Spanish bank Santander has submitted an offer to buy Royal Bank of Scotland's (RBS) Williams & Glyn's subsidiary.
RBS is selling the unit and its 318 branches after the European Commission ruled last year that it must dispose of the business as a condition of the bank being bailed out by the UK government.
Virgin Money, who had earlier dropped out of the bidding, told the BBC it was still interested in the RBS branches.
Santander said it was not sure when the tender process would end.
Santander is understood to have offered considerably less than £2bn.
"There is a pretty high probability that the board of RBS will conclude that Santander is not offering enough and will therefore withdraw the branches from sale, in the hope that market conditions for the auction of such assets improve in a year or two's time," BBC business editor Robert Peston said.
Under the agreement RBS reached with the European Commission on the disposal of certain of its businesses, RBS has another three and half years to complete the sale of the branches.
'Sale still open'
RBS said it was "seriously reviewing" Santander's offer, but added that the tender process remained open to other interested parties.
"This remains a competitive process and we will continue to do what is right for our shareholders in disposing of these assets," it said in a statement.
A number of other banks have been named as potential bidders, including National Australia Bank and US private equity group Blackrock, but reports have said they have dropped out of the running.
Santander already has a substantial presence on the UK High Street having bought Abbey National, Alliance & Leicester and Bradford & Bingley in recent years.
vineri, 18 iunie 2010
Obama warns G20 leaders on budget cuts
Barack Obama has warned against cutting national debts too quickly as it would put economic recovery at risk.
In a letter to G20 leaders, the US president said that while it was important to put in place "credible plans" to cut deficits, withdrawing economic stimulus early was dangerous.
"[In the past] stimulus was too quickly withdrawn and resulted in renewed hardships and recession," he warned.
But Mr Obama said the US would still aim to halve is own deficit by 2013.
The US budget deficit would be cut to 3% of GDP by 2015, the president said.
The leaders of the world's 20 leading economies are due to meet in Toronto on 26 June.
Mr Obama said the priority of the meeting should be "to safeguard and strengthen the recovery".
The BBC World Service's economics correspondent Andrew Walker said the letter appeared to express the US administrations reservations over recent changes in economic policy in Europe.
"There has been a marked change in emphasis in the G20 in the last few weeks," he said.
"For many of the group's member countries, especially in Europe, the case for stimulating economic recovery using the public finances has been overtaken by concerns about stabilising government debt."
The governments of several large European countries, Germany and the United Kingdom among them, have recently outlined plans for spending cuts.
In comments apparently directed at China, Mr Obama also stressed the need for flexible exchange rates to ensure a balanced global economy.
China has been criticised by the US for failing to allow its currency to trade freely.
The G20, which includes both developed and developing economies such as Russia, China and Argentina, has taken the lead in efforts to tackle the global financial crisis.
In a letter to G20 leaders, the US president said that while it was important to put in place "credible plans" to cut deficits, withdrawing economic stimulus early was dangerous.
"[In the past] stimulus was too quickly withdrawn and resulted in renewed hardships and recession," he warned.
But Mr Obama said the US would still aim to halve is own deficit by 2013.
The US budget deficit would be cut to 3% of GDP by 2015, the president said.
The leaders of the world's 20 leading economies are due to meet in Toronto on 26 June.
Mr Obama said the priority of the meeting should be "to safeguard and strengthen the recovery".
The BBC World Service's economics correspondent Andrew Walker said the letter appeared to express the US administrations reservations over recent changes in economic policy in Europe.
"There has been a marked change in emphasis in the G20 in the last few weeks," he said.
"For many of the group's member countries, especially in Europe, the case for stimulating economic recovery using the public finances has been overtaken by concerns about stabilising government debt."
The governments of several large European countries, Germany and the United Kingdom among them, have recently outlined plans for spending cuts.
In comments apparently directed at China, Mr Obama also stressed the need for flexible exchange rates to ensure a balanced global economy.
China has been criticised by the US for failing to allow its currency to trade freely.
The G20, which includes both developed and developing economies such as Russia, China and Argentina, has taken the lead in efforts to tackle the global financial crisis.
Chevron vows to pay for Salt Lake City oil spill
By PAUL FOY, Associated Press
Salt Lake City attorneys expect Chevron Corp. will quickly agree to a financial settlement related to last weekend's pipeline spill that dumped 33,000 gallons of crude oil into city waterways, a spokeswoman for Mayor Ralph Becker said Friday.
Becker has vowed to make Chevron pay for the cleanup, and the company has repeatedly pledged to cover the city's expenses, as well as damage or reimbursement claims from others.
A deal could be announced next week, said Lisa Harrison Smith, the mayor's spokeswoman.
"We won't be satisfied until it's done," she said.
San Ramon, Calif.-based Chevron believes an improbable series of events led to last Saturday's spill, which sent crude oil into pristine Red Butte Creek.
A short in an overhead 46,000-volt power line traveled to a fence post that acted like an electric arc welder, melting a quarter-size hole in the pipeline, the company said.
The bottom of the fence post was anchored just inches above the buried pipeline — an obvious danger that went unnoticed for 30 years, Chevron said.
"It would be highly unusual, but it's a plausible theory," Rocky Mountain Power spokesman Dave Eskelsen said.
Some of the spilled oil traveled in the creek through Salt Lake City to the Jordan River, which drains into the Great Salt Lake.
Chevron said it has cleaned up 21,000 of the 33,000 gallons of spilled oil. Much of that has been mopped and vacuumed from city waterways. Absorbent booms on the Jordan River have been capturing traces of oil, and workers were seen digging up oil-soaked soil Wednesday and sucking up residual oil from Red Butte Creek near the spill site.
Chevron said it plans to flush the Red Butte Creek with water Saturday to capture residual oil with absorbent booms. It warned residents the flushing could stir up oil fumes for three or four hours.
But the latest samples from 13 locations along Red Butte Creek and the Jordan River show no danger to human health or aquatic life, Utah Division of Water Quality officials said.
The U.S. Department of Transportation has jurisdiction over oil pipelines and is investigating what caused the spill, said Patricia Klinger, a spokeswoman for the department's pipeline-safety group. A metallurgist is examining the pipe, she said.
The department's Pipeline and Hazardous Materials Safety Administration can fine Chevron, but has no authority over Rocky Mountain Power, which owns the nearby fenced compound and power lines near the pipeline, Klinger said.
Chevron officials said earlier this week that more than 30 claims had been filed with the oil company. The company is taking full responsibility and expects to get hit with a large amount of bills for damages and expenses, Chevron spokesman Dan Johnson said Friday.
"We think that's appropriate," he said. "People who pay their bills are trusted."
The Utah Rivers Council on Friday called for Chevron to deposit $15 million into an escrow account to pay for damages and cleanup expenses. But the expected settlement agreement would make an escrow account unnecessary, Smith said.
Stocks post biggest two-week gain since November
By TIM PARADIS and SETH SUTEL, AP Business
Here's something for investors beaten down by the market's sharp declines this spring: The Dow Jones industrial average just had its best two weeks since November.
The Dow's gain of 16 points on Friday was relatively modest, but it capped a surge of 5.2 percent over the past two weeks that puts the average nearly halfway back to the high for the year that it reached on April 26.
Stocks had a longer winning streak earlier this year, an eight-week stretch that ended in late April, but those gains were more gradual. Then a sharp drop in May and early June brought the Dow down as much as 12.4 percent below its 2010 high, a decline that market analysts call a "correction."
The debate now is focusing on whether that correction phase is over. A correction is generally considered a drop of 10-20 percent from a recent peak. The Dow has risen back 6.5 percent from its lowest close of the year on June 7, but it's still down 6.7 percent from its 2010 high.
"I don't know that we're totally through the correction," said Stu Schweitzer, global markets strategist at JPMorgan's Private Bank in New York. "I do expect markets to remain quite volatile all through the rest of this year, but I still expect that we're going to end the year higher."
Minerals companies led other shares higher after gold settled at another record high. Barrick Gold Corp. jumped 3.5 percent, while Newmont Mining Corp. rose 2.6 percent.
Corporate news also brought out buyers. CVS Caremark Corp. rose 1.9 percent and Walgreen Co. rose 2.8 percent after the two companies settled a dispute over pharmacy prescriptions that had threatened to hurt profits. Dow component Caterpillar Inc. gained 1.4 percent after reporting sharply higher sales.
The Dow rose 16.47, or 0.2 percent, to close at 10,450.64. The broader Standard & Poor's 500 index rose 1.47, or 0.1 percent, to 1,117.51. The Nasdaq composite index edged up 2.64, or 0.1 percent, to 2,309.80.
All three indicators posted solid gains for the week. The Dow is up 2.3 percent, the S&P 500 2.4 percent and the Nasdaq 3 percent.
The Dow posted its second consecutive weekly gain of more than 2 percent. Before that, the Dow had been down for three weeks. The last time the Dow had a two-week stretch of gains that strong was in November 2009.
Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where consolidated volume came to 4.9 billion shares, versus 4.6 billion the day before. Volume was heavier because of the simultaneous expiration of four kinds of futures and options contracts, which occurs once every quarter.
Trading was relatively quiet considering the options and futures expirations, which can often bring volatility as traders adjust their portfolios. The week that follows the June expiration is often a losing one for investors. The Dow has posted a loss during that week for the past 11 years, according to the Stock Trader's Almanac.
Bond prices slipped, pushing interest rates higher. The yield on the benchmark 10-year Treasury note rose to 3.23 percent from 3.20 percent late Thursday.
The dollar edged lower against the British pound and Japanese yen, while the euro edged down versus the dollar. The euro has regained strength over the past week amid encouraging signs in Europe's efforts to control its debt crisis. Spain had successful bond sales this week, and European leaders pledged to disclose the results of stress tests on banks.
Crude oil rose 39 cents to settle at $77.18 per barrel on the New York Mercantile Exchange.
Randy Frederick, director of trading and derivatives at Charles Schwab, said the market's bounce from its recent lows has come too quickly. He said professional traders are building up positions in investments that would cushion their losses if the market fell again.
"Not that we're going into this big ugly bear market but to go back down to the lows that we were at just a few weeks ago, I think, seems very possible based on what I see," Frederick said. "I see a reason to be a little cautious right now."
The coming week brings readings on home sales and consumer sentiment. The Federal Reserve also will meet on interest rates.
Gold settled up $1,258.30 an ounce, a gain of $9.60. Barrick Gold rose $1.56, or 3.5 percent, to $46.38, and Newmont Mining climbed $1.57, or 2.6 percent, to $61.25.
CVS rose 59 cents to $32.43, while Walgreen gained 82 cents to $30.09. Caterpillar gained 90 cents to close at $65.85.
The Russell 2000 index of smaller companies rose 1.07, or 0.2 percent, to 666.92.
joi, 17 iunie 2010
On the Call: Kroger CEO David Dillon
By The Associated Press
Companies always keep a close eye on competitors, but when your rival is the biggest retailer on earth the pressure is even tougher. Supermarket retailer Kroger Co. reported its first-quarter results Thursday — net income fell but the results beat expectations and sales grew. However, the grocer is facing tough competition from Wal-Mart Stores Inc., which recently rolled out some of its fiercest reductions in food prices to help boost its slumping sales. Wal-Mart gets about half of its revenue from groceries.
Kroger CEO discussed the issue during a conference call with analysts:
QUESTION: Wal-Mart started the roll-back campaign on April 1st and started to do the deep discounts on May 1st. Wondering in markets where you overlap with a Wal-Mart super center, have you seen any discernible trends since they began that roll-back activity?
RESPONSE: Let me talk generally about Wal-Mart and how we see our markets for a moment.
We don't often talk about individual competitors, but many of you have asked about them, so it is probably worth commenting.
Wal-Mart affects any of the marketplaces in which they operate like any other competitor affects those marketplaces. Wal-Mart has become publicly more aggressive in what they're saying that they're doing, and if you look at what's happening in the stores and in the markets — just like we said the last two quarters — the marketing behavior, merchandising behavior Wal-Mart is (doing is) a lot more consistent with a traditional grocery supermarket operation than it is consistent with what Wal-Mart used to do.
It is a lot more feature items, sometimes features are on a little longer than a week, but it is feature items. And when you operate that way, there are items that come down in price which get lots of publicity, but there are also items that go up in price that don't get much publicity.
So we see the behavior as there is a lot of marketing noise around it, but we see the behavior as pretty much what happens in a lot of grocery. ... As a result, the most important thing I think for you to think about is that our behavior in those markets and in every market is based upon our plan and what we believe to be consistent with our customer-first strategy and what we think our customers want.
We can't do that with a blind eye to what competition does, but we also can't let competition dictate what we're going to do in those markets and we have chosen not (to do).
We're approaching this from purely from the point of view of 'What do we think our customers want from us in this kind of environment?' and using our data and insight in order to drive that.
Companies always keep a close eye on competitors, but when your rival is the biggest retailer on earth the pressure is even tougher. Supermarket retailer Kroger Co. reported its first-quarter results Thursday — net income fell but the results beat expectations and sales grew. However, the grocer is facing tough competition from Wal-Mart Stores Inc., which recently rolled out some of its fiercest reductions in food prices to help boost its slumping sales. Wal-Mart gets about half of its revenue from groceries.
Kroger CEO discussed the issue during a conference call with analysts:
QUESTION: Wal-Mart started the roll-back campaign on April 1st and started to do the deep discounts on May 1st. Wondering in markets where you overlap with a Wal-Mart super center, have you seen any discernible trends since they began that roll-back activity?
RESPONSE: Let me talk generally about Wal-Mart and how we see our markets for a moment.
We don't often talk about individual competitors, but many of you have asked about them, so it is probably worth commenting.
Wal-Mart affects any of the marketplaces in which they operate like any other competitor affects those marketplaces. Wal-Mart has become publicly more aggressive in what they're saying that they're doing, and if you look at what's happening in the stores and in the markets — just like we said the last two quarters — the marketing behavior, merchandising behavior Wal-Mart is (doing is) a lot more consistent with a traditional grocery supermarket operation than it is consistent with what Wal-Mart used to do.
