Share market upbeat at weekend; KSE gains 194 points

KARACHI: Investors continued to invest in their favorite stocks at Karachi Stock Exchange (KSE) on Friday, contributing 194 points to the benchmark KSE-100 Index which closed at 5,377.The stock market opened upbeat and the positive trend continued in both the sessions of the last trading day of the week.The trade volume stood at 190 million shares today.NIB bank was star performer in terms of volume which gained paisas 61 to close at Rs5.93.According to market analysts, the investors looked active in the share market on reports regarding easing of discount rate in the new monetary policy.

Stocks fall on fresh worries about economy

Updated at: 0125 PST, Friday, January 30, 2009 NEW YORK: Caution returned to Wall Street Thursday as weak earnings reports and record unemployment claims offered the latest evidence of the economy's struggles.Stocks fell sharply after soaring Wednesday on hopes the government will develop a way to remove bad debt from banks' books. All the major indexes lost more than 1 percent Thursday. Some pullback was to be expected after the Standard & Poor's 500 index put up its first four-day advance since November.Investors' mood darkened after companies from Eastman Kodak Co. to chip maker Qualcomm Inc. reported that profits tumbled the final three months of 2008.

Honda quarterly profit slumps, cuts annual target

TOKYO: Honda Motor Co.'s net profit tumbled 90 percent in the October-December quarter from a year earlier, hit by the global economic slump.Japan's No. 2 automaker also cut its net profit forecast for the current fiscal year through March by 57 percent, to 80 billion yen ($888.9 million) from 180 billion yen.Honda released its quarterly earnings Friday, which showed its net profit was 20.24 billion yen during the latest quarter, versus 200 billion a year earlier. Like other carmakers, Honda is cutting workers and scaling back production as demand for vehicles falls in key markets amid the global economic slump.

Asian markets end mixed on gloomy economic, corporate data

SINGAPORE: Asia-Pacific region ended mixed on Friday, weighed down by losses on Wall Street and poor investor sentiment after dismal corporate and economic data from the U.S., Europe, Japan and South Korea underlined the severity of the global slowdown. The Dow closed down 226.44 points, or 2.7% at 8,149.01, the Nasdaq closed down 50.50 points, or 3.2%, at 1,507.84 and the S&P 500 closed down 28.95 points, or 3.3%, at 845.14.The Japanese market tumbled, as investors expressed anxiety about poor earnings. Investors were particularly concerned about reports saying that Toyota's operating loss for the year to March may jump to around 400 billion yen from a 150 billion yen loss estimated previously. The benchmark Nikkei 225 index closed at 7,994, down 257 points or 3.12%, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange ended down 24 points or nearly 3% at 794.

Geithner, Bernanke work on $700B bailout overhaul

WASHINGTON – Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke and other top banking officials met Friday to hammer out details of a major overhaul of the government's financial rescue program. One official said the Obama administration was close to unveiling the new plan.
This senior administration official, who spoke to The Associated Press, said the administration was on track to announce its overhaul of the $700 billion bailout program soon, possibly as early as next week.
This official, who spoke on condition of anonymity because the plan has not yet been unveiled, said that it would employ a full range of tools to get credit flowing again to families and businesses.
While there had been reports that the administration may decide against setting up a government-run bank known as a bad bank to purchase toxic assets, this official said the administration was still developing the part of the plan to deal with toxic assets and no final decisions had been made.
The administration is working on proposals for how it will use the last $350 billion from the rescue program. Some of the measures being considered could end up costing taxpayers hundreds of billions of dollars beyond the original $700 billion pricetag.
Geithner previously said the administration is weighing the possibility of using a bad bank to buy up toxic assets that are weighing on the books of financial institutions, a proposal that some analysts have estimated could cost well over $1 trillion.
In addition to conferring throughout the day Friday with senior Treasury Department officials, Geithner met with Bernanke and other top banking regulators including Federal Deposit Insurance Corp. Chairman Sheila Bair and John Dugan, the head of the Office of the Comptroller of the Currency. The OCC regulates the country's biggest banks.
Sen. Charles Schumer, D-N.Y., said the issue of how much more money to ask Congress to commit beyond the current $700 billion is a key item the administration is debating.
"Do you guarantee the bad assets or do you buy them? Do you guarantee all the bad assets or just the housing assets? There are a lot of unanswered questions," Schumer said.
Meanwhile, congressional auditors released a new report saying it may never be known whether the initial $700 billion plan accomplished its objectives because it will be difficult to separate the impact of the rescue program from the effects of other economic forces.
The Government Accountability Office said the Treasury Department had made progress in implementing about half of the nine reforms it suggested in an earlier report, including improving communication about the bailout and hiring more staff to run it.
But the department had not fully addressed eight of the recommendations, according to the GAO. "The lack of a clearly articulated vision has complicated Treasury's ability to effectively communicate to Congress, the financial markets, and the public on the benefits of TARP," the report said.
Treasury spokesman Isaac Baker said President Barack Obama and Geithner both agree that "much more needs to be done to better stabilize our financial system and get credit flowing again to families and businesses."
In an e-mail responding to the GAO report, Baker wrote the administration would soon announce an overhaul of the bailout program "that will increase lending and impose new measures to strengthen oversight, transparency and accountability so that taxpayers know where and how their money is being spent and whether it's achieving real results."
Geithner said earlier this week that the administration would announce its new proposals "relatively soon." Many expect decisions as early as next week.
The administration is trying boost confidence that it can get control of the worst financial crisis to hit the country since the 1930s. However, former Treasury Secretary Henry Paulson quickly committed the first $350 billion from the bailout program in an effort that so far has not yielded the expected results of stabilizing the situation and getting banks to resume more normal lending to consumers and businesses.
The bailout program has generated a huge amount of controversy. Critics charge that the Bush administration failed to impose enough restrictions on banks to make sure the billions they were receiving went to boost lending.
Obama on Thursday called it "shameful" and the "height of irresponsibility" that Wall Street had paid out $18.4 billion in bonuses last year.
The Treasury statement on Friday said that Geithner, who was sworn into office Monday night after being confirmed by the Senate, had spent part of this week in telephone conversations with the finance ministers of France, Germany and Australia on the joint efforts that will be needed to stabilize the global economy and restore growth.
Treasury said the discussions with French Finance Minister Christine Lagarde involved a review of France's proposals to overhaul the global financial architecture and the progress being made by the Group of 20 major industrial and developing countries.
Those talks are in preparation for a G-20 leaders' meeting in April that will be a follow-up to an initial summit chaired by former President George W. Bush in November.

