Broadway ignores economic downturn

Wall Street be in a slump as the global economic downturn grinds on, but 6.4 km north in midtown Manhattan, Broadway theatres continue to lure crowds as they have for decades during times of recession.

Some people might find it hard to believe that Broadway has proven so resilient in the face of rising unemployment and record losses at some of the biggest US corporations.

Six months back, predictions for Broadway were dire. The gloomier newspaper headlines included “Broadway braces for recession fallout” and “Recession to finally kill Broadway.” So far there are no signs that Broadway — which survived the post-September 11 economic slump and a lengthy strike by stagehands in 2007 — is dead.

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United States House rejects $700-billion Wall Street bailout Bill, shaky markets plunge

In a moment of historic drama in the US Capitol and on Wall Street, the House of Representatives voted today to reject a $700 billion rescue of the financial industry. The vote against the measure was 228 to 205. Supporters vowed to try to bring the rescue package up for consideration again as soon as possible. Stock markets plunged sharply at midday as it appeared that the measure would go down to defeat.

The Dow, which had been trading down about 300 points for most of the afternoon, fell to a 600-point deficit before recovering slightly. The index was down more than 550 points as lawmakers scrambled, but failed, to round up votes to pass the package.

House leaders kept the voting period open for some 40 minutes past the allotted time, trying to convert “no” votes to “yes” votes by pointing to damage being done to the markets, but to no avail.

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Recovery after panic on Dalal Street

On a fate-changing day for Wall Street, the Indian stock market saw panic selling on Monday morning in the wake of news that Lehman Brothers, the fourth largest US investment bank, had succumbed to the bad mortgage finance and that Bank of America would buy the trouble-torn Merrill Lynch for $50 billion.

In the drastic early sell-off Sensex plunged 850 points. However, the market recovered in the latter half on short covering and bottom fishing. The index ended the day with a less severe loss of 469.54 points. What triggered the short covering was a decline in crude oil prices by more than $4 while the Indian market traded. “I don’t believe in the decoupling theory.Whatever happens in the US will have repercussions around the world, be it Brazil, Europe, China or India,” said Leslie Menkes, Morgan Stanley head of onshore private wealth management for Asia. “We don’t see markets breaking away from the trend.”

With Monday’s decline, Sensex lost 1,413.7 points, or nearly 10 per cent, in a week’s time — equivalent to a loss of Rs 4,39,535.2 crore in investor wealth in six trading sessions. The NSE’s S&P CNX Nifty index fell 3.68 per cent, or 155.55 points, to close at 4,072.90.

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Investors eye Yahoo's alternatives to Microsoft

Yahoo Inc faced growing pressure on Sunday to find an alternative strategy to Microsoft Corp's $47.5 billion takeover offer after the software maker walked away over a disagreement on price.

Yahoo shares could fall by more than 30 percent on Monday over the breakdown of talks, but that drop could be softened if Wall Street believes Yahoo Chief Executive Jerry Yang has another strategy up his sleeve, analysts said.

Yahoo is likely to push for an advertising partnership with Web search leader Google Inc, sources familiar with the matter said. A tie-up with Google, seen as a big winner from the end of Microsoft-Yahoo talks, should help boost Yahoo's operating performance in the near term.

"It's time to get a move on with Google," said Jeffrey Lindsay, analyst with Sanford C. Bernstein. "Let's hope they weren't bluffing."

Yahoo is also still considering a deal with another Internet media and advertising major, such as Time Warner Inc's AOL, people familiar with the discussions said.

But Yang and the company he helped create could face a flood of shareholder lawsuits or other actions if nothing materializes.

"There are two things that could support the stock: the potential for Microsoft to return and the potential to do a Google deal," said Clayton Moran, analyst at Stanford Group.

Moran said Yahoo shares could fall to the mid- to low-$20 range on Monday from their $28.67 close last week. Other analysts said it could slip closer to $19.18, where it closed on January 31, a day before Microsoft made its offer public.

Microsoft shares are likely to rise on Monday, with its investors relieved that Chief Executive Steve Ballmer didn't shell out billions more for Yahoo, analysts said.

Microsoft on Saturday sweetened its initial $31-per-share offer for Yahoo to $33, but then withdrew from the talks when Yang dug in for a price of $37.

SHAREHOLDER CHALLENGE

While some Yahoo investors hoped it could wrest a price closer to $35 per share from Microsoft, a dissident shareholder said he would challenge Yang and the board over the collapse of talks.

"Shareholders didn't even get a chance to vote on the deal, but the board negotiated on our behalf and not in good faith," Eric Jackson, who leads a group of investors who collectively own 2 million Yahoo shares, told Reuters.

He said he would urge shareholders to withhold votes from the company's directors this year.

Yahoo officials were not immediately available to comment.

Bernstein's Lindsay estimates Yahoo could be worth up to $35 per share with a Google deal, and even $37 with more job cuts, but that drops to $25 per share if no partnerships are in the offing.

Yahoo has conducted tests with Google to outsource some of its search listings to its arch-rival. It has also held talks in tandem with AOL and Rupert Murdoch's News Corp.

A source familiar with the matter said on Sunday that the News Corp talks had cooled in recent weeks.

"It increasingly appears like Yahoo will pursue a Google search partnership," said Moran, who said he still favored a Microsoft buyout. "Given Google's position (in the market), a partnership with them cedes control and limits the long-term value creation for Yahoo."

BALLMER'S WARNING

Ballmer portrayed Yahoo's options as particularly stark in a letter to Yang detailing his reasons for pulling back, and suggested any Google tie-up would preclude a Microsoft deal.

Microsoft and Google are increasingly competing on the same turf, such as Web-based applications, email and messaging. The proposed Yahoo purchase was meant to create a fiercer rival to Google and challenge its hold on Internet advertising.

"The real winner in all of this seems to be Google," said Canaccord Adams analyst Colin Gillis. "There's going to be no powerful number two" in the Web market, he said.

Gillis rated Yahoo a "buy" with a $35 price target before the deal talks with Microsoft collapsed. "We were very clear that was not based on fundamentals," he said.

Ballmer also warned Yahoo that it would give up its relationship with advertisers by coordinating with Google and could lose some of its best engineering talent.

Some analysts disputed that idea, saying Yahoo's operating results would certainly benefit from a Google partnership.

Other Google partners, including IAC/Inter ActiveCorp's Ask.com, have structured deals that keep them in control of their advertiser ties, Bernstein's Lindsay said.