Wednesday, December 31, 2008

Motorola to layoff another 400 employees

Mobile phone maker Motorola Inc said it will lay off 400 more employees in the fourth-quarter than it originally planned, resulting in additional charges.

In October, Motorola announced a cost-reduction plan that included cutting a total of 3,000 jobs, with 1,500 coming in the fourth quarter. The change means 1,900 will be in the fourth quarter although the overall total will not change.

The plan is intended to save the company $800 million in 2009. The fourth-quarter job cuts, primarily from the mobile devices segment, were expected to result in charges totaling $104 million.

In a filing with the US Securities and Exchange Commission, the company said it has since approved plans to cut another 400 jobs in the quarter. Motorola now expects $189 million in charges in the period related to its cost-cutting initiative.

In the filing, Motorola said "all of the company's business segments, as well as various corporate functions, are impacted by these plans."

Earlier this month, Motorola said it would suspend contributions to its 401(k) worker retirement plan, freeze its pension plan, stop some pay increases and cut the salaries of its two top executives.

Shares of Schaumburg, Illinois-based Motorola closed up 11 cents at $4.16.

Source: Agencies

Dell preparing for changes in senior management

Dell Inc's president of global operations, Michael Cannon, and chief marketing officer, Mark Jarvis will leave their roles in moves expected to be announced soon, the Wall Street Journal said, citing people briefed on the matter.

The people told the paper that they expect Jarvis to leave Dell, while Cannon will likely stay on in a different capacity.

Other changes are expected to focus on cutting costs and gaining tighter control over the company's global operations.

Two people with knowledge of the situation told the paper that Dell may also make cuts to its lower executive ranks.

The impending changes are intended to make managing Dell's world-wide business more efficient, people briefed on the matter said.

Operations now divided by geography will be consolidated into international business units, a shift Dell made earlier this year with its consumer division.

A Dell spokesman declined to comment to the paper on any changes, but said Dell has "been in a two-year process of positioning the company best for customers and long-term growth."

Dell could not be immediately reached for comment.

Source: Agencies

Air India announces fare cut up to 82pc

A day after Jet Airways reduced fares on domestic routes, state-owned operator Air India on Tuesday announced fare cut up to 82 percent in at least 20 sectors, mostly on metro routes, a senior airline official said.

"The new fare cut comes into effect today (Tuesday). We have cut fares on 20 sectors by up to 82 per cent. This will largely benefit passengers on metro routes," an airline spokesperson told reporters.

India's leading private air carrier Jet Airways Monday reduced fares on its domestic routes by up to 40 percent with immediate effect.

Another leading carrier, Kingfisher Airlines, Sunday announced fare cut from Jan 1. However, it has not announced the quantum of fare cut.

Low cost carriers are also expected to follow suit, said an industry official. The fare cuts comes in the wake of slackening demand in the post-peak season and continued decline in fuel prices.

Over the past four months, there has been a sharp decline in aviation fuel prices. While some air carriers earlier this month reduced the fuel surcharge on the ticket price by Rs 200 to Rs 400, they did not touch the base fare.

Oil companies have reduced aviation fuel prices seven times since September. The fuel is now sold at Rs 32,691.28 per kilolitre in Delhi after prices were slashed by Rs 4,208.37 in the first week of December.

Source: Airlines

GM cuts financing costs; GMAC expands lending

General Motors Corp and its financing affiliate GMAC on Tuesday announced programs to make it easier for car and truck buyers to get financing, a day after GMAC agreed to sell the government a $5 billion stake.

Through Jan. 5, GM will offer interest rates of zero percent to 4.9 percent on loans of up to five years on various 2008 model year vehicles, and 3.9 percent to 5.9 percent on some 2009 vehicles. Many of the vehicles also carry cash discounts of $500 to $4,250.

The move is a bid to capitalize on GMAC's separate plan to provide auto financing to more U.S. consumers. GMAC will extend loans to retail buyers with credit scores of 621 or higher. In October it had restricted loans to borrowers with scores of 700 or higher.

Many analysts consider borrowers with credit scores of 620 or lower to be "subprime." Dealer wholesale financing is unchanged, GMAC said.

GMAC is owned by GM and private equity firm Cerberus Capital Management LP [CBS.UL].

The changes may help bolster sales at GM, the nation's largest automaker, following a 41 percent plunge in November.

GMAC has traditionally provided the bulk of financing for GM's retail customers and the floorplan financing that dealers rely on to carry car and truck inventory.

Mark LaNeve, GM's sales and marketing chief, said the lower financing costs will encourage customers to "get back into the game."

Source: Agencies

Tuesday, December 30, 2008

RCom plans to invest Rs 4,000 crore on 3G network

Reliance Communications is looking forward to participate in the 3G auction slated for next year, company chairman Anil Ambani said Tuesday.

The company has planned an investment of Rs 2,000 crore to Rs 4,000 crore on 3G services, he said.

Ambani also said the company would participate in the auction for spectrum on a nationwide basis and not restrict to a few circles.

Indian IT cos eye Japanese outsourcing biz

After neutralising their mother-tongue accent and mastering the American drawl, Indian geeks are busy learning Japan’s Kanji, Katakana and Hiragana symbols.

Reason: The recession is eating into the volume of outsourced IT work from the US; and after the US, Japan is an important market from the IT perspective, more so during the current period.

Take the case of Suman Reddy Ragidi, a business analyst of Cognizant. Japanese language training has enabled her to converse with clients both in formal as well as informal situations.

“The training has also made it easier for me to understand all project documentation written in Japanese,’’ says Reddy Ragidi. On its part, Cognizant runs foreign language training in its offices and its mandatory for employees to enroll in such language courses.

“Language is an important aspect of culture and such training is helpful in everyday communication. Importantly, employees are able to articulate their viewpoints to clients,’’ says K Venkataraman, director of Cognizant.

The Japanese IT services market is valued at $108 billion, according to a recent survey by Nasscom and Pricewaterhouse-Coopers. India has bagged only 13 per cent of this offshoring pie. Moreover, demand for software is primarily driven by the BFSI (banking, financial, services and insurance) and manufacturing companies which consume 42 per cent of the total IT services.

Another Chennai-based IT player Infoview Technologies, whose business comes fully from Japanese majors, is making sure its employees know Japanese symbols by heart. Around three-fourth of the company’s employees have learnt the language and the top management team which accounts for 10 per cent of the workforce has reached the ‘near native level’ in terms of mastering the language.

The company also recently launched an online Japanese learning software for beginners in India. JWEIC is developed by WEIC Corporation, a Japanese company that is into production and sales of e-learning language and learning management systems. Infoview, which has the rights to sell the software in India and Singapore, is targeting executives and college students alike for the online course. It is targeting 10,000 learners during the first year.

Similarly, Noida-based Nucleus Software which generates half of its revenues from Japan is encouraging its employees to learn the language. “Right now, we are utilising the services of interpreters and translators,’’ says chief executive and managing director, Vishnu Dusad.

For Indian IT entrepreneurs like Chandrasekaran of Infoview Technologies and Dusad of Nucleus the lure for doing business with ‘The Land of the Rising Sun’ is the importance that the Japanese place to long-term relationships. “It’s tough to crack the market initially,” says Cheran Chandrasekaran, CEO, Infoview Technologies.

Source: Times of India

AMD raises layoff count to 600 now

US chip maker Advanced Micro Devices Inc said that it laid off 600 workers, 100 more than first announced, and was taking yet another charge related to its $5.4 billion purchase of ATI Technologies Inc.

AMD said it cut 600 employees in its most recent quarter, compared with the 500 it had originally planned. As a result, the company now expects to record $70 million in restructuring charges, versus the $50 million it previously predicted.

In addition, the new cost reductions would result in more charges in the first half of 2009, although AMD would not provide an estimate.

The chip maker also said it would take a goodwill impairment charge related to its 2006 acquisition of graphics chip maker ATI. AMD said its decision was "based on the results of an updated, long-term financial outlook" for the business, according to a filing with US securities regulators.

The company said it could not estimate the size of the charge, which would be material and non-cash, according to the filing with the US Securities and Exchange Commission. A company spokesman declined to provide any further detail.

It is the latest charge AMD has taken related to its purchase of ATI. In the June quarter, the impairment charge totalled more than $800 million.

In the December quarter, AMD said it would also take a $20 million impairment charge on its investment in flash memory chip maker Spansion Inc.

Source: Agencies

India delays 3G spectrum auction

The Government of India has further postponed the auction of the much-awaited 3G spectrum in the country taking into consideration the concern of the prospective applicant companies, say reports.

According to a report, the last date of receiving application has been extended to January 20 from January 5. Though the auction was supposed to take place before December 31, it was later postponed to January 16.

Earlier there were reports that the auction would be delayed as the Department of Telecom has not received the Cabinet's approval on vital proposals relating to the services.

Also it was said that the Defence Ministry, which holds the spectrum, may not be able to vacate the same before the auction date.

Monday, December 29, 2008

Jet Airways, Kingfisher to cut air fares in January

Private air carriers Jet Airways and Kingfisher announced reduction in fares following steep fall in Aviation Turbine Fuel prices.

While Jet Airways said it was reducing air fare ranging 15-40 per cent from tomorrow, Kingfisher Airlines said it would effect fare cut across its network from January 1.

"Jet Airways is reducing basic fares ranging from 15-40 per cent across most of the domestic flights with effect from tomorrow," a Jet Airways spokesperson said.

The fare cut would be across all domestic sectors, the spokesperson said tonight.

