Facebook Inc., owner of the world’s largest social-networking site, said its advertisers have more than quadrupled since the start of 2009 as marketers aim to get their products before a growing global audience.
Facebook, which has been opening offices around the world to serve ad clients, doubled the number of salespeople last year from 2008, according to an e-mailed statement. The company didn’t disclose the number of advertisers or salespeople.
Companies are boosting ad spending after a lull during the recession in a bid to reach consumers who spend long stretches on the Internet. Facebook, which has more than 500 million users, counts Procter & Gamble Co., Toys “R” Us Inc. and Virgin America Inc. among its customers. It’s relying on ads to maintain sales growth and lay the groundwork for a possible initial public offering.
“We’re very well positioned as people come out of this current economic situation,” Mike Murphy, vice president of global sales, said in an interview at Facebook’s headquarters in Palo Alto, California. “What we’ve become is absolutely core to marketing campaigns.”
Facebook sells ads that are placed on the home pages of users, where the latest comments, pictures and links from their friends are posted. The ads also show up next to profile pages, which may include a person’s information such as gender or birth date.
Adidas Marketing
Adidas AG has used Facebook to promote its youth-focused Originals label, said Chris Barbour, who leads global digital marketing for the company’s Sport Style unit. Adidas, the world’s second-largest sporting-goods maker, tries to target users regionally to give the brand a personal touch, he said.
“Wherever our fans are, we’re going to use Facebook to speak to them,” Barbour said. “And we’re going to try to speak to them in a locally relevant way.”
The company ran ads this year to drive more users to its Originals page on Facebook, which features new products and user discussions, he said. Three times as many people signed up to be “fans” of the page during the campaign, compared with the typical rate, he said.
Facebook ran 176 billion display ads in the U.S. in the first quarter, up from 70.7 billion a year earlier, according to research firm ComScore Inc. in Reston, Virginia.
Yahoo, Microsoft
Its growth comes as a threat to rivals Yahoo! Inc. and Microsoft Corp. Facebook has emerged as the largest site for display ads, with a market share of 16 percent, rising from 11 percent in the fourth quarter. That topped Yahoo, which had a 12 percent share, down from 13 percent in the previous period. ComScore doesn’t include the ads that Yahoo places on websites it doesn’t own. Microsoft had 5.5 percent.
Facebook also became the most visited website in March, overtaking longtime leader Google Inc. for the first time, according to Experian Hitwise, a research firm in New York.
Even as companies ramp up spending, privacy challenges threaten to curb advertiser interest if it leads to a slowdown in Facebook’s user growth, said Debra Aho Williamson, an analyst at market-research firm EMarketer Inc. in Seattle.
Facebook faced growing criticism over how it handles privacy after announcing features in April that enabled more sharing with outside sites. Consumer groups filed a complaint with the Federal Trade Commission, and some users dropped the service.
Responding to the criticism, Facebook introduced new privacy settings last week that make it easier for users to protect their information. The company is also making less data publicly available.
‘Pay Attention’
The new settings should “help us scale the service to millions and millions of more people,” Chief Executive Officer Mark Zuckerberg, 26, said last week. The privacy complaints had no meaningful impact on Facebook usage, he said.
Companies should keep a close eye on user growth numbers in coming months, EMarketer’s Williamson said. Users might decide to hide some personal information used by advertisers to target customers, she said.
Facebook had 519.1 million users in April, up from 411 million in September, according to ComScore.
For now, the user growth presents a big enticement for advertisers, Williamson said.
“Any large numbers like that make advertisers say, ‘Wow, I need to pay attention to this.’”
Wednesday, June 02, 2010
Tata Opens Plant for World’s Cheapest Car on Demand
June 2 (Bloomberg) -- Tata Motors Ltd., maker of the world’s cheapest car, opened a plant for the $2,500 Nano model that will boost output amid rising demand for automobiles in the south Asian nation.
The factory in Sanand, in the western Indian state of Gujarat, will have initial capacity to build 250,000 Nanos a year, Tata Motors said in an e-mailed statement today. The facility may later be able to produce as many as 350,000 of the cars annually, the company said without elaborating.
Higher production will help Tata clear a backlog of orders for the Nano as it seeks to win customers from Maruti Suzuki India Ltd. and Hyundai Motor Co., the country’s two largest carmakers. Renault SA is also working on an ultra-low cost auto for India, where the government estimates demand for cars may more than double to 3 million annually by 2015, helped by economic expansion and rising incomes.
“More Nanos on the road is crucial to establish the brand as a car for the masses,” said Vaishali Jajoo, a Mumbai-based analyst at Angel Broking Ltd. “Exports of the Nano were always on the cards and this factory will help achieve that as well.”
Tata Motors received 206,703 Nano orders in the initial sales period in April 2009 and chose the first 100,000 customers for the 624-cc model by lottery. That car, with one windshield wiper and no radio or air conditioning at the entry level, sells for 123,360 rupees ($2,615) in New Delhi.
Deliveries of the Nano began in July, and the company sold 33,875 of the cars through April, according to data from the Society of Indian Automobile Manufacturers.
Personal Transport
“Our effort was to give people of India an affordable car,” Ratan Tata said in a speech today. “We are giving people of India a chance for personal transport.” The company canceled a press conference on the Nano because of a cyclonic storm.
Indians may buy as many as 1 million low-cost cars a year by 2016, according to CSM Worldwide Inc. Tata, also owner of the Jaguar Land Rover luxury brands, can account for at least half of that market with its first-mover advantage, according to Puneet Gupta, a New Delhi-based analyst of CSM.
Nissan Motor Co., Renault and Bajaj Auto Ltd. are jointly developing a $3,000 car for showrooms in 2012. The car, one year behind schedule, would be produced at a plant in the western Indian state of Maharashtra with capacity to produce 400,000 vehicles.
A dedicated factory for the Nano was delayed after the automaker halted construction of another plant in Singur, West Bengal state, because of violent protests by farmers demanding the return of land acquired for the site.
Tata abandoned the near-complete facility in October 2008 and began building the Sanand facility on 445 hectares (1,100 acres).
The factory in Sanand, in the western Indian state of Gujarat, will have initial capacity to build 250,000 Nanos a year, Tata Motors said in an e-mailed statement today. The facility may later be able to produce as many as 350,000 of the cars annually, the company said without elaborating.
Higher production will help Tata clear a backlog of orders for the Nano as it seeks to win customers from Maruti Suzuki India Ltd. and Hyundai Motor Co., the country’s two largest carmakers. Renault SA is also working on an ultra-low cost auto for India, where the government estimates demand for cars may more than double to 3 million annually by 2015, helped by economic expansion and rising incomes.
“More Nanos on the road is crucial to establish the brand as a car for the masses,” said Vaishali Jajoo, a Mumbai-based analyst at Angel Broking Ltd. “Exports of the Nano were always on the cards and this factory will help achieve that as well.”
Tata Motors received 206,703 Nano orders in the initial sales period in April 2009 and chose the first 100,000 customers for the 624-cc model by lottery. That car, with one windshield wiper and no radio or air conditioning at the entry level, sells for 123,360 rupees ($2,615) in New Delhi.
Deliveries of the Nano began in July, and the company sold 33,875 of the cars through April, according to data from the Society of Indian Automobile Manufacturers.
Personal Transport
“Our effort was to give people of India an affordable car,” Ratan Tata said in a speech today. “We are giving people of India a chance for personal transport.” The company canceled a press conference on the Nano because of a cyclonic storm.
Indians may buy as many as 1 million low-cost cars a year by 2016, according to CSM Worldwide Inc. Tata, also owner of the Jaguar Land Rover luxury brands, can account for at least half of that market with its first-mover advantage, according to Puneet Gupta, a New Delhi-based analyst of CSM.
Nissan Motor Co., Renault and Bajaj Auto Ltd. are jointly developing a $3,000 car for showrooms in 2012. The car, one year behind schedule, would be produced at a plant in the western Indian state of Maharashtra with capacity to produce 400,000 vehicles.
A dedicated factory for the Nano was delayed after the automaker halted construction of another plant in Singur, West Bengal state, because of violent protests by farmers demanding the return of land acquired for the site.
Tata abandoned the near-complete facility in October 2008 and began building the Sanand facility on 445 hectares (1,100 acres).
Thursday, May 27, 2010
Goldman Says Buy Microsoft Shares After Apple Overtakes Stock
Microsoft Corp. shares have fallen to attractive levels after a selloff that caused the software maker to lose its status as the world’s biggest technology company by market value, according to Goldman Sachs Group Inc.
Microsoft slumped 18 percent in May through yesterday, when Apple Inc.’s market value exceeded Microsoft’s by $2.94 billion. Technology companies in the Standard & Poor’s 500 Index retreated 11 percent since April 30. Microsoft shares lost 4.1 percent yesterday after Chief Executive Officer Steve Ballmer said that the effects of the European debt crisis will spread outside the region.
“While European contagion is a concern, Ballmer’s comments were not Microsoft specific,” Sarah Friar, an analyst at New York-based Goldman Sachs, wrote in a report to clients dated yesterday. “The shares underperformed large-cap tech despite having relatively lower exposure outside of the U.S. Given significant underperformance and attractive valuation levels, we are buyers of the shares.”
Microsoft had the biggest gain in the Dow Jones Industrial Average, surging 5.3 percent to $26.34 at 10:54 a.m. in New York. It jumped 5.4 percent earlier, the most intraday since Oct. 23.
Microsoft slumped 18 percent in May through yesterday, when Apple Inc.’s market value exceeded Microsoft’s by $2.94 billion. Technology companies in the Standard & Poor’s 500 Index retreated 11 percent since April 30. Microsoft shares lost 4.1 percent yesterday after Chief Executive Officer Steve Ballmer said that the effects of the European debt crisis will spread outside the region.
“While European contagion is a concern, Ballmer’s comments were not Microsoft specific,” Sarah Friar, an analyst at New York-based Goldman Sachs, wrote in a report to clients dated yesterday. “The shares underperformed large-cap tech despite having relatively lower exposure outside of the U.S. Given significant underperformance and attractive valuation levels, we are buyers of the shares.”
Microsoft had the biggest gain in the Dow Jones Industrial Average, surging 5.3 percent to $26.34 at 10:54 a.m. in New York. It jumped 5.4 percent earlier, the most intraday since Oct. 23.
Wednesday, May 26, 2010
Nokia C6 Deals Cost Effective Price
To address the need of the consumers who expect minimal requirement along with simplistic cosmetic work Nokia has come out with their new offering named Nokia C6. Available in two attractive color options comprising black, deep red this smart phone proves to be a users delight as it comes equipped with all the latest features that promise to give best in its class results. Display size being the focal part here this smart phone leaves nor room for complaint as this dual screen phone with its impressive resolution gives out crystal sharp pictures without any distortion. This smart classic phone is ideally targeted at those users who expect minimal requirement without any comprise on standard features like media player, camera, FM radio along with exciting set of games. Audio output of this device sounds simply superb as it powerful speakers give amazing sound clarity that enable its listeners to groove while listening to their favorite music tracks.
