Steven Spielberg’s new film studio will have about $825 million in financing once the initial funding is completed, according to its biggest investor, Reliance Anil Dhirubhai Ambani Group.
DreamWorks SKG, formed in November by Spielberg and Indian billionaire Anil Ambani, will receive equity from Reliance and bank loans, according to an e-mailed statement today from Ambani’s Reliance BIG Entertainment, the distributor for India. Walt Disney Co., which will release films elsewhere, is also providing funding, according to the statement.
DreamWorks plans to start production this year and release its first movie in 2010, according to the statement. The Los Angeles-based studio seeks to make five to six films a year. The initial funding is expected to close shortly, Reliance said, without offering details. In December, Spielberg delayed a plan to raise about $700 million in debt, in addition to equity, a person with knowledge of the situation said at the time. The funding was previously targeted for January, the person said.
“We welcome the opportunity and freedom they have given us to make the films we want to make,” Stacey Snider, chief executive officer of DreamWorks, said in the statement.
Spielberg broke away from Viacom Inc.’s Paramount Pictures in September. He spent $26.5 million of his own money to buy rights to 17 films from Paramount, Variety reported in January.
In February, Disney agreed to distribute DreamWorks films to theaters and to provide the studio with loans that may total as much as $200 million, two people with knowledge of the deal said at the time.
Burbank, California-based Disney will receive fees and increase its release schedule with the DreamWorks agreement.
Disney, the world’s biggest media company, rose 97 cents, or 4.2 percent, to $24.08 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 6.1 percent this year.
Wednesday, July 15, 2009
Pakistan seeks additional $4bn from IMF
Pakistan has requested an additional $4bn in financing from the international monetary fund (IMF) to meet the higher costs of security, finance ministry officials in Islamabad said on Wednesday.
The funding would come on top of a $7.6bn loan agreed late last year to ward off a balance of payments crisis.
EDITOR’S CHOICE
Pakistan’s displaced return to Swat Valley - Jul-12
Helmand deaths trigger debate on UK role - Jul-13
However, a senior finance ministry official said, the additional IMF loan would be used mainly to bridge the expenditure gap until Pakistan’s major aid donors known as the “friends of Pakistan” begin to provide a $5.25bn promised for the next two years until June 2011.
“The request to the IMF is for a bridging loan. We are not seeking a new loan that will add to our debt stock. This is simply money which will be repaid when the assistance from the friends of Pakistan gets delivered,” said Sakib Sherani, a senior advisor to Shaukat Tarin, the de facto finance minister.
Mr Tarin, currently on a visit to the United States, is expected to meet with officials from the IMF, the World Bank and US Aid to discuss the economic fallout from Pakistan ’s three-month-long battle with Taliban militants in the country’s northern Swat valley.
Pakistani officials and western diplomats warn that the extent of international support to help the country meet the economic fallout of the fighting may be a crucial factor in persuading Pakistan to fight Taliban militants in other areas.
“The international support will be a principal litmus test of how Pakistan reacts in future to international pressure on fighting the Taliban” said one western diplomat..
At least 2m people forced to flee the fighting in Swat began returning home in the first phase of a potentially difficult resettlement process on Monday. The return has coincided with warnings from senior Pakistani officials who say that remnant Taliban militants will try to fight back, possibly carrying out suicide attacks targeting refugess returning home.
“One such security incident and you will surely see people suddenly just driving back to the (internally displaced persons’) camps,” said one senior government official. Pakistani officials and UN experts said, beyond the immediate relief, medium to long-term rehabilitation of the IDPs could cost as much as $2bn or more.
Earlier this year, Mr Tarin told the FT that the fallout from Pakistan ’s campaign against militant Islamists was costing up to $8.5bn annually “in terms of lost exports, lost investments, increased expenses and loss in revenue.”
“Direct annual cost of the security apparatus is about US$2.5bn-US$3bn in the next two years,” he added.
However, some of the IMF conditions are already facing mounting popular criticism in Pakistan including energy price increases proposed earlier this year.
The funding would come on top of a $7.6bn loan agreed late last year to ward off a balance of payments crisis.
