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Fed gives no timeframe for interest rate hike

Pointing to a sharp slowdown in economic growth and weakness in labor market, the Federal Reserve has downgraded its assessment of the US economy and offered no sign that a rate increase might be coming soon. On a day when the US government said the economy barely grew in the January-March quarter, the central bank appeared no closer to raising its benchmark interest rate from a record low near zero. The Fed noted in a statement that growth slowed, business investment softened and exports declined in the first quarter. The Fed's policy statement puts it on track to begin a meeting-by-meeting approach toward deciding when to pull the trigger on its first rate hike since June 2006. The central bank, however, acknowledged soft patches across the economy, making it more likely that it will not be ready to hike rates until at least September. "The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term," the Fed said in its statement, following a two-day meeting of its policy-setting committee. The Fed's rate guidance mirrored what it gave last month. But unlike its March policy statement, this time the central bank did not effectively rule out hiking rates at its next meeting. While that makes a June move possible, the economic data is not cooperating. Weak growth Harsh weather, plunging exports caused by a strong dollar, and sharp cutbacks in investment and government spending weighed on the US economy in the first quarter, causing GDP to expand by a meager 0.2 percent. Plummeting exports linked to a strong rise in the dollar pulled growth down by nearly a full percentage point. At the same time, investments in oil and gas exploration drilling plunged 48.7 percent. Consumer spending also slowed sharply as a severe winter kept shoppers home. A now-resolved labor dispute at normally busy West Coast ports also slammed growth, the government said. The first-quarter GDP growth number was much smaller than economists had expected, but analysts are still looking for a solid rebound for the rest of the year. However, data on home building, manufacturing, retail sales and business investment suggest the rebound will lack the vigor seen last year, when the world's largest economy picked up momentum after being blindsided by cold weather. Furthermore, US employers added just 126,000 workers last month, the fewest since December 2013, breaking a 12-month streak of gains above 200,000. The dollar's strength is expected to remain an economic headwind in the quarters ahead. The stronger dollar has hurt American manufacturers by making their goods costlier overseas. It has also made foreign imports more competitive in the United States, thereby squeezing the sales of US companies and depressing profits. Lower import prices have helped hold US inflation below the Fed's long-run target of 2 percent rate. Rate hike soon? Still, economists expect the benefits of lower energy prices to boost consumer spending - and lift economic growth - over the rest of the year. Some see September as the more likely time for a rate hike, while many investors see an even later time horizon, with futures contracts pointing more toward December. The central bank will have at least two months of economic data to consider before its next policy-setting meeting in June, when it also issues new economic projections. Once the Fed does start raising rates, it's expected to do so very gradually. And the timetable for a rate hike could be delayed if growth doesn't pick up or if some crisis should erupt.

Pointing to a sharp slowdown in economic growth and weakness in labor market, the Federal Reserve has downgraded its assessment of the US economy and offered no sign that a rate increase might be coming soon. On a day when the US government said the economy barely grew in the January-March quarter, the central bank appeared no closer to raising ... Read More »

Greek PM Tsipras presses for early May debt deal

Greek Prime Minister Alexis Tsipras has expressed confidence a deal with international lenders will be reached by early May. But he warned anything not covered by the government's mandate would result in a referendum. In one of his first major television interviews since being elected in January, Greek Prime Minister Alexis Tsipras said Tuesday he was optimistic an outline deal with international creditors could be reached by May 9. That's three days before a debt payment to the IMF of about 750 million euros ($815.5 million) falls due. He combined his hope with the warning that he would have to resort to a referendum if lenders insisted on demands deemed unacceptable by his left-wing government, which was elected to end austerity. A day earlier, Tsipras had reshuffled the country's team in charge of negotiations with creditors and EU finance ministers. The move effectively took the talks out of the hands of Finance Minister Yanis Varoufakis, who had fallen out of favor with lenders and many EU officials in Brussels. But Tsipras on Tuesday once more defended Varoufakis, saying that he appreciated his clear language and vision of Greece's future. He conceded, though, that Varoufakis was at the center of a negative climate at the negotiating table. "Part of the negotiating game obviously is to deconstruct the person who sits opposite you at the negotiating table," Tsipras said in the televised interview. Turning to tax sinners In a separate move Tuesday, the Greek government said it was preparing a bill that would allow owners of undeclared money abroad to be taxed at a discount rate and walk away without a penalty. Under the planned law, hitherto undeclared deposits in Switzerland and elsewhere would be taxed at a rate of 15 to 20 percent as an incentive for those who have sent money abroad, but have not reported it as income to Greek tax authorities. Depositors who have evaded reporting incomes would otherwise face a 46-percent tax rate in penalties if caught. Varoufakis said once the bill was passed by parliament, a political agreement would be signed between Greece and Switzerland on the exchange of information on Greek deposits held in Swiss banks. Experts have claimed there are some 80 billion euros in Greek deposits in Swiss banks, two thirds of which are believed to be undeclared.

