Wine and spirits firm bucks trend

Drinks maker Pernod Ricard has reported a rise in half year net profits as consumers continue to buy wine and spirits despite the economic downturn.

The French group said profits rose 5% to 615m euros ($793m; £547m) for the six months to the end of December 2008.

Sales for the period rose 13% to 4.2bn euros, and the firm forecast "strong organic growth" for the full year.

Shares in Pernod, whose brands include Jacob's Creek wine and Absolut vodka, were up 6% in early trade.

"Although visibility is limited for the second half of the year, we anticipate that the wine and spirits sector will on the whole continue to show excellent resilience," Pernod said.

Pernod is the second biggest alcoholic drinks group in the world after Diageo.

On Thursday Diageo reported a 3.2% rise in half-year profits but cut its forecast for the full year.

Microsoft to launch retail chain

Computer software giant Microsoft has announced plans to open its own stores, at a time when many other retailers are struggling in the economic downturn.

The company plans to sell computers installed with Microsoft software and other products, Microsoft chief operating officer Kevin Turner said.

The stores will also promote new operating system Windows 7 and updates of Windows Live and Windows Mobile.

Ex-Wal-Mart executive David Porter will head the new retail division.

The company's rival Apple already has high-profile stores located around the world.

'Tremendous opportunities'

"This is an exciting time with our strong line-up of upcoming product releases," Mr Turner said in a statement.

"There are tremendous opportunities ahead to create a world-class shopping experience for our customers."

Mr Porter, corporate vice-president of retail stores, will devise a strategy outlining when the stores would be launched and where they would be located.

The decision comes after Microsoft launched a $300 million (£207m) advertising campaign last autumn in a bid to revive its Windows Vista operating system, which was widely criticized for being too slow.

In January the company cut 1,400 jobs and said it would axe 3,600 more workers over the next 18 months.

Oil rises on stimulus plan hopes

Oil prices jumped after a week of falling crude prices on hopes US President Barack Obama's stimulus plan will revive the economy and demand.

US crude for March delivery rose $3.53 to $37.51 a barrel. Brent oil added $1.22 to $44.81 a barrel.

"It looks like a bounce on stimulus hopes," said Tom Bentz at BNP Paribas Commodity Futures.

In earlier trade prices dipped below $34 as oil producers' cartel Opec warned that demand would fall in 2009.

The House of Representatives has approved Mr Obama's revised emergency plan, including tax cuts and spending aimed at rescuing the US economy, and the Senate is expected to do so later.

But analysts have questioned how much the oil price will benefit from it.

'Steep decline'

The global slowdown has seen oil prices fall more than $110 off the highs seen in July last year and Opec forecasts that demand will fall by 0.67% in 2009.

Opec now forecasts that global oil demand will fall by 580,000 barrels a day to average 85.13 million barrels a day. It had earlier forecast that demand would fall by 180,000 barrels a day.

"World oil demand continues its steep decline from last year and is expected to follow this strong negative pattern at least for the first three quarters of the year," the oil producers' cartel said in its February report.

Oil demand in industrialised countries "is experiencing a steep decline resulting from the region's economic depression", the cartel said.

Earlier this week, the Energy Information Administration reported a seventh consecutive weekly increase in nationwide crude oil stocks as the economic crisis crushed business and consumer demand for fuel.

And rising unemployment has led to further fears of weakening demand for oil among US consumers.

New claims for unemployment benefit remain close to record highs.

The US jobless rate rose to 7.6% in January, up from 7.2% in December, according to official figures - the highest level since 1992.

The rapid rise in unemployment suggests the US recession is deepening.

US Congress passes stimulus plan

The US Senate has voted in favour of Barack Obama's $787bn (£548bn) economic stimulus plan - clearing the way for it to be signed into law.

The vote came hours after the House of Representatives passed the measure without Republican backing.

Mr Obama has said the plan - a package of tax cuts and spending - will "save or create more than 3.5 million jobs".

Republicans argue the tax cuts are insufficient, and that the economy will be saddled with debt for years to come.

Members of both houses of Congress reached a deal over the content of the stimulus package on Wednesday.

All 176 Republicans and seven Democrats voted against the revised package in the House. It was backed by 246 House Democrats.

In the Senate just three Republicans voted for the package.

The rebel votes were however enough under Congress rules to stop the Republican Party using blocking tactics to delay the stimulus plan, and it passed 60-38.

'Shot in the arm'

The approved version of the plan is split into 36% for tax cuts and 64% percent in spending and money for social programmes.

