Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) agreed to sell its 29 percent stake in Sanyo Electric (6764.T: Quote, Profile, Research, Stock Buzz) after Panasonic Corp (6752.T: Quote, Profile, Research, Stock Buzz) slightly sweetened its offer, three financial sources said, clearing the way for a deal worth at least $6.4 billion.
The move by Goldman, which, unlike two other major Sanyo shareholders, had rejected Panasonic’s earlier lower offers, came after the Wall Street firm reported its first quarterly loss since going public.
The combination of Panasonic, the world’s biggest plasma TV maker, and Sanyo, the top producer of rechargeable batteries, would create Japan’s No. 2 electronics manufacturer after Hitachi Ltd (6501.T: Quote, Profile, Research, Stock Buzz) with $120 billion in annual sales.
Sanyo shares closed down 1.4 percent at 141 yen on the news that a deal had been reached below the company’s current share price.
Panasonic and Sanyo plan to hold a news conference on Friday to give details of a planned tender offer, in which Panasonic will offer 131 yen per Sanyo share, the sources with direct knowledge of the matter said, 1 yen more than it had earlier offered this month.
Officials at Goldman Sachs and Panasonic declined to comment.
Goldman appears to have taken its chance to sell its stake, despite the price being far below what it had been seeking, due to the increasingly bleak outlook for Japanese consumer electronics makers.
Late last month, Panasonic, formerly known as Matsushita Electric, cut its annual net profit forecast by 90 percent and announced plans to restructure as the global financial crisis dampens sales of TVs and other electronics on line pay day loans.
Some analysts have also said the market price of Sanyo shares may not have fully factored in a dilution in per-share value, which comes with the conversion of preferred shares into common shares.
Sumitomo Mitsui Banking, Daiwa Securities SMBC and Goldman hold nearly 430 million of Sanyo’s preferred shares, each of which can be exchanged for 10 common shares when a restriction is lifted in March.
If converted, Goldman and Daiwa Securities SMBC would each hold a 29 percent stake in Sanyo, while Sumitomo Mitsui Banking would hold 12 percent. The combined 70 percent stake would be worth about $6.4 billion, based on the offer price of 131 yen.
CHALLENGES AHEAD
Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said Panasonic President Fumio Ohtsubo would have a tough time creating synergy effects even though the deal now looks set to go through.
“When things are good and top lines are growing, it is easy for Japanese companies to carry out restructuring. They are not very good at streamlining in an environment like this since no one would rehire the employees they let go,” he said.
“His pain from overseeing the birth of a successful merger has just begun.”
Nintendo Co Ltd said sales of its Wii game console more than doubled during the week of Thanksgiving in the United States, apparently defying the retail gloom of the global economic crisis.
President Satoru Iwata told Reuters in an interview that Wii sales more than doubled to about 800,000 units during the week of Thanksgiving, from about 350,000 units a year earlier.
While Iwata did not give specific dates, he said the sales were measured over a seven-day period that included both Thanksgiving and the so-called Black Friday for U.S. retailers, which is the traditional start of the holiday shopping season and when retailers rack up their biggest sales of the year.
“Fortunately for us a lot of shoppers put our products at the top of their list,” Iwata said on Monday.
He said sales of its DS handheld game player were up about 20 percent year-on-year during the holiday period. European Wii sales so far this holiday season have outstripped last year’s, he said.
“We are shooting for quite big numbers as our annual (unit) sales targets. But we are not in a situation where it is getting difficult to hit that target or our plans are getting off track,” Iwata said.
Nintendo, locked in a three-way battle with Sony Corp and Microsoft Corp in the global video game industry, aims to sell 27.5 million units of the Wii in the year to end-March, up 48 percent from a year earlier.
Since 2002, Iwata has focused on expanding the overall gaming population by launching game machines and software like the ‘Wii Fit’ home exercise game, rather than competing head-on with Sony and Microsoft in enhancing the speed and power of game consoles fast pay day loan.
That strategy appears to have paid off handsomely as the Wii is outselling Sony’s PlayStation 3 and Microsoft’s Xbox 360 by a large margin, allowing Nintendo to forecast an operating profit more than three times as big as Sony’s.
