CEO Watch

Addressing Globalization Fears: Oracle Leader Fills In For CEO and Lays Out An International High-Tech Corporate Perspective

Mon, 07 Nov 2011 20:37:04 +0000

Globalization is sort of a catch-all term dealing with things such as free trade, free trade agreements, outsourcing, and off-shoring of workers. In reality, globalization is an “is”. Meaning that it is all around us and it is happening and will continue to happen. As we often hear: the world is shrinking. Largely due to a down economy, this thing called globalization is perceived negatively by many in the American workforce.

An important aspect in determining whether this negative connotation remains perception or the reality for any nation comes down to this: how the next generation of workers is prepared for the realities. Tomorrow’s workforce will be competing internationally for their piece of the American dream. That was the clear message from Oracle Co-President Mark Hurd featured in the Salt Lake Tribune addressing a gathering of Utah based technology companies last week in Salt Lake City. Mr. Hurd was filling in for Oracle CEO Larry Ellison who canceled due to illness.

Mr. Hurd spoke to the gathering in a question and answer format with the focus on what Utah should do to remain at the forefront of emerging technology and industries. Mr. Hurd pointed out that corporate motivation for locating major operations always centered on where the best workforce talent is located. To that end, he stressed that universities graduate engineers who are
ready to compete with well-trained and hungry graduates from China and India in particular.

“The view that Students in the United States are so far and away better than students in China and India is a fallacy.” Mr. Hurd told the gathering.

Mr. Hurd also said that a government that was supportive of Oracle’s business would also be a determining factor in locating businesses. It was clear from Mr. Hurd’s perspective that globalization is something that can be a springboard for great fortunes for businesses and workers if they commit themselves to competing and preparation. It also seems that the increasing sophistication and digital capability of emerging nations means, a country like the United States must avoid the temptation to stop competing. Avoiding globalization is very likely not a realistic option to achieve future prosperity.

Addressing Globalization Fears: Oracle Leader Fills In For CEO and Lays Out An International High-Tech Corporate Perspective

Mon, 07 Nov 2011 20:37:04 +0000

The Bright Lights Are Now On: GE CEO Jeff Immelt to Spearhead US Economic Recovery as Job "Czar"

Tue, 11 Oct 2011 13:38:26 +0000

Immelt actually assumed the position of President Barack Obama's Job's Council head, aka Jobs “Czar” in January. Since then, he has been very public, but hasn't been widely recognized perhaps because of the administrations late arrival to the "jobs first" focus. The report on “60 Minutes” illuminated some of the issues with Immelt being entrusted with job creation by the Obama Administration.

As Shahihen Nasiripour noted in Huffington Post in January: "Immelt's firm stands as Exhibit A of a successful and profitable corporate America standing at the forefront of the recovery. It also represents the archetypal company that's hoarding cash, sending jobs overseas, relying on taxpayer bailouts and paying less taxes than envisioned."

The difficulty the administration and Immelt face, amidst Wall Street occupation protests, is with regards to gaining a foothold of credibility. There is probably a larger distrust of big corporations by more people in the US than ever before. There is a large cloud of belief-fueled by broiling disenchantment of not being able to find good paying work- that corporations put profits first, second and third and that there is no serious commitment to employing Americans. Worse, there is a wide perception that government facilitates the disintegration of the US job market via no-strings attached corporate bailouts and tax/trade policies that encourage exporting of jobs.

For his part, Immelt spent two years prior to his promotion serving on President Obama's job's council. He was not new to being a powerful figure in the private sector of the American economy. In early September, he marked his 10th year at the CEO of GE. He has been named one of the world's best CEOs three times by Barrons. GE is still a brand synonymous with American economic power and stability.

Despite perceptions to the contrary, the company is more than yesterday's news. It employs roughly 150,000 people domestically and was recently chosen by Fortune as one of the top corporations in the world. Immelt has been at the forefront of reimagining GE's growth with a forward focus on advanced medical and transportation technologies. On a world wide scale, GE under Immelt has been a vehicle for job creation. Mr. Immelt was careful to note the forthcoming growth in GE manufacturing jobs domestically during the “60 Minutes” report.

His focus and how he conveys the message of how good jobs will be created in the US in the new economy carries tremendous political impact. President Obama has fought a perception that he spent valuable time his first 3 years on issues like Health Care and was slow to act on jobs. Immelt's strategy and how he sells it must be satisfactory to a sensitive and impatient US workforce. His record at GE regarding globalization does him no favors.

Immelt, to his credit, has not tried to be something he is not. He also has not tried to give a comforting message of a future that will be the same as the past. He laid out his vision in the Washtington Post in late January. In that op-ed piece, it was clear he was not buying that the US is done as a manufacturing power, but that free trade and the downsides that are inherent, is central to the future. He said free trade will guarantee access to US manufactured goods in emerging markets. In the “60 Minutes” piece, Immelt also noted that a weak dollar and increasing wage demands by overseas workers bodes well for the present and future for the US job market. For the current administration facing a difficult case for reelection, the imperative will be that these benefits be real in the short term.

If you have stories or observations that further the discussion, please share them on http://www.ceo-watch.com

The Bright Lights Are Now On: GE CEO Jeff Immelt to Spearhead US Economic Recovery as Job "Czar"

Tue, 11 Oct 2011 13:38:26 +0000

Steve Jobs and Assessing the Impact of a Media Superstar CEO on a Company

Sun, 09 Oct 2011 08:00:45 +0000

He also died as one of the top 5 most recognized CEO’s in the world. As one Apple observer and former executive put it: “He was a giant and bigger than the powerful company he led to prominence. The confidence that was basically universal throughout the company and the business community in the company has taken a real hit knowing he won’t ever be coming back to take charge.”

This analysis speaks volumes to the very human element at work in leadership by any CEO, even in the largest most sophisticated operations. The perception that even though retired, Jobs still had the ability to reemerge as leader, was a public relations tool. His presence in the background not only steadied, but gave the company the continuous aura of being ready to launch the next big thing any day. Investors, analysts, and even customers had a name they could trust, not only because of his varied accomplishments and his largely amazing track record, but also because he had built up massive name recognition.
Due to leaders like Jobs, Warren Buffett, Bill Gates, Jack Welch and Mark Zuckerberg, a new convention is taking hold that the collection of genius accolades and notoriety can drive the company to heights that business fundamentals alone never could. This super star CEO status is now coveted more than ever and not just for ego-driven reasons. There are very tangible advantages of having a powerfully recognizable CEO with a real track record backing up the persona.

The downside for a company is obvious and will play itself out in the coming weeks and months as observers follow Apple. Just this week, one day prior to Jobs’ passing, Apple announced the details of the Iphone 4S. Whether intended or not, the message is clear: business carries forward, and innovation never stops at Apple.

The true measure of the impact of the loss will be measured over time. Harkening back to ancient civilizations the question is: can the empire survive and thrive without the visionary and driving force? Rome had many effective leaders after Caesar, some with greater accomplishments, but none cast the shadow, unified, and provided a national identity quite like him.
It’s the scarcity of people like Jobs that makes their value immeasurably large. The world produces many effective CEO’s but few effective transcendent media star CEO’s.

As one business and industry observer noted: “On a purely practical level, a guy as big as Jobs could easily insulate the company from inevitable bumps, mistakes or downturns with minimal investor or analyst fall out. The positive vibe was always there and that vibe has meaning in business, no less important than the balance sheet.” What happens when the vibe isn’t so loud and so automatically positive? That’s the question for Apple.

If you have stories or observations that further the discussion towards common sense reforms, please share them on http://www.ceo-watch.com

Steve Jobs and Assessing the Impact of a Media Superstar CEO on a Company

Sun, 09 Oct 2011 08:00:45 +0000

Steve Jobs and Assessing the Impact of a Media Superstar CEO on a Company

Sun, 09 Oct 2011 08:00:45 +0000

US Postal Service CEO Looks to Forge a new Direction Amidst Dire Budgetary Realities

Fri, 30 Sep 2011 06:17:41 +0000

Since the 1970 Postal Reorganization Act, the USPS receives no tax dollars. It is designed to be what the government called a semi-independent agency and is required to be “revenue neutral”. Basically the USPS is told: Don’t make a profit, don’t lose money.

This mission is striking in the current technological and monetary environment because it makes a tightrope walk over an open canyon seem safe and dull by comparison. Patrick Donahoe is both Postmaster General and CEO of the USPS. He is facing the stark reality of making the USPS a solvent business entity. Recently the USPS reported more quarterly losses in the Billions (with a B). Mr. Donahoe took over the position in October 2010 in the middle of a time of serious financial losses and under his brief watch things have gotten worse. He came to the job as a 35-year postal service veteran having recently held the dual roles of Deputy Postmaster General and Chief Operating Officer.

In his September 6, 2011 statement to Congress, Mr. Donahoe noted that not only does the USPS serve the underserved in remote areas all around the country at no additional cost to those consumers, but nearly 8 million people are employed in jobs related to the process and delivery of the mail. The economic devastation of a total collapse of the Postal Service as an operating entity would be felt not just by employees. Commerce would be at the mercy of purely private carriers and their fully market-driven carrier fees.

The internet is the obvious culprit in the drop in demand for USPS’s bread and butter product: First Class Mail. In Mr. Donahoe’s own words: “The growth in electronic communications continues to drive the diversion of First-Class Mail.
Instead of buying stamps, many consumers pay bills online, send “e-vites” to friends and family, and simply press “Send” when they want to communicate.”

In the face of the competition from expanding free digital technology, the task ahead seems insurmountable. To aid the USPS in returning to break-even from $3 Billion quarterly losses and close the estimated future cost gaps of over $20 Billion, Mr. Donahoe recommended: reductions of over 220,000 career positions by 2015, direct management by the Postal Service over employee health care plans, relief from the Government mandated Multi-billion dollar annual pre-funding of employee pensions and legacy benefits, 5-day rather than 6-day delivery, and allowing the Service to price based on market supply and demand rather than abide by government caps. These were a few of the highlights among many ideas.

Predictably, the political leanings of the decision makers in the Federal Government are influencing the talking points on how to best proceed. The trend among many Republicans in government is to support a streamline towards total privatization of services that were once government run. Conversely, Democrats looking to lend support to President Obama’s recent job’s proposal are emphasizing the importance of the government protecting jobs. (Especially the protection of jobs produced by an organization with no current tax dollar support.) What is very possible in the near future is temporary relief from the required employee retirement pre-funding payment. This payment represents a huge cash flow debit for the USPS before one stamp is sold, or one package delivered.

If you have stories or observations that further the discussion towards common sense reforms, please share them on http://www.ceo-watch.com

US Postal Service CEO Looks to Forge a new Direction Amidst Dire Budgetary Realities

Fri, 30 Sep 2011 06:17:41 +0000

US Postal Service CEO Looks to Forge a new Direction Amidst Dire Budgetary Realities

Fri, 30 Sep 2011 06:17:41 +0000

A Public Health Threat: The Fallacy of the FDA’s Regulation of Natural Nutritional Supplements

Mon, 26 Sep 2011 07:05:08 +0000

This process of postulating reasons always undermines the otherwise positive and legitimate activities of the government agency at issue. So it is continues to be with the government’s seeming war on nutritional supplements derived from natural vitamins, minerals and extracts. The hope here is that a critical mass will rise, the more discussion there is about the problem. Currently the status quo is the government advertently or inadvertently (depending on who you ask) blocking access to preventative and curative remedies that have no negative safety record.

Keith Morey of Super Good Stuff, based in L.A specializes in providing natural dietary supplement options for people suffering from basically every chronic problem that plagues us. His business and thousands of others like it nationwide operate under strict guidelines that do not even allow them to make claims that something natural effectively treats an ailment. Rather sellers of remedies comprised of fully natural vitamins, minerals, and extracts are forced to use clumsy wording about how their things might “aid the body” even if they work spot on 100 out of 100 times.

Mr. Morey had this to say about the climate that his business operates under and who clearly benefits.

"In 1994, Congress passed a law prohibiting the FDA to ban popular nutrients. The FDA has since found a loophole in the law and is trying to gain authority to regulate ingredients, which were introduced AFTER 1994. The FDA believes that “new dietary supplements” must undergo the same testing as synthetic food preservatives! The tests that the FDA will require would be exorbitantly expensive and would use extremely high doses. Most supplement manufacturers will not be able to afford the hundreds of thousands of dollars required for testing just one supplement. This would cause the price of supplements to skyrocket or take them off the market entirely!"

From there Morey talked frankly about what a lot of people are likely thinking and in the process gives a poignant example of the credibility problem for the FDA in the over-regulation of natural supplements.

"Who profits from this? The large pharmaceutical companies! By limiting the availability of supplements that could help against degenerating diseases or by taking many supplements off the market, aging Americans will have to rely on prescription drugs that are laden with harmful side effects."

Here’s what everyone knows about the pharmaceutical industry: they make their money by obscure closely guarded concoction science. Meaning they have a vested interested in complex solutions over simple less expensive solutions that might be readily available to the general public. When the FDA treats natural supplements the same as the obscure closely guarded concoctions for no seemingly legitimate reason, they create availability based on who has the biggest war chest. The superior funding war chest will always be possessed by big pharma. The question to be asked is are we getting the best health care options our money can buy, or the best the pharmaceutical industry chooses to let us buy at their chosen price?

Positive advancement at this point for businesses like Keith Morey’s would be greater dialogue through more coverage of what amounts to a nonsense regulatory framework being applied by the appointed guardians of the public health. With the direct result being decreased access to viable affordable treatments. If you have stories or observations that further the discussion towards common sense reforms, please share them on http://www.ceo-watch.com

The Buffett Rule and the Possible Impact on Other U.S. CEO’s

Thu, 22 Sep 2011 07:32:28 +0000

His reaffirmation was in the form of support for President Barack Obama taking to the airwaves around the clock and referring to the proposal as “The Buffett Rule”.

Buffett has gained notoriety over the years for his impressive track record of spotting value in undervalued companies and investing long-term. His wealth strategies have made him one of the most famous billionaires in the United States if not the world. He is perhaps most famous for his everyman middle-American existence in a modest house in Omaha, despite his massive wealth. In light of his well-established reputation, it is little surprise that he has long held the position that a “billionaire friendly” Congress has coddled the wealthy and that the practice as he sees it should end. His position has further raised his profile and ignited debate about mega-rich CEOs and how to best tax their sometimes massive compensation packages.

Upping the ante further this week was fellow billionaire Mark Cuban. Cuban is also a celebrity CEO and perhaps the most famous example of the “internet tycoon”. He is renowned for his brash, upbeat, high-energy and hustling demeanor and his preferred attire of jeans and a t-shirt. He is currently owner of the National Basketball Association Champion Dallas Mavericks, Landmark Theaters and Magnolia Pictures. He made his original fortune as founder and CEO of Broadcast.com in the 90’s which married his desire to listen to his favorite teams’ games back in Indiana with the online technology boom.

This week on his blog, Cuban expressed support for the Buffett Rule stating: “So be Patriotic. Go out there and get rich. Get so obnoxiously rich that when that tax bill comes, your first thought will to choke on how big a check you have to write. Your 2nd thought will be “what a great problem to have”, and your 3rd should be a recognition that in paying your taxes you are helping to support millions of Americans who aren’t as fortunate as you.”

These are important CEO’s in the debate because they are two of the highest profile and they represent the dream of great wealth achieved in decidedly different ways.

Another issue under consideration is whether a Buffett Rule implemented in the tax code would have a chilling effect on new investment, thus harming the prospects of CEO’s on the rise. Eric Jackson of the online investment platform Caplinked, stated this week in the Washington Post that the because The Buffett Rule proposes a raise on the tax rate for capital gains (money made from investments), it might lower the pool of available money for continued investment in a growing enterprise by original investors. The debate has many layers. One thing that’s undeniable: public opinion is squarely behind Buffett’s proposal. Polls reflect the public favors The Buffett Rule by a 2 to 1 margin.

The Buffett Rule and the Possible Impact on Other U.S. CEO’s

Thu, 22 Sep 2011 07:32:28 +0000

The Buffett Rule and the Possible Impact on Other U.S. CEO’s

Thu, 22 Sep 2011 07:32:28 +0000

Yahoo presses forward: CEO to lead an evolution in philosophy and direction

Mon, 19 Sep 2011 09:19:14 +0000

Like numerous times in the last decade, Yahoo finds itself looking for a direction that will utilize it’s strengths and establish a beach head ahead of the company’s competitors. Also like numerous times in the past, this effort to break out from the pack and taste the pre-2000 market dominance is being done under rumors of mergers and stock tender offers.

Recall that last week we discussed the firing of Yahoo CEO Carol Bartz after only a couple years at the helm. She was replaced by her Chief Financial Officer Tim Morse. Yahoo immediately made it clear that Morse was serving on an interim basis. This served to keep analysts guessing but applauding, as the general belief was the Bartz/Morse stewardship was not forward thinking. On the date of the announcement of the Bartz firing, Yahoo’s stock price shot up from $12.50 to 13.72 a share.

Now this past week, Yahoo saw it’s stock value jump again amid rumors of a another offer to buy from the outside. Microsoft, a suitor in the past, was again rumored to be interested. Microsoft has long desired a deeper stake in the search market to counter the dominance of Google. Plus internet companies generally covet the platform of Yahoo’s position as the leader in web-based mail users. There are many who have see the sale of Yahoo as matter of when, not if.

The question on the mind of many in the turbulent internet industry is what impact the Yahoo CEO search will have on the prospective sale. Andres Bylund writing for the technical news watch magazine artstechnica.com, pointed out that when prior overtures were made by Microsoft to buy Yahoo in the mid to late 2000’s, Yahoo was in an enviable position in terms of it’s internal talent base. The cost-cutting directives under Bartz may have stripped the company of a valuable but overlooked commodity on the sales market: people with ideas. The opinion is that unless the stockholders of Yahoo are in a cut and run mood, they likely will not be in love with the offers at this point. That could change (and dramatically) with the right infusion of talent at the CEO position.

Om Malik of GigOm stated that Yahoo needs a CEO “who cut his/her teeth on the consumer internet” and the moxy to abandon old products that no longer serve the company in favor of bold directions and new products. Kara Fisher of AllThingsDigital mentioned Facebook COO Sheryl Sandberg and Hulu CEO James Kilar as potential candidates. It is increasingly clear that pulling together new leadership that makes an industry splash, will be a pre-requisite for maximizing Yahoo’s market potential, sale or no sale.

Yahoo presses forward: CEO to lead an evolution in philosophy and direction

Mon, 19 Sep 2011 09:19:14 +0000

CEO Upheaval at Yahoo and The Fundamentals Preventing Dominance.

Sun, 11 Sep 2011 23:01:10 +0000

To this day, Yahoo is still one of the top 3 largest players in online search engines and is a highly valued entity in the tech world because of the massive directory of email users it possesses. Yet it carries a persistent stigma that the game has passed it by. After all, it was Google who took dominance of search and rode it’s Adwords to record breaking revenues for an internet company. In the process, Google perfected a model for massive income creation online by basically monetizing every set of eyeballs who used search. The key being that it owned the most set of eyeballs.

Then it was Myspace, Facebook and Twitter who foresaw and capitalized on the socialization of the internet. All the while, Yahoo seemed to be playing catch up on both fronts. Timing and perception are such key factors in internet dominance and it always seemed that Yahoo lacked in both areas.

It was amid this backdrop that Carol Bartz took the helm as Yahoo CEO in January 2009 succeeding Founder Jerry Yang. Her strategy centered around the sell-off of parts of the Yahoo whole, coupled with cost- cutting measures including firing large numbers of management and staff. The larger strategy centered around using the excess cash from the sales to locate and acquire emerging businesses in the internet arena. These businesses were meant to augment and upgrade Yahoo’s ability to compete with Google and Facebook. Basically, Yahoo wasn’t willing to go full throttle investing in creating and testing their own emerging ideas. Instead they were gambling on both being able to spot the next big thing from outsiders, and also finding a smooth way to integrate them.

Many analysts such as Trip Chowdhry of Global Equities Research take a pessimistic view of Yahoo’s move to fire Bartz, but not because these analysts saw great potential in her leadership. Rather the installation on an interim basis of Tim Morse as her replacement signals that Yahoo’s Board of Directors was in agreement with Bartz’ fundamental approach. The reason for this view is that Morse served as Chief Financial Officer under Bartz and was a primary driving force in implementing her “slash and vulture” strategy.

Bartz’ short tenure of roughly 30 months was hallmarked by the same trend that was seen before her leadership: loss of market share to Google and no answers that seized the timing and perception initiatives from either Google or Facebook. Yahoo’s strategy appears fuzzy currently. It seems likely, according to reports, that a new CEO will be hired and Morse will not be that person.

For her part, Bartz was blunt in her assessment of Yahoo’s Board describing them as “doofuses”. The performance of Yahoo’s stock the last decade seems to support her conclusion. However, there is also a widely held view that Yahoo is only one visionary, creative leader away from recapturing pre-bubble burst glory. Who? and how? are still the questions on the table. Stay tuned.

CEO Upheaval at Yahoo and The Fundamentals Preventing Dominance.

Sun, 11 Sep 2011 23:01:10 +0000

Apple CEO Tim Cook’s Big Raise from Apple and Trends in CEO Compensation

Wed, 07 Sep 2011 06:23:38 +0000

It was reported from SEC filings that Cook was awarded 1 million shares of Apple Stock. The shares will vest half in five years and the other half five-years later. So for Cook to collect on all shares, he’ll need to remain with the company for 10 years from the date he succeeded Jobs. Based on the value per share at the time of the SEC filing, Cook received a deferred bonus of $383 Million.

The stakes are high at Apple which in terms of stock value is one of the most valuable companies on the planet. It is also riding an all-time high thanks greatly to the forward thinking leadership of Jobs. He is without a doubt a nearly impossible act to follow. A school of thought exists that a CEO’s job performance is often perceived negatively or positively based on something as simple as point of entry. Point of entry means the timing of when he takes the position. In this case, Cook may be coming in at the worst possible time as far as his perceived performance. Although he has expressed confidence and has disagreed with the media assessments that there is nowhere to go but down, he has unique challenges due to his difficult point of entry. There is little doubt that his new compensation package reflects the challenges ahead.

The nature of his new compensation package is also interesting because the deferred nature of the stock ties the package to the performance of Apple as a whole. Although we are definitely talking a lot of zeros, more than many can fathom, this is far different than massive golden parachutes being delivered to CEOs who were shown the door during business downturns that were prominent starting with the recession of 2008. In those cases, companies were publicly embarrassing themselves with rewards of multi-generational wealth guarantees for people who had basically failed in their position, while many employees wondered how to make ends meet each week.

Obviously the stakes are different (along with responsibilities) the higher up you go up the hierarchy of a corporation. Basic working and middle-class employees at the foundation of the pyramid are less likely to have an issue with a situation where performance of the whole company ties into massive CEO bonuses. In the case of Cook, Apple smartly applied this standard knowing that a better Apple will please employees, making it more likely they will look at the breathtaking numbers in a CEO compensation package with more of an open mind.

The use of incentive based equity compensation, rather than a raise in traditional salary, is actually a continuation of a trend that has grown in popularity among companies since World War 2. According to a 2007 Vanderbilt University study by Carola Frydman and Raven Saks, the largest 50 public companies surveyed in 3 different decade increments post WWII including the 1990s, exhibited an increasing correlation between CEO and top executive compensation and the performance of a company as a whole.

The obvious difference between the 1990s and today is the increased access to information and corresponding media saturation of business-related topics. The effect has been increased scrutiny and pressure on a CEO to grow the business in shorter time-frames to please not only stock holders but employees leery of being the first victims of a downward cycle. It’s a war of perceptions and even if actual compensation isn’t growing beyond normal patterns over time (as studies indicate), a CEO and his large compensation arrangement has more to answer for now than at any time in history. The part that makes it even more difficult is the people he’ll be answering to are as informed and possibly as sophisticated as he is.

Tribune Company has a new leader

Wed, 01 Jun 2011 16:51:27 +0000

I see a man who knows how to get things done, doing things that others recognize, so he gets the reward – the bigger office. Of course, there is more responsibility that goes with this job, but Nils is not afraid.

Mr. Larsen knows about how to keep the balloons in the air by holding their strings at the same time as ALL the plates are spinning. He thinks on his feet, and from a chair, sometimes at the same time. But this position is not to be made light of. He is so detail oriented that his shoelace aglets are marked for left and right.

