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7:30pm UK, Wednesday May 23, 2012

A group of disgruntled shareholders is suing the company, its founder and several banks behind the flotation in a New York court.

The shareholders claim that during the IPO marketing process the defendants concealed “a severe and pronounced reduction” in Facebook revenue growth forecasts because of increased mobile device usage.

The lawsuit was filed in the US district court in Manhattan, according to a lawyer for the plaintiff.

The Facebook share price has suffered since Friday’s $38 (£24) launch and it fell $3.03 on Tuesday to close at $31 (£19.75) – a drop of more than 18% on the IPO.

Early market trades on Wednesday showed only a modest share price improvement.

The legal action comes after regulators stated they are investigating Morgan Stanley, the lead investment bank that handled the IPO last week.

The Nasdaq exchange has admitted flaws with the IPO on May 18

A report emerged that claimed it selectively informed clients of an analyst’s negative report about the company before the stock started trading.

Financial Industry Regulatory Authority boss Rick Ketchum, the self-policing body for the securities industry, stated the question is “a matter of regulatory concern” for his organisation and the powerful Securities and Exchange Commission (SEC) watchdog.

The top securities regulator for Massachusetts, William Galvin, stated he had also subpoenaed Morgan Stanley over the claim it only divulged details of the revenue cut estimates to some clients.

Morgan Stanley stated that it “followed the same procedures for the Facebook offering that it follows for all IPOs,” and that its procedures complied with regulations.

As lead underwriter in the deal Morgan Stanley is under pressure

Questions about the role played by Morgan Stanley as lead underwriter have added to the confusion surrounding Facebook’s IPO, which was one of the most hotly anticipated debut in years.

The IPO raised $16bn (£10bn) for the social networking company and valued it at $104bn (£66bn).

Nasdaq stock market boss Robert Greifeld acknowledged that “clearly we had mistakes within the Facebook listing”.

The stock debut, originally set for 11am on May 18, was delayed by more than 30 minutes because of technical problems, with some brokerages still sorting out the aftermath on May 22.

Facebook founder Mark Zuckerberg remotely launched the stock on the Nasdaq

But brokerage firm Needhams has issued a “buy” rating for the stock, with a $40 (£25.60) target price for the social networker.

According to Reuters, Morgan Stanley analyst Scott Devitt cut his estimate for Facebook’s revenue this year to $4.85bn (£3.05bn) from more than $5bn earlier.

Further scrutiny has been levelled at the IPO after the Wall Street Journal stated that Facebook’s chief financial officer David Ebersman decided shortly before the stock debut to increase the shares on offer by 25%.

The newspaper claimed that underwriter Morgan Stanley had assured Mr Ebersman there was plenty of demand for the stock.

A spokesman for California-based Facebook told the AFP news agency: “We believe the lawsuit is without merit and will defend ourselves vigorously.”

source : news.sky.com

The department store chain plans to have its new website ready by February next year, with the roll-out beginning in August 2012.

“We already have over a million customers coming to the site every month and that is growing at an exponential rate,” Mr Brookes told reporters on Wednesday.

“We know there is a much larger upsize for us in this area.”

Myer will spend around $5 million on a new web provider next month as it looks to dominant UK Department store John Lewis which sells 16.4 per cent of its goods online.

Myer, which has been slow to adopt digital technology, currently sells less than one per cent of its items on the web.

“There’s no reason why world wide web sales cannot be 10 per cent of our volume which runs to $300 million,” Mr Brookes said.

“What we are not certain of is when that time will be.”

It depended on the adoption rate, the roll out of the broadband network and Myer’s capability to provide competitive prices, he said.

The ideal performing areas of the website were women’s and youth fashion while customers who shopped on-line were highly valued within the store.

Myer stated it will offer discounts of between 40 and 60 per cent during the four week long stocktake sale in June following discounts of 30 to 50 per cent at last year’s sale.

Boots, gloves, scarfs and coats would all be discounted as winter stock piled up due to a slowdown in sales over the past six to seven weeks.

source : www.wabusinessnews.com.au

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12:38am UK, Wednesday May 23, 2012

Katie Stallard, media and technology correspondent

The social network stock dominated Nasdaq trade again, with shares falling another 8.9% at the close on Tuesday – the third day of trading – as accusations flew that leading underwriters had cut their projections ahead of the initial public offering (IPO) on Friday.

