(CNNMoney.com) -- Once a titan in the insurance world, AIG is a shadow of its former self, and experts say the company is likely doomed for failure.
That's partly because AIG (AIG, Fortune 500) is slowly getting rid of its strong, moneymaking businesses as it attempts to pay back the roughly $130 billion it has borrowed on its $182 billion government bailout.
The company had to give up more than it had anticipated to pay back taxpayers because of the horrid credit environment, and analysts believe AIG may be giving up too much for it to survive on its own. Not that there was much choice.
"The plan has been, since the first days of the bailout, to sell off the crown jewels including its investment arm and very strong insurance units, because that's all the market will accept now," said Julie Grandstaff, managing director of StanCorp Investment Advisers. "It was the only way to save the organization, but it's questionable if there will be a freestanding AIG in the end."
What AIG is losing: On March 2, AIG transferred its property and casualty businesses into a new, separate company called AIU Holdings. AIG did the same with its AIA Asian life insurance business and ALICO foreign life insurance unit.
The government will eventually take a stake in AIA and ALICO, and on April 22, AIG began the process of selling off a minority stake in AIU to investors. Eventually, all three companies will have their own boards, management and could even trade on the stock market separately from AIG.
AIG has also attempted to sell off many of its other subsidiaries, but those purchases have been small in number and value. The largest of the 10 sold-off units was AIG's car insurance unit, which the company earlier this month announced it would sell for $1.9 billion. The next largest unit was its Hartford Steam Boiler unit, which fetched $745 million.
Read more here
Tuesday, April 28, 2009
Monday, April 27, 2009
Deutsche Bank Chief’s Contract Extended After Navigating Crisis
(Bloomberg) -- Josef Ackermann, who helped Deutsche Bank AG navigate the financial crisis, will have his contract as chief executive officer extended by three years.
Ackermann, 61, acceding to a supervisory board request, will remain CEO until the annual general meeting in 2013, Frankfurt-based Deutsche Bank said in a statement late yesterday. He was scheduled to step down in May of next year.
The Swiss-born CEO, who has been at the helm since 2002, helped Deutsche Bank skirt the worst of the U.S. subprime mortgage market crash and resist taking government aid. The German bank returned to profit in the first quarter, analyst estimates show, bouncing back from the first annual loss in more than 50 years in 2008.
“This is about continuity,” said Manfred Jakob, a Frankfurt-based analyst at SEB AG. “Ackermann has best exemplified the company’s strategy of both pursuing investment banking and expanding retail banking. Overall, it’s not a bad move.”
Deutsche Bank, which reports first-quarter earnings today, may post net income of 773 million euros ($1.02 billion), compared with a loss of 131 million euros a year earlier, according to the median estimate of 13 analysts surveyed by Bloomberg.
Ackermann “steered the bank safely through the crisis,” said supervisory board Chairman Clemens Boersig in the statement. “Our performance in the first quarter 2009 is impressive evidence of this.”
‘Secures’ Leadership
Deutsche Bank rose 55 percent so far this year in Frankfurt trading. The stock is the third-biggest gainer in the Bloomberg index of 65 European banks, following a 69 percent slump last year. The company has a market value of 26.9 billion euros.
Ackermann said on Feb. 5 at the annual earnings press conference in Frankfurt that he was sticking to his plan to step down in May 2010, when asked by Bloomberg News whether he’d consider extending his contract.
Deutsche Bank appointed four executives to its management board in March, stoking speculation one of them would be selected to succeed Ackermann. Investment banking co-heads Anshu Jain and Michael Cohrs were named to the board, as was Rainer Neske, the head of private and business clients, and regional management chief Juergen Fitschen.
The decision to extend the contract “secures leadership continuity for the bank,” Boersig said in the statement.
Read more here
Ackermann, 61, acceding to a supervisory board request, will remain CEO until the annual general meeting in 2013, Frankfurt-based Deutsche Bank said in a statement late yesterday. He was scheduled to step down in May of next year.
