Global Corporate

1 Saab aims to survive without GM
Carmaker Saab, which is owned by General Motors, has had its application to enter a reorganisation process approved by a Swedish court. An administrator has been appointed to handle the process. Saab is seeking to create a fully independent business. GM has said that it wants to sell Saab. There had been concerns about the loss-making carmaker after the Swedish government rejected GM's call for aid. GM took a 50% stake in Saab in 1989 and gained full ownership ten years later. Any restructuring would need the approval of Saab's creditors, who meet on 6 April. Despite turning down GM's request for support, a senior Swedish government official has said the government has not ruled out providing loan guarantees to Saab following its restructuring. It is not the case that we have closed the door to that. That will depend on what the plans look like, Joran Hagglund, state secretary at the Swedish Industry Ministry, told the Reuters news agency. Sweden said last year that it would provide up to 25bn Swedish crowns in aid to its auto industry to help it through the economic crisis.
20th February 2009, www.bbc.co.uk

2 Stanford bank in Antigua seized
Caribbean regulators have taken over the Bank of Antigua, owned by the Stanford group, amid fraud accusations. The move comes after governments elsewhere, including in Peru, Venezuela, and Ecuador, suspended operations at banks owned by the group. Sir Allen Stanford stands accused by US financial authorities of involvement in an $8bn (Ł5.6bn) investment fraud. He was served civil papers on Thursday. The billionaire had been the single biggest private investor in Antigua. The Securities and Exchange Commission (SEC) has accused Sir Allen of an alleged fraud "of shocking magnitude". However, he is not in custody and has not been charged with any criminal violations. Authorities in the US claim that Sir Allen attracted clients by promising unrealistic returns on investments.
23rd February 2009, www.bbc.co.uk

3 Rentokil's profits almost halve
Rentokil Initial has seen its annual profits for 2008 almost halve because of restructuring work and tough trading conditions towards the end of the year. The struggling business support firm made an underlying pre-tax profit of Ł107.9m last year, down 49% from 2007. Its annual revenues rose 9.4% from a year earlier to Ł2.4bn. Rentokil said 2008 was "clearly a challenging year", but it was making progress on fixing its problems. It is cutting its dividend to preserve cash. The firm said its profits had been hit by poor performances in five businesses. These were its City Link parcel delivery unit, its washrooms and pest control businesses in the UK, and its washrooms and pest control operations in Australia.
19th February 2009, www.bbc.co.uk

4 UBS blocks US client details move
Swiss bank UBS has refused a US government demand to provide information on 52,000 US clients. The request was made in a lawsuit filed earlier in the day in Miami as part of a tax fraud investigation. The Obama administration wants UBS to turn over information on American customers who hid accounts from US authorities, in violation of tax laws. A deal on Wednesday provides access to about 250 to 300 UBS customers who used Swiss bank secrecy laws to hide assets. Bank chairman Peter Kurer said UBS accepted "full responsibility" for helping its US clients hide assets from the Internal Revenue Service. But the bank said it had a defence against the enforcement of the summons to hand over account details, and that it would vigorously contest the enforcement of the summons in the civil proceeding. On Wednesday UBS agreed to pay $780m (Ł549m) to the US government to settle allegations that it had defrauded US tax authorities, after being accused of conspiring to create sham accounts to hide clients' assets.
22nd February 2009, www.bbc.co.uk

5 BAE Systems profits almost double
Defence giant BAE Systems has reported a strong rise in annual profits for 2008 as orders and sales grew, helped in part by the weak pound. Pre-tax profits for the full year were Ł2.37bn, up 91% from Ł1.24bn in 2007. Sales of Ł18.54bn were up 18% on the previous year, while orders rose 20%. The results were boosted by Ł238m from the sale of a number of businesses. The company said that it expects further "good growth" in 2009, despite an expected dip in land vehicle sales. In June 2008, BAE acquired US-based MTC Technologies and Australian-based Tenix Defence. Despite the programme of acquisitions, the company said it was able to generate good cash flow and maintain a strong balance sheet. As well as the overseas acquisitions, orders were boosted by a new 15-year UK munitions capability contract and a UK aircraft carrier contract. BAE said it would continue to benefit from the continued weakness of sterling against the US dollar. The company supplies tanks to the US army, which is involved in military operations in Afghanistan and Iraq. It also said that it expects business in India to increase this year.
24th February 2009, www.bbc.co.uk

