Amid speculation over his whereabouts, B Ramalinga Raju, who stepped down as Chairman of Satyam Computer after admitting to financial irregularities, is believed to have left for the US in connection with a court case.
Speculation mounted tonight when a TV channel reported that Raju may have gone to Dubai.
"We have no idea of where Raju is," a Satyam spokesperson told the media over phone when asked if he had left for the US in connection with a case filed by a British Telecom solution firm Upaid.
Raju was also not reachable on his mobile phone despite several attempts, but police sources said that Raju left here for Texas this morning from the Hyderabad Airport.
Earlier in the day, Andhra Pradesh Chief Minister Y V Rajasekhara Reddy had said that he would refer the Satyam matter to CB-CID for investigation.
Upaid had filed a petition in Texas seeking details of the USD 1.6 billion dollars acquisition of two Maytas firms, promoted by Raju's family, before Satyam dumped the deal after attack from investors.
In its petition, Upaid had demanded presence of Raju and senior directors of Satyam for questioning by its lawyers.
Wednesday, January 7, 2009
Probe into Satyam market operations: SEBI
Startled by the disclosure of fudging of accounts by Satyam founder B Ramalinga Raju, market regulator SEBI on Wednesday ordered probe into share market operations and inspection of the IT company.
"SEBI has ordered an investigation into the affairs relating to buying, selling or dealing in the shares of Satyam Computers," it said in a release.
The probe follows a letter written by Raju in which he disclosed that "accounts provided to the stock exchanges were not true".
The investigation, SEBI said, will ascertain whether any provision of the Act or regulation has been violated.
As a first step, SEBI today ordered an investigation into affairs relating to buying, selling or dealing in shares of Satyam to ascertain if any regulatory provision was violated. Besides, it ordered inspection of Satyam Computer (books).
Giving details of the irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books)."
It also carries "an accrued interest of Rs 376 crore which is non-existent, understated liability of Rs 1230 crore on account of funds arranged by me, overstated debtors position of Rs 490 crore (as against Rs 2651 crore in the books."
The USD 2-billion Satyam also reported a revenue of Rs 2700 crore for the September quarter and an operating margin of Rs 649 crore (24 per cent of revenue) as against the actual revenue of Rs 2112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue).
"This has resulted in artificial cash and bank balances going up Rs 588 crore in Q2 alone," Raju said, adding that the gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years.
Satyam, meanwhile, said Board member Ram Mynampati has been appointed interim CEO. "We are obviously shocked.. immediate priorities are to protect interest of shareholders, protect the careers and security of its approximately 53,000 associates..," Satyam said in a statement.
A shocked industry called for deeper regulation. "This fraud on the investors and employees... shows a systemic breakdown in audit and board oversight... questions will need to be asked," FICCI President Rajeev Chandrasekhar said.
FICCI and CII, however, said the Satyam episode should not be seen as a blot on all the Indian firms.
Corporate Affairs Minister Prem Chand Gupta said stern action would be taken under the law.
Agencies
"SEBI has ordered an investigation into the affairs relating to buying, selling or dealing in the shares of Satyam Computers," it said in a release.
The probe follows a letter written by Raju in which he disclosed that "accounts provided to the stock exchanges were not true".
The investigation, SEBI said, will ascertain whether any provision of the Act or regulation has been violated.
As a first step, SEBI today ordered an investigation into affairs relating to buying, selling or dealing in shares of Satyam to ascertain if any regulatory provision was violated. Besides, it ordered inspection of Satyam Computer (books).
Giving details of the irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books)."
It also carries "an accrued interest of Rs 376 crore which is non-existent, understated liability of Rs 1230 crore on account of funds arranged by me, overstated debtors position of Rs 490 crore (as against Rs 2651 crore in the books."
The USD 2-billion Satyam also reported a revenue of Rs 2700 crore for the September quarter and an operating margin of Rs 649 crore (24 per cent of revenue) as against the actual revenue of Rs 2112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue).
"This has resulted in artificial cash and bank balances going up Rs 588 crore in Q2 alone," Raju said, adding that the gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years.
Satyam, meanwhile, said Board member Ram Mynampati has been appointed interim CEO. "We are obviously shocked.. immediate priorities are to protect interest of shareholders, protect the careers and security of its approximately 53,000 associates..," Satyam said in a statement.
A shocked industry called for deeper regulation. "This fraud on the investors and employees... shows a systemic breakdown in audit and board oversight... questions will need to be asked," FICCI President Rajeev Chandrasekhar said.
FICCI and CII, however, said the Satyam episode should not be seen as a blot on all the Indian firms.
Corporate Affairs Minister Prem Chand Gupta said stern action would be taken under the law.
Agencies
Strong reactions by CXOs on the Satyam saga
The Satyam “Saga” took a dramatic turn on Wednesday with B. Ramalinga Raju, the chairman of Satyam Computer resigning from the company’s board. In a shocking disclosure, he admitted some financial irregularities in the company, including an inflated cash balance of Rs 5,040 crore.
So is it possible for one of world’s best known businessman to make mistakes? Or was it only greed or some compulsion. Well, it did happen at Satyam Computers.
Mean while reports indicate that at least 120 of Satyam's employees from the lower and middle rung management have resigned after the Satyam-Maytas fiasco broke out and as many as 100 more, including the senior level management, are waiting to take a decision after the board meeting expected to take place on January 10. Meanwhile, DSP Merrill Lynch has terminated all its engagement with Satyam.
IT companies across the country were shocked at the incident and have strongly reacted to the episode. Here are some of the reactions from top-notch CXOs from various companies.
Kehav Murugesh, President of Syntel Inc, a global outsourcing company reacting to the Satyam saga said, “It is unfortunate that there is so much attention on the company now for the wrong reasons. It is difficult for their employees and clients to ignore the situation and there could be an impact on performance as a result. Good governance, transparency and following not just the letter but also the spirit of the law must be the supreme endeavour at all times and that is not necessarily a learning from this episode alone. There has been talk of overseas investors painting all IT companies with the same brush but I am confident that investors and decision makers are very mature and insightful and will easily separate the wheat from the chaff. Syntel being a global organisation that is registered and listed in the US follows the highest governance standards and is SOX compliant.”
Regarding the Satyam story, Phaneesh Murthy, CEO, iGATE said, "An old moral - no amount of pressure should force dishonesty. This is where values should hold up. The market is bad enough. On top of this, visits are curtailed because of the Mumbai incident - this elongates and delays sales cycles."
Nagaraja (Naga) Prakasam, Managing Director of CDC Software (India) said the Satyam episode brings a number of lessons for organizations namely the importance of Corporate Governance. This will clearly have the beneficial effect of having all companies look at good governance processes, such as a enhanced role for independent directors.
V. Balakrishnan, chief financial officer, Infosys, said the developments at Satyam is shocking, unbelievable and sad it has happened in India. So, should one be concerned about the industry at large? "I don't think it is a reflection of the industry or India. It is an isolated case, just like Enron in US. The regulators should get into the case and punish them. It is important to bring back credibility."
Balakrishnan added that Satyam has cooking up the books for a very long time... "they have done it systematically... it is shocking that it has gone unnoticed."
He added that Infosys will address the concerns of clients. "It is for the regulators to address issues, and avoid any such thing in the future."
L. Subramanian, CEO of Chandamama.com, a children's website with stories on Indian Mythology said, "It (The Satyam episode) is probably one of the most serious cases of breach of fiduciary responsibility that has come to light in India. After all the recriminations, I hope that wisdom will dawn on the regulators to figure out how to prevent such incidents rather than react to them. I think it is the trust placed by over 50,000 employees of Satyam that has been shaken, besides that of the shareholders. My one single question is - 'where were the myriad auditors - financial, cost, management, quality systems auditors... surely someone knew that there was rot in the system and chose to keep quiet?"
Ramakrishna Voruganti, Managing Director of Barracuda Networks, a global leader in email and Web security said, “ I think Mr. Raju’s moving out will give Satyam a much-needed chance to take some hard decisions regarding restructuring, governance and their approach to customers.
It would’ve more difficult to take difficult and independent decisions, with Raju at the helm.”
Suresh Sambandam, founder & CEO of OrangeScape, a leading Chennai-based software product company said, “The sequence of events at Satyam is very shocking and unfortunate. While all of us appreciate the seriousness of the issue, it is important to treat this as an isolated failure of corporate governance. Media and industry forums should work closely and use all possible options to uphold the fame and reputation of the Indian IT / BPO industry.”
“The corporate governance needs to be stronger, said Ajay Dhir, CIO of Jindal Stainless Ltd. reacting strongly, he said and the role of the independent directors, who act as the watch dogs needs to be more assertive.”
R. Mohan, Director of Cache Technologies & Communication Ltd, a leading Singapore-based enterprise infrastructure solutions said, “The Satyam incident brings to light to need for proper governance and compliance that is not in place. To prevent such things from happening especially for family-held companies the government should impose stricter norms.”
Jagan Mohan Raju, executive of ADP India Private Ltd, a Hyderabad-based leading providers of business outsourcing solutions said, “Satyam is a very strong brand not only in India but also has a global identity. I think what has happened is very unfortunate. Organizations build over a period of time should be more responsible towards its stake holders including investors, employees and customers. They should be more ethical and should not bring their personal agenda to compromise at the stakeholders’ interest. More over, the issue has been kept away from the board is very unfortunate. I feel that Satyam’s employees’ campaign on Mr Raju is a very positive one.”
So is it possible for one of world’s best known businessman to make mistakes? Or was it only greed or some compulsion. Well, it did happen at Satyam Computers.
Mean while reports indicate that at least 120 of Satyam's employees from the lower and middle rung management have resigned after the Satyam-Maytas fiasco broke out and as many as 100 more, including the senior level management, are waiting to take a decision after the board meeting expected to take place on January 10. Meanwhile, DSP Merrill Lynch has terminated all its engagement with Satyam.
IT companies across the country were shocked at the incident and have strongly reacted to the episode. Here are some of the reactions from top-notch CXOs from various companies.
Kehav Murugesh, President of Syntel Inc, a global outsourcing company reacting to the Satyam saga said, “It is unfortunate that there is so much attention on the company now for the wrong reasons. It is difficult for their employees and clients to ignore the situation and there could be an impact on performance as a result. Good governance, transparency and following not just the letter but also the spirit of the law must be the supreme endeavour at all times and that is not necessarily a learning from this episode alone. There has been talk of overseas investors painting all IT companies with the same brush but I am confident that investors and decision makers are very mature and insightful and will easily separate the wheat from the chaff. Syntel being a global organisation that is registered and listed in the US follows the highest governance standards and is SOX compliant.”
Regarding the Satyam story, Phaneesh Murthy, CEO, iGATE said, "An old moral - no amount of pressure should force dishonesty. This is where values should hold up. The market is bad enough. On top of this, visits are curtailed because of the Mumbai incident - this elongates and delays sales cycles."
Nagaraja (Naga) Prakasam, Managing Director of CDC Software (India) said the Satyam episode brings a number of lessons for organizations namely the importance of Corporate Governance. This will clearly have the beneficial effect of having all companies look at good governance processes, such as a enhanced role for independent directors.
V. Balakrishnan, chief financial officer, Infosys, said the developments at Satyam is shocking, unbelievable and sad it has happened in India. So, should one be concerned about the industry at large? "I don't think it is a reflection of the industry or India. It is an isolated case, just like Enron in US. The regulators should get into the case and punish them. It is important to bring back credibility."
Balakrishnan added that Satyam has cooking up the books for a very long time... "they have done it systematically... it is shocking that it has gone unnoticed."
He added that Infosys will address the concerns of clients. "It is for the regulators to address issues, and avoid any such thing in the future."
L. Subramanian, CEO of Chandamama.com, a children's website with stories on Indian Mythology said, "It (The Satyam episode) is probably one of the most serious cases of breach of fiduciary responsibility that has come to light in India. After all the recriminations, I hope that wisdom will dawn on the regulators to figure out how to prevent such incidents rather than react to them. I think it is the trust placed by over 50,000 employees of Satyam that has been shaken, besides that of the shareholders. My one single question is - 'where were the myriad auditors - financial, cost, management, quality systems auditors... surely someone knew that there was rot in the system and chose to keep quiet?"
Ramakrishna Voruganti, Managing Director of Barracuda Networks, a global leader in email and Web security said, “ I think Mr. Raju’s moving out will give Satyam a much-needed chance to take some hard decisions regarding restructuring, governance and their approach to customers.
It would’ve more difficult to take difficult and independent decisions, with Raju at the helm.”
Suresh Sambandam, founder & CEO of OrangeScape, a leading Chennai-based software product company said, “The sequence of events at Satyam is very shocking and unfortunate. While all of us appreciate the seriousness of the issue, it is important to treat this as an isolated failure of corporate governance. Media and industry forums should work closely and use all possible options to uphold the fame and reputation of the Indian IT / BPO industry.”
“The corporate governance needs to be stronger, said Ajay Dhir, CIO of Jindal Stainless Ltd. reacting strongly, he said and the role of the independent directors, who act as the watch dogs needs to be more assertive.”
R. Mohan, Director of Cache Technologies & Communication Ltd, a leading Singapore-based enterprise infrastructure solutions said, “The Satyam incident brings to light to need for proper governance and compliance that is not in place. To prevent such things from happening especially for family-held companies the government should impose stricter norms.”
Jagan Mohan Raju, executive of ADP India Private Ltd, a Hyderabad-based leading providers of business outsourcing solutions said, “Satyam is a very strong brand not only in India but also has a global identity. I think what has happened is very unfortunate. Organizations build over a period of time should be more responsible towards its stake holders including investors, employees and customers. They should be more ethical and should not bring their personal agenda to compromise at the stakeholders’ interest. More over, the issue has been kept away from the board is very unfortunate. I feel that Satyam’s employees’ campaign on Mr Raju is a very positive one.”
Is IBM likely to layoff 16,000 jobs?
International Business Machines Corp, the biggest technology employer, may cut thousands of jobs this month amid the global economic slowdown, according to the employee group Alliance for IBM.
Employees have been hearing that layoffs will take place in late January, said Lee Conrad, national coordinator of the Alliance, an organization seeking union recognition at Armonk, New York-based IBM. The size of the reduction may be larger than those in the past few years, he said in an interview.
Generally they go in batches of a couple hundred here and a couple hundred there,” Conrad said.
A post on the Alliance’s website said the company may cut 16,000 jobs, which would top the 15,600 eliminated by Chief Executive Officer Sam Palmisano in 2002. The worldwide slump has tightened companies’ technology budgets and IBM may report a 1.6 per cent drop in sales last quarter to $28.4 billion, based on the average analyst estimate.
“There’s likely to be production cutbacks at IBM,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in Bedford Hills, New York. “There will be job cuts. For now, reducing the workforce to benefit the viability and competitiveness of the company makes sense.”
Solaris, which oversees $2 billion, held 29,000 shares of IBM as of Sept 30.
IBM rose $2.41, or 2.8 per cent, to $89.23 at 4 pm in New York Stock Exchange composite trading. The shares lost 22 per cent last year.
‘Rebalance our workforce’ IBM has frequently pruned its staff over the past few years. The company had two waves of job cuts in 2007, totaling more than 2,000 positions. IBM had $318 million in job-reduction costs that year, compared with $272 million in 2006.
“We constantly rebalance our workforce and continue to invest in growth areas,” said Ian Colley, a company spokesman. He declined to comment further when asked about the Alliance posting.
IBM had 386,558 employees at the end of 2007. Palo Alto, California-based Hewlett-Packard Co, the world’s largest personal-computer maker, had 321,000 as of Oct 31, and Panasonic Corp, based in Osaka, Japan, had 313,594 as of Sept 30.
Agencies
Employees have been hearing that layoffs will take place in late January, said Lee Conrad, national coordinator of the Alliance, an organization seeking union recognition at Armonk, New York-based IBM. The size of the reduction may be larger than those in the past few years, he said in an interview.
Generally they go in batches of a couple hundred here and a couple hundred there,” Conrad said.
A post on the Alliance’s website said the company may cut 16,000 jobs, which would top the 15,600 eliminated by Chief Executive Officer Sam Palmisano in 2002. The worldwide slump has tightened companies’ technology budgets and IBM may report a 1.6 per cent drop in sales last quarter to $28.4 billion, based on the average analyst estimate.
“There’s likely to be production cutbacks at IBM,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in Bedford Hills, New York. “There will be job cuts. For now, reducing the workforce to benefit the viability and competitiveness of the company makes sense.”
Solaris, which oversees $2 billion, held 29,000 shares of IBM as of Sept 30.
IBM rose $2.41, or 2.8 per cent, to $89.23 at 4 pm in New York Stock Exchange composite trading. The shares lost 22 per cent last year.
‘Rebalance our workforce’ IBM has frequently pruned its staff over the past few years. The company had two waves of job cuts in 2007, totaling more than 2,000 positions. IBM had $318 million in job-reduction costs that year, compared with $272 million in 2006.
