Headlines for May 16
CBS to buy CNET for $1.8 billions
CBS Corp. (stock quote: CBS) agreed to acquire CNET Networks Inc. (stock ticker: CNET) for about $1.8 billion, just as the technology-focused online news provider’s battle with dissident shareholders was heating up.
CNET shareholders will get $11.50 a share, a 45% premium to Wednesday’s closing price and above any price at which the stock has traded in about two years. Shares of CNET soared 43% recently to $11.36, while CBS’ stock fell 2.5% to $24.21.
CBS structured the deal as a tender offer, so it will pay cash for the individual shares and avoid a shareholder meeting. It’s believed the company went this route because it wanted to wrap up the deal quickly and dissuade third parties from jumping in at the last minute.
“It represents a cleaner way of getting shareholders and management bought out,” said Frederick Moran, an analyst at Stanford Group Co.
Ben Bernanke encouraged by banks raising capital
Federal Reserve Chairman Ben Bernanke offered an upbeat assessment of financial conditions Thursday, saying he is “encouraged” by the recent ability of banks to raise capital from “diverse” sources.
In prepared remarks to a Chicago Fed conference, Bernanke cautioned that conditions remain fragile, and urged financial institutions to stay “proactive” in raising fresh capital, saying it will create “new profit opportunities as conditions in the financial markets and the economy improve.”
“Importantly, capital raising and balance sheet repair allow for the extension of new credit, which supports economic expansion,” he said.
Much of Bernanke’s prepared remarks — which didn’t address the economy or monetary policy — dwelled on the lessons from the recent financial crisis.
That crisis resulted in large cuts in the fed funds and discount rates and new initiatives by the Fed to boost liquidity in frozen credit markets.
US data shows weak manufacturing and labor sectors
U.S. economic data released Thursday is keeping recession worries afloat, showing continued weakness in the labor market and a struggling manufacturing sector.
The Federal Reserve’s monthly industrial production report was grim, showing a larger-than-expected plunge in April. A wide swath of manufacturers cut output, leading to a 0.7% drop in overall production among the nation’s industries.
Export growth spurred by a falling dollar wasn’t sufficient to offset the drag of faltering demand within the U.S.
Meanwhile, the number of U.S. workers filing new claims for unemployment benefits rebounded modestly last week, indicating that labor market conditions remain weak.
Initial claims for jobless benefits increased by 6,000 to 371,000 after seasonal adjustments in the week ended May 10, the Labor Department said Thursday.
JC Penney plans to improve operations
After posting a 50% plunge in first-quarter net income, J.C. Penney Co. (JCP) said in a conference call with analysts on Thursday it has an array of plans to improve operations.
One of the areas J.C. Penney executives emphasized is bringing down excess inventory. The company is also continuing to roll out new merchandise lines in the belief that fresh concepts are a key to success.
J.C. Penney is also expanding successes such as the Sephora makeup line. The company’s Ralph Laureninspired American Living line was also talked up, although some critics question just how much of the line, which was introduced early this year, Penney is selling.
“We’re definitely taking steps to improve our business,” said President Ken Hicks.
BofA and Wells Fargo in processing venture
Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) are joining forces to create a platform that handles electronic payments as more customers use online banking to pay bills.
The new entity, called Pariter Solutions LLC, will be the country’s largest processor of automated clearinghouse payments. Financial terms weren’t disclosed.
Stephanie Sturgis-Griffin, a Wells Fargo senior vice president who will be the venture’s chief executive, said the effort is aimed at making payment handling more efficient and to coordinate the companies’ infrastructure.
In calling electronic payments “the wave of the future,” she noted that automated clearinghouse volume continues to climb and that the two banking giants’ customers won’t see any difference after the venture begins its payment processing operations in late 2009.
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