“When similar products are on store shelves, price competition is inevitable. Nintendo has been trying to steer clear of that direction and create a market of our own,” Iwata said. “Our effort in the past is now bearing fruit.”
NOT OUT OF STEAM
Worldwide Wii sales came to 34.6 million units at end-September, against about 16.8 million for the PlayStation 3 and about 22.5 million for Microsoft Corp’s Xbox 360.
“The competition stage is over,” Nomura Securities analyst Yuta Sakurai said. “The spread on shipment volumes is so large that it’s not even worth talking about it. They aren’t rivals.”
For a graphic on hardware sales by Nintendo and its rivals, click here
Iwata said people tended to pick video games even when their budget was tight as they were affordable.
It’s one of the biggest if not the biggest asset for millions of Americans in or near retirement. Despite a global financial crisis, it has kept all of its value.
But we have little practical knowledge of this asset — assuming we even think about how to get the most out of it.
I am taking about Social Security retirement benefits, which by all rights should be a major component of any retirement income plan.
Consider: The average monthly Social Security retirement benefit, after a 5.8 cost-of-living increase, will be about $1,153 in 2009. To receive that much inflation-adjusted income for life, a 65-year-old man would have to pay an insurance company a lump-sum premium of about $204,000 for an immediate annuity, and a 65-year-old woman about $225,000, based on the lowest quotes I found from highly rated companies.
Is your IRA or 401(k) worth that much? In addition, Social Security offers attractive spousal and survivor benefits.
Clearly, we should pay attention to the ins and outs of Social Security. The decision of when best to start collecting benefits — as early as age 62 for reduced benefits to as late as age 70 for enhanced benefits, or anywhere in between — can hinge on many factors.
Aside from any immediate need for money, these factors include how long you expect to live, your tax bracket, whether you’re still working and whether you are single or married.
"Social Security-related decisions can be complex and there can be tradeoffs," said Carolyn Clancy, an executive from Fidelity Investments. A recent online survey commissioned by Fidelity shows many Americans lack the basic knowledge to understand these tradeoffs and make informed decisions.
A vast majority (85 percent) of 300 61-year-olds surveyed did identify age 62 as the earliest they can start collecting reduced benefits. But 56 percent didn’t know when they would receive unreduced benefits if they waited to collect same day payday loans. (The answer is age 66 for anyone born between 1943 and 1954. After that, the age of eligibility rises by two months every year until it becomes age 67 for those born in 1960 or later.)
More than half didn’t know we have to file for benefits three months before we want to start receiving them. Almost a third believed incorrectly that Social Security benefits are not taxed (up to 85 percent of benefits may be taxed depending on what other income we have).
Nearly three-quarters didn’t know that a non-working or lesser-earning spouse could be eligible for benefits based on the work record of the higher-earning spouse. More than half didn’t know that a surviving spouse could be eligible to receive the Social Security benefit of the deceased spouse if it was larger than the survivor’s own benefit.
Also, 45 percent of the 61-year-olds say they plan to start taking benefits as soon as they are eligible at age 62. The most common reason given was that they need the money.
Such an action would lower their benefits permanently. Among those planning to collect as soon as possible, 73 percent didn’t have a retirement income plan. So perhaps there is another way to bridge the income gap until full retirement age that they didn’t consider.
Also, just 22 percent said they knew exactly how much their benefits would be — and 26 percent had no idea. And yet Social Security has been mailing Americans an annual benefits estimate since 1997, and this year the agency introduced an improved benefits estimator at www.socialsecurity.gov/estimator). Fidelity also has launched a site, www.socialsecurity.com/socialsecurity, that while obviously commercial does include valuable educational information.
AskHumberto@aol.com
2008, TRIBUNE MEDIA SERVICES INC.
FRANKFURT–Chemical company BASF SE said Wednesday it is temporarily closing 80 plants worldwide due to slumping demand and cutting production at 100 more, including facilities in Texas and Louisiana. Some 20,000 workers are affected.
It also abandoned its goal to match last year's profit, citing slowing demand for its products, particularly from automotive customers.
BASF shares plunged 14.7 per cent to euro21.68 ($27.39) in Frankfurt after the announcement.
BASF spokesman Gareth Rees said the shutdowns and slowdown have already begun and will extend into January. Workers were being encouraged to take vacation time and reduce their overtime.
