News Corp investors to vote against Murdochs (Reuters)

LONDON (Reuters) – Rupert Murdoch's multi-million dollar campaign to win back the hearts and minds of News Corporation's independent investors suffered a new blow on Friday after another key shareholder group called for his eviction from its board.

Hermes Equity Ownership Services (HEOS), the shareholder advisory service affiliated to Britain's largest pension fund, issued a rallying cry to investors to vote against all Murdoch family re-elections to the board of the embattled media group at next week's annual general meeting on October 21.

"The time is right for the company to appoint an independent chairman to rebuild trust, help correct the governance discount, and ensure that the interests of all investors are properly represented," Jennifer Walmsley, Director of Hermes Equity Ownership Services, said.

"We have a battle on our hands to demonstrate the strength of shareholder opposition because so many shares are held by the family or by people affiliated with the family," she told Reuters.

The organization, which votes on behalf of the BT Pension Fund and more than 20 other institutional clients running $140 billion of assets, has also called for an independent investigation into the phone hacking scandal that led to the closure of top-selling British tabloid The News of the World.

Besides seeking the removal of Murdoch and sons James and Lachlan, HEOS -- whose members hold 0.5 percent of News Corp's shares -- Hermes is also withholding support for the re-election of directors Arthur Siskind and Andrew Knight, citing concerns for their independence.

The statement from HEOS is the latest in a flurry of anti-Murdoch lobbying from corporate governance watchdogs and proxy voting companies all over the world.

Earlier this week, Institutional Shareholder Services Inc. (ISS) said Murdoch and 10 other News Corp directors should be ousted from board in the wake of the phone hacking scandal, which it said "laid bare a striking lack of stewardship and independence."

The ISS statement prompted News Corp, which has bought back more than $1 billion of its stock since August, to step up its appeal for shareholder support with a letter that reiterated its strong financial performance in the face of the flagging global economy.

But Walmsley said investors were growing impatient for fundamental change that would see the infamous 'Murdoch discount' gone for good.

News Corp shares typically trade below rival media groups because the market applies a discount to reflect Murdoch's tight control of the company and a tendency to make decisions that shareholders may not support.

"There's an enormous groundswell of opposition and I think there are a lot of investors out there who feel ... the governance structures in place are clearly not sufficient to safeguard the interests of minority investors," Walmsley said.

"There is a huge problem with shareholder democracy at News Corp -- it breaches what we see as a fundamental shareholder right of 'one share, one vote'," she said.

The war of words between News Corp and its shareholders over the need for a sweeping purge of its board is likely to revive a debate over whether James Murdoch should be forced to give up his role as chairman of British Sky Broadcasting.

Investors in BSkyB -- News Corp's erstwhile bid target -- will vote on the make-up of their board next month.

(Editing by Chris Vellacott and Hans-Juergen Peters)

View the original article here

Investors to manufacturers: what about next year? (Reuters)

BOSTON (Reuters) – "Forget about where you've been. Tell us where you're going."

That's the message from investors to big U.S. manufacturers ahead of a wave of earnings reports over the next few weeks. They will be far less interested in hearing how the third quarter went than what companies expect next year to be like and how they are preparing for it.

While early earnings reports from big companies including Alcoa Inc and JPMorgan Chase & Co disappointed investors, analysts are still expecting the industrial sector to chalk up solid third-quarter profit growth of 15.2 percent across the sector, above the 12.5 percent forecast for the full Standard & Poor's 500 index.

Chief executives are likely to push back on questions about their 2012 outlooks -- big companies including General Electric Co, United Technologies Corp and Honeywell International Inc typically wait until December to discuss their forecast for the next year. But some investors say the European debt crisis and signs of slowing demand will make them eager for an earlier update.

The memory of the sharp downturn following the late 2008 credit crunch is still fresh in their minds.

"Are managements going to retrench as quickly and as deeply in the event of a credit moment in Europe or China as they did last time around?" said Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, Ohio. "What we want to hear is a dose of reality. What are you planning, what's your contingency, what are you actually seeing?"

This comes as CEOs of many big U.S. companies say orders are holding up, and one of the main risks they see is that customers will start holding off on orders out of fear that something might happen to hurt the economy.

"There is just not enough certainty and in some ways the most important thing we can do right now is social and it has to do with rebuilding confidence," GE CEO Jeff Immelt told a group of executives from mid-sized U.S. companies in Columbus, Ohio last week.

Immelt is due to speak at a Thomson Reuters Newsmaker event in New York on Monday.

