S&P Says Euro Region’s EFSF May Lose Rating If Any AAA Member Downgraded

The European Financial Stability Facility may lose its top credit rating if any of the bailout fund’s six guarantors face a downgrade from AAA, Standard & Poor’s said.

“We could lower the long-term credit rating on EFSF by one or two notches if we were to lower the AAA sovereign ratings, which are currently on creditwatch, on one or more of EFSF’s guarantor members,” S&P said in a statement today.

At the same time, the ratings company said it “could affirm the AAA ratings on EFSF and its issues if we affirm the rating on all six of EFSF’s guarantor members currently rated AAA.” Germany, France, the Netherlands, Finland, Austria and Luxembourg are the top-rated nations backing the rescue fund.

European stocks the euro fell after S&P said late yesterday that it may cut the debt grade of 15 euro nations, including Germany and France. German Finance Minister Wolfgang Schaeuble said today the downgrade warning should spur European leaders to ratchet up efforts to resolve the region’s debt crisis at a summit in Brussels on Dec. 8-9.

“The crisis has become a crisis of euro-zone governance and crisis management,” Moritz Kraemer, managing director of European sovereign ratings at S&P, said on a conference call today. He said the summit is of the “utmost importance” and that leaders must address the turmoil “in a more robust and comprehensive way than what we’ve seen so far.”

Stocks Decline

The Stoxx Europe 600 Index fell 0.3 percent at the close today, having earlier dropped as much as 0.8 percent. National benchmark indexes dropped in 12 of the 17 western-European markets that were open today. The euro slipped 0.1 percent against the dollar, while French bonds declined, pushing the yield on the 10-year debt up 10 basis points to 3.24 percent.

S&P said today it could affirm the rating on the EFSF if one or more of its guarantor countries lost their top rating, but it had evidence that the nations “were implementing further credit enhancements that were in our view sufficient to mitigate the relevant guarantor members’ reduced creditworthiness.”

The company last night rebuked leaders for their “continuing disagreement” over how to best tackle the crisis that now threatens to tip the global economy into recession.

“The truth is that markets in the whole world right now don’t trust the euro area at all,” Schaeuble said today in Vienna. S&P’s statement will prompt European leaders “to do what we’ve promised, namely to take the necessary decisions step-by-step and to win back the confidence” of investors.

Merkel-Sarkozy Charge

German Chancellor Angela Merkel and France’s Nicolas Sarkozy are leading the charge toward the latest crisis fix after agreeing a joint position on automatic penalties for deficit violators and anchoring debt limits into euro states’ constitutions. Investors are looking for such an agreement on closer fiscal cooperation in the euro area to trigger intensified action from the European Central Bank.

“The ECB is somewhat hesitant to engage in full-throttle QE,” Kraemer said. “The first steps will have to be made by politicians and the summit is very important.”

With EU leaders due to gather in a little over 48 hours, U.S. Treasury Secretary Timothy Geithner arrived in Berlin for talks with Schaeuble after meeting earlier today with ECB PresidentMario Draghi and Bundesbank President Jens Weidmann in Frankfurt. The ECB holds a policy meeting on Dec. 8.

Geithner said at a press conference in Berlin that it’s “very important” for Germany and France to succeed in their efforts to strengthen the European Union, and that he’s “very encouraged” by recent developments.

“While we’re of the opinion that politicians are keenly aware of challenges, our experience with past summits suggests that it’s far from certain that an outcome would” bring “confidence to the market,” S&P’s Kraemer said. “If that was to be unsuccessful, we anticipate the possibility of another leg downward of the crisis and market confidence.”

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

Oil Trades Near Three-Week High on Middle East Supply Concern

Oil traded near a three-week high in New York as investors speculated global supplies will shrink after the European Union indicated it may ban imports of Iranian crude and U.S. stockpiles declined.

