Global Business |Update|
(A weekly
update on Global Business )
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2686 6968
Issue 117
Global Business
Update
(10th June’09---16th June’09)
Contents
Global Corporate
1 GM agrees Saab sale to Koenigsegg
2 Matalan to expand store numbers
3 BA asks staff to work for nothing
4 Renault boss defends state help
5 Citi, World Bank cut $1.25B trade fund deal
6 Chrysler restarts with the Viper
7 Starbucks recalls 530,000 coffee grinders
8 Yahoo names GE veteran as CFO
Global Outsourcing
9 India Infosys wins outsourcing deal from Telstra
10 Texas receives stimulus funds to retrain outsourced workers
11 Infy, Wipro to tap expanding rural outsourcing market
12 Jaipur may challenge Gurgaon as IT outsourcing hub
13 Labor Department gives $456M to help outsourced workers
14 CSC wins six UK nuclear IT outsourcing contracts
15 MVP Outsourcing Behavioral Health Services Management
Global Economy
16 China lends Shanghai group $10bn
17 IMF predicts US economic recovery
18 Oil falls back below $70 a barrel
19 Further slowdown in UK inflation
20 More optimism from Bank of Japan
21 US economist joins Bank committee
Global Market
22 Bull market story awaits Goldman Sachs’ blessing
23 Asia stocks mixed as Nikkei retreats from 10,000
24 Global banking in disarray; reforms in India can wait: Kamath
25 Hedge fund start-ups sprout as Roc Capital gathers $1 billion
26 SCI net profit 15% higher in FY09; to
raise rates
Global Corporate
1 GM agrees Saab sale to Koenigsegg
General Motors has reached a tentative agreement to sell Saab to
the Swedish sports car manufacturer Koenigsegg. GM said that as part of the
deal there would be $600m (£367m) of funding from the European Investment Bank
(EIB), guaranteed by the Swedish government. It is the latest part of GM's
reorganisation, which is also set to see the Opel and Vauxhall brands going to
Canada's Magna. Saab filed for reorganisation under Swedish law on 20
February. Koenigsegg produces 18 cars a year and employs 45 people, and there
has been some doubt as to whether it has the expertise to run Saab, which sold
93,000 cars in 2008.
16th June 2009,
www.bbc.co.uk
2 Matalan to expand store numbers
Discount clothing retailer Matalan, which has 203 outlets, will
open three new stores in the UK this year. Matalan also said it was working on
an accelerated store programme for 2010. It came as the company said pre-tax
profits for the year to 28 February were up 6.3% to £145.1m, and forecast a
year of challenging trading conditions. But the chain, which was taken private
in 2006, said that in the first 14 weeks of the new financial year,
like-for-like sales improved by 8.2%. The group said shoppers had been
responding to an ongoing store refurbishment programme, which had seen 120
outlets upgraded. Matalan also said net debt was £247.4m ($404.8m), down from
£275.3m last year.
15th June 2009,
www.bbc.co.uk
3 BA asks staff to work for nothing
British Airways is asking thousands of staff to work for
nothing, for up to one month, to help the airline survive. The appeal, sent by
e-mail to more than 30,000 workers in the UK, asks them to volunteer for
between one week and one month's unpaid leave, or unpaid work. BA's chief
executive Willie Walsh has already agreed to work unpaid in July, forgoing his
month's salary of £61,000. Last month, BA posted a record annual loss of
£401m, partly due to higher fuel bills and other costs. BA has said that
hundreds of staff have responded positively to the request. But some employees
and unions have condemned the plan, saying improvements in the management of
the airline were a bigger priority. Indeed cabin crew and baggage handlers
contacted by the BBC rejected the plan out of hand.
16th June 2009,
www.bbc.co.uk
4 Renault boss defends state help
Renault's president has defended the right of the European car
industry to receive cash from governments. In a BBC World Service interview,
Carlos Ghosn denied that taxpayers were propping up weak carmakers who should
be allowed to fail. Banks had stopped giving the industry the funds it needed,
he told the Business Daily programme. Mr Ghosn insisted that government
support was to help the industry's 12 million workers not its shareholders. In
Europe, the motor industry is getting two types of government help; easier
financing and money to encourage motorists to scrap their old cars and buy new
ones instead. Carlos Ghosn is president and chief executive of Renault in
France and Nissan in Japan, which he famously shook up and turned around. He
is also head of the organisation which represents all the companies that make
cars in Europe - from Audi to Volkswagen.
