NEWS AT A GLANCE
Sprint Nextel loses money and subscribers
Sprint Nextel, the No. 3 U.S. wireless carrier, posted a worse-than-expected $505 million quarterly loss, as high-value monthly customers defected to other carriers. (Reuters) Sprint said it lost about a million customers in the quarter, about the same number as it lost all last year. (AP in Yahoo! Finance) AT&T picked up 1.3 million wireless customers last quarter, and Verizon Wireless brought on an extra 1.5 million. “Sprint has had a really bad reputation for customer service,” said analyst Steve Clement at Pacific Crest Securities “They’ve struggled to figure out a way to market themselves, and I think they’re still struggling.” (Bloomberg)
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HSBC profits despite bad loans
HSBC, Europe’s largest bank by market value, said that it had a profitable first quarter, despite taking a $3.2 billion charge for bad loans in the U.S. and $2.6 billion in writedowns at its investment bank. The bad debt charge, tied to U.S. home loans, was smaller than expected. (MarketWatch) HSBC said it was increasingly probable the U.S. would enter a recession this year, but that strong growth in Asia, the Middle East, and Latin America made up for a decline in U.S. earnings. “The U.S. provisions are less than some of the more aggressive forecasts,” said analyst Simon Maughan at MF Global Securities in London, but “people need remember how strong Asia can be.” (Bloomberg)
Cablevision scoops up Newsday
Tribune Co. agreed to sell its New York newspaper Newsday to Cablevision Systems for $650 million, after News Corp. dropped out of the bidding war over the weekend. The other remaining suitor, with a $580 million bid on the table, was Mortimer Zuckerman, who owns the New York Daily News. (Newsday) News Corp. already owns two area papers, The Wall Street Journal and the New York Post. (AP in Yahoo! Finance) Cablevision, controlled by the Dolan family, owns cable TV networks and several New York sports and entertainment properties. “We find it incredibly hard to believe the Cablevision board can find an acquisition of a local newspaper in shareholders’ best interests,” said Pali Capital analyst Richard Greenfield. (Bloomberg)
China’s growing outsourcing problem
The cost of labor is rising in coastal China, and that is pushing Chinese textile and toy industrialists to Vietnam, India, and other areas with lower costs and access to ports, despite Chinese government subsidies to encourage the manufacturers to move to inland China. The shift isn’t expected to affect the Chinese economic juggernaut, as coastal manufacturers switch to more valuable products like computer chips and electronics. But it is increasing the income disparity between the wealthy southeaster provinces and the poorer inland areas. “It is absolutely key that China push its development model westward,” says Stephen Roach at Morgan Stanley inHong Kong. “The jury’s out on whether they will pull it off.” (Bloomberg)
