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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 123

Global Business Update
(29th July’09---4th August’09)

Contents

Global Corporate

1 Nissan rolls out new electric car
2 British Airways makes £148m loss
3 Safety fears spark Honda recall
4 Barclays profit up to almost £3bn
5 HSBC global profits halve to $5bn
6 Maruti sales jump 33.36 pct in July

Global Outsourcing

7 BASF eyes offshore outsourcing
8 CGI Group Q3 profit beats estimates
9 India firms to spend more on outsourcing
10 IT outsourcing likely to remain subdued this year
11 TCS, Infosys Patni await clarity on ABN Amro outsourcing
12 Alcatel-Lucent to consider outsourcing
13 Infosys gets Telstra outsourcing contract

Global Economy

14 Price of oil bounces back sharply
15 Fraud warning on tax credit date
16 US economy begins 'to stabilise'
17 Obama sees US economy improving
18 IIP, FDI flows to improve: Industry secy
19 Inflation slips to minus 1.54 pct on July 18
20 'RBI signals end of soft monetary stance'

Global Markets

21 Europe shares dip but on track for 3rd weekly rise
22 Wall Street sees modest profit-tak
23 Asia stocks hit 11-month high, recovery strengthens
24 WTO system starting to show results

Global Corporate

1 Nissan rolls out new electric car
Japanese carmaker Nissan has unveiled its first electric car, taking it closer to its aim to become the first car firm to mass produce the vehicles. The zero-emission hatchback vehicle, called Leaf, is set to go on sale in Japan, the US and Europe next year. Nissan chief executive Carlos Ghosn did not announce the prices but said it would be very competitive. The monthly cost of the battery, plus the electric charge, will be less than the cost of gasoline," Mr Ghosn said. Nissan, Japan's third largest carmaker, has been slower than rivals Toyota and Honda to embrace hybrids, which run on petrol and electric engines, and is instead pinning its hopes on solely battery-powered cars.
2nd August 2009, www.bbc.co.uk

2 British Airways makes £148m loss
British Airways has reported a pre-tax loss of £148m ($245m) in the three months to the end of June. This compares with a profit of £37m in the same period last year. Its operating loss of £94m compares with a profit of £35m last year. Its losses come in the middle of a tough year for airlines as passengers cut back spending in the recession. Passenger revenue fell 12.5% while the worldwide decline for airfreight has also hit its cargo business, where revenues were down 28.1%. Other airlines including Air France-KLM and Lufthansa, which this week reported falling revenues, have also been hard hit by the slowdown.
31st July 2009, www.bbc.co.uk

3 Safety fears spark Honda recall
Japanese carmaker Honda has announced it is recalling 440,000 vehicles in the US due to an airbag defect. One fatality and a number of injuries have been linked to the defect, Honda said. The carmaker had already recalled some models last November. The recall includes some of the company's best-selling Accord and Civic models from 2001 and 2002. The carmaker said it would contact customers and arrange for the airbag to be replaced free of charge.
31st July 2009, www.bbc.co.uk

4 Barclays profit up to almost £3bn
Barclays has announced an 8% rise in first-half profits, boosted by its investment banking division. Pre-tax profits for the first six months came in at £2.98bn ($5bn), although this was slightly below analysts' forecasts. Profits at its investment bank Barclays Capital doubled, but those at its UK retail banking arm more than halved. HSBC reported half-year profits of $5bn, although this was about half what it made in the same period a year ago. Shares in Barclays ended up 6.7%, while HSBC had climbed 5%.
3rd August 2009, www.bbc.co.uk

5 HSBC global profits halve to $5bn
Banking group HSBC saw pre-tax profits halve to $5bn (£2.98bn) in the first six months of 2009. Rising bad debts in the US, Europe and Asia forced it to write-off $13.9bn - 39% more than the same period in 2008. Earlier Barclays also announced pre-tax half-year profits of £2.98bn boosted by its investment banking arm. HSBC is in the process of closing most of its retail lending operations in the US, having taken hefty losses from mortgages which went unpaid. Its US consumer lending business, Household International, which is being wound down after being devastated by the credit crunch, saw a $2.9bn pre-tax loss for the period.
4th August 2009, www.bbc.co.uk