Greek Prime Minister Alexis Tsipras has expressed confidence a deal with international lenders will be reached by early May. But he warned anything not covered by the government’s mandate would result in a referendum. In one of his first major television interviews since being elected in January, Greek Prime Minister Alexis Tsipras said Tuesday he was optimistic an outline deal ... Read More »

Trial of Deutsche Bank Co-CEO Fitschen looms

Jürgen Fitschen and four former executives of German lender Deutsche Bank are accused of falsely testifying in court. DW takes a look at the case and the impact it could have on Germany's biggest bank. It has been described as no less than the most spectacular trial in the history of German banking. When Deutsche Bank co-CEO Jürgen Fitschen faces fraud allegations in a Munich court starting April 28, much will be at stake. For one, Fitschen's reputation within private banking circles could suffer. As co-head of Germany's biggest bank, he brings home an annual salary of 6.7 million euros ($7.3 million). He also enjoys an illustrious position as the president of the Association of German Banks. But even Fitschen's freedom is at risk. If found guilty, the 66-year-old could face up to 10 years in prison. The allegations against one of Germany's most prominent bankers involve testimony he gave in 2011 in a court case linked to the collapse of media mogul Leo Kirch's TV empire. But the trial's impact is not only limited to Fitschen. On the weight of the trial, Germany's influential weekly, "Die Zeit," said the trial raised questions that went deeper than Fitschen's own culpability. Jurors would establish whether Deutsche Bank functioned as a normal financial institution or a criminal organization, the paper wrote. All accusations denied Fitschen, however, has made clear he won't back down from the fight. "I have neither lied nor cheated," the banker maintains. The lawyer representing Fitschen is Hanns Feigen, one of Germany's best-known defense lawyers. People familiar with the trial said Fitschen turned down a plea deal with prosecutors that would have seen him pay a fine. The court has limited hearings in the trial to one day a week and they come at a particularly inopportune moment for Deutsche. The bank recently announced a new strategy, the execution of which requires the complete attention of its executives. But it remains to be seen just how effectively Fitschen will be able to oversee the plan's implementation when he has to spend at least one day a week in court. Sixteen days of court hearings are planned until September but that number could rise. A partially absent co-CEO is only one of the bank's concerns. Last week, Deutsche agreed to pay a record multi-billion-dollar fine to US and UK authorities for its role in manipulating Libor interest rates. Commanding support A fierce debate is already taking place in the bank's supervisory board, although Chairman Paul Achleitner has firmly backed Fitschen. Deutsche's powerful financial supervisors also have so far not expressed any qualms about the co-CEO. But distance with the political class is growing, a distance that was indicated by the absence of high-ranking coalition officials at a recent meeting of the Association of German Banks hosted by Fitschen in Berlin. Still, the bank's official line is that "the presumption of innocence applies to all former and current management board members." Those former board members include two previous Deutsche Bank CEOs, Josef Ackermann and Rolf Breuer, as well as two former executive board members, Clemens Börsig and Tessen von Heydebreck. All of them have been charged with attempted fraud relating to their testimonies in the Kirch trial. Ackermann was indicted once already 11 years ago in a case over a hostile takeover of Mannesmann by Britain's Vodafone in early 2000. Critics decried his victory gestures in the court as being tantamount to the arrogance of bankers. Ackermann and other defendants ultimately agreed to a cash settlement with authorities. The fall of Leo Kirch The Kirch debacle can be traced back to 2002, when Breuer, the former Deutsche CEO, said in a TV interview with Bloomberg that lenders weren't prepared to refinance Kirch's cash-strapped business on the same terms as before. The Kirch Group, which was the biggest private TV operator in Germany at the time, had to file for insolvency shortly thereafter. Kirch, who died in 2011, blamed Deutsche for his media group's collapse. The bankruptcy set off one of the country's most high-profile corporate disputes, which was settled in a deal that cost Deutsche Bank some 925 million euros. Noble banker or convicted felon? However, the bank's problems did not end there. A separate investigation into the veracity of the testimony given by the Deutsche executives continued. Fitschen is accused of failing to correct the erroneous testimony given by his former colleagues rather than wrongly testifying himself. That's what the Munich court is looking into now and its ruling will ultimately determine whether Fitschen's reputation as one of Germany's leading bankers will remain intact or whether he will go down in history as a convicted felon.

