TOKYO, Nov 17, 2008 (Kyodo News International - McClatchy-Tribune Information Services via COMTEX) -- SZKMF | Quote | Chart | News | PowerRating -- Suzuki Motor Corp. said Monday it has agreed to buy back General Motors Corp.'s 3.02 percent stake in the Japanese automaker for 22.37 billion yen ($230 million) as the struggling U.S. auto giant is seeking to raise cash.
With the sale, GM, which used to own shares in Isuzu Motors Ltd.
and Fuji Heavy Industries Ltd. in addition to Suzuki, will break all of its capital ties with Japanese automakers.
GM will sell the whole stake, equivalent to 16.41 million shares, on the stock market Tuesday and the Shizuoka Prefecture-based automaker will buy back all of the shares the same day, Suzuki said.
Suzuki's purchase, to be made through the Tokyo Stock Exchange's ToSTNeT-2 system for purchasing treasury stock, will be implemented at 1,363 yen per share, the closing quote for Suzuki stock on the TSE's First Section on Monday, it said.
Suzuki Chairman and Chief Executive Officer Osamu Suzuki said in a press release that the automaker decided to agree to GM's request because "this particular step to sell the shares it owns as a step toward strengthening its balance sheet is very understandable." Suzuki said he agreed in a telephone conversation with GM Chairman Rick Wagoner that the two automakers will continue a range of joint projects they have been implementing.
Suzuki said he and Wagoner confirmed "that all individual initiatives will be pursued as they are today." On Nov. 7, GM said in a statement that it had suffered a net loss of $2,542 million (250 billion yen) in the July-September quarter, attributing the poor performance to the impact of the "unprecedented economic and credit market turmoil." A Suzuki official said that "all individual initiatives" that the automaker's president referred to include joint development of hybrid vehicles and fuel cells as well as development of power trains.
Suzuki and GM have been cooperating under tie-up arrangements entered in 1981.
The Japanese automaker said the planned sale by GM of the Suzuki shares has been approved by the carmakers' respective boards.
Major U.S. automakers including GM and Ford Motor Co. have reported huge net losses, prompting President-elect Barack Obama to pledge to do all he can to turn around the ailing U.S. auto industry.
Obama, in his first media appearance in Chicago since the presidential election, said the auto industry's hardship "goes far beyond individual auto companies to the countless suppliers, small businesses and communities throughout our nation who depend on a vibrant American auto industry." Wagoner said in the Nov. 7 statement, "Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales." U.S. congressional efforts to enact legislation to reinvigorate the automakers will shift to top gear in the coming months, industry watchers said.
To see more of Kyodo News International, go to http://www.kyodonews.com Copyright (c) 2008, Kyodo News International, Tokyo Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
Source: http://www.tradingmarkets.com/.site/news/Stock%20News/2029693/
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Monday, November 17, 2008
US Market Update
US indices opened weaker this morning, weighed down by confirmed large job cuts at Citigroup, a gloomy outlook from the Philly Fed and soft Empire manufacturing data. Traders are fretting over the Philly Fed survey is particular, as it indicates a Q4 GDP figure of -2.9%, well below its prior view of +0.7%. The survey noted that the US recession began last April and was expected to last about 14 months. The dark outlook has kept the pressure on Treasury yields. The 10-year note future has rallied half a point sending the cash yield back below 3.7%. Front-month NYMEX crude traded up towards $59 after reports that a Saudi oil tanker was hijacked off Somalia, but has since drifted back into negative territory. Adding to the uncertainty this morning, Senate Democrats plan to introduce legislation today to direct part of the TARP to help prop up the Big Three automakers.
- Citigroup fulfilled expectations for big job cuts at its company-wide town hall meeting this morning, while rumors are circulating that the board is discussing a plan to break the group into several companies. Reports on Friday and over the weekend anticipating cuts of around 10,000 jobs, while just ahead of the meeting CNBC's Charlie Gasparino bid this figure up to around 50,000 jobs, or 14% of the banking giant's global workforce. In the event, CEO Pandit said that the bank's near-term headcount target is about 300K, down from 352K employees on Sept 30. Pandit reiterated the usual boilerplate, noting that "revenues are strong, the underlying business remains solid" and that Citi has a "very strong capital position." Rival Goldman Sachs's seven top executives, including the CEO, pledged to give up their bonuses for 2008. In the meantime, a Sanford Bernstein analyst lowers his FY08 EPS target for Goldman to $8.92 from $11.65. CIT launched its exchange offers for notes and equity units in connection with its application to become a bank holding company. Citgroup, Morgan Stanley, Goldman Sachs and Bank of America are all trading down 5-6%.
- Retail powerhouses Lowe's and Target released their third-quarter results before the open. LOW came in ahead of earnings and revenue estimates, and guided earnings for the full year in line with consensus. Lowe's CEO expects pressure on the home improvement retailing sector to continue into 2009, although he believes that housing turnover seems to be bottoming. TGT met consensus EPS targets, missed revenue estimates by a hair and suspended its stock buyback program. The company's credit card profitability fell 83% to $35M v $202M y/y, due to a decline in overall portfolio performance, reduced investment in the portfolio, and a decrease in interest rates. LOW+9% is surging while TGT is well off its best levels in negative territory. In other equity news, price targets for smartphone rivals AAPL and RIMM were both cut at Barclays, while Merrill cut its FY09 and FY10 earnings estimates for AAPL on declining Mac and iPod sales growth. Las Vegas Sands said that it believes it has resolved the “substantial doubt about its ability to run as going concern” via its recent $2.1B capital raise.
