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Friday, 2 May 2014
WSJ: DirecTV Shows a Need for AT&T
"The world has become a tougher place for DirecTV since 2010, whenAT&T Inc. unsuccessfully tried to buy the satellite-TV operator. After years of outperforming the rest of the pay-TV industry, subscriber growth has slowed sharply while programming costs are rising and cheap online video alternatives are multiplying.
In response to changing market conditions, DirecTV's satellite-TV rival Dish Network Corp. has invested billions of dollars in trying to diversify into wireless broadband and launch its own online-video service.
DirecTV, in contrast, has bought back stock—lots of it. The company has spent $29.7 billion on repurchases in the past eight years, according to regulatory filings. DirecTV has taken some steps to develop online-video services but it isn't as advanced as Dish, which hopes to offer its service beginning this summer, people familiar with the matter say.
DirecTV's strategic position is in the spotlight now that AT&T has come back with yet another approach, as The Wall Street Journal reported late Wednesday.
DirecTV stock rose 4% on the report, lifting its market capitalization—and rough purchase price—to $41.1 billion
A person close to the situation says DirecTV, which became independent in late 2009 when its then-biggest shareholder Liberty Media Corp. divested its stake, is likely open to a sale. The company's board, say people familiar with the situation, is concerned with satellite TV's Achilles' heel: its inability to offer an Internet-access broadband service competitive with the packages delivered by cable and phone companies.
While the biggest cable and phone companies offer broadband speeds of up to 500 megabits a second, with some planning gigabit-per-second services, technological differences mean that satellite companies typically offer no more than 10-15 megabits a second.
That means even if DirecTV rolls out an online-video service, its customers would likely be using broadband supplied by rival cable or phone companies. DirecTV's board is worried about the possibility that cable and phone companies could raise the price of broadband connections, disadvantaging DirecTV as an online-video alternative, one of the people said".
Source: WSJ
Source: WSJ
WSJ: Huawei Founder: Company Aims to Be Viewed as 'European'
The Wall Street Journal reports, "in a rare interview with journalists, Ren Zhengfei said the company he founded is investing and opening itself up in an effort to build trust with foreign customers and governments. Huawei has faced allegations in the U.S. that it is a security risk, as well as the threat of an European Union investigation into allegations that China is dumping or subsidizing products pertaining to mobile-telecommunications networks".
"My reluctance to meet with the media has been used as a reason to label Huawei as a mysterious company," Mr. Ren said through a translator during the interview. In a few years, "our idea is to make people perceive Huawei as a European company," he said.
As part of the push, Huawei will increase investment in European research and development, and will extend an employee incentive plan to all key non-Chinese employees this year in order to attract and keep top talent, Mr. Ren said.
Huawei's new openness comes as the company in recent years has faced scrutiny in Europe, where its growth has buffeted competitors, including Sweden's Ericsson and France's Alcatel-Lucent. In the U.S., meanwhile, Huawei has been effectively shut out of the telecom equipment market after a 2012 congressional report saying the company's gear could be used by Beijing to spy on Americans.
Huawei grabbed nearly 22% of mobile-network infrastructure spending in Europe, the Middle East and Africa last year, up from just 12% in 2010, according to market-research firm Infonetics. By contrast, in North America, Huawei had only a 2.8% share of that market in 2013—prompting the company to pull back from investments there.
Huawei, founded by Mr. Ren in 1987, has repeatedly denied it has benefited from government subsidies, and said that allegations it is a conduit for espionage are tantamount to China-bashing. Mr. Ren is a former officer of the People's Liberation Army, but the employee-owned company denies direct links to the Chinese government or military.
Key to Huawei's defense against allegations of dumping is its growing investment in research and development to improve its products and raise prices. Mr. Ren said its gear is now being priced at record highs in Europe. He also said the company would continue to increase its research spending, which rose last year to roughly $5 billion, at average 2013 exchange rates, compared with Ericsson's $4.9 billion.
Change has its limits, however. Mr. Ren rejected the idea of taking his company public in the coming years, saying that public shareholders would force Huawei to focus too much on the short term, rather than long-term research and development.
Huawei has an unusual private structure in which it is owned by its Chinese employees, including Mr. Ren. He holds roughly a 1.4% stake, but has veto power over important decisions, a right he says he has had no reason to exercise yet.
"Shareholders are greedy and they want to squeeze every bit out of the company as soon as possible," Mr. Ren said. By contrast, Huawei's employee-owned structure, he said, is "part of the reason Huawei could catch up and overtake some of our peers in our industry."