Jürgen Fitschen and four former executives of German lender Deutsche Bank are accused of falsely testifying in court. DW takes a look at the case and the impact it could have on Germany’s biggest bank. It has been described as no less than the most spectacular trial in the history of German banking. When Deutsche Bank co-CEO Jürgen Fitschen faces ... Read More »

Deutsche Bank poised for major revamp

Will Deutsche just spin off Postbank or its entire retail operation? Either way, there are mounting fears of job losses. They could be part of a major overhaul Germany's largest bank is expected to announce soon. Analysts and banking experts have been busy speculating on the future of Germany's largest financial institution, Deutsche Bank. The bank wants to reinvent itself and, to that end, its management is expected to submit a new strategy to the bank's supervisory board on Friday. Speculation is focused on the future of Postbank, which has been part of the group since 2010. According to reports, Deutsche has narrowed its options down to two. One is to split the group into two separate legal entities, with one focusing on investment banking and the other dealing with retail businesses. The second option is to spin off Postbank. Waiting for the big hit "I believe investors are expecting the board to provide more clarity on the new strategy, and that means they would like to see more decisions come out of the board meeting on Friday than just the sale of Postbank," said Hans-Peter Burghof, a banking expert at the University of Hohenheim. Burghof told DW that the goal of the new strategy therefore has to be to surprise the capital markets and show that the bank's management can produce results." The current uncertainty, however, means that employees at Postbank - numbering some 14,800 - are increasingly concerned about job security, particularly after recent wage negotiations came to a standstill, and employees began a strike on April 20. Strike at Postbank Trade union Verdi is demanding a 5.5-percent payrise for the bank's employees. The dispute, however, is chiefly about better protection from dismissal for all of Postbank's staff. Due to the discussions over strategy at Deutsche, the issue of protection from dismissals gained prominence during the collective bargaining round. However, many of the Postbank employees are already civil servants with permanent contracts who cannot be fired. But the bank has repeatedly said that it cannot exclude the possibility of redundancies, given the continuing pressure on margins and structural changes in the industry. Experts say offering employees protection against dismissals would reduce the price that any interested buyer would be willing to muster. Spain's Santander group and France's BNP Paribas are seen as potential buyers of Postbank. An acquisition would give either buyer the opportunity to expand their presence in Germany. Sell at a loss? It is not clear yet how much the sale of Postbank could net Deutsche Bank. German business weekly "Wirtschaftswoche" estimates Deutsche Bank could pocket 6 billion euros by selling its subsidiary - exactly the same amount it paid for Postbank five years ago. But insiders put the figure at a more modest 4 billion euros on account of the bank's portfolio of risky assets, which amount to some 11 billion euros. "It will be difficult to sell Postbank without offering a large discount on its book value," writes German daily "Süddeutsche Zeitung," citing an unnamed investment banker. Nevertheless, it remains to be seen what decision Deutsche Bank's management and its supervisory board will make with regard to Postbank, said analyst Burghof. "As a professor in banking, I believe a bank should be diversified and capable of offering a wide variety of services," he underlined. "A bank must also be able to deal with the tension between different corporate cultures," the expert stressed. Radical option If the board decides to split Deutsche Bank, it would be a radical decision to slim down its operations, which could boost earnings. At present, as a universal bank, Deutsche offers investment and retail banking as well as wealth management. Retail clients are offered services by both its Deutsche Bank and its Postbank brands. Big changes are therefore expected in retail banking. But even if Postbank were to be hived off, there could still be more job cuts at Deutsche Bank's retail banking operations. The new strategy paper is believed to contain proposals envisaging the closure of up to a third of the 700 branches the bank operates in Germany, with potentially thousands of job losses. Investment banking won't be spared The restructuring is also expected to affect Deutsche's investment banking division, which could see bigger cuts than originally expected. The division's business volume could be cut by up to 200 billion euros, reports say. The division has to be downsized as many of its activities consume too much capital, according to news agency Reuters, which cited soucres in financial circles. Deutsche, however, remains mum on all the speculation surrounding the bank. A spokesperson reiterated that the results of the ongoing strategy debate will be published before the end of June. The bank's management will then also have to focus on how to get its people back on board. Employees' motivation "This is the aspect I am most anxious about," says banking expert Burghof. He wonders what Deutsche will do to motivate staff and get them to commit to the bank after a period of high uncertainty. "The culture change the bank wants to achieve means that Deutsche has to be seen as a long-term and reliable partner. And it is not going to achieve that with short-term strategy changes."

