(Reuters) - The potential for changes in the blue-chip Dow Jones industrial average remains high, according to the head of the index's oversight committee, the same day the head of General Motors said bankruptcy had become more likely.
Both GM and Citigroup have needed large infusions of capital from the government to stay alive, and while the automaker edges closer to bankruptcy, Citigroup's capital cushion still remains tenuous.
"The chain of events involving GM and Citi seem to be marching in a certain direction," said John Prestbo, executive director of Dow Jones Indexes and the chairman of the DJI oversight committee.
Monday, Fritz Henderson, the chief executive officer of GM, said it was "more probable" the automaker would need to file for bankruptcy in order to restructure, though there was still a chance it could be avoided.
GM might not be the Dow's only casualty, however, as Citigroup may also be on the chopping block because the financial institution has seen its market capitalization shaved to a fraction of its peak and faces the chance that the government may increase its stake in the company.
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Monday, 11 May 2009
Thursday, 07 May 2009
DJ to double investment in India
Dow Jones has major expansion plans for India and will double its investment in its Indian operation in each of the next two years, the company said today.
“India is an increasingly important market for us. The opportunities are significant and will only continue to grow as the Indian market becomes more and more hungry for high-quality business news and information,” Dow Jones vice-president, Mr Bruce MacFarlane said in a release.
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“India is an increasingly important market for us. The opportunities are significant and will only continue to grow as the Indian market becomes more and more hungry for high-quality business news and information,” Dow Jones vice-president, Mr Bruce MacFarlane said in a release.
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Wednesday, 06 May 2009
Ford May Suffer as Chrysler Shutdowns Reach Suppliers
(Bloomberg) -- Ford Motor Co., the only self- sufficient U.S. automaker, may be hobbled should prolonged shutdowns at Chrysler LLC and General Motors Corp. lead to failures of essential partsmakers.
Ford, launching three critical models, is at risk of periodic shutdowns if suppliers it shares with GM and Chrysler collapse, analysts said. GM is closing 14 North American plants for as much as nine weeks this summer and Chrysler, which filed for court protection from creditors on April 30, plans to close its factories until emerging from Chapter 11 in a month or two.
“There’s definitely potential for sporadic shutdowns at Ford,” said Mike Wall, supplier analyst at industry consultant CSM Worldwide in Northville, Michigan. The idling of plants at Chrysler and GM “is going to shoot a significant amount of stress through the supply chain.”
Ford is vulnerable because of the interwoven nature of the auto-supply network. Ford shares 70 percent of its suppliers with GM and 64 percent with Chrysler, according to CSM. Asian- based automakers share 59 percent with Chrysler and 58 percent with GM. The loss of a single part can close a plant, Wall said.
“Our ability to unilaterally carry the supply base through this, we just can’t do it,” Ford Executive Chairman Bill Ford told reporters today at a Wayne, Michigan Ford factory. “We’ve spent a lot of time talking to the Automotive Task Force about keeping the viability of the supply base. This is a major issue.”
‘Fluid Situation’
Toyota Motor Corp. and Honda Motor Co. may also be disrupted if suppliers who lose business during the GM and Chrysler shutdowns can no longer afford to stay in business, said Craig Fitzgerald, a supplier consultant at Plante & Moran in Southfield, Michigan.
Chrysler purchasing chief Scott Garberding said in court documents that the failure of suppliers to the Auburn Hills, Michigan-based automaker would “cause severe production problems” for other carmakers, “including GM and Ford.”
Ford doesn’t anticipate production disruptions in the next 30 days, said Todd Nissen, a spokesman for the Dearborn, Michigan-based automaker.
“We don’t see any short-term issues with continuing production,” said Nissen. “Beyond that, we’re all looking at the same things. It’s a fluid situation.”
GM, the largest U.S. automaker, has until June 1 to meet a government-imposed deadline to negotiate concessions with labor and lenders or file for bankruptcy. GM is operating on $15.4 billion in government loans and requested $11.6 billion more.
‘Really Worried’
“Take a supplier with 50 percent GM and 50 percent Ford, if GM files, suddenly their book of business is cut in half,” said Keith Francis, managing director at restructuring firm Hydra Professional in Farmington Hills, Michigan. “Ford, which has positioned itself to stay out of the bailout, has increased risk with its supply base because of what’s happening.”
