(Reuters) - The United States is at risk of losing its triple-A credit rating unless it starts putting its finances in order, a former head of the agency in charge of fiscal accountability said in the Financial Times on Wednesday.
David Walker, former director of the Government Accountability Office, cited a warning from Moody's Investors Service nearly two years ago about ballooning healthcare and social security costs.
"Signs are abound that we are in even worse shape now, and that confidence in America's ability to gain control of its finances is eroding," the former comptroller general and current chief executive of Peter G. Peterson Foundation, wrote to the FT.
Read more here
Tuesday, May 12, 2009
Monday, May 11, 2009
Boeing Targets $10 Billion Market for Leased Drones
(Bloomberg) -- Boeing Co., the second-largest U.S. defense contractor, is leasing drones to government agencies and militaries seeking to bypass years-long purchasing processes, a market the company says may grow to $10 billion in a decade.
Boeing won contracts in 2007 and 2008 for a total of $312.7 million to supply the U.S. Navy and Marine Corps with ScanEagle spy drones on a fee-for-service basis and got a $250 million contract from the U.S. Special Operations Command on similar terms last month. Under the deals, Boeing owns the equipment and sends the operators where the military wants them.
Drones including the ScanEagle, the A-160 Hummingbird and the Unmanned Little Bird may be used to perform surveillance and cargo-delivery missions for militaries and civilian agencies worldwide, said Phil Panagos, Boeing’s director of Intelligence, Surveillance and Reconnaissance Services.
“The purpose of our business is to provide platforms and systems to customers who don’t want to purchase” them right away, Panagos said in an interview. The global market for supplying drones and other services on that basis may be worth “$10 billion over the next 10 years,” he said. He declined to give an estimate of what Boeing’s share of that market may be.
Chicago-based Boeing fell $1.11, or 2.4 percent, to $44.72 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 4.8 percent this year.
Pirate Surveillance
The Navy’s contract with Boeing allowed it to deploy a drone from the USS Bainbridge destroyer to help rescue Captain Richard Phillips from pirates off Somalia’s coast on April 13, said Navy Captain J.R. Brown, program manager for Small Tactical Unmanned Air Systems.
The Bainbridge was equipped with ScanEagle and Boeing- supplied operators as part of the ship’s maritime surveillance mission, he said.
The drone used optical and infrared cameras to track the lifeboat holding Phillips, who was captured by pirates that hijacked the Maersk Alabama cargo ship. He was rescued after Navy commandos shot and killed three pirates in the lifeboat.
Boeing’s drones are used only for surveillance and reconnaissance missions, not to shoot at targets. The U.S. Air Force and Central Intelligence Agency own Predator drones made by privately held General Atomics in San Diego. The Predators are equipped with two laser-guided Hellfire missiles and are used to fire at targets in Afghanistan and Iraq.
The ScanEagle is launched from a pneumatic catapult, flies to an altitude of 16,000 feet and can loiter for about 20 hours, according to the Navy. On return, the drone is captured by a rope suspended from a 50-foot high tower.
‘Feet in the Water’
“Some militaries would like the unmanned aerial vehicles for temporary use in peacekeeping operations, and other militaries are still trying to understand their use,” said Philip Finnegan, an analyst at Teal Group Corp., a defense consulting firm in Fairfax, Virginia. “This may allow them to get their feet in the water and understand what it is.”
Boeing’s estimate of a $10 billion global market for leased drones “seems conservative,” with the U.S. military budgeting $3.8 billion to buy drones in its fiscal 2010, Peter Arment, an analyst at Broadpoint AmTech Inc., in Greenwich, Connecticut, said in an interview.
“We know that the military services’ demand for these systems is going to go up exponentially,” he said. He rates Boeing shares “neutral.”
Read more here
Boeing won contracts in 2007 and 2008 for a total of $312.7 million to supply the U.S. Navy and Marine Corps with ScanEagle spy drones on a fee-for-service basis and got a $250 million contract from the U.S. Special Operations Command on similar terms last month. Under the deals, Boeing owns the equipment and sends the operators where the military wants them.
Drones including the ScanEagle, the A-160 Hummingbird and the Unmanned Little Bird may be used to perform surveillance and cargo-delivery missions for militaries and civilian agencies worldwide, said Phil Panagos, Boeing’s director of Intelligence, Surveillance and Reconnaissance Services.
