Syntel's revenue for the third quarter increased one percent to $104.7 million (Rs.506 crore), compared to $103.8 million (Rs.502 crore) in the prior-year period, and increased five percent sequentially from $100.1 million (Rs.484 crore) in the second quarter of 2009.
Sequential revenue improvement was driven by its Applications Outsourcing service offering, and growth was broad-based across all verticals. During the third quarter, Applications Outsourcing accounted for 74 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 18 percent, e-Business contributing six percent and Team Sourcing at two percent.
The Company's gross margin improved to 49.3 percent in the third quarter, compared to 44.3 percent in the prior-year period (500 bps increase) and 48.2 percent in the second quarter of 2009 (110 bps increase). Selling, General and Administrative (SG&A) expenses were 18.1 percent in the third quarter, compared to 19.1 percent in the prior-year period and 20.8 percent in the previous quarter.
Syntel's income from operations expanded to 31.2 percent in the third quarter as compared to 25.2 percent in the prior-year period (600 bps increase) and 27.4 percent in the second quarter of 2009 (380bps increase).
"Increasing stability in the business environment and a gradual improvement in customer confidence had a positive effect on our top line during the third quarter," said CEO and President Keshav Murugesh. "While our clients remain comfortable in moving forward with cost reduction initiatives, they are now increasingly willing to discuss longer-term business plans and strategic technology investments."
"The strong financial and operating discipline at Syntel has been evident in our financial performance during a very difficult nine month period. We expect that as demand for offshore services improves, costs of doing business in India will increase resulting in margin pressure. Syntel continues to invest in the people, infrastructure and new services necessary to drive long-term sustainable value for all of our key stakeholders."
Based on current visibility levels and an exchange rate assumption of 47.0 rupees to the dollar, the Company is updating 2009 guidance from Revenue of $395Mn (Rs.1,910 crore) to $415Mn (Rs.2,007 crore) and EPS of $2.40 to $2.50 to Revenue of $405Mn (Rs. 1,959 crore) to $408Mn (Rs.1,973 crore) and EPS of $2.60 to $2.65.
Agencies
Showing posts with label Wall Street. Show all posts
Showing posts with label Wall Street. Show all posts
Friday, October 30, 2009
Sunday, September 27, 2009
Did Microsoft loose $560 million on Windows Live?
Online services have been a financial drain for Microsoft, and the company said it has moved financial reporting for Windows Live from the Online Services Business to the Client division.
In a conference call with Wall Street analysts, Microsoft executives said Windows Live pulled in $520 million in revenue in fiscal year 2009, but posted a loss of $560 million. This is by no means a recent trend. Overall, the Online Service Business posted an operating loss of $2.2 billion during fiscal 2009, after racking up a $1.2 billion loss in fiscal 2008.
Tami Reller, Chief Financial Officer and Corporate Vice President, Windows Business Group, said Windows Live operates at a loss primarily due to data center construction costs, research and development, and sales and distribution costs.
"The investments in the data centers is one of the most significant investments in the Windows Live business, and really is a result of the large customer base and the strong competitive position that we have today across these services," said Reller.
Windows Live, which includes Hotmail, Live Messenger, and Skydrive, has more than 500 million users, and makes the bulk of its money through online advertising, according to Microsoft. As the user base grows, Microsoft will continue to invest in building out the data center infrastructure to support them, while also maintaining its investment in R&D, sales, and distribution, according to Reller.
"It is an organizational move, not new or changed investment," said Reller.
Microsoft will report its fiscal 2010 first quarter results on October 22, and Wall Street will be looking for some signs of improvement from several consecutive dismal quarters. Slowing PC and server sales have decimated Microsoft's business, and company officials have called the situation the most difficult economic environment the company has faced in its history.
Agencies
In a conference call with Wall Street analysts, Microsoft executives said Windows Live pulled in $520 million in revenue in fiscal year 2009, but posted a loss of $560 million. This is by no means a recent trend. Overall, the Online Service Business posted an operating loss of $2.2 billion during fiscal 2009, after racking up a $1.2 billion loss in fiscal 2008.
Tami Reller, Chief Financial Officer and Corporate Vice President, Windows Business Group, said Windows Live operates at a loss primarily due to data center construction costs, research and development, and sales and distribution costs.
"The investments in the data centers is one of the most significant investments in the Windows Live business, and really is a result of the large customer base and the strong competitive position that we have today across these services," said Reller.
Windows Live, which includes Hotmail, Live Messenger, and Skydrive, has more than 500 million users, and makes the bulk of its money through online advertising, according to Microsoft. As the user base grows, Microsoft will continue to invest in building out the data center infrastructure to support them, while also maintaining its investment in R&D, sales, and distribution, according to Reller.
"It is an organizational move, not new or changed investment," said Reller.
Microsoft will report its fiscal 2010 first quarter results on October 22, and Wall Street will be looking for some signs of improvement from several consecutive dismal quarters. Slowing PC and server sales have decimated Microsoft's business, and company officials have called the situation the most difficult economic environment the company has faced in its history.
Agencies
Monday, September 7, 2009
Make-or-break bet for Motorola as it takes on Android
Motorola Inc needs to spark some serious gadget lust next week when it unveils new phones to convince consumers and Wall Street that it's still a player in the global mobile industry, but the odds may be heavily stacked against it.
After losing market share for years, Motorola has made what is viewed as a make-or-break bet on Google Inc's Android mobile software, hoping the partnership with the giant Web company can help it win back customers.
Shares of the one-time market leader, now ranked fourth in global handset sales, jumped 11 percent earlier this week on investor hopes that the new phones could generate enough excitement to make Motorola's bat-wing logo famous again.
But while no one is expecting an iPhone-killer at the San Francisco unveiling on September 10, analysts say the risk is still that the new phones will not be unique enough to wow consumers, especially when other vendors also sell Android phones. "Early devices will not be significantly differentiated and could disappoint those playing the 9/10 launch," said Macquarie Research analyst Phil Cusick, who expects Motorola to display two new Android phones that day.
Motorola has given few details about the announcement, which will come during Co-Chief Executive Sanjay Jha's keynote at GigaOm's mobile conference. Jha first revealed his plans for creating Android phones in October.
He has said the new phones will be integrated with popular online social networks; but rivals such as Apple Inc, Research in Motion Ltd, HTC Corp and Palm Inc already have features for services like Facebook.
Shareholders have been impressed enough with Jha that they have more than doubled Motorola's share price since May. Still, the stock is down 70 percent from its 2006 peak of $26 and has been trading below $8 per share. "It's going to be extremely significant to the company's future," said Current Analysis analyst Avi Greengart. "If the phone does well, they live to fight another day."
Comparisons will inevitably be drawn to Palm's Pre phone unveiling, which was also seen as a last chance for that company. Pre reception was good and caused Palm's share price to quadruple, in part on the perception that the company has become a more attractive takeover target.
