Buffett goes on $20 billion stock buying spree

NEW YORK (CNNMoney) -- In the worst quarter for U.S. stocks since the financial crisis, investor Warren Buffett went on a stock buying spree.
A filing late Friday from Buffett's Berkshire Hathaway (BRKA, Fortune 500) shows it bought $20 billion in stocks in the three months ended Sept. 30 -- including $6.9 billion worth of dabbling in U.S. stocks.

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The purchases also included the $8.7 billion purchase of specialty chemical company Lubrizol Corp., which closed in the quarter after being announced earlier in the year, and $5 billion in preferred shares and warrants of Bank of America (BAC, Fortune 500).
The $6.9 billion in common stock purchases represented a fairly aggressive market position, said Greggory Warren, the analyst who follows Berkshire for Morningstar.
"That's a better jump than we've seen from them in a while," he said.
Berkshire bought about about $3.6 billion in stock in the second quarter and less than $1 billion in the first quarter. Given Buffett's inclination to try to find bargains, the buying in the third quarter wasn't a surprise, Warren said.
"We saw a fairly significant decline in the quarter," he said. "The question is where he put the money to work. We'll have to wait to find that out."
The blue chip Standard & Poor's 500 fell 14% in the third quarter, the biggest drop since the fiscal crisis hit markets in the final three months of 2008. Other major indexes also tumbled, driven by the downgrade of the U.S. debt rating, the uncertainty over the European sovereign debt and rising worries during the period that the U.S. economy is in danger of a new recession.
Buffett continued to be bullish on stocks in comments during the period. On Aug. 15, he told PBS interviewer Charlie Rose that on the first day of trading after the U.S. credit downgrade -- as the S&P 500 plunged nearly 7% -- Berkshire made its largest single-day stock purchases of the year to date. And he said the $7 billion Berkshire had invested to that point of the year was at least $1 billion more than it had ever purchased in a year.
"It's like buying on sale," he said in that interview.
Berkshire's earnings tumbled 24% in the quarter to $2.3 billion, hurt by the decline in value of its holdings and a $1.6 billion loss on derivatives it held during the period.
But Cliff Gallant, analyst with Keefe, Bruyette & Woods, said he believes most of the reported derivative losses have already been reversed by the rebound in stocks in October. He said the operating earnings beat forecasts.
"The strength of core operating earnings shrugged off mark-to-market paper losses in the derivatives book," he wrote in a note Monday. "With nearly $35 billion of cash on hand and as one of the highest credit worthy financial institutions in the world, we expect that Berkshire will continue to be positioned for such attractive opportunities."
Berkshire shares were down just less than 1% in midday trading Monday, but that was less than the drop in the broader markets.

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France, Germany demand Greek decision on euro

PARIS/ATHENS (Reuters) - Germany and France told Greece on Wednesday it should make up its mind by mid-December whether it wants to stay in the euro zone when Greeks vote on a 130-billion-euro ($178 billion) bailout.

French President Nicolas Sarkozy and Germany's Angela Merkel summoned George Papandreou for crisis talks in Cannes, before a G20 summit of major world economies, to push for rapid implementation of measures to tackle the euro zone debt crisis, which Athens has thrown into doubt.

Sarkozy said Papandreou's announcement of a referendum "took the whole of Europe by surprise" and his prime minister, Francois Fillon, told parliament: "Europe cannot be kept waiting for weeks for the outcome of the referendum.

"The Greeks must say quickly and without ambiguity whether they choose to keep their place in the euro zone or not."

Opinion polls suggest most Greeks think the deal thrashed out by euro zone leaders last week is a bad one, but much will depend on how Papandreou frames the debate, either on the bailout -- and the painful cuts it demands -- or membership of the euro, which remains popular.

Greece's European partners will press for the latter.

German Chancellor Merkel struck the same tone of exasperation and impatience as Fillon in comments before flying to Cannes for hastily arranged meetings of European Union policymakers (1630 GMT) and with Papandreou (1930 GMT).

"We agreed a plan for Greece last week. We want to put this plan into practice, but for this we need clarity and the meeting tonight should help with precisely this," she told a news conference with Turkish Prime Minister Tayyip Erdogan.

