Business and Finance

After days of speculation, Houston oil service companies Schlumberger Ltd. and Smith International Inc. jointly announced today plans to merger in a stock transaction valued at about $11 billion.

Smith shareholders will receive 0.6966 shares of Schlumberger in exchange for each Smith share. Based on the closing stock prices for both companies on Feb. 18, the agreement places a value of $45.84 per Smith share – 37.5 percent higher than Smith’s Feb. 18 closing price of $33.35.

Upon closing, Smith stockholders collectively will own approximately 12.8 percent of Schlumberger's outstanding shares of common stock.

Andrew Gould, Schlumberger’s chairman and chief executive officer, said that Smith’s drilling technologies, other products and expertise complement those of Schlumberger.

Smith CEO John Yearwood predicts accelerated technology development for the combined company’s customers.

Said Yearwood: “Schlumberger offers Smith's various segments enhanced engineering and design capability to place our products and expertise at the center of the total drilling system of the future.”

The deal, which is subject to regulatory and Smith stockholder approvals, is expected to close in the latter part of the year. It will create an industry giant with revenues double that of rival Halliburton Co. (NYSE: HAL).

For 2009, Schlumberger (NYSE: SLB) and Smith (NYSE: SII) reported revenue of $22.7 billion and $8.2 billion, respectively.

Meanwhile, Halliburton posted 2009 revenue of $14.7 billion.

Schlumberger expects to realize incremental pretax synergies — after integration costs –of approximately $160 million in 2011 and approximately $320 million in 2012. Schlumberger expects the combination to be accretive to earnings per share in 2012.

On Feb. 19, Smith’s stock shot up by more than 14 percent to a new 52-week-high of $38.16 in heavy trading after The Wall Street Journal reported that the company was in advanced talks to be acquired by Schlumberger.

There was no word yet as to how many jobs might be impacted by the transaction.

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Confidence in the world economy dropped in February on concern worsening government finances in some European nations will derail the global recovery, according to a Bloomberg survey of users on six continents.

The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago. The index exceeded 50 for a seventh month, which means there were more optimists than pessimists. The survey was conducted last week, before Germany and other European Union nations signaled they may help support Greece’s government finances.

Greece, Spain and Portugal are among European nations struggling to control widening budget deficits, prompting investors to dump the countries’ assets and question the sustainability of the recovery in the global economy. More than $4.5 trillion has been wiped from stocks worldwide since Jan. 14, while credit-default swaps have risen as investors seek protection against deteriorating European government finances.

“The situation in Greece and other European economies shows us that the global deleveraging process is not over and governments cannot continue the pace of stimulus they’ve been undertaking,” said Venkatraman Anantha-Nageswaran, global chief investment officer at Julius Baer & Co., which manages about $142 billion in assets. “We see global confidence fluctuating from month to month as growth disappoints.”

Group of Seven

The survey of 2,486 Bloomberg users was done between Feb. 1 and Feb. 5. Since the previous survey, China unexpectedly raised reserve requirement ratios for lenders, the Group of Seven finance ministers pledged to continue economic stimulus measures and a report showed the U.S. economy expanded at the fastest pace in six years last quarter.

“People aren’t concerned about the exit strategies from countries, they’re concerned about the total debt level,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York who participated in this month’s survey. “The global economy is a little bit more unsteady than it was a month ago.”

The fallout from the budget crisis in Greece has led investors to become the most bullish on the U.S. dollar since November 2008. The dollar confidence index rose to 55.7 from 53.1 in January. Most survey respondents in Europe turned more pessimistic on the outlook for the euro, expecting it to weaken against its U.S. counterpart over the next six months.

‘Downside Risk’

“If people start worrying about a big developed economy as they did Greece, that could start to affect the global growth outlook,” said Nick Kounis, chief European economist at Fortis Bank Nederland NV in Amsterdam, and a regular survey participant ay day loans. “Credit concerns have remained well-contained for the big countries. That suggests so far the global economic outlook is not seriously affected by this, although there are big problems about public finances and it remains a downside risk.”