This is a big job. There are 23 TV stations, the WGN national network and WGN radio that will be overseen by him. Yep, spinning plates and lots of pretty balloons to distract him, but he plans on being on top of every question. Yes, that IS pizza for lunch!

Copter crash kills Saba Masri, a prominent Mexican Telecom & Construction Billionaire

Tue, 12 Jan 2010 08:04:13 +0000

On Sunday, a copter crash killed five people, including high-end Mexican billionaire businessman Moises Saba Masri, declared the state-run Notimex news agency.
The five casualties of the Sunday night crash included Saba's wife, their son, their son's wife and the pilot, declared Felipe Calderon, Mexico's President.
According to Mexico's City civil protection secretary, Elias Moreno Brizuela, it seems that weather, fog in particular, played a major part in the accident that took place around 8:30 pm.
Apparently, the copter's tail hit a house and its blade struck a tree, still according to Moreno Brizuela. There were no additional injuries on the ground.
After the copter hit a house, it fell into a 90 feet deep ravine, adding difficulty for the rescue team to recover the bodies.
In the Notimex news conference, Saba Masri was depicted as one of Mexico's wealthies citizens, worth billions of dollars. Masri made fortune in the telecommunications business, and owned construction and textile companies. Masri was also a major investor in the TV Azteca network and was proprietor of two hotels in Acapulco, said a state report on Monday. His latest venture was planning to build a 52-story building of flats and offices in the heart of Mexico this year.

Recipe for Success: Just Add Drive

Tue, 06 Oct 2009 18:02:17 +0000

Since she can remember, Laura Hylton wanted to launch her own business. She just didn’t know how to get started.

After a brief stint in sales and marketing for Business Journal of San Jose, Hylton decided to set off on her own.

Today Hylton serves as chief executive officer of Tactical TeleSolutions, a 100 percent woman-owned company she founded in 1991. The lead generation and event registration business boast clients such as PG&E, Chartis and Nestle Nutrition.

Below Hylton shares a bit of her knowhow and her particular recipe for success.

Ceo-watch.com: Where were you before Tactical TeleSolutions?
Laura Hylton: After I graduated from college, I answered a sales ad for the Business Journal of San Jose. I decided I wanted to be an investigative reporter but had to work my way up. So I applied for the sales position. Instead, I was hired for a clerical position, as I had no sales experience. I was fortunate to have met Don Keough, the publisher and editor. The newspaper was expanding across the country and I travelled around and helped set up 13 business weekly newspapers. I was in charge of marketing and telemarketing to sell newspapers to businesses as well as selling classified advertising. It was a great experience in terms of learning how to run certain aspects of a business, in particular, sales.

Ceo-watch.com: How did you arrive at Tactical TeleSolutions?
Laura Hylton: I founded the company in 1991—18 years ago. I borrowed $27,000 from my mother for the first year and was able to repay her the following year.

Ceo-watch.com: What does Tactical TeleSolutions do exactly?
Laura Hylton: (We) provide lead generation and event registration in the high tech, telecommunications, financial, healthcare and solar industries. Tactical TeleSolutions helps companies generate leads that convert to sales. Our primary focus is return on investment. Specific telemarketing services include appointment setting, lead generation, list building, market research, surveys, customer outreach and event registration.

Ceo-watch.com: What is your blueprint for success?
Laura Hylton: I am driven and, I think, I was born driven. My one role model was my boss in the newspaper industry, Don Keough. He was one of the smartest, charming and inspirational people I have ever met. If you listened hard enough and read between the lines, he was always trying to teach you something. I was fortunate to be able to work for him at the young age of 23 and learned a great deal because I listened.

Ceo-watch.com: What makes Tactical TeleSolutions different from the competition?
Laura Hylton: Experience and seasoned agents on the phone. TTS has been around for almost 19 years. Many of the employees have been with the company for five to 10 years. TTS knows how to make a campaign successful and work diligently, along with the client to ensure this happens. Seasoned employees share experience and strategy with clients to create a successful campaign. Philosophically, TTS believes that honesty, integrity and the desire to succeed fosters a good business relationship with clients.

Ceo-watch.com: How important is your website to generate sales leads?
Laura Hylton: Very important now that yellow page advertising and other advertising methods are no longer effective. Generating sales leads from our website is critical in terms of prospects being able to narrow down what they are really looking for, whether it be a woman-owned company or a telemarketing firm who excels at generating leads for an enterprise-wide application.

Ceo-watch.com: What’s your biggest headache at Tactical TeleSolutions?
Laura Hylton: When I started my business in 1991, I told myself that sales was the key component to a successful business. I still think this is true today. Sales is, and always has been, my biggest challenge. How to retain existing customers and bring in new customers, especially in a difficult economy. We try to surpass this challenge by paying close attention to our existing client base and providing value with continual suggestions for improvement and ways to increase return on investment. The level of value we are able to provide is extensive because we have been in business for many years and have the experience to guide our clients down the appropriate path. But the core component that runs throughout the company is our integrity and honesty with prospects and clients. This component is more important than the sale.

Ceo-watch.com: What drove you to this line of business?
Laura Hylton: I always wanted to start my own business but I didn't know what I should do. A woman who provided direct marketing for the San Francisco Business Times worked with an advertising agency that needed telemarketing. This woman offered me an office at no charge. She helped me prepare a proposal for the advertising agency and I was awarded the contract. It was for the chamber of commerce and industry for Normandy, France. We were to call into computer companies to see if they wanted to meet with someone to discuss relocation or opening a branch office in Normandy. After I was awarded the contract, I went to my mother to borrow money for a year and gave my two-week notice.

Aeropostale CEO to Step Down

Thu, 24 Sep 2009 23:54:30 +0000

Aeropostale’s long-time chief executive officer, Julian Geiger, will step down by the end of the fiscal year but will continue serving at the retail giant as chairman, the company announced Thursday.

Geiger, who has served as CEO since 1996, will be replaced by co-CEOs Mindy Meads and Thomas Johnson, who have served as chief merchandising manager and chief operation officer, respectively.

Mead has served in her current role since 2007, while Johnson has been the retailer’s
COO since 2004.

Aeropostale has survived a down economy by offering popular merchandise at reduced prices. The company has 891 outlets in 49 states, according to BusinessWeek, and 39 stores in Canada.

Wisconsin Targets Payday Lenders

Fri, 11 Sep 2009 19:07:45 +0000

A bill winding through Wisconsin’s legislature would tighten regulations on the fast-growing payday loan industry, which provides small, short-term loans.

Sponsored by Rep. Gordon Hintz, D-Oshkosh, the proposal would cap interest rates on borrowers at 36 percent a year, whereas current interest rates can easily surpass 100 percent annually. Currently, there is no interest rate cap on the industry.

Legislation aimed at payday lenders varies widely across the United States. But Wisconsin is the only state that has not yet targeted the industry with legislation.

“The challenge has been issued to the Legislature about whether we're going to pass some meaningful legislation to protect consumers or not," said Hintz, according to a report in the Wisconsin State Journal. "We've ignored this for long enough.”

Payday lenders have seen their industry flourish in the last decade—there has been a 391 percent growth during that span, according to the Journal—with revenues reaching $723 million last year.

Hintz’ bill, payday lenders say, would leave no room for profits and put them out of business in Wisconsin. And that will strain an immense community of borrowers, comprised mostly of the working poor, in need of easy, short-term loans.

"It would eliminate the industry not regulate the industry," said Erin Krueger, a lobbyist for the payday loan industry, referring to the Hintz bill, according to the Journal.

Proponents of the bill say they want to rid the state of predatory lending practices in which borrowers become burdened by paying escalating interest on their loan without ever paying the principal of the loan.

Google Goes Semantic

Wed, 01 Apr 2009 18:14:34 +0000

In an effort to better understand search engine users, search giant Google Tuesday announced improvements to its search-term association technology, improvements that go beyond the traditional matching of key words with words found at websites.

The new technology allows Google to identify associations related to search queries and better understand what search phrases or words mean.

"We're deploying a new technology that can better understand associations and concepts related to your search," wrote Ori Allon, head of Google’s search quality team, in a blog post, according to Agence France Press. "We are now able to target more queries, more languages, and make our suggestions more relevant to what you actually need to know."

Google said it unveiled semantic search functions in 37 languages.

An English language example of its new technology, Allon noted, is evident when Web users deploy a Google Web search using the phrase “principles of physics.” Instead of simply matching the query with Web pages utilizing the words in the phrase, search results now include “big bang” and “quantum mechanics.”

While Google and competitors like Microsoft and Yahoo have been busy improving semantic search capabilities for some time, improvements have been somewhat narrow given the time-consuming process of generating split-second, semantic search results.

"If we want to get it all done in a matter of milliseconds, there are a lot of innovations we still have to do,” Allon wrote in a blog post, according to IDG News Service. “A full semantic search would be very hard to do in this limited amount of time."

Google’s new semantics features are part of an ever-evolving search industry, where, for example, public relations firms like Seo-pr.com now optimize press releases for search engines and organic search management platforms like Seosamba.com provide a centralized seo software system where affiliate marketers, franchises and businesses can build a vast number of search engine optimized websites.

Google also announced a feature that will provide longer text excerpts, or “snippets,” for search results in order to give readers more context, a move that has come under fire by some website owners who the added information will reduce page visits.

Ford Cuts CEO Pay By A Third

Wed, 25 Mar 2009 01:02:02 +0000

Ford Motor Co. CEO Alan Mulally will receive a 30 percent pay cut during the next two years, the Detroit automaker announced in a filing with the U.S. Securities and Exchange Commission.

Besides Mulally’s pay cut, Ford announced the elimination of cash compensation for members of Ford’s board of directors in 2009 and the termination of merit increases for all salaried employees.

"Ford is acutely aware that current economic conditions have had a significant adverse impact on our shareholders, customers, dealers, employees and other stakeholders," Ford said in its preliminary proxy statement, according to TheStreet.com. "We do not view these actions as merely symbolic, but as a necessary step in the restructuring of our business in which all our stakeholders have been asked to participate."

Mulally’s salary, not including bonuses, dropped 78 percent to $2 million in 2008, the company said, as sales swooned at Ford and throughout the U.S. auto industry. His total compensation in 2008 dropped by 37 percent to $13.57 million.

Ford’s executive vice president, Lewis Booth, received $1.08 million in cash compensation in 2008, a 66 percent drop compared to the previous year. His total listed compensation fell 54 percent to $4.74 million.

Ford saw its worst year ever in 2008, as the Dearborn, Michigan-based company lost $14.6 billion.

Deutsche Bank CEO Takes 90 Percent Pay Cut

Wed, 25 Mar 2009 00:57:43 +0000

Duetsche Bank AG announced that compensation for chief executive officer Josef Ackermann’s fell 90 percent during 2008 after the bank posted historic losses.

Ackermann earned $1.89 million last year compared with $18.8 million in 2007, the Frankfurt-based bank, Germany’s largest, stated in its annual report.

Ackerman stated in 2008 that he would decline performance related bonuses if Deutsche Bank could not avoid financial pitfalls related to the world economic crisis, according to the Associated Press.

Deutsche Bank posted its first annual loss in over 50 years during 2008, with $3.9 billion in total losses.

Although Ackermann said Deutsche Bank has had a good start to 2009, he acknowledged that the bank continued to face challenges.

"A global economic downturn affects all our client segments, and financial markets remain under pressure," Ackermann said, according to the AP. "Nevertheless, we are confident that Deutsche Bank is correctly positioned to weather these difficult conditions."

Deutsche Bank’s management board saw compensation drop from 44.7 million in 2007 to $5.9 last year.

Additionally the bank plans to cut bonuses at its investment banking unit by 60 percent during 2009, according to Bloomberg.

Ackerman said he expected Deutsche Bank to return to profitability by the end of 2009 if financial markets emerge from the global economic slump as some analysts have predicted.

Activision Taps Ex Yahoo COO to Head “Guitar Hero”

Tue, 24 Mar 2009 01:18:06 +0000

Activision Blizzard Inc. has appointed former Yahoo chief operating officer Dan Rosensweig chief executive officer of RedOctane, which develops the multi-billion dollar Guitar Hero franchise, according to several reports.

Rosensweig, who will oversee game development, hardware manufacturing, logistics and marketing, replaces Kai Huang, RedOctane’s former chief executive responsible for co-creating Guitar Hero with his brother. Huang will continue working for RedOctane.

"Under the leadership of Kai and Charles, Guitar Hero established the music gaming genre and became a global phenomenon," said Mike Griffith. "With the addition of Dan's proven operational expertise and leadership, we will continue expanding the franchise's global footprint in new and innovative ways.

Guitar Hero sales have remained strong despite the recession, with sales of over $800 million during 2008, but analysts say 2009 will present a bigger challenge to the video game industry. Rosensweig will be in charge of developing other popular games in order to increase sales.

Rosensweig spent 18 years at Ziff Davis, including a stint as president of the company, before serving as Yahoo’s operating chief from 2002 to 2006, where he oversaw the search giant’s product development, marketing, and advertising sales.

"I am extremely excited for this opportunity to work with the talented Guitar Hero team, which has transformed the interactive entertainment landscape," said Rosensweig, according to PR Newswire. "With a platform and content that universally engages a wide range of audiences, Guitar Hero has incredible growth potential. I look forward to continuing to develop Guitar Hero into an even more successful enterprise."

Intel Freezes CEO Pay

Tue, 24 Mar 2009 01:15:51 +0000

Intel Corp. announced plans to freeze employee pay, including the salary of chief executive officer Paul Otellini, as sales at the giant chip maker have dipped amid the economic downturn.

Besides overhauling its employee compensation plan, Intel said it would give employees the opportunity to change “underwater,” or expensive stock options, for lower priced ones.

The moves must be approved by Intel shareholders.

"In 2008, net revenue declined slightly and net income declined 24 percent compared to 2007," the company said in its filing, according to the San Jose Mercury News. "We face a rapidly changing marketplace in which demand is shifting among mobile, desktop and server microprocessors, and the prices and margins of our products have been under pressure."

Otellini received a total compensation of $12.1 million in 2008, according to Intel’s proxy statement, with a base salary of $1 million and $3.9 million in incentive plans, in addition to over $7 million in stock and option plans.

Intel’s net income dropped 24 percent last year, Bloomberg News reports, and its share price dipped by one third.

The Santa Clara, California-based semiconductor giant joins hundreds of other companies who have proposed option-exchange programs.

Search engine strategy conference SES New York is gearing up

Fri, 13 Mar 2009 09:56:46 +0000

Amid increasingly challenging economic times, as business budgets continue the delicate shift from traditional marketing outlets to online venues, New York City will play host to the online marketing conference Search Engine Strategies (SES) New York, from March 23 to 27.

The conference features two days of hands-on search marketing training, where marketers can catch up on the latest online trends for search engine optimization (SEO) consultants, web developers and public relations professionals.

The intensive workshops, hosted by SEO industry expert Bruce Clay, are designed to provide the applications and applied exposure necessary to increase businesses’ web visibility and return on investments.

Moreover, over 5,000 corporate leaders, web developers and search engine marketing (SEM) specialists will be in attendance during the week-long conference, as they showcase strategies for prevailing in today’s mine-filled economic landscape.

These professionals will offer tips on, among other things, how to:

•Optimize your web pages and outrank your competition.
•Increase traffic via organic listings while adhering to search engine guidelines and avoiding “spam” penalties.
•Build links that will keep you visible amidst potential customers.
•Rank better with pay-per-click advertising.

In addition, SEO Samba is offering contestants the opportunity to win a free full conference pass ($2,000 value) to SES New York when they participate in SEO Samba’s Twitter contest as well as free exhibit passes for all. Contestants have until Tuesday, March 17, 12 PM Eastern Time to submit entries. For information, please go to the following link: social marketing

-Now in its 10th year, the global SES Conference and Expo Series educates thousands of delegates each year, with a 98% satisfaction rate. Events are organized and programmed in cooperation with the SES Advisory Board and SearchEngineWatch.com, the leading authority on Search Engine Marketing. SES New York is the only major Search Marketing Conference on the East Coast.

Clearwire Taps Morrow as CEO

Thu, 12 Mar 2009 17:52:03 +0000

Clearwire Corp., the wireless broadband service provider, named William Morrow to replace Benjamin Wolff as chief executive officer.

Morrow, who previously served as CEO of Pacific Gas & Electric, will head Clearwire as it develops WiMax technology, which offers broadband networks at higher speeds than current networks.

"The chance to lead Clearwire at a time when the company sits on the cusp of doing something truly remarkable—to change the way people connect to and use the Internet—was not one to be missed," said Morrow upon announcement of his post, according to Business Wire.

Clearwire recently partnered with Sprint Nextel Corp. with the promise of providing blanket broadband service for cities. The network is already active in Baltimore and Portland, Oregon, according to an Associated Press report, and promises to extend its service to Chicago, Philadelphia, Dallas and Atlanta during 2009.

Before serving as CEO of PG&E, Morrow held executive posts at Vodafone and Japan Telecom Co.

"Bill Morrow has developed a global reputation in the telecommunications industry as a highly regarded executive with an extraordinary track record of success in U.S., Europe and Japan,” said Craig McGraw, founder and chairman of Clearwire, according to Business Wire. “Years of experience in key positions with great companies such as AirTouch and Vodafone have given Bill a great perspective on achieving operating efficiencies and enhancing value creation to profitably build and scale businesses.”

Intel CEO Offers Support for Economic Stimulus

Wed, 11 Feb 2009 13:04:45 +0000

Intel Corp. CEO Paul Otellini offered support Tuesday for President Barack Obama’s $800 billion economic recovery package during a speech at the Economic Club of Washington D.C.

“This year, we are going to see an unprecedented level of public investment in schools, bridges, roads and healthcare,” said Otellini, according to the Wall Street Journal. “It is important. It will make a difference.”

While Otellini strongly supported certain aspects of the recovery package—he lauded planned investments in classrooms, health and broadband infrastructure—but stopped short of fully endorsing the program.

The stimulus plan calls for billions to be spent on unemployment benefits, food stamps and public spending to create jobs.

Otelleni said Mr. Obama has personally “encouraged” him to publically support the stimulus package.

Otelleni also announced that Intel will embark on a $7 billion investment in U.S.-based manufacturing facilities in New Mexico, Arizona and Oregon during the next 18 to 24 months.

Otelleni said Intel’s investment during tough times will give the company a competitive advantage.

"For nations like the United States, absolutely nothing about the future is inevitable or guaranteed—not jobs, not leadership, not our standard of living," said Otellini, according to Cnet.com. "How we deal with these changes can lead us to new heights--or they will define the beginning of a downward spiral."

The two-year, $7 billion investment will go towards overhauling Intel’s chip manufacturing capabilities, generating an estimated 7,000 jobs at the factories and via contract jobs.

Otelleni also said Intel will co-sponsor a program with the Aspen Institute aimed at garnering Washington D.C.’s support for technology investment, according to the Journal.

Eight U.S. CEOs To Testify Before House Committee

Wed, 11 Feb 2009 13:02:58 +0000

Eight U.S. bank CEOs will appear before the House Financial Services Committee Wednesday to defend their use of $176 billion they have received in bailout funds under the Troubled Asset Relief Program, or TARP.

The CEOs assert that they are lending money despite economic hardship, according to testimony prepared for the House committee.

"In late December, utilizing TARP capital, we authorized our line businesses to provide $36.5 billion in new lending initiatives and other new programs,” said Citigroup Inc. CEO Vikram Pandit in prepared remarks, according to Dow Jones. The programs are “expanding mortgages, personal loans and lines of credit for individuals, families and businesses and creating liquidity in the secondary markets."

Kenneth Lewis, CEO of Bank of America, says in prepared remarks that America deserves to know “"what return they are making on their investment, and when it will be paid back," according to Dow Jones. He added that Bank of America intends to pay back all TARP money as soon as possible.

The CEOs have come under fire for reportedly not doing enough to inject TARP funds into the economy while continuing to lavish top executives with huge bonuses and expensive travel perks.

President Barack Obama last week placed a $500,000 cap on executive pay to banks benefitting from TARP. That move was followed by a Senate vote that bans bonuses to top managers and businesses receiving bailout assistance.

The CEOs scheduled to testify on Wednesday are: Citigroup's Pandit, Lewis of Bank of America, Goldman Sachs Group Inc's Lloyd Blankfein, JPMorgan Chase & Co's James Dimon, John Mack of Morgan Stanley, Robert Kelly of Bank of New York Mellon Corp, Ronald Logue of State Street Corp and John Stumpf of Wells Fargo & Co.

All eight CEOs have said they will travel to Washington Wednesday using commercial transportation.

Aozora Bank CEO Steps Down

Tue, 10 Feb 2009 14:49:02 +0000

Aozora Bank Ltd. chief executive and president Federico Sacasa stepped down Monday in the wake of the Japanese bank’s estimated annual net loss of $2.1 billion.

The mid-tier bank, majority owned by the U.S. firm Cerberus Capital Management LP, has been rocked by exposure to the subprime loan market and hedge funds.

Deputy president Brian Prince, who previously worked at Lehman Brothers in Japan and Shinsei Bank, is expected to take over as acting CEO.

“Prince is very well regarded in the market and is much more familiar with Japan than his predecessor,” James Fiorillo, of the Tokyo-based private equity firm Ottoman Capital Japan, told Bloomberg News.

The estimated $2.1 billion net loss is seven times larger than the bank estimated in November.

Aozora shares have fallen 80 percent since it went public in 2006, according to a Reuters report.

Aozora is attempting to write off bad loans, and the bank said it hopes to return to profitability by next fiscal year. The bank said it would increase domestic lending and its retail deposits in order to reduce its dependence from the wholesale debt market, according to Reuters.

Sacasa replaced Kimikazu Noumi as Aozora’s CEO in February 2008. He is the second CEO of a major Japanese bank to be replaced in the last three months, after Thierry Porte of Shinsei stepped down in November, according to Bloomberg News.

Former eBay CEO to Run for California Governor

Tue, 10 Feb 2009 14:04:38 +0000

Former eBay chief executive Meg Whitman joined the race for governor of California Monday, announcing the creation of an exploratory committee to seek the Republican nomination.

The move, which allows Whitman to raise campaign funds, follows a politically active 2008 in which she served as finance chairwoman for Mitt Romney’s presidential campaign and as co-chair of John McCain’s campaign.

"California faces challenges unlike any other time in its history — a weak and faltering economy, massive job losses and an exploding state budget deficit," Whitman said in a written statement on her web site. "California is better than this, and I refuse to stand by and watch it fail."

Whitman, who became a billionaire as she steered eBay towards global prominence from 1998 to 2008, will surely use her vast personal wealth against main rival Steve Polzner, a high-tech entrepreneur.

Whitman has not revealed her position on social issues but is likely to run as a fiscal conservative and a social moderate, promoting her financial experience at a time when California is reeling from the financial crisis.

"California faces challenges unlike any other time in its history - a weak and faltering economy, massive job losses, and an exploding state budget deficit," Whitman said. "I refuse to stand by and watch it fail."

Whitman named former Republican Gov. Pete Wilson as her campaign chairman and Republican Reps. Kevin McCarthy and Mary Bono as her co-chairs.

"I think that she will be sort of a classic California Republican who demands that money be spent wisely, and not too much of it, and not more than we have," Wilson said in an interview Monday. "She will definitely be a taxpayer's friend and a friend to the people who create jobs."

BofA CEO: Talk of Nationalization “Absurd”

Mon, 09 Feb 2009 16:26:08 +0000

Bank of America chief executive Kenneth Lewis dismissed speculation that his bank needs more money from the federal government, adding that he does not expect BofA to be nationalized.

The nation’s largest bank saw its stock price fall to a 25-year low last week on speculation it might need more government support.

Lewis, speaking in CNBC, said he has talked to government officials recently and that there was no mention of nationalizing the Charlotte, N.C.-based bank.

“It’s just absurd,” Lewis told CNBC. “I’ve never had anybody even hint at it.”

Lewis showed support for Bank of America by purchasing 200,000 shares in his struggling bank valued at nearly $1 million, according to a filing with the Securities and Exchange Commission. It was the second time in recent weeks that Lewis has injected his own money into the bank.

Bank of America shares have been pummeled in recent weeks after the bank recently disclosed its first quarterly loss in 17 years. In an effort to reassure shareholders, Lewis recently met with his directors.

