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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
Issue 125
Global Business Update
(12th August’09----23rd August’09)
Contents
Global Corporate
1 Oracle gets go-ahead to buy Sun
2 Swiss pair indicted in tax probe
3 China Mobile suffers slow growth
4 Germany offers Opel suitor loan
5 Rio Tinto hit by falling prices
6 Barnes & Noble limits profit fall
7 Tesco to create 800 finance jobs
8 BT axes graduate recruit scheme
Global Outsourcing
9 Broadridge Financial Solutions 4Q profit rises
10 Intec Completes Outsourcing & Data Center Investment
11 Infosys Looks to China Outsourcing Market for Growth
12 Pharma outsourcing to cross $2.3 bn by 2010
13 India's Outsourcing Firms Lure More Japan Business
14 Coca Cola workers to strike over outsourcing plans
15 Accenture to cut 7 percent of senior executives
Global Economy
16 Mexico suffers amid US recession
17 Oil price touches high for 2009
18 Decline in UK car output slowing
19 FDI up 8 pct in June to USD 2.58
bn
20 India likely to be a key to
world economy
21 Indian Aviation Industry Seeks Way Out From Its Continuing Loses
22 Reliance agrees to scrutiny on the gas issue
23 Maruti Goes on a Hiring Spree for Qualified Talent
Global Markets
24 Asian shares fall in pre-Fed economy report
25 Nikkei hits 10-mth closing high but Shanghai weighs
26 Europe stocks rebound ahead of US housing data
27 Shanghai stocks rebound, drive Asia gains
28 Investment banks offer to sell old debt as new products
29 Wall St gains on factory data, China
30 Wall Street sinks as recovery hopes hurt
Global Corporate
1 Oracle gets go-ahead to buy Sun
The US Justice Department has given its approval for business
software firm Oracle to take over computer hardware software maker Sun
Microsystems. The $7.4bn (£4.5bn) deal was agreed by the two in April this
year, but still needs approval from the European Commission before it can be
concluded. The acquisition gives Oracle control over Java, a key programming
language used in its products. The takeover had been held up over questions
about licensing Java. The language is used in billions of electronic devices
across the world.
24th August 2009,
www.bbc.co.uk
2 Swiss pair indicted in tax probe
A Swiss banker and lawyer have been indicted by the US Justice
Department on charges they helped wealthy Americans evade taxes. The
allegations relate to banker Hansreudi Schumacher, who has now been sacked by
employer Neue Zuercher bank, and lawyer Matthias Rickenbach. The indictments
are part of a tax probe in the US, centred on UBS bank. Meanwhile, former UBS
banker Bradley Birkenfeld has been sentenced to 40 months in prison for fraud
conspiracy. Mr Birkenfeld admitted last year that he helped a US client hide
$200m (£121m) in assets from the US authorities to avoid paying tax. He has
since provided information to the investigation of UBS's private banking
business.
21st August 2009,
www.bbc.co.uk
3 China Mobile suffers slow growth
The world's biggest mobile operator, China Mobile, has reported
the slowest profit growth since it listed in 1997. Net profit was 55.3bn yuan
(£4.9bn) in the first six months of 2009, up only 1.5% from the same period
last year. The company has been hit by greater competition and the need to
target less profitable rural consumers as urban markets become saturated. We
can't preserve such a [high] margin for the long term, chief financial officer
Xue Taohai warned. China Mobile predicted further falls in average revenue per
user in the coming months. Its results were also hit by the economic slowdown
as well as spending on an expensive new third-generation network. It had
warned in March that it would not be able to escape the effects of the
downturn.
20th August 2009,
www.bbc.co.uk
4 Germany offers Opel suitor loan
Germany has said it would be prepared to give a 4.5bn euros
$6.4bn: £3.9bn loan to carmaker Opel if its favoured suitor is chosen to take
over the firm. Berlin is offering the money if Opel's US owner, General Motors
GM, sells the German-based business to Canadian car assembly and parts group
Magna. Magna is one of the two remaining bidders for Opel, the other being
Belgian financial group RHJ. The UK government said GM's choice of buyer
should not be distorted. The BBC understands the winner will not be formally
announced until at least next week. This is because while the GM board is
planning to meet on Friday, its choice of either Magna or RHJ still has to be
discussed by the Opel Trust, which is due to convene next week.
