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Global Business |Update|
(A weekly update on Global Business )
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2686 6968

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Issue 122


Global Business Update
(22nd July’09----28th July’09)

Contents

Global Corporate

1 Ericsson buys key Nortel assets
2 Stagecoach eyes National Express
3 Deutsche Bank sees profits rise
4 Lower oil prices cut BP profits
5 Tata profits defy falling sales
6 Jet's new Hyderabad-Dubai flight from Aug 16

Global Outsourcing

7 IT Outsourcing Continues Apace, Despite Recession
8 Wipro Sees Drop in Outsourcing Revenue
10 Mercer taps ING exec to run outsourcing
11 WU outsourcing dies again
12 Global IT contracts dip 22% in H1
13 TCS, Infosys Patni await clarity on ABN Amro outsourcing

Global Economy

14 Decline in UK car output slowing
15 South Korea economy grows by 2.3%
16 Banks 'approving more mortgages'
17 US-China ties 'to shape century'
18 Asian market rally pushes oil up
19 UK economy continues to contract
20 Bernanke defends bail-out package

Global Market

21 Caterpillar lifts Wall St, but caution curbs gains
22 Investors getting bolder, willing to stake more on India, China
23 European shares ahead for 10th day; at 8-month high
24 Asia stocks at 10-month high on improved earnings
25 Nikkei rises 1.4% on economic hope, but off highs

Global Corporate

1 Ericsson buys key Nortel assets
Sweden's Ericsson has won an auction for the wireless assets of bankrupt Canadian telecoms firm Nortel Networks. Ericsson is paying $1.13bn (£688m) for the businesses, which analysts say will enable it to substantially increase its North American presence. The units were put on sale by Nortel after it was forced to apply for bankruptcy protection in January, blaming the impact of global recession. Nortel is now effectively in the process of being broken up. There had previously been hope that it could emerge from bankruptcy protection as a slimmed-down firm.
26th July 2009, www.bbc.co.uk

2 Stagecoach eyes National Express
Transport group Stagecoach has said it is in exclusive talks with potential buyers of rival National Express, over a possible break-up of the firm. A group including Spain's Cosmen family and private equity firm CVC has made a takeover proposal for National Express. And Perth-based Stagecoach expressed interest in certain assets and businesses should the bid succeed. But Stagecoach will also consider "all other options" - which media reports say may include its own individual bid. On Monday, the Financial Times reported that National Express was set to reject the approach from the consortium of CVC and the Cosmen family.
24th July 2009, www.bbc.co.uk

3 Deutsche Bank sees profits rise
Deutsche Bank has reported a 67% rise in quarterly profits, boosted by its investment banking arm. Germany's largest bank announced a net profit of 1.1bn euros (£950m) for the second quarter of 2009, compared with a 645m euros profit a year ago. Provision for credit losses rose to 1bn euros from 135m euros a year earlier. The results were ahead of analysts' expectations of a profit of 985m euros. Its investment banking arm alone made a pre-tax profit of 828m euros in the quarter.
28th July 2009, www.bbc.co.uk

4 Lower oil prices cut BP profits
Lower oil prices in the global downturn have led to second-quarter profits at BP more than halving from a year ago. Its replacement cost profit between April and June was $3.1bn (£1.9bn), down 53% from $6.75bn a year earlier. Oil prices have hovered at between $60 and $70 a barrel recently - well off the high of $147 seen last July, but up from the $30 lows of earlier this year. Chief executive Tony Hayward said the firm expected the global economic recovery to be long and drawn out.
23rd July 2009, www.bbc.co.uk

5 Tata profits defy falling sales
Tata Motors has announced a 58% rise in net profits as lower steel costs helped outweigh a fall in vehicle sales. Tata made a net profit of 5.14bn rupees ($107m; £65m) in the April to June quarter, compared with 3.26bn rupees in the same period a year ago. India's largest carmaker sold 127,340 vehicles in the period, down from the 133,079 it sold a year earlier. Tata Motors, which owns the Jaguar and Land Rover brands, launched the world's cheapest car, the Nano, in April.
27th July 2009, www.bbc.co.uk

6 Jet's new Hyderabad-Dubai flight from Aug 16
Jet Airways will launch a new Hyderabad-Dubai flight from August 16, the leading private carrier's fifth daily service to the Gulf city and second from Southern India. The airlines will deploy Boeing 737-800 aircraft on the lucrative route. Currently, the Naresh Goyal-led carrier operates twice daily services to Dubai from Mumbai, and daily from Delhi and Chennai.
25th July 2009, www.financialexpress.com

