Global Business |Update|
(A weekly update on Global Business )
Skyline Business School
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Tel: 2686 4848, 2686 6968

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Issue 84
 

 

Global Business Update

(11th June---17th June)

 

Contents

 

Global Corporate

1 Barclays considers new share sale

2 Finnair axes jobs to reduce costs

3 VW's takeover of Scania cleared

4 Honda makes first hydrogen cars

5 Investors doubt Yahoo deal merits

6 eBay forced to delay Paypal move

7 Insurer AIG ousts chief executive

 

Global Outsourcing

8 SPi Named in IAOP's Global Outsourcing 100 Ranking

9 Procter & Gamble Signs $650 Million Outsourcing Deal With BT

10 The Falling US Dollar and its Impact On Outsourcing

11 Visionnet Expands Offshore Business Process Outsourcing Operations

12 Embarq outsourcing tech centers to Nokia Siemens

13 Yahoo Unveils Ad Outsourcing Deal With Google

14 Wipro sees revival in outsourcing biz

15 Trai gives clean chit to outsourcing deals, Tata-Virgin deal

 

Global Economy

16 Eurozone inflation at record 3.7%

17 Fuel costs push up US inflation

18 Europe probes biodiesel 'dumping'

19 Direct China-Taiwan travel agreed

20 US retail sales in surprise climb

21 Indian inflation at 7-year high

22 Euro slides after Irish no vote

 

Global Markets

23 India Inc mops $4.2 bn via IPOs in '08

24 Equities close in red; metal, realty drag

25 Indiabulls falls 7.5% in Singapore

26 Ranbaxy at 3-½ yr high on stake sale report

 

Global Corporate

 

1 Barclays considers new share sale
Barclays has said it is considering selling shares to new and existing investors to raise cash. The announcement comes after it was reported over the weekend that the bank has been in talks with foreign investors to raise £4bn. It would become the latest UK bank to approach investors for extra capital as credit and economic conditions worsen. Royal Bank of Scotland has already raised £12bn through a rights issue, while HBOS is keen to raise £4bn. Barclays shares jumped by almost 13% on the news in early trading in London. Prior to the announcement, Barclays shares had been hammered amid continuing concerns about its financial position and those of its rivals. Barclays said it was actively considering selling new shares "by way of a placing and pre-emptive offer to existing shareholders". The firm said that it had already lined up buyers to take the shares at an agreed price, but it would first offer the new shares to its existing shareholders. Analysts consider that the new shares will not be offered at a discount to Barclays current share price, raising questions as to how many shareholders will take up the offer.
16th June 2008, www.bbc.co.uk

 

2 Finnair axes jobs to reduce costs
Finnair is to cut 500 jobs to counter a drop in demand for its services and the spiralling cost of fuel. The rising cost of oil has meant Finnair's fuel bill will increase by 160m euros (£126.7m; $246.9m) compared with last year. Airlines have been struggling with record oil prices and a number have cut services and jobs to counter costs. The Finnish airline's shares fell to their lowest level for three-and-a-half years before later recovering. At the close of trade in Helsinki its shares were 5.16 euros, up just 1 euro cent. Finnair said it required additional cuts of at least 50m euros per year to ensure its growth trategy. The airline, which is majority-owned by the Finnish state, employs about 9,500 people. It has not said where the job cuts will be made.
12th June 2008, www.bbc.co.uk

 

3 VW's takeover of Scania cleared
The European Commission has cleared German carmaker Volkswagen's proposed takeover of Swedish truck and bus manufacturer Scania. The commission said the two companies' core businesses did not overlap and the merger would not significantly impede competition in Europe. VW concentrates on cars under brands such as Audi, Bentley and Skoda, whereas Scania produces heavy trucks. The Commission said VW's minority stake in bus maker MAN was not a concern. There was only a "marginal" overlap in the production of diesel engines for industrial and marine use, the commission said. Volkswagen took sole control of Scania in March this year, pending approval, when it increased its holding in the Swedish company to 68.6% of the voting rights and 37.73% of the capital rights.
13th June 2008, www.bbc.co.uk

 

