Archive for August, 2009

Employees aim for up to 5 percent stake in VW: report (Reuters)

Saturday, August 29th, 2009 | Finance News

FRANKFURT (Reuters) –
The roughly 370,000 employees of Volkswagen (VOWG.DE) and Porsche are striving initially to acquire a stake of up to 5 percent in the automotive group, VW's labor chief told a German newspaper.

"I don't know how much we will end up with. It certainly won't be 10 percent overnight, but between one and five percent to begin with," Sueddeutsche Zeitung quoted Bernd Osterloh on Saturday as saying.

It was not clear yet how the employees would finance the purchase of their stake, the paper said.

Volkswagen -- Europe's biggest carmaker -- agreed to buy a 42 percent stake in the sports car unit of debt-ridden Porsche SE (PSHG_p.DE) earlier this month.

It will pay up to 3.3 billion euros ($4.7 billion) this year for the initial stake in the unit, Porsche AG, paving the way for the creation of an "integrated" automotive group by the end of 2011.

To finance the purchase, Volkswagen plans a capital increase of preference shares in the first half of 2010.

(Editing by Mike Peacock)

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China’s CIC wealth fund muscles up as markets recover (Reuters)

Friday, August 28th, 2009 | Finance News

BEIJING (Reuters) –
China Investment Corp is investing as much overseas each month this year as it did in all of 2008, Lou Jiwei, the chairman of the $298 billion sovereign wealth fund, said on Saturday.

CIC is counting on handsome returns this year and might one day ask the government to hand it more of the country's record hoard of foreign reserves to manage, Lou, a former vice finance minister, said.

The fund invested just $4.8 billion outside China last year as it kept its powder dry during the global financial crisis, when asset prices tumbled. It held fully 87.4 percent of its overseas investments in cash or cash equivalents.

Now that markets are recovering, CIC is constructing a broad-based portfolio, Lou told reporters on the sidelines of a forum organized by the Washington-based Brookings Institution and the Chinese Economists 50 Forum, a Beijing think-tank.

CIC posted a negative 2.1 percent return on its global investment portfolio last year as the value of stakes such as those in Wall Street bank Morgan Stanley (MS.N) and private equity giant Blackstone Group (BX.N) slumped.

But Lou said 2009 was shaping up better.

"It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose," he said.

CIC was set up in September 2007 with $200 billion of foreign currency reserves transferred from the central bank, which manages its own stockpile of $2.13 trillion.

"If our returns are not bad and the state's FX reserves are still rising, we may go and ask for more," Lou said.

He said the risk of a decline in the dollar risks was more of a national issue for China than for CIC because its capital is in dollars.

Asked whether CIC would be a keen buyer in the United States, Lou said CIC can buy anywhere in the world, but it cannot avoid buying U.S. assets because the American economy and capital markets are so large.

Lou said CIC was building a broad investment portfolio that includes products designed to generate both alpha and beta; to hedge against both inflation and deflation; and to provide guaranteed returns in the event of a new crisis.

"We have to be in everything because you never know what's going to happen in this world," he said.

As well as investing overseas, CIC controls Central Huijin, a company that holds the state's shares in big commercial banks. The increase in the value of these stakes is the reason why CIC's assets had soared to $298 billion by the end of last year.

Lou said he expected returns from Central Huijin to decline in coming years because domestic banks profits will come under pressure as their net interest margin shrinks.

Moreover, banks will have to bolster their capital base by issuing subordinated bonds or equity, diluting Huijin's returns, he said.

(Reporting by Zhou Xin and Alan Wheatley; Editing by Sanjeev Miglani)

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Sun Microsystems posts loss as Oracle deal nears (Reuters)

Friday, August 28th, 2009 | Finance News

SAN FRANCISCO (Reuters) –
Sun Microsystems Inc (JAVA.O) reported a fourth quarter loss on Friday, as the computer server maker's planned acquisition by Oracle Corp (ORCL.O) nears expected completion.

Sun, which is being acquired by the world's No. 3 software maker for $7 billion, posted a net loss of $147 million, or 20 cents a share, in the fourth quarter ended June 30.

That compares with a net profit of $88 million, or 11 cents a share, in the year ago period.

Excluding items, Sun reported a loss of 3 cents a share.

Sun will post additional charges related to job cuts and facilities reductions over the next several quarters, the company said.

Sun's fourth quarter revenue fell to $2.63 billion from $3.78 billion a year ago.

Oracle has said it expects to close its acquisition of Sun by August 31, and the company last week won U.S. antitrust approval for the deal. The acquisition also requires approval by the European Commission.

Shares in the Santa Clara, California-based Sun slipped 0.2 percent to $9.32 after closing at $9.34 on the Nasdaq.

Shares in Redwood City, California-based Oracle held steady after-hours after closing at $22.16 on the Nasdaq.

(Reporting by Clare Baldwin; editing by Carol Bishopric)

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