Finance Blog number 1

May 13, 2012

Greek President to Tackle Post-Vote Political Stalemate - Bloomberg

Filed under: Canada, money — Tags: , , , — Sun @ 9:20 pm

Greek President Karolos Papoulias will today take on the task of trying to persuade political leaders to form a government and avert a new election amid mounting concern the country may leave the euro area.

Evangelos Venizelos, the socialist Pasok leader, will return the third, and final, mandate to form a government to Papoulias at a meeting in Athens today, after Alexis Tsipras, the leader of the biggest anti-bailout party, Syriza, turned down an appeal to join a unity government.

Tsipras

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April 6, 2012

Sexy Lumia has Microsoft and Nokia gunning for iPhone

Filed under: Canada, money — Tags: , , , — Sun @ 4:36 am

A sexy, award-winning smartphone is going on sale Sunday at half the price of the iPhone, and it’s launching on a blazing fast 4G network.

What’s the catch? Two things: The phone, called the Lumia 900, is made by Nokia — and it’s running Microsoft’s Windows Phone software.

They may be household names, but Microsoft (, Fortune 500) and Nokia () are unproven in the U.S. smartphone space. Nokia hasn’t ever sold a major smartphone in the United States, and it has been almost invisible in the North American market for the past five years.

Meanwhile, Microsoft had a big, expensive, but tepidly received launch of Windows Phone 7 in late 2010. The software giant has actually lost market share since then.

Putting Microsoft and Nokia’s efforts together to create a third major challenger to the iPhone-Android smartphone duopoly is kind of like putting Linux on a Sony () Vaio to take a run at HP (, Fortune 500) and Dell (, Fortune 500). In the United States, Apple (, Fortune 500) and Google (, Fortune 500) control a combined 80% share of the smartphone market, according to comScore. Microsoft has less than 4%.

But if ever there were a time to make a run, it’d probably be now.

The Lumia 900 is a visually dazzling smartphone that’s generating a lot of chatter after it took home the Best of Show award at this year’s Consumer Electronics Show in Las Vegas. Windows Phone has already gone through its first major update to clear away the early bugs and has 77,000 apps in its app store. And Nokia’s phone is compatible with AT&T’s new ultra-fast 4G LTE network, making it the first LTE-capable Windows Phone device.

To top it all off, AT&T (, Fortune 500) is selling the Lumia 900 for just $100.

The iPhone is a nightmare for carriers

"We have a great amount of consumer buzz, so we feel good about our ability to take off in a really big way," said Chris Weber, president of Nokia’s North American business. "But we’ve got to have a great device that is super compelling to do that. We think we have that."

As Microsoft’s Aaron Woodman, the company’s Windows Phone director, put it: "There is an enormous amount of momentum, and now is the time to strike."

The Lumia 900 is not the first Nokia Windows Phone device to launch in the United States no fax payday advance. That was the Lumia 710, an entry-level device that went on sale on T-Mobile’s network in January.

But Nokia’s new Lumia 900 device is the first Windows Phone that stacks up well against the big boys — the iPhones and the Samsung Galaxies of the smartphone world. Nokia’s expensive ad campaign for the phone goes for the jugular, attacking the iPhone’s Antennagate issue, as well as rival smartphones’ fragile cases and poor screen performance in sunlight.

The jabs play to Nokia’s strengths. Cased in a polycarbonate shell, the Lumia 900 lacks any paint — it is blue, black, or white all the way through, making the device appear scratch- and crack-resistant. It feels solid, though at 5.6 ounces it’s a bit on the heavy side. The device’s large, eye-popping screen performs quite well outdoors.

But is that enough to persuade former Android and iPhone customers to switch?

Microsoft thinks they’re ready.

"There is a sense of fatigue with Android, which really makes you do a lot of work — that’s true for Apple as well," Woodman said. "Since we arrived late to the game, that allowed us to solve a lot of problems that people were having with their smartphones."