Stocks stumble as investors fear worsening economy

NEW YORK – Wall Street ended its worst January ever by stumbling again over the banking system and the economy.
The major indexes all fell sharply for the second straight day, leaving the Dow Jones industrial average and Standard & Poor's 500 index with record percentage drops for January — 8.84 percent and 8.57 percent, respectively. Some market watchers believe that's a bad omen for the rest of the year, as the market usually ends a year down after having fallen in January.
Investors began the day on edge about the economy and were further rattled by reports that the government's plans to help banks may have hit a snag. Investors have been hoping that the government would create what's being called a "bad bank" to buy financial companies' toxic assets, removing them from banks' balance sheets. But some in Washington suggested the administration may be re-examining that idea because of its cost.
"So many people were anticipating good announcements about the bad bank over the weekend, but now, not expecting any good news," said Anton Schutz, portfolio manager of the Burnham Financial Industries Fund and the Burnham Financial Services Fund.
Earlier in the day, investors found little solace in a milder-than-expected report on fourth-quarter economic activity. In fact, the report only heightened concerns that the economy is worsening.
Gross domestic product, the widely followed measure of the economy, shrank at a 3.8 percent pace in the final three months of 2008, the Commerce Department reported. That compared with a 0.5 percent decline the previous quarter.
Friday's reading was much better than the 5.4 percent drop economists expected. But many analysts suspect the economy is shrinking at an even faster pace in the first quarter. Weak earnings reports and rising job losses are helping to solidify that belief.
"We expected fourth quarter to be the worst of the recession," said Randy Frederick, director of trading and derivatives at Charles Schwab. "From an investor's perspective, they may see this stronger-than-expected report setting us up for the first quarter to be worse.
"Each time you get a report that indicates that maybe we hadn't bottomed out yet, it prolongs the recovery."
The Dow fell 148.15, or 1.82 percent, to 8,000.86 after falling 226 on Thursday on negative employment and housing news.
The S&P 500 fell 19.26, or 2.28 percent, Friday to 825.88, and the Nasdaq composite index fell 31.42, or 2.08 percent, to 1,476.42.
The Russell 2000 index of smaller companies fell 9.71, or 2.14 percent, to 443.53.
Declining issues outnumbered advancers by 3 to 1 on the New York Stock Exchange, where consolidated volume came to 5.22 billion shares, up from 4.87 billion on Thursday.
Volatility was high this week, with the market zigzagging on a mix of earnings and economic news as investors tried to determine what the rest of 2009 will bring. In the end, the Dow fell 0.90 percent for the week, while the S&P 500 fell 0.70 percent and the Nasdaq dipped 0.10 percent. It was the market's fourth straight losing week.
Friday's corporate earnings reports were anything but encouraging.
Evidence that consumers are cutting back on even the most basic of items came as Procter & Gamble Co. said sales in the fourth quarter dipped 3 percent on weakening demand for its products — which include Tide detergent, Olay skin cream and Crest toothpaste. The company also lowered its earnings projections for the full year, and said it expects sales to fall in the current quarter.
Meanwhile, two of the country's largest oil companies reported feeling the pain of sinking oil prices. Exxon Mobil Corp. said that it surpassed its own record for annual earnings by a U.S. company last year, but saw a big drop in profit during the fourth quarter. Chevron Corp.'s fourth-quarter results also suffered from the late-2008 plunge in oil prices.
Honda Motor Co. slashed its 2009 profit target by more than half as its earnings dropped 90 percent in the latest quarter.
Also Friday, Japanese electronics maker NEC Corp. said it will cut 20,000 jobs worldwide as it reported a $1.46 billion loss for the fourth quarter. The cuts are in addition to big staff reductions announced earlier this week by Starbucks Corp., Eastman Kodak, Allstate Corp. and others.
"The market is a forward-looking indicator, but the market sees nothing good in front of us," said Stu Schweitzer, global markets strategist at J.P. Morgan's Private Bank.
One bright spot came from Amazon.com Inc., which reported late Thursday that its fourth-quarter profit rose 9 percent and easily surpassed analysts' forecasts. The online retailer also provided an optimistic forecast for 2009.
Its shares soared more than 17 percent, adding $8.82 to $58.82.
After rising earlier in the day, Exxon and Chevron turned lower. Exxon closed down 52 cents to $76.48, while Chevron fell 10 cents to $70.52.
Procter & Gamble shares hit a four-year low of $54.24 before plunging $3.72, or 6.4 percent, to close at $54.50.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.85 percent from 2.87 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, dipped to 0.22 percent from 0.23 percent.
The dollar was mixed against other major currencies. Gold prices soared.
Light, sweet crude for March delivery rose 24 cents to settle at $41.68 a barrel on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average fell 3.12 percent. Britain's FTSE 100 fell 0.97 percent, Germany's DAX index dropped 2.03 percent, and France's CAC-40 fell 1.19 percent.
___
The Dow Jones industrial average closed the week down 76.70, or 0.90 percent, at 8,000.86. The Standard & Poor's 500 index fell 6.07, or 0.70 percent, to 825.88. The Nasdaq composite index lost 0.87, or 0.10 percent, closing at 1,476.42.
The Russell 2000 index, which tracks the performance of small company stocks, fell 0.83, or 0.17 percent, to 443.53.
The Dow Jones Wilshire 5000 Composite Index — a free-float weighted index that measures 5,000 U.S. based companies — ended at 8,335.64, down 49.49 points, or 0.59 percent, for the week. A year ago, the index was at 14,091.09.

