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Vol. 3 :: No. 11
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World Brief
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World Brief |
Renault and its Japanese partner Nissan announced stake in Renault while the French car maker is to raise its stake in Nissan from 36.8 percent to 44.4 percent.
The two companies are also to create a new company called Renault-Nissan BV to oversee the strategy of the alliance and in which Renault and Nissan are to have an equal stake. The new entity is to be registered in the Netherlands.
General Motors Corporation has agreed to sell its Hughes Electronics subsidiary and its Direct TV home satellite network to EchoStar Communications for US$ 25.8 billion, the automaker said.
GM’s board of directors decided to sell the subsidiary to EchoStar after News Corporation dropped out of the bidding. If approved by regulators, EchoStar’s purchase would make the home satellite business in the United States a near monopoly.
Under terms of the deal announced sometime back in a news release, GMN would technically spin off Hughes and merge it with EchoStar in a tax-free transaction.
EchoStar, of Litytleton, Colorado, is learned to be offering 0.73 EchoStar shares for each share of Hughes.
News Corporation Chairman Rupert Murdoch withdrew his company’s long-standing offer after GM’s board failed to reach a decision on the sale.
Japan’s Honda Motor Corporation has said that its interim net profit surged 42.5 percent to 1.45 billion dollars from the same time last year due to strong sales, a weak yen and aggressive restructuring efforts.
Group net profit in the six months to September came to 173.74 billion yen (1.45 billion dollars), with pre-tax profit of 269.99 billion yen, 40.6 per cent higher than last year, the firm said.
Half year revenue rose 14.8 per cent to 3,505 billion yen.
Honda’s stunning growth amid a global economic slump was strongest in the second quarter to September, the company reported.
For the full year to March, the world’s biggest motorcycle maker forecast group net profit of 330 billion yen, up from 315 billion yen predicted in August.
Pretax profit for the year was seen at 510 billion yen on revenue of 7,170 billion yen.
Japanese hi-tech giant Hitachi Ltd. said that it suffered a 921 million dollar net loss for the six months to September due to a slump in sales of personal computers and mobile phones.
The group net loss came to 110.5 billion yen (921 million dollars) for the six months, swinging into the red from a net profit of 61.7 billion yen over the same period last year, the nation’s largest maker of electronics components and consumer products said.
Interim revenue fell 1.8 per cent year-on-year to 3,938.1 billion yen, while the pre-tax loss came to 98.5 billion yen, contrasting sharply with a 154.8 billion yen pre-tax profit a year earlier.
In August, Hitachi said it would cut 14,700 jobs, or four per cent of its total workforce, because of slack demand for hi-tech products, especially personal computers and mobile phones.
Cathay Pacific Airways announced that it will eliminate a traditional 13th-month bonus for its employees this year – cost cutting measure intended to help Hong Kong’s biggest airlines weather the global terror crisis.
Chairman James Hughes-Hallett told reporters at an economic conference that Cathay does not now plan to cut staff or reduce base salaries, although neither option can be ruled out as the aviation industry suffers some of the hardest times seen in years.
Hughes-Hallett, however, did not specify how much money Cathay would save.
The general secretary of Cathay’s pilots’ union, John Findlay, said cockpit crew were disappointed they won’t get an extra month’s pay, a practice among many Hong Kong employers that enables workers to cover their income tax bills without saving all year.
But Findlay said Cathay and the pilots resumed formal talks on pay and working condition recently, for the first time since the pilots launched a go-slow job campaign on July 3 that they recently abandoned without gaining any concessions.
Moody’s Investors Service said that it has put ratings on Toshiba Corporation under review for a possible downgrade after the Japanese electronics giant announced a huge loss for the first half.
The A3 senior unsecured debt ratings of Toshiba, Toshiba International Finance (Netherlands) B.V., Toshiba Capital (Asia) Ltd., Toshiba America Capital Corporation and Toshiba Carrier Corporation could be cut, warned the global risk evaluator.
The review is prompted by weakening demand for information technology products and sharply falling semiconductor prices, which have negatively impacted sales and caused losses, it said in a statement.
Toshiba said its group net loss in the six months to September totaled 123.1 billion yen (one billion dollars), reversing a net profit of 53.9 billion yen in the same period last year.
Revenue fell 11.2 per cent to 2,510.7 billion yen, while per-tax losses hit 196.6 billion yen, contrasting with a pre-tax profit of 106.2 billion yen a year earlier.
India’s central bank recently announced interest rate cuts in an attempt to boost credit flow in the financial sector, which has been hit by global and local woes.
