• A team of economists estimate that China’s January exports likely fell 14% from a year earlier, which would be the biggest monthly decline in a decade, Bloomberg reported. With demand from the United States and Europe waning, “the implications for China’s industrial sector are severe because exports account for close to 20 percent of industrial output,” Isaac Meng, a senior economist at BNP Paribas SA in Beijing, told Bloomberg.

• Sales for appliance maker Whirlpool Corp. (WHR) fell 76% for the quarter, and the company said earnings would continue falling in 2009. Its debt ratings have also been downgraded to a notch about “junk” status, Reuters reported.

• Coffee giant Starbucks Corp. (SBUX) will begin an all-day value meal, pairing its beverages with two new sandwiches starting March 3, MarketWatch reported. “Our customers need to know that we are listening to them by making Starbucks an affordable everyday option,” Michelle Gass, executive vice president of marketing, said in a release.

• Venezuelan President Hugo Chavez said his country’s economy hasn’t been touched by the global economic crisis, despite the country’s second-biggest bank said GDP will expand 0.4% in 2009, down from 4.9% last year. Chavez is campaigning to amend the constitution so that he can seek another presidential term in 2012, Bloomberg reported.

• Defaults on prime-jumbo hybrid adjustable-rate mortgages could double in coming months according to JP Morgan Chase & Co. (JPM) analysts. The share of prime-jumbo mortgages at least 60 days late climbed 0.71% to 5.29% in the month covered by January bond reports.  Losses on so-called hybrid adjustable-rate mortgages backing 2006 and 2007 prime-jumbo securities will reach 8 to 10%, the analysts told Bloomberg.

• Satyam Computer Services Ltd. (ADR: SAY) will decide on a long-term action plan by next week, including a possible sale of the company, its chairman said, as the fraud-marred outsourcer struggles for survival.  Satyam was hit by massive fraud in India’s biggest corporate scandal as it disclosed that profits had been overstated for years.  Its founder and former chairman Ramalinga Raju resigned last month, Reuters reported.

Source: Global Investment News Briefs Tuesday, February 10th, 2009

This from Money Morning:

The U.S. housing market is already being pounded by the “perfect storm.” And the outlook for the New Year is for the stormy weather to continue – and probably to get worse.

As if a locked-up credit market and tidal waves of foreclosures weren’t already enough, we’re now watching unemployment climb and consumer confidence plunge.

But even when the housing market is taking on water, there are ways to stay afloat. Indeed, investors nimble enough to maneuver can even make money.

The watchword on this market, though, is caution.  If an investor decides to test the waters, beware of the extraordinary financial undertow.

Here’s a look at what’s happening now, and what the implications there are for investors in the New Year.

Rising Unemployment Feeds into Sinking Demand

The grim reality is that skyrocketing unemployment is a major threat to the recovery of the U.S. housing market.  And consumers shackled with record levels of debt are unlikely to ride to the rescue this time.

Since this recession is expected to be long and deep, economists are projecting high rates of unemployment. And the latest statistics released by the U.S. Labor Department show the crucial jobs market deteriorating at an alarmingly rapid pace.

The U.S. unemployment rate jumped to a 14-year high of 6.5% in October as another 240,000 jobs were cut – an uptick from 6.1% in September and the 10th month in a row the jobless rate has risen. Most forecasts are calling for unemployment to spike as high as 8.5%, which would be the worst showing since 1980.

So far this year, a staggering 1.2 million jobs have disappeared. More than half the decrease occurred in the past three months alone, Money Morning reported in its “Outlook 2009” series economic forecast story. Even worse: A year ago, job cuts were concentrated in the financial-services and homebuilding sectors. Now they’re rising across the board; virtually every part of the economy is feeling the squeeze.

