By William D. Cohan, contributor
Last Updated: May 18, 2009: 10:39 AM ET
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NEW YORK (Fortune) -- Imagine if you were not really in the market for a house but the government came along and said that it would finance 94% of a home's purchase price with a mortgage rate of less than 3%. Still not interested? Wait, Uncle Sam has some additional sweeteners: if you do the deal and buy the house for only 6% down, you also get the equivalent of rental income every month to the tune of at least an annualized yield of 10% of the purchase price.
But wait there's still more: if, say, after two years, you decide you don't want the house any longer, you can just walk away from it. No need to pay the balance of the mortgage (it won't affect your credit rating), and you can keep the rental income received to date.
That's essentially the deal that Treasury Secretary Timothy Geithner has offered qualified professional investors who participate in the so-called TALF (Term Asset-Backed Securities Loan Facility). Two months into the program as the first TALF- backed deals hit the market, you can see why the likes of hedge fund Fortress Investment Group are drooling over it. "I'm a big believer in the impact that TALF can and should have," Fortress CEO Wes Edens said on a May 6 investor call, adding that he expects that Fortress will be "a big participant" in the TALF program "three to six months from now."
0:00 /24:35Geithner opens up
The first few TALF deals -- one for Ford Credit (the financing arm of the automaker), another for American Honda Receivables Corp., a third for the student loan company Sallie Mae and a fourth for motorcycle icon Harley Davidson -- shed some light on our tax dollars at work.
"I've had accounts that dropped everything they were doing to take a look at this TALF financing," one Wall Street trader explained. "It was like nothing they had ever seen. It beats any financing that the private sector could ever come up with. I almost want to say it is irresponsible." For instance, Prudential Financial, Inc. (PRU, Fortune 500), the large insurer and investment manager, borrowed $786 million from the TALF as of March 31 and put up only $50 million to do so, some 6.4% of the deals.
In case you're not totally conversant with the alphabet soup of financial remedies emanating from the Obama Administration, here's a brief refresher: Geithner and the Federal Reserve announced the launch of the TALF in March. The TALF is a $200 billion (on its way to $1 trillion) non-recourse lending program to private investors as a way to encourage them to buy newly underwritten securities backed by auto loans, credit-card receivables and student loans, among other asset classes. (The TALF program is set to extend, in June, to the issue of new commercial real-estate mortgage-backed securities.)
These securitizations were once upon a time a key component of the so-called "shadow" financing system that helped raise trillions of dollars of capital worldwide. Of course, the securitization and sale of mortgage-backed securities was one of the leading causes of the current financial crisis as the people who took out the underlying mortgages started to default upon them in unexpected numbers. Still, Geithner has determined, correctly, that getting these securities circulating again is crucial to restoring the health of the credit markets. The Treasury designed the program, but it is the Federal Reserve that provides the government's share of the capital. "The increase in the TALF is expected to help stimulate both new issuances and the removal of assets from bank balance sheets," Credit Suisse wrote to its shareholders on May 8.
Investors interested in borrowing from the TALF program have to be approved by the Treasury and then, once approved, have to set up an account with a broker-dealer that is subject to a variety of the usual terms and conditions. The investor then must indicate a desire to buy, say, at least $10 million of one of the dozen or so deals, worth an aggregate of around $25 billion, which have come to market since the TALF program was set up in March. An early test for TALF was a May 5, $1.5 billion car-receivables securitization for American Honda Receivables Corp. and underwritten by JPMorgan Securities (JPM, Fortune 500) and BNP Paribas Securities. Investor demand for the deals so far is said by one trader to be "strong" and the deals are selling well. The real market test, though, of TALF will come when the first deals involving CMBS (Commercial Mortgage Backed Securities) start coming to market in the next few months.
