Skip to main content

Opening Bell: 5.22.06

Probably False Rumor Alert! Ballmer To Be Fired? (Ars Technica)
It can take a couple of days for a story to percolate up from the bowels of the trade press and get some exposure, but last week an article in, uh, Client Server News (yes) reported that certain key experts were predicting a move to push Microsoft CEO Steve Ballmer out. First off, congratulations to Client Server News for getting some desperately needed attention; it's been awhile since they've had anything resembling a scoop. Second, the rumor is probably false. Though Microsoft has been weak of late, it seems likely that a new CEO would do little to boost the street's confidence, or anyone else's. We'll keep you posted if Client Server News, or even Network Administrator World gets any more on the story.
NYSE Group Plans to Buy European Exchange (NYT)
For a while there, there was news about stock exchange merger activity every day. Then it seemed to go away for a month, though really it was just that the executives shut up for a little bit. The NASDAQ has been gobbling up more of the LSE on a daily basis, with their position now topping 30%. Not to be outdone, the NYSE has announced plans to purchase Euronext, and pending approval from Euronext shareholders, it looks like a done deal. Of course, in the cr-cr-crazy world of stock exchanges, who knows what white knight is going to come along and disrupt the deal.
Punch Taverns to sell 380 pubs (Reuters)
Given the financial world's love for business exotica, this could be a really hot sale. The UK's largest operator of pubs plans to sell 380 of them sometime this year. We wouldn't be surprised to see the banks battle it out with the hedge funds for this kind of asset. But anyone bidding should probably know a little about the scene. Naturally, this year it's all about the World Cup, as the chain hopes that the event drives attendance. Presumably, a decent showing for England will be important, though a bad performance should also drive pint sales. Also, like NYC, a smoking ban has recently been put into effect in Scotland, which could prove detrimental to some locations. Caveat Emptor.
Is Qwest Ready to Sell Out? (IP Democracy)
Did Qwest CEO Dick Notebaert signal that the company is looking to sell out? In an interview with the NY Times, the CEO is seen as indicating that the company might be in a good position to get taken out. The company received a mini-boost after their staunch claim that they did not provide information with the NSA, and now the CEO is playing up the fact that the company is profitable, and financially as healthy as ever. But the company has little future in some ways, as the company has no wireless infrastructure, or any plans to roll out IP video. So the time may be right to take them out of their misery.

India on alert for suicides after stocks slide (Reuters)
Recent crushing losses in the Indian stock market have put the police on suicide watch, hoping to catch forlorn traders. 'Til now, none have been reported, but the police have been strategically put at places such as canals and lakes. The market, which had already been down 10%, in recent trading, was down another 10% in Monday trading. One trader spoke with a kind of poetry you'd rarely hear among local boys, "Gold has turned into brass. We are finished". India loves its gold.
Toyota Seeks to Improve Prius And Plans to Produce Car in U.S. (WSJ)
This is getting kind of embarrassing. Toyota has no plans to give up on their relentless drive to build cars in the US, despite the obvious fact that it's well, impossible. Though we're not a manufacturing powerhouse (our economy is based on ideas, remember), the company continues to hire Americans to build cars. The logic seductive; Priuses are a runaway hit in the country, and so it makes to move the manufacturing to the market. Meanwhile, the company thinks they can improve the fuel efficiency of the car, as well, which would be good for everyone -- except the companies that can't compete.

Mittal Steel's Second Run at Rival Arcelor Gaining Steam (LA Times)

The move to create a world steel powerhouse may really happen this time, as the Arcelor board is seen seriously considering Mittal's latest offer. Though Arcelor immediately rejected the first bid, back in January, they haven't rejected those one, probably because it's significantly higher than the first. The big losers in such a merger would be both the iron ore companies and the car companies, both of whom will have to deal with a much stronger buyer/supplier in the new company. For more color on this story, read Oligopoly Watch on oligopoly vs. oligopsony.
Good Reason to Stay Cool Amid New Inflation Scare (Bloomberg)
By reading Chet Currier, at Bloomberg, you can understand why the inflation debate is so confusing. He points out, rightly, that despite the recent inflation data, the long-term trends of the economy point to disinflation. Among the obvious trends is the emergence of the inflation-fighting internet. But even before the internet, disinflation via increased productivity was always a factor. It's not even a matter of technology; each year every skill, device, and area of expertise, should be cheaper or less valued than it was the year before. As long as people are doing the same thing, they should get better at it, and thus more productive. The problem is that there are two kinds of inflation -- one is a result of price signals, e.g. higher oil prices signal that we need to invest in fuel-efficient technologies. The other is a result of bad monetary policy, which is much tougher for the economy to rectify. So while the internet and other information technologies will certainly disinflate, it's not clear that this will do much to stem monetary inflation, which is what people are worried about.

Oil price falls $1 to six-week low (CNN Money)

The price of a barrel of oil has fallen to around $67, which is all well and good. But several articles have cited "inflation fears" as one of the reasons for oil's recent decline. Does this make sense to anyone else? What does this phraseology mean? Wouldn't inflation fears cause people to continue rushing into the dirty stuff? Any insights are quite appreciated.