EDITOR’S CHOICE
Pakistan’s displaced return to Swat Valley - Jul-12
Helmand deaths trigger debate on UK role - Jul-13
However, a senior finance ministry official said, the additional IMF loan would be used mainly to bridge the expenditure gap until Pakistan’s major aid donors known as the “friends of Pakistan” begin to provide a $5.25bn promised for the next two years until June 2011.
“The request to the IMF is for a bridging loan. We are not seeking a new loan that will add to our debt stock. This is simply money which will be repaid when the assistance from the friends of Pakistan gets delivered,” said Sakib Sherani, a senior advisor to Shaukat Tarin, the de facto finance minister.
Mr Tarin, currently on a visit to the United States, is expected to meet with officials from the IMF, the World Bank and US Aid to discuss the economic fallout from Pakistan ’s three-month-long battle with Taliban militants in the country’s northern Swat valley.
Pakistani officials and western diplomats warn that the extent of international support to help the country meet the economic fallout of the fighting may be a crucial factor in persuading Pakistan to fight Taliban militants in other areas.
“The international support will be a principal litmus test of how Pakistan reacts in future to international pressure on fighting the Taliban” said one western diplomat..
At least 2m people forced to flee the fighting in Swat began returning home in the first phase of a potentially difficult resettlement process on Monday. The return has coincided with warnings from senior Pakistani officials who say that remnant Taliban militants will try to fight back, possibly carrying out suicide attacks targeting refugess returning home.
“One such security incident and you will surely see people suddenly just driving back to the (internally displaced persons’) camps,” said one senior government official. Pakistani officials and UN experts said, beyond the immediate relief, medium to long-term rehabilitation of the IDPs could cost as much as $2bn or more.
Earlier this year, Mr Tarin told the FT that the fallout from Pakistan ’s campaign against militant Islamists was costing up to $8.5bn annually “in terms of lost exports, lost investments, increased expenses and loss in revenue.”
“Direct annual cost of the security apparatus is about US$2.5bn-US$3bn in the next two years,” he added.
However, some of the IMF conditions are already facing mounting popular criticism in Pakistan including energy price increases proposed earlier this year.
Indian Lawmakers Approve Budget as Minister Vows to Cut Deficit
India’s parliament approved this year’s budget as Finance Minister Pranab Mukherjee vowed to trim the fiscal deficit after economic growth picks up.
“What is required right now is to achieve high growth in the shortest possible time,” Mukherjee told lawmakers today in the upper house, urging them to support the finance bill. “This level of deficit is not sustainable and we shall correct it soon.” The lower house passed the budget yesterday.
Financial markets are concerned the record 4.51 trillion rupees ($92 billion) borrowing may leave little money for private companies for investments, with the key bond yield rising 24 basis points since the budget was presented on July 6. Mukherjee said he plans to trim the deficit to 5.5 percent of gross domestic product by March 2011 and to 4 percent in the following 12 months.
Mukherjee forecast higher spending for infrastructure and the rural poor will see the budget deficit widen to 6.8 percent of gross domestic product in the year ending March 31, from 6 percent in the previous year. He is betting on faster economic expansion to raise tax revenue and step up allocations for roads and the poor, and trim the budget deficit in the coming years.
The finance minister said the widening of the deficit won’t “crowd out” borrowing needs of private companies, adding that the government “working in tandem” with the central bank will ensure enough money is available with the nation’s banks.
Reviving Demand
Prime Minister Manmohan Singh’s government, which won re- election in May for a second term, is focused on reviving consumer and investment demand as the nation’s $1.2 trillion economy, pummeled by the global recession, is forecast to grow 6.7 percent this year, the weakest since 2003.
“Higher growth is essential because it means higher tax incomes -- and this is no longer a theoretical proposition,” Mukherjee said. India’s record growth of close to 9 percent in the five years ended March 31 helped tax revenue more than double since 2004, he said.
The minister said the government’s fiscal stimulus since December is showing positive results, though the economy is still “not out of the woods.”
In June, steel and cement production grew by 13 percent each from a year earlier, while mobile-phone connections in May rose by 12 million, a 49 percent increase from the year before, the minister said.
Fiscal Discipline
“These are small beginnings that show that our strategy to generate internal demand is responding,” Mukherjee said. “In the medium term, we should have clear objectives and come back to the path of fiscal discipline.”
He said he plans to tap revenue from the sale of stakes in state-run companies and generate more revenue from the introduction of a goods and service tax from April 1 that will subsume all indirect taxes and will levy only value-added production so that manufacturers don’t pay taxes twice.
