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Home Foreclosures Jump In 3rd Quarter: Regulators

by on December 29, 2010

WASHINGTON (By Dave Clarke) – U.S. home foreclosures jumped in the third quarter and banks’ efforts to keep borrowers in their homes dropped as the housing market continues to struggle, U.S. bank regulators said on Wednesday. The regulators said one reason for the increase in foreclosures is that banks have “exhausted” options for keeping many delinquent borrowers in their homes through programs such as loan modifications. Newly initiated foreclosures increased to 382,000 in the third quarter, a 31.2 percent jump over the previous quarter and a 3.7 percent rise from a year ago, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in their quarterly mortgage report. The number of foreclosures in process increased to 1.2 million, a 4.5 percent increase from the second quarter and a 10.1 percent increase from a year ago, according to the regulators. The report, which covers 33 million loans serviced by national banks and federally regulated thrifts, also shows a sharp drop in the amount of loan modifications processed through the Home Affordable Modification Program (HAMP), the Obama administration’s leading foreclosure prevention effort. HAMP loan modifications fell by almost 46 percent in the third quarter, according to the report. Regulators noted, however, that loan modifications done by servicers outside of HAMP increased by 10 percent in the third quarter. Overall home retention actions taken by banks to keep borrowers in their homes dropped by 17 percent compared to the second quarter. (Reporting by Dave Clarke, Editing by Chizu Nomiyama) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Geely-Volvo Deal Completed, Chinese Buys Ford’s Struggling Brand

by AP on August 2, 2010

BEIJING — Geely Holding Group completed its acquisition of Ford Motor Co.’s Volvo unit Monday in a $1.5 billion deal that gives the small-but-ambitious Chinese automaker a global brand and huge management challenges. The legendary Swedish automaker is China’s biggest foreign auto acquisition and an unusually large deal for a private Chinese company. Industry analysts say 13-year-old Geely, barely known abroad, will face a struggle in integrating the two corporate cultures and turning around Volvo Cars, a perennial money-loser in a country with strong labor unions. Geely agreed in March to buy Volvo from Ford, which sold its European brands to raise cash and focus on its core Ford and Lincoln units. Geely said it paid $1.3 billion in cash plus a $200 million note – less than the $1.8 billion price announced in March due to changes in pension obligations and working capital. “This famous Swedish premium brand will remain true to its core values of safety, quality, environmental care and modern Scandinavian design,” said Geely founder and chairman Li Shufu in a statement. Beijing has been encouraging Chinese companies to expand abroad, taking advantage of the global crisis to acquire assets at lower prices. The biggest acquisitions to date have been by government companies in the energy and mining industries. Geely will face a long struggle in reviving Volvo, said Zhang Xin, an industry analyst for Guotai Junan Securities in Beijing. “Why would a company suddenly make money by simplying replacing a boss?” Zhang said. “I don’t hold high expectations for Geely. They still have a long way to go.” Li said that under Chinese ownership, Volvo will strengthen its presence in the U.S. and European markets and expand in China and other emerging markets. Li said in March that Geely expected to spend up to $900 million to return Volvo to profitability. He said Volvo’s biggest problem was high research and development costs while it produces far fewer vehicles than rivals Daimler AG and BMW AG. Volvo will keep its headquarters and manufacturing presence in Sweden and Belgium and its board will have autonomy to execute its strategic plan, Geely said. Privately owned Geely has built a business selling cars, motorcycles and scooters with little government support. The deal could give Geely an edge in China, which is the world’s biggest auto market and one in which foreign brands often dominate. Volvo will also give the company a foothold in Europe. Geely said the chief executive of Volkswagen’s U.S. arm, Stefan Jacoby, has been named president and chief executive of Volvo Cars. He succeeds Stephen Odell. Ford acquired Volvo in 1999 for $6.45 billion but has been trying to unload it since 2008 to raise cash and focus on its two remaining core brands. Ford sold sold its Jaguar and Land Rover brands to India’s Tata Motors Ltd. in June 2008 for $1.7 billion, and it sold Aston Martin to a private equity group in 2007 for $931 million. Ford also plans to stop producing its Mercury brand by the end of this year. Ford said last week that Volvo made $53 million in the second quarter, a $290 million improvement from the second quarter of 2009. Volvo sold 191,000 cars and SUVs in the first half of this year, up 29 percent from last year. ___ Associated Press researcher Bonnie Cao contributed to this report. ___ On the Net: Geely Auto: http://www.geely.com