The Swiss-born CEO, who has been at the helm since 2002, helped Deutsche Bank skirt the worst of the U.S. subprime mortgage market crash and resist taking government aid. The German bank returned to profit in the first quarter, analyst estimates show, bouncing back from the first annual loss in more than 50 years in 2008.
“This is about continuity,” said Manfred Jakob, a Frankfurt-based analyst at SEB AG. “Ackermann has best exemplified the company’s strategy of both pursuing investment banking and expanding retail banking. Overall, it’s not a bad move.”
Deutsche Bank, which reports first-quarter earnings today, may post net income of 773 million euros ($1.02 billion), compared with a loss of 131 million euros a year earlier, according to the median estimate of 13 analysts surveyed by Bloomberg.
Ackermann “steered the bank safely through the crisis,” said supervisory board Chairman Clemens Boersig in the statement. “Our performance in the first quarter 2009 is impressive evidence of this.”
‘Secures’ Leadership
Deutsche Bank rose 55 percent so far this year in Frankfurt trading. The stock is the third-biggest gainer in the Bloomberg index of 65 European banks, following a 69 percent slump last year. The company has a market value of 26.9 billion euros.
Ackermann said on Feb. 5 at the annual earnings press conference in Frankfurt that he was sticking to his plan to step down in May 2010, when asked by Bloomberg News whether he’d consider extending his contract.
Deutsche Bank appointed four executives to its management board in March, stoking speculation one of them would be selected to succeed Ackermann. Investment banking co-heads Anshu Jain and Michael Cohrs were named to the board, as was Rainer Neske, the head of private and business clients, and regional management chief Juergen Fitschen.
The decision to extend the contract “secures leadership continuity for the bank,” Boersig said in the statement.
Read more here
Thursday, April 23, 2009
Retest coming?
(MarketWatch) -- New bull market, or bear market rally?
That's the big debate currently, of course -- with a lot apparently riding on the right answer. But what if it doesn't make that much of a difference?
I ask because new bull markets often retest the lows of the bear markets that preceded them. That means that, even if a new bull market is now underway, it is not necessarily essential that you immediately increase your equity exposure.
Consider what happened after the 2000-2002 bear market came to an end on Oct. 9, 2002, at the 7,286 level on the Dow Jones Industrial Average . Over the next 49 calendar days, the Dow turned in a 23% rally. That's remarkably similar to the current rally, which as of Thursday night is 45 days old and in which the Dow has risen 22%.
But, following that 49-day rally in 2002, the Dow declined for a few months, in the process setting up a retest of its Oct. 9 low. By the subsequent March 11, for example, the Dow stood at 7,524, just 3.3% above the bear market low.
If the 2002-2003 script were to be followed today, the Dow would fall back in coming weeks to the 6,763 level.
Read more here
That's the big debate currently, of course -- with a lot apparently riding on the right answer. But what if it doesn't make that much of a difference?
I ask because new bull markets often retest the lows of the bear markets that preceded them. That means that, even if a new bull market is now underway, it is not necessarily essential that you immediately increase your equity exposure.
Consider what happened after the 2000-2002 bear market came to an end on Oct. 9, 2002, at the 7,286 level on the Dow Jones Industrial Average . Over the next 49 calendar days, the Dow turned in a 23% rally. That's remarkably similar to the current rally, which as of Thursday night is 45 days old and in which the Dow has risen 22%.
But, following that 49-day rally in 2002, the Dow declined for a few months, in the process setting up a retest of its Oct. 9 low. By the subsequent March 11, for example, the Dow stood at 7,524, just 3.3% above the bear market low.
If the 2002-2003 script were to be followed today, the Dow would fall back in coming weeks to the 6,763 level.
Read more here
Wednesday, April 22, 2009
Treasury Said to Ask Chrysler Banks to Cut Debt to $1.5 Billion
(Bloomberg) -- The U.S. Treasury asked Chrysler LLC’s secured lenders to reduce their debt to $1.5 billion from $6.9 billion in exchange for a 5 percent equity stake in the automaker, a person familiar with the negotiations said.
