Finance Blog number 1

May 15, 2012

Saverin dumps US citizenship ahead of Facebook IPO

Filed under: mortgage, term — Tags: , , , — Sun @ 12:16 pm

Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship, a move expected to save him hundreds of millions of dollars in taxes stemming from the company’s impending initial public offering.

The Brazil-born 30-year-old became a U.S. citizen in 1998 but has lived in Singapore since 2009. Giving up his citizenship will allow him to avoid paying taxes on billions of dollars of capital gains when Facebook launches its IPO Friday. Singapore does not have a capital gains tax.

Saverin gave up his citizenship in the first quarter of this year, the U.S. Internal Revenue Service said.

“Eduardo recently found it to be more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Saverin’s New York-based spokesman Tom Goodman said Tuesday in a statement.

Goodman said that because Saverin plans to invest in Brazilian and global companies that have strong interests in entering Asian markets, “it made the most sense for him to use Singapore as a home base absolutely free credit score.”

Saverin has a 4 percent stake in Facebook, which has headquarters in Menlo Park, California. Analysts say the company could be worth $100 billion.

Saverin, who moved to the U.S. from Brazil in 1992, founded Facebook with Mark Zuckerberg in 2004 while the two were students at Harvard University. Saverin gained additional fame when his conflict with Zuckerberg and departure from the company was depicted in the 2010 movie “The Social Network.”

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May 12, 2012

Banks sink on JPMorgan loss; tech stocks gain

Filed under: Canada, Uncategorized — Tags: , , , — Sun @ 6:28 am

JPMorgan’s surprise $2 billion trading loss prompted a sell-off in financial stocks Friday, but the broader market rose as investors decided this was a problem for investment banks and not other industries.

The Dow Jones industrial average rose 31 points in morning trading after bouncing back from a 76-point decline. The Standard & Poor’s 500 index rose four points to 1,362. The Nasdaq composite index, which is heavily weighted with technology stocks, was up 20 points at 2,954.

Financial stocks in the S&P fell 1 percent, while the other nine industry groups rose. For that, the other investment banks could thank JPMorgan, America’s biggest bank. The stock plunged 8 percent, dragging other banks with big Wall Street operations down with it. Morgan Stanley fell 4.3 percent and Goldman Sachs fell 3 percent.

Retail-focused banks fared better. Bank of America and Wells Fargo each declined just 0.3 percent.

JPMorgan’s blunder comes in the midst of a political battle over how closely to regulate banks, though JP Morgan’s CEO Jamie Dimon said the trades would not have been affected by the so-called Volcker rule, expected to take effect this summer. Still, the $2 billion loss is sure to be used as ammunition by those pushing for tighter regulation of investment banks.

Tech stocks did well. Intel rose 1.8 percent after it told analysts that it is on track to meet sales expectations. Tech investors were relieved to hear that one day after Cisco Systems prompted selling in tech shares by being pessimistic about sales. Microsoft shares rose 2 percent. Semiconductor maker Nvidia jumped 8.6 percent, the most in the S&P 500, after reporting revenue that was higher than analysts were expecting.

Consumer discretionary stocks were also up. Retailer Bed Bath & Beyond jumped 4.5 percent, one of the biggest gains in the S&P 500 index, and video streaming and DVD-by-mail company Netflix rose 6.6 percent.

Also Friday, the Labor Department said that the producer price index, which measures price changes before they reach the consumer, dropped 0.2 percent last month. It was the first decline since December and the biggest drop since October. Declines were driven by gas and energy prices. That’s good news for consumer spending.

Separately, a closely watched measure of consumer confidence from the University of Michigan released Friday morning was better than analysts had expected. The index was at its highest level since January 2008.

Crude and gasoline futures slid again. Oil fell 44 cents to $96.64 per barrel. Gold prices fell a half-percent to $1,587.70 per ounce.

