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Following a 34-year run, a Dallas Macy's store is among nine Macy's closing nationwide in light of slow sales, the company announced Friday.
The Macy's Valley View Center location, which employs 132, will go into sales-clearance mode on Jan. 13, and once it sells out of merchandise, its doors will close, said Macy's spokesman Ed Smith.
Macy’s Inc., the owner of its namesake chain and Bloomingdale’s, said Friday that it would close stores deemed to have inadequate sales and eliminate 899 jobs.
Macy’s will shut locations in Akron, Canton and North Randall, Ohio; Lake Charles, La.; Riverdale, Utah; Indianapolis; Oklahoma City; Houston; and Dallas. Final clearance sales will begin in the next few weeks, the retailer said.
The company will operate 815 Macy’s after shutting the stores, all of them locations the chain acquired when it bought May Department Stores in 2005, a spokesman, Jim Sluzewski, said. The retailer’s sales growth has been hurt by the former May stores, which were converted to the Macy’s name last year, analysts said.
“They are certainly muddling through, but not muddling through very well,” Patricia Edwards, a portfolio manager at Wentworth, Hauser & Violich in Seattle, said of the merger. “It’s a big bite to chew off, and these customers are used to different things.”
Former May shoppers want coupons and national brands, Ms. Edwards said, while Macy’s clients are accustomed to that chain’s own labels. She holds shares of retailers including Target.
Shares of Macy’s rose 44 cents, or 1.8 percent, to $25.48, on the New York Stock Exchange.
In a statement, Macy’s chief executive, Terry J. Lundgren, said: “While the decision to close stores is difficult, it is necessary that we do so selectively in locations with declining sales and where we have been unable to identify sufficient growth opportunities.”
The company, based in Cincinnati, opened 10 new stores and one furniture gallery in 2007. In 2008, it expects to open five stores, and has six to eight new locations planned for 2009.
Macy’s $11 billion acquisition of May made it the second-largest department store company after Sears Holdings. Macy’s converted more than 400 May locations, including Marshall Field’s and Hecht’s, to the Macy’s name, doubling the size of the chain, in September 2006. It operates 40 Bloomingdale’s stores.
Saturday, December 29, 2007
Friday, December 28, 2007
Bhutto's death likely to roil Pakistan markets
Bussiness stopped!!! plitical stablity reached 0 in Pakistan,
The assassination of Pakistani opposition leader Benazir Bhutto will likely rattle the country's equity markets, eroding confidence at least in the short term in a market that's been one of the best performers in Asia, observers said.
Bhutto, a former prime minister of Pakistan, was killed Thursday in an attack that also killed at least 20 others at the end of a political rally in Rawalpindi. Read full story.
World leaders condemned the assassination, which sent shock waves through the Pakistani political system ahead of Jan. 8 parliamentary elections. It immediately raised questions about whether the elections would proceed on schedule and whether President Pervez Musharraf would reimpose a recently lifted state of emergency.
'The big takeaway from this horrible event is that Pakistan could slide into a civil war of sorts.'
— Win Thin, Brown Brothers Harriman
News of the assassination left U.S. financial markets unsettled, with the Dow Jones Industrial Average ($INDU:
Dow Jones Industrial Average
News, chart, profile, more
Last: 13,359.61-192.08-1.42%4:03pm 12/27/2007Delayed quote data
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$INDU 13,359.61, -192.08, -1.4%) falling more than 100 points. Crude-oil and gold futures rallied, as did prices of U.S Treasurys. See Market Snapshot. See Futures Movers.
Bhutto's death will likely also destabilize Pakistan's equity market, among the best-performing bourses in the region.
"In the very short term, there will be a knee-jerk reaction as you saw at the time of the imposition of the rule of emergency by Musharraf earlier this year," said Rupert Neil Bumfrey, an advisor to emerging markets asset-management companies, in a phone interview from Dubai.
"Again, the knee-jerk reaction will be don't go Pakistan," said Bumfrey, who travels often to Pakistan. "However, as we've seen with the stock market since the imposition and abandonment of emergency rule, the stock market has continued to be positive. In the long run, Pakistan remains an excellent investment. It has good value."
In Karachi, the benchmark KSE-100 stock index closed down 0.3% on Thursday. See the Karachi Stock Exchange's Web site.
It has rallied 47% year to date. By comparison, India's Sensex index has gained 46.6% year to date.
Another key indicator showed a similar advance. The MSCI Pakistan index's year-to-date gain has been 40.7%, while MSCI India has surged 70% and MSCI China has rallied 65%.
"This is going to be the first big test of sentiment since fund managers started focusing on this market in the middle of last year," said Cameron Brandt, global markets analyst at EPFR Global.
Economic growth story
"Pakistan was on the front edge of the frontier market phenomenon -- the quest for untapped value in emerging markets," Brandt said. "Pakistan is on the front end of that because its economy has been doing reasonably well with almost no fanfare."
Indeed, Pakistan's gross domestic product has averaged 6.9% growth over the past five years.
That strong economic growth, however, might be overshadowed now that Bhutto's killing thrust the volatile region, which many observers consider a breeding ground for violent Islamic extremism, back into the global spotlight.
Pakistan, which borders Afghanistan, is the recipient of billions of dollars of U.S. aid and a key front in the U.S.-declared war on terrorism. The death of Bhutto, who was expected to be a force in Pakistani politics following the election, cast U.S. policy toward the region into turmoil.
"The big takeaway from this horrible event is that Pakistan could slide into a civil war of sorts," said Win Thin, senior currency strategist at Brown Brothers Harriman, in a research note. "Such a development would upset the delicate balance in the region. India, for instance, has benefited from improved relations with Pakistan under Musharraf."
Pakistan equities and rupee are likely to come under pressure when markets reopen, Thin said.
Investors with a long-term perspective and mettle, however, may well find lucrative opportunities in Pakistan.
After Egypt, Pakistan is one of the first emerging markets where Persian Gulf investors look to for opportunities, Brandt noted.
Echoing this, Bumfrey said that the United Arab Emirates and Saudi Arabia have been investing a lot of money in Pakistan.
"The biggest support for Pakistan will continue to come from this region," Bumfrey said. "New refineries are being financed by Abu Dhabi. All of that will continue."
Temasek, one of Singapore's sovereign wealth-management funds, for example, also has holdings in Pakistan, he said.
Under Musharraf, the Pakistani economy has boomed in comparison with its performance in the past. The government has introduced major macroeconomic reforms since 2000, such as privatization of the banking sector.
"But it is not India. India has surged well ahead," Bumfrey said.
For Pakistan to reach India's pace of growth, "you need the liquidity. You need the external international capital. There's offshore funds that are being crated now as we speak to garner that liquidity," he said.
Bumfrey conceded that Pakistan hasn't marketed itself very well: "The big problem is one of perception by the western world."
Goldman Sachs, which coined the BRIC term to refer to Brazil, Russia, India and China, has also come up with the term "Next 11."
The list of those eleven countries that have the potential to offer tremendous investment opportunities, akin to the BRIC countries, includes Pakistan, as well as Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, the Philippines, Turkey and Vietnam.
"It's a question of people getting the liquidity and investing," Bumfrey said. "They've got to be brave. Not everyone will want to invest in Pakistan, but not everyone wanted to invest in India [back in the early 1990s
The assassination of Pakistani opposition leader Benazir Bhutto will likely rattle the country's equity markets, eroding confidence at least in the short term in a market that's been one of the best performers in Asia, observers said.
Bhutto, a former prime minister of Pakistan, was killed Thursday in an attack that also killed at least 20 others at the end of a political rally in Rawalpindi. Read full story.
World leaders condemned the assassination, which sent shock waves through the Pakistani political system ahead of Jan. 8 parliamentary elections. It immediately raised questions about whether the elections would proceed on schedule and whether President Pervez Musharraf would reimpose a recently lifted state of emergency.
'The big takeaway from this horrible event is that Pakistan could slide into a civil war of sorts.'
— Win Thin, Brown Brothers Harriman
News of the assassination left U.S. financial markets unsettled, with the Dow Jones Industrial Average ($INDU:
Dow Jones Industrial Average
News, chart, profile, more
Last: 13,359.61-192.08-1.42%4:03pm 12/27/2007Delayed quote data
Add to portfolioAnalyst Create alert
InsiderDiscussFinancials
Sponsored by:
$INDU 13,359.61, -192.08, -1.4%) falling more than 100 points. Crude-oil and gold futures rallied, as did prices of U.S Treasurys. See Market Snapshot. See Futures Movers.
Bhutto's death will likely also destabilize Pakistan's equity market, among the best-performing bourses in the region.
"In the very short term, there will be a knee-jerk reaction as you saw at the time of the imposition of the rule of emergency by Musharraf earlier this year," said Rupert Neil Bumfrey, an advisor to emerging markets asset-management companies, in a phone interview from Dubai.
"Again, the knee-jerk reaction will be don't go Pakistan," said Bumfrey, who travels often to Pakistan. "However, as we've seen with the stock market since the imposition and abandonment of emergency rule, the stock market has continued to be positive. In the long run, Pakistan remains an excellent investment. It has good value."
In Karachi, the benchmark KSE-100 stock index closed down 0.3% on Thursday. See the Karachi Stock Exchange's Web site.
It has rallied 47% year to date. By comparison, India's Sensex index has gained 46.6% year to date.
Another key indicator showed a similar advance. The MSCI Pakistan index's year-to-date gain has been 40.7%, while MSCI India has surged 70% and MSCI China has rallied 65%.
"This is going to be the first big test of sentiment since fund managers started focusing on this market in the middle of last year," said Cameron Brandt, global markets analyst at EPFR Global.
Economic growth story
"Pakistan was on the front edge of the frontier market phenomenon -- the quest for untapped value in emerging markets," Brandt said. "Pakistan is on the front end of that because its economy has been doing reasonably well with almost no fanfare."
Indeed, Pakistan's gross domestic product has averaged 6.9% growth over the past five years.
That strong economic growth, however, might be overshadowed now that Bhutto's killing thrust the volatile region, which many observers consider a breeding ground for violent Islamic extremism, back into the global spotlight.
Pakistan, which borders Afghanistan, is the recipient of billions of dollars of U.S. aid and a key front in the U.S.-declared war on terrorism. The death of Bhutto, who was expected to be a force in Pakistani politics following the election, cast U.S. policy toward the region into turmoil.