Should the initial reaction to Motorola's devices be as strong, the company could have a good chance of luring back consumers, investors and mobile service providers, analysts say.
PRETTY HARDWARE
Motorola turned to Google for phone software because its own strength has been in hardware. This was demonstrated by the Razr, whose slim form inspired imitations for two years before it started to fall out of favor in late 2006.
Analysts expect Motorola's new phones to have stylish enough hardware to secure distribution by mobile carriers, but the question is whether the software will be different enough to spur holiday season sales -- especially when the bar has been set very high by Apple's iPhone and the thousands of apps available for download from Apple's online store.
"Short-term, Motorola needs to win the purchase decision of specific carriers," Greengart said. "Long-term, they're going to need to do something more than selling pretty hardware running an operating system other competitors have access to."
Motorola's Jha has said several times that carriers were impressed with the Android phones. He told Reuters in a recent interview that he was encouraged when one operator executive told him "bat-wings are back."
Analysts expect Motorola Android phones to be sold by Verizon Wireless, owned by Verizon Communications Inc and Vodafone Group Plc, and by T-Mobile USA, owned by Deutsche Telekom AG. But Verizon said it is not involved in Motorola's announcement next week. T-Mobile said it will launch new Android phones this year but declined to give details.
Even if carriers did back the phone, some of Motorola's former shareholders say they would be wary of betting on the company unless it started to show sustainable improvements.
"I wouldn't touch the stock until they've launched three, four or five phones and they've gained market share for at least a year," said Jane Snorek, an analyst for First American Funds, which manages $35 billion in equities that used to include Motorola shares.
Deutsche Bank analyst Brian Modoff said he is impressed by Jha but agreed that investors should look beyond September 10. "If you get to several phones and they're all disappointing, then you have to start writing the obituary. I don't see that," said Modoff. He said he will focus on the reaction from young consumers who crave cool gadgets: "We'll see what the 20-year-olds think. That's what really matters."
Agencies
After losing market share for years, Motorola has made what is viewed as a make-or-break bet on Google Inc's Android mobile software, hoping the partnership with the giant Web company can help it win back customers.
Shares of the one-time market leader, now ranked fourth in global handset sales, jumped 11 percent earlier this week on investor hopes that the new phones could generate enough excitement to make Motorola's bat-wing logo famous again.
But while no one is expecting an iPhone-killer at the San Francisco unveiling on September 10, analysts say the risk is still that the new phones will not be unique enough to wow consumers, especially when other vendors also sell Android phones. "Early devices will not be significantly differentiated and could disappoint those playing the 9/10 launch," said Macquarie Research analyst Phil Cusick, who expects Motorola to display two new Android phones that day.
Motorola has given few details about the announcement, which will come during Co-Chief Executive Sanjay Jha's keynote at GigaOm's mobile conference. Jha first revealed his plans for creating Android phones in October.
He has said the new phones will be integrated with popular online social networks; but rivals such as Apple Inc, Research in Motion Ltd, HTC Corp and Palm Inc already have features for services like Facebook.
Shareholders have been impressed enough with Jha that they have more than doubled Motorola's share price since May. Still, the stock is down 70 percent from its 2006 peak of $26 and has been trading below $8 per share. "It's going to be extremely significant to the company's future," said Current Analysis analyst Avi Greengart. "If the phone does well, they live to fight another day."
Comparisons will inevitably be drawn to Palm's Pre phone unveiling, which was also seen as a last chance for that company. Pre reception was good and caused Palm's share price to quadruple, in part on the perception that the company has become a more attractive takeover target.
Should the initial reaction to Motorola's devices be as strong, the company could have a good chance of luring back consumers, investors and mobile service providers, analysts say.
PRETTY HARDWARE
Motorola turned to Google for phone software because its own strength has been in hardware. This was demonstrated by the Razr, whose slim form inspired imitations for two years before it started to fall out of favor in late 2006.
Analysts expect Motorola's new phones to have stylish enough hardware to secure distribution by mobile carriers, but the question is whether the software will be different enough to spur holiday season sales -- especially when the bar has been set very high by Apple's iPhone and the thousands of apps available for download from Apple's online store.
"Short-term, Motorola needs to win the purchase decision of specific carriers," Greengart said. "Long-term, they're going to need to do something more than selling pretty hardware running an operating system other competitors have access to."
Motorola's Jha has said several times that carriers were impressed with the Android phones. He told Reuters in a recent interview that he was encouraged when one operator executive told him "bat-wings are back."
Analysts expect Motorola Android phones to be sold by Verizon Wireless, owned by Verizon Communications Inc and Vodafone Group Plc, and by T-Mobile USA, owned by Deutsche Telekom AG. But Verizon said it is not involved in Motorola's announcement next week. T-Mobile said it will launch new Android phones this year but declined to give details.
Even if carriers did back the phone, some of Motorola's former shareholders say they would be wary of betting on the company unless it started to show sustainable improvements.
"I wouldn't touch the stock until they've launched three, four or five phones and they've gained market share for at least a year," said Jane Snorek, an analyst for First American Funds, which manages $35 billion in equities that used to include Motorola shares.
Deutsche Bank analyst Brian Modoff said he is impressed by Jha but agreed that investors should look beyond September 10. "If you get to several phones and they're all disappointing, then you have to start writing the obituary. I don't see that," said Modoff. He said he will focus on the reaction from young consumers who crave cool gadgets: "We'll see what the 20-year-olds think. That's what really matters."
Agencies
Sunday, August 30, 2009
Open Source technologies now sought by Wall Street companies
Economic slowdown had a huge impact on the financial institutions around the world. Recession has forced these financial institutions to take a look at their budget as well as the technology that they are using. In times like this open source technology is growing in the capital markets because of increased cost pressures. Many Wall Street companies are now adopting open source even though there are many who still believe that any software that they develop is proprietary and has a competitive edge.
"What the crisis has done is shattered the orthodoxy in what is accepted as the correct way to build out systems, and it has allowed people to think more creatively about how their software works," comments Graham Miller, Co-Founder and CEO of Marketcetera, an open source platform for building automated trading systems to Wall Street and Technology. Many banks and brokers have been running open source applications like Linux and the free Apache web servers in the back office. Now, open source is finding its way to the front office trading desk as well.
Many open source companies are booming in times like these. One such example is Esper, which provides an open-source event stream processing and complex event processing (CEP) solution. Esper is already built. Instead of being a standalone server product that runs as a separate product, it's a library that companies can link in with their own proprietary stuff.
Recently, many Wall Street IT developers have started participating in open source technology projects. Firms like Credit Suisse, Goldman Sachs, JPMorgan Chase and Deutsche Borse Systems participated in the open source (AMQP) Advanced Message Queing (popular open source project among the financial services industry) Working Group and collaborated on standards for messaging infrastructure. "AMQP is not just a financial service [project], but it's something that has been taken seriously in the financial services space. Tough economy has opened the growth of open source. You get your base products for free, and you're essentially getting innovation in that product for free, because people are contributing and improving the software all the time," said Kevin McPartland, Senior Analyst at TABB Group to Wall Street and Technology.
