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International News • China Export Growth Plummets Amid Fake-Shipment Crackdown
China Export Growth Plummets Amid Fake-Shipment Crackdown
By Bloomberg News – Jun 8, 2013 10:01 AM MT
China’s export growth plummeted to a 10-month low in May and imports unexpectedly fell as a crackdown on fake trade invoices exposed weakness in global demand.
Overseas sales rose 1 percent from a year earlier, the General Administration of Customs said in Beijing yesterday, trailing 35 of 38 analyst estimates in a Bloomberg News survey and down from April’s 14.7 percent pace. Imports dropped 0.3 percent, leaving a trade surplus of $20.4 billion.
The report reflects a government campaign to root out illegal capital inflows disguised as trade that had inflated figures and added to appreciation pressure on the yuan. It also underscores the challenges Premier Li Keqiang faces as overseas demand stalls while rising home prices, financial risks and overcapacity at home limit his room to boost the economy.
“This shows the real state of the Chinese export situation,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. The data show a “pretty depressed” picture, with weak external demand and a yuan that has appreciated substantially against a trade-weighted basket of currencies, said Shen, who previously worked at the European Central Bank.
The slowdown in May’s figures was partly the result of “arbitrage trade” with Hong Kong being curbed, the customs administration said in a statement yesterday. Appreciation in the yuan and the worsening trade environment, as well as a domestic slowdown, weak external demand and high business costs, also contributed, the agency said.
Inflated Data
The State Administration of Foreign Exchange last month started a campaign to curb money flows disguised as trade payments that had inflated export data.
China’s exports to Hong Kong fell to $28 billion in May from $39.5 billion in April, according to yesterday’s customs data. Growth in sales through bonded zones, which lie within China’s borders and handle shipments as international trade, slumped to a year-on-year pace of 45.8 percent in May from April’s 253.5 percent.
Data due today on industrial production and retail sales for May and fixed-asset investment for the first five months are forecast to show little change from April’s growth rates. Analysts last month trimmed economic-expansion forecasts for the April-June period to a median projection of 7.8 percent from an 8 percent pace forecast in April.
Li, who took office as premier in March, has resisted adding stimulus to the economy as the new leadership tries to make growth more sustainable and avoid stoking financial risks.
Supportive Policies
The trade figures reflect a “normalization,” said Hu Yifan, chief economist at Haitong International Securities Co. in Hong Kong, the only analyst to forecast declines in exports and imports. “We expect export growth to remain modest but import growth to pick up along with implementation of supportive policies,” she wrote in a note yesterday.
The trade slump adds to concerns that the global recovery is losing momentum even as the U.S. shows signs of strengthening. The ECB last week forecast the 17-nation euro area will contract 0.6 percent this year, more than its March estimate of 0.5 percent. In the U.S., employers added more workers than forecast in May.
Even so, China’s exports to the U.S. fell 1.6 percent in May from a year earlier and imports from the U.S. dropped 1.5 percent, the first time since 2009 that both showed a decline in the same month.
Yuan Strength
Exports “may remain weak in the near term” as the U.S. economy softens, which is likely to shift expectations for a strengthening yuan, said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. The yuan has risen 1.6 percent this year against the U.S. dollar and about 14 percent against the yen, the most among Asian currencies tracked by Bloomberg.
Analysts had median estimates of 7.4 percent for May export growth, 6.6 percent for import gains and $20 billion for the trade surplus.
Part of China’s broader import drop resulted from falling commodity prices. The volume of inbound iron ore shipments rose 7.4 percent in May from a year earlier while the value increased about 1 percent, based on previous data. Average prices in the first five months were down 4 percent, the customs agency said.
The customs administration in April acknowledged concerns that export data may be overstated after March shipments to Hong Kong jumped 92.9 percent from a year earlier, the most in at least a decade. A Bloomberg News survey last month showed analysts estimated January-April export growth was overstated by 4 to 13 percentage points.
Solar Tariffs
Trade friction may also hamper exports this year. The European Union last week said tariffs of as much as 67.9 percent could be imposed on solar panels from China in the largest EU commercial dispute of its kind, affecting Chinese companies like Yingli Green Energy Holding Co. and Wuxi Suntech Power Co.
