlarge image

RIM President and Co-Chief Executive Officer Mike Lazaridis delivers a keynote address at the BlackberryDevCon 2010 in San Francisco. Photographer: Justin Sullivan/Getty Images

Play Video

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

Enlarge image

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

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

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

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

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

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

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

Wireless Pioneer

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

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

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

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

-- Editors: Ville Heiskanen, Peter Elstrom

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

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

Read more...

Banks ‘Quietly’ Lobby BRICs for Greece Aid

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

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

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

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

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

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

Government Debt

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

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

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

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

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

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

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

Read more...

Europe Rules Out Stimulus, Shuns Geithner’s Plea

By James G. Neuger and Rebecca Christie - Sep 17, 2011 5:00 AM GMT+0700
Enlarge image

Timothy Geithner, U.S. treasury secretary, second right, leaves the RTCB building at the start of Europe's Economic and Financial Affairs Council, known as Ecofin, in Wroclaw, Poland, on Sept. 16, 2011. Photographer: Bartek Sadowski/Bloomberg

Play Video

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

Play Video

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

Enlarge image

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

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

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

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

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

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

‘Non-Member’

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

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

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

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

‘Permanent Message’

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

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

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

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

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

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

‘Substantial Improvement’

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

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

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

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

Greek Aid

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

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

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

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

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

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

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

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

Read more...

United Technologies Exploring Goodrich Takeover

By Jeffrey McCracken, Rachel Layne and Serena Saitto - Sep 17, 2011 11:09 AM GMT+0700
Enlarge image

A visitor looks at a United Technologies Corp. Pratt & Whitney PurePower PW1000G engine on display on the third day of the Farnborough International Airshow on July 21, 2010. Photographer: Simon Dawson/Bloomberg

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

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

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

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

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

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

Helicopters, Nacelles

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

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

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

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

Industry Takeovers

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

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

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

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

Goodrich History

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

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

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

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

Boosting Production

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

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

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

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

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

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

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

Read more...

Samsung Electronics Claims Apple IPad, IPhone Infringe Australian Patents

By Susan Decker - Sep 16, 2011 10:25 PM GMT+0700

Samsung Electronics Co. accused Apple Inc. (AAPL) of patent infringement in Australia, adding to multiple lawsuits across at least four continents involving the two companies’ dispute over smartphone technology.

The cross claim filed with the Federal Court of Australia alleges Apple’s iPhone and iPad infringe seven patents related to wireless communications standards, Samsung said in an e-mail today. It also seeks to invalidate and revoke Apple patents that have been asserted against Samsung’s Galaxy phones and tablets.

Apple, based in Cupertino, California, and Samsung have been embroiled in a global battle over market share for both phones and tablet computers. Apple has accused Samsung of “slavishly” copying the iPad and iPhone and has had success in curtailing Galaxy sales in Australia and Germany. There are also lawsuits in the U.S. and Asia.

“Samsung has a proud history of innovation in the mobile industry,” the Suwon, South Korea-based company said. “It has invested continuously in R&D, design and technology to produce our innovative and cutting-edge mobile devices.”

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

Read more...

Stimulus Fatigue Stymies Obama in Rounding Up Votes for Full Jobs Package

By Richard Rubin and James Rowley - Sep 16, 2011 11:00 AM GMT+0700

Enlarge image

President Barack Obama speaks about his $447 billion job-creating proposal at North Carolina State University in Raleigh, North Carolina. Photo: Mandel Ngan/AFP/Getty Images

Republican lawmakers are rejecting President Barack Obama’s $447 billion job-creation plan in its entirety and expressing skepticism about its pieces, creating doubt about whether it can overcome obstacles in Congress.

As Obama tries to rally public support behind tax breaks and spending on schools and bridges, the reaction on Capitol Hill indicates that only a few fragments of the plan may become law -- most likely tax cuts to promote consumer demand and hiring. Many Republicans dismiss Obama’s proposal as a warmed- over version of the 2009 stimulus law they opposed.

“I just don’t see much Republican support in the Senate for hardly anything that’s been out there so far, and especially when they put the pay-fors forward,” said John Thune of South Dakota, the fourth-ranking Republican in the Senate. “I mean, that’s just a complete non-starter.”

