• The index that measures pending sales of previously owned homes rose 3.2% in March on the renewed confidence of first-time buyers. Meanwhile, the U.S. Department of Commerce reported that U.S. construction inched 0.3% in March, the first increase in six months, Reuters reported.

• Famed investor and chairman of Templeton Asset Management Ltd. Mark Mobius said emerging-market stocks may “break out” into a bull market at the end of the year. “We are at the base building period for the next bull market,” Mobius, who helps oversee $20 billion in emerging market assets at San Mateo, California-based Templeton, said yesterday (Monday) in an interview with Bloomberg. “What I see happening is perhaps this continuing till the end of the year, and then a break out.”

• Cost cutting measures helped Sprint Nextel Corp. (NYSE: S) post an unexpected quarterly profit excluding items, but the company also lost its highest amount of customers. “There are no clear signs that the business has made its turn,” Piper Jaffray analyst Christopher Larsen told Reuters.

• The Bovespa, Brazil’s benchmark index, hit a seven-month high yesterday (Monday), pushed by analysts’ expectations that Brazil’s economy will contract less than forecast. Analysts also expect commodities to continue jumping on global growth prospects, causing the country’s top commodities producers to see stock gains, Bloomberg reported.

• Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) Chairman Warren Buffett blasted bankers, insurers and regulators and said their shortcomings caused the worst recession in half a century.  As he hosted a record 35,000 people at the company’s annual meeting in Omaha, Nebraska on Saturday, Buffett said Wall Street sold subprime mortgage “sewage,” blamed the media and regulators for missing the danger, and lambasted bankers for being blind to the possibility that housing prices could fall, Bloomberg reported.

• Liberty Media Corp (NASDAQ: LCAPA), controlled by cable pioneer John Malone, said on Monday it plans to split off the DirecTV Group Inc (NASDAQ: DTV) satellite TV operator into a separate company combined with other media assets.  Liberty plans to combine the top U.S. satellite TV provider with assets that include Game Show Network, FUN Technologies and three regional sports networks, Reuters reported. Liberty owns a 54% economic stake in DirecTV.

• U.S. airlines face a potential liquidity crisis if revenue keeps falling while credit markets remain tight, Reuters reported.  If revenue does not increase this year, carriers may breach the minimum liquidity covenants enforced by their creditors, who then may accelerate the loan and force a default. “If revenue doesn’t stabilize and capital markets remain constrained, then I think it’s certainly possible that we’ll see increased risk of a covenant breach for a couple of carriers moving into 2010,” said Fitch Ratings analyst Bill Warlick.

• Health Minister Jose Cordova said most of Mexico’s businesses will reopen in two days as the pace of new swine flu infections slows, putting an end to a five-day shutdown of most businesses enacted to stop the spread of the illness, Bloomberg reported.  Mexicans will return to work on May 6 except in areas of the country where new infections continue to rise. Authorities haven’t yet decided whether schools will reopen May 6, he said.

Source: Investment News Briefs Tuesday May 5, 2009

Editors Note: With their investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.

The deal also marks another chapter in an ongoing saga featuring John Malone, Liberty’s CEO, and rival Charles Ergen, the satellite-TV pioneer behind Dish Network Corp. (DISH) and sister firm Echostar Corp. (SATS).  The two have occasionally worked together but are major competitors in satellite, as they were when Malone controlled cable-television company Tele-Communications Inc.

“Sometimes they play nicely together in the sandbox, but sometimes they are good, old-fashioned rivals,” satellite analyst April Horace of Denver-based Janco Partners told the Denver Post. Both companies are headquartered in Englewood, Colorado.

Under terms of the agreement, Liberty would provide a $280 million senior secured loan   to help Sirius repay $171.6 million in convertible notes due yesterday (Tuesday), which are owned by Ergen.  At a later date, Liberty would provide another $150 million loan to XM Satellite Radio, Sirius XM’s wholly owned subsidiary, and purchase up to $100 million of XM’s credit facilities, according to Bloomberg News.

The loan will pay Liberty a whopping 15% interest rate and mature in December 2012. When the second loan is completed, Liberty will get 12.5 million shares of preferred stock convertible into 40% of Sirius XM common stock.

The deal allows Sirius to avoid bankruptcy and a major shuffle of talent. A bankruptcy filing could have threatened contracts with such luminaries as Martha Stewart and Bob Dylan, as well as the company’s five-year, $500 million pact with Howard Stern.

Sirius has never been profitable, mainly because it was burdened with massive interest payments on its debt. After acquiring rival XM in July, it was hit hard by the credit crunch and poor auto sales – its main distribution channel.  Sirius XM has about $3.25 billion in total debt.

“Sirius is in the process of getting out of the woods because Liberty is putting up a lot of money,” David Joyce, an analyst with Miller Tabak & Co., told Bloomberg News. “It shows that Sirius will be around for a long time.”