"Every member of the management executive team participated, as we discussed in great detail the company's most recent performance and our plans for getting through the recession in a position of strength," he wrote in the memo, according to the Associated Press.

Lewis added that he expects Bank of America to repay the $45 billion it received from the Troubled Asset Relief Program within three years.

Bank of America has had a good 2009 so far, according to a Reuters report, boosted by a boom in mortgage refinancing.

Bank of America CEO on the Hot Seat

Mon, 19 Jan 2009 17:07:37 +0000

Bank of America Corp.’s first quarterly loss in 17 years, coupled with the troubled purchases of Countrywide Financial Corp. and Merrill Lynch, has put the bank’s chief executive, Ken Lewis, on the hot seat, according to several reports.

The Charlotte, North Carolina-based bank dropped 14 percent in New York trading last week after news of the quarterly loss, despite a capital injection of $138 billion from the U.S. government to help absorb losses from Merrill Lynch, valued at $15.3 billion in the last quarter.

“He’s made so many just grossly wrong projections or statements in the public press over the last 18 months,” Jon Fisher, an analyst at Fifth Third Asset Management, told Bloomberg News. “I’m sorry, I don’t think he should have a CEO title if he can’t forecast his own business or he can’t understand his own financials.”

Bank of America shares have already fallen 41 percent in 2009.

Lewis has stoked shareholder fury for accepting an agreement to buy Countrywide Financial and Merrill Lynch.

"All the explanation in the world is not really going to assuage calls from many of his shareholders for his head," Gary Townsend, president of Hill-Townsend Capital, hedge fund specializing in financial companies, told Reuters "Is there someone else who can step in and run the company at this point? I should hope so."

Lewis has defended the acquisition of Merrill Lynch, saying the brokerage house is strategically important to Bank of America, despite mounting credit losses and writedowns at the brokerage.

Lewis recently told investors that Bank of America will rebound strongly when the economy emerges from its malaise.

“This company will generate huge amounts of profit when we get a normal economic environment, not even a great one, just a normal one,” said Lewis, according to Bloomberg News.

But Lewis will remain on the hot seat, as bank shares continue to plummet. Analysts have pointed out several candidates to replace Lewis, including Bank of America mortgage chief Barbara Desoer and general counsel Brian Moynihan, according to Reuters.

New Yahoo CEO to Receive $19 Million Pay Package

Mon, 19 Jan 2009 16:24:00 +0000

New Yahoo CEO Carol Bartz stands to earn $19 million in stock and cash during her first year at the search engine giant, according to several reports.

Bartz will receive a 2009 equity grant of about $8 million, in addition to a $1 million annual salary and roughly $10 million in cash and restricted shares to “make up” for equity grants and benefits she had at her previous employer, Autodesk Inc, according to the Wall Street Journal.

"It's a fair deal for the shareowners and a fair deal for Carol," Mark M. Reilly, a partner at 3C-Compensation Consulting Consortium, told the Journal. "If she gets the stock price up, she'll do very well."

Bartz could also reap huge financial rewards if she succeeds in turning around a struggling Yahoo.

Bartz will receive 5 million stock options tied to Yahoo’s share price. She can begin to exercise the options, according to the Journal, only if the share price rises by 50 percent between January 30, 2009 and January 1, 2013.

Bartz succeeds Yahoo co-founder Jerry Yang, a billionaire from his holdings. Yang was paid an annual salary of $1 to run the search engine.

Analysts believe Yahoo could boost it stock immediately by selling its search operation to rival Microsoft Corp. But Bartz, known for her no-nonsense management style, has previously expressed doubts about Yahoo parting with its search engine.

Terry Semel, who ran Yahoo before Jerry Yang, received a $250,000 salary during his last year on the job. He resigned amidst public outrage after it was disclosed Yahoo planned to reward him with stock options valued at $71 million.

CEO Compensation Up in 2007

Wed, 10 Dec 2008 12:59:23 +0000

The median pay raise for the nations top CEOs rose 7.5 percent in 2007, representing the lowest rate of increase in six years, according to the Corporate Library.

The increase represented the first single digit percentage change since the corporate governance group began compiling data in 2001.

The rise in total annual compensation – base salary, bonuses, perks and equity-based compensation was due to profits from stock options, according to CNNMoney.com.

Larry Ellison of Oracle Corp. was the nation's highest paid CEO, with and annual total compensation of $192 million the report added. Ellison received a base salary of $1 million, while the remaining compensation came in the form of stock options.

IAC/InterActive's Barry Diller was the nation's second highest CEO with a total compensation of $184 million. Angelo Mozilo, the former CEO of Countrywide Financial, came in third on the list with a total compensation of $124 million.

Some highly compensated CEOs increased shareholder value at their firms, but others had not.

"The presence of the CEOs of six financial services companies in the (top 30) table also comes as something of a surprise given that sector's current woes, particularly the presence of Angelo Mozilo," said the group, according to AFP.

Other findings:

•Profits from stock options contributed significantly to the compensation of all but three of the top 30 highest-paid CEOs in the survey, despite the general move away from stock options.
•The top four highest paid executives are Lawrence Ellison of Oracle, Barry Diller of IAC/Interactive, Angelo Mozilo of Countrywide Financial and Margaret Whitman of eBay.
•CEOs from six financial services companies appear on list of the top 30 highest-paid CEOs in the survey.

Novellus to Cut Jobs, CEO Pay

Wed, 10 Dec 2008 12:56:00 +0000

Novellus Systems Inc. CEO Richard Hill announced plans Tuesday to cut 10 percent of its workforce and reduce his own salary by 50 percent due to weakening demand from Asia.

The San Diego, Calif.-based chip tools maker said it will cut its 3,500-strong workforce through attrition and layoffs. Novellus highlighted weakening demand from Korean memory chipmakers as the cause of its recent woes.

"Visibility is extremely limited at this time, [but] Novellus expects an incremental reduction of at least ten percent in bookings, shipments and revenue for the fourth quarter," said Novellus via its web site, according to MarketWatch.

Hill also warned that the company's fourth quarter expectations would be far below previously forecast, adding that Novellus had acted rapidly to cut expenses.

"We were quick to respond to weakening business conditions early in 2008," said Chief Executive Rick Hill, according to the Wall Street Journal. "Unfortunately, the current environment warrants deeper cost reductions."

Hill announced that his salary would be reduced by 50 percent and added that he would not receive a bonus, according to MarketWatch. Additionally, Hill will not receive stock in 2009.

Merrill, Morgan CEOs Won’t Receive Bonuses

Tue, 09 Dec 2008 19:18:58 +0000

The chief executives of Merrill Lynch and Morgan Stanley, along with top company officials, will not receive pay bonuses for 2008, according to several reports.

Merrill CEO John Thain, who had recently asked for a 2008 bonus of as much as $10 million, told a compensation committee late Monday that he would not request a bonus, according to the Wall Street Journal.

Thain’s counterpart at Morgan Stanley, John Mack, will also forgo an annual bonus for the second consecutive year.

Morgan Stanley’s two co-presidents will also pass up their bonuses. Additionally, the firm will cut compensation for its 35 top executives by 65 percent, the Journal reported. The top 14 executives will take a 75 percent cut.

The announcements come amid increased public anger over CEO culpability in the widespread credit crisis.

Last week Bank of America shareholders approved the acquisition of Thain’s Merrill Lynch. Thain, who spearheaded the acquisition by reaching out to bank of America CEO Ken Lewis, will not be a member of the Bank of America boards after the transaction closes, according to Forbes.

Qantas Chief: British Airways Deal in Doubt

Tue, 09 Dec 2008 12:54:05 +0000

Qantas Airways chief executive Alan Joyce warned investors its merger plan with British Airways could fall apart because of the British airline's potential deal with Spanish carrier Iberia, according to several reports.

"There's absolutely no guarantee that a transaction will be forthcoming," said Mr. Joyce said, according to the BBC. They were Mr. Joyce's first public comments since word of the merger was leaked last week.

"That's why I think we felt that the leak was a bit premature."

There are significant hurdles to overcome, said Joyce, citing British Airways' current pension liabilities, which total roughly $2.2 billion, according to the BBC.

But a bigger obstacle is British Airways' talks with Iberia.

"BA are conscious, I think as Iberia are and a we are, that only one of the transactions could take place," said Joyce, according to Reuters.

Mr. Joyce also told Australian investors that, in any deal, the majority of the company's shares would be held by Australian investors.

"Whatever happens, Qantas will remain majority Australian-owned, the vast majority of employees will always be Australian, and Australia will remain our headquarters," said Mr. Joyce, the BBC reported.

Airline mergers looked particularly appealing for the industry this year, say analysts, as summer-long record fuel prices gave way to falling demand in the face of worldwide economic turmoil.

Besides British Airways' merger talk with Qantas and Iberia, other airlines are looking for merger or deals. Lufthansa is trying to strike a merger with ailing Alitalia, as is Air France KLM, according to Reuters.

Playboy CEO to Resign

Tue, 09 Dec 2008 12:51:00 +0000

{$linkPage:1803}CEO's biographies, gossips, job ratings, including Steve Ballmer, Dov Charney, Carlos Ghosn, Richard Branson and more...{/$linkPage}{$linkPage:1803}CEO's biographies, gossips, job ratings, including Steve Ballmer, Dov Charney, Carlos Ghosn, Richard Branson and more...{/$linkPage}{$linkPage:1803}CEO's biographies, gossips, job ratings, including Steve Ballmer, Dov Charney, Carlos Ghosn, Richard Branson and more...{/$linkPage}Playboy Enterprises CEO Christie Hefner will step down next year after two decades at the helm of the magazine company her father founded, the adult entertainment company announced Monday.

Hefner, 56, the daughter of Hugh Hefner, will resign January 31 but remain on the company board until a replacement is found. Playboy shares jumped over 14 percent Monday on the news.

"Last month marked my 20th anniversary as CEO; just as this country is embracing change in the form of new leadership, I have decided that now is the time to make changes in my own life as well," Hefner said in a statement, according to Reuters.

Jerome Kern will serve as interim chairman while Playboy searches for a permanent replacement.

For years, the company has lost adult entertainment readers to free online sites. Playboy reported a third-quarter loss of $5.2 million, while its stock has plummeted 81 percent this year.

In October, Playboy announced it was abandoning the DVD market while it simultaneously said it would fire 55 people as it sought $12 million in savings, according to Bloomberg News.

Hefner on Monday CNBC she would not be stepping down if Playboy were not in strong shape, adding that the election of Barack Obama had inspired her to become involved in public service.

“Big Three” CEOs Leave D.C. Empty Handed

Sat, 06 Dec 2008 14:48:31 +0000

After hours of testimony before Congressional leaders Friday, the chief executives of Detroit’s “big Three” automakers left Washington D.C. empty handed, uncertain if they will secure the $34 billion rescue package they requested for their struggling companies.

The CEOs of Ford, General Motors and Chrysler could ultimately benefit from another dismal jobs report released Friday, which showed that employers cut over half a million jobs in November.

"I hope we will do something because I think for us to do nothing, to allow bankruptcies and failures in one, two or three of these companies in the midst of the worst credit crisis and the worst unemployment situation that we've had in 70 years would be a disaster," said Barney Frank, D-Mass., chairman of the House Financial Services Committee, according to MarketWatch.

Senate Banking Committee Chairman Christopher Dodd will draft legislation that lawmakers can consider Monday, but it remained unclear whether the Senate and House would approve an eventual measure. Frank vowed to work with Dodd and other Congressional leaders over the weekend to craft a measure.

GM CEO Rick Wagoner has asked Congress for $12 billion in loans, while Chrysler’s Robert Nardelli seeks $7 billion. Ford chief executive Alan Mulally wants a $9 billion credit line.

Despite the consequences a bankruptcy of one of the “Big Three” could have on the economy, numerous lawmakers remain skeptical of the multi-billion dollar bailout package proposed by Detroit.

"I'm concerned that businesses are rightly going to start thinking that they can just come to Uncle Sam to bail them out, and we're broke," said Republican Rep. J. Gresham Barrett of South Carolina, according to Fox News.

Ex-WorldCom CEO Seeks Presidential Pardon

Fri, 05 Dec 2008 18:50:16 +0000

Former WorldCom chief executive Barnard Ebbers has submitted a request to have his 25-year sentence commuted, according to several reports.

Ebbers. 67, convicted in 2005 of spearheading an $11 billion conspiracy and securities fraud that led WorldCom to bankruptcy, joins a growing list of executives seeking clemency from President Bush.

But don’t expect Mr. Bush to comply, say analysts, given the increased public scrutiny of chief executives under extreme economic hardship and fury over lavish CEO compensation at some of the country’s biggest financial firms.

"If you think the president is going to be attentive to political winds, it's hard to imagine he would burnish his legacy by granting some indisputably high-profile and therefore controversial pardons to white-collar defendants," Douglass Berman, a law professor at Ohio State University, told Reuters.

Ebbers built WorldCom into the second-largest U.S. long distance provider before his 2005 conviction. The Justice Department’s Office of the Pardon Attorney is reviewing Ebbers’ request, reports Bloomberg.

Ebbers joins a list of over 3,000 felons seeking pardons from Mr. Bush. So far, the president has pardoned 171 people.

“Big Three” CEOs Go to Washington, Again

Thu, 04 Dec 2008 18:18:49 +0000

The chief executives of the Big Three U.S. automakers returned to Washington D.C. Thursday to plead Congress for a $34 billion bailout, two weeks after their initial attempt to secure a government rescue was met by demands that they overhaul their restructuring plans.

"It's fair to say that last month's hearings were difficult for us ... but we learned a lot," General Motors CEO Rick Wagoner told the Senate Banking Committee, according to AFP. "We're here today because we made mistakes, and we're here because forces beyond our control have pushed us to the brink."

Earlier in the week, GM and Chrysler CEO Bob Nardelli said their companies face bankruptcy if they do not receive government loans. Chrysler seeks $7 billion in bailout funds by year’s end, while GM needs $4 billion.

GM, perhaps the company with the greatest risk of collapse, plans to lay off a third of its workforce, while cutting the number of its U.S. plants from 47 to 38 in 2012, according to AFP.

Ford CEO Alan Mulally, who Wednesday voiced increasing worry about the fates of GM and Chrysler, said his auto company is in better shape than his competitors, adding that Ford might return to profitability by 2011. Nonetheless, he has asked Congress for a $9 billion credit line in case the economy worsens.

“We produced more vehicles than our customers wanted, then slashed prices,” Mulally told Congress Thursday, according to CNBC. As a result of those mistakes, Mulally added, “we are really focused.”

But it remains unclear whether there is enough support in Congress for a rescue plan.

While lawmakers like Senate Banking Committee Chairman Christopher Dodd and New York Senator Charles Schumer back a bailout, prominent Republicans and Democrats oppose a rescue plan.

Wagoner, Nardelli and Mulally, who drove to Washington in hybrids after being criticized for jetting to the nation’s capital during their first trip, have all warned of the tremendous damage to the U.S. economy if they are forced to file for bankruptcy.

Yahoo's Next Moves

Wed, 19 Nov 2008 16:05:31 +0000

Jerry Yang’s decision to resign as chief executive officer of Yahoo has not only set off a frenzied search for his successor – it has also increased the likelihood that the search engine giant will be acquired by Microsoft.

Yahoo shares, currently trading at $11.55, could double in worth if a new CEO can restart negotiations with Microsoft, according to analysts.

"The strategic necessity here is for this company to merge with Microsoft," Larry Haverty, a fund manager at Gamco Investors Inc. in Rye, N.Y., told Bloomberg News. "This is just unmitigated good news for the Yahoo shareholders."

Nonetheless, Yahoo will have to swallow it pride during possible negations. It won’t be seeing a deal anywhere in the ballpark of the $47.5 offer it received from Microsoft nearly seven months ago.

Microsoft, set on competing with Google in the Internet search market, has expressed interest in talks with Yahoo, but has stated that it is not interested in buying the entire company.

Possible successors to Yang include News Corp. President Peter Chernin, Kevin Johnson, a former Microsoft exec who helped engineer the initial bid for Yahoo, and Yahoo President Sue Decker. Also mentioned as candidates are former eBay Inc. CEO Meg Whitman and Jonathan Miller, the former CEO of AOL.

The new CEO’s contract should have many pay incentives, analysts say, and should include change of control terms, in case Yahoo is acquired rapidly. The package should be “a mixture of cash and equity,” Edward Deibert of the law firm Howard Rice Nemerovski Canady Falk & Rabkin, told Forbes.

"The company is trading at such an all-time low, the equity could turn out to be quite valuable,” he added.

Some on Wall Street Expect Bigger 2008 Bonuses

Thu, 13 Nov 2008 15:10:46 +0000

Despite mounting job losses and widespread economic gloom, a third of Wall Street professionals expect a higher end-of-year bonus in 2008, according to a study by the web outfit eFinancialCareers.com.

Thirty-six percent of 1,400 professionals polled say they expected bigger bonus this year, while 30 percent said they expected a smaller bonus and 34 percent expected no bonus at all.

That 36 percent expect a bigger bonus is surprising given the backlash on Main Street over executive compensation on Wall Street and Congressional efforts to curb excessive C.E.O. pay.

And a recent report says senior executives at Wall Street firms will have their bonuses cut by as much as 70 percent. Falling revenue and Congressional pressure will account for the bonus cuts, says the study by Johnson Associates, according to Bloomberg News.

The executives whose pay is disclosed in public filings will have the steepest reductions, and bonuses for other workers will drop by 10 percent to 45 percent this year. Rewards are likely to decline even more in 2009 as business slows further, said Alan Johnson, managing director of the compensation consulting firm that bears his name.

"One-third of the world is not going to get more than they got last year," Richard Lipstein, managing director at Boyden Global Executive Search in New York, told eFinancialCareers.com.

Despite diminishing profits, "bonuses will still be paid to those individuals who generated revenue for their institutions," said John Benson, C.E.O. of eFinancialCareers.com.

Congressman Eyes CEO Pay

Wed, 29 Oct 2008 22:47:58 +0000

The nation's nine largest banks benefiting from $125 billion in government emergency aid were asked Tuesday to justify executive bonuses.

Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, asked the chief executives of the nine banks to provide detailed information about compensation payments to the 10 highest paid employees for the last three years.

"I question the appropriateness of depleting the capital that taxpayers just injected into the banks through the payment of billions of dollars in bonuses, especially after one of the financial industry's worst years on record," wrote Waxman in a letter written to the banks, according to the Washington Post.

Additionally, Waxman asked the banks – Wells Fargo & Co., Bank of America, Bank of New York Mellon, JPMorgan Chase & Co., State Street Corp., Citigroup Inc., Merrill Lynch & Co., Morgan Stanley, and Goldman Sachs Group – for the number of employees who are paid more than $500,000 annually, in addition to total compensation figures for the banks' 10 highest-paid employees, according to Bloomberg News.

"Some experts have suggested that a significant percentage of this compensation could come in year-end bonuses and that the size of the bonuses will be significantly enhanced as a result of the infusion of taxpayer funds," said Waxman, according to the Washington Post.

Despite the historic financial crisis, 36 percent of 1,400 Wall Street professionals surveyed expect a higher bonus this year, according to an online poll conducted by eFinancialCareers.

CEO Pay Increases Vary Widely

Tue, 28 Oct 2008 21:33:39 +0000

The rates of increase in CEO pay at large S&P index firms were up to four times higher than those at small S&P index firms, according to a recently released report by the Corporate Library, an independent provider of corporate governance and executive compensation data.

The median increase in total compensation at large companies was 22 percent from 2006 to 2007, while total compensation for S&P 500 CEOs are mid-level companies was 15 percent.

CEOs at smallcap firms, on the other hand, saw a median increase of 5.5 percent, according to the survey.

Total actual compensation increases far outpace rises in annual compensation, which includes base salary and annual cash bonuses.

"While 2007 was a relatively unsuccessful year for many companies, and this can be seen in the single digit increases in total annual compensation, this had yet to affect equity compensation," said Paul Hodgson, a senior research associate at the Corporate Library and co-author of the report. "On the other hand, total annual compensation did not go down."

The survey examined compensation at over 3,000 companies in the United States and Canada.

Median total actual compensation for the CEOs surveyed was a little more than $2,000,000, but levels varied significantly.

AIG Freezes Former CEO's Compensation

Thu, 23 Oct 2008 22:55:14 +0000

Troubled insurance giant American International Group will freeze compensation payments to former CEO Martin Sullivan, as New York State Attorney General Andrew Cuomo examines executive compensation in light of the insurer's U.S. bailout.

"Until the taxpayers recoup their investment in AIG, which is now in excess of $120 billion plus interest, there should not even be any contemplation of bonuses for executive performance," Cuomo said in a conference call, according to Bloomberg News.

AIG will freeze $19 million in compensation payments to Sullivan. The insurer also agreed not to distribute funds from $600 million in deferred compensation to its Financial Products subsidiary, which underwrote credit default swaps that led to the firm's $25 billion in write-downs.

AIG agreed to give Sullivan $47 million in compensation in June when he was replaced as CEO by AIG Chairman Robert Willumstad, according to Bloomberg News.

The insurer recently received credit lines of over $122 billion from the federal government. The company has already used nearly $83 billion, the Wall Street Journal reported.

"The American taxpayer is now supporting AIG, making the preservation of these taxpayer funds a vital obligation and a priority responsibility of your company," said Cuomo's letter to Edward Liddy, AIG's new chairman and CEO, according to Reuters.

Top CEOs of French bank Caisse d'Epargne resign

Tue, 21 Oct 2008 18:32:56 +0000

Groupe Caisse d'Epargne, third largest French consumer banking network has ousted its chairman and CEO after suffering a nearly €695 million ($931 million) trading loss on Oct 6.

Charles Milhaud, chairman of the management board, will be replaced by Bernard Comolet, while Alain Lemaire will become CEO, replacing Nicolas Merindol, Caisse d'Epargne said on Monday in an e-mailed statement.

Both Comolet and Lemaire are already at the group. Comolet is the head of the Caisse d'Epargne dealing with the Paris region, while Lemaire runs the Caisse d'Epargne branch dealing with the Provence-Alpes-Corse region.

The supervisory board of Caisse d'Epargne also accepted the resignation of Julien
Carmona, head of finance, the Paris-based lender said.

"This loss is the consequence at the same time of markets' exceptional volatility, and of the violation of instructions that the board and myself had given," Mr Milhaud, aged 65, said in a separate statement.

"Nevertheless, I take entire responsibility for it," he said, adding that he is asking for no golden parachute.

This abysmal loss seems to be attributed to a team of three traders who, after exceeding authorized limits on size and risk, bet on a rebound of stock markets just before the latter brutally crumbled on the 6^{th of October, declared French newspaper Le Figaro.}

The latest French banking turmoil, said by President Sarkozy to show an "absence of responsibility" at the bank, comes about nine months after Societe Generale SA suffered a €4.9 billion ($6.5 billion) loss, in late January, from unauthorized bets by trader Jerome Kerviel, prompting risk-management questions.

The worst week on record for European stock markets drove Caisse d'Epargne's trading losses.

A decision of Caisse d'Epargne's management board earlier this year to stop proprietary trading had not been implemented, Milhaud told French newspaper Le Journal du Dimanche on Sunday.

Mr Milhaud said he was informed on October 13th of a deficit of about $134 million, according to the same newspaper.

Bailed out AIG Executives blow $442,000 in California retreat

Fri, 17 Oct 2008 08:13:08 +0000

After a $85 billion federal bailout, you might be tempted to hold a retreat in an exclusive California resort, and that’s what American International Group executives did.

Recently, the committee on Oversight and Government Reform held a hearing to investigate the world’s largest insurance company meltdown. The committee aimed at discussing the regulatory mistakes and financial excesses that paved the way to AIG’s federal bailout.

One of the key item discussed was AIG’s spending of no less than $442,000 for a corporate retreat at the ST. Regis Monarch Beach resort in Dana Point, California, south of Los Angeles. This original amount was spent on Sept. 22, a week after the Federal Reserve attributed an $85 billion emergency loan to AIG in order to keep the company afloat, avoiding bankruptcy due to insurance liabilities.

