The following are the day's top business stories:
1. Apple's Jobs Takes Leave as Weight Loss Said to Continue; Cook Takes Over 2. Goldman Sachs Halts Facebook Share Sale to U.S. Investors on Rule Concerns 3. U.S. Stock Futures Drop as Jobs's Medical Leave Spurs Speculation on Apple 4. Iberdrola Hurt as Utilities Snared in Europe's Austerity: Credit Markets 5. Obama-Bernanke Bonds Show Real Yield Advantage Attracting Global Investors 6. Bank of America's Talent Exodus Cuts European Share in Half Since Merrill 7. Pound Losing to Euro as Cameron Budget Cuts Collide With King's Inflation 8. Orix CEO Miyauchi Targets 10% Return on Equity, Gradual Dividend Increases 9. Mitsui Mining Maintenance at Largest Zinc Smelter May Cut Output of Metal 10.Tunisia Revolt Spurs Surge in Region's Credit-Default Swaps: Chart of Day 11.Steve Jobs's Health Reports Since His Cancer Diagnosis in 2003: Timeline 12.Food Prices Causing Riots in Africa Stoke Record U.S. Farm Economy Growth
1. Apple's Jobs Takes Leave as Weight Loss Said to Continue; Cook Takes Over
Apple Inc. Chief Executive Officer Steve Jobs took a leave of absence as his health deteriorates from battling a rare form of cancer and the effects of a liver transplant he had almost two years ago, according to a person with knowledge of the situation. Jobs has been unable to keep on weight as he undergoes treatment for his conditions, said the person, who requested anonymity because the matter is private. He took two previous leaves -- for cancer surgery in 2004 and the transplant in 2009. Chief Operating Officer Tim Cook will be responsible for the day-to-day operations, with Jobs continuing as CEO, Apple said today, citing an e-mail to employees from Jobs. "I love Apple so much and hope to be back as soon as I can," Jobs, 55, said in the e-mail. Jobs said he will continue to "be involved in major strategic decisions for the company."
2. Goldman Sachs Halts Facebook Share Sale to U.S. Investors on Rule Concerns
Goldman Sachs Group Inc. halted an offering of Facebook Inc. shares to U.S. investors on concern that "intense media attention" on the deal may violate rules limiting marketing of private securities. Instead, the sale, first reported Jan. 2, will be restricted to non-U.S. investors, the New York-based bank said in an e-mailed statement today. Goldman Sachs and funds it manages had agreed to buy $450 million of closely held Facebook before the bank began seeking investors. "Goldman Sachs concluded that the level of media attention might not be consistent with the proper completion of a U.S. private placement under U.S. law," it said in the statement. The move "was based on the sole judgment of Goldman Sachs and was not required or requested by any other party." Goldman Sachs, the biggest U.S. securities firm before converting to a bank in 2008, had been trying to sell as much as $1.5 billion in Facebook shares to investors inside and outside the U.S. before making the change announced today. The company didn´t say whether it still expects to raise that amount. The target is still achievable, according to a person with knowledge of the bank´s plan who declined to be identified because it isn´t public.
3. U.S. Stock Futures Drop as Jobs's Medical Leave Spurs Speculation on Apple
U.S. stock futures signaled losses for benchmark indexes after Apple Inc. Chief Executive Officer Steve Jobs´s leave of absence spurred concern over the prospects for the world´s second-largest company. Futures on the Nasdaq-100 Index, of which Apple makes up 21 percent, sank to 2,295.25 at 8:12 a.m. in Tokyo, down 1.1 percent from their close on Jan. 14. Standard & Poor´s 500 Index futures expiring in March slipped 0.3 percent from their close last week. Apple, which rose last week to a record in New York, slid 6.2 percent in Germany yesterday, when U.S. exchanges were closed for Martin Luther King Jr. Day. The announcement may spur a decline for Apple and computer makers after the company rallied 319 percent since March 2009, according to Michael Yoshikami, who owns the shares and oversees $1 billion at YCMNet Advisors in Walnut Creek, California. Jobs, a cancer survivor, is taking a leave to focus on his health, putting Apple in the hands of Chief Operating Officer Tim Cook for the third time in seven years. "It´s a corporate setback and a negative for the stock," said Yoshikami. "Investors may be less negative this time because we´ve been down the road before when Tim Cook did a great job navigating the company in Steve Jobs´s absence, and Apple probably has its product replacement cycle set for the next two years. Still, the stock could sell off 10 to 15 percent and bring technology stocks down on sentiment."