- It appears that European governments are looking to aid the struggling auto manufacturing industry, including GM, after the White House stressed again that it opposes drawing funds from TARP for US automakers. A German government spokesperson said that Germany would do “everything in its power” to aid GM's European subsidiary Opel. The German state of Hesse raised its OPEL guarantee to €500M. Automakers with operations in the UK said they would ask the government for assistance. Back in the USA, the president of the UAW said the auto industry cannot survive at current sales levels and warned that the bankruptcy of one automaker could bring down others. Speaking of bankruptcy, the New York Times reported overnight that it believes foreign automakers would pick up the slack if a US car maker goes into bankruptcy, noting that if one or more of Detroit's Big Three declared Chapter 11 it would put a huge initial dent in American manufacturing but in time foreign car companies would pick up the slack by stepping up production at plants in the US. All this comes after Nikkei reported that it expects Japanese domestic car production to decline for the first time since 2003 and Toyota told a local Japanese paper that it is set to announce 2009 production cuts of around 7%.
- The greenback was weaker against the European pairs on a combination of recent- profit taking and higher crude prices. GBP/USD rose over 350+ pips as dealers noted good interest from far eastern names from the start of the European session. GBP/JPY is firmer by 400+ pips above 145.00. EUR/GBP surrendered its all-time highs of 0.8660 from last week to move back toward the 0.84 handle. The profit-taking theme was reinforced after ECB's hawk Weber noted that Euro Zone CPI provided leeway for monetary policy easing and added that he did not rule out further interest rate cuts. Other ECB members reiterated that view today, but noted the final decision would not be made until after the receipt of the new ECB staff projection figures. Commodity related currencies firmed up on higher energy prices.
Source: http://forexdistrict.com/node/4570
- Citigroup fulfilled expectations for big job cuts at its company-wide town hall meeting this morning, while rumors are circulating that the board is discussing a plan to break the group into several companies. Reports on Friday and over the weekend anticipating cuts of around 10,000 jobs, while just ahead of the meeting CNBC's Charlie Gasparino bid this figure up to around 50,000 jobs, or 14% of the banking giant's global workforce. In the event, CEO Pandit said that the bank's near-term headcount target is about 300K, down from 352K employees on Sept 30. Pandit reiterated the usual boilerplate, noting that "revenues are strong, the underlying business remains solid" and that Citi has a "very strong capital position." Rival Goldman Sachs's seven top executives, including the CEO, pledged to give up their bonuses for 2008. In the meantime, a Sanford Bernstein analyst lowers his FY08 EPS target for Goldman to $8.92 from $11.65. CIT launched its exchange offers for notes and equity units in connection with its application to become a bank holding company. Citgroup, Morgan Stanley, Goldman Sachs and Bank of America are all trading down 5-6%.
- Retail powerhouses Lowe's and Target released their third-quarter results before the open. LOW came in ahead of earnings and revenue estimates, and guided earnings for the full year in line with consensus. Lowe's CEO expects pressure on the home improvement retailing sector to continue into 2009, although he believes that housing turnover seems to be bottoming. TGT met consensus EPS targets, missed revenue estimates by a hair and suspended its stock buyback program. The company's credit card profitability fell 83% to $35M v $202M y/y, due to a decline in overall portfolio performance, reduced investment in the portfolio, and a decrease in interest rates. LOW+9% is surging while TGT is well off its best levels in negative territory. In other equity news, price targets for smartphone rivals AAPL and RIMM were both cut at Barclays, while Merrill cut its FY09 and FY10 earnings estimates for AAPL on declining Mac and iPod sales growth. Las Vegas Sands said that it believes it has resolved the “substantial doubt about its ability to run as going concern” via its recent $2.1B capital raise.
- It appears that European governments are looking to aid the struggling auto manufacturing industry, including GM, after the White House stressed again that it opposes drawing funds from TARP for US automakers. A German government spokesperson said that Germany would do “everything in its power” to aid GM's European subsidiary Opel. The German state of Hesse raised its OPEL guarantee to €500M. Automakers with operations in the UK said they would ask the government for assistance. Back in the USA, the president of the UAW said the auto industry cannot survive at current sales levels and warned that the bankruptcy of one automaker could bring down others. Speaking of bankruptcy, the New York Times reported overnight that it believes foreign automakers would pick up the slack if a US car maker goes into bankruptcy, noting that if one or more of Detroit's Big Three declared Chapter 11 it would put a huge initial dent in American manufacturing but in time foreign car companies would pick up the slack by stepping up production at plants in the US. All this comes after Nikkei reported that it expects Japanese domestic car production to decline for the first time since 2003 and Toyota told a local Japanese paper that it is set to announce 2009 production cuts of around 7%.
- The greenback was weaker against the European pairs on a combination of recent- profit taking and higher crude prices. GBP/USD rose over 350+ pips as dealers noted good interest from far eastern names from the start of the European session. GBP/JPY is firmer by 400+ pips above 145.00. EUR/GBP surrendered its all-time highs of 0.8660 from last week to move back toward the 0.84 handle. The profit-taking theme was reinforced after ECB's hawk Weber noted that Euro Zone CPI provided leeway for monetary policy easing and added that he did not rule out further interest rate cuts. Other ECB members reiterated that view today, but noted the final decision would not be made until after the receipt of the new ECB staff projection figures. Commodity related currencies firmed up on higher energy prices.
Source: http://forexdistrict.com/node/4570
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