4 Honda makes first hydrogen cars
The Japanese car manufacturer Honda has begun the first ever commercial production of a hydrogen fuel-cell powered vehicle. The medium-sized four-seater, called the FCX Clarity, runs on hydrogen and electricity, emitting only water vapour. Honda claims the vehicle offers three times better fuel efficiency than a traditional, gasoline-powered car. It plans to produce 200 of the cars over the next three years. One of the biggest obstacles standing in the way of wider adoption of fuel cell vehicles is the lack of hydrogen fuelling stations. The car will initially be available for lease starting July to a limited number of customers in southern California and then in Japan later this year. Honda says it expects to lease a few dozen units in the U.S. and Japan within a year, and about 200 units within three years. It said the cost of the car, on a three-year lease, would be $600 (£300) a month.
11th June 2008, www.bbc.co.uk

 

5 Investors doubt Yahoo deal merits
Shares in Yahoo fell up to 7.5% on Friday, after some investors doubted the financial benefits of a tie-up with search engine giant Google. Yahoo said the agreement to allow Google ads to appear alongside Yahoo search results could be worth up to $800m (£410m) in additional revenue. Some analysts suggest a deal with Microsoft may have been better for Yahoo shareholders. Yahoo shares later recovered to finish broadly flat, while Google shares rose. This week Yahoo spurned a Microsoft offer for its online search business. The internet giant said it did not want to sell just that part of the business and had hoped to persuade Microsoft to revive its $47.5bn offer for the whole of the company, that Yahoo had earlier rejected. Microsoft said in a statement on Thursday that it was no longer interested in buying Yahoo outright. Instead, according to the Reuters news agency, it offered $1bn in cash to take control of the search business and a further $8bn for a 16% stake in Yahoo. Citing sources familiar with the deal, Reuters suggested the Microsoft deal would have delivered $1bn in additional revenue for Yahoo every year from improved advertising rates. Analysts suggest that Yahoo may face further legal action from shareholders unhappy at their handling of the Microsoft negotiations.
13th June 2008, www.bbc.co.uk

 

6 eBay forced to delay Paypal move
Auction website eBay has delayed plans to make Australian users pay for items solely via the firm's Paypal service after the country's regulator objected. The Australian Consumer and Competition Commission (ACCC) said competition could be hurt if eBay went ahead with the switch to a single payment method. EBay said the plan would provide buyers and sellers with more security and said it would lodge an appeal. The company had planned to introduce the change on 17 June. Australia was to be the first country to see the roll-out of eBay's Paypal-only plan, which would effectively block other payment services from seeking a share of the lucrative online market. But the ACCC's draft notification warned that the strategy could "lessen competition". EBay has moved the planned launch date to 15 July in order for both eBay and other interested parties to lodge submissions to the ACCC.
12th June 2008, www.bbc.co.uk

 

7 Insurer AIG ousts chief executive
American International Group (AIG), which has suffered record losses from the sub-prime crisis, has fired its chief executive Martin Sullivan. The world's largest insurer named former Citigroup banker Robert Willumstad as its new CEO. Mr Sullivan is the latest Wall Street boss to lose his job in the wake of the collapse of the US mortgage market and the global credit crunch. AIG shares have halved in value over the past year. Mr Sullivan joins the likes of Stanley O'Neal and Charles Prince, the former chiefs of Merrill Lynch and Citigroup, who were also replaced after their firms sustained massive losses related to the sub-prime mortgage market. The insurer had reported two consecutive quarters of record losses as it made $20bn worth of writedowns on the value of risky assets. Mr Willumstad, who will come under pressure to lift AIG's share price, hopes to come up with a plan to revive the insurer's fortunes by September.
11th June 2008, www.bbc.co.uk

Global Outsourcing

 

8 SPi Named in IAOP's Global Outsourcing 100 Ranking
SPi, a leading global BPO provider, announced today that it has been ranked 17th on the International Association of Outsourcing Professionals (IAOP)'s "2008 Global Outsourcing 100" List. This marks the third consecutive year that SPi has been named on IAOP's annual listing of the world's best outsourcing service providers. With the latest ranking in the 'Leaders' category, SPi has improved its position in the listing by 15 places.
11th June 2008, www.tutorial-reports.com

