Business this week
Sep 28th 2013 |From the print edition
After admitting in August that it was considering its options, BlackBerry announced that it had agreed to a $4.7 billion buy-out from a consortium headed by its biggest shareholder. (The deal is not final; the board may explore alternative bids.) The company’s announcement came after it reported a $960m write-down because of poor sales of its latest touchscreen phone. Once so addictive it was dubbed “CrackBerry”, BlackBerry’s share of the global smartphone market has fallen to less than 3%, from 11% in 2011.
Anger mounted in Finland, Nokia’s home country, about the euro 19m ($25m) pay-off that Stephen Elop will receive when he takes up his new job at Microsoft. Microsoft is buying Nokia’s once-proud handset division, which saw its business slip further under Mr Elop’s tenure as chief executive. According to a Finnish newspaper, he refused a request to hand back some of the money because he is battling a divorce from his wife.
Once again proving the naysayers wrong, Apple sold 9m of its new iPhone 5C and 5S models in their first weekend on the market, doubling its previous launch record for an iPhone. The figure was boosted by including sales from China for the first time, where the new gold-coloured iPhone was particularly popular.
Alibaba, China’s biggest e-commerce firm, failed to reach an agreement with the Hong Kong stock exchange about how it will structure its board after an IPO, and is now likely to list in New York, according to reports. Alibaba’s valuation is expected to be at least $60 billion when it makes its stockmarket debut next year.
Applied Materials, which is based in Silicon Valley, agreed to merge with Tokyo Electron in a deal that shakes up the business of supplying equipment to the semiconductor industry. The combined pair will account for a quarter of the market. Shareholders in Applied Materials will own 68% of the new entity, which is valued at $29 billion. That makes it one of the biggest foreign takeovers of a Japanese company.
A bump in the road
The United Auto Workers’ health-care trust exercised its right as the holder of a 41.5% stake in Chrysler to require the carmaker to file for an IPO. The trust is in dispute with Fiat, Chrysler’s majority owner, about the value of the shares it holds, which Fiat wants to buy in order to own Chrysler outright. The IPO’s prospectus warned that a flotation could see Fiat divorcing itself from Chrysler, which has blossomed since their marriage in 2009. No date was forthcoming as to when the IPO might happen.
JPMorgan Chase was rumoured to be nearing an $11 billion mega-settlement that covers all its outstanding legal issues with regulators. On September 19th the bank was fined $920m by American and British authorities for its conduct in the “London whale” trading scandal.
ICAP, a London-based broker, was fined $65m by America’s Commodity Futures Trading Commission and $22m by Britain’s Financial Conduct Authority for manipulating the LIBOR benchmark interest rate. America’s Department of Justice brought criminal charges against three former employees at ICAP, only the second group of bankers it has charged over the LIBOR scandal (the first were at UBS).
The Swedish government sold its remaining 7% stake in Nordea, ending its involvement with the Nordic region’s biggest bank, which was bailed out in the early 1990s. The government is using the proceeds from the sale to repay public debt.
The IMF cut its GDP growth forecast for Russia for the third time this year, partly because of weak investment. It now expects the Russian economy to grow by 1.5% this year and 3% in 2014. That is far below the growth of 5-8% in the years before the financial crisis.
New rules came into force in America that allow private firms to advertise publicly for funding from accredited investors. A ban on what is known as general solicitation was passed in the 1930s to protect investors from an abundance of money-raising scams during the Depression. The new rules should help start-ups in their quest for seed money by allowing them to place adverts on anything from the internet to buses.
Speaking a few days after the Federal Reserve decided not to start tapering its $85-billion-a-month asset-buying programme, William Dudley, the vice-chairman of the Fed’s policymaking committee, said the economy remained “tepid” and that “no one in markets should have been surprised” by the decision. Mr Dudley still thinks tapering could begin this year, though it “depends on the data”. The Fed’s next meeting is in October