Microsoft thinks sales will really take off after Windows 8 launches later this year. The company’s reimagined Windows for PCs will look and feel a whole lot like Windows Phone.

Windows 8: It’s a game changer

"A successful Windows 8 and a congruent platform across phone, tablet, PC, TV and cloud is the vision they are going for," said Al Hilwa, analyst at IDC. "That is going to take a few years to execute on."

That means Microsoft will have to be patient — but it’s always been willing to play the long game. It plowed billions into its Xbox division, which was unprofitable for years, and continues to lose billions each year on Bing and its online services.

"The critical question is, ‘Will they be able to ride out short-term failures and moderate successes with the aim of creating a long term viable third ecosystem?’" said Jagdish Rebello, director at IHS iSuppli. "I believe that the answer is yes."  

Source

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March 7, 2012

BlackRock president: Why I’m in blue-chips

Filed under: money, technology — Tags: , , , — Sun @ 11:44 pm

BlackRock president Robert Kapito is walking the firm’s talk.

Kapito, who helped found the world’s largest asset management firm, now has about 70% of his investment assets in dividend-paying global companies, and 30% in high-yield corporate bonds.

Those are both cornerstones of BlackRock’s new "Investing in a New World" initiative, which encourages investors to get out of idle cash and find assets that generate income in a slow-growth, low-rate environment.

Americans had a record $10 trillion deposited in their bank accounts at the end of 2011, noted Kapito. And with the Federal Reserve holding interest rates near historic lows, that cash is earning virtually nothing.

"People need to rethink the cost of cash, and think about income," said Kapito. "They’re worried they don’t earn enough and won’t have enough to retire on, but the longer they sit in cash, the longer they’ll have to work and they won’t be able to retire when they want to."

Century-old IBM hits fresh all-time high

Kapito said investors are much better off investing in dividend-paying stocks, which return between 3% and 5% a year, and so-called junk bonds, which yield between 5% and 6%. Both offer better returns than Treasuries, he added. The 10-year government note currently pays only about 2%.

High-yield bonds have been extremely popular among income-hungry investors this year. BlackRock’s iShares iBoxx High Yield Corporate Bond ETF () has raked in more than $3 billion so far in 2012, almost as much at the total amount of assets it brought in during all of 2011.

For dividend-paying stocks, Kapito said investors can gain exposure through individual companies, like AT&T (, Fortune 500), Pfizer (, Fortune 500), Verizon (, Fortune 500) and Johnson & Johnson (, Fortune 500), or buy shares of an ETF like the iShares High Dividend Equity Fund (), which launched last year and includes all of those companies and others like Procter & Gamble (, Fortune 500), Merck (, Fortune 500) and Intel (, Fortune 500).

Kapito said he also likes to invest in municipal bonds, particularly those issued in his current hometown of New York City, since those yield about 4% and are exempt from income taxes.  

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March 4, 2012

American Express CEO’s pay up 38 pct in 2011

Filed under: loans, money — Tags: , , , — Sun @ 5:56 pm

The chairman and chief executive of American Express Co. received a compensation package valued at $22.5 million for 2011, a 38 percent increase from a year earlier, according to an Associated Press analysis of a regulatory filing.

The company credited Kenneth Chenault and his management team for delivering revenue and profit growth, and gaining market share over the past two years.

The executive, who has been chairman and CEO since 2001, received $16.3 million in compensation in 2010.

Chenault, 60, received a base salary of $2 million, up 3 percent from the previous year, according to documents filed Friday with the Securities and Exchange Commission.

The executive also received a cash bonus of $2 million, unchanged from 2010.

But the bulk of Chenault’s compensation hike came in the form of stock awards, which were worth about $15.3 million at the time they were granted _ a sevenfold increase from $2.1 million worth of stock awards the year before.

Chenault also received option awards valued at about $2.2 million on the day they were granted, down 76 percent from $9.2 million a year earlier.

His other compensation declined 7 percent to about $1.02 million, and included $570,000 in company contributions to Chenault’s defined contribution plans; $395,439 for perks and other personal benefits; $53,458 in dividends and equivalents; and, $3,939 in life insurance.

