Archive for June 8th, 2009

Setanta ‘is on brink of collapse’
Setanta faces administration “within days” unless backers provide more funds to pay 30m it owes to the English Premier League, reports suggest.The broadcaster has already failed to pay the Scottish Premier League 3m it owes in television rights money. Setanta, which also shows cricket, golf and rugby union, has about 1.2m subscribers, but is losing up to 100m a year, analysts say. Deloitte is set to step in to run the firm if it goes into administration. ‘Weaker’ matchesThe rights to show the English Premier League – and the subscribers that this pulls in – lie at the heart of Setanta’s business model. But the firm had only about 60% of the subscribers it needed to break even, said Professor Chris Brady of the BPP Business School. “They have predicated the whole thing on getting those subscribers. The problem is they are taking on Goliath in BSkyB,” he told the BBC. Not only did Setanta have only a small percentage of televised Premier League games, but they tended to be “weaker” matches, he added. There had also been problems with customer service, Prof Brady told the BBC. Falling values?Setanta’s viability was cast into doubt earlier this year when it lost the rights to show 46 live Premier League matches from 2010/2011. In future it will show only 23 games per season, compared with BSkyB’s 115, with industry observers saying that thousands of customers would give up their subscriptions. It is expected that a rival broadcaster – perhaps ESPN – would buy up its Premier League football rights. But the worsening economy has led observers to suggest that the rights to 46 games which Setanta holds for next season, the final year of its current contract, would not be worth as much as they had been. There are also doubts about whether the Premier League could match the 159m Setanta paid for the right to screen 23 Premier League games each season from 2010-11. A shared deal with ITV saw them secure rights for England and FA Cup matches for 425m – and it is likely another firm would buy up these rights.
Source:BBC

Qatar may buy VW or Porsche stake
The Gulf state of Qatar is considering buying a big stake in either Volkswagen or its majority owner Porsche.VW said in a statement that it would welcome the investment because it would speed up its merger with Porsche. The Qatar Investment Authority (QIA) is in advanced talks about buying up to 25% of Porsche, according to a report in the Financial Times. Porsche owns more than 50% of VW, but suspended attempts to buy a controlling stake of 75% when it ran out of money. Porsche took on 9bn euros (12.2bn; 8bn) of debt to increase its stake in VW, but that debt is now creating tension between the two companies. Had Porsche succeeded in controlling VW, it could have used the larger company’s financial muscle to refinance its debt, but having failed to do so, it has been forced to apply to the German government for an emergency 1.75bn euro emergency loan. VW and Porsche own stakes in each other through a complicated family history that unites the two carmakers and the German state of Lower Saxony, which holds a 20% stake in VW and can block strategic decisions under the “VW law”. VW chairman Ferdinand Piech is the grandson of Ferdinand Porsche, the founder of the car company that bears his name. He has a seat on Porsche’s board. Mr Piech strained relations recently by saying that Porsche had to trim its debt if the merger was to move ahead. Porsche’s holding company is chaired by Mr Piech’s cousin, Wolfgang Porsche.
Source:BBC

Boston Globe workers reject plan
Workers at one of the oldest big-city newspapers in the US, the Boston Globe, have rejected the latest cost-cutting package proposed by their managers.The Boston Newspaper Guild union voted down 10m (6.2m) of pay and benefit cuts proposed by its parent company, the New York Times. The Times says it will now have to impose a 23% pay cut on union members to keep the paper in circulation. Both sides say they will keep talking to resolve the long-running dispute. The Globe lost 50m last year and is expected to lose 85m this year. ‘Multifaceted proposal’Overall the Times wants the paper to save 20m. Several of the paper’s smaller unions had already agreed to make 10m of savings. But the deal hinged on the paper’s largest union, the Boston Newspaper Guild, agreeing to make up the other half. The guild voted by 277 to 265 to reject the proposals, effectively killing the deal. Robert Powers, spokesman for the paper’s managers, said they were disappointed with the union’s vote. “As we have stated, the 10m in cost savings from this multifaceted proposal is essential to the Boston Globe’s financial future,” he said in a statement. He added that there was “no financially viable alternative” other than to declare an impasse and propose a 23% pay cut for all guild members. After the vote, guild president Daniel Totten said in a statement that the paper’s owners “must do better than the offer that was presented”. He said the Globe was “vital to the life and culture of the region” and depended on the “fair treatment” of those who produced it. The Boston Globe is the latest title to find itself squeezed by falling sales, rising costs and declining advertising revenues. Traditional papers also face stiff competition from websites offering news content for free and other sites luring away classified advertisers. At least 12,500 jobs have gone in US print journalism in the past two years.
Source:BBC