Stocks' January drop isn't welcome sign for 2009

NEW YORK – It's been an unusually cold January on Wall Street.
The Standard & Poor's 500 index was down 8.57 percent for the month, its worst January ever and a worrisome sign for investors who see the first month as a trendsetter for the 11 that follow. They're believers in the January Barometer: As January goes, so goes the year.
Since 1950, there have been only five times when January got it wrong in a big way. That gives it an accuracy ratio of 91.4 percent. Throw in the 10 years since then when the market hasn't moved much in a year, and January is still accurate 74.1 percent of the time, according to the "Stock Trader's Almanac," a book that tracks market trends.
But after a horrendous 2008, some Wall Street veterans say 2009 isn't a time for looking at past trends.
"We're in a different world. If the last two years have taught us anything it's to be very skeptical about statistical predictions of markets," said Jerry Webman, chief economist at Oppenheimer Funds Inc. in New York.
Whether the January Barometer holds up this year will depend on the impact of government efforts to help lift the economy. If stimulus plans and capital infusions for banks do revive the economy, the stock market is expected to rally and could end the year with an advance.
"The axioms that always held true are out the window," said Brian Battle, vice president of trading at Performance Trust Capital Partners in Chicago. He noted it wasn't too long ago that many investors and consumers alike believed housing prices would always rise.
"This year is so different. You have to go back to the 1930s to find this kind of dislocation," he said. "It's a coin toss."
He's not the only one questioning the January Barometer.
"I don't think any of those things count anymore. This is unprecedented, what we're dealing with here," said Robert B. MacIntosh, chief economist at Eaton Vance Investment Management in Boston.
Still, it's easy to understand why investors would look to anything that could hint where stocks might head. Especially in 2009.
"It's going to be quite a rabbit out of the hat to be positive this year," said Jeffrey Hirsch, editor of the "Stock Trader's Almanac." His father, Yale, developed the January Barometer idea in 1972.
Even a flat year wouldn't seem so bad after the 38.5 percent plunge in the S&P 500 index in 2008. But Hirsch worries about another steep drop in the index, which is a yardstick for the overall stock market.
"Initially, the scary part is that all the down Januarys were followed by a new or continuing bear market, or a flat year," he said. Hirsch noted that only 1956 was an exception; it ended flat after a losing January.
When the January Barometer has been wrong it's often because of major events.
In 2001, the S&P 500 rose 3.5 percent in January. But the index ended the year down 13 percent because of the Sept. 11 terrorist attacks. And in 2003, stocks fell 2.7 percent in January as investors grew nervous ahead of the U.S.-led invasion of Iraq. But investors set aside their jitters and stocks rallied to a huge gain of 26.4 percent for the year.
This year, the concern on the Street is that no one knows how far corporate profits will fall as consumers ratchet back their spending. And banks don't seem anywhere near a resumption of more normal levels of lending, something that could also help stimulate business growth and in turn, stock prices.
Some analysts say history is the only possible guide.
"If you have a bad January, it augurs for a poor rest of the year, said Thomas Nyheim, portfolio manager at Christiana Bank & Trust Co. in Greenville, Del. "It's a pretty good indicator because it's just showing momentum."
Many investors use January to lay out how they will invest for the year. He said they aren't likely to make big changes after that.
"It holds a lot of water, basically because in the beginning of the year they're setting their allocations," Nyheim said.
In January 1960, the S&P slid 7.15 percent for the month. The index, which is the benchmark for many mutual funds, ended that year down 3 percent.
But a market that stumbles in January has found stability by year-end. January 1970 was the worst-ever performance for the S&P. The index tumbled 7.65 percent that month — but ended the year with a gain of 0.1 percent.

Bonuses no luxury for some Wall Street workers

NEW YORK – To President Barack Obama, Wall Street's $18.4 billion in bonuses is "shameful." To thousands of bank employees who don't sit in corner offices, that money helps pay the bills. Outrage over the bonuses reached as high as the White House this week following news that financial firms were rewarding employees even as they were being bailed out with billions of taxpayer dollars. The feelings are understandable: The average Wall Street bonus of $112,000 was about twice the average American's income.
But the issue is a complicated one.
While Wall Street investment banks and other financial firms make headlines for the millions paid out to certain executives, more modest bonuses go to workers from human resources representatives to secretaries as well as employees who actually made money for their companies last year.
Jason Weisberg, vice president of the Wall Street brokerage Seaport Securities, said bank employees count on performance bonuses like salesmen count on commissions.
"What are you supposed to pay them?" Weisberg asked. "Or are you not supposed to pay them? And if you don't pay them, how do you expect that employee to stay employed at that company?"
A product manager at one investment bank said she is cutting corners after her 2008 bonus fell by 38 percent, even though her job performance exceeded expectations and her division posted a profit. To save money, she's raising the deductible on her health insurance to lower the premium, shopping around for less expensive car insurance and cutting back on small luxuries.
"My bills haven't gone down by 40 percent," said the worker, who isn't being named because talking to the media is against her employer's rules.
Many argue that anyone who works at a bank right now should feel lucky to be employed — after all, hundreds of thousands of their colleagues have been shown the door over the past year.
Most compensation experts say bonuses will be much lower in the coming years, but that some sort of bonus system should stay in place at these institutions to separate the strong performers from the laggards.
Part of the problem with bonuses for 2008 stem from many of them being contractually guaranteed before the banks' troubles escalated.
The governments "Troubled Assets Relief Program," or TARP, required compensation for senior executives to be subject to "clawbacks" — where the companies would recoup pay if it was based on inaccurate information, or if the employee's actions hurt the company. But it did not give the government authority to scrap bonus contracts.
Consultant Vicki Elliott said she expects the banks will make fewer guarantees going forward. Elliott leads the global financial services industry consulting group at the business consulting firm Mercer, a subsidiary of Marsh & McLennan Cos.
"The landscape is changing," she said.
If it were up to James Reda, a compensation consultant who has testified on Capitol Hill, bonuses would not be cut to zero, but instead brought down to about $8 billion or $9 billion. That would be about half of the 2008 Wall Street bonus pool and about a quarter of what it was in 2007. The base salaries of most secretaries and information technology workers on Wall Street are comparable to other industries, anyway, he said.
The $18.4 billion doled out in Wall Street bonuses last year was down 44 percent from the previous year. Per person, the average bonus dropped 36.7 percent to $112,000. (It's a smaller drop because the investment banks laid off so many workers last year.)
All the very top executives at the major banks — including Citigroup, AIG, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Merrill Lynch — gave up their bonuses.
And many major banks have been modifying their bonus policies. Both Morgan Stanley and Citigroup said late last year they plan to tie compensation for employees eligible for bonuses more closely to performance, and allow for clawbacks. Europe's UBS AG also added a clawback provision.
Managers argue that while Main Street views bonuses as extra money, the annual incentive often represents a big chunk of compensation for most Wall Street workers. That means banks would risk of losing their smartest and most productive employees if the bonuses were trimmed too dramatically.
Executive compensation consultant Steven Hall said he knows of at least one firm, which he wouldn't name, that already has drawn up a list of potential employees to poach if they are unhappy with their bonuses.
Although many people might say good riddance to any defector against this backdrop, Hall argues taxpayers should want banks to retain the cream of the crop given that the federal government has become a shareholder in so many banks.
"The reality is good people will always be able to get a job someplace else if they are unhappy," Hall said. "So do you want to own stock in a company that is filled with people who can't get a job anywhere else?"
But even to some Wall Street workers, the pay has gotten out of hand.
Gordon Charlop, managing director at the Wall Street brokerage Rosenblatt Securities, called the president's criticism "fair."
"I can't disagree with the president here," Charlop said, adding that there's a "disconnect" between pay structures on Wall Street and the companies' responsibility to the country and shareholders.
A Wall Street veteran at one financial services firm said he was notified that his bonus will be slashed by 30 percent. He would not disclose the amount, but said he isn't losing any sleep over it.
"You could absolutely make an argument that we shouldn't be getting any bonuses this year," said the worker, who also requested anonymity because of his company's restrictions on talking to the media.
"If you are going to have a pay-for-performance system, you have to take the lows with the highs," he said. "This just happened to be a really low year."
He said he feels sorry for clerks and other people making less than $60,000 per year who are also having their annual bonuses lowered through no wrongdoing of their own.
But this worker has had so many good years that he usually just earmarks his annual bonus for his retirement nest egg.
"All this means for me," he said, "is that I am going to have to work a little longer."