 

9 Procter & Gamble Signs $650 Million Outsourcing Deal With BT
The keyword at Procter & Gamble is collaboration. The company runs a Web portal where inventors can submit product ideas to the company and has a broad collaboration plan in place that includes blogs, wikis, presence-enabled unified communications and telepresence. But those plans won't realize their potential without a top notch network, as P&G's newly announced $650 million outsourcing deal with BT Group suggests. The agreement announced Tuesday gives BT control over a wide swath of networking capabilities, including LAN and WAN network infrastructure and management at more than 1,100 locations in more than 80 countries. BT will run P&G's VoIP, Internet services, remote access, audio and videoconferencing and some security services like firewall and anti-virus.
12th June 2008, www.tutorial-reports.com

 

10 The Falling US Dollar and its Impact On Outsourcing
Until recently various Philippines companies are scurrying to find clients in Europe following the downward trend of the U.S. dollars in the global market. Following the same track are some of the countries which have made huge investments and heavily rely on outsourcing as a means of livelihood for their people. India and Philippines plus other major outsourcing countries area welcome victim in the downward spiral the U.S. dollar is heading to. There is no doubt that cost-cutting may happen as well as a decrease of profit-margin in the different sectors of Business Process Outsourcing (BPO) companies.

Critics are may be on the right track by saying and predicting the European Market as a significantly larger than that In the U.S. and is increasingly growing real fast.As these outsourcing countries are looking for new ways and alternative ideas to ameliorate their disposition there is no denying that with the weakening dollar the U.S. can be a competition if they accept outsourcing projects from Europe themselves having the advantage of language and culture thereof the east would have to contend with a more serious form of competition - that is culture wise.
13th June 2008, www.tutorial-reports.com

11 Visionnet Expands Offshore Business Process Outsourcing Operations
As the mortgage industry slows and consolidates, outsources service providers are becoming critical to maintaining cost-effective operations — Cranbury, New Jersey Visionet Systems said Wednesday that its business process outsourcing operations have grown significant as a result of the industry shift, and that as a result it has moved to a newer and larger premise in Bangalore, India. Most of the company’s growth in the BPO business is centered in knowledge-based services such as high-cost lending auditing, tax searches, title policy production, lien release, loan boarding and repurchase management, it said in a press statement. The growing demand for outsourcing capabilities with equal or better quality at discounted costs has helped drive our successful growth.
12th June 2008, www.tutorial-reports.com

 

12 Embarq outsourcing tech centers to Nokia Siemens
Embarq Corp. said Thursday it will hand over four technical service centers to Nokia Siemens Networks later this year, outsourcing the jobs of monitoring and providing technical support for its traditional telephone voice network. Separately, the Overland Park, Kan.-based company said it will close three customer call centers that it says it no longer needs, affecting 210 jobs. That will leave Embarq with eight consumer call centers and six business call centers in the U.S. Under the seven-year agreement with Nokia, to begin in the fourth quarter of this year, Nokia Siemens will take over centers in Gardner, Kan.; Johnson City, Tenn.; Leesburg, Fla.; and Greenville, N.C. The 256 Embarq workers in those centers will become employees of Nokia Siemens, the companies said. Embarq spokesman Charles Fleckenstein said the move would cut costs and improve the company's efficiency and customer service. They have a lot of tools that would take us a big investment to duplicate, he said. The centers monitor call traffic and can dispatch technicians to fix problems in the network. It only involves voice calls, not the company's high-speed Internet or other data services. The companies said the deal was the first significant agreement of its kind for Nokia Siemens in North America.
14th June 2008, www.tutorial-reports.com

 