Indian state-owned companies NHPC Ltd. and Oil India Ltd. will sell shares to the public this year, Mukherjee had told lawmakers earlier in the day. NHPC is India’s largest hydroelectric power generator while Oil India is the country’s second-biggest government-owned energy explorer.
“What is required right now is to achieve high growth in the shortest possible time,” Mukherjee told lawmakers today in the upper house, urging them to support the finance bill. “This level of deficit is not sustainable and we shall correct it soon.” The lower house passed the budget yesterday.
Financial markets are concerned the record 4.51 trillion rupees ($92 billion) borrowing may leave little money for private companies for investments, with the key bond yield rising 24 basis points since the budget was presented on July 6. Mukherjee said he plans to trim the deficit to 5.5 percent of gross domestic product by March 2011 and to 4 percent in the following 12 months.
Mukherjee forecast higher spending for infrastructure and the rural poor will see the budget deficit widen to 6.8 percent of gross domestic product in the year ending March 31, from 6 percent in the previous year. He is betting on faster economic expansion to raise tax revenue and step up allocations for roads and the poor, and trim the budget deficit in the coming years.
The finance minister said the widening of the deficit won’t “crowd out” borrowing needs of private companies, adding that the government “working in tandem” with the central bank will ensure enough money is available with the nation’s banks.
Reviving Demand
Prime Minister Manmohan Singh’s government, which won re- election in May for a second term, is focused on reviving consumer and investment demand as the nation’s $1.2 trillion economy, pummeled by the global recession, is forecast to grow 6.7 percent this year, the weakest since 2003.
“Higher growth is essential because it means higher tax incomes -- and this is no longer a theoretical proposition,” Mukherjee said. India’s record growth of close to 9 percent in the five years ended March 31 helped tax revenue more than double since 2004, he said.
The minister said the government’s fiscal stimulus since December is showing positive results, though the economy is still “not out of the woods.”
In June, steel and cement production grew by 13 percent each from a year earlier, while mobile-phone connections in May rose by 12 million, a 49 percent increase from the year before, the minister said.
Fiscal Discipline
“These are small beginnings that show that our strategy to generate internal demand is responding,” Mukherjee said. “In the medium term, we should have clear objectives and come back to the path of fiscal discipline.”
He said he plans to tap revenue from the sale of stakes in state-run companies and generate more revenue from the introduction of a goods and service tax from April 1 that will subsume all indirect taxes and will levy only value-added production so that manufacturers don’t pay taxes twice.
Indian state-owned companies NHPC Ltd. and Oil India Ltd. will sell shares to the public this year, Mukherjee had told lawmakers earlier in the day. NHPC is India’s largest hydroelectric power generator while Oil India is the country’s second-biggest government-owned energy explorer.
Retailer Knockoffs Abound in India
NEW DELHI — Retailers are flocking to India, thanks to an economy that is still growing and a young population eager to gobble up new brand names.
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But some Western brands — once they conquer the regulatory hurdles to getting into the market here — may get a sinking sense of déjà vu. For instance, Timberland, the maker of hiking boots and other outdoor gear, identifiable by its tree logo and chunky, durable shoes, will find Woodland, which sells similar shoes and clothing, and has a tree logo.
Pinkberry, the Los Angeles-based frozen yogurt chain, will encounter Cocoberry, a frozen yogurt retailer with a look-alike logo and a similar array of candy and fresh fruit toppings.
And The Financial Times, Pearson’s newspaper published with a pink tint since 1893, is locked in a legal battle with Bennett, Coleman & Company, owners of India’s largest English-language newspaper: a pink-tinted supplement it calls The Financial Times, which it registered in India in 1984.
Pearson’s Financial Times is eager to publish in India, but Bennett Coleman is challenging that right in court. Indeed, in recent months, a subsidiary of Bennett Coleman registered similar names with India’s newspaper registry, including FT Asia and Worldwide Financial Times.
Like Bennett Coleman, Woodland — the Timberland look-alike — is no mom-and-pop operation. It has 230 stores nationwide and another 50 on the way, and it is a staple of urban shopping malls. That could cramp Timberland’s planned expansion in India, potentially confusing would-be customers and costing Timberland sales.
