Early Edition September 08 2008 at 02:42 PM Chi-Chu Tschang and Harry Maurer
UAL Stock Crashes on False Report
One red cent. That's what shares in United Airlines parent UAL were worth briefly this morning, after rumors spread that it was filing for bankruptcy. Shares tumbled from their $12.30 closing price on Friday to a penny by about 11 a.m., when trading was halted to await the company's response. After UAL denied the report, trading resumed and the shares recovered most of their ground.
It was unclear exactly how the snafu unfolded. UAL said that the Web site of a Florida newspaper mistakenly published a 2002 news report from the Chicago Tribune that said UAL was entering bankruptcy. The Tribune itself said that a reporter for an investment research firm called Income Securities Advisors found the old report on the Tribune Web site and posted it to Bloomberg, and the false news spread from there.
Source: New York Times
Lehman Closer to Selling Neuberger
The troubled investment firm is nearing a deal to sell its prize unit, the Neuberger Berman wealth management arm. That's a signal that Lehman's prolonged effort to raise more capital by other means isn't getting anywhere. The head of the investment management division told the Neuberger partners that a sale is looking more likely. The partners may meet with prospective buyers in the coming days. The firm wants $10 billion for the unit but buyers have been resisting that price. Meanwhile, CEO Richard Fuld shuffled management for the third time in four months, and the stock fell sharply once again, dropping more than 13% by midafternoon.
Source: CNBC, Bloomberg
Shares of Smartphone Makers Drop
A research report showing a dramatic decline in sales growth for smartphones whacked the shares of Apple, Nokia, and Research in Motion. The Gartner report says that sales of smartphones grew 16% in the second quarter. That's down from 55% in the same quarter last year.
Source: MarketWatch
Washington Takes Over Fannie and Freddie
U.S. Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart placed Fannie Mae and Freddie Mac in a government-operated conservatorship on Sept. 7, ousting the firms' chief executives and eliminating their dividends. The Treasury may purchase up to $200 billion of stock in the firms to keep them solvent. The move opens up the option to either split up and sell off the companies or a full nationalization that would cement the government's role in mortgage markets. European and Asian equity markets rebounded strongly on Sept. 8 to the announcement, led by double-digit gains for mortgage banks as fears about the global implications of a possible default by the twin giants of the U.S. mortgage market faded. Investors had worried failures by Fannie Mae and Freddie Mac, which hold more than $1.5 trillion in assets and almost the same amount of debt, would spark further losses at financial institutions around the world. The rally spread to the U.S. where the Dow was up nearly 200 points at 2:45 p.m.
Source: Bloomberg, Financial Times
New CEOs at Fannie Mae & Freddie Mac
Along with the U.S. government's intervention in Fannie Mae and Freddie Mac, the two mortgage lenders also came under new leadership on Sept. 7. Herbert Allison, who was named chief executive of Fannie Mae, worked for Merrill Lynch for almost 30 years, rising to the positions of president and chief operating officer. David Moffett, who was appointed chief executive of Freddie Mac, helped transform U.S. Bancorp from a small Ohio bank into the nation's sixth biggest lender.
Source: New York Times
Australian banks agree to $15.1 billion takeover
Australia's St. George Bank on Sept. 8 said it had agreed to a sweetened $15.1 billion takeover bid from rival Westpac Banking, paving the way for the creation of the country's biggest bank by market capitalization. While there has been no change to Westpac's offer of 1.31 of its own shares for each St. George share, St. George shareholders will receive dividends totaling up to $1.03 a share -- an improvement of 23 cents a share.
Source: Wall Street Journal
WaMu's CEO forced out
Kerry Killinger, the longtime chief executive of Washington Mutual -- America's biggest savings and loan -- has been forced out because of the company's mounting losses, according to people briefed on the matter. The departure would end an 18-year run in which he built the bank into one of the country's biggest financial institutions.
Source: New York Times
OPEC expected to keep oil production unchanged
OPEC -- the supplier of 40% of the world's oil -- is expected to keep producing at a near record pace as $106-a-barrel crude squeezes the global economy. According to 29 of 32 energy analysts, the 13-nation Organization of Petroleum Exporting Countries will keep production unchanged at a meeting in Vienna on Sept. 9.
Source: Bloomberg
U.S. advertisers against link-up between Yahoo and Google
The Association of National Advertisers -- a trade association representing many of the biggest consumer advertisers in the U.S. -- on Sept. 7 said it is against a controversial search advertising alliance between Yahoo and Google. The intervention was made in a complaint to U.S. anti-trust regulators and represents the first broad attack on the Internet search alliance.
Source: Financial Times
Travelers to suffer from airline downsizing
The end of this year's U.S. Labor Day holiday marks the beginning of the sharpest downsizing in the airline industry since the 2001 terrorist attacks. Faced with sky-high fuel costs and a weak economy, big airlines are cutting their flight schedules by as much as 14% this fall. For air travelers this will mean higher fares, fewer flight options, and planes that will still seem as crowded as sardine cans.
Source: BusinessWeek
Nasdaq OMX close to launching pan-European trading platform
Trading platform Nasdaq OMX has received a key regulatory approval for its new pan-European stock-trading platform, which is expected to go live sometime in September. Britain's Financial Services Authority has approved Nasdaq OMX's application to operate a system that will trade stocks listed on exchanges across Europe.
Source: Wall Street Journal
Conversation of the Day: Detroit At The Conventions
Reader Williambanzai7 Writes: "If they convince Washington to go along with this, I will make sure no one in my family and circle of friends ever buys an American car again."
Tell Us: Do U.S. Automakers Deserve $25 Billion in Subsidized Loans?
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