14th June 2009,
www.bbc.co.uk
5 Citi, World Bank cut $1.25B trade fund deal
Citigroup Inc. and the private sector arm of the World Bank have
struck a deal to offer a $1.25 billion funding facility intended to stimulate
emerging markets trade over three years. The U.S. bank said on Monday it would
provide 60%, or about $750 million, while the World Bank arm, International
Finance Corp., and other development agencies will purchase participations for
the remaining $500 million. The groups said they expect the funding to support
trade flows of up to $7.5 billion. Under the facility, Citi (C, Fortune 500)
will provide funding to banks in Asia, Africa, Latin America, Central and
Eastern Europe, and the Middle East.
15th June 2009,
www.cnn.com
6 Chrysler restarts with the Viper
Chrysler will soon be making cars again. Chrysler Group
announced Monday that it is restarting a factory, after shutting down all of
its manufacturing for nearly seven weeks following the bankruptcy of Chrysler
LLC. Chrysler Group is the new company that emerged last week with most of
Chrysler's assets and a new ownership structure. The first plant to reopen is
the one that makes the Dodge Viper sports car. The Viper has a 600 horsepower
V-10 engine and a price tag that starts at about $90,000. The Viper was
introduced in the 1992 model year, and only 25,000 have been sold since then.
The Conner Avenue Assembly Plant in Detroit that makes the car employs 115
people. Chrysler LLC had announced last year that it intended to sell off the
Viper brand. The high-performance, 10-cylinder sports car sells in low
numbers. Ultimately, Chrysler said it had not received any bids that met its
requirements.
14th June 2009,
www.cnn.com
7 Starbucks recalls 530,000 coffee grinders
Starbucks is recalling about 530,000 coffee grinders because of
a laceration hazard, a government agency said Tuesday. Starbucks, based in
Seattle, said consumers should immediately stop using the Starbucks Barista
Blade Grinder and Seattle's Best Coffee Blade Grinder, and contact the company
to receive a free replacement. The U.S. Consumer Product Safety Commission
announced the recall after Starbucks received 176 reports of grinders that
failed to turn off or that turned on unexpectedly. There were three reports of
injuries that occurred when the grinders, which were made in China, turned on
unexpectedly during cleaning. The affected appliances were sold in Starbucks
and Seattle's Best Coffee stores from March 2002 through March 2009, for about
$30.
12th June 2009,
www.cnn.com
8 Yahoo names GE veteran as CFO
Yahoo on Thursday announced it has appointed longtime General
Electric veteran Tim Morse as its new chief financial officer. Morse currently
serves as the CFO of semiconductor company Altera Corp. (ALTR), a position
he's held since January 2007. Prior to Altera, Morse was at GE (GE, Fortune
500) for 15 years, including a stint as the CFO for the conglomerate's
plastics division. Yahoo is an amazing brand with a unique combination of
assets, and I am extremely excited to be joining a finance team with a deep
commitment to financial excellence and fiscal discipline, Morse said in a
statement.
Morse's appointment is one of Carol
Bartz's first major executive hires after taking over as Yahoo's chief
executive in January. Bartz has said that she aims to make the company's
management structure more efficient as she tries to move the once-dominant
tech company back to the industry's vanguard. Yahoo has lost significant
online search market share to Google and Microsoft over the decade, though its
share has stabilized recently.
10th June 2009,
www.cnn.com
Global Outsourcing
9 India Infosys wins outsourcing deal from Telstra
Infosys Technologies India's second-largest software services firm by sales,
said on Tuesday it had won a new IT outsourcing contract from Telstra Corp
Australia's top phone company. Telstra has awarded application development and
maintenance services contracts to Infosys and U.S. firm EDS, a unit of
Hewlett-Packard Co, the Australian firm said in a statement posted on its
website. The total value of the outsourcing contract is A$450 million ($355
million) over five years, Infosys said in a statement, but didn't disclose its
share in the deal. U.S. technology major IBM is also part of the project.
Telstra has been a client for Nasdaq-listed Infosys since 2003, Infosys chief
executive Kris Gopalakrishnan said in the statement.
