Opening arguments are to resume today in the trial of three former Nortel Networks Corp. senior executives accused of fabricating profits to trigger multi-million dollar bonus payouts.
Chief prosecutor Robert Hubbard is expected to continue laying out the Crown
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A Qatar-owned company says it has taken over the famous Raffles Hotel Singapore and an affiliated luxury hotel in Paris in the latest high-profile acquisitions by the energy-rich Gulf state.
The Qatar National Hotels Co. said Saturday that it recently took ownership of the 125-year-old Raffles Hotel Singapore and Le Royal Monceau Raffles hotel in Paris.
It did not disclose financial terms in the deal with Toronto-based Fairmont Raffles Hotels International, which had owned both hotels one hour payday loan.
State-owned Qatari companies have been snapping up investments at a brisk pace in recent months, including stakes in European energy companies, Germany’s largest builder Hochtief AG and majority ownership in the French football team Paris Saint-Germain.
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Manufacturing in India and China improved in December, a sign the world
NEW YORK
WATERLOO, ONT.
The marriage of square burgers and roast beef sandwiches is about to end.
Wendy’s/Arby’s Group said Monday that it will sell a majority stake in its struggling Arby’s brand to Roark Capital Group, the Atlanta private equity firm. The move marks the end of a short-lived union between the two fast-food chains, and represents a role reversal. Arby’s started as the suitor in the relationship, and ended up on the chopping block.
In an interview with the Associated Press, Wendy’s/Arby’s Group CEO Roland Smith said that the combination of the two fast-food chains in 2008 had “absolutely not” been a failure.
“I think that at the time we put the two brands together it was the exact right thing to do,” Smith said, “but any business that continues to do well and perform has to be nimble and adapt to what the market is.”
Wendy’s/Arby’s shares rose 19 cents, or 4 percent, to $4.71 in morning trading.
Roark, which already owns Moe’s Southwest Grill, Cinnabon and other restaurants, will pay $130 million in cash for an 81.5 percent stake in Arby’s. It will also assume $190 million worth of Arby’s debt.
Smith said Wendy’s/Arby’s had entertained offers from “quite a number” of bidders, but declined to give details. He said that the company’s decision to keep an 18.5 percent stake in Arby’s should signal its confidence in Arby’s future.
Smith is a veteran of the Arby’s side, having served as CEO of Arby’s Inc. from 1997 to 1999 and again starting in 2006. He has been CEO of the combined Wendy’s and Arby’s since it was formed in September 2008. He said that selling Arby’s was “a little bittersweet.”
Smith will receive a cash bonus of $350,000 when the sale goes through, and general counsel Nils Okeson will receive a bonus of $100,000, according to regulatory filings.
Smith said in the interview that he didn’t think employees would be bothered by the bonuses.
“I would say that the folks in our company understand clearly how compensation works, and it is a very typical (bonus) that would come up any time we go through a change in our organization,” he said. “I quite honestly don’t think anyone’s going to focus on it.”
Wendy’s/Arby’s will change its name after the sale is completed. Spokesman Bob Bertini said the company is considering options, and the new name will include the word “Wendy’s.”
Wendy’s/Arby’s Group will also get a tax benefit worth $80 million related to the sale, which Bertini described as an “offset to taxable income.”
Wendy’s and Arby’s first came together when billionaire investor Nelson Peltz and his Triarc hedge fund, which already owned Arby’s, agreed to scoop up Wendy’s as well. Peltz remains involved as the company’s chairman. Smith said Peltz is “a tough taskmaster, but he’s fair,” and said they have a “very, very solid relationship.”
Atlanta-based Wendy’s/Arby’s Group has struggled since its formation in late 2008, the depths of the recession, losing money for seven of its 10 quarters. In January, the company said it would consider selling Arby’s in order to focus on Wendy’s, which it hopes to expand by launching breakfast in more locations and by opening more restaurants overseas.
Wendy’s has about twice as many restaurants _ 6,500 to Arby’s 3,600 _ and represents about 70 percent of the company’s revenue. However, in the first quarter, Arby’s seemed like the stronger player by some measures. Its revenue rose by 5 percent, while Wendy’s revenue fell less than 1 percent, though some of Arby’s performance was likely due to sale prices.
