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Archive for August 3, 2006

Business this week: 29th July – 4th August 2006

August 3, 2006 Leave a comment

AOL, Time Warner’s internet division, said it would provide free software, e-mail and other services to broadband customers as part of its strategy to boost advertising. Time Warner hopes people will visit AOL even when they move to other firms’ broadband. Analysts wondered if this would be enough to get AOL growing: its advertising revenue in the second quarter was 40% higher than a year ago, but that was more than offset by lower revenue from subscribers, whose number has fallen by 30% since 2002. See article

Vonage issued its first quarterly statement since its disastrous stockmarket debut in May. The company reported a net loss of $74m as rivals piled into the business of offering phone calls over the internet, in which Vonage was an innovator. It has spent an ever-greater amount on marketing—$90m in the second quarter—to keep up. Since flotation, its share price has fallen by more than half.

Verizon Communications’ chief executive all but ruled out buying the 45% of its profitable subsidiary, Verizon Wireless, that is held by Vodafone within the next few years. The admission came as Verizon Communications reported a steep fall in net profit for the second quarter.

In Serbia’s biggest privatisation, Mobi 63, the country’s second-biggest mobile-phone operator, was sold to Telenor, a Norwegian operator, for $1.9 billion after a nifty government auction.

Eastman Kodak reported poor sales of consumer digital equipment (and its seventh straight quarterly loss) and said that it would outsource the manufacture of its cameras, a tradition the company traces back to 1888, to Singapore’s Flextronics. An icon of photography in the 20th century, Kodak is undergoing a hard time as it switches away from film to digital media and graphic imaging.

Japan Post published details of its planned privatisation, which is due to start in October 2007 and take ten years to complete. The company will be split into four parts: a postal-savings bank, a life insurer, a mail-delivery business and a post-office services unit. The bank’s assets alone total ¥227 trillion ($2 trillion).

E.ON, a German utility, received a setback to its euro27 billion ($34 billion) offer to buy Spain’s Endesa. Spanish regulators imposed conditions on a takeover, including the sale of some assets on the ground of energy security. German officials cried foul, insisting the conditions were illegal under European Union competition regulations. In a further test of those regulations, Iberdrola, a rival to Endesa, said it would appeal against the EU’s approval of E.ON’s bid.

Using a new law, a French court granted Eurotunnel its request for protection from a group of disgruntled bondholders unhappy with the restructuring of its £6.2 billion ($11.6 billion) debt. The ruling gives the operator of the tunnel linking Britain and France a six-month period to push through its plan.

An air of finality hung over the saga of Yukos, which was formally declared bankrupt by a judge in Moscow. Once Russia’s biggest oil company, its fall from political grace led to the forced sales of its biggest assets, the trial and jailing of its boss and the flight of other managers, who still claim Yukos is solvent.

The mining industry was galvanised by the latest efforts at consolidation. Inco, a Canadian miner, admitted failure in its bid to buy Falconbridge, a compatriot, leaving the way open for a takeover of the latter by Switzerland’s Xstrata. Inco’s defeat unravels Phelps Dodge’s plan to buy a combined Inco and Falconbridge and thus create one of the world’s biggest mining firms.

Amid a batch of statistics forecasting a rise in inflationary pressures, the European Central Bank lifted its key interest rate by one-quarter of a percentage point to 3%. Surprisingly, the Bank of England also raised its key rate by the same amount to 4.75%, the first change for 12 months. See articleE+

Hank Paulson made his first speech as America’s treasury secretary. He was more frank than expected about the country’s budget deficit, the reform of entitlement programmes and the stagnation of the living standards of middle-income Americans.

America’s three biggest carmakers saw a slump in sales in the United States during July as demand fell for petrol-thirsty SUVs and rose for fuel-efficient cars. Japan’s carmakers fared rather better: Toyota outsold Ford for the first time, putting it in second place behind General Motors. Meanwhile, Ford reported a second-quarter loss of $254m, twice what it had previously said, owing largely to extra pension costs caused by job cuts.

Categories: Uncategorized

Business this week: 29th July – 4th August 2006

August 3, 2006 Leave a comment

AOL, Time Warner’s internet division, said it would provide free software, e-mail and other services to broadband customers as part of its strategy to boost advertising. Time Warner hopes people will visit AOL even when they move to other firms’ broadband. Analysts wondered if this would be enough to get AOL growing: its advertising revenue in the second quarter was 40% higher than a year ago, but that was more than offset by lower revenue from subscribers, whose number has fallen by 30% since 2002. See article

Vonage issued its first quarterly statement since its disastrous stockmarket debut in May. The company reported a net loss of $74m as rivals piled into the business of offering phone calls over the internet, in which Vonage was an innovator. It has spent an ever-greater amount on marketing—$90m in the second quarter—to keep up. Since flotation, its share price has fallen by more than half.