The way the TALF works in practice is this: The amount of equity an investor has to put up, or the "haircut" as the TALF documents call it, depends upon the assets involved, the term of the loan or lease of the underlying asset (say, a car) and the credit quality of the underlying borrower. A loan to buy a three-year security backed by a group of credit-card receivables from high-quality borrowers would require an investor to put up 6% of the capital -- a 6% "haircut" -- and then can borrow the rest from the TALF through his brokerage account. To buy a two-year high-quality credit-card receivable security, a borrower would put up 5% of the face amount of the securities purchased. Auto receivables require as 12% equity investment for a three-year security. Small business loans require 5% down. Student loans require 10% down for a three-year deal.
An investor interested in a $10 million slice of three-year credit card receivable would put up 6% of the money -- $600,000 -- and borrow the balance of $9.4 million from the TALF at a rate of three-year LIBOR plus 100 basis points (Attention K-Mart shoppers, that's 2.85% at this moment.) Depending on all sorts of assumptions, the yields on these investments are said to be in the 11% to 15% range, especially attractive since the TALF loans are non-recourse to the borrowers -- you can just walk away and lose only your underlying equity investment and the collateral but you are not held responsible for the unpaid portion of the TALF loan itself.
In addition, the TALF loan is not marked-to-market so if the underlying collateral deteriorates in value, the investor is not required to put up more equity. What's more as the car payments or credit-card payments on the underlying security are made, the payments are distributed to the government and the investor on equal footing -- that means the investor starts getting paid back at the same time as the government even though the government is the senior secured creditor and even though an investor has put up only a small fraction of the original money. One private equity investor, who would not normally have looked at investing in such a deal but did, called this particular aspect of the TALF "shockingly good."
But who will the TALF deals be shockingly good for -- the players on the field or those of us in the bleachers? If what Geithner calls "our lending facility with the Fed" does its job and jumpstarts the credit markets then the extraordinary concessions the government has made to attract private capital may have been worth it.
William Cohan is the author of House of Cards: A Tale of Hubris and Wretched Excess on Wall Street, published this month by Doubleday Books, a division of Random House, Inc.
Monday, May 18, 2009
Wednesday, May 13, 2009
Stock selloff accelerates
Dow sinks 200 points; Nasdaq, S&P 500 drop almost 3%. Reports show weaker-than-expected consumer spending and a big jump in foreclosures.
By Alexandra Twin, CNNMoney.com senior writer
NEW YORK (CNNMoney.com) -- A stock selloff gained steam Wednesday afternoon, with the S&P 500 sliding for the third session in a row, as weaker retail sales and a report showing a big number of foreclosures gave investors a reason to retreat.
The Dow Jones industrial average (INDU) lost 200 points, or 2.4%, with under 2-1/2 hours left in the session. The S&P 500 (SPX) index fell 25 points, or 2.7%. The Nasdaq composite (COMP) dropped 48 points, or 2.8%.
The worse-than-expected retail sales was dragging on stocks, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. He said investors were also a little jittery about the bevy of banks rushing to raise capital to pay back the government bailout money they received.
Detrick said that over the last two years, when the monthly retail sales report missed forecasts, the S&P 500 generally closed more than 1% lower on the session.
"We were due for a pause here and with questions about the consumer and the banks, investors are finding an excuse to take some profits," he said.
Stocks seesawed Tuesday as investors showed caution after a roughly 2-month rally that propelled all the major stock gauges by at least 30%. That hesitation remained in place Wednesday.
Stocks have risen since early March on bets that the economy is close to turning a corner. But April reports on retail sales and the housing market threw such bets into question.
Economy: Retail sales fell 0.4% in April, according to a report from the Commerce Department released before the market open. Sales were expected to hold steady, according to a consensus of economists surveyed by Briefing.com. Sales fell a revised 1.3% in March.
Sales excluding volatile autos fell 0.5% in April, after dropping 1.2% in the previous month. Economists forecasts had called for a rise of 0.2%.
The number of U.S. households facing foreclosure jumped 32% in April versus a year ago, according to RealtyTrac. More than 342,000 homes received notices of default in the month, up 1% from March.