Germany's finance ministry hinted that European partners and the International Monetary Fund may withhold the next 8 billion euro aid instalment to Athens, due this month, until after the referendum.

"The tranche has not yet been paid. That is the situation today. How things proceed is yet to be seen. But according to everything we hear from Greece, there is no urgent need for the payout until mid-December, more or less," finance ministry spokesman Martin Kotthaus said.

EU leaders endorsed the disbursement of the money last week, but the IMF board has yet to set a date for a decision. An IMF source said the way forward would depend on the outcome of Wednesday's EU talks with Papandreou, which IMF Managing Director Christine Lagarde will join.

French officials said Papandreou would be pressed to put the bailout deal to parliament first in hopes of reassuring financial markets which panicked when he called the plebiscite.

WEEKS OF UNCERTAINTY

Win or lose, his gamble guarantees weeks of uncertainty just as the 17-nation European currency area is desperate for a period of calm to implement the remedies agreed to corral its sovereign debt crisis.

Some in Papandreou's party called for him to quit, accusing him of endangering euro membership with his shock decision to call a popular vote, a move that pummelled the euro and stocks.

The Socialist prime minister battled late into the night to win cabinet support, giving him at least a stay of execution before a confidence vote in parliament on Friday.

"The referendum will be a clear mandate and a clear message inside and outside Greece on our European course and participation in the euro," Papandreou told a cabinet meeting that lasted seven hours.

European Commission chief Jose Manuel Barroso urged Greeks to unite in support of the bailout plan, warning that the alternative would be too ghastly to predict.

"Without the agreement of Greece to the EU/IMF programme, the conditions for Greek citizens would become much more painful, in particular for the most vulnerable. The consequences would be impossible to foresee," he said.

If Papandreou wins the confidence vote, the euro zone faces a period of policy vacuum in which markets can create havoc. If he loses, Greece faces a disorderly default which would hammer Europe's banks and threaten the much larger economies of Italy and Spain, which the bloc may not have the means to bail out.

As a result, the Greek premier's move has aroused anger and surprise in equal measure around the world.

"That's enough now: Greeks out!" Kronen Zeitung, Austria's biggest-selling paper, said on its front page.

The chairman of euro zone finance ministers, Jean-Claude Juncker, said Greece could go bankrupt if voters rejected the bailout package and Japanese Finance Minister Jun Azumi said: "Everyone is bewildered."

Juncker, European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, IMF chief Christine Lagarde and an ECB official will also attend Wednesday's talks in the southern French resort town.

ECB IN SPOTLIGHT

Doubt about Europe's ability to contain the debt crisis has once more sent markets into a spin and put Italy firmly in the firing line.

The risk premium on Italian bonds over safe-haven German Bunds hit a euro-lifetime high on Tuesday, despite European Central Bank buying of its bonds.

Ireland's finance minister said the ECB would be forced to pledge "a wall of money" to buy bonds, something many of its policymakers are deeply uncomfortable about.

Until the Greek situation is clearer, last week's package of measures is likely to be in limbo, leaving the ECB as the only bulwark against market attacks.

The head of Germany's banking association, Michael Kemmer, said agreement on a 50 percent writedown of Greek debt by its private creditors would have to wait. "I can't imagine a debt exchange taking place before the referendum," he said.

Greek Conservative opposition leader Antonis Samaras said Papandreou had acted as a one-man roadblock.

"How can banks accept a haircut on their debt if they don't know if Greece accepts it in the first place?" he told lawmakers in a speech. "Papandreou has put the country in the centre of a global storm ... a government in such a state of panic is dangerous and must leave as soon as possible."

Meanwhile, another premier under fire, Italy's Silvio Berlusconi scrambled to come up with measures to placate markets, seeing senior aides and ministers ahead of an expected meeting of the cabinet later.

TIMING, RESULT IN DOUBT

Greek government spokesman Ilias Mosialos said the referendum would take place "as soon as possible, right after the basics of the bailout deal are formulated".

Greek officials had suggested it would probably be held in mid-January but the interior minister said it could happen as early as December.

The Greek press, including dailies traditionally friendly to the government, almost unanimously condemned Papandreou.

Centre-left newspaper Eleftherotypia described the prime minister on its front page as "The Lord of Chaos". Ethnos, another pro-government paper, called the referendum "suicidal".

