Exclusive: Mexico’s Slim not eyeing more Europe buys for now


MEXICO CITY |
Wed Jul 4, 2012 1:12am EDT

MEXICO CITY (Reuters) – Mexican tycoon Carlos Slim said on Tuesday he has no immediate plans for further telecommunications purchases in Europe after buying into Dutch firm KPN and Telekom Austria.

Asked if he was looking to expand further in Europe after the two recent deals, Slim told Reuters: “No, no. We’re not looking for nothing now. We are going to consolidate what we’ve got.”

Slim’s America Movil, which is present in roughly a dozen Latin American countries, is establishing a beachhead in Europe where a combination of tough competition, regulatory pressure and recession in many markets has beaten down some company valuations to near decade lows.

Unlike his expansion in Latin America, where the 72-year-old entrepreneur has purchased much bigger stakes or whole companies, he has taken a more cautious approach in Europe.

Slim recently increased his stake in KPN to 27.7 percent and boosted his stake in Austria Telekom to 23 percent, his biggest foray yet into the European market.

His arrival in Europe touched off a period of turbulence in the telecoms sector, with industry executives and analysts questioning if it would lead to a long-awaited consolidation in some markets like Germany or Spain.

OPEN TO OPPORTUNITIES

With an empire stretching from banking to hotels to mining, the world’s richest man said he remained open to opportunities.

“We’re always open in the world for everything… Well not everything,” he said in English at an Independence Day party at the U.S. ambassador’s residence in Mexico City, laughing as party guests snapped pictures of him with their phones.

“Careful, you’ll fall in the water,” he warned one picture taker who was backing away to get a wider angle and nearly fell into the ambassador’s swimming pool.

Austria’s competition watchdog said on Monday it was examining America Movil’s bid to buy up to 25.9 percent of Telekom Austria and will give its decision in four weeks’ time.

Slim is spending over $1 billion on the stake in the Austrian telecoms firm, most of which he is buying from investor Ronny Pecik and his partner, Egyptian telecom tycoon Naguib Sawiris.

(Reporting By Simon Gardner and Krista Hughes; Editing by Ryan Woo)

No let up in gloom for Europe’s big economies


LONDON |
Wed Jul 4, 2012 9:57am EDT

LONDON (Reuters) – All of Europe’s biggest economies are in recession or heading there and there is little sign things will improve soon, surveys showed on Wednesday, backing a growing view the region’s major central banks are poised to ease policy this week.

Business surveys covering thousands of companies suggested the euro zone economy contracted again between March and June, and that Britain’s mild recession extended into a third straight quarter.

The latest batch of purchasing managers’ indexes did nothing to alter expectations the European Central Bank will cut interest rates to a new record low on Thursday, or that the Bank of England will turn its printing presses on again to buy bonds.

“The PMIs are bottoming out at a level consistent with further contraction of activity in the second quarter,” said James Nixon, chief European economist at Societe Generale, of the euro zone PMIs.

Markit’s Eurozone Composite PMI was revised up in June to 46.4 from a preliminary reading of 46.0 that matched the May figure, but the index has undercut the 50 mark that divides growth from contraction for nine of the last 10 months.

“We are looking for GDP to decline by 0.3 percent in the euro area in Q2 and these numbers are perfectly consistent with that,” Nixon said.

PMI compiler Markit said the surveys were consistent with a 0.6 percent contraction for the euro zone economy in the second quarter, and 0.1 percent for Britain.

Worryingly, there were clear signs that Germany, Europe’s biggest economic engine, is also entering a modest downturn. Its services sector unexpectedly stagnated in June, as its PMI reading fell to its lowest since September last year.

“Germany looks to have fallen into a renewed decline, though only a very modest drop in output is signalled. The pace of downturns in other major euro member states is far more worrying,” said Chris Williamson, chief economist at PMI provider Markit.

He said output in Italy probably declined 1 percent in the second quarter, with steep downturns also on the cards in Spain and France.

Perhaps the only bright spot in the PMIs was a sharp drop in price pressures among companies in the euro zone, suggesting inflation will decline in coming months.

A sharp fall in oil prices held inflation steady at a 16-month low of 2.4 percent in June, cited by many economists as a major reason why the ECB may cut interest rates this week by 25 basis points to a record low 0.75 percent.

News euro zone retail sales rose 0.6 percent in May after falling 1.4 percent in April failed to overcome the gloomy mood in markets, as European shares retreated from two-month highs on Wednesday after three days of gains. MKTS/GLOB

U.S. data, due on Thursday on account of the Independence Day national holiday, is also expected to show growth of activity among American services firms slowed in June.

