The name which comes on top of the list when we talk about investments is surely Warren Buffet, Chief Executive Officer, Berkshire Hathaway Inc. (Public, NYSE:BRK.A). Warren Buffett’s firm said today that it will buy railroad operator Burlington Northern Santa Fe for $44 billion.
The company, Berkshire Hathway already has 22.6% stake in Burlington Northern and it would acquire the remaining 77.4% in a cash and stock offer for $100 per share. Buffett called his firm’s investment an “all-in wager on the economic future of the United States.”
“Our country’s future prosperity depends on its having an efficient and well-maintained rail system,” Buffett said in a statement. After the news came, Burlington Northern shares rose 28% in the early hours of trading.
The deal is said to be largest in Berkshire Hathway’s acquisition history and it would also include Burlington Northern’s $10 billion debt. During the conference call with investors on Tuesday, Chairman and CEO of Burlington Northern- Mathew Rose said that the sale of the Fort Worth, Texas based firm was a “strategic fit” for both the company’s employees and customers. Rose also assured that there would be no management shakeup at Burlington Northern as a result of the deal, which will close sometime in early 2010.
CIT Group which is one of the leading US funders for medium sized and small ventures filed for the bankruptcy on Sunday which is 5th largest by assets in America’s history. They have planned a reorganization that has the support of its major debtholders.
The group has asked the US Bankruptcy Court for the Southern District of New York for a quick approval for its plan. They said that its subsidiaries will continue its operations and would not be affected by the filing.
Jeffrey M Peek, Chairman of the group said, “The decision to proceed with our plan of reorganization will allow CIT to continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy”.
The assets shown in the bankruptcy filing are $71 billion and $64.9 billion in liabilities. The other 4 companies which had more assets when they filed for protection are Lehman Brothers, Washington Mutual, Worldcom and General Motors.
Separately, the company said in a filing with the Securities and Exchange Commission on Friday that it had struck an agreement with Goldman Sachs to change the terms of a loan it had originally sought from the Wall Street firm in June.
In reducing the size of the loan to $2.125 billion from $3 billion, CIT Group will pay Goldman a termination fee of $285 million and will post $250 million in collateral.
In return, Goldman agreed not to terminate the credit facility in the event of a CIT bankruptcy. Prior to Friday’s announcement, Goldman Sachs was poised to collect $1 billion when CIT filed for bankruptcy, according to reports.
Insider trading scandals hurt the best of employees and companies. This time its IBM.Robert Moffat, IBM’s head of supply chain was arrested few weeks ago in the wake of the massive Galleon scandal, bringing not only his career on the wire but also creating a vacuum in the supply chain, hardware, server & semiconductor business of IBM.
IBM officially lost one of its favoured employees on Friday in what can be termed as a straight result of his arrest.This can be seen as just a completion of the formal seperation obligations as he was placed on leave by IBM after his arrest on Oct 16th. Whether its a v oluntary defection or a forced one, nobody knows but his lawyer’s trying his best to not give this a “termination” tag.
More details of the government’s case continue to come out. Last week, for example, government prosecutors released information from an informant and wire taps that allege Moffat gave inside information about the quarterly earnings of Sun Microsystems to Rajaratnam through an intermediary that allowed the Galleon find to make a $900,000 profit on Sun’s stock. At the time, IBM was doing due diligence with Sun for a then-pending move to buy the company (a deal which later collapsed).
A year after the massive bailout initiated by the American goverment to save wall street’s banks comes the pay cut scandal. On Oct 22 the Obama administration announced that its “payback” time for a small group of Wall Street executives. The pay of 25 top-level executives each at 7 banks which received the maximum amount of the bailout will be cut by arount 50 percent.
The administration had a lot to say, and they needed to as its a bit hard to digest - “the goverment capitalising on the capitalists”, isn’t it so? Some said that “the executive bonuses have been cut in order to keep the companies “viable.” & some were of the opinion that “the principal reason for the cuts is not to punish capitalists, but to rescue and save the bailed-out capitalist giants from their own CEOs on behalf of the stock holders.”
