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Business this week: 15th – 21st April 2006

April 20, 2006 Leave a comment

Business this week

Apr 20th 2006
From The Economist print edition

The London Stock Exchange’s share price hit a new high (following last week’s gains made after NASDAQ revealed it had become the LSE‘s biggest shareholder) as investors pondered the possibility of a takeover bid from the New York Stock Exchange. The speculation focused on a regulatory filing by the NYSE, which recently listed its own shares, confirming it was in merger talks with unnamed rival exchanges. See articleE+

In a further sign of the increased competition among exchanges and the blurring of lines between asset classes, the International Securities Exchange, the biggest equities options exchange in the world, announced it was launching the ISE Stock Exchange with the backing of several Wall Street banks. It will be fully electronic and is expected to start operating later this year.

Standard Life revealed it had rejected several approaches from companies interested in a merger and is to press ahead with its planned demutualisation this summer. Europe’s biggest mutual insurer said it expects to be valued at up to £5.5 billion ($9.8 billion) on its stockmarket debut, which is subject to a vote in May by its members.

Citigroup, America’s biggest financial-services company, reported a net profit of $5.6 billion for the first quarter on the back of strong performances from its international and investment-banking businesses. Citigroup released its statement shortly before Sandy Weill stepped down as chairman at a glitzy shareholders’ event.

Kohlberg Kravis Roberts is to pay $850m for an 85% stake in the software-development and solutions unit of Flextronics, a company that makes products, including Microsoft’s Xbox 360 gaming consoles, for the electronics industry. The unit is based in India (Flextronics is headquartered in Singapore) and KKR‘s is the biggest-ever leveraged buy-out by a private-equity firm operating in the country. See articleE+

Tata Consultancy Services announced a further expansion that will result in an extra 30,500 people being employed by the company in the coming year. India’s biggest exporter of software services, which also said net profit rose by 41% in the year ending March 31st, has benefited from a surge in outsourcing, most notably by big financial-services firms.

Intel reported poor earnings. The world’s biggest chipmaker said net profit had fallen by 38% in the three months ending April 1st, compared with a year ago, to $1.35 billion. The company has been losing market share to Advanced Micro Devices, a Silicon Valley rival with which it is in fierce competition, and predicts a further fall in demand for its chips.

Wal-Mart is to stop stocking rifles and shotguns in a third of its shops in the United States (where it is the biggest seller of guns) because of a lack of demand. The decision should do no harm to the retailer’s efforts to break into urban shopping locales, where it has sometimes met with stiff resistance.

Knight Ridder, which is America’s second-biggest newspaper publisher and is being acquired by McClatchy, a smaller rival, said net income had fallen by 53% in the first quarter compared with a year ago. McClatchy is reportedly close to finding buyers for the 12 Knight Ridder titles it is selling.

BAA confirmed it had rejected a takeover approach by a consortium led by the ubiquitous Goldman Sachs that valued the operator of several British airports, including Heathrow, at £9.4 billion ($16.4 billion), around £650m higher than the hostile bid BAA is fighting from Grupo Ferrovial, a Spanish construction firm.

The International Monetary Fund released its latest semi-annual World Economic Outlook and raised its forecast for global GDP growth in 2006 to 4.9%. The fund also slightly raised its growth forecasts for the United States and the euro area (to 3.4% and 2.0% respectively), but expects China’s GDP to grow by 9.5% this year, up from the forecast of 8.2% it made last September. See article

The price of oil reached record highs, pushing well past $70 a barrel. Fears that oil supplies might be jeopardised by any confrontation with Iran contributed to market jitters. See articleE+

Saudi Arabia’s Tadawul All Share index, the biggest stockmarket of any Arab country, and a star performer in 2005, fell by 7.6% on April 18th, continuing a slide that has seen it fall by around 36% from its peak in February. Some analysts pointed to the suspension by Saudi regulators of two dealers on allegations of manipulating markets as one factor that has spooked wealthy investors.

Categories: Uncategorized

Business this week: 15th – 21st April 2006

April 20, 2006 Leave a comment

Business this week

Apr 20th 2006
From The Economist print edition

The London Stock Exchange’s share price hit a new high (following last week’s gains made after NASDAQ revealed it had become the LSE‘s biggest shareholder) as investors pondered the possibility of a takeover bid from the New York Stock Exchange. The speculation focused on a regulatory filing by the NYSE, which recently listed its own shares, confirming it was in merger talks with unnamed rival exchanges. See articleE+

In a further sign of the increased competition among exchanges and the blurring of lines between asset classes, the International Securities Exchange, the biggest equities options exchange in the world, announced it was launching the ISE Stock Exchange with the backing of several Wall Street banks. It will be fully electronic and is expected to start operating later this year.

