The stock market penalized Toyota and publicly held automotive dealership groups and suppliers with exposure to Toyota on Wednesday as news emerged that the U.S. government asked Toyota to halt sales of eight popular models at all Toyota dealerships.

Toyota and its dealers face the daunting prospect of being unable to sell models that made up 58% of Toyota's U.S. sales last year for an unknown period of time until the company and the U.S. government agrees on a way to prevent Toyota's accelerator pedals from sticking.

"For Toyota, basically, there is a real risk of losing potential market share, because you have companies now that are more competitive than they have been in decades," said Aaron Bragman, automotive analyst for IHS Global Insight.

Toyota's stock fell 8% or $7.01 per share on Wednesday to close at $79.77. CTS, which supplies the part believed to have caused the problem for Toyota, fell 2.4% and shares of Denso, a major Toyota supplier partly owned by Toyota, dropped 5.4%.

Bragman noted that Ford gained a full point of market share in the U.S. in 2009, and the Dearborn-based automaker is well-positioned to gain from Toyota's troubles.

John Murphy, Bank of America Merrill Lynch auto analyst, said in a report Wednesday that other brands - especially those such as Ford and Hyundai that are introducing models this year - are likely to pick up sales.

On Wednesday, Ford's stock rose 3.2% or 36 cents to close at $11.55 per share. Ford also is to report year-end earnings today.

Meanwhile, the shares of five publicly traded automotive dealership groups declined. Shares of AutoNation, the largest U.S. automotive retailer, fell 21 cents to close at $18.31 per share.

AutoNation spokesman Marc Cannon gave Toyota credit for getting information out to its dealers as quickly as possible, and for putting the consumer first.
"They are being very proactive," Cannon said.

AutoNation operates 207 franchises in the U.S., including 25 Toyota locations.

A spokesman for Bloomfield Hills-based Penske Automotive Group, which operates 39 Toyota, Lexus and Scion dealerships in the U.S., did not return a phone call Wednesday. Shares of Penske Automotive fell 74 cents to close at $14.09 per share on Wednesday.

American International Group Inc.’s Robert Benmosche became the fourth consecutive chief executive officer to preside over a stock decline at the bailed-out insurer.

AIG fell $1.56 to $26.50 in the four days ended Jan. 22, the ninth decline in the past 10 weeks of trading on the New York Stock Exchange. The insurer ended at $27.14 on Aug. 7, the last trading day before Benmosche replaced Edward Liddy. The shares have dropped 98 percent under the four CEOs who ran the firm since Maurice “Hank” Greenberg resigned in 2005.

AIG’s five-month slide nullifies the rally Benmosche sparked in his first weeks by promising to rebuild what was once the world’s biggest insurer. In the year before his arrival, New York-based AIG reported the biggest loss in U.S. corporate history and accepted government bailouts valued at $182.3 billion in exchange for preferred stock and debt that subordinated common stockholders.

“Regardless of who is at the helm, there are some numbers here that can’t be ignored,” said Catherine Seifert, an equity analyst with Standard & Poor’s. “If you’re going to be at the bottom end of the capital structure you need to know that there’s going to be something left for you” as a common shareholder.

Investors suffered under each CEO since Greenberg ended a reign of more than three decades amid a probe by then-New York Attorney General Eliot Spitzer. The stock fell by almost half in three years under Martin Sullivan before he was ousted by the board in June 2008. Robert Willumstad, whose three-month term ended when he delivered the firm to the government, saw shares drop more than 90 percent.

Out of Retirement

Liddy, called out of retirement by the government after a career at home and auto insurer Allstate Corp., reported losses of $61.7 billion in the fourth quarter of 2008 and $4.35 billion in the first quarter of 2009 before returning to profit in the second. Shares fell by a third during his tenure, which lasted less than a year.

Benmosche took control of a company whose funds had been drained by soured mortgage investments and bad derivative bets. The company was selling assets to repay its aid package, and top employees were fleeing to rivals. Some who remain are subject to pay curbs as a result of the bailout, and have been criticized by politicians and regulators who blamed the company for contributing to the credit crisis.

“Benmosche had a very tough hand,” said Paul Newsome, an analyst with Sandler O’Neill & Partners LP. “Not only did he have a company that needed a lot of work, but he was facing an extremely skeptical stock market.” Mark Herr, a spokesman for AIG, declined to comment.


Steven Udvar-Hazy, the chief executive officer of AIG’s aircraft leasing unit, may leave the company as early as this week, the Wall Street Journal reported yesterday, citing unidentified people familiar with the situation. John Plueger, International Lease Finance Corp.’s president and chief operating officer, may be named Udvar-Hazy’s successor, the newspaper said.