China’s exporters are losing competitiveness “because of a strong yuan and rising protectionism,” Liu Li-Gang, Australia & New Zealand Banking Group Ltd.’s head of Greater China economics in Hong Kong, said in a note yesterday. That trend “will gradually show up in China’s export data in the following months, which will have dire consequences to China’s already weak job markets.”
http://www.bloomberg.com/news/2013-06-0 … -drop.html
Statistics: Posted by yoda — Sat Jun 08, 2013 10:19 am
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Business • Coutts warns clients of threat from debt markets amid bubbl
Coutts warns clients of threat from debt markets amid bubble fears
Coutts, the high-end private bank, has warned its clients against exposing their fortunes to a potential collapse of the high-yield debt market amid growing concerns of a new global credit bubble.
Fears have been raised as investors increase the risk they are taking on the bonds by borrowing further Photo: Alamy
By Harry Wilson, Banking Editor10:23PM BST 01 Apr 2013
Senior managers at the private bank, whose customers include a who’s who of British society, are being discreetly advised to reduce their holdings of high-yield bonds, according to an internal warning seen by The Daily Telegraph.
Sales of high-yield debt have exploded this year as investors chase returns in an environment of historically low interest rates and rising inflation. In both Europe and Asia, high-yield sales have reached all-time highs. In January alone, Asian companies sold just over $9bn (£6bn) of high-yield bonds, a year-on-year increase of more than 6,000pc, according to data provider Dealogic.
Fears have been raised as investors increase the risk they are taking on the bonds by borrowing further. Coutts’ investment strategy committee has become concerned at the use by some wealthy individuals of borrowed money to enhance returns from high-yield investments and is understood to have begun advising clients to avoid the practice.
“If and when yields rise, the impact of these bonds, magnified with leverage, could lead to serious losses,” said one investment manager.
The use of borrowed money to enhance returns has become particularly prevalent in Asia, where local and international private banks have used guarantees of access to loans to win business.
This practice has led to fears of a new bubble in high-yield debt as investors buy riskier bonds using more borrowed money.
Among the products causing most concern are CoCos – contingent convertible bonds – that either transform into ordinary shares or are wiped out when a bank’s capital levels fall below a given level.
One of Britain’s leading bond funds has warned against buying CoCos, claiming they are “dreadful” for investors. “By losing all value prior to existing credit and equity investors, this bond is essentially providing insurance to every other investor. In short, investing in these bonds is like being in a reverse lottery where someone gives you one pound every week and then suddenly turns up demanding millions,” said Christine Johnson, manager of Old Mutual’s corporate bond fund.
Lloyds Banking Group and Barclays have both issued CoCos. Barclays issued a $3bn (£2bn), 10-year bond in November that attracted orders of more than $15bn.
But there are concerns that many investors have little appreciation of the risk. “Many buy based on superficial factors – such as the coupon [interest rate] and name rather than the terms and conditions of the bond,” said one senior investment strategist.
Last week, the Bank of England’s Financial Policy Committee said it had identified a £25bn capital shortfall in British banks and it is likely that at least some of this will be raised through new sales of CoCos.
“It appeals to senior management at the banks because it doesn’t dilute equity. And it appeals to regulators because it explicitly takes the pain… In short, good for regulators, good for bondholders but dreadful for those who buy it,” said Ms Johnson.
http://www.telegraph.co.uk/finance/news … fears.html
Statistics: Posted by yoda — Tue Apr 02, 2013 12:30 am
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Agriculture • Commodity mogul lauds ‘restraint’ amid cash exodus
Commodity mogul lauds ‘restraint’ amid cash exodus
Commodities billionaire Richard Elman highlighted the benefit of financial restraint at a time when "funding is pulling out of the sector" as the Noble Group he founded unveil a rise in earnings despite a slump in agriculture.
Mr Elman, worth $1.8bn according to Forbes, blamed the "uncertainty" caused by elections and government changes in the likes of China and the US, as well as "echoes of the financial crisis" for causing "huge volumes of investment money to drain out of the commodity space" last year.
And still "funding is pulling out of the sector", he said, adding that "significant asset write-downs are being taken" by commodities groups.
The comments come against a background of concerns over commodities losing their appeal to investors, many of which are seen switching cash into equities.
Calprs, the pension fund for California state workers, this month reported a cut to $1.58bn in commodities investments as of the close of 2012, down from $3.45bn as of the end of September.
In another high profile exit this month, Barclays ditched serving speculators in agricultural commodities, a decision market rumour linked to talk of heavy liquidations by two hedge funds.
‘Restraint’
These dynamics justified a decision by Noble Group, the commodities trading giant he founded and chairs, not to "try to get long of commodities aiming to make super-profit from mining and farming, with their enticing producers’ margins".
