BP Plc. To Face Up To $60 billion In Cost For 2010 Oil Spill

The article takes a look at the total cost of the oil spill that BP could end up paying for the 2010 Gulf of Mexico oil spill.

BP plc was involved in the biggest oil spill in Gulf of Mexico in 2010. In the result of the oil spill, eleven rig workers died because of the blowout, while significant amount of oil leaked into the deep ocean and caused huge environmental damage.

Carl Bieber, US federal judge, in 2014 deemed the company as “grossly negligent.” He ruled maximum fine to be forced on the oil company under the CWA. His ruling related to BP’s fine might now come any time and can be as much as 413.7 billion.

The London oil company has spent a massive amount on cleanup of the oil spill. The company has spent approximately $43.8 billion. According to analysts, the costs are most likely to cross $60.2 billion to $68.2 billion mark, which will hurt BP immensely, among falling oil prices.

According to Fuel Fix, Brendon Barnes, an analysts at Bloomberg Intelligence has also stated that 5 Gulf coast have also sued BP for the harms. Under the Act of Oil Pollution, these 5 states are looking for a total compensation of around $35 billion.

Mr. Barnes related to issue said, “It’s highly unlikely, that the states will be awarded an amount close to $35 billion.” He thinks that the states might witness $650 million to almost $1.5 billion in compensations at most, and it looks doubtful that the company will settle with them. He also said, “So far, the five Gulf states have agreed to hold off on filing Natural Resource Damage claims – the claims that are the most difficult to predict. Natural resource damage actually tries to monetize the value of trees, different aquatic organisms, so it’s very uncertain.”

On the other hand, BP is also witnessing pressure from residents and other businesses of the Gulf. As per Mr. Barnes, company’s economic business losses have reached up to almost $160,000 in the past few years. He assesses that the claims might add another $12.4 to $13.5 billion for BP while other claims might total up to $9.7 billion.

William Hares, Intelligence Energy Analyst at Bloomberg said, “Barring a worst-case scenario, BP will continue to exist, though the impact from the litigation will be felt by investors. Something has to give as it faces tens of billions of dollars in incremental penalties.”

Mr. Hares said, BP will be evaluating every situation before coming up with a decision, which will include its capital spending and dividends cutting decision. BP believes that the oil prices will stabilize soon so that it might witness satisfactory growth and enhance on its liquidity position.

Petroleo Brasileiro Petrobras SA Stock Update

The article takes a look at the causes of the recent Petroleo Brasileiro Petrobras SA (ADR) stock price surge and whether this is sustainable going forward.

On March 13, Petroleo Brasileiro Petrobras stock price tumbled to a multi-year low of $4.90. This drop was due to the biggest bribery and corruption scandal in the company’s history, which took place in October last year.

The company was alleged of increasing its contracts. The excess from this were used to bribe local politicians and former official of company. The share price of world’s most indebted energy company dropped by 75.7% for six months from October’14 to March’15. Above all, the Brazilian oil company share price has also suffered due to decline in crude oil prices.

Earlier in February, the company changed its Chief Executive Officer and other five senior officials to draw a line for the scandal, named ‘Operational Carwash’. In the month of April, the company also noted a $17 billion of impairment charge in its 4QFY14 earnings report. A slice of this total amount almost $2.10 billion was allotted to “improper payments”.

Talking about the Macro-economic outlook of the country, analysts are expecting interest rate in Brazil will top later in 2015. During the start of this month, the Brazilian Central Bank raised the short term interest rate by 50bps to 13.75%. Another smash to 14% is most likely to be seen, however most of the analysts believe the Bank might reached its ability to raise rates.

High rate of interest negatively impact the economic activities of the country. The Central bank of Brazil is focused on controlling the inflation rate. The inflation rate has touched 8.47% 11 year high over the past one year.

Jorge Mariscal, CIO of UBS Wealth Management emerging markets while talking to Barrons said, “Brazil’s economy is not doing well, growth and inflation numbers aren’t good, but there are encouraging signs that policy is moving in the right direction. It’s likely we’re going to see the peaking-out of interest rates over the next few months.”

As of December 2014, the company’s revenue dropped by a compound yearly growth rate of 0.60%. In the coming period, revenue of the company is most likely to drop by 27% on year over year basis to $104.90 billion this year. The main reason for this drop can be due to the uncertainty in crude oil prices and weakening Brazil currency against other currencies.