GOOD NEWS, BAD NEWS

Heading into the reporting season, not every company has offered a positive view of how the third quarter went.

Ingersoll Rand Plc fired a warning shot, saying that profit could be down for the quarter, as demand for heating and cooling equipment that it had earlier expected in North America failed to materialize.

But Honeywell confirmed its outlook, saying it expected to come in at the high end of its forecast on strong demand for turbochargers and automation and control equipment.

Several factors are working in big manufacturers' favor: One is that the price of a wide range of metals have fallen, easing pressure on profit margins. The price of copper, particularly important as it used for all sorts of wiring, fell by 25 percent in the third quarter.

Another is that many big industrials, including GE, United Technologies and ITT Corp now generate a significant portion of their revenue from maintenance of the products they sell, and that business tends to hold up even when new-equipment sales fall.

But the risks are also clear. With growth at home sagging, U.S. multinationals have been counting on foreign demand to drive results. Europe's economies are being rocked by a sovereign-debt crisis and China is showing signs of slowing.

Analysts, on average, have forecast slower growth for big manufacturers in the third quarter versus the first half of the year, according to Thomson Reuters I/B/E/S.

Among blue-chip names, for GE, they look for earnings to rise 10.7 percent; for United Technologies they see 11.5 percent; for Caterpillar Inc 27 percent, and for 3M Co 5 percent.

In addition, some investors say Wall Street's worries may have gotten ahead of reality. The S&P capital goods index has fallen some 14 percent over the past six months, a steeper slide than the 8 percent decline of the broad S&P 500.

"We don't believe there's going to be a double dip. We do believe we're in a slow recovery, but this market is behaving like it's got bipolar disorder," said Scott Schermerhorn, portfolio manager with Granite Investment Advisors Inc in Concord, New Hampshire, which manages about $500 million in investments and is currently underweight in the industrial sector.

"The reason we scaled back on industrials was they were ahead of themselves," Schermerhorn said. "Now we view industrials as attractive again and we're actively looking in that space."

(Additional reporting by Nick Zieminski in New York; Editing by Steve Orlofsky)

View the original article here

BofA plans 30,000 job cuts; investors underwhelmed (Reuters)

(Reuters) – Bank of America Corp said it is cutting 30,000 jobs in the coming years as it looks to slash annual expenses by $5 billion, but investors were disappointed in the scant new detail the bank provided about its plans.

The bank's chief executive, Brian Moynihan, said Bank of America is focusing for now on cutting costs in consumer banking and is taking steps like combining data centers to reach its target. Many of the job cuts will come from attrition and eliminating positions that are open now, the bank said.

Bank of America's shares have lost more than half their value this year as mortgage litigation and a weakening economy threatened to sap the bank's profits for years.

Media reports last week said the bank could cut as many as 40,000 jobs, and many investors had hoped the bank would announce a dramatic turnaround plan on Monday to show how it is addressing its difficulties.

The Moynihan speech "was pretty underwhelming. They need to address the bigger issues the bank faces," said Jason Ware, equity analyst at Salt Lake City-based Albion Financial Group.

Moynihan was speaking at a Barclays Capital financial services conference in New York, and the bank announced the 30,000 layoff figure in a separate statement later Monday morning.

Bank of America is in the middle of a broad cost-cutting initiative known as New BAC after the company's stock symbol. The first phase aims to reduce expenses by $5 billion by 2014.

The bank is targeting an expense-to-revenue ratio to 55 percent, compared with the first quarter when it was about 57 percent. Bank of America is cutting from roughly $73 billion in annual expenses, excluding interest expenses.

The next phase of cost cutting will focus on corporate and institutional businesses, like commercial lending.

Bank of America built itself through acquisitions over decades and, according to analysts, has not properly integrated systems or closed unnecessary branches. The bank had 5,700 branches nationwide and 287,000 employees as of June 30.

Bank of America has about 50 senior employees reviewing some 150,000 ideas for cutting costs, Moynihan said.

The bank's talk of cost cuts came as U.S. President Barack Obama unveiled a plan to boost employment amid the struggling economy.

Bank of America shares were down 2 cents at $6.96 on Monday afternoon on the New York Stock Exchange.

BOOSTING CAPITAL

Bank of America shares have lost nearly half their value this year amid rising fears the bank will need to sell more shares to boost capital levels.

By many estimates, the bank will need to raise about $50 billion in coming years to meet new global capital requirements, a level the bank says it can reach through earnings and asset sales.

