Microsoft’s new search engine, Bing.com has reportedly received good ratings. If the deal comes through, both Yahoo and Microsoft can gain. In addition, we can also get ready for some new innovative technology, which is caused by the intense competition.

Now, what does this mean for Google, currently the world’s largest search engine?

Google states that their primary competitors are Microsoft and Yahoo. They believe Microsoft will increasingly use its financial and engineering resources to compete, especially since Microsoft has more employees and cash resources. In addition, both Microsoft and Yahoo have longer operating histories and more established relationships with customers. Any teamwork between Microsoft and Yahoo will could lead to a decline in Google’s user traffic or the size of their network, thereby bringing a decline in their revenues.

Investments whose ties to the global economy which made them the biggest recent gainers have now fallen. These investments include copper, oil, commodity-related companies, banking shares and some developing-country stock markets.

On top of the all the concerns regarding the global growth, investors also appear to be nervous about what Federal Reserve officials will say on Wednesday about whether or not they will continue to pump money into the economy. The fear is that it could still be several months before signs of real economic recovery start showing. Long-term investors continue to hold back, allowing stocks to fall.

The S&P 500 fell 3.06% to 893.04. The Nasdaq Composite Index fell 3.35% to 1766.19. Concerns continued when a World Bank report warned that the global economy could contract at a 2.9% rate this year, worse than the 1.7% contraction that was predicted earlier.

A Chicago hedge fund Citadel Investment Group LLC affiliate bought 90.9 million additional shares in the offering, which they now have an approximately 17% stake, making them E-Trade’s largest stock and bondholder. Citadel’s founder and chief executive, Kenneth Griffin, joined E-Trade’s board of directors just last week.

E-Trade plans to raise $400 million through the common stock offering, a move that will reduce the value of existing shares. They also plan to exchange more than $1 billion in outstanding debt to help strength its capital position. This debt exchange will allow E-Trade to lower its debt by eliminating the interest payments that are tied to it. Citadel will exchange as least $800 million in debt as part of the plan as well.

How has this affected E-Trade’s stock performance? Since the beginning of the week, E-Trade’s stock has fallen and is currently trading at $1.22, which is nearly 15% down from Thursday’s close at $1.43.

Despite the good year the company had in 2008 with over 25 million and a generation of record revenues, they still shouldered $2.4 billion debt. Now they face nearly a $300 million payment to preferred shareholders due this August, along with $31 million in unpaid dividends. However, the company is seeking court approval for a restructuring plan, a proposal that would eliminate $1.8 billion of their debt.

On the brighter side, CEO Mark Shapiro stated that the bankruptcy will not affect the daily operation of its 20 theme parks, meaning the parks will still stay open. The 2009 season has just gotten started and the parks are keeping busy as they are trying to add new rides.

Six Flag shares have traded below $1 since September 2008, closing at 26 cents on Friday.

“This financial crisis had many significant causes, but executive compensation practices were a contributing factor,” Geithner said in a statement.

Of course, there were criticisms, such as beliefs that the administration was interfering in the affairs of private firms. Geithner has tried his best to silence those complaints. He said,

“I want to be clear on what we are not doing. We are not capping pay,” he said. “We are not setting forth precise prescriptions for how companies should set compensation, which can often be counterproductive.”

Instead, shareholders would receive a nonbinding voice on executive pay and corporate compensation committees will be independent from company management. The nonbinding shareholder vote will include compensation on not just salary, but also on bonuses and stock awards for the top 5 executives at public companies.

However, if this legislation is approved by Congress, it would not just affect banks and other financial firms, but also all public companies. The Obama administration is doing what they can to better mange excessive executive compensation to prevent risk of jeopardizing the economy.

Today is a new beginning for carmaker, Chrysler, as they finally closed a government-brokered alliance with Italian carmaker Fiat.

Just a few months ago, Chrysler had been regarded as dead but, after a 5-week reorganization in federal bankruptcy, they’re off to a new start. They have sold most of their assets to a new company, called Chrysler Group, which will pick up where the old Chrysler left off. The task for the new Chrysler is to prove that they will not forget what they’ve learned from these past few years of painful experiences.

Marchionne, who was immediately named CEO of Chrysler Group LLC said, “The alliance is a bold first step to implement those lessons we’ve learned, but it is only a first step. Now we must prove we can make it work.” Marchionne said workers have already began developing new fuel-efficient small cars. So far so good?

