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China Folds On Reforms – Bails Out 2nd Shadow-Banking Default After “Last Drop Of Blood” Threats

China Folds On Reforms – Bails Out 2nd Shadow-Banking Default After “Last Drop Of Blood” Threats

Tyler Durden on 02/17/2014 14:20 -0500

As we showed over the weekend, it is abundantly clear that for all the talk of reform, Chinese authorities have found the gap between words and deeds uncrossable. First, Chinese authorities bailed out the relatively small CEG#1 Trust (for fear of contagion); second, the PBOC injects CNY 375 bn into short-term repo to save banks from a liquidity crisis at year-end; third, total social financing rose by the largest amount on record in January (despite all the talk of deleveraging following the Plenum); and now, fourth, thanks to a CNY 2bn loan (to an entirely insolvent coal company), Chinese authorities have bailed out a 2nd wealth-management product – this time even smaller. Read more of this post

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“Soros Put” Hits Record As Billionaire’s Downside Hedge Rises By 154% in Q4 To $1.3 Billion

“Soros Put” Hits Record As Billionaire’s Downside Hedge Rises By 154% in Q4 To $1.3 Billion

Tyler Durden on 02/17/2014 12:15 -0500

A curious finding emerged in the latest 13F by Soros Fund Management, the family office investment vehicle managing the personal wealth of George Soros.

Actually, two curious findings: the first was that the disclosed Assets Under Management as of December 31, 2013 rose to a record $11.8 billion (this excludes netting and margin, and whatever one-time positions Soros may have gotten an SEC exemption to not disclose: for a recent instance of this, see Greenlight Capital’s Micron fiasco, and the subsequent lawsuit of Seeking Alpha which led to the breach of David Einhorn’s holdings confidentiality). Read more of this post

In one of the largest-ever lay-off drive among global technology companies, IBM is said to have started cutting 15,000 jobs globally, with first casualties in India

Big blues at IBM India

Layoffs are likely to spread to all IBM units globally. 2,000 may lose job in India, 15,000 lay-offs worldwide.

Sufia Tippu

2/17/2014 00:00 AM EST

BANGALORE — In one of the largest-ever lay-off drive among global technology companies, IBM is said to have started cutting jobs globally on Wednesday, with first casualties in India.

Wral TechWire, a tech-related website, quoted IBM staffers in Bangalore as saying that “people broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands.” Unofficial estimates put the sacking number at around 1,000 in Bangalore alone.

Poor fourth-quarter results reported last month, marked by a 26 percent slump in hardware revenue, is suspected to be the main cause of layoffs. Worldwide, IBM employs 430,000 people and reports say some 13,000 jobs are likely to be cut as the tech major performs a “global rebalancing” act, termed “resource action” or RA, that could save about $1 billion in costs.

Bloodbath at STG Bangalore
Already, at one centre in Bangalore, IBM has asked about 40 people at its Systems Technology Group (STG) to leave, one person at the company told The Economic Times (ET). STG is often referred to as IBM’s hardware division, according to the company’s website.

According to the report, a person in Bangalore said on condition of anonymity that they were asked to surrender their official laptops and leave. “They were told STG business has been suffering financial woes. Employees across IBM India are extremely disgruntled. Several middle level executives have put in their papers in the last few weeks,” the person added.

“STG Bangalore literally turned into a slaughter house today,” Lee Conrad, national coordinator for Alliance@IBM, a union-backed workers group to The Economic Times in an email. “Several employees were called to a meeting and RA’d… and they were asked to vacate premises immediately. Severance package was on an average three months basic component of salary, which is like six weeks full pay,” Conrad said.

RA refers to ‘resource action’ that IBM’s managers at various units were asked to prepare for, ahead of the job cuts, according to media reports in the US. “People broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands,” according to the email.

According to the union, job cuts in the Systems and Technology Group are happening because of a drop in profits and IBM’s drive for $20 (Rs 1,240) earnings per share. IBM has set itself this earnings target by 2015, but analysts have questioned if this is achievable, especially after the company’s latest results.