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Gauging the Fallout of Another Rescue

Another European plan to fix its sovereign debt problem has initiated another sharp market rally. But will the enthusiasm over the latest rescue effort last longer than the optimism that greeted past plans, only to slowly fade away?
The market’s quick embrace of the latest effort to tackle Greece’s mammoth debt burden and restore confidence in the Continent’s banks reflected hope that this plan was broader and more robust than previous ones.
“It’s not a silver bullet, but it makes things manageable to some extent,” said Gilles Moec, co-head of economic research for Deutsche Bank. Though vague on details, others said, it is clearly a step in the right direction after many missteps.
But skeptics quickly emerged, saying some of the main elements of the plan may not be as good as they looked initially, starting with whether it will truly deliver as much debt relief to Greece as promised, and whether it is sufficient to buttress potentially troubled banks.
Moreover, they add, plenty of things will have to go right to ensure its success, and plenty could go wrong to derail it.
“It’s another patchwork effort,” said Richard Cookson, global chief investment officer of Citi Private Bank. “It’s trying to tide things over for the euro zone, and it has worked a bit today. But the half-life of the euphoria seems to diminish with every package that comes along.”
And David Watts, senior European strategist for CreditSights, said, “It’s certainly hard to see this as the bazooka that the market has been calling for. There are very real risks that this will prove to be just another divot in the road.”
The yield on Italy’s 10-year bond, which recently hit a high of 6 percent on concern over the country’s debt and commitment to fiscal reform, remained uncomfortably high at 5.8 percent after the agreement was announced. And the interest rates on Spanish and French bonds narrowed only slightly as well, reflecting a deeper concern that this plan would not provide a magic cure for Europe’s debt problems.
Finally, even if all the components fall into place for Greece, looming on the horizon is the debt burden of other countries, including Ireland, Portugal, Spain and especially Italy, which owes more than $2 trillion and is the world’s fourth-largest borrower after the United States, Japan and Germany. “Everything depends on Italy,” said Lüder Gerken, director of the Center for European Policy in Freiburg, Germany.
The cornerstone of the latest plan, which helped feed investor enthusiasm, is a 50 percent reduction of Greece’s government debt.
But this — the simplest part of the blueprint — comes with asterisks.
Of the 340 billion euros in Greek government debt, only about 200 billion euros — most of it owed to banks — falls under the scope of the accord, meaning the country’s total sovereign debt would be reduced by about 30 percent at best. The rest of the debt is controlled by the European Central Bank, the International Monetary Fund and other institutions that have said they would not participate in a debt restructuring.
But even a 30 percent reduction in Greece’s debt load is not assured. That is because the 50 percent write-off on the value of Greek debt, the so-called haircut that policy makers want banks and other financial institutions, to accept, is voluntary. Since Greek government bonds are trading at about 40 percent of their face value, officials from the Institute of International Finance, which represented the banks in the marathon negotiations with European leaders, said the number of participants was “very likely to be very high.”
Still, it is far from certain all those volunteers will materialize.
Antonio Garcia Pascual, Barclays Capital’s chief economist for southern Europe, said he feared that many hedge funds and nonbank investors would hold out for better terms. If enough of those investors balk, the deal could fall through.
That may leave European officials in the unenviable position of either filling in the financing gap with government-backed funds or forcing an involuntary loss of 50 percent on private creditors, in turn initiating a default on the bonds, which policy makers fear would make it harder for Greece to raise money from public markets in the future.
“You cannot have a lot of holdouts,” Mr. Garcia Pascual said. “If you want to get the debt relief you need for Greece, you may be forced to impose a haircut.”
