The U.S. dollar touched a one-month high against the euro Friday after comments from European Central Bank President Jean-Claude Trichet left investors uncertain about the bank's future policy path.
The dollar was also boosted by a slight rise in risk aversion despite a smaller-than-expected loss from Citigroup (C, Fortune 500) as investors reassessed the sustainability of the recent spate of more upbeat results.
The ECB's Trichet, who is to unveil the bank's plans for unconventional policy steps next month, gave no details of these measures in a speech in Tokyo, saying he did not want to create expectations.
Concerns over a split in the ECB's governing council and uncertainty over the central bank's next move on interest rates and non-standard measures have weighed heavily on the euro in recent sessions.
"The market is getting increasingly disappointed with the ECB's policy stance," said Vassili Serebriakov, currency strategist at Wells Fargo (WFC, Fortune 500) in New York.
"Trichet failed to clarify the central bank's position on either rates or prospects for non-conventional easing measures," he added. "We could see some stand-alone euro weakness across the board."
In late afternoon trading, the euro fell 1.1% to $1.3039, still near the session low of $1.3019, according to Reuters data, its weakest since March 18, when the dollar fell sharply after the Federal Reserve announced its plan to buy government bonds.
Besides the Fed, central banks in Britain and Japan have started quantitative easing measures to fight the deepening recession around the world.
The dollar was little changed against the yen and last traded at ¥99.22.
"A little bit of risk aversion and euro weakness ... is boosting the dollar," said Paresh Upadhyaya, a portfolio manager at Putnam Investments in Boston.
Despite the better-than-expected results from Citigroup, "the market still remains skeptical about what this means going forward for the financial sector," he said.
Trichet, SNB eyed
Also hurting the euro were Trichet's comments in Tokyo, which analysts at Brown Brothers Harriman said were seen as "a possible warning" to ECB members who have recently expressed different views on the bank's next policy move on both rates and nonconventional measures.
In his speech, Trichet said: "Any ambiguity in our medium-term policy direction would delay the return of sustainable prosperity."
"The euro is the star underperformer (in recent sessions) ... because of question marks over the direction of monetary policy." Putnam's Upadhyaya said. "Markets have been questioning the ECB's stubbornness in easing monetary policy or (its) stubbornness to react in a pro-active manner."
Adding to pressure on the euro was a warning from ratings firm Moody's Investors Service that Ireland's 'AAA' rating may be cut to mid-to-high 'Aa' range if it concludes that the country will emerge from the crisis with relatively weak growth prospects and a much higher debt burden.
Against the yen, the euro dropped below 130 to trade down 1.3% at ¥129.25.
The Swiss franc fell sharply against the euro and dollar after Swiss National Bank Chairman Jean-Pierre Roth warned the central bank was ready to intervene should the Swiss franc strengthen.
The dollar last traded up 1.8% at 1.1670 francs after hitting a session peak of 1.1688 francs, according to Reuters data.
Friday, April 17, 2009
Lamps
Not only functions as the only lighting equipment, lighting is a unique and beautiful for those who understand the meaning of beauty, lights also act as a decorator who can give the room a touch of artistic feeling. In fact, there is a special designed to be consistent with the needs of an interior or exterior space.
There are so many options for lighting decorations that are available in the market. Even the type of lamps are classified through a variety of ways to install or accessories that are used as examples of decorative lights which show more aesthetic value, decorative lights are uniquely shaped and is usually the product of craft and in place on the corner of a room or a table. Then the ceiling lamps are installed under the ceiling with a variety of accessories that can be found in the shops. This usually is installed with the light that functions as a reflector, and many tend to be used for offices.
Then the floor lamps is usually used to provide more lighting, or strengthen a beautiful interior design. This type of lamp can be used for the reading lamp beside the sofa or reading chair, even become a living room ornament. While the sleep lamps have a typical with the light dimmed. That is, the sleep lamps is most suitable to accompany you during a night of rest and the sleep lamps are usually in place near the head so easily turn on or off in this tool.
For the table lamps being used for the activities of reading or other activities at the table or can also be as light decorations, and most of these lamps are only for the table area. This type should be regulated in terms of the quantity of light and light direction can be arranged as needed.