It is a lot more feature items, sometimes features are on a little longer than a week, but it is feature items. And when you operate that way, there are items that come down in price which get lots of publicity, but there are also items that go up in price that don't get much publicity.
So we see the behavior as there is a lot of marketing noise around it, but we see the behavior as pretty much what happens in a lot of grocery. ... As a result, the most important thing I think for you to think about is that our behavior in those markets and in every market is based upon our plan and what we believe to be consistent with our customer-first strategy and what we think our customers want.
We can't do that with a blind eye to what competition does, but we also can't let competition dictate what we're going to do in those markets and we have chosen not (to do).
We're approaching this from purely from the point of view of 'What do we think our customers want from us in this kind of environment?' and using our data and insight in order to drive that.
Feds announce arrests in mortgage fraud crackdown
By KEN RITTER, Associated Pres
Some 500 people have been arrested in a nationwide crackdown on mortgage fraud, and federal officials pointed to Las Vegas as one of the centers of the scams that pumped up home prices until the housing market bubble finally burst.
"I heard this many times," said Scott Hunter, a Las Vegas FBI agent who has interviewed hundreds of so-called "straw buyers" lured into buying homes by unscrupulous real estate agents, brokers and loan officers. "They said, 'Don't let your good credit go to waste. You can purchase these properties. This is how you acquire wealth.'"
"What happened here was, when the party stopped and they were not able to keep inflating the prices on these houses, the whole thing collapsed."
Nevada's U.S. attorney, Daniel Bogden, counted 123 defendants charged, convicted or sentenced in the Silver State since March 1 as part of a national crackdown dubbed Operation Stolen Dreams. Bogden put losses in Nevada alone at almost $250 million.
In Washington, the Justice Department linked nearly 500 arrests nationwide to the crackdown. U.S. Attorney General Eric Holder called the push the largest collective enforcement effort aimed at confronting mortgage fraud.
Holder said 1,215 criminal defendants had been netted in cases that uncovered more than $2.3 billion in losses, and said the Justice Department also engaged in civil enforcement actions to recover more than $147 million in the operation.
FBI Director Robert Mueller called mortgage fraud "a risk to our economic stability" as a nation.
More than lending institutions were victimized, said Michael Gibson, a Los Angeles-based federal Housing and Urban Development inspector who has been investigating cases in Las Vegas.
Homeowners, taxpayers, reputable real estate industry officials and the Federal Housing Administration were also hurt, Gibson said. "They're all victims in this. Every time you have a bad loan that's FHA-insured, the federal government pays that claim amount."
Real estate analyst Rick Sharga, of Irvine, Calif.-based RealtyTrac Inc., said places with the most foreclosures today were the most fertile places for mortgage scams during the housing boom.
"The states that had the highest fallout in foreclosure and price depreciation certainly didn't have markets built on sound business practices," Sharga said. "The running gag was, you'd put a home on the market at breakfast and have three offers for twice the asking price by lunch. We're seeing the consequences of that now."
"As soon as prices stopped going up, the whole house of cards came down," he said.
Prosecutors and investigators said schemes typically involved straw buyers with good credit buying homes at an inflated price or obtaining loans greater than the cost of the home. The resulting cash was skimmed by the person controlling the scheme.
Homes were "flipped," or quickly sold at inflated prices, driving up prices of comparable or neighboring homes, said Hunter, supervisor of the Las Vegas FBI white collar crime unit.
"If you didn't lie on your loan application, and you later go into foreclosure, there's no fraud there," he said. "But if you lie about everything about the application, and you mislead a lender into believing that all the information on that document is accurate, that's what we're going after."
Foreclosures have decreased in Nevada during the last year, according Realty Trac. But the state continued to lead the nation in May, followed by Arizona, Florida, California and Michigan. One of every 66 homes in the Las Vegas area received a foreclosure filing last month.
The Justice Department said the probe announced Thursday resulted in significant criminal cases in places like Duluth, Minn.; New Jersey and Atlanta.
Officials said that in Chico, Calif., a home builder sold houses built before the market cooled in 2006 to straw buyers at inflated prices, then rebated tens of thousands of dollars to shell companies controlled by the buyers' agents. The lenders were unaware of the rebates. The Justice Department said that to date, 38 of the homes are in foreclosure.
In New Jersey, a servicing manager at U.S. Mortgage pleaded guilty in the fraudulent sale of more than $136 million in mortgage loans to Fannie Mae and other investors.
In Oregon, the U.S. attorney said the FBI had received almost 5,000 reports of fraud since the height of the housing market in 2006.
In Detroit, investigators broke up a "ghost loan" mortgage scheme in which conspirators recruited more than 108 straw buyers and obtained some 500 mortgages totaling more than $100 million.
In Minnesota, convicted mortgage fraud defendant Michael Fiorito was sentenced in April to more than 22 years in prison for conspiracy and mail fraud. Prosecutors said he led homeowners who were in or near foreclosure to refinance or sell their homes, then stole their money.
An indictment in Miami accused two defendants of targeting Haitian-Americans, with one defendant also offering help with immigration issues.
In Las Vegas, Hunter said industry insiders controlling scams didn't spend their own money, but reaped cash from homes "like ATMs."
"They took as much money out of them as they could, and when they were done, they left southern Nevada in the wreckage," the FBI agent said. "Now it's our job to hold these people accountable."
Some 500 people have been arrested in a nationwide crackdown on mortgage fraud, and federal officials pointed to Las Vegas as one of the centers of the scams that pumped up home prices until the housing market bubble finally burst.
"I heard this many times," said Scott Hunter, a Las Vegas FBI agent who has interviewed hundreds of so-called "straw buyers" lured into buying homes by unscrupulous real estate agents, brokers and loan officers. "They said, 'Don't let your good credit go to waste. You can purchase these properties. This is how you acquire wealth.'"
"What happened here was, when the party stopped and they were not able to keep inflating the prices on these houses, the whole thing collapsed."
Nevada's U.S. attorney, Daniel Bogden, counted 123 defendants charged, convicted or sentenced in the Silver State since March 1 as part of a national crackdown dubbed Operation Stolen Dreams. Bogden put losses in Nevada alone at almost $250 million.
In Washington, the Justice Department linked nearly 500 arrests nationwide to the crackdown. U.S. Attorney General Eric Holder called the push the largest collective enforcement effort aimed at confronting mortgage fraud.
Holder said 1,215 criminal defendants had been netted in cases that uncovered more than $2.3 billion in losses, and said the Justice Department also engaged in civil enforcement actions to recover more than $147 million in the operation.
FBI Director Robert Mueller called mortgage fraud "a risk to our economic stability" as a nation.
More than lending institutions were victimized, said Michael Gibson, a Los Angeles-based federal Housing and Urban Development inspector who has been investigating cases in Las Vegas.
Homeowners, taxpayers, reputable real estate industry officials and the Federal Housing Administration were also hurt, Gibson said. "They're all victims in this. Every time you have a bad loan that's FHA-insured, the federal government pays that claim amount."
Real estate analyst Rick Sharga, of Irvine, Calif.-based RealtyTrac Inc., said places with the most foreclosures today were the most fertile places for mortgage scams during the housing boom.
"The states that had the highest fallout in foreclosure and price depreciation certainly didn't have markets built on sound business practices," Sharga said. "The running gag was, you'd put a home on the market at breakfast and have three offers for twice the asking price by lunch. We're seeing the consequences of that now."
"As soon as prices stopped going up, the whole house of cards came down," he said.
Prosecutors and investigators said schemes typically involved straw buyers with good credit buying homes at an inflated price or obtaining loans greater than the cost of the home. The resulting cash was skimmed by the person controlling the scheme.
Homes were "flipped," or quickly sold at inflated prices, driving up prices of comparable or neighboring homes, said Hunter, supervisor of the Las Vegas FBI white collar crime unit.
"If you didn't lie on your loan application, and you later go into foreclosure, there's no fraud there," he said. "But if you lie about everything about the application, and you mislead a lender into believing that all the information on that document is accurate, that's what we're going after."
Foreclosures have decreased in Nevada during the last year, according Realty Trac. But the state continued to lead the nation in May, followed by Arizona, Florida, California and Michigan. One of every 66 homes in the Las Vegas area received a foreclosure filing last month.
The Justice Department said the probe announced Thursday resulted in significant criminal cases in places like Duluth, Minn.; New Jersey and Atlanta.
Officials said that in Chico, Calif., a home builder sold houses built before the market cooled in 2006 to straw buyers at inflated prices, then rebated tens of thousands of dollars to shell companies controlled by the buyers' agents. The lenders were unaware of the rebates. The Justice Department said that to date, 38 of the homes are in foreclosure.
In New Jersey, a servicing manager at U.S. Mortgage pleaded guilty in the fraudulent sale of more than $136 million in mortgage loans to Fannie Mae and other investors.
In Oregon, the U.S. attorney said the FBI had received almost 5,000 reports of fraud since the height of the housing market in 2006.
In Detroit, investigators broke up a "ghost loan" mortgage scheme in which conspirators recruited more than 108 straw buyers and obtained some 500 mortgages totaling more than $100 million.
In Minnesota, convicted mortgage fraud defendant Michael Fiorito was sentenced in April to more than 22 years in prison for conspiracy and mail fraud. Prosecutors said he led homeowners who were in or near foreclosure to refinance or sell their homes, then stole their money.
An indictment in Miami accused two defendants of targeting Haitian-Americans, with one defendant also offering help with immigration issues.
In Las Vegas, Hunter said industry insiders controlling scams didn't spend their own money, but reaped cash from homes "like ATMs."
"They took as much money out of them as they could, and when they were done, they left southern Nevada in the wreckage," the FBI agent said. "Now it's our job to hold these people accountable."
Smart Modular Technologies returns to 3Q profit
Smart Modular Technologies Inc., which makes computer memory products, on Thursday reported a profit for its fiscal third quarter, as renewed spending by businesses on technology helped it recover from a loss posted in the same period last year.
For the three months ended May 28, Smart Modular Technologies' net income was $14.9 million, or 23 cents per share. In the same period last year, the company reported a net loss of $2.4 million, or 4 cents per share.
Excluding stock options expenses and the divestiture of a business, the company earned 26 cents per share in the latest quarter.
Analysts surveyed by Thomson Reuters had forecast net income of 18 cents per share. Analyst estimates typically exclude one-time items.
Revenue more than doubled to $201.2 million from $91.6 million in the year-ago quarter. Analysts predicted revenue of $180.7 million.
Shares jumped 25 cents, or 3.9 percent, to $6.75 in after-hours trading. During the regular session, the stock added 3 cents to close at $6.50.
For the three months ended May 28, Smart Modular Technologies' net income was $14.9 million, or 23 cents per share. In the same period last year, the company reported a net loss of $2.4 million, or 4 cents per share.
Excluding stock options expenses and the divestiture of a business, the company earned 26 cents per share in the latest quarter.
Analysts surveyed by Thomson Reuters had forecast net income of 18 cents per share. Analyst estimates typically exclude one-time items.
Revenue more than doubled to $201.2 million from $91.6 million in the year-ago quarter. Analysts predicted revenue of $180.7 million.
Shares jumped 25 cents, or 3.9 percent, to $6.75 in after-hours trading. During the regular session, the stock added 3 cents to close at $6.50.
Bank of Japan unveils $33bn loan scheme
BBC News
apan's central bank has announced plans to provide up to 3 trillion yen (£22bn; $33bn) in low interest loans in an effort to spur economic growth.
The bank plans to make the money available to commercial banks to encourage them to lend more to private businesses.
Firms in growth sectors including energy, the environment and tourism will be targeted by the scheme.
The Bank of Japan also confirmed it would hold interest rates near zero.
Rates have remained at 0.1% since the end of 2008, with Japan contining to fight deflation and recover slowly from recession.
The bank gave no indication that interest rates would rise in the near future, saying it planned to keep montary policy "extremly accomodative".
Impact questioned
Meanwhile it said its lending programme should help boost productivity and raise the economy's growth rate.
The plans allow approved banks to borrow up to 150bn yen each for up to four years at an interest rate of 0.1%.
The scheme is due to begin at the end of August.
But economists questioned what impact, if any, the plan would have on economic growth.
"We see little impact at this stage due to a lack of demand for funds," said Chiwoong Lee, economist at Goldman Sachs.
The Bank of Japan is also likely to come under further pressure from Japan's new prime minister, Naoto Kan, who has cited the country's massive debt levels as a chief concern.
Deflation is also a worry, with prices currently falling at an annual rate of 1.5%.
Russia becomes leading oil producer, BP says
Russia overtook Saudi Arabia to become the world's leading oil producer in 2009, while global oil consumption fell the most since 1982, BP has said.
According to the oil giant's latest Statistical Review of World Energy, Russia increased oil production by 1.5% in 2009, claiming a 12.9% market share.
Production in Saudi Arabia fell 10.6%, giving the country a 12% market share.
Global oil consumption fell by 1.2m barrels a day, or 1.7%, while natural gas use dropped 2.1%.
The world's oil production dropped by 2m barrels a day, or 2.6%, also the largest decline since 1982.
'Unconventional supplies'
BP also said that "global gas production declined for the first time on record", falling 2.1%.
"Production fell sharply in Russia (-12.1%) and Turkmenistan (-44.8%), driven by declining consumption - in Russia and much of the rest of Europe - and the availability in Europe of competitively priced liquefied natural gas," the report states.
The US became the world's largest gas producer, surpassing Russia, thanks to "continued expansion of unconventional supplies".
Global proven oil reserves increased by 700m barrels to 1.33 trillion barrels last year.
At the same time, the world's gas reserves grew by 2.21 trillion cubic meters to 187.49 trillion cubic meters.
Fannie Mae and Freddie Mac delisted from stock exchange
US home loan giants Fannie Mae and Freddie Mac are to cease trading on the New York Stock Exchange (NYSE).
The state-sponsored lenders were ordered to leave the exchange by the Federal Housing Finance Agency (FHFA).
They have both continued to suffer heavy losses in the aftermath of the financial crisis.
Their share prices have slumped to the NYSE's minimum level of $1 a share - requiring them to try to boost their stock, or delist.