Even if most private lenders and investors sign off, and the restructuring is completed voluntarily, Greece will still be heavily burdened with debt.
The 120 percent debt-to-gross-domestic-product goal for 2020 assumes that Greece will be generating a budget surplus equal to 4.5 percent of G.D.P. by 2014, and that the Greek economy will be growing at 3 percent annually by 2016, said David Tan, lead portfolio manager of the international fixed income group at J.P. Morgan Asset Management.
In reality, the I.M.F. expects Greece’s economy to contract by 5.5 percent this year and 2.5 percent in 2012, as austerity measures imposed as part of earlier restructuring efforts go into effect. “If you make less heroic assumptions on growth, debt doesn’t come down very much at all,” Mr. Tan said.
Another main element of the plan is to shore up 70 of Europe’s biggest banks by requiring them to raise 106 billion euros in fresh capital, to help them offset the losses they will suffer in taking haircuts on Greek bonds and the drop in value of other sovereign debt they own.
But that is not a sure thing, either.
In contrast to bank rescue plans in the United States and Britain, European governments are not injecting funds directly into financial institutions. Instead they are asking banks to turn to private investors to significantly raise their capital level, to 9 percent by next year. Raising money from private investors will be difficult, though, especially as many of the likely sovereign fund candidates are the same ones that suffered deep losses from investing in troubled American banks in 2007 and 2008.
In addition, some economists say that European banks are so burdened with bad sovereign debt that they need to raise far more than 106 billion euros to become healthy. Some estimate they need to raise 300 billion euros, or three times that amount.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, said that 106 billion euros might allow European banks to absorb losses stemming from a Greek debt restructuring, “but I’m not sure that it is enough to deal with write-downs on Italian debt if that country runs into trouble.”
Then there is the question of whether the answer to the euro zone’s debt crisis is taking on even more debt, which this plan requires.
The main bailout fund of 440 billion euros known as the European Financial Stability Facility, relies on the sterling credit of Germany and France for its borrowing power. European leaders have promised to use the fund to provide insurance for investors looking to buy risky Italian and Spanish bonds.
In addition, they hope to leverage their contribution by turning it into an insurance program as well as obtaining additional private investments to increase the facility’s borrowing capacity to about 1 trillion euros. But, just as with the money Europe hopes to get from private investors to help recapitalize its banks, it is not clear that there is enough appetite from outsiders to take on this risk.
Moreover, although it is a large number, the 1 trillion euro facility would cover only about three years of financing needs for Italy and Spain, while they endeavor to return their weakened economies to health so they no longer need a handout.
Similarly, the initial bailout package for Greece fashioned by European and I.M.F. officials last year was intended to give Greece relief for a three-year period, with the aim that it would then be back on its feet economically.
“Clearly that didn’t work,” noted Mr. Watts of CreditSights. Allowing a mere “three years to grow the Italian economy back to the point where it can underpin market confidence is probably optimistic.”
Besides being unequal to the scale of the Continent’s debt burden, critics add that the financial stability plan is too reliant on France, which may well see its AAA rating taken down a notch because of its own debt and deficit problems. That would make it harder and more expensive for France to make its expected contribution. A downgrade for France would hurt the bailout fund’s ability to issue bonds and attract capital from investors.
And, just as with the money Europe hopes to get from private investors to help recapitalize its banks, it also remains unclear if Europe will be able to entice Asian and Middle East investors to put money into investments that would be linked to the bailout fund, and allow it to leverage up its existing assets.
“It’s not a solution to the crisis,” said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels. “It doesn’t address the weak links in the banking system.”