Malone and Ergen, who have been fierce rivals over the decades, were again pitted against one another by Sirius Chief Executive Mel Karmazin to save the company he formed just seven months earlier.

In 2003, Ergen abandoned a bid for DirecTV’s then-parent company, Hughes Electronics Corp. because he couldn’t get regulatory approval. Malone gained control of DirecTV last year after buying out Rupert Murdoch’s News Corp.’s (NWSA) stake. Ergen’s Dish Network had 13.8 million customers as of Sept. 30, trailing DirecTV’s 17.3 million.

The Liberty deal came after recent efforts by Ergen to acquire control of Sirius by purchasing its maturing debt, following an unsuccessful takeover bid in December, according to the sources cited by Bloomberg.

Ergen, a former professional gambler, bought the majority of a $300 million batch of discounted Sirius bonds that came due Tuesday. The company, said Feb. 13 it might have to file for bankruptcy if it couldn’t reach an agreement to restructure the debt.

Ergen offered to restructure the debt and invest several hundred million dollars into Sirius in exchange for control of the company.  That plan was scuttled by Liberty’s “white knight” move, which allows Karmazin to keep his job as CEO.

Liberty’s plans for Sirius are unclear.

“We think that John Malone and Charlie Ergen’s strategies are different,” Thomas Eagan, an analyst at Collins Stewart told Reuters. “We think that Charlie Ergen’s strategy may have been more about creating a broader strategic play in wireless services as he has attempted mobile video before. For John Malone it’s more of a financial investment. He had this venture fund with cash available and he figured this was a worthwhile investment.”

Whatever his motives, Ergen’s strong personality and previous clashes with Karmazin may have presented obstacles impossible to overcome.

The two locked horns in 2004 when Karmazin was head of media giant Viacom. When talks broke down over rate hikes imposed by Viacom for the rights to carry certain channels, Ergen published Karmazin’s home number and told subscribers to call him.

“I can’t imagine Ergen and Mel Karmazin working that well together,” said Matthew Harrigan, an analyst at Wunderlich Securities.

Source: Sirius Business – Liberty Injects $530 Million into Satellite Radio Provider

• The U.S. Federal Reserve released its Beige Book report yesterday (Wednesday), which looks at the economic conditions in the 12 Fed regions. “The pace of economic activity has been slow in most districts,” the report said, Bloomberg News reported. “Wage pressures were characterized as moderate by most districts amid a general pullback in hiring.”

• August was another weak month for auto sales as most major carmakers reported declines. Ford Motor Co. (F) reported 26.6% decline, while General Motors Corp. (GM) sales fell 20.4%. Toyota Motor Corp. (ADR: TM) fared better with a 9.4% decline, but Japanese rival Nissan Motor Co. Ltd. (ADR: NSANY) had a surprising 13.6% increase, Reuters reported.

• GMAC Financial Services (GMA) announced yesterday that it would close all 200 GMAC Mortgage retail offices and reduce and its Residential Capital LLC unit in an effort to cut costs and streamline operations, The Wall Street Journal reported. Approximately 5,000 employees, 60% of Residential Capital staff, will be let go.

• U.S. government officials charged two former Credit Suisse Group AG (ADR: CS) brokers with fraud and conspiracy yesterday (Wednesday) concerning sales of subprime-related debt, the International Herald Tribune reported. The two brokers gave clients the impression the debt was secured by federally guaranteed loans. “In September 2007, these former employees resigned after we detected their prohibited activity and promptly suspended them,” the bank said. “Credit Suisse immediately informed our regulators.”

• Orders to U.S. factories rose by a larger-than-expected amount in July, the Commerce Department said yesterday (Wednesday). New orders increased by 1.3%t in July, much stronger than the 0.8% increase economists expected. The July advance follows a 2.1% increase in June and represents the fifth straight rise in orders, The Associated Press reported.

• Staples Inc. (SPLS) the world’s largest office supply company, reported profit of $150.2 million, or 21 cents per share, for the quarter ended Aug. 2. Down from $178.8 million, or 25 cents per share, a year ago. Sales climbed 18% from $4.29 billion to $5.07 billion.

• A division of United Technologies Corp. (UTX) received a $78.1 million contract from the U.S. Navy for parts and materials to build propulsion systems for a variant of the Joint Strike Fighter, The Associated Press reported yesterday (Wednesday). United Technologies’ Pratt & Whitney will also build 10 propulsion systems for the U.S. Air Force, two of the same for the Royal Netherlands Air Force and three for the United Kingdom’s Royal Navy.

• Liberty Media Corp. (LMDIA) will spin off its stake in DirecTV Group Inc. (DTV) and other assets into a publicly traded company called Liberty Entertainment Group SA, according to Reuters. Liberty’s 50% stake in DirecTV will be the dominant asset in Liberty Entertainment, accounting for more than 80% of its value.

Sourcce: Global Investing Roundups Thursday, September 4th, 2008