The offer followed by a day a proposal by the lenders to reduce the debt to about $4.5 billion and take 40 percent equity. The person describing the Treasury offer asked not to be identified discussing the private talks.
Treasury and the lenders, made up of four banks and about 45 investment funds, are still far apart as a government deadline of April 30 approaches for Chrysler to cut most of its secured debt, reach cost-saving labor accords and forge an alliance with Fiat SpA. The government has been negotiating with the lenders on Chrysler’s behalf.
The proposal from the lenders also asked Fiat to make a cash contribution to its proposed Chrysler alliance, said people familiar with their offer.
Treasury submitted an initial offer to the lenders early this month to reduce their loan obligations to about $1 billion. The lenders rejected that request and crafted a counter-offer using new business assumptions for Chrysler based on a partnership with Fiat, the people said.
Treasury spokeswoman Jenni Engebretsen declined to comment. The Wall Street Journal reported the offer earlier.
Read more here
The offer followed by a day a proposal by the lenders to reduce the debt to about $4.5 billion and take 40 percent equity. The person describing the Treasury offer asked not to be identified discussing the private talks.
Treasury and the lenders, made up of four banks and about 45 investment funds, are still far apart as a government deadline of April 30 approaches for Chrysler to cut most of its secured debt, reach cost-saving labor accords and forge an alliance with Fiat SpA. The government has been negotiating with the lenders on Chrysler’s behalf.
The proposal from the lenders also asked Fiat to make a cash contribution to its proposed Chrysler alliance, said people familiar with their offer.
Treasury submitted an initial offer to the lenders early this month to reduce their loan obligations to about $1 billion. The lenders rejected that request and crafted a counter-offer using new business assumptions for Chrysler based on a partnership with Fiat, the people said.
Treasury spokeswoman Jenni Engebretsen declined to comment. The Wall Street Journal reported the offer earlier.
Read more here
Monday, April 20, 2009
Barendrechters Stand Up to Shell’s Plan to Bury CO2
(Bloomberg) -- The Dutch town of Barendrecht has a message for Royal Dutch Shell Plc: Not under my backyard.
The oil company and the Netherlands government intend to build the first of a new generation of carbon-dioxide storage facilities in two depleted natural-gas fields in Barendrecht. The plan is to capture emissions from a gasification hydrogen plant at Shell’s nearby Pernis refinery and then store the CO2 more than a mile below area homes, preventing the greenhouse gas from reaching the air and harming the environment.
“I don’t think this is the solution to the CO2 problem,” said 53-year-old resident Gerard van Gils. “Why do a project in a residential area and not offshore? The atomic bomb wasn’t tested under Manhattan. To me this means: Not under my backyard.”
Barendrechters like Van Gils say they’re concerned about safety and a possible drop in property values. Governments around the world want energy companies to store CO2 instead of releasing it, to combat global warming. The Netherlands aims to bury 30 million tons of CO2 by 2030 and is spending about 750 million euros ($980 million) in three years on CO2 reduction.
Carbon capture and storage, or CCS, involves extracting CO2 from power generation and industrial projects, compressing it and injecting it into depleted oil and gas fields or saline aquifers. The technology would allow prolonged use of coal for electricity generation while reducing greenhouse pollution.
“We are very confident about the safety of the project,” said Margriet Kuijper, CCS project manager at Shell. “Barendrecht is strategically important for Shell and for the Netherlands, as it is paving the way for the bigger projects.”
Environmental Assessment
An independent environmental assessment this month will determine whether the project at Barendrecht, on the outskirts of Rotterdam, addresses all concerns. The city council, which so far has opposed the plan, will deliver a final decision by June 29. That can still be overruled by the Dutch government, which commissioned the project.
In its preliminary finding, the council said public support was “lacking” and asked Environment Minister Jacqueline Cramer to halt the venture.
“This project is an experiment, and we don’t think that it is a good idea to have that in a densely populated area,” Simon Zuurbier, alderman of the city council, said in an interview. “It would be better to do it somewhere else.”
