Global Business |Update|
(A weekly update on Global Business )
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Issue 118


Global Business Update

(17th June’09---23rd June’09)

Contents

Global Corporate

1 ESPN buys rights to Setanta games

2 BA union backs pay cut for pilots

3 Blackberry sees profits increase

4 M&S boss to forgo part of bonus

5 Japan Airlines to receive bailout

6 Aviva sells Australian business

7 Pantaloon to open nine malls by Dec-end

8 Air India to cut employee costs by Rs 500 cr

Global Outsourcing

9 EDS Wins $34 Million DoD Contract

10  Neoris Named One of the Top 50 Global Outsourcers in Black Book 2009 Annual Survey

11 Economy could break outsourcers, analysts say

12 Kontron gets $60 million outsourcing order

13 Rio Tinto Will Outsource Legal Work to India, Times Reports

14 Outsourcing still hot business in China

Global Economy

15 Asian markets continue big falls

16 Indian inflation turns negative

17 US banks pay back bail-out cash

18 May rebound in US housing starts

19 'Huge job cuts' for public sector

20 Emerging nations' growth to slow

Global Market

21 Infosys applies to register new securities in US

22 Nasdaq advances with tech, but banks curb Dow, S&P

23 India’s US debt exposure jumps to $38.5 bn in April ’09

24 Timing the shift from stimulus key to sustainable recovery: IMF

25 Thomson Reuters to quit London exchange

Global Corporate

1 ESPN buys rights to Setanta games
ESPN has bought the rights to show 46 games in next season's English Premier League that were to have been shown by struggling broadcaster Setanta. Disney-owned ESPN has won the two packages of games shown on Saturday teatimes and Monday evenings. Both will be sold to customers through BSkyB. It has also won the 23 games per season Setanta was due to show from 2010-13. The league took the broadcasting rights back from Setanta on Friday after it missed a payment deadline. It is not clear how much ESPN paid for the rights. Meanwhile, the Scottish Premier League (SPL) has taken back its UK rights for 2009/10 and beyond from Setanta after the Irish broadcaster missed a £3m payment.
22nd June 2009, www.bbc.co.uk

2 BA union backs pay cut for pilots
Pilots at British Airways (BA) have been asked by their own trade union negotiators to accept a pay cut and work longer hours. The British Airline Pilots' Association (Balpa) says in exchange the pilots may be given shares in the airline which they can sell after three years. The aim is to save the struggling airline £26m a year in running costs. Balpa officials are recommending the deal in a ballot to help BA get through the current economic downturn. Balpa General Secretary Jim McAuslan said it was a unique agreement, which would eventually give pilots a share of the wealth they created.
18th June 2009, www.bbc.co.uk

3 Blackberry sees profits increase
Research in Motion, the maker of Blackberry phones, saw its profits beat expectations for the quarter thanks to an increase of subscribers. The firm saw profits reach $643m £393.4m for the three months to 30 May, a 53% rise on the $482.5m profit seen in the same period a year before. Shares in the company fell 5% in after-hours trading as the firm's outlook was seen to disappoint investors. The firm saw an additional 3.8 million subscribers during the period. Pete Misek, an analyst with Canaccord Adams described the results as a solid quarter but added that expectations going into this were really high, so I think there's going to be a little bit of disappointment with the guidance.
18th June 2009, www.bbc.co.uk

4 M&S boss to forgo part of bonus
Marks and Spencer executive chairman Sir Stuart Rose has offered to waive a slice of his long-term bonus award. Sir Stuart and M&S marketing director Steve Sharp have both decided to forgo a third of their entitlement to shares. Sir Stuart is waiving almost 395,000 shares, which at the current share price of 294 pence, is worth £1.16m. He was initially awarded 1.18m shares. M&S is currently closing stores and cutting jobs as it strives to boost profits in the downturn. Steve Sharp is waiving 197,484 shares of the 592,450 he was entitled to. The shares were awarded on 11 June under a performance-related three-year bonus plan, but M&S said it had faced an "unexpected" shareholder reaction.
19th June 2009, www.bbc.co.uk

5 Japan Airlines to receive bailout
The Japanese government is ready to make an emergency loan to the country's biggest airline. Loss-making Japan Airlines (JAL) could receive up to 100bn yen in state aid, say reports, on condition that the airline's management improves. Any loan would be made through state owned Development Bank of Japan (DBJ). Earlier this year JAL, hit by the global economic downturn, looked to borrow up to 200bn yen from a government low-interest loans scheme. Finance Minister Kaoru Yosano said he had received a request from transport minister Kazuyoshi Kaneko, in charge of overseeing airlines, for a DBJ loan to JAL. I replied that we hope to co-operate through DBJ loans and that I will pass on the request to them, Mr Yosano told a news conference after a cabinet meeting.
21st June 2009, www.bbc.co.uk