Standard Life revealed it had rejected several approaches from companies interested in a merger and is to press ahead with its planned demutualisation this summer. Europe’s biggest mutual insurer said it expects to be valued at up to £5.5 billion ($9.8 billion) on its stockmarket debut, which is subject to a vote in May by its members.

Citigroup, America’s biggest financial-services company, reported a net profit of $5.6 billion for the first quarter on the back of strong performances from its international and investment-banking businesses. Citigroup released its statement shortly before Sandy Weill stepped down as chairman at a glitzy shareholders’ event.

Kohlberg Kravis Roberts is to pay $850m for an 85% stake in the software-development and solutions unit of Flextronics, a company that makes products, including Microsoft’s Xbox 360 gaming consoles, for the electronics industry. The unit is based in India (Flextronics is headquartered in Singapore) and KKR‘s is the biggest-ever leveraged buy-out by a private-equity firm operating in the country. See articleE+

Tata Consultancy Services announced a further expansion that will result in an extra 30,500 people being employed by the company in the coming year. India’s biggest exporter of software services, which also said net profit rose by 41% in the year ending March 31st, has benefited from a surge in outsourcing, most notably by big financial-services firms.

Intel reported poor earnings. The world’s biggest chipmaker said net profit had fallen by 38% in the three months ending April 1st, compared with a year ago, to $1.35 billion. The company has been losing market share to Advanced Micro Devices, a Silicon Valley rival with which it is in fierce competition, and predicts a further fall in demand for its chips.

Wal-Mart is to stop stocking rifles and shotguns in a third of its shops in the United States (where it is the biggest seller of guns) because of a lack of demand. The decision should do no harm to the retailer’s efforts to break into urban shopping locales, where it has sometimes met with stiff resistance.

Knight Ridder, which is America’s second-biggest newspaper publisher and is being acquired by McClatchy, a smaller rival, said net income had fallen by 53% in the first quarter compared with a year ago. McClatchy is reportedly close to finding buyers for the 12 Knight Ridder titles it is selling.

BAA confirmed it had rejected a takeover approach by a consortium led by the ubiquitous Goldman Sachs that valued the operator of several British airports, including Heathrow, at £9.4 billion ($16.4 billion), around £650m higher than the hostile bid BAA is fighting from Grupo Ferrovial, a Spanish construction firm.

The International Monetary Fund released its latest semi-annual World Economic Outlook and raised its forecast for global GDP growth in 2006 to 4.9%. The fund also slightly raised its growth forecasts for the United States and the euro area (to 3.4% and 2.0% respectively), but expects China’s GDP to grow by 9.5% this year, up from the forecast of 8.2% it made last September. See article

The price of oil reached record highs, pushing well past $70 a barrel. Fears that oil supplies might be jeopardised by any confrontation with Iran contributed to market jitters. See articleE+

Saudi Arabia’s Tadawul All Share index, the biggest stockmarket of any Arab country, and a star performer in 2005, fell by 7.6% on April 18th, continuing a slide that has seen it fall by around 36% from its peak in February. Some analysts pointed to the suspension by Saudi regulators of two dealers on allegations of manipulating markets as one factor that has spooked wealthy investors.

Categories: Uncategorized

Politics this week: 15th – 21st April 2006

April 20, 2006 Leave a comment

Politics this week

Apr 20th 2006
From The Economist print edition

The promised shake-up of White House staff began in earnest. Scott McClellan, the press secretary, announced his resignation and George Bush picked Rob Portman, the current United States Trade Representative, as his new budget chief (Susan Schwab, Mr Portman’s deputy, is promoted to the top spot). In a surprise move, Karl Rove will lose some of the policy co-ordination duties he took on a year ago, but remains Mr Bush’s deputy chief of staff. See articleE+

Mr Bush and senior military personnel rallied around Donald Rumsfeld after several retired generals called for the defence secretary to resign over his handling of the occupation of Iraq. The Pentagon released a memo documenting the “unprecedented degree” to which Mr Rumsfeld consulted with senior officers. See article

George Ryan, a former Republican governor of Illinois, was found guilty of various federal charges linked to a corruption scandal involving bribes for trucking licences in the state.

Arizona’s Democratic governor vetoed a state bill that would allow local authorities to arrest illegal immigrants and charge them with trespassing. Janet Napolitano, who said she had taken advice from the police, insisted the proposal was unworkable and blurred the line between state and federal responsibilities.