Cost still remains the most important reason especially when many major vendors have increased the licensing fees of their product. Buying a Trading system from a vendor will require lengthy and costly customization. "We've built out a platform product that provides out-of-the-box components for market data, signal analysis engines, market connectivity and user interface capabilities to exchanges, ECNs, brokers and lots of different destinations," says Miller. Marketcetera launched Version 1.0 of its Trading Platform, which can be downloaded free-of-charge from its Web site. They have tried to follow Red Hat way of providing fee-based service and support. The company integrates several open-source technologies including QuickFIX/J, a messaging engine for the FIX protocol, and QuantLib, a free library for quantitative finance and Esper.
However, despite open source company's claim many experts doubt that open source is cheaper than software vendors. Custom development of open source software can be more costly than proprietary software. "It might look cheaper on paper but if you look at what you want to do with it, and it requires a substantial engineering effort rather than a commercial product, then it's not necessarily the most effective solution," says Adam Honore, Senior Analyst at Aite Group. He further adds that there could be support, maintenance and accountability issues with some open source vendors.
Agencies
"What the crisis has done is shattered the orthodoxy in what is accepted as the correct way to build out systems, and it has allowed people to think more creatively about how their software works," comments Graham Miller, Co-Founder and CEO of Marketcetera, an open source platform for building automated trading systems to Wall Street and Technology. Many banks and brokers have been running open source applications like Linux and the free Apache web servers in the back office. Now, open source is finding its way to the front office trading desk as well.
Many open source companies are booming in times like these. One such example is Esper, which provides an open-source event stream processing and complex event processing (CEP) solution. Esper is already built. Instead of being a standalone server product that runs as a separate product, it's a library that companies can link in with their own proprietary stuff.
Recently, many Wall Street IT developers have started participating in open source technology projects. Firms like Credit Suisse, Goldman Sachs, JPMorgan Chase and Deutsche Borse Systems participated in the open source (AMQP) Advanced Message Queing (popular open source project among the financial services industry) Working Group and collaborated on standards for messaging infrastructure. "AMQP is not just a financial service [project], but it's something that has been taken seriously in the financial services space. Tough economy has opened the growth of open source. You get your base products for free, and you're essentially getting innovation in that product for free, because people are contributing and improving the software all the time," said Kevin McPartland, Senior Analyst at TABB Group to Wall Street and Technology.
Cost still remains the most important reason especially when many major vendors have increased the licensing fees of their product. Buying a Trading system from a vendor will require lengthy and costly customization. "We've built out a platform product that provides out-of-the-box components for market data, signal analysis engines, market connectivity and user interface capabilities to exchanges, ECNs, brokers and lots of different destinations," says Miller. Marketcetera launched Version 1.0 of its Trading Platform, which can be downloaded free-of-charge from its Web site. They have tried to follow Red Hat way of providing fee-based service and support. The company integrates several open-source technologies including QuickFIX/J, a messaging engine for the FIX protocol, and QuantLib, a free library for quantitative finance and Esper.
However, despite open source company's claim many experts doubt that open source is cheaper than software vendors. Custom development of open source software can be more costly than proprietary software. "It might look cheaper on paper but if you look at what you want to do with it, and it requires a substantial engineering effort rather than a commercial product, then it's not necessarily the most effective solution," says Adam Honore, Senior Analyst at Aite Group. He further adds that there could be support, maintenance and accountability issues with some open source vendors.
Agencies
Friday, May 22, 2009
Is HP set to layoff 6,400 employees in 2010?
US computer giant Hewlett-Packard reported a 17-per cent fall in quarterly net profit and said it plans to cut two per cent of its workforce, or nearly 6,400 workers, over the next year.
HP said net profit fell to $1.7 billion, or 86 cents per share, in the second quarter of its fiscal year from $2.1 billion, or 87 cents per share, a year ago, in line with the expectations of Wall Street analysts.
The Palo Alto, California-based company, the world's largest manufacturer of personal computers, said revenue was down three per cent in the quarter which ended on April 30 to $27.4 billion.
Chief financial officer Cathy Lesjak announced the planned layoffs in a conference call with analysts after the release of the results.
“We will be taking some targeted action to structurally change and improve the effectiveness of our product businesses,” she said.
“These actions will result in the elimination of approximately two per cent of the HP workforce as we further streamline and simplify our organization and supply chain. These actions will be implemented over the next 12 months.”
The only bright spot for HP in the quarter was in its services business, which notched up an operating profit of $1.17 billion in the quarter due to its purchase last year of EDS. “Our services business continued to deliver strong profitability with an increased deal pipeline and the EDS integration tracking ahead of schedule,” said HP chairman and chief executive Mark Hurd.
HP said revenue from its enterprise storage and servers division fell 28 per cent to $3.5 billion while software revenue declined 15 per cent to $880 million. Computer shipments were flat in a “challenging environment” and the division saw revenue fall 19 per cent to $8.2 billion. Revenue from laptop computers was down 13 per cent while desktop computer revenue fell 24 per cent.
Operating profit for the division fell to $374 million from $544 million a year ago. The imaging and printing group saw revenue decline by 23 per cent to $5.9 billion and operating profit fall to $1.1 billion from $1.2 billion a year earlier.
HP said revenue grew nine per cent in the Americas to $12.1 billion and declined by 11 per cent in Europe, the Middle East and Africa to $10.6 billion. Revenue fell 10 per cent in Asia Pacific to $4.7 billion.
HP said it expects third quarter revenue to be flat and full fiscal year revenue to decline by four per cent to five per cent with full-year earnings per share of between $3.76 to $3.88.
Agencies
HP said net profit fell to $1.7 billion, or 86 cents per share, in the second quarter of its fiscal year from $2.1 billion, or 87 cents per share, a year ago, in line with the expectations of Wall Street analysts.
The Palo Alto, California-based company, the world's largest manufacturer of personal computers, said revenue was down three per cent in the quarter which ended on April 30 to $27.4 billion.
Chief financial officer Cathy Lesjak announced the planned layoffs in a conference call with analysts after the release of the results.
“We will be taking some targeted action to structurally change and improve the effectiveness of our product businesses,” she said.
“These actions will result in the elimination of approximately two per cent of the HP workforce as we further streamline and simplify our organization and supply chain. These actions will be implemented over the next 12 months.”
The only bright spot for HP in the quarter was in its services business, which notched up an operating profit of $1.17 billion in the quarter due to its purchase last year of EDS. “Our services business continued to deliver strong profitability with an increased deal pipeline and the EDS integration tracking ahead of schedule,” said HP chairman and chief executive Mark Hurd.
HP said revenue from its enterprise storage and servers division fell 28 per cent to $3.5 billion while software revenue declined 15 per cent to $880 million. Computer shipments were flat in a “challenging environment” and the division saw revenue fall 19 per cent to $8.2 billion. Revenue from laptop computers was down 13 per cent while desktop computer revenue fell 24 per cent.