“The purpose of our business is to provide platforms and systems to customers who don’t want to purchase” them right away, Panagos said in an interview. The global market for supplying drones and other services on that basis may be worth “$10 billion over the next 10 years,” he said. He declined to give an estimate of what Boeing’s share of that market may be.
Chicago-based Boeing fell $1.11, or 2.4 percent, to $44.72 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 4.8 percent this year.
Pirate Surveillance
The Navy’s contract with Boeing allowed it to deploy a drone from the USS Bainbridge destroyer to help rescue Captain Richard Phillips from pirates off Somalia’s coast on April 13, said Navy Captain J.R. Brown, program manager for Small Tactical Unmanned Air Systems.
The Bainbridge was equipped with ScanEagle and Boeing- supplied operators as part of the ship’s maritime surveillance mission, he said.
The drone used optical and infrared cameras to track the lifeboat holding Phillips, who was captured by pirates that hijacked the Maersk Alabama cargo ship. He was rescued after Navy commandos shot and killed three pirates in the lifeboat.
Boeing’s drones are used only for surveillance and reconnaissance missions, not to shoot at targets. The U.S. Air Force and Central Intelligence Agency own Predator drones made by privately held General Atomics in San Diego. The Predators are equipped with two laser-guided Hellfire missiles and are used to fire at targets in Afghanistan and Iraq.
The ScanEagle is launched from a pneumatic catapult, flies to an altitude of 16,000 feet and can loiter for about 20 hours, according to the Navy. On return, the drone is captured by a rope suspended from a 50-foot high tower.
‘Feet in the Water’
“Some militaries would like the unmanned aerial vehicles for temporary use in peacekeeping operations, and other militaries are still trying to understand their use,” said Philip Finnegan, an analyst at Teal Group Corp., a defense consulting firm in Fairfax, Virginia. “This may allow them to get their feet in the water and understand what it is.”
Boeing’s estimate of a $10 billion global market for leased drones “seems conservative,” with the U.S. military budgeting $3.8 billion to buy drones in its fiscal 2010, Peter Arment, an analyst at Broadpoint AmTech Inc., in Greenwich, Connecticut, said in an interview.
“We know that the military services’ demand for these systems is going to go up exponentially,” he said. He rates Boeing shares “neutral.”
Read more here
Sunday, May 10, 2009
Australia May Face Debt Crisis From Grants to Young Home Buyers
(Bloomberg) -- Australian Prime Minister Kevin Rudd’s bid to ensure his housing market avoids the global property slump may push a generation of buyers into a debt crisis.
Grants of as much as A$21,000 ($16,142) to first-time buyers and the lowest interest rates in 49 years have emboldened more than 40,000 young Australians to take out home loans since October, stoking demand for properties that cost less than A$500,000.
These buyers may be vulnerable when interest rates begin rising, potentially triggering a jump in foreclosures that will drive down property prices, cut profits at banks and damp household spending, which accounts for half the economy. A surge in defaults in America was a key trigger for the financial crisis that pushed the global economy into its worst recession since World War II.
“We’re mirroring what happened to the U.S. three years ago, when people who shouldn’t have been in the market bought houses,” said Martin North, managing director of Fujitsu Australia, a Sydney-based property-consulting company. “It’s a strategy set for an unfortunate outcome.”
As Australia slides into its first recession since 1991, Rudd’s payments have been criticized by economists and newspapers for fueling a property boom that may burst once the grants are reduced, possibly as soon as July 1.
No Subprime Crisis
While the central bank says Australia doesn’t have a subprime crisis because banks have tightened lending standards, recent reports show first-time buyers are driving a residential construction industry that employs 5 percent of the workforce. New home sales have surged 22 percent this year, and building approvals climbed 12 percent in February and March.
“March was the busiest month I’ve ever had,” said Peita Jackson, a real-estate agent at Bradfield & Prichard, who specializes in selling homes in Sydney’s eastern suburbs. “I sold six properties, and four were to first-time buyers.”
Former Prime Minister John Howard introduced the grants in 2000 to boost a slumping housing market. Last year Rudd tripled the payments for new homes to A$21,000 and doubled handouts for existing houses to A$14,000 to support the economy.