"The big takeaway from this horrible event is that Pakistan could slide into a civil war of sorts," said Win Thin, senior currency strategist at Brown Brothers Harriman, in a research note. "Such a development would upset the delicate balance in the region. India, for instance, has benefited from improved relations with Pakistan under Musharraf."
Pakistan equities and rupee are likely to come under pressure when markets reopen, Thin said.
Investors with a long-term perspective and mettle, however, may well find lucrative opportunities in Pakistan.
After Egypt, Pakistan is one of the first emerging markets where Persian Gulf investors look to for opportunities, Brandt noted.
Echoing this, Bumfrey said that the United Arab Emirates and Saudi Arabia have been investing a lot of money in Pakistan.
"The biggest support for Pakistan will continue to come from this region," Bumfrey said. "New refineries are being financed by Abu Dhabi. All of that will continue."
Temasek, one of Singapore's sovereign wealth-management funds, for example, also has holdings in Pakistan, he said.
Under Musharraf, the Pakistani economy has boomed in comparison with its performance in the past. The government has introduced major macroeconomic reforms since 2000, such as privatization of the banking sector.
"But it is not India. India has surged well ahead," Bumfrey said.
For Pakistan to reach India's pace of growth, "you need the liquidity. You need the external international capital. There's offshore funds that are being crated now as we speak to garner that liquidity," he said.
Bumfrey conceded that Pakistan hasn't marketed itself very well: "The big problem is one of perception by the western world."
Goldman Sachs, which coined the BRIC term to refer to Brazil, Russia, India and China, has also come up with the term "Next 11."
The list of those eleven countries that have the potential to offer tremendous investment opportunities, akin to the BRIC countries, includes Pakistan, as well as Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, the Philippines, Turkey and Vietnam.
"It's a question of people getting the liquidity and investing," Bumfrey said. "They've got to be brave. Not everyone will want to invest in Pakistan, but not everyone wanted to invest in India [back in the early 1990s
Berkshire Hathaway to buy reinsurer from ING
Warren Buffett's Berkshire Hathaway on Friday reached a deal to buy a reinsurer from Dutch financial-services giant ING for $433 million (300 million euros), part of a busy week in which the Omaha, Neb.-based investment group is opening a bond insurer and buying an industrial group.
As the Dutch firm wants to concentrate on its core insurance, banking and asset management business.
ING is taking a capital loss after tax of 100 million euros this year on the sale. Berkshire Hathaway didn't immediately issue a statement on its side of the deal.
NRG, formerly called Nederlandse Reassurantie Groep, hasn't taken on new business since 1993. NRG's life reinsurance subsidiaries have been sold and a number of the remaining insurance liabilities were successfully settled, ING said.
The deal comes on the same day that Berkshire Hathaway is opening Berkshire Hathaway Assurance, a bond insurer for cities, counties and states that issue bonds to finance sewer systems, schools, hospitals and other public projects, The Wall Street Journal reported.
Many bond insurers have run into difficulty with their triple-A credit ratings in jeopardy because of the increased risk from the mortgage-related bonds they insure, which could potentially erode their capital.
The bond insurer unit will begin operations in New York before moving to California, Puerto Rico, Texas, Illinois and Florida, Buffett told the Journal.
"Ideally we'd be licensed in every state, but there's a limit to what we can do," Buffett told the newspaper.
On Christmas, Berkshire Hathaway announced a deal to buy 60% of Marmon Holdings, an industrial group owned by trusts benefiting members of the Pritzker family of Chicago, for $4.5 billion. The investment firm will buy the rest of the company over the next five to six years.
Marmon, with annual revenue of around $7 billion, holds more than 125 manufacturing and service businesses worldwide,
Berkshire Hathaway
Berkshire Hathaway is a conglomerate holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. Berkshire Hathaway's core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. The Company averaged a 25%+ annual return to its shareholders for the last 25 years while employing large amounts of capital and minimal debt.
Warren Buffett is the company's chairman and CEO. Buffett has used the "float" provided by Berkshire Hathaway's insurance operations (a policyholder's money which it holds temporarily until claims are paid out) to finance his investments. In the early part of his career at Berkshire, he focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. Berkshire now owns a diverse range of businesses including candy production; retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; and manufacture, import and distribution of footwear.
As the Dutch firm wants to concentrate on its core insurance, banking and asset management business.
ING is taking a capital loss after tax of 100 million euros this year on the sale. Berkshire Hathaway didn't immediately issue a statement on its side of the deal.
NRG, formerly called Nederlandse Reassurantie Groep, hasn't taken on new business since 1993. NRG's life reinsurance subsidiaries have been sold and a number of the remaining insurance liabilities were successfully settled, ING said.
The deal comes on the same day that Berkshire Hathaway is opening Berkshire Hathaway Assurance, a bond insurer for cities, counties and states that issue bonds to finance sewer systems, schools, hospitals and other public projects, The Wall Street Journal reported.
Many bond insurers have run into difficulty with their triple-A credit ratings in jeopardy because of the increased risk from the mortgage-related bonds they insure, which could potentially erode their capital.
The bond insurer unit will begin operations in New York before moving to California, Puerto Rico, Texas, Illinois and Florida, Buffett told the Journal.
"Ideally we'd be licensed in every state, but there's a limit to what we can do," Buffett told the newspaper.
On Christmas, Berkshire Hathaway announced a deal to buy 60% of Marmon Holdings, an industrial group owned by trusts benefiting members of the Pritzker family of Chicago, for $4.5 billion. The investment firm will buy the rest of the company over the next five to six years.
Marmon, with annual revenue of around $7 billion, holds more than 125 manufacturing and service businesses worldwide,
Berkshire Hathaway
Berkshire Hathaway is a conglomerate holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. Berkshire Hathaway's core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. The Company averaged a 25%+ annual return to its shareholders for the last 25 years while employing large amounts of capital and minimal debt.
Warren Buffett is the company's chairman and CEO. Buffett has used the "float" provided by Berkshire Hathaway's insurance operations (a policyholder's money which it holds temporarily until claims are paid out) to finance his investments. In the early part of his career at Berkshire, he focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. Berkshire now owns a diverse range of businesses including candy production; retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; and manufacture, import and distribution of footwear.
Thursday, December 27, 2007
Sallie Mae's stock, decladed sales raise $3 bln
Sallie Mae , the largest educational lending company in the United States, said it sold $1 billion of convertible securities and $2 billion of common stock, raising more money than it had expected to pay off bad derivatives bets.
Sallie Mae sold common stock at $19.65 a share, equal to the company's closing share price on Thursday. The common stock sale offering was increased from an originally planned $1.5 billion, signaling strong demand.
The mandatory convertible preferred securities will offer a dividend of 7.25 percent, until investors convert them into common stock, or until their mandatory conversion on Dec. 15, 2010.
Sallie Mae, formally known as SLM Corp, said on Wednesday it was issuing $2.5 billion of convertible preferred securities and common shares, with about $2 billion of the proceeds going to pay off derivatives known as equity forward contracts.
Sallie Mae used equity forwards as part of its share buyback plan for years. The contracts allowed the company to reduce the cost of buying back its shares as long as its stock price kept rising.
But if Sallie Mae's share price fell far enough, the company had to buy back a large number of shares at above-market prices.
In this case, Sallie Mae will use about $2 billion from its offering to buy back about 44 million shares, now worth closer to $865 million at current market prices. The rest of the proceeds will be used for general corporate purposes.
more news
Sallie Mae is launching public offerings of both common stock and mandatory convertible preferred stock to raise up to $2.5 billion in capital.
The Reston-based student lender, which manages $160 billion in education loans, plans to use about $2 billion of the net proceeds from the two proposed offerings to settle its outstanding equity forward purchase contract, pursuant to which Sallie Mae will repurchase more than 44 million shares of common stock, the company said in a statement.
Sallie Mae (NYSE: SLM), formally known as SLM Corp., said any proceeds remaining from the public offerings after settling this contract will be used for general corporate purposes.
UBS Investment Bank and Citi will serve as joint book-running managers for the offerings, which include the issuance of $1.5 billion of common stock and $1 billion of convertible preferred stock.
Separately, Sallie Mae disclosed in a regulatory filing the terms and conditions of a separation agreement with Kevin Moehn, the company's executive vice president of sales and originations, who is leaving Sallie Mae.
Moehn will receive a cash payment totaling $1.5 million as well as a cash bonus of $285,000. He has also agreed to provide consulting services for 12 months following his termination of employment for a monthly fee of $16,500, Sallie Mae said in a filing with the Securities and Exchange Commission.
The agreement also provides that Moehn will not compete with Sallie Mae for six months following his termination of employment, and that he will not solicit or hire company employees for 24 months following his termination of employment.
Earlier this month, Sallie Mae announced that Moehn and June McCormack, the company's executive vice president of servicing, technology, sales and marketing, would be leaving the firm. Sallie Mae has promoted two executives to replace them.
Stock in Sallie Mae fell more than 11 percent on Thursday, to close at $19.65 per share. The company's shares have fallen about 43 percent in the last month and more than 57 percent over the past year.
Investors haven't reacted well to news that Sallie Mae's proposed acquisition by two private equity firms and two banks is not going through.
In April, the buyout group of J.C. Flowers & Co. LLC, Friedman Fleischer & Lowe LLC, Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) agreed to purchase Sallie Mae for about $25 billion.
The buyout group sent a revised offer to Sallie Mae's board in October, arguing that new legislation which cuts federal subsidies to student lenders could materially hurt Sallie Mae's financial performance.
Sallie Mae's board didn't accept the revised -- and lower -- offer. The Reston company then filed a lawsuit against the buyout group, seeking a $900 million breakup fee that was part of the original deal.
In recent weeks, Sallie Mae said that it held discussions with representatives of the buyout group to resolve their dispute. But the buyout group indicated to Sallie Mae that it would not submit a new proposal to buy the student lender, according to Sallie Mae.
Sallie Mae sold common stock at $19.65 a share, equal to the company's closing share price on Thursday. The common stock sale offering was increased from an originally planned $1.5 billion, signaling strong demand.
The mandatory convertible preferred securities will offer a dividend of 7.25 percent, until investors convert them into common stock, or until their mandatory conversion on Dec. 15, 2010.
Sallie Mae, formally known as SLM Corp, said on Wednesday it was issuing $2.5 billion of convertible preferred securities and common shares, with about $2 billion of the proceeds going to pay off derivatives known as equity forward contracts.