Thousands of people, including a dozen survivors, commemorated the 1906 San Francisco earthquake on April 18th at 5.12am, the exact time that the disaster struck. Around 3,000 people were killed in the quake, which destroyed vast tracts of the city.

After several years in which it claimed that coca production in Colombia was falling swiftly, the United States found that it had increased by 26%, to 144,000 hectares (356,000 acres), after almost doubling the area surveyed. Since 2000, Washington has spent some $4 billion helping Colombia’s government to fight the drug trade.

Venezuela’s president, Hugo Chávez, announced that his country would withdraw from the five-country Andean Community because two other members, Colombia and Peru, had signed free-trade agreements with the United States.

Three ministers in Bolivia’s leftist government were kidnapped by townspeople supporting foreign investment in their country. The ministers told residents of Puerto Suárez that a steelworks being built by a Brazilian firm broke a law barring foreign ownership near the borders. Security forces later released them.

EPA
EPA

Hu Jintao, China’s president, made Seattle his first stop on his visit to the United States, before heading to Washington, DC, for a “formal lunch” with George Bush. See articleE+

Australia dispatched 180 soldiers to the Solomon Islands after rioters wrecked its capital, Honiara, following an election. Australia already had several hundred police in the Solomons as part of a regional peacekeeping force.

Singapore called a parliamentary election for May 6th. Opposition leaders are hoping to contest at least half the seats, though another easy win by the ever-ruling People’s Action Party seems certain. See article

Vietnam’s ruling Communist Party began its tenth congress. Corruption was high on the agenda, following a scandal involving transport ministry officials.

A general strike and political demonstrations continued in Nepal against the king, paralysing the capital, Kathmandu. Tens of thousands defied government curfew zones, resulting in the deaths of several protesters. See articleE+

President Gloria Macapagal Arroyo of the Philippines announced that she would commute to life imprisonment the death sentences of some 1,200 convicts on death row. Under a bill to be introduced to parliament, all future death sentences would likewise be commuted until the end of her term in 2010.

The top appeals court in Italy confirmed a narrow victory for a centre-left coalition, led by Romano Prodi, over the outgoing government of prime minister Silvio Berlusconi in last week’s bitterly contested general election. Parliament reconvenes on April 28th but a new government may not be constituted until June.

The German government, yielding to international pressure, finally agreed to open a huge collection of records relating to concentration camps and slave labour under the Nazi regime. The files contain information about more than 17m people who were imprisoned or enslaved.

Mikhail Khodorkovsky, the imprisoned former head of the Russian oil company, Yukos, has been attacked with a knife by a cellmate, according to lawyers for the ex-tycoon. An associate of the businessman said the attack would not have been possible “without an order from above”.

The governor of Hungary’s central bank was accused by the ruling Socialist party of meddling after he criticised their fiscal record ahead of a second round of voting in parliamentary elections.

A suicide bomber from the West Bank, a member of Islamic Jihad, killed nine people in Tel Aviv. The Hamas government defended his action. Israel refrained from direct retaliation. Meanwhile, Jordan accused Hamas of smuggling arms into the kingdom and scouting targets there. See article

AP
AP

Muslims and Christian Copts battled in the Egyptian port city of Alexandria after a Copt was stabbed to death. See articleE+

Nigeria’s president, Olusegun Obasanjo, announced a new development plan to alleviate poverty in the oil-rich Niger delta region. Militant groups fighting for a larger share of oil revenues rejected the plan, and renewed their offensive, killing at least two people in an attack on an army barracks.

Kenyan MPs approved a report that implicates senior ministers and civil servants in corruption. Several other ministers have already resigned over the Anglo Leasing affair, and this latest move could lead to the prosecution of the vice-president, Moody Awori.

President Robert Mugabe said his opponents in Zimbabwe were “playing with fire” and threatened action if they organise against him. He also promised to extend state control over the mining industry.

Categories: Uncategorized

Politics this week: 15th – 21st April 2006

April 20, 2006 Leave a comment

Politics this week

Apr 20th 2006
From The Economist print edition

The promised shake-up of White House staff began in earnest. Scott McClellan, the press secretary, announced his resignation and George Bush picked Rob Portman, the current United States Trade Representative, as his new budget chief (Susan Schwab, Mr Portman’s deputy, is promoted to the top spot). In a surprise move, Karl Rove will lose some of the policy co-ordination duties he took on a year ago, but remains Mr Bush’s deputy chief of staff. See articleE+

Mr Bush and senior military personnel rallied around Donald Rumsfeld after several retired generals called for the defence secretary to resign over his handling of the occupation of Iraq. The Pentagon released a memo documenting the “unprecedented degree” to which Mr Rumsfeld consulted with senior officers. See article

George Ryan, a former Republican governor of Illinois, was found guilty of various federal charges linked to a corruption scandal involving bribes for trucking licences in the state.