European stocks were mixed. France’s CAC 40 index fell 0.3 percent, but Britain’s FTSE 100 rose by the same percentage and Germany’s DAX rose 0.7 percent. Borrowing costs for Germany and France fell, while costs for Italy and Spain rose as investors remain focused on Greece, where another general election is expected for next month following the failure of attempts to form a government.

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May 5, 2012

A modest economy seems to be keeping lid on hiring

Filed under: lenders, loans — Tags: , , , — Sun @ 6:36 pm

U.S. job growth slumped in April for a second straight month. It pointed to a steadily growing but still sluggish economy that could tighten the presidential race.

A drop in the unemployment rate wasn’t a necessarily a healthy sign for the job market. The rate fell from 8.2 percent in March to 8.1 percent in April. But that was mainly because more people gave up looking for work.

People who aren’t looking for jobs aren’t counted as unemployed.

The 115,000 jobs added in April were fewer than the 154,000 jobs created in March, a number the government revised up from its first report a month ago of 120,000. It also marked a sharp decline from December through February, when the economy averaged 252,000 jobs per month.

The percentage of adults working or looking for work has fallen to its lowest level in more than 30 years. Many have become discouraged about their prospects.

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Here’s what The Associated Press’ reporters are finding:

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TEPID ECONOMY, TEPID HIRING

Over time, strong economic growth is vital for strong job growth.

But early this year, hiring accelerated much faster than economic growth did. Job gains averaged a strong 229,000 in the first three months. But the economy grew at a sluggish annual rate of 2.2 percent.

Economists began to wonder: Would growth catch up with hiring? Or would hiring slow to match economic growth (as measured by gross domestic product, or GDP)?

Some economists say April’s disappointing job growth suggests an answer, and it’s not a cheerful one:

“It now appears that jobs have decelerated into line with GDP, rather than GDP accelerating to catch up with jobs,” said Nigel Gault, an economist at IHS Global Insight.

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REVISING HISTORY

The job market seems to look better with hindsight.

The Labor Department has revised job growth upward for 10 straight months _ and for 18 of the past 21. Over the past 10 months, it’s added 413,000 jobs to the original estimates.

The job figures are revised twice. They’re updated in the two months after they first come out. And they’re revised again in an annual update meant to capture updated employment data from the states.

History shows that the updated totals typically follow the trend in job creation: When the economy is creating jobs consistently, the revisions tend to be positive. Months of job losses typically lead to negative revisions.

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THE POLITICAL DEBATE

A falling unemployment rate would seem to be good news for President Barack Obama’s re-election hopes. Dating to 1956, no incumbent president has lost when unemployment fell in the two years leading to an election.

On Election Day, unemployment will almost surely be less than it was two years earlier: 9.8 percent in November 2010.

But for the past two months, the rate has fallen for the wrong reason: More than 500,000 Americans have stopped looking for jobs and are no longer counted as unemployed business card. Job growth averaged a healthy 252,000 from December through February. It slowed to 135,000 in March and April.

The question is whether voters will focus more on the falling unemployment rate (good for Obama) or the modest job growth (not so good).

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A JAB FROM ROMNEY

Mitt Romney seized on the latter. He noted that the declining number of people seeking work explains the drop in the unemployment rate.

“This is way off from what should be happening in a normal recovery,” Romney said on Fox & Friends. “You have more people dropping out of the work force than you have getting jobs.”

“This is not progress,” Romney said.

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DISAPPEARING WORKERS

The percentage of Americans 16 and older working or looking for work is now 63.6 percent, the lowest since 1981. For men, the so-called “labor force participation rate” is 70 percent. That’s the lowest since the government started keeping records in 1948.

The rate peaked at 67.3 percent in early 2000 as women poured into the workplace. Since then, it’s turned south. Demographic and social trends help explain the drop: Baby boomers are aging and retiring.

And more women, especially in upper-income families, are staying at home. The drop in participation accelerated after the economy slid into recession in late 2007. The tough job market led many to give up looking for work.

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   SOUR INVESTORS

The stock market didn’t take Friday’s news well.

The Dow Jones industrial average sank 132 points, or 1 percent, in late-morning trading. The broader Standard & Poor’s 500 index fell 1.4 percent.