The United States has long tussled over intellectual property rights with China, where counterfeiters crank out knockoffs of designer bags and iPhones (and manufacturers have even made entire vehicles that look just like foreign cars). But as brands look to India as one of the few opportunities for growth in an anemic global market, foreign companies and governments alike are protesting the country’s lack of intellectual property protections, too.
As Gary Locke, the Commerce secretary, told a group of Indian executives visiting Washington this month, “U.S. businesses need assurances that when they come to India, they’ll be operating in a secure and reliable environment for intellectual property.”
India will be the best market in the world for retail sales growth this year, A. T. Kearney said in a report released in June. India’s “growing, educated and aspirational middle class is demanding a better retail environment and more global brands and styles,” the consulting group said.
Wal-Mart, Carrefour and Tesco are opening wholesale stores that will sell to restaurants and owners of small shops. Dozens of foreign brands that have not already entered the Indian market are searching for domestic joint venture partners, which they need before opening a store here.
When questioned about the inspiration for Woodland, Harkirat Singh, managing director and the third generation to run the family shoe company, said the assumption should not be made that “just because the name sounds similar,” Woodland is copying Timberland. There is a “similarity,” he acknowledged, “but our line is quite different from theirs.”
Mr. Singh said he thought Timberland’s entry into India could help, not hurt, his business. Foreign brands “bring more awareness about quality footwear” to India, he said. Then Indian consumers “buy our product because it is more value for money.”
Timberland’s spokeswoman, Robin Giampa, said that Woodland’s “imitation of several of the valuable and well-recognized Timberland brands is a concern.” The company is addressing Woodland’s “brand piracy” through the appropriate legal processes in India, she said.
Whether that will be successful or not is unclear. “Our courts have recognized that you can’t have an isolated approach to trademark law,” said Gayatri Roy, a lawyer with Luthra & Luthra in New Delhi, meaning judges have often ruled that brands that are well known around the world cannot be copied by someone else in India, even if the companies with those brands do not do business in India. In such cases, Indian courts have decided in favor of Whirlpool, Dunhill and Volvo, among others.
In the case of Timberland and Woodland, though, it may be difficult for Timberland to prove that it should be protected, Ms. Roy said. After all, Woodland has been in business since 1992, she said, so they have created their own identity.
When asked whether Pinkberry frozen yogurt was his inspiration, Cocoberry’s chief executive, G. S. Bhalla, said he wanted to create a brand “associated with nature, health and social responsibility.”
(The company said Mr. Bhalla’s seven-year-old daughter was the inspiration for combining the words Coco, for cocoa, and berry, for the fresh fruit that tops the yogurt.)
“Our product, recipe, store design, menu and philosophy are unique and very different from any other brand in the world,” Mr. Bhalla said. “We plan to expand at a steady and controlled pace in India,” he said. Pinkberry had no comment.
Citigroup has been active in India, as Citibank, for decades, and the country’s urban areas are dotted with bank branches with the blue-striped sign. But that did not stop “Yes Bank,” a retail banking chain that rolled out branches throughout India in recent years, from using a very similar sign.
Some imitators are so loosely based on the original that they may not be considered a threat — like the “6Ten” convenience stores. With their yellow and blue signs and piles of loose grains for sale rather than Slurpees, they are unlikely to be seen as competition to 7-Eleven.
And sometimes, the imitation is less about the brand than about what it represents. Across India, a number of scooter and motorcycle drivers sport the familiar Marlboro cigarette logo of a red and white chevron on their helmets. On closer inspection, those logos say “Marlborne” or “Melbourne.”
The helmets, made by several manufacturers, are “basically replicas of the helmets worn by Michael Schumacher during his racing days at Ferrari,” explained Rahim Premji, a partner with Allibhai Premji Tyrewalla, a bike dealership. Mr. Schumacher, a Formula One driver, was sponsored by Marlboro.
Helmet manufacturers were forced to replace the Marlboro name after the authorities said that tobacco advertising was not allowed in India, Mr. Premji said. Marlboro, not surprisingly, has not complained about the free advertising.
Skip to next paragraph
Add to Portfolio
* Timberland Co
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But some Western brands — once they conquer the regulatory hurdles to getting into the market here — may get a sinking sense of déjà vu. For instance, Timberland, the maker of hiking boots and other outdoor gear, identifiable by its tree logo and chunky, durable shoes, will find Woodland, which sells similar shoes and clothing, and has a tree logo.
