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Business this week: 20th – 26th January 2007

January 29, 2007 Leave a comment

Business this week

Jan 25th 2007
From The Economist print edition

Pfizer, the world’s biggest drugs firm, said it would cut almost 8,000 jobs (on top of 2,000 announced last month) and close several manufacturing and research facilities as part of a restructuring effort. The closures include the production site in Brooklyn where Pfizer was founded in 1849. The patent on Pfizer’s biggest-earning drug is due to expire in 2010; a potential blockbuster was cancelled last year; and Pfizer, like its rivals, faces a struggle to come up with new money-spinners and growing competition from makers of generic drugs. See article

MAN, a German truckmaker, dropped its euro10.5 billion ($13.7 billion) hostile bid for Scania, a Swedish rival. The offer had been opposed by Scania’s two largest shareholders, Volkswagen and the investment arm of Sweden’s Wallenberg family, since it was launched last autumn. Ferdinand Piëch, the chairman of VW (which is also MAN‘s biggest investor), pressed for friendly merger talks instead. See article

A report commissioned by New York’s leading politicians, including its mayor, Michael Bloomberg, gave warning that the city’s status as the world’s foremost financial centre was under threat. It said that up to 7% of the American market in global financial services could be lost to foreign competitors over the next five years. The report proffered various recommendations to help the city avoid this fate, chief of which was clearer guidance on the regulatory structure that has been in place since the Sarbanes-Oxley act.

Citigroup reported that net income had fallen by 12% in 2006, to $21.5 billion. The financial giant also parted company with Todd Thomson, its head of global wealth management, and is replacing him with Sallie Krawcheck, currently chief financial officer. See article

Other big American banks also reported yearly results. Bank of America’s net profit rose by 28% in 2006, to $21.1 billion, boosted in part by its acquisition of MBNA, a credit-card issuer, at the beginning of the year. And net income at Wachovia increased by 17%, to $7.8 billion, as it booked the benefits of integrating two banks, Golden West and Westcorp, it bought recently.

Paul Pressler resigned as chief executive of Gap. The clothing retailer has seen its sales droop over the past two years and is reviewing a number of options for its brands. Speculation has centred on a buy-out of the company. Robert Fisher, whose parents founded Gap in 1969, replaces Mr Pressler in the interim.

Sun Microsystems made a surprise quarterly profit (its first for a year and a half) as sales of its Solaris 10 operating system took off. Sun also laid its differences with Intel to rest by proclaiming a strategic alliance, which includes the use of Intel’s Xeon chips in some of Sun’s servers. The news came at a bad time for Intel’s arch-rival Advanced Micro Devices. The chipmaker confirmed that a price war was damaging its business when it reported a quarterly net loss of $574m.

The share price of Alcatel- Lucent plunged by more than 8% after the Franco-American company forecast that fourth-quarter profit would be flat. Alcatel’s merger with Lucent, completed two months ago, created the second-biggest provider of networking equipment, but there has been a delay in combining product lines, causing some customers to turn elsewhere.

EBay reported solid revenue growth in the fourth quarter in its core auction and sales businesses, partly due to people trading game consoles in the run up to Christmas. Its share price, which has been languishing of late, soared. Revenue at Skype jumped by 164%, but eBay admitted that the benefits of acquiring the internet-calling business in 2005 had yet to be seen.

The price of oil jumped by some 5% after George Bush outlined a plan in his speech to Congress to double the size of America’s strategic reserves by 2027. A few days earlier the price had fallen, briefly, to below $50 a barrel for the first time since May 2005.

Amid all the glad-handing and schnapps at the World Economic Forum in Davos, the prospect was raised of an effort to revive the stalled Doha round of trade talks. A meeting was called between trade officials from rich and poor countries to boost confidence in the process, which led to hopes of a new timetable. See articleE+

America’s labour productivity growth rate in 2006 was the lowest for more than a decade, according to a study by the Conference Board. Although productivity growth rates were higher in most of Europe and Japan, the report suggested there would be future diminishing returns worldwide from investments in information and communication technology.

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Politics this week: 20th – 26th January 2007

January 29, 2007 Leave a comment

Politics this week

Jan 25th 2007
From The Economist print edition

Reuters
Reuters

George Bush delivered his annual state-of-the-union message to Congress. The president laid out policies on health insurance, immigration, education and energy, where he presented a plan to reduce petrol consumption in America by 20% over the next ten years. See article

Mr Bush also sought support for his plan to send more troops to Iraq, arguing that, should America retreat, the result would be a “nightmare scenario” in Iraq and surrounding countries. The Senate Foreign Relations Committee promptly responded by voting against the plan, arguing it was “not in the national interest” of the United States.