It’s been less than 3 years since its predecessor, Windows Vista, was released. However, Vista wasn’t a huge success due to problems such as compatibility with other software applications and components. Many corporate customers avoided the program, saying that it required costly hardware upgrades and that they preferred to rely on the earlier operating system, Windows XP. Vista overall received many complaints and now it is up to Microsoft to reverse its previous missteps with their new release of Windows 7.

Microsoft has said that Windows 7 will come in 5 different editions in most markets – Starter, Home Premium, Professional, Enterprise, and Ultimate. Windows 7 will include a number of new features, such as advances in touch and handwriting recognition. Presentations given by the company in 2008 have focused on multi-touch support, which is often associated with Apple products.

I am actually very excited to use Windows 7. I have been wanting a netbook (the mini laptops) for awhile now and I’ve considered getting it during this summer. However, a friend of mine bought up a good point and asked, “Why don’t you just wait until Windows 7 comes out?” In fact, I might actually do just that. The only downside about its release date is that Microsoft will miss some opportunity from students going back to school in the fall.

There are some YouTube links featuring the new Windows 7 if you want to check out some of their new features:

http://www.youtube.com/watch?v=M8AqXaNr8ag

Another question arises to our attention? How will Apple handle Microsoft’s new release? Do they also have something locked up, perhaps even better than Windows 7?

However, GM will continue to manufacture and sell cars. The U.S. government is hoping for a “surgical” process to build a new, smaller GM out of its remains. GM’s chairman, Kent Kresa, described this process as a “new beginning” for the company, saying that, “A court-^­supervised process and transfer of assets will enable a new GM to emerge as a stronger, healthier, more focused and nimbler company with a determination not to just survive but to excel.”

This massive reorganization of GM would leave the U.S. government holding 60% of the company’s equity but, nevertheless, this is an essential process in order for America to sustain a feasible US auto industry. Yet still, Obama had to reiterate that the government was still reluctant about becoming a shareholder in GM, but acknowledged that to go to with the alternative, which would be to extend more loads, would be worse.

Today, GM announced that they plan to sell their Hummer brand to Chinese equipment maker Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd., in a transaction that would secure more than 3,000 U.S. jobs.

Yet another question lingers in our minds as we think to ourselves, “Will GM’s bankruptcy work?” Some people believe that GM has finally made the necessary changes to be competitive but still others hold their doubts about GM’s future prospect.

]]> http://www.dojitrading.com/2009/06/general-motor-bankruptcy/feed/ 0 http://www.dojitrading.com/2009/05/brink-of-bankruptcy/ http://www.dojitrading.com/2009/05/brink-of-bankruptcy/#comments Wed, 27 May 2009 20:04:47 +0000 Tim Huang http://www.dojitrading.com/?p=272 Will this be the end of General Motors? Bondholders have rejected a debt exchange offer from GM, which expired at midnight last night. The United States’ biggest automaker has failed to persuade enough creditors to ingest their losses and is now approaching their deadline that the Obama administration has set for them–June 1, which is next Monday. This leaves GM the rest of the week and the weekend to finish restructuring for a possible miracle or resort to filing for Chapter 11 bankruptcy, which is more than likely to happen.

One thing is for sure: GM’s uncertainty over its finances has hurt sales of their cars, as consumers worry about matters such as warranty protection. Would you purchase your own car from a company that is nearly bankrupt? For many people, this bankruptcy issue does not affect their personal interest, as the case shows that Chrysler’s sales have been holding up well even though they had recently filed for bankruptcy.

Does the news of GM dampen our optimistic attitude about the economy and its possible recovery by this year? More than 90% of economists predicted that the recession will end this year, acknowledging that the recovery will be bumpy and slow. Nevertheless, this news still may have a significant impact on consumer confidence, although there has been some positive reading in that consumer confidence has been improving lately. However the reality is that the economy is still very weak, which is also stated by Alan Gayle, senior investment strategist at RidgeWorth Capital Management.

Although Systemax has also acquired access to the previous Circuit City’s customer record, due to privacy issues, they have offered the earlier buyers the ‘opt-option’ right on its website, so that their personal information would not be transferred to the ‘new’ Circuit City.

The new Circuit City is offering new lower prices, new wider selection, and new faster shipping. Sounds quite attractive, right? BUT caution out folks because there is also a stricter return policy, in that the company reserves the right to reject specific returns, with some products not being accepted at all for returns.  These products include widely-known brand names — Compaq, IBM, Hewlett Packard, Toshiba, and Epson, etc. So before you get lured into consumerism, do your research!