JOB WORRIES

The PMIs showed little sign of relief for workers – euro zone firms cut jobs for the sixth straight month in June, suggesting the currency union’s record unemployment rate of 11.1 percent in May has further to climb.

“Job losses are mounting as a result of falling demand, as companies seek to reduce costs and prepare for the possibility that worse is to come,” added Williamson.

While the euro zone’s services PMI also edged up slightly to 47.1 in June from 46.7 in the previous month, it was still anchored below the 50 mark for a fifth straight month.

Britain’s dominant service sector, which accounts for the vast majority of its private economy, grew at a much weaker pace than expected last month, as the PMI fell to 51.3 from May’s 53.3 compared with an expected 52.8.

The latest round of gloomy data will solidify expectations the Bank of England will start another round of quantitative easing (QE) asset purchases when it meets on Thursday.

“The sharp deterioration in June’s UK CIPS services survey seals the deal for more QE tomorrow,” said Vicky Redwood, chief UK economist at Capital Economics.

“If we are right in thinking that the surveys have underestimated the impact of June’s extra bank holiday, the economy is actually probably still in recession.”

Faced with a struggling economy, the BoE is expected to flood markets with another 50 billion pounds of cash this week, on top of the 325 billion pounds it has already pumped in, according to a Reuters poll taken last week. BOE/INT

News from Asian PMIs on Wednesday was fairly mediocre too. China’s developing service sector grew at its slowest pace in 10 months in June, hit by new order growth pushing the PMI down by over two points to 52.3 from 54.7 in May.

(Editing by Jeremy Gaunt.)

Shares, euro dragged lower by grim economic data


LONDON |
Wed Jul 4, 2012 12:20pm EDT

LONDON (Reuters) – World shares, the euro and oil prices fell on Wednesday as evidence grew of the headwinds facing the global economy, though hopes of policy easing by major central banks limited the falls.

Strong demand for safe-haven German debt at a bond auction also signaled that investors remain worried about the implementation of recently agreed measures to help ease the euro zone’s debt crisis, with Spanish and Italian bond yields higher.

However, activity was very subdued with U.S. markets closed for the Independence Day holiday and before policy decisions from the European Central Bank and Bank of England on Thursday.

In the quiet market Germany still found it easy to sell 3.3 billion euros ($4.2 billion) of 5-year government bonds, receiving bids for 2.7 times the amount on offer at an average yield of just 0.52 percent.

“What we are seeing is that … this demand for safety remains intact,” said Michael Leister, rate strategist at DZ Bank.

After the auction 10-year Spanish bond yields rose 14 basis points to 6.4 percent, and the Italian equivalent rose 12.5 basis points to 5.77 percent.

The euro steadied against the dollar to trade around $1.2525, under pressure from widespread expectations that the ECB is about to cut interest rates.

The single currency fell to an 11-1/2 year low against the higher-yielding Swedish crown when Sweden’s central bank kept its main interest rates unchanged.

EQUITIES SLIDE

European share markets ended three days of gains, with the FTSEurofirst 300 index .FTEU3 of top European shares finishing down 0.2 percent at 1,044.29 points, retreating from a two-month high set on Tuesday.

MSCI’s world equity index .MIWD00000PUS also snapped a three-day rally, dipping 0.1 percent to 316.03 points.

Equity markets began their latest rally on Friday, having fallen sharply for much of June, after European Union leaders agreed on new measures to support the region’s banks and address funding problems facing Spain.

Investors have also been encouraged back into riskier asset markets by the belief that the ECB will cut rates on Thursday and that it may also inject fresh funds to help boost the region’s struggling economy.

A Reuters poll of economists showed a majority of economists expect the ECB to cut its main rate by 25 basis points to 0.75 percent on Thursday, while money market traders are evenly split on whether the central bank will cut the deposit rate, a separate survey showed.

“Investors will also want to see if the ECB President (Mario Draghi) will highlight downside risks to growth and inflation, which will set the ground for more easing,” said Paul Robson, currency strategist at RBS.

The Bank of England is expected to launch a third round of monetary stimulus at its meeting.

GLOBAL SLOWDOWN

Data releases from across the globe continue to add weight to the view that the world economy is slowing down.

An survey of private Chinese service sector firms showed their activity growing at the slowest rate in 10 months in June as new orders growth cooled, although the services Purchasing Managers Index has shown 43 months of expansion.