Operating profit for the division fell to $374 million from $544 million a year ago. The imaging and printing group saw revenue decline by 23 per cent to $5.9 billion and operating profit fall to $1.1 billion from $1.2 billion a year earlier.
HP said revenue grew nine per cent in the Americas to $12.1 billion and declined by 11 per cent in Europe, the Middle East and Africa to $10.6 billion. Revenue fell 10 per cent in Asia Pacific to $4.7 billion.
HP said it expects third quarter revenue to be flat and full fiscal year revenue to decline by four per cent to five per cent with full-year earnings per share of between $3.76 to $3.88.
Agencies
Friday, January 9, 2009
Satyam's Ramalinga Raju surrenders
The disgraced chairman of Satyam Computer Services B Ramalinga Raju has surrendered on late Friday night before the Andhra Pradesh Director General of Police, two days after he confessed to perpetrating a Rs 7,000-crore financial fraud. The CID had registered a case based on Raju's confessional statement.
B Ramalinga Raju tonight surrendered before the Director General of Andhra Pradesh Police S S P Yadav, a police spokesperson said.
"I am prepared to subject myself to the laws of the land and face the consequences thereof" Raju had said in a confessional statement.
Agencies
B Ramalinga Raju tonight surrendered before the Director General of Andhra Pradesh Police S S P Yadav, a police spokesperson said.
"I am prepared to subject myself to the laws of the land and face the consequences thereof" Raju had said in a confessional statement.
Agencies
Thursday, January 8, 2009
Has Satyam duped many US investors?
In separate lawsuits filed in US courts, Satyam Computer has been charged with duping thousands of American investors of billions of dollars by artificially inflating share price.
Demanding trial by jury against Satyam Computer, its chairman Ramalinga Raju, managing director and CEO B Rama Raju, the complainants have said that each of them is "liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit..."
The IT firm has also deceived the investing public regarding Satyam's business, its finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices, said the class action suit filed by lawfirm Vianale & Vianale LLP on behalf of shareholders.
Another lawfirm Izard Nobel LLP also filed an identical class action suit on the issue at the US District Court for Southern District of New York.
"A lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs of Satyam Computer between January 6, 2004 and January 6, 2009," Izard Nobel LLP said in a statement.
The class action complaint filed by Vianale & Vianale LLP in Manhattan Federal Court said that there are thousands of such shareholders throughout the US who have been affected by "a series of false and misleading statements, containing materially inaccurate financial information about the company, which served to artifically inflate the value of its ADSs.
Trading on Satyam ADRs was suspended yesterday after it plunged by over 90 per cent to 0.85 dollars in pre-market trade in US following Satyam founder and chairman B Ramalinga Raju's confession to a Rs 7,800 crore fraud in the company.
"When the truth was revealed the company's ADSs lost nearly their entire value and investors lost billions of dollars as a result," the suit filed by Vianale said.
The suits also charged Raju and his brother B Rama Raju with having engaged "in such a scheme to inflate the price of Satyam ADSs in order to 1) protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; and 2) enhance the value of their personal holdings of Satyam stocks."
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to the Board of Directors yesterday, while announcing his resignation as chairman.
Agencies
Demanding trial by jury against Satyam Computer, its chairman Ramalinga Raju, managing director and CEO B Rama Raju, the complainants have said that each of them is "liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit..."
The IT firm has also deceived the investing public regarding Satyam's business, its finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices, said the class action suit filed by lawfirm Vianale & Vianale LLP on behalf of shareholders.
Another lawfirm Izard Nobel LLP also filed an identical class action suit on the issue at the US District Court for Southern District of New York.
"A lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs of Satyam Computer between January 6, 2004 and January 6, 2009," Izard Nobel LLP said in a statement.
The class action complaint filed by Vianale & Vianale LLP in Manhattan Federal Court said that there are thousands of such shareholders throughout the US who have been affected by "a series of false and misleading statements, containing materially inaccurate financial information about the company, which served to artifically inflate the value of its ADSs.
Trading on Satyam ADRs was suspended yesterday after it plunged by over 90 per cent to 0.85 dollars in pre-market trade in US following Satyam founder and chairman B Ramalinga Raju's confession to a Rs 7,800 crore fraud in the company.
"When the truth was revealed the company's ADSs lost nearly their entire value and investors lost billions of dollars as a result," the suit filed by Vianale said.
The suits also charged Raju and his brother B Rama Raju with having engaged "in such a scheme to inflate the price of Satyam ADSs in order to 1) protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; and 2) enhance the value of their personal holdings of Satyam stocks."
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to the Board of Directors yesterday, while announcing his resignation as chairman.
Agencies
Saturday, January 3, 2009
Citigroup to limit top executives' pay, bonuses
The recipient of a $45 billion infusion from the US government, Citigroup Inc on Wednesday said it would place strict limits on management's compensation, including no severance for its top five executives.
Under pressure from lawmakers, Citigroup Chief Executive Vikram Pandit and Chairman Win Bischoff opted to forego their 2008 bonuses. The company's new executive pay limits also feature a clawback provision in which Citigroup can recoup executive pay ``that over time proves to be based on inaccurate financial or other information.''
The compensation restrictions come as the New York-based bank signed an agreement with the federal government to receive an additional $20 billion on top of the $25 billion it received in October. Restrictions on expenses, including the use of corporate aircraft and costs related to entertainment or holiday parties, also will be put in place.
Part of the $700 billion bailout program authorized by Congress, the capital infusions to Citigroup and dozens of other banks are the government's main tool for attempting to stabilize the financial services sector and spur lending between financial institutions and to customers.
Citi said it will issue $20 billion in preferred shares to the Treasury Department, and warrants to buy about 188.5 million shares of common stock at a strike price of $10.61 a share, according to a filing with the Securities and Exchange Commission.
In doing so, members of the company's senior leadership and executive committees will see pay cuts and limits on severance packages, according to a memo sent to Citigroup staff Wednesday.
In the memo, Pandit announced measures that will tie executive pay more closely to performance.
``We are fully committed to paying for high-performance people at all levels of the organization and at competitive rates, in the context of the company's overall financial results,'' Pandit said.
The most senior leaders will be affected the most, Citi said. Pandit said he and Bischoff thought it ``fair'' to forgo their bonuses ``in light of the challenges of the year and the need for compensation elsewhere in the organization,'' the memo said. Robert Rubin, a Citigroup adviser and former Treasury secretary, also will decline a bonus.
Pandit added that senior leadership committee members will see their bonuses ``substantially reduced,'' while executive committee members will have larger proportions of their bonuses in deferred compensation than other employees.
As a condition for receiving government money, lawmakers are making companies reel in bonuses. The congressional backlash and public outrage followed a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firms received taxpayer money.