Flashing point about this smart phone is its 5 megapixels camera that comes equipped with
4 x Digital Zoom,CMOS Sensor, automatic white balance, full screen viewfinder and capture mode . Due to the presence of these smart tool one can capture and view distortion free images with great clarity. Other camera based utilities that comes equipped with this device include 5 MP, 2592 x 1944 pixels, autofocus, LED flash, Video and screensavers. Further its advanced messaging system like Nokia Xpress Audio Messaging allow the users to send the messages in different modes that include SMS, MMS, EMS. For the entertainment purpose Nokia C6 comes loaded with smart interesting features like audio and video player along with FM radio and FM recording.
People today like to bank on the mobile phone deals that come tagged with several benefits. One such amazing deal that has struck the limelight and is ruling the chart on all the UK based online mobile shops is contract deals on Nokia C6. Once the user avail this kind of wonderful facility he/she gets entitled to receive numerous benefits like free text messages, free talk time. Apart from these assets the users even gets a chance to grab some amazing gifts of his choice that include gaming consoles, LCD TVs or even iPod music player. So this cost effective deal coming with several benefits give its users best value for the money as one can now buy this handset at a cost effective price.
Flashing point about this smart phone is its 5 megapixels camera that comes equipped with
4 x Digital Zoom,CMOS Sensor, automatic white balance, full screen viewfinder and capture mode . Due to the presence of these smart tool one can capture and view distortion free images with great clarity. Other camera based utilities that comes equipped with this device include 5 MP, 2592 x 1944 pixels, autofocus, LED flash, Video and screensavers. Further its advanced messaging system like Nokia Xpress Audio Messaging allow the users to send the messages in different modes that include SMS, MMS, EMS. For the entertainment purpose Nokia C6 comes loaded with smart interesting features like audio and video player along with FM radio and FM recording.
People today like to bank on the mobile phone deals that come tagged with several benefits. One such amazing deal that has struck the limelight and is ruling the chart on all the UK based online mobile shops is contract deals on Nokia C6. Once the user avail this kind of wonderful facility he/she gets entitled to receive numerous benefits like free text messages, free talk time. Apart from these assets the users even gets a chance to grab some amazing gifts of his choice that include gaming consoles, LCD TVs or even iPod music player. So this cost effective deal coming with several benefits give its users best value for the money as one can now buy this handset at a cost effective price.
Greece Faces Debt Restructuring or Default, Mundell, Hanke Say
Nobel Prize winning economist Robert Mundell said debt restructuring may be “inevitable” in parts of the euro area and Steve Hanke, the architect of currency regimes from Argentina to Estonia, warned a Greek default may become unavoidable.
Mundell, who won the economics prize in 1999, predicted debt restructuring for “one or two” euro nations within five years. Hanke of Johns Hopkins University said Greece’s “death spiral” will end in default if debt obligations can’t be renegotiated.
Euro-area ministers agreed on May 2 to provide 110 billion euros ($135 billion) of aid to Greece as the country struggled to control a deficit that reached 13.6 percent of gross domestic product last year, more than four times the European Union limit. When that failed to stop the euro’s slide, the EU and International Monetary Fund offered a financial lifeline of almost $1 trillion to member states.
“Greece’s death spiral will end with debt restructuring or the outright default of its sovereign debt,” Hanke wrote in an article on the website of the Cato Institute in Washington D.C. dated yesterday. “While politicians and bureaucrats from the EU, IMF and Greece tell us that the bailout package will defuse Greece’s time bomb, don’t believe their ‘cheerful Charlie’ chant.”
Not ‘Deconstruction’
Mundell, whose Nobel Prize was for work on exchange rates and capital mobility, said at a conference in Warsaw today that “debt restructuring may be needed for one or two fiscally weak euro members. In five years it may be inevitable, but it doesn’t mean euro deconstruction, it just means debt restructuring.”
Europe needs greater fiscal centralization, including the creation of euro-area Treasury notes and bonds, Mundell said.
“The euro has done marvelously well in its 10 years of existence, but it is operating with one of its two hands tied behind its back,” Mundell said. “There is no area bill like a U.S. Treasury bill. A euro-area bill will greatly improve the ascent of the euro as the reserve currency along the dollar.”
Europe’s currency has dropped 14.2 percent against the dollar this year, the biggest loss among its 16 most-active counterparts, according to data compiled by Bloomberg. It traded at $1.2283 as of 6:20 a.m. in London, after dropping to a four- year low of $1.2144 on May 19.
Exit Possible
Nouriel Roubini, the New York University professor who predicted the global financial crisis, also warned today that financial markets aren’t “credibly” convinced Greece will control its budget deficit.
The euro will weaken further, and some countries may be forced to abandon the common currency, Roubini said at a conference in Bucharest, Romania today.
“I’m not predicting the breakup of euro zone, but the probability is not zero that some of weakest members of euro zone might decide to exit it,” he said.
There are also concerns Spain and Portugal as well as Greece lack the political will to cut spending, Roubini said. Greece pledged to implement austerity measures equal to almost 14 percent of GDP in exchange for the EU rescue funds.
“The markets are not credibly convinced Greece can do the fiscal adjustment it engaged to do,” Roubini said. There are “also questions whether, from a political point of view, there’s going to be support for budget consolidation in these countries -- Greece, Portugal and Spain.”
Double-Dip Risk
Without the option of currency devaluation, Greece needs to push through tax reform to improve its competitiveness, Hanke said. The country ranks 109th in an “ease of doing business” survey of 183 countries, according to the World Bank.
“Without growth, Greece is doomed,” said Hanke, who was an architect of currency policy in Indonesia, Venezuela, Estonia and Kazakhstan among other nations.
There are “serious economic difficulties in the euro zone,” Roubini said today. “There’s even a risk of a double- dip recession.”
The 16-member euro area emerged from its five-quarter recession in the three months through September. A double-dip recession would mean the region’s economy contracting again for at least two consecutive quarters.
The euro region economy will grow 0.9 percent this year after contracting 4.1 percent in 2009, the European Commission estimated May 5. Germany, the bloc’s biggest economy, will expand 1.2 percent in 2010 and 1.6 percent next year. Greece’s economy will contract 3 percent this year and a further 0.5 percent in 2011, the commission estimates.
Greece would benefit from scrapping employer contributions to payroll taxes and imposing a uniform value-added tax rate, Hanke said. Such measures would boost competitiveness “roughly” equivalent to a 40 percent to 45 percent currency devaluation, he said, citing research by Domingo Cavallo, Argentina’s former Economy Minister, and Joaquin Cottani, former Undersecretary of Economic Policy in Argentina.
Mundell, who won the economics prize in 1999, predicted debt restructuring for “one or two” euro nations within five years. Hanke of Johns Hopkins University said Greece’s “death spiral” will end in default if debt obligations can’t be renegotiated.
Euro-area ministers agreed on May 2 to provide 110 billion euros ($135 billion) of aid to Greece as the country struggled to control a deficit that reached 13.6 percent of gross domestic product last year, more than four times the European Union limit. When that failed to stop the euro’s slide, the EU and International Monetary Fund offered a financial lifeline of almost $1 trillion to member states.
“Greece’s death spiral will end with debt restructuring or the outright default of its sovereign debt,” Hanke wrote in an article on the website of the Cato Institute in Washington D.C. dated yesterday. “While politicians and bureaucrats from the EU, IMF and Greece tell us that the bailout package will defuse Greece’s time bomb, don’t believe their ‘cheerful Charlie’ chant.”
Not ‘Deconstruction’
Mundell, whose Nobel Prize was for work on exchange rates and capital mobility, said at a conference in Warsaw today that “debt restructuring may be needed for one or two fiscally weak euro members. In five years it may be inevitable, but it doesn’t mean euro deconstruction, it just means debt restructuring.”
Europe needs greater fiscal centralization, including the creation of euro-area Treasury notes and bonds, Mundell said.
“The euro has done marvelously well in its 10 years of existence, but it is operating with one of its two hands tied behind its back,” Mundell said. “There is no area bill like a U.S. Treasury bill. A euro-area bill will greatly improve the ascent of the euro as the reserve currency along the dollar.”
Europe’s currency has dropped 14.2 percent against the dollar this year, the biggest loss among its 16 most-active counterparts, according to data compiled by Bloomberg. It traded at $1.2283 as of 6:20 a.m. in London, after dropping to a four- year low of $1.2144 on May 19.
Exit Possible
Nouriel Roubini, the New York University professor who predicted the global financial crisis, also warned today that financial markets aren’t “credibly” convinced Greece will control its budget deficit.
The euro will weaken further, and some countries may be forced to abandon the common currency, Roubini said at a conference in Bucharest, Romania today.
“I’m not predicting the breakup of euro zone, but the probability is not zero that some of weakest members of euro zone might decide to exit it,” he said.
There are also concerns Spain and Portugal as well as Greece lack the political will to cut spending, Roubini said. Greece pledged to implement austerity measures equal to almost 14 percent of GDP in exchange for the EU rescue funds.
“The markets are not credibly convinced Greece can do the fiscal adjustment it engaged to do,” Roubini said. There are “also questions whether, from a political point of view, there’s going to be support for budget consolidation in these countries -- Greece, Portugal and Spain.”
Double-Dip Risk
Without the option of currency devaluation, Greece needs to push through tax reform to improve its competitiveness, Hanke said. The country ranks 109th in an “ease of doing business” survey of 183 countries, according to the World Bank.
“Without growth, Greece is doomed,” said Hanke, who was an architect of currency policy in Indonesia, Venezuela, Estonia and Kazakhstan among other nations.
There are “serious economic difficulties in the euro zone,” Roubini said today. “There’s even a risk of a double- dip recession.”
The 16-member euro area emerged from its five-quarter recession in the three months through September. A double-dip recession would mean the region’s economy contracting again for at least two consecutive quarters.
The euro region economy will grow 0.9 percent this year after contracting 4.1 percent in 2009, the European Commission estimated May 5. Germany, the bloc’s biggest economy, will expand 1.2 percent in 2010 and 1.6 percent next year. Greece’s economy will contract 3 percent this year and a further 0.5 percent in 2011, the commission estimates.
Greece would benefit from scrapping employer contributions to payroll taxes and imposing a uniform value-added tax rate, Hanke said. Such measures would boost competitiveness “roughly” equivalent to a 40 percent to 45 percent currency devaluation, he said, citing research by Domingo Cavallo, Argentina’s former Economy Minister, and Joaquin Cottani, former Undersecretary of Economic Policy in Argentina.
Monday, May 10, 2010
3G auction returns near Rs 55,000 cr-mark
NEW DELHI: India Monday concluded 148 rounds of an auction to award spectrum for third generation (3G) telecom services in the country, with the government's provisional revenue from the sale of airwaves nearing the Rs.55,000 crore ($12.2 billion) mark and the nationwide licence price reaching Rs.13,473.55 crore ($3 billion).
The provisional winning price for the pan-India 3G licence was around 285 percent higher than the Rs.3,500 crore reserve price fixed by the government.