Civil Aviation Minister Praful Patel had repeatedly asked the airlines to pass on the benefit of sharp drop in ATF prices to passengers. Earlier in the day, Kingfisher Airlines said it would effect a fare cut across its network from January 1.

"Kingfisher Airlines will begin the New Year on an aggressive note by slashing fares on its network," Kingfisher Airlines Chairman, Vijaya Mallya, said in a statement here. He, however, did not specify the quantum by which fares would come down.

The current low prices of ATF allows Kingfisher to pursue an opportunity to significantly increase market share by offering the fine five-star flying experience at reduced fares, he said.

Earlier, Kingfisher had said that it would effect fare cut only after the government classifies ATF in the Declared Goods category. The airlines across the board are demanding the Government to classify ATF in the Declared Goods category.

Under the declared goods category, there will be a uniform 4 per cent sales tax on air fuel across the country. The proposal is now before the Parliament.

However, several state governments are likely to oppose the uniform taxation as it would cause revenue loss to them. Now, the sales tax varies from four per cent to 32 per cent, and accounts for over 35 per cent of airlines' operational cost.

Over the last four months, there has been a sharp decline in ATF prices. While some air carriers earlier this month reduced the fuel surcharge between Rs 200 and Rs 400, they did not touch the basic fare.

Microsoft advised to lay off over 9,000 employees

The world's top software firm Microsoft has been asked to cut its workforce by 10 per cent, or about 9,100 employees, to tell the market that profits are more important than revenue growth in difficult times.

Brokerage firm Oppenheimer & Co's analyst Brad Reback has said in a report on Microsoft that such layoff exercise "would be a healthy move for the company."

The move would be well received by the market and would "signal that profitability is more important than revenue growth during this very difficult time," Reback added.

Calling for a 10 per cent reduction on the company's payrolls, Reback said in his report for the institutional investors of Microsoft that this would result in an approximately 10 per cent gain in its earnings per share.

The software giant had close to 91,000 employees on its payrolls at the end of July-September quarter.

Earlier in October, Microsoft had put in place a hiring freeze on some of its divisions, such as entertainment and devices businesses that make products like X-Box and Zune.

There have been some unconfirmed reports on blogs that the company would announce some major layoffs in the first month of 2009.

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 more than one lakh job cuts in the month of December alone in the US, while so far in 2008 there have been close to 20 lakh layoffs.

Source: Agencies

Saturday, December 27, 2008

Top Web-based operating systems

Want to see what lies ahead in the world of operating systems? Head to the Web. That's where you'll find some workable examples of operating systems that move everything- applications, files, and communications- from the confines of your desktop to the more widely accessible Internet.

And mind you, Web-based operating systems are more than just a collection of applications that run within a browser. They're self-contained environments in which you can create and store documents, copy files from one folder or drive to another, and conduct communications.

In short, almost everything you can do from Windows or the Mac OS should be able to be accomplished within a Web OS. All you need is a Web browser to get there. Here's looking into some options.

Google Chrome

While the major players in the software industry are not yet among those with Web-based operating system (OS) prototypes, it's clear that the big names are paying attention- and making plans.

Google's Chrome, with its Spartan interface- largely devoid of visible menus, button bars, and status panels, easily reminds one of the basis of an operating system when it's expanded to full screen.

And Microsoft, although deriving a large portion of its revenue from the lucrative desktop applications business, has just announced that it will create Web-based versions of its Microsoft Office applications- and make them available for free.


A good place to start in your discovery of Web-based operating systems is eyeOS (, which is free, open source, and very easy to sign up for. There's no need to install anything to use eyeOS.

Simply sign up with a user name and password to create an account, and from that point forward, you have an operating system on the Web, accessible from any browser. eyeOS creates space on its servers to store your operating system settings and any files you create.

eyeOS resembles contemporary desktop-bound operating systems.

There's a workspace area- or desktop- along with icons on the left that represent shortcuts to applications, including a word processor, calendar, contact manager, RSS feed, and a trash bin.

Fire up the eyeOS word processor and you'll find yourself in a serviceable document creation tool, replete with toolbar buttons for most of the formatting tasks that users require today.

Documents you save are stored on eyeOS's servers by default, so there's no local storage involved. You can, if you choose, download the files you create to your own PC and upload files to your eyeOS environment.

The beauty of a Web-based environment, however, is that you can shut down your browser -- and thus your eyeOS operating system -- on one machine, launch a browser on another machine in another location, and then launch your eyeOS desktop again.

eyeOS even remembers all of the applications and documents you were last working on, so the workspace you see is exactly the one you left off with.

A green eyeOS button at the bottom middle of the screen is analogous to the Windows Vista Start button.

It contains shortcuts to system settings, applications, and a few other commands, including Close Session. Enter System Preferences, and you'll see some impressive customisation options, including the ability to change the theme, or look, of eyeOS to resemble Vista, Ubuntu, Gnome, or other operating systems. The one glaring omission from eyeOS is an e-mail client. Apparently you're expected to bring your own e-mail. ( is in some ways even more full-featured and certainly more colourful- than eyeOS. After you sign up, for free, carves out an impressive 5 gigabytes of file storage on its servers for you, and it creates your very own Mail e-mail account, with 3 gigabytes of storage.

Like eyeOS, there's nothing to install. Once you sign up, you'll receive a confirmation e-mail message. Click the activation link inside, and you're ready to go.

The first time you launch, your browser will switch to full-screen mode so that you can see all there is that has to offer. There's a full-featured word processor, spreadsheet, e-mail, your personal drive for file storage, instant messaging, and even a few games.

There's also plenty of hand-holding in, as well, with icons that offer to take you on a tour of, help you set up your e-mail, create and edit documents, and upload files from your desktop computer to your environment.

A Go button in the lower left-hand corner of the screen mimics Vista's Start button; it provides handy access to all of the operating system's features and programs. is full of glitz and color, and it is consequently more demanding of your hardware and somewhat more sluggish than eyeOS, which is streamlined by comparison. Still, many will likely find that's friendliness will make any performance hit worthwhile.

Desktop Two

Desktop Two ( is a java-based Web operating system that's the quickest of all to set up and get going.

After a brief sign-up routine, the desktop loads, and you're ready to start exploring.

Desktop Two offers more applications that allow users to create their own presence on the Web than the other major Web operating systems. Along with a word processor and e-mail program, Desktop Two provides a Web site editor and a blogging programme.

The blogging application, in particular, is impressive, providing a two-click entry into the world of setting up and maintaining your own blog.

Once you create your first blog entry, the programme provides you with the Web address that you can distribute to the world so that others can visit your blog on the Internet.

Desktop Two's conventional applications are less impressive, however, in part because the operating system was not always able to save documents to Desktop Two's online storage system.

Why Web-based OS

One could argue that a Web-based operating system is redundant, since one needs a computer, operating system, and Web browser to access an online operating system.

While that's true, the point of an online operating system is complete environment portability.

That means being able to log on to any computer that has an Internet connection and, in the time it takes to launch your Web OS, having all of your applications and documents ready for you to resume work.

Although you could cobble together many of the elements of a Web OS by using, say, Google Docs, Yahoo Mail, and other online applications, doing so would require you to make several stops around the Internet.

There's no doubt that today's Web-based operating systems are far from feature-laden, and they probably will not tempt many to abandon their current routine that combines desktop and Web-based software.

But given the push that the major players in the industry are making toward a completely Web-based future, there's also little doubt that Web-based operating systems, or some form thereof, are in our collective future.

Source: Agencies

Caretel Infotech hires 600 people for BPO operations

Dalmia group company Caretel Infotech is upbeat about the opportunities in the BPO space and has hired about 600 people, even while others are handing out pink slips to employees amid the current slowdown.

"In last 30 days, we have recruited 619 employees for our various projects from metros and even small towns like Chindwara at Rajasthan for our Kisaan Call Centre Project. For our various assignments, we will be recruiting more and more people from all over India and train them for the future," Caretel Infotech Chief Executive Officer Amit Roy said in a statement.

The company also said it is looking at the downturn as as an opportunity to bag more deals, both in the country and overseas.

"We are looking at this slowdown as an opportunity and have started international outsourcing process for some part of the US, Europe, Australia and New Zealand to manage the slowdown impact. We have also increased our national clientele as we have bagged assignments from reputed brands like DDA ... and soon will close a DTH service provider in India," Roy said.

Caretel has 13 business centres in India and employs over 6,000 people. It is now expanding its operations overseas and is targeting a significant growth from its global clients.

For our international clients, we will be hiring 200 or more people in near future, he added.

Source: Agencies

Friday, December 26, 2008

Techies bidding farewell in 2008

It's time to bid adieu to the year 2008, the year which witnessed the farewells of some of the biggest names in the technology world -- some of the marking the end of an era.

While most of these were ceremonious exits with some moving to take up their passions or philanthropy, others in pursuit of greener pastures. There were also some unceremonious exits, where some CEOs were made to resign penalising them for falling revenues and constant battering of their company's stocks at the bourses.

Here's looking into some of the most high-profile exits of 2008:

Arun Sarin, Vodafone

One of the most successful CEOs of British telecom giant Vodafone, Arun Sarin, quit the company in the July 2008 to don a new challenge.

During his five year tenure at the world's largest mobile firm, Sarin is credited for acquiring a controlling stake in one of India's biggest mobile phone companies, Hutchison Essar. Under him Vodafone posted group revenue of 35.5 billion pounds for the year ending March 31, an increase of 14.1 per cent, and organic growth of 4.2 per cent. This came in marginally higher than market consensus, provided by the company, of 35.2 billion to 35.4 billion pounds.

