Archive for November, 2008

Microsoft rules out buying Yahoo but likes search deal (Reuters)

Wednesday, November 19th, 2008 | Finance News

NEW YORK (Reuters) –
Microsoft Corp Chief Executive Steve Ballmer ruled out an acquisition of Yahoo Inc on Wednesday but said his company was interested in resuming talks on a Web search partnership.

Yahoo shares fell 19 percent on the remarks, after gaining this week on renewed investor hopes that Microsoft may refresh its bid for the Internet company after Yahoo Chief Executive Jerry Yang announced that he would step down.

"Let me be as clear as I think I've tried to be publicly. We are done with all acquisition discussions with Yahoo," Ballmer told Microsoft's annual shareholders meeting, in response to a question on what was happening with Yahoo.

"I've said that a bunch of times. Somehow some people have gotten confused nonetheless," Ballmer added. "We thought we had something that made sense. (It) didn't make sense to them. We've moved on."

Microsoft withdrew its $47.5 billion buyout offer for Yahoo in May after Yang and his board rejected the bid as too low. The software company then offered to buy Yahoo's search business, but Yahoo decided instead to sign a search advertising deal with Google Inc

The Google deal has since fallen apart, after opposition from U.S. antitrust regulators who were concerned about an alliance between the Web's two biggest search companies.

Microsoft has said that it was still interested in pursuing a search deal with Yahoo, and Ballmer reiterated that on Wednesday.

"There's no active discussion on that front. But we'd be very open to it. But acquisition discussions are finished," he said.

At the meeting, which was broadcast over the Internet, Ballmer told shareholders that while the world's biggest software maker is seeing growth in all of its business groups, it is "not immune" to the tough economic climate.

He repeated that Microsoft is looking for areas to cut costs, including hiring, which "points to much, much slower head count for the remainder of this financial year and I suspect into next financial year."

However, investment in research and development would continue, Ballmer said.

Microsoft, the world's largest software maker with more than 91,000 employees worldwide, has been on a hiring spree, adding more than 20,000 employees in the last two years.

Shares of Yahoo fell 19 percent to $9.38, while Microsoft shares were down 3 percent at $18.99.

(Reporting by Franklin Paul, Editing by Derek Caney)


US inflation plunges, world crisis hits carmakers (AFP)

Wednesday, November 19th, 2008 | Finance News

Automakers worldwide warned of more perils from the global economic meltdown as the latest US data on Wednesday added to growing fears of huge job losses and a long, painful recession ahead.

Automakers in the United States, Britain, Germany and Italy appealed for government help, opening a new front in the crisis after two months of financial turmoil and sparking more sharp falls on jittery stock markets.

US government data meanwhile showed that consumer prices plunged a record 1.0 percent in October -- the steepest one-month decline in 60 years, led by oil prices plummeting from their July record highs.

US stocks opened in negative territory Wednesday after the consumer price data, which highlighted slowing demand in the world's largest economy.

The Dow Jones Industrial Average dropped 0.24 percent to 8,404.60 in opening trade and the tech-heavy Nasdaq fell 0.25 percent to 1,479.61.

On Wednesday the heads of the US "Big Three" car makers, General Motors, Ford and Chrysler, were to return to Congress, hats in hand.

They warned lawmakers on Tuesday that the US economy faced a "catastrophic collapse" if the government did not lend 25 billion dollars to keep them afloat.

Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corporation, warned: "The auto industry is related to many other industries and the negative impact (of its possible collapse) on employment is unfathomable."

In Britain the Society of Motor Manufacturers and Traders (SMMT) and the Retail Motor Industry Federation called on the government to shield the British automotive sector from a credit squeeze through loans and possible guarantees.

German carmaker Opel, a division of General Motors, is to cut production next year and is mulling a 30-hour work week, its directors told the Frankfurter Allgemeine Zeitung newspaper.

"We are getting set for tough times and revising lower by around 10 percent our (output) volume forecasts for 2009," Hans Demant said.

Opel has already asked the German government to guarantee loans it might need if the US parent group goes bankrupt.

Meanwhile the German solar power group SolarWorld surprised the auto industry by offering 1.0 billion euros (1.26 billion dollars) for Opel.

In Milan the head of Italian auto giant Fiat, Luca Cordero di Montezemolo, insisted that Europe now had to "find a means to stimulate the automobile industry," which "represents a significant part of the continent's gross domestic product."