Even with high unemployment and continued doubts about the strength of the economy, credit card use has been on the rise.

New York-based American Express, which caters to a more affluent customer than its peers, saw its 2011 profit climb to $4.94 billion, an increase of 22 percent from the year before. Full-year revenue rose 9 percent to $29.96 billion.

Shareholders saw the company’s stock price rise about 10 percent last year. The stock closed Friday at $52.99.

The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive’s stock and option awards for 2011 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

Source

February 4, 2012

Stingy bankers stall housing market, economist says

Filed under: Crisis, money — Tags: , , , — Sun @ 12:52 pm

Tightwad lenders are prolonging the housing bust and killing home sales, says the National Association of Realtors’ chief economist.

“If credit standards just went back to normal, you’d have a 15 to 20 percent more sales right away,” said Lawrence Yun, who spoke to the St. Louis Association of Realtors today.

Yun thinks it’s too hard to get a loan these days. Before the housing boom, and the subprime mortgage debacle, the typical person getting a loan backed by Fannie Mae loan had a credit score of 720. Now it’s 762.

The FHA used to have a typical score of 650. Now it’s 698, says Yun. The FHA is the government agency designed to back loans to people with minor credit blotches and little money for down payments.

It’s not all the bankers fault, Yun acknowledged. They’re scared that Fannie Mae and Freddie Mac will leave them holding a bag of bad mortgages.

Fannie and Freddie buy mortgages from lenders. The mortgage giants hold some of them, and package others into securities for sale to investors. After the housing bust, Fannie and Freddie were holding so many failing mortgages that the government had to nationalize the companies to prevent collapse.

Now Fannie and Freddie are trying to force the banks that originally made those mortgage to buy many of them back, claiming that the banks misrepresented the loans.

That’s frightened lenders, who could face gigantic losses. To stop it from happening again, bankers say they’re insisting that home buyers meet standards even higher than those set by Fannie and Freddie.

That shows up in the default figures. Of loans made in 2009, after the bust, 1.2 percent were in default after 18 months, Yun noted. On those made in 2007, 29 percent went bad.

The dilemma points out the conflicting goals of the government-run mortgage giants. On one hand, they’re supposed to keep mortgages flowing smoothly to aid the economic recovery. On the other, their government managers want to limit losses to the taxpayers. The government expects the Fannie and Freddie bailouts to cost $124 billion through 2014.

Lending could get tougher later this year if federal agencies go ahead with proposals to require borrowers to place 20 percent down on a home to get the best mortgage rates, Yun noted

Stingy lending and high unemployment are blocking what, by other measures, looks like a housing market ripe for a turnaround.

Housing prices are down and mortgages rates are near historic lows. “These are the best affordability conditions ever,” says Yun.

Yun suspects that pent-up demand for homes is building. America adds about 3 million people a year, and housing construction has slowed dramatically. Young people have moved back home, or taken in roommates, and they’ll want their own places. Rents are also rising, making home ownership look better.

As for the future: “Many many metrics point to the fact that it can’t get any worse than this,” said Yun.

Source

January 3, 2012

European Central Bank ramps up bond purchases

Filed under: legal, money — Tags: , , , — Sun @ 2:16 am

FRANKFURT

December 29, 2011

U.K. Store Traffic Falls From 2010 on Second Shopping Day After Christmas - Bloomberg

Filed under: Canada, money — Tags: , , , — Sun @ 3:00 am

U.K. shopper numbers fell yesterday as discounting and mild weather failed to entice cost-conscious Britons to spend, according to market researcher Experian Footfall.

Visits to shops and malls fell 0.7 percent on Dec. 27, compared to the Tuesday after Christmas last year, Experian Footfall said by e-mail. Shopper numbers surged 21.5 percent on Boxing Day, Dec. 26, with extended hours helping boost business limited last year by Sunday trading restrictions. The four-day U.K. holiday weekend ended on a Tuesday in both 2010 and 2011.