Under Sarin, Vodafone expanded aggressively into emerging markets, including Romania, the Czech Republic and Turkey. Sarin visited India before his exit along with his successor to participate in Vodafone-Essar board meeting, triggering speculation that he may join Tatas, but officials of the Indian conglomerate debunked any such report.

Post-exit Sarin planned a trekking trip to Himalayas before settling in California. Recently, Sarin, 53, who quit Vodafone at the pinnacle of his career, was speculated to be the most sought-after contender for the position of Yahoo CEO, after the Jerry Yang's exit.

Sarin, however, said he was not keen on the position. Sarin is looking at alternative roles at other US public companies as well as at a private equity firm, the Financial Times wrote recently.

The India-born US citizen is an IIT Kharagpur alumnus and has an MBA degree from University of California, Berkley.

Bill Gates, Microsoft

This was surely the biggest farewell of 2008. 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.

A Harvard College drop out, Gates has been a permanent fixture in the Forbes Richest people list, holding the numero uno slot for 15 years in a row between 1993 and 2007. In 2008, Gates was topped by investor Warren Buffett and Mexico's telecom tycoon Carlos Slim in the world's wealthiest list.

Bill Gates' key creation is Microsoft, a company with sales of $51 billion as of June 2007 with 78,000 employees across 105 countries. Almost 90 per cent of the estimated 1 billion computers (desktop and laptop) in the world run on Microsoft's Windows and Office. The company has products across the layers network, operating system, database, middleware, application software.

Gates departure comes at a time when Microsoft is engaged in an escalating rivalry with Google and other competitors who are using the internet to chip away at its software dominance.

During his recent visit to India, Gates launched a major initiative for India’s public healthcare with a special focus on eradicating polio.

Jerry Yang, Yahoo

After a rocky tenure at Yahoo, co-founder Jerry Yang stepped down as chief executive this November.

Among the Silicon Valley dotcom billionaires, Yang was named CEO in June 2007 after Terry Semel exit. As CEO, Yang struggled to turn around the company's dwindling fortunes. The rejection of Microsoft offer and a failed advertising deal with Google marred his brief tenure.

Earlier this year, Yang rejected a $33 per share offer by Microsoft for Yahoo worth a total of more than $47 billion. Microsoft CEO Steve Ballmer later withdrew the offer after Yang sought $37 per share. The negotiating breakdown triggered a shareholder revolt led by billionaire investor Carl Icahn, who called for Yang's ouster in July. Since then Yahoo has been trading at between $10-12 a share.

With a fortune estimated at $2.23 billion, some shareholders accused Yang of putting his personal affection for the company he created over the interests of its shareholders. After squandering the opportunity to sell to Microsoft, Yang tried to boost Yahoo's profit by forging an advertising partnership with Google. But this backup plan too fell when Google walked away from the deal to avoid a court battle with the US Justice Department, which concluded that the partnership may throttle competition in the online advertising market.

Sanjay Jha, Qualcomm

Indian engineering whizkid Sanjay Jha left Qualcomm CDMA Technologies (QCT) group as COO and president this year to join beleaguered US telecom major Motorola as CEO of Mobile Devices.

At Motorola, Jha holds a key task to pull the American cellphone pioneer which slipped to the fourth position in global handset sales and the downslide has been quite sharp.

What top's Jha's priorities is reversing the fortunes of the company’s loss-making handset business -- comprising over one third of Motorola’s total business worth $36.6 billion.

Forty five-year-old Jha started as a senior engineer at Qualcomm VLSI (very large scale integration) group in 1994 and was promoted as senior vice-president of engineering in 1998.

He was elevated as the president of QCT in 2003 when the chipset and software division was started at Qualcomm. For the past five years, this division of Qualcomm has been ranked among the world's largest fabless semiconductor producers, and was rated as being ahead of the leader Texas Instruments last year. Qualcomm had sold its own CDMA cell phone business to Kyocera in February 2000.

Neelam Dhawan, Microsoft

Ending her three-and-a-half years stint as MD Microsoft India, Neelam Dhawan joined Hewlett-Packard India as its managing director in June.

At HP, 48-year-old Neelam holds key tasks of driving overall strategy, revenues and profitability for HP India. Currently she reports to Balu Doraisamy, MD, HP Asia Pacific & Japan.

During her tenure at Microsoft, she looked into the strategic focus and improved company's operating efficiency and execution, as well as its financial performance and customer focus.

Prior to Microsoft, Neelam worked with Compaq as head (Enterprise Sales) and HP as vice president (Customer Solutions Group). Under her leadership the Rs 16,000-crore Hewlett-Packard recently won a multi-million dollar Godrej outsourcing deal.

An economics graduate from St Stephen’s College Delhi, Neelam holds a masters in Business Administration from the Faculty of Management Studies, Delhi University.

Lee Kun-hee, Samsung

In one of the most sensational and controversial exits of the year, Samsung Group chairman Lee Kun-hee, resigned following an indictment on tax evasion charges after a counsel investigation.

Known to be the most powerful Korean tycoon, Lee was charged with $133m tax evasion and breach of trust during his 20-year tenure at Samsung. Lee was also charged with damaging the interest of other shareholders. He was accused of forcing Samsung subsidiaries to sell shares to his son at unfairly low prices.

However, the company was cleared of the most serious allegation that it raised money to bribe influential citizens and ministers in its native South Korea.

Joining Lee in stepping down were Vice Chairman Lee Hak-soo and Lee Jae-yong, the chairman's son and heir apparent to the Samsung throne. Nine other senior executives also left Samsung following the charges.

Sixty six-year old Lee is credited of having built $160-billion Samsung Group which is Korea Inc's pride, accounting for roughly 21 per cent of the country's total exports.

Ben Verwaayen, British Telecom

British Telecom Group, one of the largest telecommunications companies in Europe, saw the departure of its CEO Ben Verwaayen in the month of April.

Having served BT for almost six years, Verwaayen headed back to the US to take up a position with a venture capital firm. Verwaayen joined BT in January 2002 after quitting his job from US equipment vendor Lucent.

During his tenure at BT, Verwaayen initiated a complete broadband overhaul of BT's aging infrastructure. He mended fences with Ofcom, the UK's version of the FCC.

Fifty-six year old Dutch national was also awarded an honorary knighthood for services to the communications industry. Verwaayen helped BT buy a slew of US-based companies including Infonet, Radianz, Counterpane and INS pushing the telecom giant into a number of emerging markets.

Ian Livingston, who was chief executive of BT Retail, succeeded Verwaayen.

Farewell in the wings: Steve Jobs?

Apple recently announced that its Chief Executive Steve Jobs will not deliver the keynote address at the Macworld trade show next month. The announcement once again revived investors' concerns about the state of his health and sent the company's shares down.

Apple spokesman, however, denied that Jobs was missing the show due to health issues. Instead of Jobs, Philip Schiller, the senior vice president of worldwide product marketing, will deliver the keynote.

However, Samuel Wilson, an analyst at JMP Securities, said Jobs' absence at the event was important. "It's like the first time in a long time he hasn't spoken in Macworld. Why is he not speaking this year would be the question."

Investors have been concerned Jobs health after he was diagnosed with cancer some years back. In 2004, Jobs, 53, said he had undergone successful surgery to remove a rare type of pancreatic cancer. In September, Jobs, who is often perceived as irreplaceable as Apple's leader, appeared thin but jaunty as he introduced new iPod digital music players.

Macworld is a cultural event that draws thousands of Apple fans and technology aficionados to San Francisco, where they have been treated to major announcements from Jobs in past years, including the launch of the iPhone in 2007.

Source: Indiatimes Infotech

50,000 Indian IT jobs may go, says UNITES

Over 50,000 IT professionals in the country may lose their jobs over the next six months as the situation in the sector is expected to worsen due to the impact of global economic meltdown on the export-driven industry, a forecast by a union of IT Enabled Services warned.

"...there would be 50,000 job losses (IT and BPO put together) over the next six months," Karthik Shekhar, general secretary of UNITES India, a politically neutral union of ITES professionals told the media.

The job loss in the IT and BPO sector in the country topped 10,000 in the September-December period, Shekar said.

While employees of medium-sized companies bore the brunt of job losses in the September-December period, it's going to be their counterparts in the big and small firms who would increasingly face the axe in the coming six months, he said.

UNITES India, affiliated to the global union United Network International, suggested that the companies in trouble could resort to salary and incentive cuts without trying to "squeeze" the staff, rather than adopting the "layoff path".

Employees are willing to take such cuts for 12-16 months till the demand picks up again, when such benefits should be restored to them.

Shekhar said senior officials of the industry had concurred with the figure of 10,000 job loses in September-December, stating that it accounted for "bottom five per cent of the performers".

Consultations with the union's counterparts in the US and UK suggested that slowdown would continue to hit the offshore sourcing space, he said.

He said factors like continued slowdown, likely "tax application" to companies outsourcing jobs under the new US regime and tightening in regard to H1-B visas were among the key reasons cited for the acceleration in issue of pink slips.

Source: Agencies

Will Japanese production plunge amid global slump?

Japanese production fell at the fastest rate on record in November as firms closed factories and cut jobs due to slumping demand brought on by the global economic crisis, according to data out Friday.

Industrial output in the world's second largest economy plunged a record 8.1 percent in November from the previous month, the ministry of economy, trade and industry said.

It was the biggest drop since the ministry began releasing output statistics in 1953 and was much worse than market forecasts of a 6.7% fall.

Production is likely to continue falling, with the ministry expecting an 8.0% drop in December and another 2.1% decline in January, as the auto industry feels the pinch.

"Overall, production is rapidly falling," the ministry said.