Sallie Mae used equity forwards as part of its share buyback plan for years. The contracts allowed the company to reduce the cost of buying back its shares as long as its stock price kept rising.
But if Sallie Mae's share price fell far enough, the company had to buy back a large number of shares at above-market prices.
In this case, Sallie Mae will use about $2 billion from its offering to buy back about 44 million shares, now worth closer to $865 million at current market prices. The rest of the proceeds will be used for general corporate purposes.
more news
Sallie Mae is launching public offerings of both common stock and mandatory convertible preferred stock to raise up to $2.5 billion in capital.
The Reston-based student lender, which manages $160 billion in education loans, plans to use about $2 billion of the net proceeds from the two proposed offerings to settle its outstanding equity forward purchase contract, pursuant to which Sallie Mae will repurchase more than 44 million shares of common stock, the company said in a statement.
Sallie Mae (NYSE: SLM), formally known as SLM Corp., said any proceeds remaining from the public offerings after settling this contract will be used for general corporate purposes.
UBS Investment Bank and Citi will serve as joint book-running managers for the offerings, which include the issuance of $1.5 billion of common stock and $1 billion of convertible preferred stock.
Separately, Sallie Mae disclosed in a regulatory filing the terms and conditions of a separation agreement with Kevin Moehn, the company's executive vice president of sales and originations, who is leaving Sallie Mae.
Moehn will receive a cash payment totaling $1.5 million as well as a cash bonus of $285,000. He has also agreed to provide consulting services for 12 months following his termination of employment for a monthly fee of $16,500, Sallie Mae said in a filing with the Securities and Exchange Commission.
The agreement also provides that Moehn will not compete with Sallie Mae for six months following his termination of employment, and that he will not solicit or hire company employees for 24 months following his termination of employment.
Earlier this month, Sallie Mae announced that Moehn and June McCormack, the company's executive vice president of servicing, technology, sales and marketing, would be leaving the firm. Sallie Mae has promoted two executives to replace them.
Stock in Sallie Mae fell more than 11 percent on Thursday, to close at $19.65 per share. The company's shares have fallen about 43 percent in the last month and more than 57 percent over the past year.
Investors haven't reacted well to news that Sallie Mae's proposed acquisition by two private equity firms and two banks is not going through.
In April, the buyout group of J.C. Flowers & Co. LLC, Friedman Fleischer & Lowe LLC, Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) agreed to purchase Sallie Mae for about $25 billion.
The buyout group sent a revised offer to Sallie Mae's board in October, arguing that new legislation which cuts federal subsidies to student lenders could materially hurt Sallie Mae's financial performance.
Sallie Mae's board didn't accept the revised -- and lower -- offer. The Reston company then filed a lawsuit against the buyout group, seeking a $900 million breakup fee that was part of the original deal.
In recent weeks, Sallie Mae said that it held discussions with representatives of the buyout group to resolve their dispute. But the buyout group indicated to Sallie Mae that it would not submit a new proposal to buy the student lender, according to Sallie Mae.
Wednesday, December 26, 2007
Home price fell in USA 6.1%
The demand of homeHome price fell in USA 6.1% price fall specialist is watching their invest conciously,
Home prices in 20 U.S. metropolitan areas fell in October by the most in at least six years, a private survey showed today.
Property values fell 6.1 percent from October 2006, more than forecast, after dropping 4.9 percent in September, according to the S&P/Case-Shiller home-price index. The decrease was the biggest since the group started keeping year-over-year records in 2001. The index has fallen every month this year.
Prices will probably remain under pressure as the jump in foreclosures puts even more homes on the market just as stricter lending rules make it harder for buyers to find financing. Declining values make it harder for owners to tap home equity for extra cash, posing a risk to consumer spending.
``With supply overhang enormous and mortgage financing tougher to obtain, home prices are going to decline considerably further in the quarters ahead,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm.
Compared with a month earlier, home prices dropped 1.4 percent, the biggest one-month decline since records began. The figures aren't seasonally adjusted, so economists prefer to focus on the year-over-year change.
The median forecast of 12 economists surveyed by Bloomberg News projected a 5.7 percent decline.
Broad Decline
The index is a composite of transactions in 20 metropolitan areas. Seventeen cities showed a year-over-year decline in prices, led by 12 percent slumps in Miami and Tampa, Florida. Three, including Charlotte, North Carolina, Seattle and Portland, Oregon, showed an increase from a year earlier.
All 20 areas covered showed a drop in prices compared with September.
``The current state of the single-family housing market remains grim,'' Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, said in a statement.
Shiller and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.
A report on Nov. 21 from the National Association of Realtors showed home prices fell in one third of U.S. cities last quarter.
The housing market may continue to weaken as an increase in foreclosures adds to a glut of unsold homes on the market, spurring sellers to cut prices, economists said.
Sales Report
Figures this week from the Commerce Department may show new homes sold at an annual rate of 718,000 in November, down from October's 728,000 rate, based on the median estimate of economists surveyed by Bloomberg News.
Sales of new houses probably will fall 8.9 percent in 2008 after a 25 percent drop this year, according to a Dec. 13 forecast from Fannie Mae, the largest mortgage buyer.
``The market is too challenging to make predictions for fiscal 2008,'' Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., said on a conference call on Dec. 19. ``It will be a difficult year.'' The Red Bank, New Jersey- based company reported a net loss of $467 million for the three months ended Oct. 31.
Residential investment has subtracted from economic growth for the past seven quarters. Home building dropped at a 20.5 percent annual pace in the third quarter, the most since 1991.
The S&P/Case-Shiller index and another by the Office of Federal Housing Enterprise Oversight track the same home over time and more accurately reflect price trends, economists said.
Price gauges from the Commerce Department and the Realtors group can be influenced by changes in the types of homes sold. Higher sales of cheaper homes relative to more-expensive properties will bias the figures down.
Home prices in 20 U.S. metropolitan areas fell in October by the most in at least six years, a private survey showed today.
Property values fell 6.1 percent from October 2006, more than forecast, after dropping 4.9 percent in September, according to the S&P/Case-Shiller home-price index. The decrease was the biggest since the group started keeping year-over-year records in 2001. The index has fallen every month this year.
Prices will probably remain under pressure as the jump in foreclosures puts even more homes on the market just as stricter lending rules make it harder for buyers to find financing. Declining values make it harder for owners to tap home equity for extra cash, posing a risk to consumer spending.
``With supply overhang enormous and mortgage financing tougher to obtain, home prices are going to decline considerably further in the quarters ahead,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm.
Compared with a month earlier, home prices dropped 1.4 percent, the biggest one-month decline since records began. The figures aren't seasonally adjusted, so economists prefer to focus on the year-over-year change.
The median forecast of 12 economists surveyed by Bloomberg News projected a 5.7 percent decline.
Broad Decline
The index is a composite of transactions in 20 metropolitan areas. Seventeen cities showed a year-over-year decline in prices, led by 12 percent slumps in Miami and Tampa, Florida. Three, including Charlotte, North Carolina, Seattle and Portland, Oregon, showed an increase from a year earlier.
All 20 areas covered showed a drop in prices compared with September.
``The current state of the single-family housing market remains grim,'' Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, said in a statement.
Shiller and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.
A report on Nov. 21 from the National Association of Realtors showed home prices fell in one third of U.S. cities last quarter.
The housing market may continue to weaken as an increase in foreclosures adds to a glut of unsold homes on the market, spurring sellers to cut prices, economists said.
Sales Report
Figures this week from the Commerce Department may show new homes sold at an annual rate of 718,000 in November, down from October's 728,000 rate, based on the median estimate of economists surveyed by Bloomberg News.
Sales of new houses probably will fall 8.9 percent in 2008 after a 25 percent drop this year, according to a Dec. 13 forecast from Fannie Mae, the largest mortgage buyer.
``The market is too challenging to make predictions for fiscal 2008,'' Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., said on a conference call on Dec. 19. ``It will be a difficult year.'' The Red Bank, New Jersey- based company reported a net loss of $467 million for the three months ended Oct. 31.
Residential investment has subtracted from economic growth for the past seven quarters. Home building dropped at a 20.5 percent annual pace in the third quarter, the most since 1991.
The S&P/Case-Shiller index and another by the Office of Federal Housing Enterprise Oversight track the same home over time and more accurately reflect price trends, economists said.
Price gauges from the Commerce Department and the Realtors group can be influenced by changes in the types of homes sold. Higher sales of cheaper homes relative to more-expensive properties will bias the figures down.
Restructuring Aims to Give Canada’s Debt Market a $33 Billion Lift
The Crawford Committee managed to secure its rescue effort to restructure $33-billion in asset-backed commercial paper (ABCP) in time for exhausted negotiators to take a holiday break, but some of the banks have still not signed on.
Sources familiar with discussions said some of the Canadian banks have thus far declined to sign an agreement to provide funding support to the sector because the formal request came late last week, when a number of senior executives had already left for the Christmas break.
The committee that's working to fix the sector wanted the banks to contribute more than $2-billion to a $14-billion margin facility that will be key to the restructuring.
A tentative restructuring agreement should unlock a $33 billion portion of Canada’s debt market that has been frozen since August, its chief architect said on Monday.
Fears about subprime lending in the United States led to a liquidity crisis in Canada’s market for asset-backed commercial paper that had been sold by dealers not owned by the country’s six major banks.
A standstill agreement in August prevented the collapse of the market but created problems for some investors, particularly businesses that had bought the short-term debt to park cash they planned to use later.
Under the agreement reached Sunday night, the asset-backed paper, which is mostly made up of auto loans, market rate mortgages and credit card receivables, will be repackaged to make it more attractive.
A crucial element of the plan involves segregating 3 billion Canadian dollars (about the same in American dollars) in subprime mortgage debt, and then packaging it with a similar amount of higher quality debt.
“They’ve decided quite wisely to firewall that off from the other debt,” said Huston Loke, who heads the structured finance group at DBRS, a debt rating agency in Toronto. “That’s the portion that everyone globally has the biggest question marks around.”
Most debt will be transformed into medium terms notes that will probably mature in five to seven years, Purdy Crawford, the Toronto lawyer who coordinated the negotiations, said in a conference call. That debt will be managed by one of two trusts.
