Corporate Profits a Boost for US Industry

Corporate America took another step along its long road to recovery on Tuesday as companies from the industrial heartland of Peoria to the technology hubs of Silicon Valley reported stronger-than-expected profits and bullish outlooks. The wave of positive second-quarter results from Caterpillar, DuPont and Apple, which came a week after several banks beat analysts’ expectations, fuelled investors’ hopes for a rebound in the US economy.

Shares in Caterpillar rose nearly 8 per cent on Tuesday after the world’s biggest maker of construction equipment un-veiled profits far ahead of Wall Street’s expectations and issued a more optimistic outlook. Its upbeat comments fuelled hopes that the global industrial economy was recovering. The manufacturer is a bellwether of the US economy but also heavily relies on overseas markets.

After the market close, Apple added to investors’ optimism with better-than-expected third-quarter results driven by strong sales of its iPhone. Apple’s results were the best-ever in a quarter not including a holiday. Chemical group DuPont and drugmaker Merck both reported a drop in second-quarter profits, but their earnings exceeded Wall Street’s forecasts. Coca-Cola results were ahead of analysts’ predictions but the world’s largest soft-drinks group warned US consumers remained under pressure – a factor underlined by steep revenue falls at three airlines: United, Continental and Southwest.

The figures from Caterpillar boosted stocks, pushing New York’s S&P 500 index to match its intra-day high for the year of 956 set last month. “Everyone is now looking for growth in the economy and people who were under-invested in stocks are being forced back into the market,” said Anthony Conroy, head equity trader for BNY ConvergEx.

After several strong sessions that sent the S&P 500 more than 8 per cent higher in the past six days, the benchmark index rose 0.4 per cent to close at 954.58. Credit Suisse on Tuesday raised its year-end target for the S&P 500, to 1,020 from 920. The S&P has not traded above 1,000 since November. Technology shares have set the pace for the market, with the Nasdaq Composite up 21.5 per cent this year.

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Source: http://www.ft.com/cms/s/0/4bbd740a-7622-11de-9e59-00144feabdc0.html

Intel and Nokia Announce Long-Term Relationship

In a deal intended to strengthen Intel's push into the mobile computing arena, the Santa Clara chip maker and Finnish cell phone giant Nokia on Tuesday announced what they called a long-term relationship to develop new mobile devices.

Under the arrangement, the companies said they will work together on chip design and open-source software. Intel recently has entered that field with its Linux-based operating system called Moblin, designed to function on portable devices, and Nokia has a Linux-based operating system, dubbed Maemo. In addition, Intel will license some modem technology from Nokia.

However, executives with the two companies repeatedly declined during a conference call and a later interview to discuss what type of devices they might make and to what extent Nokia might use Intel's chips.

"We will talk about products when we are ready to talk about products, but that is not for today's discussion," said Anand Chandrasekher, senior vice president and general manager of Intel's ultra mobility group.

"There is a lot of room for innovation here, to really define what mobile can do," said Kai Öistämö, Nokia's executive vice president for devices. "It's a future full of different possibilities." After the announcement, Intel's stock rose 13 cents to $15.81 at the close of trading.

No financial terms were disclosed for the deal, and the two executives were evasive about when their collaborative discussions began. They said only that their companies have been doing joint research for several years. In May, Intel, Nokia and a number of other companies formed an association to promote rapid new wireless technology for shuttling data among computers, high-definition television sets and other devices in homes.

Although details about the agreement announced Tuesday remain vague, the deal suggests intriguing possibilities for Intel. Although the company's x86 microprocessors serve as the brains in most personal computers and servers, it sees the rapidly expanding market for mobile computing devices as one of its biggest growth opportunities. And the cell phone business, where Nokia is the world's biggest manufacturer, is an area Intel is especially keen to enter.

Intel, whose chips are not used in Nokia products, has so far been shut out of the cell phone market. That's largely because Intel's microprocessors use too much power to enable the phones to maintain sufficient battery life. Instead, cell phones use low-power chips based on technology developed by ARM, a small company in the United Kingdom.

Öistämö said Nokia plans to continue working with ARM-based chip makers. But Intel hopes to break into the cell phone market with future versions of a chip it introduced in March last year, called Atom, which uses less power than other Intel microprocessors and is relatively inexpensive. Moblin, one of the open-source software systems that Intel and Nokia will collaborate on, works well with the Atom chip, the companies noted in their joint press release.

