After BHP Billiton pulled out of a $100 billion takeover bid last month, Rio Tinto has announced that it will axe 14,000 jobs, increase asset sales and reduce spending, but its dividend will hold steady; all to help the company cut $10 billion in its $38.9 billion debt by the end of 2009.
As well, it will consolidate several offices around the world, including one in London.
Source: Business Day
The Rudd Government has announced that it will set up a special $2 billion fund, starting from January 1, to keep the car dealers in Australia from going under in the already decreasing industry. The fund, according to The Age, was set up after being consulted by Australia’s biggest banks.
”The automotive industry plays a vital role in Australia’s economy, supporting many thousands of Australian jobs, and today’s announcement will support a stable and viable future for the industry, in the face of very difficult global conditions,’ Treasurer Wayne Swan said in a statement today/
This comes on top of an additional $6.2 billion pledged by the government to keep manufacturers alive. While parent companies for both Holden and Ford are also asking money from Washington, Toyota says that, though it is in better shape, its sales are decreasing.
AT&T has announced that it would buy Centennial Communications for $944 million on Friday (US Eastern Time), giving the company an additional 1.1 million customers to its 74.9 million customers, and will improve the coverage of AT&T in the Midwest, Southeast, Puerto Rico and the Virgin Islands.
The deal, announced after the markets were closed, would see Centennial stockholders getting $8.50 a share, a premium of 121 percent over the closing price of $3.84 – with shares jumping to $7.90 in after hours trading. The deal is expected to close in second-quarter of next year.
The deal is seen as a response to the acquisition of Alltel by Verizon Wireless, which was recently approved by the government.
Source: NY Times
Originally written in TECHGEEK.com.au.
The Reserve Bank has cut 0.75% of its key cash rate, reducing it to 5.25%, the lowest rate since December 2003. This is the third cut in a row as the Reserve Bank attempts to prevent Australia’s economy falling into a recession. This means that a person that has a typical 25-year, $250,000 home loan will save $112.63 a month in payments.
This brings the total cuts made by the Reserve Bank to 2 percent, retreating from a 12-year interest rate hike to 7.25 percent.
Source: BusinessDay
In an interview to The Weekend Australian, owned by News Corporation, Rupert Murdoch has said that Barack Obama could worsen the financial crisis if he implements his protectionist policies when he becomes president next week.
“For the past three or four years, some Democrats have been threatening to do things like put on extra tariffs (against Chinese imports) if they don’t change their currency,” he told the Weekend Australian. “If it happened, it could set off retaliatory action which would certainly damage the world economy seriously.”
Murdoch, who is a Republican supporter, has also defended Kevin Rudd’s policies on dealing with the crisis, saying that he “has acted very sure-footedly.”
Source: The Australian
The Federal Reserve has said that the US has now entered a recession, echoing chairman Ben Bernanke’s statement that the credit strains may take a “heavy toll” if the US economy is left unchecked.
”The recent flow of economic data suggests that the economy was weaker than expected in the third quarter, probably showing essentially no growth at all,” said Janet Yellen, head of the San Francisco branch of the Federal Reserve.
Recessions are defined. in a broad sense, to have more than two consecutive quarters of decline growth. Analysts are also saying that the recession may last for two years, with housing prices falling to 15% and unemployment expected to reach 9%.
This comes after yesterday’s announcement of using US taxpayers money to purchase equitiy in the top nine banks in the US, including Bank of America and Citigroup, to halt a credit freeze that threatens to drive companies to bankrupcy and eliminate employees.
The Reserve Bank of Australia (RBA) has stunned the financial market by announcing a full percentage point cut, double what analysts had suggested, saying that the markets had taken a “significant turn for the worse.”
Also, the RBA cut its key cash rate from 7% to 6%, double the 50-basis point cut expected by the market. This follows a 25-basis point cut in September, lowing the lending rate from a 12-year high.
Market reaction was positive, with the Australian dollar slightly recovered from a 2 US cents drop at the market’s open. The ASX 200 is, at the time of writing, up 1.86% from yesterday - now at 4624.9 points.
The economy has also held up, better than most developed countries, with France and Ireland in a recession, with predictions that Spain and the UK may be next. This is because of the strength of the mining boom, which recently delivered the second-highest trade surplus on record.
The ASX 200 fell more than 3.3 percent, losing 155 points, to 4540.4 after confidence on the stock market turned into worries that the US$700 billion rescue package passed by the US Congress last week would do little to reverse the effects of the global economy.
Leading the fall were banks and mining stocks, with BHP Billion losing 2.1% – the lowest close in 17 months, Rio Tinto losing 5% and Fortescue Metals losing 56 cents, or 11 percent, to $4.41 – losing two-thirds of their value in the past three and a half months.
In the banks, only Suncorp-Metway was the best performer, rising 40 cents to $11.08 over rumours of a break-up and sale of its assets.
European markets are also under siege, with Germany’s government planning to bail-out the second-best mortgage bank in Germany, Hypo Real Estate Holding, for a value of $89 billion.
The Australian dollar also plunged, falling against the US dollar and the Japanese yen; both setting new record lows, but managed to regain slightly from their losses.
TECHGEEK.com.au - The U.S. Securities and Exchange Commission said that it will be investigating whether a false report that Apple’s CEO Steve Job had a heart attack was a deliberate attempt to push down the company’s stock price.
The story, which appeared on CNN’s iReport, a citizen journalist website, claimed that the Apple co-founder had been rushed to a local emergency room following the “major heart attack”; following a series of rumours of Steve Jobs’ health after he underwent treatment for pancreatic cancer in 2004, and a more recent struggle with nutrition, according to AppleInsider, that has contributed to his visible weight loss.
Apple representative Steve Dowling has denied the report, saying that it was “not true”. In addition, CNN spokeswoman Jennifer Martin told Bloomberg that the content published on iReport is “entirely user-generated,” and once the community alerted CNN, “the fraudulent content was removed from the site and the user’s account was disabled."
The company’s stock price fell to $97.07, losing 3 percent, at closing time. It earlier fell to $94.65, after the news was reported. This is the first time since May 2007 that Apple has traded below $100.
The recent performance of its stock has been declining since the middle of August, even though the company is breaking records and its products, especially the iPhone and iPod product line, are proving more popular. The declining stock value is due to the financial crisis that is affecting all companies.
CNN is cooperating with the Securities and Exchange Commission with its investigation, handing over the details of the user who posted the story.
TECHGEEK.com.au is the sister blog to The Journal.
According to the France’s statistics agency, Insee; France has entered into a recession, with economic contraction expected during the third and fourth quarters of 2008, shrinking by 0.1 percent in both quarters. This would now bring the total growth down for 2008 to 0.9 percent, after having a 0.3 percent fall in the second quarter.
Insee also forecasts that unemployment will rise to 7.4 percent by the end of the year, up from 7.2 percent in the third quarter, if the current financial crisis does not worsen.
The finance minister, Christine Lagarde, who had previously rejected claims that the country is heading for a recession, which economists generally define it as having two consecutive quarters of falling gross domestic product, has said that the “risk of negative growth this autumn for the second consecutive quarter is now real.”
Lagarde has blamed the high price for oil, the strength of the euro earlier this year and the worsening financial crisis for the recession.
France joins Ireland in announcing they are in recession; and other European nations are not fairing much better. The EU is forecasting that there would be a possible recession for Germany, Spain and the UK – predicting that their economies will shrink for two consecutive quarters.