For instance:

• U.S. automaker Chrysler Corp., one of Detroit’s wheezing “Big Three,” is laying off 25% of its white-collar work force of 18,500.
• Appliance maker Whirlpool Corp. (WHR) recently announced it would cut 5,000 jobs to cope with declining sales.
• Worldwide shipping giant DHL, a subsidiary of Deutsche Post AG, is laying off 9,500 people, and threatening to close its U.S. distribution center.
• Onetime Internet search giant Yahoo! Inc. (YHOO) plans to let 1,100 workers go – on top of the 1,000 already jettisoned in January – the result of several botched merger attempts.
• Ailing banking giant Citigroup Inc. (C) heaped more bad news on the financial sector, announcing whopping 50,000 layoffs in the next 12 months.

Layoffs of this magnitude are more than a mere shot across the bow of the housing market – they’re actually a direct hit amid ship. People who are unemployed cannot buy homes. Period. But even consumers who are afraid that they might be joining the jobless ranks are loath to take on the added risk – making them unlikely candidates to buy a new home.

Foreclosures Still Rising

As unemployment climbs, foreclosures will continue to multiply. That only exacerbates an already unappealing combination – more houses being dumped onto the market even as the pool of potential buyers grows increasingly smaller.

RealtyTrac Inc. reported that more than 81,000 homes were foreclosed on in September – 71% increase from the same period just a year ago. For 2008, foreclosures rose to a record 765,558.

“I wouldn’t be surprised to see foreclosures increase as the economy slows down,” said Rick Sharga, RealtyTrac’s vice president of marketing. “The people living paycheck to paycheck are at risk if they lose their jobs. It will cause more people to lose their homes.”

And while foreclosure volumes are outpacing projections, the cumulative losses by banks on bad mortgages may have yet to hit their books.  Since loan losses don’t get recorded until the property is sold, it’s likely there’s a lot of bank-owned inventory that hasn’t been unloaded – meaning there may be more foreclosures out there investors don’t yet know about.

“We are in uncharted waters,” said Brian Bethune, an economist at research firm Global Insight (IHS).

Making the waters even rougher was the decision by Standard & Poor’s Inc. (MHP) to cut the ratings on $34.1 billion of “Alt-A” residential loan packages that had been issued in 2006 and 2007.  Alt-A mortgages are those written with little or no documentation, i.e., without proof of income or assets. Even worse, S&P put an additional $351.7 billion of Alt-A securities up for possible review reflecting the rating company’s “belief that further declines in home sales will depress prices further and push loss severities higher than we had previously assumed.”

On top of all that, record numbers of borrowers are already “underwater,” or “upside down” on their mortgages, making it more attractive for them to default by simply walking away, than to hang around and drown.

About 18% of homes nationwide are now “upside down,” according to a report from First American CoreLogic.  Almost two-thirds of those homes are in just seven states: Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio. In Mountain House, Calif., an unincorporated planned housing community located in the foothills of the Diablo mountain range, the housing crisis right now has nearly 90% of the homeowners owing more on their houses than they are worth – the highest percentage in the country, The New York Times reported on Nov. 10. The average homeowner is underwater by $122,000, the newspaper said.

Other areas are suffering almost as much: In Nevada, alone, borrowers owed a whopping 89% of the value of their homes.

Despite such dramatic anecdotes, this housing slump is nationwide in nature. It’s more severe than any other such downturn since World War II, mostly because of the risky lending practices that inflated the real-estate bubble in the first place.

The Downdraft in Housing Prices

Meanwhile, while unemployment rises, the downward spiral in housing prices is gaining momentum.

“The No.1 thing that drives housing values is incomes,” said Todd Sinai, an associate professor of real estate at the Wharton School at the University of Pennsylvania. “When incomes fall, demand for housing falls.”

The S&P/Case-Shiller Index of home prices plunged 16.6% in August from the year before, following a 16.3% drop in July. The index has fallen every month since January 2007 (See accompanying chart, “Plummeting Prices.”).

Prices were lower in all 20 of the major cities the index covers, with Phoenix and Las Vegas down nearly 31% from last year.