The increases coincided with record interest-rate cuts by Reserve Bank Governor Glenn Stevens, who has reduced the overnight cash rate target by 4.25 percentage points since September to a 49-year low of 3 percent.
Tax-Free Boost
The rate cuts have lowered payments on an average A$250,000 mortgage to A$1,470 from A$2,120. The Reserve Bank says that equals an 8 percent tax-free boost to family incomes. About 90 percent of Australians hold variable-rate loans that are adjusted when the central bank changes its benchmark rate.
“All these things have increased the demand side of property and not the supply side, which always results in increased prices,” said John Lindeman, head of research at property-information company Residex Pty in Sydney.
The 10 suburbs with the biggest prices gains in Sydney during the six months through March were all in locations where homes cost less than the city’s median price of A$564,500, according to Lindeman. The biggest jump was in Greenfield Park, 36 kilometers (22 miles) west of the city center, where the median price rose by A$23,700 to A$420,000.
“We’re setting up a whole generation of people for grief,” Lindeman said. “Interest rates will go up, and that’s when they will feel the pain.”
Prospective Owners
The government grants and interest-rate cuts have prompted first-time buyers, who accounted for a record 27 percent of dwellings financed in February, to borrow more than other prospective home owners. Lending to these consumers surged 6.1 percent between October and February to an average of A$280,600, the Statistics Bureau said. By contrast, home loans to all borrowers fell 1.1 percent to A$253,200.
“For many buyers, the grant was critical,” said Fujitsu’s North. “Over 30 percent had loan-to-valuation ratios on their properties of 95 percent or higher.”
This may eventually leave some new buyers with so-called upside-down loans, as they owe more on their mortgage than the market price of their home. That threat will be heightened if unemployment climbs above 7 percent from the current rate of 5.4 percent, as forecast by the government.
Rudd, Stevens and the International Monetary Fund have all said Australia is in a recession as companies such as BHP Billiton Ltd. and Qantas Airways Ltd. fire workers. Gross domestic product declined 0.5 percent in the quarter ended December 2008 from the previous three months.
Read more here
Grants of as much as A$21,000 ($16,142) to first-time buyers and the lowest interest rates in 49 years have emboldened more than 40,000 young Australians to take out home loans since October, stoking demand for properties that cost less than A$500,000.
These buyers may be vulnerable when interest rates begin rising, potentially triggering a jump in foreclosures that will drive down property prices, cut profits at banks and damp household spending, which accounts for half the economy. A surge in defaults in America was a key trigger for the financial crisis that pushed the global economy into its worst recession since World War II.
“We’re mirroring what happened to the U.S. three years ago, when people who shouldn’t have been in the market bought houses,” said Martin North, managing director of Fujitsu Australia, a Sydney-based property-consulting company. “It’s a strategy set for an unfortunate outcome.”
As Australia slides into its first recession since 1991, Rudd’s payments have been criticized by economists and newspapers for fueling a property boom that may burst once the grants are reduced, possibly as soon as July 1.
No Subprime Crisis
While the central bank says Australia doesn’t have a subprime crisis because banks have tightened lending standards, recent reports show first-time buyers are driving a residential construction industry that employs 5 percent of the workforce. New home sales have surged 22 percent this year, and building approvals climbed 12 percent in February and March.
“March was the busiest month I’ve ever had,” said Peita Jackson, a real-estate agent at Bradfield & Prichard, who specializes in selling homes in Sydney’s eastern suburbs. “I sold six properties, and four were to first-time buyers.”
Former Prime Minister John Howard introduced the grants in 2000 to boost a slumping housing market. Last year Rudd tripled the payments for new homes to A$21,000 and doubled handouts for existing houses to A$14,000 to support the economy.
The increases coincided with record interest-rate cuts by Reserve Bank Governor Glenn Stevens, who has reduced the overnight cash rate target by 4.25 percentage points since September to a 49-year low of 3 percent.
Tax-Free Boost
The rate cuts have lowered payments on an average A$250,000 mortgage to A$1,470 from A$2,120. The Reserve Bank says that equals an 8 percent tax-free boost to family incomes. About 90 percent of Australians hold variable-rate loans that are adjusted when the central bank changes its benchmark rate.
“All these things have increased the demand side of property and not the supply side, which always results in increased prices,” said John Lindeman, head of research at property-information company Residex Pty in Sydney.