6 Aviva sells Australian business
National Australia Bank is to pay 825m Australian dollars ($660m:£401m) for UK insurer Aviva's Australian wealth management businesses Navigator. NAB is Australia's biggest lender, and the deal is the first acquisition under new chief executive Cameron Clyne. The deal will add scale, efficiency and new capabilities to our operations, said NAB. NAB has identified wealth management, insurance and its advisory business as its key growth areas. NAB beat off competition from AMP for Navigator and said it expected to complete the acquisition in the fourth quarter of 2009.
22nd June 2009, www.bbc.co.uk

7 Pantaloon to open nine malls by Dec-end
Kishore Biyani-led Pantaloon Retail India has posted over 14 per cent growth in sales last month from its value, home and lifestyle retailing segments. The Future group firm, which has chalked out ambitious expansion plans, also plans to open nine additional Central malls by December 2009, it said in an investor update. The BSE-listed company's three segments put together generated sales worth Rs 619.27 crore last month, against Rs 540.66 crore in May 2008, up by 14.54 per cent. India's largest listed retailer saw its sales jumping by almost 30 per cent at Rs 6,719.29 crore during July-May 2009 in the three segments compared with the year-ago period.
23rd June 2009, www.financialexpress.com

8 Air India to cut employee costs by Rs 500 cr
Air India is working on plans to reduce its expenditure on employees by Rs 500 crore per annum, with a newly formed Committee re-examining wage and other agreements in consultation with the Unions. The cash-strapped airline's employee cost currently is over Rs 3,000 crore annually, a company spokesperson said, adding that the airline was now targeting a reduction in employee cost to the tune of Rs 500 crore per annum. At present, the merged carrier has around 31,000 employees. One of the six panels set up recently is the Cost Rationalisation Committee, comprising officials of HR and Finance Departments.
22nd June 2009, www.financialexpress.com

Global Outsourcing

9 EDS Wins $34 Million DoD Contract
Hewlett-Packard's EDS outsourcing unit said Monday that it won a $34 million contract to provide a range of services to the U.S. Department of Defense. Under the deal, EDS, along with partner Harris Information Technology, will provide the Defense Information Systems Agency with engineering, technical, and analytical services for its Multinational Information Sharing program. The program aims to facilitate collaboration among multinational forces to improve intelligence, decision making, and odds of mission success. The goal is to help the MIS program office "align cutting-edge technologies to their mission requirements," Dennis Stolkey, senior VP for EDS's U.S. public-sector unit, said in a statement.
19th June 2009, www.informationweek.com

 10 Neoris Named One of the Top 50 Global Outsourcers in Black Book 2009 Annual Survey
Neoris, a global business and IT consulting company, today announced that it has been named on The Black Book of Outsourcing's prestigious 2009 "50 Best Managed Global Outsourcing Vendors list, as announced in The Wall Street Journal. Neoris is placed in the highest ten percent of all firms judged in each survey area: C-Level Commitment, Human Capital Performance, Corporate Direction, Leadership Impact, and new for this year 5 questions on Accountability, Trust and Transparency. Rankings are based strictly on responses from client surveys. Neoris is experiencing great success in 2009 due to our nearshore outsourcing strategy," said Claudio Muruzabal, CEO of Neoris. "The continued success and recognition of Neoris by analysts, customers and partners highlights the need US businesses have for outsourcing services that are world-class, price-competitive, and complemented by business consulting in such fast-growing industries as retail, transportation, and oil and gas.
20th June 2009, www.tutorial-reports.com

11 Economy could break outsourcers, analysts say
Demand for IT services continues to grow in the depressed economy, but outsourcers still face financial challenges as the economy forces them to evolve their services and customers continue to seek reduced pricing and smaller deals. Research firm Gartner Inc. this week at its Outsourcing and IT Services Summit in London discussed why service providers need to safeguard themselves against bankruptcy and shared the signs enterprise IT customers should watch for when selecting an outsourcer. Gartner recently reported that worldwide IT services revenue in 2008 totaled $806 billion, up 8.2% over $745 billion in 2007. IBM, HP and Accenture garnered the top three market-share positions and brought in $58.9 billion, $38.5 billion and $23.7 billion in 2008 revenue, respectively.
16th June 2009, www.tutorial-reports.com

12 Kontron gets $60 million outsourcing order
Embedded computer manufacturer Kontron AG (Eching, Germany) has secured two design wins at a combined value of $60 million over three years. Both design wins went to the same customer, the company said. However, it declined to name that customer; in a press release Kontron only states it is one of the largest vendors of complex solutions of information and communication technology. Starting in Q4, Kontron will supply its customer with motherboards, equipped with Intel's Nehalem high end microprocessor.
17th June 2009, www.tutorial-reports.com

