Google buys Zagat to vie with OpenTable, Yelp

Google buys Zagat to vie with OpenTable, Yelp

Stock Market Predictions

SAN FRANCISCO (Global Markets) - Google Inc has bought popular dining ratings authority Zagat, adding a valuable brand to its content offerings and bolstering its push into the rapidly growing local commerce market.

Local commerce offers services such as finding a discount from a nearby store, or a review of a neighborhood eatery, and the world's No. 1 search engine plans to compete in this market against Yelp and OpenTable.

The deal, for which Google did not provide financial information, gives it valuable content about restaurants, hotels and nightclubs that can be paired with its popular online maps and mobile search services.

Google needs to provide more than just directions to consumers seeking information about restaurants and other local businesses, said Marissa Mayer, Google's VP of Local, Maps and Location services, in an interview with Global Markets on Thursday.

"It's also (about) getting them a sense of the place. A sense of what to expect," said Mayer. "Zagat reviews, in a few short lines and a few scores, gives you a great sense of a place very quickly when you're on the go."

The move is part of Google's push to adapt its online services for a world in which consumers increasingly access the Web on mobile phones such as Apple Inc's iPhone and rely on social networking services such as Facebook to get information from friends.

Last month, Google announced plans to acquire mobile phone manufacturer Motorola Mobility for $12.5 billion. The deal, if approved by regulators, will allow Google to produce its own line of smartphones based on its Android software.

"A reasonable person would say that Google may never beat apple in product design by itself. At least not for a sustainable period of time. But Google could better integrate content and have that become another reason to buy those devices," said Stifel Nicolaus analyst Jordan Rohan.

The 32-year-old Zagat, which polls consumers and compiles reviews about restaurants around the world, will become a cornerstone of Google's "local offering", Google said.

"This underscores Google's local and mobile initiatives," said Brian Pitz, an analyst at UBS, who expected the acquisition to provide a boost to Google Maps as customers look for restaurants. Last year, Google moved Mayer, a top search executive, to head its local initiatives.

Google needs reviews and other content for its "Google Places" websites, in part to fend off criticism. It has been accused of using comments from review sites such as Yelp, essentially siphoning off their readers and, more importantly, their clicks. Google has toned down its borrowing of comments recently, Pitz said.

The Federal Trade Commission has been looking into the issue as part of a broad antitrust investigation, a source familiar with the probe has said.

The move raises the question of whether the search giant will start its own restaurant reservation service, building on existing ties with restaurants that advertise on it.

The shares of restaurant-booking service OpenTable, which also publishes reviews and ratings, closed down more than 8 percent at $57.50 on Thursday after hitting a low of 54.50 earlier in the day.

OpenTable is already reeling from financial results that have disappointed investors this year and the departure in May of CEO Jeffrey Jordan, who joined venture-capital firm Andreessen Horowitz. Jordan remains chairman.

Pitz said expanding into reservations would require extra steps such as building out reservation software and getting restaurants to install it, as well as building different relationships with the restaurants.

"It's apples and oranges," he said.

While much of Zagat's content is free and available to anyone, some content remains behind a paywall and it was unclear if Google would remove it.

Founded by Tim and Nina Zagat, the eponymous service provides the familiar burgundy pocket-sized guides to restaurants in more than 100 cities. It may be one of the earliest forms of user-generated content, Google Vice President Marissa Mayer said in a blog post on Thursday.

Zagat gave Google a tongue-in-cheek rating on its home page on Thursday, awarding the Internet company a maximum 30-point rating for its "local, social, mobile and usefulness" categories. Industry analysts regard the local, social and mobile markets as some of the fastest-growing areas of the technology sector.

"We are thrilled to see our baby placed in such good hands and to start today as official 'Googlers,'" the founders said in a joint statement.

Zagat enlisted Goldman Sachs to explore a sale as early as 2008, although no buyers emerged in the middle of a recession. The company might fetch as much as $200 million, it was reported at the time.