6 Lufthansa unit declares cash dividend to owners
LUFTHANSA Technik Philippines (LTP) has declared a cash dividend of $18.4 million to its two major owners—Lucio Tan-controlled MacroAsia Corp. and German-owned Lufthansa Technik AG. Out of the total dividend payout, MacroAsia, which owns 49 percent of LTP, will get $9.016 million (roughly P433 million) while Lufthansa Technik AG will secure $9.384 million for its 51-percent stake in the joint-venture firm. The first payment of $16.2 million will be made on or before the end of this month while the second tranche, covering the balance of $2.2 million, will be made in October. MacroAsia said they will reserve the dividend payout for future expansion plans. LTP is the only company that provides a wide range of aircraft maintenance, repairs and overhaul (MRO) services at the Ninoy Aquino International Airport (Naia) in Pasay and the Diosdado Macapagal International Airport In Clark, Pampanga. It consistently generates both domestic and export revenues and enjoys tax incentives as a registered entity of the Philippine Economic Zone Authority.
23rd February 2009, www.businessmirror.com

7 Boeing in pact with India's BEL for new facility
Indian state-run firm Bharat Electronic Ltd has signed an agreement with US aircraft manufacturer Boeing Co to jointly set up a facility to help modernise India's defence forces, the company said in a statement on Saturday. The proposed analysis and experimentation centre will be staffed with local personnel who will work with India's Defence Ministry, the statement said. India is looking to spend $30-40 billion on imports over the next five years to modernise its largely Soviet-era arms by introducing new weapons systems. It is allowing state-run and private firms to tie up with foreign defence equipment makers to scale up domestic production. Boeing along with Lockheed Martin Corp, France's Dassault Rafale, Sweden's Saab are vying for a contract to supply India with 126 multi-role fighter jets potentially worth more than $10 billion.
21st February 2009, www.financialexpress.com

8 Price Waterhouse resigns as Satyam auditor
Price Waterhouse has said that it resigned as statutory auditor of Satyam Computer Services Ltd with effect from February 12, 2009, while stating that it would co-operate with the ongoing investigations into the Rs 7,800 crore fraud at the IT major. The Satyam Computer Board yesterday proposed the removal of its auditor Price Waterhouse to the Ministry of Corporate Affairs. The Board had recommended to the Ministry of Corporate Affairs the removal of Price Waterhouse (PW) as the statutory auditors of the company and notified PW. PW has tendered its resignation to act as Statutory Auditors of the company. The company is now intending to appoint new statutory auditors, a statement from Satyam said.
23rd February 2009, www.financialexpress.com

9 Honda to continue production cut in India
Japanese car major Honda will continue to cut its India output by over 45 per cent for the next six months in order to prevent inventory build up amidst the ongoing slowdown in the domestic market. The company, however, said its planned launch of hatchback Jazz in the Indian market is on schedule. It is also mulling to increase the prices of its products. We have already adjusted our productions. Today our inventory level for India is quite appropriate -- two weeks for our own hand and two weeks on dealers' side, Honda Siel Cars India President and CEO Masahiro Takedagawa said. The company, which is present in India through a joint venture with the Siel Group, has cut its production to 200 cars a day in a single shift since the beginning of this year from the capacity of producing 380 units a day in two shifts, he added.
23rd February 2009, www.bbc.co.uk