Another survey revealed that Germany’s services sector unexpectedly stagnated in June, ending an eight-month period of expansion as new orders dropped.

A composite Purchasing Managers’ Index (PMI) for the whole euro area, which surveyed thousands of companies, was revised up in June, but has been below the 50 mark that separates growth from contraction for nine of the last 10 months.

“The PMIs are bottoming out at a level consistent with further contraction of (economic) activity in the second quarter,” said James Nixon, chief European economist at Societe Generale, of the euro zone PMIs.

COMMODITIES STEADY

The prospect of further central bank monetary easing has supported the prices of gold and other commodities this week, but the increasingly grim news about the health of the world economy has sparked a retreat.

“We believe that the euro zone crisis, the U.S. fiscal cliff, and the possibility of a hard landing in China will give the markets plenty to worry about and will keep risk appetite low and constrained,” Societe Generale said.

The bank has lowered its price outlook for Brent crude by $5 a barrel to $100.

Brent crude, which had also been gaining on rising tension over Iran’s nuclear program, was $1.10 lower at $99.58 per barrel after jumping more than 3 percent on Tuesday.

Brent crude was trading as low as $88.49 on June 22.

Spot gold was little changed, holding near a two-week high of $1,624.70 an ounce at $1,616.05, having risen more than 4 percent since last Friday.

The gold market is likely to remain steady before the release of U.S. monthly employment data on Friday, which may encourage talk the Federal Reserve will join with its European counterparts in taking additional policy easing measures.

The U.S. monthly jobs report is expected to show 90,000 workers were added to non-farm payrolls in June and the unemployment rate held at 8.2 percent. ECONUS

(Additional reporting by Anirban Nag; Editing by David Stamp)

Diamond admits traders’ behavior "reprehensible"


LONDON |
Wed Jul 4, 2012 2:06pm EDT

LONDON (Reuters) – The chastened former head of Barclays apologized for the “reprehensible” behavior of his traders who fixed interest rates, but told British lawmakers on Wednesday his bank had been unfairly singled out after coming forward to admit wrongdoing.

Bob Diamond, 60, quit this week after Barclays agreed to pay nearly half a billion dollars in fines for manipulating the interest rates at the heart of the global financial system.

British politicians have seized on the case as a symbol of a culture of greed that has poisoned the entire financial industry. Newspapers have highlighted e-mails disclosed in the case which show traders congratulating each other for fiddling figures with promises of bottles of champagne.

Appearing thoughtful and humble before an often hostile parliamentary committee, the man who until Tuesday was one of the world’s highest paid and most powerful financial executives with an aggressive reputation acknowledged “inexcusable” behavior among his group’s traders.

“When I read the e-mails from those traders, I got physically ill,” Diamond said. “That behavior was reprehensible, it was wrong. I am sorry, I am disappointed and I am also angry.”

He said those involved in rigging interest rates would be subject to criminal investigation and should be “dealt with harshly”.

The wrongdoing at the 300-year-old bank was “not representative of the firm that I love so much”, the American banker said, appearing on his nation’s Independence Day. But he insisted that Barclays was being made a scapegoat because it had cooperated with the authorities to help unearth the misdeeds.

“This week the focus has been on Barclays because they were the first,” Diamond said, describing years of cooperation with regulatory agencies to uncover the practice.

“I think it’s a sign of the culture of Barclays that we were willing to be first, we were willing to be fast and we were willing to come out with this.”

The decision by Britain’s third-biggest bank to cooperate with regulators may have been designed to limit damage but it appeared to have backfired, hurting Barclays’ reputation and costing Diamond his job, banking analysts said.

The case has reopened a debate in Britain on whether big banks should be split into retail and investments units, while also raising questions about the morality of bankers’ salaries and bonuses and whether banks should be more closely regulated.

STONEY-FACED

Diamond testified for nearly three hours, during which time the Barclays share price was volatile before closing at 164.6 pence, almost exactly where it was when he started speaking.

In the committee room, he was accompanied by half a dozen Barclays staff but ignored them, not seeking any guidance.

He sipped water continuously from a plastic cup, especially when questions became more uncomfortable, downing so much he had to be given a new bottle.

The committee remained stoney-faced throughout, with their skepticism, frustration and open disdain at his answers becoming more and more apparent.