If you already know the type of lights you want to buy then now you need a shop where provides all these lamps. As reference there is online store Farreys.com offers thousands of lamps including table lamps, floor lamps, task lamps, reading lamps, piano lamps and torchieres in a wide range of styles and at the lowest prices from dozens of top manufacturers. Visitors may shop by lamp brand, by lamp application or by style. And their lamp product search tool quickly helps find the perfect lamps for your application.
There are so many options for lighting decorations that are available in the market. Even the type of lamps are classified through a variety of ways to install or accessories that are used as examples of decorative lights which show more aesthetic value, decorative lights are uniquely shaped and is usually the product of craft and in place on the corner of a room or a table. Then the ceiling lamps are installed under the ceiling with a variety of accessories that can be found in the shops. This usually is installed with the light that functions as a reflector, and many tend to be used for offices.
Then the floor lamps is usually used to provide more lighting, or strengthen a beautiful interior design. This type of lamp can be used for the reading lamp beside the sofa or reading chair, even become a living room ornament. While the sleep lamps have a typical with the light dimmed. That is, the sleep lamps is most suitable to accompany you during a night of rest and the sleep lamps are usually in place near the head so easily turn on or off in this tool.
For the table lamps being used for the activities of reading or other activities at the table or can also be as light decorations, and most of these lamps are only for the table area. This type should be regulated in terms of the quantity of light and light direction can be arranged as needed.
If you already know the type of lights you want to buy then now you need a shop where provides all these lamps. As reference there is online store Farreys.com offers thousands of lamps including table lamps, floor lamps, task lamps, reading lamps, piano lamps and torchieres in a wide range of styles and at the lowest prices from dozens of top manufacturers. Visitors may shop by lamp brand, by lamp application or by style. And their lamp product search tool quickly helps find the perfect lamps for your application.
Wednesday, April 15, 2009
Obama: Tough choices ahead
President Obama on Tuesday outlined the administration's efforts to restart the economy and warned that tough times and decisions lie ahead, according to prepared remarks of a speech he'll present in Washington.
Obama pointed to more job losses and foreclosures as well as "difficult and unpopular choices" when it comes to restructuring the auto industry and insurance giant American International Group (AIG, Fortune 500). The government has already sunk $182 billion into propping up AIG.
The Obama administration is under pressure to address the financial crisis on many different fronts. While job losses and foreclosures continue to mount, the credit markets remain frozen.
There's only $135 billion left in the Treasury Department's coffers for bailout measures. The administration is completing stress tests of the nation's 19 largest banks burdened with toxic assets to size up which will need more bailout dollars to survive.
In the meantime, the administration is trying to prepare the nation for the possibility that two of the largest domestic auto makers, General Motors (GM, Fortune 500) and Chrysler LLC, are likely headed for major restructuring's and possible mass layoffs.
Obama discussed all these developments, offering a fierce defense of pricey government actions to prop up tottering banks and clean their books of toxic assets.
"Of course, there are some who argue that the government should stand back and simply let these banks fail - especially since in many cases it was their bad decisions that helped create the crisis in the first place," he said. "The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth."
Drawing on the biblical parable of two men who built their houses - one on sand and one on rock - Obama said the country need to rebuild the economy on a "new foundation."
That foundation includes many proposals that the Obama administration has unveiled but has yet to detail and will need congressional approval. Among them: stronger regulations of Wall Street and the possibility of more funding to bail out the financial sector and get the economy moving.
Obama also said he wants lawmakers to tackle health care and environmental initiatives, but experts say Congress has a full plate already and may not tackle such legislation until later this year.
Obama said he expects to have a health care bill arrive on his desk before the year is up. He was less definitive on hopes for bills that improve education standards and cap emissions.
"I know how difficult it is for members of Congress in both parties to grapple with some of the big decisions we face right now," Obama said. "It's more than most Congresses and most presidents have to deal with in a lifetime. But we have been called to govern in extraordinary times."
Obama pointed to more job losses and foreclosures as well as "difficult and unpopular choices" when it comes to restructuring the auto industry and insurance giant American International Group (AIG, Fortune 500). The government has already sunk $182 billion into propping up AIG.
The Obama administration is under pressure to address the financial crisis on many different fronts. While job losses and foreclosures continue to mount, the credit markets remain frozen.
There's only $135 billion left in the Treasury Department's coffers for bailout measures. The administration is completing stress tests of the nation's 19 largest banks burdened with toxic assets to size up which will need more bailout dollars to survive.