Negligible Risks
The Dutch Economic Affairs and Environment Ministries sought proposals for the project. Shell’s plan is to inject as much as 10 million tons of CO2 into the fields, the same amount of the gas created by heating one million modern houses over five years.
The fields are about 1,700 meters (5,577 feet) and 2,700 meters underground. Shell, Europe’s largest oil company, says the risks are negligible and within government standards.
The proximity of the refinery to the ageing gas fields and the existing pipelines make Barendrecht the ideal site for a trial project, The Hague-based Shell said.
Other countries are competing for European Union funding to support similar projects. BP Plc in 2007 scrapped a $1 billion carbon capture and storage power project in Scotland because possible U.K. government money would come too late.
Chancellor of the Exchequer Alistair Darling will introduce incentives this week for U.K. businesses to capture carbon dioxide and store it underground, two people familiar with the plans have said.
Read more here
The oil company and the Netherlands government intend to build the first of a new generation of carbon-dioxide storage facilities in two depleted natural-gas fields in Barendrecht. The plan is to capture emissions from a gasification hydrogen plant at Shell’s nearby Pernis refinery and then store the CO2 more than a mile below area homes, preventing the greenhouse gas from reaching the air and harming the environment.
“I don’t think this is the solution to the CO2 problem,” said 53-year-old resident Gerard van Gils. “Why do a project in a residential area and not offshore? The atomic bomb wasn’t tested under Manhattan. To me this means: Not under my backyard.”
Barendrechters like Van Gils say they’re concerned about safety and a possible drop in property values. Governments around the world want energy companies to store CO2 instead of releasing it, to combat global warming. The Netherlands aims to bury 30 million tons of CO2 by 2030 and is spending about 750 million euros ($980 million) in three years on CO2 reduction.
Carbon capture and storage, or CCS, involves extracting CO2 from power generation and industrial projects, compressing it and injecting it into depleted oil and gas fields or saline aquifers. The technology would allow prolonged use of coal for electricity generation while reducing greenhouse pollution.
“We are very confident about the safety of the project,” said Margriet Kuijper, CCS project manager at Shell. “Barendrecht is strategically important for Shell and for the Netherlands, as it is paving the way for the bigger projects.”
Environmental Assessment
An independent environmental assessment this month will determine whether the project at Barendrecht, on the outskirts of Rotterdam, addresses all concerns. The city council, which so far has opposed the plan, will deliver a final decision by June 29. That can still be overruled by the Dutch government, which commissioned the project.
In its preliminary finding, the council said public support was “lacking” and asked Environment Minister Jacqueline Cramer to halt the venture.
“This project is an experiment, and we don’t think that it is a good idea to have that in a densely populated area,” Simon Zuurbier, alderman of the city council, said in an interview. “It would be better to do it somewhere else.”
Negligible Risks
The Dutch Economic Affairs and Environment Ministries sought proposals for the project. Shell’s plan is to inject as much as 10 million tons of CO2 into the fields, the same amount of the gas created by heating one million modern houses over five years.
The fields are about 1,700 meters (5,577 feet) and 2,700 meters underground. Shell, Europe’s largest oil company, says the risks are negligible and within government standards.
The proximity of the refinery to the ageing gas fields and the existing pipelines make Barendrecht the ideal site for a trial project, The Hague-based Shell said.
Other countries are competing for European Union funding to support similar projects. BP Plc in 2007 scrapped a $1 billion carbon capture and storage power project in Scotland because possible U.K. government money would come too late.
Chancellor of the Exchequer Alistair Darling will introduce incentives this week for U.K. businesses to capture carbon dioxide and store it underground, two people familiar with the plans have said.
Read more here
Thursday, April 16, 2009
Asian Shares Rise Before Weekend; Tech Stocks Solid
(MarketWatch) -- Asian shares were higher Friday, led by technology stocks after their U.S. peers gained on hopes for better demand and some stability in the economy there.