WSJ: Highlights from the April Jobs Report
The WSJ reports,"U.S. payroll growth was the strongest since January 2012. Gains were broad-based, led by professional and business services (including temporary workers, management and computer systems design), retail trade, food services, construction, health care and mining. Despite signs that the housing market is faltering, construction employment is up by 189,000 over the past year, with almost three-quarters of the gain occurring in the last six months, the Labor Department said".
"Unemployment: The unemployment rate dropped to its lowest level since September 2008. But the big decline isn’t all good news. The Labor Department’s figures, obtained by a separate survey of households, showed the labor force shrank by 806,000 and the number of employed people fell by 73,000. The labor force participation rate was down to 62.8%, around a three-decade low. People are dropping out of the workforce. That’s been a concern for Federal Reserve officials, who worry that too many Americans have become frustrated with a slow recovery and simply dropped out of the work force".
"U-6: The unemployment figure only captures those who have a job or are actively looking for work. A broader measure of joblessness, known as the “U-6,” accounts for people who have stopped looking for work as well as people working part-time for economic reasons. That number dropped to 12.3% from 12.7%".
"Part-timers: The Fed is also monitoring the number of part-timers. In April, almost 7.5 million were working part time but would have preferred a full-time job, a very slight increase from the prior month. The figure remains relatively high, suggesting there is still quite a bit of slack in the labor market".
"Revisions: February and March payrolls were revised up by a combined 36,000. Monthly job gains have averaged 238,000 over the past three months. In the 12 months prior to April, employment growth averaged 190,000, the Labor Department said".
"Earnings and Work Week: Neither the work week nor wages budged. Taken together, the figures show how much money workers are taking home each week, a key metric for consumer spending''".
WSJ: Obama: U.S., Germany United in Imposing Costs on Russia Over Ukraine
May 2, 2014 1:02 p.m. ET
The WSJ reports,"If Russia continues on its current course, we have a range of tools at our disposal, including sanctions that would target certain sectors of the Russian economy," Mr. Obama said during a news conference at the White House. "And we've been consulting closely with our European and G-7 partners, and we're stepping up our planning."
"Ms. Merkel said if further destabilization should happen, Europe will move to so-called Stage 3 sanctions".
"What we're talking about are sectoral measures," she said. She said part of that effort is a diversification of Europe's energy supply in the short, as well as long, term.
Targeting oil and gas sectors next might be unrealistic, given opposition from within the EU, but there are other key sectors that could be hit, Mr. Obama said.
"We're confident that we will have a package that will further impact Russia's growth and economy," Mr. Obama said. "Our hope is that we don't have to deploy them."
WSJ: Retirement Investors Flock Back to Stocks
The WSJ reports,"retirement investors are putting more money into stocks than they have since markets were slammed by the financial crisis six years ago.
Stocks accounted for 67% of employees' new contributions into retirement portfolios in March, according to the most-recent data from Aon Hewitt, which tracks 401(k) data for 1.3 million people at large corporations.
That is the highest percentage since March 2008, when stocks were teetering under the weight of mounting mortgage defaults, and compares with 56% in March 2009, when the market hit bottom.
The rising deposits, combined with the powerful bull market that took the Dow Jones Industrial Average to a record high on Wednesday, have left retirement savers with their biggest exposure to stocks in more than six years. In March, stocks made up 66% of the assets in the 401(k)s surveyed by Aon Hewitt, up from 48% in February 2009.
The stock crash deeply scarred investors, and even after the bull market began, they stuck with low-yielding bonds for the better part of three years.
It took last year's rally—with the S&P 500 soaring 32%, including dividends—and signs of an improving economy to coax them back to stocks in significant numbers.
Individual investors, notorious for mistiming the market, didn't fare well in the financial downturn. At the stock market's peak in October 2007, investors put 69% of new 401(k) contributions into stocks, according to Aon Hewitt. The S&P 500 went on to lose 57% of its value by March 2009.
Some financial advisers now worry that retirement investors could be late to the game, pouring into stocks after much of the easy gains have already been had. This year, the S&P 500 is 1.9% higher, but it is 0.4% off its record high hit at the beginning of April. By comparison, in the first four months of last year, the S&P 500 was 11% higher.
Meanwhile, large investors such as pension funds, banks and insurance companies are showing less appetite for risk. Demand for shares of newly public companies has weakened, and utilities, considered safe when economic growth isn't robust, are the best-performing group this year".
WSJ: AstraZeneca Rejects Pfizer Bid
The WSJ reports, "AstraZenecaPLC on Friday rejected an improved takeover offer fromPfizer Inc. worth more than $106 billion, saying the proposal substantially undervalued the company and putting the onus back on Pfizer Chief Executive Ian Readto either raise his bid again, go directly to shareholders, or walk away.