A composed Diamond also pointedly referred to each committee member by their first name, even in the face of hostile questioning with one MP calling Barclays a “rotten, thieving bank” and saying Diamond was either complicit in wrongdoing or “grossly incompetent”.

“My general impression was that it was not the kind of gun fight at the O.K. Corral that we had anticipated before the event,” said Richard Reid of the International Centre for Financial Regulation, a think tank. “No real smoking gun was found.”

Of his own decision to step down, a day after saying he wouldn’t, Diamond said he had realized that he had become a lightning rod for criticism. “The focus of intensity was my leadership. It was better for me to step down.”

Barclays has acknowledged that its traders colluded with others to manipulate the London Interbank Offered Rate, or Libor, the rate that big banks say they borrow from each other which underpins trillions of dollars in global contracts.

In addition to the manipulation by traders, which took place from 2005-2009, Barclays also has admitted it deliberately understated its submissions of Libor rates at the height of the 2008 financial crisis to make its balance sheet look stronger.

Lawmakers questioned Diamond over a 2008 memo, in which he appeared to suggest that the Bank of England or the government might be giving the firm the nod to report that it was able to borrow money at lower rates to make it look better.

At the time, Barclays was reporting Libor funding costs that were among the highest of the large banks, even though others were in much worse shape.

Diamond wrote in the memo that the Deputy Governor of the Bank of England, Paul Tucker, told him “it did not always need to be the case that we appeared as high as we have recently”.

Barclays has said that another senior executive – Chief Operating Officer Jerry del Missier, who also resigned on Tuesday – understood the memo as a green light to submit lower rates. Del Missier was not immediately available for comment.

“HEADS UP”

Diamond said he interpreted Tucker’s call as a “heads up” that politicians were worried about the rates Barclays was reporting, but not as a green light to fiddle them.

Diamond feared at the time that if the British government believed Barclays’ costs were higher than those of other banks, it might have nationalized it, as it did with several competitors, he said.

“They might say to themselves, ‘My goodness, they can’t fund. We need to nationalize them.'”

The Bank of England said Tucker intended to present his own explanation of the phone call to lawmakers at a later hearing.

Britain’s finance minister, George Osborne, said the government of the previous prime minister, Gordon Brown, had some questions to answer.

“They were clearly involved and we just haven’t heard the full facts, I don’t think, of who knew what when,” Osborne said in an interview with the Spectator, a right-leaning political weekly.

Shareholders, meanwhile, also want answers.

“What was the nature of the manipulation? Who was involved, how long were they involved for? Was it escalated? If it was escalated, who was it escalated to?” asked Dominic Rossi at Fidelity Worldwide Investment, a top 10 Barclays investor.

“What did the people who it was escalated to actually do? Who did they inform? Did they inform the regulator? Did they inform the Bank of England? If they did, who within the Bank of England? Who within the FSA (regulator)? These are all the questions that we need to establish.”

The bank said in documents released ahead of Diamond’s appearance that it was “ironic” that there had been such an intense focus on it alone, as it had been lauded by regulators for its “exceptional level of cooperation” over the Libor probe.

But some investors accuse the bank of missing the “big picture”.

“The board should now proactively break the bank up into its constituent parts after putting in place a coherent bonus and remuneration clawback of all misdemeanors of the last decade, from Libor to mis-selling of mortgage protection and interest rates swaps,” said Neil Dwane, CIO Europe, Allianz Global Investors, which owns 13.4 million Barclays shares via its RCM unit.

“Break it up because it trades at half book value.”

Libor is compiled by Thomson Reuters on behalf of the British Bankers’ Association from estimates supplied by the world’s biggest banks of the amount they believe other banks will charge them for loans.

(Additional reporting by Steve Slater, Sinead Cruise, Raji Menon, Kirstin Ridley, Chris Vellacott and Tim Castle; Writing by Peter Graff; Editing by Will Waterman and Giles Elgood)

Barclays CEO Diamond quits over rate rigging


LONDON |
Tue Jul 3, 2012 11:52am EDT

LONDON (Reuters) – Barclays chief executive Bob Diamond quit on Tuesday under fire from politicians and regulators as the bank defended its actions in an interest rate-rigging scandal involving a dozen banks and which threatens to drag in government and the Bank of England.

“The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen,” said Diamond, 61. The terms of his severance were not announced, though Sky News cited shareholder sources as saying the bank would ask Diamond to forfeit almost 20 million pounds ($30 million) in bonuses.