Will Deutsche just spin off Postbank or its entire retail operation? Either way, there are mounting fears of job losses. They could be part of a major overhaul Germany’s largest bank is expected to announce soon. Analysts and banking experts have been busy speculating on the future of Germany’s largest financial institution, Deutsche Bank. The bank wants to reinvent itself ... Read More »

Nasdaq hits record high, smashes dotcom record

The Nasdaq Composite Index broke through its 15-year-old record on Thursday. Higher oil prices and solid earnings reports contributed to the rise. The index gained 0.42 percent, or just over 20 points on Thursday, to close at an all-time high of 5,056. It means the Nasdaq has now made up the nearly 4,000 points it lost after its previous high during the height of the dotcom boom on March 10, 2000. Higher oil prices pushed up energy stocks by 0.6 percent. Strong earnings from telecoms bellwether AT&T, up 4.2 percent to $34.23, and eBay, up 3.8 percent to $58.89, helped offset lackluster US economic data. Apple and Google also helped propel the Nasdaq to its new high. The index is up 353 percent from its October 2002 low, when the technology bubble burst. "It has the potential to go up, absent some external event that I can't predict." Walter Price, senior portfolio manager and managing director of the AllianzGI Global Technology fund in San Francisco told the Reuters news agency. He pointed out that unlike in the early 2000s, companies are generally not overvalued nor are share prices inflated. In 2000, "a lot of the high-growth companies were selling at 200 or 300 times next year's earnings," he said. "This is nothing like that. This is a whole different world versus 2000." The Nasdaq used to be dominated by technology companies. Today, biotechnology and consumer services firms make up a large share of the index.

The Nasdaq Composite Index broke through its 15-year-old record on Thursday. Higher oil prices and solid earnings reports contributed to the rise. The index gained 0.42 percent, or just over 20 points on Thursday, to close at an all-time high of 5,056. It means the Nasdaq has now made up the nearly 4,000 points it lost after its previous high ... Read More »

Greece hopes to strike a deal with Gazprom soon

Greek PM Alexis Tsipras and the head of Russian gas giant Gazprom have reportedly agreed to set up a working group to promote the creation of a pipeline which will transport Russian gas to Europe via Greece. The Greek prime minister and Gazprom chief Alexei Miller held talks in Athens on Tuesday over a multibillion dollar gas pipeline project. Reports said both sides would work towards setting up a "road map" detailing the responsibilities the two parties would commit to in the coming months. Government sources said Athens hoped an agreement would be signed shortly. The proposed pipeline, which has not been approved by the European Union, could deliver Russian gas through Turkey and Greece to Europe. The visit by Miller came after Tsipras met Russian President Vladimir Putin in Moscow at the beginning of April and expressed his country's interest in taking part in the so-called Turkish Stream gas pipeline project. The pipeline is expected to transport Russian gas though Turkey and then in to Europe by 2017. Some observers, however, doubt the pipeline will be built on time, or even at all. "The pipeline is of big interest to our country and is among our priorities," said Greek Energy Minister Panagiotis Lafazanis. "We are continuing talks with the Russian side and we hope to reach an agreement very soon," he added, terming the talks as constructive. Heavily-reliant According to the Greek Kathimerini newspaper, Athens stands to earn several billion dollars in advance of the deal. However, Lafazanis declined to comment when asked by reporters about any advance payments. Talking to reporters after meeting Tsipras, Gazprom's Chief Executive Alexei Miller also did not make any reference to any advance payments to Greece from the pipeline. Greece is heavily dependent on Russian energy imports and is looking to negotiate a deal with Moscow for the reduction of the price of gas that it imports from Russia. Furthermore, Athens has indicated its interest in becoming a European hub for the natural gas pipeline project. Greece is quickly running out of cash as the leftist-led government under Tsipras is struggling to strike a deal with its international lenders on the country's bailout terms and come up with credible reforms. Russia, on the other hand, is moving ahead with its plans to build the Turkish Stream project to Turkey and further out to Greece via the Black Sea, in line with its aim to stop exporting gas via Ukraine by 2019. Miller said Gazprom would pump up to 47 billion cubic metres (bcm) via Greece through the pipeline, which would be implemented strictly according to the EU law.