Pinkberry, the Los Angeles-based frozen yogurt chain, will encounter Cocoberry, a frozen yogurt retailer with a look-alike logo and a similar array of candy and fresh fruit toppings.
And The Financial Times, Pearson’s newspaper published with a pink tint since 1893, is locked in a legal battle with Bennett, Coleman & Company, owners of India’s largest English-language newspaper: a pink-tinted supplement it calls The Financial Times, which it registered in India in 1984.
Pearson’s Financial Times is eager to publish in India, but Bennett Coleman is challenging that right in court. Indeed, in recent months, a subsidiary of Bennett Coleman registered similar names with India’s newspaper registry, including FT Asia and Worldwide Financial Times.
Like Bennett Coleman, Woodland — the Timberland look-alike — is no mom-and-pop operation. It has 230 stores nationwide and another 50 on the way, and it is a staple of urban shopping malls. That could cramp Timberland’s planned expansion in India, potentially confusing would-be customers and costing Timberland sales.
The United States has long tussled over intellectual property rights with China, where counterfeiters crank out knockoffs of designer bags and iPhones (and manufacturers have even made entire vehicles that look just like foreign cars). But as brands look to India as one of the few opportunities for growth in an anemic global market, foreign companies and governments alike are protesting the country’s lack of intellectual property protections, too.
As Gary Locke, the Commerce secretary, told a group of Indian executives visiting Washington this month, “U.S. businesses need assurances that when they come to India, they’ll be operating in a secure and reliable environment for intellectual property.”
India will be the best market in the world for retail sales growth this year, A. T. Kearney said in a report released in June. India’s “growing, educated and aspirational middle class is demanding a better retail environment and more global brands and styles,” the consulting group said.
Wal-Mart, Carrefour and Tesco are opening wholesale stores that will sell to restaurants and owners of small shops. Dozens of foreign brands that have not already entered the Indian market are searching for domestic joint venture partners, which they need before opening a store here.
When questioned about the inspiration for Woodland, Harkirat Singh, managing director and the third generation to run the family shoe company, said the assumption should not be made that “just because the name sounds similar,” Woodland is copying Timberland. There is a “similarity,” he acknowledged, “but our line is quite different from theirs.”
Mr. Singh said he thought Timberland’s entry into India could help, not hurt, his business. Foreign brands “bring more awareness about quality footwear” to India, he said. Then Indian consumers “buy our product because it is more value for money.”
Timberland’s spokeswoman, Robin Giampa, said that Woodland’s “imitation of several of the valuable and well-recognized Timberland brands is a concern.” The company is addressing Woodland’s “brand piracy” through the appropriate legal processes in India, she said.
Whether that will be successful or not is unclear. “Our courts have recognized that you can’t have an isolated approach to trademark law,” said Gayatri Roy, a lawyer with Luthra & Luthra in New Delhi, meaning judges have often ruled that brands that are well known around the world cannot be copied by someone else in India, even if the companies with those brands do not do business in India. In such cases, Indian courts have decided in favor of Whirlpool, Dunhill and Volvo, among others.
In the case of Timberland and Woodland, though, it may be difficult for Timberland to prove that it should be protected, Ms. Roy said. After all, Woodland has been in business since 1992, she said, so they have created their own identity.
When asked whether Pinkberry frozen yogurt was his inspiration, Cocoberry’s chief executive, G. S. Bhalla, said he wanted to create a brand “associated with nature, health and social responsibility.”
(The company said Mr. Bhalla’s seven-year-old daughter was the inspiration for combining the words Coco, for cocoa, and berry, for the fresh fruit that tops the yogurt.)
“Our product, recipe, store design, menu and philosophy are unique and very different from any other brand in the world,” Mr. Bhalla said. “We plan to expand at a steady and controlled pace in India,” he said. Pinkberry had no comment.
Citigroup has been active in India, as Citibank, for decades, and the country’s urban areas are dotted with bank branches with the blue-striped sign. But that did not stop “Yes Bank,” a retail banking chain that rolled out branches throughout India in recent years, from using a very similar sign.