Investors fear mortgage settlements could boost the bank's capital requirements, and that any stock offering would further dilute shareholder equity. The bank's share count has risen from 4 billion in 2007, before the financial crisis peaked, to more than 10 billion this year.

The bank's share price decline was temporarily arrested in late August by a $5 billion investment from billionaire Warren Buffett, who purchased preferred stock and warrants to buy 700 million common shares over the next decade.

The initial news of the Buffett investment sent Bank of America shares soaring more than 20 percent, but they have since retreated to levels seen before the investment.

At the Barclays conference, Moynihan said the bank was not required by regulators to seek outside capital. He also said the Buffett deal was "absolutely the right thing" for the bank to do.

(Reporting by Joe Rauch and Dan Wilchins; Editing by Lisa Von Ahn, John Wallace and Matthew Lewis)

View the original article here

Investors stay cautious as H2 starts: Reuters poll (Reuters)

By Jeremy Gaunt, European Investment Correspondent Jeremy Gaunt, European Investment Correspondent – Thu?Jun?30, 9:10?am?ET

LONDON (Reuters)- Investors have become a little more upbeat heading into the second half of the year, lifting stock allocations from 2011 lows but remaining cautious with plenty of safe-haven cash and bonds.

They also lifted their exposure to euro zone stocks and bonds in the month, despite the ongoing debt crisis.

Reuters asset allocation polls released on Thursday showed leading investors across the world recovering from May's retrenchment, brought on by fears over a stagnant U.S. economy, potential over-heating in China, and the euro zone debt crisis.

On average, 58 fund firms in the United States, Europe excluding the UK, Japan and Britain held 51.5 percent of a balanced portfolio in equities, up from 50.7 percent in May.

Bond holdings were at 35.1 percent, down slightly from 35.5 percent a month earlier. Cash was at 4.9 percent, down from 5.2 percent.

The overall picture suggested that investors have overcome some of their worst fears but are far from bullish.

June's equities allocation, for example, is far closer to what it was last year before the Federal Reserve launched its second asset-buying quantitative easing program (QE2) than it was in the immediate months that followed.

QE2, which ends on Thursday, provided a major sentiment boost for investors.

"The investment environment continues to be highly uncertain," said Yoshinori Nagano, senior strategist at Daiwa Asset Management in Tokyo.

Investors are being battered by the Greek sovereign debt crisis, in which a default could spread into a wide range of other assets through banking losses and contagion into other euro zone countries.

Despite this, the euro zone saw more interest from investors in June, with holdings of both euro zone stocks and bonds rising.

This appeared to be based on a belief that policymakers would do what was necessary to keep the crisis contained.

"Ultimately, (Greece) cannot be allowed to fail because this could cause a contagion effect across peripheral Europe," said Neil Michael, executive director of investment strategies at London & Capital.

REGIONALLY

U.S. fund managers added to equities for the first time in two months and decreased bond exposure.

Fifteen U.S.-based fund management firms held an average of 63.9 percent of assets in equities, up from 61.6 percent a month earlier and 63.3 percent in April.

Bond holdings decreased to 28.5 percent in June from 30 percent in May and 29 percent in April. Cash exposure remained at 3 percent in June.

European investors raised equities and cut cash for the first time this year while they held their bond holdings largely steady.

The survey of 17 Europe-based asset management firms outside Britain showed a typical balanced portfolio holding 47.6 percent of equities in June compared with 45.5 percent in the previous month.

It held 39.0 percent in bonds compared with 39.5 percent in May. Cash holdings fell for the first time since December to 7.1 percent from 8.8 percent.

Japanese fund managers' global bond weighting was near a record high while their stock weighting sunk toward a 12-year low.

The poll of 13 institutions found the average weighting for global bonds was 49.5 percent, close to the 49.6 percent logged in March and May, which was the highest since the survey began in February 1995.

Their average weighting for global equities edged down to 42.6 percent in June after a three-month high of 43.0 percent in May. Cash positions rose to 4.8 percent this month from the three-month low of 4.5 percent in May.

British fund managers trimmed equity holdings and lifted bonds.

The 13 UK-based management companies polled held 52 percent of their portfolios in stocks, down from 52.0 in May. Bond holdings rose to 23.3 percent from 22.9 percent.

Cash weightings rose slightly to 4.5 percent from 4.4 percent.

(Additional reporting by Chris Vellacott and Natsuko Waki in London, Jennifer Ablan in New York, Kaori Kaneko in Tokyo and Bangalore Polling Unit; Reporting by Jeremy Gaunt)

View the original article here