Verizon Communications’ chief executive all but ruled out buying the 45% of its profitable subsidiary, Verizon Wireless, that is held by Vodafone within the next few years. The admission came as Verizon Communications reported a steep fall in net profit for the second quarter.

In Serbia’s biggest privatisation, Mobi 63, the country’s second-biggest mobile-phone operator, was sold to Telenor, a Norwegian operator, for $1.9 billion after a nifty government auction.

Eastman Kodak reported poor sales of consumer digital equipment (and its seventh straight quarterly loss) and said that it would outsource the manufacture of its cameras, a tradition the company traces back to 1888, to Singapore’s Flextronics. An icon of photography in the 20th century, Kodak is undergoing a hard time as it switches away from film to digital media and graphic imaging.

Japan Post published details of its planned privatisation, which is due to start in October 2007 and take ten years to complete. The company will be split into four parts: a postal-savings bank, a life insurer, a mail-delivery business and a post-office services unit. The bank’s assets alone total ¥227 trillion ($2 trillion).

E.ON, a German utility, received a setback to its euro27 billion ($34 billion) offer to buy Spain’s Endesa. Spanish regulators imposed conditions on a takeover, including the sale of some assets on the ground of energy security. German officials cried foul, insisting the conditions were illegal under European Union competition regulations. In a further test of those regulations, Iberdrola, a rival to Endesa, said it would appeal against the EU’s approval of E.ON’s bid.

Using a new law, a French court granted Eurotunnel its request for protection from a group of disgruntled bondholders unhappy with the restructuring of its £6.2 billion ($11.6 billion) debt. The ruling gives the operator of the tunnel linking Britain and France a six-month period to push through its plan.

An air of finality hung over the saga of Yukos, which was formally declared bankrupt by a judge in Moscow. Once Russia’s biggest oil company, its fall from political grace led to the forced sales of its biggest assets, the trial and jailing of its boss and the flight of other managers, who still claim Yukos is solvent.

The mining industry was galvanised by the latest efforts at consolidation. Inco, a Canadian miner, admitted failure in its bid to buy Falconbridge, a compatriot, leaving the way open for a takeover of the latter by Switzerland’s Xstrata. Inco’s defeat unravels Phelps Dodge’s plan to buy a combined Inco and Falconbridge and thus create one of the world’s biggest mining firms.

Amid a batch of statistics forecasting a rise in inflationary pressures, the European Central Bank lifted its key interest rate by one-quarter of a percentage point to 3%. Surprisingly, the Bank of England also raised its key rate by the same amount to 4.75%, the first change for 12 months. See articleE+

Hank Paulson made his first speech as America’s treasury secretary. He was more frank than expected about the country’s budget deficit, the reform of entitlement programmes and the stagnation of the living standards of middle-income Americans.

America’s three biggest carmakers saw a slump in sales in the United States during July as demand fell for petrol-thirsty SUVs and rose for fuel-efficient cars. Japan’s carmakers fared rather better: Toyota outsold Ford for the first time, putting it in second place behind General Motors. Meanwhile, Ford reported a second-quarter loss of $254m, twice what it had previously said, owing largely to extra pension costs caused by job cuts.

Categories: Uncategorized

Politics this week: 29th July – 4th August 2006

August 3, 2006 Leave a comment

Western powers struggled, and continued to fail, to bring about a ceasefire in Lebanon, while Israel continued to hit what it said were strongholds of the Hizbullah militia across the country. An attack on the town of Qana, one such Hizbullah stronghold, killed at least 28 people, more than half of them children, causing an international outcry that increased the pressure on Israel and its American ally to agree to an unconditional ceasefire. Israel insisted that Hizbullah should first disarm. See articleE+

In a leaked memorandum, the outgoing British ambassador to Iraq said that “the prospect of a low-intensity civil war and a de facto division of Iraq is probably more likely” than a stable democracy.

More than 30 ministers resigned from the UN-backed transitional government in Somalia over the prime minister’s refusal to talk to the Council of Islamic Courts. For their part, the Islamists will not talk to the government as long as Ethiopian troops remain in the country.

The first democratic election in Congo for 46 years passed off fairly well on July 30th. The incumbent, President Joseph Kabila, is expected to win, but official results will not be out for several weeks. See articleE+

Ngozi Okonjo-Iweala was removed from her post as head of Nigeria’s economic-reform team. Previously a campaigning finance minister, she was credited with leading an anti-corruption drive and securing debt relief until unexpectedly becoming foreign minister last month. This latest move reinforces fears that economic reforms are faltering.

