Archive for November, 2009

GE, Vivendi agree to value NBCU stake at $5.8 billion (Reuters)

Monday, November 30th, 2009 | Finance News

NEW YORK (Reuters) –
General Electric Co and Vivendi SA have agreed in principle to a deal in which GE would buy the French company's 20 percent stake in NBC Universal for $5.8 billion, a source familiar with the matter said on Monday, paving the way for Comcast Corp's proposed joint venture with GE.

The agreement is mainly the result of a meeting between GE Chief Executive Jeffrey Immelt and Vivendi's CEO Jean-Bernard Levy in Paris last week, where the two parties made progress on the talks that had been going on for weeks, the source said.

GE and Comcast declined to comment. A Vivendi spokeswoman did not immediately return a call seeking comment.

Vivendi had originally valued its 20 percent stake in NBC Universal, acquired in 2004, at $6.1 billion, sources told Reuters earlier this month. But the two sides differed on that valuation, slowly narrowing their gap over the past few weeks. GE, which owns the remaining 80 percent, had offered around $5.6 billion about 10 days ago, a source had said then.

The two sides also have differed on when Vivendi would get paid: Vivendi initially wanted the entire payment upfront, while GE wanted to pay after its deal with Comcast closed. On November 20, a source familiar with the negotiations told Reuters that Vivendi had agreed to accept payment for one-third of its stake until the deal with Comcast closes.

The negotiations between Vivendi and GE have been holding up Comcast's plan to form a joint venture with GE by buying a controlling stake in NBC Universal, in what would be the biggest media deal this year. The two sides have valued NBC Universal at about $30 billion.

As part of that proposed deal, NBC Universal would become 51 percent owned by Comcast and 49 percent by GE. Comcast would contribute around $4 billion to $6 billion in cash, as well as its collection of cable networks to pay for its stake.

But for that deal to happen, GE has to buy out Vivendi's stake first. With the tentative agreement between GE and Vivendi, an announcement on the Comcast-GE deal could come in the next few days, two sources familiar with the matter said.

BIGGEST MEDIA DEAL

Under the terms of the proposed deal, the new company is expected to be able generate cash to pay down $9 billion in debt that would be added to its books as part of the agreement. It would use that debt to buy the rest of the company from GE.

GE has negotiated a redemption option that would give it the right to redeem all or part of its stake in the new company in exchange for cash at the 3-1/2-year mark and at a 7-year mark, sources have said.

Comcast has long wanted to buy media assets to create a content powerhouse spanning broadcast TV, cable and film. Chief Executive Brian Roberts said last month he would look at all opportunities in content.

Many of GE's shareholders have urged the conglomerate to offload NBC Universal, whose broadcast and cable networks, movie studio and theme parks are considered misfits among GE's mostly industrial operations.

(Reporting by Jui Chakravorty; Additional reporting by Anupreeta Das; Editing by Richard Chang and Carol Bishopric)

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Treasury sets guidance to simplify “short sales” (Reuters)

Monday, November 30th, 2009 | Finance News

NEW YORK (Reuters) –
The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed "short sales" of homes and other loan modification alternatives to stem a rising tide of foreclosures.

The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury's website.

Guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders.

The incentives, first announced in May, expand on the government's Home Affordable Modification Program, known as HAMP, that has seen limited success in lowering payments for distressed homeowners. The Treasury earlier on Monday stepped up pressure on mortgage companies to make permanent the 650,000 trial modifications they have started.

"While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve" or offer a modification, the Treasury said in its announcement.

Financial incentives for completing short sales or similar deed-in-lieu transactions -- in which the deed is simply transferred to the lender -- include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses.

Short sales are favored by real estate agents and community groups over foreclosure because they can preserve the borrower's credit rating and leave the property in better condition than when a homeowner is evicted. While primary lenders typically realize steep losses, their recovery is typically far better than under foreclosure.

But short sales have been frustrating for borrowers and real estate agents, often hung up by negotiations with multiple lien holders and mortgage insurance companies. Real estate agents have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.

Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.

It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.

In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.

Second lien holders in recent months have begun demanding more money from the first lender, seller, buyer or agent in exchange for releasing their claim, agents have said. Because primary lenders would face larger losses in a foreclosure, some subordinate lenders have felt empowered, the agents said.

The largest second-lien holders are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc.

Second lien holders may proceed with a short sale outside of the Treasury program, if they felt the cap was too low, a Treasury official said in October.

"If there was a short sale program that didn't recognize the second lien holder position, it could have pretty damaging consequences for the industry," Sanjiv Das, chief executive officer of CitiMortgage, said in an interview last week.