18th August 2009,
www.bbc.co.uk
5 Rio Tinto hit by falling prices
Anglo-Australian mining giant Rio Tinto has reported its profits
have been hit by falling metals and minerals prices in the global economic
downturn. Its profit for the first half of 2009 fell to $2.66bn (£1.6bn), down
63.7%. Rio Tinto said a share issue earlier in the year had helped it reduce
its debt of $39.1bn by $14.8bn. Commenting on last week's arrest of Rio
workers in China, boss Tom Albanese said he was pleased the charges they faced
were less severe than expected. The four workers were arrested on suspicion of
stealing trade secrets and taking bribes. It had earlier been suggested that
they would be charged with stealing Chinese state secrets, a much more serious
offence.
15th August 2009,
www.bbc.co.uk
6 Barnes & Noble limits profit fall
Barnes & Noble, the largest US bookstore chain, has reported
another fall in quarterly profits, but cost-cutting managed to limit the
decline. Net profit at the firm fell to $12.3m (£7.5m) in the three months to
1 August, down 27% from a year earlier. Its latest profit equates to 21 cents
per share, while analysts had been expecting it to fall to 9 cents. Same-store
sales at the firm, which pull out the impact of new openings, declined 6.9%
from last year. The firm's second-quarter revenues were down 5% to $1.16bn.
Analysts said Barnes & Noble continued to be hit by consumers cutting back
their discretionary spending due to the recession, or else switching to
discount booksellers. The firm expects same-store sales to decline again
between August and October.
20th August 2009,
www.bbc.co.uk
7 Tesco to create 800 finance jobs
Tesco has announced plans to create more than 800 customer service centre jobs
in Scotland to support its finance operation. The supermarket giant said the
centre would open in central Glasgow in the first half of 2010. Tesco wants to
offer a full banking service, with its Edinburgh-based Tesco Personal Finance
(TPF) already having six million customers. It hopes to open TPF branches in
Tesco stores. Six are being trialled at the moment, including one at the
Silverburn Shopping Centre near Glasgow. Tesco recently bought out former
partner Royal Bank of Scotland's 50% stake in TPF, while there has been
speculation that Tesco may also bid for Northern Rock when the government
sells the lender.
14th August 2009,
www.bbc.co.uk
8 BT axes graduate recruit scheme
Telecoms giant BT has closed its graduate recruitment programme
as it continues to cut costs in the downturn. The firm said it had no plans to
reopen the scheme, but added that it remained committed to the 2009 intake,
who are due to start in September. The news will add to rising concern about
youth unemployment. According to BBC calculations, the unemployment rate among
16 to 24 year olds stands at 19%. In May, BT said it planned to cut about
15,000 jobs in 2009, mostly in the UK.
23rd August 2009,
www.bbc.co.uk
Global Outsourcing
9 Broadridge Financial Solutions 4Q profit rises
Broadridge Financial Solutions Inc. said Tuesday that its fiscal
fourth-quarter profit rose 20 percent, helped by lower expenses and favorable
tax rates. The technology outsourcing company earned $116.9 million, or 83
cents per share, for the period ended June 30. That's up from $97.8 million,
or 69 cents per share, a year earlier. Analysts surveyed by Thomson Reuters,
whose estimates normally exclude one-time items, predicted net income of 79
cents per share. Total expenses declined to $551 million from $621.3 million.
Revenue dropped 7 percent to $736.5 million from $792.4 million on lower
distribution revenue, reduced event-driven revenue and the stronger dollar.
13th August 2009,
www.tutorial-reports.com
10 Intec Completes Outsourcing & Data Center Investment
Intec, a global provider of business support systems (BSS)
solutions, announced today the completion of the consolidation of its Americas
data centers and outsourcing operations at its regional headquarters in
Atlanta. Intec’s multimillion dollar investment in the Atlanta facility
consolidates its outsourcing and service bureau operations formerly located in
Mechanicsburg, Pennsylvania; Toronto, Canada; and Dallas, Texas under one roof
in a state-of-the art data center. The Atlanta center is now Intec’s second
largest office globally, is fully SAS 70 compliant, and is operationally
staffed round the clock every day of the year. Through its Managed Services
division, Intec provides tested, proven and highly integrated software and
services, allowing service providers to move rapidly and safely from concept
to operations.
14th August 2009,
www.businesswire.com
11 Infosys Looks to China Outsourcing Market for Growth
When India's second-largest outsourcer, Infosys Technologies,
opened a China office six years ago, it followed the offshoring industry into
a country seen as a rising alternative to India. Since then, China has mainly
served as an added base from which Infosys can serve global customers, but now
the company is now looking to China's domestic market for continued growth.