Japan's Nikkei 225 was up 2.2% with Australia's S&P/ASX 200 up 1.5% and South Korea's Kospi Composite up 0.7%. Hong Kong's Hang Seng Index was up 1.9% with Taiwan's main index up 0.7% but the Shanghai Composite Index down 1.9%.
"It's all reasonably positive at the moment," with U.S. bank earnings so far not a major cause for concern, said MF Global senior trader Anthony Anderson in Australia.
All eyes though were on Citigroup's report, due later Friday. "If it doesn't throw up too many surprises we're probably going to test high levels," Anderson said.
Wall Street gained Thursday amid hopes for an economic bottom in the U.S., though U.S. stock futures were mildly lower in screen trade as the weekend drew near.
Google shares erased an initial late-session gain to be down 0.1%, despite news its first-quarter net income rose 8.9% on higher revenue and U.S. paid clicks for Internet searches, with the results topping Wall Street's estimates.
And Federal Reserve Bank of San Francisco President Janet Yellen sounded a note of caution on the U.S. outlook. "The global nature of the downturn raises the odds that the recession will be prolonged, since neither we nor our trade partners can look to a boost from foreign demand."
Barclays Capital analysts said sentiment had improved dramatically over the past month, with risky assets rallying. "The verdict is still out on whether this is just another bear market correction or a sign of better times to come."
In Asia, Toshiba was up 4.1% after the company said it likely sustained a group operating loss of around Y250 billion for the year ended last month, a narrowing from its existing estimate of a Y280 billion loss, helped by output cuts by chipmakers
Asian tech shares generally were finding buyers with Samsung Electronics up 2.9%, LG Electronics up 4.3% and Hynix up 8.3%. Sony added 4.9% in Japan with TDK up 5.8% and Elpida up 6.7%.
Taiwan's Nanya Technology was up 3.1% with Inotera Memories up 6.7%, helped by a recent rise in DRAM prices. Nanya said Thursday it planned to raise contract chip prices 10% in the latter part of April; "contract prices will likely remain strong throughout this year amid an expected supply shortage although demand won't likely to pick up any time soon," said Kim Gee-soo at Goodmorning Shinhan Securities.
LG Display added 4.2% in Seoul. It posted its second-straight quarterly net loss in the three months ended March 31, but the flat-panel maker signaled better results in the current quarter.
Financial stocks were gaining across Asia with National Australia Bank up 2.0% and Commonwealth Bank of Australia rising 2.0%, too. Korea's KB Financial was up 1.8%, with bank stocks helped by Thursday's rise in JPMorgan Chase shares in the U.S. after its results.
Tourism stocks gained in Taiwan before cross-strait trade negotiations, with Formosa International Hotel up 3.4% and China Airlines higher by 0.7%.
Cathay Pacific Airways was up 0.7% in Hong Kong, even as it said it was reducing its passenger and cargo capacity and would ask some staff to take unpaid leave over the next 12 months.
Hong Kong developer stocks were higher, helped by brisk sales at Cheung Kong's new project Central Park Towers II, with Cheung Kong up 1.7% and Sino Land up 4.6%.
Read more here
Japan's Nikkei 225 was up 2.2% with Australia's S&P/ASX 200 up 1.5% and South Korea's Kospi Composite up 0.7%. Hong Kong's Hang Seng Index was up 1.9% with Taiwan's main index up 0.7% but the Shanghai Composite Index down 1.9%.
"It's all reasonably positive at the moment," with U.S. bank earnings so far not a major cause for concern, said MF Global senior trader Anthony Anderson in Australia.
All eyes though were on Citigroup's report, due later Friday. "If it doesn't throw up too many surprises we're probably going to test high levels," Anderson said.
Wall Street gained Thursday amid hopes for an economic bottom in the U.S., though U.S. stock futures were mildly lower in screen trade as the weekend drew near.
Google shares erased an initial late-session gain to be down 0.1%, despite news its first-quarter net income rose 8.9% on higher revenue and U.S. paid clicks for Internet searches, with the results topping Wall Street's estimates.