“We constantly rebalance our workforce and continue to invest in growth areas,” said Ian Colley, a company spokesman. He declined to comment further when asked about the Alliance posting.
IBM had 386,558 employees at the end of 2007. Palo Alto, California-based Hewlett-Packard Co, the world’s largest personal-computer maker, had 321,000 as of Oct 31, and Panasonic Corp, based in Osaka, Japan, had 313,594 as of Sept 30.
Agencies
Tuesday, January 6, 2009
FIEO estimates 10 million layoffs in export units
Ten million people in the export sector will be out of job by March this year, as Indian goods find fewer buyers in the international Coming to terms with layoffs market which is battling the worst crisis since 1929.
"There will be 10 million job losses by March," Federation of Indian Export Organisations (FIEO) President A Sakthivel told reporters here on Tuesday.
Indian exports, which account for just about 20 per cent of the country's Gross Domestic Product, are a highly labour-intensive activity, employing 150 million people.
The country's exports, which posted a robust 30.9 per cent growth rate in the first half of fiscal, contracted by 12.1 per cent in October, for the first time in the last five years. The negative trend continued in November, when exports fell to $11.5 billion from $12.7 billion. The data for December are yet to be released.
"I can safely say that negative growth trends will continue in December and in the next couple of months... I hope we will end the fiscal with exports of about $175-180 billion," Sakthivel said.
FIEO yesterday said there was no "serious consideration" for exporters in the measures announced by the government last week.
The target for the current fiscal is $200 billion while exports totalled about $160 billion in 2007-08.
Europe and North America, which account for 37 per cent of India's merchandise exports, are reeling under recession and slowdown.
The FIEO chief said he did not see positive trends before the fourth quarter of the calendar 2009, "though a complete U-turn may take a little longer", he said.
Agencies
"There will be 10 million job losses by March," Federation of Indian Export Organisations (FIEO) President A Sakthivel told reporters here on Tuesday.
Indian exports, which account for just about 20 per cent of the country's Gross Domestic Product, are a highly labour-intensive activity, employing 150 million people.
The country's exports, which posted a robust 30.9 per cent growth rate in the first half of fiscal, contracted by 12.1 per cent in October, for the first time in the last five years. The negative trend continued in November, when exports fell to $11.5 billion from $12.7 billion. The data for December are yet to be released.
"I can safely say that negative growth trends will continue in December and in the next couple of months... I hope we will end the fiscal with exports of about $175-180 billion," Sakthivel said.
FIEO yesterday said there was no "serious consideration" for exporters in the measures announced by the government last week.
The target for the current fiscal is $200 billion while exports totalled about $160 billion in 2007-08.
Europe and North America, which account for 37 per cent of India's merchandise exports, are reeling under recession and slowdown.
The FIEO chief said he did not see positive trends before the fourth quarter of the calendar 2009, "though a complete U-turn may take a little longer", he said.
Agencies
Logitech to cut 15 percent salaried staff
Logitech International SA, a maker of mice, webcams and other computer peripherals, said it is cutting its salaried work force by 15 percent in response to weak consumer demand amid what it expects to be an extended global downturn.
Switzerland-based Logitech, which also has offices in Fremont, has about 3,500 salaried employees in a total work force of about 9,000.
The company also withdrew its previous fiscal 2009 forecasts for sales growth of 6 to 8 per cent and operating income growth of 3 to 5 per cent. It did not provide revised targets and said it plans to update investors on its outlook during its third-quarter results briefing on Jan 20.
"During the December quarter, the retail environment deteriorated significantly," said Gerald P Quindlen, Logitech's president and chief executive officer. He added in a statement that "we expect the economic environment to worsen in the coming months and we are therefore taking significant actions to align our cost structure with what is likely to be an extended downturn."
Logitech said it will book a restructuring charge for the job cuts in its fiscal fourth quarter. It said it will detail the charge when it issues its third-quarter results.
Quindlen said the company has a strong cash position, no debt, and is maintaining market share.
Agencies
Switzerland-based Logitech, which also has offices in Fremont, has about 3,500 salaried employees in a total work force of about 9,000.
The company also withdrew its previous fiscal 2009 forecasts for sales growth of 6 to 8 per cent and operating income growth of 3 to 5 per cent. It did not provide revised targets and said it plans to update investors on its outlook during its third-quarter results briefing on Jan 20.
"During the December quarter, the retail environment deteriorated significantly," said Gerald P Quindlen, Logitech's president and chief executive officer. He added in a statement that "we expect the economic environment to worsen in the coming months and we are therefore taking significant actions to align our cost structure with what is likely to be an extended downturn."
Logitech said it will book a restructuring charge for the job cuts in its fiscal fourth quarter. It said it will detail the charge when it issues its third-quarter results.
Quindlen said the company has a strong cash position, no debt, and is maintaining market share.
Agencies
Monday, January 5, 2009
Infosys, Wipro get terror e-mails
Six prominent IT companies in the city, including Infosys and Wipro, have received e-mails threatening to blow up their buildings, said a top police officer.
Joint commissioner of police B. Gopal Hosur said here that the companies received e-mails threatening to blow up their establishments two days ago and immediately informed the police.
The police have already begun investigations, he said, but did not divulge further details.
Security had been tightened at all the Information Technology companies which received the threats.
City police commissioner Sankar Bidri said police viewed the e-mail threats seriously and that all precautionary measures were being taken.
Joint commissioner of police B. Gopal Hosur said here that the companies received e-mails threatening to blow up their establishments two days ago and immediately informed the police.
The police have already begun investigations, he said, but did not divulge further details.
Security had been tightened at all the Information Technology companies which received the threats.
City police commissioner Sankar Bidri said police viewed the e-mail threats seriously and that all precautionary measures were being taken.
India to emerge strong from the global meltdown
The report said India, along with China, Russia and South Korea would emerge stronger from the global financial crisis as they enjoy strong economic foundations, higher growth rates and sound monetary policy measures.
US, China and Japan were ranked first, second and third respectively.
India ranked 19th in terms of budget balance as a percentage of the gross domestic product (GDP) and 12th in terms of public debt as a percentage of the GDP.
The ranking was based on seven economic indicators: size of the economy, spending power, tax structure, interest rate policy, budget balances, debt burden and foreign exchange reserves.
US, China and Japan were ranked first, second and third respectively.
India ranked 19th in terms of budget balance as a percentage of the gross domestic product (GDP) and 12th in terms of public debt as a percentage of the GDP.
The ranking was based on seven economic indicators: size of the economy, spending power, tax structure, interest rate policy, budget balances, debt burden and foreign exchange reserves.
Sunday, January 4, 2009
Will US debt increase by $2 trillion in 2009?
The US national debt is expected to jump by as much as $2 trillion this year, thus putting more pressure on the American economy, a leading daily here said.
At present, the country's debt stands at nearly $10.7 trillion. Of this $3 trillion is held by foreign investors , with China ($652.9 billion) and Japan ($585.5 billion) being the top two creditors.
The soaring national debt would saddle taxpayers with huge new interest payments for years to come, the Washington Post said.
"Some analysts also worry that foreign investors, the largest United States creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the US as the bedrock of the global financial system," the Post wrote.
The newspaper said economists from across the political spectrum have endorsed the idea of going deeper into debt to combat the worst ever economic crisis since great depression of last century.
They argue that even with an increase of $2 trillion national debt, the United States is in relatively good financial shape as compared to other industrial nations.
Japan's public debt equalled 182% of its GDP in 2007 and that of Germany was 65%, the newspaper said referring to a forthcoming report by Scott Lilly, a senior fellow at the Centre for American Progress.
Even a $2 trillion increase would push the US debt to about 53 of the overall economy. This is "only a few percentage points above where it was in the early 1990s," Lilly was quoted as saying by the newspaper.
Source: Agencies
At present, the country's debt stands at nearly $10.7 trillion. Of this $3 trillion is held by foreign investors , with China ($652.9 billion) and Japan ($585.5 billion) being the top two creditors.
The soaring national debt would saddle taxpayers with huge new interest payments for years to come, the Washington Post said.
"Some analysts also worry that foreign investors, the largest United States creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the US as the bedrock of the global financial system," the Post wrote.
The newspaper said economists from across the political spectrum have endorsed the idea of going deeper into debt to combat the worst ever economic crisis since great depression of last century.
They argue that even with an increase of $2 trillion national debt, the United States is in relatively good financial shape as compared to other industrial nations.
Japan's public debt equalled 182% of its GDP in 2007 and that of Germany was 65%, the newspaper said referring to a forthcoming report by Scott Lilly, a senior fellow at the Centre for American Progress.
Even a $2 trillion increase would push the US debt to about 53 of the overall economy. This is "only a few percentage points above where it was in the early 1990s," Lilly was quoted as saying by the newspaper.
Source: Agencies
Chrysler gets $4-billion loan from US govt
Chrysler LLC said on Friday it has received an initial $4 billion emergency loan from the US government.
"This initial loan will allow the company to continue an orderly restructuring," Chrysler Chief Executive Bob Nardelli said in a statement.
But Chrysler later said its statement that talks continue between the US Treasury Department and Chrysler Financial about a loan should have been omitted.
Its earlier press release said a closing was expected in due course.
Two spokeswomen for the company could not immediately be reached by the media to clarify.
General Motors Corp received $4 billion in emergency loans on December 31.
Both Chrysler and GM have said they need the government cash to meet payouts to suppliers at a time when a plunge in auto sales has drained their cash holdings.
Under terms of the government bailout, Chrysler and GM will have to submit restructuring plans by mid-February and demonstrate that they are viable by the end of March.
Source: Agencies
"This initial loan will allow the company to continue an orderly restructuring," Chrysler Chief Executive Bob Nardelli said in a statement.
But Chrysler later said its statement that talks continue between the US Treasury Department and Chrysler Financial about a loan should have been omitted.
Its earlier press release said a closing was expected in due course.
Two spokeswomen for the company could not immediately be reached by the media to clarify.
General Motors Corp received $4 billion in emergency loans on December 31.
Both Chrysler and GM have said they need the government cash to meet payouts to suppliers at a time when a plunge in auto sales has drained their cash holdings.
Under terms of the government bailout, Chrysler and GM will have to submit restructuring plans by mid-February and demonstrate that they are viable by the end of March.
Source: Agencies
Apple likely to unveil cheaper iPhone in 2009
Apple Inc will probably begin selling a lower-priced version of the iPhone in the first half of 2009, tapping a new chipmaker for a key component, according to Friedman, Billings, Ramsey & Co.
Qualcomm Inc will replace Infineon Technologies AG as the supplier of the baseband processor -- the chip that translates radio signals into voice and data -- in the new model, analyst Craig Berger said in a report. The phone might debut in the second quarter, he said, citing unidentified industry sources.
Apple may be turning to lower-cost products to fuel sales in developing countries as the US economy shrinks. The company is planning a smaller version of its Shuffle music player and a cheaper MacBook laptop, Berger said. None of the devices is likely to be ready to be unveiled at next week’s Macworld conference, where Apple typically makes product announcements.
“Mobile phone sales figures will continue to grow worldwide in 2009 and most of that growth will come from developing countries,” said Hakim Kriout, a portfolio manager at Grigsby & Associates, a New York-based securities trading firm that owns Apple shares.
“Turning the iPhone into a product line by adding another device for the lower end of the market is the next logical phase.”
Jennifer Bowcock, Apple’s spokeswoman for the iPhone, didn’t immediately return a call or email seeking comment. San Diego-based Qualcomm’s Bertha Agia also didn’t immediately return a phone call.
Wal-Mart, Best Buy
Apple currently sells two versions of the iPhone, an 8GB model for $199 and a 16GB device for $299. Wal-Mart Sto
res Inc, the world’s largest retail chain, began offering the product last week, with its starting price at $197. Best Buy Co, the biggest electronics seller in the US, sells the phone for $189.99 and $289.99.
Berger, who contacted parts suppliers, also said that Apple made fewer iPhones in the fourth quarter than originally estimated. That shortfall will be partially offset by greater first-quarter output, he said. About 10 million phones were available for purchase in the fourth quarter, he estimates.
Apple said this month that chief executive officer Steve Jobs won’t appear at the Macworld show, fuelling speculation that the company doesn’t have a significant new product to offer.
Apple will probably use the event to show updated versions of its aluminum-cased iMac desktop computers and a new operating system, Brian Marshall, an analyst at Broadpoint.AmTech in San Francisco, said.
Source: Agencies
Qualcomm Inc will replace Infineon Technologies AG as the supplier of the baseband processor -- the chip that translates radio signals into voice and data -- in the new model, analyst Craig Berger said in a report. The phone might debut in the second quarter, he said, citing unidentified industry sources.
Apple may be turning to lower-cost products to fuel sales in developing countries as the US economy shrinks. The company is planning a smaller version of its Shuffle music player and a cheaper MacBook laptop, Berger said. None of the devices is likely to be ready to be unveiled at next week’s Macworld conference, where Apple typically makes product announcements.
“Mobile phone sales figures will continue to grow worldwide in 2009 and most of that growth will come from developing countries,” said Hakim Kriout, a portfolio manager at Grigsby & Associates, a New York-based securities trading firm that owns Apple shares.
“Turning the iPhone into a product line by adding another device for the lower end of the market is the next logical phase.”
Jennifer Bowcock, Apple’s spokeswoman for the iPhone, didn’t immediately return a call or email seeking comment. San Diego-based Qualcomm’s Bertha Agia also didn’t immediately return a phone call.
Wal-Mart, Best Buy
Apple currently sells two versions of the iPhone, an 8GB model for $199 and a 16GB device for $299. Wal-Mart Sto
res Inc, the world’s largest retail chain, began offering the product last week, with its starting price at $197. Best Buy Co, the biggest electronics seller in the US, sells the phone for $189.99 and $289.99.
Berger, who contacted parts suppliers, also said that Apple made fewer iPhones in the fourth quarter than originally estimated. That shortfall will be partially offset by greater first-quarter output, he said. About 10 million phones were available for purchase in the fourth quarter, he estimates.
Apple said this month that chief executive officer Steve Jobs won’t appear at the Macworld show, fuelling speculation that the company doesn’t have a significant new product to offer.
Apple will probably use the event to show updated versions of its aluminum-cased iMac desktop computers and a new operating system, Brian Marshall, an analyst at Broadpoint.AmTech in San Francisco, said.
Source: Agencies
Saturday, January 3, 2009
US credit card cos losses could top $70 billion in 2009
Credit card companies have little to celebrate as many analysts brace for 2009 to be one of the worst years on record for consumer credit.
Losses for the industry could top $70 billion, but it is hard to predict how bad the pain will be.
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 per cent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread.
In short, there's more debt than ever and fewer people are able to pay it.
"In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 per cent of their value in 2008.
The United States is not standing idly by. Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options.
This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers.
"It is hard to see the light at the end of the tunnel," Williams said.
NOWHERE TO HIDE
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JP Morgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual.
Together, these six companies hold around 90 per cent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment.
Credit card companies have reported increased losses. Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November.
Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming Credit Cards quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told reporters in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up.
Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
Losses for the industry could top $70 billion, but it is hard to predict how bad the pain will be.
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 per cent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread.
In short, there's more debt than ever and fewer people are able to pay it.
"In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 per cent of their value in 2008.
The United States is not standing idly by. Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options.
This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers.
"It is hard to see the light at the end of the tunnel," Williams said.
NOWHERE TO HIDE
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JP Morgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual.
Together, these six companies hold around 90 per cent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment.
Credit card companies have reported increased losses. Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November.
Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming Credit Cards quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told reporters in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up.
Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
Here are the Ten US Business Predictions for 2009!
Two words apply well for the year just ended: Whoa, Nelly! With the financial markets in chaos, the jobs landscape littered with layoffs, and the most audacious outpouring of federal funds since the Great Depression, most of us are ready to look forward to cheerier times in 2009.
Here at BusinessWeek, we've again donned our prognostication helmets and took a gander into the old crystal ball for a few (educated?) guesses at what this new year holds in store. True, we failed to predict the two major events of 2008—the election of Barack Obama and the financial meltdown rippling across the world economy. But we did nail one call: 2008 was the year of $100-per-barrel oil—we just didn't anticipate its stunning slide back to $40.
Recession Reigns
Expect more budget cuts, layoffs, shutdowns, bankruptcies, and mergers. Look for beleaguered bookseller Borders Group (BGP) to slip into Chapter 11, and for Barnes & Noble (BKS) to take over some of those stores—but only a few. Also expect Chrysler to merge into General Motors (GM) at a bargain-basement price as Chrysler's private equity owners at Cerberus Capital race to get that investment off their books. With the rapid collapse of oil prices, and the resulting financial pressures, expect two or more mergers among Big Oil. Our best guess?