Barclays later released an internal 2008 memo from Diamond, then head of its investment bank, suggesting that the deputy governor of the Bank of England, Paul Tucker, had given Barclays implicit encouragement to massage the interest figures lower during the peak of the financial crisis in order to present a better picture of the bank’s financial position.

According to the memo, Tucker told Diamond he had received calls from senior government officials. “It did not always need to be the case that we appeared as high as we have recently,” the memo said Diamond had been told.

Diamond’s resignation was a sudden reversal, hours after he said it was down to him to clear up the mess at Britain’s third-largest bank, fined nearly half a billion dollars for its part in manipulating the benchmark interest rate used to price everything from derivative instruments to home loans.

Prime Minister David Cameron had announced a parliamentary inquiry after calling for Diamond to take responsibility for the scandal, and the Financial Services Authority regulator had also brought pressure to bear on the board.

FSA Chairman Adair Turner said on Tuesday he had had private conversations with Barclays since Friday morning about the need for “cultural change” at the bank.

“We communicated to the board those were the sort of issues they needed to think about, but it was for them to decide whether they could achieve that degree of change … under the current leadership,” he said.

Diamond sent a long letter to staff on Monday showing his resolve to continue. But he and the board decided he should quit later that day after Cameron and finance minister George Osborne announced the parliamentary inquiry.

Politicians and newspapers have zeroed in on the scandal – which revealed macho e-mails of bankers congratulating each other with offers of champagne for helping to fiddle figures – as an example of a rampant culture of wrongdoing in an industry that stayed afloat with huge taxpayer bailouts.

Diamond’s resignation was “a first step towards that change of culture, that new age of responsibility we need to see”, Osborne told BBC radio.

“The chairman of Barclays phoned me last night to let me know that this was the decision of the board and of Mr Diamond, and I think Mr Diamond made the right decision,” Osborne said.

Diamond will appear before the parliamentary inquiry on Wednesday, where his memo on the attitude of the Bank of England towards the manipulation of the interest rate at the time is likely to take centre stage.

Outgoing chairman Marcus Agius will lead the search for a new CEO, despite having announced his own imminent departure a day earlier. Newly appointed Chief Operating Officer Jerry del Missier, long a Diamond lieutenant, also left.

The reversal was a shock within the 322-year-old bank, which in recent years has boasted an aggressive culture cultivated by Diamond, first as head of investment banking and then as CEO. One Barclays banker, asking not to be identified without permission to speak publicly, said staff were disappointed.

“Everyone here has been bandying around names, but it’s going to be hard to find someone of the same quality as Bob and John (Varley, his predecessor). I guess it would be hard to appoint someone from the investment banking side now.”

Barclays has admitted it submitted falsely low estimates of its borrowing costs to calculate interbank rates from late 2007 to May 2009, a time when Diamond ran investment banking. Large banks’ estimates of the interest rates they pay each other are used to calculate the London Interbank Offered Rate, or Libor, basis for trillions of dollars in contracts around the globe.

By manipulating the figures, banks could give flattering impressions of their financial strength. Barclays says it submitted low figures because it thought rivals were doing the same and higher rates would have made it seem to be in trouble.

The Libor figures submitted by banks are compiled by Thomson Reuters, parent company of Reuters, on behalf of the British Bankers’ Association.

EMBARRASSING DETAILS

The Financial Times reported that Diamond is threatening to reveal potentially embarrassing details about Barclays’ dealings with regulators if he comes under fire at the parliament hearing on Wednesday, when his evidence will have legal immunity.

A conversation between Diamond and Tucker at the heart of the 2008 memo was cited in documents released by U.S. authorities last week, after which some people at the bank may have mistakenly believed they had been granted permission to falsify the Libor submissions.

Opposition Labour Party leader Ed Miliband, who has said he wants to see criminal prosecutions of Barclays bankers, welcomed Diamond’s resignation but said a parliamentary inquiry was not enough and demanded an independent probe led by a judge.

“This is about the culture and practices of the entire banking system, which is why we need an independent, open, judge-led, public inquiry,” he said.

The government said a judge-led inquiry would take too long to be of use shaping new laws to tighten rules. Cameron, elected in 2010, has repeatedly made the point that Miliband’s Labour was in power at the time of the wrongdoing.

NAMES IN THE FRAME

Antony Jenkins, currently chief executive of Barclays retail and business banking, is the most likely internal candidate to replace Diamond, said Oriel Securities analyst Mike Trippitt. However, the firm may choose to look outside for a new leader to turn the page on the scandal.

