Business and Finance

When General Motors executives stopped in St. Louis last fall to meet with auto dealers, the economy was entering a free fall.

"We were right in the middle of the meltdown when we were out doing this. We just didn’t know it," said Mark LaNeve, GM vice president for sales. "I mean we thought it was a bad couple of weeks. And as it turned out, the vehicle market was collapsing, the stock market was collapsing, the banking sector (too)."

Last week, LaNeve, CEO Fritz Henderson and other GM executives met with Midwestern auto dealers in downtown St. Louis for the first time since emerging from bankruptcy last month. The automaker is going forward with fewer brands, fewer vehicle "nameplates" and, ultimately, fewer dealerships.

The launch of the nine-city dealer tour comes at a pivotal time for the American automaker. The deep recession has hurt auto sales, and consumers have been lukewarm to some of its vehicle brands.

Henderson called last week’s meeting a good opportunity to reconnect with GM dealers and get people "charged up about winning in the marketplace." To do so, the new, smaller GM has to win back the hearts and minds of U.S. consumers, he added.

"For those people who own our vehicles today, and are happy with them, we want to make sure we make them even happier," Henderson said after the meeting. "And for those that don’t want to consider us, we want to compete and get back on their consideration list."

Several area dealers were upbeat about what they heard and the prospects for the future. The fact that Henderson attended this year’s meeting was further evidence that "they mean business; that they’re serious," said attendee Greg Flotte, general manager of Don Brown Chevrolet in St. Louis.

Flotte said there already had been some signs that it wasn’t business as usual at the new GM. When the federal government was slow to reimburse dealers on Cash for Clunkers rebates, GM came up within 48 hours with a loan program to help dealers who had not been paid car loans for bad credit.

"That would not have happened under the old General Motors," Flotte said. "To have that happen that quickly and take action that was effective was something that I was very, very impressed with."

General Motors plans to put more marketing muscle behind fewer vehicle models within its core brands — Chevrolet, Buick, Cadillac and GMC, LaNeve said. "We’re going to very aggressively get our story told. That’ll kind of start in September."

Dealers said they welcomed that focused approach to advertising.

LaNeve said reducing the number of dealerships proved "an enormously emotional, painful process." The company plans to shed about 1,200 dealers nationwide under its reorganization, but GM officials would not disclose how many are in the St. Louis region or elsewhere.

It also plans to sell off Hummer, Saturn and Saab, and discontinue the Pontiac brand.

"So we’ll have a 24, 25 percent reduction in the overall number of dealers, which we did to strengthen the dealers," he said. "We’ve got to have dealers that can compete."

The weakened economy has hurt demand for GM’s full-size GMC Savana and Chevrolet Express vans built at the company’s Wentzville plant, where GM eliminated one of two production shifts. But Henderson said that the van remained an important product and that Wentzville was "the only place where we build that van."

One analyst said GM’s campaign for the hearts and minds of consumers, dealers and auto enthusiasts was not unlike a political campaign.

"A lot of it, at the end of the day, is to get votes," said Erich Merkle, president of Autoconomy in Grand Rapids, Mich. "GM wants to be elected. They want to be perceived as a cutting-edge, high-quality company."

Source

MOUNTAIN VIEW, Calif. — Chatter about ensuing plans permeates any graduation, though it’s not common for the talk to surround which class projects will receive venture capital funding.

This was a hot topic at the first commencement at Singularity University, a school that is backed by Google, operates on NASA’s Silicon Valley campus and gets its name from futurist and co-founder Ray Kurzweil’s favorite term for our technologically enhanced future.

Founded last year with the idea that rapidly evolving technologies can be harnessed to solve problems like poverty and climate change, Singularity University does not offer a degree — though it is working to get some universities to accept coursework for credits.

More than a graduate school, it resembles an incubator for technological ideas that, at the end of a nine-week program, may turn into actual companies with a humanitarian edge.

Starting in June, students spent three weeks attending lectures by faculty members and visiting luminaries to get a basic grounding in fields ranging from networks and computing systems to artificial intelligence and robotics. After that, they chose one of four subjects to study more closely for three weeks. For the privilege, the 40 members of the initial class paid $25,000 apiece.

The premise for the school is that change is occurring exponentially from the frenetic pace of technology and globalization. "We’re teaching students to understand and think about that," said Peter H. Diamandis, Singularity co-founder and CEO of the X Prize Foundation.