Stores including Debenhams Plc (DEB), the U.K.

December 17, 2011

Covidien plc plans to spin off Hazelwood-based drug business

Filed under: loans, money — Tags: , , , — Sun @ 12:44 am

Covidien plc will spin off its Hazelwood-based drug business, turning it into an independent company that may restore the historic corporate name of Mallinckrodt.

Covidien, based in Dublin, makes medical devices and medical supplies in addition to drugs. The proposed spinoff also will have its legal headquarters in Ireland, largely for tax reasons, company executives said in a conference call.

But the spinoff’s U.S. operation will be based in Hazelwood, and its new CEO will work from here. Spokesman Steve Littlejohn said the company has not made a final decision on its name, “but chances are good that it will be Mallinckrodt.”

Covidien’s pharmaceutical business has $2 billion in sales, with two-thirds of that coming in the U.S. market. It turned an operating profit of $318 million this fiscal year.

The drug business is a large provider of acetaminophen, the ingredient in Tylenol, and the largest U.S. supplier of opioids; both are pain medicines. Other lines include contrast products used with medical imagery and nuclear medicine products.

The pharmaceutical operation currently employs about 2,500 people in metro St. Louis. A company spokesman said the move should have no immediate impact on jobs here. Some jobs might be added as the firm sets up its own administrative operation.

Analysts had speculated that Covidien might get rid of the drug operation. Although profitable, it is less lucrative than the rest of Covidien and demands a higher investment in research and development. The drug operation earns a 16 cent operating profit for every dollar of sales, compared with 28 cents for the rest of the company.

The drug operation has a “lumpy” revenue history, notes analyst Aaron Vaughn of Edward Jones in Des Peres. The division is largely a generic drugmaker, and that sector suffered through a price war in past years, he noted.

“We thought they would be getting the business right-sized so that they could spin it off and let it grow on its own,” he said.

Covidien Chief Executive Jose Almeida said the pharmaceutical drug division’s performance had improved in recent years.

“We’re confident the business can now stand on its own,” he said in a conference call Thursday morning.

He said the company had been thinking about shedding the business for several years, citing “major differences” between drugs and Covidien’s other medical products. The operations have different business models, sales channels, customers and capital requirements, and demand different talents, he said.

Separating the operations would allow both to focus on their own strategies, Almeida said. Shareholders also might get more value over the long term, he said.

The drug business “definitely needs some investment,” said analyst Jeff Jonas of Gabelli & Co. in an interview with Bloomberg News. “They need to find new products, invest in the pipeline. That’s a multiyear process.”

Research and development consumes 7 percent of revenue in the drug division, compared with 4 percent in the rest of Covidien.

The spinoff would be in the form of a stock distribution, tax-free to U.S. shareholders, the company said. That tax-free aspect made the option of a spinoff superior to the alternative of selling the unit, company officials said.

The spinoff could take 18 months to complete and would need approval of regulators.

Bloomberg News, citing unidentified sources, reported last summer that Covidien had tried to sell the unit, but talks broke down.

Almeida said he has picked a CEO for the new company, although he didn’t name the person. The person is a ’strong leader” with “broad pharmaceutical experience,” Almeida said, and will join the spinoff from another company.

The drug operation is now headed by Matt Harbaugh, the drug division’s chief financial officer serving as interim president. Based in Hazelwood, he has led the unit since the previous president left last year.

Besides its Hazelwood headquarters, the drug unit has a research operation in Webster Groves, a nuclear medicine facility in Maryland Heights and a plant just north of downtown St. Louis.

That plant sits on what was the Mallinckrodt family farm. G. Mallinckrodt & Co. was founded there in 1867 and grew up as a chemical and drug firm. It refined uranium for the Manhattan Project, which created the atomic bomb during World War II.

Avon Products acquired Mallinckrodt in 1982. Avon sold the company to International Minerals and Chemical Corp. in 1986, which later changed its own name to Mallinckrodt.

