Global finance blog - news, jokes, life…

Swiss drugmaker Roche Holding AG launched a hostile bid for Genentech on Friday and lowered its offer for the remaining 44 percent of the U.S. biotechnology company it does not already own.

Roche is now offering $86.50 per share in cash, valuing the deal at $42.5 billion, after initially offering $89 a share in cash, which valued the original bid at $43.7 billion.

The offer is at a premium of nearly 3 percent over the Genentech’s closing price of $84.09 on Thursday.

Buying Genentech would give Roche control of all revenues for big-selling cancer drugs Avastin and Herceptin, as well as absorbing an attractive portfolio of new medicines.

Roche’s new offer comes as a surprise as investors had initially expected the Swiss group to sweeten its bid for Genentech after it rebuffed Roche’s initial offer, saying it undervalued the company but it would consider a higher offer that reflected the benefits of an acquisition payday loans.

But the credit crisis has raised doubts about Roche’s ability to secure the necessary financing to conclude the deal.

“The commencement and completion of the tender offer does not require any approval by the special committee or the Genentech board, and Roche has not asked the special committee to approve the tender offer,” the group said.

Roche, which currently owns 55.8 percent of the Genentech outstanding shares, expects to commence the tender offer within approximately two weeks.

The group plans to finance the deal through its own funds, commercial paper, bonds and bank loans, Roche said.

(Reporting by Katie Reid and Sven Egenter)

Read more

New york — Stocks climbed for a second day Monday as Home Depot Inc. cut jobs, joining companies that are taking steps to weather the economic slowdown, and Freeport-McMoRan Copper & Gold Inc. beat analysts’ profit estimates.

Home Depot advanced 4.7 percent, leading the Dow Jones industrial average’s gain, after the biggest home improvement retailer eliminated 7,000 jobs. Freeport-McMoRan surged 9.3 percent. Lennar Corp. jumped 14 percent as Citigroup Inc. recommended the house builder, saying its shares sank too far.

The Standard & Poor’s 500 index added 0.6 percent to 836.57, trimming its yearly loss to less than 7.4 percent. The Dow rose 38.47 points, or 0.5 percent, to 8,116.03. The Nasdaq composite index gained 12.17, or 0.82 percent, to 1,489.46.

"The job cuts have scared the pants off of people, but they are a part of repairing balance sheets and fixing a company to become stronger," said Robert Lutts, president of Cabot Money Management in Boston, which manages $400 million.

Home Depot rose $1.01 to $22.73.

Freeport-McMoRan Copper & Gold jumped $2.13 to $24.94. The world’s largest publicly traded copper producer reported profit excluding some one-time items of 6 cents a share, beating the $1.01 a share loss estimated by analysts.

Lennar climbed 14 percent, the most in the S&P 500, to $7.82. The builder was raised to buy from hold by analysts at Citigroup.

General Electric Co. jumped 3.2 percent to $12.42 after S&P said the company’s and General Electric Capital Corp.’s AAA debt ratings are not immediately affected by fourth-quarter earnings results payday loans.

Rohm & Haas Co. dropped 13 percent to $57.10 after saying Dow Chemical Co. doesn’t intend to close its $15.4 billion acquisition by today as required by their merger agreement.

Caterpillar slumped $2.99 to $32.67 after reporting profit that trailed analysts estimates.

Wyeth fell 35 cents to $43.39 even after Pfizer Inc. said it will pay $50.19 a share in cash and stock for the drug maker. Pfizer retreated 10.3 percent to $15.65.

"The market is signaling that its probably not going to go through, not at that price anyway," said Peter Sorrentino, who co-manages $16 billion at Huntington Asset Advisors Inc. in Cincinnati. "It looks tenuous at best."

Profits decreased 47 percent for the 84 companies in the S&P 500 that have released fourth-quarter results since Jan. 12. Analysts now forecast a 32 percent drop in earnings for the fourth quarter after saying in March 2008 that net income would rise as much as 55 percent, according to Bloomberg data.

"Earnings have been an absolute disaster so far, but the market feels that earnings numbers couldn’t possibly get any worse than they are," said David Kelly, chief market strategist at JPMorgan Funds, which oversaw $304 billion as of Oct. 8.

"The market is getting used to the shocking news flow even though the hits keep on coming."

The S&P 500, which has dropped for three straight weeks, is still 11 percent above an 11-year low reached on Nov. 20.