Although IBM has not confirmed the layoffs sources confirmed that hundreds of IBM staffers at its Bangalore office were asked to leave suddenly. Some of them, it is said, were given just a couple of hours notice and asked to leave behind their laptops and vacate the premises pronto, said the DNA newspaper.

IBM’s poor results lead to lay-offs 
Last month IBM had agreed to sell its low-end server business for $2.3 billion to Lenovo, which had already bought company’s PC business. At STG, “even people with very high rating were asked to leave. Two weeks ago they were told there would be no salary hikes this year,” the report added.

IBM reported a 5 percent drop in revenue in the December quarter versus the year-earlier period and analysts attribute a slightly higher-than-expected earnings per share for the quarter to measures including share buybacks and not growth in business. “We are hearing up to 15,000 cuts worldwide in the first quarter. We expect job cuts in the US February 26.” Conrad said.

In India,  IBM has a  head count of over 130,000, its largest presence outside the US.

Chief financial officer Martin Schroeter told analysts in a conference call last month after the company reported its fourth quarterly decline in sales that the hardware business, which sells mainframes, servers, storage and related gear, was facing difficulties and would see job cuts.

Currently the talk among recruitment experts is that IBM may be targeting up to 2,000 job cuts in India though nobody is confirming this figure yet.

Cuts take place worldwide
The restructuring process, which would see as many as 15,000 jobs being cut globally, including India, Brazil, and the European region.

“The estimate of jobs cut globally is 15,000,” international coordinator at the Alliance@IBM (official IBM employees union) Lee Conrad told an Indian news agency, PTI.

Similar cuts are happening in Brazil, according to WRAL Techwirewhich reported that  an IBMer reached out directly to  the website after reading reports about layoffs in India.

The same thing is happening in Brazil and the story needs to be told, the worker said.

“So far the numbers are close to 450 this time,” the worker who asked not to be identified said. Major cuts also were made in Brazil last year as part of a work force reduction.

Alliance@IBM, which is seeking to unionize North American workers, said Thursday afternoon that some 1,500 layoffs are expected in Brazil.

Lee Conrad, who heads up Alliance@IBM and is a retired IBM worker, had predicted earlier this week that layoffs would start in Europe as soon as the company, unions and governments were able to strike agreements. Unlike the U.S., he said, many EU countries are very strict when allowing corporate cuts.

On the Alliance@IBM website Thursday, posts noted possible layoffs in the works in Australia and Germany,

The tech website stated that the latest “rebalancing” of Big Blue is heading west, with the first reports of job losses in the U.S. coming from New York. There, a “few”contractors have been “walked out.”

Speculation has been that layoffs in the U.S. would begin either Feb. 19 or Feb. 26.

“Reports from Europe and South America are also coming in. In Europe, due to union contracts, the targeted cuts must be negotiated,” Alliance noted in an update. “Some cuts will be voluntary.”

The layoff count as off Thursday evening as compiled by the Alliancebased on reports from workers and affiliated unions in Europe:

Belgium, 105

Argentina, 600

Brazil, 1500

Netherlands, 240

Norway, 35

France, 480

Italy, 430

Interestingly, the reductions in Italy include 60 workers who sources there say are “being moved out to Lenovo.”

Lenovo is in the process of buying IBM’s x86 server business, which is part of the STG group. About 2,000 IBMers in Research Triangle Park are expected to be transferred to Lenovo, which operates its executive headquarters in Morrisville. The total is around 7,500 worldwide.

If IBM cuts follow a similar plan as implemented in 2013, some 13,000 layoffs across its workforce of more than 434,000 are expected. That 2013 plan led to hundreds of layoffs in North Carolina and about 3,500 across North America, based on documents and sources. IBM still employs about 9,500 people across North Carolina.

Lay-offs could be done sensibly
Globally, other tech firms like Intel and Texas Instruments are reported to be laying off 5,000 and 1, 100 employees respectively.

Even in India, there is speculation that iconic IT firms may well lay off up to 2,500 staff each during the January-March quarter.

“Sacking, though a tough choice should be done when needed but sensibly and not in such a inhuman manner. We know that companies have to do it, across the world and even in the US, there were so many lay-offs during recession.,” says an IBMer on condition of anonymity.