   Investors were a lot happier earlier this week. They sent the Dow to its highest close since December 2007.

   Technology stocks and banks led the market lower Friday. Utility companies were the only broad category of stock in the S&P 500 index trading higher. They tend to fare well when investors grow nervous about the economy.

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NO SURPRISE TO BERNANKE

One person not likely surprised by the sluggish hiring in April: Ben Bernanke.

The Federal Reserve chairman has cautioned for months that the spike in hiring at the start of the year didn’t match the economy’s more modest growth.

His Fed colleagues probably agree. Their latest forecasts show that even under a best-case scenario, unemployment will be at least 7.3 percent in late 2013. Historically, a normal rate would range between 5 percent and 6 percent.

Most analysts expect the Fed to keep its key interest rate at a record low near zero well into 2013, if not later. But few think hiring has weakened enough to trigger a third round of bond buying to help lower long-term rates and encourage more lending.

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May 4, 2012

ECB leaves rates steady but hints at future cut

Filed under: legal, loans — Tags: , , , — Sun @ 3:44 am

European Central Bank officials voted Thursday to hold interest rates steady, even as the euro area economy slides towards recession. But ECB president Mario Draghi appeared to hint that there could be rate cuts in the future.

In a widely expected move, the ECB left its main overnight lending rate at 1%, a level the bank has maintained since late last year.

The Governing Council of the Frankfurt-based ECB met in Barcelona as the economic outlook in the eurozone has deteriorated.

Speaking to reporters after the meeting, Draghi said the ECB’s policies remain "accommodative" in light of the economic data from the first quarter. But he acknowledged that more recent economic indicators highlight the uncertain outlook for the eurozone.

Draghi noted that economic activity was "stabilizing" in the first quarter but that more recent data shows "uncertainty prevailing."

While he stressed that interest rates are very low and liquidity is abundant, Draghi said several times that "any exit strategy remains premature." ECB policymakers will be "clearer in our assessment" at the council’s next policy meeting in June, he added.

"The ECB does appear to be leaving the door open to an eventual further interest rate cut," said Howard Archer, chief UK and European economist at IHS Global Insight.

But monetary policymakers will probably not act until economic conditions have deteriorated further, according to Archer. "Unfortunately that could very well happen," he added.

Europe: ‘Dark clouds on the horizon’

Meanwhile, the ECB is under pressure to intervene in financial markets as investors have been rattled by renewed concerns about the euro debt crisis.

In response to a question on the ECB’s controversial bond buying program, Draghi simply said the so-called securities market program, under which the ECB purchased billions of euros worth of government debt last year, is "an important instrument."

But he stressed that eurozone governments still need to reduce debt and take steps to increase economic competitiveness.

"These mechanisms are useful, but they cannot replace either fiscal consolidation or structural reforms as the way to go back to stability," said Draghi guaranteed personal loan approval.

The ECB has taken unprecedented steps to support the economy.

In two separate operations, the ECB funneled more than 1 trillion euros worth of ultra low-cost loans into the banking system starting late last year. The two long-term refinancing operations, or LTROs, helped prevent a credit crunch in the banking system.

The LTROs also appeared to drive down borrowing costs for troubled euro area governments including Italy and Spain. But the effects of the lending program have waned and some investors are now calling for the ECB to do more.

Spain, for example, confirmed earlier this week that it officially slipped back into recession in the first quarter. Meanwhile, unemployment in the 17-nations that use the euro edged up to 10.9% in March — the highest level since the common currency was introduced in 1999.

In addition to Spain, several other eurozone economies already struggling with recession including Italy, Ireland, Greece and Portugal.

Eurozone unemployment hits record 10.9%

Overall, the eurozone economy is widely expected to suffer a mild recession this year as austerity — budget cuts and tax hikes — take a toll on growth.

The bleak economic climate has raised concerns that austerity is doing more harm than good, and a growing number of policymakers have been calling for reforms to boost economic growth.