The receipt from the St. Regis resort revealed that the eight-day company retreat was extravagant. Indeed, about $139,000 was spent on hotel rooms, and a staggering $147,000 was spent on banquets. Another $23,400 was spent on undisclosed spa treatments and another $6,950 was spent on the golf course. Don’t forget the $10,000 spent on room service, food and cocktails at the hotel lounge.

Following these revelations, AIG issued a statement saying that "This type of gathering is standard practice in the industry and was planned a year advance of the Federal Reserve’s loan to AIG. We recognize, however, that even activities that have long been considered standard practice may be perceived negatively. As a result, we are re-evaluating various aspects of our operations in light of the new times in which we operate."

Still according to the statement, AIG claims that the event was held by an insurance subsidiary, not AIG executives. The participants were independent life insurance agents who were "top business producers" for AIG. Only about 10% of participants were AIG American General employees, and no corporate executives from AIG headquarters attended the retreat, according to the statement.

Still one can wonder if this expenditure could not have been scaled back in the light of the company’s Federal bailout.

Dexia’s CEO, Axel Miller, will not seek golden parachute

Fri, 10 Oct 2008 08:46:30 +0000

Axel Miller, the leaving CEO of Dexia, the Franco-Belgian bank rescued from final collapse earlier this month, guaranteed he will not ask for a pay-off when he quits the company.

As developed in a previous article, Dexia became, after Fortis, the second Belgium lender to be bailed out by European authorities, and was rescued by a $8.9 billion cash injection from three different governments earlier this month.

Axel Miller declared: "Following my decision to resign as CEO, I have also decided that I will not ask for payment of any end-of-contract indemnities."

"I shall leave it to the board of directors at the end of the work with which they have entrusted me to determine all matters relating to my actions with the Dexia group."

He resigned after the Governments of France, Belgium and Luxemburg vowed $8.9 billion to sustain the local government lender, which has retail banking unit with more than 5 million customers.

Dexia’s near meltdown came the day after the partial nationalisation of the Dutch-Belgian bank, Fortis.

According to his contract, Axel Miller was supposed to leave the fallen company with a $5.2 million golden handshake.

Steve Ballmer and Microsoft bet on Paris to reinforce Research Department

Thu, 09 Oct 2008 22:31:56 +0000

Software Giant is to open three Internet search technology centers, in Paris, London and Munich.

Microsoft CEO admits it himself: "We are the challenger, not the leader in search. But there is so much room for innovation". It is true that with a 10% share of the market, Live Search, Microsoft’s search engine, is not succeeding in competing with Google which reigns with a 70% share over this highly lucrative industry.

Microsoft has decided to play hardball in order to catch on Google on the Internet industry. Steve Ballmer, Bill Gates’ successor at the top of the software giant, announced that the company was about to invest in three European countries in order to boost its search engine: France, United Kingdom and Germany. The American company will open a European high tech centre entirely dedicated to Internet searches, an activity that gathers almost half of the web’s worldwide advertisement investments.
Grand opening in 2009

Next spring, this three-headed technology center should employ about a hundred engineers and "several hundreds" in the years to come , declared Steve Ballmer in the presence of French Finance Secretary, Christine Lagarde.

Ballmer, who refused to unveil the amount of this investment, insisted in reminding how important Europe is to Microsoft: "It represents more than 13,000 employees and a third of our general income. Outside the USA, Europe is on top concerning our investments in the Research and Development field, followed by China and India", stressed Microsoft CEO.

The company might in a second time enlarge its technology center of excellence to other countries which candidacies have been rejected. Especially as Microsoft has understood that the Search market was not global but local. "We have noticed that in China, Japan and South Korea, the local researchers recruitment had led us to improve our performances", declared Jordi Ribas, European Excellence Center Director. "Searches must largely relate to local culture and language in order to be relevant".

Dexia CEO’s golden parachute is sparking off fierce debate

Thu, 02 Oct 2008 21:03:37 +0000

The debate did not take more than twenty-four hours before hitting the fan. According to his contract, the Franco-Belgian Bank Dexia’s CEO, Axel Miller, who resigned while the bank was being bailed out by French and Belgian’s government, is said to be leaving the company with a €3.7 million ($5.2 million) golden handshake.

It’s already creating quite a stir within the French government as Finance Secretary Christine Lagarde said “she shall be very careful on this matter,” to French newspaper Le Figaro. She added that she is “opposed to any golden parachute reward in a case of a company failure.” French government spokesperson, Luc Chatel, declared that he had asked the French Public and Investment Organization, a major Dexia shareholder, to veto both leaving CEOs’ compensations (Axel Miller and Pierre Richard). In addition, Luc Chatel added that the French Representatives House will vote “in the coming weeks,” an amendment preventing oversized golden parachutes.

Miller himself confirmed on Tuesday evening on FTBF, a Belgian national television, that he was against the idea of golden handshakes (parachutes) when they were unmerited. But in his case it was "different."

"As far as my situation is concerned the practice is not unmerited, as nobody has told me it's unmerited," he said.

$3 billion shared in between five Wall Street bosses

Tue, 30 Sep 2008 21:44:21 +0000

Between 2003 and 2007, five high profile US fund banks' CEOs (Goldman Sachs' Lloyd Blankfein, Morgan Stanley's John Mack, Lehman Brothers' Richard Fudd, Merrill Lynch's Stanley O'Neal, Bear Stearns' James Cayne) received record breaking pays that are sparking off fierce debate.

The big five houses' bosses - the five US fund banks of which only two, Goldman Sachs and Morgan Stanley are still afloat - shared between themselves no less than $3.1 billion in pays within the five years preceding the Wall Street meltdown, according to a study led by Bloomberg agency.

An amount that needs to be compared with the $1.7 billion that Barclays paid in order to take over Lehman Brothers' US operational infrastructure a fortnight ago, or compared with the $2 billion that JPMorgan paid for the Bear Stearns takeover in March.

Stanley O'Neal, Merrill Lynch CEO (taken over by Bank of America two weeks ago) between 2003 and 2007, received $172 million and his successor John Thain, who arrived in December, took $85 million. A part of this package were stock-options that vanished into thin air when the fund banks' stocks went down at the NYSE.

50% of profits redistributed

The 185,000 employees of these five high profile banks were not forgotten: they received $66 billion (including $39 billion in bonuses) last year alone, that is $353,000 apiece. It represents with more or less 50% of the profits, the highest redistribution ratio in all sectors of the economy taken together.

These astronomical figures emerge in the midst of the efforts made in Washington to pass a $700 billion bailout plan in order to rescue the US bank system, in which was included an amendment limiting banks' CEOs salaries who would call for State aid. For Democrat Senator Chris Dodd, "the authors of this calamity must not walk away with bonuses". Presidential candidates, Barack Obama and John McCain, as well as President Bush, have backed a salary limitation and golden parachutes abolition. At first, hostile to such measures, Henry Paulson at the origin of the bailout plan, finally gave in. "Americans are angry at the excesses. They're angry at executive compensations and they're right" admitted Paulson to CBS News. He personally made $111 million when he was at the head of Goldman Sachs between 2001 and 2006.

The average income of the 500 biggest American companies' top executives reached $10,5 million last year, i.e. 344 times the average national median income. In the 1970's, this ratio was barely reaching 35 times.

Paulson Accepts Limits on C.E.O. Pay: Report

Wed, 24 Sep 2008 21:31:04 +0000

Treasury Secretary Henry Paulson Wednesday agreed to accept executive pay limits for the C.E.O.s of Wall Street firms slated to benefit from the $700 billion bailout initiative winding through Congress, according to several reports.

The Treasury Department, though, denied such a deal was in place. President Bush was scheduled to address the nation on the bailout plan Wednesday night.

Republican presidential candidate John McCain, meanwhile, flanked by former Massachusetts Gov. Mitt Romney earlier Wednesday, joined the chorus of critics calling for a plan that emphasizes greater C.E.O. accountability and curtails rich C.E.O. payouts for floundering companies.

"The senior executives of any firm that is bailed out by Treasury should not be making more than the highest-paid government official," said McCain, according to the Associated Press.

Below is a look at the 2007 compensation packages received by the C.E.O.'s of the major banks at the heart of the U.S. financial fiasco, provided by the East Bay Business Times.

• Lehman Brothers C.E.O. Richard Fuld made $34 million in 2007. Lehman filed for bankruptcy protection mid-September.
• Goldman Sachs paid C.E.O. Lloyd Blankfein $70 million last year. Co-Chief Operating Officers Gary Cohn and Jon Winkereid took home $72.5 million and $71 million, respectively.
• American International Group C.E.O. Martin Sullivan received $14 million in 2007. He was ousted in June. The insurance titan is due to receive an $85 billion bailout from the federal government.
• Merrill Lynch chief executive John Thain was paid $17 million in salary, bonuses and stock options in 2007. Merrill is being acquired by Bank of America Corp.
• JP Morgan Chase & Co. C.E.O. James Dimon earned $28 million in 2007. Chase acquired troubled investment house Bear Stearns earlier this year.
• Fannie Mae C.E.O. Daniel Mudd received $11.6 million in 2007, while Freddie Mac C.E.O. Richard Syron, brought in $18 million. The federal government will take over the mortgage backers with Herbert Allison to serve as Fannie CEO and David Moffett the new CEO at Freddie.

David Moffett, New Freddie Mac CEO, to be paid $900,000 salary

Wed, 24 Sep 2008 12:54:09 +0000

The bailed out lender's new CEO, David Moffett, is to receive base pay that is 25% lower than his predecessor.

Freddie Mac, the mortgage finance company, says its new chief executive will earn a base salary of $900,000 a year, 25% less than his predecessor, Richard Syron, who also received important bonuses and stock options.

The company, seized along with sister lender Fannie May by the government on September 8th, declared in a regulatory form that new CEO David Moffett will earn the salary while his final compensation package is to be later determined by the Federal Housing Finance Agency, both controlling Freddie Mac and Fannie Mae.

David Moffett, ex US Bancorp vice chairman, took duty in Freddie Mac earlier this month after his predecessor Richard Syron was ousted as part of the government's emergency takeover.

As read in a previous CEO-Watch article, Richard Syron received a jolly $19.8 million in compensation from his former company Freddie Mac, including a $1.2 million salary, a $3.5 million bonus and $771,585 in diverse compensations. Beside this, he also was given stock and options valued by the company at $14.3 million at the time they were awarded.

Dupont Names Kullman C.E.O.

Tue, 23 Sep 2008 23:15:08 +0000

Dupont Co., the third largest U.S. chemical company, announced that Ellen Kullman will take over as chief executive officer from Charles Holliday starting January 1, 2009

The board also named Kullman president and director of Dupont, effective October 1, 2008.

"I think it's a savvy move," Gene Pisasale, of PNC Capital Advisors in Baltimore, told Bloomberg News. "Having a woman as a C.E.O. of a major chemical company will be quite interesting because many of the products they sell are bought by women."

Kullman will eventually take over Holliday's position as chairman as well.

Kullman, an executive vice president at the chemical maker, has been groomed for the C.E.O. position for years, analysts say, and announcement of promotion came with little surprise.

"This gets the succession planning sorted out," HSBC analyst Hassan Ahmed told Reuters. "Its a good move to bring in Ellen, considering that she is already running most of the segments of the company."

"Having transformed the company, increased our profitability and returns, and developed a talented and strong next generation of leaders, now is the right time to make a seamless transition to new leadership," added Holliday in a statement published by the Associated Press.

Kullman joined Dupont in 1988 from General Electric. From 2002 to 2006, she served as group vice president of Dupont's safety and protection unit. Revenue during her tenure there increased from $3.5 billion to $5.5 billion.

Kullman will become the 19th chief executive officer of the 206-year-old chemical maker based in Wilmington, Delaware, according to AP.

Holliday, 60, ran Dupont for 10 years.

Washington: Slash C.E.O. Pay with Bailout Bill

Mon, 22 Sep 2008 21:04:23 +0000

Republicans and Democrats are calling for strong oversight of the federal government's $700 billion bailout plan for Wall Street, adding the initiative must set limits on compensation packages for the chief executives of financial institutions rescued by Washington.

Republican presidential candidate John McCain called for setting strict limits on C.E.O. compensation during the weekend.

"No CEO of any corporation or business that is bailed out by us, that is rescued by American tax dollars, should receive any more than the highest paid person in the federal government," said McCain, according to Reuters.

Added House Speaker, Nancy Pelosi: "We will not simply hand over a $700 billion blank check to Wall Street,"

The U.S. Treasury would force financial institutions with troubled assets to "meet appropriate standards for executive compensation," under a proposal drafted by House Democrats, the Washington Post reported over the weekend. The proposal would also include a ban on incentives that encourage chief executives to take excessive risks and the ability to rescind bonuses, the paper added.

Christopher Dodd, chairman of the Senate Banking Committee, is circulating a plan that will most likely clash with the initiative proposed by the Bush Administration. The plan, according to the Wall Street Journal, would limit executive compensation "to exclude incentives for executives to take risks that the Secretary deems to be inappropriate or excessive."

And Democrat Barney Frank, chairman of the House Financial Services Committee, said he has started drafting additions to the Bush Administration's bailout plan.

"There are going to be federal tax dollars buying up some of the bad paper," said Frank, according to a New York Times report. "They should accept some compensation guidelines, particularly to get rid of the perverse incentives where it's 'heads I win, tails I break even.' "

Democrats have said they will push for an economic stimulus initiative, one that includes middle class homeowner protections, as part of the $700,000 bailout plan, or as part of a future Congressional budget resolution.

Virgin CEO Richard Branson ready to buy Gatwick Airport in London

Fri, 19 Sep 2008 16:16:46 +0000

According to the Associated Press, Virgin Atlantic chairman Sir Richard Branson showed an interest in acquiring Gatwick Airport.

London Gatwick is not officially yet for sale but the Competition Commission lately recommended that the British Airports Authority, which presently owns the premises, should sell the Sussex airport along with two other airports from its seven-sites portfolio in order to improve competition in the London airport market in particular, and in the British market to a larger extent.

Indeed, BAA, owned by Spanish conglomerate Ferrovial since 2006, has been also criticized for its poor management in London airports. The Commission considered that the customer service offered by BAA in its seven premises was waning due to the company’s monopoly.

Now, Richard Branson says that his Virgin group would be definitely interested in bidding for Gatwick when it comes up for sale. He added: "We are open to being courted by anyone who is interested in bidding".

London Gatwick is valued somewhere between $3.6 and $5 billion, and according to the Daily Telegraph, Richard Branson has apparently been in intensive discussions with several potential partners to raise the funds necessary for a bid.

Branson said: "It now looks as though they are going to break up the British Airports Authority and so they should. For the last few years BAA have been an absolute embarrassment".

Although the Commission does not have the power to force BAA to sell, it is serious to believe that when the Commission hands over its final report next year, it will recommend that Gatwick is sold off.

But Richard Branson is one among others who have showed an interest in acquiring London’s second major airport. Australian company Macquarie Airports (owing Birmingham, Bristol and Sydney Airports) as well as the Manchester Airports Group (owning Manchester, East Midlands and Bournemouth airports) and Aeroports de Paris are also said to be monitoring the situation.

Auto Industry C.E.O.'s Lobby for Loans

Thu, 18 Sep 2008 21:07:20 +0000

The chief executives of three U.S. auto giants asked House Speaker Nancy Pelosi Wednesday to fund a $25 billion loan program that would allow their companies to modernize plants and fight off a freefalling economy.

Robert Nardelli of Chrysler LLC., G.M. C.E.O. Rick Wagoner, and Ford chief executive Alan Mulally said in a letter addressed to Pelosi that the credit crunch, rising commodity prices, and increasing gas prices had resulted in sluggish sales.

"The potential adverse effects of the above combination of factors–factors outside our direct control–have the potential to severely impact tens of thousands of employees and have a lasting effect on industrial production in the U.S.," wrote the chief executives in the letter, according to the Associated Press.

The three C.E.O.'s met with Pelosi for 45 minutes Wednesday and emerged from their meeting with an optimistic outlook. Pelosi said the House will consider the funding as part of an upcoming budget resolution.

"The support that we got was again very encouraging," said Chrysler's Nardelli, according to a New York Times report. "The conversations I have had all day on the Hill have been very encouraging, very candid, very straightforward and so as we conclude the day, I would say it was successful."

Congress authorized the loan program in its 2007 energy bill–but kept from funding it–in an effort to aid the auto industry meet new fuel-efficiency standards.

Despite criticism that the program amounts to another government bailout, Congressional leaders have signaled that they favor helping automakers.

"It's incumbent on them [automakers] to make the case to Congress that it is a loan guarantee, that it is a wise investment of taxpayer dollars, and I think that they are on the Hill this week making that case," said Representative Adam Putman of Florida, according to a Times report. "The reports that I have heard from my colleagues is that they have been fairly persuasive."

The government interest rate for the loans would be around 5 percent.

Fed Taps Liddy to Head A.I.G.

Wed, 17 Sep 2008 20:55:37 +0000

The Federal Reserve tapped former Allstate Corp. C.E.O. Edward Liddy to take charge of American International Group, as part of its $85 bailout plan to keep the colossal insurer from collapsing.

Liddy replaces Robert Willumstad, who took the helm of A.I.G. just three months ago. The Fed demanded that Liddy replace Willumstad as part of its historic loan, according to several reports.

Given A.I.G.'s $1 trillion in assets and 74 million clients in 130 countries, the Fed determined it needed to rescue the insurer to keep further shockwaves from rattling the global financial system.

A.I.G. has piled up $18 billion in losses during the last three quarters.

Liddy, 62, a partner at the private equity firm Clayton Dubliner & Rice, has won high praise for stewarding Allstate from 1999 to 2006. He is a "brilliant strategist," Robert Pike, a former chief administrative officer at Allstate, told Bloomberg News. "He's able to take an extraordinary amount of data and synthesize it, probably better than anybody I ever met," Pike added.

Before Allstate, Liddy served as chief financial officer for Sears Roebuck & Co. He joined Allstate in 1994 and oversaw Sears' spinoff of its Allstate segment.

"Ed Liddy led Allstate from being a typical average performance subsidiary of Sears to becoming one of the best- capitalized and best-managed insurers in the U.S.," Cliff Gallant, an analyst at KBW Inc. told Bloomberg News. "He is known for integrity and strong leadership."

Liddy is a director of Goldman Sachs, Boeing Co., and 3M Co., according to a Chicago Tribune report. He has an undergraduate degree from Catholic University of America and an M.B.A. from George Washington University.

Merrill CEO Stands to Collect Big Payout

Tue, 16 Sep 2008 22:39:28 +0000

Merrill Lynch CEO John Thain stands to receive $11 million from restricted stock options when the sale of his bank to Bank of America is completed, according to several reports.

Thain's total stock compensation depends on the value of Bank of America when the deal is finalized, probably in early 2009.

Thain earns an annual salary of $750,000, in addition to a $15 million signing bonus he received in December 2007. Additionally, Thain received 46,000 restricted shares when he arrived at Merrill, according to Dow Jones.

Merrill shares were trading at $17 before announcement of the sale to Bank of America, down from $56 a share when Thain was hired in 2007.

Despite the precipitous fall of Merrill shares, analysts have praised Thain for keeping Merrill Lynch afloat and quickly striking a deal with Bank of America, something Thain's counterpart at Lehman Brothers, Richard Fuld, was not able to achieve.

"Thain did the right things and succeeded in keeping that business together and maintaining a lot of value," Steven Kaplan, of University of Chicago's Graduate School of Business, told the Wall Street Journal. "It's not the outcome he would have preferred...[but] certainly it's a much better outcome than Lehman."

Analysts may be heaping praise on Thain but Merrill shareholders may have trouble mustering similar enthusiasm for the company's executive payouts, especially given Merrill's freefalling stock.

Writedowns and devalued mortgage holdings have sent Merrill's stock on a nosedive, as shares have fallen 70 percent this year.

"Investors will definitely be disappointed," Richard Bove, an analyst at Ladenburg Thalmann & Co., told Bloomberg News. "Thain's claim to fame here is that he kept them from going bankrupt."

CEO Lewis Touts Merrill Move

Mon, 15 Sep 2008 21:32:39 +0000

Bank of America CEO Kenneth Lewis Monday touted his bank’s deal to acquire storied Merrill Lynch, despite a financial system he described as “under almost unprecedented stress.”

Lewis’ announcement of the deal came amid an epically grim day on Wall Street, as the U.S. financial system strained to absorb the economic shockwaves unleashed Sunday when Lehman Brothers filed for bankruptcy, Bank of America began moves to purchase Merrill Lynch and American International Group searched for an economic lifeline.

The Dow reacted to the turmoil by dropping 4.4 percent, or 504 points.

Lewis said he plans to buy Merrill in a $50 billion, all-stock transaction. Bank of America, already the nation’s largest retail bank, would become the largest U.S. brokerage with the addition of Merrill, which employs 20,000 financial advisors and has $2.5 trillion of client assets, according to Reuters.

Bank of America is the nation’s largest bank by market value, with roughly $154 billion.

In addition to it’s sizeable brokerage division, Merrill would give Bank of America a large investment bank. The bank would also acquire one half stake of the asset manager BlackRock Inc. with the transaction, Reuters reported.

“This creates the company it would have taken a decade to build,” said Lewis during a conference call with investors, according to Reuters.

Lewis expects the Merrill deal to be completed in 2009, he told investors, adding that it would reduce earnings per share by 3 percent next year, Dow Jones reported. Lewis expects Bank of America to break even by 2010.

The deal comes just a few months after Bank of America purchased Countrywide Financial for $2.5 billion.

American Apparel CEO Praises Economic Milestones

Mon, 15 Sep 2008 21:28:01 +0000

Dov Charney, C.E.O. of retail giant American Apparel, announced the achievement of economic milestones during a recent press conference in Los Angeles.

American Apparel, owner of the nation's largest garment factory, topped a worldwide employment figure of 10,000, said Charney. The company has hired roughly 3,500 employees so far in 2008, he added, including 2,500 manufacturing hires at American Apparel's Los Angeles facilities.

"I am very pleased by the rapid expansion of American Apparel this year, the continued momentum our business is enjoying worldwide, and the important investments we have made this year to position the company for future growth and profitability" said Charney, according to Business Wire. "We have welcomed a large number of new employees into the American Apparel family this year, and by so doing have made it possible for them to earn a decent livelihood for themselves and their families."

Los Angeles Mayor Antonio Villaraigosa, who attended the press conference to announce the kick-off of his economic stimulus plan, which hopes to create 100,000 Los Angeles-based jobs by 2010, said: "Over the past number of years, American Apparel has played an important role in the revitalization of downtown Los Angeles and has created thousands of jobs in the process," said Charney, Business Wire reported. "With the jobs that American Apparel has created so far this year, we are well on our way towards meeting my goal of creating 100,000 living wage jobs in Los Angeles by 2010."

Charney also announced American Apparel had completed the grant of roughly 1.9 million shares of the firm's common stock to its factory employees, worth approximately $18 million. The company will distribute another 800,000 shares in the near future, Charney added.

"I am particularly proud that so many of our long-standing manufacturing employees have become shareholders in American Apparel, which serves as recognition of their contributions to the company's success," said Charney, according to Business Wire. "Going forward they will now have a direct stake in American Apparel's financial success."

Mexican billionaire Carlos Slim acquires 6.4% Stake in New York Times

Fri, 12 Sep 2008 19:37:25 +0000

Mexican billionaire Carlos Slim and his family became yesterday one of the biggest shareholders of the American New York Times group, when they took a 6.4% stake in the company worth $127 million.

According to the Securities and Exchange Commission, who filed the purchase, that makes Slim the third largest outside shareholder in the New York Times.

Carlos Slim is best known for his telecommunication investments including Telefonos de Mexico and America Movil, the largest mobile phone company in Latin America.

Second richest man in the world, after Warren Buffet, with a net worth of $60 billion according to Forbes Magazine, Carlos Slim now holds 9.1 million shares of the group that publishes The New York Times and The Boston Globe.

This occurs a few months after Harbinger Capital Partners purchased almost 20% of the New York Times and Boston Globe, securing two seats on the board.

This purchase comes after a 20% drop in the stock this year.

The shares gained in trading today.

Arturo Elias Ayub, a spokesman for Slim declared in a telephone interview with Bloomberg TV: "It is a great company that has an attractive value today. The door is always open to assess whether we will buy more."