The House of Representatives finished passing all the bills that comprised the Democrats’ “100 hour” agenda, with plenty of time to spare. However, the proposal to increase the federal minimum wage was stalled in the Senate when Republicans insisted on adding tax breaks for small businesses to help cover the cost of the wage increase. See article

Hillary Clinton made it official by declaring “I’m in, and I’m in to win” the race for president in 2008. Also throwing his hat into the ring was Bill Richardson, the Democratic governor of New Mexico. John Kerry, the loser in the 2004 election, said no thanks and confirmed he would not run this time. On the Republican side, Sam Brownback, a senator from Kansas and a champion of social conservatives, announced his candidacy. See article

Twelve days after testing an anti-satellite weapon by blowing up one of its own satellites in space, China admitted it had done so. It denied it had any intention of joining the arms race in space that its critics feared it had started. See article

The Philippines armed forces said they had proof that human remains found on the southern island of Jolo last month were those of Khaddafy Janjalani, leader of the Abu Sayyaf, a brutal group of Islamic separatists. See article

At least 16 people died in a shoot-out on the Indonesian island of Sulawesi, where police were detaining alleged members of the Jemaah Islamiah, an Islamic militant group.

A suicide-bomber killed at least ten people outside a military base housing NATO soldiers near Khost, in eastern Afghanistan. Most of the dead were Afghans employed at the base.

Vladimir Putin, Russia’s president, arrived in India for talks expected to yield agreements on arms sales and on co-operation in nuclear and other forms of energy.

Getty Images Europe
Getty Images Europe

Thousands of Turks, some with banners declaring “We are all Armenians”, marched to the funeral in Istanbul of Hrant Dink, a Turkish-Armenian journalist murdered last week, apparently for “insulting Turkishness”. Attending the funeral were ministers from both Turkey and Armenia. Turkey denies committing genocide against the Armenians in 1915. See articleE+

The ultra-nationalist Serbian Radical Party, whose leader is on trial at The Hague accused of war crimes, won most votes in Serbia’s general election. But its vote was outweighed by the tally of the two main moderate parties, who are likely to form a pro-Europe coalition government. See article

A European Parliament committee concluded that EU countries, including Britain and Germany, were aware of the abduction of terror suspects by the CIA. The committee criticised EU officials, among them foreign-policy chief Javier Solana, for not co-operating in its investigation.

The European Union, in bilateral talks with China, said it would continue its arms embargo, imposed after the Tiananmen Square killings of 1989, until China ratified a UN convention on human rights, freed those jailed in connection with Tiananmen Square and ended the “re-education through labour” system of imprisonment without trial.

The Iraqi prime minister, Nuri al-Maliki, has apparently decided, at last, to try to rein in the Shia militias responsible in large part for the continuing rash of sectarian murders in Baghdad. At least 600 members of the Mahdi Army, the biggest militia, have been arrested in the past few weeks. Meanwhile, Sunni insurgents continued to kill hundreds of Shias with bomb attacks in crowded places in Baghdad and towns nearby. See article

Israel’s attorney-general said he intends to charge the president, Moshe Katsav, with rape. Mr Katsav accused the media of hounding him; his lawyers will try to stop the charges being brought. Meanwhile, a parliamentary panel approved a request by the president for a three-month leave of absence.

The prospect of civil strife in Lebanon loomed as demonstrations in Beirut, led by the Shias’ Hizbullah movement against the pro-Western coalition government of Fouad Siniora, turned nasty, leaving at least three dead. But the government refused to step down or accept the opposition’s demands for a veto-wielding minority of ministers in the government. See article

Ethiopia’s government said its troops had started to leave Somalia a month after helping to defeat Islamist militias that had taken over the south of the country. Meanwhile, America made another air strike in southern Somalia, reportedly targeting al-Qaeda operatives.