Interest in property ‘up again’
Rising interest from potential buyers coupled with falling numbers of sellers is stabilising UK house prices, according to surveyors.New buyer inquiries increased for the seventh month in a row in May – at the fastest rate since 1999, said the Royal Institution of Chartered Surveyors. But there were fewer sellers, continuing a trend of the last two years, the survey found. Two other surveys recently reported a rise in house prices in May. SurveyThe Rics survey, which has been running since 1978, takes a snapshot of the degree of confidence in the market from surveyors and estate agents across the UK.
They reported that average sales were at their highest level since August last year. However, at 11.8 properties sold per surveyor in the last three months, this remained 31% down on the same period a year earlier. The Rics members did again suggest a further increase in potential new buyers window shopping for property, most notably in Scotland, London and the South East of England. Alongside this, there were fewer people asking agents to sell their homes in May, which was having a logical effect on house prices. “On the face of it, the housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilising,” said Rics spokesman Ian Perry. “However, it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand.” ‘Obstacles’Some 11% more surveyors were now expecting property prices to fall rather than rise, the survey found. In addition, 40% more were predicting sales to increase than fall. Yet, Mr Perry stressed that the troubled state of the economy could still constrain any housing market recovery. “With the economic backdrop still quite uncertain, unemployment is set to continue increasing sharply and finance for first time buyers is still in short supply, there are a number of significant obstacles for the market to overcome over the coming months,” he said. Some surveyors pointed to the seasonal nature of property sales. “[There are] definite signs of early recovery but we are hoping the usual summer seasonal downturn does not now occur,” said Ian Shaw, who operates in Lincolnshire. On 4 June, a survey by the Halifax said that UK house prices rose by 2.6% in May compared with April but activity remained low in the market. This came shortly after the Nationwide building society reported a 1.2% rise in prices in May compared with April – the second rise in three months.
Source:BBC

Retail sales take a knock in May
UK retail sales fell in May from a year earlier as hard-up consumer steered clear of buying big-ticket items, industry data has shown.The British Retail Consortium said the value of like-for-like sales fell 0.8% after a 4.6% rise in April. The BRC said the Easter boost had proved hard to sustain. However, it said warm weather at the end of May had boosted sales of hot-weather foods like salads and outdoor products like gardening tools. “The turnaround in sales of big-ticket items such as furniture and large electricals, which would indicate real change in the mood of customers, still eludes us,” said Stephen Robertson, director general of the British Retail Consortium. Better figures expectedThe BRC said food sales rose, particularly as hot sunny weather as the end of May bolstered sales of salads and fresh fruit, barbecue foods, ice cream and beers, wines and soft drinks. However, sales of clothing, footwear and furniture fell. “We might have expected better figures as, while there are consumers struggling financially due to actual, or the prospect of, job losses, there are also those with greater disposable income due to lower mortgage payments, easing inflation and lower fuel costs,” said Helen Dickinson, head of retail at consultants at KPMG. “It remains to be seen when those who have cash to spare will feel confident to start spending again,” she added.
Source:BBC

Shell settles Nigeria deaths case
Royal Dutch Shell has agreed to pay 15.5m to settle a lawsuit which accused the oil firm of complicity in rights abuses in Nigeria.The case, due for trial in the US next week, was brought by relatives of a group of anti-Shell activists executed in 1995 by Nigeria’s military rulers. The families say Shell helped the government to punish the campaigners. But the company insists it did nothing wrong and said the payment was part of a “process of reconciliation”. Shell official Malcolm Brinded said: “This gesture also acknowledges that, even though Shell had no part in the violence that took place, the plaintiffs and others have suffered.” ‘Victory’ for campaignersAmong those executed was Ken Saro-Wiwa, a prominent writer. He and other activists had formed a group in 1990 aimed at showing the world the environmental damage they said Shell’s drilling was causing in the Niger Delta. But the campaigners were jailed on charges of ordering the 1994 murder of four local leaders. After a trial, they were hanged. Their relatives have pursued Shell through the courts ever since. Ken Saro-Wiwa’s 40-year-old son, Ken Saro-Wiwa Jr, said his father would have been happy with the result. He told the Associated Press that Shell’s settlement represented a “victory for us”.
Source:BBC