Ford, Toyota and other automakers are probably “really worried” about the fallout from the production shutdowns and managing their supply bases, John Plant, the chief executive officer of TRW Automotive Holdings Corp. said on a conference call today.
The Livonia, Michigan-based company, the world’s largest supplier of vehicle-safety equipment, managing distress among its own suppliers because of the drop in vehicle production, Plant said.
Ford rose 41 cents, or 7 percent, to $6.26 at 4:00 p.m. in New York Stock Exchange composite trading. Ford has more than doubled this year. GM fell 19 cents, or 10 percent, to $1.66. GM has declined 48 percent this year.
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Ford, launching three critical models, is at risk of periodic shutdowns if suppliers it shares with GM and Chrysler collapse, analysts said. GM is closing 14 North American plants for as much as nine weeks this summer and Chrysler, which filed for court protection from creditors on April 30, plans to close its factories until emerging from Chapter 11 in a month or two.
“There’s definitely potential for sporadic shutdowns at Ford,” said Mike Wall, supplier analyst at industry consultant CSM Worldwide in Northville, Michigan. The idling of plants at Chrysler and GM “is going to shoot a significant amount of stress through the supply chain.”
Ford is vulnerable because of the interwoven nature of the auto-supply network. Ford shares 70 percent of its suppliers with GM and 64 percent with Chrysler, according to CSM. Asian- based automakers share 59 percent with Chrysler and 58 percent with GM. The loss of a single part can close a plant, Wall said.
“Our ability to unilaterally carry the supply base through this, we just can’t do it,” Ford Executive Chairman Bill Ford told reporters today at a Wayne, Michigan Ford factory. “We’ve spent a lot of time talking to the Automotive Task Force about keeping the viability of the supply base. This is a major issue.”
‘Fluid Situation’
Toyota Motor Corp. and Honda Motor Co. may also be disrupted if suppliers who lose business during the GM and Chrysler shutdowns can no longer afford to stay in business, said Craig Fitzgerald, a supplier consultant at Plante & Moran in Southfield, Michigan.
Chrysler purchasing chief Scott Garberding said in court documents that the failure of suppliers to the Auburn Hills, Michigan-based automaker would “cause severe production problems” for other carmakers, “including GM and Ford.”
Ford doesn’t anticipate production disruptions in the next 30 days, said Todd Nissen, a spokesman for the Dearborn, Michigan-based automaker.
“We don’t see any short-term issues with continuing production,” said Nissen. “Beyond that, we’re all looking at the same things. It’s a fluid situation.”
GM, the largest U.S. automaker, has until June 1 to meet a government-imposed deadline to negotiate concessions with labor and lenders or file for bankruptcy. GM is operating on $15.4 billion in government loans and requested $11.6 billion more.
‘Really Worried’
“Take a supplier with 50 percent GM and 50 percent Ford, if GM files, suddenly their book of business is cut in half,” said Keith Francis, managing director at restructuring firm Hydra Professional in Farmington Hills, Michigan. “Ford, which has positioned itself to stay out of the bailout, has increased risk with its supply base because of what’s happening.”
Ford, Toyota and other automakers are probably “really worried” about the fallout from the production shutdowns and managing their supply bases, John Plant, the chief executive officer of TRW Automotive Holdings Corp. said on a conference call today.
The Livonia, Michigan-based company, the world’s largest supplier of vehicle-safety equipment, managing distress among its own suppliers because of the drop in vehicle production, Plant said.
Ford rose 41 cents, or 7 percent, to $6.26 at 4:00 p.m. in New York Stock Exchange composite trading. Ford has more than doubled this year. GM fell 19 cents, or 10 percent, to $1.66. GM has declined 48 percent this year.
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Tuesday, 05 May 2009
Chrysler Bankruptcy May Not Dent Economy as Cutbacks Were Set
(Bloomberg) -- Chrysler LLC’s bankruptcy may not rattle the U.S. economy even as the automaker idles all assembly plants for at least 30 days while it reorganizes.