Nationwide home prices have fallen 20.3% since peaking in June 2006.

And the skid isn’t over.

According to Fitch Ratings Inc., U.S. home prices will fall another 8% to 10% before they show signs of stabilizing.  According to a Fitch forecast, the peak-to-trough price decline will be 30%.
And still one other reliable indicator of housing prices seems to confirm that, in many cities, home prices still have further to fall.

According to analysis by Moody’s Investors Service (MCO), Miami houses are right now priced at about 22 times annual rental income – versus an average of just 15 over the past two decades. This suggests that a home currently priced at $350,000 is actually worth only $238,600 – meaning the price would have to drop 32% to reach the fair-value point.

Congressional Missteps

In an effort to help more than 400,000 homeowners avoid foreclosure, Congress came up with the “Hope for Homeowners” program.  Unfortunately, in their infinite wisdom, federal lawmakers designed a program that is almost certain to fail.

The program supposedly makes as much as $300 billion available to at-risk borrowers, enabling them to refinance into a 30-year, fixed-rate loan insured by the Federal Housing Administration (FHA).

The biggest mistake Congress made was to make this program strictly voluntary for participating banks, experts say.

Just as bad: In an effort to make the program more affordable for beleaguered homeowners, it also requires the lenders to write the value of the home down to 90% of its current market value. So in a downtrodden market like Phoenix, if a lender holds a $400,000 mortgage on a home currently appraised at $300,000, the bank would have to settle for a new mortgage worth only $270,000.

Needless to say, the response has been underwhelming.  After four weeks, a whopping 79 people had applied for the program.

Not to be deterred, the Federal Deposit Insurance Corp. (FDIC) is proposing another package, which would extend the terms of at-risk loans from 30 years to 40 years, with interest rates as low as 3.0%.  Housing payments for delinquent borrowers could not exceed 38% of gross monthly income.

In order to sweeten the pot for lenders, the government would share as much as 50% of the losses if a borrower ended up in default anyway.  In addition, the FDIC would pay servicers who process these new mortgages a fee of $1,000 for each re-worked loan.

FDIC officials estimate that this anti-foreclosure program would cost $24.4 billion, and would prevent 1.5 million of the 2.2 million at-risk homes from falling into foreclosure.

But that also means the taxpayer will be on the hook for half the value of 700,000 mortgages that do fail.

Can you say “fuzzy math?”

Homebuilders on the Ropes

You can probably guess where this leaves the nation’s homebuilders – gasping for air.

D.R. Horton Inc. (DHI), one of the nation’s biggest homebuilders, just wrote down $1.1 billion in land, deposits and inventory in the third quarter, as sales fell by half. The Ft. Worth, Tex.-based company expects to post a fourth-quarter net loss of between $800 million and $900 million, 18 times more than it lost in the fourth quarter a year ago.

Other builders are in similar shape. Pulte Homes Inc. (PHM) and The Ryland Group Inc. (RYL) just reported quarterly losses of $280.4 million and $65.7 million, respectively.

Even Toll Bros. Inc. (TOL), which caters to the high-end buyer, said fourth-quarter revenue fell 41% from the same period last year.

The Forecast for 2009: More Pain Before Any Gain

No matter what happens in the U.S. housing market, until a large inventory reduction takes place, housing prices will not stabilize.

In a recent Forbes magazine column, A. Gary Shilling, president of an economic consulting firm of the same name, said the worst is yet to come. Says Schilling: “Excess inventory, the mortal enemy of prices, now amounts to 1.8 million homes, which is a huge number relative to the net demand (new families minus departures due to deaths and moves to nursing homes) which is only 1.5 million a year.”

And one of the architects of the U.S. housing debacle – former U.S. Federal Reserve Chairman Alan Greenspan – is also downbeat: “At a minimum, stabilization of home prices is still many months in the future,” Greenspan said in an October speech.

The question that needs to be answered, then, is this: In the current atmosphere, does anyone believe we actually need homebuilders to add even one new home to the market?

