Archive for December, 2010

Google buy of Groupon could see antitrust review

Wednesday, December 1st, 2010 | Finance News

NEW YORK (Reuters) – Google Inc could run into antitrust scrutiny that would make any acquisition of discount coupon provider Groupon a long, complex affair, a source and experts said.

The two companies remain in direct negotiations, sources said on Wednesday.

"The more Google acquires, the more antitrust issues they are opening themselves up to," said a source familiar with the situation, who requested anonymity because the talks are ongoing. "That has to be considered."

The review process in the United States will take a long time, said one head of media investment banking who is not involved in the discussions.

But one argument that Google could make is that the barriers to entry for a discount coupon company are low, given the 80 to 100 participants already in the market, said a sector banker who is not involved in the talks.

A possible deal will undoubtedly bring more vendors and customers to one place, but that banker said Google will be able to assert that although it is buying a big participant, the deal is not anticompetitive.

Groupon said it would not address any speculation about its business, an apparent reference to media reports on Tuesday that Google was close to buying it for $6 billion.

Google shares gained 1.6 percent to close at $564.35 on Wednesday.

Chicago-based Groupon separately said it was acquiring Ludic Labs, which develops local marketing services including Offer Foundry and Diddit. It also announced the opening of an office in downtown Palo Alto, California, and plans to expand its team there from 25 people to more than 100 in the next year.

Late on Tuesday, Groupon said it had acquired three "daily deal" websites -- uBuyiBuy, Beeconomic and Atlaspost -- to expand its reach across East and Southeast Asia. Atlaspost has more than 1.2 million users in Taiwan, Groupon said.

Groupon did not disclose terms of any of the transactions.

The company sends its members daily e-mails with details of discounts for 200 goods and services. The deals are activated only when a minimum number of people agree to make a purchase, giving Groupon the clout to negotiate steep group discounts on products and services.

The three Asian companies, active in Taiwan, Hong Kong and Singapore, will transition to the Groupon brand in a few months.

Groupon also launched Groupon Hong Kong, Groupon Singapore, Groupon Philippines and Groupon Taiwan on Wednesday.

"We see enormous potential in the Asian marketplace," President Rob Solomon said in a statement.

Groupon's global network has more than 33 million subscribers in 35 countries.

(Reporting by Martinne Geller in New York and Melanie Lee in Shanghai; Editing by Chris Lewis, Lisa Von Ahn and Matthew Lewis)

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GOP says it’ll block bills until tax cuts extended

Wednesday, December 1st, 2010 | Finance News

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WASHINGTON – Senate Republicans threatened Wednesday to block virtually all legislation until expiring tax cuts are extended and a bill is passed to fund the federal government, vastly complicating Democratic attempts to leave their own stamp on the final days of the post-election Congress.

"While there are other items that might ultimately be worthy of the Senate's attention, we cannot agree to prioritize any matters above the critical issues of funding the government and preventing a job-killing tax hike," all 42 GOP senators wrote in a letter to Majority Leader Harry Reid, D-Nev. The 42 signatures are more than enough to block action on almost any item he wishes to advance.

The threat does not apply to a new arms control treaty with Russia that is pending, since it would be debated under rules that differ from those that apply to routine legislation. President Barack Obama has made ratification of the pact a top priority.

But it does threaten Democratic attempts to lift the Pentagon's ban on openly gay members of the military, a separate item to give legal status to young illegal immigrants who attend college or serve in the military, and a measure to expand first responders' collective bargaining rights. The tax and spending bills are likely to be the last to pass before Congress adjourns for the year.

"Republicans have pleaded with Democrats to put aside their wish-list to focus on the things Americans want us to focus on. They've ignored us. The voters repudiated their agenda at the polls. They've ignored them. Time is running out. They're ignoring that," Senate Republican Leader Mitch McConnell of Kentucky said in remarks on the Senate floor. "The election was a month ago. It's time to get serious. It's time to focus on priorities."

McConnell and Reid met Wednesday to discuss the legislative agenda, but no agreements were reached.

The Democratic to-do list also includes extending the expiring tax cuts — although they and Republicans differ on particulars, as well as a measure to keep the government in operation. But the rest of their agenda marks an attempt to court voters Democrats need in 2012 to recapture the majority, including Hispanics, gay-rights activists and organized labor.

Call it lame-duck politics.

Take the so-called Dream Act, a measure to give young people whose parents brought them into the United States illegally before they were 16 a path to legal status by going to college or joining the armed forces.

The measure has enjoyed some degree of bipartisan support in the past, and Reid, the majority leader, vowed last month — in the thick of his tough re-election fight in heavily Hispanic Nevada — to hold a vote on it when Congress returned to finish its end-of-the-year business. He said Tuesday he'd move to overcome GOP objections and force a test vote, although it's unclear when one will occur.

Hispanic voters also played a major role in sparing other Democrats — including Sens. Michael Bennet of Colorado and Barbara Boxer of California — from being toppled by a GOP wave.