Source

The British economy is officially in a recession, according to GDP numbers released Friday.

The British gross domestic product declined by 1.5% in the fourth quarter of 2008, the British government announced. That followed a decline of 0.5% in the third quarter.

The traditional definition of a recession is two consecutive quarters of negative GDP growth.

There were already hints the British economy was heading toward a recession before the fourth-quarter results emerged, because second-quarter results for 2008 had showed no change in the GDP.

"The increased rate of decline in output was due to weaker services and production industries output," Britain’s Office for National Statistics announced payday loans.

Manufacturing output fell by 4.6% in the fourth quarter and was the biggest contributor to the slowdown in production, the government said.

Large declines also occurred in construction; the services sector, especially hotels and restaurants; and transport. 

Source

Satyam Computer Services Ltd has been approached by potential buyers, a member of its new board said on Tuesday, while concerns grew about the business prospects for the fraud-hit outsourcer.

Some clients of Satyam, at the center of India’s biggest corporate scandal, have told the company they want a contingency plan in case things do not stabilize in the next three months.

“All I can say, we have been approached by potential buyers,” Tarun Das, one of six members of Satyam’s new government-appointed board, told reporters, adding the board, which met on Saturday, had not discussed a buyer.

Satyam, India’s No. 4 software services exporter, was plunged into crisis after founder Ramalinga Raju resigned as chairman earlier this month, revealing profits had been falsified for years and $1 billion of cash on the books did not exist.

Engineering and construction company Larsen & Toubro, which had built up a 4 percent stake in Satyam ahead of Raju’s disclosures, was seen as a possible partner, with the Economic Times reporting it had appointed Japan’s Nomura to advise it.

However, Y.M. Deosthalee, chief financial officer of Larsen & Toubro, told Reuters the company had not appointed any merchant banker for a possible deal with Satyam, although he said it had been approached by several bankers.

“We have not appointed Nomura,” he said.

On Monday, Satyam, which specializes in business software, said U payday advance.S.-based State Farm Insurance Co had canceled its contract, and there were signs other customers had concerns.

“In a few isolated cases, customers have been engaged with us to understand the process of transition,” a spokesman said in an emailed response to questions from Reuters.

“They have said they would like to have a contingency plan, should it be required, if things don’t stabilize within the next 90 days,” he said.

Local media has reported that some big customers of Satyam, which has corporate giants such as Nestle and General Electric as clients, may terminate their projects.

“In this difficult process of saving the company, Satyam may lose two or three clients,” said K.K. Mital, head of portfolio management services at Globe Capital.

“Clients are definitely concerned and it depends on the kind of confidence-building measures the company takes.”

On Saturday, Satyam’s new board said it was still looking for a new chief executive and chief financial officer.

Analysts said outsourcing sector leader Tata Consultancy Services and No. 2 Infosys Technologies could benefit from Satyam’s woes, although both have said they are not trying to poach its clients. 

Read more

Fast-growing salmon. Heart-healthy pigs. Nutrient-packed milk. These and other genetically engineered products have gotten one step closer to store shelves.

The Food and Drug Administration on Thursday announced final guidelines that will help producers clear the regulatory hurdles as they try to bring genetically engineered meat to the marketplace. The guidelines, though themselves not legally binding, will help companies meet mandated regulations.

"This guidance will help the FDA efficiently review applications for products from GE animals to ensure their safety and efficacy," said Randall Lutter, the agency’s deputy commissioner for policy.

The products will undergo a mandatory safety review, the agency said.

But consumer groups quickly criticized the FDA’s decision Thursday, saying the application process should be more transparent and that genetically engineered products should be labeled as such.

"FDA claims these foods are not different from conventional food, and therefore don’t need to be labeled," said Jean Halloran, a director at Consumers Union, publisher of Consumer Reports, in a statement. "This flies in the face of consumer opinion and common sense."

A genetically engineered animal is one whose DNA has been altered with DNA from another animal to produce a desirable trait. In some cases, animals are engineered to produce milk that contains medicines — so called "biopharm" animals — and in others, to provide fast-growing or more nutritious food.

Under current rules, a genetically engineered product requires only a label saying it has new nutritional content. For example, if milk were engineered to have more vitamins, a label would have to say only that it has more vitamins, not that it was genetically engineered.

The agency and the biotech industry have agreed that a label isn’t required because the animals aren’t any different from regular animals.