In 2000, Tyco bought the company. After Tyco went bankrupt amid scandals, its health care operations were spun off as Covidien in 2007.

Without the drug business, Covidien would have $9.6 billion in sales. Covidien’s remaining business makes trays, hypodermic needles, retractors, pumps for patient feeding and pain management, and other medical devices.

Covidien stock rose $1.39 to $43.55 on Thursday.

Source

December 5, 2011

Markets buoyed by euro crisis resolution hopes

Filed under: Uncategorized, money — Tags: , , , — Sun @ 4:08 pm

Markets rose Monday on hopes that Europe’s leaders will agree on a plan to restore long-term confidence in the euro, saving it from collapse and averting global economic chaos.

A crucial week for the future of the euro kicks off later with a meeting of German Chancellor Angela Merkel and French President Nicolas Sarkozy in Paris. The two are expected to discuss how to achieve closer political and economic union of the 17 euro countries, including stricter budgetary oversight.

Merkel wants to change the basic EU treaty to reflect the tougher rules on euro countries and make them enforceable, while Sarkozy is resisting giving up more powers to Brussels, especially since he faces a tough re-election campaign in April. Sarkozy is thought to prefer an intergovernmental deal between the 17 euro countries.

The markets are hopeful that, given the gravity of the situation afflicting the eurozone, the two leaders will come up with a common proposal for tighter integration on budget matters. Analysts say that such a plan could lead to further emergency aid from the European Central Bank, possibly through the International Monetary Fund.

“Markets have gained ground ahead of a Franco-German summit which is supposed to resolve some long-standing issues between the two continental titans,” said Chris Beauchamp, market analyst at IG Index.

In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 5,582 while Germany’s DAX rose 0.9 percent to 6,133. The CAC-40 in France was 1.2 percent higher at 3,202.

The biggest gainer was Italy’s FTSE MIB, which was trading 2.2 percent higher, a day after the government led by Premier Mario Monti agreed big austerity and growth-boosting measures. They are to be presented to a skeptical Parliament later Monday.

Monti is to brief both Parliament chambers on the package, which includes euro30 billion ($27 billion) of spending cuts and tax hikes, euro10 billion of which will be reinvested to boost anemic growth instant payday loan.

His government agreed Sunday to slap taxes on property and luxury goods, increase the age at which retirees can draw pensions, trim the cost of Italy’s political class and give incentives to companies that hire women and young workers.

Significantly, the pressure on Italy eased in bond markets. The country’s ten-year bond yield was down 0.40 of a percentage point to 6.16 percent.

Italy is the eurozone’s third-largest economy and is considered too big to be bailed out. Its borrowing rates have in recent weeks hovered around the 7 percent mark, a level that eventually forced Greece, Ireland and Portugal to seek financial help. By comparison, bond yields in Germany, Europe’s largest and most stable economy, are roughly 2 percent.

Wall Street was poised for a stronger opening, too _ Dow futures were up 1 percent at 12,120 while the broader Standard & Poor’s 500 futures rose 1.1 percent to 1,257.

The upbeat tone in markets helped the euro advance 0.3 percent to $1.3448 and the main New York oil contract rise 83 cents a barrel to $101.79.

Earlier in Asia, Japan’s benchmark Nikkei 225 index added 0.6 percent to close at 8,695.98 while Hong Kong’s Hang Seng rose 0.7 percent to 19,179.69. South Korea’s Kospi ended 0.4 percent higher at 1,922.90.

Mainland Chinese shares lost ground on worries over the economic outlook. The benchmark Shanghai Composite Index lost 1.2 percent to 2,333.23.

____

Pamela Sampson in Bangkok contributed to this report.

Source

November 27, 2011

Greek activists take on the power company

Filed under: loans, money — Tags: , , , — Sun @ 1:20 pm

The Robin Hoods in this northern Greek town sport rubber gloves, fuses and orange stickers.