Some imitators are so loosely based on the original that they may not be considered a threat — like the “6Ten” convenience stores. With their yellow and blue signs and piles of loose grains for sale rather than Slurpees, they are unlikely to be seen as competition to 7-Eleven.
And sometimes, the imitation is less about the brand than about what it represents. Across India, a number of scooter and motorcycle drivers sport the familiar Marlboro cigarette logo of a red and white chevron on their helmets. On closer inspection, those logos say “Marlborne” or “Melbourne.”
The helmets, made by several manufacturers, are “basically replicas of the helmets worn by Michael Schumacher during his racing days at Ferrari,” explained Rahim Premji, a partner with Allibhai Premji Tyrewalla, a bike dealership. Mr. Schumacher, a Formula One driver, was sponsored by Marlboro.
Helmet manufacturers were forced to replace the Marlboro name after the authorities said that tobacco advertising was not allowed in India, Mr. Premji said. Marlboro, not surprisingly, has not complained about the free advertising.
Tuesday, July 14, 2009
Key Says New Zealand Is Coming Out of Recession
July 15 (Bloomberg) -- New Zealand Prime Minister John Key said he agrees with Reserve Bank Governor Alan Bollard’s assessment that the economy is recovering from a recession.
“That tallies with what he’s been privately telling us, that we’re starting to come out of this recession, which is good news,” Key told Television New Zealand today. “The governor is in a good position to assess both the international markets and the domestic market.”
Bollard yesterday said the economy, which has been in a recession since the first quarter of last year, is likely to start recovering earlier than some of its trading partners. The central bank has cut borrowing costs to a record low and Key has reduced income taxes and boosted infrastructure spending to kick-start demand.
The government will develop policies to bolster exports and improve productivity in industries that sell goods overseas, Key said earlier in a speech in Wellington. The six main policy drivers are regulatory reform, infrastructure investment, better public services, education, innovation and a world-class tax system, he said.
Key wants increased output from exporters rather than growth fanned by consumer spending and borrowing, which widens the nation’s trading deficit and increases debt.
“There has been insufficient growth and investment in the internationally competitive sectors of the economy,” Key told a business audience. “Because of our poor export growth, our current account deficit has grown unsustainably large.”
The deficit was 8.5 percent of gross domestic product in the year ended March 31 compared to 4.5 percent in the U.S.
Key said New Zealand needs to encourage business investment and run a more efficient public sector. The government will also review the tax system.
“We can’t consider our tax system in isolation,” Key said. “The government will be watching closely what comes our of the Henry review of taxation in Australia.”
“That tallies with what he’s been privately telling us, that we’re starting to come out of this recession, which is good news,” Key told Television New Zealand today. “The governor is in a good position to assess both the international markets and the domestic market.”
Bollard yesterday said the economy, which has been in a recession since the first quarter of last year, is likely to start recovering earlier than some of its trading partners. The central bank has cut borrowing costs to a record low and Key has reduced income taxes and boosted infrastructure spending to kick-start demand.
The government will develop policies to bolster exports and improve productivity in industries that sell goods overseas, Key said earlier in a speech in Wellington. The six main policy drivers are regulatory reform, infrastructure investment, better public services, education, innovation and a world-class tax system, he said.
Key wants increased output from exporters rather than growth fanned by consumer spending and borrowing, which widens the nation’s trading deficit and increases debt.
“There has been insufficient growth and investment in the internationally competitive sectors of the economy,” Key told a business audience. “Because of our poor export growth, our current account deficit has grown unsustainably large.”
The deficit was 8.5 percent of gross domestic product in the year ended March 31 compared to 4.5 percent in the U.S.
Key said New Zealand needs to encourage business investment and run a more efficient public sector. The government will also review the tax system.
“We can’t consider our tax system in isolation,” Key said. “The government will be watching closely what comes our of the Henry review of taxation in Australia.”
Intel Jumps After Asian Consumers Spur Comeback in PC Industry
July 15 (Bloomberg) -- Intel Corp. rose as much as 8.4 percent in late trading yesterday after its revenue forecast topped analysts’ estimates, indicating that shoppers in Asia are helping reignite demand for personal computers.
Sales will be as much as $8.9 billion in the current quarter, Intel said yesterday. That compares with an average estimate of $7.86 billion in a Bloomberg survey of analysts.
