Azure Global : 11/04/13

Monday 4 November 2013

Twitter claims $13.6bn market valuation as tech rivals take aim

'Elite' social media company raises its IPO asking share price by 25% and reveals IBM has accused it of violating three patents

Twitter, after canvassing professional investors for a week on how much they would be willing to pay for its shares, raised the asking price of its stock by 25% on Monday.

The company said it would value its IPO at between $23 and $25 a share, up from the $17 to $20 range, indicating that it was a popular potential investment. Traditionally, however, the banks advising companies on their public debuts start out with a modest asking price, in the hopes that investors will prove willing to pay more.

Twitter also stopped selling its shares a day early, according to a news report by Reuters. It's common for companies to keep order books open for investors until the day before the IPO, but Twitter plans to close the books on Tuesday at noon, Reuters said. In the traditional signals of Wall Street, that move could be interpreted in two ways: it could indicate either high demand for the shares or that investors are tapped out.

Twitter, which plans to list its shares for the first time on the New York Stock Exchange on Wednesday, can now claim a market value of $13.6bn before its shares have even started trading. The company could raise as much as $1.4bn in the offering.

MKM Partners, a research firm for professional investors, said Twitter will be in the competitive "elite" of tech companies by its market value.

"We look at a [comparison] group including Facebook, LinkedIn, TripAdvisor, Yelp and Zillow," MKM analyst Rob Sanderson wrote in a client note late last week. "These companies are regarded as 'category killers', each with very strong operating momentum, disruptive characteristics and open-ended opportunities."

That doesn't necessarily mean smooth sailing ahead, however. Twitter is facing business challenges from rivals as well as skepticism from investors burned by the Facebook IPO.

Twitter is not seen as a good investment by nearly half of active investors, according to a new CNBC-AP poll out Monday.

"That sentiment is stronger from higher-income respondents; some 56% of those with incomes of $75,000 a year have doubts about its investment prospects," CNBC wrote.

In addition, as Twitter's profile rises, rivals are taking aim at its business prospects. "We presently are involved in a number of intellectual property lawsuits, and as we face increasing competition and gain an increasingly high profile, we expect the number of patent and other intellectual property claims against us to grow," the company said.

Twitter revealed on Monday, for instance, that tech giant IBM has claimed that Twitter has violated three of its patents. The patents involve the presentation of advertising and the process of searching for user contacts.

By striking at Twitter's advertising plans, IBM is striking at the company's heart. Twitter gained 85% of its revenue from advertising in 2012, and an even higher percentage – 89% – in the first nine months of this year. "We generate substantially all of our advertising revenue through the sale of our three promoted products: promoted Tweets, promoted accounts and promoted trends."

Twitter said IBM was not suing, however, and only inviting a negotiation. In its public filing, Twitter said "we believe we have meritorious defenses," although it also said "there can be no assurance that we will be successful" in resolving the dispute.

Article Source : http://www.guardian.co.uk
Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

China prepares to liberalise finance as hedge funds and estate agents salivate

Beijing is making prepartions to let its money off the leash, and the repercussions will be felt everywhere

It's a long way from Beijing to Belgravia but London's upmarket estate agents would be well advised to keep a close eye on developments in China over the next 10 days. The price of a mansion in London's more fashionable districts is rising fast. Cash buyers from overseas have snapped up houses with little or no regard of the cost, creating a property microclimate divorced from the rest of the market.

The Bank of England is keeping tabs on the boom, concerned that the flood of foreign cash pushing up the price of mansions could – if left unchecked – herald the start of the next bubble.

Well, you ain't seen nothing yet. The freeing up of China's economy over the past 35 years has been methodical. First it was agriculture. Then it was industry. Now, the next phase of liberalisation planned by the ruling cadre of the Communist party includes finance.

A host of possible reforms are being considered. These include offering higher interest rates for domestic savers backed up by deposit insurance for savings accounts and making China's currency, the renminbi, convertible.

Unfettered movement of capital out of China is not going to happen overnight, but it could happen within five to 10 years. That's why George Osborne was in China last month seeking to make London the global hub for dealings in the renminbi. That is why fund managers, hedge funds, private equity firms and property specialists in Britain are licking their lips.

China's leaders have encouraged speculation that radical change is afoot by talking about a "masterplan" for the economy. There have been signs that Beijing is prepared to sacrifice quantity for quality: accepting that growth needs to be slower but more sustainable.

Although living standards have risen sharply, China's economic model is investment-intensive. There has been a rapid expansion of industrial capacity to provide goods for export. Heavy debts have been incurred in the process, particularly by local government. The sluggish recovery in the global economy that followed the financial crisis of 2007-08 means that demand for China's manufactured products is growing less quickly than it once was. Hence the feeling that the economy needs more of a domestic focus and that capital should be used less wastefully.

The internal debates about the future of the economy will come to a head next weekend when the central committee of the Communist party meets in its third plenary session since it was elected for a five-year term in 2012.

Historically, the so-called third plenum has been the occasion for the party hierarchy to focus on the economy, followed by big shifts in policy. It was at the third plenum in 1978 that Deng Xiaoping announced the opening up of the Chinese economy: the move that triggered 35 years of stupendous growth.