13 Rio Tinto Will Outsource Legal Work to India, Times Reports
Rio Tinto Plc has hired a team of lawyers in India as it seeks to reduce its legal costs, the London-based Times reported. The mining group has an agreement with CPA Global, a legal- services outsourcing firm, it expects will produce savings on its legal costs of up to 20 percent, the newspaper said. CPA will act as an extension to Rio Tinto’s in-house lawyers, allowing them to focus on more-complex tasks, the Times said.
18th June 2009, www.tutorial-reports.com

14 Outsourcing still hot business in China
China's outsourcing industry has maintained a strong business growth in the first five months of this year although the financial crisis has reduced demand from foreign companies such as big banks and insurance companies. Wang Chao, assistant minister of commerce, said in an industry forum yesterday that the contract value of China's outsourcing industry reached $2.59 billion from January to March, an increase of 25.9 percent compared with the same period last year. But he said Chinese outsourcing companies still have to face great challenges, as the global economy cannot recover in the short term. He warned that some small and medium sized outsourcing companies might have to wind up due as banks have become cautious in their lending due to the economic crisis.
21st June 2009, www.tutorial-reports.com

Global Economy

15 Asian markets continue big falls
Asian shares fell in Tuesday trading, echoing declines seen in both the US and Europe on Monday following a downbeat World Bank report. Japan's main Nikkei index ended 2.8% lower, while Hong Kong's Hang Seng lost 2.9%, after the World Bank study said emerging economies were slowing. The report also hit global oil and metal prices, with firms in those sectors leading the share falls. US light crude was down 85 cents to $66.65 a barrel in Tuesday trading. On Monday it had fallen by $2.76 a barrel. London's Brent crude also continued to slide, dropping a further 83 cents to $66.15. The US's Dow Jones share index fell 2.4% on Monday, while the UK's FTSE 100 index shed 2.6%.
23rd June 2009, www.bbc.co.uk

16 Indian inflation turns negative
Inflation in India has turned negative for the first time in more than 30 years, official figures have shown. Wholesale prices fell 1.61% in the year to 6 June, compared with a rise of 0.13% the previous week, the Ministry of Commerce and Industry said. Cheaper food prices dragged the index down, and analysts said prices could continue falling for about four months. It marks the first annual decline in wholesale prices since the government started releasing weekly data in 1977.
18th June 2009, www.bbc.co.uk

17 US banks pay back bail-out cash
US banks have started to pay back money borrowed through the government's Troubled Asset Relief Program (Tarp). Ten banks have collectively repaid $68bn(£41.5bn) out of the $700bn provided through taxpayer money. Of these, JP Morgan repaid $25bn, Goldman Sachs and Morgan Stanley each paid $10bn, US Bancorp paid $6.6bn and American Express returned $3.4bn. Before being allowed to pay back money, the banks had to be able to show that they were able to raise cash privately. Other banks to repay funds on Wednesday included Capital One Financial, which paid $3.6bn, BB&T Corp paid $3.1bn, Bank of Mellon New York paid back $3bn, State Street returned $2bn while Northern Trust returned $1.57bn.
17th June 2009, www.bbc.co.uk

18 May rebound in US housing starts
The number of new houses started in the US rebounded in May from April's record low, the Commerce Department has said. Housing starts jumped 17.2% to a seasonally adjusted annual rate of 532,000 units in May, up from April's figure of 454,000. However, the rate was still down 45.2% from May 2008. Also on Tuesday, the Federal Reserve said industrial production fell 1.1% in May from April, which was worse than had been expected. Speaking on the housing figures, Zach Pandl at Nomura Securities in New York said: "This starts report is actually very encouraging. Single-family housing starts, where the core of the inventory problem is in the housing market, are really coming back at a good pace.
18th June 2009, www.bbc.co.uk

19 'Huge job cuts' for public sector
As many as 350,000 public sector jobs could be lost over the next five years, the Chartered Institute of Personnel and Development (CIPD) is warning. Chief economist John Philpott says the recession will bring a bloodbath in the public finances which will force employers to slash their workforce. This could lead to "guerrilla war" in the workplace, characterised by repeated strike action, he said. The public sector union, Unison, said support for Labour had collapsed. Speaking ahead of the union's national conference, general secretary Dave Prentis said a poll of 1,000 members found just over 30% planned to back Labour at the next election, down from 42% a year ago.
22nd June 2009, www.bbc.co.uk

20 Emerging nations' growth to slow
The World Bank says the economies of developing countries are expected to grow by just 1.2% this year, compared with 5.9% in 2008 and 8.1% in 2007. And if China and India are excluded, gross domestic product in developing countries is projected to fall by 1.6%. Its annual Global Development Finance report warns of possible joblessness and poverty in developing nations. It also forecast the global economy as a whole would shrink by 2.9% this year, against an earlier prediction of 3%. The report says that economic policies have to focus rapidly on financial sector reform and support for the poorest countries. In addition, the bank warns that the flow of money into the developing world is likely to halve this year. 

21st June 2009, www.bbc.co.uk