10th June 2009,
www.reuters.com
10 Texas receives stimulus funds to retrain outsourced workers
The U.S. Department of Labor on Wednesday released more than
$450 million worth of Trade Adjustment Assistance funding for workers who lost
their jobs due to outsourcing and foreign trade. The Labor Department released
the funds to states as part of the American Recovery and Reinvestment Act,
also known as the federal stimulus plan. Texas will receive more than $17.5
million. The money will be used to pay for job training and placement. Workers
around the nation continue to see their jobs disappear as a direct result of
increased imports and competitive trade,” says U.S. Secretary of Labor Hilda
L. Solis. The funding announced today will help more of these workers upgrade
existing skills or retrain for new careers in industries that have the
potential to grow in the coming months and years. The stimulus funding
increases the maximum amount of Trade Adjustment Assistance funding nationwide
from $220 million to $575 million.
11th June 2009,
www.tutorial-reports.com
11 Infy, Wipro to tap expanding rural outsourcing market
Indian tech majors Infosys Technologies and Wipro are set to
enter the booming domestic back-office service market, multiplying by more
than one-third every year, and join a tech revolution happening in rural
India. Infosys BPO, the $316-million back-office service arm of Infosys, plans
to tie up with service providers with shops in rural areas and small towns for
its domestic operations, company officials said. The revenue-share model will
see Infosys getting the customers and the rural operators doing the service.
The $395-million Wipro BPO too will enter the domestic market soon. It already
provides technology and other supports to a few rural service providers and
may also explore service delivery tie-ups with them, company officials said.
So far, both the firms have been servicing only global clients. But, with
global demand falling (Nasscom revised the growth to around 16% a year from
around 25% earlier) due to the downturn in the US and other western economies,
the domestic market, estimated at $1.6 billion and growing at an annual
compounded rate of 38%, has gained a momentum.
12th June 2009,
www.economictimes.com
12 Jaipur may challenge Gurgaon as IT outsourcing hub
Jaipur is fast becoming a rival for outsourcing hub Gurgaon, with large IT and
BPO firms setting up offices in the pink city. Top 10 IT/ITes predictions for
2009 Top 5 India-centric BPO Vendors Cities that are IT hubs. More than 100 IT
and ITES companies have set up operations in Jaipur in the past three years,
growing the total exports from the city by 40%, to about $100 million in the
current fiscal year, according to senior state officials. Although this is
less than 1% of India's total IT exports, the state government has been
focusing on this sector mainly due to its potential. "The government's
attitude is very positive as it realises that this sector will contribute
largely to the job market," said Sanjay Tyagi, Software Technology Parks of
India Rajasthan additional director and central head. Most of the IT companies
are located in these parks and have seen an addition of 10,000 direct jobs.
Software Technology Parks are government-promoted dedicated regions that give
tax holidays to IT companies and have been very popular with smaller firms.
13th June 2009,
www.economictimes.com
13 Labor Department gives $456M to help outsourced workers
U.S. workers who lost their jobs to outsourcing received more
help from the stimulus Wednesday, when the U.S. Department of Labor announced
the release of an additional $456 million to state Trade Adjustment Assistance
programs. The programs help provide career training and assistance to U.S.
citizens who were laid off due to outsourcing or foreign trade. The money,
released Wednesday, is supplemental to Labor Department funds already
distributed earlier this year.
12th June 2009,
www.bizjournals.com
14 CSC wins six UK nuclear IT outsourcing contracts
Computer Sciences Corp. has won information technology
outsourcing contracts from Britain’s Civil Nuclear Police Authority CNPA and
five UK Atomic Energy Authority UKAEA companies. The six five-year contracts
have a total estimated value of $50 million 31 million pounds sterling.
Britain’s Energy Act of 2004 created the CNPA, which consists of seven members
appointed by the UK secretary of state for trade and industry. Under the terms
of the contracts, CSC will provide the CNPA and the UKAEA companies with a
full range of infrastructure services including desktop, help desk and network
support. The contractor also will provide applications management and database
administration. UKAEA is responsible for the cleanup of its former nuclear
research sites at Dounreay, Scotland; Harwell, England; and Winfrith, England.
It also carries out the national fusion research program at Culham, England,
and manages a fusion research project there.
14th June 2009,
www.tutorial-reports.com
15 MVP Outsourcing Behavioral Health Services Management
MVP Health Care, previously known as Preferred Care, is
outsourcing the management of its behavioral health services. MVP has
contracted with Value Options to manage all mental health insurance claims.