In late 2009 Google was in talks to acquire Yelp for at least $500 million, according to news reports at the time, but the deal fell apart.

(Reporting by Edwin Chan and Sarah McBride; editing by Maureen Bavdek and Andre Grenon)

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Saab union eyes bankruptcy push

Saab union eyes bankruptcy push

Stock Market Predictions

TROLLHATTAN, Sweden (Global Markets) - Saab faced a fresh threat to its survival on Friday after a union said it would next week push for the ailing car maker to be made bankrupt.

Saab's workers are still waiting to get their pay for August and unions have the right to seek bankruptcy if they want to activate a state scheme to pay the salaries instead.

The company said it would make a fresh application for court protection from creditors on Monday, as it tries to fend off what many commentators see as the inevitable collapse of the 60-year-old group, but a lawyer said he thought the plea for the process, called a reconstruction, would be rejected again.

Production at Saab, rescued from closure just last year, has been halted for months as bills to suppliers remain unpaid.

White collar union Unionen said it would make a legal move next week. "We have to act quickly," said legal officer Martin Wastfelt. "We must act within a couple of working days."

The blue collar union, IF Metall, and a smaller engineers union said they would wait, but wanted a quick wage solution.

"As we see it today, there is a possibility that our members will get their money from Saab, but that must happen soon, in a couple of days the money must be in the bank accounts," IF Metall chief Stefan Lofven told reporters.

Saab's Dutch-based owner Swedish Automobile NV (SWAN.AS) was not throwing in the towel.

"We anticipate filing (an appeal) by Monday," Swedish Auto Chief Executive Victor Muller said, referring to an appeal against a lower court decision on Thursday to reject the company's application for protection of creditors.

His company, then called Spyker, rescued Saab from closure in early 2010 by buying it from General Motors (GM.N), but ran into a cash crisis this year.

"We are now talking with our Chinese partners and our Chinese advisors to put together a more convincing and compelling information package to submit to the court," he said in an interview on public radio.

Muller said the company had money to pay the salaries but had been legally advised it could not pay out as this would be showing preference to one set of creditors over another.

SCEPTICISM

Hans Rydberg, an official at the state debt collection agency, which has been seizing funds in Saab accounts to pay suppliers' debts, told public radio that Muller would be breaking the law if he had concealed funds.

Muller told news agency TT he has all along been advised by lawyers. "The advice we have been given is that we are absolutely within the law," he said.

Saab has said suppliers are owed 150 million euros.

Rolf Abjornsson, a partner at law firm Danowsky & Partners who specializes in insolvency and company reconstruction, said Saab's court appeal was likely to be fruitless.

"The law requires that there is a reasonable chance that the reconstruction process will work. If you have production stopped and you have no cash, then you have no proper financing. It just does not add up," he told Global Markets.

Muller told the radio that the court appeal would answer the first court's questions about the process by which Chinese car companies Pangda Automobile Trade Co Ltd (601258.SS) and Zhejiang Youngman Lotus Automobile are seeking approval from China's authorities to invest 245 million euros. ($343 million)

Saab will also supply to the appeal court more detail on when that money can be expected and whether it is sufficient to get the company up and running again.

The first court said the company had already had protection from creditors in 2009-2010 and it had not made a convincing argument for a new scheme.

Swedish Automobile's shares were down 42 percent at 0.4150 euro at 1425 GMT after a two-day suspension. They are down 79 percent this year.

In Sweden skepticism is high about the chances of survival for Saab, a small niche maker of premium cars in a highly competitive market dominated by the likes of BMW (BMWG.DE). "End the misery now," was the headline in daily Dagens Nyheter, which went on to say bankruptcy was unavoidable.