At the end of the 26th day of the auction, which began April 9, the government's provisional revenue from the 3G auction stood at Rs.54,378.39 crore, which is well above the amount it had expected.
Earlier, the government had said that it hoped to rake in Rs.55,000 crore ($12.2 billion) from both the 3G auction and the rolling out of broadband wireless Internet services in the country. But with the aggressive bidding in few circles, the government is poised to get more than the estimated amount from the 3G auction alone.
Slots for three-four players are available in each of the 22 circles into which the country has been geographically divided for the 3G services, which will facilitate faster connectivity and enable applications such as Internet TV, video-on-demand, audio-video calls and high-speed data exchange.
Nine telecom companies - Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications - are participating in the online auction.
The government has already given Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) spectrum for 3G services on the condition that they pay the same licence fee as would be levied on private players after the auction.
Along with the fee that will be eventually paid by the two state-run enterprises for the licences, the government will provisionally get at least Rs.54,378.39 crore from the auction.
According to the Department of Telecommunications (DoT), the 3G auction may conclude this week.
Data on the DoT's website showed Mumbai continued to attract the highest bid at Rs.2,433.88 crore. The provisional winning price for Delhi stood at Rs.2,372.97 crore, followed by Karnataka at Rs.1,402.13 crore, Tamil Nadu at Rs.1,287.24 crore and Maharashtra at Rs.1,150.12 crore.
While Bihar, Mumbai, Delhi, Punjab, Orissa and Andhra Pradesh witnessed more players in fray than the number of slots available, Jammu and Kashmir, Haryana, Himachal Pradesh, Madhya Pradesh, West Bengal and Rajasthan could not attract enough bidders.
This 3G auction is a simultaneous auction for the 22 circles over a secure website. At each round, the price is hiked from between 10-1 percent based on demand.
The auction is being held on all days except Sundays and national holidays. The bid data, including the winning companies' names, will be made public after the auction's completion and approval by the government.
The winning firms will have to deposit the money within 10 days after the auction and the successful bidders would be allowed to offer 3G services on a commercial basis from Sep 1.
The provisional winning price for the pan-India 3G licence was around 285 percent higher than the Rs.3,500 crore reserve price fixed by the government.
At the end of the 26th day of the auction, which began April 9, the government's provisional revenue from the 3G auction stood at Rs.54,378.39 crore, which is well above the amount it had expected.
Earlier, the government had said that it hoped to rake in Rs.55,000 crore ($12.2 billion) from both the 3G auction and the rolling out of broadband wireless Internet services in the country. But with the aggressive bidding in few circles, the government is poised to get more than the estimated amount from the 3G auction alone.
Slots for three-four players are available in each of the 22 circles into which the country has been geographically divided for the 3G services, which will facilitate faster connectivity and enable applications such as Internet TV, video-on-demand, audio-video calls and high-speed data exchange.
Nine telecom companies - Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications - are participating in the online auction.
The government has already given Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) spectrum for 3G services on the condition that they pay the same licence fee as would be levied on private players after the auction.
Along with the fee that will be eventually paid by the two state-run enterprises for the licences, the government will provisionally get at least Rs.54,378.39 crore from the auction.
According to the Department of Telecommunications (DoT), the 3G auction may conclude this week.
Data on the DoT's website showed Mumbai continued to attract the highest bid at Rs.2,433.88 crore. The provisional winning price for Delhi stood at Rs.2,372.97 crore, followed by Karnataka at Rs.1,402.13 crore, Tamil Nadu at Rs.1,287.24 crore and Maharashtra at Rs.1,150.12 crore.
While Bihar, Mumbai, Delhi, Punjab, Orissa and Andhra Pradesh witnessed more players in fray than the number of slots available, Jammu and Kashmir, Haryana, Himachal Pradesh, Madhya Pradesh, West Bengal and Rajasthan could not attract enough bidders.
This 3G auction is a simultaneous auction for the 22 circles over a secure website. At each round, the price is hiked from between 10-1 percent based on demand.
The auction is being held on all days except Sundays and national holidays. The bid data, including the winning companies' names, will be made public after the auction's completion and approval by the government.
The winning firms will have to deposit the money within 10 days after the auction and the successful bidders would be allowed to offer 3G services on a commercial basis from Sep 1.
India mutual fund assets surge 32 pct in April
MUMBAI: Assets of Indian mutual funds surged 31.7 per cent to Rs 8.1 trillion, helped by large inflows into fixed income funds, data from the Association of Mutual Funds in India showed on Monday.
Income funds, popular among corporates and banks as a venue to park their surplus funds, saw a net inflow of Rs 1.8 trillion. Equity funds saw a net outflow of Rs 12.4 billion, the data showed.
Industry assets had plunged 19.9 per cent to Rs 6.1 trillion in March on outflows from fixed income funds.
Income funds, popular among corporates and banks as a venue to park their surplus funds, saw a net inflow of Rs 1.8 trillion. Equity funds saw a net outflow of Rs 12.4 billion, the data showed.
Industry assets had plunged 19.9 per cent to Rs 6.1 trillion in March on outflows from fixed income funds.
EU Crafts $962 Billion Show of Force to Halt Crisis
May 10 (Bloomberg) -- European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases to stop a sovereign-debt crisis that threatened to shatter confidence in the euro. Stocks surged around the world, the euro strengthened and commodities rallied.
Jolted by last week’s slide in the currency and soaring bond yields in Portugal and Spain, European Union finance chiefs met in a 14-hour session in Brussels overnight. The 16 euro nations agreed in a statement to offer as much as 750 billion euros ($962 billion), including International Monetary Fund backing, to countries facing instability and the European Central Bank said it will buy government and private debt.
The rescue package for Europe’s sovereign debtors comes little more than a year after the waning of the last crisis, caused by the U.S. mortgage-market collapse, which wreaked $1.8 trillion of global credit losses and writedowns. Under U.S. and Asian pressure to stabilize markets, Europe’s governments bet their show of force would prevent a sovereign-debt collapse and muffle speculation the 11-year-old euro might break apart.
“A very thick line has been drawn in the sand,” said Andrew Bosomworth, Munich-based head of portfolio management at Pacific Investment Management Co. and a former ECB official. “This is all in. What more could they have done?”
A 110 billion-euro bailout package for Greece approved last week by the EU and IMF failed to reassure investors, prompting yesterday’s renewed bid to bolster the euro.
How to Pay
“It might temporarily calm nerves but questions will come back later on how they will pay for this package when all of them need fiscal consolidation,” said Venkatraman Anantha- Nageswaran, who helps manage about $140 billion in assets as global chief investment officer at Bank Julius Baer & Co. in Singapore.
The MSCI World Index climbed 2.6 percent to 1,128 at 12:15 p.m. in Brussels. Standard & Poor’s 500 Index futures rallied 4.4 percent. The euro appreciated 2 percent to $1.30. Crude-oil futures gained 3.4 percent.
“The message has gotten through: the euro zone will defend its money,” French Finance Minister Christine Lagarde told reporters in Brussels early today after markets punished inaction last week.
ECB policy makers said they will counter “severe tensions” in “certain” markets by purchasing government and private debt, and the bank restarted a dollar-swap line with the Federal Reserve.
‘Overwhelming Force’
“This truly is overwhelming force, and should be more than sufficient to stabilize markets in the near term, prevent panic and contain the risk of contagion,” Marco Annunziata, chief economist at UniCredit Group in London, said in an e-mailed note. “This is Shock and Awe, Part II and in 3-D.”
Treasuries tumbled on investors’ increased appetite for risk, with yields on benchmark 10-year U.S. notes rising to 3.57 percent from 3.43 percent at last week’s close. German bunds also declined, sending 10-year yields up 18 basis points.
The steps came after failure to contain Greece’s fiscal crisis triggered a 4.1 percent drop in the euro last week, the biggest weekly decline since the aftermath of Lehman Brothers Holdings Inc.’s collapse. European stocks sank the most in 18 months, with the Stoxx Europe 600 Index tumbling 8.8 percent.
The ripple effect in the U.S., including a brief 1,000- point drop in the Dow Jones Industrial Average on May 6, prompted President Barack Obama to call German Chancellor Angela Merkel and French President Nicolas Sarkozy to urge “resolute steps” to prevent the crisis from cascading around the world.
Loan Package
Under the loan package, euro-area governments pledged 440 billion euros in loans or guarantees, with 60 billion euros more in loans from the EU’s budget and as much as 250 billion euros from the International Monetary Fund.
“They will have bought themselves a significant amount of time to do the right thing,” said Barry Eichengreen, an economics professor at the University of California, Berkeley.
In a step that skirts EU rules barring direct central bank lending to governments, the ECB said it will conduct “interventions” to ensure “depth and liquidity” in markets. The purchases will be sterilized, meaning they won’t increase the overall money supply in the financial system.
“This sets a precedent for the rest of the life of the Central Bank and will have likely surprised even the most seasoned observers,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London. “While the ECB’s intervention might attract bad press regarding its mandate and independence, we believe that this was necessary to short circuit the negative feedback loop which was getting more and more threatening for the global economy. ”
Central Banks Buy
Central banks in Germany, France and Italy all said they began buying government bonds today. None provided further detail.
The ECB also reactivated unlimited fixed-rate offerings of three-month loans, a key tool in the ECB’s efforts to fight the credit crisis.
In Brussels, finance ministers from the 16-nation euro region -- joined by ministers from the 11 EU countries outside the euro -- raced against time to weld the contingency lending arrangements before markets opened in Asia.
Inability to craft a convincing package in time would have left deficit-plagued countries at the mercy of the “wolfpack behavior” of speculators, Finance Minister Anders Borg of Sweden, a non-euro member, said as the meeting began.
Budget Cuts
The new war chest would be used for countries like Portugal or Spain in case their finances buckle. Deficits are set to reach 8.5 percent of gross domestic product in Portugal and 9.8 percent in Spain this year, above the euro region’s 3 percent limit. Both countries pledged “significant” additional budget cuts in 2010 and 2011, which will be outlined in May, an EU statement said.
The extra yield that investors demand to hold Greek, Portuguese and Spanish debt instead of benchmark German bonds fell from euro-era highs. The premium on 10-year government bonds plunged to 343 basis points from as high as 973 basis points for Greece. It fell to 201 basis points from 354 for Portugal and to 94 basis points from 173 for Spain.
Europe’s financial leaders sought to master the euro’s stiffest test since its debut in 1999 without wheelchair-bound Finance Minister Wolfgang Schaeuble of Germany, Europe’s largest economy, who was rushed to a hospital soon after the meeting started due to an adverse reaction to new medication. Interior Minister Thomas de Maiziere got on a last-minute flight to Brussels to take his place.
Merkel’s Meeting
As Merkel’s cabinet held a late-night meeting in Berlin on the euro rescue, her party unexpectedly lost control of Germany’s most populous state in a regional election, potentially costing her a majority in the upper house of the federal parliament.
Goaded by Germany, the ministers made a fresh commitment to closer monitoring of government finances and more rigorous enforcement of the deficit-limitation rules.