Running to more than 1,000 pages, it includes new road building, cash to pay police in hard-up cities, and tax breaks for consumers buying houses and cars.

The package also imposes new limits on cash bonuses and other incentive compensation for executives on Wall Street, which are much tougher than those proposed by the Obama administration last week.

The provision, inserted by Senate Democrats, targets senior executives at financial institutions receiving government bail-out funds.

The colossal package is all to be funded with borrowed money.

Republicans had insisted on larger tax cuts instead of big spending programmes.

Republican Senate minority leader Mitch McConnell said: "This isn't Monopoly money. It's real. It adds up, and it has to be paid back, by our children and by their children."

The Democratic leader of the Senate, Harry Reid, praised the three Republicans who had voted for the bill and said it was the most important piece of legislation he had worked on.

"The country is in trouble and we're so fortunate we were able to get it passed," he said.

"It's going to give this country a shot in the arm."

Earlier, Mr Obama had said that in the longer term the government needed to rein in spending, and that "we are going to have to once again live within our means".

The president told members of the Business Council in Washington that the package was "only the beginning of what I think all of you understand is going to be a long and difficult process of turning our economy around."

Presidential pressure

"We have a once-in-a-generation chance to act boldly, and turn adversity into opportunity, and to use this crisis as a chance to transform our economy for the twenty-first century," Mr Obama said.

Among the measures in the approved package is a "Buy American" clause that had caused alarm among US trading partners.

The EU and Canada said that provisions favouring American-produced materials for government projects risked provoking retaliatory protectionist measures.

In the face of this reaction, the clause was softened to a version requiring the government not to violate trade agreements.

Last week, the House had approved an earlier $825bn version of the package without any Republican support.

The Senate voted to approve a different $838bn version on Tuesday, with few Republicans opting to back it.

The two versions had to be reconciled in a joint House-Senate committee before facing final votes in the two chambers.

President Obama increased the pressure on Congress this week, saying he wanted the bill on his desk ready to sign by the weekend.

Satyam getting new contracts: Murty

Even as a few customers have left in the wake of the financial fraud committed by its erstwhile promoter, Satyam Computer on Wednesday said it is continuously getting new software services orders and existing clients have showed faith in the company.

"A significant majority of our clients have indicated their support for Satyam, and are staying with us. Orders continue to come in, and the organisation is (making) efforts to grow new businesses," Satyam Computer CEO A S Murty told a news agency.

Asked if he visualises Satyam regaining its earlier position of the fourth-largest software exporter, the CEO said, "The board and senior management have been in constant contact with customers and associates to assure them of business continuity. To this point, our efforts to provide clear, consistent and forthright communications are working."

Earlier Infosys, TCS and mid-sized IT firm Infotech had said some Satyam clients have approached them.



In January, State Farm Insurance Co of the US terminated its contract with Satyam. Its other key customers -- GE, Nestle, Coca Cola, and National Australia Bank -- had earlier said it would suspend new contracts given to Satyam.



On working alongside the rivals, Murty said, "We continue to compete for new businesses with Infosys and TCS and other companies in all the markets we serve.


"With a new management at the helm of affairs, Satyam Computer is also looking at long-term strategic options and reviewing its legal liabilities.

"My immediate short-term priority as CEO would be to initiate and continue measures that will instill confidence in all our stakeholders, customers, associates, alliance partners, vendors, etc. and to ensure business continuity."

The CEO said his priorities are also to address key customer concerns, focus on delivery, reinforce associate confidence and introduce key retention measures.

With Satyam's market value plunging to less than $700 million from $7 billion in May 2008, the company is weighing long-term strategic options.

"Our other priorities are evaluating long-term strategic options, assessing and managing legal liabilities and resuming investments in identified areas," Murty said, adding the company recently got a financial commitment of Rs 600 crore for working capital needs and has receivables of up to Rs 1,700 crore.

BK Modi's Spice Corp and L&T Infotech, which is a 12 percent shareholder, are among the possible firms interested in taking over the scam-hit company.



The focus is on assessing the company's financial position and taking measures to ensure business continuity as well as evaluating cost-rationalisation alternatives, he added. He, however, did not elaborate on cost-control measures. It could mean staff reduction wherever possible.


Murty said, "We are in the process of creating detailed plans for the next 30, 60, and 90 days. Having secured funding, our immediate focus remains on working closely with our associates, customers and partners, determining Satyam's strategic options, and providing stability and leadership.”

“When these are achieved, we will turn our attention to medium- and long-term programs. The options will address the interests of all stakeholders", he said.

