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[IMAGE]=09[IMAGE]=09[IMAGE]=09[IMAGE]=09Business this week
=09=09=09=09June 14th 2001
=09=09=09=09From The Economist print edition =20
=09=09=09=09
=09=09=09=09
=09=09=09=09Contractions
=09=09=09=09
=09=09=09=09
=09=09=09=09
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=09=09=09=09
=09=09=09=09
=09=09=09=09
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=09=09=09=09
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=09=09=09=09
=09=09=09=09
=09=09=09=09Yet another recession seems to be hitting Japan. GDP contracted=
by 0.8% in=20
the first quarter compared with the previous quarter at an annual rate. The=
=20
current-account surplus shrank in April by 24% compared with a year earlier=
,=20
as the slowdown of the world economy affected Japan=01,s exports. The yen s=
lid=20
more against both the dollar and euro.
=09=09=09=09
=09=09=09=09Britain's European partners imposed on it a European directive =
on workers'=20
rights that requires companies to consult staff about job cuts and other=20
restructuring. Employers moaned. The pound fell against the euro as entry t=
o=20
the single currency looked increasingly likely, but not at the pound's=20
current high rate.
=09=09=09=09
=09=09=09=09See article: EU workers' rights=20
=09=09=09=09
=09=09=09=09Inflation in Europe gave cause for concern. British and French =
inflation,=20
both at 1.8% in April, increased to 2.1% and 2.3% respectively in May. Spai=
n=01,
s inflation hit 4.2% from 4.0%. Luxembourg, Greece and Norway all recorded=
=20
faster price rises as well.
=09=09=09=09
=09=09=09=09Zimbabwe=01,s government raised the price of fuel by nearly 70%=
, deepening an=20
economic crisis. The country=01,s main trade union said that over three-qua=
rters=20
of Zimbabweans already live below the poverty line.=20
=09=09=09=09
=09=09=09=09After President Thabo Mbeki intervened, South Africa=01,s gover=
nment struck a=20
deal with the mining industry over new legislation designed to increase=20
involvement by black entrepreneurs.
=09=09=09=09
=09=09=09=09Calling charges
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
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=09=09=09=09
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=09=09=09=09
=09=09=09=09[IMAGE]
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=09=09=09=09
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=09=09=09=09
=09=09=09=09
=09=09=09=09Nokia, the world=01,s biggest maker of mobile phones, saw its s=
hare price plunge=20
after revealing that sales growth would be lower than forecast and that=20
second-quarter profits would suffer. Nokia insists, however, that sales wil=
l=20
improve as new technology is introduced.=20
=09=09=09=09
=09=09=09=09See article: The mobile-phone industry at a turning point=20
=09=09=09=09
=09=09=09=09Standard & Poor=01,s downgraded the debt of Lucent Technologies=
, a struggling=20
telecoms-equipment maker, to junk status. Higher borrowing costs will not=
=20
help the firm. Nor will contracting demand for telecoms equipment.
=09=09=09=09
=09=09=09=09The board of Eircom, Ireland=01,s former monopoly telecoms oper=
ator, is to=20
recommend a euro2.9 billion ($2.5 billion) bid from Valentia, a consortium=
=20
headed by Tony O=01,Reilly, an Irish media tycoon.=20
=09=09=09=09
=09=09=09=09The chief executive of Sonera, a partly privatised Finnish tele=
coms operator,=20
resigned, hinting that government interference was to blame. The firm,=20
heavily indebted after investing in third-generation mobile licences, is no=
w=20
leaderless while rumours abound of a takeover by Sweden=01,s Telia.
=09=09=09=09
=09=09=09=09British Telecom and Deutsche Telekom agreed to share the buildi=
ng of=20
third-generation mobile networks in Britain and Germany. The companies coul=
d=20
save up to euro4 billion ($3.4 billion) between them. BT raised o2.3 billio=
n=20
($3.2 billion) from the sale of property in Britain.
=09=09=09=09
=09=09=09=09Axa questions
=09=09=09=09
=09=09=09=09Claude B,b,ar, chairman of the supervisory board of Axa, a huge=
French=20
insurance company, and Henri de Castries, its chief executive, were=20
questioned by police investigating money-laundering at PanEuroLife, a=20
Luxembourg company owned by Axa in 1996-98. PanEuroLife is suspected of=20
complicity in helping French citizens to evade taxes.
=09=09=09=09
=09=09=09=09See article: French investigations into money-laundering=20
=09=09=09=09
=09=09=09=09Accenture, formerly Andersen Consulting, a management consultan=
cy, announced=20
details of an initial public offering that would value the firm at up to $1=
5=20
billion. Accenture=01,s 2,500 partners will be offered 80% of the shares. L=
ess=20
lucky: 600 staff whom Accenture intend to lay off and 800 more facing up to=
a=20
year off on 20% pay.
=09=09=09=09
=09=09=09=09Philip Morris sold 16% of Kraft, an American food giant, in an =
initial public=20
offering valuing the company at $53.8 billion. America=01,s second-largest =
IPO=20
will raise around $8.7 billion, which Philip Morris will use to pay off deb=
t.
=09=09=09=09
=09=09=09=09The European Commission began investigating whether Electricit,=
de France, an=20
acquisitive French power company, had received any illegal state aid. Italy=
=20
and Spain responded to EDF=01,s predatory moves on domestic power companies=
with=20
emergency laws meant to fend off the French firm.=20
=09=09=09=09
=09=09=09=09A link-up scheme between state-owned Caisse des D,p"ts et Consi=
gnations and=20
the mutually owned Caisse d=01,Epargne will create France=01,s third-bigges=
t=20
banking group by assets.
=09=09=09=09
=09=09=09=09Strike aircraft
=09=09=09=09
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=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09EPA
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09Lufthansa, Germany=01,s flag-carrying airline, cut its forecast=
for operating=20
profit in 2001 by about a third to as little as euro700m ($596m), blaming a=
=20
euro125m pay deal with pilots and the cost of several strikes on top of a=
=20
faltering world economy. Pilots at other airlines have observed the wage ri=
se=20
with interest.
=09=09=09=09
=09=09=09=09General Electric offered the European Commission more concessio=
ns to secure=20
approval of its planned $40 billion merger with Honeywell. GE said it would=
=20
sell bits of Honeywell=01,s aerospace business as well as its regional=20
jet-engine and marine-engine divisions. Negotiations with the commission=20
continued in a fraught atmosphere as the deadline loomed.
=09=09=09=09
=09=09=09=09Months after abandoning a merger because of regulatory difficul=
ties, British=20
Airways and KLM Royal Dutch started talks aimed at =01&alternative forms of=
=20
co-operation=018. BA and its partner, American Airlines, also met America=
=01,s=20
transport secretary to ask for antitrust immunity to allow a deepening of=
=20
their alliance.
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
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