Noble’s "restraint" meant it had entered 2013 with its lowest levels of committed capital expenditure, of $500m over the next two years, compared with the $824m spent in 2012.
"The balance sheet is as strong as it has ever been. We have never had access to more funding, nor has that funding been cheaper," Mr Elman said.
Rival commodities trader Olam International, which like Noble Group is based in Singapore, has been attacked by short selling fund Muddy Waters over its debt levels.
‘Strongly negative margins’
The comments came as Noble unveiled a rise of 9.2%, to $471.3m, in annual earnings, on revenues up 16.5% at $94.0bn, despite a sharp decline in its performance in agriculture.
The group said that its grains and oilseeds operations "experienced a very difficult year", thanks to the South American drought which cut crushing volumes at its Timbues plant in Argentina, and also hurt profits by lifting world crop prices.
In China, the group’s margins "continued to be negative, often strongly so", Noble said, highlighting a setback also identified by Singapore-based peer Wilmar International.
With the group’s Brazil sugar business performing in an "operationally challenging environment" too, with the cane crush hampered for much of last year by excessive rains, the Agriculture division reported a slump of 62% in operating profits.
Better year ahead?
However Noble, which reported rise of more than 30% in annual profits from energy and metals, forecast improved conditions for its agriculture division in 2013.
The grains and oilseed operations should "benefit from a strong crop outlook" in the group’s "key" areas for sourcing crops, in South America, while the sugar operations would benefit from higher capacity utilisation, thanks to a forecast 27% rise to 13.6m tonnes in cane crushing volumes.
"Recent changes in the [Brazilian] regulatory environment, which include reduced taxes and increase in ethanol blend, are helpful to the domestic ethanol market," the group said.
In soft commodities, Noble forecast "further improvement through 2013 with a new cocoa team strengthening the division".
The results were released after the close of Singapore markets, where Noble shares closed up 0.9% at Sing$1.185
http://www.agrimoney.com/news/commodity … -5573.html
Statistics: Posted by yoda — Thu Feb 28, 2013 11:00 am
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Canadian • CIBC Calls For More Stimulus Amid Double Dip Recession Fears
CIBC Calls For More Stimulus Amid Double Dip Recession Fears
http://www.huffingtonpost.ca/2012/07/30 … 19506.html
OTTAWA – The economic clouds gathering beyond Canada’s borders are so ominous that at least two bank economists recommend Canadian governments, and particularly Ottawa, start thinking about a contingency plan should the world be plunged into a second crisis — further stimulus spending.
CIBC chief economist Avery Shenfeld, who cautions that another recession is not in his baseline forecast as yet, believes Canada’s best response to a new crisis should not be for the Bank of Canada to cut interest rates further.
That would merely stimulate an already overheated housing market and lure even more households to take on debt that is already at record levels.
Rather, Shenfeld recommends that the federal government do the borrowing and use the money for a second round of stimulus spending, on needed infrastructure such as roads and power projects that will serve the economy well into the future.
Ottawa is well-placed for a second round of deficit-spending because its books are relatively sound, and could borrow at very low rates. He says the government could actually wind up richer rather than poorer by borrowing now.
"Ten-year rates have been below two per cent, and if you take on inflation, the economy might be growing long term at something like four per cent in nominal terms," he explained.
"So if you can create some additional room for economic activity because you’ve built things the economy needs, it could pay off in future tax revenue flows that pay the interest."
The Canadian economy is broadly expected to keep growing at about two per cent in the current year, and in 2013, a weaker recovery than earlier predicted but still well north of actual contraction.
Canada appears set to print an against-the-grain month of healthy growth for May in fresh data set for release Tuesday. But even on the island that so far has been Canada’s economy, May’s gross domestic product report from Statistics Canada isn’t likely to change economists’ minds about where they economy is headed.
The consensus among analysts is that the data will show a gain of 0.2 per cent, with some analysts thinking it will be as high as 0.3 per cent, matching the strongest monthly tallies since last July.
Shenfeld says May’s performance won’t likely be repeated in June — or the next few months afterwards — given troubling signals from around the world, and especially Europe.
"As Europe struggles through a recession and America’s economy continues to disappoint, markets are focused on the downside risks … so much so, that for some weeks, a small interest rate cut was priced into Canada’s yield curve," he writes in a new paper titled "Canada’s Plan B."
Shenfeld said he is not recommending Ottawa bring in stimulus now, although he thinks it would be a good idea for the United States.
"The U.S. has a huge reservoir of unemployed construction workers, and by putting them back to work, the government would actually generate additional tax revenues and economic growth that could cover the future costs (of borrowing)."