To guarantee liquidity in the market for the restructured paper, several dealers have agreed to provide about 12 billion Canadian dollars to cover margin calls on the notes. Mr. Crawford declined to identify the firms or even to say how many were participating.
Five of six major banks indicated that they might add about 2 billion Canadian dollars to that fund, Mr. Crawford added. If those banks do not ultimately come through, however, Mr. Crawford said that another, non-Canadian financial institution will cover that amount in a contingency plan. He declined to identify the backup financier.
“It will be good paper,” Mr. Crawford said, after indicating that most owners of the restructured debt would probably be repaid if they held it until maturity. The agreement followed the first lawsuits by holders of the paper against dealers as well as threats of more litigation. If the agreement is approved, debt holders will be required to waive their right to sue.
Two ratings agencies, which remain undisclosed, will rate the debt, which was previously only valued by DBRS. As part of that process, Mr. Loke said, investors will be given a detailed breakdown of their debt’s structure. Previously, they were offered general guidance and descriptions from the ratings agency.
“The lesson everyone is taking away from this is that disclosure is very important,” Mr. Loke said.
The Caisse de dépôt et placement du Québec, the large pension fund that is a major holder of the paper and a participant in the talks, said in a statement that it was “very satisfied” with the agreement. The deal requires approval from debt holders, various government agencies and departments. It is not expected to close until March.
Sources familiar with discussions said some of the Canadian banks have thus far declined to sign an agreement to provide funding support to the sector because the formal request came late last week, when a number of senior executives had already left for the Christmas break.
The committee that's working to fix the sector wanted the banks to contribute more than $2-billion to a $14-billion margin facility that will be key to the restructuring.
A tentative restructuring agreement should unlock a $33 billion portion of Canada’s debt market that has been frozen since August, its chief architect said on Monday.
Fears about subprime lending in the United States led to a liquidity crisis in Canada’s market for asset-backed commercial paper that had been sold by dealers not owned by the country’s six major banks.
A standstill agreement in August prevented the collapse of the market but created problems for some investors, particularly businesses that had bought the short-term debt to park cash they planned to use later.
Under the agreement reached Sunday night, the asset-backed paper, which is mostly made up of auto loans, market rate mortgages and credit card receivables, will be repackaged to make it more attractive.
A crucial element of the plan involves segregating 3 billion Canadian dollars (about the same in American dollars) in subprime mortgage debt, and then packaging it with a similar amount of higher quality debt.
“They’ve decided quite wisely to firewall that off from the other debt,” said Huston Loke, who heads the structured finance group at DBRS, a debt rating agency in Toronto. “That’s the portion that everyone globally has the biggest question marks around.”
Most debt will be transformed into medium terms notes that will probably mature in five to seven years, Purdy Crawford, the Toronto lawyer who coordinated the negotiations, said in a conference call. That debt will be managed by one of two trusts.
To guarantee liquidity in the market for the restructured paper, several dealers have agreed to provide about 12 billion Canadian dollars to cover margin calls on the notes. Mr. Crawford declined to identify the firms or even to say how many were participating.
Five of six major banks indicated that they might add about 2 billion Canadian dollars to that fund, Mr. Crawford added. If those banks do not ultimately come through, however, Mr. Crawford said that another, non-Canadian financial institution will cover that amount in a contingency plan. He declined to identify the backup financier.
“It will be good paper,” Mr. Crawford said, after indicating that most owners of the restructured debt would probably be repaid if they held it until maturity. The agreement followed the first lawsuits by holders of the paper against dealers as well as threats of more litigation. If the agreement is approved, debt holders will be required to waive their right to sue.
Two ratings agencies, which remain undisclosed, will rate the debt, which was previously only valued by DBRS. As part of that process, Mr. Loke said, investors will be given a detailed breakdown of their debt’s structure. Previously, they were offered general guidance and descriptions from the ratings agency.
“The lesson everyone is taking away from this is that disclosure is very important,” Mr. Loke said.
The Caisse de dépôt et placement du Québec, the large pension fund that is a major holder of the paper and a participant in the talks, said in a statement that it was “very satisfied” with the agreement. The deal requires approval from debt holders, various government agencies and departments. It is not expected to close until March.
Deal :Berkshire to Pay $4.5 Billion for Pritzkers' Marmon
Warren E. Buffett may be a choosy shopper, but when he sees a firm he likes, he moves fast.
After just two weeks of negotiations, Mr. Buffett, who has been looking for acquisitions on which to spend his company’s billions of dollars, snagged an industrial conglomerate in a deal announced Tuesday. The Pritzker family of Chicago will sell to Mr. Buffett’s firm, Berkshire Hathaway, a 60 percent stake in Marmon Holdings for $4.5 billion.
The deal would go a long way toward unwinding the business holdings of the Pritzkers, a process that started in 2001. For Mr. Buffett, the deal represents his largest acquisition outside the insurance industry and suggests that he is finally finding some deals he can get excited about.
Berkshire will acquire the remaining 40 percent of Marmon over the next five or six years at a price that will be based on the future earnings of the company. In 2006, Marmon posted revenue of $7 billion and profit of $1 billion from operations like wire and cable, railroad tank cars and water treatment systems.
After just two weeks of negotiations, Mr. Buffett, who has been looking for acquisitions on which to spend his company’s billions of dollars, snagged an industrial conglomerate in a deal announced Tuesday. The Pritzker family of Chicago will sell to Mr. Buffett’s firm, Berkshire Hathaway, a 60 percent stake in Marmon Holdings for $4.5 billion.
The deal would go a long way toward unwinding the business holdings of the Pritzkers, a process that started in 2001. For Mr. Buffett, the deal represents his largest acquisition outside the insurance industry and suggests that he is finally finding some deals he can get excited about.
Berkshire will acquire the remaining 40 percent of Marmon over the next five or six years at a price that will be based on the future earnings of the company. In 2006, Marmon posted revenue of $7 billion and profit of $1 billion from operations like wire and cable, railroad tank cars and water treatment systems.
Dec. 26 (Bloomberg) -- Billionaire Warren Buffett's Berkshire Hathaway Inc. will pay $4.5 billion for 60 percent of Marmon Holdings Inc., adding another family run company that prospered without shareholder demands for short-term profits.
Chicago's Pritzker family, which controls Global Hyatt Corp., built Marmon into a group with $7 billion in annual sales and 125 units including operations serving the railroad and energy industries. Operating income more than tripled from 2002 to 2007, Omaha, Nebraska-based Berkshire said in a statement yesterday.
Marmon has ``businesses that are fairly niche-oriented where they have dominant positions established over time,'' said Thomas Russo, who manages about $3.5 billion at Gardner Russo & Gardner in Lancaster, Pennsylvania and counts Berkshire as its largest holding. ``They have a history under the Pritzkers of being liberated from the quarterly earnings game.''
Buffett, 77, built Berkshire over four decades, buying out- of-favor stocks and manufacturers to transform a failing textile maker into a $210 billion holding company. His biggest investment last year was the $4 billion purchase of Iscar Metalworking Cos. from Israel's Wertheimer family.
Marmon is ``our kind of company,'' Buffett said in an interview with CNBC today. ``It's in some very basic businesses but good businesses.''
Berkshire, which had more than $45 billion in cash as of Sept. 30, is as prepared as it has ``ever been'' to buy a ``big business outright,'' Buffett told shareholders at an annual meeting in May. He's said he'd be willing to spend as much as $60 billion on the right company.
The Marmon acquisition is set to be completed in the first quarter of 2008, with Berkshire acquiring the remainder of the company by 2014 at a cost based on future earnings.
Trains, Cranes
Marmon employs 21,500 people, mostly in North America, the U.K., Europe and China, according to the company's Web site. Its businesses include a dozen companies that manufacture wire and cable products for energy and construction use.
The Chicago-based group also has a transportation-services operation that produces railroad cars and leases tank containers in China. Operating income was $794 million last year, according to the Web site.
The businesses ``are not prone to widespread technical obsolescence,'' Russo said. ``They would have a relationship with their suppliers and customers that give them an ongoing partnership.''
Berkshire had about 217,000 employees as of Dec. 31 in businesses ranging from auto insurer Geico Corp. and carpet manufacturer Shaw Industries to ice cream company International Dairy Queen Inc. and business-jet fleet operator NetJets Inc.
Largest Since 2005
The Marmon takeover is the largest announced by Buffett since 2005, when Berkshire's utility company agreed to buy PacifiCorp from Scottish Power Plc for $5.1 billion in cash and assume $4.3 billion in debt. Buffett has also been investing in railroads, disclosing in April that he purchased a $3 billion stake in Fort Worth, Texas-based Burlington Northern Santa Fe Corp., the second-largest railroad in the U.S. after Union Pacific Corp.
Buffett prefers buying companies outright rather than investing in stocks because ``that way he can control the reinvestment decisions,'' Russo said. ``He would have the appetite and the balance sheet to underwrite almost limitless investments through their operating entities.''
Marmon has an ``impressive record of growth and profitability,'' Buffett said in the statement. ``The decision to purchase and work out the details of this transaction was done without delay.''
Berkshire spokeswoman Jackie Wilson and Chief Financial Officer Marc Hamburg didn't return calls seeking comment. David Dees, a spokesman for Marmon, had no comment.
Pritzker Breakup
The Pritzker family has discussed breaking up its holdings since the 1999 death of Jay Pritzker, who began the hotel company in 1957 by buying the Hyatt House in Los Angeles. The family's investments range from a global credit-check company to a maker of artificial joints. Marmon was acquired in 1953 by Jay and his brother Robert, according to the statement.
``This transaction is being done in the context of the previously reported restructuring of our family business interests,'' Marmon Chairman Tom Pritzker said in the statement.
In August, the family said it would sell a minority stake in Global Hyatt to investors including Goldman Sachs Capital Partners for $1 billion. In 2006, the family agreed to sell snuff maker Conwood for $3.5 billion to Reynolds American Inc.
In January 2005, actress Liesel Pritzker and brother Matthew Pritzker, settled a $2 billion suit accusing Tom Pritzker and other relatives of cheating them out of their inheritance.
Inheritance Suit Settled
The siblings claimed their trust-fund assets were being transferred to accounts benefiting other relatives and the family foundation. Terms of the deal weren't disclosed.
Tom Pritzker was ranked by Forbes as the 117th wealthiest person in the U.S. with a net worth of $3 billion. Buffett was second with $52.4 billion, the magazine said.