The sale is expected to close in the third quarter, which starts in July. Roark managing partner Neal Aronson said in a statement that Roark looks forward to helping Arby’s “great brand achieve its full potential.”
Japan’s government decided Friday to set up a fund to help pay damages stemming from the crisis at a tsunami-crippled nuclear plant, financed by public money and mandatory contributions from utility companies.
Tokyo Electric Power Co. expects a deluge of damage claims from those affected by the radiation-leaking Fukushima Dai-ichi nuclear plant on the northeastern coast, whose problems constitute the worst nuclear accident since Chernobyl in 1986. However, the utility is not expected to be able to pay all of them.
The government’s plan, which would spread the burden for the crisis and must be referred to parliament for its expected approval, would create an entity that collects money for compensation from TEPCO and other utilities that operate nuclear power plants. The government will issue the body special bonds that can be cashed when needed to pay claims.
TEPCO earlier this week agreed to a cost-cutting reorganization, also intended to ensure its ability to pay compensation that includes creating a commission to monitor the company’s management.
Economy and Trade Minister Banri Kaieda insisted earlier this week that the new fund was not a bailout for TEPCO, but rather a way to ensure victims get paid.
“We want to avoid big changes in the electricity bills and contain (the public burden) as much as possible,” Kaieda said Friday.
TEPCO President Masataka Shimizu said he expects the plan to go into effect soon.
“Under this support scheme, while receiving support from the government, we will prepare to compensate those who are suffering in a fair and prompt manner,” he said in a statement.
Shinichi Ichikawa, the director of equity research at Credit Suisse in Tokyo, said the plan needed to achieve three goals: maintain a stable electricity supply, ease concerns of financial markets and ensure victims of the nuclear disaster would be compensated.
“It looks like it’s a good solution,” he said.
TEPCO has sought a 2 trillion yen ($24.8 billion) loan to get it through the initial emergency period. It expects to pay 50 billion yen ($620 million) in initial compensation to nearly 80,000 residents evacuated from around the radiation-leaking plant, which was hit by a giant tsunami after Japan’s massive March 11 earthquake. Overall damages are expected to be much higher.
Also Friday, the operator of a nuclear plant in central Japan began suspending operations at its reactors while it strengthens tsunami protections, under a separate agreement with the government.
The crisis at Fukushima had prompted the government to evaluate all of Japan’s 54 reactors for quake and tsunami vulnerability. The March 11 tsunami knocked out electricity and crucial cooling systems at the Fukushima plant.
That assessment led to Prime Minister Naoto Kan to request a temporary shutdown at the Hamaoka plant in Shizuoka prefecture amid concerns an earthquake with a magnitude of 8 or higher could strike central Japan sometime within 30 years. The Hamaoka facility sits above a major fault line and has long been considered Japan’s riskiest nuclear power plant fast cash online.
Chubu Electric Power Co., which supplies electricity to central Japan, including the city of Toyota, where the automaker is based, said steps to idle the No. 4 reactor at the Hamaoka plant started Friday morning. The company expects to begin halting the No. 5 reactor _ its only other operating reactor _ on Saturday.
Nuclear energy provides more than one-third of Japan’s electricity and shutting the Hamaoka plant is likely to exacerbate power shortages expected this summer. Its reactors account for more than 10 percent of Chubu’s power supply.
The government has said it will not seek similar shutdowns of any other reactors in the country.
Chubu Electric will also indefinitely delay a planned resumption of Hamaoka’s No. 3 reactor, which was shut down for regular maintenance late last year.
In a serious setback for efforts to stabilize the Fukushima plant, officials said Thursday that one of the reactors had been more heavily damaged than previously thought. The findings likely mean it will take longer than expected to restore the plant’s cooling systems. The original plan promised to bring the plant’s three troubled reactors to a cold shutdown by early next year.
Nuclear officials said that new data showed that the water level in the core of Unit 1 was much lower than expected, fully exposing what was left of the fuel rods that had partially melted in the hours and days immediately following the tsunami.
The findings _ which came after workers repaired monitoring equipment this week _ indicate that melted fuel also had fallen to a lump in the bottom of the pressure chamber and may have even slipped into the larger beaker-shaped drywell, or containment vessel.