Royal Dutch Shell (RDSA) buys troubled BP (BP), in part to avoid regulatory issues that could come from merging with a U.S. oil company. There will also be tremendous pressure on wireless phone prices, causing financial headaches for companies like AT&T (T). Newspaper companies' profits will continue to shrink; watch for a billionaire such as financier George Soros or New York Mayor Michael Bloomberg to lead a rescue of The New York Times (NYT), which will become part of a not-for-profit corporation by the end of the year.
Bernanke: Four and No More
President-elect Obama has nowhere to go but down in his approval ratings, so he may lose some popularity points as me makes tough choices in his early months. Also expect to see the last vestiges of the Bush Administration head for the exits. Declaring that his work is done, Federal Reserve Chairman Ben Bernanke will announce he'll leave the Fed upon the expiration of his four-year term as chairman on Jan. 31, 2010.
While mostly not his fault, the recession has hurt his standing with the Obama Administration—and it also has worn him down on a personal level. He'll be succeeded by Lawrence Summers, former Treasury Secretary under the Clinton Administration.
There will also be realignment on the global level. Look for Canada to forge stronger labor and trade ties with Europe in an effort to further unhinge itself from the flailing U.S. economy. Canada also will snub its southern neighbor to strike more energy and resource deals with other countries—especially China, which will continue its ascendance on the world stage in spite of economic setbacks. Also, it's a good bet Vladimir Putin will reassume the Russian presidency.
Oil Rises Again
There's a fair chance for a resurgence in oil prices, even if they dip below $30 in the next few months. Crude is likely to average $60 or $70 per barrel in 2009. OPEC will get its act together and rein in supply, and demand won't shrink as much as speculators had feared.
Still, oil won't spike to the $100-plus range because consumers remain more energy-conscious. Oil companies will continue to invest in major projects as cash-strapped nations will open their doors to foreign investments just as they have done in the past when times are tough. And commodities are no longer the place for speculators to make a fast buck.
Workers Go Creative
Economists agree that further mass layoffs will continue in 2009, and the unemployment rate could reach the double digits. That means workers will turn creative about job opportunities. Look for freelancing and small business applications to explode as laid off workers attempt to strike out on their own. The downturn also is spurring more business and other graduate school applications, and young people will continue to take shelter at universities to ride out the storm.
Bling Takes a Break
Who can afford bling anymore? Who wants to? The ostentatious—eye-popping expense accounts, showy jewelry, McMansions—will be out and frugality will be back in fashion. Suddenly clipping coupons becomes trendy and, fortified by new Web services, hitchhiking stages a comeback. Boxed wine, already a budget sensation in Europe, will take off in the U.S. Look for eBay (EBAY) to enjoy a revival as Americans turn to the underground market to raise money and scour for bargains.
Business Embraces Big Government
Long considered a thorn in the side of commerce, the government will continue to be the apple of the business community's eye. Why? In tough times, Uncle Sam remains the economy's last resort. That doesn't mean there won't be plenty of fights over how to regulate industries and how to create not just Big Government, but also Smart Government.
But by the time all is said and done, the Troubled Assets Relief Program (TARP) funding will go well beyond $700 billion. President Obama will request, and Congress will approve, another several hundred billion in aid. Much of that will go to homeowners, although airlines will probably get a slug of cash as will auto parts makers.
Digital TV Nightmare
Chaos ensues in February when U.S. broadcasters cease analog TV signals, throwing millions of Americans into a dark-screen panic. Despite nearly $1 billion in spending on educational campaigns alerting Americans to the change, surveys show that many of the 40 million or so likely to be affected still don't realize what the digital broadcast shift means to them. The government is offering a $40 subsidy to help pay for converter boxes—but plenty of Americans still using older analog TVs have no idea.
3D Returns in a Big Way
Recession notwithstanding, innovations in 3D technology will flourish. Computing technology firm NVIDIA (NVDA) is bringing realistic 3D effects on the desktop into the market this year, and more movie theatres will have IMAX screens. Consumers also will get a peek at James Cameron's much ballyhooed Avatar, a 3D movie and game the storied producer has been slaving over since 2004.
Consumers Fight Back
Tapped out consumers will look for advocates in Congress for protection against predatory or deceptive practices in areas from Credit-card fees to mortgages to exorbitant charges for text messaging by wireless companies. Legislation like the Credit Cardholders' Bill of Rights, which passed in the House in September, will have a better shot at passing the Democrat-controlled Congress and being signed by President Obama.
Housing Hits Bottom, At Last
Super-low mortgage rates—engineered by the government to help zap the economy—finally motivate us to shop for houses again. Prices will remain weak, as people who had kept their houses off the market suddenly put them up for sale as soon as they see a little buying interest. Expect home prices to continue to fall through the end of 2009. While the decline will mean trouble for some, for others, it's a golden opportunity to buy. By early 2010 credit and confidence in the market will be restored, and smart investors will be pleased to see the housing market start to recover.
Source: Economic Times
Here at BusinessWeek, we've again donned our prognostication helmets and took a gander into the old crystal ball for a few (educated?) guesses at what this new year holds in store. True, we failed to predict the two major events of 2008—the election of Barack Obama and the financial meltdown rippling across the world economy. But we did nail one call: 2008 was the year of $100-per-barrel oil—we just didn't anticipate its stunning slide back to $40.
Recession Reigns
Expect more budget cuts, layoffs, shutdowns, bankruptcies, and mergers. Look for beleaguered bookseller Borders Group (BGP) to slip into Chapter 11, and for Barnes & Noble (BKS) to take over some of those stores—but only a few. Also expect Chrysler to merge into General Motors (GM) at a bargain-basement price as Chrysler's private equity owners at Cerberus Capital race to get that investment off their books. With the rapid collapse of oil prices, and the resulting financial pressures, expect two or more mergers among Big Oil. Our best guess?
Royal Dutch Shell (RDSA) buys troubled BP (BP), in part to avoid regulatory issues that could come from merging with a U.S. oil company. There will also be tremendous pressure on wireless phone prices, causing financial headaches for companies like AT&T (T). Newspaper companies' profits will continue to shrink; watch for a billionaire such as financier George Soros or New York Mayor Michael Bloomberg to lead a rescue of The New York Times (NYT), which will become part of a not-for-profit corporation by the end of the year.
Bernanke: Four and No More
President-elect Obama has nowhere to go but down in his approval ratings, so he may lose some popularity points as me makes tough choices in his early months. Also expect to see the last vestiges of the Bush Administration head for the exits. Declaring that his work is done, Federal Reserve Chairman Ben Bernanke will announce he'll leave the Fed upon the expiration of his four-year term as chairman on Jan. 31, 2010.
While mostly not his fault, the recession has hurt his standing with the Obama Administration—and it also has worn him down on a personal level. He'll be succeeded by Lawrence Summers, former Treasury Secretary under the Clinton Administration.
There will also be realignment on the global level. Look for Canada to forge stronger labor and trade ties with Europe in an effort to further unhinge itself from the flailing U.S. economy. Canada also will snub its southern neighbor to strike more energy and resource deals with other countries—especially China, which will continue its ascendance on the world stage in spite of economic setbacks. Also, it's a good bet Vladimir Putin will reassume the Russian presidency.
Oil Rises Again
There's a fair chance for a resurgence in oil prices, even if they dip below $30 in the next few months. Crude is likely to average $60 or $70 per barrel in 2009. OPEC will get its act together and rein in supply, and demand won't shrink as much as speculators had feared.
Still, oil won't spike to the $100-plus range because consumers remain more energy-conscious. Oil companies will continue to invest in major projects as cash-strapped nations will open their doors to foreign investments just as they have done in the past when times are tough. And commodities are no longer the place for speculators to make a fast buck.
Workers Go Creative
Economists agree that further mass layoffs will continue in 2009, and the unemployment rate could reach the double digits. That means workers will turn creative about job opportunities. Look for freelancing and small business applications to explode as laid off workers attempt to strike out on their own. The downturn also is spurring more business and other graduate school applications, and young people will continue to take shelter at universities to ride out the storm.
Bling Takes a Break
Who can afford bling anymore? Who wants to? The ostentatious—eye-popping expense accounts, showy jewelry, McMansions—will be out and frugality will be back in fashion. Suddenly clipping coupons becomes trendy and, fortified by new Web services, hitchhiking stages a comeback. Boxed wine, already a budget sensation in Europe, will take off in the U.S. Look for eBay (EBAY) to enjoy a revival as Americans turn to the underground market to raise money and scour for bargains.
Business Embraces Big Government
Long considered a thorn in the side of commerce, the government will continue to be the apple of the business community's eye. Why? In tough times, Uncle Sam remains the economy's last resort. That doesn't mean there won't be plenty of fights over how to regulate industries and how to create not just Big Government, but also Smart Government.
But by the time all is said and done, the Troubled Assets Relief Program (TARP) funding will go well beyond $700 billion. President Obama will request, and Congress will approve, another several hundred billion in aid. Much of that will go to homeowners, although airlines will probably get a slug of cash as will auto parts makers.
Digital TV Nightmare
Chaos ensues in February when U.S. broadcasters cease analog TV signals, throwing millions of Americans into a dark-screen panic. Despite nearly $1 billion in spending on educational campaigns alerting Americans to the change, surveys show that many of the 40 million or so likely to be affected still don't realize what the digital broadcast shift means to them. The government is offering a $40 subsidy to help pay for converter boxes—but plenty of Americans still using older analog TVs have no idea.
3D Returns in a Big Way
Recession notwithstanding, innovations in 3D technology will flourish. Computing technology firm NVIDIA (NVDA) is bringing realistic 3D effects on the desktop into the market this year, and more movie theatres will have IMAX screens. Consumers also will get a peek at James Cameron's much ballyhooed Avatar, a 3D movie and game the storied producer has been slaving over since 2004.
Consumers Fight Back
Tapped out consumers will look for advocates in Congress for protection against predatory or deceptive practices in areas from Credit-card fees to mortgages to exorbitant charges for text messaging by wireless companies. Legislation like the Credit Cardholders' Bill of Rights, which passed in the House in September, will have a better shot at passing the Democrat-controlled Congress and being signed by President Obama.
Housing Hits Bottom, At Last
Super-low mortgage rates—engineered by the government to help zap the economy—finally motivate us to shop for houses again. Prices will remain weak, as people who had kept their houses off the market suddenly put them up for sale as soon as they see a little buying interest. Expect home prices to continue to fall through the end of 2009. While the decline will mean trouble for some, for others, it's a golden opportunity to buy. By early 2010 credit and confidence in the market will be restored, and smart investors will be pleased to see the housing market start to recover.
Source: Economic Times
Oil falls to below $42 a barrel in Asia
Oil prices fell below $42 a barrel Friday in Asia after Russia and Ukraine said a dispute over natural gas payments wouldn't affect shipments to Western Europe.
Light, sweet crude for February delivery fell $3.05 to $41.55 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Singapore. Trading was closed Thursday for New Year's Day.
The contract rose $5.57 on Wednesday, the last trading day of 2008, to settle at $44.60 after Russia threatened to cut off natural gas supplies to Ukraine. Russia followed through with that threat Thursday, though both countries pledged they would keep supplies to the rest of Europe flowing.
Russia's gas monopoly Gazprom shut off gas supplies after talks broke down over Ukraine's payments for past shipments and a new price contract for 2009. Gazprom said it had boosted natural gas deliveries through other pipelines to Western Europe.
The European Union depends on Russia for about a quarter of its gas, with some 80 per cent of that delivered through pipelines controlled by Ukraine.
Concerns that the week-old conflict between Israel and Hamas in Gaza could disrupt supplies in the oil-rich Middle East helped keep prices from falling further. Israeli troops massed on the Gaza border Thursday in preparation for a possible ground offensive.
Oil prices began 2009 the same way they spent the most of the second half of 2008 _ going down. Crude peaked at $147.27 a barrel in July before plummeting to as low as $33.87 on Dec. 19.
Prices fell 54 per cent last year after soaring 57 per cent in 2007.
Investors remain focused on the slowing global economy and its impact on crude demand. The Department of Energy said earlier this week that U.S. fuel consumption fell 3.7 per cent in the four weeks ended Dec. 26 from a year earlier.
In other Nymex trading, gasoline futures fell 3.55 cents to $1.03 a gallon. Heating oil dropped 3.55 cents to $1.41 a gallon while natural gas for February delivery slid 2.2 cents to $5.60 per 1,000 cubic feet.
In London, February Brent crude fell $3.31 to $42.28 a barrel on the ICE Futures exchange.
Source: Agencies
Light, sweet crude for February delivery fell $3.05 to $41.55 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Singapore. Trading was closed Thursday for New Year's Day.
The contract rose $5.57 on Wednesday, the last trading day of 2008, to settle at $44.60 after Russia threatened to cut off natural gas supplies to Ukraine. Russia followed through with that threat Thursday, though both countries pledged they would keep supplies to the rest of Europe flowing.
Russia's gas monopoly Gazprom shut off gas supplies after talks broke down over Ukraine's payments for past shipments and a new price contract for 2009. Gazprom said it had boosted natural gas deliveries through other pipelines to Western Europe.
The European Union depends on Russia for about a quarter of its gas, with some 80 per cent of that delivered through pipelines controlled by Ukraine.
Concerns that the week-old conflict between Israel and Hamas in Gaza could disrupt supplies in the oil-rich Middle East helped keep prices from falling further. Israeli troops massed on the Gaza border Thursday in preparation for a possible ground offensive.
Oil prices began 2009 the same way they spent the most of the second half of 2008 _ going down. Crude peaked at $147.27 a barrel in July before plummeting to as low as $33.87 on Dec. 19.
Prices fell 54 per cent last year after soaring 57 per cent in 2007.
Investors remain focused on the slowing global economy and its impact on crude demand. The Department of Energy said earlier this week that U.S. fuel consumption fell 3.7 per cent in the four weeks ended Dec. 26 from a year earlier.
In other Nymex trading, gasoline futures fell 3.55 cents to $1.03 a gallon. Heating oil dropped 3.55 cents to $1.41 a gallon while natural gas for February delivery slid 2.2 cents to $5.60 per 1,000 cubic feet.
In London, February Brent crude fell $3.31 to $42.28 a barrel on the ICE Futures exchange.
Source: Agencies
Teja Raju appointed new CEO of Maytas Infra
Maytas Infra, promoted by Ramalinga Raju, Chairman of Satyam Computer Services and his sons, has appointed Teja Raju as the new Chief Executive Officer of the company. He will be assuming the role of a CEO in addition to he present charge he holds as the Vice President of the company, said a spokeswoman of the company.
The move comes close on the heels of CEO of Maytas Infra P K Madhav's arrest, for allegedly defaulting payments to investors of Nagarjuna Finance Limited (NFL) to the tune of Rs 100 crore. PK Madhav was on the Board when NFL raised money.
"PK Madhav is presently under judicial remand and Teja Raju will be the CEO of the company till the law takes course," said the spokeswoman of Maytas Infra.
Satyam Computer Services was to acquire 51% stake in Maytas Infra, but was aborted following investor's ire to call off the deal. The promotes of Maytas Infra including Ramalinga Raju and his sons hold 36.64 per cent stake in the company.
The move comes close on the heels of CEO of Maytas Infra P K Madhav's arrest, for allegedly defaulting payments to investors of Nagarjuna Finance Limited (NFL) to the tune of Rs 100 crore. PK Madhav was on the Board when NFL raised money.
"PK Madhav is presently under judicial remand and Teja Raju will be the CEO of the company till the law takes course," said the spokeswoman of Maytas Infra.
Satyam Computer Services was to acquire 51% stake in Maytas Infra, but was aborted following investor's ire to call off the deal. The promotes of Maytas Infra including Ramalinga Raju and his sons hold 36.64 per cent stake in the company.
Will US Treasury mull Citi-style rescues to auto giants?
The US Treasury Department has given itself free rein in deciding the rescues of companies in the finance and auto sectors, according to two Treasury statements published this week.
The Treasury on Friday released guidelines for its Targeted Investment Program (TIP), part of emergency legislation enacted in early October to ease a credit crunch from the worst global financial meltdown since the Great Depression.
In the statement, the Treasury outlined the principles of the program under which it rescued ailing banking giant Citigroup on November 23.
Under TIP, the Treasury said it would determine the eligibility of participants and the allocation of resources "on a case-by-case basis."
"Treasury may invest in any financial instrument, including debt, equity, or warrants, that the secretary of the Treasury determines to be a troubled asset, after consultation with the chairman of the board of governors of the Federal Reserve System and notice to Congress," the department said.
Among the criteria in determining a financial firm's eligibility is "whether the institution is sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to credit markets ... or lead to similar losses of confidence or financial market stability that could materially weaken overall economic performance."
Wednesday, the Treasury Department posted on its website a description of its Automotive Industry Financing Program, justifying after the fact its decision to lend a combined 13.4 billion dollars in TARP funds to embattled automakers General Motors and Chrysler to stave off their imminent collapse.