It’s not every day that bank economists argue the benefits of government intervention in the economy, especially on borrowed money. But Shenfeld’s thesis gets some support from Doug Porter of the Bank of Montreal as well.
Like Shenfeld, BMO’s deputy chief economist says Ottawa should not push the panic button on a second round of stimulus until it is needed, although given the lag time in getting useful infrastructure projects going, it would be wise to draw up contingency plans.
Speculation around global recession has mounted as Europe’s problems look more and more intractable.
"I think something did shift for a lot of economists sometime late last year and early this year," Porter explained.
"A lot of people got a lot more concerned about the medium term realizing that Europe had years and years of challenge ahead of it, and the U.S. is also unlikely to break free with strong growth."
In fact, the U.S., which was expected to outperform Canada in growth this year, is being sideswiped by Europe to an ever greater degree than its northern neighbour. It has already reported an anemic 1.5-per-cent annualized growth rate for the second quarter, while Canada is expected to hit near two per cent in the April-June period.
Still, the longer-term prospects for Canada appear to be muted growth at best. Apart from Europe, the domestic economy is being weighed down by heavy consumer debt, which dampens spending, and weak exports.
That leaves business investment to do the heavy lifting.
But although firms are flush with cash, capital investment on such things as machinery and equipment is not a big enough part of the economy to sustain a strong recovery, noted David Madani, chief economist with Capital Economics.
"All things considered, we forecast business investment growth of about 4.5 per cent in 2012 and close to four per cent in 2013," he said. "Unfortunately, this growth is only enough to buffer the anticipated slowdown."
The enthusiasm over the May report being released in Ottawa at 8:30 a.m. Tuesday is based on previously reported indicators, including positive readings for sales, manufacturing and wholesale trade. As well, hours worked grew during the month, a strong signal of increased output.
The possible wild card in the expectation, said Scotiabank economist Derek Holt, is the possibility of soft energy sector activity due to ongoing production disruptions.
Statistics: Posted by DIGGER DAN — Wed Aug 01, 2012 2:17 am
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International News • German Property Market Soars Amid Euro Crisis
‘Cement Gold’
German Property Market Soars Amid Euro Crisis
By Renuka Rayasam
dapd
German real estate market prices have increased sharply over the last two years as investors look for solid returns and safe havens in the midst of the euro crisis. That has some worried about the formation of a bubble that could collapse if the German economy falters.
At first glance the two story office building tucked away in the town of Nordhausen seems unremarkable. The boxy building north of Erfurt, the capital of the eastern German state of Thuringia, is painted yellow and comes with a parking lot. Though part of the first floor already has a reliable renter, another part suffered fire damage earlier this year. Still, it’s in a desirable location.
In a catalog for an auction early this month in central Berlin, the property was listed for €48,000 ($60,355). But by the end of an intense 15-minute bidding war between two remote buyers and a gentleman in the back of the airy atrium, it went for almost double the asking price: €90,000 ($113,166). The top bidder turned out to be an investor from western Germany.
"It is an example of what real estate can fetch when it’s good," says Carsten Wohlers of Plettner & Brecht, the property brokerage that ran the auction. About 90 percent of the 53 properties listed were sold, a 10 percent improvement over last year, he says. Organizers also noticed that more buyers called in bids rather than coming in person, though Wohlers attributes that as much to the good weather as the ongoing European Football Championship.
The auction is just one example of how, even as housing market recovery in the United States, Spain and other struggling countries muddles along, Germany’s real estate market has taken off. After years of stagnating, German prices for both residential and commercial real estate began rising again in 2009. Buoyed by trouble in other euro crisis countries, German property has become a safe haven for both German and international investors looking for a secure place to store their money.
Indeed, German real estate prices rose 3.5 percent between September 2010 and the same month the following year, according to the Organization for Economic Cooperation and Development (OECD). Meanwhile, the average price for homes rose 5.5 percent in 2011, according the Bundesbank, Germany’s central bank. And major German cities such as Berlin, Hamburg and Munich have seen between 10 and 13 percent increases in prices for existing and new apartments, offsetting flat and declining prices in rural parts of the country.
Safe Haven
Though these price increases sound impressive, they hardly indicate a dreaded housing bubble. By comparison, during the first quarter of 2005, as prices approached their peak ahead of the US housing crisis, they rose 12.5 percent over the previous year, with costs for homes in places like California, Nevada and Florida going up some 20 percent a year. Still, the price increases in Germany have the Bundesbank worried enough that it said recently it was monitoring the situation to keep it from getting out of hand.
