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REWIND: International Business News #9

Posted on December 6th, 2010 | Author: admin

  • Apple Inc. is forced to lawyer up yet again.  Apple Inc. (California) has been involved in endless litigation since the introduction of its iPhone to the market in 2008. The latest suit, to be heard by the International Trade Commission (ITC) is between Apple Inc., the front runner in the Smartphone market and Nokia Oyj (Finland) the world’s largest mobile phone maker. In addition, Apple Inc. is wrapped in lawsuits over patent rights against Motorola (Illinois) and HTC (Taiwan). Google Inc.’ Android operating system, the world’s most advanced software for the Smartphone (currently adopted by HTC and Motorola) is seen as Apple’s biggest competitor. Lawyers for Apple believe that the company’s phenomenal success has caused rivals to go down the litigation route, in an effort to curb their continued growth. The spiraling legal action, between the world’s leading phone companies remains prevalent in the technology market.
  • In an attempt to re-gain control of its consumer business, Starbucks (Washington) face up against Kraft Foods (headquartered in Chicago and Switzerland) in a rumored takeover battle. Pursuant to a partnership agreement by and between the parties in 1998, the two have worked in close collaboration until the recent turmoil. Kraft Foods is now seeking to stop the company, which currently operates in over 50 countries worldwide, from selling their pre-packaged goods under the Starbucks name. In retaliation, Starbucks are alleging that Kraft Foods had previously breached various terms of their agreement. However, the joint venture grants Starbucks the right to buy back the property rights depending on market rates. Starbucks, in a constant struggle to return to profitability, has greater incentive to regain control of these rights. 
  • United States federal court have forced 82 websites to close in the wake of Cyber Monday, notoriously known as the highest day for cyber crime in the year. Authorities have found a substantial surge in the presence of websites selling counterfeit goods, using falsely branded names and violating other property rights. Significantly, seventy seven of the websites were China-based. Not surprisingly, it has been pinpointed as a major player in creative theft abuse. The federal authorities have been focusing their resources to prevent the spread of these illegal websites, in an effort to stop the loss of billions of dollars to the government and the legitimate business market. This particular rise in cyber crime and intellectual property infringement has been on the authorities’ radar since last June.
  • Credit default swaps have fallen 40-60 percent (%) in anticipation of new regulatory measures soon to  be imposed. The severe decline is the result of reduced financial activity, uncertainty and sweeping financial reform. Firms, which previously reaped the benefits of these financial markets, are now faced with harsh cuts in profits and job positions. The Depository Trust & Clearing Corp. (DTCC), has announced that credit swaps have fallen a considerable 20% worldwide within the past two years. The Dodd Frank Reform Act seeks to act as a protective measure by reducing the risk these swaps carry, requiring the trades to go through clearinghouses, funded by the banks. Furthermore, the Act demands the presence of collateral to support such trades, resulting in greater transparency and efficiency of over the counter (OTC) derivates. Recently, Congress failed to implement its proposal which sought to ensure that investors could only buy swaps if they owned the underlying debt there were insuring. Consequently, this has spurred anxiety in the market as the extent of the rules and regulations to be imposed next year remain unknown. 
  • Rise in hedge fund consolidations lifts market spirits. In the hope of taking shelter from harsh conditions ravaging the markets since 2008, smaller hedge funds are taking advantage of the capabilities, resources, and finance available in larger firms. MAN Group (London) bought GLG Partners (London) for $1.6 billion, while Credit Suisse is projected to buy a minority stake in York Capital (New York) for $425 million.  Although hedge funds and asset management are merely small facets of the much larger merger market, it is nonetheless grasping the attention of bankers as an area of expected future growth. Despite the effects of the financial crisis, this sector of the market has seen an increase in global mergers of more than six percent (%) over the past two years. Furthermore, it is anticipated that these mergers will continue to grow over the next few years.

Compiled and summarized by Muireann O’Keeffe.