13 Yahoo Unveils Ad Outsourcing Deal With Google

Yahoo  this afternoon unveiled a deal to outsource some search-related advertising sales to Google The company said the deal represents “a $800 million annual revenue opportunity,” and that the deal should produce $250 million to $450 million in incremental operating cash flow in the first 12 months. According to the company’s announcement, the agreement “enables Yahoo to run ads supplied by Google alongside Yahoo’s search results and on some of its web properties in the United States and Canada.” Yahoo says the the deal is non-exclusive, “giving Yahoo the ability to display paid search results from Google, other third parties and Yahoo’s own Panama marketplace. Clearly, it is time to move on,” Yang said this afternoon on a conference call with investors to talk about the deal, after noting the company’s announcement earlier in the day of the termination of talks with Microsoft (MSFT) The companies have agreed to delay implementation of the deal for up to 3.5 months to allow for review by the U.S. Department of Justice. Terms of the agreement call for Yahoo to run ads from Google’s Adsense and Adsense for Content services next to Yahoo’s internally generated paid search and algorithmic search results. Yahoo also may run Google-supplied ads on non-search Yahoo web properties, as well as on partner sites.
15th June 2008, www.tutorial-reports.com

 

14 Wipro sees revival in outsourcing biz  
Wipro Ltd, India's No. 3 software services exporter, is seeing a revival in flow of outsourcing deals as the turmoil in the global financial industry eases a bit, joint chief executives of its IT business said. Still, Wipro is cautious about its prospects in the next two quarters and expects business to accelerate towards the end of the fiscal year ending in March, Girish Paranjpe and Suresh Vaswani said. Relative to how it was in the first quarter of this (calendar) year, there was a feeling that things are almost frozen, I think things are beginning to come back to normal," Paranjpe said. The good news is that there have been no casualties after Bear Sterns. Whatever management changes had to happen has taken place in many of the big companies.
15th June 2008, www.tutorial-reports.com

 

15 Trai gives clean chit to outsourcing deals, Tata-Virgin deal  
The telecom regulator, Trai has reportedly given a formal approval to the various outsourcing deals for IT operations signed by operators as well as to the Tat Tele-Virgin Mobile deal. Additionally the regulator has also pointed out that the recent rend by operators to hive off their infrastructure business does not in any result in loss of revenues to the government. The issues came to light post Tata Tele-Virgin deal. Operators alleged that the deal was used as a back door entry for Virgin Mobile. Tata Tele then alleged that the outsourcing deals signed by operators should also be brought under scanner since it involved active infrastructure sharing which was not allowed till recently.
16th June 2008, www.tutotrial-reports.com

 

Global Economy

 

16 Eurozone inflation at record 3.7%
Inflation in the eurozone has a climbed to a record level amid higher food and fuel costs, official figures show. The annual rate of inflation in the 15 state zone hit 3.7% in May, according to the Eurostat statistical office. The figure is the highest since 1996, when Eurostat started using the current methodology for calculating inflation. There are concerns that price growth will keep accelerating, and the European Central Bank warned it will raise interest rates to slow inflation. The rate of inflation was up from 3.3% in April, and compares with a 1.9% figure in May 2007. Eurostat said that the main driver of inflation last month was an increase in food prices, which were up 6.4%, and transport costs, which were 5.9% higher. Monday's figures are for the 15 nations that use the euro. Across the European Union as a whole, the rate of inflation climbed to 3.9% in May.
16th June 2008, www.bbc.co.uk

 

17 Fuel costs push up US inflation
US inflation rose at its fastest pace for six months in May because of sharply higher energy costs. Consumer prices rose 0.6% last month, government figures showed, the steepest monthly increase since last November. Petrol costs surged by 5.7% last month, driven by the soaring global cost of oil which recently reached more than $139 a barrel. Rising inflation is a worry for the Federal Reserve, which has cut rates aggressively to stimulate growth. May's figure topped market expectations and represented a jump from April's 0.2% rate. On an annual basis, inflation touched 4.2% in May, again above analysts' expectations. Gasoline prices rose at their fastest monthly rate this year while food prices rose 0.3%.
13th June 2008, www.bbc.co.uk

 