For his part, Draghi seemed to suggest that policymakers need to do both.

"We have to put growth back at center of agenda without any contradiction to the need to preserver in fiscal consolidation," said Draghi.

He supported calls for a "growth pact" to compliment the "fiscal pact" that euro area leaders signed late last year.

Draghi said the growth pact should emphasize polices aimed at opening up eurozone labor and product markets to increased competition. At the same time, Draghi said targeted spending on infrastructure projects will help create jobs in the public sector.

"We need a common European discipline in doing these reforms," he said.  

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May 2, 2012

Swiss bank UBS reports 54 pct profit drop for Q1

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

Switzerland’s biggest bank UBS AG reported a 54 percent drop in first-quarter net profit for 2012 that it blamed Wednesday on a loss at the investment bank, an accounting charge on its debt and difficult market conditions.

First-quarter net profit fell to 827 million francs ($910 million) from 1.81 billion francs in the same period last year, the bank reported before trading opened in Zurich. The results did not meet analysts’ average estimate for a net profit of 1.2 billion Swiss francs ($1.32 billion).

UBS also offered a somewhat grim outlook for the second quarter of 2012, owing to Europe’s sovereign debt crisis, the U.S. federal deficit and continuing global uncertainties.

“Failure to make progress on these key issues would make further improvements in prevailing market conditions unlikely and would have the potential to continue the headwinds for revenue growth, net interest margins and net new money,” the bank reported.

Chief Executive Officer Sergio P. Ermotti said despite the “challenging market conditions” the bank had performed well.

“We improved operational performance across all our businesses, strengthened our leading capital ratios further, reduced risk-weighted assets and remained vigilant on costs,” he said in a statement. “The strong net new money inflows in our wealth management businesses provide further clear evidence of the trust our clients place in UBS.”

It was just the second quarter for the bank under the leadership of Ermotti, who took over in September with the aim of restoring clients’ trust following a case of alleged rogue trading in its investment bank that cost UBS $2 billion. Ermotti pledged to tighten oversight at UBS and restructure the ailing investment banking unit where the trading scandal occurred.

Last month, the specter of a damaging tax evasion case rose again. After resolving a long-running tax probe in the United States with a $780 million fine and the handover of thousands of client files, UBS now faces allegations by former staff in France that it also helped French clients cheat on their taxes.

The bank strenuously denies the allegations and says it will defend itself using “appropriate legal means.”

The first-quarter results for 2012 also were a turnaround from the last quarter of 2011 when the bank, Switzerland’s biggest by market capitalization, posted a net profit of 319 million francs.

Rival Credit Suisse reported a 95 percent drop in first-quarter net profit last week due to writedowns, staff severance costs, bonus payments and the strong Swiss franc.

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April 29, 2012

U.K. Services, Manufacturing, Building Probably Slowed in April - Bloomberg

Filed under: marketing, mortgage — Tags: , , , — Sun @ 7:00 am

U.K. services, manufacturing and construction probably waned this month as Bank of England policy makers prepare to discuss whether they need to extend stimulus after the economy slipped back into recession.

A gauge of factory activity based on a survey of purchasing managers will fall to 51.5 from 52.1 in March, according to the median estimate of 27 forecasts in a Bloomberg News poll. A reading above 50 indicates expansion. An index of services, the largest part of the economy, will decline to 54.1 from 55.3, while a construction measure will also fall, separate surveys of economists show.

U.K. gross domestic product fell in the first quarter, pushing the economy into its first double-dip recession since the 1970s. While Bank of England officials have said that may hurt confidence, they must balance that risk with the threat from faster-than-targeted inflation at their May 9-10 meeting.

April 24, 2012

China official says Proview owns iPad trademark

Filed under: legal, loans — Tags: , , , — Sun @ 10:04 am

Apple Inc. risks losing the right to use the iPad trademark in China, a senior official suggested Tuesday, as a Chinese court was seeking to mediate a settlement between the technology giant and a local company challenging its use of the iPad name.