Global Corporate

7 IT Outsourcing Continues Apace, Despite Recession
Even IT outsourcing is suffering during the current difficult economic downturn, according to a report issued Tuesday by outsourcing advisory firm TPI, which said the number of outsourcing awards fell 7.5% from the first quarter to the second quarter to a total of 135. The TPI Index, which follows commercial outsourcing contracts of $25 million or more, found that the market in the first half of 2009 had 11% fewer contracts with 22% lower total contract value than for the like six-month period in 2008.
24th July 2009, www.informationweek.com

8 Wipro Sees Drop in Outsourcing Revenue
Wipro, one of India's largest outsourcing companies, reported a 3.3 percent dip in U.S. dollar revenue for IT services during the quarter ended June 30. Wipro's revenue from IT services during the quarter was about US$1 billion, and the company said it expects revenue will be about the same during the current quarter. IT services accounted for 77 percent of Wipro's revenue during the previous period. Besides IT services, Wipro has an IT products business, and consumer care and lighting businesses. Other large Indian outsourcing companies, including Tata Consultancy Services, the largest, also reported a decline in their U.S. dollar revenue during the quarter. India's second largest outsourcing company, Infosys Technologies, said earlier this month that revenue for its current fiscal year, which ends March 31, 2010, will decline by 3.1 percent to 4.6 percent compared to the previous year.
23rd July 2009, www.tutorial-reports.com

10 Mercer taps ING exec to run outsourcing
Mercer, the global benefits firm based in Norwood, Mass., said it landed an ING executive to run its U.S. retirement-related outsourcing business. Mercer named Sandy McCarthy as retirement business leader, effective Aug. 10. She will be responsible for Mercer’s defined contribution, defined benefit administration and total retirement sourcing lines of business. She will report to Michael Sternklar, COO and Head of the Americas for Mercer’s outsourcing business, and will be based in Norwood. McCarthy most recently served as president of ING’s institutional plan services. She also was a member of the founding executive team of CitiStreet and was president of the company when it was acquired by ING.
25th July 2009, www.tutorial-reports.com

11 WU outsourcing dies again
President Jerry Farley put it on the agenda and Christel Marquardt moved to approve it, but reconsideration of outsourcing buildings and grounds maintenance never came to a vote at Friday’s Washburn University Board of Regents meeting. After Marquardt made her motion, there was no second, so it died. However, the board did approve a budget for the coming year — about 3 percent smaller than last year’s — with warnings the financial picture could become even darker. The budget adopted for the 2009-2010 fiscal year requires no increase in property tax.
25th July 2009, www.tutorial-reports.com

12 Global IT contracts dip 22% in H1
Compared with the first six months (January-June) of 2008, which saw record levels of outsourcing activity, the information technology industry awarded a total contract value (TCV) of just $20.5 billion in the first half of 2009 which is 22 per cent lower, year-on-year (y-o-y). The decline was primarily due to a reduction in mega-deals in Europe, as well as lower spending globally on business process outsourcing (BPO), states a new report from TPI, a research and advisory firm. For the calendar year 2008, the industry had signed $90 billion worth of contracts. Moreover, the annualised contract value (ACV) — TCV divided by the duration of the contract — was the largest ever in 2008, at $17 billion. For the first half of 2009, however, the ACV is 28 per cent lower y-o-y.
27th July 2009, www.business-standard.com

13 TCS, Infosys Patni await clarity on ABN Amro outsourcing
Top outsourcing firms including TCS, Infosys and Patni Computer wait for more clarity at RBS-owned ABN Amro, as the management remains undecided about outsourcing deals worth $400-500 million signed by the erstwhile Dutch bank four years ago with these vendors. In April 2005, ABN Amro had announced several contracts worth nearly $2.5 billion, due to be renewed in 2010. While IBM had won the lion’s share of the deal (around $2 billion) for managing the bank’s servers, desktops and other IT infrastructure, Accenture, TCS, Infosys and Patni shared $400-500 million worth of contracts for software application, development and maintenance. At least three people familiar with the sourcing decisions at ABN Amro told ET that while RBS is yet to take a call on whether it wants to integrate its technology and business systems with ABN Amro, there is a definite move to shrink the Dutch bank’s operations through a sale, which will bring down the outsourcing revenues for these vendors as well.
28th July 2009, www.economictimes.com