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Siemens Said to Hire UBS for Possible Sale or IPO of Hearing-Aid Division

December 2, 2009

By Aaron Kirchfeld Dec. 2 (Bloomberg) — Siemens AG , Europe’s biggest engineering company, is hiring UBS AG to advise on a possible sale of its hearing-aid division, three people familiar with the matter said. Siemens, based in Munich, will also consider an initial public offering of the unit, said the people, who declined to be identified because the talks are private. The Zurich-based bank may send out information on the business to potential buyers as soon as this month, one of the people said. The division, valued at 2 billion euros ($3 billion) to 3 billion euros, may draw interest from private-equity firms including KKR & Co. LP and BC Partners Ltd., two people familiar with the matter said last week. Siemens claims the No. 1 position in the global hearing aid market by units manufactured. It trails Sonova Holding AG of Switzerland and William Demant Holding A/S of Denmark by market share, according to Sonova. Siemens, Europe’s largest engineering company, has sharpened its focus on infrastructure, energy, transport and sold assets such as mobile phones. Siemens, which also makes high-speed trains, power grids and medical scanners, doesn’t disclose sales for its hearing aids. The company has been making the products for more than 100 years, and the business is based in Erlangen in southern Germany, home to some of Siemens’s largest production sites. Marc Langendorf , a Siemens spokesman, declined to comment. A spokeswoman for UBS in Frankfurt couldn’t immediately comment UBS ranks as the No. 4 adviser on takeovers announced in Europe this year, down from the second spot in 2008, according to data compiled by Bloomberg. Hermann Requardt , the chief executive officer of Siemens’s health-care division, said on Sept. 29 at a meeting with analysts and investors that the hearing aids are “a very solid business and a strong contributor.” The company reports earnings for its fiscal full year tomorrow, and Chief Executive Officer Peter Loescher will hold a press conference in Munich. To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

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Video: S&P’s Six Says Euro-Area Economic Recovery `Very Uneven’: Video

November 13, 2009

Nov. 13 (Bloomberg) — Jean-Michel Six, chief European economist for Standard & Poor’s, talks with Bloomberg’s Francine Lacqua about third-quarter gross domestic product for the euro-area economy. GDP in the economy of the 16 nations using the euro rose 0.4 percent from the second quarter, when it fell 0.2 percent, the European Union’s statistics office said. Exports from Germany and France helped compensate for households’ reluctance to increase spending. (Source: Bloomberg)

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Applied Materials Posts First Profit in a Year, Will Cut Up to 1,500 Jobs