Business daily Dagens Industri said: "Someone not blinded by all the beautiful phrases about a premium brand with iconic status and a world-class car factory cannot avoid seeing that Saab as a business stands naked." ($1=0.714 euros)

(Additional reporting by Simon Johnson, Patrick Lannin and Roberta Cowan; Editing by Greg Mahlich and David Holmes)

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Hewitt buy drags on Aon margins, shares slide

Hewitt buy drags on Aon margins, shares slide

Stock Market Predictions

(Global Markets) - Aon Corp (AON.N), the world's largest insurance broker, posted a rise in quarterly profit, but missed analysts' expectations as higher costs squeezed margins at its human resources solutions business.

Aon last year bought HR specialist Hewitt Associates Inc HEW.N for $4.9 billion in a bid to create the world's largest HR services company.

But costs of more than $1 billion at the expanded business in the third quarter almost entirely canceled out incoming commissions and fees. The HR Solutions division's operating margins fell 590 basis points to 11.2 percent.

On a post earnings conference call, Aon said it was still on track to save about $242 million related to the Aon-Hewitt restructuring, and expects to achieve its long-term operating margin of 20 percent in HR solutions.

Sandler O'Neill analyst Paul Newsome said, "The core issue is that they made an acquisition which was controversial to begin with, and is not going as well as we would like it to go."

Shares in Chicago-based Aon fell as much as 10 percent in early Friday trading from a 3-month closing high of $50.94.

Revenue from its brokerage unit rose 9 percent in July-September, with reinsurance revenue up 1 percent to $365 million, and retail revenue up 12 percent as new business grew in Canada, and generally strong growth in Asia and New Zealand.

Unlike in developed markets, insurance has significant growth potential in emerging markets as faster-growing economies and rising disposable income feed demand for vehicle, home and life coverage.

July-September net income attributable to common shareholders rose to $198 million, or 59 cents a share, from $144 million, or 51 cents a share, a year ago. Excluding items, earnings from continuing operations were 69 cents a share.

Analysts had forecast earnings of 73 cents a share, according to Thomson Global Markets I/B/E/S. (Reporting by Aditi Sharma and Aman Shah in Bangalore, Editing by Ian Geoghegan and Gopakumar Warrier)

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Europe's banks, insurers jump on Greece rescue deal

Europe's banks, insurers jump on Greece rescue deal

Stock Market Predictions

LONDON (Global Markets) - Europe's banks and insurers rose on Friday after Greece's private sector creditors agreed to take a 21 percent loss on their debt holdings as part of a rescue plan.

Although the deal will force many banks to take a big hit -- non-Greek banks face a 5.4 billion euros ($7.7 billion) loss -- the Greek deal was seen as reducing the threat the euro zone crisis will spread to Spain and Italy. But risks remain.

"It is good that everybody has been able to make a compromise, but it still needs to be detailed and implemented," said Francois Savary, chief investment officer at Geneva-based fund managers Reyl.

Other investors and analysts also gave it a cautious welcome, saying the threat of further contagion remains.

"There is still the need for a strong policy response, but the market's reaction this morning shows it is willing to give them (EU leaders) credibility," said Paola Biraschi, an analyst at RBS in London. "There is more to come ... but it has restored credibility."

By 0830 GMT the STOXX Europe 600 banking index .SX7P was up 1 percent, pulling back from an early 2.6 percent rally. The index jumped 4 percent on Thursday as a Greek deal neared. The STOXX Europe 600 insurance index .SXIP was up 1.1 percent in early trade.

Four options are being offered to creditors, including bond exchange and rollover offers as well as a bond buyback scheme as part of a 37 billion euro private sector contribution to Greece's rescue plan.

Financial firms are likely to write down the value of Greek bonds in the second quarter, possibly by 21 percent, but more losses could follow. The change in the terms on Greek bonds means ratings agencies are likely to downgrade Greece to selective default soon.

"We have long thought that the most likely outcome for Greek bondholders would be that they would take a small haircut first followed by a larger one at a later date. To give Greece a fighting chance they probably need a write down close to 65 percent," said Gary Jenkins, head of fixed income research at Evolution.