4. Iberdrola Hurt as Utilities Snared in Europe's Austerity: Credit Markets
Utility company bonds are trading at the highest ever relative yields compared with industrial debt as borrowers with ties to governments suffer the most from budget cuts amid the sovereign deficit crisis. The extra yield investors demand to hold bonds sold by utilities instead of benchmark government securities is 131 basis points, 2 basis points wider than the debt of industrial borrowers, according to Bank of America Merrill Lynch index data. Average spreads on utility bonds, historically among the least risky industries, widened above industrials for the first time on Dec. 24. Spanish utilities including Iberdrola SA, the country´s largest power company, and Barcelona-based Gas Natural SDG SA are being hurt as Europe´s so-called peripheral nations struggle to bring budget shortfalls within euro-region limits. Austerity measures are weighing on the area´s recovery, with economic growth forecast to slow to 1.5 percent this year, from 1.7 percent in 2010, according to economists surveyed by Bloomberg News. "These utilities cannot de-couple from the sovereign debt crisis," said Christian Kleindienst, an energy-industry analyst at UniCredit SpA in Munich. Also, "investors fear that they might be hurt by higher taxation," he said.
5. Obama-Bernanke Bonds Show Real Yield Advantage Attracting Global Investors
The highest inflation-adjusted yields in the world´s most-developed bond markets are appeasing investors waiting for President Barack Obama to begin reducing the more than $1.2 trillion U.S. budget deficit. Treasury 10-year notes pay 1.81 percent after subtracting consumer price increases, compared with 1.32 percent for German bunds and 1.1 percent for Japanese government bonds. Gilts yield 31 basis points less than the U.K.´s inflation rate. Obama and Federal Reserve Chairman Ben S. Bernanke are benefiting from the slowest inflation, excluding food and energy costs, since before the 1960s as so-called real yields lure investors to finance the deficit and stimulate the economy. Foreign buyers, who own more than half the $8.86 trillion in outstanding U.S. marketable debt, have added to their holdings of Treasuries for 18 consecutive months through October. "There has been grumbling about the deficit, but the market is betting that policy makers will do the right thing and focus on growth, which will help the debt picture in the long run," Jack McIntyre, a fund manager who oversees $21 billion in debt at Brandywine Global Investment Management in Philadelphia, said. "Real yields are at levels that make them attractive with the lack of inflation pressure the market is seeing, a still weak recovery and a stubborn lack of job growth."
6. Bank of America's Talent Exodus Cuts European Share in Half Since Merrill
Bank of America Corp., hurt by an exodus of at least 30 senior investment bankers in Europe, is falling behind rivals fighting for a shrinking pool of business. The company slipped to 11th place in European merger advice last year after taking over Merrill Lynch & Co. in 2009, from fourth in record 2007, according to data compiled by Bloomberg. Its share of investment-banking fees in Europe, the Middle East and Africa was cut by more than half to 2.2 percent since the acquisition, according to research firm Freeman & Co. In response, the Charlotte, North Carolina-based bank, the largest in the U.S. by assets, is planning to hire as many as 30 managing directors in the region and is counting on its ability to finance and complete deals once business improves in Europe, said Christian Meissner, head of investment banking for Europe, the Middle East and Africa. "The first priority is clearly rebuilding the talent base," Meissner, 41, who joined in July from Nomura Holdings Inc., said in an interview last month at the bank´s European headquarters, steps from St. Paul´s Cathedral in London. "It´s easier to develop corporate dialogue while rebalancing your own business when things are relatively quiet."
7. Pound Losing to Euro as Cameron Budget Cuts Collide With King's Inflation
No major currency is performing worse than the pound as Prime Minister David Cameron´s budget cuts slow growth and rising inflation limits the Bank of England´s ability to spur the world´s sixth-largest economy. Sterling has weakened against all 16 of the most-traded currencies, depreciating even more than the euro, since the start of August. The three most accurate strategists for the pound expect it to continue falling and futures traders this month were the most bearish since September. The pound, which appreciated 8 percent against the dollar after Cameron took power in May until November, has been trapped by the government´s efforts to close a deficit that grew to 11.1 percent of gross domestic product in the last fiscal year. Bank of England Governor Mervyn King is keeping interest rates at record lows to spark growth at the same time that inflation has remained above the government´s 3 percent limit for nine months. "Tightening policy to rein in inflation in a weak-growth environment would be a double whammy against the pound," said Lee Hardman, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. "Rate hikes are currency supportive only if they´re consistent with stronger economic growth."
