Aug. 28 (Bloomberg) -- Billionaire investor Wilbur Ross has acquired the second-largest stake in Satyam Computer Services Ltd.’s U.S. securities, after missing out in an April auction for control of the Indian software developer.
Invesco Private Capital Inc., controlled by Ross, bought 1.8 million American depositary receipts, according to filings to the Securities & Exchange Commission. The securities, equivalent to two of Satyam’s Indian shares, were worth $3.11 apiece at the end of June, according to the filing. Ross in April offered the equivalent of 80 cents per depository receipt for a controlling stake.
Satyam, at the centre of India’s biggest corporate fraud, has more than doubled since Pune-based Tech Mahindra Ltd., a software provider, won the auction on April 13. The government took over the management of Satyam after founder Ramalinga Raju’s January admission that he overstated assets by $1 billion.
Tech Mahindra Chairman Anand Mahindra, who outbid billionaire Ross and Larsen & Toubro Ltd. with a $579 million offer in April, has said he’s taking a “calculated risk” in buying Satyam before the company restates accounts and without clarity on liabilities from lawsuits in the U.S.
Ross, who made his fortune taking over bankrupt steel, coal and textile companies, offered 20 rupees and Larsen bid 45.9 rupees a share, Satyam Chairman Kiran Karnik said on April 13.
Ross didn’t immediately respond to e-mailed questions about his investment in Satyam.
The investment makes Invesco the second-largest shareholder in Satyam’s depository receipts, behind Security Investors LLC, according to data compiled by Bloomberg.
Ross invested in SpiceJet Ltd. India’s second-largest budget airline, in July last year after record fuel costs deepened the Indian carrier’s losses. In February 2007, Ross acquired OCM India Ltd. a worsted suiting maker, for about $37 million, in his first investment in India.
Saturday, August 29, 2009
U.S. Economy: Spending Climbs on ‘Cash for Clunkers’
Aug. 28 (Bloomberg) -- Consumer spending in the U.S. rose in July as Americans jammed auto showrooms to take advantage of the “cash for clunkers” program while avoiding other purchases.
The 0.2 percent gain in spending was in line with forecasts and followed a 0.6 percent increase in June, the Commerce Department said today in Washington. Excluding cars, purchases were flat. Consumer sentiment was little changed in August, a separate report showed.
Auto dealers benefited from the Obama administration’s incentive plan, which ended this month, while retailers such as Kohl’s Corp. and J.C. Penney Co. struggled to lure customers shaken by mounting job losses. Spending gains aren’t likely to be sustained as incomes stagnate and households pay down debt, casting doubt on the strength of the economic recovery.
“The cash-for-clunkers program helped auto sales but hurt other sales, which shows consumption remains weak,” said Christopher Low, chief economist at FTN Financial in New York. “Consumers don’t want to spend on other things and cannot spend, to some extent, because income growth is still anemic.”
The Reuters/University of Michigan final index of consumer sentiment dipped to 65.7, better than forecast, from 66 in July. A preliminary reading for August was 63.2.
Stocks Fell
Stocks dropped after early gains. The Standard & Poor’s 500 Index closed down 0.2 percent at 1,028.93. The yield on the benchmark 10-year Treasury note was 3.45 percent at 5:02 p.m. in New York, down from 3.46 percent yesterday.
Economists forecast consumer spending would rise 0.2 percent, according to the median of 75 estimates in a Bloomberg News survey. The June spending figure was revised from an initial estimate of 0.4 percent.
Incomes were unchanged after dropping 1.1 percent in the prior month. The decrease in income in June reflected the fading boost from government stimulus-related tax cuts and transfers. Wages and salaries posted the first gain of the year, increasing 0.1 percent after a decline of 0.3 percent the prior month.
The savings rate fell to 4.2 percent from 4.5 percent in June as spending increased while incomes stagnated.
Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, jumped 1.8 percent last month after increasing 0.8 percent in the prior month. Spending on motor vehicles and parts jumped 6.4 percent, the biggest increase in 11 months.
Spending Breakdown
Purchases of non-durable goods decreased 0.3 percent for a second month. Spending on services, which account for almost 60 percent of all outlays, climbed 0.1 percent.
Consumer spending, which accounts for about 70 percent of the economy, fell at a 1 percent pace in the second quarter, revised figures from the Commerce Department showed yesterday. The economy shrank at a 1 percent annual rate from April to June, less than analysts’ median forecast.
While economists project that spending will start growing again this quarter, much of the gain will be driven by programs such as the “cash-for-clunkers” plan.
The program provided a “short-term boost” while taking away from future growth, said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York. Consumers “remain under major stress,” he said.
Auto industry data showed sales of cars and light trucks rose to an 11.2 million unit annual pace in July, the most since September, after the government offered credits of up to $4,500 to trade in gas guzzlers for more fuel-efficient cars.
Retail Sales
The boost from the auto plan failed to overcome cuts at other merchants, according to government figures released on Aug. 13. Sales at retailers in July fell 0.1 percent, the first drop in three months.
Forecasts call for below-average gains in spending because of stagnant incomes, a lack of jobs and an unemployment rate that may reach 10 percent early next year for the first time since 1983, according to a Bloomberg survey taken this month.
Purchases will probably climb at an average 1.6 percent quarterly rate through June 2010, compared with a 2.8 percent gain on average during the six-year expansion that ended in December 2007, the survey showed.