In other economic news, March business inventories fell 1% after falling 1.4% in the previous month. Economists expected inventories to have fallen 1.1%.
Company news: AIG (AIG, Fortune 500) shares slipped as the company's CEO discussed restructuring plans at a House hearing about how the company plans to pay back billions in government loans.
In other news, Intel (INTC, Fortune 500) was fined a record $1.45 billion by the European Union for allegedly anti competitive practices, a decision the chipmaker plans to appeal. Shares were little changed.
Freddie Mac (FRE, Fortune 500) posted a $9.9 billion quarterly loss after the market close Tuesday and also asked the government for another $6.1 billion in aid.
GM (GM, Fortune 500) shares continued to slide on concerns that it will have to file for bankruptcy, with the stock touching $1 per share, the lowest level since 1933.
Market breadth was negative. On the New York Stock Exchange, losers topped winners six to one on volume of 690 million shares. On the New York Stock Exchange, decliners beat advancers four to one on volume of 1.09 billion shares.
By Alexandra Twin, CNNMoney.com senior writer
NEW YORK (CNNMoney.com) -- A stock selloff gained steam Wednesday afternoon, with the S&P 500 sliding for the third session in a row, as weaker retail sales and a report showing a big number of foreclosures gave investors a reason to retreat.
The Dow Jones industrial average (INDU) lost 200 points, or 2.4%, with under 2-1/2 hours left in the session. The S&P 500 (SPX) index fell 25 points, or 2.7%. The Nasdaq composite (COMP) dropped 48 points, or 2.8%.
The worse-than-expected retail sales was dragging on stocks, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. He said investors were also a little jittery about the bevy of banks rushing to raise capital to pay back the government bailout money they received.
Detrick said that over the last two years, when the monthly retail sales report missed forecasts, the S&P 500 generally closed more than 1% lower on the session.
"We were due for a pause here and with questions about the consumer and the banks, investors are finding an excuse to take some profits," he said.
Stocks seesawed Tuesday as investors showed caution after a roughly 2-month rally that propelled all the major stock gauges by at least 30%. That hesitation remained in place Wednesday.
Stocks have risen since early March on bets that the economy is close to turning a corner. But April reports on retail sales and the housing market threw such bets into question.
Economy: Retail sales fell 0.4% in April, according to a report from the Commerce Department released before the market open. Sales were expected to hold steady, according to a consensus of economists surveyed by Briefing.com. Sales fell a revised 1.3% in March.
Sales excluding volatile autos fell 0.5% in April, after dropping 1.2% in the previous month. Economists forecasts had called for a rise of 0.2%.
The number of U.S. households facing foreclosure jumped 32% in April versus a year ago, according to RealtyTrac. More than 342,000 homes received notices of default in the month, up 1% from March.
In other economic news, March business inventories fell 1% after falling 1.4% in the previous month. Economists expected inventories to have fallen 1.1%.
Company news: AIG (AIG, Fortune 500) shares slipped as the company's CEO discussed restructuring plans at a House hearing about how the company plans to pay back billions in government loans.
In other news, Intel (INTC, Fortune 500) was fined a record $1.45 billion by the European Union for allegedly anti competitive practices, a decision the chipmaker plans to appeal. Shares were little changed.
Freddie Mac (FRE, Fortune 500) posted a $9.9 billion quarterly loss after the market close Tuesday and also asked the government for another $6.1 billion in aid.
GM (GM, Fortune 500) shares continued to slide on concerns that it will have to file for bankruptcy, with the stock touching $1 per share, the lowest level since 1933.
Market breadth was negative. On the New York Stock Exchange, losers topped winners six to one on volume of 690 million shares. On the New York Stock Exchange, decliners beat advancers four to one on volume of 1.09 billion shares.