The confidence gauge for Western Europe fell to 49.8 from 55.5 last month, dropping below 50 for the first time since November. Greek Finance Minister George Papaconstantinou has struggled to convince investors that the government can push its deficit below the European Union’s ceiling of 3 percent of gross domestic product.

Germany is considering assistance for Greece after the country’s deficit threatened the stability of financial markets, two lawmakers from Chancellor Angela Merkel’s governing coalition said Feb. 9. The European Union is scheduled to hold a summit in Brussels today.

Greek Tragedy

“The officials need to give a clear indication that it’s not just about fire-fighting Greece but also putting forward a wider European bailout mechanism that is applicable to other countries that get into trouble,” said Fortis’s Kounis. “That could stem the confidence crisis and boost credibility.”

A measure of U.S. participants’ confidence in the economy fell to 41.3 this month from 54.4 in January. More Americans unexpectedly filed first-time claims for unemployment insurance even as the jobless rate dropped in January, while Federal Reserve policy makers are attempting to gauge whether the economy is strong enough for them to withdraw unprecedented stimulus.

“It’s a jobless recovery,” said Jonathan Basile, an economist at Credit Suisse Group AG in New York and a regular survey participant. “The U.S. economy is still going to expand, it’s just not going to expand as quickly as the fourth quarter. We’re a long way from acceptable levels of unemployment” of about 5 percent that the Fed is comfortable with, he said.

Asia’s index fell to 70.8 in February from 79.8, while the confidence gauge for Japan dropped to 40.6 from 44.1. Japan’s government must heed the warning on soaring debt loads stemming from the turmoil in Greece and concerns about the credit quality of some European countries shouldn’t be regarded as “a burning house on the other side of the river,” Bank of Japan board member Seiji Nakamura said Feb. 4.

Most Bloomberg users were less optimistic on the outlook for their equity markets in the next six months, with respondents in the U.S., the U.K. and Spain turning bearish. Survey participants in the U.S. and Europe remained confident short-term interest rates will rise in the next six months, the survey showed.

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Robert Rogalski has been named CEO at Excela Health, a position he has held on an interim basis for three months, the Greensburg-based hospital network announced on Monday.

Rogalski, a former senior counsel and health care practice group leader at Thorp Reed & Armstrong LLP, joined Excela as a hospital trustee six months ago. He brings to the job more than 17 years of experience advising health care systems on a variety of strategic and legal matters, including corporate governance and acquisitions.

“While a number of candidates emerged during the deliberations, we found the opportunity to observe Bob’s strengths firsthand in day-to-day operations a considerable advantage,” Excela board Chairman Paul Mongell said in a prepared statement. “The positive results and substantive work he has performed during the transition period demonstrate the key attributes we seek in moving Excela Health forward.”

Before Thorp Reed, Rogalski was in-house counsel for health systems in western Pennsylvania and upper Midwest. Most recently he served as vice president and general counsel and compliance officer at MedCenter One Health Systems in Bismarck N.D. He has also worked as in-house counsel at the University of Pittsburgh Medical Center and West Penn Allegheny Health System, the first and second largest hospital networks in the region.

Rogalski is a graduate of St. Vincent College. He received his law degree from the University of Pittsburgh.

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Struggling to pay your FHA mortgage? Now you no longer have to be late with your payments to get help.

On Friday, the Federal Housing Administration announced that it will assist borrowers before they become delinquent. All you need do is prove your problems were caused by a reduction of income from a job loss, fewer paid hours, slashed wages or a decline in self-employed business earnings.

You may also qualify because of a change in household circumstances, such as a death or disability.

"The FHA has always required lenders to establish early contact with delinquent borrowers to discuss the reason for missing a payment and to evaluate reinstatement options," FHA Commissioner David Stevens said in a prepared statement. "Now servicers will have additional options for those borrowers who seek help before they go delinquent, which increases the likelihood that the borrower will be able to retain their home no fax payday loan."