The chief executive of Japan's Nissan Motor Co. Carlos Ghosn meanwhile signalled that his company was likely to make "zero" profits in the second half of the current fiscal year.

"We have to recognise 2009 will be one of the most challenging years for our industry and the whole economy in the last 50 years," he told the Wall Street Journal.

Officials said the European Union was preparing targeted action including incentives to make environmentally friendly cars, rather than an overall bailout to help the auto sector, one of Europe's biggest employers.

"There won't be subsidies, and besides the industry is not asking for subsidies," said EU Industry Commissioner Guenter Verheugen.

European stock markets fell sharply Wednesday, deepening earlier losses following the release of the new US data.

The London FTSE 100 index was down more than two percent while the CAC 40 in Paris and the DAX in Frankfurt each lost more than three percent.

Tokyo on Wednesday closed down 0.66 percent, Hong Kong fell 0.77 percent and Sydney dropped 0.7 percent. Shares in Shanghai, however, surged 6.05 percent at the close as bargain-hunters bought up energy stocks.

More gloomy signs appeared in Spain, where the economy hovered on the brink of recession after 14 years of growth, having shrunk 0.2 percent in the third quarter compared to the second, official figures showed on Wednesday.

The OECD economic group warned Spain was hurtling toward recession and called for reforms expected to be painful for workers.

Other US government data on Wednesday showed construction starts on new homes and housing building permits also fell to record lows in October as the prolonged slump in the real-estate sector deepened.

"This report is a shocker," said Patrick Newport, analyst at IHS Global Insight.

One bright spot in the relentless fog of gloomy economic news was provided by Kenichi Watanabe, chief executive at Nomura Holdings, Japan's top brokerage, who said a global liquidity crisis appears to have passed.

"The liquidity crisis in the financial world is over. The next step is how to rebuild the real economy," he told reporters.


Holiday traffic could fall 9.9 percent: ShopperTrak (Reuters)

Wednesday, November 19th, 2008 | Finance News

CHICAGO (Reuters) –
Retail stores may be much less crowded this holiday season, as one research firm sees foot traffic sliding a record 9.9 percent as shoppers suffer from the weak economy and low consumer confidence.

ShopperTrak, which also sees a record-low increase in sales during the same period of 0.1 percent, said retailers have experienced a "perfect storm" of high gasoline prices, collapsing stock markets and a presidential election that distracted shoppers.

"Due to numerous factors that retailers can't control, 2008 has been a challenging year and it seems this pattern will continue throughout the crucial holiday shopping season," Bill Martin, co-founder of ShopperTrak, said in a statement.

"Currently we're anticipating the lowest retail sales and total U.S. traffic numbers we've seen since we started compiling this data in 2001, which will most likely leave retailers scrambling to entice consumers into their stores early and often during the holidays," he added.

ShopperTrak measures foot traffic mainly in mall-based retailers and it does not capture traffic at many busy big-box retailers like Wal-Mart Stores Inc (WMT.N), Target Corp (TGT.N) and Best Buy Co Inc. (BBY.N).

ShopperTrak defines the holiday season in its study as the full months of November and December, although the bulk of the activity takes place in the traditional holiday season between the day after Thanksgiving and Christmas.

The ShopperTrak Retail Traffic Index is based on data from more than 50,000 retail and mall locations throughout the United States.

In November, ShopperTrak sees foot traffic and sales off 12.1 percent and 0.6 percent, respectively. In December, it sees foot traffic off 8.1 percent, while sales are expected to rise 0.6 percent.

Last year's holiday shopping season saw traffic fall 2.7 percent, while sales rose 2.5 percent, ShopperTrak said.

Martin pointed out that the 2008 holiday shopping season has only 27 days between Thanksgiving and Christmas, five days less than the prior year, because of a late Thanksgiving.

"This means retailers should see some strength earlier in the season on Black Friday due to pent-up demand, but also means procrastinators may be caught by surprise late in the year," he said.

This year could resemble the 2002 holiday season, which also reflected a 27-day shopping period, a recession and a national election, though not a presidential one, ShopperTrak said. Following the 2002 election, enclosed mall traffic averaged a 3.9 percent year-over-year decline through the rest of the holiday shopping season.

"Black Friday," the day after Thanksgiving, is expected to be the busiest traffic day of the holiday season, and the Saturday before Christmas -- December 20 -- is forecast to be the second-busiest day of the season, followed by the day after Christmas, Friday, December 26 -- a big day for exchanges and returns.

(Reporting by Ben Klayman, editing by Gerald E. McCormick)