“Promoting an existing manager might not look like it is doing enough to tackle problems with aspects of the bank’s culture which the LIBOR scandal has exposed,” one top 25 Barclays investor said, asking not to be identified.

Other names in the frame include former JPMorgan investment banking co-head Bill Winters and Naguib Kheraj, the ex-Barclays finance director and former CEO of JPMorgan Cazenove.

“I struggle to see many worthy candidates to replace him,” said a top 40 investor.

Barclays shares, which rose on the news of the departure of Agius on Monday, were down 1.1 percent late on Tuesday at 166.5 pence, while the European banking stocks index was flat. The shares were down more than 15 percent from Thursday’s open.

Barclays was fined $453 million by U.S. and British authorities, the first bank to settle in an investigation that is looking at more than a dozen others, including Citigroup, UBS and RBS.

($1 = 0.6374 British pounds)

(Additional reporting by Sinead Cruise, Chris Vellacott, Victoria Howley, Sophie Sassard, Douwe Miedema, Hugh Jones and Matt Falloon; Writing by Will Waterman; Editing by Peter Graff and Giles Elgood)

Microsoft takes $6.2 billion charge, slows Internet hopes


SEATTLE |
Tue Jul 3, 2012 6:25am EDT

SEATTLE (Reuters) – Microsoft Corp admitted its largest acquisition in the Internet sector was effectively worthless and wiped out any profit for the last quarter, as it announced a $6.2 billion charge to write down the value of an online advertising agency it bought five years ago.

The announcement came as a surprise, but did not shock investors, who had largely forgotten Microsoft’s purchase of aQuantive in 2007, which was initially expected to boost Microsoft’s online advertising revenue and counter rival Google Inc’s purchase of digital ad firm DoubleClick.

Microsoft’s shares dipped slightly to $30.28 in after-hours trading, after closing at $30.56 in regular Nasdaq trading.

The world’s largest software company said in a statement that “the acquisition did not accelerate growth to the degree anticipated, contributing to the write-down.”

Microsoft bought aQuantive for $6.3 billion in cash in an attempt to catch rival Google Inc in the race for revenues from search-related display advertising. It was Microsoft’s biggest acquisition at the time, exceeded only by its purchase of Skype for $8.5 billion last year. But it never proved a success and aQuantive’s top executives soon left Microsoft.

As a result of its annual assessment of goodwill – the amount paid for a company above its net assets – Microsoft said on Monday it would take a non-cash charge of $6.2 billion, indicating the aQuantive acquisition is now worthless.

The charge will likely wipe out any profit for the company’s fiscal fourth quarter. Wall Street was expecting Microsoft to report fiscal fourth-quarter net profit of about $5.25 billion, or 62 cents a share, on July 19.

In addition to the write-down, Microsoft said its expectations for future growth and profitability at its online services unit – which includes the Bing search engine and MSN Internet portal – are “lower than previous estimates”.

The company did not say what those previous estimates were, as it does not publish financial forecasts.

Microsoft’s online services division is the biggest drag on its earnings, currently losing about $500 million a quarter as the company invests heavily in Bing in an attempt to catch market leader Google. The unit has lost more than $5 billion in the last three years alone. Even though its market share has been rising, Bing has not reached critical mass required to make the product profitable.

Before rolling out Bing in June 2009, Microsoft’s Windows search engine had 8 percent of the U.S. Internet search market, compared with Yahoo’s 20 percent and Google’s 65 percent.

In the three years since then, Bing has almost doubled its market share to 15 percent, but that has been mostly at the expense of Yahoo, which has had its share whittled down to 13 percent. Google now has almost 67 percent, according to research firm Comscore.

Yahoo’s internet searches are powered by Microsoft’s Bing under a 10-year agreement initially struck in 2009. Microsoft hands back to Yahoo 88 percent of revenue generated from search ads on Yahoo sites. That deal has not met the ambitious targets set by either company.

(Additional reporting by Siddharth Cavale in Bangalore, editing by Supriya Kurane, Bernard Orr and Richard Pullin)

Factory orders rise more than expected in May


WASHINGTON |
Tue Jul 3, 2012 10:15am EDT

WASHINGTON (Reuters)- New orders for U.S. factory goods rose more than expected in May, a hopeful sign for U.S. manufacturers who have appeared more vulnerable to Europe’s festering debt crisis.

The Commerce Department said on Tuesday new orders for manufactured goods rose 0.7 percent during the month.

Economists had forecast orders rising 0.2 percent.