Some pundits claim this may be a golden opportunity to short U.S. homebuilders. Even though they’re already down 80% from their highs, the deadly combination of skyrocketing unemployment, deflating prices and tight credit continue to spell further pain for the industry.

Short sellers would obviously look at any of the companies mentioned above. They might also consider iShares US Home Construction (ITB), the prominent exchange traded fund (ETF) for the group. However, any such move would have to be made with extreme caution.

The reason: All bets are off if the new Barack Obama Administration implements a moratorium on mortgage foreclosures. There’s also the possibility that Obama will be able to shepherd through any one or more of the proposed mortgage guarantee programs now on the table.

Those kinds of moves could provide a boost to homebuilders and leave short sellers in the grips of an uncomfortable squeeze – just like the millions of homeowners saddled with mortgages they can no longer pay.

Source: New Year U.S. Housing Market Forecast: No Gain, More Pain

* The Conference Board said yesterday (Tuesday) that its consumer confidence index fell to 38 – the lowest level since the Conference Board began tracking consumer sentiment in 1967. The index registered a revised 61.4 in September, which makes this month’s drop the third-steepest drop on record. A year ago, the index stood at 95.2.

* The Standard & Poor’s/Case-Shiller 20-city housing index dropped a record 16.6% from August last year – the largest drop since its inception in 2000, The Associated Press reported. Prices in the 20-city index have plummeted more than 20% since peaking in July 2006, the group reported. The 10-city index tumbled 17.7% — the biggest decline in its 21-year history.

* The Organization of Petroleum Exporting Countries (OPEC) said yesterday (Tuesday) that it would continue to prop up the oil market and may call another meeting before the group’s next scheduled conference in December. “If circumstances dictate we have to have another meeting, we will have a meeting before the Algerian meeting,” OPEC Secretary General Abdullah al-Badri told Reuters.

* Whirlpool Corp. (WHR) said yesterday (Tuesday) it will eliminate about 5,000 jobs this year and next, as the U.S. economy continues down its path to recession. The nation’s largest home appliance maker said its earnings fell 7% in the third quarter.

* Despite a market deep in bear territory, Wall Street professionals still expect year-end bonuses. According to a survey by eFinancialCareers, a unit of specialty jobs site operator Dice Holdings Inc. (DHX), 67% of workers expect a bonus for 2008. But some companies, such as Deutsche Bank AG (DB) have already announced top executives would not receive bonuses for the year, Reuters reported.

* Credit Suisse Group AG (ADR: CS) and Deutsche Bank AG (DB) yesterday (Tuesday) both refused to provide financing for the $6.5 billion buyout of Huntsman Corp. (HUN) by a unit of Apollo Global Management LLC. The banks refused to fund the purchase of the chemical company because the combined company could prove insolvent, Bloomberg News reported.

* The 100-year-old Christian Science Monitor said yesterday (Tuesday) that it would stop printing a daily edition next year in order to focus on the Internet – becoming the first nationally distributed newspaper to do so, Bloomberg News reported. And in a related story, national newspaper publisher Gannett Co. Inc. (GCI) said it would cut 10% of the workers at its community newspapers – a move that follows a cut of 3%, or 1,000 jobs, back in August. The cuts should be completed by early December and don’t apply to USA Today, Gannett said. Gannett, which publishes 85 daily newspapers, recently reported that third-quarter revenue declined 9%, and said it would re-evaluate its dividend policy.

Source: Global Investing Roundups Wednesday, October 29, 2008

Whirlpool said the drop in profit reflects significantly higher material and oil-related costs and lower industry demand. U.S. industry unit shipments of major appliances declined 11 percent in the quarter.

Whirlpool said it now expects a profit of $5.75 to $6 per share for 2008, compared with its previous estimate of $7 to $7.50 per share.

Based upon its revised earnings expectations and the glum industry outlook, the company said it now expects to generate free cash flow of $50 million or less for the full year, well down from its previous estimate of $500 to $550 million.