The company has formed a task force to look at cost optimisation, which will involve exploring options such as optimising infrastructure spend, non-billable travel, and balancing onsite-offshore people-related costs and sabbatical to keep expenses in tune with revenue.

Large-scale layoff is definitely not among the options Satyam is considering at this time, company officials said.

Satyam's founder B Ramalinga Raju on 7th January confessed to doctoring the accounts of the firm, resulting in a Rs 7,800 crore fraud.


Satyam Computer was trading at Rs 42.35, down 4.19 percent, in morning trade on the Bombay Stock Exchange.

Govt infuses Rs 3,800 cr in 3 banks to raise capital adequacy

The government on Wenesday announced a Rs 3,800-crore fund infusion into state-run lenders - UCO Bank, Central Bank of India and Vijaya Bank - to shore up their capital adequacy.

Under the recapitalisation package Central Bank of India will get Rs 1,400 crore, while UCO Bank and Vijaya Bank will get Rs 1,200 crore each, Home Minister P Chidambaram told reporters after the cabinet meeting.

The capital infusion would be done in two tranches, he said, adding the first tranche would be made available during the current fiscal and the remaining in 2009-10.

As part of the first tranche, UCO Bank will get Rs 450 crore, while Central Bank of India and Vijaya Bank will get Rs 700 and Rs 500 crore, respectively, in the current fiscal.

Spelling out the reason for the capital infusion, Chidambaram said, this will help banks raise capital adequacy over 12 per cent much above the Basel II norms of 9 per cent.

In the next tranche, UCO Bank will get Rs 750 crore, while Central Bank of India and Vijaya Bank to get Rs 700 crore each, he said.

The amount would be form a part of Tier I Capital, he said, adding the infusion would increase the government holding in the three state-run banks.

The increase in the government's holding in these banks would depend on the instruments that they subscribe to, Chidambaram said, adding, such decisions would be taken by respective boards.

Under Tier I, banks can raise capital as equity and innovative instruments like perpetual non-cumulative preference shares and perpetual bonds.

The government holding in Central Bank of India currently stands at 80.20 per cent, UCO Bank 75.98 per cent, while in Vijaya Bank it is 53.87 per cent.

When asked whether these banks would be allowed to tap the primary market, Chidambaram said, accessing capital market is not a viable option."

Last year in November, the government restructured the capital structure of UCO Bank by converting Rs 250 crore equity into preference shares, to enable the bank raise fund in the market when required.

This conversion of equity into perpetual non-cumulative preference shares is in accordance with RBI circular dated 29th October, 2007.

Foreign investment via Indian firm out of FDI cap purview: Chidambaram

Foreign investment through an investing Indian company will not be taken into account in determining the sector FDI cap, the government on Wednesday said.

The Cabinet Committee on Economic Affairs (CCEA) approved the changes in the guidelines for calculating total foreign investment, direct and indirect, in Indian companies.

"The objective is to make it simple and transparent, according to the Department of Industrial Policy and Promotion (DIPP)," Home Minister P Chidambaram told reporters after the CCEA meeting.

Intel announces $7bn plant plan

Computer chipmaker Intel has announced plans to build new plants worth $7bn (£4.78bn) weeks after announcing the closure of five plants.

The world's biggest chipmaker says the investment will fund 7,000 jobs in Oregon, Arizona and New Mexico.

Last month, Intel said it was cutting up to 6,000 jobs in response to slowing consumer demand for computers.

It also aims to increase production of faster chips. Two of the plants being closed make older-style chips.

"Spending this money will lower our costs and give us more competitive products. It's something that's fundamental to our business model," said Intel chief executive Paul Otellini.

"From our perspective this is a cheaper, better technology," he said.

Nanometer race

Intel has the advantage of the being the largest chipmaker and is using its bigger purse to expand while some of its rivals scale down.

California-based Intel is hoping to boost its fortunes by using the new plants to produce 32 nanometer chip technology, which will lead to its products performing faster and more efficiently.

A nanometer is one billionth of a meter and the majority of Intel's chips use 45 nanometer technology.

Intel's nearest competitor, Advanced Micro Devices (AMD) is already busy upgrading plants, though it is still lags some way behind Intel. AMD is phasing in 45 nanometer technology to replace 65 nanometers.

Intel said in January it would close five plants in California, Oregon, Malaysia and the Philippines with the loss of between 5,000 and 6,000 jobs.

It said the two US factories were based on older microchip technology.

Intel's plans come as joblessness in the US soars. In January the US unemployment rate reached 7.6%, the highest level since 1992.

GM confirms 10,000 jobs are to go

US carmaker General Motors has confirmed it is cutting 10,000 jobs from its workforce by the end of 2009.

