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Thursday November 15th 2001 |
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Business this week November 15th 2001 From The Economist print edition Gains in trade
The world's trade ministers agreed to launch a new round of trade talks at the World Trade Organisation meeting in Doha, despite the misgivings of India over the treatment of poor countries and France over the phasing-out of farm export subsidies. Broad agreement was, however, reached on one issue dear to poor countries: rich countries agreed to make it easier to override patents on drugs to treat malaria, AIDS and other diseases. China signed up to become a member of the WTO after many years of negotiations. As part of the deal, Taiwan joined at the same time under its Chinese name, Taipei, and with no explicit recognition of its sovereign status. Nasdaq Europe is to ally with the small Berlin Stock Exchange. This marks the American market's first foray into Europe. Nasdaq is still eager to team up with a bigger European exchange, possibly London's. Running out of energy
Enron, Houston's mighty power-trading company, was taken over by Dynegy, a hometown rival, in an all-share deal worth some $10 billion. Enron's shares had crumbled in the wake of revelations of unorthodox financial dealings. Dynegy has saved a company that once dwarfed it, but it may yet suffer from Enron's undisclosed liabilities. The OPEC meeting in Vienna, intended to shore up oil prices, ended in disarray after members put off planned production cuts until Russia and other non-OPEC countries join in. Oil prices immediately fell sharply; some analysts speculated that they could fall to $15 or less per barrel over the next few months. Newmont Mining, America's biggest gold producer, bid to become the world's biggest. It announced an all-share offer worth around $2.6 billion to acquire Canada's Franco-Nevada Mining and a $1.8 billion offer for Australia's Normandy Mining. Japan Airlines, the country's leading carrier, is to take over the third-largest, Japan Air System, in an effort to cut costs as passengers turn their backs on airlines after September 11th. Buying wisely?
American retail sales shot up by a record 7.1% in October, driven mainly by car sales, which leaped by 26.4% over the same period. General Motors extended until the start of 2002 its “Keep America Rolling” scheme of zero-interest financing on new vehicles introduced to boost car sales after September 11th. Ford and Chrysler had introduced similar offers. The scheme has clearly been a great success for now, though profitability and future vehicle sales are likely to suffer. Americans have reacted to the slowing economy by shopping in lower-cost stores. Wal-Mart, the world's biggest retailer, said that sales had risen by a record 15.5% in the latest quarter compared with a year ago, pushing profits up to $1.5 billion. J.C. Penney and Home Depot also made gains. Luxury-goods companies are usually the first to suffer as a recession approaches, and LVMH is proving no exception. It issued its third profit warning in eight weeks, putting the main blame for its troubles on the American market. The price of a call
Vodafone, the world's biggest mobile-phone operator, announced pre-tax losses of £8.4 billion ($12 billion) in the six months to the end of September. The loss reflects write-offs of the value of assets it bought during the telecoms bubble. Its shares gained as its core mobile-phone services continued to perform well. Vodafone also said it would like Britain's government to improve the terms for third-generation mobile licences. Marconi at last accepted that it had heavily overpaid for American telecoms firms acquired near the height of the telecoms boom. It announced pre-tax losses for the latest half year of a whopping £5.1 billion ($7.3 billion) after drastically reducing the value of its transatlantic assets. The companies, purchased for cash, have left Marconi with a heap of debt. Cable & Wireless, a telecoms company, said that it would use part of its £4.1 billion ($5.9 billion) cash pile to buy back shares and pay a special dividend to the tune of £1.7 billion. The company said it would still look for acquisitions to put some of the spare money to work but said it was in no hurry. Profits at Siemens fell by 76% in the year to the end of September to euro2.1 billion ($1.9 billion), including restructuring charges and a write-down of assets at the German engineering giant's mobile and fixed-line telecoms divisions.
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