1 Brics nations to have $100bn bank (BBC) The leaders of the five Brics countries have signed a deal to create a new $100bn development bank and emergency reserve fund. The Brics group is made up of Brazil, Russia, India, China and South Africa. The capital for the bank will be split equally among the five participating countries. The bank will have a headquarters in Shanghai, China and the first president for the bank will come from India.
Brazil’s President, Dilma Rousseff, announced the creation of the bank at a Brics summit meeting in Fortaleza, Brazil on Tuesday. At first, the bank will start off with $50bn in initial capital.
The emergency reserve fund – which was announced as a “Contingency Reserve Arrangement” – will also have $100bn, and will help developing nations avoid “short-term liquidity pressures, promote further Brics cooperation, strengthen the global financial safety net and complement existing international arrangements”.
The creation of the Brics bank will almost surely create competition for both the World Bank and other similar regional funds. Brics nations have criticised the World Bank and the International Monetary Fund for not giving developing nations enough voting rights. One of the goals for the bank would be to increase the amount of money loaned to developing countries to help with infrastructure projects.
2 Ad slump hurts Yahoo (San Francisco Chronicle) Yahoo Inc. has said that its second-quarter earnings and revenue declined, as the company struggled again with display advertising sales. Both fell short of Wall Street’s expectations, as did revenue forecast for the current quarter.
Before the forecast was revealed, Yahoo’s stock rose as the company announced that Alibaba Group agreed to reduce the number of shares Yahoo is required to sell in the Chinese e-commerce company in an initial public offering of stock this year. Yahoo, which holds a 23 percent stake in Alibaba, now has to sell only 140 million shares in the IPO, down from 208 million earlier.
Although the reduction means that Yahoo’s immediate windfall from the Alibaba IPO will be smaller, it’s also a long-term bet on Alibaba’s success. Analysts say Alibaba’s IPO could be bigger than Facebook’s $16 billion stock debut two years ago, which would make Alibaba the biggest tech IPO ever.
Yahoo earned $270 million, or 26 cents per share, in the March-June quarter. That’s down from $331 million, or 30 cents per share, in the same period a year earlier. Revenue fell 4 percent to $1.08 billion from $1.14 billion. After subtracting commissions paid to Yahoo’s ad partners, revenue totaled $1.04 million, down 3 percent from $1.07 billion a year ago.
Yahoo has seen its key display advertising sales slump amid competition from No. 1 Google Inc. and No. 2 Facebook Inc. Even Microsoft Corp. is catching up. Research firm eMarketer, which tracks digital advertising, expects Microsoft to surpass Yahoo to take the No. 3 spot in the worldwide digital ad market.
3 Microsoft layoffs likely this week (Stephanie Mlot in PC Mag) Microsoft is expected this week to announce its largest round of layoffs since 2009. According to a report by Bloomberg, the tech giant plans to slim down its 127,104-person workforce—likely in those divisions that overlap with the newly acquired Nokia handset unit. Microsoft declined to comment on the reports.
The news comes days after new Microsoft CEO Satya Nadella issued a lengthy memo to staffers, which suggested that layoffs might be on the horizon in the form of “engineering and organization changes” this month. Bloomberg’s anonymous sources suggested this round of layoffs could eclipse the 5,800 cuts made five years ago—the largest in Redmond history.
Microsoft has handed out a number of pink slips in its time, dropping an undisclosed number of marketing and advertising jobs two years ago. But those cuts pale in comparison to the sweeping changes executed in 2009. The Redmond rumors come less than three months after Microsoft and Nokia sealed a $7.2 billion deal, in which the Seattle company purchased Nokia’s smartphone and mobile phone businesses.