Founder, Imdad Capital Ltd.
Unsurprising news - but probably not the first, nor the last person who will fall victim to the recent credit market turmoil. Sad day, but a right off of $8Bn is no small change.
O’Neal poised to step down at Merrill
By David Wighton in New York
Published: October 28 2007 15:36 | Last updated: October 28 2007 19:19
Stan O’Neal was poised to step down as chief executive of Merrill Lynch on Sunday, making him the biggest casualty of the recent credit market turmoil.
A number of the Wall Street bank’s directors had lost confidence in his leadership, rendering his position untenable, according to people close to the situation.
Copyright The Financial Times Limited 2007
Now that is BIG news!
Merrill Lynch stuns with an $8bn subprime hit
Pressure builds on chief executive as the bank unveils Wall Street's biggest hit from risky mortgage debt
Merrill Lynch stunned Wall Street after it admitted to a far bigger loss than expected arising from toxic subprime mortgage-backed investments.
The investment bank said it would write-down $7.9 billion the third quarter of the year to cover bad investments and the falling price of mortgage-backed collateral it usedto raise money.
The write-down was far bigger than either the bank or Wall Street had expected. Last month, Merrill Lynch said that it had to write down $4.5 billion because some of the investments it made in bonds backed by mortgage assets were effectively worthless. Wall Street analysts expected that the bank would take a $7 billion charge, as a worst case scenario.
Hulu is a NewCo online video effort. CEO Jason Kilar explains the reasons why they picked the name.
"Why Hulu? Objectively, Hulu is short, easy to spell, easy to pronounce, and rhymes with itself. Subjectively, Hulu strikes us as an inherently fun name, one that captures the spirit of the service we’re building. Our hope is that Hulu will embody our (admittedly ambitious) never-ending mission, which is to help you find and enjoy the world’s premier content when, where and how you want it."
Anyway, NBC doing all the prep work to launch their Hulu next week!
It is all coming to a head in little pieces or should I say big pieces. Never really sure, anymore when it comes to the markets. But, it seems that things might be coming to an inflection point.
Otherwise, the leveraged buyout by Hellman & Friedman of Goodman Global using debt financing from altrernative sources: think hedge funds - also leaves one with something to ponder. As does the fact that Apple in the words of Steve Jobs: "We are very pleased to have generated over $24 billion in revenue and $3.5 billion in net income in fiscal 2007". Well, I would be too!
The economy continues on its downward spiral and as I noted in July - this correction is not about to go away in the short term.
Rather, then crying the sky is falling; I gave some thought over the weekend to what could be done to move the global economy onto an upward projectile versus the downward spiral we seem to be facing. And the conclusion that I arrived is it all depends on one's view of Keynesian economics and/or laissez-faire economics.
And in honesty, how one regards the writings of John Keynes, the New Keynesians, Milton Friedman's, Adam Smith etc. I must admit, even I am mildly impressed with my ability to follow the economic issues currently at play.
In other words, who would have thought that those economic classes with Chip Case while at Wellesley and then my New Insitutional Economics MA from Indiana University would mean I would actually understand this stuff?
Go figure! Let me assure you, I never thought this would be the case. However, its nice once in a while to realise that perhaps, one's education was not all about doing time. Please see below a well written piece on the credit crisis and also highlights of Mary Meeker's speech on technology trends. I have also uploaded Ms Meeker's ppt from the Web 2.0 conference. Happy reading!
Column: The credit crisis is far from over, just look at what the new facts show, Rachel Beck, The Associated Press
NEW YORK: The facts speak for themselves: The credit crisis is getting even scarier.
The first evidence was the announcement by the biggest U.S. banks that they are banding together with the government's blessing to try to bail out institutional customers — and maybe themselves — stuck with illiquid asset-backed investments. That is a clear indication that there has been little relaxation in the paralysis gripping debt markets in recent months.
