Archive for June, 2009 ends commission program in RI (AP)

Tuesday, June 30th, 2009 | Finance News

PROVIDENCE, R.I. – has cut ties with Rhode Island Web sites that make referrals to the online retailer because a law designed to collect sales taxes on these transactions will soon come into force, the Providence Journal reported Tuesday.

Seattle-based Amazon wrote to Rhode Island Web site operators, telling them its "Associates program" ended Monday. Web sites that posted links to the company about its products have received up to a 15 percent cut on sales.

On June 17, the Rhode Island legislature passed a budget provision that would force Amazon to collect 7 percent in sales taxes on these so-called "click-through" transactions.

Amazon argues the law is unconstitutional, so eliminating the commission would prevent the company from having to collect the sales tax most consumers pay on purchases at in-state stores.

Rhode Island taxpayers currently must pay sales taxes for out-of-state purchases on their annual tax return, but it's an honor system.

Amazon spokeswoman Patty Smith did not immediately respond to an Associated Press e-mail seeking comment Tuesday.

She, however, told the Providence Journal on Monday that "The government in Rhode Island is attempting to go about tax collection in what we feel is an unconstitutional manner."

Amazon's decision will have no immediate effect on Rhode Island's revenues because the state didn't project any new tax income immediately, according to House Finance Committee chairman Steven M. Costantino.

Amazon's announcement is the latest in a legal fight involving states trying to get out-of-state companies that perform commerce largely online with their residents but have little or no physical presence in the state to collect taxes.

The stakes are large. Governments could generate $3 billion in new revenues if Web retailers had to collect taxes on all sales to consumers, according to Forrester Research.

Amazon sued New York in 2008 over a law similar to what Rhode Island lawmakers passed because it argued it unlawfully imposes tax-collection obligations on out-of-state entities. A trial court judge dismissed the case in January.

"It should be noted that while Amazon is fighting this measure in New York, they have not stopped doing business with the affiliates in New York state," Gov. Don Carcieri's spokeswoman, Amy Kempe, said.

On Friday, Amazon pulled the plug on commissions for North Carolina Web sites because a similar law could soon be enacted.

The company currently collects sales taxes from customers in states in which Amazon has a bona fide physical presence, including Washington, Kentucky and Kansas.


Magna-Opel deal in doubt (Reuters)

Tuesday, June 30th, 2009 | Finance News

Efforts to save two leading European carmakers took a twist on Tuesday that could change the ownership of both crisis-hit General Motors Corp's (GMGMQ.PK) Opel and German sportscar maker Porsche (PSHG_p.DE).

As GM readied for bankruptcy, the Financial Times reported Belgium-based holding company RHJ International (RHJI.BR), a former bidder for Opel, was back in the running and close to a deal that would strand Canadian-Austrian auto parts group Magna International (MGa.TO).

Elsewhere, Qatar made an offer to the Porsche and Piech families that control the Porsche SE automotive holding that could help cut its debt mountain.

Porsche and Volkswagen (VOWG.DE) have been in talks to create an "integrated" automotive group after Porsche's 9 billion euro ($12.6 billion) debt burden forced it to drop plans for a full takeover of VW. But progress toward creating a combined company stalled after Porsche chief executive Wendelin Wiedeking sought investment from Qatar's sovereign wealth fund.


The FT reported GM was close to a deal with RHJ to sell a stake in Opel, and a memorandum of understanding could be signed within days.

Talks on a stake in Opel between its parent, GM, and Magna -- going on since Magna clinched an agreement just before GM's bankruptcy filing in May, pipping Fiat (FIA.MI) to the post at the time -- have hit snags, the paper said.

RHJ was named as a potential Opel buyer in media reports but never confirmed or denied it had made an initial bid let alone a second, improved one. But according to the Financial Times, RHJ has improved an earlier bid and is being taken "very seriously" by GM and a memorandum of understanding could be signed in days.

The FT reported RHJ's new offer was said to be more sensitive to job losses in Germany, which is providing $2.1 billion of bridge financing to keep the carmaker afloat as GM goes through bankruptcy proceedings.

Another sticking point in negotiations with Magna is access to the Detroit carmaker's global technology, which Magna wants to secure on behalf of Russian partners, the paper said. Magna has teamed up with GAZ (GAZA.RTS) and Sberbank (SBER03.MM) for the bid.

RHJ and Magna declined to comment, as did Fiat whose chief executive Sergio Marchionne has said he wants to focus on Chrysler (CBS.UL) -- in which it has taken a 20 percent stake -- after the Italian automaker's bid for Opel failed, and that its existing bid for Opel was the best it can do.

Back in the United States, GM is due to seek approval from a court on Tuesday to sell its assets to a "New GM" in a plan to reinvigorate the automaker under government ownership.

Also on Tuesday, Hyundai Motor Co (005380.KS) offered to allow customers to lock in fuel prices for new vehicles in a sales promotion aimed at the economic anxieties of American consumers.

(Reporting by Reuters reporters; Writing by Helen Massy-Beresford; Editing by Dan Lalor.)

($1 = 0.7143 euro)


Airlines lost $3 billion in first quarter (Reuters)

Tuesday, June 30th, 2009 | Finance News

GENEVA (Reuters) –
The world's airlines lost more than $3 billion in the first quarter of 2009, the International Air Transport Association (IATA) said on Tuesday, maintaining its estimate for full-year losses of $9 billion.

In its latest snapshot on the industry, the Geneva-based lobby said weak travel demand and lower freight volumes in the global recession had bled revenues for major carriers, in "a significant deterioration from last year."

"This deterioration was before the recent rise in fuel prices," IATA said, warning the 30 percent increase in oil and jet fuel prices since early May would squeeze airline cash flows further in coming months.

Both oil and jet fuel prices have risen almost $20 a barrel in the past two months, and are now 75 percent higher than their low point at the end of 2008, the Financial Monitor report said.

"Airlines have not yet felt the full impact of this oil price rise," it said.

But it said it was not changing its previous 2009 loss forecast of $9 billion, which follows revised 2008 losses of $10.4 billion.

On Tuesday, U.S. crude traded around $72 per barrel.

IATA, which represents more than 200 airlines, also said carriers trying to fly fewer flights to save costs during the downturn have not managed to cut capacity in line with shrinking air transport demand.

Leading airlines have been seeking mergers and acquisitions to help build scale and shield themselves against continued market weakness until the global economy recovers.

Delta Air Lines (DAL.N) swallowed rival Northwest Airlines last year to create the world's largest airline, and European carriers have also consolidated with Deutsche Lufthansa (LHAG.DE) agreeing to buy Austrian Airlines and Air France-KLM (AIRF.PA) scooping up Alitalia.

British Airways (BAY.L) is also in merger talks with Iberia (IBLA.MC), and Singapore Airlines (SIAL.SI) has said it is eyeing acquisitions in China and India.

(Reporting by Laura MacInnis; Editing by Stephanie Nebehay and Dan Lalor)