Presently, Petrobras is trading at 1 year forward 9.6x of price to earnings multiple. It might be appropriate to compare the company valuation with the Brazil Sao Paulo Exchange Index performance then S&P 500 Index.

Pfizer’s Updates Its “Get Old” Campaign To Target Customers

“Get Old” campaign conveys health information to consumers in a provocative way.

Pfizer Inc (NYSE:PFE) “Get Old” campaign is about to get a makeover. Since its launch three years ago, “Get Old” conveys health related information to consumers in such a way that it provokes a ‘food for thought’ for consumers in their minds.

Vice President of Pfizer Communications, Sherry Pudloski, says that consumers pin their hopes on pharmaceutical companies, such as Pfizer itself, to provide information about the vitamins to consume, but that has now become old school.

The campaign, which was designed and developed by a marketing agency, Huge, has an overriding message that age itself is an empowering tool and conveys messages, such as featuring an article of an 80 year old woman who  graduated with honors from college, or maybe a bald couple (both who suffered from cancer) coming together  in their first date.

Advocacy groups have provided a helping hand to the campaign by sharing the “Get Old” posters and materials in addition to using the media to promote an outreach. While the campaign has been positive so far, Ms. Pudloskihas revealed that it also does more than generate a sense of goodwill to its customers; it also helps in improving the balance sheet in terms of a positive corporate reputation.

A poll conducted on behalf of Pfizer reveals that there is a 45-55% rise in how consumer perceives Pfizer as a trustworthy organization and the one that has enabled itself to attract employees.

As part of a refreshing tagline, the word “retired persons” is banished from the American Association of Retired Persons to AARP to make the aging feel less like Golden Years UT rather more upbeat. Ms. Pudloski explains that stress for 30-50 years old, which is mainly associated with building careers and rising families, is the period dubbed as the “troughs of misery”, and that one type of stress gives way to other different types of stress while presenting opportunities when they reach their early 60’s.

The campaign, in a way, is also tied to the ongoing evolution of the company. When current CEO Ian Read took over from Jeff Kindler, the company was riddled with excessive compensation for the top management, as well as inefficient management of the company. In 2009, Pfizer was struck with a $2.3 billion settlement case over the wrongful marketing of its anti-inflammation drug, Bextra. Pudloski says that this campaign is a part of cleaning up that reputation.

Pfizer stock price ended the day at $34.29, a gain of 0.82%.

eBay Comes Up With Mobile Push For Apple Watch

eBay has finally launched an app for Apple's smart watch.

eBay Inc. has currently inclined its focus more on smartphones and such devices. On many previous occasions, the company has had a period where it specifically focused and launched apps for smartphones and other devices. According to Cnet.com, the online retailer has unveiled a new app for Apple Watch on Tuesday. Furthermore, the company also tweaks in its smartphone apps. According to sources, the e-commerce company’s new app for the Apple Watch will allow the users to have an overview look of their notifications and the items they are bidding, buying, selling, or watching.

Reportedly, eBay app might also offer push up notifications to the Apple Watch users in order to make it more convenient for the consumers. Through push notifications, buyers will be able to keep a tab on different items that they might be watching. Moreover, it will also help sellers to quickly see customer messages and respond to them.

eBay started to make smart watch apps in 2013 for smart watches of Samsung and Pebble. Apple Watch was launched and available to market in April and it is believed that the newly released smart watch by the smartphone giant is set to dominate the market in the future as well.

Hence, eBay considered the iOS platform as a very important one for the company to reach and capitalize. The major rival of the online retailer, Amazon, launched its app for Apple Watch in April.

According to eBay senior product manager for wearables, John Tapley, stated in an interview, “Our goal is to make it relevant to users and not obnoxious. We're just at the start of it, so we'll continue to evolve the feature set over time.”

The online giant has now also joined the list of other online retailers that have been and are still working on apps for Apple’s smart watch. All e-commerce companies believe that the customers will now prefer to browse more on smart watches and smartphones instead of personal computers and laptops. Hence, to target that audience, eBay also came up with a smart watch app for Apple.