In the meantime, the administration is trying to prepare the nation for the possibility that two of the largest domestic auto makers, General Motors (GM, Fortune 500) and Chrysler LLC, are likely headed for major restructuring's and possible mass layoffs.
Obama discussed all these developments, offering a fierce defense of pricey government actions to prop up tottering banks and clean their books of toxic assets.
"Of course, there are some who argue that the government should stand back and simply let these banks fail - especially since in many cases it was their bad decisions that helped create the crisis in the first place," he said. "The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth."
Drawing on the biblical parable of two men who built their houses - one on sand and one on rock - Obama said the country need to rebuild the economy on a "new foundation."
That foundation includes many proposals that the Obama administration has unveiled but has yet to detail and will need congressional approval. Among them: stronger regulations of Wall Street and the possibility of more funding to bail out the financial sector and get the economy moving.
Obama also said he wants lawmakers to tackle health care and environmental initiatives, but experts say Congress has a full plate already and may not tackle such legislation until later this year.
Obama said he expects to have a health care bill arrive on his desk before the year is up. He was less definitive on hopes for bills that improve education standards and cap emissions.
"I know how difficult it is for members of Congress in both parties to grapple with some of the big decisions we face right now," Obama said. "It's more than most Congresses and most presidents have to deal with in a lifetime. But we have been called to govern in extraordinary times."
Tuesday, April 7, 2009
Mortgage rates sink again
Home mortgage rates continued to march lower, according to two separate reports released on Thursday.
The average 30-year fixed mortgage rate sank to 5.13%, down from 5.19% the week prior, according to Bankrate.com's weekly national survey.
The average 15-year fixed-rate mortgage fell to 4.73% from 4.80% the week prior, according to Bankrate.com.
Bankrate obtains its data by surveying the top 10 banks and thrifts in the top 10 markets every Wednesday.
Meanwhile, a report from Freddie Mac showed that the 30-year fixed-rate mortgage fell to 4.78% in the week ending April 2, down from 4.85% the week prior.
The 4.78% rate is the lowest on record according to the Freddie Mac survey, which dates back to 1971 for that particular mortgage. The 30-year fixed rate averaged 5.88% at this time last year, according to Freddie Mac.
Freddie Mac reports the 15-year fixed rate mortgage fell to 4.52%, down from last week when it stood at 4.58%.
0:00 /3:17Housing on the rebound?
There is a difference in reported rates between Bankrate and Freddie Mac because lending rates are constantly fluctuating and the surveys are conducted at different moments.
The two agencies also report the rates with a different average number of "points," which borrowers can purchase at closing to buy down their lending rates. Therefore, the more points a borrower purchases up front, the lower the lending rate. Bankrate.com's averages have fewer points than Freddie Mac's average.
While rates are already very low, one analyst said that they could potentially dip a little bit more. "They could dip maybe another 20 basis points from where they are, but not a huge amount," said Brian Bethune, chief financial economist at IHS Global Insight.
Bethune also said that he thinks mortgage rates will stay low for a while. "I wouldn't expect them to necessarily jump back up again, but it all depends on the path of the economy."
Mortgage rates follow Treasury rates: No matter which report you look at, the consensus is that mortgage rates are low. The 30-year fixed mortgage rate moves in correlation with the yield on the 10-year Treasury bond. Therefore, lower the yields on government debt weighs on mortgage rates.
"Rates are just coming down as a catch up phenomenon because the 10-year Treasury has come down by 25 to 30 basis points in the past couple weeks," said Bethune. The yield on the benchmark Treasury dropped after the government announced its massive debt-repurchase plan in an effort to encourage lending and spur recovery in the housing market.
The government said two weeks ago that it would be buying more than $1 trillion in debt in an effort to provide liquidity in the credit markets. With the key lending rate already at a range of 0% to 0.25%, the Federal Open Market Committee - the policymaking committee of the Fed that sets interest rates - turned to less traditional means to encourage lending.
"Once we start to see a recovery, the Federal Reserve will start to reverse a lot of its liquidity programs," said Bethune. "We will see rates move up simply reflecting the anticipation that the Fed is going to start to pull liquidity out of the system."
But Bethune said that he expects the economic recovery to be slow, and rates should not move up significantly until 2010.
The average 30-year fixed mortgage rate sank to 5.13%, down from 5.19% the week prior, according to Bankrate.com's weekly national survey.