The FHFA said the decision to exit the exchange did not "constitute any reflection on [Fannie Mae and Freddie Mac's] current performance or future direction".
FHFA's acting director Edward DeMarco added that delisting the shares "makes sense and fits with the goal... to preserve and conserve assets".
The two lenders, which provide mortgage finance to other lenders, were placed under government control in September 2008 after being severely hurt by the collapse in the mortgage market.
Both have continued to make heavy losses, however, so far costing US taxpayers $145bn in bail-out costs.
The state-sponsored lenders were ordered to leave the exchange by the Federal Housing Finance Agency (FHFA).
They have both continued to suffer heavy losses in the aftermath of the financial crisis.
Their share prices have slumped to the NYSE's minimum level of $1 a share - requiring them to try to boost their stock, or delist.
The FHFA said the decision to exit the exchange did not "constitute any reflection on [Fannie Mae and Freddie Mac's] current performance or future direction".
FHFA's acting director Edward DeMarco added that delisting the shares "makes sense and fits with the goal... to preserve and conserve assets".
The two lenders, which provide mortgage finance to other lenders, were placed under government control in September 2008 after being severely hurt by the collapse in the mortgage market.
Both have continued to make heavy losses, however, so far costing US taxpayers $145bn in bail-out costs.
Murdoch's News Corporation in BSkyB takeover bid
By Robert Peston BBC Business
Rupert Murdoch's News Corporation is seeking to take full control of satellite broadcaster BSkyB, by acquiring the 60.9% of the shares it does not already own.
News Corporation's initial offer of 700 pence a share, which values BSkyB at around £12bn, was rejected.
Talks are now expected to continue until a deal is reached. BSkyB said it wants "in excess of 800p" per share.
News of the bid pushed shares in BSkyB up 16.6%.
News Corporation also owns the Sun, Times and News of the World newspapers.
Industry giant
Agreement between News Corporation and BSkyB would go some way to clear the way for Mr Murdoch's ambitions, though any deal would also need regulatory approval.
"Both parties have agreed to work together to proceed with the regulatory process in order to facilitate a proposed transaction," said News Corporation.
BBC business editor Robert Peston said that if the deal did go ahead, it would "erase any scintilla of doubt that Mr Murdoch's News Corporation would be the most powerful of all the traditional media groups in the UK".
"The combination of Sky with his newspapers, such as the Sun and the Sunday Times, would generate annual revenues of around £8bn, compared with the £4.6bn income of the next largest player, the BBC."
Our editor added that any agreed deal between News Corporation and BSkyB may cause problems for the UK's coalition government.
He said this was because while the Conservatives had benefited from the support of News Corporation's newspapers during the general election, the Liberal Democrats were far more hostile to Mr Murdoch's media empire.
Whether to grant regulatory approval for any agreed takeover would be decided by the European Commission - unless it was called in by either Business Secretary Vince Cable or the Office of Fair Trading (OFT).
Mr Cable would have to say he had public interest concerns, while the OFT would have to stress competition fears.
British Sky Broadcasting was formed in 1990 by the merger of News Corporation's Sky Television and rival British Satellite Broadcasting.
Bebo sold by AOL after just two years
Internet company AOL has sold Bebo, the social networking site it bought two years ago for $850m (then £417m).
Criterion Capital Partners, a small private investment firm, announced that it had bought the business, but did not disclose the amount paid.
However, analysts suspect it to be just a fraction of the price paid by AOL in 2008.
Since then, Bebo has struggled to compete effectively against social networking rivals such as Facebook.
Earlier this year, AOL announced plans to sell or shut down Bebo because it was unable to provide the "significant investment" needed to prevent its decline as a business.
The BBC's technology correspondent Rory Cellan-Jones called AOL's decision to buy Bebo "one of the worst deals ever made in the dotcom era".
"The extraordinary thing is the deal was made years after the dotcom crash which was supposed to have taught the industry lessons," he said.
"The interesting thing is that the founder, Michael Birch, walked away with $300m - it's the art of timing."
'Active user base'
Criterion Capital's plans for Bebo are unclear, and the company was not immediately available to give further details.
But the new owners are believed to see significant potential in the business.
Bebo's headquarters is set to remain in San Francisco, at least in the near term, but job losses have not been ruled out.
In a statement, Adam Levin, Criterion Capital's managing partner, said there was plenty to be positive about.
"The young, highly active user base, revenue history, presence in countries throughout the world and solid technical infrastructure make it an attractive media platform," he said.
Criterion Capital Partners, a small private investment firm, announced that it had bought the business, but did not disclose the amount paid.
However, analysts suspect it to be just a fraction of the price paid by AOL in 2008.
Since then, Bebo has struggled to compete effectively against social networking rivals such as Facebook.
Earlier this year, AOL announced plans to sell or shut down Bebo because it was unable to provide the "significant investment" needed to prevent its decline as a business.
The BBC's technology correspondent Rory Cellan-Jones called AOL's decision to buy Bebo "one of the worst deals ever made in the dotcom era".
"The extraordinary thing is the deal was made years after the dotcom crash which was supposed to have taught the industry lessons," he said.
"The interesting thing is that the founder, Michael Birch, walked away with $300m - it's the art of timing."
'Active user base'
Criterion Capital's plans for Bebo are unclear, and the company was not immediately available to give further details.
But the new owners are believed to see significant potential in the business.
Bebo's headquarters is set to remain in San Francisco, at least in the near term, but job losses have not been ruled out.
In a statement, Adam Levin, Criterion Capital's managing partner, said there was plenty to be positive about.
"The young, highly active user base, revenue history, presence in countries throughout the world and solid technical infrastructure make it an attractive media platform," he said.
The Other U.S. Energy Crisis: Lack of R&D R&D Neglect is holding back innovative energy technologies
By Peter Coy Businessweek
BP (BP) says it's throwing its best people at stopping the Gulf of Mexico oil spill. Nevertheless, it took an outsider—Energy Secretary Steven Chu, who has a Nobel Prize in physics—to come up with the idea of peering inside the malfunctioning blowout preventer with high-energy gamma rays. BP tried Chu's idea—after a few snickers and Incredible Hulk jokes, according to the Washington Post—and lo and behold, it worked. The probe was "crucial in helping us understand what is happening inside the BOP [blowout preventer] and informing the approach moving ahead," said Jane Lubchenco, head of the National Oceanic & Atmospheric Administration.
The gamma ray incident is symptomatic of a problem that's bigger than London-based BP: Energy companies worldwide are far less science-oriented than one might expect from an industry that is heavily dependent on technology for safety and profit. In the U.S., energy companies' spending on research, development, and deployment amounts to just 0.3 percent of sales. That's barely more than a tenth what the auto industry spends as a share of sales and is dwarfed by the pharmaceutical industry, which spends nearly 19 percent of sales. (American Petroleum Institute chief economist John Felmy says R&D measures understate his industry's "overall investment for the future.")
Many economists argue that government needs to step in when the private sector isn't providing the socially optimal amount of something like research. But government R&D spending on energy has been scarce, too. It was less than 0.03 percent of U.S. gross domestic product as of 2007, about one-third the share in Japan. The dearth of investment in energy R&D helps explain why the world is still getting its energy by punching holes in the sea floor rather than from safer, renewable sources such as the sun and the wind.
In his Oval Office speech on the Gulf spill on June 15, President Barack Obama cited a rapid boost in energy R&D as one of several ideas that "have merit and deserve a fair hearing in the months ahead." That was a paler endorsement than some boosters hoped for. On June 11, the American Energy Innovation Council called for a gradual increase to $16 billion in annual federal R&D energy spending, from around $5 billion now. The seven-member council includes Microsoft (MSFT) Chairman Bill Gates, General Electric (GE) Chief Executive Officer Jeffrey Immelt, and Silicon Valley venture capitalist John Doerr.
The drive for more energy R&D is up against formidable obstacles, starting with the budget deficit. Representative Ralph Hall, the ranking Republican on the House Science & Technology Committee, tried in May to cut about $40 billion from the $86 billion sought by House Democrats for the America COMPETES Act, which funds federal research and math and science education. "We must be mindful of our spending if America is to continue to compete globally," Hall said then. The House eventually voted to reauthorize the act without Hall's cuts, while the Senate hasn't yet acted. Even if Congress agrees to authorize the full $86 billion, funding could still be cut in the appropriations process.
Money isn't the only problem. On the right, many Republicans say the federal government should be involved only in basic science, not steps toward commercialization. On the left, many Democrats hope to kick-start research and investment in green energy via measures such as carbon caps that would make coal and oil more expensive.
Hanging in the balance are initiatives such as ARPA-E, a 20-employee Energy Dept. program that funds what Director Arun Majumdar calls "really high-risk, high-reward, disruptive technologies." ARPA-E is modeled on DARPA, the Pentagon's Defense Advanced Research Projects Agency, which helped launch the Internet and the global positioning satellite system. Like DARPA, the Energy program is free from civil service hiring rules, so it can bring in top scientists and engineers for short stints. It began operations last year with a two-year allocation of $400 million in stimulus funds. The Obama Administration is seeking $300 million for ARPA-E for the fiscal year beginning Oct. 1.
Defying bureaucratic convention, ARPA-E is funding an unorthodox technique for producing fuel from plant matter even though it competes with another project of the Energy Dept., the Joint BioEnergy Institute. "That's the kind of environment we want," Majumdar said in a June 14 interview. "I'd rather have the competition inside the U.S. than outside the U.S."
What looks like fruitful competition to Majumdar can look like wasteful redundancy to a Congress that's worried about deficits. He says that's a problem. "Frankly we haven't done a good enough job of explaining what we're about. It's a new model."
The American Energy Innovation Council argues that ARPA-E merits $1 billion a year. Majumdar says he'd be happy just getting the requested $300 million given the big budget deficit. On the other hand, Energy's Chu testified last year that China is spending $9 billion a month on clean energy investments. Says Energy Under Secretary Kristina Johnson: "We're competing with some very fierce competitors that are throwing everything they have behind being successful in this clean energy economy."
The bottom line Lack of R&D is limiting development of new energy technologies, and prospects for a big increase remain cloudy.
BP (BP) says it's throwing its best people at stopping the Gulf of Mexico oil spill. Nevertheless, it took an outsider—Energy Secretary Steven Chu, who has a Nobel Prize in physics—to come up with the idea of peering inside the malfunctioning blowout preventer with high-energy gamma rays. BP tried Chu's idea—after a few snickers and Incredible Hulk jokes, according to the Washington Post—and lo and behold, it worked. The probe was "crucial in helping us understand what is happening inside the BOP [blowout preventer] and informing the approach moving ahead," said Jane Lubchenco, head of the National Oceanic & Atmospheric Administration.
The gamma ray incident is symptomatic of a problem that's bigger than London-based BP: Energy companies worldwide are far less science-oriented than one might expect from an industry that is heavily dependent on technology for safety and profit. In the U.S., energy companies' spending on research, development, and deployment amounts to just 0.3 percent of sales. That's barely more than a tenth what the auto industry spends as a share of sales and is dwarfed by the pharmaceutical industry, which spends nearly 19 percent of sales. (American Petroleum Institute chief economist John Felmy says R&D measures understate his industry's "overall investment for the future.")
Many economists argue that government needs to step in when the private sector isn't providing the socially optimal amount of something like research. But government R&D spending on energy has been scarce, too. It was less than 0.03 percent of U.S. gross domestic product as of 2007, about one-third the share in Japan. The dearth of investment in energy R&D helps explain why the world is still getting its energy by punching holes in the sea floor rather than from safer, renewable sources such as the sun and the wind.
In his Oval Office speech on the Gulf spill on June 15, President Barack Obama cited a rapid boost in energy R&D as one of several ideas that "have merit and deserve a fair hearing in the months ahead." That was a paler endorsement than some boosters hoped for. On June 11, the American Energy Innovation Council called for a gradual increase to $16 billion in annual federal R&D energy spending, from around $5 billion now. The seven-member council includes Microsoft (MSFT) Chairman Bill Gates, General Electric (GE) Chief Executive Officer Jeffrey Immelt, and Silicon Valley venture capitalist John Doerr.
The drive for more energy R&D is up against formidable obstacles, starting with the budget deficit. Representative Ralph Hall, the ranking Republican on the House Science & Technology Committee, tried in May to cut about $40 billion from the $86 billion sought by House Democrats for the America COMPETES Act, which funds federal research and math and science education. "We must be mindful of our spending if America is to continue to compete globally," Hall said then. The House eventually voted to reauthorize the act without Hall's cuts, while the Senate hasn't yet acted. Even if Congress agrees to authorize the full $86 billion, funding could still be cut in the appropriations process.
Money isn't the only problem. On the right, many Republicans say the federal government should be involved only in basic science, not steps toward commercialization. On the left, many Democrats hope to kick-start research and investment in green energy via measures such as carbon caps that would make coal and oil more expensive.
Hanging in the balance are initiatives such as ARPA-E, a 20-employee Energy Dept. program that funds what Director Arun Majumdar calls "really high-risk, high-reward, disruptive technologies." ARPA-E is modeled on DARPA, the Pentagon's Defense Advanced Research Projects Agency, which helped launch the Internet and the global positioning satellite system. Like DARPA, the Energy program is free from civil service hiring rules, so it can bring in top scientists and engineers for short stints. It began operations last year with a two-year allocation of $400 million in stimulus funds. The Obama Administration is seeking $300 million for ARPA-E for the fiscal year beginning Oct. 1.
Defying bureaucratic convention, ARPA-E is funding an unorthodox technique for producing fuel from plant matter even though it competes with another project of the Energy Dept., the Joint BioEnergy Institute. "That's the kind of environment we want," Majumdar said in a June 14 interview. "I'd rather have the competition inside the U.S. than outside the U.S."
What looks like fruitful competition to Majumdar can look like wasteful redundancy to a Congress that's worried about deficits. He says that's a problem. "Frankly we haven't done a good enough job of explaining what we're about. It's a new model."