Unemployment meanwhile rose to 3.9% in November, worsening 0.2 percentage points from the previous month, the internal affairs ministry said.

The figure was slightly below average market forecasts of 4.0%.

The number of people out of work increased by 100,000 from a year earlier to a total of 2.56 million.

The data came as brand-name Japanese manufacturers, including Toyota Motor Corp., Sony Corp. and Canon Inc., lower production and eliminate jobs to adjust to the slump in overseas demand for their exports.

The job cuts have targeted mainly people on limited-term contracts or those who were dispatched from temp agencies.

The labour ministry said that a total of 85,012 temporary or dispatch workers have already lost their jobs or know they will be laid off by March.

The figure doubled in a month, reflecting the rapid deterioration of the employment environment for people without permanent contracts, a health ministry official said.

In other data, Japan said that core consumer prices rose 1.0 percent in November from a year earlier although they eased by 0.8 percent from the previous month.

Core consumer prices have been rising for more than a year, albeit at a slower pace than before as global energy prices come down.

Japan for a decade battled deflation, or falling prices, which sapped growth from the economy.

Source: Agencies

Will oil prices rebound in post-Christmas trade?

World oil prices rebounded in Asian trade on Friday after tumbling to four-year lows before the Christmas break, with economic gloom weighing on the market, analysts said.

New York's main contract, light sweet crude for February delivery, rose 93 cents to 36.28 dollars a barrel after closing down 3.63 dollars at 35.35 in US trade on Wednesday.

Brent North Sea crude for February delivery rose 1.04 dollars to 37.65 dollars. In London the contract settled on Wednesday 3.75 dollars lower at 36.61 dollars, its lowest since July 2004.

After taking a one-day trading break for Christmas, oil reopened higher on Friday partly because of technical factors, said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage.

"After a sharp drop in sentiment on Wednesday, before the holidays, today (there is) a slight technical rebound," he said from Tokyo.

Another factor boosting prices was the US government's latest weekly report on crude stockpiles in the world's largest energy consumer, Hasegawa said.

The Energy Information Administration (EIA) report, released Wednesday, showed US crude inventories sank 3.1 million barrels in the week ending December 19. The drop was far heavier than market expectations.

The EIA added that crude reserves were 9.1 percent higher than at the same stage last year.

Analysts said that recent US data showing that the world's biggest economy remains in a recession were likely to keep crude oil prices under pressure in the immediate term.

A sharp global economic downturn that has slashed the world's demand for energy has led the price of crude oil to collapse by about 75 percent since hitting record highs above 147 dollars per barrel in July.

Oil markets are pricing in a continued decline in economic activity despite efforts by governments around the world to stimulate activity, MF Global energy analyst John Kilduff said.

"The energy markets appear as unappreciative of the stimulus efforts as any of the other markets and the pricing in of doom and gloom are producing price levels that transcends reality," he said.

"Obviously we haven't reached the ultimate end point yet."

The Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 percent of the world's crude, agreed last week to cut output by 2.2 million barrels per day to shore up the market.

Prices have continued to slide despite OPEC's announcement.

Source: Agencies

Thursday, December 25, 2008

World Bank rejects Satyam's demand for an apology

The World Bank has rejected Satyam Computer Service’s demand to withdraw a statement by which the organisation imposed an eight-year ban on any business with the IT major.

Satyam Computers had earlier asked the international lender for an apology for its statement on the IT major's failure to give proper documentation on fees charged for sub-contractors, and asked the Bank to withdraw the statement.

"The Bank stands by its statement issued on its Indian website on December 23," the India spokesperson of the World Bank Sudip Mazumder said.

The World Bank had said on December 23 said that "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."

Asked if the Bank would apologies as demanded by Satyam, he said any comment if at all had to come from the headquarters in Washington, but the Bank stands by its statement.

He said "It will be in appropriate to comment on Satyam's statement since I have not received it or read it."

It is important to note that these developments are based out of our headquarters in Washington and are not related to Bank's India Programme," Mazumder said.

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."

Satyam, which is already reeling under a crisis over aborted acquisition of two firms promoted by family of Chairman Ramalinga Raju, advised the Bank that the IT firm would evaluate all options in view of both the Bank's "inappropriate" public statements and its response to Satyam's requests.

"Satyam usually does not comment publicly on matters involving our customer relationships. However, the inaccuracy and inappropriateness of the World Bank's public statements regarding Satyam has forced us to issue this brief statement in order to set the record straight," it added.

The issue will now come up for discussion at the December 29 Board meeting of the company, against which the Bank has imposed an eight-year ban.

Source: Agencies

MphasiS asks 1,300-1,500 employees to relocate or quit

IT services firm MphasiS has asked all 1,300-1,500 employees at its Noida office to either move to a low-cost location or quit.

Most of the employees have quit or are in the process of quitting the firm. Only a few have decided to shift to another centre, informed four former employees who quit recently.

MphasiS, majority-owned by EDS that was acquired by HP this year, offers outsourcing services in financial services, healthcare, communications, transportation, consumer & retail industries and has over 28,000 people on its rolls. It set up the Noida centre in 2005 for BPO operations and has over 1,000 BPO employees, besides some IT employees.

The four former MphasiS employees ET spoke to said the company had told the BPO employees about three months ago to decide between quitting or relocating to other MphasiS centres such as Indore and Vadodara. All employees were given time till December-end to decide and were not given any reason behind the move.

A company spokeswoman said that MphasiS continues to work out of the Noida centre. “We continue to shape our operations as per our client needs, and have recently set up a new centre in Vadodara.

MphasiS is known for its sensitive HR policies and the interests of its employees are a priority,” she said. The spokeswoman did not comment on the decision to relocate people.

Besides giving the option to relocate, MphasiS had invited rival firms such as HCL, ExlService Holdings and Tech Mahindra to recruit from among its employees.

One of the four ex-employees, who bagged a job with one of these firms, said most BPO employees at the Noida centre had managed to find another job.

However, those in the IT services business were not so lucky. One former IT employee at Noida said the company informed the team about a month ago that they need to find another job. “They also said that if we quit early, we will get our retention bonus, which was due later, with our November salary,” he said, adding he is yet to find another job.

Earlier this month, MphasiS opened a 400-seat BPO centre in Vadodara. The company had said it plans to increase the number of seats to 800 seats and employ 2,500 people within a year.

Source: Agencies

Despite meltdown: No job loses in BPO sector!

Software and BPO industry body Nasscom on Wednesday said the business process outsourcing sector is not in the danger of losing jobs due to the ongoing economic downturn rather a net hirer in the current fiscal.

In a statement here Nasscom said, "Media reports suggest that the Indian BPO industry will see 2.5 lakh job losses by the first quarter of 2009, in the wake of downturn in the US and other developed economies. Nasscom’s research and interaction with its member companies is not in support of this statement. Our detailed industry performance and forecast for FY09 will be released in the next fortnight. However, on employment the industry will continue to be a net hirer in FY09 as a direct corollary of industry growth and fears of large scale job losses at an industry level are unfounded."

The industry body's comment comes in the wake BPO Industry Association President Samir Chopra stating that "severe job loss is expected because of recession. We are going to request for a fiscal package from the Government but if that doesn't happen, then there be huge amount of losses in terms of manpower. I think a quarter of a million jobs will go."

The $11-billion BPO sector employs about seven lakh people.

Source: Agencies

Has US economy sunk deeper into recession?

Bleak housing data showed the United States and Britain were sinking deeper into recession and authorities from Washington to Tokyo worked hard to spend their way out of the worst downturn in decades.

Japan's government on Wednesday approved its biggest-ever budget to revive its economy while US President-elect Barack Obama sought to clinch a deal with congressional lawmakers on a massive stimulus package even before the Christmas Day.

"Japan cannot avoid the tsunami of the world recession, but it can try to find a way out," Japanese Prime Minister Taro Aso said announcing the budget.

"The world economy is in a once-in-a-hundred years recession. We need extraordinary measures to deal with an extraordinary situation," he said.

A record drop in U.S. existing home sales and prices last month reported on Tuesday showed the world's biggest economy was on track for what one Federal Reserve official said could be the longest downturn since the World War Two. Housing is at the root of the U.S. slump and the global malaise and economists expect the economy to decline much more in the current quarter after a 0.5 percent contraction in the third quarter. Britain, the world's fifth-largest economy, is in an equally dire shape.

The Royal Institution of Chartered Surveyors said house prices were set to fall by 10 percent next year, confirming the bleak outlook after Tuesday's data showed the economy shrinking by 0.6 percent in the third quarter.

The relentless flow of bad news overshadowed rescue efforts and prompted a warning from European Central Bank President Jean-Claude Trichet that investors could be overlooking the importance of steps already taken by policymakers.

Japan had its share of gloom this week, reporting a record drop in exports -- the mainstay of an economy dogged by weak consumer spending -- and a similarly sharp collapse in business sentiment.


Grim data and warnings from the central bank that the worst may not be over fanned expectations that it will cut its key rate to zero from 0.1 percent and revive a policy of flooding banks with interest free cash it abandoned just two years ago.

Doing its part, Japan's cabinet approved a record 88.5 trillion yen ($980.6 billion) budget for the next fiscal year starting in April. The plan boosts overall spending, excluding debt servicing costs, by 9 percent compared to this year's initial budget and aims to accommodate part of 12 trillion yen in extra spending on government stimulus packages.

Source: Agencies

Where has the US bailout money gone?

The US Treasury Department said on Tuesday that it completed purchases of equity in 49 banks on Friday and 43 on Tuesday as part of a plan to stabilize the financial system and restore normal lending.