The vow to push budget shortfalls below the euro’s 3 percent limit echoes promises that have been regularly broken ever since governments in 1999 set a three-year deadline for achieving balanced budgets. The euro region’s overall deficit is forecast at 6.6 percent of gross domestic product in 2010 and 6.1 percent in 2011.
Britain, the EU’s third-largest economy, won’t contribute to a euro rescue fund, though it backs efforts to restore stability, Chancellor of the Exchequer Alistair Darling said.
“When it comes to supporting the euro, that is for the eurogroup countries,” Darling told Sky News.
Jolted by last week’s slide in the currency and soaring bond yields in Portugal and Spain, European Union finance chiefs met in a 14-hour session in Brussels overnight. The 16 euro nations agreed in a statement to offer as much as 750 billion euros ($962 billion), including International Monetary Fund backing, to countries facing instability and the European Central Bank said it will buy government and private debt.
The rescue package for Europe’s sovereign debtors comes little more than a year after the waning of the last crisis, caused by the U.S. mortgage-market collapse, which wreaked $1.8 trillion of global credit losses and writedowns. Under U.S. and Asian pressure to stabilize markets, Europe’s governments bet their show of force would prevent a sovereign-debt collapse and muffle speculation the 11-year-old euro might break apart.
“A very thick line has been drawn in the sand,” said Andrew Bosomworth, Munich-based head of portfolio management at Pacific Investment Management Co. and a former ECB official. “This is all in. What more could they have done?”
A 110 billion-euro bailout package for Greece approved last week by the EU and IMF failed to reassure investors, prompting yesterday’s renewed bid to bolster the euro.
How to Pay
“It might temporarily calm nerves but questions will come back later on how they will pay for this package when all of them need fiscal consolidation,” said Venkatraman Anantha- Nageswaran, who helps manage about $140 billion in assets as global chief investment officer at Bank Julius Baer & Co. in Singapore.
The MSCI World Index climbed 2.6 percent to 1,128 at 12:15 p.m. in Brussels. Standard & Poor’s 500 Index futures rallied 4.4 percent. The euro appreciated 2 percent to $1.30. Crude-oil futures gained 3.4 percent.
“The message has gotten through: the euro zone will defend its money,” French Finance Minister Christine Lagarde told reporters in Brussels early today after markets punished inaction last week.
ECB policy makers said they will counter “severe tensions” in “certain” markets by purchasing government and private debt, and the bank restarted a dollar-swap line with the Federal Reserve.
‘Overwhelming Force’
“This truly is overwhelming force, and should be more than sufficient to stabilize markets in the near term, prevent panic and contain the risk of contagion,” Marco Annunziata, chief economist at UniCredit Group in London, said in an e-mailed note. “This is Shock and Awe, Part II and in 3-D.”
Treasuries tumbled on investors’ increased appetite for risk, with yields on benchmark 10-year U.S. notes rising to 3.57 percent from 3.43 percent at last week’s close. German bunds also declined, sending 10-year yields up 18 basis points.
The steps came after failure to contain Greece’s fiscal crisis triggered a 4.1 percent drop in the euro last week, the biggest weekly decline since the aftermath of Lehman Brothers Holdings Inc.’s collapse. European stocks sank the most in 18 months, with the Stoxx Europe 600 Index tumbling 8.8 percent.
The ripple effect in the U.S., including a brief 1,000- point drop in the Dow Jones Industrial Average on May 6, prompted President Barack Obama to call German Chancellor Angela Merkel and French President Nicolas Sarkozy to urge “resolute steps” to prevent the crisis from cascading around the world.
Loan Package
Under the loan package, euro-area governments pledged 440 billion euros in loans or guarantees, with 60 billion euros more in loans from the EU’s budget and as much as 250 billion euros from the International Monetary Fund.
“They will have bought themselves a significant amount of time to do the right thing,” said Barry Eichengreen, an economics professor at the University of California, Berkeley.
In a step that skirts EU rules barring direct central bank lending to governments, the ECB said it will conduct “interventions” to ensure “depth and liquidity” in markets. The purchases will be sterilized, meaning they won’t increase the overall money supply in the financial system.
“This sets a precedent for the rest of the life of the Central Bank and will have likely surprised even the most seasoned observers,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London. “While the ECB’s intervention might attract bad press regarding its mandate and independence, we believe that this was necessary to short circuit the negative feedback loop which was getting more and more threatening for the global economy. ”
Central Banks Buy
Central banks in Germany, France and Italy all said they began buying government bonds today. None provided further detail.
The ECB also reactivated unlimited fixed-rate offerings of three-month loans, a key tool in the ECB’s efforts to fight the credit crisis.
In Brussels, finance ministers from the 16-nation euro region -- joined by ministers from the 11 EU countries outside the euro -- raced against time to weld the contingency lending arrangements before markets opened in Asia.
Inability to craft a convincing package in time would have left deficit-plagued countries at the mercy of the “wolfpack behavior” of speculators, Finance Minister Anders Borg of Sweden, a non-euro member, said as the meeting began.
Budget Cuts
The new war chest would be used for countries like Portugal or Spain in case their finances buckle. Deficits are set to reach 8.5 percent of gross domestic product in Portugal and 9.8 percent in Spain this year, above the euro region’s 3 percent limit. Both countries pledged “significant” additional budget cuts in 2010 and 2011, which will be outlined in May, an EU statement said.
The extra yield that investors demand to hold Greek, Portuguese and Spanish debt instead of benchmark German bonds fell from euro-era highs. The premium on 10-year government bonds plunged to 343 basis points from as high as 973 basis points for Greece. It fell to 201 basis points from 354 for Portugal and to 94 basis points from 173 for Spain.
Europe’s financial leaders sought to master the euro’s stiffest test since its debut in 1999 without wheelchair-bound Finance Minister Wolfgang Schaeuble of Germany, Europe’s largest economy, who was rushed to a hospital soon after the meeting started due to an adverse reaction to new medication. Interior Minister Thomas de Maiziere got on a last-minute flight to Brussels to take his place.
Merkel’s Meeting
As Merkel’s cabinet held a late-night meeting in Berlin on the euro rescue, her party unexpectedly lost control of Germany’s most populous state in a regional election, potentially costing her a majority in the upper house of the federal parliament.
Goaded by Germany, the ministers made a fresh commitment to closer monitoring of government finances and more rigorous enforcement of the deficit-limitation rules.
The vow to push budget shortfalls below the euro’s 3 percent limit echoes promises that have been regularly broken ever since governments in 1999 set a three-year deadline for achieving balanced budgets. The euro region’s overall deficit is forecast at 6.6 percent of gross domestic product in 2010 and 6.1 percent in 2011.
Britain, the EU’s third-largest economy, won’t contribute to a euro rescue fund, though it backs efforts to restore stability, Chancellor of the Exchequer Alistair Darling said.
“When it comes to supporting the euro, that is for the eurogroup countries,” Darling told Sky News.
Wednesday, April 21, 2010
Banks face fresh hit from IMF twin tax
LONDON (Reuters) - To embellish Benjamin Franklin's quote: "In this world, nothing is certain but death and bank taxes."
Sure enough, European and U.S. banks could pay over $35 billion a year under twin taxes proposed by the International Monetary Fund (IMF) to recoup some of the rescue costs of the financial crisis -- and help prevent a repeat.
Support for a global bank levy has built since the United States in January proposed a 0.15 percent charge that could raise $90 billion to $117 billion over a decade.
A tax on banks is seen as inevitable following a wave of government proposals to claw back billions of dollars and euros of taxpayer cash used to bail out the industry. How to structure a levy and smooth it across borders will be a key challenge for world leaders in the next two months.
"We estimate that a U.S.-style tax on the Europeans could raise up to 19 billion euros ($25.5 billion) ... and potentially knock 6-10 percent off normalised profits," Keefe, Bruyette & Woods analyst Andrew Stimpson estimated.
The impact could range from 1 percent of profits to 21 percent, he said, with Dexia worst placed and RBS and Credit Agricole also ranking poorly.
Other banks with big balance sheets would be negatively affected, such as Deutsche Bank and BNP Paribas, while the least impacted should be deposit-rich banks, such as those in Spain and Italy, analysts said.
FAT'S IN THE FIRE?
The IMF suggests a two-pronged approach: a levy on the liabilities of financial firms to cover the cost of any future bailouts and an extra tax on profits and pay.
It is the extra levy -- dubbed a "financial activities tax", or FAT -- that surprised bankers and added heat to a row that has raged since most of the industry rebounded from a two-year financial crisis with bumper profits and bonuses for staff.
"It is potentially more onerous and potentially more wide-ranging but it would be premature to take away a radically negative conclusion," said Ian Gordon, analyst at Exane BNP Paribas in London. "A two-pronged approach wasn't expected, but we don't yet have any better idea on quantum."
The FAT proposal was unwelcome for the sector, and may penalise successful banks rather that risky behaviour, but was not a surprise given lawmakers' mood to curb excessive profits and payouts in the industry, analysts said.
The FAT would be levied on the sum of the profits and remuneration of banks. How countries define each would determine its impact, but a 2-percent FAT in Britain could raise 0.1-0.2 percent of gross domestic product (GDP).
The IMF suggests the first levy -- or financial stability contribution -- could raise 2-4 percent of GDP. A flat initial charge would be refined over time to reflect where risk lay.
A levy similar to a U.S. proposal, with national refinements to adjust for derivatives, capital, deposits and other factors, appears most likely, analysts said. They put the cost for Europe's banks at between 13 billion and 50 billion euros.
"We would not be buying into the sector until it becomes clear where the regulatory goal posts are going to be moved to," noted Bruce Packard, analyst at Seymour Pierce.
The IMF's move helped assuage government fears they risked a "first mover disadvantage" by addressing a tax ahead of peers, said Jan Putnis, a partner at UK law firm Slaughter and May.
But he said there was little in the proposals to discourage banks from taking many of the risks that led to the crisis, and some lawyers warned that as returns are dented, banks may chase riskier opportunities knowing there might be a fund, stuffed with bank taxes, to bail them out.
The IMF said directly supporting banks had cost an average of 2.7 percent of GDP across G20 countries. It was as high as 5.4 percent in Britain, 4.8 percent in Germany and 3.6 percent in the United States.
News that Goldman Sachs has earmarked an average of $166,000 for each employee for the first three months of this year stoked criticism that bankers reap the profits while taxpayers bear the cost of failure.
Britain, which was first to propose a global levy, welcomed the IMF move and is hopeful of clinching agreement. But others, such as Japan and Canada, whose banks avoided problems in the financial crisis, oppose it.
A senior Canadian official doubted there would be wide support across G20 countries as priority should be on toughening capital standards -- which could be at risk of getting crowded out by ideas such as a bank levy.
Sure enough, European and U.S. banks could pay over $35 billion a year under twin taxes proposed by the International Monetary Fund (IMF) to recoup some of the rescue costs of the financial crisis -- and help prevent a repeat.
Support for a global bank levy has built since the United States in January proposed a 0.15 percent charge that could raise $90 billion to $117 billion over a decade.