The average 15-year fixed-rate mortgage fell to 4.73% from 4.80% the week prior, according to Bankrate.com.
Bankrate obtains its data by surveying the top 10 banks and thrifts in the top 10 markets every Wednesday.
Meanwhile, a report from Freddie Mac showed that the 30-year fixed-rate mortgage fell to 4.78% in the week ending April 2, down from 4.85% the week prior.
The 4.78% rate is the lowest on record according to the Freddie Mac survey, which dates back to 1971 for that particular mortgage. The 30-year fixed rate averaged 5.88% at this time last year, according to Freddie Mac.
Freddie Mac reports the 15-year fixed rate mortgage fell to 4.52%, down from last week when it stood at 4.58%.
0:00 /3:17Housing on the rebound?
There is a difference in reported rates between Bankrate and Freddie Mac because lending rates are constantly fluctuating and the surveys are conducted at different moments.
The two agencies also report the rates with a different average number of "points," which borrowers can purchase at closing to buy down their lending rates. Therefore, the more points a borrower purchases up front, the lower the lending rate. Bankrate.com's averages have fewer points than Freddie Mac's average.
While rates are already very low, one analyst said that they could potentially dip a little bit more. "They could dip maybe another 20 basis points from where they are, but not a huge amount," said Brian Bethune, chief financial economist at IHS Global Insight.
Bethune also said that he thinks mortgage rates will stay low for a while. "I wouldn't expect them to necessarily jump back up again, but it all depends on the path of the economy."
Mortgage rates follow Treasury rates: No matter which report you look at, the consensus is that mortgage rates are low. The 30-year fixed mortgage rate moves in correlation with the yield on the 10-year Treasury bond. Therefore, lower the yields on government debt weighs on mortgage rates.
"Rates are just coming down as a catch up phenomenon because the 10-year Treasury has come down by 25 to 30 basis points in the past couple weeks," said Bethune. The yield on the benchmark Treasury dropped after the government announced its massive debt-repurchase plan in an effort to encourage lending and spur recovery in the housing market.
The government said two weeks ago that it would be buying more than $1 trillion in debt in an effort to provide liquidity in the credit markets. With the key lending rate already at a range of 0% to 0.25%, the Federal Open Market Committee - the policymaking committee of the Fed that sets interest rates - turned to less traditional means to encourage lending.
"Once we start to see a recovery, the Federal Reserve will start to reverse a lot of its liquidity programs," said Bethune. "We will see rates move up simply reflecting the anticipation that the Fed is going to start to pull liquidity out of the system."
But Bethune said that he expects the economic recovery to be slow, and rates should not move up significantly until 2010.
Monday, April 6, 2009
Coming soon: Higher taxes, bigger government
We've all hunkered down for a pretty lousy year. Maybe 2010 will bring some good economic news, though I don't know anybody who is actually willing to bet on that.
Still, sooner or later - please, please let it be sooner - things are going to get back to something we can call "normal." But what will the next normal look like?
It's hard to picture because we haven't had anything like a normal economy for a very long time. It's spooky: I'm in my late thirties, and I've just realized that almost my entire working life has been spent inside one asset bubble or another (first stocks, then homes).
A generation of Americans grew into middle age thinking that they had more wealth than they really did and that their future was a lot more secure than it really was. This age of fantasy economics changed not just the way we thought about spending and borrowing (leading us to do too much of both) but also the way we thought about politics.
Social safety nets didn't seem so important when even families with modest incomes could get 10% to 20% annual gains on their houses.
Colin Crouch, a professor of governance at the University of Warwick in Britain, has coined a useful name for this situation: privatized Keynesianism.
The economist John Maynard Keynes has been in the news a lot lately. During the Depression his great insight was that government could take on budget deficits to pull the economy back up. The U.S. and parts of Europe embraced Keynesianism for a time as a way of ensuring popular support for a mostly market economy. But under an accidental system of privatized Keynesianism, says Crouch, many rich countries leaned heavily on the deficit spending - that is, the chronic debt - of ordinary families.
Coming into this financial crisis, about 70% of U.S. gross domestic product came from consumer spending, boosted by easy mortgages and unsecured credit card borrowing. The nation wouldn't have recovered from the 2001 recession so quickly without all those loans.
Some optimistic pundits even saw this borrowing spree as a workable solution to the new stresses that were showing up in the economic statistics, such as rising inequality and increasingly unstable middle-class incomes. If you lost your job or didn't get a raise, you could borrow to smooth things over until better times.
