Global Business

Global Corporate

1 Fortis results hit by sub-prime

The Dutch-Belgian financial group Fortis has reported a big fall in profits as a result of its exposure to US sub-prime mortgages. Fortis lost 1.5bn euros ($2.3bn; £1.1bn) on assets backed by US mortgages given to home buyers with poor credit histories. Fortis reported a 2007 net profit of 3.9bn euros, including a 900m euro gain from the sale of its CaiFor unit. The firm's chief executive said there might be a similar deals on the way. We have been engaged in exclusive negotiations on another transaction that will further strengthen our solvency substantially, Jean-Paul Votron said. Fortis had warned in January that its sub-prime losses would be up to 1bn euros. Fortis said that the 1.5bn euro write-down was based on a prudent approach.

7th March 2008, www.bbc.co.uk

2 Jump in McDonald's European sales

Restaurant giant McDonald's has posted better-than-expected sales for February, helped by growth in Europe. Sales at outlets open at least a year was up 11.7%. Europe saw a more marked 15.4% rise, US sales rose 8.3%. A wider choice of sandwiches in Europe and more variety of coffees in the US helped boost both regions. The extra leap year day also pushed up sales. Analysts had been cautious after poor results in December, fearing that the firm would be hit by the slowdown. But the latest results have helped calm those concerns. McDonald's is extremely well positioned relative to the competition. It's a strong brand name, very closely tied to value, said Peter Jankovskis, co-chief investment officer at Oak Brook Investments. McDonald's has been offering speciality coffees in more than 1,000 US outlets and aims to make these available nationally by the middle of this year. It has also added two new types of chicken sandwiches to its menu.

10th March 2008, www.bbc.co.uk

3 BMW to increase US car production

The luxury carmaker BMW has announced it will invest $750m (£373m) as part of plans to increase production in the US. The investment at the Spartanburg plant, South Carolina, is aimed at increasing capacity from 160,000 to 240,000 units by 2012. The move is set to create 500 new jobs and comes after the firm recently said it would cut 7.5% of its German workforce in 2008. The firm is facing both rising costs in Europe as well as slowing US demand. Since last September, the dollar has tumbled against the euro, hurting firms that pay their costs in euros but receive payment in dollars. The euro touched an all-time high of $1.546 last week after punching through the $1.50 level at the end of February. BMW is not the only European firm affected by the swings in exchange rates.

6th March 2008, www.bbc.co.uk

4 Air France board back move on Alitalia

The board of Air France-KLM, the leading European airline, on Monday gave its backing for the group to submit on Friday a takeover bid for Alitalia, the lossmaking state-dominated carrier. Air France-KLM was due to decide by the end of the week on making a binding offer for the Italian airline, but it said on Monday the offer would still be subject to some conditions, most importantly on the deal receiving the backing of the trade unions. Air France has taken a pioneering role in the consolidation of the European airline industry following its takeover of KLM, the Dutch national airline, in 2004, the first takeover of a flag carrier in Europe. Details of its offer, prepared after an eight-week due diligence investigation, are yet to be disclosed. In its non-binding offer submitted in December, however, it said it would acquire 100 per cent of Alitalia’s shares through an exchange offer and would acquire 100 per cent of Alitalia’s convertible bonds. Air France-KLM said it also planned to inject immediately at least €750m ($1.2bn) into Alitalia through a capital increase that would be fully underwritten by Air France-KLM.

7th March 2008, www.ft.com

5 Delphi confident of securing $6bn boost

Delphi, the troubled automotive parts maker, expressed confidence on Friday that it could proceed with a critical $6.1bn financing next week after a New York bankruptcy court gave conditional approval for General Motors’ participation. The funds are required as part of Delphi’s planned restructuring and emergence from Chapter 11 protection. However, a group of hedge funds and investment banks that have signed up as the company’s future controlling shareholders have objected to the terms of GM’s participation. They contend that the financing would leave Delphi with too much debt and too little liquidity. Instead, they have proposed that GM, which was Delphi’s parent up to 1999, should be an equity holder rather than a lender.

7th March 2008, www.ft.com

6 Blackstone profits tumble 90%

Blackstone Group, the manager of the world’s biggest buy-out fund, suffered a 90 per cent drop in profit during the fourth quarter and warned that conditions would remain difficult for the rest of this year or longer. The fall in economic net income, from $808m to $88m, was slightly worse than analysts expected. Under US accounting principles, which include compensation costs relating to Blackstone’s initial public offering last year, the company reported a $170m loss, a reversal from the $1.18bn profit of a year earlier. Blackstone blamed the dramatic deterioration in the credit markets for its performance. Tony James, chief operating officer, said on Monday: The lack of credit meant there are few large LBOs in the fourth quarter, and since LBOs had the highest deal fees, that meant lower revenue for Blackstone. Steve Schwarzman, chairman and founder, said: “Clearly we are in the midst of a severe financial crisis. Until relatively recently this has been primarily a US issue, and mostly in the debt markets. Now stock markets are also affected, and banks have stopped lending.