A tax on banks is seen as inevitable following a wave of government proposals to claw back billions of dollars and euros of taxpayer cash used to bail out the industry. How to structure a levy and smooth it across borders will be a key challenge for world leaders in the next two months.
"We estimate that a U.S.-style tax on the Europeans could raise up to 19 billion euros ($25.5 billion) ... and potentially knock 6-10 percent off normalised profits," Keefe, Bruyette & Woods analyst Andrew Stimpson estimated.
The impact could range from 1 percent of profits to 21 percent, he said, with Dexia worst placed and RBS and Credit Agricole also ranking poorly.
Other banks with big balance sheets would be negatively affected, such as Deutsche Bank and BNP Paribas, while the least impacted should be deposit-rich banks, such as those in Spain and Italy, analysts said.
FAT'S IN THE FIRE?
The IMF suggests a two-pronged approach: a levy on the liabilities of financial firms to cover the cost of any future bailouts and an extra tax on profits and pay.
It is the extra levy -- dubbed a "financial activities tax", or FAT -- that surprised bankers and added heat to a row that has raged since most of the industry rebounded from a two-year financial crisis with bumper profits and bonuses for staff.
"It is potentially more onerous and potentially more wide-ranging but it would be premature to take away a radically negative conclusion," said Ian Gordon, analyst at Exane BNP Paribas in London. "A two-pronged approach wasn't expected, but we don't yet have any better idea on quantum."
The FAT proposal was unwelcome for the sector, and may penalise successful banks rather that risky behaviour, but was not a surprise given lawmakers' mood to curb excessive profits and payouts in the industry, analysts said.
The FAT would be levied on the sum of the profits and remuneration of banks. How countries define each would determine its impact, but a 2-percent FAT in Britain could raise 0.1-0.2 percent of gross domestic product (GDP).
The IMF suggests the first levy -- or financial stability contribution -- could raise 2-4 percent of GDP. A flat initial charge would be refined over time to reflect where risk lay.
A levy similar to a U.S. proposal, with national refinements to adjust for derivatives, capital, deposits and other factors, appears most likely, analysts said. They put the cost for Europe's banks at between 13 billion and 50 billion euros.
"We would not be buying into the sector until it becomes clear where the regulatory goal posts are going to be moved to," noted Bruce Packard, analyst at Seymour Pierce.
The IMF's move helped assuage government fears they risked a "first mover disadvantage" by addressing a tax ahead of peers, said Jan Putnis, a partner at UK law firm Slaughter and May.
But he said there was little in the proposals to discourage banks from taking many of the risks that led to the crisis, and some lawyers warned that as returns are dented, banks may chase riskier opportunities knowing there might be a fund, stuffed with bank taxes, to bail them out.
The IMF said directly supporting banks had cost an average of 2.7 percent of GDP across G20 countries. It was as high as 5.4 percent in Britain, 4.8 percent in Germany and 3.6 percent in the United States.
News that Goldman Sachs has earmarked an average of $166,000 for each employee for the first three months of this year stoked criticism that bankers reap the profits while taxpayers bear the cost of failure.
Britain, which was first to propose a global levy, welcomed the IMF move and is hopeful of clinching agreement. But others, such as Japan and Canada, whose banks avoided problems in the financial crisis, oppose it.
A senior Canadian official doubted there would be wide support across G20 countries as priority should be on toughening capital standards -- which could be at risk of getting crowded out by ideas such as a bank levy.
Iron ore prices reach $190/mt
Week 16 opened with a bang with the Indian spot prices making a quantum jump of almost USD 10 per tonne since 16th April. The unprecedented escalation seems unstoppable leaving veterans exasperated. It is noteworthy that the gradient has become steeper with each passing days from 1% in mid February to 11% during the course of last one week.
The following factors needs to be mentioned
1. After the banishing import of iron ore below Fe 60% by Chinese traders India could play only second fiddle as the composition of Indian iron ore is skewed towards low grade. As a result, spot prices of high grade iron ore from India have sky rocketed. Although the CNF prices seem to be prevailing at USD 190 per tonne, freakish cases of USD 195 have also been heard on week opening.
2. Prevailing mining mess in India has further fanned the fire with curtailed supply especially on East Coast.
3. The three mining behemoths viz., Vale , Rio Tinto and BHP Billiton have been playing truant to the roost by withholding supplies to leverage negotiating power in contractual discussions creating a situation of "take it or leave it " for Chinese buyers.
4. Against the backdrop of limited ore supply, traders are postponing selling in anticipation of better realization thereby supporting the hike.
However all the fun and frolic is not devoid of an element of scepticism as the tenants of this surge seems artificial rather than market driven.
1. In all likelihood Chinese buyers will bulk under the burgeoning costly ore prices as the finished demand is not increasing proportionately . Domestic prices have already showed signs of waning towards the weekend when the prices of long and flat product dipped slightly.
2. Shanghai equities slumped the most in 6 weeks due to the suspension of lending from banks to third home buyers in some areas.
3. Once the Chinese buyers acquiesce to the demands of the biggies naturally the spot prices will be doused.
The iron ore prices seems all set for a turbulent phase in the coming weeks in view of the above paradoxical reasons however clarity will dawn after the shaping of price trend in the domestic market during the coming week.
The following factors needs to be mentioned
1. After the banishing import of iron ore below Fe 60% by Chinese traders India could play only second fiddle as the composition of Indian iron ore is skewed towards low grade. As a result, spot prices of high grade iron ore from India have sky rocketed. Although the CNF prices seem to be prevailing at USD 190 per tonne, freakish cases of USD 195 have also been heard on week opening.
2. Prevailing mining mess in India has further fanned the fire with curtailed supply especially on East Coast.
3. The three mining behemoths viz., Vale , Rio Tinto and BHP Billiton have been playing truant to the roost by withholding supplies to leverage negotiating power in contractual discussions creating a situation of "take it or leave it " for Chinese buyers.
4. Against the backdrop of limited ore supply, traders are postponing selling in anticipation of better realization thereby supporting the hike.
However all the fun and frolic is not devoid of an element of scepticism as the tenants of this surge seems artificial rather than market driven.
1. In all likelihood Chinese buyers will bulk under the burgeoning costly ore prices as the finished demand is not increasing proportionately . Domestic prices have already showed signs of waning towards the weekend when the prices of long and flat product dipped slightly.
2. Shanghai equities slumped the most in 6 weeks due to the suspension of lending from banks to third home buyers in some areas.
3. Once the Chinese buyers acquiesce to the demands of the biggies naturally the spot prices will be doused.
The iron ore prices seems all set for a turbulent phase in the coming weeks in view of the above paradoxical reasons however clarity will dawn after the shaping of price trend in the domestic market during the coming week.
Tuesday, April 20, 2010
Goldman Sachs Says It Didn’t Mislead Investors; Profit Jumps
Goldman Sachs Group Inc., facing a fraud lawsuit from U.S. regulators, reported net income almost doubled in the first quarter and said it didn’t mislead investors.
“This all seems to be at root about whether someone intentionally misled someone, and that’s not something we would approve of or sanction,” Goldman Sachs Co-General Counsel Greg Palm told analysts on a conference call today. He spoke after the firm said earnings jumped 91 percent to $3.46 billion, or $5.59 a share, surpassing analysts’ estimates.
Goldman Sachs, led by Chief Executive Officer Lloyd Blankfein, finds itself fending off regulatory claims while cementing its position as the most profitable investment bank in Wall Street history. The Securities and Exchange Commission accused the firm of failing to tell investors in a 2007 collateralized debt obligation that hedge fund Paulson & Co., which planned to bet against the CDO, helped select the underlying assets.
Goldman Sachs had “no incentive” for the deal to fail, and lost more than $100 million on the transaction, Palm said. The firm was “somewhat surprised” when the SEC filed its suit on April 16, as “no one had told us in advance,” he said.
Fallout Eyed
Blankfein, 55, didn’t refer specifically to the suit today, saying in a statement, “In light of recent events involving the firm, we appreciate the support of our clients and shareholders, and the dedication and commitment of our people.”
Shareholders said concern about potential fallout from the accusations would supersede the earnings report. The stock, which fell 13 percent on April 16 after the SEC filed its case, fell $1.17 to $162.15 at 9:38 a.m. in New York Stock Exchange composite trading.
Ralph Cole, a senior vice president in research at Ferguson Wellman Inc., is among investors who said they are concerned the case could hurt Goldman Sachs’s reputation and cause clients to switch their business to other firms. Another worry is that the case could lead to additional lawsuits against the bank and add impetus to financial-reform efforts that would erode Goldman Sachs’s earnings potential.
Reputational Risk
“I don’t think the cost of this one suit’s the big deal, not certainly compared to what they make,” said Cole, whose firm manages $2.6 billion including Goldman Sachs stock. “It’s what does this do to their reputation and what does this do to the industry because of the current legislation going through?”
In the U.K., meantime, Britain’s financial regulator said Goldman Sachs’s London units will be formally investigated for fraud. “The Financial Services Authority has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations,” the FSA said in an e-mailed statement.
Goldman Sachs said revenue from fixed-income, currencies and commodities trading, which contributed more than half of revenue last year, rose 13 percent in the first quarter to an all-time high of $7.39 billion from $6.56 billion. That beat estimates for $5.95 billion from Howard Chen at Credit Suisse Group AG and $6.09 billion from Roger Freeman at Barclays Capital.
Bank of America Corp. and JPMorgan Chase & Co., the two biggest U.S. banks by assets, both reported record fixed-income revenue last week of $5.52 billion and $5.46 billion respectively.
Investment-Banking Revenue
“We’re looking at a great year for capital markets firms,” Thomas Brown, CEO of Second Curve Capital LLC and founder of bankstocks.com, said yesterday.
Equities-trading revenue rose 18 percent to $2.35 billion from $2 billion a year earlier, Goldman Sachs said. Gains from principal investments, which includes the company’s stakes in Industrial & Commercial Bank of China Ltd. as well as real estate and other companies, were $510 million compared with a net loss of $1.41 billion in the first quarter of 2009.
Investment-banking revenue climbed 44 percent to $1.18 billion from $823 million last year. Within that, fees from financial advice fell 12 percent to $464 million from $527 million and equity-underwriting revenue surged to $371 million from $48 million. Debt underwriting generated $349 million compared with $248 million a year earlier.
Compensation and benefits, the firm’s biggest expense, increased 17 percent to $5.49 billion in the quarter, or 43 percent of the firm’s overall revenue. The cost compared with $4.71 billion in the first quarter of 2009, when the firm set aside 50 percent of revenue.
The bank said the percentage of quarterly revenue put aside for compensation expense was the lowest for any first quarter.
“This all seems to be at root about whether someone intentionally misled someone, and that’s not something we would approve of or sanction,” Goldman Sachs Co-General Counsel Greg Palm told analysts on a conference call today. He spoke after the firm said earnings jumped 91 percent to $3.46 billion, or $5.59 a share, surpassing analysts’ estimates.