PC makers are boosting orders for chips in anticipation of increasing demand in the second half, Chief Executive Officer Paul Otellini said. While businesses probably won’t start buying new PCs until next year, consumers in Asia -- especially China -- are leading the recovery, he said. Intel reported a 12 percent jump in second-quarter sales from the previous three months, the largest sequential increase since 1988.
“Intel’s results reflect the stabilizing environment,” said Patrick Wang, a New York-based analyst at Wedbush Morgan Securities. Wang, who rates the stock “outperform,” owns the shares personally. “It was a superb quarter for them.”
Intel, based in Santa Clara, California, jumped as much as $1.42 to $18.25 yesterday in extended trading. The shares, up 15 percent this year, closed at $16.83 on the Nasdaq Stock Market.
Intel’s Asia-Pacific sales were $4.41 billion last quarter, up 21 percent from the first quarter. Sales in the Americas rose 12 percent sequentially, while Europe dropped 9.4 percent.
European Fine
Intel set aside funds in the second quarter to pay a $1.45 billion European Union fine, resulting in its first loss in 22 years. The net loss was $398 million, or 7 cents a share, compared with a profit of $1.6 billion, or 28 cents, a year earlier.
The European Union announced the fine in May, saying the company used illegal rebates to thwart competitors. Intel, which accounts for about 80% of the PC processor market, is appealing the decision.
Excluding the European fine, Intel reported a profit of 18 cents a share. That topped the average analyst estimate of 8 cents. Revenue fell 15 percent from a year earlier to $8.02 billion, compared with the $7.29 billion predicted by analysts.
There is “a clear expectation for a seasonally stronger second half,” Otellini said on a conference call.
Profit Margin
Gross margin, the percentage of sales remaining after excluding costs of production, will be about 53 percent this quarter, Intel said. Chris Danely, an analyst at JPMorgan Chase & Co. in San Francisco, had predicted 51 percent.
Sales typically decline in the second quarter from the first, then begin to rise again in the third quarter -- when computer makers increase orders to meet back-to-school demand.
Intel kicked off two weeks of earnings reports by technology companies such as International Business Machines Corp., Google Inc. and Microsoft Corp. The use of Intel’s chips in everything from laptops to supercomputers makes its earnings an indicator of industry demand.
Intel cut its 2009 budget for plants and equipment to about $4.7 billion, down from $5.2 billion last year. The company had said previously that the budget would be little changed from 2008.
PC sales may drop 4 percent this year as companies slash spending on technology, according to El Segundo, California- based ISuppli Corp. That would be the first decline since 2001, when the dot-com bust left a glut of PCs.
Intel’s Otellini said yesterday that the company isn’t expecting corporate spending to improve this year. Microsoft’s new operating system, Windows 7, will likely fuel purchases next year, he said.
Sales will be as much as $8.9 billion in the current quarter, Intel said yesterday. That compares with an average estimate of $7.86 billion in a Bloomberg survey of analysts.
PC makers are boosting orders for chips in anticipation of increasing demand in the second half, Chief Executive Officer Paul Otellini said. While businesses probably won’t start buying new PCs until next year, consumers in Asia -- especially China -- are leading the recovery, he said. Intel reported a 12 percent jump in second-quarter sales from the previous three months, the largest sequential increase since 1988.
“Intel’s results reflect the stabilizing environment,” said Patrick Wang, a New York-based analyst at Wedbush Morgan Securities. Wang, who rates the stock “outperform,” owns the shares personally. “It was a superb quarter for them.”
Intel, based in Santa Clara, California, jumped as much as $1.42 to $18.25 yesterday in extended trading. The shares, up 15 percent this year, closed at $16.83 on the Nasdaq Stock Market.
Intel’s Asia-Pacific sales were $4.41 billion last quarter, up 21 percent from the first quarter. Sales in the Americas rose 12 percent sequentially, while Europe dropped 9.4 percent.
European Fine
Intel set aside funds in the second quarter to pay a $1.45 billion European Union fine, resulting in its first loss in 22 years. The net loss was $398 million, or 7 cents a share, compared with a profit of $1.6 billion, or 28 cents, a year earlier.
The European Union announced the fine in May, saying the company used illegal rebates to thwart competitors. Intel, which accounts for about 80% of the PC processor market, is appealing the decision.