Global Outsourcing

10 A.T. Kearney offers perspective on changing outsourcing landscape
While the economic crisis and changing offshoring environment will require strategic adjustments, companies that carefully choose solid vendors and negotiate the right deals will still find the significant savings their shareholders are looking for. According to global management consulting firm A.T. Kearney, the changing economic environment offers US companies increased buying power in creating new and revising existing outsourcing contracts. Despite currency fluctuations, declining growth in the Indian economy, changing Indian labour rates and the recent accounting scandal at Satyam, the environment for outsourcing is actually quite favourable.
18th February 2009, www.consultantnews.com

11 Babock to target army outsourcing
Babcock International is expecting an increase in outsourcing work opportunities from its biggest customer the Ministry of Defence (MoD), while seeking small acquisitions in overseas markets such as Eastern Europe. Chief Executive Peter Rogers said the engineer and support services group, which already manages a number of naval bases including the nuclear submarine base in Devonport, England, said he thought the MoD would start to put out more work to tender from the army and airforce divisions. He also said Babcock is boosting its presence overseas, and while he ruled out entering the world's biggest defence market the United States, he said he was keen to target Eastern Europe.
19th February 2009, www.tutorial-reports.com

12 China supports outsourcing in long-awaited tech industry stimulus plan
Outsourcing projects to foreign companies will foster the development of China's electronics and IT industry in the long run, according to a research firm's analysis of a long-awaited government support plan, which was released this week. The plan to take advantage of outsourcing may help to improve product quality - thereby stimulating consumption - and also create an opportunity to learn from foreign expertise, Sherman Chan, economist with Moody's Economy.com, said in a report on Feb. 19. The Chinese government announced on Feb. 18 that the State Council, China's chief administrative body, approved a fiscal stimulus plan for the electronics and IT industry. According to the announcement, the plan will promote innovation, develop key sectors including integrated circuit (IC) production, flat-panel television manufacturing and TD-SCDMA development, and encourage exports.
20th February 2009, www.tutorial-reports.com

13 Synygy Named 2009 Global Outsourcing
Synygy Inc., the most experienced provider of sales performance management SPM solutions, today was named a Rising Star in the International Association of Outsourcing Professionals IAOP 2009 Global Outsourcing 100™ list of top service providers and announced at the Outsourcing World Summit in Carlsbad, CAEmailPrintDownload PDFAdd to GoogleRSSPune, Maharashtra, IND, 2009-02-19 16:32:18 DownloadsNo files attachedSynygy Inc., the most experienced provider of sales performance management (SPM) solutions, today was named a Rising Star in the International Association of Outsourcing Professionals IAOP 2009 Global Outsourcing 100 list of top service roviders and announced at the Outsourcing World Summit in Carlsbad, CA. “At a time when companies that outsource are scrutinizing their suppliers more closely than ever to ensure they are delivering the high quality, value-added results being sought by customers.
21st February 2009, www.tutorial-reports.com

14 Global recession makes Bangladesh's software industry suitable harbor for outsourcing
Global market recession makes Bangladesh's software industry a very suitable harbor for outsourcing as many western and European companies shifted their focus on the country for low-cost IT services, sector insiders said on Sunday. They said the country's software export has achieved hefty growth in recent months, as more than 400 software and IT companies are exporting their services to around 30 countries in the world. President of Bangladesh Association of Software and Information Services (BASIS) Habibullah N Karim told Xinhua on Sunday, Global economic downturn hastened export growth of our software industry. Bangladesh's software industry will become a 500 million U.S. dollars export earning sector by 2013-2014 fiscal year (July 2013-June 2014) if the current trend of robust growth continues, he said. With nearly 100 percent growth, Karim said Bangladesh fetched over 14 million U.S. dollars from export of software in the first five months of the current 2008-09 fiscal year. The country set 30 million U.S. dollars of software export target for the current fiscal year after the sector earned 24 million U.S. dollars in 2007-08 fiscal year which was 2.24 million U.S. dollars in 2000-01 fiscal year, he said.
22nd February 2009, www.tutorial-reports.com