Republicans, who have ideas about how to lower unemployment by limiting regulation and expanding domestic oil production, aren’t ceding ideological or political ground to the administration. Beyond that, the Senate’s Democratic leader isn’t rushing to bring Obama’s proposal to the floor as he focuses on other legislation such as disaster assistance. Also, some rank-and-file Democrats have complained about the tax increases in the bill.

Obama proposes paying for the measure with a cap on some deductions and exclusions for high-income taxpayers, along with tax increases for private equity firms, oil and gas companies and corporate jet owners. Democrats and Republicans have objected to the cap on tax breaks, and the other revenue-raising proposals haven’t advanced in the past.

‘Pass This Bill’

With 14 months until he faces re-election and a 9.1 percent unemployment rate, the president has been traveling across the country telling the public to press Congress to “pass this bill,” though the bill itself is likely to be carved up.

“We’ve got to tell Congress to do their part,” Obama said in Raleigh, North Carolina, on Sept. 14. “You’ve got some Republicans in Congress, they like to talk about how ‘We’re in favor of America’s job creators.’ Well, you know what, if you’re in favor of America’s job creators, this is your bill.”

House Speaker John Boehner said in a Washington speech yesterday that some of Obama’s proposals “offer opportunities for common ground.” He wasn’t specific, and he didn’t signal that House leaders felt any urgency to advance the plan.

“Let’s be honest with ourselves,” said Boehner, an Ohio Republican. “The president’s proposals are a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America.”

Entire Package

The White House has been pressing for passage of the entire bill. Obama political adviser David Axelrod said on ABC’s Good Morning America Sept. 13 that the administration is “not in a negotiation to break up the package” and Republicans shouldn’t consider it an “a la carte menu.”

Still, White House Press Secretary Jay Carney told reporters later in the day that Obama wouldn’t veto partial measures. If Congress were to “send a portion of the American Jobs Act, the president would of course not veto it,” Carney said. “He would sign it and then he would return to press the Congress to get the job done.”

The package’s elements with the best chance of making it to the president’s desk are tax cuts, in part because letting the current payroll tax cut lapse would raise taxes for workers, lawmakers in both parties said. Representative Mike Simpson, an Idaho Republican, predicted that a payroll tax cut would ultimately pass.

Obama wants workers to pay 3.1 percent of wages up to $106,800 in Social Security payroll taxes, down from 4.2 percent this year and 6.2 percent in a typical year. He has proposed a similar cut to the employer’s side of the payroll tax for the first $5 million of a company’s wages and a complete payroll tax holiday for the first $50 million in increased payroll in 2012.

Skepticism

Some Republicans, including Thune and Representative Scott Garrett of New Jersey, are skeptical of the payroll tax cuts. Representative Kevin Brady, a senior Republican on the House Ways and Means Committee, said rebates and tax cuts designed to stimulate consumer demand in 2001, 2008, 2009 and 2011 didn’t work as intended.

“We’re taking a hard look at the payroll taxes from the standpoint that the last four consumer rebates -- the two Bush ones and the two Obama ones -- have been economically very disappointing,” he said. “They just haven’t performed.”

House Republicans haven’t said how they might package the payroll tax cuts when they write legislation. They might pair them with provisions the White House opposes, such as restrictions on regulation or cuts in entitlement spending.

Representative Ron Kind, a Wisconsin Democrat, questioned whether the payroll tax cut for employers would prompt much hiring by small businesses.

‘Just Not’ Hiring

Employers “are just not going to hire until consumer demand” improves, he said. The cuts in employer payroll taxes may mean “better cash flow” for struggling small businesses and help them avoid layoffs, he said. “But I don’t think it’s going to result in a lot of new hires on the employer side.”

Brady, who represents suburbs near Houston, said the idea that might garner the most Republican support would be Obama’s proposal to extend through 2012 the ability for businesses to write off 100 percent of some equipment purchases.

“For small businesses especially, private business investment like buying new equipment, new buildings, new technology, that has a direct correlation with jobs and hiring,” Brady said.

Obama’s Democratic allies, including Senator Robert Menendez of New Jersey, note that Republicans have backed infrastructure investments, payroll tax cuts and a job-training program used in Georgia.

