Weekend Edition September 05 2008 at 02:44 PM Chi-Chu Tschang and Harry Maurer
Top Stories of the Week
Jobs: It's Getting Worse
The U.S. unemployment rate jumped sharply in August, from 5.7% to 6.1%, the Labor Dept. reported. Nonfarm payrolls sank by 84,000, compared with an upwardly revised decline of 60,000 in July. June's drop of 51,000 was revised to a loss of 100,000. The job losses were slightly larger than economists' predictions, but the spike in the unemployment rate came as a surprise, since analysts had expected it to remain at 5.7%.
The weak job numbers will boost pressure on the Fed to keep rates steady, though it had recently hinted at a rate hike because of rising inflation. The stock market for the second day in a row was dismayed by labor-market news, with the Dow sinking more than 100 points in mid-morning before recovering by midafternoon.
Source: BusinessWeek
Nokia's gloomy news
Shares in the Finnish cell-phone giant sank by as much as 11% after it issued a downbeat forecast. Nokia said that tougher competition and production snafus on one of its key products would cause it to lose market share in the third quarter.
Source: MarketWatch.com
Samsung may buy Sandisk
The world's No. 1 maker of memory chips for cameras surged by more than 25% after Samsung Electronics announced it might buy the company. Such an acquisition would boost Samsung's lead over Toshiba in the $15 billion global market for chips that store data in cameras and music devices. Sandisk shares had fallen 59% this year because of a consumer cutbacks and a chip glut.
Source: Bloomberg
McCain accepts Republican presidential nomination
U.S. Senator John McCain accepted the Republican nomination for president on Sept. 4, offering himself an "imperfect servant" who will never surrender in his fight to change Washington and the country. In a speech to the Republican national convention, McCain said his record demonstrates an instinct for putting the people's interests over party loyalty. McCain's nomination caps an extraordinary two-week period in American politics and sets the stage for a historic November election.
Source: Washington Post
BP buries the hatchet with Russian partners
On Sept. 4, the shareholders of Anglo-Russian oil venture TNK-BP announced a deal to settle their long-running dispute. In a memorandum of understanding signed in Moscow, BP and its Russian partner, Alfa Access Renova, have effectively agreed to bury the hatchet, ending months of acrimonious conflict.
Source: BusinessWeek
European Central Banks cracks down on cheap lending
Bank stocks across Europe fell sharply and the risk of owning their debt leapt on Sept. 4 after the European Central Bank (ECB) declared a crackdown on abuses of its bank liquidity operations. ECB President Jean-Claude Trichet announced rule changes more radical than had been expected. These will affect financial firms that have developed too great a dependence on cheap funding from the bank.
Source: Financial Times
Tobacco giant Altria eyes $10 billion acquisition
Tobacco giant Altria is in talks to buy UST -- the maker of the popular Skoal and Copenhagen smokeless tobacco brands -- for more than $10 billion, according to people with knowledge of the negotiations. The terms could not be ascertained, but the acquisition would be Altria's first major purchase since the company split from Philip Morris International.
Source: New York Times
Auto sales sink again
U.S. carmakers reported grim numbers for August, but reading between the lines, observers spied signals that the industry has bottomed out. General Motors sales sagged 20%, Ford's 26%, and Chrysler a huge 35%. Nissan rose 14%, while Toyota and Honda each dropped less than 10, and all three gained share against Detroit. But GM's chief sales analyst says the market may be "starting to turn the corner."
Source: New York Times
GMAC axes 5,000 jobs
GMAC Financial Services announced on Sep. 3 that it will lay off 60% of workers at its Residential Capital unit. One of the country's largest subprime lenders, ResCap logged losses of $4.3 billion 2007. And the red ink continues to flow, despite ongoing restructuring efforts. GMAC, in which private-equity firm Cerberus Capital owns a 51% stake, faces other problems besides toxic mortgages. The company's auto leasing business also is being squeezed by falling prices for used vehicles. GMAC took a $716 million write-down in the second quarter.
Source: The Wall Street Journal
Oil prices continue to fall
Oil prices dropped more than $1 to below $109 on Sept. 3, deepening this week's sharp fall as traders looked past Hurricane Gustav to focus on the slowing global economy and gloomy outlook for energy demand. Oil has fallen more than $6 since Aug. 29, touching its lowest in five months after early signs that a weakened Hurricane Gustav caused little damage to U.S. oil installations.
Source: Reuters
Coca-Cola eyes $2.4 billion Chinese acquisition
Coca-Cola has offered to acquire a Chinese maker of juices and nectars for about $2.4 billion -- the second-largest acquisition in the Atlanta company's history. If successful, the acquisition of Beijing-based China Huiyuan Juice Group would also represent the largest purchase of control of a Chinese company by a foreign company.
Source: BusinessWeek
Alcatel-Lucent chooses Verwaayen as new CEO
Alcatel-Lucent, the world's largest supplier of fixed-line phone networks, selected former BT Group Chief Executive Officer Ben Verwaayen to run the company as it seeks to end six straight quarters of losses. Philippe Camus, co-managing partner of Lagardere, will serve as non-executive chairman of the Paris-based company, which has posted $7 billion in losses since its creation through the merger of Alcatel and Lucent Technologies.
Source: Blomberg
Google launches its own Internet browser
Google is to release its own Internet browser in its most direct attack yet on Microsoft's dominance of PC software. The launch of the browser -- known as Google Chrome -- will pit the Internet company against Microsoft's dominant Internet Explorer browser, which is used by an estimated three-quarters of all internet users. A test version of Google's browser will be released in 100 countries on Sept. 2.
Source: Financial Times
Spielberg nears deal with India's Reliance Communications
Steven Spielberg, Hollywood's most powerful director, is meeting in New York with -- and will likely announce a deal with -- India's Reliance Communications to restart the DreamWorks studio that he's relocating from Paramount Pictures in an acrimonious split. Spielberg is meeting with Anil Ambani, the billionaire chairman of Reliance Communications, to finalize what's expected to be up to a $1.2 billion deal that would make the Indian conglomerate a 50% owner of Spielberg's new studio.
Source: BusinessWeek
Commerzbank buys Dresdner for $14.5 billion
German financial giant Commerzbank will buy its rival Dresdner Bank for $14.5 billion from Allianz, creating a competitor to Deutsche Bank in Europe's biggest economy. The German financial institution aims to cut almost $3 billion in costs by slashing 9,000 jobs. Much of the purchase price will be paid to Allianz in the form of shares, leaving Europe's biggest insurer with a 30% stake in Commerzbank.
Source: Reuters
Conversation of the Day: Squeezing Out Extra MPG
Reader HW Writes: "WWII German SI aircraft engines and the MB 300 Gullwing Coup SI engine used direct fuel (gasoline) injection. So it's nothing new."
Tell Us: Tell Us: Can the Auto Industry Cruise in Comfort at 35 MPG?
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