The American Energy Innovation Council argues that ARPA-E merits $1 billion a year. Majumdar says he'd be happy just getting the requested $300 million given the big budget deficit. On the other hand, Energy's Chu testified last year that China is spending $9 billion a month on clean energy investments. Says Energy Under Secretary Kristina Johnson: "We're competing with some very fierce competitors that are throwing everything they have behind being successful in this clean energy economy."
The bottom line Lack of R&D is limiting development of new energy technologies, and prospects for a big increase remain cloudy.
Toyota is latest car maker hit by strike in China
By ELAINE KURTENBACH,AP Business
Toyota Motor Corp., the latest automaker to be hit by a strike at a China parts supplier, said Thursday its car assembly operations were not affected by the short-lived dispute.
The strike comes amid mounting concern over signs of increasing unrest among the migrant workers who are the backbone of the country's industrial sector.
Niu Yu, spokesman for Toyota China in Beijing, said the strike at affiliate Toyoda Gosei Co. Ltd.'s plant in the northeastern city of Tianjin, had ended.
"So far, operations of our car assembly plant have not been affected," Niu said.
Toyoda Gosei spokesman Tomotaka Ito said the strike at the plant, Tianjin Star Light Rubber and Plastic Co., began Tuesday and ended Wednesday after the company agreed to review the pay structure for its 800 workers.
Production resumed Wednesday afternoon, despite a national holiday, to make up for lost time, said Ito, who would give no further details.
The strike was the first reported for Toyota following strikes at several China suppliers of Honda Motor Co. that forced that Japanese automaker to suspend car assembly intermittently in the past month due to a lack of parts.
So far, most of the auto-related labor disputes have been reported in southern China, near Guangzhou, where both Honda and Toyota have manufacturing bases along with their local partner Guangzhou Auto Group. Toyota has a separate joint venture in Tianjin with FAW Group.
Although Beijing has so far said little about specific labor disputes, earlier this week Premier Wen Jiabao signaled the leadership's concern, urging better treatment for the country's legions of young migrant workers.
"Migrant workers should be cared for, protected and respected, especially the younger generation," the official Communist Party paper, People's Daily, cited Wen as telling a group of migrant workers in Beijing.
In a commentary Thursday, the newspaper said China's economic model is facing a "turning point."
"Raising workers' income levels and adjusting the gap between rich and poor is not just an emergency response to protect stability," said the author Tang Jun, a researcher at the Chinese Academy of Social Sciences, a government think tank.
A labor law that went into effect in 2008 has accelerated an upsurge in workers' awareness of their rights. Meanwhile, there has been a generation shift between older migrant workers, who grew up in poverty and usually were the first in their families to seek non-farm work, and their children, who have higher expectations and less tolerance for low wages and harsh conditions.
_
Toyota Motor Corp., the latest automaker to be hit by a strike at a China parts supplier, said Thursday its car assembly operations were not affected by the short-lived dispute.
The strike comes amid mounting concern over signs of increasing unrest among the migrant workers who are the backbone of the country's industrial sector.
Niu Yu, spokesman for Toyota China in Beijing, said the strike at affiliate Toyoda Gosei Co. Ltd.'s plant in the northeastern city of Tianjin, had ended.
"So far, operations of our car assembly plant have not been affected," Niu said.
Toyoda Gosei spokesman Tomotaka Ito said the strike at the plant, Tianjin Star Light Rubber and Plastic Co., began Tuesday and ended Wednesday after the company agreed to review the pay structure for its 800 workers.
Production resumed Wednesday afternoon, despite a national holiday, to make up for lost time, said Ito, who would give no further details.
The strike was the first reported for Toyota following strikes at several China suppliers of Honda Motor Co. that forced that Japanese automaker to suspend car assembly intermittently in the past month due to a lack of parts.
So far, most of the auto-related labor disputes have been reported in southern China, near Guangzhou, where both Honda and Toyota have manufacturing bases along with their local partner Guangzhou Auto Group. Toyota has a separate joint venture in Tianjin with FAW Group.
Although Beijing has so far said little about specific labor disputes, earlier this week Premier Wen Jiabao signaled the leadership's concern, urging better treatment for the country's legions of young migrant workers.
"Migrant workers should be cared for, protected and respected, especially the younger generation," the official Communist Party paper, People's Daily, cited Wen as telling a group of migrant workers in Beijing.
In a commentary Thursday, the newspaper said China's economic model is facing a "turning point."
"Raising workers' income levels and adjusting the gap between rich and poor is not just an emergency response to protect stability," said the author Tang Jun, a researcher at the Chinese Academy of Social Sciences, a government think tank.
A labor law that went into effect in 2008 has accelerated an upsurge in workers' awareness of their rights. Meanwhile, there has been a generation shift between older migrant workers, who grew up in poverty and usually were the first in their families to seek non-farm work, and their children, who have higher expectations and less tolerance for low wages and harsh conditions.
_
Swiss parliament clears way for US tax deal
By ELIANE ENGELER, Associated Press
Swiss lawmakers on Thursday gave final approval to a treaty with the United States that will hand Washington thousands of files on suspected tax cheats, agreeing to drop plans to allow a referendum on the issue.
Parliament's upper and lower house agreed that there will be no possibility of referendum on the deal that will see the country's biggest bank, UBS AG, divulge the names of 4,450 American clients suspected of tax evasion to U.S. authorities.
The agreement between both houses secured final approval of the treaty, which the government hopes will eventually end UBS's three-year battle with U.S. tax authorities that culminated in revelations the bank had for years helped American clients hide millions of dollars in offshore accounts.
UBS chief executive Oswald Gruebel welcomed the decision.
"I and the whole bank thank the Federal Council and those parliamentarians who worked to find a solution to this issue," he said in a statement.
The lower house voted 81-63 to drop its earlier demand that Swiss voters should be allowed to approve the deal in a referendum before it comes law. Forty-seven lawmakers abstained.
A popular ballot would have made Switzerland miss a late August deadline to hand over all 4,450 names because the vote would have been held in November at the earliest.
"Nothing now stands in the way of UBS client details being disclosed in cases where the decision handed down has taken legal effect," said the Swiss Justice Ministry in a statement.
The deal is crucial to UBS, which has faced intense pressure from U.S. authorities since 2007. Last year the bank agreed to turn over hundreds of client files and pay a $780 million penalty in return for a deferred prosecution agreement. But Washington has signaled that unless UBS reveals the further 4,450 American names demanded in the U.S.-Swiss agreement, it may face a crippling civil investigation just at a time when the bank is recovering from the subprime crisis and seeking to rebuild its U.S. business.
Swiss authorities have already transmitted the names of about 400 UBS clients who signed waivers as part of the Internal Revenue Service's voluntary disclosure program, according the Swiss Federal Tax Administration. A further 100 UBS clients gave their consent directly to Swiss authorities.
Shares in UBS were up 1.10 percent at 15.68 Swiss francs ($13.95) on the Zurich exchange.
miercuri, 16 iunie 2010
Bloomberg BusinessWeek Business Exchange
by: Arik Hesseldahl Bloomberg
Apple announced a new version of the Mac Mini today, bringing its design more in line with its siblings, the iMac and the MacBook Pro.
It’s nice to see Apple remaining committed to the Mac Mini. The line has been the subject of recurring rumors that Apple was close to killing it over the last few years, only to have its fans lobby Apple to keep it going. It once went an entire 19 months between updates. While It’s popular not only among consumers for being easy to connect to a TV. It’s also turned out to be a popular small and light server for small businesses. Apple sells a version specifically aimed at use as a server, which sells for a starting price of $999.
The new machine sports a unibody aluminum design similar to that used for the MacBook Pro, and is about 20 percent smaller than the previous Mac Mini. It’s less than an inch-and-a-half thick.
However don’t take its smaller size as any suggestion that it lacks power. Inside is an Intel Core 2 Duo processor clocked at 2.4 GHz and 2.66 GHz, an Nvidia GeForce 320M graphics processor, giving it twice the graphics power of its predecessor. The standard model comes with a 320 gigabyte hard drive and two gigabytes of RAM. Its starting price is $699.
Other big news is on the back. Like the iMac and MacBook Pro before it, the Mini now sports an SD memory card slot, and for those who use it like a digital media center, an HDMI display port for connecting to TV sets. There are also four USB ports.
Apple has also dubbed this new Mac Mini as the world’s most energy-efficient desktop. It bases that claim on how this machine compares to other desktop computers in the Energy Star 5.0 database as of this month. It also meets EPEAT Gold certification status.
A few other interesting notes about the new design. There’s a removable panel underneath the body that gives aces to the memory slots, allowing for easy RAM upgrades. It supports as much as 8 GB of RAM.
Heavy digital media users will find a lot to like. While the Mac Mini is a natural for watching movies from within iTunes and the Front Row, the Mini sports a DVD player, and can just as readily be connected to a nice set of stereo speakers, whether the music is coming from an iTunes playlist or a CD, or is streaming from the Web. Install software like Boxee or the Hulu desktop application for the Mac, and you’ve got a pretty good all-in-one digital media machine
Bloomberg BusinessWeek Business Exchange
Posted by: Arik Hesseldahl Businessweek
How bad was the AT&T data breach on Apple’s iPad? According to AT&T, and the information about affected subscribers was limited to their email address, and a serial number known as an ICCID.
AT&T sent an email apologizing to affected customers, blaming “malicious hackers,” for the incident in reference to Goatse Security, a security consulting firm that publicized the vulnerability last week.
Now a wireless security consultant says that an ICCID number, once disclosed, can lead to further vulnerabilities that have been known for more than two years. An ICCID is a 19- or 20-digit serial number printed on a SIM card, the thumbnail-sized chip that gives the iPad and most wireless phones access to the cellular networks on which they operate.
Chris Paget, president and CTO of H4RDW4RE, a Sunnyvale, California-based firm that specializes in wireless security wrote in a blog post that on the AT&T network, the ICCID number directly correlates to another more sensitive and important number known as an IMSI, or International Mobile Subscriber Identity. An IMSI is a unique 15-digit number stored inside a SIM card, and it’s the number that a phone to identify itself on the wireless network.
Anyone who understand the correlation between the ICCID and IMSI numbers could use that information to carry out other kinds of attacks against wireless subscribers, Paget writes.
It turns out, that the correlation between the two numbers has already been documented. In a 2008 paper, security researcher Lee Reiber, owner of Boise, Idaho-based Mobile Forensics, Inc., a firm that trains law enforcement in collecting evidence from wireless phones, documented exactly how to extract an IMSI number from an AT&T ICCID number.
With the IMSI number in hand, the potential for trouble-making by an attacker grows much more serious, Paget says. In one scenario, the IMSI can be used to retrieve the subscriber’s full name, phone number, and approximate location relative to the nearest cell tower. Additionally, an attacker might be able to listen to their voice mail messages, something that obviously doesn’t apply to iPad owners.
In a second, more extreme scenario, a determined attacker could program a notebook PC to mimic a cell tower, and then drive within a few miles of their location, and intercept traffic from their phone or iPad. He describes the scenarios in more detail here and cites more original research in making his case.
AT&T spokesman Mark Siegel declined to comment on Paget’s observations in an email.
The list of people whose addresses were exposed include New York Times CEO Janet Robinson and New York Mayor Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg Businessweek.
How bad was the AT&T data breach on Apple’s iPad? According to AT&T, and the information about affected subscribers was limited to their email address, and a serial number known as an ICCID.
AT&T sent an email apologizing to affected customers, blaming “malicious hackers,” for the incident in reference to Goatse Security, a security consulting firm that publicized the vulnerability last week.
Now a wireless security consultant says that an ICCID number, once disclosed, can lead to further vulnerabilities that have been known for more than two years. An ICCID is a 19- or 20-digit serial number printed on a SIM card, the thumbnail-sized chip that gives the iPad and most wireless phones access to the cellular networks on which they operate.
Chris Paget, president and CTO of H4RDW4RE, a Sunnyvale, California-based firm that specializes in wireless security wrote in a blog post that on the AT&T network, the ICCID number directly correlates to another more sensitive and important number known as an IMSI, or International Mobile Subscriber Identity. An IMSI is a unique 15-digit number stored inside a SIM card, and it’s the number that a phone to identify itself on the wireless network.
Anyone who understand the correlation between the ICCID and IMSI numbers could use that information to carry out other kinds of attacks against wireless subscribers, Paget writes.
It turns out, that the correlation between the two numbers has already been documented. In a 2008 paper, security researcher Lee Reiber, owner of Boise, Idaho-based Mobile Forensics, Inc., a firm that trains law enforcement in collecting evidence from wireless phones, documented exactly how to extract an IMSI number from an AT&T ICCID number.
With the IMSI number in hand, the potential for trouble-making by an attacker grows much more serious, Paget says. In one scenario, the IMSI can be used to retrieve the subscriber’s full name, phone number, and approximate location relative to the nearest cell tower. Additionally, an attacker might be able to listen to their voice mail messages, something that obviously doesn’t apply to iPad owners.
In a second, more extreme scenario, a determined attacker could program a notebook PC to mimic a cell tower, and then drive within a few miles of their location, and intercept traffic from their phone or iPad. He describes the scenarios in more detail here and cites more original research in making his case.
AT&T spokesman Mark Siegel declined to comment on Paget’s observations in an email.
The list of people whose addresses were exposed include New York Times CEO Janet Robinson and New York Mayor Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg Businessweek.
SEC proposes new disclosures for target-date funds
By MARCY GORDON,
Federal regulators on Wednesday proposed new disclosure rules for target-date retirement funds that would require sponsors to spell out how they are investing the money and to warn about risks.
The Securities and Exchange Commission voted 5-0 to propose that marketing materials for target-date funds include how investments are being allocated among stocks, bonds, cash and such.
The proposed rules could be formally adopted sometime after a 60-day public comment period, possibly with changes.
Target-date funds, also called lifecycle funds, are pegged to a person's expected retirement year. They are an increasingly popular way to invest in 401(k) accounts and are appealing because of their "set-it-and-forget-it" approach. Usually named for the year the investor expects to retire, the funds now command a total of about $270 billion in assets.
The funds allocate investments among various types of assets, shifting to a more conservative mix as the target date for retirement approaches. The shift is called the fund's "glide path."