"The objective of this program is to prevent a significant disruption of the American automotive industry that poses a systemic risk to financial market stability and will have a negative effect on the real economy of the United States," it said.
Similar to its approach to the finance industry, the Treasury said it would determine eligibility of participants in the program on a case-by-case basis.
The Treasury announced on December 19 a massive rescue of cash-strapped GM and Chrysler, facing a threat of imminent bankruptcy that could create economic chaos and throw millions out of work across the country.
Source: Agencies
The Treasury on Friday released guidelines for its Targeted Investment Program (TIP), part of emergency legislation enacted in early October to ease a credit crunch from the worst global financial meltdown since the Great Depression.
In the statement, the Treasury outlined the principles of the program under which it rescued ailing banking giant Citigroup on November 23.
Under TIP, the Treasury said it would determine the eligibility of participants and the allocation of resources "on a case-by-case basis."
"Treasury may invest in any financial instrument, including debt, equity, or warrants, that the secretary of the Treasury determines to be a troubled asset, after consultation with the chairman of the board of governors of the Federal Reserve System and notice to Congress," the department said.
Among the criteria in determining a financial firm's eligibility is "whether the institution is sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to credit markets ... or lead to similar losses of confidence or financial market stability that could materially weaken overall economic performance."
Wednesday, the Treasury Department posted on its website a description of its Automotive Industry Financing Program, justifying after the fact its decision to lend a combined 13.4 billion dollars in TARP funds to embattled automakers General Motors and Chrysler to stave off their imminent collapse.
"The objective of this program is to prevent a significant disruption of the American automotive industry that poses a systemic risk to financial market stability and will have a negative effect on the real economy of the United States," it said.
Similar to its approach to the finance industry, the Treasury said it would determine eligibility of participants in the program on a case-by-case basis.
The Treasury announced on December 19 a massive rescue of cash-strapped GM and Chrysler, facing a threat of imminent bankruptcy that could create economic chaos and throw millions out of work across the country.
Source: Agencies
India gets more room to grow with Stimulus-II package
The government on Friday announced the second and final installment of its fiscal stimulus package. Complementing monetary easing by the Reserve Bank of India (RBI), the Centre enhanced the spending power of states with specific measures to boost credit availability.
It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles.
Credit availability has been hiked in a variety of ways, the interest ceiling on external commercial borrowings has been removed; the cap on foreign institutional investments in the domestic corporate debt market has been jacked up two-and-a-half times from $6 billion to $15 billion; a special purpose vehicle is being created to lend to non-banking finance
companies to the tune of Rs 25,000 crore; Indian Infrastructure Finance Company is being permitted to raise another Rs 30,000 crore by means of tax-free bonds, and states are allowed to borrow an additional Rs 30,000 crore from the market.
In addition, public sector banks would be given additional capital to the extent of Rs 20,000 crore over the next two years, so they can lend roughly 10 times as much additionally.
The latest measures, which come in less than a month after the first package was unveiled on December 7, are aimed at benefiting housing, NBFCs that lend to infrastructure and finance commercial vehicles.
Announcing the measures, Planning Commission deputy chairman Montek Singh Ahluwalia said: “By no measure can we insulate our economy from slower growth, when the external factors are of such enormous magnitude. However, we will be able to manage a 7% growth this fiscal through these measures.”
Mr Singh added that these contra-cyclical steps and fiscal policy “in these truly exceptional circumstances” would ensure that growth momentum would be maintained next fiscal, which, he said, would be tougher than this year. But such counter-cyclical fiscal activism has to pay a price in the form of a higher fiscal deficit.
“Considering the implementation of the Sixth Pay Commission, the consensus within the government was a fiscal deficit of 3%. The mid-term review of the economy said that the fiscal deficit would be over 5%, excluding the below-the-line items such as fertiliser and oil subsidy. If we include these items, the fiscal deficit could exceed by 3% of gross domestic product, what was being targeted,” said Mr Singh.
The budgeted target for the fiscal deficit is 2.5% of GDP. The global financial meltdown has already forced the US and some other major developed countries into recession, and hit India too. This year, the economic growth is expected to be around 7%, down from the 9% average of the past three years.
The first stimulus package, estimated at over Rs 30,000 crore, included a 4% across-the-board cut in excise duty for the remaining part of the financial year and an additional Plan spending of Rs 20,000 crore.
“Because of slowing industrial output and resultant tax receipts, the government will have to forego about Rs 40,000 crore this fiscal. This is a rough estimate in a dynamic situation and improved production because of the steps taken could offset part of it,” said finance secretary Arun Ramanathan.
To facilitate access to funds for the housing sector, companies developing integrated townships have been allowed to borrow overseas with prior approval of RBI. The ceiling on interest rates for all overseas borrowings has been removed to provide flexibility to companies to borrow abroad.
Source: Agencies
It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles.
Credit availability has been hiked in a variety of ways, the interest ceiling on external commercial borrowings has been removed; the cap on foreign institutional investments in the domestic corporate debt market has been jacked up two-and-a-half times from $6 billion to $15 billion; a special purpose vehicle is being created to lend to non-banking finance
companies to the tune of Rs 25,000 crore; Indian Infrastructure Finance Company is being permitted to raise another Rs 30,000 crore by means of tax-free bonds, and states are allowed to borrow an additional Rs 30,000 crore from the market.
In addition, public sector banks would be given additional capital to the extent of Rs 20,000 crore over the next two years, so they can lend roughly 10 times as much additionally.
The latest measures, which come in less than a month after the first package was unveiled on December 7, are aimed at benefiting housing, NBFCs that lend to infrastructure and finance commercial vehicles.
Announcing the measures, Planning Commission deputy chairman Montek Singh Ahluwalia said: “By no measure can we insulate our economy from slower growth, when the external factors are of such enormous magnitude. However, we will be able to manage a 7% growth this fiscal through these measures.”
Mr Singh added that these contra-cyclical steps and fiscal policy “in these truly exceptional circumstances” would ensure that growth momentum would be maintained next fiscal, which, he said, would be tougher than this year. But such counter-cyclical fiscal activism has to pay a price in the form of a higher fiscal deficit.
“Considering the implementation of the Sixth Pay Commission, the consensus within the government was a fiscal deficit of 3%. The mid-term review of the economy said that the fiscal deficit would be over 5%, excluding the below-the-line items such as fertiliser and oil subsidy. If we include these items, the fiscal deficit could exceed by 3% of gross domestic product, what was being targeted,” said Mr Singh.
The budgeted target for the fiscal deficit is 2.5% of GDP. The global financial meltdown has already forced the US and some other major developed countries into recession, and hit India too. This year, the economic growth is expected to be around 7%, down from the 9% average of the past three years.
The first stimulus package, estimated at over Rs 30,000 crore, included a 4% across-the-board cut in excise duty for the remaining part of the financial year and an additional Plan spending of Rs 20,000 crore.
“Because of slowing industrial output and resultant tax receipts, the government will have to forego about Rs 40,000 crore this fiscal. This is a rough estimate in a dynamic situation and improved production because of the steps taken could offset part of it,” said finance secretary Arun Ramanathan.
To facilitate access to funds for the housing sector, companies developing integrated townships have been allowed to borrow overseas with prior approval of RBI. The ceiling on interest rates for all overseas borrowings has been removed to provide flexibility to companies to borrow abroad.
Source: Agencies
Citigroup to limit top executives' pay, bonuses
The recipient of a $45 billion infusion from the US government, Citigroup Inc on Wednesday said it would place strict limits on management's compensation, including no severance for its top five executives.
Under pressure from lawmakers, Citigroup Chief Executive Vikram Pandit and Chairman Win Bischoff opted to forego their 2008 bonuses. The company's new executive pay limits also feature a clawback provision in which Citigroup can recoup executive pay ``that over time proves to be based on inaccurate financial or other information.''
The compensation restrictions come as the New York-based bank signed an agreement with the federal government to receive an additional $20 billion on top of the $25 billion it received in October. Restrictions on expenses, including the use of corporate aircraft and costs related to entertainment or holiday parties, also will be put in place.
Part of the $700 billion bailout program authorized by Congress, the capital infusions to Citigroup and dozens of other banks are the government's main tool for attempting to stabilize the financial services sector and spur lending between financial institutions and to customers.
Citi said it will issue $20 billion in preferred shares to the Treasury Department, and warrants to buy about 188.5 million shares of common stock at a strike price of $10.61 a share, according to a filing with the Securities and Exchange Commission.
In doing so, members of the company's senior leadership and executive committees will see pay cuts and limits on severance packages, according to a memo sent to Citigroup staff Wednesday.
In the memo, Pandit announced measures that will tie executive pay more closely to performance.
``We are fully committed to paying for high-performance people at all levels of the organization and at competitive rates, in the context of the company's overall financial results,'' Pandit said.
The most senior leaders will be affected the most, Citi said. Pandit said he and Bischoff thought it ``fair'' to forgo their bonuses ``in light of the challenges of the year and the need for compensation elsewhere in the organization,'' the memo said. Robert Rubin, a Citigroup adviser and former Treasury secretary, also will decline a bonus.
Pandit added that senior leadership committee members will see their bonuses ``substantially reduced,'' while executive committee members will have larger proportions of their bonuses in deferred compensation than other employees.
As a condition for receiving government money, lawmakers are making companies reel in bonuses. The congressional backlash and public outrage followed a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firms received taxpayer money.
Last month, American International Group Inc. said it would be limiting how much it pays its top executives, including granting a $1 salary for 2008 and 2009 to its CEO Edward Liddy.
New York-based AIG has received a roughly $150 billion rescue package from the federal government.
Shares of Citi fell 9 cents to $6.71 Wednesday. The company's stock shed more than three-fourths of its value in 2008.
Source: Agencies
Under pressure from lawmakers, Citigroup Chief Executive Vikram Pandit and Chairman Win Bischoff opted to forego their 2008 bonuses. The company's new executive pay limits also feature a clawback provision in which Citigroup can recoup executive pay ``that over time proves to be based on inaccurate financial or other information.''
The compensation restrictions come as the New York-based bank signed an agreement with the federal government to receive an additional $20 billion on top of the $25 billion it received in October. Restrictions on expenses, including the use of corporate aircraft and costs related to entertainment or holiday parties, also will be put in place.
Part of the $700 billion bailout program authorized by Congress, the capital infusions to Citigroup and dozens of other banks are the government's main tool for attempting to stabilize the financial services sector and spur lending between financial institutions and to customers.
Citi said it will issue $20 billion in preferred shares to the Treasury Department, and warrants to buy about 188.5 million shares of common stock at a strike price of $10.61 a share, according to a filing with the Securities and Exchange Commission.
In doing so, members of the company's senior leadership and executive committees will see pay cuts and limits on severance packages, according to a memo sent to Citigroup staff Wednesday.
In the memo, Pandit announced measures that will tie executive pay more closely to performance.
``We are fully committed to paying for high-performance people at all levels of the organization and at competitive rates, in the context of the company's overall financial results,'' Pandit said.
The most senior leaders will be affected the most, Citi said. Pandit said he and Bischoff thought it ``fair'' to forgo their bonuses ``in light of the challenges of the year and the need for compensation elsewhere in the organization,'' the memo said. Robert Rubin, a Citigroup adviser and former Treasury secretary, also will decline a bonus.
Pandit added that senior leadership committee members will see their bonuses ``substantially reduced,'' while executive committee members will have larger proportions of their bonuses in deferred compensation than other employees.
As a condition for receiving government money, lawmakers are making companies reel in bonuses. The congressional backlash and public outrage followed a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firms received taxpayer money.
Last month, American International Group Inc. said it would be limiting how much it pays its top executives, including granting a $1 salary for 2008 and 2009 to its CEO Edward Liddy.
New York-based AIG has received a roughly $150 billion rescue package from the federal government.
Shares of Citi fell 9 cents to $6.71 Wednesday. The company's stock shed more than three-fourths of its value in 2008.
Source: Agencies
Toyota developing solar powered green car
Toyota Motor Corp is secretly developing a vehicle that will be powered solely by solar energy in an effort to turn around its struggling business with a futuristic ecological car, a top business daily reported.
The Nikkei newspaper, however, said it will be years before the planned vehicle will be available on the market. Toyota's offices were closed Thursday and officials were not immediately available for comment.
According to The Nikkei, Toyota is working on an electric vehicle that will get some of its power from solar cells equipped on the vehicle, and that can be recharged with electricity generated from solar panels on the roofs of homes. The automaker later hopes to develop a model totally powered by solar cells on the vehicle, the newspaper said without citing sources.
The solar car is part of efforts by Japan's top automaker to grow during hard times, The Nikkei said.
In December, Toyota stunned the nation by announcing it will slip into its first operating loss in 70 years, as it gets battered by a global slump, especially in the key U.S. market. The surging yen has also hurt the earnings of Japanese automakers.
Still, Toyota is a leader in green technology and executives have stressed they won't cut back on environmental research despite its troubles.
Toyota, the manufacturer of the Lexus luxury car and Camry sedan, has already begun using solar panels at its Tsutsumi plant in central Japan to produce some of its own electricity.
Source: Agencies
The Nikkei newspaper, however, said it will be years before the planned vehicle will be available on the market. Toyota's offices were closed Thursday and officials were not immediately available for comment.
According to The Nikkei, Toyota is working on an electric vehicle that will get some of its power from solar cells equipped on the vehicle, and that can be recharged with electricity generated from solar panels on the roofs of homes. The automaker later hopes to develop a model totally powered by solar cells on the vehicle, the newspaper said without citing sources.
The solar car is part of efforts by Japan's top automaker to grow during hard times, The Nikkei said.
In December, Toyota stunned the nation by announcing it will slip into its first operating loss in 70 years, as it gets battered by a global slump, especially in the key U.S. market. The surging yen has also hurt the earnings of Japanese automakers.
Still, Toyota is a leader in green technology and executives have stressed they won't cut back on environmental research despite its troubles.
Toyota, the manufacturer of the Lexus luxury car and Camry sedan, has already begun using solar panels at its Tsutsumi plant in central Japan to produce some of its own electricity.
Source: Agencies
Microsoft to axe 15,000 jobs this January
The world's top software firm, Microsoft, is planning a massive reduction in its workforce where up to 15,000 jobs may be axed this month, says a media report.
"Microsoft is preparing to announce the first wide scale layoffs in its 32-year history, with up to 15,000 jobs at risk, according to some predictions," The Times said in a report published online.
Speculation about job cuts was triggered by a report by Fudzilla, a technology blog site, which said employees were told that the software group was preparing for major layoffs from its global operations on January 15, it added.
Earlier, a brokerage firm Oppenheimer & Co's analyst Brad Reback had asked Microsoft to cut its workforce by 10% or about 9,100 employees.
"Such layoff exercise "would be a healthy move for the company," Reback added. Microsoft had close to 91,000 employees on its payrolls at end of July-September quarter.
Further, The Times report stated that the news of job losses came amid the company being forced to apologise for an embarrassing hiccup with its Zune digital music player.
A bug in the device's internal clock in the original 30-gigabyte version failed to cope with the last day of the leap year and thousands of owners were left with a frozen screen on December 31.
The report quoted Microsoft statement as saying, "the issue should be resolved over the next 24 hours as the time change moves to January 1, 2009. We expect the internal clock on the Zune 30 GB devices will automatically reset."
Besides, Microsoft is scheduled to release its second quarter results for the fiscal year 2008-09 on January 22.
Battling the economic crisis, companies in their bid to save costs, have announced over one lakh job cuts in December in the US.
Source: Agencies
"Microsoft is preparing to announce the first wide scale layoffs in its 32-year history, with up to 15,000 jobs at risk, according to some predictions," The Times said in a report published online.
Speculation about job cuts was triggered by a report by Fudzilla, a technology blog site, which said employees were told that the software group was preparing for major layoffs from its global operations on January 15, it added.
Earlier, a brokerage firm Oppenheimer & Co's analyst Brad Reback had asked Microsoft to cut its workforce by 10% or about 9,100 employees.
"Such layoff exercise "would be a healthy move for the company," Reback added. Microsoft had close to 91,000 employees on its payrolls at end of July-September quarter.
Further, The Times report stated that the news of job losses came amid the company being forced to apologise for an embarrassing hiccup with its Zune digital music player.
A bug in the device's internal clock in the original 30-gigabyte version failed to cope with the last day of the leap year and thousands of owners were left with a frozen screen on December 31.
The report quoted Microsoft statement as saying, "the issue should be resolved over the next 24 hours as the time change moves to January 1, 2009. We expect the internal clock on the Zune 30 GB devices will automatically reset."
Besides, Microsoft is scheduled to release its second quarter results for the fiscal year 2008-09 on January 22.
Battling the economic crisis, companies in their bid to save costs, have announced over one lakh job cuts in December in the US.