A billion reasons to charge for luggage
The money-losing airline industry reaped more than $1 billion last year from excess baggage fees
By Aaron Smith, CNNMoney.com staff writer
Quick Vote
How is the paycheck stimulus tax break affecting your economic situation?
It's helpfulIt's not a big dealI don't get the break or View results
NEW YORK (CNNMoney.com) -- The round of baggage fees that came last year may have annoyed the heck out of customers, but according to government figures, they were a billion-dollar lifesaver for cash-strapped airlines.
Baggage fees from the U.S. airline industry totaled $1.15 billion in 2008, according to the U.S. Department of Transportation.
0:00 /Airline earnings grounded
Traditionally, airlines would not charge for the first two pieces of checked luggage unless they exceeded weight limitation. But in February of 2008, United Airlines, owned by UAL Corp., (UAUA, Fortune 500) began charging $25 for the second checked bag. In July of that year, US Airways (LCC, Fortune 500) started charging $15 for the first checked bag.
Many of the competing airlines followed suit. This was in addition to a whole host of other fees for once-free services and products, such as meals, snacks and non-alcoholic drinks, as well as ordering tickets via phone and redeeming flight miles.
American Airlines, owned by AMR Corp., (AMR, Fortune 500) topped the industry, according to the DOT, gleaning $278 million in baggage fees during 2008, followed by US Airways, with $187 million, and Delta Air Lines (DAL, Fortune 500), with $177 million. The baggage fees for United Airlines totaled $133 million last year, while Northwest (which merged with Delta in 2008) totaled $121 million and Continental Airlines (CAL, Fortune 500) made $97 million.
Southwest Airlines (LUV, Fortune 500), which avoided much financial hardship through successful hedging of fuel prices, totaled $25 million in excess baggage fees in 2008, the DOT said, the least among the seven major carriers. Southwest promotes itself as not charging excessive fees.
"I am positive consumers don't like the fees but they have little choice other than to change their behavior," said Rick Seaney, chief executive of Farecompare.com. "Southwest is the lone holdout on this point."
Seaney was speaking from the A-La-Carte Pricing Conference in Miami on Tuesday. The conference host, a company called Airline Information, estimates that excess luggage fees could total $3.5 billion in 2009.
"2008 was only a partial year for bag fees," said Seaney. "These numbers will be up dramatically in 2009 and are here to stay even though the justification to add these fees was related to the run up in fuel prices early last year."
0:00 /2:05United's new 'big' policy
While the added charges have fueled resentment among some passengers, airlines blamed the price of fuel, which escalated to unprecedented levels. In the U.S.-based airline industry, fuel costs averaged more than 30% of all operating costs in 2008, according to the DOT, compared with five years before, when it was 14%. But while fuel prices in 2009 have come way down off their highs, the fees are still there.
"We think the passengers are being gouged by these baggage fees," said David Stempler, president of the Air Travelers Association, an advocate for passengers. "They initially came into effect from the high fuel costs. But since the fuel costs have fallen off, they haven't rescinded these fees."
A decline in business and vacation travel stemming from the recent recession has also posed serious threats to the industry, which has met the drop in demand by cutting capacity in scaling back its least fuel-efficient flights.
David Castelveter, spokesman for the Air Transport Association, an airline industry group, defended the baggage fees as necessary to the survival of a money-losing industry.
"The first quarter for the industry is still a multi-billion dollar loss," said Castelveter. "I don't know of a business model that calls for a company to lose money. I fail to understand why the industry is demonized for trying to return to profitability."
Castelveter also said the "a la carte" nature of the baggage fees favors the light travelers who don't have to "subsidize" the passengers with lots of luggage.
Harlan Platt, a finance professor at Northeastern University College of Administration in Boston who follows the airline industry, said that a checked bag costs an airline $15 on average, so the fees are designed to alleviate that cost.
"It's hard to argue with user fees," he said. "Why should a guy who's not bringing luggage on the plane pay for the guy who's bringing too many bags?"