(Editing by Leslie Adler)

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Online retailers rev up deals to keep up momentum (AP)

Monday, November 30th, 2009 | Finance News

NEW YORK – Retail Web sites kept amping up the deals Monday, the first day after Thanksgiving weekend's strong online sales, to try to maintain the momentum.

Meanwhile, a research firm that tracks business at stores reported tepid sales and customer traffic for Friday and Saturday that confirmed a so-so start to the season for the bricks-and-mortar world.

Though the Web is only about 10 percent of the holiday shopping pie, it's seen most of the growth so far this year — an encouraging sign after last year's first online sales decline.

Coremetrics, a Web analytics company in San Mateo, Calif., said that as of 1 p.m. Monday, sales for the day that the industry still pitches as "Cyber Monday" were up 19.6 percent over a year ago.

The bright spot offers hope after traditional retail sales came in just above flat for Black Friday, with shoppers packing stores but sticking to their lists, going for deep discounts and practical items.

Investors voted with their dollars, rewarding online sellers. Amazon.com shares rose $4.17, or 3.2 percent, to $135.91 on a day when stocks of most traditional retailers fell as Wall Street analyzed the sea of data and anecdotal reports from the weekend.

ShopperTrak, which is based in Chicago and tracks sales and traffic at more than 50,000 outlets, said late Monday that retail sales for Friday and Saturday edged up 0.9 percent to $16.77 billion, while customer traffic fell 2.7 percent compared with last year. According to ShopperTrak, U.S. traffic slipped 2.5 percent on Friday, compared with an 18 percent drop in the year-ago period. Traffic fell 3.2 percent Saturday, compared with a 17 percent drop a year ago.

ShopperTrak derives its estimates from crowd-counting sensors in stores, combined with data from the retailers themselves on spending and how it relates to customer traffic.

The ShopperTrak results contrast with a report Sunday from the National Retail Federation on its poll indicating that more shoppers flocked to stores but each spent less than last year.

The dueling assessments show the difficulty of gathering and interpreting holiday weekend results. A fuller picture won't be known until Thursday, when major retailers report November sales figures.

Deeply discounted electronics such as flat-screen TVs, game systems and netbooks were popular, but more practical items such as appliances and home decor were also big sellers, as consumers took advantage of sales to buy things for themselves.

Many shoppers started looking for online deals ahead of what the industry still pitches as "Cyber Monday," as retailers stretched their online deals over several days.

Target, Walmart, Amazon.com and other retailers started offering the online equivalent of Black Friday specials on Thanksgiving or even earlier.

They stepped it up Monday. Amazon.com was discounting the Apple iPod Touch 8GB for $158, $20 less than Sunday and $40 off the retail price of about $200. Target.com offered a deal Monday for a Garmin GPS system for $186.99, down from $249.99. Free shipping was also prevalent.

Marshal Cohen, chief industry analyst at market research firm NPD Group, said this year saw the "graying of Black Friday," because deals that typically occurred only on the Friday after Thanksgiving have been spread out over two weeks.

"The holiday spread itself out," he said. "On Thanksgiving Day, there's a new tradition, shopping online before you stuff the turkey, putting the turkey in oven and going out shopping."

The Monday after Thanksgiving is usually far from the busiest online shopping day of the year, but it is typically one of the 10 busiest. It was dubbed "Cyber Monday" by the National Retail Federation trade group in 2005 to describe the Monday after the Thanksgiving holiday.

The thinking was that shoppers who lacked broadband Internet access at home would wait until returning to work to look online. Now that most homes have broadband, that rationale has faded.

Analysts expect Dec. 14, the last day consumers can order goods and have them arrive before Christmas, will be the busiest online shopping day.

Keith Harris, 36, an IT consultant for Hewlett-Packard, went out Friday for in-store sales, but he waited until Monday to buy a Playstation 3 because Walmart.com offered it at the best price on Monday — in a bundle with two games and a movie, for $369.

"You're looking for that once-in-a-lifetime deal," he said.

Forrester Research analyst Sucharita Mulpuru predicts online holiday sales will rise 8 percent to $44.7 billion. So far, the weekend results are "strong reinforcement of how Web sales continue to outpace store sales," she said. Online sales account for about 7 percent of retailers' total sales, though that increases to about 10 percent during the holidays, according to Forrester.

Scott Savitz, CEO of Shoebuy.com, one of the largest online shoe retailers, reported that traffic has been robust since Thanksgiving. He expects that Black Friday, not the Monday after Thanksgiving as it had in past years, will mark the first big surge in sales and traffic for his site.

"There is definitely a behavioral shift," said Savitz. "Clearly, people are seeing that Black Friday will be the start of the holiday season, no matter whether you are online or offline."

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Associated Press Writer Anne D'Innocenzio in New York contributed to this report.

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