The funds drew criticism in the market meltdown of 2008 for wide variations in their returns, and excessive risks and high fees for some funds.
More than 40 companies offer target-date funds. The funds' complexities are so great that comparison tools from financial analysis companies are geared toward advisers and retirement plan administrators, not individual investors. It's difficult to make comparisons because of the wide variation in asset mixes.
Under the SEC proposal, target-date funds' marketing materials, whether electronic or in print, would have to include a prominent table, chart or graph showing the allocations among the various assets over the life of the fund. A statement would have to explain that the asset allocation changes over time.
The marketing materials also would have to include a statement telling prospective investors that they should consider their financial situation and tolerance for risk before going into a fund, and that it is possible to lose money investing in the fund, including at and after the target date.
"It's clear that investors need more information than just the date in a fund's name," SEC Chairman Mary Schapiro said before the vote.
The government has designated the funds as a qualified "default" investment option. That means employers are protected from liability when they invest a worker's contributions in a target-date fund if the worker hasn't chosen otherwise.
"It's not true that this is a good default investment," said Richard Michaud, president and chief investment officer of Boston's New Frontier Advisors and a critic of target-date funds.
Michaud said the SEC's proposed disclosure rules are helpful. However, the agency also should make clear "that these funds are a pretty risky bet on a long-term market," he said in a telephone interview.
Michaud calls "a dangerous myth" the idea that an investor's level of risk should be based on age, since stocks are shown to outperform bonds around three-quarters of the time over the long run. Factors more relevant than age are the investor's financial and personal situations and tolerance for risk, he says.
Target-date funds came under criticism during the market meltdown of 2008 and in its aftermath. Among 31 funds with a 2010 target date, the average loss in 2008 was nearly 25 percent. Returns for those funds varied widely: from minus 3.6 percent to minus 41 percent. Some had half or more of the assets allocated to stocks, only two years from the retirement target.
The funds have mostly recovered their losses since then. However, returns have continued to range widely, according to the SEC, from 7 percent to 31 percent last year for 2010 target funds — with an average return of around 22 percent.
A Senate investigation raised the question of whether some funds charged unreasonable fees and carried excessive risk. Several major fund companies have made changes in response to the criticism, cutting fees for their target date funds and making asset mixes more conservative sooner.
Among the largest providers of target-date funds are Fidelity Investments, Vanguard Group and Principal Financial Group.
FedEx says global trade recovery is underestimated
By SAMANTHA BOMKAMP
FedEx said people are too pessimistic about a recovery in global trade, after it reported Wednesday that strong exports from Asia and other international shipments drove its improved fourth-quarter results.
While concerns about European economies and their looming debt problems remain, FedEx said international shipments overall grew by 23 percent. Countries like India, China and Brazil in particular are driving the increase.
FedEx said the U.S. economy is steadily growing as well. Still, it has a conservative outlook for the next year, expecting rising costs as shipments pick up.
The company's forecast for earnings of $4.40 to $5 per share for the fiscal year that started June 1 falls short of analysts' predictions of $5.05 per share. It's the first time FedEx has issued a full-year forecast since before the recession, indicating the company's growing confidence in the long-term recovery.
FedEx, based in Memphis, Tenn., expects to earn 85 cents to $1.05 per share for the quarter ending in August. Analysts forecast $1.03 per share.
In the quarter ended in May, FedEx earned $419 million, or $1.33 per share. It lost $876 million, or $2.82 per share a year earlier. Excluding a writedown on the value of assets and aircraft, earnings were 64 cents per share a year ago.
Revenue climbed 20 percent to $9.43 billion. FedEx took delivery of 18 planes in the fourth quarter. Six of those were Boeing 777Fs, which can fly from the company's hub in Memphis to China without refueling.
FedEx said international priority shipments jumped 24 percent in the period. Most of those shipments are high-tech, high-value goods like electronics and pharmaceuticals, which people want fast. FedEx will ship Apple's new iPhone 4s when the popular gadget launches next week.
Average daily shipments in the company's Ground unit rose 7 percent. The Ground segment grew steadily during the recession as people switched to slower shipping methods to save money, and FedEx gained business as DHL retreated from the U.S. market.
The company's weak point remains its freight segment, which posted back-to-back losses. FedEx said the market still has too many trucks competing for a relatively small amount of freight, which is preventing it from raising prices. FedEx Freight CEO William Logue said the unit is aggressively reviewing the business. He didn't provide a timeline for when it would become profitable. This segment ships things like refrigerators and other large appliances...
FedEx's fourth-quarter earnings were also affected by the reinstatement of merit raises and some 401(k) contributions it cut off during the recession.
For the full fiscal year that ended in May, FedEx posted net income of $1.18 billion, or $3.76 per share, compared with $98 million, or 31 cents per share, in the previous fiscal year.
Revenue fell 2 percent to $34.73 billion.fell $4.94, or 6 percent, to close at $78.07 Wednesday
marți, 15 iunie 2010
Solar Panels – Are They a Threat to Biodiversity?
Solar panels are gaining more recognition as key ingredients to produce eco-friendly and renewable source of energy. With growing need for more energy, there will be in future, a plethora of solar panels all over the world. Now this has become a source of eco-conservative concern, according to Mr. Bruce Robertson, Research Associate, from Kellogg Biological Station, Michigan State University.
Threat to biodiversity:
Mr. Robertson sounded a warning about a possible threat to biodiversity. He noted that the shining dark surfaces of the solar cells, which reflect light, resemble water surfaces resulting aquatic insects like mayflies depositing their eggs on the solar panels. The solar panels are posing a false habitat hazard to more than 300 species of insect. This leads to a reproductive failure which may have far-reaching cascading adverse effects to the food chain. The insects fall a prey to predators. This data was discovered from a research held at Hungary.
Mistaken surface:
After their research at Hungary, Mr. Robertson and his colleagues published an online article in ‘Conservation Biology.’ Reflected sunlight from expanses of dark surfaces that are shiny like glass-clad buildings, even vehicles, solar panels of all sizes, becomes a worrisome new source for polarized light pollution. This is what causes the caddis flies and other aquatic insects to mistake shining surface to be water surface to lay their eggs.
Warning off:
Mr Robertson estimated that white marking the solar cells may reduce this threat to a great extent. He calculated that the efficiency of solar cells is not too greatly affected by the white grids. While humans may recognize reflected sunlight as glare, the group discovered that the aquatic insects can be warned off by fixing white-color grids and other methods to break up the polarized reflection. Non-polarizing white-grid use is a new approach for habitat fragmentation, used beneficially here.
Research group:
Supported by Great Lakes Bio-energy Research Centre, U.S. Department of Energy and the Hungarian Science Foundation, Robertson and his team conducted his research at Hungary. The team consisted of scientists from Eotvos University in Budapest and Szent Istvan University in Godollo, Hungary.
The Rise of a Chinese Worker's Movement
By Dexter Roberts Businessweek
A nondescript Beijing suburb was recently the venue for an evening of radical politics. The New Labor Art Troupe, a performance group with a cast of laborers, ran a graphic photo of a Foxconn worker who had just killed himself. Poems were read commemorating the hard lives of migrant workers in electronics factories and on construction sites. A guitar and harmonica were hauled out and songs were sung with titles like Marginalized Life, Industrial Zone, Working Is Our Glory and Our Hell, Get Back Our Wages, and Fighting in Solidarity. Some of the hundred or so assembled migrant workers, many of them employed in small furniture factories around the capital, started crying. The evening ended with the crowd standing up for a Chinese rendition of the The Internationale, the old battle hymn of the worldwide socialist movement. "The atmosphere was militant, but there was no overt criticism of the government," says University of Hawaii political scientist Eric Harwit, who attended the two hour-plus evening performance on May 28. "They seemed really sincere that they were upset about migrant labor working conditions."
The recent Beijing performance is just one example of the rising labor activism now evident in China, activism that asserted itself in recent weeks at the factories of Foxconn and Honda Motor (NYSE:HMC - News). It includes groups like New Labor, yet it also encompasses legal aid and other support networks at scores of universities, law firms focused on promoting worker rights, and countless migrant worker aid associations. "Civil society organizations are growing more powerful. They will push China to change," says Li Fan, director of the Beijing-based nongovernmental organization World & China Institute. Li has worked closely with labor groups as well as those pushing grassroots democracy.
The question is whether these groups can spawn a workers' movement that has the organization and mass to challenge factory owners across the country. Until a few years ago the Chinese authorities broke up sporadic workers' protests with relative ease: Local officials arrested a few ringleaders, then quickly offered concessions to the rest of the strikers to stop the unrest. Above all else, the Chinese security apparatus made sure that the leaders of labor protests in Shenzhen, Harbin, and elsewhere didn't connect with each other to form a national movement.
Today's young workers may be harder to corral. China now has 787 million mobile-phone users and 348 million Internet users -- and migrant workers in their twenties are far more aware of world developments than their parents. The younger generation can follow labor actions as they unfold, whether in China's northeastern Rust Belt or southern Pearl River Delta. "They have access to information. They use their mobile phones for messaging, to send pictures and video, and to go online," says Chinese Academy of Social Sciences journalism professor Bu Wei, who is researching the use of media by migrant workers.
The more assertive workers have also benefited from a huge push by China's state-run media to popularize knowledge about the tough labor contract law promulgated in 2008. As a result, young workers know what's owed them, whether it be guarantees of double pay for overtime or safer working conditions. "Every worker is a labor lawyer by himself. They know their rights better than my HR officer," says Frank Jaeger, a German factory owner who produces cable connectors in Dongguan in Guangdong Province. Adds Harley Seyedin, president of the American Chamber of Commerce of South China: "There are Internet cafes everywhere, so the workers can get information. They are starting to ask for more. The days of cheap labor are gone."
The workers' ranks are now filled with self-starters like Xu Haitao. A 28-year-old technician in a small metal components factory in Shenzhen, Xu takes a class on labor law and worker rights every Sunday at a local migrant workers support center. "Of course, more and more workers understand their rights these days," says Xu, who surfs labor law sites regularly. "Last year I started using my own computer. Computers are not expensive anymore. I bought the pieces and constructed my own." Xu wants more workers to educate themselves. "Many capitalists and factory managers still abuse our rights," he says. "If all the workers knew the labor law -- all 600 million of us -- then many factory owners would go bankrupt."
These self-educated workers now have new allies in China's universities. A decade-long effort by Beijing to expand the number of students in China's universities has brought more and more of the rural population -- and those with relatives and friends who still work in the factories -- onto Chinese campuses. That has driven a wave of support at colleges for migrant workers, points out CASS professor Bu. Students studying law, political science, and social science are forming support groups and even provide legal aid for workers, to a degree not seen before. One of Bu's graduate students, for example, has a brother working for the Foxconn facility near Shanghai.
Many faculty members support their students' activism. "From the Foxconn tragedy, we hear screams coming from the lives of a new generation of migrant workers, warning the entire society to rethink this development model leveraged upon the sacrifice of people's basic dignity," warned an open letter dated May 19 and signed by nine sociologists from prominent schools, including Peking and Tsinghua Universities. "We call for national and local governments to implement practical measures that allow migrant workers to integrate and establish roots in the city...sharing the fruits of economic development they themselves created."
It may be a long summer for Chinese officials trying to contain this unrest. On June 3 more than 20 women workers were detained when police tried to shut down a two-week strike at a formerly state-owned cotton mill in Pingdingshan, Henan. Thousands of workers had stopped operating the looms to express their anger at their factory's privatization and to demand higher wages, reports the Hong Kong-based China Labour Bulletin. Although workers are back on the line at the Honda transmission plant that strikers had shut down, their language is anything but conciliatory. "We call all workers to maintain a high degree of unity and not to allow the capitalists to divide us," the Honda workers declared in a statement released on June 3. "We are not simply struggling for the rights of 1,800 workers, but for the rights of workers across the whole country." On June 7, another Honda plant in China went on strike.
The bottom line: A new, savvier, and more militant generation of workers may start to form a genuine labor movement in China.
A nondescript Beijing suburb was recently the venue for an evening of radical politics. The New Labor Art Troupe, a performance group with a cast of laborers, ran a graphic photo of a Foxconn worker who had just killed himself. Poems were read commemorating the hard lives of migrant workers in electronics factories and on construction sites. A guitar and harmonica were hauled out and songs were sung with titles like Marginalized Life, Industrial Zone, Working Is Our Glory and Our Hell, Get Back Our Wages, and Fighting in Solidarity. Some of the hundred or so assembled migrant workers, many of them employed in small furniture factories around the capital, started crying. The evening ended with the crowd standing up for a Chinese rendition of the The Internationale, the old battle hymn of the worldwide socialist movement. "The atmosphere was militant, but there was no overt criticism of the government," says University of Hawaii political scientist Eric Harwit, who attended the two hour-plus evening performance on May 28. "They seemed really sincere that they were upset about migrant labor working conditions."
The recent Beijing performance is just one example of the rising labor activism now evident in China, activism that asserted itself in recent weeks at the factories of Foxconn and Honda Motor (NYSE:HMC - News). It includes groups like New Labor, yet it also encompasses legal aid and other support networks at scores of universities, law firms focused on promoting worker rights, and countless migrant worker aid associations. "Civil society organizations are growing more powerful. They will push China to change," says Li Fan, director of the Beijing-based nongovernmental organization World & China Institute. Li has worked closely with labor groups as well as those pushing grassroots democracy.
The question is whether these groups can spawn a workers' movement that has the organization and mass to challenge factory owners across the country. Until a few years ago the Chinese authorities broke up sporadic workers' protests with relative ease: Local officials arrested a few ringleaders, then quickly offered concessions to the rest of the strikers to stop the unrest. Above all else, the Chinese security apparatus made sure that the leaders of labor protests in Shenzhen, Harbin, and elsewhere didn't connect with each other to form a national movement.
Today's young workers may be harder to corral. China now has 787 million mobile-phone users and 348 million Internet users -- and migrant workers in their twenties are far more aware of world developments than their parents. The younger generation can follow labor actions as they unfold, whether in China's northeastern Rust Belt or southern Pearl River Delta. "They have access to information. They use their mobile phones for messaging, to send pictures and video, and to go online," says Chinese Academy of Social Sciences journalism professor Bu Wei, who is researching the use of media by migrant workers.