Though the decision will reduce workers’ earnings and force suppliers to reduce or halt operations, Chrysler probably would have had to shut down temporarily anyway, said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.
“There’s no economic difference between Chapter 11 and the restructuring they would have done outside of bankruptcy,” Zandi said in an interview. “Chrysler, its employees, dealerships, and suppliers are going to end up in the same place whether they go through bankruptcy or not.”
Chrysler, which filed for the fifth-biggest U.S. bankruptcy last week, already had been reducing payroll and closing factories because of the industry’s slump. The third-largest U.S. automaker now will combine with Fiat SpA, a move that will require a retooling of manufacturing processes and products that probably was also inevitable, according to Zandi.
Zandi estimates a one-month shutdown of Auburn Hills, Michigan-based Chrysler’s assembly lines would idle about 45,000 workers at the company and its suppliers. That would result in about $7.5 billion in lost output, which would shave about 0.02 percent from 2009 growth.
Not Like 1970
That’s a minor dent compared with what happened in a similar period in 1970, when the U.S. was also in recession and General Motors Corp. was hit by a 67-day nationwide strike. GDP fell 4.2 percent in the fourth quarter of that year, following the walkout.
A bankruptcy at GM, which faces a June 1 U.S. deadline to prove it can survive without a court restructuring, would probably take a more severe toll on the economy. GM sold twice as many new cars and trucks in the U.S. last year as Chrysler, and had almost 5 times as many employees worldwide.
Auto production makes a much smaller contribution to GDP now than it did three decades ago. Car, truck and parts manufacturing accounted for 0.7 percent of value-added to U.S. gross domestic product in 2007, the last year for which figures were available. Durable goods manufacturing, which includes autos, accounted for 13.4 percent of GDP in 1970, and made up 6.4 percent in 2008.
GDP declined 6.1 percent January through March, in part because inventories fell $103.7 billion. Analysts surveyed by Bloomberg before the Chrysler announcement forecast output to fall 2 percent in the current quarter.
Up to Court
The effects of Chrysler’s bankruptcy would slightly more than double if the shutdown went on for two months, and increase proportionately if a resumption in production were delayed, Zandi said. It may be hard to disentangle Chrysler’s impact from GM’s previously announced plans to idle 13 U.S. assembly plants from mid-May into July to pare inventory.
“A lot in terms of the economic implications is going to depend on whether the court requires an adjustment at different speed than what it was before,” said Mike Montgomery at IHS Global Insight, an economic consulting firm in Lexington, Massachusetts. “The production level over the next six months was expected to be so lean to clean up the inventories that the bankruptcy considerations aren’t as important.”
For parts producers, Chrysler’s production line halt will likely mean “chaos,” said Jim Gillette, director of supplier analysis for CSM Worldwide, a consulting firm in Grand Rapids, Michigan.
Chrysler has more than 150 major suppliers, he said, many of whom do work for other auto companies as well. As part of the bankruptcy, the administration is providing $1.5 billion to Chrysler’s suppliers, including Magna International Inc.,BorgWarner Inc., Visteon Corp., Denso Corp. and American Axle & Manufacturing Holdings Inc., to help prevent halts in production as the company reorganizes.
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Though the decision will reduce workers’ earnings and force suppliers to reduce or halt operations, Chrysler probably would have had to shut down temporarily anyway, said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.
“There’s no economic difference between Chapter 11 and the restructuring they would have done outside of bankruptcy,” Zandi said in an interview. “Chrysler, its employees, dealerships, and suppliers are going to end up in the same place whether they go through bankruptcy or not.”
Chrysler, which filed for the fifth-biggest U.S. bankruptcy last week, already had been reducing payroll and closing factories because of the industry’s slump. The third-largest U.S. automaker now will combine with Fiat SpA, a move that will require a retooling of manufacturing processes and products that probably was also inevitable, according to Zandi.
Zandi estimates a one-month shutdown of Auburn Hills, Michigan-based Chrysler’s assembly lines would idle about 45,000 workers at the company and its suppliers. That would result in about $7.5 billion in lost output, which would shave about 0.02 percent from 2009 growth.