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World stocks, euro fall as EU summit hopes sag

World stocks and the euro fell on Thursday on fresh doubts that the keenly awaited EU summit this weekend will result in a comprehensive plan to rein in the euro zone debt crisis.

A media report that the German government had not ruled out postponing the summit, set for Sunday, poured another dose of cold water on optimism over the weekend meeting of European Union leaders in Brussels.

The news out of Europe kept investors on their toes. Worries that the debt problems could cause another global recession have been at the forefront for months.

"It's a Ping-Pong game -- people have been burned by reacting to individual news stories only to have them refuted, withdrawn or contradicted," said Stephen Massocca, managing director, Wedbush Morgan in San Francisco.

Citing sources from both the center-right coalition of German Chancellor Angela Merkel and from her government, German newspaper Die Welt said the possible delay was due to stalled negotiations on the possible leveraging of the euro zone bailout fund.

Senior EU sources and the Austrian Finance Ministry said

they were unaware of any plan to postpone the weekend meeting.

Still, the euro fell to a session low against the dollar. It was last down 0.5 percent at $1.3680 after falling as low as 1.3669.

World stocks as measured by MSCI tumbled 1.4 percent, while European shares dropped 1.3 percent.

Wall Street stocks also declined, as the news out of Europe overshadowed data showing an unexpected rebound in factory activity in the U.S. mid-Atlantic region in October.

The Dow Jones industrial average was down 84.69 points, or 0.74 percent, at 11,419.93. The Standard & Poor's 500 Index was down 8.56 points, or 0.71 percent, at 1,201.32. The Nasdaq Composite Index was down 35.13 points, or 1.35 percent, at 2,568.91.

On Wednesday, French President Nicolas Sarkozy said that plans to tackle the European debt crisis had stalled with Paris and Berlin at odds over how to increase the region's bailout fund, the European Financial Stability Facility.

There's "growing investor realization that the upcoming European policymakers' summit may not yield a lasting solution to the ongoing euro zone debt crisis after all," said Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston.

U.S. Treasury prices edged higher. Benchmark 10-year notes were last up 3/32, yielding 2.15 percent.

Pressuring bonds earlier, guidelines on the euro zone's rescue fund indicated that the facility would be able to buy bonds in the secondary market.

For debt crisis in graphics: click http://r.reuters.com/hyb65p

For government bond spreads: click http://r.reuters.com/kus82s

For asset returns in 2011: click http://r.reuters.com/suz52s

OIL REVERSES EARLIER GAINS

Uncertainty about the weekend meeting in Europe reversed gains in oil, with Brent crude oil prices down 37 cents at $108.02.

News that deposed Libyan leader Muammar Gaddafi had died of wounds suffered in his capture near his hometown of Sirte on Thursday had little market impact.

"The regime had already fallen," said Olivier Jakob, oil analyst at Petromatrix. "It will bring additional peace to the country but oil exports are already in the process of coming back -- so there is no great change to the short-term supply and demand picture."

Gold fell for a fourth consecutive day.

Solid earnings helped to limit losses in stocks. In Europe, shares of Nokia, the world's largest cellphone maker, advanced 5.5 percent after its earnings beat forecasts, helped by strong sales of basic cellphone models and sparking hopes that the company's worst days are over U.S.-listed shares of Nokia jumped 5.2 percent to $6.44.

U.S. economic data also helping limit losses on Wall street. The Philadelphia Federal Reserve Bank said factory activity in the U.S. mid-Atlantic region unexpectedly expanded in October to its highest level in six months, supporting views that the U.S. economy recovery is progressing, albeit at a slow pace.

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AT&T revenue falls short, promises stronger fourth quarter

AT&T Inc's quarterly revenue fell short of Wall Street estimates, as wireless customers spent less than expected ahead of the introduction of the latest Apple Inc iPhone.

But AT&T expects subscriber service revenue to recover this quarter due to strong sales of smartphones such as the iPhone, which boosts data service revenue.

Customers held back on purchases of new smartphones in the third quarter, in favor of the new iPhone 4S, which was introduced on earlier this month.

"The primary driver of ARPU (average revenue per customer) in Q3 was slower smartphone growth. As smartphone growth continues in Q4 we expect (ARPU) growth to pick up," Ralph de la Vega, the head of AT&T's mobile business, told analysts on a conference call.

AT&T faces a difficult balance between profit margins and revenue. While iPhone sales boost AT&T's subscriber numbers and revenue, they also eat into its profits as the company heavily subsidizes it to get customers to commit to contracts.

Since the iPhone 4S didn't launch until after the quarter was over, this reduced third-quarter subsidies while it boosted AT&T's profit margins for the quarter.

Stifel Nicolaus analyst Chris King said AT&T's third-quarter ARPU of $63.69 missed his $64.50 expectation. But its 43.7 percentprofit margin from wireless services was well ahead of his expectation for 41.9 percent.

AT&T executives promised a "significant" increase in smartphone sales boosting fourth quarter revenue growth, albeit at the expense of profit margins.

BUSINESS GROWTH

Chief Financial Officer John Stephens declined to discuss how far he expects margins to fall this quarter.

He was more focused on AT&T's sequential increase in quarterly revenue from business customers of its wireline service for the first time in three years. Stephens said he was "very optimistic" this trend would continue. That segment represents 29 percent of the company's overall revenue.