Futures were little changed after advancing for a third day. The EU may have reached an agreement to ban oil imports from Iran, OPEC’s second-biggest crude producer, EU Energy Commissioner Guenther Oettinger said yesterday. U.S. crude inventories declined 5.04 million barrels last week, according to the American Petroleum Institute. Kuwait’s ruler dissolved parliament after a dispute over corruption allegations sparked anti-government protests.

“Prices are slowing ticking up on the back of potential supply shocks,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who had forecast oil would trade from $80 to $90 a barrel before tension increased in the Gulf. “The market is still looking at what may or may not happen in terms of embargoes on Iran from the West. There’s also the potential for civil unrest in Kuwait.”

Crude for January delivery traded at $101.35 a barrel, up 7 cents, in electronic trading on the New York Mercantile at 12:01 p.m. Sydney time. The contract yesterday rose 29 cents to $101.28, the highest close since Nov. 16. Prices are 11 percent higher this year after climbing 15 percent in 2010.

Brent oil for January settlement was at $110.80 a barrel, down 1 cent, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $9.45 a barrel, compared with $9.53 yesterday and a record $27.88 on Oct. 14.

Iran Sanctions

Oil prices are rising because of the tension between Iran and the West, Seth M. Kleinman, European head of energy research at Citigroup in London, said in an e-mailed report yesterday. A boycott will probably be timed for after peak winter refinery demand in the Northern Hemisphere, he said.

Oettinger answered “I think so, yes” when asked whether there was consensus within Europe to stop imports of Iranian oil. He didn’t specify when a ban would be implemented. Europe should agree on the ban and then bring in other countries such as Russia and the U.S., he said in Doha, Qatar.

The EU agreed to tighten sanctions on Iran at a Dec. 1 meeting in Brussels to try to pressure the nation to curtail its nuclear program, blacklisting certain individuals and companies, while falling short of authorizing an immediate ban amid reservations from Greece. The U.S. approved additional curbs on Iran’s oil industry on Nov. 21.

Iran accounted for about 5 percent of the world’s oil output last year, according to BP Plc’s Statistical Review of World Energy.

Kuwait Elections

Political tensions in Kuwait, which accounted for about 3 percent of global oil production, are obstructing the country’s progress, requiring “a return to the nation to choose its representatives,” according to a decree issued by Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah yesterday and cited by state news agency Kuna. The decree didn’t say when elections will be held. Kuwait’s cabinet, headed by Sheikh Nasser Al-Mohammed Al- Sabah, resigned Nov. 28 following months of protests calling for his ouster and a change in government.

Saudi Arabia, accounting for about 12 percent of global crude output and the biggest producer in the Organization of Petroleum Exporting Countries, boosted production last month to the most in more than three decades to meet demand, Ali al- Naimi, the nation’s oil minister, said yesterday.

Crude, Fuel Supplies

U.S. crude supplies probably dropped 1.25 million barrels last week, according to the median of 12 analyst estimates in a Bloomberg News survey before an Energy Department report today .

Gasoline stockpiles may have climbed 875,000 barrels, according to the survey. They rose 5.97 million barrels in the industry-funded API report. Distillate supplies, a category which includes diesel and heating oil, may have gained 1.15 million barrels. The API report showed an increase of 1.68 million.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore atakwiatkowsk2@bloomberg.net

Wal-Mart brings ‘endless aisle’ to Canadian cyberspace

RETAIL

Wal-Mart brings ‘endless aisle’ to Canadian cyberspace

MARINA STRAUSS — RETAILING REPORTER

From Monday's Globe and Mail

Published Sunday, Dec. 04, 2011 4:41PM EST

Last updated Sunday, Dec. 04, 2011 4:52PM EST

Retailers are gearing up for an e-commerce battle this holiday season after discount giant Wal-Mart Canada Corp. entered the cyber fray, taking on the burgeoning e-titan Amazon.ca.

The push by a growing numbers of chains to pump up their domestic Internet sales raises the stakes for the entire sector. With consumers racing to find deals and convenient shopping venues in uncertain economic times, major retailers are vying to draw customers and stop them from shopping at established U.S. e-tailers.

Wal-Mart Canada’s launch of its new website this fall adds to the growing pressure on merchants to get cyber-selling right.