Not Like 1970
That’s a minor dent compared with what happened in a similar period in 1970, when the U.S. was also in recession and General Motors Corp. was hit by a 67-day nationwide strike. GDP fell 4.2 percent in the fourth quarter of that year, following the walkout.
A bankruptcy at GM, which faces a June 1 U.S. deadline to prove it can survive without a court restructuring, would probably take a more severe toll on the economy. GM sold twice as many new cars and trucks in the U.S. last year as Chrysler, and had almost 5 times as many employees worldwide.
Auto production makes a much smaller contribution to GDP now than it did three decades ago. Car, truck and parts manufacturing accounted for 0.7 percent of value-added to U.S. gross domestic product in 2007, the last year for which figures were available. Durable goods manufacturing, which includes autos, accounted for 13.4 percent of GDP in 1970, and made up 6.4 percent in 2008.
GDP declined 6.1 percent January through March, in part because inventories fell $103.7 billion. Analysts surveyed by Bloomberg before the Chrysler announcement forecast output to fall 2 percent in the current quarter.
Up to Court
The effects of Chrysler’s bankruptcy would slightly more than double if the shutdown went on for two months, and increase proportionately if a resumption in production were delayed, Zandi said. It may be hard to disentangle Chrysler’s impact from GM’s previously announced plans to idle 13 U.S. assembly plants from mid-May into July to pare inventory.
“A lot in terms of the economic implications is going to depend on whether the court requires an adjustment at different speed than what it was before,” said Mike Montgomery at IHS Global Insight, an economic consulting firm in Lexington, Massachusetts. “The production level over the next six months was expected to be so lean to clean up the inventories that the bankruptcy considerations aren’t as important.”
For parts producers, Chrysler’s production line halt will likely mean “chaos,” said Jim Gillette, director of supplier analysis for CSM Worldwide, a consulting firm in Grand Rapids, Michigan.
Chrysler has more than 150 major suppliers, he said, many of whom do work for other auto companies as well. As part of the bankruptcy, the administration is providing $1.5 billion to Chrysler’s suppliers, including Magna International Inc.,BorgWarner Inc., Visteon Corp., Denso Corp. and American Axle & Manufacturing Holdings Inc., to help prevent halts in production as the company reorganizes.
Read more here
Monday, 04 May 2009
Amazon expected to lift wraps on large-screen Kindle
(MarketWatch) -- Amazon.com is widely expected to lift the wraps on a new large-screen Kindle device this week, which could be the first in a line of electronic reading devices geared toward newspapers and textbooks.
The online retail giant has scheduled a news conference for Wednesday -- 10:30 Eastern -- at Pace University in New York City.
Amazon did not disclose details about the event, but the New York Times reported over the weekend that the company is expected to unveil the latest version of its Kindle e-book reader. This device would reportedly have a larger screen optimized for newspapers, magazines and textbooks.
The Times also said that the newspaper's parent company is expected to be one of Amazon's partners in providing content for the device, citing unnamed sources.
Shares of Amazon were trading up nearly 2% at $80.50. The stock is up 60% since the first of the year.
A new Kindle designed for newspapers could be the first of many such devices. Two newspaper publishing companies -- News Corp. and privately held Hearst Corp. -- have disclosed plans to develop similar e-reader devices. A Silicon Valley startup called Plastic Logic is also developing a large-screen e-reader device geared toward newspapers.
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The online retail giant has scheduled a news conference for Wednesday -- 10:30 Eastern -- at Pace University in New York City.
Amazon did not disclose details about the event, but the New York Times reported over the weekend that the company is expected to unveil the latest version of its Kindle e-book reader. This device would reportedly have a larger screen optimized for newspapers, magazines and textbooks.
The Times also said that the newspaper's parent company is expected to be one of Amazon's partners in providing content for the device, citing unnamed sources.
Shares of Amazon were trading up nearly 2% at $80.50. The stock is up 60% since the first of the year.
A new Kindle designed for newspapers could be the first of many such devices. Two newspaper publishing companies -- News Corp. and privately held Hearst Corp. -- have disclosed plans to develop similar e-reader devices. A Silicon Valley startup called Plastic Logic is also developing a large-screen e-reader device geared toward newspapers.