The 49 banks that received Treasury capital on Friday included 14 privately held institutions, marking the first government capital injections into private banks since the Treasury widened the reach of its capital purchase program.

Congress approved a $700 billion financial rescue program in early October, and the Treasury has said it would use $250 billion to bolster banks' capital position. Currently, the Treasury has authority to use only half of the overall $700 billion approved by Congress.

Following are details on what has been spent or pledged so far of the $350 billion the Treasury currently has authority to draw on:

What has been spent so far

==> $250 billion to buy senior preferred shares and warrants in banks and thrifts.

The latest equity purchases brought the total of investments made so far to $162 billion. A further $10 billion is approved for Merrill Lynch but has been deferred pending its merger with Bank of America.

==> $40 billion investment in troubled insurer American International Group, which has been completed.

==> $20 billion investment in Citigroup pledged as part of a bailout announced on November 23.

Global stimulus package I 2008: Year of financial crisis

Recession hits IT companies I India battles credit crisis I Credit crisis strikes Europe I Financial turmoil grips Europe

What has been spent so far

==> $13.4 billion to prop up General Motors Corp and Chrysler LLC. The Treasury has said GM could qualify for a further $4 billion in March, which would have to come from the final $350 billion tranche of the financial rescue fund.

==> $5 billion pledged to cover potential losses on a portfolio of Citigroup mortgage-related assets.

==> $20 billion pledged to cover potential losses for a Federal Reserve program aimed at improving consumer access to credit.

Source: Agencies

Wednesday, December 24, 2008

Google staff will not get bonus this year

Google Inc, owner of the world’s most-used search engine, is giving employees mobile phones instead of cash gifts this year as it reins in costs during the recession, according to a person familiar with the matter.

About 85 per cent of workers will get a handset powered by Google’s Android operating system as a holiday gift, said the person, who asked not to be identified. Google handed out $1,000 cash gifts to most employees last year.

Chief executive officer Eric Schmidt said last month that Google is seeking to control expenses and add fewer jobs as the global slump curbs online advertising growth. T-Mobile USA Inc began marketing the G1 Android phone in October, offering many of the same features as Apple Inc’s iPhone, including Web browsing.

The holiday gift is separate from the performance bonus handed out by the company, the person said.

“The current economic crisis requires us to be more conservative about how we spend our money,” Mountain View, California-based Google said in an internal memo that was posted on technology industry blog Valleywag.

The memo lists 17 countries where the phone won’t work, including Brazil, Russia, India and China. Employees in those countries will receive about $400, the cash value of the phone, Google said in the memo.

Krista Bessinger, a Google spokeswoman, didn’t return a call seeking comment.

Ad spending

Google, which offers employee benefits such as free gourmet lunches and massages, has clamped down on costs as the recession squeezes online ad revenue. Douglas Anmuth, an analyst at Barclays Capital in New York, lowered his forecast for US Internet ad spending last week by 11 per cent to $25.1 billion in 2009.

Google added 519 workers in the third quarter, compared with 2,130 in the same period a year earlier. Google said last month it would reduce the use of contract workers. At the end of the quarter, the company had more than 20,000 regular employees, up from almost 11,000 at the end of 2006.

Technology companies throughout Silicon Valley and beyond are grappling with a slowing economy, forcing them to cut workers and roll back other expenses. Printer and computer maker Hewlett-Packard Co. is freezing salaries to lower expenses, people with knowledge of that decision said. Technology services company Unisys Corp said yesterday it was cutting about 4.5 per cent of its workforce and halting some pay raises.

Half of chief information officers are looking to cut consulting-services costs, 35 per cent want to reduce computer and server expenses, and 23 per cent are seeking savings on software, according to a Goldman Sachs Group Inc survey.

Source: Agencies

Warnings by Russia, China dire economic straits in 2009

Russia and China issued stark warnings on Wednesday about the impact of the crisis on their recently booming economies in 2009, as stocks and oil prices took a hit from economic gloom over Christmas.

A top official in Moscow warned that the crisis could spark popular unrest after a Kremlin economic aide said Russia next year would have its first budget deficit since the 1998 financial crisis, which brought the country to its knees.

Japan also approved a record-high budget aimed at avoiding the worst effects of the crisis and there were reports that Germany was preparing to pump up to 40 billion euros (56 billion dollars) into the economy in a new rescue plan.

"We need to take unprecedented measures when in an extraordinary economic situation," Japanese Prime Minister Taro Aso said at a news conference after his cabinet backed the new 980-billion-dollar (700-billion-euro) budget.

"Japan cannot evade this tsunami of world recession. But by taking bold measures, we aim to be the world's first to come out of recession," he said.

In Asian stock markets, Tokyo tumbled 2.37 percent and Chinese shares closed down 1.76 percent. European stocks also slipped, with the FTSE 100 in London closing down 0.93 percent and the CAC 40 in Paris down 0.39 percent.

There was more bad news coming from the United States, the world's biggest economy, where US government figures showed jobless claims rising by 30,000 over the past week to 586,000 and incomes and spending contracting in November. With oil prices at their lowest level for four years because of weak global demand, the price of light sweet crude for delivery in February shed 1.56 dollars to 37.42 dollars a barrel on the New York Mercantile Exchange (NYMEX).

The low price spells bad news for Russia, the world's second-biggest producer after Saudi Arabia. "The deficit is caused by the fall in oil prices, above all," Kremlin economic aide Arkady Dvorkovich was quoted as saying.

Oil prices reached record highs of more than 147 dollars a barrel in July.

Commenting on the worsening situation, Deputy Interior Minister Mikhail Sukhodolsky warned that unpaid wages, the threat of layoffs and unpopular government anti-crisis measures "may aggravate the protest mood."

China's top economic planner also warned of "great challenges" ahead.

The head of the National Development and Reform Commission, Zhang Ping, told parliament that "grave risks" lay ahead for the government's economic goals if China did not manage to stimulate demand and maintain export growth.

Economists have warned that the global downturn could mean that China will end 2008 with its weakest economic growth for nearly two decades. China has not posted annual growth of less than 7.6 percent since 1991.

The dollar was on the back foot in currency exchanges, falling to 90.37 yen in Tokyo from 90.96 in New York late Tuesday and dropping against the euro in light trading in London to 1.3991 dollars from 1.3924 dollars on Tuesday.

In a sign of the times in Germany, Europe's biggest economy, poodles, terriers and sheepdogs queued up for rations in the country's first soup kitchen for pets in the German capital.

The soup kitchen was opened in October and offers free food for pets belonging to pensioners and the growing ranks of Berlin's unemployed. Julia Raasch, who heads the soup kitchen, said: "We've already signed up nearly 400 people. And our stocks are dwindling fast."

Source: Agencies

Tuesday, December 23, 2008

Wipro to buy Citi unit for $127 million

Wipro Ltd, India's third-ranked outsourcer, said on Tuesday it had agreed to buy Citi Technology Services Ltd for $127 million in cash and would sign a six-year service agreement worth at least $500 million.

The deal done through Wipro Technologies, the information technology arm of the New York-listed Wipro, is expected to close in March 2009, Wipro said in a statement. Citi Technology Services is the India-based captive technology services unit of Citigroup.

This is the second time that Citi, will sell off its Indian back-office operations. In early October, it had sold its captive BPO Citigroup Global Services (CGSL) to Tata Consultancy Services for $505 million.

In addition to the sale, Citi also signed a $2.5-billion deal through which TCS will provide process oursourcing services to Citi and its affiliates over nine-and-a-half years. This will be provided through CGSL.

The acquisition broadens TCS's portfolio of end-to-end IT and BPO services in the global banking and financial services sector.

CGSL is one of the largest providers of BPO services within the banking and financial services sector, providing end-to-end process management across this spectrum and a broad array of services to Citi's consumers, corporate and global wealth management businesses globally.

Sources: Agencies

Asian tech firms force workers to take leave

When the global recession began to take a toll on high-tech manufacturers in Taiwan, the factories gave their workers a vacation that many would have just as soon skipped.

Putting workers on forced unpaid leave, often for one or more days a week, is a tactic being adopted around the world as firms seek to cut costs and keep skilled workers on the payroll, even if there is little work to do, so that they will have resources when orders pick up.

“When an economic downturn begins to take hold, employers knee-jerk into making dramatic changes,’’ said Darryl Green, president of Asia Pacific for human resources firm Manpower.

“But there are employers who will stop at nothing to try to retain their valuable workforce. These employers — often in the manufacturing sector where skills are hard to come by — consider innovative alternatives such as shorter working weeks and short-term shut-downs.’’

Employment specialists say the phenomenon is not unique to Taiwan, and is used more broadly by manufacturers in cyclical industries, ranging from electronics makers in South Korea, to car makers in Britain, and manufacturers in Germany.

In Taiwan, the trend of forcing workers to take leave without pay, euphemistically called “unpaid vacation’’ in Chinese, began in the memory chip sector which experienced its worst-ever slump throughout most of 2008.

From there this cost savings measure has quietly spread to other key sectors such as LCD manufacturing and other chips.

In one of the clearest and most sobering signs of the times, TSMC, the world’s biggest contract chipmaker and one of Taiwan’s most profitable tech firms, said this month it will roll out its own forced leave without pay system in 2009. TSMC’s main rival, UMC, is taking similar measures.

Taiwan makes 70 per cent of the world’s made-to-order chips which are used in everything from computers to cell phones and MP3 players. TSMC and UMC, which are the biggest players in Taiwan, saw their collective sales plunge 35 percent in November from a year before, with TSMC posting its worst monthly sales in 3-years.