Top early gainers included firms that have been hit hard by the threat the Greek crisis could spread.

Belgian-French Dexia (DEXI.BR) jumped 4 percent and France's BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA), Italy's Unicredit (CRDI.MI), Germany's Commerzbank (CBKG.DE) and Britain's Barclays (BARC.L) all gained over 2 percent. Insurers AXA (AXAF.PA) and Ageas (AGES.BR) were each up about 2 percent.

The Institute of International Finance (IIF), which has led the negotiations for private investors, reckons 90 percent of creditors will sign up. Deutsche Bank (DBKGn.DE), HSBC (HSBA.L), BNP Paribas, Allianz and AXA are among the firms to already sign up.

There is about 150 billion euros of outstanding Greek sovereign debt, so a 90 percent take-up would account for 135 billion euros, including about 54 billion euros in the period up to mid-2014.

Europe's banks held 98 billion euros of Greek debt at the end of last year, with two-thirds of that in domestic hands. They will be recapitalized under the rescue plan, with about 15 billion euros likely to be pumped in, on top of 10 billion already earmarked for them.

About four-fifths of debt is typically held in banking books that may now face a haircut, indicating non-Greek banks face a loss of 5.4 billion euros.

BNP Paribas has the biggest holding outside Greece, with 4.5 billion euros of bonds in its banking book, according to data released last week as part of an industry health check. A 21 percent loss on that would be 945 million euros.

Dexia held 3.5 billion euros and Cyprus's Marfin CPBC.CY held 3.4 billion, indicating a hit to each of over 700 million euros. Commerzbank held 3 billion euros and Societe Generale (SOGN.PA) held 2.4 billion, so they face haircuts of 630 million and 500 million euros respectively. ($1 = 0.695 Euros)

(Reporting by Steve Slater, Myles Neligan and Sudip Kar-Gupta in London and Michel Rose in Milan; Editing by Mike Peacock)

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Pandora shares fall on fears of competition, outlook

Pandora shares fall on fears of competition, outlook

Stock Market Predictions

(Global Markets) - Shares of Pandora Media fell more than 10 percent on Wednesday after the online streaming music service company gave a muted fourth-quarter outlook.

The company posted higher-than-expected third-quarter earnings and revenue after the market closed on Tuesday.

Investors shrugged off that news and focused on broader concerns about the company's growth potential, given a flock of competitors as well as executives' remarks about fourth-quarter revenue.

"We are not comfortable adding to shares at current levels due to valuation and the increased competitive threat from other social music platforms, despite differences in the business models compared to Pandora's Internet radio platform," Stifel Nicolaus analyst Jordan Rohan wrote in a note to investors on Wednesday.

Stifel Nicolaus has a "hold" rating on Pandora stock.

Pandora, which has been around for a decade, runs a mostly free service that recommends different songs based on listener's playlists. Almost 90 percent of its revenue comes from advertising.

The company faces competition on all flanks, from traditional radio companies such as Clear Channel, which has started its own customized online streaming service; satellite radio providers such as Sirius XM Radio Inc; and Spotify, which allows users to integrate its streaming music through Facebook.

Investors had been eagerly awaiting Pandora's initial public offering in June, but the stock price has sunk about 32 percent since then. The company's market capitalization is roughly $2 billion.

Pandora said it expected fourth-quarter revenue of $80 million to $84 million. Rohan wrote that was "below previously implied guidance of $83 million at the mid-point."

During a conference call with analysts on Tuesday, Pandora said it was taking a responsible approach to its forecast, keeping a watchful eye on advertisers who might cut back on fears of a wider economic downturn.

"There's no impact at the moment, but we are paying close attention to what's going on in the marketplace," Pandora Chief Financial Officer Steve Cakebread said during the call.