Stempler disagreed. He said that travelers have limited control over their luggage-toting behavior, considering certain restrictions, like those applying to liquids.
"Passengers can't always carry their luggage on board because of the strict [Transportation Security Administration] rules," he said.
First Published: May 12, 2009: 12:04 PM ET
By Aaron Smith, CNNMoney.com staff writer
Quick Vote
How is the paycheck stimulus tax break affecting your economic situation?
It's helpfulIt's not a big dealI don't get the break or View results
NEW YORK (CNNMoney.com) -- The round of baggage fees that came last year may have annoyed the heck out of customers, but according to government figures, they were a billion-dollar lifesaver for cash-strapped airlines.
Baggage fees from the U.S. airline industry totaled $1.15 billion in 2008, according to the U.S. Department of Transportation.
0:00 /Airline earnings grounded
Traditionally, airlines would not charge for the first two pieces of checked luggage unless they exceeded weight limitation. But in February of 2008, United Airlines, owned by UAL Corp., (UAUA, Fortune 500) began charging $25 for the second checked bag. In July of that year, US Airways (LCC, Fortune 500) started charging $15 for the first checked bag.
Many of the competing airlines followed suit. This was in addition to a whole host of other fees for once-free services and products, such as meals, snacks and non-alcoholic drinks, as well as ordering tickets via phone and redeeming flight miles.
American Airlines, owned by AMR Corp., (AMR, Fortune 500) topped the industry, according to the DOT, gleaning $278 million in baggage fees during 2008, followed by US Airways, with $187 million, and Delta Air Lines (DAL, Fortune 500), with $177 million. The baggage fees for United Airlines totaled $133 million last year, while Northwest (which merged with Delta in 2008) totaled $121 million and Continental Airlines (CAL, Fortune 500) made $97 million.
Southwest Airlines (LUV, Fortune 500), which avoided much financial hardship through successful hedging of fuel prices, totaled $25 million in excess baggage fees in 2008, the DOT said, the least among the seven major carriers. Southwest promotes itself as not charging excessive fees.
"I am positive consumers don't like the fees but they have little choice other than to change their behavior," said Rick Seaney, chief executive of Farecompare.com. "Southwest is the lone holdout on this point."
Seaney was speaking from the A-La-Carte Pricing Conference in Miami on Tuesday. The conference host, a company called Airline Information, estimates that excess luggage fees could total $3.5 billion in 2009.
"2008 was only a partial year for bag fees," said Seaney. "These numbers will be up dramatically in 2009 and are here to stay even though the justification to add these fees was related to the run up in fuel prices early last year."
0:00 /2:05United's new 'big' policy
While the added charges have fueled resentment among some passengers, airlines blamed the price of fuel, which escalated to unprecedented levels. In the U.S.-based airline industry, fuel costs averaged more than 30% of all operating costs in 2008, according to the DOT, compared with five years before, when it was 14%. But while fuel prices in 2009 have come way down off their highs, the fees are still there.
"We think the passengers are being gouged by these baggage fees," said David Stempler, president of the Air Travelers Association, an advocate for passengers. "They initially came into effect from the high fuel costs. But since the fuel costs have fallen off, they haven't rescinded these fees."
A decline in business and vacation travel stemming from the recent recession has also posed serious threats to the industry, which has met the drop in demand by cutting capacity in scaling back its least fuel-efficient flights.
David Castelveter, spokesman for the Air Transport Association, an airline industry group, defended the baggage fees as necessary to the survival of a money-losing industry.
"The first quarter for the industry is still a multi-billion dollar loss," said Castelveter. "I don't know of a business model that calls for a company to lose money. I fail to understand why the industry is demonized for trying to return to profitability."
Castelveter also said the "a la carte" nature of the baggage fees favors the light travelers who don't have to "subsidize" the passengers with lots of luggage.
Harlan Platt, a finance professor at Northeastern University College of Administration in Boston who follows the airline industry, said that a checked bag costs an airline $15 on average, so the fees are designed to alleviate that cost.