The other e-commerce companies, such as Target, Amazon, and Fandango have also made their way to Apple Watch. According to Cnet.com, “eBay on Tuesday also said it updated its apps on Apple's iPhones and iPads and Google's Android mobile operating system to improve the search function, so people looking for a laptop don't end up getting results filled with laptop cords or chargers.”

Broadcom Avago Deal Triggered More Companies To Make IoT Chipsets

Big chip makers are triggering deals that could bolster Internet of Things.

This is supposed to be the biggest year in chip deals since 2000. The powerhouses of the industry that includes Broadcom Corporation, Intel, and many more are currently working on the future of technology. Internet of Things is the next big thing in the technology sector and more companies are trying to get opportunities to capitalize on it. It is believed that soon all devices in the world will be connected with each other one way or the other. And Broadcom is leading the race to win it. Recently, the company aimed to win by becoming partners with Avago.

Broadcom Avago deal was the talk of the city. The chipset industry has never been so busy and all semiconductor companies are focusing more on Internet of Things along with their big deals. Broadcom Avago as well as Intel Altera deal are making Internet of Things reality for users. Currently, all big name companies are focused on incorporating and integrating special functions for certain chips that handle low powered devices. Reuters wrote in its article “Bigger is better is the new mantra, as more technologies are being squeezed onto chips and customers want to deal with integrated suppliers that can offer the broadest range of products.”

Furthermore, the managing director at Credit Suisse, Ernie Ruehl stated that every company is wanting to become a supplier with having the most capability. This is more feasible for big companies as they can bear the ever rising manufacturing and designing costs.  Credit Suisse advised the deal between Broadcom Corp. and Avago as well as NXP Semiconductors and Freescale Semiconductor which was the moment where ‘the current wave of chip mergers’ started to happen starting March. A tech analyst at IDC research firm, Mario Morales said “A leading-edge design can cost $150 million to $200 million, which means that you have to be able to generate four times the revenue to get a return on investment.”

Analysts believed that companies that are engaged in analog signal and mixed signal chips i.e. combination of analog and digital have more demand in the market. Hence the reason Broadcom, Maxim Integrated Products, and Silicon Laboratories etc. are under immense limelight these days.

But companies like Qualcomm and Intel are looking for opportunities to beef up and strengthen their stance in this market. Reuters reported that there are more deals coming through focusing Internet of Things. This will not stop in the near future.

Alibaba Plans To Take on Amazon In The Field Of Cloud

Move comes as the Chinese ecommerce giant stakes in a series of partnerships to bolster cloud offerings.

In yet the latest signs of its troubles related to operating in China in the face of continuing economic slowdown, as evidenced from a decline in both exports and imports, Alibaba Group Holding Inc. (NYSE:BABA) has made a strong push of boosting its cloud offerings by entering into partnerships with global companies that are likely to prove great synergies, and also give competitors, such as Amazon, Google, and Microsoft a run for their money.

The deals will see Alibaba Group cloud computing division, Aliyun, utilize the existing data centers built by partners such as Intel, US data center company, Equinox, and  Singapore telecom giant, SingTel, so as to push their own services on the horizon. The move will see the Chinese corporate giant saving money and to localize its services to tap into new markets.

Simon Hu, President of Aliyun, stated that with more storage problems and more clients demanding for data analytics services, it has led to this move. The main clients will be small and medium sized businesses, who will be given advanced infrastructure to harness the power of big data and analytics.

It is not going to be an easy fight though. Amazon, IBM, and Microsoft are already big and dominant players in the $16 billion market, and their growth shows no sign of slowing down. However, this has not stopped Alibaba cloud computing revenue from growing from 213 million yuan to over 390 million yuan, which is more than 80% growth. The revenue earned is a tiny fraction of the amount that the company normally earns from charging a fee for exporters and importers.

Mr. Wu said that Alibaba is not scared about the competition, rather they are willing to learn from their US rivals and to benefit from “technology products and create a better balance and increased efficiency.“ When asked about pricing, he said that it would most likely depend on the locality.

Aliyun’s expansion outside China is not new since Alibaba had opened up a data center in the Silicon Valley, but the move suggests that it intends to utilize economies of scale by going for partnerships with other data centers and not having to go through the trouble of being burdened by building more data centers, even if they have bullish assessments about the analytics market.

 Alibaba’s stock price ended the day at $90.70, a gain of 0.12% from the previous week, after reaching the initial high of $91.5 in the middle of last week.