"There’s opposition to labeling because we support FDA policy on labeling which says labels must be truthful and not misleading," said Karen Batra of the Biotech Industry Organization, which represents companies developing genetically engineered meat, milk and other products. "If you identify a nongenetically engineered product, then you insinuate there is some sort of health or safety concern, and that’s not the case faxless payday loan."

RELATED LINKS

 Get more business news, blogs and opinion

Some consumer groups argue with that notion, saying that shoppers, who may oppose the technology on ethical grounds, need the information to make an informed choice.

"The are recommending labeling only when there’s a new health claim made, or it’s got a different nutritional profile," said Jaydee Hanson of the Center for Food Safety. "We would say that an animal that’s got a gene that wasn’t in it before has got a different nutritional profile."

Hanson noted that the U.S. Department of Agriculture requires any milk other than cow’s milk to be labeled. "If I’ve got to tell you that it’s goat’s milk, why shouldn’t I have to tell you it’s genetically engineered milk?" Hanson said.

The FDA has been reviewing genetically engineered animals since the early 1990s but had never formally clarified the approval process. Last fall, it issued draft guidelines, followed by a 60-day public comment period. During that period, some 28,000 people weighed in.

According to the agency, companies have submitted as many as 50 applications to bring their genetically engineered products to the market. Agency officials will not say which companies’ applications are under review. So far, none has been approved, though last week, an FDA committee recommended that the agency approve a genetically engineered goat that produces human blood thinner in its milk.

President-elect Barack Obama has said he favors labeling genetically engineered food products — a preference consumer groups are banking on.

Source

U.S. exports fell in November, capping the biggest four-month decline in more than a decade and signaling trade will contribute little to economic recovery, even as the recession depresses imports.

Exports decreased 15.2 percent from August to November, the most since at least 1992, according to Commerce Department figures released today in Washington. The trade deficit narrowed to $40.4 billion, the smallest since November 2003, as imports fell to the lowest level in three years.

“The key message from this report is bad news,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “It is slim comfort that the U.S. cut its demand for imports more rapidly than the rest of the world cut its demand for U.S. exports. That might cushion the U.S. downturn a little, but it is not a route to recovery.”

American exports and imports are both contracting as the global economy faces the first simultaneous recession in the U.S., Japan and the euro region in the postwar era. While plummeting demand helps trim the nation’s purchases of foreign goods, falling exports of U.S.-made products will hobble American factories and jobs.

Trade has contributed to growth in the U.S., the world’s largest economy, since the first three months of 2007.

Americans bought 12 percent fewer goods and services from abroad, reducing imports to $183 payday loans.2 billion as demand for foreign crude oil, automobiles, computers and televisions sagged. Exports dropped 5.8 percent to $142.8 billion in November, today’s figures showed. Foreign purchases of automobiles were the lowest since October 2006.

Decline in Trade

“The real story is the contraction in important export volumes that underscores the decline in world trade,” John Ryding, chief economist at RDQ Economics LLC in New York, wrote in a note to clients. “An economy cannot grow its way out of a recession by reducing imports, especially one the size of the U.S.”

Slumping demand for American-made computers and semiconductors contributed to the drop in November exports. Intel Corp., the world’s largest chipmaker, said this month that fourth-quarter sales dropped 23 percent, more than it projected in November, as the global recession intensified.

Intel Chief Executive Officer Paul Otellini, 58, has said he expects the current U.S. recession will be the worst of his lifetime. The Santa Clara, California-based company’s chips run about 80 percent of the world’s PCs, making it a bellwether for technology spending.

Source

President-elect Barack Obama warned that without immediate steps by the government to revive the economy, family incomes will drop, the unemployment rate could reach “double digits” and the U.S. risks losing a “generation of potential and promise.”

In excerpts of a speech he’s scheduled to give today at 11 a.m. New York time in the Washington suburb of Fairfax, Virginia, Obama says that while the cost of his economic recovery plan will add to a deficit already projected to exceed $1 trillion, he “won’t just throw money at our problems.”

“It is true that we cannot depend on government alone to create jobs or long-term growth,” Obama will say. “But at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.”

Obama’s speech, which aides billed as a “major” economic address, is part of a broader pitch to Congress and the American public as he works on selling his $775 billion, two-year economic stimulus plan to pull the U.S. out of a recession. While the excerpts released by his transition office didn’t provide specifics of the plan, advisers said the full speech would expand on previously reported elements.