Global Economy

14 Decline in UK car output slowing
The number of new cars made in the UK fell 30.2% in June from the same month a year earlier, the Society of Motor Manufacturers and Traders (SMMT) said. But the drop, to 91,718 cars, was the smallest of the year so far. The SMMT said that despite the recession, the pace of decline in output was slowing. SMMT chief executive Paul Everitt said the UK motor industry was beginning the long road to recovery. Commercial vehicle production fell 60.4% to 8,532 vehicles. Several firms have temporarily shut factories or cut back production to run down existing supplies after the downturn hit demand for new vehicles.
24th July 2009, www.bbc.co.uk

15 South Korea economy grows by 2.3%
South Korea's economy expanded in the second quarter by its fastest rate in five-and-a-half years. Gross domestic product rose 2.3% from the previous three months. It fell 2.5% from the same quarter a year earlier, a smaller-than-expected fall. Increased government spending, help for car buyers and record low interest rates helped boost the economy, the country's central bank said. South Korea's economy is the third largest in Asia and 13th in the world. The growth in the April-to-June period - the biggest such rise since the fourth quarter of 2003 - compares with 0.1% growth from January to March and a 5.1% drop in the October-to-December period. Its exports rose 14.7% in the second quarter compared with the previous three months, helped by a weak won.
25th July 2009, www.bbc.co.uk

16 Banks 'approving more mortgages'
Mortgage approvals by the major banks increased to a 15-month high in June, according to the British Bankers' Association (BBA). Some 35,235 mortgages were approved for house purchases in June, up from 31,919 the previous month, the BBA said. The figures reflected the banks' increased ability to lend and was 65% up on the same month a year earlier. However, the appetite for remortgaging and for borrowing with other loans remained subdued, the group said. The increase in mortgage approvals raises hopes that there will be subsequent rise in activity in the property market. David Dooks, the BBA's statistics director, said that approvals were recovering from a very low level since last November, but he suggested that the pick-up in mortgage lending by the major banks was in sharp contrast to a contraction in lending by other home loan providers.
23rd July 2009, www.bbc.co.uk

17 US-China ties 'to shape century'
The relationship between the US and China will shape the 21st Century, President Barack Obama has said, as top officials met in Washington for talks. Co-operation, not confrontation was the way forward, he said, with climate change, security and the economy all areas where common ground existed. His comments opened two days of talks at a new forum between the two nations. The US-China Strategic and Economic Dialogue is expected to focus on working towards economic recovery. Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton are co-hosting the talks. China has sent Vice Premier Wang Qishan and State Councillor Dai Bingguo to the forum.
27th July 2009, www.bbc.co.uk

18 Asian market rally pushes oil up
The price of oil has risen towards $69 a barrel after investors were buoyed by rallying stock markets in Asia. US light crude oil for September delivery climbed 63 cents to $68.68 a barrel. London Brent crude rose 77 cents to $71.09 a barrel. Asian markets experienced strong gains on Monday amid hopes that corporate earnings will be better than expected. Japan's Nikkei 225 index closed 144 points higher at 10,088.66. Hong Kong's Hang Seng was up 1.35% at 20,251.62. Some analysts said a faster rebound in Asian economies would offer further support for oil prices in coming months.
28th July 2009, www.bbc.co.uk

19 UK economy continues to contract
The UK economy contracted 0.8% between April and June, more than double the figure economists had expected. While an improvement on the previous quarter, the figures may indicate that the recovery could take longer than previously had been thought. The contraction was much less than the 2.4% seen in the first quarter but was still above analysts' 0.3% prediction. The latest figures take the annual rate of decline to 5.6%, the biggest fall since records began in 1955. Liam Byrne, Chief Secretary to the Treasury, said that he was cautious but confident that growth was going to return at the end of the year.
25th July 2009, www.bbc.co.uk

20 Bernanke defends bail-out package
Ben Bernanke, the boss of the US central bank, has defended the US bail-out plan citing his fears of a second Great Depression, during a public talk. I was not going to be the Federal Reserve chairman who presided over the second Great Depression", he said at an event in Kansas. Helping finance firms as part of the $700bn (£424bn) stimulus plan had benefitted the wider economy, he said. He added that more regulation was needed so no firm was too big to fail.
28th July 2009, www.bbc.co.uk