Samsung Upcoming Phone Specification Leaked

Samsung so called new phone, Samsung Galaxy Active, will be an improvised version of S6 and S6 Edge.

Samsung flagship products, Samsung Galaxy S6 and Samsung Galaxy S6 Edge, are doing quite well in the market. The company has managed to sell millions of phones in a short span of time in order to become the largest smartphone vendor in the world once again.

The South Korean smartphone maker is usually known to release its flagship products that are relatively more reliable and durable than other standard phones. Hence, its advanced and improved version of Galaxy S6 is accidentally out. The company posted a user manual of the new version of Galaxy S6 this week.

It is believed that the new rugged version of smartphone is named as Galaxy S6 Active, whose details were accidentally disclosed. However, the posted manual is now taken down but ‘9to5Google’ managed to save a photo of the manual, which had a picture of the new phone and the phone details as well.

According to the disclosed manual, it is believed that the phone will come with a big screen of 5.1 inches, along with a resolution display of 2560x1440. Furthermore, a 16-megapixel camera will be installed that will be the main or rear camera, along with a 5-megapixel front or secondary camera. All of these features of the new phone are as same as the ones in its previous Galaxy S6 and Galaxy S6 Edge version.

Furthermore, the internal specifications are supposed to be the same as Samsung Galaxy S6 as well, according to the leaked details. However, Samsung Galaxy Active will have a stronger body and bumper but the biggest difference between its predecessor and itself will be the design. Phone will not have a fingerprint sensor and has physical menu buttons rather than a touch screen.

According to Business Insider, “The S6 Active still has a heart-rate monitor and is just as light as the regular Galaxy S6. But, as the photo shows, the phone appears to have a sturdier bumper and is most likely made of a different material, since the standard Galaxy S6 has a glass-coated back. It's not as attractive as the Galaxy S6, but it's not meant to be — Samsung's line of Galaxy Active phones are usually aimed at those looking for a phone that can withstand a few drops and getting a little wet.”

There are no official news regarding the launch date of this phone or other details, such as price of the phone or through which carrier it supports, but one thing is for sure that it will hit the markets soon.

JP Morgan to reduce cost by halting Voicemail Services

America largest bank plans to reduce expenses and improve revenue by halting its voicemail service for a number of employees.

As extensive cost reduction plan to boost earnings, JP Morgan Chase and Co. has adapted to stop voice mail services for its several employees, as reported by Wall Street Journal. The news came out followed by the US bank decision to reduce its work force by thousands.

On Wednesday, in a financial conference, Chief Executive Officer at consumer community unit of JP Morgan, Gordon Smith said that the service that provide $10 each month will no longer be available to most of its employees. Mr. Smith said, “We realized that hardly anyone uses voice mail anymore…we’re all carrying something in our pockets that’s going to get texts or e-mail or a phone call to you.” quoted by WSJ. JP Morgan spokeswoman also told WSJ that the voice mail service is mainly cut for those workers who don't have any direct contact with employees. So, majority of employees employed in operations to technology departments will no longer be availing the free voice mail service facility provided by JP Morgan.

The US bank has decided to cut its cost with the target of improving profitability  prospects at the company. Around 3 months back, United States largest bank in terms of assets, revealed its cost reduction strategies to shareholders in a conference. JP Morgan disclosed that it has decided to cut its spending by over $4.8 billion, mainly from it investment banking and retail unit. Finally, the bank plans on capturing the $57 billion spending target in 2015, down from $58.4 billion in 2014.

The reduction in voice mail services at consumer & community division at the bank will support the expense reduction policy and continuous revenue generation policy of James Dimon, CEO and Chairman of the bank. JP Morgan spokesperson also told WSJ that as an alternate to voice mail service, the customer will now be getting a message notifying about unavailability of the service.

Mr. Smith said that the unit was currently on the correct path to meet cost reductions outlined to shareholder previously. He further said that the unit had successfully executed the necessary actions required for yearly expense target this year at JP Morgan. He also ensured, “We’ve laid out pretty good plans around branch automation, what we are doing with digital and mobile…the mortgage servicing space. The vast majority of (the expense savings) are just where we want them to be.” 

Moreover, majority of other large bans in US have implemented the similar measure to reduce expenses. As of March 31, BofA cut workforce by  20%, while Citigroup slashed its workforce by 9.1%.