Excluding the European fine, Intel reported a profit of 18 cents a share. That topped the average analyst estimate of 8 cents. Revenue fell 15 percent from a year earlier to $8.02 billion, compared with the $7.29 billion predicted by analysts.
There is “a clear expectation for a seasonally stronger second half,” Otellini said on a conference call.
Profit Margin
Gross margin, the percentage of sales remaining after excluding costs of production, will be about 53 percent this quarter, Intel said. Chris Danely, an analyst at JPMorgan Chase & Co. in San Francisco, had predicted 51 percent.
Sales typically decline in the second quarter from the first, then begin to rise again in the third quarter -- when computer makers increase orders to meet back-to-school demand.
Intel kicked off two weeks of earnings reports by technology companies such as International Business Machines Corp., Google Inc. and Microsoft Corp. The use of Intel’s chips in everything from laptops to supercomputers makes its earnings an indicator of industry demand.
Intel cut its 2009 budget for plants and equipment to about $4.7 billion, down from $5.2 billion last year. The company had said previously that the budget would be little changed from 2008.
PC sales may drop 4 percent this year as companies slash spending on technology, according to El Segundo, California- based ISuppli Corp. That would be the first decline since 2001, when the dot-com bust left a glut of PCs.
Intel’s Otellini said yesterday that the company isn’t expecting corporate spending to improve this year. Microsoft’s new operating system, Windows 7, will likely fuel purchases next year, he said.
London Financial Job Openings Increased in June, Survey Says
July 15 (Bloomberg) -- Job openings in London’s financial- services industry rose in June to the highest level this year, according to a survey by recruitment firm Morgan McKinley.
The number of job vacancies climbed 20 percent last month from May, when openings were also up 14 percent versus April, the London-based company said in a statement today. In all, job openings have increased 30 percent this year, the survey shows.
“There does seem to have been an improvement in the appetite amongst employers to recruit,” said Andrew Evans, managing director of Morgan McKinley’s financial-services unit. “There have been muted increases in hiring in most areas and across most levels within the financial-services industry. This was particularly apparent in June.”
Signs are mounting that the U.K. economy is recovering from the worst recession since 1979. Bank of England Deputy Governor Charles Bean said on BBC Radio Leeds this week that the economy has probably hit bottom and will recover over time. The U.K.’s benchmark FTSE 100 index has gained about 20 percent since its low in March.
Total job openings are still down 58 percent compared with a year ago, the survey shows. There were 3,780 new job openings within the financial services industry in June, an increase from the 3,150 available in the previous month. That’s still less than half the 8,946 jobs open in June 2008.
The average city salary was almost unchanged at 50,115 pounds ($81,787), only 1 percent lower than in the same period in 2008, Morgan McKinley said.
As the financial markets thaw, redundancy announcements slow and confidence levels improve, workers in the financial industry have started to seek out better positions, Evans said.
“The financial services jobs market is still highly competitive,” he said. “It is likely to get even more competitive over the summer months.”
The number of job vacancies climbed 20 percent last month from May, when openings were also up 14 percent versus April, the London-based company said in a statement today. In all, job openings have increased 30 percent this year, the survey shows.
“There does seem to have been an improvement in the appetite amongst employers to recruit,” said Andrew Evans, managing director of Morgan McKinley’s financial-services unit. “There have been muted increases in hiring in most areas and across most levels within the financial-services industry. This was particularly apparent in June.”
Signs are mounting that the U.K. economy is recovering from the worst recession since 1979. Bank of England Deputy Governor Charles Bean said on BBC Radio Leeds this week that the economy has probably hit bottom and will recover over time. The U.K.’s benchmark FTSE 100 index has gained about 20 percent since its low in March.
Total job openings are still down 58 percent compared with a year ago, the survey shows. There were 3,780 new job openings within the financial services industry in June, an increase from the 3,150 available in the previous month. That’s still less than half the 8,946 jobs open in June 2008.
The average city salary was almost unchanged at 50,115 pounds ($81,787), only 1 percent lower than in the same period in 2008, Morgan McKinley said.
As the financial markets thaw, redundancy announcements slow and confidence levels improve, workers in the financial industry have started to seek out better positions, Evans said.
“The financial services jobs market is still highly competitive,” he said. “It is likely to get even more competitive over the summer months.”
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