Business Blog Posts

The political outlook remained unclear in struggling Italy and Greece as they attempt to push through severe austerity measures needed to get bail-out funds and win market confidence. Prime Minister designate Mario Monti was expected to unveil Italy's new government on Wednesday.

MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS fell 2.1 percent, while Japan's Nikkei stock average .N225 slipped 0.9 percent on Wednesday. .T

The euro hit a five-week low against both the dollar and the yen, as euro zone jitters spurred risk aversion, and stood down 0.7 percent at $1.3437. Gold fell 1 percent to $1,763.39 an ounce as some sought to cover losses in riskier assets.

"Markets are clearly expecting a circuit breaker to alleviate pressure on periphery bond yields," said David Scutt, a trader at Arab Bank Australia in Sydney. "If no announcement is forthcoming in the days ahead, one suspects that situation could unravel fairly quickly."

European stocks were set to fall, with spreadbetters seeing London's FTSE 100 .FTSE opening down 0.6 percent, Frankfurt's DAX .GDAXI down 0.9 percent, and Paris' CAC-40 .FCHI 0.6 percent lower. .EU .L

Italian 10-year bond yields on Tuesday climbed back above 7 percent, a level of funding costs seen as unsustainable for the debt-ridden country, while Spanish 10-year bond yields rose to 6.3 percent.

The trend spread to France, where the premium over comparable German Bunds hit euro-era highs above 190 basis points. French banks are among the most exposed to Italy's 1.8 trillion euro ($2.4 trillion) public debt, holding $416 billion as of end-June, Bank for International Settlements data showed. Italian debts' premium over Bunds rose above 500 basis points.

Italy's five-year credit default swaps (CDS) -- a form of insurance against default -- scaled a new high of 600 basis points, with Italian banks and corporates the worst performers in the Markit iTraxx Europe CDS index on Tuesday.

Bearish sentiment spilled over to Asian credit markets, with risk aversion pushing the spreads on the iTraxx Asia ex-Japan investment grade index wider by 6 basis points.

ECB ROLE EYED

The uncertainty over fiscal reforms in highly indebted euro zone countries has sparked heavy selling of bonds issued by these countries, prompting financial institutions to slash their bond holdings for fear of posting huge losses as prices plunged.

Pressures for banks to beef up their capital base have only exacerbated the situation as banks' accelerated deleveraging has further eroded their appetite for government debt.

Borrowing difficulties have fueled concerns about fund raising in general, increasing strains in money markets.

Euro/dollar three-month cross currency basis swaps widened to -128.0 basis points at one point on Tuesday, the most since late 2008.

"This indicates funding issues, the market getting very nervous," said a trader for a European bank in Singapore.

With an absence of government debt buyers threatening to squeeze liquidity, "the ECB has no choice but to provide whatever liquidity the system needs and remain a very active part of the European financial market", said Adrian Foster, head of financial markets research for Asia-Pacific at Rabobank International in Hong Kong.

Many analysts say the ECB could stem this negative spiral by buying large amounts of bonds, under similar quantitative easing measures implemented by the U.S. and British central banks.

But Germany is resolutely opposed to such moves and the ECB has repeatedly rebuffed calls to become the lender of the last resort, saying it is up to individual governments to put their fiscal houses in order.

As policymakers stand at odds in determining details of the roadmap to resolve the debt crisis, EU governments have until a summit on December 9 to offer a bolder and more convincing strategy, including visible financial backing.

The sovereign debt problems have slashed euro zone growth to a mere 0.2 percent in the third quarter, raising the risk of a recession.

The United States, however, where economists expect gross domestic product growth of 1.8 percent this year, has seen recent data suggesting its economy was likely to stay clear of a recession, with October retail sales beating forecasts.

"In the current environment, a 1-1/2 to 2 percent growth would be seen as a positive support for the market," Rabobank's Foster said. ($1 = 0.739 Euros)

(Additional reporting by Ian Chua in Sydney and Masayuki Kitano in Singapore; Editing by Alex Richardson)

Uncertainties surrounding the economy and the hard drive shortage means that Dell's fiscal 2012 revenue is tracking at the lower end of its growth forecast of 1 to 5 percent, the company said.