5th March 2008, www.ft.com

7 Goldman Sachs to ramp up India operations

Goldman Sachs is looking to launch a full complement of services in India, including an asset management company, a brokerage, and units for wealth management and commodities, the Mint newspaper said on Thursday. Goldman Sachs, which broke off a venture with India's Kotak Mahindra Group to set up shop on its own in 2006, will also launch an offshore fund this month and set up a non-banking finance company, the paper said, citing the India head of the U.S. investment bank. We are ready to attack all opportunities, Brooks Entwistle, managing director and chief executive of Goldman Sachs India, told the paper in an interview. Having a significant presence in India is a must for any firm that describes itself as global, the paper quoted him as saying.

6th March 2008, www.ft.com

8 PepsiCo more admired than Coke: Fortune

Beverages major PepsiCo, led by India-born Indra Nooyi, has been placed higher than its arch rival Coca-Cola on a list of 20 most-admired global Companies prepared by US business magazine Fortune. The list, published in the latest issue of Fortune, ranks PepsiCo at 13th position as against Coca-Cola at 19th spot. The list has been led by Apple Computer, the maker of digital music player iPod and Mac personal computers. PepsiCo shares the 13th position with IT services major IBM. PepsiCo is the only company run by a person of India origin to have figured on the list of most admired firm. Apple is followed by diversified industrial conglomerate General Electric at the second position and Japanese auto major Toyota at the third place.

9th March 2008, www.financialexpress.com

9 Mastek acquires US firm for $29 mln

Software firm Mastek Ltd on Monday announced the acquisition of US-based STG International for $29 million in an all-cash deal. The acquisition, made through Mastek's US subsidiary, would involve an 85 percent upfront payment, with the remainder based on future earn-outs. Systems Task Group (STG) provides business software services to the property and casualty insurance market in North America, Mastek said in a statement. It has about 350 employees and a customer-base which includes more than 35 small and medium American insurance carriers, it added. In 2007, STG had revenues of $17 million and earnings before interest, tax, depreciation and amortisation of $1.73 million. The acquisition, which will be completed by June 2008, will be funded by internal accruals and bank borrowings, Mastek said. It will contribute to Mastek's financial performance partly in 2007/08 and fully in 2008/09, it added.

10th March 2008, www.financialexpress.com

Global Outsourcing

10 Philippines emerging as top choice for outsourcing

The Philippines is giving India a run for its money in the booming call center industry, according to the latest Asian Contact Center Benchmarking Report. Callcenters.net president Catriona Wallace said in a news briefing Friday that call center seats in the Philippines would increase 23.4 percent this year from the present 129,000, which would make the Philippine industry the fastest-growing in countries covered by the report. India’s 500,000-strong contact center sector grows at an average of 10 percent a year, Malaysia’s 33,000 by 17 percent, Thailand’s 28,000 by 15 percent, and Singapore’s 20,500 by eight percent, Wallace said. We noted that there is a shift to the Philippines from India as the top-of-mind choice for outsourced services, especially in customer-related work, she said.

8th March 2008, www.tutorial-reports.com

11 LaTurner condemns outsourcing of Air Force airbus

Jake LaTurner (R-Pittsburg) announced today that he is disappointed with the military’s choice of a French company over Boeing to build $35 billion worth of refueling tankers. To turn their backs on the men and women of Boeing, who have built tankers for the US military for almost 50 years, is unthinkable. To send that contract overseas to France, to a company who has never even built a tanker, is an outrage, said LaTurner. The contract with Boeing could have brought as many as 1000 jobs to Kansas alone, a significant boost to the state’s economy. LaTurner completely supports the efforts of Senators Sam Brownback and Pat Roberts, and Congressman Todd Tiahrt, who jointly questioned the disastrous contract, saying, “Why would the Air Force outsource a contract so critical to the security of our nation to a foreign company that is highly subsidized by European Governments.

7th March 2008, www.tutorial-reports.com

12 Outsourcing firm makes workplace woman friendly

Consulting and outsourcing firm Accenture on Friday said it will strengthen efforts to make its workplace more conducive to women, especially in the Philippines where the proportion of men to women is higher compared to elsewhere in its global network. Kevin M. Campbell, Accenture's chief executive for its outsourcing group, said in a briefing there was a one-to-one ratio in the firm's 15,000-strong workforce in the Philippines. The statistics are lower outside this country, Campbell said. We view this as one of the strengths of our operations here. He said the sex ratio of Accenture's local workforce evened out in the past three or four years when more and more women were hired as working women became more and more socially acceptable and necessary.