"The fact we grew sequential revenue in wireline business this quarter. That is important," he told Reuters. "The fact I sold a few less handsets in Q3 ... that's no big deal because I'm going to sell those handsets in the fourth quarter."

But Stephens conceded that the economy is a challenge.

"Bad debts are at a very low rate but the economy is still very difficult," he said citing weak housing starts as well as employment numbers. "We've got to get people jobs."

Mizuho analyst Michael Nelson said that AT&T's results -- the first of its peers to be published this quarter -- will likely be followed by similar wireless trends at rivals such as Verizon Wireless and Sprint Nextel .

"In this quarter what you're going to see not just from AT&T but from other carriers is purchase delays ahead of the iPhone launch," Nelson said.

AT&T said activated 1 million customers of the latest Apple phone, the iPhone 4S, as of Tuesday. Orders for the device started on October 7, after the end of the third quarter.

This marked the most successful iPhone launch yet, according to AT&T, which has been heavily dependent on iPhone sales for customer additions since 2007. For more than 3 years AT&T had exclusive rights to sell iPhones, but it now shares the market with Verizon Wireless and Sprint.

AT&T added 319,000 subscribers in the quarter, compared with the median expectation for 311,000 from nine analysts contacted by Reuters.

The company is preparing a court battle to fight for regulatory approval to buy T-Mobile USA, a unit of Deutsche Telekom . Executives did not provide an update except to say that the company still hopes it can win approval.

It reported a drop in operating revenue to $31.48 billion from $31.58 billion in the year-ago quarter, and was shy of analyst expectations for revenue of $31.60 billion, according to Thomson Reuters I/B/E/S.

AT&T's profit of $3.6 billion, or 61 cents per share that was in line with Wall Street expectations. It compared with a profit of $12.32 billion or $2.07 per share in the same quarter the year before, when it had a big gain from an asset sale.

AT&T shares were down 22 cents at $28.87 in early afternoon trade on the New York Stock Exchange.

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Infosys Q2 results beat expectations: An analysis

Infosys announced Q2 results (September 2011) today, beating expectations substantially. Revenues were up 8% from last quarter to 8099 cr. and Net profits up 9.73% from last year, to 1906 cr.
The stock is up 5% and has lifted the index up with it, with both the Nifty and Sensex up 1%.

Revenues and Profits

Revenue growth has returned but much of the spike is from the strong dollar. In dollar terms, Revenues grew 4.5% (QoQ) — the remaining has come from the dollar move. The USD-INR equation has moved 4% in their favour (from an average of 44.78 to 46.3)
Despite the dollar move, the EPS growth wasn't impressive; at 9.7% in rupee terms and 9.9% in dollar terms, year on year, EPS growth looks incredibly small given that the dollar has risen. Since 54% of Infy's revenues come from onsite work, those expenses are also in dollars, which negates ,to a certain extent, the rise in the dollar.

Employees and Attrition

September is usually a great quarter for hiring and this one was no different. With over 15,000 people hired, and a net addition of 8,262 employees, Infy sees its employee strength go to 1.42 lakh people.
The attrition rate remains around 16%.
Utilization has gone up to just about 70%, which is a good sign. Strong hiring and good utilization usually means continuing business — there isn't much of an impact of the global slowdown (yet).
Project Types, Geographies
Infy increased Time and Material (T&M) Billing this quarter, which is lucrative because you can bill more if you add more people.

The kind of work they do hasn't changed substantially — slowdown or not.

And finally, they have moved away from Europe into America, which is probably reflective of the troubles in the Eurozone.

Work in India as a percentage has decreased (2.2% versus 2.6% in Q1) and the rest of the world has gone up to 12% from 11.9%.

EPS Growth And P/E

The P/E has come down substantially with the recent price fall and hovers around 20.

The problem is that the Trailing Twelve Month (TTM) EPS growth has softened, to just 13.16%. They do expect to grow more in the coming months (to 21%!), but much of that will come due to a weak rupee, if it remains so.
Risks to growth will be a strengthening of the rupee back to the 44 levels, or a much larger crisis in the west (85% of their revenues come from North America and Europe).
EPS Growth this quarter has come down to less than 10% after a great quarter last year.

