Factories Take a Vacation
Edited by Harry Maurer
“Housing is in deep recession, and manufacturing is in a shallow one.” So said one economist in the wake of a report from the Federal Reserve that manufacturing contracted by 0.7% in April, more than twice the shrinkage expected by analysts. If there is any expansion going on in the economy, only exports and consumer spending are responsible.
And in yet another signal that the housing slump may continue for a while, the National Association of Homebuilders/Wells Fargo index of homebuilder sentiment dropped to 19 this month, close to its record low of 18 in December. Any reading under 50 means that respondents think conditions are bad.
Source: Bloomberg
Icahn goes after Yahoo
As expected, billionaire investor Carl Icahn officially served notice that he plans a proxy fight for the Internet pioneer. Icahn proposed a slate of 10 dissident directors including himself. His goal apparently is to push through the merger with Microsoft that Yahoo’s current management rejected.
Source: BusinesssWeek
CBS snaps up CNet
In a daring move to expand its presence in the online world, CBS said it would pay $1.8 billion for CNet Networks, the online tech news provider. CBS, which split off from Viacom, is growing slowly, as is CNet. The TV and radio network evidently aims to make itself into more of an Internet company, and said a hookup with CNet offers many synergies.
Source: New York Times
Red Ink at Blackstone
Blackstone Group, the private equity giant whose stock has dropped 37% since it went public at the peak of the takeover boom last year, posted a surprising $66 million loss in the first quarter as revenues dropped 94%. With deals having largely dried up, Blackstone saw fees fall in virtually every area of its business, and returns from its investment funds turned negative.
Source: Bloomberg
The feds want the names of UBS clients
U.S. authorities are expected to subpoena the names of wealthy American clients of the Swiss financial giant UBS in an effort to ascertain whether they used the bank’s services to avoid income taxes, according to lawyers and others involved in the case. The subpoena would follow an indictment, unsealed on May 13 in a Florida federal court, of former UBS private banker Bradley Birkenfeld and his alleged accomplice, Mario Staggl, a Liechtenstein businessman who set up intricate trusts in Europe and offshore tax havens. Birkenfeld, Staggl, and ‘others known and unknown’ are accused of conspiring to defraud the U.S. from at least 2001 by engaging in a scheme that included falsifying documents, helping to set up shell companies, and destroying banking records. The charges brought against the men follow the detainment of Martin Liechti, a senior UBS banker, as a material witness in the Department of Justice’s ongoing investigation into the Swiss bank’s wealth management business.
Source: Wall Street Journal
Barclays announces further writedowns
Barclays, Britain’s third-largest bank, posted a $1.95 billion writedown of assets and refused to rule out a rights issue after the bank’s profits fell by an undiscolosed amount during the first quarter of 2008. The figure was less than those reported by its competitors, and the bank said the writedown for its investment bank arm Barclays Capital came after a net $1.4 billion gain on the fair valuation of debt it carries on its own books.
Source: Reuters
Verizon snubs Google’s mobile phone platform
Verizon Wireless, the second-largest U.S. mobile operator, has dealt a blow to Google’s attempts to break into the mobile phone operating system market with its Android software after the company announced on May 14 it would throw its weight behind an Android rival created by an organization called the LiMo Foundation.
Source: BusinessWeek
GE mulls sale of appliance business
General Electric is preparing to sell its century-old appliances business as Chief Executive Officer Jeffrey Immelt looks to revive the weakened company. According to people familiar with the matter, GE could receive between $5 billion and $8 billion from a sale of the business. Any possible sale comes as the GE faces pressure to trim a portfolio that ranges from credit cards to aircraft engines to television broadcasting, following a disappointing first-quarter earnings report.
Source: Wall Street Journal
2.5 million people at risk after Myanmar cyclone
Almost 2.5 million people are at risk after the generals who rule Myanmar said they don’t need help from international relief workers after a cyclone devastated the country’s southern region 12 days ago. In an effort to stem to suffering, Myanmar’s neighbors will lead a ‘coalition of mercy’ to develop an aid plan, although Surin Pitsuwan — secretary-general of the Association of Southeast Asian Nations — said it would require overcoming the military government’s long tradition of ‘very, very stiff resistance.’
Source: Blooomberg
Food prices start to decline
After months of skyrocketing food prices, the first signs that costs for commodities are returning to normal are reaching the market. The United Nation’s Food and Agriculture Organization food price index — considered the best measure of global food inflation — recorded its first decline in 15 months in April, as wheat, dairy, sugar and soya bean prices fell.
Source: Financial Times
IBM computers help alleviate food crisis
A project announced on May 15 by the University of Washington and IBM’s World Community Grid could help to speed up the delivery of better rice. By tapping a cluster of nearly 1 million PCs scattered around the world, the researchers hope to develop more nutritious, robust strains of rice sooner by completing complex genetic calculations in just one or two years. Those calculations might have taken 200 years if left to the school’s computers.
Source: BusinessWeek
China’s factory spending continues to climb
China’s factory and property spending rose 25.7% in the four months through April and may accelerate as the country’s southwestern Sichuan province rebuilds after the country’s worst earthquake in more than 50 years.
Source: Bloomberg
French bank to sell off assets
Credit Agricole, France’s biggest retail bank, said on May 15 that it would sell assets and restructure its investment banking arm after it initiated a $9.1 billion rights issue. The bank said it would cut around 10% of costs at its investment bank operation, which has been hit by the global credit crunch. Agricole also said it would continue to sell non-core assets to bolster its financial position and had identified $7.7 billion worth of potential disposals over an 18-month period.
Source: Reuters
Conversation of the Day: Content vs. Search
Reader Peter Monk Writes: “Internet users will begin to question exactly who is producing content and will place a premium on valid and reliable content.”