Because of this and the economic conditions, the company has suspended its $500 million share-repurchase program announced in April.

The job cuts include positions being eliminated from plant closings that the company already announced this year along with new reductions taking place now and through the end of next year. Whirlpool, whose brands include Maytag, KitchenAid and Jenn-Air, said it has 73,000 employees worldwide.

PS. Early in September, Taipan Daily’s Adam Lass recommend shorting Whirlpool for a minimum 30% return. Since then, the stock has been cut in half.

Read more about Adam’s stock recommendations here.

The bottom line is consumers are running scared, and that is bad news for retailers and manufacturers.

Adam says Whirlpool (NYSE:WHR) and Sherwin-Williams (NYSE:SHW) are in for a particularly rough ride. Even ’safe’ stocks such as Sears (NASDAQ:SHLD) or Kohl’s (NYSE:KSS) could seriously hurt your portfolio in the coming months.

Still, if you dig a little below the facile headlines, you’d learn that the bailout may be sucking up all the air in the room, but that trillion dollars is NOT really this week’s big story. That is reserved for a lowly zero.

Because zero is the change in consumer spending from July to August.

The bright guys over at the Commerce Department were kind of hoping that spending would go up about 0.2%. That’s not much, but it would at least have been double the increase between June and July.

The Economic Stimulus Act of 2008 (remember that?) was supposed to have one of those multiplied effects wherein Joe buys from Fred, who in turn hires Mike, who takes Sadie out to dinner etc., etc.

Instead, there was no gain whatsoever, demonstrating quite clearly that dumping $152 billion into a system already overburdened with excess dollars wasn’t quite the cure Washington thought it might be.

Here’s another “small” figure that dwarfs that trillion-dollar package Congress is screwing around with: Excluding “volatile food and fuel” (snicker), prices increased 0.2% July to August, and 2.6% between August 2007 and August 2008. The latter is the largest spike since January 1995.

Run these “ tiny fractions” all the way through the system, and American disposable income fell 0.8% in July and 0.9% in August. To paraphrase Ross Perot, that loud snapping sound you hear is millions of pocketbooks, wallets and checkbooks snapping closed.

And it’s not going to get any better anytime soon. According to the latest Bloomberg economist survey, the last quarter of 2008 should be the worst in almost 20 years.

In a nutshell, all this horse hockey going on in Washington this week isn’t touching the underlying economic problems we are facing. In fact, if anything, it is only making them worse. And it’s scaring consumers to death.

My advice? Forget about anyone who makes washing machines… I am thinking Whirlpool (NYSE:WHR) here. I am not a big fan of anyone who makes house paint either. Here’s a hint: Run — don’t walk — away from a big coatings manufacturer like Sherwin-Williams (NYSE:SHW).

And I know that some folks are still warm to certain outfits like Sears (NASDAQ:SHLD) or Kohl’s (NYSE:KSS) that sell washing machines and house paint, and sweaters and khakis, too, for that matter.

Maybe they are right. Heck, if you are buying for the next decade looking for $300, you won’t care if you bought for $100 or $50.

But right now, that sort of drop looks like a 50% loss to me.

And this week, -50% trumps a trillion easy.

Source: Zero Growth Trumps Washington’s Trillion Dollars

However, the stock of home appliance maker Whirlpool (NYSE:WHR) has risen 6.4% in the year to date despite razor thin margins and a wider downturn.

Wave Strength Options Weekly editor Adam Lass says this is a great opportunity to make at least 30% with a simple short play.

Buying strategic put options could increase these gains up to 118%.

More from Adam in today’s Taipan Publishing:

My partner Bryan Bottarelli’s analysis of Whirlpoolmakes perfect sense:

When I look at Whirlpool’s business model, I see a company with a $6.64 billion market cap, trading at a P/E ratio of 12.19, while making a razor-thin profit margin of 2.89%.