Last month, American International Group Inc. said it would be limiting how much it pays its top executives, including granting a $1 salary for 2008 and 2009 to its CEO Edward Liddy.
New York-based AIG has received a roughly $150 billion rescue package from the federal government.
Shares of Citi fell 9 cents to $6.71 Wednesday. The company's stock shed more than three-fourths of its value in 2008.
Source: Agencies
Under pressure from lawmakers, Citigroup Chief Executive Vikram Pandit and Chairman Win Bischoff opted to forego their 2008 bonuses. The company's new executive pay limits also feature a clawback provision in which Citigroup can recoup executive pay ``that over time proves to be based on inaccurate financial or other information.''
The compensation restrictions come as the New York-based bank signed an agreement with the federal government to receive an additional $20 billion on top of the $25 billion it received in October. Restrictions on expenses, including the use of corporate aircraft and costs related to entertainment or holiday parties, also will be put in place.
Part of the $700 billion bailout program authorized by Congress, the capital infusions to Citigroup and dozens of other banks are the government's main tool for attempting to stabilize the financial services sector and spur lending between financial institutions and to customers.
Citi said it will issue $20 billion in preferred shares to the Treasury Department, and warrants to buy about 188.5 million shares of common stock at a strike price of $10.61 a share, according to a filing with the Securities and Exchange Commission.
In doing so, members of the company's senior leadership and executive committees will see pay cuts and limits on severance packages, according to a memo sent to Citigroup staff Wednesday.
In the memo, Pandit announced measures that will tie executive pay more closely to performance.
``We are fully committed to paying for high-performance people at all levels of the organization and at competitive rates, in the context of the company's overall financial results,'' Pandit said.
The most senior leaders will be affected the most, Citi said. Pandit said he and Bischoff thought it ``fair'' to forgo their bonuses ``in light of the challenges of the year and the need for compensation elsewhere in the organization,'' the memo said. Robert Rubin, a Citigroup adviser and former Treasury secretary, also will decline a bonus.
Pandit added that senior leadership committee members will see their bonuses ``substantially reduced,'' while executive committee members will have larger proportions of their bonuses in deferred compensation than other employees.
As a condition for receiving government money, lawmakers are making companies reel in bonuses. The congressional backlash and public outrage followed a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firms received taxpayer money.
Last month, American International Group Inc. said it would be limiting how much it pays its top executives, including granting a $1 salary for 2008 and 2009 to its CEO Edward Liddy.
New York-based AIG has received a roughly $150 billion rescue package from the federal government.
Shares of Citi fell 9 cents to $6.71 Wednesday. The company's stock shed more than three-fourths of its value in 2008.
Source: Agencies
Wednesday, December 24, 2008
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
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
Wednesday, December 17, 2008
Madoff crambles out to find friends following scam
Bernard Madoff, the longtime Wall Street executive accused of cheating investors around the world out of $50 billion, scrambled to find friends or relatives to guarantee his bond on Tuesday and keep him out of jail.
In Massachusetts, where the disgraced investor long cultivated a loyal group of wealthy individuals, the state's chief securities regulator subpoenaed Bernard L. Madoff Investment Securities and Cohmad Securities Corp, a firm that marketed Madoff investment products.
The two firms must hand over the names and addresses of all local residents who let Madoff invest their money by December 29. They must also deliver notes, emails, meeting agendas related to investments made since 2000, William Galvin, the state's Secretary of the Commonwealth, said on Tuesday.
In New York, Madoff, who was arrested last week, has not yet fully met the conditions of his $10 million bond, according to court papers. He must find three co-signers to guarantee the bond.
If he fails to meet all the conditions, prosecutors could seek to have the 70-year-old Madoff jailed, pending trial. A court hearing was set for Wednesday on bail matters after a Tuesday hearing was postponed.
Madoff, a former chairman of the Nasdaq Stock Market, faces up to 20 years in prison and a maximum fine of $5 million if convicted.
The U.S. Securities and Exchange Commission, which has been accused of missing red flags about Madoff's investment business, is asking its internal watchdog to probe the agency's conduct in the case.
SEC Chairman Christopher Cox said he was "gravely concerned" by the agency's "apparent multiple failures over at least a decade" to thoroughly investigate allegations or seek formal authority to pursue them.
As more banks, hedge funds and wealthy investors around the world realize they fell victim to a man long respected on Wall Street for the steady returns that his funds produced year after year, their outrage has grown.
LAW SCHOOL LAWSUIT
"The names and sizes of those exposed to Bernard Madoff keep growing and most remarkable of all is the concentration of investments made by funds of hedge funds which promise their clients a diversified portfolio," said Philippe Bonnefoy, chairman of the asset allocation committee at Cedar Partners, an investment adviser.
A fund of hedge funds is a basket of funds selected by the manager to spread around risk.
New York Law School sued Ascot Partners LP, an investment firm, general partner J. Ezra Merkin and auditor BDO Seidman LLP on Tuesday over investments with Madoff.
Massachusetts Mutual Life Insurance Co acknowledged its exposure to Madoff after a hedge fund unit invested heavily with him. Tremont Holdings Inc's Rye Investment Management unit lost roughly $3 billion, nearly all of the money the unit managed, people familiar with the matter said.
Madoff is also closely tied to Carl Shapiro, a 95-year-old Boston philanthropist who gave much of his fortune to the city's Beth Israel Deaconess Medical Center and the city's Museum of Fine Arts.
Austria's Bank Medici, a closely held bank serving wealthy clients, also said it was affected by Madoff's scheme, but declined to give a total for its losses.
At the same time, prosecutors and regulators asked people who suspect they lost money to Madoff to come forward.
The U.S. Attorney's Office in New York, which is prosecuting the Madoff case, set up a website for investors who may have been victimized. It also posted an FBI hotline number, 212-384-2359, for investors to call.
SIFTING THROUGH THE PAPERS
Investors were asked to gather any documents related to their Madoff investments and to check the website and others set up by the SEC, the trustee of Madoff's brokerage business and the court-appointed receiver in the case.
Lawyers worried that many of the financial statements that Madoff's firm mailed to clients were not accurate, and that it will take months to sift through the papers.
"This is a mess and it will take much longer than normal," said Douglas Hirsch, a partner at law firm Sadis & Goldberg, describing the work facing the trustee appointed to oversee the liquidation of Madoff's firm.
The Securities Investor Protection Corp, a nonprofit organization that provides limited insurance on investors' accounts, was named as trustee on Monday.
Madoff, who was well-known on the charity ball circuit and supported cancer and diabetes research, also gave about $238,200 to political candidates, parties and committees, mostly Democratic, since 1991, according to the Center for Responsive Politics, which tracks political giving.
U.S. Senator Charles Schumer, a New York Democrat, received $12,000, while U.S. Rep. Edward Markey, a Massachusetts Democrat, received $10,000 over the years, the Center found.