Goldman Sachs, led by Chief Executive Officer Lloyd Blankfein, finds itself fending off regulatory claims while cementing its position as the most profitable investment bank in Wall Street history. The Securities and Exchange Commission accused the firm of failing to tell investors in a 2007 collateralized debt obligation that hedge fund Paulson & Co., which planned to bet against the CDO, helped select the underlying assets.
Goldman Sachs had “no incentive” for the deal to fail, and lost more than $100 million on the transaction, Palm said. The firm was “somewhat surprised” when the SEC filed its suit on April 16, as “no one had told us in advance,” he said.
Fallout Eyed
Blankfein, 55, didn’t refer specifically to the suit today, saying in a statement, “In light of recent events involving the firm, we appreciate the support of our clients and shareholders, and the dedication and commitment of our people.”
Shareholders said concern about potential fallout from the accusations would supersede the earnings report. The stock, which fell 13 percent on April 16 after the SEC filed its case, fell $1.17 to $162.15 at 9:38 a.m. in New York Stock Exchange composite trading.
Ralph Cole, a senior vice president in research at Ferguson Wellman Inc., is among investors who said they are concerned the case could hurt Goldman Sachs’s reputation and cause clients to switch their business to other firms. Another worry is that the case could lead to additional lawsuits against the bank and add impetus to financial-reform efforts that would erode Goldman Sachs’s earnings potential.
Reputational Risk
“I don’t think the cost of this one suit’s the big deal, not certainly compared to what they make,” said Cole, whose firm manages $2.6 billion including Goldman Sachs stock. “It’s what does this do to their reputation and what does this do to the industry because of the current legislation going through?”
In the U.K., meantime, Britain’s financial regulator said Goldman Sachs’s London units will be formally investigated for fraud. “The Financial Services Authority has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations,” the FSA said in an e-mailed statement.
Goldman Sachs said revenue from fixed-income, currencies and commodities trading, which contributed more than half of revenue last year, rose 13 percent in the first quarter to an all-time high of $7.39 billion from $6.56 billion. That beat estimates for $5.95 billion from Howard Chen at Credit Suisse Group AG and $6.09 billion from Roger Freeman at Barclays Capital.
Bank of America Corp. and JPMorgan Chase & Co., the two biggest U.S. banks by assets, both reported record fixed-income revenue last week of $5.52 billion and $5.46 billion respectively.
Investment-Banking Revenue
“We’re looking at a great year for capital markets firms,” Thomas Brown, CEO of Second Curve Capital LLC and founder of bankstocks.com, said yesterday.
Equities-trading revenue rose 18 percent to $2.35 billion from $2 billion a year earlier, Goldman Sachs said. Gains from principal investments, which includes the company’s stakes in Industrial & Commercial Bank of China Ltd. as well as real estate and other companies, were $510 million compared with a net loss of $1.41 billion in the first quarter of 2009.
Investment-banking revenue climbed 44 percent to $1.18 billion from $823 million last year. Within that, fees from financial advice fell 12 percent to $464 million from $527 million and equity-underwriting revenue surged to $371 million from $48 million. Debt underwriting generated $349 million compared with $248 million a year earlier.
Compensation and benefits, the firm’s biggest expense, increased 17 percent to $5.49 billion in the quarter, or 43 percent of the firm’s overall revenue. The cost compared with $4.71 billion in the first quarter of 2009, when the firm set aside 50 percent of revenue.
The bank said the percentage of quarterly revenue put aside for compensation expense was the lowest for any first quarter.
Asian Stocks Rise on Divided Goldman Sachs Vote, Citigroup, Yen
Asian stocks rose, led by finance companies, as people familiar with the matter said regulators were split on suing Goldman Sachs Group Inc., easing concern over the impact increased scrutiny on banks will have on profits.
Sumitomo Mitsui Financial Group Inc. rose 1.4 percent in Tokyo as Morgan Stanley upgraded the nation’s banks and Citigroup Inc.’s profit beat estimates. National Australia Bank Ltd., the nation’s third-biggest lender, climbed 2.8 percent in Sydney. Honda Motor Co., which gets 44 percent of its sales in North America, gained 1.7 percent in Tokyo after the yen weakened against the dollar.
The MSCI Asia Pacific Index gained 0.6 percent to 126.30 as of 9:44 a.m. in Tokyo. The gauge slumped the most since Feb. 19 yesterday after regulators sued Goldman Sachs for fraud related to collateralized debt obligations. Securities and Exchange Commission officials voted 3-2 to pursue the case, two people familiar with the matter said.
“The divided vote on Goldman suggests excessive regulation that would reduce bank earnings will be avoided,” said Fumiyuki Nakanishi, a senior strategist at SMBC Friend Securities Co. in Tokyo.
Futures on the Standard & Poor’s 500 Index advanced 0.1 percent. The gauge rose 0.5 percent yesterday as the index of U.S. leading indicators rose in March by the most in 10 months.
Sumitomo Mitsui Financial Group Inc. rose 1.4 percent in Tokyo as Morgan Stanley upgraded the nation’s banks and Citigroup Inc.’s profit beat estimates. National Australia Bank Ltd., the nation’s third-biggest lender, climbed 2.8 percent in Sydney. Honda Motor Co., which gets 44 percent of its sales in North America, gained 1.7 percent in Tokyo after the yen weakened against the dollar.
The MSCI Asia Pacific Index gained 0.6 percent to 126.30 as of 9:44 a.m. in Tokyo. The gauge slumped the most since Feb. 19 yesterday after regulators sued Goldman Sachs for fraud related to collateralized debt obligations. Securities and Exchange Commission officials voted 3-2 to pursue the case, two people familiar with the matter said.
“The divided vote on Goldman suggests excessive regulation that would reduce bank earnings will be avoided,” said Fumiyuki Nakanishi, a senior strategist at SMBC Friend Securities Co. in Tokyo.
Futures on the Standard & Poor’s 500 Index advanced 0.1 percent. The gauge rose 0.5 percent yesterday as the index of U.S. leading indicators rose in March by the most in 10 months.
Monday, April 19, 2010
Sesa Goa Profit Increases on Higher Iron-Ore Demand From China
April 19 (Bloomberg) -- Sesa Goa Ltd., India’s biggest iron-ore exporter, said fourth-quarter profit more than doubled on higher demand for the steelmaking raw material from China.
Group net income climbed to 12.2 billion rupees ($273 million) in the three months ended March 31 from 5.5 billion rupees a year earlier, the Panaji, Goa-based company said today in an e-mailed statement. Net sales rose to 28.1 billion rupees from 15.8 billion rupees.
Sesa Goa, a unit of Vedanta Resources Plc, exports most of its production to steelmakers in China and Japan. China is the world’s largest buyer of iron ore and last year increased imports by 42 percent to a record 628 million metric tons. Chinese imports of the iron ore by sea could rise 47 percent this year from 2008 levels, Johannesburg-based Kumba Iron Ore Ltd. said on April 15.
Average cash prices of 62 percent iron-content ore delivered to Tianjin port in China jumped 87.5 percent to $131.6 a metric ton in the three months ended March 31, compared with $70.2 a ton a year ago, according to the Steel Index.
Group net income climbed to 12.2 billion rupees ($273 million) in the three months ended March 31 from 5.5 billion rupees a year earlier, the Panaji, Goa-based company said today in an e-mailed statement. Net sales rose to 28.1 billion rupees from 15.8 billion rupees.
Sesa Goa, a unit of Vedanta Resources Plc, exports most of its production to steelmakers in China and Japan. China is the world’s largest buyer of iron ore and last year increased imports by 42 percent to a record 628 million metric tons. Chinese imports of the iron ore by sea could rise 47 percent this year from 2008 levels, Johannesburg-based Kumba Iron Ore Ltd. said on April 15.
Average cash prices of 62 percent iron-content ore delivered to Tianjin port in China jumped 87.5 percent to $131.6 a metric ton in the three months ended March 31, compared with $70.2 a ton a year ago, according to the Steel Index.
Citigroup Net More Than Doubles as Loan Costs Decline
April 19 (Bloomberg) -- Citigroup Inc. said profit more than doubled as the global economic rebound trimmed costs for bad loans, trading revenue surpassed analysts’ estimates and the value of subprime mortgage bonds increased.
First-quarter net income of $4.43 billion followed a loss of $7.58 billion in the fourth quarter and a profit of $1.59 billion in the first three months of 2009, New York-based Citigroup said today in a statement. Adjusted per-share earnings were 14 cents. Analysts in a Bloomberg survey estimated the company would break even.
Chief Executive Officer Vikram Pandit, who is taking a $1 annual salary until the company turns consistently profitable, said in February that 2010 may show the “earnings potential of the new Citi” after two straight annual losses totaling $29 billion. Profit was the highest since the second quarter of 2007 as bad-loan costs fell 16 percent to $8.37 billion.
“They are now feeling themselves to be sufficiently reserved and they’re beginning to reduce credit expenses,” said Gary Townsend, president of Hill-Townsend Capital LLC, a Chevy Chase, Maryland-based investment firm, in an interview on Bloomberg Television. “That falls directly to the bottom line.”
Citigroup, which climbed 38 percent on the New York Stock Exchange this year before today, advanced 19 cents, or 4.2 percent, to $4.75 in composite trading at 9:46 a.m.
Assets Increase
The bank’s assets increased 8 percent to $2 trillion, after accounting rule makers closed a loophole that had allowed banks to keep credit-card loans and other debt instruments off their balance sheets.
Revenue from continuing operations shrank 5.8 percent to $25.4 billion, while consumer-banking revenue rose 3.1 percent to $8.08 billion, Citigroup said.
Chief Financial Officer John Gerspach said on a conference call with reporters that the company took $800 million of write- ups on subprime mortgage bonds. Writedowns on subprime bonds were among the biggest causes of Citigroup’s losses over the past two years.
“Our performance was aided by stability in the capital markets and improvement in the global business climate,” Pandit said in the statement.
Under bank accounting rules, bad-loan costs include charge- offs during the quarter as well as any increases or decreases of loss reserves for future defaults.
Charge-Offs
Charge-offs in the first quarter climbed to $8.38 billion from $7.28 billion. Overall, the bad-loan costs fell because the bank released $18 million from its reserves, compared with an increase a year earlier of $2.63 billion.
Revenue from trading and investment banking fell 34 percent to $8 billion. Citigroup had $6.59 billion of trading revenue, exceeding Credit Suisse Group AG analyst Moshe Orenbuch’s estimate of $5 billion.
The bank had $1.06 billion of mergers-advisory and underwriting revenue. Orenbuch forecast $1.1 billion.
Citigroup Vice Chairman Edward “Ned” Kelly will become chairman of the investment-banking division, according to an internal memo obtained by Bloomberg News and confirmed by spokeswoman Danielle Romero-Apsilos.
Revenue in Citigroup’s global transaction services division, which manages bank accounts for corporations and acts as securities custodian for fund managers, was $2.44 billion, up from $2.37 billion.
The Citi Holdings division, which includes businesses that Pandit has said he wants to exit, had revenue of $6.55 billion, compared with $4.06 billion a year earlier.