NEW YORK (Reuters) — Texas Instruments raised its targets for second-quarter earnings and revenue, signaling improving demand in the chip market, and its shares rose 4%.TI’s analog chips, used in a everything from phones and consumer electronics to cars and industrial equipment, were the biggest driver of growth in the quarter, the company said during a conference call with analysts.TI investor relations executive Ron Slaymaker told analysts that like the first quarter, Asia was driving the improvements and Europe and the United States were lagging behind. He also said that mobile phone chips were selling better than TI had initially expected at the start of the quarter.The company, which competes with Qualcomm Inc in the wireless chip market, said it now expects second-quarter earnings per share of 14 cents to 22 cents, much better than its previously announced target range of 1 cent to 15 cents.It forecast current-quarter revenue of 2.3 billion to 2.5 billion compared with its previous expectation for a range of 1.95 billion to 2.40 billion.0:00
/4:27No surprises, just a new iPhoneOn average analysts had expected revenue of 2.21 billion, according to Reuters Estimates.Analysts said investors had expected TI’s targets to increase but that the improvement was better than hoped for.”It was a little higher than some people had expected. It’s a continuing of the trend of semiconductor ordering bouncing off the bottom since late February,” said Jefferies & Co. analyst Adam Benjamin.Another analyst Doug Freedman of Broadpoint Amtech noted that the guidance still implied a revenue decline of 28% from the same quarter a year ago.”We still have a ways to go before the semiconductor revenue number returns to the comparable year over year production level from the hardware manufacturers,” he said.Manufacturers have been drastically cutting their stockpiles of chips from TI and other chip makers in recent quarters amid weak consumer demand in the recession.Now that stockpiles are much lower Slaymaker said clients were slowing their chip inventory cuts but he said they were still not building up stock levels for any big improvement in consumer demand.”What we believe is happening is that we’re seeing customers getting rid of inventory at a slower rate than in the first quarter,” he said.TI’s biggest wireless customer is cellphone market leader Nokia (NOK) and it also supplies applications chips for Pre, a high-profile smartphone launched by Palm Inc (PALM) on Saturday.TI shares rose to 20.70 in after-hours trade after closing at 19.77 on New York Stock Exchange ahead of the update.

US work visas applications dry up
By Salim Rizvi
New York
As an Indian American entrepreneur in Silicon Valley, Venkatesh Shuklaw has been hiring software professionals from India for years.This has not always been easy because in order to get work visas for Nusym’s staff he has had to compete with large US companies such as Microsoft or Indian software companies such as Infosys and Wipro. But now he expects it to be easier to get visas for professionals working for his company, because many big companies no longer sponsor foreign workers applying for work visas. That is partly because they are hiring fewer people during the recession, but also because of a new set of government rules. Applications slowThe United States Citizenship and Immigration Services (USCIS) issues H1B work visas designed to bring highly skilled foreign professionals into the US.
Companies have to sponsor their employees and file visa applications to get foreign workers up to a set quota every year. This year the limit for these visas is 65,000. The US immigration department is inviting applications for H1B visas for its 2010 quota year, which begins on 1 October 2009. Eight weeks after the time for the filing of petitions began, only around 45,000 H1B visa applications have been received. In the past, the H1B quota used to fill up within a week. “We are still accepting petitions, so folks who are interested should apply and get their petitions in,” says Sharon Scheidhauer from USCIS in New York City. Different situation
IT professionals from India have been much in demand in the US in recent years. In past years, more than 60% of the H1B visas were granted to professionals from India. But this year, things are different. Firstly, the big companies that have been hit by the recession are neither hiring staff themselves nor giving much business to the IT companies that might have hired foreign professionals themselves. But also, the US Congress has forbidden companies and banks that receive funds from the Troubled Asset Relief Program (Tarp) from hiring foreign workers. Hard to getThe strict implementation of immigration rules by US authorities has made matters worse for foreign workers. Manhattan-based Indian American lawyer Prashanthi Reddy has mainly Indian-origin clients who are either based in India or the US. She also maintains one office in the Indian city of Hyderabad. “Indian professionals are just afraid to come here because they are hearing so much bad news about the economy and layoffs,” she says. “Also, the USCIS seems to be clamping down hard on Indian consulting companies, which are owned by Indian nationals.” “It could be that they found some rotten apples and they think that the entire basket is bad. The work visa rules have always been there, but the USCIS is now implementing them more rigorously.” The USCIS requires H1B applicants to provide many documents, including photos and brochures of the office, tax returns as well as the work orders, contracts and client letters. All that makes the process tedious for many companies and it is also expensive. H1B visas cost around 5,000 (3,131) per person. Yet there are some Indian American companies who are hiring Indian professionals because it is easier to get H1B visas this time. Foreign workers, who are already working in the US on H1B visas, are facing problems getting their visas extended, however, or getting sponsors to apply for a green card. “They are in a lot of trouble, because some have lost jobs while some sponsors are not willing to follow up,” says immigration lawyer Reddy. “So people who have lived here for five to 10 years are forced to pack up and leave.” Strict rulesSome H1B visa holders have been waiting for their precious green cards for many years now. Ashish Sharma is an Indian IT professional who is employed by a company in California. He came to the US on an H1B visa 10 years ago. He says there is a big backlog of Indians waiting for green cards. “The sense of uncertainty and the restrictions on job search and career development lead to the dilemma that it might be worth going to some place where one easily gets work and life is easy,” he adds. Indian workers are calling for comprehensive immigration reforms in America, including changes in work visa rules. But American lawmakers are having none of it. Senators Dick Durbin from Illinois and Charles Grassley from Iowa have reintroduced a bill on the H1B visa programme. It calls for increased oversight and enforcement and discourages the use of H1B visa holders. It also requires all employers to pledge that the H1B visa-holder will not displace an American worker. But many Indians strongly object to some provisions of the bill saying they are against the principles of free trade.
Source:BBC