"It's hard to argue with user fees," he said. "Why should a guy who's not bringing luggage on the plane pay for the guy who's bringing too many bags?"
Stempler disagreed. He said that travelers have limited control over their luggage-toting behavior, considering certain restrictions, like those applying to liquids.
"Passengers can't always carry their luggage on board because of the strict [Transportation Security Administration] rules," he said.
First Published: May 12, 2009: 12:04 PM ET
Wednesday, May 6, 2009
Will 'world's best job' earn tourism dollars?
(CNN) -- The "best job in the world" contest has generated huge interest around the globe, but the jury is out on whether that will translate into more tourism dollars for Queensland, Australia.
Ben Southall will move into a three-bedroom beach home overlooking the Great Barrier Reef.
"That's the million dollar question," said Anthony Hayes, CEO of Tourism Quensland, which sponsored the contest.
"Quite frankly you can have $150 million worth of publicity, but if it doesn't generate sales you've really wasted your time on a pretty story."
A British man beat 34,000 other applicants Wednesday to win the right to stroll the white sands of a tropical island in Queensland, Australia, file weekly reports online to a global audience and earn a cool $100,000. Watch as lucky winner is revealed »
For the winner, Ben Southall, the six-month assignment is a far cry from his old job as a fundraiser.
"I love discovering new places," Southall said in his hyperkinetic minute-long application video for the position.
"Last year, I drove all around Africa, I crossed deserts, climbed mountains, run marathons, bungee jump, mountain-bike, scuba-dive and snorkel everywhere because I'm practically a fish myself."
Oh, and he rode an ostrich.
He will move into a three-bedroom beach home overlooking the tropical island's Great Barrier Reef. For six months, he will feed the fish, clean the pool and send weekly blog and video reports on what is happening on the island.
Other benefits include free return airfares from their nearest capital city, transport on the island, computer and camera gear and travel to other islands.
Ben Southall will move into a three-bedroom beach home overlooking the Great Barrier Reef.
"That's the million dollar question," said Anthony Hayes, CEO of Tourism Quensland, which sponsored the contest.
"Quite frankly you can have $150 million worth of publicity, but if it doesn't generate sales you've really wasted your time on a pretty story."
A British man beat 34,000 other applicants Wednesday to win the right to stroll the white sands of a tropical island in Queensland, Australia, file weekly reports online to a global audience and earn a cool $100,000. Watch as lucky winner is revealed »
For the winner, Ben Southall, the six-month assignment is a far cry from his old job as a fundraiser.
"I love discovering new places," Southall said in his hyperkinetic minute-long application video for the position.
"Last year, I drove all around Africa, I crossed deserts, climbed mountains, run marathons, bungee jump, mountain-bike, scuba-dive and snorkel everywhere because I'm practically a fish myself."
Oh, and he rode an ostrich.
He will move into a three-bedroom beach home overlooking the tropical island's Great Barrier Reef. For six months, he will feed the fish, clean the pool and send weekly blog and video reports on what is happening on the island.
Other benefits include free return airfares from their nearest capital city, transport on the island, computer and camera gear and travel to other islands.
Tuesday, May 5, 2009
Fiat boss tries to transform auto industry
CNN) -- A former accountant from Toronto is looking to remake the auto car industry.
Sergio Marchionne, CEO of Fiat, has ambitious plans to combine with Chrysler and GM Europe.
1 of 2 When Sergio Marchionne took the helm of Fiat five years ago, the carmaker was driving toward insolvency and saddled with more than $12 billion in debt. Four years and 15 profitable business quarters later, Marchionne is attempting to position Fiat just behind pole sitter Toyota in the race to win global car customers.
"I've heard him speak many times and it's clear he's got a certain target in mind of what scale is necessary to succeed," said John Bonnell, an auto industry analyst with J.D. Power and Associates.