“To me, there’s a lot of this that should be an easy lift, but certainly those are three that come -- off the top of my head -- that Republicans are actually advocates of,” he said.

Deficit Issue

Some Republicans may support money for roads and bridges, Simpson said, though he added that his colleagues look warily on new spending as long as the U.S. has a large budget deficit.

Democratic Senator Ben Nelson of Nebraska, who faces a tough re-election contest in 2012 in a Republican-leaning state, said he opposes the tax increases and would reserve judgment on Obama’s spending proposals.

Republicans plan to focus some of their attacks on the idea that Obama is trying to spur economic growth in the months leading up to the reelection campaign. Instead, they say, Congress should focus on proposals such as a tax code overhaul that would promote long-term growth.

“We don’t need temporary anything,” said Representative John Campbell, a California Republican. “We need new permanent policies: tax policies, deficit policies, and regulatory policies that people can count on so that they can make longer- term decisions.”

Garrett, the New Jersey Republican, said Obama’s broad rhetoric is better than his substance.

“The devil is in the details,” he said. “And I have yet to see any details I am actually signing onto.”

To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net James Rowley in Washington at jarowley@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Read more...

Stocks Rally as Gold Declines for Third Day

By Lynn Thomasson - Sep 16, 2011 2:12 PM GMT+0700

Enlarge image

Gold for immediate delivery has tumbled 4.6 percent this week, the biggest decline since the week ended May 6. Photographer: Ron D'Raine/Bloomberg

Play Video

Sept. 15 (Bloomberg) -- Kirk Hartman, chief investment officer of Wells Capital Management in Los Angeles, talks about global financial markets and the U.S. economy. Hartman speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Play Video

Sept. 16 (Bloomberg) -- Andrew Freris, senior investment strategist for Asia at BNP Paribas Wealth Management, talks about Greece's debt crisis and the potential impact on Asia. Freris speaks with Susan Li, Zeb Eckert and John Dawson on Bloomberg Television's "Asia Edge." (Source: Bloomberg)

Stocks rose, sending the MSCI All- Country World Index higher for a fourth day, amid speculation European policy makers may contain the region’s sovereign-debt crisis. Gold fell for a third day and the cost of protecting Asia-Pacific bonds from default declined.

The Euro Stoxx 50 Index gained 1 percent at 8:10 a.m. London time, while the MSCI Asia Pacific Index jumped 2 percent. Gold for immediate delivery sank 1.1 percent to $1,768.15 an ounce, poised for the biggest weekly loss in more than two years. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell to a one-week low. Copper increased 0.4 percent for a second day of gains.

Global equities have rebounded this week after the European Central Bank said yesterday it coordinated with other central banks to extend three-month loans to euro-area banks and German and French leaders expressed support for Greece to remain in the euro monetary union. The MSCI All-Country World has jumped 2.7 percent this week, set for the biggest gain in almost three months.

“There needs to be more coordinated action and I think markets are taking this very positively,” Kirk Hartman, who oversees $355 billion as the Los Angeles-based chief investment officer of Wells Capital Management, told Susan Li on Bloomberg Television’s “First Up.” “I don’t think we’re going to having a banking crisis, but I think we are going to have more turmoil. Clearly there are issues, but I think over time it will work itself out.”

Weekly Advance

European finance ministers are meeting in Wroclaw, Poland, today to discuss the euro-area crisis. Jean-Claude Trichet, president of the region’s central bank, said yesterday that the policymakers need to show the same “unity of purpose” as central banks did yesterday in providing extra dollars to European banks.

The euro fell 0.1 percent to 1.3857 per dollar today. The 17-nation currency is set for its first weekly gain against the yen in three weeks.

The MSCI All-Country World Index, which tracks equities in 45 developed and emerging markets, has lost 16 percent since its peak on May 2 amid concern global growth is slowing. Data today may show the Thomson Reuters/University of Michigan preliminary index of U.S. consumer sentiment rose to 57 in September from an almost three-year low of 55.7 the prior month, based on economist estimates tracked by Bloomberg.