It seems unlikely we'll revert to that behavior anytime soon. So one prediction I'll make about the next normal is that voters will look to government to help them manage risk.
That means President Obama might actually push through the national health-care system he campaigned on (although a change that big is still a tough political battle). A safer bet: Social Security will be one of your most solid assets. Whatever the system's internal financing problems, keeping it going is mostly a matter of political will. And with 401(k) balances deep in the tank, the political demand for Social Security is only going to go up. Talk of big benefit cuts will fade. In fact, I suspect benefits may actually increase for those seniors living closest to the bone.
It follows that life in the next normal will carry a higher tax bill - maybe not in the next couple of years, but soon enough. Whether you look at top marginal rates or the effective burden on families, taxes have been at a historically low ebb in recent years. Given the deficits we faced even before the crisis, they were already bound to go up. It's just more obvious now.
You can prepare a bit for higher taxes (for example, by saving in a Roth IRA, which allows tax-free withdrawals in retirement). But should you be upset about it? If we could also get a more reality-based economy in the bargain, it seems to me a fair price to pay.
Still, sooner or later - please, please let it be sooner - things are going to get back to something we can call "normal." But what will the next normal look like?
It's hard to picture because we haven't had anything like a normal economy for a very long time. It's spooky: I'm in my late thirties, and I've just realized that almost my entire working life has been spent inside one asset bubble or another (first stocks, then homes).
A generation of Americans grew into middle age thinking that they had more wealth than they really did and that their future was a lot more secure than it really was. This age of fantasy economics changed not just the way we thought about spending and borrowing (leading us to do too much of both) but also the way we thought about politics.
Social safety nets didn't seem so important when even families with modest incomes could get 10% to 20% annual gains on their houses.
Colin Crouch, a professor of governance at the University of Warwick in Britain, has coined a useful name for this situation: privatized Keynesianism.
The economist John Maynard Keynes has been in the news a lot lately. During the Depression his great insight was that government could take on budget deficits to pull the economy back up. The U.S. and parts of Europe embraced Keynesianism for a time as a way of ensuring popular support for a mostly market economy. But under an accidental system of privatized Keynesianism, says Crouch, many rich countries leaned heavily on the deficit spending - that is, the chronic debt - of ordinary families.
Coming into this financial crisis, about 70% of U.S. gross domestic product came from consumer spending, boosted by easy mortgages and unsecured credit card borrowing. The nation wouldn't have recovered from the 2001 recession so quickly without all those loans.
Some optimistic pundits even saw this borrowing spree as a workable solution to the new stresses that were showing up in the economic statistics, such as rising inequality and increasingly unstable middle-class incomes. If you lost your job or didn't get a raise, you could borrow to smooth things over until better times.
It seems unlikely we'll revert to that behavior anytime soon. So one prediction I'll make about the next normal is that voters will look to government to help them manage risk.
That means President Obama might actually push through the national health-care system he campaigned on (although a change that big is still a tough political battle). A safer bet: Social Security will be one of your most solid assets. Whatever the system's internal financing problems, keeping it going is mostly a matter of political will. And with 401(k) balances deep in the tank, the political demand for Social Security is only going to go up. Talk of big benefit cuts will fade. In fact, I suspect benefits may actually increase for those seniors living closest to the bone.
It follows that life in the next normal will carry a higher tax bill - maybe not in the next couple of years, but soon enough. Whether you look at top marginal rates or the effective burden on families, taxes have been at a historically low ebb in recent years. Given the deficits we faced even before the crisis, they were already bound to go up. It's just more obvious now.
You can prepare a bit for higher taxes (for example, by saving in a Roth IRA, which allows tax-free withdrawals in retirement). But should you be upset about it? If we could also get a more reality-based economy in the bargain, it seems to me a fair price to pay.
IBM, Sun talks break down
IBM's talks to acquire smaller computer and software rival Sun Microsystems Inc broke down on Sunday after Sun rejected IBM's $7 billion offer, a source with knowledge of the matter said.
The collapse of negotiations, if final, is likely to hurt Sun's shares as a buyout was seen as a means of survival for the once-storied Silicon Valley company, which has been losing market share. A deal would also have helped IBM (IBM, Fortune 500) compete more effectively against rivals such as Hewlett-Packard Co (HPQ, Fortune 500).