TSMC laid down the cold reality of its situation to employees in a December 3 letter from CEO Rick Tsai, who said he feared the current economic downturn could last for a “fairly long time.’’

“The company must do its utmost to lower costs,’’ Tsai wrote. “At the same time, we will also do all we can to protect employees’ jobs. Under these circumstances manufacturing departments have decided to take a certain amount of unpaid furlough in December. All other departments will begin to do the same on January 1.”

Sources: Agencies

Asian tech firms force workers to take leave

When the global recession began to take a toll on high-tech manufacturers in Taiwan, the factories gave their workers a vacation that many would have just as soon skipped.

Putting workers on forced unpaid leave, often for one or more days a week, is a tactic being adopted around the world as firms seek to cut costs and keep skilled workers on the payroll, even if there is little work to do, so that they will have resources when orders pick up.

“When an economic downturn begins to take hold, employers knee-jerk into making dramatic changes,’’ said Darryl Green, president of Asia Pacific for human resources firm Manpower.

“But there are employers who will stop at nothing to try to retain their valuable workforce. These employers — often in the manufacturing sector where skills are hard to come by — consider innovative alternatives such as shorter working weeks and short-term shut-downs.’’

Employment specialists say the phenomenon is not unique to Taiwan, and is used more broadly by manufacturers in cyclical industries, ranging from electronics makers in South Korea, to car makers in Britain, and manufacturers in Germany.

In Taiwan, the trend of forcing workers to take leave without pay, euphemistically called “unpaid vacation’’ in Chinese, began in the memory chip sector which experienced its worst-ever slump throughout most of 2008.

From there this cost savings measure has quietly spread to other key sectors such as LCD manufacturing and other chips.

In one of the clearest and most sobering signs of the times, TSMC, the world’s biggest contract chipmaker and one of Taiwan’s most profitable tech firms, said this month it will roll out its own forced leave without pay system in 2009. TSMC’s main rival, UMC, is taking similar measures.

Taiwan makes 70 per cent of the world’s made-to-order chips which are used in everything from computers to cell phones and MP3 players. TSMC and UMC, which are the biggest players in Taiwan, saw their collective sales plunge 35 percent in November from a year before, with TSMC posting its worst monthly sales in 3-years.

TSMC laid down the cold reality of its situation to employees in a December 3 letter from CEO Rick Tsai, who said he feared the current economic downturn could last for a “fairly long time.’’

“The company must do its utmost to lower costs,’’ Tsai wrote. “At the same time, we will also do all we can to protect employees’ jobs. Under these circumstances manufacturing departments have decided to take a certain amount of unpaid furlough in December. All other departments will begin to do the same on January 1.”

Sources: Agencies

BRIC will account for 40% of world growth by 2020

BRIC nations - Brazil, Russia, India and China - are likely to contribute 40 per cent of global economic growth in the next 10 years due to a "tectonic shift" in the distribution of global capital over the next decade, global consultancy firm Ernst & Young said.

"Companies and governments in the developed world have to face up to the reality that there will be a further shift in the economic balance of power in the years ahead," Mark Otty, Area Managing Partner (Europe, the Middle East, India and Africa) at Ernst & Young said.

In the latest research note titled 'For Richer, For Poorer Global Patterns of Wealth', Ernst & Young said emerging economies have seen their share of global output and wealth rise significantly over the last few years, driven by faster growth, rising income, high savings ratios, strong investment and export.

In the next decade, the BRIC countries are likely to contribute 40 per cent of global growth, while the US would account for around 14 per cent.

China is set to become the biggest economy in the world in public-private partnership terms by 2019 and by 2020 the BRIC countries would account for almost a third of global GDP - of which China will contribute 18 per cent.

E&Y projects that the BRICs would account for 65 per cent of global basic metals output by 2020 and here also China would account for the lion's share of growth.

According to the report, around 77 per cent of world reserves, totalling almost $ trillion, are held by emerging markets. Besides, cross-border private investment by emerging economies has been increasing as well.

Sources: Agencies

Monday, December 22, 2008

Will the Internet economy shrink in 2009?

The Internet economy could shrink in 2009 because of the worldwide downturn, the OECD warned on Monday in a report that forecast contraction of the semiconductor industry and cutbacks by corporate customers.

The Paris-based Organisation for Economic Co-operation and Development said that "with the outlook for the global economy worsening and business and consumer confidence plummeting, growth will remain flat or decline in 2009."

The report also forecast growth of four per cent in the IT industry this year and said some sectors such as software, outsourcing, Internet sales and infrastructure investments would "weather the storm better than others."

The report said the semiconductor industry - seen as a leading indicator for the information technology sector - would fall nearly six per cent in 2009 after weak growth of 2.2 per cent in 2008.

Source: Agencies

World jobless total could rise by 25 million?

The global economic crisis will push up unemployment by up to 25 million by 2010, the OECD head forecast on a 'truly scandalous failure' of regulatory supervision.

"We're heading for a loss of between eight and 10 million jobs in the OECD area... and 20 to 25 million in the world as a whole between now and 2010," Angel Gurria said on France's BFM radio.

The International Labour Organisation earlier forecast that the number of global unemployed could go up by 20 million to reach a record high point of 210 million people by the end of 2009.

The Organisation for Economic Co-operation and Development in Paris brings together 30 countries, including all the world's industrialised economies. The group conducts research and publishes economic forecasts.

Gurria also said that European countries should spend more in stimulus plans to kickstart their economies and suggested that the European Central Bank should lower interest rates because of falling inflation.

The European Union should "go beyond" the fiscal stimulus plans already announced, equivalent to around 1.4 percent of GDP, since "all the other major countries are going beyond that," Gurria said.

He also said that the OECD economies were in recession in the current quarter and would remain so for at least the first two quarters of 2009, with many countries being in recession for most of 2009.

"We predict a recovery at the end of 2009 and weak growth in 2010" he said.

Commenting on the build-up to the crisis, Gurria said there had been "a truly scandalous failure of regulation... and supervision", and poor risk management and corporate governance by companies.

Meanwhile there was fresh movement to stop the meltdown, with a decision by US president-elect Barack Obama to add 500,000 jobs to a 2.5-million-job creation goal to kickstart the world's biggest and ailing economy.

Vice president-elect Joseph Biden also confirmed the Obama team was working on a second economic stimulus package. According to US media, they want to craft a package worth between 675 and 775 billion dollars over two years.

In Europe, the Irish government said it was injecting 5.5 billion euros (7.6 billion dollars) to recapitalise three major banks: Anglo Irish Bank, Bank of Ireland and Allied Irish Banks.

British Prime Minister Gordon Brown promised to create at least 100,000 new jobs through a 10-billion-pound investment in infrastructure, in a newspaper interview.

The Bank of England's deputy governor John Gieve said in an interview with BBC television that the bank under-estimated how serious the credit crunch would be even though it knew that "crazy borrowing" was taking place.

Gieve said the Bank of England had predicted a correction as far back as two years ago but he added: "We didn't think it was going to be anything like as severe as it turned out to be."

Source: Economic Times

Sunday, December 21, 2008

Taj, Trident reopen after restored to old glory

The Taj Hotel and the Trident hotel, the targets of November 26 terror attacks, reopened on Sunday after three weeks of refurbishment.

First guests checked in at around 7 pm at the Taj Mahal hotel and its celebrated restaurants and diners thronging the five joints which have been restored to their old glory.

Each of the restaurants received full bookings for the evening, hotel officials said.

The hotel's tower wing reopened 24 days after the terrorists attack on Mumbai and the Taj being the last to be rescued from the three terrorists holed up inside for over two-and-a-half-days.

Making a brief statement to reporters outside the hotel before the reopening, Ratan Tata, chairman of the Indian Hotel Company which owns the Taj hotel chain said, "To us it was a challenge to have the hotel reopened in some form within one month from the attack. We dedicate the restored hotel to those who lost their lives in the event that took place."

When asked about the enhanced security measures taken to ensure such events do not recur, he said, "We have our plans for security. But we cannot share it."

He said, "I hate to look back. All of us have learnt lessons."

A press statement issued by the company said it has unveiled a memorial in salutation to all of those who lost their lives in the hotel during the terrorist attacks.

The names of the 31 people who died in the attack will be inscribed at its base, the note said.

Raymond Bickson, Managing Director and CEO, Taj Hotels, Resort and Palaces said among those who died were the hotel's guests, staff members and police and security forces.

"We felt that it was fitting and proper for there to be a symbol of permanent remembrance for all of those who fell within the building," he said.

The press note quoting Ratan Tata said, "There is still much work to do, but we are all determined to rebuild the Taj brick by brick until it outshines even its former glories."

"The artwork would now be placed at the lobby of the hotel as a memorial and the names of the 31 persons who lost their lives in the hotel would be engraved on it," a senior official of the hotel said.

The Trident, which started its operations in morning after a multi-religion prayer meeting in the reception area, which was also attended by the Chief Minister Ashok Chavan, started seeing guests some of whom came to show that they would not be cowed down with such acts.

"We should be bold enough to deter and stop them (terrorists). Instead of getting scared, we should scare them with our resolve to fight back," Devendra Ksheer Sagar, one of the first customers, who visited the Trident said.

As the guests started trickling into the glistening lobby of the hotel, dolled up with flowers, they were greeted by the staff with traditional folded hands and a yellow flower. It seemed like a usual day but the staff took care that guests should be given much needed pampering to put the memories under the carpet.

"Some guests did ask questions about where was I when it (siege) started? Some were emotional while some were happy that we are back. In some cases we answered but in most we politely changed the discussion," one Trident staff preferring anonymity said.