November 11, 2009

By Ian King and Joseph Galante Nov. 11 (Bloomberg) — Applied Materials Inc. , the world’s biggest maker of chip equipment, reported its first profit in a year after a pickup in orders. The company also made plans to cut as many as 1,500 jobs as it adjusts to a gradual recovery. Fourth-quarter net income was $137.9 million, or 10 cents a share, the first profit since the year-earlier period, the Santa Clara, California-based company said today in a statement. Sales fell to $1.53 billion in the quarter, which ended Oct. 25. The company doesn’t expect orders to return to pre- recession levels any time soon, prompting the cutbacks. Applied will eliminate the jobs over the next 18 months, reducing its headcount by as much as 12 percent. The chip industry, led by Intel Corp. and Samsung Electronics Co., is rebuilding the market from a lower level. “There are fewer chipmakers out there and people are being more rational in their spending,” said Patrick Ho , an analyst for Stifel Nicolaus & Co. in Dallas. He recommends buying Applied’s stock. “I think we are going to get a good bounce back, but I don’t know if we’re going to the 2006, 2007 levels.” Applied rose 25 cents, or 1.9 percent, to $13.50 in late trading after the announcement. The shares, up 31 percent this year, closed at $13.25 today in Nasdaq Stock Market trading. Analysts had estimated a fourth-quarter profit of 3 cents a share and sales of $1.32 billion on average, according to a Bloomberg survey. The company reported net income of $231.1 million, or 17 cents a share, in the year-earlier period. Chip Spending Semiconductor companies will spend about $15 billion on manufacturing machinery this year, half the amount in 2008 and a fraction of 2007’s $43 billion tally, according to trade group Semiconductor Equipment and Materials International . Applied’s orders were $1.07 billion in the fiscal third quarter, up 65 percent from the second quarter. To cope with the slump, the chip industry shut down older plants and curbed expansion plans. Samsung, the world’s second- largest chipmaker after Intel, will spend $5 billion on new plants and equipment next year, down from the $8.15 billion in 2007, according to Daniel Berenbaum , an analyst at Auriga USA LLC in New York. Under Chief Executive Officer Mike Splinter , Applied has sought to decrease its reliance on the chip-equipment business. It’s adapted some of its semiconductor and flat-panel display machinery for use in the production of solar panels. To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net ; Joseph Galante in San Francisco at jgalante3@bloomberg.net

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Gold Demand Falls to Six-Year Low as Jewelry, Electronics Sales Decline

August 19, 2009

By Claudia Carpenter Aug. 19 (Bloomberg) — Gold demand fell to a six-year low in the second quarter as recession curbed buying by jewelers and electronics producers, the World Gold Council said. Central banks were net buyers for the first time since at least 2000. Global consumption fell 8.6 percent to 719.5 metric tons from a year earlier, the London-based industry group said in a report today. That’s the lowest level since the first quarter of 2003. Jewelry demand declined 22 percent and electronics, the biggest industrial use for gold, slid 26 percent. The World Bank said in June the global recession will be deeper than it expected three months earlier. Investors bought 222.4 tons of gold in the quarter, 46 percent more than a year earlier, as an alternative to stocks and bonds, said Rozanna Wozniak , investment research manager at the council. “Tough economic conditions have impacted jewelry and industrial demand,” Wozniak said. “Investment demand provided a cushion and we do expect that to continue.” Central banks bought 14 tons of gold more than they sold, the first quarterly net purchases since at least 2000, according to the council, based on figures from London-based research company GFMS Ltd. The so-called official sector had net sales of 69 tons in the second quarter last year, the report said. Wozniak said GFMS wouldn’t identify any of the buyers. Central bank purchases aren’t counted in the 719.5 tons of total demand because they are considered a traditional source of supply, she said. Other such sources showed gains, including a 6 percent rise in mine production from the second quarter of 2008, and a 21 percent jump in recycled metal, the report said. In India, the largest buyer, gold demand fell 38 percent to 109 tons, while it rose 11 percent in China, the second-biggest buyer, to 89.6 tons, the World Gold Council said. Germany was the biggest investment market with demand of 28 tons, compared with 23 tons in the U.S. and 21 tons in India, the report said. To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

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Bank of Korea Keeps Interest Rate at 2% for Sixth Month as Growth Recovers