The bank rate was cut 0.5 percent from 7.0 percent to 6.5 percent. The cash reserve ratio (CRR) for banks was cut by 2.0 percent, bringing the rate down to 5.5 percent in two phases.
A first cut of 1.75 percent was effective from November 3 and the second cut of 0.25 percent will come into effect from January next year.
The rate cuts are expected to release 80 billion rupees (1.6 billion dollars) of loans into the financial sector.
Indian Finance Minister Yashwant Sinha said the central bank’s move to cut interest rates would inject liquidity into the market and help reverse falling industrial growth.
The Reserve Bank of India (RBI) said the economic growth rate would be between 5 and 6 percent for the fiscal year ending in March 2002, compared to an earlier forecast of 6.0-6-5 percent.
RBI also said the interest rate cuts were in line with its existing policy of softening interest rates in the country.
RBI governor Bimal Jalan said normal monsoon rains this year were expected to bring about a turnaround in agricultural growth in the current financial year, after it suffered a fall in growth last year. However he said industrial and export growth rates had fallen in the first half of this year compared to the same period last year.
The industrial production growth rate fell to 2.2 percent during April to August 2001 from 5.6 percent last year, led by lower manufacturing sector growth.
Top electronics firm Hitachi Ltd. and rival Toshiba Corporation said they will team up with other Japanese and Chinese firms to develop software in China, where labour costs are much lower than at home.
"It is cheaper to operate in China but we plan to import the software to Japan afterwards, that is the main target," said Hitachi spokesman Atsushi Kanno. The two technology leaders will club together with systems integrator Otsuka Corporation and Tokyo-based software developer Original Soft Co. to launch a 50-50 joint venture in Shanghai with major Chinese software house Top Group.
Shanghai Sakura Information System, capitalized at 600 million yen (4.95 million dollars), will sell software to firms in Japan and also China, targeting annual revenue of two billion yen.
It is much cheaper to develop software in China if you consider the labour costs and, also, the level of technology expertise their is very high, said Toshiba in statement.
More and more technology firms in Japan are reported to be opening offices in China and shifting production their in a bid to cut costs amid a global hi-tech slump.
Toshiba will own 50 percent of the venture, with Hitachi and Otsuka taking a 22 percent stake each, Original Soft 4.5 percent and Tashiba the remaining 1.5 percent.
Sales of imported vehicles in Japan fell 1.2 percent in October from a year before amid the country’s lingering economic downturn, an industry group said.
A total of 18, 996 new cars and trucks imported from abroad were sold last month, compared with 19,231 sold in October of 2000, the Japan Automobile Importers Association said. Not a single bus was sold in the latest reporting month.
The association attributed the slop in imported auto sales to the weakness in consumer confidence in Japan, particularly after the September 11 terrorist attacks in the United States.
By company, Volkswagen, AG of Germany, sold 4,487 vehicles in October, down 4.5 percent. It controlled top market share among imports in Japan at 23.62 percent.
South Korea’s Daewoo Shipbuilding & Marine Engineering Co. said it has won a dlrs 380 million order to build oil drilling and production facilities for U.S. firm.
The contact, awarded by BP PLC’s BP Exploration & Production Inc, will require Daewoo to finish building the facilities in Crazy Horse Field, 200 kilometres (125 miles) southeast of New Orleans, Louisiana by March 2004, the company said in a news release.
The facilities will be capable of pumping 250,000 barrels of crude oil and 250 million cubic feet of natural gas daily, it said.
Oil production in the facilities will begin in the first quarter of 2005, the company said.
The oil field is owned 75 percent by BP and 25 percent by Exxon Mobil Corporation.
Energy trading and power company Dynegy Inc., a Chevron Texaco Corp affiliate, confirmed that it is negotiating a possible merger with the troubled energy group Enron Corp.
Houston-based Dynegy said in a statement that it is engaged in discussions with respect to a possible business combination with Enron, adding that Dynegy has not agreed to the terms of any transaction with Enron.
The Wall Street Journal reported that Dynegy was discussing a deal to buy Enron for seven to eight billion dollars in stock and to inject an additional 1.5 billion dollars into Enron to shore up its finances.
Chevron Texaco, which holds 26 percent of Dynegy, is expected to provide Dynegy with the funds for the cash infusion and is playing a significant role in talks,, the report said.
Chevron Texaco will inject an additional one billion dollars into the combined company once the deal is concluded so that its stake in Dynegy is not substantially reduced and so the combined company has a healthy balance sheet, the journal said.
The boards of Dynegy, Chevron and Enron are said to have met recently to discuss a deal.
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