Nuclear Industrial and Safety Agency spokesman Hidehiko Nishiyama acknowledged for the first time Friday that the condition constituted a “meltdown” under the Japanese definition, which requires melted fuel to drop to the bottom of the core.
“Meltdown” is not a scientific term and the definitions for it vary, though generally a “partial meltdown” refers to the melting of fuel rods _ as has been known to have happened at Fukushima for some time _ and a “complete meltdown” can mean the pressure vessel and other containments have been breached.
Officials made it clear that the fuel had melted early on the crisis and posed no danger now, as the temperature at the bottom of the reactor was around 100 degrees Celsius.
TEPCO had adopted an unorthodox method of trying to cool Unit 1’s reactor by trying to fill the drywell with water leaking from the core. But the new information means that they will have to find a new strategy, said Goshi Hosono, a prime minister’s aide and director of the nuclear crisis task force.
“We were too optimistic,” he said.
Singapore’s Prime Minister Lee Hsien Loong, whose party’s five-decade rule oversaw a 41-fold jump in gross domestic product, may find past success doesn’t sell as well to younger voters in tomorrow’s election.
The People’s Action Party is facing the most contests for parliamentary seats since independence in 1965. PAP members will likely keep a majority at a time of record economic growth, according to Pearlyn Wong, an investment analyst in Singapore at Bank Julius Baer & Co., which manages about $262 billion. At the same time, a decline in the share of the popular vote may spur the next PAP government to lean toward opposition concerns.
Singapore’s success has fueled wider income inequality, with the world’s highest share of dollar-millionaire households contributing to pressure on property and consumer prices. The opposition has called for more limits on the influx of foreign workers that make up the majority of construction and shipyard employees, and urged further steps to contain home prices.
“The PAP has to be mindful of and adapt to the new generation of voters who demonstrate a ‘papa don’t preach’ mentality,” said Eugene Tan, assistant professor of law at the Singapore Management University. “A relatively poor showing at the general election would certainly get the PAP back to the drawing board not just to re-examine the policy but also how to better communicate the policies.”
Parliament Makeup
Polls close at 8 p.m. tomorrow. The parliament dissolved last month was made up of 82 PAP lawmakers, two elected opposition politicians and 10 non-elected members. Tan said a loss of more than seven seats by the PAP or their share of the popular vote dipping below 60 percent would be a poor showing.
In a nation where 82 percent of households have Internet access, the PAP’s Facebook page is “liked” by 25,004 people, less than the 32,332 who favor the rival Workers’ Party. Voter polls and approval ratings aren’t published in Singapore.
Opposition groups including the Workers’ Party and Singapore Democratic Party are contesting the PAP for 82 of 87 parliamentary seats on May 7. The constituency of Lee Kuan Yew, 87, the Cambridge University-trained lawyer who led the island from British rule and became its first premier, is the only one going uncontested.
“This is really shaping up to be an exciting election,” said Samantha Lee, 23, an undergraduate and first-time voter. “The PAP has done a great job bringing us so far but maybe it’s time to have more voices representing the people. The record number of opposition candidates this time must surely say something about citizens wanting more alternatives.”
Stock Reaction
Property stocks including CapitaLand Ltd. (CAPL) and Keppel Land Ltd. (KPLD) have fallen in the run-up to tomorrow’s vote amid concern there will be increased pressure to rein in home prices. CapitaLand has dropped 4.4 percent in the past month, exceeding the 1.6 percent decline in the Straits Times Index (FSSTI), while Keppel Land has retreated 11 percent.
“If there is a result that’s a lot less than expected for the ruling party, such as if they lose 20-30 percent of the number of seats in the parliament,” stocks would drop, said Wong of Bank Julius Baer. “There might be some concern in the market that some of the policies that they’ve been very aggressive on might be scaled back or modified, such as on casinos, tourism, commercial properties and immigration.”
Opposition parties may win 10 to 17 parliamentary seats, meaning the PAP will still have more than 80 percent of seats and “be in complete control of policy-making and implementation,” Prasenjit Basu, an economist at Daiwa Capital in Singapore, wrote in a report dated yesterday no faxing payday loan.