Buffett will work with Tom Pritzker, Marmon Chief Executive Officer Frank Ptak and former CEO John Nichols over the next five to six years ``in continuing to build Marmon,'' Berkshire said in the statement.
Berkshire, which traded at $2,950 on Dec. 31, 1987, is poised to post its 17th annual gain in 20 years. It climbed $3,980 Dec. 24 to $137,980 in New York Stock Exchange composite trading. The stock is up 25 percent in 2007, outpacing the 5.5 percent gain for the Standard & Poor's 500 Index.
The company's largest purchase was the acquisition of General Re, the largest U.S. reinsurance company. The stock deal was valued at $16 billion when it was completed in 1998.
`Simple' Businesses
Buffett's investment criteria include companies with ``good returns on equity,'' little or no debt, ``simple'' businesses that he can understand, and consistent earnings, he said in Berkshire's latest annual report. Buffett doesn't participate in auctions for companies and can tell prospective sellers within five minutes of an offer if he is interested in completing a deal, he said in the report on March 1.
The Marmon acquisition ``was done just the way Jay would have liked,'' Buffett said in the statement. ``No consultants or studies.''
Chicago's Pritzker family, which controls Global Hyatt Corp., built Marmon into a group with $7 billion in annual sales and 125 units including operations serving the railroad and energy industries. Operating income more than tripled from 2002 to 2007, Omaha, Nebraska-based Berkshire said in a statement yesterday.
Marmon has ``businesses that are fairly niche-oriented where they have dominant positions established over time,'' said Thomas Russo, who manages about $3.5 billion at Gardner Russo & Gardner in Lancaster, Pennsylvania and counts Berkshire as its largest holding. ``They have a history under the Pritzkers of being liberated from the quarterly earnings game.''
Buffett, 77, built Berkshire over four decades, buying out- of-favor stocks and manufacturers to transform a failing textile maker into a $210 billion holding company. His biggest investment last year was the $4 billion purchase of Iscar Metalworking Cos. from Israel's Wertheimer family.
Marmon is ``our kind of company,'' Buffett said in an interview with CNBC today. ``It's in some very basic businesses but good businesses.''
Berkshire, which had more than $45 billion in cash as of Sept. 30, is as prepared as it has ``ever been'' to buy a ``big business outright,'' Buffett told shareholders at an annual meeting in May. He's said he'd be willing to spend as much as $60 billion on the right company.
The Marmon acquisition is set to be completed in the first quarter of 2008, with Berkshire acquiring the remainder of the company by 2014 at a cost based on future earnings.
Trains, Cranes
Marmon employs 21,500 people, mostly in North America, the U.K., Europe and China, according to the company's Web site. Its businesses include a dozen companies that manufacture wire and cable products for energy and construction use.
The Chicago-based group also has a transportation-services operation that produces railroad cars and leases tank containers in China. Operating income was $794 million last year, according to the Web site.
The businesses ``are not prone to widespread technical obsolescence,'' Russo said. ``They would have a relationship with their suppliers and customers that give them an ongoing partnership.''
Berkshire had about 217,000 employees as of Dec. 31 in businesses ranging from auto insurer Geico Corp. and carpet manufacturer Shaw Industries to ice cream company International Dairy Queen Inc. and business-jet fleet operator NetJets Inc.
Largest Since 2005
The Marmon takeover is the largest announced by Buffett since 2005, when Berkshire's utility company agreed to buy PacifiCorp from Scottish Power Plc for $5.1 billion in cash and assume $4.3 billion in debt. Buffett has also been investing in railroads, disclosing in April that he purchased a $3 billion stake in Fort Worth, Texas-based Burlington Northern Santa Fe Corp., the second-largest railroad in the U.S. after Union Pacific Corp.
Buffett prefers buying companies outright rather than investing in stocks because ``that way he can control the reinvestment decisions,'' Russo said. ``He would have the appetite and the balance sheet to underwrite almost limitless investments through their operating entities.''
Marmon has an ``impressive record of growth and profitability,'' Buffett said in the statement. ``The decision to purchase and work out the details of this transaction was done without delay.''
Berkshire spokeswoman Jackie Wilson and Chief Financial Officer Marc Hamburg didn't return calls seeking comment. David Dees, a spokesman for Marmon, had no comment.
Pritzker Breakup
The Pritzker family has discussed breaking up its holdings since the 1999 death of Jay Pritzker, who began the hotel company in 1957 by buying the Hyatt House in Los Angeles. The family's investments range from a global credit-check company to a maker of artificial joints. Marmon was acquired in 1953 by Jay and his brother Robert, according to the statement.
``This transaction is being done in the context of the previously reported restructuring of our family business interests,'' Marmon Chairman Tom Pritzker said in the statement.
In August, the family said it would sell a minority stake in Global Hyatt to investors including Goldman Sachs Capital Partners for $1 billion. In 2006, the family agreed to sell snuff maker Conwood for $3.5 billion to Reynolds American Inc.
In January 2005, actress Liesel Pritzker and brother Matthew Pritzker, settled a $2 billion suit accusing Tom Pritzker and other relatives of cheating them out of their inheritance.
Inheritance Suit Settled
The siblings claimed their trust-fund assets were being transferred to accounts benefiting other relatives and the family foundation. Terms of the deal weren't disclosed.
Tom Pritzker was ranked by Forbes as the 117th wealthiest person in the U.S. with a net worth of $3 billion. Buffett was second with $52.4 billion, the magazine said.
Buffett will work with Tom Pritzker, Marmon Chief Executive Officer Frank Ptak and former CEO John Nichols over the next five to six years ``in continuing to build Marmon,'' Berkshire said in the statement.
Berkshire, which traded at $2,950 on Dec. 31, 1987, is poised to post its 17th annual gain in 20 years. It climbed $3,980 Dec. 24 to $137,980 in New York Stock Exchange composite trading. The stock is up 25 percent in 2007, outpacing the 5.5 percent gain for the Standard & Poor's 500 Index.
The company's largest purchase was the acquisition of General Re, the largest U.S. reinsurance company. The stock deal was valued at $16 billion when it was completed in 1998.
`Simple' Businesses
Buffett's investment criteria include companies with ``good returns on equity,'' little or no debt, ``simple'' businesses that he can understand, and consistent earnings, he said in Berkshire's latest annual report. Buffett doesn't participate in auctions for companies and can tell prospective sellers within five minutes of an offer if he is interested in completing a deal, he said in the report on March 1.
The Marmon acquisition ``was done just the way Jay would have liked,'' Buffett said in the statement. ``No consultants or studies.''
Tuesday, December 25, 2007
Toyota announces plan to sell 9.85M vehicles in 2008
Toyota (TM - Cramer's Take - Stockpickr) said Tuesday that it expects to increase worldwide vehicle sales by 5% to 9.85 million in 2008.That figure includes the company's Daihatsu and Hino units. Toyota estimates that total worldwide production also will rise by 5%, to 9.95 million vehicles.
In a news release, Toyota also published expected results for all of 2007 and estimated worldwide sales of 9.36 million, up 6% from 2006.
In a news release, Toyota also published expected results for all of 2007 and estimated worldwide sales of 9.36 million, up 6% from 2006.
Toyota plans to sell 9.85 million vehicles worldwide in 2008, the company said Tuesday, setting itself an ambitious target despite worries about a slowing U.S. car market as it tries to become the world's top automaker.
Toyota also said it plans to produce 9.95 million vehicles worldwide next year, up 5% from this year — the same projected on-year percentage jump for Toyota's global sales.
Its recent growth has put Toyota Motor Corp. on track to beat U.S.-based General Motors to become the world's biggest automaker by sales. GM has said it estimates this year's sales to total 9.3 million vehicles, against Toyota's estimate of 9.36 million sales.
Toyota's growth has been based in large part on the popularity of models such as the Camry sedan, Corolla subcompact and the Prius gas-electric hybrid.
Soaring gas prices have dramatically boosted the appeal of smaller fuel-efficient models that are Toyota's main strength.
Toyota also said it plans to produce 9.95 million vehicles worldwide next year, up 5% from this year — the same projected on-year percentage jump for Toyota's global sales.
Its recent growth has put Toyota Motor Corp. on track to beat U.S.-based General Motors to become the world's biggest automaker by sales. GM has said it estimates this year's sales to total 9.3 million vehicles, against Toyota's estimate of 9.36 million sales.
Toyota's growth has been based in large part on the popularity of models such as the Camry sedan, Corolla subcompact and the Prius gas-electric hybrid.
Soaring gas prices have dramatically boosted the appeal of smaller fuel-efficient models that are Toyota's main strength.
General Motors has been fiercely fighting back, boosting its overseas business and could yet maintain the top industry spot which it has held for 76 years.
GM has not given a forecast for the number of vehicles it expects to produce or sell in 2008. But the Detroit automaker has the industry record for annual global vehicle sales at 9.55 million vehicles, sold by GM in 1978.
Toyota executives acknowledged Tuesday worries about the U.S. market, which has been hit by the subprime mortgage crisis and soaring oil prices. But they remained upbeat about increasing sales in the key U.S. market — projecting 2.64 million vehicles, edging up 1% from this year.
They were also bullish about prospects for emerging markets such as China, Russia and South America, while being conservative in expectations for Europe at a 2% increase to 1.27 million vehicles, and seeing sales in Japan remain flat at 1.6 million next year.
But Koji Endo, auto analyst with Credit Suisse in Tokyo, said next year will likely prove a challenge even for Toyota, as U.S. economic woes weigh on sales and profits.
But he said the overall optimism for sales growth was "reasonable," given Toyota's recent performance.
"These are targets Toyota is giving, not forecasts, and so they are reasonable," he said.
After the first nine months of this year, Toyota was — at 7.05 million vehicles sold worldwide — trailing GM's sales of 7.06 million vehicles for the same period. The final tally for this year's numbers won't be out until January next year.
GM's spokesman in Tokyo Michihiro Yamamori declined to comment, citing company policy to refrain from commenting on its rivals' targets.
Toyota also said it was preparing to start mass producing lithium-ion batteries for low-emission vehicles.
Lithium-ion batteries, already widely used in laptops and other gadgets, are smaller yet more powerful than the nickel-metal hydride batteries used in gas-electric hybrids like the Prius now.
Lithium-ion batteries will not be used in the Prius, on sale for a decade and the most popular hybrid on the market, according to Toyota.