18 Europe probes biodiesel 'dumping'
The European Commission has launched an investigation into claims that the US is "dumping" subsidised biodiesel onto the European market. The US government supports the production of biofuels from corn and soya, saying it provides an alternative to expensive, foreign crude oil. It sells the surplus abroad, including to Europe. But European manufacturers have complained that the artificially cheap imports are damaging their industry. The complaint from the European Biodiesel Board, which sparked the investigation, suggested that the dumping had had an adverse effect on prices and the market share of European producers. We have always said that the European Union will not tolerate unfair trade practices and will pursue vigorously any well-founded complaint, said EU trade spokesperson Peter Power. The Americans [exported] more than a million tonnes of biofuel to Europe last year, all of it heavily subsidised, said Doug Ward, from Scottish biofuel maker Ardent Energy. But because it leaves the country, it does nothing to help them reduce their carbon emissions, he added. The complaint from the European Biodiesel Board, which sparked the investigation, suggested that the dumping had had an adverse effect on prices and the market share of European producers. We have always said that the European Union will not tolerate unfair trade practices and will pursue vigorously any well-founded complaint, said EU trade spokesperson Peter Power. The Americans more than a million tonnes of biofuel to Europe last year, all of it heavily subsidised, said Doug Ward, from Scottish biofuel maker Ardent Energy. "But because it leaves the country, it does nothing to help them reduce their carbon emissions," he added.
14th June 2008, www.bbc.co.uk

 

19 Direct China-Taiwan travel agreed
China and Taiwan have signed historic agreements to establish regular direct flights and allow more mainland tourists to visit the island. The deal means there will be direct cross-strait flights every weekend, instead of just during holiday periods. The development came at the first formal talks between the two sides for almost 10 years. Ties have been tense for years but have improved rapidly since Taiwan President Ma Ying-jeou took office in May. In contrast to his independence-leaning predecessor, Mr Ma wants warmer ties with Beijing and says his priority is maintaining regional stability. Negotiators from Beijing and Taipei have been holding their first formal bilateral talks since 1999 at a state guesthouse in the Chinese capital.
13th June 2008, www.bbc.co.uk

 

20 US retail sales in surprise climb
US retail sales climbed by the largest amount in six months during May after spending was helped by tax rebates. Sales rose by a better-than-expected 1% in May, the Commerce Department said, the largest rise since November. It also said April's figure had been revised up to a rise of 0.4% against the previous estimate of a 0.2% fall. Economists said the rise indicated that the economy had been given a boost by the stimulus package under which millions of Americans got tax rebates. Core retail sales, which exclude car sales, rose 1.2%, the Commerce Department said. Analysts had predicted that retail sales would rise by 0.6% and core retail sales would grow by 0.7% Consumer spending is the key driver of US economic growth. The stimulus payments were introduced to try to avoid a recession in the US by offsetting some of the gloom brought on by the credit crisis, housing market slump and surging energy bills.
14th June 2008, www.bbc.co.uk

 

21 Indian inflation at 7-year high
Indian inflation has risen at its fastest rate in seven years. Wholesale price inflation rose 8.75% in the 12 months to 31 May, rising from the previous week's 8.24% and above analyst forecasts. The inflation rate is now at its highest since February 2001 and well above the government's target of between 5% and 5.5%. The rising cost of food and oil are pressuring prices and interest rates are expected to rise. The central bank has already raised rates to combat inflation, lifting its key lending rate by 25 basis points to 8% this week, its first rise in a year. Analysts fear inflation could exceed 9%, a 13-year high. With this kind of galloping inflation one cannot rule out the possibility of it touching double digits ... in coming months, said Rupa Rege Nitsure, chief economist at Bank of Baroda.
15th June 2008, www.bbc.co.uk

 

22 Euro slides after Irish no vote
The euro has fallen against the dollar and the pound after Ireland rejected the EU's reform treaty in a referendum. Irish voters' decision not to back the Lisbon treaty throws the EU's lengthy efforts to revamp its institutional structures into fresh confusion. The euro fell to $1,5301 against the dollar and 78.88 pence against sterling once the result became clear. European leaders argue the changes are needed to make the EU function better and support stronger economic growth. The treaty's future is now uncertain although European Commission President Jose Manuel Barroso has insisted the process to ratify it in other EU states is still alive. The value of the euro, which is used by 15 European nations, has sharply appreciated against both the dollar and sterling this year. But the euro fell sharply after voters in France rejected the EU constitution in 2005 and analysts said something similar could happen this time around.
16th June 2008, www.bbc.co.uk