Security forces in Guinea killed some 30 people in clashes with protesters calling for the ailing president, Lansana Conté, to resign. See article

Reuters
Reuters

Mexico’s new government extradited 15 alleged drug traffickers to face charges in the United States. They included Osiel Cárdenas, the leader of the “Gulf Cartel”. The extraditions are part of a wider crackdown against organised crime. See article

Brazil’s government announced a long-awaited package of tax breaks and public- spending measures aimed at boosting the country’s lacklustre rate of economic growth. Private business said the measures were in the right direction, but too timid. See article

Bolivia’s socialist president, Evo Morales, marked his first year in office by promising to raise taxes on foreign mining-firms and to speed up land reform. He also reshuffled his cabinet, replacing several indigenous leaders with left-wing activists.

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Politics this week: 13th – 19th January 2007

January 18, 2007 Leave a comment

The American secretary of state, Condoleezza Rice, toured the Middle East to promote George Bush’s plan to send more troops to Iraq; she also sounded out the Palestinians and Israelis over the possibility of reviving a peace process, and proposed a three-way meeting soon. As well as Israel and the Palestinian territories, she visited Egypt, Jordan, Saudi Arabia and Kuwait. See article

Israel’s top general, Dan Halutz, resigned over the handling of last summer’s war in Lebanon. Meanwhile, the justice ministry announced a criminal investigation into corruption allegations against the prime minister, Ehud Olmert, whose government looks increasingly fragile.

Reuters
Reuters

Sectarian carnage in Iraq persisted. A bomb attack on a university in Baghdad killed at least 70 people, many of them female students, while attacks elsewhere in Baghdad and in the disputed city of Kirkuk killed at least another 100. The government, meanwhile, said it had agreed to a new law to distribute oil revenue fairly among Iraq‘s people.

Tunisia‘s interior minister said that an armed group that was broken up by security forces in a recent shoot-out were radical Islamists who had infiltrated from Algeria. This raised fears that groups linked to al-Qaeda were trying to build a north African front.

On a tour of Latin American countries with anti-American governments, Iran‘s president, Mahmoud Ahmadinejad, said he would put $1 billion into an Iranian-Venezuelan fund to help poor countries throw off the “yoke of American imperialism”. But back home, powerful figures criticised him for his bellicose foreign policy and extravagant economics. See article

The African Union continued its effort to raise an 8,000-strong peacekeeping force for Somalia to replace the Ethiopian army which, with American backing, has swept the Islamists from power in the past few weeks. See article

José Luis Rodríguez Zapatero, Spain’s socialist prime minister, said he had made a “mistake” in predicting improved relations with ETA, the Basque terrorist group. His prediction had been made one day before ETA broke a ceasefire on December 30th with a bomb at Madrid’s airport that killed two people. See article

Breaking a seven-month political stalemate, a centre-right coalition under Mirek Topolanek formed a government in the Czech Republic. It relies on two defectors from the opposition for its majority in the deadlocked parliament.

A vote in Ukraine‘s parliament diminished the power of the presidency. The measure was another blow to President Viktor Yushchenko, and a victory for Viktor Yanukovich, the prime minister. Yulia Tymoshenko, the president’s former ally, sided with Mr Yanukovich for the vote.

Reuters
Reuters

Security was increased in the Moscow metro and at transport and infrastructure facilities across Russia following warnings of an impending terrorist attack. The security services said they were acting on a tip-off from foreign colleagues.

Fidel Castro has had three operations for diverticulitis— an inflamed colon—and is now suffering from peritonitis, and other complications, according to a detailed account in El País, a Spanish newspaper. Cuban officials have refused to discuss their president’s condition, except to deny American claims that he has cancer.

In the first confession by a senior paramilitary leader in Colombia under a controversial peace process, Salvatore Mancuso gave details of the killing of more than 300 people in 87 different militia operations. See article

Evo Morales, Bolivia‘s president, sent the army to patrol the country’s third city, Cochabamba, after two people were killed and dozens wounded in clashes between his supporters and those of the local governor, who supports regional autonomy.

Meeting in Cebu, the Philippines, leaders of the Association of South-East Asian Nations (ASEAN) agreed to accelerate their move toward a regional free-trade area, and signed an agreement on migrant labour. An accord was also reached with China on liberalising trade in services. See article

China and Russia vetoed a UN Security Council resolution put forward by America condemning the junta in Myanmar and demanding political reform. Indonesia, its ASEAN partner, abstained.

The foreign ministers of India and Pakistan met in Islamabad. There was no breakthrough, but both sides spoke positively of a peace process that had appeared in jeopardy after last July’s bombings in Mumbai. See article

Fakhruddin Ahmed, a former World Bank economist and central-bank governor, was appointed the new head of Bangladesh‘s caretaker administration. With the country in a state of emergency enforced by the army, Mr Ahmed promised to arrange credible elections. See article

In important steps towards cementing peace in Nepal, Maoist rebels took seats in an interim parliament, and promised to dissolve their parallel government. They also began to register and lock up their weapons.