Branded ‘FB’ on the Nasdaq exchange, the shares fell as far as $30.94 (£19.61) on Tuesday, and closed at $31.12 (£19.73).

At that price the company has seen more than $19bn ($12bn) wiped off its value since last week.

Facebook stock fell more than 8% at Tuesday’s opening, before rallying to 4.2% down within 90 minutes of opening.

The company’s shares fell 11% on Monday as the hype surrounding the firm’s flotation evaporated. They closed flat on Friday.

What we see are a series of bad decisions made by Facebook’s executives going back many years. The insiders got greedy, too clever by half, in how they used secondary markets. They picked a bad banker and an awful exchange.

Barry Ritholtz, financial blogger and chief market strategist at Fusion IQ

At the initial offering of $38 (£24), the company was valued around $104bn (£66bn), but doubts have persisted about whether it can convert its large global following into revenue.

Facebook now has more than 901 million users worldwide, but some have questioned its capability to deliver that reach into a tangible return for advertisers.

General Motors canceled its $10m (£6.3m) marketing contract with the social network last week, claiming its adverts had tiny impact on its consumers’ decisions to purchase cars.

Investors stated the firm would have to justify its valuation and demonstrate its maturity.

David Rolfe, chief investment officer at Wedgewood Partners, said: “Wall Street is a severe task master and they are going to want to see quarterly results, then guidance, then subsequently they are going to want to see that guidance beaten, and then the guidance raised.”

Questions have also been raised about the decision to price opening shares at $38, up from the initial range of $28-35 (£18-22) per share.

Financial blogger and chief market strategist at Fusion IQ in New York, Barry Ritholtz, blamed the company, its underwriters, and the exchange itself.

He said: “What we see are a series of bad decisions made by Facebook’s executives going back many years. The insiders got greedy, too clever by half, in how they used secondary markets. They picked a bad banker and an awful exchange.”

Founder Mark Zuckerberg rang the opening bell by remote world wide web link from California on Friday, surrounded by thousands of cheering Facebook staffers.

source : news.sky.com

The iron ore miner stated commissioning for the upgrade, which will effectively double its capacity at the port to 6 million tonnes per annum, was now under way.

Chief executive Jim Beyer stated the port upgrade would enable the company to consolidate its position as a leading iron ore exporter.

“The commissioning of our upgraded facilities at Geraldton will help transform the performance of our Mid West operations, as well as further strengthen Mount Gibson’s strategic position in the long-term development of the Mid West iron ore industry.

“These new facilities will enable us to rapidly ramp up shipments from our Extension Hill and Tallering Peak mines, and provide a platform for long term growth in the Mid West region.”

Mr Beyer stated he expected commissioning and ramp-up to be finished by the end of the current quarter.

By close of trade today, Mount Gibson stocks had inched up 0.5 per cent, trading at 92.5 cents. 

source : www.wabusinessnews.com.au

Facebook had its debut on the Nasdaq exchange on May 18

The shares dropped below their debut price of $38 (£24) in early Wall Street trading, at one point falling to $33 (£21) – down 13.7%.

They began to rise as the day progressed. The shares ended their first day, Friday, flat, despite an initial surge to $43 (£27).

The fall has raised concerns about the value of the stock should its lead underwriter, Morgan Stanley, stop propping it up.

There are also fears that investors, hoping for a surge in price, decide to pull out.

The company has a host of high-profile investors, including Apple co-founder Steve Wozniak and U2 frontman Bono, and more than 500 million shares exchanged hands on the stock’s first day of trading.

There was some speculation after Facebook’s stockmarket debut on Friday that its IPO (Initial Public Offering) partner, Morgan Stanley, was buying shares itself to keep their value above the opening price of $38.

A spokesman for Morgan Stanley would not confirm or deny this strategy when asked by the Wall Street Journal.

Analysts have suggsted that short traders – who make a profit from falling share prices – have been trying to capitalise on Morgan Stanley’s actions and that the bank has stopped intervening to discourage them from doing so.

Shares in other recently floated technology companies such as LinkedIn, Groupon and Zynga were dragged lower by Facebook’s performance but the wider Nasdaq index of technology shares rose.

Meanwhile the Nasdaq exchange has apologised that a glitch in its system affected trading in newly-issued Facebook shares on Friday.

The US stock exchange is planning to revamp its technology systems that handle IPOs after trading in Facebook shares was delayed by half an hour as the company went public and investors were left unaware for hours as to whether their purchase and sell orders had been executed.

