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The NYSE has been on a roll recently and closed above the the 13,900 mark for the first time Thursday. The current rally has been broadly based on the rise in value of large cap blue chip stocks. The momentum can be sustained if individual investors, mostly watching from the sidelines, jump onto the investment bandwagon.
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Is GM ready for a comeback?
Once at the core of US business, this auto giant has been struggling for the past few years to regain its footing in the auto industry.
GM is leaning towards designing smaller and more fuel efficient vehicles. The recent volatility in gas prices
has made the customer look at vehicles that guzzle less fuel. More and more people are considering hybrid cars.
GM needs cars that can be sold at huge volumes. It needs a consistent winner like Toyota's Corolla and Camary or Honda's Civic or Accord.
Its recent decision against pursuing an alliance with Renault and Nissan should help the company focus on its own products.
GM desperately needs to change consumer perception that it can deliver high quality vehicles at affordable prices. It needs
to strike a fine balance between technology and price.
Google – Fast Paced Results
Google – One of the fastest growing technology companies, reported third-quarter sales and earnings Thursday that beat analysts' estimates.
For the third quarter, the company reported revenue of $2.69 billion and net income of $733.4 million, or $2.36 a share, up 92 percent from the same period last year.
Google is growing at a blazing pace in the Internet market as compared to other players such as Yahoo and eBay. Google's search engine continues to dominate the Internet search market, thus ensuring an increasing revenue stream from its text ads business.
Recently Google announced that it was buying YouTube for $1.6 billion. This deal will give Google a leadership position in the online video market and help increase its revenues from online advertising.
A Steel Deal?
Tata Steel – India’s largest private sector steel company - is on the path to become a global player in the steel industry if it is successful in acquiring Corus. Corus, based in UK, is the world’s seventh largest steel producer. Tata Steel is offering 455 pence per share for a 100% stake in Corus. Tata Steel values the offer at $10 billion, including debt. The offer comes at a time when the global steel industry is consolidating and a few months after Mittal Steel's buyout of Arcelor. The combined entity would make Tata Steel the fifth largest steel producer in the world with an annual capacity of 26 million tons and a turnover of more than $21 billion (Arcelor-Mittal the world’s largest steel maker with an annual capacity of 120 million tons. The newly formed entity is headquartered in Luxembourg)
Tata is one of the world's most efficient steel producers and is the lowest cost producer on a per ton basis and could be a good suitor for Corus, which has a high cost structure. With Mittal Steel aggressively acquiring companies and transforming them into more efficient units, the pressure has been on in the steel industry to improve operational efficiencies and cut costs. Tata Steel which owns iron ore and coal mines would provide easy access to the key raw material used for making steel – something which Corus doesn’t have at the moment. A logical step for the combined entity would be to produce semi finished steel in India and finish the steel at Corus plants in Europe.
Tata Steel will have to go through some major negotiations before it can close the deal. There is always the possibility of a counter offer from another steel maker. In the mix of things, it is important to make the acquisition at the right price. A highly leveraged buyout could impact the bottom line if steel prices were to fall in the medium term.
However, with its massive expansion plan in India coupled with its continuous effort of improving operational efficiencies, Tata Steel may be correctly poised to forge the right deal.