Fannie Mae and Freddie Mac ousted CEOs to share $23 million

Mon, 08 Sep 2008 19:20:14 +0000

Both top executives ousted from Fannie Mae and Freddie Mac, in the major federal bailout ever of the troubled mortgage lenders, will receive a combined payoff exceeding $23 million.

This move will surely enrage shareholders of the abyssal loss-making companies.

Daniel Mudd, disembarked from Fannie Mae, is expected to be given $9.3 million in pay and retirement benefits.

Richard Syron, the departing CEO of Freddie Mac, could leave the ship with a towering $14.1 million, under the terms of his contract.

Richard Syron’s greater payoff is due to a clause added to his contract last summer following the initial signs of the credit meltdown.

But following last night’s bailout by the government, it is too early to affirm that either executive will effectively receive the money.

Considering the 90% dropdown of both companies’ shares this year, US analysts consider that both Mudd and Syron were too slow to react to the sub-prime mortgage breakdown.

In response, two high-profile bankers tied to the Republican party will bear the Herculean mission to bail Fannie and Freddie out.

Herbert Allison, a 65 year-old veteran who served as finance chairman on John McCain’s unsuccessful 2000 presidential campaign, was named CEO of Washington-based Fannie Mae on Sunday. He formerly was president of Merrill Lynch and lately CEO of pension fund TIAA-CREF.

David Moffett, a 56 year-old former executive at Carlyle Group, the private equity firm, will lead Virginia-based Freddie Mac. He was most recently an executive with U.S. Bancorp.

But in answer to the treasure chest that both Mudd and Syron are taking back home, officials at the federal Housing Finance Agency, the primary regulator of Fannie Mae and Freddie Mac, declared that the pay of Mr Allson and Mr Moffet would be significantly lower than their predecessors.

Fannie Mae and Freddie Mac CEOs ousted

Mon, 08 Sep 2008 00:16:19 +0000

On Sunday, the U.S. government took control of major mortgage finance companies Fannie Mae and Freddie Mac, embarking on what could be it’s largest federal bailout ever, in an effort to support the sinking national housing market and avoid more global financial market turmoil.

The companies’ top executives were ousted. Fannie Mae’s CEO Daniel Mudd and Freddie Mac chief executive Richard Syron, were replaced in the process by Herb Allison, formerly with Merrill Lynch and pension fund TIAA-CREF and David Moffett, a former top official at US Bancorp.

Top officials were highly concerned with ever rising losses at the two companies, which own or guarantee almost half of the nation’s $12 trillion in outstanding home mortgage debt.

"Our economy and our markets will not recover until the bulk of this housing correction is behind us," U.S. Treasury Secretary Henry Paulson said in a White House communique. "Fannie Mae and Freddie Mac are critical to turning the corner on housing."

Both companies, publicly traded but serving as well a government mission to support housing, were placed in a conservatorship that allows their stock to keep trading but puts shareholders last in any claims.

The National Treasury is immediately going to take stakes of $1 billion in each company. Those stakes are expected to grow to get as large as $100 billion. The Treasury will also receive warrants to buy up to 79.9 percent of the common stock.

Federal Chairman Ben Bernanke fiercely supported the action in order to avoid a major financial meltdown. "These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets," he declared on Sunday.

Indian farmers drive Tata Motors’ Nano project to a halt

Thu, 04 Sep 2008 20:33:27 +0000

It is a hard blow to the Nano. The manufacturing of the tiny "revolutionary," less expensive car in the world ($2,500) is being stopped. "Tata motors has been constrained to suspend the construction and commissioning work at the Nano plant in Singur in view of the continued confrontation and agitation at the site," declared Ratan Tata’s spokesman yesterday in the Hindustan Times. The company also declared that it was looking at alternative sites.

The announcement came even as Mamata Banerjee, leader of the protests in Singur, agreed to talk with the state government and West Bengal Governor offered to mediate.

The statement could put more pressure on Mamata and force a solution to the vexed issue around acquisition of land.

The Tata Motors statement on suspension of work at the Singur unit, located 65 miles away from Calcutta, highlighted growing impatience on the company’s part. Ratan Tata had plans to hit the market, and especially the Indian lower middle class, with the Nano before Dussehra, a major bank holiday weekend in India starting on October the 9th.

Tata has invested some $350 million in this unit, in which 250,000 cars a year were expected to be manufactured.

The day Tata decided to produce the Nano in Singur in early 2008, a ferocious battle started. With on one side, the land-workers not willing to sell their lands, and on the other side West Bengal State willing to industrialized the area.

This project had the backing up of the middle class and of the high profile manufacturers of Calcutta, but the anger of the poor landowners found help in the opposition party Trinamool Congress. This party pushed the expropriated landowners to reclaim their land by blocking the plant.

After the statement, speaking to protesters outside the Nano factory, Mamata made a major climb down accepting the "land for land" theory. This is the first time the opposition party leader has moved from her stand that some 400 acres of land acquired for the project was not negotiable.

Nevertheless, "a detailed plan to relocate the plant and machinery to an alternate site is under preparation," the Tata statement continued. If that happens the company intends to relocate people who have been hired and trained at the Singur site, the statement said.

LVMH Bernard Arnault's first foray into luxury yachts

Tue, 02 Sep 2008 22:29:25 +0000

Bernard Arnault, CEO of LVMH Moët Hennessy Louis Vuitton, the largest luxury-goods maker, said on September the 2nd that he had agreed to buy Royal van Lent, a 160-year-old maker of custom-designed yachts from the Dutch investment company Egeria.

Royal van Lent, a Netherlands based company that has manufactured more than 800 yachts ever since its founding, designs and builds to order yachts over 50 meters, or 165 feet, a market that has grown 20 percent a year since 2000, Paris-based LVMH said in a statement. The companies did not disclose the exact financial terms but the French newspaper Les Echos (owned by LVMH) spoke of a "few hundreds of million euros' transaction".

The company's luxury yachts sell for an average of €30 million, or $44 million, each. These ships are reserved for the wealthiest clientele of the world. The group insists on the similarities between its existing brands like Vuitton or Moët & Chandon, and Royal van Lent: it’s a company producing handcrafted luxury goods and aiming at the same ultra select customers. Bernard Arnault's group will henceforth use its existing high profile customer network in mature and emerging countries to promote the growth of Royal van Lent.

Oracles' Ellison is Highest Paid CEO

Fri, 22 Aug 2008 21:15:30 +0000

Oracle Corp.'s Larry Ellison topped the list of the 10 highest-paid CEOs at Standard & Poor's 500 companies, with a fiscal 2008 pay package of $84.6 million, according to a new report.

Ellison's 2008 pay jumped 38 percent compared to the $61.2 pay package he received the previous year, according to the Associated Press. Annual pay totals are based on salary, bonuses, incentives and perks.

Oracle granted Ellison options valued at $71.4 million during 2008, which easily beat the stock option gains of other chief executives.

"In a year when stock prices are depressed for so many companies in the U.S., cases like this, where an executive realizes huge sums from the exercise of stock options, will probably be few and far between in 2008," said Alexander Cwirko- Godycki, a research manager at Equilar, an executive compensation research firm, according to Dow Jones Newswires.

Ellison, Oracle's largest shareholder, recommended how much he should be paid, according to AP.

Ellison is the world's 14th richest person, with a net worth of roughly $25 billion, according to Forbes magazine.

Below is a list of the 10 highest-paid CEOs at S&P 500 companies for 2007.

1. Larry Ellison, Oracle Corp., $84.6 million

2. John Thain, Merrill Lynch & Co., $83.1 million

3. Leslie Moonves, CBS Corp., $67.6 million

4. Richard Adkerson, Freeport-McMoran Copper & Gold Inc., $65.3 million

5. Bob Simpson, XTO Energy Inc., $56.6 million

6. Lloyd Blankfein, Goldman Sachs Group Inc., $54.0 million

7. Kenneth Chenault, American Express Co., $51.7 million

8. Eugene Isenberg, Nabors Industries Ltd., $44.6 million

9. John Mack, Morgan Stanley, $41.7 million

10. Glenn Murphy, Gap Inc., $39.1 million

-List provided by AP.

First Marblehead Replaces CEO

Tue, 19 Aug 2008 23:47:28 +0000

The student finance firm First Marblehead Corp. saw its stock skyrocket Monday after it completed an investment with Goldman Sachs Group and announced that Daniel Myers, the company's co-founder and former chief executive, would return to the CEO post.

A $132 million investment from Goldman Sachs saw First Marblehead shares rise 71 percent in trading, the company's highest jump in five years.

Meyers, who co-founded the Boston-based student loan company in 1992, will replace Jack Kopnisky as chief executive on September 1. Meyers stepped down from First Marblehead in 2005 after the company learned he spend $32,000 of his own money on lavish gifts for an executive at Bank of America, according to the Boston Globe.

But yesterday, the board welcomed Meyers back as the ideal CEO to guide First Marblehead through the capital markets crisis that resulted in 500 layoffs at the firm in May.

"We believe there is no better person now to lead First Marblehead than our cofounder Dan Meyers," said lead director William Berkley, according to the Globe.

Goldman's private equity unit, GS Capital Partners, invested the $132 million yesterday, which is in addition to $59.9 million Goldman invested in First Marblehead in December. With the investment, GS Capital Partners owns a little over 13 percent of First Marblehead.

Despite the one-day spike in First Marblehead stock, shares have fallen 66 percent this year due to reduced demand for the firm's securities backed by student loans, according to Bloomberg News. The firm reported a fiscal fourth-quarter loss of roughly $57 million this year, compared to a $78 million gain during the fourth quarter of 2007.

Shareholder Support of “Say on Pay” Growing

Tue, 19 Aug 2008 00:54:17 +0000

Shareholder support for advisory votes on executive compensation is growing, albeit modestly, at U.S. corporations, according to a recently released report.

Median shareholder votes for “Say on Pay” rose to 42 percent in 2008 from 41 percent in 2007, according to The Corporate Library, an executive compensation research firm, which based its study on 76 proposals that have come in so far this year.

Say on Pay, nonetheless, lost support at eight financials institutions, Citigroup, Wachovia, Merrill Lynch and Wells Fargo.

Some of these banks, the study noted, had new CEOs and CEO compensation had decreased.

“It is possible that these facts have played a role in the decreased shareholder support for “say on pay” at these financial institutions,” said Damion Rallis, a research associate at The Corporate Library and author of the report.

But some big name companies have agreed to adopt Say on Pay.

Verizon Communications and Blockbuster Inc., among a handful of other companies, will give investors a nonbinding vote in executive pay early next year. The moves follow an unprecedented advisory vote in May by shareholders at insurance giant Aflac, the first for a U.S. company. Investors approved CEO Dan Amos’ $14.8 million compensation in 2007 after company shares reached record highs, according to the Associated Press.

The recent Say on Pay initiatives come as Congress considers legislation that would allow investors to weigh in on executive compensation. A bill that would do just that, proposed by Rep. Barney Frank, is awaiting a Senate vote after approval by the House of Representatives.

Increasing interest in executive compensation is driven by a need for greater accountability, some analysts say.

CEOs today make 400 times the salary of the average worker, compared with 40 times as much in 1980, according to the liberal research group The Institute for Policy Studies.

CEOs Exiting Position Prematurely: Study

Tue, 19 Aug 2008 00:50:48 +0000

A growing number of chief executives are exiting their positions prematurely, according to a new study.

In a survey of 184 publicly traded firms – among them are oil giants like Shell Oil Co. and Texaco Inc. – 27 percent of CEOs left their positions within three years.

The rapid dismissals may be due to what the study refers to as “information asymmetry,” circumstances where one party knows less inside information than the other, which can result in the board of directors making a faulty hire, according to Yan Zhang author of the study at Rice University’s Jesse Jones Graduate School of Management.

A lack of knowledge about a candidate’s competencies can result in faulty hires, for example, the study notes.

The origin of a new CEO is vital to the equation – whether he or she was an internal or outside hire – because internal candidates are chief financial officers or executive vice presidents and familiar with firm’s modus operandi, the study adds.

“They would have had numerous opportunities to interact with the board members,” said Zhang. “The board has a great opportunity to know inside candidates, thus reducing information asymmetry between the board and inside candidates.”

It seems hiring external CEOs can be not only risky, but also expensive.

Another recent study found that chief executives hired externally at Standard & Poor’s 500 companies received a median total compensation package of $12.2 million, compared to median compensation of $6.9 million for internally hired CEOs.

The study by Equilar, an executive compensation research firm, looked at nearly 1,300 large, medium and small companies and found compensation disparities between external and internal CEOs across the board.

The Rice study looked at CEO successions between 1993 and 1998 at 184 publicly traded firms with annual revenue of more than $100 million.

GE's Immelt on Financial Deals, China Investments

Tue, 19 Aug 2008 00:37:22 +0000

General Electric will dive into the turbulent financial services industry, said chairman and CEO Jeff Immelt during a wide ranging interview from the Beijing Games, adding that he expects GE to double its business in China by 2010 to $10 billion a year.

"We're going to do deals right now in financial services that will fuel earnings for years," Immelt told CNBC's Carl Quintanilla in Beijing. "If you've got some cash, if you have a strong balance sheet, this is as good of a time you're going to see."

Although earnings are down almost 10 percent at is financial services unit, which provides 45 percent of GE profits, Immelt said GE has navigated choppy waters fairly well and that depressed asset prices would provide incentive to invest in some "great deals."

"Some of the best opportunities we've seen in the last 10 years we're seeing right now. Assets are cheap," said Immelt, according to the Associated Press. "In financial services, sometimes bad news is good news. You'll see some great deals done in this cycle, and we'll do some of them."

Immelt expressed delight with GE's revenues from the Beijing Olympics – $700 million from the sale of power and equipment for sports venues and $700 million in advertising from GE's NBC television network, the American broadcaster of the games. NBC Universal paid $900 million to broadcast the games.

Despite pressure from some shareholders to sell NBC Universal, Immelt said GE had no plans to sell its media unit.

"I always say, look, it's a good business. We run it well," said Immelt, according to AP.

Immelt said he expects GE to double its business in China within a few years, growth spurred by China's drive to improve energy efficiency and clean up the environment. China's investment in infrastructure will also boost GE's bottom line, Immelt added.

"We've seen great growth in China," Immelt told AP. "I think the whole focus on water and the environment, that's going to offer, we think, big opportunities for us as time goes on."

GE has 12,000 workers and one of its four research and development centers in China.

Calpine Corp. Names New CEO

Wed, 13 Aug 2008 20:51:02 +0000

Power producing giant Calpine Corp. named former Texas Genco chief executive Jack Fusco its new president and CEO, replacing Robert May, who had been CEO since December 2005.

Calpine, the largest U.S. producer of electricity fueled by natural gas, posted a net income of $197 million, or 41 cents per share, during the second quarter of 2008, compared to a net loss of $500 million during the same quarter in 2007.

Fusco takes the reigns after May guided Calpine through bankruptcy.

In May, the Calpine board rejected a $9.32 billion takeover bid from coal and nuclear power producer NRG Energy, and Fusco's hiring may curtail speculation on Calpine's status as a stand-along firm, according to a Reuters report.

Fusco said he was "eager to build on the positive momentum to improve our operating efficiencies and to implement a strategy for Calpine's future growth," according to Reuters.

Calpine entered bankruptcy in December 2005 after natural gas costs skyrocketed and an overabundance of power kept electricity prices stagnant. May, considered a turnaround specialist, took control of Calpine and said he would retire once a replacement was found.

Fusco was the chief executive of Texas Genco, the state's second largest power producer, until NRG Energy bought it out. Previously, Fusco was an energy investment advisor to Texas Pacific Group, from 2002 to 2004.

United Pilots Call for CEO's Resignation

Tue, 12 Aug 2008 21:31:42 +0000

The United Airlines pilots union called for the resignation of UAL chairman and chief executive Glenn Tilton, underlining the airline's poor on-time performance and financial losses.

"Under Glenn Tilton's tenure, United has gone from being the finest airline in the world, with the best route structure and safety record, to a shell of its former self," said UAL Captain Steve Wallach in a statement, according to Reuters.

"It is time for Glenn Tilton to go," added Wallach.

Tilton has steered United through three year of reorganization under bankruptcy. During that span, he has reduced the airlines fleet by 19 percent and slashed 24,000 jobs.

The airline has continued to struggle with on-time performance, though. United, during the last 12 months, has the worst on-time arrival rate among major carriers, at 68 percent, according to Bloomberg News.

United Airlines said the union's call for Tilton's resignation was meant to serve as a distraction from a United lawsuit that accuses the labor group of misusing sick leave and other ploys to cancel flights. The airline says union tactics have resulted in 300 flight cancellations that have affected over 30,000 customers.

"This is an obvious and predictable attempt to deflect attention from ALPA's illegal activity cited in our lawsuit, which details the organized and concerted effort to harm our customers, our employees and our performance," UAL said in a statement, according to Reuters.

The world's second-largest airline, ailing from skyrocketing fuel costs that have plagued the entire industry, posted loses of $3.2 billion during the first half of 2008. And UAL stock has fallen roughly 70 percent since February 2006, when the carrier left bankruptcy.

The spat between the airline and its union intensified in July, when United announced it would eliminate 7,000 more jobs, including 950 pilots.

Jobs: iPhone Software Booming

Mon, 11 Aug 2008 22:51:48 +0000

What a month for Apple Inc.'s App Store.

Apple CEO Steve Jobs said users downloaded 60 million programs from the newly launched online software clearinghouse, according to a Wall Street Journal report.

About half of the downloaded programs were free, but Apple sold an average of $1 million per day in applications nonetheless, for a total of $30 million in sales during the stores opening month.

Jobs said he expects Apple to sell about $360 million a year at App Store if current revenue streams continue at a similar pace.

"This thing's going to crest a half a billion, soon," Jobs told the Journal. "Who knows, maybe it will be a $1 billion marketplace at some point in time."

"I've never seen anything like this in my career for software," Jobs added.

Apple keeps 30 percent of proceeds from the application sales, Jobs explained, while the software creators receive 70 percent. While Jobs doesn't expect Apple to make huge profits from Apps Store, he expects Apps Store will result in the sale of more iPhones and iPod touch devices.

Applications, added Jobs, are what differentiate Apple from competing cell phone companies in the years ahead.

"Phone differentiation used to be about radios and antennas and things like that," Jobs told the Journal. "We think, going forward, the phone of the future will be differentiated by software."

Monkeyball, a video game made by Sega Corp., was a best seller during App Store's opening month, selling 300,000 copies at $9.99 per copy. And Epocrates, maker of a free drug encyclopedia, also did well, as users downloaded 125,000 copies.

Some software developers, however, were not so happy.

Apple removed one application from its store, I Am Rich, which caused some developers to question Apple's capability to remove undesirable software.

Jobs defended the move as necessary to protect App Store from potentially malicious programs.

"Hopefully we never have to pull that lever," Jobs told the Journal, "but we would be irresponsible not to have a lever like that to pull."

Firms Pay More for External CEOs

Sat, 09 Aug 2008 23:17:26 +0000

Chief executives hired outside a company are paid significantly more than chief executives hired in-house, according to a new study.

CEOs hired externally at Standard & Poor's 500 companies, for example, received a median total compensation package of roughly $12.2 million in 2007, or 51 percent more than CEOs with at least two years of tenure, who recorded a median pay of approximately $8 million, according to a study by Equilar, an executive compensation research firm based in Redwood Shores, Calif.

Internally promoted CEOs made less than both groups, earning a median pay package of roughly $6.9 million.

"This study highlights the costs of poor succession planning by boards and senior executives," said Alexander Cwirko-Godycki, a research manager at Equilar. "When companies don't have a solid pool of internal candidates, they often pay extra to new executives by offering signing bonuses, large initial equity grants and make-whole payments."

The study looked at nearly 1.300 large, medium and small companies and found pay disparities across the board.

Small companies were most likely to hire from the outside, and CEOs for those companies benefited from the largest premium in pay, the study noted, receiving a pay package that was almost 80 percent higher than the median package for tenured CEOs at the same company.

Mid-sized companies, paying 10.2 percent more to externally hired chief executives, paid the smallest premium for outside talent.

In each three segments, companies with lowest performing figures where most likely to hire outside CEOs, the study concluded.

The study focused on CEOs hired between April 30, 2007 and March 31, 2008.

Large Gap in CEO Pay

Sat, 09 Aug 2008 23:13:37 +0000

Despite increasing public scrutiny of exorbitant CEO salaries, 2007 saw an increase in CEO pay at S&P 500 companies.

The median increase in CEO pay at S&P 500 firms was nearly 16 percent, compared to a median increase of 2 percent for CEOs at smaller companies, according to a study released by The Corporate Library, an independent research firm.

The median rate of increase in CEO pay at all the companies studied was 5 percent, less than half of the 2006 median increase, the study notes. But while there has been an overall slowdown of CEO pay increases, S&P 500 CEOs have been least affected.

“The median increase in annual compensation of just over 5 percent was driven largely by base salary rises and increases in the cost of benefits and perquisites,” said Paul Hodgson, a senior research associate at The Corporate Library and the author of the study. “Given the focus on perks, and the anecdotal evidence that many boards were set on reducing them, this comes as something of a surprise. Perhaps the high cost of jet fuel is driving costs up.”

The report surveyed 614 companies that filed a proxy statement in the first quarter of 2008.

Several other recent studies on CEO pay and bonuses point to similar increases at big corporations, despite Congressional hearings and shareholder scrutiny.

One Wall Street Journal/Hay Group study, which looked at performance-based salaries and compensation, noted a net income increase of 7.9 percent among CEOs at 200 companies with more than $5 billion in annual revenue.

From 2006 to 2007, the median annual salary and bonus for these CEOs increased 4.7 percent to $2.9 million.

Cisco Sales Rise, Beat Forecasts

Thu, 07 Aug 2008 15:17:23 +0000

Despite a lagging economy, Cisco Systems profits rose 4.4 percent in the fourth quarter from a year earlier, as CEO John Chambers announced he was "very comfortable" with the company's long-term growth target.

The nation's largest maker of networking equipment said its revenue increased 9.9 percent to $10.3 billion, reassuring investors that the San Jose-based company can boost sales despite harsh economic conditions.

"Given the weak economy, the results are very good," Jerome Dodson, chief executive officer of Parnassus Investments in San Francisco, told Bloomberg News. "The stock should be trading at a higher price."

Chambers predicted economic turmoil would soon begin to wane, but not without some challenging quarters ahead. Chambers added that he was comfortable with Cisco's long-term growth market.

"Our comfort level in terms of long-term growth of 12 to 17 percent hasn't changed at all," said Chambers, according to Bloomberg News. "If you watch our history over the last 15 years, we've been very predictable on our forecast and direction."

Chambers said two sectors that proved troublesome in 2007, the financial industry and multinational companies, showed signs of revival during the fourth quarter, according to a New York Times report.

Cisco's revenue gains were attributed to $8.64 billion in product sales, while sales of services accounted for $1.72 billion. Fourth quarter profit was 40 cents per share, compared to 31 cents per share during the fourth quarter of 2007.

"It's still a tough environment out there, but Cisco has delivered very strong results, with revenue exceeding $10 billion for the first time in the company's history," Mark Sue, an analyst at RBC Capital Markets, told the Times.

Friendster to Name New CEO

Tue, 05 Aug 2008 21:20:33 +0000

Pull Friendster out of the dumpster.

The social networking site overshadowed in the U.S. by Facebook Inc. and MySpace.com plans to name Richard Kimber its new chief executive.

Kimber was the regional managing director of Google in South Asia, where Friendster has witnessed a recent surge of visitors. A new $20 million investment round, led by the venture capital group IDG Ventures, aims to solidify Friendster's standing in the region.

Friendster's investment in Asia, with a strong presence in the Philippines and Singapore, has made it the region's top social networking site, outside of China, according to reports.

The firm grew from 45 million users in 2007 to 75 million this year, according to the Wall Street Journal, and more than 55 million of its users come from Asia.

"Friendster is growing at an enormous rate in Asia-Pacific and is clearly leading the competition," said Kimber in a statement published by CNET News. "I believe this is partly because the Internet is transforming the lives of everyone, and it will probably become one of the greatest liberators of our time. I look forward to growing our business further, as we continue our global growth and strong focus on Asia."

The San Francisco-based company has seen its dominance curtailed by Facebook and MySpace.com in recent years as technical problems and management shortfalls have stalled its progress.

But Friendster's steady expansion in Asia, including the translation of the site into several Asian languages, has recently seen it attract twice as many users as any other social networking site in the region – 33 million unique visitors per month.