Ireland: boom to bust
Viewpoint
By Olivia O’Leary
BBC Radio 4
“Who’s that guy who always looks bored and never has anything to say?” a newcomer is said to have asked at an EU Council of Finance Ministers a few years ago.”It’s the Irish Finance Minister,” a colleague replied. “He has record growth rates, overflowing state coffers and income levels 40% above the EU average. What does he need to say?” The story is different now. Ireland’s Celtic Tiger economy, with full employment and growth rates at one stage reaching 10%, has collapsed. It is forecast to contract by more than 9% this year alone and unemployment next year is forecast to reach 17%. London callingFor James Mooney, 23, and his generation, the crash is particularly galling.
While Mr Mooney was studying to be a surveyor, his lecturer told them they would all be millionaires by the time they were 35, such was the construction and property boom at the time. Instead he is one of the new breed of Irish emigrants, living in a house in London with five other Irish people in their twenties, in a position none of them ever dreamed they would face. “Getting dropped back to Dublin airport, that’s when it hits home, that you’re leaving again,” says Mr Mooney. “Sunday nights, flying back to London. I dread it. “You see the same faces at the airport now. I never thought I’d have to leave.” Great expectationsUnlike previous generations bred for emigration – and hardened to it – James and his friends were brought up to believe that those days were long over; that they would always find work at home. As a small open economy, Ireland could not escape the global recession. But it did not have to be this bad. Ireland’s troubles are doubled by the fact that, having started with proper export-led growth, it switched after 2001 into a consumer boom. We were spending as if there was no tomorrow, particularly on property. We thought we had found the answer to everlasting economic growth and that answer was to build lots and lots of houses – and sell them to one another. Everybody was fuelling the boom. The government gave tax breaks for building, renting and buying houses. The Irish banks lent wildly and massively to developers for overpriced sites and property, and pushed 100% mortgages at anybody they could persuade to take them. House prices in Dublin were dearer than Paris, the cultural capital of Europe, and Dublin workers were being pushed further and further out of the capital. They were moving to places like Cavan, Kinnegad, and Tullow – places with no rail line often a two- or three-hour round-trip commute from the capital. Irish farmers could not believe their luck as new houses sprang up in green fields in the middle of nowhere. They had never had a crop like this and the demand was massive. People bought fistfuls of houses – for their children or as investments. Polish workers came in to help build the houses and then rented and lived in them. Against the profits or expected profits on Irish property, developers began to buy property abroad. The Irish were buying up the world and the sweetest deal of all was when an Irish consortium bought the Savoy group in 2004. The Irish, who had provided the navvies for Britain’s roads, had now taken over some of its greatest establishments: Claridges, the Connaught, the Savoy Hotel itself. Just to drive the point him, the Irish tricolour was run up the hotels’ flagpoles. No fatalismThe collapse, when it came, was quick and brutal. The Irish banking system – to use a great Irish phrase – is effectively banjaxed. Having overlent wildly for overinflated property deals, they have had to be rescued by the taxpayer. One bank has already been fully nationalised and others may follow. We will be paying for this bail-out for a very long time. All over the country there are ghost villages, schemes of new houses, half occupied or half finished. People who bought a year or two ago are stuck out in the middle of the country with big mortgages for houses that have fallen 40% in value from their peak, and are still falling. And now those same people are facing high unemployment. Mr Mooney wants to come home, eventually. What kind of Ireland will he find? The years ahead are going to be bad. We do not even know yet how bad or whether we will have to ask for outside help or what price we will have to pay for that help. But prosperity has done one thing for us. It has taken away our fatalism, our belief that we would always be poor. We now know there is no God up there wanting the Irish to stay poor. Just wanting us, maybe, to be a little bit less greedy.
Source:BBC