Yan Xiaohong, deputy director of the National Copyright Administration, told reporters in Beijing that the government regards Shenzhen Proview Technology as the rightful owner of the trademark for the popular tablet computers. His remarks could add to pressure on Apple to find a solution to the standoff.

Yan’s comments followed news that the Guangdong High Court in southern China is seeking to arrange a settlement in the case. In late February, the court began hearing Apple’s appeal of a lower court ruling that favored Proview in the trademark dispute.

“The dispute between Apple and Shenzhen Proview concerning the iPad trademark is going through the judicial process,” Yan said in a news conference carried on the Internet.

But he added that “according to our government’s laws, Shenzhen Proview is still the lawful representative and user of the trademark.”

China has sought to showcase its determination to protect trademarks and other intellectual property, but with hundreds of thousands employed in the assembly of Apple’s iPhones and iPads is unlikely to want to disrupt the company’s production and marketing in China.

Ma Dongxiao, a lawyer for Proview said the company had expected all along to settle with Apple, with the key sticking point being the amount of money involved.

“It is likely that we will settle out of court. The Guangdong High Court is helping to arrange it and the court also expects to do so,” Ma said in a phone interview.

Court officials contacted by phone said they were not authorized to comment on the issue to foreign media.

“Given the wide implications of this case we need to wait to see the final ruling of the court, which will decide the ownership rights for the trademark,” Yan said. “We will proceed with the case in a prudent manner.”

He said commercial authorities that had received complaints about Apple’s use of the iPad trademark were collecting evidence.

“Once the ruling emerges we will handle the case according to the evidence we have,” he said.

Chinese courts often try to mediate agreements out of court. But it is unclear whether Apple is open to that option.

Proview, a financially troubled maker of computer displays and LED lights, says it registered the iPad trademark more than a decade ago. Apple says Proview sold it worldwide rights to the iPad trademark in 2009, though the registration was never transferred for China.

Proview’s other worldwide trademarks for the iPad name were owned by another subsidiary of the Proview Group, Taiwan-based Proview Electronics. But the mainland China trademark was registered by Shenzhen Proview.

An Apple spokeswoman, Carolyn Wu, said the company had no new comment on the possibility of a settlement with Proview.

In a statement, Apple reiterated its earlier insistence that it would never “knowingly abuse someone else’s trademarks.”

The statement adds that Proview “still owe a lot of people a lot of money, they are now unfairly trying to get more from Apple for a trademark we already paid for.”

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Researcher Fu Ting contributed to this report.

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April 22, 2012

Unauthorized biography spills Simon Cowell secrets

Filed under: Crisis, lenders — Tags: , , , — Sun @ 7:08 pm

He gets colonic irrigations, Botox injections and vitamin drips, and insists on black toilet paper in his home.

A revealing new biography offers intimate _ some might say too intimate _ details about Simon Cowell, along with a portrait of the entertainment mogul’s savvy business side.

“Sweet Revenge: The Intimate Life of Simon Cowell” is written by British journalist and biographer Tom Bower, whose previous subjects include former British Prime Minister Gordon Brown, jailed media mogul Conrad Black and ex-Harrods owner Mohammad al-Fayed.

His latest portrait of power centers on the tanned and brush-cut Cowell, 52, who has gained fame in both Britain and North America as producer and an acerbic judge on TV talent shows including “The X Factor” and “America’s Got Talent.”

Bower says he became fascinated by the story of a middle-aged music producer who struck gold by turning the old-fashioned talent contest into a slick 21st-century phenomenon _ and in the process earned a fortune estimated at 200 million pounds ($320 million) by the Sunday Times Rich List.

The book paints a picture of a man who struggled for years in the music business, spurred on to success out of a desire to prove his detractors wrong.

“He had 20 years _ more than 20 years _ of humiliation,” Bower said. “At school he was a total failure and as a music producer he was a total failure.

“But what he did have was charm and an ability to understand the music business because of all this failure.”