Kimber will take over for Kent Lindstrom, who was the company's chief executive since 2006.

Motorola Names Jha co-CEO

Mon, 04 Aug 2008 21:07:36 +0000

Motorola Inc., the nation's largest mobile phone maker, named former Qualcomm executive Sanjay Jha co-Chief Executive Officer, tapping him to run the company's ailing wireless handset division.

Jha, who will share the CEO title with incumbent Greg Brown, will have the task of revamping Motorola's mobile devices division, which has seen its share of the market fall from 24 percent to 9.5 percent in the last two years. The wireless handset division has lost nearly $2 billion during that time.

"Sanjay's technical expertise and industry experience make him ideally suited to lead mobile devices," said Motorola Chairman David Dorman said in a statement, according to MarketWatch.

Motorola had spent months looking for an executive to run the division, which is will be spun off as a separate public company by mid-2009.

Brown had run the handset division for several months, taking over the job for Stu Reed, who left Motorola in March.

Jha joined Qualcomm in 1994 and was recently its CEO. Qualcomm CEO Paul Jacobs credited Jha with helping build the firm become a major player in the world of wireless technology.

"Sanjay's leadership has been instrumental in growing Qualcomm into the No. 1 wireless semiconductor supplier," said Jacobs in a statement, according to MarketWatch.

Before joining Qualcomm, Jha worked at San Diego-based BrookTree Corp. and London-based GEC Hirst Research Labs.

Former Bear Stearns CEO to Exit J.P. Morgan Chase

Thu, 31 Jul 2008 20:44:55 +0000

Former Bear Stearns chief executive Alan Schwartz will leave J.P. Morgan Chase at the end of August, according to an internal memo from J.P Morgan CEO Jamie Dimon.

After three decades at Bear Stearns, Schwartz was forced to sell the firm to J.P Morgan in March after speculation about the firm's liquidity forced investors to pull their cash. At that point the federal government stepped in to orchestrate the sale.

"With most of the work on the merger integration behind us, Alan will be moving on from the firm at the end of August to pursue other interests," said a memo signed by Dimon, according to an Associated Press report. "Despite the extremely difficult circumstances that brought our firms together, Alan has been a terrific and constructive partner through the process."

Analysts predicted Dimon would offer Schwartz a major role in its investment banking division, according to AP. But that speculation proved to be false.

"I am very proud to have been a part of Bear Stearns," Schwartz said in the memo, according to Bloomberg News. "It was a special place I know many of us will miss."

It has been rumored for that Schwartz is headed to buyout titan Kohlberg Kravis Roberts & Co., according to TheStreet.com. KKR founder Henry Kravis recently announced his plans to take the firm public.

Over 7,000 Bear Stearns employees lost their jobs when shareholders approved the government-led merger of Bear Stearns and J.P. Morgan in May.

Morgan Stanley Invests in New Hires

Thu, 31 Jul 2008 20:41:48 +0000

Morgan Stanley chief executive John Mack recently told associates that global economic turmoil, which has resulted in 75,000 job losses in the U.S. financial sector alone, represents a historic occasion to recruit employees.

After cutting 4,800 jobs earlier this year – or 10 percent of its workforce – Mack, it seems, is ready to seize that opportunity and go on a hiring binge, according to a Financial Times report.

With the roughly $1 billion Morgan Stanley saved via job cuts, Mack is ready to hire top bankers, traders and risk managers. Morgan Stanley employees told the Times that Mack has already spent about $400 million to that end.

They add that Mack could spend another $600 million on new recruits by year's end.

One high-profile hire is Luc Francois, the former head of equities at Societe Generale, who will head equity derivatives and European equities at Morgan Stanley.

"At Morgan Stanley Luc will help the firm build on its considerable momentum in equity derivatives, which is a key strategic focus for us," a bank spokesman said, according to a Reuters report.

And James Brown, the former Merrill Lynch head of commodities risk management, will anchor Morgan Stanley's global commodities risk, a newly created post.

The strategic hires are seen as a way for Morgan Stanley to reposition itself amidst an rapidly changing market jolted by the credit crunch.

"It's wise for banks with good financial positions to build up their teams opportunistically,'' Andy Mantel, managing director of Pacific Sun Investment Management Ltd. in Hong Kong, told Bloomberg News. "There will be lots of investment opportunities with all the market turmoil."

First Merrill. Who's Next?

Wed, 30 Jul 2008 20:31:18 +0000

After Merrill Lynch CEO John Thain shored up capital with an $8.5 billion share offering, analysts are wondering, who's next?

The troubled investment bank sold roughly $30 billion in collateralized debt obligations (C.D.O.s), or packaged mortgage securities, for $7 billion – a fire sale aimed at eliminating the company's most troubled assets and cleaning its balance sheet.

Take the losses and start over. Merrill shares subsequently rose 7.9 percent.

Now analysts say other troubled firms will follow suit.

"This is setting some sort of precedent for these prices," Stuart Plesser, an analyst with Standard & Poor's Equity Research, told the New York Times.

Citigroup, much like Merrill Lynch, exposed itself to mortgage securities. A Deutsche Bank analyst said the mark established by Thain might cost Citigroup up to $8 billion, according to a Times report. Other analysts estimate the possible Citigroup write-down will be closer to $6 billion.

Vikram Pandit, Citigroup's CEO, has recently expressed optimism about the value of the bank's CDO holdings. Citigroup has $22.5 billion of net exposure to C.D.O.s

"We expect peers will adjust marks (prices), eliminating an incentive to hold on to impaired assets," Kenneth Worthington, a J.P. Morgan analyst, said in a report, according to the Associated Press. "We see this a part of the cleansing process."

In addition to Citigroup, analysts say that J.P. Morgan Chase, Bank of America and Morgan Stanley, among others, could follow in Merrill's footsteps.

Merrill sold its C.D.O.s to Dallas-based Lone Star Funds, and agreed to lend the fund group roughly 75 percent of the purchase price.

Alcatel-Lucent CEO and Chairman to Quit

Tue, 29 Jul 2008 18:12:11 +0000

After six consecutive quarters of eroding profits, the telecommunications-equipment firm Alcatel-Lucent announced it would dump the two architects who orchestrated the company’s merger two years ago.

Alcatel-Lucent announced that Patricia Russo, the company’s chief executive, and chairman Serge Tchuruk will step down at the end of the year, as the telecom firm posted a second-quarter loss of $1.7 billion, a larger-than-expected drop.

The company has not posted a profitable quarter since it was created in November 2006, when U.S.-based Lucent Technologies merged with Alcatel of France.

“The merger phase is now behind us,” Mr. Tchuruk said in a press statement, the New York Times reported. “I am proud that Alcatel-Lucent has become a world leader in a technology which is transforming our society. It is now time that the company acquires a personality of its own, independent from its two predecessors. The board must also evolve and the chairman should give the first example, which I have decided to do.”

Shareholders had sharply criticized top directors at Alcatel-Lucent, which has seen its market capitalization cut in half since the merger. Additionally, the company’s shares have fallen 60 percent since last year, as shareholders grew increasingly impatient.

"These departures are not a total surprise," Alexander Peterc, an analyst at Exane, told Reuters. "It is a good thing that the company can now move forward and put behind it the differences between the Lucent parts and Alcatel side."

The sharp decline of Alcatel-Lucent’s CDMA network business accounted for $1.2 billion of the company’s massive quarterly writedowns, the company announced in a statement.

No immediate successors to Russo or Tchuruk have been announced, which has caused concern among analysts.

"I don't think it should be seen as good news," Thomas Langer, an analyst at WestLB, told the Wall Street Journal. "What you need in such difficult times is true leadership."

Kravis to Take KKR Public

Mon, 28 Jul 2008 23:54:33 +0000

Buyout king Henry Kravis announced late Sunday that he will take his private equity firm Kohlberg Kravis Roberts & Co. public on the New York Stock Exchange through a takeover of its Amsterdam-based investment firm KKR Private Equity Investors LP.

Kravis, who gained fame in 1989 when he orchestrated the $21.5 billion buyout of RJR Nabisco, said KKR & co.'s proposed merger will allow the buyout firm to expand during an ideal time to make acquisitions.

"For KKR, this transaction provides us with additional capital for our business," Kravis and co-founder George Roberts said in a statement, according to the Associated Press. "Moving forward with a public listing will allow KKR to do what we do best — grow companies around the world and produce solid returns for our investors from a larger platform and a deeper capital base."

Kravis said the initial public offering will provide the firm with currency and allow it to benefit from its recent investments in fixed-income businesses.

The new publicly traded firm would be valued between $12 and $15 billion, according to the Wall Street Journal. The value of the company will depend on how KKR Private Equity shares trade in the coming months. KKR would hold 79 percent of the newly formed company, while shareholders of KKR Private Equity would own 21 percent, according to KKR officials.

Kravis, who has spearheaded KKR's biggest buyouts and has built the public persona of an insular and somewhat cold mastermind, will now become a very C.E.O.

Kravis and Roberts started KKR in 1976. Besides its famous purchase of RJR Nabisco, the buyout firm gained notoriety for its deals for TXU Corp. and HCA Inc., according to AP.

Charles Schwab Names New C.E.O.

Fri, 25 Jul 2008 08:33:12 +0000

Bettinger, 47, will take over the San Francisco-based brokerage from founder Charles Schwab, who increased the company's value 158 percent since coming out of retirement and returning to the C.E.O. post in 2004.

Analysts have lauded Schwab for steering clear of the economic turmoil – and heavy losses – that have plagued its competitors.

"Our steady growth and financial strength are testaments to his skills," said Schwab, referring to Bettinger, according to MarketWatch.

Added Bettinger, in a written statement: "Chuck and I have worked closely over the years preparing for this transition, and we will continue to work closely together in our respective roles."

Over the past year, Schwab shares have spiked 14 percent as the credit crunch has plagued rivals like E*Trade Financial Corp. and Lehman Brothers Holdings Inc., who have seen their stock plummet by 82 percent and 70 percent respectively during the same time period, according to Bloomberg News.

"Charles Schwab is a guy who came back to the company when it was foundering after the Internet bubble burst and really led it to a new business model and has been knocking the cover off the ball," Adam Honore, an analyst at Aite Group LLC, told Bloomberg. "If Bettinger doesn't have a shake-things-up philosophy, the path is pretty well set for them."

Last week, Schwab reported that second-quarter profits grew by 1 percent, and yesterday the company announced that it increased its quarterly dividend by 20 percent, to 6 cents a share.

Bettinger, who has been a standout at Schwab for years, joined the company in 1995 when Schwab purchased The Hampton Co., a retirement services company Bettinger founded when he was 22.

Ford Posts Largest Quarterly Loss

Fri, 25 Jul 2008 08:25:23 +0000

The world's third-largest automaker announced a quarterly loss of $8.7 billion – a record – and unveiled plans for a revival.

The quarterly loss included $8 billion in pretax writedowns for plant closings. Ford has recorded six losing quarters during Mulally's 8-quarter stewardship of the company. The Detroit-based motor company reported a $750 net profit during last year's second quarter.

Mulally said Ford will convert three North American SUV factories to produce small cars. The motor company will also add fuel-efficient cars to the North American lineup, including six European small vehicles.

Mulally also announced that Ford will double its production of hybrid vehicles in 2009.

"We continue to take decisive action in response to the rapidly changing business environment," said Mulally in a statement, according to the Detroit Free Press. "Our European and South American operations are robust and profitable. We have momentum in Asia. And we are uniquely positioned to leverage our global assets and the global strength of the Ford brand to quickly bring more small, fuel-efficient vehicles to North America."

Ford surprised analysts by posting a $100 million first quarter profit, after having lost over $15 billion the previous two years. Recently, record gas prices have stalled the sales of its pick-up trucks and SUVs.

Sales of Ford's F-Series, for example, dropped 31 percent during the second quarter of 2008. Thus, Ford's new focus on small, fuel-efficient cars. Mulally, though, said he doesn't expect a U.S. economic turnaround until 2010.

"They believe this is a permanent shift in buyer sentiment that they have to adjust to no matter how hard it will be,'' Maryann Keller, an independent auto analyst, told Bloomberg News. "This is going to be expensive. The losses are going to be bigger during this transition.''

Wachovia Loses $8.9 Billion

Tue, 22 Jul 2008 22:40:24 +0000

Robert Steel's honeymoon as the new C.E.O. of Wachovia Corp. is officially and unequivocally over.

The nation's fourth largest bank reported a staggering $8.9 billion loss during the second quarter, adding that it will cut its dividend again and slash 6,350 jobs.

Overall revenues fell 14 percent, to $7.5 billion, at the Charlotte, North Carolina-based bank, which also announced it will end its wholesale mortgage operations.

"These bottom-line results are disappointing and unacceptable," said chairman Lanty Smith in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility."

Added Steel, who came on as C.E.O. on July 9: "In the short term, the entire organization is focused on protecting, preserving and generating capital; reinforcing Wachovia's strong liquidity position; and reducing risk."

Wachovia has plunged over 75 percent since former C.E.O. Kennedy Thompson spearheaded the bank's purchase of Golden West Financial Corp. in 2006 for $24 billion. The 2008 second-quarter losses include $936 million of losses from capital markets, a $975 million charge for tax treatment of leveraged leases, and a $590 million charge for legal matters, according to Reuters.

"Steel is clearly trying to get his arms around this,'' Joseph Gordon, president of Gordon Asset Management in Durham, North Carolina, which owns Wachovia shares, told Bloomberg. "We aren't advising any clients to buy until they fess up and go full transparency on Golden West and their commercial lending problems.''

Wachovia said it plans to cut 6,350 full-time jobs and leave about 4,400 positions open in an effort to cut expenses. The job cuts amount to roughly 5 percent of the bank's 120,000 employees. The bank will cut 2,000 retail mortgage jobs and 4,400 more jobs in 2009, Reuters reported.

The bank's $8.9 billion quarterly loss amounted to 4.20 dollars per share—much higher than Wall Street forecasts.

Icahn on Board

Mon, 21 Jul 2008 15:07:16 +0000

Yahoo and Carl Icahn avoided a proxy battle by agreeing to a deal that will place the billionaire investor on Yahoo's board of directors.

Yahoo will expand its board from nine to 11, with Icahn filling a seat and the remaining two positions being chosen from a list that includes Icahn's original candidates. Eight of Yahoo's existing board members will stand for re-election during August 1 shareholder meetings. As part of the deal, Robert Kotick will not stand for re-elections at the annual meetings.

"This agreement will not only allow Yahoo to put the distraction of the proxy contest behind us, it will allow the company to continue pursuing its strategy of being the starting point for Internet users and a must buy for advertisers," said Yang, Yahoo's chief executive, in the statement.

Icahn, who owns 4.98 percent of Yahoo and had been pushing for a Microsoft purchase of Yahoo for weeks, agreed to vote his shares in support of the Yahoo board's nominees.

"While I continue to believe that the sale of the whole company or the sale of its search business in the right transaction must be given full consideration, I share the view that Yahoo's valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders," said Icahn in a statement. "I believe this is a good outcome and that we will have a strong working relationship going forward."

Icahn began his battle with Yahoo after the search engine giant rejected an unsolicited bid from Microsoft valued at $4.6 billion.

Merrill Reports $4.9 Billion Loss

Fri, 18 Jul 2008 15:01:56 +0000

Merrill Lynch & Co., weighed down by $9.4 billion in write-downs, posted a second-quarter loss of $4.89 billion Thursday and unveiled plans to sell billions of dollars of assets.

Merrill chief executive John Thain called the quarter – Merrill's fourth straight losing quarter – "disappointing." Merrill Lynch has racked up close to $40 billion in write-downs since the credit crisis began a year ago, with net losses of $19.2 billion.

Thain, though, stressed the firm's drive to increase capital and confirmed that Merrill had completed the sale of its 20 percent stake in Bloomberg LP for $4.43 billion.

"Our core franchise continues to perform well despite the extremely challenging market environment," said Thain in a statement, according to the Associated Press. "Importantly, with the transactions we announced today, we are bolstering our capital base and continue to move forward on our risk management and strategic growth initiatives."

Thain inherited a struggling investment bank in November, the nation's third largest, burdened by massive write-downs that forced the ouster of former chief executive Stanley O'Neal.

But Thain has recently taken heat for his own missteps since taking over, as the Merrill's assets continue to deteriorate.

"They're moving in the right direction but Merrill still has significant challenges, including material exposure to collateralized debt obligations," Chris Armbruster, an analyst at Al Frank Asset Management, told Reuters. "We like the company, but it's going to be a tough go."

In addition to the sale of its stake in Bloomberg, Thain announced Merrill plans to sell a controlling stake in its Financial Data Services Inc. unit for $3.5 billion, according to Reuters.

But the capital Merrill expects to raise, roughly $8billion with the sale of its stake in Bloomberg and Financial Data Services, would only offset the losses Merrill has posted in recent quarters.

J.P. Morgan Beats Forecasts

Thu, 17 Jul 2008 16:42:56 +0000

Jamie Dimon, chief executive of J.P. Morgan Chase, announced Thursday that the bank's second-quarter net income fell 53 percent as a result of the continued credit crunch and $540 million in costs for the acquisition of Bear Stearns.

But investors greeted the dismal numbers as good news given that they exceeded estimates. J.P. Morgan Chase shares rose 5 percent in early trading.

The nation's third largest bank recorded $1.1 billion in write-downs in the second quarter, and it earnings dropped to $2 billion, or 54 cents a share, compared to $4.2 billion, or $1.20 a share in the second quarter of 2007.

But its write-downs were minimal in scale compared to those reported recently by J.P. Morgan chief rivals. In addition to higher-than-expected revenue, J.P. Morgan reported growth in its retail financial services.

"J.P. Morgan is obviously much better positioned in a very tough environment," Peter Boockvar, equity strategist at Miller Tabak & Co., told Reuters.

Still, Dimon called for caution.

"Our expectation is for the economic environment to continue to be weak -- and to likely get weaker, and for the capital markets to remain under stress," said Dimon during a conference call.

The second-quarter figures included $540 million in losses for J.P. Morgan Chase's $1.08 billion purchase of Bear Stearns in May.

"Through the truly remarkable partnership and efforts of our people in extremely difficult times, we made great progress towards full integration, while also significantly reducing our combined risk positions," said Dimon, in reference to the Bear Stearns acquisition, according to the Wall Street Journal. "We now have an expanded platform to better serve our institutional clients – one which we fully expect will make our franchise stronger over time."

Goldman Questioned About Bear's Collapse

Thu, 17 Jul 2008 16:03:46 +0000

The chief executive Lehman Brothers, Richard Fuld, and former Bear Stearns chief Alan Schwartz have questioned Goldman Sachs Group's Chief Executive Officer Lloyd Blankfein about speculation that the securities firm played a prominent role in pressuring their firms' stocks, according to a report by the Wall Street Journal.

Schwartz, who headed Bear Stearns before its epic collapse in March, asked Blankfein whether Goldman Sachs traders in London manipulated the firm's stocks. Fuld, who has had difficulty steering Lehman Brothers away from the credit crisis, also questioned Blankfein, according to the report.

"You're not going to like this conversation," Fuld told Blankfein when he first contacted him about the matter, according to the Journal.

Goldman Sachs has denied any wrongdoing. "We went out of our way to be supportive of Bear and were rigorous about conducting business as usual," Lucas van Praag, a Goldman spokesman, told the Journal.

Blankfein allegedly told Schwartz that any evidence of inappropriate behavior by traders would result in severe reprimands. Blankfein did not alter Goldman's terms for doing business with Bear Sterns, even as other big name lenders pulled their financing.

Spreading false rumors with the purpose of intentionally manipulating a public company's price is against the law.

The U.S. Securities and Exchange Commission is investigating trading documents to determine whether Bear Stearns stock, in the weeks before its collapse, suffered from insider trading and market manipulation.

Bear Stearns collapsed in March, a high profile victim of the credit crisis that has put a stranglehold Wall Street's biggest firms, as it saw the Federal Reserve help orchestrate its fire sale to J.P. Morgan Chase & Co.

G.M. to Cut Jobs, Sell Assets

Wed, 16 Jul 2008 21:02:51 +0000

Battered by slumping sales and a sagging economy, General Motors C.E.O. Rick Wagoner announced plans Tuesday to eliminate its quarterly dividend, slash salaried jobs by 20 percent and further curtail truck production.

Wagoner warned of "significant" losses in the second quarter and offered the cost-cutting program as a way to finance G.M. through 2009.

"These were very difficult decisions but ones necessary to help us get through the current weak U.S. market and position us for long-term success," said Wagoner in a prepared statement. "We will continue to take the steps necessary to align our business structure with the lower vehicle sales volumes and shifts in sales mix."

Wagoner also said G.M. will cut cash bonuses for executives and health-care coverage for retired workers over 65.

The moves are expected to raise about $15 billion by the end of 2009, Wagoner added.

G.M. has lost $54 billion since 2005, eliminating 40,000 jobs during that time period. Additionally, sales were down 16 percent in the first half of 2008.

Just last month, at G.M.'s annual shareholders' meeting, Wagoner announced plans to close truck production plants in North America, as demand for its cars and trucks have dried up.

G.M. recently announced that it has put its gas-guzzling Hummer brand up for sale, and Wagoner is mulling the sale of other brands, including Buick and Saab.

With G.M. bleeding money, and no short fix in sight, it stock price has dropped recently to 54-year lows.

Merrill Lynch analysts recently predicted that G.M. could be forced to file for bankruptcy unless it finds more capital to withstand heavy losses.

Farewell, Fake Steve

Tue, 15 Jul 2008 12:09:58 +0000

R.I.P Steve Jobs. The Fake Steve, that is.

Daniel Lyons, the former Forbes magazine journalist who wrote the immensely popular blog The Secret Diary of Steve Jobs, has decided to pen his last entry.

Known as Fake Steve Jobs, Lyons captivated the online tech world since 2006 with posts from the supposed secret diary of the famous Apple chief executive.

"I tried transitioning to other voices, like Jerry Yang's, but it just didn't work," Lyons told the New York Times, referring to the embattled Yahoo chief. "It seems clear that people reading the blog wanted to read Fake Steve or nothing."

Lyons, who will soon start writing for Newsweek as a technology columnist, parodied some well-established traits of Jobs and Apple. The blog was a platform for views on numerous industry matters, including Microsoft, industry merger talks, and Silicon Valley. For years, it was must-read material for tech observers and anyone interested in Apple.

Lyons, who wrote anonymously until the Times discovered his identity last summer, translated the success of his blog into a book titled, "Options: The Secret Life of Steve Jobs, a Parody," also a big hit.

Recent blog posts as a fake Jerry Yang didn't generate nearly as much buzz for Lyons as Fake Steve, and when Newsweek offered him a position, he decided to bury his fictional creations. Lyons also expressed concerns about mocking a person whose health has come under increased scrutiny in recent months. Several news sourced have speculated that Jobs has had a cancer relapse.

Lyons said he will leave his blog posts up and plans to sell a "best-of" books with some of his blog's most popular entries.

Merrill Eyeing Sale of Stake in Bloomberg

Tue, 15 Jul 2008 12:07:19 +0000

Facing second-quarter write-downs that could top $6 billion, Merrill Lynch & Co. C.E.O. John Thain is contemplating selling other investments in order to raise capital, including its stake in Bloomberg LP, according to a report by CNBC.com.

Thain, analysts say, is trying to minimize the amount of BlackRock stake he has to sell to raise capital because the mutual fund manager is considered one of Merrill Lynch's core assets and produces a steady stream of revenue. Merrill Lynch owns 49 percent of BlackRock, which also manages pension funds.

Thain is hoping to raise as much as $6 billion from Merrill Lynch's 20 percent stake in Bloomberg. Merrill and Bloomberg have had preliminary talks about selling Merrill's 20 percent stake, with Merrill asking for $6 billion while Bloomberg has countered with $3 billion, according to CNBC.com.

Bloomberg is profitable for Merrill but not seen as a core asset, analysts say.

Merrill, add analysts, has other smaller assets that might also produce the desired capital.

Negotiations with Bloomberg and BlackRock have been ongoing and a deal could be announced this week.

Merrill Lynch, the country's third largest broker-dealer, has recorded over $30 billion in write-downs since the third quarter of 2007, according to reports. Exposure to mortgage-backed securities and collateralized debt obligations has helped it stock plummet by 45 percent since early May.

