The following are the day's top business stories:
1. Google's Co-Founder Page Takes CEO Reins as Schmidt Turns Focus to Deals 2. Hewlett-Packard Names Meg Whitman, Four to Board in Wake of Hurd Departure 3. Swaps Climb to Two-Year High as Rate Rise Seen Within Weeks: China Credit 4. Japanese Stock Futures Rise on U.S. Home, Jobs Data; Australia Stocks Gain 5. Banker Influx to Push Luxury Home Rents in Hong Kong 15% Higher This Year 6. China Rural Incomes Rising Most Since '84 Show Lure for Job-Seeking Obama 7. IBM Said to Give Hundreds of Thousands of Workers $1,000 in Stock Awards 8. JPMorgan Hires Cravath Lawyer Woolery as Co-Head of North American Mergers 9. Chinese Watches to Challenge Cheaper Swiss Brands, Parmigiani's Jacot Says 10.Cotton, Wheat Surge as `Return of Agflation' Outpaces Metals: Chart of Day 11.Akerson Turns GM Designers to Cars Buyers Want Instead of Insiders' Needs 12.Quattrone Mounts Silicon Valley Comeback in Challenge to Wall Street Firms
1. Google's Co-Founder Page Takes CEO Reins as Schmidt Turns Focus to Deals
Google Inc. co-founder Larry Page will become chief executive officer, taking the reins from Eric Schmidt, who in a decade oversaw the transformation of a barely profitable Web startup with 200 employees into the world´s most- used search engine, generating $29 billion in sales last year. "Larry is ready," Schmidt, who will become executive chairman, said today on a conference call. "It´s time for him to have a shot at running this." Schmidt, 55, who joined the company in 2001, will focus on deals, partnerships and customers, he wrote in a blog post. Page will take over day-to-day operations as CEO on April 4. Schmidt navigated the company past early questions about whether a successful ad business could be built behind a search engine. He also oversaw the 2004 initial public offering, the biggest for an Internet company at the time. "We view this as evidence of the founders staying fully engaged in the business -- a positive," said Mark Mahaney, an analyst at Citigroup Inc. in San Francisco.
2. Hewlett-Packard Names Meg Whitman, Four to Board in Wake of Hurd Departure
Hewlett-Packard Co., the largest maker of computers, announced a board shake-up in the wake of criticism over the way it handled the departure of Chief Executive Officer Mark Hurd. Departing board members are Robert Ryan, John Joyce, Joel Hyatt and Lucille Salhany, Palo Alto, California-based HP said in a statement today. Directors joining the board are Shumeet Banerji, CEO of Booz & Co.; Patricia Russo, former CEO of Alcatel-Lucent SA; Dominique Senequier, CEO of AXA Private Equity; Meg Whitman, former CEO of EBay Inc.; and Gary Reiner, former chief information officer of General Electric Co. The board had been faulted for its handling of Hurd´s departure, including from shareholders who filed lawsuits. It´s unusual for companies to revamp the board and management as completely as HP has done since naming Leo Apotheker and Ray Lane as CEO and chairman respectively last September, said Dennis Carey, vice chairman at executive recruiter Korn/Ferry International. "It´s extremely rare for a company to almost simultaneously install both an outside CEO and an outside nonexecutive chairman and also so dramatically overhaul its board, as HP has done," said Carey.
3. Swaps Climb to Two-Year High as Rate Rise Seen Within Weeks: China Credit
China´s 12-month interest-rate swaps climbed to the highest in two years as faster-than-forecast economic growth fueled speculation the central bank will raise borrowing costs in coming weeks. The contracts, which exchange the seven-day repurchase rate for fixed payments, climbed nine basis points to 3.54 percent yesterday, according to data compiled by Bloomberg. The repo rate, a gauge of cash availability in the interbank market, jumped the most since October 2007. The swaps market reflected bets for the benchmark one-year deposit rate to be raised by about a percentage point from 2.75 percent in 2011. Deutsche Bank AG, JPMorgan Chase & Co. and UBS AG boosted 2011 economic growth and inflation estimates for China yesterday after data showed expansion unexpectedly picked up last quarter. Mizuho Securities Asia Ltd. and Action Economics said interest rates may be lifted before the week-long Chinese New Year holiday starts Feb. 2. Brazil raised borrowing costs two days ago and economists expect India to follow suit next week. "The numbers show that inflation remained high and the economy was still at the verge of overheating, entailing a continuation of policy tightening," said Liao Qun, a Hong Kong- based economist at Citic Bank International Ltd., a unit of the state-owned investment company. "The next move is anticipated to be an interest-rate hike around Feb. 10," when economic data for January will start to be released, he said.