Futures on the Standard & Poor’s 500 Index were little changed after the U.S. equity benchmark jumped 1.7 percent yesterday. Research In Motion Ltd. dropped in extended trading after U.S. exchanges closed yesterday. The maker of the BlackBerry smartphone missed analysts’ estimates for the second quarter on lower-than-expected sales of phones and the PlayBook tablet computer.

India Rates

The BSE India Sensitive Index gained 0.7 percent after the country’s central bank raised interest rates for the 12th time since the start of March 2010. The Reserve Bank of India increased the repurchase rate to 8.25 percent from 8 percent, breaking ranks among the so-called BRIC nations that have either cut or held borrowing costs as the global recovery falters.

About five stocks advanced for each one that fell in the MSCI Asia Pacific Index, which has declined 0.3 percent this week. Hong Kong’s Hang Seng Index (HSI) rose 1.8 percent, while the Shanghai Stock Exchange Composite Index was little changed.

Foreign direct investment in China climbed 11.1 percent in August from a year earlier, the Ministry of Commerce said in a statement on its website yesterday. That compares with a 19.8 percent expansion in July. Businesses are turning to China to bolster sales as rising unemployment and government indebtedness damp confidence in developed nations.

Esprit Holdings Ltd. (330), Hong Kong’s biggest listed clothing chain, plunged 20 percent and was headed for the biggest two-day drop since listing in 1993. At least seven brokerages downgraded the stock after the company said in a filing yesterday that the brand has “lost its soul.”

Gold, Copper

Gold for immediate delivery has tumbled 4.9 percent this week. December-delivery bullion in New York dropped 0.8 percent to $1,767.90. Silver for immediate delivery fell 1 percent to $39.44 an ounce.

Copper on the London Metal Exchange rose 0.6 percent to $8,765 a metric ton. Prices have fallen 0.7 percent this week, a second weekly drop. On Sept. 14, the metal touched $8,590, the lowest price since Aug. 11.

The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 6 basis points to 166, Credit Agricole CIB prices show. The Markit iTraxx Australia index dropped 5 basis points to 176 basis points, according to Credit Agricole. Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality.

Treasury 10-year note yields were poised for the biggest five-day advance in 11 weeks on optimism European leaders meeting today will step up efforts to halt the euro region’s debt crisis, damping demand for the safest assets. Ten-year yields rose 1 basis point to 2.09 percent today.

To contact the reporter on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

Read more...

RIM Drops as Investors Disappointed With Earnings Report for Third Quarter

By Hugo Miller - Sep 16, 2011 11:01 AM GMT+0700
Enlarge image

People take pictures of the Research In Motion Ltd. (RIM) BlackBerry PlayBook tablet computer on display during the BlackBerry DevCon 2010 developers conference in San Francisco. Photographer: David Paul Morris/Bloomberg

Play Video

Sept. 15 (Bloomberg) -- Daniel Ernst, an analyst at Hudson Square Research in New York, talks about Research In Motion Ltd.'s second-quarter performance and the outlook for its products. Ernst speaks with Matt Miller, Julie Hyman and Lisa Murphy on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Research In Motion Ltd. (RIMM), struggling to compete against Apple Inc. (AAPL)’s iPhone and iPad, plunged in extended trading yesterday after its earnings report disappointed investors for the third consecutive quarter.

“Credibility sinks further,” said Mike Abramsky, an analyst with RBC Capital Markets in Toronto, who rates RIM “sector perform.”

Profit, excluding some costs, fell to 80 cents a share, RIM said yesterday in a statement. Analysts predicted 88 cents, according to a Bloomberg survey. Revenue fell to $4.17 billion in the three months through Aug. 27, compared with the average estimate of $4.47 billion.

The company’s PlayBook is struggling to gain ground against the iPad, with the Apple Inc. device outshipping the RIM tablet 46 to 1 in the latest quarter. A range of new BlackBerrys with more advanced touch-screen features, RIM’s first new models in a year, have to lure customers away from Apple’s iPhone and others running Google Inc. (GOOG)’s Android software.

“It’s about growing the footprint and that’s where I think they’ve got problems,” said Mark McKechnie, a ThinkEquity LLC analyst in San Francisco who has a “hold” rating on RIM. The new versions of the BlackBerry Bold and Torch “are not really gathering new users,” he said.