And Federal Reserve Bank of San Francisco President Janet Yellen sounded a note of caution on the U.S. outlook. "The global nature of the downturn raises the odds that the recession will be prolonged, since neither we nor our trade partners can look to a boost from foreign demand."
Barclays Capital analysts said sentiment had improved dramatically over the past month, with risky assets rallying. "The verdict is still out on whether this is just another bear market correction or a sign of better times to come."
In Asia, Toshiba was up 4.1% after the company said it likely sustained a group operating loss of around Y250 billion for the year ended last month, a narrowing from its existing estimate of a Y280 billion loss, helped by output cuts by chipmakers
Asian tech shares generally were finding buyers with Samsung Electronics up 2.9%, LG Electronics up 4.3% and Hynix up 8.3%. Sony added 4.9% in Japan with TDK up 5.8% and Elpida up 6.7%.
Taiwan's Nanya Technology was up 3.1% with Inotera Memories up 6.7%, helped by a recent rise in DRAM prices. Nanya said Thursday it planned to raise contract chip prices 10% in the latter part of April; "contract prices will likely remain strong throughout this year amid an expected supply shortage although demand won't likely to pick up any time soon," said Kim Gee-soo at Goodmorning Shinhan Securities.
LG Display added 4.2% in Seoul. It posted its second-straight quarterly net loss in the three months ended March 31, but the flat-panel maker signaled better results in the current quarter.
Financial stocks were gaining across Asia with National Australia Bank up 2.0% and Commonwealth Bank of Australia rising 2.0%, too. Korea's KB Financial was up 1.8%, with bank stocks helped by Thursday's rise in JPMorgan Chase shares in the U.S. after its results.
Tourism stocks gained in Taiwan before cross-strait trade negotiations, with Formosa International Hotel up 3.4% and China Airlines higher by 0.7%.
Cathay Pacific Airways was up 0.7% in Hong Kong, even as it said it was reducing its passenger and cargo capacity and would ask some staff to take unpaid leave over the next 12 months.
Hong Kong developer stocks were higher, helped by brisk sales at Cheung Kong's new project Central Park Towers II, with Cheung Kong up 1.7% and Sino Land up 4.6%.
Read more here
Wednesday, April 15, 2009
Economy still worsening across U.S.: Beige Book
(MarketWatch) - The economy continued to worsen across the United States in March and early April, amid scattered signs that the pace of the decline was lessening in some regions, the Federal Reserve reported Wednesday in its Beige Book account of the economy.
"Overall economic activity contracted further or remained weak," the Fed said, based on reports from thousands of business sources across the country. "However, five of the 12 districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level."
The report, written by the economics staff at the Dallas Fed, generally agrees with comments by top policymakers that there are some signs that the economy may be getting worse at a slower pace.
The economy declined at a 6.3% annual pace in the fourth quarter, and economists are forecasting a decline of 5% in the first quarter and about 2% in the current quarter.
Read more at MarketWatch
"Overall economic activity contracted further or remained weak," the Fed said, based on reports from thousands of business sources across the country. "However, five of the 12 districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level."
The report, written by the economics staff at the Dallas Fed, generally agrees with comments by top policymakers that there are some signs that the economy may be getting worse at a slower pace.
The economy declined at a 6.3% annual pace in the fourth quarter, and economists are forecasting a decline of 5% in the first quarter and about 2% in the current quarter.
Read more at MarketWatch
China's economy likely to show bottoming
(MarketWatch) -- Key Chinese economic data due out this week may mark the low point from which a recovery will follow, economists say.
"The worst of statistics in terms of GDP are probably behind us," said Credit Suisse's Chief Asian Economist Dong Tao in Hong Kong. "Either the fourth quarter of last year, or the first quarter of this year are probably the worst in terms of China's growth cycle."
China's gross domestic product growth likely slowed to 6% in the January-March quarter, according to the median forecast of 15 economists surveyed by Dow Jones Newswires, compared to a 6.8% expansion in the fourth quarter.
