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Online ad agency ValueClick yesterday agreed to acquire online ad company FastClick in a deal worth $214 million in stock.
According to Bloomberg, ValueClick said "the combination will provide about $4 million a year in savings"--probably by eliminating overlapping staff functions and offices. What's more, the combined companies will only have to bear the costs of supporting one Click instead of two.
Posted by dan at 01:51 PM
Companies and institutions walking away from debts and obligations have become so commonplace that it takes something extra special to attract the notice of cram-down aficianados.
Well, Delphi, the second-largest car parts maker, is executing a maneuver rarely tried: the double cram down. Delphi was spun off from General Motors as an independent company several years ago. And, like GM, it’s struggling with high legacy costs. So, as James Mackintosh reported in yesterday’s Financial Times, CEO Steve Miller threatening the unions.
"It is no secret that Delphi's in need of a fix," Mr Miller said. "We simply cannot compete and cannot survive in the long term unless we reduce our costs under the [union agreement]."He said pay and benefits for a US worker were $130,000 a year under the generous terms agreed when Delphi was spun off from GM six years ago. The company is paying more than $100m a quarter to 4,000 laid-off workers it cannot sack.
That's par for the course in Detroit these days. But here's the wrinkle. At the same time he's threatening the UAW, Miller is also audaciously threatening to cram down Delphi's biggest customer and former parent: General Motors.
As part of the deal, GM "guaranteed healthcare benefits and pensions for its former workers at Delphi until 2007, with Delphi promising to reimburse the cost." But, as Macintosh notes:
If Delphi were to file for bankruptcy, GM would become an unsecured creditor with little likelihood of recovering the $2.4bn minimum that Deutsche Bank analysts estimate the guarantee would cost.
So the message to GM is: pay us more for auto parts, and use whatever leverage you have with the UAW to get them to accept lower pension and healthcare benefits--or else!
It's the sort of triangulation that would make Pythagoras--or Bill Clinton--proud.
Posted by dan at 05:51 PM
The rich may be getting richer, but somehow there seem to be fewer of them today than there were a few years ago. Maybe we should cut taxes on capital gains again.
The Wall Street Journal reports.
Fewer people qualified for a high-income club, the IRS says.About 2.4 million individual income-tax returns reported adjusted gross income of $200,000 or more for 2002, according to the latest issue of the IRS's Statistics of Income Bulletin. That was down from nearly 2.6 million the prior year and nearly 2.8 million for 2000. The number of members was up from each year prior to 1999.
The IRS also said it received a total of about 130.1 million individual income-tax returns for 2002. Thus, about 1.9% of those returns reported income of $200,000 or more, down from about 2% the prior year.
Posted by dan at 05:40 PM
The president's Council of Economic Advisers, in a report issued yesterday, finds the economy's performance "remarkable," in part because 4 million payroll jobs have been created in the past 27 months. That comes out to fewer than 150,000 per month -- not enough to accomodate all the people entering the work force each month. That's subpar, not remarkable. Talk about the soft bigotry of low expectations.
Posted by dan at 09:30 PM
My latest in Slate, on the strange commercial durability of network news.
Posted by dan at 09:23 PM
In France, the mandarinate is in a permanent high sense of dudgeon and fear that foreign companies will acquire important national champions in crucial industries. But it's apparently perfectly OK for French companies to buy important national champions in crucial industries in neighboring countries.
The latest. Yesterday, Suez, the giant water and energy company, offered to buy the shares it doesn't already own in Electrabel, the largest electricity generator in Belgium. Electrabel is part of the Bel20 index of the country's blue-chip stocks. (Actually, it only has 19 components. But that's OK. The Big Ten has 11 schools in it, and nobody in the Midwest seems to mind.)
Now, it seems, the French are about to get a taste of their own cooking.
Peggy Hollinger and Raphale Minder report in the Financial Times.
However, Suez is likely to face strong local opposition to its bid for a full takeover of one of Belgium's most important companies.Jean-Claude Marcourt, the economics minister of the Walloon regional government, said authorities would seek to ensure Suez retained its energy headquarters in Belgium. In a jibe about the French government's recent efforts to shield Danone from a possible takeover by PepsiCo, Mr Marcourt added: "Electricity is certainly more strategic than yoghurt."
Posted by dan at 08:46 AM
Santanu Choudhury writes in today's Wall Street Journal:
NEW DELHI -- General Motors Corp. expects to source $1 billion in auto parts from India by 2008, a sharp increase from $120 million a year currently, as the world's biggest auto maker seeks to cut production costs, a senior executive at its local subsidiary here said Friday."We are planning to increase auto-parts sourcing from India substantially over the next few years," said P. Balendran, vice president of General Motors India. "Auto parts in India cost 25% to 30% less than in North America or Europe. They are also around 15% cheaper than South Korea and Mexico, but the quality is on a par," he added.
GM currently buys auto parts such as castings and forgings from about 110 suppliers in India.
GM is among various auto makers -- including Ford Motor Co., DaimlerChrysler AG, Volkswagen AG, Volvo AB and Mitsubishi Motors Corp. -- that are buying auto parts from low-cost countries such as India because of cutthroat competition and rising costs of raw materials.
India's Automotive Component Manufacturers' Association has forecast auto-parts exports from the country will grow to $2.7 billion by 2010 from more than $1 billion currently.
Posted by dan at 02:09 PM
For years, business owners and the wealthy (there's a certain overlap among the two) have complained bitterly about the devastating damage wrought by class-action lawsuits. But now that a group of wealthy business owners believes they've been screwed over by a professional services provider, they're beginning to see the merits of the whole process.
Diya Gullapalli reports in the Wall Street Journal.
A former KPMG LLP tax-shelter client has filed what is believed to be the first lawsuit seeking class-action status over a strategy that KPMG used to shift tax obligations away from the firm's clients.The complaint, filed last week in a federal District Court in New York, centers on a shelter that KPMG sold under the name S-Corporation Charitable Contribution Strategy, or SC2. The Internal Revenue Service in April 2004 declared SC2 to be an abusive tax-avoidance scheme. The shelter was one of four KPMG tax shelters that were criticized by the Senate Permanent Subcommittee on Investigations in public hearings in November 2003.
From 2000 to 2001, KPMG sold SC2 to 58 closely held corporations, according to a report by the subcommittee, generating $28 million in fees for the accounting firm. The shelter was one of the firm's 10 best sellers at the time, the report said.
A KPMG spokesman declined to comment.
Posted by dan at 12:40 PM
Have you noticed that everybody seems to complain a lot more about the weather these days than they used to? The summers are always either too hot, or too cold. The winter produces either too much snow or too little. I think part of it is that people have come to expect that we should somehow be able to control the outdoor climate as easily and methodically as we control the indoor climate.
Retailers in particular have taken to complaining about the weather. Remember June? Apparently, it wasn't hot enough for their liking, and sales suffered as a consequence. Becaues the weather was cooler than expected, not enough people came out to buy sprinklers, air conditioners, bathing suits, e tc.
Last week, July sales cam in. And wouldn't you know it? It was too darn hot. Despite the fact that stores generally have excellent air conditioning, it seems people prefer to chill out at home, or by the beach when the mercury rises. And as the Associated Press article in the New York Times put it, "hot weather limited sales of some early fall items like sweaters."
Poor guys can't win.
Posted by dan at 11:49 AM