India remains the clear global leader in outsourcing, but more companies are
choosing to outsource to China even as Chinese companies themselves demand
more IT services.
15th August 2009,
www.tutorial-reports.com
12 Pharma outsourcing to cross $2.3 bn by 2010
Riding over lower manufacturing cost coupled with availability
of quality manpower with technical capabilities, the Indian pharmaceutical
outsourcing industry is expected to reach $2.3 billion by the end of 2010,
according to a report. The report jointly prepared by global consultancy firm
Ernst & Young and industry body OPPI said Indian pharmaceutical contract
manufacturing industry is growing at thrice the rate of the global outsourcing
market, and is expected to reach $2.3 billion dollars from $1.1 billion in
2008.
16th August 2009,
www.tutorial-reports.com
13 India's Outsourcing Firms Lure More Japan Business
Indian software and outsourcing companies are starting to crack the tough
Japanese market in an effort to trim their dependence on ailing U.S. financial
clients. Wipro Technologies Ltd., Infosys Technologies Ltd. and other Indian
information-technology companies that had only tiny teams here five years ago
now have thousands of employees dedicated to Japan. And with Japan's aging
populace producing few new engineers, Indian companies expect much more
business in the future. The game is changing, for Japanese companies, says
Hiroshi Alley, the Yokohama-based head of Wipro's Japan and China businesses.
They are becoming more open to outsourcing and taking it further and even
going offshore. Wipro just had its best year to date in Japan. Its revenue
there climbed 15% to $115 million in the year ended March 31. While that is 2%
of Wipro's global revenue, Mr. Alley expects close to 10% of the company's
sales to come from Japan over the next few years.
18th August 2009,
www.tutorial-reports.com
14 Coca Cola workers to strike over outsourcing plans
Workers at Coca Cola Ireland are to strike over the company’s
decision to outsource around 130 jobs, it was revealed today. Trade union
Siptu served notice on bosses after talks at the Labour Relations Commission
ended without agreement yesterday. Union chiefs said management would only
discuss its plan for lay-offs and outsourcing. But Coca Cola said there was no
alternative but to push ahead with the cost-cutting proposals and claimed
strike action was detrimental. Gerry McCormack, Siptu’s National Industrial
Secretary, said: Having agreed initially to attend the LRC and recognise
SIPTU’s position on a number of issues, Coca Cola HBC has now stated that it
is only willing to talk about transferring our member’s jobs to third party
operators and redundancies.
20th August 2009,
www.tutorial-reports.com
15 Accenture to cut 7 percent of senior executives
Technology outsourcing and consulting firm Accenture Ltd said on
Thursday it cut 7 percent of its senior executives and would take charges that
will lower its fiscal fourth-quarter profit. The New York-based company also
said it is also taking steps to reduce office space as it seeks to drive
growth. Accenture said the cost-cutting actions would result in a pre-tax
restructuring charge of around $247 million in the fiscal fourth quarter
ending Aug 31. Accenture said it continued to expect net revenues for the
fourth quarter in the range of $5 billion to $5.2 billion with operating
margins between 13.4 percent to 13.7 percent. The company said it expects the
restructuring charges to reduce its earnings per share for both the fourth
quarter and the full year by 24 cents.
23rd August 2009,
www.tutorial-reports.com
Global Economy
16 Mexico suffers amid US recession
Mexico's economy shrank by 10.3% between April and June as the
global downturn hit demand for exports and swine flu drove tourist numbers
down. The decline was blamed on slides in the industrial and services sectors,
which are closely tied to the US and have felt the force of the economic
crisis. The US recession has also led to a sharp drop in the amount of money
sent home by migrant workers. Meanwhile, the outbreak of swine flu in April
and May severely dented tourism. Mexico, which is Latin America's second
largest economy, went into recession in the first quarter of 2009, when it saw
GDP drop by 8.2% compared with the same period in 2009.
20th August 2009,
www.bbc.co.uk
17 Oil price touches high for 2009
The price of oil has hit its highest level of the year, boosted
by sharp rises in Chinese stocks and rising shares on Wall Street. The price
of US crude rose to $74.15 a barrel before settling at $73.89, a gain of 98
cents. London Brent was up 86 cents at $74.19. The oil price hit $147 a barrel
last July and fell below $74 last October, a level it has not breached since.