Then Standard & Poor's made another sweeping downgrade of the credit ratings on mortgage-backed securities worth some $23.35 billion (€16.34 billion) — this time for loans granted since the first of the year, a sign that loose lending standards lasted far longer than many thought.
More trouble also surfaced on the housing front, with construction of new homes plunging to the lowest level in 14 years and home builders' sentiment falling to its lowest on record.
Even the stock market took a pause from its recent bullish run, with investors tempering their buying on concerns that the credit and housing mess would lead to a contraction in third-quarter earnings for the first time in six years. On Friday, the Dow Jones industrial average dropped more than 360 points, and the major stock market indexes turned in their worst week since July.
So much for the worst of this crisis being over. Just a few weeks back, there was some optimism building in the marketplace that the end of this bumpy road was near. Those upbeat views now look like they were just wishful thinking.
Why else would a consortium of banks — including Citigroup, JPMorgan Chase and Bank of America — be uniting with a plan to keep the housing-related debt crisis from worsening. If they thought conditions in the credit market were about to improve, would they be gathering for this group hug?
The banks have proposed creating a fund that will buy around $100 billion (€70 billion) in debt from structured investment vehicles, or SIVs, in an attempt to break the logjam in the market for short-term debt instruments that hold mortgage-related assets.
Banks sponsor the SIVs, contributing longer-term assets like mortgage-backed securities to the investment vehicle. The SIV then sells unsecured commercial paper or other forms of short-term debt at low interest rates to the likes of hedge funds and money-market mutual funds hungering for a few extra basis points of yield. Those proceeds are then used to repay the sponsor for its investment.
Accounting rules do not require the SIVs to appear on bank balance sheets, even though they create, run and generate fees from them. But if debt markets seize up and the SIV cannot repay or roll over the commercial paper debt when it comes due, the sponsor then is expected to come up with cash to cover the SIV — or face a big blow to its reputation. For the banks, helping the SIVs could lead to big losses as they are forced to mark down the value of the now-shunned asset-backed securities.
The goal of the new bailout fund is to prevent that from happening. Its plan is to sell short-term notes to investors and then use the proceeds to buy distressed securities from the SIVs that otherwise would have to be sold at fire-sale prices. Eventually, they will try to sell those securities to investors.
The fund's backers are spinning this as a way to save the market from more meltdown, but it really is nothing more than a shell game to try to rescue them from the mess they got themselves into.
It is not even clear if that will do the trick. Given the complexity in valuing the SIVs illiquid securities, there are lingering questions over what price the banks will place on the debt and whether investors will be willing to bite. The fund's backers also say that they will only buy highly rated assets, a promise investors should be wary of since they've seen massive downgrades of the ratings on mortgage-related debt that was not supposed to be risky.
Standard & Poor's helped to stoke investors' fears about that this week when it cut the credit ratings on 1,713 classes of securities backed by mortgages issued in the first six months of this year. S&P placed 646 other classes of mortgage-backed securities on negative credit watch, which mean they could be downgraded soon.
The securities are backed by subprime, alt-A and home-equity loans, three types of loans have gone increasing delinquent and into default in recent months. Subprime loans typically carry higher interest rates and were about the only way people with bad credit were able to get into the housing game, while alt-A loans are for people who lack the full documentation that traditional borrowers have.
That massive cut in ratings is raising concerns that the housing and mortgage sector problems are not improving, which was also confirmed by new data from the Commerce Department that construction of new homes fell 10.2 percent last month, compared to August. That was the slowest building pace since March 1993.
The National Association of Homebuilders also reported that its index of builder confidence fell for the eighth consecutive month in October, pushing the index to a record-low of 18 from a reading of 20 in September.
With all eyes on corporate earnings right now, shareholders seem to be disappointed that growth is not coming in at the pace they had hoped for just a few months ago. S&P is now calling for a 3 percent decline in year-over-year earnings for the third quarter, well below analysts' estimates in July for quarterly gains of more than 6 percent.