In an apparent resolution of a long political crisis, Ukraine’s President Viktor Yushchenko agreed to nominate his pro-Russian rival, Viktor Yanukovich, as prime minister. See articleE+

Turkey named General Yasar Buyukanit as the new head of its armed forces, ending speculation that the ruling Justice and Development Party, which traces its roots to political Islam, would try to block his appointment. General Buyukanit is expected to take a tough approach in maintaining Turkey’s secularism. See articleE+

The unemployment rate in the euro area fell to 7.8% in June, it lowest level in five years.

After weeks of protests against the proposal, Italy’s parliament voted for measures to end protectionism in jobs ranging from taxi-drivers to lawyers. The average Italian family is expected to save euro1,000 ($1,270) a year because of the deregulation. See articleE+

AP
AP

Tony Blair visited California, where he signed an agreement with the state’s governor, Arnold Schwarzenegger, to collaborate on tackling global warming. Mr Schwarzenegger, a Republican, criticised the federal government for not taking strong action on the issue, a position that will do him no harm as he starts his re-election campaign. See articleE+

Polling indicated a close finish in Connecticut’s Democratic primary for senator on August 8th. Joe Lieberman, the incumbent, has said he will run as an independent in November’s mid-term election, potentially fracturing the Democratic vote, if he loses the primary to an anti-war candidate, Ned Lamont.

A marine who is under investigation for taking part in the alleged murder of civilians in the Iraqi town of Haditha last November filed a defamation lawsuit against John Murtha, a veteran Democratic congressman and hawk who no longer supports the Bush administration on Iraq, for comments he made about the incident.

Andrew von Eschenbach was grilled by Democrats in Congress at his nomination hearing for commissioner of the Food and Drugs Administration. Mr von Eschenbach, who is acting head of the agency, was asked why the FDA had suddenly announced it might approve a “morning-after” contraceptive pill, which has been dogged by controversy since 2003.

For the first time in his 47-year rule Cuba’s Fidel Castro handed over power temporarily to his brother Raúl, the defence minister. Fidel claimed his health was stable after emergency surgery to halt intestinal bleeding. Although the news caused some anxiety in Havana, Cuban exiles celebrated in Miami. Mr Castro turns 80 on August 13th. See articleE+

Thousands of supporters of Andrés Manuel López Obrador, who is contesting the results of Mexico’s presidential election, occupied Mexico City’s main square and held sit-ins on main roads in the capital in support of his demand for a full ballot recount. See articleE+

Argentina’s Congress voted to grant the executive branch the right to alter the national budget however it chooses, so long as the total amount of spending is not changed. The decision strengthens the president’s already robust powers at the expense of the weak legislature.

Fifteen soldiers died in an ambush in north-eastern Colombia and a civilian was killed by a car bomb in Bogotá, the capital. The attacks came a week before the inauguration of Álvaro Uribe to a second term as president and are thought to be the work of the FARC, the main rebel group. See articleE+

Fresh fighting erupted in the port city of Trincomalee in Sri Lanka’s north-east as thousands of people reportedly fled the area. The conflict between the army and Tamil Tiger rebels has intensified recently and the country is sliding ever-closer to civil war. See articleE+

NATO took command of operations in southern Afghanistan and claimed to have killed dozens of Taliban fighters in the region. At least four troops, three of them British, were also killed.

The top diplomats of India and Pakistan met for the first time since seven bombs killed more than 180 people in Mumbai last month, and vowed that the peace process would not be disrupted.

Three policemen were killed by a bomb in Thailand’s rebellious south. The explosion came the day after suspected Muslim separatists carried out dozens of co-ordinated bomb attacks using small devices, which injured three people.

Australia’s prime minister, John Howard, confirmed that he intends to campaign for a fifth term at the next general election, expected next year. His decision ends speculation about his likely successor, but will disappoint Peter Costello, the finance minister, who was tipped to get the job. See articleE+

Categories: Uncategorized

Politics this week: 29th July – 4th August 2006

August 3, 2006 Leave a comment

Western powers struggled, and continued to fail, to bring about a ceasefire in Lebanon, while Israel continued to hit what it said were strongholds of the Hizbullah militia across the country. An attack on the town of Qana, one such Hizbullah stronghold, killed at least 28 people, more than half of them children, causing an international outcry that increased the pressure on Israel and its American ally to agree to an unconditional ceasefire. Israel insisted that Hizbullah should first disarm. See articleE+

In a leaked memorandum, the outgoing British ambassador to Iraq said that “the prospect of a low-intensity civil war and a de facto division of Iraq is probably more likely” than a stable democracy.