Senior Afghan and American officials continued to accuse Pakistan of harbouring Taliban militants active in Afghanistan. Pakistan denied the charges and mounted air strikes on a militant camp in South Waziristan, a tribal area bordering Afghanistan. See article

The Philippines army claimed to have killed Abu Sulaiman, a leading member of the Islamist militant group Abu Sayyaf, in a gun battle. The group has been linked with al-Qaeda.

Reuters
Reuters

Barack Obama took his first formal step towards running for president by forming an exploratory committee. The senator from Illinois, who has held his seat for two years, is considered a front-runner for the Democratic nomination along with a certain senator from New York who is expected to make her intentions known (officially) soon. See article

Jury selection began in the trial of Lewis “Scooter” Libby. The former chief of staff for the vice-president, Dick Cheney, is accused of perjury in an investigation into the leaking of a former CIA officer’s name to the press. The Plame affair was a headache for George Bush prior to the 2004 election.

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Hello iPhone, Best of CES; Political Tiptoeing

January 18, 2007 Leave a comment

Top Stories For the Week of January 8 – January 12

 Hello, iPhone. You’ve waited for it, longed for it, dreamed about it-now start saving for the Apple iPhone, which is an iPod, a cell and an Internet mobile communicator in one sleek device (via Read/Write Web). Apple exceeded expectations with the iPhone’s sleek design, touch screen and ability to run OS X, blogs Monkey Bites. Sure, you have to cough up $499 for the 4GB or $599 for the 8GB, but Mark Evans will happily dump his Palm, BlackBerry and iPod for a single device with great design. For one thing, the iPhone’s got just one button-everything else is on the touch screen, blogs Don Dodge. The markets were as pumped as Mac devotees, with AAPL jumping more than 3 percent during Steve Jobs’s keynote address (via Nik Cubrilovic) and 7 percent for the day-while sellers punished Research in Motion (BlackBerry) and Palm (Treo) with 6 percent hits on each (via TechCrunch).

 It’s a big risk for Jobs and Business 2.0 details some gripes-the case may scratch, Cingular’s weak cell coverage may cause even Jobs to throw his pricey paperweight at the wall, data transmission may be subpar, and 8GB isn’t exactly huge capacity for an iPod. But GigaOM captures overall reaction with a simple graphic where Apple replaces a fistful of other devices, while Gizmodo links to Apple’s gorgeous video of an iPhone making a phone call.

Cisco owns the iPhone name and Apple has been negotiating for the rights, blogs Paul Kedrosky, but in the end Apple just went ahead and used it anyway. This could end with either a signed agreement between Apple and Cisco, or big fights between their lawyers. Oh wait – Cisco just sued Apple.

 Nearly forgotten in the iPhone roar is AppleTV, which lets you transfer content from multiple PCs, outside sources or even Apple.com to your TV. It’s got a 40GB hard drive and will sell for $299, blogs VentureBeat, while Techmeme points out it follows all the right standards. Basically, PVRblog writes, Apple now owns pay-per-view in your living room. And let’s not forget the AirPort Extreme, five times faster than its predecessor with WAN, Ethernet and USB ports, and finally doesn’t look like a boob says Gizmodo.

San Francisco wasn’t the only city inundated with hype. At CES Las Vegas, Disney CEO Bob Iger introduced the new Disney.com, which will be heavy on widgets, video and personalization (via Micro Persuasion). Bill Gates introduced the Windows Home Server and why you need it-but don’t need a computer-science degree to run it, while TiVo finally announced the long-awaited TivoToGo Mac client and the incorporation of Rhapsody’s unlimited music service (via PVRblog).

 Elsewhere in the blogosphere, political candidates continue tiptoeing around the 2008 presidential race, with Rudolph Giuliani trademarking his name to protect against slander, according to Huffington Post, and acting cagey when asked his position on the president’s ���troop surge��� request (via Eschaton). On the Democratic side, Taegan Goddard sees hopefuls Obama and Clinton rushing to poach the fundraising network of Evan Bayh, who has dropped out.