Wachovia Names Steel Chief Executive

Fri, 11 Jul 2008 11:58:17 +0000

Wachovia Corp., the nation's fourth largest bank, has named former Treasury Undersecretary Robert Steel chief executive.

"I'm just excited to be here at Wachovia and it's a real privilege and honor to have this type of responsibility," said Steel, according to the Associated Press. "I can tell you we are going to work through the challenges in a very deliberate and focused fashion."

But excitement over the news could not keep Wachovia from overcoming disappointing earnings figures. The Charlotte-based bank said it could post a second-quarter loss of $2.8 billion as mortgage-related losses continue to pile up, adding that it had set aside $4.2 billion pretax to cover bad loans for the quarter.

"Wachovia expects to report an after-tax loss available to common stockholders of 2.6 to 2.8 billion dollars," the bank said, according to AFP. The bank plans to release second-quarter earnings on July 22.

Wachovia said it planned to pay Steel a $1.1 million annual salary, plus a bonus of up to $12 million. The bank could pay Steel an additional $15 million if he meets long-term incentives.

Steels takes over as C.E.O. after Wachovia's month-long search to replace Ken Thompson, who was shown the door after a series of miscalculations, including the purchase of Golden West Financial in 2006 for roughly $25 billion, according to Forbes magazine.

Steel, a former employee of Goldman Sachs Group, has been a key liaison between the Bush administration and Wall Street since 2006. He is also a native of Durham, N.C., and chairman of the Board of Trustees at Duke University.

Casino Tycoon Cleared for SJM Listing

Thu, 10 Jul 2008 08:07:37 +0000

Stanley Ho, the billionaire casino entrepreneur, can debut his Macau gambling company on the Hong Kong stock exchange after a court rejected a legal challenge from his sister, Winnie Ho.

A justice rejected her argument that Sociedade de Jogos, or SJM, should not be listed because of her continuing litigation over SJM's parent company, one of 37 suits Winnie ho has filed related to the group's shareholding structure.

Stanley Ho, 85, can now move ahead with the $493 million initial public offering, scheduled for mid-July. He has said that most of the money raised will be spent on new casino projects.

"Investors may still have concerns since there's a good chance Winnie will file an appeal," said Kenny Tang, an associate director at Tung Tai Securities Ltd. in Hong Kong, according to Bloomberg News. "For now, it looks like some retail investors borrowing on margin have withdrawn."

Ho held a tight grip on Macau's casino industry for 40 years, but in 2002 Macau allowed competition into the market, including U.S.-based Wynn Resorts and Las Vegas Sands Corp. Today, Ho operates 19 of Macau's 29 casinos. In 2007, he took in 40 percent of Macau's gaming revenue, down from 75 percent in 2005, Bloomberg reported.

Winnie and Stanley Ho went separate ways in 2001 after a major spat. Since then, Winnie has attempted to keep Stanley from listing SJM on the Hong Kong exchange. Winnie has also argued that she is owed dividends from SJM.

Stanley Ho is worth over $9 billion, according to Forbes magazine.

Dimon: Credit Crisis Could Worsen

Thu, 10 Jul 2008 08:05:16 +0000

The credit crisis has eased a bit but still could deteriorate, according to J.P. Morgan Chase C.E.O. Jamie Dimon, who spoke at the Federal Deposit Insurance Corp. conference in Arlington, Va.

"I do think we have some very serious issues to face," said Dimon, according to Reuters. "Things could actually get worse."

Dimon lauded the U.S. regulatory system's response to the credit crisis, but he warned that no institution is safe from potential failure, including big banks. In particular, he praised Treasury Secretary Henry Paulson for his plans to overhaul the nation's regulatory system.

Paulson and Fed chairman Ben Bernanke have called for the Federal Reserve to be given more power to battle widespread financial turmoil.

"I think the government is taking proper, in my opinion, monetary and fiscal policy at this point," Dimon told Reuters.

In March, the Federal Reserve helped J.P. Morgan orchestrate a takeover of Bear Stearns by facilitating a $29 billion loan to complete the transaction, a move triggered by fear that a Bear Stearns collapse could have spurred widespread financial panic.

"There was no question that the right thing was done," said Dimon, according to BusinessWeek. Dimon added that a Bear Stearns bankruptcy could have been a "catastrophe."

Critics say the Fed facilitated a fire-sale of the nation's then fifth-largest bank – a bailout that has placed billions of taxpayer dollars at risk.

Dimon concluded by saying that commercial and regional banks could be the next institutions to face significant stress as the U.S. economy continues to flounder.

G.M. Ponders Job Cuts, Downsizing

Wed, 09 Jul 2008 09:22:45 +0000

Reeling from slumping sales amid a stalling U.S. economy, General Motors C.E.O. Rick Wagoner is considering cutting thousands of jobs at the Detroit automaker, while also contemplating whether to stop production on some G.M. brands, according to a report by the Wall Street Journal.

As the automaker continues to rack up massive losses, Wagoner and other executives believe the new strategy can bring the G.M. back to profitability by 2010.

The jobs cuts, according to the Journal, are likely to be approved by early August, when G.M.'s board of directors meets. Board members will also consider eliminating some of G.M.'s brands.

The automaker has already put Hummer up for sale as overall G.M. sales nosedive amid skyrocketing oil costs. Buick could be next in line for sale, according to MarketWatch. Buick sales are down 42 percent from a year ago, and Pontiac, GMC, Saturn, and Saab, all bleeding money, could join Hummer on the sales block.

Wagoner and G.M.'s chief financial officer, Frederick Henderson, have closely monitored most G.M. brands for possible brand reductions, except for Cadillac and Chevrolet, analysts say.

For years, Wagoner has resisted the thought of reducing the number of G.M. brands, according to the Journal report, but massive losses, and Henderson's promotion as chief operating officer, have forced G.M. to rethink the viability of some of its brands.

Wagoner announced earlier this year that G.M. will close four truck and sport utility plants, as the company reels from a 16.3 percent drop in sales in 2008 and a stock price that recently dipped below $10 for the first time since 1954.

Ballmer Open to Restarting Yahoo Talks

Wed, 09 Jul 2008 09:21:47 +0000

Microsoft C.E.O. Steve Ballmer is still interested in buying Yahoo, but only of the entire Yahoo board of directors is replaced, according to reports.

Ballmer and billionaire investor Carl Icahn, who has amassed a stake in Yahoo and is actively seeking to oust Yahoo's board, have been in discussions for weeks about restarting merger negotiations.

"Our talks centered on the industry in general but, more importantly, on how Yahoo and Microsoft can do a transaction together," said Icahn in an open letter to Yahoo board members, according to TheStreet.com. "Steve made it abundantly clear that, due to his experiences with Yahoo during the past several months, he cannot negotiate any transaction with the current board."

Ballmer and Icahn would expect a new board to immediately fire Yahoo's chief executive Jerry Yang. Yahoo's board of directors meets on August 1.

Yang responded to Icahn's statement by pointing out that Yahoo approached Ballmer in June about accepting Ballmer's original offer for the search engine, only to be rejected.

"If Microsoft and Mr. Ballmer really want to purchase Yahoo, we again invite them to make a proposal immediately," said Yahoo in a statement. "And if Mr. Icahn has an actual plan for Yahoo beyond hoping that Microsoft might actually consummate a deal which they have repeatedly walked away from, we would be very interested in hearing it."

In January, Ballmer made an unsolicited offer to buy Yahoo for $44.6 billion, but he withdrew the offer in May after Yahoo kept insisting on a higher price. Yahoo's stock price has plummeted 27 percent since Ballmer made his $33-per-share offer.

Analysts say an Icahn-Ballmer pact would certainly appeal to Yahoo shareholders.

"I think Carl's chances are pretty high," said analyst Rob Enderle, according to Agence France Presse. "Microsoft may not want all of Yahoo, but they certainly don't want Google to get part of it."

"Clearly, Microsoft is interested in blocking Google," added Enderle. "There is no love lost between these companies. Google has it in its DNA as a primary goal to put Microsoft out of business."

Lakshmi Mittal joins Goldman Sachs board

Thu, 03 Jul 2008 20:54:18 +0000

The steel magnate CEO of ArcelorMittal, Lakshmi Mittal, joined the board of American business bank Goldman Sachs as an independent director, the company announced Sunday.
Aged 58, the Indian-born Mittal joined the investment bank's audit, compensation and corporate governance and nominating committees, the bank said. Mittal became Goldman's tenth independent director on its 13-member board.
"Lakshmi's experience judgment and independent thinking represent an important addition to our board of directors, and will be of tremendous value to our people, our shareholders and our clients," Lloyd Blankfein, Goldman's chairman and chief executive officer, said.Mittal is a longtime client of Goldman Sachs, and the Wall Street bank was alongside him in the battle for taking over the European steel company Arcelor for $33.5 billion to create the world's biggest steel maker in 2006.

High profile Manager

Goldman Sachs was seduced by Mittal’s high profile manager whose merits have been praised many a times in recent years.
Goldman Sachs like other investment banks, have stepped up investments in India to profit from an economy whose growth in the first quarter of this year was second only to China. Goldman bought a minority stake in the biggest sports utility vehicle maker in the country, Mahindra & Mahindra in May and invested $50 million in the Indian engineering company Sterling & Wilson in June.
Goldman was the second-biggest financial advisor in Asia, including India, in the first half of 2008 after UBS, according to Thomson Reuters data.

Grasso to Keep Pay Package

Thu, 03 Jul 2008 13:47:06 +0000

The long legal battle former NYSE Chairman Richard Grasso's compensation package ended when a New York court ruled Grasso could keep the $187.5 million he was paid.

"We have reviewed the court's opinion and determined that an appeal would not be warranted," said Alex Detrick, spokesman for Attorney General Andrew Cuomo, according to the Associated Press. "Thus, for all intents and purposes, the Grasso case is over."

The 3-1 ruling by the New York State of Appeals concluded that the attorney general could not sue Grasso for excessive pay since the exchange had be converted in 2005 from a non-profit entity to a for-profit corporation.

''Dick Grasso is gratified by the ruling of the appellate division,'' said his lawyer, Gerson A. Zweifach, a partner at Williams & Connolly, according to the New York Times. ''His devotion to the stock exchange never wavered, and neither did his faith that he would be vindicated by the courts.''

Launched in 2004 by then Attorney General Eliot Spitzer, the lawsuit sought to strip Grasso of his compensation package, alleging in was excessive and unlawful.

Grasso was forced out of the NYSE in 2003 amid furor over his high pay. Grasso's salary from 1995 to 2002 was about $1.4 million, with bonuses that topped at $10.6 million in 2002, according to court documents obtained by AP. His 2003 compensation package included $139.5 million, plus an added $8 million payable over four years.

After the court's decision, Grasso told Bloomberg News: "It's a confirmation of the belief I've held for the last five years in our justice system and my having performed in a manner consistent with my responsibilities. Right now I'm going to turn to my family and we're going to move on to the next chapter."

Yang Attempts to Sway Shareholders

Wed, 02 Jul 2008 09:48:44 +0000

C.E.O. Jerry Yang began making his case to Yahoo shareholders that his management team acted correctly when it rejected Microsoft's $47 billion takeover offer, the Associated Press reports.

In a 32-page presentation, Yang defended how he handled merger discussions, listing the dates of several meetings he had with Microsoft in an attempt to reopen sales negotiations after Yahoo initially rejected the takeover bid.

"The record casts doubt on whether Microsoft was ever committed to a whole company acquisition," said Yahoo during its shareholder meetings, according to AP.

During the presentation, Yang also reportedly took aim at billionaire investor Carl Icahn, who has aggressively proposed that Yahoo replace its nine directors and revive negotiations with Microsoft.

Yang will have difficulty winning over investors, who are scheduled to vote on the matter during an Aug. 1 annual shareholder meeting.

Yahoo stock recently dipped below $20 a share, a far cry from the $31 a share that Microsoft C.E.O. Steve Ballmer offered when he made his initial $44.6 billion takeover offer. Yang, at the time, wanted $37 a share.

That's a $20 billion loss, according to MarketWatch, which adds that since Yang, since he rejected the Microsoft offer, has reorganized Yahoo management and consolidated power.

Yang will have an additional opportunity to defend his argument during an exclusive media investment conference, according to AP, given that Gordon Crawford and Bill Miller, money managers for Yahoo's two biggest shareholders, will be in attendance.

The Allen & Co. conference, held annually in Sun Valley, Idaho, is renown as a launching pad for some of the biggest deals in media and technology.

Lehman Boss to Give Up Bonus

Tue, 01 Jul 2008 06:56:48 +0000

Lehman Brothers C.E.O., Richard Fuld, has reportedly decided to give up his 2008 bonus after the investment bank posted its first-ever quarterly loss since going public in 1994.

Lehman, the nation’s fourth-largest investment bank, lost almost $3 billion in the second quarter, according bank insiders who wished not to be identified, reports the Associated Press.

“This is my responsibility,” said Fuld on a recent conference call with journalists, according to AP.

Bart McDade, Lehman’s chief operating officer, will reportedly join Fuld in foregoing a 2008 bonus.

The bank recently raised $6 billion in capital after losing $2.8 billion during the second quarter.

Fuld joins a growing list of chief executives who have decided to give up annual bonuses as shareholder ire has risen amid tumbling profit figures. Last year, Morgan Stanley’s John Mack gave up his bonus, joining top executives at Bear Stearns and Merrill Lynch who did the same.

Despite the loss, Fuld should remain in sound fiscal shape. Lehman’s chief executive has made nearly half a billion dollars since the firm went public in 1994, despite a 60 percent drop in Lehman’s stock so far this year, reports fortune.com

Fuld has made $489 million from selling over 14 million optioned and restricted shares, Last year when Lehman’s stock fell 16 percent, Fuld made $53 million from selling shares, adds fortune.com.

Mozilo, Countrywide Under Fire

Fri, 27 Jun 2008 08:05:27 +0000

Countrywide Financial C.E.O. Angelo Mozilo is under fire for providing two U.S. senators and former cabinet members special home loans that waived lender fees and company borrowing rules.

The Senate Ethics Committee is investigating if charges that Sen. Kent Conrad, D-N.D., and Sen. Christopher Dodd, D-Conn., violate Senate rules on gifts that make it illegal to receive loan on favorable terms.

The revelations, first reported by Portfolio, come as Democrats put the finishing touches on sweeping housing legislation that would help Americans in danger of foreclosing on their homes.

Conrad has acknowledged that he spoke to Mozilo when he was searching for a mortgage, according to the Associated Press.

“I had no reason to believe, and I had no expectation, that I’d have any sweetheart deal,” Conrad told AP.

Dodd told reporters he knew that Mozilo placed him in a “V.I.P. section” when Countrywide gave him mortgage rates. But he denied he knew he was getting special deals.

He also said he had no plans to give up the loans, according to the AP.

In more bad news for Mozilo, the Attorneys General of Illinois and California said they are suing Countrywide for its role in the subprime meltdown.

Lisa Madigan, the Attorney General of Illinois, said Countrywide promoted high-risk loans that contributed to the spike in home foreclosures throughout the state.

Jerry Brown, Madigan’s counterpart in California, said Countrywide violated the state’s unfair business practices with many actions it took to market its risky loans.

Anne Lauvergeon, McMurphy and Areva's triple play in the United States

Thu, 12 Jun 2008 21:17:25 +0000

Areva, the French engineering and nuclear technology group, harvested a total $11.8 billion worth of contracts this spring in the United States thanks to 3 major deals awarded by the Department of Energy.

MOX plant in South Carolina

A joint venture between French nuclear engineering titan Areva and Shaw Group Inc. has won a $2.7 billion contract with the U.S. Department of Energy to build a mixed oxide nuclear fuel plant (MOX) at the Savannah River Site, located in Aiken, South Carolina.

The joint venture, Shaw Areva Mox Services LLC, is owned 70 percent by Shaw, a U.S. construction and engineering firm, and 30 percent by Areva.

The plant will purify surplus weapon-grade plutonium and mix it with uranium oxide to form MOX fuel pellets for use as fuel in commercial nuclear power reactors, Areva said. The design of the 600,000-square-foot facility is based on Areva's La Hague and Melox fuel treatment facilities in Normandy, France.

Work on the plant began in August, 2007 and is continuing on schedule, Areva said, without specifying a target completion date. This would become only the fourth operating MOX facility in the world (one in France, one in Belgium and one in England).

Idaho

The French-owned energy services company will also build a $2 billion uranium enrichment plant near the eastern Idaho city of Idaho Falls, after winning tax concessions from the state Legislature.

The plant will be built near the Idaho National Laboratory, where scientists have done research into nuclear energy since the 1940s, the company announced on its website.

Areva plans to build the plant by 2014. But before the plant is built, Areva still must get approval from local, state and national agencies, including a license from the Nuclear Regulatory Commission to construct and operate the facility.

Areva selected Idaho over sites in Washington state, Ohio, Texas and New Mexico.

"While we had several attractive sites to choose from, we opted for Idaho Falls, which has strong ties to nuclear energy, and which welcomed Areva and its proposed enrichment facility to become a new member of its community," said McMurphy, Areva NC's CEO.

Areva NC, headquartered in Bethesda, Md., is a subsidiary of France's Areva Group. Areva also is building a similar, larger uranium enrichment plant in Pierrelatte, Southern France.

Hanford site, Washington

Last but not least, Anne Lauvergeon declared on the company's website in early June that the Department of Energy has awarded a contract to Washington River Protection Solutions of which Areva Federal Services is the dedicated subcontractor, to manage the remediation of DOE's radioactive and hazardous underground waste tanks located at the Hanford site, Washington.

The five-year based contract with another five year option is estimated at $7.1 billion. The contract includes operations and construction activities needed to store, retrieve and treat tank waste and start closure of the tank farms to protect the Columbia River.

Almost 53 million gallons of highly radioactive and chemically hazardous waste is stored in over 170 underground tanks at Hanford, which is said to be the most polluted site in America after decades of exploitation and loose storage.

Thinking Inside the Box

Sun, 08 Jun 2008 17:00:21 +0000

Netflix chief executive Reed Hastings, addressing investors in San Francisco, outlined a plan to provide online video streaming for thousands of movies and TV shows.

The streaming service is crucial to Netflix's future prosperity, Hastings noted.

"Our key challenge is growing earnings per share and subscribers while funding streaming, which should give us years of subscriber and earnings expansion," said Hastings, according to PC Magazine.

Netflix currently offers about 10,000 movies online, while offering over 100,000 movies and TV shows through its DVD rental business.

Hastings expects the company's emphasis to switch over to online streaming, but not for another five to 10 years, he told investors.

Just last week, the startup company Roku unveiled a set top box that transfers video to TV. It's one of several set-top boxes to be introduced this year that will transfer Netflix videos.

Hastings said Netlfix' online investment in 2008 and 2009 would be "fairly inefficient," PC Magazine reports, but recognized it as essential to the rental company's future.

He added that a combination of the streaming service and the traditional rental business will help Netflix compete in a competitive market in the future.

Hastings envisions eventually attracting over 20 million subscribers worldwide via its streaming service, though he admitted the company is still a long way from reaching that goal.

Rick Wagoner and General Motors get ready for the post S.U.V.'s era

Thu, 05 Jun 2008 23:38:41 +0000

With consistently rising gas prices, General Motors' CEO, Rick Wagoner, announced drastic cuts in production of S.U.V.'s and pickups on June 3, and geared up plans for smaller cars and engines.

Rick Wagoner, said G.M. will stop production at four North American assembly plants (in Janesville, Wis. and Moraine, Ohio, in the U.S., one in Ontario, Canada and one in Toluca, Mexico) that make S.U.V.’s and pickups by 2010. These production cuts will cost jobs to an estimated 8,000 workers at these plants. G.M. and its CEO were not willing to provide any details about the near future of the workers affected.

While announcing the changes, Mr. Wagoner said, in the New York Times, $4-a-gallon gas prices had forced a "structural shift" by American consumers away from large vehicles into more fuel-efficient cars.

"These prices are changing consumer behavior and changing it rapidly," Mr. Wagoner said before G.M.’s annual meeting in Wilmington, Del. "We don’t believe it’s a spike or a temporary shift. We believe it is permanent."

While Ford already reduced its pickup and S.U.V. production last month, the drastic cuts at G.M. seem to be closing a chapter in the American auto industry, emphasizing the radical transformation of the automotive landscape in the past few months.

In the meantime, small cars and hybrids, that use less gas than S.U.V.’s, are taking over the streets, with the Honda Civic and Toyota Corolla ranking as the two top-selling vehicles in the United States in May.

Chronicle of a Death Foretold

G.M. unveiled its latest restructuring on the same day that it reported that its United States sales plunged 27.5 percent in May. Following the same downhill path, Chrysler's domestic sales also dropped by 25 percent last month.

But the day of reckoning for the XXL S.U.V. and its 14-miles-per-gallon fuel consumption has been coming for some time.

"At the peak in 2002, G.M. sold 600,000 full-size S.U.V.’s, but they’re on pace this year to sell less than 250,000 of them," said David Healy, an analyst with Burnham Securities, in the New York Times. "And the nails in the coffin are getting screwed down a little tighter."

Rick Wagoner said that the closing of the plants was a "difficult" decision and added it was unlikely any of them would receive new products to stay open.

"These moves are all in response to the rapid rise in oil prices and the resulting changes in the U.S.," he went on.

G.M. hopes to counter the increasing drop in S.U.V. sales by increasing car production and accelerating the development of more fuel-efficient models. G.M and its board also approved production of two new small cars and gave the green light for production of the all-electric Chevrolet Volt by 2010.

The Volt, which will be powered by batteries coupled with a small gasoline engine, is the centerpiece of G.M.’s will to develop alternative-fuel vehicles. Mr. Wagoner said. "We believe this is the biggest step in our industry’s move away from our historic, virtually complete reliance on petroleum to power vehicles."

Over all, G.M. is slashing 700,000 vehicles out of its North American annual production capacity. By reducing capacity to 3.7 million vehicles a year from the current 4.2 million, the dominant automaker expects to save $1 billion on top of a target of reducing costs by $5 billion by 2011.

But even with the cuts, Wagoner declined to predict when G.M., which lost $3.3 billion in the first quarter this year, will become profitable in North America, bearing in mind that this occurs after a staggering $38.7 billion loss in 2007.

The plant shutdowns were announced days after G.M. said 19,000 of its hourly workers had accepted buyouts or early retirement packages.

G.M. is drastically changing its strategy on the fly in the face of increasingly tough economic conditions.

Industry analysts expect overall vehicle sales in the United States to fall below 15 million this year, the lowest point in more than a decade and far below the peak of 17.4 million in 2000.

Silencing Hummer

The decision to conduct a "strategic review" of the Hummer brand underlined the painful fate G.M. is facing.

Rick Wagoner said the review of the brand could result in "a partial or complete sale" of Hummer. And in a humbling admission that the S.U.V. era is all but over, G.M., Detroit’s leading automaker, said it was considering selling the gas-guzzling Hummer brand it once regarded as a pillar of future growth.

That is a far cry from the ambitious goals that G.M. had for Hummer when it acquired rights to the brand nearly a decade ago.

Once considered a brand with global potential, the monster-sized Hummer has become a symbol of the decline of the large, big-gulp gas-consumer S.U.V.

So far this year, Hummer sales have fallen 36 percent to 14,000 vehicles.

CEO Ken Thompson disembarked by Wachovia Bank

Wed, 04 Jun 2008 15:31:02 +0000

Ken Thompson, CEO of United States’ fourth largest bank, Wachovia, has been asked to quit by the board of directors of the company. He is temporarily replaced by Lanty Smith, present chairman of the board. This decision came to sanction the turbulences that the bank encountered since the beginning of the sub-prime crisis.

In his first five years as chief executive of First Union, later to become Wachovia Bank, Ken Thompson was the antithesis of a big-bank CEO. While his predecessor, Ed Crutchfield Jr., was a famous daredevil during merger, Thompson was a master at carefully protecting his every bet.

Just a year after his nomination at First Union, Thompson deftly talked fellow North Carolina bank Wachovia into a "merger of equals." Thompson also took over Wachovia's name for the combined bank, allowing him to bury the First Union brand, which had become tarnished by Crutchfield's disastrous direction of the company.