Low fleet demand gets '09 auto sales to slow start

NEW YORK – A steep drop in sales to rental car companies and other fleet buyers is expected to weigh heavily on carmakers when they report their January sales results Tuesday. It remains to be seen whether injecting government cash into automakers' financing arms helped consumers make up the difference.
"It is an automotive hurricane moving through this industry," said Jim Farley, Ford Motor Co.'s marketing chief, at last weekend's National Automotive Dealers Association convention. Farley predicted a big drop in business from fleet buyers, which are keeping their current vehicles longer to pare costs.
General Motors Corp. said earlier this month it is planning for the entire industry to sell 10.5 million new vehicles in the U.S. this year, while Chrysler LLC has said it's planning on 11.1 million units. But few people are expecting the automakers to start 2009 at that pace.
Fleet sales — big-volume sales to customers like rental car companies and municipalities — typically account for about 20 percent of industrywide sales, but analysts expect that to be down sharply in January. Rental car companies have taken a big hit as consumers and businesses slash their travel budgets in the economic downturn, and the companies are holding onto their old cars rather than buying new ones.
"Our demand is down double-digits," said Richard Broome, spokesman for rental car company Hertz Global Holdings Inc. "So the need for new cars is less now than it would be in most years."
Compounding that downturn have been the production cuts and factory idlings across the auto industry. Many fleet customers get their deliveries right after cars roll off the assembly line, so when factories suspend production, those deliveries come to a halt.
Many U.S. auto plants have been closed all month, with some shut down as long as eight weeks, said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com. He predicted industrywide fleet business fell 50 percent from January 2007.
At the same time, the ills that have plagued the industry for the better part of 2008 — a battered economy, anxious consumers in no mood to make big purchases, and banks in no mood to lend to them — haven't gone anywhere.
Last week, the Treasury Department said it would give Chrysler's financing arm a $1.5 billion loan to help spur lending. The Treasury also gave GM's financing unit, GMAC LLC, $6 billion in assistance last month.
The companies immediately announced low-interest financing offers and less prohibitive credit requirements, but it remains unclear if the offers have been effective.
Mike Jackson, chief executive of the largest auto dealership chain, AutoNation Inc., said Thursday that those billions have failed to significantly loosen credit for his company's customers.
Chrysler Vice Chairman Jim Press, however, predicted a better month than December due in large part to the company's employee pricing offer, incentives and more available credit thanks to the loan.
Press said last weekend that Chrysler's market share surpassed 10 percent through Jan. 22, the highest share for the company in the past couple of months.
Deutsche Bank auto analyst Rod Lache is expecting U.S. sales in January declined 37.5 percent from a year ago to a seasonally annualized adjusted rate of about 9.8 million. The consulting firm CSM Worldwide is a little less pessimistic, projecting an annualized 10.2 million sales.
That figure, known in the industry as SAAR, indicates what sales would be for the full year if they remained at that month's pace, with adjustments for typical seasonal fluctuations.
Automakers are counting on more buyers in the second half of this year, when consumer confidence and the housing market — economic indicators closely tied to auto sales — are expected to improve.
Edmunds predicts sales will recover during the second half of the year to an annual total of 12.4 million units, down from 13.2 million in 2008.
"I think there's a lot of pent-up demand," Toprak said. "Consumers postponed purchases in the marketplace for the last year or longer, and once conditions start stabilizing in the economy, we're going to start seeing those postponements become reality."
Geoff Pohanka, who heads a chain of dealerships in the Washington, D.C., area, said sales at his 13 franchises are down roughly in line with the broader market, and the mood among those in the industry has been dour.
"It's a good time for someone to buy because we're hungry for sales and we'll stretch as much as we can," he said.