Greek PM Alexis Tsipras and the head of Russian gas giant Gazprom have reportedly agreed to set up a working group to promote the creation of a pipeline which will transport Russian gas to Europe via Greece. The Greek prime minister and Gazprom chief Alexei Miller held talks in Athens on Tuesday over a multibillion dollar gas pipeline project. Reports ... Read More »

Winterkorn to stay CEO at Volkswagen

German carmaker Volkswagen (VW) has ended the crisis in its top management which pitted CEO Martin Winterkorn against VW's powerful board chairman Ferdinand Piëch. Winterkorn's contract is set to be extended. A week-long power struggle at German carmaker Volkswagen (VW) came to an end on Friday, with the six-member presidium of the company's supervisory board saying it would recommend extending the contract of Chief Executive Martin Winterkorn beyond 2016. The presidium said in a statement that Martin Winterkorn was "the best possible chief executive" for Volkswagen. Winterkorn was under pressure after VW's powerful Board Chairman Ferdinand Piëch withdrew his backing for the CEO, telling German news magazine "Der Spiegel" on Friday last week that he was "at a distance to Winterkorn." On Friday, the presidium, however, said that it set "great store by the fact that Winterkorn should continue to act in his function as CEO as actively and successfully as he has done in the past." "He has the full support of the presidium, which will propose that his contract be extended at the supervisory board meeting in February 2016," the statement added. The announcement came after a crisis meeting of Volkswagen's inner circle in the Austrian city of Salzburg on Thursday that had industry experts wondering whether Piëch would kill off his own protégé. After less than three hours, the meeting was adjourned. The six-member leadership committee and Winterkorn left without saying a word. A twisting road The power struggle at Germany's biggest carmaker came as a surprise to everyone, including VW's second-most powerful man, and Piëch's own cousin, Wolfgang Porsche. The story took an unexpected turn, when, less than 48 hours after launching his verbal attack, some of Piëch's most trusted allies began defecting: From the state of Lower Saxony, which holds a 20-percent stake in the company, to Piëch's own family. "Dr. Piëch's statement reflects his private opinion, which is not aligned…with that of the family," said Porsche, who also chairs the Porsche SE holding company, which owns a 51-percent in the 12-brand VW group. By Monday, a throng of supporters had lined up behind Winterkorn. "We have in Mr. Winterkorn an outstanding industry leader and CEO, who has our full trust," VW Deputy Chairman Berthold Huber, also a former chairman of the powerful IG Metall trade union, told Der Spiegel. The company's council also refused to withdraw its backing of an extension of the CEO's contract, set to run out end of 2016, according to an unnamed source. As the dust began to settle, Piëch was left looking increasingly isolated. Strictly business But insiders disagree as to the 78-year-old patriarch's motives. Anonymous sources had said that the chairman had grown increasingly unhappy with Winterkorn's performance, particularly for his failure to turn around disappointing sales in the crucial North American market - something he had expressed at several supervisory board meeting over the past five months. Recent earnings reports may have provided Piëch plenty of ammunition to sustain his attack on Winterkorn - and win over skeptics: VW's first-quarter sales tanked in several key markets. Demand for the group's core brand dropped 1.3 percent, with deliveries down 9.3 percent in the US and 0.6 percent in China. The Russian market bled the most as Volkswagen suffered a 47.2-percent sales cut, amid continuing Western sanctions over Moscow's involvement in the Ukraine crisis.

