October 2008 Archives

October 2, 2008

California to attend CeBIT and launch Germany-California ICT Summit

California will be officially represented at CeBIT, a trade show for information and communications
technology (ICT) that will take place in March 2009 in Hannover, Germany.  According to Governor Schwarzenegger’s press release:

Governor Arnold Schwarzenegger today announced California will be the first state to be the official partner of CeBIT, the world’s largest trade fair for digital business solutions and information and communications technology (ICT). In previous years, CeBIT has partnered with other nations
including the United States, France, Russia, India and Canada. As the Partner State, California businesses will be highlighted above all others, providing a great opportunity for business matchmaking and networking for California businesses “I am excited to officially announce that California will be the 2009 CeBIT partner state, a role previously reserved only for nations, and we look forward to demonstrating California’s global leadership in information communications technology,” said Governor Schwarzenegger. “Not only does CeBIT provide California with a venue to showcase our innovative spirit, it is a tremendous opportunity for California companies looking to promote their
products in the global marketplace. I urge businesses across California to showcase
their innovation at CeBIT 2009.”

At CeBIT 2009, California will spotlight the state’s innovative ICT technologies in several key industries including green IT, entertainment, Internet-based services, TeleHealth, security, consumer
electronics, digital content generation and distribution, aerospace, and research and technology. The star attraction of the Partner State program will be the Germany-California ICT Summit. The two entities will use this opportunity to step-up collaboration and stimulate more bilateral business. “It is fitting that we are in the Silicon Valley today since it is a major source of global information, communications technology and venture capital. The region has garnered a lot of well-deserved attention over the years,” said Dale E. Bonner, Secretary of California’s Business, Transportation & Housing Agency. “But there are also many other innovative information and technology companies located in places like Los Angeles, San Diego and regions throughout California
that will play an important role in CeBIT 2009.”

Filed under California Government, Governor Schwarzenegger, Information Technology by

October 6, 2008

California seeking $7 billion emergency loan from Federal Government

California may be the next domino to fall in the global financial meltdown, and it has gotten surprisingly little attention. Because of the credit crises, the State my had difficulty arranging financing for the bond sales it uses to generate cash flow to run the government. Governor Schwarzenegger has written a letter to the Secretary of the Treasury, Henry Paulson, advising him that California may need a $7 billion emergency rescue loan from the Federal Government. State Treasurer Bill Lockyer warned that the State’s cash revenues will dissipate completely by the end of the month, and the state’s 5,000 cities, counties, and school districts will face job layoffs and payments for law enforcement agencies, teachers, nursing homes and an array of other services and government entities could soon be suspended.  As reported in Financial Times:

California’s economy, which would be the eighth biggest in the world if the state was a separate country, is teetering on the brink of a financial crisis intensified by the credit crunch. California is weeks away from running out of money. In a letter to Hank Paulson, the US Treasury secretary, Arnold Schwarzenegger, California’s governor, last week admitted an immediate $7bn was needed to pay for essential public services, such as police and fire-fighters.

California would normally generate interim funding by issuing “revenue anticipation notes” in the short term credit markets to tide it over until tax revenues arrive later in its financial year. But the door to the credit markets is firmly closed.   Other states are also suffering from poor economic conditions and declining tax revenues.

Florida, Nevada, Massachusetts and Ohio have dipped into their reserves  to maintain spending, according to Robert Kurtter, managing director of Moody’s US public finance group. But he said California’s situation was unique as it often relied on the capital markets to maintain spending commitments.  “When you have that dependency year-in-year-out you are going to get caught out when the markets are disrupted,” he said. “And that’s exactly what happened.”

Unlike most other states, California does not have a reserve fund and because it depends heavily on capital gains tax and stock option realisations, its revenues can be volatile. The looming cash flow crunch has caused considerable alarm.  “We are two weeks or so away from not being able to pay teachers and fire-fighters,” said Ross DeVol, director of regional economics at the Milken Institute, a Los Angeles-based think-tank.

Passage of the $700bn bail-out bill last week may not have solved the state’s immediate problems. “If we could get through the next two or three weeks without another financial institution being taken over that might restore confidence in counter-parties. But I don’t think the bill will free up the credit markets in the near term.”

