Archive for February, 2009

Microsoft CFO sees tough years ahead (Reuters)

Thursday, February 26th, 2009 | Finance News

SEATTLE (Reuters) –
Microsoft Corp's (MSFT.O) chief financial officer forecast at least another year of tough trading in all areas on Thursday, as the economy shows no immediate sign of recovery.

At the same time, the world's largest software company confirmed that it had cut the rate it pays agencies supplying temporary office workers by 10 percent, as it looks to trim costs as demand wanes for its applications and devices.

"A contraction of some substance is the way that we are thinking about it," said Microsoft Chief Financial Officer Christopher Liddell at a Goldman Sachs technology conference in San Francisco, which was broadcast on the Internet.

"How long the contraction's going to be and how deep none of us know," he added. "Despite what politicians and others are saying, it's probably for the next year or two that we're going to see a difficult trading environment."

Separately, Microsoft confirmed that it had cut rates paid to agencies supplying temporary office staff, saying it was part of a broad cost-cutting plan announced in January, which included slashing 5,000 staff over the next 18 months.

The move was motivated by "the need to achieve greater cost reductions," a Microsoft spokesman said, adding that the cuts did not affect more skilled contract workers such as programmers.

The Redmond, Washington-based company, which employs about 95,000 people, does not break out numbers of temporary or contract workers and did not say how much the move would save.

At the Goldman Sachs conference, Liddell also said that the roll-out of its new Windows 7 operating system might help personal computer sales rebound next year.

"We might see a bump (in PC sales) next year, just as a result of lower demand this year," said Liddell, who expects some users will delay buying a new computer to wait for Windows 7, expected early next year. "It will be helpful, but it will not outweigh the general macro-economics."

Liddell was neutral on the prospects for a deal with Yahoo Inc (YHOO.O) over its rival's Internet search business, which the executives of both companies appeared to be warming to in comments made this week.

"We have to have a plan that excludes Yahoo, we can't be dependent on that," said Liddell. "Even though we've suggested it would be great to get together, we don't work on the basis that's going to happen. If it does that's great, but if it doesn't, that's fine too."

Yahoo rebuffed a $47.5 billion acquisition bid from Microsoft last year, and saw a deal to form a search advertising partnership with Google Inc (GOOG.O) fall apart amid antitrust concerns.

Microsoft's shares closed down 3.2 percent at $16.42 on Nasdaq.

(Reporting by Bill Rigby)

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Fannie Mae posts huge 2008 loss, seeks new bailout (AFP)

Thursday, February 26th, 2009 | Finance News

WASHINGTON (AFP) –
Troubled US mortgage finance giant Fannie Mae said Thursday it lost almost 60 billion dollars last year and expected to suffer more losses in 2009, and asked for a further 15.2 billion dollars in government aid.

The US government-controlled Fannie Mae reported a loss of 25.2 billion dollars in the fourth quarter driven mainly by the effects of a prolonged housing slump and a global financial crisis. It had a third-quarter loss of 29.0 billion dollars.

For the full year of 2008, the company posted a loss of 58.7 billion dollars, almost 27 times higher than the 2007 loss of 2.1 billion dollars.

Fannie Mae said it submitted a request Wednesday for 15.2 billion dollars from the Treasury "in order to eliminate our net worth deficit as of December 31, 2008."

"We expect the market conditions that contributed to our net loss for each quarter of 2008 to continue and possibly worsen in 2009, which is likely to cause further reductions in our net worth," the company said in a statement.

The fourth-quarter loss was driven mainly by 12.3 billion dollars in credit losses due to declining housing market conditions, 12.3 billion dollars in losses on derivatives and 4.6 billion dollars in writedowns of the value of its mortgage-backed securities, the statement said.

The company and its troubled twin, government-controlled Freddie Mac, finance more than 40 percent of US home mortgage and were taken over by the government in September last year in a bid to avert their collapse and a further meltdown of the mortgage market.

The US Treasury Department said last week it was doubling its financial support to the two mortgage giants, to 200 billion dollars each, in an effort to stabilize the real estate sector.

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Hedge fund in talks with Target on board seats (AP)

Thursday, February 26th, 2009 | Finance News

NEW YORK – Activist hedge fund manager William Ackman is in talks with Target Corp. about naming potential directors to the discount retailer's board, according to a Securities and Exchange Commission filing on Thursday.

Target shares gained 61 cents, or 2.2 percent, to $28.43 in aftermarket electronic trading, after gaining 23 cents to close the regular session at $27.82. The stock has lost about half of its value since peaking at $59.55 in September before the market meltdown.

In recent months, Target Corp. has suffered from a drop in consumer spending, while other discount chains — particularly rival Wal-Mart Stores Inc. — have outperformed. While Wal-Mart concentrates on offering low-price essentials, Target has focused more on a cheap-chic variety of more discretionary items like clothing and home decor.

On Tuesday, Target reported that its fourth-quarter profit fell 41 percent.

Ackman did not disclose the number or identity of the potential board nominees. The investor said his firm may boost or reduce his stake in the company or take other action, depending on the outcome of the talks and other factors.

In the filing, Ackman said he continues to believe in the "fundamental investment case for Target" and thinks its stock is currently undervalued.

Through his hedge fund, Pershing Square Capital Management LP, Ackman reported holding 58.4 million Target shares, which represents a 7.8 percent stake in the Minneapolis, Minn.-based company.

Ackman also reported selling a number of call options covering Target's common stock this month. In early February, Ackman's stake in the company totaled 9.7 percent.

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