Growth Recipe
In recent years, Singapore’s drive for growth has included the opening of two casino-resorts and bringing the Formula One race to the island to boost tourism. More than a third of Singapore’s 5.1 million population is made up of foreigners and permanent residents, whose growing numbers have led to increased competition for housing, jobs and education.
Smaller than New York City and without natural resources, Singapore’s gross domestic product was about S$285 billion ($231 billion) last year, compared with S$6.9 billion in 1960, while GDP per capita surged to S$59,813 from S$1,310. GDP surged 14.5 percent last year, the most in Asia. Singapore is the only Asian country with AAA ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.
“Do not rock this foundation,” Lee Kuan Yew said in an editorial in the Today newspaper last week. “Do not risk your assets, property values, job opportunities. Vote for men and women of proven character and track records of high performance.”
Paying Dividends
The administration of Lee’s son, Prime Minister Lee Hsien Loong, 59, says it hasn’t neglected its citizens for the sake of growth. In this year’s budget, the government plans to spend S$6.6 billion on benefits to ease the burden of inflation.
The government is distributing cash to all adult citizens as a “dividend” from record growth, supplementing the wages of low-income workers, upgrading homes and requiring companies to increase contributions into employees’ pension fund.
The PAP’s message still resounds among some voters.
“The current party works for me,” said Tan Sze Theng, 31, a tutor who lives in the affluent Bukit Timah neighborhood in Singapore. “I have my job, the country is stable, there are worse-off places to be in. There is complacency in the government, but it’s not big enough a reason for me to vote for the opposition.”
Lee Apologizes
Opposition groups are seeking to create a more diverse political structure. The Singapore Democratic Party said on its website April 18 that “little room has been left for the views of citizens to shape the policy-making process. This has led to a situation where local and national government is very far removed from the day-to-day concerns of the people.”
Prime Minister Lee apologized at a PAP rally for not moving faster to address shortfalls in housing, the Straits Times reported. “If we didn’t quite get it right, I am sorry but we will try and do better the next time,” the paper quoted him as saying May 3.
Dissent is growing among Singaporeans who may feel less beholden to a ruling party that led the island out of colonial rule than past voters. The shift mirrors that in nations from Malaysia to India, where the hold of independence-era parties has weakened. The last polls, in May 2006, returned the PAP to power with about 67 percent of the votes cast, down from 75 percent in the 2001 elections.
‘Very Complacent’
“They keep telling us how they built Singapore,” said Alvin Lee, a 25-year-old economics and finance student at Singapore Institute of Management who plans to vote for the opposition. “They are really very complacent.”
Singapore’s Gini coefficient, a gauge of income inequality, rose to 0.48 last year from 0.444 in 2000, according to the statistics department. A reading of zero means income equality, while a reading of one means complete inequality. Inflation accelerated to a two-year high of 5.5 percent in January.
“It’s very pressurizing living in Singapore,” said housewife Low Bee Kian, 39, who has three children aged 10 to 16. “Everything is so expensive. The government says the economy is doing well but why am I not feeling it?”
The quarterly celebration known as earnings season gets underway next week, and investors are eager to see how a resurgent Corporate America is coping with rising energy and commodity prices.
Gas prices have surged this year, and although they remain below the record highs from 2008, prices are expected to continue moving higher into the summer. That could spell trouble for the nascent rebound in consumer spending and put pressure on top-line sales growth.
At the same time, prices for many industrial and agricultural commodities have been sharply rising. Food producers have been looking for ways to deal with higher costs for wheat and corn, while rising cotton prices have led to hand wringing in the apparel industry.
"We’re already starting to see some companies pass on cost increases," said Doug Roberts, chief market strategist at Channel Capital Research. In particular, he pointed to shrinking portion sizes in the food industry and the myriad of fees that airlines have come up with to deal with higher fuel costs.
Overall, earnings for the companies in the S&P 500 (SPX) are expected to be up 11.5% over the first quarter of 2010, according to estimates from Thomson Reuters. That compares with 37% earnings growth in the fourth quarter of 2010, when year-ago comparisons were still relatively easy.
Revenues are expected to rise 8% in the first quarter versus the same period last year. That would be unchanged from the fourth quarter, when sales finally started to pick up for many companies.