He also will again call for using the government’s “full arsenal of tools” to unlock credit markets and “a sweeping effort” to stem home foreclosures. Obama also is promising to overhaul financial-markets regulations and crack down on “reckless greed and risk-taking” on Wall Street to restore confidence in markets.

Quick Action Sought

Obama, who has made getting a stimulus package through Congress his top priority even before he takes office on Jan. 20, is pressing Congress to act quickly on his proposals, which include infrastructure spending aimed at creating or saving 3 million jobs and about $300 billion in tax cuts for individuals and businesses.

Yesterday, Obama said that spending in the stimulus plan would have to be geared toward programs that foster long-term economic growth — in energy, health care and education.

As part of his effort to gain support from congressional Republicans, some of whom have questioned the price tag on the stimulus, Obama says his plan is “not just another public works program.”

Private Sector Jobs

“The overwhelming majority of the jobs created will be in the private sector, while our plan will save the public sector jobs of teachers, cops, firefighters and others who provide vital services,” he will say.

The cost of the economic recovery package is at the high end of the range the president-elect’s advisers had been promoting and lower than the $1 trillion stimulus that some economists have called for cash loans. In the speech, he warns that it will widen the federal budget deficit, which the Congressional Budget Office yesterday forecast would hit $1.18 trillion this year.

“It will certainly add to the budget deficit in the short- term,” Obama will say. “But equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, incomes, and confidence in our economy.”

Obama has spent the bulk of his first full week in Washington since the Nov. 4 election meeting with advisers and congressional leaders to help craft the package and shore up support. He is under pressure from lawmakers in both parties to ensure strong oversight given the price tag.

Oversight

Yesterday he named Nancy Killefer, a director at management consulting firm McKinsey & Co. and formerly an assistant secretary of the Treasury in the Clinton administration, to a new post of chief performance officer. She is charged with making the government more accountable for the money it spends.

In his speech, Obama will say the public will be able to use the Internet to view information about where the stimulus money is being spent and promises to create an economic recovery oversight board. He also will bar lawmakers from inserting pet spending projects, known as earmarks, into the legislation.

“Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made transparently, and informed by independent experts wherever possible,” Obama will say.

Obama speaks just hours after retailers, including Wal- Mart Stores Inc., reported that consumers pared their holiday shopping and profits were squeezed by discounts. The government also reported that the number of Americans collecting unemployment benefits surged to 4.6 million, a 26-year high.

The Labor Department may report tomorrow that the economy lost another 510,000 jobs in December, bringing the 2008 total to a six-decade high of 2.4 million, according to economists surveyed by Bloomberg. The unemployment rate probably jumped to 7 percent, the highest level since 1993.

Obama urged Congress to pass the measure, which has yet to be introduced, “as quickly as possible.”

“Every day we wait or point fingers or drag our feet, more Americans will lose their jobs, more families will lose their savings,” Obama will say. “More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”

Source

The engines that have lifted the U.S. economy out of every recession since World War II will be of little help this time around.

Inventory rebuilding, household spending, home construction and payroll growth — the forces that powered, to a greater or lesser extent, each recovery since 1945 — may remain missing for much of 2009. A glut of unsold properties may keep housing depressed, while shriveled savings will discourage consumers. Companies may be reluctant to restock and rehire while their profits are squeezed.

“There are no obvious drivers of growth from the private sector,” says Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York.

The result: A recovery, whenever it comes, may be anemic and heavily dependent on low-cost lending by Federal Reserve Chairman Ben S. Bernanke and stepped-up spending by new President Barack Obama. Short-term interest rates might have to remain around zero throughout the year, while the federal budget deficit stays at or near record highs into 2010.

“If we don’t act swiftly and boldly, we could see a much deeper economic downturn that could lead to double-digit unemployment,” Obama said in his weekly radio address on Jan. 3. The jobless rate stood at 6.7 percent in November.

UBS Securities LLC forecasts that gross domestic product will contract at a 3 percent annual pace this quarter after shrinking 4.5 percent in the final three months of 2008.

‘Policy Blitz’

James O’Sullivan, senior economist at UBS in Stamford, Connecticut, says the economy is likely to stop eroding in the second quarter, thanks to an unprecedented “policy blitz” by the Fed and the Obama administration. The second-half recovery, though, will be weak, he says: growth of 1.5 percent in the third quarter and 2 percent in the fourth, as tight credit continues to pressure consumers and companies.