“Sweet Revenge,” published in the U.S. by Ballantine Books on Tuesday, is billed as the first book about Cowell written with the mogul’s participation _ though not his authorization. Bower spent many hours with Cowell aboard his private jet, at his Los Angeles home and on his yacht in the south of France and the Caribbean.

But he says Cowell told some friends and associates not to talk to him. Writing the book became “a cat and mouse game” between him and his subject.

“He clearly wanted his story told properly, but there are parts he didn’t want told and it was up to me to find out about them,” Bower said.

Cowell has stressed that the book was not written with his approval, tweeting: “This book is not written by me. It is unauthorized. The writer is Tom Bower.”

Cowell can’t have enjoyed the revelations in The Sun tabloid, which has been serializing the more salacious bits of Bower’s book.

Among the details: Cowell gets regular colonic irrigations because “it’s so cleansing _ and it makes my eyes shine brighter.” He is put on a drip of vitamins and nutrients for a half hour each week.

He’s not gay, despite long-standing rumors. The book reveals bedroom secrets including a brief affair with former “X Factor” judge Danii Minogue. But Bower says that Cowell isn’t interested in serious relationships.

“He is only interested in women who are uninhibited and uncomplicated,” Bower said. “He is not interested in relationships. He’s a schoolboy my credit score.”

He is, however, generous. Bower says Cowell gave his ex-fiance Mezhgan Hussainy, a makeup artist on “American Idol,” a $5 million Beverly Hills house as a parting gift. Most of his exes have refrained from spilling the beans in the media.

While Britain’s tabloids have focused on Cowell’s sex life, Bower is more interested in the story of money and power, of “business rivalry and the skullduggery.”

At the heart of the book is Cowell’s feud with fellow svengali and former Spice Girls manager Simon Fuller. The pair fell out over the 2001 British musical talent-show, “Pop Idol,” progenitor of “American Idol.” Fuller was listed as creator of the show despite what Cowell said was a verbal agreement to split the credit.

A legal battle between the two men was settled out of court, with Fuller getting the creator credit for “Idol” _ though Bower says he found “overwhelming” evidence that Cowell played a vital role.

Bower said Cowell was “naive and humiliated by Fuller’s dexterity.”

“He didn’t understand the importance of owning a format,” Bower said. “He learnt his lesson.”

He said Cowell became “incensed” by the “created by Simon Fuller” credit on “Pop Idol” and “American Idol,” and vowed to create his own rival show.

The result was singing competition “X Factor,” which had its debut in Britain in 2004 and in the U.S. last fall. Cowell also created “Britain’s Got Talent” and executive produces its U.S. spinoff, “America’s got Talent.”

Cowell’s response to the book, published in Britain on Friday, is so far unknown.

Publicist Max Clifford _ who says Cowell pays him hundreds of thousands of dollars a year to keep stories out of the press _ said he had advised Cowell not to speak to Bower, because it would undo years of carefully protected privacy.

“He knows it was a mistake,” Clifford said.

“For Simon, who has protected his privacy and never, ever spoken about his relationships with anybody, to suddenly be quoted about this, that and the other is to me very damaging.

“Having created an image that’s been hugely successful, to see him damage it like that is sad and disappointing,” Clifford said.

Bower, though, thinks the book’s portrait of Cowell is fairly positive.

While Bower has been openly hostile to some of his previous subjects _ he called Gordon Brown a ruthless bully and Conrad Black a crook _ he has a soft spot for Cowell.

“He’s not a crook,” Bower said. “So far he hasn’t sued me. And it was good fun.

“He doesn’t sit on his laurels. That’s what’s endearing about him. Although he is vain, he is a perfectionist and a professional _ and he understands the business better than most.”

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Jill Lawless can be reached at: http://twitter.com/JillLawless

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April 2, 2012

Illumina urges shareholders to reject buyout

Filed under: online, technology — Tags: , , , — Sun @ 10:52 pm

Illumina urged its shareholders Monday to reject a sweetened buyout offer from the Swiss drugmaker Roche, saying that the $6.5 billion deal still undervalues the California maker of genetic analysis instruments.