The British company said the financial and other terms described in the U.S. group's latest proposal were inadequate and not a basis on which to engage in talks.
"The large proportion of the consideration payable in Pfizer shares and the tax-driven inversion structure remain unchanged. Accordingly, the board has rejected the Proposal," AstraZeneca said in a statement.
The rejection came roughly four hours after Pfizer announced a fresh offer worth £50 ($84.47) a share, valuing the U.K. drug maker at £63 billion ($106.43 billion).
The revised offer represents a premium of about 7% over Pfizer's previous bid, made back in January, and increases the cash component of the offer to about 32% from 30% previously. Under the revised offer, AstraZeneca shareholders would get 1.845 shares in the combined company and £15.98 in cash.
Investors, too, appeared underwhelmed by the new offer. AstraZeneca shares were trading down about 1% in late morning London trading, hovering around £48 a share, still well below the £50 offer price, suggesting market skepticism about a deal getting done or a white knight emerging.
"We are showing strong momentum as an independent company, in particular with our exciting, rapidly progressing pipeline, which the board believes will deliver significant value for shareholders," AstraZeneca Chairman Leif Johanssonsaid. "Pfizer's proposal would dramatically dilute AstraZeneca shareholders' exposure to our unique pipeline and would create risks around its delivery. As such, the board has no hesitation in rejecting the proposal."
In an interview with The Wall Street Journal, AstraZeneca Chief Executive Pascal Soriot said the revised offer "underappreciated" the company's pipeline of new drugs in development and that no investors had approached him to ask him to consider the offer. "We haven't had anybody contacting us to say, 'Please engage, it's a good starting point,'" he said
Mr. Soriot added that he worries a deal could disrupt drug development. "Any merger creates disruption, and if you want to look for savings it creates even more disruption," he said".
WSJ: Oil Majors Stay Close to Russia
EXXON HOLDS LINE IN RUSSIA
The WSJ reports,"despite tensions between the West and Moscow over Ukraine, Western oil majors show no sign of pulling back on bets they’ve made in Russia in recent years.
Take ExxonMobil: As Daniel Gilbert writes, the U.S. giant is pushing ahead with plans to drill in the Arctic off Russia’s northern coast, in partnership with state-controlled Rosneft.
The Arctic is a key region for oil majors desperate to ensure their production keeps rising. Exxon reckons the prospect it is involved with there could contain 9 billion barrels of oil, equivalent to more than a third of the company’s current proven reserves.
The problem for oil majors has long been that maintaining growth has meant having to get involved in areas that are politically tricky. Exxon isn’t alone in having sought partnerships and investments in Russia in recent years: BP has gone so far as to take a near-20% stake in Rosneft. They will be hoping that the current crisis will blow over. But if it doesn’t, the safety of oil-industry bets on Russia will be questioned ever more closely".
Geopolitics: Ukraine's Crisis
"A spokesman for Vladimir Putin said the Geneva agreement to defuse the situation in eastern Ukraine was no longer viable after Kiev launched a military operation against the rebel-held city of Slavyansk.
The Ukrainian military launched its first serious offensive to retake the city, which is being held by pro-Russia militia, early on Friday morning. The rebel militia said Ukrainian troops had launched attacks on several checkpoints. Ukraine's defence minister, Arsen Avakov, said his forces had taken control of nine checkpoints to form a "tight ring" around the city.
Two Ukrainian helicopters were shot down and their pilots killed, both Russian and Ukrainian media reported. One militant was killed and another injured, according to the reports. Ukraine's security service said one helicopter had been brought down by a surface-to-air missile, citing this as evidence that Slavyansk's defenders were not just citizens who have armed themselves.
Four of those who had shot at helicopters were captured, Ukraine's defence ministry said, but rebel leader Vyacheslav Ponomaryov denied this.
"Basically, at the same time that Russia is taking pains to de-escalate and regulate the conflict, the Kiev regime has begun shooting up peaceful towns with military helicopters and has started a punitive operation, essentially destroying the last hope for the viability of the Geneva agreement," Putin's spokesman, Dmitry Peskov, said.
"Earlier, when he was still in Minsk, Putin called the possible operation a criminal action. Unfortunately, the development of events completely confirms this appraisal."
Russia, Ukraine, the US and the EU agreed in Geneva last month on a series of steps to reduce tensions in eastern Ukraine, where pro-Russia protesters and militia have seized government buildings in at least a dozen towns and cities.
