The Star Online: Business
The Star Online: Business |
- Oil price rises as Irene heads for the East Coast
- AMD names new CEO from Lenovo
- Few think Bernanke speech will signal major action
| Oil price rises as Irene heads for the East Coast Posted: 25 Aug 2011 05:33 PM PDT NEW YORK: Oil rose Thursday as concerns grew about the potential impact of Hurricane Irene on U.S. oil and gas supplies. Benchmark West Texas Intermediate crude rose 14 cents to finish at $85.30 per barrel in New York. Brent crude, which is used to price oil produced abroad, rose 47 cents to end the day at $110.62 per barrel in London. Analyst Tom Bentz with BNP Paribas Commodity Futures in New York thinks Irene is pushing up oil because of the possible problems that coastal flooding could cause for refineries and shipping. Refineries in Delaware, New Jersey, Pennsylvania and Virginia produce nearly 8 percent of the country's gasoline and diesel fuel. Irene is forecast to affect a broad area, from North Carolina to Canada, with flooding and winds as high as 120 miles (190 kilometers) an hour. Some forecasters think Irene could be the worst hurricane to hit the Northeast in 50 years. In other energy trading, heating oil rose 2.42 cents to finish at $2.9932 per gallon and gasoline futures rose 4.59 cents to end at $2.8017 per gallon. Natural gas was up almost a penny to finish at $3.931 per 1,000 cubic feet after the government said the nation's supplies rose last week. - AP |
| Posted: 25 Aug 2011 05:31 PM PDT NEW YORK: Chip maker Advanced Micro Devices Inc. has named an executive from PC maker Lenovo Group as its new CEO Thursday, giving him a mission to improve the struggling company's finances and turn the rise of smartphones and tablets into an opportunity rather than a threat. Rory P. Read, who was Lenovo's chief operating officer, takes the helm of AMD from Chief Financial Officer Thomas Seifert, who had served as interim CEO since January, when Dirk Meyer was ousted. Seifert remains the company's CFO. AMD, based in Sunnyvale, California, is Intel Corp.'s only sizeable competitor when it comes to making PC processors, with about 20 percent of the market. It's also a leading maker of graphics chips. AMD has long struggled against Intel and has been unable to match the larger company's enormous investments in research and chip factories. Now, both companies are facing the rise of smartphones and tablets, which don't use their chips and are starting to take a bite out of PC sales. Next year, Microsoft Corp. will launch Windows 8, which will be able to run on cellphone-style chips in addition to Intel and AMD chips. AMD's board felt Meyer had not acted fast enough to address the change in the industry and broaden the use of the company's chips. "There a number of very important changes taking place around our industry, and these changes create opportunities. We'd like to develop strategies that thoughtfully but aggressively take advantage of these opportunities," AMD chairman Bruce Claflin told analysts on a conference call Thursday. The board also wants Read to improve the company's margin and restore growth in its current markets, Claflin said. AMD is set to launch a chip for tablets next year. Intel already sells chips for tablets and similar devices, but their usage is minimal. Read said the future of the PC market is still bright. "The core PC market space is going to continue to expand. I believe it will grow in the next five, ten-plus years, and I think it particularly will be strong in emerging markets as those economies expand their middle classes," he said on the conference call. AMD shares jumped Thursday morning after Read's appointment, but subsided through the day as broader markets declined. In afternoon trading, they were up 3 cents at $6.37. Intel's shares fell 34 cents to $19.47. Lenovo, which is based in China, is the world's third-largest maker of PCs. Read worked for 23 years at IBM, and followed the PC division to Lenovo, which bought it in 2005. Lenovo said it had no immediate plans to name a new COO. The functions that reported to Read will now report to CEO Yang Yuanqing. Claflin was AMD's executive chairman during the search for a new CEO. He will lose the "executive" part of the title and return to being board chairman. - AP |
| Few think Bernanke speech will signal major action Posted: 25 Aug 2011 05:30 PM PDT WASHINGTON: Many on Wall Street hope Federal Reserve Chairman Ben Bernanke will unveil a new effort Friday to boost the economy in a highly anticipated speech in Jackson Hole, Wyoming. Economists say a major new program is unlikely. But Bernanke will likely lay out the Fed's options for lowering long-term interest rates even further. His speech comes at a pivotal moment for the U.S. economy. Growth has slowed. Stock prices have been gyrating. Europe is struggling to contain a spreading debt crisis. And analysts have been reducing their forecasts for growth this year and next. The situation resembles the one Bernanke faced last year. He responded at the annual economic conference in Jackson Hole by suggesting that the Fed could buy more government bonds. The goal was to reduce long-term rates, stimulate spending and lift stock prices. The Fed began buying $600 billion in Treasurys in November and completed its purchases in June. Stock prices rose steadily throughout the bond-buying program. One reason few expect any such dramatic step this time is that just two weeks ago, Fed policymakers said they would keep short-term rates at record lows for two more years. "It would seem strange for Bernanke to conclude so soon that this move was not enough," Paul Dales, an economist at Capital Economics, said in a note to clients. Inflation is higher than it was last year, though still within the Fed's target range. But the Fed prefers to consider "core" inflation, which excludes volatile food and energy prices. Core prices rose 1.8 percent in July from July last year. That's twice the rate in July 2010, when the Fed was worried about deflation - a debilitating drop in prices and wages. Last month, Bernanke said the Fed would consider further steps if the threat of deflation returned. The Fed chairman will likely outline the economy's challenges and explain why growth will probably stay weak for several years, analysts said. After its Aug. 9 meeting, the Fed said it would keep its options open in case conditions worsened. Bernanke has previously outlined those options: - Buying more longer-term securities. The Fed could replace its short-term Treasurys, once they mature, with longer-term securities. The idea would be to reduce longer-term rates, such as those for mortgages and auto loans. Doing so might spur more consumer spending, which accounts for about 70 percent of the economy. - Reducing interest rates on bank reserves. The Fed could start paying banks less interest on the excess money they keep at the Fed. The Fed pays only about 0.25 percent interest now. But paying even less could encourage banks to lend more money rather than hoarding it at the Fed. - Clarifying how long the Fed will maintain its portfolio of bonds and other securities. That portfolio amounts to about $2.9 trillion, mostly government bonds and mortgage-backed securities. Reinvesting the proceeds from maturing bonds could keep the Fed's portfolio stable and help keep down rates. And providing a rough timetable could give investors confidence about how long rates will stay low. - Launching another round of government bond purchases. The $600 billion in Treasurys the Fed bought earlier this year was the second round of such purchases. Bernanke argued last month in testimony to Congress that the Fed's second round of purchases - dubbed quantitative easing II , or QE2 - helped keep rates down and stave off deflation. Critics question whether those purchases helped the economy. Some argue that by injecting more dollars into the financial system, the Fed raised inflation pressures and potentially reduced consumers' purchasing power. "If QE2 worked so well, why are we talking about QE3?" asked Tom Porcelli, chief U.S. economist at RBC Capital Markets. Consumers are trying to pay down debt, Porcelli said, and don't want to take out more loans, even at low rates. Mortgage rates are near record lows. Yet that hasn't spurred home buying. "Growth is likely to be sluggish for a while, and there's not a whole lot the Fed can do right now," said Mark Vitner, an economist at Wells Fargo Securities. "The U.S. economy is going to have to gut it out." - AP |
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