Fitch Affirms U.S. AAA, For Now, Cuts Outlook To Negative – Forbes

Fitch said:

Rating reflects still strong economic and credit fundamentals. U.S. sovereign liabilities, both the dollar and Treasury securities, remain the global benchmark and accordingly the U.S. credit profile benefits from unparalleled financing flexibility and enhanced debt tolerance, even relative to other large ‘AAA’-rated sovereigns. The U.S. dollar’s status as the pre-eminent global reserve currency and depth of the U.S. Treasury market render financing risks minimal and underpin a low cost of fiscal funding.

Fitch’s latest projections see the federal debt burden topping 90% of GDP and interest accounting for more than 20% of tax revenues by 2020. Throw in local and state debts and gross government debt climbs to 110% of GDP. That level “would no longer be consistent with the U.S. retaining its ‘AAA’ status despite its underlying strengths.”

The ratings agency said it has declining confidence that Congress will put the U.S. on a more sustainable fiscal path, after the Supercommittee failed to find at least $1.2 trillion to cut out of the federal budget over the next decade by last week’s deadline. Last week, Moody’s said its rating was unaffected by the Supercommittee coming up empty, and added Monday that the lack of a deal does not affect its fiscal outlook on the U.S.

Fitch warns that the $1 trillion of automatic across-the-board cuts triggered by the failure of the Supercommittee is primarily focused in discretionary spending, no recipe for long-term fiscal responsibility. “Further deficit reduction will not be credible if it relies solely on further cuts in discretionary spending rather than reform to entitlements and taxation,” Fitch says.

The firm’s negative outlook means there is a better than 50% chance of downgrade over the next two years, but Fitch said it does not expect to resolve the outlook until late 2013 absent any “material adverse shocks,” so that it can take into account “any deficit-reduction strategy that emerges after the Congressional and Presidential elections.”

If yields on U.S. Treasury securities are any indication, the uncertainty around global economic growth and the European sovereign debt crisis are far more pressing concerns to investors than America’s growing deficit. Even after S&P’s downgrade in August, yields have declined as the market continued to treat U.S. debt as one of the few safe havens in times of stress. The 10-year yield currently sits just below 2%, and has shown few signs of moving very far above that level at a time when Europe’s debt picture continues to look far worse than the one on this side of the Atlantic.

via Fitch Affirms U.S. AAA, For Now, Cuts Outlook To Negative – Forbes.

“If you’re not paying for the product, you are the product.” EU scrutinizing Facebook’s business model | VentureBeat

Perhaps you’ve heard the saying that goes, “If you’re not paying for the product, then you’re the product.”

Facebook (and just about every other free web service) has built a business on that saying and its implications, and the European Commission is taking the social network to task for it.

First, let’s have a primer on how Facebook makes money: The company gets you to willingly enter all kinds of demographic and behavioral information into a massive database. Advertisers, big brands and Facebook’s sales team call it “data.” You call it your profile, your likes, your checkins, your comments and everything else you do on the site.

via Facebook’s entire business model is under fire in the EU | VentureBeat.

10 disruptive cloud companies we’re excited about | VentureBeat

There is so much happening right now in emerging cloud computing — the entire economy is being disrupted by the trend.

With publicly-traded giants like Amazon, Google, VMWare, Microsoft, Cisco and Salesforce lurching around with new and improved services that can help businesses with cost and efficiency gains, sometimes it’s easy to miss the hot players that are up-and-coming.

We’ve assembled a list of ten private cloud companies that we think are particularly intriguing — focused on massive opportunities and leading the disruption in the sector they’re targeting.

via 10 disruptive cloud companies we’re excited about | VentureBeat.

NYC judge rejects $285M SEC-Citigroup agreement – Yahoo! News

NEW YORK (AP) — A federal judge on Monday struck down a $285 million settlement that Citigroup reached with the Securities and Exchange Commission, saying he couldn’t tell whether the deal was fair and criticizing regulators for shielding the public from the details of what the firm did wrong.

U.S. District Judge Jed Rakoff said the public has a right to know what happens in cases that touch on “the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives.” In such cases, the SEC has a responsibility to ensure that the truth emerges, he wrote.

Rakoff said he had spent hours trying to assess the settlement but concluded that he had not been given “any proven or admitted facts upon which to exercise even a modest degree of independent judgment.” He called the settlement “neither fair, nor reasonable, nor adequate, nor in the public interest.”

via NYC judge rejects $285M SEC-Citigroup agreement – Yahoo! News.

Nexon pushes ahead with $1.3 billion IPO, hacking impact looms | Reuters

* Range at 1,200-1,400 yen vs tentative price 1,360 yen

* Pushes ahead with IPO despite massive hacking attack

* To raise up to 98 bln yen in biggest Tokyo IPO of 2011

* Hacking incident will likely dampen demand for stock-analyst (Adds details)

TOKYO, Nov 28 (Reuters) – Online gaming firm Nexon Co said on Monday it would raise up to 98 billion yen ($1.3 billion) in an initial public offering this month, pushing ahead with its planned listing even as a massive hacking attack threatens to dampen excitement for the stock.

Nexon, founded in South Korea in 1994 and now based in Japan, said in a statement on Monday that it had set the price range for the IPO at 1,200-1,400 yen per share, compared with a 1,360 yen tentative price announced earlier this month.

The company is due to list on the Tokyo Stock Exchange on Dec. 14 in what is expected to be Japan’s largest IPO since drugmaker Otsuka Holdings attracted around 160 billion yen in December 2010.

via UPDATE 2-Nexon pushes ahead with IPO, hacking impact looms | Reuters.