The seven co’s affected are Citigroup, Bank of America, AIG, General Motors, Chrysler, GMAC and Chrysler Financial.Citigroup CEO Vikram Pandit made $10.82 million in 2008, while the company received $45 billion from the government. Bank Of America’s CEO Kenneth Lewis is stepping down at the end of 2009 amid BAC’s horrid run in the last two quarters. Lewis has made headlines by proclaiming he will not take a salary for 2009, yet he will still walk away from Bank of America, which received $45 billion in bailout funds, with a retirement package worth $125 million. There were rumours that Goldman Sachs & JP Morgan had cleared out their account with the administration, but it is entirely unclear, however they have escaped this one.
Its not an argument entirely against the administration, what needs to be seen here is that yes capitalists need to make profits but not at the expense of workers.The administration is just trying to redirect workers’ very correctly placed anger at those who run the capitalist system. Obama made it very clear right from his first day that without disturbing the economic model of the country, he will make sure that supernormal or abnormal profits(including extraordinary pay packages for CEOs) do not become a case in every other Wall Street company.
After the company’s exceptional 3rd quarter results, the company decided to increase its operating profit in the next 3 years. They have decided to boost its growth and regain the confidence of its investors. Yahoo’s CEO, Carol Bartz on its presentation to investors on Wednesday said Yahoo had left many people confused about its purpose in recent years and disappointed by its lackluster financial performance. Yahoo managed to have only 6% of operating margin in the third quarter, which Bartz described as “pathetic” earlier on Wednesday.
“Along the way, here we are a 14-year-old Internet company that somehow got boring,” said Bartz, who said the company’s 6 percent operating margins were “pathetic” and “unacceptable.”
“Today is the beginning of a journey back to respect,” Bartz said.
Since Yahoo changed its homepage in July, page views have increased 9% while time spent on the site has increased 20%, according to Tapan Bhat, SVP (Integrated Consumer Experience). He also said that, Click-throughs on the advertisements on the front page have increased 10%. Also, since Bartz took over as CEO, the company laid off 5% of its staff and shut down its several businesses.
Yahoo also announced its 10 year partnership with Microsoft Corporation in July. This will let Microsoft provide search technology to Yahoo and compete with Google, the world’s No. 1 search engine.
The oil & gas industry is looking down at huge losses in the present & for the future. Royal Dutch Shell & BP, two of the strongest players have reported plummeting of profits by almost three quarters. Shell reportedly has suffered a 73% reduction in its profits, two days after BP announced quite the same story, its profit going down by ~50%. Also, as expected, Shell cut its workforce by about 5000 in addition to reducing operating costs.
The results might be hard to bear for these companies but the oil demand scenario over the last few months has been pathetic. It has influenced oil & gas companies as the oil prices have been on a continuous decline. Crude oil declined the most in a month yesterday as an Energy Department report showed that U.S. gasoline stockpiles climbed 1.62 million barrels last week.
Peter Voser, Shell’s chief executive says that, “We see some indications that energy demand and pricing are improving, but the outlook remains uncertain, and we are not expecting a quick recovery”, is this some news or is he just stating the fact? Anyways, maybe a CEO can’t say more than this & that too if he’s been on the seat for just over two months. Voser took over the CEO post in July 2009 & he needs to act immediately. The options he has are pretty few. Maybe he needs to forego the plans he has to expand production to add 1 million barrels a day to capacity by the end of 2012. If this happens then maybe by 2012 he’ll be surrounded by oil barrels and no customers. This is where the diversity of a company’s business lines comes handy but I am afraid, oil companies generally have pretty few options.
The situation is such that every company in the industry is keeping a hawk-eye watch on results for each company. Exxon Mobil & Chevron Corp.’s results are next, watch out !!
The world’s one of the most loved and admired company McDonald’s Corporation (NYSE:MDC) is pulling out its operations from Iceland. McDonald’s has decided to close its stores and had no plans to return. Iceland is going through a huge financial crisis and this has made it very expensive to operate its franchises. Besides the economy, McDonald’s blamed the “unique operational complexity” of doing business in an isolated nation with a population of just 300,000.