The impact of Madoff's alleged fraud may be felt most severely among hedge funds. For example, the Credit Suisse/Tremont Hedge Fund Index fell 4.15 percent in November, far more than the preliminary 0.7 percent decline reported last week.
Standard & Poor's said it will review public sector entities, such as universities, that invested with Madoff, to see whether their ratings should be cut as a result of their likely investment losses.
Source: Agencies
In Massachusetts, where the disgraced investor long cultivated a loyal group of wealthy individuals, the state's chief securities regulator subpoenaed Bernard L. Madoff Investment Securities and Cohmad Securities Corp, a firm that marketed Madoff investment products.
The two firms must hand over the names and addresses of all local residents who let Madoff invest their money by December 29. They must also deliver notes, emails, meeting agendas related to investments made since 2000, William Galvin, the state's Secretary of the Commonwealth, said on Tuesday.
In New York, Madoff, who was arrested last week, has not yet fully met the conditions of his $10 million bond, according to court papers. He must find three co-signers to guarantee the bond.
If he fails to meet all the conditions, prosecutors could seek to have the 70-year-old Madoff jailed, pending trial. A court hearing was set for Wednesday on bail matters after a Tuesday hearing was postponed.
Madoff, a former chairman of the Nasdaq Stock Market, faces up to 20 years in prison and a maximum fine of $5 million if convicted.
The U.S. Securities and Exchange Commission, which has been accused of missing red flags about Madoff's investment business, is asking its internal watchdog to probe the agency's conduct in the case.
SEC Chairman Christopher Cox said he was "gravely concerned" by the agency's "apparent multiple failures over at least a decade" to thoroughly investigate allegations or seek formal authority to pursue them.
As more banks, hedge funds and wealthy investors around the world realize they fell victim to a man long respected on Wall Street for the steady returns that his funds produced year after year, their outrage has grown.
LAW SCHOOL LAWSUIT
"The names and sizes of those exposed to Bernard Madoff keep growing and most remarkable of all is the concentration of investments made by funds of hedge funds which promise their clients a diversified portfolio," said Philippe Bonnefoy, chairman of the asset allocation committee at Cedar Partners, an investment adviser.
A fund of hedge funds is a basket of funds selected by the manager to spread around risk.
New York Law School sued Ascot Partners LP, an investment firm, general partner J. Ezra Merkin and auditor BDO Seidman LLP on Tuesday over investments with Madoff.
Massachusetts Mutual Life Insurance Co acknowledged its exposure to Madoff after a hedge fund unit invested heavily with him. Tremont Holdings Inc's Rye Investment Management unit lost roughly $3 billion, nearly all of the money the unit managed, people familiar with the matter said.
Madoff is also closely tied to Carl Shapiro, a 95-year-old Boston philanthropist who gave much of his fortune to the city's Beth Israel Deaconess Medical Center and the city's Museum of Fine Arts.
Austria's Bank Medici, a closely held bank serving wealthy clients, also said it was affected by Madoff's scheme, but declined to give a total for its losses.
At the same time, prosecutors and regulators asked people who suspect they lost money to Madoff to come forward.
The U.S. Attorney's Office in New York, which is prosecuting the Madoff case, set up a website for investors who may have been victimized. It also posted an FBI hotline number, 212-384-2359, for investors to call.
SIFTING THROUGH THE PAPERS
Investors were asked to gather any documents related to their Madoff investments and to check the website and others set up by the SEC, the trustee of Madoff's brokerage business and the court-appointed receiver in the case.
Lawyers worried that many of the financial statements that Madoff's firm mailed to clients were not accurate, and that it will take months to sift through the papers.
"This is a mess and it will take much longer than normal," said Douglas Hirsch, a partner at law firm Sadis & Goldberg, describing the work facing the trustee appointed to oversee the liquidation of Madoff's firm.
The Securities Investor Protection Corp, a nonprofit organization that provides limited insurance on investors' accounts, was named as trustee on Monday.
Madoff, who was well-known on the charity ball circuit and supported cancer and diabetes research, also gave about $238,200 to political candidates, parties and committees, mostly Democratic, since 1991, according to the Center for Responsive Politics, which tracks political giving.
U.S. Senator Charles Schumer, a New York Democrat, received $12,000, while U.S. Rep. Edward Markey, a Massachusetts Democrat, received $10,000 over the years, the Center found.
The impact of Madoff's alleged fraud may be felt most severely among hedge funds. For example, the Credit Suisse/Tremont Hedge Fund Index fell 4.15 percent in November, far more than the preliminary 0.7 percent decline reported last week.
Standard & Poor's said it will review public sector entities, such as universities, that invested with Madoff, to see whether their ratings should be cut as a result of their likely investment losses.
Source: Agencies
Monday, December 15, 2008
$50 bn Madoff victims include super rich to charities
From a Jewish youth charity in Boston to major banks as far afield as Zurich, the list of investors who say they were duped in one of Bernard L Maddoff Wall Street's biggest Ponzi schemes is growing.
Around the world, investors who sunk cash into veteran Wall Street money manager Bernard Madoff's investment pool spent the weekend calculating how much exposure they might have. The 70-year-old Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested Thursday in what prosecutors say was a $50 billion scheme to defraud investors.
One thing was clear in the fallout from his arrest: The alleged victims span from the super rich, to pensioners and powerful financial institutions, to local charities. Some investors claim they've been wiped out, while others are still likely to come forward.
"There were a lot of very sophisticated people who were duped, and that happens a great deal when you've had somebody decide to be unscrupulous," said Harvey Pitt, a former chairman of the Securities and Exchange Commission, a regulator in charge of monitoring investment funds like the one Madoff operated.
"It isn't just the big investors," he said. "There's a lot of charitable and foundation money involved in this, which is the real tragedy."
Charities across the country are expected to be directly affected by the collapse of Madoff's investment fund. The assets of Bernard L. Madoff Investment Securities LLC were frozen Friday in a deal with federal regulators and a receiver was appointed to manage the firm's financial affairs.
One of the largest financial scams to hit Wall Street has investors wondering if they'll ever get their money back.
In Boston, the Robert I. Lappin Charitable Foundation, a charity that financed trips for Jewish youth to Israel, said on its Web site Sunday that the money for its operations was invested with Madoff.
"The money needed to fund the programs of the Lappin Foundation is gone," it said. "The foundation staff has been terminated today."
New Jersey Sen. Frank Lautenberg, one of the wealthiest members of the Senate, entrusted his family's charitable foundation to Madoff. Lautenberg's attorney, Michael Griffinger, said they weren't yet sure the extent of the foundation's losses, but that the bulk of its investments had been handled by Madoff.
Lautenberg's foundation handed out more than $765,000 to at least 100 recipients in 2006, according to the most recent listing on Guidestar, which tracks charitable organization filings.
The foundation helps support a variety of religious, educational, civic and arts organizations in New Jersey and elsewhere, and its contributions range from a gift of than $300,000 to the United Jewish Communities of MetroWest New Jersey to a $2,000 donation to a children's program at the Hackensack Medical Center.