Shares of the company were down 10.5 percent at $10.60 in morning trading.

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Bayer gains as U.S. hopes revive for stroke drug

Bayer gains as U.S. hopes revive for stroke drug

Stock Market Predictions

FRANKFURT/LONDON (Global Markets) - Bayer (BAYGn.DE) shares rose 2.5 percent on Friday after its stroke-prevention drug Xarelto was recommended by a U.S. panel, moving it a step closer to approval in the world's biggest market.

But analysts said the drug, being developed with Johnson & Johnson (J&J) (JNJ.N), was only likely to carry a claim of non-inferiority, rather than superiority, over the established product warfarin and there may be a need for further studies.

"(The vote) should aid recovery in the stock although investors should be aware that Xarelto could still be delayed in the United States for stroke prevention," JP Morgan analysts said in a note.

Xarelto's place in the global stroke-fighting market, which could top $10 billion annually, had looked in serious jeopardy just three days ago.

On Tuesday, Food and Drug Administration (FDA) reviewers called for the agency to delay approval in an initial assessment, sending Bayer shares on a one-day slump of 7.5 percent.

They recovered on Friday to be up 2.2 percent at 1114 GMT.

Now, with the backing of the advisory panel, the medicine seems likely to get to the U.S. market, though it could face delays and may well end up with labeling that puts it at a disadvantage to rivals.

WestLB analyst Norbert Barth said Xarelto's commercial potential appeared limited, even if it was approved in the U.S. by the target date of early November.

Other analysts were not convinced approval would come so quickly.

Jeffrey Holford of Jefferies said it seemed likely the FDA would require a further small clinical study to assess risks for patients when they come off the drug, delaying its launch by around 12 months.

A delay for Xarelto could give a further edge to a rival treatment, Eliquis, being developed by Bristol-Myers Squibb (BMY.N) and Pfizer Inc (PFE.N), which is considered to have the strongest profile among the new rivals to warfarin.

Another blood clot preventer, Boehringer Ingelheim's Pradaxa, was approved last year and is already available in the U.S. as an alternative to decades-old warfarin.

All three drugs are designed for patients with atrial fibrillation, an irregular heartbeat mainly affecting the elderly that can cause blood to pool, increasing their risk of blood clots and strokes.

Tim Race of Deutsche Bank said it seemed likely Xarelto's label would disadvantage the drug relative to Pradaxa and Eliquis, denting commercial expectations.

That could cut Deutsche's 2015 U.S. Xarelto sales forecasts to 300-400 million euros from a current assumption of 900 million, he added.

Bayer said in a statement it continued to see worldwide peak sales of Xarelto at more than 2 billion euros ($2.8 billion), "irrespective of the decision by the FDA in early November."

The German chemicals-and-drugs group sold exclusive U.S. rights for Xarelto to J&J in 2005. As part of that pact, Bayer stands to receive royalty payments of up to 30 percent on U.S. sales, while retaining exclusive rights outside the U.S.

In Europe, Bayer expects approval of Xarelto in the third or fourth quarter of this year.

($1 = 0.714 Euros)

(Editing by Hans-Juergen Peters, Sophie Walker and David Hulmes)

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General Mills cuts '12 outlook on weak sales

General Mills cuts '12 outlook on weak sales

Stock Market Predictions

(Global Markets) - General Mills Inc (GIS.N) cut its 2012 outlook on Friday, citing weak sales volume, and its shares fell more than 4 percent.

The maker of Progresso soups and Cheerios cereal said it expected 2012 earnings of $2.53 to $2.55 per share, down from a prior forecast of $2.59 to $2.61.

The company forecast earnings of 54 cents to 56 cents per share for the third quarter ending on February 26.

The company plans to report third-quarter earnings on March 21.

General Mills shares fell 4.2 percent to $38.10 in premarket trading.

(Reporting By Martinne Geller in New York; Editing by Lisa Von Ahn)

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