Nearly two years of pay cuts, job cuts and tax hikes have pummeled living standards in debt-crippled Greece and the country is facing record unemployment and a fourth year of recession in 2012. On a personal level, that means many in Veria can’t pay for basic necessities such as electricity and end up getting cut off from the grid.

That’s where the “Citizens of Veria” activists step in.

The group illegally reconnects needy households back to the electric grid in a direct challenge to the country’s dominant power provider, the Public Power Corporation.

“By cutting off power, (PPC) punishes young children, elderly people and generally those who can’t cope without it,” said activist Nikos Aslanoglou. “We decided that we had to reconnect them. We’re not hiding, everybody knows who we are.”

He says the group has so far reconnected dozens of households, particularly in the villages and small towns outlying Veria.

Greece sank into a financial crisis in 2009 after it emerged that authorities had been falsifying financial data for years. The fallout from that blocked the country’s access to bond markets. Greece only escaped bankruptcy with a euro110 billion ($147 billion) international rescue loan in May 2010, and when that was not enough, a second, euro130 billion ($174 billion) rescue deal that awaits final approval.

In return, the government has promised to slash bloated budget deficits through harsh austerity measures.

As jobs become rarer and worse-paid, many in this northern farming region are falling through a weakening social safety net. In the village of Agia Marina, 9 miles (15 kilometers) from Veria, activists recently reconnected the house of a disabled, 34-year-old single mother, who lives with four of her five children.

As they left, they placed an orange sticker on the electricity meter that reads: “Citizens of Veria. Social solidarity. We are reconnecting the power.”

The woman’s eldest daughter, a 19-year-old student, said before the activists came her siblings _ aged from 6 to 18 _ had to study by candlelight or with oil lamps in an unheated house.

“Our only income is a euro400-euro500 ($535-$668) welfare payment every two months,” said the student, Vasso. “PPC disconnected us because we owed them money, and we were left in the dark for about a month, but then some gentlemen came and reconnected us. Now we have heating again.”

She didn’t want her full name used because she was afraid authorities would track down her family.

What the activists are doing is illegal and can be punished by more than ten years’ imprisonment depending on the size of the outstanding bills, although in most cases sentences do not exceed five years no fax payday loan.

“Greek law treats the theft of electricity like any other common theft,” University of Thessaloniki law professor Lambros Margaritis said.

Undeterred, a three-strong activist team recently reconnected a house in the small town of Meliki, where a 54-year-old woman lives with her two unemployed sons in their thirties. Working deftly, it took them 15 minutes.

“We’re not stealing, the electricity consumption is recorded,” Aslanoglou said. “The poor houseowners can’t face consequences, it’s us who do the reconnecting.”

Hence the stickers.

Veria activists claim their campaign is catching on in other parts of the country _ particularly since the introduction in September of a deeply resented new property tax levied through power bills. People who can’t pay the new tax face losing their power supply.

That prospect has enraged even PPC employees, who staged a sit-in at a company office in Athens to disrupt the collection of the new emergency tax.

While the Veria municipal authority says have-nots should not be disconnected over the new tax, Mayor Haroula Ousountzoglou says the activists are going too far.

“What the group is doing may be very romantic, it is, however, dangerous,” Ousountzoglou told the AP. “PPC just goes and cuts off the electricity again, and imposes additional charges.”

In cases of repeated illegal reconnection, homeowners can also face prosecution _ or have their link severed at the nearest electricity pole, a drastic move that activists are powerless to counter.

PPC public relations officer Kimon Stergiotis warned that the company is determined to protect its interests.

“To illegally reconnect cut power links poses severe threats to the life and property of unsuspecting citizens,” he said. “In any case, PPC will use the law to its utmost severity.”

Ousountzoglou said her town has about 330 families on a welfare program that sometimes includes assistance in paying power bills.

“But our funds are constantly dwindling, and I keep making the rounds of local firms to ask for contributions,” she added.

The Veria mayor has threatened to sue PPC if people who really can’t pay the property tax are left without power.

“We told them we’re not joking,” she said. “PPC can’t behave like that to needy people.”

Source

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