Worldwide oil prices have been extremely volatile this year. Prices have been
affected as much by sentiment as by fundamentals of demand and supply. Ben
Bernanke, the chairman of the Federal Reserve, said that prospects for a
return to growth in the near term appeared good in the US and abroad.
18th August 2009,
www.bbc.co.uk
18 Decline in UK car output slowing
The number of new cars made in the UK fell 17.9% in July from
the same month a year earlier, the Society of Motor Manufacturers and Traders
(SMMT) said. But the drop, to 107,635 cars, was the smallest of the year so
far. The SMMT said that reflected the impact of scrappage schemes throughout
Europe. On a visit to a dealership on Friday, Chancellor Alistair Darling
stressed that production had risen from June. In June, 91,718 cars were
produced, which was down 30.2% from 2008.
20th August 2009,
www.bbc.co.uk
19 FDI up 8 pct in June to USD 2.58 bn
India has attracted foreign direct investment worth USD 2.58 billion in June,
an 8 per cent increase over the same month last year, a senior official said
on Wednesday. The FDI is rising. In June, it was eight per cent more (than the
same month last year), Secretary in Department of Industrial Policy and
Promotion Ajay Shankar said in New Delhi. In June 2008, the FDI inflow was USD
2.39 billion. However, the total foreign investment inflows during April-June
contracted by over 30 per cent to USD 7.02 billion over the same quarter of
2008-09. In the first quarter of the previous fiscal.
16th August 2009,
www.financialexpress.com
20 India likely to be a key to world economy
China may be getting the bulk of the press these days when it comes to the
world economy, but don't forget India. India is expected to grow by 5.4
percent in 2009 while the Chinese economy will expand by 7.5 percent - even
with the world economy projected to shrink by 1.4 percent this year, according
to the International Monetary Fund. India's economic growth is likely to be
one of the topics covered by Ashok Kumar Attri, Consul General of India, at 7
p.m. Thursday in a program hosted by the Peoria Area World Affairs Council at
Barrack's Cater Inn, 1224 W. Pioneer Parkway. "Everyone needs to be aware
what's going on between the United States and India," said Srinivas Vuppuluri,
an employee with Caterpillar Inc. in the information systems division.
18th August 2009,
www.news.yahoo.com
21 Indian Aviation Industry Seeks Way Out From Its Continuing Loses
With analysts already pointing out that the Indian Aviation Industry which
suffered a net loss of $2 billion is in dire straits, the pressure on the
government to offer some relief is going up by the day. With the state run Air
India requesting a bailout package of $3billion, which incidentally has been
completely rejected by the Government things do not look good for the carrier.
Government wants to refurbish the management of the AI and continuously
searching for a skilled operating officer to handle the entire situation in an
efficient manner. Due to heavy losses experienced by the Aviation Industry in
March, salaries of the employees have been delayed for the first time in June.
Jet Airways and the kingfisher Airlines are also not much in a good shape.
12th August 2009,
www.economynews.com
22 Reliance agrees to scrutiny on the gas issue
Reliance Industries are now prepared for the inspection of the expenses
incurred on extracting gas through Krishna-Godavari Basin by any inspection
agency like Comptroller and Auditor General (CAG) of India. It is reported by
the sources that company executives have notified the petroleum Industry that
the company is open to scrutiny and there is nothing to hide as everything is
very much clear. Anil Ambani who is controlling and running Reliance Natural
Resources Limited has suspected that RIL may have exaggerated the price of
developing gas in order to charge high amounts from end users.
18th August 2009,
www.economynews.com
23 Maruti Goes on a Hiring Spree for Qualified Talent
Eight Automobile engineers belonging to Detroit, which is the car capital of
US, will join Maruti Suzuki’s processes in India within the upcoming two
months. This is a part of a major plan by the Maruti Suzuki in order to
transform itself as the biggest research and development association. These
engineers are specialized in car design, crash testing, styling and modeling,
hybrid technology and engine development. These are highly talented with great
potential in automobile research, stated IV Rao, executive officer of Maruti
Suzuki.
21st August 2009,
www.economynews.com
Global Markets
24 Asian shares fall in pre-Fed economy report
Asian shares sagged on Wednesday after losses on Wall Street and as investors
locked in profits as they waited to hear what the US Federal Reserve would say
about prospects for recovery in the world’s largest economy. Shares in Seoul
and Tokyo fell while the MSCI index of Asian markets excluding Japan slipped 1
percent, still in retreat from last week’s 11-month peak. The Fed started its
two-day meeting on Tuesday, with expectations that it will leave benchmark
interest rates near zero and let a $300 billion programme to buy Treasury
securities expire on schedule in September as economic gloom lifts.