The more assertive workers have also benefited from a huge push by China's state-run media to popularize knowledge about the tough labor contract law promulgated in 2008. As a result, young workers know what's owed them, whether it be guarantees of double pay for overtime or safer working conditions. "Every worker is a labor lawyer by himself. They know their rights better than my HR officer," says Frank Jaeger, a German factory owner who produces cable connectors in Dongguan in Guangdong Province. Adds Harley Seyedin, president of the American Chamber of Commerce of South China: "There are Internet cafes everywhere, so the workers can get information. They are starting to ask for more. The days of cheap labor are gone."
The workers' ranks are now filled with self-starters like Xu Haitao. A 28-year-old technician in a small metal components factory in Shenzhen, Xu takes a class on labor law and worker rights every Sunday at a local migrant workers support center. "Of course, more and more workers understand their rights these days," says Xu, who surfs labor law sites regularly. "Last year I started using my own computer. Computers are not expensive anymore. I bought the pieces and constructed my own." Xu wants more workers to educate themselves. "Many capitalists and factory managers still abuse our rights," he says. "If all the workers knew the labor law -- all 600 million of us -- then many factory owners would go bankrupt."
These self-educated workers now have new allies in China's universities. A decade-long effort by Beijing to expand the number of students in China's universities has brought more and more of the rural population -- and those with relatives and friends who still work in the factories -- onto Chinese campuses. That has driven a wave of support at colleges for migrant workers, points out CASS professor Bu. Students studying law, political science, and social science are forming support groups and even provide legal aid for workers, to a degree not seen before. One of Bu's graduate students, for example, has a brother working for the Foxconn facility near Shanghai.
Many faculty members support their students' activism. "From the Foxconn tragedy, we hear screams coming from the lives of a new generation of migrant workers, warning the entire society to rethink this development model leveraged upon the sacrifice of people's basic dignity," warned an open letter dated May 19 and signed by nine sociologists from prominent schools, including Peking and Tsinghua Universities. "We call for national and local governments to implement practical measures that allow migrant workers to integrate and establish roots in the city...sharing the fruits of economic development they themselves created."
It may be a long summer for Chinese officials trying to contain this unrest. On June 3 more than 20 women workers were detained when police tried to shut down a two-week strike at a formerly state-owned cotton mill in Pingdingshan, Henan. Thousands of workers had stopped operating the looms to express their anger at their factory's privatization and to demand higher wages, reports the Hong Kong-based China Labour Bulletin. Although workers are back on the line at the Honda transmission plant that strikers had shut down, their language is anything but conciliatory. "We call all workers to maintain a high degree of unity and not to allow the capitalists to divide us," the Honda workers declared in a statement released on June 3. "We are not simply struggling for the rights of 1,800 workers, but for the rights of workers across the whole country." On June 7, another Honda plant in China went on strike.
The bottom line: A new, savvier, and more militant generation of workers may start to form a genuine labor movement in China.
Lawmakers blast oil firms' drilling plans
By Tom Doggett and Matt Daily Reuters
U.S. lawmakers blasted major oil companies on Tuesday for "virtually worthless" and "cookie cutter" plans to handle a deepwater oil disaster, with one top executive conceding the industry was ill prepared to handle big offshore spills.
Summoned to Capitol Hill to testify along with the U.S. chief of BP, top executives from four major oil companies distanced themselves from BP and its massive Gulf of Mexico oil spill by defending their practices and explaining how they could have prevented the catastrophe.
Facing a hostile room, the oil company executives were hoping to head off potentially costly new regulations by detailing their drilling policies and criticizing BP for not following industry norms.
Democrat Edward Markey blasted the companies for mentioning walruses -- which have not been found in the Gulf of Mexico for millions of years -- in their plans and for including the name and phone number of a specialist who died in 2005.
The outcome of the charged hearing could affect BP, U.S. offshore drilling and legislative efforts to introduce a new climate bill, as lawmakers consider options to address the worst oil spill in U.S. history.
The hearing came ahead of a televised address to the nation on Tuesday evening by President Barack Obama, who could outline new efforts to contain the spill and make a new call for climate legislation. Polls show many Americans doubt his administration has done enough to clean up the mess.
'NOT WELL EQUIPPED'
Soon after the deadly BP well explosion that killed 11 people, the Obama administration imposed a six-month moratorium on drilling in waters more than 500 feet deep.
The executives from Exxon Mobil, Chevron, ConocoPhillips and Royal Dutch Shell, are trying to reassure lawmakers that drilling is safe, saying they would have done things differently with such a spill.
But when pressed on how to handle a worst-case scenario with hundreds of thousands of barrels of oil spilling into the ocean, Exxon's chief Rex Tillerson said, "When these things happen we are not well equipped to deal with them."
"We've never represented anything different than that. That's why emphasis is always on preventing these things from occurring, because when they happen we are not very well equipped to deal with them," Tillerson said.
Lawmakers seemed unconvinced that the four major oil companies had better contingency plans than BP, which is still struggling to contain the oil that has been gushing into the ocean from a ruptured well for nearly two months.
The hearing could lead to new legislation that would have wide impact in the U.S. Gulf, America's best hope for increasing its domestic oil supply. It's also one of the most promising exploration frontiers for companies including BP, Shell and Chevron.
One by one the lawmakers took turns heaping criticism on the oil executives who sat expressionless as they stared facing rows of their inquisitors.
"Lawmakers won, no question. As soon as the companies were asked why they were better, it ended up making them all look worse in the eyes of the lawmakers," said Kevin Book, analyst at ClearView Energy Partners in Washington.
Though all five men were seated at the same large table, it was clearly four against one with BP America's chief Lamar McKay looking solitary at the end of the table as he faced most of the verbal attacks.
While McKay silently listened to Republican Representative Cliff Stearns of Florida demand his resignation, the other executives had only to defend their policies and insist that they would have done it differently.
McKay, who appeared drawn but showed little emotion, did not offer much new ahead of Thursday's testimony by BP's chief executive, Tony Hayward, on Capitol Hill.
Though Wall Street investors shrugged off the hearing as political theater, it is a tradition in Washington and a conduit of public anger, especially ahead of November elections.
Representative Bart Stupak, a Democrat and one of the lawmakers heading a probe of the disaster, slammed the companies' response plans for offshore accidents. He singled out Exxon Mobil for having a 40-page media response strategy, including pre-written talking points.
"Exxon Mobil's plan appears more concerned about public perception than wildlife protection given the fact that their media plan is fives times longer than its plan for protecting wildlife," said Stupak, adding that all of the companies' plans were "virtually worthless when an actual spill occurs."
'COOKIE CUTTER'
Representative Henry Waxman, a Democrat, said the companies had submitted nearly identical "cookie cutter" strategies to deal with a major spill which all included techniques that had failed to stem the flow of oil from BP's well.
"We found that none of the five companies has an adequate plan," he said.
BP's McKay was emotionless when repeatedly asked by Markey to apologize for under-estimating how much oil was gushing into the ocean after the well ruptured.
"We are sorry for everything the Gulf Coast is going through, we are sorry for that and the spill," he said, adding that the company did not have the technology to measure the amount of spilled oil.
But though the four non-BP executives appeared to stick together, chatting apart from McKay when the hearing ended, they still had to face public anger.
As the hearing came to a close, a protester holding a soda bottle filled with a black liquid approached the executives shouting, "You all are just as corrupt as BP. You should all be ashamed of yourself."
Police presence was beefed up, with the building and hearing room entrances both inside and outside lined with police officers.
EU demands 'extra' 2011 deficit measures of Spain
Europe on Tuesday told Spain it must introduce "extra" measures in its 2011 budget if it is to restore its public deficit to the EU limit of three percent of GDP by a 2013 target.
"For 2011, Spain will need to specify concrete measures of about 1.75 percent of GDP to reach the deficit target of six percent in 2011," the EU's economic and monetary affairs commissioner Olli Rehn said in Strasbourg, France, at the European parliament.
So far Spain's deficit busting measures for next year only amount to 1.00 percent of output, according to Rehn's spokesman.
"Extra measures" need to be "specified in the 2011 budget," he stressed.
Spain was one of 12 countries, including Portugal, whose existing deficit reduction plans were considered, and broadly approved, by the EU Commission.
But while officials had already said they expected Spain to require additional measures in 2012 and 2013, Brussels now wants fresh action in Madrid when its budget is announced in mid-September.
Last month, the Spanish parliament, by a single vote, approved plans to slash 15 billion euros of spending (18.5 billion dollars) in an extended austerity plan covering this year and next.
That came on top of 50 billion euros of radical cuts already announced in January, plus pension and job market reforms, the latter due to be approved by the Spanish government on Wednesday.
The commission's stance, however, will likely increase intense scrutiny on capital markets after Spain's public deficit soared to 11.2 percent of GDP in 2009, the third-highest level in the eurozone after Greece and Ireland.
Investors are demanding ever higher interest payments in return for providing fresh cash, and banks' funding is also drying up according to experts.
Group of Seven finance ministers fear that problems with Spain's economy in particular -- Europe's fifth largest, with its banks heavily involved in Latin America -- could undermine global recovery.
"We are all concerned ... with the need for certain vulnerable European economies to act quickly to fiscally consolidate," Canadian Finance Minister Jim Flaherty said on Monday.
A string of leading EU figures have had to deny persistent reports that Spain is preparing to tap an EU emergency fund of 500 billion euros of loans and guarantees.
Spain "is working to ensure that these rumours remain unfounded, as is currently the case," Spanish Economy and Budget Minister Carlos Ocana said.
German Chancellor Angela Merkel said in Berlin late on Monday that "Spain, or any country, knows that it can make use of this mechanism at any time, if necessary," subject to conditions being thrashed out as was the case with Greece in a separate bailout.
Ten countries were given the all-clear under existing austerity drives including France, Germany and Italy, which have all recently announced new cuts of their own, as well as Austria, Belgium, the Czech Republic, Ireland, the Netherlands, Slovakia and Slovenia.
Portugal, for its part, has pledged to cut its public deficit this year to 7.3 percent, rather than 8.3 percent as initially planned. However the commission said that "further corrective measures should be included," next year.
Britain should have been the 13th EU member state to come up for inspection but with the new government having slated an emergency budget for June 22, its review was put back.
Two days from a summit of EU leaders dominated by their response to Europe's debt crisis, the commission meanwhile recommended opening excessive deficit procedures on three additional countries -- Cyprus, Denmark and Finland -- in moves to be agreed formally by EU finance ministers on July 13. Bulgaria is likely to follow.
"For 2011, Spain will need to specify concrete measures of about 1.75 percent of GDP to reach the deficit target of six percent in 2011," the EU's economic and monetary affairs commissioner Olli Rehn said in Strasbourg, France, at the European parliament.
So far Spain's deficit busting measures for next year only amount to 1.00 percent of output, according to Rehn's spokesman.
"Extra measures" need to be "specified in the 2011 budget," he stressed.
Spain was one of 12 countries, including Portugal, whose existing deficit reduction plans were considered, and broadly approved, by the EU Commission.
But while officials had already said they expected Spain to require additional measures in 2012 and 2013, Brussels now wants fresh action in Madrid when its budget is announced in mid-September.
Last month, the Spanish parliament, by a single vote, approved plans to slash 15 billion euros of spending (18.5 billion dollars) in an extended austerity plan covering this year and next.
That came on top of 50 billion euros of radical cuts already announced in January, plus pension and job market reforms, the latter due to be approved by the Spanish government on Wednesday.
The commission's stance, however, will likely increase intense scrutiny on capital markets after Spain's public deficit soared to 11.2 percent of GDP in 2009, the third-highest level in the eurozone after Greece and Ireland.
Investors are demanding ever higher interest payments in return for providing fresh cash, and banks' funding is also drying up according to experts.
Group of Seven finance ministers fear that problems with Spain's economy in particular -- Europe's fifth largest, with its banks heavily involved in Latin America -- could undermine global recovery.
"We are all concerned ... with the need for certain vulnerable European economies to act quickly to fiscally consolidate," Canadian Finance Minister Jim Flaherty said on Monday.
A string of leading EU figures have had to deny persistent reports that Spain is preparing to tap an EU emergency fund of 500 billion euros of loans and guarantees.
Spain "is working to ensure that these rumours remain unfounded, as is currently the case," Spanish Economy and Budget Minister Carlos Ocana said.
German Chancellor Angela Merkel said in Berlin late on Monday that "Spain, or any country, knows that it can make use of this mechanism at any time, if necessary," subject to conditions being thrashed out as was the case with Greece in a separate bailout.
Ten countries were given the all-clear under existing austerity drives including France, Germany and Italy, which have all recently announced new cuts of their own, as well as Austria, Belgium, the Czech Republic, Ireland, the Netherlands, Slovakia and Slovenia.
Portugal, for its part, has pledged to cut its public deficit this year to 7.3 percent, rather than 8.3 percent as initially planned. However the commission said that "further corrective measures should be included," next year.
Britain should have been the 13th EU member state to come up for inspection but with the new government having slated an emergency budget for June 22, its review was put back.
Two days from a summit of EU leaders dominated by their response to Europe's debt crisis, the commission meanwhile recommended opening excessive deficit procedures on three additional countries -- Cyprus, Denmark and Finland -- in moves to be agreed formally by EU finance ministers on July 13. Bulgaria is likely to follow.
Tesla Motors to raise $185M in IPO, Toyota deal
By DAN STRUMPF Associated Press
Electric car maker Tesla Motors Inc. expects to raise $185 million from its highly anticipated initial public offering of stock and an investment from Toyota Motors Corp.
The company, which makes the $109,000 all-electric Roadster sports car, plans to begin selling stock the week of June 28, according to IPO research firm Renaissance Capital.
The Palo Alto, Calif. company currently sells just the Roadster, a high-end car powered by lithium-ion batteries with a design based on the Lotus Elise two-seater sports car. It has sold just 1,063 Roadsters since 2008 and has lost $290.2 million since the company was founded in 2003. Revenue has totaled $147.6 million.