The workouts available include forbearance, in which lenders agree to postpone or reduce payments for a specified period. This does not actually forgive the payments, they are just added to balance later in the mortgage term.

In more severe cases, borrowers may qualify for permanent payment reductions. This may be done by increasing the length of the loan, reducing the interest rate or even forgiving principal — or a combination of any of the three. 

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Greece should remain in the euro region where its problems “will be unequivocally easier to solve,” rather than allowing a new currency to devalue, pushing up inflation and interest rates, the central bank governor said.

A new currency would not be like “waving a magic wand,” George Provopoulos said in an article for the Financial Times. A weakened currency could increase the cost of imports, stoking inflation, and boost the cost of servicing public debt.

Concern that Greece’s government will struggle to tame the European Union’s biggest budget deficit this week pushed the yield premium investors demand to hold the nation’s debt instead of German bunds to the highest since the euro’s debut in 1999. Finance Minister George Papaconstantinou said yesterday that Greece won’t need a rescue package to reduce its debt.

“It will be immensely less costly for Greece to eradicate its problems from within the euro zone,” Provopoulos wrote. “Greece will not be tempted by these short-term options, but will undertake the necessary, bold adjustments.”

Greece’s debt has contributed to a slide in the euro against the U.S. dollar. The euro traded at $1.4124 at 3:01 p.m. in Sydney, close to its lowest level in almost six months.

‘Homer’s Sirens’

The idea of Greece leaving Europe’s monetary union “is based on flawed reasoning,” Provopoulos said fast cash online. “Those who suggest Greece might leave the euro zone are like Homer’s sirens.”

Prime Minister George Papandreou has said that the “unprecedented” crisis in Greece has led to “discussion on the euro, if the currency is stable.” He said there is “not one day to lose” in bolstering the nation’s finances.

Finance Minister Papaconstantinou denied a report yesterday in EuropeanVoice that EU officials were looking into a possible loan to help Greece tackle its deficit, the highest in the region at 12.7 percent of economic output. Amelia Torres, the spokeswoman for EU Economic and Monetary Affairs Commissioner Joaquin Almunia, said she wasn’t aware of any talks on a loan. A spokesman for the European Central Bank declined to comment.

Germany said it won’t support any EU loan to help Greece cut its deficit. “Greece must solve its problems through its own efforts,” German Finance Ministry spokesman Michael Offer said yesterday in an e-mailed statement.

While Greece’s problems are “extremely serious,” its economic future is “unwaveringly tied to the mast provided by the euro,” Provopoulos wrote in the Financial Times. “It will be unequivocally easier to solve these problems from within the euro area,” he said.

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Takuji Okubo, former senior director at Merrill Lynch Japan Securities Co. in Tokyo, has joined Societe Generale SA as its chief Japan economist.

Okubo starts work today for the Paris-based bank in the newly created position, Glenn Maguire, chief Asia-Pacific economist at Societe Generale in Hong Kong, wrote in an e-mail to Bloomberg News.

Okubo was employed at Merrill Lynch from 2007 to 2009 after working for Goldman Sachs Group Inc. in Tokyo.

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Flash memory maker SanDisk Corp. has been of the hottest stocks on the market in December, up 52 percent in the past 19 trading sessions.

Milpitas-based SanDisk (NASDAQ:SNDK) has gathered a number of positive analyst ratings during that time but there has been little else to explain investors' enthusiasm.

Its stock rose to a 52-week high of $30.14 in trading on Christmas Eve before closing at $30.13. It has more than quadrupled since hitting a 52-week low of $7.73 in March.

In its most recent quarterly earnings report, SanDisk posted a $231.3 million profit on a 14 percent rise in revenue to $935.2 million.