Outlook

For the next quarter, Infy expects both Revenues and EPS to grow between 24% to 26% (YoY).
For the entire year ending March 2012, the projection is that revenues grow 22% to 24% YoY. the EPS expectation is Rs. 143.02 to 145.06 (a growth of 21%)
Current Trailing Twelve Month (TTM) EPS is 126.46, which has grown just marginally from the March 2011 year end EPS of 119.41. So most of the growth needs to come in the next two quarters.
How likely is that? Debt ridden Europe, a hurting US, potential slowdown in China — all point to a tough H2 for this year. In it's favour, the company always gives muted guidance and outperforms it — this time their guidance itself is strong. Infosys has been known to pull rabbits out of hats every once in a while, can they do it now?

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The Future of Apple Without Steve Jobs

Steve Jobs is gone. He passed away too young and undoubtedly with plenty of innovative ideas still brewing. It comes as no surprise but it's now a reality.

Jobs' imprint and influence on Apple will remain for years. However, his management team can no longer count on his presence, opinion and impeccable taste.

How will that affect Apple?
As Aaron Task and Henry Blodget discuss in the accompanying clip, the near term is not a concern. Apple will remain one of the most valued companies in the world thanks to strong sales of Macs, iPhones and iPads. The company appears to have incredible momentum over the next few product cycles, thanks largely to Jobs' technological vision and marketing brilliance.

Then what?
The technology sector is arguably the most competitive industry in the world. Steve Jobs' genius was creating products no one even knew they wanted before Apple built them. He did not invent the personal computer, the digital music player, smartphones and or tablets; but his creations so fundamentally changed the market, he might as well have. (See: iPod, iPhone, iPad) No one knows better than Apple how one product enhancement or advancement can change consumer demand in inconceivable ways. (See: Blackberry vs iPhone)

Can Apple continue to innovate without Jobs?
The iPhone enjoys 27% market share in the smartphone category, according to the latest comscore stats. That's second only to Google's Android with 44% market share. Rest assured, Google is looking to increase their piece of the pie with the acquisition of Motorola Mobility. And while the iPhone 4S will likely fly off the shelves, it did disappoint some hoping to see an iPhone 5. Shares of Apple fell following Tuesday's announcement and were down modestly Wednesday morning in reaction to Jobs' death.
In the tablet category, the iPad dominates. It controls 73% of the market and expects to have at least 50% share through 2014, says industry research firm Gartner. The competition has so far been weak but Amazon's new Kindle Fire may change that. Even if it's not a game changer, competitors will continue to try.
This is not to say Apple will fail without Steve Jobs. They are still in good hands. Apple certainly has talented engineers, product managers and executives. CEO Tim Cook has been steering the ship for the last several years as Jobs battled his health issues. The company has excelled during this time. Another integral piece of the puzzle, Jonathan Ive remains. Ive is the lead designer behind just about every great product Apple developed in the last decade and half.
In the end, the only thing we know is: things will be different. And, as Steve Jobs proved, different has the potential to be much better.

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Carlyle, Hellman & Friedman to take PPD private for $3.9 bln

Carlyle Group and Hellman & Friedman will buy contract research firm Pharmaceutical Product Development Inc in a $3.9 billion cash deal, the latest in a string of private equity takeovers in the healthcare industry.

The offer price of $33.25 per PPD share is nearly 30 percent higher than the stock's Friday close.

The deal follows on the heels of Apax Partners' $5 billion deal for Kinetic Concepts Inc, TPG Capital's $2 billion buy of diagnostics firm Immucor and KKR's $2.38 billion buyout of a Pfizer unit.

It would also mark the second deal in the contract research sector since May, when privately held global contract research organization INC Research bought Kendle International for $232 million.

PPD shares were trading up 26 percent at $32.25 in morning trade on Nasdaq, a dollar shy of the offer price, suggesting some investors have doubts about the transaction.

"The event-driven investors that remained in the stock as it weakened over the last couple of weeks are going ahead and selling their positions on the news, rather than wait for the final dollar," Jefferies analyst David Windley said.

"The price is satisfactory but it obviously was impacted by the challenging market conditions -- comes at the low end of the range that was discussed in the news earlier in the quarter."

Industry analysts were predicting an offer in the range of $35-$37 a share, after a media report in July first said the company was looking to sell itself.