RIM, based in Waterloo, Ontario, fell as much as $5.75, or 19 percent, to $23.79 in extended trading after closing yesterday at $29.54 on the Nasdaq Stock Market. The stock dropped 49 percent this year at yesterday’s close of regular trading.

Disappointing Shipments

The company shipped about 200,000 PlayBooks, compared with the average estimate of 490,000 units. Analysts have cut estimates for full-year PlayBook sales to an average of 2.2 million. In its last quarter Apple shipped 9.25 million iPads.

RIM shipped 10.6 million BlackBerrys last quarter. Analysts predicted 11.9 million, according to the average of 10 estimates compiled by Bloomberg.

Co-Chief Executive Officer Jim Balsillie attributed the sluggish shipments to lower-than-expected demand for older devices that have struggled to compete with the iPhone and Android devices such as the Samsung Galaxy. He also said on a conference call yesterday that RIM’s latest handsets, which run on a new BlackBerry 7 operating system, are “having an excellent reception.”

Co-CEO Mike Lazaridis said RIM will issue a software upgrade for the PlayBook next month that will include dedicated e-mail, contacts and calendar programs, as well as software to allow the PlayBook to run Android applications. RIM drew criticism for introducing the PlayBook in April without e-mail and a shortage of apps like Netflix Inc. (NFLX) movies.

‘Challenging’ Few Months

Lazaridis also said prototypes of phones built on a new QNX operating system that already underpins the PlayBook will be available “in the not-too-distant future” and that he will give more details at a conference in San Francisco next month.

“RIM is still going to have a challenging next few months until the QNX products are out and the Android app products are available,” said Alkesh Shah, an analyst at Evercore Partners. “The transition probably doesn’t finish until sometime mid to late 2012.”

RIM forecast third-quarter revenue of $5.3 billion to $5.6 billion and shipments of between 13.5 million and 14.5 million BlackBerrys. Earnings excluding charges related to job cuts will be in the range of $1.20 to $1.40.

Analysts estimated sales of $5.3 billion, 13.8 million units shipped and earnings per share of $1.38.

RIM also said that earnings for the year, excluding some costs, would be at the low end of its previous forecast of $5.25 to $6 a share.

Under Review

“We don’t trust those numbers,” said Jeff Fidacaro, an analyst at Susquehanna International Group in New York. “We thought $5.06, but that’s under review.”

RIM’s share of the global smartphone market dropped to 12 percent in the second quarter from 19 percent a year earlier, according to Gartner Inc. In the same period, Apple climbed to 18 percent from 14 percent, and Google’s Android, used in phones from Samsung Electronics Co. and Motorola Mobility Holdings Inc., rose to 43 percent.

Net income fell 59 percent to $329 million, or 63 cents a share, from $797 million, or $1.46, a year earlier.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

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

Read more...

Silver Lake Is Said to Weigh Buying Yahoo

By Brian Womack and Cristina Alesci - Sep 16, 2011 10:26 AM GMT+0700
Private-equity investor Silver Lake is considering a bid for Yahoo! Inc., the Web company that ousted Chief Executive Officer Carol Bartz, two people involved in the deliberations said.

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

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

Kim Rubey, a spokeswoman for Yahoo, and Gordon Goldstein, a spokesman for Silver Lake, didn’t immediately return phone messages seeking comment.

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

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

Alibaba, Softbank

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

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

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

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

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

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

Read more...

Asian Stocks Rise, Paring a Weekly Loss, on ECB Offer of Dollars to Banks

By Anna Kitanaka and Shani Raja - Sep 16, 2011 1:34 PM GMT+0700

Enlarge image

Samsung Electronics Co., which receives 20 percent of its revenue from Europe, jumped 2.9 percent in Seoul. Photographer: SeongJoon Cho/Bloomberg

Play Video

Sept. 16 (Bloomberg) -- Timothy Moe, a Hong-Kong based strategist at Goldman Sachs Group Inc., talks about the outlook for Asian stocks and investor sentiment. He speaks from Singapore to Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Play Video

Sept. 15 (Bloomberg) -- Kirk Hartman, chief investment officer of Wells Capital Management in Los Angeles, talks about global financial markets and the U.S. economy. Hartman speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Asian stocks rose, trimming losses on the regional benchmark index this week, after the European Central Bank and international policy makers coordinated to lend dollars to euro-area banks, increasing confidence the region’s debt crisis may be contained.