However, the company plans to start selling a mass-market luxury sedan starting in 2012 that is expected to cost $49,900 after a $7,500 federal tax credit. The company has said it expects continuing quarterly losses until the sedan, the Model S, hits the market. Tesla said it has already taken 2,200 reservations for the five-passenger sedan.
After the release of the Model S, Tesla plans to continue expanding its lineup of electric cars with increasingly cheaper models.
Tesla said in a Tuesday filing with the Securities and Exchange Commission that the company and its stockholders plan to sell 11.1 million shares when it goes public. Shares will be priced between $14 and $16.
Toyota Motor Corp. will buy an additional $50 million in Tesla stock immediately after the close of Tesla's public offering.
As part of the partnership with Toyota, Tesla will pay the Japanese automaker $42 million for a shuttered auto plant in Fremont, Calif. The plant, called New United Motor Manufacturing Inc., is a former joint venture between Toyota and General Motors Co., but GM withdrew from the joint venture when it filed for bankruptcy protection last year, leaving Toyota saddled with the idled facility.
Tesla said it plans to use the sprawling, 207-acre facility — most recently used to build the Pontiac Vibe and the Toyota Corolla and Tacoma — to build the Model S. In addition, the two companies have loose plans to work together later on another electric car.
Tesla also has another source of funding: the U.S. government. In January, the company received approval for a $465 million loan from the Energy Department under a program established by Congress to foster development of electric vehicles. Ford Motor Co. and Nissan Motor Co., among other automakers, have also received funding from the program.
Tesla said it has drawn down $45.4 million of its government loan as of Monday. The company has also received $31 million in tax incentives from the state of California.
Electric car maker Tesla Motors Inc. expects to raise $185 million from its highly anticipated initial public offering of stock and an investment from Toyota Motors Corp.
The company, which makes the $109,000 all-electric Roadster sports car, plans to begin selling stock the week of June 28, according to IPO research firm Renaissance Capital.
The Palo Alto, Calif. company currently sells just the Roadster, a high-end car powered by lithium-ion batteries with a design based on the Lotus Elise two-seater sports car. It has sold just 1,063 Roadsters since 2008 and has lost $290.2 million since the company was founded in 2003. Revenue has totaled $147.6 million.
However, the company plans to start selling a mass-market luxury sedan starting in 2012 that is expected to cost $49,900 after a $7,500 federal tax credit. The company has said it expects continuing quarterly losses until the sedan, the Model S, hits the market. Tesla said it has already taken 2,200 reservations for the five-passenger sedan.
After the release of the Model S, Tesla plans to continue expanding its lineup of electric cars with increasingly cheaper models.
Tesla said in a Tuesday filing with the Securities and Exchange Commission that the company and its stockholders plan to sell 11.1 million shares when it goes public. Shares will be priced between $14 and $16.
Toyota Motor Corp. will buy an additional $50 million in Tesla stock immediately after the close of Tesla's public offering.
As part of the partnership with Toyota, Tesla will pay the Japanese automaker $42 million for a shuttered auto plant in Fremont, Calif. The plant, called New United Motor Manufacturing Inc., is a former joint venture between Toyota and General Motors Co., but GM withdrew from the joint venture when it filed for bankruptcy protection last year, leaving Toyota saddled with the idled facility.
Tesla said it plans to use the sprawling, 207-acre facility — most recently used to build the Pontiac Vibe and the Toyota Corolla and Tacoma — to build the Model S. In addition, the two companies have loose plans to work together later on another electric car.
Tesla also has another source of funding: the U.S. government. In January, the company received approval for a $465 million loan from the Energy Department under a program established by Congress to foster development of electric vehicles. Ford Motor Co. and Nissan Motor Co., among other automakers, have also received funding from the program.
Tesla said it has drawn down $45.4 million of its government loan as of Monday. The company has also received $31 million in tax incentives from the state of California.
luni, 14 iunie 2010
Shareholder Activists Set to Drill Oil Companies
By David Bogoslaw Business
BP's Gulf disaster pressures energy companies to disclose more about environmental and safety compliance. How to account for catastrophic risk?
(This story has been updated in the fifteenth paragraph to include comment from BP.)
It may seem unthinkable that a company with so formidable a public image and financial track record as BP (BP) is fighting to save its reputation—and potentially, its very existence—less than two years after the oil industry logged its biggest-ever growth in profits. Reversals of fortune of this magnitude aren't as rare as we sometimes think. Recall how the tobacco giants wound up ceding enormous, profit-generating power to the U.S. government and how asbestos lawsuits forced such major industrial outfits as Johns-Manville into bankruptcy.
The common denominator linking BP with these companies is growing clear: They all failed to anticipate risks that could threaten their business foundations.
Now the tide has shifted with respect to how much thought mainstream investors are giving to environmental, social, and corporate governance (ESG) issues. Michael Passoff, senior program director for the Corporate Social Responsibility Program at As You Sow, a shareholder advocacy organization in San Francisco, has reviewed as far back as 1999 resolutions focused on corporate environmental issues that were being filed for the first time. "Nothing comes close to the support we're getting now," says Passoff.
A June 3 proxy vote that called on Layne Christensen (LAYN), a mining and production company, to produce a sustainability report drew support from over 60 percent of shareholders. Earlier resolutions regarding disclosures about coal ash at power producers CMS Energy (CMS) and MDU Resources Group (MDU) were supported by over 40 percent of each company's shareholders. Resolutions demanding greater disclosure by natural gas producers about their hydraulic fracturing practices have drawn supportive votes ranging from 26 percent to 41 percent of shareholders, five to six times what they've received in prior years, says Passoff.
He believes environmental sustainability issues had already begun to attract broader support before the Apr. 20 explosion of BP's Deepwater Horizon rig sent an estimated millions of barrels of oil gushing into the Gulf of Mexico. Passoff credits the change in consciousness to growing awareness of climate change issues. "Investors are seeing that environmental practices affect their bottom line. It's starting to become more commonly accepted," he says.
Environmental resolutions are drawing affirmative votes from pension funds such as the California Public Employees Retirement System (CalPERS) and from RiskMetrics, a proxy service that historically has tended to support management on ESG resolutions, says Passoff.
Other oil companies face same risks
On June 11, MSCI, a provider of stock indices and portfolio risk analytics, announced plans to include nonfinancial factors such as ESG in its investment products. MSCI acquired RiskMetrics Group on June 1.
There's undeniable risk that BP could declare bankruptcy as a result of the Gulf oil disaster, says Nell Minow, editor and co-founder of the Corporate Library, an independent research group. That BP is on the spot doesn't mean other oil companies are doing any better at planning for environmental debacles, she adds.
"If large fiduciary institutional investors who are going to own a piece of every company for a long time don't understand that they need to do a better job of monitoring risk and getting boards of directors to monitor risk," investors are better off "putting [all their money] in T-bills," says Minow.
he Securities & Exchange Commission's greater receptivity toward requiring disclosures on various matters concerning climate change points to a push for more disclosure, not less, says Robert Graham, founder and head of the environmental law practice at Chicago-based Jenner & Block. He thinks this should motivate shareholders to require companies to disclose more thorough information in their public filings.
In the past, demands for risk disclosure tended to be viewed as hypothetical. In light of the Gulf disaster, Graham predicts that requests for such information will become more mainstream. "These issues are real and this disaster dramatically demonstrates how they impact a company's balance sheet," he says.
$20 billion liability for marshlands?
Skeptics need look no further than the toll taken on BP's shares since Apr. 20, he says. (The stock has declined 44 percent.) It's also clear—from the thousands of lawsuits BP is facing as a result of the spill's health and safety effects, plus damages claims by many businesses operating in the Gulf—that the company is likely to be held accountable, Graham adds.
The plunge in BP's stock price over the past six weeks amounts to roughly $83 billion in market capitalization erased, no small loss for shareholders. If BP bows to pressure from U.S. politicians to suspend its $3.36 per ADR annual dividend, the pain will be compounded for BP investors. While the company has reportedly said it won't seek to limit payouts on legal claims to the $75 million cap set by the Oil Pollution Act of 1990, the liability cap is likely to be thrown out if plaintiffs' attorneys can prove that the company's reckless behavior and lack of proper safety measures contributed to the disaster.
BP could be on the hook for as much as $20 billion if a major public works project needs to be undertaken to save marshland around the Gulf, Douglas Brinkley, fellow in history at the Baker Institute at Rice University in Houston, told CNN (TWX) last week.
As of June 10, the company had received roughly 42,000 claims and paid over 20,000 claims totaling $53 million, a spokesman in BP's Houston office told Bloomberg Businessweek.
It is inevitable, Graham says, that companies will be pressed by shareholders to disclose more information about safety practices, the kinds of fail-safe mechanisms they have in place for high-risk operations, and their plans and prospects. Companies will have to reconsider the insurance they've arranged to better gauge how much and what kinds of coverage they need to cover potential risks. They'll also need to figure out how much cash to set aside in reserve to cover unforeseen incidents that may cause environmental damage, he says. Shareholders will also start to insist on viewing companies' safety records, including any sanctions received from federal or state agencies regarding their operations.
Do short-term investors care?
There will also likely be a bigger push for disclosure on what companies are doing to develop alternative energy sources and how much money they're investing in that area, relative to investments in fossil fuels, says Graham, which he notes would fit in well with disclosures on climate-related risks that the SEC began to require in February. In the long run, it may well encourage energy producers to put further research and money into developing less risky, climate-friendlier alternative energy sources such as solar and wind, he adds.
From one perspective, growing awareness among shareholders of environmental, social, and governance-related risks could be seen as a corrective to the general trend toward a relatively short-sighted view as investors' time horizons have shrunk. "If you're renting the stock, you don't care what happens next year," says Lloyd Kurtz, manager of the Wells Fargo Advantage Social Sustainability Fund (WSRAX). "You don't care if the company has a litigation problem in two years because you'll be gone by then."
The prevailing short-sighted view of risk creates an opportunity for investors with longer time horizons, who are more inclined to look for problems that may crop up, he says.
Kurtz would prefer that the damages companies are required to pay for litigation and environmental destruction continue to come out of shareholder equity rather than out of cash reserves earmarked to cover such events. That's the only way to get investors to make it common practice to weigh environmental risks, along with other risk factors, when deciding whether or not to invest in a company, he says. He suspects that any attempt to assign a monetary value to such risks before they manifest would only enable companies to manage the reserves to help bolster or reduce their profits.
Minow at the Corporate Library agrees that investors need to consider such risks when researching companies to invest in. She would also like to see these risks accounted for on companies' balance sheets. Apart from what she says is BP's environmental negligence, the company embarked on a project "without any idea of how to handle it if things went wrong," something Minow calls "utterly indefensible." The fact that BP didn't have a backup plan in place speaks to sustainability issues, she adds.
She sees a clear parallel with the fate of Texaco, which—while still an independent company—was forced to file for bankruptcy in 1987 so it could continue operating while it figured out how to recover from a huge civil verdict stemming from its attempted acquisition of Getty Oil.
shareholders might write in directors
The financial industry reform legislation that's now in conference committee between the U.S. Senate and the House of Representatives includes provisions for shareholders to propose their own board candidates on companies' proxy cards, which will put unprecedented pressure on individual directors, says Minow. She believes this—more than resolutions, which aren't binding—will be the focus of shareholder activism.
"[Primary attention] is going to be on replacing boards of directors and if the board of directors at BP didn't do a good-enough job of responding to problems, they'll be out," she predicts. If BP lacks directors with environmental credentials, some will have to be found and added, she says.
Coming as it did toward the end of proxy season, the timing of the Gulf disaster may seem unfortunate for activists, but Minow believes time will confer an advantage. By the time the 2011 proxy season comes around, she predicts that the financial reform legislation will have passed, opening fresh opportunities for activists to exert pressure on companies.
"There's a reason shareholders' resolutions have to be in by fall for meetings in the spring. It gives corporations a really good opportunity to get their acts together before shareholders start proposing resolutions," she says. "Partly for that reason, I suspect [BP chief executive officer Tony] Hayward will be out by the end of the summer."
BP's Gulf disaster pressures energy companies to disclose more about environmental and safety compliance. How to account for catastrophic risk?
(This story has been updated in the fifteenth paragraph to include comment from BP.)
It may seem unthinkable that a company with so formidable a public image and financial track record as BP (BP) is fighting to save its reputation—and potentially, its very existence—less than two years after the oil industry logged its biggest-ever growth in profits. Reversals of fortune of this magnitude aren't as rare as we sometimes think. Recall how the tobacco giants wound up ceding enormous, profit-generating power to the U.S. government and how asbestos lawsuits forced such major industrial outfits as Johns-Manville into bankruptcy.
The common denominator linking BP with these companies is growing clear: They all failed to anticipate risks that could threaten their business foundations.
Now the tide has shifted with respect to how much thought mainstream investors are giving to environmental, social, and corporate governance (ESG) issues. Michael Passoff, senior program director for the Corporate Social Responsibility Program at As You Sow, a shareholder advocacy organization in San Francisco, has reviewed as far back as 1999 resolutions focused on corporate environmental issues that were being filed for the first time. "Nothing comes close to the support we're getting now," says Passoff.
A June 3 proxy vote that called on Layne Christensen (LAYN), a mining and production company, to produce a sustainability report drew support from over 60 percent of shareholders. Earlier resolutions regarding disclosures about coal ash at power producers CMS Energy (CMS) and MDU Resources Group (MDU) were supported by over 40 percent of each company's shareholders. Resolutions demanding greater disclosure by natural gas producers about their hydraulic fracturing practices have drawn supportive votes ranging from 26 percent to 41 percent of shareholders, five to six times what they've received in prior years, says Passoff.
He believes environmental sustainability issues had already begun to attract broader support before the Apr. 20 explosion of BP's Deepwater Horizon rig sent an estimated millions of barrels of oil gushing into the Gulf of Mexico. Passoff credits the change in consciousness to growing awareness of climate change issues. "Investors are seeing that environmental practices affect their bottom line. It's starting to become more commonly accepted," he says.