The 10 suburbs with the biggest prices gains in Sydney during the six months through March were all in locations where homes cost less than the city’s median price of A$564,500, according to Lindeman. The biggest jump was in Greenfield Park, 36 kilometers (22 miles) west of the city center, where the median price rose by A$23,700 to A$420,000.
“We’re setting up a whole generation of people for grief,” Lindeman said. “Interest rates will go up, and that’s when they will feel the pain.”
Prospective Owners
The government grants and interest-rate cuts have prompted first-time buyers, who accounted for a record 27 percent of dwellings financed in February, to borrow more than other prospective home owners. Lending to these consumers surged 6.1 percent between October and February to an average of A$280,600, the Statistics Bureau said. By contrast, home loans to all borrowers fell 1.1 percent to A$253,200.
“For many buyers, the grant was critical,” said Fujitsu’s North. “Over 30 percent had loan-to-valuation ratios on their properties of 95 percent or higher.”
This may eventually leave some new buyers with so-called upside-down loans, as they owe more on their mortgage than the market price of their home. That threat will be heightened if unemployment climbs above 7 percent from the current rate of 5.4 percent, as forecast by the government.
Rudd, Stevens and the International Monetary Fund have all said Australia is in a recession as companies such as BHP Billiton Ltd. and Qantas Airways Ltd. fire workers. Gross domestic product declined 0.5 percent in the quarter ended December 2008 from the previous three months.
Read more here
Thursday, May 7, 2009
Sallie Mae Plans Life Without Loans Obama Wants Gone
(Bloomberg) -- Sallie Mae, the biggest U.S. provider of college loans, says it doesn’t oppose President Barack Obama’s plan to wipe out much of that business. The company just has a few suggestions.
“What we’ve thought about here is how to make the president’s proposal better,” Jack Remondi, chief financial officer of the company, known formally as SLM Corp., said in an interview.
Obama has proposed saving $94 billion over 10 years by issuing all federal college loans directly instead of using private lenders led by Sallie Mae. The company is pushing a counterproposal that wouldn’t reduce its lending as much. It’s also mounting a public relations effort, pledging to bring jobs home from abroad and deploying lobbyists with Democratic connections.
“They’re not expending political capital to block something that’s going to be very hard to block,” said Charles Gabriel, an industry analyst at Washington-based Capital Alpha Partners. The company is “trying to build a new future.”
The company’s version of Obama’s proposal would let the private lenders continue to market federal student loans. They would sell the loans to the Education Department instead of financing them through capital markets, and collect a fee from the government for each loan purchased.
Sallie Mae’s plan would prevent disruptions in the student- loan system, minimize defaults and give students a continued choice among lenders, Remondi said in the interview.
Pell Grants
Obama and Democratic leaders in Congress say they want to put taxpayer dollars to better use and help more students get a college education. The administration plans to use the money saved by cutting out the private lenders to increase Pell Grants, which help low-income families afford college. Its plan would restrict lenders to less profitable tasks such as processing payments and collecting on defaulted loans.
Reston, Virginia-based Sallie Mae is the biggest of more than 2,000 student-loan providers, followed by Citigroup Inc.’s Student Loan Corp., and Lincoln, Nebraska-based Nelnet Inc. Sallie Mae made $24.2 billion in student loans last year, 74 percent of them federally guaranteed.
Under either Obama’s plan or the company’s version, “Sallie Mae would earn significantly less” on federal student loans than it has in the past, said Martha Holler, a company spokeswoman. Current market conditions make specific estimates difficult, she said.
Shares Plunge
Sallie Mae may lose as much as 40 percent of its revenue if Congress passes Obama’s plan without modifications, said Matt Snowling, an analyst with Friedman Billings Ramsay Group Inc. in Arlington, Virginia. Sallie Mae’s revenue totaled $1.78 billion last year, and most of the rest came from private loans and from services such as collecting on defaulted loans.
The projection of $94 billion in savings over 10 years comes from the nonpartisan Congressional Budget Office. The savings stem partly from the government’s ability to finance loans at lower interest rates than private lenders. The CBO plans to analyze the lender’s counterproposal.