In strong economic times, making 2.89% on a high-ticket item like appliances makes you a lot of money. But in the heart of a market recession (like we have right now), I can’t see a company like WHR being able to maintain any upside momentum.

After all, millions of unsold U.S. homes are currently sitting on the market with brand-new WHR appliances. I would think that the market needs to work through this inventory before WHR can think of receiving a substantial amount of new sales. And therefore, the forward outlook, to my eye, is very weak.

Now WHR stock is a bit of an oddity right now. Most everyone else connected with the housing and home wares biz have been well and truly stomped on.

You wouldn’t expect a builder like Lennar (NYSE:LEN) to be up, and indeed it is not. You wouldn’t advise a friend to buy shares of a joint that sells nails and furnishings like Home Depot (NYSE:HD).

But WHR is still vainly trying to hold on to its 2008 highs. My Wave Strength Options Weekly charts tell us that even a simple short play ought to be good for some 30% gains over the next few months.

However, the puts that Bryan and I recommended to WOW readers stand to gain as much as 118% off that same 30% drop.

Certainly something to cheer you up as you fold the wash, eh?

Source: Can Long Lines, Broken Machines and a Botched Election Sell Dishwashers?

• Retailers reported a 4.3% increase in sales in June gain as rebate checks again bolstered consumer spending. Wal-Mart Stores Inc (WMT), BJ’s Wholesale Club Inc. (BJ) and Costco Wholesale Corp. (COST) were also among the best performers.

• Toyota Motor Corp. (ADR: TM) will start producing the hybrid Prius in the United States for the first time as the Japanese automaker adjusts its manufacturing operations to meet demand for smaller, more fuel-efficient vehicles, the Associated Press reported. The company said Thursday it will start producing the Prius in late 2010 at a plant it is building in Blue Springs, Miss.

• Appliance maker Whirlpool Corp. (WHR) said yesterday (Thursday) that it will close two plants in an effort to streamline manufacturing, the Associated Press reported. Approximately 1,250 jobs will be lost as a result of the closings.

• Brazilian president Luiz Inacio Lula da Silva visited Vietnam yesterday (Thursday) to enhance trade relations between the two nations. “Our bilateral trade remains too small compared with our capability,” Silva said through a translator at a joint news conference with his Vietnamese counterpart, Nguyen Minh Triet.

• General Electric Co. (GE) announced yesterday (Thursday) that it would spin off its GE Consumer & Industrial Group in an effort to bolster a sagging stock price, Bloomberg News reported. Two months prior, GE announced it was selling its well-known appliance division.

• Wachovia Corp. (WB) appointed Robert K. Steel as the new chief executive officer for the Charlotte-based commercial bank. He replaces Kenneth Thompson. Dealing with problem assets still on the bank’s balance sheet is “mission No. 1,” Steel said, DowJones reported.

• The International Association of Machinists and Aerospace Workers (IAM) wants Secretary of Defense Robert M. Gates to ensure that the reopened $35 billion tanker contract bidding for the U.S. Air Force is fair and even this time around, MarketWatch reported. “We are calling for aggressive oversight of the bidding process to make sure [The Boeing Co.’s (BA)] tanker is evaluated on a fair, level playing field,” said IAM General Vice President Rich Michalski. “We will not accept, nor should American taxpayers accept a process or an outcome that is only slightly less rigged than the initial round of bidding.”

• Crude oil for August delivery closed at $141.60 yesterday (Thursday) on the New York Mercantile Exchange after a jump of $5.60 a barrel, which recouped some of the previous days’ losses. “This market, losing $9 in two days, has really been oversold,” Zachary Oxman, senior trader at futures brokerage Wisdom Financial, told MarketWatch. “Geopolitical pressures mixed with the oversold condition are” driving up oil prices.

Source: Global Investing Roundups Friday, July 11th, 2008

If you need proof, just look at the Top Five suitors for General Electric Co.’s (GE) century-old home-appliances division. There isn’t a U.S. company on the list.