CEO Eli Harari said at the time, "We are encouraged by improved industry fundamentals and our increasingly diversified global markets, which bode well for further growth in the fourth quarter and in 2010 easy fast payday loans."

That followed word in September that South Korea-based Samsung Electronics Corp. had officially dropped a bid to buy SanDisk. Samsung's $5.85 billion offer was rejected last year as too low and later withdrawn.

The companies in May also signed a patent-license deal that reduces the threat of litigation between them in the flash-memory chip market.

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With rising unemployment stymying the president’s economic revival plans, the Obama administration is huddling with business leaders, academics and other experts Thursday to find a way to jumpstart hiring.

Some 130 people will gather for the afternoon jobs summit at the White House on the eve of the government’s November unemployment report. The nation is expected to have lost another 114,000 jobs, with unemployment remaining at 10.2%, the highest in 26 years, according to an economists’ survey.

The employment picture is certainly grim. Nearly 16 million Americans are out of work, one-third of whom have been unemployed for more than six months. There are now six workers competing for every job vacancy.

President Obama and some lawmakers are searching for a way to stem this unrelenting loss of jobs, which is casting doubt on effectiveness of many of his economic programs, from his $787 billion stimulus plan to his $75 billion foreclosure prevention initiative.

"We are going to be bringing together people from all across the country … to explore how we can jumpstart the hiring that typically lags behind economic growth, but we don’t want to wait," Obama said last week.

Invited executives include Google CEO Eric Schmidt, Disney chief Bob Iger, Boeing head James McNerney and AT&T’s Randall Stephenson. Also expected are United Steel Workers president Leo Gerard, San Antonio Mayor Julian Castro, former Fed vice chairman Alan Blinder and Paul Krugman, the Nobel Prize-winning economist and New York Times columnist.

The guests will also include small business owners, academics and non-profit leaders.

On the schedule are discussions on green jobs, small business employment, infrastructure and exports. Also, breakout groups will look at ways to encourage business competitiveness and to better prepare workers for the economy of the future.

The discussions will be led by top administration officials, including Treasury Secretary Tim Geithner, Council of Economic Advisers Chair Christina Romer, Labor Secretary Hilda Solis and Energy Secretary Steven Chu. Obama will make opening and closing remarks.

There’s no shortage of job growth proposals being bandied about. Though all sides agree that rising unemployment must be addressed, the solutions run the gamut. Some left-leaning economists and politicians are pushing for another round of stimulus, while their conservative counterparts are calling for tax breaks, such as a hiring credit for companies who add to their payrolls.

Indicative of just how contentious job creation is, House Republicans are holding an alternate roundtable on Thursday to discuss what they call the administration’s "job-threatening" policies.

"From the Obama administration, which produced a trillion-dollar ’stimulus’ that didn’t create jobs "immediately" as promised, comes a "jobs summit" that won’t actually help create jobs," said House Republican Leader John Boehner, R-Ohio. "Now more than ever, America needs more jobs, not more debt online payday loans."

Just how much Washington can do to boost hiring remains to be seen.

The administration and Congress are tied up with health care reform and foreign policy issues. And their ability to institute new programs will be hampered by the nation’s record budget deficit.

Though experts say the economy is recovering, they don’t expect jobs to return anytime soon. The National Association for Business Economics pushed recently pushed back their expectations for when companies will start adding positions to mid-2010. They previously had predicted a gain of 12,000 jobs a month in the first quarter.

Some of the proposals

Some of the leading ideas under discussion include:

• offering a payroll tax holiday, which would temporarily suspend the 12.4% tax on workers’ first $106,800 of wages;
• creating a new jobs hiring credit;
• giving more money to states and localities to close budget deficits. These shortfalls could cost 900,000 jobs in 2010 alone, according to one think tank;
• and offering public-service employment.

One measure that is more likely to be enacted is an extension of unemployment benefits. One million people could lose unemployment benefits in January if Congress doesn’t lengthen the deadline to apply for federal aid beyond Dec. 31, according to the National Employment Law Center.