6th March 2008, www.tutorial-reports.com

13 ISU considers outsourcing e-mail system

Iowa State officials are looking into outsourcing the university's e-mail system. ISU technology officials say the school spends about $450,000 a year on its central e-mail system. They say having a outside company like Google oversee the system could cut costs. But critics say switching to a larger company would make it more difficult to access open records. There are also concerns that companies could sell student information for marketing purposes. Iowa State offiicals say they're investigating those issues and plan to have a proposal out by June. University of Iowa and University of Northern Iowa officials say in the last few years they have also considered the move, but decided against it.

9th March 2008, www.tutorial-reports.com

14 Outsourcing firms get many H-1B visas

Data just released by the federal government show that offshore outsourcing firms, particularly from India, dominate the list of companies awarded H-1B visas in 2007, BusinessWeek reported. Indian outsourcers accounted for nearly 80 percent of the visa petitions approved last year for the top 10 participants in the program, the story said. American high tech companies have been asking Congress to increase the annual allotment of H-1B visas, which allow highly educated foreigners to work in the United States temporarily. They say the visas allow them to hire the best and the brightest minds from around the world and stay globally competitive. Microsoft Chairman Bill Gates is planning to make the case for more of the visas at a House hearing on Wednesday. The newly released government numbers, however, will likely fuel criticism of the program from detractors such as Sen. Charles Grassley, an Iowa Republican, BusinessWeek said.

10th March 2008, www.tutorial-reports.com

15 IT, BPOs bought 94 firms worth $2 b in '07: Nasscom
The IT sector is having a party on deal street. Domestic IT and BPO companies were involved in as many as 94 deals, largely cross-border in 2007, involving investment of over $2 billion. The momentum is expected to gain strength in 2008, with consolidation expected in the domestic arena and Europe likely to emerge as a key destination for outbound deals. Indian companies are using cross-border M&A to enhance their global service delivery capabilities, recognising the advantage it offers in better managing evolving customer requirements and providing end-to-end services, Nasscom said in its Strategic Review 2008. Among the key deals in 2007 were Wipro’s $598.4-million acquisition of US-based infrastructure management firm Infocrossing, the largest by an Indian technology firm and Firstsource Solutions’ acquisition of MedAssist Holdings for $330 million.

10th March 2008, www.economictimes.com

Global Economy

16 China inflation hits fresh high

China's inflation hit 8.7% in February, the highest rate in over 11 years, the National Statistics Bureau said. Soaring food prices were driving inflation, up 23.3% in February against the previous year, the bureau said. It attributed the jump to snow storms last month that caused widespread disruption and to seasonal price rises over the Lunar New Year holiday. Analysts had predicted a rise of 8.0% but the figure, up from 7.1% in January, was higher than forecast. In recent months inflation has continued to rise despite higher interest rates and other measures by Beijing to keep the economy from overheating. This is a serious concern for the government, which fears higher food prices could trigger social unrest. Last week in a report to the National People's Congress, Premier Wen Jiabao said tackling inflation was the biggest concern of the people. February's inflation rate of 8.7% was the highest figure since May 1996.

10th March 2008, www.bbc.co.uk

17 Sub-prime CEOs defend high wages

Executives have been defending before a Congressional committee large salaries and pay-off packages earned while their firms were hit by the sub-prime crisis. Angelo Mozilo, boss of Countrywide Financial, Merrill Lynch ex-head Stanley O'Neal and ex-Citigroup boss Charles Prince all faced the panel. The three firms were hit by the US home slowdown and subsequent credit crunch. It seems that CEOs hit the lottery when their companies collapse, said House Oversight chair Henry Waxman. At the opening of the hearing Mr Waxman said: Any reasonable relation between their compensation and the interests of their shareholders appears to have broken down. Mr Waxman highlighted the fact that Mr Mozilo received more than $120m in compensation and sales of countrywide shares in 2007, at the same time that the firm registered losses of $1.6bn.

7th March 2008, www.bbc.co.uk

18 Oil hits record at $108 a barrel
The price of crude oil has hit an all-time high for the fifth time in six trading sessions. New York sweet light crude touched a new high of $108.21 a barrel, before edging down to trade at $107.93. Analysts say traders are investing in commodities to protect themselves against the falling dollar. Another factor pushing up prices is last week's decision by producers' cartel Opec to keep output unchanged, despite rising demand in China. The dollar has been reaching new lows against the euro and other key currencies since last summer, and was hit again on Friday by a US employment report showing the labour market at its weakest in five years. This has prompted traders to seek refuge in commodities, including oil and gold, which are more likely to sustain their value than the greenback. In Europe, Brent crude hit $104.42 at one point on Monday - also a record.

