Business Blog Posts

Microsoft, which was the largest U.S. company by market value in the late 1990s, has seen its stock stand still for the past 10 years as it failed to attack new Internet and mobile computing markets, surrendering leadership of the tech sector to Apple Inc.

Microsoft shares shot up 0.87 percent in after-hours trading, the most of any Dow Jones industrial average component.

Many have been privately critical of Ballmer, but Einhorn's remarks are the most pointed yet from a high-profile investor.

Einhorn's Greenlight Capital hedge fund has been a recent buyer of Microsoft stock, which at under 10 times expected earnings is regarded by many as undervalued.

Greenlight currently holds about 9 million shares in Microsoft, or 0.11 percent of the company's outstanding shares, according to Thomson Reuters data.

Speaking at the annual Ira Sohn Investment Research Conference in New York on Wednesday, Einhorn said it was time for Ballmer -- who succeeded co-founder Bill Gates in 2000 -- to step aside and "give someone else a chance."

"His continued presence is the biggest overhang on Microsoft's stock," he said.

On Tuesday, Microsoft was overtaken by IBM in market value for the first time in 15 years, chiefly because of its static shares. Apple roared past it last year to become the world's most valuable tech company.

An investor who put $100,000 into Microsoft stock 10 years ago would now have about $69,000 worth.

Einhorn, the president of Greenlight Capital, which had $7.8 billion of assets as of January 1, first rose to prominence for making a prescient call on Lehman Brothers' accounting troubles before the bank's subsequent collapse.

Shares of Microsoft edged up 0.87 percent to $24.40 in afterhours trade from a regular-session close of $24.19.

(Reporting by Bill Rigby, Svea Herbst and Edwin Chan; Editing by Steve Orlofsky and Lisa Shumaker)

Equities on Wall Street slipped in light volume on Tuesday on growing concerns over slower economic growth and worries about the euro zone debt crisis.

The S&P 500 closed at its lowest level in over a month and ended below its 50-day moving average for a second straight day.

Recent weak economic data, including soft manufacturing data from the Atlantic region and disappointing New York and Philadelphia Fed manufacturing surveys, pointed to a slowdown in the pace of economic growth.

Investors are likely to look for further evidence when U.S. durable goods orders for April is released at 8:30 a.m. EDT.

Durable goods orders are expected to have dropped 2.2 percent in April, a sharp correction from the gain of 4.1 percent the month before weighed down by weak aircraft orders.

Other data due includes home price numbers due at 10 a.m. EDT.

On the earnings front, Costco Wholesale Corp (COST.O) posted a higher quarterly profit as it sold more gasoline and got a boost from stronger foreign currencies.

Other quarterly earnings set for release include Computer Sciences Corp (CSC.N), seen reporting earnings per share (EPS) of $1.11 against $1.66 a year ago, and Polo Ralph Lauren (RL.N), seen reporting EPS of $0.79 against $1.14 a year ago.

The U.S. Treasury made a small profit when it sold a portion of its shares in American International Group Inc (AIG.N) on Tuesday, but it was unclear how its investment in the beleaguered insurer will ultimately fare. The shares were sold at $29 a piece.

U.S. regulators launched one of the biggest ever crackdowns on oil price manipulation on Tuesday, suing two well-known traders and two trading firms owned by Norwegian billionaire John Fredriksen for allegedly making $50 million by squeezing markets in 2008.

GE Capital (GE.N) is selling its A$5 billion ($5.3 billion) Australia and New Zealand mortgages books to Pepper Homeloans as concerns rise over a softening of the Australian housing market and rising cost of funds.

Chrysler on Tuesday paid back $7.6 billion in U.S. and Canadian government loans from its 2009 bailout, a move that allows the U.S. automaker to distance itself from an unpopular bailout and deepen its ties with Fiat (FIA.MI)

On the economic front, the OECD said global economic recovery is on track, helped by a stronger United States, but threats ranging from high oil prices to European sovereign debt crises could yet combine to create a bout of stagflation.

France's finance minister is set to declare on Wednesday she wants to be the next head of the IMF even though big emerging economies have decried Europe's "obsolete" grip on the top job.

In Europe, the pan-European FTSEurofirst 300 .FTEU3 index of top shares edged up 0.1 percent, rebounding from falls at the open, investors bought beaten-down banking stocks.

(Editing by Louise Heavens)

Asian stocks also fell, tracking weakness on Wall Street as firmer commodity prices were offset by lingering concerns over the economic outlook for the United States as well as euro zone debt woes.

The euro, which had rallied after better-than-expected German business confidence data on Tuesday, edged back in the direction of a two-month low of $1.3968 hit earlier this week. It has lost roughly 6 percent since early May.

Europe's policy options to avert a Greek debt default appear to be dwindling fast, casting a pall over the single currency and fueling fears of a chain reaction in other heavily indebted countries in the 17-nation euro area.

"Concern about Spain and Italy might be overblown, but the Greece issue is not going away, and if Greece restructures, that may open the door for Ireland and Portugal." said Brian Dolan, chief strategist at Forex.com.

The U.S. dollar .DXY rose 0.3 percent against a basket of major currencies.