Udvar-Hazy, 63, was replaced last month as chairman of the business he founded 37 years ago by Douglas Steenland, a former airline CEO. AIG is considering selling or breaking up the world’s largest aircraft lessor.

Getting a Raise

Benmosche, a former CEO at life insurer MetLife Inc., negotiated a $7 million annual salary, compared with Liddy’s $1. He fought for higher pay for managers after his predecessor asked some employees to return a portion of their bonuses. Benmosche told staff that regulators were to blame for the insurer’s meltdown and said he would get tough in talks with New York Attorney General Andrew Cuomo over compensation.

“The worst thing that will ever happen to him is when he and I meet in the room and I close the door,” Benmosche, 65, said of Cuomo, according to a record obtained by Bloomberg. Cuomo was “unbelievably wrong” for demanding AIG employees return their bonuses and promising to publish the names of staff who didn’t comply, Benmosche said. Benmosche later apologized for the comments.

AIG under Liddy planned to repay the government’s original September 2008 bailout of $85 billion in two years and hired Paula Reynolds as chief restructuring officer to raise the funds by selling businesses and other assets. Reynolds, the former Safeco Corp. CEO who sold that firm to Liberty Mutual Group Inc., left AIG after Benmosche took over.

Benmosche, while still considering asset sales, has said he wants to slow the pace of deals to allow the units to generate profits that will boost their value. That objective is complicated by clients that have scaled back coverage in the recession and by rivals that are cutting prices to win business.

Stock markets have fallen sharply in response to far-reaching plans by Barack Obama to curb the activities of the biggest US banks.

The Dow Jones closed down 2%, its worst fall since October, while Japan's Nikkei was down early on Friday.
Shares in major US banks Goldman Sachs, JP Morgan and Bank of America all fell.
Mr Obama - who said he was "ready for a fight" with banks - plans to limit the size of banks and impose restrictions on risky trading.
"Never again will the American taxpayer be held hostage by banks that are too big to fail," Mr Obama said.

Limiting risk taking

"While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," Mr Obama said.
His proposals may mean that some of the biggest US banks have to be broken up.
They also include a ban on retail banks using their own money in investments - known as proprietary trading. Instead, banks would be limited to investing their customers' funds.
That attitude brought an immediate reaction from the markets.
Investment banking giant Goldman Sachs lost more than 4% despite announcing a sharp increase in profits. Bank of America fell 6.2% and shares in JP Morgan Chase were down 6.6%.
"Banking reforms do not come bigger than those proposed by President Obama," the BBC's business editor Robert Peston said.

Fighting talk

Mr Obama's move is his first proposal since Republican Scott Brown's shock victory in Massachusetts to win a Senate seat.
The Republican victory may make it harder to get Mr Obama's proposals passed in the Senate, as they are more likely to get held up in political wrangling.
"This is a political effort because of what happened in Massachusetts," said economist Peter Morici of the University of Maryland.
Banks have also been lobbying against more stringent regulation.
"If these folks want a fight, it's a fight I'm ready to have," Mr Obama vowed.
The president dubbed his proposals on limiting bank risk the Volcker rule - after Paul Volcker, one of his economic advisors and a former chairman of the Federal Reserve central bank.
The moves follow popular anger at financial institutions, who have been paying large bonuses to staff even as they accepted government bail-outs to keep them going.
Mr Obama's proposals appear to be a return to the principles underlying the Glass-Steagall Act.
That law - from the 1930s in the aftermath of the Great Depression - separated commercial and investment banking and was eventually abolished in 1999 under President Bill Clinton.
Mr Clinton's financial secretary at the time, Robert Rubin, previously worked at Goldman Sachs and went on to be an adviser to Citigroup until last year.
The latest proposals follow a $117bn (£72bn) levy on banks to recoup money US taxpayers spent bailing out the banks.
The tax will claw back some of the losses from a $700bn taxpayer bail-out of US banks known as the Troubled Asset Relief Program (Tarp).
It was drawn up in the midst of the financial crisis in 2008, following the collapse of US investment bank Lehman Brothers and rescue of insurance giant American International Group (AIG).
The industry lobby group for banks suggested Mr Obama was trying to return the US to the past.
"The better answer is to modernise the regulatory framework and not take the industry and the economy back to the 1930s," said the Financial Services Roundtable, an industry group that represents large Wall Street institutions.
In the UK, City Minister Lord Myners said the US proposals were "very much in accordance with the direction we have been setting".
While shadow chancellor George Osborne said that if the Conservatives won the next general election, they would impose an identical dismantling of UK banks to those suggested by the US president.