Although Fiat, like many automakers, lost money in the first quarter this year due to the credit crisis, Marchionne is making an impressive play to take advantage of the troubles at GM and Chrysler.
A combined company of GM Europe, Chrysler and Fiat would generate about $100 billion annually with sales of between 6 and 7 million cars a year, according to Fiat.
"Clearly they're trying to take advantage of the opportunity when a lot of stakeholders may be willing to accommodate them," said Bonnell, the auto analyst. "It may be their only opportunity to get to the kind of scale necessary to succeed in this market."
In an interview with the Financial Times, Sergio Marchionne, chief executive officer of Fiat, detailed a plan to separate Fiat Auto core car divisions and join with Opel/Vauxhall, Saab and GM's other European operations.
Last week, Fiat agreed to take an initial 20 percent of Chrysler as the U.S. manufacturer filed for bankruptcy protection.
"It's an incredibly simple solution to a very thorny problem," Marchionne told the Financial Times.
Marchionne hopes to have the deal finished by the end of this month, and list shares for the new company -- which may be called Fiat/Opel -- by the end of August.
Sergio Marchionne, CEO of Fiat, has ambitious plans to combine with Chrysler and GM Europe.
1 of 2 When Sergio Marchionne took the helm of Fiat five years ago, the carmaker was driving toward insolvency and saddled with more than $12 billion in debt. Four years and 15 profitable business quarters later, Marchionne is attempting to position Fiat just behind pole sitter Toyota in the race to win global car customers.
"I've heard him speak many times and it's clear he's got a certain target in mind of what scale is necessary to succeed," said John Bonnell, an auto industry analyst with J.D. Power and Associates.
Although Fiat, like many automakers, lost money in the first quarter this year due to the credit crisis, Marchionne is making an impressive play to take advantage of the troubles at GM and Chrysler.
A combined company of GM Europe, Chrysler and Fiat would generate about $100 billion annually with sales of between 6 and 7 million cars a year, according to Fiat.
"Clearly they're trying to take advantage of the opportunity when a lot of stakeholders may be willing to accommodate them," said Bonnell, the auto analyst. "It may be their only opportunity to get to the kind of scale necessary to succeed in this market."
In an interview with the Financial Times, Sergio Marchionne, chief executive officer of Fiat, detailed a plan to separate Fiat Auto core car divisions and join with Opel/Vauxhall, Saab and GM's other European operations.
Last week, Fiat agreed to take an initial 20 percent of Chrysler as the U.S. manufacturer filed for bankruptcy protection.
"It's an incredibly simple solution to a very thorny problem," Marchionne told the Financial Times.
Marchionne hopes to have the deal finished by the end of this month, and list shares for the new company -- which may be called Fiat/Opel -- by the end of August.
Monday, May 4, 2009
Chrysler to lose $4.7B this year
By Chris Isidore, CNNMoney.com senior writer
May 4, 2009.
NEW YORK (CNNMoney.com) -- Chrysler LLC expects to lose $4.7 billion this year and to continue to lose money for the next two years, according to a filing from one of the company's top financial advisors.
Robert Manzo, a financial advisor hired by Chrysler for help with the company's bankruptcy process, estimated in the filing that the company will have cash expenditures far greater than losses for the next few years. Chrysler is estimated to go through about $15.7 billion this year as part of its restructuring.
The company filed for bankruptcy Thursday as part of a deal with the federal government, unions, some lenders and Italian automaker Fiat to keep the company from being shut down.
The filing also discloses the company lost $16.8 billion in 2008,. That's about the same as what larger rival General Motors (GM, Fortune 500) lost in 2008, excluding special items, and worse than the $14.6 billion lost by Ford Motor Co. (F, Fortune 500) last year.
Manzo's filing forecasts that Chrysler will lose about $900 million in 2010 and another $300 million in 2011, before finally reporting a $100 million profit in 2011.
May 4, 2009.