15 Satyam saga’s impact on outsourcing industry
SATYAM’S fall from grace has been much discussed. Besides tarnishing the accounting image of all Indian companies, this saga has newfound consequence to the outsourcing industry as a whole. With one of its stars being jolted into the spotlight for the wrong reasons, the entire industry is left to lick its wounds and consider the profound impact to the perception of the industry in the midst of challenging times. Though unfair, the saga has affected confidence in India as a preferred choice of outsourcing destination. Recently, India’s IT industry suffered a major blow with the barring of Wipro Technologies and Megasoft Consultants from doing any work with World Bank. These and other similar outcomes have alienated a number of clients from outsourcing companies in India. With the belief that the Satyam scandal may not be an isolated case, people are now starting to question the viability of other Indian companies as well.
23rd February 2009, www.tutorial-reports.com

Global Economy

16 US inflation picks up in January
US consumer prices climbed in January, the first rise since July, after energy prices picked up. The consumer price index rose 0.3% from a month earlier after dropping 0.8% in December, the US Labor Department said. The rise in the cost of living was expected, but analysts said that price rises were unlikely to accelerate given the depth of the recession. Consumer prices were unchanged over the past 12 months, the weakest reading since 1955. Some analysts had been worried about the US entering a period of prolonged deflation, which can make a recession even worse. Continued falling prices hit company profits hard as consumers put off purchases.
20th February 2009, www.bbc.co.uk

17 Slump hits China multinationals
Nearly 70% of multinational companies in China plan to cut recruitment this year, and more than a quarter have laid off staff already, a survey suggests. Of the more than 350 companies questioned in different sectors across the country, finance, communications and IT firms were the hardest hit. Two years ago the multinationals were competing to hire the brightest talent from China's universities. But since the financial crisis, jobs there no longer look so secure. Jobs in multinational companies are highly prized in China especially white collar jobs. For a start the pay is often better than you might get as a public servant or the employee of a state-owned enterprise. The jobs tend to be concentrated at the moment in the larger cities like Beijing or Shanghai, or in the areas where there are many factories making goods for export.
22nd February 2009, www.bbc.co.uk

18 Recession reduces total tax paid
The recession led to a Ł7bn fall in the amount of tax paid by individuals and businesses in January, data shows. Public finances, which usually rise as tax receipts come in, fell amid higher unemployment and lower company profits. Government borrowing for the full financial year is now expected to exceed its own forecasts of Ł77bn. The Conservatives said the debt burden would slow the UK economy's rate of recovery, but the government said it was committed to maintaining spending. Treasury minister Angela Eagle said: "What would be a disaster is to cut public expenditure now... of course it's important that we return in the medium term to sustainable public finances.
19th February 2009, www.bbc.co.uk

19 Taxpayer may get Ł500bn liability
Taxpayers may become liable for Ł500bn worth of bad loans and investments made by Royal Bank of Scotland and Lloyds Banking Group, the BBC has learned. It would be part of the government's Asset Protection Scheme, under which taxpayers insure banks against future losses from such assets. RBS has a Thursday deadline to agree terms, while Lloyds has until Friday. The idea is to draw a line under bad assets to free up cash that the banks can lend to companies and individuals. BBC business editor Robert Peston says that if the deal is completed it will take the total support by British taxpayers to the banks to Ł1.3tn. That figure, made up of loans, guarantees, insurance and investments, is equivalent to the entire annual output of the UK economy. RBS and Lloyds are understood to be hoping to insure Ł250bn of assets each.
23rd February 2009, www.bbc.co.uk

20 IMF expects more requests for aid
The head of the International Monetary Fund has told the BBC that he expects more countries to request financial aid to survive the global slowdown. Iceland, Hungary and Ukraine were forced last year to appeal to the organisation for aid. IMF chief Dominique Strauss-Kahn has warned that a second round of nations will be forced to seek IMF cash. Separately, Germany's finance minister said Germany might consider bailing out smaller European nations. Germany's Finance Minister Peer Steinbrueck described the suggestion that the eurozone could fall apart as totally absurd and promised that if other member states got into trouble, we will show ourselves to be capable of acting. Mr Steinbrueck's comments strengthened the euro against the dollar. One euro was worth $1.2760 by late afternoon from $1.2511 on Wednesday.
19th February 2009, www.bbc.co.uk