What sort of devices the two companies might develop remains unclear. Nokia has been rumored this year to be considering making netbooks, which are smaller than laptops. Intel, whose microprocessors already are in laptops and netbooks, is promoting its chips for even tinier gadgets, including phones.

In their press release, the companies said they hoped to "define a new mobile platform beyond today's smart-phones, notebooks and netbooks." The deal drew mixed reviews from analysts.

"This is a compelling partnership," Jack Gold, founder of technology research firm J. Gold Associates, based in Massachusetts, said in a note to his clients. "We do not envision Nokia abandoning its core dependence on the ARM architecture in the short term, but longer term (two to three years) we expect Nokia to offer devices based on Atom." Gold added that "this collaboration could limit the impact Google's Android operating system will have on the netbook market."

But J.P. Morgan analyst Christopher Danely was less enthusiastic about the partnership, writing to his clients that "we don't expect much to come out of it."

While the deal "should help Intel in its quest to generate wireless design wins for its Atom processor," Danely concluded, "we continue to believe the deficiencies of Atom in power consumption, cost and software relative to other applications processors render it an uncompetitive product."

Source: http://www.mercurynews.com/business/ci_12672076?source=email

Tags: Intel, Nokia, Strategic Partnership, Jack Gold, Atom, ARM chips, Google Android, Christopher Danley, JP Morgan, Silicon Valley, Moblin, Santa Clara, Netbooks, Maemo, Global IT News,

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Microlending Taking Off In U.S

Yeah, yeah. I was sure I knew all about microfinancing.

Kiva.org. Muhammad Yunus. Creating entrepreneurs and changing lives for an investment of pennies a day in India, Pakistan, Vietnam and the rest of the developing world.

I'm a smart guy, see. So smart that I recently found myself standing in a business started with a microloan in the exotic outpost of Mountain View, Calif. It was a dance studio that I'd driven by dozens of times, never giving a thought to where the money came from for the rent, costumes or the sound system that plays the music that keeps the aspiring ballerinas quite literally on their toes.

I ended up at Stars in the Light dance studio after a conversation with Eric Weaver, CEO of San Jose-based Opportunity Fund. The nonprofit is the biggest microlender in the Bay Area. And it so happens it loaned Svetlana Taran $15,000 so she could open the Mountain View studio.

"There have been people practicing microfinance in California for years," Weaver told me. "And maybe there is not a lot of awareness that it is happening here." Me? Not aware?

Turns out microfinance is big in the United States, though not as big as Weaver and many others would like it to be. Opportunity Fund says there are at least 20 million U.S. microbusinesses, which generally means businesses employing fewer than five that borrowed less than $35,000 — often much less — to start up.

And just this week Kiva, the San Francisco nonprofit that made international microfinance a household name, launched a Web-based way for individuals to make small loans to small businesses in the United States.

Microloans, typically a few thousand dollars, are aimed at helping people raise themselves out of poverty. They go to entrepreneurs who can't get conventional credit: immigrants, women with little credit history, borrowers with good prospects but bad past credit.

The loans are usually made through nonprofits with money from foundations, government grants and traditional lenders. The loans come with business education and advice.

Weaver's organization has loaned about $10 million to 800 Bay Area businesses since 1995. Still, Opportunity Fund estimates that about 50,000 potential enterprises in the area need microfinancing help.

"Somebody can use it to buy toys and furniture and open a licensed family day care and begin generating income," Weaver says. "They can buy a second hot dog cart." The option is more important than ever as the Great Recession drags on. Weaver says he can think of few better economic stimulus plans. Small businesses create jobs even in hard times, while big companies cut them.

Yes, expanding microlending depends on donors. The loans are paid back with interest. (It's a big range. Think roughly 5 to 15 percent from nonprofit lenders.) But nonprofits don't always recover the full cost of making the loan and providing support.

Weaver says microlenders also need to get the word out among potential borrowers. "The one thing I think we need most to take it to scale," he says, "is raising the awareness that it is here so that people know to look for it."

To that end Opportunity Fund, Kiva and Silicon Valley Community Foundation late last month hosted a daylong microfinance conference at Stanford University. The day's agenda was none-to-subtly labeled "Microfinance: It's Happening in Our Backyard." About 500 attended to debate the future of the industry in the United States and to discuss models that might broaden the success of the practice.

It was during one of those sessions, a field trip to two businesses launched with microloans, that a group of conference attendees met Taran and even took an impromptu salsa lesson from her.

Taran, who was a dancer in Russia before immigrating in 1991, had always wanted to open a studio. But banks wanted nothing to do with her.