The report showed broad gains across industries making everything from machinery and appliances to cars and planes.

Still, the trend in U.S. manufacturing has appeared softer and has added to concerns the economic recovery is losing steam.

New factory orders have declined in three of the five months through May, and the government on Tuesday revised its estimate for April to show a slightly sharper 0.7 percent drop.

On Monday, the private Institute for Supply Management said activity in the manufacturing sector contracted in June for the first time in nearly three years.

America’s factories have been a major ingredient of the country’s recovery from the 2007-2009 recession.

The Commerce Department report showed new orders outside transportation rose 0.4 percent, with machinery up 4.2 percent and orders for household appliances up 2.0 percent.

Orders for non-defense capital goods excluding aircraft – seen as a measure of business confidence and spending plans – increased 2.1 percent in May.

(Reporting by Jason Lange; Editing by Andrea Ricci)

Intel fights $1.3 billion EU antitrust fine in court


LUXEMBOURG |
Tue Jul 3, 2012 10:23am EDT

LUXEMBOURG (Reuters) – EU antitrust regulators relied on “profoundly inadequate” evidence in their case against Intel, the U.S. chipmaker said in court on Tuesday in a bid to quash a record 1.06 billion euro ($1.33 billion) fine.

The European Commission penalised the world’s No.1 chipmaker three years ago for hindering arch-rival Advanced Micro Devices, after an eight-year investigation.

The fine, which represented 4.15 percent of Intel’s 2008 turnover versus a possible maximum of 10 percent, was the biggest ever levied on a company.

A panel of five judges at the General Court in Luxembourg, Europe’s second highest, will hear arguments from both the EU watchdog and Intel during the four-day hearing, in which the company wants its conviction and fine thrown out or reduced.

The Commission did not have sufficient evidence of any wrongdoing by Intel and relied too much on subjective comments by the company’s customers, Intel’s lawyer Nicholas Green told the court.

“The quality of evidence relied on by the Commission is profoundly inadequate. The analysis is hopelessly and irretrievably defective,” he said.

“The Commission’s case turns on what customers’ subjective understanding is,” Green said.

U.S. No.2 PC maker Dell Inc., Hewlett-Packard Co, Japan’s NEC, world No.2 PC maker Lenovo and German retail chain Media Saturn Holding received rebates from Intel during the period investigated by the regulator.

Lawyers for the Commission said this was at the core of Intel’s illegal business practice.

“These kind of rebates can only be intended to tie customers and put competitors in an unfavourable position,” Commission lawyer Nicholas Khan told judges.

He said contract wording also showed that “Intel carefully camouflaged its anti-competitive practices”.

Intel gained backing from the European Ombudsman, who censured the Commission for procedural errors in its investigation.

In his non-binding report issued five months after the regulatory finding, the Ombudsman said he had found “maladministration” because the regulator had failed to make a proper note of a meeting with Dell during its probe.

The Association for Competitive Technology, a lobby group representing more than 3,000 small software developers and information technology firms, supported Intel.

French consumer organisation Que choisir is backing the Commission’s position.

The General Court is expected to rule in the coming months. Companies can appeal to the highest court, the EU Court of Justice, if they take their case further.

The case is T-286/09, Intel vs Commission.

(Reporting by Foo Yun Chee; editing by Rex Merrifield and Mark Potter)

Wall Street edges up after data


NEW YORK |
Tue Jul 3, 2012 11:14am EDT

NEW YORK (Reuters) – Stocks were slightly higher on Tuesday after better-than-expected data on factory orders.

The Commerce Department said new orders for manufactured goods rose 0.7 percent during May. Economists had forecast orders rising 0.2 percent.

Trading is expected to remain volatile on low volume as U.S. stock markets close at 1 p.m. ET. (1700 GMT) ahead of the Independence Day holiday on Wednesday. Volume is likely to start building up from early Thursday, ahead of Friday’s non-farm payrolls data.

“Investors have to be prepped for one of two outcomes on Friday. Our baseline is at or below the consensus 90,000 figure in which case more stimulus is on the cards. The risk is a bigger number that leaves a 30-point air-pocket above the current market level,” said Andrew Wilkinson, chief economic strategist at Miller Co in New York.

A U.S. ISM manufacturing report on Monday, whose main index registered a contraction in the sector for the first time since July 2009, boosted speculation that the Federal Reserve will announce it will embark on a third round of asset purchases, known as ‘QE3’, perhaps as soon as the central bank’s next policy meeting from July 31 to August 1.