Roche makes lowered, hostile bid for Genentech

NEW YORK – Swiss drugmaker Roche Holding AG surprised Wall Street with plans for a lower-than-expected and hostile $42.1 billion buyout offer for Genentech Inc. Friday, a move some consider a tactic to force negotiations with the biotechnology behemoth.
The $86.50-per-share offer, $2.50 less than an offer rejected in July, sparked some concern from analysts that key personnel at the biotech pioneer could leave, depending on any potential deal.
Roche said it would formally make the offer directly to shareholders within two weeks. Several analysts have said it is a possible attempt to force talks with what has been a reticent Genentech board and take advantage of falling share prices amid the global economic crisis.
Roche already owns 55.8 percent of Genentech, and had its prior $89-per-share offer rejected as too low by the South San Francisco-based company's board last July. The new offer values the outstanding shares at about $1.6 billion less than the previous bid.
Genentech shares fell $2.85, or 3.4 percent, to close at $81.24. The stock has traded between $66.80 and $99.14 over the past 52 weeks.
Roche said its new offer is aimed directly at shareholders, bypassing the board. The offer is significantly lower than the $100-per-share value analysts had been touting for several months.
"We feel it is now time to give the Genentech minority shareholders the opportunity to decide on our offer," Roche chairman Franz Humer said in a statement.
"Especially in the current market environment the offer provides an opportunity for all public shareholders to achieve liquidity and to receive a fair price for all their shares."
The lower-than-expected offer comes amid a dismal global economy and after several lackluster quarters for Genentech. Many on Wall Street had been pinning hopes for a near $100-per-share offer to upcoming study data on Avastin, expected in April. The drug is approved for colon, lung, and breast cancer and many say it has already saturated the market in those first two uses, leaving little room for growth.
"The entire (stock) market has been revalued," Leerink Swann analyst William Tanner said in an interview with Associated Press.
He called hopes that any new data would drive the stock higher are disproportionate to how much shares could fall on bad news.
"Why wouldn't you sell for $86.50?" he said.
Genentech derided the move by Roche in a statement Friday but said it wouldn't take a position until the drugmaker formally makes the offer.
"The special committee is disappointed that Roche has taken this unilateral and opportunistic step in an attempt to take advantage of current market conditions," Genentech said.
Meanwhile, BMO Capital Markets analyst Jason Zhang sees the lower offer as a tactic by Roche to force Genentech negotiations. Roche, could have the upper hand right now because its ownership stake in Genentech essentially means the company can't sell itself to anybody else.
Erik Gordon, biomedical analyst and professor at University of Michigan's Ross School of Business, was more blunt about the tactic.
"It's a signal from Roche to shareholders and the special committee: 'Don't underestimate us, don't think we are a solid Swiss company that won't take off the gloves and fight,' " he said.
While he said Roche can take advantage of the weak economy in the lower offer, it is likely that the price could rise if the bid spurs Genentech to negotiate.
Meanwhile, experts expressed concern that the hostile bid could harm relations at the boardroom level.
Analysts at the St. Gallen-based private bank Wegelin spoke of a "worrying gap" between Roche and Genentech executives, saying a successful takeover might result in key people leaving the company out of frustration.
Zuercher Kantonalbank said it expects Roche's takeover attempt to fail.
Roche said it intends to retain Genentech's South San Francisco base as an independent research center if the takeover succeeds.
Gordon, meanwhile, doesn't expect there would be an exodus of talent from Genentech if Roche completes a deal.
"You can be sure that Roche will be very careful not to destroy the asset they bought," he said. "Big pharma people know this; they have to be able to bring in small, focused companies and biotech to make it work because it's a big part of their future."
Genentech was one of the first biotech companies and is known as a haven for scientists.
Roche shares rose 1.9 percent to 163.40 Swiss francs ($140.67) on the Zurich exchange Friday.

Federal regulators shut MagnetBank in Utah

WASHINGTON – Federal regulators have closed Salt Lake City-based MagnetBank, the fourth U.S. bank failure this year.
The Federal Deposit Insurance Corp. was appointed as receiver of the bank, which had assets of $292.9 million and deposits of $282.8 million as of Dec. 2.
The FDIC says it was unable to find another bank willing to take over MagnetBank's deposits and operations. As a result, the agency says checks will be mailed on Monday morning to retail depositors for the amount of their insured funds.

P&G cuts outlook, says sales slowing

CINCINNATI – Even Procter & Gamble Co., the world's largest consumer products maker, is getting dragged down by the spreading recession that has households around the globe looking for ways to tighten their budgets.
P&G reported Friday that its second-quarter profit jumped 53 percent, but that was boosted by the sale of its Folgers coffee business last year. The current outlook isn't so robust, and P&G stock tumbled 6 percent Friday to close at a 52-week low.
The company dropped its earning projections for the full year, and expects total sales to fall in the current quarter and possibly for the year. Chairman and CEO A.G. Lafley had warned in December that P&G, long considered a safe harbor in economic tempests, is recession-resistant — but not recession-proof.
Friday, he told investors that he remains confident for the long term, but there could be more turbulence in the meantime.
"We're going to have to see how deep the recession is ... and what (the market condition) looks like when we do come out, and then we'll be realistic," Lafley said in a conference call. "I think we're in a very volatile and obviously uncertain period."
P&G shares fell $3.72 to $54.50. They have traded as high as $73.57 in the past year, but have been sliding since mid-September.
Edward Jones analyst Jack Russo remains optimistic about P&G for the long term, calling it a well-managed company with a strong portfolio. He said its current sales outlook shows that people will cut back just about anywhere in hard times.
"I don't think anyone is immune to some of the pressures we're seeing now," Russo said in an interview. "You've just got to grit your teeth as an investor the next couple years."
He has a "buy" rating on P&G. But Bill Schmitz Jr., a Deutsche Bank analyst, has the stock as "hold."
"With unemployment growing, tradedown expanding and retailer destocking accelerating, (the) growth outlook remains bleak," Schmitz said in a note Friday, adding that it's "hard to get excited about the name here."
P&G, whose brands cover a wide range of household, beauty, and personal care products such as Tide detergent, Pampers diapers and Gillette shavers, said net sales fell 3.2 percent to $20.37 billion on lower volume and a stronger dollar. It also confirmed that organic sales — those not related to acquisitions — have slowed below its targets. Analysts had expected revenue of $20.64 billion, according to a Thomson Reuters poll.
The company earned $5 billion for the quarter, compared with $3.27 billion a year earlier. Earnings per share were $1.58, in line with Wall Street expectations, and include a gain of 63 cents per share from the Folgers deal with Orrville, Ohio-based jams and jellies maker J.M. Smucker Co. A year earlier, P&G earned 98 cents per share in its second quarter.
Lafley expects P&G to continue to grow profitably by offering better value and innovation and with cost-cutting and increased productivity.
He said the company is trying to increase its market share through promotions such as offering more coupons and by emphasizing value — recent Gillette Fusion commercials say its blades deliver a comfortable shave for $1 a week, less than many men spend each day on coffee. Fusion's double-digit sales growth was among the few bright spots in Friday's report.
U.S. households have been trimming spending and some are turning to cheaper store and generic brands. P&G officials said some women are cutting down on beauty spending, fine fragrances are down, and that households are emptying their pantries and drawers of products like its Duracell batteries before buying any more while retailers are tightening inventories.
P&G said its own lower-priced brands, such as Gain detergent and Luvs diapers, and "basic" versions of Charmin toilet paper and Bounty paper towels showed solid growth.
The company's organic sales growth was down, to 2 percent. P&G had warned in December it would miss its organic sales target of 4 percent to 6 percent.
P&G said Friday it now expects organic sales to grow by 2 percent to 5 percent for its full fiscal year ending in June, with total sales growth that will be from flat to down 4 percent.
The Cincinnati-based company said it is "comfortable" with analysts' consensus earnings estimate of $4.29 for its fiscal year. P&G's revised forecast was $4.20 to $4.35 per share, down from earlier guidance of $4.28 to $4.38.
For the current January-March quarter, P&G expects organic sales growth of 2 to 5 percent, but said total sales could fall 2 percent to 7 percent. P&G projects earnings of 78 cents to 86 cents per share. Analysts are projecting a profit of 85 cents per share.