12th August 2009,
www.livemint.com
25 Nikkei hits 10-mth closing high but Shanghai weighs
Japan’s Nikkei average rose 0.8% to hit a 10-month high on Friday, helped by
growing evidence of an improving global economy but falls in Chinese stock
markets helped it come off earlier highs. Big gainers for the day included
Komatsu Ltd, the world’s second-biggest maker of construction machinery
equipment, as well as rival Hitachi Construction Machinery which rose on
rating upgrades from brokerages. Concerns over an increased supply of shares
amid new listings and rights issues sent Shanghai shares down over 3 percent
at one point and dragged Hong Kong down as well. There’s no question that the
world economy is improving, but stock markets have risen further than is
warranted by recovery at this point, making them vulnerable to profit-taking,
said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
14th August 2009,
www.livemint.com
26 Europe stocks rebound ahead of US housing data
European shares were up 1% around midday on Tuesday, recouping a big portion
of the previous session’s losses, helped by forecast-beating German sentiment
data and ahead of key US housing figures. Banks were among the top gainers,
with UniCredit up 2.6%, UBS up 1.8% and Deutsche Bank up 1.6%. HSBC rose 2.5%
after Goldman Sachs analysts upgraded their rating on the stock to “buy” from
“neutral”, saying the lender’s troubled US unit would stop being a major drag
on earnings earlier than expected. Swedbank jumped 8 percent a day after the
bank surprised markets with a $2.1 billion rights issue to boost its balance
sheet hit by bad debts in the Baltics, which triggered rating upgrades from a
number of brokers. At 4:10pm, the FTSEurofirst 300 index of top European
shares was up 1% at 930.72 points.
18th August 2009,
www.livemint.com
27 Shanghai stocks rebound, drive Asia gains
Chinese shares clawed higher on Thursday after a two-week sell-off, giving a
boost to Asian stock indexes and commodities even as many investors remained
worried that the Shanghai slide may have more room to run. European shares
were set to build on the gains in Asia, with futures on the Dow Jones
Eurostoxx 50 up 1.4%, while US stock futures rose 0.5%. The benchmark Shanghai
Composite Index jumped more than 4%, helped by reports that the stock
regulator had approved new mutual funds this week to help underpin the market
that has slid nearly 20% since hitting a 14-month high earlier in the month.
The gains in another day of volatile trade helped give a lift to other
regional shares that have been battered by sudden slumps in Shanghai this
month.
20th August 2009,
www.livemint.com
28 Investment banks offer to sell old debt as new products
Wall Street may have discovered a way out of the bad debt and risky mortgages
that have clogged the financial markets. The would-be solution probably sounds
familiar: It’s a lot like what got banks in trouble in the first place. In
recent months, investment banks have been repackaging old mortgage securities
and offering to sell them as new products, a plan that’s nearly identical to
the complicated investment packages at the heart of the market’s collapse.
23rd August 2009,
www.livemint.com
29 Wall St gains on factory data, China
US stocks rose for a third straight session on Thursday with financial stocks
leading gains after US manufacturing data and a rebound in Chinese stocks
reassured investors. The Dow and the S&P 500, which suffered their worst day
in about seven weeks on Monday, got a lift from signs of improvement in US
Mid-Atlantic manufacturing and China’s stock market reversing its 20% drop in
the last two weeks. The S&P 500 is now up about 49% from its 12-year closing
low set on 9 March. The positive manufacturing data from the Federal Reserve
Bank of Philadelphia offset the market’s disappointment that weekly jobless
claims increased for a second week.
20th August 2009,
www.livemint.com
30 Wall Street sinks as recovery hopes hurt
US stocks suffered their worst loss in seven weeks on Monday as weak data from
Japan and a disappointing outlook from retailer Lowe’s Cos dampened hopes
about the economy’s growth. Japan’s gross domestic product showed its economy
pulled out of recession in the second quarter, but at a slower pace than
expected, prompting a sell-off in major Asian markets that spilled over into
Europe and North America. Lowe’s stock dropped 10.3% as the US home
improvement company gave investors few reasons to be positive about the
outlook for the consumer. The results amplified worries about weak consumer
spending following last week’s poor data on US consumer sentiment and retail
sales.
19th August 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