GE Chief Executive Officer Jeffrey R. Immelt – who last week told analysts the company was “seriously considering a spin-off” for the unit – said yesterday (Wednesday) that there were five possible buyers, including:

• LG Electronics Inc., a South Korean electronics and telecommunications giant that’s positioning itself as a global heavyweight.
• Haier Group Co., a China-based appliance-maker that’s one of that country’s real corporate success stories.
• Controladora Mabe S.A. de C.V., a successful Mexico-based appliance firm that is partly owned by GE, and that already makes appliances for other brand-name firms – including GE.
• Electrolux AB (OTC ADR: ELUXY), a Stockholm-based company that parlayed its success in high-end vacuum cleaners into a broader success in home appliances.
• Arcelik Anonim Sirketi, an Istanbul, Turkey-based appliance-maker that does business throughout the world – including in the United States.

It’s only been a week since reports surfaced that GE was looking to sell or spin-off its home-appliance business unit, the latest in an ongoing series of divestitures aimed at unshackling the Corporate America heavyweight from the ebb-and-flow of consumer-focused markets. In that time, however, the unconfirmed rumors have solidified to the point that Immelt yesterday identified specific possible suitors.

“The players become very obvious,” Immelt said during a breakfast meeting with businessmen in Seoul yesterday. “It’s Haier in China, LG in Korea, and so on. Of course, LG is one of the leading candidates.”

Immelt said the sale of the unit will be “a long process.”

GE’s appliances division is the No. 1 provider of refrigerators, ovens and dishwashers for newly-constructed houses in the U.S. market. The unit may draw bids of $3 billion to $8 billion, according to analysts at Citigroup Inc. (C) and Goldman Sachs Group Inc. (GS).

For Haier, the acquisition of the GE unit would give the China-based company a household brand name it could use to accelerate its U.S. expansion. Once named Qingdao Refrigerator Plant, the company is now “China’s ambassador to appliance stores worldwide,” according to Hoover’s, the well-known business-information provider.

From the brink of bankruptcy, Haier rebounded and remade itself into China’s largest appliance company and a world-renowned brand that sells refrigerators, freezers, mobile phones, computers, air conditioners and more in more than 160 countries worldwide. Since “pulling itself up by its bootstraps,” Haier has used joint ventures and other shrewd maneuvers to branch out both geographically and commercially, Hoover’s reports.

For the Seoul-based LG Electronics, the purchase of GE’s appliance business would allow the Korean firm to challenge U.S. heavyweight Whirlpool Corp.’s (WHR) global lead in the production of appliances, Bloomberg News reported.

According to published reports by Bloomberg and others, LG hasn’t decided whether to bid for the GE unit, the company said yesterday in response to a query by Korea’s stock exchange.
LG is “carefully monitoring” the sale of GE’s appliances division, Chief Executive Officer Nam Yong said. Zhao Rui, a spokeswoman at Haier, declined to comment, Bloomberg said.
James Kim, an analyst at Lehman Brothers Holdings Inc. (LEH), wrote in an investment note that speculation that LG will bid for GE “has been overdone, without any concrete developments … according to our channel checks, GE and LG Electronics have not talked about this potential acquisition.”

However, Castor Pang, an analyst at Sun Hung Kai Securities in Hong Kong, told Bloomberg that “both LG and Haier need [the] GE [business unit in order] to break into the U.S. market because [GE] has a very strong brand. Buying GE would be a big advertisement for them. After all, the U.S. market is still a very big market.”

GE’s appliances business had a U.S. market share of 27% in 2006, the most recent figures available, JPMorgan Chase & Co. (JPM) analysts estimate. The unit had revenue of $7.2 billion in 2007, according to Credit Suisse Group (ADR: CS) estimates.

Source: GE Home Appliance Unit Sale Underscores Again That Corporations and Investors Alike Must Go Global to Succeed