German carmaker Volkswagen (VW) has ended the crisis in its top management which pitted CEO Martin Winterkorn against VW’s powerful board chairman Ferdinand Piëch. Winterkorn’s contract is set to be extended. A week-long power struggle at German carmaker Volkswagen (VW) came to an end on Friday, with the six-member presidium of the company’s supervisory board saying it would recommend extending ... Read More »

In cloud of confetti, ECB pledges to stay the course

Mario Draghi has said he will keep pumping money into the economy, doing his best to keep markets happy amid reports that the eurozone recovery is turning a corner. But it was a protester that ended up stealing the show. The European Central Bank (ECB) will forge ahead with its controversial bond-buying scheme, president Mario Draghi announced at a Wednesday news conference in Frankfurt, expressing surprise at speculation of an early end to the bank's quantitative easing (QE) policy. "Our focus will be on the full implementation of our monetary policy measures," the ECB chief said, stressing his resolve to stay the course until the 60-billion euro ($63.6-billion) a month money-printing program is set to expire in September 2016, at a total cost of 1.1 trillion euros. Draghi said that the 25-member governing council decision to keep the benchmark refinancing rate, known as "refi," at its current all-time low of 0.05 percent, reflected "clear evidence" that the central bank's aggressive monetary policy were "effective." The ECB will also leave untouched the two other key deposit and marginal lending rates, currently pegged at -0.2 percent and 0.3 percent, respectively. "Through these measures we will contribute to a further improvement in the economic outlook," Draghi predicted, pointing to data showing the threat of deflation on the retreat. "Financial market conditions and the cost of external finance for the private sector have eased considerably over the past months and borrowing conditions for firms and households have improved notably, with a pick-up in the demand for credit." Recovery ahead On Tuesday, the International Monetary Fund revised up its growth forecast for the eurozone to 1.5 percent this year, followed by 1.6 percent in 2016. The eurozone's top financial shepherd has repeatedly signalled that he won't scale back QE until consumer prices return to the bank's inflation goal of below, but close to, 2 percent. "I'm quite surprised, frankly, by the attention a possible early exit of the program is receiving, when we've been in the program only a month," Draghi said, comparing it to asking a marathon runner "is it over yet?" after just one kilometer. No olive branch, but much confetti Debate about the eurozone economy invariably also raised questions about Greece and the increasingly likely scenario of an exit from the 19-member currency bloc. Asked about ECB aid to Greek banks, Draghi replied, "the answer to your question is entirely in the hands of the Greek government and the negotiations between Athens and its eurozone partners." He added that the question of debt restructuring for Greece had been raised at the meeting of the governing council, but only said that it would "come back to this issue in due time." Overall, there was little to surprise anyone at Wednesday's press conference, save for a brief confetti-filled intermezzo, when a member of feminist activist group FEMEN charged at Draghi, jumped on the podium and shouted "end the ECB dictatorship!" After two men in suits carried her out of the room, Draghi picked up where he left off, albeit looking a little shaken. "You know it's been a dull press conference when the only real talking point to come from it is a protestor jumping on the table in front of Mario Draghi, throwing confetti on him. That was very much the case today," Craig Erlem, analyst at Oanda, concluded. "All things considered, as expected, today was something of a non-event from the ECB."

Mario Draghi has said he will keep pumping money into the economy, doing his best to keep markets happy amid reports that the eurozone recovery is turning a corner. But it was a protester that ended up stealing the show. The European Central Bank (ECB) will forge ahead with its controversial bond-buying scheme, president Mario Draghi announced at a Wednesday ... Read More »