9th March 2008, www.bbc.co.uk

19 Further falls in shares in Asia
Growing concerns about the state of the US economy have taken their toll on share prices in Asia. Tokyo's Nikkei index closed down 250.7 points or 1.96% at 12,532.1, which was its lowest close since September 2005. The falls were sparked by US jobs figures on Friday, which showed the biggest monthly fall in employment for five years, and other gloomy US data. European shares have not followed the Asian falls having already reacted to the US data on Friday. As well as the Nikkei, other indexes in Asia were in negative territory. The stock market in Shanghai fell by 3.59% to a seven month low on continued inflation worries. Taiwan's benchmark Taiex index fell 2.7%, which was its biggest fall for six weeks. Manila fell 4.0%, Seoul lost 2.3%, while Sydney's index fell 1.6% to lowest level since October 2006.

7th March 2008, www.bbc.co.uk

20 India-Japan trade may touch $15 bn: CII
Trade between India and Japan has the potential to double in the next two years if issues like trade facilitation and non-tariff barriers are addressed, according to industry body CII. India-Japan trade can reach 15 billion dollars by 2010 from 7.5 billion dollars in 2006-07. New areas of trade in services, higher investment flows into India from Japan, promoting people-to-people contact are other ways through which the level of bilateral trade can increase, CII said. Bilateral trade has more than doubled since 2002-03 with trade balance in favour of Japan. While import duties on most goods in Japan is low at present, the India-Japan Comprehensive Economic Partnership Agreement (CEPA) can raise the level of India's exports, it said in a study.

9th March 2008, www.financialexpress.com

21 India needs vigilance on food prices: Montek
India needs to be vigilant about rising food prices but achieving a goal of 9 percent economic growth on average over the next few years is feasible, Montek Singh Ahluwalia said in an interview. Ahluwalia, the deputy head of India's planning commission, said India should consider setting up a sovereign wealth fund to make use of its swelling foreign exchange reserves, although any such move would take time. Annual inflation accelerated in late February to 5.02 percent, the highest in nearly nine months and above the 5 percent level the central bank wants to contain it at for the fiscal year ending on March 31. I think that an inflation rate somewhere between 4.0-5.0 percent, nearer the lower end of that range, is what one can defend. However a lot depends on the composition of inflation, Ahluwalia said in the interview late last week.

10th March 2008, www.financialexpress.com

Global Market

22 Gold resumes at an all-time high of Rs 12,885

Gold prices resumed at an all-time high of Rs 12,885 in the bullion market here on Friday on fresh stockists buying in view of rising trend in the global Markets. Silver also crossed Rs 25,000-mark on good industrial demand. Some of the investors shifted their funds in bullion due to fall in equity market, traders said. Standard gold (99.5 purity) rose by Rs 300 per ten grams to Rs 12,885 from the Wednesday's closing level of Rs 12,585. Pure gold (99.9 purity) also rose to Rs 12,940 from Rs 12,635 previously. Silver ready (.999 fineness) shot up by Rs 1,000 per kilo to Rs 25,100 from Rs 24,100.

7th March 2008, www.ft.com

23 Rupee falls to near six month low

The Indian rupee fell to a near six-month low against the dollar on Friday, mirroring losses in local equities that weakened on renewed fears of a recession in the US, dealers said. At 1:00 p.m., the partially convertible rupee was trading at 40.545/555 per dollar, its weakest since Sept. 18, according to Reuters data. The rupee ended at 40.30/31 on Wednesday, and the market was closed on Thursday for a holiday. India's benchmark share index was trading nearly 5 percent lower on Friday and Japan's Nikkei index dropped to a six-week low on concerns about the health of the US Economy.

8th March 2008, www.ft.com

Adverse global factors and fears of economic slowdown amid inflation above the RBI's tolerance level pulled down the Bombay Stock Exchange benchmark Sensex by a huge 9 per cent or 1,603 points over the week under review, making it the biggest post-budget weekly fall. The week also left behind footprints of a bear phase with the US economic data released on Friday showing a fall in employment in February, heightening worries about the Economy. Crude oil prices also remained above 100 dollar level and hovered around its record high and the US credit crisis continued to cast a shadow on the global Economy. Foreign Institutional Investors (FIIs) too have adopted a cautious approach in the prevailing situation after the dollar continued to seek new lows against the basket of currencies in overseas Markets.

Having made money in the five-year rally in Indian stocks, retail investors are now slowly turning to other asset classes and Markets to boost returns, mutual fund officials said. A 21 percent drop in the benchmark index this year, that wiped out more than a fifth of the net values of local equity funds, is also making investors view diversification more seriously and invest in mixed asset and bond funds, they said. Balanced funds, investing about 35 percent of assets in bonds and the rest in stocks, mobilized 19.44 billion rupees in January -- highest monthly inflow in nearly seven years -- while bond or income fund assets doubled, data from fund tracker ICRA showed.