The first-quarter GDP figures are due to be released Thursday morning in Beijing, or 9 p.m. Eastern time Wednesday.
The big question in the minds of China watchers is whether the 4 trillion yuan ($586 billion) stimulus package -- along with other measures designed to kick start the economy -- are beginning to find traction.
For the most part, analysts were upbeat over the latest batch of data, released over the weekend, which showed efforts to inject cash into the economy appear to working.
Money supply, as measured by M2, expanded 25.5% in the first quarter from a year earlier. Meanwhile, banks extended 4.58 trillion yuan in new loans in the quarter, nearly as much as the 4.9 trillion yuan that was issued in all of 2008.
Those two figures prompted several analysts to say new bank-lending growth this year looks likely to top 8 trillion yuan, up from the government's earlier 5 trillion yuan target.
Read more at MarketWatch
"The worst of statistics in terms of GDP are probably behind us," said Credit Suisse's Chief Asian Economist Dong Tao in Hong Kong. "Either the fourth quarter of last year, or the first quarter of this year are probably the worst in terms of China's growth cycle."
China's gross domestic product growth likely slowed to 6% in the January-March quarter, according to the median forecast of 15 economists surveyed by Dow Jones Newswires, compared to a 6.8% expansion in the fourth quarter.
The first-quarter GDP figures are due to be released Thursday morning in Beijing, or 9 p.m. Eastern time Wednesday.
The big question in the minds of China watchers is whether the 4 trillion yuan ($586 billion) stimulus package -- along with other measures designed to kick start the economy -- are beginning to find traction.
For the most part, analysts were upbeat over the latest batch of data, released over the weekend, which showed efforts to inject cash into the economy appear to working.
Money supply, as measured by M2, expanded 25.5% in the first quarter from a year earlier. Meanwhile, banks extended 4.58 trillion yuan in new loans in the quarter, nearly as much as the 4.9 trillion yuan that was issued in all of 2008.
Those two figures prompted several analysts to say new bank-lending growth this year looks likely to top 8 trillion yuan, up from the government's earlier 5 trillion yuan target.
Read more at MarketWatch
Tuesday, April 14, 2009
Bono Plays Matchmaker as YouTube, Universal Create Music Site
(Bloomberg) -- Since MTV started in 1981 with “Video Killed the Radio Star,” record labels have treated videos as a marketing expense. Now, with album sales plummeting, music companies aim to make them a source of profit.
That’s the goal of Universal Music Group’s venture with Google Inc.’s YouTube. Vevo.com, a new site announced last week, will stream videos from artists such as U2, Beck and the Rolling Stones. YouTube will then split advertising revenue with Universal, the world’s largest music company.
The agreement is a sign of progress in the record industry’s efforts to make money from YouTube, the biggest online video service. Internet ads could help the labels rebound from a 45 percent plunge in U.S. album sales since 2000, according to Nielsen SoundScan. Working with YouTube also may let the industry rein in the wild-west nature of online music.
“As an industry or a company, we have to figure out how to derive some sort of revenue from the consumption of music, whether or not people buy it,” said Rio Caraeff, executive vice president of Universal Music’s ELabs, which handles its e- commerce strategy.
Over dinner earlier this year in Paris, U2 singer Bono urged Universal Music Chairman Doug Morris to get in touch with Google Chief Executive Officer Eric Schmidt about working together, according to a person with knowledge of the talks.
Giving Away
The revenue-sharing plan is a shift from the 1980s and 1990s, when videos from artists such as Bon Jovi, Madonna and ‘N Sync were given free to MTV for marketing purposes. With album sales falling, music stores closing and MTV moving to a reality-television format, videos need to start paying for themselves.
New York-based Universal, owned by France’s Vivendi SA, says its videos have been watched on YouTube more than 3.6 billion times.