In a statement, the Ludwigshafen-based maker of everything from fertilizers and paints to glues and ingredients for cosmetics said it was trying to stem any overcapacity at its operations "as a result of a massive decline" in demand.
The measures will affect major plants in Freeport, Texas; Geismar, Louisiana; Ludwigshafen, Germany; Antwerp, Belgium; Nanjing, China; and Kuantan, Malaysia.
"BASF already drew attention to the difficult economic situation at the end of October," Chief Executive Juergen Hambrecht said in a statement. "Since then, customer demand in key markets has declined significantly. In particular, customers in the automotive industry have canceled orders at short notice.''
Last year, the company's pretax profit was euro7 cash advance in one hour.6 billion on sales of euro57.9 billion. For 2008, BASF said it doesn't expect to achieve that figure.
Hambrecht said "it was difficult to foresee how the coming year would develop and said that BASF was preparing for tough times.''
The company saw its third-quarter earnings fall 38 percent to euro758 million ($959.1 million) from euro1.2 billion a year earlier.
In Ludwigshafen, it signed an agreement with its employee council to take advantage of flex time and vacation there, moves that will affect 5,000 workers.
"We are responding flexibly to market developments and are acting quickly," Hambrecht said. "BASF will now focus even more closely on cost and budget discipline, and will use opportunities arising from the crisis.''
He said the moves would not affect its planned 6.1 billion Swiss franc (euro4 billion; $5 billion) acquisition of Switzerland's specialty chemicals firm Ciba, which it hopes to complete by the first quarter of 2009.
"We will also proceed swiftly with the planned acquisition and integration of Ciba to further optimize our business," Hambrecht said.
With all three Detroit-based automakers in dire straits and seeking a Washington bailout, the moment finally has arrived for a radical reinvention of America’s domestically owned auto industry. Which means letting the Detroit Three reorganize under bankruptcy protection, from which several smaller, more nimble and competitive firms would emerge, no longer prisoner to Detroit’s hidebound, century-old decision-making traditions.
To bail out Detroit is not to rescue the U.S. auto industry, despite how the CEOs of General Motors Corp., Ford Motor Co. and Chrysler LLC continue to misrepresent the federal bailout they seek.
For more than two decades, there have been two U.S. auto sectors. There is the familiar Detroit Three (no longer the Big Three), which are corporate cripples after decades of mismanagement.
And there are the much healthier U.S. operations of Asian and European automakers that employ millions of Americans turning out Hondas, Toyotas and BMWs, sooner or later to be joined by Chinese and Indian makers. The foreign-based firms already operate 16 vehicle assembly plants and dozens of parts plants from Alabama to Ohio to Ontario.
Led by GM, Detroit is again a holdout against progress, arguing for the continuation of a failed status quo, just as it resisted everything from today’s life-saving three-point seatbelts to fuel-efficiency standards to the devastating (to Detroit) recent shift in consumer demand to small cars from gas-guzzling sport utility vehicles and heavy trucks.
Detroit arguably stands alone in chronically failing to "get it" since its laudable introduction of enclosed passenger cabins and automatic transmissions before most of today’s motorists were born.
One way or another, Detroit has been cosseted by taxpayers and motorists since the ill-fated Chrysler bailout of 1979; followed by the Reagan-era "voluntary" quotas imposed on imports, which did not deter American consumers from paying the resulting higher prices for better-built Hondas and Toyotas; followed by repeated abeyance or postponements of fuel-efficiency standards the feds sought to impose on Detroit.
The ill-fated 1979 Chrysler bailout, which secured that company’s viability for just two decades, signalled the larger GM and Ford that they also were "too big to fail" and needn’t abandon their complacent ways. The import quotas inspired first the Asian rivals and later the Europeans to leapfrog that barrier by making in America most of the vehicles they sell in America. And granting Detroit leave from onerous fuel-efficiency standards enabled the foreign-based competition to gain a competitive advantage by complying with or exceeding the U.S. mandates.
Detroit’s sense of exceptionalism has not diminished.