Bill Lockyer, California’s treasurer, said immediate cash needs could be met with as little as $3bn.  But to end its reliance on the markets, California must first become better at balancing its budget, said Mr Kurtter. “Typically, when entities get into trouble it begins with cash flow. And when you are chronically running budget deficits, your cash is going to dry up.”

Filed under California Economy, California Government, U.S. Government by

October 7, 2008

EBay Inc. to eliminate 1,600 jobs

EBay Inc. plans to eliminate 1,600 jobs, or 10 percent of its workforce, to reduce costs as the company tries to revive its slowing growth, according to a report in the San Francisco Chronicle:

The staff cuts include 1,000 full-time, temporary and part-time workers, plus some open positions that will be left unfilled. They come on top of 125 dismissals earlier this year by the San Jose company, whose core online marketplace is slumping in the face of stiff competition from Amazon.com and users’ growing preference for shopping for products at a fixed price rather than by auction.

John Donahoe, eBay’s chief executive, said that reducing staff will “make us a nimbler, more efficient organization.” He acknowledged that the economy and an unfavorable foreign exchange rate are hurting the company’s finances, although the cuts largely are prompted by internal problems.

Imran Kahn, an analyst with JPMorgan, said in a note to investors, “We believe the cuts could help position eBay to more efficiently weather the current challenging economic environment.” EBay expects upfront the job reductions to will cost $70 million to $80 million, which it plans to record in the fourth quarter.

Investors have been pessimistic about eBay for some time, driving its shares down and prompting calls for management to make cuts. Executives have launched a plan to revive the business by emphasizing bigger retailers in the marketplace along with changes to search and user feedback that have proved unpopular with many sellers.

EBay’s acquisition of Bill Me Later of Timonium, Md., is for $820 million in cash and $125 million in outstanding options. By combining forces, eBay is hoping to bolster its PayPal online payments service, which already dominates the industry. Bill Me Now allows users to buy online, but bills them up to 30 days later. At that time, they can pay immediately or take a loan… In addition, eBay plans to pay $390 million in cash to expand its online classifieds business by buying Danish classified site dba.dk and auto site bilbasen.dk.

Donahoe acknowledged that, given the bleak global environment, it might seem counter-intuitive to make major acquisitions. But he emphasized that eBay’s strong cash reserves – it has nearly $4 billion in cash and short-term investments in June – puts it in a position of strength. “In times like this, stronger companies get stronger, and that’s exactly what these acquisitions will help us do,” Donahoe said.

The cutbacks, the biggest ever at eBay, are yet another example of Silicon Valley giants shedding workers amid the economic slump and potentially foretell a stark job environment in the technology industry. Hewlett-Packard and Nvidia both have recently said they plan to pare their workforces, and Yahoo is in the process of reviewing its organization to make it more “fit,” as CEO Jerry Yang put it.

Filed under Information Technology, Internet by

October 10, 2008

HP to build new PC manufacturing plant in China

Hewlett-Packard Co. has announced plans for an advanced manufacturing complex in West China.   According to a report in Silicon Valley / San Jose Business Journal, Palo Alto-based HP plans a 20,000-square-meter facility in Chongqing where it will make notebook and desktop PCs for customers.  Manufacturing operations are expected to begin in 2010. When in full operation, the HP-managed plant is expected to have the capacity to meet market demand in Chongqing as well as other parts of China across government, public and retail sectors. 

Filed under China, Manufacturing by

October 14, 2008

Wine Institute hires international marketing executive

The Wine Institute hired a director of international marketing, according to a report in San Francisco Business Times.  Linsey Simpson Gallagher will fill the new position at the San Francisco-based Wine Institute, created because Joseph Rollo, head of the institute’s international department for 20 years, had seen his work increase dramatically.  Rollo will continue full time work at the Wine Institute under the title director of international trade policy.  Gallagher, who starts Nov. 1, was vice president of her family’s real estate business on the East Coast. She was also marketing manager for E.&J. Gallo Winery and also manager of finance for the NBC Today Show.  Robert Koch is president and CEO of the Wine Institute.

Filed under People on the Move, Wine by

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