Much of that can be attributed to the expected double-digit decline in the financial sector, with big writedowns on credit losses taking a toll on those companies' earnings.
Now, it should be pretty clear where the credit crisis stands.
As you have undoubtedly heard Al Gore won the nobel peace prize on Fri for his work on climate change.
This very simple act has yet again confirmed for me that those who are truly meant to lead - do lead. What do I mean? Specifically, in Jan 2001 a bewildered world watched as a highly contested US election led Mr. Gore to step back and allow his rival, George Bush Jr, to take on the mantle of the American presidency. In doing so, at the time Mr. Gore stated he was doing this as he felt it was in the best interest of the Country and in so doing seemed to end his political career.
Yet, seven years later Mr. Gore is back in the spot light. Not as a result of his position within a Corporate or in his capacity as a Statesman of the US or the World; but, simply as himself. As a man who choose to stand for something bigger then himself and/or a need for power for power's sake.
Following, his decision in 2001, Mr. Gore could have easily disappeared into retirement. Rather, his concern for the health of our ailing planet led him to become actively involved in the climate debate. By doing so, he has been heavily praised and maligned - depending on your personal stance.
Yet, through it all - he remained resolutely true to his own values and the higher ambition that he holds for this planet and those that will inhabit it after we are no more.
To Mr. Gore - bravo & well done! You have demonstrated that one does not require a political or corporate office to have one's voice heard. And, that one man can indeed make the difference. You have indeed served your country and the planet without having the title of Mr. President. Now isn't that something to be proud of?
Gore prize transforms climate debate
By Fiona Harvey in Deauville, Amy Yee in New Delhi and Edward Luce in Washington
Published: October 12 2007 10:06 | Last updated: October 12 2007 19:01
Al Gore won the Nobel Peace Prize on Friday for his work on climate change in a move that is likely to place the issue at the forefront of the political debate in the US as the country moves into its presidential election season.
The award, which the former vice-president shares with the United Nations body of climate experts, follows feverish speculation about a Gore presidential bid next year.
It will also give fresh impetus to efforts to persuade the US to back a successor to the Kyoto treaty at a crucial international conference to take place in Bali this December.Mr Gore, whose documentary An Inconvenient Truth won two awards at the Oscars in March, had been hotly tipped as a contender for the prestigious prize, but the choice of the Intergovernmental Panel on Climate Change, a body of the world’s top climate scientists convened by the United Nations, was a surprise choice.
At a news conference in Palo Alto on Friday, Mr Gore said he would donate his share of the $1.5m prize money to the Alliance for Climate Protection, a private group he helped set up to spend $100m a year on changing attitudes and lobbying for political action. Mr Gore, who declined to take questions on his political ambitions, said the prize was just the beginning of the crusade to confront global warming.
His aides said he would continue to focus on influencing change rather than running for election again. Michael Feldman, an adviser, said: “Al Gore has repeatedly said his aim is to change the political climate in America and elsewhere. This will give him further ability to continue doing that.”
This year, the IPCC produced the most comprehensive study of climate change undertaken, drawing on the work of more than 2,500 scientists over six years, which concluded it was 90 per cent certain climate change was caused by human activities, and that emissions must start to fall within 15 years to avoid the worst consequences of global warming.
The work will be discussed at Bali, where talks will begin on a potential successor to the Kyoto protocol, the main provisions of which expire in 2012. Many governments believe a breakthrough must be made in Bali to save the prospect of co-ordinated international action on the climate.
But the IPCC has attracted the ire of sceptics and some US conservatives, who claim its pronouncements show political bias.
George W. Bush silenced some of that criticism when he cited the IPCC’s work at a meeting of the world’s 16 biggest greenhouse gas-emitting countries in Washington last month. It was the first summit to draw those countries together. The IPCC was set up in 1988 to provide the scientific advice on which the 1992 UN Framework Convention on Climate Change was based and from which the Kyoto protocol was drawn.