The source, who was not authorized to speak publicly about the matter, said Sun was unhappy with International Business Machines Corp's offer of $9.40 per share or below, and that it was unclear if talks would resume.
The bid represented a premium of up to 89% on Sun's shares before deal talks were first reported last month.
"Sun is now sort of damaged goods," said Peter Falvey, a technology banker at Revolution Partners. "If IBM got under the covers and didn't like what they saw, then what does that mean for other potential buyers?"
An IBM spokesman declined to comment, while Sun officials did not return calls.
Sources told Reuters last month that IBM was in exclusive talks to buy Sun and had proceeded to the due diligence stage. One source had said on Saturday that IBM lowered its offer price for Sun to $9.50 a share from $9.55 a share and that a deal may be announced this week.
Sun shares had risen to $8.49 on Friday, from $4.97 on March 17, a day before talks between the two technology companies were first reported. The Wall Street Journal had previously said IBM's original bid was $10-$11 a share.
Deal factored in
The collapsed talks are expected to damage the smaller Sun more than IBM, the world's largest technology services provider, which has fared relatively well despite the global economic slump thanks to its outsourcing business and its shift from hardware to higher-margin software sales.
Kaufman Brothers analyst Shaw Wu said it was a mistake for Sun to reject the bid, citing the leap in Sun shares since reports of the deal talks.
"The acquisition is already factored into the market's thinking. To reject it over 50 cents a share, or whatever it may be, doesn't seem like a very prudent move," Wu said.
Sun posted an 11% decline in quarterly revenue for its fiscal quarter ended Dec. 28, while gross margins shrank to 41.9% from 48.5% from a year earlier.
The company rose to prominence selling high-end computer servers in the 1990s but never fully recovered from the dotcom bubble burst earlier this decade. Analysts also say it has failed to fully capitalize on its software assets including Solaris and Java.
Some analysts have thought from the start that a deal between Sun and IBM could prove difficult, particularly due to the likelihood of intense antitrust scrutiny.
The merger would give the combined company 65% of the $17 billion high-end Unix server market, according to market researcher IDC.
Failed negotiations with IBM could mean that Sun will need to look for another buyer, and contend with a lower offer. But no bidder other than IBM has emerged in the months that Sun has been shopping itself.
The Wall Street Journal reported that Sun had demanded assurances from IBM that it would proceed with the deal in the face of regulatory challenges, fearing IBM's offer left too much room for it to walk away.
Negotiation tactic?
While a deal was widely seen as more crucial for Sun than for IBM, many analysts had also said it would help IBM if the company is able to cut costs and make better use of Sun's assets.
IBM shares have also risen 10% since the negotiations were first reported, helped by an upswing in the overall market.
Tim Ghriskey, chief investment officer for Solaris Investment Management, which manages about $2 billion, said the latest developments could be part of negotiating tactics and that Sun is still likely to strike a deal at around $9.40 a share and that IBM was still the most likely buyer.
"Like any acquisition candidate they are trying to force the highest bid possible," Ghriskey said. "IBM doesn't necessarily need these assets. But I think they could probably benefit from them at a reasonable price."
Buying Sun would hand IBM a clear lead at the high end of the $45 billion overall server market fought over with Hewlett-Packard.
It would also broaden IBM's software portfolio, add storage products that vie with EMC Corp and Network Appliance Inc.
Analysts have said Sun's software could also help IBM compete with Microsoft Corp (MSFT, Fortune 500), as well as Cisco Systems Inc (CSCO, Fortune 500), which some see as IBM's biggest rival in the long term.
Both Cisco and IBM have been expanding beyond their traditional products to new technologies like "cloud computing," in which companies store data and computing power in remote data centers accessed over the Internet, rather than buy their own computer equipment.
The collapse of negotiations, if final, is likely to hurt Sun's shares as a buyout was seen as a means of survival for the once-storied Silicon Valley company, which has been losing market share. A deal would also have helped IBM (IBM, Fortune 500) compete more effectively against rivals such as Hewlett-Packard Co (HPQ, Fortune 500).
The source, who was not authorized to speak publicly about the matter, said Sun was unhappy with International Business Machines Corp's offer of $9.40 per share or below, and that it was unclear if talks would resume.
The bid represented a premium of up to 89% on Sun's shares before deal talks were first reported last month.
