Monday, 31 October 2011

U.S. Stock Futures Retract from Last Week’s Gains

Weighed down by weakness in overseas markets and apprehensions of investors regarding the key readings on the U.S. economy this week, U.S. stock futures pulled back from the sharp gains observed at the end of last week. Dow Jones Industrial Average plunged 89 points to 12,079. The Dow rose 524 points over the last three sessions to extend its month-to-date gains to 1,318 points. As such, the Dow is on track if it does not slip more than 315 points on Monday. If so, it will create the biggest monthly gain in its 115-year history.

Futures on Standard & Poor’s 500-stock index fell 12 points to 1,269 and Nasdaq 100 futures slumped 19 points to 2,378. It is worth noting that changes in stock futures don’t always accurately predict stock moves after the opening bell.

Europe was broadly lower in overseas markets with the Stoxx Europe 600 down 1.3%, as some investors were skeptical about the effectiveness of last week’s plan to resolve the euro-zone’s debt crisis. Doubts regarding the strength of the economy also lowered investors’ sentiments.

The Organization of Economic Development and Cooperation said Monday that some advanced economies could have persistent runs of weak growth and high employment and that the GDP of the euro zone was expected to rise only 0.3% next year instead of the previous forecast of 2%.

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Oil Falls after Biggest Monthly Gain since May 2009

Oil fell in New York in the wake of a surge in the U.S. dollar after Japan intervened to stem the rise of the yen for the third time this year and on the basis of speculation that demand is set to slow down. Brent’s premium to U.S. crude slid to a four-month low and futures dropped as much as 1 percent after the weakening of the yen and a technical indicator signaling prices may have risen too fast. Oil surged 18 percent in October, the biggest monthly increase since May 2009.

The former head of the International Energy Agency said that crude prices at $100 a barrel would be unsustainable. A stronger dollar typically curbs demand for commodities from holders of other currencies. Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, said, “My anticipation is that prices will consolidate,” and added that prices at $93 to $95 a barrel are “expensive.”

Crude for December delivery dropped as much as 92 cents to $92.40 a barrel in electronic trading on the New York Mercantile Exchange and was at $92:56 at 12:02 p.m. Singapore time. Prices slid 0.7 percent on Oct. 28 to $93.32.

Brent crude for December settlement was at $109.02 a barrel, down 0.8 percent, on the London-based ICE Futures Europe exchange. The contract traded at a premium of $16.46 a barrel to New York futures, which would be the lowest close since July 4. It closed at a record $27.88 on Oct. 14.

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Sunday, 30 October 2011

Apple Loses out to Samsung in Smartphone Business

Samsung surged past Apple (NASDAQ: AAPL) and usurped its position as the world’s top smartphone maker, in the third quarter with a 44 percent jump in shipments. It has also forecast strong sales in the current quarter. Whereas Apple had introduced its first iPhone in 2007, Samsung is comparatively new as it entered the smartphone market only last year. However, its sales soared mainly because of a sleek production system that is capable of rapidly bringing new products to the market.

Kim Hyun-joong, a fund manager at Midas Asset Management, which owns Samsung shares, said that “In the handset division, Samsung has no real rival models to challenge its products except for the iPhone 4S. Apple and Samsung will continue to dominate the market in the fourth quarter.”

On Friday, Samsung posted more than double profits for its telecoms division, which stood at $2.2 billion and accounted for 60 percent of Samsung’s total profits. Its shipments of smartphones increased by 44 percent from the previous quarter and stood at 27.8 million units, up nearly four times from a year ago. On the other hand Apple’s iPhone sales dropped by 16 percent to 17.1 million units in the third quarter.

Samsung’s share of the global smartphone market stood at 23.8 percent, 9 points higher than Apple. Its shares were up 1.6 percent by 0500 GMT, versus a 0.6 percent gain in the wider market.

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Saturday, 29 October 2011

Motorola Mobility Slashes 800 Jobs at a Cost of $31 Million

In a regulatory filing with US Securities and Exchange Commission, Motorola Mobility Holdings Inc., the mobile phone maker, that agreed to be bought by Google Inc (NASDAQ: GOOG) said that it is slashing 800 jobs at a cost of of $31 million out of which $27 million will go towards severance and $4 million for closing facilities. Libertyville, Illinois-based Motorola Mobility said that these costs will be booked this quarter and that the moves have been approved on Oct. 24.

On Aug. 15, a deal was announced for the takeover of Motorola Mobility by Mountain View, California-based Google Inc. for $12.5 billion and Motorola Mobility is preparing to complete its acquisition by reining in costs.

Jennifer Weyrauch-Erickson, a spokeswoman for Motorola Mobility, said in a statement that “Motorola Mobility continues to focus on improving its financial performance by taking actions to manage the company’s costs,” and added that the efforts are unrelated to the proposed acquisition.

The financial results announced by Motorola Mobility on Oct. 27 indicate that sales rose 11 percent to $3.26 billion beating analysts’ estimates. However, the company is still losing money, though its loss narrowed to $32 million or 11 cents a share, from a loss of $34 million a year earlier. Google is acquiring the company mainly to gain access to mobile patents and move into the hardware business.

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