Fifteen years later, Deng said the economy needed more investment and had to become more export-focused. Within a decade, the country's success in breaking into western markets was crowned by admission into the World Trade Organisation. WTO membership, together with a period in the early 2000s when the global economy was expanding at its fastest rate since the late 1960s and early 1970s, meant there was little pressure to reform China's economy. It was hard to argue with growth rates of 10% and record rates of poverty reduction. Now, though, expectations are high that President Xi Jinping and Premier Li Keqiang will act.

Analysts at Capital Economics say the third plenum will come up with a direction of travel rather than a detailed policy programme. But they expect the new leadership to address three key issues: the low share of national income going to average households; the dominant role of the state in much of the economy; and the inefficient use of capital.

Xi and Li are likely to proceed with caution. There will be strong opposition to reform from vested interests who like the status quo. What's more, China's fragile financial sector needs handling with care. The balance sheets of commercial banks and the shadow banking sector are bloated with loans to state-owned enterprises and real estate companies. Many of these loans are non-performing, and there are enough parallels between China today and the United States half a dozen years ago if Beijing wishes to observe the consequences of over-hasty or badly sequenced reforms.

Even so, the feeling seems to be that ducking the need for change will merely store up even bigger problems for the future. Deregulation, land reform and a strengthening of the social security system are on the agenda.

But it will be financial reform that will be of most interest to the outside world. There has been liberalisation in this sector but Capital Economics says this is set to accelerate by allowing the renminbi to operate in a wider trading band, allowing full private ownership of banks, facilitating the development of the corporate bond market and loosening curbs on cross-border capital flows.

In the US, there has been much agonising over the emergence of China as a rival economic superpower. America's trade deficit with China has been a particular cause of concern, with Beijing accused of manipulating the renminbi exchange rate to dump goods in the west. Fears have been expressed that America is vulnerable to a financial Pearl Harbor: a sudden decision by Beijing to stop buying US Treasury bills.

In the light of what is going to be discussed later this week, such fears look overblown. That's not just because such a move would be a pyrrhic victory for China, since it would destroy the value of its assets. It's also because bit by bit, China's economy – if not its political structure – is being reshaped along the lines sought by Wall Street and by American-owned transnational corporations.

Back in the late 1990s, US multinationals demanded that China accept more stringent conditions than had been imposed on other developing countries in order to secure WTO membership. Beijing accepted. Now America wants two things: China's financial sector to be opened up to US banks and the country's savings to boost western capital markets. More than likely, Washington will get its way, perhaps not immediately but with profound effects.

Why? Well, consider this. America, the world's biggest economy, has savings of $2.8tn (£1.7tn); China has more than $4tn. As a result, the impact of financial liberalisation in China will make the flow of funds into the west from Russian oligarchs look inconsequential.

As Diana Choyleva of Lombard Street Research notes, China's elite already sends its children to Britain to be educated. The money is about to follow. Which is why the hedge-fund owners of Mayfair and the estate agents of Belgravia have every reason to be cheerful.

Co-operative Bank to cut hundreds of jobs as new chiefs clamp down on costs

Company has sunk to a loss and aims to return to profit – but also has plans to state its ethical stance officially for first time

Co-operative Bank is expected to signal on Monday that hundreds of jobs could be under threat as part of a pledge by the new management team to cut costs.

In documents due to be published by the bank, it will signal a need to shed costs from a business that employs 10,000 people as it scrambles to return to profit.

The bank, which declined to comment, has sunk to a loss and needs to raise £1.5bn under a controversial proposal that will require the Co-operative Group to concede control of the bank after pressure from two major US hedge funds.

Prospectuses setting out details for bondholders are scheduled to be published on Monday to provide information about the new business plan of the bank and the exact terms being offered to bondholders who are to own 70% of it.

The Co-operative Group, which owns funeral homes, supermarkets and pharmacies, will set out that it now expects to put between £400m and £500m into the bank, while bondholders will find the remainder.

Under a previous plan, announced in June, the group planned to put in £1bn and keep a 25% stake, but that sum has now been reduced after protracted discussions with a group of bondholders under the name LT2 – so called because they own lower tier two debt.

Two hedge funds, Silver Point Capital and Aurelius, have led the LT2 Group and will end up with shares in the Co-op Bank which is to be floated on the stock market.

The Co-op Group will be the largest single shareholder with a 30% stake and none of the others will own more than 10%.

The bank hopes to quell concerns that its ethical status will be undermined by the stock market flotation, and the involvement of the hedge funds, by writing its commitment to an ethical stance in its articles of association. This will be the first time its stance has been spelled out so clearly.

The bank, which is already a plc but owned by a mutual, will also focus on retail and small business banking and pare back costs, although precise details of the scale of job losses are not expected to be published in the prospectuses.

The failure of the Co-op to take over 631 branches from Lloyds Banking Group in the Project Verde deal will continue to be examined this week when the former chairman of the bank appears before the Treasury select committee of MPs.

Former chairman Paul Flowers is likely to be asked about his banking qualifications when he gives evidence, which was delayed from last week when former chief executive Barry Tootell appeared.

The committee has already heard from Peter Marks, who was chief executive of the overall group until May, who described its problems as a "tragedy".

Some of loans that the bank inherited from the 2009 deal to buy the Britannia building society are now being wound down by the Co-op.