This week, two groups at opposite ends of the political spectrum offered a bevy of suggestions on how to spur job creation.

The U.S. Chamber of Commerce on Monday sent a letter to the president with seven policies that it said are crucial to job creation. Its suggestion include expanding infrastructure investment by removing regulatory and other requirements, as well as better preparing American students for future jobs and lowering tax rates on entrepreneurs.

"While the government can help support some jobs in the short run, the only way to meet this challenge over the long term is through a vibrant and dynamic free enterprise system," Thomas Donohue, the chamber’s president.

The Economic Policy Institute, on the other hand, supports more government spending on transportation infrastructure and school buildings, as well as the creation of one million public service positions.

The labor-supported group, which released a five-point plan Monday that it says will create 4.6 million jobs in its first year, also supports extending unemployment benefits and health insurance subsidies. And it wants to see the president and lawmakers send more funds to state and local governments and create a hiring credit.

"Some people have questioned whether we can afford to do more to create jobs, but they’ve got it backwards," said Lawrence Mishel, EPI’s president. "We can’t afford not to do more." 

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Wilfrid Sio was suspicious when he got an email from PayPal, with a subject line saying account verification.

"Congratulations! You have been chosen by the Online Department to take part in our survey. In return, we will credit $99 to your account, just for your time."

Instead of clicking on the link in the email, he wrote to me instead.

Send it to spoof@paypal.com, I told him.

The company’s response: "You’re right – it was a phishing attempt and we’re working on stopping the fraud. By reporting the problem, you’ve made a difference."

Phishing (pronounced fishing) is a fraud designed to steal your identity. It uses false pretenses to get you to disclose sensitive personal information, such as credit card numbers or account passwords.

A common scam involves sending a fraudulent email that claims to be from a well-known company. Phishing can also be carried out in person, over the phone, through fraudulent pop-up windows and websites.

How do you spot a phishing email?

There are some telltale signs, which I verified by comparing Sio’s spoof against a genuine PayPal email I received recently (telling me the credit card used for my account had expired).

• Generic greeting. A typical phishing email will have a generic greeting, such as "Dear User." The spoof was addressed to "Dear client, PayPal." All real PayPal emails will use your first and last name.
• False sense of urgency. A phishing email will try to deceive you by saying you will be in jeopardy if your account is not updated right away. The spoof said the survey deadline was Nov. 30, three weeks after the mailing date, to avoid losing out on the $99 credit.
• Fake links. A phishing email will have a link that looks legitimate, but may send you to a fraudulent website. The spoof had a link to www.xcyg.net, which preceded the PayPal name and led me to Beijing Sunrise Technology Co. Ltd. (almost entirely in Chinese). Always check where a link is going before you click and if it looks suspicious, don’t click it.

Eric Hagedorn, an experienced eBay seller, says you should never sign into your PayPal account from a link provided by an email, no matter what the email says.

"This is how 90 per cent of all PayPal accounts get hacked – the person gives away their password to a fake PayPal site."

Always log into PayPal by opening a new browser and typing in the following, https://www.paypal.com/ca.

The term "https" should precede any web address (or URL) where you enter personal information. The "s" stands for secure. If you don’t see "https," you’re not in a secure web session and you should not enter data.

Now there’s an extra layer of security for the 8 million registered PayPal accounts in Canada – a foolproof system to prevent your account from being hacked.

The PayPal security key, which costs $5, has two forms. You can carry a small device, the size of a credit card, which lets you create a unique six-digit security code each time you log into your account. Or you can sign up to get unique security codes sent by text message to your mobile phone.

"With this in place, you can give your passwords to hackers and they’ll still be unable to break into your account," Hagedorn says.

PayPal, owned by eBay Inc., accounted for 31 per cent of company revenues in the last quarter. It’s now accepted by other online retailers such as Dell and La Senza.