Source: Agencies
Around the world, investors who sunk cash into veteran Wall Street money manager Bernard Madoff's investment pool spent the weekend calculating how much exposure they might have. The 70-year-old Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested Thursday in what prosecutors say was a $50 billion scheme to defraud investors.
One thing was clear in the fallout from his arrest: The alleged victims span from the super rich, to pensioners and powerful financial institutions, to local charities. Some investors claim they've been wiped out, while others are still likely to come forward.
"There were a lot of very sophisticated people who were duped, and that happens a great deal when you've had somebody decide to be unscrupulous," said Harvey Pitt, a former chairman of the Securities and Exchange Commission, a regulator in charge of monitoring investment funds like the one Madoff operated.
"It isn't just the big investors," he said. "There's a lot of charitable and foundation money involved in this, which is the real tragedy."
Charities across the country are expected to be directly affected by the collapse of Madoff's investment fund. The assets of Bernard L. Madoff Investment Securities LLC were frozen Friday in a deal with federal regulators and a receiver was appointed to manage the firm's financial affairs.
One of the largest financial scams to hit Wall Street has investors wondering if they'll ever get their money back.
In Boston, the Robert I. Lappin Charitable Foundation, a charity that financed trips for Jewish youth to Israel, said on its Web site Sunday that the money for its operations was invested with Madoff.
"The money needed to fund the programs of the Lappin Foundation is gone," it said. "The foundation staff has been terminated today."
New Jersey Sen. Frank Lautenberg, one of the wealthiest members of the Senate, entrusted his family's charitable foundation to Madoff. Lautenberg's attorney, Michael Griffinger, said they weren't yet sure the extent of the foundation's losses, but that the bulk of its investments had been handled by Madoff.
Lautenberg's foundation handed out more than $765,000 to at least 100 recipients in 2006, according to the most recent listing on Guidestar, which tracks charitable organization filings.
The foundation helps support a variety of religious, educational, civic and arts organizations in New Jersey and elsewhere, and its contributions range from a gift of than $300,000 to the United Jewish Communities of MetroWest New Jersey to a $2,000 donation to a children's program at the Hackensack Medical Center.
Source: Agencies
Friday, December 5, 2008
AT&T likely to cut 12,000 jobs
AT&T, the largest US phone company, will cut 12,000 jobs, striving to trim expenses as the US economy falters. The reductions amount to about 4% of the workforce, Dallas-based AT&T said on Thursday in a statement.
The company plans to record $600 million in expenses for severance this quarter. The reductions would bring AT&T’s total job cuts to more than 25,000 this year. The carrier and its smaller competitors are grappling with slowing consumer spending and a jobless rate at its highest level in 14 years.
AT&T fell 18 cents to $28.90 in early trading after closing at $29.08 on Wednesday on the New York Stock Exchange. The carrier also plans to reduce spending next year to cope with the slowdown, with plans to give specific forecasts for 2009 spending plans in late January.
The carrier said its still adding jobs in its wireless and video units. In July, the company said it would eliminate 10,000 jobs to reduce overlap in some departments after its 2006 purchase of BellSouth Corp. Before that, the company announced 4,650 cuts, some in its home-phone business, which has lost customers to cable operators and wireless competitors.
Source: Agencies
The company plans to record $600 million in expenses for severance this quarter. The reductions would bring AT&T’s total job cuts to more than 25,000 this year. The carrier and its smaller competitors are grappling with slowing consumer spending and a jobless rate at its highest level in 14 years.
AT&T fell 18 cents to $28.90 in early trading after closing at $29.08 on Wednesday on the New York Stock Exchange. The carrier also plans to reduce spending next year to cope with the slowdown, with plans to give specific forecasts for 2009 spending plans in late January.
The carrier said its still adding jobs in its wireless and video units. In July, the company said it would eliminate 10,000 jobs to reduce overlap in some departments after its 2006 purchase of BellSouth Corp. Before that, the company announced 4,650 cuts, some in its home-phone business, which has lost customers to cable operators and wireless competitors.
Source: Agencies
Friday, November 21, 2008
Citigroup looks at sale of parts or merger
Citigroup Inc lost more than one-quarter of its market value on growing worries over whether it has enough capital to withstand billions of dollars of potential losses and despite new support from its largest individual investor.
The second-largest U.S. bank by assets is looking at options now, including a sale of parts of the company or a merger with another firm, after its stock fell 50 percent this week, a person familiar with the matter said on Thursday.
Discussions so far have been internal, and some options --such as entering into a merger where other executives end up running the company -- are unpalatable to managers at Citigroup, the person said. The bank's board of directors is set to meet on Friday, and Morgan Stanley is not considering a possible bid, the Wall Street Journal reported.
Citigroup did not comment on the report, repeating that it has a "very strong capital and liquidity position" and is focused on a strategy that will generate benefits "over time." Morgan Stanley did not immediately return a call for comment.
Earlier Thursday, Saudi Prince Alwaleed bin Talal said he plans to increase his stake in Citigroup to 5 percent from less than 4 percent, calling its shares "dramatically undervalued."
Alwaleed expressed "full and complete support" for management, including Pandit, who said this week the bank will slash 52,000 jobs and 20 percent of expenses.
Investors were unimpressed, and drove the bank's shares below $5, a level not seen since 1994. The market value of Citigroup has fallen $48.7 billion this month alone.
Citigroup is not seeking any government financial aid, and is not seeing any unusual business activity, a person close to the bank said.
But government aid may have to be part of any deal for Citigroup, investors said. Raising capital, whether through a share sale or selling businesses, would be difficult in the current environment.
Citigroup "will get bailed out, and that's another unfortunate strain on the U.S. government," said Saj Karim, an investment adviser at Cannacord Capital in Waterloo, Ontario.
The government may look to augment the $25 billion it injected last month from a $700 billion industry rescue package. The bank has raised another $50 billion since the middle of 2007.
Analysts said the bank could face more than $20 billion in losses in 2009 on commercial real estate, credit cards and emerging markets, as the world economy sinks into recession.
"How much capital is Citi going to need?" said Keith Davis, a bank analyst at Farr, Miller & Washington in Washington, D.C. "I don't think anyone knows, and so the knee-jerk reaction is to sell first and ask questions later."
The bank has asked the U.S. Securities and Exchange Commission to reinstate a ban on the short-selling of financial stocks, in an attempt to arrest their downward spiral, a person familiar with the matter said. A prior ban expired Oct 8.
Other banks' shares also tumbled on Thursday, with JPMorgan Chase & Co falling 17.9 percent and Bank of America Corp closing down 13.9 percent. Along with Citigroup, the banks are components of the Dow Jones industrial average, which shed 5.6 percent.
JPMorgan is eliminating about 3,000 investment banking jobs, or 10 percent of that unit, to cope with the deteriorating economy, people familiar with the matter said. Bank of New York Mellon Corp announced 1,800 job cuts.