Investors fear a slowdown in PC manufacturing through 2012 after flooding in Thailand severely disrupted production of hard drives, a key component in computers.

"To the extent that we see higher (drive) prices we'll also see some offsets in other components and we're going to do everything we can to protect our customers. But maybe in some cases we do have to raise our prices," Chief Financial Officer Brian Gladden told Reuters in an interview.

The shortage of hard drives will force Dell to prioritize toward higher-value customers and products," Gladden said.

Dell also appears to not have benefited much from the disarray at bigger rival Hewlett Packard Co, which spent much of the last quarter considering whether to spin off its PC business.

The company lost market share during the third quarter to Asian rival Lenovo Group which vaulted past it to claim the No. 2 ranking in PCs behind market leader HP.

"The PC business will remain difficult over the next year," said Brian White, analyst with Ticonderoga Securities. He cited pressure from slowing public sector spending as various government agencies around the world take austerity measures over the next year.

Dell's public business generated revenue of 4.2 billion, which was down 2 percent from the 2010 third quarter due to weakness in the United States and Western Europe.

Desktop PC revenue slid 6 percent to $3.4 billion as Dell's sales to consumers fell 6 percent over the same period.

Chief Executive Michael Dell said the company was moving away from low-margin businesses.

"We're choosing not to participate in low value opportunities which have put short-term pressure on revenue growth but have been a real driver of our expanded margins and growing earnings," Dell told analysts on a conference call.

Gross margins slipped to 23.1 percent from 23.2 percent in the prior quarter, but rose from 20 percent a year earlier.

Dell said revenue in its fiscal third quarter was essentially flat at $15.36 billion, but slightly lower than the average analyst estimate of $15.65 billion according to Thomson Reuters I/B/E/S.

Analysts on average had projected a 1.6 percent climb in Dell's fiscal 2012 revenue to almost $62.5 billion.

Net earnings rose to $893 million, or 49 cents a share, from $822 million, or 42 cents a share, in the year-ago period.

Excluding items, Dell earned 54 cents a share, better than the average analyst estimate of 47 cents.

Dell's large enterprise business increased sales 8 percent in the quarter as corporations continued to upgrade aging hardware.

Shares of Dell slid 2 percent to $15.32 in extended trade, after closing at $15.63 on Nasdaq.

Iger brings sector expertise and Disney's clout as the world's largest media and entertainment conglomerate to bear, as Apple prepares to step up a fight with the likes of Amazon.com Inc and Google Inc over content and its distribution.

Many on Wall Street also expect an attempt soon to shake up the fragmented television market, much as Apple did with iTunes and music years ago.

"Apple is going to get more into content distribution over time on the video side. That's where it makes sense for someone like Bob Iger from Disney to have that relationship with Apple," Morningstar analyst Michael Corty said.

Apple is taking the fight to Internet distribution and the so-called "cloud". It recently launched "iTunes Match", a service that for a fee of $24.99 scans the content of your music library and matches it with music available on its iTunes Store.

Google is expected to announce this week an online music service similar to iTunes.

In coming years, investors are betting that Apple will launch a full-fledged assault on TV, though skeptics say it will prove difficult to arrange distribution agreements with cable and content companies.

Jobs was himself a director at Disney, whose corporate empire encompasses TV network ABC, sports cable channel ESPN, movie studios and theme parks and resorts.

He and Iger forged a strong relationship after Disney bought Pixar -- which Jobs took over in 1986 -- for about $7.4 billion in 2006.

WHO WATCHES THE WATCHMEN?

Genentech Inc Chairman Arthur Levinson will become chairman, replacing Jobs, who died in October after a years-long struggle with cancer. Levinson had been a co-lead Apple director since 2005, alongside Avon Products Inc's Andrea Jung.

Apple had lacked a chairman until Jobs in August took the role, relinquishing his CEO duties at the same time because he could no longer fulfill them due to his worsening health. The company argued that co-lead arrangement enhanced its independence.