Exxon Mobil sets record with $45.2 billion profit

HOUSTON – Exxon Mobil Corp. on Friday reported a profit of $45.2 billion for 2008, breaking its own record for a U.S. company, even as its fourth-quarter earnings fell 33 percent from a year ago.
The previous record for annual profit was $40.6 billion, which the world's largest publicly traded oil company set in 2007.
The extraordinary full-year profit wasn't a surprise given crude's triple-digit price for much of 2008, peaking near an unheard of $150 a barrel in July. Since then, however, prices have fallen roughly 70 percent amid a deepening global economic crisis.
In the fourth quarter alone crude tumbled 60 percent, prompting spending and job cuts in an industry that was reporting robust, often record, profits as recently as last summer.
With piles of cash and diversified operations, the majors like Exxon Mobil have fared better than many smaller oil and gas companies, but Friday's results show no one is completely insulated from the ongoing malaise.
Irving, Texas-based Exxon said net income slid sharply to $7.8 billion, or $1.55 a share, in the October-December period. That compared with $11.7 billion, or $2.13 a share, in the same period a year ago, when Exxon set a U.S. record for quarterly profit. It has since topped that mark twice, first in last year's second quarter and then with earnings of $14.83 billion in the third quarter.
Revenue in the most-recent quarter fell 27 percent to $84.7 billion.
Both the per-share and revenue results topped Wall Street forecasts. On average, analysts expected the company to earn $1.45 a share in the latest quarter on revenue of $69.1 billion, according to Thomson Reuters.
Shares rose $1.52, or 2 percent, to $78.52 in early trading.
The nation's second largest oil company, Chevron Corp., reported profits of $4.9 billion for the fourth quarter, though revenues slid 26 percent with oil prices in sharp decline.
It earned $2.44 per share in the three months ended Dec. 31. Like Exxon, Chevron easily beat expectations of analysts, who were looking for profits of $1.81 per share.
The industry went into retrenchment toward the end of the year with demand falling.
As expected, Exxon Mobil's bottom line took a beating from its exploration and production, or upstream, arm, where net income fell 31 percent to $5.6 billion. The culprit: lower crude prices, which the company said decreased earnings by $3.2 billion in the fourth quarter alone.
The company, which produces about 3 percent of the world's oil, said overall output fell 3 percent in the most-recent period, a troubling trend in previous quarters. Exxon, which generates more than two-thirds of its earnings from oil and gas production, said production-sharing contracts and OPEC quotas contributed to its lower output.
Results were better at its refining and marketing unit, where earnings rose 6 percent to $2.4 billion as higher margins overcame costs related to last summer's hurricanes and other factors.
The company's chemical division also took a hit, posting net income of $155 million versus $1.1 billion a year ago. Results were hurt by lower volumes and margins and hurricane-repair costs.
Exxon Mobil said it bought 119 million shares of its common stock in the quarter at a cost of $8.8 billion. Roughly $8 billion of that amount was dedicated to reducing the number of shares outstanding; the balance was used to offset shares issued as part of the company's benefit plans.
Exxon said it spent $26.1 billion on capital and exploration projects last year, up 25 percent from 2007. Its earnings release provided no information about its planned spending for 2009.
For the full year, Exxon Mobil's massive profit amounted to $8.69 a share, versus $7.28 a share a year ago.

KSE decides to utilize MPFs

KARACHI: Karachi Stock Exchange (KSE) has decided to utilize Members Protection Funds (MPFs) in view of the prevailing market conditions.This will provide an opportunity of borrowing up to Rs500 million each from the fund for a particular time period. The opportunity is for those stock members who are unable to clear payments against losses.Presently there is more than Rs2 billion in KSE Members Protection Funds.