The lithium-ion battery will be used in a plug-in hybrid, which would recharge from a regular home socket, and travel longer as an electric vehicle than the Prius. Toyota has started tests on its plug-in hybrid, but has not shown a model using the new battery.
Executive Vice President Masatami Takimoto, who oversees technology, said Toyota had developed the lithium-ion battery to a level that it is almost ready for mass production, although that won't start until sometime after next year.
Toyota President Katsuaki Watanabe said the hybrid will be a pillar of Toyota's growth in the years ahead, and he reiterated the plan to offer hybrid versions of all its models sometime after 2020.
As part of its strategy to be ecological and super-efficient in manufacturing — as well as with its products — Toyota will use solar energy and wind power to reduce global-warming emissions at what it called five "sustainable plants." The facility being built in Mississippi, set to be up and running in 2010, will be one such plant, Toyota said.
Weekend Surge May Not Rescue Retailers' Holiday Slump
American consumers, uneasy about the economy and unimpressed by the merchandise in stores, delivered the bleak holiday shopping season retailers had expected, if not feared, according to one early but influential projection.
Spending between Thanksgiving and Christmas rose just 3.6 percent over last year, the weakest performance in at least four years, according to MasterCard Advisors, a division of the credit card company. By comparison, sales grew 6.6 percent in 2006, and 8 percent in 2005.
“There was not a recipe for a pick up in sales growth,” said Michael McNamara, vice president of research and analysis at MasterCard Advisors, citing higher gas prices, a slowing housing market and a tight credit market.
Strong demand at the start of the season for a handful of must-have electronics, like digital frames and portable GPS navigation systems trailed off in December. And robust sales of luxury products could not make up for sluggish sales of jewelry and women’s clothing.
What did eventually sell was generally marked down — once, if not twice — which could hurt retailers’ profits in the final three months of year. “Stores are buying those sales at a cost,” said Sherif Mityas, a partner at the consulting firm A.T. Kearney, who specializes in retailing.
A surge in spending during the weekend before Christmas may not have been enough to rescue Target Corp., Sears Holdings Corp. and Macy's Inc. from the slowest holiday spending season in five years.
MasterCard Inc.'s consulting unit said today that sales from Nov. 23 to Dec. 24 gained 3.6 percent. Spending in the week through Dec. 22 declined 2.2 percent, the fourth week of declines, even after sales increased almost 20 percent over the last weekend before Christmas, Chicago-based ShopperTrak RCT Corp. said yesterday.
``It's not going to overcome the negative forecasts,'' Frederick Crawford, managing director at Southfield, Michigan- based AlixPartners LLP, said of the weekend in a Bloomberg Television interview. ``It's going to be a good start, a very weak midsection, and a strong finish.''
Gasoline at $3 a gallon and rising food prices have discouraged shoppers from spending during November and December, which account for 20 percent of retailers' annual revenue, according to the National Retail Federation in Washington. Target, the second-biggest U.S. discounter, said yesterday that sales at stores open more than a year may decline in December after customer visits slowed in the weeks after Thanksgiving.
Five-Year Low
Sales in November and December this year may rise 4 percent, the slowest growth since 2002, according to the National Retail Federation. ShopperTrak has predicted a 3.6 percent increase. MasterCard's holiday growth figure was the lowest in at least three years.
Costco Wholesale Corp., the largest U.S. chain of wholesale clubs, said the holiday season ``went well,'' the Wall Street Journal reported today. Costco Chief Financial Officer Richard Galanti didn't immediately return a call left at his Issaquah, Washington, office today.
Sales rose 19 percent from Dec. 21 to Dec. 23 as U.S. shoppers took advantage of discounts and extended hours, ShopperTrak said.
Less than one-fifth of consumers had finished their holiday shopping as of Dec. 16, according to the International Council of Shopping Centers in New York. J.C. Penney Co., Sears and Toys ``R'' Us Inc. tried to lure late buyers with discounts over the weekend, helping boost U.S. retailers' sales by 7.6 percent on Dec. 22, the Saturday before Christmas.
Chris Lewis, a cleaning-franchise owner, began shopping for his two children on Dec. 21, and may buy more items after Christmas.
Staying Frugal
``I try to stay kind of frugal,'' the 35-year-old resident of Silver Spring, Maryland, said. ``I'm not going to give everything I have in one day.''
Shoppers buying online led the growth in spending, with Internet sales gaining 22 percent from Nov. 23 though Dec. 24, Michael McNamara, vice president for research and analysis at MasterCard Advisors, said in an interview today.
``If you were expecting this holiday season to stimulate a new ramp-up in growth, I think you'd be disappointed,'' McNamara said. said. ``I think the vast majority of people in the marketplace had modest expectations.''
Apparel rose 1.4 percent from a year ago, McNamara said. Men's clothing climbed 2.3 percent, while clothes for women fell 2.4 percent.
Luxury Gains
Luxury goods, excluding jewelry, rose 7.1 percent compared with the same period last year, and footwear sales increased 6 percent.
MasterCard Advisors' SpendingPulse surveys retailers across the U.S. Its figures are based on sales in the MasterCard network and estimates of other forms of payment, including checks and cash. MasterCard is the second-biggest U.S. credit- card company.
Last year's holiday season grew 6.6 percent over 2005's holidays. Two years ago, retail sales grew 8 percent from the previous year, MasterCard said.
Although Target's customer visits increased for the week ended Dec. 22, ``this increase was not sufficient to compensate for the unfavorable traffic trends that carried over into December from the week following Thanksgiving,'' the Minneapolis-based retailer said on a recorded call.
Spending between Thanksgiving and Christmas rose just 3.6 percent over last year, the weakest performance in at least four years, according to MasterCard Advisors, a division of the credit card company. By comparison, sales grew 6.6 percent in 2006, and 8 percent in 2005.
“There was not a recipe for a pick up in sales growth,” said Michael McNamara, vice president of research and analysis at MasterCard Advisors, citing higher gas prices, a slowing housing market and a tight credit market.
Strong demand at the start of the season for a handful of must-have electronics, like digital frames and portable GPS navigation systems trailed off in December. And robust sales of luxury products could not make up for sluggish sales of jewelry and women’s clothing.
What did eventually sell was generally marked down — once, if not twice — which could hurt retailers’ profits in the final three months of year. “Stores are buying those sales at a cost,” said Sherif Mityas, a partner at the consulting firm A.T. Kearney, who specializes in retailing.
A surge in spending during the weekend before Christmas may not have been enough to rescue Target Corp., Sears Holdings Corp. and Macy's Inc. from the slowest holiday spending season in five years.
MasterCard Inc.'s consulting unit said today that sales from Nov. 23 to Dec. 24 gained 3.6 percent. Spending in the week through Dec. 22 declined 2.2 percent, the fourth week of declines, even after sales increased almost 20 percent over the last weekend before Christmas, Chicago-based ShopperTrak RCT Corp. said yesterday.
``It's not going to overcome the negative forecasts,'' Frederick Crawford, managing director at Southfield, Michigan- based AlixPartners LLP, said of the weekend in a Bloomberg Television interview. ``It's going to be a good start, a very weak midsection, and a strong finish.''
Gasoline at $3 a gallon and rising food prices have discouraged shoppers from spending during November and December, which account for 20 percent of retailers' annual revenue, according to the National Retail Federation in Washington. Target, the second-biggest U.S. discounter, said yesterday that sales at stores open more than a year may decline in December after customer visits slowed in the weeks after Thanksgiving.
Five-Year Low
Sales in November and December this year may rise 4 percent, the slowest growth since 2002, according to the National Retail Federation. ShopperTrak has predicted a 3.6 percent increase. MasterCard's holiday growth figure was the lowest in at least three years.
Costco Wholesale Corp., the largest U.S. chain of wholesale clubs, said the holiday season ``went well,'' the Wall Street Journal reported today. Costco Chief Financial Officer Richard Galanti didn't immediately return a call left at his Issaquah, Washington, office today.
Sales rose 19 percent from Dec. 21 to Dec. 23 as U.S. shoppers took advantage of discounts and extended hours, ShopperTrak said.
Less than one-fifth of consumers had finished their holiday shopping as of Dec. 16, according to the International Council of Shopping Centers in New York. J.C. Penney Co., Sears and Toys ``R'' Us Inc. tried to lure late buyers with discounts over the weekend, helping boost U.S. retailers' sales by 7.6 percent on Dec. 22, the Saturday before Christmas.
Chris Lewis, a cleaning-franchise owner, began shopping for his two children on Dec. 21, and may buy more items after Christmas.
Staying Frugal
``I try to stay kind of frugal,'' the 35-year-old resident of Silver Spring, Maryland, said. ``I'm not going to give everything I have in one day.''
Shoppers buying online led the growth in spending, with Internet sales gaining 22 percent from Nov. 23 though Dec. 24, Michael McNamara, vice president for research and analysis at MasterCard Advisors, said in an interview today.
``If you were expecting this holiday season to stimulate a new ramp-up in growth, I think you'd be disappointed,'' McNamara said. said. ``I think the vast majority of people in the marketplace had modest expectations.''
Apparel rose 1.4 percent from a year ago, McNamara said. Men's clothing climbed 2.3 percent, while clothes for women fell 2.4 percent.
Luxury Gains
Luxury goods, excluding jewelry, rose 7.1 percent compared with the same period last year, and footwear sales increased 6 percent.
MasterCard Advisors' SpendingPulse surveys retailers across the U.S. Its figures are based on sales in the MasterCard network and estimates of other forms of payment, including checks and cash. MasterCard is the second-biggest U.S. credit- card company.
Last year's holiday season grew 6.6 percent over 2005's holidays. Two years ago, retail sales grew 8 percent from the previous year, MasterCard said.
Although Target's customer visits increased for the week ended Dec. 22, ``this increase was not sufficient to compensate for the unfavorable traffic trends that carried over into December from the week following Thanksgiving,'' the Minneapolis-based retailer said on a recorded call.
Merrill raising up to $6.2 billion:
Investment Contract :Merrill Lynch & Co. will raise up to $6.2 billion to be invested by Singapore-based investment firm Temasek Holdings Pte. Ltd. and U.S.-based Davis Selected Advisers L.P., the investment bank said Monday.