With shares at $38 (£24) a piece, the company was valued at $104bn (£66bn) on Friday, making it more valuable than Amazon, Disney, McDonalds or the Ford Motor Company.

Facebook has more than 900 million active users globally who log in at least once a month. But the firm makes only a little proportion of its income from its users – mainly through advertising.

The founding of the social networking site by Mark Zuckerberg in a Harvard dorm room was made into a film in 2010.

source : news.sky.com

Elders reported a net profit of $40.5 million for the first half of its 2011/12 fiscal year, compared to a net loss of $14.6 million in the prior corresponding period.

The result was boosted by a $34.4 million gain from one-off items, including a $58.3 million gain arising from a successful objection to an Australian Taxation Office (ATO) tax assessment.

That gain was partly offset by a reduction in deferred tax assets, losses from discontinued forestry operations and other costs.

Elders’ underlying profit after tax was $6.1 million, down from $7.5 million in the prior corresponding period.

The company’s rural services and automotive operations slightly improved their contributions to underlying EBIT (earnings before interest and tax) but income from the jointly-owned Agricultural Land Trust fell.

Elders chief financial officer Mark Hosking stated above-average rainfall across parts of Australia had affected the rural services results for February and March.

Customers had kept their livestock on the paddock, where there was abundant feed to fatten the animals, and the rain had made it impractical to transport animals for sale.

The high Australian dollar had also weighed upon demand in the live export market, which had had flow-on effects in domestic markets.

In many areas it had been too wet to access paddocks for spraying, which had affected demand for herbicide and fungicide, the company said.

Falling prices for fertiliser had resulted in farmers deferring purchasing, which had affected the volume of fertiliser sold.

“While the short term is impacted by these events, the outlook for agriculture is positive given resulting improved soil moisture and water availability,” Mr Hosking stated during a market briefing.

He stated sales of fertiliser had rebounded strongly in April and May.

Mr Hosking stated activity in the real estate sector was subdued even though off-shore interest remained.

He stated foreign interest in Australian rural property continued to attract more than its fair share of attention and conspiracy theories.

“It’s interesting to reflect that if you go back to the turn of the (19th century into the) 20th century, you will find the same anxieties and disquiet about overseas ownership existed then,” he said.

“However, at that point everyone was concerned about the English.

“So, I think foreign investment in agriculture has always been, and always will be, a fact of life in Australia.”

Elders stated activity for the Futuris automotive operations was picking up in the second half of the fiscal year as it started, or prepared, to supply new contracts in Thailand, China and North America.

Elders’ revenue from continuing operations in the six months to March 31 was $1.07 billion, down one per cent on the prior corresponding period.

The company did not declare an interim dividend.

Shares in Elders were 0.5 cents lower at 20 cents at 1209 AEST on Monday.

source : www.wabusinessnews.com.au

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11:09am UK, Sunday May 20, 2012

Sky News last interviewed George Papaconstantinou two-and-a-half years ago.

In December 2009 he told how Greece could survive independently and Greece’s creditors had nothing to fear – they would get back every euro they were owed.

Greece is in the process of borrowing 240bn euros of emergency loans from the EU and the IMF (in return for pledges to raise taxes, cut spending and balance the books) and investors holding Greek debt have been forced write off up to 50% of their money.

Even now Greece remains heavily in debt, deep in recession (now in its fifth year) and without a functioning elected government.

Mr Papaconstantinou lost his position as finance minister last summer, shortly after the second bailout package was agreed.

In the general election, two weeks ago, he also lost his seat as an MP. He was not alone as support for his Pasok party collapsed.

The result of the election was inconclusive and, ultimately, no party was able to form a coalition government. In four weeks’ time Greece will vote again.

The opinion polls suggest that were an election to be held tomorrow the result would, once again be inconclusive, but the Syriza party, which is promising to “tear up” the bailout agreement with the EU and the IMF, continues to attract support.

Mr Papaconstantinou is the man who negotiated Greece’s participation in the bailout deal and he states comprehends that the people of Greece are angry.

There are no simple solutions. Either we stay within the framework we have all concur or we tear it up in which case we have a complete and utter catastrophe.

“People have had wage cuts, pension cuts, tax rises… and unemployment has gone through the roof – we need to respond to this,” he told Sky News.