Source: Agencies
Friday, January 2, 2009
Kingfisher slashes air fares between 21 to 65 per cent
Kingfisher Airlines said it had slashed air fares between 21 per cent and 65 per cent on various routes across its network with effect from January 1, 2009.
"This is consistent with Kingfisher Airlines' mission to aggressively pursue increase in market share and to deliver India's only five star experience at highly competitive fares", a Kingfisher press statement said here on Friday.
The airlines will also offer significant discounts to its traditional corporate customer base, it said.
Its frequent flier programme, King Club, will now offer incentives and rewards including free overseas travel on its new launched international routes.
"The declining prices of ATF facilitate such consumer-benefitting initiatives that will also stimulate the industry", CEO and Chairman of the airlines, Vijay Mallya said in the statement.
"We will aggressively pursue sales and share and this will help sustain increased load factors in the shoulder season between February and April", he said.
Source: Agencies
V
"This is consistent with Kingfisher Airlines' mission to aggressively pursue increase in market share and to deliver India's only five star experience at highly competitive fares", a Kingfisher press statement said here on Friday.
The airlines will also offer significant discounts to its traditional corporate customer base, it said.
Its frequent flier programme, King Club, will now offer incentives and rewards including free overseas travel on its new launched international routes.
"The declining prices of ATF facilitate such consumer-benefitting initiatives that will also stimulate the industry", CEO and Chairman of the airlines, Vijay Mallya said in the statement.
"We will aggressively pursue sales and share and this will help sustain increased load factors in the shoulder season between February and April", he said.
Source: Agencies
V
Job losses would be temporary, says Montek Ahluwalia
The government on Friday said the current economic situation could lead to some job losses, but these would only be temporary with economy poised to grow at seven per cent this fiscal.
"Certainly in sectors that are badly affected, if we are not able to completely counter the effect of recession, there may be some job losses. We hope they will be temporary," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters while briefing on the stimulus package.
He said the idea behind this package is to ensure that economy does not slow down too much.
Ahluwalia said the economy is expected to grow at seven per cent this fiscal and that will be a good performance.
"So, when I say that this package will hopefully generate a growth rate of seven per cent, that is a growth rate that is certainly consistent with the total number of jobs in the economy increasing," he said.
The Planning Commission Deputy Chairman, however, said it is not possible to completely counter the impact of an external slowdown.
"But with this package what we are doing is minimising the pain on that score," he added.
Source: Agencies
"Certainly in sectors that are badly affected, if we are not able to completely counter the effect of recession, there may be some job losses. We hope they will be temporary," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters while briefing on the stimulus package.
He said the idea behind this package is to ensure that economy does not slow down too much.
Ahluwalia said the economy is expected to grow at seven per cent this fiscal and that will be a good performance.
"So, when I say that this package will hopefully generate a growth rate of seven per cent, that is a growth rate that is certainly consistent with the total number of jobs in the economy increasing," he said.
The Planning Commission Deputy Chairman, however, said it is not possible to completely counter the impact of an external slowdown.
"But with this package what we are doing is minimising the pain on that score," he added.
Source: Agencies
Nasscom no authority to probe Satyam-WB episode, reacts Som Mittal
Reacting to a request by an IT-BPO union UNITES to conduct inquiry into the Satyam-World Bank fiasco, IT industry body Nasscom on Friday said that it has no authority to look into the matter.
"It is a company-level issue and we do not have any authority to conduct an inquiry into the matter," Nasscom President Som Mittal said, adding that he was yet to received a formal request in this regard.
Fearing that the image of the Indian IT firms globally will take a beating following the Satyam fiasco, IT-BPO union UNITES has urged Nasscom to institute an inquiry in association with the World Bank on Satyam,which has been banned from doing business with the bank for eight years.
"We want the inquiry to look into the possibility that some vested interests, who want to tarnish the good name and reputation of the Indian IT companies," Prithviraj Lekkad, President, UNITES Professionals India told PTI.
Nasscom and the government would have to decisively intervene and get to the bottom of the World Bank findings on Satyam and clear the fair name of Indian firms, including Satyam, and the integrity of the staff working for them abroad, he added.
The Bank had said on December 23said, "Satyam was declared ineligible for contracts for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charges for its sub-contractors.
Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."
Source: Agencies
"It is a company-level issue and we do not have any authority to conduct an inquiry into the matter," Nasscom President Som Mittal said, adding that he was yet to received a formal request in this regard.
Fearing that the image of the Indian IT firms globally will take a beating following the Satyam fiasco, IT-BPO union UNITES has urged Nasscom to institute an inquiry in association with the World Bank on Satyam,which has been banned from doing business with the bank for eight years.
"We want the inquiry to look into the possibility that some vested interests, who want to tarnish the good name and reputation of the Indian IT companies," Prithviraj Lekkad, President, UNITES Professionals India told PTI.
Nasscom and the government would have to decisively intervene and get to the bottom of the World Bank findings on Satyam and clear the fair name of Indian firms, including Satyam, and the integrity of the staff working for them abroad, he added.
The Bank had said on December 23said, "Satyam was declared ineligible for contracts for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charges for its sub-contractors.
Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."
Source: Agencies
Thursday, January 1, 2009
Indian companies to hire 2,50,000 in next few months
There is a good news for job seekers, with the companies planning to hire more than 2,50,000 new employees over the next months -- making the new year a welcome change from the gloom of 2008 in the job market.
While the proposed over 2.5 lakh hiring is mostly for the financial services industry, the industry experts believe that the overall job market scenario is also set for a recovery in the second half of the year.
Topping the list of the companies planning to hire big include public sector banking giants like State Bank of India and Punjab National Bank as well as insurance firms such as Anil Ambani group's Reliance Life, SBI Life, Metlife, Max New York Life.
Even some BPOs and healthcare firms like ACS and Accentia are planning to hire thousands of people in the coming days.
The proposed hirings include more than one lakh of full- time employees and about 1.5 lakh in the part-time positions with the insurance companies
.
Among other sectors, manufacturing and export-oriented businesses are, however, likely to continue to witness some pressure in the next few months, after huge job losses seen during 2008.
HR consultancy major Hewitt Associates believes that sectors like insurance, telecom (where new licensees are entering), infrastructure and Special Economic Zones may look for fresh hirings in 2009, being the major beneficiaries of the government's stimulus plans.
However, the hiring outlook remains uncertain for sectors like real estate, textile and retail sectors, it believes.
Another global HR consultancy Mercer believes that hiring plans by the companies would depend on their business prospects in the coming year.
Among the major companies planning to hire big time, SBI is planning to recruit 25,000 employees by March. Besides, its life insurance venture, SBI Life, is looking to hire 13,000 agents and 200 sales managers.
Besides, the country's second largest public sector lender PNB and Union Bank are also hiring 5,000 people each, while Indian Overseas Bank, South Indian Bank and IDBI Bank are bringing on board 1,000, 12,000 and 650 employees, respectively.
Among life insurance firms, Reliance Life is hiring 90,000 agents and 2,500 managers, Metlife has announced plans to hire 30,000 agents and 2,000 managers and Max New York Life is recruiting 30,000 agents and 14,000 managers.
Among other sectors, BPO major ACS is hiring 1,000 employees, while health care solutions provider Accentia plans to add 5,000 staff to its payrolls.
" Exponential growth had resulted in a culture where mediocrity flourished. 2009 is an opportunity for companies to bring the performance orientation back into how they manage their human capital," Mercer India Information Product Solution business leader Gangapriya Chakraverti said.
Global HR consultancy major Manpower believes that hiring outlook for the first quarter of 2009 was the weakest since 2005.
Expressing similar views, leading job portal Naukri.com's owner InfoEdge India CFO Ambarish Raghuvanshi told the media that hiring was going to be slow in the first quarter of 2009 as recruitment trends are impacted by the slowdown in economic growth and decline in business confidence in the country.
He, however, added that some improvement was likely in the second half of calendar year 2009.
Source: Agencies
While the proposed over 2.5 lakh hiring is mostly for the financial services industry, the industry experts believe that the overall job market scenario is also set for a recovery in the second half of the year.
Topping the list of the companies planning to hire big include public sector banking giants like State Bank of India and Punjab National Bank as well as insurance firms such as Anil Ambani group's Reliance Life, SBI Life, Metlife, Max New York Life.
Even some BPOs and healthcare firms like ACS and Accentia are planning to hire thousands of people in the coming days.
The proposed hirings include more than one lakh of full- time employees and about 1.5 lakh in the part-time positions with the insurance companies
.
Among other sectors, manufacturing and export-oriented businesses are, however, likely to continue to witness some pressure in the next few months, after huge job losses seen during 2008.
HR consultancy major Hewitt Associates believes that sectors like insurance, telecom (where new licensees are entering), infrastructure and Special Economic Zones may look for fresh hirings in 2009, being the major beneficiaries of the government's stimulus plans.
However, the hiring outlook remains uncertain for sectors like real estate, textile and retail sectors, it believes.
Another global HR consultancy Mercer believes that hiring plans by the companies would depend on their business prospects in the coming year.
Among the major companies planning to hire big time, SBI is planning to recruit 25,000 employees by March. Besides, its life insurance venture, SBI Life, is looking to hire 13,000 agents and 200 sales managers.
Besides, the country's second largest public sector lender PNB and Union Bank are also hiring 5,000 people each, while Indian Overseas Bank, South Indian Bank and IDBI Bank are bringing on board 1,000, 12,000 and 650 employees, respectively.
Among life insurance firms, Reliance Life is hiring 90,000 agents and 2,500 managers, Metlife has announced plans to hire 30,000 agents and 2,000 managers and Max New York Life is recruiting 30,000 agents and 14,000 managers.
Among other sectors, BPO major ACS is hiring 1,000 employees, while health care solutions provider Accentia plans to add 5,000 staff to its payrolls.
" Exponential growth had resulted in a culture where mediocrity flourished. 2009 is an opportunity for companies to bring the performance orientation back into how they manage their human capital," Mercer India Information Product Solution business leader Gangapriya Chakraverti said.
Global HR consultancy major Manpower believes that hiring outlook for the first quarter of 2009 was the weakest since 2005.
Expressing similar views, leading job portal Naukri.com's owner InfoEdge India CFO Ambarish Raghuvanshi told the media that hiring was going to be slow in the first quarter of 2009 as recruitment trends are impacted by the slowdown in economic growth and decline in business confidence in the country.
He, however, added that some improvement was likely in the second half of calendar year 2009.
Source: Agencies
Ravi Uppal joins L&T Power as MD cum CEO
Ravi Uppal, till now head of global markets and member of group executive committee of engineering major ABB, has joined Larsen and Toubro as head of its power unit, L&T Power.
Mr Uppal has been appointed as managing director and chief executive officer of L&T Power, the Mumbai-based L&T said in a statement on Thursday.
"I am sure that Mr Uppal's presence will give further impetus to our thrust on the power sector," said L&T chairman AM Naik.
Mr Uppal is credited with the accelerated growth and turnaround of ABB's business in India and in the Asia Pacific region also, as its regional president, before taking up the role at the group level. He had earlier established Volvo's operations in India as its founding managing director and personally led the introduction of several new transportation concepts, including the highly successful intercity coaches of Volvo.
L&T, which has identified power as one of its thrust areas for the future, is making a major entry into generation and is set to become one of India's largest players in the supply of power island equipment including boilers, turbines, generators and related auxiliaries for super critical power plants rated to 1050 megawatts, said the L&T statement.
L&T has already set up joint ventures with Mitsubishi Heavy Industries for the manufacture of boilers and turbines. Advanced manufacturing facilities for these units are currently under construction. The company also has in place joint ventures with European and US majors for power plant engineering and auxiliary systems.
Source: Agencies
Mr Uppal has been appointed as managing director and chief executive officer of L&T Power, the Mumbai-based L&T said in a statement on Thursday.
"I am sure that Mr Uppal's presence will give further impetus to our thrust on the power sector," said L&T chairman AM Naik.
Mr Uppal is credited with the accelerated growth and turnaround of ABB's business in India and in the Asia Pacific region also, as its regional president, before taking up the role at the group level. He had earlier established Volvo's operations in India as its founding managing director and personally led the introduction of several new transportation concepts, including the highly successful intercity coaches of Volvo.
L&T, which has identified power as one of its thrust areas for the future, is making a major entry into generation and is set to become one of India's largest players in the supply of power island equipment including boilers, turbines, generators and related auxiliaries for super critical power plants rated to 1050 megawatts, said the L&T statement.
L&T has already set up joint ventures with Mitsubishi Heavy Industries for the manufacture of boilers and turbines. Advanced manufacturing facilities for these units are currently under construction. The company also has in place joint ventures with European and US majors for power plant engineering and auxiliary systems.
Source: Agencies
Is it tough times ahead for techies in 2009?
With sinking profits, eroding margins, cost-cuttings and an acquisition bid gone awry, 2008 was a year with more jeers than cheers for the country's over $50 billion IT sector, which has seen nearly a decade of uninterrupted boom.
However, as 2008 draws to a close, the sector is bracing up for a tough time ahead as the scars of global recession are showing up on the country's sunrise sector.
The sector, which has been charting a growth of over 30 per cent, had to settle for a growth rate of 20 per cent, as the global slowdown plunged the industry into unpredictable times.
In the year littered with economic disasters, the failed attempt of country's fourth largest software exporter Satyam Computer to botch up two family-promoted firms for $1.6 billion not only resulted in loss of face but also hit the reputation nurtured by the Indian IT sector over the years.
Faced with shareholder's revolt and heavy criticism over corporate governance issues, Satyam withdrew the offer within hours of making the proposal. But within a space of 24 hours, the scrip lost over 30 per cent in India and was down 55 per cent in New York Stock Exchange trade.
As a fallout, the Board size also shrank with four independent Directors resigning from the 10-Directors strong Board of the company in the wake of the fiasco.
The Satyam saga is likely to continue next year as well with the Board scheduled to meet on January 10.
If Satyam made it to the headlines for a failed deal, it was HCL Technologies, the country's fifth largest software exporter next to Satyam that made the country proud by inking the largest takeover deal in the software space overseas.
HCL piped rival country's second largest IT giant Infosys to bag UK-based SAP consulting firm Axon for $658 million. While Infosys had made 600 pence per share offer for Axon, HCL made a counter bid of 650 pence a share to acquire the UK-based firm.
The year was also some significant M&As on the IT front, such as the $13.9-billion acquisition of Electronic Data Services by HP. Back home
, Wipro acquired Citi Technology Services, Citigroup's IT arm in India, in an all-cash $127 million deal.
Earlier, TCS had bought out Citi's captive BPO arm Citigroup Global Services for about $505 million, which reiterates the strength of the Indian IT story. Another reason that will give the software services sector a reason to rejoice is the IT Amendment Bill.
The Lok Sabha passed the Information Technology (Amendment) Bill 2006 this month, which gives the government the power to tackle data theft. The bill might act as a shot in the arm for the BPO firms for whom data security is of utmost importance.
The Bill has provisions to deal with new forms of cyber crimes like publicising sexually explicit material in electronic form, video voyeurism and breach of confidentiality, leakage of data by intermediary and e-commerce frauds, among others.
The US is the world's largest technology market and accounts for between 50 per cent and 60 per cent of the revenues of the top Indian firms. Since September, however, the economic situation in the US and the rest of the world has worsened.
Country's software lobby group Nasscom had estimated that India's software and back-office services industry would grow by 21-24 per cent in the 12 months to March, but its president Som Mittal said recently that this number could be revised downward. With no signs of an early revival, all the IT biggies such as TCS, Infosys, Wipro and Satyam have revised their revenue guidance downwards.
The currency volatility has also compounded the woes of the Indian IT sector. If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September) impacted revenue realisation in dollar terms since 30 per cent of the billing is done in these currencies.
The sector also experienced slowdown in hiring. Already, under pressure to cut cost, most of the IT biggies had to freeze their hiring in the year. Moreover, the joining dates of the new recruits were also postponed, ringing the alarm bells in the job market. The top five IT companies posted a 36 per cent decline in their rate of manpower addition in the last quarter.
As for hiring by BPOs -- for long looked upon as poor the cousins of information technology companies -- also faced the heat.
However, BPOs remained a bit sanguine, as Nasscom's figures indicate that the BPO sector recorded revenue growth of 31.6 per cent whereas IT companies grew at 28 per cent.
In 2009, as the new administration led by Barack Obama takes a look at the outsourcing story vis-a-vis India, it is the efficiency and resilience of the IT sector which can help it sail through the troubled waters.
Source: Agencies
However, as 2008 draws to a close, the sector is bracing up for a tough time ahead as the scars of global recession are showing up on the country's sunrise sector.
The sector, which has been charting a growth of over 30 per cent, had to settle for a growth rate of 20 per cent, as the global slowdown plunged the industry into unpredictable times.