Rick Wagoner, GM’s chief executive, was on Capitol Hill last Thursday making a pitch for taxpayer assistance in financing its proposed merger with Chrysler – this after Detroit had secured in September $25 billion (U.S.) in federal funds to finance development of fuel-efficient vehicles.
Yes, you read that correctly. Developing products necessary to ensure their future, as foreign-based firms have long since done with their own money, is something Detroit has to be paid public money to do.
At a moment when Washington is trying to come up with the scratch to keep imperilled homeowners from losing their homes, the Detroit makers further propose that the additional bailout funds they seek – a rumoured $10 billion in GM’s case – be carved out of the $700 billion bank bailout fund that U pay advance in 24 hour.S. lawmakers rightly criticize for failing to provide for homeowners as well as Wall Street banks and brokerages.
As if chutzpah weren’t enough – GM’s finance arm, GMAC LLC, which has lost $9.1 billion in the past two years as a mortgage-lending enabler in the historic collapse of the U.S. housing market – Detroit is also stooping to coercion.
GM has lost an almost incomprehensible $70 billion (U.S.) since the end of 2004, while the U.S. economy was still healthy, and yesterday reported a $2.5-billion third-quarter loss.
Barack Obama backer Roger Altman, the former Clinton-era Treasury official forced to quit under an ethical cloud, and now a top adviser to GM in its merger talks with Chrysler, warned the Obama economic team publicly last week that the collapse of any of the Detroit Three "would be a difficult way for a new administration" to take office.
Reading from the same scare-tactics script, John Snow, a mediocre if generously compensated CEO of U.S. rail giant CSX before becoming George W. Bush’s second, invisible, Treasury secretary, and now chair of Chrysler owner Cerberus Capital Management LP, told CNBC that Washington must ensure "that a vital industry like autos, which is such a big part of the overall economy, doesn’t lead us into a deeper and harsher downturn."
Any bailout of GM, enabling it to purchase Chrysler, would be a bailout of the short-sighted dealmakers at private-equity firm Cerberus in their exquisitely ill-timed bet on Chrysler in buying the firm from Daimler AG last year, only to see Chrysler’s fortunes further plummet after the deal.
Detroit has been a significant destroyer of jobs and shareholder value for the past decade, and sporadically in decades past, as well. Worse, its sclerotic decision-making has helped hold America back from technological leadership in one of the world’s major industries.
As the cockpit of capitalism, banking is an essential service whose seize-up this September required a bailout by global governments. The auto sector is not as important, and the Detroit Three no longer account for more than a fraction of that sector.
And the latest straw GM is grasping at, a combination with Chrysler, proves again how lacking in smarts is the existing troika of Detroit CEOs. A GM already burdened with too many brands (eight) merged with Chrysler’s three brands would require a years-long shedding of jobs and closing of excess plant capacity in search of the "synergies" that former Chrysler owner Daimler found so elusive in its sorry nine-year-long ownership of the firm.
If an Obama who last week pledged to make aid to Detroit a top priority is serious about change, he will rule out a Detroit bailout. Or he and Congress will effectively nationalize Detroit, deploying a team of experts to preside over the dismantling of these firms that for generations have lacked the managerial acuity of founders William Durant and Alfred Sloan of GM, Henry Ford and Walter P. Chrysler.
David Olive writes on business and political issues. He can be reached at dolive@thestar.ca
Enterprise Financial Services Corp. of Clayton is preparing to raise up to $62 million in new capital to position the banking company for growth in a period of economic uncertainty.
Peter Benoist, Enterprise Financial president and CEO, said Thursday that the company will consider seeking the new capital from a combination of sources, including the government’s Troubled Asset Relief Program and private equity groups.
Enterprise remains well capitalized, Benoist said, but it wants to be ready to take advantage of opportunities that may arise while weathering the "uncharted waters of the financial industry.
"The financial industry is transforming right before our eyes," Benoist said, "and it’s clear to me that highly focused, well-capitalized commercial banking organizations in attractive markets will be the ultimate winners when the dust settles."
Banks must apply for the TARP funds by Nov. 14, and the process of gaining approval likely will take 30 to 45 days after a bank applies. Enterprise also has been working with investors on raising money by selling convertible trust preferred securities.
Enterprise, the parent of Enterprise Bank & Trust, also reported a 74 percent drop in third-quarter profit after it took a $5 free credit report instantly.9 million goodwill impairment charge.