Government’s Stake
Citigroup, which had to get a $45 billion bailout in 2008, repaid $20 billion of the funds in December. The remaining $25 billion was converted by the Treasury Department into 7.7 billion Citigroup shares, which have a market value of about $35 billion.
“All of us at Citi recognize that we would not be where we are without the assistance of American taxpayers,” Pandit said in the statement. He said the company was “gratified” to be able to repay the government “with a substantial return, as well as create a significant increase in the value of their equity in Citi.”
JPMorgan Chase & Co.’s first-quarter profit climbed 55 percent from a year earlier, and Bank of America Corp.’s fell 25 percent. Goldman Sachs Group Inc. reports earnings tomorrow and Morgan Stanley is scheduled for April 21.
First-quarter net income of $4.43 billion followed a loss of $7.58 billion in the fourth quarter and a profit of $1.59 billion in the first three months of 2009, New York-based Citigroup said today in a statement. Adjusted per-share earnings were 14 cents. Analysts in a Bloomberg survey estimated the company would break even.
Chief Executive Officer Vikram Pandit, who is taking a $1 annual salary until the company turns consistently profitable, said in February that 2010 may show the “earnings potential of the new Citi” after two straight annual losses totaling $29 billion. Profit was the highest since the second quarter of 2007 as bad-loan costs fell 16 percent to $8.37 billion.
“They are now feeling themselves to be sufficiently reserved and they’re beginning to reduce credit expenses,” said Gary Townsend, president of Hill-Townsend Capital LLC, a Chevy Chase, Maryland-based investment firm, in an interview on Bloomberg Television. “That falls directly to the bottom line.”
Citigroup, which climbed 38 percent on the New York Stock Exchange this year before today, advanced 19 cents, or 4.2 percent, to $4.75 in composite trading at 9:46 a.m.
Assets Increase
The bank’s assets increased 8 percent to $2 trillion, after accounting rule makers closed a loophole that had allowed banks to keep credit-card loans and other debt instruments off their balance sheets.
Revenue from continuing operations shrank 5.8 percent to $25.4 billion, while consumer-banking revenue rose 3.1 percent to $8.08 billion, Citigroup said.
Chief Financial Officer John Gerspach said on a conference call with reporters that the company took $800 million of write- ups on subprime mortgage bonds. Writedowns on subprime bonds were among the biggest causes of Citigroup’s losses over the past two years.
“Our performance was aided by stability in the capital markets and improvement in the global business climate,” Pandit said in the statement.
Under bank accounting rules, bad-loan costs include charge- offs during the quarter as well as any increases or decreases of loss reserves for future defaults.
Charge-Offs
Charge-offs in the first quarter climbed to $8.38 billion from $7.28 billion. Overall, the bad-loan costs fell because the bank released $18 million from its reserves, compared with an increase a year earlier of $2.63 billion.
Revenue from trading and investment banking fell 34 percent to $8 billion. Citigroup had $6.59 billion of trading revenue, exceeding Credit Suisse Group AG analyst Moshe Orenbuch’s estimate of $5 billion.
The bank had $1.06 billion of mergers-advisory and underwriting revenue. Orenbuch forecast $1.1 billion.
Citigroup Vice Chairman Edward “Ned” Kelly will become chairman of the investment-banking division, according to an internal memo obtained by Bloomberg News and confirmed by spokeswoman Danielle Romero-Apsilos.
Revenue in Citigroup’s global transaction services division, which manages bank accounts for corporations and acts as securities custodian for fund managers, was $2.44 billion, up from $2.37 billion.
The Citi Holdings division, which includes businesses that Pandit has said he wants to exit, had revenue of $6.55 billion, compared with $4.06 billion a year earlier.
Government’s Stake
Citigroup, which had to get a $45 billion bailout in 2008, repaid $20 billion of the funds in December. The remaining $25 billion was converted by the Treasury Department into 7.7 billion Citigroup shares, which have a market value of about $35 billion.
“All of us at Citi recognize that we would not be where we are without the assistance of American taxpayers,” Pandit said in the statement. He said the company was “gratified” to be able to repay the government “with a substantial return, as well as create a significant increase in the value of their equity in Citi.”
JPMorgan Chase & Co.’s first-quarter profit climbed 55 percent from a year earlier, and Bank of America Corp.’s fell 25 percent. Goldman Sachs Group Inc. reports earnings tomorrow and Morgan Stanley is scheduled for April 21.
Sunday, April 18, 2010
C.K. Prahalad, Management Guru, Dies
Coimbatore Krishnarao Prahalad, one of India's best-known management exports and a distinguished professor at the Ross School of Business at the University of Michigan, died Friday in San Diego after a brief illness. He was 68 years old.
Mr. Prahalad, a world authority on management thinking, was most famous for his unconventional thinking on the "bottom-of-the-pyramid" approach. He followed this up with a book of the same name in 2004. In his book, "The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits," Mr. Prahalad proposes that businesses should start looking at the billions of poor all over the world as value-demanding consumers and not just as those on the fringes of society who can ill afford to buy products. The book went on to become a New York Times bestseller.
Born in Chennai in the Indian state of Tamil Nadu in 1941, Mr. Prahalad was one of nine children of a Sanskrit scholar and judge. He joined Union Carbide in 1960 soon after completing his bachelors in Physics from Loyola College in Madras. He then did his post graduation at the Indian Institute of Management in Ahmedabad, completing his studies there in 1966, and went on to do a PhD on multinational management at the Harvard Business School in 1972.
Mr. Prahlad's theory is believed to have affected many Indian and developing world retail outlets, for instance driving consumer-goods companies like Godrej and Hindustan Lever to come up with small-sized sachets of products like shampoo that could be sold as individual portions.
In 2009, the government of India conferred upon him the Padma Bhushan, one of India's highest civilian awards.
Mr. Prahalad's repertoire includes consulting for some of the world's leading companies, such as AT&T, Citigroup, Kodak, Oracle, Philips and Unilever. Besides "The Fortune at the Bottom of the Pyramid," his other books include "Competing for the Future" with Gary Hamel, "The Future of Competition" with Venkat Ramaswamy and "The New Age of Innovation" with M.S. Krishnan
Mr. Prahalad, a world authority on management thinking, was most famous for his unconventional thinking on the "bottom-of-the-pyramid" approach. He followed this up with a book of the same name in 2004. In his book, "The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits," Mr. Prahalad proposes that businesses should start looking at the billions of poor all over the world as value-demanding consumers and not just as those on the fringes of society who can ill afford to buy products. The book went on to become a New York Times bestseller.
Born in Chennai in the Indian state of Tamil Nadu in 1941, Mr. Prahalad was one of nine children of a Sanskrit scholar and judge. He joined Union Carbide in 1960 soon after completing his bachelors in Physics from Loyola College in Madras. He then did his post graduation at the Indian Institute of Management in Ahmedabad, completing his studies there in 1966, and went on to do a PhD on multinational management at the Harvard Business School in 1972.
Mr. Prahlad's theory is believed to have affected many Indian and developing world retail outlets, for instance driving consumer-goods companies like Godrej and Hindustan Lever to come up with small-sized sachets of products like shampoo that could be sold as individual portions.
In 2009, the government of India conferred upon him the Padma Bhushan, one of India's highest civilian awards.
Mr. Prahalad's repertoire includes consulting for some of the world's leading companies, such as AT&T, Citigroup, Kodak, Oracle, Philips and Unilever. Besides "The Fortune at the Bottom of the Pyramid," his other books include "Competing for the Future" with Gary Hamel, "The Future of Competition" with Venkat Ramaswamy and "The New Age of Innovation" with M.S. Krishnan
Friday, April 16, 2010
Goldman Sachs Sued by SEC for Fraud Tied to CDOs
April 16 (Bloomberg) -- Goldman Sachs Group Inc. was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The firm’s shares tumbled as much as 16 percent and financial stocks slumped.
Goldman Sachs misstated and omitted key facts about a financial product tied to subprime mortgages as the U.S. housing market was starting to falter, the Securities and Exchange Commission said in a statement today. The SEC also sued Fabrice Tourre, a Goldman Sachs vice president.
“The product was new and complex but the deception and conflicts are old and simple,” SEC Enforcement Director Robert Khuzami said in the statement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
The SEC alleged that Goldman Sachs, led by Chief Executive Officer Lloyd Blankfein, 55, structured and marketed CDOs that hinged on the performance of subprime mortgage-backed securities. The New York-based firm failed to disclose to investors that hedge fund Paulson & Co. was betting against the CDO, known as Abacus, and influenced the selection of securities for the portfolio, the SEC said. Paulson wasn’t accused of wrongdoing.
Financial Stocks Slump
A gauge of banks and brokerages in the Standard & Poor’s 500 Index sank 3.9 percent for the top loss among 24 groups after the SEC announced its action. Bank of America Corp. and JPMorgan Chase & Co. lost at least 3.5 percent as all 27 companies in the S&P 500 Diversified Financial Index declined.
“This gave the politicians everything they need to push for stronger financial reform and it’s going to further shake investor confidence in Wall Street,” said Matthew McCormick, a banking-industry analyst and portfolio manager at Bahl & Gaynor Inc. in Cincinnati, which oversees $2.8 billion.
Shares of Goldman Sachs fell $23.64, or 13 percent, to $160.63 as of 11:37 a.m. in New York Stock Exchange trading. It was the biggest one-day drop since Jan. 20, 2009.
Goldman Sachs spokesman Lucas Van Praag didn’t return a call and an e-mail seeking comment. A call to Richard Klapper, an attorney for Goldman Sachs at Sullivan & Cromwell LLP, wasn’t returned. Tourre, reached by phone in London today, declined to comment. A call to Pamela Chepiga, a lawyer for Tourre at Allen & Overy LLP, wasn’t returned.
Stefan Prelog, a spokesman for New York-based Paulson & Co., said he couldn’t comment. The company oversees $32 billion.
Goldman Sachs misstated and omitted key facts about a financial product tied to subprime mortgages as the U.S. housing market was starting to falter, the Securities and Exchange Commission said in a statement today. The SEC also sued Fabrice Tourre, a Goldman Sachs vice president.
“The product was new and complex but the deception and conflicts are old and simple,” SEC Enforcement Director Robert Khuzami said in the statement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
The SEC alleged that Goldman Sachs, led by Chief Executive Officer Lloyd Blankfein, 55, structured and marketed CDOs that hinged on the performance of subprime mortgage-backed securities. The New York-based firm failed to disclose to investors that hedge fund Paulson & Co. was betting against the CDO, known as Abacus, and influenced the selection of securities for the portfolio, the SEC said. Paulson wasn’t accused of wrongdoing.
Financial Stocks Slump
A gauge of banks and brokerages in the Standard & Poor’s 500 Index sank 3.9 percent for the top loss among 24 groups after the SEC announced its action. Bank of America Corp. and JPMorgan Chase & Co. lost at least 3.5 percent as all 27 companies in the S&P 500 Diversified Financial Index declined.
“This gave the politicians everything they need to push for stronger financial reform and it’s going to further shake investor confidence in Wall Street,” said Matthew McCormick, a banking-industry analyst and portfolio manager at Bahl & Gaynor Inc. in Cincinnati, which oversees $2.8 billion.