SLM fell 49 cents, or 8 percent, to $5.62 at 4:01 p.m. in New York Stock Exchange composite trading and is down 37 percent this year. The shares tumbled 31 percent on Feb. 26, the day Obama released his budget outline calling for an end to loan subsidies.
Five of 10 analysts surveyed by Bloomberg recommend holding SLM shares, one rates the company a “sell” and four recommend buying.
Read more here
“What we’ve thought about here is how to make the president’s proposal better,” Jack Remondi, chief financial officer of the company, known formally as SLM Corp., said in an interview.
Obama has proposed saving $94 billion over 10 years by issuing all federal college loans directly instead of using private lenders led by Sallie Mae. The company is pushing a counterproposal that wouldn’t reduce its lending as much. It’s also mounting a public relations effort, pledging to bring jobs home from abroad and deploying lobbyists with Democratic connections.
“They’re not expending political capital to block something that’s going to be very hard to block,” said Charles Gabriel, an industry analyst at Washington-based Capital Alpha Partners. The company is “trying to build a new future.”
The company’s version of Obama’s proposal would let the private lenders continue to market federal student loans. They would sell the loans to the Education Department instead of financing them through capital markets, and collect a fee from the government for each loan purchased.
Sallie Mae’s plan would prevent disruptions in the student- loan system, minimize defaults and give students a continued choice among lenders, Remondi said in the interview.
Pell Grants
Obama and Democratic leaders in Congress say they want to put taxpayer dollars to better use and help more students get a college education. The administration plans to use the money saved by cutting out the private lenders to increase Pell Grants, which help low-income families afford college. Its plan would restrict lenders to less profitable tasks such as processing payments and collecting on defaulted loans.
Reston, Virginia-based Sallie Mae is the biggest of more than 2,000 student-loan providers, followed by Citigroup Inc.’s Student Loan Corp., and Lincoln, Nebraska-based Nelnet Inc. Sallie Mae made $24.2 billion in student loans last year, 74 percent of them federally guaranteed.
Under either Obama’s plan or the company’s version, “Sallie Mae would earn significantly less” on federal student loans than it has in the past, said Martha Holler, a company spokeswoman. Current market conditions make specific estimates difficult, she said.
Shares Plunge
Sallie Mae may lose as much as 40 percent of its revenue if Congress passes Obama’s plan without modifications, said Matt Snowling, an analyst with Friedman Billings Ramsay Group Inc. in Arlington, Virginia. Sallie Mae’s revenue totaled $1.78 billion last year, and most of the rest came from private loans and from services such as collecting on defaulted loans.
The projection of $94 billion in savings over 10 years comes from the nonpartisan Congressional Budget Office. The savings stem partly from the government’s ability to finance loans at lower interest rates than private lenders. The CBO plans to analyze the lender’s counterproposal.
SLM fell 49 cents, or 8 percent, to $5.62 at 4:01 p.m. in New York Stock Exchange composite trading and is down 37 percent this year. The shares tumbled 31 percent on Feb. 26, the day Obama released his budget outline calling for an end to loan subsidies.
Five of 10 analysts surveyed by Bloomberg recommend holding SLM shares, one rates the company a “sell” and four recommend buying.
Read more here
Wednesday, May 6, 2009
News Corp profit slides, Murdoch says worst is over
(Reuters) - News Corp posted a 47 percent drop in operating income on Wednesday as advertising revenue declined, but Chairman Rupert Murdoch said the worst effects of the recession are behind the media company.
"It is increasingly clear that the worst is over," he said, echoing executives at other media conglomerates such as Walt Disney Co and Viacom Inc. "There are emerging signs in some of our businesses that the days of precipitous decline are done," Murdoch said.
Profit and revenue slid in News Corp's fiscal third quarter because of lower ad sales at its television stations and newspapers. The company maintained its earlier forecast that operating income would fall 30 percent in fiscal 2009.
While still a decline, the outlook reflects stabilizing ad sales and "other bright spots" in different parts of the business, Murdoch said on a conference call with analysts to discuss News Corp's results.
News Corp reported third-quarter net income of $2.7 billion, or $1.04 a share, compared with $2.7 billion, or 91 cents a share, in last year's quarter. The results included a gain of $1.2 billion for selling an ownership stake in NDS Group Plc and a $1.2 billion non-cash tax benefit.
Operating income fell 47 percent to $755 million.