8. Orix CEO Miyauchi Targets 10% Return on Equity, Gradual Dividend Increases
Orix Corp., the Japanese financial services firm that cut its dividend by 71 percent in the wake of the credit crisis, is targeting a 10 percent return on equity in three years and a gradual increase in payments to shareholders. Orix´s return on equity, a measure of how well companies reinvest shareholders´ money, climbed to 3.06 percent as of March 2010 from 1.8 percent a year earlier, according to data compiled by Bloomberg. Its annual dividend rose to 75 yen in the fiscal year ended March from 70 yen after being slashed from 260 yen. Orix is yet to announce a payment for this fiscal year. "We´ll quickly go for the 10 percent target focused on caution and stability," Chairman Yoshihiko Miyauchi, 75, said in an interview last week. "For the time being, our dividend won´t return to the levels paid before the financial crisis, as the global market is still fragile." Orix, whose businesses include brokering, golf courses and Osaka´s Buffaloes baseball team, has almost tripled its cash holdings over the past three years for investment and acquisitions abroad to cope with Japan´s population decline and waning demand for financial products. Domestic industries Miyauchi expects to fare well include Tokyo real estate and businesses tied with the aging society.
9. Mitsui Mining Maintenance at Largest Zinc Smelter May Cut Output of Metal
Zinc output by Mitsui Mining & Smelting Co., Japan´s biggest producer of the refined metal used to galvanize steel, may decline in the next fiscal year as it plans to shut its largest smelter for two months of maintenance. The Tokyo-based company will close its Hachinohe smelter from March 15 to May 15, Nobuyuki Nakamoto, general manager of the company´s zinc business, said yesterday in an interview. The plant´s output may fall by 10,000 metric tons to about 90,000 tons in the year starting from April 1, he said. Zinc jumped 50 percent since June as the global economy recovered from its worst postwar recession. Supplies of the metal in Asia remained tight amid growing demand from China, the biggest user, to build infrastructure and cars. The country´s vehicle sales jumped 32 percent in 2010 as stimulus measures and economic growth helped the nation remain the largest auto market. "Metal demand in Asia will remain strong following economic expansion in China and Southeast Asian nations and an export-led recovery at home," Nakamoto said. The company´s annual sale premiums have climbed 20 percent from last year, including shipping and insurance costs, he said.
10.Tunisia Revolt Spurs Surge in Region's Credit-Default Swaps: Chart of Day
Investors are insuring against contagion across North Africa after Tunisian President Zine El Abidine Ben Ali was forced to flee the country following protests against rising food costs, unemployment and corruption. The CHART OF THE DAY shows credit-default swaps insuring government debt from Morocco to Egypt have surged to the highest levels since July 2009. Contracts on Tunisia climbed to 184 basis points from 120 at the start of the year, while contracts on Egypt jumped to 307.5 from 237 and Morocco rose to 159 from 125, CMA prices show. "If things were to get out of hand, you have the risk of broader contagion that starts to impact banking exposures," said Vivek Tawadey, head of European credit strategy at BNP Paribas SA in London. "The risk is it moves further eastward. As things currently stand, we believe that this is a localized event which should correct over time." When Ben Ali fled Jan. 14 after at least 23 deaths, the protests had developed into an revolt against repression of critics and human-rights abuses. Similar charges are leveled by opposition movements in other North African nations including Egypt, where a man set himself on fire yesterday to oppose state security, Al Masry Al Youm reported.
11.Food Prices Causing Riots in Africa Stoke Record U.S. Farm Economy Growth
The same record food prices causing riots in Algeria and export bans in India are allowing President Barack Obama to combine the biggest-ever U.S. farm exports with the tamest inflation since the 1960s. Global food costs jumped 25 percent last year to an all- time high in December, according to the United Nations. Countries probably spent at least $1 trillion on imports, with the poorest paying as much as 20 percent more than in 2009, the UN says. In the U.S., the largest exporter, retail food rose 1.5 percent last year and will gain as little as 2 percent in 2011, the Department of Agriculture estimates. Governments from Beijing to Belgrade are boosting imports, limiting sales or releasing stockpiles to curb food inflation. Higher prices will push U.S. agricultural exports up 16 percent to a record $126.5 billion this year, according to a USDA forecast. While U.S. consumers haven´t been squeezed so far, grocers from Winn-Dixie Inc. to SuperValu Inc. have said they plan increases. Commodities will keep rising, according to a Bloomberg survey of more than 100 analysts and traders. "We are absolutely spoiled," said Jason Britt, president of Central States Commodities Inc., a research and analysis company in Kansas City, Missouri. "We have the luxury that we spend a small percentage on food. But I wouldn´t be surprised to see larger bites of our incomes used."
-0- Jan/18/2011 00:35 GMT