BRIC Building; Bankruptcies Accelerate; Auto Parts Suppliers Denied Additional Government Funds; GM Sells Saab; Best Buy Misses Expectations; MySpace Cuts 1,000 Workers; Banks See Recession Ending in Late Summer
Members of the so-called "BRIC" nations - Brazil, Russia, India and China - met in Russia yesterday (Tuesday) for their first ever summit. The meeting was followed by the release of a joint communiqué that demanded a larger role for emerging nations. "The emerging and developing economies must have a greater voice and representation in international financial institutions," the statement said. "We also believe that there is a strong need for a stable, predictable and more diversified international monetary system." However, the statement did not mention a smaller role for the dollar and a supranational reserve currency, suggestions previously proposed by Russia and China as a result of the financial tidal wave that emanated from the United States.
U.S. corporate bankruptcies are accelerating, as eight public companies with assets of more than $1 billion filed for bankruptcy protection in the last four weeks, according to data compiled by BankruptcyData.com. That compares with five multibillion-dollar company bankruptcies in the prior four-week period, Reuters reported. "In the 12-month period ending March 31, 2009, there were approximately 1.2 million bankruptcy petitions filed - nearly double the number of petitions filed in 2006," Barbara Lynn, chair of the bankruptcy committee of the Judicial Conference of the United States told Reuters.
A request from auto suppliers for as much as $10 billion in funding from the government was denied by the Obama administration, The Associated Press reported. An existing $5 billion in funds for auto parts makers was playing an important role in stabilizing the United States' auto supply base, the Treasury Department said yesterday (Tuesday). The group of suppliers lobbied for the money to help them buy raw materials and pay employees as Chrysler LLC and General Motors Corp. (OTC: GMGMQ) resume production.
A group led by Swedish sports car maker Koenigsegg Group AB agreed to buy General Motors Corp.'s (OTC: GMGMQ) troubled Saab Automobile ABunit. Saab has been a part of GM since 2000, but was put up for sale earlier this year as the government-supported GM attempts to return to profitability. GM unloaded its Saturn unit last week, which was sold last week Penske Automotive Group (NYSE: PAG).
Shares of Best Buy Co. (NYSE: BBY) fell more than 7% in trading yesterday (Tuesday) after the company's first quarter profit missed Wall Street's revenue forecasts. The No. 1 electronics retailer in the United States posted a net income of $153 million, or 36 cents per share on sales of $10.1 billion. That compares to a net income of $179 million, or 43 cents per share on sales of $8.9 billion. Declining sales of video game products, digital cameras, movies and appliances offset stronger sales of mobile phones and notebook computers, Best Buy said.
News Corp.'s (Nasdaq: NWS) social networking site MySpace.comhas laid off 1,000 workers in response to sagging ad sales and large user gains by rival Facebook Inc., Bloomberg News reported. "Our staffing levels were bloated and hindered our ability to be an efficient and nimble, team-oriented company," said MySpace Chief Executive Officer Owen Van Natta, adding the move was "necessary for the long-term health and culture of MySpace."
The largest banks in the nation expect the worst recession in more than 60 years to finally end late this summer, but expect the economy to remain weak until next year. "The economy will return to growth but not to health," Bruce Kasman, chief economist for JPMorgan Chase & Co. (NYSE: JPM) and chairman of the American Bankers Association's Economic Advisory Committee, said yesterday (Tuesday). The committee expects gross domestic product to increase 0.5% in the July-September quarter, after falling a projected 1.8 percent previous period, The Associated Press reports. Despite the expected recovery, jobs will remain hard to come by going into the first quarter of 2010, the committee said.