Although PPD has 30 calendar days to solicit acquisition proposals from third parties, Windley does not expect a better offer for the company.

FOCUS ON CRO

Contract research organizations (CROs), which provide drug research services to the pharmaceutical and biotechnology industry, were hit hard during the credit crunch when drugmakers halted or shelved a lot of drug development to cut costs.

However, drugmakers are turning to new development with renewed vigour as they have exhausted all methods to streamline operations and the patent cliff on several blockbuster drugs looms. CROs should reap the benefits of any new development.

PPD shares, however, have lost 8 percent of their value since July, when its board had asked management to review its strategic plan. In August, sources told Reuters that Carlyle was in talks to buy the company.

The shares were trading at a multiple of 16 times forward earnings as of Friday, compared with a sector average of 30, according to Thomson Reuters data.

Bigger rival and industry bellwether Covance and peer Charles River Laboratories International have also been trading at similar multiples.

The chance of a competing offer from its rivals was widely dismissed by analysts, citing the limited number of large CROs with resources to mount a bid as well as the lack of meaningful savings from a potential combination.

Last year, peer Charles River was forced to drop its plans to buy Chinese peer Wuxi PharmaTech for $1.6 billion, after investors and proxy advisory firms opposed the deal.

The PPD deal will be funded by a combination of equity provided by Carlyle Partners and Hellman & Friedman Capital Partners and external debt financing from Credit Suisse, JP Morgan, Goldman Sachs and UBS.

The transaction is expected to close in the fourth quarter and PPD said it will not host a conference call to discuss financial results for the third quarter of 2011.

Morgan Stanley advised PPD on the deal, while Credit Suisse advised Carlyle and Hellman & Friedman.

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Reebok to pay $25 mln for toning shoe claims

Reebok International Ltd has agreed to pay $25 million to settle charges that it made unsupported claims that its "toning shoes" help wearers get fit faster, the U.S. Federal Trade Commission said on Wednesday.
The money will go toward consumer refunds.
Reebok advertisements said the shoes strengthened hamstrings and calves by up to 11 percent more than regular sneakers, and toned the buttocks up to 28 percent more, the FTC said.
"To its credit, Reebok pulled these ads sometime in the middle of our investigation," David Vladeck, head of the FTC's Consumer Protection Bureau.
Toning shoes are designed to be slightly unstable. Manufacturers say the instability requires the wearer to work harder, thus strengthening muscles.
"We did get consumer complaints. We watch TV. We read the newspapers," said Vladeck. "There is no such thing as a no-work, no-sweat way to a fit and healthy body."
Adidas, which owns Reebok, said it disagreed with the FTC and stood behind the shoes.
"The (FTC) allegations suggested that the testing we conducted did not substantiate certain claims used in the advertising of our EasyTone line of products," Adidas said in a statement. "In order to avoid a protracted legal battle, Reebok has chosen to settle with the FTC. Settling does not mean we agreed with the FTC's allegations; we do not."
The company added: "We stand behind our EasyTone technology -- the first shoe in the toning category that was inspired by balance-ball training."
Reebok brought out a toning shoe in early 2009 and has sold "millions" of pairs in the United States, said Katja Schreiber, an Adidas spokeswoman in a telephone interview from Adidas offices near Nuremberg, Germany. She declined to be more specific about sales.
Despite the Adidas statement, much of Reebok's advertising has already changed, and other changes are coming, said Dan Sarro, a Reebok spokesman.
A variety of companies advertise toning shoes, including New Balance, Skechers, Ryka and Avia. The shoes range in price from $12 to nearly $300.
Jaime Bianchi, an expert in consumer class-action lawsuits with the law firm White & Case, said these other manufacturers could become targets of the FTC if their advertising makes unsubstantiated claims.
"They normally go after the biggest player and work down," said Bianchi.
Skechers said in an August filing with the Securities and Exchange Commission that the FTC was looking at its advertisements for its Shape-ups and other toning shoes.
Private lawsuits alleging deceptive advertising have been filed against Skechers, New Balance and Reebok.
(Reporting by Diane Bartz in Washington and Nivedita Bhattacharjee in Bangalore; editing by Gerald E. McCormick and John Wallace)

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