NEW YORK: One week before its emergency loan program is slated to launch, the Small Business Administration issued guidelines for banks and borrowers on how the new loans will work.Called “America’s Recovery Capital,” ARC loans are designed to make up to 35,000 available to struggling small business owners to temporarily help them keep up with payments on existing loans, including credit card debt. Authorized as part of February’s stimulus bill, the program has been under development for four months. Many banks were waiting for the SBA’s procedural guidance, released Monday, before deciding whether or not to participate.Here’s a primer on how the emergency loans will work.Eligibility: Sorry, startups, this isn’t for you. ARC loans are only open to businesses that have been in operation for at least two years and have been profitable in at least one of the last two years. (Startup businesses can apply for financing through other SBA programs, including the agency’s flagship 7(a) loan program.)Borrowers can use ARC loans to make payments for up to six months on their existing debt, with no repayment due on the loan for another year. After that, the business has five years to pay back the loan principal. The government covers the interest payments.Talk back: What do you think of ARC loans?Applicants must prove they are experiencing financial hardship, as evidenced by declining sales (a drop of at least 20% over the past year), frozen credit lines, rising business costs (again, 20% or more in the past year), or difficulty meeting payroll, paying rent or making loan payments.But borrowers also have to be running a “viable” business. The SBA wants to see cash-flow projections for at least the next two years illustrating that the business will be able to repay its ARC loan and other debt obligations. Borrowers must have “acceptable” business credit scores, and they can’t be more than 60 days past due on any loan they’d like ARC funds to help cover. Lenders may also require collateral to back up the loan.Qualifying debt: Because of arcane government rules, ARC loans can’t be used to make payments on loans backed by the SBA before Feb. 17, 2009, the date the stimulus bill took effect. However, borrowers can use the loans for relief from virtually any other business debt, including a commercial mortgage or lease, home equity loans used to finance business operations, bank loans made outside the SBA program, notes payable to suppliers, and credit card debt.That last one is a key feature. Borrowers can use ARC loans to cover payments on their personal credit cards if the money was borrowed for business expenses. “We do recognize the merging of the owners’ and businesses’ finances,” says Eric Zarnikow, the SBA’s associate administrator for capital access.How to apply: The SBA won’t make ARC loans directly. As with most of its lending programs, it will instead offer guarantees on loans made by banks. If the business owner defaults, the SBA pays off the debt. (The business owner still takes a hit on their credit report.)Each bank will set its own procedures and timeline for issuing loans, so business owners looking to apply should contact a participating bank. For a list of banks that make SBA loans, click here. Each business can receive only one ARC loan, for a maximum of 35,000, but that loan can be used to make payments on more than one debt.The SBA will begin processing applications for the loans on June 15, but individual banks may take longer to draft their own application procedures.What’s in it for banks: ARC loans are a sweet deal for borrowers: They carry no fees, require no payments for at least a year, and have their interest payments fully subsidized by the government.That, and the fact that they’re specifically targeted at businesses in trouble, makes them especially risky. Banks have been wrangling with the SBA for years about underwriting standards for their small business loans: The government can penalize lenders for high default rates in their portfolios, which has made some banks nervous about participating in the ARC loan program. Collecting the government guarantee on a loan gone bad can be onerous, and banks have to absorb the administrative costs of pursuing delinquent loans and liquidating those that default. The SBA says it expects ARC loans to default at a higher rate than its other programs, and will adjust its expectations for lenders accordingly.Because the loans are fully guaranteed by the government, ARC loans are fairly safe for banks. But the interest rate on them isn’t very competitive. The SBA has set the interest rate it will pay for the loans at prime plus 2%. For June, that rate would be 5.25%.That’s a lower interest rate than the SBA sets for its other loan programs. However, unlike ARC loans, those programs don’t offer a 100% loan guarantee — on a traditional SBA loan, if a business defaults, banks would be stuck with some of the loss.Availability: The SBA estimates that around 10,000 small businesses will receive ARC loans, but it’s uncertain how quickly the loans will be dispersed. “It’s a little challenging to anticipate what the demand will be,” Zarnikow says. “There will be ramp-up time as lenders train operators.”In the Recovery Act, Congress allocated 255 million to support the ARC loan program. That money covers only the program’s subsidies, for interest payments and defaults, allowing the money to stretch to support a larger dollar-volume of lending. Each lender will be limited to 50 loans per week. If a bank makes less than 50 loans, they can carry the unused allocation over to other weeks, but lenders will be capped at a maximum of 1,000 loans through the program’s duration.The ARC loan program is scheduled to run through Sept. 30, 2010, or until its funding runs out, whichever comes first.

Source:CNN