A Greek debt default would hurt other peripheral euro zone states and could push Portuguese and Irish debt into junk territory, Moody's said on Tuesday, warning it would classify most forms of restructuring as a default.

As investors reduced exposure to riskier assets, MSCI's index of Asia-Pacific stocks outside Japan fell 0.7 percent while Japan's benchmark Nikkei slipped 0.46 percent.

Oil slid as the dollar rebounded against the euro, giving up some of its 2 percent rise overnight after Goldman Sachs raised its price forecasts for Brent crude. Brent crude for July delivery fell 0.64 percent to $111.81 a barrel, having swung between $109.50 and $112.65.

Euro-denominated gold hit a record high after the euro edged back toward a two-month low on euro zone debt fears.

Spot gold fell to $1,524.20 an ounce after rising as high as $1,527.45 on Tuesday, its strongest since May 4. Bullion was still below a lifetime high around $1,575 an ounce struck in early May.

The Treasury sold 200 million shares of AIG at $29 per share, a slight discount from their closing price and not far above the $28.73 average price the Treasury will need to recoup its full investment in the company.

The $8.7 billion total sale, which included 100 million shares sold by AIG itself, was also far smaller than the $10 billion to $20 billion banking sources had been throwing around, and hinted at a persistent lack of investor interest in the firm despite its apparent strides.

Treasury acquired the shares under extreme duress, as the potential failure of the insurance giant threatened to exacerbate an already severe financial crisis in late 2008.

Tuesday's sale represented the first step in removing generous support for the insurance behemoth, which totaled over $180 billion in several installments.

Treasury will remain by far the majority shareholder of AIG, but its holdings now comprise 77 percent of the total, down from 92 percent before the sale.

"We're hopeful that we can recover all the investment that we made," Tim Massad, the Treasury's acting secretary for financial stability said during a conference call with reporters.

But he added that the extent of losses -- or profits -- would not be known until Treasury fully exits its stake.

Massad said there is no specific timetable for the sale of remaining shares. He added that, following an agreed "lock-up" period of 120 days, the Treasury would continue to reduce its holdings "in an orderly fashion."

"We're going to sell in a way to maximize value to the taxpayer," Massad said.

Treasury raised $5.8 billion on Tuesday. All told, it needs to raise $47.5 billion to break even on the equity portion of its investment in AIG.

WHO COULD FORGET?

AIG's share sale is important for the U.S. government, which is trying to sell out of multiple investments it made in companies during the financial crisis.

The bailouts were highly unpopular, especially after it became known that top managers in the very same AIG unit that drove the company into a rut had continued to pay themselves handsome bonuses even while receiving taxpayers' help.

The AIG share sale is also a key moment for Chief Executive Officer Robert Benmosche. Benmosche, who became AIG's fifth CEO in less than five years in August 2009, halted a plan to break the company up in a fire sale of its parts.

He instead embarked on a revival centered around two core businesses: U.S. life insurer SunAmerica and global property insurer Chartis. Other businesses were sold, taken public or left to operate with a view toward an eventual sale.

AIG was literally minutes from bankruptcy when it was rescued in September 2008. The various iterations of the rescue package ended up being worth $182 billion, dwarfing various other bailouts around the world during the financial crisis.

The question now is how quickly the U.S. government exits its investment and whether it breaks even.

Benmosche has said he expects the government to be out of its AIG position by mid-2012. Fitch Ratings said recently its own models for the company assume the government is out by the end of 2012.

(Additional reporting by Ben Berkowitz; Editing by Gary Hill)

The 300 million share offering, which includes shares sold by Treasury as well as AIG, priced at $29 and raised $8.7 billion, a source familiar with the situation said on Tuesday.

For Treasury to break even on its investment, it needs to sell its 1.7 billion shares for an average price of $28.72.

The offering, in which Treasury is selling 15 percent of its AIG stake, is important for the U.S. government as it tries to sell off investments it made in multiple companies during the financial crisis.

The AIG share sale is also a key moment for Chief Executive Officer Robert Benmosche. Benmosche, who became AIG's fifth CEO in less than five years in August 2009, halted a plan to break the company up in a fire sale of its parts.

He instead embarked on a revival centered around two core businesses: U.S. life insurer SunAmerica and global property insurer Chartis. Other businesses were sold, taken public or left to operate with a view toward an eventual sale.

AIG was literally minutes from bankruptcy when it was rescued in September 2008. The various iterations of the rescue package ended up being worth $182 billion, dwarfing various other bailouts around the world during the financial crisis.

The question now is how quickly the U.S. government exits its investment and whether it breaks even.

Benmosche has said he expects the government to be out of its AIG position by mid-2012. Fitch Ratings said recently its own models for the company assume the government is out by the end of 2012.

Either way, the terms of the recapitalization deal that closed earlier this year include penalties if the government's investment is not closed out by 2013. Those penalties include the potential for forced asset sales.

The Treasury sold 200 million shares in the offering on Tuesday, with AIG selling an additional 100 million shares.

(Reporting by Clare Baldwin and Ben Berkowitz; Editing by Carol Bishopric, Gary Hill and Tim Dobbyn)