And KeyCorp, a Midwest regional bank, reduced its common stock dividend for the second time in six months.
Citigroup's market value, which once topped $270 billion, fell to $25.7 billion on Thursday. The bank was overtaken in market value this week by U.S. Bancorp and Bank of New York Mellon, despite being more than four times larger by assets than those companies combined.
Five-year credit default swaps for Citigroup rose to 395 basis points, meaning it would cost $395,000 annually to protect $10 million of debt, according to Phoenix Partners Group. That's up from $357,000 of annual payments on Wednesday, according to Markit.
But those levels are not as high as they were for other banks just prior to failure. Combined with the low share price, markets seem to be implying that either Citigroup will raise capital without government help, or it will receive government help that does not hurt bondholders and derivatives trading partners.
Earlier this year, the government has rescued giant insurer American International Group Inc and mortgage giants Fannie Mae Freddie Mac.
U.S. Treasury Secretary Henry Paulson declined to comment on Citigroup.
Despite its troubles, Citigroup is one of three final bidders, along with JPMorgan and Capital One Financial Corp for Chevy Chase Bank, a Bethesda, Maryland, lender with $11.4 billion in deposits, people familiar with the matter said.
Pandit suffered a setback last month when Wells Fargo & Co agreed to buy Wachovia Corp, trumping Citigroup's bid to buy much of the Charlotte, North Carolina-based bank and add $418.8 billion of deposits.
'LONG-TERM WINNER'
Alwaleed said the bank is "taking all the necessary steps to position the company to withstand the challenges facing the banking industry and the global economy."
The Saudi billionaire, a nephew of Saudi King Abdullah, said he is "fully confident that Citigroup's universal banking model and global franchise will make it a long-term winner in the financial services industry."
Alwaleed also came to the bank's aid in 1991, when he invested $590 million in Citigroup predecessor Citicorp, which at the time needed cash as it struggled with Latin American loan losses and a collapse in U.S. real estate prices.
Citigroup has lost $20.3 billion in the last year and taken tens of billions of dollars in writedowns on mortgage and other toxic debt. Analysts expect it to lose money in the fourth quarter, and some don't see any profit in 2009.
The second-largest U.S. bank by assets is looking at options now, including a sale of parts of the company or a merger with another firm, after its stock fell 50 percent this week, a person familiar with the matter said on Thursday.
Discussions so far have been internal, and some options --such as entering into a merger where other executives end up running the company -- are unpalatable to managers at Citigroup, the person said. The bank's board of directors is set to meet on Friday, and Morgan Stanley is not considering a possible bid, the Wall Street Journal reported.
Citigroup did not comment on the report, repeating that it has a "very strong capital and liquidity position" and is focused on a strategy that will generate benefits "over time." Morgan Stanley did not immediately return a call for comment.
Earlier Thursday, Saudi Prince Alwaleed bin Talal said he plans to increase his stake in Citigroup to 5 percent from less than 4 percent, calling its shares "dramatically undervalued."
Alwaleed expressed "full and complete support" for management, including Pandit, who said this week the bank will slash 52,000 jobs and 20 percent of expenses.
Investors were unimpressed, and drove the bank's shares below $5, a level not seen since 1994. The market value of Citigroup has fallen $48.7 billion this month alone.
Citigroup is not seeking any government financial aid, and is not seeing any unusual business activity, a person close to the bank said.
But government aid may have to be part of any deal for Citigroup, investors said. Raising capital, whether through a share sale or selling businesses, would be difficult in the current environment.
Citigroup "will get bailed out, and that's another unfortunate strain on the U.S. government," said Saj Karim, an investment adviser at Cannacord Capital in Waterloo, Ontario.
The government may look to augment the $25 billion it injected last month from a $700 billion industry rescue package. The bank has raised another $50 billion since the middle of 2007.
Analysts said the bank could face more than $20 billion in losses in 2009 on commercial real estate, credit cards and emerging markets, as the world economy sinks into recession.
"How much capital is Citi going to need?" said Keith Davis, a bank analyst at Farr, Miller & Washington in Washington, D.C. "I don't think anyone knows, and so the knee-jerk reaction is to sell first and ask questions later."
The bank has asked the U.S. Securities and Exchange Commission to reinstate a ban on the short-selling of financial stocks, in an attempt to arrest their downward spiral, a person familiar with the matter said. A prior ban expired Oct 8.
Other banks' shares also tumbled on Thursday, with JPMorgan Chase & Co falling 17.9 percent and Bank of America Corp closing down 13.9 percent. Along with Citigroup, the banks are components of the Dow Jones industrial average, which shed 5.6 percent.
JPMorgan is eliminating about 3,000 investment banking jobs, or 10 percent of that unit, to cope with the deteriorating economy, people familiar with the matter said. Bank of New York Mellon Corp announced 1,800 job cuts.
And KeyCorp, a Midwest regional bank, reduced its common stock dividend for the second time in six months.
Citigroup's market value, which once topped $270 billion, fell to $25.7 billion on Thursday. The bank was overtaken in market value this week by U.S. Bancorp and Bank of New York Mellon, despite being more than four times larger by assets than those companies combined.
Five-year credit default swaps for Citigroup rose to 395 basis points, meaning it would cost $395,000 annually to protect $10 million of debt, according to Phoenix Partners Group. That's up from $357,000 of annual payments on Wednesday, according to Markit.
But those levels are not as high as they were for other banks just prior to failure. Combined with the low share price, markets seem to be implying that either Citigroup will raise capital without government help, or it will receive government help that does not hurt bondholders and derivatives trading partners.
Earlier this year, the government has rescued giant insurer American International Group Inc and mortgage giants Fannie Mae Freddie Mac.
U.S. Treasury Secretary Henry Paulson declined to comment on Citigroup.
Despite its troubles, Citigroup is one of three final bidders, along with JPMorgan and Capital One Financial Corp for Chevy Chase Bank, a Bethesda, Maryland, lender with $11.4 billion in deposits, people familiar with the matter said.
Pandit suffered a setback last month when Wells Fargo & Co agreed to buy Wachovia Corp, trumping Citigroup's bid to buy much of the Charlotte, North Carolina-based bank and add $418.8 billion of deposits.
'LONG-TERM WINNER'
Alwaleed said the bank is "taking all the necessary steps to position the company to withstand the challenges facing the banking industry and the global economy."
The Saudi billionaire, a nephew of Saudi King Abdullah, said he is "fully confident that Citigroup's universal banking model and global franchise will make it a long-term winner in the financial services industry."
Alwaleed also came to the bank's aid in 1991, when he invested $590 million in Citigroup predecessor Citicorp, which at the time needed cash as it struggled with Latin American loan losses and a collapse in U.S. real estate prices.
Citigroup has lost $20.3 billion in the last year and taken tens of billions of dollars in writedowns on mortgage and other toxic debt. Analysts expect it to lose money in the fourth quarter, and some don't see any profit in 2009.
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