Samsung Electronics Co., which depends on Europe for 20 percent of its sales, jumped 3.5 percent in Seoul. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender by market value, increased 4.6 percent in Tokyo, leading financial shares higher. BHP Billiton Ltd. (BHP), the world’s biggest mining company, added 1.6 percent after metal prices rose. Tokyo Electric Power Co., the operator of the stricken Fukushima Dai-Ichi nuclear-power plant, fell 5.9 percent. Esprit Holdings Ltd. (330) headed for its biggest loss since 1997 after reporting profits plunged.

The MSCI Asia Pacific Index gained 2.1 percent to 120.40 as of 3:16 p.m. in Tokyo, with nine of the 10 industry groups on the measure rising. The gauge advanced for a second day, rebounding from its lowest level since Aug. 25, 2010. For the week, the index is headed for 0.3 percent loss.

“What these authorities are trying to do here is preempt any panic over banks’ access to short-term funding,” said Prasad Patkar, who helps manage about $1.1 billion at Platypus Asset Management Ltd. in Sydney. “Anything that suggests they will act proactively to avoid another Lehman-style crisis will help equities, commodities and other risk assets because of how oversold they are, and how bearishly everybody is positioned.”

　　　　　　　　　　 Global Concerns

Concern the global economy was slipping back into a recession amid a worsening European-debt crisis and slowing U.S. growth triggered a 16 percent plunge in the MSCI Asia Pacific Index between this year’s high on May 2 and yesterday.

Japan’s Nikkei 225 Stock Average climbed 2.3 percent today. South Korea’s Kospi Index rose 3.7 percent. Australia’s S&P/ASX 200 Index advanced 1.9 percent in Sydney. Hong Kong’s Hang Seng Index rose 1.9 percent and China’s Shanghai Composite Index increased 0.1 percent.

Futures on the Standard & Poor’s 500 Index were little changed. The index advanced yesterday in New York for a fourth day, rising 1.7 percent, as the ECB coordinated with the Federal Reserve and other central banks to extend three-month loans to euro-area lenders to ensure they have enough cash for the rest of the year.

Samsung Electronics jumped 3.5 percent to 798,000 won in Seoul, the single biggest support to the MSCI Asia Pacific Index. Canon Inc. (7751), which depends on Europe for about a third of its sales, added 4.3 percent to 3,410 yen in Tokyo.

Banks Lead Gains

Financial stocks provided the biggest support to the MSCI Asia Pacific Index, with the measure tracking banks increasing 2.4 percent.

Mitsubishi UFJ rose 4.6 percent to 345 yen, the biggest support to Japan’s Topix Index, while Westpac Banking Corp. (WBC), Australia’s No. 2 lender by market value, gained 2.6 percent to A$19.92.

“There needs to be more coordinated action and I think markets are taking this very positively,” Kirk Hartman, chief investment officer of Wells Capital Management in Los Angeles, told Susan Li on Bloomberg Television’s “First Up.” “I don’t think we’re going to having a banking crisis, but I think we are going to have more turmoil. Clearly there are issues, but I think over time it will work itself out.”

Metals Increase

Raw-material producers posted the second-biggest increase among the MSCI Asia Pacific Index’s 10 industry groups after a measure of prices for metals including copper and aluminum rose for the first time since Sept. 8. The London Metal Exchange Index advanced 1.2 percent yesterday.

BHP added 1.6 percent to A$38.23, the fourth-biggest contribution to the MSCI Asia Pacific Index’s advance. Rio Tinto Group, the world’s second-largest mining company by sales, climbed 2.7 percent to A$71.27. Jiangxi Copper Co., China’s No. 1 producer of the metal, 3.6 percent to HK$18.66 in Hong Kong.

Among stocks that fell, Tokyo Electric declined 5.9 percent to 335 yen in Tokyo, the steepest drop on the Nikkei 225. Japan’s banking lobby repeated that the nation’s banks won’t forgive loans made to the utility, even after a government official said creditors should help support the nuclear-plant operator.