4. Japanese Stock Futures Rise on U.S. Home, Jobs Data; Australia Stocks Gain
Japanese stock futures rose after U.S. home sales jumped and claims for unemployment benefits declined, boosting confidence in the global economic recovery. Australian shares declined on lower commodity prices. American depositary receipts of Toyota Motor Corp., the world´s biggest carmaker, climbed 0.4 percent from the closing share price in Tokyo. Those of Trend Micro Inc., a maker of computer-security software, rose 1.1 percent after Advanced Micro Devices Inc. said sales this quarter will exceed analysts´ estimates. Virgin Blue Holdings Ltd., an airline backed by Richard Branson, rose 3.4 percent after Air New Zealand acquired a 14.9 percent stake. "We are seeing continued improvement in U.S. employment and housing, even if the recovery has been slow," said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. "With the favorable data from the U.S., we´re seeing a weaker yen and stronger dollar, which should lead to the buying of Japanese exporter shares. However, the decline in commodities can be seen clearly, and so related shares may decline." Futures on Japan´s Nikkei 225 Stock Average expiring in March closed at 10,475 in Chicago yesterday, compared with 10,435 in Singapore. They were bid in the pre-market at 10,480 in Osaka, Japan, at 8:05 a.m. local time today. Australia´s S&P/ASX 200 Index rose 0.1 percent and New Zealand´s NZX 50 Index climbed 0.4 percent.
5. Banker Influx to Push Luxury Home Rents in Hong Kong 15% Higher This Year
Sarah Cheung was bracing for a rent increase on her apartment in Hong Kong´s Happy Valley district ahead of the expiration of her lease this month. She still wasn´t prepared when her landlord demanded 43 percent more. "We´ve looked around and this is still one of the better deals, even after the raise" to HK$40,000 ($4,890) a month, the first increase in five years, said Cheung, a 45-year-old businesswoman who lives with her husband and two daughters in a 1,250 square foot apartment that overlooks the Happy Valley racecourse. Rents of Hong Kong luxury homes, classified as those of at least 100 square meters (1,076 square feet), are growing faster than in London, fuelling lease increases in the broader market, fanning inflation and hampering government efforts to cool housing prices. Hong Kong luxury rents may jump as much as 15 percent this year after a 13 percent gain in 2010, according to property brokers Savills Plc and Jones Lang LaSalle Inc. HSBC Holdings Plc and Standard Chartered Plc are among companies boosting hiring to tap record equity sales in Hong Kong and demand for wealth management. The number of registered financial professionals in the city rose to a record 38,304 in the third quarter, according to the Securities and Futures Commission.
6. China Rural Incomes Rising Most Since '84 Show Lure for Job-Seeking Obama
China´s 10.3 percent economic growth last year drove the biggest increase in the nation´s rural incomes in a quarter century, bolstering efforts to spur consumption in the world´s most populous nation. In the countryside, per capita net income rose 10.9 percent to 5,919 yuan ($898), a statistics bureau report showed yesterday. The gain was faster than for urban incomes for the first time since 1997. The report also showed an acceleration in retail sales and industrial production at the end of last year. A stimulus-induced investment boom has fueled growth in inland provinces, lifting wages both there and in trade-reliant coastal regions now fighting to retain workers: Guangdong, the biggest exporter among China´s provinces, said this week it will raise minimum wages. The potential gains for Chinese spending are a draw to President Barack Obama, who this week pressed President Hu Jintao for greater access for American companies. "Faster rural income growth is a result of China´s economic rebound and booming construction across the nation, which boosted migrant workers´ employment and wages," said Wang Tao, a Beijing-based economist at UBS AG, who previously worked at the International Monetary Fund. "There is a vast rural market to tap and the key is to boost jobs and incomes for farmers."
7. IBM Said to Give Hundreds of Thousands of Workers $1,000 in Stock Awards
International Business Machines Corp. chief Sam Palmisano is giving non-executive workers $1,000 in long-term stock incentives after the company posted fourth- quarter earnings that sent shares to a record high. "We are continuing to outperform the market and our competitors and to make encouraging progress against our strategic growth initiatives," Palmisano wrote in a memo to employees. "Our long-term success is the product of the work, innovation and superior execution of more than 400,000 IBMers." He said that all non-executive employees who performed consistently during the execution of the company´s 2010 strategic plan, covering the years from 2007 to 2010, would receive the IBM stock. The shares will vest in 2015. Hundreds of thousands of workers will receive the awards, said a person familiar with the situation, who couldn´t be identified because the number of awards isn´t public. The Armonk, New York-based company had about 400,000 employees at the end of December. Doug Shelton, a spokesman for the company, wouldn´t give the specific number of workers getting the awards.
8. JPMorgan Hires Cravath Lawyer Woolery as Co-Head of North American Mergers
JPMorgan Chase & Co. hired James Woolery, a partner at the law firm Cravath, Swaine & Moore LLP, as co-head of North American mergers and acquisitions, part of management changes in the investment banking group. Chris Ventresca, who has co-managed the North American M&A division since 2008, will remain a co-head with Woolery, who is 41, JPMorgan said in a statement today. Jimmy Elliott, who had been global M&A head for five years at JPMorgan, will focus on working with clients and hold the title of global chairman of M&A. He won´t be replaced as global head of the group. Jeffrey Stute, who had co-run the North American M&A group while advising on deals in the health-care industry, will move over to be North American head of JPMorgan´s broader health-care coverage group. He has advised on deals such as Universal Health Services Inc.´s acquisition of Psychiatric Solutions Inc. and Merck & Co.´s takeover of Schering-Plough Corp. Robbie Huffines, who previously held that health-care post at JPMorgan, will become a vice chairman of investment banking. Huffines worked on the sale of Guidant Corp. to Boston Scientific Corp. and is currently advising Sanofi-Aventis SA on its proposed acquisition of Genzyme Corp.