But the real estate situation in Germany "is not comparable with the US and Spain," says Steffen Sebastian, chair of real estate finance at the University of Regensburg, in the southern German state of Bavaria. Today’s real estate price increases are also nothing like Germany’s real estate bubble in the mid-1990′s, when Helmut Kohl’s government provided tax breaks to support post-reunification investment in the former East German property market. Those tax benefits have since been halved.
Sebastian says that German real estate heated up about a year and a half ago, but that the difference between what happened in other countries hit by a housing crisis is that individuals, and not investment banks, are putting their own money into real estate. And they aren’t just Germans, but people from across the Continent. "Much of the demand is from speculation across Europe," says Sebastian.
Sebastian also attributes the price increase to low interest rates, fears of inflation within Germany, general concern over the collapse of the euro and relatively few safe investment alternatives. German bond prices, for example, have become so low that investors are practically paying the German government to take their money. In contrast to the stock market and government bonds, German real estate appears to many investors as a safe bet that can earn rewards. Unlike opening a foreign bank account, buying real estate also comes with few regulations and restrictions.
"Italians don’t care where they put their money as long as it is in German real estate," says Ruth Stirati, a real estate consultant who works primarily with Italians looking to buy apartments in Berlin. Stirati says that many of her clients are normal Italians who have a little bit of savings that they are too scared to put in Italian banks for fear the euro will collapse.
Sticker Shock
Even though Berlin lacks the kind of industry or job market that support other parts of the country, as Germany’s political and (arguably) cultural capital, it has become a particularly attractive destination for international buyers. Many hundreds of individual apartments were sold there in January 2012, and more than half of those purchases were made by Italians, Russians, French, and other international buyers, according to a market report by German real estate market firm Engel & Völkers.
"Before there was steady growth in demand, and now it’s become a flood," Stirati says of Berlin real estate. Before, Berlin was an insider tip, she says, but in the last two years the city has become the new trend for Italian investors because it’s frequently profiled in the media. "Since the crisis there are so many investors who have come to Berlin that the prices are like waves," she says. "One month they are really high and the next month they go down."
Increases in Berlin real estate values have led to sticker shock for buyers and brokers accustomed to the years of low prices. "It’s too expensive," says Rudolf Rude, a German engineer who dabbles in real estate investment. At the Plettner & Brecht auction in early June, Rude bought a 95-square-meter (1,020-square-foot) store-front in Berlin’s trendy Prenzlauer Berg district for €178,000, about 40 percent above the listed price.
Rude attributes the price increases to Berlin’s recent development, which puts it on par with Paris and Moscow, leading to more attention internationally. He says that even though he thinks he paid too much for the property, other investments are too risky and the stock market is too uncertain. "I like to put my money in the ground, in the earth, as cement gold," says Rude. He plans to open a high-end cheese shop in the space.
In the financial capital Frankfurt, by comparison, demand has mostly been from German investors who have money to spare, says Peter Talkenberger, a broker at AllGrund, a real estate consulting firm. In the city center there are few available apartments these days, he says. If an apartment does crop up, it’s gone within a week. Still, he adds, "the market is not nearly as wild as Berlin. Berlin is on another level with so much international demand."
On The Brink Of A Bubble?
Wohlers, Rude, Stirati and others on the front lines of German’s real estate market believe it will only continue to grow. But whether their forecasts will come true rests largely on the fate of the German economy. Regardless of a shrinking population, a strong job market and solid economic growth has kept demand for homes strong. More people are also moving into cities and looking for new homes.
The international rating agency Standard & Poor’s predicts that German home prices will rise for another two or three years, even as the euro crisis engulfs neighboring countries. The agency points to lower unemployment, sustained low interest rates and the already low price to income ratios as reasons for its optimism.
But some experts have warned recently that as the euro crisis deepens, the Germany economy may not be immune for long. It would only take a spike in unemployment and interest rates to stall the country’s brisk real estate market.
"You can count on more turbulence in the German real estate market," says the University of Regensburg’s real estate finance chair Sebastian. "We are living in uncertain times and what we are experiencing happens once a century. We have seen so much that did not seem possible five years ago."
