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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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