"I couldn't show them a business being active for several years," she says. "I could not show them a profit-and-loss statement."

Instead she went to Opportunity Fund, which focused on her passion and her ability to learn from the organization's business education program.

Taran moved into the studio in February. She's hired two instructors and enrolled 17 students — children and adults. One day, she says, she'd like to see her operation grow into an academy that attracts dancers from Italy, Russia, Switzerland and elsewhere. You know, an international dance academy.

Yes, an international dance academy. Built on microloans. Right here in Silicon Valley.

Source: http://www.siliconvalley.com/opinion/ci_12570572

Tags: Kiva, Microfinance, Mohammed Yunus, microloans, Silicon valley, Opportunity fund, Global Development News, Stanford University, microlenders, Svetlana Taran,

Posted via email from Global Business News

Cisco Joins Dow Jones Industrial Average Today

Cisco Systems today joins the elite circle of 30 blue-chip businesses that make up the Dow Jones industrial average, a move that may make it easier for the San Jose company to attract investors — at least initially.

Plus, in joining Intel and Hewlett-Packard on the list, Cisco is sure to get a boost in prestige. But more than anything, experts say, the decision to replace General Motors with Cisco is recognition that technology is a primary innovator and spark plug of the nation's economy. And that trend is turning heads everywhere from Wall Street to Washington.

"It signals the ascendancy of Silicon Valley and high tech," said Stephen Levy of the Center for Continuing Study of the California Economy. "We're seeing older industries and companies be replaced by a sector that has substantial long-term growth prospects."

Technology already has the attention of President Barack Obama, who is actively promoting such ideas as smarter electricity grids and computerized health records. And now, with Cisco, HP and Intel on the fabled stock index, along with IBM and Microsoft, elected officials may listen even more closely to the needs of Bay Area businesses, said Jim Wunderman, CEO of the Bay Area Council.

"It certainly cements the tech industry in Silicon Valley as an integral part of the American economy," he said. "From a public policy basis, it has some impact. I think it makes a stronger case in Washington and maybe in the state capitals."

Since its debut in 1896, the Dow Jones industrial average has predominately featured so-called smokestack industries, from U.S. Rubber and Bethlehem Steel to Standard Oil and American Smelting. However, reflecting a major shift in the nation's economy, those types of businesses have gradually given ground to firms offering products centered on computers, software and communications technology.

Officials with the federal Bureau of Economic Analysis say it's hard to say how much of the gross domestic product is represented by sales of such technology to consumers and the government. But business purchases alone of such goods represented about 3 percent of the GDP in 2008, compared with less than 1 percent in 1968. And one of the biggest up-and-comers in the tech field is Cisco, which was founded in 1984 and earned $8 billion on sales of nearly $40 billion during its most recent fiscal year.

Since the June 1 announcement that Cisco will replace GM, a part of the index for 83 years, the Internet-networking equipment maker's stock price has risen more than 7 percent, closing Friday at $19.87. That kind of increase is common after companies are first selected for the list, in part because some big institutions invest heavily in firms that are on such indexes, said Sybille Reitz, a Dow Jones spokeswoman.

"It certainly does increase your visibility in the market," she said. "You're included among the bluest of the blue-chip companies in the United States." But the share-price bump frequently is temporary, she said, adding, "at the end of the day, it doesn't mean anything to their business or to their long-term stock price."

Although HP executives declined to discuss how they've been affected by being placed on the list in 1997, Intel, which got on two years later, hasn't seen much of an impact, according to spokesman Chuck Mulloy. "By and large, it's more prestige than anything substantive," he said.

John Roberts, director of Stanford's Center for Global Business and the Economy, also expressed skepticism that being on the index would mean significantly more business for Cisco or Silicon Valley. After all, he said, "very few people can tell you whether a given company is in the DJ30. I certainly cannot."

Still, in a prepared statement, Cisco officials said they are pleased at their inclusion. Noting that today marks "the first time in nearly 10 years that a technology company has been added to the Dow," the company said, "We are honored with this recognition of our continued strong performance."

Tags: Cisco Systems, Cisco, DJIA, Dow Jones Industrial Average, GM, Sybille Reitz, Chuck Mulloy, DJ30, John Roberts, Stanford's Center for Global Business and the Economy, Silicon Valley, Bay Area Council, HP, IBM, Microsoft, Intel,

Source: http://www.mercurynews.com/business/ci_12530721?source=email

Posted via email from Global Business News