Revenue fell 15.7 percent to $7.37 billion, short of the average analyst forecast. The recession damaged the company's heavily advertising based-businesses around the world which include Dow Jones and The Wall Street Journal, the Fox TV network, and satellite TV network Sky Italia.
"The notion is that even though they missed, they missed on the divisions that have been generally underperforming anyway," said Miller Tabak analyst David Joyce. "The market's getting more confident that a rebound's starting to form."
Operating income in News Corp's television and newspaper segments fell more than 95 percent in the quarter, while cable network programing rose 30 percent.
To the relief of analysts displeased with Murdoch's portfolio of newspapers, he said he has no plans to buy more. He has been mentioned as a possible suitor for The New York Times Co.
Murdoch also dismissed buying Internet company AOL, which parent Time Warner Inc plans to spin off. "We've never really thought about it, to be honest," he said. "They're always talking ridiculous prices."
MYSPACE
News Corp's "other" segment reported an operating loss of $89 million, due in part to lower ad revenues and higher costs for its MySpace music project.
Online social network MySpace has ceded ground to rival Facebook in terms of worldwide users. In the United States, Facebook has 54.5 million monthly unique visitors, compared with 76 million for MySpace, according to comScore data released in March.
MySpace is profitable, Murdoch said, but he wants to make it "really profitable." He said MySpace and Fox Interactive Media will undergo "major cost savings," but did not say if that would involve layoffs.
Read more here
"It is increasingly clear that the worst is over," he said, echoing executives at other media conglomerates such as Walt Disney Co and Viacom Inc. "There are emerging signs in some of our businesses that the days of precipitous decline are done," Murdoch said.
Profit and revenue slid in News Corp's fiscal third quarter because of lower ad sales at its television stations and newspapers. The company maintained its earlier forecast that operating income would fall 30 percent in fiscal 2009.
While still a decline, the outlook reflects stabilizing ad sales and "other bright spots" in different parts of the business, Murdoch said on a conference call with analysts to discuss News Corp's results.
News Corp reported third-quarter net income of $2.7 billion, or $1.04 a share, compared with $2.7 billion, or 91 cents a share, in last year's quarter. The results included a gain of $1.2 billion for selling an ownership stake in NDS Group Plc and a $1.2 billion non-cash tax benefit.
Operating income fell 47 percent to $755 million.
Revenue fell 15.7 percent to $7.37 billion, short of the average analyst forecast. The recession damaged the company's heavily advertising based-businesses around the world which include Dow Jones and The Wall Street Journal, the Fox TV network, and satellite TV network Sky Italia.
"The notion is that even though they missed, they missed on the divisions that have been generally underperforming anyway," said Miller Tabak analyst David Joyce. "The market's getting more confident that a rebound's starting to form."
Operating income in News Corp's television and newspaper segments fell more than 95 percent in the quarter, while cable network programing rose 30 percent.
To the relief of analysts displeased with Murdoch's portfolio of newspapers, he said he has no plans to buy more. He has been mentioned as a possible suitor for The New York Times Co.
Murdoch also dismissed buying Internet company AOL, which parent Time Warner Inc plans to spin off. "We've never really thought about it, to be honest," he said. "They're always talking ridiculous prices."
MYSPACE
News Corp's "other" segment reported an operating loss of $89 million, due in part to lower ad revenues and higher costs for its MySpace music project.
Online social network MySpace has ceded ground to rival Facebook in terms of worldwide users. In the United States, Facebook has 54.5 million monthly unique visitors, compared with 76 million for MySpace, according to comScore data released in March.
MySpace is profitable, Murdoch said, but he wants to make it "really profitable." He said MySpace and Fox Interactive Media will undergo "major cost savings," but did not say if that would involve layoffs.
Read more here
Tuesday, May 5, 2009
Plan to Sell Chrysler to Fiat Clears Bar
The judge overseeing the bankruptcy of Chrysler on Tuesday took a significant step toward allowing the sale of most of the automaker to Fiat, approving the bidding procedures advocated by the company and backed by the Obama administration.
The decision by the federal bankruptcy judge, Arthur J. Gonzalez, is a setback for a group of Chrysler creditors who have argued that liquidation of the company or some other transaction could yield greater value. These lenders, primarily investment firms, have said that the plan for the Fiat transaction ran afoul of bankruptcy law and would chill efforts by others to produce competing, potentially higher bids.