The discounter has big e-tailing ambitions. “This is Wal-Mart – there’s no limit to how high is high,” said Gino DiGioacchino, senior vice-president of e-commerce at Wal-Mart Canada. “The opportunity here is not only to offer the customer what they see in-store online. Our real opportunity is really going beyond that [offering] that’s existing in the store.”

Dubbed the endless aisle, e-commerce provides retailers with the chance to bolster their business by peddling a vast array of products online, more than they could ever squeeze on to their shelves. But U.S.-based Amazon.ca has nabbed a lot of customers here as it rapidly branches beyond its roots in books into a wide range of merchandise.

In the crucial holiday period, domestic retailers including clothier Mark’s Work Wearhouse and department-store chain the Bay have hopped on the e-commerce wagon, girding to convert browsers into customers even as U.S. chains step up efforts to gain cyber-business here.

“It appears the market has tipped,” said Jim Okamura, online retail specialist at Okamura Consulting in Chicago. “Everyone’s been anticipating Wal-Mart finally going live with their e-commerce capabilities. Obviously it sends a signal to the rest of the industry: if you’re not there or you’re not in some development stage, you’re probably feeling very behind the ball now, if you weren’t already.”

U.S. retailers have cashed in on their Canadian counterparts’ late arrival to online selling, said Jeffrey Grau, principal analyst at digital researcher eMarketer. “Such a large percentage of Canadian online spending goes across the border to U.S. retailers,” he said. Companies such as fashion specialist L.L. Bean and department-store Nordstrom Inc. (JWN-N47.170.070.15%)are offering a range of online promotions to lure Canadians.

Mr. Grau’s data confirm that the appetite for online shopping is picking up in Canada. By year’s end, Canadians will have spent $18.5-billion in retail e-commerce, up 12 per cent from last year, according to eMarketer predictions. By 2015, the figure is projected to be $30.9-billion.

On “Cyber Monday” – Nov. 29 – the Monday after the U.S. Thanksgiving weekend, when online retailers offer some of their best bargains, Canadians spent 15.4 per cent more than they did a year earlier, according to Moneris Solutions, the country’s largest credit-card processor. (Its figures don’t include Amazon.ca, among other U.S. players.)

Wal-Mart’s move online is part of a wider strategic effort by U.S. parent Wal-Mart Stores Inc. (WMT-N58.09-0.52-0.89%) to become a heavyweight in cyber space, pitting it against Amazon.com (AMZN-Q196.03-1.10-0.56%).

Mr. DiGioacchino is leading the Wal-Mart Canada charge, having come from Home Depot Canada, an early e-commerce adopter. Wal-Mart’s online sales so far have beaten internal targets, he said. About one-third of the products that it plans to sell online are available for sale right now. “Our early days, coming out of the gate, have been great. It’s really starting to build.”

The retailer is looking for a lift. In its third quarter, its Canadian same-store sales rose 0.9 per cent, and average purchase value rose 2.2 per cent, but store traffic slipped 1.3 per cent.

Wal-Mart is wooing holiday shoppers with an e-commerce focus on two major gift-giving areas: toys, which Amazon.ca does not carry in Canada, and electronics. It recently started to pilot jewellery, Mr. DiGioacchino said. Shipping charges vary, but movies, music and video games ship for 97 cents. Amazon.ca touts free shipping on purchases of $25 or more, down from $39 last year.

In the next year, Wal-Mart will rev up its e-commerce offerings in home furnishings, hardware, sporting and seasonal goods and apparel, Mr. DiGioacchino said.

RIM finds new ways to disappoint investors

RIM finds new ways to disappoint investors

IAIN MARLOW — TECHNOLOGY REPORTER

WATERLOO, ONT.— From Saturday's Globe and Mail

Published Friday, Dec. 02, 2011 7:12AM EST

Last updated Friday, Dec. 02, 2011 7:59PM EST

Research In Motion Ltd. (RIM-T17.08-1.73-9.20%) took a hit of nearly half-a-billion dollars on its PlayBook tablet, but it was troubling news about sales of its BlackBerry smartphones that stoked fresh worries from investors about the tech giant.