The enhanced security apparatus put in place by the Trident was evident as bunkers were erected outside the main entrance of the hotel. In addition to this baggage scanners were also a new sight at the entrance. The security guards, with polite smile, thoroughly checked the guests and ascertained the identity before allowing them inside the hotel.

Source: Times of India

Texas Instruments to layoff 400 employees in Philippines

Texas Instruments, one of the world's biggest semiconductor manufacturers, is laying off 400 workers from its factory in the northern Philippines due to the global financial crisis, officials said.

The Labour Department's assistant regional director Sixto Rodriguez said the US-based company had notified the government of the cuts that will take effect on January 15, 2009.

He said the company has assured the government that it will give the laid-off employees all the necessary benefits and is offering them early retirement.

Company spokesmen would not comment however.

Texas Instruments employs about 2,300 people in its plant in the northern resort city of Baguio where it makes semiconductors -- conductive elements used in electronic circuits -- mostly for phone maker Nokia. It is the biggest taxpayer in the region.

The company has been operating in the Philippines for 28 years and was one of the pioneers of the electronics industry which has become the biggest export sector in the country.

Texas Instruments announced in May 2007 that it would invest around one billion dollars in a new test and assembly facility at the former US Airforce base at Clark, north of Manila.

The company would not comment on the fate of that plant in the face of the economic contraction that is hitting many countries.

The Baguio facility conducts final assembly and testing of semiconductors for customers in computer, aerospace, telecommunications and automotive industries in the US, Asia and Europe.

Press reports earlier said that Lear Automotive Services, a maker of automotive wire harnesses for export, was laying off 80 workers from its plant in the central Philippines.

Source: Agencies

Terrorists attacked Taj Mahal likely to be fully functional by end 2009

Indian Hotels on Sunday said it expects to partially open Taj Mahal Palace in February and the entire hotel by end of 2009.

"The north block of the Heritage wing of the hotel is expected to be ready by February 2009 while the south block will be ready by end of next year," Indian Hotels Vice Chairman R K Krishna Kumar said.

On November 26, terrorists attacked Taj hotel and occupied the fifth and sixth floor of the Heritage wing.

The south side of the hotel came under heavy fire. "The fifth and sixth floor have been damaged by the attack. The Wasabi and Harbour Bar have been completely gutted," he said.

The company is in talks with four interior decorators out of which one would be selected for renovation of the hotel.

"This gives us an opportunity to work on it and redefine the Presidential suite. There would be new facilities and new designs and would bring something new to the world," Kumar said.

"The tower wing which opened for guests today has been cleansed of evil among other things. All the rooms and the kitchen have been fully cleaned and sanitised by an international agency," he said.

Religious rites of various faiths have been performed inside the hotel, he said.

The Taj hotel has an insurance cover of Rs 1,000 crore and the first instalment has been received without the company claiming for it.

"Our hotel is widely covered. The renovation would be below the limit of the insurance cover. Even before a formal claim was made, we received the first instalment cheque," Kumar said.

All Taj employees have undergone counselling sessions post the attack. In addition to this, the employees have also been trained to be on alert, he said.

The artwork in the hotel would be restored. "Curators have looked at the artworks. About 90 per cent of the artwork is untouched and the remaining have been damaged due to bullet marks but are not beyond redemption," Kumar said.

One piece of art with a bronze framework, 'Tree of Life' which is about seven feet high and had been placed on the sixth floor has not suffered any damage.

"The artwork would now be placed at the lobby of the hotel as a memorial and the names of the 31 persons who lost their lives in the hotel would be engraved on it," Kumar said.

With regard to security in the hotel, Kumar said the company would ensure that it has better security measures than airports in the country which had turned into fortresses.

"We would not be 100 per cent secure but we would be technologically smarter and better trained," he said.

Metal detectors have been installed and baggages will be thoroughly checked. "At the instance of (Tata Sons Chairman) Ratan Tata, we had approached the most premium agency in combating terrorism for advice regarding security measures," Kumar said, refusing to divulge the name of the agency.

"Taj has been legendary for its rooms and restaurants since 105 years now there will be a third dimension to it- security," he said.

Kumar further said that in September a general alert had been issued to all hotels in the city following which certain security measures had been taken, but there was no specific time period given about the attack.

Metal detectors were installed following the alert with baggage checks and frisking of guests at the entrance of the hotel.

"After two months, we reduced the security due to complaints of inconvenience from the guests," Kumar said.

When asked if the hotel would prohibit entry of guests from any other country, Kumar said, it cannot operate in isolation but in compliance with what the government decides.

Source: Agencies

Sonia, Shahrukh in Newsweek list of 50 most powerful people

Congress President Sonia Gandhi and Bollywood superstar Shahrukh Khan have been ranked among the 50 most powerful people in the world by the prestigious US-based magazine 'Newsweek' magazine in a list topped by President- elect Barack Obama.

Pakistan army chief Ashfaq Parvez Kayani, who controls the the country's nuclear weapons, is placed 20th on the list of the global "power elite" at the beginning of 2009 in the magazine's January issue.

Obama, who scripted history by becoming the first black-American to be voted to the White House, is followed by Chinese President Hu Jintao, French President Nicolas Sarkozy, British Prime Minister Gordon Brown, German Chancellor Angela Markel and powerful Russian Prime Minister Vladimir Putin.

A surprise inclusion in the list, which the magazine admits is subjective, is Osama bin Laden, whom the Newsweek describes as "global terrorist." North Korean dictator Jim Jong II also finds a place in the list.

Placing Sonia Gandhi at 17th spot, the magazine says though Indian political scene is riven by factions, Congress remains the strongest national force and rules unchallenged. "In the world's largest democracy, she is the queen."

The magazine describes Shahrukh Khan, who occupies 41st spot, as the 'King of Bollywood'.

"It's not just that his (Shahrukh Khan's) romantic flicks make gazillions it's where those gazillions come from. Khan is huge in the Muslim world, even in Pakistan and Afghanistan, where the mullahs ban his films. (The movies thrive on the black market.)

"Their main appeal is certainly the song-and-dance numbers, but Khan (a Muslim married to a Hindu) makes devoutly secular films where love trounces bigotry," the magazine says, adding that Sonia Gandhi gives Khan's DVDs to visitors, especially Muslim ones. "Here's hoping tolerance will leap from reel life to real life."

On Kayani, it says, that in theory this mumbling chain-smoking Pakistan army chief answers to President Asif Ali Zardari. But Kayani and his troops remain the dominant power in what could be the most dangerous country in the world, it adds.

"He's responsible for Pakistan's nukes; for the battle against al-Qaeda and its tribal allies along the Afghan border; and for managing tensions with neighbour India," the magazine stresses, noting that so far, his army has kept itself out of politics and seems focused on the battle against 'jihadists'.

"In the wake of the November terrorist attacks in Mumbai, Kayani stood firm on Pakistan's sovereignty while also taking measures against the alleged sponsors of the outrage," it says.

About 47-year-old Obama, it says the presidency of the "intensely charismatic" Democrat, who will be inaugurated on January 20, will be judged on how he handles the economic crisis that now envelops the US and the world. "For Obama to be remembered as a great President, he has to do nothing less than rescue capitalism."

For bin Laden, who finds 42nd spot, the magazine says the manhunt may not have been successful, but it has driven him far underground. Once a glutton for publicity, he has not shot a new video since September 2007, and no audio message from him has been heard since May 2008, it says.

Source: Agencies

Saturday, December 20, 2008

Walk-in jobs at TCS for doctorates in computer sciences

At a time when job offer letters to campus recruits are few and far between, India's software giant Tata Consultancy Services Limited (TCS) has declared that it will recruit all doctorates in computer science without any interview.

Speaking to reporters on the sidelines of the PanIIT 2008, a conference of the Indian Institute of Technology alumni here Saturday, TCS CEO and managing director S. Ramadorai declared: "We will hire Ph.D. degree holders in computer science over the next five years."

He said the move was expected to enthuse more students to pursue doctoral studies in the subject.

Source: Agencies

Internet's underground economy is worth $5 billion

Internet fraud has become a multi-billion dollar business with thieves stealing bank account information and credit card numbers and then selling them online.

Hi-tech thieves who specialize in card fraud have a credit line in excess of $5bn, research by the world’s largest maker of security software, Symantec, suggests .

Symantec calculated the figure to quantify the scale of fraud it found during a year-long look at the internet’s underground economy , according to reports.

Credit card numbers were the most popular item on sale and made up 31% of all the goods on offer. Coming in second were bank details which made up 20% of the items being offered on criminal chat channels. The $5.3bn figure was reached by multiplying the average amount of fraud perpetrated on a stolen card, $350, by the many millions Symantec observed being offered for sale. Similarly, the report said, if hi-tech thieves plundered all the bank accounts offered for sale they could net up to $1.7bn.

Symantec said it was likely that many of the cards offered for sale were invalid or cancelled and bank accounts closed but it added: “These figures are indicative of the value of the underground economy and the potential worth of the market.”

Credit card numbers have proved so popular among hi-tech thieves because they are easy to obtain and use for fraudulent purposes. Many of the methods favoured by cyber criminals, such as phishing schemes, database attacks and magnetic strip skimmers, are designed to steal credit card information , it said.

The existence of a ready market for any stolen data and the growing use of credit cards also helped maintain their popularity, it said.

“High frequency use and the range of available methods for capturing credit card data would generate more opportunities for theft and compromise and, thus, lead to an increased supply on underground economy servers,” said the report.

