International
Markets: Faltering Sony to cut 10,000 jobs - - 6% of workforce
By Finfacts Team
Apr 12, 2012 - 9:52 AM

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Former President and COO of Sony Corporation Kunitake Ando with Steve Jobs of Apple in 2005. Sony launched the Walkman in 1979 pioneering mobile music; Apple launched the iPod in 2001. Photo: Sony

Sony, Japan's faltering electronics giant today announced plans to cut about 10,000 jobs in FY12  -- 6% of the workforce.

The jobs decision came at the end of a statement on many plans: "By implementing a rapid decision-making approach that draws on the strengths of the entire Sony Group as 'One Sony,' Sony aims to revitalize and grow the electronics business to generate new value, while further strengthening the stable business foundations of the Entertainment and Financial Service businesses."

Bloomberg reports that the plan comes after Sony lost ¥919bn (US$8.64bn at today's rate) in the past four years as the company that set the trend in 1980s with gadgets like the Walkman lost customers to Samsung Electronics Co. and Apple Inc. Kazuo Hirai, the CEO who took the top job this month after earning a reputation for turning around the PlayStation game business, has vowed “painful” cost cuts and put himself in charge of the bleeding TV unit as part of the overhaul.

“We cannot avoid facing painful decisions, but if we are scared of pains we cannot change Sony,” said Hirai. “My biggest responsibility is to revive the electronics business and shift it into a path for growth.”

Pressures in European bond markets ease: Conall Mac Coille, chief economist at Davy, comments - - "Markets pared back some of Tuesday's losses yesterday. An unexpected first quarter profit from Alcoa Inc, the world's third-largest aluminium producer, provided an early impetus to markets, bolstered by speculation that the ECB will intervene in bond markets should the sovereign debt crisis intensify.

Comments from executive board member Benoit Coeure indicated that current Spanish bond yields are not justified, and that the ECB stands ready to use its Securities Markets Programme. Ten-year Spanish bond yields fell back from their high above 6.0% on Tuesday to finish at 5.9% at the close yesterday. Similarly, ten-year Italian bond yields fell by 20bps to 5.5% yesterday, ahead of several auctions of Italian bonds this morning.

Today, the market may focus on initial jobless claims data. Markets were disappointed by the slowdown in US non-farm payrolls in March to just 120,000 jobs growth. In contrast, the ADP employment report had indicated 200,000 jobs growth. Initial jobless claims fell to 357,000, their lowest level since March 2008, and Tuesday's JOLTs job openings showed another high in new jobs.

So, it is worth remembering that the non-farm payrolls data tend to be heavily revised, perhaps upwardly in March, given other positive indicators on the health of the US labour market. Hence, another low in initial jobless claims today could help the market shrug off some of the negative sentiment lingering from last week's disappointing non-farm payrolls report. Markets will also take some comfort from yesterday's release of the Federal Reserve's Beige Book, indicating that the US economy expanded at a moderate pace. Indeed, stock index futures suggest that European markets may open up modestly this morning."

Economic View: Government sticking to its guns in austerity versus growth debate; Dermot O'Leary, chief economist at Goodbody comments - - "Responding to calls to abandon what have been termed 'austerity' strategies by a group of economists last week, Minister for Public Expenditure and Reform, Brendan Howlin, writes an opinion piece supporting current Government’s strategy in the Irish Times this morning. The views are familiar ones and an obvious response to the calls of a change to current policies; the current Government inherited a massive structural budget deficit, which means it does not have the resources to respond to the crisis by traditional Keynesian responses of investment.

While it would, of course, be preferable to increase investment and improve labour market prospects to replace the lost demand in the private sector, it is simply not an option as the finance is not available in the current market for a country like Ireland. Finance is being provided by the Troika but with strict conditions.

The economists also failed to mention that Ireland has the highest structural budget deficit in the euro area at the current time. Given the focus on fiscal consolidation across the bloc, it is difficult to see how European officials would ease the conditions in relation to fiscal austerity in Ireland any further (it has already been given the longest time period to reach the 3% of GDP deficit target of any of the Programme countries). Based on the comments from the Minister’s opinion piece this morning, the Government is of the same view and remains committed to the fiscal austerity plan. We have noted before that a policy of simultaneous fiscal consolidation, private household deleveraging and banking sector deleveraging is unlikely to be successful.

However, it is our view that it is the private deleveraging that is having a more detrimental impact on economic activity and leading to further problems in the banking system. A slower pace of deleveraging for the banking system would be beneficial and this is where the current policies need to be changed."

US Markets

The Dow Jones rose 89 points or 0.70% Wednesday to 12,805.

The S&P 500 added 0.74% and the Nasdaq advanced 0.84%.

Asia Markets

The MSCI Asia Pacific Index rose 0.1% Thursday. The measure increased 11% in the first quarter.

Japan's Nikkei gained 0.70%; China’s Shanghai Composite Index jumped 1.82%. South Korea's Kospi index fell 0.57%. Australia's S&P/ASX 200 rose 0.81% and the Bombay Stock Exchange Sensex 30 index in Mumbai climbed 0.93%.

Asia benchmarks

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600 is down 0.17% in early trading Thursday.

The ISEQ has risen 0.32% in Dublin.

CRH is up 1.01%; Glanbia has added 1.24%.

European Benchmarks

Irish Share Prices

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies

The euro is trading at $1.3121 and at £0.8237.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Wednesday the BDI closed up 16 points or 1.72% at 944 - -  the BDI plunged a full 70% from its recent mid-October peak of 2,173 to an all-time low of 647 on February 3. London's Baltic Exchange was closed on Friday and Monday.

Freighter Oversupply Weighs on Shipowners and Banks - - Jan 26, 2012: The New York Times says vessels bought during the global commodity boom are only now being delivered, putting pressure on the European banks that financed the purchases.

The skyscrapers and immaculate beaches of Singapore's seaport look out on one of the world’s largest parking lots: mile after mile of empty cargo ships, as far as the eye can see.

Similar fleets bob at anchor, with empty cargo holds, off the coasts of southeast Malaysia and Hong Kong. And dozens of newly built ships float empty near the giant shipyards of South Korea and China, their owners from all over the world reluctant to accept delivery during one of the worst markets ever for the global shipping industry.

As recently as six weeks ago large freighters that can carry bulk commodities like iron ore or grain were fetching charter rates of $15,000 a day. Now, brokers and owners say, the going rate is $6,000 a day. If any customers can even be found.

Crude oil for April 2012 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $103.04 up 34 cents from Wednesday's close. In London, Brent for April delivery is trading on the International Commodities Exchange at $120.41. The North Sea benchmark accounts for two-thirds of the global market.

The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is over $17 - - The Globe and Mail says that for the past 10 months, Canadian producers - - whose prices are tied to WTI - - have been taking steep discounts for their oil compared with international crude prices that are benchmarked against North Sea Brent, which can be shipped more readily. In the past, WTI tended to trade at a small premium to Brent, because it is easier to refine.

That spread hit a peak of $28.08 (US) on Oct. 14, but has fallen dramatically since then. After plans for more pipeline capacity at Cushing, Oklahoma, the differential narrowed.

Gold spot price

The spot price of an oz of gold is trading in New York at $1,656.40, down $3.30 from Wednesday's close in New York.

Gold had hit a record high of $1,921.05 a troy ounce on Sept 6.

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