"Sun is now sort of damaged goods," said Peter Falvey, a technology banker at Revolution Partners. "If IBM got under the covers and didn't like what they saw, then what does that mean for other potential buyers?"
An IBM spokesman declined to comment, while Sun officials did not return calls.
Sources told Reuters last month that IBM was in exclusive talks to buy Sun and had proceeded to the due diligence stage. One source had said on Saturday that IBM lowered its offer price for Sun to $9.50 a share from $9.55 a share and that a deal may be announced this week.
Sun shares had risen to $8.49 on Friday, from $4.97 on March 17, a day before talks between the two technology companies were first reported. The Wall Street Journal had previously said IBM's original bid was $10-$11 a share.
Deal factored in
The collapsed talks are expected to damage the smaller Sun more than IBM, the world's largest technology services provider, which has fared relatively well despite the global economic slump thanks to its outsourcing business and its shift from hardware to higher-margin software sales.
Kaufman Brothers analyst Shaw Wu said it was a mistake for Sun to reject the bid, citing the leap in Sun shares since reports of the deal talks.
"The acquisition is already factored into the market's thinking. To reject it over 50 cents a share, or whatever it may be, doesn't seem like a very prudent move," Wu said.
Sun posted an 11% decline in quarterly revenue for its fiscal quarter ended Dec. 28, while gross margins shrank to 41.9% from 48.5% from a year earlier.
The company rose to prominence selling high-end computer servers in the 1990s but never fully recovered from the dotcom bubble burst earlier this decade. Analysts also say it has failed to fully capitalize on its software assets including Solaris and Java.
Some analysts have thought from the start that a deal between Sun and IBM could prove difficult, particularly due to the likelihood of intense antitrust scrutiny.
The merger would give the combined company 65% of the $17 billion high-end Unix server market, according to market researcher IDC.
Failed negotiations with IBM could mean that Sun will need to look for another buyer, and contend with a lower offer. But no bidder other than IBM has emerged in the months that Sun has been shopping itself.
The Wall Street Journal reported that Sun had demanded assurances from IBM that it would proceed with the deal in the face of regulatory challenges, fearing IBM's offer left too much room for it to walk away.
Negotiation tactic?
While a deal was widely seen as more crucial for Sun than for IBM, many analysts had also said it would help IBM if the company is able to cut costs and make better use of Sun's assets.
IBM shares have also risen 10% since the negotiations were first reported, helped by an upswing in the overall market.
Tim Ghriskey, chief investment officer for Solaris Investment Management, which manages about $2 billion, said the latest developments could be part of negotiating tactics and that Sun is still likely to strike a deal at around $9.40 a share and that IBM was still the most likely buyer.
"Like any acquisition candidate they are trying to force the highest bid possible," Ghriskey said. "IBM doesn't necessarily need these assets. But I think they could probably benefit from them at a reasonable price."
Buying Sun would hand IBM a clear lead at the high end of the $45 billion overall server market fought over with Hewlett-Packard.
It would also broaden IBM's software portfolio, add storage products that vie with EMC Corp and Network Appliance Inc.
Analysts have said Sun's software could also help IBM compete with Microsoft Corp (MSFT, Fortune 500), as well as Cisco Systems Inc (CSCO, Fortune 500), which some see as IBM's biggest rival in the long term.
Both Cisco and IBM have been expanding beyond their traditional products to new technologies like "cloud computing," in which companies store data and computing power in remote data centers accessed over the Internet, rather than buy their own computer equipment.
Gold Made Easy
People everywhere in the world has craze for precious stones like gold, silver, platinum and diamond generally. But the need for gold never dies as its been worn by all the people in the world and the people like to invest in their time in gold even in the times of financial turmoil as it’s a never depreciating thing. Gold Made Easy is the place where all you must go to buy and sell gold as it makes easy to buy and sell at the need of the customer. All the news related to gold and their varieties can be known in Gold Made Easy as it has a large collection of gold coins and you can decide the type of gold depending upon the need. You all might think why you must choose when there are several other precious stones available in the market. And the answer for this too is available as here you can know about the history of gold and their precious value you get even in the old age. Gold Made Easy looks at building the investor base in the market by giving out new measures to lure customers as they are awarded new schemes such as Free Gold guide. So if you are looking at a place to buy gold coins of different kinds then this is the place as it’s a certified one so you can be guaranteed about the originality.
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