Copyright The Financial Times Limited 2007
Madonna - can one say, she is one of the most powerful women in the world of music - yes - is set to leave Warner Brothers and sign on with LiveNation. Demonstating that the music industry's core structure is dramatically changing. A very significant move.
Otherwise, find attached a list of Europe's 25 most powerful women. Sadly, I have not made the list again - however, it is just a matter of time. Said with tongue in cheek! Or as John Lennon would say: Woman - http://www.youtube.com/watch?v=PaLfDnShEn0
Madonna set to leave record label
By New York Times
Madonna is about to become the latest music superstar to defy the music industry’s traditional structure by exiting her longtime record label, Warner Brothers Records, for a lucrative deal that relies heavily on her longevity as a live-concert attraction.
Madonna is nearing an agreement with Live Nation, the concert promoter, that would pay her more than $100m in exchange for three albums and the exclusive rights to promote her concerts and to market her merchandise in a wide-ranging partnership, according to people briefed on the talks.
The deal, which includes cash and stock, would pay her about half the total upfront, said these people, who requested anonymity because the agreement had not been completed.
The deal is the latest example of how tough times for record labels and concert promoters have set off a free-for-all over the rights to the various revenue streams created when a musician becomes a star. Instead of sharing in only one piece of the income — say, CD sales — companies are angling to share in all of an artist’s business lines, like publishing, merchandise sales and endorsement fees.
It also comes as the major record companies are reeling from the loss of historically reliable brand-name acts. Word of Madonna’s likely exit from Warner Brothers, a unit of the publicly held Warner Music Group, came the same day that one of rock’s biggest free agent acts, the acclaimed British band Radiohead, started delivering digital copies of its new album directly to fans, in a big break with industry convention. Another influential free agent band, the Eagles, is selling its new album directly to Wal-Mart Stores.
Madonna’s move particularly underscores the determination of Live Nation to encompass a wider swath of the music business. The publicly held company, based in Beverly Hills, Calif., made an earlier foray into so-called all-rights or 360 deals with artists when it made a small investment to share in the earnings of Korn, the hard-rock act.
But it is making a much bigger leap — and taking a bigger risk — with Madonna, who turns 50 next year, and who, the company expects, will continue her live-concert success for years to come. Madonna’s “Confessions” tour last year ranked as the highest-grossing tour ever by a female artist, according to Billboard magazine. The tour generated roughly $195m from 60 shows and drew more than 1.2m fans.
Her last album, “Confessions on a Dance Floor,” sold an estimated 1.6m copies in the United States.
It is not clear how many copies Live Nation expects her future albums to sell, but it may be some time before the company has a chance to release Madonna’s music. Madonna owes one more studio album to Warner under her contract there; that album is expected to be released next year.
Warner also owns the rights to Madonna’s catalogue of earlier recordings. Under the deal with Live Nation, according to people briefed on the arrangement, ownership of her new recordings would eventually revert to her.
Representatives for Live Nation and Warner Music declined to comment. Madonna’s manager, Guy Oseary, could not be reached for comment.
Anne Lauvergeon named Europe’s top businesswoman
By Andrew Hill and Joanna Chung
Published: October 10 2007 17:58 | Last updated: October 10 2007 17:58
Anne Lauvergeon, chief executive of Areva, the French nuclear group, has been named Europe’s top businesswoman in the FT’s annual ranking.
Ms Lauvergeon displaces Ana Patricia Botín, executive chairman of Spanish bank Banesto. Ms Botín headed the FT ranking in 2005 and 2006 but dropped to number four this year. Ms Lauvergeon, second in 2006, has earned a strong reputation at the state-owned nuclear company, where she faces both political and commercial pressure.
There were seven new entrants in this year’s top 25, headed by Cynthia Carroll, Patricia Russo and Monika Ribar, who in the past year have taken the top executive jobs at, respectively, Anglo American, the mining group, Alcatel-Lucent, the telecommunications company, and Panalpina, the big Swiss logistics and transport group.
