Home > Uncategorized > Business this week: 13th – 19th January 2007

Business this week: 13th – 19th January 2007

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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