Wall Street gains as GMAC gets financing

NEW YORK – Wall Street staged a big advance in the next to last session of 2008 Tuesday after Washington's latest lifeline to the auto industry bolstered hopes that the government will do whatever is necessary to cut short the recession.Investors found solace in news that General Motors Corp.'s troubled financing arm received $5 billion of financing. The Treasury Department said late Monday it would provide the money to GMAC Financial Services LLC from the $700 billion bank rescue program.The injection is on top of the $17.4 billion in loans the Bush Administration agreed to provide to the auto industry on Dec. 19. GMAC said Tuesday it would immediately resume lending to certain customers it had previously said were too great a risk for auto loans because of tight credit markets."This is trying to slow down the economic train wreck," said Jack Ablin, chief investment officer at Harris Private Bank. "Investors are taking a step back, and realizing that this will enable auto buyers to finance their cars and add liquidity to the market."Ablin also said the move will have an effect on the entire economy, especially amid a backdrop of sluggish consumer spending, which drives more than two-thirds of the U.S. economy.Wall Street got another disappointing reading about the mood of Americans after the Conference Board reported its Consumer Confidence index dropped to a record low. The trade group reported the index's reading fell to a 38 in December from a revised 44.7 in November, well below the expectation of 45 economists surveyed by Thomson Reuters.Investors were well prepared for a downbeat report after consumers reluctant to spend left retailers with their worst holiday season in years. The International Council of Shopping Centers said Tuesday that weekly same-store sales, those from stores open a year or more, dropped 1.5 percent last week at the 40 retailers it polls.The Dow Jones industrial average rose 184.46, or 2.17 percent, to 8,668.39. But even with that advance, the blue chips are still down 36.04 percent for the year with one more trading day remaining.Broader indexes also moved higher. The Standard & Poor's 500 index rose 21.22, or 2.44 percent, to 890.64, leaving it down 40.79 percent for the year; while the Nasdaq composite index added 40.38, or 2.67 percent, to 1,550.70, leaving it down 43.06 percent for 2008.With many traders away for the holidays, volume was low, which can exaggerate price moves. Advancing issues led decliners by 4 to 1 on the New York Stock Exchange, with consolidated volume at a light 3.23 billion shares, up from 2.98 billion on Monday.Most investors are looking past 2008 for clues about how stocks will fare in the coming year.Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto, said the market's moves in the final days of the year are more noteworthy than some investors realize; stocks have been fairly steady despite low volume that could easily lead to sharp declines. But he predicts trading will remain volatile into mid-2009."It's still relatively encouraging that the markets have been able to hold up," he said.Investors might have been able to overlook the disappointing consumer data after a surprise uptick in the Chicago Purchasing Managers' index, which measures business conditions across Illinois, Michigan and Indiana. It advanced in December for the first time since August. Wall Street had expected a decline. The index, which rose 34.1 from 33.8 in November, is considered a precursor to the Institute for Supply Management's manufacturing survey on Friday.Bond prices were higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.06 percent from 2.10 percent late Monday. The yield on the three-month T-bill, in great demand because it is considered one of the safest investments, rose to 0.06 percent from 0.03 percent late Monday.Light, sweet crude fell 99 cents to $39.03 on the New York Mercantile Exchange. Oil prices rose Monday as investors worried fighting between Israel and Hamas in Gaza would disrupt oil shipments.The dollar was mixed against other major currencies, while gold prices fell.In corporate news, shares of GM rose 20 cents, or 5.6 percent, to $3.80 after GMAC was given government financing. GM owns 49 percent of GMAC, while private equity firm Cerberus Capital Management holds the remainder.The Federal Reserve last week approved GMAC's application to become a bank holding company, a move that cleared the way for the company to receive money from the financial rescue fund. In addition to the cash infusion for GMAC, the government also agreed to lend $1 billion to GM so it can contribute to the financing arm's reorganization as a bank holding company.Meanwhile, General Motors said it is offering financing as low as zero percent over the next week for several 2008 and 2009 models in a big year-end sales push.The Russell 2000 index of smaller companies rose 16.62, or 3.57 percent, to 482.77.Overseas, Japan's Nikkei stock average rose 1.28 percent in the final session of the year, ending 2008 with a loss of 42 percent. Markets in Japan are closed for a holiday Wednesday. Britain's FTSE 100 rose 1.70 percent, Germany's DAX index rose 2.24 percent, and France's CAC-40 rose 2.76 percent.

Govt to buy stocks from support fund next week: Tarin

ISLAMABAD: The government will start taking positions in the stock market from the next week with the help of Rs20 billion market support fund.This was stated by Advisor to Prime Minister for Finance, Shaukat Tarin during the meeting of National Assembly Standing Committee for Finance.He said the government will ensure protection to the small investors while providing safeguarding of big brokers is not among the priorities of the government.Shaukat Tarin told the meeting that 500 million dollars will be received from the World Bank during this quarter. Similar amount is also expected to come form China in the first week of January, he added.He informed the rate of inflation is steadily dropping.

China's exports, imports drop

BEIJING, China (CNN) -- China's exports declined for the second straight month in December, a byproduct of the global economic crisis, Chinese state media reported Tuesday.December exports fell 2.8 percent from a year earlier, while imports dropped 21.3 percent as the nation dealt with the decline in international trade and the weak U.S. economy, according to customs figures quoted in the newspaper China Daily.Exports fell 2.2 percent in November. The drop in exports for the second consecutive month marked the first such instance in a decade, the newspaper reported.The decline was attributed to falling demand in the United States and the European Union.

Heavy selling squeezes 272 points from KSE

KARACHI: Bears came back to Karachi Stock Exchange (KSE) on Thursday, eroding 272 points from the benchmark KSE-100 Index which closed at 5,778.Investors seemed cautious in the wake of growing Indo-Pak tensions while foreigners off-loaded their holdings in energy stocks which put the market under pressure throughout the session.Trade volume shrank by 40 million shares to 400 million as compared to yesterday’s trade.OGDC was the volume leader which lost Rs2.73 to close at Rs52. KSE-30 Index plummeted by 308 points to finish the day at 5,510.

US stocks tumble on disappointing retail sales

NEW YORK: US stocks fell hard Wednesday on dismal retail sales data and renewed concerns over the health of banks. The Dow Jones industrials slid 249.37 points or 2.95 percent at the close.A darkening outlook for companies from banks to retailers to energy producers has pummeled Wall Street Wednesday. Government figures have show retail sales declined more than expected in December and concerns about troubled balance sheets are weighing on banks. The Dow Jones industrial average is down 248, or 2.94 percent, at8,200 after being down more than 300 points earlier in the session. Broader indexes are down more than 3 percent. The Dow has now fallen for six straight sessions.

Global stocks in grip of losses on worsening economic indicators

SINGAPORE: The world stock markets this week for the investors brought losses, as the worsening data on global economy kept pouring in.Despite Barack Obama’s $825 billion bailout package announcement, US stock markets remained downbeat and both the index Dow Jones and NASDAQ declined by 3.6 percent and 2.7 percent respectively. Besides, Asian markets’ Hong Kong’s Heng Sang plummeted by 7.3 percent and closed at 13255 points, while Japan’s Nekkei-225 gaining 17 points wrapped up at 9323 points. Following Indian Satyam scandal, Mumbai KBSE Sensix-30 kept plunging and index this week falling by 5.7 percent closed at 8230 points. On the other hand European stock markets were also seen in the negative terrain and despite Germany’s announcement of $66 billion bailout package DAX-30 index tumbled down by 8.3 percent and closed at 4366, while Britain’s FTSE-100 index eroded by 6.7 percent and France’s KCAC-40 index lost 8.2 percent.