As a note of caution for would-be investors he adds: "It’s not necessarily a bubble, but under no circumstance would I still put all of my savings into real estate."
http://www.spiegel.de/international/ger … 38437.html
Statistics: Posted by yoda — Fri Jun 22, 2012 5:10 am
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Political Correctness • Australia’s parliamentary speaker steps down amid sexual har
Australia’s parliamentary speaker temporarily stepped down Sunday amid allegations of sexual harassment and fraud, touching off a political crisis that threatens Prime Minister Julia Gillard’s tenuous grip on power.
House of Representatives Speaker Peter Slipper announced Sunday that he will be temporarily replaced by his deputy Anna Burke, a Labor Party government lawmaker, while police investigate allegations he misused taxi payment vouchers.
According in parliamentary regulations, the move effectively costs Ms. Gillard’s government its single-seat majority.
While the government will face greater difficulty in passing contentious legislation through the House of Representatives, the opposition is still short of the 76 votes it needs in the 150-seat chamber to bring down the government.
Ms. Gillard, who has struggled to maintain her minority government since elections in 2010, welcomed the move.
“It is appropriate that Mr. Slipper has stood aside as Speaker whilst alleged criminal conduct is investigated,” she said in a statement.
An openly gay male former staff member James Ashby, 33, made the fraud allegations and he is also suing Mr. Slipper in the Federal Court claiming sexual harassment. Mr. Slipper denies all the allegations.
Mr. Slipper, 62, who is married with two adult children from a previous relationship, defected from the opposition in November last year to take the speaker’s job in a move that effectively gave Ms. Gillard’s minority government an additional vote — 76 in the chamber.
An independent lawmaker has since withdrawn his support for Labour, leaving Ms. Gillard with command of exactly half the chamber.
Since a speaker can only vote to break a draw, Ms. Burke will effectively be barred from most votes. The rules state that Mr. Slipper cannot vote at all while he stands aside.
The sexual harassment case is a civil matter, while the taxi voucher allegations are criminal. Police have confirmed they are evaluating the criminal allegation.
“Any allegation of criminal behaviour is grave and should be dealt with in a manner that shows appropriate regard to the integrity of our democratic institutions and to precedent,” Mr. Slipper said in a statement after returning from the United States on Sunday.
“As such, I believe it is appropriate for me to stand aside as speaker while this criminal allegation is resolved,” he said.
“The allegation is incorrect, and once it is clear they are untrue, I shall return to the speakership. I would appreciate the relevant bodies dealing with the matter expeditiously,” he added.
http://www.theglobeandmail.com/news/wor … le2410280/
Statistics: Posted by yoda — Sun Apr 22, 2012 10:06 am
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Business • Best Buy chief Dunn quits amid probe into ‘personal conduct
Best Buy chief Brian Dunn quits amid probe into ‘personal conduct’
Brian Dunn, the chief executive of America’s biggest electronics retailer Best Buy, has abruptly quit amid a company investigation into his "personal conduct".
Brian Dunn had been at the helm of Best Buy for close to three years 10 Apr 2012
“Certain issues were brought to the board’s attention regarding Mr Dunn’s personal conduct, unrelated to the company’s operations or financial controls, and an audit committee investigation was initiated,” the company said in a statement. “Prior to the completion of the investigation, Mr Dunn chose to resign.”
Mr Dunn, who had been at the helm for close to three years, had been criticised for not recognising the scale of the challenge that Best Buy faces from internet retailers such as Amazon, discount chains including Wal-Mart, and from the rise of Apple stores.
Best Buy, which built its success around the creation of huge shops, slumped to its first annual loss in more than two decades in 2011 as customers migrated online. Although Best Buy’s online sales are climbing, its large stores have become an increasing financial burden to a company struggling to lift revenue. Sales climbed less than 1pc last year.
The company did not initially disclose the probe when announcing the resignation, saying: "It was time for new leadership to address the challenges that face the company," and claimed Mr Dunn’s resignation had been by "mutual agreement".
Mike Mikan, a board director, will take over as an interim chief executive.
Last month Best Buy announced plans to close 50 of its "big-box" stores and open more of its smaller outlets that focus on selling smartphones. Wall Street analysts said the move would not be sufficient to revive one of America’s best-known retailers.
Mr Dunn, who joined Best Buy as a VCR salesman in 1985, told Bloomberg last month: "I believe I absolutely am the right person to lead the company forward. I’m not really spending a lot of time looking in my rearview mirror."
Shares in Best Buy fell 5.9pc to $21.32 on Tuesday. They fell more than 30pc during Mr Dunn’s tenure.
http://www.telegraph.co.uk/finance/news … nduct.html
Statistics: Posted by yoda — Tue Apr 10, 2012 10:36 pm
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