6 Maruti sales jump 33.36 pct in July
The country's largest car maker, Maruti Suzuki India Ltd, reported a 33.36 per cent jump in sales at 78,074 units in July. It had sold 58,543 vehicles in the same month last year. Sales in the domestic market grew by 27.63 per cent to 67,528 units in July from 52,911 units in the same month last year. Exports rose by 87.25 per cent to 10,546 units compared to 5,632 units in the year-ago period, Maruti Suzuki India (MSI) said in a statement. During the month the company crossed the 50,000 units export mark for its A-Star which was introduced internationally in January this year, it added.
1st August 2009, www.bbc.co.uk

Global Outsourcing

7 BASF eyes offshore outsourcing
BASF AG, the world’s biggest chemical company, along with Euroclear, Europe’s largest settlement firm, and Anheuser-Busch InBev, the world’s biggest brewer, are among companies looking at offshore outsourcing for the first time, as they seek to lower their operational costs and cope more effectively with an unprecedented slump in demand for their products and services. Worsening economic crisis is fueling demand for offshore outsourcing from first-time customers. Experts tracking the sector say new customers in Europe and Asia are considering outsourcing decisions worth up to $1 billion. In a year when large, traditional outsourcing customers such as Citibank and GE are shelving new technology investments, new outsourcers from Europe and Asia provide a sliver lining for India’s $40-billion software export industry.
29th July 2009, www.economictimes.com

8 CGI Group Q3 profit beats estimates
Outsourcing company CGI Group Inc reported a third-quarter profit that beat market estimates, helped by strong contract bookings. CGI, Canada's biggest computer consulting company, said it earned C$76.5 million, or 25 Canadian cents a share, compared with C$78 million, or 24 Canadian cents a share, in the year-ago quarter. Revenue fell to C$950.4 million from C$950.5 million last year. Analysts were expecting earnings of 24 Canadian cents a share, before special items, on revenue of C$970.8 million, according to Reuters Estimates.
30th July 2009, www.reuters.com

9 India firms to spend more on outsourcing
A majority of Indian enterprises will increase their investments in IT outsourcing within the next two years, a new survey revealed. According to the Springboard Research study released Friday, 65 percent of IT decision makers in Indian enterprises planned to increase their IT outsourcing budget during this period. Another 29 percent of the 107 CIOs polled from large enterprises in India, expected their investment to remain constant in the same period. With 84 percent of Indian enterprises expecting a significant impact on their IT budgets due to the current economic climate, this budgetary pressure was a core driver for the acceleration of investments in IT outsourcing.
4th August 2009, www.tutorial-reports.com

10 IT outsourcing likely to remain subdued this year
Mirroring the global trend, IT outsourcing in the Indian market is expected to remain subdued this year, though it is expected to pick up during the second half of next year. Most enterprises have reported an impact on their IT budgets because of the slowdown, with nearly a third of them slowing their IT-related investments, said Springboard Research in its latest study, ‘Inside the end-users’ mind — India IT services demand side analysis’. “For CIOs, the slowdown is an opportunity to manage costs, and they have shown an open-minded approach towards IT outsourcing,” said Sudip Saha, senior research analyst for IT Services, Springboard Research. According to the research body, the Indian IT services market is expected to grow to $8.1 billion in 2011 from $4.1 billion in 2007, a CAGR of 18.6%.
3rd August 2009, www.economictimes.com

11 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

12 Alcatel-Lucent to consider outsourcing
Worlds largest maker of fixed-line networks Alcatel-Lucent is planning to hive off one of its R&D units to Indian IT major Infosys by the end of August this year, according to a report published. According to the news report, earlier this month, employees working with Alcatel-Lucents `Mature R&D’ division in Chennai were informed of the divestment. Presently the division has close to 591 employees that work in the area of testing. Of these, while approximately 175 are based out of India, the rest of the employees are spread across in France (59), Germany (72), Romania (101), Morocco (22), Egypt (10) and China (152), says the report. The employees have been told that they will be working with Infosys for a period of 18 months after which the IT major can take a decision on their further retention.
2nd August 2009, www.offshoringtimes.com

13 Infosys gets Telstra outsourcing contract
Infosys Technologies, Indias secondtolargest software firm by sales, has won an outsourcing contract worth about  USD80 to 100 million from Australian phone firm Telstra. The Australian phone firm had undertaken a vendor consolidation exercise to reduce its IT service providers from four toto EDS, IBM, Infosys and Satyam toto to two. The consolidation was aimed at bringing down the cost of managing its IT systems. The Australian telecom major plans to bring down the number of IT systems from about 1,350 now to almost 300 by 2010. According to an outsourcing expert who helps customers on their outsourcing strategy, vendor consolidation at Telstra is not over yet. Infosys and EDS are clear winners, but we will need to wait for few more weeks to get the entire picture, he said.
27th July 2009, www.offshoringtimes.com