In the year littered with economic disasters, the failed attempt of country's fourth largest software exporter Satyam Computer to botch up two family-promoted firms for $1.6 billion not only resulted in loss of face but also hit the reputation nurtured by the Indian IT sector over the years.
Faced with shareholder's revolt and heavy criticism over corporate governance issues, Satyam withdrew the offer within hours of making the proposal. But within a space of 24 hours, the scrip lost over 30 per cent in India and was down 55 per cent in New York Stock Exchange trade.
As a fallout, the Board size also shrank with four independent Directors resigning from the 10-Directors strong Board of the company in the wake of the fiasco.
The Satyam saga is likely to continue next year as well with the Board scheduled to meet on January 10.
If Satyam made it to the headlines for a failed deal, it was HCL Technologies, the country's fifth largest software exporter next to Satyam that made the country proud by inking the largest takeover deal in the software space overseas.
HCL piped rival country's second largest IT giant Infosys to bag UK-based SAP consulting firm Axon for $658 million. While Infosys had made 600 pence per share offer for Axon, HCL made a counter bid of 650 pence a share to acquire the UK-based firm.
The year was also some significant M&As on the IT front, such as the $13.9-billion acquisition of Electronic Data Services by HP. Back home
, Wipro acquired Citi Technology Services, Citigroup's IT arm in India, in an all-cash $127 million deal.
Earlier, TCS had bought out Citi's captive BPO arm Citigroup Global Services for about $505 million, which reiterates the strength of the Indian IT story. Another reason that will give the software services sector a reason to rejoice is the IT Amendment Bill.
The Lok Sabha passed the Information Technology (Amendment) Bill 2006 this month, which gives the government the power to tackle data theft. The bill might act as a shot in the arm for the BPO firms for whom data security is of utmost importance.
The Bill has provisions to deal with new forms of cyber crimes like publicising sexually explicit material in electronic form, video voyeurism and breach of confidentiality, leakage of data by intermediary and e-commerce frauds, among others.
The US is the world's largest technology market and accounts for between 50 per cent and 60 per cent of the revenues of the top Indian firms. Since September, however, the economic situation in the US and the rest of the world has worsened.
Country's software lobby group Nasscom had estimated that India's software and back-office services industry would grow by 21-24 per cent in the 12 months to March, but its president Som Mittal said recently that this number could be revised downward. With no signs of an early revival, all the IT biggies such as TCS, Infosys, Wipro and Satyam have revised their revenue guidance downwards.
The currency volatility has also compounded the woes of the Indian IT sector. If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September) impacted revenue realisation in dollar terms since 30 per cent of the billing is done in these currencies.
The sector also experienced slowdown in hiring. Already, under pressure to cut cost, most of the IT biggies had to freeze their hiring in the year. Moreover, the joining dates of the new recruits were also postponed, ringing the alarm bells in the job market. The top five IT companies posted a 36 per cent decline in their rate of manpower addition in the last quarter.
As for hiring by BPOs -- for long looked upon as poor the cousins of information technology companies -- also faced the heat.
However, BPOs remained a bit sanguine, as Nasscom's figures indicate that the BPO sector recorded revenue growth of 31.6 per cent whereas IT companies grew at 28 per cent.
In 2009, as the new administration led by Barack Obama takes a look at the outsourcing story vis-a-vis India, it is the efficiency and resilience of the IT sector which can help it sail through the troubled waters.
Source: Agencies
What were the hottest tech news of 2008?
As we enter in 2009, it's time to look into the big happenings that kept made headlines in 2008. In many ways 2008 can be called an unprecedented year, history has seen collapse of corporate giants, but never has so many companies that signified the strength of the financial industry gone bust, and with them throwing the entire world economy in tailspin.
With the economy down, the fate of IT industry could have been better. The financial crisis means IT industry losing out as much as $170 billion in sales in 2009. As meltdown melted IT spending, IT companies went on a belt tightening mode: giving pink slips, extending holidays and cutting perks.
Other than the grim reality of meltdown, the year 2008 also saw several big mergers and launches. Indian telecom industry finally made its 3G leap, with MTNL launching the services in Delhi. On M&A front, the IT services giant EDS merged with HP. Indian IT cos too were no behind in the acquisition space, three big IT companies buying overseas firms to extend their global and product footprint.
Here's bringing to you all the big IT stories of 2008.
3G launch
In December, Indian telecom sector took another technological leap, with the launch of 3G services in the capital city of country, Delhi.
Mahanagar Telephone Nigam Ltd (MTNL) put India on the 3G global map with the launch of third generation (3G) mobile service 'Jaadu' in Delhi.
The 3G services will give mobile users high-quality voice transmission and access to high-end data applications on their mobile phones, including broadband Internet access, interactive gaming and download movies, video clips and music. They can also enjoy other multimedia features such as video conferencing, mobile TV etc.
For example, a user will be able to download a 3-minute song in approximately 15 seconds with 3G. This compares to 8 minutes usually required in existing mobile technologies.
This will help mobile players to offer high-end value-added services like movie downloads, mobileTV, etc to prop up their ARPUs (average realisation per user). Presently, Indian mobile operators generate only 7-10 per cent of their revenue from non-voice services, primarily dominated by SMSes.
As for the pricing, MTNL is yet to release a commercial tariff plan. The company is currently serving corporate clients and will rely on their feedback before the commercial launch.
Tech terror
The gruesome terrorists attacks that rocked several parts of the country brought to the fore the fact that the technology which makes our live simpler has also become a handy tool for terrorists. The use of technology is evident everywhere, right from providing recruiting grounds (social networking sites) to being a communication platform (Internet, mobile and satellite phones) to providing geographical details (digital maps).
The ease and frequency with which terrorists freely communicated using sat-phones, BlackBerrys and used Google maps to pin down locations, deepened the intensity of terror attacks across the country.
The recent Mumbai carnage also saw terrorists using Google Earth maps to establish locations, sat-phones for un-intercepted communication, Global Positioning Systems and VOIP (Voice over Internet Protocol).
Earlier in Feburary, Lashkar-e-Taiba terrorist Fahim Ahmed Ansari, arrested by Uttar Pradesh Police with maps and details of the spots hit during the recent terror attacks, in his statement had conceded that his masters showed him the maps on Google Earth to pin-point the specific targets.
The Google Earth Map gives a bird’s eye view of the city providing detailed topography of the area in the forms of actual photographs. The details provided in the application can be useful for identifying buildings, roads, streets.
Also, unlike the mobile phones that can be easily intercepted by the security agencies to track data, sat-phones are non-interceptable in India. This is primarily because no satellite phone network operator has its centre in India. Also, since these phones are satellite driven and the operator doesn't need any interconnectivity with India's domestic network, the communication cannot be traced.
Microsoft's Yahoo chase
The year 2008 began with the software giant Microsoft proposing a $31 per share buyout to Yahoo. However, the bid was rejected by Yahoo board of directors saying it "substantially undervalues" the company. On its part, Yahoo announced an expensive severance package which made any acquisition attempt more expensive.
In May, Microsoft revised its offer to $33 a share, which was again rejected by Yahoo. This was followed by speculations that Microsoft may go for a forced deal with the company talking tough.
Yahoo reportedly tried exploring alternative deals with News Corp, Google and Time Warner unit AOL. The chief executive Jerry Yang kept waiting for the software giant to offer a better price than $47.5 billion for Yahoo. However, it never happened. Instead, Yahoo's stock started to fell and hit nearly five-year lows. Yahoo's plan 2, an advertising deal with Google too failed, after Google pulled out fearing a court battle with the US Justice Department.
In November, Yang stepped down and Yahoo, in December, overhauled its severance plan apparently hiked to discourage Microsoft's acquisition plans.
Infy loses Axon
Infosys-Axon deal was hailed as the largest outbound acquisition by an Indian IT company. The analysts termed Axon as strategic fit for Infosys.
Then came the rumours that there was competition: a rival UK security firm has quoting a price higher by 7 pence per share to counter Infosys' offer.
But the software giant was confident. MD and CEO, S Gopalakrishnan said that the company can sail through the deal with its transaction advantage of a full cash deal offer.
However, it seems the Indian IT giant underestimated its rivals, tough competition was there, and closer home. In October, HCL Technologies makes a counter offer to Infosys' Axon bid by raising the value by 8.3 per cent to seal the biggest overseas deal by an Indian firm in this space. The deal got shareholder's nod in November.
HCL beats Infy to bag Axon
The deal for the first time saw two leading Indian vendors, HCL and Infosys, used to fighting over deals, battle it out over an overseas acquisition.
Infosys had made a cash offer of 407.1 million pound for buying out Axon. The country's fifth largest software exporter, HCL Tech, raised its counter bid 441 million-pound ($811 million) to clinch the deal.
HCL Technologies recently completed the acquisition and the new entity would pursue deals worth 1.2 billion dollars.
Post-acquisition, HCL Axon is headed by Steve Cardell, the President of Axon. The independent entity have about 4,500 consultants which includes 1,700 people involved in the SAP practice in HCL.
Enterprise Application Services (EAS), the sector in which HCL AXON operates, constitutes 11 per cent of HCLs revenue. Company's Corporate Vice President and Head - Enterprise Application Services Ram Krishna said that HCL-Axon will create a business accounting for 25 per cent of HCLs revenues.
Satyam saga
The year 2008 would have ended for India's fourth largest IT company, Satyam, just like it will for most other IT cos with worries of ongoing economic gloom. However, there's much more on Satyam plate to tackle now.
The company's troubles began on December 16 when Satyam announced acquisition of Maytas Infrastructure for $1.6 billion (Rs 7658-crore). Institutional investors strongly opposed the move. Satyam's ADR lost 50 per cent on NYSE. Faced with shareholders' revolt and heavy criticism over corporate governance issues, in the early hours of December 17 the company withdrew the proposal. But the scrip lost over 30 per cent in India.
What came as the next severe blow to the Hyderabad-based IT provider facing flak from investors on its decision to acquire Maytas' was World Bank banning it for 8 years over bribery and corruption charges. Ramalinga's family loses half a billion dollars in a week as stock crashes.
Then the worst followed. Shocked by Satyam’s admission to BSE that the company’s promoters have pledged their entire shareholding to institutional investors, independent directors Vinod Dham (father of Pentium chips) and Harvard Business School professor Krishna Palepu, immediately resigned from the board. Also, Indian School of Business dean M Rammohan Rao followed suit. Another independent director, academic Managalam Srinivasan had quit earlier.
This leaves Satyam with only five directors on the board, from nine directors earlier.
Wipro buys Citi unit
India's third-ranked outsourcer, Wipro Technologies acquired Citi Technology Services Ltd, India-based captive IT unit of Citigroup Inc, for $127 million in cash and signed a six-year service agreement worth at least $500 million.
As part of the deal, Wipro and Citi will sign a master services agreement for delivery of technology infrastructure services and application development and maintenance (ADM) services for six years. Under this the banking giant will source services worth at least half a billion dollar from the Indian vendor.
Citi Technology Services is based in Mumbai and Chennai and employs around 1,650 staff servicing the bank’s offices in over 32 countries. Apart from its core focus area of technology infrastructure services, the business also specialises on ADM for cards, capital markets and corporate banking.
Citi Technology Services is expected to report revenue of $80 million in 2008, up from $53 million last year. The deal done through Wipro Technologies, the information technology arm of the New York-listed Wipro, is expected to close in March 2009.
TCS buys Citi BPO
In one of the largest deals in the Indian BPO sector, IT major Tata Consultancy Services, clinched a deal to acquire Citigroup Global Services Ltd (CGSL), a large captive BPO of Citibank operating out of India, for $505 million (around Rs 2,425 crore).
In addition to the sale, Citigroup which is shedding its non-core assets worldwide, signed an agreement with TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates for an aggregate amount of $2.5 billion over a period of 9.5 years.
Citigroup Global Services has around 12,000 employees in India and expects revenues of approximately $278m in 2008.
The acquisition broadens TCS’s portfolio of end-to-end IT and BPO services in the global banking and financial services (BFS) sector.
CGSL provides end-to-end process management across the BFS spectrum and a broad array of services to Citi’s consumer, corporate and global wealth management businesses worldwide.
Citigroup Global Services, the India back office unit, began as a business processing arm for Citi India in 1992 and expanded to serve Citi's global operations in 1998, according to its website. The unit operates out of seven facilities across Indian cities and offers back office services to Citi's consumer, corporate and global wealth management entities in 50 countries.
Pink slips scourge back
This year the ugliest face of slowdown, pink slips, came back to haunt Indian IT pros. The year that saw the slowdown hitting major IT players, many companies resorted to pink slips to beat the downturn blues. India's sunshine sector handed pink slips as the heat of global meltdown severely affected revenues and growth opportunities.
Country's largest software exporter, TCS laid off close to 500 employees and put many under performance scrutiny. Wipro too followed with 1000 employees shown door. India's fourth largest IT player, Satyam too laid off 4,500 jobs to cope up with the turbulent times. Mumbai-based Patni Computer Systems too gave pink slips to 400 employees on grounds of non-performance.
Incidentally, all companies termed the job cuts as purely performance-based. However, it came as no surprise that pink slips were a belt tightening measure from IT companies facing sagging bottomlines due to global economic turmoil.
According to the latest news on the layoff front, software giant Microsoft is reported to be planning a 10 per cent cut in its global workforce.
Bill Gates dethroned
This year tech tycoon Bill Gates not only made his exit from the company he founded, but also lost his position as the world's richest man, a title he had held since 1995. Gates' friend and investment mogul Warren Buffett, succeeded him as world's richest man according to Forbes magazine's annual ranking of the world's wealthiest people.
The magazine estimated Buffett's worth at $62 billion, and Gates' fortune not too far behind at $58 billion. But Gates didn't slipped one position down, Carlos Slim, a Mexican telecom tycoon, came in second with an estimated worth of $60 billion.
Riding the surging price of Berkshire Hathaway stock, America's most beloved investor Warren Buffett saw his fortune up $10 billion from a year ago.
The exit of Bill Gates marked an end of era. Gates retired from Microsoft, the company he co-founded with college-friend Paul Allen in 1975. In June, Gates quit as full-time chairman and software architect of the world's largest software company to work full-time at his charitable organisation Bill & Melinda Gates Foundation. Gates will remain the company's non-executive chairman.
Purse tightening begins at Google
Meltdown has left none, not even the world's top tech brand Google remains unscathed. In a cost cutting mode, the Internet search giant Google is cutting its famed `generous perks'.
Google, known for hosting the most extravagant holiday parties and pamperimg its employees with free food and drinks on the house, has gone into a strict cost saving mode.
Company's cost cutting programme include cutting new projects, ratcheting back spending, chipping away at perks and reducing employee strength. The austerity measures came in as Google's revenue growth has slowed down dramatically over the past one year.
Google also scaled back its holiday celebrations this year due to a global economic downturn and an ever-expanding workforce that had grown to 20,000 in October.
Not only this, the Web giant gave employees mobile phones instead of cash gifts this Christmas as it reins in costs during the recession. About 85 per cent Googleites got handset powered by Google’s Android operating system as a holiday gift. Last year, Google handed out $1,000 cash gifts to most employees.
Company's chief executive Eric Schmidt said that Google has adopted such necessary actions in wake of current turbulent times. He added that the company will no more give an engineer 20 people to work with on certain experimental projects.
HP-EDS merger
In the month of May, HP acquired EDS at a price of $25 per share, or an enterprise value of approximately $13.9 billion.
The deal makes HP the second-largest player behind IBM, and is HP's largest acquisition since it acquired Compaq for $20 billion six years ago.
Acquiring EDS advances HP's stated objective of strengthening its services business. The specific service offerings delivered by the combined companies are: IT outsourcing, including data center services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernisation and management; consulting and integration; and technology services.
The combination aims to provide extensive experience in offering solutions to customers in the areas of government, healthcare, manufacturing, financial services, energy, transportation, communications, and consumer industries and retail.
However, in the month of September HP announced that it will lay off about 24,600 employees over the next three years in an effort to streamline the company following its US$13.9 billion acquisition of Electronic Data Systems.
Source: Indiatimes Infotech
With the economy down, the fate of IT industry could have been better. The financial crisis means IT industry losing out as much as $170 billion in sales in 2009. As meltdown melted IT spending, IT companies went on a belt tightening mode: giving pink slips, extending holidays and cutting perks.
Other than the grim reality of meltdown, the year 2008 also saw several big mergers and launches. Indian telecom industry finally made its 3G leap, with MTNL launching the services in Delhi. On M&A front, the IT services giant EDS merged with HP. Indian IT cos too were no behind in the acquisition space, three big IT companies buying overseas firms to extend their global and product footprint.
Here's bringing to you all the big IT stories of 2008.
3G launch
In December, Indian telecom sector took another technological leap, with the launch of 3G services in the capital city of country, Delhi.