More than 30 ministers resigned from the UN-backed transitional government in Somalia over the prime minister’s refusal to talk to the Council of Islamic Courts. For their part, the Islamists will not talk to the government as long as Ethiopian troops remain in the country.

The first democratic election in Congo for 46 years passed off fairly well on July 30th. The incumbent, President Joseph Kabila, is expected to win, but official results will not be out for several weeks. See articleE+

Ngozi Okonjo-Iweala was removed from her post as head of Nigeria’s economic-reform team. Previously a campaigning finance minister, she was credited with leading an anti-corruption drive and securing debt relief until unexpectedly becoming foreign minister last month. This latest move reinforces fears that economic reforms are faltering.

In an apparent resolution of a long political crisis, Ukraine’s President Viktor Yushchenko agreed to nominate his pro-Russian rival, Viktor Yanukovich, as prime minister. See articleE+

Turkey named General Yasar Buyukanit as the new head of its armed forces, ending speculation that the ruling Justice and Development Party, which traces its roots to political Islam, would try to block his appointment. General Buyukanit is expected to take a tough approach in maintaining Turkey’s secularism. See articleE+

The unemployment rate in the euro area fell to 7.8% in June, it lowest level in five years.

After weeks of protests against the proposal, Italy’s parliament voted for measures to end protectionism in jobs ranging from taxi-drivers to lawyers. The average Italian family is expected to save euro1,000 ($1,270) a year because of the deregulation. See articleE+

AP
AP

Tony Blair visited California, where he signed an agreement with the state’s governor, Arnold Schwarzenegger, to collaborate on tackling global warming. Mr Schwarzenegger, a Republican, criticised the federal government for not taking strong action on the issue, a position that will do him no harm as he starts his re-election campaign. See articleE+

Polling indicated a close finish in Connecticut’s Democratic primary for senator on August 8th. Joe Lieberman, the incumbent, has said he will run as an independent in November’s mid-term election, potentially fracturing the Democratic vote, if he loses the primary to an anti-war candidate, Ned Lamont.

A marine who is under investigation for taking part in the alleged murder of civilians in the Iraqi town of Haditha last November filed a defamation lawsuit against John Murtha, a veteran Democratic congressman and hawk who no longer supports the Bush administration on Iraq, for comments he made about the incident.

Andrew von Eschenbach was grilled by Democrats in Congress at his nomination hearing for commissioner of the Food and Drugs Administration. Mr von Eschenbach, who is acting head of the agency, was asked why the FDA had suddenly announced it might approve a “morning-after” contraceptive pill, which has been dogged by controversy since 2003.

For the first time in his 47-year rule Cuba’s Fidel Castro handed over power temporarily to his brother Raúl, the defence minister. Fidel claimed his health was stable after emergency surgery to halt intestinal bleeding. Although the news caused some anxiety in Havana, Cuban exiles celebrated in Miami. Mr Castro turns 80 on August 13th. See articleE+

Thousands of supporters of Andrés Manuel López Obrador, who is contesting the results of Mexico’s presidential election, occupied Mexico City’s main square and held sit-ins on main roads in the capital in support of his demand for a full ballot recount. See articleE+

Argentina’s Congress voted to grant the executive branch the right to alter the national budget however it chooses, so long as the total amount of spending is not changed. The decision strengthens the president’s already robust powers at the expense of the weak legislature.

Fifteen soldiers died in an ambush in north-eastern Colombia and a civilian was killed by a car bomb in Bogotá, the capital. The attacks came a week before the inauguration of Álvaro Uribe to a second term as president and are thought to be the work of the FARC, the main rebel group. See articleE+

Fresh fighting erupted in the port city of Trincomalee in Sri Lanka’s north-east as thousands of people reportedly fled the area. The conflict between the army and Tamil Tiger rebels has intensified recently and the country is sliding ever-closer to civil war. See articleE+

NATO took command of operations in southern Afghanistan and claimed to have killed dozens of Taliban fighters in the region. At least four troops, three of them British, were also killed.

The top diplomats of India and Pakistan met for the first time since seven bombs killed more than 180 people in Mumbai last month, and vowed that the peace process would not be disrupted.

Three policemen were killed by a bomb in Thailand’s rebellious south. The explosion came the day after suspected Muslim separatists carried out dozens of co-ordinated bomb attacks using small devices, which injured three people.

Australia’s prime minister, John Howard, confirmed that he intends to campaign for a fifth term at the next general election, expected next year. His decision ends speculation about his likely successor, but will disappoint Peter Costello, the finance minister, who was tipped to get the job. See articleE+

Categories: Uncategorized