Along with the private placement of common stock, Merrill (MER:Merrill Lynch & Co., IncNews, chart, profile, more Last: 53.90-1.64-2.95%
1:00pm 12/24/2007
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MER 53.90, -1.64, -2.9%) said it's selling its middle-market commercial finance business for an undisclosed amount. New York-based Merrill said the placement of newly issued stock is expected to close by mid-January. Chief Executive John Thain, who assumed Merrill's top position in November, said the private placement will bolster Merrill's capital position. Thain came to Merrill from NYSE Euronext (NYX:NYXNews, chart, profile, moreLast:
Delayed quote dataAdd to portfolioAnalyst Create alertInsiderDiscussFinancials Sponsored by:NYX, , ) more than one month ago, amid a difficult period during which Merrill sustained significant write-downs related to troubles in the U.S. housing market. The private placement also creates a strategic partnership with Temasek, Merrill said in a statement, describing Temasek as having "sizable investments across Asia, particularly in Singapore, China and India." Temasek will invest $4.4 billion in Merrill common stock, with the option to buy an additional $600 million in stock by March 2008. Its ownership position in Merrill won't exceed 10%, Merrill said. Davis, meanwhile, will make a "long-term investment" of $1.2 billion, Merrill said. Neither Temasek nor Davis will have any "role in the governance" of Merrill, the firm said. Meanwhile, Fitch Ratings maintained a negative outlook on Merrill following news of the investment, saying in a statement that it believes "there is a high probability that additional losses will be recognized in fourth-quarter 2007 fiscal year which collectively may result in [the firm] posting a loss for its 2007 fiscal year." Fitch had lowered Merrill's long-term issuer default rating in October. Following an initial rise early in Monday's abbreviated trading session, Merrill shares closed nearly 3% lower, ending at $53.90. Also Monday, Merrill said it is selling Merrill Lynch Capital, the firm's middle-market commercial finance business, to GE Capital (GE:GENews, chart, profile, moreLast:
Delayed quote dataAdd to portfolioAnalyst Create alertInsiderDiscussFinancials Sponsored by:GE, , ) . Financial terms were not disclosed. Merrill's commercial real-estate finance unit is not part of the unit being sold, the firm said. Fox-Pitt Kelton said in a note to clients that the sale should "free about $1.3 billion [in] capital for Merrill. Thus, the total capital 'raise' is $7.5 billion." Fox-Pitt Kelton had previously estimated that Merrill's write-downs related to subprime and other troubled mortgage markets amounted to $8.6 billion. Merrill's sale of Merrill Lynch Capital "continues to signal that problems are significant, but that [management] is taking steps to get beyond it," the firm told clients
Along with the private placement of common stock, Merrill (MER:Merrill Lynch & Co., IncNews, chart, profile, more Last: 53.90-1.64-2.95%
1:00pm 12/24/2007
Delayed quote dataAdd to portfolioAnalyst Create alertInsiderDiscussFinancials Sponsored by:
MER 53.90, -1.64, -2.9%) said it's selling its middle-market commercial finance business for an undisclosed amount. New York-based Merrill said the placement of newly issued stock is expected to close by mid-January. Chief Executive John Thain, who assumed Merrill's top position in November, said the private placement will bolster Merrill's capital position. Thain came to Merrill from NYSE Euronext (NYX:NYXNews, chart, profile, moreLast:
Delayed quote dataAdd to portfolioAnalyst Create alertInsiderDiscussFinancials Sponsored by:NYX, , ) more than one month ago, amid a difficult period during which Merrill sustained significant write-downs related to troubles in the U.S. housing market. The private placement also creates a strategic partnership with Temasek, Merrill said in a statement, describing Temasek as having "sizable investments across Asia, particularly in Singapore, China and India." Temasek will invest $4.4 billion in Merrill common stock, with the option to buy an additional $600 million in stock by March 2008. Its ownership position in Merrill won't exceed 10%, Merrill said. Davis, meanwhile, will make a "long-term investment" of $1.2 billion, Merrill said. Neither Temasek nor Davis will have any "role in the governance" of Merrill, the firm said. Meanwhile, Fitch Ratings maintained a negative outlook on Merrill following news of the investment, saying in a statement that it believes "there is a high probability that additional losses will be recognized in fourth-quarter 2007 fiscal year which collectively may result in [the firm] posting a loss for its 2007 fiscal year." Fitch had lowered Merrill's long-term issuer default rating in October. Following an initial rise early in Monday's abbreviated trading session, Merrill shares closed nearly 3% lower, ending at $53.90. Also Monday, Merrill said it is selling Merrill Lynch Capital, the firm's middle-market commercial finance business, to GE Capital (GE:GENews, chart, profile, moreLast:
Delayed quote dataAdd to portfolioAnalyst Create alertInsiderDiscussFinancials Sponsored by:GE, , ) . Financial terms were not disclosed. Merrill's commercial real-estate finance unit is not part of the unit being sold, the firm said. Fox-Pitt Kelton said in a note to clients that the sale should "free about $1.3 billion [in] capital for Merrill. Thus, the total capital 'raise' is $7.5 billion." Fox-Pitt Kelton had previously estimated that Merrill's write-downs related to subprime and other troubled mortgage markets amounted to $8.6 billion. Merrill's sale of Merrill Lynch Capital "continues to signal that problems are significant, but that [management] is taking steps to get beyond it," the firm told clients
Sunday, December 23, 2007
Venezuela, Cuba Sign Accords to Increase Oil Refining, Mining
Venezuela and Cuba to increase oil refining capacity and petrochemical output in Cuba, according to a statement today from Venezuela's information ministry.
Venezuelan President Hugo Chavez signed 14 economic cooperation agreements yesterday with Cuba's acting leader Raul Castro, deepening Venezuela's ties with the communist country.
The accords will increase oil refining capacity and petrochemical output in Cuba, according to a statement today from Venezuela's information ministry. Chavez and Castro also agreed to jointly develop mining deposits containing gold, zinc, copper, lime and chromium.
Chavez, a self-proclaimed socialist revolutionary who often refers to Cuba's convalescing President Fidel Castro as a father figure, has increased trade and investment in Cuba over the past eight years, providing economic relief to the island nation after it lost economic support from the former Soviet Union in 1991.
Trade between the two countries has risen to $7 billion a year, up from $388 million when Chavez was elected in 1998, Cuban Vice President Carlos Lage Davila said, according to the Venezuelan state news wire Agencia Bolivariana de Noticias.
Chavez and Raul Castro, Fidel's brother who took over governing duties last year when the president underwent surgery for intestinal bleeding, also signed agreements to increase food and industrial production in the two countries, according to the Venezuelan government statement.
Venezuelan President Hugo Chavez signed 14 economic cooperation agreements yesterday with Cuba's acting leader Raul Castro, deepening Venezuela's ties with the communist country.
The accords will increase oil refining capacity and petrochemical output in Cuba, according to a statement today from Venezuela's information ministry. Chavez and Castro also agreed to jointly develop mining deposits containing gold, zinc, copper, lime and chromium.
Chavez, a self-proclaimed socialist revolutionary who often refers to Cuba's convalescing President Fidel Castro as a father figure, has increased trade and investment in Cuba over the past eight years, providing economic relief to the island nation after it lost economic support from the former Soviet Union in 1991.
Trade between the two countries has risen to $7 billion a year, up from $388 million when Chavez was elected in 1998, Cuban Vice President Carlos Lage Davila said, according to the Venezuelan state news wire Agencia Bolivariana de Noticias.
Chavez and Raul Castro, Fidel's brother who took over governing duties last year when the president underwent surgery for intestinal bleeding, also signed agreements to increase food and industrial production in the two countries, according to the Venezuelan government statement.
Deal: 8 TV stations to sell for $1.1 billion by News Corp.
Tribune Co.'s new venture to spread the costs of some television operations across its 23 stations and those of Oak Hill Capital Partners' Local TV LLC will get to spread those costs over an even wider swath than first announced.
News Corp., the media company controlled by Rupert Murdoch, will sell eight of its Fox network-affiliated television stations in the U.S. to Oak Hill Capital Partners for about $1.1 billion in cash.
The sale in small markets will leave News Corp. with 27 stations in major markets including New York, Boston and Los Angeles.
The media conglomerate, which owns the New York Post, a controlling stake in BSkyB satellite TV service, and 20th Century Fox movie studio, recently closed a $5.6 billion deal to buy the Wall Street Journal publisher, Dow Jones.
The sale will probably be completed in the third quarter, News Corp. said in a statement Saturday. The purchase will help Oak Hill, the buyout firm founded two years ago by Robert Bass, a Texas oil billionaire, create a broader U.S. network. In May it paid $575 million to acquire stations in Oklahoma, Pennsylvania, Iowa and Arkansas from The New York Times Co.
"It is part of News Corp.'s strategic decision to shed low-growth, noncore assets," said Richard Dorfman, managing director of the investment firm Richard Alan.
For Oak Hill, the purchase is "a classic private equity play," Dorfman said. "Ad dollars are migrating to the Web, but it's a government-licensed franchise that can throw off good cash flow and reliably service debt."
Oak Hill will get WJW in Cleveland; KDVR in Denver; KTVI in St. Louis; WDAF in Kansas City, Missouri; WITI in Milwaukee; KSTU in Salt Lake City, Utah; WBRC in Birmingham, Alabama; and WGHP in Greensboro, North Carolina, according to the News Corp. statement confirmed by Teri Everett, a spokeswoman.
Oak Hill has expanded into leveraged buyouts, high-yield debt and hedge funds, raising more than $4.6 billion from investors, including Bill Gates, the founder of Microsoft.
News Corp. hired the New York investment banking firm Allen & Co. to advise it on the sale of the TV stations in June. Two months later, it agreed to buy Dow Jones, publisher of Dow Jones Newswires, Barron's and The Wall Street Journal, after months of negotiations with the controlling Bancroft family.
Murdoch plans to use the Wall Street Journal brand to attract viewers to its television networks and Internet users to Web sites.
"News Corp.'s focus today is much more on Internet properties, such as MySpace, and cable," said Dorfman. The sale of the stations "will help News Corp. raise capital. News Corp. is not walking away from the healthy broadcast world."
News Corp., the media company controlled by Rupert Murdoch, will sell eight of its Fox network-affiliated television stations in the U.S. to Oak Hill Capital Partners for about $1.1 billion in cash.
The sale in small markets will leave News Corp. with 27 stations in major markets including New York, Boston and Los Angeles.