But analysts have said Jobs' exercised enormous influence over the board. They said his absence would trigger major changes for the board, elevating them beyond being merely advisors to a visionary leader.

The board may have to take more control, be less deferential to new CEO Tim Cook than it was to Jobs and meet more often, they said.

The naming of an independent chairman was welcomed by corporate governance experts.

"The board knows it's going to be under the microscope and Tim Cook knows that as well," said Jim Post, a professor of corporate governance at Boston University School of Management who called for an independent chairman. "The board has to move out of Steve Jobs' shadow and they have to act to like an independent board."

"The steps they have taken today move them in a better direction," he added.

Previously, some experts have raised concerns about how Jobs managed to keep his board in the dark about his health, which was a topic of constant speculation in the years before his death.

In Walter Isaacson's best-selling biography of the Silicon Valley icon, it was revealed the charismatic Jobs had sometimes lied about his condition.

Questions about the board's oversight had also arisen since Apple became one of many Silicon Valley corporations embroiled in the options-backdating scandals in the middle of the last decade.

In a fierce battle to attract and retain talent, Apple and others had resorted to backdating options -- attaching a retroactive validity date -- to make them more valuable. Apple and Jobs were eventually cleared of wrongdoing.

Apple shares were broadly unchanged at $389.12 in after hours trading. They have slid around 4 percent since the start of the month.

(Additional reporting by Lisa Richwine in Los Angeles; editing by Richard Chang and Andre Grenon)

Iger's appointment to the board of directors comes as Apple moves deeper into the media business with its iTunes store -- selling music and videos directly to consumers.

And many on Wall Street also expect an attempt to shake-up the fragmented television market.

Jobs and Iger had maintained a strong relationship after Disney bought Pixar - which Jobs took over in 1986 - for about $7.4 billion in 2006.

Genentech Inc Chairman Arthur Levinson will become chairman, replacing Jobs, who died in October after a years-long struggle with cancer. Levinson had been a co-lead Apple director since 2005, alongside Avon Products Inc's Andrea Jung.

Analysts have said Jobs absence would trigger major changes for the board, elevating them beyond being merely advisors to a visionary leader.

The board may have to take more control, be less deferential to new CEO Tim Cook than it was to Jobs and meet more often, they said.

Some have raised concerns about how Jobs managed to keep his board in the dark about his health, which was a topic of constant speculation in the years before his death.

In Walter Isaacson's best-selling biography of the Silicon Valley icon, it was revealed the charismatic Jobs had sometimes lied about his condition.

Disney's corporate empire encompasses TV network ABC, sports cable channel ESPN, movie and animation studios and theme parks and resorts.

Apple shares were broadly unchanged at $389.12 in after hours trading. They have slid around 4 percent since the start of the month.

The uncertainties surrounding the economy and the hard drive shortage due to the flooding in Thailand means that Dell's fiscal 2012 full-year revenue is tracking at the lower end of its growth forecast of 1 to 5 percent, the company said.

Severe flooding in Thailand, which produces one-quarter of the world's hard drives, has sparked a rise in prices and stranded many factories.

Analysts on average had projected a 1.6 percent climb in Dell's fiscal 2012 revenue to almost $62.5 billion.

Dell said revenue in its fiscal third quarter was essentially flat at $15.36 billion, but slightly lower than the average analyst estimate of $15.65 billion according to Thomson Reuters I/B/E/S.

Net earnings for the quarter rose to $893 million, or 49 cents a share, from $822 million, or 42 cents a share, in the year-ago period.

Excluding items, Dell earned 54 cents a share, better than the average analyst estimate of 47 cents according to Thomson Reuters I/B/E/S.

Dell's large enterprise business increased sales 8 percent on good demand for desktop PCs, servers and networking equipment as corporations continued to upgrade aging hardware. Sales to consumers fell 6 percent.

Shares of Dell slid 2 percent to $15.32 in extended trade, after closing at $15.63 on Nasdaq.

(Reporting by Poornima Gupta; Editing by Richard Chang)