Esprit tumbled 20 percent to HK$12.02 today, extending yesterday’s 18 percent plunge. The stock posted the biggest decline and is the heaviest drag on the MSCI Asia Pacific Index. The clothier yesterday said profit plunged 98 percent, prompting cuts on its investment rating by at least seven brokerages, including UBS AG, Barclays Plc and JPMorgan Chase & Co. The stock is headed for its steepest drop since Oct. 1997.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net

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

Read more...

Apple’s Smartphone Patent Win Over HTC to Be Reviewed by U.S. Trade Agency

By Susan Decker - Sep 16, 2011 7:08 AM GMT+0700

Enlarge image

The HTC Thunderbolt is displayed at the 2011 International Consumer Electronics Show in Las Vegas. HTC, Asia’s second-biggest maker of smartphones, has said that no matter the outcome, there are “alternate solutions in place” to work around the patents. Photographer: Andrew Harrer/Bloomberg

A U.S. trade agency said it will review a judge’s finding that HTC Corp. (2498) infringed two Apple Inc. (AAPL) patents, a decision that could lead to a ban of HTC’s Android- based phones in the country.

An ITC judge determined July 15 that HTC’s Android-based smartphones infringed two Apple patents, while no violation occurred for two others. The six-member commission will review infringement and validity on all four patents and whether a correct interpretation was made on terms within three of the patents, according to a notice yesterday on the ITC’s website.

Apple, the world’s biggest smartphone maker, has accused Taoyuan, Taiwan-based HTC of “stealing” its iPhone and iPad technology and using it in devices that run Google Inc. (GOOG)’s Android operating system. HTC, Asia’s second-biggest maker of smartphones, has said that no matter the outcome, there are “alternate solutions in place” to work around the patents.

The two patents HTC was found to have infringed cover transmission of multiple types of data and a system that can identify phone numbers in an e-mail in a way that lets the user dial or store that number. The two patents that the judge said weren’t infringed relate to object-oriented programming, a way of writing and executing software.

HTC is pleased with the decision to review the judge’s finding “and we are confident in our case,” Adam Emery, an HTC spokesman, said in an e-mailed statement. Kristin Huguet, a spokeswoman for Cupertino, California-based Apple, declined to comment.

The ITC is a quasi-judicial agency in Washington than can block imports of products found to infringe U.S. patents.

Dec. 6 Deadline

Apple had argued in an ITC filing that if the commission opted to review the patents that were infringed, the agency also should consider the two that were found to not be infringed.

Apple has another commission complaint pending, filed in July, that also targets HTC’s phones and Flyer tablets. HTC has retaliated with three patent-infringement cases against Apple, one submitted last year, one last month and another last week.

In addition to the review of infringement, validity and interpretation topics, the commission said it will also consider whether Apple had fulfilled a requirement that the company show it was using the inventions in two of the patents. Both HTC and Apple were told to submit arguments on five additional questions as well. The ITC is scheduled to complete the investigation by Dec. 6, according to a timeline on its website.

Espoo, Finland-based Nokia Oyj (NOK1V), which had been targeted in the same ITC complaint, reached a settlement with Apple in June. Mountain View, California-based Google wasn’t a party in the case.

Public Interest

HTC said in an Aug. 25 filing that even if it did infringe the patents, the commission shouldn’t ban U.S. imports of the company’s phones. A ban wouldn’t be in the public interest partly because HTC phones have special features for the hearing impaired, comply with requirements for “enhanced 911” location services and provide Emergency Alert Services.

About 36 percent of Android smartphones in use in the U.S. were made by HTC, according to the filing.

“The exclusion of HTC accused devices from the U.S. market would not only eliminate the most popular brand of smartphones using Android, the fastest-growing mobile operating system, but would also impact the public health, safety, and welfare concerns of individual U.S. consumers,” HTC said.

Apple said in an Aug. 25 filing there is no shortage of smartphones on the market and HTC could replace lost Android sales with phones the company makes using Microsoft Corp.’s Windows Phone operating system.

The case is In the Matter Of Certain Personal Data and Mobile Communications Devices and Related Software, 337-710, U.S. International Trade Commission (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

Read more...