IMF for sub-zero interest rates in Europe; Facebook snaps up WhatsApp for $19bn; Record profit for Ferrari

1 IMF for sub-zero interest rates in Europe (Larry Elliott in The Guardian) The International Monetary Fund has urged the European Central Bank to consider cutting interest rates to below zero as it warned that deflation in the eurozone was a key new risk facing the world economy. “A new risk stems from very low inflation in the euro area, where long-term inflation expectations might drift down, raising deflation risks in the event of a serious adverse shock to activity,” the Fund said.

It added that the eurozone was “turning the corner” from recession to a recovery that was uneven and fragile. Low inflation added to the problems of the troubled countries on the fringes of the euro area, where it would increase the real burden of already high levels of public debt. The Fund stressed that advanced economies should avoid removing stimulus too quickly given that there was still a large amount of slack to be used up, inflation was very low and governments were trying to reduce budget deficits.

2 Facebook snaps up WhatsApp for $19bn (Dominic Rushe in The Guardian) Facebook announced the purchase of the mobile messaging service WhatsApp on Wednesday, in a $19bn deal that represents the social media company’s biggest acquisition yet. Mark Zuckerberg, the founder of Facebook, described five-year-old WhatsApp as an “incredibly valuable” service that was well on its way to connecting 1 billion people around the world.

The deal is a big bet for Facebook, which has until recently struggled to convince investors of its strategy for mobile. WhatsApp has more than 400m users around the world and claims it is adding more than 1 million new registered users a day. It allows unlimited free text-messaging and picture sending between users and is among the world’s most downloaded mobile apps. Facebook’s successful bid comes after Google reportedly made a $1bn offer for the company last year.

Jan Koum, founder and CEO of WhatsApp said: “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide. We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.”

Facebook is making the purchase in a mix of cash and stock. WhatsApp will receive $12bn in Facebook shares $4bn in cash and an additional $3bn in restricted shares that will be paid out to executives at a later date. The company will operate as an autonomous unit. The company’s ownership structure has not been disclosed but one Silicon Valley source said he believed WhatsApp employed fewer than 100 people. “Probably five people are going to be rich beyond belief, the rest are going to be rich and there’s an admin assistant who right now is picking out the colour of her Lamborghini,” he said.

“This is the new generation of messaging services,” said Marcos Sanchez, vice president of App Annie, an analyst specialising in mobile technology. “Facebook understands there is a generational shift in the way people connect.”

3 Record profit for Ferrari (BBC) Italian supercar and Formula 1 racing firm Ferrari has reported record profits in 2013, despite selling fewer cars than the year before. The company made net profits of 264m euros ($363m), up 5.4% on 2012. That was despite the number of cars delivered to dealerships falling by about 5% over the year to 6,922. Ferrari said it had decided to reduce the number of cars sold, to maintain the brand’s luxury status and increase the cars’ value.

“We wanted to maintain a high level of exclusivity, designing amazing products such as the LaFerrari, the 458 Speciale and the just launched California T,” said Ferrari’s president, Luca di Montezemolo. The US remains Ferrari’s biggest market, with more than 2,000 deliveries last year – an increase of about 9% on the previous 12 months.


About joesnewspicks

This blog captures interesting news items from around the world for those strained by information overload and yet need to stay updated on global events of significance. The news items displayed are not in order of merit. (The blog takes a weekly off — normally on Sundays — and does not appear when I am on vacation or busy.) I am a journalist for nearly three decades.
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