Arizona’s Democratic governor vetoed a state bill that would allow local authorities to arrest illegal immigrants and charge them with trespassing. Janet Napolitano, who said she had taken advice from the police, insisted the proposal was unworkable and blurred the line between state and federal responsibilities.

Thousands of people, including a dozen survivors, commemorated the 1906 San Francisco earthquake on April 18th at 5.12am, the exact time that the disaster struck. Around 3,000 people were killed in the quake, which destroyed vast tracts of the city.

After several years in which it claimed that coca production in Colombia was falling swiftly, the United States found that it had increased by 26%, to 144,000 hectares (356,000 acres), after almost doubling the area surveyed. Since 2000, Washington has spent some $4 billion helping Colombia’s government to fight the drug trade.

Venezuela’s president, Hugo Chávez, announced that his country would withdraw from the five-country Andean Community because two other members, Colombia and Peru, had signed free-trade agreements with the United States.

Three ministers in Bolivia’s leftist government were kidnapped by townspeople supporting foreign investment in their country. The ministers told residents of Puerto Suárez that a steelworks being built by a Brazilian firm broke a law barring foreign ownership near the borders. Security forces later released them.

EPA
EPA

Hu Jintao, China’s president, made Seattle his first stop on his visit to the United States, before heading to Washington, DC, for a “formal lunch” with George Bush. See articleE+

Australia dispatched 180 soldiers to the Solomon Islands after rioters wrecked its capital, Honiara, following an election. Australia already had several hundred police in the Solomons as part of a regional peacekeeping force.

Singapore called a parliamentary election for May 6th. Opposition leaders are hoping to contest at least half the seats, though another easy win by the ever-ruling People’s Action Party seems certain. See article

Vietnam’s ruling Communist Party began its tenth congress. Corruption was high on the agenda, following a scandal involving transport ministry officials.

A general strike and political demonstrations continued in Nepal against the king, paralysing the capital, Kathmandu. Tens of thousands defied government curfew zones, resulting in the deaths of several protesters. See articleE+

President Gloria Macapagal Arroyo of the Philippines announced that she would commute to life imprisonment the death sentences of some 1,200 convicts on death row. Under a bill to be introduced to parliament, all future death sentences would likewise be commuted until the end of her term in 2010.

The top appeals court in Italy confirmed a narrow victory for a centre-left coalition, led by Romano Prodi, over the outgoing government of prime minister Silvio Berlusconi in last week’s bitterly contested general election. Parliament reconvenes on April 28th but a new government may not be constituted until June.

The German government, yielding to international pressure, finally agreed to open a huge collection of records relating to concentration camps and slave labour under the Nazi regime. The files contain information about more than 17m people who were imprisoned or enslaved.

Mikhail Khodorkovsky, the imprisoned former head of the Russian oil company, Yukos, has been attacked with a knife by a cellmate, according to lawyers for the ex-tycoon. An associate of the businessman said the attack would not have been possible “without an order from above”.

The governor of Hungary’s central bank was accused by the ruling Socialist party of meddling after he criticised their fiscal record ahead of a second round of voting in parliamentary elections.

A suicide bomber from the West Bank, a member of Islamic Jihad, killed nine people in Tel Aviv. The Hamas government defended his action. Israel refrained from direct retaliation. Meanwhile, Jordan accused Hamas of smuggling arms into the kingdom and scouting targets there. See article

AP
AP

Muslims and Christian Copts battled in the Egyptian port city of Alexandria after a Copt was stabbed to death. See articleE+

Nigeria’s president, Olusegun Obasanjo, announced a new development plan to alleviate poverty in the oil-rich Niger delta region. Militant groups fighting for a larger share of oil revenues rejected the plan, and renewed their offensive, killing at least two people in an attack on an army barracks.

Kenyan MPs approved a report that implicates senior ministers and civil servants in corruption. Several other ministers have already resigned over the Anglo Leasing affair, and this latest move could lead to the prosecution of the vice-president, Moody Awori.

President Robert Mugabe said his opponents in Zimbabwe were “playing with fire” and threatened action if they organise against him. He also promised to extend state control over the mining industry.

Categories: Uncategorized