Mahanagar Telephone Nigam Ltd (MTNL) put India on the 3G global map with the launch of third generation (3G) mobile service 'Jaadu' in Delhi.
The 3G services will give mobile users high-quality voice transmission and access to high-end data applications on their mobile phones, including broadband Internet access, interactive gaming and download movies, video clips and music. They can also enjoy other multimedia features such as video conferencing, mobile TV etc.
For example, a user will be able to download a 3-minute song in approximately 15 seconds with 3G. This compares to 8 minutes usually required in existing mobile technologies.
This will help mobile players to offer high-end value-added services like movie downloads, mobileTV, etc to prop up their ARPUs (average realisation per user). Presently, Indian mobile operators generate only 7-10 per cent of their revenue from non-voice services, primarily dominated by SMSes.
As for the pricing, MTNL is yet to release a commercial tariff plan. The company is currently serving corporate clients and will rely on their feedback before the commercial launch.
Tech terror
The gruesome terrorists attacks that rocked several parts of the country brought to the fore the fact that the technology which makes our live simpler has also become a handy tool for terrorists. The use of technology is evident everywhere, right from providing recruiting grounds (social networking sites) to being a communication platform (Internet, mobile and satellite phones) to providing geographical details (digital maps).
The ease and frequency with which terrorists freely communicated using sat-phones, BlackBerrys and used Google maps to pin down locations, deepened the intensity of terror attacks across the country.
The recent Mumbai carnage also saw terrorists using Google Earth maps to establish locations, sat-phones for un-intercepted communication, Global Positioning Systems and VOIP (Voice over Internet Protocol).
Earlier in Feburary, Lashkar-e-Taiba terrorist Fahim Ahmed Ansari, arrested by Uttar Pradesh Police with maps and details of the spots hit during the recent terror attacks, in his statement had conceded that his masters showed him the maps on Google Earth to pin-point the specific targets.
The Google Earth Map gives a bird’s eye view of the city providing detailed topography of the area in the forms of actual photographs. The details provided in the application can be useful for identifying buildings, roads, streets.
Also, unlike the mobile phones that can be easily intercepted by the security agencies to track data, sat-phones are non-interceptable in India. This is primarily because no satellite phone network operator has its centre in India. Also, since these phones are satellite driven and the operator doesn't need any interconnectivity with India's domestic network, the communication cannot be traced.
Microsoft's Yahoo chase
The year 2008 began with the software giant Microsoft proposing a $31 per share buyout to Yahoo. However, the bid was rejected by Yahoo board of directors saying it "substantially undervalues" the company. On its part, Yahoo announced an expensive severance package which made any acquisition attempt more expensive.
In May, Microsoft revised its offer to $33 a share, which was again rejected by Yahoo. This was followed by speculations that Microsoft may go for a forced deal with the company talking tough.
Yahoo reportedly tried exploring alternative deals with News Corp, Google and Time Warner unit AOL. The chief executive Jerry Yang kept waiting for the software giant to offer a better price than $47.5 billion for Yahoo. However, it never happened. Instead, Yahoo's stock started to fell and hit nearly five-year lows. Yahoo's plan 2, an advertising deal with Google too failed, after Google pulled out fearing a court battle with the US Justice Department.
In November, Yang stepped down and Yahoo, in December, overhauled its severance plan apparently hiked to discourage Microsoft's acquisition plans.
Infy loses Axon
Infosys-Axon deal was hailed as the largest outbound acquisition by an Indian IT company. The analysts termed Axon as strategic fit for Infosys.
Then came the rumours that there was competition: a rival UK security firm has quoting a price higher by 7 pence per share to counter Infosys' offer.
But the software giant was confident. MD and CEO, S Gopalakrishnan said that the company can sail through the deal with its transaction advantage of a full cash deal offer.
However, it seems the Indian IT giant underestimated its rivals, tough competition was there, and closer home. In October, HCL Technologies makes a counter offer to Infosys' Axon bid by raising the value by 8.3 per cent to seal the biggest overseas deal by an Indian firm in this space. The deal got shareholder's nod in November.
HCL beats Infy to bag Axon
The deal for the first time saw two leading Indian vendors, HCL and Infosys, used to fighting over deals, battle it out over an overseas acquisition.
Infosys had made a cash offer of 407.1 million pound for buying out Axon. The country's fifth largest software exporter, HCL Tech, raised its counter bid 441 million-pound ($811 million) to clinch the deal.
HCL Technologies recently completed the acquisition and the new entity would pursue deals worth 1.2 billion dollars.
Post-acquisition, HCL Axon is headed by Steve Cardell, the President of Axon. The independent entity have about 4,500 consultants which includes 1,700 people involved in the SAP practice in HCL.
Enterprise Application Services (EAS), the sector in which HCL AXON operates, constitutes 11 per cent of HCLs revenue. Company's Corporate Vice President and Head - Enterprise Application Services Ram Krishna said that HCL-Axon will create a business accounting for 25 per cent of HCLs revenues.
Satyam saga
The year 2008 would have ended for India's fourth largest IT company, Satyam, just like it will for most other IT cos with worries of ongoing economic gloom. However, there's much more on Satyam plate to tackle now.
The company's troubles began on December 16 when Satyam announced acquisition of Maytas Infrastructure for $1.6 billion (Rs 7658-crore). Institutional investors strongly opposed the move. Satyam's ADR lost 50 per cent on NYSE. Faced with shareholders' revolt and heavy criticism over corporate governance issues, in the early hours of December 17 the company withdrew the proposal. But the scrip lost over 30 per cent in India.
What came as the next severe blow to the Hyderabad-based IT provider facing flak from investors on its decision to acquire Maytas' was World Bank banning it for 8 years over bribery and corruption charges. Ramalinga's family loses half a billion dollars in a week as stock crashes.
Then the worst followed. Shocked by Satyam’s admission to BSE that the company’s promoters have pledged their entire shareholding to institutional investors, independent directors Vinod Dham (father of Pentium chips) and Harvard Business School professor Krishna Palepu, immediately resigned from the board. Also, Indian School of Business dean M Rammohan Rao followed suit. Another independent director, academic Managalam Srinivasan had quit earlier.
This leaves Satyam with only five directors on the board, from nine directors earlier.
Wipro buys Citi unit
India's third-ranked outsourcer, Wipro Technologies acquired Citi Technology Services Ltd, India-based captive IT unit of Citigroup Inc, for $127 million in cash and signed a six-year service agreement worth at least $500 million.
As part of the deal, Wipro and Citi will sign a master services agreement for delivery of technology infrastructure services and application development and maintenance (ADM) services for six years. Under this the banking giant will source services worth at least half a billion dollar from the Indian vendor.
Citi Technology Services is based in Mumbai and Chennai and employs around 1,650 staff servicing the bank’s offices in over 32 countries. Apart from its core focus area of technology infrastructure services, the business also specialises on ADM for cards, capital markets and corporate banking.
Citi Technology Services is expected to report revenue of $80 million in 2008, up from $53 million last year. The deal done through Wipro Technologies, the information technology arm of the New York-listed Wipro, is expected to close in March 2009.
TCS buys Citi BPO
In one of the largest deals in the Indian BPO sector, IT major Tata Consultancy Services, clinched a deal to acquire Citigroup Global Services Ltd (CGSL), a large captive BPO of Citibank operating out of India, for $505 million (around Rs 2,425 crore).
In addition to the sale, Citigroup which is shedding its non-core assets worldwide, signed an agreement with TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates for an aggregate amount of $2.5 billion over a period of 9.5 years.
Citigroup Global Services has around 12,000 employees in India and expects revenues of approximately $278m in 2008.
The acquisition broadens TCS’s portfolio of end-to-end IT and BPO services in the global banking and financial services (BFS) sector.
CGSL provides end-to-end process management across the BFS spectrum and a broad array of services to Citi’s consumer, corporate and global wealth management businesses worldwide.
Citigroup Global Services, the India back office unit, began as a business processing arm for Citi India in 1992 and expanded to serve Citi's global operations in 1998, according to its website. The unit operates out of seven facilities across Indian cities and offers back office services to Citi's consumer, corporate and global wealth management entities in 50 countries.
Pink slips scourge back
This year the ugliest face of slowdown, pink slips, came back to haunt Indian IT pros. The year that saw the slowdown hitting major IT players, many companies resorted to pink slips to beat the downturn blues. India's sunshine sector handed pink slips as the heat of global meltdown severely affected revenues and growth opportunities.
Country's largest software exporter, TCS laid off close to 500 employees and put many under performance scrutiny. Wipro too followed with 1000 employees shown door. India's fourth largest IT player, Satyam too laid off 4,500 jobs to cope up with the turbulent times. Mumbai-based Patni Computer Systems too gave pink slips to 400 employees on grounds of non-performance.
Incidentally, all companies termed the job cuts as purely performance-based. However, it came as no surprise that pink slips were a belt tightening measure from IT companies facing sagging bottomlines due to global economic turmoil.
According to the latest news on the layoff front, software giant Microsoft is reported to be planning a 10 per cent cut in its global workforce.
Bill Gates dethroned
This year tech tycoon Bill Gates not only made his exit from the company he founded, but also lost his position as the world's richest man, a title he had held since 1995. Gates' friend and investment mogul Warren Buffett, succeeded him as world's richest man according to Forbes magazine's annual ranking of the world's wealthiest people.
The magazine estimated Buffett's worth at $62 billion, and Gates' fortune not too far behind at $58 billion. But Gates didn't slipped one position down, Carlos Slim, a Mexican telecom tycoon, came in second with an estimated worth of $60 billion.
Riding the surging price of Berkshire Hathaway stock, America's most beloved investor Warren Buffett saw his fortune up $10 billion from a year ago.
The exit of Bill Gates marked an end of era. Gates retired from Microsoft, the company he co-founded with college-friend Paul Allen in 1975. In June, Gates quit as full-time chairman and software architect of the world's largest software company to work full-time at his charitable organisation Bill & Melinda Gates Foundation. Gates will remain the company's non-executive chairman.
Purse tightening begins at Google
Meltdown has left none, not even the world's top tech brand Google remains unscathed. In a cost cutting mode, the Internet search giant Google is cutting its famed `generous perks'.
Google, known for hosting the most extravagant holiday parties and pamperimg its employees with free food and drinks on the house, has gone into a strict cost saving mode.
Company's cost cutting programme include cutting new projects, ratcheting back spending, chipping away at perks and reducing employee strength. The austerity measures came in as Google's revenue growth has slowed down dramatically over the past one year.
Google also scaled back its holiday celebrations this year due to a global economic downturn and an ever-expanding workforce that had grown to 20,000 in October.
Not only this, the Web giant gave employees mobile phones instead of cash gifts this Christmas as it reins in costs during the recession. About 85 per cent Googleites got handset powered by Google’s Android operating system as a holiday gift. Last year, Google handed out $1,000 cash gifts to most employees.
Company's chief executive Eric Schmidt said that Google has adopted such necessary actions in wake of current turbulent times. He added that the company will no more give an engineer 20 people to work with on certain experimental projects.
HP-EDS merger
In the month of May, HP acquired EDS at a price of $25 per share, or an enterprise value of approximately $13.9 billion.
The deal makes HP the second-largest player behind IBM, and is HP's largest acquisition since it acquired Compaq for $20 billion six years ago.
Acquiring EDS advances HP's stated objective of strengthening its services business. The specific service offerings delivered by the combined companies are: IT outsourcing, including data center services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernisation and management; consulting and integration; and technology services.
The combination aims to provide extensive experience in offering solutions to customers in the areas of government, healthcare, manufacturing, financial services, energy, transportation, communications, and consumer industries and retail.
However, in the month of September HP announced that it will lay off about 24,600 employees over the next three years in an effort to streamline the company following its US$13.9 billion acquisition of Electronic Data Systems.
Source: Indiatimes Infotech
Nokia’s recycling campaign in India
Nokia will be launching its ‘Take Back’ campaign from Thursday (January 1) encouraging mobile phone users to dispose of their used handsets and accessories, regardless of the brand, at any of the recycling bins set up across Nokia priority dealers and Nokia care centres. For each handset dropped into recycling bins, Nokia will be planting a tree, besides giving gifts to people participating in its campaign.
As part of its initiative to educate mobile phone users on the importance of recycling of e-waste, India’s top mobile phone seller will begin the initiative from Delhi and then gradually roll out the programme in phases across the country. “We have laid out a robust recycling infrastructure across the country with over 1,300 recycling bins installed at our centre across India. We work with qualified recyclers around the world to ensure proper end-of-life treatment of used devices,” said Nokia India Vice-President and Managing Director D. Shivakumar.
The ‘Take back’ campaign aims to increase awareness of the concept of recycling.
Source: Agencies
As part of its initiative to educate mobile phone users on the importance of recycling of e-waste, India’s top mobile phone seller will begin the initiative from Delhi and then gradually roll out the programme in phases across the country. “We have laid out a robust recycling infrastructure across the country with over 1,300 recycling bins installed at our centre across India. We work with qualified recyclers around the world to ensure proper end-of-life treatment of used devices,” said Nokia India Vice-President and Managing Director D. Shivakumar.
The ‘Take back’ campaign aims to increase awareness of the concept of recycling.
Source: Agencies
BSNL rolls out Internet TV services
Bharat Sanchar Nigam Ltd on Wednesday launched its Internet Protocol Television services, which will enable consumers to watch TV channels using their fixed telephone line at home.
The company has launched the service in 10 cities, including Gurgaon in Haryana.
IPTV is a system where an interactive digital television service is delivered over a broadband connection instead of the traditional way of transmitting through a cable network.
Users will also get new services such as video on demand where they can watch their favourite movies for a fee. They can also pause, fast forward and rewind live and recorded content stored on a remotely located server by the service provider.
Since IPTV delivers TV channels in digital form, the quality of TV viewing is expected to be much better as compared to analog transmission.
Broadband link
To avail the service, subscribers will have to take a broadband connection from BSNL and a set-top box for an upfront payment of Rs 2,500. In addition, subscribers will have to pay Rs 280 each month for receiving all 150 channels and Rs 200 for 95 channels.
BSNL launches low-cost mobile phones for rural subscribers
In comparison, DTH subscribers pay over Rs 300 a month for receiving all the channels.
In 98 cities soon
Kuldeep Goyal, Chairman and Managing Director, BSNL, said the company plans to roll out IPTV services to 98 cities by end of the current fiscal year. He also said that this will enable BSNL to tap into the growing broadcasting sector.
BSNL has partnered Smart Digivision Pvt Ltd, a company promoted by Mahendra Nahata, Chairman, Himachal Futuristic Communications Ltd, to roll out the service in 54 cities.
Goyal said that BSNL will launch its 3G services over the next two months starting from Chennai.
The Smart TV Group, consisting Smart Digivision Pvt Ltd and Smart Broadband Services Pvt Ltd, has entered into long term contracts with MTNL and BSNL for providing co-branded interactive video services in 54 cities.
Source: Agencies
The company has launched the service in 10 cities, including Gurgaon in Haryana.
IPTV is a system where an interactive digital television service is delivered over a broadband connection instead of the traditional way of transmitting through a cable network.
Users will also get new services such as video on demand where they can watch their favourite movies for a fee. They can also pause, fast forward and rewind live and recorded content stored on a remotely located server by the service provider.
Since IPTV delivers TV channels in digital form, the quality of TV viewing is expected to be much better as compared to analog transmission.
Broadband link
To avail the service, subscribers will have to take a broadband connection from BSNL and a set-top box for an upfront payment of Rs 2,500. In addition, subscribers will have to pay Rs 280 each month for receiving all 150 channels and Rs 200 for 95 channels.
BSNL launches low-cost mobile phones for rural subscribers
In comparison, DTH subscribers pay over Rs 300 a month for receiving all the channels.
In 98 cities soon
Kuldeep Goyal, Chairman and Managing Director, BSNL, said the company plans to roll out IPTV services to 98 cities by end of the current fiscal year. He also said that this will enable BSNL to tap into the growing broadcasting sector.
BSNL has partnered Smart Digivision Pvt Ltd, a company promoted by Mahendra Nahata, Chairman, Himachal Futuristic Communications Ltd, to roll out the service in 54 cities.
Goyal said that BSNL will launch its 3G services over the next two months starting from Chennai.
The Smart TV Group, consisting Smart Digivision Pvt Ltd and Smart Broadband Services Pvt Ltd, has entered into long term contracts with MTNL and BSNL for providing co-branded interactive video services in 54 cities.
Source: Agencies
IBM in sales alliance with Japan's Ricoh
IBM and Japanese office equipment maker Ricoh Co Ltd will start sharing each other's sales network this year and promote their servers and printers together, the Nikkei business daily said on Thursday.
The alliance will enable them to offer corporate clients International Business Machines Corp's servers and Ricoh's copiers and printers as a comprehensive office information technology system, the Nikkei said.