U.S. forces apparently killed Fazul Abdul Mohammed, the alleged mastermind of the 1998 bombings of U.S. embassies in Africa (via Instapundit). Moral: Never tangle with an AC-130 gunship (via Power Line). But is he dead? First Draft says like Osama, Fazul is still among the living. And is the bombing right? Jawa Report blogs that spending too much time on this question kept the U.S. from killing Osama bin Laden in the 1990s.R

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Business this week: 13th – 19th January 2007

January 18, 2007 Leave a comment

BP’s management was sternly criticised in a report from a panel investigating safety at its operations in the United States. The panel, led by James Baker, a former secretary of state, was commissioned by BP (on the recommendation of America’s chemical-safety board) after an explosion at its Texan oil refinery in 2005 killed 15 people and injured 170 others. John Browne, BP‘s chief executive, who last week said he was stepping down in July, vowed that the report’s recommendations would be implemented in full. See article

A consortium of private-equity firms offered $37.6 billion for Equity Office Properties, topping Blackstone’s bid for America’s largest real-estate investment trust. The target of the biggest-ever leveraged buy-out, Equity Office owns 20m square feet (1.9m square metres) of office space in Manhattan alone, and is attractive because rents in many of America’s business districts are predicted to rise.

General Electric agreed to buy the aerospace business of Smiths, a British engineering group, for $4.8 billion, boosting GE‘s presence in supplying flight management, landing gear and cockpit systems to civilian and military aircraft makers. GE‘s spending spree looked set to continue with speculation that it was about to buy the diagnostics business of Abbott Laboratories.

Airbus reported 790 net orders for aircraft last year, confirming it had slipped behind Boeing (which took 1,044 orders) for the first time since 2000. But despite the production misery surrounding its A380 super-jumbo, Airbus managed to deliver more aeroplanes than its rival.

The trial of 19 former senior executives at Swissair began in Zurich. The airline, once considered a paragon of Swiss business efficiency and reliability, collapsed in 2001 with debts of SFr17 billion ($10.5 billion). The 19 defendants are accused of neglecting their responsibilities to shareholders when making expansive acquisitions in the 1990s.

The parent company of American Airlines reported net income of $231m for 2006, its first profitable year since 2000. The carrier benefited from a surge in travel.

Eurotunnel’s debt-restructuring plan was approved by a French court (and 33 lawsuits from creditors appealing against the process were thrown out). The operator of the tunnel linking Britain and France has £6.2 billion ($12.2 billion) of debt, which will be cut by half as agreed to by most debt-holders. Shares in Eurotunnel, suspended since last spring, are expected to start trading again next month.

An $8.9 billion offer for Cablevision Systems from the company’s founding Dolan family seemed doomed after it was turned down by a special committee of the board for not offering fair value. Charles and James Dolan, respectively Cablevision’s chairman and chief executive, led the bid.

The share prices of Intel and its arch-rival Advanced Micro Devices came under pressure after indications that the chipmakers’ price war is hurting profits. Intel announced that gross profit margins in 2007 would be lower than expected. AMD said its fourth-quarter earnings (due next week) would show its profit had been squeezed by prices.

Apple surpassed the already giddy forecasts of its quarterly earnings and reported a net profit of $1 billion, a rise of 77% for the quarter ending December 30th compared with a year ago. Some 21m iPod players were shipped in the period, 50% more than last year.

The music industry’s trade group said that worldwide revenue from tunes legally downloaded from the internet almost doubled in 2006, to $2 billion, accounting for 10% of all music sales. Although 795m songs were transferred to music players, burned to blank discs and the like, that was not enough to cover the loss to recording companies of falling CD sales.

A zesty rise in the price of oranges was forecast after a cold snap in California‘s Central Valley damaged a large part of the crop. The frigid weather also hurt other produce, including lemons, lettuces and avocados. Around 20% of America’s oranges are grown in the Golden State, mainly for eating rather than pulping as orange juice.

The annual “index of economic freedom” for 157 countries was released. The index measures ten variables, such as the ability to do business, property rights, corruption and labour freedom. The average score (0 equals repressed, 100 equals free) was 60.6%, down slightly from last year but the second-highest since the survey began. North Korea remained rooted at the bottom (several countries, including Iraq, were not ranked).