“Hundreds of us have left our cities  and made Bangalore our home because we were employed by IBM here. IBM was such a well-reputed company and we were so proud to work here. There are several premises where IBM operates in and each has become a landmark in the city. Tell  an auto rickshaw driver  that some address is near the IBM building in say, Bannerghata or Hebbal, he takes us unerringly to the correct address. Our parents are also  so shocked at this turn of events” said another young IBMer, who came from Kolkatta.

Real estate business has been booming because of the IT population in Bangalore where many of them have bought apartments on housing loans. “ Banks would immediately sanction loans when we say we work for IBM. Now, the question is how are we going to pay the monthly installments without a job?” laments another IBMer who used to for work with the STG group.

In India, Bangalore is a key centre for IBM with major office blocks in Manyata Embassy Business Park in Hebbal and Embassy Golf Links near Domlur and Bannerghata which are sprawling campuses employing thousands of engineers.

IBM’s response 
When contacted by PTI, an IBM India spokesperson said, “As reported in our recent earnings briefing, IBM continues to rebalance its workforce to meet the changing requirements of its clients and to pioneer new, high value segments of the IT industry.” Read more of this post

Chinese football super league becomes club for real estate firms

Chinese football super league becomes club for real estate firms

Staff Reporter

2014-02-17

Chinese financial group Ping An is rumored to have won the bid as the new sponsor of the Chinese Football Association Super League (CSL), a professional association mainly comprised of clubs backed by property companies, reports the Shanghai-based First Financial Daily. Read more of this post

Lee Khoon Choy: Golden Dragon and Purple Phoenix – The Chinese and Their Multi-Ethnic Descendants in Southeast Asia

Golden Dragon and Purple Phoenix – The Chinese and Their Multi-Ethnic Descendants in Southeast Asia [Hardcover]

Khoon Choy Lee (Author)

image001-16

Publication Date: May 29, 2013 | ISBN-10: 9814383430 | ISBN-13: 978-9814383431

Many books have been written about the Chinese in Southeast Asia, but very few, if any, are written specifically about the multi-ethnic descendants of Chinese immigrants. Golden Dragon and Purple Phoenix is not about the diaspora per se of Chinese in Southeast Asia but about the impact of intermarriage between Chinese immigrants and the natives, that is, the intermingling of blood and the offspring from such unions — the influence they wielded on the society and environment they chose to live in. Read more of this post

Managerial Ability and Earnings Quality

THE ACCOUNTING REVIEW American Accounting Association

Vol. 88, No. 2 DOI: 10.2308/accr-50318 2013 pp. 463–498

Managerial Ability and Earnings Quality

ABSTRACT: We examine the relation between managerial ability and earnings quality.

We find that earnings quality is positively associated with managerial ability. Specifically,

more able managers are associated with fewer subsequent restatements, higher

earnings and accruals persistence, lower errors in the bad debt provision, and higher

quality accrual estimations. The results are consistent with the premise that managers

can and do impact the quality of the judgments and estimates used to form earnings.

 

The Audit Committee: Management Watchdog or Personal Friend of the CEO?

THE ACCOUNTING REVIEW American Accounting Association

Vol. 89, No. 1 DOI: 10.2308/accr-50601 2014 pp. 113–145

The Audit Committee: Management Watchdog or Personal Friend of the CEO?

ABSTRACT: To ensure that audit committees provide sufficient oversight over the

auditing process and quality of financial reporting, legislators have imposed stricter

requirements on the independence of audit committee members. Although many audit

committees appear to be ‘‘fully’’ independent, anecdotal evidence suggests that CEOs

often appoint directors from their social networks. Based on a 2004 to 2008 sample of

U.S.-listed companies after the Sarbanes-Oxley Act, we find that these social ties have a

negative effect on variables that proxy for oversight quality. In particular, we find that

firms whose audit committees have ‘‘friendship’’ ties to the CEO purchase fewer audit

services and engage more in earnings management. Auditors are also less likely to issue

going-concern opinions or to report internal control weaknesses when friendship ties are

present. On the other hand, social ties formed through ‘‘advice networks’’ do not seem to

hamper the quality of audit committee oversight.

 

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