In the final weeks of their studies, students split into groups and created projects whose only requirements were that they focus on one of the world’s challenges and have the potential to improve the lives of a billion people over a decade.

The goal, as some Singularity faculty admit, sounds lofty. But with classic Silicon Valley optimism, the faculty, leaders and students seem confident that work done at Singularity U. will change the world.

"Breakthroughs come from young, unconstrained thinkers who have a bold vision of the future and don’t know that they can’t make it happen," Diamandis said, adding that many of the engineers who built NASA’s Apollo space program in the 1960s were in their 20s.

There were no spaceship models on display during a presentation of the projects Thursday afternoon. One team, called Acasa, proposed the use of rapid prototyping machines to essentially "print" affordable housing. Another team, Gettaround, showed an iPhone application and corresponding in-car technology that people can use to rent out their cars to others when not using them — without needing to hand over their keys.

The groups displayed their work to faculty, staff and potential investors. At a reception afterward, venture capitalists mingled with some students.

Source

FRANKFURT–The German government may drop its opposition to Belgian-based investor RHJ International as a buyer for General Motors Co.’s European unit, Opel, Bild newspaper reported yesterday.

Berlin could be willing to accept RHJ if it teamed up with an international partner from the car industry, the mass-selling German daily said, without specifying where it obtained the information.

Germany’s economy ministry was not immediately available for comment. The German government has so far favoured Canadian car-parts supplier Magna International Inc. over RHJ, which aims to shrink Opel to return it to profit.

Talks on Opel’s sale have dragged on for months and are a political hot potato before German elections in September, because of the state support required for the buyer.

GM placed Opel under the control of a trust in June. The trust owns 65 per cent of Opel, with GM holding the remaining 35 per cent. GM will recommend its preference to the trust’s board, which has to approve the choice of bidder. A final decision on the sale will be made by GM.

Reuters News Agency

Source

OAK BLUFFS, Mass.–President Barack Obama announced yesterday he wants to keep Ben Bernanke on as Federal Reserve chairman, saying he shepherded America through the worst economic crisis since the Great Depression.

"Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and out-of-the-box thinking that has helped put the brakes on our economic freefall," said Obama, with Bernanke standing by his side. "Almost none of the decisions he or any of us made have been easy."

Obama made the announcement while on vacation on the island of Martha’s Vineyard after aides said initially the president intended a news-free week there. He and Bernanke sported the open-collar look.

Bernanke, 55, is credited with turning the economy away from its deepest and longest recession since the 1930s. Now he faces the challenge of meeting White House expectations to chart the full economic recovery considered critical to Obama’s legacy.

In sticking with a Republican for the country’s top banker, the Democratic president was aiming for stability at a time of continuing, though easing, crisis.

The move was designed to reassure the U.S. financial sector as well as foreign central banks that the administration isn’t changing course on its largely well-received approaches to the financial meltdown and overall monetary policy.

Bernanke’s early tenure was as complicated as the crisis facing the banks he sought to save.

The Fed chairman’s successful, although unconventional, strategy to move the economy away from recession, unlock frozen credit and stabilize spiralling financial markets depended in large part on creating radical and unprecedented lending programs. But he’s not without his detractors, and Chris Dodd, the Democratic chairman of the Senate Banking Committee, warned of a thorough hearing before Bernanke would be confirmed for a second four-year term.

Many on Wall Street view Bernanke as the best choice to tackle high unemployment, fight off any inflation threat and take on the next set of risky, difficult decisions.

Associated Press

Source

A funny thing happened on the way to blogosphere dominance of the global conversation. Many of the most prominent bloggers have hitched their wagons to the traditional mainstream media (MSM). Yes, the same MSM that bloggers, or Internet diarists, ceaselessly ridiculed as slaves to conventional wisdom.

If the struggle to "monetize" online readers is the chief priority of MSM proprietors from Rupert Murdoch to the Sulzberger family of The New York Times, venerable newspapers and TV networks are at least deriving some revenue from their online products, despite the current, unprecedented advertising drought.

Yet even the best-read bloggers, the ones who break news and whose analysis is of must-read value to specialized audiences, are in far more dire financial straits. And they are coming in from the cold.

There was always a tendency for bloggers to save their best stuff for the MSM.