The August launch of sleek new BlackBerrys was supposed to stem the bleeding and protect the company’s share of the mobile phone market until next year, when it will unveil a new line of devices running on improved software called BBX.

But the company warned Friday of disappointing sales and earnings, and said it expects to ship fewer BlackBerrys in the fiscal fourth quarter, which covers the Christmas period, than the 14.1 million it shipped in the third. RIM said it doesn’t expect to meet its previously announced adjusted profit target of $5.25 to $6 (U.S.) a share for this fiscal year.

It was the third time this year that Canada’s largest technology company has revised downward the outlook for its business. The negative news sent its stock down about 9 per cent to $17.08 (Canadian) and had analysts questioning, again, the company’s direction under co-chief executive officers Mike Lazaridis and Jim Balsillie.

“RIM’s recovery window is almost closed,” National Bank Financial analyst Kris Thompson wrote in a research note to clients. He noted that the decline in BlackBerry shipments came “on the back of the largest launch in the company’s history.”

Part of the problem is that consumers and industry observers saw the new BlackBerrys as “me-too” devices – improved versions of RIM’s core product but not more compelling than Apple’s Inc.’s iPhone or the slew of new Android devices.

In the United States, RIM’s largest single market at 27 per cent of total revenue in the last quarter, the trends have been devastating: As wireless operators engaged in a marketing war over new fourth-generation networks, RIM’s 3G BlackBerrys failed to get any attention. RIM’s share of the U.S. smartphone market has slumped to 9 per cent from 24 per cent a year earlier.

“If you look at the promotions in the U.S., [wireless companies] are really focused on 4G, and you’ve really got to get into those promotional windows to drive sales,” said a former RIM executive who spoke on condition of anonymity.

Wireless carriers also have to spend less to subsidize cheaper Android phones than they do for BlackBerrys, the executive added, giving companies like AT&T and Verizon Wireless more incentive to market Android phones. “It’s all the Android guys that are working on fairly slim margins, that are driving the cost of the goods to the carriers down. … The [average monthly revenue per user to a carrier] from an Android or a BlackBerry are pretty much the same now.”

Although some analysts had predicted smartphone declines, the details came with a few additional negative surprises. RIM also said its revenue for the third-quarter would come in below the expected range of between $5.3-billion and $5.6-billion (U.S.), in part because of a $50-million charge related to a global BlackBerry outage in October.

“The bleeding continues,” said Chris Umiastowski, an independent consultant who followed RIM as a Bay Street analyst for a decade. “RIM really has no shot left beyond making BBX a success.”

The writedown on the PlayBook was widely expected, however. The tablet computer has sold nowhere near as well as analysts first forecast; in order to drive sales, the device is now being discounted at the retail level by $300, bringing the entry-level version to about $200.

RIM took a $485-million charge related to its PlayBook inventory. After tax, the hit to earnings is $360-million.

RIM said it sold more than 150,000 PlayBooks in the quarter and Mr. Lazaridis said the company “is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy.” Mike Abramsky, an analyst at Royal Bank of Canada’s capital markets unit, described that level of sales as “sluggish.”

Friday’s tribulations are simply the latest in a string of bad headlines for the Waterloo, Ont.-based company. On Friday, RIM employees were still trading e-mails about two employees who made news this week for being so drunk on a Beijing-bound Air Canada flight that the plane had to land in Vancouver, delaying other passengers by 18 hours.

Despite huge success in overseas markets, perceptions of RIM in North America remain grim. While RIM employees attempt to revive the company, they are also in the midst of a staff reduction that will remove some 2,000 people from the payroll.

Another former RIM executive with knowledge of the situation said the cuts have left some work groups operating without managers, leaving many people still fearing that they too will be laid off.

“It’s a high-stress environment but people still want to turn the company around,” the former executive said. “When you get a taste of being No. 1, that sticks with you.”