MVP says it made the change because it is no longer just a fully insured HMO,
as its portfolio now includes other self-funded plans. Contracted behavioral
health providers will contact Value Options for approval of treatment
coverage. Value Options contracts with 50,000 providers nationally, serving
23-million health plan members. Its office in troy is responsible for the MVP
contract. The Monroe County Medical Society says it will review the Value
Options contract and provide comment to physicians, so they can decide to
accept or reject the contract.
16th June 2009,
www.tutorial-reports.com
Global Economy
16 China lends Shanghai group $10bn
China will extend a $10bn (£6bn) loan to Russia and four Central
Asian states to help them in the financial crisis, Chinese President Hu Jintao
has said. Speaking at a summit of the Shanghai Cooperation Organisation (SCO)
in the Russian city of Yekaterinburg, he said China would help member states.
The group includes Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan.
Yekaterinburg is also hosting a meeting of the world's four emerging economies
- Brazil, Russia, India and China. The so-called Bric countries are meeting
for the first time to discuss ways to improve the global economy.
16th June 2009,
www.bbc.co.uk
17 IMF predicts US economic recovery
The International Monetary Fund (IMF) has said the US economy
will recover more strongly and more quickly, than it previously thought. It
now believes that the world's largest economy will grow by 0.75% next year,
rather than the 0% it forecast earlier this year. The IMF also thinks that the
US economy will shrink less sharply this year. However, the fund stresses that
an unusual level of uncertainty and significant downside risks remain. The
fund's latest report on the US economy predicts a fall in GDP of 2.5% this
year, compared with its previous forecast of a 2.8% contraction. The slight
improvement in outlook for both this year and next is, in part, due to the US
government stimulus plans that have become increasingly strong and
comprehensive since the end of last year, the report said. But despite the
fact that recent figures suggest the sharp fall in output may now be ending,
"economic activity remains weak", it continues.
15th June 2009,
www.bbc.co.uk
18 Oil falls back below $70 a barrel
Oil prices have fallen sharply, extending losses sustained since
reaching last week's eight-month high of $72.68 a barrel. US light crude fell
to $69.86, down from $72.35 it hit earlier on Monday. London Brent fell to
$69.52, down more than a dollar on the day. A stronger dollar and falling
stock markets helped to push the price lower. Oil prices have doubled since
the start of the year amid hopes that an economic recovery could boost demand.
The petroleum markets are starting off the week on a softer note, as
retreating equity markets and a firmer US dollar remove some of the wider
financial rationale for a long position in crude oil, said Tim Evans at Citi
Futures Perspective. The fall came despite the unrest in Iran following the
country's presidential election.
14th June 2009,
www.bbc.co.uk
19 Further slowdown in UK inflation
UK annual inflation slowed again in May as the Consumer Prices
Index CPI fell to 2.2% from 2.3% in April, the Office for National Statistics
ONS has said. The less-than-expected decline means the figure remains above
the Bank of England's target of 2%. However, the annual inflation reading was
the lowest since January 2008. Another inflation measure, the Retail Prices
Index RPI, which includes mortgage interest payments and housing costs, moved
to -1.1% from -1.2%. The rate of price declines under the RPI measure eased
slightly because of a slight rise in average mortgage interest payments. The
RPI rate is used by many companies as the starting point for wage bargaining.
The latest inflation figure from the ONS mean the CPI measure has now been
above the Bank of England's target rate for 20 months. However, the Bank is
forecasting that CPI inflation will fall to 1% or lower later this year.
13th June 2009,
www.bbc.co.uk
20 More optimism from Bank of Japan
The Bank of Japan (BOJ) has said the Japanese economy has begun
to stop deteriorating, but it has still kept interest rates unchanged at 0.1%.
The assessment was more optimistic than at last month's meeting, when it said
the economy was continuing to worsen. It made no change to policies such as
buying corporate bonds, the current programme of which ends in September. The
improved view of the economy had been expected given the recent rises in
factory output. We may be seeing a return to growth in Japan later this year
so it is reasonable for the BOJ to upgrade its assessment now, said Shane
Oliver, chief economist at AMP Capital Investors in Sydney.