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Politics this week: 6th – 12th January 2007

January 11, 2007 Leave a comment

Politics this week

Jan 11th 2007
From The Economist print edition

AFP
AFP

In a speech broadcast on American television, George Bush outlined a new military plan for Iraq, involving an increase of more than 20,000 troops, in an effort to stem the current sectarian bloodbath, especially in Baghdad. The Democrats grumbled, but it is unlikely they will use their congressional majority to try to scupper the plan. See article

Mr Bush also made some personnel changes and nominated Mike McConnell, a former head of the National Security Agency, as the director of national intelligence. Mr McConnell replaces John Negroponte, who is moving to the State Department as Condoleezza Rice’s deputy. See article

Also appointed was a new White House counsel to replace Harriet Miers. Fred Fielding was a deputy counsel during the Watergate scandal and was once, wrongly, thought to be “Deep Throat”.

Arnold Schwarzenegger proposed a radical shake-up of California‘s health-care system, presenting a $12 billion blueprint that requires Californians to have health insurance and provides help to those on low income to achieve that goal. The governor said his plan was intended to control some of the spiralling health-care costs that California, like most other states, is facing. See article

The Democratic-controlled House of Representatives passed legislation raising the minimum wage from $5.15 to $7.25 an hour. The bill must still be approved by the Senate and signed by the president.

America launched air strikes against Islamist fighters fleeing from the advance of government and Ethiopian troops in southern Somalia. Scores of Somali civilians were reported to have been killed. See article

Khaled Meshal, the overall leader of Hamas, the Islamist Palestinian movement which governs the West Bank and Gaza, hinted that he might recognise Israel at some point, should a Palestinian state be established on the 1967 ceasefire lines. “It is true that in reality there will be an entity or state called Israel on the rest of Palestinian land,” he said.

Nigeria‘s government said it lost $4.4 billion in oil revenues last year because of an increasing number of kidnappings and assaults on oil installations in the Niger Delta region. In the latest incident, nine South Koreans were seized from an energy facility; five Chinese, kidnapped last week, are still missing.

Reuters
Reuters

Sudan‘s government and rebel groups in Darfur agreed to a 60-day ceasefire leading up to a peace summit to be hosted by the African Union. The breakthrough came after talks between Sudan‘s president, Omar al-Bashir, and Bill Richardson, the governor of New Mexico who is a former American ambassador to the UN.

Belarus cancelled a transit tax on Russian oil. The tax, imposed after Russia doubled the price of gas supplies to Belarus, had prompted Russia to shut down a main oil pipeline to European Union countries, causing renewed alarm about Russia‘s reliability as an energy supplier. See article

In a step towards a common European energy policy, the European Commission unveiled a plan for EU members to cut greenhouse gases by 20% by 2020. The plan stresses renewable sources of energy, with all new power stations to be “carbon neutral”. See article

Stanislaw Wielgus, about to be installed as Roman Catholic archbishop of Warsaw, resigned after admitting collaborating with Poland‘s communist-era secret police. The dean of Cracow’s cathedral resigned for similar reasons, adding to the Vatican’s embarrassment. See article

Prosecutors in Sweden began an inquiry into share options given to Carl Bildt, the country’s foreign minister (and former prime minister), when he was on the board of a firm linked to Russia‘s Gazprom. Mr Bildt says the shares, which he sold for $690,000, were a legitimate reward.

Austria‘s two main parties formed a coalition government, three months after the election. The Social Democrat’s leader, Alfred Gusenbauer, becomes chancellor.

Venezuela‘s leftist president, Hugo Chávez, began a new six-year term in office by saying he would nationalise the telecoms and electricity industries and take other measures to accelerate his country’s transformation into a socialist state. The main telephone and electricity companies are controlled by American firms; officials indicated that they would receive compensation. See article

Daniel Ortega, the leader of the left-wing Sandinistas, was sworn in as president of Nicaragua. He pledged good relations with the United States, which in the 1980s backed guerrillas trying to oust Mr Ortega’s government, as well as with Venezuela and Cuba. See article

During a riot at an overcrowded prison in El Salvador 21 inmates were killed by members of a youth gang. More than 2,000 members of the security forces later regained control of the prison.

A former government minister in Colombia who was kidnapped by FARC guerrillas in 2000 managed to escape from his captors during a military operation.

A state of emergency was declared in Bangladesh, after weeks of violent protests. An alliance of political parties is calling for electoral reform or the postponement of the general election due on January 22nd. The alliance claims the election would be rigged.

Bombings and shootings in the north-eastern Indian state of Assam killed some 70 migrant workers from other Indian states. The attacks were blamed on the United Liberation Front of Asom, a separatist insurgency. See article

America presented a draft resolution to the UN Security Council calling for political reform in Myanmar. The draft argues that Myanmar poses serious risks to peace and security in the region.