Dow (INDU) component Alcoa (AA, Fortune 500), the unofficial harbinger of earnings season, is scheduled to report first-quarter results Monday after the closing bell.
While the outlook for the first quarter is still relatively robust, some analysts say the recent spike in oil prices and other cost pressures could put a damper on this quarter’s earnings.
"I think you’ll hear more about that in the guidance for the second quarter, as we look forward to input costs going up," said Kate Warne, chief market strategist at Edward Jones.
But other analysts say companies have the wherewithal to absorb higher costs and insulate their bottom lines from rising energy and commodity prices.
Many U.S. companies are still benefiting from the weak dollar, according to Alec Young, an equity strategist at Standard & Poor’s. He said about half of all sales for S&P 500 companies come from overseas markets, which are worth more when converted into dollars.
"Input costs are expected to rise, but so are revenues," said Young.
In addition, the biggest cost for most companies is labor, which remains cheap because of the lousy job market, he added.
Corporate earnings rose throughout 2010, while sales growth was lackluster for most of the year, suggesting that cost-cutting was driving profitability. But the gradually improving economy has raised optimism about so-called organic earnings growth.
Ethan Anderson, senior portfolio manager at Rehmann Financial, said gas prices have not yet reached the level where companies and consumers will start cutting back.
But the earnings outlook for the rest of the year is murky, as government stimulus programs implemented late last year wind down and corporations are forced to stand entirely on their own, he said.
If energy prices spike, all bets are off.
"Higher energy prices certainly do not help us," said Anderson. "Maybe we’ll be able to over come it, but I’m not convinced yet."
A U.K. house-price gauge rose for a fourth month in February as demand increased and transaction levels improved, the Royal Institution of Chartered Surveyors said.
The number of real-estate agents and surveyors saying prices fell exceeded those seeing gains by 26 percentage points, down from 31 percentage points in January, the London-based group said in an e-mailed report today. That matched the median forecast of 16 economists in a Bloomberg survey.
Recent data have shown a mixed picture of the housing market, with banks curtailing lending and the prospect of the largest government budget squeeze since World War II casting a shadow over the economic outlook. Bank of England policy makers will meet this week after three of the nine-member panel voted to increase the benchmark interest rate last month to tackle inflation, a move that could put further pressure on the market.
“Despite the more positive picture for some parts of the U.K., the general mood is still a little flat,” RICS spokesman Jeremy Leaf said in a statement. “Rather ominously, we have probably yet to feel the full impact of the public-spending cuts.”
The majority of respondents reporting that prices fell in February said the declines were limited to a maximum of 2 percent, RICS said. More than half of all surveyors said prices were unchanged.
Sales Gauge
A measure of sales per surveyor in the three months through February rose to 14.8 from 14.6 in the three months through January. An index of new buyer enquiries, an indicator of demand, rose to minus 1 in February from minus 7, and a measure showing the number of new property listings increased to 5 from minus 3 paydayloans.
Buyer interest continues to be hurt by lenders’ requirement for large deposits and concerns over the prospect of rising interest rates, RICS said.
The report showed a “marked divergence” across U.K. regions, with only London posting a gain in values, RICS said. Newly agreed sales were most positive in the capital, Scotland, and England’s south west, Yorkshire and Humberside regions, it said. Wales and England’s east and East Midlands areas posted “particularly negative readings.”
“There has been an increase in demand for good quality housing throughout central London in recent weeks,” James Perris, a surveyor at De Villiers Chartered Surveyors Ltd. in the U.K. capital, said in the report. “This is likely to continue for the next few weeks and may result in an increase in asking prices and the figures achieved.”
While Nationwide Building Society said last week that U.K. house prices rose in February on a supply shortage, Halifax and Hometrack Ltd. said values declined.
The Bank of England’s nine-member Monetary Policy Committee, led by Governor Mervyn King, will hold its key rate at a record low of 0.5 percent on March 10, according to all 61 economists in a Bloomberg News survey. Investors have priced in a 25 basis-point jump in the rate by June, according to forward rates on the sterling overnight interbank average, or Sonia, compiled by Tullett Prebon Plc.
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