15th June 2009,
www.bbc.co.uk
21 US economist joins Bank committee
The Bank of England has appointed US economist Dr Adam Posen to
the Monetary Policy Committee (MPC) interest rate-setting panel for three
years. Dr Posen, of the Washington-based Peterson Institute, will replace
current member Tim Besley and will take up his post in September. Mr Besley
had been seen as a policy hawk, opposed to interest rate cuts. Unlike fellow
US-based academic David Blanchflower, a former MPC member, Mr Posen will be
based in the UK. Dr Posen has extensive experience analysing central banking
policy issues in the UK, the US, Japan and across the EU, said Chancellor
Alistair Darling.
12th June 2009,
www.bbc.co.uk
Global Market
22 Bull market story awaits Goldman Sachs’ blessing
Plenty of people will dismiss the recent stock-price recovery as a dead-cat
bounce. Even more will call it a bear market rally. Yet as equity prices creep
higher, the bears may soon have to concede defeat. The Standard and Poor’s 500
Index has gained about 15% since early December and most other major
benchmarks have made solid gains in the same period. At some point, it will
become known as the 2009-2013 bull market. Only one thing is missing: a story.
A real bull market needs a simple narrative that convinces investors that
equities are worth double what they were valued at only a few months ago. So
what could be the story this time around? There are four plausible candidates:
rising savings, accelerating inflation, a takeover boom, and the scarcity of
capital.
10th June 2009,
www.livemint.com
23 Asia stocks mixed as Nikkei retreats from 10,000
Asian stock markets were mixed on Thursday, with Japan’s benchmark Nikkei
index pulling back from its first move above 10,000 in eight months amid
conflicting signs about the strength of an economic recovery. European bourses
traded higher. Oil prices rose to new highs for the year, climbing above $72 a
barrel. In early European trading, Britain’s FTSE 100 edged up 0.1%, Germany’s
DAX index rose 0.5%, and France’s CAC-40 gained 0.1%. Earlier in Asia, Tokyo’s
Nikkei 225 index lost 10.16 points, or 0.1%, to 9,981.33. It wavered in a
narrow range after a surge early in the day took it above the psychologically
important 10,000 mark for the first time since 8 October. But signs of upward
pressure on US interest rates, which could quash a nascent economic recovery,
and some weak economic data from the region offset gains in Tokyo-listed steel
shares.
12th June 2009,
www.livemint.com
24 Global banking in disarray; reforms in India can wait: Kamath
Lauding the government and RBI for saving the day for India with conservative
banking norms, ICICI Bank Chairman K V Kamath on Sunday said any further
reforms in the sector should wait as global banks are in disarray. Indeed it
has prevailed. Indeed the conservatism of Indian banking system and regulatory
framework has prevailed, Kamath told PTI when asked if the policymakers’
conservative approach on banking sector reforms has saved the day for India in
the wake of global financial crisis. Asked if he was suggesting that the
prevailing banking policies should not be altered, Kamath said: “At this point
in time, we should not tinker with it.
15th June 2009,
www.livemint.com
25 Hedge fund start-ups sprout as Roc Capital gathers $1 billion
Arvind Raghunathan, former head of Deutsche Bank AG’s global arbitrage
business, will open his new hedge fund firm next month with more than $1
billion Rs4,780 crore, a sign that investors are trickling back after record
losses last year. Roc Capital Management Lp.’s assets will include $500
million in a separate account from Deutsche Bank, according to people familiar
with the New York-based firm, who asked not to be identified because the
information is private. It’s the largest hedge fund start-up this year, one of
at least eight expected to raise at least $250 million each, according to
brokers who provide credit and lend securities to managers.
16th June 2009,
www.livemint.com
26 SCI net profit 15% higher in FY09; to raise rates
State-run Shipping Corp. of India Ltd (SCI), India’s only ocean carrier that
runs container services for foreign trade, on Monday announced net profits of
Rs940.67 crore for the fiscal year ended March, up 15% from profits of
Rs813.90 crore in the previous fiscal. Revenues for fiscal 2009 increased to
Rs4,561.83 crore from Rs4,084.36 crore a year ago. The company’s board on
Monday also declared a dividend of Rs6.50 a share. The company also said it
would hike freight rates starting 1 July on the India-Europe route, following
rate hikes announced by at least four foreign-based carriers. “We will hike
rates to Europe by $200 (Rs9,580) for a 20ft container and $400 for a 40ft
container from 1 July,” said Anand Chopra, vice-president, container services
and marketing, SCI.
15th June 2009,
www.livemint.com
Compiled By
Himanshu Gupta,
BBA Alumni (2005-08), Marketing
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2652 4399
http://www.skylinecollege.com