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IMF: Global economy to shrink for first time in 60 years
| The global economic slowdown is so severe that the worldwide economy will contract for the first time in 60 years, the International Monetary Fund says The total of goods and services produced around the world is projected to slump by 1 percent in 2009, compared with a 3.2 percent growth rate the year before. Leading the slump will be the world's most developed economies, including the United States, Europe and Japan. Japan's economy is forecast to shrink by 5.8 percent in 2009, while Europe's is expected to decline 3.2 percent and the United States' 2.6 percent. "The turnaround depends critically on more concerted policy actions to stabilize financial conditions as well as sustained strong policy support to bolster demand," the IMF said. The IMF thinks the world's emerging and developing economies will continue to grow this year, but by no more than 2.5 percent, after a 6.1 percent growth rate in 2008. Global economic recovery won't come until 2010, according to the IMF report. |
Russian planes again fly over U.S. Navy ships
 Russian military aircraft flew just 500 feet over two U.S. Navy ships this week as the ships participated in a joint military exercise with South Korea in the Sea of Japan, according to U.S. military officials. On Monday, two Russian Ilyushin IL-38 maritime patrol aircraft, known as "Mays," overflew the U.S. aircraft carrier Stennis while it was in international waters in the Sea of Japan. The Russian aircraft flew about 500 feet over the ship, lower than other flights the Russians have made over U.S. ships in the past year. The USS Stennis was about 80 miles east of Pohang, South Korea, participating in the joint military exercise when the flyover occurred. On Tuesday, the USS Blue Ridge, a lead command and control ship, and the Stennis were overflown by two Russian "Bear" long-range bombers multiple times, according to U.S. military officials. The Bears overflew the ships at about 2,000 feet, officials said. U.S. military officials said that in both cases, U.S. Navy F/A-18 fighters met up with the Russian aircraft about 70 nautical miles from the U.S. ships and flew alongside them until they left the area. On both days, U.S. aircraft tried contacting the Russian planes on international air frequency radio channels, but the Russian pilots did not respond, officials said. The last time Russian planes flew over a U.S. Navy ship was February 2008, when two Bears flew 2,000 feet over the aircraft carrier USS Nimitz south of Japan. Russian long-range flights skirting U.S. or other nations' boundaries have also been common over the last year. Although the Pentagon does not often talk about the overflights, there is nothing illegal about the actions, and they are generally seen by the United States as nothing more than muscle-flexing by the Russian military. |
Obama offers Iran 'the promise of a new beginning'
| President Barack Obama reached out to Iran on Friday -- the start of the Iranian New Year -- in a video message offering "the promise of a new beginning" that is "grounded in mutual respect." The message is a dramatic shift in tone from that of the Bush administration, which included Iran, along with North Korea and Iraq, in an "axis of evil." It also echoes Obama's inaugural speech, in which he said to the Muslim world, "we seek a new way forward, based on mutual interest and mutual respect." In Friday's video, Obama said: "The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations. You have that right, but it comes with real responsibilities. And that place cannot be reached through terror or arms, but rather through peaceful actions that demonstrate the true greatness of the Iranian people and civilization." There was no immediate response from Tehran to Obama's message, but Iranian President Mahmoud Ahmadinejad said last month that his country would welcome talks with the United States "in a fair atmosphere with mutual respect." The United States, several European nations and Israel suspect that Tehran has been trying to acquire the capacity to build nuclear weapons, but Iran says its nuclear program is solely for peaceful purposes. Last month, the Washington-based Institute for Science and International Security released a report saying that Iran has reached "nuclear weapons breakout capability" -- it has enough uranium to make a nuclear bomb. The report was based on an analysis of data from the International Atomic Energy Agency. However, an IAEA official who asked not to be named cautioned against drawing such dramatic conclusions from the data, saying Iran's stock of low-enriched uranium would have to be turned into highly enriched uranium to be weapons-grade material. That hasn't been done, the official said. The United States has had tortuous relations with Tehran since the Islamic revolution in 1979, but the Obama message speaks of "new beginnings" with the promise of a new year. "We have serious differences that have grown over time. My administration is now committed to diplomacy that addresses the full range of issues before us, and to pursuing constructive ties among the United States, Iran and the international community," the president said. "This process will not be advanced by threats. We seek, instead, engagement that is honest and grounded in mutual respect." |
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IBM $8 Billion Deal for Sun Micro Expected This Week