Also joining the list are Angela Ahrendts, who replaced Rose Marie Bravo as chief executive of clothing and luxury goods group Burberry last year, and Catherine Kinney, who has moved to Paris to oversee the integration of the New York Stock Exchange and Euronext. The list of 25 names is below, and you can read details of the top 10 positions, 11 to 15, 16 to 20 and 21 to 25.
The ranking is based on recommendations from correspondents of the Financial Times and Financial Times Deutschland, aided by Egon Zehnder, the executive search consultancy. Those recommendations were then ranked using a blend of data about the size, growth and (where relevant) share price performance of the candidates’ companies, and adjusted according to the level of responsibility, recent record and perceived potential of the individual women.
The inclusion of Ms Carroll and Ms Russo presented challenges. Ms Carroll only took on the chief executive job at Anglo American this year – a surprise outside appointment from Alcan – and the jury is still out on her impact. Ms Russo is coming under extreme pressure as leader of the recently merged Alcatel-Lucent, which has had to issue three profit warnings in 10 months.
Other new entrants were Dominique Reiniche, Coca-Cola’s European Union group president, and Anne-Marie Idrac, who chairs the French railways group SNCF.
There were some steep falls, too. Pat O’Driscoll, ranked 22nd in 2006, dropped out of the ranking after losing her job at Northern Foods, and Sly Bailey only just clung on to the number 25 slot, down seven places, as she faced challenges at Trinity Mirror, the UK media group.
For the first time this year, the ranking was revealed online in four tranches, starting on Monday October 8, with the top 10 unveiled today, to coincide with the opening day of the Women’s Forum in Deauville, France, where a number of the top 25 are due to speak. News, analysis and video from the forum will be published on the FT’s Women in Business website.
As in previous years, the list has been compiled from candidates who are based in Europe (regardless of nationality) and who hold executive roles. Employees of Pearson were ineligible to join the ranking.
FT Top 25 businesswomen in Europe (last year’s rank)
1. Anne Lauvergeon, Areva (2)
2. Cynthia Carroll, Anglo American (-)
3. Antonia Ax:son Johnson, Axel Johnson (4)
4. Patricia Botín, executive chairman, Banesto (1)
5. Clara Furse, chief executive, London Stock Exchange (6)
6. Valerie Gooding, chief executive, Bupa (3)
7. Patricia Russo, chief executive officer, Alcatel-Lucent (-)
8. Güler Sabancı, chairperson and managing director, Sabancı Holding (9)
9. Annika Falkengren, president and group chief executive, SEB (10)
10. Monika Ribar, president and chief executive, Panalpina (-)
11. Angela Ahrendts, chief executive, Burberry (-)
12. Cristina Stenbeck, chairman, Investment AB Kinnevik (13)
13. Stine Bosse, group chief executive, TrygVesta (11)
14. Nancy McKinstry, chief executive and chairman, Wolters Kluwer (8)
15. Ingrid Matthäus-Maier, chair and chief executive, KfW Bankengruppe (17)
16. Linda Cook, executive director, Shell Gas and Power (12)
17. Kate Swann, chief executive, WH Smith (21)
18. Catherine Kinney, president and co-chief operating officer, NYSE Euronext (-)
19. Dorothy Thompson, chief executive, Drax Power (16)
20. Dominique Reiniche, European Union group president, Coca-Cola (-)
21. Vivienne Cox, executive vice-president, BP (20)
22. Anne-Marie Idrac, chairwoman of the board, SNCF (-)
23. Marie-Christine Lombard, group managing director, TNT Express (23)
24. Anke Schäferkordt, chief executive, RTL Television Germany (24)
25. Sly Bailey, chief executive, Trinity Mirror (18)
Research: Anne-Britt Dullforce, Neil McDonald, Hannah Green
Copyright The Financial Times Limited 2007
I believe in and build new media companies which aim to revolutionise the manner in which consumers interact with digital media and in do... (read more)
Join now for your FREE etribes Account!