Had it not been for an extraordinary write-off, drug maker Dr Reddy’s Laboratories’ (DRL) December quarter results would have beaten market expectations. At Rs 860 crore, the one-time write-off of goodwill of the company’s German subsidiary, Betapharm, has severely impacted its consolidated earnings.

According to global financial reporting standards, the company has reported a consolidated loss of Rs 521.7 crore against a profit of Rs 244.5 crore during the same quarter last year. However, excluding the one-time loss, DRL’s operational performance has been way above market expectations.

Net profit adjusted for impairment was Rs 230.7 crore, beating Street estimates, which expected it to be at Rs 159 crore. Profit margins also showed a marked improvement. DRL enjoyed an exclusivity period for its generic Sumatriptan during the December quarter last year leading to a high base year effect this December quarter. At Rs 1,730 crore, net revenues were down by 6% against market estimates of a 10% drop. The Street cheered the results, pushing the stock up by nearly 2% which closed at Rs 1,201.5.

DRL has fared better than the local industry. Its growth rate of 20% in the past eight months is above the industry rate of 16%. While its performance in the emerging markets of India and Russia has been the key growth driver, North America and Europe proved to be disappointing. The voluntary product recalls carried out by the company in the US market resulted in a flat growth in revenues. Going forward, its generic drug Omeprazole is likely to help ramp up its market share in the US.

DRL’s operational leverage and cost management has helped maintain its selling and other general expenses (excluding the amortisation expenses) at the same level as last year’s. Strategic changes made in senior management, mitigation of profit erosion in the German market, maintaining healthy product line in the US, increased focus on non-regulated branded markets and good operational leverage are likely to help the company achieve its target revenues of $3 billion by FY013.

Mexico's peso slipped on Thursday after a drop in U.S. December retail sales boded poorly for Mexican exports while shares in wireless provider America Movil fell on news its planned to take over fixed-line firms.

The peso MXN=MEX01 lost 0.41 percent to 12.765 per U.S. dollar.

Data showing an unexpected 0.3 percent drop in U.S. retail sales last month raised concerns about the strength of the economic recovery in the United States, the destination for around 80 percent of Mexican exports.

Before Thursday's losses, the peso had gained 3 percent this year on bets Mexico will benefit from the U.S. recovery.

"The peso still feels strong but this data did not help," said a trader in Guadalajara.

The IPC stock index lost 0.43 percent to 32,695 as shares in America Movil fell 5.16 percent to 30.15 pesos.

America Movil, controlled by billionaire Carlos Slim, on Wednesday announced a share swap offer for Carso Global Telecom, which controls Slim's Mexican telecoms company Telmex and affiliate Telmex Internacional. America Movil is also seeking to buy up floating shares of Telmex Internacional.

The consolidation aims to create a provider with fixed-line telephone, mobile and Internet services across Latin America to better challenge rivals.
Shares in Telmex International gained 2.89 percent to 11.73 pesos. Telmex dipped 0.09 percent to 10.66 pesos and Carso Global Telecom gave up 0.13 percent to 62.65 pesos.

When companies take their businesses out of the country, they encounter a myriad of standards, technical regulations and compliance issues, which differ from country to country. While these improve safety, health and environmental safety, they are also a significant difficulty for exporters wishing to bring products to the global market. To help them defeat these hurdles, SPRING Singapore set up the Export Technical Assistance Centre (ETAC) in 2006, in partnership with other government agencies, regulatory establishment and industry associations.

Gaining the competitive edge

ETAC provides enterprises with information on values and conformance-related export requirements. Although ETAC focuses on the food, electrical/ electronic and environmental sectors, the centre also provides support to other industries. The ETAC team analyses new technical system to identify industry needs arising from the latest regulatory requirements, such as difficult and certification. ETAC also proactively conducts studies on existing system to assess their impact on industry and provides inputs to Free Trade Agreement (FTA) negotiations.

Studies every time show that exporting firms are far healthier, more profitable and more competitive than their non-exporting counterparts. Even successful exporters can frequently expand their global reach by targeting new export markets or improving operations in existing export markets.

The Massachusetts Export Center is pleased to launch the Export Growth Initiative, plan designed for new and existing exporters in search of to expand their international market base. The plan focuses on four export-oriented industry clusters:
  • Life Sciences
  • Renewable Energy
  • Software (Enterprise Applications)
  • Specialty Foods & Seafood

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