RBS Wants To Sell Their Investment Bank | Street Of Walls

On Wednesday at the Treasury Select Committee Mr. Hester admitted to the possibly of dumping their global banking and markets business.

“It is clear that one of the impacts of the proposals will be to shrink the scale of the domestically-owned investment banks,” said Mr Hester.  “One suggestion was that we go out and raise more capital. I would be interested to see the investor who wants to put more capital towards UK banks at the moment. They are thinking it is a dumb place to put more capital,” he said.

via RBS Wants To Sell Their Investment Bank | Street Of Walls.

AT&T to offer bigger asset sale to save T-Mobile deal: report – Yahoo! News

AT&T Inc is considering an offer to divest a significantly larger portion of assets than it had initially expected, in order to salvage its $39 billion deal to buy T-Mobile USA, Bloomberg reported citing a person familiar with the plan.

Bloomberg said the exact size of the divestiture hasn’t been determined but reported it could be as much as 40 percent of T-Mobile USA’s assets.

The divestiture is an attempt to address the concerns of the Justice Department, which sued to block the takeover on August 31 saying the deal would “substantially lessen competition” in the wireless market, Bloomberg said.

The proposed deal was dealt another blow on November 22, when the Federal Communications Commission’s chairman sought to have it sent to an administrative law judge for review.

via AT&T to offer bigger asset sale to save T-Mobile deal: report – Yahoo! News.

Chow Tai Fook IPO to Raise Up to $2.8 Billion in Hong Kong – WSJ.com

HONG KONG—A jewellery retailer controlled by Hong Kong tycoon Cheng Yu-tung plans to take orders Monday for its up to US$2.8 billion offering while a Chinese firm that specializes in saving energy at power plants kicks off a $1 billion listing, the latest in the flood of Hong Kong initial public offerings that are tapping investor funds despite market volatility and investor wariness.

Chow Tai Fook Jewellery Group Ltd., which will start taking orders from investors Monday, plans to raise up to $2.8 billion in a Hong Kong IPO by selling 1.05 billion shares for between 15 and 21 Hong Kong dollars (US$1.92-US$2.69) a share, people familiar with the situation said Friday.

That range values the jeweller at up to US$27 billion and a valuation of around 15 times to 21 times 2013 forecast earnings for the year to March— more than the 11 times the 2013 forecast earnings at which its smaller rival Luk Fook Holdings International Ltd. trades.

U.S.-listed jeweller Tiffany & Co., which has a market value of US$8.9 billion, trades at 16.4 times forecast earnings, according to FactSet.

If it raises US$2.8 billion—the fund-raising size at the top end of the range— Chow Tai Fook’s IPO will be the largest globally since July, when Spain’s third-largest bank, Bankia S.A, raised US$4.4 billion ahead of a Madrid listing

via Chow Tai Fook IPO to Raise Up to $2.8 Billion in Hong Kong – WSJ.com.

Social gaming pioneer Zynga poised to go public in closely watched IPO – San Jose Mercury News

Sometime in the next few weeks, Zynga — the San Francisco maker of addictive online games including “FarmVille” and “Mafia Wars” — will go public in what’s expected to be the biggest Internet IPO since Google’s (GOOG).

Pundits say its market value could hit $20 billion right out of the gate. But can a company that sells imaginary cows really be worth more than Sony?

Maybe so, says Jeff Tseng, president of San Francisco-based Kontagent, which helps online game makers better understand how users interact with their offerings. He argues that Zynga is “really an analytics company, not a gaming company.”

The 230 million people who play Zynga’s games each month don’t just hand over real dollars to buy digital muskets, tractors and other furnishings for their virtual worlds. They also provide the company with reams of data about their online activities.

Citing the so-called quiet period ahead of its IPO, Zynga declined to comment for this report. But in filings with the Securities and Exchange Commission, Zynga says it harvests more than 15 terabytes of data from its users — enough to fill the hard drives of 45 laptop computers — every single day. The company then threshes the data to test new features, target advertising and decide which customers are likely to spend the most.

“Just as Walmart is known for being very sophisticated with the way they merchandise their shelves, putting items that are most likely to be sold close to the checkout lanes, so has Zynga developed very sophisticated algorithms,” said Justin Smith, founder of Inside Network. The Palo Alto-based market research firm focuses on social media and mobile applications.

That “secret sauce,” as observers term Zynga’s algorithms, helps the company woo users back once they grow bored with a game, lure them to try out new titles and coax them into sharing games with friends. “Those are functions of thousands of little things that are buried in billions of points of data,” said Dwight Merriman, who helped pioneer online advertising in 1995 as a co-founder of Doubleclick.

via Social gaming pioneer Zynga poised to go public in closely watched IPO – San Jose Mercury News.

Nokia to de-list from Frankfurt

Mobile phone manufacturer says electronic trading is making stock exchange listings less relevant

Nokia has applied to de-list from the Frankfurt Stock Exchange, citing decreased trading volumes at the bourse.

Once the application to de-list has been approved, Nokia expects trading to cease at some point during the first half of 2012.

The mobile phone company will continue to be traded in Europe on the NASDAQ OMX Helsinki Stock Exchange and in the US via American depositary receipts on the NYSE.

Explaining its decision in a statement, Nokia says trading volumes in Frankfurt have declined over the years and now represent only a small proportion of global trading.

According to a report by the Associated Press, Nokia says the de-listing is a ‘pragmatic decision in an increasingly internet-connected world that allows electronic trading from anywhere.’

The phone manufacturer has also de-listed from London, Stockholm and Paris over the last eight years.

via Nokia to de-list from Frankfurt.