Archive for April, 2009

GE and Intel to unveil health care partnership (Reuters)

Wednesday, April 1st, 2009 | Finance News

BOSTON (Reuters) –
U.S. conglomerate General Electric (GE.N) and Intel (INTC.O), the world's largest chip maker, plan to join forces in the health-care field, a source said on Wednesday.

The companies' respective chief executives, Jeff Immelt and Paul Otellini are scheduled to discuss their plans at a press conference in New York on Thursday.

A GE spokesman declined to disclose details of the announcement ahead of the event.

GE's health care unit makes medical imaging devices as well as systems for managing patient records electronically.

(Reporting by Scott Malone, editing by Leslie Gevirtz)

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GM U.S. sales drop 45 percent, sees signs of bottom (Reuters)

Wednesday, April 1st, 2009 | Finance News

DETROIT (Reuters) –
General Motors Corp (GM.N) on Wednesday reported a 45 percent decline in auto sales for March in the U.S. market, but the drop was broadly within expectations for the struggling automaker.

GM executives, echoing comments from other major automakers, said there were some signs that industry-wide auto sales were starting to stabilize after a brutal decline over the past year and a half.

Shares of GM, which had been down as much as 19 percent in earlier trading on Wednesday, erased most of their losses.

Shares of the automaker, which could face bankruptcy by June as it operates under federal oversight, were down 3 percent in afternoon trade.

In March, the White House-appointed autos panel was weighing the fate of GM and its smaller rival Chrysler LLC.

The panel, which is headed by former investment banker Steve Rattner, on Monday gave GM 60 days to reach cost-saving deals with its bondholders and its major union and threatened that it could be pushed into bankruptcy.

But President Barack Obama also repeated his support for preserving the U.S. auto industry and his administration offered to backstop the warranties offered by GM and Chrysler.

GM executives said industry-wide sales closed the month on a strong note and seemed to move higher for all of the major automakers after Obama's televised remarks on the auto industry on Monday.

"He may have given the whole industry a lift," GM sales analyst Mike DiGiovanni told reporters and analysts. "Obama may have reassured consumers in general."

GM's sales were up from February and DiGiovanni said there were other economic indicators that suggested the U.S. auto market was starting to stabilize after 17 consecutive months of year-on-year sales declines.

Although unemployment continues to rise and home prices are still falling, the decline in mortgage rates and recent rally in stocks point toward a pickup in auto sales, he said.

GM joined rivals Ford Motor Co (F.N) and Hyundai Motor Co (005380.KS) in offering incentive programs for April that will cover some car payments for buyers who lose their jobs.

"Hopefully, we're bouncing around the bottom here," DiGiovanni said.

GM sold 155,334 cars and light trucks in March compared with 280,713 units a year earlier.

(Reporting by Kevin Krolicki, editing by Dave Zimmerman)

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KPMG hit with lawsuit over New Century collapse (Reuters)

Wednesday, April 1st, 2009 | Finance News

MIAMI (Reuters) –
Accounting giant KPMG was hit with a billion-dollar lawsuit on Wednesday over claims its "grossly negligent audits" helped trigger the collapse of a top subprime mortgage lender at the start of the U.S. housing crisis.

New Century Financial Corp, the largest independent provider of home loans to people with poor credit, filed for bankruptcy two years ago amid mounting customer defaults.

Its failure rippled across the U.S. mortgage lending industry, sparking a string of other bankruptcies that roiled financial markets as banks booked losses on billions in mortgage-linked securities at the heart of the current global financial crisis.

The lawsuit, on behalf of a liquidating trust formed by New Century debtors, was filed against both KPMG International (KPMG.UL) and its U.S. arm, KPMG LLP.

It accuses KPMG of helping cover up "catastrophic" problems at New Century -- including accounting and financial errors -- that led to its collapse.

"As New Century's auditor, KPMG failed its public watchdog duty," the suit says.

KPMG spokesman Dan Ginsburg said he had not seen the suit and had no immediate comment. But the company said in a statement that it had acted "in accordance with professional standards" in it dealings with New Century.

"We will vigorously defend our audit work. Any implication that the collapse of New Century was related to accounting issues ignores the reality of the global crisis. This was a business failure not an accounting issue," the statement said.

ACCOUNTING FRAUD

The suit demands at least $1 billion in damages.

At one point, KPMG "did the unthinkable for a public auditor," the lawsuit alleges. It issued an audit report on New Century's 2005 financial results before its audit was complete, "falsely enabling" New Century to file its annual report with the U.S. Securities and Exchange Commission.

Many of the problems at New Century stemmed from aggressive business practices that saw the company grow from originating $357 million in mortgage loans in its first year of operation in 1996 to about $60 billion in 2006.

Despite its denial of wrongdoing, an independent report requested by the U.S. Department of Justice found that KPMG either initiated accounting fraud at New Century or stood idly by as it committed fraud in 2005 and 2006.

"Despite KPMGI's promise that it would ensure that KPMG LLP audit services would comply with professional standards and regulatory requirements, KPMG LLP conducted grossly negligent audits and reviews of New Century that violated both professional standards and regulatory requirements," the complaint says.

The suit was filed by Venice, California law firm Thomas Alexander & Forrester LLP. Different, but overlapping versions of the complaint, targeting the Netherlands-based parent company (KPMGI) and U.S. arm of KPMG, were filed in federal courts in New York and Los Angeles, respectively.

The New York suit could mark the first time a Big Four auditing firm is held legally liable for the actions of its U.S. subsidiary, said Steven Thomas, the lead attorney for the plaintiff.

"This wasn't an audit failure that affected a small company, it wasn't an audit failure that just affected their creditors, or even just affected the U.S. financial system. This had a worldwide impact," Thomas told Reuters.

(Editing by Maureen Bavdek, Leslie Gevirtz)

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