9. Chinese Watches to Challenge Cheaper Swiss Brands, Parmigiani's Jacot Says
Chinese watchmakers will challenge producers of lower-priced Swiss watches because they can make components at prices Switzerland can´t match, the chief executive officer of luxury brand Parmigiani said. "If I was producing a cheap watch, honestly you have to go to China," said Jean-Marc Jacot, CEO of Parmigiani, whose average price is $70,000. "You have no solution. It is too expensive to produce in Switzerland." Swiss watchmakers including Cie. Financiere Richemont SA, the maker of Cartier and IWC watches, said this week that the strength of the Swiss franc, which gained 19 percent against the euro in 2010, will weigh on profitability. That will intensify the pressure to use Asian components in watches because Swiss- made parts are becoming more expensive, Jacot said. Chinese producers such as Tianjin Sea-Gull Watch Manufacturing are offering more complex watches, including some of the most difficult features to build such as tourbillons, spinning metal cages that adorn luxury timepieces. The Swiss makers have an edge given their heritage and pedigree, said Tom Russo, who manages about $3.5 billion at Gardner Russo & Gardner in Lancaster, Pennsylvania, including shares of Richemont.
10.Cotton, Wheat Surge as `Return of Agflation' Outpaces Metals: Chart of Day
Cotton and wheat are leading agriculture product price gains this year and outpacing metals as frost in China, floods in Australia, rains in India and dry weather in Brazil hamper crop prospects. The CHART OF THE DAY shows the Standard & Poor´s GSCI index of agriculture commodities lagged behind metals last year. Cotton more than doubled and wheat futures climbed 47 percent in 2010 while silver jumped 83 percent and gold rose 30 percent. "We believe 2011 will be a year of high prices in the agricultural and food sector," Kona Haque, an analyst at Macquarie Group Ltd. in London, wrote in a Jan. 19 report called "The Return of Agflation.´ "The high price scenario is reminiscent of 2007-08, the last time the world experienced agflation." The Standard & Poor´s GSCI Agriculture Index of eight futures jumped 44 percent last year. The increase was the most since 2007, when rising prices spurred riots in Niger, Guinea, Burkina Faso and Yemen, according to the Food and Agriculture Organization.
11.Akerson Turns GM Designers to Cars Buyers Want Instead of Insiders' Needs
For much of the past quarter- century, senior managers at General Motors Co. spent a lot of their time worrying about almost everything except their customers. The automaker´s cars were sometimes designed to fit the capabilities of its manufacturing plants, or simply to give its dealers something to sell. Its heavy debt load and rising health-care costs meant it had to be managed to maximize cash, rather than the long-term equity of its brands. And GM´s labor contracts all but prohibited layoffs, even if car buyers didn´t want the heavily discounted products those surplus workers churned out. No longer, Bloomberg Businessweek reports in its Jan. 24 issue. GM´s 2009 bankruptcy and subsequent restructuring allowed it to shed many of the contractual and financial obligations that weighed it down. That´s given new Chief Executive Officer Dan Akerson a window to do something radical, at least by GM standards: focus on customers. The Detroit-based automaker is free to design cars that appeal to consumers. It can restrain production to get better pricing. And the slimmed-down company now has money to crank out new models faster and expand the advertising it puts behind them.
12.Quattrone Mounts Silicon Valley Comeback in Challenge to Wall Street Firms
Silicon Valley´s go-to banker is back. Frank Quattrone, who became a star during the 1990s´ dot- com boom by bringing public 175 companies, including Amazon.com Inc. and Cisco Systems Inc., is grabbing market share from Wall Street banks less than three years after starting his own firm. Qatalyst Partners, founded in March 2008, catapulted to 10th place among financial advisers for technology mergers and acquisitions last year, ahead of Citigroup Inc. and rival boutiques Greenhill & Co. and Evercore Partners Inc., data compiled by Bloomberg show. The San Francisco firm, which didn´t appear in the 2009 M&A ranking, has already scored its first deal of 2011, advising home-networking chipmaker Atheros Communications Inc. in its $3.2 billion sale to fellow chip manufacturer Qualcomm Inc. on Jan. 5, Bloomberg Businessweek reports in its Jan. 24 issue. "Qatalyst is filling the void created by the volatility of the technology sector and the entire generation of bankers who left the industry during the financial crisis," says Chris Varelas, a partner at Menlo Park, California-based private- equity firm Riverwood Capital, who was Citigroup´s head of telecom, media and technology investment banking until 2008. Quattrone, 55, started Qatalyst six months before the bankruptcy of Lehman Brothers Holdings Inc. in September 2008. Before that he spent five years on the sidelines in legal battles with securities regulators. He was exonerated on appeal, and the matter doesn´t appear to have made a dent in his relationships with the top players in tech.
-0- Jan/21/2011 00:35 GMT