21 Fed cuts 2009 economic forecast
The US Federal Reserve has cut its economic forecasts for 2009 and considered setting an inflation target, minutes from its meeting have shown. The central bank now expects a fall in output of between 0.5% and 1.5%. In October it had anticipated output of between a shrinkage of 0.2% and growth of 1.1%. Separately, Fed Chairman Ben Bernanke told the National Press Club in Washington that the bank sees "little risk" of high inflation. He said he expects inflation to stay low because of weak global economic activity and low commodity prices. Mr Bernanke also hinted that the central bank was moving towards setting a specific target for inflation. From now on the Fed will publish projections for the next five to six years on inflation, growth and unemployment, going beyond its normal three-year forecast horizon.
22nd February 2009, www.bbc.co.uk

22 High end of GDP targets to be lowered by less than 1%–Neda
AS the economic crisis bears down on the Philippine economy, the National Economic and Development Authority (Neda) said the high end of the government’s gross domestic product (GDP) growth target will be revised downward by less than 1 percent. Neda Director General and Socioeconomic Planning Secretary Ralph Recto said the government will be revising its growth forecast for the year by slightly cutting the high end of its growth projection for 2009. The government’s official 2009 forecast for GDP growth is between 3.7 percent and 4.7 percent. However, for 2009, Recto said GDP growth may likely hit 4-percent growth in 2009. He said the main growth drivers for the country this year will be agriculture and services. Recto said the manufacturing sector will not be a significant contributor to growth due to the low demand for exports. The government expects to post a negative 8-percent growth in manufacturing in 2009. The Neda chief said he doesn’t expect consumer spending to decline this year mainly due to lower inflation, which is seen to be within the range of 3 percent to 5 percent. This, Recto said, will help keep the economy afloat.
23rd February 2009, www.businessmirror.com

Global Markets

23 Asian shares edge higher but caution lingers
Asian shares edged higher on Thursday as recent selling pressure eased and the safe-haven bid for the dollar and gold retreated, but reminders of the global economic gloom and financial sector woes kept investors cautious. Weak US housing and industrial output data, along with the concerns that worsening economies in central and eastern Europe could put more pressure on European banks, is raising the prospects of more weakness in global markets. Japanese government bonds dipped ahead of a policy decision by the central bank, which is expected to keep rates unchanged but focus on further steps to help corporate financing. Some analysts predict the yen’s days as a safe-haven may be limited because of the mounting evidence of a deepening contraction in Japan, the world’s second-largest economy. The MSCI index of Asia-Pacific stocks outside Japan gained 0.3%as of 8am, but it was still down about 6% for the week. Data on Wednesday showed US housing starts and building permits dropped to record lows in January, with US industrial output shrinking more than expected last month.
19th February 2009, www.livemint.com

24 Dow Jones falls to 6-year low as banks slide
The Dow industrials closed at a more than six-year low on Thursday as investor fears that banks could be nationalized drove their stocks to a 17-year low and a rise in the number people receiving jobless benefits to a record high stoked worries about the deepening recession. After several near misses this week, blue chips blew through the 20 November bear market closing low in late trade, erasing a year-end rally built on hopes a new president would successfully tackle the deepening recession. The Nasdaq fared the worst of the three major indexes after a disappointing outlook from Hewlett-Packard Co sent its stock down almost 8% and dragged down other technology shares, Hewlett-Packard, the world’s largest PC maker, which warned its expects weak market conditions to persist, was also the Dow’s biggest negative weight. Shares of major banks tumbled on concerns about government plans to mop up bad assets from their books. The KBW banks index fell to its lowest level since 1992, led by a 14% slide in Bank of America shares. Economic bellwether General Electric, whose operations include a big financial unit, tumbled more than 4% and briefly traded below $10 for the first time since 1995, adjusted for stock splits.
22nd February 2009, www.livemint.com