Wall Street plunges on banking woes

NEW YORK: US stocks plunged Tuesday as renewed fears about the global banking sector offset optimism surrounding the inauguration of Barack Obama as the 44th president of the United States. The Dow Jones Industrial Average slid 332.13 points (4.01 percent) to 7,949.09 at the closing bell, slipping below the key level of 8,000. The Nasdaq composite sank 88.47 points (5.78 percent) to 1,440.86 and the broad Standard & Poor's 500 index lost 44.90 points (5.28 percent) to a preliminary close of 805.22.The carnage was concentrated in the financial sector, with Citigroup sinking 19 percent on worries it may require a new bailout or nationalization. Bank of America lost 28 percent and JPMorgan Chase 20 percent. "The current leaning indicates that Mr Obama's honeymoon period will be a short one -- it may already be over," said Patrick O'Hare on media. "It also indicates the concern that exists about a nationalization of the banking system.Those concerns hit a new level yesterday as word from the Royal Bank of Scotland that it could post a loss of as much as 41.3 billion dollars for fiscal 2008 helped trigger a new round of intervention by the UK that some believe will ultimately lead to a full-scale nationalization of RBS and perhaps the banking system in the UK," he added."After the week Bank of America, Citigroup and others had last week, similar concerns, unthinkable just 18 months ago, continue to fester here at home."

Microsoft slams broad market; bottoming continues

NEW YORK (MarketWatch) -- With even Microsoft Corp. unable to predict the future, the market is likely facing for weeks to come a steady stream of companies offering equally murky views of the year, in what analysts say is part of the bottoming process for stocks."You've had positive news -- Apple -- and negative news -- Microsoft and EBay -- and, while good and bad, mostly bad, the stock market has just traded sideways for about three months now," said Dan Greenhaus, equity strategy group, Miller Tabak & Co.This, he added, "is what you see as markets enter a bottoming process."Others see the same process happening in the broader economy."The difficulty for the market is on the one hand, the economic data is dismal, and we get reminded of that on an almost daily basis. However, there are some early indicators we might be in a bottoming process for economy," said Michael Sheldon, chief market strategist at RDM Financial Group Inc.Those early indicators include mortgage rates falling back below 5%, and improvement in the TED spread, which measures financial stress, from 4.6% after Lehman Brothers went bust to around 1%, said Sheldon.On Thursday, stocks declined but closed off session lows as investors drew some cheer from the White House, which said it would do what it could to bolster the economy.Down more than 250 points during the day, the Dow Jones Industrial Average [$INDU] ended down 105.3 points, or 1.3%, to stand at 8,122.8.Twenty-four of the Dow's 30 components finished with losses, fronted by Citigroup Inc. [C] , off 15.3%.The S&P 500 [SPX] declined 12.75 points, or 1.5%, to 827.49, with financials, energy and information technology pacing losses among the index's 10 industry groups.Telecommunication services, health care and consumer staples fared the best.The Nasdaq Composite [COMP] stumbled 41.58 points, or 2.8%, to 1,465.49.The finish marked a sizeable comeback from losses that followed a pre-opening jolt, when software titan Microsoft [MSFT] reported an earnings drop and said it plans to shed as many as 5,000 workers. It declared itself unable to offer a forecast for the remainder of 2009, citing economic uncertainty."We've been rallying since noon and rallying quite hard since 1:40 [p.m. Eastern] on the backs of financial and tech names which have come off their lows considerably," said Greenhaus, who gave Microsoft, IBM [IBM] and Ebay Inc. [EBAY] as examples.Meantime, Apple Inc. [AAPL] pulled close to its high of the day, And in the financial space, Morgan Stanley [MS] and Goldman Sachs Group Inc. [GS] took off, "and the market followed suit," said Greenhaus.Bucking the negative trend, Apple Inc. [AAPL] reported quarterly profit that topped expectations, with its shares rising 6.7%.The patchy results overall -- combined with bleak economic data on jobs and housing -- had equities under water throughout the day.Bear bottomsLooking back at previous bear markets, the so-called 'V-shaped bottom' doesn't generally appear to be in evidence. Instead, equities fall to "whatever level becomes the bottom, then [engage in] horizontal trading" for a period of time, said Greenhaus.Once the stock market found its bottom in 2000, it moved sideways for about 11 months, while the 1990 bear market involved six months of lateral trade, the analyst said.Depending on the length and depth of the recession, "we could trade in this channel for two years. We have to consider the possibility that we could trade laterally for longer than most people think," said Greenhaus.For the S&P, Greenhaus expects the trading range to be from about 800 to 1,000."At 740 (for the S&P), the market started to get a handle on valuations going forward, if you assume earnings going forward are $60.00, and the market tends to find a bottom at 12 or 13 times forward earnings, saying 60 times 13 is 720 - 12 or 13 times 60 bucks is about where the market found a bottom," he said."If you assume market is going to earn 60, 65 bucks going forward, then fair value is reached in upwards 700s. That said, if this current recession proves deeper and longer, and we have continued earnings revisions to the downside, that would further depress stock prices. That is the issue going forward, to what positive effect do these government moves have?"To that end, Thursday's session included a Senate panel's approving Timothy Geithner to be the next Treasury secretary, with the nomination now moving to the full U.S. Senate."As we get closer to the confirmation of Geithner as the new Treasury secretary, that could help lift market spirits as hopes for the second part of TARP (Troubled Asset Relief Program] comes into focus along with the quick passage of the Obama stimulus package," said Cardillo.

KSE support fund buys shares

KARACHI: The full amount of Rs20 billion Karachi Stock Exchange (KSE) support fund, which was set for rescuing KSE out of crisis, has now been received and the fund is buying all the selected shares.Nation Investment Trust (NIT) Chairman and State Enterprise Fund CEO, Tariq Iqbal Khan told Geo News in program ‘Tezi Mandi’ that the fund was buying shares of the prescribed eight companies and added that those advising brisk buying, why they themselves were not buying in the market. He termed the news about the fund not having received the full amount baseless and said that the market support fund’s full amount existed in the bank with full guarantee. He further said that this was the best time for buying, as the shares prices were at low-levels.