That’s in contrast to past rebounds, where growth was boosted by a robust revival of private-sector demand.

Inventory swings played a key role in the 16-month recession of 1973-75 and the recovery that followed. Companies slashed stocks in 1974 and 1975 as demand dropped, and then rebuilt them rapidly the following year. That raised 1976 GDP by 1.4 percentage points, the biggest such contribution in 21 years.

Consumer spending and housing powered the economy out of recession in 1983, as pent-up demand sent purchases of cars and homes soaring. Payroll growth was also strong, with 1.1 million jobs created in September alone.

Help From Housing

In 1992, housing again was a big help. Along with capital spending, residential construction spurred the biggest contribution to growth from investment since 1984.

Homebuilding and consumer spending played a more modest role in the economy’s revival in 2002, but that’s because they never declined in the previous year’s recession, which was the mildest since World War II.

All those factors may be missing in action this time around.

With just-in-time inventory management, the downs — and ups — of the stockpiling cycle are more muted than before. Companies are quicker to pare stockpiles when demand wanes, limiting the buildup in unwanted products both at their own sites and those of their customers.

Clearing Out Inventories

For example, Corning, New York-based Corning Inc., the largest maker of glass for flat-panel televisions, said last month it will cut prices to clear out excess inventories.

The downside of this rapid response is that the economy won’t get as much of a pop from businesses restocking as demand recovers no fax cash advance. “There is a lack of a big inventory cycle,” O’Sullivan says.

Companies may also be reluctant to ramp up production in the face of what many economists expect to be a slow increase in consumer demand.

Allen Sinai, chief global economist at Decision Economics in New York, says households are in hunker-down mode after suffering $10 trillion in losses in wealth from sagging home prices and shrinking investments. “They know they have to save more; they have no choice,” he says.

The Conference Board’s index of consumer confidence fell in December to the lowest level on record as anxiety about job losses overcame the beneficial effects of a 60 percent decline in gasoline prices since July.

Unemployment

U.S. companies cut 533,000 jobs in November, the most in 34 years. Economists surveyed by Bloomberg News forecast that figures out on Jan. 9 will show a further 500,000 reduction in payrolls in December and an unemployment rate of 7 percent.

Joblessness is likely to continue to rise throughout 2009 and perhaps into 2010. “We’ll probably have a good chance of seeing unemployment hit 9 or 10 percent,” says Kenneth Rogoff, a former chief economist for the International Monetary Fund who’s now a professor at Harvard University.

Consumers have also been shaken by the plunge in the value of homes, for many their biggest asset. Home prices in 20 major U.S. cities declined 18 percent in October from a year earlier, the biggest drop on record for the S&P/Case-Shiller index that goes back to 2001.

The collapse in property values is damping expectations for an early rebound in the housing market. “We’re in the midst of a downward spiral and the momentum is building,” Stuart Miller, chief executive officer of Miami-based Lennar Corp., which builds homes in 14 U.S. states, said on a Dec. 18 conference call.

A Glut of Properties

A glut of unsold properties is prolonging the industry’s pain. The number of previously owned homes on the market at the end of November would take 11.2 months to sell at the current pace. That’s the highest inventory level in at least 10 years.

“Housing starts and building permits are in free-fall,” Nouriel Roubini, chairman of Roubini Global Economics and a professor at New York University, said in a Bloomberg Television interview on Dec. 23. “There’s no bottom.”

Hopes that exports would buoy the economy have been dashed by the spread of the U.S. recession overseas. Japan’s economy, the world’s second-largest after the U.S., probably shrank at an annual 12.1 percent pace last quarter, the sharpest drop since 1974, according to Kyohei Morita, chief Japan economist at Barclays Capital in Tokyo.

That’s left it up to U.S. policy makers to try to pick up the slack.

The Fed cut the main U.S. interest rate to a target range between zero and 0.25 percent on Dec. 16 and pledged to do whatever is necessary to end the longest recession in a quarter century. The incoming Obama administration, meanwhile, is working on a two-year stimulus package worth as much as $850 billion in increased government spending and lower taxes.

“The U.S. is in the midst of a long, deep and severe downturn,” Sinai says. “When we do recover, the engine will be government spending, not home building or the consumer.”

Source