Stores Struggling
Company results signal shoppers are under pressure. J.C. Penney, the third-largest U.S. department-store chain, issued a third-quarter earnings forecast that trailed analysts’ estimates and said sales may fall 3 percent to 5 percent from the same period last year. Kohl’s said second-quarter profit fell 3 percent as sales at stores open for at least a year declined.
“People are still going to shop a little less and spend a little less than they have in the past,” Kevin Mansell, chief executive officer of Menomonee Falls, Wisconsin-based Kohl’s, said in a telephone interview on Aug. 13.
Today’s Commerce Department report also showed inflation decelerated. The price gauge tied to spending patterns dropped a record 0.8 percent from July 2008.
The Federal Reserve’s preferred gauge of prices, which excludes food and fuel, rose 0.1 percent from the previous month and was up 1.4 percent from a year earlier, the smallest gain since September 2003.
Adjusted for inflation, spending increased 0.2 percent following a 0.1 percent gain the prior month.
The 0.2 percent gain in spending was in line with forecasts and followed a 0.6 percent increase in June, the Commerce Department said today in Washington. Excluding cars, purchases were flat. Consumer sentiment was little changed in August, a separate report showed.
Auto dealers benefited from the Obama administration’s incentive plan, which ended this month, while retailers such as Kohl’s Corp. and J.C. Penney Co. struggled to lure customers shaken by mounting job losses. Spending gains aren’t likely to be sustained as incomes stagnate and households pay down debt, casting doubt on the strength of the economic recovery.
“The cash-for-clunkers program helped auto sales but hurt other sales, which shows consumption remains weak,” said Christopher Low, chief economist at FTN Financial in New York. “Consumers don’t want to spend on other things and cannot spend, to some extent, because income growth is still anemic.”
The Reuters/University of Michigan final index of consumer sentiment dipped to 65.7, better than forecast, from 66 in July. A preliminary reading for August was 63.2.
Stocks Fell
Stocks dropped after early gains. The Standard & Poor’s 500 Index closed down 0.2 percent at 1,028.93. The yield on the benchmark 10-year Treasury note was 3.45 percent at 5:02 p.m. in New York, down from 3.46 percent yesterday.
Economists forecast consumer spending would rise 0.2 percent, according to the median of 75 estimates in a Bloomberg News survey. The June spending figure was revised from an initial estimate of 0.4 percent.
Incomes were unchanged after dropping 1.1 percent in the prior month. The decrease in income in June reflected the fading boost from government stimulus-related tax cuts and transfers. Wages and salaries posted the first gain of the year, increasing 0.1 percent after a decline of 0.3 percent the prior month.
The savings rate fell to 4.2 percent from 4.5 percent in June as spending increased while incomes stagnated.
Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, jumped 1.8 percent last month after increasing 0.8 percent in the prior month. Spending on motor vehicles and parts jumped 6.4 percent, the biggest increase in 11 months.
Spending Breakdown
Purchases of non-durable goods decreased 0.3 percent for a second month. Spending on services, which account for almost 60 percent of all outlays, climbed 0.1 percent.
Consumer spending, which accounts for about 70 percent of the economy, fell at a 1 percent pace in the second quarter, revised figures from the Commerce Department showed yesterday. The economy shrank at a 1 percent annual rate from April to June, less than analysts’ median forecast.
While economists project that spending will start growing again this quarter, much of the gain will be driven by programs such as the “cash-for-clunkers” plan.
The program provided a “short-term boost” while taking away from future growth, said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York. Consumers “remain under major stress,” he said.
Auto industry data showed sales of cars and light trucks rose to an 11.2 million unit annual pace in July, the most since September, after the government offered credits of up to $4,500 to trade in gas guzzlers for more fuel-efficient cars.
Retail Sales
The boost from the auto plan failed to overcome cuts at other merchants, according to government figures released on Aug. 13. Sales at retailers in July fell 0.1 percent, the first drop in three months.
Forecasts call for below-average gains in spending because of stagnant incomes, a lack of jobs and an unemployment rate that may reach 10 percent early next year for the first time since 1983, according to a Bloomberg survey taken this month.
Purchases will probably climb at an average 1.6 percent quarterly rate through June 2010, compared with a 2.8 percent gain on average during the six-year expansion that ended in December 2007, the survey showed.
Stores Struggling
Company results signal shoppers are under pressure. J.C. Penney, the third-largest U.S. department-store chain, issued a third-quarter earnings forecast that trailed analysts’ estimates and said sales may fall 3 percent to 5 percent from the same period last year. Kohl’s said second-quarter profit fell 3 percent as sales at stores open for at least a year declined.
“People are still going to shop a little less and spend a little less than they have in the past,” Kevin Mansell, chief executive officer of Menomonee Falls, Wisconsin-based Kohl’s, said in a telephone interview on Aug. 13.
Today’s Commerce Department report also showed inflation decelerated. The price gauge tied to spending patterns dropped a record 0.8 percent from July 2008.
The Federal Reserve’s preferred gauge of prices, which excludes food and fuel, rose 0.1 percent from the previous month and was up 1.4 percent from a year earlier, the smallest gain since September 2003.
Adjusted for inflation, spending increased 0.2 percent following a 0.1 percent gain the prior month.
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