“The video used to be just a cost center,” Jean-Bernard Levy, CEO of Vivendi, said in an interview last month. “We used to do lots of great artistic videos that we gave away to MTV and other people for free. We didn’t get paid. Now it’s becoming a profit center.”
Universal and Google executives are asking the other major record labels to join their partnership. That includes Sony Music Entertainment, EMI Group Ltd. and Warner Music Group Corp.
Jeanne Meyer, a spokeswoman for EMI, said talks with YouTube are at a “very early stage.” Warner Music’s Will Tanous declined to comment on the discussions. Claire von Schilling, a Sony spokeswoman, didn’t return a call seeking comment.
‘High Hopes’
YouTube also needs new ways to make money. The business will lose $470 million in 2009, according to Credit Suisse estimates. A deal with Universal could be a model for agreements with other content providers, allowing the Web site to charge premium ad rates for professionally made clips.
“We have high hopes we’re creating a sustainable, profitable business model,” David Eun, vice president of strategic partnerships at Mountain View, California-based Google, said on a conference call last week.
YouTube, famous for the low-budget videos posted by its users, is trying to add more premium content. Of the top 100 most-viewed video producers on YouTube, 39 are from musicians and labels, according to David Burch, a marketing manager with the video-tracking firm TubeMogul Inc. in Emeryville, California.
Read more at Bloomberg
That’s the goal of Universal Music Group’s venture with Google Inc.’s YouTube. Vevo.com, a new site announced last week, will stream videos from artists such as U2, Beck and the Rolling Stones. YouTube will then split advertising revenue with Universal, the world’s largest music company.
The agreement is a sign of progress in the record industry’s efforts to make money from YouTube, the biggest online video service. Internet ads could help the labels rebound from a 45 percent plunge in U.S. album sales since 2000, according to Nielsen SoundScan. Working with YouTube also may let the industry rein in the wild-west nature of online music.
“As an industry or a company, we have to figure out how to derive some sort of revenue from the consumption of music, whether or not people buy it,” said Rio Caraeff, executive vice president of Universal Music’s ELabs, which handles its e- commerce strategy.
Over dinner earlier this year in Paris, U2 singer Bono urged Universal Music Chairman Doug Morris to get in touch with Google Chief Executive Officer Eric Schmidt about working together, according to a person with knowledge of the talks.
Giving Away
The revenue-sharing plan is a shift from the 1980s and 1990s, when videos from artists such as Bon Jovi, Madonna and ‘N Sync were given free to MTV for marketing purposes. With album sales falling, music stores closing and MTV moving to a reality-television format, videos need to start paying for themselves.
New York-based Universal, owned by France’s Vivendi SA, says its videos have been watched on YouTube more than 3.6 billion times.
“The video used to be just a cost center,” Jean-Bernard Levy, CEO of Vivendi, said in an interview last month. “We used to do lots of great artistic videos that we gave away to MTV and other people for free. We didn’t get paid. Now it’s becoming a profit center.”
Universal and Google executives are asking the other major record labels to join their partnership. That includes Sony Music Entertainment, EMI Group Ltd. and Warner Music Group Corp.
Jeanne Meyer, a spokeswoman for EMI, said talks with YouTube are at a “very early stage.” Warner Music’s Will Tanous declined to comment on the discussions. Claire von Schilling, a Sony spokeswoman, didn’t return a call seeking comment.
‘High Hopes’
YouTube also needs new ways to make money. The business will lose $470 million in 2009, according to Credit Suisse estimates. A deal with Universal could be a model for agreements with other content providers, allowing the Web site to charge premium ad rates for professionally made clips.
“We have high hopes we’re creating a sustainable, profitable business model,” David Eun, vice president of strategic partnerships at Mountain View, California-based Google, said on a conference call last week.
YouTube, famous for the low-budget videos posted by its users, is trying to add more premium content. Of the top 100 most-viewed video producers on YouTube, 39 are from musicians and labels, according to David Burch, a marketing manager with the video-tracking firm TubeMogul Inc. in Emeryville, California.
Read more at Bloomberg
Subscribe to:
Posts (Atom)