Interestingly, he admits there are elements of the bailout deal that he would seek to renegotiate but he states if Greece were to do what Syriza’s leader, Alexis Tsipras, is proposing and fail to honour the promises the country has made in return for emergency funding then the results would be disastrous.

“The extremist parties are lying to the Greek people because they are not telling them that reneging on the agreement means that you have opened the door to hell,” he said.

Syriza is promising voters it will not only reject the austerity measures it states are keeping Greece in recession but will also keep Greece in the eurozone.

Mr Papaconstantinou is clear that Syriza can’t deliver on both.

“The first thing that happens is the money (from the EU and IMF) stops flowing to Greece, the second thing that happens is people begin worrying about their deposits in the banks, the third thing that happens is the banking system is in danger of collapsing and then you have to defend it even by sending in the army and the police on to the streets to avoid a bank run,” he said.

“There are no simple solutions. Either we stay within the framework we have all concurred or we tear it up, in which case we have a complete and utter catastrophe.”

In the general election in 2009 Syriza attracted barely 5% of the vote. Two weeks ago it managed 17%.

Some of the most recent opinion polls suggest Syriza is now Greece’s most popular party and that 25% of the population state they will vote for the party on June 17.

That is not quite enough support for Syriza to form a government but it does suggest that the party’s aggressive, defiant message is increasingly capturing the public mood.

It is also more than enough support to unsettle the financial markets and give the leaders of other eurozone countries a few sleepless nights.

source : news.sky.com

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4:06pm UK, Saturday May 19, 2012

The claim comes amid reports that German Chancellor Angela Merkel has suggested to Greece it should hold a referendum on the euro at the same time as the country’s elections on June 17.

Berlin at first refused to comment on the rumour, and is now denying the chancellor ever suggested such a vote during a phone call to Greek President Karolos Papoulias.

Fears are growing that Greece’s choppy political waters could lead to a jolt in the global economy.

Sky News’ Joel Hills, in Athens, said: “It is perfectly reasonable to assume the effects (of Greece abandoning the euro) would be disastrous for the people of Greece and the results would reverberate around the world.”

The FTSE 100 has suffered five consecutive days of falls in response to the ongoing debt crisis in Greece and Spain.

And Robert Chote, the chair of the Office of Budget Responsibility (OBR), has warned that the UK economy may never fully recover after another major slump.

“The concern is that you end up with an outcome in the eurozone that creates the same sort of structural difficulties in the financial system and in the economy that we saw in the past recession,” he told the Guardian newspaper.

He stated such a situation “has consequences both for hitting economic activity in the economy but also its underlying potential”.

Shares in London lost 1.3% or 70 points on Friday to close at 5267, the lowest level since November last year, after rating bureau Fitch downgraded five Greek banks.

The fall came amid growing fears that Greece will leave the eurozone after the Greek electorate, angry over austerity measures, backed parties opposed to a bailout deal.

No party was able to form a government, however, and the country now faces further political stalemate as it prepares for a new round of elections.

Hills stated the elections next month will determine whether Greece sticks with the euro. He stated the party most likely to come out on top is the left-wing Syriza party.

“Syriza is saying, ‘Elect us and we will renegotiate the terms of the bailout’,” Hills said.

“It is a message that is resonating with the Greek people… polls show one in five people will vote Syriza in the elections.”

Prime Minister David Cameron called on eurozone leaders to take “decisive action” to resolve Greece’s problems.

Speaking before a G8 summit expected to be dominated by the eurozone crisis, he said: “This is in Britain’s interest too because we want to have a successful growing eurozone on our doorstep and not the instability we have now.”

According to an OBR analysis a disorderly sovereign debt restructuring in the eurozone would likely plunge Britain into two years of recession, push unemployment to 11% and debt to more than 90% of GDP.

However, Mr Chote warned that these figures were of limited value in predicting the impact of the crisis because of the many ways in which the situation could develop.

“For example, one issue would be, do difficulties in the eurozone make it cheaper or more costly for the UK Government to borrow,” he told the Guardian.

“If it makes investors more nervous about risk in general it might make it more expensive. If they see the UK as more of a safe haven, it might make it less expensive.”

source : news.sky.com

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11:14pm UK, Friday May 18, 2012

The shares, priced at $38 (£23.95) on Thursday in the largest-ever initial public offering (IPO), failed to flourish in price on the Nasdaq in New York.

