Yang to Step Down After Microsoft, Google Deals Fail

Nov. 17 (Bloomberg) -- Yahoo! Inc. Chief Executive Officer Jerry Yang will step down amid mounting pressure from investors after he botched takeover talks with Microsoft Corp. and failed to broker an online advertising agreement with Google Inc.

Yang, 40, will stay on the board and remains CEO until Yahoo finds a replacement, the company said today. He took the top job at the 13-year-old Internet company in June 2007, promising to win back users and advertisers lost to market leader Google.

Yang's departure may be a precursor to new talks with Microsoft, which bid $47.5 billion for Yahoo this year. Shareholders criticized Yang and fellow co-founder David Filo for seeking a higher price while sales growth and profits continued to drop. The stock has lost about 60 percent since Yang took over, erasing more than $20 billion of market value.

``At a minimum, it signals that the board wants to reopen negotiations with Microsoft,'' said Jeffrey Lindsay, an analyst at Sanford C. Bernstein in New York. ``The board is frustrated with deteriorating performance and wants to move ahead.''

There isn't a time frame on finding a replacement for Yang, said Brad Williams, a Yahoo spokesman. Yang had been in discussions with the board about seeking a replacement for ``some time,'' he said. He will return to his position of Chief Yahoo when the company finds a successor.

``We all agree that now is the right time to make the transition to a new CEO who can take the company to the next level,'' Chairman Roy Bostock said in the statement. The company has hired Heidrick & Struggles International Inc. to help find a new CEO.

Shares Rise

Yahoo, based in Sunnyvale, California, rose 47 cents, or 4.4 percent, to $11.10 in extended trading after closing at $10.63 on the Nasdaq Stock Market.

Microsoft spokesman Bill Cox declined to comment.

Yahoo investors withheld one third of their votes for Yang's re-election to the board in August. He sidestepped a proxy fight with Carl Icahn, agreeing to give the billionaire investor three slots on the board. Yahoo's net sales growth dwindled to 3 percent last quarter from 14 percent a year earlier. Profit has dropped in 10 of the past 11 quarters.

Google abandoned an agreement to sell ads alongside Yahoo's search results this month after U.S. regulators threatened a lawsuit to block the partnership, saying it would give Google too much power. Yang had counted on the deal to generate as much as $450 million in operating cash flow in the first year.

Full Confidence

Bostock said this month that he had full confidence in Yang after the Google deal fell through. Yang put together the right strategic plan and made significant progress, Bostock said in a Nov. 5 statement.

Yang's plan to reverse Yahoo's slowing sales growth and profit declines was hampered by the global economic crisis, which caused advertisers to cut back on Internet spending. Yahoo announced plans in October to cut at least 1,500 jobs and reduce the number of contractors as finance, travel, retail and automotive advertisers scaled back their spending.

Yang's resignation probably signals that Yahoo's performance has deteriorated even further, Lindsay said. ``It's a precursor of a deal.''

2 town councils invested S$12m in Lehman-related structured products

SINGAPORE: Two out of 14 PAP-run town councils in Singapore have invested in Lehman-linked structured products.

Holland-Bukit Panjang and Pasir Ris-Punggol town councils have invested a total of S$12 million in DBS High Notes, Lehman Brothers' Minibond Notes and Merrill Lynch's Jubilee Series 3.

That's about 0.6 per cent of the total funds available for investments.

Senior Minister of State for National Development and Education Grace Fu gave this update in Parliament on Monday.

Town councils can invest up to 35 per cent of their sinking funds in corporate bonds and equities.

Based on the financial statements submitted to the National Development Ministry for 2007, Holland-Bukit Panjang Town Council invested about S$8 million or 6.7 per cent of its available funds while Pasir Ris-Punggol Town Council invested some 2.6 per cent totalling S$4 million.

Other town councils such as Aljunied, Ang Mo Kio-Yio Chu Kang, Hong Kah, Marine Parade, Tampines and Tanjong Pagar also have exposure to Lehman Brothers.

The fund managers appointed by these town councils invested S$4 million in Lehman Brothers through their investment portfolio.

MAS SAYS NO TO INVESTIGATING BANKS

Excerpts from Mr Tan’s speech:

“Some people say, if they find a new swap counter party, hold for five years and get the money back. Now, I don’t know if you can get your money back, but I can tell you the Pinnacle Notes are gone, Morgan Stanley is still around.”

“I want to update you the three petitions I sent to MAS. The first petition was sent on 9 October, so today one month has passed. The petition is signed by 983 people to ask MAS to carry out independent investigations, whether the financial institutions which sell the product had breach the Securities and Futures Act.”

“I also send a letter, many pages, many pages in my letter, here are the areas in my opinion the law is broken, but this is Tan Kin Lian’s opinion, and Tan Kin Lian does not have the power of the government, and I only make some guess…..If the financial institutions have broken the law, the government can bring them to court, but one month has gone, I don’t know if the government has conducted any investigation. I write to MAS requesting for a meeting, they say ‘No’. I told them I have 983 people in my petition, they say ‘No’, so I don’t know if they will investigate any wrongdoing, so far no news.”

“I write and ask them ‘Can I meet with you ?’, They say….(crowd): ‘NO !!!”, Is that fair ?….(crowd): ‘NO !!!”, ‘Is that FAIR ???….(crowd louder): ‘NO !!!’ They can’t hear you, they are all in Shenton Way. Is that FAIR ??….(crowd even louder): “NO !!!”

“Somebody say, no help. If we don’t write petition, what else can we do ? Do we give up ? (crowd): ‘NO !!!’. Do we give up ? (crowd louder): ‘NO !!!” So I shall be here every 2 Saturdays (crowd clap). Actually I want to come every Saturday, but I am afraid you may be too tired. Please get more people to come, so that we can show that this problem cannot just die away, until the problem is solved.”

