Showing posts with label EU. Show all posts
Showing posts with label EU. Show all posts

Thursday, April 04, 2013

B&E This Fortnight

INTERNATIONAL
BUSINESS, ECONOMY & FINANCE
Hello moto!

In a move that will instigate its full fledged entry into the telecommunications hardware business, the global search giant Google is set to buy Motorola Mobility for a staggering $12.5 billion. If approved, this will be Google’s most expensive acquisition ever. The deal will boost Google’s mobile OS – Android. Since its launch in 2007, Android has been installed in 150 million devices. Further, more than 550,000 devices join the Android ecosystem daily through a wide network of 39 manufacturers and 231 carriers spread over 123 countries. It’s an all cash deal where in Google will be paying $40 a share – a 63% premium. The deal will put Google in the competition zone with Apple, Nokia and Research in Motion, resulting in significant competitive advantage. The deal is supposed to close by end of this year or early 2012 subject to regulatory approvals in the US and EU. Even after the deal, the Android platform will remain open source as Google plans to operate Motorola Mobility as a separate business entity. The mobile major currently holds around 17,000 patents and the deal will enable Google to better protect Android from anti-competitive attacks from Microsoft, Apple, and other companies. The development will create phenomenal synergies that would enhance the Android ecosystem.

AIG sues BofA
American International Group (AIG) has filed a $10.5 billion lawsuit against Bank Of America (BofA) over the sale of residential mortgage backed securities that are allegedly marred by fraud, misrepresentation and omission. The claim, which is one of the largest to raise its head in the aftermath of the 2008 financial crisis, blames BofA and its subsidiaries to have issued defective mortgages to borrowers who were not in position to repay, packaged them into supposedly low risk securities and sold $28 billion worth to AIG using offering documents that misrepresented the quality of the loans. Despite the huge losses incurred from the collapse of the mortgage market, very few claims have been filed over the past three years. Last year, Goldman Sachs paid $550 million to settle allegations from Securities and Exchange Commission (SEC) for its alleged fraud in marketing of mortgage backed securities called Abacus, which the company did not admit doing.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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Saturday, October 06, 2012

IRELAND: BAILOUT

The Irish Policymakers Argue that the Country’s Economic Fundamentals are still better than That of Greece, Manish K. Pandey Analyses how Poor are they in Finalising the Rationale Behind Their Arguments 

Though it is expected that the government budget, which is due to be announced in one week, to an extent will scale up the investor confidence (the government announced last week that it plans to reduce the budget deficit by $8.20 billion in 2011 and by a further $12.31 billion over the following three years), investors are yet to be convinced that Ireland can rectify its dire financial situation. In fact, considering the present situation, the government’s aim of bringing the deficit in line with EU fiscal rules of 3% by 2014, from 32% this year, still looks illogically optimistic. Further complicating the situation is the weak economic outlook. In fact, GDP growth is not expected to return to near the rates of the Celtic Tiger years, even in the longer term. As per Moody’s Analytics, Irish GDP is expected to clock an average growth of 2.6% during 2014-2019, way below the 5.5% average reported during 2001-2007. This might force the Irish policymakers to announce even more austere measures in the 2011 budget than previously planned for, which in turn could weigh heavy on the economy’s recovery. Melanie Bowler, London based economist at Moody’s Analytics, too agrees to the fact as she tells B&E, “Higher yields on government bonds will drag on growth by crowding out private consumption and investment. At the same time, it will raise interest payments on government debt, adding to the burden on public finances and limiting other government spending.”

Housing too is likely leave a permanent scar. In fact, much of the surge in unemployment (unemployment rate in Ireland is hovering at a record 13.9%) has come from housing, which before the recession accounted for about 10% of GDP and employed over 10% of the total Irish labour force. These figures have now contracted by over 33%, with residential building shrinking by a whopping 50%.

But the current 90 bn pound bailout package would require the government to impose further spending cuts and tax increases, which means Ireland’s 12.5% corporate tax rate, which is among the lowest in Europe, will be raised. And that’s the first thing we believe Ireland should never do as this will weigh heavy on foreign investment and, in turn, exports, two of the only few factors driving the recovery in Ireland at present. In short, if Ireland were to take the bailout, leave the tax rate untouched, yet work on minimising expenses through other methods, then the current issue might resolve itself in the next half decade, no less.


Source : IIPM Editorial, 2012.

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IIPM : The B-School with a Human Face


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