GM said it would reduce its global salaried staff to about 63,000 from its current level of 73,000.

The company said it was forced to act by a "severe drop" in vehicle sales worldwide and by the need to restructure "for long-term viability".

About 3,400 cuts will be made in the US. These had already been outlined in a plan put forward to the government.

Restructuring plan

The cost-cutting was part of an initial restructuring plan GM submitted to Congress on 2 December 2008 as part of a request for aid.

The chief executives of Ford and GM also offered to work for $1 a year to persuade Congress to approve the emergency aid.

At the end of last year, the US government gave GM $10.4bn in loans and Chrysler $4bn. A further $4bn was to be provided to both firms at a later date.

GM's car loan arm GMAC also received a $5bn rescue package from the US government.

Under the terms of the deal, the US Treasury agreed to buy shares in GMAC.

Pay cuts

On Monday, GM also announced "a temporary pay reduction for a majority of US salaried employees" from 1 May to the end of the year, when it will be reviewed.

Executives' pay will be cut by 10%, while "many others" will see reductions of 3% to 7%, the carmaker said.

"Other countries are currently reviewing compensation and benefits for salaried employees," GM said.

China's exports see sharp decline

China's exports fell more than expected in January, down 17.5% from a year earlier, marking the biggest drop in more than 10 years, figures have shown.

Imports were down 43.1% in the month compared with a year ago, as China's economy continued to be hit by the global economic slowdown.

Analysts say the slowdown could prompt more factory closures and job losses.

China's global trade surplus widened to $39.1bn last month, after recording a surplus of $39bn in December.

Jobs pressure

"The numbers are terrible. The environment is awful," said Ken Peng, an economist at Citigroup.

"The pressure on unemployment will be huge," he added.

Some analysts argue that this worsening trend will continue, as the world economy contracts.

Last month, China's crude oil imports fell to their lowest level for 15 months - down 8% year-on-year.

The country shipped in 12.82 million tonnes of crude oil, nearly 11% lower than in December.

Shares fall after US banking plan

Global investors have given the $1.5 trillion (£1.02 trillion) US bank bail-out plan a muted response, following sharp falls overnight on Wall Street.

Analysts says there is scepticism over whether the proposal will work, and worries over both a perceived lack of detail and the sums of money involved.

At the core of the plan is a new $500bn fund to absorb toxic bank assets.

The UK's FTSE 100 was down 0.4% in early trading. America's main Dow Jones slumped 4.6% on Tuesday.

"This is not a clear-cut plan," said analyst Bucky Hellwig.

Mr Hellwig, who works for Morgan Asset Management, added that it wasn't "what investors are looking for", and that the package was "convoluted".

Dow slump

In early Wednesday trading in London, the FTSE 100 was 0.4%, or 18 points, lower at 4,195, while France's Cac had lost 1%.

Hong Kong's Hang Seng index was down 431 points, or 3.1%, in afternoon trading at 13,450.

Meanwhile, the top index of Australian shares closed down 10.3 points, or 0.3%, at 3,418. The Japanese stock market was closed for a public holiday.

The falls came after the US Dow Jones index slumped 382 points, or 4.6%, to 7,889 on Tuesday.

Mr Geithner said the new bank bail-out package was vital as "critical parts of our financial system are damaged".

"Instead of catalyzing recovery, the financial system is working against recovery, and that's the dangerous dynamic we need to change," he added.

Oil holds above USD 40 as stimulus, bank plans mulled

Oil prices hovered near USD 40 a barrel in Asia on Monday as investors weighed a massive stimulus package and a bank rescue plan from the US this week against soaring unemployment and falling demand for crude.

Light, sweet crude for March delivery rose 9 cents to USD 40.26 a barrel by midday in Singapore on the New York Mercantile Exchange.



The contract fell USD 1.00 on Friday to USD 40.17 a barrel after the Labor Department said the US lost 598,000

jobs in January and the unemployment rate rose to 7.6 per cent, the highest since 1992.



For all of 2008, the economy lost a net total of 2.9 million jobs, according to revised figures, marking the biggest annual loss on record.



"Considering the staggering magnitude of the jobs data, oil held up quite well," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.



"The downward momentum in oil pricing appears to have been broken as the USD 40 level has proven to be a very strong support level."



Investors will be watching as a huge stimulus bill makes its way through the US legislature this week.



A USD 827 billion stimulus package will likely pass the Senate by Tuesday, though it will have to be reconciled with a version the House of Representatives approved earlier that's about USD 7 billion apart in cost and overlaps in numerous ways.