"There was a firewall in the West where Latino voters turned out in big numbers to reward people who championed them," said Frank Sharry of America's Voice, an immigrant advocacy group. "We're going to try to make it painful" for those who oppose efforts to give illegal immigrants a path to legal status, he added.

Most Republicans vehemently oppose the Dream Act, saying it amounts to amnesty. And they decry the strategy of acting on such issues during the lame-duck session, accusing Democrats of playing politics and ignoring the message voters sent Nov. 2.

But Democrats also face pressure from their left flank.

Gay-rights groups have criticized Reid for not pushing hard enough to repeal the "don't ask, don't tell" policy against openly gay soldiers, as the House has already voted to do.

Reid has promised to hold a Senate vote on the matter before year's end, after hearings can be held later this week on a Pentagon report on the impact that openly serving gays would have on the military.

Republicans say they need to examine the report, which was issued Tuesday, before acting. It concluded that getting rid of the policy might cause some disruption at first but wouldn't create widespread or long-lasting problems.

Obama seized on the conclusion to call on the Senate to act "as soon as possible" to repeal the ban, "so I can sign this repeal into law this year and ensure that Americans who are willing to risk their lives for their country are treated fairly and equally."

Reid also said Wednesday he'd force action on legislation long sought by public safety worker unions to create federal rules guaranteeing first responders in every state and the District of Columbia have the right to organize and bargain on hours, wages and work rules, among other things.

The measure is seen by labor as a final chance before Democrats' Capitol Hill clout fades to accomplish a legislative goal, after its top priority — a bill to make it easier for workers to form unions — stalled in the Senate.

The International Association of Fire Fighters, which has pushed hard for the bill, gave nearly $2 million to congressional candidates in advance of last month's midterm elections, most of it to Democrats.

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Private employers add jobs, manufacturing grows

Wednesday, December 1st, 2010 | Finance News

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NEW YORK (Reuters) – U.S. private sector payrolls rose by the most in three years in November, lifting optimism about the job market ahead of Friday's government employment report, while manufacturing data showed growth was intact.

The labor market has been among the weakest parts of the U.S. economy, and economists see gains in that area as evidence that the recovery is picking up steam. Manufacturing, on the other hand, has led the recovery.

U.S. private employers added a stronger-than-forecast 93,000 jobs in November, the biggest rise since November 2007, after an upwardly revised gain of 82,000 the month before, data by ADP Employer Services, which developed the report with Macroeconomic Advisers LLC, showed Wednesday.

In a separate report, the Institute for Supply Management said its index of national factory activity dipped to 56.6 last month from 56.9 in October, in line with expectations and well above the 50 level which indicates expansion.

The report also showed employment plans were steady with the prior month.

The private payrolls rise "is just another sign of re-acceleration in the labor market. Some of the details suggest that there is a 60 percent chance that the government's payroll number could beat consensus," said John Canally, Investment Strategist at LPL Financial in Boston.

The U.S. government's monthly employment report on Friday is forecast to show another month of job gains in both the private and public sectors. In a Reuters poll, nonfarm payrolls are seen up 140,000 in November while private payrolls are seen up 153,000.

U.S. stocks (.SPX) ended up more than 2 percent, helped partly by the data but also by speculation that the European Central Bank would take tough measures to address the euro zone debt crisis. The U.S. dollar ended down against the euro, which snapped a three-day decline. Yields on benchmark U.S. Treasury 10-year notes were sharply higher.

UNEMPLOYMENT STILL SEEN HIGH

Even though economists cheered the job gains, they noted the labor market still has a long way to go. Friday's jobs report is forecast to show the U.S. unemployment rate remained at 9.6 percent in November.

Also, the number of planned layoffs in November by U.S. employers rose to the highest since March, according to a report by consultants Challenger, Gray & Christmas, Inc.

Employers announced 48,711 planned job cuts last month, up 28 percent from 37,986 in October, with the government and nonprofit sector leading the rise, the report showed.

A government report showing construction spending posted a 0.7 percent gain in October provided a more upbeat view of the economy. Expectations had been for a 0.4 percent decline in spending, a Reuters poll showed.

Another report showed that nonfarm productivity grew faster than previously estimated in the third quarter. According to the government data, productivity increased at an annual rate of 2.3 percent rather than the 1.9 percent pace reported last month, as employers squeezed more output from workers and kept costs down.

Suggesting improvement in consumer demand also, U.S. auto sales rose 17 percent in November from a year earlier, according to manufacturers on Wednesday.

The annual sales rate was near 12.3 million vehicles in November, little changed from October, as American consumers were lured into showrooms by month-end discounts for new car purchases that many had delayed through the recession.

Investment bank Goldman Sachs (GS.N) raised its forecast for U.S. GDP growth for 2011 to 2.7 pct from 2.0 pct on Wednesday.

(Additional reporting by Lucia Mutikani in Washington, Leah Schnurr, Richard Leong and Steven Johnson in New York and David Bailey in Detroit; Editing by James Dalgleish and Andrew Hay)

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