Ricoh expects the new business ties with IBM to help boost its sales by 100 billion yen ($1.10 billion) in two to three years, the newspaper said.
The Tokyo-based company, which competes with Canon Inc, Xerox Corp and Konica Minolta Holdings in copiers and printers, forecast 2.15 trillion yen in sales for the current business year ending March.
IBM and Ricoh will start handling each other's products in their U.S. sales channels in spring 2009, with the cooperation set to expand to other regions including Europe and Asia eventually, the paper said.
Officials at Ricoh, which in 2007 bought IBM's digital commercial printer business for $725 million, were not immediately available for comment.
Digital commercial printers are used to print big documents such as product manuals and direct mail quickly and in large volumes, and are one of the fastest-growing segments of the office equipment market.
Source: Agencies
The alliance will enable them to offer corporate clients International Business Machines Corp's servers and Ricoh's copiers and printers as a comprehensive office information technology system, the Nikkei said.
Ricoh expects the new business ties with IBM to help boost its sales by 100 billion yen ($1.10 billion) in two to three years, the newspaper said.
The Tokyo-based company, which competes with Canon Inc, Xerox Corp and Konica Minolta Holdings in copiers and printers, forecast 2.15 trillion yen in sales for the current business year ending March.
IBM and Ricoh will start handling each other's products in their U.S. sales channels in spring 2009, with the cooperation set to expand to other regions including Europe and Asia eventually, the paper said.
Officials at Ricoh, which in 2007 bought IBM's digital commercial printer business for $725 million, were not immediately available for comment.
Digital commercial printers are used to print big documents such as product manuals and direct mail quickly and in large volumes, and are one of the fastest-growing segments of the office equipment market.
Source: Agencies
Top Citi bosses like Pandit to forego 2008 bonuses
Citigroup Inc.'s Indian American chief executive Vikram Pandit and chairman Win Bischoff would forego bonuses for 2008, the ailing banking giant announced as it formalised its bailout agreement with the US government.
Bonuses for other top executives will be "reduced substantially," Pandit said in a memo to Citigroup employees Wednesday.
Citigroup has received $45 billion in federal capital infusions and a government-financed arrangement to insulate it from hundreds of billions of dollars in potential losses after the bank lost three-quarters of its market value.
"The harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower," Pandit said.
Citigroup, the biggest recipient of US bailout funds, completed an agreement for a $20 billion government investment, Pandit said in the memo. That was on top of an earlier $25 billion and a US guarantee on $306 billion in troubled assets.
Pandit is cutting 52,000 jobs worldwide after four straight quarters of losses tied to bad loans and failed investments with the last quarter alone accounting for a loss of 2.8 billion dollars.
Citigroup expects "major challenges" to continue into 2009, Pandit said, describing the proposed actions as part of a major overhaul of executive compensation to confront the problems for the company and banking sector.
The new plan may also include "clawbacks" to "recoup executive compensation that over time proves to be based on inaccurate financial or other information," according to the memo.
"The most senior leaders should be affected the most," Pandit said. "Win and I believe this is fair, in light of the challenges of the year and the need for compensation elsewhere in the organization."
The memo said bonuses for the "senior leadership committee "will be reduced substantially." Members of Citi's executive committee would see bonuses "cut even more" and in some cases given as deferred compensation.
Pandit said the principles to guide the company's executive pay would include "pay for performance" and "meritocracy," adding that "compensation will vary based on each person's performance - again, relative to the overall performance of the company."
Severance compensation will be subject to "significant new limitations" for executives and that the top five executives "no longer can receive severance," said Pandit, who became Citigroup CEO in December 2007.
Those affected executives are Pandit, Bischoff, Chief Financial Officer Gary Crittenden and Vice Chairmen Lewis Kaden and Stephen Volk.
Pandit noted that former treasury secretary Robert Rubin, an advisor to the company who has no direct management responsibilities, "has elected to take no bonus for the second consecutive year."
"The overall objective for all of us at Citi is to build shareholder value, serve our clients and customers superbly well and create growth opportunities for our employees," he said.
"Adherence to the principles of compensation outlined above is fundamental to achieving these goals."
Pandit, 51, received 1 million shares from Citigroup as part of a "sign-on" bonus in January, in addition to a $2.5 million "retention equity award," the company said in March. He was paid $250,000 in salary in 2007.
Pandit got $165 million from Citigroup in 2007 when he sold Old Lane Partners LP, the hedge fund he co-founded and ran. Citigroup closed New York-based Old Lane in June and took a $202 million writedown on its $800 million investment.
Source: Agencies
Bonuses for other top executives will be "reduced substantially," Pandit said in a memo to Citigroup employees Wednesday.
Citigroup has received $45 billion in federal capital infusions and a government-financed arrangement to insulate it from hundreds of billions of dollars in potential losses after the bank lost three-quarters of its market value.
"The harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower," Pandit said.
Citigroup, the biggest recipient of US bailout funds, completed an agreement for a $20 billion government investment, Pandit said in the memo. That was on top of an earlier $25 billion and a US guarantee on $306 billion in troubled assets.
Pandit is cutting 52,000 jobs worldwide after four straight quarters of losses tied to bad loans and failed investments with the last quarter alone accounting for a loss of 2.8 billion dollars.
Citigroup expects "major challenges" to continue into 2009, Pandit said, describing the proposed actions as part of a major overhaul of executive compensation to confront the problems for the company and banking sector.
The new plan may also include "clawbacks" to "recoup executive compensation that over time proves to be based on inaccurate financial or other information," according to the memo.
"The most senior leaders should be affected the most," Pandit said. "Win and I believe this is fair, in light of the challenges of the year and the need for compensation elsewhere in the organization."
The memo said bonuses for the "senior leadership committee "will be reduced substantially." Members of Citi's executive committee would see bonuses "cut even more" and in some cases given as deferred compensation.
Pandit said the principles to guide the company's executive pay would include "pay for performance" and "meritocracy," adding that "compensation will vary based on each person's performance - again, relative to the overall performance of the company."
Severance compensation will be subject to "significant new limitations" for executives and that the top five executives "no longer can receive severance," said Pandit, who became Citigroup CEO in December 2007.
Those affected executives are Pandit, Bischoff, Chief Financial Officer Gary Crittenden and Vice Chairmen Lewis Kaden and Stephen Volk.
Pandit noted that former treasury secretary Robert Rubin, an advisor to the company who has no direct management responsibilities, "has elected to take no bonus for the second consecutive year."
"The overall objective for all of us at Citi is to build shareholder value, serve our clients and customers superbly well and create growth opportunities for our employees," he said.
"Adherence to the principles of compensation outlined above is fundamental to achieving these goals."
Pandit, 51, received 1 million shares from Citigroup as part of a "sign-on" bonus in January, in addition to a $2.5 million "retention equity award," the company said in March. He was paid $250,000 in salary in 2007.
Pandit got $165 million from Citigroup in 2007 when he sold Old Lane Partners LP, the hedge fund he co-founded and ran. Citigroup closed New York-based Old Lane in June and took a $202 million writedown on its $800 million investment.
Source: Agencies
IT sector likely to grow 31.4 percent in '09
The domestic IT- ITeS market is likely to grow 13.4% in 2009, the slowest since 2003, as per market research firm IDC India. The market which includes hardware, software and services, grew 17.3% in 2008 to generate revenue worth Rs 1,01,031 crore.
India is likely to witness a slower growth in the coming five years, IDC said. The domestic IT-ITeS market is expected to record an average growth rate of 16.4% in 2009-13, against 24.3% during 2003-08. The slower growth will see enhanced competition, leading to a change in strategy and continuous market re-alignment on the part of players, it said.
"The issues in the short run, more pronounced throughout 2009, will be productivity, cost savings and customer retention. This would eventually pave way for innovative services by leveraging the existing infrastructure and aligning it with emerging opportunities," IDC India country manager Kapil Dev Singh.
The research firm said global IT-ITeS market is expected to grow only 2.6% in 2009, against 5% in 2008 and much slower than 7% in 2007. Despite a lower growth rate, India will continue to be the fastest-growing IT market in Asia Pacific, followed by China, Vietnam, Thailand and Philippines.
In the domestic market, the product categories expected to grow faster than the average include collaborative applications, storage software, system and network management software. Within IT services, segments likely to outgrow the average include desktop management, information systems outsourcing, network management and application management. Solutions such as virtualisation, unified communications and business continuity services will also grow faster on account of enterprises' focus on cost savings.
Among emerging technologies, cloud computing services such as software as a service (SaaS) will be tested and adopted on a larger scale and will perform even better than in 2008. IDC said the economic slowdown will further increase and accelerate the adoption of outsourcing services by the Indian enterprises, while consumer spending on IT will moderate. There will also be increased consolidation among outsourcing vendors.
Source: Economic Times
India is likely to witness a slower growth in the coming five years, IDC said. The domestic IT-ITeS market is expected to record an average growth rate of 16.4% in 2009-13, against 24.3% during 2003-08. The slower growth will see enhanced competition, leading to a change in strategy and continuous market re-alignment on the part of players, it said.
"The issues in the short run, more pronounced throughout 2009, will be productivity, cost savings and customer retention. This would eventually pave way for innovative services by leveraging the existing infrastructure and aligning it with emerging opportunities," IDC India country manager Kapil Dev Singh.
The research firm said global IT-ITeS market is expected to grow only 2.6% in 2009, against 5% in 2008 and much slower than 7% in 2007. Despite a lower growth rate, India will continue to be the fastest-growing IT market in Asia Pacific, followed by China, Vietnam, Thailand and Philippines.
In the domestic market, the product categories expected to grow faster than the average include collaborative applications, storage software, system and network management software. Within IT services, segments likely to outgrow the average include desktop management, information systems outsourcing, network management and application management. Solutions such as virtualisation, unified communications and business continuity services will also grow faster on account of enterprises' focus on cost savings.
Among emerging technologies, cloud computing services such as software as a service (SaaS) will be tested and adopted on a larger scale and will perform even better than in 2008. IDC said the economic slowdown will further increase and accelerate the adoption of outsourcing services by the Indian enterprises, while consumer spending on IT will moderate. There will also be increased consolidation among outsourcing vendors.
Source: Economic Times
Will 2009 be worst year for US credit card companies?
US credit card companies have little to celebrate as many analysts brace for 2009 to be one of the worst years on record for consumer credit. Losses for the industry could top $70 billion, but it is hard to predict how bad the pain will be.
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 percent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread. In short, there's more debt than ever and fewer people are able to pay it. "In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 percent of their value in 2008. The United States is not standing idly by.
Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options. This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers. "It is hard to see the light at the end of the tunnel," Williams said.
Nowhere to hide
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JPMorgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual. Together, these six companies hold around 90 percent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment. Credit card companies have reported increased losses.
Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November. Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told media in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up. Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 percent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread. In short, there's more debt than ever and fewer people are able to pay it. "In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 percent of their value in 2008. The United States is not standing idly by.
Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options. This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers. "It is hard to see the light at the end of the tunnel," Williams said.
Nowhere to hide
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JPMorgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual. Together, these six companies hold around 90 percent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment. Credit card companies have reported increased losses.
Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November. Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told media in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up. Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
General Motors gets first tranche of US loan
General Motors Corp received its first multibillion dollar loan installment from the US Treasury Department Wednesday night, right in time to avert a financial disaster in which the struggling automaker may have been unable to sustain operations and pay suppliers.
``Treasury today finalized the loan transaction for GM and funded the first tranche of $4 billion,'' said Treasury spokeswoman Brookly McLaughlin in a written statement. The funds are the first portion of $9.4 billion in low-cost loans that GM is expected to receive from the government.
The Detroit automaker had been working feverishly with Treasury officials to close on the first loan installment. The money will be available for GM to use almost immediately. The cash-strapped Detroit company plans to use the money for continuing its operations.
GM is obligated to a make a large payment to a major supplier in early January, but has declined to offer details on the amount of money it owes or to which supplier.
``We appreciate the Administration extending a financial bridge to GM at this critical time for the US auto industry,'' said GM in a written statement shortly after the Treasury announcement. ``We are committed to successfully executing the viability plan we submitted on December 2 and remain confident in the future of General Motors.''
The loans come from the $700 billion bank rescue plan, approved by Congress in September. President George W Bush said earlier this month that the ailing automakers could tap part of those funds in the form of low-interest loans.
GM is burning through approximately $33 million a day, based on spending $1 billion per month during the third quarter. That daily amount is likely lower for the fourth quarter as GM has reduced spending on operations, sponsorships, utilities and even office supplies.
GM previously said it might not make it through the end of the year before running out of cash without government aid.
Auburn Hills, Michigan-based Chrysler LLC is expecting $4 billion in cash as well, but the Treasury has yet to announce the closing of the first round of loan money.
``We're working expeditiously with Chrysler to finalize that transaction and we remain committed to closing it on a timeline that will meet near term funding needs,'' McLaughlin said.
Chrysler is nearing the minimum level of cash, $2.5 billion, it needs to operate. Chrysler is already fending off angry parts suppliers and other vendors demanding cash payments on delivery. It generally pays suppliers $7 billion every 45 days.
Chrysler issued a statement Wednesday night, updating the status of its talks with the Treasury.
``We recognize the magnitude of the effort by the Treasury Department to complete these multiple financial arrangements quickly and sequentially,'' the company wrote in a press release. ``The discussions relating to Chrysler have been positive and productive, and we look forward to finalizing the details of our financial assistance in the immediate future.''
Dearborn, Michigan-based Ford Motor Co. said it does not intend to use government money to fund operations, as it is in a better financial position than its competitors. The Detroit automakers are trying to weather the biggest auto sales slump in more than 26 years.
Shares of GM fell 15.8 percent Wednesday, or 60 cents to $3.20, before the Treasury's announcement. Shares of Ford closed unchanged at $2.29.
Earlier this week, GM's financial arm, GMAC Financial Services, received $5 billion in aid from the Treasury Department. In addition, the Treasury said it would lend up to $1 billion to GM so that the automaker would be able to buy more equity from GMAC. Those purchases are expected to raise more capital for GMAC, and separate from the $4 billion received from the Treasury Wednesday.
Source: Agencies
``Treasury today finalized the loan transaction for GM and funded the first tranche of $4 billion,'' said Treasury spokeswoman Brookly McLaughlin in a written statement. The funds are the first portion of $9.4 billion in low-cost loans that GM is expected to receive from the government.
The Detroit automaker had been working feverishly with Treasury officials to close on the first loan installment. The money will be available for GM to use almost immediately. The cash-strapped Detroit company plans to use the money for continuing its operations.
GM is obligated to a make a large payment to a major supplier in early January, but has declined to offer details on the amount of money it owes or to which supplier.
``We appreciate the Administration extending a financial bridge to GM at this critical time for the US auto industry,'' said GM in a written statement shortly after the Treasury announcement. ``We are committed to successfully executing the viability plan we submitted on December 2 and remain confident in the future of General Motors.''
The loans come from the $700 billion bank rescue plan, approved by Congress in September. President George W Bush said earlier this month that the ailing automakers could tap part of those funds in the form of low-interest loans.
GM is burning through approximately $33 million a day, based on spending $1 billion per month during the third quarter. That daily amount is likely lower for the fourth quarter as GM has reduced spending on operations, sponsorships, utilities and even office supplies.
GM previously said it might not make it through the end of the year before running out of cash without government aid.
Auburn Hills, Michigan-based Chrysler LLC is expecting $4 billion in cash as well, but the Treasury has yet to announce the closing of the first round of loan money.
``We're working expeditiously with Chrysler to finalize that transaction and we remain committed to closing it on a timeline that will meet near term funding needs,'' McLaughlin said.
Chrysler is nearing the minimum level of cash, $2.5 billion, it needs to operate. Chrysler is already fending off angry parts suppliers and other vendors demanding cash payments on delivery. It generally pays suppliers $7 billion every 45 days.
Chrysler issued a statement Wednesday night, updating the status of its talks with the Treasury.
``We recognize the magnitude of the effort by the Treasury Department to complete these multiple financial arrangements quickly and sequentially,'' the company wrote in a press release. ``The discussions relating to Chrysler have been positive and productive, and we look forward to finalizing the details of our financial assistance in the immediate future.''
Dearborn, Michigan-based Ford Motor Co. said it does not intend to use government money to fund operations, as it is in a better financial position than its competitors. The Detroit automakers are trying to weather the biggest auto sales slump in more than 26 years.
Shares of GM fell 15.8 percent Wednesday, or 60 cents to $3.20, before the Treasury's announcement. Shares of Ford closed unchanged at $2.29.
Earlier this week, GM's financial arm, GMAC Financial Services, received $5 billion in aid from the Treasury Department. In addition, the Treasury said it would lend up to $1 billion to GM so that the automaker would be able to buy more equity from GMAC. Those purchases are expected to raise more capital for GMAC, and separate from the $4 billion received from the Treasury Wednesday.
Source: Agencies
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