Facebook shares closed down 8% from the opening day trading peak

They eked out a fractional gain of just 0.97% to end at $38.37 (£24.19), with record volume of more than 550 million shares traded.

“It is a pretty underwhelming begin for Facebook and a problem for the much-vaunted launch on the Nasdaq,” Sky’s Dominic Waghorn, reporting from Times Square, said.

The damp end to the day also saw a slow begin – as a half-hour delay due to technical problems had investors grumbling.

“The Nasdaq seems to have a lot of questions being asked of it by disgruntled investors,” Waghorn said.

Facebook’s chief executive Mark Zuckerberg, who created the website in his Harvard University dorm room in 2004, sold about 30 million shares, pocketing $1.15bn (£724.6m) in the process.

He will retain a controlling stake in the company, making him worth an estimated $19.1bn (£12bn) – the 23rd richest person in the world – at the age of 28.

Around 1,000 millionaires were also expected to be created by the flotation, including a small number of the 100 London-based staff.

“As for Mark Zuckerberg, he has made a lot this day and his company is valued at over $100bn,” Waghorn said.

“However, there will be concerns on why there was not a significant price rise on the day.”

If Mr Zuckerberg was disappointed in the public reception, he did not reveal it on his personal Facebook page.

Instead he said: “Right now this all seems like a large deal. Going public is an important milestone in our history.

“But here is the thing – our mission is not to be a public company. Our mission is to make the world more open and connected.”

The price per share peaked at $43.02 (£27.12), up on the pre-trade valuation of £24 in the IPO.

But it quickly fell back to $38.01 in the late morning before showing modest gains mid-afternoon to around $41 (£25.85).

In late afternoon trading it dropped down again to just above the opening mark before a modest climb to the close.

The listing on the Nasdaq as FB valued the social networking website at $104bn (£66bn) – larger than Amazon, Disney, McDonalds or the Ford Motor Company.

And the sale of 421 million $38 shares is thought to have netted up to $18.4bn (£11.6bn) for the company.

Early seed investors such as U2 frontman Bono stand to make large sums, with some predicting the singer – who reportedly owns 2.3% of the behemoth – becoming the richest rock star on the planet.

But as the rocker arrived in Washington DC for a fundraiser to help US President Barack Obama, he was asked about the instant riches.

Facebook purchased Instagram recently for $1bn

The Irish singer chuckled and said: “I do not think it is true.”

But James Hughes, chief market analyst at Alpari UK, said: “The real value of Facebook is not likely to be known until the hype of the IPO has died away and investors have been able to digest how the company is going to evolve to be the money making machine many anticipate it to be.”

Facebook has more than 900 million users worldwide who log in at least once a month, but it makes only a few dollars per year from each one, chiefly through advertising that will increasingly need to be accurately targeted.

:: Facebook is being sued in the US over alleged breach of privacy, in a class action filed by a number of its members.

source : news.sky.com

On Friday, the local currency went as low as 97.95 US cents, its lowest since November 29 against the US dollar.

At 1700 AEST, the Australian dollar was trading at 98.25 US cents, down from 99.47 cents on Thursday. 

Easy Forex currency trader Tony Darvall stated the currency market is paying particular attention to a comment by ANZ chief executive Mike Smith, who stated credit markets were closing.

When that happens, it becomes harder and more costly for banks to find the money they need lend to customers.

“People are wary, people are very scared,” Mr Darvall said.

“That’s why you are seeing stock markets under pressure and Australian banks under pressure.”

Australian shares dropped to their lowest level for six months on Friday, and most Asian share markets are down over two per cent and the euro hit a four-month low against the US dollar.

Shares in the four largest Australian banks all fell over three per cent.

Mr Darvall stated the focus during the off-shore session on Friday night would be on any news about the Spanish banks, after ratings bureau Moody’s downgraded the debt ratings for 16 of them.

Another ratings agency, Fitch, downgraded the credit rating of Greece, which installed an interim government overnight ahead of fresh elections next month.

“You’re going to need a pretty huge announcement to turn things around,” Mr Darvall said.

“That announcement could come from the G8, which meets this weekend.

“It’s likely selling (in the Australian dollar) will continue, with tiny bouts of profit-taking.”

The Reserve Bank of Australia’s trade weighted index fell to 73.7 on Friday, from 74.6 on Thursday.

source : www.wabusinessnews.com.au