Early Edition August 22 2008 at 03:44 PM Chi-Chu Tschang and Harry Maurer
Top Stories of the Week
Korean Bank Interested in Lehman
Korea Development Bank confirmed on Aug. 22 that it has its eye on struggling Lehman Brothers. A spokesman at state-run KDB said the bank is weighing "all kinds of options", including an outright purchase of Lehman. The news caused Lehman's stock to jump by more than $2.
The troubled investment bank may be ripe for a hostile bid, says analyst Richard Bove of Ladenburg Thalmann. Bove believes Lehman's management is unwilling to sell voluntarily at a deeply-discounted price.
Source: Fortune, Times of London
Oil Prices Resume Downward March
The price of a barrel of oil fell back below $119 on Aug. 22, wiping out the previous day's nearly $6 surge. Factors that prompted the price slide include a strengthening dollar and the start of Russian troop withdrawals from Georgia.
Source: Associated Press
Bernanke Sees Inflation Easing
Federal Reserve Chairman said he sees inflation moderating later this year and into 2009. Speaking at the annual Fed conference in Jackson Hole, Wyo. on Aug 22, Bernanke noted that a strengthening greenback and falling commodity prices will cause price pressures to abate. In his speech, the Fed Chairman also reiterated his call for a regulatory overhaul to curtail the risk of future financial crises.
Source: Bloomberg
Boeing's High Stakes Game in Tanker Contract Bid
The aerospace giant leaked word on Aug. 21 that it may drop out of the bidding for a $35 billion airborne refueling tanker contract with the U.S. Air Force unless the deadline is extended by six months. The move was seen as a tactical ploy to win support for the company's bid from Congress and the Bush Administration.
Source: BusinessWeek
Russian Steelmaker Snaps Up U.S. Coal Miner
Russia's OAO Severstal announced on Aug. 22 that is will pay $1.3 billion for PBS Coals Corp. The purchase fits into Severstal's strategy of vertically integrating its steelmaking operations stateside.
Source: Wall Street Journal
Banks Settle Auction-Rate Bond Cases
Under deals worked out with New York state regulators on Aug. 21, Merrill Lynch, Goldman Sachs and Deutsche Bank will buy back at least $12.5 billion worth of auction-rate securities and pay fines of $162.5 million. New York authorities have hammered out similar settlements with Citigroup, JPMorgan Chase, Morgan Stanley, UBS, and Wachovia, and are currently in negotiations with other financial firms, including Bank of America.
Source: International Herald Tribune
Aon Buys British Insurer
Chicago-based Aon will spend $1.58 billion to buy up Benfield Group, a London-based reinsurance brokerage. The deal will boost Aon's profile in the Florida and Southeast U.S. markets.
Source: Chicago Tribune
Apple Has Ambitious Plans for the iPhone 3G
The company intends to make at least 40 million iPhones in the next year, but selling so many will hinge on global success and fixing connection glitches. One thing that could help: A new $100 million venture capital fund that invests in iPhone software startups.
Source: BusinessWeek, New York Times
Verizon, Google Close to Mobile Search Deal
Sources say Verizon is near an agreement with Google on a wide-ranging mobile-search partnership, the latest sign that telcos recognize their homegrown search services have stalled--and that they need help from Internet giants.
Source: Wall Street Journal
Investors Quit Russia After Georgia War
Figures released Aug. 21 show that investors pulled money out of Russia in the wake of the Georgia conflict at the fastest rate since the 1998 ruble crisis. Russian debt and equity markets also have suffered.
Source: Financial Times
Reports Offer Mixed Signals on the U.S. Economy
A grab bag of reports issued Aug. 21 provided contradictory news on the U.S. economy. Jobless claims fell and manufacturing in mid-Atlantic states declined less rapidly. But leading indicators dropped at their fastest rate in a year.
Source: Reuters/New York Times
Little Sign of Eurozone Growth Recovery
Economic growth shows scant signs of returning to the 15-country eurozone, as a purchasing managers report issued Aug. 21 tracked declining private sector output for the third month in a row. Inflation appears to be tempering, however, which could prompt a rate cut from the ECB.
Source: Financial Times
Microsoft Taps Seinfeld for New Ad Campaign
The software maker is planning a $300 million advertising campaign to fight back at Apple's successful Mac vs. PC series and will enlist comedian Jerry Seinfeld as one featured celebrity spokesman.
Source: Wall Street Journal
Continental Relents in Schaeffler Takeover Bid
The big German auto parts maker, which has fought off a proposed acquisition by rival supplier Schaeffler, finally agreed Aug. 21 to a deal that raises the purchase price and limits Schaeffler to minority ownership until 2012. Continental CEO Manfred Wennemer, who had opposed the deal, will step down.
Source: Wall Street Journal
Fannie and Freddie Swoon on Bailout Fears
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.
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 Scandinavia's SAS Group.
Sources: Bloomberg, International Herald Tribune
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 McCain's campaign, questioning Obama's 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
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
Home Depot Sees Weak Quarter, 2008
The home-improvement chain reported on Aug. 19 that second-quarter income dropped 24%, as cash-strapped consumers and a weak housing market took a toll. The Atlanta-based retailer earned $1.2 billion in the quarter, and affirmed its forecast for the full year.
Source: Associated Press
Pakistan's Musharraf Steps Down
Pervez Musharraf, the embattled president of Pakistan, resigned Aug. 18 in the face of a potential impeachment proceeding. In a televised address to the nation, the former military leader staunchly defended his nine years in office and said he was stepping down for the sake of national harmony. Musharraf's party had lost its majority in parliament last February, and calls for his departure have been mounting in recent weeks.
Source: Marketwatch
BHP Billiton Earnings Top $15 Billion
The world's largest mining company said Aug. 18 that its earnings for the year ended June 30 rose 15% to $15.39 billion, a seventh straight record. The company dismissed concerns over weakening demand for commodities from emerging economies. Analysts cautioned, though, that similarly strong earnings from miner Rio Tinto next week could make it harder for BHP Billiton to secure a proposed takeover of its rival.
Source: Marketwatch, Wall Street Journal
A Surprise Winner at the Beijing Olympics: NBC
The U.S. television network sought to lower expectations before the games began, but viewing audiences far beyond expectations have turned the event into a money-spinner, underscoring the continued relevance of network TV.
Source: New York Times
Conversation of the Day: Empty Seats at the Olympics
Reader David writes: "Empty seats or not, the hearts of Chinese people such as myself have been filled with pride throughout this Olympics!"
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