But Judge Gonzalez disagreed, saying, “The court concludes that the bidding procedures are appropriate and necessary.”
The judge’s decision was a victory for Chrysler and the government, which together argued that a speedy sale was the only way to protect tens of thousands of jobs and help resuscitate the American economy.
“It’s a very big first step,” said Howard Seife, the head of the bankruptcy practice at the law firm Chadbourne & Parke. “It’s clear that the company is moving down the road to a Fiat sale.”
The judge’s decision was the second blow dealt to the holdout lenders during a marathon hearing on Tuesday that began mid-afternoon and ended at 11 p.m.
Judge Gonzalez earlier ordered the disclosure of identities of the Chrysler creditors, who had argued that their identities should be kept secret to protect them from retaliation.
A lawyer representing them claimed that the creditors had been harassed, and some had even received death threats.
Judge Gonzalez gave the creditors until Wednesday morning to reveal their identities, saying that their lawyers had not presented enough evidence of risk. The primary evidence cited by their lawyers was a set of anonymous comments on The Washington Post Web site.
Read more here
The decision by the federal bankruptcy judge, Arthur J. Gonzalez, is a setback for a group of Chrysler creditors who have argued that liquidation of the company or some other transaction could yield greater value. These lenders, primarily investment firms, have said that the plan for the Fiat transaction ran afoul of bankruptcy law and would chill efforts by others to produce competing, potentially higher bids.
But Judge Gonzalez disagreed, saying, “The court concludes that the bidding procedures are appropriate and necessary.”
The judge’s decision was a victory for Chrysler and the government, which together argued that a speedy sale was the only way to protect tens of thousands of jobs and help resuscitate the American economy.
“It’s a very big first step,” said Howard Seife, the head of the bankruptcy practice at the law firm Chadbourne & Parke. “It’s clear that the company is moving down the road to a Fiat sale.”
The judge’s decision was the second blow dealt to the holdout lenders during a marathon hearing on Tuesday that began mid-afternoon and ended at 11 p.m.
Judge Gonzalez earlier ordered the disclosure of identities of the Chrysler creditors, who had argued that their identities should be kept secret to protect them from retaliation.
A lawyer representing them claimed that the creditors had been harassed, and some had even received death threats.
Judge Gonzalez gave the creditors until Wednesday morning to reveal their identities, saying that their lawyers had not presented enough evidence of risk. The primary evidence cited by their lawyers was a set of anonymous comments on The Washington Post Web site.
Read more here
Monday, May 4, 2009
iPhone Outsold By BlackBerry Curve In U.S. Last Quarter
(alleyinsider.com) -- Apple's (AAPL) iPhone was not the most-purchased consumer smartphone in the first quarter, according to research firm NPD Group. That title goes to RIM's (RIMM) BlackBerry Curve 8300 series, which was on sale at more carriers and had the benefit of a buy-one, get-one free sale at Verizon Wireless during the quarter.
Based on U.S. consumer sales of smartphone handsets in NPD's "Smartphone Market Update" report, the first-quarter 2009 ranking of the top-five best- selling smartphones is as follows:
1. RIM BlackBerry Curve (all 83XX models)
2. Apple iPhone 3G (all models)
3. RIM BlackBerry Storm
4. RIM BlackBerry Pearl (all models, except flip)
5. T-Mobile G1
Overall, smartphones made up 23% of U.S. phone sales in Q1, up from 17% during Q1 '08. That's good news for wireless carriers, as smartphone subscribers spend roughly 1.5x as much per month on service per month as people with "dumb" phones.
Read more here
Based on U.S. consumer sales of smartphone handsets in NPD's "Smartphone Market Update" report, the first-quarter 2009 ranking of the top-five best- selling smartphones is as follows:
1. RIM BlackBerry Curve (all 83XX models)
2. Apple iPhone 3G (all models)
3. RIM BlackBerry Storm
4. RIM BlackBerry Pearl (all models, except flip)
5. T-Mobile G1
Overall, smartphones made up 23% of U.S. phone sales in Q1, up from 17% during Q1 '08. That's good news for wireless carriers, as smartphone subscribers spend roughly 1.5x as much per month on service per month as people with "dumb" phones.
Read more here
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