The agreement called on illegal armed groups laying down their weapons and vacating buildings in exchange for a broad amnesty, but since it was signed, Kiev and Moscow have accused each other of not pressuring their supporters to disarm"
Source: theguardian
U.S. Bureau of labor Statistics: Nonfarm payroll employment rose by 288,000, and the unemployment rate fell by 0.4 percentage point to 6.3 percent in April
THE EMPLOYMENT SITUATION -- APRIL 2014
Total nonfarm payroll employment rose by 288,000, and the unemployment rate fell by 0.4 percentage point to 6.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Employment gains were widespread, led by job growth in professional and business services, retail trade, food services and drinking places, and construction. Household Survey Data In April, the unemployment rate fell from 6.7 percent to 6.3 percent, and the number of unemployed persons, at 9.8 million, decreased by 733,000. Both measures had shown little movement over the prior 4 months. Over the year, the unemployment rate and the number of unemployed persons declined by 1.2 percentage points and 1.9 million, respectively. Among the major worker groups, unemployment rates declined in April for adult men (5.9 percent), adult women (5.7 percent), teenagers (19.1 percent), whites (5.3 percent), blacks (11.6 percent), and Hispanics (7.3 percent). The jobless rate for Asians was 5.7 percent (not seasonally adjusted), little changed over the year. In April, the number of unemployed reentrants and new entrants declined by 417,000 and 126,000, respectively. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search, and new entrants are persons who have never worked.) The number of job losers and persons who completed temporary jobs decreased by 253,000 to 5.2 million. The number of long-term unemployed (those jobless for 27 weeks or more) declined by 287,000 in April to 3.5 million; these individuals accounted for 35.3 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has decreased by 908,000. The civilian labor force dropped by 806,000 in April, following an increase of 503,000 in March. The labor force participation rate fell by 0.4 percentage point to 62.8 percent in April. The participation rate has shown no clear trend in recent months and currently is the same as it was this past October. The employment-population ratio showed no change over the month (58.9 percent) and has changed little over the year. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 7.5 million in April. These individuals were working part time because their hours had been cut back or because they were unable to find full-time work. In April, 2.2 million persons were marginally attached to the labor force, down slightly from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 783,000 discouraged workers in April, little changed from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.4 million persons marginally attached to the labor force in April had not searched for work for reasons such as school attendance or family responsibilities. Establishment Survey Data Total nonfarm payroll employment increased by 288,000 in April. Job growth had averaged 190,000 per month over the prior 12 months. In April, employment growth was widespread, led by gains in professional and business services, retail trade, food services and drinking places, and construction. (See table B-1.) Professional and business services added 75,000 jobs in April. Employment in this industry had increased by an average of 55,000 per month over the prior 12 months. In April, employment growth continued in temporary help services (+24,000), in management of companies and enterprises (+12,000), and in computer systems design and related services (+9,000). Retail trade employment rose by 35,000 in April. Over the past 12 months, employment in this industry has grown by 327,000. Within retail trade, job growth over the month occurred in food and beverage stores (+9,000), general merchandise stores (+8,000), motor vehicle and parts dealers (+6,000), and nonstore retailers (+4,000). Electronics and appliance stores lost 11,000 jobs in April. Wholesale trade added 16,000 jobs over the month and has added 126,000 jobs over the year. In April, employment rose in food services and drinking places (+33,000), about in line with its prior 12-month average gain of 28,000 per month. In April, employment in construction grew by 32,000, with job growth in heavy and civil engineering construction (+11,000) and residential building (+7,000). Construction has added 189,000 jobs over the past year, with almost three-fourths of the gain occurring in the past 6 months. Health care employment increased by 19,000 in April, about in line with the prior 12-month average gain of 17,000 per month. Employment in other services, which includes membership associations and personal and laundry services, rose by 15,000 over the month. Mining added 10,000 jobs in April, with most of the gain in support activities for mining (+7,000). Employment in other major industries, including manufacturing, transportation and warehousing, information, financial activities, and government, changed little over the month. The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in April. The manufacturing workweek decreased by 0.2 hour in April to 40.8 hours, and factory overtime was unchanged at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours. In April, average hourly earnings for all employees on private nonfarm payrolls were unchanged at $24.31. Over the past 12 months, average hourly earnings have risen by 1.9 percent. In April, average hourly earnings of private-sector production and nonsupervisory employees edged up by 3 cents to $20.50. (See tables B-3 and B-8.) The change in total nonfarm payroll employment for February was revised from +197,000 to +222,000, and the change for March was revised from +192,000 to +203,000. With these revisions, employment gains in February and March were 36,000 higher than previously reported. _____________
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