Cisco Reports Hints At Mobile Data Boom in India

Internet protocol (IP)-based networking products maker’s top female engineer set to exit.

Cisco Systems Inc. (NASDAQ:CSCO), in its 10th annual visual networking index report, forecasted that India’s Internet protocol traffic is all set to skyrocket at four times the pace for the period covering from 2014 to 2019, at an astounding rate of more than 30% per year. Factors driving this growth range from increased mobile data internet usage to increased broadband speed and more ordinary Indians expected to possess low cost yet high quality featured smartphones.

The networking solutions company has bullish assessments about the world’s second largest populated country, pointing to the IP traffic expected to reach around 4 exabytes by 2019, an increase from the current traffic speed of 967 petabytes per month in 2014. In comparison, global IP traffic growth is expected to reach 2 zettabytes, largely driven by an increased number of users and enhanced broadband speeds.

Another reason for strong growth is the mobile data traffic. Cisco Systems Inc. expects the mobile data traffic in the South Asian nation to grow by more than 14%, with an annual compounded growth rate at 67%. Currently 9% of the IP traffic is credited in the mobile data, and that is expected to rise to less than 30% five years later.

On top of this, each household in India, once getting a hold of a smartphone, will generate 41 gigabytes of monthly internet traffic in the same year by 2019 and an astounding 75 billion minutes of video content is expected to be downloaded through the Internet every month.

Meanwhile, Cisco has announced that its CTO and Strategy Officer, Padmasree Warrior, is set to leave the company by the end of July, on top of two other executives, who have also called to quit – COO Gary Moore and President Rob Lloyd – both who were considered as strong front runners to run for the post of CEO once Chambers resigned.

Ms. Warrior’s success in the company has been mixed. On one hand, she is considered smart and had a good relationship with the customers, and has been an adviser to many startups. On the downside though, she has not garnered a lot of respect when she was first selected as an engineering leader.

Her rumor of quitting came early this year, only for the company to deny it, but the management is silent about her impending exit, which they will not mind since they are in the process of reshuffling the leadership positions anyway, bringing in fresh new faces.

Cisco stock price ended the day at $29.18, a loss of 0.45%.

Alibaba Alipay Reigns Over Mobile Payments In China

Alibaba is winning the game of online mobile payments in China with AliPay.

Alibaba Group Holding is considered as the most disruptive company in the Chinese tech sector. Ever since its inception, it is winning the game in its country with plans to conquer overseas markets as well in the near future. Immense growth has been noticed in recent times; hence, after conquering the Chinese market already, it is tapping on the world’s largest economy, the United States.

As far as China is concerned, the company is not only winning the e-commerce game but mobile payments game as well; the Chinese e-commerce giant introduced AliPay in 2013, which is an online payment service of Alibaba Group that has changed the paradigms of online shopping and made it more convenient for its users.

The world is advancing in technology largely and due to this, online mobile payments are gathering the pace throughout the world. It made a great impact in China, where now people mostly rely on online mobile payments. Hence, Alibaba is all set to take a bold step ahead and aim for the gold with AliPay, which currently has more than 350 million users registered to its platform along with 270 million active users monthly.

Furthermore, the company managed to defeat its United States’ counterparts. Talking about digital wallets and mobile payments, PayPal, who was previously a unit of eBay, now has around 162 million active users monthly. As The Street reports, “Alipay Wallet, which can be used for e-commerce purchases and in physical stores, has grown on the backs of more than 289 million monthly active users, who increasingly use it as opposed to entering in a credit card number.”

According to the Vice President of company’s financial arm, Fan Zhiming, said, “Alipay was established in 2004, initially to support escrow payment for Alibaba's online marketplace transactions. Mobile payment is becoming more important, especially the younger generation, and they make up a great part of Alipay users. So it is important that we develop our mobile payment capabilities via Alipay Wallet.”

So far, credit cards are not that popular or widespread in the Chinese market and not many people have access to these credit cards. Thus, an online mobile payment system, such as AliPay, is a proper solution for the nation to provide a huge relief to customers to avoid the need of big stacks of cash with them all the time.

The Chinese e-commerce giant has ‘disrupted’ the tech industry of the world by providing a great online marketplace platform to its people.