The charge relates to Millennium Brokerage Group, a wholesale insurance subsidiary Enterprise bought several years ago. The charge reflects margin pressure in insurance as carriers consolidate.
Enterprise said it is looking at strategic options to improve the brokerage. Often companies talk in terms of strategic options when they are considering selling an asset.
The non-cash charge doesn’t reduce the bank’s regulatory capital, cash flow or liquidity, the company said. Enterprise bank’s earnings, which exclude the charge, were about even with last year’s.
Benoist said the bank is seeing loan growth despite the troubled economy. That growth may slow going forward, but the bank also has been able to increase pricing.
Enterprise completed the previously announced sale of its Great American Bank charter and a branch in DeSoto, Kan., to First Financial Bancshares Inc. of Lawrence, Kan. The sale generated an after-tax gain of $1.5 million or 12 cents a share.
jerristroud@post-dispatch.com
314-340-8384
The Federal Reserve led a global round of emergency interest rate cuts Wednesday in an effort to contain the worst financial crisis since the 1930s.
The Fed said it was cutting its key federal funds rate by 50 basis points to 1.5 percent. China, the European Central Bank (ECB) and central banks in Britain, Canada, Sweden and Switzerland also cut rates in the coordinated response which analysts had been demanding.
“Incoming economic data suggests that the pace of economic activity has slowed markedly in recent months,” the Fed said in a statement.
“Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit (pay day loans).”
World stock markets cut heavy losses after the move.
The dollar fell further versus major currencies and U.S. Treasuries rose. German government bond futures wiped out gains, while European bank shares turned positive.
“At last they all woke up!” Bank of America rates strategist Riccardo Barbieri-Hermitte said.
Britain had earlier offered to pump at least 50 billion pounds ($87.2 billion) into its biggest retail banks to help them survive the crisis.
NEW YORK — A few corners of the frozen credit markets thawed a bit Monday on news of the U.S. government’s bank bailout plans, but business was hardly back to normal. And, when the dust settles, credit market participants’ lending and borrowing operations probably will be changed dramatically.
Last week, the credit markets — where the world buys and sells debt — were thrown into a tumult after a cascade of troubling events, from the bankruptcy of Lehman Brothers Holdings to the bailout of insurer American International Group. Over the weekend, the U.S. government said it would buy $700 billion in mortgage debt and asset-backed commercial paper from the nation’s struggling banks.
Although several credit market indicators improved Monday compared with last week, they did not show restored confidence. And they aren’t likely to for some time, said John Atkins, a fixed-income analyst at research company IDEAGlobal.com.
"For the next five years, certainly, we’re going to see a real retrenchment in risk appetite, risk extension," Atkins said.
As investors waited for more information on the bailout plan, they reacted to news that Morgan Stanley and Goldman Sachs were going to become commercial banks, and that Morgan Stanley was selling up to a 20 percent stake to Japan’s Mitsubishi UFJ Financial Group Inc.
The status of Morgan Stanley and Goldman Sachs as commercial banks regulated by the government could force the two institutions to take on less risk going forward than they did as investment banks.
"We’ve essentially just eliminated a whole way of doing business," said Howard Simons, strategist with Bianco Research in Chicago, referring to the changes at Morgan Stanley and Goldman Sachs.
That may mean that the level of lending in the credit markets may never get back to its year-ago levels. Over the last year, the asset-backed commercial paper market has shrunk from about $1.2 trillion to a little over $700 billion, according to Federal Reserve data.
To be sure, the commercial paper markets have not completely shut down; UnitedHealth Group Inc., for one, said it was able to sell commercial paper last week. And companies are relying on the market operating in the future; Microsoft Corp same day payday loans. on Monday established a $2 billion commercial paper program.
Still, the market is not functioning normally, which is a worry for corporations — particularly those who issue paper backed by assets such as mortgages.
Simons compared the credit markets’ role in the business world to the wiring in a building. You might not usually notice it, but it’s essential — and when it turns faulty, it becomes dangerous. "All of a sudden, we’re finding out those are causing the building to burn down," he said.
The credit markets are huge and diverse, so they cannot be measured as definitively as the stock market. But there are ways to monitor the willingness to lend in these markets.