The Dow Jones industrial average .DJI was up 21.53 points, or 0.17 percent, at 12,892.92. The Standard Poor’s 500 Index .SPX was up 3.04 points, or 0.22 percent, at 1,368.55. The Nasdaq Composite Index .IXIC was up 7.48 points, or 0.25 percent, at 2,958.71.

European stocks climbed for the third session in a row as a recent raft of weak U.S. and European macro data raised investors’ expectation that central banks will soon take fresh policy action to kick-start their economies.

The European Central Bank is expected to cut interest rates to a record low on Thursday but may need to do more to satisfy financial markets already starting to wonder about the solidity of last week’s summit measures to tackle the euro zone crisis.

Microsoft Corp (MSFT.O) shares fell 0.5 percent to $30.39 on Tuesday after the company admitted its purchase of aQuantive, its largest acquisition in the Internet sector, was effectively worthless and wiped out any profit for the last quarter.

The U.S. Justice Department is probing Chesapeake Energy Corp (CHK.N) and Encana Corp for possible collusion after a Reuters report showed that top executives of the two rivals plotted in 2010 to avoid bidding against each other in Michigan land deals, a source close to the probe said. Chesapeak shares wee up 1.3 percenat at $18.98.

U.S. investment management firm BlackRock (BLK.N) is buying Swiss Re’s (SRENH.VX) European private equity and infrastructure fund of funds franchise, it said on Tuesday.

(Reporting By Angela Moon, editing by Dave Zimmerman)

Apple pays $60 million to settle China iPad trademark dispute


SHANGHAI |
Mon Jul 2, 2012 8:34am EDT

SHANGHAI (Reuters) – Apple Inc has paid $60 million to Proview Technology (Shenzhen) to end a dispute over the iPad trademark in China that saw the world’s most valuable technology company engaged in a protracted legal tussle with a near-bankrupt Chinese firm.

The lawsuit had hampered some sales and delayed the launch of the new iPad in China. Prior to the launch, Proview requested Chinese authorities in scores of Chinese cities to order re-sellers to take all iPads off their shelves.

The court-mediated settlement, announced on the website of the Higher People’s Court of Guangdong province, will allow Apple to get on with selling its popular tablet PC in one of its most important markets, analysts said.

“The settlement is great news for Apple. It just allows them to get on with business and stop being distracted. The new iPad has been so late to the China market that if they drag it any longer, Apple will stand to lose quite a bit more,” said Teck-Zhung Wong, a Beijing-based analyst with technology research firm IDC.

Apple and Proview Technology (Shenzhen), a unit of Hong Kong-listed Proview International Holdings Ltd, have been negotiating to reach a settlement since the court conducted an initial hearing in February, after Apple appealed a lower court ruling against it.

Apple had said it bought ownership of the iPad trademark in various countries from Proview, once a global monitor maker, but the Chinese company argued the U.S. firm dealt with only one unit of Proview. A Chinese court ruled that Proview Technology (Shenzhen) owned the name in China. Proview, which registered the iPad trademark in China in 2001, tried in May to sue Apple in the United States, but that case was thrown out.

An Apple spokeswoman declined to comment on Monday.

The iPad dominates China’s tablet PC market with more than 70 percent market share, though Lenovo Group Ltd’s Lepads and Samsung Electronics Co Ltd’s Galaxy Tabs have been gaining traction.

Apple is experiencing heady growth in Greater China – China, Hong Kong and Taiwan – with second-quarter sales in the region increasing several-fold to $7.9 billion. From the launch of the iPad in the third quarter of 2010 to March this year, Apple shipped more than 6 million iPads to mainland China, according to IDC.

For Proview – which local media had said was seeking as much as 10 billion yuan ($1.57 billion) from Apple – and its creditors, the settlement should be welcomed, some lawyers said.

The $60 million will be paid into a court-designated account and used to pay Proview’s creditors, said a source familiar with the situation. In March, Taiwan’s Fubon Insurance, one of several Proview creditors and a unit of Fubon Financial Holding Co Ltd, applied for bankruptcy proceedings against Proview because of $8.68 million in outstanding debt.

“The settlement fee is not bad for Proview, because although Proview owns the trademark, it was Apple, not Proview, who created the brand’s value,” said Chen Jihong, a Beijing-based intellectual property rights lawyer at Zhong Lun Law Firm.

(Writing by Kazunori Takada; Editing by Jason Subler and Ian Geoghegan)