August 10, 2009

By Seyoon Kim Aug. 11 (Bloomberg) — South Korea’s central bank kept its benchmark interest rate unchanged at a record low for a sixth straight month amid “favorable” signs of economic recovery. Governor Lee Seong Tae and his board left the seven-day repurchase rate at 2 percent in Seoul today, as expected by 12 of 13 economists surveyed by Bloomberg. The Bank of Korea cut the benchmark by 3.25 percentage points between October and February, the most aggressive easing since it began setting a policy rate a decade ago. “Recent signs of an improvement in the economy are still not enough to justify a rate increase, as the economy only started to pick up,” said Kim Seung Hyun , head of research at Taurus Investment Securities Co. in Seoul. “The central bank will have to start thinking about inflationary pressure from later this year when demand rises further.” South Korean stocks have soared 40 percent this year on investor confidence in the economy, which last quarter expanded at the fastest pace since 2003, joining China and Singapore in leading a regional rebound. The International Monetary Fund upgraded its forecasts this week for South Korea’s economic growth in 2009, citing low interest rates and fiscal spending. “We will maintain an accommodative policy stance so the economy can improve in coming months and financial markets maintain a stable trend like they did in the past few months,” Lee told reporters in Seoul today. Stocks Rise The benchmark Kospi stock index rose 0.1 percent to 1,577.43 at 12:01 p.m. in Seoul and the won fell for a third day, with the currency 1.2 percent lower at 1,243 against the dollar. The yield on five-year government bonds fell 7 basis points to 4.92 percent. “Economic activity in terms of both production and demand has recently continued to exhibit favorable movements,” the central bank said in a statement in Seoul. South Korean industrial output rose the most in four months in June, a sixth straight advance, and manufacturers’ confidence climbed to a 14-month high. Japanese machinery orders, an indicator of capital investment in the next three to six months, jumped 9.7 percent from May, the Cabinet Office said yesterday. The Bank of Korea on July 10 raised its gross domestic product forecast for this year and next, saying the economy will shrink a less-than-expected 1.6 percent in 2009, before expanding 3.6 percent next year. Before that, the government on June 25 raised its 2009 GDP forecast, predicting the economy would shrink 1.5 percent this year, less than the previous estimate of a 2 percent drop. ‘Recovery Trend’ “The economy is likely to expand in the second half on a quarter-on-quarter basis as demand seems to have picked up from the second half, even though the impact of government policies will weaken,” Lee told reporters in Seoul today. “The recovery trend is likely to continue from the second quarter, even though there are some uncertainties remaining.” Policy makers in the U.S., Europe and the U.K. are also keeping borrowing costs unchanged to spur their economies. The European Central Bank left its benchmark rate at a record low of 1 percent on Aug. 6, and the U.S. Federal Reserve will keep its overnight lending rate at between zero and 0.25 percent on Aug. 13, according to all 38 economists surveyed by Bloomberg News. The Bank of Japan today kept its overnight lending rate at 0.1 percent and refrained from unveiling any new measures. Some economists say the South Korean central bank may need to raise rates as early as November to prevent inflation from accelerating following the economic recovery. Credit Risks “Evidence for an economic recovery will build up, raising the necessity for an interest-rate increase,” said Nomura Holdings Inc. economist Kwon Young Sun in Hong Kong. “I think there are more upside risks to the economy than the Bank of Korea is predicting.” Cheaper borrowing costs prompted households to increase borrowing, with the nation’s bank lending to households expanding for a sixth straight month in July. “Mortgage loans continued to expand markedly,” the central bank said in a statement today. “Concerns about credit risk” and the short-term focus of market funds “have not been resolved,” it added. Lee said the central bank will look into the details of the increase in mortgage loans. The government has said it will maintain its expansionary fiscal policies this year to help support the economy. South Korea spent 167.1 trillion won ($137 billion), or 64.8 percent of this year’s budget, in the first half of 2009 to help support Asia’s fourth-largest economy. The jobless rate rose to the highest in more than eight years in June after manufacturers and construction companies cut jobs. To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

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U.S. Steel Forecasts Third-Quarter Loss as Recession Hurts Domestic Demand

July 28, 2009

By Jack Kaskey July 28 (Bloomberg) — U.S. Steel Corp. , the largest U.S.- based steelmaker, forecast a third straight loss for the current quarter as the recession continues to hurt its North American business. All three business segments will report operating losses in the third quarter, as they did in the previous period, because of low operating rates, the cost of keeping plants idled and weak average prices, Pittsburgh-based U.S

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