...the main business headlines..........
Lehman reveals extent of losses
Lehman Brothers announced a $3.9 billion loss for the third quarter, as it brought forward its results to try to end stock market speculation, and steep falls in its share price. The loss is the worst ever for Lehman, coming on the back of $7.8 billion of credit-related writedowns. The company also announced plans to spin off the majority of its commercial real estate portfolio of about $30 billion, sell $4 billion of UK property to Blackrock and divest 55 per cent of its asset management arm. Its stock fell another seven per cent on the news.
Insurance industry loses out in mortgage rescue
Insurance companies and banks face billions of dollars of losses as a result of the US government’s rescue of mortgage groups Freddie Mac and Fannie Mae, said the Financial Times. Credit default swaps, a form of insurance against debt default, will have to be paid out since the guarantee of the companies’ debt by the government still counts as bankruptcy in credit derivatives contracts. There are up to $500 billion of such contracts outstanding, meaning that losses would come to around $25 billion, “putting strains” on the credit derivatives market.
Scandal of the Freddie and Fannie bail-out 
Morrisons profits leap
Wm Morrison, the UK’s fourth largest supermarket chain, has defied the economic gloom to report a 19 per cent jump in profits in the first half of the year. Like for like sales in the period increased by 7.6 per cent, with petrol sales up 31.6 per cent. The chain said it had won half a million customers from rivals in Scotland and the south-east. Shareholders will see their dividends rise too, to 0.8p per share. The company has benefited from new products and increased advertising in the wake of its takeover of Safeway.
RAB Capital threatens fund closure
Hedge fund manager RAB Capital yesterday confirmed that it was asking investors to lock up their money in its flagship Special Situations fund for three years, in return for a cut in fees, reported the Financial Times. It said if 75 per cent of investors did not agree to the plan then it would be forced to “wind up” the fund, which has made a series of losses in the past year on investments including Northern Rock and A1 Grand Prix. As a result RAB shares have nearly halved in value this year, but closed slightly up after the announcement.
UK Energy companies face up to windfall tax
Power companies in the UK believe that a series of green measures to be announced today by Gordon Brown will amount to a ‘windfall tax’, said the Independent. The three-year energy initiative is “aimed at tackling growing fuel poverty” where households spend more than a tenth of their income on fuel bills. Six million households are expected to be in this situation by year-end. The power companies have been told to raise contributions to the Government’s carbon emissions reduction target scheme, with the total take expected to top £1 billion.
More junk bonds reaching distressed levels
More than 30 per cent of European high-risk, high-yield bonds are trading at distressed levels, reported Bloomberg.com. The level is the highest for five years and has increased fears of rising defaults as companies fail. The problems have arisen as investors “shun all but the safest bonds” in the fallout from the collapse of the US sub-prime mortgage market. As a result the European high-yield bond market “has been effectively closed” since July last year and Moody’s, the bond ratings agency, sees defaults in the market rising to 2.3 per cent in a year from the current mark of 0.7 per cent.
...in brief..................
New Blackberry launched and tour operator goes to the wall
Research in Motion, maker of the iconic Blackberry mobile telephone, has launched its first ever flip-phone device. It revealed the Blackberry Pearl Flip 8200 at a trade show in San Francisco in an attempt to broaden its customer base away from the business user…………
Blackberry Bold bids for the iPhone crown
Blackberry and Apple rumble
Mexican telecommunications tycoon Carlos Slim Helu, the world’s second richest man, has bought a 6.4 per cent stake in the New York Times for $127 million. In doing so he has become the company’s third largest outside shareholder. Its shares have fallen by a third in the last 12 months…………
The rise of Carlos Slim Helu
Carlos Slim, a press baron in the making
Old Mutual’s chief executive Jim Sutcliffe resigned yesterday with immediate effect, to be replaced by former finance director Julian Roberts. The news came as the insurer issued another profit warning, including £77 million of writedowns related to Fannie Mae and Freddie Mac…………
ImClone rejected a $60 per share offer from Bristol-Myers Squibb on Wednesday, citing an offer from another suitor worth $70 per share. Bristol-Myers offered to buy the 83 per cent of the company it doesn’t already own in July but ImClone viewed the price as too low…………
Deutsche Post is set to announce the sale of all or part of Postbank, said the Financial Times. Deutsche Bank is thought the most likely candidate to buy its rival in the second big deal in days, following Commerzbank's agreed bid for Dresdner Bank. An announcement is likely on Friday............
Thousands of holidaymakers may be stranded abroad after holiday tour operator Seguro Travel went into administration yesterday. The company offers package deals to Gran Canaria and Costa Brava from Glasgow Prestwick airport, and blamed its demise on bankrupt Spanish airline Futura…………
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