The price card thieves can expect for the numbers they offer for sale also varied by the country of origin. US card numbers were the cheapest because they were so ubiquitous — 74% of all cards offered for sale were from the US. By contrast numbers from cards issued in Europe and the Middle East commanded a premium because they were relatively rare.

Source: Agencies

Net blackout in Mideast and South Asia

Breaks in three submarine cables which link Europe and the Middle East have disrupted Internet and international telephone services in parts of the Middle East and South Asia.

The disruption reduced Egypt's Internet capacity by about 80 percent. Technicians were restoring some capacity by diverting communications traffic through the Red Sea, said a Communications Ministry official, who asked not to be named.

Residents said Internet service was either non-existent or very slow. The gravity of the outage, caused by breaks in cables in the Mediterranean off Italy, varied from area to area and according to the service provider.

In Pakistan, Internet service provider Micronet Broadband said its customers were facing degraded Internet services because of "issues" on the SMW-3, SMW-4 and FLAG lines.

In January, breaks in undersea cables off the Egyptian coast disrupted Internet access in Egypt, the Gulf region and south Asia, forcing service providers to reroute traffic and disrupting some businesses and financial dealings.

Several Egyptian residents said late on Friday that it was impossible to call the United States but calls to Europe appeared to be going through.

In Pakistan, Micronet engineer Wajahat Basharat said on Saturday Internet traffic was congested and slow and some of it was being diverted to other routes.

"Significant outage”
The International Cable Protection Committee, an association of submarine cable operators, said it was "aware of multiple submarine cable failures in the Eastern Mediterranean area that may be affecting the speed of Internet communications on some routes."

It said in a statement on its website it did not know what had caused the problem.

Stephan Beckert, an analyst with the U.S.-based telecommunications market research firm TeleGeography, said the three affected cables were the most direct route for moving traffic between Western Europe and the Middle East.

"If those three cables were cut and are completely out, it would be a fairly significant outage," he said.

"It is going to cause problems for some customers. It's certainly going to slow things down," Beckert said, adding that he did not believe financial institutions would be hit hard.

"Generally speaking we find that they are extremely painstaking about making sure that they have redundant capacity," he said.

Officials with AT&T Inc and Verizon Communications, the two largest U.S.-based carriers, said that some customers in the Middle East had lost all service, while others were experiencing partial disruptions on Internet connections.

Verizon had rerouted some of its traffic by sending it across the Atlantic, then the United States, across the Pacific, and on to the Middle East.

A New York Stock Exchange spokesman said he was unaware of any disruptions in trading. Exchanges CME Group, and IntercontinentalExchange said they had no disruption in their trading on Friday.

Source: Agencies

Mobile phone sales set to slide in 2009!

An IDC report Says the impact of economic crisis on mobile phone market may not continue past 2009.

Technology research firm IDC said in a report that the global mobile phone sales are set to slide for the first time since 2001 as a result of the global economic crisis.

The report forecasts that total mobile phone volumes would be 1.9 per cent lower in 2009 than the 2008 levels, said a press release.

In 2001, the shipments had declined 2.3 per cent. Over the past several years, the mobile phone market has enjoyed double-digit annual growth due to an increased emphasis on emerging markets.

However, emerging market growth has been steadily slowing as these markets mature, the release said. IDC now expects worldwide growth to be just 7.1 per cent in 2008 before slipping into negative growth in 2009.

A number of major industry players, including component suppliers, handset makers, and operators have announced their concerns about handset volumes in 2009.

Most have indicated that they expect a year-over-year decrease due to the flagging global economy, the release added.

The report stated that it did not expect the downturn to continue past 2009, with the market in 2010 showing signs of revival as the economic recovery takes effect. "Converged mobile devices remain a much sought-after option for many consumers," noted Ramon Llamas, senior analyst, Mobile Devices Technology and Trends.

He added that users have come to realize what these devices can do beyond voice telephony, especially when it comes to running applications. In response, handset vendors have been building the product and applications portfolios to catch this wave of opportunity.

Will oil, gas spending drop in 2009?

Global spending on oil and gas exploration and production will shrink 12 per cent to $400 billion in 2009 as the steep slide in energy prices and tight credit markets reverse a six-year trend of rising budgets, analysts at Barclays Capital said on Friday.

Those spending cuts threat to curtail growth in oil and gas output, potentially supporting energy prices that have been in a freefall since hitting peaks in July. A steady stream of energy companies have been announcing budget cuts for 2009 as the price of oil slumped this week to its lowest levels in 4-1/2 years, and Barclays said that could be pushing spending even lower than its report showed.

Another analyst agreed, saying companies were being prudent during the economic crunch to protect cash reserves they had built up during the four-year run-up in energy prices. "My guess is the (report) is probably overstating what is going to be spent," said analyst James Halloran of National City Private Client Group, which manages $26 billon in assets.

Analysts said that while the drop in spending threatens to slow down growth in world energy production, the impact depends on how the smaller budgets are used. "It may be that a combination of higher utilization of more efficient rigs and lower costs of drilling will equal or more than compensate for the decline in the absolute amount of capital devoted to upstream expenditures," said Edward Morse, chief economist at LCM Commodities.

He added that oil firms may be negotiating with their suppliers and contractors to lower project costs. The soft energy market has also darkened the world oil supply picture by leading OPEC to announce three rounds of cuts that would trim 4.2 million barrels per day of oil production, or 5 percent of global output.

Spending in the United States is expected to show the sharpest drop, falling 26 percent to $79 billion from the 2008 mark of $106 billion, Barclays analysts James Crandell and James West said in their semiannual report based on a survey of oil and gas companies.

In the United States, Chesapeake Energy, the largest US natural gas producer, is expected to cut spending by 51 percent, the analysts said, while Devon Energy is likely to cut by 44 percent, EOG Resources by 34 percent and SandRidge Energy by 78 percent.

Oil prices peaked above $147 a barrel in July, but have tumbled more than 75 percent since then to trade near $35.75 a barrel as economic weakness hits fuel demand. Shares of oilfield service companies face the greatest risks from the cuts in spending, since it is their drilling rigs, maintenance operations and other activities that energy producers reduce when budgets are slashed.

But those stocks have already been battered, Halloran said, and may see only a limited impact from new reports of spending cuts. The Philadelphia Oil Service index, which includes companies like Schlumberger Ltd, Halliburton Co and Transocean Ltd, has fallen 68 percent since July.

Still, the Barclays analysts said they recommended shares of Weatherford International, Halliburton, Cameron International, Oceaneering International, Tidewater, Dril-Quip, Core Laboratories NV as the best sector bets.

Regions under pressure

Overall, companies' Canadian spending budgets will fall 23 percent to $22 billion, the lowest level since 1999. Husky Energy is likely to cut its spending 47 percent in Canada, while Devon's budget there will fall 71 percent, Talisman Energy by 47 percent and EnCana Corp by 16 percent.

Spending in the United States by Exxon Mobil, the world's largest publicly traded oil company, is likely to drop 17 percent, or $450 million, to $2.15 billion, while its Canadian budget will shrink 14 percent to $375 million. Its spending elswhere will rise 14 percent to $14.98 billion.

The overall drop in spending outside North America is expected to be a more moderate 6 percent to $300 billion. Russia, the UK North Sea, Saudi Arabia and Venezuela were expected to see some of the sharpest spending declines, while the rest of the Middle East, North Africa and Mexico were likely to post increases.

In 2008, spending rose about 22 percent globally, the analysts said. The analysts said the budget forecasts were based on average prices of $58 per barrel for oil and $6.35 per thousand cubic feet for natural gas.

Source; Agencies

Finally bailout approved: Automakers to get $17.4 bn

Citing danger to the national economy, the Bush administration approved an emergency bailout of the US auto industry on Friday, offering $17.4 billion in rescue loans in exchange for concessions from the deeply troubled carmakers and their workers.

The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.

At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total, he said.

President Bush said, "Allowing the auto companies to collapse is not a responsible course of action." Bankruptcy, he said, would deal "an unacceptably painful blow to hardworking Americans" across the economy.

One official said $13.4 billion of the money would be available this month and next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help.

Bush's plan is designed to keep the auto industry running in the short term, passing the longer-range problem on to the incoming administration of President-elect Barack Obama.

Bush said the rescue package demanded concessions similar to those outlined in a bailout plan that was approved by the House but rejected by the Senate a week ago. It would give the automakers three months to come up with restructuring plans to become viable companies.

If they fail to produce a plan by March 31, the automakers will be required to repay the loans, which they would find very difficult.

"The time to make hard decisions to become viable is now, or the only option will be bankruptcy," Bush said. "The automakers and unions must understand what is at stake and make hard decisions necessary to reform."

He said the companies' workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year.

And he called for elimination of a "jobs bank" program — negotiated by the United Auto Workers and the companies — under which laid-off workers receive unemployment benefits and supplemental pay from their companies for 48 weeks. If they remain laid off beyond that, they move to a jobs bank in which the company provides about 95% of their pay and benefits. Until the most recent contract, people could remain in the jobs bank for years. Early this month, the UAW agreed to suspend the program.

Under terms of the loan, GM and Chrysler must provide the government with stock warrants giving it the option to buy GM and Chrysler stock at a specific price.

In addition, the automakers would be required to agree to limits on executive pay and eliminate some perks such as corporate jets.

Paulson said that with the help for the carmakers, the government will have allocated the first half of the largest government bailout program in history.

He said he was confident that the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. have the resources to address a significant market crisis if one should occur before Congress approves the use of the second half of the rescue fund.

Paulson said he would discuss the process with congressional leaders and Obama's transition team "in the near future.

Source: Agencies

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