NEWS AT A GLANCE
Northern Rock sinks amid low expectations
U.S. buyout firm J.C. Flowers has made a bid for ailing British bank Northern Rock, Reuters reported this morning. (Reuters) However, Cerberus Capital Management dropped out of the bidding because of subprime-mortgage related losses at lender GMAC, of which it owns 51 percent. (MarketWatch) The J.C. Flowers bid reportedly offers shareholders a “nominal value” for their stakes. But Northern Rock shares—which are down 93 percent this year—dropped even further after the bank said the bids entered so far are “materially below” last Friday’s closing price. (Bloomberg)
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HP profits jumps 28 percent
Hewlett-Packard, the world’s largest technology company, reported a 26 percent jump in profits, to $2.2 billion, beating analysts’ forecasts. A 49 percent surge in notebook PC sales and strong overseas earnings helped push HP’s profits. (MarketWatch) The company also issued a rosy growth forecast and said it is buying back $8 billion in shares. CEO Mark Hurd said HP had little exposure to the banking industry, helping it avoid credit pitfalls. HP shares rose a modest 1.4 percent in extended trading. (Reuters) “Very good numbers from HP,” said analyst Daniel Renouard at Robert W. Baird & Co. “This has kind of become almost a boring story as they continue to beat both top and bottom line.” (Bloomberg)
Goldman paints gloomy pictures
A dour report from Goldman Sachs analysts late yesterday forecast that housing prices are going to fall much further, credit-related write-downs will jump, and several mortgage-related companies are entering sink-or-swim territory. The analysts said that collateralized debt obligations (CDOs) tied to subprime mortgages will lose $150 billion in value across the banking industry. (Reuters) Earlier yesterday, Goldman downgraded Citigroup from “neutral” to “sell” and forecast $15 billion more in CDO write-downs for the firm over the next two quarters, sending its shares down 5.9 percent and fueling yesterday’s market selloff. (MarketWatch)
Amateurs need not apply
People are watching more videos on the Web, but not necessarily more home-movie-quality videos uploaded by amateur videographers. In a study by Burst Media, user-generated content ranked ninth in 11 categories of what people like to watch online. Web sites are noticing, replacing amateur video content with polished made-for-Web shows and TV programs from Hollywood. Pros like the medium because it gives them more creative control, and Web sites like professional content because it brings ad revenue. “We don’t need the classical user-generated talent when we have the Hollywood talent that wants to work with us,” notes ManiaTV CEO Peter Hoskins. (BusinessWeek.com)