Next Sunday, I’ll look at prepaid credit cards and problems that can arise when using them online.

eroseman@thestar.ca

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Investors will brace for a spate of economic reports this week with their fingers crossed that there is more good news than bad since that will set the tone for the remaining seven weeks of the year.

With Black Friday less than two weeks away, retailers are hoping consumers will be willing to open their wallets during the all-important holiday sales period, helping fuel the economic recovery.

Kicking off the week will be the government’s monthly retail sales report, which investors hope will shed light on how much consumers will be willing to spend.

"Next week is all about consumer spending and the holiday," said Burt White, chief investment officer at LPL Financial.

Retail sales have shown some improvement recently, suggesting that consumers are suffering from "frugal fatigue" and may be more willing to splurge this holiday season, White said.

A rebound in consumer spending, which accounts for the bulk of U.S. economic activity, could help fuel bets that a recovery is firmly underway.

The outlook for consumer spending remains murky with the national unemployment rate at a 26-year high of 10.2%.

"In this environment, anything associated with jobs is probably the most important thing," said Quincy Krosby, market strategist at Prudential Financial.

To that end, investors will likely pay close attention to Thursday’s report on the number of Americans filing first-time claims for state unemployment benefits.

Investors will also focus on the plight of the U.S. dollar, which wallowed near a 15-month low against the euro for most of last week.

The dollar has been taking a beating recently as investors take advantage of rock-bottom interest rates in the United States to bulk up on more risky assets.

"For now, it’s still sell the dollar and buy risk," White said. "It’s a crowded trade, but a good one."

Stocks ended the week on a high note, logging the second consecutive week of gains as optimism about the recovery gained momentum. The question on investors’ minds this week will be ‘can that momentum be sustained?’

Eyes on Bernanke

Demand for riskier assets, like equities, could hit a speed bump Monday afternoon with Federal Reserve chairman Ben Bernanke scheduled to deliver an economic outlook speech at the Economic Club of New York.

While the central bank is not responsible for managing currency fluctuations, some analysts think Bernanke may strike a more hawkish tone given the severity of the greenback’s recent weakness payday loan companies.

Others expect Bernanke to echo recent official policy statements that interest rates will remain "exceptionally low" for an "extended period" of time.

On the docket

Monday: The week starts with a closely watched report on October retail sales before the opening bell.

Economists expect the Commerce Department to report that sales rose 0.9% last month after 1.5% drop, according to consensus estimates gathered by Briefing.com.

Also due Monday morning, a report on manufacturing activity in the mid-Atlantic region and business inventory data from September.

Federal Reserve chairman Ben Bernanke will speak about the outlook for the U.S. economy in New York at midday.

Tuesday: The government’s producer price index comes out before the market opens. Analysts think prices at the wholesale level ticked up 0.5% in October. Excluding volatile energy prices, the index is forecast to rise 0.1%.

Government figures on capacity utilization and industrial production in October are due out at 9:15 a.m. ET.

The market will also digest quarterly financial results from Home Depot (HD, Fortune 500), Target (TGT, Fortune 500) and TJX Companies (TJX, Fortune 500) before the opening bell.

Wednesday: The housing market will be in focus with reports on housing starts and building permits released before the market opens.

Also before the opening bell, the government’s closely-watched inflation gauge is expected to show that consumer prices were flat in October. Excluding food and energy, prices are expected to have risen 0.1% last month after a 0.2% increase the month before.

Thursday: The Labor Department reports on the number of Americans filing new claims for unemployment benefits at 8:30 a.m. ET.

Jobless claims fell to 502,000 filings last week and analysts say a figure below 500,000 this week could help push the market higher.

A report on leading economic indicators comes out after the market opens.

Sears Holdings (SHLD, Fortune 500) will report quarterly earnings in the morning, while PC giant HP (HPQ, Fortune 500) and apparel-maker Gap (GAP, Fortune 500) will post earnings after the closing bell.

Friday: No economic reports are on the docket. 

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