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Sun Backs Away from IBM; HSBC Raises $19.1 Billion; Ford Reduces Debt by 38%; Emerging Market Stocks Regaining Strength; Stanford Investors Sue for Funds; Bank Stocks Sink on Mayo's "Underperform" Rating; Time Warner Prepping for AOL Spinoff; Oil Drops Near $50
- Sun Mircosystems Inc. (JAVA) has broken talks with International Business Machines Corp. (IBM), a source close to the situation told Bloomberg. According to the source, Sun backed out because IBM's offer of around $9.40 a share was too low.
- Shareholders bought 97% of HSBC Holdings Plc's (ADR:HBC) $19.1 billion (12.85 billion-pound) share sale, the bank said. "This staves off by a very long way the day when they would have to go cap in hand to the government," Alan Beaney, who helps manage about $2 billion at Principal Investment Management, told Bloomberg. "The real question is have they raised enough?"
- Ford Motor Co. (F) said yesterday (Monday) that it has reduced its automotive debt by $9.9 billion, or 38%. The debt reduction will trim more than $500 million from the carmaker's annual cash interest expense, Reuters reported.
- Emerging-market stocks, as measured by the MSCI Emerging Markets Index, climbed to nearly a six-month high yesterday (Monday) on speculation that stimulus packages around the world are loosing credit markets, Bloomberg reported. Last year, the index lost 54% of its value, but has gained about 11% so far this year.
- Investors in Stanford Group Co. asked a federal appeals court to order a Dallas judge to unlock brokerage accounts frozen when U.S. regulators sued Allen Stanford over an alleged Ponzi scheme and seized his assets, Bloomberg reported. Lawyers for the investors argued that the judge lacked authority to place into receivership Stanford's Antigua-based bank, which is at the center of the alleged $8 billion fraud.
- Financial shares and major U.S. stock indexes dropped yesterday (Monday) after influential analyst Mike Mayo assigned an "underweight" rating to U.S. banks, Reuters reported. Saying loan losses may exceed Great Depression levels and the government may be forced to take over large lenders, Mayo advised clients to sell shares of banks. Mayo gained recognition in 1999 at Credit Suisse AG (ADR: CS), for correctly taking a bearish stance on bank stocks when other analysts remained bullish.
- Time Warner Inc. (TWX), tried to pave the way for a spin-off of its beleaguered AOL Internet unit by asking bondholders to change credit terms, Reuters reported. The media conglomerate said the change in credit terms would allow for a possible change in ownership at AOL. AOL has long been one of the weakest units at Time Warner.
- Oil prices fell to near $50 a barrel yesterday (Monday) as U.S. stock markets dropped on worries over the banking sector and the dollar gained against the euro. Oil prices have been tracking equities markets closely in recent weeks as energy dealers use stock index performance as a gauge of sentiment around the economy, Reuters reported. U.S. light crude for May delivery fell $2.26 to $50.25 a barrel while London Brent crude fell $1.81 to $51.65 a barrel.