Shares of Goldman Sachs fell $23.64, or 13 percent, to $160.63 as of 11:37 a.m. in New York Stock Exchange trading. It was the biggest one-day drop since Jan. 20, 2009.
Goldman Sachs spokesman Lucas Van Praag didn’t return a call and an e-mail seeking comment. A call to Richard Klapper, an attorney for Goldman Sachs at Sullivan & Cromwell LLP, wasn’t returned. Tourre, reached by phone in London today, declined to comment. A call to Pamela Chepiga, a lawyer for Tourre at Allen & Overy LLP, wasn’t returned.
Stefan Prelog, a spokesman for New York-based Paulson & Co., said he couldn’t comment. The company oversees $32 billion.
Financial Shares Tumble After Goldman Sachs Charged With Fraud
April 16 (Bloomberg) -- Financial shares tumbled after the Securities and Exchange Commission charged Goldman Sachs Group Inc. with fraud related to packaging and selling collateralized debt obligations linked to subprime mortgages.
Goldman Sachs, the most profitable firm in Wall Street history, tumbled 10 percent to $165.02 in New York Stock Exchange composite trading at 11:12 a.m. in New York for the biggest intraday decline in a year.
A gauge of banks and brokerages in the Standard & Poor’s 500 Index sank 4.3 percent for its biggest decline since February 4 and the top loss among 24 groups. Bank of America Corp., Morgan Stanley and JPMorgan Chase & Co. lost at least 4.3 percent as all 27 companies in the S&P 500 Diversified Financial Index declined at least 1.7 percent after the SEC announced its action. Berkshire Hathaway Inc. Class A shares tumbled 5.1 percent.
Goldman Sachs misstated and omitted key facts about a CDO as the U.S. housing market was beginning to falter, the Securities and Exchange Commission said in a statement today. The SEC also sued Fabrice Tourre, a Goldman Sachs vice president.
“I wouldn’t want to own Goldman stock right now,” said Keith Goddard, president of Capital Advisors, which oversees $810 million in Tulsa, Oklahoma. “If this turns out to be remotely true, do you want to be doing business with someone who doesn’t have your best interests in mind? That’s the accusation here.”
Goldman Sachs, the most profitable firm in Wall Street history, tumbled 10 percent to $165.02 in New York Stock Exchange composite trading at 11:12 a.m. in New York for the biggest intraday decline in a year.
A gauge of banks and brokerages in the Standard & Poor’s 500 Index sank 4.3 percent for its biggest decline since February 4 and the top loss among 24 groups. Bank of America Corp., Morgan Stanley and JPMorgan Chase & Co. lost at least 4.3 percent as all 27 companies in the S&P 500 Diversified Financial Index declined at least 1.7 percent after the SEC announced its action. Berkshire Hathaway Inc. Class A shares tumbled 5.1 percent.
Goldman Sachs misstated and omitted key facts about a CDO as the U.S. housing market was beginning to falter, the Securities and Exchange Commission said in a statement today. The SEC also sued Fabrice Tourre, a Goldman Sachs vice president.
“I wouldn’t want to own Goldman stock right now,” said Keith Goddard, president of Capital Advisors, which oversees $810 million in Tulsa, Oklahoma. “If this turns out to be remotely true, do you want to be doing business with someone who doesn’t have your best interests in mind? That’s the accusation here.”
Thursday, April 15, 2010
Govt imposes duty on cotton exports to check rising prices
NEW DELHI: The government has imposed a duty of Rs 2,500 per tonne on raw cotton exports in order to moderate prices of the commodity in the domestic market and help the local textiles industry.
The Central Board of Excise and Customs has notified the export duty on the natural fibre, which has seen a sharp rise in prices in the recent few months.
The measure follows the decision by a high-level meeting chaired by Finance Minister Pranab Mukherjee last week.
The export duty has been levied for six months, an official in the textiles ministry said.
The domestic textile industry has been pitching for cotton export restrictions in the wake of steep rise in prices of the natural fibre.
The price of Shankar-6 variety, the premium quality of cotton, has risen to around Rs 28,500 per candy from around Rs 25,000 per candy (356 kg) in November 2009.
India, the world's second largest cotton producer, exported 2.36 million bales (of 170 kg each) of cotton last season (from October 2008 to September 2009).
Besides, the government is taking steps to ensure that there is adequate availability of cotton in the country.
"It was decided that there should be a carry-forward stock of about 50 lakh bales of raw cotton at the beginning of the next cotton season (starting October 2010)," the textiles ministry official said.
Besides, a three per cent duty on export of cotton waste has also been imposed.
Last week, the government also imposed restrictions on export of cotton yarn, making it mandatory for exporters to register their shipments with the textiles commissioner.
As per a notification by the Directorate General of Foreign Trade, export consignments of cotton yarn would now have to be registered with the textiles commissioner before they can leave the country.
The Central Board of Excise and Customs has notified the export duty on the natural fibre, which has seen a sharp rise in prices in the recent few months.
The measure follows the decision by a high-level meeting chaired by Finance Minister Pranab Mukherjee last week.
The export duty has been levied for six months, an official in the textiles ministry said.
The domestic textile industry has been pitching for cotton export restrictions in the wake of steep rise in prices of the natural fibre.
The price of Shankar-6 variety, the premium quality of cotton, has risen to around Rs 28,500 per candy from around Rs 25,000 per candy (356 kg) in November 2009.
India, the world's second largest cotton producer, exported 2.36 million bales (of 170 kg each) of cotton last season (from October 2008 to September 2009).
Besides, the government is taking steps to ensure that there is adequate availability of cotton in the country.
"It was decided that there should be a carry-forward stock of about 50 lakh bales of raw cotton at the beginning of the next cotton season (starting October 2010)," the textiles ministry official said.
Besides, a three per cent duty on export of cotton waste has also been imposed.
Last week, the government also imposed restrictions on export of cotton yarn, making it mandatory for exporters to register their shipments with the textiles commissioner.
As per a notification by the Directorate General of Foreign Trade, export consignments of cotton yarn would now have to be registered with the textiles commissioner before they can leave the country.
One year on, challenges remain at Mahindra Satyam
A year after taking over the former Satyam Computers, the Mahindra Satyam officials say that a lot has changed for good in the internal systems of Satyam, reports CNBC-TV18's Appaji Reddem.
Exactly a year after taking over Satyam, a visibly confident management of Mahindra Satyam says the fundamentals of the company have been changed to ensure better transparency.
CP Gurnani, CEO, Mahindra Satyam, said, "The fundamental change that happened in the organization was that 14 layers of management were reduced to seven layers. That means between CEO to my youngest engineer trainee, there are seven layers. Fundamentally, the structural changes that have happened around a better transparency, more availability of data, better collaboration between teams and essentially what you see is that customer centricity."
Despite legal issues, the firm also ensures that the much awaited re-statement of Satyam accounts will happen in the coming June as scheduled.
Vineet Nayyar, Chairman, Mahindra Satyam, said, "As the schedule goes, we believe, we will be able to meet the timelines."
The Corporate Affairs Minister Salman Khurshid, who had inaugurated Mahindra Satyam's 26 acre SEZ today, said one needs to take law into account before thinking of meeting timelines, especially with regard to the re-statement of Satyam accounts.
Khurshid stated, "There are technical matters that obviously have to be taken into account. Not everything that we wish and desire is possible immediately because we have to take the law into account. There are many other aspects related to recovery and revival of Mahindra Satyam."
Anand Mahindra tells Mahindra Satyam employees that war is over and it's time to dance. But it's definitely a tough road ahead for Mahindra Satyam as several of documents required to re-state the accounts are still locked up with the Central Bureau of Investigation. And the lawsuits by the US Securities and Exchange Commission are expected to be one of the major troubles for the company.
Exactly a year after taking over Satyam, a visibly confident management of Mahindra Satyam says the fundamentals of the company have been changed to ensure better transparency.
CP Gurnani, CEO, Mahindra Satyam, said, "The fundamental change that happened in the organization was that 14 layers of management were reduced to seven layers. That means between CEO to my youngest engineer trainee, there are seven layers. Fundamentally, the structural changes that have happened around a better transparency, more availability of data, better collaboration between teams and essentially what you see is that customer centricity."
Despite legal issues, the firm also ensures that the much awaited re-statement of Satyam accounts will happen in the coming June as scheduled.
Vineet Nayyar, Chairman, Mahindra Satyam, said, "As the schedule goes, we believe, we will be able to meet the timelines."
The Corporate Affairs Minister Salman Khurshid, who had inaugurated Mahindra Satyam's 26 acre SEZ today, said one needs to take law into account before thinking of meeting timelines, especially with regard to the re-statement of Satyam accounts.
Khurshid stated, "There are technical matters that obviously have to be taken into account. Not everything that we wish and desire is possible immediately because we have to take the law into account. There are many other aspects related to recovery and revival of Mahindra Satyam."
Anand Mahindra tells Mahindra Satyam employees that war is over and it's time to dance. But it's definitely a tough road ahead for Mahindra Satyam as several of documents required to re-state the accounts are still locked up with the Central Bureau of Investigation. And the lawsuits by the US Securities and Exchange Commission are expected to be one of the major troubles for the company.
Monday, April 12, 2010
Government to discuss allowing FDI in retail
The government of India is planning to allow multi-brand retail to the foreign direct investment (FDI) showing its resolve to open up the sector to international chains.
The department of industrial policy and promotion (DIPP) was written a letter to the finance ministry and is also carrying out discussions with the agriculture ministry about the allowing FDI into the sector.
DIPP is responsible for framing the foreign investment policy for the central government. The department is under the commerce and industry ministry and is proposing to allow 100% FDI in defence production.
"The move to open up retail is part of the government's strategy to plug gaps in the food supply chain and more importantly, help bring down the difference between farm-gate prices and retail prices," said a DIPP official.
Presently, the government allows 51% foreign investment in single-brand retail only and it has been reluctant in opening up the sector to the FDI fearing blackish from the political parties.
The government will put forward the argument that the control of the units will remain in the Indian hands. The official indicated that government will put a cap of 49%.
International chains like US-based Wal-Mart and Germany's Metro AG who have set up shops in the country have been asking the government to open up the sector for FDI.
The department of industrial policy and promotion (DIPP) was written a letter to the finance ministry and is also carrying out discussions with the agriculture ministry about the allowing FDI into the sector.
DIPP is responsible for framing the foreign investment policy for the central government. The department is under the commerce and industry ministry and is proposing to allow 100% FDI in defence production.
"The move to open up retail is part of the government's strategy to plug gaps in the food supply chain and more importantly, help bring down the difference between farm-gate prices and retail prices," said a DIPP official.
Presently, the government allows 51% foreign investment in single-brand retail only and it has been reluctant in opening up the sector to the FDI fearing blackish from the political parties.
The government will put forward the argument that the control of the units will remain in the Indian hands. The official indicated that government will put a cap of 49%.
International chains like US-based Wal-Mart and Germany's Metro AG who have set up shops in the country have been asking the government to open up the sector for FDI.
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