Roche raised its proposed price for Illumina last week, but Illumina CEO Jay Flatley says the offer is still not good enough. He calls the deal “opportunistic” and says his San Diego-based company is poised to deliver better returns through higher sales and profits.

Roche Holding AG did not immediately provide comment on Illumina’s statement.

Illumina shares fell 88 cents, or 1.7 percent, to $51.73 after word of the latest rejection.

Swiss drug company Roche Holding AG proposed to buy Illumina in January for $44.50 per share, or about $5.7 billion. Roche said the deal would strengthen Roche’s position in life sciences diagnostics because its technologies are complementary with Illumina’s.

Illumina’s board unanimously turned down Roche’s offer, saying it was “grossly inadequate” and that shareholders should not tender their stock to Roche.

Last week, Roche raised its offer to $51 per share, or about $6.5 billion, an increase of almost 15 percent.

Earlier Monday, Illumina said that its first-quarter revenue will be about $270 million on strong demand for its research instruments. The estimate tops current Wall Street expectations.

The company also said that it expects its adjusted earnings for the quarter will match of beat current Wall Street expectations. Analysts expect earnings of 31 cents per share on revenue of $258 million, according to a survey by FactSet.

Illumina said the numbers could change by the time it reports its final earnings results later this month.

Illumina makes equipment that biotechnology researchers can use to sequence genes or do other tasks.

Flatley said that during the first quarter, the company’s “book-to-bill” ratio showed that customer orders were outpacing deliveries for the third consecutive quarter. He said more customers are “getting back to work,” and boosting demand.

Illumina’s shares rose sharply after Roche made its initial offer for the company, and the stock is up about 65 percent for the year.

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March 25, 2012

Japan and Canada to start free trade talks

Filed under: Crisis, mortgage — Tags: , , , — Sun @ 8:08 pm

Japan and Canada agreed Sunday to formally start talks aimed at forging a free trade agreement between the two countries.

If established, the pact would be Japan’s first with a country from the Group of Eight major economies.

Japanese Prime Minister Yoshihiko Noda and his Canadian counterpart, Stephen Harper, said they would also seek to boost economic, energy and security relations between the two countries.

“This is a truly historic step that will help create jobs and growth in both countries,” Harper told a joint news conference. “The negotiations we are announcing today complement Canada’s ambitious trade agenda.”

Japan is Canada’s fourth-largest export market, and a free trade deal could potentially increase that “by as much as two-thirds,” Harper said.

Japan’s main exports to Canada are cars, machinery and other industrial products. Its chief imports from Canada are natural resources and agricultural products including soybeans and pork. Both countries are seeking to join the U.S.-led trans-Pacific multilateral trade pact known as TPP. Japan’s highly protected farm sector is seen as a main obstacle.

Noda stressed the importance of accelerating private-sector cooperation on the trade of natural gas and other energy resources.

Japan is struggling to secure a stable supply of energy resources due to concerns about a serious power crunch stemming from the nuclear crisis set off by last year’s massive earthquake and tsunami paydayloans.

The March 11, 2011, disasters destroyed power and cooling functions at the Fukushima Dai-ichi nuclear power plant, sending three reactors into meltdown and forcing 100,000 people to relocate.

The crisis also raised public concerns and opposition to restart reactors idled for regular safety checks. Only two of Japan’s 54 reactors are currently running, with all of them expected to go offline by the end of April if none are resumed by then.

During the talks Sunday, Japan and Canada also agreed to strengthen cooperation in defense and security in the Asia-Pacific region, Noda said. The two leaders are heading to Seoul to attend this week’s Nuclear Security Summit.

“We reaffirmed the importance to tackle outstanding global issues, particularly the issues surrounding North Korea and others in the Asia-Pacific region, as we cooperate as partners,” Noda said.

North Korea says it will launch an observation satellite on a long-range rocket next month. Japan shares fear by the U.S. and South Korea that Pyongyang wants to test long-range missiles that could eventually deliver nuclear warheads.

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