Early Edition August 20 2008 at 04:40 PM Chi-Chu Tschang and Harry Maurer
Fannie, Freddie Shares Continue Steep Decline
The shares of U.S. housing finance giants Fannie Mae and Freddie Mac declined to their lowest levels in nearly two decades on Aug. 20 as investors began to confront the likelihood that any federal bailout is almost certain to erase the stock value of both companies. A day earlier, Freddie Mac was forced to pay its highest yield premium in a decade for a $3 billion debt sale, while Fannie also faced higher costs to unload $5 billion in debt on Wednesday. Moreover, Asian and European investors are reducing their purchases of debt from both firms.
Freddie Mac shares fell more than 22% to $3, while Fannie Mae was off 27% to $4. To date, Treasury officials say they have no plans to use any of the emergency funds Congress authorized in July to help stabilize the companies. But Wall Street is betting that any plan short of a nationalization of the finance firms will not bolster investor confidence.
Source: Bloomberg, Reuters
Spanair Jet Crashes in Madrid, 145 Killed
A Spanish jet en route to the Canary Islands crashed on takeoff from Madrid on Aug. 20, in a fiery blaze that left nearly 150 people dead. Authorities said the fully-loaded Spainair flight skidded off the runway and then burned. Analysts suggested the crash could mark the end of financially troubled Spanair, a unit of Scandinaviaâ?Ts SAS Group.
Sources: Bloomberg, International Herald Tribune
Russia To Recognize Two Georgia Regions
Russia is beginning to consolidate its power around Georgia, two weeks after conflicts flared between the two nations. Russia is preparing to recognize the independence of South Ossetia and Abkhazia, two pro-Russian regions that sparked the fighting between Russian and Georgian troops, and plans to enforce its military presence in those areas. A Georgian official called the expected Russian buffer zone â?ototally illegal and illegitimateâ? and said it would violate a peace treaty the countries signed last week.
Source: Wall Street Journal
Palm Rolls Out New Blackberry Rival
Palm unveiled a new version of its Treo smartphone on Aug. 20, with a novel twist: No agreement with a U.S. carrier to sell the phone. The new Treo Pro, at $549, will run on Microsoftâ?Ts Windows Mobile 6.1 and is designed to counter Blackberryâ?Ts new Bold smartphone, which will be available late this year. Analysts note that the lack of carrier subsidies is likely to limit the Palm deviceâ?Ts sales.
Source: Reuters
Maryland Lab Sues Over Wii
A Maryland company is seeking to block imports of Nintendoâ?Ts Wii game console and remote controls, saying the devices violate four patents obtained by Hillcrest Laboratories Inc. The company filed a federal lawsuit and a complaint with the U.S. International Trade Commission.
Source: Bloomberg
McCain Takes Lead on Obama in New Poll
Republican Senator John McCain holds a five-point lead over Democrat Barack Obama in a new Reuters/Zogby poll released Aug. 20. The results show Obama slipping behind after several weeks of negative ads by McCainâ?Ts campaign, questioning Obamaâ?Ts effectiveness as a manager of the economy and opposition to oil and gas drilling off the U.S. coasts.
Source: Reuters
BAA Told to Sell Three British Airports
In a surprisingly tough ruling issued Aug. 20, Britain's competition commission told the Spanish-owned operator of seven major airports in Great Britain, including London's Heathrow and Gatwick, that it must divest two of its three airports in London as well as one in Scotland to boost competition. But the move may not solve underlying capacity constraints and other problems.
Source: Times of London, BusinessWeek
HP Posts Strong Results on Laptop Sales
Info tech giant Hewlett-Packard beat Wall Street expectations for second-quarter results, announcing a 14% jump in net earnings, to $2 billion, on revenues of $28 billion, up 10.5%. International sales and laptops were strong, but the company's troubled printer unit continues to struggle.
Source: Reuters, New York Times
Ericsson, STMicro to Form Wireless Chip Business
Swedish telecom equipment giant Ericsson and Franco-Italian semiconductor maker STMicroelectronics announced Aug. 20 that they will combine their mobile chip units, forging a stronger challenger to U.S. rivals Texas Instruments and Qualcomm.
Source: MarketWatch
EBay: Amazon-ification Takes Hold
The electronic marketplace, once known primarily for its online auctions, is moving increasingly into the business of fix-price sales, posing a competitive threat to e-tailing king Amazon.
Source: BusinessWeek
IBM Plans $300 Million Cloud Computing Project
International Business Machines will spend $300 million to build 13 data centers in ten countries to help protect clientsâ?T operations. IBMâ?Ts cloud computing centers will help to keep businesses operating in the event of an emergency or natural disaster.
Source: Information Week
Conversation of the Day: Immigration: Enforcement or Politics?
Reader Will C: "The United States is no place to be if you are not here by permission and documented as such, or a United States citizen. If you are illegal you are subject to incarceration and immediate deportment. We are fed up with illegal alien criminals and their destruction and burdens they place on citizens in their selfish quest to steal from us, both jobs, and social program funding intended for real citizens."
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