NEW YORK (CNNMoney.com) -- Chrysler LLC expects to lose $4.7 billion this year and to continue to lose money for the next two years, according to a filing from one of the company's top financial advisors.
Robert Manzo, a financial advisor hired by Chrysler for help with the company's bankruptcy process, estimated in the filing that the company will have cash expenditures far greater than losses for the next few years. Chrysler is estimated to go through about $15.7 billion this year as part of its restructuring.
The company filed for bankruptcy Thursday as part of a deal with the federal government, unions, some lenders and Italian automaker Fiat to keep the company from being shut down.
The filing also discloses the company lost $16.8 billion in 2008,. That's about the same as what larger rival General Motors (GM, Fortune 500) lost in 2008, excluding special items, and worse than the $14.6 billion lost by Ford Motor Co. (F, Fortune 500) last year.
Manzo's filing forecasts that Chrysler will lose about $900 million in 2010 and another $300 million in 2011, before finally reporting a $100 million profit in 2011.
Thursday, March 12, 2009
Grab Market Share Now With Your Website!
Now is the time to grab market share. When every penny counts, one important place you can really put your marketing dollars in and truly track results is with your website.
Here are five things to try to help increase the amount of traffic to your website and keep visitors coming back.
The first tip is to have proper page titles. This refers to how each page of your website is named. A proper title means that it contains key words and relevant information that describe the content of the page. The order of the words within the name is also an important factor. Make sure that the most relevant keyword appears first. Remember, the closer the title describes the page, the likelier it becomes to gain a better ranking in search engines.
Adding additional relevant keywords to your homepage is another thing to try. While your homepage may already have some relevant text, it needs to spell out your services in terms that people would use to search for you. Also keep in mind that if your text is in flash or graphics, search engines are not able to read it.
Speaking of content, another thing that is a must is keeping your content fresh. Keeping your content fresh plays a very big role in keeping visitors coming back. A content management system is a great tool that allows site owners to upload new content any time they want. Visitors will come back to your site again and again as long as it meets their viewing expectations and it provides them the information they are looking for.
Fourthly, improve the links that point to your site. Some search engines such as Google use the number of links pointing to a site as a measurement tool. You should not only check how many sites link to your site but also check how relevant the data is that links to you. You can find this information on alexa.com or by using Google.
Finally, start a blog and put relevant articles on it that contain important keywords. Link the blog back to your main website. Blogs are easy to use and a fun way to communicate real time information. A blog for your business can be implemented within 24 hours and can have a huge effect on your relationships and website traffic. It is a unique way to connect with existing clients and build trust with prospects.
Here are five things to try to help increase the amount of traffic to your website and keep visitors coming back.
The first tip is to have proper page titles. This refers to how each page of your website is named. A proper title means that it contains key words and relevant information that describe the content of the page. The order of the words within the name is also an important factor. Make sure that the most relevant keyword appears first. Remember, the closer the title describes the page, the likelier it becomes to gain a better ranking in search engines.
Adding additional relevant keywords to your homepage is another thing to try. While your homepage may already have some relevant text, it needs to spell out your services in terms that people would use to search for you. Also keep in mind that if your text is in flash or graphics, search engines are not able to read it.
Speaking of content, another thing that is a must is keeping your content fresh. Keeping your content fresh plays a very big role in keeping visitors coming back. A content management system is a great tool that allows site owners to upload new content any time they want. Visitors will come back to your site again and again as long as it meets their viewing expectations and it provides them the information they are looking for.
Fourthly, improve the links that point to your site. Some search engines such as Google use the number of links pointing to a site as a measurement tool. You should not only check how many sites link to your site but also check how relevant the data is that links to you. You can find this information on alexa.com or by using Google.
Finally, start a blog and put relevant articles on it that contain important keywords. Link the blog back to your main website. Blogs are easy to use and a fun way to communicate real time information. A blog for your business can be implemented within 24 hours and can have a huge effect on your relationships and website traffic. It is a unique way to connect with existing clients and build trust with prospects.
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