Each week QFINANCE will endeavor to bring you some of the biggest news stories from the past five days in finance and business, as well as some of the most fascinating websites and links that have crossed our path. We hope you'll enjoy reading, we hope you'll have a great weekend and we hope that you'll come back each Friday to brush up on your finance and business knowledge.
Monday August 15
Google is no stranger to purchasing other companies (see the other link below this news story), but on Monday it dipped into its savings pot in order to buy its biggest ever acquisition, Motorola Mobility. Google, whose Android software has recently become the most popular Smartphone platform, spent $12.5bn (£7.6bn) in order to acquire the mobile phone- and tablet-maker. Analysts said that Motorola’s portfolio of 17,000 patents, as well as their new ability to licence these to other Android users such as HTC and Sony, was the central motivation behind the acquisition. This claim was later reinforced by Google chief executive Larry Page, who stated: “Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which enables us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”
Read about Google's acquisition of Motorola Mobility and the initial reaction to this in more depth here.
...we also found this (you can say that when someone else posted it on Twitter, right?), which we thought was rather fascinating and relevant to Monday’s big news (like a ‘Where are they now’ of big companies, rather than of stars from Saved By The Bell).
Read about Google's past acquisitions here.
Tuesday August 16
German chancellor Angela Merkel shocked the world of investors last night by announcing her support for an EU-wide financial transactions tax (also known as a Tobin tax). Speaking alongside French President Nicolas Sarkozy in Paris, Merkel stated: “French and German finance ministers will table a joint proposal at the EU level in September for a tax on financial transaction”, before saying that it was a priority for both of them. The tax, which has been supported strongly by anti-capitalist groups and trade unions, is intended to raise government funds and alleviate market instability. However, many critics of the idea state that this could lead to any number problems, including increasing asset bubbles and distorting real-world information.
Read about Angela Merkel's support for the European financial transactions tax in more depth here.
Wednesday August 17
Then, the next day, the investors reacted. After the various announcements made by the French and German leaders, including Angela Merkel’s support for a Tobin tax and promises by both leaders for closer economic integration across eurozone member states, European shares fell. Closing in on the end of trading, Commerzbank had fallen 4%, while RBS and BNP Paribas had both dropped 2%. The drop was said to be due to the lack of detail in Merkel and Sarkozy’s talks about the measures that would be implemented and exactly what these would involve. The German chancellor did announce that, until a closer economic union had been achieved, the issuing of eurobonds would not be on the agenda.
Read about the market's reaction on Wednesday in more depth here.
Read our blog on the issues with these announcements and growing EU fiscal union here.
Thursday August 18
Hewlett-Packard announced that it is going to buy the UK’s most valuable software company Autonomy for $10.2bn (£6.2bn) in the most recent of a series of deals that has seen American firms taking over British companies. The acquisition will be part of a massive shake-up for HP and was announced on Thursday night after the computing giant revealed its third quarter earnings. Chief executive Leo Apotheker said, “We are building a strong HP software business… The acquisition of Autonomy will build on that momentum and accelerate our software strategy”. Autonomy had closed down in London by 8.3 per cent, with a market cap of $5.7bn. This means that HP is offering an almost fifty per cent premium.
Read about Hewlett Packard's acquisition of Autonomy in more depth here.
...and read about the market's reaction to the deal here. (75%?!)
However, as we’re sure you all know, Autonomy weren’t the only company to lose significant figures in the market on Thursday. Where to start? Perhaps it’s better just to list. The FTSE 100 ended 4.49% down (its biggest fall in over two years), the Euro Stoxx 50 dropped 5.34% and the Dow Jones 3.68%. Economic worries were shown further by a drop in crude oil, which went down 4.82%. However, banks across Europe suffered some of the greatest pains, with UK banks feeling it the worst. Barclays dropped 11.47%, Lloyds lost 9.25% and RBS fell 11.31%.
Read a more in-depth analysis of the movements in the markets on Thursday here.
Friday August 19
Bank of America today announced that it would be cutting 3,500 jobs as part of a larger restructuring plan. In July, the firm reported a record quarterly loss, which comes after agreeing a settlement of £8.5bn (£5.2bn) for a case related to sub-prime mortgages. The Wall Street Journal, who predicted that these cuts could eventually exceed 10,000 jobs, reported that the initial 3,500 would come from various areas of the bank’s operations, including investment banking and trading. After losing 5.8% yesterday on Wall Street, the bank has officially seen nearly 50% fall from its share price so far this year.
Read about the cutting of jobs at BoA in more depth here.
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Come back next Friday for another report on the world of business and finance.
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