Global Economy

14 Price of oil bounces back sharply
Sharply higher global stocks have pushed oil prices higher, clawing back almost all of Wednesday's big falls. US light crude was up $3.66, or almost 6%, to $67.01 a barrel, while London Brent was ahead by $3.68, at $70.21. US light crude slumped $3.88 on Wednesday after figures showed a rise in US oil stockpiles, indicating too much supply in relation to demand. Renewed confidence in stock markets, sparked by a series of encouraging corporate results, caused the rebound. With Japan's Nikkei ending up 0.5%, Europe's main markets closing about 2% higher and the Dow Jones in the US up 1.7% by mid-afternoon, investors' confidence in future oil demand returned.
30th July 2009, www.bbc.co.uk

15 Fraud warning on tax credit date
A wave of bogus e-mails is targeting people aiming to meet Friday's tax credit renewal deadline, according to credit reference agency Equifax. The emails offer tax refunds in return for credit card or bank details, the agency warns. Householders should be aware that organisations such as HM Revenue and Customs do not ask for such details via e-mail or the telephone. The deadline for providing information about income to HMRC is 31 July. The tax credits system was introduced in 2003, but has been dogged by problems with overpayments. Many people have been sorting out their tax credits, having received renewal packs through the post in recent weeks.
31st July 2009, www.bbc.co.uk

16 US economy begins 'to stabilise'
US economic activity has begun to stabilise, according to the Federal Reserve's influential Beige Book. The economy continued to be weak going into the summer, the report said, highlighting sluggish retail activity and weak labour markets. But the pace of decline moderated over the last month, it added. The report failed to lift stock markets after earlier figures showed an unexpected fall in orders for US manufactured goods. Most districts indicated that the pace of decline has moderated since the last report or that activity has begun to stabilise, albeit at a low level, the report said. Most districts indicated that labour markets remained extremely soft, with wages being frozen or cut, it added. The report also highlighted the fact there had been no improvement in bank lending.
29th July 2009, www.bbc.co.uk

17 Obama sees US economy improving
US President Barack Obama has said that new figures on the American economy indicate progress is being made in tackling the country's problems. The economy shrank at an annual pace of 1% in the April-to-June quarter, government figures have shown. The data was better than expected, but marked the longest period of decline since records began in 1947. Analysts said the data suggested the worst could be over for the economy - now in recession for a year. Mr Obama said the figures showed that the economy was heading in the right direction. However, the figures for the January-to-March quarter were revised down to -6.4%. The previous estimate was -5.5%.
31st July 2009, www.bbc.co.uk

18 IIP, FDI flows to improve: Industry secy
India's June industrial output looks promising while foreign direct investment (FDI) inflows should improve with ample liquidity and rising confidence on the economy, the industry secretary said on Wednesday. It looks promising. We expect improvement. I expect continuous improvement going forward, Ajay Shankar said referring to industrial output. We think, with liquidity improving and confidence in the economy rising these (FDI) numbers should pick up, he said.
4th August 2009, www.financialexpress.com

19 Inflation slips to minus 1.54 pct on July 18
After showing a small rise for two weeks, inflation slipped again at (-)1.54 per cent for the week ended July 18, but there was no respite from soaring prices of essential items like cereals, pulses, and fruit and vegetables. The wholesale price index, for the seventh week in a row, remained below zero. It was (-) 1.17 per cent a week before. However, prices of food items like mutton rose 14 per cent, arhar 9 per cent, gram 4 per cent, and fruit and vegetables 2 per cent during the week. At the same time, prices of imported edible oil increased 4 per cent, and coconut oil, sugar, butter, ghee and gur were expensive by one per cent each.
1st August 2009, www.financialexpress.com

20 'RBI signals end of soft monetary stance'
Global agency Moody's described the RBI's decision to keep key policy ratios and rates unchanged as the end of central bank's soft monetary stance and said it could tighten the policy in a year from now to tame the emerging inflationary pressure. The Reserve Bank of India's decision to sit tight at the July meeting marks the end of the monetary loosening regime...The RBI (is) likely to commence monetary tightening a year from now, as inflation may again emerge as a concern to policymakers, Moody's Economy.com said in a release. The RBI in its first quarterly review of the credit policy kept the repo and reverse repo-- short-term rates at which banks lend and borrow from RBI--unchanged, retained economic growth projection at 6 per cent with an upward bias and projected inflation at around 5 per cent by March, 2010.
29th July 2009, www.financialexpress.com