For instance, when it came time for a Rush Limbaugh takedown, David Frum penned a cover story last March for Newsweek. But now, even the pretence of independence is going by the wayside. Andrew Sullivan has moved his one-man blog to The Atlantic. Fellow former independent bloggers Andrew Coyne and Eric Alterman (Altercation) now blog for Maclean’s and The Nation, respectively.

It works the other way, of course. The Toronto Star is in the company of scores of MSM outlets, broadcast and print, in "repurposing" traditional journalists into bloggers. Nobel laureate economist Paul Krugman completes the points he makes in his New York Times columns on his "The Conscience of a Liberal" blog for that paper.

It turns out that traditional media remain unrivalled in audience reach. More than anything, bloggers and other "opinionators" want a vast audience. But blogs reach their saturation point quickly, a big audience being 2,000 or so. There is little "stumble upon" factor in blogs – strangers who come across a website by accident and become fans. You won’t stumble across the website of prolific blogger Mark Steyn at the dentist’s office, as you will Chatelaine. Opinionators want to change the world, and only a tiny fraction of it is tuned in.

Peggy Noonan’s weekly four minutes of face time on Meet the Press – must-watching for official Washington – and each of her weekly columns in the dead-tree Wall Street Journal make more of an impression than a thousand blog posts.

In order to drive up audience numbers, the U.S. political website Talking Points Memo, the first online journal to win a prestigious Peabody Award for investigative journalism, and Frum’s recently launched newmajority website, have adopted the "aggregator" model of Huffington Post, Newser and Tina Brown’s newish Daily Beast.

Aggregator sites offer congeries of mini-blogs, rewritten New York Times and Us Weekly articles, celebrity gossip and YouTube videos. As online variety shows, they do enjoy better ratings. But the voices of the erstwhile independent bloggers who have bunked in with the aggregators has been greatly diluted.

If that new online business model seems familiar, it is. It’s the same role played by newspapers, the pioneer aggregators. (Unless you count all the contributors to the Bible.)

We are witnessing the triumph of the allegedly extinction-bound MSM over their cyberspace detractors. The economic reality is that the 224-year old Times of London boasts vastly more "brand-name awareness," as marketers say, than the best-written, most imaginatively designed blog in the world. So do The Lancet, Paris Match and National Public Radio.

And that’s separate from the newspapers’ and TV news channels’ vaunted advantage in newsgathering, about which we so often hear from those making the case for "saving" our endangered traditional news media. The MSM win because of their continued, far larger financial resources, ubiquity of distribution, and decades-long familiarity and trust with audiences.

So if it ever was a war – and some of the early bloggers called it that– the MSM have won it. Why?

Because bloggers who piggyback on The Economist, Reuters, The Atlantic, The Nation, CBS News or the Toronto Star have to accommodate themselves to the standards and practices of those MSM outlets, which the original bloggers found overly restrictive.

There always will be independent bloggers content with an audience of 20, or 200, or 2,000 for their arcane field of inquiry. That’s why there are an estimated 200 million-plus blogs.

But there will always be bloggers who want to reach a bigger audience, which is why the lifespan of the average blog is two to three months.

So, long live the best blogs in their evolution into appendages of the mainstream media.

dolive@thestar.ca

Source

Ontario teachers have upped their bet on Toronto sports fans, setting off a new round of speculation about the value of the city’s hockey, basketball and soccer teams.

The Ontario Teachers’ Pension Plan said yesterday it is buying a further 7.7 per cent stake in Maple Leaf Sports and Entertainment from media company CTVglobemedia.

That will leave Teachers’ with a 66 per cent stake in the Toronto Maple Leafs, Raptors, Toronto FC and the Marlies, plus the Air Canada Centre, BMO Field and Ricoh Coliseum.

The owner with the second-largest stake is businessman and MLSE chairman Larry Tanenbaum, who also increased his significant stake when he bought 7.7 per cent from CTVglobemedia in February.

In a release, Ivan Fecan, president of CTVglobemedia, said the broadcaster-publisher sold at a profit but said nothing about the sale or purchase price.

"The time is right for us to exit and redeploy the proceeds from this sale to pay down debt," Fecan revealed.

Like other media companies in Canada, CTV is faced with declining advertising revenue. Meanwhile, its lenders will require it to keep debt service costs in line with cash flow.

It has been a constant guessing game to determine the market value of Maple Leaf Sports & Entertainment.