Read more here
Sunday, 03 May 2009
Buffett: Government doing right
Billionaire Warren Buffett said on Saturday that the US government is taking the correct actions to help the economy recover.
Buffett spoke briefly before the opening of the annual meeting for his Berkshire Hathaway, expected to draw an audience of roughly 35 000 people.
"The government is doing the right things," Buffett said. "They're acting in a countercyclical manner."
But Buffett said he can't predict how quickly the economy and the markets will improve. He said last fall that the US faced an "economic Pearl Harbor."
Buffett and his partner, Charlie Munger, were expected to spend more than five hours answering questions at the Berkshire meeting. In the exhibit hall on Saturday morning, Buffett was mobbed by shareholders seeking photos of the billionaire CEO as he walked between exhibits for subsidiaries Justin Boots and Dairy Queen.
The meeting began as usual with a humorous movie, but instead of the traditional comical cartoon, Berkshire offered a reassuring message from animated versions of its products.
An animated Mrs. See of See's Candy told the crowd that it didn't seem right to have a humorous cartoon when so many things in the world don't seem sweet. And a talking Dairy Queen ice cream treat said the security of the company's balance sheet would help it withstand any blizzard.
Read more here
Buffett spoke briefly before the opening of the annual meeting for his Berkshire Hathaway, expected to draw an audience of roughly 35 000 people.
"The government is doing the right things," Buffett said. "They're acting in a countercyclical manner."
But Buffett said he can't predict how quickly the economy and the markets will improve. He said last fall that the US faced an "economic Pearl Harbor."
Buffett and his partner, Charlie Munger, were expected to spend more than five hours answering questions at the Berkshire meeting. In the exhibit hall on Saturday morning, Buffett was mobbed by shareholders seeking photos of the billionaire CEO as he walked between exhibits for subsidiaries Justin Boots and Dairy Queen.
The meeting began as usual with a humorous movie, but instead of the traditional comical cartoon, Berkshire offered a reassuring message from animated versions of its products.
An animated Mrs. See of See's Candy told the crowd that it didn't seem right to have a humorous cartoon when so many things in the world don't seem sweet. And a talking Dairy Queen ice cream treat said the security of the company's balance sheet would help it withstand any blizzard.
Read more here
Tuesday, 28 April 2009
ANZ Bank first-half cash profit misses expectations
(MarketWatch) -- Australia and New Zealand Banking Group said Wednesday its net profit and cash profit for the fiscal first-half fell due to burgeoning bad debt on its ledger, with the cash profit result missing analysts' expectations.
For the six months ended March 31, ANZ Group said its cash profit -- a closely watched metric for banks -- dropped to 954 million Australian dollars ($673 million) from 1.67 billion Australian dollars at the same time last year.
A Dow Jones Newswires survey had put analysts' average expectations for cash profit at 1.19 billion Australian dollars.
Bottom-line net profit, meanwhile, fell to 1.42 billion Australian dollars from 1.96 billion Australian dollars in the year-ago half.
Bad loans for the recent period more than doubled to 1.37 billion Australian dollars.
ANZ Chief Executive Mike Smith was quoted by Dow Jones as saying the outlook for bad loans in the second half of the fiscal year was "difficult" and the bank won't meet an earlier forecast to limit provisions to between 2.4 billion and 2.5 billion Australian dollars for the entire 2008-09 fiscal year.
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For the six months ended March 31, ANZ Group said its cash profit -- a closely watched metric for banks -- dropped to 954 million Australian dollars ($673 million) from 1.67 billion Australian dollars at the same time last year.
A Dow Jones Newswires survey had put analysts' average expectations for cash profit at 1.19 billion Australian dollars.
Bottom-line net profit, meanwhile, fell to 1.42 billion Australian dollars from 1.96 billion Australian dollars in the year-ago half.
Bad loans for the recent period more than doubled to 1.37 billion Australian dollars.
ANZ Chief Executive Mike Smith was quoted by Dow Jones as saying the outlook for bad loans in the second half of the fiscal year was "difficult" and the bank won't meet an earlier forecast to limit provisions to between 2.4 billion and 2.5 billion Australian dollars for the entire 2008-09 fiscal year.
Read more here
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