| International Business Machines is likely to buy Sun Microsystems for between $10 and $11 a share, the Wall Street Journal reported Wednesday. That purchase price would value the deal at around $8 billion, including $1.4 billion in cash on Sun's balance sheet. The newspaper said an agreement is expected to be announced as early as this week. Such a move could bolster IBM against rivals in the high-end computer server market. Shares of Sun [JAVA 8.80 If the companies reach a deal, it would be IBM's largest-ever acquisition, and represent a departure from its recent strategy of focusing on deals to strengthen its software and services businesses, rather than hardware. Analysts saw talk of the deal as part of a consolidation trend, as Hewlett-Packard [HPQ 29.24 "It makes sense in an industry consolidation view, but looking at Sun's performance over the last couple of years, it's not one of my top picks for IBM to buy," said Jyske Bank analyst Robert Jakobsen, speaking from Denmark. Having said that, there's clearly a huge synergy combining these two companies," he said. "The market hasn't been kind to Sun Microsystems in the last 12 months. So it's not an expensive acquisition in my view." Sun, which was not available for comment, has long been cited as a takeover target for IBM, HP, Dell or Cisco, which introduced a comprehensive set of data center products earlier this week. Bankers have said Sun has been searching for a buyer in recent months. But the challenge of valuing Sun's intertwined software, hardware and services businesses could put off potential buyers, analysts say. Sun has never fully recovered from the dot-com bubble burst in the early 2000s, when demand for its servers cratered. IBM, which had nearly $13 billion in cash at the end of $2008, declined comment. Its largest acquisition to date is the $5 billion purchase of Canadian software maker Cognos in 2008. The Wall Street Journal said HP had declined to buy Sun, citing a person briefed on the matter. Tech Spending Cuts IBM was the top supplier of servers in the fourth quarter, with a market share of 36.3 percent, according to market researcher IDC. HP has 29.0 percent, followed by Dell with 10.6 percent, Sun with 9.3 percent, and Fujitsu with 4.2 percent. These five server vendors all posted declines in their fourth-quarter server revenue, hurt by pullbacks in corporate spending on technology due to the weak global economy. IBM's move, as well as Cisco's announcement on Monday, may signal a new wave of partnerships and acquisitions in the data center market as companies strive to provide more comprehensive products and services to their customers. Cisco's move could put into play data equipment maker Brocade Communications Systems [BRCD 3.11 "IBM wants to become a one-stop shop for all IT related offerings, whether it is hardware, software services or solutions," Avinash Vashistha, chief executive at IT consulting firm Tholons Inc. "They have been executing this strategy for the last few years and with the Sun deal, they will only accelerate that move." Sun, whose name stands for Stanford University Network, rose to prominence in the 1990s when start-ups flocked to its high-end computers, which run on its Solaris operating system and have been widely used in the financial services industry. When the Internet bubble burst in 2000-01, funding for start-ups dried up along with much of the demand for Sun's computers. Sun has tried to reinvent itself by offering more services and software, and expanding production of Linux-based computers, which tend to be cheaper. But that failed to revive its stock price. The company is shedding up to 6,000 jobs, or 18 percent of its workforce.
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Jaguar, Buick Dethrone Lexus in Reliability Study
| British luxury carmaker Jaguar surged to the top of J.D. Power and Associates' closely watched vehicle dependability study this year, tying Buick for the No. 1 spot and dethroning Lexus for the first time since the Japanese luxury brand has been a part of the survey. Lexus, Toyota Motor's [TM 62.42
"Buick and Jaguar both lead the industry in nameplate performance," said Neal Oddes, director of product research and analysis at J.D. Power. "In terms of individual model performance, Lexus and Toyota still do very, very well." The annual study measures problems experienced by the original owners of vehicles after three years. Suzuki owners reported the most problems among the 37 brands assessed by J.D. Power. Despite losing its crown to Jaguar and Buick, Lexus still swept top awards in four segments, while Toyota's namesake brand took five awards. General Motors' [GM 2.80 Jaguar's sudden jump to the top from its No. 10 spot in 2008 was notable for a study that is fairly consistent from year to year. Oddes said the brand has made significant improvements across many areas. "We see improvements all over the board with Jaguar," Oddes said, citing fewer reported problems with vehicle exterior, sound system and the overall driving experience. "The improvement at a nameplate level is significant." Still, Jaguar, which Indian car giant Tata Motors [TTM 4.24 Oddes said this year's study was redesigned to exclude routine fixes from a vehicle's list of problems. For example, the study no longer counts tire or windshield wiper replacements as a reportable problem. The intended result is a study that focuses on actual glitches with a vehicle, Oddes said, though it also makes it difficult to make year-over-year comparisons. "We cleaned up the survey to really try to focus in on things that are truly broken," he said. The industry average was 170 problems per 100 vehicles, or somewhat less than two problems per vehicle. Last year, the industry average was 206 problems per 100 vehicles, but year-over-year improvements this year are much less pronounced when accounting for the changes in the study's methodology, Oddes said. The most frequently reported problem was wind noise, followed by brake noise, peeling paint, brake vibrations and problems with a vehicle's lights, Oddes said. The problems have been fairly consistent from year to year, he said. J.D. Power's dependability study surveyed 46,313 original owners of 2006 model-year vehicles in October 2008. The results are watched closely by automakers and are often used in advertising. Owners' opinion of a car after three years can be a major influence on their opinion to buy that brand again. The firm also releases an initial quality study, which measures problems in the first 90 days of ownership. |