Forbes business magazine estimated last November the Leafs were the most valuable hockey franchise in North America at $449 million (U.S.) and the Raptors the 17th most valuable basketball franchise at $310 million. Part of those estimates included the value of the Air Canada Centre, estimating it was worth about $228 million free credit report without a credit card. So, those three assets were supposedly worth $876 million (U.S.), or about $1.07 billion (Canadian) at the time.

The only public disclosure from an insider is contained in the 2008 annual report of the Ontario Teachers’ Plan.

The report reveals the pension plan put a total value of $1.58 billion in private Canadian equity holdings. It held a 25 per cent stake in CTVglobemedia and, at the time, a 58 per cent stake in MLSE, plus an undisclosed number of other companies worth less than $100 million each.

Any estimate of the value of these firms would be based on old data in a period of rapidly deteriorating ad revenue. An estimate at time of sale would be complicated further by the fact the buyers are part-owners of the motivated seller.

Pension plan executives would have had an interest in propping up CTVglobemedia while, at the same time, assigning a significant value to Maple Leaf Sports.

Spokespersons for CTVglobemedia and Ontario Teachers’ both declined comment beyond what was in their release. All parties would have committed to keep the private transaction, well, private.

Tanenbaum chose not to return a telephone call, as did Eugene Melnyk, owner of Ontario’s other major league hockey team, the Ottawa Senators franchise.

A spokesperson for would-be franchise purchaser Jim Balsillie, co-CEO of Research In Motion, said he would not talk to the press.

Source

Tee time adds billions of dollars to the Canadian economy each year in goods and services, jobs and tax revenues, according to a national study of the country’s golf industry.

Golf accounts for about $11.3 billion of Canada’s gross domestic product, said the report, sponsored by the National Allied Golf Association and made public yesterday.

"Beyond its value as a sport, golf is a major industry generating jobs, commerce, business development and tax revenues for communities across Canada," said Steve Carroll, executive director of the Canadian PGA and chair of the group.

The results of the study – the first to measure the sport’s national economic impact – were unveiled in Oakville at the Canadian Golf Hall of Fame and Museum.

In the coming weeks NAGA, an umbrella group of Canadian golf organizations, will determine how it will use the data to lobby government, Carroll said. "It would be easy just to rush out and have a session up in Ottawa in front of government officials but that might not be the most effective thing to do right out of the gate."

Golf is often viewed as an elitist pastime, with acres of well-manicured greens and club memberships that run into the thousands of dollars at private clubs.

But the recession, along with cool, wet weather across Canada, put a damper on the industry car insurance quotes.

Advocates want to see fewer tax restrictions on golf as a business expense, the removal of the harmonized sales tax on golf memberships and green fees, as well as government support.

"Governments are spending lots of money to rebuild arenas and baseball fields, but they’re not rebuilding golf courses. I think now they can go and say, `This is a big industry. Help us out like you’re helping out these other industries,’" said Bob Weeks, editor of ScoreGolf.com. "For a long time they’ve said it’s a big industry … but now they have some numbers to back up what they’ve been talking about."

The study also found Canada’s golf industry creates about 342,000 jobs, $7.6 billion in household income and $1.9 billion in income taxes. About six million Canadians play golf each year and approximately 70 million rounds were played in 2008 – a decline of some 10 per cent from previous years.

"I think everyone is concerned about the decline in participation but it’s information like this that will help us turn this around," said Scott Simmons, head of the Royal Canadian Golf Association.

Strategic Networks Group carried out the nationwide survey of more than 4,000 golfers and 350 courses.

Source

Struggling handset maker Sony Ericsson is focusing on a return to profit and increasing its market share, incoming Chief Executive Bert Nordberg told Reuters in an interview.

“I would go for increased market share and restoring profitability,” Nordberg said when asked where he hopes to see Sony Ericsson in 1-2 years’ time.

He said turning to profit “can’t be too far away.”

Sony Ericsson said on Monday Chief Executive Dick Komiyama would retire at the end of the year, with Ericsson executive Nordberg to take the helm effective October 15 payday advance.

The venture has reported steep losses in past quarters and seen its market share slip to below 5 percent.

Nordberg said he would continue ongoing restructuring at the firm and look for a strategic refocus of its product portfolio — the company’s key weakness.

“In this industry you need smash-hit products,” he said. (Reporting by Tarmo Virki)

Read more

NEW YORK–J.C. Penney Co. roughly broke even in the second quarter, just topping Wall Street expectations as the department store chain benefits from cost-cutting moves.