One is the 3-month Treasury bill, considered one of the safest short-term investments and an alternative when other short-term debt markets are tight. As oil prices jumped and stocks tumbled on Monday, demand for the 3-month Treasury bill remained high. The yield, which moves opposite from price, was at 0.91 percent by Monday afternoon, down modestly from 0.94 percent late Friday. That means the investment will earn less than 1 percent after three months.
Another indicator is the rate on commercial paper, or the bonds that companies sell to borrow money for a short period of time, usually 30 days. Higher rates mean people are less willing to lend companies money in return for their bonds.
Richard Cantor, chief credit officer at Moody’s Investors Service, said during a conference call Monday that the ratings agency expects credit conditions to tighten in the near term for individuals and businesses, and that it is "also likely that the commercial paper market will remain challenging" for issuers for some time before returning to normal.
According to Bianco Research’s Simons, 30-day dealer commercial paper traded at a rate of 3.2 percent, the same as Friday. That rate is still well above 2.38 percent on Sept. 12, but below the rate of 3.27 percent reached last Wednesday.
Tom Murphy of The Associated Press in Indianapolis contributed to this report.
Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz) is well prepared for Google’s (GOOG.O: Quote, Profile, Research, Stock Buzz) high-profile foray into the mobile phone business thanks to years of development experience and millions of phones on the market, a senior Nokia official told Reuters.
Details of Google’s plan to enter the mobile software market are expected on Tuesday when T-Mobile USA (DTEGn.DE: Quote, Profile, Research, Stock Buzz) displays the first phone based on Google’s Android platform in New York, sources familiar with the plan have said.
In response to Google’s impending entry into the market, world’s top cellphone maker Nokia said in June it would buy out the remaining shareholders of UK-based smartphone software maker Symbian for $410 million, then give the software to not-for-profit organization and make it royalty-free.
“I think that the fact there is a mature platform that is being introduced in an open source environment kind of changes the game,” said David Rivas, head of technology management at Nokia’s S60 business, the platform that runs on Symbian.
“The choices up until then were: You could go with proprietary and mature, or you could go with immature and free paydayloans. Now there is a choice that is free and mature,” Rivas said.
Nokia, Motorola (MOT.N: Quote, Profile, Research, Stock Buzz), Sony Ericsson (6758.T: Quote, Profile, Research, Stock Buzz)(ERICb.ST: Quote, Profile, Research, Stock Buzz) and others will contribute assets to the not-for-profit Symbian Foundation, which unites handset makers, network operators and communications chipmakers to create an open-source platform.
Rivas pointed to the 226 million Symbian phones that had been sold by end-June, saying they gave Symbian an advantage over the new platforms of Google and Apple (AAPL.O: Quote, Profile, Research, Stock Buzz).
“All developers tend at the end of the day to look for something that has impact in the context of volume,” Rivas said.
American International Group Inc, thrown a $20 billion lifeline by New York state, came under renewed pressure on Tuesday as ratings agencies downgraded the insurer’s debt and the financial sector meltdown spread.
Fears that AIG, once the world’s largest insurer by market value, could be the next financial giant to tumble fuelled worries about the potential fallout.
“If AIG tanks, that will be the big one. AIG has more to do with the oil price right now than the Saudis do,” said Larry Grace, an energy analyst at Kim Eng Securities in Hong Kong.
Asian share markets, many of them closed for a holiday on Monday, tumbled as investors absorbed the weekend’s dramatic events on Wall Street, where Lehman Brothers filed for bankruptcy protection and rival Merrill Lynch agreed to be sold to Bank of America for $50 billion.
Big European markets were seen opening around 3 percent lower.
Shares in AIG plunged nearly 61 percent on Monday and the U.S http://easy-quick-payday-loans.com. Federal Reserve hired investment bank Morgan Stanley to review options for the firm, a person familiar with the situation said on Monday. AIG has lost 92 percent of its value this year.
British bank Barclays Plc, which over the weekend pulled out of rescue talks for Lehman, was reported by the Wall Street Journal to be in talks to buy large portions of Lehman.
“We do not comment on market rumors,” said Angie Tang, a Barclays spokeswoman in Hong Kong.
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