Environmental resolutions are drawing affirmative votes from pension funds such as the California Public Employees Retirement System (CalPERS) and from RiskMetrics, a proxy service that historically has tended to support management on ESG resolutions, says Passoff.
Other oil companies face same risks
On June 11, MSCI, a provider of stock indices and portfolio risk analytics, announced plans to include nonfinancial factors such as ESG in its investment products. MSCI acquired RiskMetrics Group on June 1.
There's undeniable risk that BP could declare bankruptcy as a result of the Gulf oil disaster, says Nell Minow, editor and co-founder of the Corporate Library, an independent research group. That BP is on the spot doesn't mean other oil companies are doing any better at planning for environmental debacles, she adds.
"If large fiduciary institutional investors who are going to own a piece of every company for a long time don't understand that they need to do a better job of monitoring risk and getting boards of directors to monitor risk," investors are better off "putting [all their money] in T-bills," says Minow.
he Securities & Exchange Commission's greater receptivity toward requiring disclosures on various matters concerning climate change points to a push for more disclosure, not less, says Robert Graham, founder and head of the environmental law practice at Chicago-based Jenner & Block. He thinks this should motivate shareholders to require companies to disclose more thorough information in their public filings.
In the past, demands for risk disclosure tended to be viewed as hypothetical. In light of the Gulf disaster, Graham predicts that requests for such information will become more mainstream. "These issues are real and this disaster dramatically demonstrates how they impact a company's balance sheet," he says.
$20 billion liability for marshlands?
Skeptics need look no further than the toll taken on BP's shares since Apr. 20, he says. (The stock has declined 44 percent.) It's also clear—from the thousands of lawsuits BP is facing as a result of the spill's health and safety effects, plus damages claims by many businesses operating in the Gulf—that the company is likely to be held accountable, Graham adds.
The plunge in BP's stock price over the past six weeks amounts to roughly $83 billion in market capitalization erased, no small loss for shareholders. If BP bows to pressure from U.S. politicians to suspend its $3.36 per ADR annual dividend, the pain will be compounded for BP investors. While the company has reportedly said it won't seek to limit payouts on legal claims to the $75 million cap set by the Oil Pollution Act of 1990, the liability cap is likely to be thrown out if plaintiffs' attorneys can prove that the company's reckless behavior and lack of proper safety measures contributed to the disaster.
BP could be on the hook for as much as $20 billion if a major public works project needs to be undertaken to save marshland around the Gulf, Douglas Brinkley, fellow in history at the Baker Institute at Rice University in Houston, told CNN (TWX) last week.
As of June 10, the company had received roughly 42,000 claims and paid over 20,000 claims totaling $53 million, a spokesman in BP's Houston office told Bloomberg Businessweek.
It is inevitable, Graham says, that companies will be pressed by shareholders to disclose more information about safety practices, the kinds of fail-safe mechanisms they have in place for high-risk operations, and their plans and prospects. Companies will have to reconsider the insurance they've arranged to better gauge how much and what kinds of coverage they need to cover potential risks. They'll also need to figure out how much cash to set aside in reserve to cover unforeseen incidents that may cause environmental damage, he says. Shareholders will also start to insist on viewing companies' safety records, including any sanctions received from federal or state agencies regarding their operations.
Do short-term investors care?
There will also likely be a bigger push for disclosure on what companies are doing to develop alternative energy sources and how much money they're investing in that area, relative to investments in fossil fuels, says Graham, which he notes would fit in well with disclosures on climate-related risks that the SEC began to require in February. In the long run, it may well encourage energy producers to put further research and money into developing less risky, climate-friendlier alternative energy sources such as solar and wind, he adds.
From one perspective, growing awareness among shareholders of environmental, social, and governance-related risks could be seen as a corrective to the general trend toward a relatively short-sighted view as investors' time horizons have shrunk. "If you're renting the stock, you don't care what happens next year," says Lloyd Kurtz, manager of the Wells Fargo Advantage Social Sustainability Fund (WSRAX). "You don't care if the company has a litigation problem in two years because you'll be gone by then."
The prevailing short-sighted view of risk creates an opportunity for investors with longer time horizons, who are more inclined to look for problems that may crop up, he says.
Kurtz would prefer that the damages companies are required to pay for litigation and environmental destruction continue to come out of shareholder equity rather than out of cash reserves earmarked to cover such events. That's the only way to get investors to make it common practice to weigh environmental risks, along with other risk factors, when deciding whether or not to invest in a company, he says. He suspects that any attempt to assign a monetary value to such risks before they manifest would only enable companies to manage the reserves to help bolster or reduce their profits.
Minow at the Corporate Library agrees that investors need to consider such risks when researching companies to invest in. She would also like to see these risks accounted for on companies' balance sheets. Apart from what she says is BP's environmental negligence, the company embarked on a project "without any idea of how to handle it if things went wrong," something Minow calls "utterly indefensible." The fact that BP didn't have a backup plan in place speaks to sustainability issues, she adds.
She sees a clear parallel with the fate of Texaco, which—while still an independent company—was forced to file for bankruptcy in 1987 so it could continue operating while it figured out how to recover from a huge civil verdict stemming from its attempted acquisition of Getty Oil.
shareholders might write in directors
The financial industry reform legislation that's now in conference committee between the U.S. Senate and the House of Representatives includes provisions for shareholders to propose their own board candidates on companies' proxy cards, which will put unprecedented pressure on individual directors, says Minow. She believes this—more than resolutions, which aren't binding—will be the focus of shareholder activism.
"[Primary attention] is going to be on replacing boards of directors and if the board of directors at BP didn't do a good-enough job of responding to problems, they'll be out," she predicts. If BP lacks directors with environmental credentials, some will have to be found and added, she says.
Coming as it did toward the end of proxy season, the timing of the Gulf disaster may seem unfortunate for activists, but Minow believes time will confer an advantage. By the time the 2011 proxy season comes around, she predicts that the financial reform legislation will have passed, opening fresh opportunities for activists to exert pressure on companies.
"There's a reason shareholders' resolutions have to be in by fall for meetings in the spring. It gives corporations a really good opportunity to get their acts together before shareholders start proposing resolutions," she says. "Partly for that reason, I suspect [BP chief executive officer Tony] Hayward will be out by the end of the summer."
ATHENS, Greece – Moody's Investors Service slashed Greece's credit rating to junk status on Monday in a new blow to the debt-ridden country that is un
Battery maker Valence Technology Inc. said Monday that its fiscal fourth-quarter loss widened on lower sales of large battery systems as well as higher expenses.
The company reported a loss of $5.1 million, or 4 cents per share, in the quarter ending March 31. Valence recorded a loss of $4.4 million, or 4 cents per share, in the year-ago quarter, when the company had fewer shares outstanding.
Revenue dropped to $3.9 million from $4.7 million.
Analysts surveyed by Thomson Reuters expected a loss of 4 cents per share on revenue of $4.3 million.
Operating expenses increased to $4.6 million from $3.7 million.
For the full fiscal year, Valence lost $23.2 million, or 18 cents per share, compared with a loss of $21.4 million, or 18 cents per share, in the 2009 fiscal year.
Shares of Valence finished regular trading unchanged at about 91 cents.
The company reported a loss of $5.1 million, or 4 cents per share, in the quarter ending March 31. Valence recorded a loss of $4.4 million, or 4 cents per share, in the year-ago quarter, when the company had fewer shares outstanding.
Revenue dropped to $3.9 million from $4.7 million.
Analysts surveyed by Thomson Reuters expected a loss of 4 cents per share on revenue of $4.3 million.
Operating expenses increased to $4.6 million from $3.7 million.
For the full fiscal year, Valence lost $23.2 million, or 18 cents per share, compared with a loss of $21.4 million, or 18 cents per share, in the 2009 fiscal year.
Shares of Valence finished regular trading unchanged at about 91 cents.
Moody's downgrades Greece's debt to junk status
By NICHOLAS PAPHITIS, Associated Press Writer
ATHENS, Greece – Moody's Investors Service slashed Greece's credit rating to junk status on Monday in a new blow to the debt-ridden country that is under intense international scrutiny after narrowly avoiding default last month.
A Moody's statement said it was cutting Greece's government bond ratings by four notches to Ba1 from A3, with a stable outlook for the next 12-18 months. It was the second of the three major agencies to accord Greek bonds junk status. Standard & Poor's did the same in late April.
The downgrades reflect concern that the country could fail to meet its obligations to cut its deficit and pay down its debt — which the Greek government says is out of the question.
Finance Ministry officials in Athens had no immediate reaction to the rating cut, which came as a delegation from the International Monetary Fund and the European Union started an interim review of the country's efforts to pull itself out of a major debt crisis.
After amassing a vast public debt and overspending that sent its budget deficit spiraling to 13.6 percent of gross domestic product in 2009, Greece was saved from defaulting on its loans in May by the first installment of a joint EU and IMF euro110 billion bailout. It is to receive the second in September, pending implementation of a major austerity program that has sparked strong union reaction and a series of damaging strikes.
"The Ba1 rating reflects our analysis of the balance of the strengths and risks associated with the Eurozone/IMF support package," said Moody's lead analyst for Greece Sarah Carlson.
"The package effectively eliminates any near-term risk of a liquidity-driven default and encourages the implementation of a credible, feasible, and incentive-compatible set of structural reforms, which have a high likelihood of stabilizing debt service requirements at manageable levels."
"Nevertheless, the macroeconomic and implementation risks associated with the program are substantial and more consistent with a Ba1 rating."
Despite the downgrade, the gap, technically known as a spread, between Greek 10-year bond yields and their benchmark German equivalents dipped only slightly late Monday. The difference was at 5.91 percent, down from 6.12 percent earlier in the day.
That means that Greece would have to pay a rate of around 9 percent were it to raise cash through bond issues. However, bolstered by the rescue loans, Athens says it has no plans to try selling its bonds to the markets soon — except for short-term treasury bill issues in July.
In return for the bailout, Prime Minister George Papandreou's center-left government announced painful austerity measures, slashing pensions and salaries while increasing indirect taxes, seeking to gradually bring the deficit down to 2.6 percent in 2014. The continued flow of EU and IMF funds is conditional on Greece meeting its targets, which will remain under constant scrutiny.
Athens says it has exceeded deficit-cutting targets in the first five months of 2010, as a lower-than-expected increase in revenues was offset by higher spending cuts.
The finance ministry says the January-May deficit stood at euro8.97 billion ($10.77 billion), compared to euro14.65 billion in the first five months of 2009. The drop translates into a 38.8 percent reduction, more than the planned 35.1 percent cut.
Papandreou said late last week that Greece was back on track to "a normal financial and fiscal situation, having left the major dangers behind."
Monday's Moody's statement said the austerity package was "very ambitious."
"There is considerable uncertainty surrounding the timing and impact of these measures on the country's economic growth, particularly in a less supportive global economic environment," Carlson said.
The EU/IMF delegation, which will stay in Athens for the week, was holding meetings at the finance ministry and was expected to also meet with officials at the labor ministry in coming days to review reforms to the social security system.
ATHENS, Greece – Moody's Investors Service slashed Greece's credit rating to junk status on Monday in a new blow to the debt-ridden country that is under intense international scrutiny after narrowly avoiding default last month.
A Moody's statement said it was cutting Greece's government bond ratings by four notches to Ba1 from A3, with a stable outlook for the next 12-18 months. It was the second of the three major agencies to accord Greek bonds junk status. Standard & Poor's did the same in late April.
The downgrades reflect concern that the country could fail to meet its obligations to cut its deficit and pay down its debt — which the Greek government says is out of the question.
Finance Ministry officials in Athens had no immediate reaction to the rating cut, which came as a delegation from the International Monetary Fund and the European Union started an interim review of the country's efforts to pull itself out of a major debt crisis.
After amassing a vast public debt and overspending that sent its budget deficit spiraling to 13.6 percent of gross domestic product in 2009, Greece was saved from defaulting on its loans in May by the first installment of a joint EU and IMF euro110 billion bailout. It is to receive the second in September, pending implementation of a major austerity program that has sparked strong union reaction and a series of damaging strikes.
"The Ba1 rating reflects our analysis of the balance of the strengths and risks associated with the Eurozone/IMF support package," said Moody's lead analyst for Greece Sarah Carlson.
"The package effectively eliminates any near-term risk of a liquidity-driven default and encourages the implementation of a credible, feasible, and incentive-compatible set of structural reforms, which have a high likelihood of stabilizing debt service requirements at manageable levels."
"Nevertheless, the macroeconomic and implementation risks associated with the program are substantial and more consistent with a Ba1 rating."
Despite the downgrade, the gap, technically known as a spread, between Greek 10-year bond yields and their benchmark German equivalents dipped only slightly late Monday. The difference was at 5.91 percent, down from 6.12 percent earlier in the day.
That means that Greece would have to pay a rate of around 9 percent were it to raise cash through bond issues. However, bolstered by the rescue loans, Athens says it has no plans to try selling its bonds to the markets soon — except for short-term treasury bill issues in July.
In return for the bailout, Prime Minister George Papandreou's center-left government announced painful austerity measures, slashing pensions and salaries while increasing indirect taxes, seeking to gradually bring the deficit down to 2.6 percent in 2014. The continued flow of EU and IMF funds is conditional on Greece meeting its targets, which will remain under constant scrutiny.
Athens says it has exceeded deficit-cutting targets in the first five months of 2010, as a lower-than-expected increase in revenues was offset by higher spending cuts.
The finance ministry says the January-May deficit stood at euro8.97 billion ($10.77 billion), compared to euro14.65 billion in the first five months of 2009. The drop translates into a 38.8 percent reduction, more than the planned 35.1 percent cut.
Papandreou said late last week that Greece was back on track to "a normal financial and fiscal situation, having left the major dangers behind."
Monday's Moody's statement said the austerity package was "very ambitious."
"There is considerable uncertainty surrounding the timing and impact of these measures on the country's economic growth, particularly in a less supportive global economic environment," Carlson said.
The EU/IMF delegation, which will stay in Athens for the week, was holding meetings at the finance ministry and was expected to also meet with officials at the labor ministry in coming days to review reforms to the social security system.
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