The media conglomerate, which owns the New York Post, a controlling stake in BSkyB satellite TV service, and 20th Century Fox movie studio, recently closed a $5.6 billion deal to buy the Wall Street Journal publisher, Dow Jones.
The sale will probably be completed in the third quarter, News Corp. said in a statement Saturday. The purchase will help Oak Hill, the buyout firm founded two years ago by Robert Bass, a Texas oil billionaire, create a broader U.S. network. In May it paid $575 million to acquire stations in Oklahoma, Pennsylvania, Iowa and Arkansas from The New York Times Co.
"It is part of News Corp.'s strategic decision to shed low-growth, noncore assets," said Richard Dorfman, managing director of the investment firm Richard Alan.
For Oak Hill, the purchase is "a classic private equity play," Dorfman said. "Ad dollars are migrating to the Web, but it's a government-licensed franchise that can throw off good cash flow and reliably service debt."
Oak Hill will get WJW in Cleveland; KDVR in Denver; KTVI in St. Louis; WDAF in Kansas City, Missouri; WITI in Milwaukee; KSTU in Salt Lake City, Utah; WBRC in Birmingham, Alabama; and WGHP in Greensboro, North Carolina, according to the News Corp. statement confirmed by Teri Everett, a spokeswoman.
Oak Hill has expanded into leveraged buyouts, high-yield debt and hedge funds, raising more than $4.6 billion from investors, including Bill Gates, the founder of Microsoft.
News Corp. hired the New York investment banking firm Allen & Co. to advise it on the sale of the TV stations in June. Two months later, it agreed to buy Dow Jones, publisher of Dow Jones Newswires, Barron's and The Wall Street Journal, after months of negotiations with the controlling Bancroft family.
Murdoch plans to use the Wall Street Journal brand to attract viewers to its television networks and Internet users to Web sites.
"News Corp.'s focus today is much more on Internet properties, such as MySpace, and cable," said Dorfman. The sale of the stations "will help News Corp. raise capital. News Corp. is not walking away from the healthy broadcast world."
Saturday, December 22, 2007
Goldman's Blankfein collects $67.9M bonus
Goldman Sachs Chairman and CEO Lloyd Blankfein will take home nearly $68 million in restricted stock, options and cash, making it the largest bonus ever given to a Wall Street CEO.
Blankfein was awarded $26.8 million in cash and $41.1 million in restricted stock and stock options, according to a company filing with the Securities and Exchange Commission issued Friday.
Lloyd Blankfein, Goldman Sachs Group Inc's CEO has been given a $67.9 million bonus for 2007, the firm said on Friday. This news comes in a period throughout which other top rival CEO’s lost their jobs or didn’t get any bonuses after losing billions of dollars on sub-prime mortgages.Goldman, one of the world's largest global investment banks, managed to steer clear of a meltdown and capped its fiscal year with outstanding financial results. Consequently, Blankfein’s reward for keeping the form on its right track included $41.1 million of restricted shares and options, as well as $26.8 million in cash.The CEO wasn’t the only member of Goldman’s management to be rewarded for the job well done. Co-Presidents Gary Cohn and Jon Winkelried will also receive a restricted shares and options valued at about $40.5 million each, up from $25.7 million last year.Cash payments weren't disclosed for anyone other than Blankfein, who reaped a record-setting $53.4 million last year.Goldman Sachs Group Inc. exceeded Wall Street profit records for the fourth-consecutive year and this in a period throughout which even banks and securities firms like Citigroup Inc. and Merrill Lynch & Co. had no choice but to take at least $96 billion of write-downs.Goldman also increased its employee’s salaries and set aside $20.2 billion for the benefits and bonuses which increased 23 percent compared to last year.“There are successful people and then there's extraordinary success, and they're trying to show as a firm that they're really extraordinary. They're rewarding him for leading such a fabulously successful ship,'' said Jeanne Branthover, managing director of Boyden World Corp., for Bloomberg.Blankfein, 53, earned a total of $53.4 million in 2006, thus becoming one of the highest paid executives on Wall Street. His bonus reflected the performance of Goldman Sachs, which reported record net earnings of $9.5 billion.
With this year's bonus, Blankfein shatters the record he set a year ago, when he was awarded $54 million.
News reports had originally projected that Blankfein will take home as much as $70 million, after helping to lead the company through this summer's market meltdown and the ongoing credit crisis.
Unlike some of its rivals, which have witnessed billions of dollars evaporate from their balance sheets, Goldman Sachs has proved unshakable. Just this week, the company reported better-than-expected fourth-quarter earnings, while peers like Morgan Stanley and Bear Stearns recorded steep losses.
As it stands right now, Blankfein will be among the few Wall Street CEOs to collect a bonus this year. After this week's dismal results, Morgan Stanley (MS, Fortune 500) Chairman and CEO John Mack and Bear Stearns (BSC, Fortune 500) chief James Cayne both announced they would forsake their 2007 bonuses.
While bonuses are common throughout corporate America, they are a far bigger part of overall compensation for all levels of employee pay on Wall Street than they are at a typical corporation.
Tom McMullen of the Hay Group, a human resources and management consultant, estimates that cash bonuses typically equal between 40 and 100 percent of base salary for top executives on Wall Street, while senior managers receive between 15 to 30 percent of base pay as bonus payments. Even entry-level employees might see 10 to 20 percent of their base pay in the form of a bonus.
This year was expected to be a difficult one for finance pros given the recent market turmoil and the ongoing credit crisis. Overall, financial firms were expected to cut bonuses up to 10 percent from a year ago, according to industry projections.
A year ago, bonuses on Wall Street reached a record $23.9 billion, averaging more than $136,000 per employee, according to the New York State Comptroller's office.
Facing the biggest bonus squeeze were those individuals working in mortgage-related areas, with their bonuses declining by as much as 50 percent from a year ago, according to a report published last month by the compensation research firm Options Group.
Even though dealmaking has slowed considerably on Wall Street, investment bankers are still expected to enjoy a bump in their annual bonus from a year ago given the frenetic pace of merger-and-acquisition activity in the first half of 2007.
With so many banks underperforming, many financial firms were widely expected this bonus season to shift from cash to stock in an effort to compensate employees while retaining talent. Some firms have already said they would cap their cash compensation, including UBS, which announced a limit of $750,000 for its workers.
Goldman Sachs (GS, Fortune 500) stock finished more than 3 percent higher in Friday trade
Blankfein was awarded $26.8 million in cash and $41.1 million in restricted stock and stock options, according to a company filing with the Securities and Exchange Commission issued Friday.
Lloyd Blankfein, Goldman Sachs Group Inc's CEO has been given a $67.9 million bonus for 2007, the firm said on Friday. This news comes in a period throughout which other top rival CEO’s lost their jobs or didn’t get any bonuses after losing billions of dollars on sub-prime mortgages.Goldman, one of the world's largest global investment banks, managed to steer clear of a meltdown and capped its fiscal year with outstanding financial results. Consequently, Blankfein’s reward for keeping the form on its right track included $41.1 million of restricted shares and options, as well as $26.8 million in cash.The CEO wasn’t the only member of Goldman’s management to be rewarded for the job well done. Co-Presidents Gary Cohn and Jon Winkelried will also receive a restricted shares and options valued at about $40.5 million each, up from $25.7 million last year.Cash payments weren't disclosed for anyone other than Blankfein, who reaped a record-setting $53.4 million last year.Goldman Sachs Group Inc. exceeded Wall Street profit records for the fourth-consecutive year and this in a period throughout which even banks and securities firms like Citigroup Inc. and Merrill Lynch & Co. had no choice but to take at least $96 billion of write-downs.Goldman also increased its employee’s salaries and set aside $20.2 billion for the benefits and bonuses which increased 23 percent compared to last year.“There are successful people and then there's extraordinary success, and they're trying to show as a firm that they're really extraordinary. They're rewarding him for leading such a fabulously successful ship,'' said Jeanne Branthover, managing director of Boyden World Corp., for Bloomberg.Blankfein, 53, earned a total of $53.4 million in 2006, thus becoming one of the highest paid executives on Wall Street. His bonus reflected the performance of Goldman Sachs, which reported record net earnings of $9.5 billion.
With this year's bonus, Blankfein shatters the record he set a year ago, when he was awarded $54 million.
News reports had originally projected that Blankfein will take home as much as $70 million, after helping to lead the company through this summer's market meltdown and the ongoing credit crisis.
Unlike some of its rivals, which have witnessed billions of dollars evaporate from their balance sheets, Goldman Sachs has proved unshakable. Just this week, the company reported better-than-expected fourth-quarter earnings, while peers like Morgan Stanley and Bear Stearns recorded steep losses.
As it stands right now, Blankfein will be among the few Wall Street CEOs to collect a bonus this year. After this week's dismal results, Morgan Stanley (MS, Fortune 500) Chairman and CEO John Mack and Bear Stearns (BSC, Fortune 500) chief James Cayne both announced they would forsake their 2007 bonuses.
While bonuses are common throughout corporate America, they are a far bigger part of overall compensation for all levels of employee pay on Wall Street than they are at a typical corporation.
Tom McMullen of the Hay Group, a human resources and management consultant, estimates that cash bonuses typically equal between 40 and 100 percent of base salary for top executives on Wall Street, while senior managers receive between 15 to 30 percent of base pay as bonus payments. Even entry-level employees might see 10 to 20 percent of their base pay in the form of a bonus.
This year was expected to be a difficult one for finance pros given the recent market turmoil and the ongoing credit crisis. Overall, financial firms were expected to cut bonuses up to 10 percent from a year ago, according to industry projections.
A year ago, bonuses on Wall Street reached a record $23.9 billion, averaging more than $136,000 per employee, according to the New York State Comptroller's office.
Facing the biggest bonus squeeze were those individuals working in mortgage-related areas, with their bonuses declining by as much as 50 percent from a year ago, according to a report published last month by the compensation research firm Options Group.
Even though dealmaking has slowed considerably on Wall Street, investment bankers are still expected to enjoy a bump in their annual bonus from a year ago given the frenetic pace of merger-and-acquisition activity in the first half of 2007.
With so many banks underperforming, many financial firms were widely expected this bonus season to shift from cash to stock in an effort to compensate employees while retaining talent. Some firms have already said they would cap their cash compensation, including UBS, which announced a limit of $750,000 for its workers.
Goldman Sachs (GS, Fortune 500) stock finished more than 3 percent higher in Friday trade
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