Nokia to buy Alcatel-Lucent

Finland's Nokia has said it has agreed a deal with Alcatel-Lucent to fully take over its Franco-American competitor. The move would create a new global networking giant to rival Sweden’s Ericsson and China’s Huawei. Nokia announced Wednesday (15.04.2015) it had agreed to take over Alcatel-Lucent in a deal valuing the Franco-American company at 15.6 billion euros (16.6 billion dollars). "I firmly believe that this is the right deal, with the right logic, at the right time," Nokia CEO Rajeev Suri said. Both companies' boards of directors had given their blessing to the deal, which would help Nokia bolster its mobile infrastructure business against Swedish archrival Ericsson, profiting from Alcatel's position as a leading supplier of 4G and LTE mobile networks and related services. Alcatel-Lucent's market capitalization stands at roughly 11 billion euros ($11.63 billion), while Nokia's market capitalization is about 28 billion euros. On Tuesday, Alcatel-Lucent's shares bounced on the announcement that an agreement was in the works, gaining 13 percent to 4.38 euros per share in morning trading in Paris. Networking behemoth in the making A merger between the two companies would end years of speculation about a possible tie-up, and reshape the market for telecommunications equipment. The new company would have a combined 2014 revenue of 25.9 billion euros and more than 100,000 employees in businesses spanning wireless communications and Internet routing. Market leader Ericsson reported revenue of 25.1 billion euros in 2014, while the telecoms equipment business of China's Huawei had revenue of about 23.6 billion euros. Alcatel-Lucent CEO Michel Combes suggested the combined firm might emphasize the venerable Bell Labs name, which US-based Lucent brought with it when it merged with France's Alcatel in 2006. Bell Labs originated as the research wing of US telephone company AT&T and is credited with inventions as diverse as the transistor and the UNIX operating system. "This transaction comes at the right time to strengthen the European technology industry," Combes said. "We believe our customers will benefit from our improved innovation capability and incomparable R&D engine under the Bell Labs brand." According to Bloomberg financial services, Nokia is seeking the blessing of the French government for the purchase and is working with regulators in an attempt to preserve research jobs in France. Last year, Nokia sold its consumer handset business, once the world's largest, to Microsoft in order to focus on networking equipment. The company has also indicated it may be willing to sell its Here mapping division.

Finland’s Nokia has said it has agreed a deal with Alcatel-Lucent to fully take over its Franco-American competitor. The move would create a new global networking giant to rival Sweden’s Ericsson and China’s Huawei. Nokia announced Wednesday (15.04.2015) it had agreed to take over Alcatel-Lucent in a deal valuing the Franco-American company at 15.6 billion euros (16.6 billion dollars). “I ... Read More »

China’s growth slows to 7 percent

Growth in the world's second-largest economy has slowed to a six-year low of 7 percent. But these new figures were not as bad as some investors had feared following poor trade performace last month. In a further sign that China's economic slowdown is continuing, economic growth fell to its lowest rate since the global financial crisis six years ago. Official data released Wednesday showed growth in the world's second-largest economy came in at 7.0 percent for the first three months of the year, down from 7.3 percent in the previous quarter. The disappointing figures reflected slowing manufacturing and retail sales. They came in the wake of other weak indicators including February's trade figures, although slightly above a forecast of 6.9 percent. It was China's lowest posted growth rate since first-quarter 2009, when growth dropped to 6.1 percent as the world economy ground to a halt following bank collapses around the world brought on by a property bubble. Some of today's decline is due to official policy that came in response to that decline. To head off worries of overheating, China's communist leaders appear comfortable with a lower growth rate. They have tried to steer the economy toward a growth model that relies on domestic consumption rather than trade and foreign direct investment (FDI). "If the Chinese market were to double from here it would indeed be in bubble," James Griffiths of Citi Research said in a commentary Wednesday. "The same is true for Asia." But a further decline threatens job creation, a key factor in the social stability prized by the Chinese authorities. Many economists say the government may have to step in to stimulate the economy. "The weaker Q1 GDP growth and much weaker-than-expected March activity data suggest that growth momentum remains weak, which calls for further policy easing," Nomura analysts led by Yang Zhao wrote in a note. Statistics bureau spokesman Sheng Laiyun said Wednesday that China's survey-based unemployment rate stood at 5.1 percent, without specifying the time period. Asian markets were mostly down slightly following the news. The Shanghai Composite Index dropped 1.1 percent to 4,089.52, while Hong Kong's Hang Seng index lost 0.1 percent to 27,547.60.

Growth in the world’s second-largest economy has slowed to a six-year low of 7 percent. But these new figures were not as bad as some investors had feared following poor trade performace last month. In a further sign that China’s economic slowdown is continuing, economic growth fell to its lowest rate since the global financial crisis six years ago. Official ... Read More »

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