25 UK xenophobia will not help economy
Bashing Johnny Foreigner, the pejorative British term for anyone else, was supposed to have gone out in the 1970s, when punks stopped crowding London’s streets. Lord Mandelson doesn’t seem to have heard. The UK business minister’s already infamous outburst—“who the fuck is he?”—wasn’t pure jingoism, but it was directed at a foreigner, the US head of Starbucks Corp.Howard Schultz had blamed the UK economy for some of the coffee chain’s troubles. This kind of talk—as Mandelson of all people should know—isn’t just bad manners, but bad policy. It threatens the global nature of business and is rotten for the economy and culture. Worse still, the former EU trade commissioner seems to have caught on to an anti-foreign trend.
23rd February 2009, www.livemint.com

26 Asean+3 to set up $120 bn multilateral currency swap fund
The finance officials of the Association of South-East Asian Nations, or Asean, and Japan, China and South Korea said on Sunday they would expand a currency swap agreement to help bolster their currencies in the global economic crisis and they hoped to have a full agreement ready by May. The ministers and senior officials agreed to set up a multilateral swap fund totalling $120 billion (about Rs6 trillion), up from the $80 billion proposed last year. An independent regional economic surveillance unit would be set up to help determine when the mechanism should be activated, according to a statement issued after the meeting in Phuket, Thailand. Building on the basis of the progress made thus far, with a view to making our financial cooperation more responsive and effective, we strive to reach agreement on the main components (of the fund) by our next meeting in 2009, in Bali, Indonesia, the ministers said. The meeting is scheduled for May, possibly timed to coincide with the annual meeting of the Asian Development Bank, or ADB.
24th February 2009, www.livemint.com

27 Citi relief boosts shares, weighs on govt bonds
World stocks rose from last week’s three-month lows and government bonds fell on Monday as expectations grew that the US government will increase its stake in Citigroup, instead of fully nationalising the bank. A source told Reuters that Citigroup is in talks that could result in the US government increasing its stake in the bank. The Wall Street Journal said the government could own as much as 40% of the bank’s common equity by converting preferred shares it holds into common stocks. The plan would not cost further taxpayer money. The government currently owns a stake of nearly 8%. The news calmed fears over the bank’s future and the prospect of a full nationalisation of the stricken lender, which not only depresses stocks but adds to the fiscal burden of the biggest world economy. Shares in Britain’s partly-nationalised Royal Bank of Scotland jumped nearly 20 percent as it is expected to announce a restructuring to create a non-core division into which unwanted assets will be placed.
23rd February 2009, www.bbc.co.uk

28 AIG seeks more aid, sees $60 bn loss: source
American International Group Inc, rescued twice last year by the US government, is asking for more aid and bracing for a fourth-quarter loss of roughly $60 billion, a source familiar with the matter said. It would be the biggest loss in a quarter in corporate history. The $60 billion would exceed Time Warner’s $54 billion single-quarter loss in 2002 and dwarf the $24.5 billion loss AIG posted in the third quarter, when the government increased its rescue package for the insurer to about $150 billion. By contrast, two analysts polled by Reuters Estimates have forecast on average a net loss of $5.46 billion. The latest round of talks with the government include the possibility of additional funds for the insurer and trading debt for equity, another source said on Monday. The situation is fluid and other options are being discussed, this second source said, adding that it was unclear where the talks would lead. AIG may look to convert preferred shares held by the government into common stock, Bloomberg reported, citing an unnamed source. The discussions are going on as US financial authorities try to put out other fires, as well. Citigroup Inc, whose stock has been pounded by fears that the government may seize the bank and wipe out shareholders, is also in talks to give the government a larger stake, a person familiar with the matter told Reuters.
24th February 2009, www.livemint.com

Compiled by:
Himanshu Gupta
BBA (MAHE) L3,S2 - 3rd Year
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2686 6968
www.SkylineCollege.com