Archive for June, 2009

Apple CEO Steve Jobs returns to work (Reuters)

Monday, June 29th, 2009 | Finance News

SAN FRANCISCO (Reuters) –
Apple Inc Chief Executive Steve Jobs is back at work following a near 6-month medical leave, although he will work at least initially from home for a few days a week, the company said on Monday.

The official word of his return followed months of speculation about the health of Jobs, a pancreatic cancer survivor and his future with the company he co-founded more than 30 years ago.

Jobs, 54, underwent a liver transplant in Memphis, Tennessee, while on leave. He has remained involved in strategic decisions at Apple while away, according to the company and he has been seen in recent weeks at Apple's headquarters in Cupertino, California.

"Steve is back to work," a company spokesman said. "He's currently at Apple a few days a week and working from home the remaining days. We are very glad to have him back."

Collins Stewart analyst Ashok Kumar said investors will be reassured that Jobs is back at the helm of the company he helped resuscitate over the past decade, with category-defining products such as the iPod and, more recently, the iPhone.

Kumar noted that some investors had feared Jobs would never return. "In many ways he's irreplaceable," he said. "Having him back brings the halo back to the company."

Apple shares were flat in late trading on the Nasdaq. The stock used to sink and surge with every twist in Jobs' health, but has proved to be less volatile of late as investors got used to the idea of other executives running the company in his absence.

STOCK LESS VOLATILE

Oppenheimer & Co analyst Yair Reiner said that, given the lack of information about Apple's CEO over the past six months, investors were forced to remove him from the equation.

"It really wasn't possible for someone to make an investment decision in Apple under the assumption that Steve Jobs was going to come back," Reiner said.

Jobs was treated for a rare form of pancreatic cancer in 2004. His gaunt appearance at an Apple event last summer spurred worries the cancer had returned.

In January, after initially blaming his noticeable weight loss on a hormone imbalance, Jobs announced he was taking medical leave until the end of June, saying his health-related issues were "more complex" than originally thought.

While Jobs was on leave, Chief Operating Officer Tim Cook handled Apple's day-to-day operations. Some analysts think Jobs may transition into an advisory role, focusing on products and strategy and Cook would formally become CEO.

The hospital in Memphis that performed Jobs' liver transplant said he "is now recovering well and has an excellent prognosis," but has not provided further details.

Pacific Crest Securities analyst Andy Hargreaves said questions remain and added that Apple has not shown itself very forthcoming on the subject of Jobs' health.

"The question is whether or not he's going to be there for the next several years and I don't think they've added any clarity on that," he added.

(Reporting by Gabriel Madway, editing by Richard Chang and Andre Grenon)

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Watson Wyatt shares slide, deal concerns cited (Reuters)

Monday, June 29th, 2009 | Finance News

NEW YORK (Reuters) –
Shares of consulting company Watson Wyatt Worldwide (WW.N) tumbled 8 percent on Monday as analysts cited concerns about its $3.5 billion merger with Towers Perrin Forster & Crosby.

The deal, announced late Sunday, will create the biggest human resources consultancy in the world, according to analysts at Stifel Nicolaus.

It will be a more powerful rival to businesses such as Hewitt Associates (HEW.N) and Mercer, a subsidiary of Marsh & McLennan Companies (MMC.N), during a time when clients have curbed discretionary spending.

The deal will take three years for Tower Perrin to add to Watson Wyatt's earnings on a GAAP basis, and two years on an adjusted earnings per-share basis, Roger Millay, Watson Wyatt's chief financial officer said on a conference call.

A three-year path to become accretive could imply a difficult integration, while there could be a net exodus of talent, said an analyst at Citigroup in a research note.

Integration and deal costs are likely to lower earnings per share and cash flow, thereby making the valuation less interesting, Citi said, while the integration could also offer its rivals some competitive opportunities in the interim. Citi lowered its price target on the deal by a dollar to $46 a share.

Watson Wyatt's shares slid 8 percent to $37.95 in early trading.

Stifel Nicolaus also said that near term disruption from the merger might help competitors, although it said that longer term, "we expect the combined entity to be a more formidable competitor".

The pair don't expect regulatory issues with combining the two firms, one executive said on the conference call on Monday.

Citi's analyst said that the deal could give Hewitt the opportunity to either pick up assets that may need to be sold for anticompetitive reasons or because talent is dissatisfied with elements of the merger.

"We would look for a net exodus of talent and relationships from Towers Watson to others in the industry like Hewitt and Mercer," Citi said.

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State Street may face SEC charges over mortgages (Reuters)

Monday, June 29th, 2009 | Finance News

NEW YORK (Reuters) –
Asset management and servicing giant State Street Corp (STT.N) said it might face civil charges by U.S. securities regulators for exposing investors to losses on subprime mortgages.

The company said on Monday that Securities and Exchange Commission staff had issued a "Wells" notice to its banking unit on Thursday regarding disclosures and management by State Street Global Advisors of "active" fixed-income strategies in 2007 and in prior periods.

A Wells notice indicates that SEC staff may bring civil charges, and gives the recipient a chance to mount a defense.

The Securities and Exchange Commission said on Monday that it had no comment on the matter.

Boston-based State Street, which oversees $11.3 assets in custody and has $1.4 trillion in assets under management, said it had been cooperating with the SEC and other regulators.

In 2007, State Street established a $625 million legal reserve to cover investor claims after the company invested in mortgage-related securities that lost value when credit markets tightened in the second half of the year.

Many investors have sued State Street, accusing it of misleading them about the risks of the investments. Last month, the company said that as of March 31, it had made $418 million of payments from the legal reserve, leaving $207 million.

State Street disclosed the Wells notice in an SEC filing.

In morning trading, the company's shares were down 2 percent at $47.38.

At Friday's close, the stock was up 22.8 percent year to date, beating the 16.5 percent rise in the Dow Jones U.S. Asset Managers Index (.DJUSAG).

(Reporting by Jonathan Stempel; Svea Herbst and Julie Vorman editing by John Wallace and Lisa Von Ahn)

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