Gold May Top $1,000 in 3 Years, Morgan Stanley Says

Nov. 13 (Bloomberg) -- Gold may climb above $1,000 an ounce in 2011 as global mine output drops, mining costs rise and demand increases, Morgan Stanley said.

``Mining production actually peaked in 2001 and has since been declining,'' the bank's commodity analyst Hussein Allidina said in an interview with Bloomberg television in Singapore. ``When I look at the demand side, as income growth accelerates, the consumption of gold for jewelry purposes increases.''

Gold more than doubled in the past six years and reached a record $1,032.70 an ounce March 17 as the dollar slumped and oil advanced, increasing concern inflation would accelerate. In the past eight months, the precious metal plunged 31 percent as the dollar rallied, oil collapsed and the global credit crisis pushed the world toward a recession.

``The issue moving forward'' now is deflation, said Allidina. ``If you've got concerns about deflation you've lost that luster that gold has.'' Gold for immediate delivery traded at $714.45 an ounce at 3:22 p.m. Singapore time today.

Agriculture commodities will be the least affected by slowing global growth compared with industrial metals and energy, and corn and soybeans are ``oversold by far,'' he said.

``When you think about it from a layman's perspective, if your income is curtailed maybe you forego the purchase of a condominium or a car, you don't really change your food consumption,'' Allidina said. ``You still have population growth and that always works in the favor of corn and soybeans.''

Price Spikes

Corn has plunged 54 percent from a record $7.9925 June 27, and traded at $3.6675 a bushel at 3:23 p.m. Singapore time. Soybeans have tumbled 46 percent from their peak July 3 and traded at $8.8725 a bushel.

Allidina said while he is cautious on base metals, ``you don't necessarily want to short any of these'' as supply disruptions would probably cause a rally in prices.

``Inventory levels with the exception of aluminum are relatively tight,'' he said. ``They've improved over the last six to 12 months but if you pull back 10 years, inventories are much lower today than they were in other cycles.''

China announced a 4 trillion yuan ($586 billion) stimulus package Nov. 9 for spending on low-rent housing, infrastructure in rural areas, as well as roads, railways and airports.

``The plan is net positive but I don't know if it'll necessarily prevent a slowdown,'' said Allidina. ``Granted a lot of the copper used in China is in government-sponsored infrastructure, so that should continue, but the rest of the space is such a mess -- auto sales, housing, it's all down.''

Cash Costs

Most metals have fallen below their marginal cost of production and some are trading near their cash cost, which should limit the downside.

``If you look back historically for a full year you never average below the cash cost of production,'' he said. ``This time we'll probably spend even less time below the cash cost because who's going to loan you money if you're cash negative.''

``Definitely capital expenditure for the future is being reduced,'' he said. ``That's why I'm very concerned about what happens three years from now, because the same time that growth starts to recover is the time you don't have the supply that we should be investing in today.''

Oil is different from other commodities because of the issue of depletion.

``Next year it's going to be a weaker scenario,'' Allidina said. ``I don't believe we will go down to $30 or $40. You could see prices fall below $50 in the short term on a day to day basis, but I don't think you will average in that range.''

CIA head says bin Laden isolated, fighting to survive

WASHINGTON (CNN) -- U.S. intelligence agencies believe Osama bin Laden is isolated from al Qaeda and spending much of his energy merely surviving, the head of the CIA said on Thursday.


Osama bin Laden remains on the run despite a $25 million reward for his capture.

CIA Director Michael Hayden said hunting down bin Laden remains his agency's priority.

"He is putting a lot of energy into his own survival -- a lot of energy into his own security," Hayden said in a speech at the Atlantic Council in Washington.

"In fact, he appears to be largely isolated from the day-to-day operations of the organization he nominally heads," he said.

In recent weeks, there have been several U.S. missile strikes by unmanned drones around the Afghanistan-Pakistan border.

The United States maintains that Taliban and al Qaeda forces operate with relative impunity in tribal areas along Pakistan's border with Afghanistan and use those areas as staging grounds to attack U.S. forces and their allies inside Afghanistan.

Hayden said al Qaeda has been hurt by a sustained fight with the United States and its allies, but remains a threat.

"Al Qaeda has suffered serious setbacks, but it remains a determined, adaptive enemy unlike any our nation has ever faced," Hayden said. "The war is far from over."

Regardless of whether bin Laden is actively helping lead the terrorist organization, the CIA believes capturing or killing him would be a huge blow to al Qaeda, according to Hayden.

"This is an organization that has never been through a change at the top," he said. "For 20 years, bin Laden has been the visionary, the inspiration or harmonizing force behind al Qaeda."


Hayden said it remained to be seen whether bin Laden's deputy, Ayman al-Zawahiri, could maintain unity in the ranks without him.

"The truth is, we simply don't know what would happen if bin Laden is killed or captured. But I'm willing to bet that whatever happens, it would work in our favor," Hayden said.

MAS reserve

What's Treasury Secretary Paulson doing??

Right or wrong, Treasury Secretary Paulson's shifting strategies put his most valuable asset--his credibility--at risk.

On Friday, Sept. 19, Treasury Secretary Henry Paulson marched into the Treasury Department's media room and announced he needed several hundred billion dollars to save the financial system by buying "troubled assets." Markets soared.

Wednesday, Paulson traipsed in again and said the $700 billion that Congress granted him will not be used to buy troubled assets after all, but rather to shore up troubled companies by taking equity stakes, among other things. "Our assessment at this time is that this is not the most effective way to use TARP funds," Paulson said.