EPA
EPA

Israel’s prime minister, Ehud Olmert, arrived in China for talks with his counterpart, Wen Jiabao. China has signalled it wants a greater role in the Middle East. Mr Olmert asked China to support tougher measures against Iran unless it halts work on its nuclear programme. See article

Chinese officials acknowledged that China is failing to meet its own targets for improving energy efficiency and reducing emissions. One called 2006 the grimmest year for China’s environment.

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Business this week: 6th – 12th January 2007

January 11, 2007 Leave a comment

Business this week

Jan 11th 2007
From The Economist print edition

George Bush and Susan Schwab, America’s trade chief, met José Manuel Barroso, the president of the European Commission, and Peter Mandelson, the European Union’s trade commissioner, at the White House in an effort to push forward the stalled Doha round of trade negotiations. No new offers overcame the sticking points of American farm subsidies or European agricultural tariffs, but trade officials promised to continue talking. See article

US Airways increased the value of its bid to buy Delta Air Lines by 20%, to $10.2 billion, putting pressure on Delta’s creditors to accept the offer. Delta’s management rejected US Airways’ initial advance last November, deciding to stick with a bankruptcy restructuring plan instead.

Apple held the annual jamboree designed to show off its new products. The highlight was the unveiling of the touch-screen iPhone, which Steve Jobs, the company’s chief executive, claimed would revolutionise the mobile-communications industry just as the iPod changed the music industry. The share prices of some of Apple’s putative competitors suffered. See article

Motorola’s share price slipped further following last week’s profit warning, which analysts blamed on the low profit margins to be had from the company’s bestselling range of RAZR ultra-thin mobile phones.

The battle for the market in high-definition DVDs moved to new ground when LG Electronics introduced the first machine capable of playing both Blu-ray and HD DVD discs. Consumer-electronics firms and film studios have had to choose between the two formats, making consumers uncertain which one will triumph and causing them to delay buying new players.

Eastman Kodak said it would sell its medical-imaging unit, which traces its roots back to 1896 (soon after the discovery of X-rays), to a division of Canada’s Onex conglomerate. The deal, worth up to almost $2.6 billion, is part of the photography company’s strategy to refocus its business. It has made eight consecutive quarterly losses.

Gap’s share price rose by more than 7% amid speculation that its review of “brand strategies” might lead to the sale or break-up of the company, which owns the Old Navy label. The review was disclosed last week by Gap’s boss when he reported poor sales leading up to Christmas.

Express Scripts filed a lawsuit with the intent of blocking Caremark’s acceptance of a merger with CVS. Express Scripts has offered $26 billion for Caremark (both companies manage pharmacy services for consumers and health-care firms), but Caremark says a lower bid from CVS, America’s biggest retail-drug chain, provides less risk. A merger with Caremark is attractive because of the extra weight it will bring to price negotiations with drugs firms.

China National Offshore Oil Corporation agreed to invest in a $5.5 billion Indonesian biofuels project, thought to be one of the world’s largest. The state-owned company is looking for energy sources that could one day ease China’s reliance on oil and coal. However, the news was not welcomed by environmentalists worried about the rainforest that will be cleared to make way for crops needed to produce the biofuels.

France’s stockmarket regulator gave François Pinault, a retail and luxury-goods tycoon, a deadline of February 2nd to make a firm offer for Suez, a French utility company which is in the midst of a messy merger with Gaz de France.

NYSE Group and three other foreign investors, including Goldman Sachs, acquired a combined stake of 20% (of 5% each) in India’s biggest stockmarket, the National Stock Exchange. The move by the operator of the New York Stock Exchange underscores the trend toward consolidation among bourses. Under new rules, the Indian government allows foreign investors to take combined stakes of up to 49% of the country’s stock exchanges.

In a decision that took markets by surprise, the Bank of England raised its key interest rate by one-quarter of a percentage point to 5.25%. Britain’s inflation rate has recently crept up to its highest level in a decade. See article

Bulging fuel inventories in America on the back of mild winter weather helped to dampen the price of oil, which fell below $53. See article

The price of copper continued to fall sharply (the metal’s price has dropped by some 10% since the start of the year). Copper almost doubled its value last year, but supplies have been steadily storing up as the demand from carmakers and housebuilders in America has tapered off.

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