The retailer also boosted its annual profit outlook, but expects sluggish sales for the rest of the year after second-quarter revenue fell 7.9 per cent.

Plano, Texas-based J.C. Penney said it lost $1 million, or break-even per share, in the quarter ended Aug. 1. That compares with a profit of $117 million, or 52 cents per share, in the year-ago period. Revenue was $3.94 billion, down almost 8 percent from $4.28 billion in the year-ago period.

Analysts expected a loss of 1 cent per share on $3.94 billion in revenue.

Same-store sales, or sales at stores opened at least a year, fell 9.5 percent for the period. Same-store sales are considered a key indicator of a retailer's health.

Myron E. Ullman, III, Penney's chairman and CEO, called the consumer climate "very difficult" but said in a statement that the company's strong financial position has let it invest in several initiatives, including opening its first Manhattan store last month, he said paydayloan.

Penney and other department store chains have faced increasing challenges as shoppers worry about job security, declining home prices and tight credit. While the stock market has rallied and there are signs of stabilization in the economy, business remains weak.

Also like other retailers, Penney has been cutting inventory in response. It also has been trying to expand its assortment of trendy, affordable labels.

For the third quarter, Penney expects same-store sales to decline anywhere between 5 to 7 per cent and total sales to drop between 3 per cent and 5 per cent. For the full year, Penney said that same-store sales should fall anywhere from 7 per cent to 7.5 per cent. Total sales should decline in the range of 5.5 per cent to 6 per cent.

Based on better-than-expected results for the second quarter, the company raised its annual profit outlook. It now expects earnings per share to be in the range of 75 cents to 90 cents. That's up from its previous range of 50 cents to 65 cents per share. Analysts surveyed by Thomson Reuters estimated 89 cents per share.

Source

Shares in UBS() on Thursday extended gains as investors expected the settlement of a damaging U.S. tax dispute to allow the bank to focus on becoming profitable again.

UBS, the world’s second-largest wealth manager in terms of managed assets, and the U.S. government agreed on Wednesday to settle a long-running dispute over the disclosure of names of wealthy American clients suspected of tax evasion.

“The stock is benefiting from the fact Switzerland and the U.S. have reached a fundamental agreement in the tax dispute,” a trader said. “The details of the deal are still missing but it is definitely positive that it did not come to a trial against UBS.”

The deal removes the prospect of a tax trial against UBS. A lengthy court battle would have hindered the bank’s ability to win back client confidence after the subprime crisis and the tax row triggered billions of Swiss francs of client withdrawals.

“This deal obviously closes a Pandora’s Box for UBS, which avoids an extremely long and delicate court procedure which could have called into question its very existence,” said Geneva-based lawyer Philippe Fisher.

Traders also said the prospect that the Swiss government would quickly sell its 9 percent stake in UBS was also supporting shares as a sale would signal Berne believes Switzerland’s largest bank is on the right path.

The government last year injected 6 billion francs to help the bank recover from its subprime binge.

Swiss Finance Minister Hans-Rudolf Merz said earlier this week the government wants to sell the stake soon. He had previously said the government would sell its holdings when the bank was back in good shape cash loans.

UBS shares traded 4.8 percent higher at 0919 GMT, outperforming a 2 percent rise in the Dow Jones Stoxx European banks index .SX7P. The stock rallied 3 percent in the aftermath of the settlement on Wednesday.

Domestic rival Credit Suisse gained 2.3 percent.

“The share is getting toward the level at which the government can sell its stake. Even if it sells at a lower price, it still gets the coupon,” said Sarasin analyst Rainer Skierka, adding the government would still break even at a price of 12.50 Swiss francs a share.

“I would not be surprised to see the government wait until the share is nearer 18 francs as this is easier to explain to the public,” he said.

The government would probably favor large institutional investors who would not feed the shares back into the market, hitting the share price.

The settlement is expected to involve transferring of some UBS client names to U.S. tax authorities, but no large payment for UBS.

“I don’t think that a heavy fine for UBS is on the cards,” said Ivan Pictet, a senior partner at Swiss private bank Pictet Cie and president of the Geneva Place Financiere.

UBS’s problems mean it has missed out on much of the recovery in banking stocks this year, with its shares gaining just 10 percent so far in 2009, against a rise of around 46 percent in the shares of European peers. 

Read more