There is only one company in Iceland which operates all the franchises of McDonald’s Corporation i.e. “Lyst”. The owner of the firm Mr. Jon Gardar Ogmundsson said that the decision was “not taken lightly”. He told that stores imported the goods from Germany and the cost has almost doubled, with the falling Krona, currency of Iceland.
Mr Ogmundsson said the restaurants had “never been this busy before… but at the same time profits have never been lower”. “It just makes no sense. For a kilo of onion, imported from Germany, I’m paying the equivalent of a bottle of good whisky,” he added. Almost all the Iceland’s banks ran into losses at the height of the global credit crisis - devastating the country’s economic condition and forcing it to rely on an $10bn (£6.1bn) international aid package.
Oracle is seriously concerned about the delay in the approval of its Sun Microsystems acquisition. Its fate is hinging on nothing else but what ultimately happens to MYSQL. The stakeholders are quite big in their own standards & also varied in terms of their operating markets.
On one hand Oracle itself is facing tough challenges from state bodies like the European Commission & on the other it’s a tussle between companies like Microsoft,( “actively seeking to scuttle the deal or even purchase MySQL for itself.”) & non-profit foundations & free software groups. Microsoft can be seen to have a massive vested interest in MySQL and whoever ultimately owns it. According to Gartner, via Reuters, SQL Server had a 18.1 per cent market share in 2008 compared to Oracle’s 48.6 per cent continued dominance (this is the market share for ‘paid for’ databases, thus MySQL hardly figures in Gartner’s report). Thus Microsoft is seriously lagging in the commercial database market & would want to use MYSQL to create a niche for itself in the commercial databases market.
Microsoft’s reason for buying MYSQL seems valid. However another school of thought is that of the free software foundation. It says it would preserve the software & make sure that no one else takes advantage of it to threaten Oracle’s position.
From Oracle’s point of view an immediate resolution is important as Sun is losing $100 million a month as rivals like Hewlett-Packard Co and IBM poach customers amid uncertainty about the closing of the deal.
Steve Jobs, CEO of Apple, Inc. is a man always creating something new and unimaginable products. Imagine a situation, While you are starting your computer or notebook, an advertisement pops up and the screen freezes for some time. The ad could be an audio or a plain visual one.
Regardless, it may offer you some product or could even offer the operating system (which enables you to start or boot your computer) free or at a lower cost. Tying you down for a few more seconds, the ad automatically fades away and allows you to continue with the booting process.
If Apple Computer has its way, this is precisely what you may get in some years to come. Steve Jobs, the chief executive officer and co-founder of the company, has aptly titled the patent application as ‘Advertisement in an Operating System’. And he has listed himself as an ‘inventor’ of the application (US Patent Application 20090265214).
Jobs is credited with 133 patents — unusual for a CEO of a large company who may have other important issues to handle — of the 1,250-odd patents that Apple has been granted till date.
Everyone knows about Windows 7 & it being the quick fix for a crushed product , just to add on, Microsoft has chosen Australia to be its inaugural market for this one. As per the management, one of the main reasons for choosing Australia was the high percentage of representatives from the country during the beta testing phase.
“Aussie Windows 7 internet traffic “as big as Obama”? ” (http://www.itnews.com.au/News/144366,aussie-windows-7-internet-traffic-as-big-as-obama.aspx#), it seems now that maybe it actually was. Well, being the giant it is, one can imagine & understand this strategy of choosing a country where the interest has been maximum. Windows Vista was a total failure everywhere & it was important this time that Microsoft carefully chooses a launch market. It gives enough confidence to a company if the potential users are large at one particular place & moreover if they have evidence of that, in this case Australia.
A number of Enterprises globally have shifted to Windows 7 while the pace amongst consumers is a bit slow but nevertheless its catching up. This one’s gonna be big !!
The name which comes on top of the list when we talk about investments is surely Warren Buffet, Chief Executive Officer, Berkshire Hathaway Inc. (Public, NYSE:BRK.A). Warren Buffett’s firm said today that it will buy railroad operator Burlington Northern Santa Fe for $44 billion.