Under Thompson, Wachovia improved its customer service so much that it was the perennial top performer among banks in national surveys. This attention to detail, coupled with his clever deal-making, won Thompson many fans among Wall Street investors, who bid Wachovia shares up 40% by the time of the Prudential deal.

A Series of Setbacks

But Thompson's reign ended abruptly on June 2, when Wachovia's board announced Thompson "had retired at the request of the board." It was just the first of two big blows for bank chiefs beset by mortgage woes: The same day, Washington Mutual said it was replacing Kerry Killinger as chairman. He remains CEO of the nation's largest savings and loan. During the first quarter, Washington Mutual lost more than $1.1 billion and set aside $3.5 billion to cover defaulted loans.

While the Wachovia board prudently said Thompson's dismissal wasn't due to any single event but rather to "a series of previous disappointments and setbacks," it was painfully clear Thompson's ouster stemmed from his one and only major deal: his $25 billion acquisition two years ago of Golden West Financial, a large mortgage lender that has been crushed by the housing bubble bust in California and Florida.

In retrospection, it would be easy to assign Thompson's decision to buy a mortgage lender at the height of the housing bubble to executive hubris. But it may have been more that Thompson was battling the same problem that bedevils the rest of today's mega-banks: The law of large numbers.

Rupert Murdoch and Tom Glocer support Microsoft-Yahoo merger

Tue, 03 Jun 2008 21:39:54 +0000

Two media titans, Rupert Murdoch News Corp's CEO and Tom Glocer, the head of Thompson Reuters, said they support a partnership between computer giant Microsoft and Internet giant Yahoo!, after a deal between the two companies fell through in April.

"I think they need each other," Glocer said at All Things Digital media conference organized by The Wall Street Journal. "I think it makes a lot of sense. One way or another, I'd be surprised if there wasn't some way to make that happen."

For his part, Murdoch said he could not understand why the deal was aborted, but noted that Yahoo! founder Jerry Yang is "emotional about his company."

"Microsoft came up with a price, which the vast majority of the shareholders said 'give me quick,' he managed to hold them off. And Microsoft, who is not used to buying big things, they backed off," he said.

"They will try to find some other way to do things, buy search," Rupert added.

Murdoch also said he would not be surprised by a deal between Yahoo! and search giant Google, "but there is a huge regulatory risk for everybody."

Microsoft says it ceased takeover talks in late April after it raised its February 1 bid of 44.6 billion dollars by three billion dollars and Yahoo's board still wanted more.

Jeffrey Immelt's GE Energy signs $500 million turbine contracts with Saudi Electricity Co

Sat, 31 May 2008 15:14:20 +0000

GE Energy, a division of General Electric Co., has signed, with Saudi Electricity Company, contracts worth over $500 million to build and install gas turbines and generators at Saudi Arabian power plants, the company announced on May 27.

GE Energy has won a contract to supply gas turbine generators for a 960-megawatt expansion of the Rabigh Power Plant in Rabigh City. The contract with Saudi Electricity Co. includes technical advice during installation and spare parts.

GE Energy also has won a contract to build and install gas turbines used by four other power plants owned by Saudi Electricity Company in Jizan City, Qunfutha City, Aljouf City and Tabouk City.

Demand for power in Saudi Arabia is rising by about 8 percent a year, GE Energy said. Saudi Arabia is one of GE's key growth regions. GE maintains a work force of more than 600 employees in Saudi Arabia and has joint ventures in energy, health care and appliances.

"These projects are part of Saudi Electricity Co.'s ongoing efforts to meet the region's soaring power demand," said Joseph Anis, GE Energy's region executive for the Middle East, to the Associated Press.

The gas turbines will be manufactured at GE Energy plants in Greenville, South Carolina. The generators will be made in Schenectady, N.Y.

Shares of General Electric rose nine cents to close at $30.64 Thursday.

Exxon Chief Keeps Both Roles

Fri, 30 May 2008 16:28:47 +0000

Exxon Mobil C.E.O. and Chairman Rex W. Tillerson defeated an attempt to displace him from one of his jobs during an annual shareholders meeting.

Shareholders' non-binding vote, in the event it had been successful, would have place great pressure on Tillerson to renounce his chairman title at the world's largest oil company.

But only 39.5 percent of shareholders voted for the measure.

"It just reemphasizes to me the importance of our continuing efforts to communicate better with shareholders and with the public and with policymakers," said Tillerson, according to an Associated Press report.

Despite a record profit of almost $41 billion last year, shareholders have criticized Tillerson for not focusing too much on developing oil sources and not devoting enough resources towards developing alternative energy.

Tillerson, though, defended Exxon's record on both fronts.

"We're focused on safely and reliably meeting the growing energy demand while working to reduce our impact on the environment," Tillerson told the New York Times.

But some high profile shareholders, including descendants of John D. Rockefeller, founder of Standard Oil Trust, called on Tillerson to do more.

"It's crucial for every company to ask, 'Is it doing all it can to prepare for the future?' The Rockefeller family believes now is precisely the time for Exxon Mobil, with its strong financial performance, to take the long-term steps needed to increase shareholder value," said Peter O'Neill, the great grandson of John D. Rockefeller, according to AP. "All of Exxon Mobil's acknowledged strengths are no guarantee it will remain flexible and visionary in light of the changing energy realities that lie ahead."

The measure to strip Tillerson of the chairman's roles was one of 19 resolutions shareholders put to vote. None of them won approval.

Sears Posts Dismal Earnings

Fri, 30 May 2008 16:27:54 +0000

Saying customers were forced to spend more of their money on the soaring cost of gas and food, Sears Holdings Chairman Eddie Lampert announced a quarterly loss of $56 million.

Sales fell to $11.1 billion, a 6 percent drop.

The results surprised analysts, who did not expect such a steep loss. Some of them warned of further hemorrhaging.

"It's going to get a lot worse," Howard Davidowitz, of the consulting firm Davidowitz & Associates, told the Associated Press. "Given these results, I think Lampert really has to now face up to major, major store closings."

Declining housing markets and the credit crunch have hurt Sears, say analysts. Stiff competition from similar retail outlets like Wal-Mart and J.C. Penny has also added to Sears Holdings woes.

Costco Wholesale, for example, one of several chains to lure customers away from Sears, reported a 32 percent quarterly increase in sales.

A steep drop in the purchases of home appliances and lawn and garden products hit Sears especially hard, according to AP.

"Our first quarter results reflect the difficult economic environment and intense competition for consumer business," W. Bruce Johnson, Sears Holdings' interim chief executive officer and president, told AP. "That said, since May 3, 2008, our sales declines have moderated somewhat."

Lampert said he doesn't expect a quick improvement in overall retail sales, at least not until end of year, but said he saw some evidence of improvement. Nonetheless, analysts say Lampert will have to shuffle business units and close some stores.

Honda Announces New Hybrid Schedule

Thu, 29 May 2008 21:54:21 +0000

Honda C.E.O. Takeo Fukui announced the upcoming release of several Honda hybrid models.

Honda plans a gas-electric version of its popular subcompact model, Fit, with rollout projected for early next decade. And Honda's dedicated hybrid vehicle, offered as a 5-door hatchback that evokes the FCX Clarity, will hit U.S. streets in early 2009.

Additionally, Fukai said 2010 will bring a sporty hybrid based in the CR-Z model, plus a new version of the Civic hybrid.

"Hybrids have drawn attention for their image, but the time has come to go to the next step," Fukui told reporters in Japan, according to Business Week Online.

And that next step appears to be inspired by affordability.

The FCX clarity-inspired hybrid is being developed to fit within an affordable price range.

"This hybrid vehicle will be chosen rationally by customers based on its economic benefit," Fukai told Honda shareholders, according to Business Week.

Of the estimated 200,000 units to be produced annually, about half are slated for sale in the U.S. In total, Honda expects to sell 500,000 hybrids a year starting early next decade.

Fukai expects new hybrid models to sell no higher than 2,000 more than the price of standard models, basing figures on the significant reduction in the cost of hybrids' Integrated Motor Assist components.

"Honda has been at the forefront of hybrid development since it first introduced the American public to hybrid technology with the Insight in 1999," said John Mendel, executive vice president of American Honda, according to PR Newswire. "These new advancements in Honda's technology and production systems will result in cost reductions that will allow us to make hybrid technology available to a whole new generation of buyers.

Microsoft Demos Windows 7

Thu, 29 May 2008 21:53:17 +0000

Microsoft chief executive Steve Ballmer unveiled a few details of the software giant's upcoming operating system, tentatively titles Windows 7, during the Wall Street Journal's "D: All Things Digital" conference.

Ballmer touted the new operating system's touch-screen technology, which Microsoft calls Multi-touch.

The new technology, similar to that of Apple's iPhone, will allow users to enlarge and shrink photos and navigate internet maps.

Ballmer said the touch-screen technology is just a small sample of what will be available with Windows 7 when it launches in late 2009.

"Today almost all the interaction is keyboard-mouse," said Microsoft Chairman Bill Gates, according to the Associated Press. "Over years to come, the role of speech, vision, ink all of those will be huge."

Gates plans to give up daily responsibilities at Microsoft in July to focus on philanthropy.

Microsoft refused to unveil other features of Windows 7, perhaps in an effort to raise consumer expectations too high.

Gates and Ballmer also defended Microsoft's latest operating system, Vista, which has been panned by critics, adding that all of the company's operating systems have had flaws that were corrected in later versions.

Ballmer said Microsoft remained in talks to partner with Yahoo but added that Microsoft was not planning buy the Web portal.

"We are not rebidding for the company. We reserve the right to do so. That's not on the docket," Ballmer told AP.

Ballmer added that Microsoft never considered the possible purchase of Yahoo as strategic. Microsoft now has $50 billion to spend on other deals, said Ballmer, according to Reuters.

Carlos Ghosn: “Renault shall be a long term resident in Formula One”

Thu, 29 May 2008 11:08:22 +0000

Renault-Nissan’s CEO, was in Monaco on Sunday, May 25, for the Formula One Grand Prix. In an interview delivered to the local newspaper Nice Matin, Ghosn confirmed a long term participation of the French motor team in the competition, despite a year and a half of mediocre results.

"Renault shall be a long term resident in Formula One !" he hammered. "We are consistently developing our technology, our pilots, our team. Renault is in a process of global expansion in several emerging countries and in many of these countries, Formula One has a strong echo and influence. The fact that Russians, Indians, Chinese, Koreans and Southern Americans are Formula One addicts encourages us to continue our taking part in the competition in order to display our brand and company. The next step for us is to imagine how could we possibly exploit even further our image and aura in Formula One in order to sell our products in these emerging nations."

The answer is for Carlos Ghosn to see, a little more often, his Formula One drivers Fernando Alfonso and Nelson Piquet Jr mounting the podiums.

Sarin to Step Down at Vodafone

Wed, 28 May 2008 02:21:38 +0000

Vodafone Group's Arun Sarin will step down as chief executive officer of the world's largest cell phone operator, a move that surprised industry analysts.

Sarin, who has held the top post at Vodafone for five years, will be replaced by Vittorio Colao.

"I felt the timing was right to hand over as the company is in a good position strategically," Sarin said in a conference call, according to the Wall Street Journal. "I've achieved what I set out to achieve when I took the position."

The surprise move comes as Vodafone returned to profitability. Vodafone announced a net profit of $13.25 billion, up from a loss of $9.6 billion a year ago.

Under Sarin's guidance, Vodafone increased its customer base from 120 million worldwide to 260 million, a feat accomplished by expanding in emerging markets in India, Czech Republic and Turkey, say analysts. And Vodafone's acquisition of India's Hutchison Essar is another high-point for Sarin.

Nonetheless, Sarin's tenure at Vodafone has been a rocky one, say analysts. Sarin clung to power in 2006, when nearly 10 percent of shareholders at the British-based telecommunications company voted against his re-election. The failed attempt to buy AT&T will also mark Sarin's legacy at Vodafone, say critics. And holding on to a minority stake in Verizon Wireless will also blemish Sarin's resume.

But Vodafone Chairman John Bond could only praise Sarin after the announcement of him imminent departure.

"He has led the company with distinction and navigated Vodafone through a period of rapid change," said Bond, according to MarketWatch. "He has developed a new strategy for the business and significantly expanded our footprint in emerging markets. The acquisition in India was very well timed and executed."

HSBC Chief: Mortgage Crisis Could Worsen

Wed, 28 May 2008 02:20:31 +0000

HSBC chief executive Michael Geoghegan says the British-based bank might see further losses stemming from the U.S. subprime mortgage debacle, and he suggested banks worldwide hike interest rates to combat inflation.

"We are seeing a slowing of provision requirements in the first quarter," said Geoghegan at shareholders meeting in Hong Kong, according to a report by Dow Jones Newswires. "But is this permanent? We do not know. We are not convinced yet that the worst is over."

Although Geoghegan expects losses tied to subprime mortgages to dwindle from quarter to quarter, he said further problems could still be lurking for banks.

While HSBC, Europe's largest bank, wrote down $4.6 billion in the fourth quarter of 2007, writedowns downs decreased to $3.2 billion in the first quarter of 2008.

But Geoghegan said subprime woes might be sustained by U.S. market volatility tied to the U.S. presidential election and inflation.

"I'm concerned that the economy in the U.S. may potentially slip into recession and then have a period of inflation," said Geoghegan, according to Dow Jones. "Both of those will not be good."

Central banks should hike interest rates to confront inflation, Geoghegan added during his stop in Hong Kong.

Soaring global commodity prices in recent months have spurred inflation. Rising food and oil prices have only added to the problem.

"Inflation is a long-term problem because there is no long-term will to solve it," said Geoghegan, according to MarketWatch.

Red Bull fuels the fire of the Cola War

Mon, 26 May 2008 18:10:04 +0000

Mateschitz's energy drink pioneer company, Red Bull, hopes its new Red Bull Cola, which debuts in Las Vegas in June, will grab a larger share of the mainstream crowd.

The editor of Beverage Business Insights in New York, Gerry Khermouch, recently said "If, as energy drink proponents have been saying, energy drinks are the new colas, then it's perfectly logical for Red Bull to try to reinvigorate the declining cola segment."

Unlike Pepsi and Coca-Cola, Red Bull Cola will enjoy a 100% natural image and command a premium price. Its formula will consist of kola nut and coca leaf.
The debut comes as Red Bull has fallen behind Monster Energy as the top energy drink in term of volume, according to Beverage Digest. Monster Energy owns 27.6% of volume compared to Red Bull's 24.6%.
Beverage Digest editor, John Sicher, said "Red Bull is a very strong brand and it has an enthusiastic following but the cola business in the U.S. is in decline. Even with their brand strength they will face headwinds after some probable initial excitement."
Indeed, the realm has fallen considerably from its golden era. Still according to Beverage Digest, carbonated soft drink sales dropped by 2.3% in 2007. Colas, which makes up more than half of soda sales, shrank back by 7.7%. Atlanta's Coke company volume was off 3% while Pepsi's was down 4.8%.

Nevertheless, unlike many other beverage brands outside the Coke and Pepsi domination, Red Bull does enjoy the advantage of an already existing strong distribution. That shall be a big difference between Mateschitz's Red Bull Cola and Branson's ill-fated Virgin Cola, which never established a decent route to market in two tries.

"The cola from Red Bull. Strong & natural"
Red Bull spent, in 2007 alone, $82.5 million on media and marketing materials in support of beverages and events. However, the budget for the launch of Red Bull Cola has been made public.

Red Bull Cola will be available in 8.4-oz. cans at bars, club and restaurants, as well as 12-oz. cans at convenience and grocery stores. Pricing has not been revealed yet.

Dov Charney Named Retailer of the Year

Sat, 24 May 2008 03:21:43 +0000

American Apparel C.E.O. Dov Charney was named Retailer of the Year at 15^th Annual Michael Awards, a fashion industry ceremony held at New York City’s Marriott Marquis Hotel.

Often referred to as the “Oscars of Fashion,” the award honors the fashion industry’s brightest stars. Calvin Klein, Oscar de la Renta and Hugo Boss comprise a partial list of past winners.

“I am privileged to accept this award in recognition of the hard work and creativity of the many people who have contributed to American Apparel’s rapid growth and success,” said Charney upon receiving the award, according to PR Newswire. “For years I have said that it is possible to manufacture clothing in the United States, pay among the best wages in the apparel industry, and still have a profitable business.”

Labor rights activists have lauded American Apparel in the past for the company’s labor practices. All of the company’s apparel is made at an 800,000 square-foot location in downtown Los Angeles, the nation’s largest garment factory.

Charney pays his workers almost twice the California minimum wage and offers health insurance for $8 a week, both rarities on the bottom rung of the U.S. labor market. Additionally, American Apparel offers workers free English lessons and provides well-lighted and well-ventilated working areas, conditions that have won Charney praise among labor rights groups.

“In a surprisingly short period of time, American Apparel has distinguished itself as a truly unique and exciting retail brand in the global market,” said Steve Shor, president of the Michael Awards. “American Apparel’s Made in USA clothing, together with the company’s progressive business practices and provocative advertising campaigns, have set the company apart as a fascinating story in the fashion world.”

Cablevision Acquires Newsday

Sat, 24 May 2008 03:20:00 +0000

Cablevision Systems Corp., led by C.E.O. James Dolan, reached a $650 million deal to buy the Long Island daily Newsday from Tribune Co.

Immediately after announcement, though, analysts questioned the purchase given the sorry state of the newspaper business. And critics pointed out Cablevision’s lack of expertise with print media.

“Murdoch knows newspapers,” David Joyce, an analyst for Miller Taback, told Newsday. “The Dolan family does not.’

The deal will allow Cablevision to share content from Newsday’s print and online outlets and cross promote Cablevision products.

Cablevision has over 3 million subscribers in the New York City area and also owns the cable networks AMC and IFC, while Newsday reached 1.5 readers daily.

But the deal is subject to regulatory approval, notes Reuters, because Cablevision is Long Island primary distributor of TV content. Now, as the sole publisher of television news, Cablevision’s acquisition of Newsday could draw antitrust scrutiny.

Critics also wondered how Dolan, owner of the New York Knicks and New York Rangers, will orchestrate Newsday coverage of the two sports franchises. How would Newsday, for example, have covered last summer high profile sexual harassment lawsuit against former Knicks coach Isiah Thomas and Dolan?

“If there is any overt attempt by the Dolans to control coverage, it will demonstrate that this deal is a total failure,” Howard Schneider, dean of the journalism school at Stony Brook University, told the New York Times.

Big Bosses Take Moderate Pay Hit

Wed, 21 May 2008 09:29:05 +0000

The economy is seemingly grounding to a halt while the rising price of oil breaks records daily, and frightened Wall Street bankers are facing the worst round of layoffs in recent history.

But don’t shed a tear for C.E.O.s, at least not yet.

The median C.E.O. pay increased just 1.3 percent from 2006 to 2007, according to a recent study by the executive compensation research firm Equilar. A similar Equilar study, while not directly comparable, found that median C.E.O. compensation rose 6 percent from 2005 to 2006.

Despite the increase in median compensation among 233 S&P 500 chief executives polled by Equilar, the company notes, aggregate compensation fell by 1.9 percent from 2006 to 2007.

Total compensation includes base salary, bonuses, non-equity incentive plan payouts, and the grant date value of stock awards, among other compensation.

Median base salary among chief executives increased by 3 percent from 2006 to 2007, rising from $1,000,000 to $1,030,000.

With the economy mired in a prolonged slump, C.E.O. compensation has come under harsh scrutiny from analysts and shareholders alike. While the Equilar figures point to a downturn in C.E.O. compensation, the losses are moderate when compared to other sectors of the workforce, especially when looking at base salaries and bonuses.

Besides the median salary of $1,000,000, the median annual cash bonus for C.E.O.s was $1,837,080 in 2007, a drop of 4.5 percent but hardly a reason for C.E.O.s to jump off the ledge.

Additional resources:
http://www.forbes.com/2007/05/03/ceo-executive-compensation-lead-07ceo-cx_sd_0503ceocompensationintro.html
http://www.aflcio.org/corporatewatch/paywatch/

Carlos Ghosn and Renault-Nissan to go electric

Fri, 16 May 2008 19:23:56 +0000

Carlos Ghosn, the CEO and chairman of car manufacturer alliance Renault-Nissan, said the company plans to build a zero-emission electric Nissan vehicle to be available in the U.S. and Japan from 2010, before extending to the rest of the world two years later, he told French newspaper Le Figaro.
With the electric concept car called "Pivo 2", Ghosn intends to make of Nissan a world leader in environment-friendly car manufacturing in the near future.
In Time magazine, he declared, "We are not interested in some Star Wars prototype, but in bringing a mass-market product that everybody can buy. It's a new chapter in the life of this industry."

Cleanup at Citigroup

Fri, 16 May 2008 09:27:45 +0000

Vikram Pandit has lots of spring cleaning to do.

The C.E.O. of Citigroup since December, Pandit has vowed to unload beleaguered assets from the biggest U.S. bank.

Within the next three years, Pandit announced, Citigroup will shed $400 billion in assets, all in an effort to streamline the bank and appeased worried shareholders.

Citigroup has already sold off or closed 45 U.S. branches, the New York Times reports, and has shuttered Citigroup’s headquarters building in Tokyo. But the bank, reeling from $45 billion in write downs and credit losses since 2007, has only begun to make deep cuts in its divisions and personnel.

More jobs cuts are on the way, Pandit announced, in addition to this year’s 13,200 cuts.

Pandit will also attempt to reduce costs by streamlining its cumbersome infrastructure. Citigroup will shed assets in its consumer banking and securities businesses, Pandit added. Pandit recently dumped the credit card Diners Club, CitiStreet and CitCapital. Now Citigroup has focused on ridding itself of the insurance and mutual fund company Primerica Financial, according to the Times.

Several influential – and anxious – shareholders have pressed Pandit to consider breaking up Citigroup. But Pandit made it clear during a recent conference call that he will not go down that path. Instead, Pandit expressed optimism in diverse areas, including credit cards and consumer banking.

Pandit hopes to increase revenues by 9 percent as Citigroup “gets it, restructures and maximizes” it business. The banks assets totaled $2.2 trillion at the end of the last quarter.

CBS’s Big Bet

Fri, 16 May 2008 09:26:50 +0000

C.E.O. Les Moonves announced CBS Corp. is buying CNet Networks Inc., the online news provider for $1.8 billion.

The ability to target CNet’s substantial online audience through its own online outlets was a major motivation for the acquisition, Moonves told reporters during a conference call.

“Our idea is to have our content wherever, whenever you can get it, and adding CNet just makes that happen faster,” said Moonves, according to the Associated Press.

CNet shares, in a freefall for months, soared almost 44 percent after announcement of the deal.

As recently as the end of 2006, CBS vowed it would not make big acquisitions.

“We are not going to spend $1.6 billion on YouTube,” said Quincy Smith, CBS’s interactive chief said in November 2006.

But CBS, desperate shed its image as an old media company, reversed course and bet big in an effort to reach younger consumers.

Moonves says the deal will make CBS one of the top 10 online properties. With the acquisition, CBS will generate $1 billion in new revenue by 2010, Moonves added.

“I suspect that Moonves is showing his boss, Summer Redstone, the executive chairman of both Viacom and CBS, that he has a daring internet strategy in place, and that CBS is not merely what it seems to be: an old media company with a few internet properties on hand to keep up appearances,” said Marketwatch analyst Jon Friedman.

CNet – owner of several internet businesses, including ZDNet, GameSpot.com and TV.com – is an online maverick. It was the first internet company to go public in the mid-1990s but has struggled this decade as the competition has caught up to it.

Moonves said that, with the deal, he sees the opportunity to distribute CBS news and music through CNet outlets while profiting from CNet’s online advertising operations.

Ghosn's Renault-Nissan Alliance and Bajaj to give Tata's Nano a race

Thu, 15 May 2008 22:56:24 +0000

Ghosn and Renault-Nissan Alliance have announced on May 13, the launching of the manufacturing of their own ultra-budget car. The new joint venture with the Bajaj Auto Indian group are thus following the footsteps of Tata with their new car, with a starting price of just $2,500. The car, so far code-named ULC, will be built at an all-new, yet to be constructed production plant in Chakan, India.

Ghosn declared on Renault’s website that the initial production numbers are set at 400,000 units per year, in large proportion for the growing Indian market. The ULC is planned to go on sale in 2011, other emerging markets will possibly follow.